NO. 08-964
IN THE
Supreme Court of the United States
BERNARD L. BILSKI AND RAND A. WARSAW,
Petitioners,
v.
JOHN DOLL, ACTING UNDER SECRETARY OF COMMERCE
FOR INTELLECTUAL PROPERTY AND ACTING DIRECTOR,
PATENT AND TRADEMARK OFFICE,
Respondent.
ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
BRIEF OF DR. ANANDA CHAKRABARTY
AS AMICUS CURIAE
IN SUPPORT OF PETITIONERS
RICHARD A. EPSTEIN
F. SCOTT KIEFF
1111 East 60th Street
Counsel of Record
Chicago, Illinois 60637
1111 23rd Street, NW
(773) 702-9563
Apt 8d
Washington, DC 20037
(202) 558-6667
August 6, 2009
Counsel for Amicus Curiae
BATEMAN & SLADE, INC.
BOSTON, MASSACHUSETTS
i
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ...................................... iii
INTEREST OF AMICUS CURIAE ............................ 1
STATEMENT OF CASE ............................................ 1
SUMMARY OF ARGUMENT .................................... 8
ARGUMENT ............................................................. 12
I.
The Federal Circuit’s Approach
Conflicts with the Statute ................... 12
II.
The Federal Circuit’s Approach
Conflicts with this Court’s
Precedent ............................................. 14
III.
The Federal Circuit’s Approach
Conflicts with Sound Policy ................ 15
A.
Sound Patent Law Need Not
Tie a Patentable Invention
to Some Physical Mode of Its
Expression ................................. 15
B.
Strong Patent Protection
Opens Technology Markets
to Multiple Players and
Facilitates Cooperation
Among Them ............................. 17
ii
C.
Localized Solutions Offer the
Best Means for Dealing with
Particular Defects of the
Patent System ........................... 19
IV.
The Federal Circuit’s Approach Will
Have a Profound Adverse Effect on the
Public’s Ability to Benefit from Dr.
Chakrabarty’s Own Research ............. 23
CONCLUSION ......................................................... 26
iii
TABLE OF AUTHORITIES
CASES
Page
In re Alappat,
33 F.3d 1526 (Fed. Cir. 1994) .......................... 6, 22
In re Bilski,
545 F.3d 943 (Fed. Cir. 2008) ................. 2, 6, 12-15
Diamond v. Chakrabarty,
447 U.S. 303 (1980) ..................................... passim
Diamond v. Diehr,
450 U.S. 175 (1981) .......................... 6, 9, 13-15, 26
Funk Brothers Seed Co. v. Kalo Inoculant Co,
333 U.S. 127 (1948) ....................................... 14, 15
Gottschalk v. Benson,
409 U.S. 63 (1972) ................................. 5, 6, 14, 15
Graham v. John Deere,
383 U.S. 1 (1966) ............................................ 16-17
J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int’l, Inc.,
534 U.S. 124 (2001) ................................... 9, 14, 26
In re Johnston,
502 F.2d 765 (CCPA 1974) .................................... 6
Parker v. Flook,
437 U.S. 584 (1978) ....................................... 14, 15
Picard v. United Aircraft Corp.,
128 F.2d 632 (2d Cir. 1942) ................................. 17
State Street Bank & Trust Co. v. Signature
Fin. Group Inc.,
149 F.3d 1368 (Fed. Cir. 1998) ........................ 6, 22
Page
iv
STATUTES
35 U.S.C. § 100(b) ..................................................... 13
35 U.S.C. § 101 .......................................... 9, 12, 13, 14
35 U.S.C. § 102 .................................................... 13, 20
35 U.S.C. § 103 .................................................... 13, 20
35 U.S.C. § 112 .................................................... 13, 20
35 U.S.C. § 122 .......................................................... 20
OTHER AUTHORITIES
Timothy Caulfield et al., Evidence and
Anecdotes: An Analysis of Human Gene
Patenting Controversies, 24 Nature
Biotechnology 1091 (2006) .................................... 8
Ian Cockburn et al., Pharmaceuticals and
Biotechnology, in U.S. Industry in 2000
Studies in Competitive Performance (David
C. Mowery ed., 1999) ............................................. 5
Richard A. Epstein & Bruce Kuhlik, Is There a
Biomedical Anticommons, Regulation,
Summer 2004, at 54 ........................................... 7-8
Michael Heller and Rebecca Eisenberg, Can
Patents Deter Innovation? The
Anticommons in Biomedical Research, 280
Science 698, 700 (1998) ......................................... 7
v
OTHER AUTHORITIES (continued)
Page
F. Scott Kieff, On Coordinating Transactions
in Information: A Response to Smith’s
Delineating Entitlements in Information,
117 Yale L.J. Pocket Part 101 (2007) ............. 8, 19
NIH: Moving Research from the Bench to the
Bedside: Hearing Before the Subcomm. on
Health of the H. Comm. on Energy and
Commerce, 108th Cong. (2003), available at
http://energycommerce.house.gov/108/action
/108-38.pdf (statement of Phyllis Gardner,
Senior Associate Dean for Education and
Student Affairs, Stanford University) ................. 4
Henry E. Smith, Intellectual Property as
Property: Delineating Entitlements in
Information, 116 Yale L.J. 1742 (2007) ............. 19
John P. Walsh et al., View from the Bench:
Patents and Material Transfers, 309 Science
2002 (2005) ............................................................ 8
1
INTEREST OF AMICUS CURIAE
Dr. Ananda Chakrabarty is Distinguished
University Professor in the College of Medicine’s
Department of Microbiology and Immunology at the
University of Illinois at Chicago. He was the inventor
of the bacterium at issue in this Court’s decision in
Diamond v. Chakrabarty, 447 U.S. 303 (1980), which
supported a broad definition of patent eligibility.
