Tag: patent

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Patent Law Patent Litigation

TPLFA: Protecting Predatory Infringers

Blog post by Michael Doane

The CEO of a small technology-based company with many groundbreaking patents in its field once asked me what the point was of obtaining patents when the company simply did not have the resources to enforce them. Although patents provide many benefits, the ability to enforce them against infringers is paramount. Patent infringement litigation is euphemistically referred to as “The Sport of Kings” due to the burden imposed by massive legal fees and the redirection of resources away from the core business to litigation support. The American Intellectual Property Law Association estimates that the median cost of patent litigation is approximately $5 million with a median cost of $600,000 for cases in which less than $1 million is at risk.[1] The cost of patent litigation is inflated by large well-funded infringers engaging in what they prefer to call efficient infringement but is more properly called predatory infringement. From their perspective, it is more efficient to infringe and engage in protracted litigation in district court and before the U.S. Patent and Trademark Office (USPTO) than to compensate the innovator at a properly negotiated market rate. Because of the high cost of litigation, they infringe because “they can get away with it . . .”[2] facing at worst a long delayed and potentially lower court-imposed royalty rate, assuming the patent owner survives the expense of litigation. Litigation funding or, in other words, third party investment in the potential outcome of litigation, is a step toward levelling the playing field by providing access to small innovators to the expensive enforcement mechanisms that are supposed to be available to all patent owners and not just a select few.

As if predatory infringement were not enough, a patent owner with limited internal resources now faces the prospect of third-party litigation funding being made unavailable to them. Recently, Senator Tillis tacked a bill known as the Tackling Predatory Litigation Funding Act (TPLFA) onto the One Big Beautiful Bill. Although it was ultimately removed on procedural grounds, it is highly likely that the TPLFA will be introduced as a standalone bill in the near future. Interestingly, the TPLFA does not make litigation funding illegal; instead it seeks to make litigation funding unprofitable. To discourage litigation funding, “qualified litigation proceeds” are to be taxed at “the highest rate of tax imposed by section 1 for such taxable year, plus 3.8 percentage points.”[3] In other words a penalty in excess of 40% is imposed on the proceeds of any litigation funding agreement paid to any third party that is not an attorney representing the party.[4]

Although the term “predatory” is in its title, the TPLFA does not purport to define or identify that which is predatory, but rather simply imposes this penalty on the proceeds from any litigation funding regardless of the nature and purpose of the litigation. Is it predatory for a small innovator to obtain the necessary resources to enforce its patents against a large well-funded infringer? Why should legitimate patent litigation be deemed predatory simply because the patent owner must seek outside resources to enforce its rights?

The other justification for TPLFA is China. The spectacle of purported Chinese investors targeting U.S. business through litigation funding is used as a strawman by those seeking limits on litigation funding to jury-rig some type of national security argument. Alleged fears of foreign investors gaining access to confidential information are properly and effectively handled by protective orders which limit access to attorneys. Ironically, most if not all the predatory infringers raising such concerns manufacture the vast majority of their products in China and certainly almost none manufacture in the United States.

In addition to the TPLFA, efforts are being made to impose disclosure requirements on those relying on litigation funding. The Litigation Transparency Act of 2025 would require an innovator relying on litigation funding to “disclose in writing to the court and all other named parties to the civil action the identity of any person (other than counsel of record) that has a right to receive any payment or thing of value that is contingent on the outcome of the civil action. . .”[5] along with a copy of the agreement. These disclosure requirements are meant to discourage litigation funding by imposing additional burdens on the patent owner while acting as a distraction from the real issue in such cases—patent infringement.  As noted in the E-Discovery Model Order developed by the Federal Circuit Advisory Council the key and most consequential issues in patent litigation are:

  • what the patent states,
  • how the accused products work,
  • what the prior art discloses, and
  • the proper calculation of damages.[6]

The identity of those that may or may not be providing financial support for the litigation could not be more irrelevant to these issues.

The TPLFA and Litigation Transparency Act are being touted as litigation reform but are actually designed to limit the ability of small, less-resourced innovators to obtain the funding necessary to enforce their patent rights. Predatory infringers wish to maintain the expensive patent litigation system to enforce their own intellectual property rights, including against each other, without the annoyance of small innovators enforcing their intellectual property rights. Thus, they pursue their claimed reform around the edges by making intellectual property enforcement expensive and unprofitable. If the true goal is to eliminate predatory litigation funding, such activity should be specifically defined and identified so it can be properly addressed. Adopting the overbroad expedient of imposing an absurdly high tax on all litigation funding revenue to render it unprofitable further restricts access to the U.S. judicial system by small innovators. Requiring disclosure from the plaintiff, but not the defendant, imposes another burden and also provides the defendant with an expectation of exactly how long they will need to protract litigation … just long enough to use up the funding. The effect of these bills would be to keep patent litigation a Sport of Kings.

[1] 2023 Report of the Economic Survey, American Intellectual Property Law Association.

[2] Colleen V. Chien, Holding Up and Holding Out, 21 MICH. TELECOMM. & TECH. L. REV. 1, 20 (2014).

[3] Id. at Sec. 2: Litigation Financing, Pg. 2, 7-17.

[4][4] Id. at Sec. 2: Litigation Financing, Pg. 3, 9-17.

[5] H.R. 1109, 119th Cong. (2025) (Litigation Transparency Act of 2025).

[6]  Federal Circuit Advisory Council, An E-Discovery Model Order and Model Order Regarding E-Discovery In Patent Cases at 2 (2011).

The arguments and views in this blog post are the author’s own and do not necessarily reflect those of IPPI or of any other organization.

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Biotech Healthcare Innovation International Law IPPI News Patent Law Patents Pharma

IPPI Cautions that Pharmaceutical Tariffs Would Harm Patients and U.S. Innovation Leadership

IPPI has submitted formal comments to the U.S. Department of Commerce regarding its Section 232 investigation of pharmaceutical imports, cautioning against imposing tariffs on medicines and their ingredients.

In our submission, IPPI scholars Mark Schultz, Emily Michiko Morris, and Joshua Kresh explain that imposing such tariffs would have severe negative consequences for American patients, healthcare affordability, and U.S. pharmaceutical innovation leadership.

