Oh, and he sort of signalled what a winning comment might look like:

“This report is the sum of all ingenuity that crosses our desks and why American ingenuity has advanced society at a pace unmatched by any other country or society in human history—even to this day.”

“The report confirms the resounding and unassailable fact that the doorway to America’s Innovation Agency is, in both fact and deed, the entry point to indomitable prosperity. There is no better return on investment, than investing in American ingenuity.”

And lest anyone miss the intended takeaway, Squires also told employees:

“Every time you grant a patent or register a mark, you are keeping innovation alive. YOU are adding new opportunities for growth in the American job market. YOU are increasing our nation’s GDP. YOU are bolstering the American economy.”

So this was not exactly a blind test. Before giving employees 30 minutes to study the report, Squires had already told them what he thought it proved — including the very causal conclusion the report itself says it cannot establish.

In the same Friday post in which he made the unsupported claim that each week saved in issuing a patent is worth $50,000 to a company’s value, Squires announced the winners, saying that the resulting discussion was “excellent” and thanking the “economic report enthusiasts” who participated. He then announced the ten employees who, in his words, had “cooked with their comments and have earned that bread.”

Given Squires’s own pronouncements about what the study supposedly showed, and the fact that participants had only 30 minutes to read the report and say something coherent about it, it comes as no surprise that the winning comments largely accepted his framing rather than independently testing it.

The whole exercise was, at best, a pretty substantial waste of “other time.” And “other time” has value. Assuming these “colleagues” messages go to the entire agency, and using roughly $150 per employee-hour as a rough measure of the value of agency time, 30 minutes for everyone could represent on the order of $1 million in USPTO resources — plus, of course, the $1,000 in gift cards.

Or forget the dollar estimate and look only at the patent examiners. If roughly 8,000 examiners each received 30 minutes of “other time,” that is about 4,000 examiner-hours — nearly two full work-years for one examiner. That’s a fair amount of examination time to devote to reading a report whose intended lesson had already been supplied.

Which makes Squires’s statement that he was offering the time and prizes to “maximize the return on my investment in you to devour the report” especially ironic.

If you’ve read my three previous posts on this report, you can probably skip the next two sections. For everyone else, here’s the short version — illustrated this time by some of the winning comments.

The “big numbers” aren’t actually very surprising

The report divides a huge economy into two huge groups and then invites readers to marvel that one of them contains trillions of dollars of GDP and tens of millions of jobs. That is the basic problem I’ve discussed in my three previous posts on the report (here, here, and here).

Specifically, the USPTO classifies industries as more or less “IP-intensive,” then totals the economic activity associated with the industries on the IP-intensive side. When you divide the economy into two enormous groups, it should not be surprising if each group accounts for something on the order of half of GDP and employment. Indeed, the supposedly IP-intensive side accounts for less than half of both.

And yet, following Squires’s lead, several of the winning comments react to the resulting numbers as though their sheer magnitude establishes IP’s economic importance. One comment is literally titled “Big numbers!” and says the report shows “how huge of an impact our sector makes.” Another says that the “11.4T contribution to U.S. GDP and 49.6M jobs really puts the impact into perspective.” Another says that USPTO employees “underpin nearly 100% of commerce here and abroad.”

Those comments almost perfectly illustrate the problem with the report’s presentation. The numbers sound enormous because the report is measuring an enormous portion of the economy. Finding that roughly half of the economy supplies roughly half of the jobs and GDP is not, standing alone, a remarkable finding about IP.

And the report does not establish causation

Beyond that, the report specifically acknowledges the central correlation/causation problem: it cannot tell us how much, if any, of the GDP and employment it counts was caused by IP.

As the report puts it:

“While we cannot isolate IP’s impact from other factors, this exercise provides a useful benchmark to characterize the economic importance of industries that most heavily use IP protection and to compare the results to other countries.”

The danger of treating these associations as causal should be obvious from the resulting numbers. On Squires’s reading, design patents would appear to contribute more to GDP and jobs than utility patents and more than three times as much as copyrights, while trademarks supposedly contribute substantially more than either form of patent.

We get these results because the study is simply reporting on economic activity that occurs in industries classified as IP-intensive. It does not tell us how much of that activity exists because of IP rights.

Most of the winning comments overlook this, presumably because of the way Squires framed the exercise. One says the report “definitely highlights the importance for IP in regards to the economy” and celebrates “how huge of an impact our sector makes.” Another treats the $11.4 trillion and 49.6 million jobs as demonstrating IP’s “impact.” And another says the report shows “without doubt the value of IP-intensive industries,” before moving directly to the need for “strong protection at home.”

That last one is, unfortunately, the takeaway that Squires had already encouraged — and exactly how he and other maximalists will use the report. But even if the report had established that IP rights caused all of the economic activity associated with IP-intensive industries — which it plainly does not — that still would not establish that stronger IP protection would produce more of it. In fact, as noted in one of my posts, the methodology would probably produce approximately the same result if IP rights were made substantially stronger or substantially weaker.

On the positive side, at least a couple of the winning comments did display some genuine skepticism. One asked whether measuring IP intensity by patents per employee might improperly exclude human-capital-intensive industries and whether revenue associated with IP-protected activity might be a better measure. Another asked exactly the right causal question about wages: “Does intellectual property (IP) create higher paying jobs or do higher paying industries rely more heavily on IP?”

So it would be unfair to say that none of the winners thought critically about the report. But overall, the exercise seems to have rewarded enthusiasm for it much more than scrutiny of what it actually proves.

So what did the contest actually teach?

Mostly, it taught us what message USPTO leadership wanted employees to take away from the report. Squires told employees in advance that the report established a connection between the USPTO and “indomitable prosperity”; he expressly told them that granting patents and registering trademarks increases jobs and GDP; he gave them 30 minutes to read the report and say something about it; and he offered prizes for the best responses. The comments he ultimately selected overwhelmingly reflected that framing.

We don’t know what the losing comments said. Perhaps some employees did notice that the enormous numbers are largely an artifact of dividing a huge economy into huge groups, or that the report expressly disclaims the causal conclusion. If so, those were not the comments leadership chose to celebrate.

All in all, this fits the broader pattern I discussed yesterday: the USPTO is presenting economic research as support for a policy agenda the research itself does not support.

Applicants need to know whether their inventions are patentable, and getting that information faster can sometimes have economic value. A startup with a core invention may make different decisions about investment, financing, licensing, or product development depending on how patent examination unfolds.

But is it possible to quantify that somehow?

Director Squires clearly wants to believe it is. From his August 28 Friday message to USPTO employees:

“Studies show that each week saved in issuing a patent is worth $50,000 to a company’s value.”

Squires Friday Message 082826

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What “studies,” Mr Squires?

As far as I can tell, the “studies” consist of a single, unpublished USPTO research project by former USPTO employees that is still publicly described as research in progress. And the public record suggests that what the researchers were actually studying is considerably different from what Squires now says “studies show.”

The Underlying Research

Nicholas Pairolero’s research page currently lists, under “Working papers and research in progress”:

“The financial value of shorter USPTO patent pendency for U.S. companies,” with coauthors Charles DeGrazia, Nicholas Rada, and Andrew Toole.

Nicholas Rada’s current LinkedIn page, under “Projects,” provides considerably more detail:

“The financial value of patent rights is central to innovation policy, helping drive business growth. Policymakers recognize the importance of timely patent delivery and that influences business decisions and performance. This work quantifies the financial gains to U.S. companies of the USPTO delivering more timely information regarding the patentability of a given invention. Specifically, we estimate the financial implications of shorter first action patent pendency to all U.S. companies.”

USPTO’s Public Statements

• In September 2025, on the USPTO’s LinkedIn Page, the USPTO attributed the following statement to “a recent study from the USPTO’s Office of the Chief Economist”:

  • “a one-week patent pendency reduction could increase a U.S. company’s financial value on average $35,000.”

    • The qualifications are worth noticing: one week; could increase; on average; $35,000.

    • It’s also worth noting that this study that was supposedly “recent” in September 2025 is not available anywhere on-line, and the Rada and Pairolero pages both indicate that it is in progress.

• In an April 10, 2026 USPTO press release, Director Squires is quoted as saying:

  • “And reduced wait time means money – our studies show even a one-week reduction in pendency increases a U.S. company’s value by approximately $35,000 on average. For sure, we have major work to do, but all three trends now correlate in the right direction. In addition, we’re steadily releasing robust AI tools to assist our examiners, and we’re about halfway to our aggressive goal for new examiner hires. That’s why I’m bullish.”

    • “Could increase” had become “increases.”

    • Study becomes “studies,” even though there’s no evidence on-line of any completed study.

• On July 23, 2026, at the Howard Lutnick Trading Card Unveiling Ceremony, Squires said:

  • “We have even exceeded our stretch goals in getting patents to market, knocking 9 months and counting off the time lag – with every WEEK a patent gets to market sooner increasing a U.S. company’s value by approximately $35,000 on average. Per week.”

    • Since 9 months is about 39 weeks, I guess he’s telling us that the USPTO is saving companies an average of $1.365 million each.

• On August 12, 2026, the USPTO stealthily updates the April 10 press release, changing the $35,000 figure to $50,000, editing Squires’s quote as follows:

  • “And reduced wait time means money – studies show even a one-week reduction in pendency increases a U.S. company’s value by approximately $50,000 on average. For sure, we have major work to do, but all three trends now correlate in the right direction. In addition, we’re steadily releasing robust AI tools to assist our examiners, and we’re about halfway to our aggressive goal for new examiner hires. That’s why I’m bullish.”

    • Except for the italicized clause, the quote (including parts I left out) is identical to the April 10 quote.

      • But now “our studies show” is just “studies show.”

      • And $35,000 is $50,000.

Again, there is no published study supporting the original $35,000 figure. And there’s no published study supporting $50,000 either.

And then, in his August 28 Friday message to employees, he says:

• “Studies show that each week saved in issuing a patent is worth $50,000 to a company’s value.”

Squires Friday Message 082826

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So we have gone from:

“could increase” → “increases” → “every week” → “each week is worth”

and from:

$35,000 → $50,000

and, perhaps most importantly:

first-action pendency → issuing a patent.

All without any published explanation of the methodology.

But what is the study actually measuring?

The best description of the study we have is Rada’s, which raises some questions.

According to Rada, the study estimates the financial consequences of shorter first-action pendency.

But a first office action is usually a rejection. Roughly 85 percent of ordinary applications are not allowed on first action, and first-action rejections are a routine part of patent prosecution. Applicants generally do not regard them as a determination that their invention will not ultimately be patented.

So even before getting to Squires’s characterization, we need to understand the methodology that got the economists to $35,000 — or $50,000.

Why would receiving a first office action — which is a rejection 85% of the time — one week earlier add tens of thousands of dollars to a company’s value?

Perhaps the researchers have an answer. But we can’t evaluate it because the study has not been published.

And what exactly does the $50,000 “average” mean?

Patent values vary enormously.

Many issued patents are never licensed, litigated, or otherwise directly monetized. Some unmonetized patents may have defensive or “scarecrow” value, but there are plainly large numbers of patents for which accelerating examination by one week would have essentially zero effect on the value of the company.

If $50,000 is really some kind of average effect, then the companies that do experience a positive effect would have to experience considerably more than $50,000 on average to offset all of those zero-effect cases.

Does the study consider the fact that USPTO delay itself can create value for the patentee?

When qualifying USPTO delay produces patent term adjustment, the patent receives additional life at the back end. For an ordinary low-value patent, those extra days may be worthless. But for a blockbuster pharmaceutical patent, an extra day of enforceable patent term can be worth millions of dollars.

The same point can apply to later patents in a pharmaceutical thicket. Those patents often issue while foundational patents, FDA exclusivities, or other barriers to competition are still in place. Moving a thicket patent forward by a week has little or no immediate exclusion value, while — if the thicket strategy succeeds — a week of PTA at the back end can be enormously valuable.

So if this really is an “average” measure of the economic consequences of USPTO delay, is the USPTO really averaging in cases where the delay increases the value of the patent?

Just as the many patents for which delay has essentially zero effect would imply a larger average loss among the patents that are actually harmed by delay, PTA pushes the arithmetic even further. If some qualifying delays actually increase company value, then the patents that are harmed by delay would have to show still larger average losses to get the overall average back to $50,000.

What is “each” supposed to mean?

Even if the researchers actually estimated some $50,000 effect associated with reducing pendency by one week, that does not establish that the effect scales linearly.

Squires’s current formulation does. He has now repeatedly said that each week saved means $35,000 or $50,000 to the company. Taken literally, that would suggest that a ten-week delay in one application — or ten one-week delays across ten applications — is worth $350,000 (or $500,000) to the company.

Maybe there is a good study underneath all of this

There may be a perfectly respectable empirical result behind the original $35,000 estimate — and perhaps even behind the revised $50,000 estimate.

I would be astonished, however, if the eventual paper supports Squires’s current statement without substantial qualifications.

And that is precisely why the paper should be published before the Director turns its preliminary findings into claims that the public cannot verify.

All four economists named as co-authors on Pairolero’s page have now left the USPTO. DeGrazia left years ago; Toole, Rada, and Pairolero were gone by the end of 2025. The public $35,000 estimate appears to date from while that research team was still at the agency.

The $50,000 figure seems to have appeared only later — apparently first through the August 12 edit to an old USPTO press release.

So who changed the estimate?

Why?

A broader problem with USPTO data

Unfortunately, this is beginning to look less like an isolated overstatement and more like a broader problem.

The USPTO increasingly seems to generate, select, and present economic data in ways that reinforce its preferred policy direction and invite conclusions stronger than the underlying analysis supports.

Its recent IP-intensive-industries study counts trillions of dollars of economic activity and tens of millions of jobs occurring in industries classified as “IP-intensive.” Those numbers sound enormous. But the study is sorting essentially the entire economy into two enormous buckets — more IP-intensive and less IP-intensive. Of course a bucket that large is going to contain trillions of dollars of GDP and tens of millions of jobs.

Worse, those jobs and GDP are already being described as somehow attributable to IP, even though the report itself expressly warns that it cannot isolate IP’s effect from other factors.

I’ve discussed those problems — and more — in three previous posts: here, here, and here.

Now an unpublished study apparently concerning first-action pendency has somehow morphed into “studies” showing that each week saved in issuing a patent is worth $50,000.

The same agency is making policy decisions with enormous economic consequences. Its proposed one-and-done rule, for example, is part of a much broader effort to restrict administrative challenges to issued patents — yet OIRA has classified the rule as “not significant.”

The USPTO has not made public whatever economic analysis underlies that conclusion.

So isn’t that interesting? When the USPTO wants to emphasize the economic importance of patents, it is willing to quote unexplained numbers from an unpublished study, or invoke a published study that does not support the conclusions being drawn from it. Yet the OIRA “not significant” designation suggests that the agency is equally capable of minimizing the economic significance of patent policy when doing so advances a different policy objective.

If the USPTO believes it has economic evidence supporting its conclusions, the public should be able to see it.

The broader pattern deserves scrutiny. But the immediate question is simpler:

What study supports the $50,000 claim?

If the USPTO has one, publish it.

SHOW US THE STUDIES.

In yesterday’s IP Fray, Coke Stewart calls it “unfair” for me to say that she “blew a hole in the USPTO’s credibility” when she began drastically cutting access to IPRs shortly after Director Squires had assured Congress that he would study the issues and work with Congress before making major changes.

I can’t help but notice that Coke seems to be throwing Squires under the bus here. But — as alert readers may have surmised — I think they both belong under the bus. So here’s the scoop.

I’ll go through the relevant portion of the IP Fray interview — in all its incoherence — and explain what’s wrong with each piece of it.

“During her term as Acting Director, Ms. Stewart brought in an array of initiatives, including – perhaps most controversially – reinstating the NHK-Fintiv framework as it existed before Director Vidal, which allowed the office to deny more IPRs amid parallel district court litigation (February 28, 2025 announcement by the USPTO).”

First, she did far more than just “reinstate” NHK-Fintiv, and second, that was NOT the most controversial of her initiatives — settled expectations was.

Specifically, BEFORE Director Vidal — i.e. under Andrei Iancu, for whom Coke served as Chief of Staff — the NHK-Fintiv framework included Sotera, and, in the vast majority of cases, a Sotera stipulation averted a discretionary denial.

Vidal’s memo made only limited changes to the existing framework. It provided that a qualifying Sotera stipulation would preclude Fintiv denial; created an exception for petitions presenting a compelling case of unpatentability; and clarified that Fintiv did not apply to ITC proceedings. None of those changes dramatically affected the institution rate, and merely rescinding the memo would not have done so either.

It was only when Coke Stewart started issuing Director Review decisions that it became clear how far she was departing from the Iancu-era NHK-Fintiv framework. In Motorola Solutions v. Stellar, No. IPR2024-01205 (March 28, 2025), she reversed institution despite a Sotera stipulation, treating Motorola’s separate system-prior-art defense as a reason for denial even though that defense could not legally have been raised in the IPR in the first place. In later cases, she gave near-dispositive weight to scheduled district-court trial dates, even when numerous other cases were set for trial the same day. So no, she did not merely “restore” the pre-Vidal NHK-Fintiv framework.

And in iRhythm on June 6, she used “settled expectations” for the first time as a basis for denying institution — giving substance to a concept she had listed, without explanation, in her March Interim Processes memo. The patent owner had not even argued settled expectations; Stewart raised it herself — a pattern that continued in several of the early cases, until parties began citing iRhythm. She then developed the doctrine over the following weeks, making clear that it could apply (1) to patents only about six years old, (2) even if the petitioner didn’t know about the patent, (3) even if the patent owner was an NPE that had bought the patent secondhand, and (4) even if the challenger was a biosimilar trying to clear out a patent thicket and could not have challenged the patent in court. So no, “restoring” NHK-Fintiv was not her most controversial change.

“But some of those changes came in shortly after Director Squires had assured Congress that he would study these issues before making changes, blowing “a hole in the agency’s credibility” (August 14, 2026 Tom Krause Substack), former Deputy General Counsel for IP Thomas Krause wrote on his Substack last week.

“This is an “unfair” interpretation of the Director’s testimony, Ms. Stewart says. The Director had not claimed he would maintain or revert back to every policy in effect under former Director Kathy Vidal, if he were confirmed.”

Sorry, but I didn’t say that Squires said he would bring back Director Vidal’s policies — that would have been a strange thing to claim, given that Stewart had already rescinded them. I said he “had assured Congress that he would study these issues before making changes.” Here’s the exact context for my “blew a hole in the agency’s credibility” quote:

3. And inventors are not the same thing as patent owners. If her objective really was to help struggling small inventors, why didn’t she use the USPTO’s asserted discretion in a targeted way? Instead, the principal effect of her “helpful changes” was to strengthen the position of patent owners generally, including well-funded patent assertion entities that bought their patents secondhand – and that have long relied heavily on the plight of small inventors in lobbying for stronger patent rights.

4. Those “helpful changes” also undermine what Congress was trying to accomplish with the AIA. If the Supreme Court does not reverse them, a future Director very likely will.

5. Coming as they did shortly after Director Squires had assured Congress that he would study these issues before making changes, they also blew a hole in the agency’s credibility.

I was just explaining that the initiatives Stewart imposed while Squires was still awaiting confirmation — primarily settled expectations, but also her changes to the Iancu NHK-Fintiv framework — were impossible to square with Squires’s assurance that he would study these issues before making changes.

And that sentence was shorthand for a much broader set of assurances he had given the Senate about preserving meaningful access to IPRs, studying the record, and working with Congress and others before deciding what needed to change. I had already collected and analyzed those assurances in Squires Confirmation — Good News!, published when he was confirmed.

Here’s the Top 10 from that post:

He specifically:

(1) asserted that he has “no pre-disposition to alter the PTAB’s authority or restrict IPR access,”

(2) said he would “ensure that American companies that are sued on questionable patents will be allowed to seek review on the merits of those patents at the PTAB,”

(3) “pledge[d] to vigorously oppose abusive patent troll tactics and protect American businesses from frivolous patent litigation,”

(4) stated that “Allowing foreign rivals to bankroll lawsuits against U.S. companies to gain access to our technology is unacceptable,”

(5) said he’d “work with stakeholders, USPTO leadership and Congress to assess the almost 15 years of data since the PTAB creation” as part of his process formulating a position on how Congress (i.e. not the USPTO) should, if at all, change the AIA,

(6) observed that both IPRs and PGRs “have served their function as a faster and cheaper alternative to district court litigation,”

(7) agreed that “the PTAB [is] an effective way to challenge bad pharmaceutical patents,” and added that it “plays an important role in the U.S. patent system to provide redress in terms of a faster and cheaper alternative venue to challenge the validity of a patent in our unitary system, including pharmaceutical patents,”

(8) committed “to ensuring the PTAB has the resources and personnel to be able to fulfill their current mandate and continue to administer IPRs and PGRs,”

(9) agreed that “a strong Patent Trial and Appeal Board (PTAB) [is] a partial remedy” against “poor quality patents being asserted for nuisance value,”

(10) committed to “requiring the [USPTO] to operate the PTAB as Congress articulated in the America Invents Act and not exceed the authority granted to discretionarily deny petitions for review as previous Directors have done.”

At this point, I think these assurances speak for themselves. Chairman Issa apparently agrees. In his Questions for the Record from the March 25 oversight hearing, he summarized Squires’s confirmation testimony this way:

“At your Senate confirmation hearing, you testified that, before making major changes to PTAB practice, you would work with Congress and stakeholders to determine what reforms, if any, were appropriate. You also testified that you did not intend to restrict access to IPRs, particularly where they serve to address abusive patent practices. Since being confirmed six months ago, you have announced numerous major changes to PTAB practice that have already sharply decreased the ability of petitioners to access IPRs. Can you explain how the policy changes you've pursued, and the way you've pursued them, comport with your prior testimony?”

That seems like a pretty good question. Nearly five months later, Chairman Issa — and the rest of us — are still waiting for the answer.

Back to Coke Stewart and IP Fray:

“And, while many at the office were constantly studying and collecting data, a new director like Squires, with a lot of experience in patents, is equally not going to come in and not make any changes for a full year.”

I don’t really understand this. I never said Squires would make no changes for a “full year” after taking office. My point was that he had just given Congress all of the assurances quoted above — and then, before he had even arrived at the USPTO, Stewart began drastically restricting IPR access anyway. That undercut Squires and the credibility of the assurances the Senate had just received.

“He will consider, in consultation with the Secretary, what is working and what, if any, additional reforms he wants to make.”

Right. “He will consider.” That sounds pretty much like what I understood Squires to be telling the Senate. The problem is that Stewart had already made the changes I was criticizing months before Squires became Director.

Since she’s raised my favorite topic — Secretary Lutnick’s control of the USPTO — I should say a few words about that. Both Stewart and Squires have said on several occasions that the Office’s policy direction has come from Lutnick. That’s certainly believable: an Acting Director was unlikely to make changes this sweeping without the Secretary’s approval, and their own descriptions suggest that Lutnick was doing considerably more than merely signing off on them. And, of course, he’s the one who dissolved PPAC.

This also creates an odd statutory picture. In 35 U.S.C. § 3, Congress put an experienced patent professional at the head of the USPTO, and in § 5 created PPAC specifically to review the Office’s patent policies and advise the Director. Here, apparently, major patent policy was being driven by Howard Lutnick — who is not a patent professional — after he had eliminated the statutory advisory body Congress created to provide patent-policy advice. Given Lutnick’s own long history of obtaining and monetizing patents, the fox-and-henhouse problem is hard to miss.

“Further, Ms. Stewart reportedly told another media outlet that the changes implemented by the USPTO were fueled by the nation’s “patent crisis” (August 5, 2026 Law360 article). The crisis she was referring to, she tells ip fray, is the state of affairs at the beginning of 2025.

The crisis was manifesting in two ways:

1. A historically high backlog of patent applications: very serious thought leaders were starting to look at other forms of IP such as trade secrets, or suggesting the USPTO move to a registration system, because the backlog was getting “unreasonably” high. At the start of her term, the backlog was at around 850,000 unexamined applications, and would hit approximately 1 million if it continued to grow at that rate.

2. Disillusionment in the innovation ecosystem: there was a growing feeling of “there is no point in filing for a patent application because of the uncertainty in its enforceability”. There were so many ways you could challenge issued claims, and innovators were starting to believe it was not worth the expense of an application.”

So now we know what the “patent crisis” was: an application backlog and “disillusionment in the innovation ecosystem.” Fair enough on the backlog — but cutting access to IPRs did nothing to reduce the backlog.

“Disillusionment” needs some unpacking. The USPTO was still receiving hundreds of thousands of patent applications every year; there was hardly a mass exodus from the patent system. What Stewart seems to be describing is the disillusionment of some small inventors who believed that issuance meant their patents were essentially secure — and the amplification of those complaints by professional patent-advocacy groups, like the one she now leads, that have every incentive to present them as evidence of a system-wide crisis.

And judging from the policies Stewart, Lutnick, and Squires adopted, the cure for that “disillusionment” was to inflate the value of existing patents across the board — shielding questionable drug patents from biosimilar challenges; weakening the ability of accused infringers to preserve IPR review by eliminating duplicative validity arguments; treating patents that had been in force for about six years as effectively too old for IPR review; and enabling patent assertion entities to make even more money off of their secondhand patents.

“Ms. Stewart started her new role at C4IP last week. While she has already worked twice at the USPTO, nothing would prevent her from taking up another post there in the future. For now, though, she is eager to get stuck into advocacy – something she has been passionate about for a long time.”

I assume that is meant to leave open the possibility of a third tour at the USPTO — perhaps as Director. If so, USPTO examiners may want to pay attention. Stewart’s last tour — presumably with Lutnick’s approval and direction — was pretty rough on the examining corps, and the reaction to her departure suggested that quite a few career employees were not sorry to see it end.

As you may recall, I posted this on January 4:

That post gives a detailed timeline of what’s happened with PPAC and TPAC, starting from when Secretary Lutnick dissolved them both — without explanation — in March 2025, through the eventual appointment of three PPAC members and two TPAC members in September 2025, and explains how the USPTO had violated five separate statutory requirements: (1) missing the 90-day deadline for filling vacancies; (2) missing the December 1 deadline for appointing the next class of members to staggered three-year terms; (3) operating with too few members to satisfy the statute’s required composition; (4) failing to participate in the consultations with the Director required by statute; and (5) failing to issue its FY2025 annual report. It had also violated its charter by missing both required 2025 public meetings.

It also explained that, because the terms are staggered, we really need to know whose terms last September’s appointees are supposed to be filling, and how the USPTO is going to deal with the staggering requirement with future appointments. More on that below.

Although I’m fairly sure that the USPTO leadership monitors this Substack, there was complete radio silence from them up until March 25, and the silence was only broken in response to a question from a congressmember about what’s going on with the PPAC. In response, Director Squires said the USPTO had offered a slot to an independent inventor, and that would “crystallize” the committee.

That brings us up to the present, nearly five months after the hearing, as the USPTO has announced the addition of an individual inventor to the PPAC. I explained the development yesterday on LinkedIn as follows:

Three cheers for Director Squires and the USPTO! They’ve now sworn in two (!) TPAC members and four (!!) PPAC members.

In other words, between the two bodies, they've managed to add exactly ONE more person since September 8, 2025, when they appointed two to TPAC and three to PPAC. They added that person yesterday.

We're here because Secretary Lutnick fired all members of both bodies back in March 2025. Although the USPTO said it would have all 18 replacements by May 2025, all we have here in August 2026 are the five from September plus one from yesterday.

Back on January 4, I explained how this violated the relevant statute five times over, and how PPAC had missed two public meetings and an annual report.

https://lnkd.in/eqrZSsnQ

In yesterday’s announcement, the USPTO said PPAC and TPAC bring the agency “outside expertise, candor, common sense and real economy sensibilities.” That might have come in handy during the USPTO’s unilateral imposition of the most consequential – and least justifiable – patent policy changes in its history.

At his March 25, 2026 oversight hearing, Squires claimed that the bodies would both be constituted “very soon,” but followed up with: “we just extended an offer last night to the individual inventor which is the statutorily required person that crystallizes everything.”

Obviously, adding a single individual inventor to the existing three doesn't “crystallize” much of anything – the statute requires nine members. And TPAC is even less “crystallized.”

In her Questions for the Record – sent over four months ago – Rep. Lofgren asked some fairly pointed follow-ups, including:

• When does the Office expect to restore full compliance with the statutory structure Congress established?

• When filling these positions, how will the Office ensure that appointments reflect a balanced and representative set of stakeholders, consistent with Congress’s intent?

• What safeguards are in place to ensure that advisory committee members are able to provide independent perspectives, including views that may differ from current USPTO policies?

• In the absence of fully functioning advisory committees, how is the Office ensuring meaningful public input into major policy decisions affecting the patent system?

• Is the Office concerned that recent policy changes may have been implemented without the level of stakeholder engagement Congress intended these committees to provide?

https://lnkd.in/eArkAixQ

So where are the USPTO's answers to the QFRs?

Last time I checked (less than a week ago) Squires had still not provided them.

Link to announcement: https://lnkd.in/eCY2gnXX

A few more comments:

Meet the PPAC!

I assume we’ll get official bios about the members sooner or later, but here’s what I know about them (assuming I’ve even got the right Bill Johnson).

Makan Delrahim — an unapologetic advocate for strong patent rights. As head of DOJ’s Antitrust Division, he developed his “New Madison” approach, arguing among other things that patent hold-up generally isn’t an antitrust problem, restrictions on patent injunctions should face a very high bar, and unilateral refusals to license patents should generally be per se lawful under the antitrust laws. When I heard he had been made General Counsel at Paramount Skydance, I permitted myself to hope that the patent world had seen the last of him. Alas, it was not to be.

Tracy Durkin — a very experienced patent lawyer and former PPAC member whose practice has focused heavily on design patents. She undoubtedly knows the patent system. It’s not clear what particular perspective she brings to some of the unprecedented questions now confronting PPAC.

Bill Johnson — “Independent Inventor.” A plausible William “Bill” Johnson in Texas founded BillJCo, LLC to develop and commercialize beacon technology he helped invent. If this is the same guy, his experience with IPR is substantial: Apple successfully challenged claims in at least five BillJCo patents at the PTAB, and the Federal Circuit later affirmed those rulings. But there’s no way to tell if this is the same guy — the USPTO has only given us the name. (Obviously, if it is the same guy, we might be able to guess where he stands on IPRs.)

Professor John Duffy — John and I go way back, and I have a great deal of respect for his intellect and integrity. We’ve disagreed before — about section 101 in connection with the Bilski case, and more recently about whether Squires should be confirmed. And I’ve heard that he believes the USPTO’s current black-box institution process complies with the APA, which seems wrong to me, but if that’s really his position, I’ll suspend judgment until he puts it in writing.

Bottom line — this has been a very strange selection process. There are literally thousands of practicing patent and trademark lawyers, academics, inventors, and other stakeholders from whom qualified candidates could presumably be found. And if the first nomination call somehow didn’t produce enough, there was nothing stopping the USPTO from asking again. If it makes another nomination call, I am sure it would get dozens of qualified nominees and could move quickly to fill the remaining slots.

We can only hope it does — and that the ultimate composition reflects the independent perspectives contemplated by Congress, while providing the “outside expertise, candor, common sense and real economy sensibilities” that the USPTO itself claims to be looking for.

Who’s on First?

The question of which appointee is serving which term has been hanging around since September.

PPAC has nine staggered seats. When Lutnick removed everyone in March 2025, three terms were due to expire in December 2025, three in December 2026, and three in December 2027. And the statute says that someone appointed to fill a vacancy serves only the remainder of the predecessor’s term.

So when Delrahim, Durkin, and Duffy were “appointed” in September 2025, they had to be filling three particular existing seats. The USPTO never told us which ones.

The 2025 class has since rolled over, meaning PPAC should now have three seats expiring in 2026, three in 2027, and three in 2028.

But that leaves an obvious problem. If any of the September appointees were filling seats that expired in December 2025, those appointments ended then.

If instead Delrahim, Durkin, and Duffy occupy seats expiring in 2026 or 2027, then some or all of the three 2028 seats remain vacant.

Johnson is different because he was only just appointed. He can presumably be placed into any currently vacant seat. But again, which one? If he fills a 2026 or 2027 vacancy, he serves only the remainder of that term. If he occupies one of the seats expiring in 2028, his term runs through December 2028.

So after all of this, we still don’t know something fairly basic: which staggered seat does each PPAC member occupy, and when does each term expire?

And that’s hardly the only unanswered question. When will the remaining five PPAC seats and seven TPAC seats be filled? Will PPAC actually hold a public meeting in November? Will it produce the annual report that Congress requires this year?

After seventeen months, these do not seem like particularly difficult questions.

Don’t get me wrong: yesterday’s announcement at least paid lip service to the importance of PPAC and TPAC, and that’s a good thing. But after seventeen months of missed deadlines, missed meetings, missing reports, and unexplained vacancies, forgive me if I’m not yet confident there is a plan to get either committee functioning as Congress intended.

If the USPTO really wants the “expertise, candor, common sense and real economy sensibilities” it says these committees provide, perhaps it could start by actually letting the committees exist.

Even before any briefs were filed, I thought there was a significantly greater than 50% chance that the Supreme Court would grant cert on a challenge to the USPTO’s interpretation of § 314(a). It’s getting closer and closer to a sure thing.

The briefs, along with Intel’s cert petition, are available here.

PS: If you are an author of one of these briefs — or else just a close reader — and see anything that AI got wrong, let me know and I’ll fix.

Seven amicus briefs were filed yesterday in Intel Corp. v. Squires, No. 26-73, supporting Intel’s petition for Supreme Court review of the Federal Circuit’s approach to judicial review of USPTO inter partes review policies. The amici range from Samsung, Microsoft, TSMC, Tesla, and other major companies to Unified Patents, industry associations, the PTAB Bar Association, a financial-services patent-quality organization, and an individual patent lawyer.

Although the briefs approach the case from different directions, they display a striking degree of agreement on the underlying statutory problem. The Federal Circuit has treated 35 U.S.C. § 314(a) — which says the Director “may not” institute IPR “unless” the petition satisfies a reasonable-likelihood-of-success threshold — as conferring broad discretion to deny institution for reasons nowhere specified in the statute. It has then treated § 314(d) as largely insulating policies governing that discretion from judicial review.

The amici argue, in different ways, that those two propositions together have allowed the USPTO to impose increasingly broad restrictions on access to the IPR system Congress created in the America Invents Act.

Here is what each brief adds.

Samsung, Microsoft, TSMC, SAS, SAP, EchoStar, and Acushnet

The Samsung brief may be the broadest attack on the current discretionary-denial regime.

Its central textual point is simple: § 314(a) does not contain the word “discretion.” It establishes a condition that must be satisfied before the Director can institute. Elsewhere in the AIA, Congress expressly conferred discretionary authority when it wanted to do so — including joinder under § 315(c) and rejection of petitions involving previously presented art or arguments under § 325(d).

The amici therefore argue that § 314(a) cannot plausibly be understood as a hidden grant of unlimited authority to impose additional institution restrictions.

The brief then moves well beyond Fintiv. It challenges recent USPTO policies involving “settled expectations,” prior adjudications involving other parties, and preferences based on domestic manufacturing or company size.

Its treatment of prior challenges is particularly interesting. The amici argue that denying IPR because an unrelated party previously challenged the patent effectively creates a form of nonmutual offensive collateral estoppel. Congress, however, expressly defined IPR estoppel in § 315(e) in terms of the petitioner, its real parties in interest, and privies. And § 325(d) separately gives the Director limited authority to consider whether substantially the same art or arguments were previously presented to the Office.

The amici argue that those provisions are difficult to reconcile with a supposed free-floating power under § 314(a) to impose much broader prior-challenge restrictions.

The brief also supplies striking numbers. It says Q2 2026 saw only 57 new IPR petitions, compared with 337 in Q2 2025; roughly 770 petitions, about 55%, have been denied for non-merits reasons since the new discretionary-denial regime accelerated; and those denials have generated more than $130 million in estimated sunk filing and preparation costs. The seven amici themselves report 166 discretionary denials, more than $3.9 million in nonrefundable PTO fees, and at least $24.9 million in legal fees.

Unified Patents

Unified Patents makes perhaps the clearest connection between the statutory argument and the practical dismantling of IPR.

Unified likewise argues that § 314(a) is a floor, not a general delegation of authority. Reading “may not institute unless” as an affirmative grant of unlimited denial discretion, it argues, turns the provision upside down.

Its brief is especially useful because it treats recent policies as variations on the same basic problem. It discusses settled expectations, expanded treatment of previous patent challenges, assignor-estoppel-like restrictions, and the proposed categorical “one-and-done” approach.

The common thread is that each policy effectively substitutes an administrative policy choice for a choice Congress made elsewhere in the AIA.

Unified also emphasizes the scale of the change. It reports that monthly IPR filings fell from 131 in January 2025 to 22 in June 2026, while Q2 filings reached the record-low figure of 57. It says institution rates have fallen dramatically and ex parte reexamination now accounts for nearly three-quarters of post-grant filings.

That produces a striking historical irony: IPR was created because Congress regarded the old inter partes reexamination system as too slow and ineffective. Yet use of IPR has now fallen below the level of the system Congress replaced.

US*MADE, AFAI, HTIA, CCIA, ACT, SIIA, and NRF

This brief, filed by a coalition of industry and trade groups, makes an especially strong legislative-history argument.

Its focus is § 315(b), which gives an accused infringer one year after service of an infringement complaint to file an IPR petition.

The brief emphasizes that this was a deliberate congressional choice. Earlier proposals contemplated a shorter period. Congress ultimately selected one year so defendants would have enough time to determine which patent claims actually mattered, investigate the prior art, and prepare a petition before becoming subject to IPR estoppel.

The amici therefore portray Fintiv as something more consequential than an additional discretionary consideration. In their view, it effectively rewrites the filing period Congress chose, sometimes reducing a statutory one-year opportunity to only a few months — or eliminating it altogether.

They rely heavily on the Supreme Court’s reasoning in Petrella and SCA Hygiene: once Congress itself has specified a timeliness rule, courts and agencies generally do not get to overlay a second policy-based limitations rule.

The brief then broadens its argument. Like several of the other amici, it stresses that § 314(a) never says “discretion.” And it points out that “may not … unless” formulations appear throughout federal law. If that language gives an agency unlimited authority to refuse to carry out a statutory program, the implications extend considerably beyond patent law.

PTAB Bar Association

The PTAB Bar Association brief is particularly notable because of the organization filing it.

