Most of us by now are familiar with the Coons Cotton Stronger Patents Act introduced a few weeks ago. If you have not yet caught up, it is a gem. At my Ipstrategic website, there are three levels of pertinent information including a sponsor press release and a summary of its provisions. We will not repeat them here. Suffice it to say that this artfully crafted proposed legislation restores much of the damage to our patent landscape recently inflicted by Congress and the Courts. It also addresses the troll issue in inappropriately targeted manner. The bill has intelligent bi-partisan backing. Until yesterday it had been the sole occupant of the center ring in the congressional patent law circus.
Yesterday Reps. Issa and House Judiciary Goodlatte initiated the Megatech response igniting a backfire in the House with a hearing designed to revive the tired troll narrative. Being in the majority, they selected three anti patent witnesses. Unfortunately for them, the one minority witness was Former Chief Judge Paul Michel whose knowledgeable testimony itself backfired on the Issa’s plan to counter the Senate bill. Judge Michel won the day with his deep understanding of patent law and policy. He made it clear that our patent system is in crisis and that patent restoration legislation must be enacted.
That means we now have to pass a bill over the objections of the incumbent mega techs and their Congressional water carriers. No small challenge! So far, the “politics” of this fight have gone their way. That will continue to be the case. Home state research universities themselves become a credible RESOURCE to their home state congressional delegations, by credibly explaining as Judge Michel did (see below) what is at stake and why it is important. Research universities can and must do so. Here’s why. . .
Continue reading Issa et al
We are often asked by readers how to explain Bayh-Dole commercialization’s importance to Members of Congress when they know so little about patent law or policy. As is always essential to conducting any successful sale it helps to begin with where the customer is. Most members favor federal research and development funding known as “R&D funding” This is an approach that has worked for us. For the past ten years, federal R&D grants have been level-funded at $130 and 140 billion annually. NIH typically receives about $30 billion. Most members appreciate and value the work of NIH whose job it is to convert that funding into economic and medical progress. After setting aside approximately 10% for its research, NIH distributes specific project financing to research institutions and universities for peer-reviewed competitive research proposals. Such grants for basic scientific research may run from 2 to 5 years. Grants include creating antidotes to “super bugs,” cures for cancer, diabetes and presently incurable diseases like Alzheimer’s. Such research may have a promising hypothesis but it is not yet proven or enough advanced to attract private sector development funding. The government begins the process through federal grants, but the bulk of the risk and expense of moving it from lab bench to bedside is assumed in the private sector. Here’s how:
For the past ten years, federal R&D grants have been level-funded at $130 and 140 billion annually. NIH typically receives about $30 billion. Most members appreciate and value the work of NIH whose job it is to convert that funding into economic and medical progress. After setting aside approximately 10% for its research, NIH distributes specific project financing to research institutions and universities for peer-reviewed competitive research proposals. Such grants for basic scientific research may run from 2 to 5 years. Grants include creating antidotes to “super bugs,” cures for cancer, diabetes and presently incurable diseases like Alzheimer’s. Such research may have a promising hypothesis but it is not yet proven or enough advanced to attract private sector development funding. The government begins the process through federal grants, but the bulk of the risk and expense of moving it from lab bench to bedside is assumed in the private sector.
Continue reading Draft NIH
Before the long weekend ahead we want to call your attention to two hurdles ahead as Congress considers the Coons-Cotton STRONGER Patents Act and SCOTUS considers PTAB’s constitutionality in Oil States.
When our Founders expressly established patent rights in the Constitution they underlined the document’s unique establishment of a new and different sovereignty for the US. It was to be vested by the people in a Constitution not by a deity in a king. Patent property rights were expressly defined and vested in the inventor whose labor produced it and were no longer subject to a royal grant or withdrawal pursuant to the king’s sovereign whim. Like the Constitution itself, patent property rights were based upon the property theories of John Locke. Congress was given the power to codify them but Congress could not completely cancel, replace, or repeal them by completely denying their exclusivity. In short Congress could set a time limit but could not do so in a way that allowed for no time at all to securely exercise the rights conferred.
