UA LAW IP – Page 19

The Value of Public Data: Update to “Turning Gold to Lead”

Post author By Joshua Grove
Post date June 28, 2018

files labeled as "patents" By Kevin Madigan & Adam Mossoff

A key value in the empirical work done in the social sciences and in the STEM fields is that data is made public and available for review, testing, and confirmation. Humans are neither infallible nor omniscient, and thus this standard practice in empirical research has evolved as a way to ensure that mistakes are identified and corrected. All scholars should ensure that their data is accessible, their analysis is understandable, and the means by which they draw their conclusions in both content and method is independently verifiable. As scholars, we embrace these principles.

Thanks to our making the data publicly available, we recently discovered that we made a mistake in listing a patent application number in an essay we published on a dataset of patent applications. In Turning Gold to Lead: How Patent Eligibility Doctrine Is Undermining U.S. Leadership in Innovation, George Mason Law Review, vol. 24 (2017), pp. 939-960, we reported on a dataset compiled by David Kappos and Bob Sachs of 17,743 patent applications “that received a § 101 rejection in initial or final office actions and then were abandoned between August 1, 2014 and September 27, 2017” (p. 941, footnote 10). The Kappos-Sachs dataset, as we detail in our article, identifies 1,694 patent applications among these 17,743 applications that received initial or final rejections and were ultimately abandoned in the United States, but patents were granted on the same inventions by the European Patent Office, China, or both.

We used the Kappos-Sachs dataset in our essay to highlight a “disturbing trend” in the U.S. patent system today in comparison to other countries. Our essay does not draw statistical inferences about this dataset, but rather reports on it and contextualizes it within the changes in patent eligibility jurisprudence recently wrought by the U.S. Supreme Court. We compare the more restrictive approach in patent eligibility doctrine in the U.S. today with historically a more open and accessible patent system for cutting-edge innovation in the U.S. The earlier approach led commentators to refer to the U.S. patent system as the “gold standard” compared to the rest of the world. Thus the title of our essay, “Turning Gold to Lead.”

In our essay, we listed twelve patent applications that exemplified this new disturbing trend of the closing of the U.S. patent system to cutting-edge innovation, as compared to other countries (pp. 957-958). In accord with publicly accessible data standards, we identified these twelve applications in a table with their patent application numbers, the titles of the inventions in the applications, the publication dates of the applications, and the assignees of the now-abandoned U.S. applications.

We have since learned that we made a mistake in one of the patent application numbers listed in this table. The invention, “Method for Growing Plants,” is listed as application number US12/139,753. This was a “parent” application that was ultimately rejected on novelty (§ 102) and nonobviousness (§ 103) grounds, but it was not rejected for lack of § 101 patent eligibility. We should have instead listed patent application US12/968,726, which has the same title, “Method for Growing Plants,” and is the “child” application of the mistakenly listed “parent” application.

(For non-patent-law geeks, a “parent” is a patent application during which, while its examination is still pending, the applicant files another patent application on a related invention that is linked to the “parent” in order to receive the earlier invention/filing date of the parent. These patent applications are also linked in the database of applications in the USPTO. This related “child” application is a new application that may disclose new features of or adds new claims to the original “parent.” These additional, related applications are expressly permitted under § 120 and § 121 of the Patent Act.)

We would also like to make clear that our essay reports on the Kappos-Sachs dataset, which comprises patent applications that have been abandoned by the applicants after an initial or final rejection on § 101 patent eligibility grounds. A typo at the end of footnote 10 on p. 941 leaves out the “initial,” and this could be confusing given the earlier sentence in the footnote that refers to both “initial or final rejections.” An example of an initial rejection for lack of § 101 patent eligibility is a patent application in our table on pp. 957-958: patent application US13/746,180, titled “Methods For Diagnosing and Treating Prostate and Lung Cancer.” This patent application received an initial rejection based on § 101 for lack of patent eligibility, but the applicant continued to pursue the application at the USPTO, revising and resubmitting the application in the hope it would be granted. This patent application was ultimately abandoned, just like all the others in the dataset, and the very last rejection before this abandonment was one in which the examiner argued that it was not patentable given its obviousness (§ 103) and a lack of proper disclosure (§ 112).

Pursuant to the terms of the Kappos-Sachs dataset, there was an initial rejection under § 101 for patent application US13/746,180 and it was ultimately abandoned. In fact, given the extensive confusion now in the courts and at the USPTO between the legal standards of § 101 and § 103, as many scholars and others have widely recognized, it is completely unsurprising to find an initial rejection under § 101 morph into a rejection under § 103 after which the applicant then abandoned it (while the corresponding patent for the same invention was granted in other countries where it was not similarly rejected and abandoned).

We regret any confusion that may arise from the dynamic and evolving examination histories of the patent applications in the Kappos-Sachs dataset, and we especially regret listing the wrong “parent” application number instead of the “child” application number.

This is just the start of data collection on the nature and impact of the overly restrictive approach to patent eligibility in the U.S. in the past several years. We hope that scholars trained in rigorous statistical analysis will start to scrutinize the Kappos-Sachs dataset. As we state in the conclusion of our essay:

This Essay highlights empirical data about extensive invalidations of patents by the courts and by the PTO, and hundreds of patent applications rejected in the U.S. but granted for the same or similar inventions in Europe and China. This data reflects a very disturbing trend that portends darkly for the future of the U.S. innovation economy. The data deserves to be mined further with rigorous statistical analysis, investigating more closely issues like technology classes and other relevant variables, but this is beyond the scope of this conference Essay.

Our essay is short and so we invite any interested parties to consider it for themselves. Also, as we said, the dataset is on the Internet and available to all (unlike empirical claims made by others in the patent policy debates that are based in secret, proprietary data and infected with basic methodological problems in statistical analysis).

In conclusion, we wish to express (again) our profound appreciation to David Kappos and Bob Sachs for sharing their dataset with us. We were honored that they gave us permission to report on it. We apologize for any confusion caused by our “scrivener’s error” in listing the wrong patent application number and any confusion caused by an applicant’s ongoing attempts at trying to obtain a U.S. patent before abandoning it after receiving an initial § 101 patent eligibility rejection.

One final minor update is necessary. In our essay, we expressly state that if anyone has questions about the dataset, they should contact Robert Sachs, but the email address is at his old law firm and is now defunct. Bob can now be contacted at rsachs@patentevaluations.com.

Tags Adam Mossoff, Bob Sachs, David Kappos, Kevin Madigan, nonobviousness, Patent Office, patentable subject matter, Section 101, Section 103, subject matter eligibility, USPTO

Patent Law Pharma

New CPIP Policy Brief: An Unwise Move to Discriminate Against Pharmaceutical Patents

Post author By Joshua Grove
Post date June 7, 2018

CPIP has published a new policy brief entitled An Unwise Move to Discriminate Against Pharmaceutical Patents: Responding to the UN’s Guidelines for Pharmaceutical Patent Examination.

The brief, written by CPIP Senior Scholar and UMKC Professor of Law Chris Holman, analyzes the UN’s recent Guidelines for Pharmaceutical Patent Examination, which are influential in the policy debates regarding the role of patented pharmaceuticals in public health. Professor Holman critically examines the Guidelines, pointing out that they “put a thumb on the scale in favor of generic medications” while failing to adequately consider “the development and incremental improvement of innovative pharmaceutical products.”

The Executive Summary is copied below:

EXECUTIVE SUMMARY

Recently, United Nations agencies have encouraged countries to make it harder to get patents on pharmaceuticals. The primary vehicle for this policy has been the Guidelines for Pharmaceutical Patent Examination: Examining Pharmaceutical Patents from a Public Health Perspective (the “Guidelines”). The Guidelines advocate excluding entire categories of pharmaceutical inventions from patentability.

