What is Patentable? Bilski Patent Case Oral Argument Heard at the United States Supreme Court : We Hope for Adoption of the Transformative Standard

On Monday, November 9, 2009, the U.S. Supreme Court heard oral argument in the Bilski patent case, the judicial resolution of which is bound to have far-reaching consequences on the way that the United States and the rest of the world view and treat patents (see the original transcript of the arguments here - hat tip to Kevin E. Noonan at PatentDocs in Supreme Court Bilski Argument).

Although the Supreme Court may decide the case narrowly with respect to the particular facts of the Bilski business method patent case, the reasons which the Supreme Court sets out as the basis for its decision will nevertheless have broad application in law, for the Supreme Court can not duck the pressing legal patent issues and must provide a flexible standard NOW, inserting stability into a system currently ruled by chaos.

Joe Mullin at The American Lawyer in Supreme Skepticism Over Bilski Claims Puts Method Patents on Shaky Ground writes in this regard that:

"For the first time in almost 30 years, the U.S. Supreme Court on Monday considered the issue of what types of technology should be eligible for patent protection when it heard oral arguments in Bilski v. Kappos.

Across the board, the justices indicated a deep skepticism toward the invention described in the patent application at issue, which was rejected by the U.S. Patent and Trademark Office and describes a method for trading commodities. Some of the justices went even further--expressing both a fair amount of disdain for the idea of granting broad "method" patents and a concern that ruling in favor of the petitioners would lead to patent grants on fundamental ways of conducting business or organizing human behavior. "

We have posted about the landmark Bilski case from the very beginning and our line of reasoning - prior to the court decisions - anticipated what the courts decided:

In re Kubin : Hitting the NAIL on the Head : Sequencing Poor Federal Circuit Court Decisions out of the Biotechnology Patent Genome via KSR and/or Bilski Reasoning

In re Bilski : Patentable Subject Matter : Federal Circuit Overturns Pure Business Method Patents : Requires Machine Process / Physical Transformation

Federal Circuit to Review Business Method Patents for Future Viability : There is a Great Likelihood of a New Upcoming Legal Standard

The Patentability of Business Methods and the Upcoming Federal Circuit Hearing en banc in Ex parte Bilski

For our part, we hope that the standard adopted is the transformative one. Transformation is the operative element that is common not only to patents but also to copyright law, for it is "transformation" which is the inventive step.

A copyrighted work is after all - in most cases - simply a unique transformation of commonly used words of the language or languages written. Since nearly every word is in a sense "copied" from prior art, and since many elements of any written work are common to many works due to the linguistically identifiable rules of grammar and syntax, almost any truly transformative work still necessarily contains many copied "elements". It is therefore the transformative nature of a work as a whole which must be judged and not its individual parts per se.

As far as patents are concerned, the same reasoning applies. Any transformation of "matter" or of a more abstract element of technology such as software or medical knowledge necessarily "copies", i.e. it relies on many elements of prior art to reach a new discovery. An inventive step is never taken in a vacuum and can therefore as good as never be divorced from the environment in which it takes place.

An invention is the whole work and it is entirely conceivable to imagine a fantastic new written work or invention made up totally of otherwise copyrighted or patented parts - for which the copyright or patent holders of those parts should in the case of such an invention nevertheless get nothing, because a transformation has taken place in the new whole.

A transformative standard can also be equally applied to software products (as a whole) or to new medical advances (as products), i.e. the transformative software (as a product) should be patentable, but NOT elements of the software code, and similarly, transformative medical discoveries should be patentable, but NOT the methods used to achieve them, e.g. transformative new ways to synthesize a gene should be patentable, but not the gene itself.

In the case of business methods, a transformative software product implementing a particular business method should be patentable - but NOT the business method itself. Until a business method is APPLIED, no transformation has occurred. Therefore, only a product which performs such a transformation can be patented.

We see no serious problems with a transformative standard - which need not be tied to machines or any other technology. The inventive step should be universally recognizable as a reproducible transformation.

The view voiced by some commentators and also expressed by some judges and also U.S. Supreme Court Justices that the Bilski patent might be rejected as being merely "an abstract idea" is an intellectual cop-out and begs the question of drawing the necessary line between "an abstract idea" and "an inventive step". WHERE that line is to be drawn is the job of the U.S. Supreme Court to determine and the Supremes therefore can not avoid the establishment of a standard simply by rejecting Bilski's business method as "an abstract idea".

The question is, when does a non-obvious abstract idea become an invention? And that question, the Court must answer. They have little choice.

We suggest that the only viable answer is the transformative standard.

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Comparing Pharmaceutical and Biotechnology Innovation in the United States and Europe : The Key Player is Venture Capital Financing and not Patents

It is often claimed that the liberal granting of patents is essential for the development of the pharmaceutical industry, especially modern biotechnology. The facts do not support that view.

NGP's Mind the gap? writes:

"Fast facts

For most of the past century, Europe has been leading the world in pharmaceutical innovation. But over the last decade, the US gradually overtook Europe both in terms of innovative efforts (R&D investment) and in terms of the output of its innovative activity (New Molecular Entities).

Europe is still leading the world in pharmaceutical production, which has risen fivefold in value over the last 20 years, with exports accounting for 60 percent of total production.

More than 400,000 Europe-born scientists are estimated to have crossed the Atlantic, where they account for 40 percent of scientists working in the US.

About 40 percent of the new active substances launched nowadays on the world market have been discovered and developed in Europe, whereas 30 years ago Europe’s share of pharmaceutical discoveries was 65 percent."

