“A significant number of the technologies that are being abandoned in the United States—and at the same time being issued as patents by the European Patent Office, China, or both—cover innovations in medical treatments and the life sciences.”
Five years after the last of the four decisions in patent eligibility doctrine by the Supreme Court—creating what is now referred to as the Alice-Mayo framework—the impact of this upheaval in the patent system has become even more clear. Ongoing court decisions and new data confirm that the Alice-Mayo framework has wrought an unsettling revolution and sowed uncertainty in what former U.S. Patent and Trademark Office (USPTO) Director David Kappos has referred to as the “the greatest innovation engine the world has ever known.” As policy debates on subject matter eligibility ramped up this past year, it is time to return back to the original dataset created by Robert Sachs and David Kappos that we presented in Turning Gold to Lead and provide an update.
The Continuing Legal and Policy Quagmire in Patent Eligibility Doctrine
Under the Alice-Mayo framework, courts continue to invalidate patents securing the fruits of inventive labors in medical diagnostic tests, medical treatment methods, medical devices, and in high-tech inventions. They continue to invalidate these patents without rhyme or reason. Contrary to long-settled rules on how to interpret patents, courts are disintegrating claims into their individual elements, focusing on only a single unpatentable element comprising a law of nature or abstract idea, finding easily no inventive step in this individual element, and concluding that the invention as a whole is ineligible for patent protection.
This pattern of decision-making is exhibited in so many court decisions, it’s impossible to detail them all. In Athena Diagnostics v. Mayo Collaborative Services (Fed. Cir. Feb. 6, 2019), for example, the Federal Circuit invalidated another innovative diagnostic medical treatment patent. On July 3, 2019, the Federal Circuit denied the en banc petition in Athena Diagnostics in a highly fractured decision with four dissenting opinions and another four separate concurrences. The recently filed cert petition by Athena Diagnostics is supported by several amici, including Chief Judge Paul Michel (ret.), and the case is now set to go to conference on January 10. This is just one illustrative example. As reported at the Senate hearings last June on the need for reform of patent eligibility doctrine, diagnostics, medical devices, and other cutting-edge innovations in healthcare are suffering greatly under the Alice-Mayo framework.
But the patent ineligibility contagion is spreading beyond just medical treatments, drugs, and high-tech innovations. Courts have invalidated patents covering methods of using garage door openers and operating oil derricks as allegedly claiming abstract ideas or laws or nature. The most recent example is American Axle v. NEAPCO. In this case, the Federal Circuit affirmed a district court’s invalidation of a patent on a method of making an axle in an automobile engine as ineligible subject matter because it claimed an application of the laws of thermodynamics. Of course, everything is an application of the laws of physics! In her scathing dissent, Judge Kimberly Moore lambasted the “validity goulash” in patent eligibility doctrine under the Alice-Mayo framework and lamented “result-oriented judicial action.” Classic inventions from the industrial age are now falling victim to the Alice-Mayo framework’s invalidation contagion, confirming that this is not merely a problem for the sectors of the economy producing next-generation innovations.
A recent report on court decisions applying the Alice-Mayo framework compiled by Robert Sachs shows that court decisions under Section 101 jumped 730% after 2014 with a 659% increase in the number of litigated patents. This is in stark contrast to the longstanding, historical role of Section 101 as only a minimal “threshold test” (in the Supreme Court’s own words in Bilski v. Kappos). Among these massive numbers of decisions, hope springs eternal for consistency and predictability, but hardnosed realists can easily point out that anyone skeptical that the courts will fix this doctrinal mess have the data firmly on their side.
Additional studies are confirming the discouraging state of U.S. innovation. In World Intellectual Property Indicators 2019, the World Intellectual Property Organization identifies a 1.6% drop in U.S. patent filings in 2018—the first decline since 2009. This decline stands in sharp contrast to patent filing activities in China and in Europe, which saw 11.6% and 4.7% growth in 2018, respectively. The European Patent Office (EPO) also granted 20% more patent applications in 2018 than it did the previous year. These numbers signal an alarming overseas shift in patent activity, and it’s a shift that does not portend well for the future of U.S. innovation.
