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  • Senate Bill Proposed to Provide Subject Matter Eligibility Solution

    By Kevin E. Noonan –

    Washington - Capitol #6Through the vicissitudes of the continuing chaos of subject matter eligibility, Senators Coons and Tillis have been steadfast in attempting to provide a legislative solution.  They chaired a series of Congressional hearings in 2019 (see "Senators Tillis and Coons Release Statement on Recent Patent Reform Hearings"), have asked the Patent and Trademark Office for its statistics and other information on patent eligibility (see "Senators Request USPTO to Provide Information on Subject Matter Eligibility"), and have proposed several bills providing various iterations of these solutions (see "Senator Tillis Proposes Patent Eligibility Reform (Again)").  Today, they co-sponsored the latest attempt, entitled "The Patent Eligibility Restoration Act of 2023."

    The bill contains a preamble of "Findings" that amount to a litany of all the reasons why Supreme Court decisions and how they have been implemented by district courts, the Federal Circuit, and the Patent and Trademark Office have "led to extensive confusion and a lack of consistency" regarding eligibility.  This portion of the bill reads as a justification (to the Senators' colleagues, the judiciary, and the public) of the need for subject matter eligibility reform by Congress; it cites for example an "increasing number of inventions ineligible for patent protection" as a consequence of creation of the "judicial exceptions" by the Supreme Court and other courts.  It also asserts that "[m]any judges of the United States Court of Appeals for the Federal Circuit and of various district courts of the United States have explicitly expressed the need for more guidance with respect to the meaning of section 101 of title 35, United States Code" as well as "many patent owners, and persons that engage with patent owners, complain[ing] that the interpretation of that section is extremely confusing and difficult to discern and apply with any confidence."  The cosponsors' intentions with these amendments are plainly set out, starting with the elimination of all judicial exceptions and that "any" invention or discovery in the statutory categories (process, machine, manufacture, or composition of matter) be eligible for patenting apart from explicitly recited exceptions recited in the statute.  Also recited in this Findings section is that the other statutory requirements under Section 102, 103, and 112 are not to be used to determine patent eligibility.

    The bill provides then provides specific modifications to the patent statute.  These begin with the provisions defining a "process" (Section 100), which are amended by deleting the phrase  ''includes a new use of a known process'' and inserting ''includes a use, application, or method of manufacture of a known or naturally-occurring process."  Also provided is a definition of the word "useful" to mean "with respect to an invention or discovery, that the invention or discovery has a specific and practical utility from the perspective of a person of ordinary skill in the art to which the invention or discovery pertains.''

    Section 101 is amended to abrogate the so-called "judicial exceptions" by enumerating an explicit and exclusive set of ineligible subject matter.  These exceptions include and are limited to:

    • a mathematical formula that is not part of a claimed invention in a statutory category [of process, machine, manufacture, or composition 16 of matter, or any useful improvement thereof];

    • a process that is substantially economic, financial, business, social, cultural, or artistic, even though not less than 1 step in the process refers to a machine or manufacture, but not if the process cannot be cannot practically be performed without the use of a machine or manufacture;

    • a mental process performed solely in the human mind, or that occurs in nature wholly independent of and prior to any human activity;

    • an unmodified human gene as it exists in the human body; or

    • an unmodified natural material as that material occurs in nature.

    Importantly, the term "unmodified" as it is used with regard to human genes or natural products is defined in the statute not to include embodiments that have been "isolated, purified, enriched, or otherwise altered by human activity" or "otherwise employed in a useful invention or discovery."

    The amendments to Section 101 also include a section on how eligibility is to be determined which includes:

    • 'by considering the claimed invention as a whole and without discounting or disregarding any claim element'; and

    • without regard to "the manner in which the claimed invention was made," "whether a claim element is known, conventional, routine, or naturally occurring," "the state of the applicable art, as of the date on which the claimed invention is invented," or any other considerations in the other statutory sections (specifically Section 102, 103, or 112).

    Finally, the amendments provide that in infringement actions, eligibility can be addressed by motion of a party when there are no genuine issues of material fact, and that a court can consider permitting "limited discovery" before ruling.