Drawing on extensive research, particularly Geneva Network’s 2021 study modeling the effects of a 25% pharmaceutical tariff, our comments highlight five critical concerns:

  1. Higher Drug Prices for Patients: Research demonstrates that pharmaceutical tariffs create a “compounding effect” as each link in the supply chain adds markup to the tariff-inflated price, potentially increasing final costs by up to 80% for consumers.
  2. Drug Shortages Risk: With over 90% of U.S. prescriptions being for generic drugs and 83% of top generics having no domestic source, tariffs would disrupt existing supply chains and potentially force manufacturers to exit certain market segments.
  3. Ineffective for Boosting Domestic Manufacturing: Building pharmaceutical manufacturing facilities in the U.S. requires billions of dollars and 5-10 years to accomplish—making tariffs ineffective for addressing immediate or even medium-term supply concerns.
  4. International Retaliation Threats: Our comments note that major trading partners including China, Brazil, and the EU are already considering pharmaceutical IP rights suspensions and other countermeasures in response to U.S. tariff actions.
  5. Government Cost Implications: Paradoxically, the U.S. government could end up paying 2-6 times more through Medicare and Medicaid for tariff-inflated drugs than it collects in tariff revenue.

“Imposing tariffs on medicines would be counterproductive to U.S. interests,” said Mark Schultz, Faculty Chair of IPPI. “Such measures would ultimately undermine, rather than enhance, American healthcare security while threatening our position as the world leader in pharmaceutical innovation.”

The full text of IPPI’s comments is available here.

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Patent Law

RESTORE, PERA and PREVAIL: Bills that fix problems with the patent system

Blog Post by Kristen Jakobsen Osenga

As the 118th Congress drew to a close at the end of 2024, there was a spate of intellectual property activity on Capitol Hill. I was fortunate enough to be part of one of these exciting events. On December 18, 2024, the IP Subcommittee of the Senate Judiciary Committee held a hearing on the RESTORE Patent Rights Act. I was one of four witnesses testifying at that hearing, alongside fellow professor Jorge Contreras. The other two witnesses were Jacob Babcock, CEO of NuCurrent, and Joshua Landau, Senior Counsel, Innovation Policy, at the Computer & Communications Industry Association (CCIA). Video of the hearing is available here. My written testimony is also published.

In addition to the hearing on the RESTORE Patent Rights Act, the Senate Judiciary Committee also voted to advance the PREVAIL Act to the full Senate in November 2024. The PREVAIL Act addresses a number of abuses plaguing PTAB proceedings. In addition to RESTORE and PREVAIL, other IP-related bills were introduced last Congress, including the PERA Act to clarify patent-eligible subject matter. All of these activities gave hope that Congress was ready to fix issues that interfered with innovators being able to obtain and enforce effective and reliable patent rights. As 2025 began and the new Congress was sworn in, patent advocates wished for them to pick up where the 118th Congress left off.

Thankfully, we did not have to wait long. On February 25, 2025, Senators Coons and Cotton and Representatives Moran and Dean re-introduced the RESTORE Patent Rights Act, which provides a presumption of injunctive relief when a patent is found to be valid and infringed. This bill fixes a string of events that began with the Supreme Court’s 2006 decision in eBay v. MercExchange that has led to not just fewer injunctions being granted, but also fewer companies even seeking injunctive relief. (See article by Dr. Kristina M.L. Acri née Lybecker.) Because a patent only provides the right to exclude, if a patent owner cannot obtain an injunction, the patent loses much of its value. The presumptive injunction of the RESTORE Act would, as the name suggests, restore a patent’s exclusive right, as well as its value.

Further reading:

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From Great Ideas to Global Impact – A Talk with Andrew Byrnes

The following post comes from Tuan Tran, a rising 3L at Scalia Law and a Research Assistant at C-IP2.

2022 Andrew Byrnes event flyer
Click on image for full-size PDF flyer.

Small ideas can lead to big changes, which in turn can make a significant impact on the world, but—as technology executive, attorney, and investor Andrew Byrnes knows well—this is no easy task.

On May 4, 2022, Mr. Byrnes gave a talk co-hosted by the Center for Intellectual Property x Innovation Policy (C-IP2) at George Mason University, Antonin Scalia Law School, and Business for a Better World Center, School of Business, George Mason University. With his background and experiences in both the legal and technology industries, Mr. Byrnes shared his knowledge about how just a single idea can be transformed to make a great impact on society. His talk focused on two main points: how ideas are developed, and the framework he has used to implement and transform those ideas into something impactful.

According to Mr. Byrnes, the first step is “finding the idea.” There are three principles involved in the process: be curious, look at intersections, and be passionate. The first principle is to be open to the possibility of having a great idea that can either address a challenge or take advantage of an opportunity. It is important to listen and be observant, because the more one talks with new people about new topics in different contexts, the more one will be likely to come up with interesting and powerful new ideas. One of the key things to keep in mind is to not waste time looking for a perfect idea, because a big idea is usually not presented initially in its complete form. Instead, it is usually presented as smaller ideas that are eventually brought together. Second, “looking at intersections between disciplines and industries” means to be curious and examine known things and combine them “in ways that they haven’t been combined before.” For example, with patents, “most inventions are combinations of known elements.” The third principle stands out as the most important one: being passionate about the pursuit of the idea. Without passion, it is extremely difficult to go from that great idea to real-world impact.

Mr. Byrnes has laid out a framework that involves the most crucial aspects of how to accomplish the goal of transforming ideas into impactful innovation. The framework has “five pillars” in a “hub-and-spoke” formation: legal clearance, intellectual property (IP) protection, market validation, operationalization, and user adoption. As Mr. Byrnes explained, “The reason why I have this hub-and-spoke model is it’s not remotely linear. You . . .  have to do all of these things in sequence and at once, and once you’ve gone through all of them, you have to go back and do them all again, because the world is dynamic, your idea is dynamic, and the operationalization of the idea will require you to . . .  adjust over time.” Following is the discussion of the five pillars.

