How Misaligned Incentives Are Now Killing Us

By Andrew Berks & Gene Quinn
April 1, 2020

Facts matter. Policies matter. And thanks to the current coronavirus pandemic the world is learning first hand why the path chosen by the Supreme Court to shut down medical diagnostics in America was a mistake of epic proportions.

coronavirus - https://depositphotos.com/152093816/stock-photo-modern-medical-equipment-at-testing.htmlToday, like so much of the rest of the world, the United States is faced with many shortages due to the coronavirus pandemic, including personal protective equipment, basic medical supplies, and qualified medical staff. Of course, the lack of treatments or vaccine is a huge problem. Another secular problem is the lack of a quick, inexpensive, reliable test for the virus.

The Big Problem

But a test for the virus is a diagnostic method, and that is a big problem for U.S. patent laws because diagnostic methods are simply not patent eligible in the United States. This is also a big problem for the world because ever since the veil of patent eligibility was lifted for the life sciences sector in 1981 by the U.S. Supreme Court in Diamond v. Chakrabarty, the U.S. has dominated the biotechnology sector, specifically, and life science sectors more generally speaking. In 1981, the Supreme Court opened the floodgates saying that what was created by man could be patented, and if it could be owned it could be invested in, and investors rushed in and the biotechnology industry that we know today was born. But what the Supreme Court gave they can, and ultimately did, take away.

Thanks to the propensity of the federal courts to chase rabbits down holes, today the overbroad and over-inclusive definitions of what constitutes a law of nature, a natural phenomenon, or qualifies as an abstract ideas has captured innovative technologies in the death spiral trap of unpatentable subject matter—like light trying to escape from a black hole, paradigm shifting innovations that wind up characterized as a law of nature, natural phenomenon or abstract idea cannot break out. Witness: Assn, Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013) (isolating naturally occurring DNA used for the detection of a breast cancer gene is insufficient for patent eligibility); Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir. 2015) (rehearing en banc denied, 809 F.3d 1282 (Fed. Cir., 2015)) (cell-free fetal DNA (“cffDNA”) in maternal plasma and serum useful for prenatal diagnosis of fetal DNA that avoids the risks of prior art techniques; claims are directed to a natural phenomenon and the methods are conventional, routine and well understood, so unpatentable); In re Roslin Institute, 750 F.3d 1333 (Fed. Cir. 2014) (mammalian clones found to be a natural phenomenon that did not possess “markedly different characteristics than any found in nature.”).

True Mischief

The true mischief, however, is found in Mayo, where the Supreme Court found that the steps in the claimed processes (apart from the natural laws themselves) involve well-understood, routine, conventional activity previously engaged in by researchers in the field. Mayo Collaborative v. Prometheus Labs., 132 S. Ct. 1289, 1294 (2012). Prometheus’ patents were said to set forth laws of nature—namely, relationships between concentrations of certain metabolites in the blood and the likelihood that a dosage of a thiopurine drug will prove ineffective or cause harm. Id. at 1296-1297. The court notes that the relation between a therapeutically effective dose and a toxic dose itself exists in principle apart from any human action. The relation is a consequence of the ways in which thiopurine compounds are metabolized by the body—entirely natural processes. So, a patent that simply describes that relation allegedly sets forth a natural law. Id. at 1297. “[We] conclude that the patent claims at issue here effectively claim the underlying laws of nature themselves. The claims are consequently invalid.” Id. at 1305.

It has been widely recognized, even in the Mayo decision itself, that this outcome “will interfere significantly with the ability of medical researchers to make valuable discoveries, particularly in the area of diagnostic research.” Mayo at 1304. See also, e.g., Sanjeev Mahanta, Patent Eligibility of Medical Diagnostic Inventions: Where Are We Now, and Where Are We Headed? IPWatchdog, 4/14/2019.   Perhaps recognizing the havoc this decision would cause, the Supreme Court in the Mayo opinion invited the intervention of Congress to rectify this situation (id.), an invitation which Congress has so far declined to accept, although recent attempts by Senator Thom Tillis (R-NC), Senator Chris Coons (D-DE), Representative Steve Stivers (R-OH) and Representative Hank Johnson (D-GA) seem all the more urgent, although they sadly ended in futility.

Misaligned Incentives

So where does that leave us in the coronavirus pandemic? Diagnostic tests are urgently needed, particularly quick yet reliable tests. But inventors of such tests have little incentive under the Mayo precedent, which even the Federal Circuit has now correctly admits a virtual per se rule that prohibits the patenting of medical diagnostics.

