It’s not just about innovation in general, it’s also about what can be patented in the first place.

BIO is concerned that more than nine years after the Supreme Court decided Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012), there continues to be unabated uncertainty about the patent-eligibility of many biotechnological inventions, with diagnostic and prognostic methods being particularly affected. The unstable state of patent-eligibility jurisprudence affects modern biotechnologies ranging from biomarker-assisted methods of drug treatment to companion diagnostic tests, fermentation products, industrial enzyme technology, and marker-assisted methods of plant breeding. As inventors, developers, and investors in such technologies, BIO’s members have a strong interest in clear and predictable rules of patent-eligibility.

In this submission, BIO focuses on the impact of patent-eligibility jurisprudence on the biotech industry including its ability to attract the capital investment necessary to develop products the help heal, feed, and fuel the world. Accordingly, BIO will limit its submission to the USPTO’s questions that are relevant to these issues.

3. Please explain how the current state of patent eligibility jurisprudence in the United States impacts particular technological fields, including investment and innovation in any of the following technological areas:

[…]

c. precision medicine;

d. diagnostic methods;

e. pharmaceutical treatments;

Research and development within the biotechnology industry is time and capital intensive. The likelihood of failure is significantly higher than of success. The typical BIO member company does not have a product on the market yet, nor a source of revenue. The biotechnology industry provides employment to over 1.5 million individuals nationwide, and private and corporate biomedical research spending now approaches $70 billion annually. Virtually all of this investment is through private funding.1 Developing a single therapy requires an average investment ranging from $1.2 billion to over $2 billion, and the clinical testing period alone consumes more than 8 years on average.2

The biotechnology industry’s ability to develop and deliver precision medicine, pharmaceutical treatments, and diagnostics to patients has been jeopardized by the uncertainty and doctrinal drift in the area of subject matter eligibility. The past decade has seen an unprecedented expansion of common-law exceptions to patentability. All indications are that these exceptions are still expanding, with courts struggling to identify any outer boundaries in the Supreme Court’s caselaw. Businesses must rationally assume that patents that are validly issued today can “become” invalid over time, because new creative applications of judicial exceptions may lurk only an appellate decision or two in the future. Nothing could be worse for investment in innovation than changing the rules of patentability after the fact in this way, after large investments have been made in reliance on properly examined and issued patents. If courts continue their current practice of construing judicial exceptions unmoored from the provisions of the Patent Act, without being able to genuinely explain the doctrinal origins of these exceptions or even clearly articulating the policies that are to be achieved, it is no exaggeration to say that investment in biotech innovation will sooner or later be negatively affected. By the time we understand the impact on new tests and treatments that may only become available a decade from now, it will be too late.

The ability of innovators to patent diagnostic claims, for example, has been decimated by judicial developments in the area of patent-eligibility. As Chief Judge Moore of the United States Court of Appeals for the Federal Circuit noted in 2019, “[s]ince Mayo, we have held every single diagnostic claim in every case before us ineligible” (citing Cleveland Clinic Found. v. True Health Diagnostics LLC, 760 F. App’x 1013 (Fed. Cir. 2019) (“Cleveland Clinic II”); Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC, 915 F.3d 743 (Fed. Cir. 2019); Roche Molecular Sys., Inc. v. CEPHEID, 905 F.3d 1363 (Fed. Cir. 2018); Cleveland Clinic Found. v. True Health Diagnostics LLC, 859 F.3d 1352 (Fed. Cir. 2017) (“Cleveland Clinic I”); Genetic Techs. Ltd. v. Merial L.L.C., 818 F.3d 1369 (Fed. Cir. 2016); Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir. 2015); In re BRCA1- and BRCA2-Based Hereditary Cancer Test Patent Litig., 774 F.3d 755 (Fed. Cir. 2014); PerkinElmer, Inc. v. Intema Ltd., 496 F. App’x 65 (Fed. Cir. 2012)).

Given that a diagnostics company – if it is even so lucky as to obtain a patent from the USPTO – can reasonably expect to have its patent invalidated in court, it is hard to imagine how investment in this space can continue. In vitro diagnostics and radiopharmaceutical diagnostics take on average 7-10 years and 7-9 years, respectively, to go from invention to market.3 And the costs associated with research and development through market introduction can range from around 20 million for follow-on diagnostic products to over 100 million for new platforms or tests involving a new biomarker.4 Without the ability to protect these diagnostic tools once introduced into the market, large sustained investment in this area may not be maintained and, consequently, innovation will diminish. Already, business analysts are characterizing the in vitro diagnostics (IVD) industry as being dominated by a small number of key players, consolidation, and lackluster levels of investment. Between 2016-2019, the IVD industry received only about 3% of all biomedical venture dollars. And the COVID pandemic has brought to light what has been described as a lack of recent innovation.5 Emerging evidence shows that Myriad, Mayo, and their progeny have caused the development of molecular tests to be abandoned, have interfered with the ability of small developers to enter into development partnerships, and are driving a pivot to trade secrecy rather than patenting and publication.6