EP 521- Recent Developments in Patent Law Part Two

Episode Notes

Transcript

Announcer:

Welcome to The. Jury. is Out a podcast for trial attorneys who want to sharpen their skills and better serve their clients. Your co-hosts are John Simon, founder of the Simon Law Firm Tim Cronin personal injury trial attorney at the Simon Law Firm and St. Louis attorney Erich Vieth.

Erich Vieth:

Welcome to another episode of The. Jury is Out. I’m Erich Vieth. I’m here with Tony Simon, Rudy Telscher and Ben Clark. Welcome back for part two of recent Developments in Patent Law. Excited to be here.

Tony Simon:

Thank you. Thank you very much. AI is not magic

Erich Vieth:

. It’s zeros and ones. It’s a program, correct, but it’s not a human but it can’t

Ben Clark:

But it’s not a human

Erich Vieth:

Can the current framework handle that or do we need new tools to handle ai?

Rudy Telscher:

That’s a great question. Right now we’re going to use the current framework for it, but I think as it starts to evolve, you’re going to see Congress have to think about whether we need new rules that govern what patents you can get, what copyrights you can get to protect ideas, inventions where the machine is involved with the human, what’s that going to look like? That’s going to be really interesting. Right now we’re using the current tools and the courts are addressing it, starting to address those issues,

Tony Simon:

But is the issue of whether a computer can be an inventor, is that something that could be fixed with legislation? I don’t know what the holding was, whether it was constitutional issue or was it just the current patent statute says

Rudy Telscher:

Constitutional, it says

Tony Simon:

Person. Yeah,

Rudy Telscher:

So that’s how they interpreted it. So

Tony Simon:

You’d have to amend the constitution

Rudy Telscher:

And where the patent office is coming down on it right now as they say that, if you can show that you’ve got a significant contribution machine was helping you, but you were involved, if you can say you had a significant contribution, you get a patent still even though the machine helped you get there, but I think those lines are going to be fuzzy. I’ve yet to see a case in the courts on that. So all we’ve dealt with in the court so far is the high level idea that a machine can’t be an inventor by themselves. When you start to dig in, you get into, and again a bunch of trial lawyers that are listening to this, you’re going to get into discovery and now I’m going to start taking the deposition and somebody’s going to say, yes, I use this software that helped me invent and now the issue, did you make a significant contribution?

What does your paper trail look like? Can you prove that you made a significant contribution? And so we’re going to see those cases get litigated. The other for the trial lawyers I think is fascinating for all those people out there looking for new area of law, you’re going to have AI companies and say, I’m an AI company and I’m going to automate a process and say it’s petroleum manufacturing and now one of these petroleum plants blows up. And the question is, was it the AI that went wrong? Was it the integration of the AI or was it something at the site? So there is going to be, and one of the problems you have is chat GT right now is the big platform. That’s the one everybody knows and even Sam Altman who owns OpenAI, which is chat, GPT says you can’t reverse engineer how the software got there. If you go back traditionally we can look at the software code and go, oh, this is how it got there. The software’s at fault right now. We can’t even reverse engineer and know how the computer got to the decision that it made because it’s simulating neurological behavior. It’s not thinking like a human, but it’s simulating that neurologic behavior and we can’t reverse engineer it at this point. So it’s going to be fascinating to see how that plays out in the course. When I

Erich Vieth:

Was a teenager, pong was this video game and I’ve lived through all this. This is incredible to hear in these disputes, can we can issue a subpoena to the ai? Should we take a deposition of the ai, put a terminal at the end of the table and ask you questions? That is funny. How do you handle that when everything is so mishmoshed together and can’t be, like you say, reverse engineered, where does this go?

Rudy Telscher:

Well, and Sam Altman does predict and he tends to be the genius, him and Bill Gates like to have dinner together and Microsoft’s the biggest investor in OpenAI, but Sam Altman predicts in three years we’ll be able to reverse engineer how these networks got to their decision, but we’re not there yet.

Erich Vieth:

So maybe you need AI to reverse engineer the ai.

Rudy Telscher:

It may be,

Tony Simon:

I read an article the other day on a GI, artificial general intelligence, which is the next step where artificial intelligence surpasses human intelligence and what do we do?

Ben Clark:

One of the reasons why, the thing I was talking about before that I didn’t have the name when I was talking, it’s digital therapeutics or digital therapeutical if you want to do a search on this is so important particularly to big pharma, is that a bunch of the most important pharma patents are expiring. So for instance, by 2030 there are almost 200 drugs that are covered by patents. That exclusivity is going to be lost and 70 of them are like big name drugs.

