Category: Patent Law

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Patent Law

CPIP Affiliate Scholar Erika Lietzan Testifies at HJC Hearing on FDA Approval Process

U.S. Capitol buildingOn July 27, 2017, CPIP Affiliate Scholar and Associate Professor of Law at the University of Missouri–Columbia Erika Lietzan testified before the House Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law in a hearing on Antitrust Concerns and the FDA Approval Process. The hearing was an attempt by lawmakers to better understand the sometimes complex pharmaceutical development and approval process and to consider legislative tactics that could help curb regulatory abuses in the drug marketplace. Professor Lietzan’s testimony provides her perspective and recommendations on three aspects of the regulatory paradigm of particular interest to the Committee: citizen petitions, use and distribution restrictions, and FDA’s unapproved drugs initiative.

Citizen Petitions

Addressing the first topic, Lietzan praises the development of the citizen petition process, which was initiated in the late 1970s in order to allow any person to request that the FDA issue, amend, or revoke a regulation or order. Though citizen petitions were meant to move the administrative agency towards an “open government” philosophy and embrace transparency, access, and accountability, critics argue that they’ve enabled some innovative drug makers to intentionally delay the approval of generics through frivolous petitions. But as Lietzan points out, many critics’ concerns over meritless innovator petitions are based on inferences and not factual findings.

Professor Erika LietzanLietzan explains that there is scant factual evidence of delay in the approval of generic drugs due to petitions, noting that of 175 petitions related to pending applications over a recent eight-year period, only five resulted in delays not necessary to protect the public health. Additionally, while two of the most relied upon studies track denied petitions, neither of them evaluate the strength or contents of the petitions. As Lietzan notes, “[t]he claim that petitions are frequently frivolous appears based on the timing of petitions and denial rate, not the substance, of the petitions.”

In her recommendations to the Committee, Professor Lietzan suggests enhancing existing empirical work with a robust examination of the agency’s disposition of the issues presented in the petitions, rather than a cursory look at the requests stated in the petitions. In order to help conduct this research, Lietzan recommends providing the agency with additional resources and incentivizing petitioners to include more comprehensive data as part of their submissions.

Use and Distribution Restrictions

Of particular focus during the hearing was the proposed Creating and Restoring Equal Access to Equivalent Samples Act of 2017 (CREATES Act), which aims to prevent drug innovators from using FDA-required risk evaluation and mitigation strategies (REMS)—required for potentially high-risk drugs—to obstruct generic competition. Again, Lietzan points out that the studies relied upon to promote the CREATES Act often involve unclear methodology and weak empirical support.

When dealing with new drugs that may pose great risk to the public, innovators have legitimate concerns about the sale of their products to another company, regardless of a competitive relationship. As Lietzan explains, these innovators have a special responsibility to the public, and the CREATES Act lacks meaningful protections in the event their products lead to toxicity or other harm to patients.

Lietzan then challenges the CREATES Act as “flatly inconsistent with fundamental patent law.” She explains that by requiring a company to practice its patent for the benefit of a competitor, the Act contradicts a central principle of patent law which guarantees that a patent owner has no duty to practice their invention. After she warns that “[e]nacting this provision will inherently devalue patents” and “harm incentives to innovate,” Lietzan asserts that the FDA simply lacks the authority to require a company to practice their patent or sell their product to a competitor.

In lieu of enacting the flawed CREATES Act, Lietzan recommends that robust liability protections be implemented for innovative companies providing products to third parties, and that the agency examine ways to incentivize innovators to manufacture and sell patented drugs, as well as agree to shared access systems.

Unapproved Drugs Initiative

Addressing concerns over recent sharp increases in the price of drugs that have long been available at a low cost, Professor Lietzan explains that—despite public outrage—these  price hikes are a direct result of the FDA’s “unapproved drugs initiative” and represent a system working directly as designed. The reality is that there are several thousands of unapproved drugs marketed in the US, which Lietzan explains are the result of piecemeal evolution of drug approval mechanisms throughout the 20th century.

The FDA has adopted a risk-based approach to combating unapproved drugs, prioritizing those that pose the biggest threats to public health while also providing a grace period for some companies to try to bring their products into compliance. But Professor Lietzan notes that in order for many established medicines to obtain approval, companies must generate substantial data and perform research that will inevitably cost a significant amount of money. And while there may not be a way to bring these drugs into compliance without price disruptions, Lietzan recommends the creation of programs in which companies involved with specific ingredients pool resources and collaborate on research, allowing the FDA to save time and money by approving a group of applications at the same time.

Conclusion

Professor Lietzan’s testimony and recommendations reflect the core values of public health and open government embodied in the FDA’s mission of ensuring that pharmaceuticals are safe and effective. In addition, her testimony stresses the importance of maintaining effective patent property rights and promoting evidence-based policymaking—two fundamental principles that are unfortunately often overlooked.

Video of the full hearing can be found here.

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Injunctions Innovation Legislation Patent Law Patents

The STRONGER Patents Act: Important Legislation to Protect Our Innovation Economy

U.S. Capitol buildingToday, Senators Chris Coons, Tom Cotton, Dick Durbin, and Mazie Hirono introduced the Support Technology & Research for Our Nation’s Growth and Economic Resilience (STRONGER) Patents Act of 2017. This important piece of legislation will protect our innovation economy by restoring stable and effective property rights for inventors.

