The Senate deserves praise for again "tackling" patent reform, CEA President Gary Shapiro said, citing hearings Wednesday and Thursday to study what he said was “the impact of abusive patent litigation practices have on American businesses.” Since Congress last acted on patent reform legislation in December 2013, “patent trolls have bled over $100 billion from the U.S. economy,” Shapiro said Thursday in a statement. “And with each week that passes, trolls send more demand letters to small businesses and startups, and drain another $1.5 billion from our economy. The immense amount of money spent fighting bogus patent lawsuits amounts to a massive tax for over 80 percent of victims who are startups or small and medium businesses. Blatant patent extortion needs to be stopped.” Wednesday’s hearing was before the Senate Judiciary Committee (see 1503180042), and Thursday’s was before the Senate Small Business and Entrepreneurship Committee. Shapiro has identified patent reform as one of CEA’s highest legislative priorities and has been outspokenly critical of former Senate Majority Leader Harry Reid, D-Nev. for “single-handedly” killing patent reform legislation in the last Congress (see 1411050022).

“I am optimistic the Senate can pass meaningful [patent reform] legislation this year,” said Senate Judiciary member Orrin Hatch, R-Utah, in a statement after a committee hearing on patent issues. “Effective legislation must include mandatory fee shifting and a mechanism to ensure recovery of those fees, even against judgment-proof shell companies.” Hatch said last month that it was time to reform the America Invents Act, which he introduced in 2005 with Sen. Patrick Leahy, D-Vt., (see 1502120047). Patent reform legislation has been proposed, but Hatch said then that he will “oppose any bill that fails to prevent patent trolls from litigating-and-dashing.” "Patent trolls strategically set their royalty demands below litigation costs to entice companies to settle rather than run the risk of expensive and risky patent litigation,” said Senate Judiciary Chairman Chuck Grassley, R-Iowa, in written remarks. “We recognize that abusive patent litigation practices are a corrosive assault on the nation’s patent system and must be forcefully countered,” said Michael Crum, Iowa State University vice president-economic development, in written testimony. But a “careful, fact-based cost/benefit evaluation of each of these proposals must be carried out, particularly given that the evidentiary basis for sweeping patent reform has been called sharply into question,” he said. “The patent landscape has shifted considerably since various patent reform proposals were first proposed, creating fundamental questions about the urgency of broad patent reform at this time.”

Members of Congress were urged to enact broad patent reform legislation, in a Tuesday letter signed by 140 startup investors who invested in companies including Dropbox, Facebook, Kickstarter, Instagram, Redfin and Twitter, said an App Developers Alliance and Engine Advocacy news release. Organized by Engine Advocacy and the App Developers Alliance, the letter asks Congress to “support reforms that include increased demand letter transparency” and limit the “scope of expensive litigation discovery,” because patent litigation abuse is a growing problem, the news release said. So-called patent trolls filed 2,791 new lawsuits in 2014, the release said. About 82 percent of patent troll activity targets small- and medium-sized businesses, the release said. “Our Constitution favored a patent system to incentivize innovation and benefit all Americans,” the letter said. “Unfortunately that system has been hijacked by some intent on exploiting Patent Office weakness, and all too frequently it now hinders innovation and chills investment, harming the new companies it was designed to foster and imposing a patent troll tax on new technologies.” The investors asked Congress to pass legislation that would increase transparency, limit the scope of expensive litigation discovery, allow courts to use their discretion to require patent trolls to pay legal fees and other costs incurred by prevailing defendants and to protect end users of technology from being liable for infringements by tech providers, the letter said.

“Patent trolls are crippling growth across all sectors of our innovation economy -- from small businesses to America’s largest companies,” Sen. Orrin Hatch, R-Utah, wrote in a column for Wired Monday. Hatch said he would work with colleagues on “legislation to stop these patent trolls in their tracks” and announced hearings will begin this week “to address this issue.”

CEA will join the United for Patent Reform coalition, the group that the National Retail Federation and others launched in January to promote enactment of patent reform legislation, CEA said Wednesday. President Gary Shapiro said in a statement: “A tsunami of bogus patent claims is killing jobs and innovation, while costing the U.S. economy $1.5 billion a week. Republicans, Democrats and the White House all agree that the patent extortion racket must be stopped. Congress must expeditiously pass the Innovation Act to hold patent trolls accountable for their frivolous lawsuits and baseless threats.” Though CEA has made patent reform one of its highest legislative priorities, it stopped short in January of committing to joining the coalition, saying only it was “considering how we can be most helpful” (see 1501200025). Coalition members from the tech industry include Adobe, Amazon, Cisco, Dell, Facebook, Google, Oracle and Verizon. The coalition's website says membership spans a wide diversity of companies and trade groups from many industries.

