Patent Reform Opponents Find Support from Unions

Opponents of legislation that would overhaul the U.S. patent system have enlisted new allies who may cause majority Democrats in Congress to rethink their support of the proposals.

Since late July, three labor unions -- the AFL-CIO, the International Federation of Professional and Technical Engineers (IFPTE), and the United Steelworkers -- have sent letters to lawmakers saying they oppose two current patent reform bills. Patent reform opponents say they hope their alliance with organized labor, which has a long history of supporting Democrats, will stall the legislation.

But representatives of large tech vendors that are pushing for patent reform say they're confident there will be support for the legislation when Congress returns from summer recess in early September. The committees in both the Senate and the House of Representatives approved versions of a sweeping patent reform bill in July, and House leaders have targeted the patent reform bill for passage by the end of the year.

"I think the momentum exists for this thing to move forward," said Joshua Ackil, vice president of government relations for tech trade group the Information Technology Industry Council (ITI). "As folks [in Congress] dive in a little deeper on this issue, they will come around and understand how important patent reform is to the tech sector."

In recent sessions of Congress, then-majority Republicans were tugged in two directions when they focused on patent reform bills similar to ones introduced in the current session of Congress. Several high-profile Republicans pushed for patent reform, and won praise from many large tech vendors, but the Republican friendly pharmaceutical industry was staunchly opposed to the bills.

By enlisting labor unions, patent reform opponents are trying to put Democrats "in the same situation the Republicans were in," said Ronald Riley, president of the Professional Inventors Alliance, which represents small inventors. Riley's group, along with the American Ingenuity Alliance and other groups, have focused getting unions to back their cause in recent months.

Riley portrays patent reform as enabling large tech vendors to steal the ideas of small inventors. "We're tired of these transnationals ripping off our people's work," he said. "We're just warming up."

Tech vendors including Microsoft Corp., IBM Corp., and Cisco Systems Inc. have argued that the U.S. Patent and Trademark Office (USPTO) too often approves questionable patents, and that it's too easy for patent holders to sue, collect huge damages and shut down product lines that have a small infringing piece. In many cases, patent lawsuits are brought by companies that make all their money by owning patents, critics have said.

Cisco spends US$45 million a year defending itself against patent lawsuits, Matt Tanielian, director of government relations for the company, said during a forum in June. "There's a lot of bad patents out there," he said. "When you get sued, you ought to get a fair shake."

The letters to Congress from the AFL-CIO and the United Steelworkers focused on two controversial sections of the patent reform legislation in both the House and the Senate. The two groups objected to the way the legislation would change how courts apportion damages when a company is found to infringe a patent.

Currently, courts generally consider the value of the entire product when a small piece of the product infringes a patent, but supporters of the bills want Congress to base damages only on the value of the infringing piece.

The groups also questioned how the legislation would allow a new way of challenging patents after they're issued, called post-grant review. The bills would allow companies sued for patent infringement a new way to file challenges with USPTO.

Representatives of the of the AFL-CIO and United Steelworkers didn't return messages or declined to comment on their recent interest in patent reform. But the AFL-CIO letter alluded to recent efforts of the U.S. government and the U.S. tech industry to prod China to strengthen its intellectual property protections.

These two changes "may have a negative impact on innovation and research," the AFL-CIO letter said. "At a time when the Chinese government is constantly being challenged to live up to its intellectual property obligations, we do not want to take actions that may weaken ours."

The United Steelworkers letter said nearly 70 percent of patents filed in the U.S. come from manufacturing firms. "These bills would allow an endless loop of legal challenges after patents are awarded that will make it more difficult for U.S. patent holders to prevail against frivolous challenges," the letter said.

ITI's Ackil and representatives of two other tech groups said they doubted the unions' opposition would kill patent reform, although Ackil acknowledged that "anyone should be concerned" with opposition from large labor groups.

Ackil and a representative of another tech trade group, who spoke on background, questioned the depth of the opposition from the labor unions. "The AFL-CIO has been nowhere on this issue for three years," Ackil said.

Democrats knew of the labor concerns before the House Judiciary Committee approved the patent reform bill, added a spokesman for Representative Howard Berman, a California Democrat and primary sponsor of the House patent bill.

"We're working now to try to understand and deal with any concerns labor may have," said spokesman Gene Smith. "We think that labor will not be opposing the bill when it comes to the floor soon after the House returns from recess."

But the labor opposition could lead to changes in the bills, said Bill Mashek, a spokesman for the Coalition for 21st Century Patent Reform, a group that has opposed parts of the current patent bills.

"Labor's voice in the debate is significant and influential," Mashek said. "It shows, in our view, that the bill needs further work to ensure that U.S. manufacturing and innovators have the incentives to invest and develop new products. The concerns of ... organized labor resonate with members across the country and of all political stripes."