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

SCOTUS Issues Heartland Decision

The defense venue rule in patent cases had been that suits must be brought in the state where the defendant resides or where they have committed regular acts of infringement and have a regular and established place of business. In Heartland, the Court focused on the “resides” portion of this test. In 1990 the Federal Circuit ruled that patent actions also could be initiated in any venue where the defendant conducts its business. Patent suit venues were thus treated differently for more than 25 years. No more. SCOTUS has ruled by a vote of 8-0 that the special rule for patents should be narrowed holding that its “resides” prong means wherever the domestic corporation is incorporated. SCOTUS thus has overruled the Federal Circuit’s broader rule regarding venue. Henceforth plaintiffs relying on the reside prong of the test will have to bring their actions in the defendant’s state of incorporation (which often is Delaware). The regular acts of infringement or permanent place of business prong were not affected. Until now “doing business” especially in the digital age had meant they could be brought virtually anywhere and had led to forum shopping.

Justice Thomas writing for the Court said concerning venue based on party home location as distinguished from their infringement activity: “we, therefore, hold that a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute.”

We consider this decision to be another setback for patent holders. The infringer lobby has long complained that the Eastern District Court in Marshall Texas of being a haven for patent trolls. That particular venue was not at issue in this case, but most consider that the Texas court’s conduct was what this case was about. The Marshall court both moved too fast in the opinion of anti-patent infringers and ruled too often in favor of plaintiff patent holders. Anti-patent infringers will characterize it as a setback for patent trolls, but of course, it applies to all patent suits. Stanford professor Mark Lemley authored a brief for 61 economists emphasizing these issues, reiterating the troll narrative that dangerously seems to have become the prism through which SCOTUS now views all patent cases. It could be considered the final troll abuse to be addressed and end the patent troll narrative’s repeated harm to early stage innovation. But do not expect big tech to relent. Because efficient infringement tactics traditionally include the imposition of attrition through stalling and delay, the decision is another significant loss for all under-resourced patent holders, the usual victims of the anti-patent troll narrative. Big tech still values that capacity. This decision will more likely be seen by them as an invitation to seek more anti-patent costs sanctions in Congress.

So here we go again. Senator Hatch has indicated earlier that he wants to introduce venue legislation, however, Heartland was decided. To be sure Senate Judiciary is busy but there is always time it seems for Chair Grassley to respond to the wants of Silicon Valley. The decision is below. Any bill introduced in the House for any purpose or that passes the Senate will be before the House Judiciary Committee anxious to revive portions of the Innovation Act. Rep Goodlatte’s supportive Statement (below) suggests that the Innovation Act’s punitive sanctions are still alive.

Continue reading SCOTUS Issues Heartland Decision

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.

Restoring Sanity to the Patent Landscape

Summarizing IIPC’s recent Capitol Hill Conference IPWatchdog’s Steve Brachmann and Gene Quinn highlight a consensus assertion by its numerous panelist experts. In simple terms they repeatedly asserted that patents are property and were intended in our Constitution to be legally recognized as such. Patents are not privileges granted by sovereign whim as they were in England. That John Locke’s property ownership theory influenced the drafters of our Constitution is universally accepted by constitutional scholars and historians.The Patent Act reflected it. Yet this historic differential between patent property and privilege has been watered down by PTAB and the Federal Circuit (CAFC) in recent decisions holding that patents are simply “public rights”. As such patent holders are not entitled to the basic protections set forth in the Bill of Rights. SCOTUS has declined cert in earlier appeals from Federal Circuit public rights decisions. It is again considering a cert petition in a dispute involving the applicability of Art. III and Art. VII to PTAB’s proceedings.(Oil States Energy Services) Below are excerpts from a typically thorough Watchdog post highlighting the misleading big tech troll narrative’s pernicious influence on patent property rights.

