Courts foreclosing patent eligibility is gutting global economy & separation of powers – Congress should fix it

Over the past decade, though, the U.S. patent system has been put under an extensive amount of stress from all branches of the federal government. For its part, the Supreme Court is now deciding patent cases at a rate not seen for almost 100 years,8 changing the law in all aspects of the patent system. This has sown extensive uncertainty for innovators, which has undermined the reliability of patents as a guaranty that an inventor or creator will be able to rely on them to reap the fruits of their labors.

But it is far worse. The Supreme Court is now closing off the patent system to the innovations that it has long recognized as worthy of securing with patent protection. This has had a tremendously negative impact on the inventors and the companies working in the innovation industries that invest millions of dollars in creating the new products and services that drive economic growth, job creation, and higher standards of living. The Supreme Court is undermining America’s long-standing comparative advantage among world economies in securing reliable and effective patent rights for all innovators.

This Legal Memorandum addresses why Congress should act to reform the patent laws to bring back balance to the U.S. patent system in promoting the innovation that creates new jobs, grows the economy, and makes possible a flourishing society. First, it briefly describes what is a patent and what the Supreme Court has done in recent years in creating a new legal test in an area of patent law known as “patent eligibility doctrine” under a provision of the patent laws enacted by Congress. Second, it identifies the need for congressional action by surveying the incredibly high rates of invalidation of patents by courts and of rejection of patent applications under this new legal test created by the Supreme Court. The data is striking in both its magnitude and in the stark break from historical norms that these large numbers represent because this doctrine historically was rarely used in patent law. Third, Congress can act, and it has done so before. It has abrogated Supreme Court decisions to correct mistaken interpretations of its patent statutes many times in the past 200 years.9 Congress enacts the patent laws pursuant to its authorization in the Constitution, and when the courts misconstrue these laws in ways that undermine the constitutional authorization to Congress “to promote the progress of useful Arts,” it should assert its delegation of power and reclaim its constitutional mandate. Finally, it concludes by identifying what a successful legislative reform of § 101 of the Patent Act would look like, as reflected in a “discussion draft” of an amended § 101 first proposed by Senators Thom Tillis (R–NC) and Chris Coons (D–DE) in May 2019.

This is not simply a matter of ensuring the division of powers between the courts and Congress. In a global economy, research and development (R&D) investments and the venture capital financing that are the lifeblood of innovation can easily move from one country to another in search of more reliable legal security in the fruits of inventive labors. Historically, it was the U.S. that became the home to innovators and R&D financing, which was one reason for its explosive economic growth. Even with periodic upheavals in U.S. patent policy over the past two centuries, the U.S. often forged ahead when other countries hesitated in securing patents in cutting-edge discoveries and inventions, such as in biotechnology and computer software.10 Alarmingly, China and European countries are now the ones forging ahead and securing reliable and effective patents in innovation that the U.S. no longer protects due to the closing of its patent system under the Supreme Court’s new test for what counts as an invention or discovery eligible for patent protection.11