US leadership through promoting what works best for International Standards

The United States Government National Standards Strategy for Critical and Emerging Technology calls for a whole of government approach to reinvigorate its rules-based and private sector-led approach to standards development. The strategy seeks to prioritize efforts for standards development that are essential for US competitiveness and national security including communication and networking technologies, semiconductors and microelectronics, artificial intelligence and machine learning, biotechnologies, clean energy, and quantum information technologies.[1] 

The International Trade Administration (ITA), The National Institute of Standards and Technology (NIST) and The United States Patent and Trademark Office (USPTO) have asked a dozen questions in their request for public comments on the strategy. I responded with my in-depth submission which can be downloaded, here. 

In this, my focus is on technical standards providing interoperability in communications and networking technologies. These have been most significant technically, economically and in improving consumer welfare in the US and globally over several decades. Purely national or geographically limited technical standards might make sense in limited cases for reasons of national security, but there is broad consensus that standardizing globally is most effective and efficient due to economies of scale and the universal interoperability provided. Various “International Standards” have also flourished because, in accordance with World Trade Organisation (WTO) Technical Barriers to Trade (TBT) requirements, these also foster various competing business models. Some industry participants are dependent on generating licensing royalties, others move fast and succeed in downstream product markets by licensing-in standard-essential technologies and incorporating semiconductor chips and other components that already include them. Many other companies have hybrid business models that operate in both ways concurrently.[2]

My responses explain that what is good for International Standard development with Fair, Reasonable and Non-Discriminatory (FRAND) licensing of Standard-Essential Patents (SEPs) is also good for America. The US is the world leader in various advanced technologies — as a technology developer, and as an implementer. For market leaders, more can usually be gained by growing the pie than by simply taking share from others.

The US should promote predictability with legal certainty in institutions and open market processes that have proven successful in the development of International Standards by private sector companies. Intellectual property rights (IPR) policies and legal rulings in foreign jurisdictions are threatening US leadership and development of International Standards overall by eroding and potentially severely undermining the value of patented standard-essential technologies. While these actions might provide some short-term advantage to certain implementers; for example in Asia where the overwhelming majority of consumer electronics products implementing Standard Essential Patents (SEPs) are manufactured, in the medium and long term these policies and rulings impede technical and market developments across the entire ecosystem, and in turn harm consumer welfare.

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[1] United States Government National Standards Strategy for Critical and Emerging Technology, May 4, 2023.

[2] These important distinctions are explicitly recognized by competition authorities; for example, in the EU’s 2023 Horizontal Guidelines, paragraph 440.

TRIPS Waiver Agreement Released

The following appears to be the “Draft Ministerial Decision on the TRIPS Agreement.”  Will COVID-19 vaccines become more available based on the waiver?  I am sure this will be carefully tracked. 

Ministerial Conference Twelfth Session Geneva, 12-15 June 2022 Original: English

DRAFT MINISTERIAL DECISION ON THE TRIPS AGREEMENT Revision

. . . The Ministerial Conference, Having regard to paragraphs 1, 3 and 4 of Article IX of the Marrakesh Agreement Establishing the World Trade Organization. Noting the exceptional circumstances of the COVID-19 pandemic; Decides as follows:

1. Notwithstanding the provision of patent rights under its domestic legislation, an eligible Member[Footnote 1] may limit the rights provided for under Article 28.1 of the TRIPS Agreement (hereinafter "the Agreement") by authorizing the use of the subject matter of a patent [Footnote 2] required for the production and supply of COVID-19 vaccines without the consent of the right holder to the extent necessary to address the COVID-19 pandemic, in accordance with the provisions of Article 31 of the Agreement, as clarified and waived in paragraphs 2 to 6 below.

2. For greater clarity, an eligible Member may authorize the use of the subject matter of a patent under Article 31 without the right holder's consent through any instrument available in the law of the Member such as executive orders, emergency decrees, government use authorizations, and judicial or administrative orders, whether or not a Member has a compulsory license regime in place. For the purpose of this Decision, the "law of a Member" referred to in Article 31 is not limited to legislative acts such as those laying down rules on compulsory licensing, but it also includes other acts, such as executive orders, emergency decrees, and judicial or administrative orders.

3. Members agree on the following clarifications and waiver for eligible Members to authorize the use of the subject matter of a patent in accordance with paragraphs 1 and 2:

(a) An eligible Member need not require the proposed user of the subject matter of a patent to make efforts to obtain an authorization from the right holder as set out in Article 31(b).

