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[Eric, 09/28/2021, Technology and Marketing Law Blog, “The SHOP SAFE Act Is a Terrible Bill That Will Eliminate Online Marketplaces,” https://blog.ericgoldman.org/archives/2021/09/the-shop-safe-act-is-a-terrible-bill-that-will-eliminate-online-marketplaces.htm, Accessed: 07/09/24, shl]

[Note: this blog post covers Rep. Nadler’s manager’s amendment for the SHOP SAFE Act, which I think will be the basis of a committee markup hearing tomorrow. If Congress were well-functioning, draft bills going into markup would be circulated a reasonable time before the hearing, so that we can properly analyze them on a non-rush basis, and clearly marked as the discussion version so that we’re not confused by which version is actually the current text.]

[Matt, 10/03/2023, Judiciary.Senate.gov, “Back to School with the SHOP SAFE Act: Protecting Our Families from Unsafe Online Counterfeits,” https://www.judiciary.senate.gov/imo/media/doc/2023-10-03_-_testimony_-_schruers.pdf, accessed: 07/10/2024, shl]

These Efforts Are Made Possible by Existing Trademark Law

[Jonathan , 05/27/2021, Internet Association, “The SHOP SAFE Act: Stemming the Rising Tide of Unsafe Counterfeit Products Online,” https://docs.house.gov/meetings/JU/JU03/20210527/112713/HHRG-117-JU03-Wstate-BerroyaJ-20210527.pdf, accessed: 07/10/2024, shl]

V. UNINTENDED ISSUES WITH THE SHOP SAFE ACT

[Eric, Betsy Rosenblatt, Professor at Case Western Reserve University Law School, Rebecca Tushnet, professor of law at Harvard Law School, 03/08/2022, Digital Commons Law, “Letter to Congress Opposing SHOP SAFE Act on Behalf of 26 Trademark Academics,” https://digitalcommons.law.scu.edu/cgi/viewcontent.cgi?article=3634&context=historical, Accessed: 07/09/2024, shl]

We are U.S. academics with expertise in trademark law. We write to express our opposition to the Stopping Harmful Offers on Platforms by Screening Against Fakes in E-commerce (SHOP SAFE) Act. The SHOP SAFE Act represents one of the most significant proposed reforms of trademark law that Congress has contemplated in years, and it will likely reshape e-commerce in unwanted ways. Due to these implications, the SHOP SAFE Act should not be included in the final version of any omnibus act, like the United States Innovation and Competition Act (USICA) or the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength (America COMPETES) Act.*

[Brian, 12/22/2020, Regulations.gov, “Letter to Andrei Iancu Re: Docket No PTO-T-2020-0035,” https://downloads.regulations.gov/PTO-T-2020-0035-0005/attachment_1.pdf, accessed: 07/09/2024, shl]

Amazon.com, Inc. (“Amazon”) welcomes the opportunity to respond to the United States Patent and Trademark Office’s (“USPTO”) request for comments on secondary trademark infringement liability in the e-commerce setting.

[28/12/2020, Patent and Trademark Office, “Engine Advocacy”, https://downloads.regulations.gov/PTO-T-2020-0035-0008/attachment_1.pdf, accessed 7/9/2024, LR]

I. Doctrine of contributory liability, as applied by courts, and how e-commerce platforms routinely address alleged trademark infringement online

[Christian and Margaritha, 5-6-24, Journal of Economic Surveys, "The economics of copyright in the digital age", https://doi.org/10.1111/joes.12632, Accessed July 9, 2024, CT]

In the past few years, the perhaps most striking innovation developments regarding copyright and the creation of new content have taken place with generative AI (Samuelson, 2023). Recent advances in ML have opened up new possibilities to produce literary, musical, and artistic works, and AI has become a new tool to express ideas for hundreds of millions of users. The applications are many and vary across the creative domains. For example, WaveNet was initially developed to help a ML algorithm create seamless artificial voices and has learned to make music itself by analyzing voice material. Current AI systems can also quickly create customized royalty-free background music, jungles, and even entire albums. Also, some video game environments are no longer created by programmers but by the program itself based on predetermined rules and algorithms (e.g., in No Man's Sky). In visual art, machines can emulate human thought and decide how to alter an image based on a given algorithm. With AI art generators, such as DALL-E, Stable Diffusion, and Midjourney, users can create artwork by entering a prompt, choosing different styles, and further modifying the generated outputs to express their ideas.

[Christopher, 9-29-23, Congressional Research Service, “Generative Artificial Intelligence and Copyright Law”, Vol 6, pages 4-5, , accessed July 9, 2024, CT

AI programs might also infringe copyright by generating outputs that resemble existing works. Under U.S. case law, copyright owners may be able to show that such outputs infringe their copyrights if the AI program both (1) had access to their works and (2) created “substantially similar” outputs.

