Prof. Strandburg`s Slides

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Transcript Prof. Strandburg`s Slides

Patentable Subject Matter from
First Principles:
Insights from User Innovation
Katherine J. Strandburg
Albert B. Engelberg Professor
New York University School of Law
Begin with a Story about Physicians
and Patents in the US …
• The Ether Anesthesia Patent Controversy
(1840s – 60s)
• Cataract Surgery Patent Controversy
• Medical Diagnostic Procedures (2000s)
The Ether Anesthesia Patent Controversy
William Morton
Dentist, Scam
artist (?)
Charles Jackson
Prof, polymath,
priority disputes:
ether anesthesia
• 1846: Morton demonstrates use of ether for anesthesia
at Mass General Hospital
• Morton and Jackson obtain patent
• Jackson immediately begins to claim sole credit for the
idea (dispute continues unabated for decades)
• Morton attempts to monetize the patent: hired licensing
agents, circulated a term sheet to dentists and surgeons
• Most practitioners simply refused to pay
Invalidating the Ether Anesthesia Patent
• Morton sues New York Eye Infirmary in 1860s
– Medical community is outraged
• Court holds ether anesthesia is an unpatentable
natural phenomenon:
“Discoverer [of use of ether for anesthesia] is entitled to be
classed among the greatest benefactors of mankind [but]
neither the natural functions of an animal [nor] any useful
purposes to which it may be applied can form any essential
parts of [a patented] combination”
• Ex Parte Brinkerhoff (Patent Office, 1883)
- “methods or modes of treatment of physicians
… are not patentable”
Medical Innovation is Community Innovation
• It is “derogatory to professional character” for a
physician to hold a patent “for any surgical
instrument or medicine” 1847 AMA Code of Ethics
• 1856 AMA Committee Report:
• “[E]very real improvement in medicine … [results from]
patient and prolonged investigation, conducted by a
succession of cooperative laborers …. not the production
and property of an individual … but the legitimate fruits of
the common efforts and devotion of a venerable and
progressive calling.”
• “[N]ot until the principles of medical science had been
applied to [it], by the profession; not until the conditions of
safety … had been investigated … by the profession, did
anaesthetic etherization become a boon to humanity, or
anything else than a seductive and dangerous nostrum.”
Fast Forward to 1990s
• 1940: “unprofessional to receive remuneration from
patents … on surgical instruments, appliances, medicines,
foods, methods or procedures [or] to retard or to inhibit
research or to restrict the benefit to patients or to the public
to be derived therefrom.”
• 1954: PTO rules medical processes patentable
• 1955: “A physician may patent surgical instruments,
appliances, and medicines or copyright publications,
methods, and procedures. The use of such patents or
copyrights or the receipt of remuneration from them which
retards or inhibits research or restricts the benefits
derivable therefrom is unethical.”
• By 1970s: “A physician may patent a surgical or
diagnostic instrument he or she has discovered or
developed. The laws governing patents are based on the
sound doctrine that one is entitled to protect one’s
discovery.” Current AMA Ethical Opinion 9.09
The Cataract Surgery Patent Controversy
• Modern cataract surgery involves removing the
lens and inserting an artificial replacement
Over time, many surgeons developed and
published improvements in surgical technique
Sutureless Cataract Surgery
• Important: sutures distort lens during healing
Mike McFarland: James Gills
3/90 “inverted
1/90 sutureless
V” incision
Jack Singer
Pallin v. Singer: History Repeats Itself
1993: Pallin seeks royalties from other surgeons,
including Singer
1994: Singer fights back
• 2/94 mass mailing: “patenting [incision shape] … is
inconsistent with … the advancement of medical
science through the free and open exchange of ideas.”
• 4/94 speech at ASOS meeting: “An insidious virus
… method patents for medical and surgical procedures
… [threatens to] block the timeless way of sharing
medical and surgical knowledge and … inhibit the
interdependent free exchange of information that is the
foundation of good medical care. Other victims …
include physician autonomy, the doctor-patient
relationship, openness in medical research, and free
exchange of medical and surgical knowledge.”
