Friday, 12 October 2018
The United States Patent and Trademark Office (USPTO) has published a final rule changing the claim construction standard applied during inter partes review (IPR), post-grant review (PGR), and the transitional program for covered business method patents (CBM) proceedings before the Patent Trial and Appeal Board (PTAB).
The final rule replaces the “broadest reasonable interpretation” standard with the federal court claim construction standard that is used to construe a claim in a civil action under 35 U.S.C. § 282(b). This is the same claim construction standard articulated in Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc), and its progeny. Additionally, under the final rule, when construing a claim term in an IPR, PGR, or CBM, the PTAB will take into consideration any prior claim construction determination that has been made in a civil action, or a proceeding before the International Trade Commission (ITC), if that prior claim construction is timely made of record in that IPR, PGR, or CBM.
. . . As noted in the rule package, the change will lead, among other things, to greater consistency and harmonization with the federal courts and the ITC and lead to greater certainty and predictability in the patent system. . . . Several comments questioned the proposed “retroactive” application of the rule. In response to these comments, the final rule will not be retroactively applied and instead will apply only to IPR, PGR, and CBM petitions filed on or after the effective date of the final rule, which is November 13, 2018.
Wednesday, 10 October 2018
The University of California [UC] has opened a “liaison office” in Beijing to provide opportunities for UC startups to access China’s large market for products and services as well as its venture capital market. The press release states, in part:
In June, 2018, UC’s Office of Innovation and Entrepreneurship (I&E) established a liaison office in Beijing at TusStar, a leading tech incubator and early-stage investment fund. The key objective of this liaison office is to provide business development and business-matching services as well as overall administrative support to UC startups looking to expand their business in China.
TusStar operates over 160 incubators globally; it has deployed over $2 billion in investment capital since 2001. It is owned by Tus Holdings, a large integrated enterprise with 500+ subsidiaries and $15+ billion in investment capital.
The new UC office will be located inside TusPark, the largest science park in Zhongguancun, the “Silicon Valley hub” of Beijing where multinational tech companies, such as Google, are based.
The creation of this new office and relationship with TusStar will help UC startups connect with resources to market their products to Chinese customers, find additional sources of investor funding, connect with strategic manufacturing and distribution partners, and network with other UC alumni and UC entrepreneurs in China.
The Beijing office will also provide UC’s Office of Innovation and Entrepreneurship with the necessary business network and program support to coordinate alumni events and other programs connecting with Chinese investors and industry partners, i.e., cross-border tours, pitch competitions, conferences, forums and symposiums.
Tuesday, 9 October 2018
The United States Trade Representative has released a summary of some of the highlights concerning IP and the new “NAFTA” between the United States, Canada and Mexico. The USMC agreement (United States Marine Corps or What We Say -- I'm making a joke.) summary states, in part:
UNITED STATES–MEXICO–CANADA TRADE FACT SHEET Modernizing NAFTA into a 21st Century Trade Agreement
The United States, Mexico, and Canada have reached an agreement to modernize the 24-year-old NAFTA into a 21st century, high-standard agreement. The new United States-Mexico-Canada Agreement (USMCA) will support mutually beneficial trade leading to freer markets, fairer trade, and robust economic growth in North America.
The United States, Mexico, and Canada have reached an agreement on a modernized, high-standard Intellectual Property (IP) chapter that provides strong and effective protection and enforcement of IP rights critical to driving innovation, creating economic growth, and supporting American jobs.
Key Highlights: Protections for United States Innovators and Creators
The new IP Chapter will:
- Include 10 years of data protection for biologic drugs and a robust scope of products eligible for protection.
- Require full national treatment for copyright and related rights so United States creators are not deprived of the same protections that domestic creators receive in a foreign market.
- Continue to provide strong patent protection for innovators by enshrining patentability standards and patent office best practices to ensure that United States innovators, including small- and medium-sized businesses, are able to protect their inventions with patents.
- Include strong protection for pharmaceutical and agricultural innovators.
- Require a minimum copyright term of life of the author plus 70 years, and for those works with a copyright term that is not based on the life of a person, a minimum of 75 years after first authorized publication.
- Require strong standards against the circumvention of technological protection measures that often protect works such as digital music, movies, and books.
- Establish appropriate copyright safe harbors to provide protection for IP and predictability for legitimate enterprises that do not directly benefit from the infringement, consistent with United States law.
- Provide important procedural safeguards for recognition of new geographical indications (GIs), including strong standards for protection against issuances of GIs that would prevent United States producers from using common names, as well as establish a mechanism for consultation between the Parties on future GIs pursuant to international agreements.
- Enhance provisions for protecting trademarks, including well-known marks, to help companies that have invested effort and resources into establishing goodwill for their brands.
Key Achievement: Most Comprehensive Enforcement Provisions of Any Trade Agreement
For the first time, a trade agreement will require all of the following:
- Ex officio authority for law enforcement officials to stop suspected counterfeit or pirated goods at every phase of entering, exiting, and transiting through the territory of any Party.
- Express recognition that IP enforcement procedures must be available for the digital environment for trademark and copyright or related rights infringement.
- Meaningful criminal procedures and penalties for unauthorized camcording of movies, which is a significant source of pirated movies online.
- Civil and criminal penalties for satellite and cable signal theft.
- Broad protection against trade secret theft, including against state-owned enterprises.
Key Achievement: Strongest Standards of Protection for Trade Secrets of Any Prior FTA
In particular, the Chapter has the most robust protection for trade secrets of any prior United States trade agreement. It includes all of the following protections against misappropriation of trade secrets, including by state-owned enterprises: civil procedures and remedies, criminal procedures and penalties, prohibitions against impeding licensing of trade secrets, judicial procedures to prevent disclosure of trade secrets during the litigation process, and penalties for government officials for the unauthorized disclosure of trade secrets.
