Giachino (00:05.0070 - 00:37.0709)
Welcome to IP Protection Matters. I'm your host, Renee Giachino. Today, we are joined by Kristen Jakobson Osenga, the Associate Dean for Academic Affairs at the University of Richmond School of Law. Dean Jacobson Osenga teaches and writes in the areas of patent law, antitrust, legislation and regulation. She joins us today to discuss patent eligibility and preliminary injunctions in patent litigation, among other issues.
Kristen, welcome to IP Protection Matters. It's a pleasure to have you join me.
Osenga (00:37.0709 - 00:39.0669)
Thank you for asking me to be on.
Giachino (00:39.0669 - 00:53.0990)
I like to start these discussions by asking a somewhat simple question that probably has a very difficult answer. Why should we care about IP protection? In other words, why does IP protection matter?
Osenga (00:54.0409 - 01:36.0089)
You are right. That is a simple and a hard question all at once. I think the easiest thing to explain is that intellectual property helps drive so many of the good things in the world. It drives innovation and we all love new stuff. We love new inventions. I was driving the other day with my children and without GPS, what did we used to do? We pulled out a big old book of maps. So it drives innovation, but it also drives the economy, it drives jobs and, for those reasons, I think IP protection is really important.
Giachino (01:36.0239 - 02:08.0440)
Let's go back in time as well. Maybe not before there was GPS. But back in 2006, the Supreme Court issued a seminal opinion in this arena - the eBay case - that dramatically altered the patent landscape.
What in your opinion has been the outcome of that case in terms of patent infringement? Maybe we'll back up a little bit for folks who might be less familiar with the case and even the terminology. What is meant by patent infringement?
Osenga (02:08.0000 - 04:58.0820)
Inventors can apply to the Patent Office to obtain a patent, and the Patent Office examines it to determine if it meets the qualifications to be patented. If it does, that means that then the inventor receives, or the company they work for, or another company can buy that patent. So let's just say the patent owner. Whoever owns the patent that has been issued by the Patent Office can then stop other people from using that technology during the period of the patent.
So it's kind of like a limited-term reward for inventing something that was worthy of a patent. You get to stop other people from using it for a short period of time. Then the good news is that the patent and the technology just goes into the public domain and everyone can use it. So that's the idea of patents and what patents give you. Patent infringement is if somebody is using your patented technology during that short period in which you have the ability to stop other people from using it, that's patent infringement.
If you're the patent owner, you bring the infringer to court generally and you ask the court to find that the infringer is infringing your patent. Before 2006, in the eBay case, in some 90+% of cases if a court had a patent owner and an infringer in front of it, and the court found that the infringer had indeed infringed the patent, and they found no reason to find the patent to be invalid, then the court would tell the infringer to stop infringing.
So what that is known as legally is an injunction. So if the court says you need to stop using the technology that you do not have the right to use, that's an injunction. What the eBay decision did in 2006 was made it more difficult for patent owners to obtain injunctive relief. Now I'm not saying that no patent owners get injunctive relief. Still a good number of patent owners get injunctive relief, but it's much harder now. It's particularly harder for certain types of patent owners to get injunctive relief.
So what that means is if your patent only gives you the right to tell other people to stop using your technology and you can't get an injunction, then you're not actually able to stop anyone from using your technology. So you might get some damages, you might get some money in exchange for letting the infringer continue to infringe, but ultimately you're kind of losing out because what you're intended to get, what a patent is supposed to give you, is the ability to tell somebody else to stop using the technology.
Giachino (04:59.0309 - 05:26.0399)
So let's dive a little deeper because in this terminology we also hear about a predatory infringement. Can you help us understand the idea of predatory infringement? In one of the articles that you wrote, you had a great analogy of a real property situation, such as an apartment. I think that will really help us dissect it a little bit for people to better understand that terminology as well.
Osenga (05:26.0859 - 08:12.0010)
Your listeners may have bumped into predatory infringement in other news stories or podcasts. Oftentimes it's called efficient infringement, which I don't like. I don't think that accurately describes the situation, but if your listeners have encountered it before. They might have encountered efficient infringement.
The idea with efficient infringement or predatory infringement is, as I mentioned just a few minutes ago, there are certain types of patent owners that are unlikely to get an injunction even if there's an infringer out there using their technology. So it is using kind of a metaphor. Say I have a piece of land that I own. For the most part, I'm able to keep you off my land. Certainly there's reasons like duress and easements and whatever. But putting that aside, for the most part, I'm able to keep you out of my house because it's my house. I own it, and I have the right to keep you out.
So that's how patents are supposed to work. But if you have a patent owner who, if they go to court, at best, the court is going to give them damages. They're not going to tell the infringer to stop infringing. Then some infringers might think to themselves, hey, I know nobody's going to stop me from infringing, so I might as well just do it. Then maybe I'll get caught. Then maybe I'll have to go to court. Maybe I'll have to pay some money, but for the however many years before I get caught and before a court determines that I'm infringing, no harm, no fault. I could basically get to be there for free.
