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IP Litigation

Patent “troll” reform efforts on hold indefinitely

May 23, 2014

IP Litigation

Patent “troll” reform efforts on hold indefinitely

May 23, 2014

Back to Fish's Litigation Blog

 

After months of delays and postponed hearings, it now appears the push to enact legislation targeting “patent trolls” has been indefinitely suspended, after Sen. Patrick Leahy (D-VT), the Chairman of the Senate Judiciary Committee, announced earlier this week he was pulling his proposed bill from the committee docket.

“Unfortunately,” Leahy said in a press release Wednesday, “there has been no agreement on how to combat the scourge of patent trolls on our economy without burdening the companies and universities who rely on the patent system every day to protect their inventions.”

While the House overwhelmingly passed patent reform legislation last year, and Senate efforts thus far have focused on enhanced pleading requirements, limitations on discovery, more stringent requirements for patent demand letters, and less exacting standards for awarding attorney fees to prevailing parties. There appeared to be fairly strong bipartisan support behind compromise language put forward by Sens. John Cornyn (R-Tex.) and Chuck Schumer (D-N.Y.) that eased concerns among patent holders.

Indeed, the Washington Post reported that “as late as Wednesday morning, Leahy and the bill’s two top shepherds…were said to have settled on the bill’s language, saying, as one reform advocate put it, ‘pencils down.’”  My own senate sources confirm that the deal was as good as done.

But then later that morning, Leahy issued his statement nixing the agreement.  “I have said all along that we needed broad bipartisan support to get a bill through the Senate,” Leahy declared. “Regrettably, competing companies on both sides of this issue refused to come to agreement on how to achieve that goal.”

Groups pushing back on the legislation included the Innovation Alliance, the Biotechnology Industry Association, assorted universities, and other research institutions fearful that the new language could impinge on their ability to enforce their IP. In a letter they sent on Tuesday, they reasoned that the proposed bill would go “far beyond what is necessary or desirable to combat abusive patent litigation, and would do serious damage to the patent system.”  But others have fingered trial lawyers as the major culprit, with Senate Majority Leader Harry Reid insisting Leahy pull the bill.

“It’s disappointing,” Sen. Cornyn noted, that “the majority leader has allowed the demands of one special interest group to trump a bipartisan will in Congress and the overwhelming support of innovators and job creators.” Many insiders speculate that key trial lawyer groups couldn’t stomach the attorney fee-shifting provisions, even in the milder form put forward in the Cornyn-Schumer compromise.

So now it’s back to the drawing board. The next best chance for passage of any type of patent reform this year—and it’s a slim one—seems to lie in a lame-duck congressional session following the November elections. Stay tuned for more.

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