By Kevin E. Noonan --
Any observer of the interaction between the Federal Circuit and the Supreme Court over the past decade has recognized that the Court has become increasingly critical of the Federal Circuit's patent jurisprudence and of patents and patent law in general. This attitude approaches disdain in many instances, for example when Justice Kagan declares that the U.S. Patent and Trademark Office is "patent happy," or when Justice Alito says in a published opinion that "[t]he Federal Circuit's analysis fundamentally misunderstands what it means to infringe a method patent," or when the Chief Justice states in open court "Well, [appellate courts] don't have a choice, right? They can't say, I don't like the Supreme Court rule so I'm not going to apply it, other than the Federal Circuit"" (to chuckles all around). (This situation must be particularly galling to the Federal Circuit, tasked as it is with trying to apply the Court's "less than pellucid" patent law opinions.)
The consequence of this tussle between the courts is that 30 years of relative certainty has evaporated in seemingly an instant. An honest assessment of the current level of certainty in patent law is that there is much more uncertainty concerning eligibility and enforceability of issued patents; eligibility and patentability of pending applications; and the value of patents for licensing, which negatively impacts, inter alia, technology transfer from universities and other research institutions by suppressing the bargaining power of innovators when negotiating with corporations better positioned to bring useful products to market for the benefit of the populace. And thus the reason why the Founders gave Congress the power to grant patents ("to Promote . . . Progress of . . . the Useful Arts") is thwarted for apparently no good purpose.
One strand of the Court's thinking is clear: relying on legal academic theories having little empirical support (like the "Tragedy of the Anticommons"), the Court believes that patents are like the various items of furniture in "Goldilocks": you can have too much patenting or too little patenting, as stated in the two most recent decisions related to biotech and pharma patent law:
"As we have recognized before, patent protection strikes a delicate balance between creating 'incentives that lead to creation, invention, and discovery' and 'imped[ing] the flow of information that might permit, indeed spur, invention.'"
Justice Thomas, Myriad
"Patent protection is, after all, a two-edged sword. On the one hand, the promise of exclusive rights provides monetary incentives that lead to creation, invention, and discovery. On the other hand, that very exclusivity can impede the flow of information that might permit, indeed spur, invention . . ."
Justice Breyer, Mayo v. Prometheus
And, of course, the only people who know the correct balance are the members of the Court; this didn't work with regard to pornography and it certainly does not work for patent law precisely because it is certainty-destroying (besides being impractical). Indeed, it only makes sense if the Court purposefully wishes to return to the days when Justice Jackson could correctly state that "the only valid patent is one which this Court has not been able to get its hands on." Jungerson v. Ostby & Barton Co., 335 U.S. 560, 572 (1949) (Jackson, J., dissenting)
The Court's antipathy to patents, patent law and the Federal Circuit ultimately extends (intentionally or not) to how Congress has exercised the patent power. For example, the Court seems to think that "mere" discovery is not enough, despite the explicit recitation in the statute that "[w]hosoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title." 35 U.S.C. § 101. And unlike earlier embodiments of the Court, there is little acknowledgement of or compliance with Congress's intent that "anything under the sun made by man" should be patent-eligible. This raises the question of why this is so; after all, the Court is perfectly aware of the limits of its Constitutional role, as set forth by the Chief Justice in his opinion affirming Congress's power to implement the various aspects of "Obamacare" (National Federation of Independent Business v. Sebelius, 567 U.S. ___ (2012)):
Our permissive reading of these powers is explained in part by a general reticence to invalidate the acts of the Nation's elected leaders. "Proper respect for a co-ordinate branch of the government" requires that we strike down an Act of Congress only if "the lack of constitutional authority to pass [the] act in question is clearly demonstrated." United States v. Harris . . . . Members of this Court are vested with the authority to interpret the law; we possess neither the expertise nor the prerogative to make policy judgments. Those decisions are entrusted to our Nation's elected leaders, who can be thrown out of office if the people disagree with them. It is not our job to protect the people from the consequences of their political choices.
Perhaps it is this simple: in rendering decisions on Obamacare, or the "milk" cases familiar to any first year law student studying the Commerce Clause, the Court is determining whether Congress's actions fall within the scope of an enumerated power. The right to grant patents, in contrast, is an enumerated power of Congress:
The Congress shall have the power to promote the Progress of Science and useful Arts, by securing for limited times to Authors and Inventors the exclusive Rights to their respective writings and Discoveries. U.S. Const. art. I, sec. 8, cl. 8.
And maybe the Court feels it has a responsibility to scrutinize more carefully how Congress implements this power (including how the Patent Office exercises and the Federal Circuit interprets this power). The plenary effect of this review has led us to the present state of the law; again as stated by Justice Jackson:
Reversal by a higher court is not proof that justice is thereby better done. There is no doubt that if there were a super-Supreme Court, a substantial proportion of our reversals of state courts would also be reversed. We are not final because we are infallible, but we are infallible only because we are final. Brown v. Allen, 344 U.S. 443, 540 (1953) (concurring)
It is important to keep this finality in mind when thinking about how best to address the further reaches of the Court's recent patent jurisprudence, to try to reestablish some contact between the Constitution's mandate that the patent laws promote progress and the Court's assiduous efforts to the contrary.
Taking a page from Hippocrates, it is certainly the case that whatever is done must not make the situation worse. When thinking about actions that Congress could take, the wrong approach could lead precisely to this unwanted outcome, because nothing short of a Constitutional amendment could reverse a decision negating an Act of Congress that attempted to force the Court to overrule its recent precedent. And that, of course, will never happen.
