by Sandra S. Park, Senior Staff Attorney, ACLU Women’s Rights Project
* This post originally appeared at the ACLU's Free Future.
Last April, during the Supreme Court oral arguments in our case challenging patents on human genes, Justice Kagan remarked, “The PTO seems very patent happy.” Her comment, and the unanimous decision invalidating gene patents, clearly expressed the Court’s concern that the Patent Office is overstepping its authority by approving patents that thwart, rather than foster, scientific inquiry and progress.
The Supreme Court will soon re-visit whether the Patent Office has gone too far in granting exclusive rights to what should properly remain in the commons. In the next few months, it will rule in Alice Corp. Pty. Ltd. v. CLS Bank International, a software patent case that completely divided the U.S. Court of Appeals for the Federal Circuit and is sparking controversy in the tech world. Alice follows three recent decisions—with the gene patents case being the last—issued by the Court reaffirming the longstanding principle that the Patent Act does not permit patents on products of nature, laws of nature, and abstract ideas. Patents on abstract ideas are especially likely to raise First Amendment problems, as the First Amendment protects freedom of speech and thought.
The case involves patents on a method for addressing the risk that one party might back out of a deal after the other one has already paid. You can read about the details of the patents here, but the steps of Alice’s patented method essentially call for a third party to keep track of financial transactions between two parties and then to instruct another institution to adjust the two parties’ accounts accordingly at the end of the day. It’s simple enough to imagine carrying out this process using pencil and paper to add up the transactions and a phone to communicate the account adjustment, but Alice’s patents claim any computer implementation of this process. That means Alice has a monopoly on any software or hardware that performs this way of using a third party to address settlement risk, even when Alice has not created the programming code or designed the computer that has this capability.
by Orly Lobel, Don Weckstein Professor of Labor and Employment Law, University of San Diego School of Law
Under the radar, the monopolization of knowledge has expanded far beyond the bargain struck in Article I, Section 8 of the Constitution. The enumerated powers of Congress permit the legislature to secure “to Authors and Inventors the exclusive Right to their respective Writings and Discoveries” for a limited time “to promote the Progress of Science and useful Art.” Thomas Jefferson described the act of delineating the appropriate scope of intellectual property rights as “drawing a line between the things which are worth to the public the embarrassment of an exclusive patent, and those which are not.” Talent Wants to Be Free: Why We Should Learn to Love Leaks, Raids, and Free-Riding argues that Jefferson’s embarrassment extends beyond ownership over creations of the mind. Moreover, it extends beyond the exercise of public authority contemplated by the Constitution, and into private conduct that can exacerbate the tension Jefferson identified. The embarrassment reveals itself in full force when we focus our attention on the ways we regulate human capital – people themselves, their skills and knowledge, the social connections and the creative capacities and inventive potential that flow through the market.
Beyond our intellectual property wars, beyond the heated debates about the proper scope of patents and copyright, we’re confronting a surge in the monopolization of human potential for creativity and invention. The past decade has seen a wild expansion of business practices which attempt to control the mobility of talent and secrets. Companies big and small are using non-compete contracts, trade secret and non-disclosure agreements, prohibitions on poaching and soliciting of customers and co-workers, and the preclusion of employee ownership of patents and copyright. Take for example David Neelman, the founder of JetBlue, who was compelled to sit on imaginative ideas that would revolutionize the airline industry for five years because he had signed a non-compete with former employer Southwest. Or Nobel laureate and former Yale University professor, 87 year old John Fenn, who was sued by Yale over his patent on a method he had invented to evaluate new drugs, including the development of innovative AIDS medication in the mid-1990s. Ironically, these pervasive business practices frequently have a counter-productive effect not only on the public and employees, but also on businesses themselves.
Talent Wants to Be Free looks at how we fight over knowledge and talent in every industry, profession, and region, and considers the right balances of secrecy & sharing, carrots & sticks and freedoms & controls. We have vigorous debates about immigration reform, the patent system, labor unions and health care – all of which bear on how people and organizations innovate – but when we look at our core strategies on human capital, we’re losing out on rich potential, creativity, and drive. When it comes to fighting the war over talent, most of us react emotionally and territorially. But these are exciting times: there is fascinating new evidence from economics, psychology, sociology, management and law that reveal a vision of how to better wage the talent wars. Through interdisciplinary empirical research and insight from the industry leaders, the book reveals that more frequently than we have come to believe, corporations, individuals, industries and regions benefit more when talent is not subject to monopoly control.
