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Posts Tagged ‘Intellectual Property’
September 22nd, 2022 at 4:58 pm
New Lung Cancer Breakthrough Illustrates the Potential Peril of Drug Price Controls
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We at CFIF often highlight the clear and present danger that drug price control schemes pose to American consumers, who benefit from our private pharmaceutical sector that leads the world – by far – in innovation.  A new lung cancer treatment breakthrough in the form of Amgen’s Lumakras illustrates that interrelationship.

Simply put, Lumakras reduced the risk of progression by 34% compared to chemotherapy in patents with advanced lung cancer, which is particularly welcome considering lung cancer’s especially low survival rate (18.6% over five years, and just 5% for advanced forms).  The breakthrough required years of research and enormous amounts of investment, however, which The Wall Street Journal notes makes Lumakras the type of innovation put at risk by new drug price controls recently enacted by Congressional Democrats and the Biden Administration:

The drug is by no means a cure, but progress occurs at the margin and some patients who had what amounted to a death sentence now have hope to live.  Lumakras is also much less brutal than chemotherapy.

Yet the drug might not have been developed had the Medicare take-it-or-leave-it negotiations that Democrats recently enacted been in effect earlier.  Their price controls will penalize in particular small-molecule drugs like Lumakras that have the potential to help large numbers of patients.  Within six years, Lumakras could be targeted by bureaucrats for price controls and the payoff on Amgen’s investment could vanish.

The reason for that is simple.  Straightforward economic principles dictate the inevitable negative blowback from government price controls, whether in the form of 1970s gas lines here in the U.S. or food shortages in Venezuela.

Even the United Nations World Health Organization (WHO) warns explicitly about these negative consequences of price controls on drug innovation:

[P]rice controls, combined with the threat of market lockout or intellectual property infringement, prevent drug companies from charging market rates for their products, while delaying the availability of new cures to patients living in countries implementing those policies.  

Closer to home, a recent University of Chicago study quantified the destructive effect of drug price controls on future lifesaving innovations:

The United States has fewer restrictions on price than other countries, but the Biden Administration has announced their goal to lower drug prices through greater price regulation…  [N]ew drug approvals will fall by 32 to 65 approvals from 2021 to 2029 and 135 to 277 approvals from 2030 to 2039.  These significant drops in new drug approvals will lead to delays in needed drug therapies, resulting in worse health outcomes for patients.  

As the University of Chicago points out, the U.S. maintains a more market-oriented approach to pharmaceutical innovation than other developed nations, which benefits American consumers.  Of 270 new medicines introduced here in the U.S. since 2011, for instance, Canadians could only access 52% of them, the Germans 67%, the British 64%, the French 53%, the Japanese 48% and the Australians just 41%.  Moreover, the U.S. accounts for two-thirds of all new drugs introduced to the world.

The real-world numbers speak for themselves.  Americans benefit immensely from our world-leading pharmaceutical sector, and Lumakras offers just the latest welcome example.  The sooner the recent drug price control schemes are repealed or scaled back, the more Americans who suffer from cancer and other ailments stand to benefit.

 

August 31st, 2022 at 6:18 pm
Senate Should Take Up Companion Legislation to the House’s American Music Fairness Act (H.R. 4130)
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Congress doesn’t maintain a spotless record of affixing accurate titles to proposed legislation, but in the case of the American Music Fairness Act (H.R. 4130), the House of Representatives nails it.

Now it’s time for the Senate to take up companion legislation and bring greater fairness to performance rights in the music industry.

By way of background, federal law currently secures royalty payments for songwriters and others when their songs are played on AM-FM terrestrial radio, but not for the performing artists themselves.  Deepening that odd paradox, performance artists receive compensation when their songs play on digital broadcast platforms like the internet, satellite and cable.  Terrestrial radio broadcasters, however, somehow remain exempt under existing law from having to pay that same compensation.  There’s no logical or legal justification for that paradox, which amounts to crony capitalism in the form of a special government carve-out.

Fortunately, the American Music Fairness Act currently before the House would finally secure performance rights for artists whose recordings are played on terrestrial radio (with exceptions maintained for smaller mom-and-pop stations).  In 2021, we at CFIF joined numerous fellow conservative and libertarian organizations in a coalition letter to the House amplifying the need to pass this legislation to protect artists’ natural intellectual property (IP) rights:

The Constitution protects intellectual property rights and specifically delegates to Congress authority to protect creative works.  Artists who produce music therefore have the right to protect their intellectual property, including both the writer and performer of a given recording.  When a given work is transmitted, common sense and basic fairness dictate that the medium of transmission should not affect the existence of these rights.  Yet, under the current regime, a performer does not hold effective or enforceable rights to his or her product when it is distributed through terrestrial radio.”

Opponents of the American Music Fairness Act illogically suggest that it would somehow introduce needless market regulation, but the obvious reality is that the market is already regulated in the discriminatory manner described above.  The American Music Fairness Act would merely level the playing field and respect the value of the artists’ works.

Some opponents of H.R. 4130 also falsely attempt to portray it as creating a “tax.”  As leading anti-tax crusader Grover Norquist of Americans for Tax Reform answers, however, taxes are compulsory payments to government, whereas royalties are voluntary payments to broadcast others’ creations:

[W]hat is proposed is not, in fact, a tax but a royalty.  The definition of a tax is the transfer of wealth from a household or business to the government.  Taxes aren’t voluntary; paying a royalty is.  It is completely within the rights of broadcasters to decide not to pay for the use of a performer’s song by simply not using the song.  This may not be an ideal option, but these songs actually are the property of someone else…  Just as dishonest as calling a tax a fee or fine, so too is it wrong to apply the word ‘tax’ to a royalty payment.  Creating the negative perception that this legislation creates a new tax may be convenient in the short term and assist opponents in gaining political support;  in the long run it is incredibly unhelpful to those who work to reduce the burden of government in our everyday lives.”

