“The political objective of ‘repealing Section 230’ that has marked the final days of the Trump Administration won’t be a similar rallying cry for the next Administration, but expect the scrutiny of the big tech platforms to continue in a more substantive, and perhaps more threatening way.”
As we thankfully see 2020 fading into the rear-view mirror and all look forward to a hopefully much better 2021, we want to take a moment to reflect on what the past year brought us and how the stage is set for another very fluid and consequential year for intellectual property policy.
In times like these, it is clear that leadership matters more than ever. During some of the most challenging times our country has faced, there were a number of places where we saw strong leadership result in tangible progress.
USPTO Leadership for the Win
At the U.S. Patent and Trademark Office (USPTO), the steady hand of Director Andrei Iancu not only kept the USPTO operating at a high level during the pandemic, but he and his team continued to advance policies to strengthen the U.S. patent system at a time of tremendous economic distress and often predatory global competition. The over 13,000 USPTO employees transitioned seamlessly to full-time telework, and while in most situations this would lead to a certain decrease in productivity, the USPTO actually saw an improvement in patent application examination process time in 2020. This at a time when some of the best and brightest minds in America were racing to develop better COVID testing, better communications tools and ultimately COVID vaccines to lead us out of this crisis. Beyond the core functionality of the Office, USPTO pushed aggressive new initiatives like the COVID-19 Fast Track Program, to allow startups and small companies to accelerate consideration of COVID-related patent applications free of charge, and the Patents 4 Partnerships program that created repository of COVID-19-related patents and applications, and also a platform to connect patent holders with others who might need to access and license their IP.
On the policy front, the USPTO ended the year by inviting stakeholders to submit formal comments regarding the Discretion to Institute Trials Before the Patent Trial and Appeal Board (PTAB). This process resulted in hundreds of comments from stakeholders ranging from independent inventors to some of the largest companies in America. This collection of input and analysis should serve as the basis for ongoing efforts to improve the PTAB process in a way that best serves the U.S. inventors, entrepreneurs, investors and workers that it was designed to support.
The USPTO likewise requested comments from private sector stakeholders late last year on Secondary Trademark Infringement Liability in the E-Commerce Setting. This process should also generate a large body of substantive comments on the key question of whether to apply contributory and/or vicarious trademark infringement liability to e-commerce. This question is also being put to the test in state court cases such as State Farm Fire & Cas. Co. v Amazon.com in New York which found that the insurance company can pursue claims against Amazon because it was the “seller” of a faulty thermostat that caused a house fire. The combination of factors such as these, as well as growing support in Congress, is creating optimism that we could see serious progress on legislation such as the SHOP SAFE Act, which would incentivize platforms to vet sellers, and the INFORM Act, which would also require much stricter verification of sellers on online marketplaces.
Congress Delivers on IP
Commitment and leadership from Congress also led to a number of accomplishments in the waning hours of 2020 that will have a profound impact on U.S. artists, creators and trademark holders. A committed, bipartisan effort led by Senators Tillis, Coons, Kennedy, Durbin and Hirono, working alongside Representatives Nadler, Jeffries and Collins culminated in the passage of both the Copyright Alternative in Small-Claims Enforcement Act (the CASE Act) and the Protecting Lawful Streaming Act (PLSA) as part of the end-of-the-year Omnibus Appropriations and COVID Stimulus package. The CASE Act sets up an efficient small claims process for copyright owners, providing them with a proactive tool to address online infringement. The PLSA would simply elevate commercial, for-profit streaming piracy to a felony offense, thereby providing a deterrent that matches the severity and impact of commercial streaming piracy felt by many copyright owners.
The much-needed Trademark Modernization Act was also enacted with wide bipartisan support in the same package as CASE and PLSA. In a sign of big tech’s modestly diminished influence in Congress, all three of the measures were enacted over public objections of several major tech companies and many similarly aligned interests. The longstanding refrains that any reasonable attempts to strengthen IP protections will “kill the Internet,” and/or are “handouts to Hollywood” seem to increasingly fall on skeptical ears in Congress. The CASE Act, for example, passed the House 410-6.