Legal Clearance

This pillar begins by “evaluating the existing law.” It is essential to understand the related law and how it could impact what will be done with the ideas, including any legal barriers that prevent the implementation of an idea. When as is common the law is unclear, there are two choices, both with costs and opportunities. Putting a hold on the idea can help avoid potential legal problems, but that might result in being left behind when the competitors decide to engage in similar markets or to produce similar products. It may be difficult to enter the market later. On the other hand, proceeding with the idea when the law is unclear might be costly later after the regulators or courts say that the implementer cannot do what they have been doing. Therefore, a company needs legal advice to understand all aspects of the related law before implementing any ideas so that the company can come up with the most suitable strategy. Lawyers are a helpful source, and—for any startups in the Northern Virginia area—so is the Innovation Law Clinic at George Mason University Antonin Scalia Law School.

IP

Mr. Byrnes pointed out that there are “many facets” involved in IP, the second pillar. Important forms of IP for protecting one’s inventions and businesses are patents and trademarks. In short, a patent is “the grant of a property right to an inventor by the government” that can “exclude anyone [else] from making, selling, or using the invention for a [specific] period of time.” Not every idea or invention can be patented, because there are some legal requirements for patent protection; trade secrets may be able to provide protection where patents cannot. However, where applicable, patent protection can be valuable for limiting competition during the life of the patent, raising the valuation of a company, and potentially for licensing purposes. When it comes to patent protection, filing as soon as possible is important because the first inventor to file a patent application will have priority. Also, it is advisable to keep documentation and to have written agreements with employees and collaborators, if any, to ensure the ownership of our idea. Trademarks are also important. A great idea may not succeed if the consumers or clients cannot find the product or service or associate it with your company. Ideally, select a trademark “that is as strong as possible” at an early stage to ensure maximum brand protection.

Market Validation

After legal clearance and protecting IP, the third pillar is market validation. Even “a legal and protected idea” is not impactful when people do not need it. As mentioned earlier, the world changes at a fast pace, so what people needed in the past might not be what they find important in the present. Thus, to build a sustainable business from great ideas, it is vital to “(re)visit demand,” “assess the model,” and “engage prospects directly.” When revisiting demand, implementers should ask themselves whether their ideas are solving any problems or providing solutions to “pain point[s]” they envisioned at the beginning or some other problems they have developed over time. In terms of economics, business models should be assessed for their sustainability. Obtain feedback from clients and consumers using a variety of methods, both traditional, e.g., customer surveys, and creative. For example, Arctop utilizes neuroscience technology to develop an app that can evaluate a user’s experience with a product based on the user’s brain activity. This method can be a better representation of customer satisfaction than what is available through a rating system or survey.

Operationalization

As Mr. Byrnes says, it is exciting to confirm that people still love and want our ideas, “but we actually have to get it done.” The operationalization area or fourth pillar is the “get-stuff-done” (the “GSD”) stage. There are three main tasks involved in this stage: “building the right GSD team, . . . focusing on execution, and then prioritizing efficiency and viability.” Building the GSD team is the most important task. Mr. Byrnes lists being emotionally intelligent, curious, diverse in perspective, synergy-seeking, resilient, and confident as important characteristics for team members. The more people in the team who have these characteristics, the more effectively and efficiently the team members can collaborate to accomplish mutual goals. Second, “ideas alone are not good enough”; the focus needs to be on execution. Avoid “mak[ing] the perfect enemy of the good.” For example, a team may wait to act if their vision of the ways things will occur is not realized, but the result may be that, “if you wait that long, … the world’s going to pass you by.” Therefore, implementers need to be confident in the team they have built and the accomplishments they have achieved in earlier stages. As Mr. Byrnes states, “be biased to action, and that’s most likely the best risk-minimizing approach.” In addition, “prioritizing efficiency and viability” is crucial. By “spend[ing] no more money than you’re making,” the team does not “hav[e] to seek as much outside investment and engagement over time.”

User Adoption

The last pillar of the framework is about conveying to the world what you are doing. To be successful at this stage, Mr. Byrnes states, it is important to have “widespread visibility,” “a compelling narrative,” and “third-party validation.” There are several tools to help in achieving widespread visibility: “earned media,” paid advertisements, or “owned” media, such as social media. Although all of these tools helping reach as many customers as possible, the most suitable tool should be chosen carefully depending on the situation. The tools are most useful only when there is a compelling narrative to deliver to the target audience. It takes effort to come up with a unique narrative, but in general, a compelling narrative should convey a key benefit of the products directly and concisely. Finally, products and services will garner more trust and credibility when potential customers see others whom they know and trust approving or using those products or services. Thus, start-up companies are highly encouraged to seek third-party validation, whether from other companies, non-profit organizations, governments, or others.

A small idea can make significant impact on society, but the path from forming an idea to making the impact is challenging. Many companies have struggled to make impactful innovations because of the lack of relevant knowledge and experiences. During the talk, Mr. Byrnes pointed out several unique problems and a sophisticated framework of five pillars to overcome those problems. Although following the five-pillars model might not guarantee success, it significantly improves any company’s chances of creating impactful innovations quickly and effectively.

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Uncategorized

Comment of 25 Law Professors, Economists, and Former U.S. Government Officials in Response to EU Commission Call for Evidence on Standard-Essential Patents

Led by Prof. Adam Mossoff and C-IP2 Senior Fellow and Senior Scholar Prof. Jonathan M. Barnett, twenty-five law professors, economists, and former United States Government officials—including C-IP2 Advisory Board members the Honorable Andrei Iancu, the Honorable David J. Kappos, the Honorable Paul Michel, and the Honorable Randall R. Rader; Faculty Director Prof. Sean M. O’Connor; Senior Scholar Prof. Kristen Osenga; and Scholar Dr. Bowman Heiden—submitted a letter in response to a “call for evidence” on the licensing, litigation, and remedies of standard-essential patents (SEPs). The response discusses core functions of SEPs in the wireless ecosystem, the lack of evidence of Patent Holdup and Royalty Stacking, assumptions about SEPs and Market Power, the importance of the potential for injunctive relief even for FRAND, levels of licensing, and SEP licensing in SME markets. The letter is available here on SSRN.

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Biotech Patents Pharma

Reply and Response to C-IP2’s March 4, 2021, Blogpost on UC Hastings’ Evergreen Drug Patent Search Database

C-IP2’s original post on the UC Hastings’ Evergreen Drug Patent Search Database can be read here.

