Diversity in Startups and Inventing Patented Developments

The Creator Fund has released a report titled, “State of Student Startups,” concerning university student involvement at around 545 startups in the UK.  Notably, the report states that Covid-19 has not slowed down student engagement in startups.  Moreover, some interesting statistics are that around 57% of students involved in university startups are foreign born, and pretty close to half of students involved in university startups are BAME (Black, Asian, Minority Ethnic) and are women.  Over 60% of the startups at Oxford and Cambridge “have at least one BAME founder.”  These data are very heartening given some of the other statistics about the lack of some racial and ethnic minorities and female involvement in inventing.  Indeed, in the United States, the United States Patent and Trademark Office relatively recently released a report stating that women are still not represented similarly to their percentage of the overall population in inventing demonstrated by patents (around 20%); although, the percentage of women participating as inventors is increasing.  Here are the USPTO’s report’s major findings:

• More women are entering and staying active in the patent system than ever before.
• The number of patents with at least one woman inventor increased from 20.7% in 2016 to 21.9% by the end of 2019.
• The “Women Inventor Rate” (WIR) – the share of U.S. inventors receiving patents who are women – increased from 12.1% in 2016 to 12.8% in 2019.
• The share of women among new inventors on issued patents increased from 16.6% in 2016 to 17.3% by 2019.
• The gender gap in the number of women inventors who remain active by patenting again within five years is decreasing. For new inventors in 2014, 46% of women patented again in the next five years versus 52% of men (by 2019). In 1980, the gap was 28% for women versus 38% for men. 
• Among the leading patent filers, the 3M Company showed the largest improvement in the participation of women inventor-patentees: Their average WIR increased from 15.2% over 2007-2016 to 16.6% for 2007-2019. 

President Trump's Executive Orders to Address Drug Pricing

In July, President Trump issued three Executive Orders designed to decrease the cost of prescription drugs.  The executive orders are part of a fulfillment of his campaign promise to address the high cost of healthcare and specifically the high cost of pharmaceuticals.  The first is directed at importation of safe drugs from other countries.  The second is directed to reducing the price of insulin and epinephrine.  The third executive order concern rebates and middleman, such as pharmacy benefit managers.  The third order states in relevant part:

By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:

Section 1.  Purpose.  One of the reasons pharmaceutical drug prices in the United States are so high is because of the complex mix of payers and negotiators that often separates the consumer from the manufacturer in the drug-purchasing process.  The result is that the prices patients see at the point-of-sale do not reflect the prices that the patient’s insurance companies, and middlemen hired by the insurance companies, actually pay for drugs.  Instead, these middlemen — health plan sponsors and pharmacy benefit managers (PBMs) — negotiate significant discounts off of the list prices, sometimes up to 50 percent of the cost of the drug.  Medicare patients, whose cost sharing is typically based on list prices, pay more than they should for drugs while the middlemen collect large “rebate” checks.  These rebates are the functional equivalent of kickbacks, and erode savings that could otherwise go to the Medicare patients taking those drugs.  Yet currently, Federal regulations create a safe harbor for such discounts and preclude treating them as kickbacks under the law.

Fixing this problem could save Medicare patients billions of dollars.  The Office of the Inspector General at the Department of Health and Human Services has found that patients in the catastrophic phase of the Medicare Part D program saw their out-of-pocket costs for high-price drugs increase by 47 percent from 2010 to 2015, from $175 per month to $257 per month.  Narrowing the safe harbor for these discounts under the anti-kickback statute will allow tens of billions in dollars of rebates on prescription drugs in the Medicare Part D program to go directly to patients, saving many patients hundreds or thousands of dollars per year at the pharmacy counter.

Sec. 2.  Policy.  It is the policy of the United States that discounts offered on prescription drugs should be passed on to patients.

Sec. 3.  Directing Drug Rebates to Patients Instead of Middlemen.  The Secretary of Health and Human Services shall complete the rulemaking process he commenced seeking to:

(a)  exclude from safe harbor protections under the anti-kickback statute, section 1128B(b) of the Social Security Act, 42 U.S.C. 1320a–7b, certain retrospective reductions in price that are not applied at the point-of-sale or other remuneration that drug manufacturers provide to health plan sponsors, pharmacies, or PBMs in operating the Medicare Part D program; and

(b)  establish new safe harbors that would permit health plan sponsors, pharmacies, and PBMs to apply discounts at the patient’s point-of-sale in order to lower the patient’s out-of-pocket costs, and that would permit the use of certain bona fide PBM service fees.