By any standard of fairness and logic, performing artists possess a natural right to enjoy the fruits of their labor and creativity, just like any of us do for our work.  After all, artists already receive performance payments from non-terrestrial radio stations, reflecting the value of their work.  The American Music Fairness Act simply corrects an unfair and illogical federal carve-out.

Accordingly, the House should promptly pass this long-overdue legislation, and the Senate should similarly take up companionate legislation.

August 5th, 2022 at 11:25 am
Image of the Day: Prescription Drug Prices Aren’t the Inflationary Problem
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As Senators Joe Manchin (D – West Virginia) and Kyrsten Sinema (D – Arizona) betray their “moderate” charade and join Senate Majority Leader Chuck Schumer’s (D – New York) latest tax-and-spend monstrosity, we’ve highlighted the preposterousness of the claim that imposing drug price controls will in any way address out-of-control inflation.  Price controls will kill innovation, but do nothing to reduce inflation, because prescription drug prices simply aren’t the problem.  Once again, economist Steve Moore offers a handy illustration of that truth:

Prescription Drug Costs Aren't the Problem

Prescription Drug Costs Aren’t the Problem

June 17th, 2022 at 12:18 pm
Inexcusable and Dangerous: Biden Administration Surrenders U.S. Patent Rights to World Trade Organization (WTO)
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For a man who constantly claims to support “Buy American,” Joe Biden demonstrates an inexplicable and almost fetish-like tendency to undercut American industries.

Since day one, the Biden Administration has ceaselessly besieged a domestic energy sector that finally achieved U.S. energy independence after decades of effort.  And now, it is following through on its inexcusably foolish assault against the U.S. pharmaceutical sector.

Each year, American pharmaceutical innovators account for an astounding two-thirds of all new lifesaving drugs introduced worldwide.  That’s the direct result of our system of intellectual property (IP) protections, including patents, which consistently leads the world.

Instead of protecting that legacy of American Exceptionalism, however, the Biden Administration remains bizarrely determined to eviscerate it.  Today, the World Trade Organization (WTO) announced agreement to forcibly waive patent protections for Covid vaccines, a dangerous effort that the Biden Administration for some reason supports.

This is nothing short of a license to steal U.S. patents.

The WTO effort serves no valid purpose, because Covid treatments are already being provided to poor nations across the world and the underlying pharmaceutical patents it targets are already being licensed at reduced prices or even for free.  Moreover, the  nations that the WTO claims to help recognize that lack of immunizations stems not from vaccine shortages, but rather from local logistical distribution problems and vaccination hesitancy among unvaccinated people in those nations.  Indeed, biopharmaceutical manufacturers remain capable of producing 20 billion vaccine doses this calendar year, so the problem isn’t lack of vaccine availability.

Additionally, a  supermajority of American voters spanning the political spectrum oppose this forcible waiver of Covid vaccine patents, favoring instead the licensing of patents to boost the global supply of vaccines.  Specifically, over 70% of voters believe that waiving Covid vaccine IP could have significant negative implications on the safety and efficacy of supply.

American patent protections explain our unmatched record of innovation, and also why we produce the overwhelming share of new drugs worldwide.  As the pandemic demonstrated once again, that includes Covid vaccines.  The WTO proposal egregiously sacrifices U.S. property rights and undermines the rule of law, which in turn will mean fewer lifesaving vaccines and treatments in the future.  If the Biden Administration won’t correct course, Congress must intervene to do so.

 

 

 

 

April 26th, 2022 at 1:28 pm
Happy World Intellectual Property (IP) Day — Celebrating the Fuel of U.S. and Worldwide Innovation
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Happy World Intellectual Property (IP) Day!

Among the many elements explaining American Exceptionalism in worldwide innovation, power and prosperity, nothing stands above our enduring legacy of protecting IP – patents, copyrights, trademarks and trade secrets.

Since America’s founding, we’ve protected IP like no other nation before or since.  Our Founding Fathers deliberately inserted text protecting IP rights into Article I of the Constitution, which reads, “Congress shall have the Power … To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”  And as James Madison explained in the Federalist Papers while advocating ratification of the Constitution, protecting IP respected the natural right of individuals to enjoy the fruits of their labors, while also serving the public good by encouraging innovation.

The assurance that one’s creations will enjoy legal protection in turn promotes creative activity, which is why Abraham Lincoln — himself a patent attorney — noted that America’s IP protections, “added the fuel of interest to the fire of genius in the discovery and production of new and useful things.”

Consequently, no nation spanning the entirety of human history even approaches America’s record of patented invention, from the telephone to the airplane, from lifesaving pharmaceuticals like the polio vaccine to the internet.   No society remotely rivals our copyrighted artistic influence, whether in the form of motion pictures, television programming or popular music.  No nation’s trademarks stand recognized in the way that the Coca-Cola or Apple logos are instantly identified across the world.  A direct relationship exists between our tradition of IP protection and our unrivaled success in innovation and prosperity.

