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The Politicization Of The US Patent System

The Washington Post story, How patent reform’s fraught politics have left USPTO still without a boss (July 30), is a vivid account of how patent reform has divided the US economy, preempting a possible replacement for David Kappos who stepped down 18 months ago. The division is even bigger than portrayed. Universities have lined up en masse to oppose reform, while main street businesses that merely use technology argue for reform. Reminiscent of the partisan divide that has paralyzed US politics, this struggle crosses party lines and extends well beyond the usual inter-industry debates. Framed in terms of combating patent trolls through technical legal fixes, there lurks a broader economic concern – to what extent ordinary retailers, bank, restaurants, local banks, motels, realtors, and travel agents should bear the burden of defending against patents as a cost of doing business.


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    IP And The White House: What Happens With IP Issues After The US Presidential Election?

    Published on 27 September 2012 @ 7:14 pm

    By for Intellectual Property Watch

    What would a Mitt Romney White House mean for intellectual property and open internet, and just how would a Vice President Paul Ryan affect those policies? Would a new Republican administration replacing the current Democratic administration mean a new approach to IP?

    While many non-profits, lobbying groups and even legal firms chose to stay mum when asked about what differences would be between a Romney and Obama administration on these issues, we have President Obama’s record of the past four years to look back on to see how he has handled issues such as intellectual property in trade negotiations, Net neutrality, Internet access and infringement. We also have the Democratic Party platform [pdf] released at the conventions this summer.

    As for Romney, we can look at the GOP platform [pdf] statements he has made on the campaign trail – or during his term as governor of Massachusetts – and media reports to get a glimpse of how he would approach such issues.

    Based on these sources, as well as others, here is Intellectual Property Watch’s comparison of what IP-related policies may look like under Obama and Romney.

     

    Internet Access, Freedom & Competition

    Obama

    Platform: “We will ensure that America has a 21st century digital infrastructure – robust wired and wireless broadband capability … committed to ensuring that 98 percent of the country has access to high-speed wireless broadband Internet access. We are finding innovative ways to free up wireless spectrum and are building a state-of-the-art nationwide, interoperable, public safety network. President Obama is strongly committed to protecting an open Internet that fosters investment, innovation, creativity, consumer choice, and free speech, unfettered by censorship or undue violations of privacy.”

    “We will continue to work with all stakeholders to protect the security of the nation and its knowledge assets, U.S. intellectual property, the functioning of fair and competitive markets, and the privacy, free expression, and due process rights of Americans.”

    Touting the Obama administration’s work in leading “the world to recognize and defend Internet freedom” and building partnerships “to support an Internet that is secure and reliable and that is respectful of U.S. intellectual property, free flow of information, and privacy,” the platform also says Democrats “support the current multi-stakeholder approach to Internet governance, and oppose the extension of intergovernmental controls over the Internet.”

    Romney

    Platform: “The Internet has unleashed innovation, enabled growth, and inspired freedom more rapidly and extensively than any other technological advance in human history. Its independence is its power. The Internet offers a communications system uniquely free from government intervention. We will remove regulatory barriers that protect outdated technologies and business plans from innovation and competition, while preventing legacy regulation from interfering with new and disruptive technologies such as mobile delivery of voice video data as they become crucial components of the Internet ecosystem. We will resist any effort to shift control away from the successful multi-stakeholder approach of Internet governance and toward governance by international or other intergovernmental organizations. We will ensure that personal data receives full constitutional protection from government overreach and that individuals retain the right to control the use of their data by third parties; the only way to safeguard or improve these systems is through the private sector.”

    On broadband, the Obama administration inherited from the previous Bush administration 95 percent broadband coverage across the nation, the platform says. “It will leave office with no progress toward the goal of universal coverage – after spending $7.2 billion more. …We encourage public-private partnerships to provide predictable support for connecting rural areas so that every American can fully participate in the global economy.” 

    “We will remove regulatory barriers that protect outdated technologies and business plans from innovation and competition, while preventing legacy regulation from interfering with new and disruptive technologies such as mobile delivery of voice video data as they become crucial components of the Internet ecosystem.”

    —–

    Both Obama and Romney oppose the idea of the UN International Telecommunication Union taking control over the pricing of internet interconnections and technical standards. There is more support for the current decentralized, multi-stakeholder approach. Romney makes a point to vow to reduce regulatory issues that may stymie internet growth, and to veer more toward a hands-off approach to telecommunications and related issues. But when it comes to distribution of child pornography, for example, Romney reportedly (also here) would take a strong stance against distribution of such material on the internet and cable services, and would prosecute if elected.

