Cruel of Law

An important feature of the rule of law is the economic support imparted by its predictability, a growth-supporting quality enabling the economically necessary use of contracts, deeds, debt, trusts, currency and licensing. Without it, long range planning and investment are impossible, variously timed delivery differences would cancel trades, and mutually beneficial transactions would necessarily be crammed into the immediate present. The absence of a predictable rule of law thus severely hamstrings economic progress. Patent law depends heavily on its special rule of law. It is expressly created in our Constitution to authorize Congress to provide future investment reliability for a “limited times.” What does limited mean? It doesn’t say how much time but it certainly means some. But if AIA’s IPR can nullify a patent throughout its term all the way to expiry, metaphysically there is no “limited” time. If laws and court decisions continue to nullify effective patents retroactively, the express constitutional provision for prospectively “limited times” is distorted. If patent rights are property rights instead of public privileges, Article I agency-appointed PTAB tribunals cannot be constitutionally enabled to cancel them without reference to the protections in Article III and the Bill of Rights.

A wise man once warned me that standing by themselves, arrogance or ignorance was to be pitied, not condemned but combined in positions of power, they are extremely dangerous. So it is with patents. Our nation’s patent system finds itself caught between apathetic ignorance and under-informed assertiveness. On the one hand, there is the proud apathy of congressional ignorance that resulted in AIA’s PTAB. On the other, there is the under-informed assertiveness of SCOTUS that still uses the term “patent monopoly” in Impression Products v. Lexmark while erasing decades of established patent law by retroactively altering the impact of conditional sales that conformed to existing law when made. Such retroactive conduct scorns patents’ special “limited time” rule of law, by enacting retroactive nullifications unforeseeable during past compliance by legal practitioners as well as practitioners of grant patents. Retroactive patent nullification decisions have become commonplace in the courts and Congress. From AIA’s IPR to Lexmark’s recent nullifications of then complying conditional sales, such conduct not only cancels past established economic process, but it also deters future investment of innovative time and developmental financial support in our nation’s innovation ecosystem. It harms our economic future. The on-going self-inflicted collapse of the patents’ rule of law has become a counter-productive “cruel of law.” Worse, stopping this relentless DC march to economic madness may itself be madness. Can we halt them? Continue reading Cruel of Law

AAMC Acts Collectively to Rescue NIH’s Commercialization Mission

On the day the president’s budget was released this week 300+ medically engaged entities and associations nationwide, the backbone of our nation’s biomedical research ecosystem including many universities, disease advocacy groups, and medical centers, signed a full-page ad in the WSJ and POLITICO. Sponsored by “The Ad Hoc Group For Medical Research” and paid for by the Assoc. of American Medical Collages, its purpose was to thank Congress for its recent increased support for basic medical research. Ascribing US medical and economic strength to congressional bipartisan medical research, its content was straightforward and simple.

“When it comes to the Nation’s health
There’s One thing we can all agree on
Medical research Makes America Healthier and Stronger. ”
“LET’S KEEP THE PROGRESS GOING. INCREASE FUNDING FOR NIH BY 2 BILLION IN 2018.”

IP Strategic gratefully salutes this concerted effort to come to the rescue of NIH’s critical role in our life science innovation ecosystem.

Within our national health care ecosystem, NIH is the bridge between congressional R&D public investment in otherwise uninvestable life science and private sector development of its commercially promising results through Bayh-Dole directed commercialization. The ad’s focus is the NIH’s bridge’s on-ramp of congressional R&D funding. For the ecosystem to work the commercialization bridge’s off-ramp of private sector investment and development also must provide public benefit with its therapies, jobs and economic development. Off-ramp commercialization requires private sector investment which in turn requires reliable patent protection. Support and direction of commercialization bridge traffic flow is NIH’s mission. That bridging mission is undercut at its entry point by the Trump budget and effectively undermined at its exit point by patent uncertainties created by Congress, SCOTUS, and the USPTO. Here are just a few: Continue reading AAMC Acts Collectively to Rescue NIH’s Commercialization Mission

The Frightful Five

Economist Farhad Manjoo’s NYT column yesterday discusses public and private funding basic scientific research, a subject about which research universities and all US citizens should genuinely be concerned. Congress now funds basic research through annual R&D appropriations of $140 billion to grant agencies who distribute research grants in response to proposals for basic research. Under Bayh-Dole (B-D), promising discoveries may be patented, then commercialized through public-private partnerships that require fulfilling specific societal obligations. Research universities are appropriately concerned about the continued viability of today’s R&D funding dynamic. At a time when funding increases are needed, Trump has proposed R&D budget cuts and unfunded tax reform. And, to make matters more perilous, deficit-hawk budget concerns combine to jeopardize such funding.

