Silicon Valley Raises Voice on IP Reform

image: Digital Vision

Silicon Valley's most powerful lawyers crowded into Symantec Corp. CEO John Thompson's tony Woodside, Calif., home on Feb. 17 for a fundraiser for a Vermont senator -- and it wasn't because they've suddenly become interested in maple syrup.

Sen. Patrick Leahy, chairman of the Senate Judiciary Committee, is expected to reintroduce a patent reform bill as early as today, according to people familiar with the matter. So it's no surprise that a who's who of tech general counsel -- Cisco Systems' Mark Chandler, Intel's Bruce Sewell, Google's Kent Walker -- and a phalanx of patent litigators paid $1,000 to down wine and hors d'oeuvres with the senator. A small group, committed to raising $10,000 for Leahy, got to stay for dinner.

"He's chair of the judiciary committee, and patent reform is an area of great interest to Silicon Valley," explained Mark Lemley, a Stanford Law School IP professor, who was in attendance, but didn't stay for dinner.

Silicon Valley's influence in Washington, D.C., has grown significantly and will likely be felt when the patent reform bill, expected to be similar to last year's version, is reintroduced. Big high-tech companies, like Cisco and Google, have pushed for the legislation that would limit the power of patents in the courts; the companies claim they are victims of too many expensive patent infringement suits.

On the other side of the debate, pharmaceutical companies that invest heavily in patenting their drugs, and local tech companies like Rambus and Tessera that rely on licensing patents for their revenues, have opposed past versions of the bill that they say would water down patent holders' rights too much.

"We're still very concerned about a bill that may weaken the patent system," said Taraneh Maghame, Tessera's patent policy and government relations counsel, who did not attend the fundraiser. "We want to make sure that certain interests are not promoted over others."

David Carle, a Leahy spokesman, said the Vermont Democrat has a long history of dealing with Internet and technology issues, gaining the moniker "cyber senator." He said the bill -- a several-year effort -- would be introduced "shortly," but referred all other questions to Leahy's chief of staff, who wasn't available for comment.

The main event of the reform bill this go-round will be the debate over damages for patent infringement, according to IP experts. High-tech companies have been pushing for so-called "damage apportionment" -- the idea that inventors shouldn't get outsized payments if just a small component of a many-featured product, like a computer, is infringing on their patent.

Past versions of the bill -- sponsored by Leahy and Utah Republican Orrin Hatch -- have sought to curtail damages, as well as limit the instances when awards can be trebled because of willful infringement.

The contentious issue stalled the bill last year. Sen. Arlen Specter, the ranking Republican on the judiciary committee, pulled his support last April, citing damages as the "principle sticking point." Specter's defiance was cheered by his supporters in the pharmaceutical and biotechnology industries.

"One of the challenges that will be faced by Sen. Leahy is going to be the same issue," said Yar Chaikovsky, a patent litigator with Sonnenschein Nath & Rosenthal who was also at the fundraiser, though not at the dinner. "And it's probably the most important issue left on the table from the perspective of the high-tech industry."

Many of the high-tech industry's other concerns have been dealt with by the courts, patent lawyers say. The U.S. Supreme Court's 2006 decision in eBay v. MercExchange , for instance, made it much harder for plaintiffs to kill infringing products with injunctions.

More recently, in December, the U.S. Court of Appeals for the Federal Circuit issued an opinion that made it easier for defendants in patent infringement suits to transfer out of the Eastern District of Texas, a plaintiff-friendly rocket docket for patent cases. Venue reform had also been an item in previous versions of the bill.

"Most of the real problems identified in [the previous] bills have been solved in the courts," Lemley said.

THE MONEY

The crowd at Thompson's home listened to Leahy talk about patent reform and other tech-related legislation, according to those in attendance. The senator also fielded questions on patent reform without delving into the details of the forthcoming bill, they said.

Last month's fundraiser wasn't the first time that Silicon Valley's tech companies have spent money to get Leahy's attention. His leading donor for the 2008 election cycle was TechNet, a lobbying group that represents companies like Cisco, Google, Intel and Apple. Member companies donated $81,491 to Leahy, according to OpenSecrets.org.

But it's not just patent reform supporters who are lobbying at the federal level. Execs from Intellectual Ventures, the giant Seattle-based patent-holding company, donated more than $10,000 to Leahy in the past two years.

"Many of IV's executives feel strongly about supporting lawmakers who are focusing on issues important to us," said Shelby Barnes, IV's spokeswoman. "Sen. Leahy, as chairman of the committee, falls into that category."

Lemley said Silicon Valley's political involvement is much greater than a decade ago.

"I think if you compare this connection between the Valley and D.C. to 10 years ago, the difference is really dramatic," he said.