The Association represents lawyers across the spectrum of PTAB practice — including counsel for patent owners and petitioners. Its argument is therefore framed less as a defense of one constituency and more as a concern about the structure and predictability of the administrative system itself.

Its central point is that the Federal Circuit’s doctrine has produced an extraordinary result: there may now be no procedural route through which a court can review the legality of generally applicable USPTO institution policies.

Direct review of institution decisions is barred. Mandamus has largely been foreclosed. And the decision challenged in Intel rejects a prospective APA challenge to the policy itself.

According to the Association, the consequence is a growing body of institution policy created without the ordinary external constraint of judicial review.

The brief traces the rapid swings in PTO policy — Fintiv, later guidance limiting it, withdrawal of that guidance, centralization of institution authority, expansion of discretionary factors, and proposed categorical restrictions. Administrative policy can of course change. The Association’s concern is that when no court can determine whether those changes remain within statutory bounds, parties have little stable law on which to rely.

The Association also joins the textual argument. Section 314(a), it says, describes what the Director may not do. And the existence of § 325(d), where Congress expressly granted discretionary denial authority for previously presented art or arguments, cuts strongly against finding boundless residual discretion somewhere else.

That makes this brief an important piece of the overall amicus picture: the concern is not confined to companies that frequently challenge patents.

Tesla

Tesla’s brief offers perhaps the cleanest doctrinal distinction in the group.

Supreme Court cases have repeatedly described institution as involving “discretion.” But Tesla argues that there is an important difference between discretion in applying authority Congress actually granted and authority to invent new criteria Congress never supplied.

That distinction also drives Tesla’s Administrative Procedure Act argument.

Even where an ultimate decision is “committed to agency discretion,” Tesla argues, courts must still be able to answer the antecedent legal question: what discretion did Congress actually give the agency?

Otherwise, the mere assertion of discretion would become self-validating. An agency could insulate virtually any action from judicial review simply by describing it as an exercise of discretion.

Tesla therefore relies on SAS Institute v. Iancu and its recognition that § 314(d) does not give the PTO immunity when it acts outside the statutory boundaries Congress established.

The brief also places Intel in the context of the growing group of certiorari petitions raising related questions about IPR institution and judicial review. That broader cluster increases the significance of the issue beyond the original Fintiv dispute.

Askeladden

Askeladden, the patent-quality subsidiary of The Clearing House, makes one of the best responses to a phrase frequently invoked in this debate: the Supreme Court’s statement in Cuozzo that there is “no mandate to institute review.”

Askeladden argues that this establishes a much narrower proposition than the Federal Circuit has drawn from it.

A petitioner can satisfy § 314(a)’s reasonable-likelihood threshold and still face other restrictions Congress itself placed in the statute. In that sense, satisfying § 314(a) is necessary but not always sufficient.

But that does not mean Congress gave the Director authority to add an unlimited number of new restrictions of his own making.

Put another way: “no mandate to institute” does not mean “authority to deny for any reason whatsoever.”

Askeladden also uses Intel’s own experience with VLSI as an illustration of the practical stakes. Intel’s IPR petitions were denied because the Western District of Texas was expected to reach trial first. A jury later returned a verdict of roughly $2.175 billion, while subsequent proceedings undermined the asserted patents and resulting judgment.

For Askeladden, that episode illustrates the danger of allowing speculative trial scheduling to override the administrative patent-review process Congress specifically created.

Teodor James Holmberg

The Holmberg brief takes the most aggressive doctrinal position of the seven.

Holmberg, an individual patent attorney, argues that the Supreme Court itself should reconsider how broadly it has interpreted § 314(d).

His proposed reading is relatively narrow: § 314(d)’s bar on review should principally protect the Director’s determination under § 314(a) about whether the petition establishes a reasonable likelihood of success. It should not automatically shield every legal issue arising under any provision that bears some relationship to institution.

Holmberg argues that Cuozzo’s broader language about issues “closely tied” to institution was unnecessary to the result there, while SAS more clearly recognized judicial authority to police whether the PTO has exceeded the authority Congress granted.

He goes further and argues that Thryv v. Click-to-Call extended § 314(d) too far by insulating the PTO’s application of § 315(b) from review.

And he invokes Loper Bright for a broader administrative-law proposition: determining the scope of an agency’s statutory authority is fundamentally a judicial task.

That makes Holmberg’s brief the doctrinal outlier in the group. The other amici generally do not need the Court to reconsider Thryv itself. Holmberg argues that the current controversy demonstrates why the Court ultimately should.

What the seven briefs collectively say

The most striking feature of the amicus filings is how much common ground exists beneath their different emphases.

Section 314(a) is a threshold, not a blank check

This is the dominant statutory theme.

Section 314(a) says the Director “may not” institute unless a threshold is satisfied. Several amici emphasize that Congress knew perfectly well how to confer discretionary authority expressly — and did so elsewhere in the AIA.

The briefs therefore resist the idea that § 314(a) silently contains a vastly broader power than the discretionary powers Congress actually identified.

That argument appears in slightly different forms in the Samsung, Unified, PTAB Bar, Tesla, US*MADE, and Askeladden briefs.

Congress already addressed many of the subjects now governed through “discretion”

This may be the amici’s most powerful collective point.

Congress addressed timing in § 315(b).

Congress addressed IPR estoppel in § 315(e).

Congress addressed previously presented art and arguments in § 325(d).

Congress expressly addressed discretionary joinder in § 315(c).

Yet recent USPTO policies impose additional restrictions dealing with many of those same subjects.

That makes the dispute harder to characterize simply as an argument about whether the Director should exercise statutory discretion generously or sparingly. The threshold question is whether the agency is using § 314(a) to make policy choices Congress already made elsewhere.

The judicial-review problem is becoming as important as the patent-law question

The briefs repeatedly return to a structural concern.

An individual institution determination may be unreviewable under § 314(d). But does that mean the USPTO can adopt a nationwide rule governing institution and no court may ever determine whether that rule is authorized by Congress?

PTAB Bar and Tesla are particularly strong here.

The PTAB Bar Association describes a system in which every conventional path of review has effectively been closed.

Tesla supplies the doctrinal answer: even where Congress commits an ultimate decision to agency discretion, courts must remain able to determine the legal boundaries of that discretion.

That question has significance well beyond IPR.

The dispute has moved well beyond Fintiv

Intel’s challenge arose from Fintiv, but the amici repeatedly discuss what has happened since.

Settled expectations.

Treatment of earlier validity decisions.

Restrictions based on challenges brought by unrelated parties.

Domestic-manufacturing considerations.

Categorical one-and-done approaches.

The briefs use these developments to argue that the underlying issue is no longer simply whether the Director may consider parallel district-court litigation. It is whether § 314(a) permits the Director to construct an increasingly elaborate body of substantive limits on IPR access that do not appear in the statute.

The empirical picture is dramatic

Several briefs also document a striking contraction in IPR.

Q2 2026 saw only 57 petitions, compared with 337 in Q2 2025.

Unified reports monthly filings falling from 131 in January 2025 to 22 in June 2026.

Samsung and its co-amici report roughly 770 non-merits denials, representing about 55% of petitions, and estimate more than $130 million in sunk costs.

PTAB Bar reports a substantial decline in institution rates and monthly filings.

Whatever one thinks of discretionary denial as a matter of policy, these figures make clear that the controversy concerns a major transformation of the administrative review system Congress created in 2011.

Different briefs, different strengths

The briefs are complementary rather than repetitive.

Samsung and its co-amici offer perhaps the broadest attack on the recent discretionary-denial regime and one of the strongest discussions of § 315(e), § 325(d), and prior challenges.

Unified Patents most effectively combines statutory structure with empirical evidence showing how dramatically IPR use has declined.

US*MADE and the trade-association coalition provide the strongest account of Congress’s deliberate choice of the one-year § 315(b) filing period.

The PTAB Bar Association supplies unusual institutional credibility and focuses on the instability produced when generally applicable agency policies become effectively immune from judicial review.

Tesla offers perhaps the cleanest doctrinal distinction between exercising discretion Congress granted and inventing entirely new discretionary criteria.

Askeladden provides the clearest answer to the proposition that because there is “no mandate to institute,” the Director necessarily possesses unlimited denial authority.

And Holmberg pushes the judicial-review argument furthest, contending that the Court should revisit Thryv itself.

The larger picture

The breadth of the amici is noteworthy. These are not seven versions of the same corporate brief.

The filings include major technology and manufacturing companies; retailers; software and semiconductor businesses; industry associations; a patent-quality organization associated with the banking industry; Unified Patents; the professional association representing lawyers who practice before the PTAB; and an individual patent attorney. The Supreme Court docket lists all seven briefs as filed on August 17.

Their interests and preferred doctrinal routes differ.

But they converge on an important proposition: the statement that the Director has discretion over IPR institution does not answer the question presented by these cases.

The harder question is what Congress authorized the Director to do with that discretion — and whether the courts remain available to enforce the answer.

Coke Stewart has just been named President and CEO of the Council for Innovation Promotion, perhaps the leading patent-maximalist advocacy organization.

I’ve spent some time lately responding to Coke’s misleading retrospective claims about what happened at the USPTO on her watch. Her new job practically guarantees I’ll never run out of material.

C4IP’s patent agenda is undiluted maximalism: expand what can be patented, make issued patents harder to challenge, and increase the value of existing patent rights and portfolios.

The most immediate beneficiaries are entities that already own substantial patent portfolios – including investors, patent monetizers, and patent assertion entities.

Interestingly, although its latest Form 990 reports more than $4 million in contributions, C4IP does not disclose its funders. Presumably, whoever is putting up that money sees value in C4IP’s efforts to make patents stronger and harder to challenge.

But it’s very hard to see how C4IP’s favored policies – like RESTORE, PERA, and PREVAIL – produce additional innovation.

Instead, C4IP’s agenda seems designed to avoid asking the harder questions. As I’ve explained at length elsewhere, anyone who cares about innovation policy should be asking whether patents are too easy to obtain, whether 20-year terms are too long for fast-moving technologies, whether accelerating AI will render much of the current patent system obsolete before patents issued today have even run their full term, and whether there may be more efficient ways to promote innovation than granting more than 350,000 potential monopolies – more than half to foreign applicants – every year.

Coke’s move to C4IP is unsurprisingly consistent with the direction she helped take the USPTO: increasing the value of existing patents while paying far less attention to whether doing so actually promotes innovation.

I suspect I’ll have more to say about this.

Director Squires unveiled the card at the “America 250 signing ceremony and Commerce Secretary Howard W. Lutnick’s Trading Card unveiling,” back on July 23.

(Sorry, I’m just catching up, but his remarks are truly timeless for anyone interested in how shallow the intellectual underpinnings of this administration’s patent policies are.)

The USPTO apparently issued only the front of the card. I looked for a reverse side online and couldn’t find one, so I supplied my own — based, to the best of my ability, on the available record.

The card is silly. The ideas behind it are both silly and scary.

I’ll let Director Squires mostly speak for himself. Again and again, the same basic errors appear: association becomes causation, and the issuance of a patent becomes proof of social value. An invention was patented, therefore the patent caused the invention. An industry obtains lots of IP rights, therefore IP created its GDP and jobs. Howard Lutnick obtained hundreds of patents relating to electronic trading, therefore he created fintech.

I’ll focus on his key claims, and explain, in some cases with reference to my past work on these issues, just how lacking in substance they are.

Since this post goes on at some length, here’s a roadmap to his claims, which are largely self-refuting for anyone who has worked in the patent field:

1. Patent rights are enshrined in the Constitution.

2. America’s economic success is due to the patent system, which creates a “butterfly effect.”

3. The patent bargain — “disclosure for exclusivity” — is the “ultimate Art of the Deal.”

4. The patent bargain works because “Capital markets look for clear signals about where investment is most likely to flourish.”

5. The 13 million patents that the USPTO will have issued by spring 2027 represent “13 million new inventions, improvements, and advances in our quality of life since America was born—that the world would NEVER have otherwise seen.”

6. “Every piece of IP we put into circulation is a potential job, a new business, a competitive advantage, an investible asset. And is yet another win for both society and the Constitutional foresight of our Founders.”

7. “In the U.S., IP intensive industries account for roughly 41 percent of U.S. economic output—estimated to be around $6.2 trillion dollars—and support more than 63 million American jobs, as well as industries that power America’s global trade competitiveness.”

8. “In fact, IP-intensive services account for about 31 percent of total U.S. Service EXPORTS, making them one of the largest contributors to the United States’ global services SURPLUS.”

9. “We are strengthening the business of America because we are strengthening the very patent bargain itself.”

10. Secretary Lutnick “improved financial services forever,” and “is the father of the industry today we all call Fintech.”

11. In Lutnick, “[T]here could be no better suited, no more courageous, no more creative, and no more passionate friend, supporter, advocate, or visionary to the importance of intellectual property, and what it means to all Americans.”

12. “And, of course, it almost goes without saying that President Donald J. Trump is the most brilliant creator and generator of brand value the world has ever seen!”

Some of those propositions confuse correlation with causation; a few are simply silly. But none of them tells us anything at all about whether patents should be stronger or easier to enforce.

Claim 1: Patent rights are enshrined in the Constitution.

In all-too-familiar maximalist-speak, Squires grossly misrepresents the Constitution:

“You see, two years earlier, our Founders ratified perhaps the most remarkable idea recorded in language of all time. The U.S. Constitution.

And even more remarkably, they placed intellectual property rights protection directly into the beating heart of a young America.

In Article 1, Section 8, Clause 8, they enshrined a right for you, and me, and every American, which secures for a limited time ‘to Authors and Inventors the EXCLUSIVE RIGHT to their respective writings and discoveries.’

And there it is.

The word ‘right.’

It’s the only recitation of a ‘right’ in the textual document itself. Otherwise, you have to look to the first 10 amendments—our Bill of Rights. But here it is unto itself—boldly, remarkably, daringly, beautifully—and ultimately singularly appearing in Article 1 among the Seven articles of the ‘Constitution Proper.’”

Yes, it appears “boldly, remarkably, daringly, and beautifully” — along with the power to “fix the Standard of Weights and Measures” — since otherwise Congress would be powerless to grant patents or copyrights, even though both had been fixtures of English law since 1624 (patent) and 1710 (copyright), states were already granting patent-like exclusive rights to inventors, and 12 of the 13 states had enacted copyright laws before the federal Constitution took effect.

Sarcasm aside, there’s nothing bold, remarkable, or daring about giving Congress the power to grant these kinds of rights.

As with many other maximalist tropes, I “pre-futed” this one in my letter to the Senate Judiciary Committee opposing Squires’s nomination:

1. Patent rights are not “enshrined” in the Constitution.

The Congress shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

– U.S. Constitution, Article I, Section 8, Clause 8.

Some rights actually are “enshrined” in the Constitution – Due Process, Free Speech, and Equal Protection, to name a few. The Constitution guarantees those rights unconditionally, to protect citizens from government overreach. By contrast, the Constitution does not provide any rights to inventors. It just says that Congress can create a patent system – a system of statutory rights, upon which Congress can place whatever conditions it wants. It doesn’t say Congress has to, and says nothing about the form that system should take.

And yet, patent maximalists inside and outside the USPTO routinely invoke the Constitution as a justification for making patents even stronger. See, e.g., PREVAIL Sec. 2 (1) (referring to “patent property rights enshrined in the Constitution of the United States”); RESTORE Sec. 2(4) (referring to “the constitutionally protected patent right”); see also Tr. 47:10-16 (“my world . . . is generally governed by . . . Article 1, Section 8, Clause 8”).

The Constitution in no way supports even stronger patent rights. If the Framers had any idea that, after more than 200 years of technological advances and multiple technological “revolutions,” we’re still handing out 20-year patent terms for nontechnological inventions and minor improvements, and considering making patent rights even stronger, they’d be astonished – if not appalled.

Squires’s observation that this is the only recitation of “Right” in the main text of the Constitution tells us nothing. “Exclusive right” was a descriptive term used for patents and copyrights, and the clause is defining a power of Congress. Nor is the word “right” talismanic. The main text protects the writ of habeas corpus while calling it a “Privilege,” and the Bill of Rights protects important rights without invariably using the word “right.”

Although this might seem harmless, it’s not. Maximalists like Director Squires use this kind of warped rhetoric to inflame the passions of credulous small inventors — and repeat the same tropes in congressional testimony, where they help dress up donor-friendly patent policy as constitutional principle.

Claims 2-4: The “butterfly effect,” the “ultimate Art of the Deal,” and capital-market signals

I’m grouping these claims together and won’t say much about them. They are typical maximalist talking points that (1) are not empirically supported and (2) at best support the existence of some patent system, not the patent system as currently configured, much less the maximalist view that the current system needs to be expanded and strengthened.

Even if patents sometimes encourage disclosure, investment, or invention, that tells us almost nothing about the optimal patent term, eligibility rules, obviousness standard, remedies, or mechanisms for challenging patents after they issue.

As discussed in my letter opposing Squires’s nomination, the system is already badly miscalibrated in several respects, and advances in AI make those problems increasingly urgent. See Letter Opposing Squires’s Nomination, Truth Nos. 5 (“Patents last too long”), 6 (“Patents are too easy to get”), and 16 (“One truth to rule them all: Advances in AI will result in explosive technological growth without the aid of the patent system”). Yet Squires is using these empirically unsupported assumptions to push the system in exactly the wrong direction, while showing remarkably little interest in seriously studying whether stronger and harder-to-challenge patents actually promote innovation.

Claim 5: The 13 million patents that the USPTO will have issued by spring 2027 represent “13 million new inventions, improvements, and advances in our quality of life since America was born—that the world would NEVER have otherwise seen.”

The maximalist claim that inventions would not be made but for patents was also heard at the recent hearing on subject matter eligibility. Iancu, Tr. 139:35-44 (“The cost of a drug that is not developed and brought to market after a lot of research and development is basically infinite.”); Tillis, Tr. 1:42:08-16 (“The cost of a drug and a therapy that could save millions that was never invented is zero [sic; infinite?]”).

I addressed this form of “innovation illiteracy” in Truth No. 4:

4. The vast majority of patented inventions are independently invented by others at about the same time.

Independent invention is the norm, not the exception. That goes for nearly all of the iconic inventions of the past, including the telegraph, the light bulb, the telephone, and radio, and it certainly goes for the vast majority of incremental improvements that are patented today. Excellent books on how innovation happens – all of which thoroughly document the fact of independent invention – are:

• Kevin Kelly, What Technology Wants (2010)

• Steven Johnson, Where Good Ideas Come From (2010)

• Matt Ridley, How Innovation Works: And Why It Flourishes in Freedom (2021)

And an excellent law review article is:

• Mark A. Lemley, The Myth of the Sole Inventor, 110 Mich. L. Rev. 709 (2012)

There are exceptions to the basic rule of independent invention – for example, new chemical entities will typically not be independently invented, and the myth of the sole inventor actually does play out from time to time – often with relatively simple “gadget” patents for the sorts of inventions we see on Shark Tank.

But independent invention is the norm across most fields, and this has rightly caused all of these authors to question whether the patent system, as currently configured, really is the best way to promote innovation. See Ridley at 342-350; Johnson at 213-246; Kelly at 131-155; Lemley at 760.

Of course, a maximalist will say that all of those independent inventors were motivated by the prospect of getting a patent. But that’s not necessarily the case. When someone asked Sir Humphry Davy why he didn’t patent an electric lamp he had invented to improve mine safety, he responded:

I never thought of such a thing: my sole object was to serve the cause of humanity; and if I have succeeded, I am amply rewarded in the gratifying reflection of having done so. More wealth could not increase either my fame or my happiness. It might undoubtedly enable me to put four horses to my carriage, but what would it avail me to have it said that Sir Humphry drives his carriage and four?

Davy was one of about 37 giants on whose shoulders Thomas Edison stood when he did a bit of routine experimentation to find a decent filament for the already-invented light bulb, got credit for “inventing” the whole thing, and patented the hell out of it.

More broadly, there is an enormous natural experiment testing Squires’s premise that America’s patent system is what makes invention happen: it’s called recorded human history. Here’s a picture of the first three volumes of A History of Technology (Oxford University Press 1950), each running about 800 pages, and covering technological advances through 1750. Humanity somehow managed to fill all that space with invention before there was a United States, much less the patent system Squires credits with producing innovations “the world would NEVER have otherwise seen.”

Finally, as with the previous claims, even if there were a grain of truth behind Squires’s statement, it says nothing about whether the system is currently calibrated for optimum invention and innovation. As explained at length in my letter opposing his nomination, it isn’t.

Claim 6: “Every piece of IP we put into circulation is a potential job, a new business, a competitive advantage, an investible asset. And is yet another win for both society and the Constitutional foresight of our Founders.”

He keeps saying this, so I’ll just quote myself from the first time I heard him say it — in his first speech as Director:

Here’s one place where his thinking needs work:

“Our Office is not just an administrative agency; we are a strategic arm of national economic policy; we are the Department of Commerce’s Central Bank of Innovation. Every piece of IP we put into circulation is a potential job, a new business, a competitive advantage, or an investible asset. And yet another win for both society and the Constitutional foresight of our Founders.”

Of course every patent has potential upsides. But patents also have serious potential downsides: lost jobs, suppressed competition, monopoly pricing, foreign ownership of the majority of U.S. patents, and heavy taxes on businesses that independently invented better products. And all of this comes on top of the separate problem of low-quality patents, which Director Squires himself has acknowledged. Patent policy, like any economic policy, must weigh the costs against the benefits.

That is why, in my letter opposing his nomination (https://lnkd.in/eBuhpuDf), I emphasized several core truths about how the patent system actually works:

• Patents distort free markets.

• Patents last too long.

• Patents are too easy to get.

• Foreign inventors get more U.S. patents than U.S. inventors.

• Most inventions are invented independently around the same time.

• Strengthening existing patents benefits patent monetizers – including foreign investors – and is a deadweight tax on society.

• Drug patents often extend monopolies based on minor advances, keeping U.S. drug prices high.

• AI will drive explosive technological growth, with or without patents.

• The USPTO must safeguard the public’s side of the patent bargain.

I hope that as Director Squires begins to form patent policy, he revisits these truths and recognizes that the loudest voices in this debate do not always serve the best interests of the U.S. or its economy. What’s needed now is a USPTO Director who makes the public interest the touchstone of policy – and who listens carefully not just to entrenched voices on both sides, but also to impartial experts, including academics in economics and in law.

That’s really the point. A patent is not automatically a “win for society.” It is a government-granted, market-distorting, right to exclude, and whether issuing or strengthening a particular class of patents improves social welfare is an empirical question — not something established by calling patents “investible assets.”

Claim 7: “In the U.S., IP intensive industries account for roughly 41 percent of U.S. economic output—estimated to be around $6.2 trillion dollars—and support more than 63 million American jobs, as well as industries that power America’s global trade competitiveness.”

This claim is primarily drawn from the USPTO’s deeply misleading Intellectual Property and the U.S. Economy: Third edition (released in 2022), which the agency issued over my strenuous internal objection, and which I dealt with as Quarter-Truth No. 14 in my letter opposing the Squires nomination.

Even Squires’s quotation is a bit of a statistical Frankenstein. The 41 percent and 63-million-job figures correspond to the Third Edition, but that report estimated roughly $7.8 trillion in GDP, not $6.2 trillion. The $6.2 trillion appears to come out of nowhere — it’s not even from an earlier edition of the report.

About a week after these remarks, the USPTO published yet another version of the study. I’ve now written three separate posts about it, including one reporting that Director Squires authorized 30 minutes of “other time” for USPTO employees to read it, and offered a chance at a $100 gift card for commenting on it on an internal blog.

Again, in addition to the report’s acknowledged causation/correlation problem, the large numbers are exactly what you would expect from an economy with a very large GDP. If you arbitrarily divide the economy into industries with above-average and below-average IP intensity, you’ll have divided it into two very large, multi-trillion-dollar parts. That’s where the trillion-dollar numbers — including, nonsensically, for design patents — come from.

My critiques of the latest edition of the report are here, here, and here.

Claim 8: “In fact, IP-intensive services account for about 31 percent of total U.S. Service EXPORTS, making them one of the largest contributors to the United States’ global services SURPLUS.”

This is a very random statistic. Here, Squires has veered into a narrow corner of “intellectual property” — that which can be swept into a category called U.S. service exports.

The statistic comes from the U.S. Chamber of Commerce’s 2026 International IP Index, which defines “IP-intensive services” to include IP licensing, R&D, software, and audiovisual services. It thus aggregates software, R&D, entertainment, and various forms of IP licensing, calls the result “IP-intensive,” and finds that it represents 31 percent of services exports.

That tells us essentially nothing about the contribution of patents, much less whether there is a trade surplus attributable to “patent-intensive services.” And even as a broader claim about IP and trade, it is highly selective: the USPTO’s own latest report shows that IP-intensive industries account for a larger share of U.S. commodity imports than exports, and that 64 of 76 IP-intensive commodity-exporting industries run trade deficits.

More fundamentally, in a speech about the importance of patents and invention, Squires has injected a statistic driven by a broad assortment of activities and IP regimes.

It’s a common patent-maximalist tactic that I addressed in Quarter-Truth 17:

17. What is true for other forms of IP is not necessarily true for patents.

Those arguing for stronger patents often use the term “IP” rather than “patent.” This enables them to make assertions that apply primarily to regimes other than patent law when arguing for stronger patent protection.

The most obvious point is that in trademark, copyright, and trade secret law, there is little question about who owns the right, and why that person or corporation’s right should be respected. In patent law, however, “ownership” of the rights is much less clear, since (1) questions often arise about whether an accused product actually infringes the properly construed claims, and (2) validity is frequently contested. In addition, patent rights do not reflect “moral rights” in the same way copyrights, trademarks, and trade secrets do. For those regimes, infringement generally involves knowledge of the right and intentional copying of it. In patent law, by contrast, independent invention is the norm (see Truth No. 3), and the patent right merely reflects the government’s initial determination that the patentee was the first to apply for a patent on the invention. In patent law, independently-inventing infringers often have the greater “moral” claim to the inventions they are accused of “stealing,” since they are the ones who invested in implementing and commercializing it.

As a concrete example, a recent patent maximalist report states that “businesses rely on strong IP rights to capture a return on their investments, securely engage in international partnerships, and protect themselves from counterfeiting, piracy, and theft.” Kirti Gupta, Andrei Iancu, Walter G. Copan, and Chris Borges, Protecting Intellectual Property for National Security, A Transition Report for the New Administration (Center for Strategic and International Studies 2025), at 32. But counterfeiting is primarily trademark infringement, piracy is primarily copyright infringement, and “theft” is a misnomer for any kind of IP other than trade secrets (see Quarter-Truth No. 3). And yet, except for some vaguely worded recommendations using the term “IP,” all of CSIS’s recommendations have to do with strengthening patent law. Id. at VIII-X.

Likewise, although Senator Tillis kicked off the IP Subcommittee’s recent hearing on Foreign Threats to American Innovation and Economic Leadership (May 14, 2025) with statements about the importance of strengthening U.S. patents, the focus of the witness testimony was on other IP regimes, and there was no significant testimony from any of the witnesses on why or how strengthening U.S. patents would address any “foreign threats to American innovation.” As discussed in Truth No. 8, strengthening U.S. patents will just make it easier for foreign entities to sue U.S. businesses in the U.S., but nobody made that point at the hearing.

Significantly, anyone arguing for a change to copyright, trademark, or trade secret law will usually focus on those doctrines and use their proper, specific names. Serious discussions of patent law should likewise focus on patent law, and avoid use of the misleading “intellectual property” umbrella term.

Claim 9: “We are strengthening the business of America because we are strengthening the very patent bargain itself.”

Director Squires doesn’t say just how “we” are strengthening the patent bargain, but presumably he’s referring at least in part to making it harder to challenge patents at the PTAB, thereby ensuring that even weak patents retain considerable nuisance value.

This again reflects a basic misunderstanding of how markets work. Patent rights deliberately distort the free market by allowing their owners to exclude competitors. That may sometimes produce offsetting benefits, but simply making those rights stronger does not necessarily “strengthen the business of America.”

Yes, it may strengthen the patent portfolios of entities like Howard Lutnick’s family firm Cantor Fitzgerald, or Squires’s former client Fortress. But that doesn’t translate into strengthening American business as a whole. Businesses on the other side of those patents face higher costs, greater litigation risk, and greater barriers to implementing technology they may have developed independently.

If anything, the relevant question is whether strengthening patent rights produces enough additional innovation to justify those costs. Squires simply assumes the answer. And, as already discussed, he’s gotten it wrong.

Claim 10: Secretary Lutnick “improved financial services forever,” and “is the father of the industry today we all call Fintech.”

This is just silly.

Lutnick and Cantor Fitzgerald were important participants in the transition from voice brokerage to electronic trading, particularly in fixed-income markets. But electronic finance and automated trading long predated Lutnick, and numerous firms were moving toward greater automation as computing and network technology improved.

Lutnick’s companies managed to obtain a very large portfolio of patents covering aspects of electronic financial trading. Many of those claims, particularly claims directed primarily to rules for conducting financial transactions using computers, would at minimum face serious questions under today’s § 101 jurisprudence after Bilski and Alice.

None of this establishes that electronic trading depended on Lutnick’s patents or that, without those patents, fintech would somehow not have developed.

And that is the same mistake as Claim 5 — treating patents as proof of causation. Lutnick and Cantor Fitzgerald may have succeeded in the marketplace while building a substantial patent portfolio around electronic trading. But that does not show that the patents caused the transition, much less that fintech would not have developed without them — or without Lutnick.

Claim 11: In Lutnick, “[T]here could be no better suited, no more courageous, no more creative, and no more passionate friend, supporter, advocate, or visionary to the importance of intellectual property, and what it means to all Americans.”

I’ve looked, but I’ve been unable to find any meaningful public statement by Howard Lutnick explaining his philosophy of intellectual property and “what it means to all Americans.”

What we do know is that he dissolved the Patent Public Advisory Committee back in March 2025 and that it still has not been reconstituted, suggesting little interest in the statutory mechanism Congress created to obtain public input on USPTO policy choices.

Likewise, Lutnick had Acting Director Stewart move forward with major changes to PTAB practice even after Squires had given the Senate quite specific assurances about what he would do once confirmed. Squires said he had “no pre-disposition to alter the PTAB’s authority or restrict IPR access,” promised to study the issues before making major changes, and said he would work with stakeholders, agency leadership, and Congress to determine what reforms, if any, were appropriate. He even specifically recognized the importance of IPR access in addressing abusive patent practices and questionable pharmaceutical patents. See Squires Confirmation — Good News! (Substack, September 18, 2025). In other words, Lutnick had effectively rendered those commitments meaningless before Squires even took office.

Most of what we know about Lutnick’s patent-policy philosophy comes indirectly from Coke Stewart and John Squires, both of whom have portrayed him as a driving force behind the USPTO’s current agenda — including cutting back IPRs and reexaminations, imposing new procedural restrictions on patent challenges, expanding patent eligibility, and emphasizing examiner production over patent quality.

The common thread is straightforward: make patents easier to obtain, harder to challenge, and more valuable once issued. That is a coherent agenda for existing patent owners and patent monetizers. It is not a coherent account of what intellectual property “means to all Americans.”

Claim 12. “And, of course, it almost goes without saying that President Donald J. Trump is the most brilliant creator and generator of brand value the world has ever seen!”

This seems like more than just sycophancy, since Trump wasn’t even there to hear it. Perhaps Squires truly believes it, which could explain a lot.

I’m pretty sure the students of Trump University, the creditors of Trump Shuttle and his bankrupt casinos, the handful of people who bought Trump Steaks or Trump Vodka, and the customer whose $640 Trump watch arrived emblazoned “RUMP” have a somewhat less exalted view of the Trump brand.

And that’s before asking what he has done lately to the value of the American brand.

The larger problem is not any one of these claims. It is a way of thinking about patent policy in which patents are presumed to cause innovation, large numbers are presumed to prove success, and stronger rights are presumed to benefit the country. Once those premises are taken as articles of faith, there is little reason to ask the question that should come first at the USPTO: what patent system actually produces the greatest benefit for the American public?

The main reason is that while Coke continues to pay lip service to “data” and reaching “common ground,” she also continues to mischaracterize both her own record and the current state of play. Until we agree on just where we are and how we got there, it’s just not productive to be talking about “common ground.”

Coke says:

“We were trying to restore balance. Petitioners may not have viewed it that way, but one issue I think many people overlook is that there is broad agreement that clearly invalid or clearly unpatentable claims should be subject to review, whether because of an office error or a major change in the law.”

There’s some serious doublespeak here. Yes, we all agree that clearly invalid or clearly unpatentable claims should be subject to review. But that’s NOT the USPTO’s approach, as Coke’s qualification makes clear. You can’t count on the USPTO to invalidate a clearly invalid or clearly unpatentable claim that’s more than six years old UNLESS there has been a “major change in the law” or you can satisfy the USPTO’s extremely narrow definition of “examiner error” — which excludes the most obvious “error” of not finding the best prior art in the first place.

And under the USPTO’s new “explain the difference” regime, the Director can literally breathe new life into claims that a PTAB panel has found unpatentable if, for example, the panel did not explain to his satisfaction why its determination differed from an earlier, non-final, non-binding determination of the ITC. See, e.g.,Biofrontera Inc. v. Sun Pharmaceutical Industries, Inc., IPR2024-01312, Paper No. 58 (July 29, 2026); see also Facebook v. Express Mobile, IPR2021-01226, Paper No. 68 (June 25, 2026) (similar, for district court); Sinclair Pharma v. Hyrdrafacial, LLC, IPR2025-00145, Paper No. 41 (Feb. 12, 2026) (deinstituting an instituted proceeding based on the “explain the difference” memo).

That’s a bizarre way to run a patent office. Why is the USPTO suddenly giving that kind of deference to non-binding ITC decisions, and vacating, on non-merits grounds, its OWN decisions finding claims unpatentable? Is there “broad agreement” on that approach?!

The better rule — and, ironically, the one that came much closer to implementing the principle Coke now says enjoys “broad agreement” — was in Director Vidal’s June 2022 memo, which provided that if the petitioner made a compelling case for unpatentability, then there would be no discretionary denial. But Coke got rid of that rule in one of her first substantive acts as Acting Director.

Speaking of the system before she got her hands on it, Coke says:

“Under the current system, anyone can challenge an issued patent, at almost any time — and repeatedly.”

That’s misleading at best — under General Plastic and the PTAB’s Consolidated Trial Practice Guide, any single petitioner generally gets only one shot at an IPR, and under the pre-existing Fintiv-Sotera rules, the petitioner often had to promise not to raise in district court arguments that it could have raised in the IPR. But that wasn’t good enough — under the Coke-Squires rules — as proposed and also as currently applied — if ANOTHER accused infringer has managed to lose before the USPTO, district court, or the ITC in a non-final decision, the USPTO slams the door on IPRs by any subsequent accused infringer.

That bears no resemblance to anything suggested by Congress in the AIA, which made it pretty clear that ANYONE could bring an IPR as long as they brought it within 12 months of being sued. And how is that unfair? The only patentees who “suffer” repeat challenges under the AIA are those that are suing multiple defendants — often an entire industry — based on a patent or family of patents with broadly written claims.

Do we really need to feel sorry for those patentees, especially considering that many of them bought their patents second hand? Isn’t the more important question to resolve whether one single entity — often a non-practicing entity — is truly entitled to a cut of the profits of an entire industry?

It’s not “harassment” if you’re sued for tens or hundreds of millions of dollars, and seek your own congressionally-authorized challenge to the patent before the agency that issued it.

One can’t help observing that the USPTO’s rules particularly benefit well-funded patent assertion entities, and NOT the struggling individual inventor whose “plight” supposedly motivated these changes. If Coke and Squires don’t understand this, it’s only because they failed to do any study whatsoever before implementing the changes, and continue to blind themselves to the impact of their changes.

Coke continues:

“The issue is not preserving patents that should not exist. The issue is preventing repeated attacks on established rights.”

Yet another non-sequitur. As already explained, the “settled expectations,” “explain the difference,” and “one-and-done” rules plainly preserve patents that should not exist. Same for the new Corning-based RPI rule, and also the Director’s use of his Director Review authority in cases like Blackhawk v. Interactive. THAT IS THE ISSUE. And as also explained, “repeated attacks” by DIFFERENT accused infringers is a feature, not a bug, of the system Congress created. Note also that she’s slipped in “established” to modify “rights,” and yet the actual practice is that a non-final, non-binding decision by the ITC or a district court against one infringer can convert a patent into an “established right” against someone else.

“Settled expectations” in particular has nothing to do with “repeated attacks” and is particularly difficult to defend in the pharmaceutical context. Generic and biosimilar manufacturers often need to address barriers caused by patent thickets well before they have Article III standing to challenge those patents in district court. There is no good reason for expectations surrounding later thicket patents to become “settled” during a period when those patents will not be infringed because the original patent still blocks generic or biosimilar entry. Knocking out those challenges based on “settled expectations” makes zero sense, unless you like high drug prices. See Post on Amgen v. BMS (LinkedIn, Aug. 2025); Post on Amgen v. BMS Rehearing Request (LinkedIn, Sept. 2025)).

For any maximalist — including Coke — who reads this, I strongly suggest that any time you talk about “repeated attacks” on a patent, you distinguish between attacks brought by a single entity (or its RPIs), and those brought by different, unrelated entities. The former is NOT the controversy here; the latter is. Conflating them obscures the issue.

Finally, we have this:

“The institution standard is relatively low, the burden on petitioners is relatively low and appellate review is highly deferential. I do not believe Congress intended to create a system that second-guesses patentability decisions under such a low threshold, but that is effectively what happened.”

So she doesn’t “believe” that Congress intended to impose the very standards — reasonable-likelihood for institution; preponderance-of-the-evidence for unpatentability — that it plainly and specifically wrote into the statute? How does that make sense?

And why should it be up to the USPTO Acting Director to unilaterally and retroactively circumvent those standards? Why not do what John Squires told the Senate and the public that he would do — study the issue, and then consult with Congress before making any significant changes?

One answer could be that these changes were demanded by Howard Lutnick, and Coke had no choice but to implement them quickly. That may well be what happened. But it just underscores that the changes were made with no attempt to actually study the issues.

And as shown above — and in the previous posts in this series — Coke’s post-hoc justifications for the changes don’t make a lot of sense.

August 7, 2026 (my repost of Nick Robertson’s post about his interview with Coke; Nick’s original post is reproduced below):

Would people PLEASE stop interviewing Coke Stewart? She needs a bit more time to reflect on how she is going to answer the questions, in view of the actual record.

