World IP Day, April 26 this year, marks an apt time to consider the ways intellectual property makes our lives better.


IP—patents, copyrights, trademarks and trade secrets—secures private property rights in one’s inventions and other creative output.


IP has spurred innovation, competition and the U.S. economy. It’s the lifeblood of many industries—producing many years of research and development, leading to all forms of innovation.


For example, thanks to IP, we enjoy electrification in our homes and businesses. Associated foundational inventions power our modern conveniences. IP lies at the center of wireless technology, computer-implemented functionality such as artificial intelligence, commercial sectors such as movies, music and publications, as well as R&D-centric medical devices and biopharmaceuticals.


Like a deed to land, patents and copyrights serve as titles on newly created property. Without clear title and enforceable ownership rights, few would make improvements on property.


“In a significant number of industries, secure patent protection has enabled the entry of entrepreneurial innovators backed by outside risk capital—a potent combination that can challenge existing technological paradigms, threaten market leaders, and drive high-intensity innovation ecosystems,” writes University of Southern California law professor Jonathan Barnett.


An Example of IP’s Blessings

How does this play out? As one example, take biopharma.


The industry marshaled all hands on deck, developed, produced and began distributing sophisticated, novel COVID-19 vaccines in less than one year. COVID medicines and tests are widely deployed, with more than 20 billion COVID vaccine doses available this year and new medicines on the way. IP made such remarkable progress possible.


Meanwhile, biopharma innovators remain hard at work addressing antimicrobial resistance with new types of antibiotics. They’re hard at work on drugs to treat Lou Gehrig’s and other diseases and have created hepatitis C cures. Even cures for such diseases as HIV and cancer are budding, thanks to gene therapy.


Biopharma’s R&D/advanced manufacturing ecosystem and the resulting innovation are fueled by IP and partnerships. These result from sound tech transfer policies in place for decades.


Anti-IP types led by Sen. Elizabeth Warren and Rep. Lloyd Doggett seek to hijack the Bayh-Dole Act’s narrow march-in authority. This tech transfer law’s march-in isn’t authorized for product price. Abusing march-in threatens Bayh-Dole’s decentralized technology transfer and commercialization decisions for inventions from federal basic research grants. Such misuse would render IP rights uncertain and, therefore, the IP unattractive to investors.


It’s crucial to realize that IP-backed, democratized tech transfer activity fuels U.S. competitiveness and jobs. Threats of misapplied march-in put these benefits, along with resulting products and practical applications, at risk.


The biopharma sector outperforms many other industries economically. Biopharma firms provide more than 900,000 U.S. jobs and support another 3.5 million domestic jobs. The more than 1,500 pharmaceutical facilities are located in 47 states.


Their workers average more than $145,000 in salary and benefits. Worker productivity exceeds the average worker by three and a half times. Biopharma’s total share of U.S. economic output at 3.7 percent surpasses $1.4 trillion and accounts for 3.4 percent of GDP.

 

In short, IP-reliant R&D rocks—technologically, economically, across society. Still, some people can’t see the IP forest for the trees of their envy, short-sightedness or biases.


Considering IP’s critical role in incentivizing innovation, you realize just how profound is IP’s contribution to human progress, health and happiness. World IP Day is a good time to remember the countless, tremendous contributions IP has made to improving the human condition.

In 2007, Idaho couple Michael and Chantell Sackett prepared to build a house in an existing subdivision. They broke ground and began excavation and backfilling on their lot. That’s when the long arm of environmental regulators reached in.


To grasp what happened, you need to know that this plot of land isn’t connected to any navigable waters. It’s across the road from existing houses and, beyond that a little distance, from Priest Lake. The Sackett property isn’t linked in a watery way to the lake.


Bureaucrats applied Clean Water Act regulations’ “navigable waters” and “waters of the United States” (WOTUS) vagueness to the Sacketts’ land, despite the absence of surface waters, such as a creek, conjoining.


Fifteen years later, the Sacketts are once again taking their case against this regulatory taking to the U.S. Supreme Court. Conservatives for Property Rights has joined with the Atlantic Legal Foundation and the Committee for Justice on an amicus brief supporting the Sacketts.


In 2007, the Environmental Protection Agency and the U.S. Army Corps of Engineers claimed the Sacketts’ property is a “wetland” in their prodigious interpretation of the Clean Water Act. The agencies ordered work to halt and the land owners to return the plot to its natural condition—or face huge fines.


From 2008 to 2012, the Sacketts fought in court for the right to challenge the EPA-Corps ruling. The couple won that question at the U.S. Supreme Court.


From then till 2019, district court litigation crawled along over the question of the EPA’s and Corps’ control under the CWA over this plat of dry land. The district court and the Ninth Circuit ruled for the Administrative State; the Supreme Court has taken the case on appeal.


The bottom line is that these bedeviled property owners have owned a vacant parcel of land in a developed neighborhood since 2004, and regulatory caprice has blocked the owners from developing their property, making any improvements on it or deriving any economic benefit from their land, all because of a too-flexible, arbitrary rule and excessive bureaucratic discretion. This exemplifies just what the Administrative State is and how it rolls.

The appellants have asked SCOTUS to address whether the standard from the Justice Scalia-authored plurality opinion in Rapanos v. United States (547 U.S. 715 (2006)) should apply instead of the Justice Kennedy-written opinion the lower courts chose. The high court seems inclined to weigh the proper legal test for the WOTUS regulatory regime.