This is a big problem. Call me a fan of Ayn Rand, but without the profit motive, a quick fix here is a lot less likely. The incentives are now misaligned, and with an uncontrolled pandemic causing a virtual stop to the world economy and overwhelming hospitals and supply chains, this is not an abstract problem. It’s a concrete issue that needs solutions fast. People are dying as a result of the misplaced incentives in current case law.

Patents exist to incentivize inventors, the fire to fuel genius to paraphrase Abraham Lincoln—the only President who was a patented inventor. Patents were a cutting-edge social policy in the 17th and 18th century designed to incentivize the development of technology, and were foundationally important during the Industrial Revolution precisely because of the incentive effect they had, with leading economists pointing out that few if any major innovations came from the Industrial Revolution without going through the patent system. And, of course, the American Founding Fathers thought the policy was important enough to add it to the U.S. Constitution (Art I §8 cl. 8). And many of the great advances in technology in the 19th century, the industrial era of railroads, steel, coal, and electric power were a direct result of a strong US patent system, and a review of those inventors who reside in the National Inventors Hall of Fame for their revolutionary, patented innovations show the scope and magnitude of what the patent system has yielded for society.

Clearly, the U.S. patent system has weakened considerably in the past ten years. It is mostly the fault of the federal courts, that began to swallow the arguments of anti-innovation activists starting with Myriad and Mayo. Because of stare decisis, it’s difficult for the courts to walk back these foolish decisions over the short-term at least. Moreover, the courts are really not in a position to determine overarching policy, although they have certainly tried in this area—and failed. Courts are designed to look at the facts in front of them and make decisions based on the arguments, the law, and precedent. Policy arguments frequently fail to persuade courts. That is why the Constitution gives Congress the power to enact legislation where the courts go astray. So, Congress shares a considerable portion of the blame here for failing to act to turn around misguided decisions like Myriad and Mayo legislatively.

Act Now

Congress has not always been so toothless. In 1984, Congress acted very quickly to enact the Hatch-Waxman Act. Roche Products v. Bolar Pharmaceutical Co., 733 F. 2d 858 (Fed. Cir. 1984) was decided on April 23, 1984. The Hatch-Waxman Act, which effectively overruled Roche v. Bolar, was enacted Sept. 24, 1984 – five months later.

It’s time for Congress to act now.

Image Source: Deposit PHotos
Image ID: 152093816
Copyright: AlexNazaruk 

The Author

Andrew Berks

Andrew Berks is a partner at Ostrolenk Faber. His practice focuses on patent prosecution. He is experienced in counseling clients, drafting patent applications, and simplifying and focusing issues to get issued patents. He also works on patent portfolio development, patent litigation, and patent office proceedings, including IPR’s. Andrew’s specialization is in the life sciences and chemical arts, but he has successfully prosecuted and litigated matters in all patent subject areas.

Andrew Berks

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 19 Comments comments.

  1. Bart April 2, 2020 6:05 am

    There could be no better example of Congress fiddling while Rome burns than the Coronavirus.

    China’s IP and economic dominance and U.S. dependence. Efficient infringement and non-existent patent rights for small inventors. The failed hearings from summer 2019 over Section 101 and patent eligibility, including medical diagnosis methods.

    Now people die. Everyone loves “Big Pharma” now, huh.

    Senator Tillis: Catering to Silicon Valley and introducing the amendment to 112 that caused delay on fixing what SCOTUS screwed up by ignoring the Constitution has put blood on your hands. You should have listened to Paul Morinville and Sherry Knowles. and not had those closed door meetings without them. I hope that little voice inside you that spoke to you and questioned your motives then now keeps you up at night.

    You can still turn, and we’ll act like it never happened. But you must act. Ball’s in your court.

  2. Pro Se April 2, 2020 9:10 am

    “ But inventors of such tests have little incentive under the Mayo precedent, which even the Federal Circuit has now correctly admits a virtual per se rule that prohibits the patenting of medical diagnostics.”

    BINGO – I’m happy to see someone said it and it was said here at IPW.

    What company in their right mind of investment and profitability will throw it all into a black hole?

    Here’s a link from John Hopkins research funding arm explaining years ago how the AIA would affect its work: https://ventures.jhu.edu/faculty-inventors/forms-policies/5-aia-changes-that-affect-johns-hopkins-researchers/

    Patent lobbyists and judges don’t produce vaccines and cures. Now we see the result of why in 2020, we can’t get a cure off the ground anywhere within the U.S.