    Related: UN Non-Takeover of the Net: ITU’s Toure Calls For Documents To Be Public

    In this year’s Science Debate, Obama also said “any effort to combat online piracy must not reduce freedom of expression, increase cybersecurity risk, or undermine the dynamic, innovative global Internet.” In that same debate, Romney said “it is not the role of any government to ‘manage’ the Internet. …I would rely primarily on innovation and market forces, not bureaucrats, to shape the Internet and maximize its economic, social and scientific value.” Ryan, for his part, praised the internet and how it has helped open up government during a Facebook event last year, saying “it strips away the intermediary between people and their government … the flattening of that process has been tremendously helpful to those of us who want to hear what people thinking.”

    As for Vice President Biden, during his tenure in Congress, he was an ardent supporter of content providers, even sponsoring copyright industry-friendly legislation. The Obama administration – which is often viewed as very Hollywood-friendly – has frequently said it will work aggressively to fight for the movie industry, among other content providers, and enforce IP protections at home and abroad.

    Related : Obama Administration Lock(e)s and Loads Against Movie Piracy

    “On the one hand it’s a good thing both parties are acknowledging internet freedom more than ever but on the other hand, it would be great if they would get more specific on copyright and actually push for copyright reform rather than just strengthening copyright laws. Same thing goes for patents,” said Trevor Timm, an activist with the Electronic Frontier Foundation (EFF).

    Sen. Chris Dodd, Chairman and CEO of the Motion Picture Association of America, said he’s pleased to see both parties have clearly stated that protecting the free flow of information on the internet and protecting American innovators “are not mutually exclusive goals – and that in fact, they are equally critical.”

    But he seemed to go a step further in supporting the Republican platform language, saying he “wholeheartedly” agrees with them on protecting free flow of information while still protecting American innovators.

    “The Republican Party platform language strikes a very smart balance: it emphasizes the importance of us doing more as a nation to protect our intellectual property from online theft while underscoring the critical importance of protecting internet freedom,” Dodd said. “As the party points out, the Internet has been for its entire existence a source of innovation, and it is intellectual property that helps drive that innovation. Copyright is the cornerstone of innovation; it allows creators to benefit from what they create. As Supreme Court Justice Sandra Day O’Connor – herself once a Republican elected official – wrote, ‘[I]t should not be forgotten that the Framers intended copyright itself to be the engine of free expression. By establishing a marketable right to the use of one’s expression, copyright supplies the economic incentive to create and disseminate ideas.’”

     

    Net Neutrality

    Obama

    Platform: “President Obama is strongly committed to protecting an open Internet that fosters investment, innovation, creativity, consumer choice, and free speech, unfettered by censorship or undue violations of privacy.”

    Romney

    Platform: The Obama administration, “through the FCC’s net neutrality rule, is trying to micromanage telecom as if it were a railroad network.”

    —-

    Net neutrality refers to the idea that internet networks shouldn’t distinguish between the types of traffic carried across them, nor between platforms, attached equipment or related sites, and that government should step in to ensure internet service providers (ISPs) don’t restrict consumers’ access to certain networks or block out competitors. Obama’s Federal Communications Commission chief, Julius Genachowski, in May 2010 proposed a “third way” on net neutrality, which applied narrow regulations to broadband providers, but scaled back original calls for carrier requirements – such as forcing them to share lines with competitors.

    In this year’s Science Debate, Romney said the FCC’s net neutrality regulation “represents an Obama campaign promise fulfilled on behalf of certain special interests, but ultimately a ‘solution’ in search of a problem. The government has now interjected itself in how networks will be constructed and managed, picked winners and losers in the marketplace, and determined how consumers will receive access to tomorrow’s new applications and services. The Obama Administration’s overreaching has replaced innovators and investors with Washington bureaucrats.” Ryan last year voted against a House resolution disapproving of FCC regulations attempting to regulate the internet by mandating that any traffic management from ISPs be “reasonable” – a term translated to be friendly toward net neutrality.

    But since the “third way” was introduced, net neutrality has fallen off the radar for many lawmakers.

    “Democrats used to be really pushing the issue but now that President Obama’s in office and the FCC has issued rules that some people think are watered down – net neutrality rules – they kind of put the issue on the back burner,” EFF’s Timm said.

     

    Infringement

    Obama

    Platform: The Obama administration vows to crack down on IP violations and the protection of America’s trade secrets. The platform notes that seizures of fake consumer safety and critical technology are up 200 percent, and that the Department of Justice has prosecuted the illegal overseas transfer of trade secrets. “As technology advances, we will continue to work with all stakeholders to protect the security of the nation and its knowledge assets, U.S. intellectual property, the functioning of fair and competitive markets, and the privacy, free expression, and due process rights of Americans.”

