By Kevin E. Noonan --
Biotech has met its Benson in the Court's Prometheus decision. Before considering what can be done, it is prudent to consider the implications of this decision (and the previous decade of Supreme Court decisions on patent law).
It is now clear that the only patent law that matters is Supreme Court law. In decision after decision, the Court has chosen to ignore thirty years of Federal Circuit precedent in favor of its decisions from thirty, sixty, or over a hundred years ago. Despite sentiments (dicta, to be accurate) from Bilski v. Kappos regarding the dangers of imposing horse-and-buggy thinking about technology to the 21st Century, the Court seems happy to do so.
This creates problems for American innovation because of the increased complexity of modern technology compared to those halcyon days of plows and cotton gins. Those devices needed patent protection because they were easily reverse-engineered and thus could be freely copied without the ability to stop the copyist without a patent. Today's inventions, particularly in the biotechnology sphere, are often the opposite -- harder to reverse engineer, and capable, with a modicum of effort, of being made more so.
The reason that, by and large, the efforts necessary to rely less on patent protection have not been made are many-fold, but relate in large part to the fruitful cooperation between academic science and biotech startups that for a generation has transferred technology created in universities into useful (and profitable) products. These have included true "wonder drugs" such as human growth hormone, interferon, and insulin, as well as a wealth of research tools that have made it possible to perform screening of small molecule drugs much more easily, cheaply, and humanely. And in the process, the money American taxpayers have contributed to university research has been recompensed by licensing fees (and commercially available drugs), rather than providing no return on that investment following the disclosure of such research in scientific publications that academic scientists rightly still believe are their principle stock in trade.
But the current spate of Supreme Court decisions has threatened this balance, because in almost every case the Court has seen fit either to make continued viability of various categories and types of patents uncertain (reversing a generation of efforts by the Federal Circuit to increase certainty in patent law, pursuant to Congressional mandate) or to "upset the settled expectations" of patent holders. Under these circumstances, investors can be expected to be less ready to choose already risky biotechnology inventions, where return on investment of even a successful product may be vitiated by the next decision of the Court.
The current trend is also bad for the Federal Circuit, whose jurisprudence is threatened to be relevant only at the margins. The Federal Circuit did yeoman's work in harmonizing U.S. patent law from the patchwork of regional circuit differences into a (relatively) cohesive whole, with increasing business certainty the explicit goal. As a consequence, the first 15 years of the CAFC's existence saw a large increase in technology-driven companies in America, from Genentech, Amgen, Genzyme, and Biogen in biotechnology to Cisco, Intel, Microsoft, and Apple in the electronics arena. While these different industries relied to different extents on patent protection, the availability of patents to protect innovation had a beneficial effect on technological innovation in this country unmatched in the centuries before.
Another entity with diminished effects on patent policy is the Administration (or, perhaps, just this Administration), where for the second time in less than a year, the Supreme Court expressly disregarded the views of the Solicitor General in rendering its decision. While the earlier instance, in Stanford v. Roche, may have been credited to the subject matter (statutory interpretation of the Bayh-Dole Act) and the involvement of the government in being the presumptive assignee of Federally funded research (and thus less of a disinterested party), here the Court expressly rejected the considered views of the Executive, presumably informed by the experience of the U.S. Patent and Trademark Office. While it is easy to appreciate why the government would prefer to utilize other sections of the patent statute to assess claims like the ones in Prometheus, the Court's decision has made it more difficult to administer the patent laws fairly and even-handedly, in view of the "we know what's patentable when we see it" nature of this and several other of the Court's decisions.
It is also clear that the Court has little time for the specifics of patent law generally, not surprising from a Court who characterized obviousness law as "gobbledygook" not so many years ago. The problem with this approach, and the "totality of the circumstances" approach in general, is that it makes patent law even more uncertain in all respects: from the increased likelihood of the variable application of patentability standards during patent prosecution to the likelihood that a judge or jury will be able to impose their own subjective beliefs on whether something should or should not be protected by patent.
In an interesting departure from its recent denigration of the efforts of the legal academy, the Court also signaled its willingness to credit their theories of what drives and sustains innovation against the arguments, based on actual experience, from groups and individuals who have created companies and been involved in innovation in the biotechnology industry. And the Court seems equally ready to be influenced by the consumers of innovation, such as amicus the American Medical Association, who understandably wish to have the maximum freedom to have their patients benefit from new technology (and the minimum interference from patent holders who would reduce their opportunities to profit therefrom).
Finally, the true villians of the decision are clearly patent drafters, whose efforts the Court expressly held out for disdain if not contempt; its precedent "warn[s] us against interpreting patent statutes in ways that make patent eligibility 'depend simply on the draftsman's art' without reference to the 'principles underlying the prohibition against patents for [natural laws].'" This analytical principle is in direct conflict with the patent statute, of course, which requires claims that set forth the "metes and bounds" of the invention and indeed are the legal description of the patent grant. Not to be bothered with these niceties, the Court is more than happy to impose its own (and by extension, any judge, jury or patent examiner's) subjective understanding of the underlying "principles" at stake in assessing whether a technology should be patented. But the reality is that claims will (by statute and practical necessity) define whatever scope of patent protection may remain available, and suggests that only by accepting the Court's challenge can patent claim drafters minimize the negative impact of this and other decisions of the Court. Suggestions on how that may be done will be in another post.