[Micaela, 4-22-24, The Yale Law Journal, “ARTificial: Why Copyright Is Not the Right Policy Tool to Deal with Generative AI,” Volume: 133, , accessed 7-9-24] nikoglenn

As discussed in the previous Section, numerous factors indicate an impending intense and lengthy judicial battle—particularly because the legal issues in terms of copyright are not as straightforward or binary as predominant media narratives have suggested. Indeed, several questions in the area of copyright and GAI remain open to judicial interpretation, with the most prominent being:

Abby, 1-19-22, Medium, “Copyright Law & Startup Innovation: Policies That Matter and Where They May be Headed,” https://engineadvocacyfoundation.medium.com/copyright-law-startup-innovation-policies-that-matter-and-where-they-may-be-headed-dea034904e25, accessed 7-9-24, CT]

Fair use and interoperability: Some big companies would like to expand the universe of what software is protected by copyright and which development activities constitute infringement. If that happened, it would prevent startups from using fundamental software development tools, expose them to new litigation risks, and make it harder to launch and compete. But after a decade of litigation, the Supreme Court recently confirmed that developers can use software interfaces — known as application programming interfaces (APIs) — without infringing copyright. The Court held that reimplementing APIs, which creates interoperability and compatibility between computer programs, is a fair use under copyright law.

Abby, 1-19-22, Medium, “Copyright Law & Startup Innovation: Policies That Matter and Where They May be Headed,” https://engineadvocacyfoundation.medium.com/copyright-law-startup-innovation-policies-that-matter-and-where-they-may-be-headed-dea034904e25, accessed 7-9-24, CT]

This week we are reflecting on copyright policy — where it has been, where it might go, and what that means for high-tech, high-growth startups and the Internet users, entrepreneurs, and creators that depend on them. Copyright law, which is supposed to encourage creation and innovation, can also be used as a weapon against progress. And what better time to take stock of that? This week marks Copyright Week, sponsored by the Electronic Frontier Foundation, and the 10 year anniversary of a high-profile protest that stopped two deeply-flawed copyright bills that would have fundamentally changed the way the Internet works. The direction copyright policy takes can have an outsized influence on what startups can (and cannot) do, and policymakers eager to support innovation should keep that in mind.

[Computer & Communications Industry Association, 2017/06, FAIR USE IN THE U.S. ECONOMY Economic Contribution of Industries Relying on Fair Use”, page 23, , accessed 7-8-24] nikoglenn

Students, teachers, and scholars rely on the fair use doctrine daily, in making and using copies and portions of copyrighted works. Litigation brought by the Authors Guild against the Google Books book scanning project led to judicial affirmation of how the digital availability of scholarship and literature enabled by “Google Books provides significant public benefits.” The appellate court agreed, finding that “Google’s making of a digital copy to provide a search function is a transformative use, which augments public knowledge by making available information about Plaintiffs’ books without providing the public with a substantial substitute for matter protected by the Plaintiffs’ copyright interests in the original works or derivatives of them.

[Computer & Communications Industry Association, 2017/06, “FAIR USE IN THE U.S. ECONOMY Economic Contribution of Industries Relying on Fair Use”, page 22, , accessed 7-8-24] nikoglenn

Balanced copyright is essential to the media, which frequently quotes and reproduces copyrighted works without license in the course of reporting stories. Journalists also report on factual information, depending on the well-established copyright limitation that mere data and facts are not capable of receiving copyright protection. Media accounts also often rely on reproducing existing reporting. The Newspaper Association of America told the House Judiciary IP Subcommittee during its copyright review that “the ‘fair use’ defense, which draws a distinction between infringing and non-infringing uses of copyrighted material, is a critically important issue for the news industry in the digital age.”

[Computer & Communications Industry Association, 2017/06, “FAIR USE IN THE U.S. ECONOMY Economic Contribution of Industries Relying on Fair Use”, pages 15-16, , accessed 7-8-24] nikoglenn

Chart 1 illustrates the estimated revenues for the fair use core and non-core industries from 2010 to 2014. Total revenue of fair use industries increased from $4.6 trillion in 2010 to $5.6 trillion in 2014, or by approximately $1.0 trillion dollars. Since 2002, fair use revenues have expanded by $2.2 trillion. Since 2010, the core industry revenues expanded by 4.9 percent on average while non-core industries grew 5.7 percent on average. Overall, fair use revenues expanded 5.2 percent annually. As a result, core industries’ share of fair use revenues declined from 57.4 percent to 56.6 percent.