Yesterday, a unanimous Supreme Court strongly reaffirmed a principle that has existed in our case law for over 150 years: laws of nature, natural phenomena and abstract ideas cannot be patented. This principle may seem obvious, but companies have sidestepped it for years by cleverly drafting applications that pass muster with the patent office.
The decision in Mayo Collaborative Services v. Prometheus Labs. involved patents on methods of correlating blood test results and drug toxicity. The Court found them invalid because the patents do nothing more than claim a law of nature -- how a patient reacts to a drug.
The ACLU filed an amicus brief in the case, arguing that these patents improperly prevent physicians from considering whether to change a patient’s treatment in light of blood test results and therefore violate patent law and the First Amendment, which protects scientific thought. Prometheus’ monopoly allowed it to sue when Mayo wanted to develop and use its own test for determining whether a patient was responding well to a drug.
The U.S. patent and trademark system depends on the dissemination of value-added information. Such dissemination can best be achieved by a public-private partnership that takes advantage of the core strengths of private sector publishers and government. Specifically, a competitive private sector patent and trademark information industry complemented by the U.S. Patent and Trademark Office (USPTO) provides the optimal approach for meeting the broad range of user needs -- from specialists to the general public. The following principles are critical to ensuring the highest quality and integrity of the U.S. patent and trademark system.
Policies Should Encourage a Diversity of Sources for Patent Information
The concept of “a diversity of sources” has special applicability to patent information. Each area of technology benefits from different types of search tools to achieve optimal results. There are many types of uses of patent information, and there are many types of users in addition to those who conduct searches for patentability, infringement, validity, etc. Such users include researchers, business intelligence analysts, financial analysts and technology specialists. If there is only one source -- the USPTO -- all of this diversity is lost, and consumers will suffer. And yet, this is what can happen if the USPTO does not consciously take into account this principle when they are making decisions about what patent services it is going to provide and at what cost.
Last week, the Congress passed the most comprehensive patent reform in the U.S. in over 50 years. Just hours before President Obama gave his jobs speech, the U.S. Senate passed H.R. 1249 by a vote of 89 to 9, clearing the bill for the president’s signature. The bill’s title is the Leahy-Smith America Invents Act, and it will help promote American innovation, thereby creating additional jobs in this country and, hopefully, enhance the economy.
Passage of the America Invents Act is the culmination of more than a decade of efforts of innovators and public policy makers. Several of the provisions implement recommendations made by the Federal Trade Commission in 2003 and the National Academy of Sciences in 2004. Congress worked on this bill from the 108th – 112th congressional sessions, holding dozens of hearings and engaging in extensive debate.
Some of the key features of the final legislation include:
Transitioning to a first-inventor-to-file system, harmonizing the U.S. patent system with the rest of the world;
Replacing the costly interference proceedings with derivation proceedings to determine the right to a patent;
Updating and improving the inventor’s oath/declaration;
Authorizing pre-issuance submissions by third parties prior to the grant of a patent to aid patent examiners and improve patent quality;
Creation of a new, first-window post-grant review process to improve patent quality;
Improving the current inter partes system by heightening the threshold for instituting a review, making it more difficult to use the process to harass a patent owner;
Creation of a new supplemental examination proceeding to incentivize patent owners to commercialize their inventions despite potential flaws in the application process;
Making failure to disclose the best mode no longer a basis for invalidity;
Eliminating harassing false marking lawsuits, and addressing recent holdings that the current statute is unconstitutional; and
Providing for a 15 percent increase in Patent and Trademark Office (PTO) fees that will take effect 10 days after enactment of the bill so the agency can have a quick infusion of desperately needed resources.
It is not a perfect bill. Most notably, it does not guarantee the PTO stable, future funding and does not require that the agency be able to utilize all of its user fee collections. By definition, however, a “perfect” bill is one that has no chance of ever becoming law in this country of diverse opinion and representational government.