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Welcome to the summer edition of The SNIP, a quarterly newsletter by Urška Petrovčič and Adam Mossoff 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
Academic Research Shows Why Big Tech Favors Weak IP Rights
Jonathan Barnett, in his new white paper “How IP Rights Keep Markets Free,” criticizes the traditionally perceived dichotomy between IP rights and free-market competition.
He explains that large, vertically integrated firms can monetize innovations by embedding them in complex, difficult-to-imitate products and service bundles. Because they can rely on these mechanisms, the firms do not need IP rights to generate returns on their inventions. They may actually prefer a weaker IP right system because it limits competition from smaller inventors that, in contrast to larger entities, have no alternative tools to monetize their inventions besides IP rights. Indeed, patents often are a precondition for innovation by firms that specialize in R&D but lack capacities to perform other functions in the supply chain. In that respect, Barnett explains, “patents not only support R&D by smaller firms that specialize in innovation but enhance the competitive vigor of the innovation ecosystem as a whole.”
THE SNIP: Barnett’s research shows that strong IP rights foster competition by lowering barriers to entry in innovative markets.
Learn More:
CASE DEVELOPMENTS
Arthrex Decision Grants USPTO Director Power to Review PTAB Decisions
On June 21, 2021, the Supreme Court delivered its opinion in United States v. Arthrex Inc., which presented the questions of (1) whether the USPTO’s administrative patent judges (APJs) were constitutionally appointed, and (2) what the proper remedy was if they were not. The Court ruled that APJs are unconstitutionally appointed and then held that the proper remedy is to grant the USPTO Director reviewing authority over Patent Trial and Appeal Board (PTAB) decisions. The Court reasoned that “executive power by inferior officers must at some level be subject of the direction and supervision of an officer nominated by the President and confirmed by the Senate.” It then found that giving the Director power to review PTAB decisions—even if it is not always used—places sufficient checks on the power of the
APJs.
SNIP: The Supreme Court held that PTAB judges are unconstitutionally appointed but decided that granting the USPTO Director the power to review their decisions would be a sufficient and proper remedy.
Learn More:
- READ: United States v. Arthrex, Inc., SCOTUSblog.
- READ: “Supreme Court Reverses and Vacates Federal Circuit in United States v. Arthrex, Inc.,” AIPLA (June 21, 2021).
- READ: “In Arthrex Ruling, SCOTUS Says Director Review of Decisions, Not Power to Remove APJs, is What Matters,” Eileen McDermott, IP Watchdog (June 21, 2021).
- READ: “Justices Add More Oversight to PTAB in Arthrex Ruling,” Dani Kass, Law360 (June 21, 2021).
Supreme Court Rules in Minerva Surgical Inc. v. Hologic Inc.
On June 29, 2021, the Supreme Court delivered its opinion in Minerva Surgical Inc. v. Hologic Inc., a case that questioned the validity of the doctrine of assignor estoppel, which bars inventors from challenging the validity of their own patents. Hologic invoked assignor estoppel when Minerva challenged the validity of patents that Hologic acquired from Minerva’s founder, Csaba Truckai. In response, Minerva argued that the doctrine interferes with the Patent Act and relies on overturned precedent. The Court ruled that the doctrine is valid and applicable when an inventor’s invalidity claim is inconsistent with representations made in assigning a patent. However, the Court said that inventors should be able to challenge the validity of their patents when changes are made after patents have been assigned. The Court remanded the case to the Federal Circuit to decide whether Hologic’s patent is “materially broader” than the assigned invention, and thus, whether assignor estoppel applies.
THE SNIP: The Supreme Court upheld the doctrine of assignor estoppel but narrowed it to apply only when the assignor’s claim of invalidity contradicts representations made in assigning a patent.
Learn More:
- READ: Minerva Surgical, Inc. v. Hologic, Inc., SCOTUSblog.
- READ: “Justices Narrow Bar on Patent Attacks by Inventors,” Ryan Davis, Law360 (June 29, 2021).
- READ: “Justices Uphold but Narrow Patent Assignor Estoppel,” Eric M. Fraser, SCOTUSblog (June 29, 2021).
- READ: “Justices Narrow Bar on Inventors Attacking Their Own Patents (2),” Perry Cooper, Bloomberg Law (June 29, 2021).
Apple Withdraws from Antitrust Suit Against Fortress Investment Group
On June 21, 2021, Apple withdrew from the joint antitrust suit that it filed with Intel against Fortress Investment Group. Apple and Intel alleged that Fortress used its subsidiaries to build monopolies over certain key technologies by “aggregating” all of the patents in various fields that might be substituted for one another. They also alleged that Fortress used these monopolies to extract inflated license fees and pursue frivolous and nuisance patent infringement lawsuits. Apple’s withdrawal was followed a day later by the voluntary dismissal of several patent infringement suits that Fortress’s subsidiaries, such as Uniloc USA Inc., had brought against Apple. Each of these joint dismissals cited an agreement with Apple but did not provide details. Commentators suggest that the withdrawal may be the result of a broad global settlement agreement between the two companies.
