Growth in IP and patents is expected to continue into 2023. New innovations and technologies present exciting opportunities across the globe, but also challenges in the increasing complexity of the IP landscape and protection of IP assets. We are already seeing a variety of unexplored and untested issues surfacing in legislative and regulatory advancements from recent innovations.
1. Continued Growth in the Value of Intellectual Property Across Industries
One of the core trends in the IP world is the continued growth in the economic value of IP across a wide range of industries, including technology, healthcare, and AI. The USPTO reports that IP-intensive industries now account for more than 40 percent of the U.S. GDP. Companies are investing more in IP and recognizing its importance as a key driver of business success. We can expect to see continued growth in the number of patents, trademarks, and copyrights being filed and granted in 2023 as companies abide to establish, protect, and develop their rights.
The continued growth in the value of IP presents both opportunities and challenges for businesses. On the one hand, effective IP protection can lead to significant financial returns and a competitive advantage in the modern marketplace. We also see the potential for more licensing and collaboration agreements. Companies that hold strong IP portfolios can leverage these assets to negotiate favorable licensing agreements (a potentially valuable source of revenue and business growth driver).
On the other hand, IP protection is a complicated, fast-moving area. Many companies are attempting to establish and protect their own interests (which may not always yield the desired outcome). The cutting-edge technologies being created and leveraged now bring about a variety of unexplored and untested issues–especially surrounding AI and open-source software. Businesses should implement effective IP strategies—including patent strategies—to position themselves favorably moving forward.
2. Innovation Across Industries (Tech, AI, VR, Renewable Energy)
Innovation is constantly re-shaping the landscape of IP and 2023 looks to be no exception. The growth of AI, VR, renewable energy, IoT-based automation, and other emerging industries push the boundaries of existing intellectual property laws, and new regulations will likely emerge.
From cutting-edge creative AI models like the DALL-E image generator and ChatGPT chatbot, to everyday applications like autonomous vehicles and virtual assistants, AI is rapidly expanding its reach and influence. And the numbers don't lie: AI is the fastest-growing major technology area in global patent filings, with an average annual growth rate of 28% from Q1 2018 to Q1 2022, according to a recent report by GlobalData. The most popular areas for AI patent filings include machine learning (ML) models, speech recognition, image analysis, and natural language processing systems. We’re also seeing rapid AI patenting in areas like robotics, medical devices, bioinformatics, drug discovery, and more.
But even as AI continues to grow in importance, legal questions need to be resolved. For example, with the rise of ChatGPT, who actually owns the content generated by ChatGPT? Can AI themselves be listed as inventors on patents?
As of now, the answer is no. Thaler v. Vidal, 43 F.4th 1207 confirmed in 2022 that an AI system does not qualify as an "individual" under the Leahy-Smith America Invents Act (AIA) and therefore can’t be listed as an inventor on a patent. Still, the question of whether inventions made by humans with the assistance of AI are eligible for patent protection is up for debate. As innovation continues to expand and more AI patent applications are filed, we can expect to receive clearer patent law distinctions surrounding the issue of AI and inventorship.
Another key sector to watch for in 2023 is the IoT industry. Patent filings have doubled just within the last five years. Industry leaders such as Siemens AG and General Electric Co lead the way as new patent filings continue to increase in this fast-growing industry. IoT's three main sectors with the highest growth rate in 2023 are IoT security market ($35.20 billion), digital twin market ($16.5 billion), and machine-to-machine healthcare market ($2.35 billion).
Of course, more innovation means more commercial opportunities for businesses and entrepreneurs within these industries. There are also plenty of IP opportunities for companies that can innovate in more traditional sectors, from agriculture to retail. Just looking at AI patent applications, the USPTO reported an increase of more than 100% from 2002-2018 that spread to over 42% of all technology subclasses by 2018. In 2022, international PCT filings hit a total of about 278,100–the highest number in history, and a clear continuation of the trend in international patent filings. Unsurprisingly, patent AI filings reflect the emergence of new AI technologies.
3. An Increase in Patent Litigation
With all the increase in patent filings, patent litigation has also been on the rise in recent years. Since 2017, the number of patent lawsuits filed has been gradually increasing. What's driving the increase?
Increase in patent infringement cases: New advancements in technology means that businesses are creating new products and services (some of which have the potential to infringe on existing patents). This has led to an increase in patent infringement cases and subsequent patent litigation.
Rise of non-practicing entities: Non-practicing entities (NPEs) are companies that acquire patents solely for the purpose of licensing or enforcing them. These entities have become more prevalent in recent years and are a significant driver of patent litigation.
Availability of litigation funding: Increased funding for litigation has allowed plaintiffs to finance patent litigation cases without incurring the high costs of litigation.
