A legislative proposal to club patent trolls over the head is now on hold indefinitely after the chairman of the Senate Judiciary Committee, Patrick Leahy (D-Vt.), shelved the idea Wednesday — much to the surprise of patent reform advocates.
The bipartisan compromise on patents was headed for a markup on Thursday. But Leahy suddenly took it off the table after Senate Majority Leader Harry Reid (D-Nev.) intervened at the last minute, according to multiple people close to the negotiations.
The bill would have made it more difficult for patent holders to file frivolous lawsuits, adding new requirements that would force lawsuit losers to cover litigation costs for both sides and patent holders to state their accusations more explicitly. Among the proposal's supporters were leading tech companies that are often the target of patent trolls — a term of art for companies that make money by suing other companies for patent infringement, with the knowledge that the other companies would rather settle than go to court.
"I think it was a surprise in some ways that it didn't go forward," said Todd Dickinson, executive director of the American Intellectual Property Law Association. "All indicators this morning were that it was going to markup. But the time ran out."
As late as Wednesday morning, Leahy and the bill's two top shepherds — Sens. John Cornyn (R-Tex.) and Chuck Schumer (D-N.Y.) -- were said to have settled on the bill's language, saying, as one reform advocate put it, "pencils down."
"We thought we were good, and Cornyn thought we were good," said the advocate, who asked not to be named because the discussions were private. "Leahy's statement dropped publicly without any of the Republicans — including Cornyn — having a heads-up, which as you can imagine, has them a little pissed off."
Sure enough, Cornyn let loose with a testy statement, blaming Reid's move to block the proposal on pressure from unnamed lobbyists.
"This is the third time in three weeks the majority leader has blocked legislation with bipartisan support in the Senate," Cornyn said. "It’s disappointing the majority leader has allowed the demands of one special interest group to trump a bipartisan will in Congress and the overwhelming support of innovators and job creators."
The ranking Republican member of the Senate Judiciary Committee, Chuck Grassley (R-Iowa), echoed that sentiment, saying he was "surprised and disappointed that the Senate Democratic leadership is not willing to move forward."
Supporters of the compromise accuse trial lawyers, universities, pharmaceutical companies and biotech companies for foiling the plan at the eleventh hour. As late as Tuesday, the University of Vermont and a biotech coalition each sent letters to Leahy opposing the legislation.
"We believe the measures in the legislation … go far beyond what is necessary or desirable to combat abusive patent litigation, and would do serious damage to the patent system," reads one of the letters. "Many of the provisions would have the effect of treating every patent holder as a patent troll."
A Leahy spokeswoman acknowledged the uptick in correspondence in the hours before the deadline. But opponents have been clear about their feelings all along, so why would Leahy choose to shelve the bill now?
Passing the legislation out of committee would put greater pressure on Reid to bring it up for a floor vote, according to one industry stakeholder, which would put the Democratic leader at even more uncomfortable odds with the groups that wanted him to sink the bill.
"He'd be put in an even tougher position with the trial bar," the stakeholder said, who also declined to be named because of the sensitivity of the negotiations. "He didn't want that."