American Intellectual Property Law Association Releases IP Wishes Letter to Incoming Trump Administration

The AIPLA has released a letter to the Trump Administration that highlights concerns with the IP system in the United States.  The letter addresses patent eligibility, patent quality, AI and IP, digital piracy and counterfeiting, trade secrecy and international IP harmonization.  The letter is available, here. 

American Antitrust Institute Adds Voice to Criticism of Lax Competition Law Enforcement in the United States

The American Antitrust Institute has released a report titled, “The State of Antitrust Enforcement and Competition in the United States” (Report).  The Report takes the Trump Administration as well as prior administrations to task for a relatively low level of merger and acquisition scrutiny.  The Report also points out that numerous current policy proposals are essentially underdeveloped.  The following is a list of the major conclusions of the Report: 

•  DECLINING COMPETITION PRESENTS A POLITICAL-ECONOMIC DILEMMA IN THE U.S.: The cumulative effects of decades of lax antitrust enforcement, coupled with a step-down in enforcement under the Trump administration, poses fundamental challenges for markets and the democratic values that undergird them. Long-term inaction has compromised the effectiveness of the U.S. antitrust laws, presenting a significant political-economic dilemma around the role of antitrust in solving the broader public policy problem of declining competition.

•  ANTITRUST ENFORCEMENT HAS DECLINED UNDER THE TRUMP ADMINISTRATION: Key metrics indicate a decline in cartel enforcement under the Trump administration, as well as a falloff in second requests and merger challenges. And despite a few high-profile cases, there is no meaningful invigoration of monopolization enforcement. Recent agency actions to block some mergers involving highly concentrated markets reflect “emergency” merger control of the most egregiously anticompetitive transactions.

•  POLICY PRIORITIES AT THE ANTITRUST AGENCIES ARE MARKEDLY DIFFERENT: The Trump DOJ has introduced major changes in government policy surrounding cartel and merger enforcement, the intersection of competition and intellectual property, and competition advocacy. Many of these policies could work against the interests of competition and consumers. The FTC has taken a more pro-active approach, with continued efforts to challenge the expansion of intellectual property to achieve anticompetitive objectives in pharmaceutical markets.

•  SHIFTS IN AGENCY ADVOCACY REFLECT MORE FEDERAL INTERVENTION BY DOJ IN PRIVATE ANTITRUST CASES: The important role of antitrust agency advocacy has shifted markedly under the Trump agencies. The FTC’s competition advocacy, embodied in comments before federal and state agencies and amicus briefs, has fallen off dramatically. In contrast, the DOJ’s competition advocacy has increased but often stakes out positions that work against the interests of competition and consumers.

•  PRIVATE ENFORCERS CAN TAKE UP SOME OF THE SLACK IN FEDERAL UNDER-ENFORCEMENT AND SPUR POLICY CHANGE, BUT THEY FACE SIGNIFICANT CHALLENGES: Key private antitrust cases have had positive impacts by obtaining compensation for victims, deterring future violations, and spurring public debate and state legislative reform. There are also opportunities for private challenges of consummated mergers that have harmed consumers and workers. But challenges remain, with tightening judicial standards for showing collusion and other impediments that make it more difficult to bring, litigate, and win cases.

•  STATE ATTORNEYS GENERAL ARE BECOMING MORE ACTIVE BUT LIMITATIONS PERSIST THAT WILL DEFINE HOW MUCH THE STATES CAN DO IN RESPONSE TO FEDERAL INACTION: State Attorneys General are stepping up efforts in response to weak federal enforcement. These include independent lawsuits to block illegal mergers and confront price fixing, a proactive stance on strengthening federal merger settlements, and investigations into the competitive practices of large digital technology companies. Resource limitations and a change in the tenor of coordination between the DOJ and the states, however, pose challenges.

•  LEGISLATIVE ANTITRUST REFORM IS NEEDED BUT PROPOSALS THUS FAR LACK A COMPREHENSIVE AND COORDINATED APPROACH: Legislative efforts to reform the antitrust laws have accelerated in the 116th Congress and are at levels not seen since the early 1990s. These include comprehensive reform proposals and narrower initiatives targeting specific antitrust issues and particularly vulnerable sectors. Legislative reform is needed to strengthen and clarify the antitrust laws, but these efforts require a coordinated response to ensure that they promote enforcement, not inadvertently weaken it or cause confusion in the courts.

• REVERSING DECLINING COMPETITION IS A PROBLEM THAT WILL REQUIRE A PUBLIC POLICY SOLUTION: Change in the way the U.S. promotes competition and protects the market system is badly needed. Strengthening antitrust to promote more vigorous enforcement of the antitrust laws is part of a broader solution that should be complemented through the use of other tools, including social and economic regulation, standard-setting and interoperability, labor policy, and intellectual property law.

