IP Policy Roundup | Edition 15

Coalition Updates

• On December 20, C4IP published an issue brief on the Bayh-Dole Act and march-in rights following the Biden administration’s new – and unprecedented – proposal for government intervention in innovation and technology companies.

•  On December 14, C4IP Co-Chair and former USPTO Director David Kappos was one of the featured speakers at a fireside chat hosted by the Bayh-Dole Coalition on the Biden administration’s new proposed framework for march-in rights.

• On December 12, innovation policy scholar Merrill Matthews published an opinion essay in The Hill emphasizing the threat that the Biden administration’s new proposed march-in framework poses to all innovative industries.
  • “While the prescription drug industry and patients have a lot to lose if Biden’s price-control scheme is successful, they won’t be the only ones. Any research or invention, any patent, any college, university or other research institute that has any connection with taxpayer funding is threatened by Biden’s proposal.”

• On December 11, C4IP Executive Director Frank Cullen published an opinion essay in the DC Journal detailing how the Patent Eligibility Restoration Act would bolster high-tech innovation by resolving the uncertainty injected into the patent system by a series of Supreme Court decisions.
  • “The Patent Eligibility Restoration Act will restore the intellectual property protections at the heart of the American innovation economy. That’s why we need Congress to step up as true champions for innovation and pass this critically needed legislation.”

• On December 10, the Wall Street Journal editorial board published an opinion essay underlining the likely damaging effects on innovation of the Biden administration’s new proposed guidance for march-in rights.
  • “Profits and intellectual-property protections drive American innovation. Mr. Biden’s patent heist undercuts both and will embolden China to seize U.S. patents.”

• On December 10, Bayh-Dole Coalition Executive Director Joe Allen published an opinion essay in IPWatchdog arguing that the Biden administration’s proposed guidelines for march-in rights pose a direct threat to all sectors of industry, and particularly startups.
  • “Small companies receive about 70% of academic patent licenses. They depend on attracting high risk investment to survive. That’s hard enough in the best of times. But what responsible venture capitalist will want to back them now that the government has signaled that it welcomes march in petitions?”

• On December 8, C4IP Co-Chair and former USPTO Director Andrei Iancu was quoted in Bloomberg Law’s article on the Biden administration’s proposed framework for march-in rights.
  • “Under the Bayh Dole Act, march-in was never supposed to be exercised for price controls. And the original drafters, Senators Bayh and Dole, have rejected that concept publicly…It’s a novel, incorrect interpretation. And, if implemented, I’m sure it’ll be challenged in court.”

• On December 7, former NIST Director Walter Copan’s 2022 opinion essay on the Xtandi march-in petition was quoted in the Washington Post’s article on the Biden administration’s new framework for march-in rights.
  • “Invoking march-in rights to lower the price of a drug such as Xtandi is ‘a disastrous idea that could effectively destroy the legal foundation for the public-private research partnerships that bring new products to American consumers.'”

• On December 7, C4IP board member and former Federal Circuit Court Judge Paul Michel was quoted in BioWorld’s article on the Biden administration’s proposal for march-in rights.
  • “[Judge Michel] noted that Sens. Birch Bayh and Bob Dole both wrote extensively saying the march-in provision…was about encouraging public-private partnerships in which the private contribution vastly outstrips the government investment. Michel said he’s concerned that the administration’s reversal of 40 years of precedent will destroy those partnerships that have led to ‘enormous success.'”

• On December 7, C4IP board member and former Federal Circuit Court Judge Paul Michel was quoted in an Endpoints News article on the Biden administration’s proposed guidance for march-in rights.
  • “As soon as somebody’s patent is effectively taken away from them under a march-in petition being granted, they’ll file suit…I’ll be surprised if the courts take a different view of the statute than prior administrations and courts and legislatures have taken for 45 years.”

• On December 7, C4IP issued a statement strongly opposing the Biden administration’s unprecedented assertion that price can be used as a factor to “march in” and relicense patents on federally-funded discoveries under the Bayh-Dole Act.
  • “If the government begins abusing march-in to relicense patents on breakthrough discoveries, it will stifle investment in energy, climate change, medicines, and all other technologies that benefit millions across the globe.”
  • This statement has been covered by IPWatchdog.