Here, Coke says:

“You knew the minute the president won that election in November that there were going to be changes at USPTO. . . . If you wanted to put blinders on and think that you were just going to keep filing those [IPR] petitions and they were going to keep sailing through without any changes in a pro-property rights conservative administration, you were not living in reality.”

Except that’s very different from the message being conveyed within the PTAB while I was there, through February 28. The understanding was that IPRs were not headed for anything like the changes that followed; if anything, there might be a temporary slowdown while the Office addressed the supposed ex parte backlog.

And it certainly isn’t what John Squires told the Senate Judiciary Committee at his May 21 confirmation hearing and in his May 28 QFR responses. As I’ve noted before, Squires promised repeatedly that he would not make major changes to the PTAB without first studying the issues and working with Congress:

https://lnkd.in/eps3yVkA

Coke now seems to be telling us that everyone should have known that the administration’s actual policy would be dramatically different from what its officials were telling employees, Congress, and the public — and that anyone who relied on those assurances was “not living in reality.”

Sorry, Coke. We did not yet know that.

Some of us also hoped that a leader of Coke’s intelligence and experience would understand -- and be able to persuade others in the administration -- that being "pro-property rights" is entirely compatible with maintaining a sensible balance between the rights of patentees and the rights of the public. Those principles should not be controversial in a patent system whose constitutional purpose is to promote progress.

Also: "settled expectations" is NOT a "logical continuation" of Andrei Iancu's work. I refuse to believe he would have signed on to such an illogical and unsupportable doctrine.

And here’s the repost (Nick Robertson/Mlex, Aug. 6, 2026):

New in MLex: I sat down with former USPTO Deputy Director Coke Morgan Stewart, who told me that she left the office because she feels she can have a larger impact on patent policy outside of government.

Stewart, who led the agency as acting director last year, said that the office is now moving into “maintinance mode” after a reform-heavy 2025. With the first PTAB rulemaking in review and Director John Squires wanting to focus on AI and patent eligibility policy, it was the right time to leave, she said.

She also defended last year’s many IPR changes, calling them a logical continuation of the work started by former Director Andrei Iancu.

“You knew the minute the president won that election in November that there were going to be changes at USPTO,” Stewart said. “If you wanted to put blinders on and think that you were just going to keep filing those [IPR] petitions and they were going to keep sailing through without any changes in a pro-property rights conservative administration, you were not living in reality.”

“And when people say abrupt change, it wasn’t abrupt for the people who had been waiting for these changes for four years,” she continued. “It was abrupt to the people who liked the status quo, which was basically unfettered access to patent challenges.”

Read more: https://lnkd.in/ezQnV854

August 10, 2026 (my repost of Angela Morris’s post about her interview with Coke; her original post is reproduced below):

Sigh. Another Coke Stewart interview.

“Something that I was able to do is bring more awareness to the challenges that the inventor community is facing. From examination processing to post-grant challenges and repeat challenges and the plight they're facing in the IP system . . . . In the USPTO, you can affect [sic] a lot of helpful change and bring a lot of awareness to those issues, so I'll definitely miss that."

A few points:

1. There is no such thing as a monolithic “inventor community.” The majority of U.S. inventors work for large companies. Inventors at large, established companies are not generally in “plight.”

2. It sounds like she really means the small-inventor community. But anyone who has practiced patent law for any length of time has long been aware of the difficulties faced by small inventors – both before and after the AIA.

3. And inventors are not the same thing as patent owners. If her objective really was to help struggling small inventors, why didn’t she use the USPTO’s asserted discretion in a targeted way? Instead, the principal effect of her “helpful changes” was to strengthen the position of patent owners generally, including well-funded patent assertion entities that bought their patents secondhand – and that have long relied heavily on the plight of small inventors in lobbying for stronger patent rights.

4. Those “helpful changes” also undermine what Congress was trying to accomplish with the AIA. If the Supreme Court does not reverse them, a future Director very likely will.

5. Coming as they did shortly after Director Squires had assured Congress that he would study these issues before making changes, they also blew a hole in the agency’s credibility.

6. And implementing this policy agenda apparently required sidelining – and ultimately pushing out – experienced career leadership at the PTAB and Solicitor’s Office, while the Public Patent Advisory Committee was dissolved and never reconstituted and the PTAB itself was largely dismantled. Those choices did real institutional damage – and they hardly suggest an administration interested in hearing views that might conflict with those of the “inventor community” it had chosen to champion.

7. Coke Stewart and Director Squires have also recently made clear that their direction came from Howard Lutnick, who does not appear to be suffering as an inventor, and whose firm – now run by his sons – benefits enormously from stronger patent-enforcement leverage. Do we really think his concern was the plight of small inventors rather than his family's economic interests?

8. My biggest complaint remains that these sweeping policies were implemented without any serious attempt to assess their effects on innovation, competition, consumer prices, health-care costs, or the economy. Concern for struggling small inventors is understandable. It is not a license to preserve bad patents at everyone else’s expense.

And here’s the original post (IAM/Angela Morris, Aug. 7, 2026):

Outgoing USPTO deputy director Coke Morgan Stewart is shifting to intellectual property policy after leaving her post, closing out an eventful tenure that saw the agency aggressively tackle a growing patent application backlog while navigating disruptive federal workforce policies.

“Something that I was able to do is bring more awareness to the challenges that the inventor community is facing. From examination processing to post-grant challenges and repeat challenges and the plight they're facing in the IP system,” Stewart said. “In the USPTO, you can affect a lot of helpful change and bring a lot of awareness to those issues, so I'll definitely miss that. That ties into what I'm interested in doing: that's the part that I really want to stay most involved in.”

Stewart sat down with IAM's Angela Morris as part of our Women in IP series. More for subscribers here: https://lnkd.in/ecG-cd7t

“The report confirms the resounding and unassailable fact that the doorway to America’s Innovation Agency is, in both fact and deed, the entry point to indomitable prosperity. There is no better return on investment, than investing in American ingenuity.”

Per the above quotes, Director Squires continues to gush over the garbage-in-garbage-out Intellectual Property and the U.S. Economy 2024 report that I’ve already posted on twice.

The quotes are from his Friday message to “colleagues” (OCR version below), in which he’s posted some of the report’s more impressive-sounding statistics and offers USPTO employees 30 minutes of nonproduction/other time to “dive into the report, digest the report, think about the report, and talk to each other about the report.” On top of that, he’ll award $100 gift cards to each of the top ten contributors to an internal “America’s Innovation Sonic Boom” blog he has set up to discuss the report.

I’m guessing many USPTO employees would prefer restoration of the union protections, bonuses, and other workplace benefits this administration has taken away to 30 minutes of other time and a lottery-ticket chance at $100.

I think I’ve already said just about everything I have to say about the report here and here.

So, to mix it up, I’ll write this one in Q&A format, centered on the statistics Squires is touting. If you’re a USPTO employee, feel free to post a version of this — or of my earlier posts — on the “America’s Innovation Sonic Boom blog.”

Q: The numbers sound impressive. How did the report arrive at “$11.4 trillion in economic contribution value to U.S. GDP (or 44% of total GDP),” and “Direct employment for 49.6 million workers (or 33% of total U.S. employment)”?

A: The report starts with 210 industries covering the U.S. private economy. For utility patents, design patents, and trademarks, it calculates how many IP rights each industry obtains relative to its number of employees. An industry is labeled “IP-intensive” if its IP-rights-per-worker figure exceeds the economy-wide benchmark for at least one type of IP. Copyright-intensive industries are identified separately. The report then divides the economy, for purposes of its headline statistics, into two groups: industries it labels “IP-intensive,” and all the rest.

Q: So ultimately there really are just two groups?

A: Right. And interestingly, the “IP-intensive” group is actually the larger one: 128 of the 210 industries — about 61%.

Q: And what percentage of jobs and GDP does that larger group account for?

A: Only 33% of direct private-sector employment and 44% of private-sector GDP.

Q: So how do we make that sound impressive?

A: Report the raw numbers. “49.6 million jobs” sounds like an enormous number, because it is. “$11.4 trillion” sounds enormous too. And “one-third of all jobs” and “44% of GDP” sound pretty good until you remember that those numbers represent the combined activity of 61% of the industries in the private economy.

Q: So what does this tell us about the importance of IP?

A: Practically nothing. As the report itself says: “While we cannot isolate IP’s impact from other factors, this exercise provides a useful benchmark to characterize the economic importance of industries that most heavily use IP protection and to compare the results to other countries.”

Q: So far, all we’ve really learned is that the industries the report calls “IP-intensive” account for fewer jobs and less GDP than the industries it does not call IP-intensive?

A: Right.

Q: So doesn’t the aggregate relationship actually run in the opposite direction from the story Squires is telling?

A: At this crude group level, yes. The group classified as more IP-intensive accounts for fewer jobs and less GDP than the group classified as non-IP-intensive.

Q: Does that mean IP causes lower employment or GDP?

A: Of course not. That would make exactly the same correlation/causation mistake. The point is that these numbers cannot support the opposite claim either — that IP rights caused the jobs or GDP Squires is touting.

And we shouldn’t lose sight of the causation problem, because it remains a complete answer to almost any causal claim someone might try to draw from this report. The report itself expressly acknowledges that limitation.

Q: What about Squires’s claim that “workers in IP-intensive industries earned on average $1,897 more per week than their counterparts in non-IP-intensive industries — that’s roughly 53% higher”? Doesn’t that show that IP-intensive industries produce better-paying jobs?

A: First, Squires has garbled the statistic. The report does not say that workers in IP-intensive industries earned $1,897 more per week. It says that $1,897 was their average weekly earnings, which was 53% higher than the average for workers in non-IP-intensive industries. Squires turned the wage itself into the wage differential.

But once that is corrected, this is actually a very good example of the correlation/causation problem. There really is a correlation here: workers in industries classified as IP-intensive earn substantially more than workers in other industries.

What the report does not show is why they earn more. It tells us only that industries whose workers earn more also happen to obtain above-average amounts of IP per worker. It does not tell us that IP rights caused the higher wages.

The reports themselves supply obvious alternative explanations. This year’s report attributes the wage difference at least in part to higher labor productivity, noting that output per worker is about $230,000 in IP-intensive industries versus $145,000 elsewhere. The previous edition also found dramatically higher educational attainment among workers in IP-intensive industries, which would naturally correlate with higher pay. And this year’s report expressly shows, in its discussion of copyright-intensive industries during COVID, that shifts in the mix of industries can change the measured wage premium. These are very different industries employing very different workers. Nothing in the analysis establishes that IP rights caused the wage difference.

Q: How does this report’s 53% “wage premium” compare with the previous report?

A: It’s actually down. The previous edition, using 2019 data, reported average weekly earnings of $1,517 in IP-intensive industries versus $947 elsewhere — a 60% premium.

Q: Does this report tell us anything about whether our standards for granting IP rights are optimal?

A: No. In fact, under this methodology, if the standards for obtaining patents or trademarks were substantially raised, the headline numbers could remain much the same.

Q: What if the standards were substantially lowered?

A: Same problem. The methodology ranks industries according to their relative use of IP. It does not tell us whether more IP, fewer IP rights, stronger IP rights, or weaker IP rights would produce more jobs or GDP.

A methodology that could produce essentially the same headline statistics under radically different amounts and strengths of IP protection cannot tell us that those statistics were caused by IP — much less that stronger IP rights would increase them.

Q: I can’t help noticing that the numbers for trademarks and design patents are both higher than those for utility patents. The report says trademark-intensive industries account for $9.46 trillion in GDP, design-patent-intensive industries $6.8 trillion, and utility-patent-intensive industries only $6.0 trillion. How should we interpret that?

A: Carefully.

The groups overlap substantially, so those figures cannot simply be added together. But if someone wants to treat the economic output of an “IP-intensive” industry as evidence of the importance of the particular IP right in question, then the report would appear to tell us that design patents contribute more to GDP than utility patents.

That is obviously not what the methodology can establish.

And yet after the previous report, those sorts of numbers were in fact used to emphasize the economic importance of design patents and to suggest that design-patent-intensive industries “drove” trillions of dollars of GDP.

That is the correlation/causation problem in especially vivid form.

Q: What about the export figures? Squires says IP-intensive industries account for $1.58 trillion — 81.5% — of all U.S. commodity exports, and that 18 of the 20 biggest commodity-exporting industries are IP-intensive. That sounds remarkable.

A: Until you look at what is actually being measured.

“Commodity exports” are physical goods, and U.S. exports of physical goods are dominated by manufacturing. Manufacturing, in turn, is overwhelmingly classified as IP-intensive under the report’s methodology.

The report’s leading IP-intensive exporters include aerospace products and parts, pharmaceuticals, petroleum and coal products, motor vehicles, basic chemicals, motor-vehicle parts, semiconductors, computer equipment, medical equipment, and communications equipment. The top 15 IP-intensive exporting industries alone account for more than half of all U.S. commodity exports.

By contrast, the report itself says that most of the non-IP-intensive commodity-exporting industries are in agriculture and raw materials.

So the 81.5% figure largely tells us that the industries that manufacture most of the things America exports also happen to be industries that this methodology labels IP-intensive.

Again, it tells us nothing about whether IP rights caused those exports — or whether exports would be higher, lower, or exactly the same with stronger or weaker IP rights.

Q: Anything else interesting about those trade numbers?

A: Yes. Squires trumpets the $1.58 trillion in exports, but the report also says that IP-intensive industries accounted for $2.76 trillion in commodity imports — 88.5% of all U.S. commodity imports. And 64 of the 76 IP-intensive commodity-exporting industries ran trade deficits.

That doesn’t mean IP caused the trade deficit either. It just illustrates once again why attaching causal significance to these industry classifications is so problematic.

Q: So is the report itself really the problem?

A: In an important sense, no. It is almost beating a dead horse to keep criticizing the methodology, because the report itself essentially acknowledges its central limitation: it cannot isolate the effect of IP from all the other things that distinguish these industries.

Q: Then why keep writing about it?

A: Because people keep using the report to make claims the report cannot support.

Squires is doing exactly that here. He tells USPTO employees:

“Every time you grant a patent or register a mark, you are keeping innovation alive. YOU are adding new opportunities for growth in the American job market. YOU are increasing our nation’s GDP. YOU are bolstering the American economy.”

He then calls IP “the very bedrock of American Exceptionalism itself” and says the report establishes the “resounding and unassailable fact” that the USPTO is the doorway to “indomitable prosperity.”

But the report establishes none of those things.

In fact, the report expressly says that it cannot isolate IP’s impact from other factors.

Q: So what does the report actually establish?

A: That some industries obtain more IP rights per worker than other industries, and that those industries have certain other characteristics.

That’s interesting descriptive information.

It is not evidence that every patent the USPTO grants creates a job, increases GDP, makes an investment worthwhile, or advances American society.

Q: One last thing?

A: There is another complication that the report largely leaves out: much of the economic activity being counted belongs to foreign-owned companies, and more than half of U.S. patents are now granted to at least one foreign applicant.

So even if the statistics had the causal meaning that Squires attributes to them, we would still have to ask who receives the resulting benefits. “Economic activity occurring in an IP-intensive U.S. industry” is not the same thing as “economic benefit flowing to Americans.”

But that is almost beside the point.

The basic problem is simpler: the report measures the size and characteristics of industries that use IP intensively. Squires is treating it as proof of what IP rights cause.

The report itself knows better.

Here’s an OCR’d version:

Director’s Message

Summer Reading

Colleagues,

IP roars. And American ingenuity roars loudest. How loud?

Try:

• $11.4 trillion in economic contribution value to U.S. GDP (or 44% of total GDP)

• Direct employment for 49.6 million workers (or 33% of total U.S. employment)

• Indirect employment (jobs created in other industries that depend at least partially on final sales in IP-intensive industries) providing an additional 11% of total U.S. employment

This past Monday, we released the latest edition of our report series titled “Intellectual property and the U.S. economy in 2024” detailing just how profoundly the economic contributions of industries predominantly relying on IP protection supercharge the U.S. economy.

There it is in black and white: IP-intensive industries provide better paying jobs, employ one-third of total workforce, and account for 44% of U.S. gross domestic product (GDP). Boom. (pun intended).

What’s more, findings corroborate that workers in IP-intensive industries earned on average $1,897 more per week than their counterparts in non-IP-intensive industries—that’s roughly 53% higher and the differential continues growing. Overall, the wage premium for workers in the IP-intensive industries rose by 13% over the past decade.

Want to read in between the lines? It gets even better: in 2024, private sector output in the U.S. amounted to $26 trillion with IP-intensive industries accounting for nearly $11.4 trillion of this output. The U.S. exported commodities worth about $1.58 trillion, or 81.5% of all U.S. commodity exports across all industries in 2024. About 73% of the industries identified as commodity-exporting industries are IP-intensive, and of the top 20 commodity exporting industries, 18 are IP-intensive—that’s 90%. Broken down by IP type, that means:

• Trademark-intensive industries accounted for $9.5 trillion in output and 54% of commodity exports

• Utility patent-intensive accounted for $6 trillion in output and 76% of commodity exports

• Design patent-intensive industries accounted for $6.8 trillion in output and 74% of commodity exports

Adjusting for inflation, total output for the IP-intensive industries in 2024 increased by an average of 3.6% per year over the 2019 estimates previously reported. This growth is higher than the 2.3% annual growth achieved by private sector GDP between 2019 and 2024. Boom.

You’ve heard me say time and again, you are the best in the world at what you do. Well, here it is in black and white for all the world to see.

And see they will, because in my follow-up “thank yous” for our WIPO bilateral meetings with over 30 international office heads, I’m personally writing to each and including a copy of the full report.

The past few years have witnessed unprecedented growth in intangible capital across countless sectors. And our nation will help lead these very sectors as we shape the next 250 years. America leads because no other nation comes close to our ability to conjure ideas, take risks, and reach breakthroughs—and see them through. And America’s Innovation Agency sets the bar through all of you.

The very IP protections sought by innovators and creators when they come to us are what motivate them to persist, to keep identifying problems, and to continue chasing solutions. Every time you grant a patent or register a mark, you are keeping innovation alive. YOU are adding new opportunities for growth in the American job market. YOU are increasing our nation’s GDP. YOU are bolstering the American economy. Because YOU are safeguarding their hard work, YOU are making every sacrifice, every setback, and every risk worth it.

You’ve also heard me say that time and again that every piece of intellectual property we put into circulation is a potential job, a new business, a new business development, an investible asset. Well, take a look at American ingenuity at scale.

And I do mean take a look. A hard look. This report is the sum of all ingenuity that crosses our desks and why American ingenuity has advanced society at a pace unmatched by any other country or society in human history—even to this day.

Indeed, IP is the very bedrock of American Exceptionalism itself. For us at America’s Innovation Agency in America’s 250th year, our mission remains the same as when the word “right” was at the tip of a quill pen and inscribed on Constitutional parchment just as it is written into every American’s DNA. These rights and protections we grant enable entrepreneurs to compete and investors to believe.

The report confirms the resounding and unassailable fact that the doorway to America’s Innovation Agency is, in both fact and deed, the entry point to indomitable prosperity. There is no better return on investment, than investing in American ingenuity.

So do take a look. And I’m doubling down and investing in your look-see. I’m granting a full 30 minutes of nonproduction/other time [use timecode ACORPI-0000-A00001] for you to dive into the report, digest the report, think about the report, and talk to each other about the report. I’ve set up a blog to do so, America’s Innovation Sonic Boom and I want you to have at it. Think of it as the Mother of all Musings—but I believe it’s that important. This is who we are, this is what we do—and no one on earth does it better.

And, as we are of course part of the Department of Commerce (not the Department of assigning homework even if it comes with other time 😉), as FURTHER incentive to maximize the return on my investment in you to devour the report and your investment of time with it, the top 10 blog responses, musings, comments, questions, thoughts, posits, you name it concerning the report will receive $100 gift cards. Boom. Boom. Boom.

Go get ’em. See you in the blogosphere. And my hat’s off to you—as is every American’s.

The USPTO has now issued the latest version of its garbage-in-garbage-out “IP and the US Economy” report and (surprise, surprise) it’s based on the same flawed methodology as the previous three versions. And yet — if history is any guide — it will be cited by USPTO leadership, certain members of Congress, C4IP, and other assorted maximalists in support of arguments for strengthening the US patent system.

I have seen this movie before. While at the USPTO, I was asked to review each of the previous two versions. Both times, I recommended that the agency scrap the project because the methodology could not support the claims officials would predictably make from it. The agency issued the reports anyway — clearly in response to outside patent maximalist demand — and neither logic nor anything else was going to stop it.

Oh, I see it’s already been been cited by a prominent maximalist:

"Today’s report is remarkable and proof-positive of the effect of American ingenuity at scale." — USPTO Director John A. Squires

I dealt with the previous version as Quarter-Truth 14 in my May 29, 2025 letter opposing Squires’s nomination:

14. The USPTO report on IP and the U.S. Economy does not support the propositions for which it is cited.

The USPTO’s Intellectual Property and the U.S. Economy: Third edition (released in 2022) is, like the two editions before it, based on a methodology that is almost totally nonsensical. One example should suffice to prove the point – the USPTO and others have repeatedly cited the study in support of claims that design patent protection plays an important role in generating $4 trillion of the nation’s GDP. That’s just embarrassing, and yet it’s a function of the methodology, which labels an industry that applies for an above-average number of a particular type of IP right as “IP intensive,” and allows policymakers to make the argument that the contribution to jobs and GDP of those industries is due to IP.

While PREVAIL does not cite the report by name, the statistics it cites – that “Intellectual property-intensive industries in the United States . . . (A) generate tens of millions of jobs for individuals in the United States; and (B) account for more than 1/3 of the gross domestic product of the United States” are similar to those in the Report. See Report at 13 (“In 2019, IP-intensive industries accounted for nearly 41% of U.S. GDP and directly accounted for 33% of all U.S. employment.”). But those figures are considerably lower than one would expect, given the methodology. To put it another way, even though we’ve divided industries into two camps – “above average use of IP” and “below average use of IP” – it is apparent that industries that rely less on IP contribute considerably more to GDP and employment than those that rely more on IP. Using the logic of those who cite the report, we should be preferentially supporting industries that do not use IP, since they account for more jobs and contribute more to GDP.

The use of the “IP” umbrella term makes the study all the more misleading. While the study itself notes that its “its “methodology does not permit us to attribute our findings to IP alone,” its main use has been to enable USPTO leaders and politicians to make utterly false claims about the patent system’s effect on the economy.

There is much else to criticize in this study, including the fact that many of the most IP-intensive businesses in the U.S. are, in fact, foreign-owned (see Jonathan Band & Jonathan Gerafi, Foreign Ownership of Firms in IP Intensive Industries (2013), and that the study seems clearly designed to allow advocates of stronger IP to make empirically unsupported claims that “the existence of intellectual property in an industry creates the jobs in that industry.” See, e.g., Eli Dourado & Ian Robinson, How Many Jobs Does Intellectual Property Create? (2014).

A Director truly concerned with the economics of innovation should withdraw and repudiate that study, and, rather than simply updating it again the next time around, replace it with a more meaningful attempt to assess the effect of utility patents on innovation and the economy.

I don’t feel like reading the new report, so I asked ChatGPT to compare the new one with the previous one and let me know if my criticism still held. It does.

I’m reproducing ChatGPT’s response (condensed version) in the next section below.

ChatGPT’s Response

Yes. Your central criticism still holds.

The new report uses essentially the same methodology as the previous editions. It counts utility patents, design patents, and trademark registrations associated with each industry, divides those figures by employment, and labels an industry “IP-intensive” whenever it exceeds the private-sector average in at least one category. It then adds up all the GDP and employment in the industries that cross the line.

The report itself concedes the crucial limitation: it cannot isolate the economic impact of IP from other factors. In other words, it does not measure how much output, employment, productivity, or innovation was caused by patents or other IP rights. It measures the size of industries that obtain above-average numbers of selected rights per employee.

Four points stand out.

1. The headline figures still do not show that IP created the measured activity

The report’s “IP-intensive” industries account for 44% of private-sector GDP and 33% of private-sector employment. The industries outside the category therefore account for 56% of private-sector GDP and 67% of employment.

That is remarkable because the report classifies 128 of 210 private-sector industries as IP-intensive. Even after placing most industries on the supposedly favored side of the line, the remaining industries still produce more GDP and twice as many jobs.

Using the logic of those who cite the report, policymakers should be preferentially supporting the industries that are not classified as IP-intensive.

2. The design-patent figures expose the absurdity of the method

The previous report associated design-patent-intensive industries with about $4.5 trillion in GDP. The new report raises that figure to $6.8 trillion.

Much of the increase occurred because computer systems design and related services crossed the report’s statistical threshold and became classified as design-patent-intensive. Once that enormous industry moved from one side of the line to the other, all of its output and employment were added to the design-patent totals.

The report did not show that design patents generated hundreds of billions of dollars in computer-services output. The industry merely crossed an above-average-per-worker threshold.

The problem becomes even clearer because the report credits design-patent-intensive industries with more GDP than utility-patent-intensive industries. There is probably close to zero correlation between ornamental-design protection and the full $6.8 trillion attributed to those industries. If design patents receive more economic “credit” than patents covering functional inventions, the figures plainly are not measuring the economic contribution of patent rights.

3. The report conflates fundamentally different kinds of IP

The report combines utility patents, design patents, trademarks, and copyrights under a single “IP-intensive” label.

Those rights protect different things, operate through different legal rules, and have different economic effects. An industry qualifies for the combined category if it is intensive in only one of them. The categories also overlap heavily.

Trademark-intensive industries account for most of the aggregate GDP, yet patent advocates can cite the combined $11.4 trillion figure as though it demonstrated the economic contribution of patents. It does not.

4. The report ignores who owns the IP

The report counts U.S. output, jobs, and GDP without adequately asking who owns the relevant companies or where the returns from the IP ultimately go.

Foreign-owned firms control major shares of several important IP-intensive sectors. Foreign-owned Universal Music and Sony Music together control roughly two-thirds of the major U.S. recorded-music market, and foreign entities own more than half of U.S. utility patents.

Thus, economic activity occurring in the United States cannot automatically be treated as a benefit generated by American-owned IP or as a return accruing primarily to Americans.

Bottom line

The new report remains a classification-and-accounting exercise, not an economic evaluation of intellectual property policy.

It answers:

How large are industries that obtain above-average numbers of selected IP rights per employee?

It is routinely cited as though it answered:

How much economic activity did IP rights create?

Those are entirely different questions.

The new report is somewhat more candid about its limitations, but its large headline numbers remain perfectly designed for officials and lobbyists who wish to blur the distinction.

Suggested revision of your section

I would update your passage along these lines:

14. The USPTO’s “IP and the U.S. Economy” reports do not support the propositions for which they are routinely cited.

The USPTO has now issued a fourth version of its Intellectual Property and the U.S. Economy report. Its methodology remains fundamentally unchanged. The agency counts utility patents, design patents, and trademark registrations associated with each industry, divides each count by industry employment, and labels an industry “intensive” in a particular right whenever its ratio exceeds the private-sector average. An industry is then deemed “IP-intensive” if it clears the threshold for any one of those rights. The entire GDP and employment of every qualifying industry is subsequently reported as the contribution of “IP-intensive industries.”

The report itself concedes that it “cannot isolate IP’s impact from other factors.” That caveat is essential. The study does not measure how much economic activity patents or other IP rights created, whether the activity would have occurred without those rights, or whether strengthening those rights would increase output or employment. It merely adds up the size of industries that obtain above-average numbers of selected rights per worker.

The treatment of design patents illustrates the absurdity. The third edition associated design-patent-intensive industries with approximately $4.5 trillion in GDP. The new report raises that figure to $6.8 trillion. Much of the increase results from the addition of computer systems design and related services to the design-patent-intensive category. Once that enormous industry happened to cross the report’s statistical threshold, its hundreds of billions of dollars in output and millions of jobs became part of the design-patent totals. The report did not establish that design patents created that economic activity.

The new report finds that its broadly defined IP-intensive industries account for 44% of private-sector GDP and directly employ 33% of private-sector workers. Thus, even after placing 128 of 210 industries in the “IP-intensive” category, the industries outside the category still account for most private-sector GDP and two-thirds of direct employment. The exercise cannot rationally support preferential treatment of the industries placed on one side of the dividing line.

Combining utility patents, design patents, trademarks, and copyrights under the umbrella term “IP” makes the presentation still more misleading. Trademark-intensive industries account for most of the aggregate GDP, the categories overlap extensively, and the copyright category is defined by a different method. Yet officials routinely cite the aggregate results as evidence of the economic contribution of the patent system.

A Director genuinely concerned with innovation economics should stop using these reports as evidence that IP rights generated the measured jobs and GDP. The USPTO should instead undertake a serious effort to identify the marginal effects of particular patent rules: which inventions required patent incentives, how patent protection affects entry and follow-on innovation, when patents accelerate commercialization, and when they instead impose costs on independent development and competition.

Conclusion

Well, that was easy. The new report has all the same flaws and — oblivious to the irony — continues to tout figures showing that the MORE IP-intensive half of U.S. industries accounts for FEWER jobs and LESS GDP than the LESS IP-intensive half.

Too bad the USPTO didn’t consult AI before putting all that work into another meaningless report.

Of course, I’m sort of joking — the whole point of the Report is to be cited by maximalists, in favor of bad patent policy. I’ll be watching.

Earlier this month, I posted my letter to Senator Rick Scott opposing Todd Blanche’s nomination for attorney general.

Tonight, I sent Senator Ashley Moody a substantially expanded letter. Senator Moody was among Blanche’s most emphatic supporters at the confirmation hearing, praising his record and dismissing objections to his nomination as lacking “good faith and nuance” and being driven by “clicks and tweets” and partisan agendas.

I therefore took the opportunity to explain why Blanche’s record is alarming on institutional and legal grounds, quite apart from partisan politics. Given that record, confirmation would be difficult to understand as anything other than an act of partisan loyalty.

Among the reasons I urged Senator Moody to vote no:

• The Justice Department has pursued investigations and prosecutions involving people President Trump publicly identified as enemies.

• It removed court-appointed U.S. attorneys in order to regain political control over federal prosecutions.

• It abandoned the Eric Adams prosecution for political reasons.

• It threatened state officials with criminal charges over the administration of the coming election.

• It hindered New Mexico’s investigation into alleged crimes at Jeffrey Epstein’s Zorro Ranch.

• It continued to conceal large portions of the Epstein files, even after Congress enacted a statute requiring disclosure.

• It entered into an extraordinary purported settlement of President Trump’s lawsuit against the IRS, including a proposed $1.776 billion taxpayer-funded “anti-weaponization” fund and sweeping protections for the President, his family, and associated entities.

• Blanche signed a release order that a federal judge found appeared to represent only one party’s interests — the President’s.

• DOJ declined to assert serious defenses to the President’s IRS claims, including defenses it had invoked in similar litigation.

• Judge Leonie Brinkema found DOJ’s assurances about the anti-weaponization fund insufficiently trustworthy without sworn declarations.

• Blanche’s written responses to senators did not provide the binding written assurance the court had requested.

• Senator John Cornyn likewise found Blanche’s later written proposal unresponsive.

• DOJ has lost more than 3,400 lawyers while hiring fewer than 800 replacements. The departing lawyers averaged more than thirteen years of government service; the new hires averaged little more than two.

• Career lawyers have been fired, demoted, reassigned, or driven out for carrying out assigned duties, resisting politically motivated cases, or refusing to take positions they considered unlawful or misleading.

• More than 1,200 former DOJ employees from administrations of both parties have urged the Senate to reject the nomination.

• DOJ and the FBI have relaxed experience requirements, accelerated training, and offered incentives as they struggle to replace the expertise they have lost.

• Department filings have increasingly reflected the President’s personal rhetoric rather than independent professional judgment.

• Administration officials have repeatedly used disappearing-message applications, deleted official communications, and failed to preserve records that may be needed to test the legality of government action.

• Blanche refused even to confirm in writing that DOJ had preserved records concerning the anti-weaponization fund and the IRS settlement.

• In the Epstein litigation, Judge Emmet Sullivan found that journalist Katie Phang was likely to succeed on her claim that Blanche was violating the Epstein Files Transparency Act.

• DOJ produced no documents in response to the court’s initial order, defended continued withholding, and sought a sixty-day delay.

• Judge Sullivan then ordered DOJ to submit unredacted emails and supporting evidence for in camera review by 3:00 p.m. on July 30 — only hours after the Judiciary Committee is scheduled to consider Blanche’s nomination.

• That review may reveal whether DOJ truthfully represented that the concealed names belonged to protected victims rather than other individuals whose identities should not have been withheld.

Under Blanche’s leadership, the Justice Department has been depleted of experienced lawyers, stripped of credibility with courts, and increasingly used to protect the President, punish his perceived enemies, and withhold information that might expose him or his administration to scrutiny.

Here’s a pdf; it’s also cut-and-pasted below.

Letter To Sen Moody Opposing Blanche Nomination 072926

261KB ∙ PDF file

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July 29, 2026

The Honorable Ashley Moody
United States Senate
SR-387 Russell Senate Office Building
Washington, DC 20002

Re: Opposition to Todd Blanche’s Nomination for Attorney General

Dear Senator Moody:

I am writing as a Florida resident to express my disappointment at your support for Todd Blanche’s nomination as attorney general and to urge you, in light of your own experience as Florida’s attorney general, to reconsider your position.

At Mr. Blanche’s confirmation hearing, you described DOJ as “one of the most important” agencies in our government. That is beyond dispute. Over many years in government, including while serving as Solicitor of the United States Patent and Trademark Office, I worked with stellar career attorneys at the Department and saw firsthand the importance of its professional culture, credibility, and independence. I have therefore watched with particular alarm as all three have been degraded under Mr. Blanche’s leadership.

In your introduction of Mr. Blanche and your questioning at the hearing, you described objections to his nomination as lacking “good faith and nuance” and being driven by “clicks and tweets” and partisan agendas. That characterization trivializes the central concern raised by his record: that he has subordinated the Department’s independence and professional judgment to President Trump’s personal and political interests.

Instead of addressing that concern, you cited routine enforcement statistics and the administration’s claimed anti-fraud vigor. Those figures say little about whether Mr. Blanche can be trusted to exercise independent judgment when the President’s personal interests are at stake.

You also emphasized Mr. Blanche’s earlier career as a prosecutor and the awards he received. But a résumé shows what a lawyer did when the incentives were ordinary. Character is tested when loyalty to power conflicts with duty to law and country. Mr. Blanche has already faced that test as acting attorney general, and his conduct demonstrates that he is unfit for the office.

Under his leadership, the Department has pursued investigations and prosecutions of individuals whom President Trump had publicly identified as enemies,^[1] removed court-appointed U.S. attorneys to regain political control over federal prosecutions,^[2] abandoned the Eric Adams prosecution for political reasons,^[3] and threatened state officials with criminal charges over the administration of the coming election.^[4] It has also hindered New Mexico’s investigation into alleged crimes at Epstein’s Zorro Ranch, ^[5] overseen the continuing concealment of the Epstein files,^[6] and entered into a sham settlement of the President’s lawsuit against the IRS.^[7]

Any one of these episodes should disqualify Mr. Blanche from serving as attorney general. Much has already been written about their individual merits. My purpose here is to address a broader and less examined consequence of his leadership: the lasting damage he has inflicted on the Department itself. The record discussed below shows a Department depleted of experienced career lawyers, stripped of credibility, increasingly distrusted by courts and the public, and repeatedly used to protect or appease President Trump rather than pursue justice.

Loss of Talent and Experience

The most immediate institutional consequence has been the depletion of the professional workforce on which the Department’s competence and independence depend.

Since the beginning of the current administration, approximately 16,000 Department employees have left, including more than one-quarter of its attorneys. Some of those departures preceded Mr. Blanche’s confirmation as Deputy Attorney General in March 2025, but the exodus continued under his leadership, accompanied by additional firings, demotions, and forced reassignments.

The loss of attorneys is especially damaging. The Department reportedly lost more than 3,400 lawyers between early 2025 and January 2026 while hiring fewer than 800 replacements.^[8] The departing lawyers averaged more than thirteen years of government service; the new hires averaged little more than two. ^[9] In my experience, DOJ lawyers were already overworked and underpaid. Many worked long hours preparing briefs, trying cases, and defending the United States for a fraction of what they could have earned in private practice. They accepted that tradeoff because they believed in public service and in the Department as an institution. Once that professional commitment is repaid with political interference, arbitrary removal, or demands that lawyers take positions they regard as unlawful or misleading, the Department drives away accumulated judgment, specialized knowledge, courtroom experience, and institutional loyalty.

Some employees left because Department leadership made continued service professionally or ethically untenable. Others were fired, demoted, or pushed aside for carrying out their assigned duties, declining to pursue politically motivated cases, or refusing to take positions they believed unlawful or misleading.^[10] Among them were prosecutors punished simply for having worked on the January 6 cases.^[11] More than 1,200 former Department employees who served under administrations of both parties have now urged the Senate to reject Mr. Blanche’s nomination, warning that his treatment of the apolitical workforce has impaired DOJ’s ability to protect public safety, civil rights, and national security.^[12]

The Department is also struggling to replace what it has lost. Positions that once attracted large numbers of highly qualified applicants have remained vacant, while DOJ and the FBI have relaxed experience requirements, accelerated training, and offered financial incentives to recruit or retain personnel. Even where vacancies are eventually filled, a new lawyer or agent cannot immediately replace the expertise of someone who spent a decade or more learning the Department’s cases, institutions, and professional obligations. The damage will persist long after the raw staffing numbers begin to recover.

Loss of Institutional Credibility

The Department has suffered a profound loss of institutional credibility, as numerous judges have recognized in their decisions – and as the Department’s own filings and official statements increasingly demonstrate.

The IRS Settlement – Conflict of Interest

Mr. Blanche’s role in the President’s IRS settlement is an especially striking example. The underlying disclosure of the President’s tax information was unlawful, but the demand for at least $10 billion in damages was preposterous. President Trump was asking his own government to transfer to him and his businesses a sum bearing no plausible relationship to any actual injury.

Whatever political or reputational harm the disclosure caused, it did not prevent him from returning to the presidency and presiding over an extraordinary expansion of his personal fortune, including an estimated $1.4 billion increase in his net worth over the following year, driven largely by cryptocurrency ventures.^[13] The complaint identified no loss remotely approaching $10 billion. That amount was staggering even by federal-budget standards and would have consumed public resources on a scale that could instead support medical research, Medicaid coverage, and school meals for millions of Americans. Yet Mr. Blanche helped convert that fantastical private demand into a costly purported settlement financed by the American people.

