House votes 325-91 to pass Innovation Act
The Innovation Act, a bill with measures aimed to stop "patent troll" lawsuits, passed the US House of Representatives this morning on a 325-91 vote. Several amendments that would have stripped out key parts of the bill were defeated.
Passage of the bill is a big step for patent reformers, which would have been hard to imagine even one year ago. However, patent trolls going after "Main Street" businesses like grocery stores and coffee shops have made headlines and enraged politicians from Vermont to California.
Majorities of representatives in both parties supported the bill. On the Republican side, 195 representatives voted in favor of the bill and 27 voted against, while 130 Democrats supported the bill and 64 opposed it. The White House has said it supports the bill, which must first pass the US Senate.
The key politician pushing the bill ahead thus far has been Rep. Bob Goodlatte (R-VA), chairman of the House Judiciary Committee. The most prominent opponent has been Rep. John Conyers (D-MI), the most senior Democratic member of that committee.
If passed in its current form, the bill will add to transparency in patent litigation and require patent holders to reveal who is profiting from a lawsuit. It will also allow lawsuits against customers to be stayed in certain circumstances and will require fee-shifting to the prevailing party in most patent cases.
“Loser pays” in patent suits
Before passing the bill, the House debated amendments that would have stripped out key parts. The closest vote of the day was on an amendment by Rep. Mel Watt (D-NC), which would have taken out the fee-shifting provisions that will move patent lawsuits toward a "loser pays" system. The amendment failed on a 199-213 vote.
While debate on the bill as a whole did not follow party lines, the Watt amendment was a more partisan affair. Democrats, who have traditionally opposed "loser pays" court systems as being overly harsh on small plaintiffs, voted 174-18 in favor of Watt's amendment, while Republicans voted 25-195 against it.
Two other amendments would have stripped out or weakened the "customer stay" provisions of the bill. As written, the bill allows patent lawsuits against customers to be stayed if there's a manufacturer who agrees to handle the patent lawsuit. The debate was heated over these amendments.
"We should not skew the scales of justice to the big and the wealthy," said Rep. Sheila Jackson-Lee (D-TX), who wanted to limit customer stay protections to companies with less than $25 million in revenue. "This [bill] gives a gift to big guys, conglomerates that can already hammer you down if you challenge their use of an invention."
Bill sponsor Goodlatte said that mandating customer stays, when the customer and manufacturer agree, was a key component of the bill. "Let's use a little common sense here," he said. "The patent trolls know there are certain jurisdictions of this country where the courts will not issue a customer stay."
Goodlatte's comment seemed to be a thinly veiled reference to venues favored by patent-holders, such as the Eastern District of Texas. The Jackson-Lee amendment was defeated on a 144-266 vote; another amendment to gut customer stays was defeated by a bigger margin.
Finally, the House voted on an amendment from John Conyers and Mel Watt (D-NC). It would have basically scrapped the bill altogether, tearing out all key provisions and reducing it to a bill that only adds some transparency to patent litigation. The Conyers-Watt amendment was defeated on a 157-258 vote.
Only one amendment was passed, from Rep. Dana Rohrabacher (R-CA). Rohrabacher's amendment stops the bill from taking out an old, rarely used provision in patent law that allows patent applicants who can't get their patents from the Patent Office to sue for them in court. Goodlatte opposed the amendment, but other bill proponents, including Rep. Zoe Lofgren (D-CA), supported it, and it passed 260-156, with mostly Democratic supporters.
Full roll call vote results for each amendment are available on the House of Representatives website.
Condemnation, but little action, on patent demand letters
The customer stay provisions and the fee-shifting aspects were the most hotly debated aspects of the bill, but it includes other measures that will change the patent litigation landscape as well. The bill includes requirements that will add transparency about who truly owns the patents involved in litigation and whether there are other parties who have financial interest in patent lawsuits. It includes provisions to join other interested parties in a lawsuit, so that those who are making money off widespread patent litigation can't hide behind shell companies.
The bill doesn't take strong action on patent demand letters that have become increasingly common, but it has a provision to study the effects of such letters further. It also states that the "sense of Congress" is that such letters are abusive. The passed version of the bill (PDF) includes this language:
It is the sense of Congress that it is an abuse of the patent system and against public policy for a party to send out purposely evasive demand letters to end users alleging patent infringement. Demand letters sent should, at the least, include basic information about the patent in question, what is being infringed, and how it is being infringed.
Stronger action on demand letters is something that proponents of legislation may try to add in on the Senate side. Opponents, meanwhile, will still be looking to stall or kill the bill entirely.
The biggest change to the bill thus far has been the removal of an expanded review program, which could challenge business method patents at the patent office. That plank was strongly desired by anti-troll advocates, since it could have greatly lowered the cost of fighting some patents. But several key tech companies with large patent portfolios, including Microsoft and IBM, were opposed to the expansion of the review program and would likely not have supported the bill if that provision had remained.