Why The Trial Lawyers May Have Miscalculated In Killing Patent Reform, And How It May Come Back To Bite Them

from the better-patent-reform-next-year dept

Wed, May 28th 2014 8:30pm — Mike Masnick

As we noted last week, it was really the trial lawyers (with some help from pharma) that killed patent reform. While patent trolling operations and some big legacy companies with giant patent portfolios had been fighting against patent reform all along, they weren't responsible for killing it outright. In fact, in talking to many people involved, the same story comes up again and again: pretty much everyone was negotiating on a deal -- and, at the last minute, the trial lawyers called Harry Reid, who told Leahy to kill the bill. Joe Mullin quotes a tech industry lobbyist who notes that "I feel like a mouse who never knew he was a mouse," and that despite all the negotiating, the trial lawyers just put an end to it:

"We felt really good the last couple of days," said the tech lobbyist. "It was a good deal—one we could live with. Then the trial lawyers and pharma went to Senator Reid late this morning and said that's it. Enough with the children playing in the playground—go kill it."

Some have asked why trial lawyers (rather than patent lawyers) were so against it, and the key thing is that the trial lawyers don't want anything to do with fee shifting. They fear, greatly, that if fee shifting is shown to be effective in patent cases, it will then make it easier to spread to other types of cases. This isn't a huge surprise. Nearly a year ago, a high ranking Democratic Congressional staffer told me flat out that "fee shifting has to be off the table" because "the trial lawyers will never allow it." I was actually surprised that it stayed in the bill as long as it did.

But here's the thing: having the trial lawyers kill the bill outright may be incredibly shortsighted. That's because this bill was already pretty weak overall. All that "bipartisan negotiating" and lobbying pressure from patent trolling operations (and big tech firms who didn't want to lose the ability to exploit giant portfolios of bad patents) had basically weakened this bill drastically already. Even the fee shifting was pretty limited and unlikely to have a huge impact.

But the problem of patent trolls still remains.

And here's the big thing. The Republicans are very much in favor of patent reform, and many prognosticators expect the Republicans to take control of the Senate in this year's elections. As lawyer Matt Johnson points out, with the Republicans in control over both houses, much stronger patent reform might go through in the next Congress, and there won't be much the trial lawyers will be able to do about it. Republicans aren't known for bending to the whims of trial lawyers.

In the interest of making a deal with Democrats this year, Cornyn offered major concessions on fee-shifting, heightened pleading, and discovery abuse during his negotiations with Sen. Chuck Schumer (D-NY). Those concessions won’t necessarily be on the table next year in a GOP-controlled Senate. And House Judiciary Chairman Bob Goodlatte may similarly be unmotivated to make concessions with Democrats in his chamber. Moreover, the trial bar certainly can’t count on the President to be a backstop. President Obama has championed many of the litigation reforms they oppose, including loser-pays and heightened pleading standards.

Reform opponents made the calculation that they’ll take their chances in 2015 rather than swallow a bipartisan compromise this year.

As he says, "this year’s Schumer-Cornyn deal is probably as good as it gets" for those looking to limit patent reform. Next year, the trial lawyers may be able to call Harry Reid, but it might not matter at all.

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Filed Under: congress, harry reid, patent reform, patent trolls, patents, patrick leahy, trial lawyers

27 Comments

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vegetaman (profile), 28 May 2014 @ 8:55pm

It never ceases to amaze me how when some group or lobby gives a sliver of the pie, the lengths they will go to so that they don't have to give it up. Reminds me of listening to my local congressman talk a few years ago, where he said:

"Everybody always calls and tells me that we need to cut government. And in the next breath, says why this or that thing shouldn't be cut or should get an increase."

Of course, we're used to it in Illinois, too. We had a "temporary" state tax increase recently so the state could (attempt to) pay off some of its many late bills and IOUs.

Well, guess what, the state is still bleeding red ink (and I'm not even sure they paid off all of the IOUs), and so they want to make said tax increase permanent. They didn't cut anything of note, and the budget ballooned again, and the money was likely squandered. Which many of us cynically assumed was the plan all along, anyway.

