Posts in Patents

A just-released study co-sponsored by the Biotechnology Innovation Organization (BIO) and AUTM provides new evidence of the significant contribution academic patent licensing makes to the U.S. economy. The report is the most recent in a series, and the numbers are astounding. This couldn’t come at a better time. Renewed efforts are underway to subvert Bayh-Dole from an engine driving innovation into a weapon for government price controls. Even though the Bush, Obama and Trump Administrations wisely rejected their theories, the critics keep banging the drum, and some in Congress are dancing to their tune.

Last week, all eyes were on the first two days of historic Senate Judiciary IP Subcommittee Hearings, led by Senator Thom Tillis (R-NC), Chair of the Subcommittee, and Senator Chris Coons (D-DE), Ranking Member of the Subcommittee. The purpose of the hearing was simple: to determine a fix for the disaster foisted upon the industry by the patent eligibility jurisprudence of the Supreme Court of the United States. The testimony of the first 30 witnesses has already been summarized, so there is no need for me to dive into the particulars of who said what here. Suffice it to say that the Subcommittee heard a range of opinions—some better supported than others.

This morning, the U.S. Supreme Court issued its decision in Return Mail, Inc. v. United States Postal Service in which the 6-3 majority held that the U.S. government doesn’t qualify as a “person” for the purposes of petitioning the Patent Trial and Appeal Board (PTAB) to institute patent validity proceedings under the Leahy-Smith America Invents Act (AIA). The majority opinion, penned by Justice Sonia Sotomayor and joined by Chief Justice John Roberts and Justices Clarence Thomas, Samuel Alito, Neil Gorsuch and Brett Kavanaugh, followed Court precedent supporting the presumption that the government isn’t a “person,” while finding the Postal Service’s arguments to the contrary to be unpersuasive. Justice Stephen Breyer penned a dissent, joined by Justices Ruth Bader Ginsburg and Elena Kagan, in which he found that Congress intended to include the government as a “person” when passing the AIA.

This week on Capitol Hill, the Senate IP Subcommittee will hold its third and final hearing on patent eligibility issues that currently exist in the U.S. patent system. Elsewhere in the Senate, hearings will focus on privacy issues posed by data brokers as well as Federal Communications Commission oversight. Hearings over at the House of Representatives will discuss topics including NASA’s science mission, sexual harassment issues within the scientific professions, and research leading towards increased use of renewable energy sources. The Information Technology and Innovation Foundation will also host an event to explore new tax models affecting U.S.-based Internet services companies.

In a June 4 op-ed to IPWatchDog, James Edwards launched a scathing attack against Judge Koh and her 233-page ruling, which found Qualcomm to have engaged in anticompetitive behavior against competitors within the cellular chipset market. However, just as Mr. Edwards claims Judge Koh failed in her undertaking, so too has Mr. Edwards by ignoring the context and facts of the case. His argument against Judge Koh, deliberately or otherwise, does not mention the fact that this case involved the licensing of standard essential patents (SEPs) subject to the FRAND commitment, a contract between the patent holder and the standard setting organization to license the relevant patents on “fair, reasonable, and non-discriminatory” terms. Indeed, Mr. Edwards makes no mention of standard essential patents in a deliberate attempt to obfuscate the facts and fit a narrative that intellectual property rights writ large are under attack by this decision.

This week in Other Barks & Bites: the Wisconsin Alumni Research Foundation’s petition to the Supreme Court in a case against Apple; AAG Makan Delrahim’s remarks about misuse of antitrust law by U.S. courts; Eli Lilly’s petition to the Supreme Court regarding functional claiming rule; cert granted in Allen v. Cooper to determine state sovereign immunity against copyright claims; the list of top universities receiving U.S. utility patents; Google Buys Looker For $2.6 Billion; and the ongoing Senate debate on patent eligibility.

