Pandemic Lays Bare Fight Over Patent Strength, Innovation

Stronger patent rights could hamper innovation, some say

But patent holders argue weak protections chill research

When a patent licensing firm sued bioMerieux SA, a French company developing coronavirus tests, over old Theranos testing patents, the Electronic Frontier Foundation called it an example of patent exclusivity rights “standing in the way of innovation.”

That same month, the Naples Roundtable asked the patent office to designate as precedent two Patent Trial and Appeal Board decisions allowing claims on medical inventions. Both inventions had previously been found to cover subject matter ineligible for patenting.

Making the decisions precedential would “promote innovation in the life sciences and encourage a robust response to public health challenges like the COVID-19 pandemic,” the Naples Roundtable, an influential patent policy group, wrote in a letter to U.S. Patent and Trademark Office director Andrei Iancu.

These two public statements, which came just days apart in March, highlight opposing sides of a broader debate over the strength of U.S. patent rights, and how to drive innovation. It’s a divide highlighted by the coronavirus pandemic, amid questions about the U.S. response to the crisis.

“I think that the pandemic is a moment when everyone realizes how important technology and innovation are,” said Alex Moss, a staff attorney at the EFF, who specializes in intellectual property. “I think right now, though, we are at the moment where we are still arguing about how best to put forth innovation.”

On one side are those who argue the U.S. needs to strengthen the rights of inventors and others who hold patents and expand the universe of what is eligible to be patented. Others say rights to patents are already well-protected, and making those rules stronger could keep innovative products off the market.

How those arguments play out could help shape U.S. policies, and the way the country structures its patent and innovation policies in advance of the next health pandemic, which scientists warn could be even more deadly.

‘Leading Edge’

The debate over patent protections has raged for years—in newspaper opinion pages, through the halls of Capitol Hill, and inside the U.S. Supreme Court. The pandemic has brought it again to the forefront and, perhaps, more into public consciousness.

Those pushing for stronger protections argue there has been a shift in the past two decades that has weakened the patent system, discouraging research and innovation. Prominent attorneys, academics, and some lawmakers argue the pandemic has spotlighted the need for changes.

Among these critics’ biggest targets has been a series of Supreme Court decisions between 2012 and 2014 about what is eligible for protection. The decisions have made it more difficult for companies to get patents on computer software and diagnostic tests.

Patent eligibility is the “leading edge of the collapse of the American patent system,” and contributed to the U.S. problems with coronavirus testing, Paul Michel, a former chief judge of the U.S. Court of Appeals for the Federal Circuit, said.

“I don’t see that there’s much doubt that a major factor in our pandemic unpreparedness was that we disincentivize corporate and VC investment in developing new and better diagnostic methods,” Michel said, referring to venture capital funding.

He and others also believe the rise of the Patent Trial and Appeal Board, which has become a popular avenue for accused infringers to challenge the validity of issued patents, and difficulties getting injunctions in district court, have also helped push investment dollars to Europe and Asia.

China, in particular, has invested heavily into building its patent system. The Trump administration has said the U.S. is already too reliant on China for drugs, and there are concerns the U.S. could lag on other technologies, including artificial intelligence and 5G.

There is a “much greater appreciation, I believe, in China for IP to foster innovation and investment and technology growth,” said Robert Sterne, a founding director of the Washington, D.C., IP boutique Sterne Kessler Goldstein & Fox PLLC.

Congress Interest

Since passing legislation in 2011 that created the PTAB, Congress has explored other patent system changes. Sen. Chris Coons (D-Del.) and Rep. Steve Stivers (R-Ohio), reintroduced last year the STRONGER Patents Act (S. 2082, H.R. 3666), a wide-ranging proposal that would, among other things, make PTAB reviews less attractive for accused infringers.

Lawmakers also set out last year to rewrite Section 101 of the Patent Act, which sets the benchmark for patent eligibility. The effort, which included three days of hearings with 45 witnesses, broke down amid disagreements among stakeholders.

One of the senators who spearheaded the proposal, Thom Tillis, (R-N.C.), said in an interview with the American Intellectual Property Law Association he planned in the coming months to work on a “narrow, targeted fix” for patent eligibility as it related to diagnostic methods, citing the coronavirus pandemic.

Tillis’ office declined further comment.

Others argue there isn’t a shortage of inventiveness. And they have concerns about strengthening patent rights, fearing broad patents on basic ideas that could block new technologies.

The bioMerieux lawsuit was viewed as an example, although the licensing firm that brought the case, Labrador Diagnostic LLC, has said the lawsuit was over diagnostic tests that predated the coronavirus. Labrador offered its patents royalty-free for companies developing a Covid-19 test.

We “don’t always need exclusive rights to incentivize innovation,” Moss said. “When there’s a real, overwhelming need, people who care about society and the world are jumping in to do it.”

Holistic Approach

There is also a risk that an overemphasis on patents could stunt progress, including the U.S.’s preparation for another crisis, some believe.

Charles Duan, a patent attorney and director of technology and innovation for the R Street think tank in Washington, said leaders shouldn’t lose focus on basic policies, like increasing science funding or better stockpiling of resources.

He also noted research from University of Chicago law professor Daniel Hemel and Stanford law professor Lisa Ouellette, who argued that government-funded cash prizes could incentivize companies to invest in coronavirus vaccine research.

“There are many, many ways that we can drive innovation,” Duan said. “We need to look to a more holistic approach than we so far have been, focusing so much on the patent system as the primary driver of innovation.”

Encouraging innovation is just half of the equation, said Christopher Morten, an attorney who teaches at New York University law school. The other is access. Morten said this has been highlighted during the pandemic, with concerns about who will get vaccines once they are available.

“The access half gets left out,” Morten said. “We don’t think about how to maximize access to those new inventions.”

An approach he recommended is codifying open science processes.

“Sharing data and knowledge accelerates competition,” he said. “It makes it harder for one company to lock up knowledge and monopolize it.”

BY MATTHEW BULTMAN AND IAN LOPEZ

Aug. 11, 2020, 6:01 AM

https://news.bloomberglaw.com/ip-law/pandemic-lays-bare-fight-over-patent-strength-innovation