An Update on Patents and Antitrust

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Dean Reuter:  Welcome to Teleforum, a podcast of The Federalist Society's practice groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group teleforum calls, become a Federalist Society member today at fedsoc.org.

 

 

Dean Reuter:  Welcome to a special Capital Conversations edition of The Federalist Society's Practice Group Teleforum conference call, as today May 18, 2020, we receive an update on patents and antitrust. I'm Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society.

 

      As always, please note that all expressions of opinion are those of the experts on today's call. Also, this call is being recorded for use as a podcast and will likely be transcribed.

 

      We're very pleased to welcome today two returning guests to teleforum. We'll hear opening remarks from each of eight to ten minutes. But then, as always, we'll turning to the audience for questions, so please have those in mind for when we get to that portion of the program.

 

      We're going to hear first from the Honorable Makan Delrahim. He's the Assistant Attorney General at the Department of Justice in the Antitrust Division. And he'll be followed by the Honorable Andrei Iancu, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office. With that, Makan Delrahim, the floor is yours.

 

Hon. Makan Delrahim:  Thank you so much, Dean, both for the kind introduction and for you and The Federalist Society for holding this teleconference, and for these types of gatherings to advance our understanding in this important area. I'm also thankful and grateful to have my friend, Under Secretary Iancu on the call and be joining him to discuss these recent developments on the intersections of IP and Antitrust. This is an issue that I think both agencies recognize to be vital to economic development and our country's leadership, and continued leadership, in global innovation.

 

      I look forward to addressing the Agency's latest work in this area. Before doing so, let me explain why it's vital that our two agencies, the Justice Department and the Patent and Trademark Office, and the Executive Branch in particular, serve in the leadership role in formulating antitrust policy that affects international commerce, as well as in the application of the antitrust laws to disputes involving intellectual property. I'm a firm believer that the Executive Branch leadership is crucial in these areas, given the perforation of antitrust regimes abroad and our increasing dependence on IP assets that fuel competition and innovation.

 

      A few first principles I think should be in order. And I come from the school of thought that maintains that under Article II of the U.S. Constitution, there's a strong unitary Executive. That is that the President controls the entire Executive Branch through the powers expressly set forth by the text of the Constitution. I'll refer you to the excellent speech by the Attorney General at The Federalist Society, recently over the past year, on the unitary Executive for that strong unitary Executive is vital to ensuring political accountability for the functions of the government, the federal government, so that a headless fourth branch does not overwhelm the constitutional framework and threaten individual liberty.

 

      In particular, under Article II of the Constitution, the President has authority to conduct foreign relations on behalf of the United States. Through the appointment and removal power, the President may delegate other members of the Executive Branch to conduct foreign relations on his behalf. But the Executive Branch speaks through one unitary voice when representing the interests of the United States with respect to foreign powers.

 

      So it follows, then, that only Executive Branch agencies may represent the United States and officially speak on its behalf in international affairs, unless of course the President, or Congress, has specifically delegated such authority to another agency, including an independent agency. In the antitrust arena, Congress authorized the Executive Branch to enforce the antitrust and competition laws of the United States by passing the Sherman Act and the Clayton Act. This authority extends to the power to articulate U.S. antitrust policy, itself.

 

      In particular, Congress passed a statute in 28 U.S.C. § 517 which authorizes the Attorney General to "attend to the interest of the United States in any court without having to seek permission from the court to participate." We, at the Division, have frequently relied on this statute when we filed statements of interest in district courts. And importantly, the Attorney General explicitly has delegated authority to the Antitrust Division to engage in international discussions about antitrust enforcement.

 

      Accordingly, when the Division engages in international affairs, to borrow a phrase from the great Justice Robert Jackson's famous Youngstown concurrence, it's "authority is at its maximum." That's because it includes all the executive processes, and I quote that, plus all Congress can delegate. From this structure, the fundamental principal of antitrust foreign affairs emerges in my view. That is, unless Congress, itself, passes new legislation, the final word on matters of the United States antitrust policy abroad, should necessarily come from the Executive Branch. To be sure, Congress has created additional independent agencies, a few of which exercise some of the same powers to enforce the antitrust laws.

 

      An independent agency, however, does not have the same degree of structural accountability to the President, and therefore, it does not act with the same power as the Executive Branch insofar as it takes positions on matters of antitrust policy abroad. By extension, when an independent agency engages in foreign affairs and makes a policy or enforcement decision that conflicts with that position of the Antitrust Division, that independent agency does not speak on behalf of the United States.