So again, going back to the analogy, if I know that no court is going to keep you out of my house and you're an unsavory nefarious person, perhaps you just move in. The only way for me to try to even get you kicked out is to take you to court. But maybe I'm one of those types of patent owners that the court's unlikely to grant an injunction. So what the court's going to say to me instead is, hey, go ahead and let Renee keep living in your house, she'll pay you some rent. But this will be years after the fact, years after you first moved in.
Because of that, because eBay changed the assessment of how infringers might be told to stop using the technology altogether, certain infringers are making what seems to be a good calculated business risk, but which is bad for the economy and bad for the patent system. But they're making a calculated business risk of, hey, it makes a lot more sense for me to do it and ask to pay rent later.
Giachino (08:12.0429 - 08:46.0190)
So it's the whole idea of infringe now, pay later. Kind of like when my husband was in the military, you would hear some of the military folks say, "do now, ask for permission later."
I'm going to dive into the weeds a little bit with you again if you don't mind. I'd like to talk a little bit about two terms that come up often when discussing intellectual property and patents. Can you define for us what is meant by evergreening?
Osenga (08:46.0609 - 11:34.0859)
I can. I will be perfectly honest, I do know what it means. I do teach patent law. Evergreening is a term that comes up most often in the pharmaceutical space, and so that's an area that I'm not quite as deeply steeped in. But the idea of evergreening is a claim that some groups make against pharmaceutical patent owners or pharmaceutical innovators [saying] that they get patents that cover little tiny improvements so that their patent term lasts longer than that short statutory time that I mentioned to you earlier. You have this limited period of time that your patent exists and then it goes into the public domain.
The argument that people who talk about evergreening are making is, well, you got the patent on the drug, but then you got a subsequent patent on the extended release of the drug. Then you got a subsequent patent on the drug mixed with a helper drug. The argument by the people who use the term evergreening is that you're extending that protective period beyond what is fair ... by making these small improvements to your drug and continuing to patent them as an improvement. I disagree 100% with the idea that evergreening is bad and wrong because those are still improvements that need to pass the Patent Office in order for that second or third or fourth patent to issue.
The underlying base drug does eventually come off patent even if the extended release is still on patent for three more years. The underlying base drug isn't on patent. The reason why I think these improvements are fine - aside from the fact that if a patent is granted by the Patent Office - the Patent Office has determined that it's different enough, it's not obvious of the old patent. It's not the same as the old patent. So if the Patent Office grants the patents, the Patent Office says this is different enough.
We want pharmaceutical firms to continue to improve their inventions, right? We don't want them to stop at the base drug, right? I love extended-release drugs. I love it when you can have multiple drugs in one pill. That makes life so much easier for a lot of people. So those are improvements that benefit society. And if the Patent Office says they're different enough, I really hate the idea of evergreening as being a problem.
Giachino (11:35.0049 - 11:54.0900)
You hear the folks also talk about a somewhat related term - patent thickets. Some people say that those are to blame for high drug prices. Recognizing again that the pharmaceutical arena isn't your area of expertise, how do you define a patent thicket or distinguish it from evergreening?
Osenga (11:56.0030 - 14:15.0539)
It's not terribly distinguishable. I think they're kind of related. What people who raise concerns about patent thickets believe is that you allow a bunch of patents that are essentially almost overlapping in space. Think about a flower that is covered by other flowers and so then you get this big bouquet of flowers. The idea there is where can innovation take place by someone else?
So that's the negative viewpoint of the patent thicket. It's that tf we allow one particular pharmaceutical company to get the patent on the base drug and the extended release and a different way of creating it and a different way of administering it, you get this essentially overlapping or at least budding patent right and the whole space is covered by one particular patentee.
The argument then is but then how does somebody else innovate in that space? How do we get somebody to design around it? I don't think that's a bad thing. I think there's a flip side argument to that. It's an old theory, but it’s known as the prospector theory. So the idea there is if you find gold in a particular part of a river that you have the rights to pan, then it's going to be cheaper, easier and faster for you to scooch just a little bit down the river and continue panning for gold than it is for somebody to come from completely outside and set up a whole new place right next to where you're at.
So the idea is you already have the expertise, the tools, the knowledge, the background. You're working in this space. It's efficient in a good way for you to continue to develop around that same space because you're already there.
So that's one way to think about it. Now, does it create a patent thicket? Perhaps, but on the other hand, we're still getting that innovative activity out of the company that started in that space. After that the Patent Office decides that it's different enough, not obvious, and grants a patent on it. That's not a problem in my personal view.
Giachino (14:15.0950 - 14:50.0809)
Dean Osenga, I really appreciate your analogies from bouquets to gold to apartments. It really helps to break it down for those of us who are still learning. It is a great educational tool.
Speaking of educating, it's been over a year now since you submitted written testimony and presented that testimony before the U.S. Senate Committee of the Judiciary on the RESTORE Patent Rights Act. Can you please share with us just a few of your thoughts on why Congress should enact this important legislation?