Complexity of technology: Technology and new complexities have made it difficult for business to determine whether they are infringing on existing patents, leading to an increase in patent disputes and litigation.
Globalization of the economy: With the rise of the global economy, businesses are competing on a global scale, which has led to an increase in the number of patent disputes and litigation cases.
The increase in litigation poses a risk for businesses and individuals alike, especially for start-ups and other companies in tech and other innovative industries. The fact is that patent litigation can be costly, time-consuming, and distracting. Beyond that, the complexity of patent law and the interpretation of patents can make litigation unpredictable. It’s not uncommon for the same patent to be interpreted differently by different courts or judges. A proactive approach is a must.
4. Key Patent Law Decisions
Amgen Inc. v. Sanofi: Supreme Court to Review Enablement Requirement of 35 U.S.C. § 112
One key case with patent law implications to watch for in 2023 is Amgen Inc., v. Sanofi, Aventisub LLC. This recent case brings about major implications for future patent law with the Supreme Court’s set to clarify the ‘enablement’ requirement of 35 U.S.C. § 112. Is enablement governed by the requirement that the specification teach those skilled in the art to “make and use” the claimed invention? Or does it enable those skilled in the art “to reach the full scope of claimed embodiments” without undue experimentation—i.e., to cumulatively identify and make all or nearly all embodiments of the invention without substantial “time and effort”?
Amgen v. Sanofi is a battle over patents related to a groundbreaking and innovative drug known as Repatha, a treatment for high cholesterol. The case concerns Amgen’s claims to a functionally-defined genus of antibodies, which Sanofi alleges lacks enablement under Section 112. In the biotech and pharma sectors, functional claiming has been used to broadly claim antibodies according to the target they bind, rather than narrow elements of the protein structure or binding site. Amgen provided 26 examples of amino acid sequences within the defined genus, but the Federal Circuit held that the bounds of the invention beyond those 26 examples were unclear.
Biotechnology firm Amgen sued Sanofi—as well as its partner firm and its Regeneron—for alleged patent infringement. In countering the lawsuit, the defendants argued that the patents in question were invalid and that the companies used their own tech to develop the drug. The Federal Circuit affirmed the district court's ruling that Amgen's patent was valid and enforceable. It was held that the patent was enabled because it provided "a reasonable amount of guidance" to enable a person of ordinary skill in the art to make and use the claimed antibodies.
A group of 14 law professors characterized the Federal Circuit’s requirement as an “impossible burden" to inventors. Others echo concern that it “effectively demands that inventors eliminate any scientific uncertainty or experimentation incidental to carrying out an invention.” On the other hand, some have argued in support of the Federal Circuit’s holding (and against functional claiming), saying that “[s]uch naked functional claims . . . preempt the future inventions of others.”
The court's decision could determine whether patents can be issued for products based on their function, as Amgen argues, or if they need to be based on a specific chemical structure, as Sanofi and Regeneron contend. The Court will clarify the standards for enablement of functional claims, and the scope of experimentation needed to support them. Biotechnology and pharmaceutical companies should keep a particularly keen eye on this patent law case.
5. New Legislative and Regulatory Development
Will there be new legislative or regulatory developments that affect IP law in 2023? More than likely, yes. Aside from Amgen, Inc. v. Sanofi, Aventisub LLC, the Supreme Court could decide a new determination of patent eligibility with Tropp v. Travel Sentry, Inc. or Interactive Wearables, LLC v. Polar Elctro Oy. There is lingering uncertainty surrounding patent eligibility and what proper application of the two-step framework from Alice looks like. Future guidance is to be expected.
The USPTO is also recognizing the importance of patenting AI and has recently launched an AI and Emerging Technology Partnership as of June 2022. They have also continued to provide more patent eligibility guidance to help patent-eligible claims protect AI and ML inventions in patent applications.
President Biden has also recently signed the "Protecting American Intellectual Property Act of 2022” (PAIP) into law. The new PAIP act complements the existing EEA, DTSA, and Section 337 in protecting US trade secrets from misappropriation by individuals and entities worldwide. It authorizes the President to impose sanctions (5 or more) against individuals & entities that engage in or benefit from theft of U.S. trade secrets (PAIP § (2)(b)). The act also requires the President to report to certain congressional committees every six (6) months (annually thereafter) about any foreign person who knowingly engaged in, or benefited from, significant theft of US trade secrets.
PAIP's impact is still awaiting, and we can't predict how things will play out until we see how the government wields its authority to punish individuals and groups across the globe. However, this new act gives the President considerable discretion in determining if a person meets the PAIP criteria (absent any form of judicial finding), and waiver authority hard-wired into the statute itself.