The arrangement would have delivered two extraordinary benefits to President Trump and those associated with him. First, a Release Order protected the President, his relatives, his companies, and affiliated entities from “any and all” existing or potential civil and criminal claims and investigations. Second, the settlement agreement would have created a $1.776 billion taxpayer-funded “anti-weaponization” fund permitting payments to people claiming injury from government investigations or enforcement actions, under standards that were left largely undefined. Mr. Blanche acknowledged that anyone who believed he had been a victim of “weaponization” could apply and refused to exclude even January 6 defendants convicted of assaulting police officers. The fund therefore could have used taxpayer money to compensate people lawfully prosecuted and convicted for political violence while offering no comparable remedy to those harmed by the present administration’s use of government power.^[14]

The settlement agreement establishing the fund was signed by lawyers representing the President and the other plaintiffs, the United States, and the IRS. The Release Order, however, was signed only by Mr. Blanche. Judge Kathleen Williams found that Mr. Blanche’s apparent ability to speak for both sides, modify the arrangement unilaterally, and act on behalf of all the parties demonstrated that there was “only one party whose interests were being represented” – the President’s.^[15]

The Department also declined to assert serious defenses, including statute-of-limitations defenses it had invoked in similar litigation. Judge Williams concluded that the action had been brought for an improper purpose: to obtain judicial legitimacy for a purported settlement that had “no viable basis in law or fact.”^[16] Citing ethical rules warning that government power must not be used for the special benefit of a former client, she concluded that the “spectre of that risk seems to be present here.”^[17]

If Mr. Blanche understood the legal and ethical defects in this arrangement and proceeded anyway, his conduct was disqualifying. If he failed to recognize that he was using the authority of the United States to advance the interests of his former client, that failure of judgment is equally incompatible with the office of attorney general.

The IRS Settlement – Lost Credibility

Judge Leonie Brinkema’s order in related litigation shows how Mr. Blanche’s personal credibility problem became the Department’s credibility problem.^[18] She offered the Department a simple way to end the litigation over the $1.776 billion fund: have Mr. Blanche and other responsible officials state under penalty of perjury that it would not proceed in any form or under another name. The Department refused, relying instead on Mr. Blanche’s unsworn statement to Congress and representations by government lawyers in court.

Judge Brinkema found those assurances insufficient. Emphasizing Mr. Blanche’s refusal to rescind the memorandum establishing the fund and the Department’s refusal to provide sworn declarations, she concluded that the defendants had failed to give their representations a “genuine degree of trustworthiness” and allowed the litigation and discovery to proceed.^[19] That is an extraordinary finding: a federal judge was unwilling to rely on the acting attorney general’s assurances, even when repeated in court by Department lawyers.

His post-hearing responses confirmed that her concern was well founded. Asked whether there was any written modification of the settlement agreement eliminating the fund, Mr. Blanche answered no. Asked whether DOJ had proposed the required modification to President Trump’s legal team, he refused to say. Elsewhere, when asked whether his verbal declaration could legally modify the agreement, he again responded only that the fund was “dead.” He still did not provide the sworn, unequivocal written assurance Judge Brinkema had requested.^[20]

Two weeks later, the day before his confirmation vote, Mr. Blanche finally submitted a written proposal intended to address the fund and the related tax-immunity provisions. Senator John Cornyn found it unresponsive, canceled a scheduled meeting with Mr. Blanche, and said that he had not seen “a single piece of writing” that answered what he had requested.^[21] Thus, even after a federal judge and members of his own party demanded a binding written resolution, Mr. Blanche still has not supplied one.

Judge Brinkema is not the only federal judge who has found it necessary to look behind the Department’s assurances. In the litigation over the Epstein files discussed below, Judge Emmet Sullivan recently ordered DOJ to submit unredacted copies of disputed emails for in camera review, together with evidence supporting its assertion that the redacted sender and recipient names belonged to victims. Rather than accept the Department’s representation that the redactions were lawful, he required the Department to prove it.

The Ballroom Filing – Taking Dictation From a Former Client

The Department’s Rule 62.1 motion in the White House Ballroom litigation shows the same collapse of professional independence in a different form. The filing, submitted under Mr. Blanche’s name as acting attorney general, reads at times less like a Department of Justice court filing than one of President Trump’s Truth Social posts. It attacks the plaintiff as “FAKE,” accuses it of having “Trump Derangement Syndrome,” refers to opposing counsel as “the lawyer for Barack Hussein Obama,” praises President Trump as having “abilities that others don’t,” and describes the project as “FREE OF CHARGE AS A GIFT TO THE COUNTRY.” In short, the filing reads like it was dictated by a petulant child. Whatever the merits of the underlying dispute, no responsible Attorney General should permit the Department of Justice to submit a filing like this.^[22]

Failure to Preserve and Disclose Official Information

The administration has repeatedly failed to preserve official records that may be needed to test the legality of its actions. Officials have used encrypted messaging applications set to delete communications automatically; senior national-security officials discussed planned military strikes in Signal chats whose messages were scheduled to disappear; a Justice Department official reportedly used Signal to discuss a grand-jury investigation with a journalist and set the messages to vanish after eight hours; and DOJ lawyers have been accused in other litigation of failing to investigate or preserve their clients’ use of disappearing messages. Presidential posts concerning contemplated prosecutions have been deleted, official direct messages have gone missing, and government devices have been wiped even after preservation obligations arose.

John Brennan, who is now the target of federal investigations that he contends are selective and vindictive, collected these examples in his complaint to explain why he cannot assume that the records needed to challenge any future prosecution will still exist. He has therefore asked a federal court specifically to order Mr. Blanche, DOJ, and other officials to preserve evidence they already have a legal duty to retain. That is the extraordinary point: a person facing possible prosecution by the United States believes he cannot rely on the Department of Justice even to preserve the records needed to determine whether its own prosecution is lawful.^[23]

The Epstein Files – Protecting the President Instead of Pursuing Justice

The Department’s handling of the Epstein files is practically a case study in everything that has gone wrong with DOJ under Mr. Blanche. Pam Bondi has testified that Mr. Blanche “was in charge of the process and the entire release,” and Regime Change describes him as playing a central role in developing the administration’s Epstein strategy by July 2025. The book reports that Mr. Blanche – but not Ms. Bondi – was included on an email concerning the brief, unsigned two-page memorandum issued by DOJ and the FBI that month. The memorandum asserted that the agencies had conducted an “exhaustive review” of their investigative holdings and categorically declared that “no further disclosure would be appropriate or warranted.”^[24]

Yet DOJ eventually released 3.5 million pages, including FBI Form 302 interview summaries containing allegations of sexual abuse against several men, while acknowledging that it had identified more than six million potentially responsive pages, along with enormous quantities of non-paper material, including more than 2,000 videos and 180,000 images. The public therefore knows that millions of potentially responsive pages were not released, but generally cannot identify the particular records withheld because it has never seen them. One intriguing exception involved three FBI Form 302 interview summaries containing uncorroborated allegations involving President Trump. Their existence could be inferred from related records, allowing journalists to identify them as missing. Only after those omissions were exposed did DOJ release the summaries, explaining that they were among 15 documents incorrectly coded as duplicates. That admission undermines DOJ’s reliance on “duplication” to withhold millions of pages. At a minimum, the Department should release all of the material it has coded as “duplicative,” subject to necessary victim protections, and allow the public to judge whether they are genuinely duplicative.^[25]

When DOJ issued the July memorandum, it had already examined a vast body of records concerning Epstein’s crimes and possible criminal conduct by others, and it must have known that those records were of extraordinary public interest. Yet it told the public that the review had uncovered nothing warranting further disclosure and used that assertion to justify keeping the underlying records secret. Regime Change portrays the discussions surrounding the memorandum as focused on containing political damage and preserving support within the MAGA base, rather than determining what disclosure the law, justice for Epstein’s victims, or the public interest required. The memorandum was an effort to close the matter and prevent the public from seeing the materials on which DOJ’s conclusions supposedly rested.¹⁰

That political strategy reportedly continued in repeated White House Situation Room meetings. According to Regime Change, Mr. Blanche proposed seeking the release of grand-jury transcripts because he expected a court would deny the request, allowing the administration to claim the high ground on transparency without producing the larger body of Epstein records. He also proposed having Ghislaine Maxwell testify before Congress in a manner favorable to President Trump, while recognizing that her lawyer would likely seek something in return. A pardon was also discussed, although it is unclear whether Mr. Blanche supported it.^[26] What is clear is that the reported reason for rejecting it was not that such a bargain would corrupt the Department’s mission, but that it might fail to protect the President and could expose him further. The episode depicts Mr. Blanche and other senior officials using the Department’s control over information to protect President Trump from political exposure rather than to pursue justice for Epstein’s victims.

Congress eventually had to enact the Epstein Files Transparency Act to compel the disclosure that DOJ’s July memorandum had declared unwarranted.^[27] In its eventual production, the Department continued to withhold millions of pages of potentially responsive documents, and improperly redacted many of the documents it did produce – in some cases failing to redact victims’ names, and in others, by redacting names that could not plausibly have been victims.

In Phang v. Blanche, Judge Emmet Sullivan found that journalist Katie Phang was likely to succeed on her claim that Mr. Blanche was violating the Act by withholding covered materials and failing to produce the redaction log Congress required.^[28] He ordered DOJ to justify specified redactions and withholdings, begin reviewing foreign-language materials, and produce that log. The Department produced no documents in response. Its July 2 submission instead defended the continued withholding and sought a sixty-day stay to consider appellate review. After further briefing, Judge Sullivan declined simply to accept DOJ’s assertion that sender and recipient names redacted from eight email chains were protected victim identities. He ordered the Department to submit the unredacted emails for in camera review, together with evidence substantiating that assertion, by 3:00 p.m. on July 30 – only hours after the Judiciary Committee is scheduled to vote on Mr. Blanche’s nomination.^[29] The review may reveal whether the Department’s asserted justification for the redactions was truthful. The committee should not vote to give Mr. Blanche permanent authority over the Department before the court has had an opportunity to examine that evidence.

If you remain in any doubt about how to vote, you should at least ask that the nomination be held over until Judge Sullivan has reviewed the documents and indicated whether DOJ’s representation survives scrutiny.

The Choice Before the Senate

At the hearing, you assisted Mr. Blanche in defining himself by his earlier career as a prosecutor rather than by his recent conduct as acting attorney general. But the Senate is not being asked to honor his résumé. It is being asked whether to give him permanent authority over a Department he has already depleted of experienced lawyers, stripped of credibility, and subordinated to the President’s personal interests.

These are not isolated abuses. Taken together, they reveal a broader transformation of the Department. Under Mr. Blanche’s leadership, the Justice Department has lost career talent, institutional memory, credibility with courts, and the capacity for independent legal judgment. It has increasingly become an instrument for protecting the President, punishing his perceived enemies, and withholding information that might expose him or his administration to scrutiny.

There is no need to speculate about how Mr. Blanche would perform as attorney general. He has already been serving in that role. Given your experience as a prosecutor, judge, attorney general, and member of the Senate Judiciary Committee, you should confront his record rather than dismiss criticism of it as partisan theater. Your introduction treated his nomination as though the past months had not happened. They did happen, and they are the most relevant evidence before the Senate.

If American democracy survives this administration, history will not look kindly on those who stood by while the Department of Justice was turned into an instrument of personal loyalty, political retaliation, and self-dealing. There are votes on which reasonable people can disagree. A vote to confirm Todd Blanche is different. It would be a knowing endorsement of what he has already done to the Department and of its continued use against the institutions and people it exists to serve.

I urge you to stand with the rule of law, the integrity of the Justice Department, and the people of the United States by voting no.

Sincerely,

Thomas W. Krause
Vero Beach, Florida

^[1] Glenn Thrush & Devlin Barrett, “Todd Blanche Targets Trump’s Enemies Amid Jockeying to Lead Justice Dept.,” New York Times (Apr. 24, 2026), available at https://www.nytimes.com/2026/04/24/us/politics/todd-blanche-trump-doj.html?unlocked_article_code=1.zlA.iNMA.60NRiHQ9MUuj&smid=url-share (describing investigations and proposed investigative steps involving Cassidy Hutchinson, James Comey, Fani Willis, John Brennan, and others whom President Trump regarded as adversaries).

^[2] Jonah Bromwich & Danny Hakim, “U.S. Attorney Chosen by Judges Challenges Trump’s Power to Fire Him,” New York Times (July 20, 2026), available at https://www.nytimes.com/2026/07/21/us/roger-rogoff-doj-lawsuit.html?unlocked_article_code=1.z1A.BsK7.AAFdKBMbXqVf&smid=url-share; Complaint for Declaratory and Injunctive Relief, Rogoff v. Trump, No. 2:26-cv-02566 (W.D. Wash. filed July 21, 2026), available at https://komonews.com/resources/pdf/e3ea027d-9fed-4ed6-a552-cae33cf2b062-Complaint.pdf#toolbar=0&navpanes=0&scrollbar=0.

^[3] Sarah N. Lynch, Luc Cohen & Jack Queen, “Justice Department Orders New York Mayor Eric Adams Charges to Be Withdrawn,” Reuters (Feb. 10, 2025), available at https://www.investing.com/news/general-news/justice-department-seeks-dismissal-of-charges-against-new-york-mayor-ny-times-says-3860454.

^[4] Sarah N. Lynch, “DOJ Threatens Criminal Action Against States That Allow Noncitizens to Vote,” CBS News (July 8, 2026), available at https://www.cbsnews.com/news/doj-threatens-criminal-action-against-states-that-allow-non-citizens-to-vote/.

^[5] New Mexico Department of Justice Press Release, Attorney General Raul Torrez: USDOJ Is Hindering Our Criminal Investigation by Withholding Unredacted Epstein Files (July 9, 2026), available at https://nmdoj.gov/press-release/attorney-general-raul-torrez-usdoj-is-hindering-our-criminal-investigation-by-withholding-unredacted-epstein-files/.

^[6] See discussion below under “The Epstein Files – Protecting the President Instead of Pursuing Justice.”

^[7] Eric Tucker, “Blanche at Center of Republican Firestorm over $1.8B Fund as He Seeks to Prove His Loyalty to Trump,” Associated Press (May 22, 2026) (describing the James Comey indictment and other actions directed at Trump adversaries under Mr. Blanche), available at https://apnews.com/article/justice-department-blanche-fbi-89a2334ef3ca9ac1398975d6a3528bff?utm_source=copy&utm_medium=share; see also discussion below under “The IRS Settlement – Conflict of Interest.”

^[8] Joe Miller, “US Department of Justice Loses a Quarter of Its Lawyers,” Financial Times (May 3, 2026) (reporting, based on Office of Personnel Management data, that 3,402 of DOJ’s 12,955 lawyers departed between the beginning of 2025 and January 31, 2026, while 771 joined).

^[9] Id.

^[10] Justice Connection, “Letter from More Than 1,200 Former Department of Justice Employees Opposing Todd Blanche’s Nomination” (July 7, 2026), available at https://www.thejusticeconnection.org/pdf/letter-from-doj-alumni-on-todd-blanche-ag-nomination.pdf.

^[11] Id.

^[12] Id.

^[13] The Editorial Board, “How Trump Has Used the Presidency to Make at Least $1.4 Billion,” New York Times (Jan. 20, 2026), available at https://www.nytimes.com/video/opinion/100000010675206/how-trump-has-used-the-presidency-to-make-at-least-1-4-billion.html; see also David A. Fahrenthold et al., “Trump Pulled In at Least $2 Billion After Returning to the White House,” New York Times (June 30, 2026), available at https://www.nytimes.com/2026/06/30/us/politics/trump-financial-disclosure-crypto-windfall.html?unlocked_article_code=1.1VA.1SGe.g-J-5ViPL-Ko&smid=url-share.

^[14] Alanna Durkin Richer & Eric Tucker, “Todd Blanche Doesn’t Rule Out Violent Jan. 6 Rioters Getting Payments From $1.8B Fund,” Associated Press (May 19, 2026), available at https://www.nbcwashington.com/news/national-international/considering-payments-violent-jan-6-rioters/4106201/ (reporting that Blanche said anyone claiming to be a victim of weaponization could apply and declined to exclude people who assaulted police officers on January 6); U.S. Department of Justice, “Justice Department Announces Anti-Weaponization Fund” (May 18, 2026), available at https://www.justice.gov/opa/pr/justice-department-announces-anti-weaponization-fund.

^[15] Trump v. Internal Revenue Service, No. 1:26-cv-20609-KMW, Order on Sanctions (S.D. Fla. July 13, 2026), at 36, available at https://democracyforward.org/wp-content/uploads/2026/07/Trump-v-IRS-106-Order-on-Sanctions.pdf.

^[16] Id. at 38.

^[17] Id. at 32.

^[18] Order, Floyd v. Department of Justice, No. 1:26-cv-01399 (E.D. Va.) (June 24, 2026), available at https://storage.courtlistener.com/recap/gov.uscourts.vaed.596617/gov.uscourts.vaed.596617.96.0.pdf

^[19] Id. at 3.

^[20] Todd Blanche, Responses to Questions for the Record from Senator Sheldon Whitehouse, at 2 (July 17, 2026) (PDF p. 78) (responding to the question whether a verbal statement could legally modify the settlement agreement by repeating that no steps had been taken to operate the fund and that “[t]he Anti-Weaponization Fund is dead”), available at https://www.judiciary.senate.gov/imo/media/doc/blanche_-_qfrs.pdf.

^[21] Anna Commander, Gabe Whisnant, & Hannah Parry, “Cornyn Says Blanche Meeting Canceled, Threatens to Oppose Confirmation,” Newsweek (July 29, 2026), available at https://www.newsweek.com/cornyn-sets-red-line-for-todd-blanche-meeting-ahead-of-confirmation-vote-12257249.

^[22] Defendants’ Rule 62.1 Motion, National Trust For Historic Preservation v. National Park Service, Case No. 1:25-cv-04316-RJL (D.D.C. April 27, 2026), available at https://storage.courtlistener.com/recap/gov.uscourts.dcd.287645/gov.uscourts.dcd.287645.79.0.pdf.

^[23] Complaint, Brennan v. Blanche (D.D.C. July 1, 2026), available at https://storage.courtlistener.com/recap/gov.uscourts.dcd.294102/gov.uscourts.dcd.294102.1.0.pdf. Mr. Blanche’s written responses to the Committee deepen that concern. When asked merely to confirm that DOJ had preserved records concerning the Anti-Weaponization Fund and the IRS settlement, he declined even to make that commitment, asserting that the pending litigation made it inappropriate for him to “comment or otherwise commit to doing anything” related to the matter. Todd Blanche, Responses to Questions for the Record from Senator Sheldon Whitehouse, at 40 (July 17, 2026) (PDF p. 116), available at https://www.judiciary.senate.gov/imo/media/doc/blanche_-_qfrs.pdf.

^[24] U.S. Department of Justice & Federal Bureau of Investigation, Unsigned Memorandum Regarding Jeffrey Epstein (July 7, 2025), available at https://www.justice.gov/opa/media/1407001/dl; Anna Betts, “Pam Bondi Testified Todd Blanche Was ‘in Charge’ of ‘Entire Release’ of Epstein Files,” The Guardian (June 4, 2026), available at https://www.theguardian.com/us-news/2026/jun/04/pam-bondi-epstein-transcript; Maggie Haberman & Jonathan Swan, Regime Change, Ch. 21 (2026) (describing Blanche’s role in the July memorandum and the administration’s internal Epstein strategy).

^[25] U.S. Department of Justice, Department of Justice Publishes 3.5 Million Responsive Pages in Compliance with the Epstein Files Transparency Act (Jan. 30, 2026), available at https://www.justice.gov/opa/pr/department-justice-publishes-35-million-responsive-pages-compliance-epstein-files; What’s Missing from the Epstein Files?, CBS News (June 19, 2026), available at https://www.cbsnews.com/news/epstein-files-whats-missing/; Justice Department Publishes Some Missing Epstein Files Related to Trump, NPR (Mar. 6, 2026), available at https://www.wbur.org/npr/nx-s1-5737562/justice-department-missing-epstein-files-trump.

^[26] Maggie Haberman & Jonathan Swan, Regime Change, ch. 21 (2026) (describing White House Situation Room discussions concerning grand-jury transcripts, possible congressional testimony by Ghislaine Maxwell, and the pardon option).

^[27] Epstein Files Transparency Act, Pub. L. No. 119-38 (Nov. 19, 2025), available at https://www.govinfo.gov/app/details/PLAW-119publ38

^[28] Memorandum Opinion and Order, Phang v. Blanche, No. 1:26-cv-01417 (D.D.C. June 25, 2026), available at https://law.justia.com/cases/federal/district-courts/district-of-columbia/dcdce/1%3A2026cv01417/291779/16/

^[29] Order, Phang v. Blanche, (D.D.C. July 25, 2026), at 1-3, available at https://s3.documentcloud.org/documents/28515466/phangblancheord072326pdf.pdf

PERA Needs an Effective Date

Before I get to today’s topic, I want to emphasize one thing that I have stressed in all three of my submissions on PERA, but which has never once been mentioned by any Congressmember or witness. That’s the absence of an effective date. I guarantee that if PERA passes in its current form, holders of existing patents that would be invalid under Alice, Mayo, and Myriad will claim that they have been restored to life. That’s a giant windfall to a lot of patent holders, including a lot of trolls, with no corresponding benefit to “innovation.” If Congress is going to keep considering PERA, it should amend it to make clear it has only prospective application.

• As an aside, I’m just guessing that if Congress were to do that, much of the current support for PERA — which is almost certainly financed by holders of existing patents — would go away.

Today’s Topic

I’ve been pretty sure for some time that I’ve already refuted just about everything that patent maximalists say in support of their agenda, and I really shouldn’t have to keep repeating myself.

This week’s PERA hearing before the full Senate Judiciary Committee gave me an opportunity to prove it.

I fed ChatGPT my last four submissions to the Committee and its IP Subcommittee, along with a transcript of the hearing, and told it to produce a document that (1) identified the positive claims made by PERA supporters, and (2) identified where I had already refuted them. There were some glitches, and it ended up taking more steps than it should have, but I didn’t provide any substantive input other than two examples up front. And the final product was an integrated whole.

Output Plus Annotations

Here is the output, with some annotations from me in highlights. The “earlier analyses” it refers to are available here, here, and here.

I told ChatGPT to use the term “Quarter-Truths,” following the terminology of my May 29, 2025 letter to the Judiciary Committee opposing Director Squires’s nomination — as you’ll see, I think it applies.

Although ChatGPT caught 20 Quarter-Truths, I caught a few more, which I’ve added to the end, with my previous responses. Again, except for the highlighted “TK notes,” what you see below is ChatGPT’s output, including its selection of quotes from the hearing plus quotes from my prior submissions:

PERA Quarter-Truths 1-20

PERA-QT-01

Current eligibility law is causing the United States to lose technological leadership.

Hearing excerpts

Sen. Thom Tillis

[12:10] “The problem that we have with patent eligibility today is that we lose—we are on the brink of losing our innovation advantage if we don’t figure out that the world has changed since the founding of the Constitution.”

[12:48] “Other jurisdictions are looking at expanding, and have expanded, eligibility. Why would the United States fall behind?”

Sen. Chris Coons

[16:42] “Developments in artificial intelligence, in blockchain, in medical diagnostics, in 5G, are patentable in China and in Europe and not patentable here.”

[16:56] “I view this as critical for us to address in order to restore American leadership and innovation and to advance our national security.”

Andrei Iancu

[23:57] “Meanwhile, Europe, China, Japan, and South Korea—the biggest other IP jurisdictions—protect inventions that American courts turn away.”

[24:05] “That is a self-inflicted competitive disadvantage in precisely the fields in which the United States is competing for technological leadership at this time.”

[53:48] “They are leading in many of them, and they’re neck-and-neck with us in others, and I believe that if we don’t do something about our patent system here in the United States, we will eventually lose that race.”

[56:05] “Without that, we already have fallen behind China, as you have indicated, Senator, but imminently we will fall far behind, and it will be very difficult to catch up for the rest of the century.”

[58:06] “I very much do agree that denying patent protection for AI innovations effectively forfeits American excellence and leadership to our competitors.”

Earlier analysis submitted to Congress

May 29, 2025 letter, pp. 22-23 (Quarter-Truths 5-6)

As noted above, the subject matter currently excluded from eligibility is mostly non-technical subject matter, or else subject matter that the Supreme Court has deemed to tie up laws of nature more than should be permitted. Most truly innovative companies have adjusted very well to these restraints. If such patents are still being granted in other jurisdictions, that’s fine – the inventors can enforce their patents abroad, instead of targeting innovators in the United States.

Although the arguments come in various forms, the patent maximalist mantra is that stronger patents cause faster and better innovation and technology. That’s the premise that underlies much of what they say about national security and the China threat. As should be clear by now, that premise is false; if anything, a “stronger” U.S. patent system aids China and weakens national security by dampening U.S. innovation and inviting Chinese inventors to sue U.S. businesses.

July 2026 statement, pp. 20-21

Eligibility reform is also defended as necessary to compete with China. Those comparisons are often incomplete. China’s approach to computer-implemented inventions generally asks whether a claim uses technical means to solve a technical problem and achieve a technical effect. That requirement resembles the Federal Circuit’s technological-improvement inquiry far more than PERA’s machine-dependent exception for economic and business processes.

If Congress believes international harmonization is essential, it should study and define a technological-contribution requirement. PERA instead confers eligibility on economic, financial, social, cultural, or artistic processes whenever they cannot practically be performed without a machine. There is no national-security race to issue patents on tax strategies or routine commercial arrangements.

PERA-QT-02

Current law excludes entire fields of important technology.

Hearing excerpts

Andrei Iancu

[23:01] “The consequences are real. The result is uncertainty in the technologies that will define this century: computing, medical diagnostics, biotechnology, artificial intelligence, and so much more.”

[23:10] “Courts have rejected tests that diagnose serious diseases as laws of nature. They have rejected improved digital-camera technology as an abstract idea. And they have treated the collection, analysis, and presentation of information as categorically suspect and likely not in the patent system.”

[45:58] “The courts have taken upon themselves to exclude from patentability major areas of technology without Congress ever saying it should do that.”

[46:11] “It’s excluding, for example, medical diagnostics, and, for example, it’s excluding the analysis—heavy-duty analysis, technological analysis—of information and data.”

[55:17] “Right now, there are major areas of technology that are basically not eligible for patent.”

[55:26] “We live in the information age, and courts took upon themselves to effectively exclude from the patent system the technological processing of massive amounts of data in innovative ways.”

Sue Peschin

[33:21] “For 15 years, the U.S. patent system has struck down thousands of patents and failed to protect some of the most transformative innovations in diagnostics.”

[33:41] “The problem is especially severe in medical diagnostics.”

[33:49] “The Supreme Court’s expanded exceptions for laws of nature, natural phenomena, and abstract ideas have made many diagnostic inventions ineligible for patents.”

Earlier analysis submitted to Congress

October 15, 2025 supplemental statement, pp. 1-2

Several witnesses supporting PERA asserted or implied that, after Mayo and Myriad, patents on diagnostic “methods” or “techniques” have become unobtainable. That is incorrect. Mayo merely held that a claim reciting a law of nature, combined only with routine and conventional testing steps, is not patent-eligible. It did not bar patents on new, non-routine diagnostic techniques or on technological improvements in testing methods.

July 2026 statement, pp. 14-16

Supporters of eligibility reform often state or imply that patents on diagnostic methods or techniques became unavailable after Mayo and Myriad. That is incorrect. Mayo held that a claim reciting a natural relationship, combined only with routine and conventional administration and testing steps, was not eligible. Myriad held that naturally occurring DNA is not made patentable merely because it has been isolated. Neither decision bars patents on new testing platforms, new laboratory techniques, engineered reagents, improved instruments, or other technological advances used to detect biomarkers.

TK Note: This quote appears on p. 14; but AI’s cite to pp. 14-16 may have been intentional — those pages explain that diagnostic methods have seen explosive growth since Myriad, and also refute the $9.3 billion number. It seems clear that AI is making judgment calls on how much to include.; note that it quotes from those pages below under PERA-QT-04 and -05.

PERA-QT-03

Current eligibility doctrine is confused, unpredictable, and unworkable.

Hearing excerpts

Sen. Thom Tillis

[12:34] “The jurisprudence is all over the place.”

[12:43] “Twelve judges have lamented the fact that they even have to deal with it when rendering a decision.”

Sen. Chris Coons

[16:09] “About 15 years ago, the Supreme Court started weighing into an area—section 101 patentability jurisprudence—that was previously relatively clear.”

[16:17] “Every member of the Federal Circuit at some point has reached out and asked us for guidance.”

[59:31] “Starting 15 years ago, the Supreme Court issued a series of decisions that threw eligibility jurisprudence into disarray, with new unworkable tests, with new judicially invented carveouts, and new uncertainty.”

[59:47] “Every member of the relevant Federal Circuit has asked us to act to clarify it.”

Andrei Iancu

[22:50] “Courts have expanded judicial exceptions that Congress never wrote and that lower-court judges say they cannot administer consistently or fairly.”

[46:35] “There is a procedural problem, which is that the courts have created an inconsistent framework that is difficult to follow and predict in the court system itself.”

Sue Peschin

[33:28] “A series of Supreme Court rulings created confusion when broadening patent ineligibility and invalidation.”

[1:01:52] “What the Supreme Court cases have done is they’ve muddied the waters by broadening these exceptions and making it harder for the cases that have come after, so that there’s a lot less predictability for inventors.”

Earlier analysis submitted to Congress

October 15, 2025 supplemental statement, pp. 4-5

Empirical analyses show that § 101 outcomes are largely predictable. As Professors Datzov and Rantanen recently found, § 101 decisions exhibit levels of consistency and affirmance comparable to other areas of patent law, undermining the claim that patent eligibility is uniquely unpredictable.

At the hearing, the only purportedly inconsistent decisions cited were Yu v. Apple and Contour IP v. GoPro. Yet as Contour expressly explained, Yu’s claims failed because they pertained to “a longstanding, fundamental practice in photography,” whereas the same could not be said for the processing of parallel video streams at issue in Contour. That distinction explains why Judge Prost – who authored Yu – joined the unanimous Contour opinion.

July 2026 statement, pp. 7-10

The line is not perfectly clear, but empirical research indicates that § 101 outcomes are broadly comparable in predictability and appellate consistency to those under other patent-law doctrines. That evidence undermines claims that eligibility is uniquely unadministrable. A desire for greater clarity therefore does not justify PERA or similar proposals, which would weaken § 101’s substantive limits rather than merely clarify them.

TK Note: The July 2026 statement (at pp. 8-9) also included a comparison Yu v. Apple and Contour v. GoPro — two cases that the maximalists claim cannot be reconciled. There was only a fleeting mention of this issue at the hearing (Mr. Iancu’s reference to digital camera technology above).

PERA-QT-04

The Supreme Court’s decisions caused approximately $9 billion in lost diagnostic investment.

Hearing excerpts

Sue Peschin

[34:05] “A 2022 study in the Washington and Lee Law Review found that within only four years after one of the key cases, investments in diagnostics fell more than nine billion dollars short of what it otherwise would have been.”

Andrei Iancu

[1:49:24] “There are studies that show that in the year following Mayo, the diagnostic market in the United States has been reduced by $9 billion.”

Sue Peschin

[1:51:20] “I think some of the other studies looking at venture capital and the decrease in investment and the $9 billion—those are real reflections.”

Earlier analysis submitted to Congress

October 8, 2025 statement, Addendum A, p. 1

The $9 billion figure comes from a regression model in a student law review note, not a peer-reviewed economics study. It reflects a counterfactual that assumes that diagnostic method investment would have exploded but for Mayo, and specifically acknowledges that “the yearly investment totals for disease diagnostic technologies have generally increased in the years following Mayo.”

October 15, 2025 supplemental statement, p. 2

PERA supporters stated or implied that investment in diagnostic technologies fell by $9.3 billion after Mayo and Myriad. As discussed in my first statement, that figure is merely a law student’s guess as to how much diagnostic investment might have risen had it continued to rise at the same rate as investment in other sectors. In reality, investment in diagnostics increased after Mayo and Myriad.

July 2026 statement, pp. 15-16

Proponents repeatedly cite an asserted $9.3 billion reduction in diagnostic investment following Mayo and Myriad. That figure is often presented as though researchers measured an actual collapse in investment. They did not. It derives from a regression model in a student law-review note estimating how much faster diagnostic investment might have grown had it followed the growth rate of selected comparison sectors. The underlying work acknowledges that annual investment totals in diagnostic technologies generally increased after Mayo.

TK Note: Just to stress — this is the by far the most common statistic we hear in defense of the “we need patents or else we won’t have diagnostic methods” mantra, and yet it’s worse than meaningless. There is plenty of investment, and plenty of new diagnostic methods. I mean no offense to the source — who is completely honest about how meaningless it is — but it’s really taken on a life of its own, and it’s unfortunate how often it continues to get misused.

Dr. Leonard spoke to this issue based on first-hand experience:

[1:10:07] “Innovations are still happening. Therapeutics are being developed. Molecular diagnostic tests are coming on the market. I don't understand the data being cited that it's being inhibited. Maybe in AI in other areas there is a real need but right now I am not seeing the need in medical practice for basically going backwards. So, literally going back to that NICU [Natal Intensive Care Unit] example, as a clinician, you would not be able to do what is necessary for the well-being of that baby. Oh, I might be able to after obtaining a 100 or 200 licenses each at I mean, the license fees we were charged were $25,000 by one company. We had to pay $120,000 for another.”

TK Note: The broader problem with even arguing about “loss of investment” is addressed below in PERA-QT-6.

PERA-QT-05

Without patents, important diagnostics will not be developed.

Hearing excerpts

Sue Peschin

[34:48] “Without patent protection, many of these tests are never developed or they sit on a shelf.”

[35:35] “A similar situation arose when university researchers developed biopsy tests that could predict brain metastases in melanoma patients. But patents on these methods were denied under the Mayo and Myriad standards, forcing researchers to abandon their efforts.”

[36:54] “This is exactly the kind of innovation America should be leading. But if diagnostic patents remain unpredictable in the U.S., investor capital will move elsewhere.”

Andrei Iancu

[1:04:05] “You need to have the innovation there in the first place for the public to even have access.”

[1:04:21] “We’re going to miss out on technologies that we don’t even know about.”

[1:04:29] “For Dr. Leonard and patients and others to have access to that technology in the first place, it has to have been invented.”

[1:04:54] “The threshold question for creating the innovation in the first place—the first leg of that balance—needs to be a reliable patent system.”

Earlier analysis submitted to Congress

October 15, 2025 supplemental statement, pp. 2-3

As above, new diagnostics have been rapidly developed and deployed since Mayo, and new diagnostic techniques are still patentable. Nevertheless, PERA’s proponents continue to assume that Mayo is preventing development of crucial – yet unspecified – diagnostics. To get there, they conflate the economics of diagnostic development with those of drug development.

Importantly, the types of diagnostic testing that are ineligible under Mayo are generally inexpensive, because they involve the application of newly discovered medical knowledge using existing testing techniques. And there is no shortage of researchers and clinicians willing to pursue such discoveries without the incentive of patent exclusivity.

July 2026 statement, pp. 15-17

Diagnostic technologies were rapidly developed and deployed during the COVID-19 pandemic, and genetic testing expanded dramatically after Mayo and Myriad. One published estimate concluded that the number of genetic tests developed increased at least sevenfold between 2013 and 2022. Those developments are difficult to reconcile with the claim that current law has broadly disabled diagnostic innovation.

TK Note: The published estimate is Charles Duan, Patent Eligibility and Diagnostic Testing, R Street Policy Study No. 269, at 2 (Nov. 2022), available at https://www.rstreet.org/wp-content/uploads/2022/11/Patent-Eligibility-And-Diagnostic-Testing.pdf, cited in the comments.

It’s interesting that even though investment in diagnostics has increased and diagnostics have exploded, Mr. Iancu and Ms. Peschin claim that many are still not being developed because of Myriad. The only support we have for that is Ms. Peschin’s vague reference to the university researchers doing melanoma work.

That seemed pretty implausible — why would the absence of broad patent protection cause a university to abandon promising medical research? If the work was promising, couldn’t they have gotten a grant?

I asked ChatGPT if it could confirm that example, i.e. Ms. Peschin’s claim that: “A similar situation arose when university researchers developed biopsy tests that could predict brain metastases in melanoma patients. But patents on these methods were denied under the Mayo and Myriad standards, forcing researchers to abandon their efforts.”

Here’s its response:

I cannot verify Peschin’s claim as stated, and the available public record raises a serious question about it.

The underlying research appears to be a 2015 NYU study titled A miRNA-Based Signature Detected in Primary Melanoma Tissue Predicts Development of Brain Metastasis. The researchers analyzed microRNA expression in primary melanoma biopsy tissue and developed a signature intended to improve predictions of which patients would later develop brain metastases.

But Peschin did not identify the university, researchers, patent applications, prosecution histories, rejection decisions, or any source for the assertion that the researchers abandoned commercialization because of Mayo or Myriad. Her current written testimony simply makes the assertion. An earlier version was equally opaque, referring only to “an East Coast medical school.”

More significantly, one of the researchers’ public profiles identifies U.S. Patent No. 9,421,218, issued in 2016, under the title A microRNA-based signature predicts melanoma brain metastasis at the time of diagnosis. That appears to cover precisely the invention Peschin was describing, and it issued four years after Mayo and three years after Myriad.

That does not necessarily prove that every desired claim issued. There could have been additional applications, broader method claims, continuations, or claims rejected under § 101. It also remains possible that NYU obtained a narrower patent but concluded that the available scope was commercially inadequate. None of that, however, has been documented in Peschin’s testimony.

There is also no obvious basis for saying the test would have “caught cancers … at their earliest stages.” The described test was prognostic: it used a biopsy of an already diagnosed primary melanoma to estimate the future risk of brain metastasis. It did not detect melanoma before it existed or necessarily detect a brain metastasis earlier.

My assessment would be:

The scientific research was real, but Peschin’s patent narrative is presently unsupported and may be materially misleading. A closely corresponding patent actually issued after Mayo and Myriad. Without the application numbers and prosecution records, there is no verifiable basis for saying that patents were denied under those cases and thereby forced the researchers to abandon the diagnostic.

The issued patent may give us enough information to locate its family and determine whether related applications received § 101 rejections.

