Welcome to The SNIP, a monthly newsletter by Urška Petrovčič, Adam Mossoff, and Devlin Hartline of Hudson Institute's Forum for Intellectual Property. The SNIP offers a brief breakdown of the latest policy issues and case developments in intellectual property. 

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THE LATEST FROM HUDSON

Hudson Senior Fellow Adam Mossoff Testifies Before Senate IP Subcommittee on Patent Eligibility Reform

On January 23, 2024, Hudson Senior Fellow Adam Mossoff testified at the Senate Judiciary Subcommittee on Intellectual Property hearing on the Patent Eligibility Restoration Act (PERA). PERA, co-sponsored by Senators Thom Tillis (R-NC) and Chris Coons (D-DE), would abrogate four decisions by the Supreme Court between 2009 and 2014 that resulted in the creation of a new legal test for assessing what inventions or discoveries may be eligible for patent protection, known as the Alice-Mayo test. In the past decade, Professor Mossoff testified on how the Alice-Mayo test has wrought legal and economic uncertainty that undermines the worldwide “gold standard” status of the U.S. patent system. This threatens the continued growth of the U.S. innovation economy and weakens its national security interests. At the latest hearing, Professor Mossoff joined former directors of the U.S. Patent and Trademark Office, Andrei Iancu and David Kappos, among others, who called for Congress to enact PERA to restore the reliable and effective patent rights once secured to innovators by the U.S. patent system.

The SNIP: Hudson’s Adam Mossoff testifies at a Senate hearing in support of patent legislation that would restore reliable and effective patent rights to innovators.

Learn More:

• WATCH: “Hearing on the Patent Eligibility Restoration Act – Restoring Clarity, Certainty, and Predictability to the U.S. Patent System,” Senate Subcommittee on Intellectual Property (January 23, 2024).

• READ: “Written Testimony of Adam Mossoff on the Patent Eligibility Restoration Act,” Adam Mossoff, Senate Subcommittee on Intellectual Property (January 23, 2024).

• READ: “Witnesses Clash Over Potential Pros and Cons of PERA in Senate IP Subcommittee Hearing,” Eileen McDermott, IPWatchdog (January 23, 2024).

• READ: “Senators Hear Praise and Worry About Patent Eligibility Bill,” Ryan Davis, Law360 (January 23, 2024).

CASE DEVELOPMENTS

The New York Times Sues OpenAI and Microsoft for Copyright Infringement

On December 27, 2023, the New York Times filed a copyright infringement lawsuit against OpenAI and Microsoft, accusing the two companies of “scraping” millions of the newspaper’s articles without authorization to create their now-famous artificial intelligence (AI) systems. The Times said that, although the parties had discussed a possible copyright license, they were unable to come to an agreement. The complaint includes multiple exhibits supporting its infringement allegations, including 100 responses by the AI systems revealing how the defendants’ AI outputs are exact reproductions of the Times’ copyrighted articles. The Times claims that this “memorization” in the training of the AI system violates its copyrights and causes harm to its subscription-based business model.

The SNIP: The New York Times sues Microsoft and OpenAI for infringing its copyrighted works to create AI products.

Learn More:

• READ: “Complaint,” The New York Times Company v. Microsoft Corporation, Case No. 23-cv-11195 (S.D.N.Y. December 27, 2023).

• READ: “Exhibit J,” The New York Times Company v. Microsoft Corporation, Case No. 23-cv-11195 (S.D.N.Y. December 27, 2023).

• READ: “OpenAI Faces Existential Threat in New York Times Copyright Suit,” Isaiah Poritz, Bloomberg Law (December 29, 2023).

