Mayo Collaborative Services v. Prometheus – Commentary

 

American Patent law is a mess. When a small section of law ends up being appealed to the United States Supreme Court so often, it is an indication that:

  1. The law is badly written
  2. Powerful interest groups are trying to bend the law
  3. There is a lot of money at stake

This is the seventeenth patent case the court has ruled on since 2005. The Supreme Court has broad powers to choose which cases that it takes. It selects cases that it believes will have a significant impact on the law in the United States. That it has taken so many patent cases implies that the Supreme Court sees problems with the Patent System.

The Case

The case involved Patent 6,355,623, which was owned by Prometheus. The patent involved a method of determining the correct dosage of medicine to use in treatment.

In the decision (which can be downloaded here – PDF warning), the court invalidated the patent on the grounds that it was an attempt to patent a natural law. From the decision:

Those cases warn us against interpreting patent statutes in ways that make patent eligibility “depend simply on the draftsman’s art” without reference to the “principles underlying the prohibition against patents for [natural laws].” Flook, supra, at 593.

Technically the patent did not directly patent the natural law. What it patented was a process whereby a physician would dose the patient, take measurements, dose the patient, and take further measurements, to determine how efficient the drug was in the patient’s system.

From the patent:

We claim:

1. A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:

(a) administering a drug providing 6-thioguanine to a subject having said immune-mediated gastrointestinal disorder; and

(b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder,

wherein the level of 6-thioguanine less than about 230 pmol per 8.times.10.sup.8 red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and

wherein the level of 6-thioguanine greater than about 400 pmol per 8.times.10.sup.8 red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.

The Court decided that this was a natural law in action, and therefore not patentable.

Impact

This is where it gets interesting. U. S. Patent Law is as I said in the opening sentence a mess. You cannot patent a Natural Law but you can patent any step beyond that.

How do you determine what is a step beyond Natural Law? For that matter how did this patent pass the bar for obviousness? It looks like a simple system which would be obvious to any physician who is skilled in the art.

Let’s take a step back. How about Patent 5,960,411, Amazon’s infamous One-Click patent?

A method and system for placing an order to purchase an item via the Internet. The order is placed by a purchaser at a client system and received by a server system. The server system receives purchaser information including identification of the purchaser, payment information, and shipment information from the client system. The server system then assigns a client identifier to the client system and associates the assigned client identifier with the received purchaser information. The server system sends to the client system the assigned client identifier and an HTML document identifying the item and including an order button. The client system receives and stores the assigned client identifier and receives and displays the HTML document. In response to the selection of the order button, the client system sends to the server system a request to purchase the identified item. The server system receives the request and combines the purchaser information associated with the client identifier of the client system to generate an order to purchase the item in accordance with the billing and shipment information whereby the purchaser effects the ordering of the product by selection of the order button.

I have a backup of software which was written in 1983 which did the same thing, with two minor differences. It used a dial-up connection instead of the internet, and it used ANSI instead of HTML. For someone who was skilled in the art, those differences would have been minor.

In fact Amazon lists a wide range of prior art, much of which is almost indistinguishable from their patent (and some of which is  their own earlier patents – I strongly suggest that you read through them if you have the time). Again it comes back to the skilled in the art designation. The differences between the patents are so minor, that it is almost impossible to see how the Patent Office could have issued them.

Until you realize that the Patent Office is funded by patents. The Patent Office has a fascinating fee schedule. Anything which would interfere with the number of patents being filed, such as a tightening of patent issuance criteria would have a severe impact in the bureaucracy. Therefore the Patent Office will fight Congress and the Courts if they attempt to limit patentability.

In the United States there are a wide range of Stakeholders, i.e. interested parties where Intellectual Property, or in this case specifically Patents are concerned:

  1. Patent Lawyers
  2. Manufacturing Companies
  3. Non-Practicing Entity
  4. Individual Inventors
  5. Employed Inventors
  6. The General Public
  7. The U.S. Patent Office

Each of these stakeholders has a vested interest in the system. Patent Lawyers want a robust system, without one they have no employment.

Manufacturing Companies want to be able to manufacture their product without interference, meaning they want to be able to block competition with patents, but not be blocked by patents.

