Patent Docs

The EFF is Patently Wrong

By Michael Borella --

The Electronic Frontier Foundation (EFF) is at it again, gaslighting the public in its ongoing crusade against patents.  While the EFF does perform some commendable work, mostly in the areas of individual privacy rights, its track record on patents amounts to little more than a hit job.  In particular, the EFF has few qualms with providing heavily slanted opinion pieces on patent policy and making statements that are misleading or outright wrong.  This is nothing new, unfortunately.

The EFF's latest screed covers Senator Tillis' recent proposed legislation to reform 35 U.S.C. § 101, but is full of falsehoods, deceptiveness, and bias.  It was written by Joe Mullin, a former journalist and current policy analyst for the EFF.  As far as I can tell, Mr. Mullin is not a patent attorney and has never practiced patent law.  His EFF job title is "Mark Cuban Chair to Eliminate Stupid Patents" (you can't make this stuff up), which pretty much says all you need to know about his positions.

So let's go through Mr. Mullin's article, line-by-line, categorizing each based on where it falls on a spectrum ranging from mostly true to deceptive to false.  Hint: very little he writes comes close to being mostly true.

"A recently introduced patent bill would authorize patents on abstract ideas just for including computer jargon . . ."

False.  Frankly, this statement is almost too vague to be meaningful.  But if Mr. Mullin is referring to just adding processors, memory, and the like to claims otherwise involving a business, mathematical, or mental process, the Tillis bill would still result in such inventions being unpatentable.

". . . and would even legalize the patenting of human genes."

Deceptive.  The Tillis bill would make unmodified human genes (e.g., those appearing naturally in the human body) unpatentable, but would allow patenting of genes that are "isolated, purified, enriched, or otherwise altered by human activity."  In other words, if you do something new and inventive with a human gene, then the result of labor by human hands might be patentable.

"The 'Patent Eligibility Restoration Act,' sponsored by Sen. Thom Tillis (R-NC), explicitly overrides some of the most important Supreme Court decisions of the past 15 years, and would tear down some of the public's only protections from the worst patent abuses."

False.  The public has many protections from those trying to unethically exploit the patent system that the Tillis bill would not touch.  Like the other parts of the patent statute that define additional requirements for patentability.

"Pro-patent maximalists are trying to label the Tillis bill as a 'consensus,' but it's nothing of the sort."

Deceptive.  And likely a straw man argument.  "Pro-patent maximalist" is a made up term that remains undefined and meaningless.  Therefore, it is irrelevant to attribute any particular viewpoint to this hypothetical group of people.

"We need EFF supporters to send a message to Congress that it isn't acceptable to allow patent trolls, or large patent-holders, to hold our technology hostage."

Deceptive.  Non-practicing entities (let's call them that rather than the pejorative term "trolls") and large patent holders do not hold technology hostage.  Anyone is permitted to file patent applications on inventions they wish to protect.  If granted, they have approximately 20 years to exclude others from practicing the invention in return for publicly disclosing the fruits of their labors.  This is a carefully-designed quid-pro-quo, not a hostage negotiation.

"Starting in the late 1990s, the U.S. Court of Appeals for the Federal Circuit essentially did away with any serious limits on what could be patented.  This court, the top patent appeals court in the U.S., allowed patents on anything that produced a 'useful result,' even when that result was just a number."

False.  Claims that are not directed to novel, non-obvious, and properly described inventions have been unpatentable since at least 1952 if not the earliest days of our republic.  In the 1990s, the Federal Circuit clarified that the broadly-drafted § 101 included certain types of business methods, thereby making such business methods patent-eligible.  But these inventions still needed to satisfy the other statutory requirements of patentability, which are indeed "serious limits" that prevent the patenting of just any useful result.

"This allowed for a period of more than a decade during which the U.S. Patent Office issued, and the courts enforced, all kinds of ridiculous patents."

Deceptive.  Again, a vacuous statement.  The USPTO has always issued patents that it should not and still does.  The USPTO also makes it unduly hard to obtain patents on legitimate inventions.  There is no such thing as a ridiculous patent, only patents that are valid and those that are invalid.  And making this determination requires more work than just reading the title or abstract.

"Several Supreme Court decisions eventually limited the power of bad patents."

Deceptive.  Another ill-defined characterization.  Yes, the Alice Corp. v. CLS Bank case, among others, made it harder to obtain certain types of patents, including vaguely-claimed business methods as well as many that represent legitimate technical inventions.

"Most importantly, the Supreme Court's 2014 Alice Corp. v. CLS Bank decision made a clear rule—just adding 'on a computer' to an abstract idea isn't enough to make it patentable."

False.  First of all, this is a poor characterization of Alice, as the rule is much more nuanced than that.  But the larger issue is that the Alice decision is notoriously vague, confusing and unworkable in practice.  Eight years later, the Federal Circuit judges still argue about what it means and how to interpret it -- and these are not minor disputes.  The distance between their positions on Alice can be measured in astronomical units.

"The Alice Corp. decision was not a panacea.  It did not eliminate the serious problem of patent trolls—that is, companies that have no products or services, but simply sue and threaten others over patents.  But it did put a big dent in the patent trolling business.  Vaguely worded software patents can still be used to extort money from software developers and small businesses.  But when those patents can be challenged in court, they now rarely survive."

Mostly True.  Well, finally something that Mr. Mullin and I almost agree about.  But why the negative view of software patents?  The modern economy is largely driven by software, so protecting the rights of innovators from copyists and efficient infringers should be important to a policy analyst.  Besides, is software inherently horrible?  Why not pick on inventions using plastic instead?

"That's been a huge benefit for individuals and small businesses.  Our 'Saved by Alice' project details the stories of several small businesses that managed to overcome unjustified patent troll demands because of the Alice Corp. precedent."

False.  A recent paper by Mark Lemley and Samantha Zyontz concludes that "[once in court] the entities most likely to lose their patents at this stage are not patent trolls but individual inventors and inventor-started companies."  Oops.  Further, the Saved by Alice project currently lists just nine stories -- this is anecdotal evidence at best and is not statistically significant.

"It's now been eight years since the Alice Corp. decision, and judges have thrown out hundreds of bad patents that couldn't stand up to this test.  It's likely that many more bad patents have been abandoned because their owners know they can't keep using them to threaten people.  The patents knocked down by Alice Corp. include [list]"

Deceptive.  Once more, whether a patent should be considered "bad" is subjective.  Further, Mr. Mullin complains about aggressive litigation tactics, which is a separate issue from whether a patent should or should not have been granted.

"Ten years ago, there weren't effective legal mechanisms to throw out the worst types of patents.  If someone targeted by a patent troll felt the patent was wrongly granted, they'd likely have to pay millions of dollars in patent litigation costs just to take their chances in front of a jury."

False.  Even ten years ago, few patent cases made it to jury trial.  Many cases were effectively decided by a judge's Markman ruling or on summary judgment.  And cases with poorly-drafted complaints could be dismissed on the pleadings.  Further, we are less than one month away from the ten-year anniversary of when the USPTO's inter partes review (IPR) proceedings began, a process that can be used to pause litigation while the USPTO reevaluates the validity of a patent.

"The Tillis bill will make it easier to use exactly the types of weak, overbroad patents that often threaten startups and small businesses."

False.  The bill's text is vague enough that it could end up being a codification of some of the worst aspects of Alice (the ones that Mr. Mullin probably likes), such as the USPTO refusing to grant patents on innovative technologies and courts invalidating patents based on nonsensical reasoning.

"Since the Alice Corp. decision, it's much harder to demand money using questionable patents.  That's why patent trolls, among others, don't like the decision, and would like to see a bill like this pass to override it.  But the Senate should not grant this wish."

Deceptive.  It is harder to stop infringement of any patent thanks to Alice, because that case and the Federal Circuit's expansion of the exclusions to eligibility made it easier to invalidate patents, period.  Overruling Alice would be a step in the right direction but the Tillis bill falls short.

"The Tillis bill encodes a version of the old rule that virtually any kind of 'business method' is worthy of a patent.  It explicitly allows for patents on 'non-technological economic, financial, business, social, cultural, or artistic process,' as long as those are embodied in a 'machine or manufacture.'  In other words, you can take basic human 'methods' of doing business, or even socializing, and just add a generic purpose computer (or another machine).  The Tillis bill does specify that the machine must do more than 'merely storing or executing,' but that's an unclear if not meaningless narrowing.  That will merely allow patent lawyers to avoid using those exact verbs—'storing' and 'executing'—when they're writing patents.

Deceptive.  If it were only that easy.  This provision of the bill is unclear and if passed as is, the courts (especially the Supreme Court) are likely to call upon stare decisis to keep things as they are under Alice.  In fact, I have yet to hear from a patent attorney who can describe what is or is not patentable based on the proposed language.

"Software patents are drafted by patent lawyers, who have come up with a lot more ways to describe manipulating data than just 'storing' and 'executing.'  To take just one of the stupid patents above, the first claim in the Ultramercial ad-watching patent described an Internet-based process of 'receiving' media products, 'selecting' a sponsor message, 'providing' the media to the public for sale, 'restricting' general access, 'facilitating' display of the ad, 'recording the transaction,' and also 'receiving payment.'"

Deceptive.  The term "stupid patent" is just as vacuous and overused as the term "bad patent".  If you don't like it, just say so.  There is much more to the Ultramercial claims, which should have been deemed patent-eligible as they materially change a technological process.  Also, all of the verbs that Mr. Mullin lists are not magic words that suddenly make unpatentable claims eligible for patenting.  If there is anything that we have learned over the eight years since Alice, it is that there is no rote procedure for drafting successful software claims when the evaluation of said claims is largely subjective.

"The Tillis bill even implicitly authorizes patents on a 'mental process,' saying the only kind that wouldn't be eligible is one that takes place 'solely in the human mind.'  That would seem to imply that even adding trivial steps like writing things down or communicating information could make a 'mental process' patentable."

Deceptive.  The problem with the current mental process exclusion to patentability is that literally everything that a computer does boils down to a handful of calculations performed by a microprocessor.  Theoretically, a human could perform these operations in their mind, though too slowly to be practically useful.  Nonetheless, mental process doctrine has been used to refuse applicants patents on otherwise innovative and complex software inventions.  Machine learning, a particularly critical competitive technology for the U.S., is often targeted in this fashion.

"If Congress passes the Patent Eligibility Restoration Act, it will destroy one of our best safeguards against abusive patents.  The Tillis bill will give an explicit green light to the most aggressive patent trolls, the funders of their litigation, and the attorneys who work for them.  They'll get more outrageous business method patents, and use them to demand payments from working software developers."

Deceptive.  As noted above, it is quite unclear whether the Tillis bill would have this impact, and aggressive litigation is an orthogonal issue with respect to patent eligibility.  Limiting the scope of what is patentable would make it harder for bad faith actors to disrupt software companies, but it would also prevent small companies from stopping the giants from stealing inventions.  The sword is double-edged, so let's be honest about how it cuts both ways.

Mr. Mullin goes on to criticize the bill's partial codification of Association for Molecular Pathology v. Myriad Genetics, in that it prevents unmodified natural DNA from being patented but allows the patenting of certain modifications.  I'll leave rebuttal of his claims in this area to my learned colleagues with advanced life sciences degrees (something that neither I nor Mr. Mullin have).

While everyone is entitled to their opinions and adversarial debate can be a healthy predecessor of progress, Mr. Mullin's unsupported claims, playing loose with the facts, and outright falsehoods are dangerous.  A layperson reading Mr. Mullin's article might assume that it is easy to get a broad patent granted on something that you did not invent.  This is not the case.

In the patent community, we have a duty to accurately represent the current state of the law, as well as the potential unintended consequences of proposed litigation.  In this way, policymakers can reach informed conclusions based on rational debate rather than sky-is-falling histrionics.  Taking advice from someone who touts being the "Chair to Eliminate Stupid Patents" is ill-advised if the goal is to avoid glaring bias.

Faux-Populist Patent Fantasies from The New York Times

By Kevin E. Noonan --

On a spring Saturday in a year when three major holidays -- Easter, Passover, and Ramadan -- coincided or overlapped, The New York Times Editorial Board decided it was time to announce that the "United States Patent and Trademark Office is in dire need of reform" ("Save America's Patent System," The New York Times, April 16, 2022).  Were that the case, the Times' rhetoric would deserve serious consideration; as it is, the Times continues a history of wrongheaded, faux populist rhetoric that comes to the entirely wrong conclusion.

This is evinced immediately by the principle basis for the sentiment regarding the patent system -- "Drugs cost too much!" -- and the basis for this conclusion:  the Initiative for Medicines, Access and Knowledge (I-MAK), a policy advocacy group dedicated to lowering drug prices by attacking the patent system.  The Times' reliance on I-MAK is particularly inopportune in light of recent events.  First, Professor Adam Mossoff of George Mason University's Antonin Scalia School of Law published a report for the Hudson Institute, entitled "Unreliable Data Have Infected the Policy Debates Over Drug Patents," that raised serious issues over the data I-MAK relies upon in making its policy arguments regarding the relationship between drug pricing and patents.  Professor Mossoff's critique was sufficiently provocative that Senator Thom Tillis wrote to I-MAK asking them to explain themselves (see E. McDermott, Tillis Wants More Info on I-MAK and Other Data Driving Anti-Patent Narratives Around Drug Pricing).  I-MAK responded, not with the information the Senator requested but with a reiteration of their rhetoric (see E. McDermott, I-MAK Defends Integrity of Its Patent Data in Response to Tillis Letter), prompting the Senator to ask for further clarification.  Professor Mossoff's analysis suggests the Senator will have a long wait for a satisfactory answer.

