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Semiconductor Chips and Stem Cells: New Wine for New Bottles?

Semiconductor Chips and Stem Cells: New Wine for New Bottles? . Professor Simone A. Rose WFU School of Law Copyright 2007. Which one does not belong?. Semiconductor Chips/ Integrated Circuits.

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Semiconductor Chips and Stem Cells: New Wine for New Bottles?

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  1. Semiconductor Chips and Stem Cells: New Wine for New Bottles? Professor Simone A. Rose WFU School of Law Copyright 2007

  2. Which one does not belong?

  3. Semiconductor Chips/ Integrated Circuits • Thin slices of semiconductor material (typically silicon) containing layers of electronic switches connected by thin wires. Switches are functional transistors – (thousands of ‘switches’ on each chip). 2 types (discrete and integrated circuit)

  4. Permanent memory (Read Only Memory “ROM” Chips) Temporary memory storage ( Random Access Memory “RAM”) Central processing units (CPU’S) IC’s found in computers, cell phones, household appliances, automobiles Functions of Semiconductor Chips (electronic circuitry)

  5. Integrated Circuit Types • Memory components (data storage) • Logic Devices • Combination of memory components and logic devices • 1971 Intel microprocessor contained only 2300 transistors, by the year 2000, Pentium processor contained 55 million transistors (2 million % increase from first generation)

  6. What to ProtectUnder Federal I.P. Law • Utility/Design/Chip Product (Patentability Problem) After 1st chip design patented, later designs failed to meet §102 Novelty/ §103 Non-Obviousness requirements. See: 35 U.S.C. §§102-103

  7. Copyrights for Technical Drawings/Mask Works? • Topography of Chips Fixed in Composite Drawing • Initially copyrightable but couldn’t resolve conflict between protecting mask work and §101’s express prohibition of protecting the “utilitarian aspect of pictorial graphic and sculptural works, unless “pictorial, graphic or sculptural features can be identified separately from or are capable of existing independently of, the utilarian aspects of the article”. 17 U.S.C. §101 (1984)

  8. Chips manufactured by laying stencil (mask) on top of a layer of semiconductive material, then etching or imprinting circuit patterns on layer. Problem: Even if “mask” contains copyrightable expression, can’t separate expression from utility…(no actual or ‘conceptual’ seperability) See: e.g. Mazer v. Stein, 347 U.S. 201 (1954) What is the problem with copyrighting “Mask Works”?

  9. Key Questions: • How to preserve the incentive (prevent piracy) when protecting semiconductor chips, while providing adequate access. • We need a new “social bargain” when semiconductors are a poor fit for the patent/copyright bargains. • (See: Pamela Samuelson, “Creating a New Kind of Intellectual Property: Applying the Lessons of Chip Law to Computer Programs” 70 Minn. L. Rev. 471, 511 (1985))

  10. Why Bridge the Gap? • Semiconductors are “building blocks” for computer technology • Per House Report: Semiconductors at “Vortex” of new information society • Designers needed incentive since new chip design both costly (80 million) & time consuming (years) – once new chip design hits market, can be duplicated for $50K or less. See: H.R. Rep. No. 281, Cong, 2d Sess. (1984)

  11. Problem: Sui generis IP Legislation • Sui generis IP legislation should be reserved for “exceptional” cases since current patent and copyright law covers a wide array of subject matter and addresses the constitutionally mandated balance of providing exclusive rights for limited times to promote the “progress of science and the useful arts”. • U.S. Const. Art 1,§ 8, cl. 8

  12. Legislative Balance Between Public vs. Proprietary Rights • How do we establish that proposed sui generis legislation provides an adequate “balancing of equities between the public interest [enriching the public domain] and proprietary rights [exclusive property rights as an incentive to innovate]”. • See Kastenmeier and Remington “The Semiconductor Chip Act of 1984: A Swamp or Firm Ground”, 70 Minn. L. Rev. 417 (1985)

  13. Kastenmeier / Remington4-Part Test For sui generis Legislation • Establish that new legislation will fit harmoniously within the existing legal framework; • New legislation must meet a high level of definitional clarity; • Must pass a comprehensive cost/benefits analysis (clearly identifying who bears loss); and • Establish how new legislation will enrich or enhance the aggregate public domain.

  14. Enter: Sui Generis Protection for Semiconductors • Semiconductor Chip Protection Act of 1984 (“SCPA”) §17 USC 901-917 (1984) (not bound by constraints of patent or copyright - containing different limitations tailored to meet incentive/access issues relating to this subject matter).