Sec. 4.  Protecting Low Premiums.  Prior to taking action under section 3 of this order, the Secretary of Health and Human Services shall confirm — and make public such confirmation — that the action is not projected to increase Federal spending, Medicare beneficiary premiums, or patients’ total out-of-pocket costs.

. . . DONALD J. TRUMP

THE WHITE HOUSE,
July 24, 2020.

President Trump Moves on Ensuring Essential Medicines Produced in United States

President Trump issued an Executive Order which helps ensure that essential medicines are produced in the United States, including critical inputs, among other things.  The Executive Order provides, in part: 

“Section 1.  Policy.  The United States must protect our citizens, critical infrastructure, military forces, and economy against outbreaks of emerging infectious diseases and chemical, biological, radiological, and nuclear (CBRN) threats.  To achieve this, the United States must have a strong Public Health Industrial Base with resilient domestic supply chains for Essential Medicines, Medical Countermeasures, and Critical Inputs deemed necessary for the United States.  These domestic supply chains must be capable of meeting national security requirements for responding to threats arising from CBRN threats and public health emergencies, including emerging infectious diseases such as COVID-19.  It is critical that we reduce our dependence on foreign manufacturers for Essential Medicines, Medical Countermeasures, and Critical Inputs to ensure sufficient and reliable long-term domestic production of these products, to minimize potential shortages, and to mobilize our Nation’s Public Health Industrial Base to respond to these threats.  

It is therefore the policy of the United States to:(a)  accelerate the development of cost-effective and efficient domestic production of Essential Medicines and Medical Countermeasures and have adequate redundancy built into the domestic supply chain for Essential Medicines, Medical Countermeasures, and Critical Inputs;(b)  ensure long-term demand for Essential Medicines, Medical Countermeasures, and Critical Inputs that are produced in the United States;(c)  create, maintain, and maximize domestic production capabilities for Critical Inputs, Finished Drug Products, and Finished Devices that are essential to protect public safety and human health and to provide for the national defense; and(d)  combat the trafficking of counterfeit Essential Medicines, Medical Countermeasures, and Critical Inputs over e commerce platforms and from third-party online sellers involved in the government procurement process.
I am therefore directing each executive department and agency involved in the procurement of Essential Medicines, Medical Countermeasures, and Critical Inputs (agency) to consider a variety of actions to increase their domestic procurement of Essential Medicines, Medical Countermeasures, and Critical Inputs, and to identify vulnerabilities in our Nation’s supply chains for these products.  Under this order, agencies will have the necessary flexibility to increase their domestic procurement in appropriate and responsible ways, while protecting our Nation’s service members, veterans, and their families from increases in drug prices and without interfering with our Nation’s ability to respond to the spread of COVID-19.” 

Will Trump Win the Presidential Election in November?

A common general inquiry I get from friends who are not Americans is “what is going on in the United States with respect to Trump—will he be reelected?”.  My answer is, “I don’t know.”  This may surprise some because they see Biden as the obvious winner.  Here are my imperfect and half-baked thoughts on the subject: 

1)      My guess is that we’ll get good news about a vaccine before the election.  It may even be distributed before the election to some in the United States.  My guess is that Trump’s biggest concern with mail in voting is that it’ll occur before the “best” news possible about a vaccine to COVID-19. 

2)     What about Trump’s handling of COVID-19?  This seems to look bad, but see above on point 1.  Also, Trump put the lock-down decisions in the hands of state and local government.  Could Trump have done more earlier?  Yes, I think he could of done more.  The Chinese apparently knew that masks were effective in slowing the spread.  Why didn’t we move faster on that?  But, see state and local government.  And, please don’t forget that many are suffering badly economically because of lock-downs. 

