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.

Even the coalition's opponents are impressed. "They had their issues and priorities lined up, and had a running start," said Bill Mashek of the Coalition for 21st Century Patent Reform, an alliance that includes several drug companies.

Still, the issue is not finished. "PhRMA and BIO are very formidable; they know how to kill legislation," Isakowitz warned, referring to the drug and biotech industry trade groups. But, for the moment, he said, "we feel like we have the wind at our back."

Puerto Rican Lobby Mess

A political kerfuffle in Puerto Rico has landed on K Street.

Supporters of Anibal Acevedo Vila, the commonwealth's governor, have complained that the interim U.S. attorney there, Rosa Emilia Rodriguez-Velez, has been conducting a witch hunt into alleged campaign finance irregularities.

The Democratic governor denies any wrongdoing, and his government's representative in Washington, Eduardo Bhatia, says the lengthy and politically damaging probe should be looked into by senators who are thinking of confirming Rodriguez-Velez as U.S. attorney. He's raised the matter with more than a dozen Senate offices. "All I am doing is making sure certain questions are asked about the nominee and the process," he said.

He is not alone. Two longtime lobbyists for Puerto Rico, Charles R. Black Jr. of BKSH & Associates and former senator John C. Culver (D-Iowa) with the law firm Arent Fox, said they also contacted Senate offices to raise questions about Rodriguez-Velez. They did so as volunteers, they said, and did not charge Puerto Rico for the service.

Nonetheless, newspapers there have been filled with criticism of the efforts and, for the moment, Rodriguez-Velez's confirmation appears to be on hold. Her office declined to comment.

A Nonpartisan Thank-You?

President Bush signed the ethics and lobbying bill into law on Sept. 14. That day, six public-interest groups that worked to pass the legislation put out a statement praising the Democrats in Congress who championed the bill. They still have not put out a joint statement thanking Bush.

The Campaign Legal Center, Common Cause, Democracy 21, the League of Women Voters, Public Citizen and U.S. PIRG thanked "the Democrats and Republicans who voted for the legislation" but singled out only prominent Democrats, including House Speaker Nancy Pelosi (Calif.), Senate Majority Leader Harry M. Reid (Nev.) and Sen. Barack Obama (Ill.).

The groups say they meant no offense, but they also do not plan to issue another statement. "It wasn't any sort of a slight at Bush," said David Vance, spokesman for the Campaign Legal Center. "I don't think it was anything partisan."

Of course not.

Hire of the Week

The Information Technology Industry Council is a high-tech lobby that actually concentrates on lobbying. The organization has six in-house lobbyists, which is a lot for a group that most people have never heard of.

Still, the council held open one of its lobbying slots for eight months because it had trouble finding the right person. It wanted a Democrat, of course. But it also wanted a recent, senior Capitol Hill staffer who did not have an inflated view of himself and his market value.

"Some people felt they could go out in industry and make a million dollars because they once sat in a leadership meeting," said Ralph Hellmann, the council's top lobbyist. "There were a lot of unreasonable expectations out there."

After talking to scads of people, Hellmann finally found the right guy: Jonathan Hoganson, 33, a policy aide to Rep. Rahm Emanuel (Ill.), a member of the House Democratic leadership. Hoganson's wife gave birth to twin boys in May, and he was eager for a change of lifestyle. But he was not so greedy to think that freshly minted lobbyists such as himself should become instant millionaires.

"You want to be paid what you think you're worth, but I wasn't cashing out, as they say," Hoganson said. "That wasn't what this was about."

Please send e-mail tokstreet@washpost.com.