[Tahir Amin and David Mitchell, 2-24-23, Amin is the Co-Founder and Co-Executive Director of Initiative for Medicines, Access & Knowledge (I-MAK). Mitchell is a cancer patient and Founder of Patients for Affordable Drugs, TIME, “Big Pharma’s Patent Abuses Are Fueling the Drug Pricing Crisis,” , accessed: 07-08-24, ES]

To fully grasp drugmakers’ vehement pushback on any attempts to reduce drug prices, it’s important to pull back the curtain on the industry’s ongoing anti-competitive practices to see what else is really at stake. Patent monopolies on 7 out of 10 of America’s top selling drugs should expire this decade. This means drugmakers stand to lose billions if—and when—lower-priced generic alternatives are allowed on the market. But unless America wises up to the industry’s under-the-table patent games, drugmakers will continue to have free rein to extend their patent protection, delay competition, and keep the cost of life-saving medicines sky high.

[Nick Skillicorn, ideatovalue.com chief editor and founder, 8-31-16, Inc., “How the Current Patent System Actually Hurts Inventorsm,” , accessed: 7-11-24, ES]

Many of the world's most forward-thinking companies still heavily support the patent system. For example, IBM spends more than $6 billion a year on R&D, and has an in-house staff of more than 370 patent lawyers. And many large companies have recently spent billions buying up patent portfolios to protect them from lawsuits by other corporations, like how Google bought Motorola for $12.5 billion, predominantly for the approximately $4 billion worth of patents it possessed around smartphone technology.

Pharmaceutical companies have become adept at “gaming” the patent system to extend exclusivity and monopoly power to maximize profits. Tactics like “evergreening” (making minor modifications to existing drugs to obtain additional patent protections), “patent thickets” (filing many different patents on different aspects of a single drug), and “product hopping” (introducing a new version of a drug as a patent is expiring and encouraging doctors, pharmacists, and patients to switch to the updated version) are commonly used to extend monopolies even after the key patent expires.

Celgene’s blockbuster cancer drug Revlimid is a prime example of this practice. Although a key patent expired in 2019, the drug will not see real competition in the marketplace until 2026. This is because Celgene, now a subsidiary of Bristol Myers Squibb, has been able to prolong the drug’s exclusivity by creating a patent thicket around it. The company filed for an additional 206 patents on the drug—117 of which were approved. The costs of such patent thickets can be substantial to consumers and the health care system: The price of Revlimid increased from $6,000 per month in 2002 to $24,000 per month in 2022, resulting in a total estimated cost of $45 billion for Americans.

Skyrocketing prescription drug prices remain a pressing political issue. Polls show that a large majority of voters in both parties support efforts to reduce drug prices, and President Joe Biden’s reelection campaign highlights his administration’s efforts to do so under the Inflation Reduction Act.

A major factor driving higher drug costs is the patent system, which grants pharmaceutical manufacturers a 20-year exclusive right to “make, use, sell, and import” their products. Although the government originally established the patent system to “promote the Progress of Science and useful Arts,” many patents are now deployed to protect and extend monopoly power. In the case of pharmaceuticals, complex patent strategies are regularly implemented to keep competitors and low-cost generics out of the market for as long as possible to maximize the profits of blockbuster drugs. Given this ongoing misuse of the patent system, any proposed changes to patent policy must be evaluated carefully to ensure that they deter, rather than reinforce, such practices.

[Ryan Cooper, 6-6-23, Prospect managing editor and The Week national correspondent, The American Prospect, “How Big Pharma Rigged the Patent System,” , accessed: 07-07-24, ES]

Finally, the broken patent system also provides a toxic incentive for pharmaceutical companies. The ability to extract year after year of hyper-profits from a handful of blockbuster drugs pushes companies to spend heavily on drug modification and lawyers who’ll protect their patent monopoly instead of investing in genuinely new drug research. In 2021, Keytruda alone made up 48 percent of Merck’s profits; Eylea 48 percent of Regeneron/Bayer’s; and Humira 40 percent of AbbVie’s. Feldman’s research found that once a drug company starts down the patent abuse road, it tends to rely on it more and more as time passes.

[Ryan Cooper, 6-6-23, Prospect managing editor and The Week national correspondent, The American Prospect, “How Big Pharma Rigged the Patent System,” , accessed: 07-07-24, ES]

As usual in health care matters, the U.S. is a huge outlier on drug patents compared to peer nations. Returning to Humira, AbbVie obtained 6.4 times more American patents than it did in the European Union, and its patents ran out in October 2018 on the continent. Another more than four years of patent protection in the U.S. market secured an additional $68 billion in monopoly profits.