Month: April 2021

Categories
Healthcare Patents

WTO IP Waiver Too Simplistic: Global Vaccine Tech-Transfer Needs Other Strategies

a scientist looking through a microscopeBy Yogesh Pai

Since October 2020, India and South Africa, joined by two-thirds of the WTO Members (African Group, LDCs and most of developing world) have been actively pursuing other developed country Members to agree to their request to waive global intellectual property (IP) rules. The waiver asserts that by suspending IP protection for COVID-19 technologies, countries will be able to quickly augment production and foster equitable access for COVID-19 related products.

The push for the IP waiver proposal rests on an often simplistic textbook assumption that IP controls exercised through legal rights allow IP owning firms exclusive control on production by reducing output (by restricting competitive copycat entry) and thus increasing prices. Of course, this is something no country wants during a pandemic where equitable access is paramount.

However, truth be told, the IP waiver proposal, even if passed by approval of three-fourths of current WTO Members (a minimum requirement under WTO Rules) or with a consensus, will not enable India or any other country (even with decent production capabilities) to quickly access complex technologies and augment production, particularly in the context of COVID-19 vaccines.

The critical issue surrounding access to COVID-19 vaccine technologies involves an active technology licensing component, which the waiver/suspension of IP laws cannot achieve (e.g. by suspending patents or trade secret protection).

Most complex technologies such as vaccines and other biological products contain two major knowledge components. One component is the knowledge that can be copied by competitors and hence patented to legally prevent copying for at least 20 years in India. Another component involves any undisclosed information such as a trade secret or know-how, including hard tacit knowledge of manufacturing/quality control measures for production and clinical data required for regulatory clearances.

IP waiver simply can’t achieve access to tacit knowledge components which are in the exclusive possession of a firm in the form of trade secrets or any other undisclosed information. Any IP lawyer with an understanding of IP intensive industries would confirm that trade secrets do not require any ‘exclusivity’ type of legal protection (e.g. like patents). Trade secret laws provide defensive protection to a firm that already has exclusive possession of some undisclosed information against industrial espionage, breach of confidence/contracts by its employees or by connected parties who benefit from such misappropriation. Of course, unconnected parties (i.e. competitors) are always free to come out with their own products/processes through capital intensive and time consuming (months/years) reverse-engineering or independent innovation, which the law on trade secrets does not prohibit.

So even if the WTO IP waiver will allow countries like India to suspend legal protection for trade secrets/undisclosed information, it means nothing in the real-world unless the law  (and often a draconian criminal measure) is used against a firm and its employees physically located in its territory to engage in forced technology transfer (FTT). Such FTT requirements have never worked in practice without other social and economic costs. India has already had a taste of it in its unsuccessful bid to get Coca-Cola to reveal its know-how under foreign exchange laws in the late 1970s. It led to Coke’s exit from India and return in the post-liberalisation era in the early 1990s.

Realising such complexities and the potential futility of blunt legal instruments early on, the Serum Institute of India (SII) actively collaborated with AstraZeneca/Oxford for obtaining a technology licence involving a reported fee of Rs. 75/- per jab. This allowed SII access to AstraZeneca’s tacit knowledge (trade secrets/other undisclosed information) and clinical trial data to engage in quality-controlled production. Scaling-up is a different challenge altogether as it requires both time and investment in heavily quality-controlled production facilities.

Similarly, India’s Council of Scientific & Industrial Research (CSIR) – Centre for Cellular and Molecular Biology (CCMB), which already has certain expertise in mRNA technologies, is pursuing Moderna to engage in vaccine technology licensing. Although Moderna has allowed free access to its mRNA patents for COVID-19 vaccine production, the crux lies in active technology licensing.

In fact, even in case of an indigenously developed vaccine technology by Bharat Biotech with an early-stage lab support from the publicly-funded Indian Council of Medical Research (ICMR) – National Institute of Virology (NIV), the Department of Biotechnology had to recently nudge Bharat Biotech to engage in talks with Panacea Biotech (the only other company in India which is currently equipped to produce Covaxin) to scale-up production.

So, a WTO IP Waiver to suspend IP obligations domestically will not help unless India engages in FTT – a recipe for complete disaster, particularly when we have finally decided to open-up to more foreign players. The Government of India must not waste its valuable energy in pursuing the waiver proposal in trying to look for solutions that are far removed from the real-world complexities and constraints posed by economics of vaccine technologies and production, and an equally complex IP ecosystem in the context of global tech-transfers. Where blunt legal instruments don’t work, using track-1 and track-2 diplomacy to place moral coercion on western governments to nudge firms to actively engage in technology licensing may still work wonders.

