Patent trolls win a huge victory in Congress; consumers lose

A couple of weeks ago, Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.), killed a major piece of patent reform legislation, presumably for the year. The tech community is still shaking in dismay, and you should too.

The measure, known as the Innovation Act, would have done a great deal to put a leash on “patent trolls.” These are firms that collect patent rights largely to threaten lawsuits against established and start-up businesses and even their lowliest customers -- coffee shops that installed a supposedly infringing Wi-Fi router, for instance. Many trolls employ a hit-and-run strategy, trying to squeeze out-of-court settlements from frightened targets they have no real intention of suing.

The act had bipartisan support and endorsements from a remarkably wide spectrum of corporations. It had passed the House with majorities from both parties, and President Obama had signaled that he would sign it. Its death in Leahy’s committee has been mourned by the Internet Assn., which lobbies for Amazon, AOL, Uber, Netflix, Twitter, and Facebook, among dozens of other consumer companies; and by Public Knowledge and the Electronic Frontier Foundation, which advocate for the public interest on technology issues.

“The real loser here is the American consumer,” stated Charles Duan, director of the Patent Reform Project at Public Knowledge, after the killing.

The act, as the EFF outlined, would limit trolling by imposing a loser-pays regime on patent lawsuits, protect end-users (those coffee shops, etc.) from being threatened with legal action for using commonly available products, and tighten up the pleading rules by requiring much more detailed descriptions of the damage supposedly suffered by plaintiffs before they can pursue a lawsuit.

For all that, the Innovation Act would be only one step in a long journey to ridding the land of patent trolls. As we’ve reported, it’s much more important to tighten up on the issuance of software patents, the trolls’ raw material.

Last June, when it announced its support for elements in the Innovation Act, the Obama White House also issued several executive orders directed at the U.S. Patent Office to that end. Whatever effect those might have had haven’t shown up yet on patent dockets in court, but they represent the right idea.

The reasons for Leahy’s killing of the Innovation Act are still murky; his stated rationale is that the measure passed by the House “would have severe unintended consequences on legitimate patent holders.” But a bipartisan group of Senators, including Charles Schumer (D-N.Y.), and John Cornyn (R-Texas), were working to iron out an agreement. Leahy killed the bill just as they were about to unveil a new version. Surely there’s more to his decision than he’s let on. But trolls usually operate in the shadows.