First and foremost, the STRONGER Patents Act will bring some much-needed balance to the post-issuance review systems administered by the USPTO’s Patent Trial an Appeal Board (PTAB). Until now, the PTAB has been a “death squad”; an arm of the USPTO killing patents that the same USPTO had previously issued. There are even examples where the PTAB has invalidated a patent that had previously been upheld by the Federal Circuit Court of Appeals.

Data analyzing PTAB outcomes demonstrates just how dire the situation has become. Coordinated and repetitive challenges to patent validity have made it impossible for patent owners to ever feel confident in the value and enforceability of their property rights. Only 16% of patents reaching a final written decision at the PTAB have survived unscathed.

This is not surprising as the procedures have been stacked against patent owners from day one. We and others have noted how broadly construing claims, multiple filings against the same patent by the same challengers, and the inability to amend claims, among other abuses, severely disadvantage patent owners in PTAB proceedings. With the STRONGER Patents Act, these proceedings will move closer to a fair fight to truly examine patent validity. There are many aspects to this legislation that will improve the PTAB, such as:

  • Harmonizing claim construction with litigation, focusing on the “ordinary and customary meaning” instead of the broadest interpretation a bureaucrat can conceive. Sections 102(a) and 103(a).
  • Confirming the presumption of validity of an issued patent will apply to the PTAB just as it does in litigation. Sections 102(b) and 103(b).
  • Permitting only those who are “charged with infringement” of the patent to challenge that patent, thus preventing the abusive and extortionate practice of challenging a patent to extract a settlement or short a company’s stock. Sections 102(c) and 103(c).
  • Limiting abusive repetitive and serial challenges to a patent. Sections 102(d), (f) and 103(d), (f).
  • Authorizing interlocutory review of institution decisions when “mere institution presents a risk of immediate, irreparable injury” to the patent owner as well as in other important circumstances. Sections 102(e) and 103(e).
  • Prohibiting manipulation of the identification of the real-party-in-interest rules to evade estoppel or other procedural rules and providing for discovery to determine the real-party-in-interest. Sections 102(g) and 103(g).
  • Giving priority to Federal Court determinations on the validity of a patent. Sections 102(h) and 103(h).
  • Improving the procedure for amending a challenged patent, including a new expedited examination pathway. Sections 102(i) and 103(i).
  • Prohibiting the same administrative patent judges from both determining whether a challenge is likely to succeed and whether the patent is invalid. Section 104.
  • Aligning timing requirements for ex parte reexamination with inter partes review by prohibiting requests for reexamination more than one year after being sued for infringement. Section 105.

Second, the STRONGER Patents Act will make other necessary corrections to allow patents to promote innovation. For example, as Section 101 of the Act confirms, patents are property rights and deserve the same remedies applicable to other kinds of property. In eBay v. MercExchange, the Supreme Court ignored this fundamental premise by holding that patent owners do not have the presumptive right to keep others from using their property. Section 106 of the STRONGER Patents Act will undo the disastrous eBay decision and confirm the importance of patents as property.

Third, the STRONGER Patents Act will once and for all eliminate USPTO fee diversion. Many people do not realize that the USPTO is funded entirely through user fees and that no taxpayer money goes to the office.  Despite promises that the America Invents Act of 2011 would end fee diversion, the federal government continues to redirect USPTO funds to other government programs.  This misguided tax on innovation is long overdue to be shut down.

Each of the steps in the STRONGER Patents Act will help bring balance back to our patent system. In addition to the major changes described above, there are also smaller changes that will be important to ensuring a vibrant and efficient patent system. CPIP co-founder Adam Mossoff recently testified to Congress about the harms being done to innovation through weakened patent protection.  It is great news to now see Congress taking steps in the right direction.

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Innovation Legislation Patent Law

CPIP Co-Founder Testifies at House Judiciary Committee Hearing on IP

U.S. Capitol buildingCPIP co-founder Adam Mossoff testified on June 13 before the House Judiciary Committee’s subcommittee on the Courts, Intellectual Property and the Internet.  He and other witnesses testified about the impact of the Supreme Courts recent decision in TC Heartland LLC v. Kraft Foods Group Brands LLC on innovators and the possibility of future changes to patent law.

For those not familiar with the decision, it held that patent lawsuits against corporations must be filed either where the corporation is incorporated or where it has infringed the patent and has a “regular and established placed of business.” This is different than the rule for most litigation which generally allows a lawsuit to be filed wherever a court may exercise jurisdiction over the corporation.  Thus, TC Heartland placed constraints on patent owners enforcing their rights that don’t exist for other litigants.

Although the hearing was nominally about TC Heartland and venue for patent suits, Members of Congress and witnesses took the opportunity to address broader issues of innovation policy.  In his opening statement, Professor Mossoff primarily described how patent owners—particularly individual inventors and small businesses—will now be required to file multiple lawsuits all across the country to enforce their rights.  This will drastically increase the costs of protecting their property from infringers, which for many innovators will be cost prohibitive.  Professor Mossoff mentioned one such inventor, Bunch-o-Balloons inventor Josh Malone, who is being seriously harmed by the inability to protect his invention from rampant infringement.  Together with the litany of other recent disastrous changes to our patent system, innovators are now in a precarious position when deciding to rely on patents to protect their inventions.

Much of the hearing was taken up by questions of what the impact of the TC Heartland decision will be.  There was general agreement that the concentration of patent cases in only a few districts will continue.  Under the old regime, many cases were filed in the Eastern District of Texas.  Under the new regime, these cases will now be filed in the Northern District of California or the District of Delaware.  There was also general agreement that this would benefit accused infringers, who will now be litigating in their preferred fora.

