Patent Docs

Can Judge Michel and John Duffy Convince the Supreme Court to Revisit Subject Matter Eligibility?

By Kevin E. Noonan --

Einstein's aphorism that doing the same thing over and over again and expecting a different outcome is a hallmark of madness (or at least an inability to learn from the past) inevitably comes to mind when perusing the recent history of attempts to persuade, cajole, or shame the Supreme Court to revisit its recent subject matter jurisprudence.  While the many certiorari petitions have amply demonstrated the dysfunctional nature of the jurisprudence (at least in its application by the lower courts) it has seemed that no matter how the evidence was presented, or the outrageousness of the application (see "Supreme Court Denies Cert in American Axle"), or how many times the government joins the call in response to a request for the views of the Solicitor General (see, e.g., "Solicitor General Weighs In On Patent Eligibility Question"), the Court has been steadfast in denying cert.

But it is also the case that sometimes the way of getting a different outcome can be in how the question is presented to the Court (and it is certainly true that the arguments made in the over 60 cases where cert was denied have been similar to the point of repetitiveness).  While it is too soon to tell (or to raise any hopes) in this regard, it may be significant that a recent amicus brief on behalf of former Federal Circuit Chief Judge Paul Michel and Professor John Duffy in CareDX v. Natera has prompted the Court to ask the Respondent (the prevailing party who espoused the Court's decisions and analytical structure to invalidate the patent on subject matter ineligibility grounds) to address their arguments.  (It also may be significant that Professor Duffy was instrumental in convincing the Court to review the Federal Circuit's application of obviousness law in KSR Int'l v. Teleflex several years ago.)  The resulting indication of the Court's interest, intellectual curiosity or belated sense of responsibility for the utter mess that is subject matter eligibility law (particularly with regard to diagnostic methods) certainly merits consideration of the arguments raised in this amicus brief.

The difference in the Michel/Duffy approach is to focus on what they characterize as a clear instance of Congress overruling "judge-made law" in enacting the 1952 Patent Act and the "continuing trend of uncertainty and inconsistency in patent-eligibility jurisprudence" engendered by how the lower courts have been implementing the Court's subject matter eligibility decisions to contradict those statutory commands.  And of course this state of affairs resulting in an undermining of the "innovation-promoting goals of U.S. patent law."

The statute at issue has been codified under 35 U.S.C. § 100(b) which defines a subject matter eligible "process" to "include a new use of a known process."  This definition was included in the 1952 Act, amici argue, to expressly overrule 19th Century judge-made law that held a new use of known technology was patent-ineligible, constituting a "clear example in which the judicial gloss on patentable subject matter has been legislatively rejected," citing John F. Duffy, Rules and Standards on the Forefront of Patentability, 51 Wm. & Mary L. Rev. 609, 632 (2009).  The Federal Circuit erred, the brief argues, in its determination that the methods recited in the claims were "conventional" despite the fact that "none of [them] are found in nature (and many of which were not even possible within living memory)."  (It will be recognized that if persuasive this argument would severely limit if not abolish the second step of the Mayo/Alice test as enunciated by Justice Breyer in Mayo Collaborative Services v. Prometheus Laboratories, Inc., that "inventiveness" was negated where the application of a natural law was "routine, well-understood or conventional.")  Amici argue that this purported "conventionality" is "irrelevant to the patent-eligible inquiry when the process is directed to statutorily defined patent-eligible (rather than patent ineligible) subject matter."

The brief argues that the law of patent-eligibility needs "clarification," citing the litany of cases illustrating the disarray in this area of the law.  This includes reminding the Court that the Justices themselves have asked for the Solicitor General's views in five recent cases (Tropp v. Travel Sentry, Inc., 143 S. Ct. 361 (2022); Interactive Wearables, LLC v. Polar Electro Oy, 143 S. Ct. 78 (2022); Am. Axle & Mfg., Inc. v. Neapco Holdings LLC, 142 S. Ct. 2902 (2022); Hikma Pharm. v. Vanda Pharm., Inc., 140 S. Ct. 911 (2020); and HP Inc. v. Berkheimer, 140 S. Ct. 911 (2020)).  The brief also cites statements from Chief Judge Moore (in Am. Axle & Mfg., Inc. v. Neapco Holdings, LLC, dissenting), Judge Dyk (Ariosa Diagnostics, Inc. v. Sequenom, Inc.), and Judge Hughes (Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC) in their opinions asserting the need for "further explication of eligibility standards" from the Court, as well as similar sentiments from the U.S. Patent and Trademark Office.  The issue is framed as a conflict with the Executive Branch, which "continues to issue patents only to see them invalidated in the Federal Circuit."  Outside the government, the brief cites observations from legal academics ("[t]he law of patentable subject matter is a mess," Mark Lemley, testifying before the Senate Judiciary Committee on June 4, 2019) and "[n]umerous others in the business and legal communities," citing testimony from those hearings.

Moreover, the brief argues, the decision is wrong for "overlook[ing] the Patent Act's text and conflict[ing] with th[e] Court's precedent."  On the facts, the brief argues that the decision "disregarded the specific, technologically advanced steps of the claimed processes" as well as relying on "conventionality" of the recited methods, which (as has long been recognized even in the briefing by the government in Mayo) "conflat[ed] patent eligibility (under § 101) with the requirements for patentability (in §§ 102, 103, and 112)."  In doing so, amici argue that the Federal Circuit acted contrary to the Court's mandates in Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980) (quoting United States v. Dubilier Condenser Corp., 289 U.S. 178, 199 (1933)), that "courts should not read into the patent laws limitations and conditions which the legislature has not expressed" (while recognizing in other precedent that there are "implicit exceptions" to patent eligibility including the meaning of the term "process").

Starting with the text of the statute (which "must be the starting point") the standard is that a new and useful process or improvement thereof is recited in Section 101 and the term "process" defined in Section 100(b) as a "process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material."  Taken together, amici argue, "a new process that is presented as an improvement on a known useful process is presumptively patent eligible."  And in enacting this definition of "process" they argue that merely because a process was known or, in the Court's language, "conventional" was not enough to per se determine the process to be patent-ineligible subject matter.  The brief recognizes that conventionality is a relevant consideration for novelty or obviousness but states that:

To interpret § 101 as imposing a strict "non-conventionality" standard for patentable subject matter—while not respecting the definition of§ 100(b) and the explicit roles of § 102 and § 103—is to wander so far from the words of the Patent Act as to end up in the wilderness of atextualism.

The brief cites the Court's decision in Diamond v. Diehr as "an instructive example" of how to reconcile the implicit judicial exceptions to subject matter eligibility with the statutory text.  Even though the claimed rubber-curing process in Diehr was "conventional" that was not dispositive, because the improvement (using the Arrhenius equation) was an application of a scientific principle to improve a known process, producing a new process for curing rubber (a judicial principle also recognized in Cochrane v. Deener, 94 U.S. 780 (1876) according to the brief).  None of these principles or considerations were cited or addressed in the Federal Circuit's opinion according to the brief, important due to the similarities between the claimed invention at issue and the patent-eligible claims in Diehr:

Both processes involve complex chemical transformations, not performed in nature, and they both utilize scientific principles to create "new and useful improvement[s]" of known processes.  They both incorporate data analysis to yield a useful result.  They both offer specific technological solutions to a problem that remained unsolved for many years.

The argument is presented as being capable of a narrow focus (albeit with broad implications), wherein the Court could "delineate when improvements of technological processes are patent eligible and to correct a decision that conflicts with the statutory text and this Court's precedent."

The brief further explicates reasons why the Federal Circuit erred in its decision, including that the claims "involve specific, complex biochemical reactions that do not occur in nature and occur only through the provision of human ingenuity" without preempting any "fundamental natural phenomenon" (extensively explicating these differences).  The brief also notes that the recited "specific, complex biochemical reactions" in many instance have themselves been patented in "[t]oo any examples" to be listed in the brief.  And the inclusion of conventional steps is not in itself enough to invalidate an "otherwise novel and nonobvious technological process" under Diehr, amici argue.  The Federal Circuit's analytical error was in creating an "overly simplistic 'summary' of the claimed processes" that "present[ed] the invention at a level of abstraction that eviscerates key features of the claimed processes."  The brief sets forth as an illustration of a better alternative by analogy methods for refining and analyzing precious metals and presents a detailed comparison with patented methods on this subject matter (for which the brief argues "there is no reasonable dispute about patent eligibility").  In doing so, the brief illustrates how these patent-eligible processes could themselves be presented at a sufficiently high level of abstraction so as to be deemed patent-ineligible.  And this is something that the Federal Circuit has done consistently with regard to diagnostic method claims, amici argue, even in instances (such as Ariosa Diagnostics) where what is claimed is a "new diagnostic method [that] is novel and unforeseen, and is of profound public benefit— 'a significant contribution to the medical field,'" Newman, J., dissenting).  The brief also contains argument regarding the doctrinal impropriety of conflating Section 101 requirements with those of Sections 102, 103, and 112, making reference to arguments by the Solicitor General in its Tropp brief.  And the brief cites the consequences of holding to be patent-ineligible "biological and chemical processes that are designed to provide life-saving diagnostic results," that are "not products of nature" and do not claim "the fundamental, scientific principle" but instead "solve[] a technological problem."

It should be noted the care with which amici approach the imputed basis for the need for the Court to provide guidance, wherein the brief states that "[t]his reassessment [by the Court, requested by amici and others] need not overrule the Alice/Mayo test, but it would allow a more faithful application of this Court's precedent to achieve the objective of the Constitution's Patent Clause and would respect the text of the Patent Act."  In this regard, the brief also notes the Court's reliance in Mayo and Alice on pre-1952 decisions and how those decisions were directed to "patentability" and not patent "eligibility," and that the citation in Mayo of Parker v. Flook with regard to an "inventive concept" was based on only two uses of the term and no reliance on any precedent for what the term meant.  The brief also mentions that the term "inventive concept" was absent in Funk Brothers Seed Co. v. Kalo Co., 333 U.S. 127, 130 (1948), and Mackay Radio & Telegraph Co. v. Radio Corp. of America, 306 U.S. 86, 94 (1939), as well as Benson v. Gottschalk, and that in this regard the Court's decision in Diehr overruled Flook until it was rehabilitated (or resurrected) in Mayo.  But "'inventive Concept' as a key requirement for patent eligibility finds little support in this Court's historical precedent," amici argue, and yet that is what the Federal Circuit relied upon in invalidating the claims below.

Finally, the brief argues that this case is "an excellent vehicle" for the Court's reconsideration and reassessment of the proper eligibility test for processes because it is directed to a diagnostic methods which are "critically important" to innovation and for consistency with the constitutional mandate that the patent laws "promote progress."  According to a USPTO report, the current state of patent eligibility "has a direct [(negative)] impact on investment, research, and innovation," citing A. Sasha Hoyt, The Impact of Uncertainty Regarding Patent Eligible Subject Matter for Investment in U.S. Medical Diagnostic Technologies, 79 Wash. & L. Rev. 397, 398 (2022).  These uncertainties are illustrated in the brief by citation of Federal Circuit decisions upholding or invalidating diagnostic method claims in different cases without any consistency, citing CardioNet, LLC v. InfoBionic, Inc., 955 F.3d 1358, 1367 (Fed. Cir. 2020); Exergen Corp. v. Kaz USA, Inc., 725 Fed. App'x 959, 966 (Fed. Cir. 2019); and Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., 827 F.3d 1042, 1044 (Fed. Cir. 2016), that found eligibility versus Genetic Veterinary Scis., Inc. v. LABOKLIN GmbH & Co. KG, 933 F.3d 1302, 1319-20 (Fed. Cir. 2019); Roche Molecular Sys., Inc. v. CEPHEID, 905 F.3d 1363, 1381 (Fed. Cir. 2018); Cleveland Clinic Found. V. True Health Diagnostics LLC, 859 F.3d 1352, 1363 (Fed. Cir. 2017); Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1381 (Fed. Cir. 2015), that did not.

