Tag: Kevin Madigan

Categories
Copyright

Scalia Law Students and CPIP Scholars Make an Impact in Copyright Office Section 512 Study

the word "copyright" written on a typewriterThe U.S. Copyright Office released its long-awaited report on Section 512 of Title 17 late last week. The Report is the culmination of more than four years of study by the Office of the safe harbor provisions for online service provider (OSP) liability in the Digital Millennium Copyright Act of 1998 (DMCA). Fortuitously, the study period coincided with the launch of Scalia Law’s Arts and Entertainment Advocacy Clinic. Clinic students were able to participate in all phases of the study, including filing comments on behalf of artists and CPIP scholars, testifying at roundtable proceedings on both coasts, and conducting a study of how OSPs respond to takedown notices filed on behalf of different types of artists. The Office cites the filings and comments of Scalia Law students numerous times and ultimately adopts the legal interpretation of the law advocated by the CPIP scholars.

The Office began the study in December 2015 by publishing a notice of inquiry in the Federal Register seeking public input on the impact and effectiveness of the safe harbor provisions in Section 512. Citing testimony by CPIP’s Sean O’Connor to the House Judiciary Committee that the notice-and-takedown system is unsustainable given the millions of takedown notices sent each month, the Office launched a multi-pronged inquiry to determine whether Section 512 was operating as intended by Congress.

Scalia Law’s Arts and Entertainment Advocacy Clinic drafted two sets of comments in response to this initial inquiry. Terrica Carrington and Rebecca Cusey submitted comments to the Office on behalf of middle class artists and advocates, including Blake Morgan, Yunghi Kim, Ellen Seidler, David Newhoff, and William Buckley, arguing that the notice-and-takedown regime under Section 512 is “ineffective, inefficient, and unfairly burdensome on artists.” The students pointed out that middle class artists encounter intimidation and personal danger when reporting infringements to OSPs. Artists filing takedown notices must include personal information, such as their name, address, and telephone number, which is provided to the alleged infringer or otherwise made public. Artists often experience harassment and retaliation for sending notices. The artists, by contrast, obtain no information about the identity of the alleged infringer from the OSP. The Office’s Report cited these problems as a detriment for middle class artists and “a major motivator” of its study.

A second response to the notice of inquiry was filed by a group of CPIP scholars, including Sandra Aistars, Matthew Barblan, Devlin Hartline, Kevin Madigan, Adam Mossoff, Sean O’Connor, Eric Priest, and Mark Schultz. These comments focused solely on the issue of how judicial interpretations of the “actual” and “red flag” knowledge standards affect Section 512. The scholars urged that the courts have interpreted the red flag knowledge standard incorrectly, thus disrupting the incentives that Congress intended for copyright owners and OSPs to detect and deal with online infringement. Several courts have interpreted red flag knowledge to require specific knowledge of particular infringing activity; however, the scholars argued that Congress intended for obvious indicia of general infringing activity to suffice.

The Office closely analyzed and ultimately adopted the scholars’ red flag knowledge argument in the Report:

Public comments submitted by a group of copyright law scholars in the Study make a point closely related to the rightsholders’ argument above, focusing on the different language Congress chose for actual and red flag knowledge. They note that the statute’s standard for actual knowledge is met when the OSP has “knowledge that the material or an activity using the material on the system or network is infringing” or “knowledge that the material or activity is infringing,” while the red flag knowledge standard is met when the OSP is “aware of facts or circumstances from which infringing activity is apparent.” This difference, the copyright law scholars argue, is crucial to understanding the two standards: while the statute uses a definite article—“the”—to refer to material or activity that would provide actual knowledge, it drops “the” to speak more generally about facts or circumstances that would create red flag knowledge. “In Congress’s view,” the comment concludes, “the critical distinction between the two knowledge standards was this: Actual knowledge turns on specifics, while red flag knowledge turns on generalities.”

 

The Office went on to state that “a standard that requires an OSP to have knowledge of a specific infringement in order to be charged with red flag knowledge has created outcomes that Congress likely did not anticipate.” And since “courts have set too high a bar for red flag knowledge,” the Office concluded, Congress’ intent for OSPs to act upon information of infringement has been subverted. This echoed the scholars’ conclusion that the courts have disrupted the balance of responsibilities that Congress sought to create with Section 512 by narrowly interpreting the red flag knowledge standard.

Scalia Law students and CPIP scholars likewise participated in roundtable hearings on each coast to provide further input for the Copyright Office’s study of Section 512. The first roundtable was held on May 2-3, 2016, in New York, New York, at the Thurgood Marshall United States Courthouse, where the Second Circuit and Southern District of New York hear cases. The roundtable was attended by CPIP’s Sandra Aistars and Matthew Barblan. They discussed the notice-and-takedown process, the scope and impact of the safe harbors, and the future of Section 512. The second roundtable was held in San Francisco, California, at the James R. Browning Courthouse, where the Ninth Circuit hears cases. Scalia Law student Rebecca Cusey joined CPIP’s Sean O’Connor and Devlin Hartline to discuss the notice-and-takedown process, applicable legal standards, the scope and impact of the safe harbors, voluntary measures and industry agreements, and the future of Section 512. Several of the comments made by the CPIP scholars at the roundtables ended up in the Office’s Report.

In November 2016, the Office published another notice of inquiry in the Federal Register seeking additional comments on the impact and effectiveness of Section 512. The notice itself included citations to the comments submitted by Scalia Law students and the comments of the CPIP scholars. Under the guidance of Prof. Aistars, the students from Scalia Law’s Arts and Entertainment Advocacy Clinic again filed comments with the Office. Clinic students Rebecca Cusey, Stephanie Semler, Patricia Udhnani, Rebecca Eubank, Tyler Del Rosario, Mandi Hart, and Alexander Summerton all contributed to the comments, which discussed their work in helping individuals and small businesses enforce their copyright claims by submitting takedown notices pursuant to Section 512. The students reported on the practical barriers to the effective use of the notice-and-takedown process at particular OSPs. Two problems identified by the students were cited by the Copyright Office as examples of how OSPs make it unnecessarily difficult to submit a takedown notice. Accordingly, the Office called on Congress to update the relevant provisions of Section 512.