In a somewhat related story, if anyone believes in the altruism of any lobbying group or politician, then I've got this here bridge for sale...
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Whatever, 28 May 2014 @ 9:34pm

Sounds more like...
This story sounds more like the "tech lobbyist" didn't get what they wanted, so it's sour grapes and hearsay as to what else happened. The first rule of compromise is that everyone has to be onboard, or nothing happens.
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David, 28 May 2014 @ 10:47pm

Fee shifting is one coffin nail for star lawyers
When you do fee shifting, fees *have* to be passed through the court and its discretion. Usually that means that standard rates and reasonability are applied.

With "everybody pays", the limiting factor is what one stands to lose without the lawyer in question, and the awards in the U.S. justice system, particularly in patent cases, are insane. With "loser pays", the limiting factor is the work being done, at least without extra "bonus" arrangements.

With standard rates and "loser pays", there can be a working business for legal insurance to private persons and small business since, as long as they don't engage in serial dubious litigation, there is a reasonable chance of recovering court costs for the insurer. If affordable competent defenses are to be feared on a regular basis, serial threats of litigation, a nice barely-in-court-before-settling money-making scheme involving trial lawyers becomes less workable.
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Anonymous Coward, 28 May 2014 @ 11:52pm

Re: Sounds more like...
So if a "tech lobbyist" suggests something everyone has to be onboard, but when it comes to SOPA and TTIP, secrecy and calling everyone else a pirate is acceptable? Really?
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Andypandy, 29 May 2014 @ 2:29am

Bribery,"i mean legally paying to pass a law"
Republicans will not pass anything unless they are paid to do so, they are the same as the Democrats, I don't see how things are going to change when the lobbyists come along with their pot of gold for the people they want to influence.
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G Thompson (profile), 29 May 2014 @ 2:49am

Re: Sounds more like...
Let me guess... you're an ambulance chaser who hates the idea of tort reform having fee shifting (loser pays) included ever..
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Ninja (profile), 29 May 2014 @ 3:15am

Republicans aren't known for bending to the whims of trial lawyers.

Money can fix it for sure.
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any moose cow word, 29 May 2014 @ 5:09am

Re: Bribery,"i mean legally paying to pass a law"
Wish I could vote for this more than once, but had to settle for voting insightful and funny. It's funny, and yet sadly true.
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mdpopescu (profile), 29 May 2014 @ 5:22am

Re: Bribery,"i mean legally paying to pass a law"
Agreed... as a non-American, it seems insane to me that Americans made bribery legal. Is this the case in other countries? (I know bribery exists everywhere - I'm asking about it being legal.)
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Anonymous Coward, 29 May 2014 @ 5:43am

Re:
I think that many who express concern about government largess actually are expressing concern about corruption rather than public service. I doubt anyone would stand up and claim that pot holes do not need to be filled.
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Anonymous Coward, 29 May 2014 @ 5:44am

Re: Re: Sounds more like...
Yes, that is the way of their "one way street" world.
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Anonymous Coward, 29 May 2014 @ 5:49am

Re: Fee shifting is one coffin nail for star lawyers
"Usually that means that standard rates and reasonability are applied."

reasonability, lol - good one

" there can be a working business for legal insurance to private person"

This is insane, therefore I'm positive it will become a reality.

"a nice barely-in-court-before-settling money-making scheme involving trial lawyers becomes less workable."

What have you been smoking?
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Anonymous Coward, 29 May 2014 @ 5:54am

Re: Re: Bribery,"i mean legally paying to pass a law"
What is really funny is to watch the political hacks wag their fingers at other countries rambling on about how corrupt those countries are and then see the speaker of the house pass out money filled envelops just prior to voting on a bill.

Corruption seems to be a universal human trait some are better at hiding it than others.
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Anonymous Coward, 29 May 2014 @ 7:20am

Re: Sounds more like...
Actually this story makes a lot of sense, because 'Loser Pays' is a very big deal to the trial lawyers. There is no question there would be a lot less work for them if low probability suits never happened on account of the risk entailed with loser pays.
Furthermore, not only would there be fewer questionable suits initiated, there would also be quicker settlements by those who knew they were at fault.
Anyone whose ever been involved with the legal profession knows that "quicker settlements" is not their objective. The longer the process takes, the more money is made by every lawyer on both sides of the dispute.
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Anonymous Coward, 29 May 2014 @ 7:25am

Re: Re: Fee shifting is one coffin nail for star lawyers
" there can be a working business for legal insurance to private person"

This is insane, therefore I'm positive it will become a reality.