The Times also wrongfoots its example of so-called "patent evergreening" -- insulin manufacturers providing devices for administering doses of the drug.  The Times might have had a point if drug companies had taken off the market traditional insulin in vials and administered by patient injection with syringes -- but a simple search shows that this is not the case.  What these devices supply are ways for a patient to readily inject the correct dose, therefore improving compliance and avoiding dosage mishaps, which improves clinical outcomes and so is desirable to physicians because it avoids complications, thus reducing costs to payors such as insurance companies.  And it is the very "simplicity" of the technology that prevents any one company from dominating the injection device market -- after all, many different drugs besides insulin are delivered using such devices -- and that both warrant and require patent protection, lest knockoffs flood the marketplace.  This protects both American industry -- from whence exactly does the Times Editorial Board suppose such cheap knockoffs would arise? -- as well as providing the return on investment that regulatory approval costs require to incentivize development of products having such benefits for patients, their doctors, the insurance industry, and (because the bulk of drug costs are borne by the U.S. government one way or the other) taxpayers.  And should the Times Editorial Board wish to understand rather than grandstand about this issue, there is academic scholarship, such as Professor Erika Lietzen's work in "The 'Evergreening' Metaphor in Intellectual Property Scholarship" and "Distorted Drug Patents" that would provide much better information for their readers.

The editorial resurrects for a new age an idea current at the turn of the century -- that applicants could "wear down" examiners who would then grant patents "out of kindness, I suppose" -- which created the ill-considered Claims and Continuation rules changes promulgated by the Patent Office encouraged by scholarship untethered to the realities of the Office or patent prosecution (see "The 'Word' on the New Continuation Rules (from the USPTO Webcast)" -- Part I and Part II); they were enjoined by the District Court of East Virginia (see "Tafas v. Dudas; SmithKline Beecham Corp. v. Dudas (E.D. Va. 2007)") and invalidated six months later.  These limitations on prosecuting patents were particularly deleterious for the type of complicated technology common in the biotechnology and pharmaceutical arts, where patent examiners, who are typically not lawyers and, while having degrees and perhaps experience in the relevant technologies are not "cutting edge," understandably require time to absorb and apply patent law to claims for such complex inventions.  Ironically, it is the very diligent gatekeeping function that the Times Editorial Board alleges the examiners are not doing that causes the delays that require applicants to pursue lengthy prosecution efforts (all while the twenty years from filing term clock is ticking and applicants are losing time during which commercial products embodying their inventions have exclusivity).

Paradoxically, the very means by which Congress has provided a mechanism for eliminating "bad patents" (which frequently just means someone else's patent that prevents you from selling something you'd like to; see "The IPO's Marc Adler on Patent 'Quality'"), the Patent Trial and Appeal Board and the various flavors of post-grant review afforded challengers under the Leahy-Smith America Invents Act, come in for criticism, based on rules permitting the Board to refuse to institute a proceeding based on avoiding duplicate adjudications before the Office and in the courts (see M. Buttman, "Turning Away a Patent Challenge: The NHK-Fintiv Rule Explained," Bloomberg Law, March 3, 2021).  In doing so, the Editorial Board comes perilously close to accusing the former Director of instituting the rules improperly, and in the process (again ironically) illustrating why Justice Thomas and others advocate overturning the protections from libel suits by public officials in N.Y. Times v. Sullivan.

Because no one can always be wrong -- including the Times Editorial Board -- there are a few, albeit precious few, reasonable ideas in the editorial.  One is giving examiners more time for examination, which could "solve" the excess prosecution "problem" the editors perceive exists.  Another is having increased public participation, although the means for achieving this goal smacks of the same motivation that has made virologists out of financial advisors during the pandemic -- the idea that people who actually understand the process and issues are somehow suspect.  And the idea asserted by the Times Editorial Board that the PTO does not coordinate with other agencies like the FDA and FTC is just wrong and illustrated by an example not representative of the realities of patent prosecution, such as the duty of candor and the penalty for violating it called inequitable conduct.

Perhaps the editors will be motivated to look into some of the deficiencies of their reasoning and understanding of the real issues facing innovation that the patent system grapples with, like "efficient infringement" by large companies with the financial wherewithal to expropriate smaller companies' inventions (see "The Proper Role of the Federal Circuit" and "The ACLU, Working for the Man").  But this is unlikely because reality does not fit the editors preconceived notion of what "everybody knows" (see "The Road to Hell Is Paved with What Everybody Knows").  The editorial pages of the Times have a long history with this type of prejudice (see "Science Fiction in The New York Times"; "The Anti-Patent Beat Goes on at The New York Times"; "Anti-Patent ("Sullivan?") Malice by The New York Times"; "The Continuing Assault on Innovation at The New York Times"; "War is Peace, Freedom is Slavery, Ignorance is Strength"; "New York Times to Innovation: Drop Dead"; and "More Patent Nonsense from The New York Times") and frankly there is no reason to think it will change.  There is nothing in this latest editorial to the contrary.

Before You Complain About So-Called Bad Patents, Read This

By Michael Borella --

This weekend The New York Times published an editorial opinion entitled "Save America's Patent System."  It bemoans the purported prevalence of "bad patents" -- including "uninspiring tweaks" to existing products -- that supposedly undermine innovation.  This led the Times to call for radical patent reform.

The Times continues a trend that has been at play for well over a decade now.  The "bad patents" narrative raises its misguided head from time to time and lodges complaints about the supposed inequities of the patent system.  According to the Times, these include higher drug prices and extortion by patent assertion entities.

Perhaps ironically, the Times does not identify any of these "bad" patents.  Every U.S. Patent has at least two unique numbers by which it can be differentiated from all others, but none of these are provided.  Therefore, it is unclear which patents the Times believes to be "bad."

Further, the Times does not go into any detail regarding how it determined the "badness" of these unidentified patents.  What part of the patents did the editorial board consider?  Did they ask a patent attorney for help?  Did they properly consider how the scope of the claimed invention might be construed?

If you think that you can just look at an issued patent and determine that it is "bad," think again.  All patents are required to be novel and non-obvious (among other requirements).  But the legal principles of novelty and non-obviousness are notoriously tricky, even for seasoned U.S. Patent and Trademark Office (USPTO) patent examiners, patent attorneys, and federal judges.

First of all, the claims of the patent define the invention.  These numbered paragraphs at the end of each patent are where you start.  All too often the popular press does little more than read the abstract of the patent and conclude that the patent is "bad."  But the abstract is required by the USPTO to be no more than 150 words and thus is almost always a high-level summarization of what is claimed.  Put another way, concluding that a patent is "bad" through a cursory reading of it is not unlike determining the guilt of a person accused of a crime by only considering their shoe size.

Instead, the claims must be construed.  Claim terms are given their ordinary and customary meaning (e.g., based on dictionary definitions or how the term is used in the relevant field).  Further, one must look to the specification of the patent to determine whether the inventors used any particular term in an unconventional fashion that would override its ordinary and customary meaning.  Also, one must look to the file history of the patent (a written record of back-and-forth arguments made between the patentee and the USPTO that led to the granting of the patent) to determine whether the patentee made representations that would further color the definition of the terms.  In some cases, testimony of the inventors or experts in the patent's field of technology may also be used to determine how the claims are to be interpreted.

As a consequence, rather than just glancing at the abstract, a drawing or two, or the claims themselves, the process for determining whether the claims are valid may require reviewing many hundreds of pages of documents.  Further, much of the patent statute has been heavily interpreted by the courts.  Thus, even after all of this material is reviewed, applying the law to the claims may involve additional review of a few dozen Supreme Court and Federal Circuit decisions.  This is a process that can take weeks.  And even after that, reasonable minds can differ.  The legal notion of non-obviousness is still somewhat subjective.

Furthermore, some of the most innovative ideas and products are obvious only when 20-20 hindsight is applied.  If you look at a patented invention and think "I could have done that!" slow down and think again about whether you could have come up with that idea only having the information available to the inventors at the time the application for this patent was filed.

Did the Times go through this process before complaining about "bad" patents?  It seems unlikely.

Nonetheless, the Times did get some things right.  It wrote that the USPTO has "devolved into a backwater office that large corporations game, politicians ignore and average citizens are wholly excluded from."  This is mostly correct.  The high cost of doing business with the USPTO (not to mention attorneys' fees) is prohibitive for most Americans.  And the economics do favor the companies with deep pockets who can persist through multiple rounds of examination.  And some patent assertion entities do act in bad faith, spamming lawsuits with the hope of recovering nuisance damages.

But this is not the whole story.  To be fair, the USPTO regularly issues patents that it probably should not.  But the USPTO also throws up arbitrary barriers to patenting solid inventions on the basis of dicey reasoning.

The quality of examination at the USPTO varies dramatically between art units and examiners.  Not all examiners are equally well-trained on the technology or the law.  Some seasoned examiners have 95% allowance rates and others allow less than 5% of their examined applications.  If an individual inventor or small business patentee finds themselves with a difficult examiner, they may lack the resources to conduct an extended prosecution or to appeal.  In some cases, the patentee will give up simply because it cannot afford to continue.

Also, once a patent is issued, the story is not over.  Since the passing of the America Invents Act in 2011, patents can be pulled back into the USPTO for further review.  Typically this occurs prior to or during litigation.  Also, the 2014 Alice Corp. v. CLS Bank decision from the Supreme Court has made it significantly easier to invalidate software patents on completely sketchy grounds.  As a result, litigation of even a patent reasonably believed to be valid is a very risky and expensive process.

The Times also fails to explain how small businesses can struggle to obtain a few (often just one or two) patents, and then have to spend millions over the course of years to shut down copyists and free-riders.  In the last decade, the term "efficient infringer" has been used to describe how a large corporation can infringe its competitors' patents with little risk of consequence.  Seeing a patent all the way from application to issuance to successfully winning an injunction, settlement, or damages award is not unlike trying to hop across a minefield on one leg.

Moreover, the strain on innovation goes both ways -- an overly permissive patent system would limit innovation, but so does an overly strict system.  Not granting patents that should be granted disincentivizes innovators from publicly disclosing their inventions and motivates the use of trade secrets instead.  And an economy based on trade secret limits our ability to share our advances in science and technology -- to stand on the shoulders of giants.

So determining whether a patent is "good" or "bad" is not at all analogous to sorting ripe fruit from rotten.  It is a process that requires more than a glance and a roll of the eyes.  You need to put in the work.

If the Times wants to improve the patent system, it needs to call for a higher quality of examination at the USPTO rather than a higher bar for non-obviousness.  It needs to call for lower fees and a less onerous examination process for individual inventors and small companies.  And it needs to stop its vigorous hand-waving away of the complexities of patent law in order to provide a more accurate and well-reasoned viewpoint.

Suspending IP Protection: A Bad Idea (That Won't Achieve Its Desired Goals)

By Kevin E. Noonan --

Demagogy is never pretty.  When coupled with a species-threatening pandemic, the propensity for the pundit class is to be susceptible to solutions that sound reasonable only to the uninformed.  To make matters worse, some of those "solutions" are proposed by actors creative in using the crisis to advocate positions that benefit their constituencies under the cover of (and preying on) the humanitarian impulses of global elites comfortable in both their privilege and ignorance.  This is particularly dangerous where positions promoted under the cover of beneficence mask long-felt and deep-seated resentments over encouraging, perhaps heavy-handedly, a global trade regime mandating recognition of intellectual property rights in countries adverse to them and that have been successful in chipping away at them for the past 20 years.

Thus we have calls, specifically by South Africa* and India**, for governments to suspend patent rights during the pandemic, ostensibly for vaccine-related IP but in fact having a much broader scope.  Most in industrialized countries who understand the impact (essentially none) of patents on vaccine production and availability are easily dismissed as speaking from a vested interest (bringing to mind the biblical exhortation against the mote in one's neighbor's eye and the mean in one's own) (see "Sen. Tillis Asks Biden Administration to Oppose WTO Waiver Proposal"; "IP Organizations Support Continued Opposition to Waiver Proposal; Industry Coalition Supports Continued Efforts to Oppose Waiver Proposal"; "BIO and PhRMA Urge Biden Administration to Oppose Proposed WTO TRIPS Waiver"; and "IPO Sends Letter on IP Law and Policy to President-Elect and Vice President-Elect").  But should governments succumb to the siren call of purported humanitarianism to the detriment of a global innovation system that (ironically) provided the innovation ecosystem that produced no fewer than half-dozen effective vaccines against COVID-19 in less than a year, in the face of a threat that even its proponents characterize as "an impediment or the risk of an impediment" to vaccine development, it seems prudent to critically assess whether technology is available for which patents could have the putative preclusive effect procurement and distribution of effective vaccines.

Such an assessment is provided by Derek Lowe in an article published in February entitled "Myths of Vaccine Manufacturing" in Science Translational Medicine.  He identified the following "steps" of the vaccine-making process (and remember, these steps occur only after the vaccine is developed, tested, and receives regulatory approval):

Step One: Produce the appropriate stretch of DNA, containing the sequence that you need to have transcribed into mRNA.  This is generally done in bacterial culture.

Step Two: Produce that mRNA from your DNA template using enzymes in a bioreactor.

Step Three: Produce the lipids that you need for the formulation.  Some of these are pretty common (such as cholesterol), but the key ones are very much not (more on this below).

Step Four: Take your mRNA and your lipids and combine these into lipid nanoparticles (LNPs).  I have just breezed past the single biggest technological hurdle in the whole process, and below you will learn why it's such a beast.