 

      With this framework, the Division, over the past year and a half I'd say, has engaged in significant advocacy at home and abroad to articulate our policy with respect to a blind antitrust IP. Intellectual Property disputes are increasingly local in scope, even though the rights conferred by the respective Patent and Trademark authorities may vary from country to country. Where one court or agency gets it wrong on a matter of IP, there could be, and there have been, harmful ripple effects across the global economic system undermining innovation and competition that effects U.S. businesses and consumers, alike.

 

      Our goal, therefore, is to provide the latest and most up to date legal and economic perspectives to global debates regarding the inner play IP rights and antitrust. Given the importance of IP rights, we're fortunate that Congress established a Patent and Trademark Office within the Executive Branch's Department of Commerce so that the Executive has the ultimate say over questions of patentability and advocacy regarding patent policy at home and abroad.

 

      At the Antitrust Division, our goal is to ensure that the antitrust laws do not displace the framework that the Founders envisioned and Congress placed within the Executive Branch. Madison, Jefferson, and others of their generation recognizes that inventors required monetary incentives to innovate so that dynamic competition can fuel the engine of economic growth. Over the last two-and-a-half years, we have kept these principles in mind as we have expanded our advocacy on matters involving the application of antitrust law to IP disputes.

 

      Let me just highlight a few of their recent milestones. On the policy front, you'll note last year that I was honored to join the Patent and Trademark Office and NIST in releasing an updated joint statement on remedies for standard essential patents, which replaced a previous statement on that same topic, which was issued in 2013. That effort would not have been possible without the close working relationship that, between both the staff and leadership at all three of those agencies. And I want to thank Andrei again, here, for that.

 

      So far, the statement has been very well received as an important step toward restoring balance to the debate over availability of injunctions for infringement of standard essential patents. Moreover, in response to the COVID pandemic, our policy experts on IP have worked closely with various federal agencies, including the Patent and Trademark Office and the private sector on efforts to develop the appropriate treatments as new technologies and new efforts are advanced. Our goal is to ensure that we swiftly bring to market the latest and most promising innovations. The whole government is harnessing the powers that exclusive rights of patents confer in order to help address the pandemic as fast as possible.

 

      On the appellate front, we have continued to file amicus briefs and statements of interest in district courts and courts of appeals to advocate for the sound application of antitrust law to IP disputes. Most recently, we filed in Continental v. Avanci argument that alleged breaches of FRAND obligations do not give rise to monopolization claims. And in the Intel Fortress case, we argued against the assertion that antitrust law should bar efforts to aggregate and to monetize patent rights. We hope to continue these efforts and to weigh in on disputes where our views might make a difference. Again, thanks for the opportunity to be with you and I'll look forward to our discussion.  Andrei, honored to be on this call with you.

 

Hon. Andrei Iancu:  Great Makan, thank you very much. And great to hear from you. And thank you Dean for organizing this and bringing us together. Makan, honored to be with you. Great comments as always. Let me touch on a few things, some of which you have mentioned. But let me add a couple of things that are more specific to the U.S. PTO.

 

      First of all, the PTO is actually physically closed right now. We have been since approximately the end of March. But operations are continuing normally. Our more than 12,000 employees are working remotely, and it's been a seamless transition for inventors and entrepreneurs who file applications with us. That is important. And it was important for us to maintain so that we can continue the protection and incentives for innovation that are so critically important at all times, and especially now. And not just that we're working continuously and seamlessly since the pandemic, but we have instituted various initiatives to help the innovation community at this time. You can see all of the initiatives on our website. But one example is a fast track application review process that we have announced about a week ago, or so, for small businesses who are innovating with respect to technologies in the COVID-19 area.

     

      As President Trump said just a couple of weeks ago or so, the importance of IP has never been more apparent than it is now. And how true that is. But as always, for IP to function as intended, it must be predictable, reliable, IP rights need to be predictable and reliable. And they must be meaningfully enforceable. For the past two-and-a-half, three years or so, we have taken a variety of initiatives at the USPTO and the rest of the administration to materially improve our system and frankly, it's been quite successful. Let's highlight just a couple of those initiatives for today, although as I said, there has been quite a bit more than just these couple. But let me highlight one that goes to the predictability and reliability aspect, and the other one that goes more towards enforceability.