Two years after the additional written comments were submitted, the Office announced a third and final roundtable to be held on April 8, 2019, at the Library of Congress in Washington, D.C. The purpose of this meeting was to discuss any relevant domestic or international developments that had occurred during the two prior years. CPIP’s Devlin Hartline attended this third roundtable to discuss recent case law related to Section 512, thus ensuring that CPIP scholars were represented at all three of the Office’s roundtables.

CPIP congratulates and thanks the students of Scalia Law’s Arts and Entertainment Advocacy Clinic for their skillful advocacy on behalf of artists who otherwise would not be heard in these debates.

Categories
C-IP2 News

CPIP Bids a Fond Farewell to Kevin Madigan and Seeks New Deputy Director

CPIP logoLongtime CPIP staff member Kevin Madigan is leaving the Center next week to become VP, Legal Policy and Copyright Counsel at the Copyright Alliance.

“I joined CPIP just over four years ago, and my time with the Center and Scalia Law has been rewarding on so many levels. The knowledge I’ve gained and the relationships I’ve cultivated are things that I’ll cherish for the rest of my life,” said Kevin Madigan. “I’m proud to have been a part of such a dynamic academic center, and I know CPIP will continue to thrive in my absence. I want to express my sincere gratitude to Sandra Aistars, Sean O’Connor, Adam Mossoff, Devlin Hartline, Matt Barblan, Mark Schultz, Kristina Pietro, and Mary Clare Durel,” he continued.

“We could not be happier for Kevin who has done impeccable work for us beginning as a Fellow and recently serving as Deputy Director. While we will miss him, we know that he will not be far away given our close relationship with CA,” said Sean O’Connor, Executive Director at CPIP.

As a result of Kevin’s departure, we are now seeking a new Deputy Director to join the CPIP team. This is an exciting position for an accomplished intellectual property professional seeking to advance their career at the interface of academia, industry, and public policy.

Reporting to CPIP’s faculty Executive Director, the Deputy Director manages and participates in CPIP’s day-to-day operations including academic and policy work as well as conferences, meetings, and other events. The Deputy Director also works with the Executive Director and other faculty directors to develop CPIP’s long-term academic and policy plans.

The position is designed for an individual with a J.D. degree and an interest in promoting innovation and creativity through CPIP’s academic and policy mission. The ideal candidate will have: strong experience in intellectual property law and policy; familiarity with the academic intellectual property community; and an understanding of government policy-making in Washington, D.C. and beyond. At least three years of IP law practice or IP policy experience are required.

The job listing is available at the following link: https://jobs.gmu.edu/postings/47630

Categories
Copyright

Proposed Open Access Regulation is a Solution in Search of a Problem

a lightbulb shatteringEarlier this week, a coalition of over 125 publishers and non-profit scientific societies joined the Association of American Publishers (AAP) in a letter to the White House expressing serious concerns with a proposed Administration policy that would override intellectual property rights and threaten the advancement of scientific scholarship and innovation. In a flawed attempt to advance open access goals, the policy would require the free and immediate distribution of any proprietary articles that report on research funded by a government agency. But overwhelming opposition by dozens of the most esteemed medical societies and research organizations reveals an ill-conceived and hasty proposal that would not only disregard long-established intellectual property rights, but would also adversely affect U.S. jobs, research, innovation, and global competitiveness.

Like other open access mandate proposals in the past, there has been no evidence offered that the untested models are viable or sustainable or that there are systematic failures in the current scholarly publishing market. In a policy brief published in 2017, CPIP identified similar proposals as nothing but solutions in search of a problem—clear examples of regulatory overreach lacking any empirical evidence of why they are needed and how they would be beneficial.

Proposed Policy Eliminates Any Opportunity to Commercialize

Proprietary articles that report on federally funded research—such as those published in leading medical and scientific journals—are currently subject to public access mandates that require them to be made publicly available no later than 12 months after publication. These mandates are meant to balance the interests of the public in accessing these works with those of publishers and non-profit organizations that bear the costs of producing them. It’s a framework that, while not perfect, reflects the Constitutional objective of securing exclusive rights to promote the progress of science and the useful arts.

Notwithstanding this long-understood trade-off between access and exclusivity, the proposed policy would require the immediate and free distribution of journal articles reporting on any amount of federally funded research. If implemented, the proposal would deny publishers any opportunity to recoup the investments made in development of these labor and cost-intensive works, and many journals and research organizations would simply no longer be able to operate. While the proposal may be rooted in a desire to benefit the public, its complete eradication of the already short 12-month embargo reveals a troubling unawareness of existing markets, the critical role of publishers, and the value of intellectual property.

Untested Model Reflects Unawareness of Creative Ecosystems

Unfortunately, proposals like this reflect a belief by some that in the digital age publishers are merely intermediaries who restrict access to works. Those who promote this narrative also tend to favor short-term access and distribution over sustainable industries, long term R&D, and free markets, but their efforts to impose sweeping open access provisions reveal an ignorance of the inner workings and contributions of the publishing industry.

The reality is that even when federal funding exists for underlying research, significant investments are required by non-profit journals and publishers to translate the research into high-quality articles. These organizations must dedicate time and resources to the review and selection of articles, management of the peer review process, editing, curating, distributing, and long-term stewardship.[i] The publishing industry employs thousands of Americans to carry out these tasks, and they fund their efforts at no cost to taxpayers. Additionally, the sale of journal subscription in hundreds of foreign countries contributes significantly to the U.S. economy and trade balance.