The new Digital Trade chapter contains the strongest disciplines on digital trade of any international agreement, providing a firm foundation for the expansion of trade and investment in the innovative products and services where the United States has a competitive advantage.
Key Highlights of the Digital Trade Chapter
The new Digital Trade chapter will:
- Prohibit customs duties and other discriminatory measures from being applied to digital products distributed electronically (e-books, videos, music, software, games, etc.).
- Ensure that data can be transferred cross-border, and that limits on where data can be stored and processed are minimized, thereby enhancing and protecting the global digital ecosystem.
- Ensure that suppliers are not restricted in their use of electronic authentication or electronic signatures, thereby facilitating digital transactions.
- Guarantee that enforceable consumer protections, including for privacy and unsolicited communications, apply to the digital marketplace.
- Limit governments’ ability to require disclosure of proprietary computer source code and algorithms, to better protect the competitiveness of digital suppliers.
- Promote collaboration in tackling cybersecurity challenges while seeking to promote industry best practices to keep networks and services secure.
- Promote open access to government-generated public data, to enhance innovative use in commercial applications and services.
- Limit the civil liability of Internet platforms for third-party content that such platforms host or process, outside of the realm of intellectual property enforcement, thereby enhancing the economic viability of these engines of growth that depend on user interaction and user content.
Beckman Coulter Diagnostics and the University of California, Irvine have issued a press release announcing their new collaboration. The press release states, in part:
"We are honored that Beckman Coulter Diagnostics has selected UCI as a strategic innovation partner," said Richard Sudek, Ph.D., chief innovation officer and executive director at UCI Applied Innovation. "This is a new type of industry collaboration which aims to significantly change how industry and universities partner together. We look forward to teaming up with Beckman Coulter to increase the speed and quality of how UCI discoveries make it to market."
"We are excited to tap into the broad expertise of UCI researchers as we focus on identifying innovative solutions to clinical unmet needs," said Fiona Adair, Ph.D., vice president of strategy and innovation at Beckman Coulter Diagnostics. "We believe this type of academic-industry partnership can lead to development of innovative diagnostic technologies to improve healthcare. UCI Applied Innovation is a place where valuable new ideas are incubated. In turn, we can provide promising students, researchers, and entrepreneurs industry-specific feedback and mentorship opportunities. We will have a Beckman Coulter office at the Cove @ UCI Applied Innovation for seamless collaboration with academic units as well as to integrate into the innovation ecosystem."
This level of collaboration is an industry model of synthesizing research, commercial expertise and clinical needs to produce beneficial results. As a first step, Beckman Coulter will fund Proof of Product grants to help UCI innovations bridge the gap between the lab and early commercialization. Through these grants, Beckman Coulter will determine a specific focus area for university entrepreneurial teams.
Additionally, Beckman Coulter will also seek eligible UCI graduate students to enter its competitive talent onboarding program, in which they'll get the opportunity to work across multiple divisions of the company.
"The partnership with UCI represents a landmark in Beckman Coulter's strategic initiative to drive translational innovation and extend the company's leadership in clinical diagnostics." said John Blackwood, senior vice president and general manager of products and services at Beckman Coulter. "Beckman Coulter is engaging with academic partners that excel in applying the latest technology to develop superior solutions for better patient outcomes. UCI maintains an ecosystem of innovation that facilitates academic-industry partnerships and we are excited about the opportunity to leverage UCI's research expertise for the benefit of patients around the world."
Hat tip to Technology Transfer Central.
Monday, 8 October 2018
The legal services market in the United States contracted since the Great Recession. However, there have been reports of a rebound. CBRE, a commercial real estate firm, has released a report concerning legal services and real estate in the United States. Part of the report concerns rethinking how square footage in law firms can be used more efficiently, including increasing collaboration space. Another part of the report examines legal services employment—attorney employment--across the United States.
The top five major legal services employment markets are 1) New York City; 2) Los Angeles; 3) Miami; 4) Chicago; and 5) Washington DC. San Francisco is ninth. The report states that there has not been much growth in most of the top ten major legal services employment markets except for Los Angeles (experiencing low double digit growth between 2015 and 2017) and San Francisco. The report states that this is likely due to the growth in the media and tech industries. In the highest growth markets category, Austin and Atlanta were the leaders in attorney growth. Austin added more than 10%. Austin is well-known for its tech industry. According to the report, the cities of Austin, Atlanta and Kansas City added 10% or more growth in attorney positions since 2015. The report also discusses the cities with largest decline in law degrees awarded.
Wednesday, 19 September 2018
In a recent essay titled, "Seeking Comparable Transactions in Patent and Tax," in the University of Texas Law School Review of Litigation, Professor Susan C. Morse discusses the merits of whether tax transfer prices can help inform patent damages. The introduction of her article states:
Most business firms do not go around licensing their crown jewel intellectual property to unrelated third parties. This presents a problem for both patent law and tax law. In patent litigation, setting damages for a reasonable royalty under Georgia Pacific invites the use of a benchmark royalty rate that would have been agreed to had the litigating parties negotiated a market rate in advance. This counterfactual analysis repeats in tax law when firms allocate taxable income among affiliates located in different tax jurisdictions. Transfer pricing rules similarly seek a price, such as a royalty, that would have been agreed to had the related affiliates negotiated a market rate as adverse, or “arm’s length,” parties.
In their article, Tax Solutions to Patent Damages, Jennifer Blouin and Melissa Wasserman argue that tax transfer prices can provide some of the data needed to set patent litigation damages. One could also ask the converse, which is whether patent litigation outcomes can provide some data that tax transfer pricing needs. If patent law looks to tax transfer prices, it sees the advantage that the tax transfer prices are set ex ante when IP developed by one affiliate was first used by another affiliate. This roughly aligns with patent law’s touchstone of a “hypothetical negotiation” that produces an “ex ante” license. If tax law looks to patent law, it sees the advantage that patent damages emerge from an adversarial process. Patent damages may be set ex post, but their validity is bolstered by the fact that they are contested.
