Op-ed: PATENT Act is a bridge over patent trolls
By Dana Rao, Vice President of Intellectual Property, Adobe
http://www.sltrib.com/opinion/2581009-155/op-ed-patent-act-is-a-bridge
Bi-partisan legislation in the U.S. Senate on patent reform is something the U.S. patent system, the U.S. economy and Utah businesses desperately need. Years of bipartisan collaboration have produced a bill — the PATENT Act — that could provide American businesses with meaningful protection against patent trolls, and has a real chance of success as it is considered by the Senate Judiciary Committee this week.
Without legislation like the PATENT Act, the number of frivolous patent lawsuits will continue to climb. Patent trolls currently bring more than half of the new patent suits filed and these suits cost the U.S. economy an estimated $12.2 billion last year, a sum which could have otherwise been put toward innovation and job creation.
That is why the PATENT Act is so critical. It includes provisions, championed by Sen. Orrin Hatch, that shift the economic burden away from the victims of patent trolls and onto the patent trolls themselves. The fee-shifting provision and Hatch's fee recovery language included in the PATENT Act are what this country needs to change the economics of the patent system. They introduce an economic cost for abuse of the patent litigation system, and ensure accountability for those that invest in that abuse. Hatch has been an indispensable backer of these necessary provisions, and we are grateful to him for his leadership.
Just a few weeks ago, Adobe concluded a case brought against us by a large patent troll. The troll sued us over a patent that we believed we were licensed to use, and the troll refused to turn over the critical documents to prove its ownership. As in most such cases, the troll prolonged the litigation, hoping we would give up and settle the case. On the eve of the critical court hearing, the troll dropped the case and walked away — only after we had spent over $1 million defending ourselves. This is just one example of a problem that has plagued our entire economy for years, with small companies being hurt the most.
Utahns have long been outspoken in their support for patent reform and their opposition to patent trolls, positioning Utah as an innovation and technology powerhouse on the world stage. Utah is one of the fastest growing tech hubs in the country, the current patent system leaves Utah's innovators, entrepreneurs and businesses vulnerable to patent trolls. Adobe's employees in Utah innovate on a daily basis, and protecting their intellectual property from patent trolls is essential. Senate action on the PATENT Act will benefit companies in all sectors of our economy, from the biggest company to the smallest startup, and is especially important to Utah's growing technology sector.
Adobe will continue to advocate for even stronger patent reform measures, and we are very grateful to all those responsible for this progress, especially Sens. Charles Grassley, Patrick Leahy, Charles Schumer, John Cornyn, Hatch, Mike Lee and Amy Klobuchar on the Senate side, and Chairman Bob Goodlatte and Reps. Zoe Lofgren and Hakeem Jeffries on the House side. While we believe the bill must be strengthened to ensure that the Patent Office's current post-grant patent quality protection mechanisms remain strong, the PATENT Act is an encouraging development and we applaud Congress' progress toward meaningful patent reform.
Dana Rao is Adobe's vice president of intellectual property.
Hatch Statement on PATENT Act Markup
Washington, D.C.—Senator Orrin G. Hatch, a member and former Chairman of the Senate Judiciary Committee and Chairman of the Senate Republican High-Tech Task Force, issued the following statement on the Judiciary Committee’s markup of the PATENT Act:
“I am pleased that the Judiciary Committee is moving forward with the PATENT Act. The fundamentals of this bill are very good, with important, commonsense litigation reforms that include fee shifting, heightened pleading standards, demand letter reforms, and a mechanism to ensure recovery of fees against shell companies. This bill is crucial for Utah businesses and families that depend on our innovation economy. There is still work we must do to strike the right balance on IPR reform, and I am committed to work through all remaining issues to ensure that innovators in every sector and industry are protected from patent trolls.”
Utah business leaders issued the following statements of support:
Dana Rao, VP of Intellectual Property, Adobe
If you choose to invest in patent trolls, you should be accountable for their actions. Senator Hatch’s leadership has been instrumental in crafting a balanced but effective provision to ensure that shifted fees can actually be recovered, either from the plaintiff engaging in the misconduct, or, if a judgment-proof shell company, then from the investors funding their business model. We thank Senator Hatch and look forward to working with him and other members of Congress to ensure this important provision is enacted into law.
