Tuesday 28 February 2017

A Closer Look at CRISPR Patents and Licensing: A More Nuanced Approach

Professors Jorge Contreras and Jacob Sherkow recently published an article on February 17, 2017, titled, "CRISPR, Surrogate Licensing and Scientific Discovery: Have Research Universities Abandoned Their Public Focus," in Science.  The authors examined the publicly available licenses between the research institutions and "spin-off" companies which include one of the principal researchers (the spin-off companies are called "surrogates" by the authors).  The authors believe that an apparent "bottleneck" exists with respect to some of the exclusive field of use licenses granted to surrogates which may result in underuse of the technology ultimately harming innovation.  This is, in part, because the surrogates may not be best positioned to utilize the technology under some of the broader fields of use that are exclusively licensed.  The authors note that a "platform technology" such as CRISPR should be broadly accessible and provide some suggestions for future licensing.  The authors also point to how the research institutions have attempted to make the technology available as a tool although without the rights to "market and develop products derived from their research."  This paper is three pages long and well-worth a read. 

Monday 27 February 2017

US Senate Candidate in California Critical of Bayh-Dole Act

Michael Eisen, a geneticist at University of California, Berkeley, has written a blog post concerning the CRISPR dispute, the Bayh-Dole Act and academic science.  Notably, Dr. Eisen is running for the U.S. Senate in California.  Dr. Eisen is essentially critical of the Bayh-Dole Act for skewing incentives toward commercially valuable research, complicating accessing research, slowing the progress of research and creating incentives for researchers to “behave badly.”  Here is an excerpt from his post:

Academic science is, after all, largely funded by the public. By all rights discoveries made on with public funds should belong to the public. And not too long ago they did. But legislation passed in 1980 – the Bayh-Dole Act – gave universities the right to claim patents on inventions made by their researchers on the public dime. Prior to 1980 these patents belonged to the federal government and many languished unused. The logic of Bayh-Dole was that, if they owned patents in their work, universities and other grantees would be incentivized to have their inventions turned into products, thereby benefiting the public.

But this is not how things worked out. Encouraged by a small number of patents that made huge sums, universities developed massive infrastructure to profit from their researchers. Not only do they spend millions on patents, they’ve turned every interaction scientists have with each other into an intellectual property transaction. Everything I get from or send to a colleague at another academic institution involves a complex legal agreement whose purpose is not to promote science but to protect the university’s ability to profit from hypothetical inventions that might arise from scientists doing what we’re supposed to do – share our work with each other.

And the idea that this system promotes the transformation of inventions made with public funding into products is laughable. CRISPR is a perfect case in point. The patent battle between UC and The Broad is likely to last for years. Meanwhile companies interested in actually developing CRISPR into new products are stymied by a combination of a lack of clarity about with whom to negotiate, and universities being difficult negotiating partners.

It would be so much easier if the US government simply placed all work arising from federal dollars into the public domain. We have a robust science and technology industry ready to exploit new ideas, and entrepreneurs and venture capitalists eager to fill in where existing companies are uninterested. Taxpayers would benefit by allowing the market, and not university licensing offices, to decide whose ideas and products make the best use of publicly funded inventions.

And most importantly we all would benefit returning academic science to its roots in basic discovery oriented research. We see with CRISPR the toxic effects of turning academic institutions into money hungry hawkers of intellectual property. Pursuit of patent riches has transformed The Broad Institute, which houses some of the most talented scientists working today, into a prominent purveyor of calumny.

Wednesday 22 February 2017

Public Universities Bringing More Patent Suits and May Be Immune to IPRs

A recent Technology Transfer Tactics article by Jesse Schwartz published on February 22, 2017 states that universities are bringing more intellectual property suits, particularly patent infringement actions, against large companies.  Notably, the article points to the University of Minnesota infringement suit against Gilead Life Sciences and states:

Litigation like the UM lawsuit indicates that universities are warming up to the idea that fighting for their patent rights is worth the effort and expense, says Joshua H. Haffner, JD, an attorney with Haffner Law in Los Angeles. The UM case continues a trend of schools stepping up and demanding payment for use of their patents, he notes. Carnegie Mellon University settled a patent infringement case with Marvell Technology Group for $750 million in 2016, and later that year a jury ordered Apple to pay the University of Wisconsin more than $234 million for using its microchip technology in iPhones and iPads without permission. In 2015, a jury awarded Boston University more than $13 million from three companies that infringed on its patent for blue light emitting diodes (LEDs).