Step Five: Combine the LNPs with the other components of the formulation (phosphate buffers, saline, sucrose and such) and fill those into vials.

Step Six: Get those vials into trays, into packages, into boxes, into crates, and out the door into trucks and airplanes.

The last step has been the subject of other analyses (see, e.g., "Latest COVID Conundrum: Accessibility of Vaccines (When They Are Available)") showing that logistics, having nothing to do with patent protection, is fraught with its own limitations, mostly political and financial.

Evaluating the potential for widespread vaccine production (which is the purported global societal benefit of suspending patent protection), Dr. Lowe moves stepwise (but focuses on Step 4 as the bottleneck step).  For Step 1, he references "Exploring the Supply Chain of the Pfizer/BioNTech and Moderna COVID-19 Vaccines", a blog post by Jonas Neubart.  This post details that "DNA plasmid production on an industrial scale is pretty well worked out" and thus is not a bottleneck in producing mRNA-based vaccines.

Step 2, transcription, is also not an impediment, albeit not as widely practiced as Step 1 ("RNA production is certainly closer to being rate-limiting than Step One, but it's nothing compared to the real bottlenecks that are coming").

Nor, according to the post is Step 3 regarding the lipids used to produce the nanoparticle carrier for viral (SPIKE protein) mRNA.  "These are surely not trivial to make on scale, but they're still small molecules with relatively straightforward structures," he says, and "[i]f you had to, you could surely get some other manufacturers up to speed on the process."

And similarly Steps 5 and 6 are not an issue, because "[e]veryone in this part of the manufacturing business has known for months that a Big Vaccine Push has been coming, and has been cranking up vial manufacturing, bringing all available production lines up to speed, and signing deals all over the place with everyone who has any kind of advanced vaccine effort."

So far Dr. Lowe sets out conventional pharmaceutical manufacturing technology that is well-established enough that patents and technology are not an impediment.  But as he quotes Neubart as saying, "Welcome to the bottleneck!" in Step 4.  Why?  Because this step involves "[t]urning a mixture of mRNA and a set of lipids into a well-defined mix of solid nanoparticles with consistent mRNA encapsulation."  These methods are done in-house by Moderna and (less certainly) by Pfizer in Kalamazoo and BioNTech in Germany.  Microfluidics are suspected to be the technology used, and these require control of a number of process parameters that, unlike patents, are not disclosed to the public.  And as Dr. Lowe posits, these processes likely require "bespoke" machines made just for this purpose, which are not readily available.

Dr. Lowe's article was directed to (and frankly prompted by) assertions that there are "dozens" of pharmaceutical companies ready to produce these vaccines, and that this is not the case.  The evidence evinced by Dr. Lowe is relevant to the question of whether patents create an impediment to COVID vaccine production.  It is apparent that, even if there might be circumstances under which intellectual property negatively affects vaccine availability, suspending patent protection is not an effective answer because the rate-limiting step for COVID vaccine production (at least for the mRNA-based vaccines) involves proprietary machines and methods for making the vaccine that are, more than likely, not covered by patents and never will be.

And that raises the specter of an even more dangerous attack on intellectual property.  Because the technological circumstances set out by Lowe and Neubert involve trade secrets regarding formulation of vaccines are what can be the bottleneck in the process.  But trade secrets are the type of property the rights to which cannot be suspended; disclosure destroys the secret and thus the property.  In the U.S., government seizure of trade secrets might be compensated as a taking (although how effective such compensation would be is in serious question).  But is the U.S. government prepared to compensate not only its own trade secret misappropriation but global dispersion of the "secrets," and just how willing can we expect countries such as India and South Africa (the prime proponents of patent suspension) to provide any compensation whatsoever?  When these facts are considered, the call by these governments (and others) should be understood for what it is:  an attempt to use the pandemic to achieve a goal of status quo ante (prior to the establishment of the GATT/TRIPS/WTO global trade and patent regime), which was imposed upon these and other countries a generation ago.  The COVID pandemic provides the humanitarian excuse for a solution that isn't a solution but that resonates with uninformed (albeit generally well-meaning) politicians, humanitarians, and religious and non-governmental organizations.

Which is not to say that there are no issues regarding availability of drugs in low- and middle-income countries that need to be addressed (see "The Law of Unintended Consequences Arises in Applying TRIPS to Patented Drug Protection in Developing Countries"; "A Modest Proposal Regarding Drug Pricing in Developing Countries"; "Trying to Find a Solution to the Global Drug Pricing Crisis").  But there are ways to achieve the lofty goals that are at the root of this message.  As Merck as done with Johnson & Johnson, partnering between pharmaceutical companies can increase the number of doses of the vaccine necessary for global vaccination.  Groups like Gavi ("a Geneva-based funder of vaccines for low-income countries"), the WHO, and the Coalition for Epidemic Preparedness Innovations (CEPI), "a fund based in Oslo that was created to finance and coordinate vaccines for outbreaks" can be involved in an concerted effort to obtain vaccine supplies for the rest of the world.  Western governments with "excess" vaccine reserves can use the auspices of these groups to send doses to low- and middle-income countries and economies (LMICS) and even some "wealthier" countries having the economic capacity to defray some or all of the costs.  Indeed, today the Biden Administration announced it would make available "excess" vaccine doses to countries in need.

And the motivations for such efforts need not rely exclusively on altruism; as has become evident recently the virus has the capacity to mutate in ways that variants of unknown resistance to current vaccines can arise.  Vaccines, particularly the mRNA-base vaccines, may not be effective against these variants (see "Do mRNA-based COVID Vaccines Have an Achilles Heel?") and thus it is in everyone's interest to extend vaccination globally (regardless of how daunting that challenge may be) to reduce the probability of such variants arising.

SARS-CoV-2 and the COVID pandemic is the greatest global health threat caused by a virus since the influenza pandemic of 1918 (see "The Great Influenza: The Story of the Deadliest Pandemic in History") and, before that, enumerable smallpox outbreaks (see "The Fever of 1721: The Epidemic That Revolutionized Medicine and American Politics").  But the current outcry calls for governments and the rest of us to heed Kipling's admonition regarding the aspiration to "keep your head when all about you/Are losing theirs and blaming it on you."  Let's hope they can do so.

* Ironically (or perhaps a basis for their position on the patent suppression suggestion), in South Africa "the existing patent system . . . plays a key role in stifling – rather than stimulating – innovation"; see "Do mRNA-based COVID Vaccines Have an Achilles Heel?"

** Pathetically, the Indian government has "come[] under fire for forcing states and private buyers to pay more for scarce vaccine even while France and Germany are preparing to send aid (in the form of vaccine doses), according to the Financial Times of London (see "US and Europe to send aid to fight India’s coronavirus surge" (subscription required)).

Financial Times to "the Patent Troll Narrative" -- Much Ado About Nothing

By Kevin E. Noonan --

Yesterday, the Financial Times (London) published an article by Rana Foroohar entitled "Big Tech vs. Big Pharma: the battle over US patent protection."  If the article can be encapsulated in a word, that word would be "debunked" for what the article calls the "patent troll narrative" that patent trolls are impeding innovation and costing U.S. jobs to go down and consumer costs to go up.  As has been said in other contexts, "it ain't necessarily so" and, in fact, it isn't so at all.

The article starts with a testimonial from Sherry Knowles, former Chief Patent Counsel at GlaxoSmithKline and a breast cancer survivor, who acknowledges that the drug that "saved her life" -- Adriamycin -- would not have been able to be developed had it been discovered under the unfriendly conditions patentees face today.  She recites an inconvenient truth sometimes ignored by policymakers unduly swayed by the desired outcome of cheaper drug prices:  "[i]f companies can't defend their intellectual property, they won't invest.  It's that simple."

While noting that Big Pharma is unlikely to garner much sympathy, the article properly notes that voices that have been raised against current trends in the USPTO, Congress, and the courts (particularly the Supreme Court) include start-up biotech companies, semiconductor and electronics firms, universities, and other innovators, precisely the sources of both innovation and job growth.

The article discusses the reasons for the complaints -- changes in patent laws including the America Invents Act and Supreme Court decisions like Mayo Collaborative Services v. Prometheus Laboratories and Alice Corp. v. CLS Bank and some of the negative consequences of these trends.  For example, the article shows that the U.S. (which spends 2.79% of gross domestic product on research and development, a total of $518,077,890,000 in 2015 according to the World Bank) has gone from 1st to 10th in patent protection according to Chamber of Commerce, and is now tied with Hungary (which spends 1.38% of its GDP on R&D, a total of $1,715,933,400).  As a consequence, the article says that some companies are encouraged to engage in "efficient infringement" defined in the article as companies that "simply copy or take the IP they want, then settle with aggrieved parties out of court for less than the full value of the IP."

The reason for the change:  "the patent troll narrative," which the author says had reached a "fever pitch" by the time President Obama was inaugurated.  This narrative was a large part of the impetus to change U.S. patent law that culminated in the America Invents Act.  But even after passage of the AIA and institution of inter partes and covered business method reviews (which were intended to solve the problem of improvidently granted patents more cheaply and efficiently than through litigation), the article states that some high tech companies wanted even more patent-unfriendly "reform."  According to David Kappos, former Director of the U.S. Patent and Trademark Office as quoted in the article, "[u]ltimately the read agenda sunk in.  This second round of drastic cutbacks to the patent system was a commercial ploy designed not to stop abuse but to cut supply chain costs by devaluing others' innovation."

In 2013, according to the article, the White House issued a report that 2/3rds of patent litigation was provoked by patent trolls.  This number was disputed by the nonpartisan Governmental Accounting Office (GAO), which estimated the number at about 20%.

The article quotes Randall Rader and Paul Michel, both former Chief Judge of the Court of Appeals for the Federal Circuit, as being against how the USPTO has administered the inter partes review process.  On the other hand Mark Chandler, General Counsel at Cisco, is quoted as saying that the problem is patents that should not have been granted, which "put[] a deadweight burden on the economy by blocking innovation by others and unnecessarily driving up prices to consumers."  But Gary Lauder, a venture capitalist from Silicon Valley, says that the patent system America needs is one where established companies pay innovator companies for their innovations rather than being able to expropriate them.  "We need to protect the larger start-up ecosystem, which is where the majority of jobs are created," he says.

Also cited in the article is a recent study from the National Bureau of Economic Research which found that having a patent increases the likelihood of acquiring venture capital by 53%, of start-up job growth by 36% and start-up sales by 51%.  And a paper by Stanford economist Stephen Haber is cited for finding that the patent troll narrative is inconsistent with the actual behavior of patentees and accused infringers.

The article closes with a view to what may happen next, which includes a bill by Senator Christopher Coons (D-DE) intended to shore up the U.S. patent system in the face of global competition particularly from China.  The article notes that there may be some acquiescence to changing the patent system to accommodate the needs of biotech and pharma with the different needs of the high technology sector, perhaps with different rules for each.

The most cogent commentary in the article regards statistics generated by Lex Machina regarding the effect of trolls on the patent system:  "There has been an abundance of data that both advocates and critics of the current patent system spin in all sorts of ways to make their case," according to the article.  The USPTO estimate that 2/3rds of patent cases involved trolls did not take into account changes in how patent cases could be brought so that this number was somewhat artificially exaggerated.  And the contemporaneous GAO study expressly refuted this number with an estimate of 20%.

Using "the best way to compare" patent lawsuit numbers pre- and post-AIA (using individual defendants as the metric), Lex Machina found that the number of patent lawsuits in fact didn't change with the change in the law, and that the brief spike in 2011 (which was the basis of much of the troll narrative) was accounted for by the law change occasioned by passage of the AIA.  These data are illustrated by Lex Machina's graph, reproduced below:

In short, the article concludes, "[t]rolls have been overblown as a patent issue."  But the consequences of this inaccurate narrative persist.

The paper's conservative bona fides are established on its website:

First published in 1888 as a four-page newspaper, the Financial Times' initial readership was the financial community of the City of London.  The Financial Times soon established itself as the sober but reliable "stockbroker's Bible", with its only rival being the slightly older and more daring Financial News.  In 1893, the FT turned salmon pink -- a masterstroke that made it immediately distinguishable from its competitor.  From their initial rivalry, the two papers merged in 1945 to form a single six-page newspaper.  The Financial Times brought with it a higher circulation, while the Financial News provided enormous editorial talent.

Insofar as many of our elected leaders profess to be conservatives, perhaps it would behoove them to listen to an authentic conservative voice on these matters.

Alternative Facts on Patent-Eligibility from the Electronic Frontier Foundation

By Michael Borella --

The textbook policy rationale for the existence of a patent system is a quid-pro-quo -- a tradeoff in which an inventor is granted a time-limited property right over his or her invention in return for disclosing it to the public.  Such disclosure is expected to, over time, spur further innovation, and bolster research and development.  But empirical measurements of the impact of the patent system on innovation and the economy have been difficult to come by.  Patents are just one factor influencing ongoing scientific and engineering advances, and their impact is perhaps impossible to determine in an aggregate sense.

Heidi L. Williams of the National Bureau of Economic Research reviewed the available evidence of how patents on existing technologies might affect follow-on innovation and research investment.  Her conclusion is that more evidence is needed:  "[G]iven the limitations of the existing literature we still have essentially no credible empirical evidence on the seemingly simple question of whether stronger patent rights -- either longer patent terms or broader patent rights -- encourage research investments into developing new technologies."

Nonetheless, in a recent article, Vera Ranieri of the Electronic Frontier Foundation (EFF) has used this essentially neutral position to argue in favor of recent changes to U.S. patent law that arbitrarily and subjectively limit patentable subject matter.  In doing so, Ms. Ranieri falls back on a number tired tropes and misconceptions about the workings of U.S. patent law, and fails to consider the damage done by these changes to the certainty function of the patent system.

