User:TGoshenBarker/draftspace

Case Law at Issue
Funk Brothers

Chakrabarti

Alice

Mayo

Senate Committee Organization

Proposed Changes
On May 22, 2019, in Washington D.C. a bipartisan, bicameral draft bill that would reform Section 101 of the Patent Act was introduced. It was proposed by the Chair of the Senate Judiciary Subcommittee on Intellectual Property Senator Thom Tillis (R-NC) and its Ranking Member, Senator Chris Coons (D-DE). They were joined by the House of Representatives Ranking Member of the House Judiciary Committee, Hank Johnson (D-GA-4), the Chairman of the House Judiciary Subcommittee on Intellectual Property and the Courts, and Representative Steve Stivers (R-OH-15) The proposal was released prior to a round-table the Senators and Representatives were holding the following day and intended to solicit feedback.

Draft Law Proposed Amendments
Section 100:

(k) The term "useful" means any invention or discovery that provides specific and practical utility in any field of technology though human intervention.

Section 101:

(a) Whoever invents or discovers any useful process, machine, manufacture, or composition of matter, or any useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

(b) Eligibility under this section shall be determined only while considering the claimed invention as a whole, without discounting or disregarding any claim limitation.

Section 112:

(f) Functional Claim Elements—An element in a claim expressed as a specified function without the recital of structure, material, or acts in support thereof shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.

Additional Legislative Provisions:

The provisions of section 101 shall be construed in favor of eligibility.

No implicit or other judicially created exceptions to subject matter eligibility, including “abstract ideas,” “laws of nature,” or “natural phenomena,” shall be used to determine patent eligibility under section 101, and all cases establishing or interpreting those exceptions to eligibility are hereby abrogated.

The eligibility of a claimed invention under section 101 shall be determined without regard to: the manner in which the claimed invention was made; whether individual limitations of a claim are well known, conventional or routine; the state of the art at the time of the invention; or any other considerations relating to sections 102, 103, or 112 of this title. Tillis' Office Announcement

Congressional Hearings
==== Hearing 1 ====

The Honorable Paul R. Michel, Former Chief Judge, U.S. Court of Appeals for the Federal Circuit
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The Honorable Q. Todd Dickinson, Former Under-Secretary of Commerce for Intellectual Property and Director, United States Patent and Trademark Office====== Prior Written Testimony-

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The Honorable David J. Kappos, Former Under-Secretary of Commerce for Intellectual Property and Director, United States Patent and Trademark Office====== Prior Written Testimony-

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Mr. Charles Duan, Director, Technology & Innovation and Senior Fellow, R Street Institute
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Professor Jeffrey A. Lefstin, Associate Academic Dean, University of California Hastings College of the Law
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Mr. Robert A. Armitage, Consultant, IP Strategy and Policy
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Professor David O. Taylor, Co-Director of the Tsai Center for Law, Science and Innovation; Associate Professor of Law, Southern Methodist University Dedman School of Law
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Ms. Sherry M. Knowles, Esq., Principal, Knowles Intellectual Property Strategies
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Ms. Alex Moss, Staff Attorney, Electric Frontier Foundation
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Professor Mark A. Lemley, Director, Program in Law, Science & Technology, Stanford University School of Law
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Mr. Michael Rosen, Adjunct Fellow, American Enterprise Institute
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Professor Paul R. Gugliuzza, Professor of Law, Boston University School of Law
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Professor Joshua D. Sarnoff, Professor of Law, DePaul University
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Mr. Patrick Kilbride, Senior Vice President, Global Innovation Policy Center, U.S. Chamber of Commerce
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Professor Adam Mossoff, Professor of Law, Antonin Scalia Law School, George Mason University
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==== Hearing 2 ====

Ms. Barbara Fiacco, Partner, Foley Hoag, President-Elect, American Intellectual Property Law Association
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Mr. Scott Patridge, Immediate Past Chair, Intellectual Property Law Section, American Bar Association
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Mr. Henry Hadad, President, Intellectual Property Owners Association
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Mr. David Jones, Executive Director, High Tech Inventors Alliance
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Ms. Stephanie Martz, Senior Vice President, General Counsel, National Retail Federation, On behalf of United for Patent Reform
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Panel 2
Mr. Paul Morinville, President, U.S. Inventor

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Mr. Phil Johnson, Chair, Steering Committee, Coalition for 21st Century Patent Reform
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Dr. William G. Jenks, PhD, JD, Principal, Jenks IP Law, On behalf of Internet Association
Brief Summary of Prior Written Testimony-

