July Highlights: Promoting Thoughtful AI Policy
Artificial intelligence technology continues to make headlines – often heralded as one of the most transformative innovations of our time. However, care must be taken with our intellectual property if America’s inventors are to make the most of this technology. These laws, for instance, should be interpreted to ensure that inventions created with the assistance of AI are eligible for IP protection, no different than if the inventors had used any other tool. If specific requirements are established only for AI, innovators will be discouraged from utilizing this cutting-edge tool.
During the month of July, C4IP was active in advocating for fair and thoughtful AI policies in order to maximize this emerging technology’s benefits for our innovation ecosystem:
- C4IP Co-Chairs Andrei Iancu and David Kappos published an opinion essay in the Wall Street Journal exposing how the USPTO’s recent guidance on patenting AI-assisted inventions could inadvertently stifle innovation.
- Their op-ed was credited in an IPWatchdog article as a potential influence on the USPTO’s updated Subject Matter Eligibility Guidance for artificial intelligence.
“This [ambiguity of the guidance] devalues the entire corpus of AI-assisted patents, discouraging innovation and inviting infringement suits from well-resourced litigants.”
- C4IP submitted a public comment responding to the USPTO’s April 30, 2024, Request for Comments regarding how the emergence of AI technology might impact the Office’s determination of whether a patent application is patentable, with particular attention to issues relating to prior art and the person of ordinary skill in the art.
- C4IP’s public comment on AI-assisted inventions was featured in a Squire, Patton, and Boggs article on the subject, which was picked up by the National Law Review (NLR) and LexBlog.
- You can find additional resources on C4IP’s AI-related advocacy below and here:
Additional Coalition Updates
- On July 30, C4IP released a statement celebrating the introduction of the Realizing Engineering, Science, and Technology Opportunities by Restoring Exclusive (RESTORE) Patent Rights Act of 2024 in both the Senate and House, and praising the original sponsors, Senators Chris Coons (D-DE) and Tom Cotton (R-AR), and Representatives Nathaniel Moran (R-TX) and Madeleine Dean (D-PA), and co-sponsors Hank Johnson (D-GA), Deborah Ross (D-NC), and Chip Roy (R-TX).
- On July 29, C4IP Chief Policy Officer and Counsel Jamie Simpson published an opinion essay in IAM addressing the threat of systematic theft of American intellectual property by foreign actors.
- On July 22, C4IP Executive Director Frank Cullen sent a letter to the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet ahead of the July 23 hearing on “IP Litigation and the U.S. International Trade Commission.” C4IP urged the Subcommittee to consider ways to strengthen and modernize the ITC’s role in protecting U.S. innovation.
- On July 22, C4IP Executive Director Frank Cullen sent a letter to the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet ahead of the July 23 hearing on “IP Litigation and the U.S. International Trade Commission.” C4IP urged the Subcommittee to consider the importance of the ITC’s ability to issue exclusion orders to protect U.S. innovation and how the ITC could be strengthened and modernized.
- On July 16, C4IP Executive Director Frank Cullen published an opinion essay in World Intellectual Property Review underlining how legislation like PREVAIL, PERA, and SHOP SAFE would help defend U.S. intellectual property from foreign theft
“In a world where technological supremacy increasingly dictates economic and military power, the systematic theft of IP amounts to a slow-motion global security crisis.”
- On July 13, C4IP Co-Chairs Andrei Iancu and David Kappos published a letter to the editor in STAT correcting misleading claims about the FDA’s “Orange Book” list of drug patents and generic competition that Senator Dick Durbin and FTC Chair Lina Khan made in a July 2 op-ed.
“[T]he Orange Book doesn’t delay generic competition — just the opposite. Drug companies are required to list every relevant patent in the Orange Book to make it easier for generic companies to know which medicines are patent-protected, and which ones are fair game.”
- On July 10, C4IP’s comments to the USPTO opposing the latter’s proposed rule change for terminal disclaimers were featured in articles in IPWatchdog and Law360.
- On July 9, C4IP Executive Director Frank Cullen submitted a public comment to the USPTO expressing strong opposition to the USPTO’s May 10 notice of proposed rulemaking on terminal disclaimers.
