Patent reform is often billed as a battle between high-tech and pharmaceutical heavyweights, but in reality sharp divisions exist such that Motorola Inc., Qualcomm Inc., InterDigital Communications Corp., Texas Instruments Inc. and others are fighting largely Democratic-crafted legislation backed by Microsoft Corp., Intel Corp. and other major tech companies.
When the House passed a patent reform bill three weeks ago, a leading high-tech trade group voiced confidence the measure would fix a broken patent system plagued with messy litigation and patent approval delays caused in part by a shortage of patent examiners at the under-funded U.S. Patent and Trademark Office.
House bill support
The controversial House patent bill had the good fortune of having been shaped and backed by Democrats from California, a hotbed for high-tech firms large and small. The measure was shepherded early in the legislative process by Rep. Howard Berman (D-Calif.), chairman of the Judiciary subcommittee on courts, the Internet and intellectual property. And the bill had the blessing of the chamber’s most powerful lawmaker.
“The bipartisan patent reform bill is a significant step toward our Innovation Agenda. It will strengthen the patent system and improve patent quality,” said House Speaker Nancy Pelosi (DCalif.) “This legislation is crucial for American inventors and American ingenuity, for consumers, and for greater innovation and economic growth.”
The bill’s advocates heaped praise on Pelosi, Berman and other key lawmakers, echoing the House speaker’s promised benefits of the bill.
“Patents are intended to encourage and protect innovation, but problems with low-quality patents and an increase in abusive patent litigation practices are negatively impacting the ability of our member companies to innovate. As a result, U.S. companies can face greater business uncertainty and economic risk compared to their foreign competitors and will be further harmed if the current system is not reformed,” said Rhett Dawson, president of Information Technology Industry Council.
The Coalition for Patent Fairness, a lobbying group whose membership overlaps with that of ITIC, also cheered House approval of the patent reform bill.
“The vote in the House is a victory for American innovators and consumers,” said Jonathan Yarowsky, policy counsel and spokesman for the coalition.
“The current patent system has become bogged down by delays, prolonged disputes and confusing jurisprudence. This comprehensive legislation is much needed, and will help drive innovation, which itself is the driver for American competitiveness and consumer choice. There is now undeniable momentum, and this will continue in the Senate with the same bipartisan and balanced approach undertaken in the House.”
How will it sell in Senate?
Maybe, maybe not.
The 225-175 margin of victory in the House was not necessarily decisive, suggesting patent reform could be a tougher sell in the Senate. Moreover, opponents of the House bill-like its backers-are many and mighty. Indeed, legislation naysayers argue the House version will make a bad patent regime worse.
An advocacy group that includes Motorola, Texas Instruments, SanDisk Corp., Northrop Grumman Corp., major drug makers and others said the House bill is anathema to innovation and patent system stability.
“The Coalition for 21st Century Patent Reform continues to support patent reform. While we appreciate the progress that was made in several areas, the bill that passed the House remains neither fair nor balanced,” the group stated. “The nation needs patent reform legislation that will protect and encourage the investments and research needed to bring new and innovative products to the market. Unfortunately the House-passed bill favors infringers over inventors. As such, it weakens the U.S. patent system, particularly in the important area of damages. The damages section in the House passed bill proposes a new, untested ‘prior art subtraction’ requirement that is fundamentally flawed and unworkable.”
The Institute of Electrical and Electronics Engineers, the national body that develops standards for wireless and other telecom sectors, agrees. In an Aug. 27 letter to Pelosi, IEEE complained the House patent bill would hurt individual inventors and small businesses.
“We are concerned that H.R. 1908 favors the companies with the financial resources that enable them to tread on others’ patents rights by commercializing works and inventions they did not create.”
Qualcomm, part of a coalition known as the Innovation Alliance that includes InterDigital and other tech firms, also opposes the House patent reform bill.
Qualcomm CEO Paul Jacobs, who with other company executives met with lawmakers last week in Washington, told reporters that if the House bill was the law of the land when the San Diego company was founded in the mid-1980s, the global CDMA powerhouse of today would not exist.
Jacobs conceded legal missteps in connection with patent litigation troubles and, in particular, the International Trade Commission’s patent infringement/import ban against Qualcomm. The firm that brought the ITC action against Qualcomm-Broadcom Corp.-is siding with Microsoft, Intel and other high-tech kingpins in the patent reform debate.
