A Natural Experiment on Innovation Without Patents

Abstract

Innovation occurs within a complex web of law. Of the myriad legal doctrines that affect innovation, the most directly relevant is intellectual property, particularly patent law. Despite the faith many have in the societal benefits afforded by patent protection, a crescendo of recent critics have suggested that the patent system may complicate, slow, or even thwart innovation. Empirical evidence evaluating how well the patent system achieves its stated goals of encouraging innovation is notably scarce. One section in the America Invents Act (“AIA”) – Section 33 – may offer a rare and valuable opportunity to explore how innovation might perform without the protections or constraints of patents. Section 33 of the AIA, which took effect on September 16, 2011, states that “[n]otwithstanding any other provision of law, no patent may issue on a claim directed to or encompassing a human organism.” Although patents claiming inventions “directed to or encompassing” aspects of human organisms, such as human bodies, organs, tissues, cells, genes, chemical products of physiological processes, and even thoughts have often been granted by the United States Patent and Trademark Office (“USPTO”), patents claiming this class of biotechnological inventions have proved increasingly difficult successfully to assert in court. It is too early to know precisely how the United States Patent and Trademark Office (“USPTO”) and the courts will interpret Section 33. Nevertheless, a rich body of judicial decisions on the validity, enforcement, and infringement of patents claiming human genes, human embryonic stem cells, chemicals produced by human physiology, and human thought (especially relating to diagnosis and therapy) do provide valuable insight into how far Section 33 may reach. These decisions suggest that inventions related to the human body and its functions represent a lacuna in patentable subject matter. If interpreted in a manner consistent with this body of court decisions, Section 33 may represent an apotheosis of the marked common law trend against the patenting of inventions relating to the humans, the human body, and human bodily processes. With the addition of Section 33 to the patent law, both statute and judicial precedent have now created a space in which innovation “directed to or encompassing a human organism” may take place substantially unfettered from fears of infringing patent rights. This safe harbor from patent infringement allows a natural experiment to take place in which innovation may operate without interference from patent rights. This natural experiment offers a valuable opportunity to observe whether innovation flourishes, wilts, or reacts with indifference to the rare circumstance of freedom from patents.