  15. Exclusive Rights/Limitations of Semiconductor Chip Protection Act of 1984 • a. Right to make, import and distribute chips embodying mask work designs • b. 10 year term for ‘original’ designs. Commercial life of chip is 2-5 years, so term commensurate with recouping cost and entry into the public domain for access.

  16. Exclusive Rights/Limitations (continued) • c. No derivative work right, instead can “reverse engineer” protected chip design as long as new chip is significant change from protected chip (“forward engineering”). • d. Must register design within 2 years of 1st commercial exploitation (statutory bar).

  17. Exclusive Rights/Limitations (continued) • e. Can reproduce solely for the purpose of teaching, analyzing or evaluation of concepts or techniques employed in the mask work or the circuitry of the integrated circuit.

  18. SCPA Passes K-R 4-ProngSui Generis Test • Placing Semiconductors within Copyright Act not in harmony with Act’s express exclusion of utilitarian subject matter, but since sui generis protection limited to ‘original’ mask works and contains ‘reverse engineering limitation it remains in harmony with the “existing structure of copyright.”

  19. SCPA Passes K-R 4-ProngSui Generis (Prong 2) • SPCA clearly defines what is and is not protected in statute.

  20. SCPA Passes K-R 4-ProngSui Generis (Prong 3) • Cost /benefit – 10 year exclusive right encouraged innovation and protected against chip piracy. Also, although chips removed from public domain for 10 years, reverse engineering allowed as long as can establish it was for ‘forward engineering’ purposes, thereby enriching public domain.

  21. SCPA Passes K-R 4-ProngSui Generis (Prong 4) • Public Domain further enhanced by limiting exclusive rights to ‘original designs’, registered within 2 years of commercialization. By increasing incentive to innovate, public gets benefits of new products created by protected technology and at end of limited term, public domain enriched by receiving work. Also, reverse engineering exception allows public to access and copy chip as long as result is ‘forward engineering’ to create a new and improved product.

  22. Split views on overall effectiveness of SCPA • Some cite single published infringement case as evidence of statute’s ineffectiveness-ambiguity in reverse engineering provisions (despite registration of chips by most designers). • Others argue exponential technological advancements (advanced designs patentable and difficult to inexpensively pirate) and international trade issues rendered SCPA obsolete. • Others cite adoption of SCPA like statutes by other countries and TRIPS, reduction in chip piracy, growth of semiconductor industry and second-source licensing agreements as evidence of SCPA’s overall beneficial effect on the market.

  23. Applying the ‘Sui-Generis’ Lessons of the Semiconductor Chip Protection Act to Stem Cells

  24. Stem Cells Stem cells need different social bargain than patent law provides Semiconductor Chips Semiconductor chips needed different social bargain than copyright and patent law provided Stem Cells – Semiconductor Chips

  25. Stem Cells Stem cells are one of today’s “basic biological building blocks” (exist at the earliest stage of development and grow into variety of types.) Benefits: Used to replace defective cells, used to research, treat & cure host of diseases. Semiconductor Chips Semiconductor chips are computers (information technology) “basic building blocks” Stem Cells – Semiconductor Chips

  26. a. Adult stem cells – “multipotent” – can turn into several different cells within basic cell type. e.g. bone marrow can turn into numerous types of blood cells. b. Embryonic stem cells (controversial, but more powerful useful) “pluripotent” – can turn into all of the body’s cell types except sperm and egg cells. Develop 5 -14 days after egg fertilized, found in interior of blastocyst. Two Main Stem Cell Types

  27. Therapeutic Cloning(somatic cell nuclear transfer SCNT) • Allows scientist to produce embryonic stem cells without using sperm to fertilize egg (still in developmental stages-but hope for the future); • 2007-Dr. Robert Lanza (Advanced Cell Technology) announces production of 3 new stem cell lines without destroying parent embryos; • 1/9/2007-Dr. Tony Atala (WFU) proposes alternative ‘ethical’ source of stem cells from fluid surrounding the fetus.

