Tech Industry Builds Lobbying Machine for Patent Fight

By Jeffrey H. Birnbaum
Tuesday, September 25, 2007

Just about every industry you can think of has worried about, and lobbied on, legislation that would alter the way patents are enforced.

You probably haven't read much about these battles, though, because most of them are too complicated, even for the experts. So here's the Cliffs Notes version of the latest, largest dispute: On one side are drug companies; on the other, tech companies -- and, so far, the tech folks are winning.

Here's how it happened. An alliance that represents tech companies -- the Coalition for Patent Fairness -- steered a bill it likes through the Senate Judiciary Committee and the House. The coalition is run by Mark Isakowitz of Fierce Isakowitz & Blalock, a veteran of such high-stakes projects, and Steve Elmendorf of Elmendorf Strategies.

The core of the coalition's success is a provision that would limit damages for patent infringements to the actual component in question and not the entire product.

Put simply, if a truckmaker impinges on a piston patent, the payment it would be forced to make to the inventor would be based on the value of the piston and not on the value of the truck.

Sounds logical enough, but at the moment the penalty can go well beyond the economic impact of the invention itself, a tendency that drug companies love. The reason: They are often plaintiffs in patent lawsuits and want the largest deterrent they can find to discourage copycatting of their patents.

In contrast, tech firms, which make products that often have thousands of patented parts, are frequent defendants in patent-infringement suits. As a result, they want to keep damages as low as they possibly can.

Thus the conflict that has rattled the nation's capital for months.

The Coalition for Patent Fairness was started by tech giants such as Intel, Cisco Systems, Apple, Oracle, Microsoft and the maker of the BlackBerry, as well as Verizon and Time Warner.

Isakowitz, a Republican, and Elmendorf, a Democrat, have been meeting at least weekly with their multimillion-dollar crew, often in Microsoft's conference room. Their strategy has been primarily an elite, inside-the-Beltway affair, since appealing to voters would be useless; most of them have no earthly idea what the bill is about.

So the coalition has flown corporate lawyers into town to brief congressional staffers and has engaged friends of key lawmakers to urge their point of view -- a "grass-tops" campaign conducted by Hilltop Public Solutions. Top executives such as Intel's Craig R. Barrett and Cisco's John T. Chambers have also made some well-placed calls.

Fundraising has helped, too. TechNet, the bipartisan political network of high-tech chieftains, many in Silicon Valley, has sent a steady stream of campaign cash into the coffers of important legislators. The coalition has also been aided immensely by its hyper-informed top negotiator, Emery Simon of the Business Software Alliance.

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