Adam MossoffUnfortunately, much of the discussion centered around a perceived problem with patent “trolls.”  This epithet based on myths is often used in the place of reasoned debate for patent policy.  As Professor Mossoff explained, as deployed in research and policy debates, this term would make even famous inventors like Thomas Edison a troll.  Furthermore, it is both wrong and irresponsible to assume that patent owners who license their inventions are practicing an illegitimate business model. Just as it is perfectly legitimate for a landlord to rent her property instead of selling it, it is likewise perfectly legitimate for a patent owner to license her patent rights instead of manufacturing and selling products to customers. And just as it is legitimate for a landlord to sue a squatter for trespass, it is equally legitimate for a patent owner who licenses her property rights to sue for infringement.

Several questions focused on broader patent issues in the context of whether or what Congress should do next for patent law. The Global Intellectual Property Center of the Chamber of Commerce recently reported that the United States had slipped from 1st to 10th in their annual ranking of patent systems.  Reasons for the degradation of our patent system are obvious: death squads killing patents at the PTAB, subject matter eligibility standards that make oil rigs outside the scope of patent laws, and the inability of patent owners to prevent others from infringing their rights through injunctions.

As Professor Mossoff emphasized, Congress’ first priority should be “do no harm.” Rather than make another attempt to pass legislation further restricting patent owners’ rights, it would be better for Congress to simply do nothing.  However, Congress could make the patent system better for innovators.  One step already being discussed that would be a positive improvement is the suggestion to amend section 101 to limit the scope of the judicial exceptions to subject matter eligibility.  At the hearing, Professor Mossoff astutely noted that the first patent ever issued in the United States—being held up at that moment by Chairman Darrell Issa—would likely be invalidated under current patent eligibility standards.

Many questions directed at the witnesses asked for them to propose specific solutions to either perceived venue abuses or broader patent law issues. Professor Mossoff stressed that systemic changes to the patent system will not just affect a few bad actors, but all of the individual inventors, small businesses, universities, licensing companies, and R&D-intensive high-tech and bio-pharma companies who rely on the patent system to protect their innovations.  These types of companies have been the fountainhead of the U.S. innovation economy for more than 200 years.  “Reform” that only addresses the concerns of accused infringers, but not the costs to patent owners, is doomed to do more harm than good.

Professor Mossoff’s written testimony can be found here.  Video of the hearing can be found here.

Categories
Innovation Patent Law

An Ever-Weakening Patent System is Threatening the Future of American Innovation

dictionary entry for the word "innovate"Over the past ten years, the United States patent system has been transformed by new legislation, regulatory actions, and numerous decisions by the Supreme Court addressing nearly every area of patent doctrine. The many disruptive legal changes have affected infringement remedies, licensing activities, and what types of inventions and discoveries are eligible for patent protection, resulting in a profound sense of uncertainty for most stakeholders. This current state of doubt about the American patent system is pushing investors to look outside of the US for less risky ventures. And because investors are shifting their focus overseas, foreign countries are for the first time poised to bypass the US as the forerunners of innovation.

Last month, the United States Patent & Trademark Office (USPTO), along with the University of Texas Law School and Antonin Scalia Law School, George Mason University, hosted the 12th annual Advanced Patent Law Institute in Alexandria, Virginia. The program featured a distinguished panel of patent experts discussing “current issues around patenting, licensing, enforcing, and monetizing patents in the U.S., and look[ing] at what the UK, EU, and China are experiencing and the impact on U.S. patent practice.” Titled The Current Patent Landscape in the US and Abroad and focusing on the economic factors that spur invention, the consensus was that dramatic changes to the US patent system are driving investment in research and development outside the country and threatening the future of American innovation.

US Patent System No Longer Adequately Incentivizes Investment

Serving as co-moderator with the Hon. Paul R. Michel, Robert Sterne—a leading patent attorney and founding partner of Sterne, Kessler, Goldstein & Fox—kicked off the panel with an overview of a patent system that is falling behind China and the European Union as a driver of innovation. Questioning the Supreme Court’s radical distortion of patent law over the last ten years and the institution of post-grant review, Sterne pointed out that the Patent Trial and Appeals Board (PTAB) has produced over 6,000 proceedings, with patent owner success rates hovering between a meager 30 to 40%. Because of these discouraging numbers, and because injunctive relief has become almost impossible to obtain for patent owners, Sterne warned that critical investment in small and medium-sized companies and universities is rapidly declining.

Judge Michel echoed many of the same sentiments, expressing concern with the “health and vitality and effectiveness of the patent system.” Michel stressed that the principle goal of the patent system is to incentivize investment, but that continued assaults on the system are driving investors to foreign jurisdictions and moving the US in the direction of “off-shore invention.” Citing studies by the Kauffman Foundation and US Census Bureau, Michel explained that most new jobs come from small start-up companies dependent on technology, and that without adequate incentives to invest in these job creators, the patent system and economy are in serious danger.

