Quarterly Journal 49-3 Volume 49, Issue 3 November 2021

DATA, PEOPLE, AND PROPERTY: MODERNIZING PRIVACY THROUGH INTELLECTUAL PROPERTY LAW

Private collection and processing of consumers’ personal data gives rise to significant privacy risks for the subjects of the data collected, but there is also significant social and economic value in the continued collection and processing of consumer information. Unfortunately, the risks and rewards of continued consumer data collection are poorly balanced. The entities who collect and process consumer data suffer little risk but reap most of the reward. The consumer whose data is collected, in contrast, suffers high risk but little reward. Recent privacy legislation provides a strong foundation for privacy rights but should be supplemented to address the risk-reward imbalance.

This Article proposes an individualized, market-based solution to balance the risk-reward scales while protecting the social and economic benefits of a healthy consumer data economy: a new intellectual property right in consumers’ personal information. Central to the proposed model is the right to exclude data traders from collection and transfer of data associated with that individual. As this Article explains, a limited right to exclude collection and transfer of consumer data is supported by leading property and economic theory as a bridge between the current consumer data economy and a more desirable one. The Article finishes with an examination of the proposed rights and the most important limitations on them: fair use, duration, and exceptions to enforcement.

THE DOJ & FTC—ONCE FRIENDS, NOW FRAND-EMIES: THE DIVERGING PERSPECTIVES OF THE TWO ANTITRUST AGENCIES ON THE FUNDAMENTAL ROLE OF ANTITRUST LAW IN THE ENFORCEMENT OF FRAND TERMS IN SEP LICENSING

During the Trump Administration, The Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) seemed to no longer share the same philosophies regarding the role of antitrust law in the enforcement of Fair, Reasonable, and Non-Discriminatory (“FRAND”) terms when dealing with Standard Essential Patents (“SEPs”). The two entities have historically viewed violations of FRAND terms by SEP holders as threats to competition, primarily using antitrust law as the means with which to respond to such violations. During the Trump Administration, however, the DOJ departed from this view and instead embraced contract law as the answer to violations of FRAND terms. This Article will explore this new approach and ultimately argue that the contract approach likely fails to adequately respond to the threat of monopolization posed by SEP holders who violate FRAND terms after Standard Setting Organizations (“SSOs”) have integrated an essential patent into the standard.

COMING TO A HOOD: NOW IS THE TIME TO REDEFINE DESIGN PATENT FUNCTIONALITY

A hypothetical electric car manufacturer holds design patents that protect the exterior shapes of the body, hood, and head lamp of its new aerodynamic vehicle. In an infringement suit, a manufacturer of replacement parts claims that the design patent for the head lamp is invalid because the claimed shape serves a primarily functional purpose: fitting the touted aerodynamic profile of the exterior design, which benefits from another design patent.

This fact pattern brings out some questions in the existing analytical framework for the functionality doctrine in design patent law. The functionality doctrine is the mechanism that screens out designs that are not “ornamental” as required by 35 U.S.C. § 171. Although the Federal Circuit maintains that no single test dominates the functionality inquiry, the court has gravitated toward an analysis that asks (1) whether alternative designs can accomplish the same function as a claimed article of manufacture and (2) whether other factors indicate that a design is primarily dictated by its function. Under current precedent, the ordering and weight of these steps are not clearly defined. In some cases, the Federal Circuit has stated that the alternative designs inquiry should happen first and may be dispositive on its own. In other cases, the court has stated that all considerations—including some commercially motivated factors—must be weighed simultaneously with the alternative designs inquiry. In over twenty years of jurisprudence, the court has seemingly vacillated between two lines of precedent without providing clear guidance on how they fit together. This absence of clarity could lead to ongoing inefficiencies and inconsistencies at the trial level.

This Note proposes that Congress should codify a new test to assist courts in applying the functionality analysis more consistently in factually complex situations. Specifically, this Note proposes that, under a new test, courts would need to: (1) define the function of the claimed design, and (2) determine whether alternative designs could perform the same function. The various factors from the existing precedent could still be helpful to guide courts toward appropriate conclusions on each determination. By following this new analysis, courts should be better equipped to resolve situations like the above hypothetical in a more consistent and predictable manner.

FAIR DRUG PRICES: A MARKET-BASED APPROACH TO COMPULSORY LICENSING

Drug prices in the United States are extraordinarily high. This phenomenon is in part due to patent rights, which enable drug companies to charge exorbitant prices without the threat of competition. Patent rights, however, also incentivize innovation—innovation that led to the discovery of the drugs in the first place.

This Note proposes a solution to strike the balance between drug price accessibility and innovation incentives. First, the government should intervene if a drug is not cost effective for patients. This can be determined using the Quality-Adjusted Life-Year (“QALY”) index, which quantifies the impact of a drug. Second, the government should limit excessive drug prices by invoking the patent “eminent domain” provision, 28 U.S.C. § 1498, and license drug patents using an auction system. Additional competitors would lower drug prices while the auction system adequately compensates patent holders, thus preserving the incentives to innovate. People should have access to both the drugs of today and the drugs of tomorrow.

THE PRICE ACT IS UNLIKELY TO SOLVE HIGH DRUG PRICES—COMPULSORY LICENSES ARE NOT THE ANSWER

Compulsory licensing is not the answer to reducing high drug prices in the United States. First, intellectual property rights are not the primary reason for high drug prices. Drug prices result from a variety of different standards that are put in place to ensure that the pharmaceutical industry in the United States is both safe and innovative. A practical solution to lowering drug prices would likely require a holistic approach considering multiple factors rather than identifying a single factor to blame, such as proposed by the PRICE Act. Secondly, even if intellectual property rights did contribute to high drug prices, compulsory licensing goes against the spirit of intellectual property law in the United States. Incorporating compulsory licensing into the everyday pharmaceutical market would hamper the industry because it would likely divert funding from the research and development of new drugs, decreasing innovation in a life-saving field of science. Manufacturers in the industry may also be more likely to utilize trade secrets, thereby reducing the flow of information. Finally, high drug prices may be addressed through other, less intrusive and established legal means such as antitrust law. Thus, the proposed PRICE Act is unlikely a reasonable solution to high drug prices in the United States.