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Biden Vaccine IP Waiver Stance Offers Clue on Patent Office Pick

May 17, 2021, 9:26 AM

The Biden administration’s blessing of an international waiver on patent protections for Covid-19 vaccines signals the president will name someone sharply different from his predecessor to run the U.S. Patent and Trademark Office.

Andrei Iancu, who led the patent office under former President Donald Trump, supported strong intellectual property rights and curtailing avenues for stripping them, an approach critics say benefited name brand drug companies while making it harder for generics to enter the market.

President Joe Biden has been tight-lipped about whether an Iancu-like director will take the helm of the patent office. Yet in backing the vaccine IP waiver, agency observers say the administration has tipped its hand.

“The WTO petition has shone a spotlight on how Trump’s patent-friendly policies have been in tension with public welfare interests,” said Charles Duan, a senior fellow at R Street Institute. “I imagine that the Biden administration wants to show a clean break from those policies.”

A departure from Iancu-era policies could hasten the entry of generic drugs into the market while complicating brand companies’ attempts to secure additional patents on existing drugs, attorneys say. Biden’s backing of the waiver also suggests a patent office open to campaigning for drug access reform.

“You’ll have an office at least willing to entertain those thoughts and consider how the patent office can be improved rather than simply going with the PTO as a customer service narrative that flowed strongly in the Trump administration,” Duan said. “The window is open” for reforms, he said.

Pharma vs. Global Community

Lobbyists, patent attorneys, and politicians have been divided on whether Biden’s PTO chief should continue Iancu’s efforts to reform the PTO to grant more patents and reduce invalidations.

Iancu strongly opposed the idea of waiving IP rights on Covid-19 vaccines, arguing that doing so would make it harder to create safe, effective vaccines and for companies to collaborate on them. Sen. Chris Coons likewise said IP is a benefit rather than a barrier during the pandemic, crediting property rights with spurring innovation. Coons, a Delaware Democrat, first entered the Senate by winning a special election in 2010 to fill the seat Biden vacated when he became vice president under Barack Obama.

That position is championed by drug companies, including vaccine producers Pfizer Inc. and Johnson & Johnson. Yet with Biden’s backing of the waiver, Duan said “the message seems to be that the administration isn’t taking the pharmaceutical industry’s party lines at face value.”

The Trump administration was “taking positions that were largely siding with the pharma industry, contrary to what the global community asked for,” Duan said, noting a proposed reform to the Bayh Doyle Act that would make it harder for the government to license drug patents.

“The WTO petition basically creates an opportunity for the Biden administration to weigh in on whether they’ll continue those policies,” Duan said.

Shift in Thinking

Iancu held patent rights above all else in his time as PTO chief, observers say. Among his reforms were new patent examination standards that some say made it easier to get patents despite Supreme Court precedent that had made it more difficult to secure IP rights.

Iancu also made changes to the PTO’s Patent Trial and Appeal Board, an agency tribunal favored by tech giants and generic manufacturers alike for invalidating rivals’ patents.

Previously known as a “death squad” for patents, the PTAB saw a drop in patent invalidations while Iancu launched new rules for proceedings that critics say favored inventors regardless of whether they had a good patent—pushing Apple Inc., Google, and other tech companies to eventually sue the PTO.

But “Covid changed everything,” said Daniel Takash, a regulatory policy fellow at the Niskanen Center. And Biden’s backing of an IP waiver marks “a huge departure from the past, and I think it recognizes a shift in thinking as it relates to intellectual property.”

IP “is a policy tool that has its place and sometimes it functions as an incentive to innovate, and other times it deserves treatment like red tape,” Takash said. “The pick for director of the USPTO will be someone who is interested in the balance side of the equation and recognizes this distinction.”

Pharma Impact

Biden’s PTO director could ramp up “quality assurance initiatives,” like increasing patent examination standards, that would decrease the number of patents granted, said Melissa Wasserman, a University of Texas at Austin law professor who has researched patent office policy. And “fewer pharmaceutical patents issued will likely mean earlier generic entry.”

Generic versions of medications can be kept off the shelves for longer periods through “patent thicketing,” in which overlapping intellectual property rights on a product and its uses can be applied to block competitors from entering the market.

Patent thickets are largely comprised of low-quality patents and “really hard to cut through” for generic producers, said Matthew Lane, executive director at the Coalition Against Patent Abuse. The Obama administration, however, initiated PTAB trial reforms that made it easier for generic companies to get blocking patents invalidated, though Iancu “did a lot to undermine” those efforts.

“There are patent quality policy initiatives the USPTO director could take—those things would be extremely beneficial to drug prices,” Lane said.

Also part of quality control is making it easier for generic producers to secure PTAB trials to challenge name brand drug patents, agency watchers say, a move they find likely under a Biden patent office.

“I would not be surprised if the initiation rate of PTAB proceedings creeps back up under the Biden administration,” Wasserman said.

Takash said a PTO director “less hesitant” to embrace PTAB trials while taking steps to improve research capabilities for examiners weighing whether an invention is unique enough to secure a patent could mark a significant shift for the drug industry.

“You will see a pharmaceutical industry that could no longer rely quite as much on patent thicketing and product hopping,” Takash said. When a drug patent is nearing expiration, pharmaceutical companies may “product hop” by switching patents to a new version of its product with longer exclusivity, preventing competitors from stepping in.

The IP waiver signals that Biden’s PTO director pick will be “someone who says patents are necessary, but we can all be adults and say bad patents sometimes slip through the cracks.” Takash said. “And we need to design an institution that prevents that.”

To contact the reporter on this story: Ian Lopez in Washington at ilopez@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Karl Hardy at khardy@bloomberglaw.com

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