TURNING GOLD TO LEAD: HOW PATENT ELIGIBILITY
`DOCTRINE IS UNDERMINING U.S. LEADERSHIP IN INNOVATION
`
`Kevin Madigan* & Adam Mossoff**
`
`Compared to other countries, the United States has long had a “gold
`standard” patent system. The U.S. has led the world in securing stable and
`effective property rights in cutting-edge innovation; most recently, in
`protecting biotech and computer software inventions. Presenting
`information from a database of 17,743 patent applications recently filed in
`the U.S., China, and Europe, this Essay explains how this “gold standard”
`designation is now in serious doubt. Many of these applications represent
`pioneering, life-saving inventions, such as treatments for cancer and
`diabetes. Although all 17,743 patent applications were rejected in the U.S.
`as ineligible for patent protection, 1,694 of them were granted by the
`European Patent Office, by China, or both. The cause of the U.S. rejections
`is the Supreme Court’s recent spate of decisions that upended patent
`eligibility doctrine, especially as it has been applied to high-tech and
`biotech innovation. The U.S. patent system is increasingly mired in legal
`uncertainty, except for the firm knowledge derived from data on the
`massive numbers of invalidations of issued patents and of rejections of
`patent applications. In addition to highlighting some of the 1,694
`inventions that were denied patent protection in the U.S., this Essay
`discusses this new legal uncertainty in the U.S. patent system, how this is a
`key change from the innovation-spurring approach of the U.S. patent
`system in the past, and what this means for the U.S. as other jurisdictions
`like China and the European Union become forerunners in securing the
`new innovation that drives economic growth and flourishing societies.
`
`INTRODUCTION
`
`Over the past ten years, the United States patent system has been
`transformed by new legislation,1 regulatory actions,2 and numerous
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`* Legal Fellow, Center for the Protection of Intellectual Property, Antonin Scalia Law School at George
`Mason University. The authors would like to thank Robert Sachs and David Kappos for providing them
`with the database of patent applications that is reported on in this Essay.
`** Professor of Law, Antonin Scalia Law School at George Mason University.
`1 See generally Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284 (2011) (codified
`in scattered sections of 35 U.S.C.).
`2 See Press Release, Fed. Trade Comm’n, FTC Finalizes Settlement in Google Motorola Mobility Case,
`(July 24, 2013), https://www.ftc.gov/news-events/press-releases/2013/07/ftc-finalizes-settlement-
`google-motorola-mobility-case (discussing the FTC’s approval of Google/Motorola merger, in which
`the FTC required Google to commit to the non-enforcement its standard essential patents); see also
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`Voip-Pal Ex. 2096
`IPR2016-01198 and IPR2016-01201
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`decisions by the United States Supreme Court addressing all areas of patent
`doctrine. These widespread and systematic changes have affected
`infringement remedies,3 licensing activities,4 and what types of inventions
`and discoveries are eligible for patent protection,5 among many other patent
`rights and doctrines. Inventors, universities, and companies working in the
`U.S. innovation economy have faced more than a decade of extensive legal
`changes to the patent system,6 and this constantly morphing legal landscape
`has created extensive uncertainty for all stakeholders.
`These many disruptive legal changes raise the question whether the
`U.S. still can lay claim to being the “gold standard” patent system as
`compared to the rest of the world.7 This concern is particularly salient in
`patent eligibility doctrine. In four decisions issued between 2010 and 2014,
`
`Letter from Renata B. Hesse, Acting Assistant Att’y Gen., U.S. Dep’t of Justice, Antitrust Division, to
`Michael A. Lindsay, Esq., Dorsey & Whitney LLP (Feb. 2, 2015), https://www.justice.gov/atr/response-
`institute-electrical-and-electronics-engineers-incorporated (approving under the antitrust laws the
`Institute of Electrical and Electronics Engineers, Inc. (“IEEE”)’s rules prohibiting enforcement of
`standard essential patents declared in this standard-setting organization).
`3 See eBay, Inc. v. MercExchange, LLC, 547 U.S. 388, 392–93 (2006) (holding that an injunction is not
`presumptively available to patent-owners on a finding of infringement); see also Samsung Elec. Co. v.
