Has Kennedy Bilski Opinion Led to Life Sciences Patent Mess?

The confusing state of affairs about the patentability of life sciences inventions arguably traces its roots to a seminal 2010 decision that will be part of retiring Supreme Court Justice Anthony Kennedy’s legacy.

Bilski v. Kappos, authored by Kennedy, marked the first time in decades the Supreme Court tinkered with the statute that sets out what can be patented, 35 U.S.C. § 101. With the dam broken, other members of the court authored three more decisions in rapid succession. The cases muddled the standard for figuring out what can be patented, leaving the life sciences intellectual property landscape particularly in disarray, patent law leaders told Bloomberg Law. Going forward, it’ll take an act of Congress to clean it up, they said.

“If you just look at [Bilski] as a document, it looks very impressive,” former Federal Circuit Chief Judge Paul Michel told Bloomberg Law in an interview. “But if you look at what its effects have been in the real world, in the ensuing eight years, I’d say its practical effects—despite how erudite it reads—have been awful. It certainly can’t be said the eligibility mess is all the fault of retiring Justice Kennedy, but certainly he didn’t help.”

Unworkable Standard?

Section 101 says inventors can get a patent for “any new and useful process, machine, manufacture, or composition of matter,” or an improvement on those.

Michel said Bilski latched onto “unclear language in ancient Supreme Court decisions” to invalidate, as an unpatentable “abstract process,” a patent on hedging against the risk of commodity price changes. It rejected a rigid “machine-or-transformation” test for patentability of process claims used by the Federal Circuit, saying it should only be considered “a useful and important clue or investigative tool.”

Two years later, Mayo Collaborative Servs. v. Prometheus Labs., Inc. similarly “picked up buzzwords” to invalidate a patent on calibrating the dosage of thiopurine drugs, Michel said. Mayo, written by Justice Stephen Breyer, said the invention “set forth laws of nature” and didn’t do more than simply describe them.

In 2013, the court also upended certain patent claims on breast and ovarian cancer diagnostic patents for similar reasons in Ass’n for Molecular Pathology v. Myriad Genetics, Inc., with Justice Clarence Thomas saying DNA extracted and isolated from the body was an ineligible “product of nature.” In 2014, Alice Corp. Pty. Ltd. v. CLS Bank Int’l, also written by Thomas, said a patent on a computer model to ensure parties to a financial transaction pay what they’re obligated to pay was drawn to an abstract idea and nothing beyond that.

“In those later [three] cases, the court admits that every invention in some fashion refers to or depends on or recites or claims in part an abstract idea or a law of nature,” Michel said. “And of course the irony in the human health field is, if the invention didn’t reflect a natural phenomenon or a law of nature, the cure would not work. The drug would not do what it needs to do. So of course it’s based on a law of nature.”

Elements of Mayo and Alice comprise the test for subject matter patentability now: First, a court must determine whether the claim indeed is directed to an ineligible concept, including natural phenomena. If so, it looks for whether the claim recites an “inventive concept” that does “significantly more” than simply describe the ineligible concept.

“The biggest problem is the terms have no clear meaning and the court has consistently refused to define any of them,” Michel said. “Going forward, nobody knows what to do. And going backward, it’s even worse because there are almost 3 million patents enforced today, and perhaps half of them are under a cloud now because they can be accused of claiming an abstract idea or a law of nature.”

Not on Kennedy?

Though it came first, Bilski may not have been the real catalyst for today’s confusion on patentable subject matter in the life sciences realm, Hans Sauer, the Biotechnology Innovation Organization’s general counsel and vice president for intellectual property, told Bloomberg Law in an interview. The industry trade group didn’t react negatively to it at the time, he said.

“The Bilski decision was concerned about unforeseen consequences,” Sauer said. “You could read it in the opinion. It was written I think in a consciously tentative way—they were concerned about quashing innovation that patent law seeks to encourage.”

Breyer took on a different tone in writing Mayo, the first case that followed, Sauer said.

“Doctrinally I think there was a break,” he said. “Because when you read Mayo, suddenly you no longer read even a single word about being concerned about incentives for innovation, being cautious, being worried about unforeseen consequences.”

“To the extent there’s blame to be laid for what we think is a deplorable state of law in Section 101, I wouldn’t lay it at the feet of Justice Kennedy,” Sauer said.

Legal, Marketplace Impact

Regardless of how the state of the law developed, patent and life sciences professionals agree the status quo on patentable subject matter is untenable.

Federal and administrative judges, patent examiners, investors, legal counsel, and others have to apply the Mayo/Alice test in “concrete situations,” Michel said. “And it’s basically mission impossible because they can’t do it in a way that’s rigorous or consistent or fair because of the inherent lack of certainty.”

The U.S. Patent and Trademark office is issuing separate guidance documents to explain to its examiners and intellectual property practitioners how the agency will construe the test. It issued one addressing the second step in the analysis in April. USPTO Director Andrei Iancu said his agency is preparing guidance to better explain the first step in the months ahead.

The quartet of patentable subject matter decisions and their ambiguity “has led to [a]n overall decline in the respect for and the understanding of the U.S. patent system,” Polsinelli PC senior partner Todd Dickinson told Bloomberg Law in an interview. Dickinson is a former director of the USPTO.

The strength of the U.S. patent system has dipped in recent years, compared with other countries’, according to U.S. Chamber of Commerce rankings. The U.S. now ranks 13th.

“We find ourselves in a situation where now you can get a stronger patent in other places in the world, like Europe and China,” Dickinson said. “There’s a lot of concern now that the patent system is in trouble, and this core set of cases is a piece of it.”

Up to Congress to Fix It?

With the Supreme Court since Alice declining to hear additional Section 101 cases, it’s going to be up to Congress to make any changes to the law on patentable subject matter, Dickinson said.

“There’s some momentum there, but changing the patent law takes a while,” Dickinson said. “It’s not a topic they deal with regularly, so they get confused by it or they get people coming in all passionate on one side or the other, and that tends to freeze them up.”

The Intellectual Property Owners Association, American Intellectual Property Law Association, and the American Bar Association’s Intellectual Property section have released proposals on how Section 101 could be amended. The effort could spur lawmakers to act, Michel said.

“I’m hoping that the Congress will realize increasingly as they get more and more information that we really do have a disaster on our hands and they’re the proper ones to fix it,” he said.

To contact the reporter on this story: Greg Langlois in Washington at glanglois@bloomberglaw.com

To contact the editor responsible for this story: Randy Kubetin at rkubetin@bloomberglaw.com