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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CASE DEVELOPMENTS

Federal Trade Commission Ramps Up Its Focus on Orange Book Patents

On November 20, 2023, the Federal Trade Commission (FTC) filed an amicus brief in Mylan Pharmaceuticals v. Sanofi-Aventis, a case in which Mylan has accused Sanofi of monopolizing the market for injectable insulin by abusing the Orange Book. The Orange Book is where drug innovators identify all the relevant patents covering drugs approved by the Food and Drug Administration (FDA). This is the official database of drug patents for generics to submit applications to the FDA for approval to make competing drugs under the Hatch-Waxman Act. The FTC’s amicus brief asserts that the improper listing of some patents in the Orange Book causes significant harm to competition and delays consumer access to lower-priced prescription drugs. This amicus filing follows the FTC’s letters to ten pharmaceutical companies on November 7, 2023, claiming that these companies improperly listed over 100 patents in the Orange Book.

The SNIP: The FTC files an amicus brief arguing that improper listings in the Orange Book harm competition and consumers.

Learn More:

• READ: “FTC’s 100-Patent Orange Book Challenge Creates Uncertainty for Pharma Patent Listings,” Steve Brachmann, IPWatchdog (November 9, 2023).

• READ: “Federal Trade Commission’s Brief as Amicus Curiae,” Mylan Pharmaceuticals Inc. v. Sanofi-Aventis U.S. LLC, Federal Trade Commission (November 20, 2023).

• READ: “FTC Puts 10 Drugmakers on Notice for Orange Book Patent Violations,” Michele Sullivan, Regulatory Focus (November 9, 2023).

Federal Circuit Vacates VLSI's $2.175 Billion Patent Damages Award

On December 4, 2023, the U.S. Court of Appeals for the Federal Circuit vacated a $2.175 billion damages award that a jury gave to VLSI after finding that Intel infringed two patents owned by VLSI. The Federal Circuit affirmed the judgment of infringement for one of the patents, but it vacated the damages award and remanded for a new trial on damages. The Federal Circuit identified several errors in how the damages were calculated, and it held that the district court abused its discretion by refusing to hear Intel’s defense that it had a license to use one of the patented inventions. The Federal Circuit also reversed the judgment of infringement of the other patent, holding that it was an error for the jury to find Intel was liable under the doctrine of equivalents.

The SNIP: Federal Circuit vacates a $2.175 billion damages award against Intel and remands for a new trial on damages.

Learn More:

• READ: “Fed. Circ. Vacates VLSI’s $2.2B Win Over Intel,” Dani Kass & Andrew Karpan, Law360 (December 4, 2023).

• READ: “Opinion,” VLSI Tech. LLC v. Intel Corp., No. 2022-1906, 2023 WL 8360083 (Fed. Cir. December 4, 2023).

• READ: “VLSI’s $2.2B Infringement Verdict Rejected by Federal Circuit,” Dennis Crouch, Patently-O (December 4, 2023).

Sarah Silverman’s Copyright Cases over Artificial Intelligence Move Forward

On July 7, 2023, two separate class action complaints were filed in the U.S. District Court for the Northern District of California against Meta and OpenAI by a group of authors, including actress and comedian Sarah Silverman. The complaints allege that the technology companies used the plaintiffs’ copyrighted books to train their large language models (LLMs), which are artificial intelligence (AI) software programs that generate text responses when prompted by users. In Kadrey v. Meta Platforms, the district court rejected the plaintiffs’ argument that Meta’s LLMs are themselves, as well as their outputs, infringing derivative works. The plaintiffs have now filed an amended complaint focusing solely on the unauthorized copying of their books for training the LLMs. In Silverman v. OpenAI, the district court recently held a hearing on whether to grant OpenAI’s motion to dismiss the plaintiffs’ vicarious infringement claims. Notably, OpenAI did not move to dismiss the plaintiffs’ claim of direct copyright infringement related to training OpenAI’s LLMs.

