AIPLA Q&A with Senator Thom Tillis

Written July 1, 2020

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AIPLA Direct delivers substantive, to the point, and useful information to all AIPLA members with summaries of cases, rulemaking, legislation, industry developments and interviews with intellectual property thought-leaders.

In this edition of AIPLA Direct Live, AIPLA President Barbara A. Fiacco asks the Honorable Thom Tillis, United States Senator from North Carolina, about the state of the intellectual property landscape.

Senator Tillis speaks on his tenure as Chairman of the Senate Judiciary IP Subcommittee, the need for strong intellectual property protection, Section 101 reform, DMCA review, oversight over the USPTO and the Copyright Office, and more. 

Fiacco: The Senate Judiciary IP Subcommittee has been incredibly active during your tenure as Chairman and got to work soon after the Subcommittee was reestablished for the first time in a decade. What drew your interest to this Subcommittee and to intellectual property issues?

Tillis: Before I entered politics, I spent many years working in the technology industry. I have seen first-hand the role that intellectual property protections play in supporting investments in the innovation, creativity, and entrepreneurship that are hallmarks of the American economy. We are the global center of entertainment and technology, and it’s no coincidence that we are also a leader in protecting and promoting intellectual property.

The state I represent, North Carolina, is home to some of the most innovative companies and to some of the top research universities in the world. These companies and universities provide thousands of good, high-paying jobs to North Carolinians and support our national and local economy. None of this would be possible without strong intellectual property protections. Without strong intellectual property protections, there would be no incentive to make the major investments that are needed to develop life-saving drugs or world-changing technologies or once-a-generation creative works.


Fiacco: You and your colleagues began by hosting numerous roundtables and hearings on patent subject matter eligibility with IP stakeholders from across the country. You even developed and circulated draft legislative language to address the issue. What did you learn about the problem from these hearings? Can we expect more from the Subcommittee on this topic this year? 

Tillis: The Intellectual Property Subcommittee held three hearings on the state of patent eligibility, featuring 45 witnesses. Most of these witnesses—including voices from academia, the private sector, former Patent and Trademark Office directors, and federal judges—represented a diverse set of viewpoints, and yet they agreed that the current eligibility criteria is unworkable and harming R&D and innovation across all sectors. At the same time, we also heard from witnesses who talked about how, in their view, the current state of patent eligibility actually promotes innovation and higher quality patents and protects fundamental research and innovation.

It was a fascinating series of hearings and all of the witnesses—even those I didn’t agree with—presented legitimate equities that would need to be addressed in any reform effort. Bridging all of those equities and finding a legitimate, politically viable compromise has been difficult. Because of that, efforts for a larger Section 101 reform have stalled. Absent stakeholder consensus, I don’t see a path forward for a more comprehensive 101 reform at this time.

But, we can’t continue to ignore the fact that the current Section 101 jurisprudence has had a dramatic negative impact on investment, research, and innovation. This is especially true for the diagnostics industry. After Athena it’s virtually impossible to get a diagnostic method patent in the United States. I think one thing the COVID-19 pandemic has taught us is just how important diagnostics, pharmaceuticals, and health-care related innovations are to this country. Even if there is no path forward now for a comprehensive fix to patent eligibility Congress can—and must, in my opinion—at least find a narrow, temporary fix for diagnostic methods.

Even some of the witnesses at my 101 hearings who were opposed to a comprehensive patent eligibility fix acknowledged that for diagnostic methods the current jurisprudence simply isn’t working and that a targeted, sui generis fix for that industry would be appropriate. That’s why in the coming months I’m going to be working to put forward a very narrow, targeted fix for patent eligibility as it relates to diagnostic methods—something which had broad consensus at our 101 hearings. I view such a fix as a temporary Band-Aid to stop the bleeding until we can develop consensus around a larger, more comprehensive 101 reform. Such a surgical, targeted fix to one area of 101 jurisprudence won’t solve the entire problem, but it will be a step forward in the right direction and will at least stop the bleeding for one of the most critical areas of research and innovation in our country right now.

Fiacco: There were many monumental developments which altered the patent landscape in the 2010s. Events like the creation of the Patent Trial and Appeal Board (PTAB) in 2012, the United States Supreme Court decision in Alice v. CLS Bank in 2014, and the focus on patent litigation. What do you think was the most significant development? Looking back at this last decade what would you say was the biggest missed opportunity in the IP sphere?