That’s why we at CFIF are pleased to join over 100 other free-market, conservative and libertarian organizations here in the U.S. and across the globe in celebrating World IP Day, as highlighted by our collective open letter to World Intellectual Property Organization (WIPO) Director-General Daren Tang:

IP-intensive industries play a central role in job creation. In the United States, IP-intensive industries account for 44 percent of total employment, and jobs in these industries come with a 60 percent weekly wage premium over jobs in other industries… 

Intellectual property protections are also important for promoting economic growth.  The United States Patent and Trademark Office found that IP-intensive industries contribute $7.8 trillion USD to the U.S. economy, or nearly 41 percent of total U.S. DP.  The U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC) further reported that these innovative industries account for over 40 percent of U.S. economic growth.  The role of robust IP protections is clearest when contrasting country scores and their World Bank income classification.  According to the 2021 International Property Rights Index, high-income countries’ scores were 33.5 percent stronger than the average score of upper-middle-income countries and 66.1 percent stronger than the average score of low-income countries.  This IP protection gap must be closed.”

Unfortunately, too many political leaders here in America and across the world fail to respect the role of IP in boosting innovation and wellbeing, and actively seek to undermine it.  We cannot let that occur, lest we all suffer.  As we conclude in our coalition letter, “On this World Intellectual Property Day, we urge WIPO, along with other international organizations, national governments, and policymakers around the world, to continue to promote policies which strengthen intellectual property protections and ensure that a healthy innovation environment can thrive for today’s youth and for generations to come.”

 

 

March 31st, 2022 at 12:49 pm
Congress Mustn’t Tolerate WTO and Biden Admin Proposal Targeting U.S. Pharmaceutical Patent Protections
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This week, the Biden Administration’s United States Trade Representative (USTR) Katherine Tai appeared before the Senate Finance Committee and House Ways and Means Committee, offering an important opportunity to rally opposition to the administration’s agreement with a misguided proposal in the World Trade Organization (WTO) to suspend patent protections for Covid vaccines, treatments and other therapies created by U.S. pharmaceutical innovators (through what’s known as the Agreement on Trade-Related Aspects of Intellectual Property, or “TRIPS”).

Don’t let the esoteric nature of the treaty fool you – this is an extremely dangerous proposal to attack U.S. patent rights.  As The Wall Street Journal observed, “this may be the single worst presidential economic decision” since the Nixon Administration.

That assessment is well-founded.  Strong patent protections provide the foundation for U.S. pharmaceutical innovation, and explain why the U.S. leads the world by accounting for an astounding two-thirds of all new drugs introduced worldwide.  The Covid vaccines and treatments at issue provide just the latest example.  Contravening that obvious causal relationship, however, some WTO members demand that the U.S. surrender those vital patent and other intellectual property (IP) protections for Covid vaccines, diagnostics and other treatments.  Worse, some misguided politicians here in America who should know better echo those potentially destructive demands.

That would tragically and needlessly undermine the very policies that prompted pharmaceutical innovators to devise and develop the vaccines already providing relief to the world, and leave us less capable of addressing current and future diseases and pandemics.  Ironically, President Biden himself has historically supported patent and other IP rights, including sponsorship of the 1980 Bayh-Dole Act that proved so invaluable in promoting innovation, and which The Economist magazine labeled “possibly the most inspired piece of legislation to be enacted in America over the past half-century.”

It’s also important to note that more rational actors like the European Union, United Kingdom, Canada, Switzerland and Japan oppose the proposed TRIPS patent suspension.   In contrast, WTO members India and South Africa, which back the effort targeting U.S. patent rights, have even joined international rogues China and Russia to create their own joint “vaccine center.”  That betrays the bad faith of their broader effort.

India and South Africa have joined with China and Russia (and Brazil) to establish a joint BRICS vaccine center.

The proposed TRIPS waiver targeting U.S. drug innovators and patent protections is also unnecessary, because treatments are already being provided to impoverished nations across the world, and patent rights are already being licensed at abnormally low prices or even free of charge.  To the extent that difficulties in immunizing impoverished populations remain, as emphasized by the Africa Centres for Disease Control, the problems center on local logistical distribution problems and vaccination hesitancy among the unvaccinated, not supply shortages.  Indeed, biopharmaceutical manufacturers already possess the ability to produce 20 billion vaccine doses in 2022.

More broadly, lawmakers and American consumers must consider the dangerous signal that suspending patent rights for pharmaceutical innovators would send, and the long-term disincentives that would follow if pharmaceutical patent rights were weakened rather than protected.  Pharmaceutical innovation demands billions of dollars in sunk costs of investment and testing, not to mention potential product liability lawsuits for any error.  To suddenly signal that those costs and risks won’t be sufficiently and fairly rewarded through ensuing patent protections would have catastrophic effects over both the short and long terms.  That will increasingly become the reality if we accept policies that deprive innovators and investors of the incentives to create drugs that save millions and even billions of lives.

American patent protections are the leading reason why we continue to produce the overwhelming share of new drugs worldwide, including the Covid vaccines themselves.  The WTO and Biden Administration must recognize and respect that reality, and Congress must act to stop this potentially catastrophic WTO proposal.

August 11th, 2021 at 11:22 am
Webinar: Debunking Patent & Antitrust Myths — Watch Now
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On August 5, CFIF teamed up with IPWatchdog, Inc. to offer a free webinar conversation to debunk several myths associated with patent thickets and pejorative terms used to denigrate innovators and patent owners.

Watch the full video of the event below.

August 3rd, 2021 at 10:07 am
Free Webinar: Debunking Patent & Antitrust Myths — Register Now
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Throughout its history, the United States has led the world in protecting intellectual property (IP) rights. On that foundation, we’ve also led the world in artistic, commercial and scientific innovation, particularly with lifesaving medicines and vaccines.

