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Senators discuss 'unintended consequences' of U.S. patent bill

By Diane Bartz

WASHINGTON (Reuters) - U.S. senators discussed on Tuesday whether a proposed bill aimed at reining in unnecessary patent litigation could also hurt companies whose patents have been genuinely infringed.

Sen. Patrick Leahy, chairman of the Judiciary Committee, has sponsored legislation aimed at targeting aggressive "patent assertion entities," often known derisively as "patent trolls" - companies that buy or license patents and then extract licensing fees or file infringement lawsuits often viewed as frivolous.

Sen. Richard Blumenthal, Democrat of Connecticut, urged caution.

"I am wary of overkill," he said. "I am wary of unintended consequences. We have a very important obligation here to make sure that we do no harm."

But Leahy said the bill as written does not go too far.

"(The bill is) balanced and targeted to preserve the rights of legitimate patent holders," he said at a committee hearing. "As we discuss proposals to address the problem of patent trolls, I urge this committee to stay focused on that balance."

Witnesses at the three-hour hearing were drawn from various backgrounds, but showed broad support for allowing judges to require losers in patent litigation to pay the winner's fees if the judge decides the case should never have been filed, a requirement designed to cull frivolous actions.

Dana Rao, an Adobe Systems, Inc vice president, was one who supported fee-shifting.

"Fee shifting is a disruption of the business model (of patent trolls), he said. "We really need to address the economics."

Philip Johnson, the chief intellectual property counsel at pharmaceutical company Johnson & Johnson, who spoke for a coalition of companies, was critical of proposals to create delays in document discovery during patent litigation while the battling sides sort out what certain portions of the patent, called claims, really mean.

"Such an approach would serve as an open invitation to copyists to enter the U.S. market safe in the knowledge that patent actions brought against them will come to a virtual standstill for an extra year or more while the parties wrangle over the meanings of patent claim terms," he said.

"In the meantime, manufacturers' market shares, and the jobs they support, will shrink as the infringement continues."

The Senate follows the U.S. House of Representatives in taking up the issue of patent abuse. The House approved a bill this month aimed at reining in "patent trolls" by encouraging judges to award fees to the winner of an infringement lawsuit.

The House bill would also require companies filing infringement lawsuits to provide specific details on what patent is infringed and how it is used.

Sponsored by Robert Goodlatte, Republican of Virginia, it targets much-criticized patent assertion entities, for behavior such as sending large numbers of licensing demands to small businesses without determining if they actually use infringing technology.

The White House urged Congress in June to take steps to curb abusive patent lawsuits that have sprung up in recent years, especially in the technology sector.

In addition, the Federal Trade Commission has a study underway on the impact on competition of abusive patent litigation.

(Reporting by Diane Bartz. Editing by Andre Grenon)

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