Expanding on the problem of investment incentivizes, Paul Stone—a partner at venture capital firm 5AM Ventures—discussed his backing over 60 life science startups in the last 15 years, all of which specialized in therapeutics aimed at developing life-saving drugs and drug delivery technologies. Stone offered the following three points to consider regarding the current innovative investment landscape: (1) 60% of the new drugs approved in 2016 came from venture capital-funded small biopharmaceutical companies, not pharma industry giants, (2) of these new approvals, the origin of half the molecules are outside the United States, a much higher percentage than ten years ago, and (3) personalized medicine and the influence of information technology on biotech is leading to smaller market sizes, and a weaker patent system is threatening the ability to realize a return on investments in this area.

Innovation is Moving Overseas

Damon Matteo of Fulcrum Strategy, an IP asset management firm, began his comments with an ominous warning: “Be afraid, be very afraid.” As a practicing IP attorney, Matteo noted that he has seen clients increasingly interested in securing their IP in Europe and China rather than the US, and that China specifically is embracing the software and business method patents that have been abandoned by the US system. Investment has been moving overseas because that’s where patents still have value. Matteo also pointed out that China has been much more favorable to patent owners in IP litigation, as plaintiffs in infringement suits prevail 60% of the time. And injunctive relief—which has become a completely improbable outcome in US litigation—is granted in upwards of 90% of infringement cases in China when there’s been a finding of infringement.

Peter Detkin, founder of the IP development and licensing company Intellectual Ventures, weighed in on some of the “alternative facts” and hysteria that have resulted in the current state of the US patent system. Despite claims over the last 15 years that extortionary demand letters were being sent by the thousands, patent ligation had gotten out of control, and patents were killing investment in R&D and startups, Detkin pointed to multiple analyses by government agencies such as the FTC and the Government Accountability Office that revealed no such exceptional activity. Unfortunately, policymakers took the bait, and entrepreneurs in Silicon Valley have suffered as a result of over-reactive legislative and judicial efforts.

As in-house Chief Intellectual Property Officer of Vivant, a fast-growing home security technology company, Paul Evans provided more insight into how absolutely vital patents are to investments and private equity–backed tech startups, emphasizing how “patents have historically created an important competitive advantage in the marketplace.” Sharing a recent professional anecdote, Evans recounted a conversation with the managing director of a private equity firm with $10 billion in assets in which they discussed the past successful sale of a company based largely on its strong patent portfolio. The two agreed that the transaction would never have happened today due to the immeasurable decline in the value of patents. Evans noted that about 85% of small businesses in the US are now technology based, and that if our patent system can’t protect the inventions they rely on, investments and jobs will be reallocated to jurisdictions that will.

Shifting the discussion to the effect innovation uncertainty is having on universities, patent law and tech transfer expert Chris Gallagher warned that university research funding is at risk, and that the system of grants can no longer be relied upon. Despite a recent case that found the 11th amendment shielded state-chartered schools from IPR exposure, Gallagher encouraged all stakeholders to reach out to Congress to push back on the persistent troll narrative that continues to affect university research.

Efficient Infringement is Devaluing Patents

The panel then moved into a discussion of the increasingly common practice of “efficient infringement,” where companies choose to infringe patents instead of licensing, understanding that the current system has made enforcing patents too expensive and risky. Damon Matteo likened the practice to robbing a bank, getting caught, and as a punishment, only having to return a fraction of the money. Peter Detkin then expanded on the analogy:

It’s a great analogy — the bank robbery — because you not only get to say whether you get caught, but if you get caught, you’ll then be able to argue to the Federal Reserve that the bank really shouldn’t have existed in the first place. Then if that fails, you get to argue to them again that their certificate never should have issued, because it’s a different ground than the first time you argued. Then you could argue that the money was improperly issued to the bank… you have all these administrative ways.

Commenting on efficient infringement, Paul Evans explained that bringing a suit for patent infringement now makes no sense, as the current ecosystem demands high costs to defend patents subject to inter partes review (IPR). According to Evans, the cost of each IPR is between $200,000 and $300,000. IPRs are instituted 70% of the time, and of those cases, 80% of the challenged claims are invalidated. Evans noted that investors are aware of these realities and are hesitant to back certain patent-reliant companies. As a result of the uncertain innovative economy in the US, Peter Detkin noted that patent application filings are down, as well as enforcement actions. Alternatively, countries in Asia and the European Union that have embraced software and biotech patents have seen an increase in filings, enforcement actions, licensing, and investment.

Judge Michel then identified software and health science technology as suffering the most under the current “huge cloud of uncertainty,” and pointed out that China and Europe have broadened patent eligibility in these two tech fields as the US Supreme Court has narrowed it. Michel questioned how anyone could make a eligibility determination given the vague standard set by the Mayo and Alice decisions, and expressed frustration in the Supreme Court’s denial of cert in Sequenom v. Ariosa—a case that would have given the Court an opportunity to correct or at least clarify the Section 101 eligibility analysis. With the Supreme Court unwilling to clean up its mess, Judge Michel expressed support for statutory amendments to 101 recently proposed by the Intellectual Property Owners Association (IPO).

Confidence Must Be Restored in the US Patent System

Wrapping up the panel, Robert Sterne made clear that the patent troll narrative that contributed to so many drastic changes in the US patent system is outdated and no longer relevant. While uncertainty about Section 101 eligibility is ubiquitous, Sterne asserted that “[w]hat is clear is that things are not getting better for innovators in the United States who are relying on the U.S. patent system and who are creating a large bulk of the innovation in our country.” And in addition to losing an edge to foreign jurisdictions in industrial competiveness and job creations, Sterne warned that missing out on innovations in the technology the US employs to protect itself could have dire consequences for national security.

