Journal of the Intellectual Property and Technology Forum
at Boston College Law School
Winter, 2015-16 Edition
Table of Contents
Letter from the Editor and Journal Masthead
By William W. Shields ......................................................................................................... iii
Antitrust Issues in Reverse Payment Settlements: FTC v. Actavis, A Case Study
By Amanda Creedon ............................................................................................................ 1
Obama’s Broadband Plan
By Ben Agatston ................................................................................................................... 8
Federal Circuit Reviews the $1.5 Billion Judgement Against Marvell Studios
By Elizabeth O’brien .......................................................................................................... 14
“Cross-Checking” as a Claim Construction Strategy
By Elizabeth O’brien .......................................................................................................... 16
‘Happy Birthday to You’: The World’s Most Famous Celebratory Song’s Copyright
Challenged
By Kena Patel ..................................................................................................................... 21
TeleMedicine & The Courts: Teledoc v. Texas Medical Board as a Case Study
By Mary Delsener .............................................................................................................. 26
The Defend Trade Secrets Acts: Arrival of the Trade Secret Trolls?
By Stephen Anderson ........................................................................................................ 35
Intersection of American Law and Technology: The Innovation Act’s Fight Against
Patent Trolls
By Mohamed Elfarra .......................................................................................................... 41
Telemedicine’s Opportunities and Risks; A Balancing Act
By Robert Park ................................................................................................................... 47
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A Review of the Modern IPR Process
By Michael Thomas ............................................................................................................ 51
Data Exclusivity for Biologic Drugs: The TPP’s Potential Poison Pill?
By Tina Cheung .................................................................................................................. 64
The TPP on Internet Service Providers: Notice, Counter-Notice, and Liability Limitations
By Joseph Davi ................................................................................................................... 69
Mascot Madness: Are Characters in Times Square Violating Copyright Law?
By Victoria Chu................................................................................................................... 72
The CRISPR Patent Battle: Who Will Win the Rights to One of the Greatest Scientific
Discoveries of Our Generation?
By Kristin Beale, Ph.D. ....................................................................................................... 88
The Fair Play, Fair Pay Act of 2015: What’s At Stake and For Whom?
By William Shields, Professor Jeffrey S. Becker, and Stephen Hutton ............................ 104
DaraPrim and the Pharmaceutical Pricing Paradox: What’s At Stake and For Whom?
By Franklin Liu .................................................................................................................. 127
ENDNOTES ....................................................................................................................... 139
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Letter from the Editor-in-Chief
Welcome and thank you for reading the latest edition of the Intellectual Property and
Technology Forum’s Journal. The works contained within are the product of Boston College
law students, alumni-practitioners, and professors. Our aim as writers is to provide neither
benign nor hostile analysis, but critical inquiries into the day’s most interesting and pressing
issues of intellectual property jurisprudence.
My congratulations go out to the first-year writers who’ve made this edition so formidable.
The willingness to surrender your ideas to an editor tasked with finding faults is no small
thing. The process can be arduous but, like a monarch butterfly masterfully extracting itself
from the confines of its cocoon, you have overcome. Thank you for such an intellectually
stimulating opportunity. The work as your Editor-in-Chief has given my final year of law
school a special purpose.
William W. Shields IV
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ANTITRUST ISSUES IN REVERSE PAYMENT SETTLEMENTS:
Federal Trade Commission v. Actavis, Inc. et al. as a Case Study
by
Amanda Creedon
I. INTRODUCTION
Drug manufacturers often spend millions on research and development for drugs that
never make it to market. As a result, manufacturers need to recoup these R&D costs in the sale of
drugs that do make it to market. They often rely on the patent system, and the exclusivity it
provides, to accomplish that recoupment. [1] Drug manufacturers have turned to reverse payment
settlements to extend that exclusivity and generate higher profits from a particular drug. Reverse
payment settlements arise in the context of generic drugs. A patentee will offer to pay a generic
manufacturer, an alleged infringer, to delay the release of the generic drug to the market. [2] The
payment is a purchase by the patentee to continue its exclusive right to sell its product; a right it
already holds by virtue of the patent. For this reason, the practice is suspect of antitrust
violations. [3]
In Federal Trade Commission v. Actavis, Inc., the Federal Trade Commission (FTC)
filed a complaint alleging that reverse settlement payments were unfair restraints of trade and
therefore violated federal antitrust laws. [4] The Supreme Court held that reverse payment
settlements in patent infringement litigation are not presumptively unlawful but can sometimes
violate antitrust laws, to be determined on a case-by-case basis. [5] The settlements are not
immune from antitrust attack even if the agreement’s anticompetitive effects fell within the
scope of the exclusionary potential of the patent. [6]
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II. BACKGROUND
The FDA approved Actavis’ and Paddock’s generic drugs in 2003, modeled after Solvay
Pharmaceuticals’ brand name drug Androgel. [7] In 2006, instead of bringing its drug to market
and as part of settlement to paragraph IV [8] litigation between Solvay and the respondents,
Actavis entered into an agreement with Solvay, agreeing not to bring the drug into the market
until 65 months before Solvay’s patent expired and to promote Androgel to doctors in exchange
for $9-10 million annually for nine years. [9] Solvay reached similar agreements with both
Paddock and Par, settling for $12 million and $60 million, respectively. [10]
The FTC filed suit alleging Actavis and Paddock violated section five of the Federal
Trade Commission Act, which prohibits “unfair or deceptive acts or practices in or affecting
commerce,” [11] by unlawfully agreeing to abandon their patent challenges, refraining from
launching their generic product, and sharing in Solvay’s profits. [12] These unusual settlements
may have an adverse affect on competition, therefore both patent law policies and antitrust
policies are relevant to determine if these settlements are legal.
III. DISCUSSION & ANAYLSIS
A. Holding
The Supreme Court held that reverse settlement payments were not presumptively illegal
but should be examined on a case-by-case basis to see if they violate antitrust laws. [13] The
court notes that the likelihood of reverse settlement payments bringing about anticompetitive
effects depends on its size, its scale in relation to litigation costs avoided, its independence from
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other services for which it might represent payment, the lack of other convincing justification,
and which industry it occurs in. [14]
Rather than measure the amount of restriction solely against the length of the patent’s
term or earning potential, which the Court of Appeals did, the Supreme Court chose to address
traditional antitrust questions like anticompetitive effects and market power. The Supreme Court
supports their ruling that these settlements are subject to antitrust policies by stating that what the
holder of a valid patent could do, does not by itself answer the antitrust question. [15] These
settlements tend to have an adverse effect on competition as the brand name company and generic
company are forming a monopoly on this particular drug and preventing the low price generic
from being made available to consumers. [16]
The court noted that the Hatch-Waxman Act, was not designed to allow deals between
brand and generic companies to delay competition, [17] but was designed to speed the
introduction of low cost generic drugs into the market. [18] It has a general precompetitive
nature to it, in that the first to file an ANDA generic manufacturer receives in the 180 days of
exclusivity, and that when parties settle a paragraph IV filing, they must report the terms to the
FTC and the Antitrust Division of the Department of Justice. [19] The period of exclusivity
given to the generic drug company who is first to file can be worth several millions, providing
them incentive to bring their drug to the market quickly. [20] Reverse payment settlements
prevent these low cost generics from being available to the public quickly, and the public must
continue to pay the high price of the brand name drug.
B. Five Considerations
The Supreme Court gave five reasons why the Federal Trade Commission should be
given the opportunity to prove an antitrust claim. [21] First, reverse settlements have potential
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for adverse effects on competition, as the payment is an extension of exclusive right to sell the
brand name drug, giving a share of the monopoly profits to the generic company. [22] The court
proposed that the patentee would have to pay millions in continued litigation if they did not settle
this way, and the lost revenue from continued litigation would flow to consumers in the form of
lower prices. [23] The court also noted that the generic entering the market before the patent
expires would bring about competition, thereby further lowering prices for the consumer’s
benefit. [24]
Second, the court reasoned that these anticompetitive effects might sometimes prove
unjustified under the rule of reason. [25] Possible valid justifications for these settlements are
when the amount is no more than a rough approximation of the litigation expenses saved or when
the settlement represent other services the generic has promised to perform, such as promoting
the patented item. [26] It may be unjustified if the brand name is using this payment and its
monopoly profits to avoid patent invalidation or a finding of non-infringement that would allow
the generic to enter the market and lower prices for that drug. [27]
Third, where this type of settlement threatens unjustified anticompetitive harm, it is the
patentee who likely possesses the power to bring that harm about in practice. The harm here is an
artificially high price for drugs consumers need access to. [28]
Fourth, an antitrust action is likely to prove more feasible than the Eleventh Circuit
believed. [29] An unexplained reverse payment would normally suggest that the patentee had
serious doubts about the patent’s survival, which suggests they would rather split the profits with
the generic company than face the competitive market. [30] The consequence of having to face
the competitive market is what underlies a claim of antitrust unlawfulness. [31]
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Fifth, the fact that this settlement risks antitrust liability does not prevent litigating parties
from settling their lawsuit. The antitrust question is why they chose reverse settlement payments
over other potential settlements. [32] If the answer is a desire to maintain and share in patentgenerated monopoly profits, without other justifications, then the settlement is likely to violate
antitrust laws. [33]
These five considerations outweigh the desirability of settlement that led the Eleventh
Circuit to provide an almost automatic antitrust immunity to reverse settlement payments. [34]
IV. RAMIFICATIONS
The court held that reverse settlement payments are not presumptively illegal but should
be examined for possible antitrust violations as they have both pros and cons in their effect on
consumers. [35] The monopoly that can be formed between brand name and generic drug
companies in extending the brand name drug’s exclusivity through these settlements can produce
unjustified anticompetitive harms, making them subject to antitrust scrutiny as well as patent law
policies. [36]
The pros are these settlements extend patents which provide incentives to drug
manufacturers to take risks associated with developing new drugs. [37] These innovative drugs
are contributing to society by supplying new drugs to treat diseases and conditions patients are
continuingly suffering from, improving improvement in medical treatment. [38] Drug companies
holding valid patents see these settlements as a way to exercise their rights under patent laws to
exclude others from infringing on their patents and reducing litigation costs, allowing them to
continued profits, which they use to produce innovative, beneficial drugs. [39]
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The argument against these settlements is that they increase the cost of drugs available to
the public by delaying generic entry into the market. [40] Payment for staying out of the market
keeps prices at patentee-set levels, the benefit of which is split by the drug company that owns
the patent and the generic company that has agreed to stay out of the market, while the consumer
looses. [41] This rising cost of prescription drugs is a large factor of the growing healthcare cost
that is a central issue the United States is attempting to confront today. [42] A 2010 analysis by
the FTC found that reverse payment settlements cost consumers 3.5 billion annually. [43]
Consumers may not have access to the drugs they need because of the high prices, especially
low-income or elderly patients or those with chronic diseases that need long term care. [44] The
amount of cost to consumers needs to be weighed against the benefit of the introduction of new
drugs into the market.
An additional possible argument is that the Court actually expanded consumer access to
affordable healthcare because it stripped brand name drug manufacturers from complete
immunity from antitrust scrutiny when they enter into these agreements.45 Therefore, if drug
manufacturers can be charged and held accountable for their antitrust behavior, the consumer
will benefit if the reverse settlement payment is deemed unlawful and the generic drug enters the
market. Although it is true that these settlements are not presumptively lawful and immune from
antitrust liability, the Court focused on the fact that reverse settlement payments are not
presumptively unlawful because they may be adversely affecting competition and adversely, not
expanding, consumer’s access to affordable drugs and healthcare.
The adverse effects these settlements have on competition, high drug prices, and
increasing healthcare costs needs to be taken into account with the incentive to drug
manufacturers to produce innovative drugs that are beneficial to society, which is potentially
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why the court deemed these not presumptively unlawful but to be determined on a case-by-case
basis. Courts must weigh these two policy arguments when deciding if a specific reverse
settlement payment violates antitrust laws and may be injurious to the public.
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OBAMA'S BROADBAND PLAN
BY
Ben Agatston
This January, President Barack Obama announced a federal government initiative to
expand broadband infrastructure. Given the widespread use of technology in today’s society, the
President believes that broadband access is an essential piece of infrastructure that needs
improvement. [46]. The Broadband Opportunity Council Report and Recommendations states:
“Access to high-speed broadband is no longer a luxury; it is a necessity for
American families, businesses, and consumers. Affordable, reliable access to
high-speed broadband is critical to U.S. economic growth and competitiveness.
High-speed broadband enables Americans to use the Internet in new ways,
expands access to health services and education, increases the productivity of
businesses, and drives innovation throughout the digital ecosystem.” [47].
Given his commitment to increasing America’s broadband access, the
Commander-in-Chief signed a Presidential Memorandum titled “Expanding Broadband
Deployment and Adoption by Addressing Regulatory Barriers and Encouraging
Investment and Training, ” which established the Broadband Opportunity Council. [48].
Secretaries Penny Pritzker (Department of Commerce) and Tom Vilsack (Department of
Agriculture) chaired the Council, which also included representatives from numerous
other federal agencies. 1
1
Other governmental agencies included the Department of Defense, Department of State, Department of the
Interior, Department of Labor, Department of Health and Human Services, Department of Homeland Security,
Department of Housing and Urban Development, Department of Justice, Department of Transportation, Department
of the Treasury, Department of Energy, Department of Education, Department of Veterans Affairs, Environmental
Protection Agency, General Services Administration, Small Business Administration, Institute of Museum and
Library Services, National Science Foundation, Council on Environmental Quality, Office of Science and
Technology Policy, Office of Management and Budget, Council of Economic Advisers, Domestic Policy Council,
National Economic Council, National Security Council staff.
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Tasked with researching a top priority of the Obama administration, the Council
studied high-speed broadband access in America and subsequently prepared
recommendations for deployment during Obama’s final days in office. The West Wing
received the Broadband Opportunity Council’s findings on August 20, 2015 and
published the report a month later. Before delving into the President’s agenda to
modernize this portion of America’s infrastructure, however, one must understand the
digital problem besetting America.
This July, the Council of Economic Advisers (CEA), an administrative office within the
Executive Office of the President, published a report that highlighted the “digital divide.” Most
notably, the report found that a large number of Americans do not use a computer and
“substantial disparities in both Internet use and quality of access.” [49]. By exploring Figure 3 of
the Council of Economic Adviser’s report, “Mapping the Digital Divide,” it becomes clear that
rural areas lag behind more densely populated, urban regions.
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However, the issue is not simply geographic. Rather, the crux of the digital divide lays in
socioeconomic factors.
The Council of Economic Advisers found a direct correlation between Internet adoption
and income in numerous cities, as seen in Figure 4.
Concluding that there is a “substantial within-city variation in Internet adoption” that is “strongly
correlated with household income,” the CEA report suggests that socioeconomic factors predict
the digital divide more accurately than population density. [50]. Thus, this initiative fits squarely
with President Obama’s general policy goals to increase investment and aiding the less fortunate,
while also modernizing the country.
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The report focuses on several wide-ranging, social benefits that Internet access provide,
such as productivity and quality of life, which are compromised by the digital divide. Holding
the divide is “likely both a cause and a consequence of other demographic disparities,” the CEA
report laid the foundation for the Obama Administration’s initiative. In closing, the report points
to the partisan rationale underlying Obama’s agenda:
Policies that aim to close the divide are pursued in recognition of the fact that the
opportunities afforded by Internet access should be accessible to every American,
much like other universally available utilities such as water and electricity.
Expanding broadband access is an important part of a larger middle class
economic policy agenda, both to support economic growth and to extend access to
opportunity to more Americans.
After the CEA published its report, the Oval Office unveiled its initiative, a plan whose roots
trace back to when Mr. Obama took office in 2009.
Since the Democrat entered the Oval Office, “investments from the Federal government
have helped deploy or upgrade more than 110,000 miles of network infrastructure, and more than
45 million additional Americans have adopted broadband Internet”. [51]. Partially a consequence
of private investment, but also stemming from a $7.5 billion federal investment from the
American Recovery and Reinvestment Act (2009), broadband infrastructure has seen great
strides throughout Obama’s tenure. [52]. The administration’s devotion to broadband is also
evidenced through its program, “ConnectED” a social program that aims to connect the vast
majority of American students to high speed broadband by 2018, as well as “ConnectHome” a
demonstration project to equip over a quarter million low-income households with high speed
broadband access. [53]. Despite these strides, after examining the Broadband Opportunity
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Council’s recommendations, it becomes clear that President Obama’s ambition to increase
broadband investment and development still persists.
The Council made four predictable, vague recommendations to adapt America’s cyber
infrastructure to today’s needs:
(1) Modernize federal programs to expand program support for broadband
investments; (2) empower communities with tools and resources to attract
broadband investment and promote meaningful use; (3) promote increased
broadband deployment and competition through expanded access to federal
assets; and (4) improve data collection, analysis and research on broadband. [54]
In order to achieve these goals, the report calls for state and local governments to collaborate
with private corporations, meaningful and productive use of technology, and promotion of
competition through ‘dig once’ policies. These policies “promotes competition, reduces costs for
providers and decreases road-related costs from repeated excavation” by partnering with Tribal,
State, and local governments to streamline construction. The themes of investment, efficiency,
and education run throughout the report, as the Council hopes the program will aid businesses
growth, while simultaneously empowering communities in the public health and education
sectors. [55].
By advocating for minorities and the destitute, these recommendations align with
Obama’s progressive platform. Despite this partisan leaning, which has become synonymous
with divisiveness in Congress of late, there is a chance that this program will be met with
bipartisan support. Since Internet access is such an important utility for all citizens and
businesses in today’s age, and this program aids a diverse constituency, it is hard to imagine that
it will be blocked in Congress. However, this may occur since this program requires government
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funding. Further, it has been difficult to pass infrastructure investment in the past, though this
sector may be exceptional, since broadband access directly coincides with modernity, economic
growth, and social benefits.
The Council’s recommendations are self-evident; of course American infrastructure
should adapt to developments in modernity, and no reasonable person in 2015 would deny that
broadband access is a prerequisite to social mobility. However, equipping poverty-stricken or
rustic areas, while good in theory, may not lead to tangible benefits, as broadband access is futile
without the expensive tools needed to utilize it. These recommendations will certainly aid
telecommunication companies through investments, though it is hard to imagine that residents of
these underserved areas possess enough disposable income to purchase tablets, laptops, or
desktop computers. Nonetheless, the Obama Administration should be commended for this
ambitious effort, for it at least lays a piece of foundation necessary for social mobility among the
destitute, forgotten areas, the demographics generally overlooked in American politics.
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Federal Circuit reviews the $1.5 billion judgment against Marvell
by Elizabeth O’Brien
INTRODUCTION
In 2009, Carnegie Mellon University sued Marvell for infringement of U.S. Patent Nos.
6,201,839 and 6,438,180, relating to methods that reduce “noise” in magnetic recording systems.
[56] The jury found that Marvell was in fact selling infringing, semiconductor products both
domestically and abroad. [57] The jury awarded $1.17 billion in damages to Carnegie Mellon
University, corresponding to 50 cents for each product sold. [58] Soon thereafter, the judge
added $287 million in enhanced damages for willful infringement. The total judgment was $1.54
billion [59]; the largest judgment in the history of patent law. Marvell appealed.
On appeal, Marvell argued that the royalty rate was too high and should not have been
applied to products sold outside of the United States. [60] On August 4, 2015, the Federal Circuit
affirmed the judgment of infringement and validity; reversed the grant of enhanced damages; and
vacated in part and remanded the royalty award. [61]
ANALYSIS
The Federal Circuit threw out the enhanced damages under the governing willfulness
standard. [62] Statute states “the court may increase the damages up to three times the amount
found or assessed” upon proof of willfulness. [63] Willfulness requires “clear and convincing
evidence that the infringer acted despite an objectively high likelihood that its actions constituted
infringement of a valid patent” and “this objectively defined risk…was either known or so
obvious that it should have been known.” [64]
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In the instant case, Marvell’s defense to the infringement claims was “objectively
reasonable” so the burden of proof for willfulness was not met. [65] In its defense, Marvell
argued there was an invalidating prior art reference. [66] The Federal Circuit held there was
uncertainty regarding what the reference disclosed such that the invalidity defense was
objectively reasonable, though ultimately rejected. [67]
The Federal Circuit left $278.4 million in damages in tact because Marvell must pay
royalties on the products that were imported and sold in the United States. [68] However, the
award was vacated in part due to an issue of extraterritoriality. [69] Marvell had argued that the
court cannot measure damages based on the total number of products sold worldwide; damages
are calculated relative to the number of products sold in the United States. [70] The Federal
Circuit agreed and ordered a new trial to recalculate the damages on products that were not
imported into the United States. [71]
Statute mandates that anyone who “uses, offers to sell, or sells any patent invention,
within the United States or imports into the United States any patented invention during the term
of the patent therefor, infringes the patent”. [72] Thus, the court must determine whether any of
the activities listed in § 271(a) occurred in the United States. [73] For example, there was some
evidence that Marvell had designed, tested, and marketed the infringing products in the United
States. [74] Many of Marvell’s investors were companies based in the United States, including
Google Inc., Microsoft Corp., and Broadcom Corp. [75] There was also evidence suggesting that
Marvell made contractual commitments for specific volumes of products, signed in the United
States. [76]
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IMPLICATIONS
The day the Federal Circuit issued its opinion, Marvell shares dropped 2.4 percent in
Nasdaq. [77] There will likely be a settlement between Marvell and Carnegie Mellon University
because it is too expensive for either party to continue litigation. [78] It would be financially
favorable for Marvell to license the technology from the university.
The outcome of this case is significant because domestic companies will now take extra
measures to insulate foreign sales from United States patent law. [79] Domestic companies may
be encouraged to move their design, testing, and marketing activities outside of the United
States. [80] Alternatively, domestic companies may conduct all contract negotiations outside of
the United States. [81].
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“Cross-checking” as a Claim Construction Strategy
by Elizabeth O’Brien
The Supreme Court has long held that claim construction is a question of law reserved for the
court. [82] During claim construction, the proper meaning of a term is construed from the
intrinsic evidence and, when appropriate, extrinsic evidence. [83] The intrinsic evidence includes
the claims, the specification, and the prosecution history. [84] The weight of the intrinsic
evidence is often determinative. Therefore, a patent attorney should maintain a consistent claim
construction strategy from the start of prosecution. This strategy should encompass the full scope
of the invention. Otherwise, the patent owner will have little protection against infringers.
One helpful strategy is “cross-checking” the list of features. For example, features A and B
can both be implemented via X. However, feature A can also be implemented via Y. Therefore,
it is important to cross-check whether B can also be implemented via Y. The inventor and the
patent attorney should work together, at the start of prosecution, to identify all the features and
all the ways each feature can be implemented. Then, cross-checking can be performed.
Failure to cross-check the list of features may result in a narrow claim interpretation, as
shown in Intellectual Ventures I LLC v. Capital One Bank. [85] On June 19, 2013, Intellectual
Ventures sued Capital One Bank for infringement of U.S. Patent No. 7,260,587 (the ‘587 Patent)
which relates to a method of organizing digital images. [86] In the simplest embodiment, hardcopy prints are placed into a desired order. A machine readable instruction form is placed in
front of the hard-copy prints. The instruction form is scanned to identify one or more categories
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associated with the hard-copy prints, e.g., “vacation 1999.” The hard-copy prints are scanned to
obtain the digital images. The digital images are manipulated such that each digital image is
associated with the one or more categories, according to the instruction form. [87] This allows
the user to organize and easily search for specific images. [88]
Claim 1 of the '587 Patent recites “digitally scanning a plurality of hard copy prints [that
have been grouped into one or more categories, each category separated by] an associated
machine readable instruction form”. [89] Capital One Bank argued non-infringement on the basis
that the claimed method required a hard-copy instruction form which Capital One Bank did not
practice. [90] Intellectual Ventures argued that there was no requirement that the instruction form
be in a hard-copy format. [91] The District Court construed the terms “machine readable
instruction form” to require a hard-copy format, rather than an electronic format. [92] The parties
stipulated there was no infringement. [93] Intellectual Ventures appealed.
On appeal, the Federal Circuit reviewed the District Court’s claim construction de novo and
ultimately affirmed that the “machine readable instruction form” must be in a hard-copy format
based on the intrinsic evidence. [94] First, the claim language suggests the machine readable
instruction form must be in a hard-copy format to physically separate the categories of hard-copy
prints before scanning. [95] Second, the specification of the '587 Patent consistently describes
the machine readable instruction form as a hard-copy document, and there are no examples of the
machine readable instruction form being anything other than a hard-copy document. [96] The
provided examples describe that instructions are written on a machine readable instruction form,
the machine readable instruction form is physically placed in an envelope with the hard-copy
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prints, and the machine readable instruction form is then physically placed in front of the hardcopy prints before scanning. Third, during prosecution, in response to an office action, the
Applicant argued that the instructions are digitally scanned, stating that this was “clearly a
physical step.” [97] Therefore, the patentee did not maintain a consistent claim construction
strategy in prosecution and litigation.
Here, the patentee should have used varied examples to show different embodiments of
the feature at issue. The patentee also should have performed cross-checking. In fact, the
specification discussed another feature of the invention (the user instructions, i.e. how to use the
method generally) that could be in audio or visual format. [98] The court believed this discussion
showed the patentee could have discussed the feature at issue (the machine readable instruction
form) also being in audio or visual format. [99]
In this instance, the patentee would have benefitted from cross-checking feature A (i.e.
the user instructions) and feature B (i.e. the machine readable instruction form.) Feature A can be
implemented via X (i.e. hard-copy format), Y (i.e. audio format), and Z (i.e. visual format).
Feature B can be implemented via X. Therefore, the patentee should have cross-checked whether
feature B can also be implemented via Y and Z. Then, the patentee would have been motivated
to use more varied examples to describe the different ways each feature can be implemented via
Y and Z. The patentee also would have maintained a consistent claim construction strategy in
prosecution and litigation.
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Thus, at the start of prosecution, the patent attorney should discuss different embodiments
with the inventor and cross-check the list of features. This strategy will help identify whether
claim limitations can be met physically versus electronically for the purposes of litigation.
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‘HAPPY BIRTHDAY TO YOU’: THE WORLD’S MOST FAMOUS CELEBRATORY
SONG’S COPYRIGHT CHALLENGED
by
Kena Patel
[ABSTRACT]
It is a well-known adage that the best things in life are free, but how true could this be
with a copyright looming over the “Happy Birthday to You” song’s head? On September 22,
2015, a U.S. District Court in California freed “Happy Birthday to You” by ruling on the case
Marya v. Warner/Chappell Music, Inc. and declaring Warner/Chappell’s copyright invalid.
Although the song is widely known by all, many individuals do not know that “Happy Birthday
to You” was copyrighted at all, let alone know that Warner/Chappell was making $2 million a
year from ownership. [100] The history of how the song came to be provides an insight into how
Warner/Chappell obtained a copyright and how the existence of the copyright was impacting
everyone from filmmakers to restaurant chains.
I. HISTORY
The world owes the creation of “Happy Birthday to You” to two sisters, Mildred Jane
Hill and Patty Smith Hill. Mildred and Patty began to collaborate on writing songs for children in
1889. One of their earliest efforts was the song “Good Morning to All,” and the melody of this
song became the melody of “Happy Birthday to You.” Patty would first write the words of the
songs and then Mildred would compose a melody. [101]
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Four years later, in 1893, the sisters sold a manuscript containing 73 songs to publisher
Clayton F. Summy, and this manuscript included “Good Morning to All.” Within the year,
Summy published Song Stories for the Kindergarten and was able to obtain copyright protection
as the proprietor of the collection of songs but not as the author. [102] In 1921, the original
copyright for Song Stories for the Kindergarten expired and Summy didn’t renew his copyright
for this work. This meant that the contents of Song Stories for the Kindergarten should have
become public domain. [103]
Then in 1934, Jessica Hill, Mildred and Patty Hill’s sister, sold and assigned rights for
certain piano arrangements of “Good Morning to All” to Summy Co. who began granting
licensing rights through the American Society of Composers, Authors and Publishers (ASCAP)
for public performances of “Happy Birthday to You” in February 1938. [104] Summy Co.
renewed its copyright registrations in 1962, and was renamed Birch Tree Ltd. Warner/Chappell
Music, Inc. acquiesced Birch Tree Ltd. in 1998 and has been enforcing copyright on the song
ever since. [105]
As birthday parties emerged, “Happy Birthday to You” became extremely well known as
the standard birthday song and continued to grow in popularity. In a 1999 press release, the
American Society of Composers, Authors and Publishers announced that “Happy Birthday to
You” was “far and away” the most popular song of the twentieth century, having been “publicly
performed hundreds of millions of times.” [106] Additionally, the Internet Movie Database
reveals that the song has appeared in 143 movies as well as in countless advertisements, in
everything from Oldsmobile automobiles to Frosted Flakes and Cheerios cereals. As the song
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became more popular, it began to generate greater and greater revenues. It also started to become
expensive to sing “Happy Birthday to You” in movies, on albums, and even in restaurants.
II. THE CASE
On April 21, 2014, Rupa Marya, Robert Siegel, Good Morning to You Productions
Corp., and Majar Productions, LLC filed a complaint against Warner/Chappell Music, Inc. and
Summy-Birchard Inc. to invalidate their copyright on “Happy Birthday to You.” [107] The
plaintiffs argued that Warner/Chappell did not own a copyright in the “Happy Birthday to You”
lyrics and that they should be compelled to return the millions of dollars of unlawful licensing
fees they have collected by wrongfully asserting copyright ownership in the lyrics. [108] The
lawsuit was prompted when documentarian Jennifer Nelson had to pay $1500 for a
synchronization license to Warner/Chappell to include the song in her movie. Another plaintiff,
musician Ruypa Marya, revealed she had to pay $455 to include "Happy Birthday to You" in a
live album in which her bandmates sang the song to her. [109]
Warner/Chappell argued that the Hill sisters eventually gave Summy Co. the rights in the
lyrics to exploit and protect, but the court concluded that this assertion has no support in the
record. As a musical work both the lyrics and music of “Happy Birthday to You” are
copyrightable, and are both independently protected from infringement. [110] Warner/Chappell
argues that the Hill sisters authored the lyrics to “Happy Birthday to You” and then transferred
them to Summy Co., which published and registered them for a federal copyright in 1935. [111]
Plaintiffs challenge that someone else may have written the lyrics and the rights were never
transferred to Summy Co. [112] The court said the Hill sisters gave Summy Co. the rights to the
melody, and the rights to piano arrangements based on the melody, but never any rights to the
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lyrics. [113] Because Summy Co. never acquired the rights to the “Happy Birthday to
You” lyrics, Warner/Chappell, as Summy Co.'s purported successors-in-interest, do not own a
valid copyright in the “Happy Birthday to You” lyrics. [114]
There was a turning point in the case when the plaintiffs had evidence that they called “a
proverbial smoking gun”: a 1922 songbook containing “Good Morning and Birthday Song,” with
the birthday lyrics in the third verse. [115] While other songs in the book are given with
copyright notices, “Good Morning and Birthday Song” says only that it appears through “special
permission” of the Summy Company. [116] Under the laws of the time, an authorized
publication without proper copyright notice would result in forfeiture of the copyright according
to plaintiff’s lawyers involved in the case. [117] Moreover, under the 1998 law, anything
published before 1923 is considered part of the public domain. [118] This would mean that
Warner/Chappell was claiming copyright rights on a piece of work that was already in the public
domain, and therefore not subject to copyright.
Although the court ruled that Warner/Chappell did not have a right to the lyrics of the
song, they may not be held liable for the hundreds of millions of dollars speculators claim
Warner/Chappell will owe. The statute of limitations for a claim such as the one brought forth by
Marya and Good Morning To You Productions is three years so Warner/Chappell is estimated to
owe around $6 million. [119] The statute of limitations has been upheld and two plaintiffs were
dismissed because their allegations fell outside the statute of limitations. [120]
Warner/Chappell has full right to appeal the ruling to the US Court of Appeals for the 9th
Circuit, although there have been no comments from the Warner/Chappell lawyers indicating
that they are pursuing further litigation. For now, then, “Happy Birthday to You” is free to use by
all, rendering the adage true at last.
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TELEMEDICINE & THE COURTS:
Teladoc v. Texas Medical Board as a Case Study
by
MARY DELSENER
[ABSTRACT]
The American Telemedicine Association defines telemedicine as the “use of medical
information exchanged from one site to another via electronic communications to improve a
patient’s clinical health status.” [1] Through telemedicine, physicians can employ an array of
applications and services, including two-way video, email, smart phones, wireless tools and other
forms of telecommunications technology, to interact with patients.