    As is frequently the case, introduction of the bill was accompanied by a press release, with the Senators joining in announcing their bill and the necessity for it.  In his statement, Senator Coons said:

    More than a decade after the Supreme Court waded into patent eligibility law, uncertainty remains about which areas of innovation are eligible for patent protection.  Critical technologies like medical diagnostics and artificial intelligence can be protected with patents in Europe and China, but not in the United States.  The Supreme Court has repeatedly failed to clarify the law, so Congress must act.  I'm proud to join Senator Tillis' bill that would reform patent eligibility law to bring vital clarity for inventors and innovators and ensure the United States maintains its competitive edge.  I look forward to working with all stakeholders as we move this bill in Congress to restore confidence in our patent system.

    For his part Senator Tillis's statement reads:

    I have long said that clear, strong, and predictable patent rights are imperative to enable investments in the broad array of innovative technologies that are critical to the economic and global competitiveness of the United States, and to its national security.  Unfortunately, our current Supreme Court's patent eligibility jurisprudence is undermining American innovation and allowing foreign adversaries like China to overtake us in key technology innovations.  This bipartisan legislation with Senator Coons maintains the existing statutory categories of eligible subject matter, which have worked well for over two centuries, and addresses concerns regarding inappropriate eligibility constraints by enumerating a specific but extensive list of excluded subject matter.  I look forward to continuing to work with all interested stakeholders on this important matter.  Passing patent eligibility reform remains one of my top legislative priorities during my second term.

    Also set forth in Senator Coons' official website is a statement from two former Directors of the U.S. Patent and Trademark Office, David Kappos and Andrei Iancu, now Co-Chairs of the Council for Innovation Promotion (C4IP), who said:

    C4IP applauds Senators Tillis and Coons for introducing critically important legislation to correct patentable eligibility law.  The Patent Eligibility Restoration Act of 2023 is much-needed legislation to foster the development of next-generation technologies across many innovative industries, including artificial intelligence, medical diagnostics, quantum computing, and telecommunications, to name a few.  With products in these sectors currently categorically ineligible for patent protection, the United States is losing its standing as the world's innovation leader.  By introducing this legislation, Senators Tillis and Coons are standing up for American inventors and ingenuity, and are positioning the United States to continue its leadership in these technologies of the future.

    The draft bill has two immediate impediments to passage (others will no doubt arise during the legislative process).  The first and perhaps most significant is that to the extent the Supreme Court has based its subject matter eligibility jurisprudence as an exercise in its role in limiting Congress to the constraints in the Constitution, that its power to grant patents must "promote progress," it is likely to strike down any law that abrogates its judicial exceptions as being ultra vires of the proper exercise of Article I power.  Two generations ago Giles Sutherland Rich (and P.J. Federico) were able to introduce obviousness into the statute by casting it as an enactment of Supreme Court precedent reaching back to Hotchkiss that patentability required something more than novelty.  It was the Supreme Court's variable ex post facto definitions of what that ineluctable something was (flash of genius, etc.) that had made "the only patent that is valid . . . one which [the] Court [had] not been able to get its hands on" and that provided the impetus for introducing obviousness as a statutory requirement.  But how later-Judge Rich effected this enactment was done with sufficient subtlety and obeisance to the Court's precedent that in Graham v John Deere the Supreme Court opined that Section 103 was just that, codification of the principle it had enunciated all along.  This bill lacks that subtlety and accordingly is much less likely to pass supreme judicial muster.

    The other aspect of the bill likely to face stiff political rather than judicial opposition is in the changes to patent eligibility of human genes and natural products.  It is extremely likely that some groups, particularly the American Civil Liberties Union and its allies in the Myriad case will argue that the definition of "unmodified" would permit patenting of isolated human genes and oppose the bill on that basis (as they have in other embodiments of reform bills from the Senators (see "ACLU (Predictably) Opposes Patent Subject Matter Eligibility Proposal").

    Neither of these impediments are incapable of being overcome by amending the scope of the statute, of course but their existence makes less likely from the outset that the bill will provide the solution the Senators seek.