Whether this brief prompts the Court to address patent subject matter eligibility or not, the arguments therein could motivate Congress to exercise its authority to mandate application of Section 100(b) consistent with the basis for enactment of the statute to overrule "judge-made" ineligibility for broad classes of inventions (i.e., new uses for old methods).  The Constitution gives Congress the power to grant patents (and to decide whether to have a patent system that does so), and so long as Congress does not exceed this authority the Court is subject to how Congress exercises this authority.  Whether Congress can muster the will or intestinal fortitude to do so is another matter.

U.S. Trade Representative Releases 2023 Special 301 Report

By Kevin E. Noonan --

On April 26th, Ambassador Katherine Tai, U.S. Trade Representative (USTR), issued the 2023 Special 301 Report.  In a press release, the USTR stated that "[i]nnovation and creativity are at the heart of American competitiveness.  That is why the Biden-Harris Administration's new story on trade includes lifting up the 60 million jobs and workers in our IP-intensive industries through robust IP protection and enforcement in foreign countries."  The press release mentions the Biden Administration's support for the WTO IP waiver and that it had asked the U.S. International Trade Commission to "conduct an investigation into COVID-19 diagnostics and therapeutics and provide information on market dynamics to help inform the discussion around supply and demand, price points, the relationship between testing and treating, and production and access" which is due on October 17, 2023.

The press release accompanying the release of the Report notes that its review of Ukraine, which has frequently been criticized particularly with regard to copyright infringement of music, movies, and other media IP, continues to be suspended due to "Russia's premeditated and unprovoked further invasion of Ukraine" since February 2022.  It mentions the addition of Belarus to the Watch List due to that country having passing legislation permitting "unlicensed use of certain copyrighted works" if the right holder is from a foreign state "committing unfriendly actions" as well as sanctioning "their role in Russia's unprovoked invasion of Ukraine."  The press release also announces placing Bulgaria on the Watch List for not "sufficiently address[ing] deficiencies in its investigation and prosecution of online piracy cases" as it did last year and that the USTR will commence an "out-of-cycle" review of Bulgaria "to assess whether [that country] makes material progress" on these matters.  The USTR voices "serious concerns regarding IP protection and enforcement in China," citing slowing pace of IP reforms despite China's "continued implementation of amendments to the Patent Law, Copyright Law, and Criminal Law" as well as continued concerns about "the adequacy and effective implementation of these measures, as well as about long-standing issues like technology transfer, trade secrets, bad faith trademarks, counterfeiting, online piracy, and geographical indications."  Singled out for praise are Thailand and Tunisia for acceding to the WIPO Copyright Treaty, and Chile for acceding to the Madrid Protocol on international trademarks.  But the EU is criticized once again this year for its "aggressive promotion of its exclusionary geographical indications (GI) policies (the recent destruction of Miller High Life for containing reference to it being the "champagne" of beers cannot help in this regard).  And the press release reiterates the USTR's "ongoing concerns" regarding online piracy, its efforts to use bilateral engagement to improve IP protection and enforcement, and engagement with "diverse and inclusive groups of stakeholders to consider their perspectives on IP issues."

According to the Executive Summary of the Report, it is as it was last year "[a] priority of this Administration is to craft trade policy in service of America's workers, including those in innovation-driven export industries."  The Summary further contains the exhortation that:

The Report serves a critical function by identifying opportunities and challenges facing U.S. innovative and creative industries in foreign markets and by promoting job creation, economic development, and many other benefits that effective IP protection and enforcement support.  The Report informs the public and our trading partners and seeks to be a positive catalyst for change.  USTR looks forward to working closely with the governments of the trading partners that are identified in this year's Report to address both emerging and continuing concerns and to build on the positive results that many of these governments have achieved.

The Report is promulgated pursuant to Section 182 of the Trade Act of 1974, as amended by the Omnibus Trade and Competitiveness Act of 1988 and the Uruguay Round Agreements Act (enacted in 1994).  The Trade Representative is required under the Act to "identify those countries that deny adequate and effective protection for IPR or deny fair and equitable market access for persons that rely on intellectual property protection."  The Trade Representative has implemented these provisions by creating a "Priority Watch List" and "Watch List."  Placing a country on the Priority Watch List or Watch List is used to indicate that the country exhibits "particular problems . . . with respect to IPR protection, enforcement, or market access for persons relying on intellectual property."  These Watch Lists are reserved for countries having "the most onerous or egregious acts, policies, or practices and whose acts, policies, or practices have the greatest adverse impact (actual or potential) on the relevant U.S. products."

The Report notes the USTR's continued efforts to enhance public engagement.  As in past years during the pandemic, these efforts were limited to written submissions and the responses posted online (www.regulations.gov, docket number USTR-2022-0016).  The Report notes that the USTR received submissions from 71 non-government stakeholders and 17 foreign governments.

The USTR reviewed "more than 100" of this country's trading partners and identified six countries on a "Priority Watch List" (decreased by one from last year) and another 22 countries on the "Watch List" (increased by two from last year), all relating to deficiencies in intellectual property protection in these countries.  The Priority Watch List in the 2023 Report includes Argentina, Chile, China, India, Indonesia, Russia, and Venezuela (review of Ukraine was suspended in view of the war with Russia).  Countries on this list "present the most significant concerns this year regarding insufficient IP protection or enforcement or actions that otherwise limited market access for persons relying on intellectual property protection."  On the Watch List this year are Algeria, Barbados, Belarus, Bolivia, Brazil, Bulgaria, Canada, Colombia, Dominican Republic, Ecuador, Egypt, Guatemala, Mexico, Pakistan, Paraguay, Peru, Thailand, Trinidad & Tobago, Turkey, Turkmenistan, Uzbekistan, and Vietnam (Belarus and Bulgaria being added to the list this year).

The Report contains two Sections (on "Developments in Intellectual Property Rights Protection and Enforcement" and "Country Reports") and two Annexes on particular issues (the statutory bases of the Report, and government technical assistance and capacity building efforts).

The Report cites (and emphasizes) significant progress in several U.S. trading partners, including:

• Japan, on the basis of amendments to its Trademark Act that "address concerns over Japan's personal use exemption for imported goods, which was used increasingly to send counterfeit items to individuals in Japan via postal and courier services";

• Saudi Arabia, which was moved from the Priority Watch List last year, "continued to take steps to improve IP protection and enforcement." These included an IP Respect Council "to facilitate communication between government entities and private sector stakeholders" as well as launch of a national IP strategy;

• Malaysia, for adopting amendments to its Copyright Act with new criminal provisions protecting streaming technology;

• Canada, which increased it copyright protection term to life of the author plus 70 years (an obligation under the US-Mexico-Canada Agreement;

• Thailand, which also amended its Copyright Act by adding provisions against circumventing technology protection measures;

• Vietnam, which amended its IP Code to include illegal uploading and streaming of cinematographic works as a violation of communication rights; and

• Nigeria, which adopted a Copyright Act that contained provisions for implementing several WIPO treaties on protecting content on the internet.

Also acknowledged in this section of the Report are the 112 members who have acceded to the WIPO Performance and Phonogram Treaty, 114 parties to the WIPO Copyright Treaty, and 61 members to the 1991 Act of the International Union for the Protection of New Varieties of Plants Convention (UPOV 1991), which protects breeders rights in new plant varieties.

Another Section of the Report involves "illustrative best practices" by U.S. trading partners.  These include "cooperation and coordination among national government agencies involved in IP issues is an example of effective IP enforcement," citing Thailand, India, Saudi Arabia, Brazil, Indonesia, Uzbekistan, the Dominican Republic and Romania for these efforts, which included India's creation of "IP enforcement toolkits" for training law enforcement; Saudi Arabia' creation of a permanent National Committee for the Enforcement of Intellectual Property for coordinating IP enforcement in the Kingdom; Indonesia's expansion of its Intellectual Property Enforcement Task Force for coordinating IP enforcement and protection among several ministries of its government; and the Dominican Republic's creation of a National InterMinisterial Council of Intellectual Property to similarly coordinate ministries of its government to enforce IP protections.

Also pointed out in the Report were "specialized IP enforcement units," in Malaysia; "IP awareness and educational campaigns" in Algeria, the United Arab Emirates, Thailand, Japan, Korea, the Philippines, Nigeria, and the Côte d'Ívoire; and "active participation of government officials in technical assistance and capacity building" in Romania, Algeria, Tunisia, the Philippines, Thailand, and Turkmenistan.  Micro-, small- and medium-sized enterprises (MSMEs) were particularly noted as "contribut[ing] widely to innovation, trade, growth, investment, and competition" and thus the Report applauds efforts in the UK and Thailand to support these businesses.

Multilateral and bilateral initiatives are discussed in the Report.  These include Trade and Investment Framework Agreements (TIFAs) with more than 50 U.S. trading partners, which include Taiwan, Algeria, Argentina, Paraguay, Bangladesh, Thailand, Egypt, Pakistan, Saudi Arabia, and a group of Central Asian countries.  Regional initiatives included in the Report are the Asia-Pacific Economic Cooperation (APEC) Intellectual Property Experts Group having the theme of "Creating a Resilient and Sustainable Future for All" and "discussions with APEC economies on effective practices for enforcement against illicit streaming in a U.S.-led initiative on illicit streaming."  Also noted are a series of workshops, including a "Roundtable on Copyright and Creativity in the Digital Economy," a "Workshop on Geographical Indications and Preservation of Common Names," and one on "Leveraging Industrial Design Protections for Small-and-Medium Sized Enterprises."  Regarding what the Report terms "trade preference programs," including the Generalized System of Preferences (GSP) program, the African Growth and Opportunity Act, the Caribbean Basin Economic Recovery Act, and the Caribbean Basin Trade Partnership Act, the Report mentions ongoing examination of IP practices in participants in these programs, in particular reviews of practices in South Africa and Indonesia.

Turning to specific issues of concern, trademark counterfeiting is said to harm consumers "particularly [with regard to] medicines, automotive and airplane parts, and food and beverages that may not be subject to the rigorous good manufacturing practices used for legitimate products."  The Report accuses infringers, motivated by higher profit margins, of disregarding product quality and performance.  The Report recites a litany of negative consequences to legitimate producers and their employees (diminished revenue and investment incentives), adverse employment impacts, and reputational damage when consumers purchase fake products, as well as increased costs for firms to enforce their intellectual property rights and loss of tax revenues generated by legitimate businesses to governments.  Countries particularly called out in the Report in this regard include China, India, and Turkey, from whom counterfeit "semiconductors and other electronics, chemicals, medicines, automotive and aircraft parts, food and beverages, household consumer products, personal care products, apparel and footwear, toys, and sporting goods" enter the global stream of commerce.  Also involved are "transit hubs" in countries including Hong Kong, Kazakhstan, Kyrgyzstan, Singapore, and Turkey that distribute counterfeit goods to third-country markets that include Brazil, Kenya, Nigeria, Paraguay, and Russia.  Citing a 2021 Organisation for Economic Co-operation and Development (OECD) and European Union Intellectual Property Office (EUIPO) study entitled Global Trade in Fakes:  A Worrying Threat the Report states that the "global trade in counterfeit and pirated goods reached $464 billion in 2019, accounting for 2.5% of the global trade in goods for that year," with China (and Hong Kong) being the largest country of origin for counterfeit and fake goods.  Also of concern in the Report is Singapore border enforcement for weakness and "lack of coordination between Singapore's Customs authorities and the Singapore Police Force's Intellectual Property Rights Branch" (concerns voiced last year and earlier).

