Sen. Patrick Leahy of Vermont, Chairman of the U.S. Senate
Judiciary Committee, announced yesterday that he effectively was abandoning
efforts to pass a patent reform bill, aimed at curbing abusive litigation
brought by patent assertion entities (PAEs, or more colorfully known as "trolls"), this year. Although a reform bill sailed
through the U.S. House of Representatives in December, more lengthy deliberations in the
Senate bogged down as disparate industry groups could not agree on key
provisions. With the legislature facing elections in November,
Leahy conceded that efforts to pass the bill would have to wait until next year.
The key elements of the Senate reform bill were extremely high
pleading standards for patent infringement allegations, imposition of a
fee-shifting provision for meritless cases, and the identification of the real
parties in interest in an infringement action.
Although many companies in the computer technology space,
which is the principal target of patent trolls, supported the reforms, the bill
faced resistance from other companies once they began to appreciate the
practical impact of the proposals. For example, some patent owners complained that the new pleading rules would added enormous cost and delay in filing suits, and could prevent smaller patentees from bringing even meritorious suits. In the end, industry groups on both sides of
the issue could not reach a satisfactory compromise. Politico has a concise review of the
breakdown HERE.
Republicans supporting reform immediately complained that the Democratic leadership in the Senate had succumbed to pressure from the "trial lawyer" lobby. However, it was clear over the last several weeks that a variety of groups, including some major manufacturers and research universities, opposed the broadest reform proposals.
The legislative collapse may provide an opening for the
courts to demonstrate that they can deal with the troll problem by embracing
aggressive case management practices. Many of the reforms in the House and
Senate bills tracked mechanisms that currently are within the power of the courts,
but are little used. Two district judges in the U.S. District Court for the
District of Delaware recently announced revised standing orders to streamline
pretrial practice in their courtrooms. Order. In addition, the U.S. Supreme Court’s
decision in Octane Fitness and Highmark seem to give district judges greater latitude
in awarding fees in cases of abusive litigation. See commentary HERE. If the courts can demonstrate a renewed commitment to addressing the most egregious aspects of the patent troll problem, reforms efforts may have a difficult time building momentum after the 2014 elections.
1 comment:
Sometimes the mere threat of something gets the job done. Trolls know now what might come if they continue to misbehave.
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