Using varied technology platforms to leverage healthcare accessibility has become a
principal goal for the venture capitalists that fund tech startups. [2] Today, health insurance
companies such as Aetna and United Healthcare have partnered with telemedicine companies in
order to provide the service for its members. Teladoc, Inc., which markets itself as the first and
largest telehealth provider in the United States, is one such company. [3] Of all of business
generated by Teladoc’s 11.5 million members, one quarter comes from Texas. [4]
Over the course of the past year, however, Teladoc’s ability to continue its services in the
state has been on legally tenuous ground due to repeated steps taken by the Texas Medical Board
to oust the company from its state. The Teladoc, Inc. v. Texas Medical Board case exemplifies
the collision between emerging technology and healthcare law, and serves as a useful study of
the treatment such a dispute receives from the court system.
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I. STATUTORY DEVELOPMENT
In June 2011, the Texas Medical Board (“TMB”), the administrative agency that licenses
and regulates physicians in the state of Texas, sent Teladoc a letter attacking the company for
advertising its ability to administer services over the telephone without any prior establishment
of a physician/patient relationship via a face-to-face examination. In its letter, the TMB asserted
that this practice was in violation of Board Rule 190.8(1)(L). [5]
Title 22 of the Texas Administrative Code governs the violation guidelines and
disciplinary actions of the Texas Medical Board. Since November 2003, section 190.8(1)(L),
paragraph (i) of the Code has defined requirements for a proper professional relationship as
follows: [6]
(i) A proper relationship, at a minimum requires:
(I) establishing that the person requesting the medication is in fact who the person
claims to be;
(II) establishing a diagnosis through the use of acceptable medical practices such
as patient history, mental status examination, physical examination, and
appropriate diagnostic and laboratory testing. An online or telephonic evaluation
by questionnaire is inadequate;
(III) discussing with the patient the diagnosis and the evidence for it, the risks and
benefits of various treatment options; and
(IV) ensuring the availability of the licensee or coverage of the patient for
appropriate follow-up care. [7]
In 2010, Texas passed a separate set of guidelines concerning the regulation of
telemedicine; medical services provided over the Internet or other “advanced communication
technology” enabling an off-site physician to see and hear the patient in real time. See Teladoc,
453 S.W. 3d at 609. These telemedicine guidelines include a provision that specifically dictates
what constitutes the creation of the physician-patient relationship in a manner similar to Rule
190.8(1)(L)(i): [8]
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(a) Evaluation of the Patient. Distant site providers who utilize telemedicine medical
services must ensure that a proper physician-patient relationship is established which at a
minimum includes:
(1) establishing that the person requesting the treatment is in fact whom he/she
claims to be;
(2) establishing a diagnosis through the use of acceptable medical practices,
including patient history, mental status examination, physical examination (unless
not warranted by the patient's mental condition), and appropriate diagnostic and
laboratory testing to establish diagnoses, as well as identify underlying conditions
or contra-indications, or both, to treatment recommended or provided;
(3) discussing with the patient the diagnosis and the evidence for it, the risks and
benefits of various treatment options; and
(4) ensuring the availability of the distant site provider or coverage of the patient
for appropriate follow-up care. [9]
Despite the discrepancy between the two provisions, TMB, in its letter to Teladoc,
asserted that the more general provision, 190.8(1)(L), had always only accepted “face-to-face”
consults as the only appropriate manner in which to establish a physician/patient relationship.
Relying on this connection between 190.8(1)(L)(I)(ii) and 174.8, TMB accused Teledoc of
unconscionable misrepresentation for advertising that its process could be conducted over the
telephone without prior establishment of a physician/patient relationship via a ‘face-to-face’
examination. The letter made clear that the physicians choosing to participate in Teladoc’s
network were jeopardizing their medical licenses. [10]
II. PROCEDURAL BACKGROUND
A) TRIAL COURT
Under the Texas Administrative Procedure Act, a rule is a generally applicable statement
that affects private rights, implements, interprets, or prescribes law or policy, amends a prior
rule, and does not deal only with the agency's internal management. [11] Failing to meet certain
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requirements can invalidate a rule. [12] These requirements include giving public notice of the
proposed rule, allowing a reasonable opportunity for interested parties to comment, and
addressing such comments with a reasoned justification for the rule's adoption. [13]
Teladoc argued before the District Court of Travis County, Texas, that the
pronouncements contained in TMB’s June 2011 letter were tantamount to statements of general
applicability because they could “apply not only to [Teladoc] but to all other [companies and
doctors] engaging in [telehealth] business across the state.” [14] Therefore, argued Teladoc, the
June 20ll letter was operating as a rule, and, because the TMB had not adhered to any of the
requirements necessary to implement a rule, the letter was void. [15]
In its defense, the TMB asserted that the June 2011 letter was merely a restatement of §
190. Citing Texas case law, TMB likened the June 2011 letter to “an informal agency statement
that does no more than restate its own formally promulgated rules [and] would not in itself be a
‘rule.’” [16] The court concluded that the letter TMB sent to Teladoc in June 2011 was not a rule
within the meaning of the Administrative Procedure Act. [17] The court also denied Teladoc's
motion for summary judgment and granted TMB's cross-motion for summary judgment and
jurisdictional challenge, which alleged that Teladoc had brought the case in the court
erroneously. [18]
B. COURT OF APPEALS
The question before the Court of Appeals of Texas, Austin, was whether TMB’s June
2011 letter qualified as a “rule” under the Administrative Procedure Act. The Administrative
Procedure Act in Texas defines a rule as follows:
(6) “Rule”:
(A) means a state agency statement of general applicability that:
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(i) implements, interprets, or prescribes law or policy; or
(ii) describes the procedure or practice requirements of a state agency;
(B) includes the amendment or repeal of a prior rule; and
(C) does not include a statement regarding only the internal management or
organization of a state agency and not affecting private rights or procedures. [19]
The court assessed the differences between the 2004 rule, § 190.8, and § 174.8, which
had been passed in 2010. The earlier provision stated that, in order to establish a
physician/patient relationship, physicians could make a diagnosis “through the use of acceptable
medical practices such as patient history, mental status examination…”. Section 174.8, by
contrast, substituted the word “including” for “such as” in the earlier statute (“establishing a
diagnosis through the use of acceptable medical practices, including patient history”) (note:
emphasis added).
The court concluded that the Medical Board had, in its pronouncements in the June 2011
letter, effectively attempted to conform the earlier law with the more recent telemedicine
guidelines. By making these amendments to the existing rule 190.8(1)(L), the June 2011 letter,
was, therefore, deemed a procedurally invalid rule. [20]
In response to the Court of Appeals’ decision, which had been delivered on December 31,
2014, the TMB issued an emergency rule on January 16, 2015. The emergency rule mandated a
face-to-face visit or in-person evaluation before a physician can issue a prescription. [21]
While Teladoc obtained a temporary preliminary injunction of the emergency rule in Texas State
Court, the TMB proceeded to engage in formal rule-making procedure. On April 10, 2015, the
TMB voted to adopt the New Rule 190.8. [22]
C. FEDERAL DISTRICT COURT
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On April 29, 2015, Teladoc filed suit in United States District Court for the Western
District of Texas, seeking to enjoin the enforcement of “New Rule 190.8”. Teladoc alleged TMB
was violating antitrust law, and sought to enjoin the New Rule from going into effect, as it was
scheduled to do on June 3, 2015. [23]
A party seeking a preliminary injunction carries the burden of persuasion on all four of
the following requirements: (1) a substantial likelihood of success on the merits; (2) a substantial
threat that failure to grant the injunction will result in irreparable injury; (3) that the threatened
injury out-weighs any damage that the injunction may cause the opposing party; and (4) that the
injunction will not disserve the public interest. [24]
1. Likelihood of Success
The court found that Teladoc satisfied the first requirement by demonstrating it was
substantially likely to succeed on the merits of their antitrust claim. [25] In order to establish a
violation of Section 1 of the Sherman Act, plaintiffs must show that the defendants (1) engaged
in a conspiracy (2) that produced some anti-competitive effect (3) in the relevant market. [26]
TMB did not contest the existence of a conspiracy, so Teladoc needed only to demonstrate
elements 2 and 3. [27]
In determining that Teladoc met its burden in demonstrating the anti-competitive effect of
New Rule 190.8, the court was largely persuaded by the ample evidence Teladoc put forth. [28]
The court specifically compared the average costs of visits to a physician or emergency room,
$145 and $1957, respectively, to the cost for a Teladoc consultation, which is typically $40. The
court also considered the research Teladoc presented, stating that companies using their services
achieved reduced monthly employee healthcare costs. [29] Taking all of this information into
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consideration, the court concluded that the effect of New Rule 190.8 would be increased prices,
reduced choice, reduced access, reduced innovation, and reduced overall supply of physician
services, thus constituting an anti-competitive effect. [30]
The court then analyzed the second part of the anti-trust analysis, balancing the anticompetitive effect of the challenged regulation with the pro-competitive justification offered in
support. [31] The only pro-competitive justification TMB offered to implement the New Rule
190.8 was that it would lead to improved quality of medical care. The court deemed the affidavit
testimony TMB used to support this claim anecdotal. Conversely, the court found that Teledoc’s
evidence more persuasively proved that allowing the company to remain operating in Texas
would lead to improved quality of medical care in the state. [32] The compelling support from
Teladoc included testimony from patients detailing positive experiences with the company’s
services. It also included a research study of Home Depot employees using Teladoc’s services.
The study’s results showed significantly lower rates of follow-up office visits, ER visits, and
hospitalizations at both 7 and 30 days. This proof countered any negative claims made by TMB.
After reviewing the copious evidence presented, the court disagreed with TMB and its
claim that the quality of medical care would improve if New Rule 190.8 were implemented. [33]
2. Substantial Threat of Irreparable Injury
The court found that Teladoc satisfied the requirement of showing substantial threat of
irreparable injury based on several factors. First, Teladoc maintained it would no longer be in
business in Texas, or otherwise, if New Rule 190.8 were to go into effect. [34] The court found
this point particularly persuasive when it considered that the defendant state agency has the
ability to assert immunity from monetary damages. [35] Second, Teladoc was about to have its
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initial public offering, and the company had been advised that it would not be able to go through
with the offering if the company had to cease operations in Texas pursuant to New Rule 190.8.
Finally, the court also conveyed that because the telehealth industry as a whole is in such an
early stage of growth, it would be difficult to quantify the amount of loss the company would
suffer as a result of New Rule 190.8. [36]
3. Balancing of Respective Interests
In the final stage of its preliminary injunction analysis, the court concluded that the
preliminary injunction inquiry collapsed because the interests asserted by the TMB, protecting
the public from injury, were rebutted by the copious evidence that Teladoc had put on the record.
[37]
In response to the TMB’s claim that Teladoc’s harm was speculative, the court countered
that the evidence detailing the financial harm the company would suffer, including the
destruction of Teladoc's business model and ability to do business in Texas, as well as the
company’s doubtful ability to receive monetary damages, was sufficient to characterize the harm
as non-speculative. [38]
III. OUTCOME:
The Federal District Court found for Teladoc and issued the preliminary injunction. The
relentless efforts made by both parties in this litigation may be indicative of the particular kind of
intensity associated territorial disputes. While this may serve as a sign of things to come, it does
not appear as though Texas is finished with Teladoc.
While New Rule 190.8 did not go into effect this past summer, the Texas Attorney
General filed a 41-page document in federal district court last month, defending the intended
regulation. The Attorney General said that because “the Texas Medical Board’s rulemaking is
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subject to review by outside state authority,” it could not be found to be in violation of antitrust
standards.
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The Defend Trade Secrets Act: Arrival of the Trade Secret Trolls?
by
Stephen Anderson
INTRODUCTION
In today’s world it is increasingly apparent that advancements in technology have
allowed information to be shared, and to be stolen, more than ever before. This encompasses
simple tweets, as well as information guarded and seemingly protected by small businesses and
large corporations alike. There have been expected downsides with these technological
capabilities, namely state-backed cyber espionage and trade secret misappropriation. A new bill
that is currently facing Congress, the Defend Trade Secrets Act, is aimed at creating a federal
private cause of action under the Economic Espionage Act of 1996 (EEA). It is a bill that will, if
passed, expand the EEA to provide federal jurisdiction for the theft of trade secrets. There is no
question as to the degree of importance the protection of trade secrets is to United States
businesses and society at large. The question is whether the well-intentioned DTSA will actually
do more harm than good. There are a substantial number of legal professionals that have voiced
their concern that not only will it fail to significantly hinder cyber-espionage, but it will open the
door to a new breed of predators, trade secret trolls.
I. Background
The very definition of a trade secret has been a point of confusion when discussing the
DTSA and is therefore necessary to first define. The Uniform Trade Secrets Act defines a trade
secret as “(1) information (2) that derives economic value from not being generally known or
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readily ascertainable through appropriate means by other persons who might obtain economic
value from its disclosure and use; and (3) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy. [1] It is important to note that trade secrets do not include
any and all information businesses keep secret and that the use of a trade secret does not always
constitute misappropriation. [2] The trade secret must be acquired through improper means or
involve a breach of confidence to be protected. [3] This distinction is something that has gotten
lost in the current discourse surrounding this topic. It is also a necessary framework from which
to discuss the DTSA and its implications, due to the difficulty to discern between routine
employee behavior and actual trade secret misappropriation.
Another necessary distinction to understand is the two legal theories underlying trade
secret law, tort and property. In order for a trade secret misappropriation to have taken place
there needs to be the tort, i.e. the improper acquisition or breach, and the property interest, i.e.
the information being misappropriated is definitively a trade secret. [4] Too often when DTSA is
discussed there is an assumption that all business information is protected under trade secret law,
when in reality it is not. Those in opposition of the DTSA consistently remark on the bill’s
“hyper-focus” on property and ownership. [5] They feel there is a necessity for the bill to
examine trade secrecy as a tort-based concept. [6] Together the two theories build trade secret
law to allow intellectual competition, while also preventing wrongful acts, such as
misappropriation. The inappropriate focus on one theory will lead to harmful repercussions and,
in this particular case, will lead to the arrival of trade secret trolls. [7]
There is little doubt that the DTSA is well intentioned and it is important to clearly lay
out the reasons the bill is currently before Congress. Trade secrets are the only form of IP rights
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that do not have the protection of a federal private right of action. [8] The primary concern,
according to the July 29, 2015 press release, is that “trade secrets can be stolen with a few
keystrokes, and increasingly, they are stolen at the direction of a foreign government or for the
benefit of a foreign competitor.” [9]
Supporters state that current federal law in the field of trade secrecy is insufficient and
present state law has not sufficiently stopped the issue. [10] Furthermore, they say the
Department of Justice does not have the adequate resources to prosecute EEA cases and federal
courts are better equipped to handle trade secrecy cases. [11] Despite these persuasive
arguments, detractors continue to say that the DTSA does not solve the exact harm it is sets out
to rid. [12] Rather, it opens the courts to a “free-ranging, plaintiff-oriented” legal system that has
the tangible probability of creating trade secret trolls. Step by step legal scholars have pointed
out the potential pitfalls of the DTSA and continue to ask for its denial. [13]
The most contentious section of the bill surrounds the ex parte civil seizure remedy. [14]
This remedy is unique to the DTSA, in that it goes far beyond what a court is willing to do under
existing state law. [15] Specifically, this remedy allows a plaintiff to obtain a court order at the
outset of the case and proceed against a defendant who is allegedly in possession of the
privileged goods and seize those goods, without any notice to the defendant. In order to meet the
requirements to enforce the ex parte remedy, the DTSA states the applicant must show that the
information is a trade secret and the person against whom seizure would be ordered did the
following:
“[M]isappropriated the trade secret by improper means; conspired to use improper means
to misappropriate the trade secret; has possession of the trade secret; the application
describes with reasonable particularity the matter to be seized and [reasonably] identifies
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the location where the matter is to be seized; the person against whom seizure would be
ordered would make such matter inaccessible to the court, if the applicant were to
proceed on notice to such person; and, the applicant has not publicized the requested
seizure.” [16]
The court order may also enjoin other associated devices or activities. See id. The original
purpose of this remedy was to provide a means for the court to exercise their jurisdiction
effectively in counterfeiting cases, i.e. to ensure the supposedly counterfeit goods were not
destroyed before the trial started. [17] In regards to the DTSA, this is aimed at preserving the
evidence and quickly hindering the misappropriation of the trade secret(s). [18]
II. Issues
The first issue is that currently most trade secret cases are of the “breach of
confidentiality” type. [19] These would not require as extreme of a remedy as an off-site
computer hacking activity would entail. Temporary restraining orders are sufficient in “breach of
confidentiality” cases and the potential far-reaching effect of ex parte remedies could be quite
damaging to our economy, particularly small businesses and start-ups. [20] Preventing the
disclosure of trade secrets remains the number one priority and there is a strong argument for the
need for the ex parte civil seizure remedy in special circumstances, for example espionage cases.
The question then becomes is this specific remedy necessary for these supposed “worst-case”
scenarios? Those against the DTSA have an answer for that, as well. They claim that these are
the cases the EEA was originally designed to tackle. [21] The concern from the drafters of the
DTSA is that federal prosecutors, with their power to obtain a search warrant, do not act quickly
enough in these situations. [22] The DTSA dissenters believe that is due to the lack of merit in
the majority of the claims. [23] In other words, is this a broad stroke remedy for a problem that is
actually rather uncommon? It seems the answer depends on whom you ask. [24]
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The serious issue the dissenters have with the ex parte remedy is that it would be the
most significant tool a trade secret troll could employ. [25] The power of seizure could be rather
easily used incorrectly in situations where information is mistakenly categorized as a trade
secret. There is the potential for substantial policy issues in these circumstances, namely the
effect this power would have, if used by trade secret trolls, on innovation and small businesses.
[26] If the requirement threshold for the remedy is low, than small businesses and start-ups could
have necessary components of their businesses, such as their computers and cell phones, seized
on unsubstantiated claims. If the threshold is high, these cases may never make their way to the
judge and would instead be determined in the marketplace.
Take the following example. Imagine a small business or start-up receives a letter from a
trade secret troll that threatens seizure and legal action. The business will have to make a
decision at that moment in time as to whether it has the resources for litigation. If it does, it will
spend money and time in the courtroom to rid itself of the trade secret troll. If it does not have
the resources and time, it will have to most likely compensate the trade secret troll with a
monetary settlement. Either way the trade secret troll has drastically altered these small
businesses or start-ups based on an unproven accusation. Trolls do not worry about the merits of
their case; they are focused on threats of litigation and early settlements. Once again we are left
with a question of whether the remedy designed to address the problem of espionage, likely
foreign, is worth the possible disruption it could cause United States businesses and their
innovation. Detractors of the DTSA do not believe so.
It is without a doubt that United States companies are facing a new and complex threat of
cyber espionage. Look no further than the continuing fallout from the Sony Entertainment
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situation and the seemingly constant state-backed foreign hacking attempts to countless other
United States companies. [27] The importance regarding the law surrounding trade secrets
cannot be questioned either.
CONCLUSION
A vital part of our economy, start-ups and small domestic businesses, could be
significantly disrupted and irreparably harmed by our solution to these novel cyber espionage
threats. Trade secret trolls have ceased to exist because of the current structure of trade secrets
law. Protecting trade secrets is the fundamental aspect that both parties are concerned with. It
would be fair to say that the detractors of the Defend Trade Secrets Act are not necessarily
opposed to legislation to establish a federal civil cause of action for trade secret
misappropriation. The important distinction is to make certain there are adequate safeguards
against improper and putative use of such legislation. The detractors are clearly not convinced
the Defend Trade Secrets Act sets in place those necessary safeguards and, without those, the
arrival of trade secret trolls could be on the very near horizon.
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Intersection of American Law and Technology:
The Innovation Act’s Fight Against Patent Trolls
By Mohamed Elfarra
INTRODUCTION
Few issues have attracted more legal attention and spurred more public debate in recent years
than the controversy over patent rights. The crossroads of American law and innovation finds its
origin in the U.S. Constitution. Article 1, section 8 states that “Congress shall have the power
to…promote the progress of science and useful arts, by securing for limited times to authors and
inventors the exclusive right to their respective writings and discoveries.” [1] The founding
fathers recognized the social value of innovation, and the critical role government will inevitably
play in protecting and encouraging technological advances.
Out of the foundations of the Constitution grew an elaborate system of patent laws,
evolving over time to meet the needs of modern society. Nevertheless, in recent years, the
frequency of extraneous patent lawsuits has become increasingly concerning. The economic and
social burdens of frivolous litigation have led “academics, policymakers, and even judges to
suggest that patent law[s] may have overleaped its proper bounds, or at least become too likely to
frustrate, rather than to fulfill, its constitutional purpose of ‘promot[ing] the progress of science
and useful arts’. [2] The primary causes of this problem are the overly litigious entities
pejoratively known as patent trolls, who are collectively responsible for the majority of today’s
patent infringement cases. [3] Although solutions to this complex problem are evasive, the need
for reform is readily apparent. One of the most important and highly debated pieces of legislature
surrounding the issue of patent trolls is the Innovation Act. This article introduces the Innovation
Act, discusses proposed arguments for and against it, and opine on its merit.
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II. The Innovation Act
Rep. Bob Goodlatte reintroduced the Innovation Act in February 2015 as a potential
solution to the patent troll problem. Although the bill is still pending, the potential impact it will
have on the patent industry has drawn enormous attention from businesses, universities and the
legal community. Non-practicing-entities, or “patent trolls” do not make any products, but file
dubious patent lawsuits against commercially lucrative companies. [4] Several provisions within
the act are meant to discourage disingenuous non-practicing-entities from filing exploitative
patent infringement lawsuits in the future.
The first provision heightens the standard of specificity in a complaint and requires a
detailed description of the technology accused of patent infringement. [5] [6] A second major
provision attempts to increase the prevalence of fee shifting by eluding the American rule that
each party pays its own litigation costs, in favor of a loser pays system. Currently, a court may
award reasonable attorney fees to the prevailing party in “exceptional cases”. [7] The Supreme
Court decision in Octane Fitness, LLC v. Icon Health & Fitness, Inc., increased a court’s
flexibility in awarding attorney fees by lowering the standard of an “exceptional case”. [8] The
presumptive fee shifting provision of the Innovation Act takes this a step further, by requiring a
court to award attorney’s fees unless the conduct of the losing party is deemed reasonably
justified, or if doing so would create an unjust outcome. [9] Such a payment scheme will likely
deter frivolous suits by increasing the risk for plaintiffs because they will be forced to incur
litigation costs of the winning party as well as their own. [10] Within this provision is a section
titled “Joinder of Interested Parties”, which gives courts the discretion to join any third parties
“interested” in the patent to the litigation and hold them liable for any damages that cannot be
paid by the losing party. [11]
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A stark dividing line has been drawn between supporters and opponents of the proposed
reform set forth through the Innovation Act. Supporters of the bill include the gamut of
technology companies, from Silicon Valley start-ups to industry giants like Apple and Google.
The bill also has strong bipartisan support in Congress. However, patent lawyers, law firms,
biotechnology and pharmaceutical companies, as well as many research driven Universities
oppose the bill.
III. Arguments in Favor of The Innovation Act
Simply put, the cost of litigation is high and patent trolls are keen on using this reality to
their advantage. In fact, 90% of technology patent cases are filed by patent trolls [12] and
roughly 80% of the defendants in these suits are small or medium sized companies. [13] Patent
trolls lamentably take advantage of the fact that these small to midsize businesses often lack the
resources to litigate, and are likely to make the economically efficient decision to settle outside
of court. Interestingly enough, a letter written by members of the Consumer Electronics Agency
regarding the Innovation Act states that “when companies do fight back in court, trolls lose more
than 90% of the time.” [14] It is estimated that frivolous lawsuits brought forth by patent trolls
cost Americans approximately 80 billion dollars per year [15], and perhaps, “impedes the spread
and development of technology at large.” [16] These statistics shine light on the inadequacy of
patent law in the United States, as it allows for disingenuous claimants to file suit in bad faith,
and to emerge financially prosperous despite the frivolity of their claims.
Proponents of the Innovation Act contend that strengthening inventor’s patent rights will
result in increased venture capitalist investment in new technology. It has been vehemently
argued that the inability of small companies to protect their legitimate patents decreases the value
of their technology, and results in venture capitalists who are much less likely to risk investing.
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[17] Indeed the National Venture Capital Association (NVCA) agrees that “investment is based
on the existence of patents to protect an emerging company’s innovative idea and deter
competitors from stealing…if this investment is not protected…further investment in patentreliant technology will decline.” [18]
The deterrence of frivolous lawsuits as a result of the Innovation Act may indeed
incentivize venture capitalist investment in start-up companies, and the NVCA says as much.
However, they also express concern that the Innovation Act will raise costs of litigation for all
companies, in effect “making it harder for startups to enforce their patent rights against
entrenched competitors.” [19] In other words, the same legislature that protects an inventor’s
patent rights by deterring frivolous accusations of infringement will also impede his/her ability to
file a good-faith suit against a true infringer because of the heightened risks of losing in court. In
effect, the Innovation Act may not be the answer to the problem.
IV. Arguments Against The Innovation Act
I.
The Innovation Act Makes Patent Defense Too Risky and Will Therefore Decrease
Research Funding Incentives
Universities across the United States echo the concerned sentiment of the National
Venture Capitalist Association, but hold more zealously in opposition of the Innovation Act as a
solution to the patent troll problem. In a letter addressed to leaders of the House and Senate
Judiciary Committees, 145 Universities outlined their concerns with the Innovation Act, arguing
it “would make the legitimate defense of patent rights excessively risky and would thus weaken
the university technology transfer process, which is an essential part of our country’s innovation
and entrepreneurial ecosystem.” [20]
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One signatory of the letter, the University of Wisconsin-Madison, recently triumphed
over Apple Inc. in a patent infringement case involving the company’s 2013-2014 iPhone and
iPad releases, in which Apple Inc. could face up to $862.4 million in damages. [21] Universities
worry that the increased risk of litigation resulting from the Innovation Act will hinder their
ability to confidently file good-faith claims such as these. The universities further contend that
the increased risk of filing suit as a result of the fee shifting provision will “reduc[e] the number
of research discoveries that advance to the market place.” [22] This argument should be given
considerable weight due to the positive societal impact of university research, including
groundbreaking technologies such as the CAT scan, MRI and the Internet. [23]
II.
The Act’s Burdens on the Courts Outweigh Its Benefits
A second argument against the Innovation Act stresses the unfair and undue burden on
the plaintiff and the judge. The contention is that the Innovation Act requires a level of
specificity in pleading far beyond what is legally mandated. This added burden could make it
more difficult to file a good-faith claim because the plaintiff may not have access to enough
information from publicly available information to meet the heightened standard of specificity.
[24] Information that can only be gleaned through the process of discovery may in fact be
necessary to file a legitimate claim. This is clearly a problem.
CONCLUSION
What is clear from all of this is that patent law reform is inevitable. Suffocating the patent
troll’s exploitative power is critical for scientific discovery and innovation to flourish. The
Innovation Act’s attempt to accomplish this goal is commendable, although its methods may be
concerning. The provisions touted by the Innovation Act to curb patent trolls are the same
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provisions that may weaken the same entities it is meant to protect. However, like anything else,
a balance must be struck and the Innovation Act will likely be that balance for the immediate
future, at least until the next round of patent reform attempts to catch up to the burgeoning
innovative industry of the 21st century.
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Telemedicine’s Opportunities and Risks; A Balancing Act
Robert Park
INTRODUCTION
The U.S. has recently undergone a significant shift in healthcare delivery for the 21 st
century, utilizing technology to deliver more efficient and effective care. [1] Because the
Affordable Care Act (ACA) and Health Information Technology for Economic and Clinical
Health Act (HITECH) emphasizes healthcare to be preventative, to detect and care for patients
before diseases or illness arise, technological innovation and standardization is critical in today’s
healthcare world. [2] If healthcare organizations can capitalize on innovation and
standardization, the government will reimburse a substantial monetary reward for successful
implementation of telemedicine.
Areas that healthcare organizations have taken in this preventative shift include lean
management, more efficient primary care coordination and of particular interest, preventative
care technology deemed under the umbrella term, “telemedicine.” [3] Telemedicine isn’t
singularly defined; some healthcare organizations interpret telemedicine as “the delivery of
specialty care at a distance via telecommunications using applications that provide direct patient
care.” [4] The U.S. Department of Health and Human Services (DHHS) and the Center for
Medicare & Medicaid Services (CMS) also define “telemedicine” as the “provision of clinical
services to patients by practitioners from a distance via electronic communications.” [5] In
essence, telemedicine can be thought of as applications that can aid patient care outside of a
traditional healthcare setting, even treating patients in their homes. [6]
Obstacles that can complicate successful implementation of telemedicine are the legal
ramifications. Legal complications can include fraud and abuse, patient confidentiality, and
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compliance with state requirements. Violation of patient care can result in heavy fines, and in
telemedicine, a recent case involving the Texas Medical Board and a Telemedicine company
could heat up within the coming months. [7] Because of these obstacles, healthcare organizations
face an arduous journey to getting reimbursed for implementing telemedicine.
II. Legal Complications That Arise from Telemedicine
Legal Complications are a definite obstacle when it comes to telemedicine
implementation. The most prevalent scholarship revolves around anti-kickback law and Stark
Law. [8] Anti-kickback and Stark laws are laws that prevent healthcare organizations from
giving “self-referrals” that affect Medicaid and Medicare reimbursement. [9] In more simple
terms, these laws prevent the exchange of services or money in an effort to induce the referral of
federal health care reimbursement. For telemedicine implementation, the prevention of antikickback liabilities is critical because several telemedicine companies are competing to provide
services to healthcare organizations. [10] Healthcare organizations should pick telemedicine
companies that don’t overcharge Medicare or Medicaid costs due to these kickback laws.
In addition to kickback laws, another legal complication is patient confidentiality; this is
keeping patient medical records private between the patient, physician, and parties that the
patient wants involved. Patient confidentiality is required in healthcare since the implementation
of the Health Insurance Portability and Accountability Act (HIPAA) was enacted in 1996. [11]
In regards to telemedicine, patient confidentiality rules have been altered to reflect telemedicine
and the technological innovations of healthcare. [12] This means that healthcare organizations
have to adhere to increasing security protocols to prevent breaches of data, such as the breach at
Anthem in 2015. [13] A key concern is that because telemedicine is still advancing in terms of
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technology, the standard of telemedicine is still changing, which means that healthcare
organizations have to make sure not to breach patient confidentiality by overstepping too far with
telemedicine. [14]
A third concern is compliance with state requirements. As mentioned before, with
telemedicine, the standards vary from state-to-state due to rapid technological innovations being
made in the U.S. [15] In a report by the American Telemedicine Association (ATA), 26 states
were graded as being proficient in several standards of measurement, such as physician-patient
interaction, technology integration, etc. [16] State to state variations in telemedicine standards
could prove difficult for healthcare organizations in providing the right kind of care for
telemedicine. In states such as North Dakota and Pennsylvania, there is at least one failing grade
in the various factors that play into the telemedicine standardization measurement. [17]
Healthcare organizations should aim for the best possible standards when implementing
telemedicine mediums.
III. Navigating the Legal Obstacles of Telemedicine
Healthcare organizations won’t be alone when trying to navigate the legal ramifications
of telemedicine. The Food and Drug Administration (FDA) has been providing resources since
2012 to help bridge the gap in telemedicine standards and implementation. [18] By working with
the Federal Communications Commission (FCC) and the Office of the National Coordinator for
Health Information Technology (ONC), the FDA consistently provides reports and
recommendations for healthcare organizations to follow. [19] Within these reports, factors such
as patient safety, functionality, and implementation are assessed and the FDA gives guidance to
how to raise grades in these factors. [20]
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In addition to the FDA, the ATA provides additional resources. [21] With reports coming
out annually on how states are performing with respect to recommended industry standards, the
ATA also provides current updates on rule or regulation standard changes within the federal
government as well as significant changes by state statutes. [22] The ATA standards are
established by experts within their field and healthcare organizations may want to optimize their
telemedicine standards by following the ATA. [23]
CONCLUSION
Telemedicine represents a unique opportunity for healthcare organizations to provide
more efficient, effective care. Telemedicine helps provide a more preventative focus on patient
care, which in turn reduces costs of treatment for reactive medicine. The government also
reimburses healthcare organizations for implementing telemedicine and healthcare organizations
should take advantage of government reimbursement to help patients get better treatment.
However, there are legal ramifications that make effective telemedicine implementation difficult.
In order for healthcare organizations to avoid liabilities, reports and advice from the ATA and
FDA can help navigate a more amenable path to better care.