Osenga (14:51.0010 - 16:54.0690)
The RESTORE Act is essentially aimed at fixing the problem that we talked about a few minutes ago with respect to eBay. As I mentioned, before the eBay case came out in 2006, if infringement was found, in most cases the court would award an injunction and tell the infringer to stop infringing. That's what a patent gets you is the ability to tell somebody to stop infringing on my technology or pay me, license with me, negotiate with me, not have the court set a rate, but negotiate with me if you want to use my technology, negotiate with me if you want to squat in my apartment.
So eBay did that and the RESTORE Act is trying to fix that legislatively by telling the patent system that it is presumptive that an injunction will issue if infringement is found. So this doesn't guarantee an injunction in every case. It's just a presumption. But if the RESTORE bill were to pass, the patent owner wouldn't have to jump through hoops to prove they're worthy of an infringement, which is kind of the situation that eBay set up.
Instead, the Court's going to have to figure out why the defendant who doesn't want to be enjoined, or the infringer is going to have to explain why it's in the public's interest for them to continue to be able to squat on the technology. So it just kind of shifts the balance of the calculus. So instead of there just being an injunction granted, which it was before eBay, now the patentee or patent owner has to jump through hoops after eBay.
What the RESTORE Act would do is say, you know what, if infringement is found, the court will tell the infringer to stop infringing unless the infringer can make a good case why that's not good for the public.
Giachino (16:54.0840 - 17:03.0090)
It is my understanding that this bill has bipartisan support, which doesn't happen all too often on Capitol Hill. So what is holding it up?
Osenga (17:03.0289 - 18:35.0530)
I don't know the actual answers to those questions. I will say a couple of things. First of all, one of the reasons I absolutely love working in the intellectual property space is that it oftentimes is bipartisan. Patents aren't really Democrat or Republican or liberal or conservative. They're a property right that gets us a valuable invention or innovation. So it's something that either side can buy into or not. It doesn't really fall within the lines of political stripes, which I just love about working in this space. But it's not to fault why the RESTORE Act hasn't gone forward or any of the many bipartisan patent bills that have come up. There’s some really strong champions of the intellectual property system in Congress.
[Senators] Koons and Tillis have been absolutely huge in getting a number of patent bills into committee. One of the other bills that's a little more esoteric got out of committee a year or two ago. But why aren't these going forward if they make so much sense? I wish I knew the answer to that. I think it's that there's a lot going on in the world. Congress has so much to do and so many things to fix that I don't know that this really captures the imagination of as many people as it captures my imagination.
Giachino (18:36.0229 - 19:23.0300)
Let's go back a couple decades and talk about another piece of legislation that did have bipartisan support - the Bayh-Dole Act. In a letter to the Director and Undersecretary of Commerce for Standards and Technology that you signed on to recently, that letter addressed the negative effects that potential changes could have on biopharmaceutical innovation. It talks about march-in rights.
Can you help us understand how exercising the Bayh-Dole march-in rights based on what we call the reasonableness of drug prices, what devastating effect that could have potentially on government-funded basic research, whether that's in the biopharmaceutical arena or any other innovation or technology?
Osenga (19:23.0550 - 21:59.0333)
This is a tricky one to kind of explain in short order. But keeping it at a very high level, almost all basic research in some respects has some sort of government funding attached to it. But it's not that base research that ultimately ends up with the drugs that we take. The underlying mechanisms, the underlying proteins oftentimes are kind of viewed as base research, but the pill you take or the drug that is injected or endosed to you is oftentimes not that government research. It's attenuated. There's research that happens in between. So that's one thing to think about.
The other thing to think about is the costs involved in high prescription prices - a very small amount of that has anything to do with the patent owner. Taking away the patent right doesn't solve the actual problems that may be more related to the costs of drug approval. When we're thinking about prescription drugs or generic drugs or whatever, we have not just the cost of developing the drug, but also getting the drug all the way through the FDA process.
On top of that, we have a really unusual setup where we have prescription benefits managers and the insurance overlay. So, drug prices are driven maybe in some small respects by the patent that underlies the drug, but the drug price is also capturing how expensive it is to get drugs approved through the FDA. Also the drug prices are being set at the end of the day, oftentimes by insurance companies.
So with all of that, if you all of a sudden then go in and say, yeah, but you know what the real problem is patents, so let's go ahead and march-in on behalf of the United States to take away the patent rights so that the United States can start doing pharmaceuticals cheaper, you're missing out on a lot of the actual problems. You're potentially solving one problem, but it's an attenuated problem at best. I'm not sure that's incredibly helpful, but the system is so complex that this is not the right thread to pull to fix it.
Giachino (21:59.0793 - 22:43.0000)
Kristen, thank you so much. Our guest has been Kristen Jakobson Osenga, Associate Dean for Academic Affairs at the University of Richmond School of Law, where she practices, writes, and teaches about areas of patent law, antitrust, legislation and regulation.
Thank you for all that you are doing to educate your students, all that you were doing to help educate us, Members of Congress, and lots of other folks on these important issues related to intellectual property and why IP protection matters.
You've been listening to IP Protection Matters. To learn more and listen to some of our other podcasts, you can go to IPprotectionmatters.org. Kristen, have a wonderful afternoon. Thank you again for your time today.
Osenga (22:43.0000 - 22:44.0000)
Thank you for having me.