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Patently Hysterical

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Skepticism about the United States patent system has hit historic highs. Even groups without an obvious interest in technology policy have joined the skeptics, such as the ACLU. But is this alarm warranted? Even more importantly, is it dangerous?

These valid questions deserve an informed debate. And virtually any worthy debate deserves to start with the wisdom of our heritage.

The Founding Fathers included the authority to grant patents among the few powers worthy of inclusion in the Constitution. Indeed, the Constitution itself provides authority for awarding exclusive rights to promote science and the useful arts.

Although exclusive commercial rights -- like other constitutionally-based rights -- can be unpopular in the short-term, Abraham Lincoln famously defended them. He observed that patents "add the fuel of interest to the fire of genius."

More recently, to safeguard a patent system in disarray, President Reagan in 1982 authorized the creation of the Federal Circuit appeals court to unify patent law. He did so because by the 1970s the system lacked a coherent body of law. In creating the Federal Circuit, Congress concluded that the consequent improved stability and predictability in the patent law would "have important ramifications upon our economy."

Our leaders have protected the patent system through the centuries because they are aware of its vulnerability. Patents, by constitutional design, remove innovation from competition by providing for exclusivity. This can increase prices in the short term and trigger populist complaint.

But in the long run patents motivate investment. No one likes to pay market prices for life-saving medicine when it costs only a few cents a pill to manufacture. But common sense tells us we cannot count on advanced medicine if the patent system does not protect the staggering investment required to invent, test, prove and deliver new cures to your pillbox.

Few serious critics suggest the elimination of the patent system outright. One common argument, though, is that patents do not belong in the modern world of information technology, citing recent high-profile patent battles. Critics contend that there are too many patents in the computer area, making it difficult to innovate.

A broadside attack on the patent system is not supported by the evidence. The United States technology sector is thriving amidst world recession like none other. More to the point, that sector is increasingly innovative, especially relative to the innovation levels in regions with weaker patent systems.

A better explanation for big verdicts and robust patenting activity is the surge in innovation. Is it surprising that there are more patents in the computer industry now than in the past? Is it surprising that the latest hi-tech products include inventions worthy of protection? Is it surprising that infringement verdicts between competitors are in the nine figures when product revenues can be in the 12-figure range?

To be sure, there are excesses in patent litigation that deserve serious attention -- just as in other areas of litigation. Patent system problems are magnified as technology products proliferate. But this is why last year Congress passed the most significant modernization of patent law in 50 years. That legislative reform includes, for example, many provisions designed to counteract junk patents, including key improvements that are only now going into effect.

If the recent patent law overhaul proves inadequate to address problems in the system, further changes may well be warranted. Nevertheless, fringe attacks on the idea of the patent system itself -- and the climate they create -- are unhealthy and can be dangerous.

Take the emerging field of personalized medicine. We are already creating new tests that allow us to identify how best to diagnose and treat patients based on saliva or blood samples. Developing such tests is often like finding a needle in a haystack. Because our genetic code is so complex, it is difficult to determine whether a particular genetic difference means that you suffer from a particular disease or would benefit from a particular treatment. Patents are critical to protect the large investment necessary to develop such a test, just as they are vital to protect the discovery of new pharmaceuticals.

Yet, in view of the populist skepticism about patents which has penetrated deep in the zeitgeist, the Supreme Court sharply cut back on patenting in the emerging field of personalized medicine. The Court in its recent Mayo decision cited academics and other critics to conclude that in this area patenting will actually impede innovation.

The Mayo decision will only hurt the personalized medicine revolution in its delicate infancy. Personalized medicine holds the key not only to improved world health, but in the long run to sharply reduce health cost by treating patients far more intelligently. While having cheap genetic tests unprotected by patents may be convenient today, future generations benefit greatly when we add the fuel of interest to the fire of the genius.

The lesson is that irresponsible attacks on the patent system have the potential to handicap the great American talent for creative enterprise that is the envy of the world. We can recover from one or two errant legal decisions. But tolerating hysteria about patents may cause us to realize that we did not appreciate the value of our strong patent system until we lost it.

Disclosure: Edward Reines filed a court brief in support of Prometheus on behalf of Genomic Health Inc., Veracyte Inc. and other companies that specialize in personalized medicine in Mayo vs. Prometheus.