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A REVIEW OF THE MODERN IPR PROCESS
BY
MICHAEL THOMAS
INTRODUCTION
In the pharmaceutical industry, patents protect a drug-maker’s right to exclusively
produce a drug or issue a license for its production by another entity. In either instance they have
the ability to control distribution and, more importantly, the cost. This exclusivity exists until the
time the patent term expires, at which point other manufacturers can begin producing a generic
versions of the drug. Production of generic drugs significantly cuts the market share of brand
name drug as well as drives down the overall cost of the drug. This makes patent protection a big
concern for pharmaceutical companies spending years and billions of dollars in drug
development.
Once a patent is issued for a drug there is still a chance that the validity of the patent may
be challenged. One such way a purported infringer or competitor can challenge a patent’s
validity is through an inter partes review (IPR) Process allowed by the United States Patent and
Trademark Office (USPTO). Until recently the use of this process by generic drug-makers to
invalidate patents has had no success. However, a recent decision by the Patent Trial and Appeal
Board (PTAB) gave generic drug-makers their first break when they invalidated the patent for
the multiple sclerosis drug Gilenya. The following will review the IPR process and examine the
decision by the PTAB to invalidate the Gilenya patent under 35 U.S.C §103.
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I. THE IPR PROCESS
The IPR process was introduced by the USPTO on September 16th 2012 as part of the
America Invents Act (AIA). This act allows a party who is not the owner of the patent to petition
the USPTO to review the validity of a patent, with several limitations. This process is available
to review any patents regardless of its filing under AIA or pre-AIA conditions but, may only be
filed nine-months after the issuance or reissuance of a patent. If the validity of the patent were to
be challenged within the nine month period a post grant review process would be initiated.
It is important to note that a civil action challenging the validity of the same patent is not
usually concurrent with an IPR. If the petitioner is part of a civil action that action will be
(subject to court discretion) stayed in lieu of the IPR. Along these same lines, if a petitioner is
requesting an IPR in response to a claim for patent infringement, then the IPR request must be
filed within one year of being served the complaint. This allows the proposed infringer to tackle
the infringement claim by using the IPR process to claim the patent is invalid.
A. Filing and challenging claims under the IPR
The IPR process only allows the validity of the patent to be challenged under 35 U.S.C
§102 or §103. 35 U.S.C §102(a) states that a patent will be valid unless the claimed invention
was previously described in a single piece of prior art, such as a prior patent, publication, etc.
According to 35 U.S.C §103, a patent will not be granted if in light of prior art the claimed
invention would have been obvious to someone skilled in the art. Multiple prior art references
can be combined to show that the claimed invention would have been obvious to someone
skilled in the art. When filing for an IPR, the petitioner must identify which claims are being
challenged, the grounds of challenge for each claim, and most importantly the evidence that
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supports those challenges. Given the limitation of the IPR rules that the claims must be argued
under 35 U.S.C §102 and §103 the evidence used in order to challenge the claims in question
will primarily consist of patents, printed publications, and declarations or affidavits from experts
in the art. Upon receipt of the petition the patent owner may review the evidence supplied by the
petitioner and issue a response as to why the IPR should be denied.
B. Burden of proof during the IPR
If, upon review, the USPTO decides there is a valid issue the request will be granted and
the PTAB will conduct the review of the patent. The burden placed upon the petitioners is that
they must show the patent is invalid by a preponderance of evidence. If the petitioner is
successful, the patent owners may then argue the validity of the patent under the same burden. If
the patent owner is unsuccessful in showing the validity by a preponderance of the evidence they
may then amend the claims in order to make them valid. The patent owner is limited during the
amendment process as they may not increase the scope of the claims or introduce new matter. In
order to successfully amend the claims the patent owner must show that the new claims will not
be invalid based on the evidence presented to invalidate the other claims. Ultimately, if either the
petitioner or patent owner is unsatisfied with the PTAB’s decision, then the party may appeal the
decision.
II. REVIEW OF THE ‘283 PATENT
Novartis AG and Mitsubishi Pharma Corporation were owners of the patent for Gileyna,
a multiple sclerosis drug in tablet form. This drug was covered under U.S. Patent No. 8,324,283
B2 (the ‘283 patent), which would have given them exclusive rights to produce the drug until
2026. This status was in jeopardy when a number of drug-makers challenged the validity of the
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patent by filing an IPR process with the USPTO PTAB. Two separate IPRs were filed: one by
Torrent Pharmaceuticals (Torrent) and the other by Apotex Inc. and Mylan Pharmaceuticals.
Torrent filed the first action on December 1, 2014 and the second action was joined with the
petition filed by Torrent. Fear of losing the patent is justified as it would mean a significant drop
in sales and drive down market share as generics are allowed to enter the market. In 2014
Gilenya generated $2.5 billion in sales for Novartis, and with exclusivity until 2026 would be an
extremely valuable drug. Unfortunately for Novartis, this fear has become reality as the PTAB
invalidated the ‘283 patent in the IPR.
While the petitioners challenge claims 1-32, claims 1 and 19 are reproduced below and
are representative of all the challenged claims.
Claim 1: A solid pharmaceutical composition suitable for oral administration,
comprising:
(a) a S1P receptor agonist which is selected from 2-amino-2-[4-(3benzyloxyphenoxy)-2-chlorophenyl]propyl-1,3-propane-diol or 2-amino-2-[4(3-benzyloxyphenylthio)-2-chlorophenyl]propyl-1,3-propane-diol, 2-amino-2[4-(3-benzyloxyphenylthio)-2-chlorophenyl]-2-ethyl-1,3-propane-diol, and its
phosphates or a pharmaceutically acceptable salt thereof; and
(b) a sugar alcohol
Claim 19: A solid pharmaceutical composition suitable for oral administration,
comprising mannitol and 2-amino-2-[2-(4-octylphenyl)ethyl]propane-1,3-diol or a
pharmaceutically acceptable salt thereof.
The drug name at use in Gileyna is FTY720, also known as fingolimod. The patent
essentially describes pairing FTY720 with mannitol, where mannitol is being used as an
excipient. Excipients are components of the drug formulation in addition to the active ingredient
and can affect things such as stability and uptake of the drug. One of the primary benefits of
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Gileyna is that it is a solid composition pharmaceutical for oral administration, which in many
cases is considered beneficial to liquid forms that are injected via syringe. The patented make-up
of the pharmaceutical allows for its solid form by providing optimum efficacy in a stable
compound and uniform distribution of the active ingredient throughout the tablet during the
manufacturing procedure.
A. Prior art used by petitioners
Torrent, Apotex, and Mylan challenged claims 1-32 of ‘283 patent on the grounds of
obviousness under 35 U.S.C §103. In order to support this position the petitioners relied
primarily on two pieces of prior art, Chiba and Aulton. [121][122].
The Chiba patent teaches the immunosuppressive mechanism of various compounds. Of
particular interest to the present case is the effectiveness of compound FTY720, the effective
compound in the ‘283 patent. The Chiba patent also teaches the potential usefulness of the
FTY720 compound for the treatment of autoimmune diseases such as multiple sclerosis.
The Aulton reference used by petitioners primarily teaches methods of using tablets and
capsules for final drug formulation so the drug can be administered orally. Excipients are given
careful consideration given their overall effect on the final product. They can provide stability
for the active compound as well as assist with solubility and uptake by the end user. Aulton
teaches which characteristics are desirable in a finished product and the ways in which to achieve
those characteristics by recommending certain formulations. Of primary concern in the instant
case is that Aulton teaches mannitol is a common used excipient in the pharmaceutical industry.
There are two primary concerns that need to be addressed when making an argument for
obviousness under 35 U.S.C §103. One should consider whether it would have been obvious to
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someone skilled in the art to combine teachings and whether or not someone would have had a
reasonable expectation of success in combining the prior art. If these two requirements are not
met then the present invention may not have been obvious to someone skilled in the art. In the
instant case the petitioners feel that a person having ordinary skill in the art would have had
reason to combine the teachings of Aulton and Chiba as well as have a reasonable expectation of
success.
B. Review of Claim 19 under 35 U.S.C §103
The first issue addressed by the board is whether or not it would have been obvious for
someone skilled in the art to combine mannitol and fingolimod. As stated, petitioners use the
Chiba and Aulton teachings as the basis for their argument of obviousness of the mannitol and
fingolimod combination. Specifically, Chiba teaches that fingolimod is compatible with many
excipients commonly used in the pharmaceutical industry. Aulton further teaches that mannitol is
a common excipient used in the formulation of tablets. These teachings would make it
reasonably obvious to one skilled in the art to at least try this combination. As additional
evidence the petitioners reference the Sakai patent (US 6,277,888) that specifically teaches the
combination of these two ingredients in liquid formulation. These three references, along with
numerous others, is used as proof this combination would have been obvious to someone skilled
in the art.
The patent owners initial response to these arguments is that prior art offered by the
petitioners does not make their claimed invention obvious. The patent owners argue their
motivation for combining the two teachings was different than that of the prior art. The patent
owners claim low concentration instability of the fingolimod made it necessary for them to use
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mannitol. They argue that since the prior art references do not mention the ability of mannitol to
fix low-dose instability of fingolimod that their finding would not have been obvious. The court
rejects this reasoning by stating “the motivation in the prior art to combine the references does
not have to be identical to that of the [patentee] to establish obviousness. In re Kemps, 97 F.3d
1427, 1430 (Fed. Cir. 1996). The board also goes on to explain that simply because the patent
owner found another benefit of the combination it is not enough to put them into the realm of
patentability. Given the failed arguments of the patent owners and in light of the references
provided by the petitioners, the court ultimately finds that combining mannitol and fingolimod
would have been obvious to someone skilled in the art. Concluding, “[i]t is irrelevant that
[p]etitioners have failed to establish that the inventors actual subjective reason for combining
mannitol and fingolimod was know in the prior art”. Torrent Pharmaceuticals Ltd. v. Novartis
AG, IPR2014-00784, Paper 112 at 19 (PTAB Sept. 24 2015).
The next issue addressed by the board is whether the prior art would have led the patent
owners to have a reasonable expectation of success in combining mannitol and fingolimod. The
patent owners primary argument is that because Chiba does not specifically mention the use of
mannitol and Aulton does not specifically mention the use of mannitol with fingolimod that there
would have been no reasonable expectation of success. The patent owners explain that someone
skilled in the art would have had a large number of combinations and parameters to explore
before finding the correct combination. In light of the large amount of experimentation still
needed the prior art suggested no reasonable expectation of success. The board is not persuaded
by this argument and simply relies primarily on the teaching of Sakai. In light of all the prior art
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teaching the combination of mannitol and fingolimod the board feels it would have been
reasonable to expect success.
C. Secondary consideration for non-obviousness
Given the patent owners were unable to defeat the claims of non-obviousness in light of
the prior art, they move to secondary considerations for showing the invention was non-obvious.
These secondary considerations can be used to show that although the prior art may teach
towards the invention it still would not have been obvious to someone skilled in the art. The
additional arguments offered by the patent owners include unexpected results, an un-met need in
the industry, industry praise, and commercial success.
When claiming unexpected results as evidence of non-obviousness, “[i]t is the established
rule that objective evidence of non-obviousness must be commensurate in scope with the claims
which the evidence is offered to support” Allergan Inc. v. Apotex Inc., 754 F.3d 952, 965 (Fed.
Cir. 2014). Put more simply, the unexpected results need to be reflected in the claims at issue.
The patent owners first argument is that the results they achieved were unexpected and
therefore novel. They argue that the low dose of fingolimod, 0.25mg, in combination with
mannitol offered stability that was unexpected. In light of the current standard this argument is
found unpersuasive as the claim at issue, claim 19, reflects no specific dosing in its limitation. If
the patent owners wanted to reflect their unexpected results the claim should have stated the
specific dosage requirement that was unexpected, it does not.
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The second argument patent owners turn to is a long-felt but unmet need. They argue that
there was an unmet need in the marketplace for a solid dosage MS drug. Two issues arise with
this argument by the patent owners. First, petitioners offer a response to this argument that the
market need was for a solid dose MS drug, not specifically the fingolimod and mannitol
combination developed by the patent owners. Since the need was not specifically for the
combination expressed by the patent owners it is not within the scope of claim 19. Second, the
petitioners offer evidence of other solid dosage MS drugs on the market, although they were not
FDA approved and not formulated using fingolimod as the active ingredient. Due to both the
prior treatments in the marketplace and no specific need for fingolimod solid dosage the patent
owners argument ultimately fails to be persuasive.
The third argument offered by the patent owners indicating non-obviousness was the
industry praise for their drug. As evidence to this they offer statements from participants in the
clinical trials and from the MS foundation. In order for this argument to be persuasive the
“[i]ndustry praise must be linked to the patent invention” Power-One, Inc. v. Artesyn Tech. Inc.,
599 F.3d 1343, 1352 (Fed. Cir. 2010). Additionally, if the praise is “due to an element in the
prior art, no nexus exists”. Tokai Corp. v. Easton Enters. Inc., 632 F.3d 1358, 1396 (Fed. Cir.
2011). Given the praise was only for a solid dose MS drug and not the specific combination in
the claimed invention, this argument fails for lack of nexus between the invention and praise
given.
The final argument given by the patent owners for evidence of non-obviousness is the
commercial success of Gileyna. “[C]ommercial success is relevant only when it is due to
[something] disclosed in the patent…which is not readily available in the prior art.” Richdel, Inc.
v. Sunspool Corp.,714 F.2d 1573, 1580 (Fed. Cir. 1983). To make a persuasive argument patent
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owners must show “significant sales in a relevant market, and that the successful product is the
invention disclosed and claimed in the patent.” Ecolochem, Inc. v. S. Cal. Edison Co., 227 F.3d
1361, 1377 (Fed. Cir. 2000). The board finds that the success of Gileyna was due to it being a
solid dosage MS drug and not the specific combination of fingolimod and mannitol. In light of
this finding there is not a significant connection between the specific patented invention and the
commercial success. The board also found that the patent owners provided no relevant evidence
of sufficient market share. While the patent owners did provide sales numbers there was no
reference as to whether Gileyna occupied a ‘significant’ share of the market.
For the reasons stated above, Claim 19 of the ‘283 patent is found obvious in light of the
prior art and therefore invalid. Since claim 19 was found to be invalid the remaining claims, 1-18
and 20-32, were all easily addressed by the board. Given claim 19 was the narrowest of the
challenged claims the others were also found to be obvious in light of the prior art.
D. Amendment of claims for the ‘283 patent
Upon the finding that claims 1-32 of the ‘283 patent were invalid for obviousness the
patent owners moved to amend the claims. Under the IPR process the patent owners are
permitted to amend the claims in order to bring them out from under the prior art. Upon doing
this “[t]he burden is not on the petitioners to show [the] unpatentability [of the proposed claims],
but on the patent owner to show patentable distinction over the prior art of record and also [the]
prior art known to the patent owner”. Idle Free Sys., Inc. v. Bergstrom, Inc., Case IPR201200027, slip op. at 7 (PTAB June 11, 2013)(Paper 26). To comply with the IPR process the patent
owners must
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“[S]et forth a prima facie case of patentability of narrower
substitute claims over the prior art of record, the burden of
production shifts to Petitioner. In its opposition, Petitioner may
explain why Patent Owner did not make out a prima facie case
of patentability, or attempt to rebut that prima facie case, by
addressing Patent Owner’s evidence and arguments and/or by
identifying and applying additional prior art against proposed
substitute claims. Patent Owner has an opportunity to respond
in its reply. The ultimate burden of persuasion remains with
Patent Owner, the movant, to demonstrate the patentability of
the amended claims.”
Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292, 1306.
In the instant the patent owners attempt to amend and add claims 33-64. Claim 51 is the
primary focus of the amended claims as it attempts to narrow claim 19. As an amendment the
petitioners offered the following in addition to the original claim 19, “wherein the composition is
stable, wherein the composition has substantially uniform distribution of the agonist throughout
the composition, and wherein the composition is made on automated equipment”. Mot. To
Amend 38-39. The additional limitations offered attempt to narrow claim 19 and bring it out
from under the prior art. The patent owners offer the same arguments discussed under the
original claim 19. As they did for the original claim, the board finds these arguments
unpersuasive and finds the amended claims do not defeat the finding of obviousness given the
prior art. Predictably, all the additionally amended claims are also found obvious and the motion
to amend was denied.
In summary the petitioners showed, by a preponderance of the evidence, that the ‘283
patent would have been obvious in light of the prior art. Since the original claims and the patent
owners amended claims failed to defeat the finding obviousness the ‘283 patent at issue was
found to be invalid.
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CONCLUSION
The success of the petitioners IPR marked the first win for generic drug-makers in the IPR
process. It is doubtful however that this will be the end of the battle over the ‘283 patent as
Novartis can appeal the decision issued by the PTAB, and likely will. If the decision stands
however, Gileyna will lose its protection in 2019 as opposed to the 2026 date it previously held.
While this is obviously a big loss for Novartis it also means more competition for other brand
name MS drugs currently facing limited competition in the marketplace. Invalidation of
pharmaceutical patents through the IPR process creates more competition in the marketplace and
ultimately drives down cost for consumers. However, the other consideration is what it may
mean for overall drug development. A basic premise for offering patent protection is that it is an
incentive for the creation of new inventions. Drug companies spend billions in developing drugs
with only a fractionally small number of them ever receiving FDA approval and reaching
market. The cost and time invested in development has typically been rewarded with the
awarding of a patent and exclusive rights to sell the drug in the market place. This allows
companies to recoup some of the costs of development and fund development of new drugs.
While ensuring patents are not issued for non-novel inventions is important, use of the IPR
process to invalidate drug patents may have the adverse affect of slowing drug development.
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Data Exclusivity for Biologic Drugs:
The TPP’s Potential Poison Pill?
Tina Cheung
INTRODUCTION
On October 5, 2015, after many years of secretive negotiations, the US government with 11 other
countries across the Asia-Pacific and Latin America reached an agreement on the largest free-trade deal in
history, the Trans-Pacific Partnership (TPP). [1] Addressing everything from wildlife conservation and
tax reductions for agriculture, to the free flow of information on the Internet and intellectual-property
rights for movies and pharmaceutical drugs, this far-reaching agreement has the potential to impact up to
one-third of world trade. [2] One of the most contentious parts of the agreement involves intellectual
property rights of pharma companies to data exclusivity for biologics, a hot and promising type of
pharmaceutical derived from living organisms. [3]
Biologics
Vaccines, gene and cellular therapies, and allergy shots are all synthesized from living organisms,
as are medicines for treating cancer, rheumatoid arthritis, multiple sclerosis, Alzheimer’s disease. [4] The
drugs fighting these diseases are produced using DNA recombinant technology2, these “biologic” drugs
are made of molecules typically much larger and more structurally complex than traditional ‘small
molecule” drugs, and are also more difficult and much more costly to develop and manufacture. Biologics
are among the most expensive drugs on the market, costing an average of 22 times more than nonbiologic drugs synthesized by combining chemical ingredients. [5]
2
DNA recombinant technology is a scientific process used to cut and paste together different DNA sequences.
It is widely used in biotechnology, medicine and basic research. The first licensed drug produced using DNA
recombinant technology was human insulin for the treatment of diabetes. In that application, human insulin
gene is inserted into E. coli or yeast genome to exploit their ability to quickly reproduce mass quantities of the
insulin protein deficient in people with diabetes.
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Because biologics are synthesized using living cells, different cell lines will produce slightly
different drugs non-identical to the original. [6] These slight differences may allow a competing company
to claim that they are not in violation of the patent. For this reason, biologics may be more vulnerable to
imitation than chemically synthesized drugs and pharmaceutical companies are pushing for greater IP
protection. [7]
Biosimilars: Saving Lives for Less
Because of the high cost of biologic drugs; patients, healthcare practitioners, and public health
watchdogs are advocating for the development of biosimilars, essentially “follow-on” versions of
biologics that are cheaper and analogous to generics. [8] To qualify as a biosimilar in the US, the drug
must share the same mechanism of action for the FDA-approved condition of use, and there must be no
clinically significant differences between the two drugs in terms of purity, safety, or potency. [9]
According to a recent Brookings Institute report, the competition from biosimilars could cut US
consumer spending on biologics by $44 to $66 billion over the next ten years. [10] In the European
Union, a 2013 analysis found that the average price discount was about 25 percent for 14 biosimilars that
have been on the market since 2006. [11]
These savings significantly impact access to essential and life-saving drugs for patients and nonprofit medical humanitarian organizations like Médecins Sans Frontières (MSF, Doctors Without
Borders). MSF treats almost 300,000 people with HIV/AIDS accross 21 countries with generic drugs.
With the introduction of generics in such treatments, the MSF’s treatment costs have fallen from $10,000
per patient per year to only $140. [12]
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Data Exclusivity
Escalating the tensions between pharmaceutical companies and patient advocates is the issue of
data exclusivity within the TPP. Data exclusivity is an IP protection granted to pharmaceutical companies
to keep critical information about their drugs from the makers of generics. [13] Whereas patents recognize
a drug’s non-obvious novelty and utility, data exclusivity, for a period of time following market approval,
bars the use of a brand name company’s clinical test data required to establish safety and efficacy.
[14][15]
Pharmaceutical companies claim this additional layer of protection is needed for biologics
because of the nuances of their manufacturing process, and argue that patents alone are insufficient in
safeguarding the IP. [16] Pharma companies also point to the lengthy drug-development and patentapproval processes, and the expiration of a patent shortly after a drug makes it to market. This problem
was addressed in 1984 with the passage of the Hatch-Waxman Act that provided innovative drug
companies with a period of patent extension as well as data exclusivity. [17][18] However, as technology
advanced and demand increased, pharma companies wanted to extend the IP protection conferred by
Hatch-Waxman from products regulated under the Federal Food, Drug and Cosmetic Act to those
regulated under the Public Health Service Act as well. [19][20]
Terms of Data Exclusivity
To recoup investments in laborious data collection and expensive clinical trials, US
pharmaceutical companies lobbied for and were granted the world’s longest term of data exclusivity for
biologics. In the Biologics Price Competition and Innovation Act (BPCIA), a provision of the Affordable
Care Act (ACA) passed in March of 2010, biologics were granted 12 years of data exclusivity in addition
to the regular 20-year patent term. [21]
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Cons of Data Exclusivity
Opponents argue that these exclusivity terms are contradictory to the spirit of free trade and
create a monopoly on biologic drugs. As a result, makers of biosimilars may be forced out altogether,
leaving patients with even fewer and costlier options. Also concerned about the skyrocketing cost of
drugs and its impact on health insurance, the Obama administration has proposed reducing the 12-year
extension to 7 in his fiscal year 2016 budget, arguing it would save Medicare $4.4 billion over the next
decade. [22]
Furthermore, data exclusivity is a weak legal tool for IP protection because it generates social and
economic waste. The ban on access to a biologic drug’s clinical test data forces makers of biosimilars to
repeat time-consuming and expensive clinical trials in order to obtain the regulatory authority’s approval.
Furthermore, requiring the use of more human subjects and animals when the outcome of the tests is
already known would be a breach of medical ethics under the standards of Institutional Review Boards.
[23]
Rather than protect the IP generated by research and development (R&D), opponents allege that
data exclusivity is instead being used to inflate already disproportionate profit margins. Expenditures in
advertising by the world’s largest pharmaceutical companies far surpass their expenditures in R&D. [24]
In 2013, Johnson & Johnson spent $17.5 billion on sales and marketing, compared with $8.2 billion on
R&D. [25] stuff
Data Exclusivity: Encouraging Disparity within the TPP
Other countries party to the TPP have varying periods of data protection for biologics that range
from zero (Peru, Mexico, Vietnam, Brunei) to eight years (Japan). During the closed-door negotiations on
the agreement, American pharmaceutical companies were pushing for the same 12-year term that they
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enjoy back at home. With its five-year exclusivity, Australia stood as the firmest opponent to the US in
the TPP negotiations. [26] They wanted to maintain and shield its beloved government-subsidized
medicines program, the Pharmaceutical Benefits Scheme, from the influence of “big pharma.” [27] The
disparity in IP protection among member states of the TPP highlights the distinction between developing
countries trying to increase their access to medicines and developed countries that could afford the costs
of medical innovation. Higher IP protections for drugs make it more difficult for developing countries to
grow their own industry, forcing them to continue relying on and abiding by the terms of “pharma
superpowers” like the US and Japan. [28]
The Compromise
According to the leaked TPP text, a compromise among the twelve nations reached on October
5th sets forth two exclusivity options: either eight years of full exclusivity, or five years of data
exclusivity plus an additional three years of semi-exclusivity. [29] ‘Full exclusivity’ refers to market
exclusivity – a bar on approval for competing products like biosimilars to enter the market for a period of
time.
There is dissatisfaction on all sides of the deal. The terms fell short of the 12-year demand by
pharmaceutical companies; but by setting a minimum, the agreement requires countries that previously
had zero years of exclusivity to have five. [30] Shortly after the signing of agreement, MSF released a
statement condemning the negative impact it would have on public health, “The TPP will go down in
history as the worst trade agreement for access to medicines in develop[ing] countries… a dangerous
blueprint for future agreements.” [31]
CONCLUSION
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As of now, 12 years of data exclusivity still stand for big-pharma in the US. Given the
widespread criticism of the TPP, Congress’s history of support for IP protections, and the dominating
influence of pharmaceutical companies, this hard-fought compromise may too be a waste.
These tensions between innovation and access call for the legal community to invent also, to find
a tool that better equips us to regulate rapidly developing technology and to recognize the unique nature
of essential medicines. These tensions, rooted in our Constitution with protection of individual rights
conflicting with its declaration to promote general welfare, are chronic and unlikely to be resolved.
However, with income inequality at its highest in US history and still rising [32] – now more than ever,
we need to reevaluate whether what is legal in our society is also just.
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The Trans-Pacific Partnership on Internet Service Providers:
Notice, Counter-Notice, and Liability Limitations
By Joseph Davi
With the recent release of the Trans Pacific Partnership (TPP) intellectual property chapters,
jurists and pundits have quickly begun to comb through the language and pick apart the intriguing and
possibly soon-to-be influential document.
While many have focused on this document’s proposed
changes to the way copyright holders and infringers interact with their governments, each other, and each
other’s governments, it is very important to stop and try to understand the changes that are more ground
level. More specifically, it is worthwhile to take a close look at the proposed changes in how copyright
holders and infringers interact with Internet Service Providers (ISPs), as this interaction and the legal
responsibilities ISPs have during this interaction will mostly define how the average citizen in TPP
member states will experience the effects of the document.
Thankfully, ISP responsibilities regarding IP infringement does not seem to span many chapters,
but rather are contained to their own sections labeled quite clearly.3 The system envisioned by the TPP is
one of notice and counter-notice, where the ultimate end for an ISP is to gain limitations on liability
(monetary or otherwise) as well as other non-defined incentives. The treaty notably states that not
qualifying for liability limitation under the TPP does not per se mean they are in a liable position. It
points out that the TPP section in question is “without prejudice” to any current limitations in liability for
intellectual property infringement, and thus does not displace those exemptions, but rather sit beside and
provide other avenues to liability exemptions.
While the treaty makes sure to note that there is no expectation that an ISP actively and
affirmatively monitor their service for infringers, it sets out clear actions that an ISP must do to qualify
for exemptions and incentives, such as immunity from liability for copy infringement suits. It makes
3
The treaty leaves those optional for the benefit of signatory countries, giving them the ability to
set what incentives they believe necessary
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quiet clear that an ISP must remove infringing materials in good faith and within a reasonable amount of
time, and identify the infringing individual to the owner of the copyright for the purposes of possible
litigation.4 They must also take reasonable steps to insure that the alleged infringer is given notice of the
removal of the content. However, the TPP has left the option open for countries to initiate a system of
counter-notices. After an accusation of infringement by a rights holder, and within a period of time to be
specified by the signatory country, the alleged infringer may then file a counter-notice with the ISP, and
the ISP must then restore data and access upon counter-notice request and within a reasonable amount of
time has passed. The IP holder can then initiate legal proceedings within a reasonable amount of time to
be determined by the signatory country. To counter a counter-notice, the IP holder must initiate legal
proceedings, and the courts will sort out the situation. Forum selection provisions are not contained within
the IP chapter.
The most important part of this section, and a running theme that is seen throughout the entirety
of the TPP, is the avenues for redress for fraud in the notice/counter-notice system. The TPP sets the
necessitation for special provisions that dole out civil liability for such events, with liability lying on the
person making those false representations (be it rights holder or end user), and the ISP upon not acting to
restore data and access to the alleged infringing individual injured, or take down infringing material
damaging a rights holder’s IPs, upon receipt of proper notice, and within a reasonable amount of time.
As a basis for the system, the TPP recommends that each signatory government make a
“stakeholder organization” made of representatives from ISPs and IP rights holders, with government
involvement, to expeditiously identify IP holders as legitimate and that the notices of infringement sent to
ISPs are entirely truthful and accurate representations of material facts.
Conclusion: Who comes out on top?
4
Making explicit note that this is to the extent that the constitutional framework any given
signatory nation allows
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Overall, the TPP is flexible and permissive in regards to possible regulatory and exemption
systems governments can adopt in how they dole out liability limitations for ISPs. It supports the current
DMCA in the U.S. while also advising for much needed redress to take down notices. IP rights holders
will most likely be happy with the outcome of the TPP’s provisions no matter what. They find themselves
in a system built entirely on mandatory protections for them. If litigious, they’ll always have a target for
their woes, no matter if the ISP serves up the alleged infringer or not, as the only way for the ISP to avoid
liability is to provide information on the end user and take their content down. Make no mistake; this is
the enforcement regime that will handle a vast majority of IP dust-ups online. The DMCA has shown us
just how powerful this system is.
End users find themselves within a grey area of the law, and will find that though the TPP pays
lip service to them, almost none of the protections within are mandatory. Nobody is sure how many
countries will adopt the advised “optional measures”, such as the entirety of the counter-notice system.
Thus, alleged infringers may end up as they are currently in the U.S., injured without clear means of
redress for possible fraud. Though those protections aren’t banned or made mandatory by this treaty, the
TPP sets out only a possible road a country can walk in terms of consumer protections, one that consumer
rights groups will be fighting for in legislatures around the world.
While the treaty does not mean much for how the system in the U.S. operates besides providing
support for possible future protections against fraud for end users who allegedly infringed on copyrights,
the wider web will be shaken up by the TPP. The tools that rights holders have to enforce their copyrights
are familiar to many within the U.S., but the TPP now extends those tools’ reach to places that have
historically been bastions for infringement both justified and unjustified. How these countries react will
determine the landscape of the web for years to come.
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MASCOT MADNESS:
Are Characters in Times Square Violating Copyright Law?
by
Victoria Chu
INTRODUCTION
In recent years, New York City's Times Square has become overrun with life-sized
cartoon characters and superheroes. The costumed performers - often undocumented immigrants
- wander the streets dressed in costumes, posing for pictures with tourists and demanding money
in return. Their solicitations are often aggressive. Refusals to pay have often escalated into
violent, even criminal encounters.
The activity in Times Square has also raised trademark issues. [1] The First Amendment
generally protects the costumed performers' right to dress up like characters in public. [2] The
First Amendment also protects the costumed performers, so long as they ask for "donations" and
"tips." [3] However, copyright and trademark owners, such as The Walt Disney Company
("Disney") and Sesame Workshop, among others, have a legitimate interest in protecting their
intellectual property. [4] Such interests include their rights to terminate unlicensed use and to
protect against consumer confusion and trademark dilution. [5]
Courts have not yet addressed whether or not the costumed performers have infringed on
trademarked characters. This article explores related case law to determine whether or not the
performers' solicitations constitute trademark infringement, and the substance of the performers'
defenses to infringement if it exists.