Updated Data Confirms Legal and Policy Problems with Alice-Mayo Framework
In our article published two years ago, we reported on the Sachs-Kappos dataset of 17,743 patent applications that had been filed in the United States, China, and Europe. As we detail in the article, the dataset identifies 1,694 patent applications among these 17,743 applications that received initial or final Section 101 rejections and were ultimately abandoned in the United States, only to be granted patents by the EPO, China, or both.
Given that patent prosecution is an ongoing activity, Sachs continued to monitor the status of applications in the original dataset, and in September 2019 provided us with a revised dataset in which he revisited the data to examine the applications in more detail. As expected, Sachs found that a number of the applications now have issued U.S. family members, and some that were abandoned have had the abandonments withdrawn and now are either pending or have been issued as patents. Moreover, some of the rejections were withdrawn prior to abandonment.
The revised dataset further corrected for false positives of applications that were rejected under Section 101 but for reasons other than the judicially created Alice-Mayo framework in assessing the patent eligibility of an invention or discovery. The revised dataset confirms that 1,310 applications were abandoned following rejections under the Alice-Mayo framework for lack of patent eligible subject matter, and yet had issued patent family members in either China or Europe. Even accounting for the correction (1,310 versus the originally reported 1,694), the number of patent applications that fell victim to the Alice-Mayo framework, while being granted in foreign jurisdictions, still remains significant. It calls into question the “gold standard” status of the U.S. patent system as a driver of next-stage innovation. We expect that updated data that evaluates abandonment in the years since 2017 will certainly find even more.
This examination of the applications also involved recoding the dataset and running keyword searches that allowed for categorization based on a number of variables, including type of Section 101 office rejection and technology field. This exercise provided an opportunity not only to more precisely report the numbers, but to assess the categories of technologies most affected by the Alice-Mayo framework. While the results offer a variety of insights into the impact of the judicial exceptions, two stand out as particularly revealing of the legal and policy problems stemming from the application of the Alice-Mayo framework.
The first telling data point is that a significant number of the technologies that are being abandoned in the United States—and at the same time being issued as patents by the European Patent Office (EPO), China, or both—cover innovations in medical treatments and the life sciences. This conclusion was reached via searching abstracts of the rejected and abandoned applications for instances of over 300 keywords and terms. The keywords were drawn from the Center for Disease Control’s 2017 report on endemic diseases and leading causes of death, including terms like heart failure, cancer, Alzheimer’s, diabetes, stroke, coronary, and others. The results show that 618 of the 1,310 applications were directed to various aspects of diagnosis or treatment of the diseases related to these keywords—thus 47% of abandoned applications include many potential breakthroughs in the identification and treatment of the most prevalent and devastating illnesses on earth.
A more granular analysis of the 618 healthcare-related technologies showed cancer treatments to be the most prominent category of abandoned or rejected applications, making up 150 (or about 24%) of the total. These innovations targeted a wide range of cancers, including carcinoma, leukemia, lymphoma, mesothelioma, and melanoma. Research and innovation aimed at combating and ultimately putting an end to these deadly cancers continues to be the focus of initiatives such as the National Cancer Institute’s Cancer Breakthroughs 2020 (formerly Cancer Moonshot 2020), and yet the US patent system is rejecting applications directed to technologies that just might be at the forefront of the next great medical breakthrough.
After cancer-related applications came healthcare and information technology applications (103, 17%) and personalized medicine at 64 (10%). These two categories covered a variety of diagnostic and treatment methods aimed at a range of illnesses, including new innovations in diagnostic imaging and gene sequencing. Rounding out the results were a number of categories including, cardiovascular disease, infectious disease, gastrointestinal disorders, gene therapies, endocrine disorders, autoimmune diseases, and neurological disorders.
The second important finding is a glaring overlap in legal grounds of rejection in the 1,310 applications that confirms the oft-repeated point that the Alice-Mayo framework conflates different legal and policy requirements. Coding for different types of rejections in Sections 101, 102, 103 and 112 confirmed that the “inventive step” inquiry in step two of the Alice-Mayo framework blends the nonobviousness inquiry under Section 103 with the patent eligibility inquiry under Section 101. The largest single overlap in legal grounds for rejection was between Sections 101 and 103, with 379 (29%) of the total 1,310 applications. If the rejection(s) combined Sections 101, 103 and 112, the percentage jumps to over 50%, confirming that nonobviousness and overbreadth are being conflated with patent eligibility in significant numbers.
