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CPIP Roundup

CPIP Roundup – October 30, 2020

Greetings from CPIP Executive Director Sean O’Connor

Sean O'Connor

With the end of the crazy year of 2020 coming into view, we here at CPIP are striving for a strong finish and already looking forward to meeting 2021 as prepared as anyone can be. Our thoughts are with all of CPIP’s friends, and I’m glad to pass along yet another Roundup full of positive news.

CPIP’s Eighth Annual Fall Conference, 5G at the Nexus of IP, Antitrust, and Technology Leadership, took place via Zoom on October 7-8. Thanks to everyone who made the event such a huge success! If you weren’t able to join us, you can find videos of the sessions here on CPIP’s website, and you can read our blog posts here and here.

In other event-related news, we have posts covering our recent conference, The Evolving Music Ecosystem, now available on both CPIP’s blog and IP Osgoode’s blog, hosted by our friends at York University’s Osgoode Hall Law School in Toronto. Bradfield Biggers, recent Boston College Law School graduate and music fintech entrepreneur at Timshel, and Meghan Carlin, Osgoode Hall law student and Co-President of the Osgoode Entertainment & Sports Law Association. You can check out the CPIP posts, here, here, here, and here, and the IP Osgoode posts here, here, here, and here.

CPIP would like to congratulate Thomas Edison Innovation Fellow Christa Laser on her professorship at Cleveland-Marshall College of Law! We’re excited about this opportunity for Christa to move into the world of academia, and we eagerly look forward to seeing all she has to offer in this space.

Congratulations also to Terrica Carrington of the Copyright Alliance for testifying at the “Copyright and the Internet in 2020” hearing before the House Judiciary Committee on September 30! You can find the written testimony, as well as a video of the hearing, on the Committee’s website. Terrica blogged about the oral argument in Google v. Oracle as well, and she joined the Committee for Justice on October 9 for a virtual panel discussion about the oral argument.

In other notable new from CPIP affiliates, CPIP Senior Scholar Mark Schultz and other experts have participated in a video for the Geneva Network on how IP helps in the battle against COVID-19. CPIP Affiliate Scholar Hina Mehta is speaking on October 30 at a session titled “Intellectual Property and its Commercialization” during Industry Day, an event hosted by George Mason University’s Department of Mechanical Engineering. Also this month, I spoke at the Law & Economics Center’s virtual Symposium on the Economics and Law of Cannabis Markets on October 12, as well as on the “Machine Learning in the Lab and in the Marketplace” panel at the LES 2020 Annual Meeting on October 16.

I’m grateful to the indefatigable CPIP staff for another productive month—especially in these crazy times—and I hope the coming months will allow us to catch our collective breath to prepare for the new year. Please read on for more October news from CPIP, and I wish you an early, happy—and especially safe—Thanksgiving!

CPIP Hosts Eighth Annual Fall Conference on 5G and the Internet of Things

Eighth Annual Fall Conference flyer

On October 7-8, 2020, CPIP hosted its Eighth Annual Fall Conference, 5G at the Nexus of IP, Antitrust, and Technology Leadership, online from Scalia Law in Arlington, Virginia. The conference featured a keynote address by the Honorable Andrei Iancu, Under Secretary of Commerce for Intellectual Property and Director of the USPTO, and it was co-hosted by Scalia Law’s National Security Institute (NSI).

This conference addressed fast-emerging intellectual property (IP), antitrust, and technology leadership issues in the 5G and “Internet of Things” innovation ecosystem. Coverage included standard-essential patents (SEPs) along with established and emerging markets on a regional and global basis. Speakers were drawn from the academic, industry, and policymaking communities, with an emphasis on using objective fact-based analysis to explore points of convergence among legal, economic, and geopolitical perspectives on the IP and regulatory infrastructures that underlie these critical industries.

Our blog posts summarizing the conference are available here and here, and you can watch the conference videos here.

CPIP Welcomes Ken Randall as Next Dean of Scalia Law School

the words "Mason" set up outside on campus with people walking behindGeorge Mason University has announced that Ken Randall will be the next Dean of Antonin Scalia Law School, beginning on December 1, 2020.

CPIP Executive Director Sean O’Connor welcomed the news: “We couldn’t be happier with the selection of Ken Randall as Dean-Elect. He cares deeply about the continued success of CPIP and is no stranger to innovation and commercialization. He and I have already developed a great working relationship, and CPIP endeavors to support his Deanship in any way we can. We also thank Dean Henry Butler for his outstanding leadership and look forward to working with him as a faculty colleague and Executive Director of the Law & Economics Center.”