Perhaps most disturbing is that those promoting the proposal seem unaware or unconcerned with the potential devastating impact the policy would have on publishing and scientific communities and America’s leadership in research and innovation. Stakeholders representing the industries that stand to be most affected by an unfettered and unproven open access policy have been left out of discussions, resulting in an ill-considered and inequitable proposal. Furthermore, the fact that the details of Administration policies are sometimes not disclosed until they are announced and implemented raises serious questions about the development of a policy that could have such a significant impact on industries, jobs, and the U.S. economy.

Strong Opposition to an Unsound Policy

Taking into account these numerous problems, it’s not surprising that stakeholders have now joined together to voice their opposition to the proposed policy. Venerable institutions such as the American Medical Association, the American Cancer Society, and the New England Journal of Medicine are just a few of the dozens of scientific, medical, and publishing organizations to challenge the proposal. In addition to these stakeholder organizations, Senator and Chairman of the Subcommittee on Intellectual Property Thom Tillis recently voiced his concerns with the proposal in a letter to Secretary of the Department of Commerce, Wilbur Ross, and to White House Chief of Staff, Mick Mulvaney. He writes:

If the current policy is changed—particularly without benefit of public hearings and stakeholder input—it could amount to significant government interference in an otherwise well-functioning private marketplace that gives doctors, scientific researchers and others options about how they want to publish these important contributions to science.

As Senator Tillis and others point out, the proposed policy has been put forward with no input from stakeholders or public comment. No evidence has been presented that a revised policy is needed, nor has the existing marketplace been shown to be dysfunctional.

While the wide distribution of and access to scholarly articles is critical to advancing research and education, it shouldn’t be so overvalued as to disregard all that goes into producing them and the associated intellectual property rights. To do so would represent a short-term fix to a problem that has not been proven to exist and result in untold damage to publishing industries, the economy, and ultimately the public.

[i] For a detailed account of the value-add services provided scholarly publishers, see Professor Adam Mossoff’s article How Copyright Drives Innovation: A Case Study of Scholarly Publishing in the Digital World.

Categories
Biotech Patents Pharma

“No Combination Drug Patents Act” Stalls, but Threats to Innovation Remain

superimposed images from a chemistry labBy Kevin Madigan & Sean O’Connor

This week, the Senate Judiciary Committee was to mark up a bill limiting patent eligibility for combination drug patents—new forms, uses, and administrations of FDA approved medicines. While the impetus was to curb so-called “evergreening” of drug patents, the effect would have been to stifle life-saving therapeutic innovations. Though the “No Combination Drug Patents Act”—reportedly to be introduced by Senator Lindsey Graham (R-SC)—was wisely withdrawn at the last minute, it’s likely not the last time that such a misconceived legislative effort will be introduced.

An Exaggerated Response to a Disputed Theory

The bill would have established a presumption of obviousness for drug or biologic patent applications whose invention was a new: dosing regimen, method of delivery, method of treatment, or formulation. While there was a rebuttal provision where the claim covered a new treatment for a new indication or “increase[d] . . . efficacy,” the latter was almost certain to introduce years of uncertainty and litigation. Further, the bill would have covered a broader class than true combination drug patents, in which one active ingredient is combined with another or with a non-drug.

Like many recent legislative efforts, the amendment sought to address a perceived lack of affordability of prescription drugs. After praising the America Invents Act of 2011 and subsequent Supreme Court rulings for strengthening the US patent system, the bill claimed that rising drug prices have outpaced “spending on research and development with respect to those drugs.” In addition to applauding Supreme Court decisions that have injected unquestionable uncertainty into patentable subject matter standards, the amendment went on to blame high drug prices on continually overstated issues related to advanced drug patents.

According to critics, combination drug patents have granted drug makers unearned and extended protection over existing drugs or biological products. But, quite simply, when properly issued by the USPTO under existing patentability standards, these are new patents for new products or processes.

Combination patents have been maligned as anticompetitive, resulting in a “thicket” of patents that impedes innovation through transaction costs and other inefficiencies. Unfortunately, notwithstanding a lack of empirical evidence validating the harm of follow-on innovation patents, patent thicket rhetoric is now being echoed by the media, the academy, courts, and policy makers in a fraught attempt to fix drug pricing.

Reports (see here, here, here, and here) from leading antitrust experts and intellectual property scholars have detailed the value of incremental innovation and challenged the notion that patent thickets are a true threat to competition and innovation. These studies have exposed patent thicket claims—much like the “troll” narrative that for years infected patent law debates—as an empty strawman theory, the repetition of which has led to undue confidence in its accuracy. The reality is that what critics point to as problematic cases of combination patents are in fact infrequent outliers, strategically highlighted to discount evidence of the value of new and innovative drug uses and administrations.

A similar claim by those promoting the patent thicket narrative is that combination patents extend exclusivity on a drug for years beyond an initial patent term, thereby blocking generic entry in the market. But if an underlying drug has gone off patent, no follow-on or combination patent will prevent a generic drug company from producing the underlying formulation—it’s only the new formulation, use, or administration that is protected.

Vague, Yet Oddly Familiar Standards

The language of the Graham amendment asserted that because “numerous” combination patents “contain obvious product developments,” a restructuring of 35 USC 103 is necessary to combat patent thickets and achieve optimal drug pricing. Suggesting that 103 obvious standards for advanced drug development should include a presumption that the covered claimed invention and the prior art to which it relates would have been obvious, the legislation would have undermined a unitary system of patent law in favor of different standards for different fields of technology. It was a bold proposal, and it’s one that ignored the proven value of new drug formulations and methods of treatment.

While the amendment provided for a rebuttal to the presumption of obviousness, the language was ambiguous and likely to render the patent system even more unreliable than it already is. The proposed statute said that an applicant may rebut the presumption of obviousness if the covered claimed invention “results in a statistically significant increase in the efficacy of the drug or biological product that the covered claimed invention contains or uses.” It is unclear what would qualify as “statistically significant,” and proving this vague standard would be nearly impossible.