    Because as soon as a company produce one, the anti-patent vultures and the USPTO and District Courts will instantly go to work for the Generic companies…

    It will be made and then made available to only personally connected and private wealth clients of pharma labs.

  3. TFCFM April 2, 2020 9:22 am

    Authors: “But a test for the virus is a diagnostic method, and that is a big problem for U.S. patent laws because diagnostic methods are simply not patent eligible in the United States.

    This is a GLARING misstatement of US law, and I urge the authors to correct it so as to avoid embarrassment.

    NON-ABSTRACT diagnostic methods are absolutely patent-eligible in the U.S. What have been held ineligible are abstract diagnostic methods, such as:

    – A method of diagnosing disease X by detecting marker Y in a sample taken from a subject (i.e., “using ANY method that works, whether I invented that method or not”).

    or

    – A method of diagnosing disease X by detecting marker Y in a sample using an antibody (i.e., ANY antibody, whether I invented the antibody or not).

    Inventive reagents, test methods, and assessment methods remain eminently patent-eligible. What has been held disqualifyingly abstract are claims to methods of detecting natural phenomena (e.g., patients with disease X exhibit marker Y in tissue Z at level n) where the only thing that differs from technology that preceded it is the natural phenomenon itself (e.g., detecting marker Y with an antibody that binds with {guess what?} Y!).

    INVENTING something still renders that something patent-eligible (subject to other requirements of eligibility not at issue here).

    On the other hand, merely being the first to RECOGNIZE a pre-existing natural phenomenon does not render all bog-standard methods of observing, measuring, or “thinking about” that natural phenomenon patent eligible. Thus, “A method of diagnosing X by detecting newly-recognized marker Y by any method that works” is ineligible, whille “A method of diagnosing X by detecting newly-recognized marker Y using the specific new technique/reagent that I invented” remains eligible.

    In situations in which the ONLY arguable contribution to the art is recognition of a not-yet-recognized natural phenomenon, patent eligibility is rightly withheld. In the context of diagnostic methods, this breaks down as described above (without trying to exemplify all potentially-patent-eligible technologies).

    The concept can be stated even more simply: If you want to PATENT something, INVENT something. Merely recognizing a previously-unrecognized natural phenomenon is not “invention” in the should-be-rewarded-with-a-monopoly sense embodied in our patent law.

  4. Jianqing Wu April 2, 2020 10:30 am

    In addition to those problems in medical diagnosis, patent doctrines that discourage anything in nature or from nature play a big role in medicine inability to control this COVID-19 pandemic. The patent law incentive is man-made drugs (not anything close to nature). My first Covid-19 article (which is widely circulated through multiple websites shows that hundreds to thousands of things could be done to turn a severe COVID-19 disease into a mild flu. The evidence is irrefutable! None of them can be protected and patented. The strongest incentive is given to synthetic chemicals that are very different from those in nature. See my long analysis at https://ssrn.com/abstract=3533279. My second article shows that a large number of things can be done before exposure of virus to recovery from the disease. Since the patent law does provide any incentive to protective natural measures, no body even bothers to let people know truth. See https://ssrn.com/abstract=3544428. I wrote two additional articles: one on transmission routes and one on the use of mask. They are important. Since the kinds of research topics do not help one to make profits, no body cares about them. See https://ssrn.com/abstract=3554043 and https://ssrn.com/abstract=3563851. Lung infections are the main risk that is widely open among Americans; and still no body knows it. The pandemic grew from 5 cases to more than 215,113 cases in such a short time. The lack of ability to control is in part due to lack of incentives in many research areas and invention areas. I start getting leads for fighting the disease. All my research works were self-supported with zero funding from federal, state, private, other public organizations. It is also patent law problem: no protection, no investment. Every revenue is a dead end. I have to find that it is important to revive patent law to make sure that vital inventions can be made without limitation of nature or activity types, protected with great certainty, and work to protect human lives and national interest. Lawmakers and judges should think about this biggest lack-of-cure problem which will not go away soon. Congress need to act NOW. One very lucky factor is that this virus has a very low death rate. If we were hit by a pandemic with 30%-70% death rate (not impossible) and we had no cure, how could we survive? Lawmakers, judges, patent examiners, etc. should think what to do now.