“Although many of the industry insiders at the event held similar opinions on the current state of the U.S. patent system, bringing their message to a mainstream audience has been difficult. Much of this has to do with the “patent troll” narrative that has been forwarded by the efficient infringement lobby. As Sen. Dick Durbin (D-IL) pointed out at a recent Senate judiciary hearing on intellectual property as a driver of innovation, “whoever came up with that phrase [patent troll] should get a special bonus” because it has created a massive mischaracterization of patent owners asserting their rights.”

Continue reading Restoring Sanity to the Patent Landscape

Efficient Infringement Works

Patent reform veterans agree that its proponents’ penetration of DC policy maker “top of mind” with its misleading patent troll narrative is what led SCOTUS and Congress down the primrose path to the twin disasters of eBay and AIA and everything that has followed both. Inundated with Amicus brief and anti-patent administration input, the Courts accepted Justice Kennedy’s uninformed musings in his concurrent opinion where legislating from the bench he effectively erased patents’ presumption of validity while for certain patent holders he replaced patent exclusivity with compulsory licensing. The term’s congressional use, (which the FTC described later as “unhelpful”) enabled busy salons to say “no” to a conjured bogeyman by saying “yes” to comprehensive patent litigation reform too few had understood. The tactic switched the “burden of persuasion” from patent reform’s proponents (where passing any bill belongs) to the bills’ opponents. And when it comes to arcane patent litigation that is a massive burden. C’mon man! There is no “elevator pitch” to explain why anyone running for the next election should not say “yes “to cash-laden Silicon Valley mega techs on a complicated bill the public doesn’t care about. Better to say “no” to predatory trolls. Pro-patent advocates were back-footed long before they climbed Capitol Hill.

“Efficient infringement” is economically explained in a short essay by economist Adam Mossoff. Below are its closing paragraphs. Efficient infringement may never be as effective as the patent troll meme, but it is short, it efficiently describes an economic practice that is far more prevalent than the occasional abuses of the few patent trolls that remain, and it is readily described even on the shortened elevator rides available on the Hill. Most important it is real and succinctly explains why big tech wants patent litigation revision that adversely affects ALL patent holders and not just abusers.  Efficient infringement is economically sound even though it is unlawful and morally reprehensible. Its use is an insurance policy against lesser-resourced patent holder assertion. It is time Congress and the courts said “no” to efficient infringement!

Continue reading Efficient Infringement Works

World IP Day

Below are excerpts from an April 26 Forbes article noting an open letter from the Online, Property Rights Alliance to WIPO’s General Director urging that WIPO becomes more engaged by fighting worldwide economic abuse of IP protection. The letter is timely. WIPO’s annual commemoration World Intellectual Property Day is fine, but it is no longer enough. Significantly, it is signed by AUTM, signaling its wider engagement in defending the IP bedrock of TT commercialization not only here in the US, but throughout our global Info Age economy. From US patent weakening to international price caps on life science products worldwide, patent protected university TT commercialization capacity is under fire. Continue reading World IP Day

Amazon’s Groceries, Mega-Cap Convergence and IPR

C’mon man! Amazon has metastasized into groceries! Here’s what’s happening: the Mega-caps are converging.

Your Google IoT control device realizes you have just closed Windows on your Mac. After checking with your fridge, she tells your Apple watch to order-out a home-delivered meal for a pre-planned dinner with a Facebook friend you mutually calendared in Microsoft’s cloud to coincide with his visit to your area. Ranked lists of meals you each have “liked” on Facebook are separately crossed-checked in Microsoft’s cloud are sent to each other’s devices. When the excellent match is found, it orders both your meals from Amazon, prepays with Apple Pay, and schedules delivery to your door by a drone one hour after your friend arrives in his self-driving Google car. During dinner, your IoT devices are busy receiving Amazon and Apple offers for discounts on a movie to be aired during the next 5 hours. Meanwhile, Google offers your friend a self-driving automobile pick-up ten minutes after dessert. You get the idea. You can sense the future of our world is just over the horizon. The mega-caps will one day control the entire consumer landscape. Their anti-patent onslaught is a symptom.