In order to show a “statistically significant increase in efficacy,” long and costly head-to-head clinical trials would be necessary. To be clear, this is not a standard required by the FDA for new drug approval, let alone patentability.

As if that wasn’t enough reason to reject the Graham amendment, the language was alarmingly similar to that of an Indian patent law statute that has been recognized by the US Trade Representative as a “major obstacle to innovators.” In 2005, in order to comply with the WTO’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, India adopted for the first time patent protection for pharmaceuticals. Despite its recognition of IP rights in pharmaceuticals, India’s Act contains a troubling ambiguity in its Section 3(d), which requires an “enhanced efficacy” for known drugs in addition to the standard novelty, inventive step, and industrial applicability requirements.

India’s Section 3(d) has been invoked to reject patent protection for life-saving drug innovations, including Novartis’ landmark leukemia drug, Gleevec. Drug companies, government agencies, and policy makers have all recognized the threat to innovation that India’s patent law poses. In 2013, not long after the Novartis ruling, a bipartisan group of 40 Senators signed a letter to then Secretary of State John Kerry urging the state department to take action against India’s “deteriorating IP environment,” citing its willingness to “break or revoke patents for nearly a dozen lifesaving medications.”

Despite the widespread condemnation of India’s Section 3(d), the Graham amendment proposed adopting similarly indefinable standards to US patent law. While the language differed slightly—replacing “enhanced efficacy” with “increase in the efficacy”—it was no clearer, and implementation of this type of standard would only cause more confusion.

Protecting and Incentivizing Medical Innovation

Like most forms of innovation, the development of medicines and therapeutics is a process by which one builds and improves upon previous discoveries and breakthroughs. Sometimes those improvements are major advancements, but often they are incremental steps forward. In the pharmaceutical field, incremental or follow-on innovation frequently results in new therapeutic uses for existing drugs, which address serious challenges related to adverse effects, delivery systems, and dosing schedules. While they might not sound like medical breakthroughs on par with the discovery of penicillin, these advancements in the administration and use of pharmaceuticals improve public health and save lives.

Additionally, follow-on innovations are—and should remain—subject to the same patentability standards as any other technologies. Patents reward advancements that are novel, useful, and nonobvious, and our patent system has long recognized that patent claims are to be presumed patentable and nonobvious. The Graham amendment would have turned this established standard on its head, creating a separate and ill-defined hurdle for certain advancements in medicine.

The benefits of incremental innovation to public health and patients cannot be overstated. New formulations of malaria drugs, dosing regimens and delivery systems for AIDS patients, more efficient administrations of insulin for the treatment of diabetes, and developments in the treatment of cognitive heart disease have all been possible because of incremental innovation.

Imposing unjustified restrictions on the patentability of advancements like these would be disastrous for drug development, as the incentives that come with patent protection would be all but eliminated. Without the assurance that their innovative labor would be supported by intellectual property protection, pioneering drug developers would shift resources away from improving drug formulations and uses. The development of more effective treatments of some of the most devastating diseases would stall, as innovators would be unable to commercialize their products, recoup losses, or fund future research and development.

As critics continue to target myopically the patent system for a broader issue of drug prices in the American health care system, it’s likely not the last time that language like this will be proposed. In order to avoid the implementation of such ill-conceived standards into our patent laws, understanding what’s at stake is critical. The future of medical innovation depends on it.

Categories
Innovation Patent Licensing

IP for the Next Generation of Mobile Technology: How IEEE’s Policy Changes Have Created Uncertainty for Innovators

In advance of our Sixth Annual Fall Conference on IP for the Next Generation of Technology, we are highlighting works on the challenges brought by the revolutionary developments in mobile technology of the past fifteen years.

hand holding a phone with holographs hovering over the screenEarlier this year, CPIP’s Adam Mossoff and Kevin Madigan detailed an in-depth empirical study on the troubling repercussions of policy changes at the Institute of Electrical and Electronics Engineers-Standards Association (IEEE).

In a rigorous study tracking the activity of creators and owners of technologies incorporated into standards by the IEEE, Kirti Gupta and Georgios Effraimidis show how policy shifts at the IEEE have required patent owners to effectively relinquish their legal right to stop the deliberate and unauthorized uses of their property. Unfortunately, as Gupta and Effraimidis explain, the current unbalanced nature of standard setting at the IEEE is resulting in inefficient licensing negotiations and delayed standards development, and it’s threatening the development of new and innovative consumer products at a crucial time for mobile technologies.

The full Gupta & Effraimidis study is available here, and the synopsis by Adam Mossoff and Kevin Madigan can be found here.

Categories
Innovation Patent Licensing

Study Finds IEEE’s 2015 Patent Policy Sowing Uncertainty and Slowing Innovation

dictionary entry for the word "innovate"By Kevin Madigan & Adam Mossoff

As the world prepares for the game-changing transition to 5G wireless systems, the high-tech industry must continue to efficiently develop and implement technologies and networks that work together across different platforms and devices. Few people are aware of how this happens, because it occurs solely between the companies who develop and implement technological products and services in the marketplace, such as Qualcomm, InterDigital, Microsoft, Apple, and others. These companies participate in private standard setting organizations, which develop technological standards agreed upon by these companies, such as three-prong electrical plugs, USB drives, hard disk storage drives, and even communications technologies such as Wi-Fi and 2G, 3G, and 4G.

In sum, the development of standards is a key part of how new technological innovations are efficiently sold and used by consumers and work for everyone. The reason standard setting organizations came into existence is because the alternative is neither efficient nor good for consumers. A standards “war” between companies in the marketplace leads to years of incompatible devices being sold while consumers wait for one company to establish (private) market dominance with its products and services such that everyone else must use that standard, such as what happened between VHS and Betamax in the 1980s or the market fight between Blu-ray Disc and HD DVD in the 1990s, to name just two examples. Standard setting organizations preempt this unnecessary and wasteful commercial war by bringing together the innovators and implementers of new technology to agree beforehand on a standard so that new standardized products and services can get into the hands of consumers faster.