  • Federal Circuit Special Committee Responds to Judge Newman’s Counsel’s Request for Clarification Regarding Misconduct Hearing

    By Kevin E. Noonan –

    Federal Circuit CourtroomResponsive to the letter from Judge Pauline Newman's counsel sent June 15th (see "Judge Newman Matter Continues"), the Special Committee directing the Federal Circuit's inquiry regarding Judge Newman's fitness for continued service on the Court (consisting of Chief Judge Moore, former Chief Judge Prost, and Judge Taranto) issued a per curiam response.

    The response sets forth the basis and scope of the June 1st Order which identified Judge Newman's refusal to comply with the Committee's demands, including to "undergo medical examinations, to provide medical records, and to sit for an interview with the Committee" set forth in prior Order, as in itself judicial misconduct under Rule 4(a)(5) ("Cognizable misconduct includes refusing, without good cause shown, to cooperate in the investigation of a complaint or enforcement of a decision rendered under these Rules.")   The response provides a recitation of the Committee's previous orders that parallels the history set forth in counsel's letter, with certain differences in characterization thereof.  For example, regarding their April 6th Order, the response characterizes the issue as "Judge Newman's disclosure of a confidential employment dispute matter and statements made in regard to that matter."  The April 20th Order, according to the response, was expanded to include potential misconduct related to "Judge Newman's alleged retaliatory, unprofessional, and abusive behavior towards her own and other court staff."  Not included in counsel's letter were Orders dated April 17th, May 3rd, and May 16th regarding the Committee's demands that Judge Newman provide medical records and undergo medical testing including "neurological and neuropsychological testing."

    Counsel's letter purported to ask the Committee for "clarification" regarding the status of the grounds for misconduct asserted in these various Orders, characterizing them as 1) allegations of mental or physical disability; 2) improper behavior towards staff; and 3) failure/refusal to cooperate.  The Committee's Order makes plain that:

    All the foregoing aspects of the investigation remain open and pending before the Committee.  No part of the investigation has been terminated.  In particular, the investigation into whether Judge Newman suffers from a disability that impairs her ability to perform the duties of her office remains ongoing.

    But the Committee's response also makes plain that these various grounds of complaint cannot substantively go forward without Judge Newman's cooperation (or compliance) which is not forthcoming.  Accordingly the Committee has Ordered briefing by July 5th and a hearing on July 13th to address the somewhat meta (or Kafkaesque) question of whether Judge Newman's refusal to comply with these Orders is itself judicial misconduct.  This question unavoidably presents the due process and Constitutional issues raised in Judge Newman's complaint to the D.C. District Court (see "Judge Newman and the On-Going Attempts to Remove Her from the Federal Circuit") but which (apparently) will not be addressed in the upcoming briefing and hearing.  The Committee's asserted basis for this course of action is that:

    [T]he Committee's investigation into whether Judge Newman suffers from such a disability has been seriously impeded by Judge Newman's refusal to undergo neurological and neuropsychological examinations, to provide medical records, and to sit for an interview with the Committee.  Her refusal to cooperate in those respects impairs the ability of the Committee to gather sufficient information to come to a definitive conclusion and recommendation for the Judicial Council on the disability issue.

    The consequences to Judge Newman are clearly laid out in the response, wherein the Committee asserts its rationale that "it would be most efficient for the Committee to focus immediate proceedings on a more discrete issue on which the Committee could likely reach a conclusion and make a final recommendation to the Judicial Council despite Judge Newman's lack of cooperation," i.e. a finding of judicial misconduct without needing to establish the purported prerequisites of mental, psychological, or physical disability that was the presumed basis for the Special Committee's actions in the first place.