Manjoo references the 60 billion annual expenditures of our five largest corporations commonly referred to as the “Frightful Five” (FF) — Alphabet, (Google) Amazon, Apple, Facebook, and Microsoft. Highlighting Google’s efforts “to inject machine intelligence into much of the global economy” he notes that total FF non-defense spending on AI and other basic science is exceeded by annual congressional spending on non-defense basic science research by a mere $9 billion! Add in other privately conducted research and the private sector is outspending the public sector on basic research. Manjoo’s article is non-judgmental. He even references to the joint op-ed by Google’s Erik Schmidt and MIT’s President Eric Lander urging more R&D spending (see my article here). But curiosity-riven basic research is non-investable but imperative to technological and biomedical progress. Corporate basic research is a very different animal.

Nevertheless, a likely take away by deficit hawks from the Manjoo article is that since funding basic science research is so prevalent in the private sector, why not move all of its there? He wonders what would happen if we eliminated our government’s investment in non-defense basic science relying exclusively on the private sector. He leaves the question unanswered but effectively asks why the government should pay for it if both are taking it in the same direction? We will surely hear this argument again. By themselves, the FF expenditures alone almost equalize it. Could our annual federal non-defense spending of $69 Billion be put to better use? The simple answer is a resounding “no.” Increased federal spending is crucial if research that does not offer an adequate return because of its nature (like antibiotics ) or doubtful patent durability (resulting from uncertainty). Research universities can not let such an elimination happen.

Read on to see what we know that Manjoo doesn’t.

Continue reading The Frightful Five

Joe Allen’s Take on Price Controls

Whether the subject is Bayh-Dole price-based march-in or other government schemes to control the final pricing of privately developed products emergent from the commercially promising discoveries made possible by federally-funded life science research, Joe Allen knows what he is talking about. NIH’s mission is to see to the commercialization of such discoveries so they can become available to the public that invested in it through congressional R&D appropriations. Such curiosity-driven basic research is otherwise uninvestable. What cannot be commercialized cannot become available. This disconnect will lead to the further diminution of R&D funding for such research. However well-intended, governmentally imposed price controls deter private sector for-profit investment. This is not a theory. It is a historical fact confirmed by CRADA pricing experiment explained by Joe in his article below. Fast forward to the present. Joe’s conclusions are being confirmed now. The private sector investment withdrawals triggered by SCOTUS’ Mayo and Myriad decisions is happening now. These Sec 101 eligibility judicial missteps have created unacceptable uncertainty, not only in the life science areas treated in the actual decisions but regarding all life science “discoveries” the examiners and Courts are declaring unpatentable. Life science commercialization has never been more needed. It has never been more perilous.

As Joe Allen explains below there are better ways to skin drug pricing’s cat than crippling life science investment in applied development that is definitionally different than the hoped for curiosity-driven discoveries that made its profit-directed development possible.”Many in Congress want to impose price controls on medicines that result from

“Many in Congress want to impose price controls on medicines that result from federally funded research. We’ve tried this before, and it nearly brought medical research and development to a halt. Lawmakers aren’t wrong to want to lower drug prices, but they should find a strategy that isn’t a proven failure. These policies would have terrible ramifications for the future of National Institutes of Health-supported research and development while harming those suffering from the ravages of disease.Responding to congressional pressure in 1989, NIH officials incorporated a form of price controls known as a “reasonable pricing” clause in its licensing agreements. In short, they didn’t want to let private firms build upon publicly funded discoveries to commercialize resulting products unless the government had a say in pricing decisions. Their actions were well-intentioned. By placing conditions on medical patent licensing agreements, they hoped to decrease drug costs for consumers. But the results were disastrous.”

Here is Joe’s Fierce Healthcare article.

