Chris Coons Working to Install Business-Friendly Candidate for Key Patent Position (original) (raw)

On May 5, U.S. Trade Representative Katherine Tai announced that the Biden administration would support a process to waive patent protections for COVID-19 vaccines, so the entire world could focus on producing these lifesaving medicines. While the process will take months and cannot by itself expand access to vaccines, it was a rare moment of the United States engaging in an intellectual-property dispute on the side of openness rather than pharmaceutical rights holders.

Pressure from advocacy groups and a surprisingly large segment of the Democratic base spurred the administration to its decision. Few Democrats lined up on the other side, in favor of maintaining vaccine patent protections. One of them was Sen. Chris Coons (D-DE), a longtime proponent of patents, who went so far as to claim that the storming of the Capitol on January 6 argued for a “Sputnik-like moment of reinvestment in American innovation and competitiveness,” which would necessarily involve strong patent rights.

Patents have not historically animated sustained intraparty fights that spill out into headlines. But Coons’s pro-IP, pro-patent stance, and his long friendship with the president, has elevated the issue, and turned the selection of the next director of the U.S. Patent and Trademark Office (USPTO) into a flashpoint. Coons has been aggressive in working with the White House to secure a director who shares his viewpoints, and his top candidates have represented patent owners as lawyers or trade group leaders. According to sources on Capitol Hill and from outside groups, Coons has claimed that he was granted the power to make the USPTO choice in exchange for staying in the Senate. Coons had been seen as a potential pick for secretary of state.

Other members of Congress, including Sen. Patrick Leahy (D-VT), chair of the Senate Judiciary Subcommittee on Intellectual Property, have stressed in their conversations with the White House the need to balance the patent system to prevent abuse. Advocates have also asked the White House to “overrule efforts” by Coons and his allies to put forward a USPTO director nominee who is “aligned with the pharmaceutical industry or other intellectual property maximalists.”

The Biden administration has not yet moved to nominate a USPTO director, and action is likely weeks away. The White House did not respond to a request for comment.

THE POSITION OF USPTO DIRECTOR is a unique hybrid. At one level, it’s mostly ministerial, running an office of 13,000 employees that issues patents and trademarks for inventions and innovations. But the director also serves as the undersecretary of commerce for intellectual property, and is a key adviser to the president, the Commerce Department, the U.S. trade representative, and the Justice Department on IP matters and litigation. In recent decades, that advice has all been in the direction of more patents, longer exclusivity periods, and stronger protections for them.

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“The patent office wants to characterize itself as being very limited and administrative,” said Shobita Parthasarathy, a professor of public policy at the University of Michigan and author of the book Patent Politics. “It really is a staunch defender of patents as the sole or significant primary way in which we stimulate innovation in the United States.”

In the wrong hands, patents can be weaponized to stifle competition and block the benefits of innovation for consumers and startup businesses. For example, Alcon, the largest global manufacturer of contact lenses, sued over trademark infringement to block a discount retailer, Allied Vision Group, from selling what Alcon claims are discontinued versions of its products in different packaging. The trademark is not about the lenses, which are FDA-approved, but the packaging; Allied Vision calls it a transparent attempt to force a discount retailer off the market so the 45 million contact lens users in the U.S. must go to Alcon for their needs.

In an even more insane recent example, disgraced diagnostic company Theranos continued to obtain patents years after it was clear that its testing machine did not work. Private equity firm Fortress Investment Group, which managed to grab some of Theranos’s patents, used them to sue a COVID-19 diagnostic company for patent infringement. Fortress has long been accused of buying up companies and their IP solely to use the patents in lawsuits. Other “patent trolls” engage in this tactic habitually, sitting on unused patents to cash in and preventing competition in the process.

In the wrong hands, patents can be weaponized to stifle competition and block the benefits of innovation.

