NEW YORK – Major changes are coming to the makeup of the US Congress from the perspective of intellectual property policy, and while it may translate into more patent-friendly officials, the prospect for legislation is uneven, a panel of IP experts told a private sector conference here last week.
The IP Dealmakers forum took place in New York from 6-8 November.
The panel entitled, “In Patents We Trust: Government Updates & Outlook,” was moderated by Fred Fabricant, partner and head of IP litigation at Brown Rudnick. Panellists included: Todd Dickinson, senior partner, Polsinelli, and former director of the US Patent and Trademark Office; Hans Sauer, deputy general counsel for IP at BIO; and Robert Taylor, founder and owner of RPT Legal Strategies.
Congress: ‘Quite a Big Change’
Todd, who is a Washington, DC insider, gave some highlights of changes relevant to intellectual property from the previous day’s high-profile congressional election, in which Democrats took back the House of Representatives and Republicans strengthened their control of the Senate but are losing several key players related to IP.
With the turnover of the House, effective in January there will be new chairs named for all committees and subcommittees so it remains to be seen who will chair the House Judiciary Committee or the Judiciary Subcommittee on Courts, Intellectual Property and the Internet.
In the Senate, Todd said there is a question about Senator Chuck Grassley of Iowa, who is currently chair of the Judiciary Committee, as he might move over to become chair of the Senate Finance Committee. Sen. Orrin Hatch of Utah will retire from the Senate at the end of the term in January, and Grassley is the senior Republican on the committee.
It is also possible that Grassley, who is 85 years old, might term out and leave the Judiciary chairmanship open that way.
Another upcoming change he mentioned was the retirement of Rep. Bob Goodlatte of Virginia, chair of the House Judiciary Committee, which takes effect in January.
In addition, January will see the retirement of Rep. Lamar Smith of Texas, who was a co-sponsor of the Leahy-Smith America Invents Act. More recently he has been chair of the House Science Committee.
A top prospect for chair of the Senate Judiciary Committee could be Republican Lindsey Graham of South Carolina, he said, with Diane Feinstein of California remaining as ranking Democrat.
In the House of Representatives, following the 6 November election in which Democrats retook control of the House, Democrat Nancy Pelosi of California is on track to return as the speaker of the House. For Judiciary, he noted Jerrold Nadler of New York is the current ranking Democrat, and the presumptive chair.
For the subcommittee on IP, the current ranking Democrat is Hank Johnson of Georgia, but it “remains to be seen” if he would be in line for the chair, Todd said. If he does, then it might be expected that things will continue as they are, he said.
Todd raised concern from a patent-owner perspective about the possibility that Zoe Lofgren of California (Silicon Valley) might be given the subcommittee chair. He said if she becomes chair, “all bets are off,” as she has historically been a strong technology industry proponent with reservations about patenting. But he noted that Lofgren is also ranking Democrat on the immigration subcommittee, which she might prefer given the high profile of the issue right now. “I think her versus Andrei [Iancu] would not be a pleasant sight,” he said.
A source after the event noted as an aside that Lofgren is close to James Pooley, the veteran Silicon Valley patent attorney who blew the whistle on World Intellectual Property Organization Director General Francis Gurry when Pooley was his deputy some years ago.
For Republicans on the IP subcommittee, for ranking Republican, he mentioned Doug Collins of Georgia, who might have been in line for the chair with Darrell Issa of California retiring in January. Collins is seen as far more favourable for patent owners. Also possible is Steve Chabot of Ohio, who just got re-elected. Todd further mentioned that Dana Rohrabacher of California was defeated in last week’s election.
What Does It Mean?
On the congressional elections, Sauer talked about what it might mean. He said the House Judiciary Committee is likely to be occupied with other activities (such as investigations of President Trump and his staff). He expected they might have oversight hearings, predicting they might have USPTO Director Iancu in “as a matter of course.”
But he said Rep. Nadler has not been very active on IP in the past. Hank Johnson has been a “bit of a contrarian on patent matters,” but “overall, I think of him as one of the good guys, he said. “It won’t be a terrible committee for proponents of IP, for friends of IP,” he said, “but it is a committee that is likely to be preoccupied with other matters.”
The best prospect is for further change is incremental change in the USPTO under the current director, he said.
Todd raised a “very, very sharply worded” letter from Lofgren to Iancu criticising his shift to the Phillips standard. There’s going to be more changes on the way. “Is she going to keep doing that?” he asked, “is he going to hauled before the committee?”
Sauer said it is not going to be desirable to have this kind of adversity between the subcommittee chair in the House and the PTO director.
Prospects for IP Legislation
The moderator Fabricant asked about a list of potential legislation in Congress and what happens to it now.
He listed several pieces of legislation and asked what might happen to them, including S 1390/HR 5340 the STRONGER Patents Act, which would: ensure injunctions are available to inventors whose IP is infringed upon; limit repetitive and harassing challenges against inventors in patent office administrative proceedings; and end fee diversion and restore funding to the USPTO.