The SNIP: Two infringement cases brought by authors against OpenAI and Meta over the use of copyrighted books to train their AIs continue to move forward.

Learn More:

• READ: “Order Granting Motion to Dismiss,” Kadrey v. Meta Platforms, Inc., No. 23-cv-03417, 2023 WL 8039640 (N.D. Cal. November. 20, 2023).

• READ: “First Consolidated Amended Complaint,” Kadrey v. Meta Platforms, Inc., No. 23-cv-03417 (N.D. Cal. December 11, 2023).

• READ: “Complaint,” Silverman v. OpenAI, Inc., No. 23-cv-03416 (N.D. Cal. July 7, 2023).

• READ: “Sarah Silverman Is Suing OpenAI and Meta for Copyright Infringement,” Wes Davis, The Verge (July 9, 2023).

LEGISLATION & POLICY DEVELOPMENTS

Biden Administration Announces Unprecedented Plan to Use Bayh-Dole for Price Controls

On December 7, 2023, the Biden administration announced new regulations to impose price controls on products and services in the marketplace through government-granted licenses issued under the march-in power of the Bayh-Dole Act. In order to promote the commercialization of new inventions, the Bayh-Dole Act confirms that inventors may obtain patents even if there was some federal funding of the research that led to the patentable invention. If a patent owner or licensee is not selling products or services in the market, the law authorizes the funding agency to “march in” and issue licenses to achieve commercialization of the invention. The Biden administration argues that “unreasonable” prices that are too high, especially for prescription drugs, prevent full commercialization of the patented invention. Thus, it proposes to use this march-in power to issue licenses for competitors to make products and services at lower prices. Critics, including Senators Birch Bayh and Bob Dole in their response to this plan when it was first proposed by two academics 20 years ago, point out that the law does not identify price as a trigger for the march-in power, among other legal and policy concerns. This past September, Hudson Senior Fellow Adam Mossoff organized a letter to Congress from 25 scholars, former officials, and former judges explaining why the Bayh-Dole Act cannot be used as a price-control statute.

The SNIP: Biden administration announces an unprecedented plan to use the Bayh-Dole Act to impose price controls on patented products and services.

Learn More:

• READ: “Biden Administration Threatens Seizure of US-Funded Drug Patents If Prices Too High,” Joseph Choi, The Hill (December 7, 2023).

• READ: “Biden Ambushes Pharma Patents,” The Editorial Board, Wall Street Journal (December 10, 2023).

• 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,” Adam Mossoff et al. (September 28, 2023).

Copyrights Office Receives Over 10,000 Comments on AI and Copyright Issues

On August 30, 2023, the U.S. Copyright Office published a request for comments in the Federal Register as part of its study of the copyright law and policy issues raised by AI. Earlier this year, the Copyright Office launched a broad initiative on AI and copyright after hearing concerns from numerous stakeholders. This initiative has included guidance on registering works containing AI-generated material, public listening sessions, educational webinars, and engagement with a broad spectrum of stakeholders. The request for comments sought input on several important topics, including “the use of copyrighted works to train AI models; the copyrightability of material generated using AI systems; potential liability for infringing works generated using AI systems; and the treatment of generative AI outputs that imitate the identity or style of human artists.” The Copyright Office received over 10,000 comments, including from prominent organizations such as the Association of American Publishers, Authors Guild, Entertainment Software Association, Getty Images, Motion Picture Association, and SAG-AFTRA.

The SNIP: The Copyright Office received over 10,000 comments as part of its study of the law and policy issues surrounding AI and copyright.

Learn More:

• READ: “Artificial Intelligence and Copyright: Notice of Inquiry and Request for Comments,” 88 Fed. Reg. 59,942 (August 30, 2023).

• READ: “Artificial Intelligence Study,” U.S. Copyright Office.

• READ: “Generative AI, Copyrighted Works, and the Quest for Ethical Training Practices,” Eileen Bramlet, Copyright Alliance (December 14, 2023).