Allowing manufacturers to strike early deals with tech players to facilitate risk-sharing and exploration of synergies driven by a predictable and transparent entry-enabled regulatory environment is a pre-requisite for sustainable vaccine production. Securing cheap upfront volume discounts for state-sponsored distribution and allowing private players to cross-subsidise through differential pricing in private sales will help in meeting the demand. This will facilitate scaling-up of production and pave the way towards healthy competition by driving down vaccine prices in order to attain vaccine equity.

Dr. Yogesh Pai is an assistant professor and the DPIIT, Ministry of Commerce and Industry IPR Chair at National Law University Delhi. He has served as a legal member of the Ministry of Health and Family Welfare’s Committee on Invoking Provisions of Compulsory Licensing under the Patents Act, 1970 in the Context of Affordable Healthcare (2013). Views are personal.

This piece first appeared on April 28, 2021, in the Express Pharma edition of the Indian Express.

Categories
WIPO

CPIP Celebrates World Intellectual Property Day 2021

lightbulbs drawn on a chalkboardToday marks the 21st annual World Intellectual Property Day. The event is held each year on the 26th of April to commemorate the day the WIPO Convention, which established the World Intellectual Property Organization (WIPO), entered into force in 1970. The theme of this year’s World IP Day is “IP & SMEs: Taking Your Ideas to Market,” and events are being held around the world to highlight the critical role of small- and medium-sized enterprises (SMEs) to bringing creative innovations to the marketplace. As President Biden noted in his World IP Day proclamation, small businesses “make up 90 percent of businesses in the United States, employ nearly half of America’s private sector workers, and create two-thirds of new jobs, and bring opportunity to every corner of our Nation.”

CPIP Executive Director Sean O’Connor spoke about the importance of IP for med tech SMEs at a World IP Day event organized by the U.S. Embassy in Tokyo, Japan. The event, entitled “Patents to Patients: The Role of Intellectual Property in Innovative Healthcare,” brought together leading experts to discuss how Japanese SMEs can take advantage of intellectual property rights. Traditionally, Japanese SMEs have often foregone IP protection because of the expense and uncertainty about its value. But as this sector increasingly relies on venture capital and commercialization based on licensing throughout the value chain, secure IP rights to define and convey the developing innovation are a necessity.

There are several events in the Washington, D.C., area this week that will underscore the success stories of SMEs and discuss the IP resources that are available to help them with their IP needs. The U.S. Patent and Trademark Office, along with several other organizations, is hosting an event today to discuss the role of IP in supporting the creativity and innovation of small businesses. The U.S. Copyright Office is likewise holding an event today to discuss the importance of SMEs in copyright, the economy, and our culture. Also today, the Licensing Executives Society (LES) has organized an event to celebrate the ingenuity and creativity embodied in SMEs, and the Intellectual Property Owners (IPO) Education Foundation is holding an event to discuss different approaches to bring ideas to the market. The Copyright Alliance is hosting two panel presentations later this week on how IP and advocacy can help creative small businesses to grow and succeed.

We are thrilled to see these and many other events celebrate the power of intellectual property to help small businesses succeed in the global economy.

Categories
Copyright Fair Use Supreme Court

Recap of the Supreme Court’s Google v. Oracle Opinion

a gavel lying on a desk in front of booksThe following post comes from Liz Velander, a recent graduate of Scalia Law and a Research Assistant at CPIP.

By Liz Velander

The Supreme Court finally reached a determination in the decade-long dispute between two of the biggest technology companies in the world, Google and Oracle. Many have long-awaited the Court’s decision in this case, as it had the potential to provide market certainty in the software industry through its copyrightability analysis. The Court ultimately declines to give that certainty by bypassing the copyrightability issue and choosing to base its holding on a fact-intensive fair use analysis. The Court does this so as to “not answer more than is necessary to resolve the parties’ dispute,” “given the rapidly changing technological, economic, and business-related circumstances.” It emphasizes that its holding is narrow, only applies to declaring code, and does not modify its prior cases on fair use. However, by framing its opinion this way, the Court provides new arguments for infringers to use in a fair use defense in the software sphere and beyond. For this reason, the Court’s decision is not as narrow as it sets out to be. It may lead to lower court decisions that broaden the fair use doctrine and limit the copyright protection given to software.

