Congress needs to clean up the Supreme Court's mess on patents

The Supreme Court is unwisely undermining America's global economic leadership.

For over a decade, the nation's highest court has sowed doubt about whether inventions in certain high-tech industries — ranging from medical diagnostics to finance — are eligible for patent protections. Without that certainty, investors naturally assume the worst and avoid those sectors.

As recently retired federal judges who regularly presided over patent disputes, we witnessed the mounting confusion firsthand. Lower courts have tried, and often failed, to make sense of the confused case law. 

Fortunately, there is an easy solution. Congress could pass a bipartisan bill, the Patent Eligibility Restoration Act, to restore predictability and thereby spur investment and job creation.  

The root cause of today's troubles is a pair of Supreme Court decisions, Mayo v. Prometheus in 2012 and Alice v. CLS in 2014. In Mayo, the court ruled that a diagnostic test was ineligible for patent protection because it relied on measuring unpatentable "laws of nature." In Alice, the justices held that a particular strategy used by a bank for automatically mitigating risk was an "abstract idea" ineligible for patenting. 

The core defect in these rulings is the justices’ reliance on subjective concepts like "abstractness" and "laws of nature" to determine patent eligibility. This injects tremendous ambiguity into the eligibility analysis, and makes it hard to predict which inventions will be deemed eligible and thus patentable if meeting other requirements of the Patent Act. 

In the aftermath of these rulings, patent eligibility challenges have skyrocketed. In the year following the Alice decision, the Federal Circuit invalidated patents in 21 of the 22 cases it heard. Yet when issued, these patents were valid.

Fields like medical diagnostics and gene therapies face a crisis of patentability, jeopardizing progress on pressing health issues. One study estimated that in the wake of Mayo, venture capital investment in medical diagnostic technologies was $9.3 billion lower than it otherwise would have been.

In our former court, which hears patent cases on appeal, concurring and dissenting opinions have proliferated. Veteran jurists have described the state of affairs as "incoherent," "unclear," "fraught," and "inconsistent."

Some defenders of the new status quo have denied there is a problem at all. One study even suggested that "under one of the most well-established metrics for measuring the predictability in the law, Section 101 proved to be more predictable than other areas of patent law over the past decade." That is, lower court decisions, usually of ineligibility, were rarely overturned on appeal. But that is unsurprising because of the ambiguity of the law.    

The study is also misleading. While it may be true that expert lawyers can predict the likely outcome of Section 101 disputes —  which generally involve finished products that have already been brought to market — startup companies are not making research and investment decisions based on finished products. 

They, and their investors, are making those decisions based on the reliability of intellectual property protections for inventions that are so early-stage, they often exist only on paper. If there is any doubt about whether those inventions can be protected, entrepreneurs and investors will inevitably err on the side of caution — and direct their resources to other sectors. 

Fortunately, a ready solution exists. The bipartisan Patent Eligibility Restoration Act (PERA) would effectively overturn Mayo and Alice, restoring Congress’ patent statute. Under PERA, pure mathematical formulas, natural phenomena and basic mental processes would remain ineligible for patent protection because they fell outside the four categories Congress enacted.

But novel, useful inventions derivedfrom these building blocks would become eligible again. For instance, metabolic processes would remain unpatentable — but a diagnostic testing company that found a novel way to detect a metabolic disorder could patent its test, assuming the invention met all other requirements of patentability.

This would give investors the certainty and objectivity needed to continue funding cutting-edge research with the potential to change, or even save, lives. 

The U.S. Senate Judiciary Subcommittee on Intellectual Property recently held a hearing on PERA, where lawmakers were able to ask questions and hear from a number of leading patent law experts. The former directors of the U.S. Patent and Trademark Office under both Presidents Trump and Obama testified in favor of the bill. And we hope the full committee will move swiftly to hold a markup of it.

Judges try their best to apply the Supreme Court's precedents in good faith. But the inherent ambiguity of decisions like Alice and Mayo put lower courts into an impossible position — and the costs to innovation and the economy continue to mount. Congress can end the damage by passing PERA without delay. 

Judge Paul Michel (ret.) served on the United States Court of Appeals for the Federal Circuit from 1988 to 2010. Judge Kathleen O'Malley (ret.) served on the United States Court of Appeals for the Federal Circuit from 2010 to 2022 and the U.S. District Court for the Northern District of Ohio from 1994 to 2010. Both are board members of the Council for Innovation Promotion.