Erich Vieth:

Give us a couple examples of the big drugs

Ben Clark:

Coming up. Yeah, you’re talking about Mercks Keytruda, you’re talking about Eli Lilly’s Trulicity. You’re talking about Bristol Meyer Squibb has three of ’em. They’re blockbusters, Opdivo. Their exclusivity is going to be lost and it’s estimated and we’re talking billion dollar revenue implications here when the competition comes in. Well, that’s why one of the reasons why they’re thinking so hard about getting a foothold in this ai, the self-diagnostic that I was talking about before, traditionally pharma is like, Hey, we will cure what ails You go into the doctor, you tell ’em you have gout, you have tell ’em whatever. You get medication like a plan of treatment. Now it’s going to be do I need to pay for the medication? If I can get a self-diagnostic online, something I can do with my iPhone, well, who’s going to make the money from that diagnostic piece? Everybody wants it.

Some of the big tech companies, patents are being invalidated under Alice. Big pharma’s patents are expiring 46% revenue decline for the 46% for the 10 biggest pharma companies over the next decade. And so I keep bringing up AI here, but the fight for who monetizes AI, both in terms of products and in patent portfolios is where so much of the action is that. And now that there was a case recently where the Supreme Court indicated that a biotech patent, which what was it case? I’ve got it right here. The biotech patent validities are now being called into question under the enablement document doctrine. And that has caused a great hubbub. Well that’s directed right at Big pharma too. And so my point being big pharma and big tech are the two biggest segments, both patents in terms of revenue. I mean they make money than and employ and touch more people than most small or medium-sized countries. Each of them do the pharma piece. They’re really having to redirect and figure out how they’re going to keep generating revenue because patents are expiring. How can they get into the AI piece?

Erich Vieth:

Have any of you tried co-counsel, the attorney AI for a week? I did a trial and it was stunning. I couldn’t believe what it was doing. And I was wondering are there equivalent programs for doctors yet?

Rudy Telscher:

Yeah, it’s out there where they’ve got artificial intelligence that’s helping doctors. One of the companies GE Healthcare, GE EHC is the stock symbol for that. They’re one of the companies that’s out there. There are, there’s software that’s helping, as Ben said, drug discovery. So they’re predicting that the drugs that humans on their own would’ve taken another decade or so to come up with. They’re going to come up within a year or shorter. Now they still have to go through FDA testing and all of that. There’s already been lots of drugs developed using ai, but they still have to go through all the traditional testing. They don’t just get approved just because their AI developed. So they’ll get tested and those will probably start hitting the market probably in the next three to five years.

Erich Vieth:

I’m thinking of the case where you get a rare disease from a flea that exists only in the Amazon and your choice would be do I want a flesh and blood doctor or do I want an AI system that has instant access to VARs, the VARs system or all this other data out there? I’m thinking, well, clearly I don’t not want a doctor, but I want a doctor who’s going to use these tools.

Rudy Telscher:

That’s what you want. The answer is both. And I speak on artificial intelligence around the country a lot and what I like to say is artificial intelligence will not replace lawyers. It will replace the lawyers that don’t know how to use artificial intelligence. It will replace the doctors that don’t know how to use artificial intelligence. When you talked about co-counsel, and we have a lot of, again, trial lawyers on here, I was faced with a very complicated Daubert motion for my damages expert in a case. He had a $50 million claim. Normally I just let my team members run with it, but there was enough on the line that I wanted to give it a look. I had an expert, got to pose twice in the case for reasons that you guys can probably figure out. Judge ruled that we had to do another round of depths.

I had two fact depositions feeding into it. Had about 800 pages of depositions from my fact experts and the damage expert sitting in my hotel room six o’clock at night. I’m on the road. I’m like, eh, nothing going. I get into co-counsel takes me five minutes to download these depositions into co-counsel within 20 minute and ask you, do you want a high level summary, a middle level summary or a detailed as you know because you use it. I said detailed. I was going to have to try the case in about four months anyway, so I wanted to start digging in even though I knew within these depths there’s probably far less on this issue that I needed, but I would just wanted to read ’em all. It took about 15 minutes for it to create four 20 page summaries of 800 pages of deposition. So now I’m sitting at about six 20 in my hotel room and I’ve got four summaries.

