The Dobrusin Law Firm - Intellectual Property

Strategic Intellectual Property Law

Category: Legal Updates

Misconception of Artificial Intelligence

As artificial intelligence has evolved, a number of questions related to intellectual property have been pondered relative to the creation of intellectual property by an AI system and the resulting property ownership, if any. Such questions have been asked for a few decades. However, until recently they have mostly been hypothetical questions.

When a work of art is created by an individual, intellectual property rights may be obtained via copyright protection. Copyright protection is available for a broad range of creative endeavors including publications, paintings, photographs, musical scores and recordings, video recordings, theatrical productions, and software code. Similarly, when individuals invent or discover something new and useful, intellectual property rights may be obtained via a patent.

When filing a patent application in the US, it is necessary to indicate the inventorship of the patent. This requirement flows from 35 U.S.C. § 101, which states:

35 U.S.C. § 101 INVENTIONS PATENTABLE.
Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

What happens when the AI system invents or discovers something new and useful?

The U.S. Patent and Trademark Office has weighed in on this question, after a patent application (US 16/524,350) was filed on July 29, 2019 listing the following sole inventor:

Given Name: DABUS
Family Name: Invention generated by artificial intelligence

On April 22, 2020, the USPTO issued a final decision ruling that the term “Whoever” in 35 U.S.C. § 101 refers to a “natural persons”. As DABUS is not a natural person, it cannot be listed as an inventor.

This interpretation is consistent with other sections of patent law, including 35 U.S.C. § 115 which requires the inventor to file an oath or declaration:

35 USC § 115 INVENTOR’S OATH OR DECLARATION
(a) NAMING THE INVENTOR; INVENTOR’S OATH OR DECLARATION.—An application for patent that is filed … shall include, or be amended to include, the name of the inventor for any invention claimed in the application. … each individual who is the inventor or a joint inventor … shall execute an oath or declaration in connection with the application.
(b) REQUIRED STATEMENTS.—An oath or declaration under subsection (a) shall contain statements that—
(1) the application was made or was authorized to be made by the affiant or declarant; and
(2) such individual believes himself or herself to be the original inventor or an original joint inventor of a claimed invention in the application ….

From 35 U.S.C. § 115, it is clear that an inventor cannot be an AI system or other machine. An AI system is not an “individual”. An AI system cannot execute an oath or declaration. An AI system cannot make a patent application or authorize one to be made. An AI system cannot believe that it is an inventor.

The USPTO also considered case law which identifies that inventors are the individuals that conceive of the invention.

“Conception is the touchstone of inventorship, the completion of the mental part of invention.” Burroughs Wellcome Co. v. Barr Labs., Inc., 40 F.3d 1223 (Fed. Cir. 1994).

Because of the mental act of conception, it follows that only individuals can be inventors.

The Applicant also painted himself into a corner, by stating that DABUS is the true inventor and then arguing that “the referenced statutes are intended to compel an applicant to name a natural person even where the person does not meet the inventorship criteria.” The USPTO responded by clearly stating that “the petition decision … does not suggest that an applicant is compelled to list a natural person who does not meet the inventorship criteria.”

This is a clear indication that the USPTO will not grant a patent when the true inventor is an AI system or other machine. Applicant cannot now list an individual as the inventor because it has admitted that the true inventor is DABUS. If the Applicant wants to prosecute this patent application, it may consider amending the claims so that an individual can truthfully submit the necessary inventor’s oath or declaration attesting to inventorship, as required by 35 U.S.C. § 115.

The “DABUS” patent application was also filed with the European Patent Office (EP3563896) and with the United Kingdom Patent Office. These patent offices are also taking the position that an inventor for purposes of obtaining patent protection must be an individual.

Although DABUS may be the true inventor, at least three patent offices have indicated that patent rights will not be granted unless the inventor is an individual.

In copyright law, protection similarly requires that the rights be granted only to individuals for their creative work.

An interesting example is the project, “The Next Rembrandt”, where an AI system was used to analyze about 300 works by Rembrandt and then create a new portrait. The AI system created a portrait that most art experts agree could pass as a Rembrandt work. The general consensus is that although such a work of art may be generated or produced by an AI system, the AI system is only building on the creativity of others. The Next Rembrandt may be considered as a derivative work based only from Rembrandt, and such derivative works are generally not allowed the benefits of intellectual property protection.