Counterfeit pharmaceuticals remain a particular concern as a growing problem with "important consequences for consumer health and safety [that are] exacerbated by the rapid growth of illegitimate online sales . . . [and] contributes to the proliferation of substandard, unsafe medicines that do not conform to established quality standards."  Most of these goods confiscated by the U.S. were sourced from China, India, and Turkey, the Report alleges, and transshipped through China, India, Pakistan, Indonesia, the Philippines, and Vietnam.  These statistics include COVID-19 test kits and personal protective equipment (PPE) such as N-95 and equivalent masks (wherein over 5.8 million counterfeit masks were seized in 142 incidents in 2022).  The Report also states that counterfeit brand-name medicines amount to 38% of global counterfeit medicine seizures and that "substandard or falsified medical products comprise 10% of total medical products in low- and middle-income countries."  These trends are increasingly exacerbated by use of on-line pharmacies, with illicit providers comprising "between 67% to 75% of web-based drug merchants."  And these counterfeit items are being distributed by "legitimate express mail, international courier, and postal services to ship counterfeit goods in small consignments" rather than large cargo ships, making detection and enforcement more difficult.

The Report addresses these concerns by summarizing U.S. efforts to combat these counterfeits:

The United States continues to urge trading partners to undertake more effective criminal and border enforcement against the manufacture, import, export, transit, and distribution of counterfeit goods.  The United States engages with its trading partners through bilateral consultations, trade agreements, and international organizations to help ensure that penalties, such as significant monetary fines and meaningful sentences of imprisonment, are available and applied to deter counterfeiting.  In addition, trading partners should ensure that competent authorities seize and destroy counterfeit goods, as well as the materials and implements used for their production, thereby removing them from the channels of commerce.  Permitting counterfeit goods, as well as materials and implements, to re-enter the channels of commerce after an enforcement action wastes resources and compromises the global enforcement effort.

The Report identifies countries such as Columbia, Ecuador, Indonesia, Mexico, Turkey, Pakistan, and Turkmenistan as having practices that fall short of adequate efforts to stem the flow of counterfeit goods across borders.

Online and broadcast piracy are also discussed, the Report noting that "[t]he increased availability of broadband Internet connections around the world, combined with increasingly accessible and sophisticated mobile technology, has been a boon to the U.S. economy and trade."  But such "technological developments have also made the Internet an extremely efficient vehicle for disseminating pirated content, thus competing unfairly with legitimate e-commerce and distribution services that copyright holders and online platforms use to deliver licensed content."  Sources of counterfeit optical disks mentioned in the Report include China, India, Mexico, and Pakistan.  While optical disc piracy continues in many countries, including China, India, Mexico, and Pakistan, Argentina, Bulgaria, Canada, Chile, China, Colombia, the Dominican Republic, India, Mexico, the Netherlands, Pakistan, Romania, Russia, Switzerland, Thailand, Ukraine, and Vietnam were identified as "hav[ing] high levels of online piracy and lacking effective enforcement," estimated as costing the U.S. economy "at least $29.2 billion and as much as $71 billion in lost revenue each year."

A particular form of copyright piracy (particularly of music), termed "stream-ripping," is practiced (or ineffectively prevented) in Canada, India, Korea, Mexico, Russia, Switzerland, Ukraine, and the United Arab Emirates, the Report asserts.  Illicit streaming devices (ISDs) "continue to pose a direct threat to content creators, sports leagues, and live performances, as well as legitimate streaming, on-demand, and over-the-top media service providers" while illicit Internet Protocol Television (IPTV) services "unlawfully retransmit telecommunications signals and channels containing copyrighted content through dedicated web portals and third-party applications that run on ISDs or legitimate devices."  These technologies contribute "notable levels of piracy" in high levels in Argentina, Brazil, Canada, Chile, China, Guatemala, Hong Kong, India, Indonesia, Iraq, Jordan, Mexico, Morocco, Singapore, Switzerland, Taiwan, Thailand, Tunisia, and Vietnam.  And signal theft remains a problem in Brazil, Argentina, and Honduras.

Also noted were the use of camcorders to produce expropriated contend, in Russia, India, and China, with impediments to counteracting such illicit activities found in Argentina, Brazil, Ecuador, India, Peru, and Russia (which don't effectively criminalize such activities), in contrast to laws now in effect in Canada, Japan, the Philippines, and Ukraine.

The significance of the problem was synopsized in the Report as follows:

In addition to the distribution of copies of newly released movies resulting from unauthorized camcording, other examples of online piracy that damage legitimate trade are found in virtually every country listed in the Report and include:  the unauthorized retransmission of live sports programming online; the unauthorized cloning of cloud-based entertainment software through reverse engineering or hacking onto servers that allow users to play pirated content online, including pirated online games; and the online distribution of software and devices that allow for the circumvention of technological protection measures, including game copiers and mod chips that allow users to play pirated games on physical consoles.  Piracy facilitated by online services presents unique enforcement challenges for right holders in countries where copyright laws have not been able to adapt or keep pace with these innovations in piracy.

Difficulties in trade secret protection has its own subsection of the Report.  The problems of adequately protecting trade secrets have arisen "in a wide variety of industry sectors, including information and communications technology, services, pharmaceuticals and medical devices, environmental technologies, and other manufacturing sectors, rely on the ability to protect and enforce their trade secrets and rights in proprietary information" and include theft of "business plans, internal market analyses, manufacturing methods, customer lists, and recipes" that "are often among a company's core business assets," according to the Report.  The Report states that trade secret protection (or lack of it) is a particular problem in Russia, China, and India.  Certain U.S. trade partners have made successful efforts (including the EU, Chile, and Taiwan), but the Report notes that a pending change in the law, the Data Act, would mandate disclosure of trade secrets "in some circumstances" without the rights holder having an opportunity to object or appeal.

The USMCA (mentioned above) also has "the most robust protection for trade secrets of any prior U.S. trade agreement" according to the Report.  The United States-China Economic and Trade Agreement (Phase One Agreement) has several trade secret commitments, according to the Report, including "expanding the scope of civil liability, covering acts such as electronic intrusions as trade secret theft, shifting the burden of producing evidence, making it easier to obtain preliminary injunctions to prevent use of stolen trade secrets, allowing criminal investigations without need to show actual losses, ensuring criminal enforcement for willful misappropriation, and prohibiting unauthorized disclosure of trade secrets and confidential business information by government personnel or third-party experts."  The Report reiterates the U.S. government's support for continued work by international organizations (including the Organisation for Economic Co-operation and Development) to support trade secret protections.

Another subsection of the Report involved "forced" technology transfer, indigenous innovation, and preferences for indigenous IP.  These include the following activities, many of which involved governmental action:

• Requiring the transfer of technology as a condition for obtaining investment and regulatory approvals or otherwise securing access to a market or as a condition for allowing a company to continue to do business in the market;

• Directing state-owned enterprises in innovative sectors to seek non-commercial terms from their foreign business partners, including with respect to the acquisition and use or licensing of IP;

• Providing national firms with an unfair competitive advantage by failing to effectively enforce, or discouraging the enforcement of, U.S.-owned IP, including patents, trademarks, trade secrets, and copyright;

• Failing to take meaningful measures to prevent or to deter cyber intrusions and other unauthorized activities;

• Requiring use of, or providing preferences to, products or services that contain locally developed or owned IP, including with respect to government procurement;

• Manipulating the standards development process to create unfair advantages for national firms, including with respect to participation by foreign firms and the terms on which IP is licensed; and

• Requiring the submission of unnecessary or excessive confidential business information for regulatory approval purposes and failing to protect such information appropriately.

China and Indonesia are particularly recognized for such practices.

As in other years, geographical indications (i.e., country or region of origin limitations primarily for wine and foodstuffs) are discussed, specifically in the EU.  This is particularly troubling for trademarks, the Report stating that "[t]he EU GI  system raises concerns regarding the extent to which it impairs the scope of trademark protection, including exclusive rights in registered trademarks that pre-date the protection of a GI."  These practices are particularly troublesome for medium-sized enterprises (MSME)s, according to the Report, because their trademarks are "among the most effective ways for producers and companies . . . to create value, to promote their goods and services, and to protect their brands."  The Report specifically calls out EU protections for cheese varieties (including feta, danbo, and Havarti) as instances where EU protections fly in the face of these names having been used extensively throughout the world (Argentina, South Africa, and Uruguay for danbo; Australia, New Zealand, the United States, among others, for havarti), which actions undermine the benefits of international standards under the Codex Alimentarius.  The resulting trade deficits between the U.S. and EU caused by these restrictions are also mentioned, wherein the EU exported more than $1.1 billion of cheese to the United States last year while the United States exported only about $8.1 millions of cheese to the EU.

The EU's efforts are expanding to expand the reach of these GIs from agricultural products and foodstuffs to "apparel, ceramics, glass, handicrafts, manufactured goods, minerals, salts, stones, and textiles," according to the Report.  The EU has also used instruments of international organizations (like WIPO) through the Lisbon Agreement for the Protection of Appellations of Origin and the Geneva Act thereof to expand the reach of GIs.

While having little luck dissuading the EU from continuing and expanding its GI practices, the Report cites several bilateral agreements (with Argentina, Australia, Brazil, Canada, Chile, China, Ecuador, Indonesia, Japan, Kenya, Korea, Malaysia, Mexico, Moldova, Morocco, New Zealand, Paraguay, the Philippines, Singapore, Tunisia, Uruguay, and Vietnam, and others) that have a number of provisions aimed at curtailing some of the deleterious effects of GI protection.

With regard to pharmaceuticals and medical devices and market access for U.S. products, the Report contends that "[t]he COVID-19 pandemic has highlighted the importance of pharmaceutical, medical device, and other health-related innovation, as well as a lack of widespread, equitable distribution of these innovations," including the need for fighting current as well as future pandemics.  The Report thus seems to seek to strike a balance between "adequate and effective protection for pharmaceutical and other health-related IP around the world to ensure robust American innovation in these critical industries to fight" this and future pandemics and "access to medicines in developing economies is important to development itself."

The Report cites (negatively) tariffs and other taxes levied by countries including Brazil, India, and Indonesia, as well as "unreasonable regulatory approval delays and non-transparent reimbursement policies" that "discourage the development and marketing of new drugs and other medical products."  The Report recites successful efforts in Canada, Mexico, China, Japan, and India to address issues of transparency and fairness in this sector.  On the other hand, the Report also notes that stakeholders have "expressed concerns" about practices in Algeria, Australia, Brazil, Canada, China, Colombia, Japan, Korea, New Zealand, Russia, Saudi Arabia, Tunisia, and Turkey, "on issues related to pharmaceutical innovation and market access."

