Written Description

In my prior post I interviewed  Christopher Morten at Columbia Law School about his article "Publicizing Corporate Secrets," which is forthcoming in University of Pennsylvania Law Review.  Morten argues that federal agencies have much more power to publicly disclose trade secrets and confidential information collected from private companies than is commonly believed. He argues that sometimes agencies do have the authority to "break" corporate secrets, and sometimes they do not. His core insight is that ultimately it's the agencies' enabling statutes passed by Congress that dictate their power to disclose trade secrets and confidential information.  I will now post links and our discussion of the full text of some of these enabling statutes, so that readers can see the statutes and make their own interpretations.

The prevailing wisdom is that federal agencies cannot generally disclose trade secrets and confidential information given to them in confidence by companies that they regulate or work with.  Indeed, the Trade Secrets Act (18 U.S.C. § 1905), passed in 1948, seems on its face to make it a crime for federal government personnel to do so.

However, in a highly provocative, but ultimately compelling article, "Publicizing Corporate Secrets," forthcoming in the University of Pennsylvania Law Review, Christopher Morten of Columbia Law School argues that federal agencies have much more power to publicly disclose trade secrets than is commonly believed. Morten argues that the scope of agencies' power to disclose is defined by their enabling statutes and that, with many important exceptions, several of these enabling statutes do not, at a legislative level, prohibit disclosure of trade secrets or confidential information. Some agencies may have regulations on the books preventing disclosure of trade secrets, but he suggests that they could in some cases change those regulations without additional authorization from Congress, and that there would be far fewer negative consequences for them than we might think if they did so.  

On a very hot day in July, I interviewed Morten about the details of his argument.  The interview took place in the air-conditioned NYU Engelberg Center. Many thanks to Katrina Southerland and Mike Weinberg for arranging a space for us.  This was a fascinating, lengthy discussion, which I have excerpted below.  

By Lisa Larrimore Ouellette, Nicholson Price, Rachel Sachs, and Jacob S. Sherkow

This week’s FDA news has been dominated by the tumultuous emergency authorization of convalescent plasma on Sunday, but let’s not forget last week’s news: On August 16, the Department of Health and Human Services (HHS) surprised public health experts by publishing a one-paragraph notice on its website rescinding FDA guidance related to laboratory developed tests (LDTs). The notice states that the FDA will not require premarket review of LDTs absent notice-and-comment rulemaking, including for COVID-19 tests. LDTs are tests “designed, manufactured and used within a single laboratory,” such as tests run by large academic medical centers, hospitals like the Mayo Clinic, and testing giants LabCorp and Quest Diagnostics. Former HHS national coordinator for health information technology Farzad Mostashari described this change as “bizarre” and like “[c]losing the barn door 6 months after the horse left the barn, and 3 months after she moved to a different barn!” What’s going on, and how will this change affect COVID-19 testing?

By Lisa Larrimore Ouellette, Nicholson Price, Rachel Sachs, and Jacob Sherkow

Our recent posts have highlighted shortages in three COVID-19-related knowledge goods: testing, drugs (such as those needed to put patients on ventilators), and clinical trial information about effective treatments. This week we focus on the role of legal regulators in another critical shortage: N95 respirators, one of the key forms of personal protective equipment (PPE) for healthcare workers. We explain how N95 regulation, like COVID-19 testing, presented an interagency coordination problem. The FDA has successfully removed key regulatory hurdles—though the problem should have been anticipated earlier, and much more needs to be done to ensure an adequate supply.

What are N95 respirators?

N95 respirators are a specialized subset of face masks (here’s a handy NY Times explainer with photos). A normal surgical mask (what you see, for example, in a typical medical TV show) fits fairly loosely around the face; it blocks splashes and relatively large droplets, but not tiny particles. An N95 respirator, on the other hand, is relatively rigid rather than being flexible, and is designed to fit closely to the face and create a tight seal—tightly enough that the masks don’t work with certain beards (or for children). The “95” in N95 refers to the requirement that the mask block at least 95% of 0.3 micron particles (about a thousandth the width of a human hair). Both types of masks are meant to be single-use.

