Policy tends to swing back and forth like a pendulum before settling on the right balance. Sometimes the worst thing you can do for your cause is to overshoot your mark and set-up a bigger backswing that undoes all of your efforts. Those of us that want sound and lasting patent reform must be cautious that the pendulum doesn’t swing too far and hurt legitimate patent enforcement. Not only would this hurt innovation long-term, it would also risk the policy pendulum swinging back to allow patent trolls and other opportunists to continue to take advantage of the patent system to harm main street businesses with bogus patent infringement suit threats.
The perfect example of this is found in the current dispute over patents integral to cutting edge cancer therapy devices currently under consideration by the U.S. International Trade Commission (“ITC”). Although there is very little dispute that a foreign company is importing products that infringe the patents of an American innovator, some argue that the “public interest” demands the ITC abstain from its enforcement duties and allow the infringing imports to continue. As someone who has frequently fought against patent trolls, I believe that this challenge to legitimate patent enforcement would be swinging the pendulum far too far with serious potential harm to consumers.
The case concerns patents owned by Palo Alto-based Varian Medical Systems, an innovator, designer, and manufacturer of radiotherapy equipment used in treating certain cancers. Varian brought the case at the ITC, which has the responsibility to bar the importation of products that infringe U.S. patents. An administrative law judge (“ALJ”) at the ITC concluded that Elekta AB, a Swedish firm, violated several of Varian’s patents in some of the machines it imports into the U.S. market. The ALJ recommended a limited exclusion order that would prevent future attempts to import infringing machines but would not impact infringing machines already in the United States. The ITC decided to review parts of the ALJ’s decision and remanded a portion for further development of the record, but the ITC will likely ultimately have to decide whether to impose a limited exclusion order on the infringing Elekta products.
There are several critical reasons why the ITC should not choose to invoke public interest concerns to decline to impose an exclusion order along the lines of what the ALJ recommended in this case. First, the ITC exists for exactly this kind of case, where a domestic manufacturer is being harmed by imports from a foreign infringer. This is far from an exceptional case, so failing to impose an exclusion order due to manufactured public interest concerns here would set bad precedent, potentially opening the flood gates for future foreign infringers to cry wolf over trumped up public interest concerns. This would significantly undermine American incentives to innovate.
Second, there is little cause for alarm in this case because Varian requested and the ALJ recommended only a limited exclusion order that does not affect machines already in the United States. Hospitals and medical facilities are free to continue to use Elekta’s machines, and Elekta is free to continue to service and update the machines until the end of their useful lives. No patients will be harmed, and no ongoing treatments will be effected.
Finally, multiple options still exist for American healthcare providers who wish to purchase radiotherapy machines. Varian competitors like Accuray and BrainLab sell non-infringing machines, as does Elekta itself. Varian’s prices have historically been in line with its competitors that offer comparable devices in the United States, and hospitals and medical facilities have long had considerable leverage in the market for radiotherapy and treatment planning systems. The exclusion order will not weaken that leverage or alter competitive pricing. To be sure, it makes sense for Varian to argue that the exclusion of some products could have some impact on competition in this specialized product market. However, the ALJ looked into the competitive effects of a limited exclusion order and concluded that protecting Varian’s intellectual property would not give it special advantages over its competitors.
A competitive marketplace depends on the existence of companies that have incentive to make the investments needed to develop and successfully bring new products to market. This requires enforcing the intellectual property laws we have when they are being used as intended. Properly balanced patent policy requires we protect legitimate uses while preventing abusive practices that do not benefit innovation, and here, that means granting Varian the relief it seeks against Elekta’s infringing imports.
David Balto counsels a wide variety of Fortune 500 companies, small business and consumer advocates on antitrust and consumer protection compliance, strategic alliances, distribution issues, mergers and joint ventures. He is the former Policy Director of the FTC in the Clinton Administration.
The views expressed by this author are their own and are not the views of The Hill.