After President Obama announced last year that he would push Congress to make patent reform a priority, it seemed possible that the U.S. patent system might change to take power away from patent trolls. Those companies, which make money from suing other corporations for patent infringement, have proven a bane for the tech industry.
Now, it seems that push may have been in vain.
Sen. Patrick Leahy, the chair of the Senate Judiciary Committee, said in a statement today that the patent reform bill, which moved through the House of Representatives with bipartisan support, has been killed.
“Because there is not sufficient support behind any comprehensive deal, I am taking the patent bill off the Senate Judiciary Committee agenda,” Leahy said in a statement. “If the stakeholders are able to reach a more targeted agreement that focuses on the problem of patent trolls, there will be a path for passage this year and I will bring it immediately to the Committee.”
Patent reform is a serious issue for the tech industry and beyond: last year, people and companies filed more than 6,000 patent lawsuits, a 12 percent increase from the number of suits in 2012. Apple, Amazon, Google and Microsoft are all among the companies sued most for patent infringement, but patent lawsuits often hit startups and small tech firms particularly hard.
Even though the patents asserted in the suit may not be valid, it’s often easier for smaller firms to settle out of court and pay a licensing fee to companies that sue them rather than go through the costly and time-consuming process of defending a lawsuit. Patent reform advocates were hoping that the bill would help protect companies from trolling, and today’s decision to kill the bill has many members of the tech industry upset.
“Patent trolls are a real and increasingly growing problem for innovators in the United States, costing companies $29 billion in resources and revenue in 2011 alone. The lack of action by the Senate will only embolden trolls to continue to go after businesses – small, medium and large – and continue to stifle innovation,” Internet Infrastructure Coalition Co-Founder Christian Dawson said in a statement emailed to GeekWire. “We urge the Senate to follow the overwhelming and bipartisan reform effort in the House and take action, and continue to support the bipartisan efforts of Senator Schumer and Senator Cornyn to combat patent trolls and bring about much needed patent reform.”
It’s good news for patent holding companies like Intellectual Ventures, which have been lobbying legislators to try and block the bill. IV has argued that patent reform would harm patent holders and patent trolls alike.
“The proposed legislation would have had severe unintended consequences on legitimate patent holders,” Intellectual Ventures Chief Policy Counsel Russ Merbeth said in a statement emailed to GeekWire. “We hope that the Senate and the House can bring forward targeted legislation that stops the spread of abusive patent demand letters and discourages frivolous lawsuits against small businesses – without unnecessarily harming all patent holders — and provides full funding for the USPTO.”
For now, patent reform advocates do have a glimmer of hope in the form of the Supreme Court’s upcoming ruling on Alice Corp. v. CLS Bank, a case about software patents. Depending on how the court chooses to rule on the case, it could make it easier and less costly for companies to defend against patent suits stemming from invalid patents.