Since that time, he has been a leading voice in the
field of patent policy. He has no direct stake in the
outcome of this case and is primarily interested in
ensuring that patent law develops in a way that best
promotes innovation and competition.1
STATEMENT OF CASE
Any patent application must go through two
stages before actual patent rights are awarded by the
Patent Office. The first of these inquiries deals with
“patent eligibility.” That question determines what
types of inventions can be considered for patent
protection. Patent eligibility thus performs a
gatekeeper function. If an invention is not patent
eligible, no other provision of the patent law can
secure patent rights for that invention. Patent
eligible inventions are not, however, automatically
1 Amicus has no financial interest in the outcome of this case. No
counsel for a party authored this brief in whole or in part, and
no counsel or party made a monetary contribution intended to
fund the preparation or submission of this brief. The Hoover
Project on Commercializing Innovation at Stanford University’s
Hoover Institution paid the actual printing and filing costs.
Counsel for amicus curiae prepared this brief on a pro bono
basis as part of their academic work in the field.
2
entitled to protection. Each such invention must
thereafter be examined under a second, well-known
set of requirements: novelty, non-obviousness, and
disclosure. These are more specific inquiries that ask
whether or not the claimed invention merits the
protection of the state by being a sufficient advance
over the existing body of patented materials and by
being supported by a sufficient disclosure to provide
the public with notice and scientific teaching.
In the decision below, the Federal Circuit held
that the Patent Office properly rejected the
applicants’ claimed process for managing legal and
business risk. The court’s sole ground was that the
claimed process failed to meet the court’s newly
announced and seriously restrictive test for patent
eligibility. Under the court’s “machine or
transformation test,” a claimed process must be “tied
to a particular machine or apparatus, or …
transform[ ] a particular article into a different state
or thing.” In re Bilski, 545 F.3d 943, 954 (Fed. Cir.
2008) (en banc).
This test threatens to transform patent law for
the worse. The key to modern technology lies in the
assembly, organization and use of information of all
sorts, kinds and descriptions. The physical substrate
in which it is contained is at best a mere technical
detail that is under the Federal Circuit’s rule
elevated to an end in itself, which only frustrates the
great ends for which the patent law is designed. Dr.
Chakrabarty’s own research on advanced techniques
for personalized medicine is placed at risk by the
narrow definition of patent eligibility used in the
Federal Circuit.
3
In light of all the relevant information, the
Federal Circuit’s approach must be rejected because
it is in conflict with the statute, with the precedents
of this Court, and with sound public policy. Of
particular concern to Professor Chakrabarty is that
affirming the decision below will place a dark cloud
over the status of his own future research. A broad
reading of patent eligibility has played a central role
in fostering both output from and competition within
a range of technology industries.
The course charted in the Federal Circuit
marks an abrupt and unwarranted about-face from
the bold decision in this Court’s 1980 Chakrabarty
case. Over strong objections that living things were
per se patent ineligible, this Court rejected the
argument of the Patent Office that subject matter
relating to living things was excluded from patent
eligibility. That case involved Dr. Chakrabarty’s
patent application for a genetically engineered
bacterium.
The Chakrabarty decision’s strong affirmation
of the broad scope for the patent system has been the
fundamental pillar supporting the dramatic success
of the United States’ biotechnology industry. At the
same time, the Chakrabarty decision is situated
squarely in the middle of a host of this Court’s
decisions relating to the patent eligibility of various
business- and computer-related inventions, which
have spurred huge technical advances in related
fields.
Before the 1980 Chakrabarty decision, the
United States, Europe, and Japan each had large
4
biotechnology companies, often collectively called “Big
Pharma,” which competed with rough parity with
each other. Each region has continued to be home to
Big Pharma companies to this day. All three regions
have enjoyed access to comparable technological and
capital resources. But neither Europe nor Japan took
the decisive step that the United States made
through this Court’s Chakrabarty decision, which
ignited the boom in basic biotechnology that
continues to this day. The rest of the world lags
behind because the narrow vision of patent law that
was adopted elsewhere led to the erection of various
artificial roadblocks to effective patents, and
resulting industrial development.