  28. 1. Patentability questionable under ‘products of nature’ ( but acceptable under Diamond v. Chakrabarty). Also, morality issues: morality requirement no longer read into Patent Act, but is basis for PTO rule barring human clones (should morality rule return to common law/statutory scheme?). See: Margo A. Bagley Patent First, Ask Questions Later: Morality and Biotechnology in PatentLaw, 45 William & Mary Law Review 469 (2003) Patent “Bargain” Defects

  29. Wisconsin Alumni Research Foundation (WARF) Thompson Family of embryonic stem cell line/methods patents recently held unpatentable upon reexaminnation. (3/30/07) (5/31- WARF limits claims to pre-implantation embryos & files response; 6/29-PUBPAT ctrs with comments). Why? §102 novelty+ §103 obviousness Does KSR v. Teleflex strengthen PTO’s position? * same problem semiconductor chips inventors faced after 1st patent issued. Patent “Bargain” Defects(continued)

  30. 3. “Anti-commons” problem of denying access to basic research building blocks (20 year patent monopoly with minimal experimental use provides insufficient access for research & development, leads to licensing abuse/high transactions costs) 4. Utility - often hard to define specific utility with embryonic stem cells since “upstream” research tools Patent “Bargain” Defects(continued)

  31. “Sui Generis” Stem Cell Protection Act • Why? Like semiconductor chips - need to “bridge the gap” and preserve incentive to create/invent methods for isolating purified stem cell lines (only 21 fully developed embryonic lines presently accessible via NIH stem cell registry), while providing appropriate level of access to methods and lines for comparable “upstream research” and “downstream” product/process development.

  32. Sui Generis Stem Cell Protection Act (continued) • Exclusive Rights/Scope • ‘Novel’/original – what basic standard? (eliminate non-obviousness?) • Term (5-10 years) must register within 1 year of publication/on sale. What time is needed to recoup investment? • Exclusive right to reproduce, manufacture import, sell , distribute (similar to semiconductor chips) (should it be a negative right? May depend on the scope of subject matter).

  33. Sui Generis Stem Cell Protection Act (continued) • Royalty free compulsory license for “upstream” research. Down stream (commercial research/products require conventional material transfer agreements (“MTA’s”) <or> • Well rounded “experimental use”: exception allowing practice of isolation methods, access to lines for upstream research or non-commercial “downstream” research, as long as ‘forward engineering’. (As with present common law exception, may be difficult to draw lines)

  34. K-R Sui Generis TestApplied to Stem Cells (Prong 1) • Proposed stem cell legislation would remain in harmony with IP framework (social bargain) since novelty and utility requirements would remain. In exchange for allowing obviousness, the Act would limit the exclusive right to 5-10 years. Also, would include broad experiment use / compulsory license.

  35. K-R Sui GenerisTestApplied to Stem Cells (Prong 2) • Proposed stem-cell legislation would be defined with clarity.

  36. K-R Sui Generis TestApplied to Stem Cells (Prong 3 &4) • Cost /Benefit: The 10 year exclusive right is a limited ‘monopoly’ which hurts the public domain. However, the threat of lost investment capital, coupled with the high cost of research and development mandate some limited exclusive right to preserve the innovation incentive. • According to most experts, we are 5-10 years away from safe and effective stem-cell therapy, so essential to provide innovation for funding upstream stem-cell research. Public domain immediately enriched by having access to stem cell technology for forward engineering /experimental use. (cont.)

  37. K-R Sui Generis TestApplied to Stem Cells (cont.) • Long term public enrichment by placing technology in the public domain at the end of the 10 year term.

  38. Other Options for Stem Cells • a. “Petit” Patent (Remain in Patent Act, and shorten term, have special “stem-cell only” limitations. Problem - won’t eliminate, utility, non-obviousness and morality issues. • b. Eliminate Federal IP Property Rights for stem cells and replace with State/Federal Funding programs to provide incentive. Problems – what about infringement? Is this a sufficient social “bargain”? • c. Amend the Patent Act to include patent pool/compulsory scheme licensing for stem cells and other upstream research (Federal Circuit and Big Pharma oppose this option).

  39. Problems/Issues (continued) • Is California a model worth emulating ($3 billion investment to start California Institute of Regenerative Medicine (“CIRM”)? Can other states afford this level of monetary investment/man power? • Lack of uniformity if state controlled funding system. • Presenty venture capitalists believe federal patent rights critical to success of bio-tech industry as a whole (investors look to strong patent protection as basis for making investment). • What is the necessary incentive for research/development of stem cells? • Scientists and institutional perspectives may differ.

  40. Thank You! • I’d love your input! • Please e-mail me at rosesa@wfu.edu

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