Yet patent rights are under increasing assault, with anti-patent activists charging pharmaceutical makers with “antitrust” violations for utilizing and building upon their patents for the greater good. Their rhetoric and false critiques under the guise of “antitrust” typically rely upon an array of misleading and pejorative labels, to the point where they take on a meaning that bears no resemblance to reality.

The Center for Individual Freedom (CFIF) and IPWatchdog, Inc., have partnered up to offer a free webinar conversation that will debunk the myths associated with patent thickets and pejorative terms used to denigrate innovators and patent owners.

Join us on Thursday, August 5 at 12pm ET.  Register now by clicking here

Gene Quinn, President and CEO of IPWatchdog, Inc., will be moderating the discussion. Joining Gene will be…

  • Timothy Lee, SVP of Legal and Public Affairs, Center for Individual Freedom
  • Chris Israel, Executive Director, The Alliance of U.S. Startups for Inventors and Jobs
  • Andrew Spiegel, Executive Director, Global Colon Cancer Association
  • Adam Mossoff, Professor of Law, Antonin Scalia Law School, George Mason University and Senior Fellow and Chair of the Forum for IP, Hudson Institute

During the webinar the panel will discuss:

  • The important role innovators play in the technology economy;
  • Why so-called “patent thickets” actually increase innovation;
  • Why claims of “product hopping” are not about pharmaceutical coercion but instead are about preventing follow-on pharmaceutical innovation so generics can compete with the drug being sold by brand name pharma companies;
  • Why courts have ruled “pay-for-delay settlements” are a valid by-product of a patent holder’s exclusionary rights.

Register here!

 

July 29th, 2021 at 10:02 am
Ramirez Cartoon: China IP Theft
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Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez…

May 13th, 2021 at 8:59 pm
Image of the Day: Private Sector Pharmaceutical Investment Propels Innovation
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As we’ve highlighted, the dangerous effort to weaken critical patent protections for U.S. pharmaceutical innovators often minimizes the role of private investment and exaggerates the role of public funding.  This offers a critical corrective at a moment when American drug and vaccine innovation is more important than ever:

The Critical Role of Private Pharmaceutical Investment

The Critical Role of Private Pharmaceutical Investment

August 28th, 2020 at 9:58 am
Image of the Day: Private R&D Dwarfs Public Funding
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As we’ve continued to highlight, Joe Biden, Bernie Sanders and others dangerously seek to weaken U.S. patent protections, which for centuries have led the world and account for the fact that the U.S. pharmaceutical sector introduces more new drugs than the rest of the world combined.  Their logic is that federal research and development funding justifies confiscation, not realizing that, as former patent attorney Abraham Lincoln once noted, the U.S. patent system added “the fuel of interest to the fire of genius.”  From our friends at AEI, a new graphic highlights again how private R&D actually dwarfs federal funding, which understandably peaked in the 1960s during the Cold War and Space Race.  It’s simply no justification for weakening America’s ongoing legacy of strong patent protections:

Private R&D Leads the Way

Private R&D Leads the Way

 

July 24th, 2020 at 4:10 pm
CFIF Opposes White House Executive Order Importing Foreign Nations’ Socialized Medicine and Drug Price Controls
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Regrettably, the White House today announced an executive order that effectively imports drug price controls from foreign nations with socialized healthcare systems.  We at CFIF strongly oppose the order and encourage immediate reconsideration.  Below is CFIF President Jeffrey Mazzella’s statement:

“Price controls simply do not work, regardless of the product targeted or the location they’re attempted, and real-world experience establishes that pharmaceutical price controls are no different.  The new executive order would impose what’s known as an International Pricing Index (IPI) for U.S. drugs administered by the federal government, meaning that foreign governments’ drug price controls would suddenly control our own reimbursement rates.  That would upend our current system, which has actually already reduced the cost of the 50 most popular Medicare Part B drugs sold by approximately 1%.  Our current system already includes the discounts negotiated between hospitals, healthcare plans and payers.  In contrast, foreign governments whose price control schemes we would import don’t negotiate, but instead dictate prices while threatening to violate patent rights and employ a ‘take it or leave it’ approach.

“As a direct consequence of foreign nations’ price control approaches that disrespect patent rights, those nations receive far fewer new lifesaving and life-improving drugs than American consumers.  For example, 96% of all new cancer drugs over the past decade were made available to U.S. consumers.  In contrast, only 56% of those same drugs became available in Canada, only 50% became available in Japan and only 11% in Greece, as just three examples.  Simply put, consumers in nations whose governments impose drug price controls don’t enjoy access to nearly as many new drugs as Americans, or nearly as soon.  As The Wall Street Journal found, that’s why America outpaces European nations in terms of cancer survival rates, among other advantages.

“Even the Trump Administration itself has highlighted the destructive effect of importing foreign price controls.  In 2018, its Council of Economic Advisers affirmed that, “If the United States had adopted the centralized drug pricing policy in other developed nations twenty years ago, then the world may not have highly valuable treatments for diseases that required significant investment.”

“Currently, the United States accounts for nearly two-thirds of all new drugs introduced worldwide, and our more market-oriented system and protection of patent rights explains why.  Very few potential new drugs ever reach the market, due to astronomical research and development costs, lengthy government safety tests, laboratory effectiveness trials, possible product liability lawsuits, patent protection limitations and other bureaucratic hassles.  Imposing artificial price controls would add to those headwinds by making it less possible to recover the massive costs of developing new medicines and R&D, leading to fewer new drugs for U.S. consumers.

“Instead of importing foreign nations’ price control schemes and their consequences, America should be exporting our superior system to their shores.