Tillis: Unfortunately, I think the biggest missed opportunity was enacting comprehensive Section 101 reform last year. We had a chance to achieve substantial reforms but it stalled out because there was a lack of consensus amongst those who supported reform. The biggest developments, in my opinion, were the series of Supreme Court decisions on Section 101 that upended subject matter eligibility and effectively created a bar on patentability for certain innovative industries.


Fiacco: As the Senate Subcommittee with oversight over the USPTO and the Copyright Office, how do view the way the offices have managed during the COVID-19 crisis, and particularly, how each has used the authorities given to them under the CARES Act? 

Tillis: My staff has regularly been checking in with folks at the USPTO and the Copyright Office, and my sense is that both agencies have done a fantastic job weathering this unprecedented moment. These are incredibly difficult circumstances for everyone, and I want to commend Director Iancu and Acting Register Strong for their swift action and leadership. I believe both have utilized the authority given to them by the CARES Act to extend some application deadlines while also ensuring they are able to continue their important work of reviewing applications and performing necessary daily functions.


Fiacco: Recently, you and your Congressional colleagues sent a letter to the USPTO asking about the impact the global pandemic has had on the Office, and particularly what the impact has been on filings and fees. What are your concerns, and how might it impact the stakeholder community?

Tillis: I think our primary concern was the potential hardships that this pandemic has caused to patent owners. I was pleased to see the USPTO take steps to help patent owners who may be struggling financially by deferring certain fees. However, as a fee-funded agency, we want to ensure that the USPTO has the resources it needs. It is important that the USPTO be able to continue operations as close to normal given the number of important functions they perform on a daily basis.


Fiacco: The United States and governments around the world are considering ways to stimulate the economy in the wake of COVID-19. What role do you think intellectual property plays? 

Tillis: Intellectual property plays an incredibly important part in helping individuals make their own contributions to stimulating the economy by telling creators, innovators, and entrepreneurs that if they invest in developing something of value, then the law will give them a way to monetize that value and, in doing so, to bolster the economy. There are countless examples of how IP helps individuals who in turn help their community. A familiar example is that of the inventor who builds an entire company—a company that later becomes the leading employer in a city, bringing with it good jobs. This is possible because the patent system promises that inventor control over his innovation and the ability to charge users a fair market rate.


Fiacco: Your Subcommittee has also spent considerable time thinking about the Copyright Office and ways it can be modernized. What can you tell us about that consideration and what are the next steps? 

Tillis: Modernizing the Copyright Office has been a top priority of mine. The Copyright Office does a fantastic job serving authors, copyright owners, users, and the public. However, I think we can all agree that the systems at the Copyright Office are long overdue for an update.  I’m currently working with the Copyright Office to fine-tune some of the language of the Copyright Office Modernization Act, and I am optimistic that we will be able to introduce a final version of that bill soon. Among many other things, the bill will improve the Library of Congress’s minimum security measures for electronic deposits, codify the Register of Copyrights’ autonomy within the Library to serve Congress and carry out her other statutorily designated duties, will direct the Copyright Office to conduct several studies that will help determine how to best implement some longer-term modernization programs, and will authorize the Register to set alternative fees including for individual authors and small businesses.


Fiacco: Your Subcommittee has undertaken a wide-ranging review of the Digital Millennium Copyright Act (DMCA), the most comprehensive review since it was enacted in 1998. What is the plan moving forward, and what do you hope to learn? What do you anticipate will be some of the more difficult, interesting or contentious issues?

Tillis: The DMCA was a cutting-edge law when Congress enacted it, but how we use communication technologies and the way we experience copyrighted works has changed dramatically since 1998. In fact, just about everything has changed about the online world during the past 22 years. Yahoo! was the dominant search engine; Google was just being started. There was no iTunes or Facebook or Twitter, and Netflix was just a DVD-by-mail service. Just about the only thing about the internet that hasn’t changed is the way copyright law regulates the use of copyrighted works.

My Subcommittee has now held three hearings as part of our year-long DMCA reform process, and as we continue this process I hope to learn more from experts about what is working and what isn’t. One of the changes to the law that I’m looking at includes moving from the current notice-and-takedown system, which has not scaled well to the internet’s growth, to a notice-and-staydown system that would help save copyright owners from having to repeatedly send notices to the same service provider about the same infringed work. I’m also looking at whether blocking access to foreign websites that host infringing content would benefit our copyright system, having heard from the president of the Internet Association that most piracy originates outside the United States. I’m also evaluating whether fair use should be expanded in the context of section 512 and online uses of copyrighted works.

There is no shortage of difficult or interesting – or contentious – issues when talking about the DMCA. That reflects the fact that authors and copyright owners have a very different opinion on the DMCA than online service providers do. But I’m hoping that we can find some areas for consensus-driven reform as my office develops legislation to introduce this year.