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I. BACKGROUND
In 2009, the Bloomberg administration closed off parts of Times Square to car traffic,
making way for pedestrian plazas. [6] Times Square has since developed a penchant for the
theater. Costumed performers dressed as children's favorite cartoon characters and superheroes
frequent the crowded streets, posing for pictures with tourists. The most popular characters
include Elmo, Cookie Monster, Mickey and Minnie Mouse. [7] Approximately eighty characters
can be found in Times Square on any given afternoon. [8] While the performers are permitted to
collect donations, they may not demand money. [9] Oftentimes, interactions between unknowing
tourists and costumed performers escalate into situations that cause concern for character
trademark owners. [10]
In January 2014, a 44-year-old man dressed as Woody from the movie "Toy Story" was
arrested for sexually abusing two women. [11] He was charged for three counts of forcible
touching and three counts of third-degree sex abuse. [12]
Later that year, a 25-year-old man dressed as Spider-Man was arrested for assaulting a
police officer, resisting arrest, criminal mischief, and disorderly conduct. [13] The Spider-Man
character refused to accept $1 from a woman as payment in exchange for a photograph. [14] The
police officer stepped forward and informed the woman that she could give whatever amount of
money she wanted. [15] After shouting expletives at the officer and failing to provide
identification, the Spider-Man punched the officer in the face. [16] Another Spider-Man was
convicted for harassment after punching a woman and knocking her to the ground in 2013. [17]
The woman had refused to tip him for a photograph and tossed snow at him. [18]
In 2013, a 33-year-old man dressed as Cookie Monster shoved a 2-year-old child after the
child's parents refused to pay him $2 for posing for a photograph. [19] The man was arrested and
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charged with reckless endangerment and acting in a manner injurious to a minor. [20] Another
Sesame Street character, Elmo, was arrested in front of the Toys "R" Us store in Times Square in
2012. [21] Adam Sandler, the infamous "Anti-Semitic Elmo" whose rants have been captured
multiple times on YouTube, was charged with disorderly conduct and resisting arrest. [22]
Such events have spurred trademark owners to take action toward addressing the
incidents. In July 2014, Sesame Workshop, the non-profit that owns the rights to Elmo, Cookie
Monster, among others, issued a statement to address the costumed performers, stating it "has not
authorized the appearance of any Sesame Street costumed characters on public streets in any
city. We care about our fans and the image of our brand and, like everyone else, we care about
public safety on our streets." [23]
Disney, on the other hand, has lobbied for a legislative solution. A spokeswoman for
Disney, Zenia Mucha, stated that "[the company has] been for years working with previous and
current administrations as well as the city council trying to get legislation passed that would
require registration and identification of these costumed characters." [24]
Trademark owners like Sesame Workshop and Disney may enforce their intellectual
property rights in a variety of ways, including registering their marks, marking their products,
employing trademark watch services, implementing trademark audit programs, and sending
cease-and-desist letters to infringers. [25]
However, trademark watch services and audit programs in this context are superfluous.
[26] Trademark owners are aware that infringing conduct occurs in Times Square. The trademark
owners have also already taken necessary precautionary measures in protecting their marks,
including registration and marking. [27] Moreover, trademark owners often do not know the
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identities of the alleged infringers. Although trademark owners know infringement occurs, there
is no feasible method for licensors to regulate the characters. [28]
In response, New York City Council Member Andy King introduced legislation in 2014, aimed
directly at regulating the "costumed individuals in Times Square. [29] If implemented, Mr.
King's proposed bill would create an effective, comprehensive licensing regime to regulate the
solicitation of costumed individuals in public spaces. [30] First, the law requires costumed
individuals to obtain a license from the city before engaging in solicitation in public spaces. [31]
Second, it imposes restrictions on the location and manner of solicitation. [32]
The law does not specifically address officially licensed characters. [33] Instead, it
creates a separate licensing system that regulates "costumed individuals." [34] "Costumed
individuals" are broadly defined as "any person wearing a costume." [35] For the purpose of
soliciting in return for posing for photographs, or otherwise interacting in public spaces,
costumed individuals must file an application for a license and pay a fingerprinting fee. [36] The
commissioner may approve or deny the application. [37] If the costumed individual's application
is approved, she must conspicuously display the license and exhibit the license to any police
officer or other authorized persons upon request. [38]
§20-548 prescribes restrictions on the costumed individuals' licensed activity. The
licensee may not solicit in an aggressive manner. [39] Such solicitation included conduct that is
either intended to or is likely to cause a reasonable person to fear bodily harm to herself, another,
or her property, (ii) intimidate her into giving the licensee money or other valuables, or (iii)
cause her to suffer unreasonable inconvenience, annoyance, or alarm. [40] Moreover, a costumed
individual is prohibited from blocking or interfering with the passage of pedestrians or vehicles,
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using violent or threatening gestures, and intentionally touching or causing physical contact to
another person without her consent. [41]
Any costumed individual who fails to obtain a license before engaging in solicitation
shall be guilty of a misdemeanor. [42] The unlicensed individual may pay a fine ranging from
$100-$1,000, face imprisonment not exceeding three months, or both. [43]
The threat of legal action has prompted a response from the costumed performers
themselves. [44] The costumed performers and their supporters argue most of them are lawabiding, and that the proposed ordinance would restrict their ability to work and limit their ability
to provide for their families. [45] In August 2014, La Fuente, a non-profit organization that
advocates for immigrants, helped organize a group of non-unionized street performers, New
York City Artists United for a Smile ("NYCAUS"). [46] NYCAUS voluntarily began drafting
rules for affiliated performers to follow, including rules on how to interact with tourists. [47] The
Executive Director of La Fuente, Lucia Gomez, stated that such legislation would wrongly
privatize public space, and would not increase safety. [48] Instead, Gonzalez has asked city
officials to work with the performers to find a solution to protect the public and performers'
rights. [49]
As of November 9, 2015, the bill remains laid over in the Committee of Consumer
Affairs. [50] In addition, trademark owners have not taken definitive action towards regulating
the costumed performers.
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II. TRADEMARK INFRINGEMENT: ESTABLISHING
CONFUSION UNDER § 43(A) OF THE LANHAM ACT
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LIKELIHOOD
OF
The costumed performers of Times Square may potentially be liable for civil damages
under the Lanham Act, the primary federal trademark statute, which prohibits trademark
infringement and trademark dilution. [51] § 43(a) of the Lanham Act encompasses a broad
spectrum of marks, including characters, which the public directly associates with the plaintiff.
[52] An "ingredient" of a product that symbolizes the plaintiff in the public mind is protectable.
[53]
Protectable "ingredients" include physical appearances and costumes of entertainment
characters. [54] Therefore, a person who uses a trademark in commerce which is likely to cause
confusion as to the origin, sponsorship, or approval of his or her services, or misrepresents the
origin of his or her goods in commercial advertising or promotion is liable under § 43(A) of the
Lanham Act. [55]
Courts generally prefer not to extend trademark protection to the visual appearance of
characters. [56] However, characters are often protected if they act as an indication of origin.
[57].
In In re DC Comics, Inc., the US Court of Customs and Patent Appeals reversed the US
Patent and Trademark Office Trademark Trial and Appeal Board's decision, finding that artistic
renditions of Superman, Batman, and Joker could serve as a trademark for a "somewhat cruder"
doll of the same fictitious characters. [58] The court reasoned that "whatever information a
drawing of Superman or Batman or Joker might convey to the average prospective purchaser
regarding a doll resembling one of the related fictional characters is wholly dependent on
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appellant's efforts to associate each character in the public's awareness with numerous attributes,
including a single source of sponsorship." (emphasis added). [59]
Determining whether a trademark infringement exists is a question of fact. [60] To
establish a claim for trademark infringement, the trademark owners must prove: 1) ownership of
the trademark at issue; (2) use by defendant, in commerce, without authorization, of the
plaintiff's mark; and (3) that defendant's use of the mark is likely to cause confusion. [61]
A) Trademark Ownership and Use in Commerce
The licensors own valid trademarks in its characters' images. [62] Such marks function as
indicators of the source of goods or services, even if the source is unknown. [63] A defendant's
use of a trademark in commerce is defined as the bona fide use of the mark in the ordinary
course of trade. [64] A mark may be used in commerce when it is used or displayed in the
advertising of services rendered in commerce (emphasis added). [65] To determine the type of
use, a court must consider factors including "any evidence that consumers have actually inferred
a connection between the defendant's product and the trademark owner." [66]
Courts distinguish between trademark use and functional use. [67] When a trademark is a
functional feature, the trademark cannot be enforced. [68] A mark is functional when it is
essential to the use of the product or affects its cost or quality. [69]
Here, the costumed performers engage in solicitations for the purpose of receiving "tips"
and "donations." [70] The characters' posing for pictures is a service to the public. [71]
Advertising services rendered in commerce constitutes a trademark use. [72] Therefore, courts
would likely find their solicitations constitute advertising for such services. [73]
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However, the trademark use must be rendered in commerce. [74] "Commerce" refers to
"all commerce which may lawfully be regulated by Congress." [75] The US Code merely defines
commerce as "trade or commerce." [76] Black's Law Dictionary defines commerce as "the
exchange of goods and services." [77] Persons who take pictures with the costumed performers
are not obligated to pay for their services. [78] Therefore, the "exchange" of goods and services
may not occur at all during the characters' solicitations. [79] However, characters that
aggressively pursue and receive donations and tips do, in fact, engage in the exchange of goods
and services. [80] Courts may consider panhandling as an exchange, and therefore sufficient
evidence of trademark use in commerce. [81]
Assuming the costumed performers' panhandling constitute advertising services rendered
in commerce, courts must next determine whether Congress may lawfully regulate such
exchanges. [82] Panhandling ordinances are often left to the discretion of the state and/or
municipality governments, including New York. [83] However, 15 U.S.C. § 1127 merely
requires that the trademark use be used in commerce that Congress may regulate. That Congress
does not regulate panhandling does not imply Congress may not regulate panhandling. [84] If
municipal governments may enact constitutional panhandling ordinances, Congress may also
enact such laws. [85] It follows that the costumed performers' solicitations would constitute a
prima facie trademark use in commerce. [86]
B.
Aesthetic Functional Use Defense
The functionality doctrine is applied most often in trade dress cases. [87] In such cases, a
mark is primarily considered functional when it is a physical feature. [88]
However, the Ninth Circuit adopted the aesthetic functionality doctrine in International
Order of Job's Daughters v. Lindeburg & Co. [89] In this case, a young woman's fraternal
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organization sued a jeweler for trademark infringement arising out of its manufacture and sale of
jewelry bearing the Job's Daughters insignia. [90] The court reasoned that "[t]he insignia were a
prominent feature of each item so as to be visible to others when worn, allowing the wearer to
publicly express her allegiance to the organization." [91] Customers did not purchase the insignia
because they believed the organization produced, sponsored, or endorsed the jewelry. [92]
Instead, they purchased the insignia for its value as a symbol. [93] The court determined the
name and emblem were functional components of the product, not trademarks. [94] Therefore,
the jeweler's use of Job's Daughters' valid trademark was not an infringing trademark use. [95]
The court in Au-Tomotive Gold, Inc. v. Volkswagen of Am., Inc., further developed the
aesthetic functionality doctrine by setting forward a two-part test. [96] First, the court must
determine whether the non-trademark function of the mark is essential to the use or purpose of
the product, or affects its cost or quality. [97] Second, the court must determine if “protection of
the feature as a trademark would impose a significant non-reputation-related competitive
disadvantage.” [98] If it poses such a disadvantage, it is deemed aesthetically functional and does
not trigger liability for infringement. [99]
Ultimately, the court must determine whether the use of the mark has a source-identifying
function, which is not protectable, or a "reputation-related" function, which is protectable under
the aesthetic function doctrine and therefore not a trademark use. [100] In Fleischer Studios, Inc.
v. A.V.E.L.A., Inc., a merchandise licensor brought a trademark claim against its competitor for
infringing its "Betty Boop" cartoon character. [101] The court held that the defendant's use of the
words "Betty Boop" was aesthetically functional, and therefore not a trademark use. [102] Like
in Job's Daughters, the Court found that the defendant's use of the mark did not identify a
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source. [103] For this reason, the court held that barring the defendant from using the words
would “impose a significant non-reputation-related competitive disadvantage.” [104]
The costumed performers could argue the aesthetic functionality doctrine precludes a
finding of trademark infringement. [105] The non-functional purpose of the trademarked literary
characters is to entice others to pose for pictures. [106] The literary images themselves are
essential to their use of the costumes, and are therefore functional. [107] Moreover, the
performers could argue protection of the marks impose a significant non-reputation related
competitive disadvantage. [108] A prohibition on this form of panhandling would also constitute
a prohibition on their pursuit of livelihood. [109]
The question of whether the trademarks serve a source-identifying function, or
reputation-related function is more elusive. [110] The marks may serve both purposes. [111]
Standing alone, the literary images are certainly valuable. [112] Tourists may take pictures, and
therefore utilize the characters' services, for the purpose of expressing their affinity for the
characters. [113] Therefore, the trademarks would serve a reputation-related function. [114]
However, tourists may also believe companies like Disney and Sesame Workshop have
authorized the life-sized characters to take pictures. [115] They may feel less inclined to take
pictures with the characters if they know Disney and Sesame Workshop have not explicitly
sponsored the characters. [116] Therefore, the aesthetic functionality defense may not be a valid
defense. [117]
C.
Fair Use Defense
Alternatively, the Lanham Act provides that fair use is another defense to trademark
infringement. “Fair use” is defined as “the use, otherwise than as a mark, ... of a term [ ] which is
descriptive of and used fairly and in good faith only to describe the goods or services of [the]
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party.” [118] To determine whether a use is "otherwise than as a mark," courts examine several
factors, including "whether the term is used as a 'symbol to attract public attention' [and] whether
the allegedly infringing user undertook ‘precautionary measures such as labeling or other devices
designed to minimize the risk that the term will be understood in its trademark sense.'" [119] In
Fleisher Studios, the court reasoned the words "Betty Boop" were not used as symbols. [120]
Instead, they comprised the exact name of the character. [121] Therefore, the words did not
identify the source of goods. [122] Finally, the court determined that no jury could conclude the
defendants used the words "Betty Boop" in bad faith. [123] The defendants did not use the mark
as a source-identifier. [124] Moreover, the defendants took the precautionary measure of
indicating themselves as the source of their goods. [125] They did not use the mark intending to
capitalize on the plaintiff's good will. [126] Therefore, as a matter of law, the defendants used the
words "Betty Boop" "otherwise than as a mark." [127]
Although the costumed performers may argue their trademark use is "otherwise than as a
mark," they are unlikely to prevail under a general fair use defense. [128] The performers use
their costumes to attract public attention to the specific fictional characters themselves. [129]
This evidences intent to capitalize on the trademark owners' good will. [130] Furthermore, the
performers are unlikely to provide evidence that they employed precautionary measures to avoid
confusion. [131] In fact, the performers are more likely to demonstrate specific intent to use the
marks to induce persons into believing they are the characters that are allegedly infringed upon.
[132] Therefore, the fair use defense may not be applicable. [133]
D) Likelihood of Confusion
Assuming the plaintiff has established that the defendant has used its mark in commerce,
and the defendant cannot rely on a functionality or fair use defense, the courts must next examine
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the likelihood of confusion. [134] A mark "is likely to cause confusion, or to cause mistake, or to
deceive as to the affiliation, connection, or association of such person with another person, or as
to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by
another person." [135] Courts use the standard of a typical buyer exercising ordinary caution.
[136] The marks are examined as they are encountered in the marketplace. [137]
Courts have held that the public's belief that the mark's owner sponsored or approved the
trademark use sufficiently satisfies the confusion requirement. [138] However, courts generally
examine eight factors to determine the likelihood of confusion in a trademark infringement case:
(1) the strength of the marks; (2) relatedness of the services; (3) similarity of the marks; (4)
evidence of actual confusion; (5) marketing channels; (6) degree of consumer care; (7)
defendant's intent; and (8) likelihood of expansion. [139]
Similarities between the marks weigh more heavily in the plaintiff's favor than
differences. [140] The balance also tips in favor of the plaintiff when the services are
complementary, sold to the same class of buyers, or the services are similar in use or function.
[141] However, if the allegedly infringing services are related, but not competitive to those of the
trademark owner, the court must consider other factors to determine whether a likelihood of
confusion exists. [142]
Bad faith, while less probative of demonstrating a likelihood of confusion, may also be
given considerable weight. [143] Courts may consider whether the defendant intended to
capitalize on plaintiff's good will. [144] Furthermore, when the defendant knowingly adopts a
mark similar to another's, the court may presume that the defendant can accomplish his purpose
of deceiving the public. [145]
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For instance, the court may consider the defendant's purposeful intent an affirmative act
of bad faith. [146] In Lone Ranger, the plaintiff owned the trademark to the fictional Lone
Ranger character. [147] The plaintiff had built up immense public good and a business of great
value. [148] The plaintiff only authorized the appearance of a person as "the Lone Ranger" on
important occasions, and only under the plaintiff's direct supervision and control. [149] The
defendant used the name "The Lone Star Ranger" and dressed as "an exact facsimile of the Lone
Ranger in the copyrighted prints." [150] The defendant advertised its rodeo shows in various
newspapers, confusing the public into believing he was appearing as "the Lone Ranger" in an
attempt to pass off his show as having some connection to the plaintiff. [151] The court
permanently enjoined the defendant from "imitating any or all of the distinctive and dominant
characteristics of "The Lone Ranger" program," and from "impersonating, acting, performing,
dramatizing or otherwise portraying any or all of the distinctive garb and characteristics of "The
Lone Ranger." [152]
In Job's Daughters, the court considered additional evidence that contributed to a finding
that Job's Daughter failed to prove likelihood of confusion. [153] First, the defendant never
designated the merchandise as "official." [154] It did not affirmatively indicate sponsorship.
[155] Job's Daughters did not show a single instance in which a customer was misled about the
origin, sponsorship, or endorsement of the defendant's jewelry. [156] It never received
complaints about the defendant's wares. [157] Finally, many other jewelers sold unlicensed Job's
Daughters jewelry. [158] This implied that consumers did not ordinarily purchase fraternal
jewelry exclusively from "official sources." [159]
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I. Issue Analysis
A.
Strength of Marks
The trademarks of characters in Times Square are strong and have established secondary
meaning. Therefore, this factor weighs in favor of the trademark owners.
B.
Relatedness of Services
Like in Lone Ranger, trademark owners often employ individuals to dress up as
characters for special events, such as the Macy's Thanksgiving Day Parade, or in theme parks
under their direct supervision. [160] Although the trademark owners' services do not include
soliciting money, their licensed characters often pose for photographs. Therefore, this factor
weighs in favor of the trademark owners. [161]
C.
Similarity of Marks
Assuming the Times Square characters' costumes are licensed, the trademarks are similar.
Even if the costumes were not licensed, the characters clearly intend for tourists to perceive them
as the trademarked characters. [162] Therefore, this factor weighs in favor of the trademark
owners. [163]
D.
Evidence of Actual Confusion
The trademark owners should conduct surveys of tourists to prove evidence of actual
confusion. This factor will weigh in favor of the trademark owners only if evidence demonstrates
tourists believe the trademark owners employed, sponsored, or approved of the characters'
services.
E.
Marketing Channels
The trademark owners' characters only pose for photographs in environments the
trademark owners explicitly supervise or authorize, such as in parades and theme parks. [164]
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Such environments do not constitute the same marketing channels as the public streets of New
York City. [165] Therefore, this factor weighs in favor of the Times Square characters. [166]
F.
Degree of Consumer Care
The court should use a standard analogous to that of a typical buyer exercising ordinary
caution. [167] Here, the court should consider a typical tourist with ordinary knowledge of the
trademarked characters who exercise ordinary caution. [168] Surveys that evidence actual
confusion may contribute to a finding that this factor weighs in favor of the trademark owners.
[169]
G.
Defendant's Intent
Like in Lone Ranger, the Times Square characters attempt to confuse the public into
believing they are the trademarked characters in an attempt to pass of their services as having
some connection to the trademark owners. [170] The characters have a conscious choice in
dressing as either trademarked or generic characters. For instance, Mickey Mouse clearly attracts
more attention than a generic mouse costume. [171]Such considerations demonstrate that the
Times Square characters have deliberately intended to free-ride off of the trademark owners'
good will. [172] Therefore, this factor weighs in favor of the trademark owners. [173]
H.
Likelihood of Expansion
The Times Square characters are unlikely to expand beyond Times Square. [174] Times
Square's pedestrian plazas and the lack of traffic surrounding them permit characters to
panhandle effectively. [175] However, New York City's local ordinances prohibit panhandling in
specified public places. [176] Very few tourist attractions that provide considerable space for
panhandlers exist elsewhere.
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On the other hand, allowing Times Square characters to continue panhandling may
contribute to a perception that their actions are legitimate. It may also encourage other
individuals to panhandle outside New York City. Therefore, this factor weighs in favor of the
Times Square characters unless trademark owners provide evidence suggesting otherwise.
VII. CONCLUSION
Trademark owners have great incentives to protect characters in an effort to maintain
their good will. The trademark owners of characters in Times Square may have a valid claim of
trademark infringement against the costumed performers. However, the performers may also
claim aesthetic functionality in its defense.
Currently, neither trademark owners nor the costumed performers appear willing to seek
a judicial solution to enforce their rights. Enacting New York City Council Member Andy King's
proposed ordinance would simultaneously protect trademark owners' characters and address any
potentially unsavory encounters between tourists and costumed performers'. Therefore, such
legislation may ultimately be the fairest and most efficient compromise between litigation and
unregulated infringement.
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The CRISPR Patent Battle:
Who Will the Rights to One of the Greatest Scientific Discoveries of Our Generation?
By: Kristin Beale
ABSTRACT
At the center of the United States patent system lies an intricate balance between creating monetary
incentives that lead to creation, invention, and discovery, and impeding the flow of the very
information that might permit invention. [123] One such invention, that of a novel gene-editing
technology called CRISPR-Cas9, has been called one of the “greatest scientific discoveries in the
last century.” [124] In simplest terms, the ability to edit genes (the basis of hereditary traits in
living organisms made up of DNA) allows scientists to target a specific mutated gene sequence that
leads to disease, cut that region out, and, if necessary, replace that sequence with a “healthy”
version. CRISPR-Cas9 has already been applied in experiments to rid mice of Muscular dystrophy
[125], block cells from HIV infection [126], and cure mice of rare liver disease. [127]
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I. Introduction
CRISPR-Cas9 is a naturally occurring process that bacterial cells use to fight viral infection. [128]
Scientists have been able to adapt and control this system for use in animal and human cells, which
renders the CRISPR-Cas9 system patentable. [129] So, who owns the patent rights to a technology
predicted to be worth billions? [130] The result will be determined in an epic patent interference battle
raging between Dr. Jennifer Doudna of University of California Berkeley, and Dr. Feng Zhang of The
Broad Institute and MIT. Although the United States Patent and Trademark Office (USPTO) awarded
Zhang the first patent rights to CRISPR-Cas9, Doudna has filed an interference claim against Zhang in a
“winner takes all” patent contest. To further complicate an already intense patent conflict, in September
of 2015 Zhang announced his discovery of a “newer and more improved” version of CRISPR, called
CRISPR-Cpf1. [131] How might this new version affect the ongoing patent battle, and is this new version
original enough to warrant its own patent? Those are questions that remain to be answered while the
CRISPR-Cas9 patent battle continues on.
II. CRISPR-Cas 9: Why is this technology such a big deal?
CRISPR-Cas9 is a naturally-occurring process that functions as a bacterial immune system to resist
infection by viruses. [132] When viruses attack bacteria, they inject their unique DNA into the cell,
causing the bacteria to use its own cellular machinery to copy and propagate the viral DNA instead of its
own. The tricked bacteria create copies of the virus which escape the host and spread to infect new
bacteria. To fight the spread of infection bacteria cells utilize special DNA cutting enzymes called Cas
(CRISPR-associated) enzymes. [133] Cas enzymes recognize foreign DNA sequences and cut them up
into small DNA fragments rendering them inactive. To prevent infections by the same virus in the future,
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these small viral DNA fragments are then incorporated and stored in the bacteria’s genome. These storage
regions are called CRISPR (Clustered Regularly Interspaced Short Palindromic Repeats) sequences.
[134] If the bacteria is ever subsequently invaded by a viral DNA sequence that has been stored in the
CRISPR “catalog”, the cell will transcribe this sequence, which will then bind with Cas enzymes like
Cas9, forming a viral “inactivation” complex. [135] This CRISPR-Cas9 complex (Abbreviated CRISPR)
then floats around the cell looking for the viral DNA that matches in sequence. Once CRISPR finds the
viral DNA match, Cas9 will bind to the viral DNA and “chop” up the sequence, preventing the virus from
replicating further. [136] Essentially, Cas9 cuts the DNA like scissors, and CRISPR tells it where to cut.
The really exciting part is that scientists have been able to “hijack” the bacteria’s CRISPR system
to create a new gene-editing tool that works in animal, plant, and human cells. Scientists have already
used CRISPR to modify crops, eradicate viruses, and screen humans for cancer genes. [ 137] Essentially,
CRISPR can be programmed to recognize and target any DNA sequence. One very controversial
application of CRISPR was a demonstration that the technology works in human reproductive cells. [138]
Scientists from China were able to use CRISPR in non-viable fertilized embryos obtained from fertility
clinics to edit the gene responsible for β–thalassaemia, a potentially fatal blood disorder. [139] This proof
of principle experiment shows that scientists could theoretically modify genes in viable embryos before
they are born, potentially eradicating genetically inherited diseases like Down Syndrome, Cystic Fibrosis,
Huntington’s Disease, certain cancers, and many others. If CRISPR can target any DNA sequence in
embryos, it could also be used to target and modify genes that determine eye color, muscle development,
or even intelligence. [140] The manipulation of the DNA of future generations of humans is an area with
deep philosophical and ethical concerns, and the potential for CRISPR to create “designer babies” puts
the technology squarely at the center of the ethical debate. [141] The US currently does not have a ban on
human reproductive cell modification, instead strict regulations implemented by the National Institute of
Health are in place, however, the experiments with CRISPR in reproductive cells has led many scientists
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(including Doudna) to call for a moratorium on such work due to safety, efficacy and ethical issues. [142]
In the meantime CRISPR is securing itself as the most widely used gene-editing technology in science to
date, with 545 research papers published using this system in 2015 alone. [143] As the application of
CRISPR technology rapidly moves forward, there is a clear and present need for the areas of science, law,
and policy to converge in order to ensure that CRISPR can be used in the most efficient, ethical, and safe
way possible.
III. Patentability of CRISPR.
As CRISPR occurs as a natural biological process, it cannot itself be patented. [144] The U.S.
Supreme Court, interpreting 35 USC 101, held that laws of nature, natural phenomena, and abstract ideas
are not patentable. [145] In Association for Molecular Pathology v. Myriad Genetics, (hereinafter,
“Myriad”), Myriad identified mutated DNA sequences in patients that increase the chance of developing
breast or ovarian cancer (BRCA 1 and BRCA 2) and used these sequences to develop genetic screening
tests for patients. USPTO granted Myriad patent rights to BRCA 1 and 2. If valid, these patents would
grant Myriad exclusive rights to the generation and use of BRCA-based medical tests. Petitioners from
the Association for Molecular Pathology filed suit, seeking declaration that Myriad’s patents were invalid
because they covered products of nature. [146] The Supreme Court agreed, stating that although Myriad
found an important and useful set of genes, the sequences existed in nature before they were discovered.
Myriad did not alter or create the DNA, and the Court held that unaltered genes are not patent eligible.
[147] The Court warned that granting such patents might tie up the use of such naturally occurring
phenomena like DNA. [148] Patent rights over natural DNA sequences like the BRCA genes might
prevent other scientists from studying those genes and potentially developing better tests or treatments for
breast and ovarian cancer, inhibiting future innovations premised upon these sequences. [149] This type
of patent would be at odds with the very point of patents, which exist to promote innovation. [150]
Unlike the BRCA genes in Myriad, CRIPSR is patentable because scientists were able to alter,
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control and modify CRISPR to function in animal and human cells, a cellular system in which CRISPR
does not naturally function. [151] Once Doudna learned how CRISPR functioned in bacterial cells, she
isolated the CRISPR components from these cells and figured out how to direct CRISPR to act upon
specific sequences that were of scientific interest (like regions of DNA with a mutated sequence). This
ability to direct the natural components of CRISPR is a step beyond its natural design of targeting
invasive viral sequences. Scientists could now “manually” navigate CRISPR to a mutated sequence of
their choosing, direct CRISPR to cut out that sequence, and have CRISPR replace the cut out sequence
with a non-mutated sequence in its place. [152]
Zhang’s group showed that CRISPR could function not only in prokaryotic cells (like bacteria) but
also in animal and human cells. [153] This meant that scientists could use CRISPR in a non-endogenous
system to potentially treat human disease. These modifications to CRISPR are what lead to the generation
of a powerful and novel gene-editing tool, making CRISPR worthy of a valid and very lucrative patent.
IV. The Current CRISPR Patent Battle.
So far, the CRISPR patent battle has been nothing short of complex. As it stands, Doudna filed a
patent regarding her work showing that she could isolate and control CRISPR activity with a priority date
of May 25, 2012. [154] Zhang filed several patents regarding his work showing that CRISPR could be
used in animal and human cells, with a priority date of December 12, 2012. [155] However, Zhang paid
an additional fee to accelerate his patent application process. [156] Patent applications are typically
examined by USPTO in the order of their effective filing date. [157] However, applicants may petition to
the USPTO for their patent application to be “made special”, which, if granted, accelerates the total length
of examination time to as little as six months after filing. [158] In order for a patent application to be
made special, a statement must be made that the claimed subject matter is directed to environmental
quality, the development of conservation of energy resources, or countering terrorism. [ 159] CRISPR
does not obviously fall into those categories, however USPTO has created additional categories of subject
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matter that it considers for special status. [160] These include, (1) applications relating to safety of
research in the field of recombinant DNA (2) applications relating to HIV/AIDS and cancer (3)
applications involving superconductivity materials and (4) applications filed by small entities that relate
to biotechnology. [161] CRISPR would fall into the category of (1) applications relating to the safety of
research in the field of recombinant DNA technology, and potentially (2) applications relating to HIV and
cancer given the applications of CRISPR thus far.
This means that even though Zhang filed his patents after Doudna, he was issued his patents by
USPTO first since they were examined first. On April 14, 2014 Zhang was officially issued 10 different
patents for CRISPR. [162] Specifically, these patents give Zhang control over commercial use of
CRISPR technology in eukaryotic cells (human and animal cells, not bacterial cells). That means that
Zhang wins control over the technology that will work in pigs, monkeys, mice and humans, most of the
models that advance the study of human disease therapeutics, and therefore where most of the profitable
use of CRISPR technology would be generated. Some say that Zhang’s patents were most likely granted
first due to this “fast track” method, without which the USPTO would have flagged the patent for being
similar to Doudna’s earlier patent application. [163] Zhang claims that USPTO was correct in granting
his patents valid first, despite Doudna filing first, because his research showed CRISPR could work
outside of bacterial cells, directly in animal and human cells, and that Doudna’s patent application was
only speculative on this scientific application. [164]
Although Zhang was awarded these CRISPR patents in animal and human cells, Doudna’s patent
may still be granted, but with significant revisions to the scope of scientific application. For example, her
patent might only grant her the rights to CRISPR in bacterial cells, which although useful for mechanistic
studies, is not the system in which the majority of CRISPR technology will be used in human disease
studies.
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V. Patent interference: The winner takes all.
A. Determining priority of invention: conception and reduction to practice
After the news of Zhang’s patent award, Doudna filed a patent interference claim (also known as a
priority contest) against Zhang stating that Zhang’s patent should be ruled invalid after review of her
patent application due to her being “first-to-invent” CRISPR. [165] Since both Doudna and Zhang filed
their patents before March 16 2013, the first-to-invent rule will still be applicable to their case.
5
An
interference proceeding based on first-to-invent can be initiated when a dispute arises between pending
applications; between pending applications and issued patents (like in Doudna/Zhang case); or between
issued patents. [166] Interference proceedings afford the party claiming to be the first inventor an
opportunity to contest priority and assert its right to patent the invention by filing an application for
interference within one year of the issuance of the contested patent. [167]
The Patent Trial and Appeals Board (PTAB) will then determine questions of priority of inventions
under 35 U.S.C. § 135(a) with the authority to determine whether Zhang’s patent should be deemed
invalid. An interference is deemed to exist if the subject matter of a claim of one party would, if prior art,
have anticipated or rendered obvious subject matter of a claim of the opposing party. [168] Doudna filed
her interference claim immediately after Zhang had been granted patents to CRISPR. If Doudna were to
win the interference, the results for Zhang could be devastating. An adverse ruling on an existing patent
results in the cancellation of the involved claims of the patent and awards the prevailing party with the
claim in dispute. [169] Essentially, this is a “winner takes all” patent contest.
Invention consists of two distinct acts: conception and reduction to practice of the invention. [170]

5
On September 16, 2011 Congress signed into law the America Invents Act, which switched the US patent
system from a first-to-invent to a first-to-file system. This means that after March 16, 2013 an inventor who
files a patent application first is awarded the patent even if another independent inventor for the same
invention was first to invent. See Wendell Ray Guffey, Kimberly Schreiber, America Invents Act: The
Switch to A First-to-File Patent System, 68 J. Mo. B. 156 (2012).
