Technology industry taking aim at patent trolls
By: Michelle Quinn, Politico
The tech industry, after focusing laserlike on immigration reform for much of the past year, is using the slow congressional walk on that issue to increasingly turn its attention to another fight: getting Washington to curb patent trolls.
Silicon Valley has long complained about abusive patent litigation, calling it extortion and an unseen tax on its businesses. But now, with other sectors from retailers to realtors crying foul about the problem, the tech industry sees an opportunity to spur Washington into action.
This has delighted tech lobbyists, who have been resigned that Congress wouldn’t return to the issue for years after passing comprehensive patent reform legislation in 2011. And it’s giving the industry a chance to apply the political muscle it’s honed during the immigration debate on another issue central to its business.
“It’s very encouraging to see the level of discussion, the number of bills and the energy and momentum that has come into this debate,” said Matt Tanielian, director of the Coalition for Patent Fairness, which represents tech companies including Google, Cisco and Intel. “The problem has become much larger, impacting a much bigger part of the economy, and it’s ripe for some solution.”
Congress, the White House and the Federal Trade Commission have shown an interest in tackling the issue.
Lawmakers have introduced or floated at least seven bills this year aimed at restricting firms whose sole purpose is to threaten companies with patent lawsuits to make money. Reps. Peter DeFazio (D-Ore.) and Jason Chaffetz (R-Utah) sponsored the Shield Act to make the loser in a lawsuit pay the litigation fees of all parties. Other proposals address patent quality and ways to make it clearer who owns a patent. Most recently, Reps. Darrell Issa (R-Calif.) and Judy Chu (D-Calif.) introduced a bill expanding the categories of patents that can be reviewed in cases of patent litigation.
The Obama administration came out with its own package of legislative proposals and executive actions in June, after the president said patent trolls “hijack” people’s ideas. It also issued an economic report citing research that “patent assertion entities” filed nearly 60 percent of the patent lawsuits in the U.S. in 2012, up from 25 percent in 2007.
Meanwhile the FTC’s chairwoman, Edith Ramirez, has called for the agency to use its subpoena power to conduct a broad study of the issue.
Sensing momentum, tech and other industry groups hit the Hill for a day of lobbying on the issue Thursday. House Judiciary Committee Chairman Bob Goodlatte (R-Va.), whose panel would play a central role in any new patent legislation, told the group that he expects to unveil a second draft patent reform bill in the coming days.
Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.), another key player, is expected to release his own proposal after the August recess, adding protections for companies hit by technology patent lawsuits as well as improving the post-grant review process for patents and creating more transparency around ownership.
“The breadth of types of industries that are concerned about being hit by troll suits has created a lot of momentum,” a Leahy aide said. “You have retailers, restaurants, hotels, advertisers and printers who were not part of the last debates yet are being hit by suits. That changes the dynamic.”
The tech industry has cheered many of these bills, and companies are pushing their trade organizations to become more involved. But there is pushback as well from some tech companies that fear restrictions aimed at patent trolls will result in overly broad laws that ultimately weaken the patent system and companies’ intellectual property rights.
“We think there needs to be an open discussion to help policymakers understand the drawbacks” of some of the proposals, said Horacio Gutierrez, Microsoft’s deputy counsel of intellectual property and licensing. He said the U.S. Patent and Trademark Office needs more resources to issue better quality patents.
“No one on the planet is against curtailing frivolous litigation,” said Brian Pomper, executive director of the Innovation Alliance, which represents companies such as Qualcomm and Dolby Labs. “If there are abuses, we should address the abuses. But we have to be deliberate. We want to be careful that we don’t do anything that would inadvertently cause more harm than good.
”The tech industry’s issues with patent litigation extend beyond trolls. Increasingly in recent years, large companies have used patents to beat each other up in court.
In the coming weeks, the International Trade Commission may rule on whether Samsung’s products violated Apple patents and should be blocked from coming into the U.S. At the same time, U.S. customs officials might stop Apple products, including the iPhone 4, at the border as a result of a case brought by Samsung at the ITC.
Some congressional leaders have expressed concern about companies using patents that are part of industry standards to try to block competitors’ products from appearing in stores. A Senate Judiciary subcommittee is set to hold a hearing on patents and industry standards on Tuesday.
And so some in the industry, while thrilled by Congress’s interest in patent reform, are also nervous.
“The more ambitious they get, the harder it is to marshal consensus among industry,” said one tech insider.
View the full article in Politico here.