• On December 4, C4IP sent a letter signed by 47 technology transfer administrators, former government officials, and other IP policy leaders to President Biden speaking out against the World Trade Organization’s proposed waiver of intellectual property rights for Covid-19 therapeutics and diagnostics.
  • This letter has been covered by IPWatchdog and Law360.

• On December 4, C4IP Co-Chair Andrei Iancu moderated a conversation with Rep. Deborah Ross (D-NC) for the Center for Strategic & International Studies’ Renewing American Innovation Project. They discussed the importance of promoting innovation through policies that strengthen intellectual property rights, including passing the PREVAIL Act, which Ross sponsors.

Following this conversation, Andrei also moderated a panel discussion – featuring Georgia Congressman Doug Collins, Dell Senior Legal Director Tom Brown, and Bristol-Myers Squibb Senior Vice President and Deputy General Counsel Henry Hadad – that focused on the PREVAIL Act and its implications for U.S. innovation, competitiveness, and national security.

Government Rundown

• National Institute of Standards and Technology: Draft Interagency March-In Framework & Informational Webinar: On December 13, the National Institute of Standards and Technology (NIST) hosted a webinar to discuss its recently-issued Request for Information regarding the Biden administration’s proposed framework for march-in rights. NIST’s presentation explained the factors that would influence march-in decisions and solicited feedback on the guidance, which has an open comment period until February 6. (NIST, 12/13)

• House Committee on the Judiciary, Subcommittee on Courts, Intellectual Property, and the Internet Hearing: Digital Copyright Piracy: Protecting American Consumers, Workers, and Creators: On December 13, the House Subcommittee on Courts, Intellectual Property, and the Internet held a hearing to discuss ways in which the government can protect consumers, workers, and creators and prevent the theft of IP via digital copyright piracy. The hearing’s witnesses included film producer Richard Gladstein, Ultimate Fighting Championship general counsel Riché McKnight, Computer & Communications Industry Association president Matthew Schruers, and Motion Picture Association senior executive vice president Karyn Temple. (House Judiciary Committee, 12/13)

• S. Patent and Trademark Office Roundtable: 17th Annual USPTO-GIPC IP Attaché Roundtable: On December 12, the USPTO’s intellectual property attaché program presented on IP protection and enforcement around the world at its 17th annual joint roundtable with the U.S. Chamber of Commerce’s Global Innovation Policy Center (GIPC). (USPTO, 12/12)

• Biden Administration Announces Proposed New Framework for March-In Rights: On December 7, the Biden administration announced that the Department of Commerce and Department of Health and Human Services working group had released a proposed framework for the march-in rights embedded in the Bayh-Dole Act. For the first time since Bayh-Dole was enacted in 1980, the federal government endorsed the use of price as a factor in decisions to “march-in” on patents for federally funded discoveries. (White House, 12/7)

• S. Patent and Trademark Office Webinar: Intellectual Property Basics and Helpful Resources: On December 7, the USPTO hosted a webinar for aspiring innovators and newcomers to intellectual property, covering the basics of patents, trademarks, copyrights, and trade secrets. The webinar discussed the importance of protecting IP and the resources the USPTO offers to that end. (USPTO, 12/7)

• House Committee on Oversight and Accountability, Subcommittee on Cybersecurity, Information Technology, and Government Innovation Hearing: White House Policy on AI: On December 6, the House Subcommittee on Cybersecurity, Information Technology, and Government Innovation held a hearing to discuss the White House’s policy goals and proposals for artificial intelligence. The Alliance for Digital Innovation’s Ross Nodurft, the Foundation for American Innovation’s Samuel Hammond, The Software Alliance’s Kate Goodloe, Stanford Law School’s Dr. Daniel Ho, and Harvard University’s Dr. Rumman Chowdhury testified as witnesses. (House Oversight Committee, 12/6)