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Conception is the “formation in the mind of the inventor, of a definite and permanent idea of the complete
and operative invention, as it is hereafter to be applied in practice.” [171] Actual reduction to practice
requires that the claimed invention works for its intended purpose. [172]
In Cooper v Goldfarb, a patent interference was issued to resolve priority of invention of materials
used in blood vessel grafting. [173] PTAB awarded priority of invention to the “junior party”, the party
that had a pending patent (like Doudna) after the “senior party”, the party that was granted the first patent
(like Zhang), failed to establish reduction to practice first. [174] Both parties were working on
experiments involving artificial vascular grafts using flexible membrane tubing, called PTFE tubing. The
issue presented in the interference regarded which of the parties was the first to recognize the importance
of the PTFE tubing fibril length and reduce it to invention by practice by performing a successful
experiment using the claimed structure. [175] Cooper began research in 1972, and claimed he discovered
that the length of fibrils was important in vascular grafting, and in 1973 several experiments were
conducted in dogs to test this theory. [176] After two of the grafts proved successful in these dog trials,
he filed a patent on April 2 of 1974. [177] He claimed conception and reduction to practice as of May 1,
1973 based on statements recorded in his lab notebook. Goldfarb began research in Feb of 1973 using the
PTFE vascular grafts provided by Cooper. [178] He claims however, that he was the one to identify the
importance of the fibril length in making PTFE vascular grafts successful after conducting experiments in
twenty-one different dogs, and that he informed engineers of the necessary fibril length in June of 1973
after he microscopically measured them all. [179] He then filed a patent in October of 1974, claiming
reduction to practice as of June 30, 1973. [180]
Goldfarb (junior party) then filed a patent interference claim against Cooper (senior party) claiming
he was first-to-invent. The Board found that although Cooper mentioned experiments in his notebook
before Goldfarb, these experiments were failures that did not show the importance of the PTFE fibril
length. They also fail to specify a fibril length, like the experiments conducted by Goldfarb. [ 181] They
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awarded priority to Goldfarb stating that Cooper’s experiments did not reduce the invention to practice.
[182] Cooper appealed to the United States Court of Appeals, Federal Circuit, but the Court also ruled in
favor of Goldfarb regarding first-to-invent, but recommended that PTAB review whether Goldfarb’s
efforts inure benefit to Cooper, since Goldfarb did get the original grafts from Cooper. [183] This is an
example of a patent case that took more than ten years to settle, which is suggestive of the time it might
take to decide the ultimate CRISPR patent interference battle.
B. Who was the first to conceive of CRISPR?
Doudna and Zhang are in a similar situation, because Doudna is challenging Zhang’s patent by
claiming priority based on first-to-invent. Doudna first published her research findings focusing on the
capability of CRISPR to cut and splice genes with better efficiency than any other previous gene-editing
technology in the August 2012 issue of the top-tier science publication journal Science. [184] This
publication was the first to show the fundamental experiment (proof of principle) that CRISPR machinery
could be controlled and directed by scientists, one of the aspects mentioned earlier that makes CRISPR
patentable. These experiments successfully showed that Doudna was able to conceive of and show that
CRISPR could be hijacked from bacterial cells and directed to cut at specific, targeted regions in genes.
Zhang’s defense is that he has proof that he independently conceived the idea of using CRISPR for
gene-editing, and performed all original proof of principle experiments a full year before Doudna. [ 185]
As evidence, he is presenting copies of all the laboratory notebooks from his lab for the years of 20112015. [186] It is possible that Zhang’s motivation for waiting to publish these results was a desire to
demonstrate that CRISPR worked in animal and human cells because such results would be more
impactful. PTAB will ultimately have to determine the authenticity of these claims after hearing
testimony to these facts and decide who conceived the idea of CRISPR first.
C. Who was the first to reduce CRISPR to practice?
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Zhang further contends that his paper, published in Science four months after Doudna’s paper,
established that CRISPR could work in animal and human cells, which is the accurate reduction to
practice exemplifying the intended use of CRISPR. His experiments demonstrated that CRISPR can be
used for gene-editing in mice, monkeys, and humans, the systems in which CRISPR would be most
valuable to disease research. [187]
Some academics have commented that Doudna’s experiments, “take place in a test tube” and
“simply highlight the potential that genome-editing might be possible”. [188] If PTAB were to make this
distinction given the evidence, Zhang could satisfy the requirement of reduction to practice requiring that
the claimed invention works for its intended purpose. The intended purpose of CRISPR is to work in
animal and human cells, and without this experiment all Doudna is showing is that CRISPR can be
controlled, but not in the system that is most relevant.
Doudna’s defense, identified in her interference claim, includes specific experiments from her
research and published work that indicate that she did, in fact, show that CRISPR works in animal and
human (eukaryotic) cells, despite Zhang’s claim to the contrary. [189] In her brief to PTAB, she argues
that:
The Zhang Declaration was accompanied by several exhibits,
including excerpts from laboratory notebooks and a manuscript. Dr.
Zhang asserted that the exhibits were evidence that patents had been
actually reduced to practice before applicants constructively reduced
their invention to practice. Dr. Zhang is wrong. Dr. Zhang’s attempts
to demonstrate…teach, suggest, describe, or enable CRISPR methods
of using the same in eukaryotic cells also are incorrect. [190]
Doudna’s brief goes on to point out 10 different examples, including photos of Zhang’s own lab
notebooks, that she argues shows that what he is claiming is not accurate. [191] It appears that PTAB will
have to spend a lot of time sifting through evidence presented in notebook documentation and carefully
determining the scientific implications of each experiment. This could explain why some patent attorneys
predict that it could be another 2-3 years before a clear winner of the CRISPR patent is announced. [192]
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So which party should win? The one that first published the proof of principle experiments, or the
one that demonstrated that the technology could work in the most efficient system? The CRISPR patent
comes down to not only who filed or invented first, but also to the scope of each patent. Even if Doudna
filed first, would the patent she might be awarded cover CRISPR technology in bacterial cells only? Or
are her experiments sufficient to show reduction to practice, providing experimental evidence that
CRISPR could work in animal and human cells as well as providing the first proof of principle
experiment? Or will Zhang’s lab notebooks from 2011 be ruled as sufficient evidence that he was in fact
the one to conceptualize and reduce CRISPR to practice? If Zhang’s notebooks do show that he
independently conducted these initial experiments, he would have a strong claim for winning the
interference battle (and keeping his awarded patents) by satisfying both conception and reduction to
practice requirements for first-to-invent. Ultimately, whoever wins patent rights to CRISPR in animal and
human cells is the one who is going to reap the most financial reward from companies and laboratories
wanting to use CRISPR technology. However, regardless of who wins the patent rights to the original
CRISPR system, there is a new aspect that even further complicates matters, Zhang’s new discovery of a
“better and more efficient” version of CRISPR that utilizes different “cutting” enzymes.
VII. Zhang’s “new and improved” CRISPR system: Another level of complexity in the
CRISPR patent conundrum.
Zhang recently published in the October 2015 issue of Cell experiments showing his use of a new
cutting enzyme that works with CRISPR better than Cas9. [193] His new system, CRISPR-Cpf1 has been
shown to be more efficient, easier to use in animal and human cells, and less prone to the editing errors
that can occur with CRISPR-Cas9 targeting. [194] A big question now becomes whether the use of a new
cutting enzyme, which is in the same class of enzymes as Cas9, is novel enough to warrant its own patent,
and if so, whether this new patent will render the CRISPR-Cas9 patent less significant.
Should Doudna be awarded exclusive rights to CRISPR technology, she could theoretically seek to
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invalidate any CRISPR-Cpf1 patent that Zhang files based on the concept of obviousness. Under the U.S.
Patent Act, an invention cannot be patented if “the subject matter as a whole would have been obvious at
the time the invention was made to a person having ordinary skill in the art to which said subject matter
pertains. [195] In addition, the party seeking to invalidate a patent based on obviousness must
demonstrate with clear and convincing evidence that someone with skills in that area would have been
motivated to combine teaching of the prior art in order to achieve the claimed invention with a reasonable
expectation of success in doing so. [196] An obviousness determination is made by analyzing a range of
factual circumstances: scope and content of prior art, differences between claims and prior art, the level of
ordinary skill in pertinent art, and secondary considerations such as commercial success. [197]
In Proctor & Gamble Co. v Teva Pharmaceuticals, Inc. (P&G) the Federal Circuit had to determine
whether chemical modifications to a drug compound to generate a new drug substance were obvious
thereby invalidating any patents on the new substance. [198] P&G owned the ‘406 patent, which related
to the intermittent dosing methods for treating osteoporosis with compounds called bisphosphonates
(inhibit bone resorption). [199] This patent mentions 36 different bisphosphonates for use in the claimed
method, including the compound 2-pyr EHDP. Later, P&G chemically modified 2-pyr EHDP to generate
the drug risedronate, which is the active ingredient in P&G’s osteoporosis drug Actonel. [ 200] They
subsequently secured the ‘122 patent for risedronate. [201] Teva Pharmaceuticals (Teva) notified P&G of
their plans to market a generic version of risedronate, which prompted P&G to file a patent infringement
suit against Teva. Teva’s defense was that the ‘122 patent was invalid due to obviousness of the previous
patent ‘406 because the chemical process done to improve ‘406 patented material and create risedronate
was obvious. Teva argued that this process rendered the ‘122 patent not a special enough innovation to
warrant patent protection, and therefor they should be able to market a generic version of risedronate.
[202] The Court upheld the lower court ruling in favor of P&G that found the ‘122 patent to be valid, and
non-obvious. [203] Specifically, they ruled that a skilled person in the field would not have identified 2Copyright © 2015 Boston College Intellectual Property & Technology Forum
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pyr EHDP as a lead compound in osteoporosis treatment, nor have modified the compound to generate
risedronate specifically. [204] An expert on bisphosphonates testified that each bisphosphonate is unique
and should be treated and evaluated differently. [205] Therefore, the modification that was made was not
routine, but additional and unique experimental work. Furthermore, the court ruled that P&G also
introduced unexpected results which showed that risedronate was extremely potent at low doses and
lacked the toxicity of similar bisphosphonates, making this compound modification a novel drug which
satisfied a long-felt but unmet need in the osteoporosis drug field. [206]
Similar arguments could eventually surface between Doudna and Zhang depending on the results of
the CRISPR patent interference case. Should Doudna ultimately be awarded the CRISPR patent, she
could claim that CRISPR-Cpf1 was an obvious iteration of CRISPR, given the existence of Cas-9, and
therefore not worthy of its own patent. She would have to show that Zhang’s identification of CRISPRCpf1 was within the skillset of a person having ordinary skill in the art of CRISPR technology, and that
this discovery was only made possible by combining teaching of the prior art (CRISPR-Cas9) with
knowing to a reasonable extent that success would result. Meaning, anyone with experience in the
CRISPR field could have reasonably used the current CRISPR system to identify Cpf1 and know to a
substantial certainty that it would perform similarly as a gene-editing tool. Zhang identified Cpf1 by
doing a sequence search of enzymes that might be similar to Cas9, using the Cas9 amino acid sequence as
the basis for his comparative search. [207] Any skilled scientist would be able to perform such a search,
even outside of the field of CRISPR specifically. Also, such a search would not be possible without the
original identification of Cas9. Additionally, Zhang is still pairing Cpf1 with CRISPR, a central
component of the CRISPR-Cas9 patent.
Zhang could argue that even if he did find Cpf1 based on the Cas9 sequence, the naturally
occurring sequence of Cas9 itself is not patentable. [208] Such a limitation would prevent scientists from
making any improvements or novel innovations in the CRISPR field. Furthermore, Zhang would be able
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to produce evidence that each cutting enzyme is unique, similar to the bisphosphonates in P&G, requiring
their own isolation and experimentation. Zhang could also produce evidence of unexpected results. [209]
Cpf1 has been shown to cut more efficiently than Cas9, and in different regions of the genome. [ 210]
Essentially, Cpf1 and Cas9 are two different kinds of DNA scissors. Cas9 acts like straight edge scissors,
cutting both strands of the DNA double helix in the same place, leaving blunt, exposed ends (exposed
ends of DNA can undergo mutation). Cpf1 acts like saw-tooth edged scissors, cutting DNA and leaving
offset ends, which reduce the chances of mutation and makes pasting in healthy DNA sequences easier.
[211] This use of Cpf1 now opens up new editing sites within the genome. Cpf1 also is less prone to
editing errors than Cas9 (cutting in the wrong spots, a phenomenon called “off target effects”), which is a
worry with all gene-editing technology. [212] This decrease in error could be ruled to satisfy a long-felt,
unmet need in the field of gene-editing technology, making CRISPR-Cpf1 worthy of a valid patent.
VIII. Does Cpf1 render the CRISPR patent less potent: What does this mean for the winner
of the battle?
If Zhang is awarded a separate patent for Cpf1, this could mean that laboratories and start up
companies could make the switch from using CRISPR-Cas9 to CRISPR-Cpf1 in order to avoid possible
infringement of the CRISPR patent, essentially continuing advancement in the scientific application of
this technology while Doudna and Zhang spend years battling over CRISPR-Cas9 patent rights. As it
stands currently, both Doudna and Zhang have granted non-exclusive CRISPR licenses to academic
institutions and start up companies. Zhang has licensed use of CRISPR to the biotech company Editas
Medicine, which has raised $120M to research developing CRISPR-Cas9 into a therapeutic agent. [213]
Since Zhang works for The Broad Institute, an academic non-profit organization, several academic use
licenses have also been granted to teaching laboratories around the country. [ 214] Meanwhile, Doudna’s
biotech company, Intellia Therapeutics, has raised more than $70M for development of CRISPR as a
therapeutic tool. [215]
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It is unclear how the current patent battle will affect CRISPR as it is being used in academic
laboratories and startup companies moving forward, but awarding Zhang a CRISPR-Cpf1 patent might
allow scientists to move forward with important gene-editing research without worrying about any future
CRISPR infringement claims being filed against them. Granting such a patent might also encourage other
scientists to search for even better/more accurate versions of CRISPR, research that might have
previously been hindered due to the complex legal landscape of the CRISPR patent. These potentially
hindering aspects of the CRISPR patent battle raise many issues about the function and efficiency of the
US patent system. Although the patent system may act to promote and encourage inventors to advance
scientific progress by ensuring that they have exclusive rights to their inventions, individual patents like
CRISPR do not always contribute to that progress. If Doudna were awarded a broad CRISPR patent,
which includes all work stemming from CRISPR, potentially including CRISPR-Cpf1, then advancement
in improvements to this groundbreaking system could be significantly slowed as researchers worry more
about patent infringement and less about how beneficial improving CRISPR could be for biotechnology
research.
IX. Conclusion
So who will walk away with the patent rights to the greatest discovery of our generation? That is
a question that could unfortunately take several more years to be answered. Even once settled, it is still
uncertain what the scope of the patent awarded will be, and how new technology that will continue to
evolve in this field will affect the financial worth of the original patent. Will Doudna win the patent
interference battle and subsequently be granted patent rights to CRISPR in all cell types or just bacteria?
Will Zhang emerge victorious and not only have patent rights to CRISPR, but also secure new patents for
his new and improved version, CRISPR-Cpf1? Regardless of who wins the CRISPR patent battle, it is
clear that CRISPR has attracted a lot of attention and money to the exciting and controversial field of
gene-editing. Future questions are bound to extend beyond that of who gets the patent, as the application
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of CRISPR, and CRISPR-Cpf1 rapidly moves forward into grey areas of ethical research. How will law,
policy, and science come together to ensure that CRISPR is used ethically and safely? Perhaps Doudna
and Zhang will have to put aside their patent battle differences in the future to serve as scientific experts
in gene-editing as these important questions begin to be addressed and policies and regulations are
molded.
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The Fair Play, Fair Pay Act of 2015
What’s At Stake and For Whom?
BY
WILLIAM W. SHIELDS
Professor JEFFREY S. BECKER
STEPHEN HUTTON
[ABSTRACT]
The United States Copyright Act is primed to take center stage during this current legislative
session, as several members of Congress introduced comprehensive legislation earlier this year
known as the Fair Play, Fair Pay Act of 2015 (FPFPA). This bill seeks to modify the Copyright
Act in three key ways. First, it would create a terrestrial public performance right for recording
artists and owners of master sound recordings. Second, it would eliminate the Copyright Act’s
exemption against federal copyright protection for sound recordings fixed prior to February 15,
1972. Third, it would establish a process designed to allow for the setting of consistent fair
market royalty rates paid in consideration of the public performance of all sound recordings.
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The FPFPA was introduced in April 2015 by four members of Congress: House
Democrats Jerrold Nadler, John Conyers Jr., and Ted Deutch, and Republican House member
Marsha Blackburn. According to Nadler, ranking member of the House Judiciary Subcommittee
on Courts, Intellectual Property, and the Internet, the bill was created to fix the “antiquated and
broken” broadcast systems allowing certain radio companies to avoid paying any fee to music
rights holders. [1]
There is no question that this bill will create a great deal of debate, as have all prior
legislative attempts to rectify areas of inequity within the Copyright Act. Regardless of which
side of the argument you may find yourself on, it is essential to understand the fundamental ways
in which the FPFPA would alter the current musical landscape.
THE CURRENT MUSICAL LANDSCAPE
In order to appreciate the impact the FPFPA would have on the music industry, one
should understand the industry’s present state. Thus, as a preliminary matter, we must
distinguish between the two distinct copyrights created when one writes and performs a new
song.
First, there is the musical composition, which is comprised of a composer’s music and a
lyricist’s accompanying words, if any. Separate and apart from the composition is the sound
recording, which is the fixation of a performance of the composition into a material and audible
format. Simply put, the composition is what you see when you purchase sheet music for the
song, and the sound recording is what you listen to when you hear that same song on the radio.
Take, for example, the song “White Christmas,” which was written by Irving Berlin
around 1940. The first public performance and recording of that song was by Bing Crosby in
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1941. When you listen to “White Christmas” as performed by Bing Crosby, the sounds you
hear—the voices and instruments—emanate from the sound recording, which is owned by Bing
Crosby’s estate. The musical composition underlying that sound recording (the lyrics and
composed music), however, remains a separate asset owned instead by Irving Berlin’s estate. To
date, there have been more than 500 different versions of “White Christmas” recorded, and each
of them constitutes a new and distinct sound recording owned by the performer(s), whereas
Irving Berlin remains the sole author and owner of the composition itself.
No Right Exists to a Terrestrial Public Performance in Sound Recordings
Section 106 of the Copyright Act provides owners of compositions with an unrestricted
right to “perform the copyrighted work publicly.” [2] This “performance right” includes the
public broadcast of compositions on the radio. To administer these public performance rights [3]
throughout the United States, nationally based performance rights organizations (PROs),
including ASCAP (American Society of Composers, Authors and Publishers), BMI (Broadcast
Music Inc.), and SESAC (Society of European Stage Authors and Composers), issue blanket
license agreements to terrestrial radio stations in exchange for payment of standard licensing
fees, which allow the stations to publicly broadcast any compositions in the PRO’s catalogue. [4]
There exists a long history in the United States of paying the authors of compositions for
the public performance of their works on the radio, which has generated hundreds of millions of
dollars in public performance royalties for songwriters and publishers. Yet, there has never been
a corresponding terrestrial public performance right for owners of the sound recordings in which
these compositions are embodied, nor the recording artists that perform on the sound recordings,
when used by radio companies. Many countries around the world (at least 75 of them) do
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provide laws enabling payment to sound recording copyright owners and recording artists for the
public performance of sound recordings by radio (as well as television, clubs, venues, and a
variety of other public businesses). Other than the United States, only a handful of countries,
including China, Iran, and North Korea, refuse to pay performers for the public performance of
their sound recordings.
In 1995, the Digital Performance Right in Sound Recordings Act (DPRA) amended § 106
of the Copyright Act to provide a right of public performance in sound recordings, but limited
that right to “non-interactive digital audio” transmissions. [5] The Digital Millennium Copyright
Act (DMCA) thereafter modified the DPRA by incorporating a list of specific types of services
that are required to pay for the public performance of sound recordings. Thus, satellite radio
broadcasters such as SiriusXM and Internet radio providers like Pandora are now required to pay
a public performance royalty in connection with their public broadcast of sound recordings. It
remains the case, however, that when these same songs are played on terrestrial radio, neither the
record label that owns the recording nor the artists who performed the song receive any
compensation in conjunction with that public performance. [6]
According to the musicFIRST Coalition—comprised of music industry members
including the RIAA (Recording Industry Association of America), the Recording Academy
(National Academy of Recording Arts and Sciences), and SAG-AFTRA, the lack of a reciprocal
performance right in the United States leads most countries who do have such a right to withhold
performance royalty payments to United States creators for their international airplay. This lack
of reciprocal payment is estimated to cost the United States economy over $100 million a year.
[7]
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“There is no doubt that the lack of terrestrial performance rights for sound recordings in
the United States badly hurts American performers and labels,” says Emmanuel Legrand, the
United States editor of British trade magazine, Music Week, who co-penned, with former
SoundExchange CEO John Simson, a study on the global market for neighboring rights.
According to Legrand:
[O]nly 1 percent of SoundExchange’s revenues come from sister societies around the world,
which does not reflect the real strength of the United States repertoire. It is over 20 percent for
the United Kingdom’s Phonographic Performance Limited (PPL). The simple reason is that
societies tell SoundExchange: “join the club first, give us terrestrial rights, and then we’ll
discuss.” Meanwhile, they all go to SoundExchange to collect the rights for their local performers
and labels.
No Federal Copyright Protection Exists for Pre-1972 Sound Recordings
As discussed above, the DPRA and DMCA provide both performers and labels a public
performance right in digital audio transmissions. As a result, music services like SiriusXM,
Pandora, and Spotify have generated significant revenue for the recording industry. There
remains one notable group, however, who has been deprived this revenue stream—our musical
forefathers.
Sound recordings fixed before February 15, 1972 (pre-1972 sound recordings) are not
protected under current federal copyright laws that compel those who digitally transmit sound
recordings to pay performance royalties for such use. Rather, when Congress passed the Sound
Recording Act of 1971, which first provided copyright protection over sound recordings, it did
so only with respect to recordings fixed on or after February 15, 1972. [8] According to § 301 of
the Copyright Act, pre-1972 sound recordings are afforded no protection under the federal
statute and are protected only by state common law. Digital radio services have thus refused to
pay performers and owners of these recordings for their public performance.
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In February 2015, the United States Copyright Office issued its report on Copyright and
the Music Marketplace, which highlights the aim of federal copyright laws to provide stability
for markets and eliminate uncertainty in the law for businesses, new and old. [9] The Copyright
Office reaffirmed its position with respect to the federalization of pre-1972 sound recordings,
and its belief that the patchwork legal system of state laws confronted by broadcasters and artists
is unsustainable. [10]
This issue highlighted in the Copyright Office report is best exemplified in a series of
lawsuits filed throughout the country by owners of copyrights in pre-1972 sound recordings. In
these cases, the copyright owners allege state law claims as the basis for the right to be
compensated for the public transmission of their recordings. These lawsuits have resulted in a
variety of rulings and settlements, highlighting the need for consistent federal regulation. Among
these cases are those initiated by Flo & Eddie Inc., which controls music belonging to former
members of the American rock group, the Turtles. [11]
Flo & Eddie first filed class action lawsuits against SiriusXM satellite radio in Florida,
California, and New York. According to its court filings, SiriusXM is “the largest radio
broadcaster in the United States, measured by revenue, [with] over 27.3 million paying
subscribers.” It features decade-specific channels such as “60s on 6,” where the Turtles’ songs
are frequently aired. [12] Flo & Eddie filed these lawsuits on behalf of themselves and all other
“owners of sound recordings fixed prior to February 15, 1972,” alleging that by failing to
license or otherwise compensate artists for the right to “perform” digitally broadcast pre-1972
sound recordings, SiriusXM infringed their public performance rights in violation of pertinent
state copyright and misappropriation laws. [13] SiriusXM denied that the respective state
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statutes provided for, or otherwise allowed the inference of, a public performance right in pre1972 sound recordings.
The United States District Court for the Central District of California granted summary
judgment in favor of Flo & Eddie, rejecting SiriusXM’s argument that “the bundle of rights that
attaches to copyright ownership of a pre1972 sound recording does not include the exclusive
right to publicly perform the recording.” [14] The court held that, pursuant to California statute,
copyright ownership of a pre-1972 sound recording includes the exclusive right to publicly
perform the recording. [15] Accordingly, if anyone wishes to publicly perform such a recording,
he or she must first seek authorization from the recording’s owner.
In a corresponding case, the United States District Court for the Southern District of New
York also held that Flo & Eddie do have the right to exclusively perform their sound recordings,
and denied SiriusXM’s motion for summary judgment on the issue. [16] In February 2015,
however, the court granted SiriusXM’s motion to certify an interlocutory appeal, and that lawsuit
is now stayed pending a decision by the Second Circuit as to whether, under New York law, the
holders of common law copyrights in pre-1972 sound recordings have an exclusive right of
public performance in their recordings. [17]
The United States District Court for the Southern District of Florida, however, held that
Florida common law does not provide Flo & Eddie with an exclusive right to the public
performance of their sound recordings. In granting summary judgment for SiriusXM, [18] the
court recognized that another Florida federal court held that the state does recognize common
law copyrights in sound recordings, [19] but it had not decided whether these common law rights
in sound recordings extended to their public performance. The court noted that while California
maintains a statute that provides artists with exclusive ownership interests in their sound
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recordings, and New York has binding precedent addressing these issues, Florida does not. It
declined to be the first to rule on the issue, stating: “whether copyright protection for pre-1972
recordings should include the exclusive right to public performance is for the Florida
legislature.”[20]
Of note, several major record labels, including Sony, Warner, UMG, Capitol, and
ABKCO, filed a similar lawsuit against SiriusXM in California. In July 2015, SiriusXM reached
a settlement with the labels, in which SiriusXM agreed to pay the labels $210 million to resolve
all claims, and to allow the continued transmitting of music owned or controlled by the labels
through 2017, at which time SiriusXM and the labels will renegotiate licenses for use of this
music. [21]
The Legendary Soul Man, Sam Moore of Sam & Dave fame, who turns 80 on October 12
of this year, was one of the first artist witnesses to testify in Congress about the still unresolved
terrestrial radio issue. He has also been outspoken on digital and satellite radio’s unwillingness to
pay any of the legacy artists for broadcast of their pre1972 recordings. Moore noted:
The hits I recorded such as “Soul Man” are still enjoyed daily by radio listeners around the world.
There’s no excuse for any business which makes millions and billions of dollars annually to skirt
paying royalties to legacy artists such as myself. Aren’t we entitled and shouldn’t we be able to
enjoy that important income from the fruits of our souls, especially as we reach our twilights?
Lack of Parity in Standards Applied in Determining Fair Market Royalty Rates for Public
Performance of Sound Recordings
The Copyright Act is comprised of a complex web of statutory provisions and rules that
determine what must be paid, and to whom, when a sound recording is publicly broadcast. Upon
careful dissection of these provisions, we find that four considerably different outcomes result
from public consumption of the same sound recording.
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On one end of the spectrum is terrestrial radio, otherwise referred to as AM/FM, or the
radio your grandfather listens to in the car. As discussed above, no right to a terrestrial public
performance in sound recordings currently exists. Consequently, terrestrial radio broadcasters are
permitted to publicly transmit sound recordings without any obligation to pay the performer or
owner of these recordings. Thus, the standard applied in determining the royalty rates and
payments to be made in exchange for use of sound recordings on terrestrial radio is therefore
rather simple: $0.00.
At the other end of the spectrum are interactive music services like Spotify, TIDAL, or
Apple Music. These service providers generally allow consumers to choose the music they want
to listen to on demand, and negotiate directly with owners of the sound recordings they wish to
broadcast. [22] In the event the service provider and the copyright owner cannot reach an
agreement, the artist can refuse to license his or her recordings to the service provider, which
will then be unable to broadcast that music. This is precisely what occurred this past year when
Taylor Swift refused to allow Spotify to play her music for its consumers after discussions broke
down between the parties concerning the terms of use for Swift’s newest album, 1989. [23]
A few months later, Swift famously wrote an open letter to tech giant, Apple, announcing her
intent to withhold 1989 from Apple’s new streaming service because it did not plan to pay
writers, producers, or artists any royalties for music streamed during the three-month free trial it
offered to consumers. [24] Within hours, Apple quickly changed course and responded via
Twitter that it would indeed pay artists for streaming their music, even during the customer’s
free trial period. [25] Examples like this demonstrate the significant control artists maintain over
the use of their music during negotiations with even the largest interactive streaming services.
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Somewhere in the middle of the spectrum we find non-interactive digital music services,
like SiriusXM and Pandora. Unlike terrestrial radio, these platforms must pay a public
performance royalty to the owners of sound recordings they publicly broadcast. And unlike
interactive music services, these platforms may negotiate directly with owners of the sound
recordings, but they need not do so. Rather, non-interactive digital music services may take
advantage of the compulsory license mechanism provided for in §§ 114 and 801 of the Copyright
Act, which allows broadcasters to legally play an artist’s music without his or her permission so
long as the service pays a reasonable royalty rate as determined by the Copyright Royalty Board
(CRB). In determining this “reasonable royalty rate,” however, the CRB does not treat all
platforms equally.
Generally speaking, the CRB sets rates every five years as required by the Copyright Act.
[26] Of note, the Copyright Act requires the CRB to apply a different set of standards when
establishing rates for subscription services and satellite digital audio radio services that were in
existence as of July 31, 1998 (pre-1998 services) [27] as compared to those services that came
into existence after July 31, 1998. [28]
For example, proceedings instituted to establish royalty rates for pre-1998 services are
conducted in accordance with the standards set forth in § 801(b) of the Copyright Act (801(b)
rate-setting standard). [29] In these proceedings, the CRB is required to consider the following
primary objectives in its rate-setting proceedings:
a) To maximize the availability of creative works to the public.
b) To afford the copyright owner a fair return for his or her creative work and the copyright user a
fair income under existing economic conditions.
c) To reflect the relative roles of the copyright owner and the copyright user in the product made
available to the public with respect to relative creative contribution, technological contribution,
capital investment, cost, risk, and contribution to the opening of new markets for creative
expression and media for their communication.
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d) To minimize any disruptive impact on the structure of the industries involved and on generally
prevailing industry practices. [30]
These four objectives are intended to provide the CRB a variety of factors to consider in
establishing a royalty rate that emulates what a copyright owner and service provider would
agree to in direct free-market negotiations. The objectives have been criticized, however, as
causing suppression of royalty rates such that owners of sound recordings are prevented from
receiving a truly fair market royalty payment in consideration for the use of their music.
In particular, critics of the 801(b) rate-setting standard have pointed to the CRB’s
consideration of the “disruptive impact” factor as unfairly suppressing implementation of a truly
fair market royalty rate. In one such proceeding, for example, the CRB determined that a fair
market royalty rate for non-interactive subscription services would be approximately “13% on a
percentage of subscriber revenue basis,” but ultimately ordered payment of between 6 and 8
percent of revenue because payment of a royalty rate at the 13 percent market rate would be too
“disruptive” given SiriusXM’s current financial condition. [31] As a result, the recording
industry has taken issue with the CRB implementing a royalty rate that is approximately half of
what was acknowledged to be the fair market rate.
In contrast, proceedings instituted to establish royalty rates for all other services are
conducted in accordance with a willing buyer/willing seller standard, which imposes upon the
CRB an obligation to set rates “that most clearly represent the rates and terms that would have
been negotiated in the marketplace between a willing buyer and a willing seller.” [32] This
standard (willing buyer/willing seller standard) requires the CRB to base its determinations on
“economic, competitive and programming information presented by the parties,” including:
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Whether use of the service may substitute for or may promote the sales of phonorecords or
otherwise may interfere with or may enhance the sound recording copyright owner’s other
streams of revenue from its sound recordings; And
The relative roles of the copyright owner and the transmitting entity in the copyrighted work and
the service made available to the public with respect to relative creative contribution,
technological contribution, capital investment, cost, and risk. [33]
Because most digital music services have come into existence after July 31, 1998, the willing
buyer/willing seller standard is utilized in rate-setting proceedings for most digital platforms in
existence today, including
Pandora. [34]
Advocates of this standard argue that it most accurately replicates the royalty rate that
would be agreed to in the open market. Others argue, however, that this standard is flawed, but
for wholly different reasons. For example, music services subject to the willing buyer/willing
seller standard argue that it results in unreasonably high royalty rates and should be replaced
with the 801(b) rate-setting standard. [35]
Many on the recording industry side of this coin, however, argue that even the willing
buyer/willing seller standard does not go far enough in allowing for a truly fair market royalty
rate, and advocate for complete eradication of the compulsory license scheme so that every
service platform is required to engage in direct negotiations with the artists and labels in the
same manner as interactive music services. Jay Rosenthal, a partner at Mitchell Silberberg &
Knupp and a former general counsel for the National Music Publishers’ Association and the
Recording Artists’ Coalition, says:
In hindsight, there might never have been any need for establishing rate-setting preferences like
the 801(b) rate-setting standards. And in any event, at this point, the Googles and other online
services are doing fine. They don’t need any more help. In today’s online environment, it is the
author and owner of music that is the aggrieved party. And there is no longer any justification to
allow their property rights to be devalued in a way that threatens their professional existence.