Signs of Wide Support Life Science Innovation

Our life science innovation ecosystem connects curiosity-driven basic science with its profit-driven private sector development and distribution. Its commercialization bridge has two other keystone components, its R&D on-ramp, and its private sector off-ramp. Politico reports that earlier this week, a high-level White House discussion was held by with President Trump, Secretary Price, Ivanka Trump, Jared Kushner and biomedical experts included drugmakers and leading university and hospital officials. The meeting’s invitation list reflects appropriate recognition of our closely integrated life science innovation ecosystem. Significantly, not discussed were NIH budget cuts to our commercialization bridge’s on-ramp or biopharmaceutical price controls which would undermine its off-ramp. According to NIH’s Francis Collins, the meeting focused on the importance to the economy of a strong U.S. biomedical research enterprise, including the role of government-funded research.

Reading the White House is difficult, but the meeting’s discussants and matters discussed indicate White House understanding of our life science innovation ecosystem’s infrastructure and its full complement of keystone components. Meanwhile on another important front, below are excerpts from a May 10, letter to the WSJ written by Rep.Tom Cole whose support for NIH funding is both critical and matched by his Democratic colleagues. Here is part of what he said about the recent budget action supporting NIH.

“I appreciate the support of my colleagues on the other side of the aisle who also recognize the important work being done by the NIH. This is a nonpartisan issue. The funding we secured for the NIH was supported by every member of the subcommittee and was clearly not a partisan vote. Supporting the pre-eminent institution researching the causes and cures of our country’s most devastating diseases has long been a Republican priority. The devastating human consequences of diseases like Alzheimer’s and cancer are evident to every compassionate person. However, many people fail to recognize the enormous costs these diseases impose on the federal government as well as individual families. Investing money to seek cures is the right thing to do. It is also the smart thing to do. I hope Congress will continue to prioritize the NIH in the coming 2018 fiscal year. Curing diseases can save and improve millions of lives while reducing federal expenditures in Medicaid and Medicare by billions of dollars.” Continue reading Signs of Wide Support Life Science Innovation

Congressional “chits”?

Comedienne Joan Rivers often began her monolog by asking ” Can we talk?”. Her purpose was to prepare her audience for some plain talk about a touchy subject. So channeling Joan, today I am asking readers “Can we talk? ”

Having worked around legislative bodies for almost 50 years, I am appalled when a client (or worse, a lobbyist) says ” Let’s not spend our “chits” on this or that.” It’s as though their congressional member was keeping score by counting your university’s “chits,” (whatever they are ). With the knowledge that TTO research commercialization capacity may not always be your university’s highest priority, it is essential to obtaining federal research grants and therefore critical to your university’s research mission. Commercialization is in danger and thus is well worth discussing with your home state delegation members. We appreciate that the political environments within universities can be complicated. Respectfully, communicating with Congress is not. University leadership frequently views communications with Congress as similarly nuanced and complex. However, it’s not rocket science. Members want to hear from their home state universities.

Henceforth herein I will refer to your university as “you” and the congress person or staffer with whom “you” communicate as “member” or ” she/her.”

She is not keeping score with you. Her reelection’s likelihood is of paramount importance. She is keeping score solely with her next vote count. You are an important and influential constituent. You often are one of the state’s largest employers. You contribute to in-state economic growth and development. You can favorably recognize her with awards, highly visible head-table location and athletic event seating, and you can even name buildings after her. She, therefore, wants to please you as much, and as often as possible. In today’s communication world, virtually every vote leaves a permanent trail and thus requires careful calculation. If that vote happens to coincide with your wishes, she will credit you with having convinced her — whatever her real reason. What members dislike most is being unaware of where you stand on an issue that affects you big or small. They appreciate communication because, a. they are hearing and learning from a credible constituent and, b. they want attention, not neglect. Connecting with them flatters their egos. As long as it is respectful, you cannot too often give your views on any issue that affects you.

Continue reading Congressional “chits”?

Essay Summarizing IPR Concerns Voiced by Panelists at PTO

I recently joined Robert Sterne, Judge Paul Michel, Peter Detkin, Damon C Mateo, Paul Evans and Paul Stone on a panel at the Advanced Patent Law Institute’s annual presentation at the USPTO. Kevin Madigan begins his summary the conference’s opening presentation with the paragraph below. It is a useful overview of a presentation to an audience of advanced patent experts with Director Lee (USPTO) seated in the front row.