N95 masks are meant to keep droplets that include the SARS-CoV-2 virus out. They’re not perfect, but if they’re well fitted, they are effective at protecting the wearer (most crucially right now, the healthcare providers who are caring for patients and are themselves still getting sick in droves). Surgical masks, on the other hand, do a worse job of keeping the virus out. Cloth masks even less so. But cloth masks can help keep droplets in—that is, if someone is sick, wearing a cloth mask may keep them from projecting droplets that can infect other people. The CDC now recommends that everyone wear a face mask when in public, to avoid infecting other people (because even asymptomatic individuals can infect others, and the lack of testing means it’s very hard for most people to know whether they have been infected). However, surgical masks and especially N95 masks are in very short supply, and should be reserved for medical professionals.

N95s were initially developed for industrial uses including mining. The key feature—and what makes N95s harder to manufacture than other masks—is that the masks are made using what’s called “melt-blown” fabric. A polymer (such as polystyrene, polyurethane, or nylon), is melted then blown through small nozzles; it forms a matrix of tiny fibers with many holes (think: cotton candy), which can capture particles. But the machines to make this fabric are complex and expensive, and manufacturers of the fabric are struggling—and failing—to meet demand.

Guest post by Rebecca Weires, a 2L in the J.D./M.S. Bioengineering program at Stanford

In their 2016 paper, Manufacturing Barriers to Biologics Competition and Innovation, Price and Rai argue the use of trade secrets to protect biologics manufacturing processes is a social detriment. They go on to argue policymakers should demand more enabling disclosure of biologics manufacturing processes, either in patents or biologics license applications (BLAs). The authors premise their arguments on an assessment that (1) variations in the synthesis process can unpredictably affect the structure of a biological product; (2) variations in the structure of a biological product can unpredictably affect the physiological effects of the product, including immunogenicity; and (3) analytical techniques are inadequate to characterize the structure of a biological product. I am more optimistic than Price and Rai that researchers will soon overcome all three challenges. Where private-sector funding may fall short, grant-funded research has already led to tremendous advances in biologics development technology. Rather than requiring more specific disclosure of synthesis processes, as Price and Rai recommend, FDA could and should require more specific disclosure of structure, harmonizing biologics regulation with small molecule regulation. FDA should also incentivize development of industrial scale cell-free protein synthesis processes.

Christopher Walker is a leading administrative law scholar, and Melissa Wasserman's excellent work on the PTO has often been featured on this blog, so when the two of them teamed up to study how the PTAB fits within broader principles of administrative law, the result—The New World of Agency Adjudication (forthcoming Calif. L. Rev.)—is self-recommending. With a few notable exceptions (such as a 2007 article by Stuart Benjamin and Arti Rai), patent law scholars have paid relatively little attention to administrative law. But the creation of the PTAB has sparked a surge of interest, including multiple Supreme Court cases and a superb symposium at Berkeley earlier this month (including Wasserman, Rai, and many others). Walker and Wasserman's new article is essential reading for anyone following these recent debates, whether you are interested in specific policy issues like PTAB panel stacking or more general trends in administrative review.

The Supreme Court issued its basically unanimous opinion in Cuozzo today. I won't give a lot of background here; anyone taking the time to read this likely understands the issues. The gist of the ruling is this: USPTO institution decisions in inter partes review (IPR) are unappealable, and the PTO can set the claim construction rules for IPR's, and thus the current broadest reasonable construction rule will surely remain unchanged.

I have just a few thoughts on the ruling, which I'll discuss here briefly.

First, the unappealability ruling seems right to me. That is, what part of "final and non-appealable" do we not understand? Of course, this leads to a partial dissent, that it means no interlocutory appeals, but you can appeal upon a final disposition. But that's just a statutory interpretation difference in my book. I'm not a general admin law expert, but the core of the reading, that Congress can give the right to institute a proceeding and make it unreviewable, so long as the outcome of the proceeding is reviewable, seems well within the range of rationality here.

But, even so, the ruling is unpalatable based on what I know about some of the decisions that have been made by the PTO. (Side note, my student won the NYIPLA writing competition based on a paper discussing this issue.) The court dismisses patentee's complaint that the PTO might institute on claims that weren't even petitioned for review as simply quibbling with the particularity of the petition and not raising any constitutional issue. This is troublesome, and it sure doesn't ring true in light of Twiqbal.