Jonathan Johnson, Chairman of the Board, Overstock.com
Overstock.com has had a first-hand view of the havoc and destruction patent trolls cause by filing their abusive lawsuits. We’ve defended dozens of patent troll suits and expended approximately $11 million in associated defense costs. We have fought these unjust suits in the courts and worked with legislators to accomplish reasonable reforms in the patent litigation system. Congress must do something now. And this much is clear: If all Congress does in patent litigation reform is a rearrangement of the litigation landscape, without striking at the economic heart of patent troll abuses, it will have utterly failed. These important reforms Senator Hatch and others now put forward are economically-based and hold the key to unlock real, meaningful, and lasting changes – changes which are the best hope for ending the reign of patent trolls in American jurisprudence today. We fully support Senator Hatch in this cause.
Rebecca Jensen, President and CEO, UtahRealEstate.com
Main Street businesses across Utah and the rest of the country are feeling the pinch from patent trolls. This year, in one single day in April, patent trolls filed 184 lawsuits across the U.S. in a race against the much-needed protections the Senate’s patent reform legislation would have provided to businesses. More than 6,000 patent lawsuits were filed in 2013 alone. Despite these figures, the Senate chose special interests over Main Street and shelved the bill in late May, leaving businesses like mine at the mercy of patent trolls. But Main Street isn’t giving up and, fortunately for us, both U.S. senators from Utah have been particularly active in the fight against the trolls.
I had an opportunity to meet with Sen. Orrin Hatch, R-Utah, on this issue and he is committed to fixing the problem for Utah businesses like mine. I would like to thank Hatch as well as fellow Utah Republican Sen. Mike Lee for their continued support of comprehensive patent reform. Speaking from experience, I know that I was not able to create jobs because I had to pay patent trolls – this is why I, along with many of Utah’s small businesses, urge Congress to shut down patent trolls, work until they get the job done and let us get back to growing our economy.
Senator Hatch’s full statement, as prepared for delivery, is below
Mr. Chairman, I’d like to say a few words about the PATENT Act.
For over a decade now, many of us on this committee have been working on legislation to stop abusive patent litigation. So-called patent trolls cost our economy billions of dollars each year and have a crippling effect on innovation across all sectors—from main street businesses to America’s largest technology companies.
Over the years, I’ve heard from Utah business owners and innovators who have received vague and hostile demand letters accusing them of infringing questionable patents. Even though these businesses have done nothing wrong, some agree to unwarranted settlements to avoid costly litigation. And those who do fight back are forced to spend millions in litigation costs, often with no chance of recovering attorney’s fees if and when they prevail.
So I am pleased that this committee is moving forward with the PATENT Act, which contains commonsense litigation reforms including fee shifting, heightened pleading standards, demand letter reforms, and a mechanism to ensure recovery of fees against shell companies.
The fundamentals of this bill are good.
As many of you know, I have long argued that any viable legislation must ensure that those who successfully defend against abusive patent litigation and awarded fees will actually get paid. I am pleased that the PATENT Act includes a fee recovery provision to stop patent trolls from litigating and dashing. This provision will ensure accountability for those who pursue meritless litigation.
Of course, enacting any legislation is a major undertaking, and the added complexities inherent in patent law make it an especially challenging subject. We have made a great deal of progress, and I believe we are heading in the right direction. But outstanding issues remain and we must make the required adjustments to resolve these issues before this legislation makes its way to the Senate floor.
Among these issues is the way some actors are using the USPTO’s Inter Partes Review process to undermine the legal framework for Hatch-Waxman and biosimilar litigation.
Let me be clear: we must ensure that the IPR process remains a legitimate and cost-effective alternative to litigation for parties to rid the system of bad patents. After all, that is what we intended when Congress enacted the America Invents Act, which created the IPR process.
But at the same time, we must also prevent bad actors from using this administrative process to interfere with a litigation system that encourages the development of cheaper, life-saving medicines. The Hatch-Waxman and Biologics Price Competition and Innovation Act litigation frameworks are carefully balanced and work only if that balance is preserved.
I am confident we can forge a consensus that accomplishes both goals, and I am committed to helping strike the right balance.
Many constituencies have a real interest in—and will be greatly affected by—this legislation.
We have momentum and now is the time to act.
