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ICLE Academic Affiliate Adam Mossoff was a guest on National Public Radio’s Planet Money podcast to discuss the purpose and value of patents in the economy.  The full episode is embedded below.

MALONE: Adam Mossoff – law professor at George Mason University, patent expert, and knows a lot about how patents get turned into actual, you know, money.

MOSSOFF: You know, patents are property rights, and they, like all property rights, might lead to great success or may not.

MALONE: Property rights. And Adam gave us this comparison that I find really useful. He said, you know, a patent is just an idea sketched out and then legally tied to the inventor. And that really is kind of like somebody who say, you know, just owns a piece of vacant land.

BERAS: Yeah. Adam says vacant land isn’t inherently a business. Its owner would have to figure out what to do with it.

MOSSOFF: They can sit and wait for the land to grow in value. They can lease it out and become a landlord. They can build a factory on it. They can build an office building on it. They can build a home. And then, they can sell that home.

Abstract

Universities are encouraged to undertake research through grants from government agencies, foundations, and other organizations. The Bayh-Dole Act reinforces this incentive structure by allowing universities to take ownership of the resultant patents. Included in these rights is the ability to generate income by licensing patents and bringing patent infringement lawsuits. Undoubtedly, exercising these rights to financially benefit the university is economically rational. But might such actions also impose a cost on the public despite the fact that these very patents arose from public research subsidies?

This study examines the relationship between a university’s research expenditures and its likelihood to litigate patent infringement claims. It finds that research expenditures increase litigation frequency, suggesting that universities may use funds earmarked for research and innovation on patent litigation. We argue that patent rights provided by the Bayh-Dole Act may motivate this phenomenon—which encourages universities to seek rents, rather than pursue innovation. Our study adds to the extant literature about firm behavior, describing universities as vertical integrators as well as horizontal coordinators. It further suggests that these coordinations inure to a university’s private benefit—but not necessarily the benefit of the public, for which universities are ostensibly organized.

Not only have digital-image generators like Stable Diffusion, DALL-E, and Midjourney—which make use of deep-learning models and other artificial-intelligence (AI) systems—created some incredible (and sometimes creepy – see above) visual art, but they’ve engendered a good deal of controversy, as well. Human artists have banded together as part of a fledgling anti-AI campaign; lawsuits have been filed; and policy experts have been trying to think through how these machine-learning systems interact with various facets of the law.

Read the full piece here.

ICLE Academic Affiliate David Teece was a guest, along with Patrick Kilbride of the Global Innovation Policy Center of the U.S. Chamber of Commerce, on IPWatchdog‘s Understanding IP Matters podcast that focused on whether U.S. policymakers have taken for granted the role intellectual property plays in shaping the nation’s ability to innovate and driving its economic advantage. The full episode is embedded below.

Late last month, 25 former judges and government officials, legal academics and economists who are experts in antitrust and intellectual property law submitted a letter to Assistant Attorney General Jonathan Kanter in support of the U.S. Justice Department’s (DOJ) July 2020 Avanci business-review letter (ABRL) dealing with patent pools. The pro-Avanci letter was offered in response to an October 2022 letter to Kanter from ABRL critics that called for reconsideration of the ABRL. A good summary account of the “battle of the scholarly letters” may be found here.

Read the full piece here.

ICLE Academic Affiliate Adam Mossoff moderated a Hudson Institute webinar on how the development of new and valuable technologies often spurs misguided arguments that the need to respect patent rights somehow gets in the way of implementing new technologies. Specifically, with the Internet of Things (IoT) expected to reach $650.5 billion USD by the year 2026, the panel explored spurious claims that a growing number of patent rights somehow hinders innovation. Panelists included:

• Bowman Heiden, Director, Center for Intellectual Property, Executive Director, Tusher Center for the Management of Intellectual Capital, UC-Berkeley
• Monica Magnusson, Vice President, IPR Policy at IPR & Licensing, Ericsson
• Richard Varey, Partner, Bird & Bird

Video of the full event is embedded below.