The Court’s decision broadens fair use by using the doctrine to loosen copyright protection for certain types of code, allowing for a more expansive reading of a “transformative use,” and giving great weight to the public benefit of the use. Before it engages in its fair use analysis, the Court states that “fair use can play an important role in determining the lawful scope of a computer program copyright, such as the copyright at issue here.” Fair use “can distinguish between expressive and functional features of computer code where those features are mixed.” It can also “focus on the legitimate need to provide incentives to produce copyrighted material while examining the extent to which yet further protection creates unrelated or illegitimate harms in other markets or to the development of other products.” The Court describes fair use as a “context-based check that can help to keep a copyright monopoly within its lawful bounds.”

To highlight the ability of fair use to accomplish these goals, the Court begins its analysis with the second statutory factor, “the nature of the copyrighted work.” The Court uses this factor to discuss issues that would have come up if it analyzed the copyrightability of Oracle’s material, such as the applicability of the merger doctrine. It then moves to “the purpose and character of the use,” where it adopts an expansive reading of what constitutes a “transformative use.” The biggest impact of the Court’s fair use analysis, however, will likely come from the great weight it gives to the public benefit of the use under the market effect factor. By using fair use to determine “the lawful scope of a computer program copyright,” the Court’s holding may inadvertently broaden the fair use doctrine.

The Nature of the Copyrighted Work

The Court begins its analysis with describing “the nature of the copyrighted work.” The copyright at issue protects a portion of Oracle’s Java SE platform, called declaring code. Java SE has three essential parts: (1) implementing code, (2) method calls, and (3) declaring code. Implementing code tells the computer how to execute the particular task the programmer asks it to perform. Method calls are commands that help the computer carry out the task by choosing the correct programs written in implementing code. The declaring code is how the method call actually locates and invokes the particular implementing code that it needs to instruct the computer how to carry out a particular task.

For each task, the specific method call entered by the programmer matches up with a specific declaring code inside Java SE. That declaring code provides both the name for each task and organizes them within Java SE’s library. In this sense, the declaring code and the method call form a link, allowing the programmer to draw upon the thousands of prewritten tasks, written in implementing code. Without that declaring code, the method calls entered by the programmer would not call up the implementing code.

In this case, Google did not copy the implementing code from Oracle’s Java SE platform; it copied the declaring code. The Court draws a “critical line” between the uncopied implementing code and the copied declaring code under this factor. On one hand is the innovative implementing code and on the other, user-centered declaring code. The Court explains that the writing of implementing code requires balancing considerations as to how quickly a computer can execute a task or the likely size of a computer memory. The Court says that this balancing is “the very creativity that was needed to develop the Android software for use not in laptops or desktops but in the very different context of smartphones.”

Declaring code, the Court says, embodies a different kind of “creativity” because it is user facing. It must be designed and organized in a way that is intuitive and understandable to developers so they can invoke it. As part of a user interface, declaring code differs from most computer code because “its use is inherently bound together with uncopyrightable ideas (general task division and organization) and new creative expression (Android’s implementing code).” For these reasons, the Court concludes that “the declaring code is, if copyrightable at all, further than are most computer programs (such as the implementing code) from the core of copyright.” Therefore, the Court finds that the second factor, “nature of the copyrighted work,” points in the direction of fair use.

The Purpose and Character of the Use

The Court explains that the inquiry into “the purpose and character” of the use turns in a large measure on whether the copying at issue was “transformative,” that is, whether it “adds something new, with a further purpose or different character.” The Court finds that, even though Google copied Oracle’s declaring code verbatim, its use was “transformative” because it furthered the development of software programs.

The Court explains that what Google did is known as “‘reimplementation,’ defined as the ‘building of a system . . . that repurposes the same words and syntaxes’ of an existing system.” Google “reimplemented” Oracle’s declaring code to allow programmers expert in the Java programming language to use the “task calling” system that they had already learned. By using the same declaring code, programmers using the Android platform can rely on the method calls that they are already familiar with to call up particular tasks. Then Google’s own implementing code carries out those tasks.

The Court concludes that Google’s copying was a transformative use. “Google’s purpose was to create a different task-related system for a different computing environment (smartphones) and to create a platform—the Android platform—that would help achieve and popularize that objective.” Such use is “consistent with the creative ‘progress’ that is the basic constitutional objective of copyright itself.” Therefore, the purpose and character of Google’s copying was transformative to the point at which this factor also weighs in favor of fair use.

The Amount and Substantiality of the Portion Used

 The Court says that the question here is whether the over 11,000 lines of code Google copied should be viewed in isolation or as one part of a considerably greater whole. On one hand, those lines of code amount to virtually all the declaring code needed to call up hundreds of different tasks. On the other hand, if one considers the entire set of software material in the Java SE platform, the quantitative amount copied was small (only 0.4 percent).

