By Diane Bartz
WASHINGTON (Reuters) - Senator Patrick Leahy, chairman of the Senate Judiciary Committee, said on Wednesday he was shelving a controversial patent bill because the two sides could not agree on a compromise that would prevent abuse of patent litigation without punishing legitimate innovators.
The committee had been attempting to reach agreement on changes to a bill aimed at reducing patent litigation brought by patent assertion entities, which critics sometimes call "patent trolls" because they make their money off lawsuits and licensing instead of manufacturing. The measure is similar to legislation passed overwhelmingly by the House of Representatives in December.
"Because there is not sufficient support behind any comprehensive deal, I am taking the patent bill off the Senate Judiciary Committee agenda," Leahy said in a statement.
"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," Leahy said.
The bill has strong support from companies such as Google Inc and Cisco Systems Inc, as well as retailers that have been surprised to find themselves accused of patent infringement for such practices as using off-the-shelf routers to provide Wi-Fi to customers.
Critics worry that efforts to rein in truly unwarranted patent infringement lawsuits could inadvertently hurt drug companies, colleges and others seeking to protect intellectual property.
On Thursday a House Energy and Commerce subcommittee meets to discuss a new bill that aims to rein in patent trolls.
Leahy did not say he was giving up on the Senate bill.
"Regrettably, competing companies on both sides of this issue refused to come to agreement on how to achieve that goal," he said.
Senator Chuck Grassley, the top Republican on the Judiciary Committee, said he was "surprised and disappointed."
The decision to pull the bill also angered coalitions and trade groups that have been pressing for a legislative solution to abusive accusations of patent infringement.
"Patent trolls and their special interest allies are the only winners today," Matt Tanielian, executive director of the Coalition for Patent Fairness, said in a statement.
Critics of the bill said they were still open to a compromise that would tackle the troll issue without punishing innovators.
"This shows pretty clearly that addressing these issues is more complicated than many may have thought," said Q. Todd Dickinson, director of the American Intellectual Property Law Association.
"The key has always been to find the right balance: deal with truly abusive behavior, while making sure that real innovators can enforce their rights," Dickinson said.
The bills in the Senate and House contemplated changes such as making it easier for judges to require the loser of an infringement lawsuit pay the winner's fees, and allowing a manufacturer to step in to defend a customer accused of infringement.
(Reporting by Diane Bartz; Editing by Ros Krasny, Bill Trott and Lisa Shumaker)