Blouin and Wasserman argue that parties and courts should make use of the large body of tax transfer price information to help support reasonable royalty calculations in patent damages cases. Perhaps so. But transfer pricing data is messy. Using tax transfer prices sets for parties and courts the challenging task of understanding the prices in context. The risk exists that the analysis will fail because of the weight of its own complexity.
Tax transfer prices are imperfect. They are motivated by the incentive to reduce tax, not by the incentive to get the prices right. Theory, doctrine, and constrained administrative resources limit the quality or truth of transfer prices. But this does not mean that tax transfer prices are irrelevant to the problem of patent damages. It means that the prices are contextual. If they are used, they should be used with attention to comparability of terms, taxpayer incentives, and government enforcement. Patent litigants may have ample incentive to engage with questions of comparability, but understanding the interaction between the complex tax system and the complex patent system as applied to transfer pricing data would not be easy. It could be so hard that the transaction costs would exceed the benefit of any increase in the quality of patent damages awards.
The essay can be found, here. A draft of the Professor Blouin and Professor Wasserman paper, titled, "Tax Solutions to Patent Damages," is available, here.
The President Trump's U.S. Office of Management and Budget has released a Federal Register request for comments from the public to help develop the U.S. 3-year Joint Strategic Plan on Intellectual Property Enforcement. A summary of the request states:
The Federal Government is starting the process to develop a new 3-year Joint Strategic Plan on Intellectual Property Enforcement. By committing to common goals, the U.S. Government will more effectively and efficiently promote and protect our intellectual property. In this request for comments, the Executive Office of the President (``EOP''), Office of the U.S. Intellectual Property Enforcement Coordinator invites public input and participation in shaping the Administration's intellectual property enforcement strategy. The Office of the U.S. Intellectual Property Enforcement Coordinator (``IPEC'') is charged with developing, with certain Federal departments and agencies, the Administration's Joint Strategic Plan on Intellectual Property Enforcement for submission to Congress every three years. The previous 3-year Joint Strategic Plans were issued in 2010, 2013, and 2016. To assist IPEC and Federal agencies in our preparation of the fourth 3-year plan, IPEC requests input and recommendations from the public for improving the U.S. Government's intellectual property enforcement efforts, along the lines of this Administration's four-part strategic approach, described in greater detail below.
The prior 3-year joint strategic plan can be found, here. We previously discussed the 2013 plan, here. The complete Federal Register request can be found, here.
Thursday, 13 September 2018
In an article titled, “MBA Apps Take a Shocking Plunge” published at Poets & Quants, John A. Byrne discusses how the number of MBA applications in the United States has dropped substantially. The amount of the drop depends on the particular school; however, even top schools are experiencing a substantial decrease. The article states:
At Rice University’s Jones Graduate School, for example, candidates to the school’s full-time programs plummeted by 27.7% to just 587 applications from 813 a year earlier. At the McCombs School of Business at the University of Texas-Austin, applications fell 19.6%. At the Kenan-Flagler Business School at the University of North Carolina-Chapel Hill, applicants declined by 18.3%. Applications dipped 16.2% at Georgetown University McDonough School of Business, while they fell 13.2% at Indiana University’s Kelley School of Business.
The article provides several reasons for the decline in applications: difficulty for international students to obtain visas; some international students choosing MBA schools outside the U.S., such as in Canada; a booming economy; and high cost. While I do not think it is a cause of the decline in applications, I do wonder if the business schools who have suffered a decline have adapted their curriculum to include intellectual property law related subjects. I have not reviewed their course offerings, but I wonder if a school that did emphasize intellectual property would have a competitive edge. Others have made this point, but I am not sure if there has been much change. This may be a good time for innovation for some schools.
The American Intellectual Property Law Association, Intellectual Property Owners Association, and the International Trademark Association have sent a letter to the Chairman and Ranking Member of the U.S. House of Representatives Judiciary Committee concerning the availability of a presumption of irreparable harm related to injunctions in trademark infringement and dilution. The letter points to the erosion of the presumption by some courts following the U.S. Supreme Court eBay case concerning patent injunctions. The letter states:
Injury in most Lanham Act violations is typically not readily or immediately quantifiable. Injunctive relief (which requires the claimant to meet a four-part test, including a showing of irreparable harm) most often is the only effective remedy to prevent harm to consumers and protect the trademark owner's reputation. For this reason, historically, U.S. federal courts, when considering a claim under the Lanham Act, almost uniformly applied a rebuttable presumption of irreparable harm upon a finding of liability or, in the context of a preliminary injunction, when liability was found to be probable. A rebuttable presumption of irreparable harm is an important avenue to adequate relief, given the difficulty of quantifying this type of injury. . . .
Legislation reestablishing a presumption of irreparable harm under the Lanham Act would provide clarity for the courts and litigants alike. It would provide injunctive relief to trademark owners who prevail on the merits of their claim or who, in preliminary injunction proceedings, demonstrate that they are likely to prevail on the merits, and allow them to appropriately protect their brands and reputations. This will also protect consumers from harm arising from confusion about the source of products or services.
Hat tip to Professor Dennis Crouch of the Patently Obvious Blog.
Tuesday, 11 September 2018
The United States Patent and Trademark Office [USPTO] has formed a “Working Group on Regulatory Reform.” [Working Group]. The Working Group is responsible for following President Trump’s Executive Orders concerning reducing regulations: “federal agencies [must repeal] two regulations for every new significant regulation, and in such a way that the total cost of regulations does not increase.” Notably, the USPTO website has a somewhat broader charge than that: “consider, review, and recommend ways that USPTO regulations can be improved, revised, and streamlined.” The USPTO website further states:
This Working Group consists of subject matter experts who are familiar with all of the agency’s regulations and will meet on a weekly basis. Members of this Working Group will also represent the USPTO on the Department of Commerce’s Regulatory Reform Task Force. Throughout this process, the USPTO Working Group will be seeking public input for any rulemaking that would revise or eliminate regulations.
