Colleen V. Chien

HIV/AIDS Drugs for Sub-Saharan Africa: How Do Brand and Generic Supply Compare?

Background Significant quantities of antiretroviral drugs (ARVs) to treat HIV/AIDS have been procured for Sub-Saharan Africa for the first time in their 20-year history. This presents a novel opportunity to empirically study the roles of brand and generic suppliers in providing access to ARVs. Methodology/Principal Findings An observational study of brand and generic supply based on a dataset of 2,162 orders of AIDS drugs for Sub-Saharan Africa reported to the Global Price Reporting Mechanism at the World Health Organization from January 2004-March 2006 was performed. Generic companies supplied 63% of the drugs studied, at prices that were on average about a third of the prices charged by brand companies. 96% of the procurement was of first line drugs, which were provided mostly by generic firms, while the remaining 4%, of second line drugs, was sourced primarily from brand companies. 85% of the generic drugs in the sample were manufactured in India, where the majority of the drugs procured were ineligible for patent protection. The remaining 15% was manufactured in South Africa, mostly under voluntary licenses provided by brand companies to a single generic company. In Sub-Saharan African countries, four first line drugs in the dataset were widely patented, however no general deterrent to generic purchasing based on a patent was detected. Conclusions/Significance Generic and brand companies have played distinct roles in increasing the availability of ARVs in Sub-Saharan Africa. Generic companies provided most of the drugs studied, at prices below those charged by brand companies, and until now, almost exclusively supplied several fixed-dose combination drugs. Brand companies have supplied almost all second line drugs, signed voluntary licenses with generic companies, and are not strictly enforcing patents in certain countries. Further investigation into how price reductions in second line drugs can be achieved and the cheapest drugs can actually be procured is warranted.

Cheap Drugs at What Price to Innovation: Does the Compulsory Licensing of Pharmaceuticals Hurt Innovation?

The patent system is built on the premise that patents provide an incentive for innovation by offering a limited monopoly to patentees. The inverse assumption that removing patent protection will hurt innovation has largely prevented the widespread use of compulsory licensing - the practice of allowing third parties to use patented inventions without patentee permission. In this Article, I empirically test this assumption. I compare rates of patenting and other measures of inventive activity before and after six compulsory licenses over drug patents issued in the 1980s and 1990s. As reported below, I observe no uniform decline in innovation by companies affected by compulsory licenses and find very little evidence of a negative impact, which is consistent with earlier empirical work. While anecdotal, these findings suggest that the blanket assertion that licensing categorically harms innovation is probably wrong. Based on the data, I comment on the use of compulsory licensing to reduce the price of AIDS and other drugs for developing countries. I suggest that, based on past experience, compulsory licenses need not result in a decline in innovation and that this policy option for increasing access to medicines deserves greater exploration.

Does the US Patent System Need a Patent Small Claims Proceeding

Patent litigation is expensive. The primary motivation for the creation of a patent small claims proceeding is to make enforcement more affordable. However, in the twenty or so years since the American Intellectual Property Law Association (AIPLA) first endorsed the idea of a small claims patent court through Resolution 401‐4, the patent litigation landscape has drastically changed. Although patent litigation costs are still high, the equities have shifted. The marketplace for patents has developed, providing more options than previously existed to monetize and assert patents. However, the cost of patent defense has not gone down, and small companies cannot afford to bring meritorious defenses. As a result, it is the high costs of defense that now presents a pressing concern. We do not believe that a small claims patent court is the answer. Nonetheless, if a small claims patent court is to be adopted, we include some principles below that should help inform such a court’s creation.This paper was submitted as a comment to the USPTOs request for comment on a small claims proceeding in March 2013.

Software Patents as a Currency, Not Tax, On Innovation

Software innovation is transforming the US economy. Yet our understanding of how patents and patent transactions support this innovation is limited, in part because of a lack of public information about patent licenses and sales. Claims about the patent marketplace, for example, extolling the virtues of intermediaries like non-practicing entities, or questioning the social utility of ex post patent licenses, tend not to be grounded in empirical evidence. This article brings much-needed data to the policy debate by analyzing transactional data from several proprietary databases of patent licenses and transfers, and reporting several novel findings. First I find that, despite recent legal developments that have reduced the enforceability of software patents, the market for software patents is remarkably robust and actually grew, not declined, from 2012 to 2015. I speculate that the strength of this demand is driven by the defensive, not only offensive, value of software patents, the importance of software business models, and bargain shopping in the acquisition of patents. Second, I explore the extent to which software patent transfers support the transfer of technology as opposed to supporting just the transfer of liability, or freedom from suit, with mixed results. I find that the majority of material software licenses reported by public companies to the SEC from 2000-2015 (N=245), which are non- representative of licenses in general, to support true technology transfer. However, I also find evidence that in recent years, large numbers of software patents apparently been sold to avoid litigation or provide general operating freedom, rather than to access specific technologies. Software patents transferred between public companies between 2012 and 2015 were two to three times more likely to go from an older company to a younger company, and from a higher revenue to a lower revenue public company. This finding lends some support to the perception that software patents are a tax on innovation that younger, lower revenue companies must pay to older firms with higher revenue.

Why Technology Customers Are Being Sued En Masse for Patent Infringement & What Can Be Done

Last year, the Children’s Hospital of Philadelphia and the AIDS Healthcare Foundation were accused of patent infringement. Their alleged wrongdoing? Purchasing routers and using them to provide wireless services. A small Atlanta-based company called Bluewave, along with hundreds to thousands of small businesses, received demands for royalties for alleged patent infringement. The accusation? Using an off-the-shelf PDF machine. As incredible as they might seem, these mass patent assertions and the harm they cause are real – six out of the top ten patent litigation campaigns have exclusively named technology customers, not suppliers. This has drawn attention from state attorneys generals, Congress, and President Obama. In this article we explain the motives, opportunistic and legitimate, behind these demands, the harm they pose, and what can be done. To do this we draw from numerous sources – including surveys of in-house and outside counsel and our own experience litigating. Good business dictates that technology suppliers should generally step in to take care of their customers. But we find legal and practical barriers exist – demand letters and litigation complaints don’t identify the basis for liability, courts have denied declaratory judgment jurisdiction and the right to intervene frequently, and the courts have refused to protect customers from litigation even when suppliers have stepped up. We recommend that Congress and the courts work to (1) confirm the right of suppliers to intervene and bring cases, (2) minimize the burden on customers when suppliers do step up and participate, and (3) incent customer demand letters and complaints to specifically identify the product which gives rise to liability and disclose other basic information, so that customers may assess their own risk and pass on the demand to their supplier. We also provide a host of reforms that federal lawmakers should consider to make end users less attractive targets for patent lawsuits.