The reason for the mass exodus of pharmaceutical scientists from Europe to the USA is the lure of more money, enabled by exorbitant U.S. pharmaceutical profits as engendered by a failed and exploitative patent policy. As written by Marcia Angell in Excess in the pharmaceutical industry:

"Although the pharmaceutical industry claims to be a high-risk business, year after year drug companies enjoy higher profits than any other industry. In 2002, for example, the top 10 drug companies in the United States had a median profit margin of 17%, compared with only 3.1% for all the other industries on the Fortune 500 list. Indeed, subtracting losses from gains, those 10 companies made more in profits that year than the other 490 companies put together. Pfizer, the world's number-one drug company, had a profit margin of 26% of sales. In 2003, for the first time in over 2 decades, the pharmaceutical industry fell slightly from its number-one spot to third, but this was explained by special circumstances, including Pfizer's purchase of another drug giant, Pharmacia, which cut into its profits for the year. The industry's profits were still an extraordinary 14% of sales, well above the median of 4.6% for other industries. A business that is consistently so profitable can hardly be considered risky.

Excess profits are, of course, the result of excess prices — and prices are excessive principally in the United States, the only advanced country that does not limit pharmaceutical price increases in some way. Of the top 10 drug companies in the world, 5 are European and 5 are American, but all of them have the US as their major profit centre. In the US, uninsured patients (of which there are many) are charged more for drugs than those who have large insurance companies to bargain for them, and the prices of prescription drugs are generally much higher to start with than in other advanced countries. Moreover, the prices of top-selling drugs are routinely jacked up in the US at 2 to 3 times the general rate of inflation."

In reality, biotechnology patents are not an issue of health, invention or patent law, but rather a matter of greed for money, as discussed in the Journal of Intellectual Property Law & Practice by Katherine A. Helm in her article, The battle over global drug markets: enforcement of pharmaceutical patents in the United States, Europe, and Japan.

The facts also tell a different story about the alleged relationship of patents to innovation. Margaret Sharp and Pari Patel, SPRU, University of Sussex, write as follows in their article Europe's Pharmaceutical Industry: An Innovation Profile: Summary as part of EIMS (European Innovation Monitoring System):

"For the 20 largest R&D spending pharmaceutical firms, there is little correlation between measures of innovation such as R&D spending, patenting, the number of new drugs under development (in R&D), or the number of top-selling drugs, except for a positive correlation between R&D intensity and the number of new drugs as a percentage of sales....

Biotechnology offers a new route to drug discovery that could potentially reduce R&D costs and development times. A large number of small, dedicated biotechnology firms (DBFs) have been established in the United States in response to a conducive environment characterised by a developed venture capital market, lenient stock exchange rules, and a well-funded research base in the life sciences (Irvine et al, 1990). In contrast, few DBFs have flourished in Europe, while Europe's large pharmaceutical and chemical firms were latecomers to biotechnology, although several built up research teams in the early 1980s in order to keep abreast of developments. Since the late 1980s an important route for European firms to access biotechnology expertise has been through the purchase of American DBFs or the establishment of research laboratories in the US. However, case-study research shows that there is no systematic tendency for leading-edge biotechnology research by European firms to move to the United States (Senker et al, 1996). On the contrary, European firms are building up strong research capabilities in biotechnology, using links with American DBFs in areas where Europe is weak.

Few DBFs have been able to become fully integrated pharmaceutical firms and as of 1993 only about 3.9% of all pharmaceutical sales were due to biotechnology drugs (Ernst & Young, 1994). Most DBFs survive through a synergistic relationship with larger firms, where the DBF supplies potential new products to a large firm which in turn takes them through clinical trials and helps defend patents. This has meant that there has been a shift over the past decade from R&D agreements to alliances based on marketing and licensing.

Conclusions

Innovation in the pharmaceutical industry is difficult to measure. Too much R&D is devoted to duplicating the work of other firms and much patenting is defensive. Counts of drugs under development is not a satisfactory innovation indicator because they can reflect poor management as much as real innovation. The best measure is perhaps to take the number of top-selling drugs, but the drawback with this measure is that it measures past rather than present innovation. By this measure German firms have been lagging while British firms are the leading innovators in the EU. All EU firms have been rather slow at making the shift from a drug development paradigm based on chemistry to one that also includes biotechnology, although most are now moving in this direction, partly through establishing links with American DBFs.

The priority for European policies to support innovation in this sector is to create an environment conducive to innovation. Several policy measures would assist the European pharmaceutical industry: continued substantial support for the public research base in the life sciences; encouraging the full exploitation of that base by Europe's major firms (who still tend to know too little about what lies beyond national boundaries); the reinforcement of the single market and in particular the construction of a European rather than a national regulatory system, the easing of financial restrictions on venture capital financing; and finally, the promotion of other mechanisms to support and fund new, technology-based firms."

Accordingly, the surely short-lasting biotechnology edge that American firms obtained in the last decade was largely a product of more lenient American venture capital financing practices. Biotechnology innovation has had little to do with patents and patent law.

Patent Baristas Comments Extensively on In Re Kubin : The Use of Conventional Techniques to Arrive at an Obvious Result Does Not Make an Invention

Stephen Albainy-Jenei at the blog Patent Baristas has an extensive posting on In re Kubin at Court: It’s Not An Invention If You Use Conventional Techniques To Make It, writing:

"In In re Kubin (08-1184), the US Court of Appeals for the Federal Circuit held that the US Patent and Trademark Office's Board of Patent Appeals and Interferences was correct to hold claims as unpatentably obvious when applicants use "conventional techniques" to make an invention. This is bad news not just for biotech but for all arts."

The discussion by Albainy-Jenei is a good one, so be sure to read it, although we think that In re Kubin is not going to be long-term bad news for biotech or for the arts. The Federal Circuit in In re Kubin, following the United States Supreme Court's new obviousness standard in KSR, simply has finally drawn an understandable and desperately needed line for biotechnology patent applications - this far and no further. Not every foreseeable - obvious - increase in our scientific knowledge is - or should be - subject to patent protection. There is something we might call the "normal" progress of science - and that - to our mind - is not invention.

