30 Jan
2015

Patent reform will need wide multi-industry support to get on statute books, says former Senate IP counsel

Yesterday we published the first of a two-part interview with Aaron Cooper, former IP and antitrust counsel to Senator Leahy on the Senate Judiciary Committee. Now of counsel at Covington & Burling, Cooper was closely involved in the development of the AIA and has a clear understanding of the legislative process in DC.

In part two of our interview with him, Cooper discusses the debate around fee-shifting, the change in control of the Senate, and achieving a compromise.

Where is the point between Octane and the English system on fee shifting, and can you move within that spectrum comfortably?

Yes, I think you can move within that spectrum – look at the Innovation Act, which had something within that spectrum, Senator Cornyn’s and Senator Hatch’s bills were within that spectrum, and if you look at the original Hatch-Leahy bill from 2006, which led to the AIA, it had a provision within that spectrum.  But I think that is just one of the pieces of the litigation puzzle that is important to work out.  I think it got more attention in the last Congress than it probably deserved.

It gets the attention because Chairman Goodlatte has said it’s his number one priority and Senator Cornyn is not too far behind on that.

Yes, but I mean that it is often viewed as the reason legislation didn’t move forward in the Senate last Congress, and I think that analysis misses the larger picture.  There were several provisions that, as drafted, drew opposition from a variety of industries and universities, which created dynamics that were too difficult to overcome, even in the absence of a fee shifting provision. 

This is the point you made about the three-dimensional nature of any legislative debate - some people see fee shifting as a Trojan horse for the Republican party. What can they do and does it give them a foothold into wider tort reform? So you sort out the retailers if we address the demand letter problem, customer stay, we basically introduce the TROL Act – but there’s a little bit more that we can do which politically is very, very beneficial to us.

I appreciate that argument, but I think ultimately what the members will care about is protecting those companies that see themselves being targeted by someone with a patent that is either invalid or not infringed, and not about broader tort reform issues. Some members may see it as a way into tort reform, but there are fee shifting provisions in all of the federal IP laws right now. And I don’t think that changing how fee-shifting currently works in the patent system - or the trademark system or the copyright system - is going to affect the debate in other areas of the law.

But as a result of what’s happened in patents do you not get a skilled appellate lawyer to bring a case in another area to test it and try to introduce fee-shifting?

Well bringing a case is not going to help because you’re going to need legislation in those areas, and I think that would be just as heavy a lift if the Innovation Act were enacted tomorrow as if it were not. Having stronger fee shifting language may be consistent with Republican principles, but the provisions in the legislation do not extend beyond patent litigation.

I suppose some will argue that if Republicans can get Democrats to vote for fee shifting language in patent legislation then they can later get Democrats to support stronger fee shifting language elsewhere.  But I think that’s not really persuasive or that effective at the end of the day.  You saw a lot of movement from Democrats on fee shifting language in the patent legislation because they see IP as different, and because the IP laws already have fee shifting provisions.  But I don’t think it will bleed over into other areas.

Where will they re-start in the Senate?

So you had several bills tackling different issues last Congress - the Cornyn bill, the Hatch bill, the Leahy-Lee bill - and one of the things that Chairman Grassley will have to do is figure out how to manage that. What Senator Leahy did last Congress was to include in his legislation the issues that were a priority for him: protecting retailers - the manufacturers stay provision and the demand letter provision; transparency; and a couple of clean-up things from the AIA to improve the post-issuance proceedings. And what was important to Senator Cornyn were fee-shifting and pleading standards and discovery issues – and so Senator Leahy suggested that Senator Cornyn take the lead on those; and Senator Hatch took the lead on developing a fee recovery mechanism - with the understanding that, ultimately, the Committee would negotiate a bill that worked for everybody.

I think when you get beyond the Committee consideration of the bill in the Senate, the change of control of the Senate - from Democrat to Republican - is really not going to have a big impact.  There is a lot of commentary suggesting that it will, but there are both Republicans and Democrats in states with companies and universities that employ a lot of people in R&D and in manufacturing that had concerns with some of the legislation, and members are going to want those concerns addressed.   