I’m not going to try to assess ChatGPT’s statement that the example “may be materially misleading,” but I don’t think it should be relied on unless and until Ms. Peschin provides more information about it. Regardless, it’s just an anecdote, and policy decisions should not be based on anecdotes, as I explained in my May 29, 2025 letter, under Quarter-Truth No. 8:

8. Anecdotes cannot substitute for data.

As any economist will tell you, you can find an anecdote to support just about any position you want to take, and for that reason anecdotes should not drive serious policy discussions. Economists call this the anecdotal fallacy. Nevertheless, much of patent maximalist thinking – and USPTO policy – in recent years has been driven by anecdote.

To be sure, all of the anecdotes involve real people who may have benefited from, or suffered at the hands of, the patent system. Some are rags-to-riches stories about hardworking inventors who came up with genuinely useful products and obtained patents that enabled them to commercialize their products, and perhaps even built up successful small businesses employing one or two other people. Anecdotes like this are used to support stronger patent rights, although in general, the heroes of these anecdotes did just fine under the current patent system.

Others involve rags-to-riches-to-ruin inventors who received patents and may even have commercialized their products, but then sued for infringement and lost the patent during an AIA proceeding. Anecdotes like these are used to support arguments for making it harder for the PTAB to review issued patents. But under the AIA, that’s the PTAB’s job, and – unfortunate though it may be for a small inventor – patents that don’t meet the already-quite-low threshold for patentability will most likely be held unpatentable by the PTAB. That’s the way the system has to work.

A third type of anecdote – which is much more common than the first two, but doesn’t get as much press – is that of the inventor who, encouraged by the rags-to-riches stories, spends tens of thousands of hard-earned dollars filing a patent application, only to find that there is no market for the inventor’s vision of the invention, and the patent is written too narrowly to be useful against those who are successfully marketing variants of it.

When all the anecdotes are considered together, they point to the conclusion that, as to small inventors, the patent game is at best a lottery. There will be winners and there will be losers, and there will be more losers than winners. For every rags-to-riches story one hears about, there may be dozens of rags-to-ruin stories that one doesn’t hear about.

Patent policy-making must not be driven by anecdotes about a small subset of small inventors. It needs to take the entire innovation ecosystem into account. And yet, much of the support for PREVAIL, PERA, and RESTORE is couched in terms of small inventor anecdotes. Tr. 1:10:47-1:11:27 (colloquy between Senator Coons and Mr. Squires about the alleged importance of injunctions to small inventors).

PERA-QT-06

Patents are needed to attract the investment required to commercialize medical innovation.

Hearing excerpts

Sue Peschin

[1:00:47] “The basic purpose of the Patent Act was to encourage inventors to create and disclose new inventions by giving them a limited monopoly in exchange for making the invention public.”

[1:01:03] “That actually helps them with investment—to gain investment in order to bring it to commercial market and allow for a lot of Americans to have access to these types of tests.”

[1:22:03] “The reason why people look into creating new diagnostic tests for a lot of the conditions that we care about, including Alzheimer’s disease, is because there is investment in them.”

[1:22:12] “It takes years and it takes study and going to the FDA and a lot of work.”

[1:23:06] “Seventy-four percent of investors considered patent eligibility to be an important factor when their firms decide to invest in companies developing new technology, and 62% agreed that their firms are less likely to invest given the unavailability of patents.”

Andrei Iancu

[24:18] “The burden falls especially hard on small innovators.”

[24:25] “For startups and other small businesses, patents may be their principal asset, the foundation for attracting capital, hiring employees, and bringing a product to market.”

[57:34] “If we want investment and innovation at scale that can compete with a very determined China and others, we need reliable intellectual-property laws.”

Earlier analysis submitted to Congress

May 29, 2025 letter, pp. 27-28 (Quarter-Truth 12)

Patent maximalists often point to studies that show that patents attract investment, and that businesses with patents do better than similarly-situated businesses without them. Were studies really necessary to show this? Everything else being equal, of course investment money will flow toward businesses with government-backed monopolies over those that actually have to compete on equal terms in a free market.

The problem with this kind of thinking is that it considers only the beneficial impact on the monopoly owner without regard for the impact on everyone else – including competitors, who might be making better products that nevertheless fall within the patent, consumers who have to pay monopoly prices for worse products, and even other potential beneficiaries of the investment dollars.

July 2026 statement, pp. 15-16

The claim that patents are needed to attract investment can also become self-confirming. If the government offers monopoly returns in a field, investors will predictably pursue them. That does not show that the underlying innovation would not occur without patents, or that granting broader patents produces the best allocation of capital.

TK Note: I’m sure we’ll keep hearing the claim that patents are needed to attract investments for diagnostic methods, but it’s really specious. Another good source on this is Richard Blaylock’s statement from the October 8 hearing:

The absence of patents on natural laws has not impaired innovation in the genetic diagnostics industry. Quite the opposite is true. In the last decade, the genetic testing industry has thrived. There is a large market with many actors all contributing to the advancement and development of high-quality clinical testing. The cost of genetic sequencing and therefore the barrier to innovation in detecting new clinically relevant biomarkers has fallen dramatically. With the vast increase in the volume of patient data new biomarkers are being recognized on a routine basis and readily being used to inform patient care.

PERA would slam the door shut on such innovation and also its clinical application in medicine. PERA would permit the privatization of natural laws in the form of knowledge of new biomarkers and their clinical relevance. Because the discernment of new (to us) biomarkers is highly distributed, patent filing on each new biomarker would proliferate with numerous and internationally dispersed patent applicants. The evolving standard of care for genetic testing relative to many medical purposes involves large panels of tests that are intended to detect the presence or absence of a very large number of possible variants. Any of scores of new patentees could stand in the way of a clinician’s effort to conduct a comprehensive and complete analysis of a patient’s genetic information because testing for a broad panel of possible variants would require permission from all of a large group of patentees, none of whom would be required to grant such permission. PERA would return the US to a time when patients had to fight for affordable access to the most scientifically up-to-date testing.

Just to drive home how silly it is to focus on the ability of patents to attract investment, remember that investors like patents because even if the company they are investing in fails, they’ll be able to sue other companies that independently arrive at the same idea and implement it successfully. In those cases, the “attraction of investment” almost certainly has a negative social value.

PERA-QT-07

Small innovators need patents because large companies can rely on scale and secrecy.

Hearing excerpts

Andrei Iancu

[24:18] “The burden falls especially hard on small innovators.”

[24:18] “Large companies can rely on scale, secrecy, and litigation budgets.”

[24:25] “For startups and other small businesses, patents may be their principal asset, the foundation for attracting capital, hiring employees, and bringing a product to market.”

[58:12] “It concentrates technology in the big and established corporations. It allows the big to get bigger.”

Earlier analysis submitted to Congress

May 29, 2025 letter, pp. 23-24 (Quarter-Truth 7)

While such businesses should be supported, the fact that they are getting above-average numbers of patents suggests that the system is working for them. Their success undercuts any claim that they need more and stronger patents.

More importantly, it is simply wrong to suggest that these very small R&D-oriented businesses – which probably include a number of NPTs – are a significant proportion of our economy or that they provide a large number of jobs, as the juxtaposition of statistics would appear to suggest. Small businesses probably do create about half of all U.S. jobs, but the vast majority of those small businesses (restaurants, retail, and services) do not rely on patents.

May 29, 2025 letter, p. 27

Moreover, there will also be anecdotes going the exact opposite way – businesses unable to attract investment because of patents held by entities that are not implementing them. For all we know, for every one business that attracts investment thanks to a patent, there may be ten better businesses that never got off the ground because of one. We just don’t know, and it’s irresponsible to base policy on the “successes” alone.

TK: This is just another specious claim, for the reasons given. The real question should be whether it’s a good idea to grant patents on diagnostic methods, business methods, and the other sorts of subject matter made eligible by PERA. As explained at length in my various submissions, it’s not a good idea — granting such patents will adversely affect competition, innovation, access, and pricing. The fact that some small businesses might benefit while these costs are imposed on everyone else provides zero support for legislation like PERA.

PERA-QT-08

Weak patent eligibility drives inventors toward trade secrecy.

Hearing excerpts

Andrei Iancu

[24:37] “Reliable patent rights also encourage inventors to disclose their breakthroughs rather than keep them secret, allowing others to learn from and build upon them.”

[58:21] “It also pushes development towards trade secrecy.”

[58:35] “If anything, we want more transparency in artificial-intelligence development, not less.”

[58:42] “A patent means to lay open. That’s what the word patent means. The patent system encourages public disclosures.”

Sen. Chris Coons

[1:05:05] “A company has a choice between keeping something secret, protecting it as a trade secret, or publishing it for the world—laying it open—as a patent.”

[1:05:21] “That choice is in part driven by whether or not there is predictability in patent-eligibility jurisprudence. Is that correct?”

Andrei Iancu

[1:05:27] “That’s absolutely right.”

[1:05:27] “There is lots of evidence that since the recent Supreme Court cases—Alice, Mayo, and so on—there has been a push towards secrecy, both for diagnostics and also for certain AI types of technologies.”

Earlier analysis submitted to Congress

May 29, 2025 letter, p. 30 (Quarter-Truth 16)

Trade secrets, unlike patents, last forever – but only if the invention can be kept secret. If you truly have something that nobody else is likely to invent – like a way of producing a complex biologic product – you’ll probably want to keep it as a trade secret, rather than disclose it to the world in exchange for a time-limited patent. But, as Kevin Kelly points out, such protectable trade secrets are the exception, not the rule – the vast majority of the inventions that we patent cannot be kept as trade secrets, because (a) they’re usually easy to reverse-engineer once commercialized, and (b) they’re likely to be independently reinvented. Yet some maximalists argue that failing to make the patent system even stronger will cause inventors to maintain their inventions as trade secrets.

TK: the kinds of inventions made eligible by PERA — including diagnostic methods and computer implemented business methods — are not generally susceptible to trade secret protection. AI presents a different case - as discussed elsewhere, its explosive growth has occurred without the need for patents (even though many thousands of patents on AI and AI applications have issued), so arguments that we need patents to spur more AI innovation are refuted by reality.

If Congress really thinks we need more and better AI, then Congress should focus on THAT question, and consider ways of furthering that goal. It should not pass PERA on the theory that it will promote more innovation in AI — it almost certainly won’t; even without PERA, all the patents we have already issued on applications of AI are almost certain to hinder more innovation than they promote.

PERA-QT-09

Sections 102, 103, and 112 will prevent undeserving patents.

Hearing excerpts

Sen. Thom Tillis

[12:26] “PERA is not guaranteeing that you’re going to get a patent.”

[13:04] “What PERA is trying to do is simply open the aperture to what may be patentable.”

Andrei Iancu

[25:13] “The patent laws impose several distinct requirements. Section 101 asks only a threshold question: Is this the kind of technology the patent system may protect?”

[25:27] “Other provisions determine whether the invention is new, non-obvious, and adequately disclosed.”

[25:34] “Eligibility is not patentability.”

[25:39] “Passing through the gate does not guarantee a patent.”

[1:14:47] “The Patent Act of 1952 created distinct areas of analysis, distinct lanes of analysis. Section 101 is one lane, but then we have a separate statute for novelty, a separate statute for obviousness, and yet another one for adequacy of disclosure and claiming.”

[1:47:59] “There are at least four statutes that govern whether a patent should be issued. Number one is section 101 eligibility. But then after that we have three other statutes: 102 on novelty, 103 on obviousness, and 112 on the appropriate scope of disclosure and claiming.”

[1:48:24] “PERA affects only the first one, section 101. After that, we need to go through the rest of the statutory lens.”

Earlier analysis submitted to Congress

October 15, 2025 supplemental statement, p. 6

Supporters of expansive eligibility often argue that § 101 should serve only as a “coarse filter” and that the other statutory provisions – §§ 102, 103, and 112 – can be relied on to weed out subject matter that should not be patented. But the current exclusions are not based on overbreadth, anticipation, or obviousness – they reflect the judgment that granting such patents does more harm than good.

Business methods are excluded because they are bad for business – not merely because they might be anticipated, obvious, or too broadly claimed. Diagnostic methods based solely on natural correlations are excluded because they allow for the monopolization of knowledge and inhibit patient access to diagnosis and treatment.

July 2026 statement, p. 19

Claims directed to tax strategies, financial arrangements, isolated natural substances, or natural-correlation-based diagnostics may be drafted to satisfy PERA’s eligibility rules. Once framed that way, they may also be novel, nonobvious, fully enabled, and clearly claimed, and therefore satisfy §§ 102, 103, and 112. Those provisions do not answer the antecedent question whether the claimed subject matter represents the kind of human-made technological contribution for which the patent system should grant an exclusive right.

TK Note: As discussed at some length in my July 2026 submission, an overarching question for Congress on any patent legislation should be whether it promotes progress in the useful arts. Prior to the Supreme Court’s getting involved with Bilski, Mayo, Myriad, and Alice, the Federal Circuit’s case law led to tens of thousands of patents being filed on subject matter that did not promote progress in the useful arts — that’s essentially what the Supreme Court was reacting to. PERA is now trying to restore patentability to much of that subject matter. In contemplating PERA, Congress should seriously consider how allowing patents on business methods and tax strategies promotes progress in the useful arts.

PERA-QT-10

PERA merely opens the gate and leaves patentability standards unchanged.

Hearing excerpts

Sue Peschin

[34:36] “Patent eligibility doesn’t guarantee patent approval. It just lets the Patent Office consider an invention.”

Andrei Iancu

[25:39] “PERA is only about eligibility and leaves the patentability standards unchanged.”

Sen. Thom Tillis

[1:34:41] “This is the eligibility phase of the process.”

[1:34:51] “I’d like for some people to talk about examples of whether sections 102 and 103 would knock out the patentability even if it was eligible.”

Earlier analysis submitted to Congress

July 2026 statement, p. 19

Section 101 should not be a coarse filter. It performs a distinct threshold function by excluding claims whose defect lies neither in novelty nor in the adequacy of their disclosure, but in the kind of subject matter over which the patent system should confer exclusive rights. Sections 102, 103, and 112 provide no adequate substitute for screening out non-technological claims and claims whose asserted inventive contribution lies principally in a discovery about nature.

October 15, 2025 supplemental statement, p. 6

Removing the barriers currently posed by section 101 would open the floodgates to unnecessary and unproductive patent applications that would not otherwise be filed and would divert USPTO resources from the examination of genuine technological advances. And it would result in patents that impede, rather than promote, progress.

TK Note: This is very similar to QT-9; it’s interesting that ChatGPT found additional refutations, including the one I mentioned in my note on QT-9. The point about how examining nontechnological patents under 102-112 diverts examination resources is important, even setting aside the damage such patents can do when granted.

PERA-QT-11

PERA codifies rather than overturns Myriad.

Hearing excerpts

Andrei Iancu

[1:26:48] “I don’t think that PERA overturns the result of the Myriad case.”

[1:26:55] “As a matter of fact, PERA effectively codifies the result of the Myriad case.”

[1:27:02] “PERA expressly says that things that occur naturally—or, in particular, human DNA as found in the human body, including human DNA as found in the human body that is isolated—which is the first half of the Myriad holding, should not be eligible for patent.”

[1:27:57] “The bottom line is, all in, the result of Myriad is expressly codified by PERA.”

Sen. Thom Tillis

[1:29:03] “The aim of this is to make it clear that human genes, whether isolated or found in their natural state, are not patent eligible.”

[1:29:20] “We want to get this over the finish line. And the aim of this is to make it clear that human genes, whether isolated or found in their natural state, are not patent eligible.”

Sen. Chris Coons

[1:57:37] “I think what we’re doing in PERA is codifying the Myriad decision that you cannot patent a human gene.”

Earlier analysis submitted to Congress

October 8, 2025 statement, p. 6

Although PERA excludes an “unmodified human gene, as that gene exists in the human body,” it clearly allows for patents on genes and gene fragments that have been isolated from the human body and separated from their chromosomes, which were held ineligible, for sound policy reasons, in Myriad.

PERA allows for patents on isolated genes that are “otherwise employed in a useful invention or discovery,” which means they are eligible if used in connection with diagnostic testing. That was held ineligible in In re BRCA1-& BRCA2-Based Hereditary Cancer Test, consistent with Myriad and sound patent policy.

July 2026 statement, pp. 17-18

PERA would move still farther in the wrong direction. To current law’s already overly permissive treatment of cDNA and recombinant host cells, PERA would add eligibility for naturally occurring human genes once they have been purified, enriched, otherwise altered by human activity, or employed in a useful invention or discovery. That expansion could restore broad control over diagnostic and research uses of natural genetic information, including later-developed tests based on relationships the original discoverer neither identified nor understood.

TK Note: The result of the Myriad case was not limited to human genes, so it’s disingenuous to pretend that PERA is trying to codify Myriad. As I believe Dr. Leonard pointed out at the hearing, PERA prevents the patentability of antigens, which also should not be patented, and it’s not Myriad alone that prevents patenting of genetic testing.

I realized after the hearing that the purported “exception” for human genes serves the maximalist purpose of making it clear that every other possible naturally occurring substance — including non-gene substances occurring in the human body, like proteins, are fair game for patenting.

PERA-QT-12

The Patent Act’s eligibility categories are antiquated because they date to 1793.

Coverage note: Closest existing language; the submissions do not appear to address the precise historical claim that the four statutory categories themselves are obsolete.

Hearing excerpts

Andrei Iancu

[22:03] “Congress has not meaningfully updated the basic statutory categories defining what kinds of innovations and technology may be patented since 1793.”

[22:23] “Technology has changed a bit since then. Indeed, it has changed beyond recognition. The statute has not.”

[56:57] “Section 101, for all practical purposes, was written in 1793.”

[57:07] “The four categories of patentability were written when Jefferson and Madison were writing laws in 1793.”

[57:21] “Courts are having a difficult time figuring out how to apply an 18th-century statute to 21st-century law.”

Earlier analysis submitted to Congress

May 29, 2025 letter, pp. 19-20 (Quarter-Truth 1)

The Constitution does not provide any rights to inventors. It just says that Congress can create a patent system – a system of statutory rights, upon which Congress can place whatever conditions it wants. It doesn’t say Congress has to, and says nothing about the form that system should take.

If the Framers had any idea that, after more than 200 years of technological advances and multiple technological “revolutions,” we’re still handing out 20-year patent terms for nontechnological inventions and minor improvements, and considering making patent rights even stronger, they’d be astonished – if not appalled.

July 2026 statement, pp. 4-6

The patent right was not created to reward inventors simply because they had made an invention. It was intended as a social inducement, granted only where the resulting addition to human knowledge justified the restrictive effect of the patent monopoly. The task, as the Court explained through Jefferson, is to identify the things “worth to the public the embarrassment of an exclusive patent.”

TK Note: As ChatGPT points out, my submissions didn’t directly address this particular maximalist claim. That’s because I hadn’t heard them make it before, possibly because I agree with it in principle — there’s no sense in considering the precise categories spelled out in 1793 to be the universe of patent-eligible subject matter. In fact, all the case law — plus the judicial exceptions — have shown that the language should probably be updated. But that doesn’t mean that it should be updated the way PERA wants to update it — it should be updated in a way that Congress concludes promotes progress in the useful arts. And it should not be updated in isolation — as mentioned in my July 2026 Statement, Congress should take a hard look at whether the other provisions that have been with us since 1793 — including the lengthy patent term — still make sense in this day and age.

PERA-QT-13

Congress intended eligibility to cover anything under the sun made by man.

Coverage note: The submissions answer the broader implication, although they do not directly parse the legislative-history phrase.

Hearing excerpts

Sen. Chris Coons

[59:17] “Congress passed the current Patent Act more than 70 years ago, defining a very broad scope for eligibility—essentially anything under the sun as made by man.”

[59:25] “And that worked fine for a half century.”

Earlier analysis submitted to Congress

May 29, 2025 letter, pp. 2-3

The patent monopoly was not designed to secure to the inventor his natural right in his discoveries. Rather, it was a reward, an inducement, to bring forth new knowledge. The grant of an exclusive right to an invention was the creation of society – at odds with the inherent free nature of disclosed ideas – and was not to be freely given. Only inventions and discoveries which furthered human knowledge, and were new and useful, justified the special inducement of a limited private monopoly.

July 2026 statement, pp. 4-6

A temporary exclusive right is justified when the public benefits expected from the inducement outweigh the restrictions the patent places on competition and the use of disclosed ideas.

Section 101 is one of the principal means by which the patent system screens out claims that do not warrant a 20-year right to exclude. That right should generally be reserved for a genuine human-made advance in a technological art. Commercial usefulness, novelty, or ingenuity in the abstract should not be enough.

TK Note: the quote from the May 29 letter was actually a block quote from the Supreme Court’s decision in Graham v. John Deere; Graham’s language strongly supports my suggestion that Congress focus on trying to align the patent system with its constitutional purpose.

As discussed above, the pre-Mayo/Alice experience has shown us that patenting everything under the sun is a bad idea, and the Supreme Court has sensibly rejected “under the sun” as a test for eligibility. If Congress wants to tinker with eligibility, it should focus on what would best promote progress in the useful arts — i.e., not PERA.

PERA-QT-14

All relevant Federal Circuit judges have asked Congress to act.

Coverage note: No direct response found to the numerical claim about Federal Circuit judges. The existing response addresses the inference proponents draw from judicial criticism.

Hearing excerpts

Sen. Chris Coons

[16:17] “Every member of the Federal Circuit at some point has reached out and asked us for guidance.”

[59:47] “Every member of the relevant Federal Circuit has asked us to act to clarify it.”

Sen. Thom Tillis

[12:34] “Twelve judges have lamented the fact that they even have to deal with it when rendering a decision.”

Earlier analysis submitted to Congress

October 15, 2025 supplemental statement, pp. 4-5

Empirical analyses show that § 101 outcomes are largely predictable. As Professors Datzov and Rantanen recently found, § 101 decisions exhibit levels of consistency and affirmance comparable to other areas of patent law, undermining the claim that patent eligibility is uniquely unpredictable.

July 2026 statement, pp. 7-10

A desire for greater clarity therefore does not justify PERA or similar proposals, which would weaken § 101’s substantive limits rather than merely clarify them.

TK Note: I’m not contesting that the Federal Circuit judges have asked for help with 101 “at some point,” but it’s interesting that we haven’t heard them say it much recently — perhaps because they’ve managed to make 101 reasonably predictable. Of course, I don’t blame them for wanting clear lines, but I seriously doubt that all of them would support enactment of PERA as a policy matter.

I’ve also noted somewhere that PERA itself introduces a host of interpretive issues about its outer edges that will have to be litigated, so even if clarity is the main concern — which it shouldn’t be — PERA is not the answer.

And to be clear: I actually support Congress taking a hard look at eligibility — I believe that it would be possible to come up with a clearer statute that betters aligns eligibility with the constitutional purpose than does the current interpretation of 101.

PERA-QT-15

High affirmance rates merely show that courts are consistently applying bad law.

Hearing excerpts

Sue Peschin

[1:50:47] “It’s true that expert lawyers can predict the likely outcome of section 101 disputes, which generally involve finished products that have already been brought to market.”

[1:51:03] “Startup companies are not making research and investment decisions based on finished products.”

[1:51:12] “If the courts are just kind of mirroring each other because of the unpredictability and validating each other on that, that’s not a sign of how things are going.”

Sen. Chris Coons

[1:54:49] “Consistently bad would be my rejoinder.”

[1:55:37] “In the five years following Mayo, district courts invalidated 60% of patents challenged as ineligible, and the Court of Appeals for the Federal Circuit invalidated 90%.”

[1:55:44] “They may have been consistent, but I would argue consistently bad.”

Earlier analysis submitted to Congress

October 15, 2025 supplemental statement, pp. 4-5

Empirical analyses show that § 101 outcomes are largely predictable. As Professors Datzov and Rantanen recently found, § 101 decisions exhibit levels of consistency and affirmance comparable to other areas of patent law, undermining the claim that patent eligibility is uniquely unpredictable.

At the hearing, the only purportedly inconsistent decisions cited were Yu v. Apple and Contour IP v. GoPro. Yet as Contour expressly explained, Yu’s claims failed because they pertained to “a longstanding, fundamental practice in photography,” whereas the same could not be said for the processing of parallel video streams at issue in Contour.

July 2026 statement, pp. 8-10

Yu and Contour draw a reasonably discernible distinction between using familiar machinery to carry out a longstanding abstract practice and requiring a specific mode of technological operation to address a technological problem. They do not support the claim that the Federal Circuit’s eligibility decisions are inexplicably contradictory.

TK Note: This QT primarily reflects Senator Coons’s belief that the current state of the law is “bad law.” For the reasons given across my submissions, the current state of the law is far better than PERA, although it could be improved to align it better with the constitutional purpose. And the answer to Ms. Peschin’s concern about startups would also be answered by a more constitutionally-aligned approach that draws sharper lines than does current law.

PERA-QT-16

Patents are not materially responsible for high pharmaceutical prices, and without them many treatments would not exist.

Hearing excerpts

Sue Peschin

[1:37:54] “Patents generally aren’t the reason that prescription drugs cost so much.”

[1:38:02] “In fact, without them, a lot of treatments wouldn’t exist. So we wouldn’t really have anything to argue about if we didn’t have the drugs themselves.”

[1:38:09] “Patents really encourage investment in new therapies and improvements in existing ones.”

Sen. Chris Coons

[1:56:19] “In terms of the patentability or patent eligibility of drugs—of pharmaceuticals—PERA has almost no impact.”

[1:56:28] “It is very rare for pharmaceuticals to be invalidated.”

Earlier analysis submitted to Congress

May 29, 2025 letter, pp. 12-15

Drug companies today routinely get follow-on patents on dosages, coatings, combinations, treatment methods, isomorphisms, and other predictable “improvements,” which may meet the current standards for patentability – and may even be useful improvements – but do not represent innovations worth billions of dollars. And yet, through various clever and usually perfectly legal tactics, the drug companies are able to extract billions in additional revenue from the U.S. public each year based on such patents.

There is no reason to think that the patent system as currently configured is the best way to promote medical innovation. Unrestricted patenting of diagnostic methods would tie up medical knowledge and hamper the ability of doctors – or, increasingly, artificial intelligence – to diagnose and treat their patients.

July 2026 statement, pp. 16-17

Diagnostic patents and drug patents share one economically important feature: demand can be highly inelastic. A patient who needs a genetic test or other diagnosis often cannot substitute a different product or wait for the patent to expire. Broad claims over natural correlations can therefore permit the owner to restrict confirmatory testing, dictate which laboratories may perform a test, and charge prices unrelated to the incremental cost of applying the discovered information.

TK Note: I believe the next few QTs came up because Senator Hawley came in and tried to make the hearing about drug pricing, over the objections of Sens. Tillis and Coons.

In any event, I’ve answered this claim at some length in my submission to the House after the Medicines and IP hearing in June 2026. I didn’t feed that submission to AI.

Of course, it’s ridiculous for maximalists to say patents are not the reason for high drug prices — their whole premise is that inventors NEED patents so they can keep their prices high, so they can recoup their investment.

PERA-QT-17

Foreign countries are free-riding on American pharmaceutical innovation.

Hearing excerpts

Andrei Iancu

[1:39:59] “There are two sides of the chart that you’re showing. The main problem is that there’s tremendous free-riding overseas on American innovation.”

[1:40:09] “As a result of that, the cost of innovation is borne disproportionately by the American taxpayer.”

[1:40:24] “Instead of engaging in a race to the bottom and decimating the American innovation ecosystem, we should work hard to force our trading partners to bear their fair cost for that innovation.”

Earlier analysis submitted to Congress

May 29, 2025 letter, p. 14

There is no reason to believe that drug companies’ prices bear any relationship whatsoever to their R&D costs – as holders of monopolies for which demand is nearly inelastic, they will set prices in each market at the level that market will bear. We are not subsidizing other countries – other countries are just better at negotiating than our government has been; the high prices that the U.S. pays for drugs is just another bad deal for the U.S. public.

July 2026 statement, pp. 20-21

Nor should the United States copy foreign diagnostic-patent rules without considering differences in health-care pricing and access. Broad medical patents are less likely to produce unaffordable testing in systems that regulate prices directly. In the United States, where diagnostic pricing can be far less constrained, patent exclusivity can translate directly into restricted testing and higher patient costs.

TK Note: The background for the quote from the May 29 letter was the point that President Trump’s “most favored nation” idea — trying to get other countries to pay MORE for drugs, so that we wouldn’t have to pay as much — was based on a misunderstanding of how monopolies work. Prices are NOT being set by the need to recover a certain amount of research costs, they are set to extract as much profit as possible. And there’s nothing wrong with that, if the law allows it — which US law in many ways does.

PERA-QT-18

Nine out of ten prescriptions being generic shows that the patent system is working.

Hearing excerpts

Andrei Iancu

[1:40:36] “The reality is that nine out of 10 prescription drugs in the United States are filled with generic substitutes, far higher than the average in the OECD.”

Sen. Thom Tillis

[1:46:01] “But, Mr. Lee, you did hear that the vast majority of drugs being dispensed are generic equivalent. You know how they become generic, right?”

Earlier analysis submitted to Congress

May 29, 2025 letter, pp. 35-37 (Quarter-Truths 25-26)

The main finding of the [USPTO Drug Patent and Exclusivity] study is that drug patents only enjoy about 11 years of exclusivity, since on average generics enter the market at that point. Unless one actually reads the study, one might assume that such early generic entry signals a well-functioning patent system.

Yet the study itself acknowledges in a footnote that it “does not examine the effect of generic launch on price” and therefore “does not examine whether generic launches, particularly those following settlement of litigation, represent unfettered competition.” In addition, the USPTO forthrightly stresses on its website that the study “does not address the price of the drug products included in the study or any effect of generic drug launch on price or market share.”

Indeed, the cited “early” generic launches were almost always authorized by the brand, typically as part of a pay-for-delay settlement, such that the generic and the brand continued to share in the profits of the patent super-monopoly, usually well beyond the patent term of the compound that first received FDA approval.

TK Note: My discussion of the USPTO’s Drug Patent and Exclusivity study did not specifically address the 90% number, but ChatGPT here is just citing it for the very point that the availability of “generics” does not necessarily mean that prices will fall. That’s the fatal error underlying all the claims that maximalists make about the USPTO study — they claim that it shows that patents don’t stop relatively early generic entry, but the USPTO specifically notes that the “generic entry” might have been the result of settlements, in which case prices would not have dropped to their eventual “true-generic” levels.

My Medicines and IP Hearing submission addressed the 90% statistic as follows:

A. The fact that most prescriptions are generic says nothing about the high-cost medicines that remain protected.

Ms. Carver and Ms. Simpson emphasized FDA’s estimate that approximately 90 percent of prescriptions dispensed in the United States are generic. The statistic says nothing about whether protected, high-cost medicines remain insulated from optimal competition. And, as discussed above, the label “generic” does not necessarily establish that a product is sold in a market open to unrestricted entry.

The large generic share is unsurprising. The United States has approved and patented medicines for many decades, and drugs whose foundational protection expired long ago should ordinarily be open to generic competition. The important question concerns the relatively small share of prescriptions represented by high-cost brand-name medicines: whether patients and taxpayers continue to pay supermonopoly prices long after the foundational invention has received a sufficient reward.

That distinction becomes clear when prescription volume is compared with spending. The RAND analysis cited by Ms. Carver found that unbranded generics accounted for only about 8 percent of spending at manufacturer gross prices, while brand-name originator drugs represented only about 7 percent of prescription volume but approximately 87 percent of spending. RAND also found that U.S. gross prices for brand-name originator drugs were more than four times prices in comparison countries and remained more than three times as high after an adjustment for manufacturer rebates.

As discussed above, the generic label does not necessarily signify robust competition. Some generic markets remain concentrated or expensive because of shortages, regulatory barriers, settlements, supply constraints, or too few manufacturers. To the extent prescriptions from those markets are included in the 90 percent figure, dividing spending into generic and brand-name categories understates the share of prescription-drug spending that remains outside robust price competition.[26]

Footnote 26 is worth reproducing, since the fact that US’s 90% generic rate is higher than those of other countries came up at the hearing:

26] Ms. Carver also observed that generics account for a smaller share of prescriptions in other countries, and that generic drugs in the U.S. cost 67% of what they cost in other countries. Carver Written Statement at 2. Those differences are not necessarily attributable to U.S. patent policy, and are in any event not relevant to the issue at hand, which concerns the drugs that are not generic.

PERA-QT-19

Innovation at scale requires patents.

Hearing excerpts

Andrei Iancu

[57:34] “Yes, we will have a Dr. Salk every now and then inventing unbelievable technologies and dedicating that to the public.”

[57:41] “But for the United States, if we want investment and innovation at scale that can compete with a very determined China and others, we need reliable intellectual-property laws.”

[1:49:24] “Sure enough, there is still innovation. Obviously, there is some innovation, but it’s not at scale.”

[1:59:05] “From a national-security perspective, we have to do everything we can to maximize the innovative potential of the United States.”

[1:59:13] “The only way that we know how to do that at scale is what the founders recognized, and it is with a reliable intellectual-property system.”

Earlier analysis submitted to Congress

May 29, 2025 letter, pp. 10-12

Patents are not necessary to spark innovation and commercialization in many fields. As just about anyone with Silicon Valley experience will tell you, patents were never needed to spark innovation in software-based inventions. And they’ve played no role in the incredible scientific and commercial development of artificial intelligence, probably the most important innovation of this century.

When innovation is actually needed, there is no substitute for direct government funding and planning. As an obvious example, if we had relied on the patent system alone for our military technology, our military would not be what it is today. Direct government spending must also step in when specific innovations are needed, like the Manhattan Project, the Apollo Project, and Operation Warp Speed.

July 2026 statement, p. 18

Arguments for broader patent eligibility often treat the existence of patents as evidence that patent protection caused the underlying innovation. That inference is unsound. A patent may attach to an innovation without having induced it. Important advances in software, biotechnology, medicine, and other fields may occur because of public funding, urgent practical need, scientific collaboration, ordinary commercial competition, or incentives unrelated to patent exclusivity.

PERA-QT-20

The patent system is the only reliable way to maximize innovation in a free-market economy.

Hearing excerpts

Andrei Iancu

[54:52] “For the United States as a free-market economy to maximize its innovation output, it needs reliable intellectual-property laws that apply in a predictable way to the entire scope of technology.”

[55:50] “If we want for the United States to maximize its potential, the only way to do that reliably in a free-market economy is through intellectual-property laws, which our founders understood from the very beginning.”

[1:59:13] “The only way that we know how to do that at scale is what the founders recognized, and it is with a reliable intellectual-property system.”

Earlier analysis submitted to Congress

May 29, 2025 letter, pp. 10-12 and 26-27

Patents are not necessary to spark innovation and commercialization in many fields. Many of our most innovative companies – think Amazon, Facebook, Google, Twitter/X, Tesla and Space-X – did not need them to become successful.

When it comes to patents (or just about anything else), correlation alone does not establish causation. There is no reason to believe that the patent system, as currently configured, is the best way to promote progress in technology or the useful arts, and there is no way to know whether we would have done better or worse under a different system.

July 2026 statement, pp. 18-20

These examples expose a recurring weakness in maximalist patent arguments. The fact that an invention was patented does not establish that the patent induced it, that broader eligibility would have produced it sooner, or that the innovation would have been lost without private exclusionary rights. Congress should not expand § 101 on the unsupported assumption that more patentable subject matter necessarily produces more innovation.

Artificial intelligence is frequently invoked as a reason to broaden eligibility, yet the field is already advancing rapidly under current law, supported by enormous private investment, public research, and ordinary commercial competition. That experience provides no basis for assuming that a lower eligibility threshold would produce more or better AI innovation.

QTs not found by ChatGPT

For completeness, I’ll respond to just a few other points from the hearing:

QT-21

The USPTO 101 Guidance Is a Success

Iancu:

[45:09] “[The 2019 guidance] took the body of law that the Supreme Court and the federal circuit has created in this area and synthesized it in a way that examiners and applicants can understand and follow a very specific process. And the result has been in the one year immediately following the guidance that the consistency of decisions in this area went up by 44%. And as Mr. Lee noted earlier uh the federal circuit affirms over 95% of decisions in this area from the PTO. So therefore the guidance uh basically follows the law given by the by the courts.”

TK Response:

That’s a total non-sequitur. With the exception of a very few PGRs, the overwhelming majority of 101 cases from the USPTO are appeals from ex parte decisions in which the Board affirmed an examiner denial of a patent. Because the 2019 Guidance takes a more liberal approach to patentability than does the Federal Circuit, it’s no surprise that when the USPTO does reject a claim under 101, the Federal Circuit will uphold the rejection. And of course, the added “consistency” that he’s talking about is the result of more examiner allowances that Federal Circuit case law would permit. I warned about this approach in my May 29 Letter:

A persistent complaint from patent maximalists is that patent law lacks clarity. But as discussed above, their proposed fixes would take the law in exactly the wrong direction – and even if enacted, would still be subject to judicial interpretation. Moreover, if history is any guide, the currently pending legislation is unlikely to pass anytime soon, leaving the task of clarifying patent law to the courts, with input from the USPTO.

One of the most effective ways the law can be clarified is through the examination process itself. When the USPTO rejects a patent claim, the applicant has the right to seek review by the Federal Circuit and, in some cases, by the Supreme Court. In the 1970s and 1980s, the USPTO routinely rejected claims in legally ambiguous areas, a strategy that ultimately yielded Supreme Court decisions in Benson, Flook, Diehr, and Chakrabarty. While imperfect, those decisions provided binding guidance to district courts, the Federal Circuit, and the USPTO.

Unfortunately, that approach was later abandoned. Following the Federal Circuit’s patent-friendly decisions in Alappat (1994), State Street (1998), and AT&T v. Excel (1999), the USPTO began granting claims that went beyond even what the Federal Circuit had permitted – extending State Street to cover business methods untethered from machines, such as tax-avoidance strategies or even methods for swinging on a playground swing. Meanwhile, the Office was also issuing patents on diagnostic methods and isolated genes, based on an expansive reading of Chakrabarty.

All of this came crashing down with the Supreme Court’s renewed interest in patent law. When the smoke cleared after Bilski, Mayo, Myriad, and Alice, tens of thousands of patents that the USPTO had issued on business methods, software, diagnostic methods, and isolated genes were wiped out. While the Federal Circuit played a role, the USPTO had helped create the problem by not taking a more cautious approach. Had it rejected gene patents when they were first applied for in the early 1990s, and business methods that went beyond those permitted by State Street and AT&T v. Excel, the law might have been clarified much sooner.

Now, history is repeating itself – both under section 101 and with respect to AI-assisted inventions. The USPTO’s 2019 patent-eligibility guidance extends well beyond what the courts consider patentable and is likely resulting in the issuance of thousands of patents that will either be invalidated after costly litigation or abandoned. Meanwhile, although the USPTO’s AI Inventorship Guidance provides a sensible framework, its lack of firm disclosure requirements for AI contributions makes it unlikely that the framework will be meaningfully tested in court for years – leaving an increasingly important question of law unsettled and thousands of additional patents subject to future invalidation.