As former judges and government officials, legal academics and economists who are experts in antitrust and intellectual property law, we write to express our support for the Avanci business review letter issued by the Antitrust Division of the U.S. Department of Justice on July 28, 2020 (the “2020 business review letter”). The 2020 business review letter represented a legally sound and evidence-based approach in applying antitrust law to innovative commercial institutions like the Avanci patent pool that facilitate the efficient commercialization of new standardized technologies in the fast-growing mobile telecommunications sector to the benefit of innovators, implementers, and consumers alike.

Read the full letter here.

Interest of Amici Curiae

Amici curiae are seventeen law professors, economists, and former government officials with expertise in antitrust, patent law, and law and economics. Their work has appeared in the American Economic Review, the Journal of Law and Economics, the Yale Law Journal, and the Harvard Law Review, among others, and collectively has been cited more than 16,000 times. As scholars and former public servants, they have an interest in promoting the coherence and development of legal doctrines consonant with sound economic principles and in ensuring that both consumers and the general public benefit from new inventions and technologies. They have no stake in any party nor in the outcome of this proceeding. Amici write to serve the Commission and the public interest by elaborating the legal and economic principles that frame this dispute. The amici and their affiliations are listed in the Appendix.

Introduction

This case presents a complex set of transactions whereby Illumina, Inc. (“Illumina”) created GRAIL, Inc. (“GRAIL”), spun it off while retaining a minority interest, and now has reacquired it. Complaint Counsel seeks to unwind this recent reacquisition. But as Chief Administrative Law Judge D. Michael Chappell’s Initial Decision (“ID”) recognized, vertical mergers are structurally distinct from horizontal mergers. Horizontal mergers carry inherent risks of anti-competitive effect; vertical mergers, by contrast, often offer procompetitive benefits. (See ID 169.) Unwinding this transaction would set a dangerous precedent by deterring innovative companies like Illumina from developing and commercializing new products or, at a minimum, restricting consumers’ access to those products. Antitrust enforcers should be held to a higher burden before risking such market disruptions.

An overbroad presumption against vertical mergers—of the type Complaint Counsel advocates here—is particularly inappropriate in the complicated institutional landscape of biopharmaceutical markets, especially those still in their infancy. Here, for example, it is difficult to predict how the market for Multi-Cancer Early Detection Tests (“MCEDs”) will operate, particularly when true alternatives to GRAIL’s products from other producers are still years away. (See ID 143.) Given the singular importance of capital investment in developing, testing, and commercializing MCEDs, the risks to consumers of blocking such investment are particularly high. Accordingly, courts have refused to enjoin vertical mergers without compelling, concrete evidence that a vertical merger is likely to harm competition to a substantial degree. See, e.g., United States v. AT&T, Inc., 916 F.3d 1029, 1032 (D.C. Cir. 2019). Scholars and courts alike have recognized that the efficiency gains from vertical mergers make it impossible to treat this class of transactions as presumptively anticompetitive. As Judge Chappell acknowledged, challenges to vertical mergers require a more fact-intensive inquiry. (ID 168-69.)

Nor should a company’s self-imposed restraints, such as Illumina’s Open Offer, be discounted in the way that Complaint Counsel advocates. (See Complaint Counsel Br. (“CC Br.”) 35.) The Open Offer is a market fact, not a legal remedy, and implicates Complaint Counsel’s prima facie case. Market participants should be encouraged to structure their operations ex ante to avoid potential anticompetitive effects. When markets are new and incentives are speculative, the Commission should not presume that a company in a vertical merger would breach its contractual obligations, especially when there are clear performance metrics that are easily monitored and enforced by the relevant parties.

The potential costs of preventing vertical mergers are high, as experience in emerging-technology markets amply demonstrates. Given the ultimate benefits to consumers, the Commission should be wary about importing the strong presumptions from horizontal-merger law and upsetting a model of spin-off and reacquisition that offers significant procompetitive benefits to consumers.

Read the full brief here.

ICLE Academic Affiliate Dean Alderucci joined the All Things Data podcast to discuss patent analytics and the insight generated regarding innovation and momentum of advanced technologies. The full episode is embedded below.