Another piece of legislation he asked about was HR 6264 the Restoring America’s Leadership in Innovation Act, which would return the US to first-to-invent patent system from the first-inventor-to-file system introduced by the AIA, abolish inter partes review and post-grant review under the Patent and Trademark Appeal Board (PTAB), and create a Board of Patent Appeals and Interferences instead of the PTAB.
He also mentioned HR 6370, the Targeting Rogue and Opaque Letters (TROL) Act, a bipartisan bill reintroduced in July that targets abusive demand letters against patent holders, setting a uniform national standard for demand letters.
Another on his list were: HR 6557, the Inventor Protection Act, introduced in July by the now exiting Rohrabacher, which aims to help inventors defend their patents by addressing PTAB proceedings, unreasonable infringement suit filing location requirements, and the loss of injunctive relief.
And finally, he raised a bill introduced in summer by Sen. Hatch entitled, The Hatch Waxman Integrity Act, which would limit biosimilar applicants using data of the reference drug product to resolving patent disputes at the district court level and not in USPTO proceedings.
Todd first noted that the President just signed IP legislation into law, extending the USPTO’s fee-setting authority for another 8 years, and also authorised a “major study” of the impact of why minorities, women, veterans and small businesses seem not to get patents in the volume you might expect them to get, and what can be done about it.
Todd mentioned the STRONGER Patents Act, which arose from Democratic Sen. Christopher Coons, who is “very interested” in issues such as abuses at the PTAB and fee diversion. Some of these things Iancu is doing by his own rule, he noted. He may have had five votes in committee before the election so it’ll be seen if he can get a few more now.
On other legislation, he did not see any moving with people not on the relevant committees and so much else going on. But he noted that Nadler has supported a fashion design industry bill for greater protections for fashion design.
The moderator asked about injunctive relief, saying in other jurisdictions you can get an injunction but is harder in the US now, and has “significantly weakened” the US position. The United States this year fell to 12th place in patent system strength in US Chamber of Commerce rankings, tied with Italy, he noted.
Todd noted that the difference between 1 and 12 in the rankings is small but still acknowledged the concern.
Taylor said over the past 15 years the Supreme Court has taken on a “steady flow of cases” related to IP, some 30 of them. And he said he would put the eBay case at the top of the list as having done the most damage to the patent system. “That court has been persuaded by the patent troll narrative that there’s something fundamentally evil about patents,” he said.
He hearkened back to the 1940s and 1950s, when he said there was a Supreme Court headed by Justices Douglass and Black that had the same point of view about the patent system. “They created a lot of very bad jurisprudence,” he said, with the result that by the end of the 1970s, entire industries were leaving the country, such as colour television and video recorders. Then in the early 1980s, the president appointed a commission to look at industrial competitiveness, and they came to the conclusion that enforcement of IP rights was absolutely essential for a strong economy.
Two keys that can happen, he argued, is to make Congress aware of how important patents are to the industrial policy of this country, and to make the Supreme Court aware of how much damage they have done to patents. Over the past 13 years or so, the Court has some 30 decisions on patents, the vast majority of which were not in favour of the patent owner.
Asked if the two new Supreme Court justices might be better for patents, he said he would hope both would see IP as a conservative property right issue.
Todd noted as an aside that Gorsuch now has two clerks who are licensed to practice at the USPTO. He just hired a professor from Notre Dame who taught IP there.
“Not Holding Our Breath”
Sauer said they are “not holding our breath” for major patent legislation, but they do have the opportunity to “lay the groundwork” for it to eventually happen. He noted for example that the STRONGER Patent Act has powerful opposition which will be mobilised again, energised, and is well-funded.
“I don’t think legislation of this kind is going to be easy, but it needs to be talked about,” Sauer said, adding that the same is true for reform of section 101, as there are interests who like the way section 101 works now and do not think the proposed changes will work.
But he said they could have hearings, lay the groundwork, and get Congress interested.
Todd said Sen. Coons has said publicly if the stakeholder community could agree on a section 101 bill he would put it forward. The American IP Law Association and the IP Owners Association processes have now come together on this, he said. So that could theoretically happen, he said.
There is some history that shows if a 101 bill is introduced in Congress it could lead the Supreme Court to take notice of it and possibly take another look it, he said.
A further issue that was asked about was the TC Heartland jurisdiction decision. The moderator said there is no other case where a person injured in their own state cannot bring an action for harm in their own state if the internet company they bought from is not located there physically. “You ended up with a scenario where you are really ignoring that we are in this century and the way business is conducted,” he said.
Taylor said he thought it might be the same with 101 and the STRONGER Patent Act, because it is an omnibus bill and tries to do too much.
Todd added that the Innovation Act introduced by Chairman Goodlatte was the same from the other side, also tried to do too much.
On an issue that was big at last year’s IP Dealmakers’ event, whether tribes can issue patents free of PTAB scrutiny due to tribal immunity, Todd recused himself due to his firm’s activities, but Sauer responded.