In other words, the USPTO’s current patent-friendly approach to both section 101 and AI-assisted inventions is producing precisely the kind of unpredictability and uncertainty that patent maximalists decry.

The USPTO should adopt a different approach: when case law is unclear, it should err on the side of rejection. This is by far the most efficient path to legal clarity. Even an answer you don’t like is better than no answer at all – and the USPTO is uniquely positioned to help get that answer. Simply issuing patents to appease vocal applicants or interest groups will only perpetuate uncertainty – and risk seeing large swaths of issued patents wiped out later in court.

Since the current USPTO has become even more permissive — including instructing examiners to err on the side of eligibility in close cases — I made the same point again in my July 26 submission:

The USPTO’s shift toward broader eligibility should be understood as an Administration policy, rather than an initiative attributable solely to Director Squires. Director Squires made clear at his March 25, 2026 oversight hearing that Commerce Secretary Howard Lutnick sets the Administration’s policy direction for the USPTO. Consistent with that direction, the Office has instructed examiners to avoid eligibility rejections in close cases, designated Ex parte Desjardins precedential to encourage broader recognition of asserted technological improvements, revised the MPEP accordingly, and created a mechanism for applicants to submit declarations aimed at overcoming § 101 rejections.

That approach risks repeating an earlier institutional failure. Before the Supreme Court clarified the law in Mayo and Alice, the Office issued large numbers of patents that later proved unenforceable, after businesses and the public had already incurred substantial examination, litigation, licensing, and settlement costs. As I explained in my Opposition to the Squires nomination, where the governing law is genuinely uncertain, the USPTO should generally preserve the issue through rejection and permit applicants to seek judicial review. A permissive administrative policy can insulate questionable claims from judicial scrutiny because competitors often cannot challenge them until years after issuance. Issuing patents first and awaiting eventual correction externalizes the cost of uncertainty onto the public.

QT-22

The “free market” needs reliable patents across all areas of “technology”

Iancu

[55:01] “[F]or the United States as a free market economy to maximize its innovation output, it needs reliable intellectual property laws that apply in a predictable way to to the entire scope of technology. Right now, there are major areas of technology that are basically not eligible for patent. Medical diagnostics we’ve discussed but a lot of information-based technologies and we live in the information age and courts took upon themselves to effectively exclude from the patent system the technological processing of massive amounts of data in innovative ways that’s another example without that you surely we will have some innovation here and we do and there is investment in innovation some of it and we do have that but if we want for the United States to maximize its potential, the only way to do that reliably in a free market economy is through intellectual property laws which our founders understood from the very beginning.

TK Response

Patents are NOT the “free market,” as I explained in Truth No. 2 of my May 29, 2025 letter:

2. Patents distort the free market.

In his opening statement, Mr. Squires asserted that he is an “eager proponent of free market solutions.” Tr. 30:33.[1] That’s a fine thing to be, but it’s a reason he should be questioning, rather than flatly endorsing RESTORE, PERA, and PREVAIL (Tr. 51:59-53:34; 1:09:10-1:12:38), the currently pending legislation that would expand and strengthen existing patent rights.

By design, patents distort the free market. The whole point of patents is to give inventors government-backed rights that enable them to prevent their competitors from fully participating in the free market. Basic economics tells us that this introduces dead-weight loss – higher prices and reduced output compared with an unfettered market.

Each of the 350,000-plus patents the USPTO issues every year and the 3.5 million U.S. patents currently in force is a landmine in the free market. Anyone wishing to enter the market in almost any technology sector either simply can’t – because of the huge webs of entry-barring patents held by industry incumbents – or does so at great risk.

There is a justification for this, but there is also a lot of collateral damage to free enterprise.

Like other well-intentioned government benefits programs, the patent system also spawns parasitical behavior, along with unintended and counterproductive consequences that distort the free market even further. Another unfortunate byproduct of the system is that a certain percentage of patents – nobody knows how many – should not have issued, and thus create market-distorting monopolies that don’t serve the patent system’s purpose.

Making existing patents stronger and harder to challenge distorts the free market even more and rewards manipulative, economy-draining tactics. Anyone who supports free enterprise or free market capitalism should not support proposals that do this absent some truly compelling justification.

And Dr. Leonard gave powerful testimony about the need for her to get licenses just to do her work — again the antithesis of the free market in which she now is able to operate on behalf of her patients:

“So, literally going back to that NICU example, as a clinician, you would not be able to do what is necessary for the well-being of that uh baby. Oh, I I might be able to after obtaining a 100 or 200 licenses each at I mean, the license fees we were charged were $25,000 by one company. We had to pay $120,000 for another.”

QT-23

PERA is needed to restore eligibility to technological processing of massive amounts of data in innovative ways

(this came from the Iancu quote for QT-22; reproducing the relevant part here again)

[C]ourts took upon themselves to effectively exclude from the patent system the technological processing of massive amounts of data in innovative ways that’s another example without that you surely we will have some innovation here and we do and there is investment in innovation some of it and we do have that but if we want for the United States to maximize its potential, the only way to do that reliably in a free market economy is through intellectual property laws which our founders understood from the very beginning.

If the data is processed in truly “innovative” ways, it’s probably the kind of technological advance that both the Supreme Court and the Federal Circuit considers patent eligible. PERA, by contrast (as discussed ad nauseam in my comments) would restore eligibility to whole categories of nontechnological patents — including ones that just process data and display it — as long as one can argue that they can only be practically implemented on a computer.

QT-24

Sunlight and pressure can cause patentees not to assert their patent rights

Peschin:

[1:21:39] “I would like to respond [to] the concern that Dr. Leonard brings up around bad actors, you know, who are not allowing licensing or sending threatening letters and all of that. As an advocacy organization, we would be happy to work with you and bring that out into the sunlight and put pressure on them, but I don’t want that to be a reason why we don’t push forward with this legislation. There are bad actors in every aspect of health care and folks who abuse things.

This was a strange offer to Dr. Leonard, who had testified that thanks to Myriad, the need to license gene-based diagnostics — and the associated letters — had stopped. In other words, Ms. Peschin is telling Dr. Leonard that if PERA is enacted and Dr. Leonard starts getting licensing letters again, Ms. Peschin’s “advocacy organization” will help shine a light on it. But we all knew about those letters before Myriad, and the pressure and sunlight were simply no match for the potential profits. The senders weren’t necessarly “bad actors” — they were just owners of patents seeking to maximize profits on their intellectual property, often to fullfil their obligations their shareholders.

QT-25

If we just work together on coming up with language that codifies Myriad, there shouldn’t be any more objections to PERA

Toward the end of the hearing, both Senators Tillis and Coons said that the “human gene” language of PERA was meant to “codify” the holding of Myriad, and asked the witnesses if they had suggestions for better ways to do so. Senator Coons had mispoken Mayo for Myriad, which led to this exchange with Dr. Leonard:

Dr. Leonard: You want language that will codify Myriad?

Sen. Coons: Yes. Did I say Mayo? Yes. Sorry.

Dr. Leonard: Well, we would like it Mayo, Myriad, and Alice.

I think that’s the perfect point to end on — it’s a reminder that codifying Myriad alone won’t prevent patents on simple genetic diagnostics, since Alice and Mayo are both needed for that. And it also would leave nothing left of PERA, which is exactly the right result!

The proposal is enormous, and I do not pretend to have addressed every issue. My comments focus on the provisions that seemed most dangerous: political review of grant decisions, displacement of peer review, ideological screening, discretionary termination of existing awards, limited administrative review, and indirect-cost preferences.

The central point is that before OMB makes DOGE-style grant administration permanent and government-wide, it should study what DOGE actually did.

Under DOGE — in the name of “Government Efficiency” — grants were suspended or cancelled across government. USAID programs were dismantled with extraordinary speed. NIH and NSF awards selected through scientific review were terminated based on political categories. DOJ grants supporting public safety, victim services, and local programs were abruptly cancelled. Humanities grants were screened for disfavored subjects. Existing awards were treated as if they were merely discretionary spending entries, rather than commitments around which recipients, employees, researchers, patients, communities, and beneficiaries had already organized their lives and work.

OMB’s proposal would now entrench some of the same instincts in government-wide rules. It would require political review of discretionary awards, instruct officials not to “routinely defer” to peer review, require awards to advance the President’s policy priorities, allow screening for “anti-American values,” and expand termination authority for existing awards based on current “agency priorities” or the undefined “national interest.”

That’s a major shift of power over federal assistance from statutory programs, expert review, and professional administration toward political control.

If OMB believes that shift is justified, it should first answer basic questions. How many awards were terminated in 2025? How many were reinstated? What were the gross savings? What were the net savings after litigation, closeout costs, reinstatements, replacement costs, and stranded public investment? What happened to beneficiaries, research participants, public-safety programs, health programs, and national-security functions? Who made the decisions? What expertise did they have? What records did they review? Did they understand what the grants actually did?

OMB has not answered those questions. It has not even shown that it seriously asked them.

That is the part I find most disturbing. The Administration says it wants transparency, accountability, performance, and protection of taxpayer funds. But where is the accountability here? Real accountability requires identifiable decisionmakers, lawful authority, written reasons, professional and expert judgment, meaningful administrative review, and standards that courts can actually apply.

My comments propose revisions along those lines. They also support one constructive part of the proposal: OMB’s recognition of “experimental development.” Properly designed, that category could help agencies fund the later-stage work needed to turn publicly supported discoveries into usable public goods – including affordable, competitively supplied medicines.

But the better course would be just to scrap the rule, at least in anything like its current form.

OMB should not make DOGE the norm. At minimum, it should study DOGE first.

Media and congressional criticisms of the rule:

• Letter from Democrats to Vought

• Letter from Sen. Susan Collins to Vought

• NYT article

• Washington Post article

My Comments

Here’s a pdf; cut and pasted comments are also below.

Krause Comments Omb 2026 0034 Federal Financial Assistance 2026 07 13

642KB ∙ PDF file

Download

Download

And just in the case the context cues in this post are not enough, the “Tom Krause” who was on DOGE is a very different guy.

COMMENTS ON PROPOSED REGULATION FOR FEDERAL FINANCIAL ASSISTANCE

Office of Management and Budget

Docket No. OMB-2026-0034

91 Fed. Reg. 32,198 (May 29, 2026)

Submitted electronically through Regulations.gov

Submitted by Thomas W. Krause

July 13, 2026

Formatting note. Consistent with the Notice’s request, each substantive comment below begins with the relevant section number or numbers in brackets. This submission contains no confidential business information or personal privacy information.

I. INTRODUCTION AND SUMMARY

[General; 200.202; 200.205; 200.206; 200.340; 200.342]

These comments are in response to OMB’s proposed government-wide Regulation for Federal Financial Assistance.

I submit these comments in my personal capacity. I previously served in senior legal and adjudicatory roles at the U.S. Patent and Trademark Office, including as Solicitor, Deputy Solicitor, and Executive responsible for Director Review. That experience informs my concerns about agency authority, reasoned decisionmaking, administrative review, and the consequences of broad discretion insulated from judicial scrutiny.

Many of the proposal’s stated goals – cost-conscious administration, attention to performance and program purpose, and broader access to federal funding opportunities – are unobjectionable. More significantly, its express recognition of “experimental development” is a promising feature. Federal research programs should be able to support not only basic and applied research, but also the later-stage work needed to translate promising discoveries into practical public benefits.

The proposal’s premise and the 2025 experience

But the proposal also reflects a flawed premise: that moving authority from professional officials and expert reviewers to political appointees necessarily produces greater accountability. Common sense and recent history tell us that it does not.

The Constitution places executive administration under presidential supervision, but formal proximity to the President does not create meaningful democratic accountability for individual grant decisions. Voters rarely know of – and virtually never cast their ballots based on – an administration’s treatment of a particular research grant, police-assistance program, choice of which diseases or scientific questions to prioritize, or other funding decision. Political accountability is important, but it is not self-executing. Consequential grant decisions still require identifiable decisionmakers, transparent standards, reasoned explanations, professional expertise, and meaningful review.

The events of 2025 illustrate the danger of political control untempered by professional administration, established agency procedures, and informed review. Grants and programs were suspended or terminated across the government, frequently through processes initiated by the “Department of Government Efficiency” (DOGE) and before ordinary agency leadership and review mechanisms were fully established. Decisions affecting foreign health programs, local policing, crime victims, scientific research, national security, and other longstanding activities were made with extraordinary speed and often without appreciation – much less reasoned consideration – of their consequences.

The 2025 cuts were presented as cost-saving measures, but the government has not supplied a comprehensive accounting of net savings after termination costs, litigation, reinstatements, stranded public investment, and the expense of rebuilding lost capacity. Their operational consequences were immediate: disruption of medical and scientific research, foreign assistance, public-safety programs, and national-security activities. Researchers have projected millions of additional deaths by 2030 if the foreign-assistance reductions persist.^[1]

The campaign expressly embraced speed at the expense of error prevention. Asked whether the USAID cuts might allow diseases or other serious problems abroad to spread to the United States, Elon Musk responded: “We are moving fast, so we will make mistakes, but we will also fix the mistakes very quickly.”^[2] At a Cabinet meeting two weeks later, after acknowledging that DOGE had “accidentally canceled” Ebola-prevention work, he repeated: “We will make mistakes. We won’t be perfect.”^[3]

That posture may be tolerable when a private company experiments with a reversible product decision and bears the resulting financial loss. It is a poor governing principle for programs involving human life, public health, national security, and long-term scientific work. Restoring funding after an error may not restore lost time, dispersed personnel, interrupted research, dismantled operational capacity, or services that people needed while the program was suspended. Officials administering statutory programs should understand those consequences before acting, rather than treat avoidable injury as an acceptable cost of moving quickly.

The 2025 grant-termination campaign provides the closest available test of the model this proposal would institutionalize. As discussed below, OMB should not make that model permanent and government-wide without first conducting and publishing a retrospective assessment of its fiscal, operational, and human consequences.

The DOGE experience underscores the value of professional grant administration under any administration, regardless of its policy aims. Career officials and subject-matter experts provide institutional knowledge, continuity, and an understanding of statutory limits and operational consequences. Those safeguards are especially important after an award has been made, employees have been hired, research has begun, and communities or patients have begun relying on promised services.

Congress generally legislates and appropriates against the expectation that the agency entrusted with a program will administer it professionally and faithfully within its statutory purposes. Congress should not have to anticipate and expressly prohibit every method by which a temporary political initiative might indiscriminately terminate grants based on keywords, ideological priorities, or an undefined conception of the “national interest.”

The proposal’s principal defects

The proposed provisions governing discretionary termination would substantially broaden and standardize authority that already permits termination under an award’s terms when the award no longer effectuates program goals or agency priorities. The proposal would add the undefined “national interest,” require broad discretionary-termination language in nearly all discretionary awards, and expressly provide that the controlling priorities are those existing at the time of termination – even if they differ from the priorities under which the award was competed, selected, and executed. Those standards supply few meaningful limits and risk frustrating Congress’s appropriations choices. They may also leave no workable standard for administrative or judicial review. The rule therefore must provide both law to apply and a meaningful process for applying it.

For new awards, proposed § 200.205 would go further by requiring discretionary awards to “demonstrably advance the President’s policy priorities.” Presidential supervision may lawfully shape agency policy, but a free-standing presidential-alignment criterion is not the same as the statutory purposes, published priorities, and announced criteria of the program Congress created. It also creates an acute risk that otherwise eligible research will be judged by its expected premises, conclusions, or political implications rather than by scientific merit and program fit.

The proposal also authorizes ideological screening, including consideration of whether an award would “promote anti-American values.” That phrase has no stable or objective meaning. Conduct or ideas condemned as “anti-American” by one administration may be defended by another as protected dissent or legitimate inquiry. In the hands of political officials, the term could readily become a label for views that criticize the President or conflict with the administration’s preferred understanding of American history and national identity. The provision therefore presents serious First Amendment and vagueness concerns.

Other provisions also require revision. The proposal’s treatment of “questionable practices” and religious-liberty concerns is too open-ended, and its preference for lower indirect-cost rates risks allowing one readily identifiable accounting percentage to distort award selection. Its recognition of experimental development should be strengthened by requiring agencies to identify the practical result the public is funding and the arrangements needed to achieve it – including, where appropriate, affordable and competitively supplied medicines.

Recommended course

OMB has not shown that the existing government-wide guidance is inadequate or that converting it into a regulation requires the sweeping substantive changes proposed here. The better course is not to finalize the proposal. If OMB nevertheless proceeds, the final rule should:

1. Before finalizing provisions that expand political review or discretionary termination, conduct and publish a retrospective assessment of the 2025 grant-termination campaign, including its net fiscal effects, operational consequences, decisionmaking methods, use of relevant expertise, and treatment of recipient and beneficiary reliance;

2. Delete “the national interest” as a termination ground and revise the existing reference to “agency priorities” to make clear that a post-award change in political priorities, standing alone, is not sufficient to terminate an executed, compliant award;

3. Limit unilateral termination to defined grounds authorized by law and stated in the award;

4. Extend objection and appeal procedures to every unilateral suspension or termination, not merely remedies imposed for recipient noncompliance;

5. Confirm that the resulting decision constitutes final agency action subject to judicial review;

6. Require consequential award and program decisions – including political reversals of award recommendations and abandonment or material alteration of funding competitions – to be made through the lawful agency chain of command by an identified official exercising expressly delegated authority;

7. Require the deciding official to set forth contemporaneously, in writing, the reasons for the decision;

8. Preserve substantial reliance on expert and professional judgment on matters within the relevant experts’ competence;

9. Delete the requirement that discretionary awards “demonstrably advance the President’s policy priorities,” or limit presidential priorities to those lawfully incorporated into the statutory purposes, published priorities, and announced criteria of the Federal program;

10. Replace the categorical prohibitions concerning DEI, gender ideology, race, and sex with a neutral prohibition on discrimination actually unlawful under identified applicable law, while preserving research, clinical inclusion, outreach, and institutional support authorized or required by Congress;

11. Delete “anti-American values” and other viewpoint-based criteria;

12. Limit proposed § 200.206’s references to “questionable practices” and conduct “inconsistent with religious liberty laws” to reliably established, materially relevant conduct, and make clear that scientific subject matter or conclusions do not violate religious liberty merely because they conflict with religious doctrine;

13. Replace preference based solely on an institution’s indirect-cost percentage with consideration of total cost and expected public value; and

14. Retain the recognition of experimental development and require agencies to identify the intended endpoint, deliverables, rights, and access arrangements for experimental-development programs, including programs designed to produce affordable and competitively supplied medicines.

II. POLITICAL SUPERVISION SHOULD NOT DISPLACE LAWFUL AGENCY GOVERNANCE AND PROFESSIONAL ADMINISTRATION

[200.205]

The proposal requires one or more “senior appointees” to review proposed awards before they are issued, requires discretionary awards to “demonstrably advance the President’s policy priorities,” and instructs those officials not to “routinely defer” to recommendations made by others.^[4]

The August 7, 2025 Executive Order defines “senior appointee” broadly to include presidential appointees, noncareer members of the Senior Executive Service, and certain Schedule C personnel.^[5] Neither that definition nor proposed § 200.205 expressly requires the senior appointee to be an official of the awarding agency. The proposal also permits review by the senior appointee’s “designee,” without defining who may serve in that role, what relationship or qualifications are required, or what authority the designee may exercise.^[6]

“Senior appointee” is a political-personnel classification that does not speak to decisional authority. If OMB retains this framework, the final rule should define the term in the regulatory text, clarify whether the senior appointee must be an official of the awarding agency, and specify who may serve as a designee and whether that person may conduct the review, recommend action, or exercise decisional authority.

More fundamentally, political status or designation alone should not confer authority to make a federal award decision. White House personnel, interagency teams, and political advisers may communicate presidential priorities and make recommendations. But consequential award actions should reflect the judgment of an identified official of the agency Congress charged with administering the program, acting under authority vested by statute, lawful acting designation, or express delegation. The administrative record should identify the responsible decisionmaker and the source and scope of that official’s authority.

Presidential priorities may appropriately influence future program design when they are implemented through lawful agency action and remain within the governing statute and appropriation. But proposed § 200.205(b)(1) appears to make alignment with the President’s priorities an independent award criterion.^[7] The final rule should instead require consistency with the statutory purposes, published priorities, and announced criteria of the Federal program. At minimum, a presidential priority should be considered only to the extent it has lawfully been incorporated into those program criteria.

The final rule should require that, whenever an award recommendation is rejected or materially altered:

1. The decision is made by an identified official of the agency administering the program, exercising authority lawfully vested by statute, lawful acting designation, or express delegation;

2. The decisionmaker considers the recommendation and the supporting views of relevant career, scientific, technical, legal, and program personnel;

3. The agency provides a contemporaneous written decision that addresses the recommendation’s material reasoning and identifies the statute, appropriation, program criteria, material facts, and other grounds supporting the departure; and

4. The agency creates a reviewable administrative record.

These requirements would not only permit meaningful review; they would also help ensure that the decisionmaker understands the proposed award before rejecting or materially altering the recommendation. Where the decision concerns scientific feasibility, clinical safety, statistical validity, manufacturing practicality, or another technical matter, the decisionmaker should ordinarily obtain qualified technical advice before rejecting the expert recommendation.

Similar safeguards should apply when, after the application deadline or commencement of substantive review, an agency decides to make no awards or to cancel and repost a funding opportunity with materially different criteria. The decision should be made by an identified official exercising lawfully vested authority and supported by a contemporaneous public explanation identifying its legal and programmatic basis. This would not prevent cancellation for legitimate reasons or create an appeal right for every unsuccessful applicant. It would require only an identifiable decisionmaker and an explanation before a completed or substantially advanced competition is abandoned or materially changed.

III. PEER REVIEW SHOULD RECEIVE SUBSTANTIAL WEIGHT ON TECHNICAL QUESTIONS

[200.205]

The proposal requires discretionary awards to “demonstrably advance the President’s policy priorities” and states that peer-review recommendations must remain advisory and may not be “ministerially ratified, routinely deferred to, or otherwise treated as de facto binding.”^[8]

It is reasonable to state that peer reviewers do not make final federal policy. But the instruction not to “routinely defer” to peer reviewers is misguided. Giving substantial weight to qualified experts is rational when the question concerns scientific merit, technical competence, clinical safety, statistical design, or likelihood of successful execution.

A peer-review recommendation need not be legally binding for expert findings to deserve substantial weight on matters within the expert’s competence. Treating peer review as binding would improperly transfer final governmental authority to reviewers. Treating expert findings as persuasive reflects ordinary rational administration: decisionmakers generally should respect informed findings reached by persons selected for relevant technical expertise. The DOGE-directed reviews described below show the consequences when officials disregard that principle and allow political labels to displace informed technical judgment.

A. Program-specific statutes require merit and peer review

Congress has required expert merit or peer review in a number of major science programs. NSF may award grants “only on the basis of merit after a comprehensive review using established Foundation procedures,” and Congress has directed that its peer- and merit-review processes be preserved.^[9] NIH grants are subject to “technical and scientific peer review,” with additional statutory requirements for peer-review bodies and advisory councils.^[10] Comparable requirements apply to specified programs administered by DOE, NASA, and USDA.^[11]

OMB’s general grants-management authority does not permit it to displace these program-specific commands. Political officials may apply governing law and lawful program criteria, but a government-wide direction against routine deference cannot authorize them to subordinate scientific merit review where Congress prescribed that review as part of the award-selection process.

The proposal repeatedly qualifies its commands by references to “applicable law,”^[12] but it does not identify or analyze these statutory requirements. That omission is itself a serious reasoned-decisionmaking problem. OMB should not finalize a rule whose central review provisions may conflict with major program statutes while leaving agencies and applicants to determine the limits after the fact.

If OMB nevertheless proceeds, the rule should state expressly that nothing in § 200.205 authorizes an agency to diminish, bypass, or alter a merit-review, peer-review, advisory-council, or other award-selection process required by statute.

B. NSF: political displacement of completed scientific review

NSF ordinarily subjects proposals to competitive review by relevant outside experts and agency program officers under established criteria of intellectual merit and broader impacts. Applicants may spend years developing preliminary work, assembling research teams, and revising proposals before receiving an award.

Beginning in April 2025, however, NSF terminated more than 1,500 grants and contracts representing more than $1 billion in previously awarded funding.^[13] The disruption began after DOGE personnel arrived at NSF and directed additional scrutiny of awards that had already completed the agency’s ordinary review and approval process.^[14] In identifying awards for possible termination, NSF used politically defined subject-matter categories and, at least in part, keyword-triggered searches, particularly for DEI-related research.^[15] Publicly identified targets included environmental justice and work involving misinformation or disinformation, but the terminations extended well beyond those subjects.^[16] Recipients then received substantially standardized notices stating that their projects no longer effectuated current agency priorities and, in many instances, that the decisions were final and not subject to appeal.^[17]

The results demonstrate the danger of replacing expert review with ideological classification and political judgments about contested scientific subjects, including climate and environmental research. Terminated projects reportedly included research intended to combat internet censorship in China and Iran,^[18] improve public understanding of artificial intelligence and deepfakes,^[19] examine wildlife and human well-being through data collected from thousands of participants,^[20] and document environmental change in collaboration with Indigenous communities in the Alaskan Arctic.^[21]

The broader treatment of climate and environmental science provides an additional warning. NSF began dismantling the Ocean Observatories Initiative, a network of more than 900 sensors built at a cost of approximately $386 million and used to study ocean circulation, marine ecosystems, climate change, and extreme weather. Scientists reported that the decision was made without prior scientific review. By the time NSF reversed course, equipment from the Endurance Array off Oregon and Washington had already been removed from the water. After objections from scientists and members of Congress, NSF halted further removals, announced plans to redeploy the removed equipment after servicing, and agreed to convene an expert panel to consider the network’s future.^[22]

The terminations also included many STEM education and workforce programs.^[23] Those projects had been evaluated under NSF’s broader-impacts criterion, which has long encompassed STEM education, public scientific literacy, and development of a capable and inclusive scientific workforce. New political priorities were thus used to terminate projects selected under criteria NSF had been charged by Congress with administering.

C. NIH: political judgments about vaccines and gender displaced biomedical review

NIH likewise employs a rigorous two-level peer-review system. Competing grant applications receive an initial review of scientific and technical merit by a scientific review group, generally composed principally of non-federal scientists with relevant expertise.^[24] An institute or center’s National Advisory Council or Board then considers mission relevance and makes a funding recommendation.

That process was displaced in 2025 by a government-wide campaign that reached far beyond a few controversial projects. Between February and June alone, NIH terminated more than 1,800 grants, disrupting biomedical research across numerous institutions and fields.^[25] These were existing awards made from funds Congress had appropriated for biomedical research and committed by NIH after scientific and programmatic review. Court filings, internal records, and testimony showed that DOGE was directly involved in hundreds of grant terminations and that awards were selected through politically defined categories.^[26]

Among those actions, NIH directed the termination or reduction of dozens of grants studying vaccine hesitancy and vaccine uptake.^[27] The stated reason was that research seeking to understand vaccine reluctance or improve vaccine acceptance no longer aligned with current funding priorities.^[28] A political judgment about the value of such research thus displaced completed scientific and programmatic review.

DOGE and other administration officials also publicly portrayed a group of NIH-funded animal studies as spending money to “make mice transgender.”^[29] Some examined the biological effects of gender-affirming hormones; others addressed different biomedical questions that were obscured by the same political label. Whatever policy disputes surround gender-affirming care, that terminology did not provide a scientific assessment of the projects’ methods, value, or likely contribution to human health. The episode illustrates the distortion that occurs when technical research is judged through culture-war rhetoric rather than relevant biomedical expertise.

D. Scientific questions should be evaluated scientifically

The NSF and NIH examples illustrate why the rule must distinguish policy judgments from technical ones. Whether a vaccine is safe or effective, why vaccination rates are declining, or how an ecosystem is changing should not depend on the political views of the officials reviewing the grant. Particular awards should be evaluated according to their methods, feasibility, and fit with the statutory program – not by whether their subject or likely conclusions comport with the administration’s political commitments.

Those episodes also contradict the proposal’s direction that political appointees should not “routinely defer” to peer review. Political officials may establish lawful funding priorities, and peer review need not dictate national policy. But an official should not displace a completed technical review merely because the subject – whether climate change, vaccination, gender, or another politically contested issue – is disfavored by the current administration.

The final rule should preserve the advisory character of peer review while deleting the direction against routine deference. Agency officials would remain responsible for applying governing law, announced criteria, and legitimate program priorities. But when a political official disagrees with an expert conclusion on a technical matter, the official should explain the technical basis for the disagreement or obtain competing expert advice. A decision to reject or undo an NSF, NIH, or other scientific award determination should require an individualized determination addressing the scientific and programmatic record, qualified technical input, a written explanation, and a meaningful opportunity for administrative review.

IV. THE FINAL RULE SHOULD DELETE “ANTI-AMERICAN VALUES” AND BAR VIEWPOINT-BASED AWARD REVIEW

[200.205]

The proposed prohibition on awards that “promote anti-American values”^[30] should be deleted. There is widespread disagreement over what “American values” require. Americans disagree about whether the current President’s policies reflect those values or betray them, and they likewise disagree about claims that the United States is a “Christian nation.”^[31] Indeed, one of the nation’s most enduring commitments is tolerance of dissent – including views that challenge prevailing understandings of American identity and values.^[32] A grant official cannot resolve those political and philosophical disputes through an undefined funding criterion.

A. The NEH cancellations show the danger of ideological screening

The treatment of National Endowment for the Humanities awards provides perhaps the clearest warning. In April 2025, DOGE personnel participated in the termination of more than 1,400 existing humanities grants representing more than $100 million in congressionally appropriated funds.^[33] A federal court subsequently concluded that the process was unlawful and involved unconstitutional viewpoint discrimination.^[34]

The grants were selected for termination through screening based on politically disfavored subjects, including race, immigration, religion, sex, and sexual orientation.^[35] The process reportedly included the use of ChatGPT both to identify grants thought to implicate those subjects and, in some instances, to generate termination rationales.^[36] That method underscores how little individualized attention was given to the projects, their statutory purposes, or the criteria under which they had been awarded.^[37]

The NEH episode demonstrates the danger of allowing political labels and keyword-driven screening to substitute for statutory standards and professional administration. A criterion such as “anti-American values” would invite the same kind of viewpoint-based classification on a government-wide scale. Related phrases such as “national interest” and “agency priorities” may present similar problems elsewhere in the proposal, but the NEH experience is a particularly direct warning against authorizing officials to identify and punish supposedly “anti-American” ideas.

B. The Administration’s explanation confirms the viewpoint problem

The August 7, 2025 Executive Order cited in the Notice states that NSF grants supported educators who promoted “Marxism, class warfare propaganda, and other anti-American ideologies in the classroom,” supposedly “masked as rigorous and thoughtful investigation.”^[38] That explanation confirms that “anti-American values” may be used to evaluate educational and scholarly viewpoints.

Marxism, class conflict, labor history, political economy, racial hierarchy, corporate influence, inequality, and criticism of American institutions are legitimate subjects of historical, economic, philosophical, and social-science inquiry. Educators may teach and compare those ideas and may reach conclusions sharply critical of the United States without engaging in activity properly excluded from federal assistance.

On July 4, 2026, the White House Domestic Policy Council released a 162-page report accusing the Smithsonian’s National Museum of American History of “ideological capture.” ^[39]The report faulted the Museum for minimizing the Founders, treating patriotic narratives with suspicion, emphasizing oppression and injustice, and failing to present an account of the Nation sufficiently “inspiring” and “unifying.”^[40] Whatever the merits of those criticisms, the report shows how readily government officials may treat critical historical interpretation, insufficient celebration of the Founding, or disagreement over national narrative as hostility to American values.

The phrase “masked as rigorous and thoughtful investigation” is particularly revealing. It treats rigor not as a reason to take scholarship seriously, but as evidence that disfavored ideas have been more effectively concealed. That approach is especially difficult to defend when the government’s own review methods relied on political labels, keyword searches, and automated screening rather than careful examination of the work.

Rigor should be assessed by method, evidence, competence, candor, reproducibility where applicable, disclosure of conflicts, appropriate qualification of conclusions, and engagement with contrary material. It should not depend on whether a proposal affirms an administration’s preferred account of American history or political economy.

The Administration’s logic is effectively self-sealing: if critical work is poorly supported, officials may call it propaganda; if it is carefully researched, they may say the rigor is merely a mask.

C. Critical examination of the United States is a legitimate subject of federal assistance

Federal awards may properly support scholarship and education concerning:

• slavery and its continuing effects;

• Native American dispossession and forced removal;

• discrimination against racial minorities and women;

• segregation, redlining, and unequal wealth accumulation;

• incarceration of Japanese Americans;

• abuses in government-sponsored medical research;

• surveillance and disruption of civil-rights and antiwar movements;

• the domestic use of military force and the limits imposed by the Posse Comitatus Act;

• the designation of individuals or groups as terrorists in the absence of criminal adjudication;

• the legal and policy standards governing government uses of lethal force against persons not convicted of crimes;

• the United States’ role in foreign coups and relationships with authoritarian governments;

• civilian harm caused by U.S. wars and military operations, including in Vietnam, Cambodia, Afghanistan, Iraq, and Iran;

• immigration enforcement;

• the adequacy and independence of government investigations into political violence and attacks on public officials;

• corporate and donor influence over government;

• presidential pardons and executive power;

• government transparency and the Epstein records; and

• the effect of American trade and intellectual-property policies on access to medicines during the AIDS and COVID-19 crises.

Each of these subjects may properly be examined through historical research, education, public-health work, archives and museums, civil-rights programs, veterans’ services, political science, economics, legal scholarship, or international-development programs. A proposal may examine American conduct critically while remaining fully within the statutory purpose of the relevant program.

Critical examination of government is among the oldest American patriotic traditions. The Declaration of Independence is itself an extended indictment of governmental abuse, and Thomas Paine’s Common Sense urged ordinary Americans to reject inherited authority when it no longer served them. From the Founding onward, criticism of those in power has often been the means by which Americans sought to bring the Nation’s conduct closer to its professed principles. Treating such criticism as evidence of “anti-American values” would reverse that tradition.^[41]

D. Viewpoint-based award criteria invite constitutional problems

The government may define the lawful subject and objective of a funding program. It may fund cancer research rather than maritime history, or domestic agriculture rather than an unrelated foreign project. But its authority to define the program does not necessarily permit it to favor one viewpoint over another within the subjects the program has made eligible.

The Supreme Court has repeatedly distinguished between defining the activity the government has chosen to fund and discriminating among eligible speakers because of their “ideology, opinion, or perspective.” Rust v. Sullivan, 500 U.S. 173, 193-94 (1991); Rosenberger v. Rector & Visitors of the University of Virginia, 515 U.S. 819, 829-30 (1995). In Legal Services Corp. v. Velazquez, the Court invalidated a funding restriction that prevented federally supported lawyers from challenging existing welfare law, explaining that the government could not structure the program to suppress arguments critical of the legal regime itself.^[42] And although National Endowment for the Arts v. Finley recognized substantial latitude in competitive grantmaking, the Court cautioned that a criterion used to suppress disfavored viewpoints would present a serious constitutional problem.^[43]

The same distinction applies to the presidential-policy criterion in § 200.205(b)(1). Government may define the subjects and questions a lawful funding program will address. It may fund cancer research rather than maritime history, or climate adaptation rather than an unrelated field. But within an established program it may not ordinarily select among otherwise eligible proposals because officials prefer one anticipated answer, premise, or policy implication over another. A requirement that research “demonstrably advance the President’s policy priorities” risks converting expected agreement with the administration into a selection criterion.

Nor are ordinary extramural research grants properly treated as government speech. Federal agencies commonly require recipients to state that publications and conclusions are those of the authors and do not necessarily represent the views of the funding agency or the United States. The government cannot claim the credibility of independent research while selecting researchers according to whether their expected conclusions convey the government’s preferred message.^[44]

The proposed phrase expressly distinguishes among viewpoints about the United States. A favorable account may be accepted, while a critical account of the same conduct may be characterized as “anti-American.” That is not merely a decision to fund one subject rather than another. It is a distinction based on the applicant’s perspective concerning an otherwise eligible subject. It therefore presents a substantial First Amendment problem and invites self-censorship because applicants cannot know which criticisms current officials will regard as disloyal.

Much of America’s moral and constitutional progress has resulted from people who argued that the country was failing to honor its professed principles. Abolitionists, suffragists, civil-rights advocates, labor organizers, antiwar protesters, investigative journalists, whistleblowers, and reformers were frequently accused of disloyalty or hostility to America. A rule allowing officials to disfavor “anti-American values” would place federal funding decisions on precisely that unstable and viewpoint-dependent ground.

V. CATEGORICAL DIVERSITY RESTRICTIONS CONFLICT WITH STATUTORY PROGRAMS AND INVITE VIEWPOINT DISCRIMINATION

[200.205; 200.300]

Proposed §§ 200.205 and 200.300 would broadly prohibit awards from funding or facilitating racial preferences, DEI, “gender ideology,” or denial of the sex binary. Existing civil-rights law may prohibit particular selection practices, and nothing in this comment defends unlawful discrimination. But the proposal goes well beyond that. It uses broad ideological labels that could reach research, outreach, clinical inclusion, data collection, health-disparities work, and institutional support that Congress has authorized or required.

These categorical provisions therefore do not account for federal statutes that require or encourage attention to women, racial and ethnic minorities, persons with disabilities, health disparities, and institutions serving historically underrepresented populations.

A. Congress has required diversity-related research, participation, and institutional support

Congress has directed federal research agencies to assess and reduce barriers limiting the recruitment, retention, and success of groups historically underrepresented in STEM.^[45] NSF’s broader-impacts criterion includes expanding participation by women and underrepresented groups, and numerous NSF provisions authorize or require programs supporting women, minorities, persons with disabilities, HBCUs, tribal colleges, and minority-serving institutions.

NIH must consider progress in reducing health disparities, include women and members of minority groups in supported clinical research, and support research concerning minority health and women’s health.^[46] Congress has imposed related obligations on NIST, DOD, and DOE.^[47]

The proposal does not explain how agencies are to reconcile these commands with a bar on funding, promoting, encouraging, subsidizing, or facilitating DEI or related activity. A general proviso requiring consistency with law does not substitute for identifying the conflicts and defining the boundary between unlawful discrimination and lawful, congressionally directed research, clinical inclusion, outreach, participation efforts, and institutional support.

