Specifically, it’s the misappropriation of the Alice/Mayo tests that causes confusion amongst the USPTO which decks biomedical software innovations.

The Supreme Court's Mayo/Alice framework for patent eligibility has now had time to show its effect. Few would argue that its effect has been anything but highly disruptive and destructive in a negative way so far as new technology development and commercialization are concerned. As an example, the Licensing Executives Society, a leading association for intellectual property, technology, and business development professionals, submitted comments this year to Undersecretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office Andre Iancu. In their statement, like many others in similar tune, they highlight recent Supreme Court precedent relating to patent eligibility and acknowledged that the existing framework for assessing eligibility has proven unduly difficult to implement in a consistent manner and has produced much uncertainty. They go on to state that this uncertainty has made it difficult for inventors, businesses and other stakeholders to predict what constitutes patent eligible subject matter, and to plan and invest accordingly.

Moreover, an interesting study from earlier this year focused on the fundamental question of whether the Supreme Court's new patent eligibility legal framework as outlined in Mayo/Myriad/Alice actually impacted decisions to invest in new technology development and commercialization. 197 Based on a survey of 475 venture capital and private equity investors to study the impact of the Court's eligibility cases on their firms' decisions to invest in companies developing technology, this study found that investors overwhelmingly believe patent eligibility is an important consideration when their firms decide whether to invest in companies developing technology, with 74% of investors agreeing that it is a key reason to invest or not to invest and 14% disagreeing. These results are in tune with the notion that patents are an absolutely integral part of capital investment decisions being made to develop newly emerging innovative technologies.

Moreover, investors view patent eligibility as affecting different industries to different levels and factor this into their capital investment decisions. For example, whereas the new patent eligibility laws would minimally impact decisions to invest capital in construction related technologies, the new changes make a huge impact for these venture capital and private equity firms when they view a potential investment opportunity in biotechnology, medical device and pharmaceutical industries. 198

The investors have been turning away from investing in certain innovation focused industries, such as Biotechnology and Software-driven innovations, as a direct result of the Supreme Court's recent decisions on this issue. In particular, about 200 venture capital and private equity investors indicated that the Supreme Court's recent patent eligibility laws had somewhat negative or very negative effects on their firm's existing investments, while only about 15% of these investors reported somewhat positive or very positive effects.199 33% of investors who focus on technologies reported that the new patent eligibility laws impacted their firms' investment behavior, with these investors reporting that they shifted their capital investments away from companies that were developing new software or new technology related to biotechnology, medical device, and pharmaceutical industries.200 This 2019 report adds to the data emerging regarding how the Supreme Court's recent decisions on patent eligibility are harming the innovation economy in the U.S.

It is clear from their statement and other similar statements made by no less than the current acting Director of the USPTO that this Mayo/Myriad/Alice test is damaging technological innovation and economic competitiveness by giving very significant reason to pause for decision makers wishing to take risks and invest to develop new emerging technologies, fearful of the fact that the Mayo/Myriad/Alice framework is a sign of weak patent protection.

B. Effect on the Biopharmaceutical and Software Industries

1. Invalidation of Patents Under the Expansive Section 101 Regime Harms Patients and Increases Costs

Since the Alice decision, patent claims that have included software have faced a much higher barrier for receiving patents than other fields. Unfortunately, this has stymied the development of specialized software, such as artificial intelligence (Al). The practical results of which have been that innovation goes where it has the best chance to grow. For example, it should be warning to law and policy makers that Chinese Al start-ups are now, three years after the Supreme Court's Alice decision, receiving more funding than U.S. Al start-ups. According to a review published in 2018 by MIT Technology Review, of the $15.2 billion invested in AI startups globally in 2017, 48 percent went to China and just 38 percent to America. The US is starting to lose out in capital investments in software driven industries, such as artificial intelligence, highlighted by the fact that while the U.S. accounted for 77 percent of such investment before the Alice decision, that investment fell to 50 percent three years after the Alice decision.