Second, the broadest reasonable construction ruling seems entirely, well, broadly reasonable. The PTO uses that method already in assessing claims, and it has wide discretion in the procedures it uses to determine patentability. Of course the PTO can do this.

But, still, it's so wrong. The Court understates, I believe, the difficulty of obtaining amendments during IPR. The Court also points to the opportunity to amend during the initial prosecution; of course, the art in the IPR is now newly being applied - so it is not as if the BRC rule had been used in prosecution to narrow the claim. Which is the entire point of the rule - to read claims broadly to invalidate them, so that they may be narrowed during prosecution. But this goal often fails, as I wrote in my job talk article: The Failure of Public Notice in Patent Prosecution, in which I suggested dumping the BRC rule about 10 years ago.

Whatever the merits of the BRC rule in prosecution, they are lost in IPR, where the goal is to test a patent for validity, not to engage in an iterative process of narrowing the claims with an examiner. I think more liberal allowance of amendments (which is happening a bit) would solve some of the problems of the rule in IPRs.

Thus, my takeaway is a simple one: sometimes the law doesn't line up with preferred policy. It's something you see on the Supreme Court a lot. See, e.g. Justice Sotomayor's dissent today in Utah v. Strieff

Jotwell—the Journal of Things We Like (Lots)—is a terrific way to keep up with interesting recent scholarship. When I created Written Description in 2011, I noted that Jotwell had only two patent-specific posts in the prior year, but the Jotwell IP section is now flourishing. The co-editors of the section, Chris Sprigman and Pam Samuelson, invited me to join as a contributor, so I'll be writing a review for them each year. For my first post, I wrote about two recent papers focusing on administrative agencies beyond the PTO: Patent Conflicts by Tejas Narechania and Administrating Patent Litigation by Jake Sherkow. You can read the full post here.

Thank you to Lisa for inviting me to join her blog, and for the very kind introduction. For my first post, I’d like to briefly point to a recent update of a prior paper published by Christopher A. Cotropia, Cecil D. Quillen, Jr., and Ogden H. Webster. The paper is called Patent Applications and the Performance of the U.S. Patent and Trademark Office. The link includes the new FY 2014 update, as well as the prior version through FY 2012.

Next in my CELS IP recap: Melissa Wasserman (Illinois) presented Is the Time Allocated to Review Patent Applications Inducing Examiners to Grant Invalid Patents?: Evidence from Micro-Level Application Data (coauthored with Michael Frakes at Northwestern). I was delighted to serve as the discussant for this paper, which is the latest in a series of outstanding empirical projects by Frakes & Wasserman on patent examination.

This is a guest post by Ben Picozzi, a J.D. Candidate at Yale Law School.

Is the U.S. Patent and Trademark Office (PTO) entitled to Chevron deference? Does this matter? Many commentators believe that courts’ failure to grant Chevron deference to the PTO’s interpretations of substantive patent law renders it powerless as a policymaking institution. As previously discussed on this blog, Arti Rai and Melissa Wasserman have argued that the America Invents Act (AIA) changes this by granting adjudicatory or rulemaking authority to the PTO over substantive questions of patent law, including the standards of patentability, and consequently interpretive authority.

The America Invents Act (AIA) shifts interpretive authority over patentability standards from the courts to the PTO, argues Melissa Wasserman in her forthcoming article, The Changing Guard of Patent Law: Chevron Deference for the PTO. My co-blogger Sarah Tran has argued that the AIA gives the PTO some substantive rulemaking authority, though not over core patentability standards. Arti Rai has stated that post-grant review proceedings "bear the hallmarks of formal adjudication" and that the PTO could ask for Chevron deference under the AIA. But Wasserman’s article is the first detailed examination I've seen of this issue, and it illustrates how a compelling legal challenge seeking greater deference to the PTO on patentability issues might proceed.

How should the Federal Circuit determine whether a Patent Office rule is within the agency’s statutory authority? The court has traditionally held that the Patent Office has the authority to issue procedural rules but not substantive ones. See, e.g., Tafas v. Doll. However, the court has struggled to identify a suitable test to define the boundary between procedural and substantive rules. Id. Professor Joseph Scott Miller (University of Georgia School of Law) proposes in Substance, Procedure, and the Divided Patent Power, 63 Admin. L. Rev. 31 (2011), that the court use a “sorting standard” modeled after the framework courts use in interpreting the Rules Enabling Act (REA).

