Following a brief markup Thursday, the Senate Judiciary Committee approved a bipartisan patent reform bill designed to curb what critics say are bogus lawsuits brought by “patent trolls.”
The PATENT Act, which will head to the full Senate after passing by a vote of 16-4 in committee, offers a more targeted approach to combating patent trolls — shell companies that buy up vague patents with the intent of collecting legal settlements in patent litigation from business owners — than a companion bill currently circulating in the House.
“This is a critical step forward in leveling the playing field to fight back against patent trolls that are sucking the life out of our innovators. I hope that this balanced and bipartisan bill will move quickly to the floor,” Sen. Charles Schumer, New York Democrat, said in a statement Thursday.
The bill, which was introduced April 29 by Senate Judiciary Committee Chairman Charles Grassley, Iowa Republican, and ranking Democrat Sen. Patrick Leahy of Vermont, would set a national standard for what is considered a deceptive patent demand letter, and give the Federal Communications Commission expanded enforcement authority.
The bill also aims to protect customers of patented technologies by making manufacturers the litigators — meaning, for example, Intel would be the defendant for patented technology on one of its chips, not J.C. Penney for using that technology in a bar code reader.
Some conservatives have raised concerns that bill supporters have not considered how the legislation will affect property rights and hurt small business start-ups and inventors.
“Along with life and liberty, the protection of property rights is one of the most fundamental principles of conservatism. Americans must stand up for patent protection and oppose any effort to undermine those rights,” Dan Schneider, executive director of the American Conservative Union, said Thursday.
Critics have also warned that the legislation’s fee-shifting provisions which would allow the courts to force the losing party in a patent litigation case to pay the winner’s legal fees, provided the court deems the losing party’s argument was unreasonable.
“This Congress should not be choosing sides between powerful interests that rely on intellectual property without a thorough and searching examination of its likely impact on the entire system of innovation in this country,” said Sen. Chris Coons, Delaware Democrat, one of four senators to vote against the bill.
During Thursday’s markup, the Senate moved to amend its fee-shifting provision to allow a judge to consider “undue economic hardship to a named inventor or institution of higher education” when determining if “special circumstances” make a fee award unjust.
Despite the tweaks, the Innovation Alliance, whose members include Qualcomm and Dolby Labs, said “significant work” still needs to be done on the bill before it can be widely supported by stakeholders and the broader Senate.
“The Innovation Alliance will continue to advocate for common-sense improvements to these provisions to ensure that the [bill] targets the existing abuse by some patent plaintiffs without creating new avenues for abuse by patent defendants in the future,” the group said in a statement Thursday. “We can strengthen our patent laws without undermining intellectual property rights and crippling a system that is so important to incentivizing innovation and job-creation in our country.”