The Alice Decision

In 2014, the Supreme Court handed down a highly controversial decision in Alice Corp. v. CLS Bank Int'l.  In a nutshell, the Court ruled that patent claims should be analyzed to determine whether they are too "abstract," and if they are, these claims should be further analyzed to determine whether they incorporate "significantly more" than an abstraction.  In doing so, the Court went well beyond the plain language that Congress set forth in 35 U.S.C. § 101, the section of the patent statute that defines subject-matter eligibility.  Furthermore, the Court purposely declined to define what it meant by "abstract" and "significantly more," essentially leaving it up to the Federal Circuit, the district courts, and the USPTO to provide meaning for these ambiguous terms.

While not explicitly stating it, in Alice the Court effectively targeted software and business method inventions (and certain types of life science inventions, such as diagnostic methods) for an additional level of scrutiny.  In fact, the EFF's own amicus brief in Alice encouraged the Court to use the case to "reign in overbroad software patents."  Whether or not this argument ultimately swayed the Justices to rule as they did, the effect of Alice is clear -- over 15,000 patent claims have been invalidated under § 101 since this decision came down, the vast majority of these in the software and business method space.  Additionally, some software and most business method claims are now harder to obtain from the USPTO, with rejection rates of over 90% in some business method art units.

In many cases, courts have invalidated patents under § 101 without undertaking claim construction.  Let that sink in for a while -- courts are throwing out patents as allegedly being abstract without determining the actual scope of the claimed invention.

The Alice Decision Has Not Been, and Cannot Be, Applied Consistently or Objectively

The problem with Alice is not just that it limits the scope of patentable subject matter, but that it does so in an arbitrary and subjective fashion.  Courts and the USPTO have struggled mightily with making sense of the decision.  Judge Wu of the United States District Court for the Central District of California criticized Alice for setting forth an "I know it when I see it" test.[1]  Judge Pfaelzer, a colleague of Judge Wu, wrote that the Supreme Court's patent-eligibility cases "often confuse more than they clarify [and] appear to contradict each other on important issues."[2]  Former Chief Judge of the Federal Circuit Paul Michel stated that Alice "create[d] a standard that is too vague, too subjective, too unpredictable and impossible to administer in a coherent consistent way in the patent office or in the district courts or even in the federal circuit."

While the Federal Circuit has attempted to provide a consistent line of post-Alice case law, this has resulted in some very thin bacon slicing.  For instance, in 2014 a panel in Ultramercial v. Hulu found a complex and narrow web-based transaction to be unpatentably abstract, while another panel in DDR v. Hotels.com found a web server that combines the look and feel of two different web sites meeting the requirements of § 101.  Last year, in Synopsys v. Mentor Graphics, an invention automating circuit design procedures was found to be abstract because these procedures had been performed manually by humans.  But in McRO v. Bandai Namco Games America, an invention automating lip-synchronization in animated characters was found not abstract even though the automated procedure could be performed by humans.

While one could argue that there are at least tenuous distinctions between the claimed inventions that were found eligible and ineligible in these four cases, the recent Recognicorp v. Nintendo case clearly illustrates the Federal Circuit's inability to apply Alice consistently.  In the decision, the panel characterized a 154-word claim as nothing more than "encoding and decoding image data," despite the panels in Enfish v. Microsoft and McRo explicitly forbidding such claim over-simplification.

At the USPTO, despite the administrators' admirable efforts to provide clear examination guidelines with respect to Alice, it is notoriously well known amongst practitioners that different art units and different examiners will apply the Alice test in radically different ways.  Further, it is common for an applicant to receive an Alice rejection that is purely conclusory in nature -- the examiner essentially saying "Your claims are abstract, no patent for you!" without any rationale or reasoning to support the rejection.  While the latter type of rejection can be rebutted, it imposes additional and unnecessary costs on the applicant to go through extra cycles of Office actions or appeals.

Ultimately, the problem does not lie with the Federal Circuit or the USPTO.  The Alice test is inherently subjective, requiring one to look at a claim and imagine analogous "well-known, routine, and conventional" activities.  In doing so, examiners and judges often ignore key claim elements, resulting in a 10,000-foot view of the claim being analyzed, rather than the actual claimed invention.

Due to this subjectivity, reasonable minds can differ regarding whether a claim is abstract and whether it contains something more.  There is no way for thousands of examiners and hundreds of federal judges to reach the same conclusion on a consistent basis.

The Lack of Evidence Found in the Williams Paper Cuts Both Ways

For sake of argument, let's assume that Ms. Williams's analysis is correct, and that there is little or no evidence identified yet that establishes innovation is spurred on by a strong patent system.[3]  Ms. Ranieri interprets this result as an invitation to slam the door on software patents, arguing that there is no need to change the law to fix problems introduced by Alice.

But the same argument could be used to establish that there was no need for the Supreme Court to change the law in Alice either.  If the impact of patent system strength on innovation was unclear, the Court should not have instituted such a dramatic change.  Besides, Congress is better equipped than the Court to derive policy from such studies.  If anything, the dramatic growth of technology company profitability and market capitalization from the mid-1990s to the Alice decision in 2014 suggests that a strong patent system is not inconsistent with innovation and technological investment in the software market.

Ms. Ranieri also states that the Williams paper establishes that there is no evidence that the Alice decision has "done any harm to the innovation economy or innovation generally."  But the paper does not address Alice at all, and most of its cited research was conducted prior to the 2014 date of Alice.  Given the lengthy, multi-year time scales of patent lawsuits, patent prosecution, and research and development, the three years between then and now is way too short a time period to draw such broad conclusions.

Ms. Ranieri Mischaracterizes the Efforts to Overturn Alice

Throughout her article, Ms. Ranieri makes misleading statements about efforts to overturn Alice.  Particularly, she focuses on proposals by the Intellectual Property Owners Association and the American Intellectual Property Law Association to rewrite § 101.  A comparison of their efforts indicates that they would replace the Alice test with an analysis of whether the claimed invention as a whole (i) exists in nature independently of human activity, or (ii) solely in the human mind.  Such a test would certainly result in fewer patents being invalidated under § 101, but would also go a long way toward clarifying the law.

Unlike Ms. Ranieri's contentions, this would not "return us to a world where 'do it on a computer' ideas are eligible for a patent."  That world never existed.  If a claimed invention's sole difference from prior art is to perform a known series of steps on a computer, the invention is probably obvious and can be invalidated on those grounds.  In fact, the claims in Alice and many other so-called "overly broad" patents could be invalidated under the patent statute's existing novelty, non-obviousness, and written description provisions.  Ms. Ranieri's further statement that the proposed changes to § 101 would mean that "anything is patentable" aside from the aforementioned exceptions ignores the fact that eligible subject matter is just one requirement of many for a patent to be granted.

Furthermore, Ms. Ranieri asserts that "the recent reform proposals seem like little more than a bid by lawyers to create work for themselves."  If anything, the opposite will likely be the case.  The uncertainty surrounding Alice has been a boon for § 101 focused practice, opening more patent prosecution and litigation opportunities.  While some applicants are filing fewer patents as a result of Alice, many are filing more -- attempting to protect multiple narrow inventions rather than one or two broader ones.  There are more appeals in the USPTO, as well as more covered business method review proceedings as well.

When there is a gray area in the law, lawyers are needed more than ever to help their clients navigate the ambiguities.  If the Intellectual Property Owners Association and the American Intellectual Property Law Association succeed in their efforts, the patent law will be less ambiguous and there will be far fewer billable hours spent determining whether or not a claim is abstract.  Even though such a change might have a negative impact on their bottom lines, many patent attorneys would welcome the change because the patent system is broken as long as Alice stands.

Conclusion

Opposition to the Alice test is not based on it making patents easier to invalidate, but that it does so in an unworkable and intellectually dishonest fashion.  This has resulted in applicants with limited financial resources being unable to pursue patent protection for legitimate technical inventions.  If such a trend is widespread and continuing, small U.S. companies will be reluctant to innovate in certain market segments because of the risk of their U.S.-based or foreign competitors getting a free ride to copying or cloning a product or service.

This is the area that merits academic study -- has Alice actually harmed innovation?  As noted above, it may be a while before we can make that determination.  But if it is the case, that would be just one more reason of many for discarding the test.

[1] Eclipse IP v. McKinley Equipment (C.D. Cal. 2014).

[2] Cal. Inst. of Tech. v. Hughes Commc’ns Inc. (C.D. Cal. 2014).

[3] As far as we know, the paper has not yet been subject to thorough peer review, and therefore its conclusions should be viewed as preliminary at best.

Addressing Increased Drug Costs -- A Proposal

By Kevin E. Noonan --

The New York Times in a recent video (see "'Could You Patent the Sun?'") has returned to its theme against patenting, particularly with regard to patents for life-saving drugs.  This time the paper invokes the meme of Jonas Salk and his response to a question during an interview by Edward R. Murrow that patenting his polio vaccine would be like "patenting the sun."  He certainly said that, and he certainly meant it, and the sentiment has a visceral appeal that echoes the success of the ACLU's anti-gene patenting campaign.  But a closer look at the circumstances in which Dr. Salk could make this statement, and the realities facing drug development today, points out again how dangerous facile pronouncements made in the media (social or conventional) can inhibit rational debate by masking the real differences (and associated challenges) between those times and our own.

As set forth in Jane S. Smith's 1990 book "Patenting the Sun: Polio and the Salk Vaccine," Dr. Salk operated under conditions that gave him the luxury of not having to worry about patents.  One was the famous "March of Dimes" campaign of the National Foundation for Infantile Paralysis, which was created specifically to address polio by President Roosevelt (himself a polio sufferer) in 1938.  The disease, virtually unheard of before the turn of the last century, created a popular panic wherein tens of thousands of children were incapacitated annually, and the grassroots efforts of the March of Dimes generated more than $200 million for research and patient care.  Salk's work (as well as that of Albert Sabin on what would become the preferred form of the vaccine) was funded by March of Dimes money, circumstances very different from how science is funded today.

Other differences involve the regulatory environment and the costs such regulations impose on drug development.  Of course, these regulations are also responsible for protecting (albeit sometimes imperfectly) the American public from ineffective or dangerous drugs, and so the societal costs need to be balanced with increased barriers to new vaccines and other drugs.  But as Ms. Smith sets out, Dr. Salk was able to test early prototypes of his vaccine on children in a nearby institution caring for mental retardation, and the force of the fear regarding polio was such that the propriety of this testing was not questioned.  Moreover, Salk did his work prior to the thalidomide tragedy that led to changes in FDA laws and regulations that greatly increased the stringency (and thus the cost) of obtaining approval.  While a great deal of the cost of drug development can be laid at the feet of other aspects of this endeavor (the cumulative costs of many failed drugs for each successful one, for example), much of the increased costs of bringing new drugs to market since Dr. Salk's day has to do with this increased (but societally desirable) regulatory burden.

But even in view of these realities, the basis for an increasing amount of political pressure on drug companies is higher drug costs, particularly (and ironically) for biologic drugs which have significant advantages in addressing otherwise intractable diseases and which can have a specificity unknown for conventional drugs.  It is easy but incorrect to attribute these costs to patents, but it is equally unavailing to ignore the political power of the many memes relating to failures in American capitalism that permit these seeming cost imbalances to arise.

If the future appears to contain even more expensive drugs and a political backlash against them, then a clear-eyed assessment of that future can provide at least three alternatives.  The first is that the drugs will exist but that their availability will be stratified, between those who will be able to afford them on their own (either out-of-pocket or through so-called "Cadillac" health insurance plans) or through government-sponsored programs for select groups (veterans, for example) and those (perhaps the majority of Americans) who will not.  The second is that these drugs will not be developed in the U.S., due to changes in patent or regulatory law that provide disincentives to development (such as further erosion of patent eligibility by the Supreme Court or a reduction in market exclusivity for biologic drugs as sought after by the Obama Administration).  Neither of these alternatives is palatable, socially or politically.

A third course that may have the ability to address the growing problem of unsustainable increases in drug pricing would be some sort of cost control (presumably by the Federal government, analogous to systems in place in Europe and elsewhere), but to be practical there would need to be an economic incentive for the biotech and pharmaceutical industry to acquiesce.  One quid pro quo in this calculus would be a reversal in the current regime that the FDA imposes user fees on applicants for regulatory approval, and instead to have the government pay the costs of its regulatory requirements.  There is precedent in the negotiations leading to passage of the "Obamacare" healthcare overhaul to have government and the pharmaceutical industry come to an agreement over new ways to reduce healthcare costs.  Such a tradeoff could reduce a significant proportion of the costs of new drug development and thus eliminate the economic pressure for legitimate recompense that is likely not economically sustainable (see, e.g., Picchi, "The cost of Biogen's new drug: $750,000 per patient").  And it might also attenuate the FDA's requirements for approval, wherein the agency as a Federal bureaucracy might have incentives to balance its mandate to ensure safety and efficacy of approved drugs with the realities of drug development, to make both more realistic.

But it is clear that something must be done, if only to ensure that our ability to produce more effective drugs does not founder on soundbite-driven, simplistic solutions to the problems of providing efficient incentives for doing so.

Pigs Fly, Hell Has Frozen Over, and the New York Times Supports Small Inventor and University Patenting

By Kevin E. Noonan --

Admittedly, only on its Op-Ed page.  But last Saturday Joe Nocera wrote a remarkably sane and reasoned column, entitled "The Patent Troll Smokescreen," pointing out that "big companies with large lobbying budgets" are using the patent troll meme to change patent law in their favor (but in ways that will not increase innovation, benefit the country or "promote progress" for anything other than their bottom lines).