3)     What about Trump’s handling of race-related issues, including the George Floyd horror and BLM?  I think Trump’s botched this badly.  However, please remember that before the last election we had serious BLM protests.  I am concerned that Trump voters have become even more concerned about so-called “law and order issues.”  This means that turn-out amongst the concerned may be strong.  Hopefully, turn-out amongst BLM supporters will be strong.  Please remember one of President Obama’s relatively quick responses to the protests: Be sure to get out and vote in local elections. 

4)     What about the polls?  I haven’t looked closely at this, but my understanding is that the polls are not that far off from where Hilary Clinton was in the last election in battleground states—she had quite a nice lead.  I think Biden has a better lead now.  We’ll see if it holds up.  Also, please don’t forget one of the supposed reasons the last election defied the polls—people didn’t want to admit they were voting for Trump.  That effect may be even stronger now. 

5)     What about the debates?  I am quite worried about this.  I think Trump is going to blast Biden on any supposed mistakes concerning the Obama/Biden administration.  This time Biden is fully on the hook as VP: 1) Opioid Crisis; 2) Crappy Economy in Some Battleground States (goodness, AOC actually is attacking Opportunity Zones); 3) Bad Trade Deals; 4) Skyrocketing Health Care Costs; and 4) the China Relationship.  Finally, Trump doesn’t have to worry about how he looks debating a woman.  He is going to fully unload on Biden.  Biden also does not always present well in debates.  He sometimes looks befuddled.  If Trump is sharp, he may come out as the winner.  Biden needs to hammer Trump on his immigration disasters.  

6)      More stimulus is on the way.  More money directly into the pockets of Americans.  If the Senate Republicans were thinking, they’d continue the $600 unemployment benefit and push up the stimulus.  People are suffering economically.  When was the last time the economy was very good--when Trump was president.  Also, Trump just issued executive orders on pharmaceutical pricing and access--he's fulfilling campaign promises (see debates). 

7)      The most important issue concerning American politics is likely turnout.  If your people don’t turnout, then you’ve got a serious problem.  Will the lack of big-time rallies hurt Trump?  Maybe.  However, I fear the continuing protests in Portland and elsewhere are going to push some Trump protesters to vote.  What about young people?  Are they going to be pissed about Tik Tok?  Well, they need to register to vote.  Guess who won’t be on campus where a lot of voter registration efforts happen?  Young people.  What about Biden’s VP choice?  That may help with turnout for him, but may help the other side as well.  And, don’t forget, the possibility of a Supreme Court vacancy(ies) soon should be a good motivator to turnout.  That’s going to seriously be on the minds of members of both parties—it really should for Dems especially given the age and health of Dem Supreme Court Justices.  

What’s the answer?  I don’t know, but this election cycle is fascinating and the result is going to be devastating to one side.  What impact on IP and Innovation?  Whoever wins the impact will be huge--from USPTO appointments and policy to FTC/DOJ appointments and policy to court appointments to trade. 

Act Now! Listerine Royalty Share Available for Purchase!

This is absolutely fantastic!  An opportunity from Royalty Exchange to purchase at auction a share of the royalties from the famous Listerine mouthwash contract.  The Listerine case is one that is still taught in IP classes in the United States as a BEWARE case.  You only have three hours left to bid and it's over $300,000!  Details are below.

Starting Price:	$180,000
Bidding Increment:	$1,500
End Date:	Jul 14, 2020, 3:00 PM MDT
Dollar Age:	139 Years
Last 12 Months' Royalties:	$32,040
Investment Term:	Perpetual (See Note Below)
Distributors:	Johnson & Johnson
Rights Included:	Sales Royalties (See Note Below)
Interests Included:	Royalty Holder (World)
First Distribution (paid 30 days from receipt):	July 15, 2020
Distribution Frequency:	Monthly
Buyer Fees:	1% of closing price or $500 (whichever is greater)‡§

^‡ Investors placing the opening bid on any listing pay no buyer fee if they win the resulting auction, a savings of 1% off the final price (minimum $500). All Access members who already receive this discount will be rewarded with a cash rebate equal to the buyer fee.

^§ Become a Royalty Exchange All Access Investor to waive auction fees and enjoy additional exclusive benefits.

