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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
Patent Experts Send Letter to Congress Correcting False Claims on Price Controls on Drug Patents
On September 28, 2023, Hudson Senior Fellow Adam Mossoff organized a letter to Congress on behalf of 25 former judges, former government officials, and scholars explaining why the Bayh-Dole Act and 28 U.S.C. § 1498 cannot be used by government agencies to impose price controls on drug patents. The Bayh-Dole Act promotes the licensing of patented inventions in the marketplace, and § 1498 is an eminent domain statute that provides jurisdiction for federal courts to hear complaints and to award compensation to patent owners whose property has been used by or for the U.S. government without their authorization. Neither law is a price-control statute, despite the policy-driven arguments by academics and activists to the contrary. The letter cautions Congress and officials not to be misled by policy arguments masquerading as interpretation of statutes. It further explains how the proposed price-control schemes would not work in lowering prescription drug costs.
The SNIP: Hudson’s Adam Mossoff and other patent experts submitted a letter to Congress explaining that the Bayh-Dole Act and 28 U.S.C. § 1498 do not authorize price controls for drug patents.
Learn More:
READ: “Letter to Congress from 25 Scholars and Former Judges and Officials Correcting False Claims about Bayh-Dale Act and § 1498 on Drug Price Controls” (September 28, 2023).
READ: “IP VIPS Send Letter to Congress Countering Calls for Government Price Controls on Drugs,” Eileen McDermott, IPWatchdog (September 28, 2023).
READ: “Patent Luminaries Try to Set Congress Straight on Drug Price Controls,” Kevin Noonan, Patent Docs (September 28, 2023).
Hudson Fellow Publishes Policy Memo on Unconstitutional State Ebook Licensing Bills
On October 31, 2023, Hudson Legal Fellow Devlin Hartline published a policy memo explaining why the proposed state bills to regulate the ebook licensing marketplace are unconstitutional. Over the past few years, several states have considered bills that would dictate the terms of the ebook licenses granted by publishers to public libraries. These bills are based on model legislation put forth by a policy organization, Library Futures, which wants the ebook marketplace to resemble that of physical books. Library Futures claims that its legislative template is constitutional because it merely dictates the terms of ebook licenses should publishers choose to grant them. Hartline explains that federal copyright law treats digital ebooks and physical books differently and that states are powerless to dictate the terms of ebook licenses when they directly relate to the exclusive rights secured under the Copyright Act.
The SNIP: Hudson’s Devlin Hartline publishes a policy memo explaining why proposed state ebook licensing bills are unconstitutional and conflict with the Copyright Act.
Learn More:
READ: “Why Overbroad State Library Ebook Licensing Bills Are Unconstitutional,” Devlin Hartline, Hudson Institute (October 31, 2023).
READ: “State Mandates for Digital Book Licenses to Libraries Are Unconstitutional and Undermine the Free Market,” Adam Mossoff et al., Federalist Society (February 13, 2023).
READ: “State Compulsory Ebook and Audiobook Licensing Is Wrong on Law and Policy,” Devlin Hartline, IPWatchdog (February 1, 2022).
CASE DEVELOPMENTS
Avanci Signs License Agreement with BMW
On August 16, 2023, Avanci launched its patented 5G connected vehicle program following the success of its 4G program. Since its launch, the program has attracted more licensors than the 4G program did in its early days. In September 2023, Avanci announced that BMW became the first licensee and that it is expecting greater success with the new program. The program provides incentives by offering lower rates to licensees who sign up for the 5G program before February 2024. It is reported that BMW’s early enrollment in the program may be attributed to its plans to become the world’s first automobile company to launch 5G connected vehicles. The company is said to have been shipping 5G backed vehicles and collaborating with top telecommunication companies to prepare for the launch.
The SNIP: Automobile giant BMW signs up as the first licensee of Avanci’s new 5G connected vehicle program as it sets out to launch 5G automated connected vehicles.
Learn More:
LEGISLATION & POLICY DEVELOPMENTS
ITC Report to Biden Administration Finds No Evidence to Support Extending Patent Waiver
On October 17, 2023, the U.S. International Trade Commission (USITC) released its report on the research, development, and worldwide distribution of therapeutics and diagnostics for COVID-19. The USITC report responded to a request by the Biden administration on December 16, 2022, that the USITC investigate the current state of COVID-19 therapeutics and diagnostics in light of prior U.S. support for a waiver adopted by the World Trade Organization (WTO) of patent protections under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) for COVID-19 vaccines, and continued lobbying efforts at the WTO to extend this patent waiver on vaccines to COVID-19 therapeutics and diagnostics. In its 497-page report, the USITC did not conclude that the patent waiver should be extended to therapeutics and diagnostics; instead, it surveyed the evidence and the arguments for and against patent protections for biomedical innovations. Hudson Senior Fellow Adam Mossoff testified at the USITC last March in its hearings for its investigation, and he submitted written testimony, which was acknowledged by the USITC as contributing to its report.
