Patent thickets have a greater negative effect on investors than eligibility concerns – empirically
Richard L. Blaylock, 2024 - partner with the law firm Pillsbury Winthrop Shaw Pittman LLP and have been a practicing intellectual property attorney since the mid-1990s. Statement Before the Subcommittee on Intellectual Property of the Committee on the Judiciary United States Senate Hearing on The Patent Eligibility Restoration Act – Restoring Clarity, Certainty, and Predictability to the U.S. Patent System, 1/24, https://www.judiciary.senate.gov/imo/media/doc/2024-01-23_-_testimony_-_blaylock.pdf //DH
Invitae’s former CEO, Dr. Sean George, testified before the Senate Judiciary Committee’s Subcommittee on Intellectual Property on the State of Patent Eligibility in America in June 2019. In his written testimony, he shared that in 2012, Invitae was turned down by hundreds of investors who said its goal to offer a comprehensive menu of the world’s medical genetic tests at lower prices would never work for one reason: the DNA patent thicket. Since the Myriad decision in 2013 eliminated that barrier, venture capital funding in genetic testing companies has ballooned. Examining the venture capital investments in companies prior to their initial public offering, the funding more than tripled three years later to a peak in 2015 at $419 million. These companies are widely respected and considered industry leaders in genomic testing: Adaptive Biotechnologies Corporation (2020-2021), CareDx, Inc. (2015-2021), Castle Biosciences, Inc. (2020-2021), Exact Sciences Corporation (2009-2021), Exagen, Inc. (20202021), Guardant Health, Inc. (2019-2021), Hologic, Inc. (2012-2020), Invitae Corporation (20152021), Myriad Genetics, Inc. (2009-2020), Natera, Inc. (2016-2021), NeoGenomics Laboratories, Inc. (2009-2021), Veracyte, Inc. (2014-2021). (Note: parentheticals indicate years for which data is provided for each company; “N.D.” means no data from any company for that year).
In the years after the Supreme Court’s decisions giving rise to the current patent eligibility jurisprudence, venture capital funding for private genetic testing companies showed similar growth. As shown below, aggregate data for BioTheranostics, Inc., Caris Life Sciences, Cernostics, Freenome, and Inivata, Inc. experienced almost a 300 fold increase.
Expanding to healthcare more broadly, venture capital investments have also increased each year since the Supreme Court decisions. It’s also increasing at a faster rate in comparison to some other sectors such as financial services.
When we examined data on research and development in the US-based diagnostics industry, we found that investment increased in the years following the Supreme Court decisions on patent eligibility. Specifically, as noted in the 10-K filings from the twelve publicly traded genetic testing companies discussed above, spending in research and development has dramatically increased since 2018.