For example, in the UK, the Copyright, Design, Patent Act of 1988 defines: “Computer-generated”, in relation to a work, means that the work is generated by computer in circumstances such that there is no human authorship of the work. The act also requires that for protection, the authorship must be an individual.

When copyright protection was offered for photographs, it was determined that such protection is appropriate due to the free and creative choices made by the photographer. The photographer determines the frame (boundaries) of the photograph, the elements being captured and excluded, and making other choices. If a monkey cannot own a copyright for a selfie that it took, then how could a machine be granted copyright protection? Maybe this will be revisited when an AI system is developed that has free and creative choices.

– By Terry Finerman

Photo Credit: nextrembrandt.com

Can Patent Trolls Impact COVID-19 Testing and Treatment?

Even though patent protection has evolved over the years, 35 U.S.C. § 261 has always dictated that “patents shall have the attributes of personal property.” As a result, patents can be traded, licensed, purchased, sold, and transferred just like any other piece of property. However, due to patents being considered property – albeit intangible intellectual property – they can be treated like a commodity. The effect is a substantial dichotomy between two fundamental groups of patent owners: practicing entities, such as manufacturing companies; and non-practicing entities.

Non-practicing entities, more commonly known as patent trolls, are an individual or a firm that purchases a portfolio of patents and asserts the rights of those patents without ever creating or manufacturing a product using the patented technology. The exploitation of patents by patent trolls is a frequent point of contention. Scholars and practitioners alike argue that the use of patents by those not actually creating or manufacturing a product based on their patents goes against the very fabric of patent law. Additionally, these patent trolls have the potential to significantly burden development by other companies with threats of litigation and exorbitant licensing fees. But surely these patent trolls would not act in arguably bad faith in a true time of need, would they?

Here we are in 2020 fighting a pandemic. Pharma companies worldwide are furiously working to find a cure or treatment for COVID-19. Companies have already begun offering their technology for public use, including the likes of AbbVie, which announced it would not enforce its patent rights on the HIV drug Kaletra, and Gilead that sought to rescind its seven-year orphan drug exclusivity period for remdesivir. Yet even with such urgency to battle COVID-19, some patent trolls are still seeking to exploit the situation.

Labrador Diagnostics LLC, a subsidiary of the fund manager Fortress Investment Group LLC, filed a lawsuit on March 9 against BioFire Diagnostics, LLC, a company deeply involved in developing coronavirus tests. To add insult to injury, the patents Labrador sought to enforce were originally issued to the company Theranos, a company that shut down in 2018 in the midst of many claiming Theranos was conducting fraudulent blood testing. While Fortress recently announced that Labrador will grant royalty-free licenses for COVID-19 testing, the decision came only after extensive backlash and awful publicity forced its hand.

So what is stopping other patent trolls from asserting patent rights against companies currently developing and testing products to combat COVID-19? The short answer is nothing. But that does not necessarily mean these trolls can get away with their exploitations in a time of undeniable need.

The U.S. government may still hold the trump card over companies like Labrador. 28 U.S.C. § 1498 states that when any invention covered by a U.S. patent “is used or manufactured by or for the United States without license of the owner thereof… the owner’s remedy shall be by action against the United States… for recovery of his reasonable and entire compensation for such use and manufacture.” In other words, a patent owner, such as a patent troll, may only be able to sue for reasonable compensation and not seek injunctions against private entities working for the United States government.

While actions were not taken against Labrador based on 28 U.S.C. § 1498, it may stand to reason that the U.S. government could have invoked its power and shielded BioFire from injunction. The U.S. government could authorize BioFire to act on its behalf to develop much-needed COVID-19 tests. As a result, any forthcoming patent infringement suits would need to make the U.S. government the defendant.

Yes, pharmaceutical affordability and accessibility based upon patent rights are still significant hurdles to overcome when addressing COVID-19 cures and treatments, but as may be gleaned from the actions of Labrador, potential patent hurdles may extend well beyond just affordability and accessibility of drugs.

It is unlikely that disputes will stop between patent trolls and companies battling COVID-19. Yet there may be a way to ensure those disputes do not dictate the actions of these companies. But, at least for now, we are left to guess whether the U.S. government will interject themselves and assert authority that has rarely been used thus far.