Now they’re dense summaries. I mean they’re 20 pages each. So it’s some reading, I’m reading ’em all, getting a sense of the case. I now highlight when I get to the stuff that matters to me, I’m not going to take AI’s word for what it says. I go look at the depth transcripts to make sure it’s accurate, how it’s summarizing spot on better than my associates. But I get a summary. I’m like, that sounds great. I go look and I’m like, well, that wasn’t quite as loft. So now I’ve got that. I look at the depth testimony now it’s probably 7 38. I’ve got what I think we need to do in view of all the testimony that I’ve read and the arguments from their side. And I write an outline, takes me about an hour to write that and I send it to the team.

I’m like, roll Took me three hours to go from start to finish. What would that look like in the old days to sign those debt summaries to one, maybe three associates, it would’ve taken a week for those to come back. Would’ve cost the client 20, $30,000 to get those debt summaries. And then I got to look at ’em. Then I got to figure out what they’ve inflated. So it’s going to be more efficient and I think it’s going to lead to one of, I think the more interesting topics is what’s the practice of law going to look like from a billing standpoint For Tony, it’s contingent fee. A lot of lawyers that are listing probably contingent fees, so that probably doesn’t affect them. It just makes contingent lawyers more efficient, makes it easier to take cases where the amounts are lower because now you’re more efficient. But for Ben and I who bill by the hour, I predict you’re going to see the hourly rate go by the wayside in the next five years because AI will drive the cost down where it’s going to be more productized, not a word, but it’s going to be more of a product that we charge a fee for versus by the hour is what I see.

Erich Vieth:

Like a flat fee.

Rudy Telscher:

Flat fee, yep. That’s what I predict.

Erich Vieth:

And from the outside looking in, it looks magic when you ask, I fed a 60 page complaint and federal complaint. It was a race discrimination case and I went through a number of levels of questions and my final one was, if I depose this person, what are some questions I should ask her?

And it came out with 20 good questions. I said, give me some more. And it gave me about 20 more good questions. And I thought, okay, it looks magic. And then the question is, as you and Ben are raising, who wants to control this market where it is like a magic pill? It’s like I’m a lawyer, I want to be smarter. What would you pay for that pill? Let’s say I invent AI program that does all these magic things, but that AI assimilates, it’s like the Borg from Star Trek. It can’t do it by itself. It gets information from somewhere. So is there an intersection between copyright and patent? Where’s it getting this information and can you patent something that’s basically sucking information from who knows where?

Rudy Telscher:

Well, you’ve put your finger on what the biggest issue is, and that’s data. Data is the key to a lot. And so you’re going to see companies, I was recently in a lawsuit with one of the big social media companies and the whole battle was over our client going in using chatbots to get their data and the battle of we can’t get their data. So the data is king. You’re going to see lots of battles over data. Data is not protectable under the patent or copyright laws. You can only own data by keeping it secret really is what that boils down to. Otherwise it’s not protectable. So there’s going to be a big battle over data. You’re right that the software on its own can’t do anything. It needs information, but it ultimately can derive solutions. What AI software is going to try to do is figure out the best solution to a problem that you’ve defined for.

Tony Simon:

And I’ll say data is not protectable. Copyright protects the expression, but there are some cases popping up here and there where these systems that go out and copy, like the letter that Rudy talked about, if that letter was copied from somewhere that’s copyrighted. And so there are lawsuits that are popping up with respect to these data gathering bots that copy more than just the data. And that’s what the fight’s about.

Rudy Telscher:

A hundred percent. Yeah. So it’s going to be interesting to see what happens in the next three to five years. Because chat GPG, the new version just came out and they already said it’s two times smarter than the prior version.

Tony Simon:

What’s the rule of every seven years that

Rudy Telscher:

Is that rule? Is it every seven or five? It’s something like that. But yes, there’s the rule, like the doubling rule that we something

Tony Simon:

Computers, yeah, we should remember it as engineers, we learned it in college. This all frightens me.

Ben Clark:

If you have to be a good lawyer, you can only be a good lawyer if you do ai, I am going to put myself into the category of bad lawyer. I need a lesson from somebody.

Rudy Telscher:

Well, what they say right now is that what AI is really good at is routine tasks. So taking data, it can do it better, faster, less mistakes than humans. What AI still hasn’t gotten to, and that’s what Tony was talking about earlier with artificial general intelligence, a GI. Right now, humans are still more creative. They can do things that AI cannot do right now, there are definitely things that humans do better than ai. And to Ben’s point, if you were using co-counsel, you got your deposition transcripts quicker, your summary’s quicker, right? But you still the lawyer creativity for how I’m going to approach that Daubert motion, how I’m going to write that opposition to a Daubert motion that creativity is still owned by the humans. That’s still our space.

