Depending on whom you ask, a bill that would stifle so-called “patent trolls” either died or was put on life support in the Senate on Wednesday. Judiciary Committee Chair Patrick Leahy (D-VT) announced that a measure designed to prevent frivolous patent litigation would be removed from his committee’s agenda because “competing companies on both sides of this issue refused to come to agreement.”
Putting aside Leahy’s apparent admission that it is corporations, not legislators, driving the content of the bill, the proposal’s failure to advance through the Senate is a major blow to many tech firms and other businesses.
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“It is unfortunate that, after over a year of negotiations and discussions, the Patent Transparency and Improvements Act has been pulled from the docket,” said Charles Duan, director of the Patent Reform Project at open-Internet advocate Public Knowledge.
“Although ‘companies on both sides of the issue’ could not come to agreement, the real loser here is the American consumer,” he said. “Patent abuse raises costs on consumer products, keeps innovators from bringing products to market, and blocks all individuals from fully accessing the wealth of technology.”
Michael Beckerman, president and CEO of the Internet Association, said “Every day that reform is delayed is a win for patent trolls and a loss for hardworking Americans.
The term “patent troll” was coined to identify individuals and corporations that acquire the rights to patented products and technologies, and then file lawsuits against companies that, they allege, are illegally using patented material. In general, this is something economists refer to as “rent-seeking” – they are trying to profit from products and technologies without actually producing anything of value to the economy.
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Over the past decade, it has become increasingly common for companies, both large and small, to find themselves named in copyright violation lawsuits, typically filed by plaintiffs alleging that they have illegally incorporated a patented process or technology into their products. In some cases, the lawsuits have merit, and are defending an individual inventor’s claim, or the product of a company’s investment in research and development.
However, more and more of the suits appear to be driven not by innovators themselves, but by speculators who have bought the rights to somewhat obscure patents, and are filing nuisance lawsuits – cases with no merit, but which companies find it simpler to settle with an out-of-court payment rather than deal with the inconvenience of a lawsuit.
Leahy, himself a supporter of the bill, called it a “real problem.” He said, “We can all agree that patent trolls abuse the current patent system.”
The current problem is the difficulty in striking a balance between protecting businesses from purely rent-seeking plaintiffs and allowing legitimate patent holders to defend their rights in court.
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An anti-patent troll bill passed by the House of Representatives has not yet received a vote in the Senate, where it faces strong objections from research universities and companies that spend a lot of money on research and development, because they feel it is too restrictive of patent holders.
Leahy held out a bit of hope for those hoping for progress on the issue this year, saying, “I hope we are able to return to this issue this year.”
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