– By Bryan Lemanski

Pharma Intellectual Property and COVID-19

Opinions abound regarding pharmaceutical patents, with some arguing that patent protection is needed to encourage innovation and allow for recouping of development costs, and others arguing that patents lead to skyrocketing prices and unaffordable health care. Regardless of viewpoint, there is no question patents are valuable to the pharmaceutical companies that own them. It is estimated that patents contribute to roughly 80% of the overall revenue of drug companies.

Currently, scientists, researchers, and drug manufacturers are racing to find a cure or a treatment for COVID-19, including turning to existing medicines used to treat other viruses. Drug manufacturers, while offering potential COVID-19 therapies, are taking vastly different approaches with respect to their intellectual property portfolios.

AbbVie announced last month that it was supporting the experimental use of its HIV medicine Kaletra (also sold as Aluvia in some markets) to address the COVID-19 public health crisis. Collaborating with the FDA, CDC, and NIH and European health authorities, among others, AbbVie is supporting clinical studies and basic research with lopinavir/ritonavir (Kaletra/Aluvia) to determine its efficacy in treating COVID-19.

In addition, the drug company announced that it would not enforce patent rights to Kaletra. This decision would allow generic drug producers to increase production to make the medication more readily available, should the drug be found effective.

While a study published in The New England Journal of Medicine found that “no benefit was observed with lopinavir–ritonavir treatment beyond standard care,” it is still worth noting that AbbVie is the first pharmaceutical company to take such a bold stance in choosing not to enforce its patent rights on all formulations of the HIV medication while it is being evaluated.

Several clinical studies are also underway to evaluate the safety and efficacy of remdesivir, an experimental drug from Gilead Sciences, in adults diagnosed with COVID-19. This comes after the FDA accepted Gilead’s investigational new drug (IND) filing. However, due to “overwhelming demand,” the company temporarily stopped granting patients access to remdesivir.

Remdesivir was granted “orphan drug status” by the FDA in February 2020. Under the 1983 Orphan Drug Act, pharmaceutical companies are given a seven-year market exclusivity period for developing treatments for “rare disease.” Through this orphan drug status, Gilead can, therefore, block generic drug manufacturers from supplying the drug.

While potential benefits and risks of treatment with remdesivir for COVID-19 are not yet known, it stands to reason that if remdesivir is found to be effective, a patent “may prove to be a blockbuster hit for its patent owner,” leading someto wonder whether it is not only the overwhelming demand keeping Gilead from allowing its experimental drug to be made widely available.

Public backlash has also perhaps made some entities change their minds about pursuing patent infringement suits at this time.

Labrador Diagnostics LLC, owning patents from the now-defunct health technology company Theranos, sued BioFire, a company making COVID-19 tests, for patent infringement. Shortly after reports surfaced of the lawsuit—described as “the most tone-deaf IP suit in history” by Mark Lemley, director of the Stanford Law School Program in Law, Science and Technology—Labrador announced that it would grant royalty-free licenses for COVID-19 testing, asserting that “the lawsuit was not directed to testing for COVID-19.”

– by Katherine Pacynski

Intellectual Property Updates From the United States, Europe, China, and Canada

As we continue to be affected by the COVID-19 outbreak, Intellectual Property Offices around the world are extending deadlines or making other exceptions to accommodate the challenges inventors and business owners are currently facing. If you have upcoming deadlines and are concerned about being able to meet them due to refocusing or shifting priorities, we highly recommend speaking with your attorney to see if a deadline extension may be applicable.

While subject to change, here’s what some of the Offices are saying:

United States Patent and Trademark Office

March 31, 2020 – “The United States Patent and Trademark Office (USPTO) today announced extensions to the time allowed to file certain patent and trademark-related documents and to pay certain required fees. These actions are an exercise of temporary authority provided to the USPTO by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) signed by President Trump on March 27.”

In addition to the relief provided under the CARES Act for certain due dates between, and inclusive of, both March 27, 2020 and April 30, 2020, the USPTO has previously waived the fee under 37 C.F.R. §1.17(m) for petitions to revive applications, when applicants were unable to timely reply to an office communication due to the COVID-19 outbreak, as described in the Office’s March 16, 2020 notice.

