Biden’s shortsighted patent attacks threaten American innovation

The Biden administration is quiet suggestion It could devastate America’s tech economy. The White House says the plan is meant to “take down Big Pharma,” but in reality it will devastate investment in a range of sectors.

The proposal would essentially rewrite the 1980 law, Bayh-Dole ActIt enables universities to patent promising discoveries with the support of federal grants and then exclusively license those patents to private partners for further development and commercialization.

Prior to the Bayh-Dole Act, the government held patent rights to federally funded research. Exclusive In reality, few companies were willing to risk millions of dollars to commercialize an early-stage technology unless they held an exclusive license. As a result, Very few The invention has moved from the lab to the market.

Innovation has flourished since the Bayh-Dole Act. $1.9 trillion It has had a huge impact on U.S. manufacturing output over the past 30 years and led to the creation of thousands of exciting new companies. Hundreds of products The Bayh-Dole Act has made a wide variety of products available to consumers, from medicines and vaccines to battery technology and electronics.

The law’s authors included a small safeguard provision, called the “march-in,” that allows the government to step in and relicense federally funded patents if universities aren’t making the effort to license their patents or if licensees aren’t making the effort to bring their discoveries to market.

It’s this never-before-used march-in provision that the White House now says it can use as a magic wand to slash the prices of prescription drugs and other consumer goods. The administration’s new guidelines encourage government agencies to revoke exclusive patent licenses if bureaucrats believe the resulting products are too expensive.

As someone who has adjudicated patent cases in federal court for over 20 years, I can say with certainty that these bureaucrats are wrong. March-ins were intended as a safeguard for exceptional cases, not as a broad tool for government intervention.

Senators Birch Bayh (D-Indiana) and Bob Dole (R-Kansas) clearly stated Their laws do not allow the government to set prices for products that are widely available on the market. Every president since Jimmy Carter has followed Bayh and Dole’s interpretation of the laws, but President Biden clearly thinks his predecessors got it wrong.

But the Biden administration’s efforts to twist decades-old law to gain political victories may not end with Bayh-Dole. Legal Documents The government, Section 1498A World War I era law designed to provide reasonable compensation to patent holders when the government infringes the patent holder’s technology during wartime or under the government’s direct responsibility.

In recent years, some activists and lawmakers have argued that the government could use Section 1498 to seize patents and allow generic drug makers to make cheaper copies of patented brand-name drugs and sell them to consumers under insurance programs such as Medicare and Medicaid.

Like the new March-in guidance, this course of action has no legal basis whatsoever. First, 1498 only applies when products are produced directly for government use. Courts have repeatedly Said Yes. Bulletproof helmets and flat-proof tires for military vehicles might qualify, but prescription drugs purchased solely through a government program for consumers definitely would not.

More importantly, Text of Article 1498 It clearly states that patent holders are entitled to “reasonable and full compensation” in the event of infringement, and any temporary “savings” resulting from abuse of the law will be borne by taxpayers.

Looking away from the legal minutiae, there is a larger problem with the calls to distort both Bayh-Dole and Section 1498. These proposals would essentially establish government patent licensing, meaning that politicians and bureaucrats, not the market, would decide what prices are “reasonable” and what aren’t, and which companies will manufacture them.

Faced with such uncertainty, many companies will lose confidence in patent protection. This will chill innovation, slow economic growth, and, ironically, reduce access in the long run by reducing the development of new technologies. And it’s not just pharmaceuticals that are at risk: both proposals would apply equally to consumer products in all high-tech, patent-intensive sectors.

Already, there is good reason to believe that the Administration’s aggressive proposals and intent to exploit Section 1498 are affecting corporate investment decisions and making them less willing to partner with universities. Investors will be similarly deterred.

“At a time when America’s technological advantage faces threats from competitors such as China, upsetting our delicately balanced patent system in an attempt to score political points is shortsighted and dangerous. The Biden Administration should focus on strengthening, not weakening, the foundations of American innovation and prosperity.”

Judge Paul R. Michel (retired) served on the U.S. Court of Appeals for the Federal Circuit from 1988 to 2010. He is a director of the Innovation Advancement Council.