The SNIP: The U.S. International Trade Commission finds no evidence supporting more patent waivers under TRIPS in a report on the role of patents in COVID-19 therapeutics and diagnostics.
Learn More:
READ: “COVID-19 Diagnostics and Therapeutics: Supply, Demand, and TRIPS Agreement Flexibilities,” U.S. International Trade Commission (October 16, 2023).
READ: “ITC Report on TRIPS COVID IP Waiver Extension Plays It Safe,” Eileen McDermott, IPWatchdog (October 28, 2023).
READ: “Written Submission Supporting Oral Statement at Public Hearing: COVID-19 Diagnostics and Therapeutics: Supply, Demand, and TRIPS Agreement Flexibilities,” Adam Mossoff, U.S. International Trade Commission (April 12, 2023).
READ: “Final Written Submission to International Trade Commission on COVID-19 Diagnostics and Therapeutics: Supply, Demand, and TRIPS Agreement Flexibilities,” Adam Mossoff, Hudson Institute (May 5, 2023).
California Becomes Third State to Pass Right to Repair Law for Electronic Devices
On October 10, 2023, California Governor Gavin Newsom signed into law the Right to Repair Act, which mandates that manufacturers of electronic devices and other products provide consumers and independent repair shops with the tools, parts, and know-how to make repairs. The Right to Repair Act, which becomes operative on July 1, 2024, will apply to products that were first sold on July 1, 2021, or later. However, as Hudson Legal Fellow Devlin Hartline has explained, the Right to Repair Act will conflict with federal IP law, thus making it preempted and unconstitutional insofar as it applies to the exclusive rights granted to authors and inventors by the Copyright and Patent Acts. For example, when a part is protected by a design patent, the state law would force the patent owner to make the part available, and this directly conflicts with the right to exclude granted under federal patent law.
The SNIP: California governor signs the Right to Repair Act into law, which expands repair opportunities but also conflicts with federal IP law.
Learn More:
READ: “Senate Bill No. 244: The Right to Repair Act,” (October 10, 2023).
READ: “The IP Law Problem with California’s New Right to Repair Act,” Devlin Hartline, IPWatchdog (October 9, 2023).
READ: “State Right-to-Repair Laws Need to Respect Federal Copyright Laws: A Constitutional, Legal, and Policy Assessment,” Devlin Hartline & Adam Mossoff, Hudson Institute (August 22, 2022).
Bipartisan Bills Seek to Restore Reliable and Effective Patents Rights
In June and August 2023, Senators Christopher Coons and Thom Tillis introduced two bills—the Patent Eligibility Restoration Act (PERA) and the Promoting and Respecting Economically Vital American Innovation Leadership (PREVAIL) Act—that aim to reform the U.S. patent system. PERA reforms the current quagmire in patent eligibility doctrine that was created by the U.S. Supreme Court in a series of court decisions between 2010 and 2014, which has resulted in innovators being unable to obtain patents on life-saving medical treatments and high-tech innovations. PREVAIL reforms the Patent Trial and Appeal Board (PTAB), which has been criticized for numerous violations of due process and basic rule of law norms as it pursues a mission of canceling patents. It currently cancels patents at around 83%, and some of its administrative review programs had cancellation rates as high as 100%. Commentators have emphasized that, if passed, the two bills would bring much-needed reform to the U.S. patent system, restoring its status as the gold-standard patent system in securing reliable and effective patent rights to the innovators who drive economic growth in the U.S. innovation economy, as well as secure U.S. national security interests.
The SNIP: Senators Coons and Tillis introduce two bills to reform patent eligibility doctrine and the PTAB in order to restore the gold-standard status of the U.S. patent system.
Learn More:
READ: “Senators Coons, Tillis, Colleagues Introduce Bipartisan Bill to Support American Inventors by Reforming Patent Trial and Appeal Board,” Chris Coons’ website (August 9, 2023).
READ: “Tillis and Coons Bill Would Eliminate All Judicial Exceptions to Patent Eligibility”, Eileen McDermott, IPWatchdog (June 22, 2023).
READ: “Big Tech’s Abuse of Patent Owners in the PTAB Must End,” Adam Mossoff, Heritage Foundation (June 29, 2023).
READ: “Congress Should Reform Patent Eligibility Doctrine to Preserve the U.S. Innovation Economy,” Adam Mossoff, Heritage Foundation (January 8, 2020).