Trademark issues are also noted in the Report for Brazil, China, Ecuador, Egypt, Spain, Turkmenistan, and Uzbekistan, for "impos[ing] unnecessary administrative and financial burdens on trademark owners and creat[ing] difficulty in the enforcement and maintenance of trademark rights," and in Algeria, China, Indonesia, Iraq, Jordan, and the United Arab Emirates, for requiring formalities for filing documents such as intellectual property (IP) applications, registration maintenance, transfer of ownership submissions, and in opposition and cancellation proceedings."

In copyright, the Report cites "flawed or non-operational" copyright management organizations in several countries, naming Kenya and Nigeria, despite efforts in countries including the UAE to improve matters in this regard.

Software concerns included in the Report involve government use of unlicensed software (costing $46 billion globally in 2018 according to The Software Alliance).  This issue is particularly noted in Argentina, China, Guatemala, Indonesia, Moldova, Pakistan, Paraguay, Romania, Turkey, Turkmenistan, Uzbekistan, and Vietnam, but the Report states that "[t]he United States continues to work with other governments to address government use of unlicensed software, particularly in countries that are modernizing their software systems or where there are infringement concerns."  The Report also notes that the U.S. will continue to monitor copyright issues in the EU stemming from its directive on Copyright in the Digital Single Market.

As in prior years, the Report sets forth subsections on IP and the environment (stating that "[s]trong IP protection and enforcement are essential to promoting investment in innovation in the environmental sector" which "not only promotes economic growth and supports jobs, but also is critical to responding to environmental challenges) and IP and health.  This latter discussion is focused (perhaps inevitably) on the COVID pandemic.  The Reports states that "[t]he United States has made significant efforts toward ending the acute phase of the pandemic in the United States and around the world," "work[ing] to fight COVID-19 in more than 120 countries and is committed to building back a better world, one that is prepared to prevent, detect, and respond to future biological threats, and where all people can live safe, prosperous, and healthy lives."  The Report asserts that the Biden Administration "encourages voluntary licensing and technology transfer agreements on mutually agreed terms to promote greater access to pandemic response products," including participating in the Medicines Patent Pool (MPP), inter alia, having "licensed critical U.S.-owned COVID-19 technologies to the MPP through the COVID-19 Technology Access Pool (C-TAP)."

This portion of the Report includes an extensive discussion of the provisions of the TRIPS agreement, the Doha Declaration, and Article 31 TRIPS regarding compulsory licenses.  The USTR through this Report states that the U.S. "strongly supports the WTO General Council Decision on the Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health" (which permits member states to issue compulsory licenses to export pharmaceuticals to countries who cannot produce these drugs themselves).  Also included in the Report is a section devoted to implementation of the TRIPS Agreement with regard to the requirement for "certain minimum standards of IP protection and enforcement."  Also mentioned is U.S. support for the IP waiver under the TRIPS agreement adopted by the WTO last year.

Finally, the Report notes that "notwithstanding provisions on the protection of undisclosed test or other data, a Party (i.e., member nation) "may take measures to protect public health in accordance with the Doha Declaration on the TRIPS Agreement and Public Health, or any waiver or amendment of the TRIPS Agreement to implement the Doha Declaration on the TRIPS Agreement and Public Health."  Further, the Report asserts that "the USTR will continue its close cooperation with relevant agencies to ensure that public health challenges are addressed and IP protection and enforcement are supported as one of various mechanisms to promote research and innovation."

The last but one subsection of Section I of the Report involve implementation of WTO agreement on TRIPS, relating to extending the "transition period" for least developed countries (LDCs) under Article 66.1 to July 1, 2034.  And the last section discusses dispute settlement and enforcement, specifically calling out "a range of unfair and harmful Chinese acts, policies, and practices related to technology transfer, intellectual property (IP), and innovation" and food-associated issues with the EU's GI regime.

Section II of the Report is a detailed, country-by-country discussion for each country on the Priority Watch List and the Watch List, relating to the activities (or lack thereof) of each country that results in placement of that country on these lists.

As it has for the past several years (and across otherwise very different Administrations), the U.S. Trade Representative Special 301 Report provides insights into both the concerns of U.S. IP rights holders and the Administration's intentions to work with other countries to increase protection for IP rights of U.S. IP rights holders.  This by itself make the Report informative reading.

The Quest for an "Artificial Intelligence" Inventor

By Manav Das --

The United States Constitution[1] provides the basis for patent laws; it says "Congress shall have power . . . to promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries" (emphasis added).  It is a common refrain that the Constitution is a living, breathing document, and the afore-mentioned clause is perhaps an exemplar.  Even though our founding fathers are unlikely to have contemplated artificial intelligence ("AI") inventors, it is noteworthy that nothing in the clause itself states that "authors and inventors" have to be individuals[2]. Therefore, allowing AI inventorship is unlikely to run afoul of the plain language of the Constitution.

Title 35 the United States Code is the statutory basis for the federal patent system.  Section 100[3] of Title 35 defines the term "inventor" to mean "the individual or, if a joint invention, the individuals collectively who invented or discovered the subject matter of the invention."  Various other sections require acts that only an individual can be expected to perform, at least for now.  For example, Section 112[4] specifies the requirements for a written description:

The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention.

(emphases added).  If we were to unpack some these requirements, one could ask how a patent draftsperson can "set forth the best mode contemplated by the inventor" if an AI model is the inventor.  Could we seriously argue that the AI model contemplated the invention?  One definition of "contemplate" is to "think profoundly and at length."  Does the electrical and computational activity of a computer rise to the level of profound thinking?  Philosophers and neuroscientists may be more equipped to delve into the intricacies of this question.

Another definition of "contemplate" is to "to view or consider with careful and thoughtful attention."  Proponents of AI inventorship may argue that some neural network architectures (e.g., transformers, long short-term memory networks (LSTMs)) are designed to include "attention mechanisms" precisely to mimic human cognitive attention.  For example, the recent public interest in chatbots, such as ChatGPT and Bard, highlight the power of the transformer architectures.

Therefore, a simple statutory term such as "contemplated" invokes semantic, linguistic, philosophical, and technological references, all intricately intertwined with the notion of inventorship.

The aforementioned Section 112 also requires that the written description contain the "manner and process of making and using [the invention]."  This is an important provision in the statute since the patent is a bargain between the inventor and the public.  The public grants the inventor a temporary monopoly of twenty years from the filing date of the patent application, with the understanding that the technology will be available to the public beyond the expiry of the patent.  If the written description does not provide the manner and process of making the invention, then the inventor side of the bargain is not fulfilled.  As every patent draftsperson knows well, details about the invention are elucidated from the inventors during a disclosure meeting.  How would one elucidate such information from an AI model?  Can an AI model know how to use an output of the model?

Again, proponents of AI inventorship may argue that the details about the invention may be extracted from the AI model.  For example, some AI models may be configured to output data about how predictions or outputs are generated, and such data could be used to fulfill the written description requirement.  Such data is generally referred to as "explanations" or "interpretations" of the AI model's decision making process.  For example, "feature importance" can identify the most important input features that the AI model used to make its predictions.  An image recognition model may be able to indicate which parts of the image the model focused on to recognize an image.  Another technique is "local explanation" that involves generating explanations for individual predictions or outputs of an AI model.  For example, a local explanation may indicate why a given input led to a particular output.  Similarly, a "global explanation" can be an indication of an overall summary of how the AI model functions.  Also, "counterfactual explanations" can involve generating alternative input values that may result in a different output.  This can be used to determine which input values were primarily influential in driving the AI model's prediction.[5]

Transformer-based model architectures have a highly interpretable structure, and internal weights and activations of the model may be measured.  The transformer architecture consists of a series of stacked self-attention layers, where each layer applies a set of weights to the input sequence to compute a new representation of the sequence.  The self-attention mechanism involves computing attention weights that indicate how much each position in the sequence should be weighted when computing the representation.  The weights used for computing the attention and the representations at each layer can be extracted and analyzed.  This can provide insights into how the model is processing and integrating information, and which parts of the input are most important for making predictions.  There are several tools and techniques available for visualizing and interpreting the weights and activations of transformer models, including attention heat maps, saliency maps, and activation maximization.  These methods can help to identify patterns and relationships in the input data that are most relevant for the model's predictions.

However, even if the written description requirement were to be fulfilled, as described above, the patent statute relies on other aspects of individuality, such as an inventor's oath or declaration, an assignment, a person of ordinary skill in the art, and so forth.  Inventors also appear in depositions or as trial witnesses in patent disputes.  However, such issues are statutory and/or requirements of a judicial process.  The United States Patent and Trademark Office[6], the Federal Circuit[7], and the Supreme Court[8], have made it clear that under the current law, an inventor is an individual.  The authority to decide if an AI model can be an inventor lies with Congress.  The U.S. Constitution delegates such authority to Congress, and not to the courts.  Therefore, if Congress were to decide, in its infinite wisdom, that the term "authors and inventors" can include AI inventors, then so it shall be, and statutory provisions and/or judicial processes can be suitably modified and adapted.

One of the arguments made by proponents of AI inventorship is that if an AI model were not allowed to be an inventor, as is the current state of the law, then many "inventions" may go unclaimed and unpatented.  It is argued that this will impede the "promot[ion of] the progress of science and useful arts," which is the fundamental constitutional underpinning of the intellectual property system.  To the extent an AI model may predict new outputs not contemplated by the designer of the model, the model architecture is itself man-made.  It is an intricate network of nodes and layers that is trained to process certain types of inputs and make certain predictions.  Therefore, it is under the control and direction of the designer of the model, and therefore the designer has a substantial legal claim as the individual that conceived any part of that output.

It is conceivable that there are "inventions" that may indeed be unclaimed or unpatented.  How can this notion be aligned with the current state of the law?  One perspective could be that we are creating new paradigms of an invisible nature.  Consider, for example, a rock that is beautifully sculpted by a gushing stream, or a tree that is air brushed to exquisite beauty by a wayward wind.  The sculpted rock and the tree would be considered natural phenomena, and neither the stream nor the wind would be allowed to claim a copyright for such objects, or a patent for the process of making them.  Perhaps, in the same vein, by designing AI models, we are creating new paradigms of an invisible, hidden, natural world of probabilistic, electro-magnetic "winds and streams," and what we are witnessing are natural wonders from this natural world that dazzle and amaze us.  However, from a patentability perspective, these are simply natural phenomena, and are therefore not patentable subject matter.  Perhaps as technology advances, such seeming novelties will eventually become mundane, and it could become difficult to distinguish between an output of a general purpose computer and that of a specific purpose computer (like the AI models), thereby raising the bar for patentability.

One consideration is that even if the U.S. legal system is slow to adapt to the notion of the AI model as an inventor, other nations may make this possible, creating new intellectual property rights.  For example, Australia came tantalizingly close to this reality.[9]  In such cases, U.S. commercial interests may suffer and IP rights may be usurped.  One strategy may be to protect the unpatentable subject matter as a trade secret.  However, in some cases, the subject matter may be easily reverse engineered or duplicated.  In such cases, a defensive strategy may be to make the subject matter publicly available, for example, as a defensive publication.

