Why the US patent reform stalled

Harry Reid (left) vs Patrick Leahy (right)



When in December 2013, the House of Representatives voted 325 votes to 91 and voted for the bill S. 1720 “Patrick Leahy” (Patrick Leahy) ), a Democratic senator from Vermont and chairman of the US Senate Law Committee, there was a surge of optimism in technology circles. The meaning of the amendments is summarized here ; their entry into force would substantially alter the judicial examination of patent disputes. The bill was actively supported by Google and Cisco Systems and a whole coalition of community groups led by the Electronic Frontier Foundation, including Public Knowledge, the Open Technology Institute, the Engine Advocacy, and the Consumer Electronics Association (CEA) and the Computer & Communications Industry Association (CCIA).



However, in May 2014, Patrick Leahy unexpectedly for many took the bill off the agenda of the legal committee, which means that its discussion is likely to continue only next year. At the same time, sources who know the law-making cuisine of the United States pointed to Harry Reid, a Democratic senator from Nevada and the leader of the Senate majority, as the one who actually pressed the red button.



The amendments would significantly complicate the lives of patent trolls, but various parties, including those directly involved in trolling, did not seem to have joined the bill. The Coalition of Patent Owners of the Innovation Alliance stated that the bill would allow each patent holder to be treated as a troll. Among the participants of the Innovation Alliance there are large patent owners, for example, Qualcomm and Dolby, who sometimes lead an aggressive patent policy, but who are difficult to attribute to the trolls. American universities reacted very negatively to the document, as they widely patent their inventions but do not have physical capabilities to put them into practice. The position of universities was expressed, for example, by the Edison Nation company, which acts as an intermediary in the process of monetization of university developments.

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However, the main pressure was exerted, apparently, yet they did not. Julie Samuels, director of the Engineers group lobbying for start-ups, said that "the pharmaceutical industry and legal advocates did it." The fierce struggle of the producers of “patents” (patented drugs) against the manufacturers of “generics” (substitute drugs) is well known. The drug market is huge, and in the US, 3.4 million jobs are somehow connected with the pharmaceutical industry. The bill will technically complicate the prosecution of generic manufacturers, and the pharmaceutical giants are not particularly affected by patent trolls, in any case, they have someone to defend. In 2011 in America there were more than 1.2 million licensed lawyers , not all of them appear in the courts, and certainly not all specialize in patent matters, but the total is impressive. And in recent years there has clearly been a shift in the specialization of lawyers towards intellectual property. For lawyers practicing in courts, reducing the number of lawsuits means falling revenues. It is logical to assume that patent trolls were not idle, but their resources are clearly incomparable with the resources of major pharmaceuticals and large law firms. Therefore, the opinion of Julie Samuels does not look strange.



Against the background of these events, it is appropriate to recall the history of the origin of the term "patent troll". Currently, it applies to a person acquiring patents without the intention to further improve patented inventions, manufacture products or provide services based on them, and profit from their sale and / or licensing to others.



The first use of this term refers to 1993, and its meaning was somewhat different from the modern one and the term applied to companies initiating aggressive patent lawsuits (“When Intel Doesn't Sue”, Forbes, March 29, 1993). The first widely known comic visualization of the patent troll appeared in 1994 in the popularization and educational film " The Patent Video ", distributed among corporations, universities and government agencies.







Subsequently, the epithet became popular thanks to Peter Detkin (Peter Detkin), former deputy chief counsel for Intel, who used it against TechSearch LLC, its director Anthony O.Brown, and its lawyer Raymond Niro. prosecuted by TechSearch. At first, Detkin used the term “patent extortionist” (patent extortionist) in relation to companies suing Intel for patent infringement, however, after accusing Intel itself of defamation, he used the term “ patent troll ”. The accepted definition has been used in the patent field to designate any plaintiff who does not like the speaker. Strictly speaking, the modern definition of who is the patent troll, does not shine with accuracy, and it falls under the company Intel itself and many other companies and organizations, including educational and research institutions.



It is worth considering here that the issue of patent trolling is not so straightforward. The surge of “smartphone” patent wars in 2012 caused a lot of statements about the “coma” and the “untimely demise” of the American patent system. “Loud” cases like the confrontation between Apple and Samsung undoubtedly attract public attention to the topic of patent wars, but they do not constitute the main problem. This has happened before, it suffices to recall the "first telephone war" of the era of Alexander Bell. In those years, only the American Bell Telephone Company and its successor, AT & T, endured 587 patent disputes. So the generals of the “smartphone wars” have something to learn from their predecessors. Ultimately, a billion-dollar fine suited by one giant to another will be “smeared with a thin layer” on a billion users, and no one has yet died. And here are a few hundred thousand dollars that a start-up on takeoff will have to be given to the troll or lawyers in the event of a patent dispute, one way or another, can severely crush it, or even lead to a crash. The cost of litigation related to trolling in 2010 amounted to $ 61 billion and the activity of trolls is increasing. All ten of the most active plaintiffs in patent lawsuits for 2013 are patent trolls. Of the top three - ArrivalStar, Wynncom and Thermolife - each filed more than a hundred lawsuits . This is a concern of the technological sector of the economy and resonates in society - it becomes clear to many that something needs to be done with this.



Opponents of this point of view indicate that, starting with the first patent law of 1790, US law provides for the sale of patent rights, which are intended to help both the US patent office and the courts. The sale of patent rights has always been an important factor in the American economy, since the main “inventor force” of America has always been independent inventors (now called Non-Practicing Entities, NPE), who did not have the financial capacity to turn their patents into new products. Documents of the XIX century indicate that two thirds of the 160 greatest inventors of the era of technical revolution, including Thomas Edison, were NPE. And in the 1894 report of the American Bell Telephone Company it is indicated that it acquired 73 patents from third-party inventors against a total of 12 inventions made within the company.



The US patent system has already undergone significant changes in 2011 with the adoption of a package of amendments to patent laws known as the America Invents Act , one of the drivers of which was also Patrick Leahy. At that time, the changes mainly affected the principle of determining primacy in the invention, and it became possible for a legal entity to file a patent application.



In his address in connection with the revocation of the new bill, Patrick Leahy stated that the failure befell this initiative because interested parties could not reach an agreement on how to deal with trolling, which is the scourge of the American economy, without violating the legitimate interests of large employers and universities and expressed the hope that the parties concerned will be able to overcome the differences and that it will be possible to return to the discussion of the draft law soon.



Hopefully, lobbyists will still find a compromise and US lawmakers will be able to adopt this package of amendments to patent laws within a reasonable time. Good luck to Patrick!