Description

Up for bid is a very unique asset with a nearly 140-year earning history, generating monthly payments for the lifetime of the brand.

It’s an opportunity to collect royalty income derived from what has been called one of the most remarkable business transactions in U.S. business history. As the winning bidder, you’ll own a royalty interest in the gross global sales of Listerine Antiseptic mouthwash. 

LISTING HIGHLIGHTS:

• 139-Year Dollar Age
• Monthly Payments
• Perpetual investment term, as long as Listerine is sold

FINANCIAL HIGHLIGHTS:

Annual earnings for this asset have remained remarkably consistent over the past 5 calendar years — averaging just over $30,000/year from 2015 to 2019. What’s more, looking at the last three years of monthly payments, there is a very low variance year to year. 

U.S. generated royalties are paid monthly, based on the prior months’ sales. Royalties from sales in all other countries are paid on a quarterly basis. 

As a result, you’ll notice a spike in payments in the first month of every quarter (January, April, July, and October) due to those quarterly foreign royalty payments.

ABOUT THE ASSET:

The history of Listerine brand royalties is one of contract law legend. 

In 1881, Dr. JJ Lawrence invented Listerine and licensed the secret formula to J.W. Lambert and Lambert Pharmaceutical Co., ultimately settling on a royalty based on the number of ounces sold, to be paid to him and his “heirs, executors, or assigns” for as long as Listerine was sold.

For the next 75 years, the Lawrence family collected these royalties, with the ownership stake splintering between various heirs, some of whom sold portions of their stake to additional owners (such as New York real estate broker John J. Reynolds, who acquired half of the share of these royalties from the Lawrence heirs in 1950). 

After Lambert Pharmaceutical merged with Warner-Hudnut in 1955, the newly merged management contested the $1.5 million a year they were paying in royalties in court… a case they famously lost in a decision that remains cited in contract law cases and classes today. 

As a result of this decision, the Listerine royalty payments will remain in force for the lifetime of the brand, paid to whoever owns a share. Today, those entities include not only the heirs of the Lawrence family, but also various pension funds, universities, hospitals, and multiple individuals. 

This is your chance to be part of this exclusive group. 

Key Drivers

Consumer Staple. The royalty interest being sold is derived from an 1881 agreement between the inventor of the Listerine formula and the original distributor of the Listerine product. The royalty agreement calls for a flat rate royalty based on the ounces of Listerine sold worldwide, for as long as Listerine is sold. 

According to Statista, Listerine is the leading mouthwash/dental rinse brand in the U.S., with 2018 sales of $354 million. That’s nearly twice that of the second-place brand.

It's important to take into consideration that this income stream will only continue to pay out for as long as the Listerine Antiseptic mouthwash is sold. 

Dollar Age. This asset has a Dollar Age of 139 years, with payments made consistently since 1881. A high Dollar Age like this suggests stability and longevity.

What’s more, this asset has already survived a landmark court case contesting this royalty payment. In 1959, a federal court ruled that Listerine’s distributor— Warner-Lambert Pharmaceutical—must continue to abide by the original 1881 royalty agreement despite the fact that Listerine’s formula had previously been made public. 

So unlike music royalties, the copyright for which lasts the lifetime of the last surviving author plus 70 years, these royalties will pay in perpetuity for as long as Listerine is sold.

Monthly Payments. These sales royalties are calculated on the gross sales of Listerine Antiseptic and paid on a monthly basis (for U.S. sales) by Johnson & Johnson. This is something noteworthy to prospective investors, as you’ll continue to collect income from this asset each month.

WHAT IS BEING SOLD?

A royalty interest in gross sales of Listerine Antiseptic. The royalty interest is derived from an 1881 agreement between the inventor of the Listerine formula and the original distributor of the Listerine product. The royalty agreement calls for a flat rate royalty on each gross of Listerine sold worldwide, for as long as Listerine is sold. The agreement has been in effect since 1881, and in 1959 its perpetual nature was upheld in U.S. federal court.

About the Royalty Distributor

Johnson & Johnson is an American multinational corporation founded in 1886 that develops medical devices, pharmaceutical, and consumer packaged goods. The corporation includes some 250 subsidiary companies with operations in 60 countries and products sold in over 175 countries. Johnson & Johnson's brands include numerous household names of medications and first aid supplies, including the Listerine brand. 