`Apple Inc., 137 S. Ct. 429, 434–36 (2016) (holding that damages must be limited to the particular value
`of a component, and not the market value of a device comprising this component).
`4 See Impression Prods, Inc. v. Lexmark Int’l, Inc., 137 S. Ct. 1523, 1533 (2017) (holding that any and
`all sales of a patented product by the patent-owner regardless of the conditions imposed on the sale
`automatically terminates all patent rights); MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 137
`(2007) (holding that a licensee can challenge the validity of the licensed patent in court without having
`to be liable for infringement by first violating the license agreement).
`5 See Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347, 2360 (2014) (holding that a computer program for
`facilitating complex international financial transactions is an abstract idea and cannot be patented); see
`also Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2117 (2013) (holding
`that isolated DNA for laboratory and medical uses is an unpatentable natural phenomenon); Mayo
`Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 72–73 (2012) (holding that a diagnostic
`medical treatment for an autoimmune disorder is an unpatentable discovery of a law of nature); Bilski v.
`Kappos, 561 U.S. 593, 609 (2010) (holding that a business method for hedging investment risk is an
`abstract idea and not a patentable invention).
`6 There have also been numerous bills introduced in Congress each year, which have entailed extensive
`and expensive lobbying fights and policy debates. See, e.g., Venue Equity and Non-Uniformity
`Elimination Act of 2016, S. 2733, 114th Cong. (2016); Innovation Act, H.R. 9, 114th Cong. (2015);
`Innovation Act, H.R. 3309, 113th Cong. (2013); Saving High-Tech Innovators from Egregious Legal
`Disputes Act of 2013, H.R. 845, 113th Cong. (2013).
`7 See Ashley Gold et al., Lee Staying on as Patent Chief Under Trump Administration, POLITICO (Jan.
`19, 2017), http://www.politico.com/blogs/donald-trump-administration/2017/01/michelle-lee-patent-
`office-chief-to-stay-on-233847 (quoting Adam Mossoff that “the U.S. has lost its ‘gold standard’ patent
`system—it no longer promises stable, effective property rights to innovators”); David Kappos et al.,
`From Efficient Licensing To Efficient Infringement, N.Y. L.J. (Apr. 4, 2016),
`http://www.newyorklawjournal.com/id=1202753754690/From-Efficient-Licensing-to-Efficient-
`Infringement?slreturn=20170307103946 (“The recent degradation of the U.S. patent system will test the
`long history of economic prosperity associated with strengthening, rather than weakening, intellectual
`property rights.” (footnote omitted)); Joff Wild, Sadly, Michelle Lee is Wrong to Believe the US IP
`System is Gold Standard and That it Works for the Little Guy, INTELL. ASSET MGMT. (Dec. 15, 2013),
`www.iam-media.com/blog/Detail.aspx?g=ce27a358-7b3f-4fe5-b8fe-4cc7e73fd515 (discussing PTO
`Director Michelle Lee’s designation of the US patent system as the “gold standard” and stating that
`“[w]hen Lee talks about the amount of innovation the US produces showing that the US system is the
`gold standard, she is talking about the past.”).
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`the Supreme Court created a new legal test for determining whether an
`invention or discovery fundamentally counts as a technological innovation
`worthy of a patent under § 101 of the Patent Act.8 Unfortunately, as
`commentators have pointed out, this legal test is rife with indeterminacy,
`creating substantial doubt as to whether long-term research and
`development (“R&D”) expenditures can be recaptured through stable and
`effective property rights in technological innovation.9
`
`This recent legal development raises an important question about
`whether the U.S. is surrendering its long-held position as the world leader
`in promoting and securing new technological innovation. This is
`significant, because other countries are neither standing still nor following
`the U.S. lead this time. Other jurisdictions, such as in Europe and China,
`are now granting patents for the same or related inventions and discoveries
`that are being rejected in the U.S. as ineligible for patent protection. This
`raises the question of whether these countries are positioning themselves to
`bypass the U.S. as the forerunners of innovation, especially in the research-
`intensive sectors of the innovation economy, such as in the life sciences,
`biotech, and high tech.