Erich Vieth:

Okay, let me ask this. Are we getting to the point where are there going to be judges able to understand or much less lawyers? I mean at some point, I don’t know how many hours a week you can work, but to understand, don’t you have to drill pretty deep into these things to be able to present your case? I know you rely on your witnesses and your experts, but this is getting very complex as a lawyer, how do you grasp what’s going on in a way to understand it and present it to a judge who might not have the longest attention span

Tony Simon:

Or to a jury who may have people that don’t have a college education.

Ben Clark:

Every lawsuit is litigation first and content second. And so themes, good guy, bad guy, who’s the corporate cattle wrestler who steals somebody else’s ideas. If you can get the jury foreman foreperson on your side there, the rest of it is sort of secondary. Now, the court of appeals will say, well, wait a minute, but it’s the same. And actually this is a very cynical comment, but the more complicated something is, the more room you have to win based on your own credibility and these sort of basic simple themes. And so as a result, I mean you can put out expert on to lay out a lot of complex stuff and it may make a difference or sometimes juries will go, I don’t understand the word he said, but I like Mr. Telscher.

Erich Vieth:

That’s exactly, Daniel Kahneman is a behavioral economist who came up with an idea called substitution. Well, here’s the principle. People throw you a question you don’t know the answer to. You can’t figure it out. You substitute an easier question and you answer that and you don’t know that you made the substitution. So here’s an example. Is your doctor a good doctor? Oh yeah. And then what you’re thinking of, he’s nice. He shakes my hand, he smiles, he gives my kids candy on the way out. And that’s the question you’re answering to whether he’s a good doctor, which you didn’t touch on any of the diagnostic talents. And I’m wondering whether we’re getting, maybe that is part of what we do as lawyers. We try to win. Of course. And when you said credibility, we keep talking about that in this podcast, if you don’t have credibility, you have nothing. And if you do have it, it might serve for some jurors or some judges as almost like a substitute for the deep complicated issues of a case. But I think you’re right.

Rudy Telscher:

I’ll say however, that judges and juries have been grappling with complex technology cases for a long time. Complicated microchips, complicated pharmaceuticals. I I’m not of the mindset right now, and I could be wrong. Obviously I’m wrong a lot, just ask my wife. But I don’t know that artificial intelligence and what it’s going to do to technology is going to change the level of complexity in a meaningful way from what judge and juries have been handling for the last 30 years. In my view. Again, I could be wrong, but I think you’re going to have to get good experts. You’re going to have to have, as Ben said, you have to have a good story. It’s going to be good trial lawyers. Imagine a world where you said it’s going to be complex. The judge may have artificial intelligence listening to everything you’re saying and almost like a superhuman LawClerk helping the judge understand that case and get to the crux of an issue where the judge can decide it. So I’m not saying that is going to happen, but you can imagine that it could happen. In fact, if I were betting, I bet that it is going to happen.

Erich Vieth:

Back to the Ironman thing, you have this entity that you’re talking to all the time about how to make sense of the world. Maybe we’re going to be to the point where we choose our algorithm. We’re shoppers, we’re consumers, we’re algorithms to guide us through the world. Like a judge might you say a judge might have an AI module helping the judge understand what’s going on in the case, what kind of AI module they have to choose, which kind, is it going to lean Republican or Democrat or is it choose a happy, happy algorithm or

Tony Simon:

What? Choosing their news station,

Rudy Telscher:

Right? Exactly. I dream of a world in which the AI gets rid of the politics. I think both sides have problems. So maybe neutral would be good for a change. Amen. But you’re asking a good question. But what’s interesting and mean, even shopping online, you’re on your computer now and the AI’s been out there for a while. It’s not just since chat. Looking at your spending habits, your shopping habits, what you looked at, and it’s guiding advertisement and content towards you based on your past conduct. So that AI is already there. Think about what’s going to happen in, I mean, three years driving cars. Waymo’s already out there. I had my first driverless Uber experience in Scottsdale like two months ago. Got in a car with no driver and they say next year automated cars are going to start being more and more common. In three years, you’re going to see lots and lots of just driverless cars.

