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Blog Post | June 28, 2021

Biden Can't Pick A PTO Director Because Democrats Can't Decide If They Like Big Pharma

Department of CommerceIntellectual Property
Biden Can't Pick A PTO Director Because Democrats Can't Decide If They Like Big Pharma

This post has been updated.

With 10% of Biden’s term gone, how are we still waiting for an official nominee for the Director of the United States Patent and Trademark Office (USPTO)?

It could be that the Biden administration is stuck between two irreconcilable wings of the Democratic party: one which wants to fight against abuse of the patent system which enables price-gouging drug monopolies, and one which doesn’t.

In other words, the holdup could be due to behind-the-scenes in-fighting between those like Senator Chris Coons, who have been backing nominees plucked straight from Big Pharma, and those who recognize the importance of a break from business-as-usual. The Biden administration signalled just such a break when it supported the TRIPS Waiver in May. Almost by definition, anyone Coons backs is unlikely to support the TRIPS waiver and the opening of the floodgates to a less monopolistic drug market it heralds. As David Dayen wrote in The American Prospect, Coons benefits directly from strong intellectual property rules as he owns up to $5 million in stocks in, W. L. Gore & Associates, Inc., his family’s company. Half of that company creates medical devices. Thus, it is unsurprising that Coons argued in favor of re-writing intellectual property laws to give more exclusivity to right holders like pharmaceutical companies, wrote multiple bills expanding intellectual property protections, and claimed monopoly patent protections benefited healthcare innovation. 

This put him on the wrong side of the administration in talks over the vaccine waiver. Coons, one of the few Democrats in Congress to oppose the waiver, and Commerce Secretary Gina Raimondo were seemingly overruled. But the White House only committed to talks at the World Trade Organization, and the next USPTO director, who is part of the Department of Commerce, will play a significant role in crafting the language. That could be why Coons is working so hard to influence the selection. Yet the Biden administration reportedly promised Coons his pick of a PTO Director, stranding them in an awkward position, since any PTO Director supported by Coons is likely to oppose their signature and much-praised move on drug IP. 

In light of the recent Supreme Court decision that substantially weakens the Patent Trial and Appeal Board and re-strengthens the USPTO Director’s power over patent decisions, selecting a public-oriented nominee is more important than ever. 

Under the 2011 America Invents Act, the newly-formed Patent Trial and Appeal Board (PTAB) was granted the power of inter partes review, a procedure in which anyone could challenge the validity of a patent, and which is one of the few patent quality measures the public could participate in. The inter partes review was met with animosity by Big Pharma because it reduced costs for generic drugmakers and shortened the time to generic drug entry. The main biotech and drug company trade groups, BIO and PhRMA, lobbied for an exemption from inter partes review challenges for biotechnology and pharmaceutical patents.

However, last week’s decision means the PTAB doesn’t have final say on inter partes decisions anymore. The Court found that PTAB judges have no means of democratic accountability, since they are hand-picked by the Secretary of Commerce and have no confirmation process. Therefore, their decisions shouldn’t outweigh decisions made by figures subject to a Presidential nomination and confirmation process.

While appealing to democratic accountability, the court has now substantially weakened one of the only mechanisms for the actual public to challenge PTO decisions. But this is still notable, since patent-dependent industries and the Patent Bar like to present the USPTO as a strictly mechanical institution, executing technical and non-subjective functions in society. However, the Supreme Court recognizes the political nature of patents and the contours of patent law, and that a person making decisions to grant, deny, or revoke a patent must have some means of accountability to democratically-elected officials. Deciding whether or not to grant a patent is an inherently political act. The actions of Trump’s USPTO Director Andrei Iancu showcase the political nature of the institution. 

The use of discretionary denial, which allows the PTO to deny review of a patent for reasons other than the petition’s merits, spiked under Iancu. Inter partes review only allows review of a petition on the merits, so Iancu just found a way to avoid that requirement. 

For instance, Iancu’s former law firm Irell and Manella was defending technology company VLSI in a patent infringement case against multinational technology firm, Intel. The PTAB rejected all three of Intel’s inter partes review proceedings using discretionary denial and VLSI won $2.175 billion in damages. Iancu then returned to Irell and Manella after serving as USPTO Director — he may now be receiving a cut of the legal fees paid by VLSI for Irell & Manella’s services, effectively profiting from decisions he made as a government official. The dangerous precedent set by Iancu further heightens the importance of a responsible pick for USPTO Director. 

Regardless of what kind of nominee the Biden administration picks, Senate confirmation is bound to be challenging in terms of getting sufficient votes — corporatists won’t vote for someone willing to challenge Big Pharma, and progressives won’t vote for a Pharma apologist. Thus, the administration is caught between a rock and a hard place — so it might as well nominate someone who is actually ethical, and will support the TRIPS waiver, which is the administration’s own stated policy. 

It would be nonsensical, from both a logistical and moral standpoint, to nominate someone unable or unwilling to carry out the administration’s pledge to increase access to COVID-related health technologies worldwide, prevent unnecessary deaths in developing countries, and prevent the emergence of new and unpredictable strains that could overwhelm our current vaccine protections. Not only is it important for the nominee to support the TRIPS waiver, they should also be willing to crack down on Big Pharma companies that weaponized the patent system to undermine competitors offering cheaper generic versions of drugs. Additionally, the next USPTO Director should respect the inter partes review process and ensure it is not abused by bad actors, not use their position of authority to undermine one of the few democratic aspects of the patent system. 

PHOTO: “Senator Chris Coons (D-DE)” by Third Way is licensed under CC BY-NC-ND 2.0

Correction: An earlier version of this post inaccurately stated that PTAB judges could “override” decisions made by the PTO Director prior to the recent Supreme Court decision.

Department of CommerceIntellectual Property

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