(b) An eligible Member may waive the requirement of Article 31(f) that authorized use under Article 31 be predominantly to supply its domestic market and may allow any proportion of the products manufactured under the authorization in accordance with this Decision to be exported to eligible Members, including through international or regional joint initiatives that aim to ensure the equitable access of eligible Members to the COVID-19 vaccine covered by the authorization.

(c) Eligible Members shall undertake all reasonable efforts to prevent the re-exportation of the products manufactured under the authorization in accordance with this Decision that have been imported into their territories under this Decision. [Footnote 3] Members shall ensure the availability of effective legal means to prevent the importation into, and sale in, their territories of products manufactured under the authorization in accordance with this Decision, and diverted to their markets inconsistently with its provisions, using the means already required to be available under the TRIPS Agreement.

(d) Determination of adequate remuneration under Article 31(h) may take account of the humanitarian and not-for-profit purpose of specific vaccine distribution programs aimed at providing equitable access to COVID-19 vaccines in order to support manufacturers in eligible Members to produce and supply these vaccines at affordable prices for eligible Members. In setting the adequate remuneration in these cases, eligible Members may take into consideration existing good practices in instances of national emergencies, pandemics, or similar circumstances. [Footnote 4]

4. Recognizing the importance of the timely availability of and access to COVID-19 vaccines, it is understood that Article 39.3 of the Agreement does not prevent an eligible Member from enabling the rapid approval for use of a COVID-19 vaccine produced under this Decision.

5. For purposes of transparency, as soon as possible after the adoption of the measure, an eligible Member shall communicate to the Council for TRIPS any measure related to the implementation of this Decision, including the granting of an authorization. [Footnote 5]

6. An eligible Member may apply the provisions of this Decision until 5 years from the date of this Decision. The General Council may extend such a period taking into consideration the exceptional circumstances of the COVID-19 pandemic. The General Council will review annually the operation of this Decision.

7. Members shall not challenge any measures taken in conformity with this Decision under subparagraphs 1(b) and 1(c) of Article XXIII of the GATT 1994.

8. No later than six months from the date of this Decision, Members will decide on its extension to cover the production and supply of COVID-19 diagnostics and therapeutics.

9. This Decision is without prejudice to the flexibilities that Members have under the TRIPS Agreement, including flexibilities affirmed in the Doha Declaration on the TRIPS Agreement and Public Health, and without prejudice to their rights and obligations under the TRIPS Agreement, except as otherwise provided for in paragraph 3(b). For greater certainty, this Decision is without prejudice to the interpretation of the above-mentioned flexibilities, rights and obligations outside the scope of this Decision.

Footnote 1: For the purpose of this Decision, all developing country Members are eligible Members. Developing country Members with existing capacity to manufacture COVID-19 vaccines are encouraged to make a binding commitment not to avail themselves of this Decision. Such binding commitments include statements made by eligible Members to the General Council, such as those made at the General Council meeting on 10 May 2022, and will be recorded by the Council for TRIPS and will be compiled and published publicly on the WTO website.

Footnote 2: For the purpose of this Decision, it is understood that 'subject matter of a patent' includes ingredients and processes necessary for the manufacture of the COVID-19 vaccine.

Footnote 3: In exceptional circumstances, an eligible Member may re-export COVID-19 vaccines to another eligible Member for humanitarian and not-for-profit purposes, as long as the eligible Member communicates in accordance with paragraph 5.

Footnote 4: This includes the remuneration aspects of the WHO-WIPO-WTO Study on Promoting Access to Medical Technologies and Innovation (2020), and the Remuneration Guidelines for Non-Voluntary Use of a Patent on Medical Technologies published by the WHO (WHO/TCM/2005.1).

Footnote 5: The information provided shall include the name and address of the authorized entity, the product(s) for which the authorization has been granted and the duration of the authorization. The quantity(ies) for which the authorization has been granted and the country(ies) to which the product(s) is(are) to be supplied shall be notified as soon as possible after the information is available

[Hat tip to Professor Justin Hughes]

TRIPS Waiver Compromise on COVID-19 Vaccines and Treatments Announcement Coming Soon?

The AIPLA and other IP organizations have issued a joint statement on a tentative TRIPS waiver compromise. On March 15, 2022, Adam Hodge, USTR spokesperson stated, in part:

Since last May, USTR has worked hard to facilitate an outcome on intellectual property that can achieve consensus across the 164 Members of the World Trade Organization to help end the pandemic. USTR joined informal discussions led by the WTO Secretariat with South Africa, India, and the European Union (EU) to try to break the deadlock.