The patent situation in biotechnology has gotten as much out of hand as in the rest of the patent world. We need merely to refer to the Google Public Policy Blog where Michelle Lee, Head of Patents and Patent Strategy at Google, writes in Patent reform needed more than ever:

"After the last time I blogged about patent reform in late 2007, the House went on to approve the Patent Reform Act. The bill unfortunately got bogged down in the Senate the following year. Since then the problems of the current system — and the need for reform — have only grown.

Consider this: Of the 20 patent lawsuits filed against Google since late 2007, all but two have been filed by plaintiffs who don’t make or sell any real product or service — in other words, by non-practicing entities or “patent trolls.” Most of these cases seem to feature the same small set of contingent fee plaintiff's lawyers asserting patent claims against the same small set of companies. We've also noticed a more disturbing trend: in many of these cases, the patents being asserted against us are owned by — and in a surprising number of cases, are even “invented” by — patent lawyers themselves.

Unfortunately, the temptations and opportunities for abuse have gotten too high. Lawyers and plaintiffs have seen the potentially huge payoffs available in patent litigation. Before 1990, there had been just one patent damage award of over $100 million. Since 1990, there have been at least 15, with at least five topping $500 million." [emphasis added by LawPundit]

As the current world financial crisis shows, especially in the United States - which is bogged down by a mountain of debt to various vested financial interests, including those created by patent monopolies - you can't have the non-producing sectors of society sucking the life out of the economy without serious deleterious economic and political consequences.

Federal Circuit affirms In re Kubin and puts sensible limits on Biotechnology Patents pursuant to the KSR obviousness standard, thus negating Deuel

We posted previously, extensively and definitey about the need to limit biotechnology patents at In re Kubin : Hitting the NAIL on the Head : Sequencing Poor Federal Circuit Court Decisions out of the Biotechnology Patent Genome via KSR and/or Bilski Reasoning.

Through Filewrapper we just became aware of the the fact that the Federal Circuit decided this landmark biotechnology case just last Friday, applying the obviousness standard in KSR to biotechnology cases and in so doing finding that Deuel in this regard is no longer good law. BRAVO to the Federal Circuit in properly applying the U.S. Supreme Court's KSR standard.

Read the full posting Kubin decided: Federal Circuit provides guidance for application of KSR in biotechnology at Filewrapper, which provides excellent links to most if not all of the necessary resources - something we ourselves always try to do in our often lengthy postings, but which most blogs in their superficiality never do.

Well done, Filewrapper team!

By contrast, Patent Docs, pushing their particular subjective and outdated view of biotechnology patents, still doesn't get it, assigning multiple errors to the Federal Circuit court rather than trying to formulate a workable understanding of the rule now applied in In re Kubin and applicable to the grant or denial of all biotechnology patents in the future. When Patent Docs writes that "the Court set forth a plethora of factual grounds unlikely to be identically (or even substantially) encountered for other genes," they are engaging in wishful nostalgic thinking which has no bearing on the current and modernized patent realities.

The fact is that biotechnology patents will be more difficult to obtain because of In re Kubin, make no mistake about that, and thank goodness for that, for the sake of the health of the patent industry as a whole and for the sake of the health of the entire legal system.

In re Kubin : Hitting the NAIL on the Head : Sequencing Poor Federal Circuit Court Decisions out of the Biotechnology Patent Genome via KSR and Bilski

The Human Genome is OURS not theirs:
Gene Patents Should be Void on their Face

Let us say, prior to our comments about In re Kubin, that we think that gene patents should be void and voided by legislation as a matter of public policy, including all gene patents thus far granted.

The very idea that any component of the human body can be patented is absurd and shows how far away from its legitimate foundations the patent law has come in the modern era.

The Constitution of the United States never intended that human genes - or any genetic sequence of them - be patentable - for any reason. No stretch of the language or the intentions of the American Founders can possibly make a gene sequence a human invention worthy of patent protection - a monopoly provided at taxpayer cost for the benefit of the greedy few.

Pharmaceutical viz. biotech companies get richer and richer, and there is good reason for this. Patents - justifiably or unjustifiably granted - provide the pharmaceutical industry with a host of government-sponsored monopolies that lead to spectacular profits and raise the cost of health care to astronomical levels for all citizens. In a world where the average age of the population in the countries of Western Civilization has reached unprecedented levels, controversial patent policies which grant patents where they need not be granted and which lead to expensive and unnecessary burdens on the health care system should be cast aside as inimical to the common weal (see also).

Patents in the area of biotechnology have scarcely anything to do with "invention". For example, gene sequences ALREADY exist in nature and NATURE itself is the prior art. No researcher invents a "code" when he or she "decodes" a gene sequence and once a protein is known, that decoding is for the most part simple technical routine that any versed lab assistant can carry out in a trial and error process. Nothing is actually being invented.

On the other hand, what genetic and biotech patents DO have a great deal to do with, is less science and more MONEY. There is a constant battle between researchers, pharmaceutical and biotech companies and those affiliated with them for the gigantic windfall profits which stem from monopolies granted to them via patent protection from patent offices.

In re Kubin is a great example of the gold rush mentality prevalent in this field.

In re Kubin : Enough is Enough : Establishing Sensible Limits to Biotech Patents

The Federal Circuit will soon decide the appeal in the gene sequence patent case In re Kubin (oral arguments were held on January 8, 2009).