Non-Practicing Entities want to collect a toll from all goods produced.

Individual Inventors want to make money from their inventions. Some of them will become Manufacturing Companies in the future.

Employed Inventors are often paid a bonus for each patent filed in their name. This can lead to contests to see who can file the silliest patent, and rather large bonuses for patents of dubious usefulness.

The General Public want to be able to buy useful products at a reasonable price.

Last but not least, the U. S. Patent Office wants lots of patents to be filed, and for that to happen they’ve got to make sure that lots of patents get issued. They also have to convince everyone that patents are valuable.

Are Patents Valuable?

That’s the $64,000.00 question, isn’t it? Let’s look at the U.S. Patent Office Stats. Or let’s look at it another way.

Year Patents Issued U.S. GNP Patent Value
2010 244341 $14,635,600,000.00 $59,898.26
2009 191927 $13,938,400,000.00 $72,623.45
2008 185224 $14,390,900,000.00 $77,694.58
2007 182899 $14,097,100,000.00 $77,075.87
2006 196405 $13,629,200,000.00 $69,393.35
2005 157718 $12,756,500,000.00 $80,881.70
2004 181299 $11,911,300,000.00 $65,699.76
2003 187012 $11,141,300,000.00 $59,575.32
2002 184374 $10,661,400,000.00 $57,824.86
2001 183969 $10,389,100,000.00 $56,472.01
2000 175979 $10,070,500,000.00 $57,225.58
1999 169085 $9,399,900,000.00 $55,592.75
1998 163142 $8,843,600,000.00 $54,207.99
1997 124069 $8,316,300,000.00 $67,029.64
1996 121696 $7,789,600,000.00 $64,008.68
1995 113834 $7,366,500,000.00 $64,712.65
1994 113587 $6,945,800,000.00 $61,149.60
1993 109746 $6,509,700,000.00 $59,316.06
1992 107394 $6,210,600,000.00 $57,830.05
1991 106696 $5,893,300,000.00 $55,234.50
1990 99077 $5,705,000,000.00 $57,581.48

Note that I’m assuming that the patent will payoff in the year of issuance to simplify the chart. Moving the payoff date to five years later has very little effect. Copies of the spreadsheet are available for download at the end of the article. Try it yourself.

In 19902 there were 99077 patents issued. The Gross National Product of the United States was $5.705 Trillion (taken from this document). That means that each patent issued that year produced only $57,581.48 worth of value, assuming that none of the patents issued in earlier years produced anything of value, and that patents were the only means of producing wealth.

I’m sure that the RIAA and the MPAA would freak out at that concept. They think that Copyright is the greatest thing since sliced bread, and the main driver of the American economy. Oh wait, that means that those patents produced less wealth. How much did they produce then?

That’s a good question. If you include the patents from earlier years which were still in force, copyrights, ideas which are now in the public domain due to the copyrights and/or patents having lapsed, and ideas which are not copyrightable or patentable, it is likely that the total amount that patents contribute to the American economy is less than 10%, or  $5,758.15.

Since patents are valid for seventeen years, if all fees are paid, and we know that the number of patents filed increased over time, let us further assume that the number of patents filed in 1990 was equal to 10% of the patents in force, and that they were therefore worth a grand total of $575.82 each.

Not all patents are created equal. U. S. Patent 5,443,036, Method of Exercising a Cat isn’t likely to bring the inventor a big payoff. However it likely brought a payoff to a patent attorney (assuming that the inventor wasn’t a patent attorney having fun).

My sometime sparring partner Gene Quinn has written about this case. Gene is upset. I think that Gene has missed the point, because he’s too close to the forest to see the trees.

Do Patents actually benefit the United States? The numbers seem to indicate that they don’t. It seems that patents are probably a drag on the economy, and that the United States would be better off closing the Patent Office.

Kind of makes you wonder why there’s such a big push on ACTA and the TPP, doesn’t it? If I can run the numbers, the U.S. Trade Office should be able to do so as well. The money just isn’t there.

Feel free to download copies of my spreadsheet in Microsoft Excel XLS Format and Opendocument Format.

Regards

Wayne Borean

Wednesday March 21, 2012

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