Alphabet, Amazon, Apple, Facebook and Microsoft are now America’s five largest firms by market cap. Their market power is already overpowering. Their incumbency is threatened only by each other. Their combined profit last year was $93 bn. While they were controlling Congress during the last decade, they swallowed whole 519 smaller firms. They undoubtedly smothered countless others by efficiently infringing their patented IP or by attrition if any dared to sue. Working with SCOTUS and Congress as allies they are preserving market monopsony by crushing or absorbing disruptive technology and pushing patent reform to beef up profits by beating down product component costs. But their DC alliance is uneasy. They are swirling into the converging vortex of multiple diverse product control within the marketplace. When they meet, some cannot survive. Thus, each must soon decide when and how to kill or capture the others while today’s business-friendly administration is in power.

Meanwhile as reported in today’s WSJ “Once-Flush Startups Struggle to Stay Alive.” Venture capital for US startups has declined by 30 % in 2016. In the two preceding years, 5000 U S tech startup firms raised about $75 bn., with 294 of them obtaining at least $50 mil. But since three-fourths of those have neither been acquired nor raised and capital.

These investment facts that matter. They tell us IPR is harming early stage investment. They are neither “patent/troll” narratives conjured to stampede an under-informed Congress nor are they AMICI blather intended to mislead SCOTUS into worrying about patent trolls instead of their political and market power. What matters is the growing scarcity if capital for disruptive early stage innovation for those who need it most. Only so-called “unicorns ” can afford to risk a fight with the reigning five. Time is running out. Director Lee’s recently announced review of IPR “records” and PTO’s dialogue with IPR “users” in her misdirected search for IPR “fairness etc.” will not reveal this reality. Investment trends are real, and they are relevant to patent policy. PTAB’s contribution to our economy is not worth its cost. Congress should declare IPR’s victory over “bad patents” and repeal it.

Saving US Basic Research

“For decades, America lost factories and jobs to China but retained a coveted title: the world’s leader in inventing and commercializing new products.  Now, even that status has been eroded, and it’s hurting the economy. While the United States is still at the top in total investment in research and development – spending $500 billion in 2015 – a new Boston Consulting Group (BCG) study released Monday has made a startling finding: A couple of years ago, China quietly surpassed the U.S. in spending on the later stage of R&D that turns discoveries into commercial products. And at its current rate of spending, China will invest up to twice as much as the U.S., or $658 billion, by 2018 on this critical late-stage research. In other words, the U.S. Is doing the hard work of inventing new technologies, and China, among other countries, is reaping the benefits by taking those ideas and turning them into commercial products, the report says.” The quote above opens a recent article in USA Today. It refers readers to a Boston Consulting Group Study confirming China’s global leadership in later stage scientific research, our country’s penultimate scientific redoubt before surrendering our early stage research to China and with it, our remaining global economic leadership. Research university administrators sadly note that talented international students and faculty are no longer as attracted to US educational institutions as they once were. They are headed for China where government R&D support is accelerating while ours declines. Venture Capital development support is following them. Administration antipathy to foreign immigration and dwindling R&D expenditures share top billing among the reasons for this dangerous development. A similar lengthy Washington Post piece quotes a Facebook entry by Rep Mike Mulvaney in which he said about a bill dealing with Zika ” No one has written to me yet, to ask what might be the best question: do we need government-funded research at all?” Mulvaney now directs the Office of Management and Budget. R&D funding is dropping here while China’s is increasing.