This distinctive United States stance has paid
huge dividends to this country in the 29 years after
Chakrabarty. Since 1980, the United States
biotechnology industry has expanded so that Big
Pharma companies are no longer the only significant
players. Their skills have been augmented by an
expanding pool of small- and medium-sized
companies that regularly numbers around 1,400 in
its ranks.2 The pool is constantly turning over as
some of these companies fail while others succeed
spectacularly and fuel the appetite for more start-
2 NIH: Moving Research from the Bench to the Bedside: Hearing
Before the Subcomm. on Health of the H. Comm. on Energy and
Commerce, 108th Cong. 47 (2003), available at
http://energycommerce.house.gov/108/action/108-38.pdf
(statement of Phyllis Gardner, Senior Associate Dean for
Education and Student Affairs, Stanford University) (detailing
the differences between the smaller biotechnology companies
and those in Big Pharma).
5
ups, whose livelihood depends on their ability to
develop some patentable technology.
This unique growth in the United States’
biotechnology industry stems from the virtuous circle
that the Chakrabarty decision helped create. The
firms that have grown through their patented
technologies in turn supply fresh resources to fund
the basic biological research community. That
community in turn improves the knowledge of
general scientific laws, which aids the formation of
new commercial firms. The general public benefits
from the steady stream of new and better goods and
services that have revolutionized vital industries
such as healthcare.3 The broad account of patent
eligibility has lowered the gates so that more can
play, and in so doing it has spurred our biotechnology
industry to be the most vibrant and competitive in
the world.
The key role played by a broad eligibility
requirement is equally important within the field of
business- and computer-related inventions, which
encompasses the patent application filed by
Petitioner in this case. In the early 1970s, the
United States’ software industry was devoid of
meaningful patent protection because of the
uncertainty created by this Court’s decision in
Gottschalk v. Benson, 409 U.S. 63 (1972).
3 Ian Cockburn et al., Pharmaceuticals and Biotechnology, in
U.S. Industry in 2000 Studies in Competitive Performance 389-
92 (David C. Mowery ed., 1999) (reviewing relative performance
of the U.S. biotechnology industry).
6
While Benson’s holding was narrow, its impact
was to leave all patents for computer software
vulnerable to serious challenges.4 Unfortunately, the
Benson approach controlled throughout the 1970s,
until this Court’s decisions in Chakrabarty and
Diamond v. Diehr, 450 U.S. 175 (1981), holding that
software patents were not subject to per se exclusion,
started to revive the market. Indeed, it was only
with In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994) (en
banc) and State Street Bank & Trust Co. v. Signature
Fin. Group Inc., 149 F.3d 1368 (Fed. Cir. 1998) that
the increased confidence in software patents
translated into major infusions of investment capital.
Yet these are the very decisions that the Federal
Circuit has unwisely called into question in the
instant case. Bilski, 545 F.3d at 990-92 (Newman, J.,
dissenting) (noting the majority’s break with these
important precedents). That window of reliable
eligibility for business method and software patents
has been closed over the past several months by the
recent Federal Circuit cases including the en banc
decision now before this Court. That point raises real
concern because the same patent system that creates
the initial economic advantage to the first in the field
also gives a strong encouragement for new firms to
compete against its initial patent advantage by
affording powerful patent protection to the next
generation of new and useful inventions.
4 For a discussion of the lead-up to Benson, and its impact, see In
re Johnston, 502 F.2d 765, 772–774 (CCPA 1974) (Rich, J.,
dissenting) (noting normative problems with such a rule against
software patents but pointing out the appellate court’s duty to
follow this Court’s case law on the issue).
7
It may seem at first blush that broad patent
eligibility would lead to an unseemly deluge of
patents. But the ultimate success or failure of any
patent in any field of technology must still be tested
through a gauntlet of challenges that are both legal
and economic. On the legal side, an applicant will
only receive a valid patent if it can carry the burden
of preparing a sufficiently strong application
containing claims that avoid the prior art. On the
economic side, the patentee can recover its initial
investment only if it can successfully navigate the
complex world of commercial transactions in the face
of ever shifting technological and market landscapes.
Restraints like these deter frivolous Patent
Office and patent litigation filings whose sole purpose
is to block other innovators from making their mark
in the marketplace. The empirical findings on the
ground do not bear out all the gloomy talk about
patent blockades, for private owners of valid patents
do not act like Soviet-style bureaucrats who only
prosper by blocking the gainful activities of others.