Congress also continued to play an active role in promoting a stronger IP enforcement environment in the U.S. by pressing major e-commerce platforms, through legislation, hearings and formal inquiries, to do much more to address rampant counterfeiting. This included a high-profile Senate Judiciary hearing in July featuring Amazon CEO Jeff Bezos.
2020 also saw an exciting and extremely well-qualified new leader take over as the U.S. Register of Copyrights. In September, Shira Perlmutter was appointed as only the 14th Register of Copyrights, a role that will put her at the intersection of an increasingly complex and global copyright system that is critical to the ongoing vitality of the U.S. creative industries.
While the Trump Administration left major opportunities on the table to press for stronger IP protections in the U.S.-Mexico-Canada Free Trade Agreement and through better collaboration with key economic allies, it did move the ball forward on several fronts. The Department of Homeland Security and the National IPR Coordination Center delivered a comprehensive report in January that included an aggressive agenda to address IP theft on e-commerce platforms. These agencies also led a quiet, but effective fight against counterfeit personal protection equipment through the height of the COVID pandemic, and they continue to battle the anticipated rise of counterfeit COVID vaccines and therapeutics.
The USPTO, along with the Department of Commerce and State Department, helped lead a global coalition to support the selection of Daren Tang of Singapore to lead the World Intellectual Property Organization for the next six years. U.S. leadership came at a critical time, as China was also making a strong push to place its preferred candidate at the head of this very important global institution.
So What’s to Come?
This year has already shown us a dramatic first few days. Beyond the tragic events in the U.S. Capitol, we saw the somewhat unexpected shift of power in the Senate to Democratic control based on the election of both Rev. Raphael Warnock and John Ossoff in Georgia. It is clear that the new Congress and the new Biden Administration will face huge challenges before we approach anything close to “normal” in any sense. That said, when it comes to IP, what can we expect?
With Democrats taking control of the Senate, significant changes are likely in store, at least in terms of process. The Senate Judiciary IP Subcommittee, if under the leadership of Senator Thom Tillis (R-NC), had fully intended to keep its foot on the throttle by tackling some major challenges in 2021. This included “reforming” both patent eligibility rules under Section 101 of the Patent Act and—perhaps one of the thorniest IP policy issues of them all—making changes to the Digital Millennium Copyright Act (DMCA). With respect to the DMCA reform, Sen. Tillis had recently released a draft bill entitled The Digital Copyright Act and had stated his interest in seeing formal legislation introduced this year.
The IP Subcommittee will now likely be led by Senator Chris Coons (D-DE) and the full Judiciary Committee will be led by Senator Dick Durbin (D-IL). Both have been very active on IP issues during their careers and are advocates for a strong patent system. They will also likely serve as a firewall against efforts to weaken IP, and we fully expect them to proactively work to improve patent protections for inventors. For example, Senator Coons, with Sen Durbin’s co-sponsorship, introduced the Stronger Patents Act last Congress. The bill would, among other things, safeguard patent holders’ interests in administrative proceedings of the USPTO’s Patent Trial and Appeal Board and restore the ability of inventors to obtain an injunction.
In terms of Section 101 reform, Senator Coons collaborated with Senator Tillis to conduct lengthy hearings last Congress and worked to develop a potential legislative framework for clarifying patent eligibility. When releasing this framework in early 2019, Senator Coons said, “Today, U.S. patent law discourages innovation in some of the most critical areas of technology, including artificial intelligence, medical diagnostics, and personalized medicine … I look forward to continuing to receive feedback as we craft a legislative solution that encourages innovation.” Look for Senator Coons, with the support of Senator Durbin, to continue the effort to fix Section 101, even if the process and timing changes.
Senator Coons’ inclination and plans for addressing the DMCA are less clear, but he has been a consistent advocate for strong copyright protection and expressed interest in fixing flaws in the DMCA during a hearing last summer. He credited the U.S. Copyright Office’s extensive report on Section 512 of the DMCA and noted that Congress’ original balance was “tilted askew” and that the notice and takedown system has not remedied the widespread problem of digital piracy. He also asked, during an exchange with witnesses that included Don Henley from the Eagles, whether some of our largest and most sophisticated companies should shoulder some of the responsibility for infringing material that is being monetized on their platforms.