The Rapanos plurality opinion standard is “wetlands with a continuous surface connection to bodies that are ‘waters of the United States’ in their own right,” whereas the Kennedy concurrence opts for a nebulous “significant nexus” of wetland to navigable water (emphasis added).


The Atlantic Legal-CPR-Committee for Justice amicus brief urges SCOTUS to adopt the clearer, more fact-based “surface connection” standard “as a necessary condition for establishing Clean Water Act jurisdiction over wetlands.”


This approach employs the legal canon of constitutional avoidance. It would reduce the risk of triggering Fifth Amendment Takings Clause concerns in EPA-Corps’ uncompensated regulatory takings every time the agencies unilaterally prohibit use of private property via loosey-goosey CWA regulations.


This case holds broad constitutional and property-rights importance for all land owners, including private citizens, farmers, ranchers and other business owners. Here’s hoping the court goes with the clearer “continuous surface connection” rule.

A federal judge calls the status of patent-eligible subject matter “validity goulash.” A former chief judge of the Federal Circuit Court of Appeals calls it “a quagmire.”

Whatever side someone may be on regarding patent eligibility, everyone should agree that the current situation in courts and the Patent Trial & Appeal Board needs fixing.

Far from dry and arcane, it’s one of the most urgent crises in patent law and policy. How this problem is resolved holds critically important consequences.

The outcome directly affects America’s innovation leadership in cutting-edge technologies, our competitiveness with China and the prospects for garage inventors to keep on inventing.

If certainty and clarity of patent eligibility is restored, it means new competitors for Big Tech and Chinese-controlled firms, wealth creation, job creation and a rising U.S. standard of living.

If patent eligibility doctrine remains a mess or narrows eligibility, it protects entrenched incumbents and patent infringers, foregoes potential wealth and job creation, and diminishes innovation that would raise the standard of living for all Americans.

The U.S. Patent & Trademark Office recently requested input on the state of patent-eligible subject matter legal interpretation.

Conservatives for Property Rights commented: “It is important that patent eligibility jurisprudence accord with this statutory design [of broad eligibility, with novelty, usefulness and nonobviousness secondary] because protecting and securing exclusivity to new property someone has created is not merely important as a property rights matter. It is the gateway to progress in science and useful arts as well as to U.S. economic prosperity, national security and industrial competitiveness.”

Eagle Forum Education & Legal Defense Fund wrote: “[T]he combination of [Supreme Court rulings in] Bilski v. Kappos in 2010, Mayo Collaborative Services v. Prometheus Laboratories in 2012, Association for Molecular Pathology v. Myriad Genetics in 2013 and Alice Corp. v. CLS Bank in 2014, individually and through the ‘Mayo-Alice Framework,’ have judicially created exceptions to broad statutory language. Worse, courts have reached contradictory decisions applying complicated ‘tests’ without definitions for key terms and untethered from the statute. . . . Further, courts and PTAB have conflated substantive patent criteria with patent eligibility.”

EFELDF’s event on this topic featured a broad array of experts, including two former directors of the PTO, one Democrat and one Republican. In a bitterly divided Washington, these experts agreed: This is an urgent problem that demands a return to broad eligibility as a threshold question separate from substantive patentability criteria.

Some background illuminates the patent law and the previous judicial stance on what the law deems eligible for a patent.

In 1980, the Supreme Court handed down a landmark ruling in Diamond v. Chakrabarty. It ruled a man-made, living microorganism is patent-eligible subject matter. The microorganism would eat hydrocarbon compounds, cleaning up oil spills.

The court invoked a phrase connected with Congress’s 1952 revision of the patent statute. The court said section 101 of the patent law generally regards “anything under the sun that is made by man” as being patent-eligible.

Among other things, that decision sparked the biotech revolution. It made possible new sectors of our economy that benefit mankind in numerous ways.

But patent eligibility has gone from the heights of a broad reading of patent eligibility to the depths of confusion and conflicting rulings. You know it’s a royal mess when Chief Judge of the Federal Circuit Kimberly Moore calls it “validity goulash[,] . . . troubling and inconsistent with the patent statute and precedent.”

The consequences of this “goulash,” turning 101 into a minefield of uncertainty and unpredictability, are many and highly disruptive. The essence of invention and patents is fostering innovation. But an invention today may well be invalidated as ineligible for patenting, such as a medical diagnostic test, a computerized function or an auto axle (the invention in the case that prompted the “validity goulash” quip).

Along with squelching innovation, this mess diminishes patent rights and renders patents unreliable. Without secure patents on cutting-edge technologies, investors shy away from funding patent-centered projects and potential business partners decline to pursue commercialization arrangements.

How dire is this? Former Federal Circuit Chief Judge Paul Michel asks, “If I, as a judge with 22 years of experience deciding patent cases on the Federal Circuit’s bench, cannot predict outcomes based on case law, how can we expect patent examiners, trial judges, inventors and investors to do so?”

Former PTO director Andrei Iancu stresses how important it is to “finally resolve this issue that has plagued our system for the past decade.” He initiated PTO’s development of useful guidance making sense of the courts’ complicated Alice-Mayo Framework.

Former PTO director David Kappos says, “The Supreme Court, Federal Circuit, district courts and USPTO are all spinning their wheels on decisions that are irreconcilable, incoherent and against our national interest.”

If the United States is to retain our innovation edge, patent eligibility doctrine must be returned to the “anything under the sun that is made by man” standard.

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