`
`This Essay contributes to this critical policy question by offering
`some empirical data on the impact of the new patent eligibility doctrines on
`existing patents and on patent applications. It presents statistics on patent-
`eligibility decisions in U.S. courts and at the United States Patent and
`Trademark Office (“PTO”), and it presents for the very first time
`information from a database of 17,743 recently filed patent applications in
`the U.S., the European Patent Office (“EPO”), and China.10 All of these
`patent applications were rejected (and then abandoned) in the U.S. on the
`ground that they are ineligible for patent protection under § 101, but 1,694
`of them were granted by the EPO, in China, or by both. These 1,694 patent
`applications rejected by the PTO raise the specter of the U.S. losing its gold
`standard status, as many of these patent applications represent innovative
`
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`8 See cases cited supra note 5.
`9 See, e.g., Brief of 19 Law Professors as Amici Curiae in Support of Petition for Writ of Certiorari at
`13, Sequenom, Inc. v. Ariosa Diagnosis, Inc., 136 S. Ct 2511 (2016) (No. 15-1182), 2016 WL 1605521
`(detailing how the Supreme Court’s new test for patent eligibility is both indeterminate and overly
`restrictive).
`10 This database was compiled by Robert Sachs, a Partner at Fenwick & West, and David Kappos, a
`Partner at Cravath, Swaine & Moore LLP and former Director of the PTO. An earlier version of this
`database obtained by the authors was limited in scope, and this resulted in previous drafts mistakenly
`reporting that 1,728 patent applications had been granted in China and by the EPO but had been denied
`in the U.S. The database has since been updated and the correct numbers are reported here. The 17,743
`patent applications is a subset of 48,586 total patent applications that received a § 101 rejection in initial
`or final office actions and then were abandoned between August 1, 2014 and September 27, 2017. The
`17,743 applications received final rejections by the PTO as patent ineligible. The database can be
`accessed here: https://cpip.gmu.edu/wp-content/uploads/sites/31/2017/10/Madigan-Mossoff-Turning-
`Gold-to-Lead-Final-Dataset.pdf. For questions about the database, please contact Robert Sachs at
`RSachs@fenwick.com.
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`and life-saving inventions in the life sciences and biotech, such as
`diagnostic cancer treatments, medical devices, and ultrasound imaging.11
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`In addressing this concern about the U.S. conceding its gold
`standard patent system to China and Europe, increasingly voiced by many
`lawyers and commentators, this Essay explains how and why this matters.
`First, it details why the U.S. has been referred to as having a gold-standard
`patent system relative to other countries. Second, it briefly explains the four
`recent patent-eligibility decisions by the U.S. Supreme Court. Third, it
`presents statistics and other empirical data on how the Court’s patent-
`eligibility doctrine has been applied by the PTO and the courts, with
`reference to some examples from the database of 17,743 patent
`applications.
`
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`THE GOLD STANDARD PATENT SYSTEM IN THE U.S.
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`I.
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`The U.S. has long been regarded as the world leader in securing
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`property rights in technological innovation, granting patents for the next
`wave of discoveries when the rest of the world hesitates. Professor Zorina
`Kahn, a leading economic historian, concludes that the U.S. patent system
`has been successful precisely because it consistently secured legal
`protection for the fruits of inventors’ labors.12 This truth is confirmed by the
`spread of patent laws across the world throughout the nineteenth and early
`twentieth centuries that were explicitly modeled on the U.S. system.13 This
`pattern of U.S. leadership in securing patents in the next wave of
`innovation continued up through the two most recent technological
`revolutions of our modern era: the biotechnology and high-tech revolutions.
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`Biotechnology
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`A.
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`In 1980, the Supreme Court held in Diamond v. Chakrabarty14 that
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`a genetically modified bacterium is a patentable innovation under § 101 of
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`11 See infra note 81 and accompanying chart.
`12 B. Zorina Kahn, Trolls and Other Patent Inventions: Economic History and the Patent Controversy in
`the Twenty-First Century, 21 GEO. MASON L. REV. 825, 855 (2014) (describing how “[i]ntellectual
`property institutions were successful in the United States largely because they ensured open access to
`creative individuals, decentralized decision making and extensive markets for technology, and strong
`legal enforcement of such rights”); see also Adam Mossoff, A Brief History of Software Patents (and
`Why They’re Valid), 56 ARIZ. L. REV. SYLLABUS 62 (2014) (explaining how the U.S. patent system has
`succeeded because it secured property rights in the new innovation that has come about with each new
`era, whether in the Industrial Revolution or in the Digital Revolution).