As Kevin E. Noonan observes at Patent Docs regarding the oral arguments in In re Kubin:

"Judge Friedman ... set forth some background information, asking for a brief synopsis of what the patent applicants were trying to do. [Ms. Rudolph] responded by explaining the underlying immunology of natural killer (NK) cells. In response to renewed questioning from Judge Rader, that the prior art Valiante reference "taught p38 which is NAIL" (the subject matter of the Kubin application was a cDNA encoding human NAIL), she reminded the Court that what Valiante disclosed was "a band on a gel," i.e., that the Valiante patent disclosed an antibody immunologically reactive to p38, and therefore, that Valiante did not disclose purified p38, but merely its detection on a Western blot (where it would be expected to be in the presence of a multiplicity of other proteins)."

The essential facts and issues of In re Kubin are found online best explained at Coping with Kubin by Kristina Caggiano at PharmaExec.com, where she even includes adaptation strategies for lawyers and law firms for the new legal circumstances. Holman's Biotech IP Blog has a good technical overview, which in our opinion, however, is too biased on the side of patent protection.

In the case itself, the existence of a protein (P38) on the surface of NK cells and the method of recognition of that protein had already been previously discovered by others. That is the prior art. What the patent claimant had done was to decode this protein, a standard procedure in this field, if also sometimes requiring a time-consuming trial-and-error process, and a task often assigned to lab assistants in the laboratory. The task can be tedious, but it is not what anyone would call "inventive".

Is that decoding a patentable invention? In fact, the patent claimant did not restrict itself to the decoded nucleotide (of which there can be hundreds of millions in a single DNA strand of the human organism) but sought a patent for the entire genus of similar polynucleotides, a gigantic biotech "land grab" which is common in the patenting of so-called biotechnology "discoveries".

A legal problem exists here therefore as regards patent enablement and description, to which also see Holman. Essentially, that legal doctrine means that you can patent YOUR mousetrap but not all other conceivable mousetraps, even those that are similar to yours. Courts still do not understand that you can patent YOUR physical invention, but not the idea incorporated in the invention. In fact, it is to the advantage of society that inventions breed imitation and improvement, which are at the root of all progress. Patent claims for entire genuses of things should thus be rejected as a matter of course by courts as spurious. Deterring high fines for such claims should be assessed against claimants. Patents should protect what has been invented (and produced as an invention), not what could be invented (or produced as an invention).

Kubin is a case which provides the Federal Circuit with a golden opportunity to put an end to the mass of biotech patent applications which have flooded the USPTO ever since their disastrous decision in In re Deuel, 51 F.3d 1552 (Fed. Cir. 1995), which the Harvard Law Review describes (in a note to In re Fisher, 421 F.3d 1365 (Fed. Cir. 2005) as:

"the Federal Circuit’s heavily criticized decision in In re Deuel."

In re Deuel : Armageddon for the USPTO

The majority opinion in Deuel is marked by Judge Alan David Lourie's statement that: ""Obvious to try" has long been held not to constitute obviousness" in a decision holding that:

(1) combination of prior art reference teaching method of gene cloning, together with reference disclosing partial amino acid sequence for a protein that stimulated cell division, did not render claims prima facie obvious; (2) conceived method of preparing some unidentified DNA does not define it with precision necessary to render it obvious over protein it encodes; and (3) patent claims generically encompassing all DNA sequences encoding human and bovine proteins to stimulate cell division were not invalid as obvious."

In our view of how the law should be, the Federal Circuit was wrong on all counts, as the Deuel decision led to an avalanche of patent applications that is still being felt today by a USPTO that has a backlog of over 1 million patent applications pending, and no end in sight.

As written at the Harvard Law Review case note cited above:

"Deuel held that, despite the existence of a known method for isolating a DNA sequence, obviousness is no bar to the patenting of a sequence as long as the precise nucleotides are not previously known. The ensuing “avalanche of patent applications on ESTs” led to the reinstatement of the requirement of substantial utility in the Utility Guidelines in 1999, but an overwhelming number of costly and complex applications continued to be filed. In addition, in 1997 the Federal Circuit appeared to be attempting to slow the flood of patents by distinguishing biotechnology from other chemical industries and holding, in Regents of the University of California v. Eli Lilly, that an adequate written description of a patent for a DNA sequence required the disclosure of the precise sequence of nucleotides. Although this requirement was seen as a means of delaying patent filing in some instances until the tedious task of sequencing was completed, it also meant that the patent would only cover the exact sequence disclosed. Together, these decisions created a field in which a large number of patents of very narrow scope would be available, inviting concerns that such a regime would produce “too many concurrent fragments of intellectual property rights in potential future products,” and thereby impede innovation in biotechnological research...."

[we go to the paragraph at the beginning of that same Harvard Law Review case discussion]

"The question of patenting expressed sequence tags (ESTs) was first raised in 1991 when Dr. J. Craig Venter of the National Institutes of Health (NIH) filed several applications for EST patents. Although the ensuing controversy ultimately prompted the NIH to withdraw its applications, private companies have since stepped in to lay claim to hundreds of thousands of ESTs. Recently, in In re Fisher, the Federal Circuit denied claims to ESTs by finding that, without knowledge of the function of the genes to which they correspond, their value as research tools did not rise to the level of patentable utility. When combined with policy considerations for furthering agricultural biotechnology, Fisher suggests that the identification of underlying gene function should be regarded as a necessary, but not sufficient, condition of utility."

What is patentable subject matter and what is non-patentable due to obviousness?

Do recent court decisions deny the patent claims in In re Kubin?

The winds of change are blowing strongly in the direction of a substantial limitation of patents, especially in light of the sensible standards recently issued by the United States Supreme Court in KSR v. Teleflex, 550 U.S. 398 (2007) and by the Federal Circuit in In re Bilski, 545 F. 3d 843 (Fed. Cir. 2008)(en banc).

In KSR, the U.S. Supreme Court, in an opinion by Justice Kennedy for a unanimous court, held that "common sense" was the prevailing standard for obviousness and not some artificial formula, and that something which was "obvious to try" for "a person of ordinary skill in the relevant art" was "obvious" and thus non-patentable. In Bilski, the Federal Circuit, sitting en banc, in a 9-3 decision and via a majority opinion written by Chief Judge Michel, held that a business method which did not involve a machine process or a physical transformation was not patent-eligible subject matter.