By characterizing these constitutionally-established rights as “public rights” for their entire term anti patent advocates aver that Congress can amend their term. But even if that was the Founders’ intent because of the words “secure …for a limited time” Congress cannot eliminate them entirely. Nor can Congress create an administrative agency like PTAB by which PTO’s administrative examination powers enables PTAB to nullify those rights all the way to and through the end of a patent’s term. PTAB’s nullification powers up to and through the final nanosecond of a patent’s entire term is contrary to the express words of the Constitution.” Secure for Limited Times” cannot mean for no time at all. This matters because unless parent rights are property rights in which ownership can become settled for a limited time such patents cannot support investment in commercialization. Gene Quinn provides further chapter and verse in a link below.
In another recent IPW post pro-patent all-star Paul Morinville, describes Google-bro Issa’s recent smarmy dismissal of Professor Adam Mossoff’s property rights testimony and explanation of what is now referred to as the China syndrome as the Asian powerhouse strengthens its patent system while weaken ours. Apparently preferring re-election support from Google and friends, Issa (who just won a close election in a recount) stands firmly on both sides of the property issue. In Paul’s description of a recent hearing, Issa first champions patent property rights but later mocks Professor Mossoff’s refutations of proponents’ support of patents as public rights. As Judiciary Chairman Goodlatte’s anti-patent poodle, Issa can be expected to block (or even adversely amend) much-needed pro-patent progress in the House during this unusual session. If Senator Coons’ STRONGER Patents Act clears the Senate, Issa will do what its takes to sabotage its passage in the House.
Both obstacles are not insurmountable but they are formidable. Please take a moment to read Gene Quinn’s take on choosing a “patent as property” PTO Director and Paul’s post describing Google tub-thumper Issa’s oily duplicity on the issue and the China Syndrome. They both are linked below. Continue reading “Secure for Limited Times” Can Not Mean No Security Ever
Below is an excerpt from an outstanding Kevin Madigan essay summarizing the problems plaguing development investment in what was once our gold-standard US patent system. Madigan explains why development investment needed to commercialize US inventions and life science discoveries is now heading overseas. Madigan’s description of the situation is spot-on. His description of this alarming situation is spot-on, and his links are reliable and helpful. Lincoln’s famed reference to the investor’s “fuel of interest” supporting the inventor’s “fire of genius” poetically describes the commercialization process. More prosaically, after Congress appropriates its R&D funding, commercialization is where that federal funding rubber meets the road. This essay is about real statistics, sound reasoning and reliable links to opinions of patent policy experts. It demonstrates the economic importance of the Oil States case pending at SCOTUS and passage of the Coons/Cotton STRONGER Patents Act.
“Venture capital investment in the United States has declined steadily for years, as investors abandon an uncertain domestic climate for more reliable opportunities in foreign countries. In a report on the current state of the entrepreneurial ecosystem, the National Venture Capital Association emphasizes the extreme decline in the US share of global venture capital in the last twenty years, highlighting a drop from 83% of global share in 1996 to just 54% in 2015. At a time of decreasing investment, the US should be working to improve its innovation ecosystem, providing stable and effective property rights to inventors so that VCs can once again feel confident that investments in startups’ R&D—secured by patent rights—won’t just be stolen by established and better-financed infringers. Unfortunately, its doing just the opposite. Over the past decade, the US has continued to gut its patent system of the protections and incentives that attracted investment and made it the world leader in cutting-edge innovation in the first place.” Continue reading Investment Moving Overseas
PTAB now appears to have gone “rogue” – a term originally applied to domesticated elephants that suddenly would become destructive, but is now appropriately applied to PTAB. In the post excerpted below, IPW’s Steve Brachmann and Gene Quinn precisely outline the administrative tribunal’s recent rejection of some district court decisions with jury verdicts confirming VirnetX patents’ validity. Such Article I outrage needs no further elaboration for us.The excerpts below from the IPW post are alarming. The post itself is bone-chilling.
“So obviously the patent claims VirnetX has used to pursue infringers such as Apple and Microsoft are not the weak patents that opponents of the patent system claim are the scourge of the system. Well — not so fast! Just because an Article III federal district court confirms the validity of a patent doesn’t mean anything anymore. Indeed, federal courts have become subordinate to the PTAB, which is as ridiculous as it sounds but sadly true. A patent is not valid until an Article I executive tribunal says so, and absolutely no deference is paid to Article III judges of the United States federal courts.”
Continue reading Has PTAB Gone Rogue?
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
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
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
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.
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