“Last month, the United States Patent & Trademark Office (USPTO), along with the University of Texas Law School and Antonin Scalia Law School, George Mason University, hosted the 12th annual Advanced Patent Law Institute in Alexandria, Virginia. The program featured a distinguished panel of patent experts discussing “current issues around patenting, licensing, enforcing, and monetizing patents in the U.S., and look[ing] at what the UK, EU, and China are experiencing and the impact on U.S. patent practice.” Titled The Current Patent Landscape in the US and Abroad and focusing on the economic factors that spur invention, the consensus was that dramatic changes to the US patent system are driving investment in research and development outside the country and threatening the future of American innovation.”

You can read Kevin Madigan’s excellent article in its entirety here.

Miracles Can Happen

In his excellent IPWatchdog post, Bruce Berman discusses Jonathan Taplin’s new book, “Move Fast and Break Things.” In his  post, Bruce sagely states, ” It would be difficult for many people and businesses to live without Amazon, Google, YouTube and Facebook, but it is becoming virtually impossible for those who produce intellectual property to live with them.”  If you missed it, his entire post and Taplin’s book are both worth reading.

But today’s must-read is a joint op-ed the Sunday Washington Post by MIT President Eric Lander and Alphabet’s (Google’s) Eric Schmidt. In their short well-crafted plea to the Trump Administration and Congress, the two Erics praise our nation’s underfunded R&D supported innovation ecosystem, referring to it as, “The Miracle Machine that needs refueling.” They explain the fundamental difference between investable and curiosity-driven basic scientific research saying “its fruits are typically too unpredictable, too far from commercialization and too early to be patentable. That’s where government comes in. While investing in basic research at universities usually doesn’t make sense for business, it has been a winning strategy for our nation. ” They then list its commercialized economic benefits including Google’s 40,000 domestic employees, then close by saying,  “The Miracle Machine has been astoundingly successful. The problem is that too few people — in government or the public — know how it works. As a result, we’ve been letting it fall into disrepair. If we don’t change course and invest in scientific research, we risk losing one of America’s greatest advantages. To our lasting detriment, we may wake up to find the next generation of technologies, industries, medicines, and armaments pioneered elsewhere.”

Continue reading Miracles Can Happen

Patents are Property

As usual Paul Morinville, (joined this time by his good colleagues) is right-on. State universities and their affiliates have been given a “get out of PTAB card ” by the University of Florida decision because of their 11th Amendment sovereignty. It may be that other research universities are not so blessed. But the patents as property issue he details affects everyone. Paul’s IPWatchdog piece is, therefore, essential reading for all. The difference between the juridical “liability” and “property” theories is how research universities were punished by eBay in 2006 and ever since. Now its “Public Rights Vs Property Rights,” and that debate not only affects everyone it affects the very survival of our patent system. Paul explains it well enough to help readers tell it to their congressional delegation. To read their excellent and detailed explanation, please visit our IPStrategic.com website.

Doing “What Works” Is Working

Basic science funding was partially restored in this weekend’s deal to avert a government shutdown. But don’t think for a moment that life science commercialization will easily survive the administration’s anti-science budget stance. The fight to stave off R&D starvation has just begun.

Mosquito-borne Zika has no respect for national borders nor will it enjoy a summer recess. New shared development strategy to spread the rising costs and risk of developing much-needed anti-viral drugs has changed the drug development game into a shared enterprise for pharmaceutical companies.  But fresh tactical approaches to vaccine development have not altered the old thinking of price-based B-D march-in crusader KEI’s Jamie Love and his Senate spokesman Bernie Sanders. They objected to an award of shared financial support to vaccine-maker Sanofi to help underwrite two-stage clinical trials that could produce concrete evidence of a potentially safe, effective and investible Zika vaccine by June. If Phase II testing is successful, NIH’s Dr. Fauci says the vaccine’s Phase III trials would require massive support from a yet unnamed drug company partner.

The US Army Office of Research and Technology Applications (ORTA) issued a letter last week reporting that the Army would pay much of this trial’s bill. The letter implied that granting Sanofi an exclusive license was a reasonable and necessary means to harness the capital and expertise needed to win FDA approval for an unproven technology. Sanofi was the only company interested in pursuing this collaborative Phase II research agreement.

Love and Sanders rottenly complained that an exclusive Phase II award might lead later to Sanofi’s charging for the vaccine “whatever astronomical price it wants.”  What Love and Sanders fail to say is how they propose to defend against a baby-maiming virus creeping up our nation’s coast. Worse, what they never seem to understand is that unless this new vaccine’s later stage development can attract private sector investment capital, there will be no such vaccine. Continue reading Doing “What Works” Is Working