The column was prompted by the paradox that for some, like the Electronic Frontier Foundation, anyone who is a non-practicing entity (or NPE) and asserts a patent is a patent troll.  Mr. Nocera clearly understands the received wisdom about patent trolls:  they are NPEs that "use [their patents] not to further innovation or manufacture a product but to conduct a kind of legal extortion racket," based on patents that are "sometimes absurdly vague."  He cites as an example the Lemelson bar code patents (which of course were never accused of being vague but this is journalism so, close enough).  Patent trolls, Mr. Nocera writes, are "sand in the engine of commerce."

But it is clear that Mr. Nocera has been taken aback by the rhetoric that patent trolls should include universities because "[w]henever the university's scientists come up with innovations -- which they rarely intend to use to manufacture a product -- WARF [who licenses patents from the University of Wisconsin] applies for a patent and then seeks to license it, just as trolls do."  Naively, he then states that "of course, nobody thinks a university is a patent troll" based on his (correct) understanding that "[u]niversities are supposed to come up with new ideas, not manufacture new products.  That's what companies do."  And he further understands that even anti-troll champions like Hastings College of Law Professor Robin Feldman recognizes the social utility of encouraging universities to license their patented technology, because it will "encourage the commercialization of new products."

The social utility could be hampered, Mr. Nocera realizes, if the bills in Congress aimed at curtailing the type of "trolling" he disparages ends up "having huge negative consequences for legitimate inventors."  Or if "a series of Supreme Court rulings make matters worse, putting onerous burdens on inventors while making it easier for big companies to steal unlicensed innovations."  (The latter has, of course, already happened; see "The ACLU, Working for the Man").

According to Mr. Nocera, those decisions and the AIA have created a situation where "big companies can now largely ignore legitimate patent holders."  And the companies doing it "don't call it stealing"; instead, they call it "efficient infringing" according to Robert Taylor, a patent lawyer for the National Venture Capital Association.  The result:  the big company expropriates patented technology and then has "top-notch" patent lawyers working for it to invalidate any patent asserted against it.  And "[b]ecause the courts have largely robbed small inventors of their ability to seek an injunction [] the worst that can happen is that the infringer will have to pay some money.  Which, for a rich company like, say, Apple, [is] no big deal," according to Mr. Nocera.  In Apple's case, the piece states that Apple has a policy, expressly stated on its website, that "the company can lay claim to any unsolicited [note, not unpatented] idea."  He then describes the lawsuit between Wisconsin and Apple and the $234 million judgment the WARF obtained against Apple for patent infringement.  But he mentions that this doesn't make Wisconsin whole, due to lost opportunity costs, stating that WARF didn't have the chance to license the technology exclusively to an Apple competitor, and in addition had to risk infringement litigation to obtain any recovery at all.

The piece ends with a reminder that bills remain pending in both the House and Senate that "will [] effectively tilt the playing field even further toward big companies with large lobbying budgets" and states:

For the sake of real innovation, and in the name of the small inventor, who holds a special place in America's mythology, the pendulum needs to start swinging in the other direction.

Perhaps a measure of sanity will return to the patent law debate, if the Times Op-Ed editors saw fit to publish Mr. Nocera's column.  Patentees would do well to send a copy to their Senators and Representatives in Congress, and perhaps take the opportunity to engage legislators in a discussion of these issues.

Because we can be sure that those "large lobbying budgets" are not going unspent by companies engaging in "efficient infringement."

Top Stories of 2014: #10 to #7

By Donald Zuhn --

After reflecting upon the events of the past twelve months, Patent Docs presents its eighth annual list of top patent stories.  For 2014, we identified eighteen stories that were covered on Patent Docs last year that we believe had (or are likely to have) the greatest impact on patent practitioners and applicants.  On New Year's Eve, we counted down stories #18 to #15, and on New Year's Day, we covered stories #14 to #11.  Today, we count down stories #10 to #7 as we work our way towards the top three stories of 2014.  As with our other lists (2013, 2012, 2011, 2010, 2009, 2008, and 2007), links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look.  As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with anything we included, please let us know.  In addition, we will be offering a live webinar on the "Top Patent Law Stories of 2014" on January 20, 2015 from 10:00 am to 11:15 am (CT).  Details regarding the webinar can be found here.

10.  While FDA Accepts First Biosimilar Application, Some Biosimilar Applicants Try to Bypass BPCIA

In July, Sandoz announced that the U.S. Food and Drug Administration had accepted its application to market a version of the protein filgrastim.  The reference product is Amgen's NEUPOGEN®.  Sandoz markets a biosimilar filgrastim outside the U.S. under the brand name ZARZIO®.  Interestingly, in October, Amgen announced the results of a Phase III clinical trial of its own biosimilar drug (designated ABP 501) for moderate-to-sever plaque psoriasis conducted in comparison with adalimumab (sold by AbbVie as Humira®).  Amgen and Sandoz were both involved in a BPCIA dispute that was resolved by the Federal Circuit in December.  In what some perceived as an attempt to sidestep the requirements of the BPCIA, Sandoz filed a declaratory judgment action against Amgen and Roche related to its etanercept biosimilar drug product, which it developed to compete with Amgen's Enbrel® TNF inhibitor.  In Sandoz v. Amgen, the Federal Circuit affirmed the District Court's dismissal of Sandoz's suit because "Sandoz did not allege an injury of sufficient immediacy and reality to create subject matter jurisdiction."  In other biosimilar developments, the FDA issued a "Guidance for Industry" in August entitled "Reference Product Exclusivity for Biological Products file under Section 351(a) of the PHS Act."  The Guidance provides some grounds for determining the term of market exclusivity under the BPCIA (12 years; Sec. 351(k)(7), codified at 42 U.S.C. 55 262(k)).

For information regarding this and other related topics, please see:

• "Celltrion Healthcare Co. v. Kennedy Trust for Rhematology Research (S.D.N.Y. 2014); Hospira Inc. v. Janssen Biotech Inc. (S.D.N.Y. 2014)," December 11, 2014
• "Sandoz Inc. v. Amgen Inc. (Fed. Cir. 2014)," December 9, 2014
• "Amgen Poised to Enter Biosimilars Market," October 8, 2014
• "FDA Releases Another Prospective Guidance," August 13, 2014
• "Finally, A Biosimilar Application Has Been Accepted By The FDA ," July 28, 2014
• "FDA Releases Draft Guidance on Biosimilars," May 14, 2014
• "Indiana Governor Signs Biosimilar Substitution Bill," April 10, 2014

9.  Congress and Tech Sector Wage Battle Against Patent Trolls

Despite having passed patent reform legislation -- the Leahy-Smith America Invents Act -- in September 2011, many in the patent community expected Congress to pass another piece of patent reform legislation in 2014 -- this time addressing patent litigation and the problem of so-called patent trolls.  However, after taking up and tabling legislation in March and April, Senator Patrick Leahy (D-VT), Chairman of the Senate Committee on the Judiciary, announced that he was taking the Patent Transparency and Improvements Act of 2013 (S. 1720) off the Committee's agenda because of a lack of "sufficient support behind any comprehensive deal."  Meanwhile, the tech sector continued to lobby for patent litigation reform.  Congress may take up patent reform again this year.

For information regarding this and other related topics, please see:

• "More Misinformation Regarding the Patent System and Non-Practicing Entities," December 18, 2014
• "Patent Litigation Reform -- Will the Outcome of the Mid-Term Elections Matter, and Is Reform Still Necessary?" October 30, 2014
• "Teva v. Sandoz -- Is Deferential Review a Boon for Patent Trolls?" October 14, 2014
• "House Tries One More Time: Targeting Rogue and Opaque Letters Act of 2014 ("TROL Act")," July 17, 2014
• "Patent Reform Legislation Off The Table -- For Now," May 21, 2014
• "Senate Judiciary Committee Tables Patent Reform, Again," April 3, 2014
• "Stopping Bad Legislation -- The Innovation Alliance Speaks Out," April 2, 2014
• "Stopping Bad Patents -- Senator Schumer Takes on the "Patent Trolls"," April 1, 2014
• "New York Times Op-Ed Argues Law Takes Misguided Approach to Software Patents," March 30, 2014
• "Senate Judiciary Committee Takes Up, Then Tables, Patent Reform," March 27, 2014
• "A Rebuttal to The Economist's "Stalking Trolls"," March 13, 2014
• "Senate Legislation Update -- The Commerce Committee Gets in the Act," March 5, 2014

8.  Courts and PTAB Deal with Fallout of Alice Corp. v. CLS Bank

In June, the Supreme Court issued its opinion Alice Corp. v. CLS Bank International, affirming the Federal Circuit's per curiam opinion in CLS Bank International v. Alice Corp. (stay tuned for more on that decision as we move closer to the top three stories of 2014).  However, the impact of the Supreme Court's Alice Corp. opinion on Federal Circuit and Patent Trial and Appeal Board decisions made it to #8 on the list.  Patent Docs covered nine such decisions during the second half of 2014, and in only one case (DDR Holdings, LLC) did the Federal Circuit conclude that computer-implemented claims survive a § 101 challenge.  Readers can look for more discussion of this top story, as well as the Supreme Court's Alice Corp. decision, during our live webinar on the "Top Patent Law Stories of 2014" on January 20, 2015.

For information regarding this and other related topics, please see:

• "DDR Holdings, LLC v. Hotels.com, L.P. (Fed. Cir. 2014)," December 8, 2014
• "Ultramercial Inc. v. Hulu LLC (Fed. Cir. 2014)," November 16, 2014
• "Ultramercial Inc. v. Hulu LLC -- Party Briefs," November 6, 2014
• "Cambridge Assoc., LLC v. Capital Dynamics (PTAB 2014); PNC Bank v. Secure Axcess, LLC (PTAB 2014)," October 16, 2014
• "U.S. Bancorp v. Solutran, Inc. (PTAB 2014)," September 10, 2014
• "Planet Bingo, LLC v. VKGS LLC (Fed. Cir. 2014)," August 27, 2014
• "I/P Engine, Inc. v. AOL Inc. (Fed. Cir. 2014)," August 18, 2014
• "Stewart Title Guaranty Co. v. Segin Software, LLC (PTAB 2014)," July 23, 2014
• "Digitech Image Technologies, LLC v. Electronics For Imaging, Inc. (Fed. Cir. 2014)," July 14, 2014
• "Cyberfone Systems, LLC v. CNN Interactive Group, Inc. (Fed. Cir. 2014)," March 3, 2014
• "SmartGene, Inc. v. Advanced Biological Laboratories, SA (Fed. Cir. 2014)," January 29, 2014

7.  Supreme Court Addresses Fee Shifting Determinations in Exceptional Cases

In April, the Supreme Court issued opinions in Octane Fitness, LLC v. ICON Health & Fitness, Inc. and Highmark Inc. v. Allcare Health Mgmt. Sys., Inc.  The issue in both cases centered on the attorney fee-shifting provision of 35 U.S.C. § 285.  In Octane Fitness, a mostly unanimous court held that "an 'exceptional' case is simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated," the Court leaving the determination of whether a case is "exceptional" to the discretion of the District Court judge.  In Highmark, the Supreme Court determined that "an appellate court should apply an abuse-of-discretion standard in reviewing all aspects of a district court's §285 determination," even though "questions of law may in some cases be relevant to the §285 inquiry."  The Supreme Court's decisions make it easier for a trial court to shift fees to the non-prevailing party if it believes that the litigation was brought or conducted in an abusive manner, and also make it more difficult for an appellate court to overturn such a determination.

For information regarding this and other related topics, please see:

• ""Standing Out" -- A Closer Look at the "Exceptional Case" Standard Articulated in Octane Fitness," April 29, 2014
• "Patent Trolls Beware -- Supreme Court Issues Decisions in Octane Fitness and Highmark," April 29, 2014
• "Oral Arguments in the Supreme Court Octane Fitness, LLC v. ICON Health & Fitness, Inc. Case," February 27, 2014
• "Supreme Court to Hear Oral Arguments in Attorney Fee Shifting Cases," February 25, 2014
• "Supreme Court Preview -- Highmark Inc. v. Allcare Health Mgmt. Sys., Inc.," February 19, 2014
• "Supreme Court Preview -- Octane Fitness, LLC v. ICON Health & Fitness, Inc.," February 13, 2014

More Misinformation Regarding the Patent System and Non-Practicing Entities

By Michael Borella and Andrew Williams --

The press has been all too eager to decry the so-called "broken" U.S. patent system and the alleged "scourge" of non-practicing entities (NPEs).  However, few if any articles attempt to provide an even-handed analysis of these issues.  Recently, Jon Potter and Julie Samuels published a piece in Roll Call, urging Congress to pass comprehensive patent reform legislation to clamp down on NPEs, while James Bessen, in The Atlantic, lauded the Supreme Court's recent Alice Corp. v. CLS Bank Int'l decision for already having a deleterious impact on business method patents.  Samuels was formerly of the Electronic Frontier Foundation (EFF), a group with an anti-patent agenda.

The need for patent reform has arguably diminished.  Three decisions handed down by the Supreme Court last year, Alice, Octane Fitness, LLC v. Icon Health & Fitness, Inc., and Nautilus, Inc. v. Biosig Instruments, Inc., each addressed one of the alleged weakness in the patent system that so-called trolls are thought to exploit.  These cases have been credited for the drop in patent litigation seen since the end of the Court's last term.  Moreover, the Patent Trial and Appeals Board ("PTAB") has been accused of becoming a patent "death squad" because of the large number of inventions that it has recently found to be unpatentable.