Nicolas Oettinger, Senior Counsel for Regulatory and Legislative Affairs in the USPTO’s Office of General Counsel, will be leading this effort.
Additionally, members of the public may submit their ideas to improve, revise, and streamline USPTO regulations to: RegulatoryReformGroup@uspto.gov (link sends e-mail).
The Working Group’s recommendations will be interesting to follow. Notably, the public can submit comments.
Tuesday, 21 August 2018
Professor Xuan-Thao Nguyen explores government created and funded patent funds in Sovereign Patent Funds recently published in the UC Davis Law Review. In part, Professor Nguyen reviews and analyzes the sovereign patent funds of numerous countries and investigates their role in patent enforcement. The following is a part of her introduction of her article:
What are SPFs? How are they created and structured? What purposes do SPFs serve? Are SPFs effective initiatives for foreign governments to encourage innovation and foster competition or are they merely state-sponsored patent trolls? Are they violating international trade law, specifically the World Trade Organization (“WTO”) Agreement on Subsidies and Countervailing Measures?
This Article is the first to address the above questions. The Article proceeds as follows. Part I traces the creation of SPFs in Japan, South Korea, Taiwan, China, and France. Part I also explains when, why, and how each country provides public funding to SPFs. There are many different types of SPFs in different technology and life sciences areas, and with specific goals and mandates, although several share the same goal of aggregating patents. Open innovation and patent licensing are two common themes among the different goals and approaches employed by SPFs. Part II investigates whether SPFs have engaged in patent assertions — attempts to use acquired patents “to generate revenue by asserting them against alleged infringers.” Part II focuses on the simultaneous litigations filed by the French SPF against LG Electronics Corporation and HTC Germany GmbH in Germany and the United States. Likewise, the Asian SPFs have filed lawsuits against multinational companies. The investigation reveals surprises, including that litigation is typically an SPF’s last resort. SPFs are reluctant to embrace litigation. Part II also examines SPFs’ licensing strategies. French and Korean SPFs seem to have success in licensing out. They direct more efforts to selecting quality patents for licensing. In addition, Korean and Japanese SPFs are engaging in licensing for open innovation.
SPFs have been condemned as global patent trolls and state sponsored patent trolls. Part III addresses whether the pejorative label is warranted. Exploring the popular narrative of patent trolls and the evolving landscape of the patent market where former manufacturing companies and research institutions, along with other non-practicing enterprises (“NPEs”), are participants, Part III reveals that the SPF label does not fit SPFs’ characteristics. SPFs are both diverse and complex. Some have collaborated with universities to engage in specific research and development projects. Some share their profits with original inventors. Some facilitate open innovation. Some are doing all of the above. Condemning SPFs as patent trolls amounts to dismissing the true innovations, research, and development that have been the hallmarks of many industries and sectors in Japan, South Korea, China, and France.
SPFs have also been condemned as a trade protectionist measure in violation of international trade law. Part IV examines the heavy charges that SPFs discourage international technology transfers, depress innovation, force foreign companies to accept unfavorable license terms akin to discriminatory tax, support domestic industries at the expense of foreign firms, resurrect ailing national companies, and cause a race to the bottom. Part IV found no evidence to support these condemnations. On the contrary, what SPFs have done since their existence refutes these charges.
If SPFs are illegal subsidies in violation of international trade law, there is an appropriate mechanism to remedy the harm. Part V turns to the WTO solution, analyzing relevant provisions of the WTO Agreement on Subsidies and Countervailing Measures. Part V discusses WTO Tribunal decisions, as they illuminate and interpret legal requirements in subsidy cases. Part V further suggests that the international framework is suited to eliminate SPFs if evidence exists that a particular subsidy is causing injury to a domestic industry. Certainly, using the appropriate channel to address SPFs is preferable to dismissive and pejorative labeling.
Part VI, however, posits that an international trade solution might be unnecessary because SPFs may soon be relics of the past. SPFs can easily alter their structure to remove the government-sponsored characteristic to quiet critics and restless nation litigants in the WTO Tribunal. Moreover, the global innovation and patent market is dynamic and complex; SPFs will not be able to survive and flourish if they are under governmental control. Part VI observes that, in fact, some prominent SPFs are planning to privatize in order to compete and adapt.
Overall, by creating and infusing SPFs with public funding to aggregate patents, a government can seem to have ownership and control of the patents while simultaneously wielding authority in dispute proceedings relating to those very same patents. The government can block or rule against others from challenging the validity of patents. The same government may coerce others into accepting unfavorable patent license terms. The same government also may protect domestic firms at the expense of foreign firms. Such an arrangement seems to create many conflicts. Additionally, SPFs may be illegal subsidies under international trade law. Also, the creation of SPFs suggests a new global chaos in patents. The new chaos raises fear that SPFs would cause a race to the bottom. SPFs become sovereign patent trolls with levers more potent than private patent trolls, depressing innovation for short-term gains. The fear about SPFs, however, is exaggerated. These concerns perhaps emanate from the tendency to group all SPFs from different countries into one and characterize them within the convenient patent troll narrative. Fear not, the present and future development of different SPFs should instead prompt us to rethink patents and the very laws creating them.
The article is available, here.
Tuesday, 7 August 2018
Deloitte Consulting has released an informative report titled, “5G: The Chance to Lead for aDecade.” [Report] The Report describes how the United States is falling behind in investing in 5G “both [in] relative and absolute terms” to other countries, and specifically China. For example, the Report states:
Since 2015, China outspent the United States by approximately $24 billion in wireless communications infrastructure and built 350,000 new sites, while the United States built fewer than 30,000. Looking forward, China’s five-year economic plan specifies $400 billion in 5G-related investment. Consequently, China and other countries may be creating a 5G tsunami, making it near impossible to catch up.