The Center for the Protection of Intellectual Property congratulates Dean Randall on his appointment and welcomes him to the Scalia Law family. His rigorous academic mind, strong leadership skills, and expertise in online learning bring together the ideal skill set to take our law school to new heights. We very much look forward to working with him in the near future.

To read our announcement, please click here.

Spotlight on Scholarship

a pair of glasses, an apple, and a stack of books

Deepak Hegde, Joan Farre-Mensa, & Alexander Ljungqvist, What Is a Patent Worth? Evidence from the U.S. Patent “Lottery”, 75 J. Finance 639 (2020)

Deepak Hegde of New York University and co-authors Joan Farre-Mensa and Alexander Ljungqvist have published a new paper from our Edison Fellowship program entitled What Is a Patent Worth? Evidence from the U.S. Patent “Lottery” in the Journal of Finance. The paper provides empirical evidence that startups that obtain their first patent have, on average, 55% higher employment growth and 80% higher sales growth five years later. Utilizing a unique dataset drawn on unprecedented access to USPTO internal databases, the study also shows with causal evidence that these startups pursue more—and higher quality—follow-on innovation as the first patent boosts innovation by facilitating their access to funding.

Olena Ivus, Edwin L.-C. Lai, & Ted M. Sichelman, An Economic Model of Patent Exhaustion, 29 J. Econ. & Manag. Strategy 816 (2020)

CPIP Senior Scholar Ted Sichelman of the University of San Diego, along with Olena Ivus and Edwin Lai, have published a new paper in the Journal of Economics & Management Strategy entitled An Economic Model of Patent Exhaustion. The paper, which comes from our Edison Fellowship program, uses a sophisticated economic model to show that, contrary to the Supreme Court’s opinion in Impression Products v. Lexmark, mandatory patent exhaustion can be highly inefficient, particularly when transaction costs are low. The authors show that it is socially optimal for patent owners to be able to opt-out of exhaustion via contract when the social benefits from buyer-specific pricing outweigh the social costs from transaction cost frictions in individualized licensing.

Lauma Muizniece, University Autonomy and Commercialization of Publicly Funded Research: The Case of Latvia, ___ J. Knowl. Econ. ___ (2020)

In this paper from our Edison Fellowship program, Lauma Muizniece of the Investment and Development Agency of Latvia focuses on university autonomy as one of the key variables in commercializing publicly funded research in Latvia. The paper presents a case study using secondary data and interviews to demonstrate that, with greater funding flexibility and experimentation, universities could develop better ways to commercialize their research that are currently hindered by systemic bottlenecks. By taking a more nuanced approach at the research organization level that aligns incentives with opportunities, the paper argues that researchers and those who pursue commercialization of that research would be more successful in their endeavors.

Activities, News, & Events

a lit lightbulb hanging next to unlit bulbs

CPIP Director of Copyright Research and Policy Sandra Aistars and the students in her Arts & Entertainment Advocacy Clinic joined the Washington Area Lawyers for the Arts (WALA) and the Copyright Alliance to co-host a virtual event entitled Arts and the Pandemic to discuss how local venues and artists are affected by the pandemic and to offer legal assistance to individual artists and small businesses. Prof. Aistars has written two recent articles at Law360 about the Google v. Oracle case. The first, RBG’s Legacy Can Guide High Court In Oracle Copyright Case, traverses the late Justice Ginsburg’s love of the arts and copyright legacy and runs through the various legal issues to explain why Google’s position is wrong on the merits. The second, High Court Oracle-Google Copyright War May Benefit Artists, examines how a case that is ostensibly about computer code could have a significant impact on the livelihoods of all artists and authors. Finally, Prof. Aistars spoke at the 2020 National Volunteer Lawyers for the Arts (NVLA) conference, discussing how to protect the arts and the importance of reversing anti-IP biases in academia.

CPIP Senior Fellow for Innovation Policy Jonathan Barnett published an op-ed at The Hill entitled “Unfair Use,” Democracy and the Supreme Court about the imbalance created by the expansion of copyright law’s fair use doctrine in recent years. Prof. Barnett explains how and why the Court can rein in the fair use doctrine in Google v. Oracle, noting that the current fair use “groupthink” dogmatism fails to recognize that platform aggregators improperly rely on the exception to generate billions of dollars annually despite having borne neither the costs nor risks of developing the content. Prof. Barnett also published an essay at Truth on the Market entitled Antitrustifying Contract: Thoughts on Epic Games v. Apple and Apple v. Qualcomm. The essay explains how the Epic v. Apple and Apple v. Qualcomm cases demonstrate “the unproductive rent-seeking outcomes to which antitrust law will inevitably be led if, as is being widely advocated, it is decoupled from its well-established foundation in promoting consumer welfare—and not competitor welfare.”