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Mr. Christopher Mohr, Vice President for Intellectual Property and General Counsel, Software and Information industry Association
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Mr. Jeffrey A. Birchak, General Counsel, Vice President of Intellectual Property, and Secretary, Fallbrook Technologies, On behalf of Innovation Alliance
Brief Summary of Prior Written Testimony-

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Mr. Jeff Francer, General Counsel, Association for Accessible Medicines
Brief Summary of Prior Written Testimony- AAM is concerned that the proposed revisions expressly overruling more than 150 years of Supreme Court precedent would be an incentive to create monopolies denying patients access to treatments and diagnostics and reverse progress made toward lowering drug prices. Further the proposed changes will stifle innovation, unconstitutionally remove existing knowledge from the public domain. Questions & Responses Highlights- "Mr. Francer, in several of our roundtables participants from your organization repeatedly made the point that the current state of patent eligibility isn’t working for the generics industry. Their point was simple: uncertainty prevents the development of new medicines, which ultimately prevents the entry of new generics...Now that Senator Coons and I have produced a draft product, what do you like about it and what do you not like? What changes should we consider making?"

"As I discussed in detail in my testimony at the hearing, AAM is deeply concerned about the ability of generic and biosimilar manufacturers to break through brand-name drug companies’ patent thickets, which are a major barrier to competition and lower prices...expanding patent eligibility in the manner proposed in the current draft legislation would make this already significant patent thicket worse...Two changes to the proposed legislation are particularly important. First, AAM strongly urges that the exceptions to patent eligibility that have been recognized by courts for more than 150 years — exceptions for “abstract ideas,” “laws of nature,” and “natural phenomena” — be maintained...Second, AAM urges the committee to require more than just any “human intervention” in order to obtain a patent related to a law of nature...any human intervention would allow, for instance, a patent on DNA fragments...To be clear, we disagree with one premise in your question. AAM does not take the position that uncertainties in current Section 101 jurisprudence are preventing the entry of new generics...The uncertainties that prevent generics from coming to market, and lowering prices, would only be compounded if brand drug companies were able to obtain patents on natural phenomena and the like."

Mr. Hans Sauer, Deputy General Counsel for Intellectual Property, Biotechnology Innovation Organization
Brief Summary of Prior Written Testimony- Funding for new cures and treatments may dry up if patents can be invalidated under overly broad criteria. Patents help biotech access to capital from third parties. Biotech drug development depends heavily on licensing, partnering, and access to capital. Patents allow inventions to be shared among parties to spread the risk failure increasing the odds of products getting to patients. While Software inventions have suffered from high numbers of rejections by the PTO biotechnology inventions relating to natural sources or materials have been affected significantly also. Biotechnology depends on harnessing knowledge about cellular and molecular processes to improve lives. Currently it is unclear whether diagnostic methods are patent eligible. Further after Mayo, it is increasing argued that the relationship between a drug's dose and effect is a natural phenomenon or law of nature. Lack of Congressional intervention threatens developments in personalized medicine. The relationship between patents and follow on research has been extensively studied and have not shown the stifling of research that some have claimed. Bio strongly supports returning to Congress control over what is patentable rather than leaving it to the courts. The speed with which 101 can be used to defend in infringement cases should not be a reason to maintain the status quo.

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Ms. Natalie M. Derzko, Of Counsel, Covington & Burling LLP, On behalf of Pharmaceutical Research and Manufacturers of America
Brief Summary of Prior Written Testimony- The protections under federal patent laws are central to providing appropriate incentives to innovation needed to overcome the costs and risks of developing new products. Innovators across the spectrum of American industries rely on the on a legal regime that provides clear, strong, and predictable protection for intellectual property when making R&D investment.

Questions & Responses Highlights- "Some of the hyperbole I’ve heard from anti-reform advocates is that somehow doing something on patent eligibility is going to lead to an increase in drug prices or the patenting of “frivolous” or “useless” drug patents...Can you briefly describe the minimal role patent eligibility plays in overall “drug pricing” and explain very clearly to this Committee how broadening the eligibility standard isn’t going to lead to “bad patents” being issued?"

"The proposal will not lead to 'bad,' 'frivolous,' or 'useless' drug patents because the patentability doctrines, including double patenting and further patentability requirements of the Patent Act under Sections 102, 103, and 112 prevent issuance of such patents. The proposal also does not impact the pricing of products that result from a patented invention. Rather, the proposal merely broadens the gateway through which meritorious inventions initially pass in order to be considered further for patent protection...A large body of literature demonstrates that the innovation triggered by patents spurs rather than chills competition..."