Patents are wasting assets that can produce revenue
only to the extent that they lead to production or
licensing or both.5
5 A popular trend in policy debates is to worry about a putative
problem of a patent “anticommons” that might be created when
there are too many valid patents in an area. See Michael Heller
and Rebecca Eisenberg, Can Patents Deter Innovation? The
Anticommons in Biomedical Research, 280 Science 698, 700
(1998). But the worries about an anticommons in the U.S.
patent system are misplaced for several reasons, including the
nature of the holder of the underlying assets, the nature of the
licensing over those assets, and the flexibility private parties
enjoy to bundle or divide both the assets and the licenses. See
Richard A. Epstein & Bruce Kuhlik, Is There a Biomedical
8
A restrictive approach to patent eligibility
embodies a dangerous view of industrial policy,
because it puts the Patent Office in the business of
picking winners and losers at the outset – by
foreclosing patent examination on the merits for
inventions that could well run the gauntlet of the
second level challenges that face all patent
applications. Broader eligibility rules avoid
truncating the process by ruling out of bounds entire
classes of useful inventions that have been routinely
evaluated successfully on a case-by-case basis like all
other inventions.
SUMMARY OF ARGUMENT
The Court should reject the Federal Circuit’s
new, restrictive approach to patent eligibility because
it is in conflict with the statute, the precedents of this
Court, and sound public policy. The approach of the
Federal Circuit decision now on review finds no
support in the statute. The statute speaks in broad,
Anticommons, Regulation, Summer 2004, at 54 (discussing the
incentives of private holders of wasting assets to negotiate
towards productive use); F. Scott Kieff, On Coordinating
Transactions in Information: A Response to Smith’s Delineating
Entitlements in Information, 117 Yale L.J. Pocket Part 101, 106
(2007) (discussing mechanisms by which holders of the assets
and those seeking licenses can and do transact with each other).
For empirical evidence against the Heller-Eisenberg hypothesis,
see Timothy Caulfield et al., Evidence and Anecdotes: An
Analysis of Human Gene Patenting Controversies, 24 Nature
Biotechnology 1091 (2006) (reviewing data); John P. Walsh et
al., View from the Bench: Patents and Material Transfers, 309
Science 2002 (2005) (reporting empirical results that
demonstrate that “access to patents on knowledge inputs rarely
imposes a significant burden on academic biomedical research”).
9
expansive terms when it holds that patent protection
should extend to “any new or useful process, machine,
manufacturer, or composition of matter, or any new
and useful improvement thereof.” 35 U.S.C. §101
(2006) (emphasis added). There are no sound policy
reasons that should lead this Court to unduly limit
the ordinary meaning of these terms, whose sole
proper office is to exclude the coverage of ideas,
natural laws and natural phenomena.
The Federal Circuit’s narrow interpretation of
patent eligibility disrupts this sensible scheme. It
strikes first at excluding patents in the area of
business methods and software, in direct conflict with
this Court’s decision in Diehr. Worse still, the
Federal Circuit’s approach could easily cast a pall
over all method claims in other areas of technology.
Given the long established links between the
eligibility rules for software and biotech, it is likely to
spread its tentacles to biotech in particular, thereby
undermining the huge boost that this Court’s decision
in Chakrabarty gave to bioscience, which this Court
blessed in its subsequent decision of J.E.M. Ag
Supply, Inc. v. Pioneer Hi-Bred Int’l, Inc., 534 U.S.
124 (2001).
The Federal Circuit’s sharp break from
established law is also bad policy. It would cloister
off large segments of the economy from the vibrant
beneficial impact that patents have had in the United
States in improving innovation and competition for
both domestic and international markets. That
sudden and unexplained reversal of policy would by
judicial fiat seriously frustrate the many investment-
backed expectations in existing patents, which could
10
now be subject to challenge under far higher
standards for patent eligibility than those under
which the patents were granted. In particular, it
would place the research efforts of Professor
Chakrabarty under a cloud by reducing the prospects
for its successful commercialization.
If left standing, the approach the Federal
Circuit has taken in this case would likely engender
other unfortunate consequences in the administration
of patent law. There is little doubt that many of the
modern advances in areas of technology and finance
are wrapped up in the creation, organization, and
interpretation of information. That information could
be embodied in a wide number of different physical
substrates, none of which is critical to its social utility
or commercial success. There is a major risk, should
the decision below be affirmed, that inventors will
now seek to recast their patent claims in ways that
seize onto some inessential detail of the invention’s
implementation in order to satisfy a “machine or
transformation test” that is better suited to the
nineteenth century than the twenty-first. But those
strategic maneuvers will only produce deadweight
losses, as these physical elements will unduly limit
the scope of claims and put greater pressure on the
doctrine of equivalents than is now the case.
Keeping the patent eligibility gates open is
vital for information-intensive industries like
healthcare and finance. The spate of new inventions
will have positive ripple effects on key actors in
adjacent and complementary fields. Patents on
business and science methods require disclosure of
valuable information about risky undertakings,
11
enabling patients, doctors, investors, and investment
advisors to make more informed decisions. For
example, investors would generally prefer for a hedge
fund to disclose a risky derivatives scheme in a
patent application than to keep it a trade secret.
Patent transparency will also outperform mandatory
disclosure regulation in getting valuable information
into the public domain. Direct regulation does not
offer any benefit to the regulated firm remotely
comparable to that of patent protection.
