Senate Judiciary Committee Called Ready to Consider Patent Litigation Bill

Final compromise language, to be contained in a manager’s amendment to the original S-1720, may be ready as soon as Monday, stakeholders said. “Assuming the amendment comes out Monday, I would be pretty confident of it passing out of committee, given the length and breadth of the negotiations,” said Charles Duan, Public Knowledge director-Patent Reform Project. “This will be a very carefully considered amendment.” A vote on S-1720 this week would culminate what stakeholders said was heightened lobbying on patent issues during Q1, partially resulting from the behind-the-scenes wrangling over the bill.

Sens. John Cornyn, R-Texas, and Chuck Schumer, D-N.Y., circulated a set of compromises over the two-week recess on the controversial provisions, including fee-shifting, heightened pleading standards, discovery limits and pre-litigation patent demand letter requirements. Stakeholders said Friday they weren’t certain how much the manager’s amendment would resemble the Cornyn-Schumer compromise. The compromise would more closely resemble provisions in the House-passed Innovation Act (HR-3309), though stakeholders noted compromise provisions aren’t as hardline as what made it into the House bill. They're “gentle compromises,” said Cathy Sloan, Computer and Communications Industry Association (CCIA) vice president-government relations. “The language has been carefully crafted to really retain the impact of reform without spilling over into unintended impacts on small inventors and universities, folks who are legitimate patent holders who aren’t abusive litigators.” Duan said he’s “pretty encouraged about the direction” of negotiations.

Cornyn-Schumer’s fee-shifting provision would only require a judge to award “reasonable attorney’s fees,” and not additional expenses that HR-3309’s provision would allow. The judge would determine whether fee-shifting was required based on whether the losing party’s positions and conduct were “objectively reasonable.” The compromise on heightened pleading standards generally resembles the version in HR-3309, said an industry lobbyist. The compromise on discovery would limit the types of discovery allowed before claim construction in a case and would ask the Judicial Conference of the U.S. to create rules on discovery limits in patent cases. Giving the conference leeway to create its own rules was important in any compromise, the industry lobbyist said.

Cornyn-Schumer’s provision on demand letters would bar a plaintiff from using a demand letter as proof of willful infringement unless the letter contains a set of required information. That information would include a detailed description of the patents and associated claims the sender alleges were infringed and how the targeted entity may have infringed the patents. The provision would also require demand letters to include a notice that the receiving entity has the right to seek a stay of any lawsuit, information on the entity asserting the patent and information on how any proposed compensation was calculated. Cornyn-Schumer “is very comprehensive,” Sloan said. “It includes all of the provisions that we support,” except for Schumer’s ill-fated proposal to expand the Patent and Trademark Office’s covered business method patent review program.

Lobbying Amid Bill Wrangling

Private wrangling over S-1720 defined much of the patent legislation debate since the beginning of the year, prompting continued lobbying from entities on all sides of the debate, according to lobbying disclosure forms due last Monday. They don’t delineate how entities or outside firms representing them prioritize their lobbying efforts on patent legislation or other issues. S-1720 and vague references to possible “draft legislation” were the focus of many entities’ lobbying efforts, as was HR-3309. Last quarter saw some tech companies spend more on lobbying and more traditional media and other companies increased spending on video market issues (CD April 23 p9).

Lobbying interest from all sides of the patent revamp debate generally remained consistent from Q4 because of Senate Judiciary’s work on S-1720, said CCIA’s Sloan. Senate Judiciary Chairman Patrick Leahy, D-Vt., had wanted to combine elements from several of the Senate’s other patent bills to make S-1720 comprehensive. Lobbying related to patent legislation was already heightened during Q4 because of the debate and ultimate passage of HR-3309, after which “everyone pivoted to the Senate side without missing a beat,” Sloan said. Disclosure forms do not make clear how companies, groups and associated outside firms prioritize different issues in their lobbying efforts. Patent legislation has remained one of CCIA’s “top priorities” since spring 2013, Sloan said. “Legislation is moving, and that can’t be said for many other areas."

Other patent bills that entities referenced included the Patent Abuse Reduction Act (S-1013), Patent Fee Integrity Act (S-2146), Patent Litigation Integrity Act (S-1612), Patent Quality Improvement Act (S-866) and Transparency in Assertion of Patents Act (S-2049). Concerns about the scope of S-2049 led to a minor focus on that bill amid perceptions that the Senate Commerce Committee was prepared to fast-track the bill, said a lobbyist who has advocated on patents on behalf of entities concerned with some aspects of current bills. Lobbying was also heightened because entities opposed to much of the bills “have become much more vocal in the last few months,” Duan said.

Many major communications and technology companies listed specific patent legislation or vague references to patent issues on lobbying forms. They included Apple, AT&T, Cisco, eBay, Facebook, Google, IBM, Microsoft, Samsung, Sprint, T-Mobile, Twitter and Verizon. Google paid at least $795,000 to outside firms to lobby on patent revamp legislation and other issues which it didn’t specify. Outside firms lobbying for AT&T on patents and other issues reported $80,000 in income from the telco in Q1. Outside firms lobbying on patents and other issues on Verizon’s behalf in Q1 disclosed $150,000 in income from the telco. Outside firms lobbying on patent and other legislation on Comcast’s behalf in Q1 reported $365,000 in income from the company. Outside firms lobbying on Facebook’s behalf on patent and other issues reported $140,000 in income from the company.

Microsoft spent at least $350,000 for outside firms to lobby on patents and other issues. Outside firms disclosed $160,000 in income for lobbying on patent and other issues for Hewlett-Packard. Outside firms reported $70,000 in income from for lobbying on patents and other issues for IBM. Outside firms reported $160,000 in income for lobbying on patents and other issues for Apple. Outside firms reported $160,000 in income from Sprint for lobbying on patents and other issues. $85,000 was disclosed as going to outside firms lobbying on patents and other issues for eBay. Akin Gump disclosed $1.02 million in income for lobbying on patents and other issues for Samsung. Twitter said it spent $50,000 on in-house lobbying on patents and other issues.

Several major patent assertion entities also continued to lobby. Intellectual Ventures (IV) said it spent $350,000 on Q1 lobbying. Outside firms Nickles Group and Richetti disclosed $165,000 in income for lobbying on IV’s behalf on patent legislation. InterDigital spent $100,000 for Lloyd Hand & Associates to lobby on patent legislation. Tessera spent $70,000 for the American Continental Group to lobby on its behalf during the quarter, while Conversant Intellectual Property Management, formerly known as Mosaid, spent $50,000 at the same firm.

Associations and interest groups continued to lobby on the patent revamp in Q1, with outside firms disclosing $240,000 in income for lobbying on patents and other issues for the Coalition for Patent Fairness. Outside firms claimed $135,000 in income for lobbying on patents and other issues for CEA. Outside firms claimed $120,000 in income for lobbying on patents and other issues for BSA/The Software Alliance; $100,000 went to firms lobbying on patent and other legislation for the pro-revamp Internet Association. The Coalition for 21st Century Patent Reform, generally critical of current patent revamp legislation, paid Akin Gump $340,000 for lobbying.

The pro-revamp CCIA used in-house lobbyists to argue for patent legislation. The Innovation Alliance, generally critical of current patent revamp efforts, spent $120,000 on lobbying at Akin Gump. The Intellectual Property Owners Association spent $30,000 on outside lobbyists for patent and other issues. Outside firms reported $60,000 in income for lobbying for the Application Developers Alliance on patent revamp legislation and other issues. The American Intellectual Property Law Association spent $20,000.