Government Rundown
USPTO Event: Impact of the proliferation of AI on prior art and PHOSITA listening session:
On July 25, the USPTO held a listening session to obtain feedback from the public about the impact of artificial intelligence technology on prior art and person having ordinary skill in the art (PHOSITA) patentability requirements. The listening session built on the USPTO’s previous Request for Comments on this topic, which opened on April 30 and closed on July 29. C4IP Chief Policy Officer and Counsel Jamie Simpson spoke at the event, and C4IP also submitted a public comment in response to the RFC. (USPTO, 7/25)
House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet Hearing: “IP Litigation and the U.S. International Trade Commission”
On July 23, the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet held a hearing to examine the role that the International Trade Commission (ITC) plays in protecting the United States from products manufactured abroad that may infringe U.S. intellectual property rights. (House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet, 7/23)
Fact Check
On May 9, the USPTO issued a notice of proposed rulemaking adding a new requirement for filing terminal disclaimers, which are generally used to allow inventors to receive multiple patents stemming from the same patent application. This allows inventors to obtain an initial patent quickly if there is agreement with the examiner that some patent claims are allowable while continuing to seek patent protection for the full scope of the invention through prosecution of continuation applications. Timely issuance of an initial patent, which this approach to prosecution facilitates, has been shown to be critical to startup success.
The examiner may issue rejections in these follow-on patent applications if some of the proposed patent claims seem too close to the claims in the original patent; applicants can overcome these rejections by filing terminal disclaimers. By law, terminal disclaimers cannot be used to extend the term of protections that these new claims receive beyond that of the original patent; they simply allow an inventor to obtain additional patent claims to ensure that the entirety of their invention is adequately protected. However, under the USPTO’s proposed rule, invalidating any claim in the original patent will also render unenforceable all of the claims in any other patents tied to it with a terminal disclaimer (no matter how unrelated the later claims are to the invalidated claim) drastically weakening patent rights and making it significantly more difficult for inventors to ensure protection for the entirety of their invention.
The Federal Trade Commission was among the organizations that submitted comments on the USPTO’s proposal, and did so in strong defense of the proposed rule. However, the arguments made by the FTC in support of the proposed rule miss the crux of the issue.
| Claim: Terminal disclaimers enable anticompetitive practices by “facilitat[ing] the growth of patent thickets,” and therefore must be reformed. |
| In reality: Both pieces of this claim are false. First, it is crucial to recognize the fallacies behind the bogeyman of the patent thicket myth. There is nothing unusual or malicious about filing multiple patents to protect different components of a single product – and in fact, being able to do so is vital to the development of high-tech products across all industries, from smartphones to medicines. Obtaining multiple patents offers no unfair advantage to the patent owner, as all granted patents must comply with statutory requirements for patentability. Terminal disclaimer practice creates no independent thicketing problems – existing limitations on the practice already treat these related patents as if they are one by requiring that they all be owned by the same entity and have the same expiration date.
The USPTO and FTC both fail to provide evidence that the current terminal disclaimer practice is actually causing harm to companies seeking to compete with patent holders. Both the FTC and the USPTO therefore appear to advocate for this change based not on a need for reform, but simply a desire to advantage non-patent competitors over patent-holding inventors – a motivation which ignores the fundamental idea that patents must be strong and valuable in order to properly incentivize inventorship. |
| Claim: The USPTO’s proposed policy would “promote[] competition and market entry,” thereby “promot[ing] innovation. |
| In reality: By making it easier to render patents unenforceable, the proposed policy might increase the ability of non-patent-holding companies to compete with patent-holding competitors, but it would do so by creating a large loophole that unfairly targets patent owners trying to use a well-established method of obtaining patent protection over time. The resultant negative effect on the reliability of IP rights would ultimately serve to undermine innovation, not promote it.