"Perhaps the most disingenuous arguments I’ve heard from anti-reform advocates is that our proposal will somehow allow the patenting of “human genes.” That’s not true...I want to dispel this notion that somehow we’re going to allow the patenting of “Human genes.” So, let me ask you a series of questions: a. It’s my understanding that the Myriad case already held that a particular gene form, cDNA, for example remains patent eligible. Is that correct?"

"Yes. The Court in Myriad explained that 'creation of a cDNA sequence from mRNA results in an exons-only molecule that is not naturally occurring,' and concluded that, '[a]s a result, cDNA is not a ‘product of nature’ and is patent eligible under § 101.'"

"With respect to the argument that reform would change anything related to human genes, wouldn’t it be accurate to say that argument is arguably specious?"

"The proposal’s definition of “useful” requires human intervention. As such, genes as they exist in the human body would remain ineligible for patenting..."

"Second, and importantly, isn’t it true that genomic DNA forms of human genes are not patentable under 102 and 103 because they have been in the public domain for about 20 years? In other words, even if Congress abrogates Supreme Court precedent, human genes, outside the cDNA form, would not be subject to patent protection. Correct?"

"Yes. Genomic DNA forms of human genes that have been in the public domain for 20 years are not patentable under Sections 102 or 103..."

Mr. Rick Brandon, Associate General Counsel, University of Michigan. On behalf of Association of American Universities and the Association of University Technology Managers
Brief Summary of Prior Written Testimony- Patents are the key to moving discoveries from the lab to the marketplace and the lifeblood of many scientific discoveries. I recent years the Federal courts have made the determination of what patentable an increasingly murky process. If we do not allow patenting on medical diagnostics in the U.S. we will miss out on better patient outcomes and the foundations of precision medicine. Possibly pushing investment overseas.

Questions & Responses Highlights- "Would the proposed legislation enable the patenting of laws of nature?"

"The proposed legislation would not enable the patenting of laws of nature..."

"Would the proposed legislation enable patenting human genes?"

"...we suggest that the forthcoming legislative text clarify and make explicit the Senators' intention without creating too many strictures..."

"Will the proposed legislation increase certainty, or decrease certainty?"

"The proposed legislation would greatly increase certainty..."

Ms. Kate Ruane, Senior Legislative Counsel, American Civil Liberties Union
Brief Summary of Prior Written Testimony-

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==== Hearing 3 ====

Mr. Manny Schecter, Chief Patent Counsel, IBM
Brief Summary of Prior Written Testimony- IBM Strongly supports the draft bill. Testimony included current lack of clarity has made it more difficult to obtain and enforce patents. They believe that the current judicially imposed patent eligibility standards have made it particularly difficult to patent computer implemented inventions. Congress should override the judicially created requirements and take steps to ensure the test for patent eligibility is more clear and predictable. The draft bill text is a significant improvement particularly as it minimizes new language requiring judicial interpretation; expressly abrogates the judicially created exceptions to eligibility; clarifies the subject matter eligibility determination should not be conflated with the 102 and 103; requires that claims be considered as a whole; and clarifies that 101 should be construed in favor of eligibility. They particularly cited Berkheimer v. HP Inc., 890 F.3d 1369, 1374 (Fed. Cir. 2018) (Lourie, J.) requesting Congressional clarification of the law of eligibility.

Questions & Responses Highlights- "Specifically as it relates to IBM, what has the current law's impact been...?"

"...IBM is likely to continue to make a significant investment in research and development even if the uncertainty in Section 101 is not corrected in the near term...Without confidence and clarity, investment dollars may be redirected to less collaborative areas...[and] areas more clearly eligible for patent protection...it has only been five years since the Supreme Court decision in Alice v. CLS Bank...we are just beginning to see the impact."

"Looking ahead ten or fifteen years, if the uncertainty related to patent eligibility isn't addressed, what do you think the impact will be on IBM's operations and on the United States as a whole?"

"the impact of the current uncertainty will likely grow over time if not addressed. With less or redirected investments in research and development, fewer people would be employed in our innovation economy...investments could shift to countries with more predictable and reliable patent protection...investments made are likely to be less effective in driving innovation as innovators become increasingly reliant on trade secrete protection...especially...as artificial intelligence and other advanced software innovations are increasingly infused across all industries..."