March 16, 2020 – “The United States Patent and Trademark Office (USPTO) considers the effects of coronavirus to be an “extraordinary situation” within the meaning of 37 CFR 1.183 and 37 CFR 2.146 for affected patent and trademark applicants, patentees, reexamination parties, and trademark owners. Therefore, the USPTO is waiving petition fees in certain situations for customers impacted by the coronavirus. This notice does not grant waivers or extensions of dates or requirements set by statute.”

European Patent Office

March 15, 2020 – “In view of the disruptions to public life caused by the COVID-19 outbreak, the EPO has taken measures to safeguard users’ rights. All time limits expiring on or after 15 March 2020 are thus extended until 17 April 2020. As regards time limits expiring before 15 March 2020, the EPO has facilitated the use of legal remedies for users located in areas directly affected by disruptions due to the COVID-19 outbreak. The extensions and remedies apply to parties and representatives in proceedings under the EPC and the PCT. The following notice provides all relevant information and will be published in the EPO’s March Official Journal. If the disruption should continue after 17 April 2020, the EPO may publish another notice informing users about further extensions and remedies in respect of time limits.”

March 30, 2020 – “The extension of time limits also applies to periods for paying fees, including renewal fees. The following notice contains information about the amounts due following the general fee increase on 1 April 2020. This notice will be published in the April edition of the EPO’s Official Journal.”

China National Intellectual Property Association

January 28, 2020 – CNIPA announced that patentees and applicants can restore their patent rights without payment of a restoration right request fee if lost rights were due to the coronavirus. Applicants and patentees need to submit a request for the restoration of the right, explain the reason, attach the corresponding certification materials, and go through the corresponding formalities before the loss of rights.

March 4, 2020 – CNIPA will waive late fees for missed patent annuity payments if the reason can be traced back to the COVID-19 epidemic.

March 27, 2020 – CNIPA confirms missed deadline policies apply to non-Chinese applicants

Canadian Intellectual Property Office

March 27, 2020 – The CIPO announced that all deadlines on IP matters that fall before 30 April 2020 are now extended until 1 May 2020. A further extension could occur depending on circumstances, the registry added.

Supreme Court Decision Raises Questions About the Authority of USPTO Administrative Judges

Recently, the U.S. Supreme Court addressed the authority of illegally appointed administrative judges, and though the decision did not speak to questionable appointments at the U.S. Patent & Trademark Office (USPTO), there may be implications for individuals and organizations holding, prosecuting, and protecting patents.

Lucia and the Appointments Clause

In Lucia v. Securities Exchange Commission, Raymond Lucia with charged with violating particular securities laws. Cameron Elliot, an administrative law judge (ALJ) with the SEC, was assigned to adjudicate the case and later imposed sanctions against Lucia. Lucia appealed the decision, claiming that the administrative proceeding was invalid because Elliot had not been “constitutionally appointed” pursuant to the Appointments Clause in Article II of the U.S. Constitution:

“[The President] shall nominate, and by and with the advice and consent of the Senate, shall appoint… judges of the Supreme Court, and all other officers of the United States, whose appointments are not herein otherwise provided for….”

Lucia argued that SEC ALJs are “Officers of the United States” and only the President, “Courts of Law,” or “Heads of Departments” can appoint such them – none of whom appointed Elliot. The case made its way to the U.S. Supreme Court, where seven of the nine justices agreed, finding that, although SEC ALJs are “Officers of the United States,” Elliot lacked authority and overturning the sanctions against Lucia.

The Appointments Clause and the USPTO

Why does the Lucia decision pose any threat to the authority of administrative law judges at the USPTO? Consider the impact if Lucia applies equally to the USPTO, the SEC, and other federal agencies.

When the result of a patent examination is unfavorable to the Applicant, the Applicant may appeal the Examiner’s decision to the Patent Trial & Appeals Board (PTAB), which then reviews the case and issues a binding decision. Within the PTAB’s branched hierarchal structure, the first tier includes a Chief Administrative Patent Judge (Chief Judge) and Deputy Chief Judge who decide petitions or may delegate authority to decide petitions. The second tier has two divisions of judges and attorneys led by a Vice Chief Judge, and under them are a variety of judges in different “sections.” each focusing on certain technical disciplines.

