On Tuesday, a hearing before the Senate Judiciary Committee marked the opening round in what could be the most contentious debate in the Senate's deliberations over patent reform: whether patent legislation should focus narrowly on reining in tactics practiced by "patent trolls," or if it should also include provisions to eliminate low-quality patents. Sen. Chuck Schumer, a powerful New York Democrat, used his opening remarks to make the case for including patent quality provisions in the Senate's patent reform bill.
Earlier this month, the House of Representatives passed the Innovation Act, a patent reform bill designed to target the growing problem of patent trolls. These litigious firms produce no useful products of their own but make their living by demanding licensing fees from other companies that accidentally infringe on their broad patents.
The Innovation Act included a number of provisions to discourage the aggressive litigation tactics favored by trolls. It makes it easier for the manufacturers of IT products to shield their customers from troll lawsuits, requires greater specificity in patent lawsuits, and makes it easier for victorious defendants to collect legal costs from plaintiffs.
But the bill's sponsor, Rep. Bob Goodlatte (R-Va.), dropped a provision designed to make it easier to get rid of low-quality business method patents. In his opening statement at the Judiciary Committee hearing, Schumer argued that isn't good enough.
"A patent reform bill that does not address patent quality is like treating the symptoms instead of the disease," Schumer argued. "If we do not address the fundamental problem of patent quality, trolls will continue to abuse poor quality patents and we will be right back here having this same debate."
Schumer wants to expand the Transitional Program for Covered Business Methods (CBM), which Schumer helped to create in the 2011 America Invents Act. It provides a "fast lane" for challenging patent validity that is quicker and less expensive than a full-blown patent lawsuit. The current version of the program, which was enacted in 2011 at the behest of banks tired of being targeted by troll lawsuits, is limited to a relatively narrow class of financial patents. Schumer hopes to expand the program to additional business method patents to protect more businesses against low-quality patents.
But the proposal has powerful detractors, including patent-rich software companies such as Microsoft, IBM and Apple. They lobbied heavily against expanding the program in the House, persuading Goodlatte to remove it from the House legislation. They are likely to oppose Schumer's proposal, as well.
But Schumer will have powerful allies. The White House supports expanding the CBM program, as do some industry groups, including Google, and some brick-and mortar businesses, such as supermarkets, restaurants and the airline industry.
"The CBM program provides cost-effective administrative review for the types of poor-quality patents that cover intangible methods of doing business," Schumer said on Tuesday. Schumer wants to "expand it and make it available to all poor-quality business method patents, not simply those that read on financial products or services."