Diagnostic Method Patents and Harms to Follow-On Innovation

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In a series of cases over the past decade, the Federal Circuit and Supreme Court have confronted the patent eligibility of broadly claimed diagnostic methods under [section] 101 of the Patent Act. (1) These diagnostic method patents claim processes that, generally speaking, first identify a biomarker and then use correlations associated with that biomarker for diagnostic purposes. This Note argues that granting these kinds of broad claims to natural correlations creates unique harms to follow-on innovation, ones that do not occur with other types of patents. Yet these harms have not been specified in the literature or the case law. In light of both these unique harms and the lack of attendant benefits, the Federal Circuit and Supreme Court should revise their approaches to broad diagnostic method patents.

Section 101 of the Patent Act provides that "[w]hoever 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." (2) Yet [section] 101 is subject to several judge-made exceptions: "laws of nature, natural phenomena, and abstract ideas" are not patent eligible. (3) Since "sometimes too much patent protection can impede rather than 'promote the Progress of Science and useful Arts,'" (4) these exceptions are needed to strike a balance between over-and underprotection of innovation. And though natural laws themselves are not patent eligible, applications of natural laws are. (5) The fine line between natural laws and applications thereof is a critical one in the diagnostic method context, given the stakes for patient care.

Proponents of the "prospect theory" of granting broad, early patent rights argue that granting such rights will avoid wasteful and duplicative investment into research and development (R&D). Under this theory, the patentee can more efficiently coordinate the management of subsequent R&D without racing. (6) Proponents argue that failing to grant strong, early patent rights leads to less future innovation, an "invisible" phenomenon because the "loss" of and harms from an invention that is never developed cannot be directly observed. Nonetheless, they argue, existence of these harms can be inferred from the economic arguments for the proposition that patent rights incentivize investment into R&D, and thus it would be a mistake to refuse to grant such patents. (7)

However, the prospect theory has been widely criticized, (8) and it is equally if not more plausible that granting strong, early patent rights will result in the underdevelopment of technology. (9) This problem is particularly acute for broad diagnostic method patents, both in terms of the need for follow-on innovation and in terms of the difficulty of such innovation as a doctrinal matter. These harms to future innovation are equally as invisible as those that are assumed to occur without broad, early patents. Yet there is actual evidence to suggest that these follow-on innovation harms exist in the diagnostic method context. Further, there is some evidence that the initial invention and at least some subsequent inventions will be developed in the absence of patent protection. Thus, granting these early patents not only creates the feared harms but also may not even achieve the intended benefits.

Part I of this Note briefly sets forth the relevant case law on the patent eligibility of broad diagnostic methods. Part II draws on Food and Drug Administration (FDA) regulations, patent doctrine, and empirical research to detail the specific harms to follow-on innovation that may result from grants of broad patents like those at issue in the described cases. Part III provides reasons why the harms occasioned by the grants of these claims are not likely to be offset by the benefits that are thought to result from the patent system. Part IV concludes by suggesting ways in which this Note might contribute to the scholarly debate on the most preferable means by which to redress the articulated problems with diagnostic method patents. …