Ms. Laurie Self, Senior Vice President and Counsel, Government Affairs, Qualcomm
Brief Summary of Prior Written Testimony- Qualcomm believes that the proposed bill is a positive step towards sensible reform. The current 101 jurisprudence has caused considerable confusion. In particular what constitutes an 'abstract idea' has made obtaining certain 5G patents difficult. The ability to obtain patents overseas in these areas favors their foreign competitors. The Alice/Mayo Test has proven to be incoherent and highly subjective. The proposed changes to section 112(f) however, could cause serious unintended consequences. It would broaden the application of the section in an expansive way, limiting the claim to the specific structural embodiment of the specification. This is at odds with longstanding practices.

Questions & Responses Highlights- "How has the current state of patent eligibility inhibited the development of next generation technologies like 5G? What is the long-term technological and economic impact on the current eligibility jurisprudence?"

"...The state of patent eligibility law makes it extraordinarily difficult to apply the 'abstract idea' concept consistently across applications and technologies...Technologies that make up 5G are often algorithmic in nature, consisting of processes or sets of rules to be followed in calculations or other problem solving operations...Under the unbounded definition of the abstract idea exception, the USPTO could deny patent applications and the courts could strike down any granted patents covering important technologies related to 5G..."

"Outside of 5G, what other next generation technologies is your company no investing in developing because of the current law?"

"Qualcomm's global business presence requires us to employ different patent filing strategies to address the unique patenting challenges in different jurisdictions...Our concern with the current 101 jurisprudence stems from the fact that one is able to obtain patents on the important technologies overseas, including in technologies related to 5G, but not in the United States."

"Can you quantify, in easy to understand terms, the economic impact of the current state of patent eligibility? In other words, how much is the current uncertainty costing our economy in terms of jobs, innovation, and development?"

"Qualcomm is not aware of any analysis that specifically examine the economic impact of the current state of patent eligibility. However,...Qualcomm's Chief Economists estimates that patent rejections under 101 cost the U.S economy approximately 92 Million in GDP and over 400,000 jobs between 2014 and 2016..."

Mr. Byron Holz, Senior Intellectual Property Rights Licensing Counsel, Nokia
Brief Summary of Prior Written Testimony- Nokia believes the balancing of interests within the patent system have recently come to disfavor the interests of patent owners. Because of this, they support the proposed reforms to Section 101, but would encourage further refinement and reconsideration of the remaining changes particularly 112(f). The current jurisprudence produces uncertainty in the field of emerging technologies which hampers investment and America's competitiveness. The proposed changes to Section 101 should correct the high rate of rejections for AI-related applications. However, the modifications to 112(f) potentially expanding its application is likely to create further uncertainties for software-related claims.

Question & Response Highlights- "How has the current state of patent eligibility inhibited the development of next generation technologies like 5G? What is the long-term technological and economic impact on the current eligibility jurisprudence?"

"The exact effects of patent eligibility law may vary depending on the nature of a company, its technology, and its role in the industry...Uncertainty in patent eligibility threatens investment because it lowers the potential value of patent protection for inventions whose claims could invite dispute under Section 101...5G can provide enormous economic value...Yet, the highly mathematical nature...can raise uncertainties under current 'abstract idea' law...Other technologies can face similar issues...uncertainty itself has potential economic consequences including:(i) increased cost of obtaining a patent due to prolonged prosecution; and (ii) reduced market prices for patent acquisitions or licenses due to perceived risks of a court invalidating a granted patent under Section 101."

"Outside of 5G, what other next generation technologies is your company no investing in developing because of the current law?"

"...Due to the scale and complexity of Nokia's portfolio and R&D operations, it may not be possible to correlate these effects to specific R&D investment decisions. Nevertheless, it is likely that, had Section 101 been conducive to stronger patent value in recent years, Nokia would have benefited from more opportunities to reinvest licensing revenue in the cycle of R&D..."

"Can you quantify, in easy to understand terms, the economic impact of the current state of patent eligibility? In other words, how much is the current uncertainty costing our economy in terms of jobs, innovation, and development?"

"Unfortunately, this question implicates an enormously complex topic that does not appear to be easily quantifiable...I believe that Section 101 law has clearly contributed to chilling investment in fields sensitive to this issue."

Ms. Kim Chotkowski, Vice President, Head of Licensing Strategy and Operations, InterDigital
Brief Summary of Prior Written Testimony- The current state of Section 101 has curbed the investment in promising new technology due to uncertainty. The Section 100(k) addition would likely spur litigation. The addition of 101(b) is unnecessary, the removal of the word 'new' from 35 U.S.C. 101 would be more efficient. The 112(f) revisions would likely create further uncertainty. "The unintended consequences of proposed 35 USC § 112(f) with the newly suggested 35 USC § 101(b) is a major concern, as it could be read as reading out the “Doctrine of Equivalents” where purely functional claiming may be the only way to obtain the full scope of what is invented."