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For the time being, however, substantially different rate-setting standards are applied when
determining what amount of royalties, if any, will be paid to the performers and owners of sound
recordings when their music is publicly transmitted.
PRIOR LEGISLATIVE ATTEMPTS TO ESTABLISH PLATFORM PARITY
The FPFPA is not the first congressional attempt to bring parity to the treatment of sound
recordings. Prior iterations of the bill were submitted to the House, but never became law. In
2009, for example, the Performance Rights Act was introduced with music industry support in an
attempt to secure terrestrial radio royalties. [36] The bill recognized the need to properly
compensate creators of sound recordings under a direct licensing mechanism for the public
performance of their music. [37] In hearings held before the Senate Judiciary Committee
concerning the Performance Rights Act, a number of artists voiced their support for the bill.
Among them was Grammy-nominated artist Sheila E., a former national trustee of the Recording
Academy, who testified that “being paid for one’s work is a basic American right. Whether your
workplace is an office, a classroom, a factory, or a recording studio, every American worker
deserves to be compensated for his or her labor. And any business that profits from another’s
work should share some of that profit.” [38] In 2013, the Free Market Royalty Act was presented
in a similar attempt to provide a public performance right for all audio transmissions of sound
recordings, which would have required terrestrial radio stations to pay royalties for non-digital
audio transmissions. [39]
If either of the above bills had passed, a statutory mechanism would exist to compensate
recording artists, while simultaneously allowing broadcasters to negotiate rates with rights
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holders in the open market, outside of the statutory rate-setting process. [40] Both bills received
heavy criticism from broadcasters, who argued that direct licensing would arbitrarily increase
operating costs, thereby resulting in the destruction of small public radio stations. The
broadcasters also argued that a performance right in sound recordings was unnecessary because
private market deals are sufficient to resolve this issue. [41]
Most recently, the RESPECT Act of 2014 sought to provide royalty payments with
respect to pre-1972 sound recordings, but without providing them full copyright protection. [42]
This bill was referred to the House Subcommittee on Courts, Intellectual Property, and the
Internet in July 2014. No further activity has taken place with respect to this bill since that time.
THE FPFPA SEEKS TO IMPLEMENT COMPREHENSIVE REFORM
The FPFPA adopts several features of the bills that came before it, while incorporating
additional provisions intended to avoid much of the criticism suffered by its predecessors. If
passed, the FPFPA will resolve several parity issues affecting the public performance of sound
recordings in one comprehensive act.
Establishing a Terrestrial Public Performance Right for Sound Recordings
One of the primary objectives of the FPFPA is to eliminate the distinction between
terrestrial and digital radio transmissions in such a manner that all broadcasters would be
required to pay for their public performance of sound recordings. As discussed above, satellite,
cable, and Internet radio services are currently required to pay a public performance royalty for
their use of sound recordings, while traditional terrestrial radio broadcasters pay nothing.
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Section 2 of the bill, aptly titled “Equitable Treatment for Terrestrial Broadcasts and
Internet Services,” amends the Copyright Act to eliminate language contained within § 106
limiting this right to digital audio transmissions. Specifically, the bill does so by redefining
“audio transmission” to include the transmission of any sound recording, regardless of its audio
format. The bill also strikes references to “digital audio transmissions” found in §§ 106(6) and
114(d)(1) of the Act, so as to provide for a much broader and unlimited right in the public
performance of sound recordings by means of any “audio transmission.” Thus, if the FPFPA is
passed, terrestrial broadcast radio stations will be required to pay royalties for both digital and
non-digital transmissions of copyrighted sound recordings.
Providing Payment for the Public Performance Royalties of Pre-1972 Sound Recordings
Another purpose behind the FPFPA is to create an avenue by which owners of pre-1972
sound recordings are compensated for the public performance of their recordings. Section 7 of
the FPFPA, titled “Equitable Treatment of Legacy Sound Recordings,” would amend § 114(f)(3)
of the Copyright Act by adding the following language at the end of the provision:
Any person publicly performing sound recordings protected under this title by means of
transmissions under a statutory license under this section, or making reproductions of such sound
recordings under section 112(e), shall make royalty payments for transmissions that person
makes of sound recordings that were fixed before February 15, 1972, and reproductions that
person makes of those sound recordings under the circumstances described in section 112(e)(1),
in the same manner as such person does for sound recordings that are protected under this title.
The bill also preempts equivalent state law claims emanating from the use of pre-1972
sound recordings in ephemeral recordings establishes a civil right of action that may be pursued
by those whose recordings are used without compensation. This provides a substantial benefit to
the owners of some of the most prolific and valuable recordings of the twenty-first century,
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including Elvis Presley, the Rolling Stones, and the Beatles. In addition, this amendment would
help subsidize income for many legacy acts that are otherwise receiving very little income
presently.
The FPFPA stops short, however, of conferring actual copyright protection over pre-1972
sound recordings. Consistent with § 301 of the Copyright Act, the bill reaffirms the rights of
recording artists and record labels to maintain state law claims in order to protect all other rights
to their sound recordings.
Establishing Consistent Rate-Setting Standards for the Public Performance of Sound
Recordings
Central to the FPFPA is the elimination of the disparate standards applied by the CRB
when setting royalty rates. To level the playing field across various music platforms, section 4 of
the FPFPA removes the § 801(b) rate-setting standard currently used to determine royalty rates
for pre-1998 services, and replaces this standard with the willing buyer/willing seller standard.
[43] When considered alongside its implementation of a terrestrial public performance right, the
FPFPA would amend the Copyright Act to allow the CRB to apply the willing buyer/willing
seller standard in all proceedings where a compulsory rate is being established for a public
performance of sound recordings, regardless of the platform in which the performance is being
transmitted. [44]
The FPFPA would also extend the practice of “minimum fees,” which digital music
services pay for all broadcast services. Under the current statutory requirements, an annual
minimum fee—$500 per station or channel and with a maximum of $50,000 per year—is paid by
digital audio services like SiriusXM and iHeart Radio to record labels and recording artists for
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public performance rights. [45] These minimum fees would be determined “based on criteria
including the quantity and nature of the use of sound recordings and the degree to which use of
the service may substitute for or may promote the purchase of [records] by consumers.” [46]
Providing for Direct Royalty Payments to Producers and Others
Another component of the FPFPA is to secure payment rights for producers, mixers,
engineers, and those who participate in production of sound recordings, but who do not
themselves hold an ownership interest in the recording’s copyright. Section 9 of the bill requires
implementation of a policy that will allow producers and others involved in the creative process
to submit letters of direction to third-party collection societies (e.g., Sound Exchange) that would
entitle these individuals to receive their royalty payments directly from the collection society.
This amendment would make it unnecessary for producers to continually monitor receipt
of payments from the artists and labels, and provide an alternative revenue stream while
production imbursement continues to sink, a problem faced by music producers just as much as
recording artists and labels. According to Andrew Brightman, whose Brightman Music
management company represents a number of producers and engineers, “as producer fees decline
and record sale royalties become almost nonexistent, the payment of master performance income
is more vital than ever. For American producers to stay competitive with their foreign
contemporaries and to continue to attract top talent to their ranks—this income is a necessity.”
Protecting Small Broadcasters, Public and Educational Radio
A primary argument raised in opposition to the Free Market Royalty Act was that
requiring terrestrial broadcasters to pay a public performance royalty for use of sound recordings
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would be cost-prohibitive for local, public radio stations, which would be unable to afford this
additional, substantial operating expense, and could be forced to shut down. [47]
The FPFPA seeks to address this issue by placing specific limits on the royalty rate
charged to small broadcasters, public and educational radio, and religious services. Specifically,
section 5 of the bill incorporates the following protections into § 114(f)(1) of the Copyright Act:
Notwithstanding the provisions of subparagraphs (A) through (C), the royalty rate for nonsubscription broadcast transmissions by each individual terrestrial broadcast station licensed as
such by the Federal Communications Commission that is not a public broadcasting entity as
defined in section 118(f) and that has revenues in any calendar year of less than $1,000,000 shall
be $500 per year for any such year. For purposes of such determination, such revenues shall
include all revenues from the operation of the station, calculated in accordance with generally
accepted accounting principles in the United States. In the case of affiliated broadcast stations,
revenues shall be allocated reasonably to individual stations associated with those revenues.
Similarly, the royalty rate charged to college radio stations and public broadcasters would be set
at $100 per year, and religious services would be completely exempt from paying any royalty
whatsoever.
According to the bill’s sponsor, this clause is intended to prevent “large radio
conglomerates” from hiding behind “truly smaller and public stations.” [48] Indeed, this is a step
toward striking a balance between the interests of recording artists being paid for use of their
content and small broadcasters being able to remain in business.
Preclude Harmful Impact on Songwriter Royalties
Finally, the FPFPA prohibits parties from using newly designated license fees paid on
account of sound recordings as a basis to lower public performance royalties payable to
songwriters for use of their compositions. Section 8 of the bill states:
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License fees payable for the public performance of sound recordings . . . shall not be cited, taken
into account, or otherwise used in any administrative, judicial, or other governmental forum or
proceeding . . . to set or adjust the license fees payable to copyright owners of musical works or
their representatives for the public performance of their works, for the purpose of reducing or
adversely affecting such license fees. [49]
ADVOCACY IN SUPPORT OF THE FPFPA
Supporters of the FPFPA believe that the bill addresses longstanding equity issues that
broadcasters have circumvented for decades. SAG-AFTRA President Ken Howard has said that
the FPFPA brings music licensing for sound recordings into the 21st century. AM/FM stations
will finally pay royalties on the sound recordings they broadcast. Right now, performers receive
nothing—no royalties at all—for use of their recordings on AM/FM radio. This is something our
members, including the late and great “Chairman of the Board” Frank Sinatra, have fought for
decades to establish. [50]
“Performers like Bing Crosby and Frank Sinatra pushed for artist compensation from
radio in the ’40s and ’50s,” noted Daryl P. Friedman of the Recording Academy. “More attention
has been focused on the issue recently because digital delivery systems, such as streaming
services, do compensate performers, leaving AM/FM radio as the only holdout, and the U.S. the
only remaining country in the developed world without this right.” [51]
Neil Portnow, president and CEO of the Recording Academy, sees the bill as a remedy to
the age-old property issues resulting from a lack of performance rights by artists. According to
Portnow, “terrestrial radio is the only industry in America that is built on using another’s
intellectual property without permission or compensation.” [52] Portnow believes that opponents
of the FPFPA, including the National Association of Broadcasters (NAB), have crafted a number
of myths in an effort to promote broadcasters’ interests—the greatest of myths being that the
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promotional support provided to artists by radio broadcasters creates a “symbiotic relationship”
between the artists and the radio industry. According to Portnow:
Even by the NAB’s own (dubious) study, the benefit to radio outpaces the benefit to artists by 10
to 1. And any promotional effect would be taken into account by the rate-setting body. Internet
and satellite radio also provide promotion, but pay a royalty. Further, a GAO study found “no
consistent pattern between the cumulative broadcast radio airplay and the cumulative number of
digital single sales.” Even Clear Channel CEO Bob Pittman admitted that, “clearly [promotion] is
not enough, or there wouldn't be a decades-long battle over [performance royalties].” [53]
ADVOCACY IN OPPOSITION TO THE FPFPA
Although its sponsors sought to preempt a number of arguments in opposition to the bill,
the FPFPA is not without its challengers. Opponents of the FPFPA continue to take issue with
the financial burden the law would have on the broadcasting industry, arguing that payment of a
“performance” fee or tax will detrimentally impact local and public radio stations. [54] Dennis
Wharton, executive vice president of communications at the NAB, has made clear: “Radio
stations, especially in mid-to-smaller markets, operate with very thin profit margins. Imposing a
performance fee on them could force them to lay off employees or otherwise downsize their
operations in order to afford paying new fees.” [55] According to Wharton, “Policymakers are
smart enough to know that assessing hundreds of millions of dollars in new fees against radio
stations would kill jobs, hurt local commerce, and force music-playing radio stations to consider
switching to all-talk formats.” [56]
In response to the FPFPA’s specific attempt to cap the royalties that would be paid by
small and local radio stations, the bill’s opponents argue that the bill draws an “arbitrary line”
between “small” and “not-small” broadcasters “at $1 million in annual revenues [that] . . .
disincentive[s] these stations to grow and earn annual revenues that would trigger higher
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performance taxes.” [57] Thus, these small stations remain at risk—perhaps not a risk of being
shut down, but rather a risk of being prevented from growing.
Generally speaking, opponents view the FPFPA and bills that preceded it as an effort to
recoup earnings lost due to a decline in music sales. “Record labels have seen a steep drop in
their revenues since their heyday and they want to make that up by instituting a performance fee
on broadcasters,” said Wharton. “What the record labels are failing to grasp is that imposing a
performance royalty on radio stations will make it harder for the public to hear artists,” he added.
“The Fair Play, Fair Pay Act would do little to help the musicians that are truly struggling. Under
the bill, 50% of royalties from radio stations would go to the records labels, 45% would go to
millionaire artists like Katy Perry and Justin Timberlake, and the scraps would go to the
‘struggling artists.’” [58]
Broadcasters contend that a performance royalty fee would effectively force them to
subsidize the recording industry. [59] In response, representatives of recording artists and record
labels argue that they are the ones that have been subsidizing the broadcast radio industry for
years, because they have been prohibited from exercising their property rights. [60]
Opponents of the bill also point to differences between terrestrial radio and digital radio:
(1) terrestrial radio has a longstanding relationship with the recording industry spanning decades,
while digital audio services do not; (2) sound quality of terrestrial radio is worse than digital
audio services; and (3) interactivity with terrestrial radio does not exist. Because of the lack of
options, terrestrial audio supporters argue they should not have to pay a premium “performance
tax.” [61] What is the answer? According to Wharton:
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We believe the private marketplace should be where a solution is found. Broadcasters are already
working towards that. In the past few years, some broadcasters such as iHeartMedia, Entercom
and Beasley have reached agreements with record labels to pay a performance royalty in
exchange for reduced streaming rates. This is a solution that we believe works best rather than
impose government intervention. A better rate structure would make streaming profitable and
encourage more radio stations to stream, which in turn would help expose more artists to more
listeners, and generate more revenues for the record industry. [62]
WHAT DOES THE FUTURE HOLD FOR THE FPFPA IN CONGRESS?
Jay Rosenthal explains that while efforts to pass the FPFPA, the Songwriter Equity Act
(which is strongly supported by the songwriter and music publishing community, and the
National Music Publishers Association), or any of the numerous bills aimed at enhancing the
value of the property owned by the authors or their distribution companies, may seem misplaced
in the era of big government gridlock, these efforts are essential as placeholders and constant
reminders that there is no longer any justification to offer special assistance to online or wireless
distributors of music.
Nevertheless, Congress has steadfastly refused to implement a system of parity to protect
those who create and perform music, and do away with antiquated distinctions in the treatment
of digital and terrestrial transmissions. When first confronted with this issue in the 1990s, [63]
the Senate reasoned that analog over-the-air stations should be excluded from protection because
“the sale of many sound recordings and the careers of many performers have benefitted
considerably from airplay and other promotional activities provided by both noncommercial and
advertiser-supported, free over-the-air broadcasting.” [64] The “symbiotic relationship” between
terrestrial radio and recording industries is something to be preserved in its current state. [65]
Thus, in passing the DMCA, Congress required only digital radio, and not analog transmissions,
to pay a public performance royalty. [66]
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Of course, the robust and resilient lobbying efforts of the broadcasting industry help
assure that their interests are protected on Capitol Hill. According to the Center for Responsive
Politics, last year alone, the NAB spent $18.4 million in lobbying efforts, compared with less
than $500,000 by the Recording Academy. [67] Even in considering the lobbying efforts of other
music industry groups (in 2014, the RIAA spent $4.14 million, UMG spent nearly $3 million,
and Sony spent $1.2 million), the NAB alone outspent the combined efforts of the recording
industry by a ratio of more than 2 to 1. And this does not account for substantial lobbying efforts
of other broadcasting groups, including CBS ($4.97 million in 2014) and iHeartMedia ($4.4
million in 2014). [68]
As part of the broadcast industry’s lobbying efforts, the Local Radio Freedom Act [69]
was introduced in February 2013. This bill calls for Congress to refrain from imposing “any new
performance fee, tax, royalty, or other charge related to the public performance of sound
recordings on a local radio station for broadcasting sound recordings over the air, or on any
business for such public performance of sound recordings.” [70] This blanket resolution to
eliminate broadcast fees has been defeated in the past but it currently has over 200 cosponsors.
The FPFPA was introduced in April 2015. Given the substantial support received thus far
in Congress for the Local Radio Freedom Act, which is essentially the antithesis of the FPFPA,
expect that the FPFPA will have an uphill battle in its journey through the legislature. Says
Rosenthal:
The powers lined up against the authors and owners of copyright are immense, but slowly these
bills gain more sponsors and supporters on Capitol Hill. And that is the important thing. It might
still take many years—and it is certainly doubtful that any of the bills will pass in an election
year. But the effort should still continue, and full support should be given to those organizations
and authors who commit their time and resources to this incredibly important fight for copyright.
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Daraprim and the Pharmaceutical Pricing Paradox
A Broken System?
By Franklin Liu
INTRODUCTION
On August 10, 2015, at a cost of $55 million, Turing Pharmaceuticals acquired the
exclusive U.S. marketing rights to Daraprim, a drug that treats toxoplasmosis (a life-threatening
parasitic infection), from Impax Laboratories. [1] Just a few weeks after the acquisition, Turing
announced that, effective immediately, the price of Daraprim would be raised from $13.50 a
tablet to $750 a tablet, an increase of over 5,500 percent. [2] The overnight price spike has
generated considerable censure from healthcare professionals, politicians and the general public.
[3] Yet, Turing Pharmaceuticals is not the only company in recent months to substantially
increase the price of one of its brand-name drugs. Just nine days after Turing’s acquisition of
Daraprim, Rodelis Therapeutics announced its acquisition of Cycloserine, a drug used to treat
tuberculosis, and subsequently raised the price for 30 capsules of the drug from $500 to $10,800.
[4] While public pressure has since forced the price of Cycloserine to be scaled back to $1,050,
Turing and Rodelis have shown that pharmaceutical companies can realize substantial upside by
targeting old, neglected drugs (often for rare diseases) and refashioning them into high-priced
specialty drugs. [5]
In a recent study by the American Association of Retired Persons (AARP), the average
prices for brand-name prescription drugs were found to have increased by an average of 13
percent in 2013, compared to the inflation rate the year of just 1.5 percent. [6] The Daraprim and
Cycloserine cases, while extreme illustrations, depict a broader trend of increasing U.S. drug and
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health care costs to patients. [7] The two manufacturers’ pricing decisions illustrate a
longstanding tension in the pharmaceutical industry between the need for firms to recoup the
high costs associated with bringing drugs to market and keeping drugs affordable for consumers.
To date, neither Turing nor Rodelis faces any lawsuits tied to their pricing decisions for
Daraprim and Cycloserine respectively. However, given what has transpired with Daraprim and
Cycloserine, and the need to keep drug and health care costs down, perhaps action should be
taken to deter future price spikes on brand-name drugs. That is, under these circumstances,
should the government intervene to curb the considerable price-making power that
pharmaceutical companies possess in order to better serve the patients who rely on their brandname drugs and society at large?
I. BACKGROUND
Originally approved by the Food and Drug Administration (FDA) in 1953, Daraprim was
made by GlaxoSmithKline (GSK) until it was sold in October 2010 to CorePharma, a maker of
generic pharmaceuticals. [8] In October 2014, Impax Laboratories acquired Daraprim through its
$700 million purchase of Tower Holdings and several of its operating subsidiaries, which
included CorePharma. [9] Less than a year later, Impax Laboratories sold Daraprim’s exclusive
U.S. marketing rights to Turing Pharmaceuticals in a deal announced in August 2015. [10] Prior
to 2010, Daraprim cost only $1 a tablet, but, citing the need to turn a profit, CorePharma raised
the tablet’s price significantly upon its acquisition from GSK. [11]
In a joint letter dated September 8, 2015 and addressed to Turing Pharmaceuticals from
the Infectious Disease Society of America (IDSA) and the HIV Medicine Association (HIVMA),
the senders noted that the increase in the price of Daraprim would result in an average bill for a
toxoplasmosis patient weighing 132 pounds of $634,500 per year. [12] With such high prices,
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and few viable alternative treatments to Daraprim, some posit that hospitals may find it too
expensive to keep Daraprim in stock, which could lead to delays in treatment. [13]
In response to the public outcry and excoriation, Martin Shkreli, Founder and CEO of
Turing Pharmaceuticals, defended the 5,500 percent price increase stating that the company
needed to turn a profit on the drug in order to modernize Daraprim (a 62 year old drug) and
create new alternatives to Daraprim with fewer side effects. [14] While the exclusivity period
prohibiting competitors from making or selling Daraprim has long since expired, there are
currently no generic alternatives.
Perhaps the biggest reason for the absence of generic
alternatives is the fact that toxoplasmosis is a relatively rare condition, with only 8,821
prescriptions having being filled in the U.S. in 2014. [15] Furthermore, ever since Daraprim
belonged to Impax Laboratories, its distribution has been tightly controlled. This means that
companies wishing to create a generic version of Daraprim face considerable difficulty in
gaining access to the samples they need for testing and developing such a generic. [16] While the
higher price of Daraprim should entice manufacturers to develop a generic competitor to
Daraprim, the limited patient market (and diminutive profits at stake) may discourage potential
entrants who are unable to justify the high costs associated with marketing a generic.
Justifications for the High Cost of Brand-Name Drugs
There are several reasons that help to explain why brand-name drugs are so expensive.
One reason is that brand-name drug companies have a first-mover advantage in the
pharmaceutical market. As in other markets, firms that are first-movers benefit by entering a
market with no other direct competitors (by definition). Without having to worry about the
behavior and pricing decisions of other firms, the first entrant is able to set prices, establish
control of the market and have their name and brand associated with the product category (e.g.
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Kleenex, Xerox, and Post-It). Thus, even if and when other firms enter the market, consumers
may prefer to keep purchasing the first-mover’s product rather than switch to an alternative, even
if the alternative is cheaper, due to their familiarity with the first mover’s product. Unlike many
other industries however, the legal system rewards pharmaceutical companies for their
innovative efforts with patents and exclusivity periods. Within the realm of brand-name drugs,
government regulations effectively prohibit other firms from producing generic forms of the
brand-name drug for a specified period of time. [17] Thus, a successful brand-name drug
producer gains not only first-mover advantages, such as consumer loyalty and brand recognition,
but a limited monopoly for a period of years guaranteed by the U.S. government.
II. REGULATION OF THE PHARMACEUTICAL INDUSTRY
The Unique Challenges of the Pharmaceutical Industry
Similar to the airline and petroleum industries, the pharmaceutical industry is
characterized by high entry costs (sometimes referred to as “barriers to entry”), which severely
limit the number of firms which are able to effectively compete in the industry. According to one
report from the Tufts Center for the Study of Drug Development released in 2014, the cost of
bringing a drug to market from the point of inception can reach as high as $2.8 billion. [18]
Given the enormous costs associated with pharmaceutical research and development, and the
need to encourage drug development as a matter of good public health and public policy, the
U.S. government provides regulatory protections to assist pharmaceutical firms. [19] The
regulations are specifically designed to help firms recoup the costs of their high-value, high-cost
investments and bring more novel drugs to market, especially for rarer diseases which are not as
profitable as drugs which treat more common afflictions. [20]
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III. REGULATION OF THE PHARMACEUTICAL INDUSTRY
The U.S. Food and Drug Administration (FDA) is a federal agency within the United
States that is tasked with “protecting the public health by assuring the safety, efficacy and
security of human and veterinary drugs, biological products, medical devices, our nation’s food
supply, cosmetics, and products that emit radiation.” [21]
Overview of the FDA’s Approval Process for Brand-Name Drugs
With respect to human drugs, the FDA has two distinct approval processes, one for new
drugs, and a separate, shorter process for generics. For new drugs, drug companies must first file
an Investigational New Drug (IND) application for their specific drug candidate. [22] The IND
must include data on the safety and efficacy of the candidate, which means that firms must have
completed substantial testing both in the laboratory and on animal subjects prior to the filing of
the IND. [23] The FDA reviews the IND in order to ensure that there is sufficient data to support
the drug candidate moving forward to clinical trials on human subjects. [24] If the FDA is
satisfied with the data in the IND, the drug candidate is put through four phases of clinical trials
with each phase designed to gather specific data on the safety and efficacy of the drugs. [25] As
the drug advances through the phases, the study is scaled up with an increasing number of
participants in each phase. [26] Upon completion of the four clinical phases, the applicant will
meet with the FDA to review the results before filing a New Drug Application (NDA), which
summarizes the findings to date. [27] If the NDA passes FDA review and is approved, the drug
progresses to the two final stages, labeling (to ensure the appropriate information is included on
the package) and an inspection of the facility in which the drug candidate will be manufactured.
[28]
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Overview of the FDA’s Approval Process for Generics
By contrast, the approval process for generic forms of brand-name drugs, often referred
to simply as “generics,” is not nearly as extensive or lengthy. However, an application to market
a generic may not be filed until the exclusivity period of the brand-name drug has expired. [29]
The length of various exclusivity periods depends on the classification of the brand-name drug
and is set out in the New Drug Product Exclusivity provision of the Code of Federal Regulations
(CFR). [30] As an example, brand-name drugs which represent new chemical entities (NCE) are
granted a five year exclusivity period, meaning a company wishing to market a generic may not
even begin the FDA approval process for generics until five years after the date the FDA
approves the brand-name drug’s NDA. [31]
For companies wishing to market a generic, the first step involves filing an Abbreviated
New Drug Application (ANDA). [32] As its name would suggest, the ANDA is a truncated
version of the IND process. In an ANDA, the applicant is only required to demonstrate that the
generic produces the same results as the brand-name drug in the human body (a characteristic
known as “bioequivalence”). [33] A generic applicant need not include any data gathered from
animal studies or clinical (human) studies as such data would be largely duplicative of the brandname drug developer’s efforts. [34] Because of the abbreviated process for generics, companies
creating generics incur far lower research and development costs, which allow generics to sell
for far lower prices than the brand-name drug. The existence of generics in a market can
therefore be a strong agent for change, inducing brand-name drug companies to lower the price
of their drug or risk facing reduced sales and profits. In this way, generics can act as a deterrent
and a check on brand-name drug companies to keep them from increasing the prices they charge
without justification.
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IV. PROPOSED SOLUTIONS
Keeping drug costs affordable is an essential and desirable outcome for patients, drug
companies, health care providers, insurance companies, and the government. Unlike other
consumer products such as books or televisions, prescription drugs are price inelastic goods,
which means that changes in their price (in either direction) will not significantly affect the
likelihood that consumers will purchase them. [35] Put differently, because of the life-extending
nature of the goods they are selling, pharmaceutical companies are able to increase their drug
prices without having to worry about a significant drop in consumer demand, which would
ordinarily result for most goods. This characteristic of prescription drugs is a crucial one and
should inform the way policymakers create solutions to limit the occurrence of future cases like
Daraprim. Consequently, many of the proposed solutions that follow herein focus on increasing
competition for brand-name drugs in order to attenuate a pharmaceutical company’s price-setting
power rather than on affecting the demand for a particular therapeutic class of drugs.
Federal Level Reforms
One logical starting point in the fight against high-priced brand-name drugs would be to
revise the FDA regulations themselves. [36] According to an estimate from the Manhattan
Institute for Policy Research, the value in bringing one generation of new drugs to market one
year faster in the United States is approximately $4 trillion, as measured by the increase in life
expectancy. [37] To that end, the FDA could modify the reward structure under which
pharmaceutical companies are permitted to benefit for their innovative efforts by shortening
exclusivity periods. In doing so, generics could more quickly reach the marketplace, providing a
valuable lower-cost alternative for consumers. However, tweaking the exclusivity term may, in
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some cases, diminish the brand-name manufacturer’s incentive to invest in research and at worst,
altogether eliminate their incentive to pursue the development of a brand-name drug in the first
place.
An alternative to modifying the exclusivity provisions would be to encourage the
development of generics and increase the pace in which they are able to reach the market. [38]
Targeted reforms to the ANDA regulations could incentivize manufacturers to develop generics
and a more efficient FDA review process of ANDA submissions would allow for more timely
approvals. [39] However, simplifying or expediting an already abbreviated process may
negatively impact the quality of the generic, which would increase the risk of harm to the public
and even hurt the reputation of the brand-name drug’s safety and efficacy. [40] Indeed, a number
of generic drugs were recalled in 2013 for noncompliance with FDA manufacturing standards,
prompting Congress to instruct the Office of Inspector General (OIG) to review and evaluate the
FDA’s oversight of generic drug manufacturers. [41]
Alternatively, a combination of the two reforms described above may prove to be a better
approach. Even if the prices of brand-name drugs are brought down, generic manufacturers may
need additional incentive to create a generic considering the diminution in profit motive. The
IND/NDA process for brand-name drugs could similarly be streamlined in an effort to reduce the
research and development cost burden.
Such a measure would still suffer from the same
drawbacks and arguably be even riskier than facilitating the ANDA process however, since
generics rely on the rigorous testing brand-name drugs undergo as part of their development.
Thus, however well-intentioned any reforms to FDA regulations may be in their efforts to
curb rising drug costs, policymakers must strike a balance between providing economic
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incentives for pharmaceutical companies on the one hand and not unduly diminish their
willingness to invest in drug research in an effort to obtain those incentives on the other.
State Transparency Legislation
At the state level, several jurisdictions have proposed bills that would require
pharmaceutical companies to provide greater detail and justification for the prices they are
charging. [42] The bills aim to put greater pressure on pharmaceutical companies to be
transparent in disclosing their costs of drug development and in so doing, force them to defend
and justify their pricing decisions to the public. [43] Among other provisions, several bills would
require disclosures on the manufacturing, marketing, and advertising costs for a drug, in addition
to research and development costs. [44] Under one proposal in Pennsylvania, insurers would
reserve the power to refuse to pay for a drug if the manufacturer fails to file the requisite
disclosures. [45] In Massachusetts, a state commission would be created with the authority to
step in and set price ceilings if they have reason to believe that a drug’s price is disproportionate
to its benefits in light of its costs and its price in other countries. [46] To date, six states
(California, Massachusetts, New York, North Carolina, Oregon, and Pennsylvania) have
pharmaceutical cost transparency bills at various stages in their legislatures. [47]
The state transparency bills represent a good-faith effort to curb the costs of brand-name
drugs, but are not without their drawbacks. [48] First, the bills do not account for other values
drugs have to our society, such as the benefits drugs convey by keeping people easily treated
with drugs out of the hospital and freeing up scarce medical resources for others. Economically,
such an outcome is desirable from a resource allocation standpoint. Furthermore, the bills also
do not give any weight to the sunk costs associated with the drugs that never make it to market
(the vast majority), which pharmaceutical companies must recoup in order to remain profitable.
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Finally, pharmaceutical companies may argue that the cost of complying with such transparency
bills would be unreasonably high, and as a result, they may be incentivized to pass the cost on to
consumers, which would undermine the bill’s intention.
To date, the proposed transparency bills have received little traction within their state
legislatures and most remain in the initial stages of deliberation. [49]
The “Value Framework”
A different approach takes advantage of the power and responsibility doctors hold in
informing their patients as to the entire menu of available therapeutic alternatives. [50] A
proposal by the American Society of Clinical Oncology (ASCO) dubbed the “value framework”
would ask doctors to discuss not only the medicinal properties of the different drugs patients may
choose, but the costs of those treatments as well. [51] The value framework would consider not
only the private cost to the patient of the treatment, but also the overall cost a drug imposes on
the health system. [52] While asking doctors to become resource allocators is admittedly
controversial, the authors of the study believe that giving patients important information on costs
will allow them to make better individual decisions, especially if the costs of a course of
treatment are disproportionately high compared to the treatment’s benefit to the patient. [53]
In an economic sense, such a proposal finds strong support in the concept of
informational asymmetry, which holds that transactions in which one side has more or better
knowledge or access to information than the other side are prone to economic inefficiencies. [54]
The classic example of informational asymmetry is the so-called “Lemons Problem” where
sellers in the used car market know considerably more about the history of their vehicles than
prospective buyers. [55] With respect to helping patients make the best choice of treatment,
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doctors are presumed to have better knowledge and information about the drugs they are
prescribing and therefore, under the value framework, would have the obligation to correct that
imbalance by informing the patients as to the costs of those drugs.