Unfortunately, some standard setting organizations are changing their rules for the companies that invest hundreds of millions of dollars in long-term R&D to create groundbreaking technologies like those used in our smartphones. These new rules create uncertainty for these innovators. As a result, this uncertainty is threatening investments in new high-tech products and the ongoing growth in the U.S. innovation economy.

Detailing this troubling trend is a recently released, in-depth, and rigorous study by Kirti Gupta and Georgios Effraimidis, which tracks the changes in the rules for the creators and owners of the technologies incorporated into technological standards by one of the largest and more influential organizations—the Institute of Electrical and Electronics Engineers-Standards Association (IEEE). In 2015, the IEEE adopted a new policy governing how owners of patents on technologies incorporated into its technological standards can protect and secure their investments via their legal rights to their patents. This shift in policy required patent owners effectively to relinquish their legal right to stop deliberate and unauthorized uses of their property and thus made it harder for them to license reasonable royalties for the use of their technology equally among all industry stakeholders.

As Gupta and Effraimidis show through detailed analyses, the IEEE’s new policy has distorted the longstanding market processes and licensing negotiations that have led to billions of smartphones being sold to consumers at relatively low cost around the world over the past decade. This is a vitally important study, because it brings key data to the policy discussions about technological standards, patents, and the incredible products and services made possible by them and on which everyone relies on today.

A Quick Summary of Standard Setting Organizations and Patented Technologies

A traditional requirement of the IEEE and several other standard setting organizations is that innovators commit to license equally their patented technologies that are incorporated into an agreed-upon standard for all companies implementing this standard in products and services. The law already provides that a patent owner will receive a “reasonable royalty” as damages for any past unauthorized uses of a patented technology, and thus standard setting organizations added the contractual requirement that this reasonable royalty also be non-discriminatory. To create a pleasant-sounding acronym, the phrase used is that licensing rates for patented technologies incorporated into market standards must be fair, reasonable, and non-discriminatory (FRAND). The goal of FRAND is to ensure that all companies creating products and services that are sold to consumers in the marketplace pay the same rates for incorporating the necessary standardized technologies into these products and services, such as the standardized 4G transmission technology used by everyone’s smartphones.

About a decade ago, some professors and lawyers posited a theory based on an abstract, economic model that owners of patents on technologies incorporated into these standards could exploit their ability to seek injunctions for violations of their patents and thus impose unduly higher costs on the companies implementing these standards in things like smartphones, laptop computers, tablets, and other devices and services. It was a simple story about property owners “holding up” people who wished to use their technologies, cashing in on the ubiquitous knowledge that any property owner can post a sign that says “no trespassing.” Based on this “patent holdup” theory, which deduced from an abstract model that patent owners would demand inordinately high royalties from the companies that need to incorporate agreed-upon technological standards into their products and services, these academics argued for “reforms” in the law to stop “patent holdup.”

But the “patent holdup” theory is just that—a theory. More than a decade of rigorous empirical studies have not only failed to confirm the “patent holdup” hypothesis of systemic market failures in the patent-intensive high-tech industry, and instead have found market conditions that directly contradict the core claim of “patent holdup” theory (see here for a letter to Assistant Attorney General Makan Delrahim summarizing this research and listing many of the studies). One study has shown that the average royalty rate for key technologies used in smartphones is only 3.4%, which is contrary to the 67% royalty rate predicted by “patent holdup” theory. Another study, among others, found significant quality-adjusted drops in consumer prices of smartphones and increasing entry of new manufacturers of smartphones, as well as other market conditions in the smartphone industry, that directly contradict the predictions of “patent hold” theory.

Unfortunately, in response to lobbying and the successful pushing of the “broken patent system” narrative in Washington, D.C., antitrust regulators forged ahead at the DOJ to push for policy changes at standard setting organizations on the basis of this unproven “patent holdup” theory. (Thankfully, recent antitrust regulators have returned back to evidence-based, balanced policy-making.) Several years after the first article propounding the “patent holdup” theory was published in 2007, implementers began pushing this theory at the IEEE to effect changes in its internal patent policy, which ultimately responded to this effort by revising its patent policy in 2015.

IEEE Policy Changes for Owners of Patents on Technological Standards

As Gupta and Effraimidis explain, the IEEE’s new patent policy has been highly controversial and generated much discussion among academics and industry practitioners. Separate from what they disclose in their article, there have been allegations that the internal process at the IEEE in changing its patent policy was initially cloaked in secrecy and was not open to all IEEE members as to when meetings were held and as to what the substantive decision-making processes were at these meetings. One commentator referred to it politely as an “opaque decision-making process” by the IEEE. If true, this is very troubling given that this violates the exemption accorded to the IEEE under the antitrust laws for operating as a standards setting organization.

Essentially, the IEEE patent policy was changed in 2015 in two key ways that impacted innovators. First, the new policy prohibits a patent owner seeking an injunction until all efforts at obtaining a license fee have been exhausted, including suing and litigating to a final judicial decision awarding a reasonable royalty. This of course incentives purported licensors to drag out licensing negotiations while they are infringing the patent, imposing large costs on patent owners in having to file lawsuits and pursue their legal remedies in court for many years and who have no choice but to allow the unauthorized use of their property during this time.

Extending these negotiations then allows licensors to take advantage of the second major rule change by the IEEE in its patent policy: the policy shifts licensing rates from the longstanding, market-based licensing of the technology given the value of the consumer device to the component level of the value of the chip itself. Of course, a smartphone without 4G or Wi-Fi is a beautiful 1995 cell phone with a very pretty, colorful screen and nothing more, which is why the free market settled on the value added to the entire smartphone for the basis of the licensing rate for this standardized technology. Moreover, calculating royalty rates based on the very cheap computer chips that contain the valuable technology fails to account for the hundreds of millions of dollars in R&D investments in developing the technology in the first place. Again, this is why the arrangement first reached in the free market between innovators and implementers was a balanced approach in device-level licensing rates that accounted for the costs of R&D and the costs of manufacturing the smartphones that contained the technology derived from this R&D. As a recent empirical study has shown, this is approximately 3.4% per smartphone, which is anything but an example of a massive payment to patent owners on 4G or Wi-Fi, especially for these core technologies that make a cell phone a “smartphone.”