THE SNIP: Apple’s withdrawal from the antitrust lawsuit against Fortress coincided with withdrawals in multiple Fortress suits against Apple, indicating the two companies have reached a settlement.
Learn More:
- READ: Motion to Dismiss, Intel v. Fortress, 3:19-cv-07651 (N.D. Cal. June 21, 2021).
- READ: “Apple Settles With Fortress, Leaving Intel To Go It Alone,” Bryan Koenig, Law360 (June 23, 2021).
- READ: “Apple Withdraws from Antitrust Lawsuit against Fortress Investment Group,” Mike Peterson, Apple Insider (June 29, 2021).
- READ: “Apple, Intel Hit Setback in Antitrust Suit Against Fortress,” Mike Leonard, Bloomberg Law (Jan. 7, 2021).
LEGISLATION & POLICY DEVELOPMENTS
Senate Passes Technology Funding Bill Aimed at Keeping U.S. Innovation Ahead of China
On June 8, 2021, the U.S. Senate passed a $250 billion bill aimed at addressing the nation’s innovation challenges and its ability to compete with China’s expansive scientific and technological research. The bill, titled the U.S. Innovation and Competition Act (USICA), seeks to increase federal spending on research and development (R&D) in artificial intelligence and other advanced technologies to counter China’s attempt at gaining global and technological supremacy. This legislation advances the nation’s R&D programs, bolsters industrial sectors—especially semiconductor manufacturing—and expands the role of the National Science Foundation, particularly by funding research for artificial intelligence. Next, the bill will go to the House for approval where a similar but different version is already being developed by the House Science, Space, and Technology Committee.
THE SNIP: The U.S. Senate passed a bill aimed to help the U.S. keep ahead of China’s growing technological advances by increasing federal spending on technology R&D.
Learn More:
- READ: “Senate Approves $250 Billion Bill to Boost Tech Research,” John D. McKinnon, The Wall Street Journal (June 8, 2021).
- READ: S.1260 – United States Innovation and Competition Act of 2021, 117th Congress (2021-2022).
- WATCH: Senate Passes Sweeping Bill to Address China Tech Threat, Reuters (June 9, 2021).
Germany to Amend Rules on Patent Injunctions
On June 11, 2021, the German Parliament (Bundestag) enacted new legislation that aims to change the availability of automatic injunctions in patent infringement cases in Germany. The amendment requires a court to determine whether an injunction would cause disproportionate hardship to the alleged infringers or relevant third parties before issuing the remedy. A court may also consider the infringer’s due diligence and whether the patent owner acquired the patent solely for exploitation. However, the Bundestag has emphasized that the interests of the patent owner should still generally prevail over those of the infringer. Therefore, even with the defense of disproportionate hardship provided by this amendment, commentators suggest that there will be no major changes to the availability of injunctions in German patent litigation.
THE SNIP: Germany amended the rules granting automatic injunctions against patent infringers, instead requiring consideration of hardships before the remedy is granted.
Learn More:
- READ: “Germany Shuts Door on Patent Trolls,” Ruth Bender, The Wall Street Journal (June 11, 2021).
- READ: “German Parliament Adopts Patent Act Amendment,” Benedickt Midgal, JDSupra (21 June 2021).
- READ: “German Government Passes Bill to Simplify and Modernize Patent Law,” Benjamin Beck & Maximillian Kücking, Lexology (November 5, 2020).
- READ: “German Patent Law Reform Would Introduce ‘Disproportionality’ Defence,” Dr. Ulrike Elteste, Lexology (February 16, 2021).
EU Proposes Alternative to IP Waiver for COVID-19 Vaccines
On June 4, 2020, the European Union (EU) submitted a proposal to the World Trade Organization (WTO) as an alternative to waiving patent protections on the COVID-19 vaccines. The proposal focuses on remedying international supply chain issues to ensure equitable access to vaccines. The EU argued that voluntary licensing between patent owners and willing producers is “the most effective instrument to facilitate the expansion of production and sharing of expertise.” The proposal also includes the possibility of compulsory licensing, whereby a government may grant a license without the patent holder’s consent if voluntary licensing fails.
THE SNIP: The EU proposed an alternative to the international patent waiver for the COVID-19 vaccine that would limit any deprivation of IP rights while streamlining supply chains for the vaccine.
