The Supreme Court's Devaluation of U.S. Patents

Decisions that Have Diminished the Scope of Patentable Subject Matter

One way in which the Supreme Court has weakened patent rights since 2006 has been by deciding five patent cases in a manner that reduces the range of potentially patentable subject matter, first by making it easier to invalidate (or deny) a patent claim as obvious, and then by raising the bar for patent eligibility.

The first decision in this category was KSR v. Teleflex, decided in 2007 and addressing the standard for establishing the obviousness of a patent claim under 35 U.S.C. § 103. ² Prior to KSR, the Federal Circuit established and strictly enforced what became known as the teaching, suggestion, or motivation (TSM) test, a doctrinal innovation designed to guard against the danger of hindsight bias, i.e., the tendency of even the most significant inventions to appear obvious when viewed in hindsight. In the decision below, the Federal Circuit reversed a district court's finding on summary judgment that a relatively simple mechanical invention was obvious, based on the court's determination that the district court judge had not adequately articulated where in the prior art one could find the teaching, suggestion, or motivation to combine the references of record to arrive at the patented invention. The Supreme Court reversed, chastising the court for applying TSM too strictly, in a manner that seemed to require the prior art to explicitly suggest the combination of references needed to arrive at the claimed invention. In fact, prior to KSR it was already well established by Federal Circuit precedent that the motivation to combine references could be implicit, so arguably, KSR did not substantively change the obviousness standard, but simply reiterated the existing standard and overturned a panel's decision that had misapplied that standard.

Nonetheless, as a practical matter, KSR made it substantially more difficult for patent applicants to obtain allowance of claims from the Patent and Trademark Office (PTO), and made it easier for patent challengers to invalidate issued patent claims in the courts and before the Patent Trial and Appeal Board (PTAB). In response to KSR, the PTO issued new guidance for patent examiners, which set forth multiple rationales that would support a conclusion of obviousness post-KSR, irrespective of TSM, such as a finding that the claimed invention employs “known methods” for combining prior art elements to yield predictable results, or that the invention involves “simple substitution of one known element for another to obtain predictable results,” or applies “known techniques” to a known device ready for improvement to yield predictable results, or, of particular significance to many biotechnology and pharmaceutical inventions, that the invention was “obvious to try.” ³ As noted by Janice Mueller in her excellent patent law treatise, KSR “expand[ed] the universe of sources from which a TSM may be derived.” Many would argue that KSR has rendered the obviousness inquiry much more subjective, and emboldened patent examiners and lower courts to reject and invalidate claims without objectively articulating a TSM for the invention in the prior art. Anecdotally, patent prosecutors report that they have experienced much more difficulty overcoming obviousness rejections in the post-KSR world.

With respect to biotechnology inventions in particular, the Federal Circuit had, prior to KSR, established a relatively permissive obviousness standard, most significantly in the court's 1995 In re Deuel decision. In Deuel, the court explicitly held that the mere fact that an invention would have been “obvious to try” is not in itself sufficient to constitute obviousness. ⁴ KSR explicitly overruled this aspect of Deuel, holding that under certain circumstances, a determination that an invention would have been obvious to try can be sufficient to rule it legally obvious. The Federal Circuit subsequently overruled Deuel in In re Kubin, replacing it with a substantially stricter obviousness standard for biotechnology inventions. ⁵ Pharmaceutical inventions based on identifying a particularly safe and effective drug product or method from a field of potential candidates are now particularly vulnerable to invalidation under the relatively subjective “obvious to try” standard.

While KSR has undoubtedly had some negative impact on the range of patentable subject matter in biotechnology, it has been overshadowed by the Court's subsequent obsession with the patent eligibility doctrine, reflected in four cases decided between 2010–2014 that have substantially raised the patent eligibility bar in certain areas of invention: Bilski, Mayo, Myriad, and Alice. ⁶ Biotechnology, and molecular diagnostics in particular, have been in the crosshairs of this reinvigorated judge-made doctrine from the beginning, and inventions based on natural products are also particularly vulnerable under the new patent eligibility jurisprudence. The two explicitly biotechnology-focused patent eligibility decisions, Mayo and Myriad, have been the subject of multiple Holman Reports over the last few years, so I will not belabor the point here. It bears noting, however, that the American Bar Association (ABA), the American Intellectual Property Law Association (AIPLA), and the Intellectual Property Owners Association (IPO) have all drafted and circulated proposed amendments to 35 U.S.C. § 101 that would to varying degrees overrule the Supreme Court's patent eligibility decisions and largely reestablish the standard for patent eligibility as it was understood prior to Bilski. ⁷ Any of these proposals, if adopted, would substantially improve the patent eligibility landscape for biotechnology innovators.

Nautilus Has Rendered it More Difficult to Claim a Patentable Invention's Full Scope

Not only has the Supreme Court reduced the range of potentially patentable subject matter, it has also imposed a more stringent standard for assessing whether a patent applicant has delineated the scope of a claimed invention with sufficient clarity. Previously, the Federal Circuit, cognizant of the inherent limitations of language, particularly when it comes to subject matter that is by definition novel, had established a relatively permissive standard for compliance with patent law's definiteness requirement. Pursuant to the standard, a claim would be found to satisfy the definiteness requirement so long as it is “amenable to construction,” and not “insolubly ambiguous” under this construction. ⁸ In Nautilus v. Biosig, decided in 2014, the Supreme Court overturned the Federal Circuit's “insolubly ambiguous” standard and replaced it with the more stringent “reasonable certainty” standard, pursuant to which a patent is invalid for indefiniteness if its claims, read in light of the specification and the prosecution history, fail to inform those skilled in the art of the scope of the invention to a reasonable degree of certainty. ⁹

The heightened Nautilus standard will in some cases render it more difficult for a biotechnology inventor to secure adequate protection for the full scope of subject matter to which that an inventor should be entitled. In Nautilus, the Court explicitly acknowledged that by raising the bar, it had reduced the incentive for innovation, but found that the improved public notice function of more-clearly defined patent claims would outweigh this cost.

Enzo Biochem v. Applera, decided a few years prior to Nautilus, provides an example of the sort of claim which could be susceptible to invalidation under the newly heightened definiteness standard. ¹⁰ The claims at issue in Enzo, directed to various techniques for labeling and detecting nucleic acids such as DNA and RNA, included the phrase “not interfering substantially,” e.g., “not interfering substantially with hybridization” or “not interfering substantially with detection.” The district court held that the “not interfering substantially” language is indefinite because “[t]he specifications neither set forth how one would gauge substantial interference, nor delimit the threshold at which interference with the procedure prevents [the claimed] method from being implemented.” On appeal, the Federal Circuit reversed, finding the claims sufficiently definite under the pre-Nautilus standard. Under the Supreme Court's new standard, however, the outcome could have been different, particularly given the deferential “clear error” standard of review applicable to a district court's determination of a question of definiteness.

