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america invents act, IP, Patent

Did A Banking Lobbyist Just Admit To Buying Its Own Section Of Patent Reform?

The Financial Services Roundtable represents the primary beneficiaries of a particular section to the currently pending America Invents Act, tucked neatly into Section 18 of the pending bill, that provides a specialized procedure to attack patents related to “data processing operations utilized in the practice, administration, or management of a financial product or service.”  (For background on this provision, see my earlier post Banks Buy Another Patent Reform Amendment.)

As if this blatant pandering to a politically coveted special interest group weren’t obvious enough, the Financial Services Roundtable has now taken a swipe at Foley & Lardner attorney Hal Wegner, claiming that he and the firm have betrayed their clients because of an e-mail from Wegner containing statements criticizing Section 18.  The use of the word “betrayal” is a curious one, especially considering the critical statements belonged to retired Chief Judge Paul Michel and not necessarily Wegner’s own opinion. But set aside that simple fact at first, and just consider the statements that offended the banking lobby.

Section 18… adds a special new procedure in the patent office that favors financial firms in several unjustified ways. First, it allows patents to be invalidated even though properly granted under the laws applicable at the time, even when they have been upheld by the courts…. Second, it allows lawsuits to be stalled for years while the patent office reviews the old patents under the new laws … by skewing the standards courts normally apply in deciding whether to freeze (‘stay’) the lawsuit until the patent office completes all reviews. Further, it creates an automatic right of appeal if the stay is denied, guaranteeing further delay and burdening the appeals court with reviewing trial court orders not normally appealable.

Wegner’s email went on to note that “Judge Michel notes that the best way to fix Leahy-Smith is simple; the ‘Senate could and should simply remove Section 18 from the bill.'” (The opinions quoted above first appeared in an op-ed authored by Chief Judge Michel: Rein in the Big Bank Bail-Out).  Aside from the underlined portion, the statements above are primarily factual, yet it would appear that the banking lobby wants to engage in a quick game of the Emperor’s New Clothes, intent on smearing anyone who won’t play along. (Uh-oh … might be time to go back to burying my cash in coffee cans).

Speaking for the Financial Services Roundtable, Peter Freeman referred to the statements above as a “little disconcerting.”  According to the Legal Times article, Freeman also reiterated that Section 18 is beneficial to financial institutions, as if we didn’t already know.  Apparently subscribing to the theory that what’s good for the banks is therefore good for America, Freeman finds comments pointing out that the provision is also detrimental to patent owners to be a bit unsettling.

However, as mentioned above, Wegner’s e-mail primarily just reiterated the opinion of a retired federal judge.  Until now, the primary critics of the financial services provision were bloggers (for example, check out Patent Docs, Dale Halling, and, of course, Gametime IP) and patent owners like Claudio Ballard, who speaks passionately, but admittedly has a direct, pecuniary interest in getting compensation from financial institution’s wide-spread and blatant patent infringement.

However, the Chief Judge’s willingness to speak out against this obvious special interest pandering lends significant credibility to the anti-patent reform half of the debate and ought to get the attention of more than a few senators.  Naturally, this is bad news for the sole beneficiaries of Section 18, because very few others will go to bat for them.  Foley & Lardner, meanwhile, represents several financial institutions, including in patent litigation.  Freeman evidently believes that Foley’s obligation is to blindly support their client’s interests to the point of ignoring the many valid points raised by Chief Judge Michel.  Freeman is quoted as saying: “It is very concerning coming from a firm that many companies rely on to go to bat for them.” Translation: we paid you, so our opinions should be your opinions.

Oh, and Freeman also claimed that Wegner’s comments went beyond just repeating Michel’s comments.  He’s right.  Wegner also speculated about an entirely realistic scenario of a foreign patent jurisdiction retaliating against US companies if Section 18 becomes law. Wegner wrote:

For example, could or should an Asian country with a generic pharma industry but without pioneer research-based interests create its own “SEC. 18” that would create a procedural nightmare for the enforcement of pharmaceutical patents?

If you didn’t already question whether Section 18 is wise or even necessary in the first place, you probably should be by now…



4 thoughts on “Did A Banking Lobbyist Just Admit To Buying Its Own Section Of Patent Reform?

  1. I have a quick question: Procedurally, can the joint committe (which has to merge the two bills together) remove the financial services reference from the bill, even though this amendment (in different forms) is on both bills? If not, maybe some rewording may help. I, for one, think this must be changed. Otherwise, the what is the next targeted industry and when will it stop?

    Posted by Mike Schulze | July 28, 2011, 10:38 am
  2. Seems like there’s a simple fix – just drop the word “financial” and you get a vast improvement.

    Posted by James Moore | August 18, 2011, 5:37 pm


  1. Pingback: Did A Banking Lobbyist Just Admit To Buying Its Own Section Of Patent Reform? | IP & innovation | Scoop.it - August 19, 2011

  2. Pingback: The Problems with Patent Reform - August 23, 2011

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