It is well established that the Director of the USPTO is an officer appointed by the President, consistent with the edicts of the Appointment Clause, and the U.S. Patent Act mandates states that “administrative patent judges shall be persons of competent legal knowledge and scientific ability who are appointed by the Secretary [of Commerce], in consultation with the Director.”

In Lucia, the Supreme Court found that SEC administrative judges are officers (rather than employees) and thus subject to the Appointments Clause. The Court identified that to qualify as an officer, an individual must (1) occupy a “continuing position established by law”; and (2) exercise “significant authority” pursuant to the laws of the U.S., according to the case law precedents.

It would seem that PTAB judges qualify as officers since they both occupy a continuing position, the position is established by law, and the judges have significant authority in the ability to make final rulings on the intellectual property rights of U.S. citizens. Furthermore, the function of PTAB judges substantially mirrors the qualities of SEC administrative judges as described in Lucia.

Are PTAB Administrative Judges “Inferior” or “Principal” Officers?

A subsequent provision in the Appointments Clause specifically references “inferior” officers, and gives Congress the legal authority, by statute, to delegate the power to appoint only inferior Officers to heads of departments (i.e., the Secretary of Commerce):

“Congress may by law vest the appointment of such inferior officers, as they think proper, in the President alone, in the courts of law, or in the heads of departments.”

While there has been generally sparse instruction on how to draw the distinction, Intercollegiate Broadcasting v. CRB, a Federal Circuit case, summarized three factors relevant to the inferior versus principal inquiry:

(1) the degree of supervision over the officer in question by a principal officer or those in the principal officer’s supervisory line; (2) whether the officer in question is removable without cause; and (3) whether the decisions rendered by the officer in question are reversible.

An example of how these criteria are considered can be found in Estes v. U.S. Dept. of the Treasury, which ruled that the three factors are not weighted independently and equally – strength in one can offset weakness in another. For instance “the power to remove officers… is a powerful tool for control” (indicating an inferior officer) and overpowers other factors such as an officer who maintains a high degree of autonomy (evidence tending to suggest a principal officer).

Degree of Supervision: It is unclear how the Secretary of Commerce supervises or directs the decisions of the Chief Judge, if at all. It is also unclear to what extent decision making is delegated. Considering the volume of cases, the degree of technical skill required of a judge, the number of judges and attorneys, and the level of hierarchical fractioning, it would seem nearly impossible for the Secretary of Commerce to exert any substantive control over the operation of the PTAB. Thus, it is probably safe to say that PTAB judges lean strongly toward the side of principal officers as they exercise a high level of independence.

Removable Without Cause: Although USPTO employment policies regarding PTAB judges are not helpful, it is safe to assume that the judges, who are chosen internally from Examiners or from extensively experienced legal patent professionals, would not be treated as expendable employees or dismissible without cause. The requisite skill required of these judges suggests that the USPTO does not have an appreciably large pool of applicants to draw from – hinting at an organizational aversion to turnover.

In Question or Reversible Decisions: Decisions regarding petitions are final within the USPTO. Applicants may seek post-decision relief in an appeal to the Federal Circuit. While technically, PTAB judge decisions are “reversible” on appeal, even federal district and circuit court judges’ decisions are appealable to a higher authority (both types of judges are appointed by the President). Thus, the fact that a PTAB judge’s decision can be appealed to a federal district court does not seem like a disqualifying characteristic for being considered a principal officer. “In question or reversible” likely refers to whether the bona fide principal officer (the Director or the Secretary of Commerce) can alter the decision of a PTAB judge. As it stands at the USPTO, the Director nor the Secretary of Commerce has any such power.

The Big Picture

As clarified by Lucia, PTAB judges are likely officers, and under the Intercollegiate framework, they are likely principal officers. Thus, there is a very strong argument that the Patent Act illegally confers the appointment of administrative patent judges to the Secretary of Commerce where their appointments should only flow from the President.

Lucia made waves in the arena of administrative law and those waves may splash over into the hallways of the USPTO. A Supreme Court ruling like Lucia will surely embolden those eagerly waiting for the opportune time to bring suit. What chaos might follow such a paradigm shift? The Court in Lucia overturned the decision of the SEC administrative judge so the likely result of a constitutional challenge of the Patent Act would be a whole host of invalidated decisions and retrials by properly appointed PTAB judges.

– by Eric Hydorn

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