CPIP Senior Scholar Erika Lietzan has published a new article in the Cato Institute’s Regulation entitled The Evergreening Myth that discusses recent efforts by U.S. policymakers to reduce so-called pharmaceutical “evergreening” by changing the antitrust, intellectual property, and regulatory landscape. Prof. Lietzan explains that claims of evergreening, where drug companies supposedly block competition by improper means, are revealed to be myths upon closer inspection. Indeed, its proponents are making unstated normative claims that blind policymakers from making informed decisions based on rigorous evidence. As Prof. Lietzan concludes, the “term’s meaninglessness makes it impossible for audiences to distinguish among situations that may be different, as a legal, theoretical, or normative matter, and that may call for differing policy solutions,” and this “does a disservice to policymakers and the public.”

CPIP Senior Scholar Kristen Osenga has published a pair of op-eds on how policymakers and regulators are threatening innovation. In an op-ed entitled Price Controls Are Intellectual Property Theft by a Different Name at Townhall, Prof. Osenga discusses a recent executive order that would decrease Medicare payments for many prescription medications to match the lowest price paid in other developed countries. This policy, which she describes as “myopic at best and downright reckless at worst,” fails to consider the devastating impact it would have on medical innovation in the United States—and how it would ultimately hurt patients in the long run. At RealClearMarkets, Prof. Osenga published an op-ed entitled Today’s Federal Trade Commission Is Taking One Giant Leap Backwards that discusses the FTC’s misguided efforts to pit antitrust and patents against each other. As she explains, patent and antitrust law share the same goal of increasing innovation. Prof. Osenga concludes: “Rather than tilting at windmills already lost, it is time for the FTC to move forward and set their focus on real impediments to innovation and competition.”

Categories
Innovation Patent Litigation

CPIP Scholars Ask Supreme Court to Resist Call to Restrict Venue Choices for Patent Owners

U.S. Supreme Court buildingOn March 8, 2017, CPIP Scholars Adam Mossoff, Devlin Hartline, Chris Holman, Sean O’Connor, Kristen Osenga, & Mark Schultz joined an amicus brief in TC Heartland v. Kraft Foods. CPIP Scholars worked with USD Law’s Ted Sichelman to organize, write, and file the brief. The case focuses on whether patent owners may sue corporate defendants in any judicial district where the court has personal jurisdiction over the defendant, which is the default rule in federal cases.

Concerned about the allegedly abusive behavior of certain firms suing in the Eastern District of Texas, some would like to severely restrict where all patent owners may sue. The amici note that, even if the Supreme Court restricts venue choices as these people would like, patent lawsuits would not be equitably distributed as a result. A recent study showed that 60% of all patent cases would still be concentrated in 5 of the 94 judicial districts. Furthermore, instead of concentrating in one district—the Eastern District of Texas—cases would primarily concentrate in two districts—the Northern District of California and the District of Delaware.

As the amici argue: “No plausible argument can be made—and Petitioner and its amici have not offered an argument—that shifting cases from one district to two districts would result in a meaningful distribution of patent cases among the ninety-four federal district courts.” The amici note that concerns about “forum shopping” are overblown since patentees are just doing what all federal plaintiffs do—choosing “the forum that gives it the best opportunity for success.” Since “corporate defendants are generally subject in any civil complaint to venue in any district in which personal jurisdiction lies,” the amici suggest that the same rule should apply in patent cases.

The amici conclude: “Innovators and their investors have long been vital to a flourishing innovation economy in the United States. Startups, venture capitalists, individual inventors, universities, and established companies often rely heavily on patents to recoup their extensive investments in both research & development and commercialization. By restricting the districts in which a patent owner can bring suit, the value of the patent itself is lessened, diminishing the economic incentives the patent system provides to spur innovation.”

To read the amicus brief, please click here.

Categories
Innovation Legislation Patent Law Patent Litigation Uncategorized

Law Professors & Economists Urge Caution on VENUE Act in Letter to Congress

Today, 28 law professors, economists, and political scientists from across the nation submitted a letter to Congress expressing serious concerns about the recent push for sweeping changes to patent litigation venue rules, such as those proposed in the VENUE Act. The letter is copied below, and it can be downloaded here: http://ssrn.com/abstract=2816062

Although proponents for the VENUE Act argue that the concentration of patent cases in a few federal district courts is bad for the patent system, this letter explains that the VENUE Act does not solve this problem. Studies show that similar restrictions on venue would only shift this concentration from the Eastern District of Texas to a couple other judicial districts – the District of Delaware and the Northern District of California. These two other districts are recognized as more friendly to defendants, such as the high-tech companies and retailers lobbying heavily for the VENUE Act. The letter also explains that Congress also should be wary of acting, because the rates and patterns in patent litigation are very fluid. For example, the percentage of patent lawsuits filed in the Eastern District of Texas relative to other districts is now declining substantially.