Has the Court of Appeals for the Federal Circuit stripped the Patent Office of its administrative power? Professor Sapna Kumar’s article, The Accidental Agency (forthcoming Florida Law Review), explains how the Federal Circuit has essentially become the head of an executive agency. By interpreting the Administrative Procedure Act (“APA”) narrowly, disregarding Supreme Court precedent, and interpreting more appellate issues as questions of law, the Federal Circuit has become the de facto administrator of the Patent Act.

Does the Patent and Trademark Office's (PTO’s) budgetary structure influence the rate at which patents are granted? In Does Agency Funding Affect Decision Making?: An Empirical Assessment of the PTO’s Granting Patterns, 66 Vanderbilt Law Review (forthcoming 2013), Professors Melissa Wasserman and Michael Frakes analyze more than two decades of patent grant rates to identify how factors like entity size and technology affect an applicant’s ability to receive a patent. The results of this study suggest that financial incentives, and not just the merits of the invention, may be, in part, driving patentability decisions.

What can the recent DNA patent controversies teach us about the role of executive agencies in shaping patent policy? In Professor Arti Rai’s essay: Patent Validity Across the Executive Branch: Ex Ante Foundations for Patent Development, Rai analyzes how systematic interagency debate can facilitate the development of beneficial patent policy ex ante. Professor Rai uses recent Supreme Court holdings to demonstrate that executive agencies like the International Trade Commission (ITC), the National Institute of Health (NIH), and the Department of Justice can work in tandem with the U.S. Patent and Trademark Office (PTO or Patent Office) to avoid some of the policy pitfalls created by the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) and Congress.

A couple months ago this blog highlighted an intriguing recent article by Jonathan Masur titled Patent Inflation (original post) that presented a model for what the author has observed as a trend of expanding boundaries of patentability. Since that time, Professor Masur’s model of patent inflation has become a hot topic in patent law that has stimulated a hearty debate among three notable patent scholars. Masur’s original article has spawned two thought-provoking responses and a sur-reply. This post summarizes this captivating debate as it is unfolding at the The Yale Law Journal Online.

Could the commonly cited flaws of the patent system be caused by the underlying relationship of its two main players, the PTO and the Federal Circuit? The patent system has come under attack in recent years in light of the growing number of invalid or weak patents and an ever-expanding definition of what can be patented. Critics have blamed this expansion (or “patent inflation”) on a number of factors including lack of funding, capture by private interests, and lack of expertise. In Patent Inflation, Jonathan Masur, a professor at the University of Chicago Law School, suggests this phenomenon may have a more fundamental source—the institutional relationship between the PTO and the Federal Circuit.

In his thought-provoking article, Masur suggests that the administrative nature of patent law creates institutional pressure to expand the boundaries of patentability. He arrives at this novel theory by combining a few simple, yet profound, observations into a model that predicts patent expansion.

Is the Federal Circuit engaging in substantive rulemaking and policy setting about patent law? Should it? Professor Ryan Vacca (Akron Law) answers "yes" to both questions in Acting Like an Administrative Agency: The Federal Circuit En Banc (forthcoming in the Missouri Law Review). When only the third of the Federal Circuit's docket comprised of patent cases is considered, the Federal Circuit goes en banc more than any other circuit (see the table on p. 4), but "the more striking feature of the en banc orders is their scope": the court often requests briefing on numerous or broad questions of patent policy, and the orders often "expressly permit amici curiae to file briefs without leave of court" and "specifically invite[] the United States or the PTO to file an amicus brief." Vacca argues that when the Federal Circuit sits en banc in patent cases, it is acting like an administrative agency. And despite concerns about separation of powers and lack of meaningful review, Vacca argues that "the Federal Circuit may be the best candidate" to set patent policy currently, as Congress has shown little interest in amending the Patent Act (though that may be changing?) and the PTO lacks rulemaking authority. It's an interesting piece and a quick read, and it received a shout-out on PatentlyO.