This new approach represents a departure from past patent policy. The patent system has long applied the same rules to everybody instead of discriminating against particular types of technologies or industries. Ordinarily, each invention is judged on its individual merits based on neutral and generally-applicable rules for patentability.

The aim of the Guidelines is to make medicines cheaper, which is a laudable goal, but the kind of goal that has long been kept out of patent examination for good reasons. If a government objects to the prices of a product or how a business behaves in the marketplace, it applies other laws after the patent is granted. But when governments interject politics and policy before a patent is granted, the patent system as a whole becomes unreliable and unpredictable. Businesses are reluctant to invest in unreliable property rights and in the markets that make them unreliable. They either stop investing in innovation or avoid the markets where their innovations are unprotected.

The Guidelines contend that many forms of pharmaceutical innovation are inherently routine and hence unpatentable by default. Consequently, they demand exceptional circumstances from pharmaceutical inventions not required in other fields. The Guidelines would also restrict patents on innovations that occur later during drug development, including after the initial launch of a product.

This Policy Brief provides an evidence-based review of the categories of pharmaceutical innovation addressed by the Guidelines and dismissed as undeserving of patents. These include “Markush claims,” selection patents, patents on different forms of the drug, prodrugs and metabolites, compositions, combinations, doses, and new medical uses. Many of these categories of inventions are rather technical, so the Policy Brief attempts to briefly illuminate what each is and why it matters to the process of discovering and bringing new drugs to patients.

Once each category is carefully explained and examined, one finds real innovations. As illustrated by the decisions surveyed in this Policy Brief, when courts delve deeply into the substance of these inventions, they are often struck by the unpredictability and difficulty inherent in pharmaceutical innovation. These innovations can provide new and beneficial ways to formulate, prepare, and deliver the drugs as well as different ways to use the drugs.

Considered in the abstract, it is easy to devalue the inventiveness of the categories of pharmaceutical innovation targeted by the Guidelines. However, it is hoped that this Policy Brief and the full-length version, In Defense of Secondary Pharmaceutical Patents: A Response to the UN’s Guidelines for Pharmaceutical Patent Examination, will provide some counterweight to balance some of the more radical, and in my view unwarranted, recommendations set forth in the Guidelines. The interested reader should consult the full-length article for an expanded explanation including examples and citations to primary sources.

To read the policy brief, please click here.

Tags Chris Holman, Guidelines, pharma, pharmaceutical patents, UN, United Nations

Despite Professors’ Misleading Rhetoric, CLASSICS is a Big Win for Everyone

Post author By Joshua Grove
Post date May 29, 2018

the word "copyright" typed on a typewriter By Matthew Barblan

America’s music industry is experiencing a historic moment. For the first time ever, stakeholders from across the industry have set aside their differences and come together to find a way to modernize our music licensing system. And what’s more, these diverse stakeholders—ranging from artists and record labels, to songwriters and music publishers, to the technology companies that distribute music throughout the country—have finally agreed on a framework for legislative reform. The resulting bill is the Music Modernization Act of 2018 (H.R. 5447, S. 2823, hereafter “MMA”), which passed the U.S. House of Representatives in April by a vote of 415-0 and is now under consideration in the U.S. Senate.

Nearly everyone sees the bill as the kind of win-win compromise that exemplifies lawmaking at its best. Nobody gets everything they want, but everyone gets something they need, and everyone is better off. Tech companies that distribute music will get relief from an uncertain patchwork of state laws for digital performances of pre-1972 sound recordings and from the difficulty of identifying the songwriters associated with millions of songs available on popular platforms like Spotify. Songwriters and music publishers will get a willing buyer/willing seller royalty rate for use of their songs that more closely resembles a rate negotiated in a free market, along with a brand new licensing collective to distribute royalties. Artists and record labels will get long-overdue recognition of the economic value of music recorded before 1972, which finally will be subject to the same federal licensing scheme for digital performances that applies to post-1972 sound recordings (and the licensing scheme, in turn, will be modified to create platform parity by applying the same royalty rate to all digital platforms).

Importantly, the public will get a healthier music ecosystem that spurs creativity by (1) giving artists and songwriters more confidence that the fruits of their labor will be protected and rewarded, and (2) giving technology platforms and others more confidence to distribute music without risking exposure to uncertain liabilities.

But not everyone is happy. Two weeks ago, a group of professors submitted a letter to the Senate Judiciary Committee complaining about the bill. Specifically, the professors take issue with the section of the bill that creates a federal right and a federal compulsory licensing scheme for the digital public performance of pre-1972 sound recordings. This section, titled Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society (CLASSICS), takes a small step towards correcting a historical injustice inflicted upon artists who recorded their songs before 1972. Unfortunately, instead of acknowledging the importance of correcting this injustice or exploring how CLASSICS will improve artist/songwriter/platform confidence in America’s music ecosystem, the professors make several misleading claims about CLASSICS and ultimately argue that it will harm the public.

This essay provides an important corrective.

The Misleading Term Extension Argument

In their letter to the Senate, the professors accuse CLASSICS of being an unjust extension of copyright term. One of the letter’s signatories—Professor Larry Lessig—further echoed this criticism in a high profile op-ed in Wired, lamenting that “the fight for [copyright] term extension has begun anew.”

It is deeply misleading to characterize CLASSICS as copyright term extension, and lawmakers and the public should not be fooled by this rhetorical ploy. The truth is that CLASSICS does nothing to extend the copyright term of pre-1972 sound recordings. That term is set by a combination of state law and Section 301(c) of the federal Copyright Act, which was enacted long ago and which CLASSICS would not change. Under the existing law of most states, the copyright term for pre-1972 sound recordings is perpetual, but Section 301(c) of the Copyright Act will step in to extinguish state law copyrights for pre-1972 sound recordings in February of 2067. This is the framework now, and this will continue to be the framework if CLASSICS is adopted as law.

CLASSICS does create a new federal cause of action that owners of pre-1972 sound recordings (secured under state copyright law) can use to protect their property from unjust exploitation. Specifically, CLASSICS protects pre-1972 sound recording copyright owners from unauthorized digital public performances of their works. But this new federal cause of action does not extend the copyright term of pre-1972 sound recordings. In fact, with respect to the new cause of action, CLASSICS actually shortens the applicable enforceability period by excluding sound recordings made before 1923. By contrast, when it comes to reproduction, distribution and other rights protected under state copyright law, sound recording copyright owners can sue infringers regardless of how old the sound recordings are.

Furthermore, since the new cause of action would not be retroactive and would not take effect until after the MMA is signed into law, the effective enforceability period for the CLASSICS cause of action will be less than 50 years. If the law takes effect in 2019, it would run for 48 years from 2019 to 2067. This modest enforceability period is a far cry from the “total term of protection of 144 years” that Professor Lessig claims the bill provides.

In this context, to call CLASSICS a copyright term extension defies logic. Rather, the bill would create a new cause of action—attached at the hip to already existing copyrights—that does nothing to affect the already-existing term for those copyrights.

The Misleading Statutory Limitations Argument

Unfortunately, the misleading criticism of CLASSICS does not end with claims of term extension. In the same letter, the professors complain that CLASSICS “arbitrarily exempts pre-1972 sound recordings from almost all the statutory copyright limitations that apply to other types of works.” As an example, the professors note that, under CLASSICS, pre-1972 sound recordings would not be subject to Section 114 of the Copyright Act.

But it takes only a cursory glance at the bill to see that CLASSICS squarely situates pre-1972 sound recordings within Section 114’s compulsory licensing scheme. While CLASSICS prevents digital distribution platforms from profiting off of pre-1972 recording artists’ hard work without providing any compensation in return, CLASSICS does not give pre-1972 sound recording copyright owners a right to negotiate license rates in a free market. Instead, just like for post-1972 sound recordings, digital platforms will still be able to publicly perform pre-1972 sound recordings by simply complying with the terms of the Section 114 license. In light of this, it is truly bizarre to see professors complaining that CLASSICS exempts pre-1972 sound recordings from Section 114.