 

      One of the areas that has suffered when it comes to predictability for the past few years has been subject matter eligibility. What we call Section 101 of the Patent Code. But this is basically the fundamental threshold question as to what is it that our patent system is supposed to cover? What is within the patent system and what is not?

 

      It's been a difficult area since the Supreme Court's Alice decision several years ago. And the interpretation and the application of that decision, subsequent to its issuance. There's been quite a bit of confusion between various decision-makers as to how to interpret it and what's in and what's out. So just as an example, unpredictability at the USPTO, itself went up after the Alice decision by more than 20 percent in the years of following.

 

      So last year, at the USPTO, we issued new guidance to our examiners on how to apply the current law. Basically, we synthesized the law and issued a systematic -- we issued guidance that provides a systematic analytical framework. And it's been very well received. We've know, anecdotally, across technology areas that the new analytical approach has worked well. But just last month, our chief economist issued the report that really shows through a statistical study how successful it has been. So while unpredictability of examination had gone up in the years since Alice by more than 20 percent, and in fact approximately 26 percent in the years following Alice, in the 12 months since our guidance, unpredictability has decreased by 44 percent in the past year alone. So that really is a significant improvement.

 

      But to solve this issue once and for all -- and it remains the most important substantive area of patent law right now. To solve it once and for all, we need all hands on deck. We, at the USPTO, are but one branch of government. We have actually shown, through our guidance, that this issue is indeed solvable. But we need all who are involved in the system to work towards solving the issue.

 

      Now, let me turn to the second example and that's something that Makan has already mentioned. And that is the new policy we have issued together with the Department of Justice and its Antitrust Division and NIST last December on standard essential patents. This new policy takes the thumb off the scale that many have come to believe that the prior 2013 policy had placed. And it allows the courts to decide remedies, appropriate remedies in the application of standard essential patents on a case-by-case basis following the existing case law and not segregating out SEPs as a special class, and instead, allowing such patents to be subject to existing law.

 

      This is critically important so that we can continue to encourage, not just competition as Makan indicated, but in particular, standards specific innovation in the United States. All remedies need to be available and patents need to be meaningfully enforceable for them to work as intended. Injunctions, where appropriate, are an important component of that. Without meaningful remedies, patents are less valuable. Investments in those patents would be of a higher risk, and therefore, decreased. And that is not what our Constitution contemplated when it included the IP Clause.

 

      So it was a great honor to work with Makan and others on that policy. As he said, it has worked well and as we see it, it really does contribute towards encouraging more innovation in standards technology in the United States. And frankly, that is such an important area, now-a-days, when you think about 5G development and the like.

 

      So let me stop there with those three examples, but as I've said, there were quite a few others, and turn it back over to Dean, if he has any questions. Or perhaps the audience has some. Thank you.

 

Dean Reuter:   Thank you both very much. Let's open the floor to questions. I'll begin with a question. It was mentioned in the opening remarks, predictability, reliability, enforceability. Those seem to be the hallmarks of the rule of law. Very interesting stuff there. I'm wondering about, and Andrei Iancu, you in particular mentioned enforceability and injunctions, I've heard about this phenomenon where businesses make sort of a business judgment that it's easier to just infringe a valid patent, knowingly infringe in a calculated way. Knowing that the patent holder might not be able to get an injunction under the current standards, and they'll continue to reap profits during the pendency of ongoing litigation, I think. I might have this wrong, but this is what I've heard, so I'd love to hear either, or both of you, respond to that phenomenon. And if that's happening, is there a way to address that? It feels to me that a property right, a patent right without a remedy is really no right at all.

 

Hon. Andrei Iancu:  The fact of the matter is that there are folks who, no matter what the rules and the laws are, they try to game the system. For an IP system to work well, it has to be carefully balanced to make sure that it really achieves the ultimate goals of protecting and incentivizing that innovation and avoids, to the extent possible, any such gainsmenship. The U.S. Constitution does provide for exclusive rights to inventors and authors. Those words, the concept of exclusivity, is in the Constitution, itself.

 

      That has been interpreted by the courts over the past 200 years in a number of ways. The most recent Supreme Court interpretation comes from the Ebay case where the ultimate analysis follows a four-factor test as to whether injunction shall issue or not. And the bottom line is, depending on the facts and circumstances, courts do need to apply the law carefully to ensure, not only the right remedies for the IP owners, but also to incentivize the right behaviors in the marketplace and disincentivize the wrong behaviors and avoid any such gainsmenship.