    The response also denies Judge Newman's counsel's request that the hearing be open to the public.  The reason for this decision is that traditionally such inquiries on judicial fitness are kept confidential under the Judicial Conduct and Disability Act of 1980 and by the Rules for Judicial-Conduct and Judicial-Disability Proceedings, according to the Committee.  This creates a "strong presumption" for the Committee that the proceedings should remain confidential.  As a practical matter, the response asserts that confidentiality "facilitates the investigative process" and its beneficial effects in this regard "ha[ve] been almost universally accepted," citing First Amendment Coalition v. Judicial Inquiry & Review Bd., 784 F.2d 467, 475 (3d Cir. 1986).  In particular, despite there having been "a great deal about the current proceedings" that have been open to the public the Committee "has taken particular care to ensure that publicly released material does not identify witnesses or confidential details of witness statements and that the public releases would not compromise the investigative process."  Opening the hearing to the public would pose "grave risk[s]" of "inadvertent" disclosure of such information in the Committee's view.  The response also contends that there is no prejudice to Judge Newman by maintaining this confidentiality because "all affidavit and deposition transcripts" have been turned over to the Judge's counsel (thus making their existence public knowledge).  Because this evidence has provided the basis for the various Orders by the Special Committee, and whether Judge Newman's non-compliance therewith constitutes judicial misconduct raises the possibility that argument on this points might result in disclosure of at least some of this evidence, which the Committee does not want to happen.  And in attempts to prevent such disclosure the Committee asserts their fears that witnesses will "censor themselves in real time" to prevent disclosure.

    The response also provides the Committee's rebuttal to the case law cited by Judge Newman's counsel.  Waller v. Georgia is inapposite, the response asserts, because that was a criminal case, and thus precluded from being held in private based on a defendant's Sixth Amendment right to a public trial.  The response also contradicts Judge Newman's counsel's argument that the hearing will be based on the paper record, because inter alia "the entire record has not been made public" (although they have been provided to counsel).

    Nevertheless, the Committee "will consider" releasing a transcript redacted as to witness identities and other confidential material in due course after the hearing is held.  This would permit "some public transparency" and "allow a more considered approach to redacting [confidential] material" than could be achieved at a live hearing, while at the same time it would "not hamper the efficiency of the Committee's investigation by impeding the flow of the argument itself."

    Briefing will be submitted by July 5th and a hearing transcript sometime thereafter (although it is unlikely that there will be publication of the recorded hearing in view of the Committee's discussion in its response).

  • Judge Newman Matter Continues

    By Kevin E. Noonan –

    Federal Circuit CourtroomThe Federal Circuit's Special Committee released two documents relevant to their continuing assessment of Judge Pauline Newman's fitness for the bench today, neither of which can be considered comforting to the patent community or those concerned about the Judge or the Court.

    The first is a letter from Judge Newman's counsel in the action brought by the Judge's complaint filed in D.C. District Court last month.  Counsel's letter was sent "in response to the Special Committee's Orders of June 1, 2023" that the Committee's investigation is not directed to the substantive issues initially raised but is now focused on whether the Judge's "refusal to cooperate" with the investigation is itself misconduct.  (Those familiar with the complaint will realize that the refusal was with the manner in which the investigation was to be performed and not a blanket refusal to cooperate.)

    The letter is appropriately deferential and respectful while at the same time managing to set forth the expanding scope of the investigation from its initiation.  These include the April 6th Order, expanding the investigation to include Judge Newman's alleged (mis)conduct related to an "employment dispute" in her chambers.  This was followed, on April 13th, by an Order that included Judge Newman's alleged "failure to cooperate" by refusing to accept service of Orders issued under Rule 15(a)91)(b).  Then on April 20th, the letter asserts that the scope of the investigation was expanded again to include "retaliatory statements and conduct toward and about" a staff member in the Judge's chambers, the Judge's refusal to allow one of her clerks to be reassigned to a different judge and "requiring the clerk to 'stay or resign,'" and the Judge's alleged conduct towards the IT department.  Lastly, the letter describes the Order of May 26th that was directed to Judge Newman's alleged refusal to cooperate with "ordered neurological and neuropsychological testing, to produce certain medical records, and to meet with the Committee for a recorded interview."  The letter summarizes the categories of allegations in the various letters to be 1) allegations of mental or physical disability; 2) improper behavior towards staff; and 3) failure/refusal to cooperate.

    Turning to the Special Committee's June 1st Order, the letter states that the Committee decided it will not pursue the first category of allegations (due to the impracticalities occasioned by the Judge's refusal to cooperate) but would focus its inquiries on the third category.  The letter requests the Committee for "formal clarification" of its intentions regarding the second category, improper behavior towards Court staff, "out of an abundance of caution and to protect Judge Newman's rights."  The letter also asks the Committee to clarify whether it is continuing its investigation into the Judge's alleged failure to cooperate with the Rule 15(a)(1)(b) orders and if the current status of these allegations is also in abeyance.

