“The prospect of real legislative reform seems close, indeed closer than anyone would have predicted just a few months ago, and people in-the-know inside the beltway are truly beginning to become optimistic that something can be done to fix Section 101—and soon.”
There is little doubt that the way intellectual property is viewed and protected has transformed over the last 12 years, at least in the eyes of those who strategically appreciate both the importance and limitations of rights available today.
Once upon a time, corporations would seek to patent as much innovation as possible, working to obtain gargantuan patent portfolios. These gargantuan patent portfolios often provided protection in numbers, and not necessarily in quality. But with the Supreme Court becoming more interested in patents since 2007, and with decisions in KSR, Bilski, Myriad, Mayo and Alice, many of these gigantic portfolios were reduced to rubble.
There were several very large technology companies that led the charge both in the courts and on Capitol Hill to change U.S. patent laws in a way that many believed would weaken patent rights and ultimately the patent grant itself. These companies enjoyed tremendous success, and today, U.S. patent laws simply do not look anything like they did a mere 12 years ago. This became indisputably clear last year when the U.S. Supreme Court decided Oil States and said that a patent is merely a government franchise, which shocked many observers.
Back to the Future
Today, both public sector and private sector trade delegations that travel the world encouraging developing nations to adopt strong intellectual property laws find themselves encouraging those nations to enact patent laws consistent with the way America used to protect patents, rather than the way America currently protects patents.
So bad and uncertain has the law of patent eligibility become that, for example, the Cleveland Clinic and other major institutions are beginning to refrain from researching and developing innovative medical diagnostics because they cannot be patented. And because they cannot be patented, this means investors are unwilling to provide the capital necessary to take the exciting early stage innovative research and turn it into developed medical diagnostics that can be deployed in hospitals and laboratories. This should send shivers down the spine of every American.
This is alarming because, as any medical device company will tell you, it is necessary to diagnose disease before treatments and cures can be invented. And, according to a brief filed by Medtronic at the Supreme Court when Bilski was argued, new innovative devices often trail diagnostics by a decade. This means the U.S. patent system has been inhibiting innovation, not enhancing or promoting innovation as the Constitution commands. Sadly, the U.S. patent system continues to inhibit innovation as the patent policies of America have continually grown to favor the few and not the many.
A Principled Approach to Change
As bad as all of this sounds, there is hope. For the first time there is a bipartisan group of Senators and Representatives working hard to find a legislative solution. Talks are proceeding to the point where a bill to legislatively fix patent eligibility and overrule at least several Supreme Court decisions is expected to be introduced late Spring—perhaps in May or June of this year. Senator Chris Coons (D-DE), Senator Thom Tillis (R-NC), Congressman Doug Collins (R-GA) and Congressman Hank Johnson (D-GA) currently have a four-principle framework that includes the following:
Guiding Principles for Section 101 Reform
- Patent eligibility should not turn on the existence of related technology or the current state of the art. In other words, subject to meeting all other requirements of the patent statute, especially novelty, obviousness, enablement, written description, and definiteness, any useful invention should be eligible for protection regardless of whether it is new or old, conventional, known, or using other terms relevant to determining obviousness or anticipation.
- When assessing the eligibility of patent claims, those claims must be construed as a whole, with each limitation in a claim given equal weight, and none dismissed or discounted as “routine,” “known,” “conventional,” mere “data gathering,” mere “post-solution activity,” or the like. It is impermissible to carve up a claim into different parts and assess the eligibility of the parts of a claim separately, rather eligibility must consider the claimed invention as a whole.
- Diagnostic and life science technologies should be eligible for patent protection per se, subject to meeting the other existing statutory requirements, and should not be considered a law of nature, natural phenomena, or otherwise patent ineligible subject matter.
- Any reform to Section 101 should statutorily codify a definition and/or exception(s) to patent eligibility. Any statutory exception(s) should not use the existing judicial exceptions of abstract ideas, laws of nature, or natural phenomena. Any statutory exceptions should be the sole and exclusive basis for excluding subject matter from eligibility and may not be expanded upon by courts. Any definition of eligible subject matter should be adaptive to include new technologies not yet invented.
This is all good news for innovators for a variety of reasons. First, it would mean a return to patent laws that encourage entrepreneurial risk-taking, which fosters innovation among the many individuals and start-up companies that have always dared to dream about the future and explore different and exciting ways to envision that future. Second, the prospect of real legislative reform seems close, indeed closer than anyone would have predicted just a few months ago, and people in-the-know inside the beltway are truly beginning to become optimistic that something can be done to fix Section 101—and soon. Third, while the Supreme Court is supposed to be wholly independent and above the political fray and public debates that sway the masses, Supreme Court watchers know that isn’t exactly correct. Supreme Court Justices are people and they react, and the Supreme Court has reacted to Congress pursuing legislation in the past, including in the early 1980s on the cusp of the formation of the Federal Circuit, which was formed because Congress was displeased with the fact that few (if any) patent claims were ever upheld as valid in federal courts.
So, there is great optimism for the future. There does appear to be a light at the end of what has been a very long tunnel. And given the delay between filing a patent application, a patent ultimately being awarded, and a patent being litigated or licensed, it seems likely that patent applications filed today will enjoy a much brighter future than those filed during the darker days of the past decade.
While the future looks brighter, it will be critically important, however, to continue to remember that quality, not quantity, will be the rule moving forward. And, frankly, it always should have been the rule. It always struck me as odd that companies would artificially inflate patent numbers with poorly drafted patents that describe marginal innovation, at best. Those patents cost money to draft, file, prosecute and maintain. And was anyone ever really scared by those paper tiger patents? Maybe. But was it the patents that were scary or just the thought of litigation?
In any event, regardless of the “mine is bigger than yours” mentality that led to the competitive rise to huge patent portfolios without much thought about quality, today, what is required is a thoughtful and strategic approach to innovation that holistically takes into account innovation possibilities, market realities, and legal trends. That will be the way forward for the foreseeable future as well. Of course, budgets are frozen or decreasing, which means navigating the increased complexity will still require working smarter, not harder. Because even as the patent eligibility crisis might soon find a resolution, patent law across the board has become more complex and the requirements to obtain and keep a patent only more onerous.
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