So imagine your world where you don’t drive your cars anymore, you’re at home, you need to cook, you type in what you want, it gives you all the ingredients. Maybe it cooks it for you, maybe you do it yourself, but it’s automating that. I recently went on vacation and used chat and I said, I’ve got, I’m in a remote area. I got to cook for four nights. I gave it the four meats I wanted. Said my kids are 21 to 23 years old. I said, I want two of the meals cookable in a crockpot. And I said, here are the vegetables. My kids here are the starches. I need a recipe, a dinner menu for each night and the recipe and ingredients. And in 30 seconds it had four nights of meals, all the recipes, all the ingredients in a shopping list.

Tony Simon:

The shopping list is the best.

Rudy Telscher:

Yeah. And now we’re going to live in a world where you can send that shopping list somebody and the grocery just show up. Maybe we’re making it too easy and it’ll be boring. Yeah, I like driving. So I don’t know if I want that world.

Tony Simon:

I don’t know. I can’t wait for a driverless car. I would love to have one.

Ben Clark:

And for those of you out there who are listening, who advise clients on what forms of intellectual property to pursue or what sorts of enforcement you want, the complexity of all of this and the uncertainty that we’ve been talking about with Alice and the case, I couldn’t remember the name of before, Amgen Biotech. The IPRs, which we haven’t talked about either, but which kind of put the validity of patents to a second test. And the uncertainty about AI all points towards considering trade secret litigation as an alternative and points towards protecting your stuff by keeping it secret and proprietary rather than even entering the patent system. And I’m sure that most of the folks listening here who have commercial litigation experience have dealt with trade secret spaces before. As the plaintiff, Rudy and I tried a case years ago, there was a trade secret case and it was maddening because the plaintiff never wanted to specify their trade secrets.

They do a general tolerances and this, but without saying, well, tell us what it is. And the game and trade secret litigation is for the plaintiff to sue, figure out what they’re going to be able to prove later, and then not to disclose it until real late. And a lot of time, money and effort has been expended. But as a plaintiff, it’s a very attractive alternative if you don’t want to get mired into the patent law system and go through how many administrative proceedings or various court considerations. And at the end of the day, you’ve spent however much or your attorneys invested however much and you’re nowhere, trade secret cases are going to tend to get you somewhere. And so it’s all a different mindset. It’s like pick your spots. But for some technology that’s not well known and out there, let’s just keep it secret software.

I mean software, it can be a trade secret, the onesie, twosies, and the zero onesies. And that is a real alternative and a more direct one. If you’re able to go through the sign-in procedures and nondisclosure, all you have to do upfront, it’s pretty almost rot. In fact, I’m sure AI could come up with the entire plan in 30 seconds if you’re willing to go that route. Trade secret litigation is a real viable alternative when the folks who I suspect are listening to this podcast are so much more familiar with, it’s much less specialized. You have to get into the technical stuff. But in terms of the law, it’s much less specialized in this patent litigation. And we’re seeing, I would say, as a result of these various uncertainties with these principles we’ve been talking about, we have seen a notable increase in trade secret litigation in this country.

Tony Simon:

And trade secrets are forever patents expire. In return for disclosing your invention, you get a limited monopoly trade secret as long as you keep it a secret, it’s protectable.

Rudy Telscher:

And as long though as your competitor doesn’t come up with it. So there’s a lot of industries where you got big competitors marching quickly towards the same result, and they’re both going to get there first. You’re going to need a patent there. But if you are Coca-Cola and you can keep that formula secret forever, trade secrets are a great way. So it’s like anything pros and cons, balances. You got to look at the situation. There’s no one size fits all. But there are two of the prominent ways that technology is protected of the patent and trade secrets for sure.

Ben Clark:

And there are opposites in a sense in that one is secret and one is public, and you can’t be both. There can be variations on it, but generally speaking, if you’re going to keep something as a trade secret, you can’t also get a patent on it. And where it comes often up more often is you disclose something in a patent and then you try to sue somebody for trades under the trade secret loan. It’s like, well, wait a minute. The whole idea behind patents is that you’re advancing technology and making this public so that when you’re right to enforce is expired. It’s open to the public. So it’s an either or, at least in theory. And you have to make that choice as a matter of business early on before you go down halfway down the path of the patent and say, gosh, I’ve already disclosed a secret that I wish I had made it instead. So

Erich Vieth:

Rudy Telscher, Ben Clark, Anthony Simon, thank you for joining us for two episodes of recent developments in patent law. Thank you so much for sharing all these ideas, these complex ideas and exciting ideas.

Tony Simon:

Good to be

Erich Vieth:

Here. Alright, this has been another episode of The. Jury is Out. I’m Erich Fi. I see you next time.

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