    The final request in the letter is for any oral argument on the matter be made public, i.e., that the public be allowed to attend the hearing scheduled for 2:00 pm on July 13th.  One basis for the request is the Committee's statement that there are no fact witnesses necessary and the argument will be based on the "paper record" and legal argument.  Insofar as all the factual evidence has been disclosed to the public, counsel contends that there is "no weighty reason" for the hearings to be behind closed doors.  The letter cites Supreme Court precedent to support holding the hearings in public absent reasons not present here.  There is also no danger to Judge Newman's reputation, counsel notes, because "the sum and substance of the allegations have already been released to the public," and "[p]ermitting public participation in the upcoming hearing will serve only to increase the public's confidence in Judge Newman's abilities and the disciplinary process."

    Discussion of the Court's Order will be the subject of a following post.

  • Vanda Pharmaceuticals Inc. v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2023)

    By Kevin E. Noonan –

    Federal Circuit SealIn its recent review of a district court decision the Federal Circuit characterized as "a thorough opinion," the Federal Circuit affirmed invalidation for obviousness of four claims from four different Orange Book-listed patents in Vanda Pharmaceuticals Inc. v. Teva Pharmaceuticals USA, Inc.

    The case arose in ANDA litigation involving Vanda's tasimelteon drug (Hetlioz®) for non-24-hour sleep-wake disorder described in the opinion as a circadian rhythm disorder prevalent amongst blind individuals.  Defendants Teva and Apotex filed ANDAs having Paragraph IV certifications that prompted Vanda's assertion of these four claims:

    • RE46,604 (Claim 3) (wherein the limitations recited in claims from which the asserted claims depend are set forth in italics):

    3.  A method of entraining a patient suffering from Non-24 to a 24 hour sleep-wake cycle in which the patient awakens at or near a target wake time following a daily sleep period of approximately 7 to 9 hours, and maintaining said 24 hour sleep-wake cycle said method comprising: treating the patient by orally administering to the patient 20 mg of tasimelteon once daily before a target bedtime, wherein the patient is totally blind and wherein the tasimelteon is administered 0.5 to 1.5 hours before the target bedtime.

    • U.S. Patent No. 10,149,829 (Claim 13):

    13.  A method of treating a patient for a circadian rhythm disorder or for a sleep disorder wherein the patient is being treated with a strong CYP1A2 inhibitor selected from a group consisting of fluvoxamine, ciprofloxacin, and verapamil, the method comprising: (A) discontinuing treatment with the strong CYP1A2 inhibitor and then (B) treating the patient with 20 mg of tasimelteon once daily, that comprises treating the patient for Non-24-Hour Sleep-Wake Disorder.

    • U.S. Patent No. 9,730,910 (Claim 4):

    4.  A method of treating a patient for a circadian rhythm disorder wherein the patient is being treated with rifampicin, the method comprising: (A) discontinuing the rifampicin treatment and then (B) treating the patient with tasimelteon, thereby avoiding the use of tasimelteon in combination with rifampicin and also thereby avoiding reduced exposure to tasimelteon caused by induction of CYP3A4 by rifampicin, [the method] compris[ing] treating the patient for Non-24-Hour Sleep-Wake Disorder, wherein the patient is light perception impaired (LPI) and wherein treating the patient with tasimelteon comprises orally administering to the patient 20 mg of tasimelteon once daily before a target bedtime.

    • U.S. Patent No. 10,376,487 (Claim 5):

    5.  A method of treating a human patient suffering from a circadian rhythm disorder or a sleep disorder that comprises orally administering to the patient an effective dose of tasimelteon without food, wherein the effective dose is 20 mg/d wherein the patient is suffering from a circadian rhythm disorder, and wherein the circadian rhythm disorder is Non-24 Disorder.

    Regarding claim 3 of Reissue Patent No. RE46,604, the District Court found this claim to be obvious over two combinations of four references:  Hack et al., 2003, "The Effects of Low-Dose 0.5-mg Melatonin on the Free-Running Circadian Rhythms of Blind Subjects," 18 J. Biological Rhythms 420; PCT Publication No. WO 2007/137244; and Lankford, 2011, "Tasimelteon for Insomnia," 20 Expert Op. Investigational Drugs 987; or Hack, the '244 application, and Hardeland, 2009, "Tasimelteon, a Melatonin Agonist for the Treatment of Insomnia and Circadian Rhythm Sleep Disorders," 10 Current Op. Investigational Drugs 691.