It is equally bizarre to see Professor Lessig argue in his Wired op-ed that because “there is no registry of [pre-1972 sound recording] owners anywhere,” if CLASSICS were to become law “no public or non-profit website could even begin to bear the cost of assuring they were not committing a crime.” For one thing, the Section 114 compulsory license is not limited to private or for-profit entities, and it does not require the licensee to identify the particular pre-1972 sound recording copyright owner in order to take advantage of the license. CLASSICS also makes the digital public performance of pre-1972 sound recordings subject to the Copyright Act’s statutory limitations for uses by libraries, archives, and educational institutions—limitations that would not otherwise apply to pre-1972 sound recordings. In doing so, CLASSICS makes it easier, not harder, for public and non-profit institutions to publicly perform pre-1972 sound recordings without risking liability.

Additionally, despite Professor Lessig’s suggestion to the contrary, CLASSICS would not create any criminal penalties. Simply reading the first sentence of the first subsection of CLASSICS makes clear that the cause of action is limited to the civil remedies codified in Sections 502 through 505 of the Copyright Act. Unfortunately, once Professor Lessig’s op-ed was published, thousands of Wired readers were potentially misled into thinking that Congress was trying to create new criminal penalties through the MMA.

Furthermore, it is deeply misleading to characterize CLASSICS as “arbitrarily exempting” pre-1972 sound recordings from any of the Copyright Act’s statutory limitations. CLASSICS itself doesn’t include any such exemptions; rather, the Copyright Act’s failure to include pre-1972 sound recordings as federal copyrightable works in the first place is the source of any so-called “exemptions.” In fact, CLASSICS significantly increases the statutory limitations applicable to pre-1972 sound recordings. And far from doing so “arbitrarily,” CLASSICS applies the limitations that are most relevant to the digital public performance of pre-1972 sound recordings. The professors lament that CLASSICS doesn’t make pre-1972 sound recordings subject to the limitations in Section 119 of the Copyright Act. But why would it? Section 119 deals with “secondary transmissions of distant television programming by satellite.” It’s simply not relevant to the new cause of action that CLASSICS would create.

To assert that CLASSICS “arbitrarily exempts” pre-1972 sound recordings from the Copyright Act’s limitations ignores both the fact that CLASSICS provides no such exemptions in the first place and the fact that CLASSICS, for the first time, subjects pre-1972 sound recordings to the most significant limitation in the Copyright Act—statutory licensing.

The Misleading “Purpose of Copyright” Argument

The professors also argue that because CLASSICS “grants new federal protections to old works,” it “does nothing to incentivize the creation of new works,” and as a result it does not serve the purposes of copyright law. Professor Lessig echoes this argument in his Wired op-ed, stating that CLASSICS “has nothing to do with the constitutional purpose of ‘promot[ing] Progress’” because it is a “blatant a gift without any public return as is conceivable.” This argument is misleading for two reasons. First, it implies that the only purpose of copyright law is the direct incentive to create new works. And second, it assumes that giving new protections to old works necessarily does nothing to incentivize the creation of new works. Neither of these assumptions are reasonable.

It is baffling to see scholars of copyright law ignore the fact that copyright serves more than one purpose. Simply looking at the way that copyright operates in the creative industries reveals that in addition to incentivizing the creation of new works, copyright also incentivizes investment in the dissemination and curation of pre-existing works. After all, the public interest—or the “Progress of Science”—isn’t served by the mere existence of creative works. The public interest is served by the existence of creative works that people actually know about and consume—the books and songs and movies and works of art that change our lives and contribute to a flourishing human experience. Like other property rights, copyright is the underlying asset that secures crucial investments in commercializing, marketing, and distributing products (in this case creative works) so that the public actually gets to enjoy them.

By adding clarity to the legal status of digital public performances of pre-1972 sound recordings—and jettisoning an uncertain patchwork of state laws—CLASSICS makes it easier for businesses and other organizations to disseminate these works without facing potential liability under the laws of the various states. Yes, they’ll have to secure a license to do so, but by bringing digital performances of pre-1972 sound recordings into the framework of the Copyright Act, including the provisions of Section 114, CLASSICS also makes it much easier to secure that license than at present. As a result, CLASSICS serves the purposes of copyright by making it easier to license and disseminate pre-1972 sound recordings.

CLASSICS also serves the purposes of copyright by rewarding pre-1972 sound recording artists for their creative labors, the results of which enrich our musical culture to this day. By finally securing to pre-1972 sound recording artists exclusive rights to the digital public performance of their sound recordings, CLASSICS acknowledges that these artists deserve to own the fruits of their hard work, and that doing so will promote a stronger and healthier music ecosystem. Securing property rights to artists for the fruits of their creative labors—and thus facilitating the myriad transactions that enable a thriving creative economy—is a core part of an effective copyright system, and it clearly serves the purposes of copyright.

But even under a narrow theory that copyright’s only purpose is to incentivize the creation of new works, CLASSICS will also help in that effort. By preventing digital platforms from selling access to pre-1972 sound recordings without paying anything to the artists who recorded those songs, CLASSICS will demonstrate to all artists that Congress is capable of correcting injustices that result from unpredictable changes in technology. As a result, CLASSICS will give artists more confidence that the fruits of their creative labors won’t be wrongfully expropriated in the future, and that if new technology makes it possible to unfairly exploit their works without compensating them, there is at least a chance that Congress will change the law to correct the injustice. This confidence will spur more artists to use their time and money (not to mention their hearts and souls) to create new works.

Whether you take a broad view of copyright’s purpose that considers the way that copyright actually functions in the music industry, or a narrow view that focuses solely on new works incentivized, CLASSICS clearly serves the purposes of copyright law.

A Good Result for the Public

So where does the public fit into all of this? Reading the professors’ letter and Lessig’s op-ed, a lay observer might conclude that CLASSICS would rob the public of a precious resource without providing any benefit in return. That simply is not the case.

CLASSICS benefits the public in many ways. For starters, the public has an interest in treating people fairly. By preventing the unjust exploitation of artists who recorded their music before 1972, CLASSICS contributes to a society that rewards people for the fruits of their labor and that closes loopholes that allow multi-million dollar companies to profit off the backs of artists without compensating them. To the extent post-72 artists take note, CLASSICS further benefits the public by increasing artists’ confidence that the laws that govern the music industry will change over time to ensure the industry’s continuing health. CLASSICS also benefits the public by fostering a music ecosystem that enables companies and other organizations to invest in the dissemination of pre-1972 sound recordings without risking exposure to an uncertain patchwork of potential state law liability.

And what is the cost of these benefits? It’s simple. Just like for post-1972 sound recordings, if you want to digitally publicly perform pre-1972 sound recordings, you have to pay. And CLASSICS makes it easy to pay. Last I checked there wasn’t a public shortage of access to sound recordings from 1973 or later. There is simply no reason to believe that CLASSICS will hurt the public’s access to pre-1972 sound recordings.

Despite a few professors’ misleading rhetoric to the contrary, CLASSICS is a big win for everyone.

Matthew Barblan is Executive Director of the Center for the Protection of Intellectual Property and Assistant Professor of Law at Antonin Scalia Law School, George Mason University, where he teaches copyright and trademark law.

