Guest post: Sherry Knowles responds to USPTO comments on new Myriad guidelines




Sherry Knowles of Knowles Intellectual Property Strategies responds to the USPTO's explanation of its controversial Myriad guidelines in a guest article

During the Life Sciences session at the March 26 MIP Annual US Patent Forum, our panel addressed the Post-Myriad Subject Matter Eligibility Guidelines issued by Andrew Hirshfeld to the Patent Examining Corps on March 4 2014. I referred to the guidelines as horrifying. MIP published a response from the USPTO to the criticism March 31, and kindly invited me to reply.

I have some sympathy for the situation the USPTO faces in its need to instruct the Patent Examining Corps on how to implement the recent US Supreme Court decisions in Myriad and Prometheus. The USPTO neither makes nor can change substantive patent law, yet has to find a way to apply it. That task can't be easy given the number of examiners and the wide variety of claims presented to the USPTO. We are also keenly aware that the USPTO's 10-year history of guidelines on the patentability of genes were squarely dismissed as irrelevant by its own executive branch and even by the US Supreme Court in Myriad. With that recent history, it is not surprising to see the USPTO fall in line over-eagerly this time.

That said, instead of limiting Myriad and Prometheus to their facts, these guidelines appear to expand the Supreme Court analyses, apply the expanded analysis to products and methods that have not yet been litigated, and in doing so arguably de facto expand the law, which currently stands only in the form of judicial exceptions to patentability, discussed further below. The guidelines are already being implemented to reject pending US patent applications, which will get stuck in years of appeals, chilling any ability to attract venture capital and stripping the value of numerous emerging life science companies.


"Instead of limiting Myriad and Prometheus to their facts, these guidelines appear to expand the Supreme Court analyses, apply the expanded analysis to products and methods that have not yet been litigated, and in doing so arguably de facto expand the law"


In doing so, the guidelines set in motion a system for examining life sciences patent applications that provides significantly less protection for life sciences inventions than is currently provided in China, Europe, Australia, Japan, Russia, South Korea and other developed countries, which all grant patent protection for isolated natural products and their derivatives. The US is losing its position as the global leader in biotechnology. And of course, developing countries still in the process of determining what kind of patent framework to institute will happily grab hold of this anti-innovation life sciences approach, on the basis that it is emulating the US.

Back to basics

Perhaps it is time to review the basics. How did we get here? Article I, Section 8, Clause 8 of the US Constitution gives Congress the sole power to promote the Progress of Science and the Useful Arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries. Thus the US Constitution does two things: it grants the power to create the patent laws only to Congress and it associates inventors (and thus inventions) with discoveries.

The Constitution and the Bill of Rights are among the most brilliant documents ever crafted. The exquisite separation and balance of powers among three branches of government is what has made this country a world leader and created the foundation for economic growth and transformational innovation. The power over the patent system was given to the branch of government most receptive to the political process where all voices can be heard in debate before formulating the best consensus approach. While the process is sometimes ugly (watching the cake get made), we did see it take place over a multi-year period prior to passage of the America Invents Act, with many provisions removed or reworded before passage. It was ready when all factions were equally happy and unhappy. In that bill, Congress primarily addressed process, not substantive patent law.

Congress, the sole branch of government authorised by us as a people to create patent law, has only issued one sentence on what constitutes patentable subject matter in the US. One might say it has slipped in its Constitutional duty to the most technologically advanced country in the world. This has left a great void, which the US Supreme Court filled, causing the balance of powers to get out of whack and resulting in deeply detrimental consequences in the sphere of life sciences innovation. The US Supreme Court is immune from the political process and does not have the resources nor the directive to determine the effect of its decisions on the US economy or innovation. It is arguably the worst equipped of the three branches of US government to create patent law, and of course is not authorised to do so under the Constitution for that very reason. Yet it has.


"The US Supreme Court is arguably the worst equipped of the three branches of US government to create patent law, and of course is not authorised to do so under the Constitution for that very reason. Yet it has"


The US Supreme Court uses the 1948 case of Funk Bros Seed Co V Kalo Inoculant Co (333 US 127; 68 S.Ct 440 (1948)) to inform its later decisions on what constitutes patentable subject matter. In that case, the Supreme Court held that a mixture of bacteria that does not inhibit each other's growth and can be used as a general inoculant is not patentable because "a product must be more than new and useful to be patented; it must also satisfy the requirements of invention or discovery….there is no invention here unless the discovery that certain strains of the several species of these bacteria are non-inhibitive and may thus be safely mixed is invention. But we cannot so hold without allowing a patent to issue on one of the ancient secrets of nature now disclosed."