  5. Jonathan R Stroud April 2, 2020 10:51 am

    As I’ve written before, at least the natural law 101 jurisprudence has hurt the growth and existence of US diagnostics companies at a critical time in their early lifecycle. I’m loathe to question the wisdom of the Supreme Court, but I maintain Myriad was wrongly decided.

  6. Jianqing Wu April 2, 2020 10:58 am

    #2 above.

    Concerning: “But a test for the virus is a diagnostic method, and that is a big problem for U.S. patent laws because diagnostic methods are simply not patent eligible in the United States.”

    I agree with #2 that it has a problem literally. However, I also agree with the author that the statement is correct in reality.

    Anyone who has repeatedly written patent responses know that the PTO can easily and quickly reject a diagnosis or any other methods by using some of prior art close to nature or related to nature. When an examiner does not understand the subject well, he often sees completely different things as same or similar. In diagnosis technologies, technology types are often prior art component as a general rule; most of measured chemicals, compounds, markers, molecules, reaction, processes, etc (several hundreds of things) are all from nature or in nature; and interaction patterns in making a measurement often are similar. If I had an invention with all of those three components that can detect the virus 3 days earlier (an important invention), the chance of getting a patent is most probably zero (0) unless the examiner is really an expert on the subject or the applicant can bring his application to the U.S. Supreme Court. The reality is that the examiner’s view decides patent eligibility.

  7. Clifton D Croan April 2, 2020 11:03 am

    I’ll remember this article when I vote.

    And, I’ll also remember it at the gravesides I attend.

  8. A Rational Person April 2, 2020 11:26 am

    #2 Above

    35 USC 101 states as follows: 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.

    Nevertheless, you state, erroneously: Merely recognizing a previously-unrecognized natural phenomenon is not “invention” in the should-be-rewarded-with-a-monopoly sense embodied in our patent law.

    As you will note, the actual US patent law in 35 USC 101 states that “Whoever . . . discovers any new and useful process . . . or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”

    “Recognizing a previously-unrecognized natural phenomenon” is a “discovery”, so you are reading the word “discovers” out of 35 USC 101, which is wrong as a matter of law.

  9. Concerned April 2, 2020 11:47 am

    Even though this author states the obvious, it needs to be said over and over.

    Give people no incentive to invent and we will not invent.

    Give people no way to protect their property and we will not own any property to steal.

    SCOTUS has figuratively washed their hands of this matter. Now doctors are telling us to literally wash our hands. Is any one really surprised?

  10. xtian April 2, 2020 12:04 pm

    @2 “A method of diagnosing X by detecting newly-recognized marker Y using the specific new technique/reagent that I invented” remains eligible.”

    This is not a claim to a diagnostic method. This is a claim to a new technique/reagent. Anything that comes before the new technique/reagent is not given patentable weight. So the article’s statement: “diagnostic methods are simply not patent eligible in the United States” is still accurate.

  11. A Rational Person April 2, 2020 1:06 pm

    TFCFM@2,

    “The concept can be stated even more simply: If you want to PATENT something, INVENT something. Merely recognizing a previously-unrecognized natural phenomenon is not “invention” in the should-be-rewarded-with-a-monopoly sense embodied in our patent law.”

    The problem with your statement is that it contradicts what 35 USC 101 of the US Patent Laws actually states:

    35 USC 101 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.

    Note the word “discovers” in 35 USC 101. Therefore, contrary to what you have stated, US Patent Law, as written, effectively states that someone who “discovers”, i.e. recognizes a previously-unrecognized natural phenomenon should-be-rewarded, if what the person discovers is novel and non-obvious.

  12. Pro Se April 2, 2020 1:19 pm

    @Johnathan #3 – 101 has been a wrecking ball on Bio patents, diagnostic patents are held 101 ineligible (sad), treatment patents are “maybe” patent eligible, and on the 17th, the CAFC has created a new “third” basket of patent eligible patents in the Illumina precedential opinion, for “preparation” claims.

    The only way forward for any new claims on Bio inventions is to disclose and claim the preparation of the solution (what and how the ingredients prepare an outcome) and avoid claiming the solution itself.

    I’m personally all for it, a preparation patent claim is not just a few sentences, it requires claim disclosure of steps and if those steps are novel over the prior art, then 101 should be hands off.

  13. Anon April 2, 2020 8:05 pm

    TFCFM,

    To be perfectly blunt, you are in no position to suggest to anyone that they have made “a GLARING misstatement of US law” nor are you in any position to urge anyone to make any correction “so as to avoid embarrassment.“

    Perhaps if you would heed your own advice, then someone might take you seriously (even on the rare occasion that you might be correct).