The Report also describes the importance of the number of towers and small cells needed for the 5G network to operate well. While advocating for a “light touch policy framework,” the Report notes that,
[T]his light-touch regulatory framework does not absolve policy makers of responsibility to inspire US leadership in 5G. Policy makers at the state, local, and federal levels can help reduce the friction associated with deploying next generations of communication infrastructure. Specifically, reducing the cost and deployment cycle times for small cells will help remove a major obstacle to network densification and allow carriers to add desperately needed low-cost capacity to our nation’s wireless networks.
Many cities continue to use the same approval standards and processes for small cell equipment deployed at the top of an existing city lamp post as they would for deployment of a new 70-foot macro tower in the public right of way; an unsustainable solution if the United States aims to keep pace with other countries’ 5G deployment. (emphasis added).
Notably, the Report also discusses the benefits of a “light touch policy framework:”
First, the United States should consider establishing a light-touch policy framework to address 5G’s inherent externalities that limit the value created by infrastructure investment from accruing to the carriers. Other countries may consider subsidizing, nationalizing, or otherwise regulating aspects of a nation’s communications infrastructure to speed 5G deployment. However, such interventions in the United States could risk disrupting a communications and technology ecosystem that has proven symbiotic and resilient over the past decade. Policy intervention in the same ecosystem of carriers, suppliers, Internet innovators, and consumers that enabled LTE leadership could inflict unintended consequences on competition and innovation.
Instead, carriers and their ecosystem partners can address the potential pitfalls of externalities by negotiating efficient solutions. Negotiated contracts between carriers and Internet content and applications providers more effectively attribute profits to those making infrastructure investments on behalf of the users.
We have already seen examples of such negotiated solutions with LTE. Unlimited usage of video streaming applications come with service-level conditions that help curtail network congestion. In some cases, content providers agreed to reduce video resolution and steaming speeds in return for carriers granting unlimited access to that content for their subscribers. These conditions, negotiated between commercial entities, can offer a win-win-win for carriers, content providers, and consumers. Consumers receive access to as much content as they want without overage fees. Content providers get unlimited access to their viewer base. In turn, carriers can better plan for and/or avoid traffic increases that necessitate costly upgrades.
The Trump Administration released a plan to develop and rehabilitate infrastructure throughout the United States, and the Washington Post recently published an interesting article describing a recent study concerning long term prosperity in Europe and the path of Roman roads. What about 5G (at least for a decade and not falling behind what’s next)?
Saturday, 4 August 2018
One way the Trump Administration appears to attempt to control drug prices is through use of the “bully pulpit.” Wikipedia states that the “bully pulpit”: “is a conspicuous position that provides an opportunity to speak out and be listened to. This term was coined by United States President Theodore Roosevelt, who referred to his office as a "bully pulpit", by which he meant a terrific platform from which to advocate an agenda.”
President Trump has used strong language to apparently shame pharmaceutical companies from raising drug prices. Indeed, two pharmaceutical companies announced they would not raise prices for their drugs. Those two examples make great headlines for President Trump, but are drug prices as a whole getting lower in the United States. Bloomberg seeks to answer that question and is tracking the pricing of "widely used" and "well known" drugs across several different disease categories and updating that information as time passes. Notably, prices (excluding Pfizer's drugs, who announced it would not raise prices) appear to be moving up. Interestingly, the price increases are mostly hovering around 9% to 10%. Also, the prices tracked by Bloomberg do not include the rebates that are provided by pharmaceutical companies, but are the list prices.
The Trump Administration is moving on other fronts to try to control drug prices, but many experts state that some of those attempts will not impact the cost of drugs in the United States by much. It will be interesting to see if actions taken by the Food and Drug Administration discussed here will make a significant difference.
Friday, 3 August 2018
In a new paper on the merit of patent boxes, Should There Be Lower Taxes on Patent Income, Fabian Gaessler, Brownyn H. Hall and Dietmar Harhoff, examine several questions:
1. When a transfer of patent ownership occurs between countries, is the choice of target country affected by the difference in tax treatment in the two countries and the presence of a patent box? . . .
2. Is the choice of priority country influenced by that country’s treatment of patent income? We are motivated to some extent by the observation that the share of patents with a priority country that differs from the location of the invention has risen in the recent past.
3. Does patentable invention in a country increase after the introduction of a patent box? That is, does this policy instrument have the desired effect?
In addition, we hypothesize that more valuable patents (that is, patents that are more likely to generate income, via own profits or licensing) are more likely to be subject to transfer.
The abstract states the general finding of the paper:
We find that the impact on transfers is small but present, especially when the tax instrument contains a development condition and for high value patents (those most likely to have generated income), but that invention itself is not affected. This calls into question whether the patent box is an effective instrument for encouraging innovation in a country, rather than simply facilitating the shifting of corporate income to low tax jurisdictions.
Federal Funding for National Institutes of Health in the United States will likely Continue to Decline
The Trump Administration is seeking cuts to the budget of the National Institutes of Health (NIH) for Fiscal Year 2019. In dollars adjusted for inflation, the decrease is from FY 2018 38.349 billion dollars to 34.767 billion dollars, as described by Judith Johnson’s Congressional Research Service NIH Funding FY1994-2019 report (CRS Report). Trump also requested a decrease in the NIH’s budget in the FY 2018 budget; however, Congress increased the budget by 2 billion dollars. Notably, the CRS Report outlines how in inflation adjusted dollars the budget for the NIH has decreased over the last 14 years from the 2003 budget high point of 43.198 billion inflation adjusted dollars. From 2011 to 2018, the budget for the NIH has decreased in double-digits in inflation adjusted dollars from the 2003 high point. The years 2013, 2014 and 2015 saw decreases from the 2003 high point of 21.7%, 21.2% and 22.4% respectively. The Trump 2019 request would be a 19.5% decrease in inflation adjusted dollars from the 2003 high point.