“This trend is continuing because they’re making money off the cases,” Haffner says. “Patent infringement cases can be very profitable, and with every win by a university others are looking at that and saying maybe they could reap the same rewards. There are other principles at play, like protecting the inventors and the principle of ownership, but really if the invention is not making money those principles tend to fall by the wayside.”

Interestingly, the Patent Trial and Appeal Board (PTAB) recently decided the Covidien v. University of Florida Research Foundation (UFRF) matter.  In that matter, the PTAB analogized inter partes review proceedings (IPRs) to litigation and decided that public (state) universities have 11th Amendment immunity against IPRs.  Basically, this means that parties cannot bring IPRs against public universities to challenge their patents.  Notably, this immunity may be waived by the public university.  Interestingly, UFRF brought an action in state court for breach of a license agreement.  Covidien counterclaimed for a declaratory judgment of noninfringement and then filed IPRs at the United States Patent and Trademark Office challenging UFRF’s patents.  Covidien then removed the action to federal court; however, the federal district court sent the action back to state court because of UFRF’s 11th Amendment immunity.  That decision is pending resolution at the U.S. Court of Appeals for the Federal Circuit (Federal Circuit). 

Interestingly, the PTAB states:

Petitioner additionally argues that “immunizing patents owned by alleged state entities from IPR proceedings would have harmful and far-reaching consequences.” Opp. 15–17. Here, Petitioner’s arguments are three-fold. One, invalid patents would stand simply because they are assigned to a state entity. Two, a patent owned by a monetization foundation affiliated with a state university would be insulated from the inter partes review process. Three, determining whether an entity is entitled to sovereign immunity is a fact-intensive inquiry that the Patent Office is not designed to adjudicate.

With respect to the first two arguments, we are cognizant of the fact that applying an Eleventh Amendment immunity to inter partes review, absent waiver by the state entity4, precludes the institution of inter partes review against a state entity entitled to Eleventh Amendment immunity. This, indeed, is precisely the point of the Eleventh Amendment, which is the preservation of the dignity afforded to sovereign states. “The preeminent purpose of state sovereign immunity is to accord States the dignity that is consistent with their status as sovereign entities.” FMC, 535 U.S. at 760 (citing In re Ayers, 123 U.S. 443, 505 (1887)). When sovereign immunity conflicts with legislation, Congress may abrogate sovereign immunity if it has unequivocally expressed its intent to abrogate the immunity and has acted pursuant to a valid exercise of power. Seminole Tribe, 517 U.S. at 55. Petitioner does not point to, and we do not find there is, an unequivocal, express intent by Congress in the AIA to abrogate immunity for the purposes of inter partes review.  

[Footnote 4 states: Because there is no related federal district court patent infringement (or declaratory judgment of validity) case brought by Patent Owner, we do not decide here whether the existence of such a case would effect a waiver of sovereign immunity.]

Further, we are not persuaded that an application of sovereign immunity to inter partes review will do violence to the patent system. The Supreme Court in Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank, 527 U.S. 627 (1999) held that Congress does not have authority to abrogate Eleventh Amendment immunity with respect to patent infringement by the States, for “Congress identified no pattern of patent infringement by the States, let alone a pattern of constitutional violations.” Id. at 640. Based on the record before us, there is no evidence that the harm to the patent system, described by the Petitioner, will come to pass, let alone exists as a basis to divest States of sovereign immunity.

Finally, we are not persuaded that our tribunal cannot perform the fact-finding duties that Petitioner alleges would be required to determine whether an entity is entitled to sovereign immunity. Our rules and procedures provide for discovery and motion practice which, at a minimum, would provide the parties an opportunity to present arguments and supporting evidence pertaining to sovereign immunity.  

The Federal Circuit decision on this issue will be interesting, particularly if public universities continue to bring more litigation matters involving patents.  However, if there is a pending federal patent infringement claim brought by the university, I believe the PTAB (and Federal Circuit) will find a waiver of sovereign immunity.  The monetization firm argument is interesting.  [Hat tip to the Goodwin Keeping Tabs on the PTAB Alert for the lead to the case.]