US Patent No. 2,200,532 to Kalo does have a fatal flaw, but not that ascribed to it by the Supreme Court. The acknowledged prior art was that composite cultures of Rhizobium bacteria are inferior to fix nitrogen on legumes because one species produces an inhibitory effect on another species in the same culture (and thus the process of mixing bacteria together to see if they are mutually inhibitory was prior art). Kalo's solution was to define an organism of the genus Rhizobium that does not inhibit other species as an "alpha" species (page 5, lines 36-38) and instruct to use such "alpha-Rhizobium" in composite cultures. Thus the solution was presented in the form of an aspiration which defined the material not by what it is but by what it does. Sound familiar? It was a classic 112 written description problem. The written description and enablement requirements go back to the First Congress in the 1790 Act. The Court could have also invalidated the claims on obviousness, as a known aspiration with a functional solution. The US Supreme Court had the gut-feel that if one simply tells the public to find a bacteria that works, and use a prior art method to do so, that alone is not patentable. However, immeasurable damage was caused by using 101 as the rationale and with expansive, unnecessary and not politically tested verbiage that any mixture of natural materials is not patentable.

The damaging situation was recognized by Justice Frankfurter, who in concurrence said he agreed that Kalo's combination of strains is not patentable, but because Kalo did not identify the strains, which are identified only by their compatibility. Importantly, Justice Frankfurter (who presumably had walked the halls on this case and knew what his fellow Justices were thinking) said: "Multi-purpose tools, multivalent vaccines, vitamin complex composites, are examples of complexes whose sole new property is the conjunction of the properties of their components. Surely the Court does not mean unwittingly to pass on the patentability of such products by formulating criteria by which future issues of patentability may be prejudged. In finding Bond's patent invalid I have tried to avoid a formulation which…would lay the basis for denying patentability to a large area within existing legislation."

Enter the wise scholar and jurist Giles Rich. In December 1964, a speech given by Judge Rich accepting the Kettering Award from George Washington University was published, titled "The Vague Concept of "Invention" as Replaced by Section 103 of the 1952 Patent Act". Judge Rich traced the history of the Supreme Court's view of an "invention." He quoted Judge Learned Hand's comments at a Congressional hearing in 1955 on the "requirement of an invention" that "You could find nearly anything you liked if you went to the opinions. It was a subject on which judges loved to be rhetorical.." Judge Rich and his colleagues were against any definition or standard of "invention" (and thus of course, any "judicial exception to invention").

He noted a report from a 1941 Roosevelt Commission headed by Kettering that said: "One of the greatest technical weaknesses of the patent system is the lack of a definitive yardstick as to what is invention. To provide such a yardstick and to assure that the various courts of law and the Patent Office shall use the same standards, several changes are suggested. It is proposed that Congress shall declare a national standard whereby [mark these words] patentability of an invention shall be determined by the objective test as to its advancement of the arts and sciences."

Judge Rich said: "One apparent thought there was to stop talking about whether a thing is or is not an "invention", to take anything presented as an invention, and then to determine its patentability according to a standard which Congress was to declare..Congress never having said anything about it up to that time."

The outcome of the Kettering Commission was a bill "to declare a national policy for determining invention" which resulted in the passage of 35 USC 103 in 1952, after Funk Bros.

Judge Rich, with uncanny foresight 50 years ago warned: "The real vice or inadequacy of the judge-made requirement for 'invention' was in the truism Mr Federico [one of the drafters of the 103 statute] restated, 'the so-called standard of invention*** is an unmeasurable quantity having different meanings for different persons.' It left every judge practically scott-free to decide this often controlling factor according to his personal philosophy of what inventions should be patented, whether or not he had any competence to do so or any knowledge of the patent system as an operative socioeconomic force. This was too great a freedom because it involved national policy which should be declared by Congress, not by individual judges or even groups of judges on multiple-judge courts."

Judge Rich ended his speech 50 years ago with the following reasons why we should stop focusing on a "requirement for invention":

• Until we stop talking about a "requirement for invention" it will never be clear that the requirement is that stated in section 103 and no other, that when 103 has been complied with, there is no further and different requirement called "invention"; that compliance with 103 is the policy judgment of Congress on how to bring the invention within the Constitutional purpose.

• Because looking for the presence of "invention" in addition to compliance with 103 defeats the legislative purpose.

• Because talking about both non-obviousness and "invention" as different things leads to weird and confused thinking.

• Because testing patentability by the presence of "invention" gives judges and the Patent Office too much freedom to decide patentability of new and useful inventions on the basis of a personal view as to what should be patentable, instead of accepting the view of the legislature on that question of national policy.

• Because it makes the prerequisites to patentability intelligible.

In 2012, the Supreme Court issued its opinion in Mayo v Prometheus, which after briefly quoting to 35 USC 101, said "This Court has long held that this provision contains an important implicit exception. 'Laws of nature, natural phenomena and abstract ideas are not patentable.'" The Court went into a long diatribe against Prometheus' method of therapy claims all based on its own prior case law on what constitutes an invention. In 2013, the Supreme Court issued its opinion in AMP v Myriad and again after giving short lip service to the 101 statute, delved into an analysis of its own case law. The Court said "As this Court has explained, without this exception, there would be considerable danger that the grant of patents would "tie-up" the use of such tools and thereby "inhibit future innovation premised on them." That sounds a lot like a political and economic issue for Congress, not a policy issue for the Supreme Court. The Court in Myriad also said: "Groundbreaking, innovative or even brilliant discovery does not by itself satisfy the 101 inquiry", again quoting not to the statute or to legislative history, but to its own Funk Bros decision. What was glaringly missing from Mayo and Myriad was an appreciation that the Supreme Court is not authorised to create patent law, even in the form of an exception.