• House Committee on Financial Services, Subcommittee on Digital Assets, Financial Technology and Inclusion Hearing: Fostering Financial Innovation: How Agencies Can Leverage Technology to Shape the Future of Financial Services: On December 5, the House Subcommittee on Digital Assets, Financial Technology and Inclusion held a hearing discussing how federal agencies can best promote innovation in financial services. Witnesses included Valerie Szczepanik of the SEC, Donna Murphy of the OCC, Mark Mulholland of the FDIC, Ann Epstein of the CFPB, Charles Vice of the NCUA, and Michael Gibson of the Federal Reserve. (House Financial Services Committee, 12/5)

Fact Check

Claim: On December 7, the Biden administration proposed a policy framework claiming a newfound authority, under the 43-year-old Bayh-Dole Act, to rescind patent licenses on drugs, energy, climate change, and all other inventions that benefit from federal research funding based on the price of the resulting product. The administration asserts that this framework is an effective way to reduce drug pricing.

Correction: The 1980 Bayh-Dole Act catalyzed an unprecedented wave of American innovation by granting universities and other nonprofits the ability to license their federally-funded discoveries and inventions to the private sector. In so doing, this pivotal law facilitated the introduction of numerous cutting-edge technologies to the market, including more than 200 new medicines and vaccines. The impact of the Bayh-Dole Act is recognized for contributing nearly $2 trillion to America’s GDP.

The policy framework proposed by the administration contradicts the plain text of this law, which specifies that march-in rights can only be exercised to relicense patents under narrow circumstances.

None of these circumstances pertain to pricing. The administration’s proposed framework also goes against the explicit intent of Bayh-Dole’s authors – former Senators Birch Bayh and Robert Dole – and a decades-long bipartisan consensus on the appropriate limits of government intervention through march-in.

In the 43 years since the law’s passage, administrations under both parties have refused to march-in on any product for any reason. Yet, the current administration identifies several scenarios in the proposed framework alone where march-in could be appropriate, spanning from water purification to vehicle communications.

The proposal encompasses all technologies. As for pharmaceuticals, misusing march-in to relicense patents on groundbreaking discoveries would not be effective in lowering drug prices in any event.

Numerous non-patent-related factors within the supply chain, such as the involvement of middlemen, play a significant role in the cost of drugs. Moreover, a recent study revealed that of the 361 drugs approved between 2011 and 2020, only 5 would qualify for march-in – the rest resulted exclusively or mostly from non-governmentally funded research.

Such government intervention would, however, introduce significant uncertainties and risks for inventors and investors, discouraging partnerships with government-funded research across the entire innovative ecosystem.

The Bayh-Dole Act has been instrumental in driving breakthroughs far beyond the life-sciences in agriculture, green energy, computer technology, and more, benefitting millions globally. Investments in these technologies would be compromised if patents could be arbitrarily revoked. Particularly at risk are innovative companies, especially smaller ones, which receive nearly three-quarters of university patent licenses.

The Biden administration’s attempt to misuse the Bayh-Dole Act to impose price controls on groundbreaking inventions is not only legally unsupported but also shortsighted.

Bottom Line: This claim is false.

Inside Look: What’s Happening in Congress

As Democratic and Republican members of Congress continue to weigh legislative priorities during the 118^th Congress, top of mind for those who follow intellectual property policy are:

• The Prohibiting Adversarial Patents (PAPA) Act: In September 2023, Representatives Scott Fitzgerald (R-WI), Mike Gallagher (R-WI), Darrell Issa (R-CA), and Blaine Luetkemeyer (R-MO) introduced legislation that raises a number of concerns. With the well-intended goal of protecting U.S. national security, the PAPA Act has the potential to trigger significant unintended consequences. These include potential retaliatory moves by China and other nations to suspend or render unenforceable patents owned by American companies, further enabling theft of American IP overseas. The actions called for by the bill could also violate U.S. treaty obligations, which would in turn embolden other nations to violate IP-related treaties in various ways. In addition, confiscating patents, or rendering them unenforceable, violates basic principles of property, and therefore could weaken the concept of patents as property rights. These and other considerations are of the utmost importance as U.S. lawmakers study the full scope of the PAPA Act. C4IP stands ready to work with Members of Congress to address the threat posed by foreign entities, while maintaining the integrity of the U.S. patent system.