Why then did IEEE change its patent policy? Consistent with the concerns about the “opaque decision-making process” at the IEEE, economist Greg Sidak has identified how the new rules were drafted by an ad hoc committee at the IEEE dominated almost entirely by implementers who license the patented technologies from the innovators who develop and contribute these technologies to the standard-setting process. In effect, the licensees strategically dominated the process and used their clout to push through a policy change that devalued the patented technologies, because they were seeking to lower their own manufacturing costs in implementing this technology in the consumer products and services they manufacture and sell in the marketplace. As evidence, Sidak shows that comments submitted in opposition to the new rules were rejected at nearly double the rate of those in support, reflecting a process that betrayed the IEEE’s core principles of openness, consensus, and the right to appeal. Instead of alleviating any alleged problems caused by patent owners, the IEEE’s rule changes actually facilitated collusion among implementers and resulted in “buyer-side price-fixing” of the patented technologies.

Negative Impact on Contributions of New Technology to Standards at the IEEE

The heart of the Gupta and Effraimidis article is not the theoretical and empirical background to the “patent holdup” dispute, but a detailed empirical study of the impact the new IEEE patent policy has had on the standard development process. Focusing on IP-intensive standards related to the development of Wi-Fi and Ethernet networks, the study first looks into the number of Letters of Assurances (LoAs) submitted to the IEEE in the years before and after the patent policy change took effect.

(LoAs are documents submitted by inventing companies who contribute new technological innovation in the standard-setting process. These technology contributors have patents on these innovations, and in these LoAs, they identify what patents may be essential to the standard that is being developed and they identify the terms under which they’re willing to license this technology if it ends up being incorporated into the standard that is ultimately set by the standard setting organization. An LoA is labeled “positive” if the contributor agrees to license its technology under the patent policy set by the standard setting organization or “negative” if the contributor declines to commit to these terms.)

The Gupta and Effraimidis study found that the number of positive LoA submissions has dropped a whopping 91% since IEEE changed its patent policy in 2015 and the number of negative LoAs rose to an all-time high in 2016. Gupta and Effraimidis explain:

The results suggest that many [patent] owners are reluctant to license their patent portfolio on the new FRAND terms. More importantly, the uncertainty on implementers’ side has increased, as new standards . . . have been approved despite the presence of negative and/or missing LoAs . . . .

Their article also tracks changes in the duration of the comments period that takes place before a new standard is approved—this is the period of time during which IEEE members discuss, debate, and resolve any concerns about a standardized technology before it is ultimately adopted as an official standard by the IEEE. Before the IEEE’s new patent policy went into effect in 2015, the average duration of the first two rounds of comments was 233 days. After the new patent policy took effect, Gupta & Effraimidis found a 42.5% increase in the comment period duration, resulting in an average resolution time of 332 days. This increase by almost half in the standard-setting process, especially in an industry marked by rapid development of new smartphones, laptops, and other high-tech consumer products and services, is concerning, to say the least. These delays are wasting private as well as public resources and impeding the commercial development of important IP-intensive technologies.

Finally, the Gupta and Effraimidis study analyzes the change in the number documents submitted at the IEEE that trigger the development of a new standard technology, which is a proxy for the development of new standards by the IEEE. Here, Gupta and Effraimidis’ findings contradict another recent study that alleged a high number of submissions in 2016 reflected a positive impact of the IEEE’s new patent policy. Gupta and Effraimidis reveal that hundreds of the submissions counted in the prior study either came from standards for which no patented inventions were contributed or were for standards of little or no value. Focusing properly on submissions for technologies that have significant value and produce an overwhelming majority of IEEE standards, they find submissions of new standards documents have in fact declined by 16% since 2015.

In sum, the changes in the internal standard-setting process at the IEEE since it adopted its new patent policy in 2015 represent a concerning shift following a strategic and collusive effort by implementers to devalue the patented technology created by innovators and contributed to standard setting organizations like the IEEE. The evidence is slowly building, showing that the IEEE’s new patent policy has devalued the innovative activity of technological innovators based on a purely theoretical and unproven claim that there is a systemic problem with so-called “patent holdup” in the smartphone and other high-tech industries. Unfortunately, in leaping into action on the basis of unproven theories, the IEEE has contributed to pervasive uncertainty and weakened incentives in the development and commercial implementation of innovative technologies, as is increasingly being documented and discussed by legal scholars and economists.

Moving Forward

The Gupta and Effraimidis study analyzes for the first time empirical data in fully detailing the effects of the IEEE’s new patent policy on the standard setting process. Their study shows that innovators are unwilling to continue to contribute the technologies they develop to the standard setting process under onerous terms requiring them effectively to give up their legal rights to their patents, and that these policies are having a perverse effect in creating inefficient licensing negotiations and delayed standards development. Their findings may sound intuitive to patent lawyers and innovators, but it is imperative to bring data into the public policy debates after ten years of concerted efforts to implement unproven theories, such as “patent holdup” theory, in both law and in the policies of private organizations like IEEE.

Gupta and Effraimidis conclude that a proper patent policy for a standard setting organization like the IEEE “should enhance incentives of technology contributors to innovate, while ensuring unlimited access to the new technology standards.” In considering its key role as a long-time professional association for the high-tech industry reaching back to Nikola Tesla and Thomas Edison, as well as its key role as standard setting organization in the innovation economy, the IEEE hopefully will reconsider its patent policy in light of actual economic and legal evidence. It should return back to the balanced patent policy that successfully promoted the computer and mobile revolutions of the past four decades. The future of new and innovative consumer products is at stake, such as the 5G technology that was first being developed many years ago and will start to be introduced into consumer products in the coming year.