“Today’s executive order contravenes the Trump Administration’s broader agenda of deregulation, free-market approaches and strong intellectual property (IP) protections.  Hopefully, the White House quickly realizes the potentially catastrophic consequences of this order, lest American consumers suffer in the same way as consumers in the foreign nations that impose the price controls that it now seeks to import.

“In his State of the Union Address earlier this year, President Trump reassured Americans that, ‘To those watching at home tonight, I want you to know that we will never let socialism destroy American healthcare.’  Unfortunately, the White House’s executive order announced today regarding drug prices would do precisely that.

“We therefore urge President Trump to reconsider this potentially catastrophic order in the strongest possible terms.”

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July 14th, 2020 at 11:47 am
Image of the Day: The Shocking Cost of Chinese Intellectual Property (IP) Theft
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Shocking but necessary perspective on the cost of Chinese theft of U.S. intellectual property (IP) from National Review employing Congressional Research Service numbers:

 

The Shocking Cost of Chinese IP Theft

The Shocking Cost of Chinese IP Theft

 

July 6th, 2020 at 2:32 pm
“Blanket Licensing” – a Collectivist, Bureaucratic, One-Size-Fits-All Deprivation of Property Rights Proposal
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America’s legacy of unparalleled copyright protections and free market orientation has cultivated a music industry unrivaled in today’s world or throughout human history.

From the first days of the phonograph, through the jazz age, through the rock era, through disco, through country, through hip-hop and every other popular musical iteration since its advent, it’s not by accident that we lead the world in the same manner in which we lead in such industries as cinema and television programming.  We can thank our nation’s emphasis on strong copyright protections.

Unfortunately, that reality doesn’t deter some activists from periodically advocating a more collectivist, top-down governmental reordering of the music industry in a way that would deprive artists and creators of their property rights.  Some advocates simply will not relent in their unceasing and misguided campaign to undermine copyright protections that have provided the wellspring for U.S. musical preeminence.  They seek to replace strong copyright protections and the freedom of market participants to mutually negotiate, ultimately to consumers’ obvious benefit, and replace them with a government-determined rate and a one-size-fits-all bureaucratic approach that eliminates market participants’ autonomy.

As just the latest example, British activist Cory Doctorow of the Electronic Freedom Foundation (EFF) now proposes a “blanket licensing” idea under which anyone wishing to offer music to pubic audiences would be required to open an account with a collecting society.  His heavily bureaucratic proposal would curtail the ability of copyright owners to negotiate royalties as they see fit with internet music platforms.

In an era of endless musical genres and methods to access them according to one’s preference, how does imposing such a collectivist, centralized, one-size-fits-all regime make sense?

The obvious answer is that it doesn’t.

Doctorow’s proposal betrays a fundamental flaw by misconceptualizing the nature of copyright itself by misstating “copyright’s real purpose:  spurring creativity and innovation.”

While Doctorow can be forgiven for his unfamiliarity with American constitutional principles, and while the utilitarian goal of creativity and innovation is indeed a primary feature of copyright and other intellectual property (IP) protections, that’s an inaccurate and incomplete statement of its “real purpose.”  Rather, copyright through common law and American constitutional history is valued as a natural property right of the creator, as we at CFIF articulated in our policy manual entitled ”The Constitutional and Historical Foundations of Copyright Protection”:

The Copyright Clause in the U.S. Constitution and the pre-existing rights it secures both arose from a long intellectual and historical tradition that reflected both the importance of economic incentives (the utilitarian argument) and the notion that individuals have an inherent and inviolable right to the fruits of their own labor.  As the Supreme Court has explained, ‘[t]he economic philosophy behind the clause empowering Congress to grant patents and copyrights’ is the conviction that:  ‘(1) encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of authors and inventors in “Science and the useful Arts”’ and (2) ‘[s]acrificial days devoted to such creative activities deserve rewards commensurate with the services rendered.’  Mazer v. Stein, 347 U.S. 201, 219 (1954).  Another early decision emphasized that only through copyright protection ‘can we protect intellectual property, the labors of the mind, productions and interests as much a man’s own, and as much the fruit of his honest industry, as the wheat he cultivates or the flocks he rears.’  Davoll v. Brown, 7 F.Cas. 197, 199 (D. Mass. 1845).

Accordingly, Doctorow’s proposal violates the central concept that copyright holders possess a natural right to their creations.  Even ignoring the natural right foundation of copyright, however, no other system of copyright protection has resulted in greater utility than our own, given America’s uniquely prolific music industry as noted above.

In addition to violating the fundamental rights of copyright owners to mutually bargain with music platforms, Seth Cooper of the Free State Foundation cogently summarizes how EFF’s proposal doesn’t accord with the obvious realities of today’s music marketplace:

[T]he EFF plan sidesteps the fact that there are several major Internet music service providers and numerous smaller providers.  Popular interactive (or ‘on-demand’) streaming music providers include Spotify, Tidal, Apple Music, Amazon Music, and Google Play Music.  Popular webcasters include Pandora, iHeartRadio, and Deezer.  And there are many others.  SoundExchange reported that some 3,600 webcasting services were operating in 2019.

Importantly, consumer choices also include nationwide satellite radio broadcaster Sirius XM and local AM/FM radio broadcasters.  Indeed, radio broadcasts are widely available through apps on smartphones and other devices.  Additional choices include digital downloads from major Internet music service providers as well as independent and individual artist websites.  CDs and vinyl records are also available at retail.