Tags CLASSICS Act, copyright, Matthew Barblan, MMA, Music Modernization Act, public performance, recording artists, streaming

Patent Law Pharma

CPIP Scholars Examine the Flaws in the Term “Evergreening”

Post author By Joshua Grove
Post date May 1, 2018

scientist looking through a microscope In their new paper, Evergreening of Pharmaceutical Exclusivity: Sorting Fact from Misunderstanding and Fiction, Professors Kristina Acri née Lybecker and Mark Schultz, along with CPIP John F. Witherspoon Legal Fellow David Lund, analyze how the term “evergreening” is used in the context of pharmaceuticals.

After sorting through the vagaries and rhetorical excesses that restrict meaningful discussion, they identify seven categories that capture typical uses of the term:

The assertion that the duration of existing patents can generally be “renewed” or “extended,” for very long or indefinite periods;
Obtaining additional patents related to a particular pharmaceutical or treatment;
The use of laws that allow patent owners to restore some portion of their term lost due to governmental delays;
The use of laws that give companies a limited term of exclusive time to market a drug;
Regulatory barriers that frustrate potential generic competitors’ ability to enter a market;
Business practices that largely rely on marketing to advantage innovators; and
Settling lawsuits with generic manufacturers that seek to invalidate a patent.

In addition to identifying practices claimed to be “evergreening,” this paper also discusses the impact and value of these practices. For most situations, the practices reflect specific policies that are having their desired effect, such as the increase in studies of drug safety and efficacy in children brought about by pediatric exclusivity. In some cases, the practices are simply legal impossibilities. Only in a few specific situations related to regulatory requirements do the authors observe strategic opportunities that could plausibly be considered problematic.

Because of the number of practices and the diversity of value those practices bring to pharmaceutical commercialization, the term obscures far more than it illuminates. Discussions about patents, exclusivities, and public health would benefit greatly from discussing the practices and policies specifically, rather than attempting to use a nebulous term such as “evergreening.”

The paper, which started as part of Professor Acri’s work through CPIP’s Thomas Edison Innovation Fellowship, can be found here. The abstract is copied below.

***

Evergreening of Pharmaceutical Exclusivity: Sorting Fact from Misunderstanding and Fiction

Abstract

When people use the term “evergreening” to describe pharmaceutical industry practices, they typically display an unwarranted confidence that they know exactly what they mean both descriptively and normatively. However, a consistent and coherent definition of “evergreening” does not appear to exist.

This article surveys legal, academic, trade, and popular sources that use the term “evergreening” to develop a taxonomy of the policies and actions to which the term is applied. We find that the term is used to cover roughly seven categories of circumstances. Our review finds that the use of the term, taken as a whole, is more typified by the diversity of practices to which it applies rather than any consistent meaning. There are some commonalties, but they exist mostly at a general level.

We then analyze these seven categories to determine if the rhetoric matches the reality. Evergreening is most frequently used as a pejorative term, with a common implication that the “evergreener” is engaged in some sort of strategic behavior at least, or perhaps an immoral if not illegal practice. However, the categorical application of a pejorative term such as “evergreening” to any of the general policies and types of actions we examine is unwarranted and inappropriate. Proponents often apply the term to ordinary use of legal rights as they were designed and the concept makes no meaningful distinction between beneficial and problematic actions.

Unfortunately, “Evergreening” is a key concept in health policy that obscures far more than it illuminates. Once the term is stripped of misunderstandings and loose rhetoric, little of value remains. This is not to say that all policies and actions that extend or preserve exclusive rights are prudent or defensible in individual cases. Rather, the discussion regarding patents and public health would gain much clarity and rationality from addressing the disparate things labeled as “evergreening” on their individual merits.

To read the paper, please click here.

Tags David Lund, evergreening, Kristina Acri, Mark Schultz, patent, pharma

Patents

CPIP Scholars To Federal Circuit: Protect Innovation in the Life Sciences

Post author By Joshua Grove
Post date April 30, 2018

Last week, a group of CPIP scholars—Chris Holman, David Lund, Adam Mossoff, and Kristen Osenga—filed an amicus brief in Natural Alternatives International v. Creative Compounds, a case currently on appeal to the U.S. Court of Appeals for the Federal Circuit. The amici ask the appellate court to correct the district court’s misapplication of the patent-eligibility test under Section 101 of the Patent Act since it threatens innovation in the life sciences.

The plaintiff-patentee, Natural Alternatives International or NAI, provides nutritional products, including proprietary ingredients and customized nutritional supplements, to its clients. NAI owns several patents relating to beta-alanine, a non-essential amino acid that delays the onset of muscle fatigue. The district court held that the claims were ineligible subject matter under the two-step Alice-Mayo test: the claims were directed to a natural phenomenon and lacked an inventive concept containing more than conventional, routine activity.

The amici point out that the district court’s overly-restricted view of patent-eligibility doctrine will dissuade the research and development of natural products that are beneficial for mankind. They note that the district court glossed over several predicate factual questions and failed to properly consider the claims as a whole. They conclude that the continued misapplication of the Section 101 analysis has resulted in legal uncertainty, undermining the innovation industries that rely on stable and effective patent rights.

The Summary of Argument is copied below, and the amicus brief is available here.

***

SUMMARY OF ARGUMENT

The district court’s decision in Natural Alternatives International, Inc. v. Creative Compounds, LLC, No. 16-cv-02146-H-AGS, (S.D. Cal. Sept. 5, 2017) and Natural Alternatives International, Inc. v. Hi-Tech Pharmaceuticals, Inc., No. 16-cv- 02343-H-AGS, (S.D. Cal. Sept. 5, 2017), represent an improper application of 35 U.S.C. § 101. The parties in their briefs address the relevant innovation covered by Natural Alternatives’ patents, as well as the application of the Supreme Court’s and the Court of Appeals for the Federal Circuit’s § 101 jurisprudence. Here, amici offer additional insight concerning the legal and policy problems with the trial court’s decision. Specifically, amici contend that Natural Alternatives’ claims represent precisely how the patent system should reward discovery of a therapeutic use of a natural compound, and thus their invention should be eligible for patent protection. The Supreme Court has repeatedly emphasized that patents claiming new uses of known drugs or new applications of laws of nature are patent eligible, and these teachings properly applied provide patent eligibility for the kinds of claims at issue in this case. Assoc. for Molec. Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 594 (2013); Mayo Collaborative Servs v. Prometheus Labs., Inc., 566 U.S. 66, 87 (2012). The district court’s decision to the contrary conflicts with the Patent Act as an integrated statutory framework for promoting and securing innovation in the life sciences, as construed by this court as well as by the Supreme Court.

The Supreme Court has recognized that the plain meaning of the language of § 101 indicates that the scope of patentable subject matter is broad. See Diamond v. Chakrabarty, 447 U.S. 303, 315 (1980); Myriad at 577. This is why the Supreme Court consistently has held that “[t]he § 101 patent-eligibility inquiry is only a threshold test.” Bilski v. Kappos, 561 U.S. 593, 602 (2010). Accordingly, the “threshold test” of § 101 is necessarily followed by the more exacting statutory requirements of assessing a claim as a whole according to the standard of a person having skill in the art as to whether it is novel, nonobvious, and fully disclosed as required by the quid pro quo offered to inventors by the patent system. Id.

Unfortunately, courts have applied the two-step “Mayo/Alice test” from the Supreme Court’s recent § 101 cases in an unbalanced and legally improper manner. See Alice Corp. Pty. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014); Mayo, 566 U.S. at 66. These practices of the inferior courts include dissecting claims into particular elements and then construing these elements in highly generalized terms with no evidentiary support. Thus, as happened in this case, a district court all too often merely asserts a conclusory finding that the claim—actually, specific elements dissected out of the claim as a whole—covers ineligible laws of nature or natural products to conclude that a patented invention is ineligible.