 

      For the standard essential patents that both Makan and I mentioned in opening remarks, it is important to understand that such remedies should be theoretically available. The same factors should be applicable. And if the facts of that particular case and if the parties are behaving certain ways, then it might be an available remedy and we do think that that would help incentivize the right behaviors in the standards development technologies and increase the investment in such innovation in the States.

 

Dean Reuter:   Makan Delrahim, anything on this point?

 

Hon. Makan Delrahim:  I think Andrei covered that well. There's one thing I would add is, I think you don't have -- you cannot nullify Article I Section 8 Exclusive Right language and expect the dynamic competition that we enjoy from the innovation that occurs. Of course, we also encounter this. Sometimes, there's antitrust claims brought when a patent owner, in a standard essential patent, just enforces, just fights to bring an injunctive relief for somebody who might be infringing without taking a license. And they may, as part of a standing setting process, committed to what's called fair, reasonable, and nondiscriminatory language.

 

      And the allegation for antitrust is just enforcing and seeking an injunction is a violation of the antitrust law. And a big subject of our advocacy has been to modify that and say, no, it is not. You still have that right to seek an injunction. Whether or not you may have violated your contractual obligation in that standard setting process maybe subject to a contract claim, or some kind of other types of claim. But it does not arise to an antitrust violation just by itself. So that's an important part of this, that hopefully the gainsmenship does not occur because then it has a ripple effect on innovation, and ultimately, competition.

 

Dean Reuter:  We do have one question pending from our audience. If you're calling from --

 

Caller 1:  Hello.

 

Dean Reuter:  Go ahead caller.  We can hear you.

 

Caller 1:  Great. Thank you very much. Thank you for taking my question. I wanted to highlight the problem of competition agencies outside the United States who use the guise of, in quotation marks, “antitrust enforcement,” to either foster long-term efficient infringement by their national champions or devalue patent technology that belongs to non-Chinese players. And I was curious if that is something you're looking into, and whether there may be a way to work with other agencies, Executive Branch agencies such as USTR to perhaps address these problem because they're serious and real. Thank you.

 

Hon. Makan Delrahim:  I'm happy to take a first shot at that. With respect to other competition agencies, I think you were eluding to, but you said non-Chinese, but particularly the Chinese, the new antitrust agency there called SAMR and I think there could very well be a broader strategy by the government in China to address that and see different sectors, including 5G in other areas for standards domination.

 

      To the extent there's any type of discrimination or misapplication of the antitrust laws, we have a strong interest in that. And as I mentioned at the opening remarks, not only have we focused on the domestic courts to address this and make sure we are not misapplying the antitrust law to diminish IP rights, but also with our foreign counterparts, with the European Union, with Korea, with Japan, China, and all through the various international forum that we have, the OECD, the ICN and other areas, to advance this exact topic.

 

      We have worked closely with the U.S. Trade Reps Office because when it gets into a trade area, or a dispute over whether or not adequate and effective IP rights are provided, the U.S. Trade Reps Office leads for the government. And we have worked with the USTR on competition chapter commitments in a couple of bilateral agreements, including Korea. And that is an area we are looking at. And if there's any other countries for which competition laws are being used in a discriminatory way, we certainly would work with them to address those issues on behalf of both U.S. innovators and consumers.

 

Dean Reuter:  Andrei Iancu, anything on this point?

 

Hon. Andrei Iancu:  Sure. Let me just add just one point from the IP perspective. We're keeping a very close eye on this issue internationally. What is really important is that the intellectual property laws in countries are applied in a non-discriminatory fashion to all comers and all types of inventors from around the world. One way to ensure that that happens is transparency of the court systems and the adjudicatory bodies, wherever they might be. Without a transparency, then it's very difficult to tell whether all inventors, all IP owners, all petitioners are heard in an equal way in a nondiscriminatory way. So we are monitoring this issue, and frankly, with particular attention to China and whatever is being spoken about anecdotally, the proof in the pudding is what is actually happening in all the court decisions. Not just the hand selected ones that are being published. Anyway, so we're attending to this.

 

      We are working with our other government agencies, partner agencies such as the USTR. But also with our international friends around the world to make sure equal treatment in IP regimes around the world.