Given the number of competitors and platform choices, it is highly unlikely that Internet music services possess market power – or the ability to charge consumers above-market prices and otherwise engage in anti-competitive conduct.  There’s no showing of market power here and so the case for government intervention falls apart.” 

Accordingly, the EFF proposal contravenes fundamental concepts of copyright protections, it proposes to reorder a music marketplace that continues to function well for all of its stakeholders and it clashes with contemporary market realities.

We currently enjoy a functional market with innumerable market participants, and copyright owners across the spectrum possess the freedom to negotiate with a wide variety of potential distributors.  EFF’s proposal nevertheless aims to strip creators of the property rights they currently enjoy without justification.  The market simply isn’t broken.  Supporters of EFF’s proposal curiously assert that today’s market is corrupted by monopolies, but as Mr. Cooper sets forth nicely above, a broad global spectrum of potential avenues exist for consumers to freely access as they prefer.

Accordingly, the notion that we should upend a market in which consumers can access an ever-greater variety of music at low cost is an untenable one.

A better option would be for Congress to expand copyright holders’ protections to the sphere of terrestrial radio via the Ask Musicians for Music Act (AMFM Act), to extend what we know works, rather than foolishly venture into demonstrably defective novel proposals.

May 18th, 2020 at 10:37 am
New Gallup Report Undermines the Myth of “Superior” European Healthcare
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Socialized medicine advocates curiously but persistently suggest that European models offer a superior alternative to the American healthcare system that relies more on private market forces and strong intellectual property rights.  Gallup offers an important corrective, even if unintentionally.  Whereas the percentage of Americans rating their healthcare as positive has remained within a high 76% to 83% window for years, Europeans consistently rate their healthcare satisfaction substantially lower, with only Germany matching American satisfaction levels:

 

Germany:  84% approve/15% disapprove

United Kingdom:  76% approve/22% disapprove

France:  74% approve/25% disapprove

Spain:  68% approve/31% disapprove

Italy:  51% approve/487% disapprove

 

That’s important to remember as calls for socialized medicine become louder amid the coronavirus pandemic and as November elections approach.

March 23rd, 2020 at 10:22 am
Trump Administration Stands Up for U.S. Copyright Protections Under Potential South African Threat
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At CFIF, we’ve unceasingly highlighted the foundational role of intellectual property (IP) rights – patents, copyrights, trademarks and trade secrets – in what we know as “American Exceptionalism.”

No nation matches our legacy of IP protection throughout the decades and centuries.  Our Founding Fathers specifically inserted IP protections in Article I of the Constitution, even before the First Amendment or other Bill of Rights protections.

As a direct result no nation in human history remotely matches our legacy of scientific inventiveness, artistic innovation, global influence, power and prosperity.

And today, IP-centric industries account for about 40% of the total U.S. economy, and 45 million jobs – nearly 30% of the U.S. labor force.  For perspective, that U.S. IP economic sector outsizes the entire economies of every other economy on Earth with the sole exception of China.

Recently, we’ve particularly highlighted the role that patent rights play in medical innovation, which has obviously taken on increased importance amid the coronavirus pandemic.  Believe it or not, America accounts for an astounding two-thirds of all worldwide pharmaceutical innovation, due in large part to the IP incentives that allow innovators to receive the fruits of their difficult and costly labor.  That continues today, more than ever.

But in the IP realm, copyright plays just as vital a role in America’s legacy of innovation, influence and prosperity.  After all, just ask yourself what nation today or throughout history even approaches our artistic influence from music to cinema to television to any other form of artistic creation.  That’s the direct result of strong copyright protections for innovators in the U.S.

Unfortunately, other nations not only don’t respect copyright and other IP rights to the degree that we do, they actively seek to undermine U.S. protections.  As the latest example, the nation of South Africa, which hasn’t adequately or effectively protected U.S. copyrights.  And making matters worse, the South African legislature recently passed two proposed laws that further weaken copyright protections and sent them to the South African president for signature.

Fortunately, the Trump Administration is standing up for U.S. copyright and must remain so.

By way of quick background, the U.S. government practices what is known as the Generalized System of Preferences (GSP) program, which allows for duty-free importation of various goods from developing nations that we designate as beneficiaries of the program.  In April of last year, as part of our annual review of GSP beneficiary nations, the International Intellectual Property Alliance (IIPA) formally requested that the U.S. government specifically analyze South Africa’s status under GSP eligibility criteria because of South Africa’s longstanding inadequacy in terms of copyright protection for American copyrighted works.  In October, the administration accepted that petition and commenced a review, including a public hearing that occurred on January 30 of this year.  As the U.S. government rightly reconsiders South Africa’s GSP eligibility, petitioners ask that its legislature reconsider the two proposed bills and remove the defective anti-copyright provisions.

If that corrective action by South Africa’s government does not occur, the U.S. should in fairness withdraw South Africa’s continuing enjoyment of the GSP program’s benefits.

Unfortunately, some groups here in the U.S. seek to undermine American copyright laws, and are acting to pressure the Trump Administration and government officials to give South Africa a free pass.

That mustn’t be allowed.  Our protection of copyright and other IP rights is a primary – if not the primary – reason for America’s unrivaled legacy of innovation and prosperity.

The Trump Administration has strengthened America’s IP legacy after eight years of decay under Barack Obama.  For example, the administration strengthened IP protections during renegotiation of the North American Free Trade Agreement (NAFTA) in the new U.S.-Mexico-Canada Agreement (USMCA).  That included stronger patent protections for pharmaceuticals, as well as higher enforcement against counterfeit copyrighted and other goods.  It is doing the right thing with regard to South Africa as well, and it mustn’t allow domestic or overseas interest groups to pressure it into doing otherwise.