    I truly doubt that you have ever held a hands-on position actually related to inventing. You have shown zero understanding of the history of innovation and innovation protection, and merely a passing recognition of litigation. Of the blind men touching the elephant, you are below the man holding the tail.

  14. Pro Say April 3, 2020 10:30 am

    My fellow IP stakeholders, a few days ago I spoke with the CDC about looking into whether microwaving our non-metallic nose / mouth / face coverings for a minute a day would kill this virus (and any other contagions). Haven’t seen or heard anything from them or the media regarding doing this, but it seems logical to me.

    Spread the word.

  15. TFCFM April 3, 2020 10:52 am

    ARP@#8 (&#11): “US patent law in 35 USC 101 states that “Whoever . . . discovers any new and useful process . . . or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”

    “Recognizing a previously-unrecognized natural phenomenon” is a “discovery”, so you are reading the word “discovers” out of 35 USC 101, which is wrong as a matter of law.

    Where all that one claims is using a known technology to assess a marker Y that is newly-recognized as correlated with a disease X, all that has been “discovered” is a pre-existing natural phenomenon (i.e., that marker Y is correlated with disease X — JUST as it has always been, at least as long as humans and the diesease have existed in nature). Thus, one has not “discovered” a new process or improvement, but rather, only a new phenomenon to which an old process can be applied to (in precisely the same way as it is applied to analogous phenomena.

    If the only arguably “new” piece of an claimed “invention” is a natural phenomenon, one has “discovered” only the phenomenon. Natural phenomena are not eligible subject matter.

  16. Anon April 3, 2020 1:29 pm

    TFCFM,

    I renew my call for you to visit the writings of Sherry Knowles as it pertains to Discovery.

    See (at least) : https://www.ipwatchdog.com/2019/01/16/sherry-knowles-scrutinizes-activist-supreme-court-unconstitutional-patent-eligibility/id=105228/

    Please do not run away this time – literally or figuratively.

  17. Ternary April 3, 2020 3:01 pm

    TF…,
    “…are abstract diagnostic methods, such as: – A method of diagnosing disease X by detecting marker Y in a sample taken from a subject.”

    You are trying to move through a methodological wall by words that do not relate to empirical events. And I admit it, I am in my methodological convictions basically a hardcore logical positivist. Early Wittgenstein: the meaning of a sentence is in its method of verification. To take a sample from a subject and detect a disease is probably as far away from abstract as you can get.

    Abstract is a concept, an idea, a figment of human imagination, intangible really. A sample taken from a subject is real, tangible, measurable, identifiable and most importantly “detectable.”

    The definition what is real/tangible and abstract has become pretty much methodologically decidable at this stage of the pandemic. We know we have to take samples of subjects to decide if they have COVID-19. But the “detecting” right now is mostly impossible, because the method, captured in a device is mostly physically unavailable.

    The detecting truly is now abstract, because the real-life method cannot be executed by lack of availability. For now, we are addressing a pandemic in mostly the same way as we did in the 1600s, isolation. We have limited visibility on the development of the disease, because of lack of testing. We cannot predict, control and release because we cannot adequately test. A technological failure and unpreparedness of epic proportions.

    And it all comes back to one of the fundamentals of technology: you have to detect/measure it to improve it.

    I am not sure why one would call a physical detection method “abstract” as you do. It is really 1984 speak. It is not abstract in any sense. If you want, you can provide arguments why it is undeserving of a patent. But you don’t. Saying that a marker is a natural phenomenon and thus abstract is not a scientific argument. It was not until Galileo/Newton that it was realized that a moving object had an instantaneous velocity. An inherent property. That doesn’t mean that measuring/detecting a velocity at a moment ‘t’ is an abstract idea.

    We are finding out in the most urgent way now that what anti-patenters call “abstract” is really not abstract at all.

  18. Anon April 7, 2020 12:08 pm

    As expected, TFCFM has run away.

    Again.

    If he does make it back though, I found something while looking in the archives on this blog that he should also read:

    https://www.ipwatchdog.com/2018/07/17/categorical-imperative-innovation-patenting/id=99178/

  19. BP April 8, 2020 7:39 pm

    Pro say, don’t trust microwaving- unless heat/temperature for sufficient time or ozone formation from plasma or arcing being formed in microwave- that require special conditions and containment not to mention danger. So, if something does not heat up due to wavelength and dielectric properties, microwave in general does nothing to kill yeast, bacteria, viruses.