Questions & Response Highlights - N/A

Mr. Sean Reilly, Senior Vice President and Associate General Counsel, The Clearing House Payments Company
Brief Summary of Prior Written Testimony- Many sectors and large companies complain of the negative impact of the current 101 jurisprudence business method and e-commerce patents are most often invalidated on this bases. 55% of all cases invalided on 101 grounds between 2015 and 2018 involved these types of patents. Abrogating the Alice and Bilski decisions and re-framing 101 in favor of eligibility runs the risk of clogging the courts with frivolous patent litigation and higher settlement costs. Attempting to strengthen Section 112 as alternative to Section 101 for dealing with abstract claims will not be an effective approach.

Questions & Response Highlights- "What do you think of our 112(f) language? Do you think it will be able to help weed out over-broad business patents?"

"...As drafted, the 112(f) language is insufficient to weed out overbroad business method patents. Section 112, even beyond 112(f), is an inadequate alternative to Section 101 for dealing with abstract claims. Section 112 cannot be used to invalidate patents on mental processes or basic principles...which section 101 has historically addressed, have caused significant harm..."

"If not, what changes would you suggest we make to our 112(f) language in order to more effectively weed out overbroad business method patents?"

"...112(f) as drafted is insufficient to address concerns regarding proposed changes to Section 101 tilting in favor of patentability. The abrogation of Bilski and Alice would leave wide swathes of the economy vulnerable to costly litigation involving low quality patents...Congress should make sections 101 and 112 available-along with evidence of prior use or sale-in IPR proceedings or modify and make permanent the CBM program. In addition Section 112 should be improved as follows: -Claims that relate to mathematic formulas, human activity and mental steps are indefinite under 112 -Clarify that the courts have discretion to adjudicate indefiniteness at an early stage of litigation."

"Outside of Section 101, are there any other sections of the patent act we could potentially amend in order to address overbroad business method patents?"

"...Because it is critical for defendants to have effective tools to address low quality business method patents asserted in litigation, as noted above, Congress should make Sections 101 and 112 available-along with evidence of prior use of sale-in IPR proceedings or modify and make permanent the CBM program. While the most elegant solution is to level the playing field by closing the IPR loophole and creating a uniform review proceeding available to parties...it should also address the inappropriate narrowing of the scope of patents eligible for CBM review by the Courts beyond the intent of Congress."

Ms. Laurie Hill, Vice President, Intellectual Property, Genentech
Brief Summary of Prior Written Testimony- A wide range of important medicines, diagnostics, treatments, and other innovations are hampered by the current state of uncertainty around Section 101. Section 101 is a barrier to protection of the next generation of medicines and diagnostics that simulate processes found in nature. The company has regularly experienced rejections by the USPTO because Section 101, even when they would pass all the other sections of the Patent Act. The draft law is a strong step in the right direction. The company emphasized that they were uninterested in patenting human genes. Since the human genome has been sequenced it is in the public domain. The potential for future innovations especially in the areas of AI and Bioinformatics may be hindered by reliance on trade secretes as the alternative.

Question & Response Highlights - "Are you seeing first-hand innovation being invested in the EU or China instead of the US because of the current patent subject matter eligibility laws? What happens to the biotechnology industry in particular if the innovation is moved to China, for example?"

"It is particularly troubling that the patent laws in European Union and China are currently more advanced that the U.S. laws.This is the result of uncertainty in the patent eligibility laws in the U.S. In the EU, for example, natural products, diagnostics, and bioinformatics are all patent eligible...Unfortunately reality is that because of the uncertainty with Section 101 in the U.S. patent laws, companies like ours often have had to make business decisions about where to pursue patents based on these facts..."

"We have heard some testimony here that the suggested changes to 101 we are proposing will lead to genes being taken out of the public domain if a new utility is identified. Do you believe that this will happen?"

"No, this legislation does not change the fundamental principle that genes should never be granted to anyone...As we discussed in the hearings, the human genome has already been sequenced and is in the public domain and thus human genes are not patentable due to this prior art...We do, however, believe that the proposed legislation clarifies that practical applications of genetic material, for example, as used to create personalized cancer medicines, would rightly be patent eligible under the coarse filter of Section 101..."

"How would you respond to the statement that patents get in the way of innovation, that we will have more drugs, more diagnostic tests without patents?"