Reply to Blog Post on UC Hastings’ Evergreen Drug Patent Search Database

Robin Feldman
Arthur J. Goldberg Distinguished Professor of Law
Albert Abramson ’54 Distinguished Professor of Law Chair
Director of the Center for Innovation at University of California Hastings

We would like to thank the author of the blog post for taking the time to look at our work for the Evergreen Drug Patent Database. It is always appreciated when others explore and examine our data. In addition, the benefit of a website is that helpful feedback from visitors can be used to make the information more accessible and easier to navigate.

We would also like to point out that the blog post misunderstands the nature of the project. The project begins with the initial patent protection on the chemical formulation of a drug and then tracks additional protections. Some of these protections increase the amount of time that the drug is protected. Others increase the number of protections that a challenger would have to overcome, without extending the length of time.

One can think of the difference in terms of building a wall of protection. Some protections make the wall higher by extending the total time period. Other protections make the wall thicker, so it is tougher for a competitor to break through.

We do have a separate tab that allows one to calculate only the months of added protection, for those who wish to view the data in that manner. We also offer tabs to view the number of unique patents and the number of patent extensions. Our goal is to allow the user to examine the information through different lenses, so that one can understand the many ways a patent holder can extend or toughen protection. If we like certain aspects, we should keep them; if we don’t like certain aspects, we should amend them. Either way, it is important to understand the system in which we live.

In addition, the blog post also may have misunderstood the database’s starting point. Specifically, the post asks why the database “allot[s] ranolazine less than four months of ‘earliest’ protection time” and suggests that such a short period of protection “seems suspect.” The answer is simple. The Evergreen Drug Patent Database begins in 2005. Thus, drugs whose original patents were around a long time have little protection left when the database begins. (The blog post itself notes this history of the drug.)

Finally, the blog post questions the database’s treatment of different strengths of the drug, questioning the fact that when patents and exclusivities apply to multiple strengths of a drug, they are counted once for each instance. We chose this approach because the law prevents automatic substitution at the pharmacy counter among different strengths. In fact, shifting the market to a new strength can create a powerful method of product-hopping by blocking generic substitution. Try asking your pharmacist the cost to fill your prescription with two 25 mg tablets rather than one 50 mg tablet. The cost variations can be odd and economically irrational. In short, creating multiple strengths of a drug can provide a form of protection in and of itself. Our goal is to report as many of these aspects as possible.

In the same vein, if the brand company has shifted the market to a different strength or formulation of the original drug, delisting the original drug can be used as an evergreening technique. It can prevent generic hopefuls from obtaining samples of a brand drug, when having samples is essential for FDA approval. It also can lead health plans to reimburse the generic at the disfavored rate of brand drugs, because the generic is now the only drug on the market at that precise dosage and formulation. One could argue that a delisting request should be characterized as something other than a protection; the argument would not be unreasonable. Nevertheless, the database chronicles the Orange Book history of each drug, based on all changes recorded. We consider any delisting information to be part of a complete picture of that history.

In closing, we note that it is highly unusual for legal academics to publicly release their data, let alone at this level of excruciating detail. We do so in the spirit of academic exchange and full disclosure, and we hope that those who write for this blog, as well as those who read it, will be motivated to follow suit.

Response to Professor Feldman’s “Reply to Blog Post on UC Hastings’ Evergreen Drug Patent Search Database”

C-IP2 appreciates Professor Feldman taking time to respond to our March 4, 2021, blogpost describing some of the problems we have identified with the UC Hastings’ Evergreen Drug Patent Search Database. We have posted her response in full, in the spirit of academic inquiry and collegiality that C-IP2 strives to foster. At the same time, we want to emphasize that we do not believe that her response in fact undercuts the observations in our original post. While we agree with Professor Feldman that legal academics should release for public scrutiny the data upon which they have based their conclusions—particularly when those conclusions are intended to have some bearing on important public policy considerations—we stand by our original statement “that—because of limitations in the methodology used and given the inadequate transparency with respect to the underlying data—policymakers and others who consult the Database [could] be misled by the statistics.”

C-IP2 disagrees with Professor Feldman’s suggestion that our post “misunderstands” Hasting’s database and its starting point. The post’s description of the database as a resource that UC Hastings had created “to address the perceived problem of ‘evergreening’” reflects UC Hasting’s own description of the database. See, for example, statements on the database’s “About” page.[1] Indeed, the database is explicitly referred to on that page as “Evergreen Drug Patent Search.” One might easily be confused into thinking that the database provides information reflecting the actual period of exclusivity experienced by FDA-approved drugs, which it clearly does not.

With all due respect, Professor Feldman seems to misunderstand some aspects of the original post. For example, at one point she states that the reason the database “allot[s] ranolazine less than four months of ‘earliest’ protection time” is because the database “begins in 2005.” But the starting point of the database is irrelevant. The database reports the drug’s “Approval Date” as January 27, 2006, and the “Earliest Prot[ection] Date” as May 18, 2006, which is a little less than four months. The database goes on to report that May 27, 2019, is the drug’s “Latest Prot[ection] Date,” leading the database to conclude that the drug had received 156 “Months Add[itional] Prot[ection] Time.” C-IP2 continues to find “suspect” the database’s implied assertion that a drug that has been on the market less than four months is already benefitting from “additional protection time,” particularly when the context of the database might lead one to believe that “additional protection time” equates with “evergreening.”

 

[1] https://sites.uchastings.edu/evergreensearch/about/#.YS_g6o5KhM1

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Biotech C-IP2 News International Law Patents

Panel Discussion: Vaccines, Intellectual Property, and Global Equity

scientist looking through a microscopeThe following post comes from Colin Kreutzer, a 2E at Scalia Law and a Research Assistant at C-IP2. 

The COVID-19 pandemic has shined a spotlight on the role of intellectual property in modern medicine and on the complex social questions surrounding a system that grants exclusive rights over life-or-death products. On the one hand, there is clearly a difference between public access to lifesaving medicines and other patented goods, such as consumer electronics. However, creating these drugs required billion-dollar investments and enormous risk, made feasible only by that promise of IP rights. Wouldn’t taking that promise away harm future development of new medicines? As the world considers a waiver of IP rights over COVID-19 vaccines and other technologies, experts are analyzing not only what’s right and what’s wrong, but also what works and what doesn’t.