The lower courts’ unduly stringent and restrictive patent eligibility test under the Mayo/Alice test produces results such as the district court’s decision in this case. This improper application of the Mayo/Alice test inevitably leads to § 101 rejections of patentable product and method inventions; here, the district court rejected an innovative invention in the biotechnology sector that the patent system is most certainly designed to promote. When a patent describes a discovery made by the inventor, even if that invention relates to a natural product or natural law, it should be possible to describe a particular application of that law or discovery that is patent eligible so as to reward the inventor for their efforts.

Furthermore, the improper treatment of the § 101 inquiry as primarily a question of law requiring no evidentiary findings whatsoever, especially when the parties expressly disagree as to what a person having skill in the art would consider routine or ordinary, allows courts to gloss over both what the claims are directed to and what importance limitations beyond the ineligible material may have. See Berkheimer v. HP Inc., 881 F.3d 1360, 1368-69 (Fed. Cir. 2018). This improper characterization of § 101 has sowed indeterminacy in patent eligibility doctrine, and has left inventors and companies in the innovation industries with little predictability concerning when or how courts will dissect claims and make conclusory assertions that they are patent ineligible under § 101.

The court in this case has an opportunity to more properly instruct the lower courts in the manner in which the § 101 analysis should be made, particularly with regard to the role of factual evidence in determining when a claimed application of a natural law or product is routine, well-understood, or conventional and when it is not and thus that the claimed invention is eligible for patenting.

To read the amicus brief, please click here.

Tags Federal Circuit, patentability, Section 101, USPTO

Innovate4Health Innovation

CPIP and ITIF Release Innovate4Health Report on Role of IP in Solving Global Health Challenges

Post author By Joshua Grove
Post date April 26, 2018

This past Tuesday, CPIP and the Information Technology & Innovation Foundation (ITIF) released our joint report: Innovate4Health: How Innovators Are Solving Global Health Challenges. The report details 25 important healthcare innovations that are being created by and for people in the developing world, where some of the most urgent challenges remain. Each of these innovations is supported by a strong intellectual property system, and many would not be viable without the security provided by these rights.

The video from our release event this past Tuesday can be found here and is embedded below. The full Innovate4Health report can be found here, and the Executive Summary is copied below. The individual stories can also be found here on the project’s Medium website.

Innovate4Health: How Innovators Are Solving Global Health Challenges

Executive Summary

Many of the world’s biggest challenges are health challenges. The good news is that, more than ever, people are meeting these challenges with innovative solutions.

While we still face great difficulties, people all over the world live better than ever before thanks to innovation. New medicines prevent or alleviate disease. New devices diagnose problems, repair bodies, and overcome physical challenges. Still other inventions keep vaccines and medicines fresh and effective or ensure their authenticity. New business models help innovation to happen and ensure that it reaches those who need it.

Many of these innovations are secured by intellectual property rights, which support the ability of innovators to invent and bring solutions to market. Property rights, particularly intellectual property rights, foster the freedom of many hands and many minds to work on challenging problems. They put decisions in the hands of those closest to problems—innovators with knowledge of potential solutions and caregivers and consumers who understand their own needs best.

With just a bit of reflection, it becomes clear that innovation and the property rights that secure it are key to meeting global health problems. Sometimes, however, the blinding light of necessity makes it hard to see this fact. When people are in need, it is all too easy to grow impatient with the rights of innovators. When that happens, innovators get treated as an obstacle.

We think that better public policy would result from better understanding of how innovation can meet global health challenges. Our organizations, the Center for the Protection of Intellectual Property (CPIP) at George Mason University’s Antonin Scalia Law School and the Information Technology and Innovation Foundation (ITIF), both non-profit, non-partisan research organizations, have teamed up to tell the exciting story of how innovation is making the world healthier.

Our Innovate4Health initiative culminates with this report, profiling 25 original case studies showcasing how innovators, many in developing countries, are tackling life-sciences/healthcare innovation in their nations and across the broader developing world. The 25 case studies are organized into the six following themes:

Adapting healthcare interventions for environments where resources and infrastructure are challenging;
Providing affordable and robust tests for diagnosing diseases;
Improving HIV diagnosis and care;
Affordable interventions to meet basic needs in challenging environments;
Getting healthcare to the people in places where it’s hard for people to come to the healthcare;
Fostering health innovation in emerging economies.

Collectively the case studies tell a compelling and inspiring story of how entrepreneurs are creating IP-enabled life-sciences innovations that are helping to tackle some of the world’s toughest health issues.

To read the report, please click here.

Tags health, healthcare, Innovate4Health, innovation, intellectual property

Antitrust Patent Licensing

Department of Justice Recognizes Importance of Reliable Patent Rights in Innovation Economy

Post author By Joshua Grove
Post date April 23, 2018

dictionary entry for the word "innovate" It is undeniable that the patent system has been under stress for the past decade, as courts, regulators, and even the Patent Office itself (as the newly confirmed Director Andrei Iancu has acknowledged) have sowed legal uncertainty, weakened patent rights, and even outright eliminated patent rights. This is why a series of recent speeches by Assistant Attorney General Makan Delrahim—head of the Antitrust Division at the Department of Justice—have signaled an important and welcome policy change from the past decade. It’s just one step, but it’s an important first step to restoring reliability and predictability to property rights in patents, which, as Director Iancu has also been saying in recent speeches, drives innovation and economic growth by promoting investments by inventors, venture capitalists, and companies in the new inventions that make modern life a veritable miracle today.

Delrahim’s speeches are important because one significant point of stress for the patent system and the innovation economy over the past decade has occurred at the intersection of antitrust law and the licensing of patents in standard setting organizations (SSOs). Many people are unaware of this particular issue, and it’s understandable why it flies under the radar screen. The technical standards set by SSOs are the things that make everything work, such as electrical plugs, toasters, and pencils, among millions of other products and services, but they are not obvious to everyday consumers who use these products. Also, antitrust law is a complex domain of lawyers, policy-makers and economists. Still, the patented innovation that comprises technical standards, such as 4G, WiFi, USB, memory storage chips, and other key features of our smart phones and computers, have been essential drivers of innovation in the telecommunications revolution of the past several decades.

In a series of recent speeches, Delrahim has signaled an important and welcome change from his predecessors in how antitrust law will be applied to patented technology that is contributed to the standards that drive innovation in the high-tech industry. Delrahim’s predecessors at the DOJ gave many speeches criticizing (and instigating investigations of) alleged “anti-competitive behavior” by patent owners on technical standards. The DOJ’s approach was one-sided, unbalanced, and lacked evidence confirming the allegations of anti-competitive behavior. Instead, Delrahim is emphasizing the key importance of promoting and properly securing to innovators the technology they create through their long-term, risky, and multi-billion-dollar R&D investments (as succinctly described in two paragraphs here about Qualcomm’s R&D in 5G by an official at the Department of Treasury).

Delrahim has announced that he will return to an evidence-based, balanced antitrust policy at the DOJ. He will not take action against innovators unless there is real-world evidence of consumer harm or proven harm to the development of innovation. The absence of such evidence is well known among scholars and policy-makers. In February 2018, for instance, a group of scholars, former government officials, and judges wrote that “no empirical study has demonstrated that a patent-owner’s request for injunctive relief after a finding of a defendant’s infringement of its property rights has ever resulted either in consumer harm or in slowing down the pace of technological innovation.” It’s significant that Delrahim has announced that the DOJ will constrain its enforcement actions with basic procedural and substantive safeguards long provided to citizens in courts, such as requiring actual evidence to prove assertions of harm. This guards against unfettered and arbitrary regulatory overreach against innocent owners of private property rights. This self-restraint is even more important when overreach negatively impacts innovation, which portends badly for economic growth and the flourishing lives we have all come to expect with our high-tech products and services.