No one doubts that there are a host of
problems in the administration of patents, which
should be addressed. But these are often localized to
specific areas or involve the administration of the
patent system. Patent eligibility is too blunt and too
crude an axe to deal with these problems, for which
much more laser-like fixes are appropriate.
In the end, Amicus of course does not take a
position on how this particular patent application
should be examined under the long established
substantive rules relating to the disclosure and the
prior art. But the looming tragedy if the Federal
Circuit’s ruling is upheld is that nobody will ever find
out, as a large swath of patent applications will be
unceremoniously barred at the gates from even
having a shot at competing in the commercial arena
of patents.
12
ARGUMENT
The Federal Circuit is improperly swinging the
very blunt axe of the patent eligibility doctrine to
excise from the patent system a huge swath of
applications, many of which could well satisfy all of
the substantive requirements for obtaining a patent.
The court confessed to this charge when it wrote:
“[w]hether a claim is drawn to patent-eligible subject
matter under § 101 is a threshold inquiry, and any
claim of an application failing the requirements of
§ 101 must be rejected even if it meets all of the other
legal requirements of patentability.” Bilski, 545 F.3d
at 950. But at no point does it offer reasons that
support this radical surgery. This Court should reject
such an approach because it is inconsistent with the
statutory language, the precedents of this Court, and
sound public policy.
I.
The Federal Circuit’s Approach Conflicts
with the Statute
The Federal Circuit’s “machine or
transformation” test has no basis in the relevant
statutory language, which is both clear and broad
with respect to the question of patent eligibility:
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,
subject to the conditions and
requirements of this title. 35 U.S.C
§ 101.
13
The section provides an expansive list in ways that do
not try to prejudge which inventions will make sense
for science and commerce and which do not. In case
there were any doubt of the breadth intended by the
word “process” in particular, the statute also
expressly provides its own definition: “The term
‘process’ means process, art or method, and includes a
new use of a known process, machine, manufacture,
composition of matter, or material.” 35 U.S.C § 100(b)
(2006). The combination of these two provisions in
the statute creates a legal test that leaves the real
limits on patentability to come from the other
“conditions and requirements of this title.” 35 U.S.C
§ 101. The linguistic framework of the next two
sections in the statute confirms Section 101’s broad
reach. Those sections are respectively titled
“Conditions for patentability; novelty and loss of right
to patent” and “Conditions for patentability; non-
obvious subject matter.” 35 U.S.C §§ 102-103 (2006).
That is, the serious limits on patent claims are
imposed by the sections of Title 35 that are outside of
Section 101. These substantive limits include the
prior art rules of Sections 102 and 103, which are
known as “novelty,” “statutory bar” (“loss of right”),
and “nonobviousness,” as well as the disclosure rules
set forth in Section 112, which are known as “written
description,” “best mode,” “enablement,” and
“definiteness.” See, 35 U.S.C § 112, ¶¶1-2 (2006).
This Court has expressly agreed with this reading.
As Judge Newman pointed out below in dissent, in
“Diehr, the Court explained that Section 101 is not an
independent condition of patentability, but a general
statement of subject matter eligibility.” Bilski, 545
F.3d at 977 (Newman, J., dissenting) (citing Diehr,
450 U.S. at 189-90).
14
II.
The Federal Circuit’s Approach Conflicts
with this Court’s Precedent
The Federal Circuit’s machine or
transformation test directly conflicts with this Court’s
well-established precedent, as Judge Newman also
explained in depth in her dissent below. Not only did
this Court expressly reject the “machine or
transformation” test in both Benson and Parker v.
Flook, 437 U.S. 584 (1978), this Court in
Chakrabarty, Diehr, and J.E.M. Ag Supply expressly
embraced a very broad reading of Section 101
eligibility to reach “anything under the sun made by
man.” Bilski, 545 F.3d at 977, 978-83 (Newman, J.,
dissenting) (providing detailed analysis of each case)
(quoting Chakrabarty, 477 U.S. at 309 (citing S. Rep.
No. 82-1979, at 5 (1952), reprinted in 1952
U.S.S.C.C.A.N. 2394, 2399; H.R. Rep. No. 82-1923, at
6 (1952))).
The choice of those words was intended to
allow the patent law to sweep broadly so as to
embrace new forms of knowledge and technology that
were unknown when they were incorporated in the
1952 Act by Congress (largely drafted by Judge Giles
Rich), which was intended to reverse some of the
narrow decisions on patent eligibility that had grown
up in the courts in the 1940s, such as Funk Brothers
Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948).
The patentee in that case had devised a method in
which multiple strains of a particular bacterium
where able to coexist in order to help a wide range of
plants take nitrogen from the air.
15
If the hostile attitude toward patents
expressed in Funk Brothers had carried over to
modern times, it is likely that the genetic revolution
would have been long retarded. It was just to avoid
this cramped interpretation of the patent law that
Congress enacted the current Section 101. That work
should not be undone by adopting a new rule that is
inconsistent with the Chakrabarty line of cases
III.