Decisions that Have Limited the Scope of the Patent Right

Not only has the Supreme Court reined in the range of potentially patentable subject matter, it has also issued several decisions tending to degrade the scope of the patent right in multiple dimensions. While these decisions do not impact the availability of patent protection, they do incrementally devalue the patent right, and in so doing weaken the ability of patents to incentivize investment in innovation.

Perhaps the most significant development in this regard has been the Court's substantial expansion and reinvigoration of the doctrine of patent exhaustion. Patent exhaustion is closely related to copyright's first-sale doctrine; both serve to extinguish intellectual property (IP) rights with respect to a product that has been the subject of an authorized sale. But while copyright's first-sale doctrine is statutory, explicitly set forth in § 109(a) of the Copyright Act, ¹¹ patent exhaustion is purely a creation of the courts, originating in a series of Supreme Court decisions dating back to the nineteenth century. Until recently, the Federal Circuit interpreted and applied the Supreme Court' patent exhaustion precedent in a manner that treated it more as a presumption against post-sale enforcement of patent rights than an absolute prohibition. In particular, the two leading Federal Circuit decisions circumscribing the role of patent exhaustion, Mallinckrodt and Jazz Photo, held that patent exhaustion does not apply with respect to certain conditional sales, and extraterritorial sales, respectively.

In Mallinckrodt v. Medipart, decided in 1992, the Federal Circuit held that a patent owner can impose restrictions on the use, reuse, and/or resale of a patented article that has been the subject of an authorized sale, and enforce those restrictions through a patent infringement action, so long as the restrictions are clearly communicated to the purchaser and “within the scope of the patent grant or otherwise justified.” ¹² In Mallinckrodt, for example, the patent owner authorized the sale of medical devices labeled “For Single Patient Use Only,” and the court held that the authorized sale did not exhaust the patent owner's right to pursue a patent infringement action against a company that refurbished and resold used devices obtained from hospitals in violation of this restriction. Conditional sales of this type are not uncommon in biotechnology, such as sales that explicitly limit use of a patented product to “experimental use.” As a condition of sale, the purchaser is required to agree not to use the product in a manner that exceeds the bounds of limitation, e.g., to use an “experimental use only” product as a component in a commercial product, such as a diagnostic test kit. The Mallinckrodt rule was significant, since it allowed a patent owner to enforce the limitation through a patent infringement lawsuit, which might be the only recourse against a third party that has not entered into a contractual relationship with the patent owner, i.e., in a case where privity is lacking. In Mallinckrodt, for example, the court noted (without deciding) that the patent owner might not have been able to enforce the restriction against the refurbishing company, since it was the hospitals that purchased the medical device originally and had agreed to the non-reuse condition, not the refurbishing company.

In Jazz Photo Corp. v. International Trade Comm'n, decided in 2001, the Federal Circuit held that a U.S. patentee, merely by selling or authorizing the sale of a U.S.-patented article abroad, does not thereby authorize the buyer to import the article and sell or use it in the United States without the patentee's permission. ¹³ In Jazz Photo, the allegation of patent infringement was based upon the accused infringer's practice of obtaining used “single use cameras,” refurbishing them through various overseas facilities, and importing the refurbished cameras into the U.S. for sale. The court held that patent exhaustion only applies to sales that occur within the United States, and that the exhaustion of U.S. patent rights is not triggered by the “patentee's authorization of an international sale.” In subsequent decisions, the Federal Circuit explicitly clarified that while an authorized foreign sale of a U.S.-patented article “does not, standing alone, confer on the buyer ‘authority’ to import the item into the United States or to sell and use it in the United States, [Jazz Photo had] “not curtailed the ability of an accused infringer to show that the patentee conferred such authority by words or implications,” i.e., an express or implied license might be found based on the circumstances of particular foreign sales. ¹⁴

In 2008 and 2013, the Supreme Court issued two decisions that called into question the continuing vitality of the Federal Circuit's patent exhaustion jurisprudence, and the Mallinckrodt and Jazz Photo holdings in particular. In Quanta Computer v. LG Electronics, decided in 2008, the Court held that “the initial authorized sale of a patented item terminates all patent rights to that item.” ¹⁵ While the language of Quanta might appear unambiguous on its face, the decision never mentions Mallinckrodt or the Federal Circuit's permissive stance on conditional sales, and did not explicitly overrule earlier Supreme Court precedent that seemed to allow some room for a patent owner to employ patent law to enforce the terms of a conditional sale. In 2013, the Court held in Kirtsaeng v. John Wiley & Sons that the first sale doctrine, as codified in the Copyright Act, applies to copies of copyrighted works lawfully made abroad. ¹⁶ It was not clear what, if any, relevance Kirtsaeng had to Jazz Photo and the doctrine of patent exhaustion, given that the Court's holding was based explicitly on provisions of the Copyright Act that find no counterpart in the Patent Act.

Indeed, in a 2016 decision, a divided en banc Federal Circuit held that Mallinckrodt and Jazz Photo had survived Quanta and Kirtsaeng. ¹⁷ The majority found that Quanta had not been on point, because the case did not involve sales made by a patentee (instead they were made by a licensee), and there were no restrictions on the sales made by the licensee; thus, the “two main issues decided by the Court in Quanta have no bearing on the issue of restricted sales by a patentee.” Judges Dyk and Hughes issued a dissenting opinion, agreeing with the district court below “that Quanta overruled Mallinckrodt sub silentio.” On the question of international exhaustion, all of the Federal Circuit judges agreed that the Supreme Court's decision in Kirtsaeng did not undermine the no-exhaustion conclusion of Jazz Photo, holding that for “various reasons, [Kirtsaeng] does not answer the question presented under the Patent Act. [That decision] says nothing about patent law; and it does not address, even in the context of copyright law, the exhaustion question presented by the Patent Act.”