Tuesday 14 February 2017

U.S. Chamber of Commerce Releases 2017 International IP Index

In February of 2017, the U.S. Chamber of Commerce (Chamber) released its 2017 International IP Index.  (Index).  Unsurprisingly, the overall conclusion is that IP is the medicine for all that ills countries.  The 148 page Index contains a helpful description of the purpose and function of the Index:

Now in its fifth edition, the U.S. Chamber’s International IP Index continues to provide an important industry perspective on the IP standards that influence both long- and short-term business and investment decisions. The Index is a unique and continuously evolving instrument. Not only does it assess the state of the international IP environment, it also provides a clear roadmap for any economy that wishes to be competitive in the 21st century knowledge-based global economy. Large, small, developing, or developed—economies from across the world can use the insights about their own national IP environments as well as that of their neighbors and international competitors to improve their own performance and better compete at the highest levels for global investment, talent, and growth.

Notably, part of the Index focuses on the “Innovation and Creativity Life Cycle.”  In examining the life cycle, the Index notes that there is a strong correlation between robust IP rights and “knowledge intensive jobs,” “biotechnology innovation,” “greater access to licensed music content,” “creative outputs,” “nearly 50% more attractive to foreign direct investment,” and “online activity” to name a few.  Perhaps the most interesting data in the Index concerns the analysis of individual countries and a breakdown of “key strengths” and “key weaknesses” in their respective IP systems.  The full Index can be found, here. 

Free OxFirst Webinar--"IP Commercialization Tactics for Wealth Generation & Innovation"

OxFirst is hosting another free webinar which, like previous events, promises to be most worthwhile. The topic is ‘IP Commercialization Tactics for Wealth Generation & Innovation’, and the event will take place on February 23rd at 15:00-16:00, British Standard Time. IP has often been portrayed as either an undervalued or underleveraged asset. This talk discusses the various means IP owners have at their disposal to commercialize their IP, be it patent brokerage, IP sales or licensing.

The speaker will be Patrick Terroir, Lead OxFirst Advisor and Chair of Patent and Technology Licensing Committee of Licensing Executive Society. Previously, Mr. Terroir was Managing Director of CDC Intellectual Property. He initiated and contributed to the creation of France Brevets and to the creation of the Tech Transfer Accelerators Companies (SATT) for the French universities. Between 2006 and 2008 he initiated and developed Caisse des Dépôts’s department in charge of industrial innovative clusters. Patrick Terroir is also an Adjunct Professor in Intellectual Property Economics in Sciences Po Paris.

To register, please consult the attached link.

OxFirst asks that you please register with your professional email account as it cannot allow attendees to sign up with private accounts (such as Yahoo or Gmail).

Friday 10 February 2017

Israel's budget confirms expansion of IP incentives for tech

Israel's budget for 2017-18 confirms some measures for tech companies announced last year, with the changes applying from 1 January 2017.

Firstly, the budget reiterates the 'innovation box' regime proposed last year, introducing a 6% corporate income tax on 'technological earnings'.

The budget also expands on the tax incentives for 'preferred technological enterprises' and 'special preferred technological enterprises':

For PTEs:
- the corporate tax rate is 12% instead of 24% on tech earnings (or lower, if in a development area)
- the withholding tax on dividends out of tech earnings of qualifying companies is reduced to 4% (unless lower by treaty)
- the capital gains tax rate on the sale of qualifying intangibles to a related nonresident is reduced to 12% where the assets were bought from a non-resident (unusual to see a tax incentive for outbound sales of IP)

For SPTEs:
- the corporate tax rate is 6% on tech earnings
- the withholding tax rate on dividends of tech earnings is reduced, as above; the withholding tax rate on all dividends to a nonresident parent is reduced to 5% (unless lower by treaty)
- the capital gains tax rate on qualifying intangibles (as above) is 6%
- the requirements to be an SPTE are modified, reducing the required preferred income by one third, and total required annual income by half

Thursday 2 February 2017

Trump's Nomination of Neil Gorsuch and Intellectual Property

Recently, President Donald Trump nominated Neil Gorsuch of the U.S. Court of Appeals for the 10th Circuit to the U.S. Supreme Court.  Many have expressed disappointment at the nomination because of his close comparison to the late Associate Justice Antonin Scalia, but it certainly could have been worse to some.  Interestingly, BuzzFeed discusses a survey which finds that based on citations to Scalia opinions there is one justice who is supposedly closer to Scalia of the group considered by Trump: Merrick Garland.  Yes, Merrick Garland, who was former President Obama’s pick. 

