“Strong patent rights that are enforceable against infringers are crucial for firms that engage heavily in research and development activities, and now is a perfect time for the pharmaceutical sector to inform the public debate on how enforceable patent rights encourage a strong innovation economy.”
The United States is not even two weeks into the administration of President Joe Biden and it’s likely that the administration’s selection for Director of the U.S. Patent and Trademark Office (USPTO) will not become clear for a few months yet. Many members of the U.S. innovation community, however, are well aware of the high stakes in play with that selection. The tenure of outgoing Director Andrei Iancu was lauded across many sectors of the U.S. patent system, perhaps with the exception of the tech sector. As we consider candidates for the next USPTO head, perhaps we should look to the political moment in which we find ourselves to guide our search.
Big Tech Influence
The recent transition document published on the Day One Project website includes several proposals related to the PTAB and Section 101 patent eligibility indicating that Iancu’s work on either issue will not be set in stone. One of the Project’s collaborators, Santa Clara Law Professor Colleen Chien, is part of the tech transition team for the Biden Administration and that has raised concerns about the potential of a USPTO Director nominee who may return the agency to harmful patent policies pursued during the Obama era, when Chien served in the White House’s Office of Science and Technology Policy (OSTP) in the months leading up to the nomination of former Director Michelle Lee.
Biden’s stance on intellectual property has been fairly inscrutable and the few mentions of IP in Biden’s campaign platform did little to answer any questions on what to expect from the incoming President on patent policy. Industry insiders have suggested several candidates with ample experience at the agency but political headwinds often play a major role in the nomination process. News reports indicate that Big Tech has been playing a role behind the scenes in placing allies in senior roles within the Biden Administration, and the lack of attention paid by the mainstream media to the USPTO could make it a prime target among corporations seeking political influence.
Yet there are reasons to believe that Big Tech won’t be as successful in advocating for a USPTO Director who can pursue favorable policies at the agency. The political moment for Google, Apple and other tech titans is much different now than it was during the Obama Administration, when those firms were becoming more successful but weren’t mired in legal actions brought by antitrust regulators. The idea that Biden would appoint someone with the same Big Tech connections as Michelle Lee, even with Chien and former Google CEO Eric Schmidt connected to the Biden transition, seems a little too brazen to be a possibility.
Movement on SEP Policies Represent Opportunity for Tech Implementers
Of course, although the current political moment may involve less movement on patent policy related to smartphones and software technologies, there are some fluid areas of patent policy that anti-inventor corporate interests may try to influence. A change in Presidential administration also brings with it the possibility of a new direction on standard-essential patent (SEP) policy, especially where it comes to enforcing fair, reasonable and non-discriminatory (FRAND) obligations on SEP owners. While the Obama Administration pursued actions on SEP policy that favored tech implementers over patent owners, the USPTO and the Department of Justice under the Trump Administration have relaxed the threat of antitrust enforcement against SEP owners over licensing practices.
It’s not hard to conceive how pro-corporate groups might use the changing political headwinds to push for appointees with favorable political views on SEPs. Automotive manufacturers, for example, are seeing major industry changes involving new propulsion systems and autonomous driving modes which are turning more of those companies into implementers of technologies invented in other sectors. In November 2019, an amicus brief filed at the Ninth Circuit in Federal Trade Commission v. Qualcomm by the Association of Global Automakers and Alliance of Automobile Manufacturers discussed many of these new technologies being implemented by automakers and how SEP risks are larger in their industry because automotive companies don’t make their own computer chips. Unlike many other corporate sectors that favor policies disadvantaging patent owners, auto industry groups include major patent owners and can make claims similar to those from the High Tech Inventors Alliance, which represents companies owning large patent portfolios but who prefer to weaken patent rights to reduce infringement liability.
So, if connections to the automotive sector, or corporate sectors disfavoring SEP rights more generally, should raise red flags, which politically connected appointee should most patent owners prefer to see? The next nominee to serve as USPTO Director will doubtless have some connections which land them in the conversation in the first place, and any nominee with patent attorney experience is going to have served the legal interests of companies that have a stake in patent policy, even if that attorney experience was at a firm and not as corporate executive counsel. What industry sector in the current political moment could produce a USPTO Director nominee that has a good shot at retaining pro-patentee Iancu era reforms?
Pharmaceutical Firms Understand Importance of Strong, Enforceable Patent Rights
One possible answer is the pharmaceutical industry. Intellectual property policy may not have played a large role in the recent Presidential election, but the COVID-19 pandemic certainly has and will continue to influence public debate over the coming months as vaccines continue to be rolled out to the public. American companies Pfizer and Moderna have been in the lead on developing COVID-19 vaccines approved for use by the Food & Drug Administration (FDA) and it should be no surprise given that the United States has the world’s #1 intellectual property system, including a patent system ranked among the world’s top five.
Last March, a study published by The Journal of the American Medical Association found that the median cost of research and development for each drug approved by the FDA between 2009 and 2018 was $985 million. “Strong and reliable IP protections have supported America’s robust innovation ecosystem by promoting discovery, development, affordability and access to new treatments and cures,” Tom Wilbur, a spokesperson for the Pharmaceutical Researchers and Manufacturers of America (PhRMA), told IPWatchdog. “As our industry continues to expand vaccine production and deliver medicines to patients in need, reliable IP protections have been critical in supporting multiple research and development and manufacturing ramp-ups on COVID-19 vaccines and therapeutics.”
Hans Sauer, Deputy General Counsel and Vice President of Legal, Biotechnology Innovation Organization (BIO), added that “less than 10% of drug candidates that begin human testing are eventually approved by the FDA. Strong IP protections – like patents, regulatory data protection, and robust international trade agreements — help offset these business risks and provide the prospect of returns on risky and sustained investments, thus encouraging investors to put money towards future cures.”
While independent inventors and pharmaceutical R&D firms may not have much in common, members of both groups understand that strong patent protections allow them to take the risks necessary to pursue innovation from concept through to commercialization. Unlike many other sectors, pharmaceutical developers often have small portfolios protecting valuable chemical compounds, giving them an innate understanding of the importance of maintaining certainty in patent validity. These same risks cannot be appreciated by most of Big Tech or the automotive industry, where large patent portfolios cover mainly incremental technological advances and innovation risks are mainly posed not by product failures but rather through increased infringement liability by operating as market incumbents in rapidly advancing sectors.
Strong patent rights that are enforceable against infringers are crucial for firms that engage heavily in research and development activities, and now is a perfect time for the pharmaceutical sector to inform the public debate on how enforceable patent rights encourage a strong innovation economy. If the world’s economy is able to reopen in 2021, it will largely be due to the fact that American firms enjoying strong patent rights just won the fastest race to a vaccine ever seen by modern science. While it will take many weeks yet to see where the chips are falling in terms of the next USPTO Director appointee, it’s possible that parties within the U.S. patent system who want to retain many of Director Iancu’s reforms might find a champion for their interests from the pharmaceutical sector.