Biden’s Executive Order prompts the FTC and USPTO to take a closer look at AI

The widespread proliferation of AI, starting with the launch of ChatGPT in November 2022, has disrupted the global economy. The associated intellectual property, privacy, equality, and security risks have not gone unnoticed by the U.S. federal and state governments and their respective agencies. 

As covered in our prior Tech Talk blog post, President Biden issued a landmark Executive Order in October 2023 that advanced a coordinated, federal government-wide approach toward the safe and responsible development of AI. 

Progress towards implementing this approach has been made and continues to be made in 2024. More specifically, in the first quarter of 2024, the:

• Federal Trade Commission (“FTC”) announced the issue of compulsory production orders to five major technology companies that recently completed multibillion dollar investments in generative AI; and
• United States Patent and Trademark Office (“USPTO”) announced the publication of inventorship guidance and examples for AI-assisted inventions.

The FTC Compulsory Production Orders

On January 25, 2024, the Federal Trade Commission (“FTC”) issued compulsory production orders to Alphabet, Inc., Amazon.com, Inc., Anthropic PBC, Microsoft Corp., and OpenAI, Inc. pursuant to Section 6(b) of the Federal Trade Commission Act of 1914 Act (“Orders”). 

These five companies have been targeted by the FTC because of their involvement in the following major investments in generative AI (“Transactions”):

• Microsoft Corp. entered into the third phase of its long-term partnership with OpenAI, Inc. through a multiyear, multibillion dollar investment (announced here on January 23, 2023); 
• Amazon.com, Inc. formed a strategic partnership with Anthropic PBC, backed by a $4 billion dollar investment (announced here on September 25, 2023); and
• Alphabet, Inc. expanded its existing partnership with Anthropic PBC, by making a $2 billion dollar investment (announced here on November 8, 2023).

The Orders require the production of various information, documentation, and other material regarding these Transactions, including:

• the specific Transaction entered into by each company, including copies of the Transaction documentation and a description of the strategic rationale for the Transaction; 
• the practical implications of the specific Transaction entered into by each company, including decisions around new product releases, governance or oversight rights, and the topic of regular meetings;
• any analysis of the Transaction’s competitive impact, including information related to market share, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets;
• competition for AI inputs and resources, including the competitive dynamics regarding key products and services needed for generative AI; and
• information provided to any other domestic or foreign government entity in connection with any investigation, request for information, or other inquiry related to these five topics.

Each company has 45 days from the date they receive the Order to respond. The FTC will analyze the information produced in response to the Orders for the purposes of “building a better internal understanding of these relationships and their impact on the competitive landscape.” Stay tuned for our next Tech Talk blog post that will focus on these responses and the resulting analysis by the FTC.

The USPTO Inventorship Guidance and Examples for AI-Assisted Inventions

On February 12, 2024, the USPTO published guidance in the Federal Register to incentivize, protect, and encourage investment in innovations made possible through the use of AI, and to provide clarity on the patentability of AI-assisted inventions. 

In summary, the guidance makes it clear that AI-assisted inventions are not categorically unpatentable. Instead of considering whether or not the contributions of the AI system to an invention would rise to the same level of inventorship if such contributions were made by a human, the USPTO will focus on whether a human provided a “significant contribution” to the invention. In order to obtain patent protection, at least one human inventor who meets that requirement must be named on the application. This latest guidance builds on the existing inventorship legal framework, including the “significant contribution” test from the Federal Circuit’s 1998 Pannu case: Pannu v. Iolab Corp., 155 F.3d 1344 (Fed. Cir. 1998).¹ It is notable that the guidance does not require prospective patent applicants to disclose the use of AI in creating their invention.

The USPTO has indicated that they are developing additional guidance for practitioners using AI and updating existing eligibility guidance to better address AI inventions. Public input will be sought and in particular, the USPTO welcomes input on how AI impacts other aspects of patentability. A&O will closely monitor and report on in our next Tech Talk blog post, any public input regarding the additional guidance proposed by the USPTO.

Footnotes

¹ The Pannu factors include whether the inventor: (a) contributed in some significant manner to the conception or reduction to practice of the invention; (b) made a contribution to the claimed invention that is not insignificant in quality, when that contribution is measured against the dimension of the full invention; and (c) did more than merely explain to the real inventors well-known concepts and/or the current state of the art.