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PATENT Act is almost there, but not quite

L to R: Sens. Chuck Schumer (D-NY), Chuck Grassley (R-Iowa), Patrick Leahy (D-Vt) L to R: Sens. Chuck Schumer (D-NY), Chuck Grassley (R-Iowa), Patrick Leahy (D-Vt)

The Senate bill to combat abusive patent troll practices that was unveiled with big fanfare last week and put on the fast track, may be put through a few more paces before it gets out of committee.

Despite enthusiasm on display during a judiciary hearing Thursday from chairman Chuck Grassley (Iowa), ranking member Patrick Leahy (Vt.), and the five other Senators that worked on the PATENT Act, other committee members asked for a little more work on parts of the bill.

Thursday’s hearing was the second Senate hearing held this Congress on patent reform. Because the bill’s history goes back two years, a lot of the work has been done. So if lawmakers can work out the kinks, the bill is likely to go to a mark up as soon as before the Memorial Day break, committee staffers said.

Patent assertion entities, companies that don’t produce any product or provide any services, have come under attack for asserting patents using vaguely-worded mass mailings and shell companies to force companies large and small to pay license fees. Because it’s often cheaper and easier to settle, many companies don’t litigate.

The number of NPE (non-practicing entity) cases continue to grow, from 640 in 2009 to 2,791 in 2014, according to new data from RPX, a company that helps companies reduce the costs and risks associated with NPE patent litigation. Last year, NPEs cost companies $12.2 billion in legal, settlement or judgment costs, up 18 percent each year from 2009 to 2014. On average, a company pays about $5.6 million to resolve a dispute.

The PATENT Act would establish uniform pleasing standards, give defendants clearer notice of the claims against them, and requires more transparency from those bringing lawsuits. It also places stricter standards on demand letters, and clarifies that enforcement of sending deceptive demand letters is covered by the Federal Trade Commission’s unfair and deceptive practices authority.

The bill has broad support from a diverse group of businesses, including retailers, restaurants, app developers, tech companies, advertisers and agencies.

But a few groups, like life-sciences and biotech, still have some problems with the bill that they believe cripples legitimate holders of patents. Lawmakers hope to work on a compromise before the mark-up that addresses abusive filings of inter pares reviews at the U.S. Patent and Trademark Office.

Sen. Chris Coons, who has a more targeted bill called the STRONG Patents Act, criticized the PATENT Act because it would treat all patent holders the same. “It changes the rules for all patent holders; we can make the distinction [from patent trolls] and we must,” he said.

After coming so close to getting a bill to the floor last year, there’s a sense of urgency to get something done this year.

“This isn’t yesterday’s patent bill. It’s different; we’re going to get it done,” said Sen. Chuck Schumer (D-N.Y.), a co-sponsor of the PATENT Act. “We can’t allow future Googles, Facebooks to be snuffed out by parasitic [patent] trolls,” he said.

“We’ve worked very hard to get where we are today. We’re not at the finished line but we’re a lot closer. I realize we are not done,” said Sen. John Cornyn (R-Tex.), one of the co-sponsors of the PATENT Act.