B. Ideological labels should not replace identified legal standards

The proposal uses “DEI” and “gender ideology” as categorical grounds for exclusion without defining the conduct those labels encompass or tying them to an identified violation of law. In practice, those labels may reach research on health disparities, sex differences, gender, disability, racial inequality, or barriers to participation in science and education. Rejecting an otherwise eligible project because officials disapprove of its premises or likely implications presents the same viewpoint problem discussed above.^[48]

The final rule should delete the categorical ideological terms and provide instead that federal awards may not be used to engage in discrimination prohibited by identified applicable law. It should also make clear that nothing in the rule prohibits research, data collection, clinical inclusion, outreach, institutional support, or other activity authorized or required by Congress.

VI. EXECUTED AWARDS SHOULD NOT BE TERMINATED BASED ON “THE NATIONAL INTEREST,” CHANGING “AGENCY PRIORITIES,” OR OTHER UNDEFINED POLITICAL CRITERIA

[200.340]

The proposal’s most serious structural defect concerns discretionary termination of executed awards. Current § 200.340 already permits termination pursuant to an award’s terms and conditions, including, to the extent authorized by law, when an award no longer effectuates program goals or agency priorities.^[49] The proposal would expand and standardize that authority by requiring a broad discretionary-termination clause in nearly all discretionary awards, adding the undefined “national interest,” and specifying that program goals, Federal agency priorities, and the national interest are those existing at the time of termination.^[50] It would thereby expressly authorize current political priorities to displace the priorities under which an award was competed, selected, and executed. The August 7, 2025 Executive Order directed OMB to adopt such termination authority and, to the maximum extent permitted by law, to revise existing awards to allow immediate termination on those grounds.^[51] The final rule should not implement that directive as proposed.

A. “National interest” supplies no ascertainable legal standard

“The national interest” is not a manageable termination criterion. It does not identify what facts must exist, what statutory purpose must be frustrated, what degree of harm must be shown, or what considerations constrain the decisionmaker.

Whether an award complies with its governing statute, appropriation, program purpose, award conditions, and stated milestones presents questions an agency and a reviewing court can evaluate. Whether current officials believe termination serves an undefined “national interest” may not.

The phrase therefore creates a serious risk that ordinary APA review will be unavailable under 5 U.S.C. § 701(a)(2), which excludes action “committed to agency discretion by law.” That exception applies in the rare circumstances where the governing law provides no meaningful standard against which to judge the agency’s exercise of discretion. Heckler v. Chaney, 470 U.S. 821, 830 (1985). OMB should not deliberately create a government-wide termination standard that approaches that kind of unreviewable authority.^[52]

Constitutional, ultra vires, or appropriations claims may remain available in some cases. But a recipient should not have to establish a constitutional violation merely to obtain review of an arbitrary or factually unsupported cancellation. “National interest” should be deleted.

B. Changes in agency priorities present much the same problem

Deleting “national interest” alone would not be sufficient. Although current § 200.340 already refers to “agency priorities,” the proposal would expressly establish that the relevant priorities are those existing at the time of termination. That clarification would confirm that a newly installed administration may invoke its own priorities to cancel an otherwise compliant award selected and executed under different priorities.

Administrations may establish new priorities prospectively. They may revise future notices of funding opportunities, recommend different appropriations, seek statutory amendments, and establish new programs within existing authority. But a later change in political preference should not ordinarily permit cancellation of an award after the government has induced hiring, investment, research, contractual commitments, clinical enrollment, or community reliance. The administration remains free to change future competitions and seek different appropriations; it should not be able to erase an existing commitment merely because it would have chosen a different project at the outset.

A rule making current priorities sufficient by themselves would leave little for a reviewing court to examine. The agency need only state that its priorities changed.

C. The Harvard terminations illustrate both the existing danger and the proposed expansion

The 2025 termination of Harvard research funding shows the danger already present in the current “agency priorities” language and why OMB should not expand it further. After Harvard rejected sweeping Administration demands concerning its governance, hiring, admissions, academic programs, and viewpoint diversity, the government froze approximately $2.2 billion in grants and later terminated hundreds of individual awards, including scientific and medical research having no apparent connection to the alleged campus misconduct.^[53] The agencies relied in part on current § 200.340(a)(4), asserting that the awards no longer effectuated agency priorities.^[54]

A federal district court set the actions aside. Among other things, the court concluded that the government could not use the general authority in § 200.340 to bypass the procedures Congress prescribed in Title VI for terminating funding based on alleged discrimination.^[55] It also found that the agencies had failed to connect the wholesale research terminations to the stated objective, consider the importance of the affected research and the reliance interests created by the awards, or provide a reasoned explanation for the action.^[56]

The proposal does not eliminate the statutory limits recognized in that decision. It continues to qualify discretionary termination as permissible only to the extent allowed by law. But it would strengthen the government’s ability to characterize comparable actions as independent policy judgments by requiring broad discretionary-termination provisions in nearly all awards, adding “the national interest,” and expressly providing that the controlling priorities are those existing at the time of termination. The Harvard experience therefore supports a clarification in the opposite direction: discretionary termination may not be used to evade a statutory enforcement scheme, punish protected speech or institutional independence, or cancel unrelated awards as leverage in a broader dispute.

D. Congressional appropriations constrain executive discretion

Congress’s appropriation of money does not guarantee continuation of every individual award. Agencies retain the authority conferred by law to enforce award conditions, respond to changed facts, and make permissible funding decisions within the statutory program. But that discretion remains authority to administer Congress’s program – not to replace it with the current administration’s preferred objectives.

Congress ordinarily establishes the program and its authorized purposes, appropriates the money, and assigns administration to an agency expected to possess the relevant expertise.^[57] The agency may exercise judgment in carrying out that responsibility, but congressional silence cannot reasonably be treated as authorization to defeat the program through criteria Congress never enacted.

The problem is especially serious when an administration uses individual terminations to eliminate or substantially disable an entire congressionally funded category, makes no replacement awards serving the same statutory purpose, or allows the appropriated funds to expire. In those circumstances, termination may operate as a functional impoundment or rescission without congressional approval. Redirecting the funds to materially different activities may present an additional problem where the agency lacks transfer or reprogramming authority.^[58]

Even when cancelled funds are eventually reallocated within a broad appropriation, the manner of administration still matters. Congress may reasonably expect funding decisions to be made through informed agency judgment about the statutory program. Mass cancellations undertaken by temporary political personnel who did not understand the work do not become faithful execution merely because some of the money may later be spent elsewhere.

E. DOJ grant terminations show the consequences for congressional purposes and recipient reliance

In April 2025, the Department of Justice abruptly terminated 373 Office of Justice Programs awards to 221 organizations. The terminations were part of the broader 2025 grant-cutting campaign, and major recipients such as the Vera Institute of Justice had already been singled out for abrupt cancellation.^[59] The affected awards supported state and local law enforcement, officer-safety and anti-terrorism training, gun-violence prevention, crime-victim services, juvenile justice, reentry programs, and criminal-justice research.^[60] Many were multiyear awards already underway. Programs had been established, employees had been hired, and communities had begun relying on the promised services.

These were awards made under congressionally funded public-safety and justice programs – not a pool of money belonging either to grant recipients or to Executive Branch officials. Congress assigned administration of those programs to the Department of Justice and was entitled to expect that knowledgeable DOJ officials would administer them in accordance with their statutory purposes.

The contrast is especially striking because Congress subsequently appropriated well over $100 billion in extraordinary funding for immigration and border enforcement while assistance for local police, gun-violence prevention, and crime victims was cancelled or delayed. Whether that allocation reflects sound policy is a question for Congress. It should not be produced indirectly through unexplained termination of previously awarded grants.^[61]

DOJ later reversed at least some terminations, while many cancellations remained in effect.^[62] Those reversals reinforce the concern that the initial review did not reliably distinguish programs officials regarded as ideological from concrete police, public-safety, and victim services.

The cancellations also produced litigation. Five nonprofits led by the Vera Institute filed a proposed class action challenging the mass terminations, but the district court dismissed the case after concluding that it lacked jurisdiction, even while describing DOJ’s action as “shameful” and likely to harm vulnerable communities.^[63] In a separate case, the American Bar Association obtained a preliminary injunction against termination of grants supporting services for domestic- and sexual-violence survivors, and DOJ ultimately abandoned the cancellation. The differing outcomes underscore how uncertain and incomplete judicial relief may be after programs have already been disrupted.^[64]

The DOJ episode demonstrates why an existing award creates interests extending beyond the named recipient. Employees may have been hired, contracts executed, services established, and communities induced to rely on the federal commitment. A process permitting immediate termination based on changing “priorities,” without individualized review or a meaningful administrative appeal, disregards both Congress’s purposes and the foreseeable consequences of the government’s own commitments.

F. USAID cuts show how superficial review can undermine national security

Abrupt stop-work and termination decisions in foreign assistance disrupted health, food, nutrition, and humanitarian programs operating across many countries.^[65] Subsequent public-health analyses projected enormous mortality consequences if those reductions continued.^[66] Precise death estimates require care, but the underlying point does not: complex programs affecting human survival were treated as spending entries before their functions and consequences had been adequately examined.^[67]

The foreign-assistance freeze also threatened programs serving an important counterterrorism function in northeastern Syria. U.S.-funded organizations provided food, water, health services, camp administration, recordkeeping, rehabilitation, and repatriation assistance at al-Hol and Roj – closed camps holding tens of thousands of women and children, along with some men, associated or allegedly associated with ISIS.

When stop-work orders abruptly took effect, approximately 300 U.S.-funded employees responsible for operating portions of al-Hol reportedly failed to report for work. Warehouses containing food, cooking gas, and other supplies were reportedly looted. Local authorities had to improvise replacement security and services, while work needed to repatriate hundreds of Iraqi residents was disrupted. Other projects at Roj were terminated, and organizations operating in the camps remained uncertain whether waivers or restored funding would permit them to continue.^[68]

The cuts risked strengthening the very terrorist organization the programs helped contain. Officials and aid organizations warned that deterioration in food, water, sanitation, administration, and security could provoke unrest, facilitate smuggling or escapes, strengthen ISIS recruitment within the camps, and impede orderly screening, repatriation, prosecution, rehabilitation, and reintegration.^[69]

Programs categorized broadly as “foreign aid” were therefore also part of the effort to prevent an ISIS resurgence. Whatever savings appeared on a spreadsheet, abruptly dismantling those programs risked undermining far more expensive military and national-security efforts. The episode illustrates why a political official cannot reliably identify the “national interest” from an award’s label, recipient, location, or broad policy category.

Knowledgeable agency personnel must determine what an award actually does, which statutory and national objectives it serves, and what foreseeable consequences termination would produce before – not after – the relevant capacity is dismantled.

G. The agency examples reveal recurring structural failures

The NSF, NIH, NEH, DOJ, and USAID episodes reveal recurring structural failures. Ideological or keyword-based screening displaced statutory and programmatic criteria. Political personnel overrode or ignored completed expert review, while officials sometimes failed to understand the operational function of the awards they were terminating. Recipient and beneficiary reliance was disregarded, and meaningful explanation or administrative review was often unavailable.

Taken together, these episodes underscore the value of professional grant administration under any administration, regardless of its policy aims. Expertise, institutional knowledge, individualized review, and ordinary agency procedure are safeguards against arbitrary decisions by officials who may know little more about an award than its title, recipient, politically disfavored terminology, or broad budget category.

H. OMB should assess the 2025 campaign before institutionalizing its methods

The 2025 grant-termination campaign is the closest available test of the model this proposal would institutionalize: political review by officials who may lack program expertise, rapid displacement of completed agency judgments, and termination based on current political priorities. Yet OMB has identified no retrospective assessment of that campaign. Before making those features permanent and government-wide, OMB should examine and disclose the number and value of awards terminated and later reinstated; gross and net savings after closeout, litigation, replacement, and stranded-investment costs; effects on recipients, beneficiaries, research participants, and national-security programs; the role of DOGE and other political personnel; and the extent to which decisions rested on individualized review and relevant expertise. OMB should not institutionalize this model without examining the results of its most recent use.

I. Unilateral termination should be confined to defined and reviewable grounds

The foregoing concerns do not require an agency to continue an award that has become unlawful, impossible to perform, or incapable of achieving its stated objective. They require the rule to distinguish those circumstances from a change in political preference.

The final rule should permit unilateral termination of an existing award only when:

1. The ground is authorized by the governing statute and consistent with the appropriation and congressional program purpose;

2. The ground is clearly stated in the award;

3. Material facts, established through an individualized review, support the determination;

4. The agency has considered reliance interests, sunk public investment, effects on beneficiaries, and reasonably available alternatives; and

5. Termination is reasonably necessary to address the identified problem rather than merely convenient to current officials.

Defined grounds may include material recipient noncompliance, fraud or material misrepresentation, statutory ineligibility, unavailability of appropriations, illegality or impossibility of continued performance, an immediate danger to health or safety, or an objectively established factual change that makes the award’s stated objective unattainable. An agency could also rely on another ground expressly authorized by applicable law and clearly incorporated into the award.

A new administration’s preference for different projects should not be sufficient to terminate an otherwise compliant award.

VII. EVERY UNILATERAL SUSPENSION OR TERMINATION SHOULD RECEIVE MEANINGFUL ADMINISTRATIVE REVIEW

[200.342; 200.340]

Section VI explains why changing “agency priorities” and an undefined “national interest” should not remain independent grounds for terminating an executed award. But even if those grounds are deleted, agencies will retain authority to terminate awards for noncompliance and for other defined circumstances authorized by law and stated in the award. Every unilateral suspension or termination should therefore be accompanied by meaningful administrative review.

Current § 200.342 requires agencies to maintain procedures for objections, hearings, and appeals in connection with remedies for recipient noncompliance. The proposal would preserve that protection for noncompliance cases but would not guarantee comparable review for terminations resting on other grounds. If OMB retains termination based on current priorities or the national interest, the omission is especially difficult to justify: the most subjective grounds would receive the least process. But the same procedural protection is warranted whenever an agency unilaterally determines that an existing award must end.

Before any unilateral suspension or termination becomes final, the recipient should receive:

1. Written notice identifying the statutory authority, award provision, material facts, and proposed ground;

2. Access to the nonprivileged materials on which the agency relies;

3. A reasonable opportunity to submit evidence and legal argument;

4. Review by an identified agency official exercising authority lawfully vested by statute, acting designation, or express delegation;

5. A written decision addressing the recipient’s principal arguments;

6. Consideration of congressional program purposes, reliance interests, sunk public investment, effects on beneficiaries and research participants, and reasonably available alternatives to termination; and

7. Preservation of the complete administrative record, including relevant career, legal, scientific, technical, and program recommendations.

Except where continued performance would be unlawful, fraudulent, immediately dangerous, or impossible because funding is unavailable, the agency should presumptively preserve the status quo during an expedited appeal when immediate termination would cause irreparable harm.

The final rule should also state that the resulting decision constitutes final agency action subject to judicial review under the Administrative Procedure Act. These procedures need not apply to every unsuccessful applicant for a new award; the reliance and public interests are different after the government has executed an award and induced performance.

An unsuccessful applicant ordinarily has not reorganized its operations around a federal commitment. A recipient performing an award may have hired employees, entered subcontracts, enrolled research participants, assembled data and specimens, or established services on which third parties depend. The government’s own decision to induce that reliance justifies a more protective process.

VIII. “QUESTIONABLE PRACTICES” SHOULD BE LIMITED TO RELIABLE, MATERIAL, AND RELEVANT EVIDENCE

[200.206]

Proposed § 200.206(b)(2)(vii) would allow agencies to consider an applicant’s “History of questionable practices” based on “publicly available and verifiable information,” including the applicant’s record of: “(A) Plagiarism in studies or papers published by the applicant or its staff”; “(B) Discredited or non-replicable studies published by the applicant or its staff”; “(C) Engaging in activities or initiatives that are inconsistent with Federal civil rights laws”; and “(D) Engaging in activities or initiatives that are inconsistent with religious liberty laws.”^[70]

Agencies may properly consider a demonstrated history of fabrication, plagiarism, material nondisclosure, serious regulatory violations, or financial mismanagement. But the proposed language extends well beyond those legitimate concerns.

The terms “discredited,” “non-replicable,” and “inconsistent with” are undefined. A study may fail to replicate without fraud, bad faith, or incompetence. A result may be criticized or described as “discredited” in public debate while remaining scientifically contested. Scientific progress often depends on identifying and correcting honestly mistaken conclusions. Nor should an entire institution be disfavored merely because one employee published disputed work.

The requirement that information be “publicly available and verifiable” does not solve the problem. A publicly available accusation is not necessarily accurate, legally sufficient, attributable to the applicant or proposed project team, or relevant to the applicant’s ability to carry out the proposed award.

The final rule should require consideration of:

1. Whether the alleged misconduct was formally found or otherwise supported by reliable evidence;

2. Whether it is attributable to the applicant, responsible institutional officials, or the proposed project team;

3. Whether it is materially relevant to the proposed award;

4. Its recency and seriousness;

5. Whether the institution concealed the problem or responded responsibly; and

6. What remedial measures have been adopted.

Ordinary scientific disagreement, an unsuccessful replication, or misconduct unrelated to the proposed award should not become a basis for selective or arbitrary exclusion.^[71]

A. “Inconsistent with religious liberty laws” should be narrowed and clarified

Proposed § 200.206(b)(2)(vii)(D) would permit an agency to treat an applicant’s “[e]ngaging in activities or initiatives that are inconsistent with religious liberty laws” as part of its “history of questionable practices,” based on “publicly available and verifiable information.”^[72]

An agency may appropriately consider a reliably established violation of applicable law when the violation is material to the proposed award or bears on the applicant’s ability to administer federal funds. The proposed language, however, does not identify which constitutional, statutory, or other requirements count as “religious liberty laws.” It also does not explain what it means for an activity to be merely “inconsistent with” such laws, whether a violation must have been formally found, or whether an agency may rely on an allegation, advocacy-group characterization, or political accusation.

The final rule should limit the factor to final or otherwise reliably established, materially relevant violations of an identified constitutional or statutory requirement. The agency should identify the law violated, the determination establishing the violation, the persons responsible, its relevance to the proposed award, and any corrective action taken by the applicant. The applicant should receive notice and an opportunity to respond.

The rule should also make clear that scientific subject matter, conclusions, and educational content do not become inconsistent with religious-liberty law merely because they conflict with the doctrines or beliefs of a religious group. Research involving genetics, evolution, embryology, reproductive medicine, gender, sexuality, geology, or cosmology does not violate religious liberty because some believers reject its premises or conclusions.

Section 200.206 should not permit officials to evaluate scientific or educational work according to their own religious understanding of human origins, reproduction, sexuality, or any other subject. The provision should address established violations of identified law and should not become a vehicle for religiously based review of scientific or educational merit.

IX. INDIRECT-COST RATES SHOULD NOT DISTORT AWARD SELECTION

[200.205]

The proposal states that, all else being equal, agencies should prefer institutions with lower indirect-cost rates.^[73]

The underlying intuition is reasonable. Public funds are finite, and cost should matter. When competing proposals offer materially equivalent merit, prospects of success, deliverables, and public value, the government may reasonably prefer the one with the lower total expected cost.

But an indirect-cost rate does not by itself show which proposal offers the better value. An institution with a higher rate may still impose a lower total cost, possess infrastructure essential to successful performance, or offer substantially greater public benefit. An institution with a lower rate may charge comparable expenses directly or may require the government to accept slower performance, weaker capabilities, or a greater risk of failure.

The proposed preference could nevertheless encourage deciding officials to treat a lower indirect-cost rate as a readily identifiable savings and therefore as evidence that the government is receiving a better deal. That tendency may be especially powerful when officials are comparing very different proposals, whose scientific or programmatic benefits cannot be reduced to a single metric. Over time, the provision could produce an across-the-board preference for lower-rate institutions and corresponding disfavor toward institutions with higher negotiated rates, even when the higher-rate institution’s proposal would better serve the program.

The rule also fails to say what “indirect cost rate” means. An institution’s negotiated rate is a ratio calculated against modified total direct costs, while the effective rate is what the government actually pays. Because equipment, patient-care costs, portions of subawards, and other categories may be excluded from the denominator, a negotiated percentage can rise even when actual overhead is unchanged. Recent empirical work reports much less variation in effective rates than negotiated percentages suggest.^[74]

OMB therefore has not shown that a lower negotiated percentage is a valid proxy for efficiency, total federal cost, or public value. The proposed preference may particularly disadvantage laboratory-, clinical-, and infrastructure-intensive institutions, including institutions that play an important role in biomedical research, patenting, and drug development.

The final rule should direct agencies to consider total expected federal cost in relation to expected public value. Relevant considerations may include direct and indirect costs, available infrastructure, likelihood and speed of successful performance, and the quality of the expected deliverables. An indirect-cost rate may be considered as part of that analysis, but it should not independently determine which institution is thought to offer the better bargain. The proposed preference should therefore be withdrawn.

This comment concerns the proposed preference in § 200.205, not the indirect-cost rate negotiation system. The Notice states that OMB is not proposing changes to that system and does not intend to consider comments concerning it in this rulemaking.

X. EXPERIMENTAL DEVELOPMENT CREATES AN OPPORTUNITY FOR PUBLIC MEDICINE DEVELOPMENT

[200.202; 200.204; 200.211]

Proposed § 200.202(g) would require agencies to categorize scientific awards as basic research, applied research, or experimental development. By recognizing experimental development as a distinct category, the proposal creates a framework for funding the work that lies between a promising discovery and a product available for practical public use.

Federal biomedical support need not always end with an academic discovery, publication, or patent application. In appropriate programs, the government should be willing to fund promising medicines through the later stages needed to make them usable, including formulation, toxicology, clinical testing, regulatory work, manufacturing preparation, and technology transfer.

When the public finances those stages, the award should be designed from the outset around the intended public result. It should specify the patents, data, regulatory materials, manufacturing information, and know-how that must be delivered or made available. The objective may appropriately be a development package that enables qualified manufacturers to obtain approval and supply generic or biosimilar versions, rather than private exclusivity.

Bayh-Dole does not categorically prohibit that approach. Although it gives nonprofit and small-business contractors a default ability to elect title to federally supported inventions, 35 U.S.C. § 202(a)(ii) permits alternative arrangements in exceptional circumstances when they would better advance the statute’s purposes. Those purposes include practical use of federally supported inventions, public availability, free competition, and protection of the public. See 35 U.S.C. § 200.

A program in which the government deliberately finances development through regulatory and manufacturing readiness in order to enable competitive production presents a strong case for considering that authority. Depending on the program, the government could retain ownership, obtain sufficiently broad rights, or hold patents defensively while offering royalty-free, nonexclusive licenses to qualified producers.

This comment need not prescribe the complete design of such a program. Related proposals have been advanced by Dana Brown and others,^[75] and I have discussed this model more fully elsewhere.^[76] The narrower point for this rulemaking is that OMB should retain the experimental-development classification and make clear that agencies may design awards to produce affordable, competitively supplied products and services rather than assume that federally supported development must culminate in private exclusivity.

The final rule should build on the experimental-development classification in three ways.

First, § 200.202 should require an agency establishing an experimental-development program to identify the practical endpoint the public investment is intended to achieve. The agency should also determine what deliverables, rights, access arrangements, and continuity provisions are needed to reach that endpoint or transfer the work to others. Depending on the program, those arrangements may address public availability, affordability, interoperability, nonexclusive licensing, competitive production, supply resilience, or use by multiple qualified providers. The rule need not prescribe the same intellectual-property arrangement for every program.

Second, the preamble should identify public medicine development as a permissible application of experimental-development authority. An agency may fund the work required to move a promising medicine through formulation, preclinical and clinical development, regulatory submission, manufacturing preparation, and transfer to qualified producers. Where authorized by statute, the intended endpoint may include affordable access, resilient supply, and competitive generic or biosimilar production.

Third, §§ 200.204 and 200.211 should require advance disclosure of the intended development endpoint and any material deliverable, data-rights, intellectual-property, technology-transfer, access, affordability, or competitive-production requirements. Disclosure in both the notice of funding opportunity and the resulting award would permit applicants to evaluate those terms before participating and preserve the voluntary character of the program.

These changes would also benefit experimental-development programs outside medicine, including public software, diagnostic tools, clean-energy technologies, agricultural innovations, manufacturing processes, disaster-response equipment, and technical standards. In each case, the agency should identify the practical public result it is funding and the assets and rights that must remain available for that result to be achieved.

XI. RECOMMENDED CHANGES

[200.202; 200.204; 200.205; 200.206; 200.211; 200.300; 200.340; 200.341; 200.342]

Before finalizing provisions that expand political review or discretionary termination, OMB should conduct and publish a retrospective assessment of the 2025 grant-termination campaign, including its net fiscal effects, operational consequences, decisionmaking methods, use of relevant expertise, and treatment of recipient and beneficiary reliance. If, after that, it concludes the rulemaking should still proceed, OMB should revise the proposed rule as follows:

1. Require consequential award and program decisions to be made through the agency Congress charged with administering the program, by an identified agency official exercising authority lawfully vested by statute, acting designation, or express delegation.

2. Require a contemporaneous written decision and reviewable administrative record whenever an award recommendation is rejected or materially altered. The decision should address the recommendation’s material reasoning and identify the legal, factual, and programmatic grounds for the departure.

3. When an agency decides, after the application deadline or commencement of substantive review, to make no awards or to cancel and repost a funding opportunity with materially different criteria, require the decision to be made by an identified agency official exercising authority lawfully vested by statute, acting designation, or express delegation, and supported by a contemporaneous public explanation.

4. Delete the requirement that discretionary awards “demonstrably advance the President’s policy priorities.” Alternatively, provide that presidential priorities may be considered only to the extent lawfully incorporated into the statutory purposes, published priorities, and announced criteria of the Federal program.

5. Delete the instruction that political officials must not “routinely defer” to peer review, and provide that expert findings should receive substantial weight on matters within the experts’ competence. A political official who disagrees with an expert conclusion on a technical matter should explain the technical basis for the disagreement or obtain competing expert advice.

6. State expressly that nothing in § 200.205 authorizes an agency to diminish, bypass, or alter a merit-review, peer-review, advisory-council, or other award-selection process required by statute.

7. Delete the categorical references to DEI, “gender ideology,” racial preferences, and denial of the sex binary, and instead prohibit discrimination actually prohibited under identified applicable law. Clarify that the rule does not prohibit research, data collection, clinical inclusion, outreach, institutional support, or other activity authorized or required by Congress.

8. Delete “anti-American values” and prohibit an agency from favoring or disfavoring an otherwise eligible application because of the applicant’s viewpoint concerning the United States, its history, institutions, officials, or policies.

9. Delete “the national interest” as a termination ground and revise the existing reference to “agency priorities” to make clear that a post-award change in political priorities, standing alone, is not sufficient to terminate an executed, compliant award.

10. Limit unilateral termination to defined grounds authorized by applicable law, consistent with the governing program and appropriation, and clearly and unambiguously stated in the award.

11. Require any unilateral termination determination to rest on material facts established through individualized review and to address reliance interests, sunk public investment, effects on beneficiaries and research participants, and reasonably available alternatives. Termination should be reasonably necessary to address the identified ground rather than merely convenient to current officials.

12. Extend § 200.342’s objection and appeal procedures to every unilateral suspension or termination. The process should include adequate notice, access to nonprivileged relied-upon materials, an opportunity to respond, review by an identified agency official who did not propose the action, and a written decision addressing the recipient’s principal arguments.

13. Require preservation of the complete administrative record and, absent illegality, fraud, immediate danger, or unavailable funding, presumptive maintenance of the status quo during an expedited appeal where immediate termination would cause irreparable harm.

14. Confirm that the resulting decision constitutes final agency action subject to judicial review under the Administrative Procedure Act.

15. Limit proposed § 200.206’s “questionable practices” criteria to reliable evidence that is materially relevant to the proposed award and fairly attributable to the applicant, responsible institutional officials, or the proposed project team. Require consideration of seriousness, recency, and corrective or remedial measures.

16. Limit the reference to activities “inconsistent with religious liberty laws” to final or otherwise reliably established, materially relevant violations of identified constitutional or statutory requirements. Require notice and an opportunity to respond, and clarify that scientific subject matter, conclusions, or educational content do not violate religious liberty merely because they conflict with religious doctrine.

17. Withdraw the preference for institutions with lower indirect-cost rates and instead require consideration of total expected federal cost in relation to expected public value.

18. Retain the recognition of experimental development and add a new § 200.202(h) requiring agencies to identify the intended practical endpoint and the deliverables, rights, access arrangements, and continuity provisions necessary to achieve it. Agencies should be permitted, where authorized by law, to obtain sufficient rights to promote public availability, affordability, resilient supply, and competitive production.

19. Add conforming provisions to §§ 200.204 and 200.211 requiring the notice of funding opportunity and resulting award to disclose the intended endpoint and any material deliverable, data-rights, intellectual-property, technology-transfer, access, affordability, continuity, or competitive-production requirements.

20. Add preamble language recognizing public medicine development as a permissible application of experimental-development authority, including programs that move medicines through regulatory and manufacturing readiness and promote affordable access and competitive generic or biosimilar production.

XII. PROPOSED LANGUAGE FOR REGULATORY AND PREAMBLE REVISIONS

[200.202; 200.204; 200.205; 200.206; 200.211; 200.300; 200.340; 200.341; 200.342]

The following proposed revisions illustrate one way OMB could implement the principles discussed above if it proceeds with a final rule. They are not intended to replace the objections, explanations, and recommendations in the body of this submission, and they should not be treated as exhaustive. Some issues discussed above may require additional conforming changes, preamble explanation, or program-specific language. The central point is that any final rule should preserve statutory limits, meaningful review, professional and expert judgment, viewpoint neutrality, and reliable consideration of recipient and beneficiary reliance.

Redline convention. Deletions from OMB’s proposed text are shown in strikethrough; additions are underlined. Unchanged provisions are omitted where they are not needed for context.

A. Section 200.202 – Program planning and design

Add a new paragraph (h) following proposed paragraph (g):

(h) Experimental-development programs. When designing a Federal program that will support experimental development, the Federal agency must identify the intended practical, technical, regulatory, manufacturing, deployment, or public-use endpoint of the program and, as appropriate:

(1) The data, materials, intellectual property, regulatory submissions, rights of reference, manufacturing information, software, technical knowledge, and other deliverables reasonably necessary to achieve or transfer that endpoint;

(2) The persons or classes of persons expected to use, manufacture, supply, implement, or benefit from the resulting technology, service, or product;

(3) The award terms necessary to preserve continuity of development and permit completion or transfer of the work if the original recipient is unable or unwilling to continue; and

(4) The rights and access arrangements necessary to achieve the authorized public purpose of the program, including, where appropriate, public availability, affordability, interoperability, nonexclusive licensing, competitive production, supply resilience, or use by multiple qualified providers.

Nothing in this paragraph requires a Federal agency to select a particular intellectual-property or licensing arrangement. Each arrangement must be consistent with applicable law and the authorized purposes and objectives of the Federal program.

B. Section 200.204 – Notices of funding opportunities

Add a new paragraph (g):

(g) Experimental-development programs. For a program supporting experimental development under § 200.202(h), the notice of funding opportunity must describe, as applicable, the intended development endpoint, required deliverables, applicable intellectual-property and data-rights arrangements, technology-transfer expectations, continuity provisions, and any public-access, affordability, competitive-production, interoperability, or supply-resilience objectives.

C. Section 200.205 – Federal agency merit review of proposals

Revise proposed paragraphs (b), (c), (d), and (e) as follows:

(b) Pre-issuance review. As part of the merit review process, Federal agencies must perform pre-issuance reviews to ensure that Federal award proposals selected for funding are consistent with applicable law, Federal agency priorities, and the national interest the statutory purposes, published priorities, and announced criteria of the Federal program. In doing so, Federal agencies heads must designate one or more senior appointees Federal agencies must designate one or more agency officials possessing authority lawfully vested by statute, acting designation, or express delegation to conduct a pre-issuance review of all discretionary awards. As part of this pre-issuance review for discretionary awards, senior appointees (or their designee) the designated official must, as relevant and to the extent consistent with applicable law, apply the following principles when reviewing Federal award proposals:

(1) Discretionary awards must, where applicable, demonstrably advance the President’s policy priorities advance the statutory purposes, published priorities, and announced criteria of the Federal program. Presidential policy priorities may be considered only to the extent they have been lawfully incorporated into those purposes, priorities, and criteria and are consistent with the governing statute and appropriation.

(2) Discretionary awards must not be used to fund, promote, encourage, subsidize, or facilitate:

* * * * *

(iv) Any other initiatives that compromise public safety or promote anti-American values are inconsistent with an identified requirement of applicable law. A Federal agency may not favor or disfavor an otherwise eligible application because of the applicant’s viewpoint concerning the United States, its history, institutions, officials, or policies.

(3) All else being equal, preference for discretionary awards should be given to institutions with lower indirect cost rates. Federal agencies should consider total expected Federal cost in relation to expected public value. An indirect cost rate may be considered as part of that analysis but may not independently determine which application offers the better value.

* * * * *

(c) Procedure for pre-issuance review. When conducting a pre-issuance review, senior appointees (or their designee) the designated official must not ministerially ratify or routinely defer to the recommendations of others, but must instead use independent reasoned judgment consider relevant recommendations and exercise independent reasoned judgment when evaluating Federal award proposals. When declining to follow an award recommendation, the official must provide a contemporaneous written explanation identifying the applicable statute, appropriation, program criteria, and material facts; address relevant career, legal, scientific, technical, and program recommendations; and preserve a reviewable administrative record.

(d) Use of peer review. Nothing in this part must be construed to discourage or prevent the use of peer review methods to evaluate proposals for discretionary awards or otherwise inform agency decision making, provided that peer review recommendations remain advisory and are not ministerially ratified, routinely deferred to, or otherwise treated as de facto binding by senior appointees or their designees. Peer-review findings should receive substantial weight on matters within the peer reviewer’s competence. A designated official who disagrees with a peer-review conclusion on a technical matter must explain the technical basis for the disagreement or obtain competing expert advice. Further, nothing in this part must be construed to create any rights to any particular level of review or consideration for any funding applicant except as consistent with applicable law.

Nothing in this paragraph authorizes a Federal agency to diminish, bypass, or alter a merit-review, peer-review, advisory-council, or other award-selection process required by statute.

(e) Agency discretion to reissue funding opportunities. A Federal agency is not required to issue a discretionary award as a result of a NOFO if doing so would fund low-quality proposals or be inconsistent with the principles of this part. The agency may, at its discretion, repost a funding opportunity. After the application deadline or the commencement of substantive review, a decision to make no awards or to repost the opportunity with materially different criteria must be made by an identified agency official exercising authority lawfully vested by statute, acting designation, or express delegation. The agency must publish a contemporaneous explanation identifying the legal and programmatic basis for the decision.

D. Section 200.300 – Statutory and national policy requirements

Revise proposed paragraph (b) substantially as follows:

(b) Prohibited discrimination. A Federal award may not be used to engage in discrimination prohibited by an identified requirement of applicable Federal law. Nothing in this section prohibits research, data collection, clinical inclusion, outreach, institutional support, or other activity authorized or required by Federal statute, including activities concerning health disparities, participation in STEM, or support for historically Black colleges and universities, Tribal Colleges and Universities, minority-serving institutions, women, members of minority groups, or persons with disabilities.

E. Section 200.206 – Federal agency review of risk posed by applicants

Revise proposed paragraph (b)(2)(vii) as follows:

(vii) History of questionable practices. Based on publicly available and verifiable information reliable evidence, the applicant’s record of

(A) Plagiarism in studies or papers published by the applicant or its staff that has been formally found or otherwise reliably established and is materially relevant to the proposed award;

(B) Discredited or non-replicable studies published by the applicant or its staff Fabrication, falsification, material nondisclosure, or other research misconduct that has been formally found or otherwise reliably established, is fairly attributable to the applicant, responsible institutional officials, or the proposed project team, and is materially relevant to the proposed award;

(C) Engaging in activities or initiatives that are inconsistent with the subject of a final or otherwise reliably established, materially relevant determination of a violation of Federal civil rights laws, including the equal protection principles of the U.S. Constitution and prohibitions against unlawful discrimination; or

(D) Engaging in activities or initiatives that are inconsistent with religious liberty laws the subject of a final or otherwise reliably established, materially relevant determination of a violation of an identified constitutional or statutory religious-liberty requirement. Scientific subject matter, conclusions, or educational content do not violate religious liberty merely because they conflict with religious doctrine.

Before relying on a matter described in this paragraph, the Federal agency must provide notice and a reasonable opportunity to respond and must consider the matter’s seriousness, recency, attribution, relevance, and any corrective or remedial measures.

F. Section 200.211 – Information contained in a Federal award

Add a new paragraph (b)(17):

(17) For an award categorized as experimental development, the intended development endpoint and any applicable deliverable, data-rights, intellectual-property, access, licensing, technology-transfer, continuity, affordability, interoperability, supply-resilience, or competitive-production requirements.

Revise proposed paragraph (c)(1)(v) to conform to the revisions to §§ 200.340 through 200.342:

(v) Termination provisions. Federal agencies must inform recipients of the termination provisions in § 200.340. Except as provided in § 200.340(b), the Federal agency must always include the termination provisions set forth in § 200.340(a)(1) through (4) in each Federal award or expressly incorporate them by reference. The Federal agency must clearly and unambiguously state each ground on which it or a pass-through entity may unilaterally terminate the award and must incorporate the notice, objection, and appeal procedures in §§ 200.341 and 200.342. Pursuant to § 200.340(a)(5), if applicable, the Federal agency must also inform recipients of any additional termination provisions that apply to a Federal award, including any applicable termination provisions in the Federal agency’s regulations. Subject to the limitations in § 200.340(b), such additional provisions must not limit the right of the Federal agency to terminate for any of the reasons in § 200.340(a)(1) through (4). Any additional provision must be authorized by applicable law and consistent with the governing program and appropriation.