These new insights into the data suggest that healthcare-related technologies are bearing the brunt of the invalidation contagion wrought by the Alice-Mayo framework, and that innovations to diagnose or cure diseases are being abandoned in the United States. Additionally, the overlap of Sections 101 and 103 rejections confirms the oft-heard criticism that the test conflates importantly different legal and policy concerns in the patentability requirements.
Reform of Section 101 is Vital to the Future of U.S. Innovation and Healthcare
Clearly the impact of Section 101 confusion will not be felt for a very long time, as it affects investment decisions made in long time-horizon R&D programs in the high-tech and biopharmaceutical industries. These R&D programs are measured in decades. For instance, the Washington Post recently reported on the creation of a new breakthrough treatment for cystic fibrosis that converts a life-threatening disease into just another manageable medical condition. This new treatment was the product of 30 years of scientific and technological research. Without the promise of reliable and effective patent rights, firms will not pursue the hundreds of millions of dollars in R&D that produces life-saving diagnoses and treatments for diseases that were once death sentences for tens of thousands of children and adults.
The Value of Continuing Empirical Studies
Understanding the impact of the Alice-Mayo framework requires continuing empirical analyses of the data available. This includes making the data accessible and ensuring that mistakes are identified and corrected. Too often, privately held and unverified statistical data is used to support policy narratives and influence policymaking. The long-discredited statistical claims and heavy-handed rhetoric that created the “patent troll” narrative are an example of this phenomenon. Unfortunately, the “stickiness” of the troll narrative remains, as confirmed in the Senate hearings on Section 101 reform last June, as well as in reports and policy pieces.
In order to ensure that policy debates are not hijacked by rhetoric based on unsubstantiated claims and secret data, all scholars should ensure that their data is accessible, their analysis is understandable, and the means by which they draw their conclusions in both content and method is independently verifiable. We wish to express our profound appreciation to David Kappos and Robert Sachs for sharing their dataset with us and for their enduring willingness to contribute their time and expertise to this ongoing study.
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Join the Discussion
22 comments so far.
staffDecember 24, 2019 01:27 pm
‘They continue to invalidate these patents without rhyme or reason. ‘
We agree. Since the eBay decision in 2005, a collection of decisions from SCOTUS have made it impossible for inventors and small businesses to obtain worthwhile patents. Whatever we get from the Patent Office after years of fighting them for our patents is essentially worthless. We cant enforce them. Meanwhile, our large multinational infringing (thieving) competitors carry the store out the front door in broad daylight. Is the day of the generalist judge in our high court past?
We believe SCOTUS must be reorganized as in our bill with judges who are expert in patent law hearing all IP cases -judges who recognize and respect property and other ‘unalienable’, Constitutional and ‘natural’ rights. It’s time to restore our patent system starting at the top.
For our position and the changes we advocate (the rest of the truth) to restore the patent system, or to join our effort, please visit us at https://aminventorsforjustice.wordpress.com/category/our-position/
or, contact us at [email protected]
TFCFMDecember 18, 2019 10:07 am
JW: “To end the incurable era, my view is all court doctrines should be wiped out completely.”
Rumor has it that Neanderthals tried this route. It did not end well.
Jianqing WuDecember 17, 2019 01:26 pm
Court decisions in patent law is one of main reasons for failure to find cures for chronic diseases. The biggest impact of section 101 law is in finding safe and reliable cures for cancer and chronic diseases. To end the incurable era, my view is all court doctrines should be wiped out completely.
Lack of cures for chronic diseases, cancer and terminal diseases is an inevitable results of the medical research and treatment models. I have proved that Randomized Clinical Trial (RCT) Is wrong and invalid in studying chronic diseases. Every conclusion in TREATING chronic diseases, cancer, and extending lifespans is wrong or at least inaccurate. Conclusions from studies using wrong models can depart from reality by tens to thousands of times! See article, http://www.igoosa.com/jsp/open/readArticle.jsp?boardId=19&recordId=6.
The key culprits are dualism, population-based approach, and binary disease definitions (the last one yet to be proved), each of which are embodied in the U.S. patent laws as well as other laws such as tax laws.
