Why The Trial Lawyers May Have Miscalculated In Killing Patent Reform, And How It May Come Back To Bite Them

Politics

from the better-patent-reform-next-year dept

As we noted last week, it was really the trial lawyers (with some help from pharma) that killed patent reform. While patent trolling operations and some big legacy companies with giant patent portfolios had been fighting against patent reform all along, they weren’t responsible for killing it outright. In fact, in talking to many people involved, the same story comes up again and again: pretty much everyone was negotiating on a deal — and, at the last minute, the trial lawyers called Harry Reid, who told Leahy to kill the bill. Joe Mullin quotes a tech industry lobbyist who notes that “I feel like a mouse who never knew he was a mouse,” and that despite all the negotiating, the trial lawyers just put an end to it:

“We felt really good the last couple of days,” said the tech lobbyist. “It was a good deal—one we could live with. Then the trial lawyers and pharma went to Senator Reid late this morning and said that’s it. Enough with the children playing in the playground—go kill it.”

Some have asked why trial lawyers (rather than patent lawyers) were so against it, and the key thing is that the trial lawyers don’t want anything to do with fee shifting. They fear, greatly, that if fee shifting is shown to be effective in patent cases, it will then make it easier to spread to other types of cases. This isn’t a huge surprise. Nearly a year ago, a high ranking Democratic Congressional staffer told me flat out that “fee shifting has to be off the table” because “the trial lawyers will never allow it.” I was actually surprised that it stayed in the bill as long as it did.

But here’s the thing: having the trial lawyers kill the bill outright may be incredibly shortsighted. That’s because this bill was already pretty weak overall. All that “bipartisan negotiating” and lobbying pressure from patent trolling operations (and big tech firms who didn’t want to lose the ability to exploit giant portfolios of bad patents) had basically weakened this bill drastically already. Even the fee shifting was pretty limited and unlikely to have a huge impact.

But the problem of patent trolls still remains.

And here’s the big thing. The Republicans are very much in favor of patent reform, and many prognosticators expect the Republicans to take control of the Senate in this year’s elections. As lawyer Matt Johnson points out, with the Republicans in control over both houses, much stronger patent reform might go through in the next Congress, and there won’t be much the trial lawyers will be able to do about it. Republicans aren’t known for bending to the whims of trial lawyers.

In the interest of making a deal with Democrats this year, Cornyn offered major concessions on fee-shifting, heightened pleading, and discovery abuse during his negotiations with Sen. Chuck Schumer (D-NY). Those concessions won’t necessarily be on the table next year in a GOP-controlled Senate. And House Judiciary Chairman Bob Goodlatte may similarly be unmotivated to make concessions with Democrats in his chamber. Moreover, the trial bar certainly can’t count on the President to be a backstop. President Obama has championed many of the litigation reforms they oppose, including loser-pays and heightened pleading standards.

Reform opponents made the calculation that they’ll take their chances in 2015 rather than swallow a bipartisan compromise this year.

As he says, “this year’s Schumer-Cornyn deal is probably as good as it gets” for those looking to limit patent reform. Next year, the trial lawyers may be able to call Harry Reid, but it might not matter at all.

Filed Under: congress, harry reid, patent reform, patent trolls, patents, patrick leahy, trial lawyers