Chances for patent reform may improve in 2015 with new Congress in office

Patent reform is unlikely to be enacted in the current Congress, but key players suspect it could be approved next year, especially if a compromise can be reached in the spring.

“We’re absolutely going to bring this back to the table … after the elections,” Dana Rao, vice president, Intellectual Property and Litigation, at Adobe, said in a recent interview with InsideCounsel.

He predicts the chances for approval could be better in the new Congress, after the November election, and further predicts there will be increased unity among supporters for reform. During the next round of attempts at reform, Rao wants supporters to provide a “clear” message, and it to be shown how different sectors of the economy – not just the tech sector -- can be hurt by abuses.

A bill that was supposed to address problems associated with “patent trolls” was scrapped by the U.S. Senate earlier this year. Senators found there was wide disagreement on how to define patent trolls, with concerns for universities, garage inventors and businesses that may want to hold onto technology for a while, InsideCounselhad reported.

During the earlier effort, trial attorneys pushed their influential weight toward members of Congress. But looking ahead, advocates for patent reform hope some other interested parties could be more flexible after the new House and Senate members take office.

John Vaughn, senior fellow at the influential Association of American Universities (AAU), who was a key representative of universities during the last patent reform debate, also predicts that patent reform will likely come up in 2015. He said that Sens. Orrin Hatch (R-Utah), and Patrick Leahy (D-Vt.), two leaders of the Senate Judiciary Committee, want to revisit the issue.

Vaughn praised the job that the Judiciary Committee did earlier this year, despite the fact that a bill was never approved. He pointed out that there were many complex issues that came into the debate and that 2014 is an election year.

“We have had real concerns with the legislation,” he added in an interview about university views on patent reform. Other groups also shared their concerns. 

In retrospect, the House process to come up with a bill was “fast,” while the Senate took a more “deliberative process,” he said. Eventually, members of the Senate Judiciary Committee “ran out of time,” Vaughn added.

The AAU was one of many organizations signing a letter earlier this year sent to the Senate Judiciary Committee which warned that “some of the measures under consideration go far beyond what is necessary or desirable to combat abusive patent litigation, and, in fact, would do serious damage to the patent system. As it stands, many of the provisions assume that every patent holder is a patent troll. Drafting legislation in this way seriously weakens the ability of every patent holder to enforce a patent.”

In contrast to many businesses, universities often license their patents for development, because universities tend to focus on fundamental research, than commercially practical applications of research. But Vaughn recognizes that patent trolls – more formally known as non-practicing entities – still are a genuine concern.

As a proposal takes shape, there needs to be a realization that different sectors have different needs, he added. When it comes to the high-tech sector, their technology can change quickly.

“Trolls are exploiting this,” Vaughn said, adding he wants to see Congress address abusive practices, while still letting patent holders protect their patents.

There likely will not be a bill that represents a perfect piece of legislation from the point of view of a single sector. “You’ve got to have compromise,” Vaughn said. “There are achievable compromises in most of these provisions.”

Looking back at the attempt this year to get patent reform, Vaughn said curbing abusive demand letters regarding patents was something he wanted to see enacted. “It would have been nice to get that off the table,” he said.

On the other hand, from the point of view of the pharma sector, Bryan Zielinski, a vice president and assistant general counsel at Pfizer, points out that its products can take 10 years to develop, with a failure rate of over 90 percent and it is very costly to develop each product. That means they have different needs than something like the tech sector.

“Our views have not fundamentally changed,” Zielinski said in a recent interview with InsideCounsel about patent reform.

He wants to see improvements in the American Invents Act, as well. Looking ahead, he predicts a bill will be introduced similar to what passed in the House, and more than one bill will be introduced in the Senate.

“We do think there is a genuine patent troll issue,” Zielinski said, adding that pharma faces different types of risk than the tech sector from trolls.

In addition, there are some issues related to patent reform when it comes to the Hatch-Waxman Act, he added. The act promotes generic medications and provides incentives for research and development of new medications.

Overall, there may be pressure put on pharma and universities to become more flexible on the new patent reform proposals. How much they will yield remains unknown, but the effort likely will be made.