`13 See Kahn, supra note 12, at 854–55 (discussing how intellectual property rights played a prominent
`role in the nineteenth century in the U.S. overtaking other nations as a leader in industry and
`technology, which led to “many countries voluntarily adopting the distinctive U.S. rules and
`standards”).
`14 447 U.S. 303 (1980).
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`the Patent Act.15 Although largely forgotten today, this was a time in which
`the patentability of the cutting-edge, innovative discoveries in the nascent
`biotech revolution was highly controversial.16 The Chakrabarty Court
`definitively settled the question in the U.S.: pioneering work by scientists
`and innovators in the U.S. should be promoted and protected by the patent
`system.17 Commentators widely recognize that Chakrabarty was a key
`factor in spurring the explosive growth in the biotech industry in the
`ensuing decade in the U.S.18
`The Charkrabarty Court’s recognition that the products of biotech
`
`research are patentable, especially when such products are living organisms
`or represent the building blocks of life, paved the way for dramatic
`advances in the life sciences and in medical treatment, such as in cancer
`research. One prominent example is the invention of the “oncomouse” in
`the 1980s. After the Chakrabarty decision, researchers at Harvard Medical
`School created a mouse that was genetically prone to cancer by giving it a
`gene that causes tumor growth, leading to invaluable opportunities to
`research new treatments for cancer.19 Following the Chakrabarty precedent,
`the U.S. was the first country to secure a patent in this radical biotech
`innovation in 1988.20
`
`The genetic modification of living organisms has been
`controversial,21 and as a result of this controversy, other countries initially
`refused to secure this innovation with patents. For fifteen years, the
`oncomouse patent application languished in the European Patent Office,
`mired in a legal quagmire of a series of rejections, court appeals, and
`remands back to the EPO for re-examination of the patent application; the
`
`15 Id. at 310.
`16 Id. at 316 (detailing a “parade of horribles” from Nobel Laureates and other scientists about the
`dangers of biotech research, who argued that it should not be patentable).
`17 Id. at 316–17. The Court recognized that biotech innovation like the genetically modified bacteria at
`issue in this case is a patentable invention “precisely because such inventions are often unforeseeable.”
`Id. at 316. This was a significant insight by the Court, because this is the function of the patent
`system—to promote and secure dynamic innovation. See Adam Mossoff, A Simple Conveyance Rule for
`Complex Innovation, 44 TULSA L. REV. 707, 729 (2009) (discussing Chakrabarty and other cases as
`exemplifying the purpose of the patent system in securing unpredictable innovation precisely because
`innovation is unpredictable).
`18 See, e.g., ROBERT PATRICK MERGES & JOHN FITZGERALD DUFFY, PATENT LAW AND POLICY 76 (5th
`ed. 2011) (noting that Chakrabarty was “extremely important for the then-nascent biotechnology
`industry because it established that the fruits of the industry’s research . . . would be eligible for
`patenting”); see also John Edward Schneider, Microorganisms and the Patent Office: To Deposit or Not
`to Deposit, That is the Question, 52 FORDHAM L. REV. 592, 592, 594 (1984) (noting that the “revolution
`in biotechnology is one of the most important developments affecting industry in the twentieth century”
`and that Chakrabarty “spurred the increased commercial interest in biotechnology” (footnotes
`omitted)).
`19 Bioethics and Patent Law: The Case of the Oncomouse, WIPO MAGAZINE, June 2006, at 16,
`http://www.wipo.int/export/sites/www/wipo_magazine/en/pdf/2006/wipo_pub_121_2006_03.pdf.
`20 U.S. Patent No. 4,736,866 (issued Apr. 12, 1988).
`21 See, e.g., Bioethics and Patent Law, supra note 19 (discussing ethical concerns regarding transgenic
`technology).