Under the proposed rule, accused infringers would be able to challenge a particularly weak single patent claim in one patent and thereby automatically invalidate all the patent claims in any patent related to the first patent by a terminal disclaimer, no matter how different the claims in the related patents are. As a result, inventors will likely avoid filing terminal disclaimers at all costs. This will upend current patent prosecution practice, incentivizing inventors (who can afford it) to draft patent claims in the initial application to cover every iteration of what they have invented, instead of proceeding in a step-wise fashion if the invention proves worthy of needing more refined patent protection. This will cost significantly more upfront, both in terms of money and time. It will also increase the USPTO’s workload at a time when it is already falling behind in its application backlog. And together, the high costs and insecurity related to terminal disclaimers will make it more difficult for inventors to obtain patents, and especially, to obtain protection for the full scope of their inventions. This, in turn, will make it harder for inventors to obtain investor funding. The foreseeable consequence of the policy will be to keep innovative companies out of the marketplace while encouraging parasitic behavior from their less productive competitors. It will also steer inventors away from patents and toward trade secrets, which, while important, do less to promote competition and innovation because they keep knowledge out of the public sphere. Overall, the proposed rule is likely to have a negative impact on innovation. |
Celebrating American Innovation
Inventor Spotlight
This month, C4IP is recognizing Les Paul, whose invention of the solid-body electric guitar revolutionized the sound of popular music.
- Paul was born in Waukesha, Wisconsin in 1915, and established himself as a successful jazz and country musician before applying that experience to develop the invention for which he is best known: the solid-body electric guitar, which he received a patent for in 1962.
- An innovator by nature, Paul is also credited with inventing the first eight-track tape recorder.
- Paul’s guitar was adopted by rock and roll pioneers like the Beatles and the Rolling Stones, who have since become some of the best-selling music artists of all time.
- It also laid the foundation for the rock music genre, which remains the most popular genre of music in the United States in terms of listenership.
- Paul’s invention remains a staple for musicians today: In 2022, the global market for electric guitars was valued at nearly $4.5 billion.
- Electric guitars are more popular than other types, making up an estimated 58% of all guitar sales in the United States.
- It is also the #1 instrument children are interested in learning to play, according to a 2022 report in Newsweek.
(Photo credit: The Daily Telegraph)
What’s Happening in Congress
As Democratic and Republican members of Congress continue to weigh legislative priorities during the 118th Congress, top of mind for those who follow intellectual property policy are:
The Realizing Engineering, Science, and Technology Opportunities by Restoring Exclusive (RESTORE) Patent Rights Act:
In July 2024, Senators Chris Coons (D-DE) and Tom Cotton (R-AR), and Representatives Nathaniel Moran (R-TX) and Madeleine Dean (D-PA) – joined by Hank Johnson (D-GA), Deborah Ross (D-NC), and Chip Roy (R-TX) – introduced legislation that aims to realign patent law with the U.S. Constitution and the Patent Act’s promise of “exclusive rights” to inventors. This bipartisan bill seeks to restore injunctive relief – court orders that stop infringers from utilizing patented technology – in response to the Supreme Court’s 2006 eBay v. MercExchange decision. That ruling substantially curtailed the granting of such injunctions, effectively denying exclusive rights to many inventors and diluting them for all others. C4IP strongly supports this legislation, viewing it as a pivotal moment for American innovation.
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. Representatives Darrell Issa (R-CA), Jerry Nadler (D-NY), Ben Cline (R-VA), and Hank Johnson (D-GA) introduced the House companion to this bill in June 2024.
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 July 2023, Senators Chris Coons (D-DE), Thom Tillis (R-NC), Dick Durbin (D-IL), and Mazie Hirono (D-HI) – joined by Deborah Ross (D-NC), and later cosponsored by Nathaniel Moran (R-TX), 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 fora.
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 the theft of American IP overseas. The actions called for by the bill may well 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 Improving Efficiency to Increase Competition Act:
In January 2024, Senators Thom Tillis (R-NC) and Chris Coons (D-DE) introduced legislation intended to reduce the administrative burden on universities and other institutions that receive federal research grants so that they can focus more intently on producing new innovations. Specifically, the legislation would direct the Government Accountability Office (GAO) to conduct a study on intellectual property reporting requirements under the Bayh-Dole Act, which vary between federal agencies. Such a study will offer important insights into how the government can make the reporting process more efficient and remove barriers that may have inhibited the development of new inventions.
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.