    The Federal Circuit affirmed, in an opinion by Judge Dyk, joined by Judges Bryson and Prost.  Vanda argued on appeal that the District Court erred in considering the Hack reference, which taught using melatonin to entrain circadian rhythms; the Federal Circuit disagreed.  While conceding that "tasimelteon and melatonin are not identical," Defendants asserted expert testimony that tasimelteon binds to melatonin receptors and that the Hardeland art taught that tasimelteon could be used to treat patients having circadian rhythm disorders.  The panel found no error in the District Court crediting this testimony or the statements in the prior art regarding the similarities between tasimelteon and melatonin.  The panel also rejected Vanda's argument that the prior art would provide no reasonable expectation of success in the claimed dose (20mg/d) because the Hardeland and '244 PCT application disclosed a study by Rajaratnam that disclosed that "[t]he most effective doses of tasimelteon were in the range of 20 to 50mg/day," supported by expert testimony), and the Lankford reference disclosed Vanda's own phase III clinical study for entraining blind individuals with 20 mg/d tasimelteon.  Finally, the panel held that the District Court was properly unconvinced that the objective indicia of non-obviousness did not rebut Defendants' prima facie obviousness case regarding long-felt need (regarding evidence from a single case) and industry praise (the evidence not being commensurate in scope with what it was being used to support).

    Turning to the '487 patent, the panel affirmed the District Court's obviousness determination based on the limitation "without food," which the District Court held would have been an obvious-to-try limitation, citing Section C of KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 421 (2007).  The panel recognized evidence of there being a "market pressure" to determine the effect of food administration on tasimelteon, which was a consideration for new drugs.  There were only two alternatives after all, the opinion states, and they amounted to "two identifiable and predictable options."  This situation satisfied the Supreme Court's criteria in KSR and the Federal Circuit affirmed the District Court's reliance thereupon in making its obviousness determination.

    The Federal Circuit rejected Vanda's arguments against the District Court's obviousness determination on claim 4 of the '910 patent, the limitation at issue being "(A) discontinuing the rifampicin treatment and then (B) treating the patient with tasimelteon."  According to the panel, the District Court properly relied on knowledge in the art that a related drug, ramelteon, had an 80% reduction in blood plasma levels when co-administered with rifampin.  Thus it would have been obvious to claim discontinuing rifampicin before treating a patient with tasimelteon, based inter alia on tasimelteon binding to the same receptor as ramelteon in the panel's view.  The panel also rejected evidence that a further reference to Vachharajani taught away from the conclusion that an enzyme induced by rifampicin would metabolize tasimelteon because the study did not show the enzyme did not do so after it had been induced by rifampicin as required in the claim.  This conjecture, that the enzyme in its rifampicin-induced state would have a different effect than in the uninduced state disclosed by the Vachharajani reference was supported by expert testimony, and the Federal Circuit held that the District Court did not err in relying on this evidence.

    Finally, the Court affirmed the District Court's obviousness determination regarding claim 14 of the '829 patent, concerning the limitation "(A) discontinuing treatment with the strong CYP1A2 inhibitor and then (B) treating the patient with  . . . tasimelteon."  The evidence relied upon by the District Court was found in the Hardeland reference, which taught that "[a]s tasimelteon is metabolized by [CYP1A2] . . . , coadministration of any drug that inhibits [this enzyme] should be regarded with caution," and taught that the blood plasma levels of ramelteon increased 100-fold upon co-administration with a CYP1A2 inhibitor.  The panel rejected Vanda's assertion that the prior art did not teach the skilled worker not to administer tasimelteon with a CYP1A2 inhibitor.  The opinion rejects this contention as illustrating a misunderstanding regarding the standards for obviousness, specifically that certainty is not required, just a reasonable expectation of success, citing Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1364 (Fed. Cir. 2007).  Using this standard, the opinion states that "a skilled artisan would have expected that taking a CYP1A2 inhibitor with tasimelteon would have negatively impacted the efficacy of tasimelteon and so the two should not be given together," which renders claim 14 of the '847 patent obvious according to the Federal Circuit.