The Federal Circuit's en banc reaffirmation of Mallinkrodt and Jazz Photo was to be short-lived. On appeal, the Supreme Court in Impression Products v. Lexmark overturned the Federal Circuit on both issues, holding, in effect, that Quanta means what it says; a patentee's sale of a patented article “terminates all patent rights to that item.” ¹⁸ In view of this termination of patent rights, the patent owner in Impression Products was disallowed from its attempt to enforce a single-use/no-resale limitation imposed on purchasers of inkjet cartridges. The Court noted that whatever rights the patent owner retained “are a matter of the contract with his purchasers, not patent law.” According to the Supreme Court, the Federal Circuit reached a different result largely because it had mistakenly interpreted exhaustion as a default rule presumptively granting a purchaser unfettered right to use and resell a patented article, but subject to a patentee's right to expressly withhold certain rights, such as the ability to resell the item. Rather than a presumption about the authority that comes along with the sale, the Supreme Court found that patent exhaustion is an absolute limit on the scope of the patentee's rights. As a result, authorized sale transfers the right to use, sell, or import a patented item “because those are the rights that come along with ownership, and the buyer is free and clear of an infringement lawsuit because there is no exclusionary right left to enforce.”

Impression Products gave short shrift to Jazz Photo's carve-out of foreign sales from the principle of patent exhaustion, citing Kirtsaeng's refusal to exclude foreign sales from copyright's first-sale doctrine and the “historic kinship between patent law and copyright law.” The Court held that “differentiating the patent exhaustion and copyright first-sale doctrine would make little theoretical or practical sense: The two share a strong similarity and identity of purpose.” In a short but pointed dissent, however, Justice Ginsburg pointed out (quite correctly in my view) that Kirtsaeng should bear little weight in the patent context, since although there may be a “historical kinship” between patent law and copyright law, the two “are not identical twins,” and more specifically the Patent Act contains no analogue to 17 U.S.C. § 109(a), the Copyright Act first-sale provision that was pivotal in the Court's resolution of the issue in Kirtsaeng.

Unfortunately, the Impression Products majority was not persuaded by an amicus brief filed by the Biotechnology Innovation Organization (BIO) and CropLife International setting forth the potential negative impact on biotechnology, and agricultural biotechnology in particular, of a patent exhaustion doctrine bereft of the Federal Circuit's carve-outs for conditional and extraterritorial sales. ¹⁹ Their brief warns that mandatory exhaustion of patent rights by foreign sales will preclude innovators from selling patented biotechnology products, including life-saving therapies and innovative bioagricultural products, internationally at locally driven market prices, particularly in developing countries. The amici further explained that “market-specific prices [allow patent owners to] account for factors such as the relative value of intellectual property rights in different markets, local demand, wealth distribution, price regulation, local manufacturing requirements, compulsory licensing practices, and special imposts and tariffs.”

The brief also makes a strong case for the importance of conditional sales to the biotechnology industry, characterizing them as an integral part of bioagricultural and agrichemical product stewardship programs that “impose conditions of use on products such as seed, herbicides, and insecticides that are intended to protect the health of farmers and the environment.” The amici further explained that conditional sales permit buyers and sellers of a patented product to negotiate use of a portion of the patent right at a price reflecting the buyer's intended specific use; for example, prior to Impression Products, biotechnology companies have routinely provided patented products, subject to research-only use restrictions, at a price lower than that of a commercial-use sale in order to further basic research and innovation. Their brief foretells that without the ability to invoke patent law to prevent unauthorized uses beyond the scope of a conditional sale, these products will only be offered at “uniform, higher prices, effectively eliminating access for limited commercial uses (e.g., veterinary use), diagnostic uses, or purely non-commercial, research uses—including by universities and other research institutions.”

In another pair of related decisions, Microsoft v. AT&T ²⁰ and LifeTech v. Promega, ²¹ the Court limited the range of infringing conduct under 35 U.S.C. § 271(f), again incrementally reducing the value of patents, including certain patents of particular relevance to biotechnology. Section 271(f) creates an important exception to the “general rule under United States patent law that no infringement occurs when a patented product is made and sold in another country,” ²² by creating liability under certain circumstances for a party that supplies a component or components of a patented invention from the United States in a manner that induces or contributes to the use of the components in the manufacture of a U.S. patented product outside the geographic boundaries of the United States. ²³

In Microsoft, decided in 2007, the Court interpreted the term “component” as it appears in § 271(f) in a relatively narrow manner which excludes a copy of a computer program so long as the physical copying of the program occurred outside the U.S., even if the computer program itself originated in the U.S. and even if supplying a copy of the program produced in the U.S. would constitute infringement under § 271(f). Microsoft thus allows a would-be infringer to avoid liability under § 271(f) by the often-simple expedient of exporting code embodying a computer program produced in the United States and using the exported code as a template for generating copies outside the U.S., then incorporating those copies into an otherwise infringing product. As described in a previous Holman Report, Microsoft has implications extending beyond software, and for biotechnology patentees in particular, since it would appear to sanction avoidance of infringement liability by means of replicating a DNA-based component of a patented invention outside the U.S.

Ten years later, the Court issued its decision in LifeTech, another case establishing a relatively narrow interpretation of liability under § 271(f). In LifeTech, the patent at issue involved a biotechnology invention, more specifically a polymerase chain reaction (PCR)–based method of genetic testing, and the question addressed was “whether a party that supplies a single component of a multi-component invention for manufacture abroad can be held liable for inducing infringement under § 271(f)(1).” A unanimous Court answered the question in the negative, holding that “a single component does not constitute a substantial portion of the components that can give rise to liability under Section 271(f)(1).” ²⁴ In doing so, the Court overturned the district court's and the Federal Circuit's decisions below which had found that the component at issue, Taq polymerase, constituted such an important and critical component of the patented invention that its supply from the United States for combination abroad with other components of the patented test could be the basis for liability under § 271(f).