 

Dean Reuter:  Let's check in with another caller now.

 

John Meyer (sp):  Hello. This is John Meyer and I question the desire to make injunctions more available. It seems to me that the injury is almost never irreparable as long as the potential infringer either has enough resources or is forced to deposit money to pay the injury done afterwards. I think the injunction struggles are very destructive in many cases. And I would even favor setting up something where there's a mechanism to expedite such things into force, at least a certain level of payment before a final agreement on royalties is reached.

 

Hon. Makan Delrahim:  Well, I think that the Supreme Court has spoken on that, as Andrei mentioned, in the eBay case and I think there's the four-part test to see when it is. I was one of those who was up with you that the Federal Circuit did not interpret the laws correctly by automatically issuing injunctions and I was actually one of those who advocated that. The area -- however, it's really up to Congress to change the law of whether or not injunctions should be available or not. I think the injunctions are available under the statute and part of my agency's role is to make sure that just seeking that injunction, which is part of your role, is not in and of itself a violation of the antitrust laws, as has been claimed by folks who are trying to efficiently infringe on IP rights.

 

      Whether or not Congress should change that law, I have no opinion on that. I do caution, though, who becomes a rate-setter. Because the balance, the leverage, the bargaining leverage changes. And what has been successful so far in 240-odd, little some odd years of this country is that we've let the IP owner, and the market, decide whether or not he should infringe -- whether or not they should license and what they should charge. Or, just a right to exclude. Somebody could choose just to sit on that patent, unless there's some kind of a Fifth Amendment type of taking to address some kind of a critical public need. I think to allow that inventor to not have to license it at all has worked just fine because it allows for the gain to trade when a licensor and licensee see fit.

 

Hon. Andrei Iancu:  Yeah, this is Andrei. Makan says it all. I don't have much to add. The statute does allow for injunctions. It is based on the constitutional provision that calls for exclusive rights. And the question is, how do you do the analysis to ensure that an injunction issues when appropriate and it doesn't issue when not appropriate. The Supreme Court has spoken on that in the eBay case.

 

      And what we've said in our SEP recent policy on standard essential patents is that the administration should not have -- I mean, the government should not have its thumb on the scale with respect to one or more of those factors in any particular type of a case. And to have de facto rule, while the statute exists as is, to have a de facto rule that says, generally speaking, no injunctions in -- for trans-encumbered standard essential patents, that is not conducive to incentivizing the innovation and is potentially conducive to inappropriate behavior and distortive behavior in the marketplace. So that's where we came from at that angle for our policy in December.

 

      But overall, there is a body of law when it comes to injunctions, and that's what we feel the courts need to apply equally in all cases.

 

Dean Reuter:  Very good. Let's check in with our next caller, heading to area code 310.

 

Timothy Lee:  Hi. This is Timothy Lee from Center for Individual Freedom. I really appreciate your presentation and the content of. Real quick question. Over the weekend in the Wall Street Journal, there was a piece by Matt Ridley in the review section. It was entitled -- it was a front page of the review. It says "Innovation Can't Be Forced But It Can Be Quashed" and he advocates weaker patent laws. I was just wondering if either of you had had the chance to read it, and if so, what particular responses you might have. Thank you very much.

 

Hon. Andrei Iancu: This is Andrei Iancu. I saw the headline, as you have indicated. I have not had a chance to read it carefully, and I believe it's an excerpt of a book -- a longer book that he has coming out. So I can't really comment directly on his piece or his thought process. But let me just say this, a little bit more generally and at the higher level.

 

      The United States has done incredibly well since its founding when it comes to innovation, growth, and the like, given our IP systems and the IP laws that were instituted right at the beginning with the first patent statute in 1790 written by Jefferson and Madison. And here's the bottom line. Humanity has been around the planet for a very, very long time. Civilization, human civilization, organized civilization has been around the planet for a very long time, thousands and thousands of years. There were smart people around the globe for a very long time. And by and large, the stake of the human condition, when our country was founded 200 and some years ago, was basically the same as it was in Ancient Rome. People were riding around on horseback. Anesthesia was just a shot of whiskey, at best. And if you wanted to send a message, you had to send Paul Revere to ride throughout the night, or carrier pigeon or something. And look how far we have come since then.

 

      There are many, many possible reasons for all that. But one thing is certain. We did all that with a new democratized IP system, constitutional system that we have in this country. And that for the first time, democratized invention and protected invention as we have in this country.

