After weeks of negotiations and multiple attempts to move forward, Senate Judiciary Committee Chairman Patrick Leahy (D-VT) announced on May 21 that his committee was unable to agree on how to stop so-called patent trolls from engaging in abusive litigation without burdening the companies and universities who rely on the patent system to protect their inventions.
Senators on the committee have been unable to find a middle ground between the Patent Transparency and Improvements Act (S. 1720) and a more comprehensive bill that passed the House in December (H.R. 3309).
“I have said all along that we needed broad bipartisan support to get a bill through the Senate,” Leahy said in a statement. “Regrettably, competing companies on both sides of this issue refused to come to agreement on how to achieve that goal.”
At issue are three provisions in the House-passed bill which have split industry groups. One is a “loser pays” fee shifting provision that would award fees to the prevailing party and put the burden on the losing party to make its case for an exception to the default. A second provision on so-called “heightened pleading” would require the patent-owning plaintiff to identify, down to the claim limitation level, how the specific product alleged to infringe matches what is claimed. A third provision on discovery would create distinctions between discovery prior to claim construction and after, as well as between “core discovery” and additional discovery, where the party requesting additional discovery would pay for it.
The failure of the broader bill may, however, boost efforts to move a narrow bill focused just on pre-litigation patent demand letters sent by patent assertion entities. Such letters typically are sent to small businesses and others likely to have purchased an allegedly infringing, off-the-shelf product, and threatening a lawsuit unless the recipient pays a license fee.
The House Energy and Commerce Committee on May 22 held a hearing on a draft bill to give the Federal Trade Commission (FTC) authority to regulate patent demand letters. Senator Claire McCaskill (D-MO) introduced a similar bill (S. 2049) in the Senate in February, but it has not been acted upon in deference to the Senate deliberations that are now tabled.
In the absence of federal action, state attorneys general have been moving ahead to curb the practice under consumer protection laws and in light of new state legislation. In addition, on May 14, Oklahoma became the 11th state to enact legislation targeted to stopping the demand-letter practice.