House Judiciary Debates Innovation Act

Most committee Democrats joined Conyers and Watt in voting for amendments that would have altered or removed controversial provisions included in the submitted version of HR-3309. Julie Samuels, an Electronic Frontier Foundation staff attorney who follows patent issues, told us she nonetheless believed several would end up voting for the final bill.

Conyers and Watt criticized vetting of the bill by Committee Chairman Bob Goodlatte, R-Va. Conyers said Goodlatte had erred “by limiting the committee to a single legislative hearing, by skipping subcommittee and moving to markup prematurely,” making it “all the more difficult for members and stakeholders to provide meaningful input into the process.” Watt repeatedly questioned the need for HR-3309 to move in an expedited fashion. “Where is the fire here?” he asked, saying he didn’t believe the committee should be “pursuing arbitrary deadlines” to pass the bill.

Goodlatte defended the bill as “central to U.S. competitiveness, job creation and our nation’s future economic security” because it “takes meaningful steps to address the abusive practices that have damaged our patent system and resulted in significant economic harm to our nation.” Goodlatte said he has been transparent and receptive to stakeholder input throughout HR-3309’s creation, making two discussion drafts of the bill publicly available and revising the measure based on significant stakeholder input. The manager’s amendment also reflected stakeholder input and the committee would continue to include stakeholders in future revisions to the bill, Goodlatte said.

The committee defeated a Democratic “substitute” version of the bill from Conyers and Watt on a 19-14 vote. Suzan DelBene, D-Wash., and Zoe Lofgren, D-Calif., along with Resident Commissioner Pedro Pierluisi, D-P.R., joined 16 Republicans to vote against the amendment. Lofgren is a cosponsor of HR-3309, while DelBene declared her support for the bill after Goodlatte agreed to remove a controversial provision that would have expanded a temporary U.S. Patent and Trademark Office covered business method (CBM) patent review program to include software patents. The 14 votes in favor of the amendment were all from Democrats. Conyers said the Democratic substitute amendment would have addressed “the real and identifiable problems of patent abuse without upsetting the entire patent laws system.” The amendment drew on provisions from the White House-supported Patent Transparency and Improvements Act (S-1720) and HR-3309. The “substitute” didn’t include HR-3309’s provisions on fee-shifting and changes to court rules in patent cases. The amendment included a provision that would create a mandatory revolving fund in the U.S. Treasury that would provide the U.S. Patent and Trademark Office full access to user fees it collects. A “handful” of committee Democrats may have preferred the language in the Democratic substitute amendment but would likely end up voting in favor of HR-3309, Samuels told us.

Goodlatte “strongly” opposed the Democratic substitute amendment, saying he believed some of the amendment’s provisions would result in problematic unintended consequences, particularly in the amendment’s patent ownership transparency provision. The provision would require a plaintiff in a patent case to disclose all entities that have a financial interest in the litigated patent, which Goodlatte said could mean disclosing every shareholder in a company. Goodlatte said he also supported allowing PTO to have full access to its user fees, but said including it in HR-3309 would be a “poison pill” that could derail HR-3309 on the House floor on procedural grounds. The committee later defeated a separate amendment from Conyers, which contained only the Democratic substitute amendment’s PTO funding provision, in a 17-13 party line vote.

The committee rejected amendments from Hakeem Jeffries, D-N.Y., and Bobby Scott, D-Va., along with a joint amendment from Watt and Steve Chabot, R-Ohio, to limit or remove provisions in HR-3309 that would change federal court rules in patent cases. Jeffries’ amendment would have eliminate a provision that would have removed a section of U.S. patent law that allows patent applicants to appeal PTO decisions to a U.S. district court. The Watt-Chabot amendment would “moderate” discovery limits included in HR-3309 to provide more flexibility to judges, Watt said. He strongly supported the Jeffries and Scott amendments, arguing it was inappropriate for the bill to change judicial rules through legislation. Goodlatte opposed all three amendments, saying “we are not overstepping our bounds.” A separate Watt amendment, which the committee also voted down, would have altered HR-3309’s fee-shifting provision so judges could allow fee shifting in “appropriate” circumstances. Jeffries said he supported the Watt amendment as a “measured attempt” to strike an appropriate balance between combating abusive patent litigation and protecting startups and entrepreneurs.

Tom Marino, R-Pa., introduced -- and subsequently withdrew -- two amendments that would have included language in HR-3309 addressing deceptive demand letters. The amendments drew on language included in the Demand Letter Transparency Act (HR-3540), which Marino, Jared Polis, D-Colo., and Ted Deutch, D-Fla., introduced Tuesday. That bill would require any entity, other than an original inventor or a university, to submit detailed information to PTO when it sends a specific number of demand letters during a 365-day period. The bill would require entities sending demand letters to include more detailed information in the letters, including the specific patents and claims at issue, a detailed description about how the letter’s recipient violated the patent and further specificity on the patent’s ownership. The bill would also task PTO, the Justice Department and the FTC with creating a publicly accessible demand letter database, and would codify the FTC’s authority to enforce violations of the bill’s requirements under Section 5 of the FTC Act.

Goodlatte said addressing demand letters was not a matter the committee had jurisdiction over, but promised to work with Marino and Polis to address demand letter abuse in the future. The committee passed a third Marino amendment that would require PTO to study demand letters. The committee also passed an amendment from Deutch, Jason Chaffetz, R-Utah, and Spencer Bachus, R-Ala., that it is the “sense of Congress” that deceptive demand letters are a problem that needs further attention. (jphillips@warren-news.com)