Free U.S. Judicial Panel on Halo, Alice and FRAND

Winston and Strawn are cohosting a free webinar titled, “Judicial Panel: Grappling with the Uncertainties Created by Halo, Alice and Frand” on July 28, 2020 at 3:00 pm EDT.  The description and registration information follows: 

Please join Kathi Vidal, managing partner of Winston & Strawn’s Silicon Valley office, the Federal Circuit Bar Association, and the Berkeley Center for Law and Technology in cooperation with The Sedona Conference® for a panel discussion on the hard topics confronting the patent system today.

Sign up for this event here.

Federal Circuit Appellate Judge Kathleen M. O’Malley and Federal District Court Judges Alan D. Albright (TXWD) and Cathy Ann Bencivengo (CASD) will join The Sedona Conference Patent Litigation Working Group Chairs Matt Powers and Eric Hutz for an engaging discussion on the current state of play for willfulness, patent eligibility, FRAND, and ways to manage the uncertainty of each.

Topics of discussion may include: 

• How should Halo be applied at the pleading stage, at summary judgment and at trial?  
• Is 101 the best way to weed out weak patents early, efficiently, and accurately? 
• Are U.S. courts ceding global FRAND determinations to courts of other countries?

A webinar is a complimentary interactive seminar offered by Winston & Strawn LLP over the Internet. You'll watch and listen to the presentation at your own computer.

Winston & Strawn LLP is an accredited CLE provider in California, Illinois, New York, and Texas.

New US $1 Billion Fund to Finance Development of Antibiotics

The Biotechnology Innovation Organization has issued a press release announcing the creation of essentially a US $1 billion fund to finance the development (particularly late stage) of antibiotics.  The press release states: 

Today more than 20 leading biopharmaceutical companies announced the creation of an estimated $1 billion fund to help support the pipeline for new antibiotic treatments. The AMR Action Fund was launched as the threat of antimicrobial resistance, or AMR, continues to grow and claim more lives. In response to today’s launch of the fund, BIO issued the following statements celebrating the news:

“Antimicrobial resistance is one of the largest and looming public health threats we face today,” said BIO President and CEO Dr. Michelle McMurry-Heath. “Even as the world’s scientists work tirelessly to fight COVID-19, we must not ease up on our battle against antimicrobial resistance. Just as we’ve seen our industry step up during the pandemic, I applaud these biopharmaceutical leaders and partners for committing to the development of new antibiotics. The AMR Action Fund will provide critical support for the development of new medicines, but it is up to policymakers to enact the long-term changes needed to support healthy, sustainable markets for the future development of new and effective antibiotics.”

“For years, we’ve watched antimicrobial-resistance infections rapidly rise around the world, while the market has slowly shrunk for new medicines to fight them,” said Greg Frank, Director of Infectious Disease Policy at BIO & Director of the Working to Fight AMR campaign. “Today’s new AMR Action Fund will have a tremendous impact on the development of new antimicrobials, but we still need government to implement new policies and incentives so companies can successfully develop, test, and launch new antimicrobial products.”

Biopharmaceutical companies and foundations supporting the fund are:

Almirall, Amgen, Bayer, Boehringer Ingelheim, Chugai, Daiichi Sankyo, Eisai, Eli Lilly and Company, GlaxoSmithKline, Johnson & Johnson, LEO Pharma, Lundbeck, Menarini, Merck, MSD, Novartis, Novo Nordisk, Novo Nordisk Foundation, Pfizer, Roche, Shionogi, Takeda, Teva, and UCB

For more details on the AMR Action Fund, visit www.AMRActionFund.com.

 To learn more about more BIO’s work to fight antimicrobial resistance, visit WorkingToFightAMR.org.