Automobiles, smartphones, laptops, medical devices, among other end products, contain scores of individual components supplied by vendors. For end products sold domestically, vendors for the components are often U.S. companies. They design and develop their products in the United States. They deploy teams of marketing and sales personnel in the United States to win incorporation of their components into end products for the U.S. market. They enter general business agreements in the United States with end product companies in the United States. They comply with U.S. certifications, standards and qualifications that make their components fit for the U.S. market. They provide customer support in the United States to end customers located in the United States. In short, they actively compete for a share of the U.S. market for their technological components. Yet, when it comes to facing liability for patent infringement, they claim to be exempt. They claim they don’t make any products in the United States—the products are made by contract-manufacturers located abroad. They claim they don’t actually sell any products in the United States either—the actual purchase orders and invoices, as well as shipment and delivery for specific units, occurs between foreign subsidiaries and contract manufacturers, also located abroad. A case currently pending before the Federal Circuit could upset these tactics: Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 2019-1246, 2019-1247 (Fed. Cir.).  At the heart of the case is the question of whether patent law has grown out-of-sync from the supply-chain realities of making, selling and marketing technological components for end use in the United States today. For instance, invoicing and shipment for particular units may be farmed out abroad. That creates an ostensibly easy way for companies selling technological components to claim they are neither making nor selling any product in the United States. But it ignores that domestic infringement can nevertheless cause foreign damages. Indeed, the recent decision of the Supreme Court in WesternGeco LLC v. ION Geophysical Corp.138 S. Ct. 2129 (2018) expressly held that foreign damages caused by domestic infringement are recoverable.

The presently pending petition for en banc review in Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC has been addressed by Sherry Knowles and Meredith Addy and is supported by a number of amicus briefs. The patent in issue has been described by the present author as a paradigm of patent eligibility, supporting the argument that en banc review is merited. Mayo has now filed its response brief, submitted on May 7, and argues that the panel’s decision invalidating the asserted claims as ineligible properly applied the two-step Alice framework in light of precedent, that the full Court need not re-examine it, and accordingly, that Appellants’ petition should be denied.

Last week at the Patent Trial and Appeal Board (PTAB), 23 institution decisions were issued based on petitions to challenge the validity of patents via inter partes review (IPR) proceedings. Only four petitions were denied institution last week, while four petitions that were instituted were joined to other IPR proceedings already ongoing at the PTAB. Qualcomm faced two institution decisions, adding to the legal troubles the company has faced in recent years in enforcing its intellectual property. Apple secured three successful decisions to institute, including two IPRs that are joined to other proceedings brought by HTC Corporation. Visa, Netflix and Guest Tek Interactive Entertainment also saw successes with their IPR petitions, while ResMed had two petitions instituted and two denied by the PTAB. 

Wednesday’s Senate hearing on patent eligibility reform, which began more than 30 minutes late due to votes on the floor, opened with Senator Thom Tillis (R-NC) reiterating that his goal in holding three hearings on this topic and receiving testimony from 45 witnesses, which is not common, is to address the major concerns on all sides of the debate. Tillis noted that he and Coons had specifically invited many of the high-tech companies that do not appear on any of the rosters for the three hearings, but they chose not to participate and instead to be represented by David Jones, Executive Director of the High Tech Inventors Alliance (HTIA), who spoke today. While Tillis said, “that’s ok,” he noted that “silence is consent. What we want here is people working out of the shadows, collaboratively.” HTIA’s members include Amazon, Google, Adobe, Intel, Cisco, Oracle, Dell, and Salesforce. Many of today’s panelists raised more substantive issues with the proposed section 100(k) and 112(f) than did yesterday’s speakers. Section 100(k)defines the term “useful” in the new section 101 and section 100(f) would eliminate functional claiming. Barbara Fiacco, representing AIPLA; Henry Hadad of Bristol-Myers Squibb and the Intellectual Property Owners Association (IPO) President; Paul Morinville of U.S. Inventor; and Phil Johnson, representing the Coalition for 21st Century Patent Reform, all raised various concerns about one or both of these sections. Notably, Hadad said that IPO has not yet taken an official position on the draft, although it meshes with its own 101 proposal, and Fiacco said that AIPLA feels 112(f) and 100(k) are areas for “further consideration.” In addition to Senator Chris Coons (D-DE) and Tillis, Mazie Hirono (D-HI) and Richard Blumenthal (D-CT) asked several questions of the panelists.