The Report notably discusses the intersection of competition policy and intellectual property, particularly efforts concerning SEPs and pharmaceuticals.  On SEPs, the Report states, in part, that: 

Under the Trump administration, the DOJ has unilaterally reversed course on patent holdup issues. For example, in 2018, the Antitrust Division withdrew from its 2013 Joint Policy Statement with the Patent & Trademark Office on Remedies for Standard Essential Patents (SEPs). The Policy Statement had endorsed sensible limits on court-ordered injunctive relief and the International Trade Commission’s issuance of exclusion orders, which ban imports of products into the U.S. if the products infringe a U.S. patent. It cautioned against such injunctions and orders when the alleged infringer’s products are compliant with industry standards and the patent holder has voluntarily committed to an SSO to license the patent on FRAND terms.

In December 2019, the Antitrust Division issued a new Policy Statement downplaying the concerns and ignoring the public policy justifications against injunctions and exclusion orders on products alleged to infringe SEPs.62 The new Policy Statement offers no tailored rules or meaningful guidance, and it signals increased scrutiny of SSOs rather than SEP owners. The new Policy Statement warns that such heightened scrutiny could result in an investigation or enforcement action when SSO’s take certain steps to clarify their patent policies and procedures to mitigate the risks of hold-up and disputes over licensing terms, whereas the previous statement had encouraged SSOs to make appropriate clarifications to that end.

The Report is available, here. 

Is it Time to Increase Funding to Universities for Research and Development in the United States?

In a document released by the Association of American Universities (AAU), Mary Sue Coleman, president of the organization, discusses Vannevar Bush’s report, “Science, the Endless Frontier” in a short essay titled, "Celebrating the Government-University Partnership's 75th Anniversary."  Notably, in light of the report, she explains how issues with respect to climate change and Covid-19 only highlight why government should continue to invest in university research.  Unfortunately, the Trump Administration continues to push for less funding for research and development at universities in terms of real dollars.  One of the Democratic presidential candidates who consistently appeared to support university research and development was Tom Steyer.  If former Vice President Biden is elected, hopefully he will consider Tom Steyer for a position in Biden's administration.  If President Trump is reelected, I hope he reconsiders his position regarding funding university research and development.  The AAU document provides, in part: 

. . . 

Famously titled “Science, the Endless Frontier,” the influential report had been requested the previous year by then-President Franklin D. Roosevelt, whom Bush served as chief scientific adviser. As World War II increasingly appeared winnable – in no small part due to the scientific research enterprise that Bush’s office led – Roosevelt was looking to the future. He asked the MIT-trained Bush to file a report addressing four questions:

1. “What can be done, consistent with military security, and with the prior approval of the military authorities, to make known to the world as soon as possible the contributions which have been made during our war effort to scientific knowledge?”

2. “With particular reference to the war of science against disease, what can be done now to organize a program for continuing in the future the work which has been done in medicine and related sciences?”

3. “What can the Government do now and in the future to aid research activities by public and private organizations?”

4. “Can an effective program be proposed for discovering and developing scientific talent in American youth so that the continuing future of scientific research in this country may be assured on a level comparable to what has been done during the war?”

Bush took this brief set of questions and delivered an expansive report with recommendations that have informed U.S. science policy ever since. Calling basic scientific research “the pacemaker of technological progress,” Bush recommended a significant and ongoing partnership between the federal government and universities to conduct research to benefit the nation.

Bush’s report noted that government support for basic research could continue to bolster not only the nation’s security, but also its economic prosperity. “New products and new processes do not appear full-grown,” he wrote. “They are founded on new principles and new conceptions, which in turn are painstakingly developed by research in the purest realms of science!”

Bush’s recommendations led to the creation of the National Science Foundation, the National Institutes of Health and other federal agencies. These agencies conducted and funded the research that sent humans to the Moon, gave us the Internet and smartphones, ended polio and a host of other diseases, and made HIV infection manageable -- more akin to diabetes than a death sentence.

I recently participated in a National Academies of Sciences-sponsored symposium exploring the legacy of this important report and forecasting the future of the government-university partnership. As Vannevar Bush realized 75 years ago, wartime is not the only time for the government to invest in the science that makes us safer and more prosperous. Leading scientists, government officials, and academic researchers at the symposium agreed that – as emerging threats like the COVID-19 virus and the climate crisis make clear – the United States should double down on investments in the government-university research partnership. In fact, in a 2018 article I wrote for Change: The Magazine of Higher Learning, I describe in detail how we must continue pressing toward that “Endless Frontier.” Our prosperous and healthy future absolutely depends on vigorously pursuing this journey.

Bloomberg Tracking Pharmaceutical Prices

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.  

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. 

New Trump Administration U.S. FDA Working Group on Importation of Pharmaceuticals

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.”