In conclusion, Sterne asked each panelist—as practitioners working in the innovation economy—what they would suggest to bring a sense of confidence back to the bleak patent law landscape. Judge Michel encouraged writing to bring awareness to the situation, including articles, op-eds, and direct letters to members of Congress. Paul Stone urged all stakeholders to focus on quality—specifically on the quality of patents reviewed and the quality of advice given to clients. Damon Matteo suggested adopting a financial mindset that considers the dynamics of returns on investments, which would help stakeholders see patents for the commercial instruments they are and should be. Peter Detkin stressed the importance of relying on hard, verifiable data, not anecdotes and hysteria. Paul Evans discussed the need to create an ecosystem that can be viewed by the investment community with some sense of understanding and confidence. Finally, Chris Gallagher insisted that, no matter the excuses of not having enough time, or not wanting to offend the wrong people, everyone must get involved to insert integrity back into the innovative ecosystem.

The concerns expressed by this panel are being echoed by stakeholders in almost every section of the innovation economy, and without a concerted effort to bring sense and clarity back to the patent system, the US is in danger of losing its competitive and innovative edge.

Categories
Patent Law

CPIP Publishes Prof. John F. Witherspoon’s Tribute to the Late Judge Giles S. Rich

Judge Giles S. RichCPIP has published a tribute to Judge Giles S. Rich by Professor John F. Witherspoon. Prof. Witherspoon is Director Emeritus, Intellectual Property Program, Antonin Scalia Law School. Prof. Witherspoon’s career in government, academia, and private practice spans more than fifty years.

After practicing with a patent law firm in Washington, Prof. Witherspoon was appointed by the President in 1971 to be an Examiner-in-Chief and to serve on the then Board of Appeals in the Patent Office. Prof. Witherspoon returned to private practice in 1978 and continued practicing law until he retired in 2016. In 1992, Prof. Witherspoon was invited to join the adjunct faculty at Antonin Scalia Law School as Distinguished Professor of Intellectual Property Law and to head the School’s intellectual property law program.

Upon graduating from Georgetown Law School, Prof. Witherspoon clerked for the Honorable Giles S. Rich at the U.S. Court of Customs and Patent Appeals (now the U.S. Court of Appeals for the Federal Circuit). This tribute is adapted from Prof. Witherspoon’s remarks delivered at the January 18, 2017, meeting of the Giles Sutherland Rich American Inn of Court. Prof. Witherspoon pays a heart-warming tribute to the late Judge Rich, whom many regard as one of the foremost authorities on U.S. patent law.

To read the tribute, please click here.

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Innovate4Health Patent Law

Innovate4Health: Global Good’s “Arktek”: A Life-Saving Super-Thermos Vaccine Cooler

This post is one of a series in the #Innovate4Health policy research initiative.

Innovate4HealthMore than 1.5 million children die every year from diseases that existing vaccines could prevent. Why aren’t these children vaccinated? One big reason is that vaccines need to be kept cool until they reach patients, but that’s a really hard task in parts of the world where power is unreliable.

A new, patented “super thermos,” the Arktek Passive Vaccine Storage Device, aims to solve this global challenge. The Arktek was developed by Global Good, a collaboration between the Gates Foundation and the innovation lab of Intellectual Ventures.

The Arktek mends gaps in the “cold chain,” the refrigerated vaccine supply chain. Breaks in the cold chain occur because power is unreliable or minimal in many places. Also, many people live in places that cannot be reached by refrigerated transport. These gaps make it impossible to keep the vaccines fresh, and thus render them unusable in less than a week’s time.

In 2008, the Gates Foundation challenged Intellectual Ventures to help fix the cold chain problem. The resulting collaborative effort, spearheaded by Global Good, invented the Arktek Passive Vaccine Storage Device, nicknamed the “super-thermos” and the “keg of life” by Bill Gates.

The Arktek keeps vaccines at a temperature between zero and eight degrees Celsius for 30 to 60 days, depending on outside temperatures and humidity. Testing shows that it retains its cooling capacity even when outdoor temperatures rise to 43 degrees Celsius (110 degrees Fahrenheit). It does not rely on outside sources of electricity or other power. This is a major step forward in vaccine cooling systems, especially in much of the developing world, in which stand-alone cold storage devices struggle to keep vaccines at proper temperatures for a maximum of five days.

The “super-thermos” bears some resemblance to an ordinary coffee thermos. In 2013, the leader of the vaccine cooler development team described it as “a super-insulated, double-walled [bottle] that holds the vaccine and ice in the middle in an inner bottle. A vacuum space separates it from the outer bottle, like a large coffee thermos.” The device combines a double-walled bottle filled with vacuum insulation with multi-layer insulation technology of the type used to protect spacecraft from extreme temperatures. It holds approximately 16 pounds of ice.

Incredibly, a vaccine kept in the Arktek for weeks will be as cold as the moment it was placed inside. No powered refrigeration or additional ice is needed.

Keeping vaccines cold isn’t the only problem that the Arktek solves. Gaps in the cold chain tend to occur in places where travel is rugged and environments are challenging. Also, sophisticated medical facilities are rarely waiting at the end of a gap in the cold chain. Any solution has to be extremely tough and user-friendly.

The Arktek meets these challenges by providing near-indestructible structural integrity and high-usability in the field. To make the device sturdy, user-friendly, and easy to maintain and use, the development team at Global Good sacrificed a bit of longevity in favor of efficiency. The sixth and current prototype is therefore created for maximum efficiency, and can hold routine vaccinations for approximately 200 children or a village with a population of 6,000.