What of Neil Gorsuch’s impact on IP should he be confirmed?  There’s some speculation and some have reported that we don’t have enough information.  Interestingly, the Congressional Research Service (CRS) released an initial report yesterday (February 1, 2017) on Judge Gorsuch.  On what area may he have the most impact on IP: his views on executive power and administrative law.  Judge Gorsuch has apparently criticized the Chevron doctrine which essentially provides that courts should provide deference to an agency’s interpretation of law.  The CRS notes:

Nonetheless, at least in one area of considerable congressional interest, Judge Gorsuch’s views on the law could be seen to be quite distinct from those of Justice Scalia: administrative law. For much of his career on the bench, Justice Scalia was a proponent of Chevron deference, the doctrine that when statutory language is ambiguous or silent on an issue, federal courts should defer to an agency’s reasonable interpretation of a statute it administers. He argued that the doctrine operated as a clear, bright-line rule against which Congress could legislate. In contrast, Judge Gorsuch, in a concurring opinion in Gutierrez-Brizuela v. Lynch, argued that Chevron and its progeny allow “executive bureaucracies to swallow huge amounts of core judicial and legislative power and concentrate federal power in a way that seems more than a little difficult to square with the Constitution of the framers’ design.” In so writing, Judge Gorsuch suggested that the Supreme Court should reconsider Chevron, an action which, if taken by the Court, could upend decades of administrative law and potentially alter the role of Congress in drafting laws for implementation by administrative agencies.

Overturning Chevron could move some power from the United States Patent and Trademark Office back to the U.S. Court of Appeals for the Federal Circuit—think Couzzo and the broadest reasonable interpretation standard.  Law Professor Jonathan Turley at George Washington University Law School has been one of the loudest critics of executive overreach—including excesses in the George W. Bush and Obama administrations.  (Hat tip to my colleague, Professor John Sims, for the reference to the CRS report). 

Wednesday 1 February 2017

$500 Million Dollar Verdict Against Oculus

Corporate Counsel (John Council with Texas Lawyer) has just announced that a Dallas, Texas jury has awarded $500 million against Facebook owned Oculus to ZeniMax Media in a copyright infringement and trade secret misappropriation case.  Interestingly, the article notes that Mark Zuckerberg testified that Facebook only "had just one weekend to conduct a due diligence before completing the deal."  I bet that was a very, very busy weekend for some lawyers.  Whither "Facebook's" virtual reality technology?  It'll be interesting to see how the appeals work out. Please see the article for more information. 

Intellectual Property Owners Association Adopts Resolution to Amend Patent Eligible Subject Matter

The Intellectual Property Owners Association (IPO) board of directors has adopted a resolution which advocates for amending section 101 of the Patent Act in the U.S. to essentially overturn Mayo v. Prometheus and Alice v. CLS Bank.  The reason for the resolution is the development of inconsistent application of the so-called Alice/Mayo test.  Indeed, there have been a number of relatively recent decisions attempting to clarify Alice/Mayo which find patent eligible subject matter satisfied, including DDR, Enfish, McRO, Amdocs, and Cellz Direct.  How does this happen: the development of panel splits at the U.S. Court of Appeals for the Federal Circuit.  Notably, the United States Patent and Trademark Office (USPTO) has worked extremely hard in attempting to provide guidance to patentees and arguably is doing quite a good job.  I think the USPTO deserves a lot of credit for attempting to bring clarity and predictability to the field.  My personal opinion (shared by others) is that section 102 and 103 could provide a better gatekeeper than section 101 even though early resolution may be difficult.  I do think that the USPTO’s attempt to place certain claims in a “streamlined” analysis seems to be a good idea.  Claims drafting gamesmanship and looking at the claim as a whole will always raise issues though (that pesky Diamond v. Diehr!).  Here is the proposed language amending section 101:

Whoever invents or discovers, and claims as an invention, any useful process, machine, manufacture, composition of matter, or any useful improvement thereto, shall be entitled to a patent for a claimed invention thereof, subject only to the exceptions, conditions, and requirements set forth in this Title.

A claimed invention is ineligible under subsection (a) if and only if the claimed invention as a whole, as understood by a person having ordinary skill in the art to which the claimed invention pertains, exists in nature independently of and prior to any human activity, or exists solely in the human mind.

The eligibility of a claimed invention under subsections (a) and (b) shall be determined without regard as to the requirements or conditions of sections 102, 103, and 112 of this Title, the manner in which the claimed invention was made or discovered, or the claimed invention’s inventive concept.