The Supreme Court in both cases stressed that a discovery is not necessarily an invention. However, how does one get away from the clear wording of the statute, "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…." Does the Supreme Court have the right to pencil out two very important words of a statute? Can the Supreme Court decide to honour only part of a statute and judicially except the rest? I would argue no, especially when the word "discoveries" is also in the US Constitution. Pencilling words out of the statute and ignoring Congressional intent as described by a witness to it, Judge Rich, is not "interpreting" statutory law; it is changing the law.

Practical effect of the guidelines

The March 2014 Guidelines indicate that the USPTO will now reject all isolated natural products and derivatives thereof that the USPTO deems not significantly different. What is the practical effect on healthcare? The Natural Products Branch of the US National Institutes for Health has published four reviews on natural products as the source of new drugs. The latest article, published in 2012, tracks 30 years of collecting data (Newman and Craig, "Natural Products as Sources of New Drugs over the 30 Years from 1981 to 2010, J. Nat. Prod. 2012 March 23; 75(3): 311-335). They have categorised approved drugs as biological ("B"), natural product ("N"), natural product (botanical) ("NB"), derived from a natural product (usually a semi-synthetic modification) ("ND"), totally synthetic ("S"), made by total synthesis but of a natural product (S*) and a vaccine ("V).

Among their results are that:

• During the years 1981-2010, the review identified 1355 new approved drugs. Of those, there were 15% B, 4% N, 22% ND, 29% S, 13% S*, and 6% V. Of these, only S are clearly out of the guidelines review, which would leave 968 approved drugs at risk of no patent. If the number is confined to biologicals, natural products, derivatives of natural products and vaccines (almost always made of pieces of natural products), 47% of drugs would be at risk, or 636 drugs.

• The natural products field is still producing or is involved in about 50% of all small molecules in the years 2000-2010 (36.5% mean and 8.6% sd);

• In 2010, fully half of the 20 approved small molecule NCEs fell into the "N" category.

• Overall, in the antibacterial area, "N" and "ND" compounds account for just under 75% of the approved agents.

• For anti-cancer drugs, of 99 small molecules, 79 were either natural products or based on a natural product.

Where do we go from here?

Judge Giles Rich was prophetic. We currently have a US Supreme Court making patent law under the guise of "judicial exceptions" to patentability, even though there is no Constitutional basis whatsoever that grants the Supreme Court the power to create exceptions to or pencil out words of the patent statute. We have a Congress that has given insufficient attention to the actual substantive structure of patent laws that is necessary to create predictability, motivate innovation and allow for a stable framework for long term investment in the life sciences and which should be done through the political process. This results in an unacceptable lack of law in a complex world that the Supreme Court fills.


"We currently have a US Supreme Court making patent law under the guise of 'judicial exceptions' to patentability, even though there is no Constitutional basis whatsoever that grants the Supreme Court the power to create exceptions to or pencil out words of the patent statute"


We have a USPTO that has issued guidelines for granting patents that cites to the Supreme Court's "judicial exceptions to patentability" 82 times as the governing law, and at no point focuses on the only law authorised by the Constitution, which are the few sentences issued by Congress. What a vivid demonstration of the break-down of the balance of powers. The USPTO indicates that it is required to follow Myriad and Prometheus, however, the executive branch is foremost required to comply with the Constitution, which directs it straight to Congressional statutes and intent.

Bob Stoll, the former USPTO Commissioner of Patents stated: "I hope the USPTO is reading the blogs and listening to the user community and decides to reissue the guidelines providing the broadest patent eligibility permitted by the Supreme Court decision. The United States leads the world in emerging technologies and limiting patent eligibility beyond what is required by the law will harm our economy and job creation."

The situation we find ourselves in is complex because it involves the breakdown of the fundamental structure of our government-the balance of powers, and therefore the solution will not be fast or easy. I share the hope that the USPTO will listen to the community and pare back the guidelines to the facts of the Supreme Court cases to give time for political debate in Congress. USPTO policy in the form of guidelines that are used to made office-wide patentability determinations but are not challengeable as law can be dangerous and insidious. The subject matter of the guidelines is so important that at a minimum it should be released as draft regulations subject to formal notice, comment and challenge.

It is time to encourage our Congressional representatives to open the political process to update the patent statutes, and in doing so, provide the necessary clarity and leadership on patentability in this complex technology space and override the Supreme Court's "judicial exceptions to patentability".



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