These articles, therefore, appear to be desperate attempts to flame the anti-patent fervor that existed last year.  As we have come to expect, both articles present only one side of the story, and do not consider the negative consequences that further anti-NPE legislation could bring about, and that the Alice decision has already produced.  Further, the authors make unsupported assertions, draw questionable conclusions, and exhibit a profoundly flawed understanding of patent law.

For example, as with similar articles, the Potter and Samuels's article starts from the presupposition that "our patent system is out of balance," citing the Alice decision for support.  The unsuspecting reader will assume that this is a forgone conclusion.  Nevertheless, it is through their explanation of how this decision and proposed legislation are meant to "solve" the supposed crisis, the authors reveal a lack of understanding of the historical and philosophical basis of the patent system.

To that point, the authors equate "trolls" with NPEs (non-practicing entities).  The term NPE, however, encompasses all entities that do not manufacture products, including most universities, research institutions, and individual inventors.  Interestingly, Ms. Samuels's previous organization, the EFF, accused universities of fueling the patent troll problem.  Patent asserting organizations have been acknowledged by most, including the White House, to serve an important role as mediator between such NPEs and operating companies often necessary to commercialize inventions.  In fact, the United States' patent system purposefully encourages such actions by making patent property rights freely assignable and eschewing a "working" requirement.  This philosophy goes back to the framers of the Constitution, and allows the patent system to be accessible to everyone, not just those with abundant resources.

Potter and Samuels go on to assert, without citing any support, that NPEs "grievously injure innovators, bankrupt small companies, and waste judicial resources."  Yet, the current functioning patent system is essential to the business models of these same innovators and small companies.  Without patents, the innovations of a small software company can be easily reverse engineered and copied by larger players with more market clout, or foreign companies with lower overheads.  Trademarks, copyrights, and trade secrets do little to help in these situations.

In addition, the authors fail to consider the fact that these "innovators" and "small companies" (or any defendant in a patent litigation case for that matter), might actually infringe a valid patent.  If so, should they be allowed to freeload off the labor of others without penalty just because the patent at issue encompasses a business method or software, or happens to be owned by an NPE?

Bessen states that a recent the Government Accountability Office ("GAO") report "attributed 89 percent of the increase in patent litigation [in the 2007-2011 time frame] to software patents."  This report, however, conflated actual software patents and business method patents, collectively referring to both as "software patents."  In fact, the GAO found that "operating companies brought most of the patent infringement lawsuits from 2007 to 2011."  Additionally, the report indicated that the number of defendants in software and business method patent litigation increased 89 percent, but the number of lawsuits increased more modestly.  According to the report, the increase in the number of patent lawsuits in 2011 "was most likely influenced by the anticipation of changes in the 2011 Leahy-Smith America Invents Act (AIA), which made several significant changes to the U.S. patent system, including limiting the number of defendants in a lawsuit, causing some plaintiffs that would have previously filed a single lawsuit with multiple defendants to break the lawsuit into multiple lawsuits."

Of course, even if there was an increase in software patent litigation, it would have likely been a reflection of the increased importance of software in our everyday lives.  The 2007-2011 time frame tracks the rise of the smartphone and always-on computing, dramatic growth in social media, and a multimedia streaming revolution led by Netflix and YouTube, among other factors.  Like it or not, software is now an integral part of our personal and professional lives, as we carry our laptops, tablets, phones, e-readers, and digital fitness trackers with us whether we are going to work or on vacation.  An increase in the number of software patents granted, as well as an increase in software patent litigation, is a natural consequence of the ubiquity of software.

Certainly, no one is denying that there are bad actors that abuse the litigation system both with regard to intellectual property rights and otherwise.  However, elevating this minority of cases to be representative of the norm is not a reason to dispense with the entire system.  In fact, Bessen's methodologies for assessing the cost of so-called patent trolls have been called into question.  See, e.g., Schwartz & Kesan, Analyzing the Role of Non-Practicing Entities in the Patent System, Cornell Law Review, Vol. 99:2, pp. 425-56 (2014).  As a result, the implications that can be drawn from the data with regard to the impact of NPEs on the system are dubious at best.

With respect to the Alice decision, both sets of authors ignore the damage that this case has already caused to the patent system.  Under Alice, when determining whether a patent claim meets the statutory requirements for patent-eligibility, one must determine whether the claim is directed to a patent-ineligible law of nature, natural phenomenon, or abstract idea.  If so, then one determines whether any additional claim elements transform the claim into a patent-eligible application that amounts to significantly more than the ineligible concept itself.

This two-prong test has been widely criticized for its vagueness and subjectivity.  The Supreme Court refused to define what it meant by the term "abstract idea," leading to consternation among patentees, patent attorneys, and even federal judges.  For instance, Judge Wu of the United States District Court for the Central District of California criticized Alice for setting forth an "I know it when I see it" test.  Judge Pfaelzer, a colleague of Judge Wu, wrote that the Supreme Court's patent-eligibility cases "often confuse more than they clarify [and] appear to contradict each other on important issues."

The Supreme Court also blurred the lines between the assessment of patent-eligibility and other patentability requirements.  The patent law requires that, among other things, claims must be novel and non-obvious, as well as encompassing patent-eligible subject matter.  In 1981, the Supreme Court clarified that each of these inquiries were separate and distinct, and that it was "inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis."  Alice, as well as its 2012 predecessor case Mayo Collaborative Servs. v. Prometheus Labs., Inc., turned this notion around.  Now, when conducting a patentable subject matter review, claims can be analyzed element by element and compared to prior art.

As many commentators have articulated since the Mayo opinion was handed down, determining whether the breadth of a claim is appropriate is better served by conducting the well-understood and more objective and established analyses of novelty and obviousness.  Despite the lack of any suggestion from Congress that patent-eligibility is to be used for these purposes, the Supreme Court, now followed by the Federal Circuit, has made patentable subject matter a perverse weapon for the unsupported rejection and invalidation of claims.

The well-understood obviousness analysis asks whether the differences between the claimed invention and the prior art would have been obvious to one of ordinary skill in the art.  The Alice test, for a claim that incorporates a preexisting algorithm or a longstanding practice, inquires if the claim adds "significantly more" to that algorithm or practice.  The substantive difference between the two is that the obviousness test is grounded using prior art as a reference point for what is known, while the Alice test is not.  This eliminates much of the objectivity from the Alice analysis, putting thousands of patents in a state of legal uncertainty.  The "validity" of such patents may depend on which judge or panel conducts the test.

Bessen goes as far as to suggest that while the Alice decision is limiting the number of granted business method patents, it hasn't gone far enough to similarly limit software patents.  But why should we view patents in such sweeping terms, with the connotation that business method and software patents are inherently bad?  Patents are either valid or invalid, regardless of the technology claimed therein.

Furthermore, the implication that software should not warrant patent protection unfairly singles out one of the greatest drivers of the U.S. economy over the last forty years.  A major aspect of innovation is to make products and services faster, cheaper, and better.  The patent system is intended to incentivize individuals and organizations to publicly disclose such inventions, and as a result receive a limited exclusive-use property right thereover.  Despite contentions of the deleterious impact of a "broken" patent system on the software industry, the computer and information industry as a whole continues to grow, as evidenced by recent record-breaking stock values, billion-dollar acquisitions, and successful initial public offerings. A broad exclusion of computer-implemented inventions is illogical and disregards the fundamental tradeoff on which the system is based.

Graphic of troll (above) by JNL was modified (cropped) from a graphic available at the Wikipedia Commons, pursuant to the Free Art License.  Any use of the modified graphic is subject to the same license.

Dr. Cook-Deegan Brings the Medical Community Up to Date on the Myriad Case

By Kevin E. Noonan --

In an article in The Cancer Letter entitled "Robert Cook-Deegan's Viewers' Guide To the Super Bowl of Gene Patent Cases," Professor Robert Cook-Deegan (at right) of the Institute for Genome Sciences & Policy and Sanford School of Public Policy, Duke University provides his colleagues in the medical arts with an update on the progress of the Myriad case, specifically the several pending district court actions, now consolidated before Judge Robert Shelby in the District of Utah.  Continuing the pervasive presence of kitsch in everything Myriad (recall Judge Moore's disdain for Acting Solicitor General Katyal's "magic microscope on these grounds), Dr. Cook-Deegan analogizes patent litigation to a "blood sport," complete with analogies between hemorrhage and spilled ink/lost profits.  Dr. Cook-Deegan's focus is on Judge Shelby's recent denial of Myriad's preliminary injunction motion, as well as providing broad hints to the court and defendants regarding other legal avenues for attacking Myriad's patents.  Dr. Cook-Deegan is not a thoughtless partisan in this debate (indeed, he provided an insightful basis for invalidating Myriad's probe-and-primer claims based on traditional patent law concerns with novelty; see "Caught in a Time Warp: The (In)validity of BRCA1 Oligonucleotide Claims"), but he has certainly taken a side.

The article starts with Judge Shelby's 106-page ruling; as with most articles on the Judge's decision its length is apparently a relevant supernumerary for the correctness of the Court's conclusion (brevity being the soul of wit but clearly not a hallmark of judicial acumen).  Dr. Cook-Deegan correctly points out that the Court understood that Myriad might in fact suffer irreparable harm to its BRCA gene testing franchise but that this likelihood was trumped by the Court's determination that Myriad was unlikely to prevail on its patent infringement claims.  Dr. Cook-Deegan characterizes the Court's assessment as being that "the claims to DNA molecules -- mainly to DNA primers used to amplify the DNA in its tests -- are in trouble; and the claims to methods are in very deep trouble."  He cites the Myriad franchise in BRCA gene testing as having generated $2.8 billion in revenues since 1996, and asserts that Myriad's "monopoly" on testing (it always a tell for a writer's opinion on patents to describe them as a monopoly) ended in June 2013 with the Supreme Court's decision in AMP v. Myriad Genetics.

Dr. Cook-Deegan (much like Judge Shelby in his opinion, one of the reasons it is 106 pages long) then follows with a synopsis of the Supreme Court's decision in the Myriad case, recognizing that Justice Thomas's opinion, while more straightforward than most of the Court's pronouncements on patent law did not produce "a map locating [the] Rubicon" between patent ineligible and patent eligible forms of DNA.  (This characterization is somewhat unfair to the Court's opinion; it seems clear that the Court decided that merely being synthetic in nature was not enough, but that the DNA sequence itself could not occur in nature.)  The article sets forth what has transpired since the Supreme Court's decision, specifically Myriad's activity in suing anyone offering a BRCA gene test and there being several potential or actual Myriad targets filing declaratory judgment actions against Myriad for invalidity based on the Supreme Court's decision.  This list includes Ambry Genetics, Gene-by-Gene, Ltd. (this defendant has since settled with Myriad); Quest Diagnostics; GeneDx; InVitae; Counsyl Genetics; and LabCorp.

Dr. Cook-Deegan notes that these lawsuits generally involve Myriad's assertion of several of the hundreds of claims remaining after the ACLU's suit against 7 claims of 15 patents.  The article questions why Myriad would sue in view of its track record before the Federal Circuit (as to some of its method claims) and the Supreme Court, and of course mentions Myriad's profits as a motive (recall that patents are intended to garner money damages upon infringement), and that the $10 million that Myriad purportedly "set aside" for patent litigation represents "one week's profits" from a purported $520 million in revenues (not profits) Myriad made "in its most recent fiscal year."  In fairness to Myriad, Dr. Cook-Deegan also acknowledges that the company thinks it will win, particularly because these lawsuits are more traditional patent infringement actions and very different from the "court of public opinion" that the ACLU manipulated so expertly in the AMP case.  But he also correctly notes that Judge Shelby's ruling on Myriad's preliminary injunction motion has changed the odds against Myriad, returning to the sports theme by drawing an analogy with the Denver Broncos recent unsuccessful experience in the Meadowlands relating to meeting a strong offense with a strong defense.  This section of the article ends by noting that up until now the issue has been one of patent eligibility, and there may be other grounds for attacking Myriad's claims that may be raised in the pending lawsuits.

At this point the article veers more closely to advocacy, with Dr. Cook-Deegan making a case for invalidating Myriad's claims to the BRCA2 gene (and any that depend, logically or legally, on Myriad's claim to having invented the isolated form of this gene) based in Section 102(g) of the (1952) Patent Act.  This section can be used to invalidate a claim if the claimed invention was made prior to the patentee's making of the invention by a first inventor who did not "abandon, suppress or conceal" the invention.  This argument involves factual issues from the time during which several laboratories, including those of Mark Skolnick (Myriad's inventor) and Mary-Claire King in Seattle, were trying to identify human genes that were involved with an increased propensity for breast and ovarian cancer.  Dr. Cook-Deegan, citing Kevin Davies's book Breakthrough, concedes that the Skolnick lab "won" the race to isolate the BRCA1 gene.  The situation is different for BRCA2, according to Dr. Cook-Deegan, and he lays out in detail the "case" for third party invention of BRCA2.