Other features help both local users and remote health officials to monitor the integrity of the vaccines. Sensors measure key information at 15 minute intervals, including the Arktek’s interior temperature, its exterior temperature, and how long it has been opened. It alerts users when temperatures begin to rise too much, and even has an LED light that comes on when a user opens the lid.

The data collected by the Arktek’s sensors is extremely accessible to all concerned. On-site users can download data logs using a simple USB stick. Meanwhile, an antenna sends data via SMS to a local telephone number every day at midnight. It provides remote personnel a summary of the day’s temperatures, location, and statistics recording when the device has been opened and for how long a period. Finally, a GPS sensor allows health officials to track the location of the devices at any given time.

During pilot testing, Global Good found the sensors to be particularly useful. For instance, if a health official was not using the device properly, Global Good was notified, and could contact the official directly and assist with training them appropriately. Armbruster observed that this kind of monitoring could eventually be relegated to local ministries of health to enable them to ensure that “they have a reliable cold chain all the way to the end point.”

Armbruster sees the Arktek as best-suited to modest villages of 5,000 to 15,000 people, in which it will be cost-effective to have a device that can be refreshed once a month by health officials. He says it may be somewhat less-suited to larger villages of 25,000 to 50,000 people, in which a large solar-powered or ice-lined refrigerator is feasible. And it may not be necessary in locales that have a reliable and consistent source of power. The cost per unit for this device currently ranges from $1,200 to $2,400, which makes it relatively affordable to health officials in the developing world.

Currently, the Arktek is in the early adoption stage of development. The WHO has “prequalified” the Arkteks under its Performance, Quality and Safety (PQS) program, which is an important seal of approval for government procurement. Global Good has collaborated with the Clinton Health Access Initiative, PATH, UNICEF, and other United Nations organizations to conduct field trials of the Arktek in Ghana, Senegal, Ethiopia, and Nigeria.

While the Arktek is still being refined for further roll-outs, it has already seen some action where it could do the most good. For example, it has stored vaccines for tuberculosis, polio, influenza, whooping cough, tetanus, hepatitis B and diphtheria. In 2014, Global Good donated 30 Arkteks to help the WHO deliver vaccines during the Ebola outbreak; and in the following year, it donated Arkteks to Nepal to assist with vaccinations after the 2015 earthquake.

Global Good is relying on property rights and commercial distribution to develop and deploy the Arktek. Aspects of the technology have been patented. Meanwhile, Global Good is currently partnering with AUCMA, a leading refrigeration manufacturer, to help commercialize Arktek and produce it at scale at an affordable price.

In 2016, Global Good received a “Patents for Humanity” award for the Arktek from the U.S. Patent and Trademark Office.

The Arktek is a vivid illustration of how patented innovation can tackle global challenges. It’s a clever, pragmatic and practical invention with a global reach and import. It reminds us that secure property rights can generate, develop and disseminate life-saving solutions to seeming intractable problems.

#Innovate4Health is a joint research project by the Center for the Protection of Intellectual Property (CPIP) and the Information Technology & Innovation Foundation (ITIF). This project highlights how intellectual property-driven innovation can address global health challenges. If you have questions, comments, or a suggestion for a story we should highlight, we’d love to hear from you. Please contact Devlin Hartline at jhartli2@gmu.edu.

Categories
Innovation Patent Law Supreme Court

CPIP Scholars File Amicus Brief Urging Consideration of Claimed Inventions as a Whole

U.S. Supreme Court buildingLast week, CPIP Senior Scholar Adam Mossoff and I filed an amicus brief on behalf of 15 law professors, including CPIP’s Devlin Hartline, Chris Holman, Sean O’Connor, Kristen Osenga, and Mark Schultz. We urge the Supreme Court to grant certiorari in TDE Petroleum v. AKM Enterprise and reaffirm that any analysis of an invention must be of the claimed invention as a whole.

Unfortunately, lower courts and the Patent & Trademark Office have been applying a test of patent eligibility that allows breaking up an invention into parts and then analyzing the parts separately. Sometimes, as in the case here, a court will completely ignore an element of the invention. This needs to be fixed. Any invention is defined by its entirety, not by its isolated parts.

As I discussed before, TDE Petroleum’s patent claims a method of operating an oil rig. Part of the method uses software. But as the claim discussed in our brief makes clear, the end result of the method is control of a physical well with a drill running inside the earth. However, the courts that have looked at this patent so far have only considered the function of certain software elements and pretend the oil rig is not important. Such unimpeded dissection of claims makes it easy to invalidate important patented innovation notwithstanding the contribution to the field.

The full amicus brief can be found here. In addition to showing that the claimed invention is a method of operating an oil rig, we show why the claim precisely parallels a claim to a method of molding rubber found patent eligible by the Supreme Court 36 years ago.

Categories
Patent Law Uncategorized

New Paper Addresses Flaws in Patent Holdup Theory

dictionary entry for the word "innovate"Stephen Haber and Alexander Galetovic of the Hoover Institution’s Working Group on Intellectual Property, Innovation and Prosperity (IP2) published a new working paper on the problems with Patent Holdup Theory. In “The Fallacies of Patent Holdup Theory,” Professors Haber and Galetovic show that Patent Holdup Theory is based on three fundamental errors. Professor Haber presented this work in October at CPIP’s 2016 Fall Conference.

