Patent Reform Returns: Venue Reform Bill to be introduced in Senate

Senator Jeff Flake is expected to introduce a venue reform bill this week. Photo by Gage Skidmore. CC BY 2.0.

Silicon Valley hates trial lawyers and employment litigation and has for a long time. Despite the left leaning politics of many in Silicon Valley on social issues and general support for Democrats, there is a long-standing alliance with Republicans and corporations generally to curb litigation and the power of trial lawyers, persistent and effective supporters of Democrats. This is one of the reasons why patents have proven to be a durable bi-partisan affair with Republicans and Democrats working together to both create and stop reforms. Technology related issues are neither purely the domain of Democrats, nor are they purely the domain of Republicans.

The bi-partisan nature of patent reform legislation is simultaneously inspiring and extraordinarily terrifying. Politics rarely plays into patent reform matters, which means even in election years Congress can actually attain legislative accomplishments. Congress working in a bi-partisan way is how many wish it could be on all issues, but for the innovation community that means that legislation is never more than right around the corner. It also means that the threat of potentially awful, crippling legislation is omnipresent for innovators.

Republicans in Congress, such as Senate Judiciary Committee Chairman Chuck Grassley (R-IA) and House Judiciary Committee Chairman Bob Goodlatte (R-VA), have openly embraced the support of President Obama and many other Democrats for their patent reform bills, The PATENT Act (S.1137), and The Innovation Act (H.R.9). Republicans control both the Senate and the House and their leadership continues to not make patent reform legislation a priority for floor time this election year. This is a familiar tune. Last year then Speaker John Boehner (R-OH) and Majority Leader Kevin McCarthy (R-CA) removed H.R.9 from the published floor calendar, punting it into 2016 at a minimum. It is not clear what Speaker Paul Ryan (R-WI) may do, although Tom Still, President of the Wisconsin Technology Council, recently wrote that in this election cycle Ryan intends on only bringing up consensus legislation.

While patent reform is apolitical, it is contentious. If Ryan is looking only for legislation that an overwhelming majority of the Republican Conference can support that should mean that sweeping patent reform remains off the menu for the remainder of the 114^th Congress. That patent reform cannot move in the House is ironic given the large bi-partisan votes in favor of the Innovation Act in the previous Congress. Of course, changes in the law due to court decisions are inevitable while legislation meanders through Congress, which may make patent reform even less likely. Indeed, if the Supreme Court were to grant district court judges discretion on enhanced damages that likely would put sweeping patent reform into a tail spin; damage issues has a way of stalling even inevitable reform.

But how does this synch with what Still wrote? Patent reform is a priority for the Wisconsin Technology Council. Is Still signaling that pro-reform voices from the tech community are telling Speaker Ryan that he need not move on patent reform legislation this year, or are pro-reform voices that know Ryan best just resigned to the fact that if reform happens it will look nothing like the Innovation Act?

The Innovation Act in the House and the PATENT Act in the Senate have been stalled now for some time. There have been whispers behind the scenes that supporters are continuing to look for opportunities to jumpstart the patent reform discussion again, but no real movement has been witnessed out in the open, and certainly no momentum. The best evidence of the failing prospects of widespread reform embodied in the Innovation Act and the PATENT Act is that yet another patent reform proposal seems close to being unveiled, which would specifically target venue reforms.

While widespread patent reform seems unlikely during the remainder of the 114^th Congress, targeted patent reform is another matter entirely. Indeed, the Senate Committee on Small Business & Entrepreneurship recently held a hearing largely attacking the America Invents Act (AIA) and the current reform bills and in a bi-partisan manner. And this week we may see a bi-partisan push in the Senate for a bill that focuses only on venue reform, which will be co-sponsored by Senator Jeff Flake (R-AZ) and Senator Cory Gardner (R-CO). The bill, available in draft form, is titled the Venue Equity and Non-Uniformity Elimination Act of 2016.

It is unclear at the moment whether the Gardner-Flake venue reform bill will start in the Small Business Committee or in the Judiciary Committee or both.  Flake and Gardner have promised supporters that they have lined up Democratic co-sponsorship for introduction.

How successful a venue reform only bill will be is uncertain, although it is clear that venue continues to be a lightening rod issue thanks to the high-volume of patent cases brought by patent owners in the Eastern District of Texas (EDTX). In June 2015, the House Judiciary Committee voted to add strict venue provisions to the Innovation Act, which would make it exceptionally difficult for patent owners could continue to bring patent infringement lawsuits in Marshall or Tyler, the most well known EDTX court locations. Having said that, there have been other attempts over the last several years to reign in the Lone Star State as the forum of choice, which have all failed to greater or lesser extents.

The Intel Corporation will be sending a letter along with other companies and trade associations in support of the venue reform focused bill. Intel is a major employer in Arizona, Flake’s home state, so it seems likely they have been to some extent a driving force behind the scenes. Flake is, however, not entirely new to patent matters; he was active on patent reform in the US House of Representatives before moving on up to the Senate where he now serves on the Judiciary Committee.

Venue reform resembles demand letters, another issue of controversy that has been marketed as a rifle shot, one issue legislative vehicle and spanning the House and Senate Commerce Committees, trying to avoid the briar patch of the Judiciary Committees and competing patent reform legislation.   Those working hard on comprehensive patent litigation abuse reform legislation in the Judiciary Committees are loathe to see rifle shot legislation succeed, especially in other committees, as they likely would drain away any remaining interest in completing the broader reform bills.

It may also be interesting to note that last year Senator Flake worked with Senator Orrin Hatch (R-UT), a senior member of the Judiciary Committee and a thought leader on both IP issues, on an immigration reform bill relating to high tech workers. Flake focused on how inventive immigrants are and in a press release pointed out: “Supply-side economists have reported that a 10% growth in H-1B population would correspond to a 6%-12% growth in invention (measured as patents) among immigrant groups and a 0.5%-1% growth in patents by U.S. natives.”

Thus, it seems that Flake is supportive of increasing H-1B visas, which would increase the number of patents and overall innovation, but is simultaneously working to make it harder for certain patent owners to truly enjoy the freedom to choose the venue where a patent litigation will take place. That seems to a large extent like Flake is picking winners and losers in the innovation game, siding with large entities that want more H-1B visas and who detest having to litigate patent disputes in Eastern Texas, which increasingly viewed as one of the few courts where the little guy has at least a fair opportunity to prevail.

There is little doubt that the venue reform bill will be welcomed with open arms by Silicon Valley, at least if it is eventually determined that is the best they can do. But given how often Donald Trump talks about immigration and his border bona fides by citing the support of Sheriff Joe Arpaio of Maricopa County, Arizona, one can’t help but notice that Flake’s interest in patents, which seem supportive of the infringer lobby, and his support of immigration reform to increase H-1B visas, are at odds with Trump, who is back to opposing H-1B visa expansion and who should be a natural supporter of independent inventors for a variety of reasons.