What: All Issues : Government Checks on Corporate Power : Banks/Credit Card Companies : (H.R. 1249) On an amendment that would have eliminated a provision in a patent reform bill that would have made it easier for financial institutions to challenge patents relating to business methods (2011 house Roll Call 489)
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(H.R. 1249) On an amendment that would have eliminated a provision in a patent reform bill that would have made it easier for financial institutions to challenge patents relating to business methods
house Roll Call 489     Jun 23, 2011
Progressive Position:
Yea
Progressive Result:
Loss

This was a vote on an amendment by Rep. Aaron Schock (R-IL) that would have eliminated a provision in a patent reform bill that would have made it easier for financial institutions to challenge patents relating to business methods. Supporters of this provision argued that it would help to vacate “low-quality” patents. They often cite Amazon’s patent on “one-click” ordering for online shopping as an example of such frivolous patents. Opponents of the business methods patents provision argued that it amounted to a special privilege for one industry—the financial industry.

Schock urged support for his amendment: “Section 18 [of the underlying patent bill] carves out a niche of business method patents covering technology used specifically in the financial industry and would create a special class of patents in the financial services field subject to their own distinctive post-grant administrative review. This new process allows for retroactive reviews of already-proven patents that have undergone initial scrutiny, review, and have even been upheld in court. Now these patents will be subjected to an unprecedented new level of interrogation….At a time when these small entrepreneurs and innovators need to be dedicating their resources and new advancements to innovation, they will instead, because of section 18, be required to divert research funds to lawyers to fight the deep pockets of Wall Street, who will now attempt to attack their right to hold these financially related patents.”

Rep. Maxine Waters (D-CA) also supported this amendment: “Elected members of Congress should not allow the banks to use us to steal legally issued and valid patents. Financial services-related business method patents have saved financial services companies billions of dollars. But that's not enough for the banks. Because the banks have failed at every attempt to void these patents, they're attempting to use their power to write into law what they could not achieve at PTO [Patent and Trademark Office] or in the courts.”

Rep. Michael Grimm (R-NY) opposed Schock’s amendment: “This amendment would strike one of the legislation's most important reforms, a crackdown on low-quality business method patents, which have weakened the patent system and cost companies and their customers millions of dollars. Infamous patent trolls--people who aggressively try to enforce patents through courts in friendly venues--have made business method patents their specialty in recent years. These same patent trolls have funded an elaborate propaganda campaign targeting the reforms in section 18….Opponents have asserted that the measure would help only the banks. This isn't true. The National Retail Federation and the U.S. Chamber of Commerce have endorsed this provision. Companies impacted include McDonald's, Walmart, Costco, Home Depot, Best Buy, and Lowes. These don't sound like banks to me.”

Rep. Joseph Crowley (D-NY) also opposed Schock’s amendment: “What are these business methods I'm talking about? In one case, a business method patent was issued for interactive fund-raising across a data packet transferring computer network. Once obtained, the patent holder sued the Red Cross for soliciting charitable contributions on the Internet, claiming that his patent covers this entire field. In another example, a patent was granted covering the printing of marketing materials on billing statements. These patents, and many others in this space, are not legitimate patents that help advance America. They are nuisance patents used to sue legitimate businesses and nonprofit business organizations like the Red Cross or any other merchants who engage in normal activity that should never be patented. In fact, this language will not go after any legitimate patent, but only allow a review of illegitimate patents, like those looking to patent the `office water cooler discussion.'”

The House rejected this amendment by a vote of 158-262. Voting “yea” were 93 Democrats—including a majority of progressives—and 65 Republicans. 170 Republicans and 92 Democrats voted “nay.” As a result, the House voted to maintain a provision in a patent reform bill that would have made it easier for financial institutions to challenge patents relating to business methods. The Senate later passed the underlying patent bill with this “business methods” provision intact. In addition, President Obama had vowed to sign the bill into law.

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