For these reasons, among others detailed in the letter, these academics conclude that Congress should adopt a wait-and-see approach on the VENUE Act. In the very least, until the patent-weakening effects of the America Invents Act’s new PTAB proceedings and recent Supreme Court decisions are better understood, Congress should be reluctant to enact legislation that will further weaken patent rights and potentially harm our innovation economy.

Read the letter below or download it here: http://ssrn.com/abstract=2816062

Letter to Congress from 28 Law Professors
& Economists Urging Caution on the VENUE Act

Dear Chairman Grassley, Ranking Member Leahy, Chairman Goodlatte, and Ranking Member Conyers:

As legal academics, economists, and political scientists who conduct research in patent law and policy, we write to express our concerns about the recent push for sweeping changes to patent litigation venue rules, such as those proposed in the VENUE Act.[1] These changes would vastly restrict where all patent owners could file suit—contrary to the general rule that a plaintiff in a civil lawsuit against a corporate defendant can select any court with jurisdictional ties to the defendant.[2]

Given the recent changes in the patent system under the America Invents Act of 2011 and judicial decisions that have effectively weakened patent rights,[3] we believe that Congress should adopt a cautious stance to enacting additional changes that further weaken patent rights, at least until the effects of these recent changes are better understood.

Proponents of amending the venue rules have an initially plausible-sounding concern: the Eastern District of Texas handles a large percentage of patent infringement lawsuits and one judge within that district handles a disproportionate share of those cases. The reality is that the major proponents of changing the venue rules are primarily large high-tech companies and retailers with an online presence sued in the Eastern District of Texas that would rather litigate in a small number of more defendant-friendly jurisdictions.

Indeed, the arguments in favor of this unprecedented move to restrict venue do not stand up to scrutiny. Specifically:

  • Proponents for the VENUE Act argue that “[t]he staggering concentration of patent cases in just a few federal district courts is bad for the patent system.”[4] As an initial matter, data indicates that filings of patent lawsuits in the Eastern District of Texas have dropped substantially this year—suggesting a cautious approach until trends have stabilized.[5]
  • Contrary to claims by its proponents, legislative proposals like the VENUE Act would not spread lawsuits throughout the country. In fact, these same proponents have found that restricting venue in a manner similar to the VENUE Act would likely result in concentrating more than 50% of patent lawsuits in just two districts: the District of Delaware (where most publicly traded corporations are incorporated) and the Northern District of California (where many patent defendants are headquartered).[6] Instead of widely distributing patent cases across numerous districts in order to promote procedural “fairness,” the VENUE Act would primarily channel cases into only two districts, which happen to be districts where it is considered much more difficult to enforce patent rights.[7]
  • Proponents for the VENUE Act have argued that the Eastern District of Texas is reversed more often by the Federal Circuit than other jurisdictions, claiming that in 2015 the Federal Circuit affirmed only 39% of the Eastern District of Texas’s decisions but affirmed over 70% of decisions from the Northern District of California and District of Delaware.[8] These figures are misleading: they represent only one year of data, mix trials and summary judgment orders, and fail to take into account differences in technology types and appeals rates in each district. In fact, a more complete study over a longer time period by Price Waterhouse Coopers found that the Eastern District of Texas affirmance rate is only slightly below the national average for all districts.[9]
  • The Federal Circuit recently confirmed in In re TC Heartland (Fed. Cir. Apr. 29, 2016) that 28 U.S.C. § 1400(b) provides that a corporate defendant in a patent case—like corporate defendants in nearly all other types of cases—may be sued in any district in which personal jurisdiction lies. Constitutional due process requires a “substantial connection” between the defendant and forum.[10] Thus, contrary to its title and the claims of its proponents, the VENUE Act does not re-establish a “uniform” litigation system for patent rights by requiring substantial ties to the forum. Instead, the Act thwarts the well-established rule that plaintiffs can bring suit in any jurisdiction in which a corporate defendant has committed substantial violations of the law.[11]
  • The VENUE Act would raise costs for many patent owners by requiring them to litigate the same patent against multiple defendants in multiple jurisdictions, increasing patent litigation overall. In recent years, the America Invents Act’s prohibition on joinder of multiple defendants in a single lawsuit for violating the same patent has directly resulted in increased lawsuits and increased costs for patent owners.[12] Moreover, the VENUE Act would also result in potentially conflicting decisions in these multiple lawsuits, increasing uncertainty and administration costs in the patent system.
  • The VENUE Act encourages the manipulation of well-settled venue rules across all areas of law by the self-serving efforts of large corporate defendants who seek to insulate themselves from the consequences of violating the law. By enacting the VENUE Act, Congress would send a strong signal to corporate defendants that they can tilt the substantive playing field by simply shifting cases to defendant-friendly jurisdictions.