It's quite standard in Germany where loser-pays-all is in effect. Legal insurance is big business, with several of the large players being household names frequently advertising on billboards and TV.

From there, the U.S. court system looks like one of the nuttier derailings from sense and proportion the States have on parade.
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Anonymous Coward, 29 May 2014 @ 7:41am

Elections are never a sure thing
Elections are never a sure thing.

It looked impossible for Republicans to not win back the senate in 2012, or at the very least gain some seats. Democrats had twice as many seats up for grabs. Yet democrats managed to expand their majority by 2 seats.

Never under estimate the ability of political parties to screw things up.
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David, 29 May 2014 @ 7:43am

Re: Re: Re: Bribery,"i mean legally paying to pass a law"
Nobody's hiding it. Like genocide, torture, global surveillance, denial of due process, bombs and grenades on civilians for fun and other war crimes, massive judicial overreach: bribery is bad when others do it. Rich Americans are entitled to buy more with their money than food and accommodation.

Why would you want to become a billionaire if you cannot buy the law, politics, power, and injustice?

Do you want to return to the dark ages where a Rockerfeller, in spite of all the fights his forefathers engaged in in the succession and tradition of the pioneers toiling to take the Land of Hope and Glory from savages not fit to exploit it and their fellow human beings, is denied the benefits of his heritage? The dark ages where men are created equal, where the court is a human institution that makes a pauper the equal of a Rockerfeller, the stupid man the equal of an Einstein and the ignorant man the equal of any college president?

America's prosperity relies on the dollar, and there is no other currency suitable for not just buying bread and a roof over your head, but also education, politicians, legislation, law-making as well as law-rendering, and influence, power, death and destruction.

This is what the dollar stands for, and what the U.S. has readily available on offer.

It does not hide it, it is proud of it and parades it. It is what makes the U.S.A. unique and morally superior to all the envious curd eaters it plasters with death raining from the skies.
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David, 29 May 2014 @ 7:56am

Re: Elections are never a sure thing
Well, how are the Republicans supposed to win back the senate in 2012 if Obama positions himself so far to the right that further right is just the loonie bin? And it's not like he has not already a foot and elbow in there, too.

So the Republicans decided to nominate the Antidemocrat in the hope to have everybody think "anything but Obama". Well, except for Romney.

I am not surprised that the Republicans did not make it. But what is just disgusting is that in spite of both political parties fighting for the loonie bin, no other party got even half a foot in the vast space of sanity that the two major parties chose to leave barren.

"Liberal" is still a smear word in the U.S.A., but there are as many liberals to be found in the political landscape as there are giants coursing La Mancha.
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madasahatter (profile), 29 May 2014 @ 8:05am

Re: Re:
Its not always corruption. Many legally benefit from various government programs. The problem is often poorly designed programs taking a life of their own. Combine this with agencies whose original, primary statutory mission is long done but still linger and there is plenty of waste.
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madasahatter (profile), 29 May 2014 @ 8:14am

Re: Re: Sounds more like...
Loser pays is the default mode in many countries. The loser pays both sides' legal fees plus penalties.

Where this hurts trial lawyers is not the typical auto accident case which does not go to court but with the larger suits that are too expensive for the defendant to properly pursue. Fee shifting tells the defendant, if you have strong case and win the other side forks over your legal fees. Defendants with weak cases will still fold but many with solid cases will stand their ground and win.

The trial lawyers know many can not afford the cost of a successful defence and indirectly use the legal fees as a form of extortion.
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John Fenderson (profile), 29 May 2014 @ 8:17am

Loser pays is even more important
One of the major problems with the court system these days is that it's really only available to the wealthy or those with access to a substantial pile of money. This is the source of a huge amount of injustice, as taking someone to court can ruin them even if the ruling goes in their favor. This is the hook that patent trolls hang their hats on -- not to mention all sorts of other badnesses.

In my opinion, getting a loser pays system is even more important than patent reforms.
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Anonymous Coward, 29 May 2014 @ 9:06am

Re: Sounds more like...
The divorcing couple both want exclusive custody of the child, therefore let's compromise and cut the child in half
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staff, 30 May 2014 @ 7:37am

more dissembling by Masnick
'Why The Trial Lawyers May Have Miscalculated In Killing Patent Reform'

Nonsense. All you know about patents is...you don't have any.