The Court decides to view Google’s copying as one part of a greater whole because the amount of copying was “tethered to a valid, and transformative, purpose.” It explains that Google did not copy the lines because of their creativity but because programmers had already learned to work with the Java SE platform, and it would have been difficult to attract programmers to build its Android smartphone system without them. It describes the portion of the declaring code used at “the key that [Google] needed to unlock the programmers’ creative energies. And it needed those energies to create and improve its own innovative Android systems.” For these reasons, the Court holds that this factor weighs in favor of fair use.

Market Effects

The fourth statutory factor focuses upon the “effect” of the copying in the “market for or value of the copyrighted work.” The Court explains that this requires a court to consider the copyright owner’s potential loss of revenue, the source of the loss, and the public benefits the copying will likely produce. As to the likely amount of loss, the Court states that Oracle was ill-positioned to enter the smartphone market, so the jury could have found that Android did not harm the actual or potential markets for Java SE. As to the source of the loss, the Court finds Android’s profitability has much to do with third parties’ (programmers’) investment in the Java programs and less to do with Oracle’s investment in creating the Java SE platform. It says that the Copyright Act does not protect third parties’ investment in learning how to operate a created work.

Finally, given programmers’ investments in learning the Java SE platform, to allow enforcement of Oracle’s copyright here would risk harm to the public by operating as a lock on innovation. “The result could well prove highly profitable to Oracle (or other firms holding a copyright in computer interfaces). But those profits could well flow from creative improvements, new applications, and new uses developed by users who have learned to work with that interface. To that extent, the lock would interfere with, not further, copyright’s basic creativity objectives.” The Court concludes that the uncertain nature of Oracle’s “ability to compete in Android’s market place, the sources of its lost revenue, and the risk of creativity-related harms to the public, when taken together, convince that this fourth factor—market effects—also weighs in favor of fair use.”

The Court ends its opinion by noting that “the fact that computer programs are primarily functional makes it difficult to apply traditional copyright concepts in that technical world.” While that is certainly true, the Court made its work more difficult by basing its opinion in fair use instead of analyzing the copyrightability of Oracle’s code in the first place.

Categories
Copyright Legislation

Professors Balganesh and Menell on “The Curious Case of the Restatement of Copyright”

The following post comes from Ryan Reynolds, a 3L at Scalia Law and Research Assistant at CPIP.

a gavel lying on a desk in front of booksBy Ryan Reynolds

In 2015, the American Law Institute (ALI) made the announcement that it would restate an area of law that is dominated by a detailed statute—the Restatement of Copyright. ALI’s Restatements have played an important role in the development of the law, with judges, lawmakers, and law students referring to them as important tools in understanding different bodies of law. In the nearly one hundred years since ALI’s formation, however, its Restatement projects have historically eschewed legal fields dominated by statutes, instead focusing on common law topics. Therefore, when ALI announced its plan to create a Restatement of Copyright, there were many who were skeptical of the project.

It is in this context that Professors Shyamkrishna Balganesh and Peter Menell provide insight in their forthcoming article in the Columbia Journal of Law & the Arts, Restatements of Statutory Law: The Curious Case of the Restatement of Copyright. While Profs. Balganesh and Menell support a Restatement of Copyright, they argue against ALI’s application of the traditional Restatement format to an area of law dominated by a detailed federal statute. They argue that such an application ignores the analytical mismatch between the traditional Restatement format and statutory domains that will create more confusion than clarity. To resolve this mismatch, Profs. Balganesh and Menell argue for several modest changes that would allow the project to serve as a template for future statutory Restatements.

Historical Origins of the “Mismatch”

Looking to the origins of ALI, Profs. Balganesh and Menell illustrate that, from the beginning, it purposely avoided areas of law principally governed by statutes. ALI’s conception of its core function then, as now, was to resolve the uncertainty and complexity of American law—which, at the time of ALI’s formation, was derived from judge-made law that lacked general agreements on legal principles. Therefore, ALI provided guidance to judges and those involved in the legal field with the first Restatements of the law. These Restatements distilled black-letter rules of law from the disparate court decisions across the country and were seen as clear statements of the law.

It is for this reason that, soon after ALI approved a Restatement of Business Associations, fear arose among its membership that it was a subject too steeped in statutory provisions to fit the Restatement model. To address this fear, then ALI Director William Draper Lewis prepared a report outlining a framework to adapt Restatements to statutorily dominated legal fields. At its core, this framework advocated for placing the statutory provisions of subjects governed by uniform statutory law front and center. To Mr. Lewis, the primary value of these Restatements would not consist in distilling black-letter rules of law but would instead be the clarification of interpretive principles, providing the relevant judicial and executive efforts surrounding the statutory text.