KSR International v. Teleflex

In KSR International v. Teleflex, the U.S. Supreme Court overturned the Federal Circuit Court TSM tripartite test of "teaching-suggestion-motivation" to determine the obviousness of a patent. During oral arguments the TSM test was called "three imponderable nouns," by U.S. Supreme Court Justice Antonin Scalia, who categorized the TSM test as "gobbledygook" and "irrational", whereas Chief Justice John Roberts called it "Federal Circuit jargon" which was "worse than meaningless because it complicates the inquiry rather than focusing on the statute."

As Tony Mauro of the Legal Times wrote at Law.com in Justices Slam Nation's Patent System....:

"In surprisingly blunt terms, Supreme Court justices Tuesday made it crystal clear that they are upset with the nation's patent system, the lawyers who litigate under it and the appeals court that referees it.

During a lively -- bordering on raucous -- hour of arguments on what makes an invention so obvious that it does not deserve a patent, justice after justice piled on criticism of the U.S. Court of Appeals for the Federal Circuit's three-part "teaching-suggestion-motivation" test for determining obviousness, an issue that arises in virtually every patent application and appeal. The test has been criticized as too patent-friendly, resulting in a proliferation of junk patents that stifle competition.

"Three imponderable nouns," is how Justice Antonin Scalia dismissed the test, also calling it "gobbledygook" for good measure.

Chief Justice John Roberts Jr. called it "Federal Circuit jargon" that is inflexible and "worse than meaningless."

And when Justice Stephen Breyer said he had read the briefs in the case "15 times" and still could not understand the "motivation" prong of the test, Scalia chimed in, "Like Justice Breyer, I don't understand."

The implied message to the Federal Circuit seemed to be: If two of the brainier justices on the Supreme Court don't have a clue what you are talking about, a new test might be in order."

In fact, the U.S. Supreme Court threw out the TSM Test altogether.

KSR was applied soon thereafter by the Federal Circuit in Leapfrog Enterprises, Inc. v. Fisher-Price, Inc., 485 F.3d 1157 (Fed. Cir. 2007).

As noted by Mark Nowotarski at IPToday.com, the Board of Patent Appeals and Interferences is citing KSR in over 60% of its decisions relating to obviousness.

In re Bilski

The holding in Bilski is that patent protection does not extend to business methods which are not tied to a machine process or a physical transformation. This standard has since been applied in the life sciences in Classen Immunotherapies, Inc. v. Biogen IDEC et al. (Fed. Cir. Dec. 19, 2008), which is labeled as a "nonprecedential" disposition, a rather misleading label which attempts to make a nothing out of a something. The notice "This disposition is nonprecedential" should be dropped as contrary to reality. Every disposition has precedential effect on the world and on the subject parties, like it or not. Law does not exist in a vacuum nor can the doctrine of stare decisis be negated by labels. What is done, is done, and it lives on as done.

Bilski casts a possible shadow over In re Kubin since the decoding of a gene is not tied per se to a machine process nor is it a physical "transformation" of the gene. It is a mere method of revealing what is present anyway. Genetic decoding means only that the researcher knows in greater detail "what it is" and "where it is", but the nucleotides remain unchanged. There is no machine process in the technical sense since the genes are not "processed" and nothing is transformed. All that has happened is that one has gained more knowledge - and the gaining of more knowledge is viz. should not be patentable.

We could understand the patenting of a specific drug that incorporates a proprietary type of method for producing its ingredients, but if these ingredients are genetic materials, then those materials themselves, including their genetic sequences, should be unpatentable per se.

What will the Federal Circuit decide in In re Kubin?

In our opinion, the Federal Circuit has no choice but to affirm the denial of the patent claimed.

The Conception of a Child is Not an Invention - But Don't Be Too Sure : The Patenting of Living Things is In Vogue

Somewhere in the near future.... government agent Troll stands on the broad side of a hill and views the brightly burning wheat in the valley below. As far as the eye can see, the fields of harvest-ripe grain are engulfed in flames, as Troll's pyromanic troops - armed with a court injunction to stop patent-infringing plant growth immediately - dutifully destroy the autumn harvest crop of the patent-infringing clan of the Hungries. "That'l learn 'ya," yells Troll out loud to the fleeing Hungries, "patents rule the world, and don't forget it".

How did the status of the patent law reach that scenario?

The Patenting of Living Things - Granting Monopolies on Life Forms

The patenting of living things - as so many other patent areas - has gotten out of hand at the USPTO, as written up at the New York Tiimes by Michael Chrichton in Patenting Life.

Chrichton's comments are contested at Patent Docs, but we find the latter unpersuasive and one-sided, as it takes an - in our opinion - pro-patent apologist position to dangers that others see, rather than tackling the hard issues of constitutional law, patent abuse and the fact that patents often create monopolies that in turn grant money and power to their holders which far outlive the length of the patent, to the detriment of the common weal.

Reach-Through Royalties Extend the Duration and Scope of Patents

Indeed, "reach-through royalties", which can contractually bind the user of a patent far beyond the expiration date and scope of the patent, have become common. As written at the Wiggin and Dana Biotechnologly and Life Sciences Advisory, When Is A Reach-Through License Appropriate, BioInsights, April 2002, Issue 4:

"A reach-through license creates royalties to the research tool developer on the sales of products that are discovered or developed through use of the research tool, even though the patented invention is not incorporated into the final product, i.e., the manufacture, use and sale of the final product does not infringe any patents claiming the enabling tool. The recent proliferation of reach-through licenses has created controversy, with proponents arguing that reach-through licenses create incentives to further research tool development, while opponents claim that reach-through licenses extend the patent rights of the research tool owner, inhibiting dissemination, freedom of use and ultimately research and product development."

