Associate Dean Lefstin & Other Leading Experts Conclude Current State of Patent Eligibility Jurisprudence "Indefensible"

In March 2017, Associate Dean Jeffrey A. Lefstin, Peter S. Menell of UC Berkeley Law School, and David O. Taylor of the SMU Dedman School of Law convened a group of prominent industry representatives, practitioners, scholars, and policymakers at the University of California, Berkeley for a day-long workshop to discuss the current rules for determining what innovations are eligible for patent protection.

The discussion revealed broad agreement that the Supreme Court’s patent eligibility jurisprudence, especially its decisions in Mayo Collaborative Services v. Prometheus Laboratories and Alice Corp. v. CLS Bank International, has diverged from the Patent Act’s text and legislative history as well as long-standing jurisprudential standards. Workshop participants also agreed that the Supreme Court’s stated rationale and formulation lacks a sound foundation and it is unlikely that the Supreme Court will reconsider the patent-eligibility issue in the foreseeable future.

After the workshop, Lefstin, Menell and Taylor prepared a written report that highlighted the major conclusions from the participants.

Dean Lefstin, how did you get involved in this project?

I’ve always been interested in and researched the history of patent law, especially from the late 19th century. It was a time very much like our own, when explosive growth in technology and innovation dominated the economy. At the same time, there was a corresponding explosion in the patent system, accompanied by concerns over low-quality patents and abusive manipulation of the patent system.

After some of the Supreme Court’s recent decisions on patent eligibility, I began reinvestigating some of these 19th century cases on which the Court was basing its modern decisions, and the Court’s story of the last 150 years of patent eligibility. By tracing back the intellectual threads of patent jurisprudence, I discovered that the story was very different than the one that the Court has told in its recent cases.

For example, in its critical Mayo decision, the Court based its approach on its view of Neilson v. Harford, a 19th-century English case that, for American courts, was the touchstone for distinguishing between discoveries and inventions in the late 19th and early 20th centuries. I published an article in 2015 that was largely about Neilson, and showed that the Court could not have been more wrong about the case. The Supreme Court in Mayo claimed that Neilson’s patent was sustained only because he applied his discovery in an inventive and unconventional way. That interpretation was 180 degrees from what the case really stood for. When you unravel Neilson, you find out that the patent was sustained only because the inventor’s application was completely conventional, and everyone knew how to do it.

My concern over the misinterpretations of some of the fundamental patent cases from the 19th century led to my involvement and assistance in organizing the workshop. These recent decisions have radically restricted the scope of patent-eligible subject matter, and have led to great uncertainty about what is or is not within the bounds of the patent system. It made it much more difficult to answer the most basic question you can ask in patent law, “are these sort of discoveries or inventions potentially the subject of patents or not?”

How did this workshop come about?

Peter Menell and I had done a series of amicus briefs for cases to the Supreme Court dealing with this fundamental question about patent eligibility, and what kinds of things are within the boundaries of the patent system.

After the Supreme Court denied certiorari in a heavily-watched case called Ariosa v. Sequenom [788 F.3d 1371 (Fed. Cir. 2015)], it became clear that the Court was not going to address patent eligibility any further. As a result, different groups were coming up with different proposals for a legislative solution. We wanted to bring together these groups, who were on all different sides of the question, to see if we could find some sort of consensus on whether what the Supreme Court has done makes any sense. We also wanted to find some consensus on a particular path going forward and in addressing some of these issues.

Who did you invite to attend the workshop?

As I said, we had representatives from all sides of the question. There were representatives from the pharmaceutical and biotechnology industries, who are concerned that the Court’s decisions have seriously eroded patent protection for many bioscience inventions – particularly diagnostics. But we also had people from large technology companies like Google and Adobe, who may value the ability to get rid of weak patents very early in the litigation process. Finally, we had attorneys from practice, judges, and academics to weigh-in and provide a well-rounded think tank.

We were hoping to achieve consensus on the lack of a coherent foundation for the Supreme Court’s jurisprudence, and essentially all the participants came around to that view. We also tried, and I think succeeded, in providing a venue for representatives of different technology sectors to understand how changes in the law have benefited some fields but imposed very real costs on others. Our final goal was also to get some consensus on what kind of changes might be made moving forward. I think we were a little less successful in that venture, but we at least encouraged discussion about what kind of approaches were likely and less likely to be fruitful.

I think the report articulates the major issues, sets up a menu of possible pathways moving forward, and got everyone to see what the pressure points were.

Do you have any insight as to the rationale for the Court to rule in the manner as they did in those aforementioned cases?