At its core, Patent Holdup Theory asserts that patents impede innovation through holdup and royalty stacking, and that these problems are exacerbated in fields reliant on standard essential patents. First, the paper shows that Patent Holdup Theory contradicts basic understandings of holdup in Transaction Cost Economics. The second problem identified in the paper is that “royalty stacking” cannot occur in the way the Theory requires because holdup cannot occur multiple times to the same firm. Third and finally, Patent Holdup Theory implicitly requires the fallacious result that patents add little or no value to the markets they help create, particularly in the context of technology standardization.

Haber and Galetovic also make an interesting observation about the implications of Patent Holdup Theory that show why it should have been obvious that the Theory was flawed from the beginning. If the premises of Patent Holdup Theory were correct, innovation in industries where it occurred would be stagnant. The fact that innovation is strong in the high tech industries suggests that there is a problem with the Theory. This paper provides excellent insights into identifying the exact problems with the Theory.

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Innovation Patent Law Uncategorized

Federal Circuit Improperly Extends Abstract Idea Exception to Industrial Machines

a gavel on a table in front of booksAn oil well drilling rig is not an abstract idea. A method of operating an oil well drilling rig is also not an abstract idea. This proposition should be clear to all, but in TDE Petroleum Data Solutions v AKM Enterprise, the Federal Circuit held that a method of operating an oil well drilling rig is directed to the abstract idea of “storing data, receiving data, and using mathematics or a computer to organize that data and generate additional information.”

Section 101 of the Patent Act has been interpreted to prohibit the patenting of abstract ideas, laws of nature, and natural phenomena. Although recent Supreme Court cases have universally found the patents at issue ineligible, Bilski, Alice and Mayo cite approvingly to a previous Supreme Court case, Diamond v. Diehr, which found a process for molding rubber articles with the aid of a computer to be patent eligible.

Alice and Mayo established a now-famous two-part test to determine whether a patent claims ineligible subject matter. The first step of the Alice/Mayo test asks whether the claim is “directed to” one of the prohibited categories. The second step asks whether the claim involves an “inventive concept” sufficient to confer patent eligibility. The Federal Circuit has applied this test with ruthless efficiency to invalidate patents, although sanity is slowly returning as the court has upheld patents improving computer animation of faces and the preservation of liver cells.

Unfortunately, the Federal Circuit rarely compares the facts of the cases before it to controlling Supreme Court precedent. The clear similarity between the claims to operating an oil well drilling rig in TDE and the claims to curing rubber in Diehr show how far off course the Federal Circuit has veered in interpreting section 101.

In Diehr, the claimed method used a computer to precisely control a rubber molding process. The computer allowed the inventors to measure and recalculate the time to cure the rubber while it was in the mold. At the end of the method, a rubber article was produced. In TDE, the claimed method used a computer to control the drilling of an oil well. The computer permitted the inventors to accurately determine the state of the well operation. Different claims provided for different ends of the method, including adjusting the operation of the drill (claim 30) and selecting the state of the well operation (claim 1).

A side-by-side analysis of representative claims from TDE and Diehr at the bottom of this post shows exactly how similar they are. Each claim recites (1) an industrial process that uses (2) initial data combined with (3) newly collected data that is (4) analyzed to (5) improve the output or operation of the industrial process.

It is worth repeating: in both Diehr and TDE, the claims were directed to an industrial process. The general industrial processes existed previously in the art. Molding rubber using the defined equation was well known. Drilling an oil well with consideration of the state of the well operation was known. The contributions in both Diehr and TDE were the addition of data collection and analysis to improve the operation of the industrial process. Neither portion of the Federal Circuit’s analysis in TDE cites to Diehr, let alone analyzes the obvious similarities between the claims at issue and those found patent eligible by the Supreme Court.

In a single paragraph of analysis regarding step one of the Mayo/Alice test, the Federal Circuit held that claim 1 of the TDE patent was directed to the abstract idea of “storing data, receiving data, and using mathematics or a computer to organize that data and generate additional information.” It completely ignored parts of the claim that required the data to be collected from an oil well drilling operation and to be used for the oil well drilling operation. Of course, ignoring these parts of the claim was required to find that the claim was directed to an abstract idea of data manipulation.

Also taking only a single paragraph, the Federal Circuit’s analysis of Mayo/Alice step two was similarly devoid of engagement with the explicit claim requirements of an oil well drilling operation. Instead, it focused only on what the computer was doing in the process, rather than the process as a whole. Diehr, along with many other cases, explicitly requires that the process be considered as a whole in the section 101 analysis.

The Federal Circuit’s error here is worse than it was in Ariosa v. Sequenom. In Ariosa, the court engaged with the closest factual Supreme Court precedent, although it felt bound by Mayo to find the claims ineligible. However, the court in TDE completely ignored and disregarded Diehr, the Supreme Court case that aligns in both law and fact with the claims at issue. Had the court analyzed or considered Diehr, it is likely the outcome would have been different.

To the extent that one asserts the final method of utilizing the data distinguished claim 1 in Diehr from claim 1 in TDE, dependent claim 30 of the patent at issue in TDE cured this defect. Claim 30 recites: “[t]he method of claim 1, further comprising using the state of the well operation to evaluate parameters and provide control for the well operation.” (emphasis added). Thus, the patent in TDE explicitly claimed the actual operation of the industrial machinery, just as the claim in Diehr.