• The Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce (SHOP SAFE) Act: In September 2023, Senators Chris Coons (D-DE) and Thom Tillis (R-NC) introduced legislation designed to protect online consumers from harmful counterfeit products. By establishing trademark infringement liability for e-commerce platforms that allow the sale of dangerous counterfeit items, requiring brand owners to notify platforms of their mark(s) in advance, and providing safety from liability to platforms that appropriately vet and remove counterfeit sellers, the SHOP SAFE Act will protect American families as well as businesses and IP holders.

• The Patent Eligibility Restoration Act of 2023: In June 2023, Senators Thom Tillis (R-NC) and Chris Coons (D-DE) reintroduced legislation aimed at restoring patent eligibility for important categories of inventions – including life sciences diagnostics, gene therapies, and computer-implemented inventions – as well as resolving questions regarding the scope of patent eligibility. In so doing, the Patent Eligibility Restoration Act will foster the development of next-generation technologies across innovative industries.

• The Promoting and Respecting Economically Vital American Innovation Leadership (PREVAIL) Act: In June 2023, Senators Chris Coons (D-DE), Thom Tillis (R-NC), Dick Durbin (D-IL), and Mazie Hirono (D-HI) – joined by Representatives Ken Buck (R-CO) and Deborah Ross (D-NC) on the House side – introduced legislation that will eliminate redundant patent invalidity challenges and safeguard Americans’ right to participate in a fair and accessible patent system. The PREVAIL Act contains important reforms to the Patent Trial and Appeal Board, which will return the body to its original purpose of providing an efficient alternative to district court litigation, and will curtail the practice by patent infringers of forcing inventors to defend their patents repeatedly and in multiple for

• The Interagency Patent Coordination and Improvement Act of 2023: In January 2023, Senators Dick Durbin (D-IL), Chris Coons (D-DE), Thom Tillis (R-NC), and Chuck Grassley (R-IA) introduced the Interagency Patent Coordination and Improvement Act of 2023. The bill would create an interagency task force to share patent filing information and technical assistance between USPTO and FDA officials. IP experts warn that interagency entanglement could weaken the patent system by inserting officials from multiple federal agencies – without patent law expertise – into the examination process. They submit that it is premature to implement such substantial changes without conducting a thorough evidence-based study.

Celebrating American Innovation

Inventor Spotlight

This month, C4IP is highlighting the accomplishments of Ashok Gadgil from the University of California, Berkeley. His groundbreaking invention, utilizing ultraviolet light to purify water, was brought to market pursuant to the Bayh-Dole Act and has since saved millions of lives across the globe.

Ashok Gadgil was born in Mumbai, India, in 1950. He attended the University of Mumbai, where he graduated with a degree in physics, and went on to earn a graduate degree at the Indian Institute of Technology Kanpur. Shortly after, Gadgil immigrated to the United States, where he quickly earned a Master’s degree and then a Ph.D. in physics from the University of California, Berkeley.

Gadgil’s extraordinary academic achievement was driven not only by his innate curiosity and intelligence, but also by his desire to make a difference in the world. Growing up in India, Gadgil witnessed firsthand the disadvantages that people in the developing world often faced, including a lack of electricity and clean water. These issues motivated Gadgil’s research, which he pursued tenaciously – working in the laboratory in his time off to avoid using up his meager government grants on his own salary.

In 1996, Gadgil achieved a breakthrough. Harnessing ultraviolet light from a fluorescent lamp, he devised a method to eliminate harmful microorganisms in water using minimal electricity. Thanks to the Bayh-Dole Act, Gadgil and the University of California secured a patent for his invention in 1998, subsequently licensing it to WaterHealth International. The company promptly initiated production of the device.

Today, Gadgil’s invention – known as “UV Waterworks” – has been installed over 300 times in more than a dozen developing countries. It is estimated to provide 2,000 people with safe drinking water each day. In conjunction with his other inventions, which include energy-efficient lighting and cooking appliances, Gadgil’s impactful work has helped more than 100 million people worldwide.