Labor surprises Dems with intervention on patent law

Labor unions have stumbled into the middle of a high-stakes lobbying fight between high-tech firms and the pharmaceutical industry over patent law, to the displeasure of some Democrats.

Just as patent reform legislation appeared to be gaining momentum this summer, the AFL-CIO and United Steelworkers of America weighed in with letters critical of bills approved by House and Senate committees. Labor had not been heard on the issue previously, even though high-tech groups have struggled to move legislation for the last two Congresses.

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House Republican leaders even used the AFL-CIO’s letter to argue that the patent reform bill should not be rushed to the floor. House Minority Leader John Boehner (R-Ohio) and Minority Whip Roy Blunt (R-Mo.), who are both seen as close to pharmaceutical companies, wrote in an Aug. 30 letter to Speaker Nancy Pelosi (D-Calif.) that it was rare “to find an issue that unites groups from the AFL-CIO to Eagle Forum,” a conservative group.

Labor’s involvement caused some head-scratching by Democrats, who were surprised that the unions cared enough about the issue to enter the fray, according to one Senate aide. Lobbyists on both sides of the fight said there has been pushback by Democratic staffers, who told their labor allies they were not pleased with the letters.

“They weren’t happy it came this late in the process,” acknowledged Bob Baugh, executive director of the AFL-CIO’s industrial council.

In an interview, he emphasized that the group did not “trash” patent reform in its July 24 letter, which he said was only sent to committee leaders and was not meant for a wider audience.

The letter was circulated to a wider audience by other groups, which Baugh said did not make AFL-CIO leaders happy. “It was not our intention for it to circulate widely. It was meant to get to the leaders of the committees,” Baugh said.

He also described patent reform as “an issue of interest” but said it was not one of the union’s top priorities.

Baugh did not speculate on who was behind the wider circulation of the letter, but said the AFL-CIO got involved after being contacted by pharmaceutical companies and other manufacturers who oppose the patent reform bills and employ workers represented by the union.

Some lobbyists say the case shows how groups with less influence with Democrats, such as pharmaceutical companies, are looking for allies such as organized labor that have more clout with the party in charge of Congress.

Pharmaceutical companies “are trying to keep an arm’s-length distance from Capitol Hill and are sending better-looking lobbyists” to argue their case on patents, according to Joshua Ackil, vice president of government relations for the Information Technology Industry Council. Drug companies have continued to give more political contributions to Republicans, and in the 2005-06 cycle gave more than twice as much to the GOP than to Democrats.

Those opposed to the patent bills “are putting an enormous effort into stopping it and have worked hard to find any ally they can,” said Steve Elmendorf of Elmendorf Strategies, which is lobbying for the Coalition for Patent Fairness, a group supporting the two patent bills.

 Besides labor, research universities such as the University of California oppose the patent reform bills, creating a dilemma for high-tech supporters like Sen. Dianne Feinstein (D-Calif.). One high-tech lobbyist said several Democratic offices have told him they have yet to hear from pharmaceutical companies on patent reform. But they have heard from the research universities, which are a better face for the issue, he said.

The two labor letters link the issue of patent reform to the larger debate over globalization, arguing that the U.S. should not weaken its patent laws and that China must strengthen its intellectual property rights protections. That argument seems targeted toward skeptics of free-trade agreements in labor and the Democratic Party.

China was also mentioned in a recent letter on patent reform from 65 House members, many representing manufacturing districts, to House Majority Leader Steny Hoyer (D-Md.) and Boehner.

Sources with high-tech groups said the arguments about China would be unlikely to kill the patent bills, only delay them. House leaders are considering bringing the bill to the floor at the end of this week, but the complaints could push this back.

“It’s kind of Lobbying 101 — if you don’t like something, let’s run out the clock,” said David Isaacs, director of government relations for Hewlett-Packard.  

Bill Mashek of the Coalition for 21st Century Patent Reform is quick to point out that his group’s steering committee includes Caterpillar, 3M and General Electric in addition to several drug companies. Opposition to the high-tech industry on patent reform is broad, and research universities and labor unions have legitimate concerns, he said.

High-tech officials note that their position also has broader support, from entertainment conglomerate Time Warner to several financial-services firms, among others.

They say patent reform is necessary because of litigation fears. Like other high-tech companies, Isaacs said, Hewlett-Packard has been hit by what he described as frivolous patent-infringement lawsuits that are generally settled out of court because of the potential for juries to award huge sanctions.

“It’s the No. 1 costs to our legal department,” Isaacs said.

The bills moving through Congress would make it more difficult to bring a patent-infringement case in some circumstances, and could also limit damages awarded in an infringement case.