As many patents were approved between 1991 and 2018 as there were in the previous 155 years. While medical devices and technology products are responsible for much of this proliferation, pharmaceutical patents have been singled out as uniquely pernicious. Drug companies file multiple patents on the same product, known as “patent thickets,” to extend exclusivity rights and enjoy monopoly profits, leading to overcharging consumers on the order of $315 billion in the U.S. in 2018, according to a study from economist Dean Baker. Profits from the COVID vaccines alone have created nine new billionaires, which is fine considering the importance of the product—but not if it comes at the expense of global access.

None of this has fazed USPTO in promoting patents as the key to innovation. Some of that is almost by design; USPTO funds itself through patent award fees, so the more patents it cranks out, the more money it makes for the government. The public advisory boards to USPTO are stacked with industry supporters—“It understands the public to be the inventors,” Parthasarathy said—and historically its top officials have come from either industry or law firms representing industry.

In the past several years, two warring camps have developed in Washington on the topic. One sees patent quality as critical, seeking to protect actual advances rather than anything that can further the financial interests of inventors. The other side supports patent quantity, pushing through as many patents as possible and making them sacrosanct. That this aligns with powerful interests that want to collect monopoly rents on their patents shouldn’t even have to be said.

Many of those rights holders come from Delaware, our corporate capital. Pharmaceutical and chemical companies have a lot of influence there. So it’s not surprising that Sen. Coons has carved out a niche as a vociferous supporter of patents. After all, he’s received over half a million dollars from the drug industry since entering Congress.

COONS, WHO SITS ON THE IP SUBCOMMITTEE, wrote a letter to President Biden and Vice President Harris in February with his subcommittee colleague Sen. Mazie Hirono (D-HI), outlining four principles for the next USPTO director. While these principles included somewhat mundane qualities such as management experience and a commitment to diversity, a couple were rather sweeping.

Coons and Hirono stressed the need for the next director to recognize the uniformly positive benefits of intellectual property. “A history of criticizing or weakening American intellectual property rights will undermine his or her ability to advocate for strong protections and enforcement mechanisms with our trade partners,” they wrote. They also indicated that the next director should “have real-world experience” litigating IP, which biases the selection in favor of a corporate patent attorney.

It was not an isolated incident. Coons has repeatedly expressed, often with Hirono or Republican colleagues like Sen. Thom Tillis (R-NC), support for accelerating patent approvals, expanding patent eligibility, and ensuring nothing gets in the way of additional patents. His STRONGER Act, introduced with Sen. Tom Cotton (R-AR) and others, would have significantly strengthened IP protections for property owners. And Coons supported Andrei Iancu, Donald Trump’s USPTO Director, who came from a law firm specializing in patent suits.

Sen. Leahy has also sent a private letter to the White House expressing his principles for USPTO, which differ from Coons’s aims.

Coons has authored several bills that were enacted, expanding IP protections, and argued that monopoly patent protections actually benefited “healthcare innovation.”

Coons benefits directly from strong intellectual-property rules, as his family’s business, the W.L. Gore Company, benefits greatly from its patent on the fabric known as Gore-Tex, as well as 3,400 inventions across a range of industries. Coons’s stepfather founded the company, and Coons served as its in-house counsel for eight years before entering the Senate. He still owns up to $5 million in company stock. “Half of that company today is medical devices,” Coons said in a speech before the Intellectual Property Owners Association in 2020. “Half of the attorneys in our legal department were patent lawyers. I know patent lawyers, and some of them are among my best friends.”

In that speech, Coons argued for using the COVID crisis as a “teachable moment” to push for a rewrite of IP laws, giving more exclusivity to such rights holders as pharmaceutical companies. Indeed, during the pandemic, Coons has authored several bills that were enacted, expanding IP protections, and argued that monopoly patent protections actually benefited “healthcare innovation.”

This put him on the wrong side of the administration in talks over the vaccine waiver. Coons, the only major Democrat in Congress opposed to the waiver, and Commerce Secretary Gina Raimondo were overruled. But the White House only committed to talks at the World Trade Organization, and the next USPTO director, who is part of the Department of Commerce, will play a significant role in crafting the language. That could be why Coons is working so hard to influence the selection.