The difficult and protracted process has resulted in a compromise outcome that offers the most promising path toward achieving a concrete and meaningful outcome. While no agreement on text has been reached and we are in the process of consulting on the outcome, the U.S. will continue to engage with WTO Members as part of the Biden-Harris Administration’s comprehensive effort to get as many safe and effective vaccines to as many people as fast as possible.

I wonder how Russia's invasion of Ukraine impacted the consensus building.  The Joint Statement provides:

JOINT STATEMENT ON TENTATIVE TRIPS WAIVER COMPROMISE

Written March 28, 2022

On March 24, AIPLA, along with the Intellectual Property Owners Association (IPO), Licensing Executives Society International (LESI), Licensing Executives Society USA & Canada, and the New York Intellectual Property Law Association (NYIPLA) issued a joint statement on the tentative TRIPs Waiver Compromise.  Our organizations are concerned by reports that the European Union, India, South Africa, and the United States have reached a tentative compromise on a proposed TRIPS waiver of intellectual property (IP) rights. We strongly support equitable, widespread and successful distribution of vaccines necessary to meet the challenges of COVID-19. However, the proposal currently being reported incorrectly portrays IP as a barrier to production and supply of COVID-19 vaccines. Our organizations know of no evidence to support that IP is such a barrier. In fact, the World Health Organization has stated: “[w]ith global vaccine production now at nearly 1.5 billion doses per month, there is enough supply to achieve our targets, provided they are distributed equitably. This is not a supply problem; it’s an allocation problem.”1 Solving the allocation problem is best accomplished by focusing on improvements to supply chain and distribution issues, rather than by concentrating on the red herring of intellectual property as an alleged barrier. Intellectual property has been critical to the development of technology that has enabled a global COVID-19 response and it continues to fuel efforts to more effectively distribute vaccines and advance other needed technology. We should not undermine our ability to respond to this and future pandemics.

Footnote 1:  See https://www.who.int/campaigns/vaccine-equity (accessed on 18 March 2022).

Biden Administration's Support of the So-Called WTO Waiver of COVID-19 Related IP

There’s been a lot of commentary going around regarding the Biden Administration’s support of South Africa and India’s proposed WTO waiver of COVID-19 related IP.  I thought I’d weigh in with maybe a bit of a slightly different angle [These are my personal views and certainly do not represent other folks on the blog.].  The Biden Administration’s support of the waiver is, mostly, about politics.  Many have written about how a WTO waiver of COVID-19 related IP under TRIPS, for a myriad of reasons, will not result in getting the vaccine or treatments to people in India or other countries who may need it.  For example, please see Professor Ana Rutschman’s excellent co-authored post, here, and Professor Jorge Contreras’ excellent post, here.  I don’t 100% agree with that general position because I frankly do not have enough information about the global patent landscape, particularly with respect to devices used to treat people with COVID-19, or global manufacturing and distribution capabilities.  I am also uncertain because some say it will help.  However, if I am in a position where I am unsure of a decision and millions of human lives are in the balance in a global pandemic, I am going to err on the side of saving human lives.  I think most Americans would agree with me.  I could be wrong. 

From a practical perspective, the patent waiver is, in my mind, political for at least two reasons.  First, the United States' standing in the world has sunk because of Donald Trump’s presidency.  In my humble opinion, he amplified some important issues, but took us down a path of challenging and alienating our allies.  Attempting to make COVID-19 treatments and vaccines available to people around the world is a great way for the United States to exercise so-called “vaccine diplomacy.”  And, let’s face it: the United States needs India on our side.  Biden is trying hard to prove that “America is back.”  That we don’t just give a crap about ourselves, but want to be there to support the rest of the world.

Second, I am doubtful the waiver will ever be adopted or fully implemented.  Why?  The United States' support for the waiver, in my mind, is about creating negotiation leverage.  The pharmaceutical industry will fight tooth and nail for every step protecting their business model, and one effective way to increase access is to create bargaining leverage through policy levers.  The United States has been dealing with a drug pricing crisis before COVID-19, and it hasn’t gone away.  Yes, I am very grateful to the pharmaceutical industry for the COVID-19 vaccines, but as others have pointed out, they have been well-compensated by the U.S. government and others who can pay.  The end result from all of this should be increased cooperation to manufacture and distribute vaccines and treatments, and the setting of a reasonable price for the vaccines and treatments.  Can you guess who is still going to make a lot (MORE) money?  Finally, do I think this is going to result in a world where people will no longer see human health innovation as something to be invested in without the potential of sufficient profits?  A world where patent protection will be waived all the time?  C’mon.  I seriously doubt it.

