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Patent Bill Unites Past Enemies

Measure Still Faces Tests in House, Senate

Tom Williams/Roll Call
Sen. Tom Coburn might decide to block a House GOP deal on patent reform that allows spending panels to control the Patent and Trademark Office’s finances.

Well, that didn't take long.

Two weeks ago lobbyists for banks and retailers were waging rhetorical "cage matches" over debit card swipe fees. Now, they are holding hands on patent reform in advance of a key vote.

With an overhaul of the nation's patent system expected on the House floor as soon as today, the National Retail Federation sent a letter Tuesday to lawmakers in support of a bank-friendly provision aimed at rooting out bad patents.

"Banks sometimes are retailers, too," said David French, the chief lobbyist for the NRF, the world's largest retail trade association. "This is Washington; we know we have fights. Sometimes we are with people, and sometimes we are against them."

The provision, which applies to patents on business processes used by the financial services industry such as check-scanning practices, would allow banks charged with patent infringement to demand a government review of the patent's validity. It's one of several contentious elements in what was expected to be a noncontroversial makeover of the patent system.

But retailers, from McDonald's to Match.com, have also been sued for infringing on these kind of patents, which they describe as low-quality patents held by nonpracticing entities.

In the letter sent to House Judiciary Chairman Lamar Smith (R-Texas) and ranking member John Conyers (D-Mich.), French noted that the technologies are used in merchants' marketing, payment and customer service practices.

For months, the Financial Services Roundtable, the Independent Community Bankers of America and other financial trade groups have been leading the fight for the provision, known as Section 18, arguing it is necessary to deal with a spate of "business-method" patents
inappropriately issued earlier in the decade for practices that were already widely in use.

But when lobbyists for a few of these patent holders began to gain traction with lawmakers on both sides of the aisle, the financial services industry reached out to retailers ­ still glowing from their major victory on the swipe-fee vote for help.

An amendment sponsored by Reps. Aaron Schock (R-Ill.) and Maxine Waters (D-Calif.) striking Section 18 from the bill is expected to come up for a vote today on the floor. Lobbyists on both sides spent the week making their final case to lawmakers and reporters, with business-method patent holders arguing that the provision amounts to an earmark for big banks, which stand to save millions of dollars in patent-infringment fees if it becomes law.

But for all the lobbying and controversy surrounding Section 18, another roadblock in the form of Sen. Tom Coburn (R-Okla.) could stand between patent reform and president's pen.

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