For example, Delrahim has rightly recognized that “patent holdup” theory is just that—a theory about systemic market failure that remains unproven by extensive empirical studies. Even more concerning, “patent holdup” theory—the theory that patent owners will exploit their ability to seek injunctions to protect their property rights and thus “holdup” commercial implementers by demanding exorbitantly high royalties for the use of their technology—is directly contradicted by the economic evidence of the smart phone industry itself. The smart phone industry is one of the most patent-intensive industries in the U.S. innovation economy; thus, “patent holdup” theory hypothesizes that there will be higher prices, slower technological development, and less and less new development of products and services. Instead, as everyone knows, smart phones—such as the Apple iPhone and the Samsung Galaxy, among many others—are defined by rapidly dropping quality-controlled prices, explosive growth in products and services, and incredibly fast technological innovation. The 5G revolution is right around the corner, which will finally make real the promise of the Internet of Things.

In sum, Delrahim has repeatedly stated that antitrust officials must respect the equal rights of all stakeholders in the innovation industries—the inventors creating fundamental technological innovation, the rights of the companies who implement this innovation, and the consumers who purchase these products and services. This requires restraining investigations and enforcement actions to evidence, and not acting solely on the basis of unproven theories, colorful anecdotes, or rhetorical narratives developed inside D.C. by lobbyists and activists (such as “patent trolls”). This is good governance, which is what fosters ongoing investments in the R&D that makes possible the inventions that drives new technological innovation in smart phones and in the innovation economy more generally.

We will delve more deeply into the substantive issues and implications of Delrahim’s recent speeches in follow-on essays. Since his speeches have been delivered over the course of the past six months, we have aggregated them here in one source. Read them and come back for further analyses of these important speeches (and more speeches that will likely come, which we will keep adding to the list below):

November 10, 2017. In a speech at the University of Southern California, Gould School of Law, Assistant Attorney General Delrahim discussed why patent holdout is a bigger problem than patent hold-up. “[T]he hold-up and hold-out problems are not symmetric. What do I mean by that? It is important to recognize that innovators make an investment before they know whether that investment will ever pay off. If the implementers hold out, the innovator has no recourse, even if the innovation is successful.” He further noted that antitrust law has a role to play in preventing the concerted anticompetitive actions that occur during holdout.

February 1, 2018. In a speech at the U.S. Embassy in Beijing, Delrahim noted that the proper antitrust focus should be on protecting the innovative process, not “short-term pricing” considerations. With this focus, using antitrust remedies should be approached with “caution.”

February 21, 2018. In a speech at the College of Europe, in Brussels Belgium, Delrahim observed that antitrust enforcers have aggressively tried to police patent license terms deemed excessive, and “have strayed too far in the direction of accommodating the concerns of technology licensees who participate in standard setting bodies, very likely at the risk of undermining incentives for the creation of new and innovative technologies.” The real problem and solution he noted is that the “dueling interests of innovators and implementers always are in tension, but the tension is best resolved through free market competition and bargaining.”

March 16, 2018. In a speech at the University of Pennsylvania Law School, Delrahim expanded on his detailed remarks from his talk at USC by adding some historical context from the founding fathers. He also made the core point that “patent hold-up is not an antitrust problem,” noting that FRAND commitments from patent owners are part of the normal competitive process and are therefore appropriately policed by contract and common law remedies. He further describes the necessary impacts of having a right to exclude in the patent right, including that the “unilateral and unconditional refusal to license a patent should be considered per se”

April 10, 2018. In a keynote address at the LeadershIP Conference on IP, Antitrust, and Innovation Policy in Washington, D.C., Delrahim emphasized the harm that can occur when “advocacy positions lead to unsupportable or even detrimental legal theories when taken out of context.” He specifically noted that some advocacy about patent hold-up could undermine standard setting as “putative licensees have been emboldened to stretch antitrust theories beyond their rightful application, and that courts have indulged these theories at the risk of undermining patent holders’ incentives to participate in standard setting at all.”

Tags "patent trolls", Antitrust, Department of Justice, DOJ, innovation, licensing, Makan Delrahim, patent holdup, patent licensing, Patent Office, patents, SSO, USPTO

Uncategorized

CLASSICS Act Provides Long Overdue Recognition for Legacy Recording Artists

Post author By Joshua Grove
Post date April 16, 2018

By Matthew Barblan & Kevin Madigan

U.S. Capitol building One of the oddities of US copyright law is that sound recordings—the way that our favorite songs are captured on media so that we can listen to them over and over again—were not protected under federal law until the early 1970s. Unfortunately, when the federal Copyright Act was finally amended in 1971 to incorporate sound recordings, copyright protection for sound recordings was not applied retroactively. As a result, artists who recorded music before February 15, 1972 (the effective date of the 1971 Sound Recording Amendment) have been unable to use federal copyright law to safeguard their valuable creative contributions to American music.

Next week, the House Judiciary Committee will mark up a legislative package that includes the CLASSICS Act (“CLASSICS” stands for Compensating Legacy Artists for their Songs, Service, & Important Contributions to Society). The CLASSICS Act creates a digital public performance right for pre-1972 sound recordings, and in doing so addresses an inequity that has persisted for decades. By giving legacy artists the ability to protect and license the use of their sound recordings in modern distribution platforms, the CLASSICS Act represents an important first step in recognizing the hard-earned property rights of countless American artists who recorded their music before 1972.

With the markup of the CLASSICS Act fast approaching, it’s fitting to look back on the peculiar history of US copyright in sound recordings and trace the events that lead to the current inequitable state of affairs. This essay first examines how sound recordings have been treated by US copyright law over time, discussing the erstwhile promise and eventual shortcomings of enforcing digital public performance rights at the state level. The article then analyzes the CLASSICS Act and discusses how the bill represents important progress in fairly compensating and securing property rights to the myriad legacy artists whose recorded music continues to influence and inspire us in the twenty-first century.

A Longstanding Struggle for Recording Artists

Sound recordings have played a vital role in the development of American art since the late 19^th century when luminaries such as Alexander Graham Bell and Thomas Edison revolutionized the fixation of sound. In addition to chronicling the rich evolution of musical genres from jazz to rock ‘n’ roll, sound recordings of folklore, radio broadcasts, speeches, and other spoken words make up an invaluable account of the American experience. But despite attempts by some of the first record companies in the early twentieth-century to secure federal copyright protection for sound recordings, the Copyright Act of 1909 only secured copyright protection to owners of the musical compositions that are the subjects of sound recordings, but not to sound recordings themselves.

The US Copyright Office’s 2011 report on pre-1972 sound recordings explains that, without federal copyright protection, administration of the infringement of sound recordings was left to the states through a patchwork of unfair competition laws and common law copyright. In the 25 years between 1925 and 1951, over 30 bills were introduced in Congress that would have extended some form of federal copyright protection to sound recordings, but as the Copyright Office report notes, none passed due to opposition “based on technical deficiencies and concerns about their constitutionality (both as to whether sound recordings were creative, and whether they were writings).”

It wasn’t until 1971—after years of review and an important study on sound recordings by former Register of Copyrights Barbara Ringer—that Congress passed the Sound Recording Amendment, which finally secured federal copyright protection for sound recordings. A key reason Congress acted in 1971 was the failure of state statutes and common law to adequately protect sound recordings in the face of an alarming rise in audio tape piracy. Copyright owners had become increasingly frustrated with having to rely on a hodgepodge of state unfair competition laws to protect their property rights against infringers, finding that even if they were successful, remedies were often limited. Additionally, the very validity of state law protection of sound recordings had been challenged in high profile cases by defendants who argued that any state law provision was preempted by federal law, despite the fact that no federal law existed to protect copyright in sound recordings.