In the midst of the first two hearings on reforming patent eligibility law, the Senate IP Subcommittee has published the witness list for next week’s final hearing on Section 101 reform, to be held on Tuesday, June 11. Again, it is decidedly pro-patent compared with previous congressional hearings on patent issues. As with the first two hearings, the Senators will hear from three separate panels of five witnesses each. The first panel will include Manny Schecter of IBM, who has noted in past articles for IPWatchdog that some of the most groundbreaking inventions of our time would likely fail or be invalidated under the current patent eligibility landscape. He will be joined by Laurie Self, Senior Vice-President and Counsel, Government Affairs, at Qualcomm; Byron Holz, Senior Intellectual Property Rights Licensing Counsel at Nokia; Kimberly Chotkowski, Vice President, Head of Licensing Strategy and Operations at InterDigital; and Sean Reilly, Senior Vice President and Associate General Counsel at the Clearing House Payments Company.

The first of three scheduled hearings in which the Senate IP Subcommittee will hear testimony from a total of 45 witnesses on the subject of patent eligibility law raised many questions. While some read the proposed draft bill released by Congress last month as clearly overturning AMP v. Myriad, for example, Senator Chris Coons (D-DE), Ranking Member of the Senate IP Subcommittee, said today that was not his intention. In his opening statement, Coons pushed back against an article published on Monday by The Washington Post, which indicated that the proposed draft bill to revise Section 101 would enable the patenting of genes. Coons called the article “significantly misleading” and noted that “our proposal would not change the law to allow a company to patent a gene as it exists in the human body. I believe I speak for the Chairman and myself when I say we do not intend to overrule that holding of the 2013 Myriad decision.” The concerns leading to the Washington Post article arose in recent days, after the American Civil Liberties Union (ACLU) released a statement and held a phone briefing for Congressional staffers claiming that the proposed draft bill would enable the patenting of genes. Sherry Knowles, Principal of Knowles Intellectual Property Strategies and one of the witnesses at today’s hearing, penned a rebuttal of the ACLU’s position that IPWatchdog published on Monday. Knowles spoke in the second panel of today’s hearing and said she hopes the proposed bill would in fact overturn the Myriad decision because “there’s been a dead stop in research in the United States on isolated natural products. The highest public interest is life itself and that has to be the goal of this statute.”

The first of three hearings on patent eligibility reform is now underway; Q. Todd Dickinson, former USPTO Director and Senior Partner at Polsinelli, was one of the first to testify, and in part emphasized to the Senate IP Subcommittee that the courts have shirked their duty to address this issue, so Congress must. Dickinson provided the Subcommittee a list of the 42 cases that have been denied cert by the Supreme Court since Alice and said that the current situation”encourages picking winners and losers” and actually pushes companies and inventors towards trade secrets.

This morning, the American Civil Liberties Union (ACLU), which will be represented in Wednesday’s hearing on Section 101 reform by Senior Legislative Counsel Kate Ruane, announced an urgent phone briefing for members of Congress and staff to address the contention that the “Proposed Patent Bill Would Jeopardize Health Care and Harm Medical Research.” The phone briefing, which all interested stakeholders should join, takes place today at 2:30 pm EST and will be jointly held by representatives from the ACLU, the Association for Molecular Pathology, a breast cancer survivor and patient, My Gene Counsel, and Invitae. Anyone who would like to listen should dial in to the number provided here. Below, Sherry Knowles, a well-known patent attorney, policy expert and also a breast cancer survivor, rebuts the arguments made in both the ACLU’s briefing announcement and associated letter to Congress on this topic.

Tuesday and Wednesday of this week will be exciting days for patents, technology and innovation in America. The Senate IP Subcommittee will hold a pair of hearings exploring patent eligibility issues facing U.S. inventors and innovators and will hear from a total of 30 witnesses over the course of both days. In the latest development, those who oppose reforms to Section 101 are briefing staffers on the Hill today in an attempt to conflate the 101 and drug pricing/ gene patenting debates. More on that later. Other Senate hearings will explore controls on sales of tech to China, promoting American leadership in nuclear energy, changes in the TV and digital video marketplace and legislative efforts to protect taxpayer-funded research from foreign espionage. In the House of Representatives, committees will focus on the use of facial recognition technologies by law enforcement and reauthorizing consent frameworks for retransmissions of copyrighted TV broadcasts. The American Enterprise Institute will also hold an event on Wednesday to look into new technologies that support child welfare activities.