The potential negative impact of LifeTech on patent owners was laid out in amicus briefs filed by AIPLA ²⁵ and IPO, ²⁶ organizations representing patent lawyers and patent owners, respectively. In the view of AIPLA, the determination of whether a party has supplied a “substantial portion of the components of the patented invention” should involve consideration of the significance of the supplied component(s) based on principles of claim construction. In particular, AIPLA argued that the best guide to whether a particular component rises to the qualitative standard of a “substantial portion of the components of a patented invention” is an analysis of the claimed invention in view of the patent specification. The Wisconsin Alumni Research Foundation (WARF), which functions as the technology transfer arm of the University of Wisconsin–Madison, also filed an amicus brief arguing that to require as a matter of law the supply of more than one component to trigger § 271(f)(1) would weaken patent rights, and thus reduce the perceived ability of patents to protect investments intellectual property, which would in turn negatively affect university research and the technology transfer sector. ²⁷

In Kimble v. Marvel, decided in 2015, while the Supreme Court did not change the law in a way that devalues patents, it did decline an invitation to overrule a 1964 decision that has had that effect, Brulotte v. Thys Co. ²⁸ In Brulotte, the Court held that a patent holder cannot charge royalties for use of his invention after the patent term has expired. ²⁹ This is entirely judge-made law, finding no explicit bases in the statute, and today many would argue that it reflects a fundamental misunderstanding of economics. As noted by Justices Alito and Thomas in their dissent, in the 50 years since Brulotte was decided, its reasoning has been “soundly refuted.” ³⁰

Nonetheless, while acknowledging the shaky underpinnings of Brulotte, the majority refused to overrule it, based primarily on principles of stare decisis. The Court characterized stare decisis, i.e., the idea that today's Court should stand by yesterday's decisions, as “a foundation stone of the rule of law.” According to the majority, application of stare decisis:

is the preferred course because it promotes the evenhanded, predictable, and consistent development of legal principles, fosters reliance on judicial decisions, and contributes to the actual and perceived integrity of the judicial process. It also reduces incentives for challenging settled precedents, saving parties and courts the expense of endless relitigation. Respecting stare decisis means sticking to some wrong decisions. The doctrine rests on the idea, as Justice Brandeis famously wrote, that it is usually “more important that the applicable rule of law be settled than that it be settled right. ³¹

The majority did not dispute that would-be licensors and licensees could benefit from post-patent royalty arrangements because they allow for a longer payment period and a more-precise allocation of risk, and recognized that post-patent royalties are sometimes not anticompetitive. However, it was not convinced that barring them imposes any meaningful drag on innovation. According to the majority:

Brulotte leaves open various ways—involving both licensing and other business arrangements—to accomplish payment deferral and risk-spreading alike. Those alternatives may not offer the parties the precise set of benefits and obligations they would prefer. But they might still suffice to bring patent holders and product developers together and ensure that inventions get to the public. ³²

One of the amici in Kimble, a biotechnology company called BioTime, Inc., took strong issue with the majority's assumption that the Brulotte rule does not unduly burden innovators and innovation. ³³ BioTime's business involves the commercialization of tools for regenerative medicine. For example, the company has developed a large bank of National Institutes of Health (NIH)–approved clinical grade stem cell lines, created using technologies developed and patented by BioTime or licensed from others. Although patent licenses are fundamental to BioTime's primary business activities, patents are not the company's only valuable intellectual property. BioTime and its subsidiaries also hold trade secrets and know-how for the effective maintenance and use of the stem cell lines, along with an extensive set of data related to the stem cell lines.

In its brief, BioTime explained that licenses to the company's intellectual property nearly always include both patent and non-patent (e.g., know-how or data) rights, and that this is typical and representative of many other companies that supply basic tools for modern medical research. The brief explains that for companies involved with such “hybrid” licenses, the per se rule under Brulotte adds complexity and imposes significant transaction costs to licensing activity, the natural consequence of which is a decline in the number of transactions. Unfortunately, in view of Kimble, companies like BioTime will have to look to Congress for relief from the unnecessary burdens associated with compliance with Brulotte.

In Global-Tech Appliances v. SEB S.A, decided in 2011, the Supreme Court devalued patents by making it more difficult for a patent owner to establish liability for induced infringement under 35 U.S.C. § 271(b). Earlier, in a 2006 en banc decision, the Federal Circuit had held that in order to establish induced infringement “the plaintiff must show that the alleged infringer knew or should have known that his actions would induce actual infringements.” ³⁴ Global-Tech Appliances raised the bar by holding that “should have known” is not enough, and that actual knowledge that the induced acts constitute patent infringement is required. The Court did allow that the actual knowledge requirement could be satisfied by a showing of willful blindness, a high threshold that surpasses recklessness and negligence and requires that the defendant must subjectively believe that there is a high probability that the induced acts constitute patent infringement, and that the defendant must take deliberate actions to avoid learning of that fact.

In an amicus brief filed in support of the respondent in Global-Tech Appliances, AIPLA warned that:

[The] actual knowledge or conscious disregard [i.e., willful blindness] standard would severely limit the ability of patent holders to succeed in prosecuting a claim for inducing infringement . … Rarely would one find direct evidence that an accused inducer had a specific intent to cause a customer to violate specific patents. Considering that intent is rarely provable by direct evidence, the effect of a high knowledge or intent standard would be to render the statute hopelessly inadequate. Manufacturers would be encouraged in such a regime to ignore patents altogether to avoid exposure to inducement liability.

If actual knowledge of infringement of a valid patent were required, an inducer could defeat a claim for inducing infringement by proffering an opinion of counsel, even one that is erroneous. The accused inducer could defeat liability because he did not “know” that he was inducing patent infringement since he had an opinion that the acts did not infringe, or that the patent was invalid. This knowledge standard is too easy to manipulate to circumvent liability. ³⁵

In a 2014 decision, Limelight Networks v. Akamai Technologies, the Supreme Court further diminished the value of patents in another decision rendering it more difficult for a patent owner to establish induced infringement. ³⁶ In the decision below, Akamai Technologies v. Limelight Networks, the en banc Federal Circuit had held that a party that performs some (but not necessarily all) of the steps recited in a method claim can be held liable for inducing infringement if that party actively encourages others to perform the remaining steps of the method. ³⁷ The Supreme Court reversed, holding that in order for a defendant to be held liable for inducing infringement under § 271(b) it is necessary to establish that someone has engaged in activities that constitute direct infringement under § 271(a), and pointing out that under the Federal Circuit's decision in Muniauction v. Thomson liability for direct infringement of a method claim under § 271(a) requires that performance of all the method steps recited in the claim be attributable to a single entity. ³⁸ In order to be attributable to a single entity under Muniauction, a step must be performed either directly by the entity or by someone operating under the control or direction of that entity, i.e., under circumstances such that “there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps.”

In Limelight, the Supreme Court explicitly recognized that its “interpretation of 271(b) [enables] a would-be infringer to evade liability by dividing performance of a method patent's steps with another whom the defendant neither directs nor controls.” However, the Court pointed out that this was a problem of the Federal Circuit's own making, calling the result an “anomaly” that was a direct consequence of the Federal Circuit's divided infringement jurisprudence, particularly the relatively narrow interpretation of § 271(a) set forth in Muniauction. Limelight explicitly invited the Federal Circuit to reconsider its Muniauction “direction or control” requirement for establishing liability under a divided infringement scenario, remanding the case so that “the Federal Circuit will have the opportunity to revisit the 271(a) question if it so chooses.”

