Brian O’Shaughnessy is a recognized authority in intellectual property law and technology licensing. He is a Partner, and head of the IP Licensing & Acquisitions Group of Dinsmore & Shohl LLP, Washington, DC. He is a Past President of the Licensing Executives Society, USA and Canada; and continues to serve LES USA & Canada as Sr. Vice President for Public Policy. He has also served the global society, LES International, as Co-chair of the LESI External Relations Committee, coordinating public policy positions among LESI’s 33 national and regional societies. He is the board chair of the Bayh Dole Coalition, a non-profit, non-partisan organization devoted to sustaining the Bayh Dole Act. He has been retained as an expert witness in IP and licensing matters by the U.S. Treasury Department, the U.S. Department of Justice, and by various private parties. He has appeared in IP-related briefings on Capitol Hill, and has testified before the U.S. Senate Committee on Small Business and Entrepreneurship on how the America Invents Act has affected small business and IP-related transactions.
For more information or to contact Mr. O’Shaughnessy please visit his firm profile page.
In teaching Intellectual Property (IP) licensing for the Licensing Executives Society (USA & Canada), Inc., we often open with the first principle of contracts: the “contract” is the meeting of the minds between the parties. What did they actually agree to? The work of the written agreement is to memorialize that meeting of the minds. It is necessarily imperfect. Sir Ernest Gowers aptly describes the challenge of good writing generally, saying it is “the choice and arrangement of words in such a way as to get an idea as exactly as possible out of one mind and into another.” (Sir Ernest Gowers, Plain Words: Their ABC, Alfred Knopf, New York, 1955). In IP licensing, it is the difficult task of reducing to writing an idea from two or more minds such that it conveys to both what each conceived of as the agreement.
The waning days of summer signal the approaching midterm election season. Amid inflation, recession and voter discontent, it’s understandable that a group of congress members are anxious to put points on the board with a price-control scheme that they wrongly believe will lower prescription drug prices. Though the goal is laudable, their approach would prove disastrous to American innovation while failing to deliver anything but higher prices for American consumers. In a recent letter to Department of Health and Human Services Secretary Xavier Becerra, 100 congressional lawmakers urged him to use his administrative authorities to leverage various intellectual property-related laws as a means of implementing price controls on patented drugs. But undermining intellectual property protection would put a deep chill on healthcare innovation, both at home and globally.
The U.S. Air Force last year announced revisions to its weapons procurement policy that will have the unintended effect of reducing its access to groundbreaking technology, thereby posing a threat to national security. Specifically, the Air Force said it would demand greater ownership of corresponding intellectual property (IP) rights. This ill-conceived policy will strip innovators of valuable property rights, and thereby diminish incentives for innovation and discourage collaboration with the military, especially the Air Force.
The art of preventive negotiation in a license agreement is not practiced solely by means of pen and paper (or word processor); but instead, starts much earlier. The care and attention devoted to the earliest stages of a deal are highly worthwhile. A friend and fellow LES member is fond of saying: “No deal without a meal.” This is emblematic of the fact that a license agreement is no more than an attempt to put in writing what the parties have agreed they are desirous of achieving, and how they propose allocating rights and responsibilities to achieve those ends. Trust is an essential component, and this is built up over time… The term sheet should be focused only on the major terms of consequence. It should not descend to tactics and operations or else it runs the risk of invading the rightful province of detailed negotiation and drafting of the agreement itself, and a needless redundancy. Tactical details are for later, when the investment is clearly justified. Likewise, premature focus on the tactical raises the risk that negotiation of the ultimate agreement becomes a rehash of the term sheet, which risks not only duplication of effort, but inconsistency, misunderstanding, and deviation from the strategic objectives underlying the alliance.
An exclusive right is more than a mere right of remuneration – it is the right to control the use and disposition of one’s property, and to deny others access to it. Without the fundamental attribute of exclusivity, we lurch toward a system of compulsory licensing, or a private right of individuals to take another’s property on the promise of mere monetary compensation. Under our Constitution, and particularly the Fifth Amendment, or the Takings Clause, even the government does not possess that right except that it be for some demonstrable public – rather than private — use. Thus, to be true to the express language of our Constitution, and respectful of the limits imposed on the Fifth Amendment, the rights inherent in intellectual property necessarily must include a right to exclude others from the enjoyment of that property.
Above all, LES recommends appointing a Director dedicated to protecting intellectual property, generally, and patents in particular, as the private property right our nation’s founders envisioned. The founders saw great value in rewarding individuals who toil to bring forth from commonly accessible resources useful products and processes by granting to those individuals an enforceable property right. They recognized that such a property right would, in the fullness of time, work a substantial benefit to the public by encouraging innovation and disclosure. We must honor that philosophy. It contributed substantially to America’s rapid ascendancy from agrarian economy to industrial powerhouse, and can be traced to America’s first patent act of 1792. In affording that private property right, we reward and empower the archetypal American innovator, the individual daring to risk all to bring forth the next big thing, and thereby challenge market incumbents who benefit from stasis and the status quo.
Congress can, and should, take at least four steps in restoring the health and vitality of our patent system: First, Congress should ensure that the patent grant is meaningful and valuable in the first instance. Second, Congress should reaffirm the exclusive nature of the patent grant. Third, Congress should clarify, and perhaps legislatively overrule, the cases addressing patent eligible subject matter, Alice, Mayo, and Myriad. Fourth, and finally, Congress should tread extremely carefully in the realm of so-called patent litigation reform.
User fees fund our patent system. The patent system turns ideas into assets. Those assets are used to secure financing and gain access to markets. Financing and market access fuel the rise of new industries, businesses, and jobs. Regrettably, however, those user fees are frequently diverted to fund other, unrelated government agencies and programs, which amounts to a tax on innovation.