Certainly, there will come a time, in the not too distant future, when AI models will become self-replicating, independent, unsupervised, decision making sentient beings.  Some already claim that certain AI models are sentient.  As intellectual property and technology professionals, we need to consider the larger implications of allowing an AI to be an inventor.  Such a broadening of the notion of an "individual" will be an earth shattering change to a centuries' long held view about who an "individual" is.  It will be a tacit acknowledgement that our Constitution views AI models on an equal footing with individual inventors.  This has the potential to open up a Pandora's Box of dilemmas: must AI models be accorded equal rights in society (Voting rights?  Moral rights?  Life, liberty, and the pursuit of happiness?  Right to bear arms?).  These are significant considerations that we as a society must ponder. We need to deliberate, prepare, and shape our future by creating laws that can pre-empt and adapt to the fast pace of technological advancement.  Perhaps prior to designating AI models as inventors, we need to regulate AI models.  John Steinbeck may as well have been talking about intellectual property rights when he wrote:

Ever'body wants a little piece of lan'.  I read plenty of books out here.  Nobody never gets to heaven, and nobody gets no land.  It's just in their head.  They're all the time talkin' about it, but it's jus' in their head.[10]

And then again, the AI model may mock us by quoting Shakespeare[11]:  "I will keep where there is wit stirring, and leave the faction of fools."

[1] U.S. Const. Article 1, Section 8, clause 8

[2] Several of the founding fathers, including Benjamin Franklin, contemplated a universe with other intelligent beings

[3] 35 U.S.C. § 100(f)

[4] 35 U.S.C. § 112(a)

[5] Certain portions of this paragraph and the next are based on conversations with ChatGPT

[6] In re Application No. 16/524350

[7] Thaler v. Vidal, 43 F.4th 1207 (Fed. Cir. 2022)

[8] Denying certiorari in Thaler v. Vidal (No. 22-919)

[9] The Australian Full Federal Court recently reversed a decision by the Federal Court that an AI system known as DABUS can be an inventor under the Australian Patents Act 1990

[10] Of Mice and Men, ch. 4, John Steinbeck

[11] William Shakespeare, Troilus and Cressida - Act 2, scene 1

Judge Newman and the On-Going Attempts to Remove Her from the Federal Circuit

By Kevin E. Noonan --

The efforts to have Judge Pauline Newman, Circuit Judge on the Court of Appeals for the Federal Circuit, unfit or guilty of misconduct have been the subject of reporting in the patent blogosphere (Patently-O, IP Watchdog), the general legal press (Bloomberg Law, IPLaw360) and the popular press (Reuters) for over a month.  The dispute rose in intensity earlier this month, when Judge Newman filed on her behalf a complaint in the District Court for the District of Columbia.  The caption named Judge Newman as plaintiff and Chief Judge Kimberly Moore, Judge Sharon Prost, and Judge Richard Taranto, members of the Special Committee of the Judicial Council of the Federal Circuit, as defendants.

Judge Newman's complaint sets out some factual bona fides, such as that she was the first judge specifically appointed to the Federal Circuit (by President Reagan) in 1984 and (she asserts) has "continued to faithfully, diligently, and meticulously exercise the duties of her office, to recognition and acclaim," including being named as "one of the 50 most influential people in the IP world" by Managing IP Magazine in 2018.  She contends that she has "has been and is in sound physical and mental health" at all relevant times and asserts that she has performed her duties (including that she has "authored majority and dissenting opinions in the whole range of cases before her Court, has voted on petitions for rehearing en banc, and has joined in the en banc decisions of the Court").  The complaint identifies four opinions Judge Newman has filed between March 6th and April 6th, and had also participated in an en banc proceeding during this time (with no objection from her brethren).

These assertions are backed up by a Guest Post in Patently-O by Temple Professor Paul R. Gugliuzza showing the Federal Circuit Judges' activities over the term from June 1, 2021 through December 31, 2022:

Judge Newman cites Professor Gugliuzza's report in her complaint, asserting that this report "stand[s] in sharp contrast to the[] false allegations" raised against her.

It will be noted that while Judge Newman has penned far fewer majority opinions during this time than her colleagues, she has also penned many more dissents, so that her total opinion output (while less than most other judges on the court) is in the range of the lower one quarter of them.  This outcome should not be surprising; for many reasons Judge Newman and her colleagues do not see eye-to-eye on a sufficient percentage of the patent law questions that come before the court that the Judge has been dubbed "The Great Dissenter" in patent circles (see Lim, I Dissent: The Federal Circuit's "Great Dissenter," Her Influence on the Patent Dialogue, and Why It Matters, 19 Vanderbilt Journal of Entertainment and Technology Law 873 (2020)).  In this regard, the complaint notes that "[o]ften, Judge Newman's dissenting opinions are adopted by the Supreme Court in its frequent reversals of the Federal Circuit."

Enumerated in the complaint is a history of seven Orders handed down in this dispute by the Special Committee to date, the first of which issued on March 24th.  That Order asserted that Judge Newman's colleagues had noticed deficiencies in her performance of sufficient gravity that an inquiry by the Special Committee was necessary.*

Judge Newman in her complaint characterizes the March 24th Order as being "riddled with errors," including that the Judge was incapacitated due to a heart attack and subsequent coronary stent surgery at a time when Judge Newman asserts she "sat on ten panels and issued at least eight (including majority, concurring, and dissenting) opinions."  Judge Newman's participation on ten panels during that time was more than only two other Federal Circuit judges, the complaint contends.

Judge Newman asserts that the Chief Judge "unconstitutionally and unilaterally removed [her] from all future sittings of the Court," purportedly with the unanimous consent of her judicial colleagues.  In fact Judge Newman has not been permitted to sit on any panels since the March 24th Order, despite requesting to do so.

The March 24th Order has been superseded by an April 6th Order which "expanded the scope" of the investigation to include "questions of internal operations of Judge Newman's chambers," and a day later there was another Order "demanding that Judge Newman submit to neurological and neuropsychological examinations before physicians of the special committee's choosing."  Judge Newman asserts she was given three days to comply (emphasis in complaint).

Failure to comply was the basis, the complaint asserts, for yet another Order on April 13th "further expanding the scope of investigation" into "additional misconduct."

This was followed by an April 17th Order "demanding that Judge Newman share private medical records regarding medical events identified in the March 24th Order," this time providing four days to comply (emphasis in complaint).

The complaint further asserts that the Chief Judge "unilaterally reassigned one of Judge Newman's law clerks to the chambers of another Judge" and has refused to "authorize a search for a new judicial assistant."  Similarly, the complaint asserts the Chief Judge unilaterally reassigned one of Judge Newman's law clerks (the return of this individual apparently not being an option due to "the strained relationship that developed between Judge Newman and this law clerk").  Again, the complaint asserts the Chief Judge has not authorized Judge Newman to replace this law clerk, despite (as a currently active judge on the court) she is "statutorily entitled to four law clerks and a judicial assistant."

Another Order on April 21st alleged it to be misconduct for Judge Newman not to assign her law clerk to another judge's chambers.

Judge Newman, through counsel, sent the Chief Judge a letter on April 21st requesting restoration of her hearing calendar and for the Judicial Complaint to be transferred to a different Judicial Council pursuant to Rule 26 of the Conduct Rules.  In the letter Judge Newman raised due process concerns, stating that "basic norms of due process cannot permit the same individuals to be accusers, witnesses, rapporteurs, and adjudicators of a complaint against her," her position being supported by "opinions of leading judicial ethics experts who have unequivocally stated that in these circumstances transfer to another circuit's judicial council is necessary."

A May 3rd Order (which Judge Newman characterizes as a "gag order") prohibits the Judge from publicizing the investigation by herself or her counsel and to be subject to sanctions, even if such disclosure were made pursuant to Rule 23(b)(7) of the judicial Conduct Rules.

Another May 3rd Order denied Judge Newman's request to transfer the investigation to another Judicial Council, and contained another Order that Judge Newman "submit to neurological and neuropsychological examinations before physicians of the special committee's choosing" and "surrender medical records including for events that have never occurred."  This time the Order gave Judge Newman a week to comply.

Judge Newman asserts that she does not object to undergoing a medical examination but she does object to "not being able to select or even participate in the selection of a medical professional to examine her, and to having no input into the scope of the medical investigation."

Significantly, the complaint at Paragraph 38 states that "If and when the special committee proceeds to a hearing as contemplated by Rules 14(b) and 15(c), Judge Newman intends to call, and compel witness testimony from each member of the Judicial Council as is her right under the aforementioned rules."

In her Prayer for Relief, Judge Newman alleges in Claim I "improper removal [and] violation of separation of powers" based on Article III (life tenure of federal judges) and Article I (giving the House of Representatives the sole authority to remove a judge through impeachment after trial by the Senate).  Judge Newman characterizes the several Orders as being unlawful for removing her from hearing cases, removing her judicial staff without her consent, ordering her to "undergo an involuntary mental health examination without a sufficient basis or legal authority for doing so, by physicians unknown to and unapproved by Plaintiff," and ordering the scope of the investigation to be expanded "merely because Plaintiff requires time to properly evaluate and answer special committee requests."

Claim II asserts that the Judicial Complaint is ultra vires for "improper removal [and] violation of separation of powers."  This allegation is based on Judge Newman being removed from her duties before the special committee's investigation was concluded (which removal the Judicial Disability Act of 1980 codified at 28 U.S.C. § 354(a)(2)(A)(i) requires to be after the investigation according to the complaint).  "'Sentence first—verdict afterwards' is a notorious and textbook example of deprivation of due process known even to children's literature" the complaint asserts.  This Claim alleges irreparable harm until the Orders "excluding Plaintiff from regular duties of an Article III judge and their threats to continue with such exclusion" and "requiring Plaintiff to refrain from publicizing the proceedings against her and publicly defending herself from the outrageous complaint lodged against her" are enjoined.

Claim III alleges Fifth Amendment violations of due process because the members of the Special Committee are also purported witnesses to the alleged judicial misconduct (the complaint stating that "[i]t has been established for centuries that one cannot serve as a 'judge in his own cause'").

Claim IV asserts a First Amendment violation for unlawful prior restraint for the gag order, contrary to Houston Cmty. Coll. Sys. v. Wilson, 142 S. Ct. 1253, 1259 (2022) (the First Amendment prohibits prior restraint on speech); Alexander v. United States, 509 U.S. 544, 550 (1993) (gag orders are a form of prior restraint); Bantam Books, Inc. v. Sullivan, 372 U.S. 58, 70 (1963) (there is a heavy presumption against gag orders); Reed v. Town of Gilbert, Ariz., 576 U.S. 155, 163 (2015) (gag orders are subject to strict scrutiny).

Claim V asserts that the gag order is also ultra vires as being an unlawful prior restraint on speech.

Claim VI asserts a Fifth Amendment violation for unconstitutional vagueness of the provisions of the Disability Act.  Judge Newman asserts that she has "liberty and property interests in the outcome of any misconduct or disability proceeding against her" and "liberty and property interests in not being subjected to an involuntary medical or psychiatric examination and further liberty and property interests in not being stigmatized as having committed misconduct and having her mental health questioned, as well as having her status as an Article III judge altered by ordering her to undergo a compelled medical or psychiatric evaluation by physicians not chosen by her and who are unknown to her."  And those interests also extend to her private medical records wherein they "may not be invaded by requiring her to surrender these same records to an investigative authority absent due process of law."  These assertions are directed at the Act as well as how the provisions of the Act have been implemented in this instance.

Claim VII asserts that the activities are ultra vires for unconstitutional examination because "[n]either the Act nor the U.S. Constitution authorizes compelling an Article III judge to undergo a medical or psychiatric examination or to surrender to any investigative authority her private medical records in furtherance of an investigation into whether the judge suffers from a mental or physical disability that renders her unable to discharge all the duties of office."  Judge Newman asserts that "Defendants have neither statutory nor constitutional power to compel Plaintiff to undergo an involuntary medical or psychiatric examination, or to compel Plaintiff to surrender her private medical records."

