New patent subject-matter eligibility test hurts US competitiveness
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The United States has historically been the world leader in providing patent protection for new and emerging technologies. Think about gene sequencing, personalized medicine and computer-implemented technologies that run everything — and America's dominance in these industries. But due to a series of poorly considered and frequently misapplied Supreme Court decisions, applicants in key technologies such as biotech and software are now facing more stringent criteria for obtaining and keeping patent protection in the U.S. than they are in China, the European Union and other jurisdictions, which reduces America's global competitiveness.

How did the U.S. position devolve to this point?

In Mayo v. Prometheus, the Supreme Court ignored decades of precedent and created a new "two-prong test" to establish patent subject-matter eligibility. The first prong is to determine if the claims are drawn to a law of nature, a natural phenomenon or an abstract idea, which are court-created exclusions to patentable subject matter. If the claims are drawn to these areas, the second prong is to determine whether elements of the claim add "substantially more" to transform it into a patent-eligible invention. The court declined to define "substantially more," adding additional ambiguity to the eligibility equation.

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The Mayo test stands in contrast to the approach in Europe, where claims are analyzed to assure they have a technical character. If they do, they are evaluated as to novelty and inventive step. If the claim is a mixture of technical and nontechnical features and the inventive step is not in a technical field, the claim is not patentable subject matter.

Even in China, patents are granted as long as the claims contain a technical feature distinctive from the prior art. A patent claim in China will overcome the "technical solution" hurdle if it uses a "technical means." This leads to broader patent subject-matter eligibility in China when compared to the U.S.

American industry — particularly biotech and software — is already feeling the impact of an erosion in patent eligibility.

Sequenom, a life sciences company, developed a test — heralded by the medical community — that determines fetal abnormalities. Their invention is based on the discovery that a pregnant woman's blood contains the DNA of the fetus. Using Sequenom's process avoids existing techniques of taking samples from the placenta or fetus, which are considerably more dangerous and invasive.

Planet Blue, a California software company, also created an invention directed to actual technical challenges. The company used complex and specific computer-implemented techniques to match the lip movements of virtual characters to the speech being spoken, solving a technological problem of the entertainment and video game industries.

Both of these companies have had their patents invalidated in the United States, yet there is considerable agreement that they continue to be patent-eligible under the European and Chinese eligibility guidelines outlined above.

From the perspective of those creating meaningful innovation like the examples outlined above, the European and the Chinese approaches to patentable subject matter are preferable to the current U.S. doctrine. Continued invalidation of large swaths of discovery and innovation domestically will result in a shift of jobs and economic growth to areas where innovators can take advantage of broader patent protection.

The U.S. is the recognized leader in software and biotech, and statistics show that eight out of 10 of the largest software companies and eight out of 10 of the largest biotech companies are headquartered in the U.S.

In addition, many of the inventions in this area result from vast numbers of independent inventors and small start-ups who need their patents to attract investor funding to develop their inventions.

Weakening patents in these areas by narrowly redefining eligibility crushes U.S. innovation and pushes research to foreign shores. This puts American competitiveness at a distinct disadvantage and will cause irreparable damage to our economy.

For this reason, our courts must reexamine the "two-prong test" on patent subject-matter eligibility. America's innovation economy and the jobs it creates cannot long survive the abandonment of the broad subject-matter eligibility that has made us world leaders in innovation for the past century.

Stoll is a partner and co-chair of the intellectual property group at Drinker Biddle & Reath and a former commissioner for patents at the United States Patent and Trademark Office.