Stopping Bad Legislation -- The Innovation Alliance Speaks Out

by McDonnell Boehnen Hulbert & Berghoff LLP

Innovation AllianceOn the day before the Senate Judiciary Committee is scheduled to take up S. 1720 (The Patent Transparency and Improvements Act), the Innovation Alliance delivered a letter to Chairman Leahy and Ranking Member Grassley concerning the committee's legislative efforts.  The Alliance was joined on the letter by a host of additional entities and organization, "representing thousands of innovative companies, universities, and organizations and millions of workers in the United States."  These included individual companies, such as 3M, Caterpillar, and Novartis, as well as organizations, such as the Association of University Technology Managers ("AUTM"), the Biotechnology Industry Organization ("BIO"), and the Pharmaceutical Research and Manufacturers of America ("PhRMA").  The letter begins by acknowledging the hard work the Committee has undertaken in crafting a "bill to target abusive practices in patent litigation."  However, it quickly points out that some of the measures are not narrowly tailored to address the perceived problem, "and, in fact, would do serious damage to the patent system."  In essence, the letter explains, every patent holder is treated as though they are a "troll" by many of the pending provisions.  "This approach clearly favors a business model that does not rely on patents and tilts the balance in favor of patent infringers, thereby discouraging investment in innovation."  Specifically, the letter calls out the current provisions on discovery, customer stay, fee shifting, pleadings, and enforcement by the FTC.  The letter concludes by suggesting that if an appropriate balance is not met, the undersigned "will oppose the legislation."

The letter comes a day after Senator Charles Schumer of New York "Hung Out" with the Internet Association.  As we pointed out yesterday, when asked how to get the anti-troll message across, Sen. Schumer stressed that it is not necessary to worry about the details.  However, it is the details that the Innovation Alliance thinks are crucial.  Much like the Internet Association's site "Stop Bad Patents," the Innovation Alliance hosts the "Save the Inventor" website, which also encourages visitors to contact their Senators.  But instead of speaking in generalities with unsupported statistics, the "Save the Inventor" site provides facts, including the sources for any numbers or statistics cited.  In fact, most of these sources are U.S. governmental organizations, such as the Government Accountability Office, the Department of Commerce, and the U.S. Chamber of Commerce.  The Innovation Alliance states that patent reform must be targeted and balanced for an innovation ecosystem that drives the American economy to thrive.  And while acknowledging that there is a litigation abuse problem, the Alliance believes that the key to solving it is improving patent quality, which includes vigorous pre-grant review.

Today's letter is not the Innovation Alliance's only recent communication with Congress.  On March 13, they released a statement supporting Senator Feinstein for introducing the "Patent Fee Integrity Act," aimed at preventing fee-division from the Patent Office.  In addition, on March 4, 2014, the Alliance sent a letter to Senate Committee on Commerce, Science, & Transportation in response to S. 2049 (The Transparency in Assertion of Patents Act).  As we reported at the time, this bill would provide the FTC with enforcement power to curb the sending of demand letters.  The Alliance's letter complained that the bill is not targeted at the abusive behavior, but rather applies to all patent enforcement, even though "the vast majority [of patent holders] are engaging in perfectly reasonable and appropriate economic activity."  The letter also pointed out the First Amendment concerns of that particular bill.

We will continue to monitor the progress of S. 1720.  As Sen. Schumer suggested yesterday, it is unlikely that the committee will vote on the bill tomorrow.  Nevertheless, every indication is that something will happen soon.  When it does, we will report on any significant advances.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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