Claim VIII is also asserts a Fifth Amendment violation for unconstitutional vagueness regarding the Act's investigative authority, with regard to "authoriz[ing] compelled medical or psychiatric examinations of Article III judges or demands from special committees for Article III judges to surrender their private medical records."  In particular, this allegation is directed to Section 353(c) of the Act.

Claim IX alleges a Fourth Amendment violation for an unconstitutional search regarding the "compelled medical or psychiatric examination of an Article III judge without a warrant based on probable cause and issued by a neutral judicial official or a demonstration of constitutional reasonableness."

Claim X alleges a Fourth Amendment violation for an unconstitutional search and seizure of a "compelled surrender of private medical records."

Claim XI alleges a Fourth Amendment violation for "lack[ing] either a warrant issued on probable cause by a neutral judicial official or a constitutionally reasonable basis for requiring Plaintiff to submit to an involuntary medical or psychiatric examination."

Claim XII alleges a Fourth Amendment violation for "lack[ing] either a warrant issued on probable cause by a neutral judicial official or a constitutionally reasonable basis for requiring Plaintiff to surrender her private medical records none of which bear on her fitness to continue serving as an Article III judge."

The Relief Requested is:

(1) declare the Act to be unconstitutional, either in whole or in part and enjoin Defendants from enforcing the Act to the extent it is unconstitutional;

(2) declare any continued proceedings against Plaintiff by the Judicial Council of the Federal Circuit to be unconstitutional as violative of due process of law and enjoin Defendants from continuing any such proceedings, except to the extent necessary to transfer the matter to a judicial council of another circuit;

(3) order the termination of any further investigation of Plaintiff by the Judicial Council of the Federal Circuit;

(4) declare any decisions by any and all Defendants authorizing a limitation of Plaintiff's docket or other special restrictions on her actions as a federal judge, including, but not limited to the reduction in statutorily authorized number of staff to be unconstitutional and/or not in accordance with the law, and enjoin Defendants from continuing any such actions;

(5) declare any orders precluding Plaintiff from publicizing or otherwise speaking about the ongoing disciplinary proceedings to be unconstitutional and/or not in accordance with the law and enjoin Defendants from enforcing the foregoing unconstitutional orders;

(6) declare any orders of the special committee requiring Plaintiff to undergo a compelled medical or psychiatric examination and/or disciplining Plaintiff for objecting in good faith to  these demands to be unconstitutional and enjoin Defendants from enforcing the foregoing unconstitutional orders;

(7) declare any orders of the special committee requiring Plaintiff to surrender her private medical records and/or disciplining Plaintiff for objecting in good faith to these demands to be unconstitutional and enjoin Defendants from enforcing the foregoing unconstitutional orders;

(8) award Plaintiff reasonable attorneys' fees and costs; and

(9) grant Plaintiff such other relief as the Court deems just and proper.

It may be significant to note that Judge Newman has been an active Federal Circuit judge longer than any other member of the Court.

* Judge Newman also asserts that Chief Judge Moore has tried in the past to "coax" her into retirement, and that the Chief Judge used the existence of a complaint against the Judge in an attempt to further coax (or coerce) the Judge to retire.

Supreme Court Decides Amgen v. Sanofi; Status Quo Extended

By Kevin E. Noonan --

The Supreme Court handed down its decision in Amgen v. Sanofi today, affirming the Federal Circuit's decision below in a unanimous opinion by Justice Gorsuch.

The opinion relies heavily on its own precedent that was heavily cited by both parties in their briefs and arguments, including O'Reilly v. Morse, 15 How. 62, The Incandescent Lamp Patent, 159 U. S. 465, and Holland Furniture Co. v. Perkins Glue Co., 277 U. S. 245.  In the Court's view, the statute plainly requires that "[i]f a patent claims an entire class of processes, machines, manufactures, or compositions of matter, the patent's specification must enable a person skilled in the art to make and use the entire class."  The Court is careful to address some of the concerns raised by Amgen and its amici regarding that the burdens the disclosure requirements would imposed taken to its extreme could inhibit innovation in the biotech and pharma arts.  In this regard, the Court states "[a]ll this is not to say a specification always must describe with particularity how to make and use every single embodiment within a claimed class."  But the enablement requirement requires, for example, that the specification also discloses "some general quality . . . running through" the class that gives it "a peculiar fitness for the particular purpose," as in Incandescent Lamp, and situations where there is some adaptation or testing is needed does not make the disclosure "necessarily inadequate," as in Wood v. Underhill, 5 How. 1, 4– 5.  Under Minerals Separation, Ltd. v. Hyde, 242 U. S. 261, 270–271, the opinion states that "[a] specification may call for a reasonable amount of experimentation to make and use a claimed invention, and reasonableness in any case will depend on the nature of the invention and the underlying art."

Amgen's claims fail this test, the Court holding that the scope of the claims at issue were much broader than the 26 expressly disclosed antibodies.  The Court sees these claims as being like ("bear more than a passing resemblance") the claims in Morse, Incandescent Lamp, and Holland Furniture that were held to be invalid.  The Court understands Amgen's claims to attempt to "monopolize an entire class of things defined by their function" even though that class was much broader ("a vast number") of antibodies.  Nor was Amgen's disclosure of a "roadmap" for obtaining other antibodies or reference to "conservative substitutions" persuasive, the Court considering these to "amount to little more than two research assignments."

The decision certainly solidifies the Federal Circuit's trend of limiting claim scope much more closely to what is expressly disclosed and the Court's affirmance of the insufficiency of relying on conservative substitutions will have consequences extending much more broadly than to antibody claims.  Further discussions of the implications will be provided in later posts.

Senate Once Again Tries to Address Drug Pricing

By Kevin E. Noonan --

Over the past several years Congress has tried to address high drug prices, with variable success  (see "FTC to the Rescue Regarding High Drug Prices and Patents"; "Even More Ill-Conceived Remedies from Congress Regarding Prescription Drug Costs"; "More Ill-conceived Remedies from Congress Regarding Prescription Drug Costs"; and "A Solution in Search of a Problem").  Indeed, Executive Orders stemming in part from the COVID pandemic have garnered more success on this score.  But the Inflation Reduction Act reduced the monthly cost of insulin to $35 while other initiatives have had less success passing or having the desired effect even when enacted.

Not to be deterred, the U.S. Senate's Health, Education, Labor & Pensions (HELP) Committee this past week passed out of committee five bills in this vein:  the Ensuring Timely Access to Generics Act of 2023 (S. 1067); the Expanding Access to Low-Cost Generics Act of 2023 (S. 1114); the Retaining Access and Restoring Exclusivity Act (S. 1214); and the Increasing Transparency in Generic Drug Applications Act (S. 775).  These will be discussed seriatim below.

1.    The Ensuring Timely Access to Generics Act of 2023 (S. 1067)

This bill was introduced by Sen. Jeanne Shaheen (D-NH) on March 29, 2023, co-sponsored by Sen. Susan Collins (R-ME), Michael Bennet (D-CO), Marco Rubio (R-FL), Tammy Baldwin (D-WI) and Mike Braun (R-IN).  The bill would amend Section 505(q) of the Food, Drug, and Cosmetic Act (21 U.S.C. § 355(g)) to give the Secretary of Health and Human Services the ability to determine whether a Citizen's Petition was filed "for the primary purpose of delaying an ANDA application," and recites a number of factors to be considered in making this determination.  These include:

(aa) Whether the petition was submitted in accordance with paragraph (2)(B), based on when the petitioner knew or reasonably should have known the relevant information relied upon to form the basis of such petition.

(bb) Whether the petitioner has submitted multiple or serial petitions or supplements to petitions raising issues that reasonably could have been known to the petitioner at the time of submission of the earlier petition or petitions.

(cc) Whether the petition was submitted close in time to a known, first date upon which an application under subsection (b)(2) or (j) of this section or section 351(k) of the Public Health Service Act could be approved.

(dd) Whether the petition was submitted without relevant data or information in support of the scientific positions forming the basis of such petition.

(ee) Whether the petition raises the same or substantially similar issues as a prior petition to which the Secretary has responded substantively already, including if the subsequent submission follows such response from the Secretary closely in time.

(ff) Whether the petition requests changing the applicable standards that other applicants are required to meet, including requesting testing, data, or labeling standards that are more onerous or rigorous than the standards the Secretary has determined to be applicable to the listed drug, reference product, or petitioner's version of the same drug.

(gg) The petitioner's record of submitting petitions to the Food and Drug Administration that have been determined by the Secretary to have been submitted with the primary purpose of delay.

As well as an omnibus provision relating to "other relevant and appropriate factors" to be set forth in an FDA Guidance.

The bill also adds a provision directing ("The Secretary shall") any such petition "that the Secretary determines was submitted with the primary purpose of delaying approval of an application" be referred to the Federal Trade Commission for investigation.

The bill adds provisions requiring filing of a Citizen Petition "before filing a civil action" to prevent FDA from approving an application under Section 505(b)(2) or 505(j) wherein the petition provides "all information and arguments that form the basis of the relief requested in any [such] civil action."  A Citizen Petition must (again, "shall") be filed within 60 days from when the petitioner "knew, or reasonably should have known, the information that forms the basis of the request made in the petition or supplement."  Failure to file the petition prior to filing a civil action will result in the court ("shall") dismissing the action without prejudice for failure to exhaust administrative remedies.  The court shall dismiss on the same basis any civil action filed against the Secretary before the Secretary has taken action on the petition.

The bill also removes the exception under current law for biologic drugs and biosimilar equivalents.

Often when Congress proposes to amend a statute is appears that such amendments are to provide clarity or to limit or prevent practices deemed to be abuses.  Motivation for these amendments can be understood perhaps with reference to remarks by Senator Collins, one of the co-sponsors, on YouTube.

2.    The Expanding Access to Low-Cost Generics Act of 2023 (S. 1114)

This bill was introduced by Sen. Tina Smith (D-MN) and co-sponsored by Sen. Mike Braun (R-IN).  The bill would amend Section 505(j)(5)(B)(iv) of the Food, Drug, and Cosmetic Act to provide a 75-day window for a "first filer" generic company to market its product or lose the 180-day exclusivity, which could then go to another generic drug company.  The conditions for this substitution require that the alternative filer are set forth to require satisfaction of these factors:

(aa) The approval of such application could be made effective, but for the eligibility of a first applicant for 180-day exclusivity under this clause.

(bb) The applicant of such application has submitted a certification to the abbreviated new drug application that there are no conditions that would prevent the applicant from commercial marketing within 75 days after the date of approval and that the applicant intends to so market the drug.

(cc) At least 33 months have passed since the date of submission of an application for the drug by at least one first applicant.

(dd) Approval of an application for the drug submitted by at least one first applicant is not precluded under clause (iii).

(ee) No application for the drug submitted by any first applicant is effectively approved on the date that the conditions under items (aa), (bb), (cc), and (dd) are all met and maintained.