COONS DID NOT ONLY DELIVER his statement of principles to the White House. He also sent a “red/yellow/green” list of recommendations for candidates for USPTO director. In general, Coons favored candidates who have come from the patent lobbying or legal realms, and disfavored those who have been willing to part from the pro-patent orthodoxy.

Names under consideration with the Coons seal of approval include Ellisen Turner, a corporate lawyer with top corporate defense firm Kirkland & Ellis, who has represented pharma companies seeking to prevent generic competition, including Gilead Sciences, the maker of Sovaldi, famously priced at $84,000 for a 12-week course. He previously represented a patent-holding firm co-owned by Apple, Microsoft, and others, which existed mainly to sue other companies over alleged violations of its patents; Trump’s USPTO Director Iancu came from the same firm.

Another candidate, Jannie Lau, was the general counsel for a patent troll called InterDigital; the vast majority of its revenue comes from its patents and the hardball legal tactics it uses to enforce them. Kevin Rhodes, a third option, takes this a step further; he was past president of the Intellectual Property Owners Association, a trade group that advocates for strong patent protections.

Others known to be under consideration are academics Arti Rai of Duke University and Colleen Chien of Santa Clara University. Both have been willing to break with the dominant pro-patent paradigm, and both have been hired at the Commerce Department. Chien is serving in a part-time role as a senior counselor to the general counsel’s office, while Rai has been named as a senior adviser to the general counsel.

Their current positions within Commerce, however, could put them out of the running for USPTO director. And according to a source familiar with Coons’s ranking, the senator had both Rai and Chien on the red or yellow lists of candidates for director. This is rather ironic, since Hirono, often Coons’s colleague on pro-patent policies, has been on a mission to get Asian Americans hired to top jobs inside the Biden administration. Yet her partner Coons opposed two qualified Asian Americans for the top slot on IP policy.

Hirono did not reply to a set of questions about the matter. Coons also declined to respond.

Several progressive groups have made USPTO a priority, demanding that the next director not come from industry.

Several sources have described Coons as “very active” in trying to get one of his preferred choices nominated. It’s unclear whether he actually has an agreement with the White House to be a decision-maker on IP-related hires, or whether he is overstating his relationship with the president to try and gain leverage. But he has definitely used his closeness with Biden as a selling point to the Commerce Department and the White House. Last year, Coons was among those eliciting frustration from the Biden campaign for overly aggressive lobbying for themselves for Cabinet positions.

Opposite Coons, several progressive groups have made USPTO a priority, demanding that the next director not come from industry. Their efforts have become an extension of the movement to reduce the power of monopolies throughout the economy, in this case, the government-granted monopolies that patents ensure. Typically, when the Biden administration has been forced to choose between two opposing factions, as it was with the Office of the Comptroller of the Currency, it has put off that decision as long as possible. That appears to be the case here as well.

The Biden team’s decision on the TRIPS waiver could cut either way. It could show a new commitment to flexibility on IP policy and a willingness to balance the sanctity of IP with the risks that can create to public-health access and competition. A nominee for USPTO who has the polar-opposite beliefs, that IP must be protected at all costs, could face a backlash. On the other hand, Coons and his supporters could say that, after losing out on the waiver, they need a USPTO director who reflects their issues, and the White House could see that as an easy win for an ally in Congress.

But patents are now an issue at the top of mind for the progressive base, not the backwater issue it has been in years past. With COVID vaccines and their patents in the public spotlight, choosing a USPTO nominee who could roll back progress on an issue of importance to many might be less tenable. “On the TRIPS waiver, with Congress signing letters, I’ve never seen that before,” said Shobita Parthasarathy. “There has been growing public scrutiny, pressure, and frustration around intellectual property. The question is whether the patent office will go along.”

David Dayen

David Dayen is the Prospect’s executive editor. His work has appeared in The Intercept, The New Republic, HuffPost, The Washington Post, the Los Angeles Times, and more. His most recent book is ‘Monopolized: Life in the Age of Corporate Power.’