The U.S. cannot correct this legal mistake. Weighing scales have been used in the Indus River valley, that does not means that they would be used to weigh chemical reagents in labs. The mistaken assumption is that RCTs are good in studying all medical problems just like scales. However, RCTs mean to get rid of mind, breaks up the mind-body model, and focuses only on the body part .
RCT has to focus on one single factor such as a drug or treatment a time. That means that treatment must be used in an indiscriminate manner like flipping a coin, and imitating what others do. It will never cure any chronic diseases, cancer, and terminal diseases.
Influenced by common law vestiges, patent law discourages inventions for mental steps, anything from nature, and anythings similar to natural products. So, the patent law drives companies to seek only man-made drugs which have drug resistance and side effects . However, RCT is unable to detect slowly delivered harmful effects.
Ten thousands of studies have been done about exercises to understand exercise mechanisms, but none teach how to use exercises to fight cancer [5, 7]. Why, exercises are human activities, and mental steps that cannot be protected. So, research efforts are made on things to get research funds, but patients are on their own to use them. That results in that all exercises are equal.
Judges never bother to understand the differences between man-made drugs and things coming from nature or existing in our body. Their decisions provide incentives to explore man-made drugs, discourage anyone from investing on nature-made cures, and even discourage people from exploring cures that are carried in our genome. Each decision may delay cures for another tens years or preclude medicine from saving millions of premature deaths. Most judges never know how their decisions are responsible for maintain this era without cures.
1. Randomized Clinical Trial Is Biased and Invalid In Studying Chronic Diseases, Compared with Multiple Factors Optimization Trial. http://dx.doi.org/10.2139/ssrn.3480523 or https://www.researchgate.net/publication/336699251 or https://www.preprints.org/manuscript/201911.0245
3. A_Multi-Factor Model for Estimating Relative Lifespans and Extending Health Spans
4. Surgery, Chemotherapy and Radiotherapy Promote Cancer Growth Speeds and Shorten Patient Lives. Click https://www.researchgate.net/publication/337260974
5. A Cancer Theory: The Central Nervous System Adaptive Changes Make Chronic Diseases Incurable. Click https://ssrn.com/abstract=3480562 or https://www.researchgate.net/publication/336775211
6. The Population-Based Medical Model Should No Longer Be Used as An Exclusive Model in Medicine. Click https://www.researchgate.net/publication/336026313
7. Safe_and_Predicable_Cancer_Cures https://www.researchgate.net/publication/337547448
SomeoneDecember 17, 2019 12:34 pm
Thank you for this important civic contribution.
Night WriterDecember 17, 2019 10:36 am
B writes “Chinese companies will turn seemingly random noise into medical breakthroughs while Taranto et. al. will continue to cluelessly spew nonsense using words they don’t understand.”
This is exactly what is going to happen. If Trump wants to fix the patent system, he needs to rid of us of the Obama judges like Taranto (and Stoll).
BemusedDecember 17, 2019 08:04 am
“TFCFM @ 8 – you get the Alfred E. Neuman Award.
(as well as the 1984 Award)”
Dang, wish I had thought to write that! 🙂
David LewisDecember 16, 2019 04:48 pm
Thanks for article and the blog, in general.
Although I generally agree with the tone and sentiment of the article, the article glosses over the fact that in most countries a pure method of medical treatment (e.g., a method of doing surgery), is essentially a nonstarter, whereas in the US, it is still quite possible to get such a claim, which is at least something positive about the US system, which probably should be mentioned in the above article (even if just in one sentence), for “fair and balance reporting” purposes. Or am I missing something (if I am, I welcome the correction).
On the other hand, it is my impression that Chinese patents now sell for more money than their US counter parts, despite the huge problems with China’s patent system, and I would think that someone should look into that and possibly mention it in an article of the nature of the above article.
jacek – the trollDecember 16, 2019 03:03 pm
PTO Only conclusion is shut up and put your invention back into a closet. Nobody wants it in the US. Big IP desert is emerging slowly in the US. The landscape is changing. I can compare it to the small retail landscape enabling me a bunch of years ago to start a small company. My first retailer was “Alphabet Soup” in Oak Park, IL. Through the years driving daily through this city, I saw small retailers posting significant discounts, then closing their stores. Now there is hardly any left. “Alphabet Soup” closed too after over 30 years in business. Soon after facing a diminishing customer base (small retailers), I closed my business also, and looking for new opportunities; I came out with a quite fancy invention only to look now for a chance for my creativity in the EU. The desert in only growing, it becomes a SAHARA. And I am discussing with my fresh university graduated daughter opportunities abroad and EU passport we applying for her. SAD.