In China “America First” translates into “China First.” How long will it take for our research universities to mobilize an effective response? The Study is informative. Its description of “friction” hampering tech transfer is worth mentioning. But the study fails to adequately emphasize the harm to our innovation ecosystem imposed by an under-informed SCOTUS and Congress. This is a problem research universities can solve. They must smooth their TT “friction,” and they must create budgetary conflict for the Trumps cuts to R&D. MIT’s President Reif is fighting back. Continue reading Saving US Basic Research

Time to Undo eBay

Are infringed patent holders entitled to remediation as owners of the personal property? Or do valid as violated patents protect their subject matter with ill-defined”liability” theory with “attributes” derived from their structure, owner identity, or developmental stage in the stream of commercial development.? The debate depicted by this false “choice” is economically and legally debilitating. It is undermining the centuries-old reliability of US patents. With SCOTUS benches filled again our patent system’s future now depends upon reversing the 2006 eBay detour from our patent system’s history and original purpose. SCOTUS must act soon or it will be too late to save US based innovation. The Court should return our patent law to the Lockean definition our founding fathers relied on while drafting our Constitution. It is time to recall Abe Lincoln’s famous phrases about investors’ “fuel of interest” in inventors’ “fire of genius”. The fuel of investors’ interest is running low. Our innovation ecosystem is sputtering. Investment in commercializing university basic research is shrinking. For some institutions such investment public and private investment funding it is an existential issue.
eBay and its concurring opinion by Justice Kennedy signaled SCOTUS’ surrender to the misdirection of a congressional and amicus brief “bait-and-switch” campaign by big ICT tech. Its “bait-and-switch assertions have since been proven wrong. Whatever merit they once had have been appropriately addressed.  Big techs’ strategic goal was to protect themselves from the remedial consequences of their “efficient infringement”, an economically fruitful but systemically amoral business model they feel compelled to continue. Sadly they conned the Courts into killing injunctions for everyone but themselves.  Big tech’s tactical rhetoric is what infected eBay. Ever since it has contaminated SCOTUS jurisprudence. It has also led to sanctioning PTAB’s intrusive elimination of statutory presumptive validity and its unconstitutional obliteration of trial by jury. Injunctions may be commercially disruptive, but the Blackberry injunction scare never happened and besides is ancient history.
Judicially framing patent infringement remediation theory with vague “liability” theory instead of “property “theory corrodes our patent system by degrading patent value. Our ICT patent community colleagues have been selfishly pursuing “liability theory” for more than a decade. Junk science academic accusations of a “tax on innovation”, speculative theories about patent “holdups”, “thickets” and “royalty stacking” and phony litigation and troll crises are over. Global markets moving up the value chain are signaling it’s time for the US to revalue patents as investors redirect their support to China and the EU. Talented researchers and students are headed there as well.Unless our new Court changes its direction, US innovation’s competitive advantage will follow them.

Continue reading Time to Undo eBay

The Chicken or the Egg

The old question which came first, (one of life’s most perplexing riddles) is often asked about “efficient infringement” (E I) and “patent trolls ” the conjoined twins invented by ICT bigs to degrade our patent system. Inspired by Samuel Butler’s famous species preservation observation that, ” Hens are the egg’s way of making another egg”, we think it important to explain that chronologically EI was first in line. Thematically originating with the mythic tale of “Billy Goat Gruff”, the term “patent troll” was invented at Intel by Peter Detkin (who ironically now helps Nathan Myhrvold run Intellectual Ventures.) “Patent Trolls” have long and ably served; as a device to distract the IP community from EI, as a symbolic cookie easily snarfed by academic street walkers and a lazy press, as a goad for SCOTUS patent property dilution and as “shiny object” by which to engineer enactment “bait-and-switch” AIA in an apathetic Congress. Even though EI literally created them, Patent Trolls have consistently preceded E I in whatever passes for” top of mind” awareness on Capitol Hill. Having recently been labeled “unhelpful” by the FTC, the term reappeared in a recent anti-patent op-ed in “The Hill”. So, although the troll meme has grown tired, it still is being kept alive. Its more obscure E I twin lives-on as well. Indeed, E I is now more prevalent as ICT biggies get bigger, patents become less reliable and costlier, and early stage innovation retreats to secondary market’s cheaper “bird-in-the-hand” monetization. Until courts see it for what it is, EI will continue creating market demand for assertion specialists among up-stream patent holders. Demand legislation could finish off obvious abuse by bad actors. The more pressing issue is how can EI be stopped? Continue reading The Chicken or the Egg