Third QMIPRI Webinar on IP Responses to Covid-19: Co-ordinating Access

Third QMIPRI Webinar on IP Responses to Covid-19: Co-ordinating Access

Webinar Details  Date: Tuesday 14 July 2020 Time: 12:00 - 13:15 BST The panel will examine mechanisms for co-ordinating access via international IP agreements, how international investment protection might interfere with national access measures, why it is important to adequately manage the public interest in technology transfer agreements, and how 3D printing can help fight the pandemic. Moderator: Duncan Matthews, Professor of Intellectual Property Law and Director of the Queen Mary Intellectual Property Research Institute Speakers: Roya Ghafele, Director of OxFirst Rochelle C. Dreyfuss, Pauline Newman Professor of Law, New York University School of Law and Arthur Goodhart Visiting Professorship in Legal Science (2019-20), University of Cambridge Henning Grosse Ruse-Khan, Reader in International and European Intellectual Property Law and Co-Director of Centre for Intellectual Property and Information Law, University of Cambridge Dinusha Mendis, Professor of Intellectual Property and Innovation Law and Co-Director of the Centre for Intellectual Property Policy and Management, Bournemouth University Book Here for Free: https://www.eventbrite.co.uk/e/third-qmipri-webinar-on-ip-responses-to-covid-19-tickets-111938974486

US FTC and DOJ, Antitrust Division, Release Vertical Merger Guidelines

The U.S. Federal Trade Commission and the Department of Justice, Antitrust Division, have released updated vertical merger guidelines.  The Press Release concerning the guidelines states, in relevant part: 

Vertical mergers combine two or more companies that operate at different levels in the same supply chain. A primary goal of the new Vertical Merger Guidelines is to help the agencies identify and challenge competitively harmful mergers while avoiding unnecessary interference with mergers that either are competitively beneficial or likely will have no competitive impact on the marketplace. To accomplish this, the guidelines detail the techniques and main types of evidence the agencies typically use to predict whether vertical mergers may substantially lessen competition. The Guidelines will help businesses, antitrust practitioners and other interested persons by increasing transparency into the agencies’ principal analytical techniques, practices, and enforcement policies for evaluating vertical transactions.

The new Vertical Merger Guidelines reflect the agencies’ analysis of vertical mergers. The revised guidelines:

• Explain that mergers often present both horizontal and vertical elements, and the agencies may apply both the Horizontal Merger Guidelines and the Vertical Merger Guidelines in their evaluation of a transaction, as part of a fact-specific process that involves a variety of tools to determine whether a merger may substantially lessen competition.
• Clarify that its analytical techniques, practices, and enforcement policies apply to a range of non-horizontal transactions, including strictly vertical mergers, “diagonal” mergers, and vertical issues that can arise in mergers of complement.
• Clarify that when the agencies identify a potential competitive concern in a relevant market, they will also specify one or more related products. A related product is a product or service that is supplied or controlled by the merged firm and is positioned vertically or is complementary to the products and services in the relevant market.
• Provide detailed discussions, including multiple diverse examples, of the “raising rivals’ costs” and “foreclosure” theories of harm. In recent decades, these theories of harm have been the principle theories investigated in merger reviews.
• Identify conditions under which a vertical merger would not require an extensive investigation, because the merger does not create or enhance the merged firm’s incentive or ability to harm rivals.
• Emphasize that analyzing efficiencies is an important part of reviewing vertical mergers.
• Explain in detail the analysis of the elimination of double marginalization (“EDM”), which economists emphasize is a frequent procompetitive result of vertical transactions.

The guidelines address the usage of confidential information in vertical mergers: 

b. Access to Competitively Sensitive Information

In a vertical merger, the transaction may give the combined firm access to and control of sensitive business information about its upstream or downstream rivals that was unavailable to it before the merger. For example, a downstream rival to the merged firm may have been a premerger customer of the upstream firm. Post-merger, the downstream component of the merged firm could now have access to its rival’s sensitive business information. In some circumstances, the merged firm can use access to a rival’s competitively sensitive information to moderate its competitive response to its rival’s competitive actions. For example, it may preempt or react quickly to a rival’s procompetitive business actions. Under such conditions, rivals may see less competitive value in taking procompetitive actions. Relatedly, rivals may refrain from doing business with the merged firm rather than risk that the merged firm would use their competitively sensitive business information as described above. They may become less effective competitors if they must rely on less preferred trading partners, or if they pay higher prices because they have fewer competing options.

The guidelines are available, here.