On remand, the Federal Circuit did indeed reconsider and revise the Muniauction approach to divided infringement, explaining that liability exists under circumstances where performance of steps of a patented method is “not limited solely to principal-agent relationships, contractual arrangements, and joint enterprise.” ³⁹ Rather, the ultimate test for liability under a divided infringement scenario is “whether all method steps can be attributed to a single entity.”

As explained in previous Holman Reports, the combined effect of Limelight and the Federal Circuit's divided infringement precedent is to render it more difficult to enforce certain biotechnology patents, particularly method of treatment claims and other processes where the performance of method steps is divided among distinct entities, e.g., a healthcare provider prescribing a treatment and a patient self-administering a drug. ⁴⁰ The problem has been ameliorated to some extent by the Federal Circuit's expansion of divided infringement liability in Akamai, and the Federal Circuit's recent decision in Eli Lilly & Co. v. Teva Parenteral Medicines provides some reason for optimism. ⁴¹ In Eli Lilly, the court upheld a district court's determination that sale of a generic version of drug would induce infringement of method of treatment claims even though two of the recited steps are performed by a physician while the third step is performed by the patient. Although Eli Lilly is a positive development for biotechnology patent holders, in finding the generic company liable for induced infringement the court emphasized certain case-specific facts that will not always be present, and it remains to be seen how broadly the Akamai test will be applied. ⁴²

Decisions that Have Rendered Patent Enforcement More Difficult

Three relatively recent Supreme Court decisions have devalued patents by rendering it more difficult for patent owners to enforce their patents. Significantly, two of these decisions specifically target pharmaceutical patents, and particularly the ability of the owners of these patents to enforce them under the provisions of the Hatch-Waxman Act.

In the first of these decisions, Caraco Pharmaceutical Laboratories v. Novo Nordisk, decided in 2012, the Supreme Court devalued pharmaceutical patents by rendering it easier for generic drug companies to avoid a Paragraph IV infringement action brought by an innovative company under the Hatch-Waxman Act. ⁴³ As a general matter, a generic company seeking approval of an abbreviated new drug application (ANDA) to market a generic version of a drug prior to expiration of all patents claiming the drug and methods of using the drug is required to submit a Paragraph IV certification asserting that the unexpired patent claims are invalid and/or will not be infringed by the proposed generic product. ⁴⁴ The Paragraph IV certification is grounds for the innovator company to file a patent infringement lawsuit prior to approval of the ANDA, thereby facilitating early resolution of the patent dispute. In certain circumstances, commencement of a patent infringement lawsuit pursuant to a Paragraph IV certification imposes a 30-month stay on the Food and Drug Administration's (FDA's) ability to approve the ANDA. ⁴⁵

However, when the unexpired patent claims a method of using the drug, the generic company can bypass the Paragraph IV process (along with its built-in protections for the patent owner) by carving out the claimed method of using the drug from its proposed labeling, and submitting a “section viii statement” (pursuant to 21 U.S.C. § 355(j)(2)(A)(viii)) that the ANDA does not seek approval for the claimed method. Under regulations promulgated by FDA, the generic company is not required to submit a Paragraph IV certification with respect to a patent that has been the subject of a section viii statement. ⁴⁶

In determining whether it will accept a generic company's section viii statement, FDA compares the ANDA applicant's proposed label with the scope of the patent as defined by the patent's “use code.” The “use code” is a creation of FDA, not Congress, and while the patentee provides the use code, it does so pursuant to FDA-imposed constraints. If use of the product as set forth in the proposed label overlaps with the use code, FDA will not accept the section viii statement, thus requiring the generic company to comply with the Paragraph IV procedure.

The innovator obviously has an incentive to draft the use code broadly, thereby making it more difficult for a generic company to use a carved-out label to avoid the Paragraph IV process and enter the market with an approved generic drug that is substitutable for all indications, including those that infringe the unexpired patent. In 2003, Congress provided generic applicants with a limited basis for filing a counterclaim challenging a use code. Under this statutory provision, a generic applicant can assert a counterclaim in a patent infringement action “seeking an order requiring the [innovator] to correct or delete the patent information submitted by the [innovator] … on the ground that the patent does not claim either … the drug for which the application was approved [or] an approved method of using the drug. ⁴⁷

In Caraco, the drug was FDA-approved for three uses, and the parties agreed that the patent at issue only claimed one of those uses. The use code for the patent, however, encompassed all three of the approved uses. In the context of a Paragraph IV litigation, the generic company filed a counterclaim seeking an order to require the patentee to correct the use code so as to only encompass the claimed use. In a divided opinion, the Federal Circuit dismissed the counterclaim, holding that under a plain reading of the statute the counterclaim provision can only be invoked if the patent does not include any approved method of using the drug. ⁴⁸ On appeal, however, the Supreme Court reversed, and held that, while the Federal Circuit's reading of the statute was plausible on its face, in the context of the statute as a whole the correct interpretation of the provision allows a generic applicant to file a counterclaim challenging a use code based on an allegation that the patent does not claim the particular method that the ANDA applicant seeks to market.

The problem for pharmaceutical patent owners is that Caraco makes it easier for a generic company to enter the market with an approved generic drug bearing a label that carves out the patented method of use, but which as a practical matter can be freely prescribed for the patented use, without being subject to a Paragraph IV lawsuit. As pointed out by the Federal Circuit, the Paragraph IV process:

could require generic manufacturers to prove specifically that their use will not overlap with and infringe the patented use [, thus ensuring that] a generic drug for non-patented purposes will not be used for patented purposes via a simple section viii certification. Instead, the generic manufacturer will need to alleviate the risk of infringement or induced infringement in a proceeding that fully tests for infringement and its implications, including potential health and safety risks. Thus, the Act again facilitates efficient resolution of disputes concerning potential overlapping of protected and unprotected uses. The Act seeks to strike a balance of the pioneering and generic manufacturers' interests. ⁴⁹

Two amicus briefs filed by representatives of the pharmaceutical industry, one by PhRMA ⁵⁰ and the other by a group of pharmaceutical companies including Allergan and Shire Pharmaceuticals, ⁵¹ explain that allowing counterclaims that challenge patent use codes in this way devalues pharmaceutical method of use patents and undercuts the balance Congress intended to strike in the Hatch-Waxman Act. For example, the amicus brief filed by the group of pharmaceutical companies warned that:

