Expanding on Supreme Court patent decisions harmful to U.S. innovation

Print 18 November 2016
Mari Serebrov / BioWorld

Too many U.S. patent examiners aren’t “getting the memo” on how to apply recent court rulings on laws of nature and abstract ideas to patent applications covering drugs and diagnostics to software and financial management tools.

That seemed to be the consensus Monday as speaker after speaker at a U.S. Patent and Trademark Office (PTO) roundtable on patent eligibility praised the PTO for issuing timely, informative guidance memos on how it will implement new precedential judicial decisions, but said many examiners are going beyond the courts in rejecting applications on basic 101 eligibility criteria.

“The memos are good, but probably not being followed,” patent attorney Robert Sachs said.

Instead of applying the court’s reasoning, many examiners assume that any claim citing a law of nature, a naturally occurring phenomenon or an abstract idea – the exceptions listed under Section 101, the threshold for patent eligibility – cannot be patented regardless of what else they cite. As a result, the PTO has expanded and broadened what falls into the not-patentable category.

“It’s not the examiner’s job to add to the list” of exceptions, as that’s a judicial function, not an administrative one, Sachs said.

Because of the PTO’s ineligibility assumption, “101 rejection has become an insurmountable barrier,” said Barbara Fiacco, second vice president of the American Intellectual Property Law Association’s board.

Patent attorney Denise Kettelberger agreed. “101 rejections are clearly eating our lunch,” she said, adding that patents for life sciences inventions are a big target, because every claim is likely to have a correlation to a natural law.

The problems stem from Supreme Court decisions in Mayo and Myriad, which concern the eligibility of diagnostic claims linked to naturally occurring blood metabolite levels and genetic mutations, as well as Alice, a case involving computer-implemented inventions in which the high court set forth a test for evaluating the subject matter eligibility of patent claims. (See BioWorld Today, March 21, 2012, and June 14, 2013.)

SORTING OUT THE CONTOURS

In deciding those cases, the Supreme Court blurred and expanded the boundaries for 101 patent exceptions. Ever since, the U.S. Court of Appeals for the Federal Circuit has been left to interpret those decisions and “sort out the contours of 101,” Kettelberger said.

Meanwhile, the PTO has tried to implement both the decisions and the contours through guidance and training examples that address claims in multiple technology areas, including nature-based products and inventions concerning abstract ideas, PTO Director Michelle Lee said in opening the roundtable.

The most recent examples, released in May, cover technological fields in the life sciences arena “specifically requested by the public, such as vaccines and diagnostics, which have not been directly addressed by the courts,” Lee said. The examples showed ways such claims could be drafted for eligibility.

But changes in how claims for complex drugs and devices are drafted to design around 101 issues could make a safe, effective product useless or dangerous, Kettelberger pointed out. She added that her hope is that the 101 issues will go away as the “Federal Circuit continues to do its thing.”

Warren Woessner, who works with startups and universities on patenting their inventions, said a split on the Federal Circuit might be needed to force the Supreme Court to rethink its decisions, which have been especially hard on diagnostics. “We want the Supreme Court to somehow fix things – to take Mayo back,” he said.

So far, the Federal Circuit has been unified in applying the high court’s decisions, but a few judges have gone along grudgingly. Woessner noted that when the appellate court invalidated a method patent last year protecting Sequenom Inc.’s MaterniT21, a noninvasive test that revolutionized prenatal diagnoses for conditions such as Down’s syndrome, one of the judges basically said “Mayo made me do it” in his concurring opinion.

When the Federal Circuit subsequently denied Sequenom’s request for an en banc hearing, two of the judges expressed concern that, as a result of Mayo, a lot of damage has been done to diagnostic patents. Despite those concerns and the harm its ruling has caused, the Supreme Court refused to hear Sequenom’s appeal. (See BioWorld Today, Dec. 4, 2015.)

Several speakers at the roundtable addressed the problem with diagnostic patents in particular. Patent attorney David Gass said that while diagnostics are directed to laws of nature, they don’t prevent innovation. Instead, they promote it. He also pointed out that the steps taken with a diagnostic occur in the lab, not in the patient.

Benjamin Jackson, of Myriad Genetics Inc., said broadly excluding molecular diagnostics from patent protection is unwise from a policy perspective, because they are the gateway to precision medicine. In taking such a broad view of the laws of nature that would strip molecular diagnostics of patent protection, the PTO confuses statistical correlation with a direct causal/mechanistic link. “Correlation does not equal causation,” Jackson said. It can hint at causation, but it doesn’t prove it.

Molecular diagnostics look at a complex web of natural laws. Determining such statistical links to disease is very different from identifying a biological marker in the blood, he explained.

NEED FOR EXAMINER TRAINING

Other problems that came up repeatedly at the roundtable spoke directly to lack of examiner training – boiler plate 101 rejections, patents being denied based on just a few words in the claims, lack of meaningful engagement, use of nonprecedential court decisions and unrelated cases, examiners not being empowered to make 101 decisions, and inconsistencies in 101 decisions from examiner to examiner and across the centers. One patent attorney said he gives copies of PTO guidance to examiners to make sure they understand what they’re supposed to do.

Yet Lee insisted, “Each time we’ve updated our eligibility guidance, we provided comprehensive training for our examiners. After the most recent update in May, we conducted workshop training for the entire corps on how to perform the eligibility analysis, formulate eligibility rejections that clearly inform applicants of the reasons for the rejection, and evaluate and respond to applicant arguments on eligibility issues.”

One area that hasn’t had that training yet is the business methods unit. The PTO is in the process of developing new guidance and examples to help business method examiners apply the Supreme Court’s 101 eligibility test to inventions in that area, Lee said. Comments made at the roundtable and an ongoing public comment period will be used in drafting the guidance and examples.

The PTO got an earful of comments about the business method unit at the roundtable, as it was singled out as having the poorest track record when it comes to 101 decisions. Patent attorney Sameer Vadera said 10 percent to 25 percent of other PTO office actions are rejections on 101 grounds, but the majority of applications going through the business methods unit are rejected for 101. He noted that many applications, including those for medical devices, are being examined as business methods.

Such misclassification and the low allowance rate discourages R&D and patent applications, Vadera said. He asked why anyone would spend $2 million to improve a hospital system if the technology won’t receive patent protection.

Bob Stoll, a former patent commissioner, said that in narrowing 101 eligibility, patent examiners are weakening the patent system and hurting U.S. innovation. The impact is already being felt, he added, as patents that were denied in the U.S. are being approved in China and the EU.

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