Excluded Apple Watches Will Be Sold in the U.S. Following Redesign

The ongoing multi-year saga of lawsuits against Apple by Masimo for the theft of Masimo’s patented health technologies took several unexpected turns over the last month. As reported in prior SNIP emails, the International Trade Commission (ITC) found that Apple infringed Masimo’s patents and issued an exclusion order against the infringing imports of Apple Watches. After unsuccessfully seeking reversal of this ITC decision by the Biden administration, Apple filed a formal appeal with the Federal Circuit on December 26, 2023. A day later, the Federal Circuit granted Apple’s request to stay the ITC exclusion order pending the appeal. The ITC denied Apple’s request to stay the exclusion order, and it also opposed Apple’s request for a stay order before the Federal Circuit. Apple then announced on January 15, 2024, that it redesigned its Apple Watch without the infringing technology and that it had submitted the redesign for approval by the U.S. Customs and Border Protection to restart imports from Apple’s manufacturing facilities in China.

The SNIP: Apple contests the patent infringement decision and exclusion order against it through multiple appeals and other actions in its continuing fight against Masimo’s lawsuits.

Learn More:

• READ: “Commission Opinion Denying Respondent’s Motion to Stay the Remedial Order,” Investigation No. 337-TA-1276 (USITC January 5, 2024).

• READ: “Redesigned Apple Watches Not Subject to Import Ban, US Customs Says,” Blake Brittain, Reuters (January 16, 2024).

• READ: “Masimo Tells CAFC that CBP Ruling for Apple Removes Danger of Irreparable Harm,” Eileen McDermott, IPWatchdog (January 16, 2024).

LEGISLATION & POLICY DEVELOPMENTS

U.S. Chamber Releases Report on the Effect of Price Control on Medical Innovation

On December 11, 2023, the U.S. Chamber of Commerce released an important report detailing evidence of the adverse effects of government price controls on the research and development of new drugs and other medical treatments. Contrary to conventional wisdom, the private sector funds the majority of research and development, accounting for 70% of all clinical trials. This funding is expected to be reduced by 75% if proposed price controls on drugs are implemented by the federal government. This would threaten U.S. leadership in medical innovation, as more than 50% of all new drugs are invented by companies based in the United States. The Chamber report was published just a few days after the Biden administration announced yet another proposal for imposing price controls on all patented products and services through nonexclusive licenses issued under the “march in” provision of the Bayh-Dole Act.

The SNIP: U.S. Chamber report details evidence of how government price controls will undermine research and development of new drugs and other medical treatments.

Learn More:

• READ: “New Study Forecasts Devastating Impact on Patients and Medical Science from Government Price Controls,” U.S. Chamber of Commerce (December 11, 2023).

• READ: “Devasting Impact on Patients and Medical Science from Government Price Controls,” U.S. Chamber of Commerce (December 11, 2023).

• READ: “Chamber Finds Drug Price Measures Will Stifle Research,” Kelly Lienhard, Law360 (December 11, 2023).

House IP Subcommittee Holds Hearing on Digital Copyright Piracy

On December 13, 2023, the House IP Subcommittee held a hearing entitled “Digital Copyright Piracy: Protecting American Consumers, Workers, and Creators.” The hearing examined how digital piracy affects audiovisual works, including movies, television shows, live sports, and other entertainment. The witnesses, which included Karyn Temple, a senior executive at the Motion Picture Association and a former Register of Copyrights, expressed their frustration at online platforms being used to stream illicit material from outside the U.S. and the present inability of copyright owners to stop these websites. The discussion included suggestions to redefine illicit streaming as an unfair trade practice and to adopt the anti-piracy regimes often employed in Europe, such as no-fault injunctive relief.

The SNIP: House IP Subcommittee hearing explores the ongoing problems of online copyright infringement and its possible solutions.

Learn More:

• WATCH: “Hearing on Digital Copyright Piracy: Protecting American Consumers, Workers, and Creators,” House IP Subcommittee (December 13, 2023).

• READ: “House IP Subcommittee Examines Efforts to Address Worst Abuses of Illegal Streaming Platforms,” Steve Brachmann, IPWatchdog (December 13, 2023).

• READ: “Letter to House IP Subcommittee on Digital Copyright Piracy,” Keith Kupferschmid, Copyright Alliance (December 13, 2023).