Politicians push low quality patent reform bills to extract nuisance value campaign contributions.

Of the many legislative and judicial threads weaving through ten years of patent reform, the maniacal effort to change longstanding law of willful infringement and treble damages shows how twisted patent reform really is. 

First a little background.  If a trial court believes an infringer willfully infringed a patent, the court can award treble damages to the inventor.  An award of treble damages means that damages are tripled.  It is a punitive measure that creates a deterrent by encouraging would-be infringers to license patented technology before they infringe. 

In June 2005, Lamar Smith (TX-21) introduced the Patent Reform Act (H.R.2795).  Section 6(b) sought to significantly alter the law of treble damages for willful infringement.  It created a high burden to prove willful infringement and placed it on the inventor.  Had it passed, the inventor would have to prove by clear and convincing evidence (the highest level of evidence in Federal Court) that an infringer had an objectively reasonable apprehension they would infringe.  In a practical sense, the infringer would have to pretty much admit that they knowingly stole the patented property, and the inventor would somehow have to find that admission and get it into evidence.

Of course, it is possible to find that sort of evidence.  Take a look at this article about a lawsuit against Google.   According to this article and others, Google had googled (read bamboozled) a small company into acquisition talks.  Then suddenly Google stopped talking.  When the small company demanded the return of their technical documents, Google returned them with Post-It notes stuck to the pages presumably written by Google lawyers explaining how to steal the small company’s patented technology and avoid treble damages. 

Unintentional self-incrimination can sometimes happen.  However, as you might imagine, the odds of a willful infringer accidentally disclosing damning evidence are quite small.   If Section 6(b) were to become law, willful infringement would almost never be proven, thus the infringer lobby’s international corporations could steal patented technology at a much lower cost.

But the Patent Reform Act was subject to considerable congressional scrutiny.  The good news is there is a substantial majority in Congress who really does care about what legislation actually does in the real world.  This principled bipartisan majority reasoned that Section 6(b) would levy significant damage on inventors.  Since inventors create the vast majority of new American jobs, passing it would harm job growth and the economy.  Thus the first attempt in Congress to pass Section 6(b) failed.

In April 2007, the Patent Reform Act (H.R.1908) in the House and the Patent Reform Act (S.1145) in the Senate were both introduced.   Both bills included the language of Section 6(b).  Separately in August 2007, the US Court of Appeals for the Federal Circuit (CAFC) decided a willful infringement case called In Re Seagate.  In this case, the CAFC effectively legislated Section 6(b), if not in the exact words, in its spirit and in its effect.  Both Patent Reform Acts of 2007 failed soon thereafter, thus bringing about the second failed attempt to pass Section 6(b) in Congress.

Seagate was a substantial deviation from 35 U.S. Code § 284, the law actually written by Congress, so some in Congress felt it was necessary to codify Seagate now that the CAFC had created new law.  To that end in 2009, Senator Leahy introduced the Patent Reform Act (S.515), which included the language of Section 6(b).  This bill failed, so for a third time Section 6(b) failed. 

Despite being a three-time loser, some politicians tried to push it through again in 2011.  This time the tattered Patent Reform Act was rebranded as the Leahy-Smith America Invents Act (S.23).  After heavy lobbying and a multimillion-dollar public relations campaign, which provided both contributions and political cover, the America Invents Act was passed by a large bipartisan majority. 

However, before the America Invents Act passed, the language of Section 6(b) codifying Seagate was amended out.  It had doomed the America Invents Act so if infringers were going to cash in on the goodies they had written into the America Invents Act, then it had to be removed.  Clearly, Congress did not intend to codify Seagate, and for a fourth time, legislation to eliminate willful infringement treble damages had failed. 

Finally convinced that Section 6(b) would not pass Congress, and with the ink not yet dry on the America Invents Act, Representative Bob Goodlatte (VA-06) introduced the Innovation Act (H.R.3309) in 2013. Notably, it did not include the language of Section 6(b) codifying Seagate.  The Innovation Act died in the Senate and was reintroduced verbatim as the Innovation Act (H.R.9) in 2015, Section 6(b) still missing. 

In June 2016, the Supreme Court decided a case called Halo Electronics v Pulse Electronics.  In keeping with the warped reality that came to characterize patent reform, six Members of Congress, Senators Leahy, Hatch and Bennet and Representatives Goodlatte, Chabot and Lamar Smith, wrote an Amicus Brief asking the Supreme Court to uphold Seagate arguing that it was actually the intent of Congress.

Think about the twisted nature of this for a minute.  Congress is the only government body that writes law, but Congress refused to pass Section 6(b).  The courts cannot write law, but the CAFC effectively wrote Section 6(b) into law in Seagate.  Congress refused to codify Seagate.  In fact, Congress specifically removed language to codify Seagate from the America Invents Act.  Clearly, Congress did not intend Seagate to ever become law.  Finally, in an last ditch effort to preserve Seagate, these six Members of Congress attempted to convince the Supreme Court to uphold Seagate because they disingenuously claimed it was the intent of Congress.  Somehow Congress' failure to put in into the law was supposed to show Congress's intent that Seagate was the law.  

In effect, these six were advocating for Congress to cede its authority to write law to the courts.  The absurdity of this Amicus Brief by sitting Members of Congress should not go unnoticed.

Despite the Amicus Brief, the Supreme Court shot down Seagate stating, in effect, that Seagate’s two-part test did not square with the actual law passed by Congress.  In other words, the CAFC had written new law – legislated from the bench – and the Supreme Court had to explain the constitutional separation of powers to the CAFC.  Lamar Smith’s willful infringement provision first presented as Section 6(b) in the Patent Act of 2005 and passed into law by the CAFC in Seagate was finally and justly eliminated.

This story never seems to stop.  It seems in the upside down world of Washington, legislation doomed to fail for the fifth time can still bring in political contributions.  Politicians just keep pushing low quality legislation to extract nuisance value contributions from Silicon Valley’s international corporations.  And Silicon Valley keeps pouring millions of dollars into Washington to encourage these politicians.  Of course, it is worth the money.  The patent system stays in a state of flux and confusion creating a litigation advantage for the infringers who are paying the politicians. 

According to Open Secrets, Senator Orrin Hatch (R-UT) has collected individual and PAC contributions of $3,377,137 so far in 2016, much of it from the likes of Google, Microsoft, Comcast, Oracle as well as dozens of other international corporate members of the infringer lobby.   

So no one was surprised when Senator Hatch offered an amendment attaching legislation reestablishing Seagate to a spending bill, the Commerce, Justice, Science, and Related Agencies Appropriations Act (H.R. 2578).  The record has unquestionably established that Seagate is bad law.  After all, Congress repeatedly refused to pass it and the Supreme Court overruled it.  But that means nothing to a politician who can extract nuisance value political contributions from Silicon Valley’s international corporations by pushing it.

This is the story of patent reform.  Big money pays politicians to push legislation any way they can for the benefit of big money.