Pending reforms in Washington aimed at curbing so-called patent “trolls” are stalled indefinitely over differences of opinion on the scope of the bill.
Aspects of the legislation, which Leahy co-sponsored, were modeled after Vermont’s own, first-in-the-nation patent troll laws.
Patent trolling is a scheme in which companies or individuals threaten to sue businesses for bogus patent violations. Analysts say trolling harms the economy because it’s often cheaper for businesses to pay off the troll than defend themselves in court.
“This is a real problem facing businesses in Vermont and across the country,” Leahy said in a statement. “Unfortunately, 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.”
Leahy previously worked to pass patent reforms in 2011 through the America Invents Act. Among other things, it raised the bar to help avoid lawsuits from overly broad patents.
The new round of reform is more targeted toward patent trolling. Similar legislation had already passed the House with wide bipartisan support.
In the Senate negotiations that fell apart, differences surfaced over proposed litigation reforms that would make it harder to file lawsuits charging patent violations.
“Our community of stakeholders was not looking for just any bill,” said Gina Woodworth, vice-president of the Internet Association, whose members include Google, Amazon and Netflix, among other high-tech powerhouses.
Along with other coalition groups, IA pushed for “fee shifting,” which means that the losing party in a patent lawsuit can be ordered to pay the winner’s attorney fees. A pending draft also may have required more detailed complaints when filing a lawsuit, and lowered the limit on information defendants must give to plaintiffs through the legal discovery process.
“In order for it to be meaningful and effective, it really needed to target the actual problems that these stakeholders were experiencing,” Woodworth said.
Individuals familiar with the negotiations said stakeholders had reached consensus on other provisions — many of which were in the House-passed version — that addressed specific litigation tactics used by patent trolls. For example, the draft would have protected businesses that use technology like wireless routers or scanners — both of which have been the subject of patent troll threats in the past.
But in recent days, senators heard from coalitions of universities, pharmaceutical companies, biotechnology firms and trial lawyers who said some of the other litigation reforms went too far.
At the request of majority leader Sen. Harry Reid, D-Nev., Leahy agreed to pull the bill this week, several unofficial sources said.
In his statement announcing the impasse, Leahy said the latest compromise draft did not have the votes to pass.
“The concern of universities and others was that a number of these provisions effectively treated all patent holders as patent trolls,” said Barry Toiv, vice-president for public affairs for the Association of American Universities.
The heightened requirements for filing lawsuits, for example, would make it hard for small-time inventors to lodge complaints against more powerful technology companies they suspect of patent infringement.
“They would have significantly weakened the value of patents because they would have made it significantly more difficult to legitimately enforce those patents,” Toiv said.
The University of Vermont also weighed in. John Evans, vice president for research, said in a May 20 letter to the Judiciary Committee that more negotiations were needed.
“We understand that some high tech companies are pushing for immediate consideration of the draft of this legislation that troubles us,” Evans said. “We hope you will not feel the necessity to report the patent legislation before this balance is reached.”
Woodward said her group will continue its grassroots efforts to tell the story of patent trolling, though some of its energy might shift from Congress to the states.
“So members of Congress can hear it when they’re home,” she said. “This is not the end for us.”
Leahy says it’s not the end for him, either.
“We can all agree that patent trolls abuse the current patent system. I hope we are able to return to this issue this year,” Leahy said.
Vermont’s pending patent troll litigation against MPHJ Technologies hinges not on federal law, but on the state’s consumer protection statutes. MPHJ lost a motion in April to move the case to federal court, but in mid-May appealed that decision.
UPDATE: This article was updated at 6:52 p.m. on May 23, 2014.