If patent litigation reform legislation is “left unresolved,” that will continue to drain startups of “precious resources,” Bronwyn Flores, CEA policy and industry communications coordinator, said Friday in a blog post. “Growing a startup is tough enough,” Flores said. “But lawyers and shell companies that contribute nothing to the innovation economy -- we call them ‘patent trolls’ -- are taking advantage of loopholes in the current patent system to legally extort startups, draining $80 billion a year from our economy.” Enactment of patent litigation reform legislation in the House and Senate will mean that “the tech community can send patent trolls back under the bridge,” she said. Such firms “have been abusing the system for years, but recent data shows they’re more aggressive than ever,” she said. “Troll lawsuits are up 500% since 2005, and 2015 is on its way to becoming a record-breaking year for frivolous patent lawsuits.” Such firms “are in the legal extortion business, and business is good,” she said. “Their actions are low-risk and high-reward -- under the current patent system, there are no disincentives.”

The Office of the U.S. Intellectual Property Enforcement Coordinator seeks comment by Oct. 16 to help craft the next iteration of its Joint Strategic Plan on Intellectual Property Enforcement. The plan, which is administered by the Office of the Coordinator, aims to put in place the mechanisms to reduce the supply of fraudulent goods and other intellectual property infringement, while also assisting other countries in cracking down on illegal operations, the Office of Management and Budget said in Tuesday's Federal Register. Through the plan, the U.S. aims to prioritize U.S. resources for "countries where programs can be carried out most effectively with the greatest impact on reducing the number of infringing products imported into the United States, while also protecting the intellectual property rights of U.S. rights holders and the interests of U.S. persons otherwise harmed by infringements in other countries," said OMB. Following two previous three-year versions, this plan will last 2016-19. OMB requested “input and recommendations” on the broad effort to crack down on IP infringement, including through legislation, presidential action and regulatory changes, “as well as ideas for improving any of the existing voluntary private-sector initiatives and for establishing new voluntary private-sector initiatives.”

The Information Technology Industry Council (ITI) wants changes made to the Innovation Act (HR-9) -- patent reform legislation set to be voted on in the full House, said a letter to House leaders Wednesday. The letter, signed by ITI CEO Dean Garfield and sent to House Speaker John Boehner, R-Ohio, and House Minority Leader Nancy Pelosi, D-Calif., supported the bill but suggested language should be added to "require plaintiffs [in patent lawsuits] to identify each claim of each patent that is allegedly infringed." Garfield also urged the House to remove a portion of the legislation that would make changes to the U.S. Patent and Trademark Office's patent review proceedings, saying the changes would harm patent quality.

Chairmen and executives from the nation's largest Internet companies, including Google, Etsy, LinkedIn, Pinterest and Yahoo, submitted a joint letter Thursday to House leadership urging the passage of the Innovation Act (HR-9). "As inventors ourselves, we support the Innovation Act because it strikes a reasonable compromise between protecting patent holders' rights and removing the threat of frivolous patent troll litigation," the letter said. The reforms in HR-9 are "not silver bullets," the letter said, but they "help remove factors that make the patent troll business model a no-risk, high-reward enterprise. The Innovation Act is a positive step in the right direction for our economy."

Abuse of the current patent litigation system by patent assertion entities (PAEs) “is the most significant problem facing the patent system and innovation more generally,” Mark MacCarthy, vice president-public policy at the Software & Information Industry Association, wrote to the House leadership Thursday urging support for the Innovation Act (HR-9). “Patent trolls do not innovate, make or sell anything, but exist simply to buy patents from others for the sole purpose of suing legitimate businesses of all sizes and kinds for alleged patent infringement, leveraging the very high cost of defending against such lawsuits to obtain ‘hold up’ settlements,” MacCarthy said. “In sum, PAEs have created a business model that exploits flaws in both the patent system and litigation practices to their advantage and to the disadvantage of innovative industries, their customers and the public. Action needs to be taken now to stop these abusive tactics.” MacCarthy cautioned lawmakers not to be taken in by “a hail-Mary mudslinging campaign” mounted by HR-9 opponents and “designed to obfuscate the purpose and effect of the Innovation Act.” Statements in that campaign that “China loves” HR-9 or that “inventors fear it” are “nothing more than scare tactics from groups that have no substantively compelling arguments on which to base their opposition,” he said. That was an apparent reference to an American Conservative Union-led ad blitz launched Monday through Washington-area newspapers urging defeat of HR-9 on the grounds it will harm American inventors and small businesses. Said MacCarthy: “We urge you to look at the facts and the overwhelming support for the bill and not be hoodwinked into believing that this bill is bad for innovators or the economy.”

The Software Alliance (BSA) submitted a letter to House Speaker John Boehner, R-Ohio, and House Minority Leader Nancy Pelosi, D-Calif., Thursday calling for "certain changes and clarifications to be made" to the Innovation Act (HR-9) as the legislation is prepared for House consideration. In the letter, the BSA said HR-9 "represents a solid framework for much-needed reform to address the rampant abuses occurring in patent litigation," but suggests changes be made to strengthen pleading requirements, and to a provision concerning U.S. Patent and Trademark Office standards for interpretation of post-grant reviews. "The pleadings provision needs to be strengthened to require patentees to articulate their allegations of infringement for every claim being asserted," said the BSA in the letter. It also urged deleting a provision from the bill to "alter the current USPTO practice of using the broadest reasonable interpretation standard during all post-grant review challenges." CEA has said that HR-9 is expected to go to a floor vote in the House during the week of July 20 (see 1507080040).