 

      Here's my concern. We know that it worked. We don't know if this type of progress could have been possible, or is possible, under a new system with weaker or no IP rights. We don't know. And for us to venture into the next industrial revolution where the entire world is competing for innovation, where many countries, big to small, are racing towards the next technologies, 5G, artificial intelligence, quantum computing, and the like, with an unknown system that's being proposed in some form or another. In my mind, it's very risky. Especially because we know how successful we have been to date. I personally, I don't think -- I do think that we have to be very cautious before we make such radical changes.

 

Dean Reuter:  Makan Delrahim on this point?

 

Hon. Makan Delrahim:  It's tough to add or improve on what Andrei just said. I'll leave it at that.

 

Dean Reuter:  Go right ahead caller.

 

John Shu:  Hello. This is John Shu calling from the beaches of Orange County. Thank you to Makan and Andrei for your service and your hard work and for this great conference call. Andrei, when you talked about the proof is in the pudding, I was wondering if you meant the Semolina pudding, or perhaps the rice saffron pudding from Persia? But in all seriousness, my question has to do with patent pools. I was wondering, with respect to your respective agencies, how does increasing globalization, and the fact that patent pools can be done with both domestic and international companies, if that effects how you analyze the pool and enforcement of the law against a particular pool.

 

Hon. Makan Delrahim:  I assume that would be on how we treat it from a competition standpoint. Patent pools, as are joint guidelines, DOJ, FTC, on intellectual property point out, are generally -- we view that as a pro-competitive effort. One that is intended to reduce friction and make an efficient process to remove some of the concerns with that. We look at the effects-based test and there's some that we have reviewed through business review letter process that our processes allow and we've done that in the past, dealing with DVDs and disc drives, 10, 15, or 20 years ago over the years. So there's some guidelines relating to how we look at whether or not -- how the pools is administered. Is it non-discriminatory? And are they blocking with each other? There's a number of factors we look to. But you're absolutely right, they have a greater impact as through globalization because you have innovation that could come from any part of the world. But also the market is much larger if we're much more interconnected.

 

      But there's a process that we could review before a pool is actually effective, but one that is proposed, what its goals are, what its intentions are, and we will look at that and provide our views and analysis on enforcement on that.

 

Dean Reuter:  Andrei Iancu on this point?

 

Hon. Andrei Iancu:  No, I don't have anything to add, Dean, to what Makan said from the antitrust point of view.

 

Dean Reuter:  Very good. We've got three questions pending. Maybe I could ask a quick follow up question. I might have this wrong. I don't know. But I've heard about patent valuation and one method of patent valuation as patent counting, which was described to me as simplistic as, if I have more patents than you do, my company's more valuable than your company. Which might be useful in some circumstances, I don't know, but it seems overly simplistic to me. It's as if my 11 high school football players can beat your 10 NFL players. Have I got this right, the way this is done sometimes, or under what circumstances? Are either of you following that? Patent counting?

 

Hon. Makan Delrahim:  Andrei?

 

Hon. Andrei Iancu:  Well, this is not quite a U.S. PTO specific issue, but I'll tell you from general experience that it is, indeed, how -- it is a very course filter that sometimes people do use. It is a measure, no question. It is a very rough measure, as you indicated, Dean. But it is a measure nonetheless.

 

      And here's a practical reason why it's somewhat of a measure. Let's assume you allege infringement against somebody of a particular patent and if you cannot work it out, you file a lawsuit in court and the other side hopes to win and invalidate that patent or show noninfringement. Well, if you have 1,000 patents lined up behind it, you can keep going.  And the other side will say, gee, even if I win this one, what might happen to the next one and the next hundred, and the next thousand? So that's a practical point of view. But nevertheless, when you start valuing it, it is, for all the reasons you've mentioned, what you really need to know is what the value of each one, how much it's contributed to the technological development of a particular product and the like. And then do a real analysis.

 

      Having said that, some standards bodies do consider it, as well. But it's just a rough measure.

 

Dean Reuter:  Let's turn to our next caller.

 

Caller 2:  Hello, this is a question for Director Iancu. And I apologize if this is a little bit off topic. But I'm a practitioner before the PCAB in IPR proceedings. And I personally just want to say, I think you've done an incredible job of bringing consistency to those proceedings through a variety of different means, Precedential Opinion Panels, designating decisions as precedential, etc. And I think the judges have been -- are quite good. Maybe even better than federal district court judges, for the most part.