Thursday, 26 July 2018
In a recent New York Times article, “Facebook Adds AI Labsin Seattle and Pittsburg, Pressuring Local Universities,” Cade Metz describes Facebook’s push to hire leading academics in the artificial intelligence space. It appears that at least some of the university researchers are retaining their university positions—although one article states that an 80/20% split of work for one researcher with 80% work for Facebook. This arrangement appears to be similar to ordinary sponsored research relationships. Sponsored research relationships in the United States have received quite a bit of attention from academics. Notably, the American Association of University Professors (AAUP) has released a relatively detailed document outlining best practices for industry/university sponsored research relationships—over 50 best practices principles. Several principles include faculty engagement on issues concerning intellectual property ownership, management and transfer. Principle 14 states:
PRINCIPLE 14—IP Management and Sponsored Research Agreements: In negotiating sponsored research agreements, university administrators should make every effort to inform potentially affected faculty researchers and to involve them meaningfully in early-stage negotiations concerning invention management and intellectual property. In the case of large-scale sponsored research agreements like Strategic Corporate Alliances (SCAs), which can affect large numbers of faculty, not all of whom may be identifiable in advance, a special faculty governance committee should be convened to participate in early-stage negotiations, represent collective faculty interests, and ensure compliance with relevant university protocols. Faculty participation in all institutionally negotiated sponsored-research agreements should always be voluntary.
Principle 18 concerns upfront intellectual property licensing and states:
PRINCIPLE 18—Upfront Exclusive Licensing Rights for Research Sponsors: Universities should refrain from signing sponsored research agreements, especially multi-year strategic corporate alliance (SCA) agreements, that grant sponsors broad title or exclusive commercial rights to future sponsored research inventions and discoveries—unless such arrangements are narrowly defined and agreed to by all faculty participating in, or foreseeably affected by, the alliance. If this is not feasible, as in the case of larger SCAs, the faculty senate should review and approve the agreement and confirm its compatibility with academic freedom, faculty independence, and the university’s public interest mission. All parties should consider the impact exclusive licenses could have on future uses of technologies. When granted, exclusive rights should be defined as narrowly as possible, restricted to targeted fields of use, and designed to safeguard against abuse of the exclusive position.
In an article by Nat Levy in GeekWire, which includes responses from the Chief AI Scientist for Facebook, Yann LeCun, LeCun outlines how Facebook is careful not to divert too many resources from universities in crafting their relationship with them. Notably, on IP rights, LeCun states:
“Facebook is not interested in stopping others for using the technology we develop,” LeCun said. “In fact it has that as an advertised policy, patents that are filed by Facebook are never for stopping other people from using it, so that makes it easy to collaborate.”
Friday, 20 July 2018
The U.S. Secretary of the Department of Health and Human Services, Alex Azar, has recently directed the Food and Drug Administration (FDA) Commissioner Scott Gottlieb to establish a working group to explore importing “safe” pharmaceuticals from other countries in the case of a dramatic price hike by a pharmaceutical company. The Press Release is careful to note that this would not include pharmaceuticals covered by “patents or other exclusivities.” However, there is the recent U.S. Supreme Court case in Impression Products v. Lexmark International concerning an international exhaustion rule for U.S. patents. The Press Release states:
As part of the Trump administration’s efforts to lower drug prices and put American patients first, Health and Human Services Secretary Alex Azar requested today that FDA Commissioner Scott Gottlieb establish a working group to examine how to safely import prescription drugs from other countries in the event of a dramatic price increase for a drug produced by one manufacturer and not protected by patents or exclusivities.
“We look forward to working with Commissioner Gottlieb and the FDA to explore how importation could help address price hikes and supply disruptions that are harming American patients,” said Secretary Azar. “We have seen a number of both branded and generic examples in recent years where a single manufacturer dramatically hikes the price for a drug unprotected by patent or exclusivities. In the 2015 case of the drug Daraprim, we saw the list price of a drug approved by the FDA in 1953 increase by more than 5,000 percent.
“Safe, select avenues for importation could be one of the answers to these challenges. When HHS released the President’s Blueprint for putting American patients first, I said we are open to all potential solutions—assuming they are effective, safe for patients, and respect choice, innovation, and access.
“Importation may well fit that bill in some instances. We look forward to working with Commissioner Gottlieb on this issue, and appreciate the voluminous work FDA has done to increase competition in America’s drug markets.”
The U.S. Department of Energy (DOE) has released a new Lab Partnering Service that allows review of patents for licensing from 17 national DOE laboratories. The Lab Partnering Service website states:
The Laboratory Partnering Service ("LPS") is a suite of online applications enabling access to leading experts, projects, and patents from across the U.S. Department of Energy (DOE) and the national laboratories. It delivers a host of information to provide access to a portfolio of investment opportunities. The LPS enables rapid discovery of expertise and serves as a conduit between the investor and the innovator by providing multi-faceted search capability across numerous technology areas and across the national laboratories.
The Expert Search provides customers a direct conduit to experts from the DOE’s national laboratories. This categorized list is a selection of lab-identified leading experts across several "hot" technology areas with ability to further refine the list of the experts by sub-specialty.
The Technical Summaries provide information about the numerous technologies associated patents, patent applications, and publications from DOE’s national laboratories and other participating research institutions available for licensing.
This search tool enables a unique, visually-facilitated search of the patent content contained in the Lab Partnering Service. This patent content contains published US patent applications and issued US patents resulting from Department of Energy funded R&D.
The Visual Patent Search tool was created using two powerful technologies developed at the Pacific Northwest National Laboratory, the IN-SPIRE™ Visual Document Analysis and the Scalable Reasoning System (SRS). Using these analysis tools, a tiered patent categorization system was created from the "bottom up", enabling Lab Partnering Service to develop a unique way of searching DOE-patents beyond a simple key word search.