"Without patents, innovation in the field of medicine is simply not feasible and would lead to a dearth of medicines and diagnostic tests..."

"What is the public policy value in encouraging investment, research, development and innovation in life sciences and precision medicine? In other words, can you explain in layman's terms why precision medicine is the future?"

"Precision medicine is an unprecedented convergence of medical knowledge, technology, and data science that is revolutionizing patient care..."

"Some have claimed we want to allow the patenting of human genes as they exist in the body. That's false. However, I do think there's value in promoting researchers and innovators to isolate human genes and apply that isolation to personalized treatment. Can you explain why that's valuable? In other words, what advancements in treatment occur because of such innovation?"

"We agree that the draft legislation will not allow for the patenting of human genes as they exist in the human body. We agree that there is value in the practical application of genetic material in the development of medicines and treatments and in incentivizing research and development to that end...Due to the Supreme Courts expansion of the current Section 101 regime, the patent eligibility of such medicines is at risk simply because they utilize genetic material or bacteria to create medicine or treatments..."

"Looking forward ten to fifteen years, if we don't correct the current state of patent eligibility what is the negative impact that American patients will experience?"

"Simply said, if the U.S. does not correct the current state of patent eligibility laws, it will be making the choice to forgo the next generation of innovation and let other countries surpass the U.S., particularly in areas of technology using A.I. and the biotechnology field..."

Mr. Sean George, Chief Executive Officer, Invitae
Brief Summary of Prior Written Testimony- The team of Invitae seeking to help make laboratory testing more available filed an amicus brief on behalf of the plaintiffs of AMP v. Myriad. In the aftermath of Myriad the patent thicket seen as hampering innovation cleared. Testing costs fell, turnaround time for results fell, and testing has become more efficient through panel testing that would have been impossible under licensing programs that existed before. The growth of Illumina in the US is an example of the success that genomics companies are still capable of, today their revenue is about $3.3 billion and employ about 7,000 people. Abrogating recent Supreme Court decisions will lock up innovation in precision Medicine. Should the associations between observed variants and disease once again be patentable data sharing would come to a standstill. The distinction between genes in the body and those isolated other witnesses have attempted to draw is not supported by science. Allowing patents on a specific variant and its association with disease could easily make it impossible to sequence and provide information to patients about even a single gene. "...despite the best of intentions -- I believe the proposed approach is fundamentally at odds with both innovation, improved patient care and public health interest."

Mr. Gonzalo Merino, Vice President and Chief Intellectual Property Counsel, Regeneron Pharmaceuticals
Brief Summary of Prior Written Testimony- The current law on patent eligible subject matter is having a real-world effect on the company's ability to address the needs of patients. Having thus far filed 36 patent applications on genetic innovations, it is anticipated nearly all will be rejected under section 101. If the Untied States is going to be a global leader than action is needed.

Mr. Peter O'Neill, Executive Director, Cleveland Clinic Innovations
Brief Summary of Prior Written Testimony- Court decisions in Cleveland Clinic vs. True Health have created uncertainty. That uncertainty has a meaningful impact on the ability to develop and bring new advances to market. There is a balancing act in the patent world, certainty should not come at the expense barriers to progress. Decisions by federal courts have made a significant impact on innovation, particularly in life sciences. Patents are an integral part of bringing products to market. The effectiveness of a patent is removed when there isn't confidence that it will withstand legal challenges. It is recommended that the Committee consider giving greater standing to PTO guidance and direction, clarify the eligibility of life science and diagnostic products under 101, and protect genetic researchers ability to work.

Question & Response Highlights - "What is the public policy value in encouraging investment, research, development and innovation in life sciences and precision medicine? In other words, can you explain in laymen's terms why precision medicine is the future?"

"...Even thought the human genome has been mapped for years, the field of precision medicine is just beginning to see research identify useful applications of that knowledge to change the way healthcare is delivered to individual patients...A public policy supporting advances in medicine must address this question of intellectual property and patentibility. As I stated in my written testimony, certainty in the marketplace should not come at the expense of barriers to progress for ground-breaking, and potentially life altering, research."

"Some have claimed that we want to allow the patenting of human genes as they exist in the body. That's false. However, I do think that there's value in promoting researchers and innovators to isolate human genes and apply that isolation to personalized treatment. Can you explain for us why that's valuable? In other words, what advancements in treatment occur because of such innovation?"

"...We support the Committee's stance that isolated naturally recurring human genetic sequences are not patentable. Personalized treatment (or targeted treatment) is the practice of detecting a genetic cause or driving factor for disease in an individual, and using that information to identify a treatment for the disease that is specific to the genetic makeup. This process has become especially beneficial in the oncology setting... The specialty of Pharmacogenomics also falls into this category of personalized treatment..."