See also the DOJ's Variations on Intellectual Property Licensing Practices
and IP Handbook of Best Practices

Patent Monopolies Far Outlive the Actual Duration of Patents

As someone who has spent many professional years in the highly profitable monopoloy-and-patent-based pharmaceutical and chemical industries, it is not without reason that we wrote previously at LawPundit:

"One of the things that the political, corporate and legal establishment in the United States does not appear to appreciate is that patent monopolies, once granted, far outlive the actual duration of patents, and give the holders of those patents - on a silver platter - industrial empires which last centuries. The best example of that in Europe is the post monopoly of Thurn & Taxis, whose family, hundreds of years later, is still one of the wealthiest families in Europe.

Alexander Graham Bell's patents were challenged something like 600 times during his lifetime, but his patent-based monopoly could not be shaken and AT&T (later known as "Ma Bell") went on to control nearly the entire US telephone market, creating one of the most powerful monopolies of the modern business age."

Patent Monopolies, Anti-Trust and the Federal Circuit

The purpose of the patent provision of the US Constitution was to enable inventors to profit fairly from their discoveries. The actual application of the patent provision of the Constitution by legislators and courts has led, by contrast, however, to the creation of economically harmful vast monopolies, which are characterized by all of the monopoly evils that laws such as the anti-trust laws were once designed to prevent, but which are ineffectual against patent-based monopoly power. Indeed, Robin Feldman, in Should We Breathe Life into Patent Misuse?, has written:

"In the last decade, the Federal Circuit has reframed the doctrine of patent misuse by prohibiting a finding of misuse without the application of antitrust law. This shift has all but eliminated patent misuse as a live doctrine, separate from antitrust. The Federal Circuit’s approach is inconsistent with legislative and judicial precedent and threatens to distort both patent and antitrust law."

Marcia Coyle at The National Law Journal on October 19, 2006 wrote about the heart of the problem in Critics Target Federal Circuit: Reversals cast patent court in harsh light. Our own criticism of the overly pro-patent, seemingly insular Federal Circuit certainly mirrors what Coyle writes in that article, for example:

"With the recent Senate confirmation of Judge Kimberly Moore, the court now has a full complement of 12 active judges....

Last year, before she became a Federal Circuit judge, Moore, in an empirical study of district court reversals, reported the reversal rate, eight years after the Supreme Court ruling, was rising instead of declining as judges got more experience with claim construction.

The fault, she wrote, rests with the Federal Circuit, which was not providing sufficient guidance: "There have not evolved any clear canons of claim construction to aid district court judges, and in fact the Federal Circuit judges seem to disagree among themselves regarding the tools available for claim construction." "

Coyle quotes Timothy R. Holbrook about the US Supreme Court and the Federal Circuit:

""I think the Supreme Court has started to pay attention to patent law for two reasons: disquiet with the Federal Circuit and also because patent law and patent reform are so on the radar screen," said patent scholar Timothy R. Holbrook of Chicago-Kent College of Law."

Coyle writes further:

"There have been two major recent studies of the patent system that noted problems, as well as patent reform proposals introduced in Congress, said Holbrook. On the "disquiet" reason, he said, "everyone thinks the Federal Circuit is pro-patent."

Bioengineered Bacteria and the Plant Patent Case

One of our "unfavorite" cases in patent law is the "unobvious" Federal Circuit decision in Pioneer Hi-Bred International, Inc. v J.E.M. Ag Supply, Inc., 200 F.3d 1374 (Fed. Cir. 2000), affirming Pioneer Hi-Bred Int’l, Inc. v. J.E.M. Ag Supply, Inc., 49 U.S.P.Q.2d 1813 (N.D. Iowa
1998)) (you will have to register for free at FindLaw to read this case at that link)

That case upheld the validity of a patent for plant seed. The "Pioneer Plant Patent Case" has led to foreseeable monopoly practices in seed corn sales some years later. The case was taken by certiorari to the US Supreme Court and unfortunately affirmed there 6-2 in J.E.M. Supply v. Pioneer Hi-Bred International, 534 U.S. 124 (2001), through a majority opinion authored by Justice Thomas who observed:

"Pioneer sells its patented hybrid seeds under a limited label license that provides: "License is granted solely to produce grain and/or forage." ... The license "does not extend to the use of seed from such crop or the progeny thereof for propagation or seed multiplication." ... It strictly prohibits "the use of such seed or the progeny thereof for propagation or seed multiplication or for production or development of a hybrid or different variety of seed....

Relying on this Court's broad construction of 35 U. S. C. § 101 in Diamond v. Chakrabarty, 447 U. S. 303 (1980), the District Court held that the subject matter covered by § 101 clearly includes plant life...."

Justice Breyer in dissent wrote about Chakrabarty, a case about bioengineered bacteria and not about plant patents:

"Respondent and the Government claim that Chakrabarty controls the outcome in this case. This is incorrect, for Chakrabarty said nothing about the specific issue before us."

Clearly, the issue was not "clear", as alleged by Thomas, otherwise Breyer would also have been in the clear about it. As Thomas wrote in his majority opinion:

"The question before us is whether utility patents may be issued for plants pursuant to 35 U. S. C. § 101 (1994 ed.). The text of § 101 provides:

"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.""

Prior to the Pioneer Hi-Bred case, a plant seed had never before been found to be patentable by a higher US court.

One reason that seed-grown plants were not patented for the first 200 years of the existence of the United States was that it was not foreseen by the nation's founders that plant seeds should fall under the patent clause. Why should they be patentable now? Reduplication is a process carried out by Mother Nature, it is not an invention of man. Man to this day has not invented a single seed - he has only retooled existing seeds as hybrids - by chance or by design, but the original seeds are not his invention and they are anticipated by the prior art of the Supreme Maker. No plant seed can violate basic genetic rules - these are predetermined.