Patent reform legislation introduced by Sen. Chris Coons, R-Del., lacks the robustness needed to stop frivolous patent litigation, said CEA President Gary Shapiro Tuesday. The Coons legislation, called the Support Technology and Research for Our Nation’s Growth (STRONG) Patents Act, “has a few modest provisions aimed at improving our patent system,” Shapiro said. "Halting the epidemic of bogus patent lawsuits will require a more robust and multifaceted approach, including fee-shifting, similar to that taken by the Innovation Act,” Shapiro said. “The STRONG Patents Act appears less like real patent reform and more like a patent troll-led effort to draft a ‘fig leaf’ bill for senators to sign on to so they can pretend they are supporting patent reform, while shielding the legalized extortion of the patent trolls.”

Ericsson sued Apple over 41 patents covering many aspects of iPhones and iPads, said the plaintiff in a news release Friday. After Apple refused the offer to have a court determine fair licensing terms binding to both companies, Ericsson filed two complaints with the International Trade Commission and seven with the U.S. District Court in Tyler, Texas, it said. A jury in that court last week found against Apple in another lawsuit by Smartfish (see 1502270013). The patents in question for Ericsson are related to 2G and 4G/LTE standards as well as design of semiconductor components, user interface software, location services and applications, as well as the iOS operating system, it said. Ericsson seeks exclusion orders in the ITC proceedings and damages and injunctions in the court actions. Apple also sued, asking U.S. District Court in San Francisco to find that it does not infringe on a small subset of Ericsson's patents, said the release. Apple didn't comment.

The Senate Judiciary Committee Thursday unanimously approved Michelle Lee to lead the Patent and Trademark Office. Sen. Orrin Hatch, R-Utah, said he was pleased that the committee unanimously approved Lee’s appointment, but said he was “disappointed” she was not “more forthcoming during the confirmation process” when asked about patent troll legislation: “This is a critical problem that demands an effective legislative solution, and the USPTO Director must be actively involved in that process.” Hatch encouraged Lee to be more forthcoming if any other Senator asked her a question before her appointment to lead the PTO is put to a full Senate vote. Information Technology Industry Council CEO Dean Garfield urged the full Senate to quickly approve Lee’s nomination, saying the office “plays a critical role in advancing innovation because intellectual property is the foundation for the new products and cutting-edge technologies that are growing our economy and transforming our world.”

Nearly 150 U.S. universities wrote Congress expressing concern over patent reform legislation. They said a large portion of the legislation goes “well beyond what is needed to address the bad actions of a small number of patent holders, and would instead make it more difficult and expensive for patent holders to defend their rights in good faith.” Mandatory fee-shifting and involuntary joinder are the most concerning because they would “make the legitimate defense of patent rights excessively risky and thus weaken the university technology transfer process,” the letter said. The patent system needs to provide strong protection for inventions to enable universities to license them to private sector enterprises, it said. Congress should take these concerns into consideration when assessing changes to the patent laws, it said. “It is imperative that any legislation avoid sweeping changes that would weaken our overall patent system and hinder the flow of groundbreaking advances from university research to the private sector, which catalyzes economic growth, creates jobs, and improves the lives of all Americans.” The letter was sent to Senate Judiciary Committee Chairman Chuck Grassley, R-Iowa; ranking member Patrick Leahy, D-Vt.; House Judiciary Committee Chairman Bob Goodlatte, R-Va.; and ranking member John Conyers, D-Mich. Among the signers were Boston University, Johns Hopkins University, Massachusetts Institute of Technology, New York University, Pennsylvania State University, Rutgers University, University of Pennsylvania and Yale University.

The Electronic Frontier Foundation released a white paper Monday outlining its vision to fix the U.S. patent system, said an EFF blog post. The 37-page white paper calls for six legislative “reforms,” including “ensuring there are inexpensive and efficient tools for challenging the validity of issued patents” and “passing a comprehensive patent reform bill, such as the Innovation Act” (HR-9) (see 1502120043). “The U.S. Patent and Trademark Office is issuing far too many weak and overbroad patents, particularly on software," EFF staff attorney Vera Ranieri said in the blog post. "Instead of promoting innovation, these patents become hidden landmines for companies that bring new products to market."