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`EPO finally relented and granted the patent in 2004, almost two decades
`after the U.S. patent had been issued.22 Even worse, after a similar multi-
`decade legal fight, some countries rejected outright the patent application
`on the oncomouse, such as Canada’s final rejection of the patent application
`in 2002.23 Although the EPO ultimately ceded to the patenting of this
`innovation, its decision to do so decades after the U.S. was significant for
`the development of a domestic biotech industry in the U.S. By first
`securing property rights in the fruits of biotech research, the U.S. became
`the birthplace of the biotech revolution.24 Europe lost the competitive and
`commercial edge in biotechnology to the U.S., which had the foresight to
`protect a new and innovative industry. This new industry both
`revolutionized modern medical research and healthcare treatments and
`brought economic growth to the many U.S. cities in which these new
`companies sprouted and flourished.25
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`B.
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`Software Programs
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`In the early days of digital computing, there was great uncertainty
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`surrounding what exactly constituted a software program and whether these
`programs represented a patentable invention.26 This confusion was obvious
`in 1972 in Gottschalk v. Benson27 when the Supreme Court denied patent
`protection for a software program, asserting that the patent claimed merely
`a “mathematical formula” and thus was unpatentable as an “abstract idea.”28
`At the time of Benson, digital computers were still in their infancy as
`consumer products, as it was a decade before the Personal Computer
`(“PC”) Revolution of the 1980s. Thus, the legal and technological
`confusion reflected in Benson about the nature of software innovation was
`
`
`22 See id. at 17 (explaining how in 2004 the EPO “concluded that the usefulness of the oncomouse in
`furthering cancer research satisfied the likelihood of substantial medical benefit, and outweighed moral
`concerns about suffering caused to the animal”).
`23 See Harvard Coll. v. Canada (Commissioner of Patents), [2002] 4 S.C.R. 45, 46, 122 (Can.) (finding
`that “[a] higher life form is not patentable because it is not a ‘manufacture’ or ‘composition of matter’
`within the meaning of ‘invention’” in [Canada’s] Patent Act”).
`24 See Life Sciences and Biotechnology—A Strategy for Europe: Communication from the Commission
`to the European Parliament, the Council, the Economic and Social Committee and the Committee of the
`Regions, at 14–15, COM (2002) [hereinafter Life Sciences and Biotechnology]; see also CLAUDE
`BARFIELD & JOHN E. CALFEE, BIOTECHNOLOGY AND THE PATENT SYSTEM: BALANCING INNOVATION
`AND PROPERTY RIGHTS 24–29 (2007) (discussing the especially crucial role patent protection has
`played in biotechnological innovation).
`25 See Life Sciences and Biotechnology, supra note 24, at 14–15 (discussing Europe’s “fragile”
`biotechnology sector and noting that “the US biotechnology industry started earlier, produces more than
`three times the revenues of the European industry, employs many more people (162,000 against around
`60,000), is much more strongly capitalized and, in particular, has more products in the pipeline”).
`26 See generally Mossoff, supra note 17 (discussing this early history and controversy); see also
`MERGES & DUFFY, supra note 18, at 134–35, 154–58.
`27 409 U.S. 63 (1972).
`28 Id. at 71–72.
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`perhaps understandable.29 Still, Justice William Douglas’s opinion in
`Benson was unfortunate, because it inserted into patent law a fundamental
`misunderstanding about computer programs. It would be nearly ten years
`before a more careful and better-informed Supreme Court corrected this
`initial misstep.
`In 1981, the Supreme Court held in Diamond v. Diehr30 that a
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`computer program was not automatically an “abstract idea” or “algorithm”
`that precluded patent protection.31 Consistent with the Chakrabarty decision
`the year before, the Diehr Court recognized that the use of a computer
`software program to operate a machine for a useful purpose—in this case, a
`manufacturing process for curing rubber—was technological innovation
`deserving of legal protection in the patent system.32 The key was
`recognizing how the software program functioned in creating new
`technological innovation; in the technical terms of patent law, the Diehr
`Court reaffirmed a basic precept of patent law that all patent claims must be
`evaluated as a whole as to their nature and function as new, useful, and
`nonobvious inventions.33
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`In the ensuing PC Revolution in which software programs became
`separate commercial products that served particular and useful functions for
`consumers who purchased them in the marketplace, the courts’
`understanding of the nature of software innovation and its patent eligibility
`also evolved. In the 1990s, the Court of Appeals of the Federal Circuit thus
`recognized that software programs represented the equivalent of a digital
`machine.34 If a mechanical typewriter was a patentable invention in the
`analog world of the Industrial Revolution in the nineteenth century, then a
`word processor is a patentable invention as a digital machine in the high-
`tech revolution of the late twentieth century. In their specific technological
`and commercial contexts, a typewriter and a word processor program are
`each a valuable machine that serves a specific function for end-users. Thus,
`as cutting-edge innovation, each invention is precisely what the patent
`system is supposed to promote and secure to inventors and to the
`companies that deploy these products and services in the marketplace. 35
`
`
`29 See Mossoff, supra note 12, at 70 n.29.