Categories
Copyright International Law

Will the EU Finally Hold Internet Giants Accountable?

gold 3D copyright symbolOn July 5th, the European Parliament will vote on a draft of the Copyright Directive for the Digital Single Market that has major implications for the future of copyright law in the European Union and beyond. At the center of the debate is Article 13, a provision that would require online platforms that feature user-generated content to screen uploads for infringing material. It’s a measure that represents a significant update to standards of accountability in the digital age, and it’s one that’s now necessary to combat the continual devaluation of creative works and to ensure the survival of essential creative ecosystems.

In the weeks and months leading up to the vote, advocates for Article 13’s defeat have become increasingly vocal in their opposition to the proposal. An overwhelming amount of those attacking Article 13 have resorted to fear-mongering and misinformed hyperbole. Detractors’ claims include everything from the ridiculous—insisting Article 13 will outlaw memes—to the clichéd—that efforts to impose platform accountability amount to censorship and will “break the internet.”

Fixing Outdated Safe Harbors and the YouTube Value Gap

Chief among opponents’ complaints is that Article 13 would destroy the safe harbors that guarantee platforms will not be liable for infringing content uploaded without their knowledge. At the turn of the century, the Digital Millennium Copyright Act in the US and E-commerce Directive in Europe included safe harbor immunities as a way to encourage the development of the internet and the companies that were leading the way in online innovation. But these protections were never meant to be sweeping get-out-of-jail-free cards that encourage platforms to ignore infringing activity.

What’s become clear is that the immunities granted to tech giants through safe harbors haven’t properly incentivized them to stop profiting from illegal activity. These once-nurtured companies are now the most powerful and wealthy entities in the world, and business models based on the unauthorized distribution of protected works must be challenged.

Making matters worse is the fact that mechanisms meant to give creators and copyright owners a way to fight infringement have fallen short. Notice and takedown is an ineffective weapon against the incessant uploading of unauthorized content, and safe harbors allow online intermediaries to repeatedly turn a blind eye to—and profit from—massive amounts of copyright infringement occurring on their platforms.

The failure of procedures like notice and takedown are nowhere more apparent than on YouTube, where the futility of artists’ efforts to fight infringement has led to an inability to be fairly compensated for the exploitation of their works. When YouTube rose to prominence as the most popular streaming platform in the world—offering up free illegal streams of thousands of popular songs and movies—copyright owners quickly realized the law left them powerless to hold YouTube accountable for being a clearinghouse of stolen creative works.

This lack of control for creators combined with YouTube’s market dominance has created a “value gap” which leaves artists in a lose-lose predicament where they must choose between the meager compensation YouTube offers and nothing at all. Furthermore, legitimate streaming platforms are forced to compete with YouTube’s enormous and popular black market. Sadly, efforts similar to  the current campaign against the EU Copyright Directive have enabled this market dysfunction to persist for over a decade.

A Campaign of Misinformation

Despite the Copyright Directive’s effort to clarify safe harbor qualifications and correct a glaring inequality, opponents of Article 13 insist content filtering provisions will result in censorship and destroy the internet as we know it. It’s a campaign that is recycling the same scare tactics and wild assumptions that seem to arise whenever there is an attempt to inject accountability in cyberspace.

A recent article by a leading European IP law expert takes many of these accusations to task, pointing to language in Article 13 that ensures a balancing of rights and interests through the introduction of exceptions and limitations by Member States “irrespective of whether the value gap proposal is adopted or not.” Article 13 clarifies that systems to prevent misuse or undue limitations to the exercise of exceptions must be adopted by Member States to ensure fundamental rights and freedom of expression are not compromised. The inclusion of carve outs and provisions that empower Member States to prohibit any behavior approaching censorship renders these doomsday “end of the internet” allegations baseless.

Additionally, the article explains that the current legal framework developed by the Court of Justice of the European Union (CJEU) has already been moving towards addressing the value gap, and Article 13 “would not represent a dramatic shift from the way in which the law has developed up till now.” The article points out that safe harbor protections under Article 14 of the E-Commerce Directive are only available to passive service providers who act as true intermediaries, and that hosting services who make unauthorized communications to the pubic are already precluded from safe harbor immunity.

So why would organizations who support tech giants spread misinformation and falsehoods about the contents of Article 13 and its repercussions? Unfortunately, it’s a strategy they’ve employed again and again whenever there is an initiative to implement responsibility and accountability online. By taking a reasonable bill or legislative effort and painting it as an attack on fundamental rights and freedom of expression, they have been able to drum up hysteria and knee-jerk reactions from those who may not fully understand the issues. It’s a formula that has worked to defeat sensible reform in the past, but it must be called out for what it is.

Accountability and Respect for Creation

Artists and representatives of the creative industries have weighed in on the proposals, explaining that content filtering isn’t just about protecting their livelihoods, but ensuring that the next generation of creators can flourish in a system that values and respects their contributions. A recent article criticizing Article 13 complained that there is no incentive for the public to welcome the implementation of content filtering. But this argument misses the point. Increasing accountability for internet giants who profit from infringement is an opportunity for the public to show that it values creative works, artists, and those responsible for bringing creative content to consumers.

It’s also an opportunity for the public to hold accountable companies and organizations that routinely behave as if they are above the law. When it comes to issues of increased accountability for their actions, internet giants have been able to trick the public in the past with misinformation campaigns similar to the one being waged against the Copyright Directive, but there is a growing tide of frustration with these deceptive practices, and the public should wake up and demand change.

As the European Parliament goes to vote on the Copyright Directive, it’s essential that parliament members, stakeholders, and the public understand what’s at stake. Recent events around the world have challenged notions of what is expected from the tech giants that have become the gatekeepers of the digital age, and it’s past time that they face responsibility for enabling and profiting from the theft of creative works. The future of creativity depends on it.

Categories
Patent Law

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

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.

