US businesses deal with devastating effects of SCOTUS decisions; support grows for subject matter reform bill 16 May 17
The ongoing uncertainty over what constitutes patent eligible subject matter has led many to voice their concerns over the long-term implications for US business of failing to get patent protection for their inventions. According to recent research, these worries are becoming reality as inventions that qualify for patent protection in Europe and Asia face the prospect of 101 rejections in the US.
In March, a paper by Adam Mossoff and Kevin Madigan from George Mason law school analysed a dataset of 1,400 patent applications, finding marked differences between patent eligibility in the US compared with Europe and China.
Adding to that growing discrepancy between the US and other major patent jurisdictions, a more recent paper from two private practice lawyers found that the Supreme Court’s decision in Mayo v Prometheus is having a significant effect on applications for medical diagnostic patents. The authors, Brian Amos and Alan Miller. from Amster, Rothstein & Ebenstein, looked at 31 Patent Cooperation Treaty (PCT) diagnostic applications and compared the fate of those filings in the US and Europe. While 30 of the 31 were allowed or pending (with no 101 rejection equivalent) in Europe, in the US just two had made it through, with the remaining 29 either abandoned or pending having received a 101 Mayo rejection. The Intellectual Property Watch website picked up on the paper and you can see its story here.
The Amos and Miller study is based on a small sample, but the degree to which applications have been rejected should still act as a wake-up call in the US and a sharp reminder that eligibility concerns are not all about business methods and software. To get a little more insight into how uncertainty around 101 is causing problems for various life sciences industries I got in touch with Hans Sauer, the deputy general counsel of the Biotechnology Industry Organisation (BIO). Sauer has become a familiar voice in recent years pointing out the dangers of various changes to the US patent system, including the threat to his organisation’s members from inter partes reviews (IPR). However, according to him, the parlous state of patent eligibility remains top of the list of concerns:
No subject of substantive patent law is raised and discussed more frequently by BIO member companies. Current jurisprudence in the area of patent-eligible subject matter is unstable, it creates unnecessary business uncertainty, and it is an astonishing anomaly in international patent law. There are biotechnologies for which it is now easier to get a patent in Europe and China than it is in the United States. When American biotech companies go to compete on the Chinese market, they will have to respect Chinese patents. When Chinese companies come to compete on the US market, it will be a free-for-all. This has real implications for US competitiveness in a field that was created and led by the United States.
Patentable subject matter is a core question of substantive patent law. This is not something better left to the courts or administrative agencies. The courts have been unable to identify the outer boundaries of the Supreme Court’s sweeping pronouncements. And the USPTO, however well intentioned, can only regulate around the margins. This question should really be owned by Congress.
I asked the USPTO for comment on how the agency can ensure medical diagnostic filings still qualify for patent protection, but I had not heard back by the time of posting this story. However, as Sauer’s comment made clear, there is a limit to what the agency can do — its hands are tied by judgments handed down by the Court of Appeals for the Federal Circuit and the Supreme Court. The decision last year by SCOTUS not to grant cert in Ariosa v Sequenom, involving a medical diagnostic grant which was ruled to be unpatentable under Mayo, means that many have given up hope of further direction from the courts; so that leaves Congress.
There is a sense now in DC patent circles that 101 reform is moving up the legislative agenda to sit above the kind of broad-based litigation changes proposed in the last Congress in the form of the Innovation Act (version two) and the Senate’s PATENT Act. Last week at a conference at Stanford University, legislative aides from Capitol Hill disclosed that patentable subject matter reform would be the first patent bill introduced in this Congress.
That was revealed in a tweet from Stanford Professor Mark Lemley who was at the event. In a follow-up email, Lemley told me that one of the staffers referred to possible 101 reform as a “narrow, targeted” bill rather than as being part of a broader reform effort. That said, there is always a chance that venue reform could be thrown into the mix depending on the Supreme Court’s decision in TC Heartland.
If legislators are looking for pointers on how 101 should be changed, the Intellectual Property Owners Association (IPO), the American Bar Association’s (ABA) IP section and the American Intellectual Property Law Association (AIPLA) have all released proposals including new draft language. That all have now done so is a clear reflection of the groundswell of support for 101 reform that has built up among patent owners and private practice lawyers. In recent years Congress has shown little interest in passing a subject matter reform bill, but that appears to be changing. As companies in sectors like medical diagnostics would probably all agree, a change can’t come soon enough. The US can only inflict so much harm on itself before permanent damage is done.
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