I think the key to moving legislation – both on the outside with the industry groups and on the inside with the members – is that everybody has to be reasonable and understand that posturing is one thing, but getting legislation to the President’s desk, that can actually help solve problems, requires understanding and addressing other people’s legitimate concerns.

How do you get around the fact that one significant side of the debate, the tech community, felt they didn’t get as much as they should have out of the AIA? So they turn around and say we’re owed one, essentially.

Well, first of all, the way that legislation gets to the President’s desk is not someone saying ‘we’re owed one’.  It’s also not enough to say that because we’ve highlighted a real problem, the fact that other people have legitimate concerns about how the problem is addressed in legislation doesn’t matter, we’re going to roll right over them. That is not a formula for getting the bill to the President’s desk, it just gets them talking points.

But it changes their willingness to compromise.

So that’s why I think it’s important to think of the supporters and opponents of legislation as multi-layered. Your premise is fair that there will be companies that for various reasons – some tactical, some historical – may not want to compromise. But there will be others that want to get the best bill they can to the President’s desk because they really want to see statutory changes and they do not see a pathway forward without making some reasonable compromises. And the key for members on the Hill who really do want to legislate is to harness the interests of those who are willing to be part of a reasonable middle. Otherwise, they are just going to end up with a talking point bill at the end of the day - and I don’t think that is their objective.

The other thing I would say on the AIA is that there was a lot of concern from some companies that are supporting this round of legislation, that the way the post-issuance proceedings – PGR, IPR and CBM – were written, was going to make them so hard to use that they wouldn’t be usable. And some even opposed the legislation as a result, and now they love it; they use the post-issuance proceedings all the time, and it is being used to the point where some people think that it goes too far and needs to be re-balanced.

Companies’ views on legislation and what ends up being helpful to them aren’t always the same, and the key for members on the Hill is to find those companies that can break through the rhetoric and get to people who see incremental change as really useful.

Do you think that the dynamic between pharma/biotech and tech will improve? To the outside world, their interests and the value they attach to patents appear to be going in opposite directions.

But a lot of them came together in the AIA and the important thing is that they are not diametrically opposed. It is not that a tech company thinks that a biotech company is using the patent system in a bad way and vice versa. They’re in different industries; they don’t overlap, and the difficulty is that a change advocated by one industry has unintended effects on the other. If you had that dynamic where they were competitors, then there’s not a whole lot you can do to find a compromise - one side is going to win and one side is going to lose.

Here, there are real concerns being raised by one industry that if addressed wouldn’t harm the other, and vice versa. The disagreements are around how a change in the statute that addresses the concerns inadvertently may harm the other.  That helps make it possible to have a negotiation that leads to provisions that could be helpful to one and not harmful to the other. But they have to want to do it. 

One of the things that then-Chairman Leahy did when we were negotiating the AIA, was to tell industry on both sides that we were going to have a deal.  He would tell supporters of his initial legislation that, despite best efforts, some of the provisions did not have the support needed to pass, but that there’s still a lot of good in the legislation, and we’re going to try to get it done - and that helped get the reasonable, moderate companies to support moving forward. 

If something comes out of the House with fewer than 300 votes – say it’s the Innovation Act again – does that send a message to the Senate then?

I think, if that were to happen, it sends more of a message to industry – when industry on all sides see a bill come out of the house with 325 votes, they see a lot of momentum attached to it.  And if you’re on the winning side of that 325 votes as an industry participant, I think some tend to see no reason to compromise, which is ultimately wrong - it puts your side in a better position to negotiate, but ultimately turning a bill into a law is so difficult to do in the best of circumstances, and if you haven’t reached a compromise that includes the middle, moderate companies, it is nearly impossible because members don’t want to pick sides between industries, especially when there are legitimate concerns out there. If the members who are running the process on the Senate side – Chairman Grassley, Senator Leahy – can go to other senators who are going to have people in their state on all sides of these issues, and they can say “here are the concerns that are being raised, here’s how we try to address them, we can’t address all of them and here’s why”, then I think you have a chance of moving something. Without expanding the circle of people who are going to be OK with legislation, it’s tough to get over the finish line.     

Richard Lloyd

Author | Editor

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