Categories
Innovation Patent Law

U.S. Innovation Economy Falls Even Further in Latest GIPC Patent Rankings

hand under a lightbulb drawn on a chalkboardThe Global Innovation Policy Center (GIPC) at the U.S. Chamber of Commerce has just released the sixth edition of its International IP Index. Unfortunately, the report finds that the United States is now tied for 12th place in its patent rankings. This is down from 10th place last year, and it’s down from 1st place just two years ago. The recent downward trend of the U.S. innovation economy is rather alarming, and it is further evidence that the U.S. is quickly abandoning its gold standard patent system.

GIPC notes that the U.S. patent system has faltered due to two key indicators: patentability requirements and patent opposition. As to the former, the report cites the Supreme Court’s recent Section 101 jurisprudence, which has created much uncertainty for innovators about what even constitutes a patent-eligible invention. These findings comport with the newly-published paper by CPIP’s Adam Mossoff & Kevin Madigan highlighting the Court’s troublesome approach to patent eligibility and its profound effect on our innovation economy. As to patent opposition, GIPC cites the ease of challenging patents that have already been issued through mechanisms such as inter partes review (IPR). Indeed, several CPIP scholars authored a recent white paper detailing how these IPR proceedings have become an existential threat to the very patent system they were meant to promote.

U.S. falls to 12th place in ranking of patent system strength. 2018 Chamber index marks further from for U.S. Category 1: Patents, Related Rights, and Limitations. 1. Singapore; 2. France; 3. Germany; 4. Ireland; 5. Japan; 6. Netherlands; 7. South Korea; 8. Spain; 9. Sweden; 10. Switzerland; 11. UK; 12. United States / Italy. ("Create," Global Innovation Policy Center, U.S. Chamber International IP Index, Sixth Edition, February 2018))

To read GIPC’s International IP Index, please click here.

Categories
Copyright

Debunking Criticism of the Copyright Small Claims Act

Cross-posted from the Mister Copyright blog.

the word "copyright" typed on a typewriterIt’s been six weeks since the Copyright Alternative in Small Claims Enforcement (CASE) Act (H.R.3945) was introduced to Congress by a bipartisan coalition of Representatives, and while there’s an abundance of support among politicians, creators, artists’ rights organizations, and the Copyright Office, some have been critical of the legislation. Although much of the pushback can be chalked up to certain groups who seemingly resist any effort to hold infringers accountable for misappropriation, it’s worth addressing some of the criticisms to show that they’re largely baseless.

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 aims to provide a venue for these often frustrated parties to address rampant infringement online, empowering a class of rights holders who have limited means and few opportunities for recourse. But some have argued that this system will be tilted in favor of claimants and unfairly burden respondents, and these critics are calling for the bill’s defeat.

One supposed problem with the CCB, according to its critics, is that the three-officer panels overseeing cases will be biased and favor the claimants and copyright owners. It’s a bold assumption, but unfortunately not surprising coming from organizations that routinely accuse the Copyright Office of being “pro-content” or “anti-user”—accusations that remain completely unsubstantiated.

Perhaps anticipating such charges, the CASE Act calls for a panel in which two of the three claims officers must have diverse copyright experience which includes representing the interests of both creators and content users. As Section 1401(b)(3)(A) on officer qualifications explicitly states:

Each Copyright Claims Officer shall be an attorney with no less than 7 years of legal experience. Two of the Copyright Claims Officers shall have substantial experience in the evaluation, litigation, or adjudication of copyright infringement claims and, between them, shall have represented or presided over a diversity of copyright interests, including those of both owners and users of copyrighted works.

The third claims officer is required to be an expert in alternative dispute resolution who also has substantial copyright law experience. Any fear that these officers will render decisions unfairly in favor of claimants is likely a reaction to the realization that the small claims system will finally hold accountable a large number of infringers who have previously flown under the radar.

Another criticism of the CASE Act is that due to appearance requirements and allegedly unfair notice procedures, the Copyright Claims Board will issue a disproportionate amount of default judgments against respondents and thereby violate due process and personal jurisdiction. However, Section 1405(g) establishes clear notice obligations of claimants, including proof of service within 90 days of receiving notice to proceed. Furthermore, there is no rule requiring parties to appear in-person before the Board in Washington, D.C. It’s anticipated that smaller claims will be electronically resolved, while larger disputes will be handled via video conferencing. Section 1405(c) clearly explains:

Proceedings before the Copyright Claims Board shall be conducted at the offices of the Copyright Claims Board without the requirement of in-person appearances by parties or others, and shall take place by means of written submissions and hearings and conferences accomplished via Internet-based applications and other telecommunications facilities.

Critics also claim default judgments would be difficult to overturn, despite section 1407(c) explicitly providing an opportunity to appeal determinations to the District Court of the District of Columbia. Additionally, Section 1407(c)(1)(c) allows for respondents to challenge default determinations “where it is established that the default or failure was due to excusable neglect.”

There have also been arguments that, at $30,000, the damages available to claimants are too high. But while it may seem like a big number compared to what’s available in other small claims courts, it is the absolute ceiling of available damages. The CCB has discretion to award up to $30,000, and that limit is much lower than what an infringer might be on the hook for in federal court.

Making these criticisms of the small claims initiative seem even more absurd is the fact that the proceeding will be completely voluntary, allowing respondents to opt out of the entire system if preferred. While it’s hoped that respondents will choose to resolve claims before the CCB—rather than risk a potentially worse fate in federal court—there is no obligation to participate if they see the process as unfair or burdensome.

The reality is that the notice requirements and damages available represent a system that is no more skewed towards claimants than any other adjudicatory proceeding. Arguments to the contrary reflect a resistance to a system that will finally hold accountable infringing behavior that, because of past difficulty to address it, has become routine in the digital age. It’s time to give small creators and copyright owners a realistic shot at protecting their works, and making the CASE Act law would lead the way in this long-overdue and worthy endeavor.