SOPA, Piracy, Pharmaceuticals May Dominate US IP Policy Discussions In 2012 23/01/2012 by Liza Porteus Viana, Intellectual Property Watch 2 Comments Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window)Online piracy, patent reform and intellectual property issues relating to pharmaceuticals are among the top legislative and regulatory priorities for many stakeholder groups in the United States this year, but given that 2012 is an election year, chances are slim that Congress will push through anything that isn’t a top priority or that could cause too much partisan rancour. SOPA/PIPA/OPEN Act The most controversial intellectual property issue in Congress at press time is the House Stop Online Piracy Act (SOPA) (HR 3261), and its Senate counterpart, the Protect IP Act (PIPA). The bills would expand the ability of law enforcement, and copyright holders to shut down sites, or stop business with sites, outside the US that host pirated content or traffic counterfeit goods. One of the most hotly contested provisions originally included in the bills would have allowed the US government to restrict illegal file-sharing sites by blocking their Domain Name System (DNS), which provides a website with its online address. Authorities would be able to get court orders that would require internet service providers (ISPs), search engines, online payment processors, and others to stop doing business with rogue websites. Critics argue this move is akin to censorship activities promulgated by governments in China and other countries in which free speech is suppressed. Bill sponsors on both sides of the aisle vowed to strip that provision out but continue moving ahead on the bill. Related: US Cracks Down On Download Sites In Midst Of Anti-Piracy Debate But after a massive internet blackout on 18 January in which tens of thousands of sites went dark in protest of SOPA and PIPA, the Senate delayed consideration of the bill, as did the House until there is wider agreement on a solution. But bill sponsors say halting the legislation altogether will just exacerbate the piracy problem. “More time will pass with jobs lost and economies hurt by foreign criminals who are stealing American intellectual property, and selling it back to American consumers,” said Sen. Patrick Leahy, the Vermont Democrat who sponsored PIPA. “I remain committed to addressing this problem; I hope other members of Congress won’t simply stand on hollow promises to find a way to eliminate online theft by foreign rogue websites, and will instead work with me to send a bill to the President’s desk this year.” The Obama administration opposed the DNS provisions, saying its analysis of some of the DNS filtering provisions “suggests that they pose a real risk to cybersecurity and yet leave contraband good and services accessible online.” IP officials in the White House also called on all private parties to adopt voluntary measures and best practices to reduce online piracy. “The administration calls on all sides to work together to pass sound legislation this year that provides prosecutors and rights holders new legal tools to combat online piracy originating beyond U.S. borders while staying true to the principles outlined above in this response,” the IP officials added. In response, Rep. Darrell Issa, the California Republican who led the charge against SOPA, introduced the Online Protection & Enforcement of Digital Trade Act (OPEN), which would send piracy cases to the International Trade Commission (ITC), which would investigate infringement claims against foreign rogue sites and cut off funding to sites found to be wilfully and primarily trafficking infringed material. Sen. Ron Wyden, an Oregon Democrat, introduced the Senate companion bill. “OPEN is a targeted, effective solution to the problem of foreign, rogue websites stealing from American artists and innovators,” Issa said. The January internet blackout “underscored the flawed approach taken by SOPA and PIPA to the real problem of intellectual property infringement. OPEN is a smarter way to protect taxpayers’ rights while protecting the Internet.” But groups in support of SOPA, such as the US Chamber of Commerce, say the ITC will take too long to deal with infringement cases and won’t be effective enough. Outside of Congress, the US Justice Department (DOJ) and other federal agencies are expected to continue cracking down on pirated and counterfeit goods, including takedowns of websites found to be infringing IP rights. The DOJ in January charged a popular Hong Kong-based file-sharing website, Megaupload, with storing and distributing pirated material worth more than $500,000. Also, sentencing is proceeding for the founders of NinjaVideo.net, a website that provided millions of users with the ability to illegally download high-quality copies of copyright-protected movies and TV programmes – including films still playing in the theatres. The investigation, led by the Immigration and Customs Enforcement’s Homeland Security Investigations-led National Intellectual Property Rights Coordination Center (IPR Center), is part of the DOJ’s IP Task Force to stop intellectual property theft both domestically and abroad. The task force in previous months also helped charge a Chinese national with economic espionage and theft of trade secrets, Brooklyn and New Jersey residents with trafficking counterfeit perfume, and a CD and DVD counterfeiter and supplier. Open Access SOPA has also brought more attention to HR 3699, The Research Works Act, sponsored by Issa and New York Democratic Rep. Carolyn Maloney. The bill would ban federal agencies from allowing the dissemination