Innovators and their investors have long been vital to a flourishing innovation economy in the United States. Startups, venture capitalists, individual inventors, universities, and established companies often rely heavily on patents to recoup their extensive investments in both R&D and commercialization. We urge you to exercise caution before enacting further sweeping changes to our patent system that would primarily benefit large infringers to the detriment of these innovators and, ultimately, our innovation economy.

[1] Venue Equity and Non-Uniformity Elimination Act, S.2733, 114th Cong. (2016),
https://www.congress.gov/114/bills/s2733/BILLS-114s2733is.pdf.

[2] See 28 U.S.C. § 1391(c)(2). See generally Ferens v. John Deere Co., 494 U.S. 516, 527 (1990) (“a plaintiff . . . has the option of shopping for a forum with the most favorable law”).

[3] These include, among others: (1) administrative procedures for invalidating patents created by the America Invents Act, which have had extremely high invalidation rates, leading one former federal appellate judge to refer to these procedures as “death squads,” and (2) several decisions by the Supreme Court and the Federal Circuit that have drastically curtailed patent rights for many innovators. See Adam Mossoff, Weighing the Patent System: It Is Time to Confront the Bias against Patent Owners in Patent ‘Reform’ Legislation, WASHINGTON TIMES (March 24, 2016), http://www.washingtontimes.com/news/2016/mar/24/adam-mossoff-weighing-the-patent-system/.

[4] Colleen Chien & Michael Risch, A Patent Reform We Can All Agree On, WASH. POST (June 3, 2016), https://www.washingtonpost.com/news/in-theory/wp/2015/11/20/why-do-patent-lawyers-like-to-file-in-texas/.

[5] See Michael C. Smith, “Hot But No Longer Boiling“ – EDTX Patent Case Filings Down almost Half; New Case Allocation and Procedures (No More Letter Briefing for SJ motions), EDTexweblog.com (July 21, 2016), http://mcsmith.blogs.com/eastern_district_of_texas/2016/07/edtx-patent-case-filing-trends-new-case-allocation-andprocedures.html.

[6] Colleen Chien & Michael Risch, What Would Happen to Patent Cases if They Couldn’t all be Filed in Texas?, PATENTLY-O (March 11, 2016), http://patentlyo.com/patent/2016/03/happen-patent-couldnt.html. This study also finds that 11% of cases would continue to be filed in the Eastern District of Texas, concentrating nearly two-thirds of all cases in three districts. See id. The authors of this study are presently expanding their investigation to an enlarged data set, which will also capture additional aspects of the VENUE Act. Neither the data nor their results are available yet. However, we have no reason to believe that the expanded data or analysis will produce results other than what has already been shown: a high concentration of patent cases in a small number of districts.

[7] See PricewaterhouseCoopers LLP, 2015 Patent Litigation Study (May 2015) (“PWC Study”), http://www.pwc.com/us/en/forensic-services/publications/assets/2015-pwc-patent-litigation-study.pdf.

[8] Ryan Davis, EDTX Judges’ Love of Patent Trials Fuels High Reversal Rate, LAW360 (Mar. 8, 2016), http://www.law360.com/articles/767955/edtx-judges-love-of-patent-trials-fuels-high-reversal-rate.

[9] See PWC Study, supra note 7 (finding an average affirmance rate of 48% for all districts, compared to an affirmance rate of 42% for the Eastern District of Texas).

[10] See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985).

[11] See generally Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947) (“[T]he plaintiff’s choice of forum should rarely be disturbed.”).

[12] See Christopher A. Cotropia, Jay P. Kesan & David L. Schwartz, Unpacking Patent Assertion Entities (PAEs), 99 MINNESOTA LAW REVIEW 649 (2014), http://www.minnesotalawreview.org/wpcontent/uploads/2015/02/REVISEDSchwartzetal_MLR.pdf.