Highlights from Congressional Briefing on Patent Litigation Reform

By Renee Dopplick, ACM Director of Public Policy
May 31, 2013

The Congressional Internet Caucus Advisory Committee yesterday held a panel discussion on “If Patent Litigation Is Strangling High Tech Innovation, When Will Congress Act?” The panelists debated whether Congress should be addressing the perceived problems of abusive patent litigation and explored why the various proposed legislative solutions in Congress should matter to you.

As part of his introductory remarks, moderator Eric Hinkes, a Legal Policy Fellow with the Congressional Internet Caucus Advisory Committee, briefly highlighted a few bills, including Reps. Chaffetz’s and DeFazio’s Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act, Senator Schumer’s Patent Quality Improvement Act of 2013, Senator Cornyn’s Patent Abuse and Reduction Act, and House Judiciary Committee Chairman Goodlatte’s Patent Discussion Draft. Senate Judiciary Committee Chairman Leahy is expected to introduce legislation soon. He also highlighted the House Judiciary Committee hearings on abusive patent litigation in March and April. He thanked the four Co-Chairs of the Congressional Internet Caucus for their assistance and support of the event: Senator Patrick Leahy, Senator John Thune, Rep. Bob Goodlatte, and Rep. Anna Eshoo.

George Mason University School of Law Professor Adam Mossoff cautioned against new legislation and questioned the fundamental premise of the panel’s title that “patent litigation is strangling high tech innovation.” He recommended giving more time for the implementation of the America Invents Act rather than “adding changes upon changes.” He warned that the loser pays model, such as proposed in the SHIELD Act, could have unintended consequences for small businesses and inventors wanting to bring lawsuit against a large competitor because there is always legal uncertainty.

Mossoff was skeptical of claims that patents are discouraging innovation and harming consumers. He stated, “We have amazing technological innovation in the high-tech and biotech industries [and] strong patenting in those industries to go along with that innovation.” He cited innovations such as tablets, smartphones, retinal scanners, and motion air swiping functionality. Referring loosely to the arguments made by some that the “internet is open” and “that we really don’t have property rights in the internet in a fundamental way,” he noted that “the packet switching technologies, which is the technological transfer of information on the internet, as well as the TCP/IP protocol, which is the core protocol of the entire communications on the internet — both of those technologies were patented, yet we have the development of the internet. We have the development of an open framework.”

Application Developers Alliance Vice President of Law, Policy, and Government Affairs Tim Sparapani urged Congress to act against the “scourge” of patent trolls and to pass legislation. He explicitly called for passage of Senator Schumer’s Patent Quality Improvement Act of 2013 to allow for speedy reexamination of patent quality.

His organization has heard from app developers nationwide that patent demand letters are impacting their ability to innovate. He characterized the problem as a pre-litigation problem – “an extortion problem” – whereby small businesses and individual innovators are faced with a choice between litigating or paying patent holders for patented technology that “everyone thought was foundational.” Do you “bet the company” or not?

Computer and Communications Industry Association (CCIA) Vice President of Law and Policy Matt Schruers endorsed Senator Schumer’s Patent Quality Improvement Act of 2013 and the proposal to expand the covered business program in Chairman Goodlatte’s Patent Discussion Draft.

He disagreed with the premise that the presence of both innovation and patents in today’s marketplace is a sign of a properly functioning patent system, as Mossoff asserted. Schruers noted that correlation isn’t causation. He further argued that $29 billion in litigation costs each year could be better spent on R&D for new products. He noted that lawsuits are diverting the efforts of software engineers, who find themselves spending time responding to pre-litigation and litigation questions rather than inventing and building new products. As a result, he stated, “We’ve come to the point where producing a product has become a liability.”

In later remarks, Mossoff said the $29 billion attributed to patent trolls comes from a study that has been “heavily criticized” by scholars Jay Kesan and David Schwartz who identified fundamental methodological flaws.

MOSAID Technologies Senior Vice President and Chief Intellectual Property Officer Scott Burt supported the proposal to direct a judicial conference in Chairman Goodlatte’s Patent Discussion Draft.

He observed that the cost of litigation is a cost of a system that allows for patent enforcement. He suggested one useful approach would be to allow judges to decide how to control costs, such as discovery costs and fee shifting, on a case-by-case basis because the judges best know how to handle the matter. He also discussed the beneficial role of the “technical meetings” between the parties before litigation even begins.

What’s Next?

In a recent press release, Senator Leahy stated, “Chairman Goodlatte and I are committed to working in a bicameral and bipartisan way to counter patent trolling. The Discussion Draft released today is an important starting point. I look forward to hearing constructive comments on it from all interested parties as I prepare legislation in the Senate.”

The event details and archived audio for “If Patent Litigation Is Strangling High Tech Innovation, When Will Congress Act?” are available at:
http://www.netcaucus.org/events/2013/patents_innovation/