Use codes … are not, nor are they intended to be, legally determinative of infringement. Caraco seeks to change this in an effort to avoid the Hatch-Waxman protections by carving out the approved use specifically claimed in an unexpired patent, obtaining FDA approval while bypassing the statutory provisions requiring patent certification and notice to the innovative pharmaceutical company pre-launch, and heading to market with a generic drug that is substitutable for all indications, including those that infringe the unexpired patent. This has the potential to render valueless method of use patents covering newly discovered indications, strongly dis-incentivizing innovator pharmaceutical companies from the pursuit of additional uses for safe and effective drugs. Surely, … Congress did not intend for generics to simply bypass the procedure for method of use patents' certifications by “carving out” approved uses, particularly when approved generics are adjudged therapeutically equivalent to the branded drug product by FDA, and are thus fully substitutable for the branded product, regardless of the narrower label of the generic. ⁵²

The following year the Court decided FTC v. Actavis, another decision that takes direct aim at biotechnology by making it more difficult for innovative drug companies and generic competitors to settle Hatch-Waxman-related patent disputes. ⁵³ Actavis addresses so-called “reverse payment settlements,” and has the effect of chilling the ability of drug companies to settle lawsuits by subjecting settlement agreements to potentially costly and time-consuming antitrust challenges. The Actavis decision also limits the settlement options for these companies, by broadly but indeterminately defining “reverse payments” to include non-cash payments.

In the decision below, the Eleventh Circuit affirmed a district court's decision to dismiss a complaint filed by the Federal Trade Commission (FTC) alleging that settlement agreements between an innovator drug company (Actavis) and would-be generic competitors were reverse payment settlements in violation of federal antitrust laws. ⁵⁴ According to the terms of these agreements, the generic companies agreed to delay entering the market and Actavis agreed to pay the generic companies a certain amount of money. The parties characterized these payments as compensation for various services the generics promised to perform, but FTC contended that these services had little value. According to FTC, the true point of the payments was to compensate the generics for agreeing not to compete against Actavis's patented product.

In agreeing with the district court that the case should be dismissed, the Eleventh Circuit held that “absent sham litigation or fraud in obtaining the patent, a reverse payment settlement is immune from antitrust attack so long as its anticompetitive effects fall within the scope of the exclusionary potential of the patent.” The Second and Federal Circuits had similarly concluded that reverse payment settlements are generally immune from antitrust attack so long as the generic company does not agree to restrictions exceeding the scope of the patent. ⁵⁵ Such would be the case, for example, if a generic company agreed not to market a product clearly falling outside the scope of the patent claims, or not to market a product after expiration of the patent. There was a split among the circuits on this issue, however, with the Third Circuit characterizing reverse payment settlements as presumptively unlawful. ⁵⁶

A divided Supreme Court reversed the Eleventh Circuit's decision, and held that reverse payment settlements in patent infringement litigation can sometimes violate the antitrust laws, and that a reverse payment settlement is not immune from antitrust attack even if the agreement's anticompetitive effects fall within the scope of the exclusionary potential of the patent. Writing in dissent, Justices Roberts, Scalia, and Thomas complained that the majority's decision marked a complete departure from the previously settled approach separating patent and antitrust law, thereby weakening the protection afforded to innovators by patents, frustrating public policy in favor of settlement, and likely undermining “the very policy it seeks to promote by forcing generics who step into the litigation ring to do so without the prospect of cash settlements.” The dissenting Justices predicted that Actavis would “subject basic questions of patent law to an unbounded inquiry under antitrust law, with its treble damages and famously burdensome discovery.”

These concerns echo those raised by PhRMA in an amicus brief it filed in the case. ⁵⁷ The brief points out that, as a practical matter, defending against an antitrust challenge will in many cases require the parties to litigate the merits of the very patent dispute the parties sought to settle, “severely diminish[ing] if not destroy[ing] innovators' ability to obtain repose from the onslaught of patent litigation that inevitably plagues their successful new products—and [] ultimately thereby harm[ing] consumers.” According to PhRMA, the “burden is not just one of marshaling potentially large amounts of evidence, but also of proving the almost-unprovable: It is just not possible for a litigant to prove in advance that the judicial system will lead to any particular result in his case, and retroactively predicting from a past perspective a future that never occurred is even more perilous.”

In its brief, PhRMA complains that:

The FTC has taken the position that nearly any form of settlement can be characterized as a verboten “payment” constituting “prima facie evidence of an unreasonable restraint of trade” under the Third Circuit's decision in In re K-Dur Antitrust Litig., [and] has thus asserted that it regards any consideration to the alleged infringer as a potentially illicit reverse payment. Confronted with the likely prospect of a post-settlement enforcement action by the FTC or private treble damages suits, parties may instead choose to litigate their Hatch-Waxman suits to final judgment, depriving the public of all the potential benefits of settlement[.] Innovators will incur burdensome costs and face the prospect of unknown and potentially incorrect litigation outcomes that may decrease incentives to innovate. [T]he results will be fewer new drugs that have led in the past to healthier and more productive lives for U.S. customers and large gains to the U.S. economy. ⁵⁸

In TC Heartland v. Kraft Food, decided in 2017, the Supreme Court further devalued patents by limiting the ability of patent owners to pursue an infringement action in the venue of their choice. ⁵⁹ Prior to TC Heartland, the Federal Circuit had held in VE Holding v. Johnson Gas Appliance that a corporation can be sued for patent infringement in any district in which it is subject to personal jurisdiction. ⁶⁰ In TC Heartland, the Supreme Court abrogated VE Holding and the Federal Circuit's relatively permissive interpretation of the patent venue statute, and held that for purposes of a patent infringement action a party can only be sued in a state in which it “resides,” and a domestic corporation only resides in its State of incorporation.