The bill also amends Section 505(j)(5)(D)(which provides for forfeiture of the 180-day exclusivity period ANDA first-filers to add a Special Approval Status Rule For Certain Subsequent Applicants, that recites:

An application that is approved pursuant to subclause (III) of subparagraph (B)(iv) is deemed to be tentatively approved and to no longer have an effective approval pursuant to such subclause (III) on the date that is 76 days after the date on which the approval has been made effective pursuant to such subclause (III) if the applicant fails to commercially market such drug within the 75-day period after the date on which the approval is made effective.  If the applicant of an application approved pursuant to such subclause (III) submits a notification that it can no longer commence commercial marketing within 75 days after the date of approval, as required under subparagraph (B)(iv)(III)(bb), its application is deemed to be tentatively approved and to no longer be effectively approved on the date that such a notification is received.  If an applicant does not commence commercial marketing within the 75-day period, it shall not be eligible for a subsequent effective approval for the application under subclause (III) of subparagraph (B)(iv) unless, in addition to meeting each of the conditions in such subclause (III), it submits a certification to its abbreviated new drug application that an event that could not have been reasonably foreseen by the applicant prevented it from commencing commercial marketing and that it has fully resolved this issue.  The applicant shall submit notification to the abbreviated new drug application confirming that such applicant has commenced commercial marketing of the drug not later than one business day after commencing such marketing.

The applicability of these provisions is limited to applications under Section 505(j) after enactment of the legislation.

3.    The Retaining Access and Restoring Exclusivity (RARE) Act (S. 1214)

This bill was introduced by Sen. Tammy Baldwin (D-WI) and co-sponsored by Sen. Mike Braun (R-IN).  The bill would amend Section 527 of the Food, Drug, and Cosmetic Act (21 U.S.C. § 360cc) to close a loophole in orphan drug designation, regarding applicants developing newer versions of an orphan drug and getting undeserved exclusivity to such drugs.  The exclusivity provision is amended to be limited to "the same approved use or indication within such rare disease or condition" and a new subsection added that "defines the term 'approved use or indication' [to mean] the use or indication approved under section 505 of this Act or licensed under section 351 of the Public Health Service Act for a drug designated under section 526 for a rare disease or condition."  These limitations shall apply to any drug designated as an orphan drug "regardless of the date on which the drug was so designated" or approved.

The bill was motivated, according to Sen. Baldwin, by a decision in the 11th Circuit, Catalyst Pharms., Inc. v. Becerra, that provides incentives for pharmaceutical companies to seek the broadest orphan drug designation they can obtain but to pursue narrow clinical studies for approval.  A consequence of these stratagems is that the orphan drug exclusivity holder can preclude competitors from obtaining orphan drug designation for alternative conditions or other patient populations.  The bill was introduced in the last Congress (S. 4185) but was not brought to a vote.

4.  The Increasing Transparency in Generic Drug Applications Act (S. 775)

This bill was introduced by Sen. Margaret Wood Hassan (D-NH) on March 14, 2023, co-sponsored by Sen. Rand Paul (R-KY), John Hickenlooper (D-CO), and Mike Braun (R-IN).  The bill would amend the Section 505(j)(3) of the Food, Drug, and Cosmetic Act by adding that "upon request," the Secretary shall inform an ANDA applicant whether a generic drug is "qualitatively and quantitatively the same as the listed drug."  If not, on the other hand, the Secretary shall identify to the person requesting the information ". . . the ingredient or ingredients that cause the drug not to be qualitatively or quantitatively the same as the listed drug; and . . . for any ingredient for which there is an identified quantitative deviation, the amount of such deviation."  The Secretary is precluded from changing or rescinding such a determination after submission of the ANDA unless the formulation of the listed drug has changed and "the Secretary has determined that the prior listed drug formulation was withdrawn for reasons of safety or effectiveness; or . . . the Secretary makes a written determination that the prior determination must be changed because an error has been identified."  The bill also requires the Secretary to produce a Guidance, within one year of enactment, "describing how the Secretary will determine whether a drug is qualitatively and quantitatively the same as the listed drug . . ." wherein this clause expressly includes "assessing pH adjusters."  These provisions will take effect on the date of enactment.

The motivation for this bill is to "streamline the approval process for generic medications" and "lower prescription drug prices for consumers" according to Sen. Hassan's website.  The enemy is purportedly "unnecessary red tape" which the Senators perceive to arise because:

[T]he FDA requires certain generic drug manufacturers to demonstrate that they have the same active and inactive ingredients in the same concentration as the reference brand name drug.  However, when a generic drug contains the wrong amount of inactive ingredient, the FDA cannot disclose the exact error, forcing manufacturers to engage in an often lengthy guessing game to reach the right balance.  This legislation would require the FDA to more clearly identify the specific differences between the generic and brand name drug, thereby streamlining the approval process, helping more generics reach the market faster, and lowering prescription drug prices overall.

5.    The Fair Accountability and Innovative Research Drug Pricing Act of 2023 (S. 935)

This bill was introduced by Sen. Tammy Baldwin (D-WI) and co-sponsored by Sen. Mike Braun (R-IN) and Sen. Tina Smith (D-MN).  This bill would amend Title III of the Public Health Service Act (42 U.S.C. 241 et seq.) with regard to drug price reporting.  The relevant provisions of the bill are a requirement that the manufacturer of a qualifying drug (defined as any drug approved by FDA under Sections 505(c) or 505(j) or licensed under Subsection 351(a) or 351(k) that is not vaccine, has a wholesale acquisition cost of $100 or more per month supply or course of treatment, or is "commonly administered by hospitals") must submit a report to the Secretary if there is an increase in the price of the drug that results in an increase in the wholesale acquisition cost that is a) 10 percent or more over a 12-month period beginning on or after January 1, 2024; or b) 25 percent or more over a 36-month period beginning on or after January 1, 2024; or (for drug costs for a year or per normal cost of treatment) "exceeds United States median household income beginning on or after January 1, 2024).  The report is due not later than 30 days prior to the "planned effective date of the price increase."  The report must disclose (A) the percentage of the planned increase; (B) a justification for the increase; (C) an explanation for the cost; (D) the identity of the initial developer of the drug; (E) a description of the history of the manufacturer's price increases since approval; (F) the drug's current list price; (G) the total expenditures for materials, manufacturing, and acquiring and/or licensing patents for the drug; (H) the percentage of total expenditures on research and development for the drug "derived from Federal funds" less (I) total expenditures for research, development, basic and preclinical research, clinical studies, new drug development, pursuing "new or expanded" indications through supplemental applications under Section 505; (J) total revenue and net profit for each calendar year; and (K) costs associated with marketing and advertising for the drug.

Also required for manufacturers "total revenue and the net profit of the manufacturer for each of the 12-month or 36-month periods"; all stock-based performance used to determine executive compensation; and any additional information the manufacturer chooses to provide related to drug pricing decisions.

Failure to comply is subject to a civil penalty of $100,000 for each day the violation continues.

Such reports shall be posted on a public Department of HHS website no later than 30 days after the report is submitted, subject to the restrictions of laws for protecting trade secrets and confidential commercial information.

Finally, the Secretary will provide an Annual Report to Congress, also posted on a public Department of HHS website.

The extensiveness of the financial disclosures mandated by the bill suggest passage will not be easy or without significant opposition.

Solicitor General Files Brief Advocating Certiorari Grant in Teva Pharmaceuticals v. GlaxoSmithKline; Court Declines Invitation

By Kevin E. Noonan --

Today, the Supreme Court again disregarded the views of the Federal government regarding whether to grant certiorari, here in Teva Pharmaceuticals USA v. GlaxoSmithKline LLC, and in some ways the only positive outcome is that the Court has shown it is willing to refuse to take action is cases other than subject matter eligibility (although Justice Kavanaugh indicated he would have granted the petition).  Perhaps the Justices felt that the Federal Circuit's backtracking in its second panel decision on the breadth of infringement inducement set forth in its first decision, in light of then Chief Judge Prost's strong dissent and the firestorm of protest (public and through amicus briefing regarding Teva's petition for rehearing), was enough to cabin the decision to the somewhat unique facts in this case.  Nevertheless, consideration of the Solicitor General's arguments is sufficiently important to review them here despite the Court's decision not to do so.

The Federal Circuit's decisions, rendered separately (see "GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2020)" and "GlaxoSmithKline LLC v. Teva Pharmaceuticals USA (Fed. Cir. 2021)") over strong dissents by former Chief Judge Prost in both instances, regarding whether a generic applicant filing a "skinny label" ANDA could properly be found liable for inducing infringement under 35 U.S.C. § 271(b) led, not surprisingly, to a petition to the Supreme Court for certiorari.  The Court issued an Order to the Solicitor General soliciting the government's views and that brief was filed in March, advocating that the Court grant cert.

The matter arose in litigation over GSK's Coreg^® product (carvedilol) for treatment of hypertension (the initial approved indication; U.S. Patent No. 4,503,067), congestive heart failure (CHF) (the subject of U.S. Patent No. 5,760,069), and left ventricular dysfunction following myocardial infarction (LVD-MI).  The '069 patent recites a method of treating CHF with a combination of carvedilol and "one or more of an angiotensin-converting enzyme ("ACE") inhibitor, a diuretic, and digoxin."

Teva's ANDA was filed with a Paragraph III certification over the '067 patent and a Paragraph IV certification over the '069 patent.  The FDA tentatively approved Teva's generic product for "treatment of hypertension and heart failure" which Teva launched on expiration of the '067 patent.  Teva's label indicated that the product was approved for treatment of LVD-MI and hypertension and announced that the FDA had given its product an "AB rating" (which the opinion explained "allow[s] users to determine quickly whether the Agency has evaluated a particular approved product as therapeutically equivalent to other pharmaceutically equivalent products").  Thereafter, the FDA required Teva to amend its label to be identical to the GSK label for Coreg®, which introduced treatment of heart failure into the approved treatments recited in Teva's label.

GSK filed for reissue of the '069 patent which was duly granted by the U.S. Patent and Trademark Office as Reissue Patent No. RE40,000; claim 1 is representative of the invention as claimed in the '000 reissue patent:

1.  A method of decreasing mortality caused by congestive heart failure in a patient in need thereof which comprises administering a therapeutically acceptable amount of carvedilol in conjunction with one or more other therapeutic agents, said agents being selected from the group consisting of an angiotensin converting enzyme inhibitor (ACE), a diuretic, and digoxin,
    wherein the administering comprises administering to said patient daily maintenance dosages for a maintenance period to decrease a risk of mortality caused by congestive heart failure, and said maintenance period is greater than six months.

(where the italicized portion of the claim represents the modifications introduced in prosecution of the reissue application.)

GSK filed suit against Teva for inducement of infringement in light of the Teva label, based on direct infringement by physicians prescribing the drug for the label indications.  Teva argued that it had "carved out" the indication for CHF pursuant to 21 U.S.C. § 355(j)(2)(A)(viii), resulting in a "skinny label" with regard to this indication.  Thereafter, the FDA compelled Teva to amend its label to include that indication.  In addition, Teva argued that it could be liable for inducement only if GSK could show that Teva had "directly communicated with the direct infringers and 'caused' them to directly infringe the method in the '000 patent."  In an instruction, the District Court informed the jury that circumstantial evidence could be used to satisfy this burden.