History can in this instance be a guide, and one relevant historical fact is how P.J. Federico and Giles Rich wrote the portion of the 1952 Patent Act codified as Section 103, which introduced obviousness as a statutory requirement for patentability. The concept of obviousness (stated in other terms) had been introduced into U.S. patent law by the Court in Hotchkiss v. Greenwood (1850), where the Court said:
Unless more ingenuity and skill in applying the old method . . . were required in the application of it to [the new product of the method] than were possessed by an ordinary mechanic acquainted with the business, there was an absence of that degree of skill and ingenuity which constitute essential elements of every invention. In other words, the improvement is the work of the skillful mechanic, not that of the inventor.
This language is frighteningly reminiscent of language in the Court's recent Mayo and Myriad decisions, insofar as it renders patentability categorical: if the basis for obtaining a patent is on the existence vel non of an inventor, this is not so far from the current Court's categorical decisions about the existence of an invention.
Messrs. Rich and Federico avoided this outcome by directing the Court's attention to the underlying basis for their unease about "inventions" that were the product of efforts by a mere mechanic, by drafting a requirement that the claims not be obvious (a determination based on the content of the prior art, albeit still not providing the clearest basis for making a decision on patentability). That Section 103's drafters were successful can be ascertained from the Court's first post-1952 decision on this new part of the statute:
In [Section] 103 of the 1952 Patent Act Congress added the statutory nonobvious subject matter requirement, originally expounded in Hotchkiss, which merely codified judicial precedents requiring a comparison of the subject matter sought to be patented and the prior art, tying patentable inventions to advances in the art. Although 103 places emphasis upon inquiries into obviousness, rather than into "invention," the general level of innovation necessary to sustain patentability remains unchanged under the 1952 Act.
Graham v. John Deere, 383 U.S. 1 (1966). With these precedents in mind there may be a way to find a middle course that can accommodate the Court's needs to cabin the patent right and innovators' needs for certainty in patent law. The first area is in "natural products" patenting, where the Court (for the first time) extended a preclusion against patenting for compounds that were "merely" isolated. Although the Court ostensibly rendered an extremely limited decision ("We merely hold that genes and the information they encode are not patent eligible under § 101 simply because they have been isolated from the surrounding genetic material") that hasn't been how it has been interpreted. The Court's language "suggests" (or "mandates") interpretations putting the patent-eligibility of previously patent-eligible subject matter ("merely" isolated antibiotics, antibodies, vitamins, etc.) at risk. This can be better appreciated by the effect of the PTO's decision on the patent-eligibility of 1355 (small molecule) drugs approved by the FDA between 1981-2010, wherein about 75% of antibacterial drugs and almost 80% of small molecule anticancer drugs were natural products or derivatives of natural products and would have been unpatentable under the Office's first guidance implementing the Court's decisions. This cannot be what the Court intended, and it is up to the patent community to help remedy what the Court has recently wrought.
One way to do so would be to include a new section 35 U.S.C. § 100(j):
The term "composition of matter" as used herein encompasses a chemical or other product found or derived from nature provided that the composition has been changed from its natural state in its structure, function, purity, or use.
This language might be sufficient to mollify the Court's concerns about patenting natural products, because it parallels the Court's own language in Chakrabarty, wherein the standard for patent-eligibility was that the invention is "a product of human ingenuity 'having a distinctive name, character [and] use,'" Hartranft v. Wiegmann, 121 U.S. 609 (1887). This is provided, of course, that this Court is as willing as the Court in 1966 to accept that Congress had within its enumerated power the right to make this determination.
The other item of the Court's jurisprudence that has "disturbed the settled expectations" of the patent community is the Mayo v. Prometheus decision. Containing an explanation of its reasoning less straightforward than the Court's decision in Myriad, the Court conflated Sections 101, 102 and 103 of the Patent Act in reaching its decision and seemingly reintroduced the inchoate concept of "inventiveness" into patent law. More problematically, the Court's analysis seemed to contravene the holding in Diamond v. Diehr (1981) that claims must be considered "as a whole." And failing to hold true to the Diehr standard has permitted district courts, and even the Federal Circuit to declare claims invalid under Section 101 based on a determination that a claim consists of a "natural law, physical phenomenon or abstract idea" plus nothing "more" than what are "routine, conventional and well-understood" applications of the natural laws or uses of the natural products. See, e.g., PerkinElmer, Inc. v. Intema Ltd.; Ariosa v. Sequenom; Genetic Technologies Ltd. v. Labcorp; and Univ Utah Res. Found. v. Ambry Genetics (Myriad III).
This situation leads to the second proposal, for a new section 35 U.S.C. § 282(d):
When assessing a defense to infringement that a patent claim does not satisfy the requirements of §§ 101, 102 or 103 of this chapter, the invention must be considered "as a whole" and not by its individual limitations. The conventionality of individual limitations shall not be the basis for a determination that a claim is invalid under said §§ 101, 102 or 103.
Additional sections of the statute, or rules promulgated by the Office, may be needed to ensure the same standard is applied during patent prosecution. But, like the proposal for Section 101, this change in the law finds support, at least, under Diehr and thus may pass muster at the Court should they be challenged.
If the past decade has shown the patent community nothing else, it is that innovation cannot be held hostage to political or doctrinaire whims of any branch of government. The idea in 1982 that U.S. patent law needed consistency was a good one; it failed only because it did not recognize that the biggest source of inconsistency would be the Supreme Court. It is a lesson that needs to be well learned, accommodated and its outcome overcome if the U.S. is to retain its lead in global innovation and the economic benefits arising from this innovation.
Note: This post was adapted from a panel discussion at the Spring 2015 BIO IPCC meeting held on April 15-17 in St. Louis, MO.