More Permissive Trade Policies
Despite the fact that the United States represents one of the largest and most profitable
pharmaceutical drug markets in the world, few foreign drug manufacturers are willing to enter
the U.S. market because of the lengthy and costly FDA approval process. Notwithstanding the
economic benefits that would result from increased trade with other nations, encouraging foreign
manufacturers to enter the U.S. market is beneficial because their entry would boost the supply
of available alternatives to brand-name drugs and therefore put downward pressure on the prices
of incumbent brand-name drugs. For instance, by importing cheaper alternatives from Canada,
U.S. patients would benefit from having more options to choose from and not having to rely on a
single drug for their treatment.
In recognizing the importance for Americans to have access to foreign-made drug
products, the FDA has recently instituted a Globalization Initiative to ensure imported drugs are
as safe and effective as products made in the United States. [56] In practice, globalization in the
area of pharmaceutical drugs is an incredibly lofty and difficult goal, not least owing to the fact
each country has a unique set of relevant standards which necessarily results in countless
discrepancies and variations amongst these regulations worldwide. One solution, which the FDA
is considering, would be to account for, reconcile and ultimate harmonize the standards of each
country into one universal drug recognition system. [57] Such a unified system would
considerably reduce the regulatory burden on foreign manufacturers and the FDA alike and may
work to increase the volume of foreign-made drug imports into the U.S. market. Even with such
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a harmonized system, foreign manufacturers with FDA approval for their drugs may nevertheless
find it difficult to gain market share and traction amongst U.S. consumers who are unfamiliar
with their company and products.
VI. CONCLUSION
There is little doubt that pharmaceutical companies (domestic and foreign) seeking to
market drugs in the United States operate in an extremely challenging environment, a world
shaped in part by the lengthy and expensive regulatory approval process imposed by the FDA.
Choosing which diseases to develop therapies for is often a decision based as much on societal
need as on the profitability and the patentability of a compound. However, despite the difficulties
faced by pharmaceutical companies, the Daraprim and Cycloserine cases clearly demonstrate the
extent to which pharmaceutical companies are willing to go to pad their bottom line. Hiding
behind the FDA licensing scheme, pharmaceutical companies can exploit the life-saving nature
of their products and capitalize on a vulnerable segment of the population by demanding
unconscionably high prices for their products.
A variety of potential solutions have been
proposed to help combat the monotonic increase in drug and health care costs, including
revisions to the FDA regulations for drugs, state transparency bills, the implementation of a
value framework by doctors, and more permissive trade policies. Ultimately however, the most
effective strategies will be those that incentivize the entry of viable alternatives to brand-name
drugs into the U.S. market.
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ENDNOTES
[1]. Hatch-Waxman Act - Reverse-Payment Settlements - Ftc v. Actavis, Inc., 127 Harv. L. Rev. 358 (2013).
[2]. F.T.C. v. Actavis, Inc., 133 S. Ct. 2223, 2227 (2013).
[3]. Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 98-417, 98 Stat. 1585 .
[4]. F.T.C. v. Actavis, Inc., 133 S. Ct. 2223, 2223 (2013) (hereinafter “Actavis”).
[5]. Id.
[6]. Id.
[7]. Id. at 2229.
[8]. 21 U.S.C. § 355(j)(2)(A)(vii)(IV).
[9]. Actavis, 133 S. Ct. at 2229.
[10]. Id.
[11]. 15 U.S.C § 45(a)(1).
[12]. Actavis, 133 S. Ct. at 2230; see FTC Act cite.
[13]. Id at 2223.
[14]. Id at 2237.
[15]. Id at 2225.
[16]. Id. at 2226.
[17]. Id at 2234 citing 146 Cong. Rec. 18774 (2000).
[18]. Actavis, 133 S. Ct. at 2229.
[19]. Id at 2234.
[20]. Hemphil, Paying for Delay: Pharmaceutical Patent Settlement as a Regulatory Design Problem, 81 N.Y.U.
L.Rev. 1553, 1579 (2006).
[21]. Actavis, 133 S. Ct. at 2234.
[22]. Id at 2234-35.
[23]. Id at 2234.
[24]. Id.
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[25]. Id at 2235-36.
[26]. Id at 2236.
[27]. Id.
[28]. Id.
[29]. Id.
[30]. Id.
[31]. Id.
[32]. Id. at 2237.
[33]. Id.
[34]. Id.
[35]. See id. at 2223-37.
[36]. See id.
[37]. Andrew E. Podgorny, Supporting the Rationale Behind the Hatch-Waxman Act and Patent Law: How Reverse
Payment Settlements Under Ftc v. Actavis, Inc. Can Be Procompetitive, 12 Ind. Health L. Rev. 423, 426 (2015).
[38]. Id.
[39]. Kyle Virtue, Ftc v. Actavis: Analysis of the Court's Decision and How It Affects Drug Prices for Those Who
Need Them the Most, 21 Wash. & Lee J. Civil Rts. & Soc. Just. 121, 124-25 (2014).
[40]. Actavis, 133 S. Ct. at 2226.
[41]. Id.
[42]. Andrew E. Podgorny, supra at 426.
[43]. Id.
[44]. Kyle Virtue, supra at 122.
[45]. Ralph B. Kalfayan & Vic A. Merjanian, Ensuring Access to Affordable Medication: The Supreme Court's
Opinion in F.T.C. v. Actavis, Inc., 22 Competition: J. Anti. & Unfair Comp. L. Sec. St. B. Cal. 120, 120 (2013).
[46] Adam Sneed, White House to unveil broadband report, POLITICO (Sept. 21, 2015 10:00 AM),
http://www.politico.com/tipsheets/morning-tech/2015/09/2015-09-21-pro-morning-tech-210309
[47] Broadband Opportunity Council, Broadband Opportunity Council Report and Recommendations, THE WHITE
HOUSE (Aug. 20, 2015), at *3.
https://www.whitehouse.gov/sites/default/files/broadband_opportunity_council_report_final.pdf
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[48] The White House Office of the Press Secretary, Presidential Memorandum – Expanding Broadband
Development and Adoption by Addressing Regulatory Barriers and Encouraging Investment and Training, THE
WHITE HOUSE (Mar. 23, 2015), https://www.whitehouse.gov/the-press-office/2015/03/23/presidentialmemorandum-expanding-broadband-deployment-and-adoption-addr.
[49] Council of Economic Advisers Issue Brief, Mapping The Digital Divide, THE WHITE HOUSE (July 2015),
https://www.whitehouse.gov/sites/default/files/wh_digital_divide_issue_brief.pdf
[50] See id.
[51] Jeffrey Zients, Deliving on Broadband Opportunity, THE WHITE HOUSE (Sept. 21, 2015)
https://www.whitehouse.gov/blog/2015/09/21/new-steps-deliver-high-speed-broadband-across-united-states
[52] Broadband Opportunity Council, Broadband Opportunity Council Report and Recommendations, THE WHITE
HOUSE (Aug. 20, 2015), at *4.
https://www.whitehouse.gov/sites/default/files/broadband_opportunity_council_report_final.pdf3.
[53] The White House Office of the Press Secretary, FACT SHEET: ConnectHome: Coming Together to Ensure
Digital Opportunity for All Americans, THE WHITE HOUSE (Jul. 15, 2015), https://www.whitehouse.gov/thepress-office/2015/07/15/fact-sheet-connecthome-coming-together-ensure-digital-opportunity-all
[54] Broadband Opportunity Council, Broadband Opportunity Council Report and Recommendations, THE WHITE
HOUSE (Aug. 20, 2015), at *3.
https://www.whitehouse.gov/sites/default/files/broadband_opportunity_council_report_final.pdf3.
[55] Broadband Opportunity Council, Broadband Opportunity Council Report and Recommendations, THE WHITE
HOUSE (Aug. 20, 2015), at *3, 12, 19.
https://www.whitehouse.gov/sites/default/files/broadband_opportunity_council_report_final.pdf3.12; 19.
[56] See Carnegie Mellon University v. Marvell Technology Group Ltd., 14-1492, *10, U.S. Court of Appeals for
the Federal Circuit (Washington), https://www.bloomberglaw.com/document/X1Q6NDHQ1182/.
[57] See id. at *11.
[58] Id.
[59] Id. at *3.
[60] Id. at *11.
[61] Id. at *3.
[62] Id.
[63] 35 USC § 284
[64] Carnegie Mellon University, supra at *24 (quoting In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir.
2007)(en banc)).
[65] Id. at *25.
[66] Id. at *27.
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[67] Id.
[68] Id. at *4.
[69] Id.
[70] See id. at *40.
[71] See id. at *38.
[72] 35 USC § 271(a).
[73] Carnegie Mellon University, supra at *38.
[74] Id. at *15.
[75] Susan Decker, Marvell Gets Reduced Damages in $1.17 Billion Patent Verdict (2), BLOOMBERG NEWS
ENTERPRISE, (August 4, 2015, 11:53 AM),
https://www.bloomberglaw.com/ip_law/document/NSKETL6KLVRG/.
[76] Carnegie Mellon University, supra at *33.
[77] Jonathan Stempel, Marvell Technology wins cut in $1.54 billion Carnegie Mellon patent award, REUTERS,
(August 4, 2015, 1:43 PM), http://www.reuters.com/article/2015/08/04/us-marvell-technlgy-carnegiemellonidUSKCN0Q91K220150804/.
[78] See Decker, supra.
[79] See id.
[80] See id.
[81] See id.
[82] Markman v. Westview Instruments, 517 U.S. 370, 391, 116 S.Ct. 1384, 1396 (1996).
[83] Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005)(en banc).
[84] See id. at 1314.
[85] See Intellectual Ventures I LLC v. Capital One Bank (USA), 2015 U.S. App. LEXIS 11537, *2 (Fed. Cir. July
6, 2015).
[86] Id. at *3.
[87] U.S. Patent No. 7,260,587, col. 2 ll.11-32.
[88] Id. at col. 5 ll.50-53.
[89] U.S. Patent No. 7,260,587, claim 1.
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[90] Intellectual Ventures I LLC v. Capital One Bank (USA), 2015 U.S. App. LEXIS 11537, *16 (Fed. Cir. July 6,
2015).
[91] Id.
[92] Id.
[93] Id. at *4.
[94] Id. at *2.
[95] Id. at *16.
[96] Id. at *17.
[97] Id. at *18.
[98] Id. at *17.
[99] Id.
[100]. Brauneis, Robert. Copyright and the World’s Most Popular Song, at 19
[101]. Id. at 10
[102]. Steve Brachmann, ‘Happy Birthday to You’ Copyright Challenged in Class Action, IPWATCHDOG (Aug. 5,
2014), http://www.ipwatchdog.com/2014/08/05/happy-birthday-to-you-copyright-challenged-in-classaction/id=50684/
[103]. See id.
[104]. See id.
[105]. See id.
[106]. Copyright and the World’s Most Popular Song at 16
[107]. See Marya v. Warner/Chappell Music, Inc., No. CV134460GHKMRWX, 2015 WL 5568497, at *3 (C.D. Cal.
Sept. 22, 2015).
[108]. See id.
[109]. Associated Press, Judge frees ‘happy birthday’ song from copyright claims, DAILY MAIL.COM (Sept. 23,
2015), http://www.dailymail.co.uk/wires/ap/article-3245843/Judge-frees-Happy-Birthday-song-copyrightclaims.html
[110]. See Marya v. Warner/Chappell Music, Inc., No. CV134460GHKMRWX, 2015 WL 5568497, at *17 (C.D.
Cal. Sept. 22, 2015).
[111]. See id.
[112]. See id.
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[113]. See id. at 20
[114]. Id.
[115]. Ben Sisario, An Old Songbook Could Put ‘Happy Birthday’ in the Public Domain, THE NEW YORK TIMES
(Aug. 4, 2015), http://www.nytimes.com/2015/08/05/business/media/an-old-songbook-could-put-happy-birthday-inthe-public-domain.html
[116]. See id.
[117]. See id.
[118]. See id.
[119]. Steve Brachmann, ‘Happy Birthday to You’ Copyright Challenged in Class Action, IPWATCHDOG (Aug. 5,
2014), http://www.ipwatchdog.com/2014/08/05/happy-birthday-to-you-copyright-challenged-in-classaction/id=50684/
[120]. See id.

CITATIONS to TELEMEDICINE & THE COURTS: Teladoc v. Texas Medical Board as a Case Study
[1]. What is Telemedicine, AMERICAN TELEMEDICINE ASSOCIATION,
http://www.americantelemed.org/about-telemedicine/what-is-telemedicine#.VjNlfyBVikq (last visited October 30,
2015)
[2]. What is Telemedicine, AMERICAN TELEMEDICINE ASSOCIATION,
http://www.americantelemed.org/about-telemedicine/what-is-telemedicine#.VjNlfyBVikq (last visited October 30,
2015)
[3]. What is Telemedicine, AMERICAN TELEMEDICINE ASSOCIATION,
http://www.americantelemed.org/about-telemedicine/what-is-telemedicine#.VjNlfyBVikq (last visited October 30,
2015)
[4]. See Teladoc, Inc. v. Texas Med. Bd., No. 1-15-CV-343 RP, 2015 WL4103658, at 11 (W.D. Tex. May 29,
2015); Teladoc Announces Second Quarter 2015 Results, TELADOC (August 12, 2015),
http://www.teladoc.com/news/2015/08/12/teladoc-announces-second-quarter-2015-results/
[5]. See Teladoc, Inc. v. Texas Med. Bd., 453 S.W.3d 606, 608-09 (Tex. App. 2014)
[6]. Teladoc, 453 S.W. 3d at 609.
[7]. 22 TEX. ADMIN. CODE § 190.8.
[8]. Teladoc, 453 S.W.3d at 610.
[9] 22 TEX. ADMIN. CODE § 174.8.
[10]. Teladoc, 453 S.W.3d at 610.
[11]. Brief of Appellant Teladoc, Inc. at 8, Teladoc, Inc., V. Texas Medical Board, 2013 WL 3973959.
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[12]. Id.
[13]. Brief of Appellant Teladoc, Inc. at 8; Tex. Gov't Code §§ 2001.024(a), 2001.029, 2001.033.
[14]. Brief of Appellant Teladoc, Inc. at 11; See Combs v. Entm't Publications, Inc., 292 S.W.3d 712, 721-22 (Tex.
App. 2009).
[15]. See 22 TEX. GOV’T CODE ANN. §§ 2001.035.
[16]. See Texas Dep't of Transp. v. Sunset Transp., Inc., 357 S.W.3d 691, 703 (Tex. App. 2011).
[17]. See Teladoc, Inc. v. Texas Medical Board, 2013 WL 4662817, at *1 (Tex. Dist. March 2013).
[18]. Id. at 613.
[19]. Tex. Gov't Code Ann. § 2001.003 (West).
[20]. See Teladoc, 453 S.W. 3d at 619-20.
[21]. See Teladoc, 2015 WL 4103658, at 3.
[22]. See id.
[23]. See Teladoc, 2015 WL 4103658, at 3.
[24]. See Mississippi Power & Light Co. v. United Gas Pipe Line Co., 760 F.2d 618, 621 (5th Cir. 1985); Teladoc,
2015 WL 4103658, at 3.
[25]. See Teladoc, 2015 WL 4103658, at 3.
[26]. 15 USC § 1; See Teladoc, 2015 WL 4103658, at 4.
[27]. See Teladoc, 2015 WL 4103658, at 4.
[28]. See id. at 5.
[29]. See id.
[30]. See id.
[31]. See id. at 6.
[32]. See id.
[33]. See id. at 14.
[34]. See id. at 11.
[35]. See id.
[36]. See id.
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[37]. See id. at 12.
[38]. See id.

CITATIONS to The Defend Trade Secrets Act: Arrival of the Trade Secret Trolls?
[1]. “Trade Secret," Legal Information Institute, (28 Oct. 2015), https://www.law.cornell.edu/wex/trade_secret.
[2]. Id.
[3]. Id.
[4]. David S. Levine & Sharon K. Sandeen, Here Come the Trade Secret Trolls, 71 Wash. & Lee L. Rev. 230, 23537 (2015).
[5]. Id.
[6]. Id.
[7]. See id.
[8]. Latest Updates on Federal Trade Secrets Legislation, Trading Secrets, (28 Oct. 2015),
http://www.tradesecretslaw.com/latest-update-on-federal-trade-secret-legislation/.
[9]. Senate, House Leaders Introduce Bipartisan, Bicameral Bill to Protect Trade Secrets, US Senator Orrin Hatch,
(July 29, 2015), http://www.hatch.senate.gov/public/index.cfm/releases?ID=ad28f305-f73a-4529-84baad3285b09d6e.
[10]. Id.
[11]. Id.
[12]. Levine & Sandeen, supra at 245.
[13]. Id.
[14]. Id., Latest Updates on Federal Trade Secrets Legislation, Trading Secrets, (October 28, 2015),
http://www.tradesecretslaw.com/latest-update-on-federal-trade-secret-legislation/.
[15]. See Latest Updates on Federal Trade Secrets Legislation, Trading Secrets, (October 28, 2015),
http://www.tradesecretslaw.com/latest-update-on-federal-trade-secret-legislation/.
[16]. H.R. 3326, 114th Cong. 1st Sess. (2015).
[17]. Lisa Pearson, et al., An Overview of Legal Remedies Against the Trafficking in Goods Bearing Counterfeit
Trademarks and Gray Market Goods Under United States Law, Intellectual Property Desk Reference,
http://www.kilpatricktownsend.com/~/media/Files/articles/LPearsonOverviewofLegalRemedies.ashx.
[18] Id.
[19] Levine & Sandeen, supra at 253.
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[20] Id. at 252-53.
[21] Id. at 254.
[22] Id. at 258.
[23] Id.
[24] Latest Updates on Federal Trade Secrets Legislation, Trading Secrets, (28 Oct. 2015),
http://www.tradesecretslaw.com/latest-update-on-federal-trade-secret-legislation/.
[25] See Levine & Sandeen, supra at 256.
[26] See id. at 256-57.
[27] Sony To Pay Out $3.5M To Lawyers To Settle Hacking Class Action Suit, Deadline, (October 20, 2015),
http://www.deadline.com/2015/10/sony-to-pay-out-3-5m-to-lawyer-to-settle-hacking-class-action-suit-1201588666/,
Is China Still Hacking US? This Cyber Firm Says Yes, CNBC, (October 19, 2015),
http://www.cnbc.com/2015/10/19/china-hacking-us-companies-for-secrets-despite-cyber-pact-.html.

CITATIONS to Intersection of American Law and Technology: The Innovation Act’s Fight Against Patent
Trolls
[1]. U.S. Const. art. I § 8, cl. 8.
[2]. John M. Golden, “Patent Trolls” And Patent Remedies, 85 Texas L.J. 2011, 2112 (2007).
[3]. Robert H. Resis, History of the Patent Troll and Lessons Learned, 17 Intellectual Property Litigation (2006).
[4]. Eric Rogers and Young Jeon, Inhibiting Patent Trolling: A New Approach For Applying Rule 11, 12 Nw. J.
Tech. & Intell. Prop. 291 (2014).
[5] Innovation Act, H.R. 3309, 113th Cong. (2013).
[6]. Jared A. Smith, Trolling For An NPE Solution, 7 Hastings Sci. & Tech. L.J. 215, 236 (2015).
[7]. Glenn Forbis, The Ups and Downs of the Innovation Act of 2015, IP Watchdog (May 27, 2015),
www.ipwatchdog.com/2015/05/27/the-ups-and-downs-of-the-innovation-act-of-2015/id=58075/.
[8]. Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S.Ct. 1749 (2014).
[9]. Glenn Forbis, The Ups and Downs of the Innovation Act of 2015, IP Watchdog (May 27, 2015),
www.ipwatchdog.com/2015/05/27/the-ups-and-downs-of-the-innovation-act-of-2015/id=58075/.
[10]. Neal S. Vickery, Don’t Forget About The Little Guys: Trolls, Startups, And Fee Shifting, 13 Colo. Tech. L.J.
171, 186 (2015).
[11]. Innovation Act, H.R. 3309, 113th Cong. (2013).
[12]. Joe Mullin, Patent Troll Lawsuits Head Toward All Time High, arstechnica, (July 10, 2015),
http://arstechnica.com/tech-policy/2015/07/patent-troll-lawsuits-head-towards-all-time-high/.
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[13]. Kelley Servick, U.S. Universities and Electronics Companies Spar Over ‘Patent Troll’ Bill, Science Magazine,
(April 10, 2015), http://news.sciencemag.org/education/2015/04/u-s-universities-and-electronics-companies-sparover-patent-troll-bill.
[14]. Id.
[15]. Steven Titch, Why Patent Reforms Are Needed: Intellectual Property Abuses Threaten Innovation and Cost
Consumers Billions, (February 2015), www.heartland.org/sites/default/files/02-05-15_titch_patent_reform_0.pdf.
[16]. Eric Rogers and Young Jeon, Inhibiting Patent Trolling: A New Approach For Applying Rule 11, 12 Nw. J.
Tech. & Intell. Prop. 291, 300 (2014).
[17]. Peter J. Toren, The anti-innovation Patent Act of 2015, The Hill, (June 22, 2015),
www.thehill.com/blogs/congress-blog/technology/245544-the-anti-innovation-patent-act-of-2015.
[18]. National Venture Capital Association, http://nvca.org/issues/patent-reform/.
19]. Id.
[20]. Kelley Servick, U.S. Universities and Electronics Companies Spar Over ‘Patent Troll’ Bill, Science Magazine,
(April 10, 2015), http://news.sciencemag.org/education/2015/04/u-s-universities-and-electronics-companies-sparover-patent-troll-bill.
[21]. Karen Herzog, Jury Rules Patent Infringed on UW-Madison Patent, Journal Sentinel, Oct. 13, 2015,
http://www.jsonline.com/business/warf-wins-in-patent-suit-against-apple-b99596325z1-332581992.html.
[22]. Kelley Servick, U.S. Universities and Electronics Companies Spar Over ‘Patent Troll’ Bill, Science Magazine,
(April 10, 2015), http://news.sciencemag.org/education/2015/04/u-s-universities-and-electronics-companies-sparover-patent-troll-bill.
[23]. Id.
[24]. Arjun Rangarajan, Pleading Patents: Predicting The Outcome Of Statutorily Heightening Pleading Standards,
13 Duke L. & Tech. Rev. 195, 213 (2015).

CITATIONS to Telemedicine’s Opportunities and Risks; A Balancing Act
[1]. Karen Davis, Melinda Abrams & Kristof Stremikis, How the Affordable Care Act Will Strengthen the Nation's
Primary Care Foundation, 26 J. of Gen. Internal Med. (2011).
[2]. See Id.
[3]. Steff Deschenes, 7 Ways Lean Healthcare Management Reduces Cost, 2012 Healthcare Fin. News, (July 24,
2012), http://www.healthcarefinancenews.com/news/7-ways-lean-healthcare-management-reduces-cost.
[4]. See Mark A. Kadzielski & Jee-Young Kim, Telemedicine: Many Opportunities, Many Legal Issues, Many Risks,
2014 AHLA Connections (2014).
[5]. 76 Fed. Reg. 25553 (May 5, 2011).
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[6]. Helen Gregg, 5 Examples of Effective Uses of Telemedicine, 2014 Becker's Health IT & CIO Rev., (Feb. 11,
2014), http://www.beckershospitalreview.com/healthcare-information-technology/5-examples-of-effective-uses-oftelemedicine.html.
[7]. Ellysa Gonzalez, Local Hospitals Embracing Telemedicine, 2015 Lubbock Avalanche J. (June 6, 2015),
http://lubbockonline.com/local-news/2015-06-15/local-hospitals-embracing-telemedicine.
[8]. Realizing the Promise of Telehealth: Understanding the Legal and Regulatory Challenges, 2015 American
Hospital Association, http://www.aha.org/research/reports/tw/15may-tw-telehealth.pdf.
[9]. See Id.
[10]. See Id.
[11]. See Glenn W. Wachter, HIPAA's Privacy Rule Summarized: What Does It Mean For Telemedicine?,
Telemedicine
Information
Network,
(February
23,
2001),
http://www.tie.telemed.org/articles/article.asp?path=legal&article=hipaaSummary_gw_tie01.xml[12]. 45 C.F.R. §
160.103.
[13]. Steve Weisman, Another Health Care Data Breach, U.S.A. Today, July 25, 2015.
[14]. Goldberg AS, Avoiding prosecution: Compliance with legal requirements for payment, privacy & security:
how to practice safe telemedicine [abstract]. Telemedicine Journal and e-Health 2003;9:S33.
[15]. Latoya Thomas & Gary Capistrant, 50 State Telemedicine Gaps Analysis, Am. Telemedicine (2015),
http://www.americantelemed.org/docs/default-source/policy/50-state-telemedicine-gaps-analysis---coverage-andreimbursement.pdf.
[16]. See Id.
[17]. See Id.
[18]. See Mark A. Kadzielski & Jee-Young Kim, Telemedicine: Many Opportunities, Many Legal Issues, Many
Risks, 2014 AHLA Connections (2014). Some examples of resources include surveys and performance reviews.
[19]. See Id.
[20]. Press Release, U.S. Dep’t of Health & Human Services, Proposed health IT strategy aims to promote
innovation, protect patients, and avoid regulatory duplication (Apr. 3, 2014); see also FDA, FCC, ONC, FDASIA
Health IT Report: Proposed Strategy and Recommendations for a Risk-Based Framework, April 2014.
[21]. Telemedicine in the Patient Protection and Affordable Care Act (2010) (Am. Telemedicine 2010).
[22]. See Id.
[23]. See Id.

CITATIONS to A Review of the Modern IPR Process
[121] Chiba et al., US 6,004,565, issued Dec. 21, 1999 (“Chiba”)
[122] Pharmaceuticals: The Science of Dosage Form Design, 223-321 (Michael E. Aulton ed. 1988)

CITATIONS for Data Exclusivity for Biologic Drugs: The TPP’s Potential Poison Pill?
[1] Dennis Normille and Kelly Servick, Trade Agreement Praised and Panned, (October 6, 2015), SCIENCE,
http://news.sciencemag.org/health/2015/10/trade-agreement-praised-and-panned.
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[2] Elizabeth Richardson, Health Policy 101: How the Trans-Pacific Partnership will Impact Prescription Drugs,
(May 9, 2015), http://www.brookings.edu/blogs/health360/posts/2015/05/19-trans-pacific-partnership-prescriptiondrugs.
[3] Id.
[4] The Trans-Pacific Partnership (TPP) threatens access to affordable cancer treatments and other biologics, (last
visited November 6, 2015), http://www.citizen.org/documents/biologics%20final%20draft1.pdf.
[5] See Richardson, Health Policy 101: How the Trans-Pacific Partnership will Impact Prescription Drugs.
[6] Id.
[7] Jim Zarroli, TPP Negotiations Reached Agreement with Sticky Compromise on Biologic Drugs, (October 8
2015), NATIONAL PUBLIC RADIO, http://www.npr.org/2015/10/08/446980186/tpp-negotiators-reached-agreementwith-sticky-compromise-on-biologics-drugs.
[8] See The Trans-Pacific Partnership (TPP) threatens access to affordable cancer treatments and other biologics,
Citizen.org.
[9] 42 U.S.C. § 262(a)(2)(C) (2010)
[10] See Richardson, Health Policy 101: How the Trans-Pacific Partnership will Impact Prescription Drugs.
[11] Id.
[12] Tharanga Yakupityage, Doctors Without Borders Oppose TPPAs Worst ‘Trade Agreement’, (October 9 2015)
http://www.thecitizen.in/NewsDetail.aspx?Id=5426&DOCTORS/WITHOUT/BORDERS/OPPOSE/TPP/AS/WORS
T/%E2%80%98TRADE/AGREEMENT%E2%80%99; Amy Kapczynski, The Trans-Pacific Partnership – Is it Bad
for Your Health?, THE NEW ENGLAND JOURNAL OF MEDICINE, 373, 201-203 (last visited November 6, 2015).
[13] See The Trans-Pacific Partnership (TPP) threatens access to affordable cancer treatments and other biologics,
Citizen.org.
[14] Id.
[15] Kristina Lybecker, When Patents Aren’t Enough: The Case for Data Exclusivity for Biologic Medicines, (July
9, 2015), IPWATCHDOG, HTTP://www.ipwatchdog.com/2014/07/09/patents-arent-enough-data-exclusivity-forbiologic-medicines/id=50318/.
[16] Id.
[17] Id.
[18] See Zarroli, TPP Negotiations Reached Agreement with Sticky Compromise on Biologic Drugs, NATIONAL
PUBLIC RADIO.
[19] 21 U.S.C. §301(1938).
[20] 42 U.S.C. § 201(1944).
[21] 42 U.S.C. §262 (2010).
[22] Amy Kapczynski, The Trans-Pacific Partnership – Is it Bad for Your Health?, THE NEW ENGLAND JOURNAL
OF MEDICINE, 373, 201-203 (last visited November 6, 2015).
[23] 45 C.F.R. 46.
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[24] Ana Swanson, Big pharmaceutical companies are spending far more on marketing than research, (February
2011, 2015), The Washington Post, https://www.washingtonpost.com/news/wonk/wp/2015/02/11/bigpharmaceutical-companies-are-spending-far-more-on-marketing-than-research/.
[25] Liyan Chen, 2015 Global 2000: The World’s Largest Drug and Biotech Companies, (June 4, 2015), FORBES,
http://www.forbes.com/sites/liyanchen/2015/06/04/2015-global-2000-the-worlds-largest-drug-and-biotechcompanies/.
[26] Michael Mezher, Trade Talks Stumble Over Biologics Data Exclusivity, (February 11, 2015),
http://www.raps.org/Regulatory-Focus/News/2015/02/11/21309/Trade-Talks-Stumble-over-Biologics-DataExclusivity/.
[27] The Pharmaceutical Benefits Scheme: About the PBS, (August 27, 2015), http://www.pbs.gov.au/pbs/home.
[28] Id.
[29] Emily R. Gabranski and Sanya Sukduang, IP Update: The Trans-Pacific Partnership and Its Potential Impact
on Exclusivity Periods for Biological Products, (October 15 2015),
http://www.finnegan.com/IPUpdateTransPacificPartnershipandImpactforBiologicalProducts/.
[30] Id.
[31] Judit Rius Sanjuan, Statement by MSF on the Conclusion of TPP Negotiations in Atlanta, (October 5, 2015),
http://www.doctorswithoutborders.org/article/statement-msf-conclusion-tpp-negotiations-atlanta.
[32] Richard Fry and Rakesh Kochi, America’s wealth gap between middle-income and upper-income families
widest on record, (December 17, 2014), PEW RESEARCH CENTER, http://www.pewresearch.org/facttank/2014/12/17/wealth-gap-upper-middle-income/.
CITATIONS for Mascot Madness
[1]. The boundary between copyright and trademark use often is not clear. This article focuses exclusively on
trademark infringement. See Michael Todd Helfand, When Mickey Mouse Is As Strong As Superman: The
Convergence of Intellectual Property Laws to Protect Fictional Literary and Pictorial Characters, 44 STAN. L. REV.
623, 667 (1992) ("Hard questions remain concerning the boundaries of copyright uses and trademark uses. Some
uses may easily be defined as either copyright or trademark uses. A character in a new story is clearly a copyright
use. A single representation of a character placed upon labels, tags, or packaging used to market a product or service
not directly related to the character is clearly a trademark use.")
[2]. N.Y. Comp. Codes R. & Regs. tit. 11, § 73.9.
[3]. See Schaumburg v. Citizens for a Better Environment, 444 U.S. 620, 629 (1980); People v. Barton, 8 N.Y.3d 70,
79 (2006).
[4]. See Helfand, supra note 1 at 627.
[5]. See id.
[6]. Michael M. Grynbaum & Matt Flegenheimer, Mayor de Blasio Raises Prospect of Removing Times Square
Pedestrian Plazas, N.Y. TIMES, Aug. 20, 2015, available at http://www.nytimes.com/2015/08/21/nyregion/mayorde-blasio-raises-prospect-of-removing-times-square-pedestrian-plazas.html.
[7]. Andrew Lapin, Times Square's unlicensed Elmos spell headaches for Sesame Workshop, CURRENT.ORG, Sept. 5,
2014,
available
at
http://current.org/2014/09/times-squares-unlicensed-elmos-spell-headaches-for-sesameworkshop/.
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[8]. Curtis Skinner, Times Square Cartoon Characters Might Be Banned After Rash of Violence, BUSINESS INSIDER,
Jul. 9, 2014, available at http://www.businessinsider.com/r-ny-lawmakers-set-to-clamp-down-on-times-squarescaped-crusaders-2014-09/currency/desperate-characters-2.