The DOE also offers the Energy Innovation Portal, which concerns access to energy efficient and renewable energy DOE funded patents for licensing. [Hat Tip to Technology Transfer Central.]
Thursday, 19 July 2018
The high cost of health care in the United States is a significant issue. Some research points to two causes of the high cost in the United States: 1) high pharmaceutical cost; and 2) high wages for health care workers.
Notably, two pharmaceutical companies, Novartis and Pfizer, recently announced that they would not implement pharmaceutical price increases on certain drugs. This is apparently from pressure from the Trump Administration.
The Commissioner of Trump's Food and Drug Administration, Scott Gottlieb, MD, recently released comments concerning pricing reform for a Brookings Institution discussion on pharmaceuticals. His comments define the problem with rising drug costs by placing a focus on biologics and the very slow movement in the United States for biosimilars to reach the marketplace. His comments further explain how improving competition can lead to decreased prices and savings for the United States. He details some solutions to the problems, including increased cooperation with regulators outside the United States to speed up biosimilar approval. He further points to how intellectual property tactics taken by biologic owners are slowing down the process for biosimilars to reach consumers and how the FDA plans to work with the Federal Trade Commission to address these tactics. Here is an excerpt of his comments:
While less than 2 percent of Americans use biologics, they represent 40 percent of total spending on prescription drugs.
So, enabling a path to competition for biologics from biosimilars is a key to reducing costs and to facilitating more innovation.
By enabling a path for competition from biosimilars, we also give innovators an added incentive to invest in further research that’ll lead to the discovery of even better drugs that deliver additional benefits for patients.
At the FDA, we’re focused on advancing policies that make the process for developing biosimilars more efficient.
To achieve these goals, I’m pleased to announce today that we’re releasing our Biosimilars Action Plan. This plan is an important piece of the Administration’s bold Blueprint to Lower Drug Prices and demonstrates the progress being made against the deliverables the President laid out.
Our plan is aimed at promoting competition and affordability across the market for biologics and biosimilar products. Before I focus on some of the details, I’d like to talk about some of the broader goals we’re focused on.
. . .
Biologics represent 70 percent of the growth in drug spending from 2010 to 2015. And they’re forecasted to be the fastest growing segment of drug spending in the coming years.
To make sure that the next generation of breakthroughs remains affordable, it requires vibrant competition from biosimilars. But it also means that we must consider new payment approaches. Models that allow us to take advantage of the competition that biosimilars offer.
Our current payment system, which reimburses drugs based on their average sales price, was designed in a single-source world. It was a market of biologics where there was typically only one drug in a category. And there wasn’t a lot of therapeutic variety or competition.
At the time, there was only one EGFR inhibitor on the market, and just one VEG-F inhibitor. I was there when this system was designed and implemented. And I can tell you many of us didn’t envision a world where there’d be so much competition in these therapeutic categories.
So a system was designed that accepted the fact that government programs, like Medicare, would be price takers.
We didn’t have the advantage of drug competition to enable the development of formularies, bidding and market-based negotiations like we have under Part D prescription drug plans.
So the system we designed—using the average sales price as a benchmark for reimbursement—was designed to help make sure that drug makers wouldn’t be able to take big price increases once the drugs reached the market. But it wasn’t a system designed to take advantage of price competition. Because we didn’t foresee that there would be multiple drugs in these different categories.
. . .
While the FDA has approved 11 biosimilars through 2018, only three are now marketed in the U.S.
Competition is, for the most part, anemic.
It’s anemic because consolidation across the supply chain has made it more attractive for manufacturers, Pharmacy Benefit Managers, Group Purchasing Organizations and distributors to split monopoly profits through lucrative volume-based rebates on reference biologics—or on bundles of biologics and other products—rather than embrace biosimilar competition and lower prices.
It’s anemic because litigation has delayed market access for biosimilar products that are, or shortly will be, available in markets outside the U.S. several years before they’ll be available to patients here. These delays can come with enormous costs for patients and payors.
Let me give you one measure of those costs.
At the FDA, we did an analysis of biosimilar competition across all Organisation for Economic Co-operation and Development (OECD) markets. We looked at what would have happened if all the biosimilars that the FDA approved in the U.S. were successfully marketed here in a timely fashion.
We’ll release the full details on this analysis soon. But I want to give you a sense today of what we found.
To measure the potential impact of this biosimilar competition, we assumed that the savings achieved in the U.S., in terms of price discounts, would have been on par with the experience enjoyed in the other OECD nations.
Based on these assumptions, our analysis showed that if Americans had the opportunity to purchase successfully marketed, FDA-approved biosimilar prescription drugs, they could have saved more than $4.5 billion in 2017.
These are large savings. They’re about half of the nearly $9 billion in total savings in 2017 from all of the 2017 generic drug approvals, according to earlier FDA work.
This analysis assumes that all of the biosimilars that the FDA approved were successfully marketed.
But we know that’s not the case. We know that litigation blocked a lot of these launches. Yet our study found that entry of a single biosimilar product in non-U.S. OECD markets lowers prices relative to the reference product by 30 percent; markets with three to four biosimilar entrants have prices 35 to 43 percent lower than their reference biologics.
Our savings estimate doesn’t include additional potential savings from biosimilars approved in 2018. Estimated savings would therefore be significantly greater than $4.5 billion if these additional FDA-approved biosimilars were also marketed at or near the time of their approval.
Biologic manufacturers have a right to defend their legitimate intellectual property interests. And we want them to continue to offer the benefits of improved versions of originator biologics. These benefits might include biologics that target disease in new ways, such as delivering a toxic payload directly to cancer cells, or biologics that target multiple targets of disease at the same time.
. . .
But rebating schemes or patent thickets that are purely designed to deter the entry of approved biosimilars are spoiling this sort of competition. Long-dated contracts are another toxin. The branded drug makers thwart competition by dangling big rebates to lock up payors in multi-year contracts right on the eve of biosimilar entry.
