Tech giants weaken patent-reform bill by lobbying to cut one key provision

Powerful tech companies have managed to cut out one of the key provisions of The Innovation Act, crippling the bill before it passes through the House Judiciary Committee.

Adobe, IBM, Microsoft, Qualcomm, members of the Business Software Alliance, and others lobbied hard and succeeded in preventing expansion of the “Covered Business Method” (CBM) program. 

The Electronic Frontier Foundation called The Innovation Act, sponsored by Rep. Bob Goodlatte (R-Va.) the “best patent troll-killing bill yet.” It had six key parts and for the most part attracted bipartisan support as well as support from the tech industry.

However, the provision regarding the CBM program caused dissent.

Expanding this program, which was previously limited to financial patents, would make it easier to challenge the validity of “data processing” patents at the Patent Office. It gives the Patent Office the power to waive fees for challenging patents, so litigation goes on hold while the officials consider the patent’s validity.

The intent is to decrease the number of low-quality existing patents, which is why institutions with large software patent portfolios are against it.

“This would have far-reaching implications, because data processing is integral to everything from cutting-edge cancer therapies to safety systems that allow cars to respond to road conditions in real time to prevent crashes,” CBM opponents said in a letter to Congress. “Subjecting data processing patents to the CBM program would thus create uncertainty and risk that discourage investment in any number of fields where we should be trying to spur continued innovation.”

Supporters of the CBM program argue that it gives smaller companies greater opportunities to protect themselves from patent trolling.

“Putting ongoing litigation on hold is no small thing,” the EFF said. “Patent litigation often costs each side well into the millions of dollars, while CBMs cost just a fraction of that. This means that more people will be in a position to challenge bad patents and fight back against the trolls who wield those patents.

Our patent system has issued “garbage patents” for years, which is part of why trolls are able to do what they do.

Patent trolls, formally known as “patent assertion entities,” are organizations that buy up patents, not to use them in business, but to file lawsuits against other companies that allegedly infringe upon them. The patents are often extremely vague and the suits frivolous, but defending a lawsuit in court is so expensive that companies will write settlement checks, regardless of the validity of the claims.

Expanding the CBM program means that defendants don’t have to pick between expensive and time-consuming litigation and surrendering to a patent troll’s demands. They have a third option — if the patent is crap, they can try to get rid of it all together.

According to reports in Politico and the Washington Post, IBM escalated the campaign against the CBM program last week and said that it would oppose to entire bill if CBM was included.

Patent reform has been an uphill battle that has dragged out over the course of many years, with plenty of rejected bills along the way. At last, The Innovation Act seemed to garner sufficient support to go through, and in an effort not to unravel all this good work, Goodlatte wiil introduce a “manager’s amendment” to remove the CBM provision.

The bill still has five other provisions (which you can learn more about here) that take serious steps to reign in patent trolling. However, the Post reported that Sen. Chuck Schumer (D-N.Y.) and the White House support CBM expansion, as do many (non-tech) businesses, and that this doesn’t necessarily mean CBM won’t make it through.

But regardless, it won’t be without a fight.