Section 101 jurisprudence renders entire industries unpatentable – like diagnostics and software

Getting Section 101 right, as PERA does, is critical. The current state of the law has profoundly and negatively impacted sectors of the American innovation economy that rely on patents and clear, reliable patent laws to incentivize their work. The deeply negative impact is well-documented through a robust body of data, empirical studies and testimonial evidence. Among other effects, the impact includes reduced investment and reduced innovation in key fields of technology like medical diagnostics, biotechnology, software, blockchain and artificial intelligence (AI). If not addressed, the result will be further harm to the health and wellbeing of Americans and broader humanity, U.S. national security, and American jobs and competitiveness. As Senator Coons stated in 2019, “Today, U.S. patent law discourages innovation in some of the most critical areas of technology.”4 And as Senator Tillis further stated in a 2019 hearing of this Subcommittee, “What we do on this subject will have major implications for every aspect of America’s innovation economy and it will determine if the United States remains the world’s leading innovator in the 21st century.”5 Many others have echoed these sentiments.

Unsurprisingly, numerous studies have shown that the Supreme Court’s changes to subject matter eligibility law through Myriad, Mayo and Alice have decreased confidence in the U.S. patent system, decreased private investment in key areas of technology that rely on patents, decreased commercialization of innovations in these areas, and created threats to America’s economic, social and national security interests. One 2022 empirical study concluded that in the four years following Mayo, venture capital investment in disease-diagnostic technologies was nearly $9.3 billion lower than it would have been without that verdict.6 A 2020 study similarly concluded that almost one-third of venture capital and private equity investors who knew about at least one of the Supreme Court’s eligibility decisions indicated that these cases caused their firms to either invest less in affected areas, or shift investments out of biotechnology, medical device, pharmaceutical and software and internet industries into other areas. Meanwhile, 62% of investors “agreed that their firms are less likely to invest” in companies developing patent-ineligible technologies “given the unavailability of patents.”7