Particularly at a time like this, we cannot allow other countries to undermine our legal rights globally, whether South Africa or others.

 

March 13th, 2020 at 1:13 pm
Image of the Day: Patent Rights and U.S. Pharmaceutical Leadership
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In our Liberty Update this week, we emphasize the critical role that strong patent rights play in U.S. pharmaceutical innovation.  Although the U.S. accounts for just 4% of the world’s population and 24% of the global economy, we account for an astonishing 2/3 of new drugs introduced worldwide, as this helpful image illustrates perfectly:

Patent Rights Protect U.S. Pharmaceutical Innovation Leadership

Patent Rights = Global Pharmaceutical Innovation Leadership

 

Strong patent protections, along with our more market-oriented approach, have made America the world leader in pharmaceutical innovation.  At a moment like this amid the coronavirus pandemic, it’s more important than ever to protect that legacy and oppose misguided efforts by some in Congress to undermine it.

December 6th, 2019 at 12:41 pm
Members of Congress Stand Up for Property Rights
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In rare but refreshing bipartisan good news out of Congress, Senator Thom Tillis (R – North Carolina) and Representatives Ben Cline (R – Virginia), Theodore Deutch (D – Florida), Martha Roby (R – Alabama) and Harley Rouda (D – California) have just taken a firm stand protecting property rights – copyrights specifically – and merit our praise.

As we’ve long highlighted, property rights constitute a central pillar of “American Exceptionalism,” and that includes intellectual property (IP) rights – copyrights, patents, trademarks and trade secrets.   Our Founding Fathers considered IP so important that they deliberately and explicitly singled it out for protection in the text of the Constitution.  As a direct result, we’ve become the most innovative and prosperous nation in human history.  And it’s not even close.

For that reason, it comes as welcome news that Senator Tillis and Representatives Cline, Deutch, Roby and Rouda recently sent a letter to the American Law Institute (ALI) to question its curious decision to develop what’s known as a “restatement” of copyright law, which Congress has already legislated over years, decades and even centuries.

For non-lawyers unacquainted with ALI, it’s an organization established in 1923 that issues what are known as “Restatements” that summarize common law principles such as contract or tort laws.  Accordingly, Restatements can assist law students, lawyers, judges or other professionals about various legal concepts as a helpful handy reference.

As Senator Tillis and Representatives Cline, Deutch, Roby and Rouda correctly point out in their December 3 letter, however, the ALI has joined too many other organizations such as the American Bar Association (ABA) in undertaking a more left-leaning political and ideological mission in recent years.  None other than Supreme Court Justice Antonin Scalia cogently highlighted that concern, as the letter notes:

The late Justice Antonin Scalia, who was the most frequent author of opinions citing ALI publications in nine opinions, wrote that ‘modern’ Restatements “are of questionable value, and must be used with caution.’  He added that, ‘[o]ver time, the Restatements’ authors have abandoned the mission of describing the law, and have chosen instead to set forth their aspirations for what the law ought to be.’  In his dissent in Kansas v. Nebraska, Justice Scalia stated that newer Restatements ‘should be given no weight whatever as to the current state of the law, and no more weight regarding what the law ought to be than the recommendation of any respected lawyer or scholar.’”

Their letter notes that Justice Scalia was not alone.  Rather, “many states have also begun to repudiate the more recent and controversial Restatement projects,” and the U.S. Copyright Office, the U.S. Patent and Trademark Office, the ABA’s own IP Law section and numerous judges and academics have expressed similar concerns.

And as it relates to copyrights, the letter wisely emphasizes that the ALI’s latest effort is particularly inappropriate:

Traditionally, Restatements have focused almost exclusively on areas of common law because judicial rulings across different jurisdictions may vary and ALI’s interpretations are predisposed to assembly, analysis, and summaries.  By contrast, laws created through federal statute, including federal copyright law, are ill-suited for treatment in a Restatement because the law is clearly articulated by Congress in both the statute and the legislative history…  Throughout its almost 100 years of history, the ALI has never chosen to draft a Restatement of an area of law that is almost exclusively federal statutory law – until now.”

The letter concludes by expressing concern that the ALI may seek to issue similar questionable Restatements on such areas as patent law, and by emphasizing that copyright law is and remains within Congress’s authority, rendering the sort of action attempted by ALI inappropriate and potentially damaging.

For that important wisdom and initiative, Senator Tillis and Representatives Cline, Deutch, Roby and Rouda deserve our respect and praise.

July 9th, 2019 at 5:48 pm
Patent Protection at a Critical Juncture
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At CFIF, we’ve consistently and unapologetically celebrated the central role of intellectual property (IP) rights – patents, copyrights, trademarks and trade secrets – in making America the most innovative, prosperous and powerful nation in human history.

Recent legal developments domestically, as well as growing focus upon Chinese IP malfeasance internationally, provide new emphasis on the importance of strong U.S. patent protections for American inventors, and highlight some increasingly obvious concerns regarding patent infringers exploiting the U.S. Patent Trial and Appeals Board (PTAB) for nefarious and selfish purposes.

A couple of weeks ago, patent holder plaintiff TQ Delta won on all eight counts in its first case in a series against 2Wire, Inc. over digital communication technology patents.  The win thereby sets a strong precedent of IP enforcement in what will be the first trial over its DSL patent porfolio.

