WASHINGTON (Legal Newsline) - At least one piece of federal legislation aimed at combating so-called patent "trolls" will have to wait until later this year.

U.S. Sen. Patrick Leahy, the sponsor of the Patent Transparency and Improvements Act, removed the bill from the Senate Judiciary Committee's calendar in May.

Leahy, D-Vt. and head of the committee, cited the lack of broad bipartisan support for Senate Bill 1720.

He also noted that many of the proposals under the bill would overly burden "legitimate patent holders who employ thousands of Americans."

"We have been working for almost a year with countless stakeholders on legislation to address the problem of patent trolls who are misusing the patent system. This is a real problem facing businesses in Vermont and across the country," he said.

"Unfortunately, there has been no agreement on how to combat the scourge of patent trolls on our economy without burdening the companies and universities who rely on the patent system every day to protect their inventions."

Leahy continued, "We have heard repeated concerns that the House-passed bill went beyond the scope of addressing patent trolls, and would have severe unintended consequences on legitimate patent holders who employ thousands of Americans."

A bill won't pass until there is support from both sides of the issue, the senator said.

"Because there is not sufficient support behind any comprehensive deal, I am taking the patent bill off the Senate Judiciary Committee agenda," he said.

"If the stakeholders are able to reach a more targeted agreement that focuses on the problem of patent trolls, there will be a path for passage this year and I will bring it immediately to the committee."

He said he hopes lawmakers are able to return to the issue this year.

This isn't the first setback for the federal legislation.

In April, Leahy put his bill on hold until after the spring recess, calling it a "complex issue" and saying lawmakers needed additional time to draft the "important provisions that have been the subject of discussion."

Those provisions focused on fee shifting, which requires the loser to pay the winner's legal fees.

Action was delayed on the legislation three other times previously.

Under S. 1720, the person or organization that holds the patent and files an action in federal court would've had to disclose any and all persons that have a financial interest in the proceedings, or that could be affected by the outcome.

And similar to other measures that have been circulating on Capitol Hill, the bill targeted the widespread sending of frivolous "demand letters."

More specifically, Leahy's measure would have empowered the Federal Trade Commission to consider such letters an "unfair and deceptive act or practice."

S. 1720 also allowed cases against customers who are sued for patent infringement to be stayed while the manufacturer litigates the lawsuit.

The bill also would have provided additional resources for small businesses that are targeted in patent infringement lawsuits, and it called for various studies to be done by the U.S. Patent and Trademark Office, among others.

Michael Meehan, spokesman for the Main Street Patent Coalition, a non-partisan group that is pushing for an end to patent trolling, said the failure of committee members to pass legislative reform means millions of small businesses will continue to be "at the mercy of trolls."

"We are disappointed that the Senate Judiciary Committee couldn't get the job done," he said. "The choice of special interests over small businesses was the wrong decision, but we aren't giving up the fight."

Overstock.com, a discount online shopping retailer that sells furniture, bedding, electronics, clothing and jewelry, also lamented Leahy's decision to hit the brakes.

CEO Patrick M. Byrne said the bill would have "put a stake in the heart of abusive patent trolls and restored order to the nonsensical patent litigation system, which today inhibits innovation."

The company, which has fought its fair share of patent trolls, argues that the legislation would have meant relief for many business owners and the economy.

"That's real money and real lost jobs and lost opportunities," said Jonathan Johnson, Overstock.com's chairman and former general counsel.

"Tens of thousands of companies have called for reform, and millions of jobs and large sections of the economy depend upon it."

Others contend holding off on the legislation was the right thing to do.

"The removal of this bill from the Senate Judiciary Committee schedule should remove some of the uncertainty that has been clouding our industry," said Anthony Hayes, CEO of Spherix.

"Spherix is committed to responsibly protecting the patents it owns, and we remain eager to work with companies large and small to reach fair agreements."

According to its website, Spherix, launched in 1967 as a scientific research company, draws on portfolios of "pioneering technology patents" to partner with and support product innovation.

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

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