`30 450 U.S. 175 (1981).
`31 Id. at 184–89.
`32 See id. at 187 (“[A] claim drawn to subject matter otherwise statutory does not become nonstatutory
`simply because it uses a mathematical formula, computer program, or digital computer.”).
`33 Id. at 192 (finding that “when a claim containing a mathematical formula implements or applies that
`formula in a structure or process which, when considered as a whole, is performing a function which the
`patent laws were designed to protect (e. g., transforming or reducing an article to a different state or
`thing), then the claim satisfies the requirements of § 101”).
`34 In re Alappat, 33 F.3d 1526, 1545 (Fed. Cir. 1994).
`35 See Brief of Ten Law Professor as Amici Curiae in Support of Plaintiff-Appellee at 9–10, Trading
`Techs. Int’l, Inc. v. CQG, Inc., 675 Fed. App’x 1001 (Fed. Cir. 2017) (No. 2016-1616), 2016 WL
`401711; Mossoff, supra note 12, at 80 (warning that “[t]o restrict the patent system to only the valuable
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`The court decisions in Diehr, Chakrabarty, and Alappat, among
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`others, meant that innovators knew the fruits of their inventive labors
`would be secured to them under U.S. law. Despite fluctuations over time in
`the specific legal protections provided to innovators in the U.S., the patent
`system has generally secured stable and effective property rights in the new
`innovation that drove the Industrial Revolution, the Biotech Revolution,
`and the Digital Revolution.36 For this reason, it rightly earned the “gold
`standard” designation compared to the rest of the world. But this “gold
`standard” designation is now open to question, as the U.S. has retreated in
`recent years from ensuring that its patent system is properly forward
`looking in promoting and securing new technological innovation in the
`twenty-first century.
`
`II.
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`THE NEW PATENT ELIGIBILITY JURISPRUDENCE
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`Between 2010 and 2014, the Supreme Court issued four decisions
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`that have dramatically restricted the scope of inventions that can receive
`patent protection: Bilski v. Kappos,37 Mayo Collaborative Services v.
`Prometheus Laboratories, Inc.,38 Association for Molecular Pathology
`(“AMP”) v. Myriad Genetics,39 and Alice Corp. v. CLS Bank
`International.40 These four decisions have significantly impacted the U.S.
`patent system. First, they each respectively restricted the scope of
`patentable inventions, and thereby incrementally chipped away at the
`innovation gains achieved by Chakrabarty, Diehr, and other prior court
`decisions. The totality of these four decisions is a substantial restriction on
`the scope of what counts as a patentable invention. Second, and far worse,
`they have injected tremendous legal uncertainty into the U.S. patent system,
`undermining the ability of inventors, universities, venture capitalists, and
`companies to make long-term investment decisions in R&D.41 This Part
`will briefly review these decisions and detail their impact on the U.S.
`innovation economy.
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`analog machines and processes of the nineteenth century is to turn the patent system on its head—
`denying today’s innovators the protections of the legal system whose purpose is to promote and secure
`property rights in innovation”).
`36 See generally Stephen Haber, Patents and the Wealth of Nations, 23 GEO. MASON L. REV. 811 (2016)
`(surveying all of the historical and economic research that overwhelmingly proves that patents are a key
`factor in promoting innovation and economic growth).
`37 561 U.S. 593 (2010).
`38 566 U.S. 66 (2012).
`39 133 S. Ct. 2107 (2013).
`40 134 S. Ct. 2347 (2014).