So, to sum up: Let’s save as many lives as we can and get the world economy back on its feet; Let’s continue to be a strong influence and partner supporting democracy and freedom throughout the world; and Let’s reach a compromise fast--protecting everyone's interests to the best extent possible--on how to move forward expeditiously to save lives.  

Free Colloquium -- "Technological Progress, COVID-19 and the Future of Globalization"

VIT University Law School in Chennai, India is hosting a Zoom colloquium titled, “Technological Progress, COVID-19 and the Future of Globalization” on June 22 at 6:30 pm Indian Standard Time (6:00 am PST (California); 3:00 pm GMT+2 (Belgium) 9:00 pm GMT+8 (China)). The colloquium participants will offer their preliminary thoughts concerning issues ranging from intellectual property access to vaccine development and manufacturing to investment and the World Trade Organization.  Given the nature of the colloquium, we will not cover all potential issues.  However, a follow-up conference exploring these and additional issues in depth is tentatively scheduled for the Winter of 2020 or Spring of 2021 in Chennai. 

The participants in the Zoom colloquium include: Dean Gandhi Manimuthu (VIT Law); Mark Lemley (Stanford Law); Jim Chen (Michigan State Law); Martin Husovec (Tilburg University); Kirsten Schmalenbach (Univ. of Salzburg Law); Stephan Kirste (Univ. of Salzburg Law); Henrik Andersen (CBS Law); Liu Lina (Xi’an Jiaotong University); Prabash Ranjan (South Asian University); James Nedumpara (Indian Institute of Foreign Trade); Ana Rutchsman (St. Louis Law); Patrick Warto (Univ. of Salzburg Law); and Mike Mireles (Univ. of the Pacific, McGeorge Law).   If you are interested in participating via Zoom, please contact Mike Mireles at msmireles@gmail.com.  There are limited spots available.  Thank you!

President Trump's 2017 Trade Policy Agenda Released

The United States Trade Representative has released the President’s 2017 Trade Policy Agenda document (Agenda) on March 1, 2017.  The Agenda sets forth its purpose as well as its top priorities.  Interestingly, the purpose points to the voters as the impetus for the focus of the Agenda:

In 2016, voters in both major parties [?] called for a fundamental change in direction of U.S. trade policy.  The American people grew frustrated with our prior trade policy not because they have ceased to believe in free trade and open markets, but because they did not all see clear benefits from international trade agreements.  President Trump has called for a new approach, and the Trump Administration will deliver on that promise.

The overarching purpose of our trade policy – the guiding principle behind all of our actions in this key area – will be to expand trade in a way that is freer and fairer for all Americans.  Every action we take with respect to trade will be designed to increase our economic growth, promote job creation in the United States, promote reciprocity with our trading partners, strengthen our manufacturing base and our ability to defend ourselves, and expand our agricultural and services industry exports.  As a general matter, we believe that these goals can be best accomplished by focusing on bilateral negotiations rather than multilateral negotiations – and by renegotiating and revising trade agreements when our goals are not being met.  Finally, we reject the notion that the United States should, for putative geopolitical advantage, turn a blind eye to unfair trade practices that disadvantage American workers, farmers, ranchers, and businesses in global markets.   [emphasis added]

One of the specific key objectives noted by the Agenda includes “Ensuring that U.S. owners of intellectual property (IP) have a full and fair opportunity to use and profit from their IP.”  The Agenda further lays out its top priorities as: “(1) defend U.S. national sovereignty over trade policy; (2) strictly enforce U.S. trade laws; (3) use all possible sources of leverage to encourage other countries to open their markets to U.S. exports of goods and services, and provide adequate and effective protection and enforcement of U.S. intellectual property rights; and (4) negotiate new and better trade deals with countries in key markets around the world.” [emphasis added].

In discussing the first priority and the WTO Dispute Settlement Understanding, the Agenda states: “[E]ven if a WTO dispute settlement panel – or the WTO Appellate Body – rules against the United States, such a ruling does not automatically lead to a change in U.S. law or practice.   Consistent with these important protections and applicable U.S. law, the Trump Administration will aggressively defend American sovereignty over matters of trade policy.”  On strictly enforcing U.S. trade laws, the Agenda states: “We strongly support true market based competition – and we welcome the partnership of any country that agrees with us.  Unfortunately, however, large portions of the global economy do not reflect market forces.  Important sectors of the global economy, and significant markets around the world, have been at times distorted by foreign government subsidies, theft of intellectual property, currency manipulation, unfair competitive behavior by state-owned enterprises, violations of labor laws, use of forced labor, and numerous other unfair practices.”

