‘Deliberative’ Approach Seen in Senate Patent Work

Capitol Hill’s approach to preparing legislation aimed at curbing abusive patent litigation has shifted since attention moved to the Senate, with industry stakeholders telling us they've noticed the Senate Judiciary Committee has been “deliberative” in its examination of the Patent Transparency and Improvements Act (S-1720) and other bills. Senate Judiciary held a hearing on S-1720 soon after the House passed the Innovation Act (HR-3309) in December, but several members of the committee urged further hearings and more deliberative consideration of legislation on the Senate side (CD Dec 18 p11). Work since then has been at a slower pace and largely behind the scenes, which stakeholders on all sides of the debate said has been beneficial.

Senate Judiciary’s focus since the December hearing has been on collecting more input through more informal means, most recently in a series of closed-to-the-public staff briefings in which stakeholders presented their opinions on provisions in S-1720 and other Senate patent legislation. The last of the briefings, which was Friday, focused on S-1720’s provision allowing a court to stay a patent lawsuit against a product’s end-user if the product’s manufacturer is also under litigation, a Senate Judiciary aide said. Other briefings have, among other things, focused on a controversial proposal to expand the Patent and Trademark Office’s covered business method (CBM) patent review program to include software patents. The staff briefings have collectively been “extremely helpful in this process,” the committee aide said.

Now that the staff briefings are finished, Senate Judiciary members “have work to do finding common ground on the more controversial provisions like the litigation reform pieces,” the committee aide said. “My guess is that that is where staff attention will be focused next.” The committee, which Sen. Patrick Leahy, D-Vt., chairs, must also determine whether it can proceed without additional hearings, which will depend on “how many senators are still going to request the hearings,” said a software industry official. “Now it’s time for Leahy’s staff to start trying to work with other senators to figure out if there’s a way to build a coalition to move forward.” Although Senate Judiciary is continuing to consider its options, a bill markup could come as soon as late February or early March, said Matt Levy, Computer & Communications Industry Association patent counsel.

A successful coalition partially depends on the committee’s creating a “landing zone” to include litigation reform in a final bill in a way that “works for the Democrats and that Republicans think is strong enough to make a difference,” said the software industry official. S-1720, unlike HR-3309, does not include provisions on litigation reform. Two other bills under consideration for inclusion in finalized Senate legislation do include litigation reforms: the Patent Abuse Reduction Act (S-1013) and the Patent Litigation Integrity Act (S-1612). Senate Judiciary had always planned to initially divide key patent issues among a series of bills “before unifying them at some point, probably during a markup,” Levy said.

The American Intellectual Property Law Association, among other groups concerned about litigation reforms included in HR-3309, is “watching” S-1013 and S-1612 “very carefully,” said AIPLA President Todd Dickinson, former PTO director. AIPLA believes S-1720 is “more appropriately targeted at problems with regard to patent assertion entities” like pre-litigation demand letters, he said. The America Invents Act, passed in 2011 and only recently taken full effect, was intended to deal with many of the same litigation issues that advocates are now trying to address again, Dickinson said. AIPLA believes the Senate should allow PTO to move forward with existing AIA programs like post-grant review before attempting to readdress the issue, and should avoid “micromanagement” of court processes that the judges are beginning to address, he said.

Litigation Reform Said Needed

Some believe a final Senate bill that doesn’t include litigation reform provisions would be less effective. “Patent reform is a fairly multifaceted problem, so addressing the issues” that Leahy “talks about without addressing some of the litigation issues in the bill would result in a half-solution,” said Charles Duan, director of Public Knowledge’s Patent Reform Project. “There aren’t going to be that many chances to reform the patent litigation system, so taking this opportunity is fairly important."

Software industry stakeholders are continuing to push Senate Judiciary to completely discount including a CBM program expansion in a final patent bill. HR-3309 had originally included a provision expanding the CBM program, but House Judiciary Committee Chairman Bob Goodlatte, R-Va., agreed to remove the provision prior to the bill’s committee markup amid concerns it would endanger the bill’s chances of passing out of committee (CD Nov 20 p16). CBM expansion isn’t part of S-1720, but is addressed in the Patent Quality Improvement Act (S-866), which Sen. Chuck Schumer, D-N.Y., has been pushing to include in final legislation. Senate Judiciary has “been very open to us educating staff members on our point of view,” said Tim Molino, BSA/The Software Alliance director-government relations. BSA has been vocally opposed to expanding the CBM program and urged Goodlatte to remove the program’s expansion from HR-3309. “We're going to continue to work to make sure what comes out of Senate Judiciary doesn’t inhibit innovation within the software industry,” Molino said.

The Senate’s slower pace “actually favors a more reasoned debate, which actually favors an expansion of the CBM program,” CCIA’s Levy said. “It’s working well so far, and if you start to look the arguments of those who oppose it, they don’t hold up all that well when you dig into them.” House Judiciary’s “accelerated pace made it easier to cut out the CBM provision rather than try to find a compromise,” he said. The Senate should produce “some form of CBM expansion,” most likely in the form of compromise language, Levy said.

A final Senate bill is also still likely to require expanded disclosure of a patent’s ownership information, despite PTO’s move last month to propose new rules on real-party-in-interest information, experts said. The proposed rules were among several executive actions President Barack Obama issued in June to address abusive patent litigation (CD June 5 p12). The proposed rules would require a patent applicant to disclose information on titleholders and enforcement entities associated with the proposed patent. The proposed rules would require information disclosure when the patent is filed, when the patent changes ownership during patent pendency, when the patent issue fee and maintenance fees are due and when the patent is involved in some PTO proceedings (http://1.usa.gov/1n5qjAq). The PTO’s proposed rules “provide a guidepost,” but a legislative fix is still necessary, said a software industry official. “A lot of what PTO is proposing can be captured in the Senate’s legislation and can provide real incentives to update that information. PTO’s answer is that your patent will be considered abandoned if you don’t disclose that information, but I don’t know how you'd enforce that."

The Senate’s slower pace benefits groups like AIPLA that thought they didn’t have enough input in HR-3309, Dickinson said. “This strikes me as pretty similar to how AIA progressed,” he said. “There was a version of AIA that passed the House that some groups had concerns about, and they felt their concerns about aspects of it had not gotten a fair hearing. When the bill got to the Senate, then that happened. I think you're going to see a more deliberate discussion in the Senate about issues like fee shifting.” AIPLA and other groups aren’t pushing for a slower look at patent legislation in order to delay the process, “they want to get it right and make sure we're taking everybody’s concerns into account,” Dickinson said. “Nobody is pro-troll, but they are pro-system. They want to make sure the system works effectively and efficiently for everybody.”