to the public of private-sector research work funded in part, or in whole, by the government. The Scholarly Publishing & Academic Resources Coalition (SPARC) of the Association of Research Libraries is one of many groups opposing HR 3699 – which include the American Association for the Advancement of Science, Knowledge Ecology International, and college libraries – arguing that it would deal a blow to public access mandates and the development of repositories for publicly funded research. These groups support the US National Institutes of Health (NIH) public access policy, which says any researcher who accepts government money for their work agrees to make that research available to the public for free via an NIH database after publishers have about a year of exclusive access to charge for the content. These groups want more federal agencies to adopt such a policy; the United Kingdom is moving to embrace a similar rule. “We have not seen any movement yet but obviously, Issa is the chair of the referring committee and the primary sponsor, we’re not taking it lightly,” said SPARC Executive Director Heather Joseph, who said it is possible the bill could also be slipped into an appropriations bill. “Because all eyes were on Issa and SOPA, we got a lot more input on this open access bill than we would have … so thank heaven for small favors.” Related: Top IP Legal Issues in the United States in 2012 The Association of American Publishers called HR 3699 “significant legislation that will help reinforce America’s leadership in scholarly and scientific publishing in the public interest and in the critical peer-review system that safeguards the quality of such research.” The Copyright Alliance called the NIH policy “counterproductive,” adding: “Providing a federal grant to fund a research project should not enable the federal government to commandeer and freely distribute a subsequently published private sector peer-reviewed article.” SPARC also would like to see a reintroduction of the Federal Research Public Access Act, which would make all agencies condition their grants to require that any research paid for with taxpayer money would be made available to the public – like the NIH policy. “We are anticipating that is going to be reintroduced fairly early on this year in both the House and the Senate,” Joseph told Intellectual Property Watch. Meanwhile, the White House Office of Science and Technology Policy (OSTP) is coordinating with other agencies to develop policies that assure widespread public access and long-term stewardship of the results of federally funded, unclassified research as part of the America Competes Reauthorization Act. The OSTP has been soliciting comments from industry on open access to scientific publications and management of digital data. The White House may eventually issue a rule or similar action to implement the new policy this year. Patent Reform The US Patent and Trademark Office (USPTO) is moving full steam ahead in implementing last year’s patent law reform legislation, the America Invents Act (AIA). The USPTO has published proposed rules to implement AIA on issues including: inventor’s oath and declaration, third-party submission of prior art in a patent application, citation of prior art in a patent file, and Office of Enrollment and Discipline statute of limitations. Many stakeholder groups like the Intellectual Property Owners Association (IPO) will spend much of the coming year filing comments on these proposals, specifically those dealing with post-grant review and inter-partes reviews, as well as a transitional program for business method patents. USPTO also delivered to Congress reports for the prior user rights defence study [pdf] and the international patent protection for small business study [pdf] in January. “We will be wanting to, on the one hand, keep this fast, inexpensive and simple as possible. On the other hand, we will be wanting to make sure that the patent owner has the full opportunity to make his case defending the validity of the patent,” IPO Executive Director Herb Wamsley told Intellectual Property Watch. “It’s important to strike the right balance. This is the area of the AIA where the shape of the rules will be very important to determine whether the AIA is a success.” The USPTO also will open a new satellite office in Detroit, Michigan, as part of its plan to set up examiner offices across the country by July. “Making it easier for entrepreneurs to get a patent means they can start turning their innovative ideas into job-creating businesses more quickly,” said Michigan Sen. Debbie Stabenow, a Democrat. “Our state is first in the nation in clean energy patents, and Michigan is home to groundbreaking research in agriculture, advanced batteries, and new auto technologies. It is very fitting the first satellite office in the country be located in Detroit.” Many eyes will also be on the appropriations process this year to ensure the USPTO has access to all of the fees it collects. “There’s going to be enormous pressure to reduce the deficit and when the 2013 budget comes to Congress” later in the year, Wamsley said, “we think it’s possible that once again there will be a move to deny the PTO access to all of its fees.” Many believe the AIA leaves open a small loophole that allows congressional appropriators to divert PTO fees to uses other than those dealing with the patent process. Beyond that, there’s no expectation of much further legislative action on patent reform. “I think in the patent area … people are still suffering somewhat from post-America Invents Act fatigue, and while we’re very interested