Fiacco: On March 11, 2020, you introduced the Trademark Modernization Act of 2020. What are the reasons for the legislation and what do you hope this bill will do?

Tillis: Trademark law is another area of our IP system that is overdue for an update. This bipartisan, bicameral legislation would modernize trademark law for the realities of today and would make important changes to protect small businesses and consumers. One key feature of the law is that it creates new procedures to reduce the prevalence of false-use claims, which acts as a barrier to market entry for others and have become more of a problem due to a flood of fraudulent trademark registrations from China.


Fiacco: According to numerous studies, counterfeit goods cost the U.S. economy billions of dollars every year and risk the health and safety of consumers. What more can Congress do to address this problem and impede the flow of counterfeit goods?

Tillis: Counterfeits pose a serious risk to public safety, consumers, and cause financial harm to legitimate companies. We held a hearing on this issue last year and I intend to continue reviewing the problem and potential solutions. Right now, we are focused on preventing a flood of fake and counterfeit goods related to COVID-19. There have already been reports of counterfeit N95 masks and other items being shipping into the country. In the short term, I think Congress needs to seriously consider all options to prevent these dangerous items from reaching consumers.

China has been clear: if America can invent it, they will try to steal it. That is why I have taken steps to raise awareness and emphasize the need for strong enforcement. I wrote an op-ed on focused on the threat counterfeits pose to public safety during this pandemic. Additionally, I sent a letter to the Department of Justice and the Department of Homeland Security along with Senators Cornyn and Blackburn highlighting the public safety risk of counterfeit Personal Protective Equipment coming into the United States from China. I intend to introduce legislation this summer to reduce the risk of dangerous counterfeits from China flooding into America.


Fiacco: In a similar vein, online piracy costs the US economy almost $30 billion a year, with pirated videos viewed over 200 billion times, according to a report from the US Chamber of Commerce. Are you concerned about this and can Congress step up to stem this tide of piracy?

Tillis: I am very concerned about the costs of piracy to the U.S. economy – in fact, I think that $30 billion is the estimated cost of just digital video piracy, of which streaming is the vast majority. Overall, as the internet has grown—with new services being developed, internet speeds rocketing up, and high-speed access moving into formerly remote communities and our pockets—combating piracy has become more challenging. This is a big reason why my Subcommittee is reviewing the Digital Millennium Copyright Act this year and will introduce reform legislation after we conclude our schedule of hearings. Congress needs to make sure that our creative industries, which contribute an estimated $1.2 trillion annually to the GDP, have the protections they need to feel comfortable investing heavily in producing new copyrighted works, which provide countless American jobs.

This is also why my staff and I have spent the past six months working to close the felony streaming loophole. Because our copyright law was enacted with older kinds of technology in mind, copyright law currently has felony criminal penalties for bootleggers who reproduce or distribute pirated works for purpose of commercial advantage over a certain amount, but for streaming, even if the pirate made millions of dollars off the act, it is only a misdemeanor. This doesn’t make sense, especially today when the overwhelming majority of piracy happens online.


Fiacco: Recently, WIPO announced that for the first time ever China has surpassed the United States in PCT filings. Do you have any reaction on this? What can or should the US do to enhance our success in IP? 

Tillis: The United States has long been the world leader in technological innovation—whether we’re talking about the invention of the internet or the development of the polio vaccine. World-changing invention and leadership is a defining feature of the American spirit, and I want to see that continue for generations to come. This is a reason I took such a deep interest in patent-eligibility reform: I want to ensure that our laws adequately encourage the kind of investment that will continue American leadership in creativity and innovation.

Fiacco: Can you tell our readers about a time in your life when you realized the importance of IP on today’s economy?

Tillis: When I was a management and technology consultant at PriceWaterhouseCooper I saw first-hand the value of intellectual property to innovative and growing companies. I also later worked in the same role at IBM—which I know at one time and might still have the most patents granted each year.

Fiacco: Most would agree that the United States' history of generating exciting breakthrough innovations plays a part in its unrivaled technological, economic and military leadership. What do you see as the biggest challenge to maintaining our country’s future success? 

Tillis: There are a lot of things that I think we need to do to ensure that our country remains the leader in technological innovation and artistic creation. But the biggest challenge we face – and the one Congress is perfectly suited to address – is modernizing our intellectual property protections for the world we live in today and the one we expect to live in tomorrow. And you can see this belief in action with the activities of my Subcommittee and the IP legislation I have been working on.