 

      But there's one thing that has always troubled me and I wanted to know if you had any thoughts on it, and whether there might be anything to do to confront it or whether it's just a fact of life. But when you get instituted, there are various services where you can check the invalidation rates for particular judges. And there's a lot of variance in that. And there's some judges that have shockingly high invalidation rates. I forget what it is, but well in excess of 90 percent and pretty close to 100 percent. And others, it's generally pretty high but much, much lower. Perhaps 80 percent or something like that. And I'm wondering if there's anything that the Office might do to, when you reach that stage, ensure a more fair outcome that doesn't seem predetermined via those, from my perspective, disconcerting statistics?

 

Hon. Andrei Iancu:  Well, first of all, thank you for your comments and for the question. Look, like any judicial body, we try to avoid that and one of the reason for issuing the various precedential decisions and trying to increase the amount of guidance we put out is to avoid variability between panels. We do try a variety of things. And in particular, the assignment of judges to cases. But it's not a perfect world and we keep working at it.

 

      One thing that works a little bit against it is trying to match to the extent possible. Again, it's not perfect, but trying to match a technical background of some judges to the relevant case at hand. And some areas of technology inherently might drive different statistical outcomes. But overall, I think the increased amount of guidance, plus the randomization of assignments to judges should help. We issued a standard operating procedure to the public where we make it clear now the process of assigning judges, so you can take a look at that.

 

      To the extent you, or others, have brought in this area, have some specific statistics, or areas of concern, please feel free to send me or the Chief Judge a note.

 

Dean Reuter:  Very good. Let's carry on. Go right ahead caller.

 

Batia Zareh:  Hi. My name is Batia Zareh, and I'm a comparative intellectual property lawyer. I specialize in antitrust actions by the EU against American Hollywood Studios. My question is regarding, you [inaudible 00:45:12] the current appetite of corporations to be advised or represented by the federal government and as responses increase leverage when responding to foreign national or super national entities. As you well know, as an example, when [inaudible 00:45:26] brought the actions, she didn't bring them against Hollywood as a sector. She brought them individually against the different studios. And depending on their power or their own solvency, different studios cut different deals. And that resulted in yielding different negotiation outcomes across the sector. So I'm just curious what your temperature is for the appetite of corporations to engage with the federal government at this point. Thank you.

 

Hon. Makan Delrahim:  So we are -- I've taken the view the last several years that we are here, not only in a unique role in the Antitrust Division. We not only enforce the laws, but in our International and Competition Advocacy, we are open to hear complaints about either abuses of processes or misapplication of the laws, one way or the other. So we have been taking comments and concerns from private sector about international applications as well as domestic abuse in private cases or otherwise. So we're perfectly open to hearing any concerns about that.

 

      I'm not totally familiar with the -- I don't know if you're able to respond, but I don't know if this is relating to the MFN provisions dealing with some of the licensing in Europe, as well as some of the sports rights. Could be that but --

 

Batia Zareh:  It was the geoblocking case -- [inaudible 00:47:05]. So basically they were predicated on rules that the EU asked the studios 20 years ago.

 

Hon. Makan Delrahim:  Right, okay. Yeah, but we are open to that. Sometimes, if it's something that would be more appropriate to work with the Trade Reps Office or the State Department, we would reach out to our counterparts there. But if there's issues that you think would skew the competitive landscape, we're happy to hear that.

 

Batia Zara:  Thank you. I'd be happy to send you the article. Yeah, I just think that [inaudible 00:47:37] and the leverage point is well taken and it’s time to sort of look at ways of implementing it. Thank you for your time and your service.

 

Dean Reuter:  Go right ahead, caller.

 

Seth Robins:  Hey gentlemen, thank you for your time and your service today. My name is Seth Robins. I'm a general practitioner in Jackson, Mississippi. I'm not an IP expert by any means, but I'd be curious to hear your take on -- particularly on the prescription drugs and whether the current balance between antitrust law and patent protection is right, or if it needs adjustment? I say this as someone that has taken some medicine that's been very expensive. And upon researching it, I see that the manufacturer had made some agreements, basically with competitors, not to allow the -- the competitors would agree not to sell the product in the United States until a specific amount of time. So I'm just curious to get your take on whether the current market is balanced between antitrust and patent protection within drug pricing.

