By Kevin E. Noonan —
One of the most powerful, visceral arguments made by the American Civil Liberties Union in Assoc. Molecular Pathol. v. Myriad Genetics, 689 F. 3d 1303 (2013), was that permitting Myriad and the University of Utah to have patent rights to isolated human DNA inhibited basic research. Indeed, the meme that patents can interfere with free access to the "building blocks" of science and technology can be found in Supreme Court dicta from Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948), to Myriad and Mayo Collaborative Services v. Prometheus Labs., Inc., 132 S.Ct. 1289 (2012). Similarly, opponents of the Bayh-Dole Act (codified at 35 U.S.C. §§ 200-212), which permits universities to patent inventions made using Federal funding, base some of their arguments on the inequity visited on the public in allowing these inventions to be protected by patent and thus (at least technically) making scientific and research use an act of infringement.
These concerns were exacerbated by the Federal Circuit decision in Madey v. Duke Univ., 307 F.3d 1351 (Fed. Cir. 2002), where the Court agreed that the practice of a patented invention by Duke University researchers was not protected by an "experimental use" exemption. In doing so, the Court recharacterized the nature of such scientific use by universities, ostensibly based on the "commercial" nature of modern university practice:
In short, regardless of whether a particular institution or entity is engaged in an endeavor for commercial gain, so long as the act is in furtherance of the alleged infringer's legitimate business and is not solely for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry, the act does not qualify for the very narrow and strictly limited experimental use defense. Moreover, the profit or non-profit status of the user is not determinative.
This decision cabined the (common law) experimental use exemption to activities akin to the Victorian practice of observing with crude microscopes rotifers in a drop of pond water as an after-dinner amusement amongst gentlemen. The Court's reasoning was set forth as follows:
Our precedent clearly does not immunize use that is in any way commercial in nature. Similarly, our precedent does not immunize any conduct that is in keeping with the alleged infringer's legitimate business, regardless of commercial implications. For example, major research universities, such as Duke, often sanction and fund research projects with arguably no commercial application whatsoever. However, these projects unmistakably further the institution's legitimate business objectives, including educating and enlightening students and faculty participating in these projects. These projects also serve, for example, to increase the status of the institution and lure lucrative research grants, students and faculty.
Regardless of the practicality of these distinctions, there the law has rested ever since, and it is generally recognized that there is no effective experimental use exemption under U.S. patent law.
There are, of course, exemptions to infringement liability in the statute; for example, 35 U.S.C. § 287(c) provides:
(1) With respect to a medical practitioner's performance of a medical activity that constitutes an infringement under section 271(a) or (b), the provisions of sections 281, 283, 284, and 285 shall not apply against the medical practitioner or against a related health care entity with respect to such medical activity.
where
"medical activity" means the performance of a medical or surgical procedure on a body, but shall not include (i) the use of a patented machine, manufacture, or composition of matter in violation of such patent, (ii) the practice of a patented use of a composition of matter in violation of such patent, or (iii) the practice of a process in violation of a biotechnology patent.
"medical practitioner" means any natural person who is licensed by a State to provide the medical activity described in subsection (c)(1) or who is acting under the direction of such person in the performance of the medical activity.
"body" shall mean a human body, organ or cadaver, or a nonhuman animal used in medical research or instruction directly relating to the treatment of humans.
And the exemption does not apply to activities directly related to "commercial development, manufacture, sale, importation, or distribution of a machine, manufacture, or composition of matter or the provision of pharmacy or clinical laboratory services (other than clinical laboratory services provided in a physician's office)," and "regulated under the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act, or the Clinical Laboratories Improvement Act."
Since the Madey decision there has been no traction for expanding the statutory exemption beyond the scope of § 287(c), but the Court's Madey decision itself provides a possible hint at a path forward. In footnote 6 of the opinion, the Court states (citing footnote 3 in the District Court's opinion):
In a footnote, the district court cites to a section from the Bayh-Dole Act to support its reasoning that the government has a license to have patents practiced on its behalf when the government contributed to the funding of such patents. Id. at 16 n. 3 (citing 35 U.S.C. § 202(c)(4) (2000)). The relevant section is set forth below.
(c) Each funding agreement with a small business firm or nonprofit organization shall contain appropriate provisions to effectuate the following: (4) With respect to any invention in which the contractor elects rights, the Federal agency shall have a nonexclusive, nontransferrable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world․ 35 U.S.C. § 202(c)(4) (2000).
The district court stated that the "funding agreements for the inventions created under the ′994 and ′103 patents[-in-suit] expressly provide that the Government retained rights in those inventions." Id. Thus, the district court reasoned, in light of the Bayh-Dole Act, Duke's use of the patents that has been authorized by the government does not constitute patent infringement. Finally, the district court noted that: "[a]lthough the parties have presented conflicting evidence as to the extent to which the patented devices have been used for a purpose consented to by the Government, because [Madey] has failed to create a genuine issue of material fact as to whether [Duke] has commercially benefited or intends to do so with respect to the patents at issue, the uses that have been made to date with respect to both patents are, at this point, exempt from infringement liability." Id.
The Bayh-Dole Act itself expressly provides limits and direction on how technology patented and licensed by universities under its provisions should behave; for example, in 35 U.S.C. § 204:
Notwithstanding any other provision of this chapter, no small business firm or nonprofit organization which receives title to any subject invention and no assignee of any such small business firm or nonprofit organization shall grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any products embodying the subject invention or produced through the use of the subject invention will be manufactured substantially in the United States [subject to waiver under conditions where this proscription cannot be carried out]. (Added Pub. L. 96–517, § 6(a), Dec. 12, 1980, 94 Stat. 3023.)
This suggests a possible avenue to enact at least a partial experimental use exemption for the members of society most impacted by even technical liability for infringement (i.e., university researchers, where the overwhelming amount of such technical infringement occurs). Specifically, Congress could amend the Bayh-Dole Act to provide that licenses of university technologies contain, and the universities themselves be bound to grant, non-exclusive licenses to use patented technology to university researchers for non-commercial purposes:
Any patent subject to the provisions of this title, and any license to any such patent granted to any commercial entity, shall be subject to a non-exclusive license to practice the patented invention for non-commercial research purposes by researchers of a U.S. university, non-profit organization, or other scientific research institute.
The statute would be limited to university patents and to university or other research institutes or organizations, but it is precisely these patents and these entities purportedly most negatively affected by the present existence of technical infringement liability (and were the entities involved in Madey v. Duke). The proposed statutory change is not intended to be a panacea, but its existence could ameliorate the angst felt by lawmakers and the judiciary (as well as policymakers and pundits) by the possible chilling effect of patenting on innovation. Make no mistake, the evidence is scant that there has been any such chill; after all, the poster child for the effects of this behavior, the Myriad gene patents, had tens of thousands of scientific papers published from grant to invalidation by the Supreme Court and Federal Circuit (see "In Defense of Patenting"). But to the extent that this is a genuine issue, actual or potential, having a statutory shield for any possible misbehavior by patentees (and their licensees) might influence policymakers to be less mindful of the rhetoric and more cognizant of the benefits of almost forty years of technology transfer under the Bayh-Dole Act.
The U.S. Patent and Trademark Office will be offering the next webinar in its Patent Quality Chat webinar series from 12:00 to 1:00 pm (ET) on November 13, 2018. In the latest webinar, entitled "eMod Update: Accessing EFS-Web and PAIR with USPTO.gov Accounts," Lisa Tran, Communications Manager for eCommerce, and Jeff Wong, Project Manager for EFS-Web, will discuss how to access EFS-Web and PAIR with USPTO.gov accounts, and will focus on:
Patent Docs 