The Federal Circuit stated that it was not considering separately the remaining claims of the patent, ostensibly because TDE did not “distinguish those claims from representative claim 1.” On the contrary, TDE argued claim 30 and related claims separately on precisely the ground that claim 30 “closed [the] loop” and required control of the well.

At this point, it is clear that neither the Federal Circuit nor the Supreme Court are going to step in to fix the wayward path of patent eligibility law. It will therefore be up to Congress to affirm what should be apparent to all: an oil rig is not an abstract idea.

Diehr – Claim 1* (US Application No. 05/602,463) TDE – Claim 1 (US Patent No. 6,892,812) Analysis
1 – Preamble A method of operating a rubber-molding press for precision molded compounds with the aid of a digital computer, comprising: An automated method for determining the state of a well operation, comprising: Both claims are directed to industrial processes where the underlying process (rubber molding or oil well drilling) existed prior to the invention
2 – Initial Data providing said computer with a database for said press, including at least,

natural logarithm conversion data (ln),

the activation energy constant (C) unique to each batch of said compound being molded, and

a constant (x) dependent upon the geometry of the particular mold of the press,

 storing a plurality of states for a well operation; Both claims require data to be provided prior to operation of the method to interpret data collected.
3 – New Data Collection initiating an interval timer in said computer upon the closure of the press for monitoring the elapsed time of said closure,

constantly determining the temperature (Z) of the mold at a location closely adjacent to the mold cavity in the press during molding,

constantly providing the computer with the temperature (Z),

 receiving mechanical and hydraulic data reported for the well operation from a plurality of systems; Both claims require collecting data from sources that are specific to the machinery being operated. Therefore, both claims require specific machinery, not just a general purpose computer.
4 – Data Analysis repetitively calculating in the computer, at frequent intervals during each cure, the Arrhenius equation for reaction time during the cure, which is

ln v = CZ + x

where v is the total required cure time,

repetitively comparing in the computer at said frequent intervals during the cure each said calculation of the total required cure time calculated with the Arrhenius equation and said elapsed time, and

 and determining that at least some of the data is valid by comparing the at least some of the data to at least one limit, the at least one limit indicative of a threshold at which the at least some of the data do not accurately represent the mechanical or hydraulic condition purportedly represented by the at least some of the data; and when the at least some of the data are valid, based on the mechanical and hydraulic data, Both claims analyze the data.

Although not apparent on the face of the claims, the underlying data analysis existed in the art for both claims. The Arrhenius equation was well known. Validating well drilling data against a limit was known in the art although its usefulness was disputed.
5 – Utilizing the Data opening the press automatically when a said comparison indicates equivalence. automatically selecting one of the states as the state of the well operation. Both claims use the data generated in the industrial process. Selecting an individual state of a well operation in a necessary component of operating the well.

*Claim 1 is representative for both the application in Diehr and the patent in TDE.

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FTC Patent Law Uncategorized

FTC’s PAE Study Makes Unsupported Recommendations

Washington, D.C. at nightThe FTC released its long-awaited study of so-called patent assertion entities, or PAEs, today. As many predicted, the FTC makes several broad recommendations for substantive and procedural reforms. The problem with this, however, is that the study was not designed to reveal the sort of data that could support such policy recommendations.

The FTC itself even admitted this. When seeking approval from the Office of Management and Budget (OMB) to go ahead with the study, the FTC explained that its findings “will not be generalizable to the universe of all PAE activity.” In another submission to the OMB, the FTC acknowledged that “the case study should be viewed as descriptive and probative for future studies seeking to explore the relationships between organizational form and assertion behavior.” Now that the study is out, we see that the FTC has neglected to recognize the very limitations it once acknowledged to exist.

The simple fact is that the PAE study is just the first step down the long road to understanding the complicated world of PAEs. While the study’s results reveal some information about a handful of firms, they don’t—because they can’t—tell us how PAE activity affects competition and innovation in general. The sample size is too small, and the questions are too open-ended, to have any predictive power.

It’s clear that many had already jumped the gun, claiming both that we need this study to understand PAEs but that we know enough about PAEs to condemn them. They were going to use this study to argue for broad reforms no matter what it said. And now that the study is out, itself suggesting many fundamental changes, the anti-patent crowd has more fuel for the anti-inventor bonfire. That the study does not support its conclusions matters a great deal, and it’s disappointing that the FTC would use an exploratory study designed to simply suggest hypotheses to claim that those hypotheses have now been fully tested.

To better understand the limitations of the FTC’s study, here are some recommended readings:

Papers

  1. Anne Layne-Farrar, What Can the FTC’s §6(B) PAE Study Teach Us? A Practical Review of the Study’s Methodology
  2. Kristen Osenga, Sticks and Stones: How the FTC’s Name-Calling Misses the Complexity of Licensing-Based Business Models
  3. Fritz Scheuren, Statistics and the Paperwork Reduction Act: An FTC Case Study

Essays

  1. Devlin Hartline, Acknowledging the Limitations of the FTC’s PAE Study
  2. Devlin Hartline, How Rhetorical Epithets Have Led the FTC Astray in its Study of Patent Licensing Firms
  3. Anne Layne-Farrar, What Can the FTC’s PAE Study Teach Us?
  4. Kristen Osenga, Why the FTC Study on PAEs is Destined to Produce Incomplete and Inaccurate Results
  5. Fritz Scheuren, What Can We Learn From the FTC’s Patent Assertion Entity Study?