In another recent example that will instantly resonate with parents as their children splash amid water balloons in their backyards this summer, a federal judge in Texas went to the rare extreme of actually doubling a multimillion-dollar jury award in favor of toy company Tinnus Enterprises, maker of “Bunch O Balloons” water balloon devices, in its patent infringement case against Telebrands.  More often, judges reduce jury awards that they consider excessive.  In this case, however, U.S. District Judge Robert Schroeder III held that the “serial infringement” of Tinnus’s patents and “flagrant” litigation misconduct merited more than doubling the original damages assessment.

The ongoing case of EagleView v. Verisk offers another salient example, a proverbial David innovator versus a Goliath infringer.  It also presents a perfect opportunity to correct a patent infringement injustice and offer a deterrent lesson to other potential patent violators of the consequences they will face.  In a nutshell, the plaintiff EagleView develops products that create 3-D models from aerial images of rooftops, from which insurers and construction companies can more accurately reach repair cost estimates.  After defendant Verisk unsuccessfully attempted to purchase EagleView in 2014, it allegedly shifted to using its subsidiary Xactware Solutions to infringing EagleView’s patented technology, triggering EagleView’s lawsuit for willful patent infringement.

Since that date, Verisk has employed an array of tactics to prevent EagleView’s lawsuit from reaching a jury, such as filing multiple petitions at the PTAB to invalidate EagleView’s underlying patents, which a federal Court of Appeals found “unpersuasive.”  Verisk has also petitioned the District Court multiple times to invalidate EagleView’s underlying patents, which the Court rejected similarly.  Now, Verisk has even resorted to joining the LOT Network, an openly anti-IP group that includes Google and other titans.  Hopefully, those tactics will be put to an end at long last.

All of this serves to highlight once again the need to protect IP, and patent rights specifically, at the legislative, executive and judicial levels.  At the Congressional and executive levels, legislation to address patent eligibility and U.S. Patent and Trademark Office (PTO) reform are critical, as CFIF has previously emphasized.  Additionally, abuse at the PTAB level must not be tolerated.  And at the judicial level, courts must hold patent infringers accountable, and grant injunctive relief to patent holders to halt violations.  By holding violators accountable, we can not only deter other potential violators, but also provide the incentive to innovators by creating greater assurance that their work will be rewarded and protected.

America’s tradition of leading the world in innovation and IP protection is ultimately at stake.

June 18th, 2018 at 11:32 pm
CFIF Strongly Opposes Senator Ron Wyden’s “ACCESS to Sound Recordings” Act
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CFIF has long championed greater fairness for recording artists and protection of intellectual property (IP) rights in the music industry.   Among other problems, current law generally protects recording artists’ rights for post-1972 songs, but not pre-1972 classics:

Under byzantine laws, artists receive just compensation whenever their post-1972 recordings are played, but in many cases not for their pre-1972 recordings.  That’s an indefensible and arbitrary artifact that has persisted far too long.  Why should Neil Diamond receive payment whenever ‘America’ is played, but not classics like ‘Solitary Man?’

Fortunately, the opportunity to correct that unfairness has arrived.  Even better, legislation to correct the existing flawed system arrives alongside other music legislation that galvanizes the coalition to finally correct the situation.  As a result, a broad coalition of music organizations representing everyone from songwriters, composers, performers, publishers and labels supports three new pieces of legislation…”

Accordingly, CFIF strongly supports the Music Modernization Act, which passed the House of Representatives unanimously earlier this year:

Introduced by House Judiciary Committee Chairman Bob Goodlatte (R – Virginia) and Ranking Member Jerrold Nadler (D – New York), the Music Modernization Act combines music licensing reforms outlined in the CLASSICS Act, Songwriters Equity Act of 2015, the rate standard parity provisions of the Fair Play Fair Pay Act, and AMP Act into a single, consensus piece of legislation.  The MMA addresses specific music legacy issues such as establishing federal copyright protection for artists who recorded before 1972, creating a single licensing entity to administer music publishing rights for all digital music and ensuring producers and engineers receive royalties for their contributions to the music they help create.”

Unfortunately, Senator Ron Wyden (D – Oregon) has counterproductively introduced the so-called “ACCESS to Sound Recordings” Act.

Just as the Music Modernization Act claims nearly unanimous support among all stakeholders in the music industry, Sen. Wyden’s proposed legislation rightfully garners similarly consensus opposition:

Seven leading unions, membership organizations, and advocacy groups representing recording artists, performers, vocalists, musicians, producers, and songwriters today sent a letter to the U.S. Senate detailing the flaws in Sen. Ron Wyden’s so-called ‘ACCESS to Sound Recordings Act.’  The groups, which include American Federation of Musicians, Content Creators Coalition, Future of Music Coalition, The Living Legends Foundation, the Recording Academy (GRAMMYs Organization), The Rhythm & Blues Foundation, and SAG-AFTRA detailed how Wyden’s bill would undermine the retirement security of elderly artists before reiterating their support for the CLASSICS Act.”

The group’s letter, which is worth reading in its entirety of detail, highlights the flaws of Sen. Wyden’s proposal:

We are disappointed that the introduction of the ‘ACCESS Act’ was done without consulting any artist group, organization, or union who would have made it clear that the bill’s eleventh-hour introduction is not a viable solution.  The ‘ACCESS Act’ would undercut the goals of the MMA by cutting compensation for the older artists that it is expressly designed to benefit.  It would unfairly shorten the period in which pre-1972 recordings produce royalties for the artists and copyright owners, effectively shutting down a lifeline of payments to artists who need it most.”

There is simply no justification for Sen. Wyden’s proposed legislation.  The MMA received unanimous House support, which is incredible in this hyperpartisan era, and the Senate should pass it for President Trump’s signature at long last.