angry dudeDecember 16, 2019 02:05 pm
Paul Morinville @6
And I can tell your precisely why this is happening
They couldn’t care less about startups and innovation in this county, of course
DC critters are paid by their Corporate Masters to prevent little guys like me from coming out of woods and suing their precious Apple or Google or Amazon for *willfully* (aka efficienlty) stealing fundamental patented technologies starting as early as 2006 (actually they were always stealing tech from each other and especially from little guys but efficient calculated stealing of small entity’s patents of unprecedented proportions started after EBay – 13.5 years ago)
angry dudeDecember 16, 2019 01:52 pm
Don’t play an idiot here
Patents are supposed to cover biggest markets
Your biggest market is USA I believe, not Israel
AnonDecember 16, 2019 12:22 pm
TFCFM @ 8 – you get the Alfred E. Neuman Award.
(as well as the 1984 Award)
BennyDecember 16, 2019 10:52 am
PTO – of course your US patent is handed out free to me, a citizen of ROW. If you didn’t want to give it to me free, gratis and for naught, you should have filed your application in my jurisdiction. The prefix US before the patent number is there to tell you it has no authority outside US borders.
PTO-IndenturedDecember 16, 2019 10:28 am
The Great American Patent Giveaway Program
Here! China, Europe, Rest of the World — thousands of U.S. patents for FREE.
Courtesy of agonizing (intentional) ambiguity, unconstitutionally empowered ‘judges’ (so-called), if not IP-inhibiting decision making appearing more akin to what ‘persons of vacuous skill in the art’ would render:
“We’re the deciders.” SCOTUS, CAFC, District Courts, USPTO / PTAB. And we are convinced the U.S. doesn’t need innovation it owns anymore, so we’re giving it away. The U.S. doesn’t need independent inventors / innovators anymore, so we’re killing off the profession, by focusing especially on their patents in our amazing ‘Stop Paying for Patents! Get Them for FREE! program.
Be the first one on your block (globally) to take full advantage of the giveaway! Don’t miss out on what Efficient Infringers have already enjoyed for years: stealing one U.S. patent after another. Oops correction: it’s not really “stealing”, because actually, we’re giving away this once highly-valued-property / innovation. Nevermind that the damage caused by our giveaway will already take decades to rebound from (Oh, right, with each of thousands of twenty-year-patent-life free U.S. patents given away).
Yes, and take comfort in the thought that this is all conveniently timed to occur concurrently with China (you know, that country once thought to be ‘so IP challenged’) becoming the new dominant IP filer on the global scene, now anticipated to far outpace our SCOTUS, CAFC, District Courts, USPTO / PTAB rendered ‘Rome is burning’ USPTO system.
JamDecember 16, 2019 10:23 am
Additional evidence of the decline in US innovation:
“China now publishes as many AI journals and conference papers per year as Europe, having passed the USA in 2006. The Field-Weighted Citation Impact of USA publications is still about 50% higher than China’s.”
TFCFMDecember 16, 2019 10:08 am
KM & AM: “Even accounting for the correction (1,310 versus the originally reported 1,694), the number of patent applications that fell victim to the Alice-Mayo framework, while being granted in foreign jurisdictions, still remains significant.”
I would hazard to bet that mine was not the only mother who rhetorically asked, “If your friends jumped off a cliff, would you jump too?”
In that same vein, the mere fact that other nations/regions continue to issue unwisely-broad patents (even ignoring the fact that analysis of patent families does not account for the breadth of claims sought in various nations/regions) does not mean that it is a good idea for the U.S. to do so, too.
Examination before PRC authorities being what it is (namely, generally quite poor), issuance of patents in PRC tells us little or nothing about whether possibly-corresponding US patent applications ought to issue.
One view of the spike in section 101 cases in the US is that it is merely a simple and predictable response to the explosion in claiming-anything-about-which-a-claim-can-literally-be-drafted that occurred in the US following the State Street Bank decision.
Meanwhile, despite the tearing-of-hair and rending-of-garments which has been so publicly highlighted in the US patent bar, developments in medical and e-commerce technologies remain as strongly rooted in the US as ever.