The world sees the U.S. as a leader in protecting and enforcing intellectual property rights, but as countries across the globe "seek to catch up," America "cannot afford to stand still," Michelle Lee, U.S. Patent and Trademark Office director, said Monday in a speech at a Center for Strategic and International Studies event. The focus of Lee's speech was primarily on the need for the U.S. patent system to evolve and the changes she said are necessary for it to improve. Lee said she met with Chinese leaders in the field of intellectual property on a recent trip and was told China is seeking to transition its economy from relying on manufacturing the inventions of people from other countries to thriving off inventions of its own. To do so, China "recognizes the need for a patent system" more like that of the U.S., she said. Because of the increased threat of competition from other countries, Lee said, it's important that the U.S. strives to become "even better at incentivizing and promoting innovation and investment." Current problems with the U.S. system stem partly from the rise of the practice of monetizing a patent bought from another company "without contributing anything inventive or without making or providing any service," and in increased patent infringement claims made merely to coerce defense settlements without regard to the merits of a claim, she said. Such problems "are not just bad for small businesses and startups," they're bad for "inventors, consumers, jobs and the American economy," she said. And "worst of all," such problems "reduce the public's faith in our patent system," Lee said. Her idea is to change the system in a way that preserves balance between maintaining strong patent protections that are necessary for innovation, and ensuring a more efficient and streamlined way of handling disputes, she said. Achieving that balance is "a responsibility shared by all three branches of government," but in order to have timely changes "targeted and balanced legislation is needed," she said. Reforms should reduce the incentive to engage in abusive patent litigation tactics without undermining the strengths of "our world-class patent system," she said. "Reform is not a crisis of faith about our patent system," Lee said, but "a way of keeping faith with its goals of promoting innovation and technological progress."

Public interest groups said they're pleased with the bipartisan support for patent reform legislation moving in House and Senate committees. During a panel Wednesday held by Public Knowledge, representatives from groups pushing for increased consumer protection from patent litigation said the support for litigation protection is across the board. There "couldn't be more support for this," said Chris Armstrong, Small Business Majority director-partnership and government affairs. Armstrong also said research by the group that represents small-business owners showed most individuals polled support increased restrictions on so-called patent trolls and on patent litigation. Charles Duan, Public Knowledge Patent Reform Project director, said patent litigation and patent demand letters have had a significant impact on the small-business sector, especially in the area of investor confidence. Duan referred to research that he said showed 75 percent of venture capital firms would be less inclined to invest in a business that has been sent a patent demand letter or threatened by a patent assertion entity (PAE). Duan also said consumers of certain products, particularly from the tech and communications sector, also are being affected by patents trolls and PAEs. As the Senate Protecting American Talent and Entrepreneurship Act (S-1137) and the House Innovation Act (HR-9) -- both targeted primarily at reducing lawsuits and threats issued by PAEs and increasing consumer security -- work their way through their respective chambers, Duan, Armstrong and others said open dialogue with those affected by the patent suits and advocacy should continue to help members of Congress find the best ways to resolve many of the issues allegedly caused by increased patent litigation.

The House Judiciary Committee approved the Innovation Act 24-8 Thursday. HR-9 “takes steps to combat the ever increasing problem of abusive patent litigation” and “abusive practices taking place in our courts,” said a House Judiciary Committee news release. Chairman Bob Goodlatte, R-Va., chief sponsor of the Innovation Act, praised the committee’s approval of the bill, calling abusive patent litigation a “drag on our economy” that affects all businesses and industries. Goodlatte said the legislation “takes the necessary steps to address abusive patent litigation, while protecting legitimate property rights.” There’s been an increase in innovation stifled by what he described as patent trolls, “who see our patent system not as a tool to spur inventiveness, but as a club with which to bludgeon those who truly seek to innovate and grow our economy,” said Intellectual Property Subcommittee Chairman Darrell Issa, R-Calif. “We must restore the promise that hard work and ingenuity lead not to crippling, frivolous lawsuits, but to well-deserved success.” Subcommittee Ranking Member Jerrold Nadler, D-N.Y., said he supports the Innovation Act because “a strong patent system requires that we protect business and consumers from the harm caused by abusive litigation.” House Communications Subcommittee ranking member Anna Eshoo, D-Calif., said that when “businesses aren’t bogged down with abusive patent litigation, they spend on average $211 million more on research and development than firms that have to redirect resources to protect their original ideas in court.” Though the Innovation Act isn't the bill Rep. Suzan DelBene, D-Wash., would have written, it “takes steps toward creating a more transparent system that will help protect innovators and entrepreneurs throughout the patent ecosystem,” she said in a news release. While DelBene ultimately voted for the bill’s passage out of committee, she said more work is needed before it comes to the House floor. The Computer & Communications Industry Association, CEA, NAB and the Software & Information Industry Association applauded the committee’s passage of the bill.

The FTC and Department of Justice “support increasing patent quality as part of their mission to protect and promote competition and consumer welfare,” and offered recommendations to the Patent and Trademark Office on how to balance the interests of patentees and the public, in joint comments submitted to the office in response to the PTO’s “comprehensive initiative to increase the quality of granted patents,” an FTC news release said Thursday.