Biogenesis is defined as: "[t]he principle that living organisms develop only from other living organisms and not from nonliving matter".

35 U. S. C. § 101 provides that "compositions of matter" could be patented, and Justice Thomas described his view of Congressional intent in this regard as follows:

"This Court thus concluded in Chakrabarty that living things were patentable under § 101, and held that a manmade micro-organism fell within the scope of the statute. As Congress recognized, "the relevant distinction was not between living and inanimate things, but between products of nature, whether living or not, and human-made inventions." Id., at 313."

The conception of a child through human seed is not an invention - or - according to the standard voiced by Justice Thomas, is it? Surely, according to the flawed reasoning in the Pioneer Hi-Bred case, it should be possible for a sperm bank donor to patent his donated semen - nothing is more "human-made" than that - and thus to obtain patent rights to the progeny of that semen. For why should a hybrid "plant" have any greater patent rights than a new "hybrid" human? Armies of "patented" human clones seem not far off the horizon of the future. And yet, these are not the kinds of "discoveries" that the US Constitution intended "to secure" by patent law.

A second reason that the plant varieties now being produced in our modern day were not produced in the first 200 years of the existence of the United States was because they were not obvious prior to recent developments in modern genetic science. It has only been possible to develop such varieties in the last several decades, because they are obvious now, given the state of the art of that new biotechnology. Hence, in our opinion, new genetically-engineered plant varieties are anticipated by modern genetic "prior art", which makes them obvious per se and hence unpatentable. Judge Newman may be aware of "unobvious varieties" (her term) - we are not. As Breyer noted in his Supreme Court dissent in referring to the oral argument about the issue of obviousness in this case:

"See Tr. of Oral Arg. 26, 30. But see S. Doc., at 20-21 (suggesting little difference [between PVP certificates and plant patents] because patent office tends to find "nonobviousness" as long as the plant is deemed "new" by the Department of Agriculture)."

In that context, here is a question for judges and Justices to ask upon oral argument:

"The claim is that this plant seed is "unobvious". If that is so, how is it that the alleged inventor came upon it now? Please describe the steps which led to this alleged discovery and why it was not made 10 or 50 or 100 or 200 or 2000 years ago. Is it "more obvious" in our biogenetic age than it was years ago, and why? Why should this now suddenly obvious and yet for patent purposes allegedly nonobvious plant seed be patented? For whose benefit?"

See Also

Hayden A. Carney, at Christie Parker Hale, "ENTER: Human-Made Inventions, Living or Not" Patent and Trademark Office Welcome Mat

Harold C. Wegner, Supreme Court Patent-Eligibility Lessons from the J.E.M. Case: From Seeds To Business Methods, Biotechnology Law Report. 2002, 21(1): 18-20. doi:10.1089/073003102317359808.

Kevin J. DUNLEAVY, Emerson V. BRIGGS III (2000), Tribunals uphold Patent Protection for Plant-Based Biotechnology Inventions in the United States and Europe, The Journal of World Intellectual Property 3 (4), 555–559.
doi:10.1111/j.1747-1796.2000.tb00142.x (paid subscription or online purchase required)

The Oyez Project, J.E.M. Supply v. Pioneer Hi-Bred International, 534 U.S. 124 (2001), available at: <http://www.oyez.org/cases/2000-2009/2001/2001_99_1996/>
(last visited Friday, November 23, 2007).

McKesson v. Bridge Medical - Dealing with Abuses of the Patent Law System

The recent May 18, 2007 Federal Circuit decision in McKesson v. Bridge Medical mirrors the trend found in information technology decisions ushered in by KSR v. Teleflex and followed in Leapfrog Enterprises, Inc. v. Fisher-Price, Inc. and Mattel, Inc. and Perfect 10 v. Google and Amazon (A9.com).

That trend is that the courts are starting to come down hard on the various existing abuses of the patent and copyright system, something which the courts must do in order to keep that same patent, trademark and copyright system functioning viably.

As written by Kevin E. Noonan at Patent Docs regarding McKesson v. Bridge Medical:

"[T]he Federal Circuit significantly increased the extent to which the duty of candor extends to activities occurring during prosecution of related applications. At the same time, the Federal Circuit lowered the standard for deciding that activities during patent prosecution could be inferred to be intentional, making it easier for a patent to be found unenforceable due to inequitable conduct. The effects of this decision are likely to be felt disproportionately by biotech patent applicants, in view of the high frequency with which applications in this technology area are required to file divisional and continuation applications." [emphasis added by Biotechnology Pundit]

Patently-O cites hopefully - and, in our opinion, unfortunately - to the woeful dissent of Judge Pauline Newman (see picture here) in McKesson, a Judge who will turn 80 this month, June, 2007, and whose current lack of good judgment - in our opinion - is evidenced by the fact that she has not gone into a timely retirement, but selfishly continues to hold on to her position to the detriment of the court, the country and patent law. What is needed - soon - is a modernly-oriented successor.

The patent system consists of "cogs" and "clogs" and Judge Newman in recent years has become one of the main clogs in a patent system desperately in need of reform. Judge Newman has through her backward opinions opposed nearly every type of patent reform and has even campaigned actively against patent reform in Congress. See IPBiz and Judge Pauline Newman urges caution in patent reform.

Nothing sensible has been done in patent law reform for the last 20 years, thank you Judge Newman, and it is time to move forward with desperately necessary intellectual property law reform before the entire IP system collapses of its own ponderous antiquity and inertia.