Just because they call it �reform� doesn�t mean it is.

http://www.npr.org/player/v2/mediaPlayer.html?action=1&t=1&islist=false&id=276448190& amp;m=276545654&live=1
http://www.npr.org/2013/11/06/243022966/secret-persuasion-how-big-campaign -donors-stay-anonymous

�patent reform��America Invents Act, vers 1.0, 2.0, 3.0�

�This is not a patent reform bill� Senator Maria Cantwell (D-WA) complained,
despite other democrats praising the overhaul. �This is a big
corporation patent giveaway that tramples on the right of small
inventors.�

Senator Cantwell is right. All these bills do is legalize theft. Just because they call it �reform� doesn�t mean it is. The paid puppets of banks, huge multinationals, and China continue to brain wash and bankrupt America.

They should have called these bills the America STOPS Inventing Act or ASIA, because that�s where they�re sending all our jobs. The present bill (vers 1, 2, 3, etc) is nothing less than another giveaway for huge multinationals and China and an off shoring job killing nightmare for America. Even the leading patent expert in China has stated these bills will help them steal our inventions.

Patent reform is a fraud on America. These bills will not do what they claim they will. What they will do is help large multinational corporations maintain their monopolies by robbing and destroying their small entity and startup competitors (so it will do exactly what they paid for) and with them the jobs they would have created. They have already damaged the US patent system so that property rights are teetering on lawlessness. These bills will only make it harder and more expensive for small firms to get and enforce their patents. Without patents we cant get funded. In this way large firms are able to play king of the hill and keep their small competitors from reaching the top as they have. Yet small entities create the lion�s share of new jobs. According to recent studies by the Kauffman Foundation and economists at the U.S. Census Bureau, �startups aren�t everything when it comes to job growth. They�re the only thing.� Meanwhile, the large multinationals ship more and more jobs overseas. These bills are a wholesale destroyer of US jobs.

Small entities and inventors have been given far too little voice on this bill when one considers that they rely far more heavily on the patent system than do large firms who can control their markets by their size alone. The smaller the firm, the more they rely on patents -especially startups and individual inventors. Congress and Obama tinkering with patent law while gagging inventors is like a surgeon operating before examining the patient.

Those wishing to help fight big business giveaways and set America on a course for sustainable prosperity, not large corporation lobbied poverty, should contact us as below and join the fight as we are building a network of inventors and other stakeholders to lobby Congress to restore property rights for all patent owners -large and small.

for a different/opposing view on patent reform, please see�
http://truereform.piausa.org/default.html
http://piausa.wordpress.com/
http://washingtonexaminer.c om/patent-reform-like-most-reforms-in-the-end-benefits-the-biggest-guys-with-the-best-lobbyists/arti cle/2524033
http://www.hoover.org/publications/defining-ideas/article/142741
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John Fenderson (profile), 30 May 2014 @ 10:10am

Re: more dissembling by Masnick
I see lots of opinionating in there, but not a single explanation of why you reached that opinion, let alone any supporting arguments. What, specifically, is your objection to the bill?
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G Thompson (profile), 30 May 2014 @ 10:11pm

Re: Re: Sounds more like...
Or here's a unique concept... work on the 'best interest model' for the child and determine what the child needs NOT what the parents need and make it an order that they BOTH need to obey.

what a concept hey?
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Pragmatic, 1 Jun 2014 @ 1:45pm

Re: Re: Elections are never a sure thing
^This. "Liberal" and "socialist" are interchangeable in some circles these days and both of those words are interpreted by those people to mean "terrorist."

When our national political well becomes so poisoned that people feel obliged to join Red Team or Blue Team for safety in numbers, something is wrong.

Let's start talking about other parties well in advance of 2016. Maybe, just maybe, we'll get some of them elected.
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Pragmatic, 1 Jun 2014 @ 1:48pm

Re: more dissembling by Masnick
property rights for all patent owners -large and small.

That's your problem, right there. Patents and copyrights were NEVER intended to be treated as property. That's why it says, "For a limited time" in our Constitution. You know, the document on which our nation was founded. THAT Constitution.

Read it, know it, love it.
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