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Patent eligibility reform high on agenda but not expected this year

With the US Supreme Court rejecting three Section 101 petitions and a presidential election underway, pro-reform businesses have little hope for an eligibility remedy in 2020

While patent eligibility reform remains high on the agenda for US-based pharmaceutical manufacturers and certain technology innovators, few have hopes of significant developments on this front in 2020.

In-house counsel tell Managing IP that their hopes for Section 101 reform were dashed last month when the US Supreme Court (SCOTUS) rejected three patent eligibility-related petitions, and Senate IP Subcommittee co-chair Thom Tillis said a bill was unlikely to be produced in this Congress.

Some patent attorneys had pinned their hopes on SCOTUS dealing with the precedent it set in Mayo, Myriad and Alice at the start of the last decade that made patent eligibility hurdles much harder to overcome for technologies in fields such as diagnostics, gene-editing and software.

But the court denied all pending petitions for certiorari on cases concerning patent eligibility last month, including Athena v Mayo, which the US solicitor general asked SCOTUS to hear when it weighed in on the petition in Hikma v Vanda.

Pro-reform hopes now rest on the legislative changes that the Senate IP Subcommittee kicked off last year with testimony from IP-focused academics, private practice lawyers and in-house counsel.

But with a presidential election due on November 3 and Tillis’s recent pledge on the Intellectual Property Owners Association (IPO) website to address the “reasonable concerns expressed about the 101 draft”, reform is unlikely to come this year.

The committee is likely to focus on copyright reform this year instead, including on potential changes to content platform liability when it comes to infringement.

“We did have hopes of a legislative solution to 101,” says John Todaro, managing counsel of patents at Merck in New York. “But I’m on an IPO committee that works carefully on trying to get matters passed in Congress, and it has no real hope of getting anything passed in the next couple of years – or in the next year, at least.”

He adds that while his company has not been hugely affected by the current eligibility framework because it is not involved in diagnostics, Section 101 is a huge issue for the industry, and it is a shame that a solution is unlikely to be found soon.

Maintaining momentum

Interested onlookers might expect these developments to kill momentum for patent eligibility reform for the foreseeable future or at least over the next year. But some in-house and private practice counsel are not so sure.

Corey Salsberg, global head of IP affairs at Novartis in Washington DC, agrees that reform is unlikely to come this year, but adds that it is important for concerned firms to continue to raise awareness of the problems that the patent eligibility framework creates.

“The likelihood of having a 101 bill passed this year seems low, but those who are in favour of reform, including Novartis, must continue to advocate for change and illuminate the reasons why it is needed,” he says.

“Nothing has changed on that front, and we will continue to explore options for a rational and balanced solution.”

On the matter of SCOTUS’s petition rejections, he adds that it is important not to read too much into those decisions, and that apart from the Athena case, few were surprised by those outcomes.

The IP manager at an electronics company in the US adds that it might be worth having to wait a little longer for a legislative fix when the alternative could have been SCOTUS muddying the water further with additional case law.

“It does make sense to pursue a legislative solution because it is by far the easiest way to fix Section 101,” she says. 

Bijal Vakil, partner at White & Case in Silicon Valley, points out that businesses’ enthusiasm for pushing forward or holding back Section 101 change, depending on which side of the matter they sit, might pick up once the presidential election is settled.

“People are sitting back and waiting to see what will happen until the end of the year when they know who the president is,” he says. “There is one camp that believes there could be legislative reform to change the presumption of patentability.” 

Software care

Sources from the software industry agree that Section 101 reform is unlikely to come this year, but argue that this development is a good thing from the perspective that the Senate IP Subcommittee is doing its job and considering the software industry’s points carefully.

US software companies are generally happy with the current eligibility framework because it gives them a procedural remedy to combat ‘bad patents’ that are commonly used against them by patent assertion entities (PAEs)

Those firms made these points at the Senate IP Subcommittee hearings on patent eligibility last year.

A lawyer at a software representative organisation says the companies he represents are mostly agnostic when it comes to Section 101 reform, because while they appreciate the need for biotech firms to reform the system, their focus is on software innovation.

It is therefore right that the Senate IP Subcommittee should take its time to ensure that the eligibility framework is not changed in a way that would adversely affect innovation by re-subjecting the industry to a barrage of PAE cases, he adds.

Section 101 reform might be dead in the water for this year, but given its importance to many large R&D-focused companies, it is unlikely to stay that way for long.

When reform returns, software, technology and life sciences firms will have to come together and find a way to make the US patent system work for everyone.

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