in trying to assist the PTO on implementing what passed, there’s not a lot of enthusiasm for further patent legislation this year,” Wamsley added. Biosimilars and Reverse Payments Ban The Food and Drug Administration (FDA) is expected to soon release guidance on follow-on biologics, or “biosimilars.” The healthcare reform act passed in the US in 2010 calls for a regulatory pathway to be formed to bring follow-on biologic drugs, or “biosimilars,” to market, and provides brand companies with 12 years data exclusivity in creating and marketing their products before generic firms can use brand firms’ data to make their own biosimilars. Drugmakers are pushing for similar protection overseas as well (IPW, US Policy, 20 December 2011). The forthcoming FDA guidance could include topics such as how to determine when a similar drug is similar enough to the original biologic, among other challenges. The Senate is also scheduled to debate S 27, the Preserve Access to Affordable Generics Act. This prohibits brand drug companies from paying generic firms to delay entry of generic drugs to market – also referred to as “reverse payments.” The Congressional Budget Office estimates that by implementing S 27, taxpayers could save more than $1.1 billion between 2012 and 2016 and more than $4 billion from 2012-2021. The federal deficit could be reduced by nearly $4.8 billion during the latter time period. S 27 sponsor Sen. Herb Kohl, a Wisconsin Democrat, Senate Finance Committee Chairman Max Baucus, a Montana Democrat, and senior Finance Committee Republican Chuck Grassley of Iowa sent letters to Pfizer, three companies that manage pharmaceutical benefits (PBMs) and two insurance companies asking for information about agreements to limit the sale of Atorvastatin, the generic to Pfizer’s Lipitor. “Consumers and taxpayers foot the bill when drug benefit companies and insurers manipulate the marketplace to prevent access to generic drugs for millions of Americans,” Kohl said. “We hope that scrutiny into these business practices will restore fairness and open the gates to affordable prescription drug choices and tremendous cost savings.” The Biotechnology Industry Organization (BIO) is discussing a package of reforms with Capitol Hill staffers and lawmakers that will encourage investment in innovation and accelerate scientific breakthroughs. BIO President Jim Greenwood expects legislation to be introduced early this year, much of which affects the FDA. Among other things, BIO is pushing for passage of the Prescription Drug User Fee Act (PDUFA) package; over the years, the PDUFA has enabled the FDA to collect user fees from companies that produce certain human drug and biological products to help expedite the agency’s drug approval process. Congress is due to take up the fifth reauthorisation of the PDUFA this year. Groups like the Heritage Foundation are urging Congress to ensure PDUFA reauthorisation comes with some teeth in terms of making sure the FDA speeds up drug development and transparency, as well as improves overall performance. Many industry groups like the Pharmaceutical Research and Manufacturers of America (PhRMA) also have been providing input to the FDA about the proposed user fees and performance goals for biosimilars. “We endorse a clear, science-based, separately funded regulatory program for biosimilars that is supported by a mix of appropriations dollars and user fees,” PhRMA said last month.” BIO will also push for extending and expanding the Therapeutic Discovery Project (TDP) tax credit to provide R&D funding to emerging biotech companies, and for legislation that helps implement the health care reform of 2009. Other IP-related bills pending in Congress include: S 1882 Fair and Immediate Release of Generics Drugs Act: Eliminates the 180-day exclusivity period for a generic drug applicant that enters into a disqualifying agreement as defined by the legislation. S 1830 Protect American Innovation Act of 2011: Holds countries accountable for abusing international trade rules; one section of the bill is dedicated to improving of IP rights by bolstering US anti-counterfeiting and anti-piracy rights. Calls for establishing within the Treasury Department position of Director of Intellectual Property Rights Enforcement to coordinate enforcement with ICE, Customs, etc. CBP commissioner to appoint Customs coordinator of IP. S 978: Amends criminal penalties, provides for imprisonment for up to five years, a fine, or both for criminal infringement of a copyright where the offense consists of 10 or more public performances by electronic means during any 180-day period of one or more copyrighted works. S 679 Economic Espionage Penalty Enhancement Act: Increases prison term to 20 years for economic espionage – i.e., stealing, copying, buying or possessing trade secrets without authorisation, to benefit a foreign government, company, or other agent. S 1886 Counterfeit Drug Penalty Enhancement Act of 2011: Increases maximum penalties for trafficking counterfeit drugs; HR 3468 is the House companion bill. HR 2933 Sound Recording Simplification Act: Extends coverage provided by the federal Copyright Act to sound recordings made before 1972. Currently, any music recorded before 1972 is subject to a number of different state laws pertaining to right of publicity, criminal laws, anti-bootlegging laws, and others. HR 2511 Innovative Design Protection and Piracy Prevention Act: Provides three years of copyright protections for fashion designs, which are not protected under the traditional intellectual property regime in the US. 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