On using leverage to open markets, the Agenda asserts that: “Other countries have looked to harm U.S. companies by blocking or unreasonably restricting the flow of digital data and services, or through theft of trade secrets.  In still others, foreign countries can use technical barriers – such as unnecessary regulations on particular items – to limit competition, including in the services sector.  Concerns have also been raised over currency practices and their impact on the competitiveness of U.S. goods and services.  These are only a few examples of the tactics that can be used to block or impede the competitiveness of U.S. exporters.”  The Agenda notes that transparency in implementing regulations of WTO rules and trade agreements would be helpful. 

On the section on negotiating new and better trade deals, the Agenda notes the following issues:  

1. In 2000, the U.S. trade deficit in manufactured goods was $317 billion.  Last year, it was $648 billion – an increase of 100 percent.

2. Our trade deficit in goods and services with China soared from $81.9 billion in 2000 to almost $334 billion in 2015 (the last year for which such data are available), an increase of more than 300 percent.

3. Of course, a rising trade deficit may be consistent with a stronger economy.  However, that has not been the experience of the typical American household.  In 2000, U.S. real median household income (in 2015 dollars) was $57,790.  In 2015 (the most recent year for which data are available), it was $56,516.  In fact, despite the recovery since the financial crisis, real median household income in the United States remains lower today than it was 16 years ago.

4. In January 2000, there were 17,284,000 manufacturing jobs in the United States – a figure roughly in line with the total number of U.S. manufacturing jobs going back to the early 1980s.   In January 2017, there were only 12,341,000 manufacturing jobs in the United States – a loss of almost 5 million jobs.

5. In the 16 years before China joined the WTO – from 1984 to 2000 – U.S. industrial production grew by almost 71 percent.  In the period from 2000 to 2016, U.S. industrial production grew by less than 9 percent.

The Agenda also notes that the most important trade deal under the Obama Administration—with South Korea—resulted in a massive trade deficit.  It will be interesting to see how intellectual property policy works out in coming negotiations.  

Dogs and Cats Living Together? The New WIPO, WTO and WHO Book.

On February 5, 2013, WIPO, the WTO, and the World Health Organization issued a jointly authored book titled, “Promoting Access to Medical Technologies and Innovation – Intersections between public health, intellectual property and trade.”  The 253 page book is an ambitious one—tackling the intersection of innovation and access.  The press release states:

Today’s health policy‑makers need a clear understanding both of the innovation processes that lead to new technologies and of the ways in which these technologies are disseminated in health systems. This study captures a broad range of experience and data in dealing with the interplay between intellectual property, trade rules and the dynamics of access to, and innovation in, medical technologies.

The study is intended to inform ongoing technical cooperation activities undertaken by the three organizations and to support policy discussions. Based on many years of field experience in technical cooperation, the study has been prepared to serve the needs of policy‑makers who seek a comprehensive presentation of the full range of issues, as well as lawmakers, government officials, delegates to international organizations, non‑governmental organizations and researchers.

The book has four parts: 1) Medical Technologies: The Fundamentals; 2) The Policy Context for Action for Innovation and Access; 3) Medical Technologies: The Innovation Dimension; and 4) Medical Technologies: The Access Dimension.  The study is very complete and attempts to tie together a lot of different concepts, and generally does so well (although I know I need to spend more time with it).  Some interesting items in the report include: a statement that a goal of the report is to find some “policy coherence” between the three organizations and that the report was made in a spirit of cooperation began by the Doha Declaration, the WIPO Development Agenda, and the WHO Global Strategy and Plan of Action for Global Health; a specific section on traditional medicine and knowledge; a statement that “[t]he overarching condition for providing access to needed medical technologies and health services is a functioning national healthcare system”; a dizzying chart concerning Tanzania’s medical supply systems; placing the human right to health within the intellectual property law context; and a helpful table breaking down pharmaceutical related provisions in FTAs.

On the Bayh-Dole Act and similar policies, the report states:

Such policies, and a general trend towards more active management of technologies created through publicly funded research, are leading to the steady accumulation of publicly held patent portfolios, including on key upstream technologies that provide platforms for a range of new medical technologies.

This report appears to be a great step toward harmonizing a lot of concepts in public health and intellectual property.  There is no question that trying to find solutions to the problems outlined in the report requires expertise in a lot of different areas and much collaboration.