The Federal Circuit’s Approach Conflicts
with Sound Policy
A.
Sound Patent Law Need Not Tie a
Patentable Invention to Some
Physical Mode of Its Expression.
As Judge Rader pointed out in dissent, below, a
fundamental policy issue that seems to be overlooked
by the Federal Circuit majority is the basic
theoretical question of “why would [it make sense for]
the expansive language of section 101 [to] preclude
protection of innovation simply because it is not
transformational or properly linked to a machine
(whatever that means)?” Bilski, 545 F.3d at 1012
(Rader, J., dissenting) (emphasis in original). To be
sure, as this Court has consistently held, it does
make good sense to exclude from patent protection
ideas, natural phenomena, and natural laws. Diehr,
450 U.S. at 185) (citing Flook, 437 U.S. at 589,
Benson, 409 U.S. at 67). Indeed, these categories are
already excluded by a basic application of the more
substantive and more well known of patent law’s
requirements: the novelty and non-obviousness rules
would prevent patents on all three because they
already exist, in nature; and the disclosure rules
16
would prevent patents on at least abstract ideas
because they are not able to be put to use if they are
merely abstract.
It might seem as though the patent system
needs to be updated to deal with the new technologies
of today and tomorrow. It would be easy to conjure
up the image of our Founding Fathers, dressed in 18th
century fashions, unable to anticipate that the patent
system they provided for in the Constitution would be
applied to modern marvels like molecular biology or
the internet. But the charge that the law must be
updated to deal with new technologies is absurd
when it comes to patents. The entire patent system,
with its core patentability requirements of novelty
and nonobviousness, was designed to embrace
unforeseen technologies. As this Court pointed out in
the Chakrabarty decision: “A rule that unanticipated
inventions are without protection would conflict with
the core concept of the patent law that anticipation
undermines patentability.” 477 U.S. 315.
Indeed, the rapid advance of technology is
precisely a reason why fears about hyper
proliferation of patenting in new fields are overblown.
With new areas of technology come new reservoirs of
prior art. As this Court took pains to elaborate forty
years ago in Graham, the ever-advancing state of the
art fixes many of the problems with patents:
Technology, however, has advanced –
and with remarkable rapidity in the last
50 years. Moreover, the ambit of
applicable art in given fields of science
has widened by disciplines unheard of a
17
half century ago. It is but an
evenhanded application to require that
those persons granted the benefit of a
patent monopoly be charged with an
awareness of these changed conditions.
The same is true of the less technical,
but still useful arts. He who seeks to
build a better mousetrap today has a
long path to tread before reaching the
Patent Office. Graham v. John Deere,
383 U.S. 1, 19 (1966).
B.
Strong Patent Protection Opens
Technology Markets to Multiple
Players and Facilitates Cooperation
Among Them.
A broad reading of patent eligibility has played
a central role in fostering both output from and
competition within a broad range of technology
industries. As Judge Jerome Frank once put it,
predictable patents can be the vital slingshots
smaller innovative ‘Davids’ use to compete against
large established ‘Goliaths.’ See Picard v. United
Aircraft Corp., 128 F.2d 632, 643–644 (2d Cir. 1942)
(Frank, J. dissenting).
Getting an invention made and bringing it to
market requires coordination among its many
complementary users, including developers,
managers, laborers, other technologists, financiers,
manufacturers, marketers, and distributors. Patents
help achieve this socially constructive coordination by
allowing those various actors to interconnect with
each other like modules of a larger system. The
18
underlying mechanism depends in at least three
fundamental ways on the expectation that patents
will be available and enforced.
First, the credible threat of a published
patent’s right to exclude acts like a beacon in the
dark, drawing to itself all those interested in the
patented subject matter. This beacon effect
motivates those diverse actors to interact with one
another and with the patentee, starting conversations
among the relevant parties.
Second, the widespread expectation that the
patent will be enforced motivates each of these
parties to reach agreements with one another over
the use and deployment of the technology. That
bargaining effect falls apart if the parties are unsure
that the patent will be enforced; if the patent is seen
as unlikely to be enforced, there is significantly less
need to reach agreement ex ante. Thus the fear of
uncertain enforcement creates a disincentive for the
necessary parties to work together at the outset.
This change in result is not a matter of indifference.
The voluntary agreements entered into by the
various firms are dense relationships that are
tailored to the specific circumstances of each case. A
complex cooperative agreement could easily run
hundreds of pages, all of which are calculated to
maximize the gains from trade among the parties.
Remove the patent system, and the gains from
cooperation over technology will shrink. And the
increased reliance on trade secrets will deny the rest
of the scientific and other communities the public
disclosures in the patent that help direct competitors
19
into fruitful areas of research, and customers,
advisors, and regulators into fruitful areas of inquiry.
