Senator Patrick Leahy, chairman of the Senate Judiciary Committee, struck a blow to patent reform earlier today when he announced that he was pulling a bill meant to stop non-practicing entities (patent trolls) from extorting funds from companies making real products.
Leahy said in a statement that the bill was pulled because it couldn’t get the support it needed to make it through the Senate despite a similar bill making it through the House in December.
“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 said. “We have heard repeated concerns that the House-passed bill went beyond the scope of addressing patent trolls, and would have severe unintended consequences on legitimate patent holders who employ thousands of Americans.”
Leahy said in his statement that he hopes to revisit the issue later this year, but given the bill’s inability to receive bipartisan support six months after the House passed its own bill, it seems like true patent reform — or at least some protection against patent trolls — is still a ways off.
Reactions from around the Web
Reuters reports on the bill’s troubles:
The bill has strong support from companies such as Google Inc and Cisco Systems Inc, as well as retailers that have been surprised to find themselves accused of patent infringement for such practices as using off-the-shelf routers to provide Wi-Fi to customers.
But it also has critics who worry that efforts to rein in truly abusive, unwarranted patent infringement lawsuits could inadvertently hurt drug companies, colleges, and others seeking to protect intellectual property from those who would steal it.
Ars Technica explains why so many companies supported the bill:
In some ways, it looks like essentially the same industries that killed earlier, more modest patent reform efforts back in 2007. Tech groups were pushing reform then, with pharmaceutical companies, universities, and ultimately manufacturers on the other side.
This year, the forces supporting reform were broader, with retailers, grocers, and restaurants taking up the cause, as patent trolls increasingly swamped more ‘Main Street’ businesses.
Re/code notes that Leahy’s decision to pull the bill doesn’t come as a surprise:
Leahy’s decision to pull the legislation wasn’t totally unexpected since he had previously delayed committee action on the measure five times while lawmakers tried to placate concerns raised by tech and pharmaceutical companies, academia and other industries (retail, financial services, etc.) with a stake in the debate.
Gigaom reports that at one point patent trolls filed up to 200 lawsuits in a single day:
Meanwhile, the trolls continue to do brisk business. In late April, for instance, trolls filed nearly 200 lawsuits in a single day, using old patents to target everyone from Etsy to the NFL.
For patent reformers, any hope of change for now rests with the Supreme Court. The court is in the course of deciding a major case called Alice Corp that could eliminate or reduce software patents, which have proved easy to obtain and are a popular weapon of patent trolls.
Pando weighs in
Gary Shapiro, president of the Consumer Electronics Association, put it best, ‘Patent trolls [are] companies that do not produce products or services but sue those who do.’ Basically, they’re organizations that buy up ambiguously worded patents and then use said patents to extort money (by suing or demanding licensing fees) from developers whose product infringes on the claims of the broadly defined patent.
On the experience of being on the receiving end of a patent troll’s lawsuit:
Once a month, Steve Wright* gets a large envelope from his lawyers and goes into a whir. ‘Every month when that hits my desk, I just get this feeling in the pit of my stomach, like, ‘How bad is it going to be?’’ says Wright, the founder and CEO of a New York-based ecommerce startup.
Invariably, the envelope contains a bill, a consequence of a patent lawsuit that has cost Wright’s startup more than $100,000 over the last six months. And that’s with a discount. While his lawyers are offering cut-price services, the number in that envelope each month is still so large that Wright has to wait until the rest of his team, five people in total, have left at the end of the day before he opens it. Then, alone in his office, the envelope’s force does its work.
You have more at stake. Don’t ever forget that. You are fighting for the entity you have poured your time and resources into. You’re using technology to solve a problem that you believe in. What is the patent troll fighting for? A settlement worth a few thousand dollars? Your cause is bigger and worth the fight.
The bad news is the patent troll has a formula — he knows what kind of threats will scare you, which legal levers to pull, and when to increase the pressure. Don’t let that scare you off. Be brave and remember what you are fighting for.
Hulls’ move reminds me of DoubleClick’s Kevin O’Connor pledging a million dollars of his own money to fight patent trolls going after his next startup, FindTheBest. But, of course, O’Connor was already a very wealthy man by that point — DoubleClick sold to Google for $3.1bn. Hulls has plenty to lose if he gets distracted by litigation, causing ADT (or any other potential acquirer) to get spooked.
Either way, it’s a ballsy move. And a refreshing one in a tech industry that increasingly seems to defer to lawyers before blowing its nose. For its part, AGIS has already responded, skipping a settlement offer, and demanding a jury trial to settle the claim.
[illustration by Brad Jonas for Pando]