In another recent study, published in 2019, surveying close to 500 venture capital and private equity firms about how their investment decisions in new technologies changed since the new Supreme Court created patent eligibility laws came into effect, has provided critical data for an evidence-based evaluation of how the havoc caused by the Supreme Court has affected investments in new technology development.20 1 Professor Taylor makes a compelling evidence-based argument, highlighting the negative impact of the Supreme Court's recent patent eligibility cases, namely Mayo! Myriad/Alice, has had on capital investment, and especially so on investment decisions being made on emerging innovative new technologies in the biotechnology, medical device, and pharmaceutical industries. The study points out that these medicine related technologies, even though they are the most impactful in terms of public health, are the most impacted by reduced investments in these industries directly because of the Supreme Court's recent decisions on patent eligibility. The study also makes a point to highlight that their empirical results show that the Supreme Court's recent patent eligibility decisions have negatively impacted each and every area of technological development studied. 202

As a consequence, the results support the idea that the time has come for Congress to at least consider overturning the Supreme Court's new eligibility standard to prevent additional lost investment in technological development in the United States. Indeed, given the results of at least the two recent comprehensive surveys outlined above, it seems likely that the Supreme Court's eligibility decisions have resulted in lost investment in the life sciences that has delayed or altogether prevented the development of medicines and medical procedures. That coupled with China taking market share from the U.S. in emerging new technologies such as artificial intelligence should give pause for lawmakers to turn their attention to this pressing issue.

VI. Congress Should Abolish the Non-Statutory Exceptions to Patent Eligibility Laws

The Supreme Court has decided eight cases in the last forty years concerning the patent eligibility issue, far more than on any other patent law doctrine. It is somewhat telling that four of those eight cases have been decided in the past eight years. And yet, even after multiple attempts to do so, the Supreme Court has been unable to provide a workable standard that comports with the legislative framework. If anything, as discussed supra, the current status of how the Supreme Court views the law on patent eligibility is directly inconsistent with statutory language and intent and simply has proved to be unworkable, causing havoc in industries focused on technological innovation.

Patent office examiners, faced with no less than five sets of very detailed guidelines in as many years being issued by the USPTO in view of the ever changing legal landscape on patent eligibility and the sever uncertainty regarding patent eligibility laws, are reminded even in the guidelines issued in 2019 that 35 U.S.C. §101 is not the sole tool for determining patentability, and that 35 U.S.C. §112 , 35 U.S.C. §102, and 35 U.S.C. §103 will provide additional tools for ensuring that the claim meets the conditions for patentability. The Supreme Court has similarly made this clear in Bilski:

The § 101 patent-eligibility inquiry is only a threshold test. Even if an invention qualifies as a process, machine, manufacture, or composition of matter, in order to receive the Patent Act's protection the claimed invention must also satisfy "the conditions and requirements of this title." § 101. Those requirements include that the invention be novel, see §102, nonobvious, see § 103, and fully and particularly described, see §112.203

Yet, the Supreme Court also foresaw the possibility of ensuing mayhem on the wider patent bar and courts using section 101 not as a low hurdle threshold test, but as a lethal dispositive weapon in patent law matters. Thus, the Supreme Court advised the lower courts in Alice to "tread carefully in construing this exclusionary principle lest it swallow all of patent law"204 and in further warning two years prior in Mayo that its own judicially created exceptions to the statute have the power to destroy Congress' patent law, stating: "The Court has recognized, however, that too broad an interpretation of this exclusionary principle could eviscerate patent law. For all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas." 205

One key problem with the Supreme Court's jurisprudence on this issue is that when coming up with their Mayo/Alice framework for determining the contours of their own created exceptions to the explicit language of the 35 U.S. Code § 101 statute, neither of the Mayo nor Alice decisions addressed the legislative history of 35 U.S. Code § 101, nor the legislative text or history of the 1952 Patent Act.206

Now that nine years have passed since the Bilski decision in 2010, including three other Supreme Court cases on patent eligible subject matter, namely Mayo in 2012, Myriad in 2013 and Alice in 2014, that have actually expanded the reach of the "exclusionary principle test", we are exactly where the Supreme Court warned we could be: that is, the Supreme Court created judicial exceptions to 35 U.S.C. §101 have all but "swallowed all of patent law," and "eviscerated patent law" as the Court itself warned in both Mayo and Alice.

Faced with daunting uncertainty in this area of patent law, the lower courts and the Court of Appeals for the Federal Circuit have used these Supreme Court decisions, especially the Mayo and Alice decisions, to strike down and invalidate hundreds of U.S. patents which, as discussed supra, has damaged technological innovation and commercialization in America.