The Sound Recording Amendment to the Copyright Act took effect on February 15, 1972, but it only secured copyright protection for sound recordings fixed on or after that date, and it omitted certain rights guaranteed to other works of authorship. The 1976 Copyright Act ultimately included sound recordings as protectable subject matter, but it too failed to secure copyright protection in pre-1972 sound recordings, and it also failed to provide sound recordings with the full scope of exclusive rights secured to other types of creative works. According to the Copyright Office’s 2011 report, it’s unclear why Congress didn’t address the issue of pre-1972 sound recordings a long time ago, but the report suggests that it was a mistake of not fully understanding the consequences of leaving these works (and artists) behind. Whatever the reason, for over 45 years since passing the 1971 Sound Recording Amendment, Congress has left pre-1972 sound recordings under the aegis of state law.

A Failure at the State Level

Left behind by the federal copyright revisions, pre-1972 sound recording owners and recording artists have long faced a web of inconsistent state criminal and civil laws. Making matters worse, many states simply do not have adequate statutes or common law causes of action to address the growing varieties of infringement that we see today, and it is often impossible to predict how courts will apply broad common law principles or unfair competition statutes to infringement claims.

The vague and varying nature of states’ protection of pre-1972 sound recordings has frustrated recording artists and copyright owners for many years, but the most vexing issue today involves digital public performances of these works. The Copyright Act was amended in 1995 to provide copyright protection for the public performance of sound recordings “by means of a digital audio transmission,” but like other federal copyright protections for sound recordings, pre-1972 sound recordings were not included. The struggles of the 1960’s-era rock band The Turtles in their high profile attempts to use state law to protect their sound recordings against digital public performance infringement provide an emblematic example of why state law is largely inadequate to protect the creative contributions of pre-1972 recording artists.

In 2013, Turtles members Flo & Eddie filed a class action suit against Sirius XM in California for infringement of millions of pre-1972 sound recordings, arguing the satellite broadcaster played the songs without permission and without paying royalties to the artists. After bringing suit in California, Flo & Eddie filed similar class action claims against satellite radio services in New York and Florida, setting up a showdown that would—for better or worse—bring additional clarity to the landscape of state law protection of sound recordings in the digital streaming age.

Despite early optimism and a conditional settlement agreement with Sirius, in 2016, the New York Court of Appeals (the highest court in the state) dealt a blow to Flo & Eddie when it ruled that New York state law did not protect public performances of pre-1972 sound recordings. Critics of the ruling pointed out that the opinion contains many logical flaws and that the court ruled in favor of Sirius mainly because of concerns over the potential disruption that a ruling in favor of Flo & Eddie would cause. In 2017, the Florida Supreme Court echoed the New York opinion, holding that Florida law doesn’t recognize public performance rights for recordings made before 1972. The Florida Supreme Court made no mystery of a chief reason for their finding, admitting that to find otherwise “would have an immediate impact on consumers beyond Florida’s borders and would affect numerous stakeholders who are not parties to this suit.”

The main remaining battleground for Flo & Eddie is the California Supreme Court, which has yet to rule on the issue, but regardless of the California outcome for Flo & Eddie, the New York and Florida cases have exposed the failure of state law to protect the creative property of legacy recording artists.

The CLASSICS Act

On July 19, 2017, Representatives Jerry Nadler (D-NY) and Darrell Issa (R-Calif.) introduced the Compensating Legacy Artists for their Songs, Service, & Important Contributions to Society (CLASSICS) Act, and the bill is now scheduled to be marked up as part of a larger legislative package in the House Judiciary Committee during the week of April 9. According to Representatives Nadler and Issa, the bill aims to resolve “uncertainty over the copyright protections afforded to sound recordings made before 1972 by bringing these recordings into the federal copyright system and ensuring that digital transmissions of both pre- and post-1972 recordings are treated uniformly.” On February 8, 2018, a companion bill was introduced in the Senate, led by Senators Chris Coons (D-Del.) and John Kennedy (R-Louis.). At its core, the CLASSICS Act would take an important step to recognize and protect the creative labors of artists who recorded their songs before 1972, bringing them closer to being on equal footing with artists who recorded their songs after 1972.

The CLASSICS Act would amend Title 17 of the United States Code, adding a Chapter 14 titled “Unauthorized Digital Performance of Pre-1972 Sound Recordings.” Under the proposed language, “[a]nyone who, . . . without the consent of the rights owner, performs publicly, by means of a digital audio transmission, a sound recording fixed on or after January 1, 1923, and before February 15, 1972, shall be subject to the remedies provided in sections 502 through 505 [of the Copyright Act] to the same extent as an infringer of copyright.” In other words, copyright owners of pre-1972 sound recordings would finally be able to stop digital platforms from publicly performing their songs without permission or compensation. This would remedy the current injustice that allows digital platforms to profit from publicly performing hundreds of thousands of pre-1972 sound recordings without paying a penny back to the myriad artists who put their hearts and souls into creating those sounds.

To be clear, the CLASSICS Act does not create a true free market for the digital public performance of pre-1972 sound recordings. Like post-1972 sound recordings, pre-1972 sound recordings would still be subject to the statutory licensing provisions in Section 114 of the Copyright Act. Nonetheless, the leap from no payment at all to payment under the Section 114 statutory licensing provisions is a significant increase for legacy recording artists, and it at least puts them on the same playing field (with respect to digital public performance) as owners of post-1972 sound recordings. Furthermore, not every digital public performance of a sound recording qualifies for the Section 114 statutory license, and in those instances the CLASSICS Act would allow owners of pre-1972 sound recordings to benefit from the same free market that owners of post-1972 sound recordings enjoy.

In addition to creating a cause of action for unauthorized digital public performance of pre-1972 sound recordings, the CLASSICS Act would also preempt “any claim of common law copyright or equivalent right under the laws of any State arising from any digital audio transmission” of a pre-1972 sound recording. The proposed statutory language also ensures that the limitations on remedies available to copyright owners for fair use, uses by libraries, archives, and educational institutions would apply to unauthorized uses of a pre-1972 sound recording. And the proposed statutory language would subject the newly-created cause of action to Section 512 of the Copyright Act and would apply the same statute of limitations applicable to other actions under the Copyright Act.

While the CLASSICS Act would not provide pre-1972 sound recordings with all the same federal protections that apply to post-1972 sound recordings pursuant to Section 106 of the Copyright Act, by creating a federal cause of action for unauthorized digital public performance of pre-1972 sound recordings, the proposed bill would go a long way towards remedying the current unfair treatment of the creative contributions of legacy recording artists.

Conclusion

For too long, Congress and the states have neglected the property rights of recording artists responsible for some of the most celebrated sound recordings in the canon of American music. As digital streaming services flourish in part through the digital public performance of pre-1972 sound recordings, thousands of legacy artists are left uncompensated and unappreciated. The CLASSICS Act represents a significant first step towards recognizing and rewarding the hard work and achievements of these important musicians.

Matthew Barblan is Executive Director of the Center for the Protection of Intellectual Property and Assistant Professor of Law at Antonin Scalia Law School, George Mason University

Kevin Madigan is Assistant Director, Development & Research, at the Center for the Protection of Intellectual Property

Uncategorized

CASE Act Set to Empower Creators and Impose Accountability

Post author By Joshua Grove
Post date April 2, 2018

Cross-posted from the Mister Copyright blog.

U.S. Capitol building Next week, the Copyright Alternative in Small Claims Enforcement (CASE) Act is scheduled for markup before the House Judiciary Committee, promising long-overdue support for small creators and copyright owners in their fight against overwhelming infringement in the digital age. While the bill has bipartisan support and the backing of a wide array of individual creators, artist organizations, and the creative industries, some detractors are now raising questions of constitutionality in an attempt to interfere with the bill’s passage. But the constitutional argument is merely a meritless rhetorical refrain put forward to mask a steadfast resistance by certain companies to any effort to impose accountability for online infringement.