On June 10, 2021, C-IP2 and the Smithsonian’s Lemelson Center for the Study of Invention and Innovation held a panel discussion on vaccines, intellectual property, and global equity. With opening remarks by Lemelson Director Arthur Daemmrich, and moderated by C-IP2 Faculty Director Professor Sean O’Connor, the panel featured Dan Laster, Director of the Washington State COVID-19 Vaccine Action Command and Coordination System (VACCS) Center; Professor Arti K. Rai, Elvin R. Latty Professor of Law and Co-Director of the Duke Law Center for Innovation Policy; and Eric Aaronson, Senior Vice President and Chief Counsel, Corporate Affairs, Intellectual Property and Intellectual Property Enforcement, Pfizer Inc.

Opening Remarks

Mr. Daemmrich began with a historical perspective of medical developments in this country, as well as the social, economic, and regulatory issues that would invariably be tangled up within them. His tale foretold many of the conflicts we see today—going from a time when most modern medicines didn’t exist, and high mortality was a fact of life, to a time when vaccines and other treatments existed, but access depended partly on wealth. In between those two periods, we saw rapid growth in IP protection that helped move society from one to the other. But whether in the form of religious opposition to smallpox inoculation, regulatory reforms after tragedies from bad medicine, or protests from a marginalized community during the AIDS crisis, legal and social issues have always played a prominent role in the story of medical science.

Building on this historical base, Mr. Daemmrich posed the problem now facing us: compared to other medicines, there are relatively few vaccines. On a grand scale, the entire field of vaccination is still in a stage of early development, and there exists great potential for growth in the future. The question is how to best stimulate that growth, or rather, how to ensure the greatest access to already-developed vaccines without stifling the creation of new ones?

Prof. O’Connor then led the panel with a series of questions. He began by asking about the difference between two classes of medicine. Vaccines are generally thought of as biologics—treatments that are derived from live cells­—whereas pharmaceuticals belong to the class of “small-molecule” drugs. They are primarily chemical compounds rather than a biological product.

Q: From an IP perspective, are vaccines different from small molecule pharmaceuticals? What role does IP play in making vaccines available?

 Prof. Rai responded that vaccines are indeed very different from small molecule drugs. From an IP perspective, the two classes derive their greatest protection from different sources.

Small molecule drugs can be produced without the need for company trade secrets. All the most critical information can be found within the text of the patent. So, the greatest protection comes from the patent itself, which grants its owner the right to exclude others from making or using the drug, and from data exclusivity, which prevents other companies from using the original developer’s clinical data to obtain regulatory approval of its own product.

Vaccines, on the other hand, cannot be quickly copied solely by reading the patent. There is a great deal of “know-how” involved in the manufacturing process. Because of this, trade secrets can be just as important to vaccine protection as the patent.

The role of IP in vaccine access, she said, is an interesting question. While public funding exists in the world of small molecule drugs, it has a “heavier footprint” in vaccine development, which then has some impact on the incentive model as it applies to vaccines.

Mr. Laster said the role of public funding was critical to his prior work at PATH, an organization devoted advancing global healthcare equity through public-private partnerships and other initiatives. Public funding has a “de-risking” effect in that the high costs and uncertainty of clinical trials are not borne entirely by the private sector. And because vaccine development typically requires cooperation among many parties, it is valuable to have different types of incentives in play (i.e., “pull”-type incentives, such as patent grants, as well as “push”-types, such as public funding). But from an IP perspective, exclusivity can pose a challenge to those cooperative efforts.

Additionally, he said that the detailed know-how involved with vaccines makes technology transfer incredibly difficult. If the intended receiver in a developing nation lacks the capacity to utilize the technology, how can effective tech transfer work in real-world practice? The question is less about whether we should be transferring vaccine technology to developing nations than it is about whether we can.

Mr. Aaronson said that a key piece of our IP system is that it does allow for greater cooperation by providing a means of transferring technology among partners while preventing that technology from being used for unauthorized purposes. He credits that cooperative system for enabling Pfizer to partner with BioNTech, producing a vaccine in record time. He added that this vaccine is currently supplied in 116 countries and counting, that they have committed to supplying at least 2.5 billion doses, and that they have just struck a purchase agreement with the United States for 500 million doses to supply lower-middle income nations. The required research, discovery, and development would not have been possible without a strong IP system that provides the right incentives and enables secure technology sharing among a large host of players.

Q: While we don’t know what final form the waiver might take, do you see it playing a necessary role in actually increasing vaccine supply and access in the coming year or two? Are there potential downsides to an IP waiver that should be considered?

Prof. Rai said that the biggest effect of a waiver would likely be its “symbolic” value, as other factors will have a much greater impact on vaccine access. But even if there were no substantive effect, it would be good for high-income nations to demonstrate an interest in global health issues. However, she considered the waiver issue “a little bit of a sideshow,” saying it likely would be “neither as bad as opponents fear nor as good as proponents hope.”

Prof. O’Connor noted that this is a particularly difficult question to answer when nobody knows what form any potential waiver would eventually take.

Mr. Laster based his perspective on his ten years of negotiating vaccine development and distribution efforts with PATH, saying he is “not sure [the waiver] aligns well” with what’s needed. Recognizing the importance of trade secrets and the complexity of the partnerships involved, he says a successful system must encourage willing cooperation. Simply waiving IP rights won’t necessarily do that. He also cautioned against taking a “static view” of the problem by taking for granted that the vaccine already exists rather than considering the IP system that helped create it, and failing to ensure that the same system is incentivizing new vaccines in the future. That said, the threat of a waiver might provide enough encouragement to bring about voluntary participation before an actual waiver becomes a reality. He credits this threat with already having a noticeable effect on pricing and other strategies.

Mr. Aaronson added that we are dealing with multiple vaccines based on very different technologies. Concentrating “a little more on the practical versus the theoretical,” he noted that the impacts of an IP waiver can vary greatly from one technology to another. The mRNA vaccine is the first drug of its type to ever receive approval. Much of the necessary tech transfer would not be limited to COVID-19, but could apply to the entire mRNA technology platform, drastically impacting its value. Waiving the rights to a groundbreaking technology could reduce the incentive to explore uncharted technological fields.