    The Democratic platform gives details how the Obama administration will continue to support the rights of intellectual property holders in economic development activities at home and abroad, and will work for “better enforcement and innovative approaches such as voluntary efforts by all parties to minimize infringement while supporting the free flow of information.”

    Romney

    Platform: “Counterfeit goods will be aggressively kept out of the country. Victimized private firms will be encouraged to raise claims in both U.S. courts and at the World Trade Organization. Punitive measures will be imposed on foreign firms that misappropriate American technology and intellectual property. Until China abides by the WTO’s Government Procurement Agreement, the United States government will end procurement of Chinese goods and services.”

    ——-

    Romney is particularly hitting hard against China for infringement (more below), but said that with the expansion of trade comes an increased change for governments to continue “Stealing our designs, patents, brands, know-how, and technology – the ‘intellectual property’ that drives innovation.” Romney says that without full parity in trade with such countries, he vows to walk away from negotiations.

    Obama nominated the first “IP czar” to the office of the Intellectual Property Enforcement Coordinator (IPEC),  as mandated by the ProIP Act passed in 2008. In June, that office, headed by Victoria Espinel, released a two-year progress report on the administration’s Joint Strategic Plan on Intellectual Property Enforcement, noting, among other things, that:

    -Between FY2009-FY2011, seizures increased 67 percent; fake consumer safety and critical technology merchandize seizures rose by 183 percent, and counterfeit drugs rose almost 600 percent. ICE reported a 66 increase in opened IP cases, 116 percent increase in arrests, and the FBI increased IP investigations by 56 percent.

    -The administration favours “voluntary approaches” that “can have a significant impact on reducing online piracy and counterfeiting.” The administration has facilitated such agreements to “quarantine” sites engaged in counterfeit acts, working with credit-card companies, domain-name registrars, and online advertisers.

    -Obama had increased penalties for counterfeit goods or services for use by the military or national security applications and grants authority to Customs and Border Patrol to share information to help determine if suspected fake products are genuine.

    -Obama, Vice President Biden and other administration officials continue to press American trading partners to improve IP enforcement; China has made “new recent commitments to improve enforcement.”

    Espinel’s office is working on a new Joint Strategic Plan on IP Enforcement to submit to Obama and Congress, which will outline the administration’s enforcement efforts for the next three years.

     

    SOPA: 

    Obama 

    The president opposed the House’s Stop Online Piracy Act (SOPA) and companion bill in the Senate, the Protect IP Act (PIPA). After a huge internet blackout in protest of the bill, lawmakers dropped discussion of the measure, which aimed to stop internet piracy and expanded the ability of law enforcement and copyright holders to shut down websites or prevent business with sites outside the US that host pirated content or traffic counterfeit goods. The Obama administration instead called on private parties to adopt voluntary measures and best practices to reduce online piracy.

    Romney

    In a Republican debate during the primaries, Romney also said the SOPA bill was “far too intrusive, far too expansive, far too threatening to freedom of speech and movement of information across the internet.” Ryan never co-sponsored the SOPA bill, and after a Redditt community launched an effort to derail Ryan’s re-election in 2012, Ryan said although SOPA “attempts to address a legitimate problem, I believe it creates the precedent and possibility for undue regulation, censorship and legal abuse.”

    Related: All Eyes on US Stop Online Piracy Act (SOPA): Fate of Bill Now Unclear

    Groups like the Motion Picture Association of America are hopeful SOPA will resurface sometime soon.

    “I think Congress, on the other hand, realized what kind of Pandora’s Box they opened up and ‘SOPA’ is just a toxic word and anything coming close to it can be labeled with the SOPA moniker” will be met immediate protests, Timm said. “I wouldn’t doubt that the movie and record industries will push for another SOPA-like bill. I I hope Congress learned its lesson and moves in the other direction toward copyright reform rather than overbearing, draconian copyright-strengthening laws.”

     

    International Trade:

    Obama

    Platform: Noting that the U.S. has progressed toward doubling exports by 2015 and Obama has signed new trade agreements with South Korea, Colombia and Panama, the administration is committed to finding more markets for American-made goods, particularly through the Trans-Pacific Partnership (TPP) between the U.S. and eight Asia-Pacific countries, while ensuring workers’ rights, environmental standards and fighting against unfair trade practices. The Obama administration also created a new government-wide Interagency Trade Enforcement Center to fight against unfair trade practices, particularly those involving China. Obama also supports Russia’s accession to the WTO. 