TC Heartland's tightening of patent venue requirements will likely be particularly burdensome for innovative drug companies attempting to keep generic and biosimilar competitors off the market using the patent enforcement provisions of the Hatch-Waxman Act and the Biologics Price Competition and Innovation Act (BPCIA), respectively. As explained in an amicus brief filed by BIO and the Association of University Technology Managers (AUTM), in a typical Hatch-Waxman case, many manufactures of generics submit ANDAs with Paragraph IV certifications challenging the same patent or group of patents. ⁶¹ In 2005, for example, it was reported that an average of 11 ANDA applications were submitted the first day that doing so was permissible. ⁶² The BIO/AUTM brief explains that when multiple ANDAs have been filed for the same brand drug, it is generally advantageous for the patent owner, as well as judicially efficient, to bring infringement actions against the applicants in a single district because such cases involve the same timelines and highly similar issues across defendants. This avoids the need to educate multiple courts on what are often complex technical issues. As one court explained in the context of a discussion of personal jurisdiction:

it would be a significant burden on Plaintiffs if required to bring lawsuits against each ANDA filer in the defendants' respective home states. In this case, Plaintiffs initially filed suit against approximately forty generic drug companies that reside in a variety of locations. Such a result would be inconsistent with the balance that Congress sought to create in passing the Hatch-Waxman Act. ⁶³

In another case decided in 2017, Sandoz v. Amgen, the Supreme Court interpreted two provisions of the BPCIA intended to protect the interests of biologic innovators in a manner that weakens their ability to defend against patent challenges. ⁶⁴

One of these statutory provisions, 42 U.S.C. § 262(l)(2)(A), specifies that an applicant seeking approval to market a biosimilar version of an innovator's biologic product “shall provide” the innovator with a copy of the abbreviated biologic license application (aBLA) and information about how the biosimilar is to be manufactured within 20 days of FDA's acceptance of the application for review. In spite of the “shall provide” language, in the decision below, the Federal Circuit held that if the biosimilar applicant refuses to provide the mandated information, the innovator's only remedy is to bring an infringement action. The requirement that the information be provided is not enforceable by an injunction. On appeal, the Supreme Court affirmed that the BPCIA's requirement that an applicant provide the sponsor with its application and manufacturing information is not enforceable by an injunction under federal law. The Court declined to answer the question of whether the provision could be enforced by an injunction under California law, and remanded to the Federal Circuit to address this question of state law.

Section 262(l)(2)(A)'s mandatory disclosure provision was intended to allow biologic innovators to identify relevant patents and assert them in an orderly and timely manner. In fact, BIO submitted an amicus brief in the case warning that “absent mandatory information disclosure, the patent-dispute-resolution mechanism in the BPCIA simply [will] not work.” ⁶⁵ With the increasing number of biosimilar filings, the Court's sanctioning of a biosimilar applicant's decision to refuse to participate in the so-called “patent dance” could significantly reduce the ability of patents to incentivize investment in the next generation of biologic drugs.

The other provision of the BPCIA interpreted by the Court in Sandoz is § 262(l)(8)(A), which specifies that the biosimilar applicant “shall provide notice to the reference product sponsor not later than 180 days before the date of the first commercial marketing” of the biosimilar product. In the decision below, the Federal Circuit held that a biosimilar applicant may only give effective notice of commercial marketing after FDA has licensed the biosimilar product, explaining that:

Congress intended the notice to follow licensure, at which time the product, its therapeutic uses, and its manufacturing processes are fixed. When a subsection (k) applicant files its aBLA, it likely does not know for certain when, or if, it will obtain FDA licensure. The FDA could request changes to the product during the review process, or it could approve some but not all sought-for uses. … If a notice of commercial marketing could be given at any time before FDA licensure, the RPS would be left to guess the scope of the approved license and when commercial marketing would actually begin. ⁶⁶

On appeal, however, the Supreme Court overruled the Federal Circuit on this issue, and held that a biosimilar applicant may provide notice of commercial marketing prior to receiving FDA approval, based on what the Court found to be the plain language of the statute. The predicted consequence of this interpretation of the statute is that innovators might be forced to file a lawsuit and seek an injunction before approval and hence at a point in time in which the product, its uses (including indications, dosing, and route of administration), and the processes by which it is manufactured are still subject to change. ⁶⁷ It could also facilitate more “at-risk” launches of biosimilar products, an outcome entirely inconsistent with Congress's intent to “ensure that litigation surrounding relevant patents will be resolved expeditiously and prior to the launch of the biosimilar product, providing certainty to the applicant, the reference product manufacturer, and the public at large.” ⁶⁸

Decisions Impacting the Availability of Remedies

To my mind, the Supreme Court's 2006 decision in eBay v. Mercexchange served to mark the beginning of the Supreme Court's active intervention in Federal Circuit jurisprudence and weakening of patent rights. ⁶⁹ In eBay, the Court overturned the Federal Circuit's strong presumption in favor of granting a permanent injunction in cases of patent infringement, and mandated a four-factor equitable test be applied to consider whether an injunction should be applied on a case-by-case basis. The result is a weakening of the property attributes of patents, since without the availability of a permanent injunction, a patent owner is unable to effectively exclude others from infringing upon its patent right.

Amicus briefs filed in the case by BIO and PhRMA attempted to convince the Supreme Court not to overturn the Federal Circuit's more patentee-friendly approach to injunctions, and warned of the disincentives to innovation that would follow from such a weakening of the patent right. In its brief, BIO explained that:

Many [biotechnology firms], particularly small companies and universities, make valuable, patentable discoveries but frequently do not practice or develop (“use”) them for a variety of reasons. They may lack scientific expertise, financing, or development and manufacturing capacity. Likewise, they simply may be unable to currently license other essential know-how. And licensing immediately may not make economic sense, or they may try and be unable to do so. In some cases, it may take years before commercialization is feasible, or even possible. These patent owners should not be deprived of their exclusive rights, as they would be if this Court created a new basis to avoid an injunction whenever a patent owner does not use its patented invention. ⁷⁰

Along similar lines, PhRMA argued in its brief that:

To undermine and weaken patent protection by sowing doubt on the availability of injunctive relief against confirmed infringers … will necessarily increase the costs of developing new medicines. Pharmaceutical companies employ sophisticated models to evaluate the risk and potential return of investment in R&D. Making the availability of injunctive relief less certain drives up the risk and so immediately dries up the pool of investments in R&D. Furthermore, changing the rule now devalues past investments made with the expectation that patent rights would be vindicated. This is not just unfair; it [will] directly impact the number of new drugs brought to market. Pharmaceutical companies [will] be unable to raise as much money to invest in R&D, and the resulting decrease in R&D funding [will] translate directly into fewer new drugs. ⁷¹

For completeness, I will note that in Samsung v. Apple the Supreme Court restricted the availability of damages in design patent cases when it held that, in the case of a multi-component product, the relevant “article of manufacture” for arriving at a damages award need not be the end product sold to the consumer, but may be only a component of that product. ⁷² But given that the focus of this article is utility patents and biotechnology, I will not attempt to analyze implications of the decision.