Senior Circuit Judge Raymond C. Clevenger III delivered the opinion of the Court, writing:

"As set forth in considerable detail below, this case involves McKesson's nondisclosure of three items of information during prosecution of the '716 patent in a setting where the applicant had co-pending applications. The district court found each of the three nondisclosures individually and collectively material to prosecution of the application that led to the '716 patent. With regard to deceptive intent regarding each nondisclosure, the district court found circumstantial evidence strongly supports an inference of deceptive intent. After assessing all the facts, the district court held that McKesson failed to provide a credible explanation for the material nondisclosures. As the district court noted, this was not a case of mistake or negligence—the prosecuting attorney testified that he would make all the same nondisclosure decisions again if prosecuting the same applications today.

The district court's thorough written opinion documents the court's correct understanding and application of the relevant precedent. The issues of materiality and intent are fact-driven. With regard to the issue of intent, the law recognizes that deceptive intent is virtually never shown or disproved by direct evidence. Instead, the ultimate fact finding on the issue depends on assessment of all the inferences, favorable and unfavorable, that can be drawn from pertinent evidence. To prevail on appeal, McKesson must demonstrate that the district court's findings of fact are clearly erroneous. After careful review of the record, we conclude that McKesson has not met its burden, and we therefore affirm."

For more material on McKesson v. Bridge Medical, see:

The Focal Point LLC : Litigation Graphics and Strategy

Eric M. Acker, Jose L. Patiño and Katherine L. Parker, Morrison & Foerster LLP, United States: Patent Prosecutors Beware, Litigators Take Note: Federal Circuit Affirms Novel Inequitable Conduct Ruling, 25 May 2007

Gehrke Law

Peter Zura's 271 Patent Blog

Some Aspects of the Legislative and Judicial Origins of Modern Biotech Patent Law

We do not make many friends by always being the one to stand up and point out that the Emperor is without clothes, but such is the case in modern patent law and what we regard to be the ignominious role played by Judge Giles S. Rich in:

1) contributing to the ill-fated drafting of the 1952 US Patent Act;
2) writing "holdings in which the court struck down prior rules against the patenting of living things (Chakrabarty v. Diamond), software-implemented inventions (In re Diehr), and business methods (State Street v. Signature Financial), saying those rules did not have a proper basis in the patent statute (which he had co-written), and opening the way for inventors to receive patents in those areas of subject matter...."; and,
3) especially writing the unwise opinion in the 1998 State Street case [State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), 47 U.S.P.Q.2d 1596, reversing 927 F. Supp. 502 (D. Mass. 1995), cert. denied, 525 US 1093 (1999), U.S. Law Week (Jan. 11, 1999)], which disastrously overturned 90 years of patent law precedent and practice.

Indeed, when Judge Giles S. Rich wrote his now precedential opinion in the State Street case - overturning 90 years of US patent law precedent - he himself was 94 years old!

The 1952 US Patent Act and the State Street case represent major - and we think clearly unconstitutional - legal detours which have led to the confused and chaotic state of patent law in the United States today.

How can the United States entertain a legal system in which tenured judges are deciding the law of the land at age 94? Just imagine a major corporation being run by someone of that age - what are the odds that correct decisions would be made which would be in concert with the spirit of the age and the needs of the times? Very small, indeed.

We are aware that Judge Rich was a respected man in many quarters and that at the time of his passing he was not only the oldest federal judge, but also the oldest active judge in US history (you can not force a tenured judge to retire), having been appointed in 1956 to the Court of Customs and Patent Appeals by President Dwight D. Eisenhower. [Note: The U.S. Court of Customs and Patent Appeals was merged with the U.S. Court of Claims in 1982 to form the U.S. Court of Appeals for the Federal Circuit.]

Indeed, for all we know, Judge Rich may have been a likeable and talented person in his personal and social relationships. However, we view his legal legacy with considerable disdain.

We definitely agree with the 1999 opinion in the Linux Journal in Internet Patents: Giving Away the Store in assigning Judge Rich a less than noble position in the development of US patent law. LJEditors (Bryan Pfaffenberger) writes:

"[Y]ou're about to find out how we got into this mess. Let's start with patent attorney Giles S. Rich, who in 1952 chaired a congressional commission that rewrote the Patent Act.

The Patent Act's language, dating back to 1790, enumerated patentable subject matter in the following terms: "any new or useful art, machine, manufacture, or process of nature". In place of "art", the Giles-led commission recommended that Congress use the word "process" instead. This was no insignificant updating. The history of technology reveals that the term "art" nicely captures the Constitution's intent in that, in this context, it refers to the non-scientific skills and techniques that a successful practitioner uses. In contrast, "process" could include scientific processes, such as those employed in industry. It seems reasonable enough to extend patent protection to industrial processes, but you shouldn't be naïve about Giles' intentions. In the early 1950s, Giles embarked on a single-minded, decades-long campaign to greatly expand the scope of patent protection to "anything under the sun made by man", as the Giles-led commission put it. Subsequently, Giles fought for the legislation and jurisprudence that enable biotechnology firms to win patent protections for engineered life forms."

And that is where we are today. PATENT LAW CHAOS. Thanks in large part to Judge Rich.

A US Senate tribute to Judge Rich contains the following story:

"Judge Rich, at one time, told an attentive audience of a verse his mother would recite, 'The wise old owl lie in an oak. The more he saw, the less he spoke; the less he spoke the more he heard. Why can't we be more like that old bird?'"

Yes, yes ... it is always the other guy who should keep quiet. But had our Judge Rich followed his own philosophy and kept quiet rather than writing opinions of law which have proven to be absolutely disastrous in the long term, the patent world of today would be much better off than it is.

So here is our tribute to Judge Rich:

I lied (sic) like a wise old owl in an oak
The more I saw, the less I spoke
The less I spoke, the more I heard
Of a patent law gone fully absurd...

As Shakespeare wrote:

"The evil that men do lives after them,
The good is oft interred with their bones."

Judge Rich, rest in peace....