    Romney

    Platform: “Some governments have used a variety of unfair means to limit American access to their markets while stealing our designs, patents, brands, know-how, and technology – the intellectual property that drives innovation. The chief offender is China, which has built up its economy in part by piggybacking onto Western technological advances, manipulates its currency to the disadvantage of American exporters, excludes American products from government purchases, subsidizes Chinese companies to give them a commercial advantage, and invents regulations and standards designed to keep out foreign competition. The current Administration’s way of dealing with all these violations of world trade standards has been a virtual surrender.”

    “Because American workers have shown that, on a truly level playing field, they can surpass the competition in international trade, we call for the restoration of presidential Trade Promotion Authority. It will ensure up or down votes in Congress on any new trade agreements, without meddling by special interests. A Republican President will complete negotiations for a Trans-Pacific Partnership to open rapidly developing Asian markets to U.S. products. Beyond that, we envision a worldwide multilateral agreement among nations committed to the principles of open markets, what has been called a ‘Reagan Economic Zone,’ in which free trade will truly be fair trade for all concerned.”

    ————

    Both Obama and Romney support completion of the controversial TPP; Obama more stresses inclusion of certain protections like worker rights and environmental standards. Both candidates also agree that Trade Promotion Authority (TPA) needs to be restored. Romney seems to be taking a more aggressive stance in making sure trading partners live up to commitments and expectations – particularly when it comes to intellectual property protection – and continues to say he will confront nations such as China and others “that steal intellectual property from American innovators while closing off American access to their markets.” During his remarks at the Clinton Global Initiative on 25 September, Romney said he intends to reverse job loss in America by negotiating new trade agreements, expanding TPP and described the Reagan Economic Zone as one in which “where any nation willing to play by the rules of free and fair trade can participate in a new community committed to free and fair trade.” Countries included in that zone would have to be committed to open market principles and strong intellectual property protections. Obama has also vowed to double U.S. export growth by 2015 – an increase he says will support 2 million jobs in America.

     

    China

    Obama

    Platform: President Obama will “continue to be clear about the importance of the Chinese government upholding international economic rules regarding currency, export financing, intellectual property, indigenous innovation, and workers’ rights.”

    Romney

    Platform: The Chinese government has engaged in a number of activities that we condemn. …Our serious trade disputes, especially China’s failure to enforce international standards for the protection of intellectual property and copyrights, as well as its manipulation of its currency, call for a firm response from a new Republican Administration.”

    “A Republican President will insist on full parity in trade with China and stand ready to impose countervailing duties if China fails to amend its currency policies. Commercial discrimination will be met in kind.”

    ———–

    In September, Obama’s US Trade Representative asked the World Trade Organization to intervene with China over illegal subsidies of exports in their autos and auto parts sectors. The US says the practice puts American parts manufacturers at a competitive disadvantage and encourages the outsourcing of production to China. Romney call it “too little, too late.” In a Google+ Hangout in August, Romney also said Microsoft officials told him they see more intellectual property theft in China than anywhere else and that software piracy gives that country a huge economic advantage. “People in the US are paying for [Microsoft’s] software,” Romney said “People in China may not buy that software, so Microsoft doesn’t make money for it and the competitor in China has an advantage of not having to pay for it.”

    In a 24 September memo [pdf], Ben LaBolt, Obama for America National Press Secretary, blasted Romney for criticising China for intellectual property theft but still investing in Youku, a Chinese version of YouTube, which “quickly became a haven for downloading illegal American content.” That memo also notes that a Chinese company in which Romney’s company, Bain Capital, has been a large shareholder, is being sued by Microsoft for piracy.

     

    Biologics/Access to Medicines

    Obama

    The Biologics Price Competition and Innovation Act of 2009, included in the health care reform act, includes 12 years of data exclusivity for brand-name biologic drugs. However, his administration more favours reducing that window to seven years; his fiscal 2013 budget proposal includes changing the 12 years to seven. Many drug companies are hoping the Obama administration will seek to include that 12-year-window in the TPP agreement, but so far, the administration is not giving a specific term. In July, Democratic Sens. Patty Murry and Maria Cantwell wrote a letter to Obama [pdf] requesting the 12 years in the TPP to be consistent with US law, while a group of Democratic House members from Massachusetts sent a similar letter [pdf].

    Romney

    Romney argues that the entire health care reform bill – the Patient Protect and Affordable Care Act (ACA), should be repealed, but there are no other clear indications that the specific issue of biologics is on his radar. However, the Republican platform criticises the Food and Drug Administration (FDA) – the agency charged with creating an abbreviated pathway to bring biologics to market in the U.S. – saying the “lack of predictability, consistency, transparency and efficiency” at the FDA is “driving innovation overseas, benefiting foreign, not U.S. patients.”

     

    Liza Porteus Viana may be reached at lizapviana@gmail.com.

     


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