[9]. J. David Goodman, Man Dressed as Spider-Man Is Arrested After Scuffle With Police in Times Square, N.Y.
TIMES, Jul. 27, 2014, available at http://www.nytimes.com/2014/07/28/nyregion/man-dressed-as-spider-man-isarrested-after-scuffle-with-police-in-times-square.html?src=twr&_r=0.
[10]. See id.
[11]. Elizabeth Landers, Times Square group to seek regulation of costumed characters, CNN.COM, Jan. 10, 2014,
available at http://www.cnn.com/2014/01/10/us/times-square-toy-story-sex-assault/.
[12]. Id.
[13]. Goodman, supra note 9.
[16]. Id.
[17]. Costumed Spider-Man convicted of harassment in NYC, CBSNEWS.COM, Jun. 19, 2014, available at
http://www.cbsnews.com/news/costumed-spider-man-convicted-of-harassment-in-new-york-city/.
[18]. Id.
[19]. Lawrence Crook, NYPD: For this 'Cookie Monster,' it was 'Me want money!', CNN.COM, Apr. 10, 2013,
available at http://www.cnn.com/2013/04/08/us/new-york-mad-cookie-monster/.
[20]. Id.
[21]. Michael Wilson, NYPD: Ranting Elmo Returns and Is Arrested in Times Square, N.Y. TIMES, Sep. 19, 2012,
available at http://cityroom.blogs.nytimes.com/2012/09/19/ranting-elmo-returns-and-is-arrested-in-times-square/.
[22]. See id.
[23]. Laila Kearney, 'Sesame Street' aims to teach lesson to Times Square Elmo, REUTERS.COM, Jul. 29, 2014,
available
at
http://www.reuters.com/article/2014/07/29/us-usa-sesame-street-new-yorkidUSKBN0FY24D20140729.
[24]. Aaron Smith, NYPD to Disney and Marvel: Get Minnie Mouse and Spider Man out of Times Square,
CNN.COM, Aug. 28, 2013, available at http://money.cnn.com/2015/08/28/news/companies/nypd-disney-marvel/.
[25]. See generally Malla Pollack, Corporate Counsel's Guide to Trademark Law § 7:1-7:19 (2015).
[28]. See id.
[29]. See N.Y.C. Code Tit. 20, Ch. 2, Subch. 33 (proposed September 10, 2014, available at
http://legistar.council.nyc.gov/ViewReport.ashx?M=R&N=Text&GID=61&ID=1805756&GUID=5748CF1BB2CD-40D4-BC1E-8BC5A2DF914F&Title=Legislation+Text).
[30]. See id.
[31]. N.Y.C. Code § 20-541.
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[32]. N.Y.C. Code § 20-548.
[33]. See N.Y.C. Code § 20-540(b).
[34]. See id.
[35]. Id.
[36]. N.Y.C. Code § 20-541; § 20-543.
[37]. N.Y.C. Code § 20-544.
[38]. N.Y.C. Code § 20-546.
[39]. Id.
[40]. N.Y.C. Code § 20-540(e)(1).
[41]. N.Y.C. Code § 20-540(e)(2)-(4).
[42]. N.Y.C. Code § 20-551.
[43]. Id.
[44]. Laila Kearney, New York City cracks down on Elmo, other Times Square costumed characters,
LAFUENTEINC.ORG, Sep. 19, 2014, available at http://www.lafuenteinc.org/index.php/press/136-new-york-citycracks-down-on-elmo-other-times-square-costumed-characters.
[45]. Id.
[46]. Lapin, supra note 7.
[47]. Id.
[48]. Kearney, supra note 44.
[49]. Id.
[50].
See
Legislation
Details,
New
York
City
Council,
http://legistar.council.nyc.gov/LegislationDetail.aspx?ID=1903343&GUID=5A45C651-7373-4589-86B4F77DD0FD5CFC.
[51]. See 15 U.S.C. § 1125.
[52]. See Perfect Fit Industries Inc. v. Acme Quilting Co., 618 F.2d 950 (2nd Cir. 1980); Dallas Cowboys
Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604 F.2d 200 (2nd Cir. 1979).
[53]. See DC Comics, Inc. v. Filmation Associates, 486 F. Supp. 1273, 1277 (S.D.N.Y. 1980)].
[54]. See id.
[55]. See 15 U.S.C. § 1125(a)(1)]
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[56]. Kathryn M. Foley, Protecting Fictional Characters: Defining the Elusive Trademark-Copyright Divide, 41
CONN.
L. REV. 921, 945 (2009).
[57]. Walt Disney Prods. v. Air Pirates, 345 F. Supp. 108, 113 (N.D. Cal. 1972), aff'd in part and rev'd in part, 581
F.2d 751 (9th Cir. 1978) (holding "that the depiction of each character as it has been developed by the plaintiff has
achieved a high degree of 'recognition' or 'identification'"); Warner Bros., Inc. v. Am. Broadcasting Co., 720 F.2d
231, 246 (2d Cir. 1983) (finding that "the image of a cartoon character and some indicia of that character can
function as a trademark to identify the source of a work of entertainment."); DC Comics, Inc. v. Unlimited Monkey
Bus., Inc., 598 F. Supp. 110, 115-16 (D.C. Ga. 1984) (reasoning that DC Comics' marks were distinctive by virtue of
their universal recognition).
[58]. See In re DC Comics, Inc., 689 F.2d 1042, 1043 (C.C.P.A. 1982).
[59]. Id. at 1044.
[60]. See 15 U.S.C. § 1114(a).
[61]. See id.
[62]. Id.
[63]. See 15 U.S.C. § 1127.
[64]. See id.
[65]. See id.
[66]. See International Order of Job's Daughters v. Lindeburg & Co., 633 F.2d 912, 919 (9th Cir.1980).
[67]. See Au-Tomotive Gold, Inc. v. Volkswagen of Am., Inc., 457 F.3d 1062, 1072 (9th Cir. 2006).
[68]. Sega Enter. Ltd. v. Accolade Inc., 977 F.2d 1510 (9th Cir. 1992).
[69]. See Au-Tomotive Gold 457 F.3d at 1072.
[70]. See J. David Goodman, supra note 9.
[71]. See 15 U.S.C. § 1127.
[72]. See id.
[73]. See id.
[74]. 15 U.S.C. § 1114(a).
[75]. 15 U.S.C. § 1127.
[76]. See 15 U.S.C. § 12.
[77]. "Commerce," Black's Law Dictionary (10th ed. 2014).
[78]. See id.
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[82]. See 15 U.S.C. § 1114(a).
[83]. See N.Y., Code § 10-136.
[87]. See Dynamic Designs Distribution Inc. v. Nalin Mfg., LLC, 2014 WL 1576381 (M.D. Fla. 2014); Frito-Lay
North America, Inc. v. Medallion Foods, Inc., 2013 WL 74605 (E.D. Tex. 2013).
[88]. See generally Dynamic Designs, 2014 WL 1576381; Frito-Lay, 2013 WL 74605.
[89]. 633 F.2d 912.
[90]. Id. at 914.
[91]. Id.
[95]. See id.
[96]. See 457 F.3d at 1072.
[97]. See id.
[98]. Id.
[99]. See Fleischer Studios, Inc. v. A.V.E.L.A., Inc., 925 F. Supp. 2d 1067, 1074 (C.D. Cal. 2012).
[100]. Id.
[101]. Id.
[102]. See id. at 1075.
[105]. See Fleischer Studios, 925 F. Supp. 2d at 1074.
[106]. See Au-Tomotive Gold, 457 F.3d at 1072.
[107]. See id.
[108]. See Fleischer Studios, 925 F. Supp. 2d at 1074.
[109]. Id.
[110]. See id.
[111]. See id.
[112]. See Job's Daughters, 633 F.2d at 914.
[113]. See id.
[114]. See id.
[115]. See 15 U.S.C. § 1125(a)(1)(A).
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[116]. Id.
[117]. See id.
[118]. 15 U.S.C. § 1115(b)(4).
[119]. Fleischer Studios, 925 F. Supp. 2d at 1076, citing Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand
Mgmt., Inc., 618 F.3d 1025, 1040 (9th Cir. 2010).
[127]. See id.
[128]. See Fleischer Studios, 925 F. Supp. 2d at 1076.
[133]. See id.
[134]. See AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 353 (9th Cir. 1979).
[135]. 15 U.S.C. § 1125(a)(1)(A).
[136]. See AMF, 599 F.2d at 353.
[137]. Id. at 351.
[138]. See Warner Bros., Inc. v. Gay Toys, 658 F.2d 76, 78 (2d Cir. 1981); Dallas Cowboys, 604 F.2d 200 at 204205.
[139]. See 15 U.S.C. § 1114(1)(a); AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348– 49 (9th Cir. 1979).
[140]. AMF, 599 F.2d at 351.
[141]. Id. at 350.
[142]. See id. at 348.
[143]. See AMF, 599 F.2d at 354.
[144]. See Fortune Dynamic, 618 F.3d at 1043.
[145]. See Fleischmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 157-58; see also Lone Ranger, Inc. v.
Currey,
79 F. Supp. 190, 196 (M.D. Pa. 1948) (stating that a "fraudulent intention or bad faith will be inferred where the
junior
appropriator has knowledge of plaintiff's trade mark, trade name, or trade symbols and nevertheless deliberately
copies such mark, or name or symbols).
[146]. See Lone Ranger, 79 F. Supp. at 193; see also Warner Bros. v. Gay Toys, Inc., 658 F.2d at 78 (enjoining the
defendant, who conceded it specifically attempted to exploit the market created by Warner Bros.' efforts from
manufacturing infringing toy cars).
[147]. Id.
[150]. Id. at 194.
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[151]. Id.
[152]. Id. at 195.
[153]. See 633 F.2d at 920.
[154]. Id.
[159]. See id.
[160]. See Lone Ranger, 79 F. Supp. at 194; Patricia Sheppard, Macy’s Thanksgiving Day Parade: A Disney
Tradition,
The Walt Disney Company, November, 23, 2012, available at https://thewaltdisneycompany.com/blog/macysthanksgiving-day-parade-disney-tradition; Entertainment, The Walt Disney Company, available at
https://disneyworld.disney.go.com/entertainment/#/character-experiences/.
[161]. See Lone Ranger, 79 F. Supp. at 194.
[162]. See id.
[163]. See id.
[164]. Patricia Sheppard, supra note 160; Entertainment, supra note 160.
[165]. See AMF, 599 F.2d at 351.
[166]. See id.
[167]. See AMF, 599 F.2d at 353.
[168]. See id.
[169]. See id.
[170]. See 79 F. Supp. at 193.
[172]. See Lone Ranger, 79 F. Supp. at 193.
[173]. See id.
[174]. See Grynbaum & Flegenheimer, supra note 6.
[175]. See id.
[176]. See N.Y., Code § 10-136.
CITATIONS to The CRISPR Battle
[1]. See Mayo Collaborative Serv. v. Prometheus Lab, Inc., 132 S. Ct. 1289 (2012).
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[2]. See Regalado, A. Who Owns the Biggest Biotech Discovery of the Century? MIT Technology Review, 2014.
[3]. See Xu, L, et al., CRISPR-mediated Genome Editing Restores Dystrophin Expression and Function in mdx
Mice. Mol. Ther, 2015.
[4]. See Hou, P, et al., Genome Editing of CXCR4 by CRISPR/cas9 Confers Cells Resistant to HIV-1 infection, Sci.
Rep., 2015.
[5]. See Yin, H, et al., Genome Editing with Cas9 in Adult Mice Corrects a Disease Mutation and Phenotype. Nat
Biotechnol, 2014.
[128]. See Liang, Q, et al., The Molecular Mechanism of CRISPR/Cas9 System and its Application in Gene Therapy
of Human Diseases, 2015.
[129]. See Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2116 (2013).
[130]. See Terry, M. Despite Patent Battle Worth Billions, CRISPR Raises $64 Million in Series A&B Rounds, 2015,
available at http://www.biospace.com/News/despite-patent-battle-worth-billions-crispr-raises/374403.
[131]. See Zetsche, B, et al. Cpf1 is a Single RNA-Guided Endonuclease of a Class 2 CRISPR-Cas System, Oct
2015.
[132]. See Zhao, Y, et al., Developing CRISPR/Cas 9 Technologies for Research and Medicine, MOJ Cell Science
and Report (2014).
[133]. See Id.
[134]. Id.
[135]. Id.
[136]. Id.
[137]. For CRISPR application in plants See Schaeffer SM, et al., CRISPR/Cas9-mediated Genome Editing and
Gene Replacement in Plants: Transitioning from Lab to Field. Plant Sci. Review, 2015; for CRISPR use in
eradicating viruses see Ebina, H. et al., Harnessing the CRISPR/Cas9 System to Disrupt Latent HIV-1 Provirus. Sci
Rep 2015; for CRISPR use in screening for cancer genes see Shalem, O. et al., Genome-scale CRISPR-Cas9
Knockout Screening in Human Cells. Science, 2014.
[138]. See Cyranoski, D. Chinese Scientists Genetically Modify Human Embryos: Rumors of Germline
Modification Prove True – and Look to Reignite an Ethical Debate, Nature News, April 2015, available at
http://www.nature.com/news/chinese-scientists-genetically-modify-human-embryos-1.17378.
[139]. See Id.
[140]. Id.
[141]. See Gallager, J. “Designer babies” Debate Should Start, Scientists Say, BBC Health News, Jan 2015,
available at http://www.bbc.com/news/health-30742774.
[142]. See Berry, K. Ethics for CRISPR and the Big Leap Forward, available at
http://blogs.law.harvard.edu/billofhealth/2015/04/24/ethics-for-crispr-and-the-big-leap-forward/.
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[143]. National Center for Biotechnology Information, available at http://www.ncbi.nlm.nih.gov/pubmed.
[144]. See Diamond v Diehr, 450 U.S. 175 101 (1981).
[145]. See Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2116 (2013).
[146]. Id. at 2109.
[147]. Id. at 2110.
[148]. Id. at 2116.
[149]. Id.
[150]. Id.
[151]. See Cong, L et al. Multiplex Genome Engineering Using CRISPR/Cas Systems, Feb. 2013.
[152]. See Jinek, M, et al. A Programmable Duel-RNA-guided DNA Endonuclease in Adaptive Bacterial Immunity.
Science, Aug. 2012.
[153]. See Cong, L et al. Multiplex Genome Engineering Using CRISPR/Cas Systems, Feb. 2013.
[154]. U.S. Patent No. 842,859 (filed May 2012).
[155]. U.S. Patent No. 8, 697, 359 (filed December 2012).
[156]. Broad Institute, Information about licensing of CRISPR-Cas9 systems, available at
https://www.broadinstitute.org/partnerships/office-strategic-alliances-and-partnering/information-about-licensingcrispr-cas9-syste.
[157]. Id.
[158]. Manual of Patent Examining Procedure (MPEP), §708.02., Petition to Make Special. [R-07.2015].
[159]. MPEP §37 C.F.R. 1.102 (c)(2). Advancement of Examination.
[160]. MPEP §708.02
[161]. Id.
[162]. U.S. Patent No. 8, 697, 359 (issued April 2014).
[163]. See Rood, J. Who Owns CRISPR? The Scientist Blog, available at http://www.thescientist.com/?articles.view/articleNo/42595/title/Who-Owns-CRISPR-/.
[164]. See Id.
[165]. U.S. Patent No. 842,859 (filed May 2012).
[166]. Patent Law Fundamentals §16:13 (2d ed.).
[167]. 35 U.S.C.A. § 135(b); 37 C.F.R. § 1.205.
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[168]. 37 C.F.R. 41.203(a).
[169]. 35 U.S.C. s 135(a) (1988).
[170]. Garascia, C. Evidence of Conceptio in U.S. Patent Interference Practice: Proving Who is the First and True
Inventor. 73 U. Det. Mercy L. Rev. 717 (1996).
[171]. Robinson On Patents 532 (1890).
[172]. See Great Northern Corporation v. Davis Core & Pad Co., 782 F.2d 159, 166 (Fed. Cir. 1986).
[173]. See Cooper v Goldfarb, 154 F.3d 1321 (Fed. Cir. 1998).
[174]. Id. at 1323.
[175]. Id. at 1324.
[176]. Id.
[177]. Id. at 1325.
[178]. Id.
[179]. Cooper v Goldfarb, 154 F.3d at 1326.
[180]. Id.
[181]. Id. at 1328.
[182]. Id. at 1330.
[183]. Id. at 1333.
[184]. See Jinek, M, et al., A Programmable Duel-RNA-Guided DNA Endonuclease in Adaptive Bacterial
Immunity, Aug. 2012.
[185]. See Regalado, A. Who Owns the Biggest Biotech Discovery of the Century? MIT Technology Review, 2014.
[186]. Id.
[187]. See Cong, L et al. Multiplex Genome Engineering Using CRISPR/Cas Systems, Feb. 2013.
[188]. Connor, S. Crispr: Scientists’ Hopes to Win Nobel Prize for Gene-editing Technique at Risk over Patent
Dispute, available at http://www.independent.co.uk/news/science/crispr-scientists-hopes-to-win-nobel-prize-forgene-editing-technique-at-risk-over-patent-dispute-a6677436.html.
[189]. See Doudna’s Suggestion of Interference Pursuant to 37 C.F.R §41.202 Claim, Application Serial No.
13/842,859, available at http://www.technologyreview.com/sites/default/files/docs/interference.pdf.
[190]. Id.
[191]. Id.
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[192]. See MIT Technology Review. CRISPR Patent Fight Now a Winner-Take-All Match.
[193].See Zetsche, B et al. Cpf1 is a Single RNA-Guided Endonuclease of a Class 2 CRISPR-Cas System, Oct 2015.
[194]. Id.
[195]. 35 U.S.C. § 103 (a).
[196]. See Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1361 (Fed.Cir.2007).
[197]. See Graham v. John Deere Co., 86 S.Ct. 684 (1966).
[198] See Proctor & Gamble Co. v Teva Pharmaceuticals USA, Inc., 566 F.3d 989 (Fed. Cir. 2009).
[199]. U.S. Patent No. 4,461,406 (June 1985).
[200]. See Proctor & Gamble v Teva, 566 F.3d at 992.
[201]. U.S. Patent No. 5,583,122 (December 1985).
[202] See Proctor & Gamble v Teva, 566 F.3d at 992.
[203]. Id. at 993.
[204]. Id.
[205]. Id. at 995.
[206]. Id. at 997.
[207]. See Zetsche, B et al. Cpf1 is a Single RNA-Guided Endonuclease of a Class 2 CRISPR-Cas System, Oct.
2015.
[208]. See Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2116 (2013).
[209]. See Proctor & Gamble v Teva, 566 F.3d at 997.
[210]. See Zetsche, B et al. Cpf1 is a Single RNA-Guided Endonuclease of a Class 2 CRISPR-Cas System, Oct.
2015.
[211]. Sharon Begley, Genome-editing Find May Improve System’s Precision, Boston Globe. 2015, available at
https://www.bostonglobe.com/business/2015/09/25/crispr-genome-editing-discovery-may-upend-high-stakes-patentdispute/9WQTAQe2xuphAuMtindB4K/story.html.
[212]. See Zetsche, B et al. Cpf1 is a Single RNA-Guided Endonuclease of a Class 2 CRISPR-Cas System, Oct.
2015.
[213]. Fidler, B. CRISPR Race Heats Up As Gates, Crossovers Put $120M into Editas, 2015, available at
http://www.xconomy.com/boston/2015/08/10/crispr-race-heats-up-as-gates-crossovers-put-120m-into-editas/2/.
[214]. Information about licensing of CRISPR-Cas9 systems, Broad Institute, available at
https://www.broadinstitute.org/partnerships/office-strategic-alliances-and-partnering/information-about-licensingcrispr-cas9-syste.
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[215]. McClune, C. Intellia Therapeutics Closes $70M in Series B Funding to Develop CRISPR/Cas9 Therapies,
2015, available at http://synbiobeta.com/intellia-therapeutics-closes-70m-in-series-b-funding-to-develop-crisprcas9therapies/.
CITATIONS for The Fair Play, Fair Pay Act; What’s at Stake and for Whom?
[1]. Ed Christman, “Fair Play, Fair Pay Act” Introduced, Seeks Cash from Radio Stations, Billboard (Apr. 13,
2015), http://www.billboard.com/articles/business/6531693/fair-play-fair-pay-act-performance-royalty-radio.
[2]. 17 U.S.C. § 106.
[3]. Id. § 101 (defining public performance as “perform[ing] . . . at a place open to the public or at any place where a
substantial number of persons . . . is gathered; or . . . transmit[ting] or otherwise communicat[ing] a performance . . .
of the work to . . . the public, by means of any device or process, whether the members of the public capable of
receiving the performance . . . receive it in the same place or in separate places and at the same time or at different
times”).
[4]. A “blanket license” is a license that allows the music user to perform any or all of the millions of songs in the
PRO’s repertory in exchange for payment of an annual fee. See, e.g., Common Music Licensing Terms, ASCAP,
http://www.ascap.com/licensing/termsdefined.aspx (last visited Sept. 14, 2015).
[5]. Edward (Ned) R. Hearn, Digital Downloads and Streaming: Copyright and Distribution Issues, L. Off. of
Edward R. Hearn, http://www.internetmedialaw.com/articles/digital-downloads-and-streaming-copyrightanddistribution-issues/ (last visited Sept. 14, 2015).
[6]. Public Performance Right for Sound Recordings, Future of Music Coalition (Nov. 5, 2013),
https://www.futureofmusic.org/article/fact-sheet/public-performance-right-sound-recordings.
[7]. Fair Pay for All Music on All Platforms, musicFirst, http://musicfirstcoalition.org/fairplay_for_fairpay (last
visited Sept. 14, 2015).
[8]. See Sound Recording Act of 1971 §§ 1, 3, 17 U.S.C. § 301(c).
[9]. Available at http://copyright.gov/docs/musiclicensingstudy/copyright-and-the-music-marketplace.pdf
[10]. See U.S. Copyright Office, Federal Copyright Protection for Pre-1972 Sounds Recordings 5 (2011), available
at http://www.copyright.gov/docs/sound/pre-72-report.pdf.
[11]. The Turtles rose to fame with their cover version of Bob Dylan’s “It Ain’t Me Babe” and the 1967 hit “Happy
Together.”
[12]. Press Release, SiriusXM, Sirius XM Radio Inc. Intends to Offer $750 Million of Senior Notes Due 2025 (Mar.
3, 2015), http://investor.siriusxm.com/releasedetail.cfm?ReleaseID=899519.
[13]. 17 U.S.C. §§ 101 et seq. do not apply to pre-1972 sound recordings. In particular, the U.S. Copyright Act
carves out certain areas of copyright law for state regulation, including rights related to sound recordings fixed
before February 15, 1972. Id. § 301(c).
[14]. Flo & Eddie Inc. v. Sirius XM Radio Inc., No. 2:13-cv-05693, 2014 WL 4725382, at *3 (C.D. Cal. Sept. 22,
2014).
[15]. Cal. Civ. Code § 980(a)(2) (recognizing an author’s “exclusive ownership” interest in pre-1972 recordings).
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[16]. Flo & Eddie, Inc. v. Sirius XM Radio, Inc., 62 F. Supp. 3d 325 (S.D.N.Y. 2014).
[17]. Flo & Eddie, Inc. v. Sirius XM Radio Inc., No. 13 Civ. 5784, 2015 WL 585641 (S.D.N.Y. Feb. 10, 2015).
[18]. Flo & Eddie, Inc. v. Sirius XM Radio, Inc., No. 13-23182-CIV, 2015 WL 3852692 (S.D. Fla. June 22, 2015).
[19]. CBS Inc. v. Garrod, 622 F. Supp. 532 (M.D. Fla. 1985).
[20]. Flo & Eddie, 2015 WL 3852692, at *5.
[21]. Kevin Goldberg, Sirius Waves a $210 Million White Flag, Above the L. (July 9, 2015),
http://abovethelaw.com/2015/07/sirius-waves-a-210-million-white-flag/.
[22]. See 17 U.S.C. § 114(d).
[23]. See Hugh McIntyre, Taylor Swift vs. Spotify: Should Artists Be Allowed to Opt Out of Free Streaming?,
Forbes Media & Ent. (Aug. 8, 2015), Swift had requested that Spotify stagger the release of her 1989album so
that only paying subscribers to Spotify’s premium service would initially have the ability to stream it, with access
being made available to nonpaying consumers of Spotify’s “freemium” model being provided sometime
thereafter. Spotify refused to window Swift’s content in this manner, and Swift therefore refused to allow Spotify
to broadcast any of her music. http://www.forbes.com/sites/hughmcintyre/2015/08/08/taylor-swift-vsspotifyshould-artists-be-allowed-to-opt-out-of-free-streaming
[24]. See Taylor Swift, To Apple, Love Taylor, Tumblr (June 21, 2015),
http://taylorswift.tumblr.com/post/122071902085/to-apple-love-taylor.
[25]. See Lauren Zupkus, Apple Responds to Taylor Swift’s Rallying Cry, Agrees to Compensate Artists for Apple
Music, Huff Post Ent. (June 21, 2015), http://www.huffingtonpost.com/2015/06/21/taylor-swiftapplemusic_n_7631054.html.
[26]. 17 U.S.C. § 801(b)(1), (2).
[27]. These pre-1998 services generally include “satellite digital audio radio services” (SDARS) such as SiriusXM,
“business establishment services” (BES) such as Muzak, “cable/satellite services” (CABSAT) such as Music
Choice, and preexisting subscription services in existence prior to July 31, 1998 (PES).
[28]. If we dig even deeper on this issue, rates will also vary depending on the service provider.
[29]. 17 U.S.C. § 114(f)(1)(A).
[30]. Id. § 801(b)(1); see also id. § 114(f)(1)(B) (specifying that Copyright Royalty Judges (CRJs) shall consider
factors set forth in § 801(b)(1) in establishing rates for PES and SDARS).
[31]. Determination of Rates and Terms for Preexisting Subscription Services and Satellite Digital Audio Radio
Services, 73 Fed. Reg. 4080, 4094–98 (Jan. 24, 2008).
[32]. 17 U.S.C. § 114(f)(2)(B).
[33]. Id.
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[34]. To complicate matters ever so slightly, Congress also passed the Webcaster Settlement Act in 2008, which
allows for the private negotiation of rates for webcasting. Thus, industry groups have been able to opt for the rates
set by the CRB or the rates negotiated under the Webcaster Settlement Act.
[35]. See SoundExchange, Inc. v. Librarian of Cong., 571 F.3d 1220 (D.C. Cir. 2009); Jeffrey A. Eisenach, The
Sound Recording Performance Rights at a Crossroads: Will Market Rates Prevail?, 22 CommLaw Conspectus 1
(2014).
[36]. See H.R. 848, 111th Cong. (2009); S. 379, 111th Cong. (2009).
[37]. “Direct licensing” refers to a license to use music that is secured directly from the owner of that song or music
recording.
[38]. The Performance Rights Act and Parity among Music Delivery Platforms: Hearing Before the S. Comm. on the
Judiciary, 111th Cong. 5 (2009) (testimony of Sheila Escovedo (Sheila E.)).
[39]. See H.R. 3219, 113th Cong. (2013).
[40]. Sunny Noh, Better Late Than Never: The Legal Theoretical Reasons Supporting the Performance Rights Act of
2009, 6 Buff. Intell. Prop. L.J. 83, 83–84 (2009).
[41]. A Performance Tax Puts Local Jobs at Risk, Nat’l Assn. of Broadcasters,
http://nab.org/advocacy/issue.asp?id=1889&issueid=1002 (last visited Sept. 14, 2015) (“[R]ecent private deals
between radio companies and record labels to compensate copyright owners and performers prove there is no need
for government involvement.”).
[42]. See H.R. 4772, 113th Cong. (2014).
[43]. H.R. 1733, § 4(a)(1), amending 17 U.S.C. § 114(f)(1).
[44]. This would, however, not include royalties established for the use of sound recordings through interactive
music services, which would remain obligated to directly negotiate rates with owners of the sound recordings.
[45]. John Villasenor, Digital Music Broadcast Royalties: The Case for a Level Playing Field, Issues in Tech.
Innovation (Ctr. for Tech. Innovation at Brookings), Aug. 2012,
http://www.brookings.edu/~/media/research/files/papers/2012/8/07%20music%20royalties%20technology%20villas
enor/cti_19_villasenor.pdf; 2015 Rates, SoundExchange, http://www.soundexchange.com/serviceprovider/rates/
(last visited Sept. 14, 2015); About Digital Royalties, SoundExchange, http://www.soundexchange.com/artistcopyright-owner/digital-royalties/ (last visited Sept. 14, 2015).
[46]. H.R. 1733, § 4(a)(1), amending 17 U.S.C. § 114(f)(1).
[47]. Press Release, Nat’l Ass’n of Broadcasters, NAB Statement on Rep. Watt’s Introduction of Radio
Performance Tax Legislation (Sept. 30, 2013),
https://www.nab.org/documents/newsroom/pressRelease.asp?id=3236; Performance Tax Bill Introduced to
Congress, Va. Ass’n of Broadcasters, http://www.vabonline.com/news/performance-tax-bill-introduced-incongress/
(last visited Sept. 14, 2015).
[48]. Kaveh Waddell, Radio Stations May Have to Pay to Play, Nat’l J. (Apr. 13, 2015),
http://www.nationaljournal.com/tech/2015/04/13/Radio-Stations-May-Have-Pay-Play.
[49]. H.R. 1733, § 8(a), amending 17 U.S.C. § 114(i) (emphasis added).
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[50]. SAG-AFTRA President Ken Howard Comments on Fair Play Fair Pay Act of 2015, Broadway World (Apr. 13,
2015), http://www.broadwayworld.com/bwwmovies/article/SAG-AFTRA-President-Ken-Howard-CommentsonFair-Play-Fair-Pay-Act-of-2015-20150413.
[51]. Kyle O’Brien, Here We Go Again: The Latest Round in the Fight for Music Royalties, Advertising Wk. Soc.
Club Blog (June 6, 2015), http://www.theawsc.com/2015/06/06/here-we-go-again-the-latest-round-in-thefight-formusic-royalties/.
[52]. Music Licensing under Title 17 (Part I and II): Hearing Before the Subcomm. on Courts, Intellectual Property,
and the Internet of the H. Comm. on the Judiciary, 113th Cong. 8 (statement of Neil Portnow, president & CEO,
Recording Academy).
[53]. And Then Turns His Attention to the NAB, Radio Ink (June 10, 2014),
http://www.radioink.com/Article.asp?id=2801497 (alterations in original).
[54]. In opposition to this argument, the recording industry has sought to make clear that the payments that would
result from this performance right do not constitute a “tax,” as they are not payments made to the government, but
rather constitute royalties paid to the owners of the music being transmitted.
[55]. O’Brien, supra note 51.
[56]. Josh Peterson, Lawmakers Spar over Radio Music Royalties, Watchdog.org (Apr. 29, 2015),
http://watchdog.org/214415/radio-music-royalties/.
[57]. Radio Broadcasters Should Stand Together: Oppose Any New Performance Tax, Md. DC Del. Broadcasters
Ass’n, http://www.mdcd.com/aws/MDCD/asset_manager/get_file/103821 (last visited Sept. 14, 2015).
[58]. O’Brien, supra note 51.
[59]. A Performance Tax Puts Local Jobs at Risk, supra note 41.
[60]. The Truth about Performance Rights, musicFIRST, http://musicfirstcoalition.org/performancerights (last
visited Sept. 14, 2015).
[61]. Chloe Albanesius, Bono: Radio Should Pay for Songs, Like Web Does, PCMag (Apr.
21, 2009), http://www.pcmag.com/article2/0,2817,2345688,00.asp.
[62]. O’Brien, supra note 51.
[63]. Digital Performance Right in Sound Recordings Act of 1995, Pub. L. No. 104-39, 109 Stat. 336.
[64]. S. Rep. No. 104-128, at 14–15 (1995).
[65]. Bonneville Int’l Corp. v. Peters, 347 F.3d 485, 487–88 (3d Cir. 2003) (footnote omitted).
[66]. Digital Millennium Copyright Act, Pub. L. No. 105-304, 112 Stat. 2860 (1998).
[67]. Kent Hoover, Music Industry Uses Star Power in Radio Royalties Battle, Wash. Bureau (Apr. 16, 2015),
http://www.bizjournals.com/bizjournals/washingtonbureau/2015/04/music-industry-uses-star-power-inradioroyalties.html.
[68]. NAB’s Lobbying Budget Soars, InsideRadio (Mar. 23, 2015), http://www.insideradio.com/free/nab-slobbyingbudget-soars/article_bad10d90-d128-11e4-91c3-7befb9a1c4c4.html.
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