Patent Troll Bill Officially Stalled in Senate

'It got nibbled to death by a flock of ducks'

High hopes for a new law aimed at curbing patent troll abuses were all but dashed today when Senator Patrick Leahy (D-Vt.), chairman of the judiciary committee, said he was taking a patent reform bill off the agenda.

For the past two months, Leahy and ranking member Sen. Mike Lee (R-Utah) have been trying to hammer out a compromise bill, but ran into some problems when some Democratic members were pressured by pharmaceutical companies and trial lawyers over controversial provisions like fee shifting. Unable to resolve the differences, Leahy was forced to delay markup of the bill, the Patent Transparency and Improvements Act, a half a dozen times.

"Because there is not sufficient support behind any comprehensive deal, I am taking the patent bill off the Senate judiciary committee agenda," Leahy said. "If the stakeholders are able to reach a more targeted agreement that focused on the problem of patent trolls, there will be a path for passage this year and I will bring it immediately to the committee. … I hope we are able to return to the issue this year."

A bill to crack down on patent trolls seemed to be one of the few sure bets for passage this year. The House bill sailed through at the end of last year in a 325-91 vote. In February, the White House, an ardent supporter of reform, called on the Senate to "finish the job."

Now the prospects of getting a bill out this year, during an election year, seem dim at best.

Advertisers and retailers buoyed by the wide support on both sides of the aisle and from the White House, were counting on some relief from patent troll suits that cost rack up more than $2 million in litigation costs. The 4A's has estimated the costs to marketing services alone has added up to about $10 million. 

"The Leahy/Lee bill was so comprehensive that it had something in it for everyone to hate," said Dick O'Brien, evp of the 4A's. "It got nibbled to death by a flock of ducks."

Retailers were disappointed. "We will not rest until the bipartisan compromise ironed out by Senators Shuck Schumer (D-N.Y.) and John Cornyn (R-Tex.) is brought before the judiciary committee for consideration," said the National Retail Federation. "Let's hope this setback marks the last victory for patent trolls."

In the absence of the Leahy/Lee bill, the 4A's and others in the Main Street Patent Coalition are shifting gears to concentrate on bills introduced by House and Senate commerce committees members targeting patent troll demand letters, the most reviled of patent troll tactics and the "biggest problem for the marketing business," O'Brien said. Vague and threatening, the letters often result in a quick monetary settlement because smaller businesses just don't have the cash or the legal resources to fight back. 

Sen. Claire McCaskill (D-Mo.) introduced a bill late last year on demand letters that would set up a government registry of demand letters to make the practice more transparent. Rep. Lee Terry (R-Neb.), chairman of the commerce, manufacturing and trade subcommittee, is holding a hearing Thursday on his draft bill to address patent troll demand letters. Terry's bill would require certain disclosures in the letters and would give the Federal Trade Commission more authority to go after the letters as an unfair or deceptive practice.