He also said it’s not certain that waiving IP rights would yield a net increase in the number of doses produced. The existing developers are producing large amounts of the vaccine. Opening the supply chain up to new entrants who may not be able to effectively utilize those supplies could yield a net decrease in production.

Prof. O’Connor also took audience questions for the panel. Some are listed below, starting with a “great foundational question.”

Q: How would it be ethical to allow lifesaving medicines and vaccines to be patented?

Prof. O’Connor began by addressing the purely legal perspective—that such patents are allowed under U.S. law, although there have been exceptions in some other countries at certain times because of this complex ethical question.

Mr. Aaronson said it’s important to think about patents as a part of a broader incentive structure. Are we putting the incentives in place to get someone to get up every morning and put in the work, money, and risk to create a product? We need an incentive structure, or there won’t be anyone making those lifesaving medicines. A patent system is one way to achieve this.

Q: If patent disclosures cannot teach producers how to make a vaccine without also getting corresponding know-how, how can they satisfy the disclosure requirement for patentability?

Prof. Rai has written multiple articles about this question (see one here) and offered several reasons. Some of the know-how is not easily written down. The need for shared know-how could possibly be satisfied by depositing biological materials with the Patent Office, but this is unlikely to happen. Another reason is that the final product that emerges from a years-long regulatory approval process is not always identical to the product described in the patent. There is also a mistaken view that patents and trade secrets cannot protect the same product. It is true that a singular feature cannot be both patented and kept as a trade secret, but a single product may have different features that are protected under one regime or the other.

Mr. Aaronson also pointed out that a single drug may be protected by many patents. Some of the know-how simply involves knowing how to properly combine the patented technologies.

Q: If most of the medical innovations occur in wealthy nations, IP laws will lock developing nations out, at least initially. Is there a way to include developing nations earlier in the innovation process?

All panelists agreed on the importance of this issue, as well as on the fact that it’s much easier said than done. Prof. Rai said that every nation must begin to create its own manufacturing capacity to avoid reliance on others, but this requires large amounts of human capital and infrastructure. The problem really goes beyond medicine to the balance of rich and poor nations generally. Mr. Laster said this is the sort of thing he was working on with PATH, which has created some networks, but there is a long way to go. Building the required skillsets and infrastructure locally takes time, but public-private partnerships can help. Mr. Aaronson said that it’s essentially like asking a nation to stop being a low-income country. It’s a somewhat circular issue, in which money is required to build infrastructure, but infrastructure is required to make money. However, this is where IP is not the problem; it is the solution. A strong IP system can create the necessary investment incentives to begin building a better future in any nation.

Closing Remarks

In closing, Prof. Rai said that “regrettably, the public debate on the . . . waiver has been very simplistic.” She hoped that the panel had “shed some light” on the issue and thanked her fellow panelists for a respectful and productive dialogue. Mr. Last er agreed that “it is a complex topic” but said that “it’s not about the waiver;  I do think there are mechanisms that can lead more likely to the outcomes we want.” Mr. Aaronson finished by saying that “we all have the same goal, to figure out ways to bring medicines and vaccines to patients, no matter where they are in the world. We’re fortunate and thrilled that our vaccine has had that potential to change lives, and our goal is to continue . . . to ensure access” to both this and to future vaccines.

A recording of the panel is available here.

Categories
Healthcare International Law

A View from Both Sides: COVID-19, the TRIPS Waiver, IP Rights, and How to Increase the Supply of Vaccines

scientist looking through a microscopeIssue

The United States and other wealthy nations have access to plenty of COVID-19 vaccine doses and thus are beginning to get the pandemic under control, while less affluent countries do not have access to adequate doses and are still struggling with rising cases. In October 2020, India and South Africa proposed addressing this problem by waiving certain portions of the TRIPS Agreement, the most comprehensive agreement on intellectual property (IP) aspects of international trade among the WTO’s 164 member states. The waiver cites “an urgent call for global solidarity, and the unhindered global sharing of technology and know-how in order that rapid responses for the handling of COVID-19 can be put in place on a real time basis.” While this proposal broadly applies to any COVID-19-related technology, much of the conversation is currently focused on vaccines.

The proposal would temporarily suspend patent rights covering COVID-19 vaccines and possibly also be used to compel the transfer of trade secret “know-how” and “show-how.” Proponents say this would allow any manufacturer to begin production—boosting vaccine supply while slashing prices—to end the surge of cases in less developed nations. Critics argue that the reality is more complicated: the waiver will be ineffective, even harmful, and it would have a devastating impact on our readiness for future health crises.

In Support of the Waiver

For supporters of the waiver, the answer is clear: cases are rising in many nations because they still don’t have the vaccines they need. It’s only reasonable to make exceptions to our ordinary system of business incentives during times of global crisis.

The Biden Administration

That is essentially what U.S. Trade Representative Katherine Tai stated when the Biden Administration announced its support for the waiver: “This is a global health crisis, and the extraordinary circumstances of the COVID-19 pandemic call for extraordinary measures. The Administration believes strongly in intellectual property protections, but in service of ending this pandemic, supports the waiver of those protections for COVID-19 vaccines.”

It affects all of us

WHO Director-General Dr. Tedros Adhanom Ghebreyesus says that the “me-first approach” among powerful nations “is self-defeating and will lead to a protracted recovery with trade and travel continuing to suffer.” Under this rationale, even purely self-interested parties should support the waiver, if only because modern commerce is so globally connected.

Dropping IP barriers will facilitate greater collaboration

Many say the threat of IP litigation prevents the kind of collaboration needed to quickly ramp up production and development, and that a waiver can remove that threat. The president of Médecins Sans Frontières, Dr. Christos Christou, says that “[t]he waiver proposal offers all governments opportunities to take action for better collaboration in development, production and supply of COVID medical tools without being restricted by private industry’s interests and actions, and crucially would give governments all available tools to ensure global access.”