A product of years of advocacy on behalf of the creative community and a thorough report by the Copyright Office, The CASE Act would create a Copyright Claims Board (CCB) within the Copyright Office to hear claims brought by individual creators and copyright owners. It would provide a venue to address rampant copyright infringement online, empowering a class of creators who have limited means and few opportunities to protect their intellectual property. The idea of a routinely ignored group of artists and copyright owners finally having a venue to protect their rights has infringers and those who enable infringement spooked, and they’re struggling to defeat the CASE Act in any way they can.

A testament to the CASE Act’s sound provisions is the fact that its critics are left grasping for challengeable issues. One of their tactics has been to contest the constitutionality of an administrative Article I court that would render decisions affecting intellectual property rights. It’s actually somewhat of a crafty approach to impeding the bills advancement, if only because of the inevitable reaction that comes any time the word “unconstitutional” is uttered. But regardless of the strategic game being played, anyone willing to pay attention will see that the creation of a Copyright Claims Board is clearly constitutional and that arguments to the contrary are hollow.

Some critics claim that the establishment of an alternative dispute forum within an executive agency would violate Article III of the Constitution, arguing that because the cases involve private property rights, they must be heard by an Article III tribunal. It’s an unconvincing argument that ignores hundreds of years of Supreme Court analysis which confirms Congress’s right to create special tribunals that adjudicate a variety of disputes outside the federal court system. As my colleague, Sandra Aistars, explains in her detailed article on copyright small claims, examples of these non Article III courts or administrative agencies include Tax Courts, the Court of Federal Claims, the Social Security Appeals Council, and the Commodities Futures Trading Commission.

But what makes the constitutionality argument utterly groundless is the fact that participation in the small claims court would be voluntary. The Supreme Court has clearly held that a litigant’s right to an Article III decision-maker is violated only when the defendant is involuntarily forced to litigate before a non-Article III court. In Wellness International v. Sharif, the Supreme Court stated that “the court has never … h[e]ld that a litigant who has the right to an Article III court may not waive that right through his consent.”

In the procedure set forth by the CASE Act, those accused of infringement would be notified of a claim against them and have the ability to “opt out” of the process. The voluntary nature of the process adheres to Supreme Court precedent and is entirely consistent with Article III of the Constitution.

Critics of the CASE Act have also pushed for the small claims process to be “opt in,” rather than “opt out,” meaning that unless a defendant actively agrees to participate, the case cannot go forward. Essentially, a defendant could ignore any notice of a claim against them without consequence, drastically weakening the small claims process the CASE Act seeks to promote. It’s a brazen proposal, and it’s one that elevates a culture of casual misappropriation and disregard for small creators above a culture that promotes respect for the property rights of others.

The groups challenging the CASE Act represent tech companies that rely on the content and creative works of others to thrive, and the fight for the CASE Act has become a battle between these dominant entities and exploited creators. As these tech companies have consolidated wealth and power in ways few thought possible, they’ve garnered considerable influence in Washington, and they are working to shut down the first opportunity individuals and small businesses in the arts have to enjoy the fruits of their constitutionally guaranteed property right.

The tide is turning in the way we interact with technology and the internet and what we as a society expect from the companies that control our digital existence. Business models that enable companies to profit off intellectual property theft must be challenged. It’s not particularly surprising that these new global titans would resist efforts like the CASE Act that plan to inject accountability into cyber space, but let’s not be fooled by empty arguments aimed at distracting us from moving towards a greater respect for creators in the digital age.

Legislation Patent Law

The STRONGER Patents Act: The House Receives Its Own Legislation to Protect Our Innovation Economy

Post author By Joshua Grove
Post date March 20, 2018

U.S. Capitol building Today, Representatives Steve Stivers (R-OH) and Bill Foster (D-IL) introduced the Support Technology & Research for Our Nation’s Growth and Economic Resilience (STRONGER) Patents Act of 2018. This important piece of legislation will protect our innovation economy by restoring stable and effective property rights for inventors. This legislation mirrors a bill already introduced in the Senate, which I have previously discussed.

The STRONGER Patents Act accomplishes three key goals to protect innovators. First, the Act will make substantial improvements to post-issuance proceedings in the USPTO to protect patent owners from administrative proceedings run amok. Second, it will confirm the status of patents as property rights, including restoring the ability of patent owners to obtain injunctions as a matter of course. Third, it will eliminate fee diversion from the USPTO, assuring that innovators are obtaining the quality services they are paying for.

First and foremost, the STRONGER Patents Act aims to restore balance to post-issuance review of patents administered by the USPTO’s Patent Trial and Appeal Board (PTAB). The creation of the PTAB was a massive regulatory overreach to correct a perceived problem that could have been better addressed by providing more resources towards initial examination. While the USPTO has long been responsible for issuing patents after a detailed examination, it has recently taken on the role of killing patents the same USPTO previously issued. What the USPTO gives with the one hand, it takes with the other.

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. In some cases, more than 20 petitions have been filed on a single patent. Although recent headway has been made to address this issue in the administrative context, it only listed factors to be used when evaluating serial petitions. A more complete statutory solution that prohibits serial petitions except in limited circumstances is necessary to fully protect innovators and provide certainty that these protections will continue.

The kill rate of patents by the PTAB is remarkable. In only 16% of final written decisions at the PTAB does the patent survive unscathed. The actual impact on patent owners is far worse. Disclaimer and settlement are alternate ways a patent owner can lose at the PTAB prior to a final written decision. Thus, the fact that only 4% of petitions result in a final written decision of patentability is more reflective of the burden patent owners faced when dragged into PTAB proceedings.

For these reasons, the PTAB has been known as a “death squad.” This sentiment has been expressed not only by those who are disturbed by the PTAB’s behavior, but also those—such as a former chief judge of the PTAB—who are perpetuating it. The list of specific patents that have been invalidated at the PTAB is mind-boggling, such as an advanced detector for detecting leaks in gas lines.

There are even examples where the PTAB has invalidated a patent that had previously been upheld by the Federal Circuit Court of Appeals. One recent examination further found that there have been at least 58 patents that were upheld in federal district courts that were invalidated in the PTAB on the same statutory grounds. The different results are not mere happenstance but are the result of strategic behavior by petitioners to strategically abuse the procedures of PTAB proceedings.

It has been well known that 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 the claim construction standard with litigation, focusing on the “ordinary and customary meaning” instead of the broadest interpretation a bureaucrat can conceive. This will promote consistent results when patents are challenged, regardless of the forum, by assuring that a patent does not mean different things to different people. 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. This will allow patent owners to make investments with reasonable security in the validity of the patent. Sections 102(b) and 103(b).
Adding a standing requirement, by permitting only those who are “charged with infringement” of the patent to challenge that patent. This will prevent 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. This will prevent one of the most common abuses, by preventing multiple bites at the apple. 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. This change will allow early correction of important mistakes as well as provide for appellate review of issues that currently may evade correction. 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. Because many procedural protections depend on identifying the real party-in-interest, this change will assure that determining who that real party is can occur in a fair manner. Sections 102(g) and 103(g).
Giving priority to federal court determinations on the validity of a patent. Although discrepancies will be minimized by other changes in this Act, this section assures that the federal court determination will prevail. Sections 102(h) and 103(h).
Improving the procedure for amending a challenged patent, including a new expedited examination pathway. This section goes further than Aqua Products, prescribing detailed procedures for adjudicating the patentability of proposed substitute claims and placing the burden of proof on the challenger. 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. This section will confirm the original design of the PTAB by assuring that the decision to institute and final decision are separate. 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. This section will prevent abuses from the multiple post-grant procedures available in the USPTO. 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 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.

Tags Adam Mossoff, David Lund, ebay, injunctions, legislation, patent, patent reform, Patent Trial and Appeal Board, PTAB, STRONGER Patents Act

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