According to this article, a British group, led by Michael Stratton, first provided linkage analysis data showing the gene now know as BRCA2 resided on human chromosome 13 in 1994.  As it turned out, Myriad filed its BRCA2 patent application three days before Dr. Stratton announced his team's discovery of BRCA2 in the scientific journal Nature.  In a sentence no doubt intended to illustrate the frenzied nature of the scientific race for BRCA2 (but that also seems to imply Myriad-associated shenanigans), Dr. Cook-Deegan asserts that "[t]he scientific scuttlebutt has long been that Myriad scientists learned of the pending publication and filed just in time.  But was it really in time?"  This quasi-allegation is followed by a timeline of events as follows:

The Stratton group, working with Andrew Futreal of Duke, filed a UK patent application on BRCA2 on November 23, 1995 (UK patent 2,307,477 was published on May 28, 1997).  The Stratton team submitted their BRCA2 paper on December 5.  Stratton's UK patent application was thus filed almost a month before Myriad's US application for BRCA2, and the Myriad/Utah team did not publish on BRCA2 until March 1996, three months after Stratton's team.  The Stratton team also got a US patent (6,045,997).  That patent was allowed to lapse when the first maintenance fee was due, but the US patent and patents in 18 other jurisdictions do establish a presumption of priority from Stratton's UK patent.

The plot spun in the article thickens, Dr. Cook-Deegan stating (correctly) that the U.S. Patent and Trademark Office is precluded from granting patents on the same invention (stated in the article slightly differently, that the Office is "not supposed to grant overlapping claims").  He also notes that the Office did not declare an interference proceeding, the way that priority disputes between separate inventors were resolved under the previous "first to invent" patent regime (that changed with the enactment of the Leahy-Smith America Invents Act).  He then states tantalizingly that "[t]he current litigation could finally bring to light the documents that would establish who knew what when, both who made the discovery and who deserves any patent rights on which mutations and the wild type sequence of BRCA1 and BRCA2."  The reader will be excused if she gets the impression that Dr. Cook-Deegan fervently wishes this eventuality to come to pass (and who he thinks will turn out to be the first inventor).

The article then turns to the question of whether Myriad's primer (and probe) claims satisfy the requirements of 35 U.S.C. § 101.  Much of this section of the article unfortunately relates to the recently issued Guidelines from the U.S. Patent and Trademark Office regarding patent eligibility in view of the Supreme Court's Mayo v. Prometheus and Myriad decisions.  While it is true that Judge Shelby's decision was made in consideration of these Guidelines, they do not have the force of law and represent merely how the Office (for now) is interpreting the Supreme Court's decisions.  They are certainly relevant to how claims in pending applications are being examined; they are of dubious relevance to the legal question of where the Court drew the line with regard to the patent eligibility of DNA primers and probes.

The article then discusses whether Myriad's primer and probe claims satisfy the written description and enablement requirements of Section 112.  The grounds for this challenge are that Myriad uses primers that flank BRCA gene exons and thus fall outside the scope of the claims reciting primers and probes that are fragments of BRCA cDNA (in view of the fact that these primers and probes are not expressly described in the BRCA gene patent specifications).  This argument seems to conflate whether these primers fall within the scope of Myriad's claims (and thus that construing the claims to so include these sequences may render them invalid for lack of descriptive support) and whether the practice of BRCA gene diagnostic testing by others using these non-exonic primers and probes would infringe Myriad's primer claims insofar as they are properly cabined within the confines of exonic sequences.  But Dr. Cook-Deegan is correct when he states that the validity vel non of these claims may depend on how they are ultimately construed by the District Court.

The article also focuses on claim 6 of U.S. Patent No. 5,747,282 which is not directed to DNA amplification methods and that would doubtless "capture" genomic DNA molecules clearly invalidated by the Supreme Court in Myriad.  These are also the types of molecules Dr. Cook-Deegan and colleagues showed to be invalid under 35 U.S.C. § 102, and the article briefly reviews the scientific basis for this conclusion.

Dr. Cook-Deegan further attempts to implicate the government's rights in the BRCA genes (stemming from National Institute of Health support for the basic genetic research underlying discovery of the BRCA genes).  It is worth noting that the "march-in rights" he cites as part of the Bayh-Dole Act have been available for the entirety of the time Myriad has held and threatened to assert its BRCA gene patents, and that the government has never used these march-in rights under any circumstances (although, famously, the government threatened to do so regarding the availability of the antibiotic Cipro in the wake of the anthrax scare after the terrorist attacks on September 11, 2001).  And it is further worth noting that the government has not acted even in the face of calls by Senators to do so after Myriad filed its lawsuits against BRCA genetic diagnostic test providers in the wake of the Supreme Court's decision invalidating some (but not all) of its claims.  Here, Dr. Cook-Deegan invokes not only Bayh-Dole but the Stevenson-Wydler Act (relating to rights in inventions made in government laboratories), as well as assorted misfeasances by Myriad having to do with reporting and other requirements with regard to whether the government can and should act.  And in this regard Dr. Cook-Deegan cites the knowledge (and possible testimony) of Dr. Andrew Futreal, who the article describes as:

[A] pivotal figure in understanding the discovery process in court proceedings.  He was a coauthor and co-inventor on the Myriad/Utah team that first characterized BRCA1 when he was at NIEHS, and then coauthor and coinventor on the Stratton papers and patents that first reported BRCA2.  . . .  He is thus the only person who was coauthor and coinventor for the first papers and patents for both BRCA1 and BRCA2.

In view of these assertions, it is surprising that the article doesn't supply defendants' counsel with Dr. Futreal's address.

Finally, Dr. Cook-Deegan points his readers (and defendants' counsel) to Myriad's litigation against OncorMed in 1997 over U.S. Patent No. 5,654,155, one of the patents Myriad is now asserting but that it attempted to invalidate in the prior litigation.  Dr. Cook-Deegan presents no information about any relevant evidence from this earlier litigation, but speculates that "[t]he 1997 litigation may have left a paper trail that the discovery process will unearth" because "[c]laims in the OncorMed patents were likely to be revoked or considerably weakened in 1997, and they are no more likely to be robust and enforceable now."

Finally, after noting more putative evidence of Myriad's bad behavior (here, with regard to "hoarding" its BRCA gene mutation database as a trade secret, complete with reference to "tart words" from Judge Shelby in dicta from his preliminary injunction decision), Dr. Cook-Deegan confesses that:

The historian in me wants this to go to court so we can learn what happened two decades ago.  Litigation is very costly, however, and the trial and appeals process is protracted, saps management attention, and poses recurrent decisions about whether and how to proceed further.  Moreover, litigation is a very expensive and not entirely reliable way to document historical events.  No one predicted a safety on the first play from scrimmage in the Super Bowl; any number of outcomes can still emerge from the litigation over BRCA1 and BRCA2.  The business models that emerge, however, are likely to entail more competition than Myriad's unitary genetic testing service that prevailed 1996-2013.

Perhaps.

New York Times Op-Ed Argues Law Takes Misguided Approach to Software Patents

By Michael Borella --

On March 28, Professor Robin Feldman of the University of California Hastings College of Law wrote an op-ed piece in the New York Times entitled "Slowing the Patent Trolls".  Unfortunately, like so many articles of its ilk, Professor Feldman's offering uses misleading hypotheticals and unsupported assertions to allege that the mere existence of software patents is allowing the so-called trolls to harm our economy.

Ostensibly written in anticipation of Monday's Alice v. CLS Bank oral arguments scheduled to be heard by the Supreme Court, Professor Feldman writes that the case "offers the court an opportunity to resolve two decades of economically harmful confusion over how the law grants patent protection to computer software."  Professor Feldman, however, seems to be focused not on the specific facts that lead to the Court's review of Alice's patents, but instead on her erroneous belief that software patents are, by their very nature, too broad.

She immediately starts off on the wrong foot by stating that "[s]ince the mid-1990s the software patent system has operated by its own rules . . . compared with patents for other innovations, those for software are granted using a very broad and lax standard of invention."  This is untrue, even as an opinion.  There certainly are specific rules regarding computer-implemented inventions, particularly with regard to subject-matter eligibility (see, e.g., the USPTO's post-Bilski and post-Mayo examination guidelines).  Additionally, several well-known Federal Circuit cases have resulted in the requirement that, for inventions that operate on a general-purpose computer claimed in means-plus-function format, the specification must provide an algorithm that performs the claimed functions (see, e.g., M.P.E.P. 2181(II)(B) for an overview of the case law).

If anything, computer-implemented inventions are held to a higher standard than most other types of inventions due to these additional requirements.  Rather than acknowledging that the computing arts have been singled out in this fashion, Professor Feldman contends that "[o]rdinarily, the law requires inventors to explain not just the result of an invention, but also how the invention actually works.  If you invent a car that drives on water, you have to explain exactly how you get it to stay afloat.  Not so for software: the mere idea of a floating car is enough."

This statement is a misrepresentation of the law.  If Professor Feldman can cite to an issued patent that claims software for a flying car but does not disclosed how the invention works, I will happily join her in condemning that specific patent for being vague and overly broad.  But even if such a patent comes to light, Professor Feldman's statement is yet another example of the hyperbole that is drowning out reason in an otherwise important debate.

Surely, not all patent applications that claim software should be allowed.  Some claims will be anticipated, obvious, or vague.  But this analysis is currently carried out on a case-by-case basis by USPTO examiners who apply the guidelines cited above, as well as a comparison of the claims to prior art.  Professor Feldman's flying car hypothetical would simply not pass muster under the existing examination standards.

Professor Feldman provides another hypothetical about a "software program to assess the riskiness of a driver for car-insurance purposes . . . based on how much the person texts while driving, combined with other risk indicators."  She adds that "[u]nder the current software patenting paradigm, providing the description above without much more could be enough to merit protection."  As discussed above, this notion is unsupported by the facts.

Regardless, she proposes that if one were to "specify the particular inputs used -- texting frequency, credit score, hobbies, driving history -- along with the weights and multipliers and software approach used to produce the risk score" the resulting invention would be patent-eligible.  Maybe.  The problem with approaching the topic of patentable subject matter at such a high level of abstraction is that patentability decisions are made based on the specific language of the claims when read in light of the invention as disclosed in the specification.  Hypotheticals may be useful thought exercises, but patent eligibility decisions must be made based on facts and the law.

Now turning briefly to her patent troll contentions -- Professor Feldman fails to acknowledge that the United States' patent system purposefully encourages the existence of non-practicing entities by making patent property rights freely assignable and eschewing a "working" requirement.  This is thought to help make the patent system accessible to those without abundant resources.  Indeed, public universities, such as the one that employs Professor Feldman, are permitted to acquire and hold patents related to the inventions fostered by research conducted under their auspices.  Further, as we have pointed out recently, calculations of the supposed harm due to such non-practicing entities are questionable at best.

The issues of patent-eligible subject matter and patent "trolls" are neither simple nor black-and-white.  There is a need for a rich, informed public discourse regarding both.  But this discourse is not aided by drawing questionable conclusions from an incomplete view of patent law.

A Rebuttal to The Economist's "Stalking Trolls"

By Michael Borella and Andrew Williams --

On March 8th, The Economist published an article deriding both so-called "patent trolls" and "software patents" as being impediments to innovation in the United States.  Unfortunately, as we have seen all too often when the mainstream media discusses the patent system, the article contains unsupported assertions, draws questionable conclusions, and displays a profoundly flawed understanding of patent law.  Such commentary is particularly troublesome in this case because of the wide circulation of this periodical.

At the outset, the article contains a proclamation that the United States' patent system is "dysfunctional," suggesting this fact is a forgone conclusion to the uninformed reader.  Nevertheless, in explaining how the reported developments are meant to "solve" this supposed crisis, the author reveals his unfamiliarity with the philosophical basis of the patent system in this country.  For example, the article equates non-practicing entities ("NPE") with "trolls."  The term "NPE," however, encompasses all entities that do not manufacture products, including most universities, research institutions, and individual inventors.  Even the reviled "patent assertion entities" have been acknowledged by most to serve an important role as mediator between such NPEs and operating companies often necessary to commercialize inventions.  In fact, the United States' system purposefully encourages such actions by making patent property rights freely assignable and eschewing a "working" requirement.  This is thought to help make the system accessible to everyone, not just those with abundant resources.

Certainly, no one is denying that there are actors that abuse the litigation system in this country, both with regard to intellectual property rights and otherwise.  However, elevating this minority of cases to be representative of the norm is simply unproductive.  So is the dissemination of questionable statistics.  For example, the article states as fact that patent "trolls" cost U.S. companies $29 billion in 2011.  It is presumed that the author is referring to the research of James Bessen and Michael J. Meurer, which has come under recent scrutiny because of the particular methodology used.  See, e.g., Schwartz & Kesan, Analyzing the Role of Non-Practicing Entities in the Patent System, Cornell Law Review, Vol. 99:2, pp. 425-56 (2014).  As a result, the implications that can be drawn from the data with regard to the impact of "trolls" on the system are questionable at best.

Moreover, the article's description of the patentability requirements in the United States also betrays the author's lack of understanding of the topic.  With regard to patentable subject matter, the article uses "boiling water to make tea" as an example of a "common idea" which certainly must be a law of nature, natural phenomenon, or abstract idea.  However, not only is this example not apropos, but it actually supports the counterpoint.  Heating water itself might occur in nature, but the application of that "natural" process to "make tea" does not.  And, even though people were certainly brewing tea before the United States' patent system was formed, does this mean Keurig was undeserving of a patent to its K-cups, which were essentially a new way to make tea?

Even worse, to support the allegation that the United States is issuing non-novel and obvious patents, the article mentions a single patent directed to "upgrading computer software over the internet."  Noticeably missing, however, was the patent number, title, inventor(s), and date of filing, without which it is impossible to determine just what would qualify as prior art.  The article appears to be referencing U.S Patent No. 5,771,354, which was the subject of a This American Life episode in 2013 ("When Patents Attack . . . Part Two!").  If so, contrary to the suggestion in the article, the invention claimed in that patent dated back to the early 1990s, and was ultimately found to be invalid by a jury not because the invention was being practiced in the prior art, but because the correct inventors were not listed on the patent.