Patents were not meant to impede emergency action

A recent editorial in the journal Nature argues that patents are designed to protect ordinary commercial interests, not to hinder global cooperation against a common threat: “A pandemic is not a competition between companies, but a race between humanity and a virus. Instead of competing, countries and companies need to do all they can to cooperate to bring the pandemic to an end.”

It solves an immediate need without setting a troubling precedent

While opponents of the waiver argue that it will weaken future drug patent protection, Imron Aly and Ahmed M.T. Riaz of Schiff Hardin LLP call those concerns “unfounded” in their post at IPWatchdog. Not only is the current proposal limited specifically to COVID-19, but it was also not created carelessly. Instead, it “has taken substantial international efforts and official international law amendments.” Aly and Riaz say this exceptional action is appropriate if it can succeed where our IP system has yet to do so: “The TRIPS waiver simply allows countries the option to suspend patent enforcement to encourage COVID-19 vaccine production, which makes sense for those countries where current investment has not resulted in vaccine access.”

Even if the waiver doesn’t work, it might work

University of Houston Law Center Professor Sapna Kumar acknowledges a number of functional issues with the waiver approach but notes that it may still have a positive effect on the pandemic: “Overall, the greatest benefit of the Biden Administration’s support for the waiver is that it signals a departure from the prior approach of punishing countries facing health crises and that it might spur pharmaceutical companies to voluntarily increase out-licensing and donations of vaccines.” Her prediction was borne out by a recent pledge to donate 2.3 billion doses by Pfizer/BioNTech, Johnson & Johnson, and Moderna.

Opposed to the Waiver

Opponents of the waiver argue that it will not be effective because it fails to address the real problems. Further, it could actually be detrimental to quality control and supply chains in the present crisis, while quite possibly affecting how pharmaceutical companies choose to allocate investment dollars in the future.

It’s a long process that requires much more than a temporary waiver of licenses

Vaccines are not like other drugs. Writing for Foreign Affairs, Peter J. Hotez, Maria Elena Bottazzi, and Prashant Yadav say that we can’t compare the current situation to similar actions on HIV treatments, and that most nations are not prepared to make use of the patented technology: “Producing vaccines—particularly those as technologically complex as the messenger RNA (mRNA) inoculations against COVID-19—requires not only patents but an entire infrastructure that cannot be transferred overnight.” The authors state that “[t]he effective transfer of such complex technology requires a receiving ecosystem that can take years, sometimes decades, to build.”

We need another way

Professor Yogesh Pai of the National Law University Delhi says that simply waiving trade secret protection won’t automatically disclose everything a manufacturer needs to know. Accessing “hard tacit knowledge of manufacturing/quality control measures for production and clinical data required for regulatory clearances” could require forced technology transfer (FTT) by national governments. He recalls how detrimental such efforts were to India’s economy when it tried FTT with Coca-Cola in the 1970s, prompting the company to leave the country altogether.

Prof. Pai instead recommends efforts to encourage voluntary cooperation: “Where blunt legal instruments don’t work, using track-1 and track-2 diplomacy to place moral coercion on western governments to nudge firms to actively engage in technology licensing may still work wonders.”

“China First” policy?

Sixteen U.S. senators issued a sharply worded letter to the executive branch, questioning the true motives of “China and other countries which regularly steal American intellectual property—like India and South Africa,” and expressing shock that an American president would go along with it: “These nations are falsely claiming that granting such a waiver would speed the development of new vaccine capacity. Nothing could be further from the truth.” Instead, the senators are suggesting that the waiver is being used as a means to unfairly to acquire trade secrets that took massive resources and time to develop.

Reuters reports that “some U.S. officials fear the move would allow China to leapfrog years of research and erode the U.S. advantage in biopharmaceuticals” and quotes a senior U.S. official as saying that the country “‘would want to examine the effect of a waiver on China and Russia before it went into effect to ensure that it’s fit for purpose.’”

IP is not the Issue

A waiver on patent rights, even with the corresponding trade secrets, can only give permission to manufacture. But Eva Bishwal of Fidus Law Chambers writes that the real problems in India “are state inaction, dearth of raw materials and low production capacity.”

According to Patrick Kilbride of the U.S. Chamber of Commerce’s Global Innovation Policy Center, and as cited in Pharmaceutical Technology, “[p]roposals to waive intellectual property rights are misguided and a distraction from the real work of reinforcing supply chains and assisting countries to procure, distribute and administer vaccines to billions of the world’s citizens.”

Low-quality vaccines could do more harm than good

Former USPTO Director Andrei Iancu voiced concern recently at a World IP Day event, asking, “if we waive IP rights, and exclude the original manufacturers, how are we going to control the quality of the vaccines that go into people’s arms? How are we going to control for the fake vaccines? Just last week we saw fake Pfizer vaccines.” And as Philip Thompson points out for IPWatchdog, when investigators are forced to “determine if adverse events or sub-par effectiveness originate from ‘real’ vaccines or fake doses, we should expect global production starts and stops to become much more frequent.”

It will discourage investment in the most critical areas

Pharmaceutical developers invest unfathomable amounts of money into bringing drugs to market. The path to success is long, expensive, and highly uncertain. But what is certain is that successful drugs can yield a profit that covers the loss from failures. Now critics are deeply worried that this waiver will skew future cost-benefit analyses against important classes of medicine. All other things being equal, a developer has a better chance at a positive return by investing in drugs that pose no risk of seizure during a global emergency. As Amanda Glassman of the Center for Global Development writes, the waiver sends the wrong message to innovators and investors: “don’t bother attacking the most important global problems; instead, throw your investment dollars at the next treatment for erectile disfunction, which will surely earn you a steady return with far less agita.” The scramble amongst pharmaceutical giants to develop a vaccine was an all-out race, with good reason, and that’s exactly how it should be. If those companies believe that forfeiture is waiting at the finish line next time around, we might see fewer contestants.

Even “no-profit” vaccine makers appear to oppose the waiver

Pfizer CEO Albert Bourla laid out everything the company has done to combat the vaccine in an equitable manner and argued that “waiver of IP rights could only derail this progress.” And while Pfizer and Moderna are selling their vaccines at a profit, Johnson & Johnson and AstraZeneca have pledged not to do so during the pandemic.