He said the St Regis Mohawk tribe is represented by “very able counsel,” and there was an expectation it would get to a position where it could be appealed to the Supreme Court. But the new members on the Supreme Court might not be as swayed by the patent troll narrative and may view sovereign immunity differently as it relates to the patent system as they look at it in a broader context, he said.
Todd agreed that they would be likely to take it in the broader context of sovereign immunity law.
Todd also noted that Claire McCaskill, who lost her race in the Senate this week, had a bill to deny jurisdiction to the tribes, leading to tribes across the country coming out against her.
Sauer said tribes argued that the bill presumes tribes cannot innovate.
Fabricant then asked about a case called Helsinn Healthcare v. Teva in which the Supreme Court has granted certiorari. In the case, Elsinn argues that under the AIA only public sales that disclose the details of an invention should trigger an on-sale bar. This would conform to the law of other countries, he said.
Todd noted, “We’ve basically been working for two decades to get global harmonisation,” and came down to about four issues, one of which was whether secret prior art could be applied, and he thinks that is what they are referring to in saying this would conform to other laws.
Sauer said he thinks the Supreme Court is going to reverse the Federal Circuit.
Finally, to a question about whether the section 101 problems might extend to software, Sauer suggested that those who want change in the statute should start presenting cases to Congress and others that make their point. For instance, a company could show that it cannot compete in China because they have software patents, but their company can do anything it wants in the US because there are none. “We are actually systematically disadvantaging US companies,” he said.
Todd agreed, saying the patent “troll” opponents had a story to tell – an elevator speech – but the software patent proponents do not yet.
IP and Amended US Trade Agreements
Afterward, a couple of attendees spoke with Intellectual Property Watch on background about the trade agreements being amended by the Trump administration and its trading partners, such as Canada and Mexico.
The experts did not think the amendments related to IP in general have been very many or very large, but they are not negative (and are celebrated as successes by the administration itself), and one, the extension of data exclusivity to 10 years for biologics, appears significant.
The first expert said Canada and Mexico make a lot of biologics, so that might have been the change both could sign, because “at the end of the day, it’s really not going to delay access or increase prices for their patients.”
Some have complained that the exclusivity should have been for 12 years, expert one said. He also highlighted another possible area for change to come in the US: Canada gives 8 years exclusivity for small molecules, and someone might get the idea to push for that in the US.
Another area that might still be outstanding is something that was in the Trans-Pacific Partnership, according to the second expert. For the earliest priority date for filing, normally it is the earliest priority date in any country in which it was filed, as long as it is consistent with the international system. But in the TPP it said you only had to back to the national priority date, he said, adding that he did not know if that got addressed yet.
The attendees noted that a key political issue is drug prices, which means, as one put it, the President has to keep talking about them, while on the other hand, he wants to help out the biopharma industry.
Drug affordability may become more of an issue following the congressional election, expert one said. But there is concern that people may start looking for simple solutions. For instance, there is a bill from Rep. Lloyd Doggett of Texas that has more than 100 cosponsors, all Democrats, he said. The bill addresses price control and Medicare negotiations.
“That bill is an example of the simple solution that people reach for,” the expert said. “They say, ‘The government will negotiate drug prices directly with manufacturers, and if the manufacturer doesn’t want to pay the price, the government proposes, we’re just going to compulsory licence the drug because how else are we going to make sure that companies are going to behave reasonably.’”
“I could see something like be easily re-introduced,” the expert said. “I don’t see it becoming law, but it’s troublesome that this gets so much traction with so many members of Congress.”
Another issue raised was that at the committee level, one thing to look out for is the ratio of members by party will shift, the second expert said. There will be an influx inevitably of new Democratic members and who ends up on the committee may make an impact on issues like drug affordability, he said.
“For good or bad, traditionally Judiciary is packed with crazies because of other issues they deal with, not IP,” the expert said. “They put the people who tend to be on opposite ends of the spectrum on things like abortion and immigration, things like this of thing, and if that continues, for us that creates an uncertainty.”
This also creates other issues, the first expert said, as there will be new people coming in “armed with subpoena power.”
“It’s not just going to be used arguably against the President, to subpoena his tax returns and things,” he said. “It’s useful for all sorts of things. It’s useful for companies to subpoena their whatever, development expense, like accounting records.” And it could be used to say, “Oh, we want to see how much you really spent developing that drug,” he said.
But the second expert reminded that there are many other things they want to do first.
The first expert noted an interview with Chairman Nadler immediately after the initial election results in which he said, “Trump will now understand that it’s not all about him.”
Asked about the multilateral level and the US’s disruptive position going forward, the second expert noted that USPTO Director Iancu attended the opening of the World Intellectual Property Organization General Assembly in Geneva in October.
The office has been quiet about his reaction to WIPO, he said, noting that usually the US is “a little frustrated.” It remains to be seen how Iancu will approach WIPO.
The biggest concern the US tends to have with WIPO is that so much of the Patent Cooperation Treaty fees are paid from the US and are the bulk of the WIPO budget. “And then they get used for copyright education for Cambodia, and all sorts of other IP issues,” he said. “That’s usually the complaint.”
Image Credits: William New
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