Resistance weakens ‘patent troll’ legislation

WASHINGTON – Opposition from drug and biotech companies has forced lawmakers to water down a bill cracking down on the so-called patent trolls who are bedeviling the high-tech industry.

Those are people who get patents for products they never plan to make, just so they can sue for infringement if a company does turn out something similar.

But the resulting draft legislation drew criticism from a top Democrat at a hearing Thursday, and a warning from a high-tech group that said lawmakers could be risking the industry’s support.

“We have a bill which to my way of thinking has stripped out very significant reforms,” Rep. Howard Berman, D-Calif., said at a hearing of the House Judiciary Committee’s subcommittee on intellectual property.

“The support of our industry for this legislation should not be taken for granted,” Emery Simon, an attorney for the Business Software Alliance, told Rep. Lamar Smith, R-Texas, the chairman of the subcommittee.

Drug companies don’t have the high-tech industry’s problem with patent trolls. Instead, they depend heavily on patents – and the ability to sue to enforce them – to safeguard their intellectual property and raise money while they develop new products.

Smith in June introduced the Patent Reform Act of 2005, which proposed a series of changes to how patents are issued and how they can be challenged. Among the changes was one long sought by high-tech firms: a provision that would make it harder for patent holders to get court orders to stop the sale of products that potentially infringe on their patents.

The Information Technology Industry Council says patent lawsuits in federal court doubled from 1,200 to 2,400 a year from 1998 to 2001.

The court order provision was opposed by the Pharmaceutical Research and Manufacturers of America and the Biotechnology Industry Organization, the powerful lobbying groups for the nation’s drug and biotech companies.

The court order provision, along with several others, would have “severely weakened the ability to innovate,” Nektar Therapeutics Chairman Robert B. Chess told Smith’s panel Thursday, speaking on behalf of the Biotechnology Industry Organization.

“Investors will only invest in ideas if they are adequately protected by strong patents,” he said.

The court order provision was dropped from versions of Smith’s bill considered at Thursday’s hearing, and so were other measures the Biotechnology Industry Organization and the Pharmaceutical Research and Manufacturers of America didn’t like, including one to give companies accused of infringing a patent the chance to challenge the basis for that patent.

There still are some provisions left that high-tech firms were seeking. Patents would be easier to challenge after being issued, and in place of the court-order provision is a measure making it easier for companies to defend patent-infringement lawsuits in a favorable venue.

But high-tech firms are still at odds with the pharmaceutical and biotech industries over several provisions, including whether damages for patent infringement should be awarded based on the value of the individual element of a product being patented, or the product as a whole.

Smith said he was confident a compromise could be reached.

“Biotech and brand drug companies … operate under very different business models that rely on a legal system that vigorously protects patent rights,” he said.