Third, patent protection allows patentees and
all other complementary users of the invention
engaged in the coordination process to appropriate
the returns to inputs (many of which economists term
“rival” because use by one person deprives use by
another) to developing and commercializing
innovation – labor, lab space, unique business
relationships, and so forth – without the law having
to trace their relative contributions through either
complex administrative procedures or complex
litigation. Instead patents form a platform on which
coordination and development can take place. 6
C.
Localized Solutions Offer the Best
Means for Dealing with Particular
Defects of the Patent System.
While patents are important for increasing
access to new technologies as well as competition,
Amicus recognizes that a number of problems can be
associated with patents. These should be taken
seriously and they are. But using the tool of patent
eligibility to solve them would make little sense
because it would not help resolve problems that are
far more localized.
6 Henry E. Smith, Intellectual Property as Property: Delineating
Entitlements in Information, 116 Yale L.J. 1742 (2007)
(discussing modularity and information costs); F. Scott Kieff, On
Coordinating Transactions in Information: A Response to
Smith’s Delineating Entitlements in Information, 117 Yale L.J.
Pocket Part 101 (2007) (discussing beacon and bargaining
effects for facilitating coordination).
20
Here are some examples of the basic
proposition. The constant concerns about the delay
in processing patents or in the reliability of patent
determinations are well known. But patent eligibility
is a vastly inferior device for dealing with these than
a shift in budgetary allocations to the Patent Office or
a change in the procedures whereby patents can be
challenged either before the Patent Office or in court.
At a more doctrinal level, designing the prior
art rules to prevent patents from issuing for
technological advances that are already in the public
domain or in patents acquired by third parties serves
to protect the reliance interests of third parties
against a late-comer into the field.7
Similarly, designing the publication rules of 35
U.S.C. § 122(b) and the disclosure rules of 35 U.S.C.
§ 112 to put the world on notice of patent claims soon
after an application is filed mitigates similar
opportunism concerns of third parties arising after a
patent is filed.
The rules of laches, implied license, and
estoppel can further act to prevent unfair surprise by
a lurking patentee who sits on his rights when others
actively seek to develop their own inventions.
Finally, good rules on licensing can increase
the gains from trade by reducing the transaction
costs needed to make voluntary agreements.
7 This is the role played by the novelty, statutory bar, and
nonobviousness requirements. See 35 U.S.C. §§ 102-03.
21
Closer to home, claims of sloppy patent control
for business patents do not require throwing out the
baby with the bathwater, as the other patent levers
could result in sensible standards for nonobviousness,
novelty, and disclosure that are appropriate to each
case.
We need not decide here which of these
possible reforms is better handled by Congress and
which by the Courts. It is enough to say that neither
the legislature nor the judiciary should select patent
eligibility as the tool of choice to deal with any of the
problems mentioned above or others that may arise
in the future. Targeted responses to specific
problems dominate the blunderbuss approach of the
Federal Circuit’s “machine or transformation” test.
Patent eligibility purports to pick winners and losers
at the outset, before any of the more discriminating
tests for patentability ever kick in.
Consider the specific rejection in this case of
Petitioners’ claim to a process for managing legal and
business risk because the process failed to meet the
Federal Circuit’s unduly restrictive test for patent
eligibility – the “machine or transformation test.”
That technology addressed one critical problem that
contributed to the recent financial crash which was
attributable at least in part to the inability of even
the best financiers on Wall Street to appreciate a host
of legal and business risks, which are difficult to
model and thus difficult to guard against. The need
for techniques to estimate the frequency and severity
of so-called low probability events is critical to
preventing a repetition of these massive dislocations.
22
Against that backdrop, it belies reality for the
Federal Circuit majority to insist that the ability to
develop new programs and protocols to deal with
these issues is not of the highest order of importance.
Yet that court’s decision explicitly derogates from its
own two earlier decisions, State Street Bank & Trust
v. Signature Financial Group, Inc., 149 F.3d 1368
(Fed. Cir. 1998), and In re Alappat, 33 F.3d 1526
(Fed. Cir. 1994), which have afforded broader
protection for business method and scientific patents.
It shows deep inability to perceive the arc of modern
technology to deny patent protection for the archaic
reason that the proposed invention does not meet
some nineteenth century test of physical
transformation.
Put differently, all modern understandings of
risk take seriously that a true reduction (or increase)
in risk leads to a significant change in overall social
welfare. There is no doubt that even the Federal
Circuit’s cramped test treats as patent eligible a
method of rescuing an innocent citizen who has been
crushed by a freight train. No sound policy reason
countenances turning our back categorically on
patent protection for those novel technologies that
enable us to better manage the risk of collision in the
first instance.
In sum, many of the other areas of the patent
system’s rules have been under consideration for
change in recent debates before Congress and this
Court. And perhaps they should be changed. But
any sensible reform should come through the front
door of a reasoned and focused debate about the
merits and demerits of specific changes as they relate
23
to each other and to the larger patent system. Back
door reform by way of a new judge-made limit on
patent eligibility is the worst way to go.
