There will be some unseen players at the table this week if the Senate Judiciary Committee takes up patent transparency legislation meant to quash what are popularly known as “patent trolls,” companies that make it their business model to acquire patents and then file infringement lawsuits against other companies, thereby often reaping lucrative license fees.
Of the 18 members of the committee, 16, or 88 percent, count entities that lobby on the issue as at least one of their top ten lifetime donors, according to an analysis of campaign finance and lobbying records by the Sunlight Foundation. (See table below.)
This list of top donors look like a who’s who of companies and organizations that have been lobbying on the highly technical—and controversial—issue of patent reform and represent a wide range of industries, from General Electric to Pfizer to Time Warner. Intellectual Ventures, which has been held up in media reports as the poster company for patent trolls, makes the list, as does the American Association for Justice, a group representing trial attorneys that has been opposed to the legislation.
But these donors are not by any means monolithic in their positions on the issue, which has created many odd bedfellows and alliances over highly nuanced language about the conditions under which such lawsuits can and should be pursued. The issue has garnered attention from all branches of the government–Congress, the White House, the agencies, and in recent decisions by the Supreme Court.
The push for legislation has followed the rise in such patent lawsuits by “patent assertion entities” (a more polite term for patent trolls) in recent years, which are criticized as hurting innovation and creating a hostile environment for tech startups in particular, but are also a problem for big business. But some institutions–such as universities, which tend to own a lot of patents–have argued against aspects of the legislation, saying that it goes too far and could prevent inventors from protecting their handiwork.
Also in the fray are groups such as Public Knowledge and the Electronic Frontier Foundation, fierce advocates for patent reform, as well as the Eagle Forum, the American Conservative Union, and other conservative groups, which are opposed.
Because so many different kinds of businesses with varying interests are impacted and weighing in, the influence picture is reminiscent of other legislative battles that proved to be a boon to lobbyists and an evergreen source of campaign cash for politicians, such as Dodd Frank financial reform and the Affordable Care Act. In the first three months of 2014, federal lobbyists disclosed working for 385 clients tracking copyright, patent, and trademark issues, according to OpenSecrets.org; in all of 2013, that number was 420, higher than any other year since 1998 save 2011, when Congress approved the America Invents Act, which also changed patent law.
Among members of the Senate Judiciary Committee, Sen. Sheldon Whitehouse, D-R.I., has two top donors who are officially lobbying on the issue. Intellectual Ventures is one of them, with executives giving him more than $35,000 over the years. Though the company does not show up as a top donor to other members of the committee, its executives have nevertheless been generous to them, including Chairman Patrick Leahy, D-Vt., $28,400; Dick Durbin, D-Ill., $39,200; and Orrin Hatch, R-Utah, $21,800, according to Influence Explorer.
Founded by former Microsoft executive Nathan Myhrvold, the company, which describes itself as “one of the largest global patent holders in the world,” has been involved in numerous legal actions against companies who it claims are violating the terms of its patents. Intellectual Ventures says it provides a needed service for business ventures seeking to innoculate themselves from such threats, by licensing and selling patents. Indeed, some big tech companies, such as Microsoft and, in the past, Apple, have invested in the company’s patent acquisition activities, thereby earning themselves low cost access to licenses.
Sen. Whitehouse is a cosponsor of S. 1720, introduced by Leahy, the original version of the Senate patent transparency legislation. When asked why the company supports the senator, lobbyist Russell Merbeth said the “calculus is fairly dynamic and complex,” and that a given lawmaker may support the company on one issue and not another. He also added that Intellectual Ventures “did not have a problem” with some aspects of the original bill.
Numerous ad hoc coalitions have sprung up around the issue of patent reform. The Coalition for 21st Century Patent Reform represents Eli Lilly, General Electric, General Mills, and Pfizer, all of which rank among top donors to Judiciary Committee members. The group seeks patent reform in a “balanced fashion that protects both the interests of the creators of new technological innovations and users of these innovations.”
Earlier this month, some of these same companies, Pfizer and General Electric among them, along with Apple and others, formed the Partnership for American Innovation, which is working to “protect IP,” or intellectual property. The Coalition for Patent Fairness counts Google among its largely high tech members, which argues that “abusive litigation is killing small companies, chilling employment and growth of all companies, and stifling the economies of a wide range of industries nationwide.”
The Innovation Alliance,, which includes Qualcomm and Dolby Laboratories among its members, has in recent weeks been running advertisements in the nation’s capital against the legislation, according to Political Ad Sleuth.
Among other groups of high-powered companies and organizations that have weighed in on the issue are the American Bankers Association and other banking trade associations, university associations and retail associations.
Leahy has already delayed the bill several times as he works to cobble together a version that will gain the committee’s support, which is proving a tricky task. In December, in a rare showing of bipartisan comity, the House muscled through its version of the legislation, the Innovation Act, in less than two months.