Congress To Take Up Patent Troll Bills

Lawmakers’ return to Capitol Hill this week will be marked by a renewed effort to find a way to curb the abusive practices of patent trolls. In the last Congress, patent troll legislation came close to passing, but never made it across the finish line.

A number of legislative approaches are again emerging, and two bills on the House side will get closer scrutiny in hearings this week. Judiciary chairman Bob Goodlatte (R-Va.) is holding a hearing Tuesday on his Innovation Act -- a bill that was overwhelmingly passed by the House last year 325-91, but couldn’t get to a floor vote in the Senate.

On Thursday Rep. Michael Burgess (R-Tex.), chairman of the subcommittee on commerce, manufacturing and trade, is holding a hearing on the TROL Act (Targeting Rogue and Opaque Letters), a narrower bill focused on abuses of demand letters.

Patent assertion entities -- companies that don’t produce or sell anything -- have made a big business out of asserting patents for a wide variety of commonly-used technologies like online shopping carts, scan-to-email, podcasts, and links in smartphone apps that direct users to privacy policies on a Web site.



Retailers, advertisers and tech companies, including Google and Facebook, have complained about the abuse of broadly worded patents and about demand letters that threaten small businesses with costly lawsuits.

But those pushing for patent reform are hopeful that this time around something will get done.

“The climate in Congress seems much more conducive to enacting this legislation this year than was the case in the last session,” said Dick O’Brien, executive vice president of the American Association of Advertising Agencies. The 4As, as well as organizations like the National Retail Federation and the Consumer Electronics Association, belong to the United for Patent Reform coalition, which is pushing to revise patent law.

There may be wide bipartisan agreement in Congress that something needs to be done, but that doesn’t mean agreement over the details of the legislation will be easy to achieve. The biotech industry, universities and inventors have stepped up their lobbying and advocacy game to oppose broader measures like the Innovation Act, which includes provisions like fee shifting and heightened pleading standards. The bill is likely to do well in the House, but its future in the Senate, where it died last year, is uncertain.

The House judiciary hearing will feature the new U.S. Patent and Trademark Office director Michelle Lee -- who has put improving patent quality at the top of her agenda -- as well as representatives from Yahoo, Eli Lilly & Co., and the Biotechnology Industry Organization.

As a much narrower bill, the TROL Act could have better odds. The bill gives broader authority to the Federal Trade Commission to go after demand letters.

Without any legislation, the Federal Trade Commission has already brought an enforcement action under its unfair and deceptive practices authority against MPHJ Technology Investments. The FTC alleges that MPHJ sent letters threatening lawsuits thousands of small businesses asserting its scan-to-email technology.

Legislation is moving slower in the Senate. Sens. Chris Coons (D-Del.), Dick Durbin (D-Ill.) and Mazie Hirono (D-Hawaii) introduced the STRONG Patent Act, which is primarily aimed at making changes to the USPTO’s review process for challenging patents.

Senate judiciary chairman Chuck Grassley (R-Iowa) and ranking member Patrick Leahy (D-Vt.) are also working on a proposal.

Even without legislation, there has been progress in the courts against the practices of patent assertion entities. Most recently on Friday, based on an expedited review requested by the Electronic Frontier Foundation, the U.S.P.T.O. invalidated key claims of the “podcasting patent” used by Personal Audio LLC to demand license fees from podcasters including, most famously, comedian Adam Carolla and three major television networks.

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