G. Section 200.340 – Termination and suspension

Replace proposed paragraph (a)(2), revise paragraphs (a)(5) and (b), and revise paragraph (e)(1) as follows:

(a) Termination provisions. The Federal award may be terminated in part or its entirety as follows:

* * * * *

(2) At the discretion of the Federal agency or pass-through entity. The Federal agency or pass-through entity, to the extent permitted by law, may terminate a Federal award in part or its entirety if the Federal agency or pass-through entity determines that a termination is in the interest of the Federal agency or pass-through entity, including if a Federal award does not effectuate program goals, Federal agency priorities, or the national interest as they exist at the time of the termination. On another defined ground authorized by law. The Federal agency or pass-through entity may unilaterally terminate a Federal award in part or its entirety only on a ground authorized by applicable law, consistent with the governing program and appropriation, and clearly and unambiguously stated in the award. The written determination must identify the material facts supporting termination, explain the ground’s relationship to the governing statute and program purpose, and address material reliance interests, sunk public investment, effects on beneficiaries and research participants, and reasonably available alternatives. Termination must be reasonably necessary to address the identified ground. A change in agency priorities or an assertion of the national interest, standing alone, is not a sufficient ground for termination. See also § 200.341;

* * * * *

(5) Pursuant to additional terms and conditions. The Federal agency or pass-through entity, to the extent permitted by law, consistent with paragraph (a)(2), may terminate a Federal award in part or its entirety pursuant to any additional termination provisions included in the terms and conditions of the Federal award.

(b) Requirements for termination provisions--(1) General requirements. The Federal agency or pass-through entity must clearly and unambiguously specify all termination provisions in the terms and conditions of the Federal award. To the extent permitted by law, and except as provided in paragraph (b)(2) of this section, the Federal agency and pass-through entity must ensure that all Federal awards allow termination for the reasons described in paragraphs (a)(1) through (4) of this section. For example, the Federal agency or pass-through entity may include a termination provision incorporating this section of the regulation by reference or including all of the reasons for termination in paragraphs (a)(1) through (4). A provision authorizing unilateral termination must identify a defined ground authorized by applicable law and consistent with the governing program and appropriation. In accordance with paragraph (a)(5) of this section, to the extent authorized by law, the Federal agency or pass-through entity may also include additional termination provisions not specified in this section if they satisfy paragraph (a)(2). See also § 200.211(c)(1)(v).

(2) Exceptions. Paragraph (a)(2) of this section does not apply to any Federal award in which inclusion of such a discretionary termination provision would conflict with a Federal statute. See §§ 200.101(d) and 200.102(b) regarding statutory conflicts and exceptions. The discretionary termination provision is generally applicable to discretionary awards, but not to Federal awards made under programs where legislation establishes an entitlement to the funds on the part of the recipient, such as block grants, those awarded based on a statutory formula, or disaster recovery grants. Consistent with Executive Order 14332, paragraph (a)(2) also does not apply to agreements entered into in furtherance of international trade agreements or those awarded by the Department of Commerce under title XCIX of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (Pub. L. 116-283), the CHIPS Act of 2022 (Pub. L. 117-167), or division F of the Infrastructure Investment and Jobs Act (Pub. L. 117-58). If questions arise regarding applicability of paragraph (a)(2) to specific Federal programs or types of Federal awards, Federal agencies are strongly encouraged to consult with OMB. Federal agencies must seek approval from OMB prior to allowing any class exceptions for paragraph (a)(2) related to a Federal program or type of Federal award not set forth in this paragraph (b)(2). No termination provision may be applied in a manner inconsistent with a Federal statute, appropriation, or other applicable law. See §§ 200.101(d) and 200.102(b).

* * * * *

(e) Temporary suspension--(1) In general. The Federal agency or pass-through entity, to the extent permitted by law, may at any time issue a written order temporarily suspending a Federal award in part or its entirety if the Federal agency or pass-through entity determines that a suspension is in the interest of the Federal agency or pass-through entity an identified ground authorized by applicable law and clearly stated in the award supports suspension and suspension is reasonably necessary to prevent immediate harm, preserve funds or evidence, address material noncompliance, or permit an expedited determination concerning possible termination. A suspension order under this provision must not exceed a period of 90 days unless the parties mutually agree to an extended period. The suspension order must:

* * * * *

H. Section 200.341 – Notification of termination requirement

Revise proposed paragraphs (a), (b), and (c) as follows:

(a) In general. The Federal agency or pass-through entity must provide written notice of termination to the recipient or subrecipient. The written notice of termination should must include the reasons for termination statutory authority, award provision, material facts, and proposed ground for termination, the effective date, and the portion of the Federal award to be terminated, if applicable. The notice must identify the official who made or proposed the decision and the source of that official’s authority, provide access to the nonprivileged materials on which the agency relies, and describe the recipient’s rights under § 200.342.

(b) Notifications of termination for noncompliance. If the Federal award is terminated Before a Federal award may be terminated for the recipient’s material failure to comply with a Federal award, for the portion of the Federal award to be terminated, which may encompass up to the entirety of the Federal award, the notification must instruct the recipient or subrecipient to stop work, make no additional financial obligations, and, to the extent authorized by law, terminate all subawards and contracts related to the terminated portion of the Federal award. the agency must provide the notice and opportunity to respond required by § 200.342. A final termination notice must identify the portion of the award terminated and provide appropriate instructions concerning work, financial obligations, subawards, and contracts. Consistent with § 200.342, the notification for a termination for noncompliance must also provide the recipient with an opportunity to object and provide information challenging the action.

(c) Notifications of discretionary other unilateral termination. In the case of a discretionary unilateral termination under § 200.340(a)(2), the notice must provide:

(1) A brief summary of the reason or reasons for finding that termination is in the interest of the Federal agency or pass-through entity. The reason or reasons may apply to an individual award or class of awards. The Federal agency or pass-through entity is not required to provide a detailed or exhaustive analysis; An individualized explanation identifying the applicable statute, appropriation, program purpose, award provision, and material facts; addressing the recipient’s principal arguments, reliance interests, sunk public investment, effects on beneficiaries and research participants, and reasonably available alternatives; and explaining why termination is reasonably necessary;

(2) For the portion of the Federal award to be terminated, which may encompass up to the entirety of the Federal award, instructions If immediate interim action is authorized under § 200.340(e), instructions to the recipient or subrecipient to stop work, make no additional financial obligations, and, to the extent authorized by law, terminate all subawards and contracts related to the terminated suspended portion of the Federal award; and

(3) An opportunity for the recipient or subrecipient to submit a written statement of termination costs The opportunity to object and submit evidence and legal argument required by § 200.342, together with an opportunity to submit a statement of termination costs if termination becomes final, which shall constitute a complete and accurate statement of all costs, financial obligations, expenditures, claims, and other commitments the recipient or subrecipient believes are relevant to the termination.

I. Section 200.342 – Opportunities to object, hearings, and appeals

Revise the proposed section in its entirety as follows:

The Federal agency must maintain written procedures for processing objections, hearings, and appeals related to remedies for noncompliance. Upon initiating a remedy for noncompliance (for example, disallowed costs, a corrective action plan, or termination for noncompliance), the Federal agency must provide the recipient with an opportunity to object and provide information challenging the action. The Federal agency or pass-through entity must comply with any requirements for hearings, appeals, or other administrative proceedings to which the recipient or subrecipient is entitled under any statute or regulation applicable to the action involved. The Federal agency is not required to allow for objections, hearings, and appeals related to any reasons for termination except termination for noncompliance.

(a) Written procedures. The Federal agency must maintain written procedures for processing objections, hearings, and appeals related to remedies for noncompliance and every unilateral suspension or termination. The Federal agency or pass-through entity must also comply with any additional requirements for hearings, appeals, or other administrative proceedings imposed by a statute or regulation applicable to the action involved.

(b) Notice and opportunity to respond. Before a unilateral suspension or termination becomes final, the recipient or subrecipient must receive written notice satisfying § 200.341, access to the nonprivileged materials on which the agency relies, and a reasonable opportunity to submit evidence and legal argument.

(c) Review. The objection or appeal must be decided by an identified agency official who did not propose the action and who exercises authority lawfully vested by statute, acting designation, or express delegation. The official must consider the governing statute, appropriation, program purpose, material facts, reliance interests, sunk public investment, effects on beneficiaries and research participants, and reasonably available alternatives. The official must issue a written decision addressing the recipient’s principal arguments and preserve the complete administrative record, including relevant career, legal, scientific, technical, and program recommendations.

(d) Interim effect. Except when continued performance would be unlawful, fraudulent, immediately dangerous, or impossible because funding is unavailable, the agency should maintain the status quo during an expedited objection or appeal when immediate suspension or termination would cause irreparable harm.

(e) Final agency action. The written decision under paragraph (c) constitutes final agency action subject to judicial review under the Administrative Procedure Act, to the extent provided by law.

J. Proposed preamble clarification concerning public medicine development

Add an explanation substantially as follows:

For example, an agency funding experimental development of a medicine may establish a program whose intended endpoint includes formulation, preclinical and clinical development, regulatory submission or approval, manufacturing preparation, and transfer to one or more qualified producers. Where consistent with the program’s statutory authority, the agency may structure the award to promote affordable access, supply resilience, and competitive generic or biosimilar production. The agency may identify and obtain the data, materials, intellectual property, regulatory submissions, rights of reference, manufacturing information, and technical knowledge needed to reach or transfer that endpoint. Nothing in this example prescribes a single ownership or licensing arrangement; the appropriate terms will depend on the governing statute and the authorized purposes and objectives of the program.

XIII. CONCLUSION

[General]

The proposal is right that federal assistance should be administered with attention to cost, performance, rigor, and public benefit. Its recognition of experimental development also creates a valuable opportunity to connect federal investment more deliberately to practical public results.

But greater political control does not necessarily produce greater accountability. Meaningful accountability requires identifiable decisionmakers exercising authority through the agency Congress charged with administering the program. It also requires written reasons, ascertainable standards, professional expertise, and meaningful review.

Political leadership should establish lawful policy and program priorities. Within that framework, career officials and subject-matter experts provide continuity, institutional knowledge, and an understanding of technical and operational consequences. Their recommendations need not be binding, but they should receive substantial weight on matters within their competence.

The final rule should also respect the distinction between changing policy prospectively and canceling commitments already made. Congress establishes programs and appropriates funds with the expectation that agencies will administer them faithfully within their statutory purposes. Recipients and beneficiaries may likewise rely on executed awards after employees have been hired, research has begun, and services have been established. Those commitments should not be displaced by changing political preferences, undefined appeals to the “national interest,” or ideological labels applied without individualized review.

The same principles apply before an award is issued. Political officials may reject recommendations or change the direction of future programs, but consequential decisions should be made by an identified agency official, supported by a contemporaneous explanation, and informed by relevant professional judgment. Scholarship should not be disfavored as “anti-American” because it criticizes the government, and scientific work should not be judged through political or religious doctrine rather than applicable law and technical merit.

OMB should therefore revise the proposal to provide clear and reviewable termination standards, meaningful administrative process, viewpoint neutrality, appropriate reliance on expertise, and evaluation of total cost and public value rather than isolated accounting measures. It should also preserve and strengthen the experimental-development provisions so that agencies may define the practical result the public is purchasing and secure the rights and deliverables needed to achieve it.

These safeguards would not prevent elected officials from directing executive policy. They would ensure that federal assistance is administered through the lawful institutions Congress created, with an informed understanding of the work and its consequences.

Respectfully submitted,

/s/ Thomas W. Krause

Thomas W. Krause

Former Solicitor and Director Review Executive

United States Patent and Trademark Office

^[1] D. M. Cavalcanti et al., Evaluating the Impact of Two Decades of USAID Interventions and Projecting the Effects of Defunding on Mortality up to 2030, 406 Lancet 283 (2025), available at https://www.thelancet.com/article/S0140-6736%2825%2901186-9/fulltext (projecting more than 14 million additional deaths by 2030 if deep cuts and dismantling persist); see also David Remnick, The Human Cost of DOGE’s War on U.S.A.I.D.—Elon Musk, Donald Trump, and the “Public Man-Made Death” That They’ve Caused, New Yorker (July 12, 2026), available at https://www.newyorker.com/news/the-new-yorker-interview/the-human-cost-of-doges-war-on-usaid (reporting former USAID Administrator Atul Gawande’s estimate of approximately 700,000 deaths already caused).

^[2] Remarks on Signing an Executive Order Implementing the President’s “Department of Government Efficiency” Workforce Optimization Initiative and an Exchange with Reporters, American Presidency Project (Feb. 11, 2025), available at https://www.presidency.ucsb.edu/documents/remarks-signing-executive-order-implementing-the-presidents-department-government.

^[3] Remarks at a Cabinet Meeting and an Exchange With Reporters, Daily Compilation of Presidential Documents, DCPD No. 202500304 (Feb. 26, 2025), available at https://www.govinfo.gov/content/pkg/DCPD-202500304/html/DCPD-202500304.htm.

^[4] Regulation for Federal Financial Assistance, 91 Fed. Reg. 32,198, 32,248-249 (May 29, 2026) (proposed 2 C.F.R. § 200.205(b)-(d)); Exec. Order No. 14,332, §§ 3-4, 90 Fed. Reg. 38,929, 38,930-31 (Aug. 12, 2025).

^[5] Exec. Order No. 14,332, § 2(h), 90 Fed. Reg. 38,929, 38,930 (Aug. 12, 2025).

^[6] 91 Fed. Reg. at 32,249 (proposed 2 C.F.R. § 200.205(b)-(c)); Exec. Order No. 14,332, §§ 3(a), 4(a), 90 Fed. Reg. at 38,930-31.

^[7] 91 Fed. Reg. at 32,249 (proposed 2 C.F.R. § 200.205(b)(1)); Exec. Order No. 14,332, § 4(b)(i), 90 Fed. Reg. at 38,931.

^[8] 91 Fed. Reg. at 32,249 (proposed 2 C.F.R. § 200.205(b)(1), (c)-(d)).

^[9] 42 U.S.C. §§ 1862c(a)(2), 1862s.

^[10] 42 U.S.C. §§ 289a, 289a-1(a)(2), 284a(a)(1), (a)(3)(A)(ii).

^[11] 42 U.S.C. § 16353(a) (DOE); 51 U.S.C. §§ 40111, 40310, 40502 (NASA); 7 U.S.C. § 7613 (USDA).

^[12] See, e.g., 91 Fed. Reg. at 32,249-50, 32,253, 32,258-60 (proposed 2 C.F.R. §§ 200.205(b), 200.206(b)(2)(vii), 200.300(b), 200.340(a)(2), 200.342).

^[13] Jonathan Schwabish & Judah Axelrod, NSF Has Canceled More Than 1,500 Grants. Nearly 90 Percent Were Related to DEI, Urban Institute (July 9, 2025), available at https://www.urban.org/urban-wire/nsf-has-canceled-more-1500-grants-nearly-90-percent-were-related-dei (1,574 projects totaling approximately $1.1 billion).

^[14] Krystal Vasquez, DOGE’s Orders Threaten NSF Grants and Proposals, Chemical & Engineering News (Apr. 18, 2025), available at https://cen.acs.org/policy/research-funding/DOGEs-orders-threaten-NSF-grants/103/web/2025/04 (reporting that DOGE directed NSF to re-review approved proposals and screen active awards); Trump Science Cuts Target Bird Feeder Research, AI Literacy Work and More, Associated Press (Apr. 24, 2025), available at https://apnews.com/article/e989c978f273fb1a94c2e47b78843d64.

^[15] Vasquez, supra note 14; Schwabish & Axelrod, supra note 13 (finding that nearly 90 percent of canceled projects contained at least one term in the authors’ DEI category).

^[16] National Science Foundation, Updates on NSF Priorities, available at https://www.nsf.gov/updates-on-priorities (identifying awards concerning DEI, environmental justice, misinformation, and disinformation as inconsistent with agency priorities).

^[17] National Science Foundation, supra note 16 (stating that terminations based on agency priorities were final and not subject to appeal); Associated Press, supra note 14.

^[18] Associated Press, supra note 14 (describing terminated work intended to study and combat internet censorship in China and Iran).

^[19] Id. (describing projects concerning AI literacy, bias in medical information, and detection of AI-generated deepfakes).

^[20] Id. (describing a bird-feeding project drawing on data from more than 20,000 participants to examine wildlife and human well-being).

^[21] Id. (describing work with Indigenous communities concerning environmental change in Alaska’s Arctic region).

^[22] National Science Foundation Reverses Decision to Dismantle Oceans-Monitoring Network After Outcry, Associated Press (June 18, 2026), available at https://apnews.com/article/7e00d19c0af8b15400d7621dcbaa2013; Lawmakers Fight to Stop the Trump Administration’s Dismantling of a $386M Ocean Observatory Project, Associated Press (June 15, 2026), available at https://apnews.com/article/9b306cb05ec3c824f5e034821add6ad2.

^[23] Consortium of Social Science Associations, NSF Releases List of Terminated Grants (May 27, 2025), available at https://cossa.org/nsf-releases-list-of-terminated-grants/ (reporting 839 terminated awards in NSF’s STEM Education Directorate); 42 U.S.C. § 1862p-14(a) (broader-impacts review criterion).

^[24] National Institutes of Health, NIH Grants Policy Statement § 2.4 (Oct. 1, 2025), available at https://grants.nih.gov/grants/policy/nihgps/html5/section_2/2.4_the_peer_review_process.htm; 42 C.F.R. pt. 52h; 42 U.S.C. §§ 289a, 289a-1(a)(2), 284a(a)(1), (a)(3)(A)(ii).

^[25] U.S. Government Accountability Office, Department of Health and Human Services—National Institutes of Health—Application of Impoundment Control Act to Availability of Funds for Grants, B-337203 (Aug. 5, 2025), available at https://www.gao.gov/products/b-337203 (noting NIH’s termination of more than 1,800 grants between February and June 2025).

^[26] See Nat’l Insts. of Health v. Am. Pub. Health Ass’n, 606 U.S. ___, No. 25A103, slip op. (Aug. 21, 2025), available at https://www.supremecourt.gov/opinions/24pdf/25a103_kh7p.pdf; Annie Waldman, Trump’s NIH Axed Research Grants Even After a Judge Blocked the Cuts, Internal Records Show, ProPublica (May 7, 2025), available at https://www.propublica.org/article/trump-nih-cuts-transgender-research-grants (describing DOGE’s direct involvement and category-based grant terminations).

^[27] Lisa Schnirring, NIH Cuts Research Grants on Vaccine Hesitancy; mRNA Vaccine Studies Could Be Next Target, CIDRAP (Mar. 11, 2025), available at https://www.cidrap.umn.edu/anti-science/nih-cuts-research-grants-vaccine-hesitancy-mrna-vaccine-studies-next-target (reporting 33 terminated and nine reduced grants).

^[28] Schnirring, supra note 27 (quoting termination notices stating that projects encouraging vaccine uptake did not align with current funding priorities).

^[29] White House, Yes, Biden Spent Millions on Transgender Animal Experiments (Mar. 5, 2025), available at https://www.whitehouse.gov/releases/2025/03/yes-biden-spent-millions-on-transgender-animal-experiments/; Americans for Medical Progress, Clarifying Misinformation About “Transgender Mice” in Research (Mar. 12, 2025), available at https://www.amprogress.org/research-news/2025/03/clarifying-misinformation-about-transgender-mice-in-research/.

^[30] 91 Fed. Reg. at 32,249 (proposed 2 C.F.R. § 200.205(b)(2)(iv)).

^[31] Pew Research Center, Views of Separation of Church and State, and Religion’s Role in Public Life (Feb. 26, 2025), available at https://www.pewresearch.org/religion/2025/02/26/religious-landscape-study-religions-role-in-public-life/ (reporting that Americans were nearly evenly divided over whether the federal government should declare the United States a Christian nation).

^[32] See W. Va. State Bd. of Educ. v. Barnette, 319 U.S. 624, 642 (1943) (“If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion . . . .”).

^[33] Am. Council of Learned Soc’ys v. Nat’l Endowment for the Humanities, Nos. 25-cv-3657 & 25-cv-3923, slip op. at 1-3 (S.D.N.Y. May 7, 2026), available at https://www.nysd.uscourts.gov/sites/default/files/2026-05/NEH.sj_.pdf (more than 1,400 grants and more than $100 million).

^[34] Id. at 57-72, 84-127 (holding that the mass terminations were ultra vires and violated the First and Fifth Amendments).

^[35] Id. at 14-30, 109-127 (describing criteria and screening tied to race, gender, immigration, religion, sexuality, and other subject matter).

^[36] Id. at 21-26, 93-95 (describing DOGE personnel’s use of ChatGPT to identify grants and generate or refine rationales).

^[37] Id. at 12-30, 66-72 (describing DOGE’s role and the absence of individualized review).

^[38] Exec. Order No. 14,332, § 1, 90 Fed. Reg. 38,929, 38,929-30 (Aug. 12, 2025).

^[39] White House Domestic Policy Council, Saving America’s Story: How Ideological Capture at the Smithsonian Institution’s National Museum of American History Erases Our Heritage (July 4, 2026), available at https://www.whitehouse.gov/wp-content/uploads/2026/07/Smithsonian-Report-Saving-Americas-Story.pdf.

^[40] Id. at 2-7 (criticizing the Museum for minimizing the Founders, treating patriotic narratives with suspicion, emphasizing oppression and injustice, and failing to present an account sufficiently inspiring and unifying).

^[41] The Declaration of Independence (U.S. 1776), available at https://www.archives.gov/founding-docs/declaration-transcript; Thomas Paine, Common Sense (1776), available at https://www.loc.gov/item/18016803/; see also W. Va. State Bd. of Educ. v. Barnette, 319 U.S. 624, 642 (1943).

^[42] Legal Servs. Corp. v. Velazquez, 531 U.S. 533, 542-49 (2001).

^[43] Nat’l Endowment for the Arts v. Finley, 524 U.S. 569, 587 (1998).

^[44] U.S. Department of Health and Human Services, HHS Grants Policy Statement § 3.4.12.3, at 57-58 (Oct. 1, 2025), available at https://www.hhs.gov/sites/default/files/hhs-grants-policy-statement-oct-2025.pdf (requiring a disclaimer that contents do not necessarily represent official agency or U.S. Government views); National Science Foundation, Proposal & Award Policies & Procedures Guide Introduction A (NSF 24-1, 2024), available at https://www.nsf.gov/policies/pappg/24-1 (stating that recipients are wholly responsible for project findings and their interpretation).

^[45] 42 U.S.C. §§ 1862p-14(a)(7), 1885a, 1885b, 1862s-5(d)(1), 19012, 19015, 19017, 19110, 19153, 19182.

^[46] 42 U.S.C. §§ 282(b)(4), 285t, 287d, 289a-2.

^[47] 15 U.S.C. § 278g-1(e)(8); 10 U.S.C. § 4144; 42 U.S.C. § 7381c-3.

^[48] Thakur v. Trump, No. 25-4249, slip op. at 24-30 (9th Cir. May 26, 2026), available at https://cdn.ca9.uscourts.gov/datastore/opinions/2026/05/26/25-4249.pdf.

^[49] 2 C.F.R. § 200.340(a)(4) (2026).

^[50] 91 Fed. Reg. at 32,258-59 (proposed 2 C.F.R. § 200.340(a)(2), (b)).

^[51] Exec. Order No. 14,332, §§ 5-6, 90 Fed. Reg. 38,929, 38,931-32 (Aug. 12, 2025).

^[52] A current controversy at the U.S. Patent and Trademark Office illustrates the danger. Congress created inter partes review as a statutory mechanism for reconsidering issued patents, but also gave the Director broad institution discretion and sharply limited judicial review of institution decisions. The USPTO has recently relied on that discretion to deny large numbers of petitions under a newly developed “settled expectations” doctrine, often based principally on patent age, substantially reducing access to the statutory review mechanism. The Federal Circuit has treated statutory-authority challenges to such denials as generally unreviewable, producing mandamus litigation and a pending petition for certiorari. See 35 U.S.C. §§ 314(a), 314(d); Petition for a Writ of Certiorari, Google LLC v. VirtaMove Corp., No. 25-1230, at 3-6, 20-27 (U.S. filed Apr. 27, 2026), available at https://www.supremecourt.gov/DocketPDF/25/25-1230/405355/20260427110315509_Google%20v.%20Virtamove%20Cert%20Petition.pdf.

^[53] President & Fellows of Harvard Coll. v. U.S. Dep’t of Health & Human Servs., Nos. 25-cv-11048-ADB & 25-cv-10910-ADB, slip op. at 1-18 (D. Mass. Sept. 3, 2025), available at https://www.harvard.edu/federal-lawsuits/2025/09/03/memorandum-and-order/ (describing the nearly $2.2 billion freeze, subsequent terminations, and government demands).

^[54] Id. at 15-18 (discussing termination letters invoking 2 C.F.R. § 200.340(a)(4) and current agency priorities).

^[55] Id. at 60-65 (holding that agencies could not bypass Title VI’s prescribed procedures).

^[56] Id. at 65-73 (finding failures to connect the terminations to the stated objective, consider the importance of the affected research and reliance interests, or supply a reasoned explanation).

^[57] U.S. Const. art. I, § 9, cl. 7; 31 U.S.C. § 1301(a); Train v. City of New York, 420 U.S. 35, 44-47 (1975).

^[58] Impoundment Control Act of 1974, 2 U.S.C. §§ 681-688; 31 U.S.C. § 1301(a); see also U.S. Government Accountability Office, B-337203, supra note 25.

^[59] Amy Solomon & Betsy Pearl, DOJ Funding Cuts: More Than 550 Organizations Impacted, New Analysis Finds, Council on Criminal Justice (May 2025), available at https://counciloncj.org/doj-funding-cuts-more-than-550-organizations-impacted-new-analysis-finds/ (identifying 373 terminated awards to 221 organizations); Vera Institute of Justice, Vera Institute of Justice Targeted by Department of Justice Funding Cuts (Apr. 9, 2025), available at https://www.vera.org/newsroom/vera-institute-of-justice-targeted-by-department-of-justice-funding-cuts.

^[60] Solomon & Pearl, supra note 59; Layoffs, Closures and Gaps in Oversight Expected After Hundreds of DOJ Grants Are Canceled, Associated Press (Apr. 25, 2025), available at https://apnews.com/article/18d5cdec6bdbb8472cd1e080e5e4e5ef.

^[61] Pub. L. No. 119-21, 139 Stat. 72 (2025) (appropriating extraordinary sums for immigration and border enforcement); see H.R. 1, 119th Cong. (2025), Summary, Congress.gov, available at https://www.congress.gov/bill/119th-congress/house-bill/1/summary.

^[62] See Democracy Forward, Restoring Funding for ABA Services That Support Domestic and Sexual Violence Survivors (updated July 18, 2025), available at https://democracyforward.org/work/legal/restoring-funding-for-aba-services-that-support-domestic-and-sexual-violence-survivors/; Solomon & Pearl, supra note 59.

^[63] Vera Inst. of Justice, Inc. v. U.S. Dep’t of Justice, No. 25-cv-1643, slip op. at 1-3, 33-35 (D.D.C. July 7, 2025), available at https://cases.justia.com/federal/district-courts/district-of-columbia/dcdce/1%3A2025cv01643/280817/47/0.pdf?ts=1751968352; Federal Judge Dismisses Lawsuit Seeking to Stop DOJ Grant Cancellations, Associated Press (July 8, 2025), available at https://apnews.com/article/327796a0357136f244475603dc48f854.

^[64] Am. Bar Ass’n v. U.S. Dep’t of Justice, No. 25-cv-1263, slip op. at 1-18 (D.D.C. May 14, 2025), available at https://democracyforward.org/wp-content/uploads/2025/05/28-Mem.-Op.pdf; Democracy Forward, Restoring Funding for ABA Services That Support Domestic and Sexual Violence Survivors (updated July 18, 2025), available at https://democracyforward.org/work/legal/restoring-funding-for-aba-services-that-support-domestic-and-sexual-violence-survivors/.

^[65] USAID Office of Inspector General, Oversight of USAID-Funded Humanitarian Assistance Programming Impacted by Staffing Reductions and Pause on Foreign Assistance (Feb. 10, 2025), available at https://oig.usaid.gov/sites/default/files/2025-02/USAID%20OIG%20-%20Oversight%20of%20USAID-Funded%20Humanitarian%20Assistance%20Programming%20021025.pdf.

^[66] D. M. Cavalcanti et al., Evaluating the Impact of Two Decades of USAID Interventions and Projecting the Effects of Defunding on Mortality up to 2030, 406 Lancet 283 (2025), available at https://www.thelancet.com/article/S0140-6736%2825%2901186-9/fulltext (projecting more than 14 million additional deaths by 2030 if deep cuts and dismantling persisted).

^[67] Cavalcanti et al., supra note 66.

^[68] Amnesty International, Syria: New Urgency to End Unlawful Detention System Holding Tens of Thousands of People Following Islamic State Defeat (May 21, 2025), available at https://www.amnesty.org/en/latest/news/2025/05/syria-new-urgency-to-end-unlawful-detention-system-holding-tens-of-thousands-of-people-following-islamic-state-defeat/ (describing the absence of approximately 300 U.S.-funded staff, looting of warehouses, disrupted Iraqi repatriations, and terminated projects at Roj).

^[69] Id. (describing warnings concerning unrest, smuggling, escapes, ISIS recruitment, and obstacles to repatriation and reintegration).

^[70] 91 Fed. Reg. at 32,250 (proposed 2 C.F.R. § 200.206(b)(2)(vii)).

^[71] The drug-patent debate provides an illustration. I-MAK, a pro-patient advocacy group, has published studies using searches extending beyond patents listed in FDA’s Orange Book to identify the broader patent landscape surrounding particular medicines. A later USPTO/FDA study used a narrower methodology focused principally on Orange Book-listed patents and the period from initial approval to generic launch. The agency expressly stated that it did not specifically assess I-MAK’s data or analysis. Yet commentators have cited the USPTO report as having “discredited” I-MAK or failed to “replicate” its findings. A study using a different universe of records to answer a different question is not a failed replication, and disagreement about the appropriate methodology does not itself render either study misconduct or “questionable.” See I-MAK, Drug Patent Book: Background & Methods, available at https://www.i-mak.org/patent-methods/; U.S. Patent & Trademark Office, Drug Patent and Exclusivity Study Report 3-7, 88-89 (2024), available at https://www.uspto.gov/sites/default/files/documents/USPTO_Drug_Patent_and_Exclusivity_Study_Report.pdf; Adam Mossoff, USPTO Confirms Unreliable Patent Numbers by I-MAK in Drug Pricing Debate, Hudson Institute (Dec. 10, 2024), available at https://www.hudson.org/drug-policy/uspto-confirms-unreliable-patent-numbers-i-mak-drug-pricing-debate-adam-mossoff.

^[72] 91 Fed. Reg. at 32,250 (proposed 2 C.F.R. § 200.206(b)(2)(vii)(D)).

^[73] 91 Fed. Reg. at 32,249 (proposed 2 C.F.R. § 200.205(b)(3)).

^[74] Pierre Azoulay, Daniel P. Gross & Bhaven N. Sampat, Indirect Cost Recovery in U.S. Innovation Policy: History, Evidence, and Avenues for Reform, NBER Working Paper No. 33627, at 1, 8-12, 28-30 (Mar. 2025, rev. June 2025), available at https://www.nber.org/papers/w33627.

^[75] Dana Brown, A Public Option for Pharmaceutical R&D (2026), available at https://cdn.vanderbilt.edu/vu-URL/wp-content/uploads/sites/412/2026/01/30174311/A-Public-Option-for-Pharmaceutical-RD.pdf; Ameet Sarpatwari, Dana Brown & Aaron S. Kesselheim, Development of a National Public Pharmaceutical Research and Development Institute, 48 J.L. Med. & Ethics 225 (2020), available at https://journals.sagepub.com/doi/10.1177/1073110520917023.

^[76] Thomas W. Krause, Publicly-Funded Drug Development—An Idea Whose Time Has Come (Substack June 23, 2026), available at https://krauseonpatents.substack.com/p/publicly-funded-drug-development.

Attaching it directly below, and also cutting and pasting (below the infographic) it for ease of reading:

Letter To Senator Rick Scott Re Blanche Nomination

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July 14, 2026

The Honorable Rick Scott
United States Senate
110 Hart Senate Office Building
Washington, DC 20510

Re: Opposition to Todd Blanche’s Nomination for Attorney General

Dear Senator Scott:

I am writing as a Florida resident to urge you to vote against Todd Blanche’s confirmation as attorney general.

I spent many years at the United States Patent and Trademark Office working closely with brilliant and dedicated Department of Justice lawyers on high-profile cases, including cases before the Supreme Court, as well as on more routine matters. That experience instilled in me enormous respect for the Department – for the quality of its lawyers, its professional traditions, and its commitment to representing the United States rather than the personal interests of any president.

Through the abandonment of the Eric Adams prosecution, the pursuit of individuals publicly identified by President Trump as enemies, the use of threatened criminal charges to pressure state officials over the administration of the coming election, the unexplained favorable treatment afforded Ghislaine Maxwell, the hindering of New Mexico’s investigation into alleged crimes at Epstein’s Zorro Ranch, and the sham settlement of the President’s lawsuit against the IRS, Mr. Blanche has shown himself incapable of exercising independent judgment or serving the American people. Each of those episodes should independently disqualify him from serving as attorney general.

Even more troubling is the long-term damage he has caused to the Department as a professional institution, which I outline briefly below.

First, experienced career attorneys have departed in extraordinary numbers, taking with them decades of accumulated judgment, expertise, and institutional memory. Some left because the Department’s leadership made continued service professionally or ethically untenable. Others were driven out – including prosecutors fired or demoted simply because they had carried out their assigned responsibility to prosecute participants in the January 6 attack. More than 1,200 former Department employees have now written to the Senate opposing Mr. Blanche’s nomination and warning that his attacks on the apolitical workforce have impaired the Department’s ability to protect public safety, civil rights, and national security. It may take decades for the Department to recover from this loss of talent and the climate of fear created among those who remain. (Letter from former DOJ Employees: https://www.thejusticeconnection.org/pdf/letter-from-doj-alumni-on-todd-blanche-ag-nomination.pdf.)

Second, the Department is no longer credible in court, as numerous judges have noted in their decisions. One has only to read the Department’s Rule 62.1 motion in the White House Ballroom litigation – which reads at times more like one of President Trump’s Truth Social posts than a court pleading – to see how far its professional standards have fallen. (Defendants’ Rule 62.1 Motion: https://storage.courtlistener.com/recap/gov.uscourts.dcd.287645/gov.uscourts.dcd.287645.79.0.pdf.)

Even more troubling are the judicial rebukes arising from the President’s IRS settlement and the $1.776 billion “anti-weaponization” fund. Judge Leonie Brinkema gave the Department a simple way to end litigation over the fund: have Todd Blanche and other responsible officials state under penalty of perjury that the fund would not proceed in any form or under another name. The Department refused, arguing that Blanche’s statement to Congress and representations by government lawyers in pleadings and open court – already subject to Rule 11 and other professional obligations – should be enough. Judge Brinkema nevertheless declined to take the Department at its word. She emphasized Blanche’s refusal to rescind the memorandum establishing the fund and concluded that the Department’s unsworn assurances lacked the necessary “degree of trustworthiness.” She therefore kept the case alive and allowed discovery to proceed. That a federal judge would require testimony under oath before accepting the word of the acting attorney general and the Department of Justice is a remarkable measure of how thoroughly their credibility has deteriorated. (Judge Brinkema’s Order: https://storage.courtlistener.com/recap/gov.uscourts.vaed.596617/gov.uscourts.vaed.596617.96.0.pdf.)

Judge Kathleen Williams has now issued an equally devastating order in the underlying IRS case. She concluded that the President’s lawsuit was brought for an improper purpose – to obtain judicial legitimacy for a purported settlement that had “no viable basis in law or fact.” She noted that the settlement created the $1.776 billion fund; that Blanche signed a sweeping Release Order protecting the President, his family, his companies, and affiliates from current or possible claims; that Blanche did not recuse himself despite his prior representation of the President; and that the failure to address the constitutional implications of benefits flowing to the President was a “glaring omission.” (Order on Sanctions: https://democracyforward.org/wp-content/uploads/2026/07/Trump-v-IRS-106-Order-on-Sanctions.pdf.)

Third, the Department has repeatedly shown itself willing to frustrate the judicial process by failing to preserve records or withholding material that should be disclosed. Former CIA Director John Brennan has taken the extraordinary step of asking a federal court to order the Department to preserve its own records, citing disappearing Signal messages, deleted official communications, failures to preserve discoverable material, and repeated disregard of discovery obligations. (Complaint: https://storage.courtlistener.com/recap/gov.uscourts.dcd.294102/gov.uscourts.dcd.294102.1.0.pdf.)

The same disregard for legal obligations is evident in the Department’s handling of the Epstein files: its early promises of disclosure; its July 2025 memorandum claiming transparency while declaring that no further disclosure was warranted; its continued improper redactions; and its withholding of millions of pages that Congress has expressly required it to release. (July 2025 Memorandum: https://www.justice.gov/opa/media/1407001/dl.)

In Phang v. Blanche, the Department continues to seek more time and further stays even though it has had nearly seven months since enactment of the disclosure law to identify a coherent legal basis for withholding the material. Judge Emmet Sullivan found that Ms. Phang was likely to prevail and ordered the Department to remove specified redactions, produce the redaction log required by Congress, or establish good cause. The Department produced no documents. Its July 2 submission offered no convincing justification for the continued withholding and again sought a stay to facilitate an appeal. (Defendant’s July 2, 2026 Response: https://storage.courtlistener.com/recap/gov.uscourts.dcd.291779/gov.uscourts.dcd.291779.19.0.pdf.)

In 2019, following Jeffrey Epstein’s death, you said that his victims “deserved an opportunity for justice” and that his death had denied them that opportunity. I hope you will apply that same principle now. The Department’s continued resistance to disclosure once again places political and personal interests ahead of the victims’ and the public’s legitimate demand for truth and accountability.

The deepest injury here is not any single questionable prosecution, dismissal, accommodation, or court filing. It is the lasting destruction of the Justice Department’s professional culture, credibility, institutional memory, and capacity for independent legal judgment. Mr. Blanche has helped lead that destruction.

When the Senate considers a nominee who has not previously held the office, a senator may hope that the nominee will rise to its responsibilities. There is no such uncertainty here. Mr. Blanche has been serving as acting attorney general, and the Senate can judge him by what he has already done. His record shows that he will subordinate the Department’s independence, professional standards, and legal obligations to the wishes and interests of the President.

If American democracy survives this administration, history will not look kindly on those who stood by while the Department of Justice was turned into an instrument of personal loyalty, political retaliation, and self-dealing. There are votes on which reasonable people can disagree. A vote to confirm Todd Blanche as attorney general is different. It would be a knowing endorsement of the damage he has already inflicted on the Department and of its continued use against the institutions and people it exists to serve.

I urge you to stand with the rule of law, the integrity of the Justice Department, and the people of the United States by voting no.

Sincerely,

Thomas W. Krause