State of Section 101, Waiver of COVID-19 Vaccine IP Rights, and More Discussed with Panelists Andrei Iancu and Rob Sterne

On May 6, IPLAC held a panel moderated by Dr. A. Christal Sheppard of the University of Nebraska College of Law on the current state of Section 101 with Andrei Iancu of Irell & Manella, Rob Sterne of Sterne Kessler, and Gwilym Roberts of Kilburn & Strode (UK/EPO). 

The panel pivoted from a pure patentable subject matter discussion to weave in commentary on the May 5 decision by the U.S. government to support a waiver of IP rights related to COVID-19 vaccines.  Given the remarkable intellectual firepower of the participants, the hour was filled with numerous insights. 

Former USPTO Director Iancu addressed the waiver before the question and called it a “serious mistake” and a “dangerous precedent.”  He noted that currently, hundreds of collaboration agreements were facilitating technology transfer using the tools of IP and contract law, noting that the current vaccine shortages are due to supply chain issues in both production and distribution.  Mr. Iancu noted that there is a need to observe the rule of law both domestically and internationally in all matters, especially intellectual property, as it allows for the innovation ecosystem to sustain itself.  Switching to the patent eligibility topic, Mr. Iancu noted that during his tenure, the USPTO issued guidance in 2019, and the publication of the guidance resulted in a 44% reduction in uncertainty metrics over the ensuing year, to a level lower than existed pre-Alice.  He expressed a positive sentiment that if industry reached a consensus, there was still an “appetite” within the U.S. Congress to solve the problem via legislation. To improve the patent system, Mr. Iancu thought that certainty and predictability were keys to investments in new technologies, and that the COVID-19 waiver went against the “fundamental principles of property rights and commercial instruments.”  His view is to do what has been done for 200+ years, or risk destabilizing the entire IP ecosystem.

Rob Sterne took up these points and raised the concern that the IP waiver would drive many innovators to employ trade secrets to protect innovations, tying this point to a trend observed in his firm’s practice that has seen clients “give up” on software patents and turn to trade secrets for protection.  This has, in turn, negatively affected funding decisions by venture capitalists and corporate acquirers, driving capital towards sectors with predictable patenting incomes.  Turning to the best solution to the patentable subject matter issue, Sterne felt the courts could solve the problem, but the CAFC had internal inconsistencies as between panels, and was not a “unifying agent.”

The view from the EPO was voiced by Gwilym Roberts, who focused on the “continental law” approach of the EPO to synthesize its rules into a body of law that although possessed of some degree of certainty, was perhaps not flexible.  In terms of the COVID-19 waiver, Roberts pointed out the “political win” facet of the announcement but emphasized that patents did not appear to be the problem and was concerned that the idea that the “patents held back vaccine distribution” idea would damage the patent in far-reaching ways going forward.  On subject matter eligibility, Gwilym Roberts noted that European companies have some difficulty borne of the uncertainty in the U.S., but still see the U.S. as a source of innovation.  He agreed with Sterne that courts or EPO proceedings are faster than legislation, but legislation is more likely to result from a consensus.  Roberts explained that the EPO “list” of exclusions existed since 1978, and its “as such” standard allows flexibility. 

In closing, the panelists discussed who would follow Mr. Iancu as the next USPTO Director.  There was sentiment that the appointment was already political, but with the waiver, stakeholders advocating a strong patent position will push that much harder for a nominee with “strong patent” credentials.  The 50/50 Senate split means the nominee needs Republican support (Iancu was confirmed 94-0).  It was noted that Senator Coons (D-DE) will likely be very influential, and that he has already publicly opposed the waiver.

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