However, it appears that even those companies oppose the waiver. As reported in The Wall Street Journal, the trade group PhRMA, which represents Johnson & Johnson and AstraZeneca among many others, is “lobbying members of Congress to oppose the Biden administration’s support for the waiver.” Johnson & Johnson’s Chief IP counsel Robert DeBerardine says that patent rights are responsible for the breakneck pace of development and that the drug’s makers are the best-equipped people to continue the fight: “What we’re able to do, because we have control of the IP, is to pick the best companies to help us supply the world. If you were to give everything to everybody, you may see a flood of vaccines, but you would have no idea if they’re safe and effective.”

Conclusion

While we share the concerns of other organizations that effective, affordable, and accessible vaccines be made available to all persons regardless of location or wealth, we do not believe that upending longstanding U.S. patent policy for a solution that will do little if anything to increase the vaccine supply is advisable. Strong IP rights remain the best way to incentivize innovation and ultimately increase the supply of life-saving medicines. The Biden administration’s unprecedented support of the proposed WTO IP waiver, while well intended, is likely to create long-term harm and unlikely to have much of an impact on global vaccine supplies. Ultimately, encouraging companies to license IP and engage in voluntary knowledge transfer, along with the sharing of excess doses that are being produced, are methods far more likely to alleviate the vaccine supply issues than waiving IP rights and would be a better path forward out of the current crisis.

Categories
Healthcare Patents

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

a scientist looking through a microscopeBy Yogesh Pai

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Categories
International Law Patent Law Patent Litigation

Hudson Institute Panel Focuses on Patent Litigation in China

The following post comes from Wade Cribbs, a 2L at Scalia Law and a Research Assistant at CPIP.

a gavel lying on a desk in front of booksBy Wade Cribbs

Questions about how Chinese patent protection operates in the international patent landscape are relevant to both companies doing business in China and policymakers in the United States. China is becoming an increasingly frequent patent litigation location for major international corporations. With this new forum for patent disputes come questions about how China can handle anti-suit injunctions and parallel proceedings regarding fair, reasonable, and non-discriminatory (FRAND) agreements for standard-essential patents (SEPs).

To discuss these questions, the Hudson Institute hosted a virtual panel presentation last week entitled Patent Litigation in China: Navigating a Changing Environment. The panel, which was moderated by Hudson Institute Senior Fellow Urška Petrovčič, included Mark Cohen (Distinguished Senior Fellow, University of California Berkeley; Director, Berkeley Center for Law & Technology, Asia Intellectual Property Project), Vivienne Bath (Professor of Chinese International and Business Law, University of Sydney), and He Jing (Founder, GEN Law Firm; Executive Director, Beijing Zhongguancun Intellectual Property Strategy Research Institute).

Mr. Cohen sees differences in patent litigation between western countries—such as the United States and the European Union—and China, particularly with injunctions due to China’s quasi-civil law system and the Chinese economy’s size. He does not view the recent emergence of anti-suit injunctions in China as unusual because they were not necessary, given that China readily awards injunctive relief. It is not unusual for the courts to get through litigation and appeal in China before a U.S. court has commenced discovery. Therefore, a litigant could initiate proceedings in China after suing in the United States and receive an injunction from the Chinese court, using it to compel the party to settle any parallel proceedings.

Mr. Cohen sees no real difference between the current practice of anti-suit injunctions and Chinese courts’ prior practice of ignoring any parallel proceeding. He agrees with Prof. Bath that the shift of Chinese courts to anti-suit injunctions is motivated by judicial sovereignty and the desire to exercise power over international FRAND rate disputes in order to protect Chinese business interests. Mr. Cohen is concerned that this desire is expanding to dictate international behavior in technological markets by leveraging SEP holders.

Mr. Jing believes that the most important SEP disputes in China are focused on the issuance by Chinese courts of anti-suit injunctions, which he notes are relatively recent for these courts. Chinese courts award these injunctions in such circumstances as preventing Huawei from enforcing a German court’s holding of a FRAND rate that was significantly higher than the rate issued by the Chinese courts. Similarly, Chinese courts have issued preliminary anti-suit injunctions against Sharp Corporation, preventing Sharp from initiating litigation in Germany after it began litigation in China.

Mr. Jing admits the logic is straightforward in the case of cell phone manufacturing, since most of the global manufacturing occurs in China. Therefore, he posits that China should have a say in cell phone SEP FRAND rates. However, he is unsure whether there is proper jurisdiction for such cases. To claim jurisdiction in some cases, Chinese courts docket FRAND disputes as contract cases. Mr. Jing’s problem with FRAND as a contract is that there is no concluded contract, and he is not convinced that such disputes meet the specific legal standard required by Chinese law to hear foreign and international contract disputes. Mr. Jing is concerned that Chinese courts are stretching beyond their bounds for jurisdiction and service to hear cases.

Prof. Bath observes that since the Chinese court systems are now fully equipped to handle IP cases, they are incredibly litigious. In this setting, the Chinese Communist Party is trying to tighten its control over the courts’ behavior as the courts streamline the process and improve injunctive enforcement. Prof. Bath sees these two forces resulting in the Chinese court system seeking to use Chinese law in an international setting through attracting dispute resolution to China. The China International Commercial Court and the one-stop diversified dispute resolution, which combine mediation and litigation in the court system, are examples of how the Chinese government is trying to attract foreign arbitration to China.

However, when it comes to international agreements, Prof. Bath notes, China has tended to agree to international instruments only where it is exempt from intellectual property judgments. Prof. Bath warns that, while China is taking steps to make its courts more available for international litigation, it is necessary to remember that the court does not always decide adjudication. Senior judges who did not sit for the case may make the final adjudicative decision, and this risks politicizing any crucial adjudication rulings.

Professor Bath sees the Chinese courts’ problem with parallel proceedings in the form of anti-suit injunctions stemming from its focus on judicial sovereignty. This focus results in China not having many tools to handle parallel proceedings. The Chinese courts will hear almost any suit brought before the court and will not refuse the case because it is already being heard elsewhere, unless a foreign judgment has already been issued and enforced in China. These practices result in foreign judgments being rarely enforced in China as a result of a Chinese court’s having already begun proceedings.

To watch the video of the panel discussion, please click here.