    Vanda Pharmaceuticals Inc. v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2023)
    Nonprecedential disposition
    Panel: Circuit Judges Dyk, Bryson, and Prost
    Opinion by Circuit Judge Dyk

  • Conference & CLE Calendar

    CalendarJune 13, 2023 – "Mastering the Art of Attracting and Winning New Clients — Strategies for Success" (IPWatchdog and Anaqua) – 11:00 am (ET)

    June 13, 2023 – "Sustainable Innovation Dialogue: Exploring the Relationship between IP and Climate Change Innovation" (U.S. Patent and Trademark Office) – 8:30 am to 12:30 pm (Hawaii Time), Honolulu, HI

    June 14, 2023 – "From Problem to Market: How Three Women Are Addressing Global Challenges" (U.S. Patent and Trademark Office and University of Hawai'i Office of Innovation & Commercialization) – 8:00 am to 9:00 am (Hawaii Time), Honolulu, HI

  • Webinar on Attracting and Winning New Clients

    IPWatchdogIPWatchdog and Anaqua will be offering a webinar entitled "Mastering the Art of Attracting and Winning New Clients — Strategies for Success" on June 13, 2023 at 11:00 am (ET).  Gene Quinn of IPWatchdog, Inc. will moderate a panel consisting of Halim Shehadeh of The CWB Group and Joseph Bichanich of Anaqua.  The panel will discuss strategies for winning new clients and provide a roadmap from engagement to investing in the right technology to scale to accept increased work.

    There is no registration fee for this webinar.  However, those interested in registering for the webinar, should do so here.

  • USPTO Program on Relationship between IP and Climate Change Innovation

    USPTO SealThe U.S. Patent and Trademark Office will be offering program entitled "Sustainable Innovation Dialogue: Exploring the Relationship between IP and Climate Change Innovation" on June 13, 2023 from 8:30 am to 12:30 pm Hawaii Time at the Waikiki Beach Marriott Resort & Spa in Honolulu, HI.

    The half-day interactive program will bring together leaders of the world's five largest IP offices (IP5), representatives from the World Intellectual Property Organization (WIPO), industry representatives, and the local Hawaiian innovation community to engage in discussions on different perspectives on incentivizing, protecting, and commercializing climate-related innovations.  The program, which precedes the 16th annual meeting of the IP5 Heads of Office on June 15, will include sessions on:

    • Perspectives on climate change from the IP5 offices, an in-depth discussion of the IP5 Offices' initiatives to encourage patent filings in climate technologies, streamline examination, and undertake eco-friendly efforts, such as paperless filing and energy efficiency.

    • Perspectives on bringing climate-related innovation to market, where representatives of industry, small and medium-sized enterprises (SMEs), and local startups will describe what it takes to bring climate change technologies from research to the marketplace.

    • Perspectives on the challenges in climate-related innovation, a discussion of IP-related challenges faced by underrepresented groups and the specific needs of SMEs and startups in this space.

    Additional information about the program can be found here.  The in-person program will be live-streamed.  There is no charge to attend the program, but registration is required.  Due to space limitations, early registration for in-person attendance in Honolulu is recommended.  Those interested in registering for the webinar can do so here.

  • USPTO WE Event on Addressing Global Challenges

    USPTO WEThe U.S. Patent and Trademark Office will be offering its next Women's Entrepreneurship (WE) event from 8:00 am to 9:00 am (Hawaii Time) on June 14, 2023 at the Waikiki Beach Marriott Resort & Spa in Honolulu, HI.  The event, entitled "From Problem to Market: How Three Women Are Addressing Global Challenges," is a collaboration with the University of Hawai'i's Office of Innovation & Commercialization, and will feature a panel of entrepreneurs and experts bringing their ideas to the marketplace through licensing partnerships and university tech transfer, just two of the many ways businesses and innovators can solve the world's biggest problems.

    Those interested in registering for the event, can do so here.

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

    By Kevin E. Noonan –

    Supreme Court Building #1Einstein'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 –

    U.S. Trade RepresentativeOn 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.