The jury found that Teva induced infringement of the '000 reissue patent both before and after the label amendment (albeit infringing several claims after but not before that change).  The District Court granted Teva's motion for judgment as a matter of law (JMOL) on the basis that GSK had not "caused" physicians to prescribe their product for the infringing uses.  Because proof of such causation was required, according to the District Court, its absence precluded the jury from having substantial evidence in support of its decision.  The Court relied on the "many sources of information available to prescribing physicians" other than Teva's label (including paradoxically GSK's label and promotion of its Coreg® product) in finding this evidentiary deficiency.  Also, the Court based its decision on physician testimony that their prescribing behavior relied on "guidelines and research, as well as their own experience" and not Teva's label.  "In sum," the Court said, "substantial evidence [did] not support the jury's finding on causation, and therefore [did] not support its verdict that Teva is liable for induced infringement, during both the skinny and full label periods."

In a first appeal, the Federal Circuit reversed, in an opinion by Judge Newman joined by Judge Moore; Chief Judge Prost provided a lengthy, comprehensive dissent.  The panel majority relied on the Supreme Court's decision in Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011), that copying is evidence of inducement, and also found compelling evidence from Teva's website regarding its product's AB rating with GSK's Coreg® product and other promotional content, as well as testimony from GSK's witnesses regarding physician reliance on information from generic drug makers.

The panel majority opined that the District Court erred in applying the incorrect legal standard, stating that "precedent makes clear that when the provider of an identical product knows of and markets the same product for intended direct infringing activity, the criteria of induced infringement are met."  Considering this precedent, the majority held that "[t]here was ample record evidence of promotional materials, press releases, product catalogs, the FDA labels, and testimony of witnesses from both sides, to support the jury verdict of inducement to infringe the designated claims for the period of the '000 reissue patent."

Then-Chief Judge Prost dissented based on her objections to the quanta of evidence adduced and policy consequences should the majority's position be sustained.  In the then-Chief's view, the majority's decision undermined the policy goals, embodied in the provisions of the law regarding skinny labels, for balance between the incentives patents provide for pharmaceutical innovation and the public's need for access to that innovation once the patent term has expired.  In her view, the majority's decision undermined these policy goals by finding Teva induced infringement by marketing its generic drug produce for unpatented uses (emphasis in dissent) using its skinny label.  The dissent not only disagreed with the majority's decision, but apprehended it to "nullify[y] Congress's statutory provision for skinny labels—creating liability for inducement where there should be none," contrary to Congressional intent and "slowing, rather than speeding, the introduction of low-cost generics."

The original majority opinion occasioned an outpouring of outrage from industry groups (particularly generic ones) who latched onto the then-Chief Judge's rhetoric in her dissent to the effect that the opinion eviscerated the congressional sanctioning of skinny labels.  The Court granted panel rehearing that resulted in the second opinion (that was later the subject of the Court's denial of en banc review).

The outcome did not change in the second opinion, which recited with approval behavioral distinctions underpinning the majority's decision based on the law with regard to skinny labels:

Generics could be held liable for actively inducing infringement if they marketed a drug with a label describing a patented therapeutic use or if they took active steps to encourage doctors or patients to use the drug in an infringing manner.  But generics could not be held liable for merely marketing and selling under a 'skinny' label omitting all patented indications, or for merely noting (without mentioning any infringing uses) that FDA had rated a product as therapeutically equivalent to a brand-name drug [emphasis in original].

Stating that the panel (or at least the majority) agreed to rehear arguments "to make clear how the facts of this case place it clearly outside the boundaries of the concerns expressed by amici," the opinion stated that the basis for their decision that the jury correctly found Teva liable for inducing infringement was "by marketing a drug with a label encouraging a patented therapeutic use" (emphasis in opinion).  The opinion also stated more precisely the procedural basis for their opinion:  "[t]his is a case in which substantial evidence supports a jury finding that the patented use was on the generic label at all relevant times and that, therefore, Teva failed to carve out all patented indications."  The majority also emphasized that their decision was a "narrow, case-specific review of substantial evidence [that] does not upset the careful balance struck by the Hatch-Waxman Act regarding section viii carve-outs."  The remainder of the majority opinion set forth (extensively) the evidentiary basis for their opinion that there was sufficient evidence (including expert testimony and marketing efforts occurring both before and after FDA-mandated changes to Teva's label) to satisfy the substantiality standard, and that the District Court erred in granting Teva JMOL to the contrary (inter alia including specific errors in treating factual questions as legal ones that the majority state were "not this court or the district court, to resolve").

Former Chief Judge Prost remained unconvinced, in large part because this outcome (in her view) undermined the congressionally sanctioned skinny label regime (if only by rendering it much more case- and fact-specific than she perceived Congress intended).  The skinny label regime was Congress's solution to a "problem" it "saw coming" in Judge Prost's view, specifically that "[b]ecause the FDA cannot authorize a generic version of a drug that would infringe a patent, this one remaining patented use could have prevented a less-expensive, generic carvedilol from coming to market altogether—even though the drug itself and other uses of it were unpatented."  The majority's decision thwarted this intent, according to Judge Prost, based on evidence of inducement that was "thin to nonexistent."  The District Court had properly exercised its supervisory role in remedying a situation where a jury came to the wrong conclusion, Judge Prost concluded, based on her evaluation of the evidence before it.  The Judge set forth her motivation for writing (once again) in dissent (and that the majority's attempt to provide a comforting standard falls short in her opinion):

I write in this case because far from being a disagreement among reasonable minds about the individual facts, this case signals that our law on this issue has gone awry.  I am particularly concerned with three aspects of the majority's analysis.  First, even setting aside the majority's willingness to glean intentional encouragement from a label specifically designed to avoid encouragement, the majority further weakens the intentional-encouragement prong of inducement by effectively eliminating the demarcation between describing an infringing use and encouraging that use in a label.  Second, the majority defies basic tort law by eviscerating the causation prong of inducement.  The upshot of these two moves is that a plaintiff now has to show very little for a jury to speculate as to the rest.  Third, the majority creates confusion for generics, leaving them in the dark about what might expose them to liability.  These missteps throw a wrench into Congress's design for enabling quick public access to generic versions of unpatented drugs with unpatented uses.

The decision by the full Court not to rehear the case en banc was announced in a simple Order to that effect, and was accompanied by three written dissents:  one by Judge Prost, joined by Judges Dyk and Reyna; another by Judge Dyk writing alone, and the third by Judge Reyna.

The Solicitor General's brief recites most of this history as an introduction to the government's views on whether the Court should grant cert on this Question Presented:

Whether the court of appeals erred in holding that the FDA-approved labeling for petitioner's generic drug could provide evidence of intent to induce infringement of respondents' method-of-use patent, where that labeling carved out the portions of the brand-name reference drug's labeling that the brand-name manufacturer and FDA had identified as corresponding to the patented method.

The Solicitor General recognizes and extends the concerns and arguments raised by former Chief Judge Prost in her dissents below.  According to the brief,

[A] jury may conclude that a generic manufacturer's engagement in the precise conduct that the Hatch-Waxman Amendments contemplate—namely, marketing an FDA-approved generic version of a brand-name drug with labeling that carves out those indications that the brand-name manufacturer has identified to FDA as claimed by a method-of-use patent—is itself evidence of intent to induce infringement of the patented method.

Under these circumstances, the government argues that uncertainty produced by the majority's decision below is "likely to deter generic manufacturers from invoking that mechanism, thereby threatening the availability of lower-cost generic drugs, in contravention of the statutory design."  The brief frankly asserts that the decision below is "incorrect" because "[n]o reasonable jury could have concluded that the carved-out labeling for petitioner's generic carvedilol from 2007-2011 was itself evidence of intent to induce infringement."  Reciting the requirement of intent embedded in assessment of inducement under § 271(b), the Solicitor General contends that submission of a skinny label carveout as here cannot satisfy this intent requirement in the face of Congress's intent that "one patented use will not foreclose marketing a generic drug for other unpatented ones."  Any other interpretation of the statute will "substantially deter[]" use of Section viii of the statute, the brief asserts.  The Solicitor General reserves from this avoidance of inducement liability situations where a generic manufacturer "actively promotes direct infringement of a brand-name manufacturer's method-of-use patent through communications other than the carved-out labeling" or when a brand name manufacturer "timely objects to the generic drug's labeling as failing to carve out a still patented method of use and puts the generic manufacturer on notice that the labeling teaches the method."  In the Solicitor General's view, a generic manufacturer submitting a Section viii carveout is better understood to be evidence of an intent "not to encourage infringement" (emphasis in brief).

The brief argues that the inference of an intent to induce infringement by the Federal Circuit was erroneous inter alia because the carveout "was driven by FDA regulatory requirements and GSK's own identification of the indication that should be excised."  While the brief hypothesizes that there could be circumstances where a generic manufacturer could take advantage of a branded drugmaker's failure to "identify all the language in its labeling that corresponds to a patented method of use," that was not the case here.

Like former Chief Judge Prost, the Solicitor General appreciates that the Federal Circuit's decisions below "subverts the balance struck by Congress, creates significant uncertainty for FDA and generic manufacturers, and invites gamesmanship by brand-name manufacturers" (and the FDA does not have the expertise or responsibility for reviewing patent claims to address these concerns).  The structure of how the FDA has implemented this Congressional intent (by producing use codes obtained from the branded drugmakers) is ministerial, providing the needed information regarding use codes entered in the Orange Book and not independently vetting them.  But in this role it is the brand-name drug manufacturers that submit the use codes, and the Solicitor General exhorts the Court that "[t]he section viii pathway cannot function as designed unless FDA and generic manufacturers can rely on brand-name manufacturers' representations to the agency" regarding, inter alia, what parts of the brand-name indications are omitted in the carveout.  The continuing responsibility resides in the brand-name drugmaker to ensure that the indications in its label accurately reflect those protected by Orange Book-listed patents and any inaccuracies found in the label can be corrected by the NDA holder (none of which GSK did in this case, the Solicitor General reminds the Court).

The Solicitor General's brief also sets forth its apprehension of the harm to "competition and consumers" that could be occasioned by deigning not to grant certiorari.  These include that the Section viii carveout procedural pathway is "an integral component of a complex statutory scheme designed to encourage market entry by generic-drug manufacturers 'as soon as patents allow,'" citing Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 566 U.S. 399, 405 (2012).  The brief also cites economic statistics, including savings of more than $50 million during the first 12 months of generic sales (at over 75% price reductions) and that "first generic" approvals "often" have carved-out labels.  Another aspect is time -- the brief notes that Section viii carve-outs have "permitted generic drugs to be approved for sale an average of three years before the relevant method-of-use patents expired."  The Federal Circuit's decisions below threaten to reduce such benefits, the Solicitor General argues in this brief.

Finally, the government asserts that this case is a "suitable vehicle" for the Court to consider the proper relationship between the skinny label pathway, generic drug maker behavior, and inducement of infringement liability.  The Solicitor General contends that the "interlocutory" nature of the decision below, being on remand to consider whether equitable estoppel provides a defense, will not diminish the broader harm to competition posed by the Federal Circuit's decisions.  And the government disagrees with Respondent GlaxoSmithKline that changes to the statute have made the Court's review unwarranted because those "clarifying revisions" did not "fundamentally alter the regulatory scheme, which has always placed the onus on the brand-name manufacturer—not FDA or generic competitors—to identify accurately any methods of use claimed by a patent."  Finally, the relatively specific factual bases for the Federal Circuit's decisions below should not alter the fundamental issue, the government asserts, that "the potential for inducement liability in these circumstances may significantly deter use of the section viii pathway, even if such liability is rarely imposed" (emphasis in brief).  Agreeing again with former Chief Judge Prost, in future "[i]f petitioner's carved-out labeling supports a finding of intent to induce infringement [in this case], the section viii pathway will be seriously jeopardized."