Nonetheless, the reference to the "computer software upgrade" patent is yet another example of how the media mistakenly characterizes a patented invention in a few short words, rather than by the patent's allowed claims.  While gospel to patent attorneys, the well-established principle that "the claims define the invention" gets little attention elsewhere.  Instead, it is easy for a commentator to read the patent's title, abstract, part of its summary, or a few of its drawings, and then provide an over-simplified synopsis of what the patent allegedly covers.  Such an interpretation is not in accordance with U.S. patent law, where special court hearings are used during litigation for the sole purpose of defining the scope of asserted claims.  Simply put, one cannot determine what a patent actually protects by attempting to determine the "gist" of the invention from the specification -- a careful evaluation of the claims is required.

This type of fundamentally flawed analysis is often directed to software and business method patents.  Never mind that neither type of patent is actually defined by the author, or that many patents purportedly directed to either of these technologies explicitly claim computer hardware or other types of physical devices carrying out, or being impacted by, the steps of a method claim.  Perhaps software in particular is an easy target for such bullying, because it is less tangible than say, a cotton gin or a light bulb, and often operates invisibly.

However, the implication that software is too abstract to warrant patent protection unfairly singles out one of the greatest drivers of the U.S. economy over the last forty years.  A major aspect of innovation is to make products and services faster, cheaper, and better.  The patent system is intended to incentivize individuals and organizations to publicly disclose such inventions, and as a result receive a limited property right thereover.  Despite contentions of the deleterious impact of a "broken" patent system on the software industry, the computer and information industry as a whole continues to grow, as evidenced by recent record-breaking stock values, billion-dollar acquisitions, and successful initial public offerings.  A broad exclusion of computer-implemented inventions is illogical and disregards the fundamental tradeoff on which the system is based.  A ban on software patents would make as much sense as, for example, barring any invention that uses plastic from being patented.

To the extent that criticism of the patent system might be warranted, the notion that software and business methods should be unpatentable per se is gross overreaction.  In addition to having to meet the patent-eligibility bar for subject matter, a claimed invention must also be novel, non-obvious, and described in such a way that it can be practiced by one of ordinary skill in the art.  The inventions of Bilski v. Kappos, Mayo v. Prometheus, and Alice v. CLS Bank have only been analyzed for validity under the subject matter rubric.  In these cases, the Supreme Court has applied (or in the case of CLS Bank, is being asked to apply) the blunt knife of subject matter eligibility rather than the more incisive tools of novelty and obviousness.

As noted by the Court in 1980's Diamond v. Diehr, "[t]he 'novelty' of any element or steps in a process, or even of the process itself, is of no relevance in determining whether the subject matter of a claim falls within [patentable subject matter]."  This understanding was in accordance with that of Judge Giles Rich, coauthor of the 1952 Patent Statute, who wrote "[a]chieving the ultimate goal of a patent [requires] having the separate keys to open in succession the three doors of [patentable subject matter, novelty, and non-obviousness]."

The Court's recent Mayo decision has been roundly criticized for combining considerations of novelty and obviousness into the patent-eligibility inquiry in a way that requires determining the "gist" of the invention.  Consequently, Mayo runs counter to the statute, the Court's own precedent, and well-established practices of claim interpretation.  And yet, Mayo may be the standard under which CLS Bank is decided.  The problem lies not in the topic of these patents, but in the inherent subjectivity of the Mayo analysis.  The fractured, six-opinion Federal Circuit ruling in CLS Bank demonstrates that ten federal judges, who are experts in patent law, could not agree how Mayo should be applied.

Surely, not all patent applications that claim software or business methods should be allowed.  Some will be too broad, obvious, or vague.  But this analysis is best carried out on a case-by-case basis by well-educated USPTO examiners who apply workable and reasonably objective standards.

The article ends with yet another oft-asserted falsehood -- that copyright would be a "perfectly adequate means of protecting and rewarding software developers for their ingenuity."  Copyright does not protect inventions -- it protects expressions of ideas.  In the case of software, this would be the source or object code itself.  If software innovators were required to rely on the weak protection that copyright provides, the computer industry would become rife with clean-room copyists who misappropriate the ideas behind innovative software by developing cloned applications.  And the so-called "trolls" are supposed to be a drain on the economy?

Top Stories of 2013: #7 to #10

By Donald Zuhn --

Reflecting upon the events of the past twelve months, Patent Docs presents its seventh annual list of top biotech/pharma patent stories.  For 2013, we identified fourteen stories that were covered on Patent Docs last year that we believe had (or are likely to have) the greatest impact on biotech/pharma patent practitioners and applicants.  Yesterday, we counted down stories #14 to #11, and today we count down stories #10 to #7 as we work our way towards the top three stories of 2013.  As with our other lists (2012, 2011, 2010, 2009, 2008, and 2007), links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look.  As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with anything we included, please let us know.  In addition, we will be offering a live webinar on the "Top Patent Law Stories of 2013" on January 21, 2014 from 10:00 am to 11:15 am (CT).  Details regarding the webinar can be found here.

10.  Myriad Asserts Patents Against Diagnostics Companies

Less than one month after the Supreme Court issued its decision in Association for Molecular Pathology v. Myriad Genetics, Inc., holding that a naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated, Myriad filed suit against Ambry Genetics, Corp. for infringement of ten patents relating to genetic diagnostic testing.  Ambry Genetics had been one of the first companies to announce that it would provide genetic diagnostic testing for the BRCA 1 and BRCA 2 genes following the Supreme Court's decision.  Since Myriad filed suit against Ambry, it has followed with suits against Gene-by-Gene, Quest, GeneDx, Invitae, and LabCorp.  The accused infringers have not sat idly by, with both Quest and Invitae filing declaratory judgment actions against Myriad (Counsyl has also filed a declaratory judgment action against Myriad).  Myriad has also expanded its suit against certain defendants to encompass claims directed to colon cancer predictive genetic diagnostic testing.  The lawsuits show that Myriad is serious about protecting its intellectual property, including more than its BRCA tests, and may have decided it has much more to lose than the company's patents scheduled to expire over the next few years.  Sixteen years of patent exclusivity have certainly provided Myriad with the motivation and the economic means to protect its franchise, but this story will have to wait until at least 2014 for an ending.

For information regarding this and other related topics, please see:

• " Invitae Files Motion to Dismiss for Lack of Personal Jurisdiction in Myriad Genetics v. Invitae Corp.," December 11, 2013
• " Myriad Genetics Sues LabCorp over BRCA Gene Testing," December 4, 2013
• " Myriad Genetics Sues Invitae over BRCA Gene Testing and Invitae Sues Right Back," November 27, 2013
• "Where Do We Stand?" October 31, 2013
• "Defendants' Oppose Myriad's Motions to Dismiss Antitrust Counterclaims," October 28, 2013
• "Myriad Genetics Files Amended Complaint Relating to Colon Cancer Genetic Diagnostic Testing," October 23, 2013
• "Myriad Genetics Sues Quest for Patent Infringement," October 22, 2013
• "Myriad Sues GeneDx on BRCA and Other Genetic Diagnostic Patents," October 21, 2013
• "Diagnostics Giant Quest Files Declaratory Judgment Action against Myriad Genetics," October 13, 2013
• "Bay Area Genetic Diagnostics Company Files Declaratory Judgment Action against Myriad Genetics," October 10, 2013
• "Preliminary Injunction in Myriad v. Ambry and Gene-by Gene: Myriad Replies," October 9, 2013
• "Defendants' Response to Myriad's Preliminary Injunction Motions," September 19, 2013
• "Myriad Moves to Dismiss Ambry's Antitrust Counterclaims on Noerr-Pennington Doctrine," August 28, 2013
• "Amici Submit Brief in Support of Ambry Genetics and Gene by Gene," August 27, 2013
• "Ambry Responds to Myriad Lawsuit," August 7, 2013
• "Why Does Myriad Think It Can Win BRCA Gene Lawsuits?" July 30, 2013
• "Myriad Genetics Files Infringement Suit Against Gene by Gene for Genetic Diagnostic Testing of BRCA Genes," July 10, 2013
• "Myriad Genetics Files Suit Against Ambry Genetics for Genetic Diagnostic Testing of BRCA Genes," July 9, 2013

9.  District Court Finds Prenatal Diagnostic Method Not Patent Eligible; Alternatives to Method Not "Commercially Viable"

On October 30, Judge Susan Illston of the Northern District of California granted summary judgment to declaratory judgment plaintiff Ariosa Diagnostics Inc. in Ariosa Diagnostics v. Sequenom.  In a case on remand from the federal Circuit, and involving claims directed to non-invasive prenatal diagnosis of sex determination, blood typing, other genetic disorders, and detection of pre-eclampsia, using a simple blood test that reduces or eliminates the need for amniocentesis and chorionic villus sampling (which incur risks to both mother and child), the District Court determined that the asserted claims were not drawn to patent eligible subject matter because paternally inherited cffDNA is a natural phenomenon and the asserted claims merely add well-understood, routine, conventional activity in the field to that natural phenomenon.  With respect to the issue of preemption, the District Court noted that "[b]ecause generally one must be able to find a natural phenomenon to use it and apply it, claims covering the only commercially viable way of detecting that phenomenon do carry a substantial risk of preempting all practical uses of it."  The District Court therefore agreed with Ariosa's argument that the alternative methods for detecting cffDNA that Sequenom presented were not practical and commercially viable.  Life sciences patent practitioners will be following this case closely in 2014.

For information regarding this and other related topics, please see:

• " Patent Eligible Subject Matter in the District Courts: Ariosa Genetics v. Sequenom (N.D. Cal. 2013)," November 5, 2013

8.  Media and Congress Combat Patent Trolls

Only months after the final provisions of the Leahy-Smith America Invents Act were implemented, Congress deemed it necessary to propose further reforms to U.S. patent law.  The outcries last year stemmed from the apparent proliferation of "Patent Trolls," also known by the less derogatory term Patent Assertion Entities (or PAEs), and their alleged penchant of engaging in abusive patent litigation.  The mainstream media, as exemplified by National Public radio (NPR), focused on the Patent Troll problem, and Congress, perhaps swayed by the media's focus, started introducing a number of bills intended to remedy the problem.  The bill at the forefront of the discussion has been H.R. 3309, which was introduced by Rep. Bob Goodlatte (R-VA), and which the House passed in early December.  The Senate is now working on its own bills to curb PAE abuse, and given the speed with which the House passed H.R. 3309, there is a possibility that legislation may be presented to the President sometime in 2014.

For information regarding this and other related topics, please see:

• "Senate Judiciary Committee Holds Hearing on 'Protecting Small Businesses and Promoting Innovation by Limiting Patent Troll Abuse'," December 23, 2013
• "Reaction to the Passage of the Innovation Act (H.R. 3309)," December 9, 2013
• "Innovation Act Passed By House -- A Closer Examination," December 5, 2013
• "House Passes H.R. 3309 (Innovation Act)," December 5, 2013
• "'Non-Practicing Lawmakers' -- The Mark-up of H.R. 3309 (Innovation Act)," November 27, 2013
• "The Futility of Petitioning Congress (After the Fix Is In): Stakeholders Tell Judiciary Committee What's Wrong with Goodlatte Bill (H.R. 3309)," November 21, 2013
• "Yet Another 'Patent-Troll' Bill – Senator Leahy Introduces Patent Transparency and Improvements Act," November 20, 2013
• "When NPR Podcasters Hit the Patent System – An Update," November 12, 2013
• "Trolls Better Watch Out This Halloween -- Senator Hatch Introduces Patent Litigation Integrity Act," October 30, 2013
• "House Judiciary Committee Holds Hearing on Innovation Act," October 29, 2013
• "Rep. Goodlatte Introduces 'Innovation Act" to Combat Patent Trolls," October 23, 2013
• "Rep. Goodlatte Introduces Second "Discussion Draft" of Legislation Aimed at Curbing "Abusive Patent Litigation"," September 24, 2013
• "The War on Patent Trolls -- Congress Prepares for Battle," September 18, 2013
• "The GAO Issues a Report on Patent Litigation Trends -- It Turns Out that the Sky Is Not Falling," August 29, 2013
• "In Defense of the Patent System: How the Mainstream Media's Representation of it is "Broken"," July 31, 2013
• "New Patent Litigation Bill Introduced in House," July 16, 2013
• "When NPR Podcasters Hit the Patent System," June 12, 2013
• "Congress Continues Efforts to 'Reform' U.S. Patent Law," June 10, 2013
• "'When the Patent System is Attacked!' -- The White House Task Force on High-Tech Patent Issues," June 4, 2013

7.  EPO Removes Time Limit for Filing Divisional Applications

In August, word started to leak out that the European Patent Office (EPO) would be removing the current two-year time limit for filing divisional applications.  By October, reports indicated that the administrative council of the EPO had voted to amend Rule 36 EPC to remove the controversial 24-month time limit within which European divisional applications may be filed, with the sole criterion set forth in amended Rule 36(1) EPC being that the application to be divided still be pending.  In practice this means that any case that is not granted or finally refused can be divided once the new rule comes into force.  The amended rule is set to come into force on April 1, 2014.  While rules changes are frequently met with trepidation, this rule change will no doubt be welcomed by patent practitioners and applicants prosecuting applications before the EPO.

For information regarding this and other related topics, please see:

• " News from Abroad: EPO to Rescind Deadline for Filing Divisional Patent Applications," October 17, 2013
• " News from Abroad: EPO Proposal Would Remove Time Limit for Divisional Filing," September 13, 2013