"Looking forward ten to fifteen years, if we don't correct the current state of patent eligibility what is the negative impact that American patients will experience?"

"...patents, are a cornerstone of that work [translating research to treatments and products]...Under the status quo, there is significant uncertainty about what technologies are eligible for patents that can withstand legal challenges...That uncertainty makes it more difficult to bring new products to markets, where they can be available for patient care...Intellectual property is also a critical tool for small businesses seeking to disrupt the marketplace...Without predictable intellectual property protections, small companies...would have faced competitive disadvantages..."

Dr. David Spetzler, President and Chief Scientific Officer, Caris Life Sciences
Brief Summary of Prior Written Testimony- The proposed changes to subject matter eligibility would clarify what is patentable and restore robust protections for innovations in healthcare. Under the current state of the law patents do not reliably protect precision medicine innovations. Uncertainty deters the substantial investment necessary to develop new healthcare technologies and emboldens competitors. Caris supports the proposed changes to Section 101.

Question & Response Highlights - "Can you you briefly share the story of your company?"

"...For more than a decade, Caris has continued to innovate our molecular profiling technology in order to refine our personalized cancer treatment technologies..."

"Under current patent eligibility jurisprudence, could your company have ever come to market and thrived?"

"Caris has come to market and is doing well, but we are in an unusual position....However, even with that private funding, Caris has experienced difficulties because of the current law...we also believe it is difficult for a new company formed today to attract venture capital or similar investment vehicles based on the value of intellectual property covering new innovations when there is no guarantee that others will not immediately copy those innovations."

"If we don't reform the current state of patent eligibility law, what is the impact going to be on companies like yours? In other words, how many new, innovative, and dynamic companies won't come to market?"

"...the inventive activities of an established company may be curtailed but not completely eliminated...Without patent protection for the assay [a hypothetical innovative diagnostic using an antibody that is not,'well known'], we believe it would be very difficult to court venture capital and thus the company would likely not come to market..."

"How do you think the current jurisprudence has impacted and hindered the diagnostic and life-sciences industry as a whole?"

"...Under the current jurisprudence, there is less incentive for investment where one knows that others are emboldened to copy without compensation. Even more importantly, the patent system is built on the concept of sharing information in exchange for a time-limited ability to exclude others from copying it. But under the current regime, the industry is incentivized to keep secrets..."

Mr. Michael Blankstein, Senior Vice President and Deputy General Counsel, Patents and Licensing, Scientific Games
Brief Summary of Prior Written Testimony- Scientific games relies heavily upon patents to drive investment in game development resources, grow the business, and to gain an advantage when competing. Since Alice, Section 101 has limited our ability to obtain game patents.

Question & Response Highlights - "Can you explain why complex software based games like the kind your company develops are worthy of patent protection, as opposed to basic and non-complex games, like hopscotch for example?"

"...Whether basic or complex, games that are implemented with a computer or other article of manufacture should be patent eligible under Section 101. The complexity of such a physically implemented game may affect its patentability under Section 102 or 103 but should not affect its eligibility under Section 101..."

"Do you think our draft bill can be amended to address concerns that it will cause a spike in non-practicing entity lawsuits? Do you have any suggestions you can offer the Committee?"

"We offer the following suggestions: Expand the Scope of Inter Party Review under 35 U.S.C. 311(b) to enable challenges on any and all invalidity grounds, not just Section 102 and 103 grounds based on patents and printed publications. For Inter Partes Review, Post-Grant Review, and Covered Business Method Review proceedings, reduce the USPTO fees for small and micro entities... Reconsider prior bills intended to curb bad faith NPE litigation. Review...https://npe.law.stanford.edu/ to understand the true impact that Alice/Mayo had on NPE litigation and whether clarifying the patent eligibility standard is likely to cause a spike in such litigation. Concerns that the draft bill will cause a spike in NPE lawsuits may be overblown."

Mr. Corey Salsberg, Vice President, Global Head IP Affairs, Novartis
Brief Summary of Prior Written Testimony- Novartis believes that the draft bill of Section 101 reflects a thoughtful balanced and elegant approach to restoring the predictability we needed in patent law. There are some aspects that will need refinement, and the section 112(f) section is still under assessment, yet support the draft legislation in concept. As a innovative pharmaceutical  company they see three major problems with the current law: 'laws of nature', 'abstract ideas', and 'abstract ideas' have become difficult to identify; the vagueness of the eligibility framework has made it difficult to predict what innovations are patent-eligible; and inventiveness has come to be entwined with the eligibility standard. Novartis attached to the record its Amicus Curiae in support of Petitioner Sequenom, Inc., On Petition for Writ of Certiorari to the United States Court of Appeals for the Federal Circuit.