`41 See generally Joan Farre-Mensa et al., What is a Patent Worth?: Evidence from the U.S. Patent
`“Lottery”, (Nat’l Bureau of Econ. Research, Working Paper No. 23268, 2017),
`https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2704028 (finding causal connection between a
`startup’s ownership of a patent and its ability to obtain venture capital funding, and thus finding a causal
`connection between patents and the ultimate market success of a startup company).
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`A.
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`Bilski v. Kappos
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`In 2010, the Supreme Court addressed for the first time whether
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`new and useful business methods are patentable inventions as a “process”
`under § 101 of the Patent Act.42 Despite an extensive legal and policy
`debate about the patent eligibility of business methods,43 the Bilksi Court
`held that they are an invented process capable of being patented (as long as
`they met the other patentability requirements).44 While the Bilski Court
`emphasized that business method patents are not unpatentable per se,
`provoking a strident “dissent” on this issue by Justice John Stevens,45 the
`Court ultimately concluded that the business method in this case was in fact
`an “abstract idea” and thus unpatentable.46 In reaching this decision, the
`Court provided no legal guidance on how to determine what counts as an
`unpatentable “abstract idea,” creating an ambiguous legal precedent that
`has provided no guidance to stakeholders in the high-tech industry as to
`how it might be applied to their inventive work-product. Unsurprisingly,
`commentators bemoan how Bilski started a legal practice of mass
`invalidation of patents on software, business methods, and diagnostic
`methods with vague or conclusory court opinions,47 which only picked up
`speed in the ensuing years.
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`42 35 U.S.C § 101 (2012) (“Whoever invents or discovers any new and useful process, machine,
`manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent
`therefor, subject to the conditions and requirements of this title.” (emphasis added)).
`43 Compare Michael Risch, Everything is Patentable, 75 TENN. L. REV. 591, 609–11 (2008) (arguing
`that business methods are patentable) with Robert P. Merges, As Many as Six Impossible Patents Before
`Breakfast: Property Rights for Business Concepts and Patent System Reform, 14 BERKELEY TECH. L.J.
`577, 581 (1999) (arguing that business methods should not be patentable).
`44 Bilski v. Kappos, 561 U.S. 593, 604 (2010) (“This Court’s precedents establish that the machine-or-
`transformation test is a useful and important clue, an investigative tool, for determining whether some
`claimed inventions are processes under § 101. The machine-or-transformation test is not the sole test for
`deciding whether an invention is a patent-eligible ‘process.’”).
`45 See id. at 613–57 (Stevens, J., concurring). Justice Stevens’ opinion is nominally styled as a
`concurrence, because he agreed with the decision that the patent in this case was an unpatentable
`abstract idea, but the substance of his opinion is a lengthy, wide-ranging dissent from the Bilski Court’s
`holding that business methods are patentable inventions.
`46 Id. at 611.
`47 See, e.g., Edward Van Gieson & Paul Stellman, Killing Good Patents to Wipe out Bad Patents:
`Bilski, the Evolution of Patentable Subject Matter Rules, and the Inability to Save Valuable Patents
`Using the Reissue Statute, 27 SANTA CLARA COMPUTER & HIGH TECH. L.J. 403, 404 (2010) (referring
`to the Bilski decision as “amorphous” and thus predicting that it “has now set the stage for years of
`Federal Circuit litigation defining the scope of patentable subject matter for software and business
`method patents”); Daniel A. Tysver, Are Software and Business Methods Still Patentable After the
`Bilski Decisions?, BITLAW, http://www.bitlaw.com/software-patent/bilski-and-software-patents.html
`(last visited Aug. 13, 2017) (claiming that “some of the software and business method patents issued by
`the U.S. Patent and Trademark Office over the last twenty years are no longer valid under
`the Bilski decisions” and that “[u]nfortunately, we don't have a clear understanding of the dividing line
`between patentable software and business method inventions and unpatentable ideas”).
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`B. Mayo Collaborative Services v. Prometheus Laboratories, Inc.
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`Two years later, the Supreme Court further narrowed the scope of
`
`patentable subject matter in the life sciences and biotech industry when it
`held that a patent on a medical treatment method was invalid because it was
`a “law of nature.”48 Unlike in Bilski, the Mayo Court was not faced with a
`fundamental question as to whether medical treatment methods are
`patentable inventions—they clearly are—but the Mayo Court concluded in
`this case that th