We’re also concerned that volume-based rebates may encourage dysfunctional clinical treatment pathways. We’ve heard from multiple sources that some payors are requiring step-therapy or prior authorization on the reference biologic before patients can access a biosimilar. We see no clinical rationale for these practices, since a biosimilar must demonstrate, among other things, that it has no clinically meaningful differences from the reference product as a part of demonstrating biosimilarity.
The branded drug industry didn’t build its success by being business naïve. They are smart competitors.
But that doesn’t mean we need to embrace all of these business tactics, or agree that they’re appropriate.
Some of these tactics should be unacceptable to every member of the drug supply chain.
Biosimilars may be relatively new, but manufacturers’ tactics to delay and frustrate Congress’ legislative intent to promote competition in drug pricing date back decades.
These tactics were first honed in battles between branded companies and manufacturers of small molecule generics after the passage of the Hatch Waxman Act in 1984.
And these battles played out for a time. But ultimately competition prevailed, and so did the benefits of generics.
In 1983, generic drugs accounted for only 13 percent of U.S. prescriptions. Today, in 2018, it’s 90 percent. And generics can cost 75 to 90 percent less than their branded competitors.
Robust competition has led to generic drug prices that are often less expensive here in the U.S. than in other developed markets in Europe and Asia. The Association for Accessible Medicines, a trade group that represents generic drug makers, estimates that generic medicines have saved the U.S. well over $1 trillion over the last decade.
The generics market that we see today, while not perfect, is robust in most respects. But it took about two decades to develop. It took a long time for providers to grow comfortable prescribing generics and patients to be confident in taking them. It took a long time to work through legal tactics that were put in the way of competition. It took a long time for the coverage systems to be changed to take brisk advantage of generic entry.
Sometimes it feels as if we’re seeing the biosimilars version of “Groundhog Day,” with brand drug makers replaying many of the same tactics, and all of us being too susceptible to many of the same misconceptions about biosimilars’ safety and efficacy relative to originator biologics.
We’re falling into some of the same doubts and policy constraints that were used to deter competition from generics in the years after the Hatch Waxman Act.
But we’re not going to play regulatory whack-a-mole with companies trying to unfairly delay or derail the entry of biosimilar competitors. We’re not going to wait a decade or more for robust biosimilar competition to emerge.
Expanding access to affordable biosimilars, and slowing the rise of health care inflation, is an even more critical issue today than it was in 1984. The higher costs, and longer timelines, required to develop biosimilars relative to generics means that these delaying tactics can make it uneconomical for biosimilar sponsors to postpone entry for extended periods of time. I’m worried that the biosimilar manufacturers may pull out of these endeavors altogether if the brand drug makers are able to lock up markets even in cases where there’s a fully interchangeable competitor.
Ultimately, this behavior is also putting innovative drug development at risk by eroding public confidence in market-based pricing mechanisms. Too many people now are shooting at the branded drug makers. And the shrapnel isn’t just going to tear apart the gaming tactics that we might agree are gratuitous and ill conceived.
I’m worried that the shrapnel could also fray the fragile market-based rewards that support new innovation.
Our Biosimilars Action Plan applies many of the lessons learned from our experience with generic drugs to accelerate biosimilar competition with four key strategies.
First, improving the efficiency of the biosimilar and interchangeable product development and approval process.
Second, maximizing scientific and regulatory clarity for the biosimilar product development community.
Third, developing effective communications to improve understanding of biosimilars among patients, providers and payors.
And fourth, supporting market competition by reducing gaming of FDA requirements or other attempts to unfairly delay market competition to follow-on products.
I don’t want to get into the details of the entire plan in my remarks today. We’ve issued a plan that lays out all of the discrete elements of our approach.
But I want to highlight a few key actions that we’re taking.
I believe some of these actions can be transformative for sponsors’ ability to bring high quality biosimilars to market.
As part of this effort, the FDA is seeking to strengthen its partnerships with regulatory authorities in Europe, Japan and Canada. Such partnerships can enable greater efficiency in developing safe and effective biosimilars.
For example, we’re actively exploring whether data sharing agreements could give us better insights into biosimilars’ real-world safety and efficacy and, in some circumstances, facilitate the increased use of non-U.S.-licensed comparator products in certain studies to support an application under Section 351(k).
We know that when those developing biosimilars use biologics sourced ex-U.S. as their comparator product, it can lower the cost of clinical studies since many of these products can be procured more easily, and cheaply, in European and Asian markets.
We’ll also be updating the Purple Book and evaluate how we can incorporate additional information into that resource to give product developers more transparency.
And we’re also taking new steps to make the biosimilar development process more efficient.
. . .
Today, the FDA issued its final guidance on biosimilar labeling. The FDA wants to make sure that biosimilar products have labeling that allows health care practitioners to make informed prescribing decisions for their patients. Our guidance gives recommendations to applicants on how to prepare this labeling for review by the FDA.
We’re also going to be updating guidance to provide additional clarity on how biosimilar manufacturers can carve out indications from their labels where a branded drug maker might still maintain some IP. And we’re going to describe how these indications can be efficiently added into a biosimilar label once that IP on the branded alternative has lapsed.
We are also currently developing and implementing new FDA review tools, such as standardized review templates, that are tailored to applications for biosimilar and interchangeable products. We’ve already adopted similar approaches when it comes to generic drugs. These templates will improve the efficiency of the FDA’s review.
We’re also developing an index of biosimilars’ critical quality attributes relative to their reference products.
Such an index can allow sponsors to better understand how the FDA evaluates data from comparative analytical studies performed to support a demonstration of biosimilarity, and how to use suitable analytical methods.
And we’re going to be taking new steps to challenge some of the gaming tactics I talked about earlier. This includes new efforts to coordinate with the Federal Trade Commission (FTC) to address anti-competitive behavior.
A video of the Brookings Institution talk along with panelist responses can be found, here.