Question & Response Highlights - "How has the current state of patent eligibility impacted research and development by your company?"

"...First, the expansion of the judicially-created exceptions('laws of nature', 'natural phenomena', and 'abstract ideas') into areas of technology that have always historically been patent-eligible has resulted in the loss of patent claims in several areas...Second, the current eligibility framework is so vague and uncertain that it has become exceedingly difficult "for us to predict whether inventions of certain types are eligible or not...Third, the rapid expansion of the judicial exceptions since Mayo, Myriad and Alice Corp. raises serious concerns with respect to the emerging technologies that we are investing in today to enable the future of medicine..."

"Can you give an example of the types of research into next generation medicines your company is abandoning as a result of the current uncertainty?"

"Research and development (R&D) investment decisions are complex decisions that involve a variety of different considerations...As such, at the present time, we are not able to point to fields of medicine or other technologies that we have specifically decided to abandon as a result of Section 101 uncertainty in the United States..."

Mr. Nicolas Dupont, CEO and Executive Chairman, Cyborg Inc.
Brief Summary of Prior Written Testimony- As small technology based business, with a majority of its market value in its intellectual property, the existing system fails to address Cyborg's needs adequately. There are three main ways in which small businesses like Cyborg are affected by the current Section 101; patent eligibility rejections, inability to predict patent eligibility, together causing a lack of confidence in the system. The draft legislation is a considerable step in the right direction. In addition to the proposed changes to existing legislation the subcommittee should consider adding software as a statutory category alongside the current list of process, machine, manufacture, and composition of matter.

Question & Response Highlights - "How has the current state of patent eligibility hindering Cyborg's long-term growth and revenue potential? Can you try to quantify that for us in terms of lost jobs and economic development?"

"...a lack of faith in the patent system led us to abandon a market segment altogether, the opportunity cost of which we estimate to lie in the tens of millions of dollars, or several dozen high-paying technology jobs."

"Can you explain why the current lack of certainty around Section 101 so negatively impacts small business?"

"The current state of Section 101 gives us no certainty in the chances of issuance in our patent applications. Not only has this caused us to forgo patent protection at time-since rejected applications are published- but also severely diminishes the value of our intellectual property portfolio..."

Mr. Robert Deberadine, Chief Intellectual Property Counsel, Johnson & Johnson
Brief Summary of Prior Written Testimony- The company believes that a predictable patent system is essential to the future of american innovation. Section 101 reform is necessary if the United States is going to stay a world leader in innovation. We strongly support the Tillis-Coons proposal to reform Sections 100 and 101 of the Patent Act. Without a predictable patent system, new discoveries would be immediately copied, and investors would pursue far less risky endeavors limiting research.

Question & Response Highlights - "How has the current state of patent eligibility impacted research and development by your company?"

"Patent eligibility is an important consideration when a pharmaceutical company considers embarking on the long, uncertain, and costly task of developing a drug. A predictable patent system encourages pharmaceutical companies to take on the significant risks associated...Without restoring clarity and predictability to Section 101, we are concerned that research in these areas [personalized medicine, digital technologies, and big data] may be underfunded..."

"Can you give us an example of the types of research into next generation medicines your company is abandoning as a result of the current uncertainty?"

"...the current state of patent eligibility law discourages research and development in some of the very same technologies that hold the greatest promise for healthcare advancements..."

"Please explain for us exactly why Congress should encourage the type of work and innovation your company performs? In other words, what are the real-world, lifesaving impacts of your work?"

"Over the last few decades, the pharmaceuticals industry had developed new medicines that have profoundly transformed and saved patient's lives...[citing study into HIV and Alzheimer's disease]"

"Do you have any comments on our draft proposal? Are there any changes you believe we should make?"

"We strongly support the draft bill language as announced May 22, 2019. However, we do not believe that a solution to the current Section 101 problem requires any change to Section 112. We are concerned that changes to Section 112 could produce unintended consequences...we recommend removing the section 112 language from the draft proposal."

Mr. John D. Vandenberg, Partner, Klarquist Sparkman, LLP
Brief Summary of Prior Written Testimony-

Question Responses -

Effects of the Draft Bill
Testimony of David O. Taylor