It’s a good question. There’s a common perception that the patent system has been abused in the past 10 years. There’s been a lot of publicity about so-called patent trolls being out of control. In addition, the lower courts had taken a very liberal view on the patent eligibility of business methods. It’s undeniable that there were a lot of poster child bad patents. Many of those patents were bad because they were obvious in light of the prior art, and many patents tried to claim simple implementations of long-known business practices on computers or the Internet. I think the Supreme Court saw this as an easy way to get rid of a lot of these patents.

The trouble is that the 1952 Patent Act mandates a series of structured questions to determine whether an invention is patentable: is the invention novel? Is the invention non-obvious? Is it sufficiently well-defined by the patent? The Court’s framework may short-circuit these inquires in favor of an “I-know-it-when-I-see-it” test for patentability under the guise of subject matter eligibility. But that vague and subjective approach to patentability was exactly what the 1952 Act aimed to replace. In many cases courts no longer perform that more searching inquiry about the validity of a patent. The ability to easily kill patent litigation early on may be good if you’re a software company, and you perceive that a lot of people are bringing very low quality patent suits against you. On the other hand I think it’s a significant risk that we’re undercutting protections in other areas, specifically in the bioscience and diagnostic field.

How do these decisions particularly have a negative effect on the bioscience field?

Bioscience innovations are often based on the discovery of something new from nature, like a correlation between a biomarker and a disease, or a molecule found in another species. Frequently, once you make that discovery then it can be obvious how you can apply it. For example, discovering the biochemical pathway that causes that disease might suggest that an old drug will be effective against that disease. It’s possible under the present line of reasoning from the Supreme Court that a second medical use may be ineligible for patent protection because the application is obvious once you assume away the discovery.

This can be particularly damaging to the biomedical field because the investments tend to be very large, sometimes hundreds of millions or even billions of dollars, and it is not always guaranteed that the research will result in a marketable product. If investors don’t think some sort of exclusivity will be available for the end product, then they are likely to direct their investments to less risky technologies. We’ve also now made patents based on discoveries much harder to obtain in the United States than in the rest of the industrialized world – which is a reversal of historical roles.

How did you conclude that the current rules for determining what innovations are eligible for patent protection are in the indefensible as a matter of legal principle?

It was largely based on my historical research on the jurisprudential foundations of the Supreme Court’s reasoning. You have to remember that none of what the Supreme Court has done is based on the patent statutes. The patent statutes are very broad and merely say that you can patent any new and useful process, machine, manufacture, or composition of matter.

The Supreme Court has interpolated or added its own limitations on patent eligible subject matter into the text of the statute. Although the Court claims that it’s just interpreting the patent laws the way they’ve been interpreted for the last 150 years, that’s very far from the truth. When you go back and actually look at those 150 years of patent history, instead of just skimming a few quotes from the 19th-century cases, you find that the whole course of patent jurisprudence flowed opposite from the way the Court thinks it flowed. The Court’s basis for imposing these limitations on the statute are essentially bankrupt.

The foundation on which the Court has based these extra-statutory limitations is rotten and I think this workshop really gave us an opportunity to lay out that argument in front of a lot of people who are influential in the field.

What’s the next step after addressing these concerns with patent eligibility jurisprudence?

What’s next is really seeing if we can spark some further action on the legislative front. I think the Supreme Court clearly signaled that they’re done with this issue when they declined to take up the Ariosa case, even with 20 or so briefs urging them to do so. If there’s change it might have to come from Congress.

This report will get a lot of people talking about the issue and about evaluating the different paths forward that we’ve proposed in the report. Hopefully, that will lead to some more coordinated action. Right now, much of the bioscience field is crying for help, but big pharma doesn’t feel threatened yet. We need to unify the different industries that are affected by patent law to have any hope of getting action from Congress. I think this report and workshop did move the ball forward some in that large effort by opening a dialogue and promoting understanding between different industries.

Will these issues affect students who are studying to pursue a career in intellectual property?

That’s a good question. Uncertainty is usually good for lawyers, if not for business. Whenever the Supreme Court lays down a standard that’s completely unclear, it creates a lot of work for lawyers. So in the short term there will be more demand for intellectual property attorneys who can help clients navigate these shoals. Patents in the engineering-related disciplines haven’t been affected by this change, and of course lots of students go on to practice in copyright, trademark, or trade secrecy rather than patent. But whenever we change the incentives for participating in the patent system, we change how valuable patent protection is to companies in the tech sector. In the long term, there could be a risk that the patent system becomes less attractive, ultimately leading to fewer opportunities for patent lawyers. But I think we are a long way from knowing how it will wind up in the end.