In short, I question the informative-ness of studies of this sort.
Paul ColeDecember 16, 2019 07:47 am
In the UK, judges are appointed from members of the bar, and in particular in IPEC and the Patents Court from members of the patent bar. They are therefore well educated not only in the general law, but also in IP law and in at least one field of technology since a science degree is an almost essential requirement for practice. They may reasonably be expected to have at least 25 years full-time experience in our profession prior to judicial appointment.
In the US by contrast, many of the judges in the Federal Circuit have been appointed from other areas of law, and their implicit comprehension of the legal and technical issues is limited. The position is exacerbated by the limited length of the briefs permitted prior to oral argument and the brief time allowed for oral argument. Full comprehension of the underlying facts and their significance for correct legal analysis is limited.
The outcome is a sequence of decisions based on egregious factual error, especially in the life sciences. As I have written, in Ariosa not only was the decision qualitatively wrong because on a deeper understanding the underlying process was clearly transformative and hence patent eligible, but insofar as it was said to both start and end with a natural product was quantitatively wrong by a factor of 1,000 – 1,000,000 on the face of the lead panel opinion.
One of the major problems, therefore is lack of judicial fitness to practice in the area of law in which judges are required to deal. Remedies include better treatment of fact in the evidence and briefs submitted to the courts recognising the difficulties of judicial comprehension, and better analysis of precedential decisions in terms of the essential facts relevant to the opinions handed down. That requires something a little more fundamental than mere extraction of passages of text from the Supreme Court or earlier CAFC opinions cited, as any competent law student should have learned during time at college. It should be noted that none of this requires Congressional action, merely better work by our profession and better understanding of the limitations of some of the judges to be found in the Federal Circuit.
Paul MorinvilleDecember 15, 2019 09:08 pm
The message that 101 is killing startups across several industries and innovation in those industries is going over seas has been so clearly and so often put out to the public on this blog, across the US media, and to Congress one office at a time by US Inventor and others, yet the US government continues to ignore dire warnings even with strong evidence presented such as the evidence in this article.
If you want to know who is killing the US innovation engine, it is pretty easy to see. Just look at the stunning amount of lobbying and political spending by big tech after the Senate Judiciary Committee hearings on 101 this summer.
It is corruption plain and clear. #BreakUpBigTech
TernaryDecember 15, 2019 06:41 pm
Excellent article. Many things are not right in patent land. Rather than ideologically driven narratives, we need objective data.
Unfortunately, effects in patent matters show up with considerable time delays. I believe we are entering a period wherein increasingly economic and other verifiable data will start to support opinions on effects of unchecked judicial interference in patent matters. It supports what many of us have said and experienced for years now.
If I were an incumbent, I would currently not engage with any patent holder on serious discussions about infringements or licensing. The opportunities to invalidate an issued patent are just too attractive. We are in a period of technological stagnation. The problems with the patent system are a symptom of that. The enormous leverage in market, economic and political power of existing companies is choking off economic renewal and innovation. Charging $700 for epi-pens may be attractive to corporate interests, but innovation it is not.
BDecember 15, 2019 04:33 pm
Gold into feces is a better analogy.
I do disagree with the authors on one issue. The effects of Alice/Mayo are being felt now. It’s just that CAFC judges and Supreme Court justices are too stupid and dishonest (especially dishonest) to admit the early signs of impending disaster their chaos is causing.
The Chinese will very soon swamp the US in medical treatments. The Chinese government, not Chinese citizens, owns their own medical records. Imagine what a few dozen competently-formed narrow AIs (shunned by the USPTO) can do with a billion medical histories and DNA profiles. Chinese companies will turn seemingly random noise into medical breakthroughs while Taranto et. al. will continue to cluelessly spew nonsense using words they don’t understand.
Pro SayDecember 15, 2019 03:35 pm
“All your patents are belong to us.”
— District Courts
— USPTO / PTAB
And because they do . . .
“All American inventions are belong to us.”
— ROW (Rest of World)
BemusedDecember 15, 2019 01:40 pm
What a damning indictment of Congress, SCOTUS and the CAFC. Well done, fools.
angry dudeDecember 15, 2019 12:55 pm
That’s 13 years later, not 5 years
And that’s “sh1t” not “lead”