 

Hon. Makan Delrahim:  Well, let me first say, that's an area of, obviously, significant impact. Just because every American at one point or another will need, and also just because of the fact that it's healthcare, it's important. Our sister agency, the Federal Trade Commission has handled -- handles a lot of the civil related issues dealing with pharmaceutical products. They have been quite active in some of the settlements culminating all the way to the Supreme Court. And a few years ago in the Activist case about when certain activities, pioneer companies are engaged with generics that might exclude the entry of new competition.

 

      As a general matter, I think, as far as the law of antitrust and patents, I think those are in sync. Whether or not private conduct transgresses one or the other. You could engage in fraud in obtaining a patent. And that could, in addition to the remedies to the patent laws, it could implicate some antitrust laws. Or you could fix markets or allocate markets or fix prices.

 

      And we've been actually quite active in the pharmaceutical area. We brought a resolution, I think about a month ago. We have been engaged—it's been public now—in a criminal investigation of a number of pharmaceutical companies who had fixed prices amongst themselves or allocated markets over a number of -- these were generic drugs, but drugs that all of us, at one point or another, have used or know somebody who does. And I believe we have resolved with four companies, including last week, we announced with Apotex, a criminal resolution. Novartis, I think, paid a $200 million fine. Several others.

 

      And in addition to that, three weeks ago, we brought a criminal case against a corporation, Florida Cancer Specialists in the Naples area in Western Florida for allocating the cancer treatment market with another company and individual charges still pending on that. But we've been active. If there's information relating to price fixing or market allocation that you or anybody in the public may be aware of, we're all ears.

 

Dean Reuter:  Looks like we're down to our final question.

 

Andrei Popovici:  Hi. I'm Andrei Popovici. I'm an IP lawyer, but I actually have an antitrust question. Quickly, should a company like Huawei be treated as an extension of the Chinese State? Now they both because of the communist party organization they have in China, internally, that makes hiring decisions and because of the China 2025 plan. I mean, they're not really a purely commercial enterprise in the western sense. Should our treatment of companies like that reflect the reality? Thanks.

 

Hon. Makan Delrahim:  I'll refer you to the -- I don't think that was necessarily an antitrust question, but I think generally dealing with the national security implications of certain companies that might be state actors, and I'll refer you to other parts of the government, Department of Commerce, Department of Treasury, as well as the other parts of this Department of Justice and National Security Division, where they've have recent comments about Huawei.

 

Dean Reuter:  We've got about a minute or two left. Let me give each of you a chance in the order we opened, to just express a final thought if you have one. Assistant Attorney General Makan Delrahim.

 

Hon. Makan Delrahim: Dean, thank you once again. Just in closing, I cannot emphasize how important the topic is and how the changes and the incentives can have real implications. The proper incentives for innovation. It's a broader innovation policy, whether it's the procurement of patents in the first place, and how that's treated through Andrei's department or its treatment in the commercialization of it where the antitrust laws come into play and the right balance is key. And we're trying to do the best that we can. And I thank you again for advancing the knowledge through these debates.

 

Dean Reuter:  Director Andrei Iancu.

 

Hon. Andrei Iancu:  Thank you Dean. Thank you Makan. Great to be on with both of you and to all the listeners and to The Federalist Society for putting this on. Critically important topic, for sure. Innovation is the heart of economic growth and development. Innovation, especially at this time, is going to be a critically important component of the United States economy going forward.

 

      What we must do is to make sure that we have a properly balanced IP ecosystem. We have to make sure that any abuses of the system are avoided and rooted out. But at the same time, we must make absolutely certain that the proper incentives for innovation and the proper level of protection for that innovation are in place. And if that happens, just like it's happened for the past 200 and some years in this country, the United States will maintain its competitive edge and the lives of our citizens and the rest of the world will improve.

 

Dean Reuter:  Well, my thanks to both of you for joining us. We certainly appreciate your time in these interesting times. I want to thank the audience, as well, for dialing in and for your questions. Lots of good questions. We appreciate that. A reminder to our audience to be in touch with The Federalist Society's website for upcoming teleforums. Monitor your emails, as well. But I happen to know the next teleforum conference call starting in a bare 30 minutes. But until that next call, we are adjourned. Thank you very much.

 

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Dean Reuter:  Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.