Is patent troll reform dead?

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Despite furious attempts at resuscitation, patent troll legislation died on the operating table at the Capitol last week. Or did it?

The cause of death, or at least apparent brain-death? A surprisingly partisan tinge to an otherwise technical issue, coupled with strong resistance from key interest groups. But don’t count out efforts to revive the now-comatose patient, if not during this session then early in the next one.

Following months of delays and postponed hearings (0), the push to enact legislation targeting patent trolls was indefinitely suspended last Wednesday when Sen. Patrick Leahy (D-VT), the Chairman of the Senate Judiciary Committee, pulled his proposed bill.

“Unfortunately,” Leahy said in a press release (1), “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.”

The House passed patent reform legislation last year in the form of Rep. Bob Goodlatte’s (R-Va.) Innovation Act (2) by a wide, bipartisan margin. But Goodlatte’s bill perished in the Senate, where alternative proposals have included limitations on discovery, enhanced pleading requirements, stricter standards for patent demand letters, and looser rules for awarding attorney fees to prevailing parties.

And more recently, there appeared to be strong bipartisan support for a compromise measure (3) presented by Sens. John Cornyn (R-Tex.) and Chuck Schumer (D-N.Y.). That draft language softened many of the edges of the Innovation Act in an effort to mollify patent holders, including the biotech industry, universities, and other research institutions. There were even reports (4) that universities were granted their own carve-out in the final version of the compromise.

In fact, the Washington Post reported (5) that “as late as [last] 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 Senate sources confirm the deal was as good as done, and Leahy’s announcement came from out of nowhere.

In that statement, the Judiciary chairman proclaimed: “I have said all along that we needed broad bipartisan support to get a bill through the Senate. Regrettably, competing companies on both sides of this issue refused to come to agreement on how to achieve that goal.”

Interest groups resisting the legislation included the Innovation Alliance, the Biotechnology Industry Association, assorted universities, and other research institutions fearful that even the Cornyn-Schumer compromise proposal could stifle their ability to enforce their patents. In a letter (6) they sent last Tuesday, they asserted 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.”

Another key culprit is the trial bar, who reportedly influenced Senate Majority Leader Harry Reid to instruct 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.”

Some speculate that trial lawyers and their lobbyists were adamantly opposed to the attorney fee-shifting provisions, even in the softer form presented in the Cornyn-Schumer compromise. Much as they resisted – and continued to resist – tort reform, they’ve vigorously contested efforts to rein in patent suits.

But perhaps most surprising of all was that Reid, and ultimately Leahy, succumbed to these pressures. Many prominent Democrats, including President Obama and House Minority Leader Nancy Pelosi (R-Calif.), have been handsomely rewarded by trial lawyers over the years, and yet they pushed hard for the latest round of patent reform legislation. Pity poor Leahy, who has endlessly adjourned markup sessions and worked tirelessly to fashion a compromise, only to have the godfather of the Senate yank the cannoli out of his hand just as he was finally ready to savor it.

But the reformers aren’t giving up yet. There’s still a chance that the Senate could act in a lame-duck congressional session in November and December, especially if the Democrats lose control of the Senate and Reid and company grow concerned that the Republicans might pass more Goodlatte-like legislation in the coming session, replete with stronger fee-shifting provisions.

Yet even if that doesn’t come to pass, expect a renewed push in the new session, and expect the dying patient to be reborn in 2015 with an infusion of Cornyn-Schumer compromise blood.



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