Decisions that Facilitate Patent Challenges

The Supreme Court has also issued three decisions that make it easier for third parties to challenge the validity of issued patents.

MedImmune v. Genentech, decided in 2017, lowered the standing requirement for parties seeking a declaratory judgment that a patent claim is invalid or not infringed. ⁷³ Prior to MedImmune, the Federal Circuit had held in Teva v. Pfizer that in order to establish the “actual controversy” necessary for standing to bring a declaratory judgment action challenging a patent, the patent challenger must be able to demonstrate a reasonable apprehension of imminent suit. ⁷⁴ In Gen-Probe v. Vysis, the Federal Circuit held that a patent licensee in good standing cannot establish an actual controversy with regard to validity, enforceability, or scope of the patent because the license agreement “obliterate[s] any reasonable apprehension” that the licensee will be sued for infringement. ⁷⁵ MedImmune abrogated Teva and Gen-Probe, replacing the “reasonable apprehension” test with a more permissive standard, according to which “the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” In MedImmune, the Court found that the declaratory-judgment plaintiff satisfied the actual controversy standard even though it had a license from Genentech and continued to pay royalties, and thus had no “reasonable apprehension” of being sued for patent infringement so long as the company continued to pay royalties.

In Medtronic v. Mirowski, decided in 2014, the Supreme Court held that in a declaratory judgment action filed by plaintiff seeking a ruling that he does not infringe a patent, the defendant patentee bears the burden of proving infringement, or, more precisely, the burden of persuasion. ⁷⁶ This was a reversal of the Federal Circuit's opinion below that had held that while a patentee ordinarily bears the burden of proving infringement, the burden of persuasion shifts when the patentee is a defendant in a declaratory judgment action brought by licensee. The court explained that this is only fair, given the fact that under such a scenario the patentee/defendant is foreclosed from asserting an infringement counterclaim by the continued existence of a license. ⁷⁷

In an amicus brief filed in the case, IPO argued that:

To permit a licensee to maintain the status quo, force the licensor to prove infringement—even where the licensor cannot plead it, let alone seek infringement remedies—and suffer no negative impact even if the licensee loses, would cause a significant imbalance between a patentee-licensor and a licensee. Indeed, such a holding may effectively render patent licenses, whether entered in advance to resolve potential disputes or to settle litigation, worth nothing more than the paper upon which they are written—at least for the patentee-licensor. ⁷⁸

MedImmune and Medtronic work in tandem to significantly empower licensees to challenge a licensed patent, with little downside due to the immunity from infringement liability provided by the license. Given the importance of licensing in biotechnology, these decisions serve to significantly devalue patents in the biotechnology sector.

In Cuozzo v. Lee, decided in 2016, the Supreme Court interpreted two provisions of the America Invents Act (AIA) in a manner that renders it more difficult for patent owners to defend their patents during inter partes review (IPR) proceedings. ⁷⁹ In particular, the Court held that a provision specifying that the Patent Office's determination as to whether to institute IPR “shall be final and nonappealable” entirely precludes judicial review of at least some PTO decisions to institute IPR, including the decision at issue on appeal in the case. Writing in dissent, Justices Alito and Sotamayor argued that Congress only intended the provision to preclude interlocutory appeals, and that decisions to institute should be subject to judicial scrutiny as part of an appeal from an agency's final decision. The dissenting Justices faulted the majority's interpretation of the provision for ignoring the strong presumption favoring judicial review, and for effectively shielding the PTO from judicial scrutiny of its compliance—or noncompliance—with significant statutory restrictions intended to cabin the agency's discretion to institute IPR.

The Court also upheld a regulation promulgated by the PTO that requires the agency, when conducting an inter partes review, to give a patent claim “its broadest reasonable construction in light of the specification of the patent in which it appears.” ⁸⁰ The Justices rejected the patent owner's contention that the PTO should, like the courts, give claims their “ordinary meaning … as understood by a person of skill in the art,” ⁸¹ holding that the agency had legal authority to issue its broadest reasonable construction regulation under a provision of the patent statute that grants the PTO authority to issue “regulations … establishing and governing inter partes review under this chapter.” ⁸²

In an amicus brief filed in support of the patent owner, PhRMA argued that:

[The PTO's broadest reasonable construction regulation] creates the risk that a patent claim could be (correctly) found valid by a district court under Phillips, but also (correctly) found invalid by the PTAB in an IPR proceeding under the BRI standard. That new reality clouds and diminishes patent rights to the detriment of patent holders, innovators, and the public at large. Uncertainty regarding the scope of patent claims and their validity is costly to the inventive community and discourages innovation. … Such uncertainty is of particular concern to PhRMA's members, which invest billions in research and development to discover new therapies—including $51 billion in 2014 alone. … Meaningful patent protection is required to justify that investment, especially in the face of frequent validity challenges in litigation arising under the Hatch-Waxman Act. Worse still, application of distinct claim construction standards creates an unfair system where patent claims are considered in a narrower manner for infringement purposes in district court and a broader manner for IPR validity challenges; such a system skews results against patent holders and leads to inconsistent determinations. ⁸³

The Supreme Court seems intent upon taking an active role in the interpretation of the many complex provisions of the AIA governing IPR proceedings. The Court wasted no time granting certiorari on its first IPR case; in fact, Cuozzo was an appeal of the very first IPR to be filed. Already in 2017, the Court has granted certiorari in two more IPR cases, one addressing the question of whether IPR violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury, ⁸⁴ and the other addressing the question of whether the AIA requires the PTAB to issue a final written decision as to every claim challenged in an IPR. ⁸⁵ Not surprisingly, the IPR process intended by Congress to simplify patent challenges is proving to be anything but straightforward.

Conclusion

It would be inaccurate to suggest that the Supreme Court's recent patent decisions have invariably devalued patent rights. Some of the Court's decisions during the time period surveyed in this article have been pro-patent, ⁸⁶ while others have been relatively neutral. ⁸⁷ But on the whole, the decisions have significantly eroded the ability of patents to incentivize innovation, at least with respect to certain technologies and certain types of innovators, and biotechnology in particular has suffered. Notably, of the 21 Supreme Court decisions since 2006 identified as anti-patent in this article, seven involved patents claiming biotechnology and/or pharmaceutical inventions, and an eighth claimed an FDA-regulated medical device. History suggests that at some point the pendulum will begin to swing back in the direction of stronger patent rights, but as of yet, such a shift appears nowhere in sight.