“I note that all 12 active judges agreed that the Athena patent should be deemed eligible, even though seven judges apparently felt helpless in view of Mayo. Is Mayo really that broad and inflexible? In my view, not unless one treats dicta as if it were binding precedent.”
The Court of Appeals for the Federal Circuit was created to provide much-needed clarity and consistency to the nation’s patent law. In prior decades, the law had become hopelessly confused and incoherent due to disparate decisions of the regional courts of appeals. Two successive presidential commissions called for rectifying the situation because U.S. industrial competitiveness was lagging, and industries were faltering as a result of the weakness that had compromised the effectiveness of the patent system. For the previous century-and-a-half it had helped transform the country from a poor, agrarian land into the most advanced, powerful and wealthy nation on earth. In the 20th Century, nearly every significant scientific invention was created in America. But that was beginning to fade in the 1970s and beyond. Congress responded in 1982 by creating the Federal Circuit to hear all patent appeals.
Within a decade, the economy recovered and then science surged forward with advanced computers, smart phones and much more in the 1990s and beyond. The Federal Circuit helped all this by clarifying and rationalizing the patent law and, being the sole arbiter of patent law, greatly boosting uniformity. These welcome developments increased incentives to invest in expensive research and development and the even more costly process of commercializing new inventions, putting new cures, products and services into the public’s hands and onto store shelves. But investors, whether internal to a company or external, such as venture capitalists, have many options. When the expected return on investment falls too low, they divert investment away for R&D and commercialization. Therefore, the incentives need to be maintained at levels that they see as adequate.
A Backwards Trajectory
In just the last few years, those incentives have lagged again due to sudden increases in uncertainty in the patent system, particularly regarding eligibility. Because of the Federal Circuit’s application of broad statements in recent decisions of the Supreme Court, experienced patent lawyers can no longer reliably advise industry executives and investors whether a given patent will survive inevitable challenge as ineligible even if clearly new, non-obvious, and distinctly and adequately described, as required by the Patent Act.
Five years ago, in 2014, the High Court in Alice announced that its decision two years earlier in Mayo applied to all patents in all technology areas, not just medical diagnostics, the subject of Mayo. In the years since, the Supreme Court has declined to review any of the dozens of eligibility cases presented to it, leaving the Federal Circuit to decide scores of such cases without clear guidance. Because the scope of Mayo/Alice was ambiguous, the appeals court did its best to apply those precedents, as it created many of its own. At least for diagnostic method patents, the results have been uniform, and uniformly harmful in the view of many: all challenged diagnostic patents were invalidated as ineligible.
Ironically, method of treatment patents fared much better, affording little help to patients since early and accurate diagnosis is the best hope of avoiding, controlling and curing the innumerable disorders and diseases that affect humans.
In my view, the Supreme Court trapped itself in language going back over 100 years, although it concerned not eligibility but what since the 1952 Act is called obviousness, a major change in the law deliberately injected by the Congress to promote predictability and rigor into adjudications of validity. The Federal Circuit, as a subordinate tribunal, was likewise trapped by this old and off-point dicta. In its application of the Mayo/Alice regime, however, a bad situation has been made even worse. Now, the appeals court has trapped itself in its own precedents, also featuring broad and vague language and concepts that undermine predictability in many areas, even while broadly excluding diagnostic methods.
After Athena, What Now?
Studies show that already many inventions declared ineligible here have been ruled eligible throughout Europe and in major Asian nations, including China. Venture capital records reveal an out-migration of VC funds to entertainment from technology and out of the United States to nations with broader eligibility standards. How much longer can the country wait for reform? In the Senate, the IP Subcommittee promises in July or August to propose a legislative fix, but Congress typically takes years to enact a completely new bill, even when, like this one, it has bipartisan and bicameral support. I hope it can act far faster here.
Meanwhile, the Supreme Court continues to deflect all opportunities for addressing what it had created—a “mess” according to the recent Senate testimony of former USPTO Director David Kappos. The question for our country and its economy then becomes: is there nothing useful the Federal Circuit can do to at least reduce the ongoing harm? By a 7 to 5 vote to deny the en banc petition in Athena, the answer for now seems to be no. But there may be further petitions in 101 appeals, including for diagnostics. Might the balance of voting shift? I earnestly so wish, for I myself cannot reconcile the divergent 101 precedents that proliferate beyond the category of diagnostic methods. And while the fate of diagnostics is clear and consistent, it is bad innovation policy. Imagine how business executives and investors and their counsel must feel.
I note that all 12 active judges agreed that the Athena patent should be deemed eligible, even though seven judges apparently felt helpless in view of Mayo. Is Mayo really that broad and inflexible? In my view, not unless one treats dicta as if it were binding precedent. And not in the view of the current USPTO director, Andrei Iancu, whose guidelines for the Office suggest Mayo can properly be given a narrower interpretation than by the courts to date, while still following its mandate.
The chaos of eligibility urgently needs elimination. Realistically, the Federal Circuit may be the agency that can act the soonest and the most adroitly, while Congress and the Supreme Court are contemplating their options. Let’s hope that, unlike the en banc vote, it will act in concert, and promptly.
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