Some Worst Case Scenarios as the Trade War with China Escalates

As the trade war and tension with China escalates, I am thinking about some worst case scenarios—particularly in the academic context concerning intellectual property/valuable information.  At least one commentator has made the allegation that the Trump Administration may attempt to restrict students from China.  This will greatly hurt some universities who are deriving a substantial amount of revenue from Chinese university students—and will benefit universities in other countries without such a restrictive policy such as Canada.   It is not too much of a jump to think the Trump Administration may also attempt to restrict Chinese professors and researchers from visiting academic institutions or being hired by academic institutions.  There have been quite a few interesting allegations raised concerning Confucius Institutes at U.S. universities.  I am wondering whether the United States and other countries will attempt to restrict the travel and employment in China of their academics who are citizens of their respective countries.  For example, let’s say a top researcher who is a U.S. citizen at Stanford University is offered a position at a major university in China or another country.  Could the U.S. government attempt to restrict the academic from moving (or even giving academic presentations)?  Does that happen already?  Certainly, we do have U.S. export control laws that would restrict certain technologies from being disclosed to a national of another country even in this country.  Perhaps a distinction will be made based on whether the research is funded by the government.  What about publication?  Will the Trump Administration also attempt to restrict academics from publishing certain research--there are some rules concerning national security and publication of patents?  Ultimately, does it matter if we do not have adequate cybersecurity protections?  

Trump Administration Moves Against Iranian Institute for Theft of University Information

US Department of Treasury and US Department of Justice charge Iranians and Iranian research institute with theft of intellectual property from universities throughout the world.  The press release from the US Department of Treasury names the Iranians.  Specifically, the press release states:

Today’s action designates one Iranian entity and 10 Iranian nationals pursuant to E.O. 13694, as amended, which targets malicious cyber activities, including those related to the significant misappropriation of funds or economic resources, trade secrets, personal identifiers, or financial information for private financial gain.

The Mabna Institute is an Iran-based company that engaged in the theft of personal identifiers and economic resources for private financial gain. The organization was founded in or about 2013 to assist Iranian universities and scientific and research organizations in obtaining access to non-Iranian scientific resources. The Mabna Institute also contracted with Iranian governmental and private entities to conduct hacking activities on its behalf.  

The Mabna Institute conducted massive, coordinated cyber intrusions into computer systems belonging to at least approximately 144 United States-based universities, in addition to at least 176 universities located in 21 foreign countries:  Australia, Canada, China, Denmark, Finland, Germany, Ireland, Israel, Italy, Japan, Malaysia, the Netherlands, Norway, Poland, Singapore, South Korea, Spain, Sweden, Switzerland, Turkey, and the United Kingdom.  The exfiltrated data and stolen login credentials acquired through these malicious cyber-enabled activities were used for the benefit of Iran’s Islamic Revolutionary Guard Corps (IRGC), and were also sold within Iran through at least two websites. The stolen login credentials belonging to university professors were used to directly access online university library systems.  

Today, OFAC is also designating nine Iran-based individuals who were leaders, contractors, associates, hackers for hire, and affiliates of the Mabna Institute for engaging in malicious cyber-enabled activities related to the significant misappropriation of economic resources or personal identifiers for private financial gain.

According to a Reuters article, this type of action was relatively rare under the Obama Administration. 

Trump Administration Suspends Program for Visas for Entrepreneurs

The Trump Administration suspended an Obama Administration program about to go in effect that would provide visas to entrepreneur immigrants.  According to the Wharton School of Business, the program would help create jobs in the United States and had little downside.  The program is apparently similar to others created in Canada, France and Argentina.  Notably, the Trump Administration is supporting new legislation to radically reform the immigration system in the United States by moving to a supposed “merit” based system designed to reduce immigration by 50%.  The Wharton School of Business states:

Immigrants make up about 12% of the U.S. working population, [Hsu] added. Among STEM (science, technology, engineering and math) workers, immigrants make up 24% of bachelors and 47% of doctorates, he continued. “So [immigrant entrepreneurs] are punching above their weight in the talent pool for the workforce that we desire in the U.S.,” he said. He pointed to one much-cited statistic: foreign-born entrepreneurs make up about half the founders in the so-called “billion dollar club” of startups that are worth at least a billion dollars each. 

In an Op-Ed in Crain’s New York Business, Orin Herskowitz, the Senior Vice President of Intellectual Property and Technology Transfer of Columbia University and President of Columbia Technology Ventures, states that:

The rule, one of President Barack Obama’s final acts in office, provides so-called “startup visas” long sought by Silicon Valley. It is narrow, allowing foreign entrepreneurs to live in the United States for 30 months while building their companies. To qualify, applicants must show that they have reputable investment in their company of no less than $250,000 and the potential for a positive impact on economic growth and job creation. The rule has now been delayed until next March, and the Department of Homeland Security has given notice that the administration will propose rescinding the program before then. . . .

There are other storm clouds on the horizon. The president’s proposed budget reduces funding for basic science. And the legal playing field is beginning to tilt against innovators, most dramatically through a retreat from the respect for patent protection recognized by our Constitution more than two centuries ago as a bulwark of our economy. The former director of the U.S. Patent and Trademark Office, David Kappos, points out that a series of court decisions have rendered many biotech and software inventions un-patentable or at best uncertain in the U.S., causing the abandonment of promising research, or the repositioning of that research overseas to China, where affirmative steps have been taken to strengthen patent protection.

[Hat tip to Technology Transfer Central for the lead to the articles.]