1996: Pallin patent invalidated
Medical Community Rallies Against
Procedure Patents
• McFarland: “It’s hard for me to conceptualize why anybody
would want to bring this whole royalty scheme into
ophthalmology . . . . We ought to get back to trying to figure
out better ways to fix folks and to share that with our
colleagues for the benefit of the patients.”
• Byron: Surgical procedure patents = threat “of a plane
flying overseas with a potential hydrogen bomb ready to
• Physicians lobby against medical procedure patents
• 1996: Congress passes an exemption from infringement
remedies for “medical practitioners”
• 1996 AMA Ethics Opinion: “The patenting of medical
procedures poses substantial risks to the effective practice
of medicine by limiting the availability of new procedures to
patients …. Accordingly, it is unethical for physicians to
seek, secure, or enforce patents on medical procedures.”
Physician Oppose Diagnostic Method Patents
• Mayo v. Prometheus Labs (2012) (diagnostic
procedure unpatentable)
use of drug metabolite levels to adjust dosage for
efficacy and toxicity
Claims merely “inform a relevant audience about
certain [correlations]; any additional steps consist of
well understood, routine, conventional activity …”
• AMP v. Myriad Genetics (2013) (“natural” DNA
unpatentable, cDNA patentable)
genetic sequences correlated with breast cancer risk
(Note: I represented amici medical associations in Mayo)
What is Going On?
• 1800s: all patents unacceptable
• Mid-1900s: drug and device patents acceptable
Triumph of commercialization in medicine?
• 1990-200s: Surprise! medical procedure
patents still highly unacceptable
Why would physicians oppose patents on their
own innovations?
Hypothesis: Physicians are (still) user innovators
of medical procedures and diagnostics, but drug
and device innovation requires cooperation with
User Innovator Communities and Patents
• User innovator communities tend to reject
patenting (von Hippel et al) Why?
• Patents are costly:
• Inhibit information flow and cumulative progress
• Transaction costs
• User innovator communities don’t need them:
• Use is an intrinsic incentive for innovation and
for free revealing
• Communities can reward innovation with
reputation credit and avoid patent exclusivity
• Communities use norms to solve free rider
What about Patentable Subject Matter?
PSM from First Principles: When should there be
no patent for a new, useful, nonobvious invention?
 When there is a better way to incentivize that
invention! Comparative institutional analysis
 No patents where:
 Patents are particularly costly and/or
 There are other ways to solve free rider issues
When are patents especially costly?
 High transaction costs
 Broad claim scope – cumulative innovation
 Unclear claim boundaries
 Highly inter-related claims
 When are alternative systems available? ?
What about Patentable Subject Matter?
Examples Beyond Medical Procedures:
 Laws of Nature
 Costs? Highly interrelated
 Open science alternative
 Also a kind of user innovation
 Software
 Costs? Cumulative
 Open source software alternative
 Most important motivation is use
 Business methods?
 Usually also user innovation
 Note successful opposition to tax strategy
The “Second Step” Problem
• Step one: Does claim contain unpatentable
subject matter?
• i.e. patent incentives are not needed because
of alternative innovation incentive system
(“community” “knowledge commons”)
• Step two: Does the claim “apply” the
unpatentable subject matter?
• Q should be: Is a patent needed to incentivize
the application?
• i.e. Is the application something that will not
be produced by the incentive system of the
community or knowledge commons?
PSM from First Principles
• Step 1: No PSM where
– There are alternative institutions to provide
incentives to innovate and avoid deadweight
– Especially where transaction costs are
expected to be high:
• Broad claims with many downstream
• Claims with many diverse uses
• Inter-related overlapping claims (thickets)
• Step 2: PSM where the claim reflects inventive
activity that the alternative institution would not