In addition to these bigger ticket items, it is also possible that Congress could examine the issue of copyright termination rights, a legal framework that has its roots in the 1976 Copyright Act, but has recently been at the center of unresolved debate and litigation between artists and record labels.
Faces of the New Administration
A more structured and predictable Biden Administration will also present a sea change in terms of approach and substance. If nothing else, there will no longer be late night and early morning tweets that infuriate allies, confuse markets and make governing precarious, to say the least. President-elect Biden has already made numerous Cabinet-level appointments that have generally received broad support, and he is tapping into a vast network of experienced and trusted experts to make up the top ranks of his White House staff.
His selection of Rhode Island Governor Gina Raimondo to be Commerce Secretary is a notable pick; she brings significant private sector experience as the founder of a prominent venture capital firm Point Judith Capital that helped launch a number of companies in the technology and health care sectors.
As we all know, however, the rubber meets the road for IP policy in places like the USPTO, the Office of the U.S. Trade Representative, the Office of IP Enforcement Coordinator, the Office of Science and Technology Policy and many other diverse facets of the U.S. Government, and we have yet to see the full slate of appointments for these roles.
For the role of USPTO Director, we expect the lobbying to be heated between IP-intensive industries that would like to see the legacy of Director Iancu continue and those from sectors like technology, software and consumer electronics, which will be working to try to reverse much of what he has accomplished. As a case in point, several big tech companies have actually taken Director Iancu to court to try to stop his ongoing efforts to reform the PTAB.
Biden on China and Big Tech
President-elect Biden brings nearly 40 years of experience on the Senate Judiciary Committee – he was either Chairman or Ranking Member for 17 of those years. Vice President-elect Harris also served on the Senate Judiciary Committee beginning in 2017. One area of consistent engagement for President-elect Biden over the years has been on IP enforcement. His Presidential platform committed to “confront foreign efforts to steal American intellectual property” noting that, “China’s government and other state-led actors have engaged in an assault on American creativity.” It is also worth noting that, as Vice President, Joe Biden played an active role in developing the Obama Administration’s IP enforcement strategy. We would expect the Biden Administration, therefore, to prioritize the appointment of a strong IP Enforcement Coordinator, as well as a Chief Innovation and IP Negotiator at the Office of the U.S. Trade Representative.
As the Biden Administration continues to take shape in the coming weeks, we also expect the wide-ranging scrutiny of “Big Tech” to continue. The political objective of “repealing Section 230” that has marked the final days of the Trump Administration won’t be a similar rallying cry for the next Administration, but expect the scrutiny of the big tech platforms – Google and Facebook in particular – to continue in a more substantive, and perhaps more threatening way. It was relatively easy to dismiss and defeat Trump’s reactionary legislative Hail Mary to repeal Section 230 of the Communications Decency Act, but the Biden Administration will inherit a Justice Department-led antitrust case against Google and a Federal Trade Commission-led case against Facebook. These are in addition to an antitrust lawsuit brought against Google in December by nearly 40 state Attorneys General. This will put big tech companies on their heels, with some of their aggressive IP tactics, such as efficient infringement, potentially at the center of the conversation with state and federal investigators.
Given the Obama Administration’s record on supporting the policy IP priorities of large tech companies, and Silicon Valley’s support for the Biden campaign, there’s little question that big tech will have greater influence with the incoming Administration. But eight years ago, the policy horizon for tech was what they chose it to be, whereas today they face a number of challenges in the form of antitrust, national security, and scrutiny regarding their extensive safe harbor from liability. How far the Biden IP team pivots back towards a policy approach that is more skeptical of the importance of IP may depend on the extent to which tech chooses to focus its political capital on weakening IP over effectively dealing with the more threatening challenges they face. As we work with new leaders in the IP space and re-engage with existing players, it is clear that 2021 will be a fluid and consequential period for all IP owners. Last year proved that progress is possible, even in a very difficult environment. But we also know that this progress is precarious, and that addressing even bigger challenges, such as Section 101 reform, making meaningful advances to online trademark enforcement and reforming the DMCA will be much more difficult—but still possible.
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