Despite Mr. Lewis’ efforts, however, ALI ultimately abandoned the project and never revisited the framework of Lewis’ report. Following this affair, ALI’s Restatements avoided direct engagement with fields dominated by statutory law, instead using model codes as an alternative. That changed in 2015 when ALI announced the Restatement of Copyright project.

The “Mismatch” in the Current Restatement Initiative

As Advisors on the Restatement of Copyright project, Profs. Balganesh and Menell take time to outline their experience and criticism of the project’s use of the traditional Restatement model to copyright law. Despite ALI initially indicating that the project would focus on common law features of the Copyright Act, the first circulated draft indicated that its scope had expanded to include federal statutory provisions. To create its distilled black-letter rules of law, Profs. Balganesh and Menell note that the draft paraphrased, condensed, and reworded the statutory provisions of the Copyright Act. These changes were such that the “lack of attention to the text, legislative history, and administrative context of copyright law . . . would not aid busy judges in identifying pertinent sources for interpreting statutory provisions.”

To illustrate their criticism of the mismatch, Profs. Balganesh and Menell provide an in-depth case study of ALI’s efforts to restate the Copyright Act’s distribution right. As they explain, the interpretation of the distribution right has been subject to significant interpretive controversy. With the rise of peer-to-peer file sharing in the early 2000s, the distribution right was the subject of massive litigation. While some courts interpreted a violation of the distribution right narrowly to require proof that sound recordings placed in a share folder were actually downloaded by a third party, other courts read it broadly so that merely “making available” a sound recording through a peer-to-peer network could constitute a violation. As argued by Profs. Balganesh and Menell, the legislative history of the Copyright Act demonstrates Congress’ intention for a broad reading of the distribution right. This legislative history was not considered by a court until the Tenth Circuit’s opinion in Diversy v. Schmidly, where the court held that the distribution right included liability for “making available” copyrighted works to the public. This same interpretation was also reached by the Copyright Office in a 2016 report prepared at the request of the House Subcommittee on Courts, Intellectual Property & the Internet.

At its core, Profs. Balganesh and Menell criticize ALI’s draft of the distribution right for not presenting faithfully all the pertinent interpretive sources and instead improperly stepping into the role of a judge by making an interpretive decision itself. Despite it’s claiming not to do so, Profs. Balganesh and Menell argue that the draft intentionally put aside a meaningful discussion of the legislative history to adopt an interpretation of the distribution right that rejected the “making available” approach to liability. Further, in its formulation of its black-letter law, the draft relied solely upon court decisions interpreting the statute prior to the Diversy decision, where the legislative history was not understood, and at no point presented the language of the statute itself. Despite their raising of these concerns to ALI, Profs. Balganesh and Menell state that ALI only “double[d] down,” committing to its textualist interpretation while “purporting not to take a position.”

Proposed Remedies for the “Mismatch”

To remedy the mismatch in the current project, Profs. Balganesh and Menell first propose that the Restatement should modify its perspective. In the traditional model, Restatements purport to speak from the perspective of an “excellent common-law judge.” When it is extended to statutory areas of law, however, Profs. Balganesh and Menell argue that this perspective is inappropriate. As statutory interpretation relies on the discretion of judges, a black-letter rule prescribing a singular interpretation of the statutory language steps beyond the role of a Restatement to only clarify the law. Profs. Balganesh and Menell propose that the Restatement should instead act to aid judges in exercising their discretion by providing them with a forthright explication of the materials that inform statutory interpretation, such as an overview of the relevant legislative history or interpretive approaches by other courts.

Second, Profs. Balganesh and Menell propose an update to the Restatement template. Keeping with the idea from Mr. Lewis’ report, Profs. Balganesh and Menell propose that the traditional black-letter law section of the Restatement be replaced with the actual and complete text of the statutory provisions. They then propose that the Restatement lay out sources of interpretation available to a judge in the context of the statute. Since interpretation begins with the text of the statute, placing the text front and center, then followed by relevant interpretive tools, respects the role of a judge while ultimately aiding in the interpretive exercise. Last, Profs. Balganesh and Menell propose reworking the preamble to the Restatement of Copyright as an objective primer to the history surrounding the Copyright Act’s formation. Due to the complex and unique history surrounding the Act’s evolution, Profs. Balganesh and Menell argue that such a preamble would allow an interpreter from the outset to see some of the relevant tools and sources that could be used in interpreting its provisions.