IV.
The Federal Circuit’s Approach Will Have
a Profound Adverse Effect on the Public’s
Ability to Benefit from Dr. Chakrabarty’s
Own Research
Professor Chakrabarty’s own research on
infectious diseases and drug design and discovery
gives ample testimony to the importance of the case
that bears his name. It is now well known that the
effectiveness of a drug varies with each patient,
whose genes often dictate whether a particular
compound will reach its target and how it will act
when it arrives. One example involves the use of the
drug Herceptin, a monoclonal antibody, in breast
cancer patients. Only some breast cancer patients,
about 10 to 15%, will have the cancers expressing a
gene, called HER 2, that Herceptin targets. Thus
HER 2-positive breast cancer patients in whom the
gene is well expressed will be excellent recipients for
Herceptin treatment. In contrast, others with low-
level expression of the gene will derive little benefit
from this drug. Expression of genes can also dictate
if a person infected with the AIDS virus HIV-1 will
develop AIDS or not, because of the expression of a
gene or genes that are involved in the entry of the
virus to the CD4+ T cells.
These general ideas are of course in the public
domain. But much hard work remains to translate
them into useful inventions that will reduce human
disease and suffering. These innovative ideas in
24
human genotypes and drug effectiveness have given
rise to the fast emerging medical field of personalized
medicine, where the efficacy of a drug is determined
based on the genetic constitution of the patient. The
narrow definitions of patent eligibility adopted by the
Federal Circuit could slow down the pace of progress.
To determine the genetic constitution of each patient
requires not only the knowledge of the sequence of
the genomic DNA but also methodologies to
determine which genetic variant may represent drug
susceptibility or a lack of it. Such methods may not
involve any machine, or transformation of an article
to another state or thing. But it is virtually certain
that they will require extensive literature searches,
insightful analyses, logical deductions, and complex
experimentation to determine if the target of a drug
is properly expressed in the patient’s genome to make
the drug functional and effective.
Professor Chakrabarty’s current research lies
at the intersection of these new fields in bioscience.
It concerns the development of multi-disease-
targeting drugs, where a single candidate drug may
be used in the treatment of a multitude of diverse
diseases such as cancer, HIV/AIDS, malaria, and
others. No such drug currently exists. Yet strong
patent laws will speed their development. Seven U.S.
patents have been issued between 2006 and 2009
relating to the fruits of Dr. Chakrabarty’s work on
the development of candidate drugs and several other
patents are pending. Thus, there is no question of
the patent eligibility of these drugs. Yet there is
ample reason to support Professor Chakrabarty’s
worry that the highly restricted definition of patent
eligibility by the Federal Circuit will prevent future
25
patents on many aspects of personalized medicine.
The baleful consequences of such a decision would be
to greatly reduce progress in this field and the
consequent development of new, innovative processes
to determine drug efficacy in individual patients.
This Court’s 1980 Chakrabarty decision
declared “anything under the sun that is made by
man” is the proper test for patent eligibility. 447 U.S.
309. That broad interpretation, not any stylized
“machine or transformation test,” is the key to the
full development of personalized medicine and other
aspects of biomedical science. The Federal Circuit’s
decision to restrict patent eligibility of these
important innovations will do much to prevent or
delay such critical innovations from reaching the
bedside or the market place.
26
CONCLUSION
Amicus respectfully urges this Court to reject
the “machine or transformation” test articulated by
the Federal Circuit and reaffirm the broad rules for
patent eligibility elucidated by this Court in
Chakrabarty, Diehr, and J.E.M. Ag Supply.
Respectfully submitted,
RICHARD A. EPSTEIN
F. SCOTT KIEFF
1111 East 60th Street
Counsel of Record
Chicago, Illinois 60637
1111 23rd Street, NW
(773) 702-9563
Apt 8d
Washington, DC 20037
(202) 558-6667
August 6, 2009
Counsel for Amicus Curiae
CERTIFICATE OF SERVICE
I hereby certify that I have caused three true
and correct copies of this BRIEF OF DR. ANANDA
CHAKRABARTY AS AMICUS CURIAE IN
SUPPORT OF PETITIONERS to be served on this 6th
day of August, 2009, by Federal Express, as well as
one electronic copy by email, to the following:
J. Michael Jakes
Finnegan Henderson Farabow Garrett &
Dunner, LLP
901 New York Avenue, NW
Washington, DC 20001-4413
(202) 408-4000
mike.jakes@finnegan.com
Attorneys for Petitioners, Bernard L.
Bilski and Rand A. Warsaw
Elena Kagan, Solicitor General
United States Department of Justice
950 Pennsylvania Avenue, N.W.
Washington, DC 20530-0001
(202) 514-2217
SupremeCtBriefs@USDOJ.gov
Attorneys for John J. Doll, Acting Under
Secretary of Commerce of Intellectual
Property and Acting Director, Patent
and Trademark Office
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