“A Reward at the End”
Patent infringement cases are very expensive in the U.S. legal system. They routinely cost litigants more than a million dollars. And their outcomes are notoriously unpredictable. So, though many doctors, hospitals, and patent experts scoff at Bogart’s claim, some of the nation’s most venerable hospitals, medical firms, and testing laboratories have followed their lawyers’ advice and reluctantly paid Bogart’s royalty.
Oakland, California-based Kaiser Permanente, the country’s largest non-profit hospital chain and health maintenance organization, is an exception. It has not agreed to pay. Instead, it has challenged Bogart in court.
Mitchell Sugarman, Kaiser’s director of technology assessment, says the HMO has contested the claim because of what it implies for its patients and the broader medical community. Kaiser expects to spend well over $1 million to litigate this case, more than it would have paid in royalties. But Sugarman contends there is a “moral argument” to be won.
Joining Kaiser is a consortium of medical professional groups, including the American College of Medical Genetics, the American Medical Association, and the American College of Obstetrics and Gynecology. The group has offered Kaiser financial aid and free expert assistance. The organizations formed the consortium because in their view the Bogart case represents “a dangerous attack on the availability of an important diagnostic test for pregnant women and on public health policy in this country,” says Michael Watson, the consortium’s leader and vice president of the American College of Medical Genetics.
On the other side of the issue, the Biotech Industry Association is watching the Bogart case closely. David Schmickel, the association’s legal counsel, argues that “medical professionals often ignore the fact that it costs tens of millions of dollars to bring a diagnostic test to market. This kind of research will not be done and those tests will certainly not reach the public unless there is a reward for the inventors at the end.”
The issues raised by Bogart’s patent are dramatic and humbling in their complexity. They are also new. Until the mid-1950s, the U.S. Patent Office did not issue patents on observations or procedures. Patent directives and patent-law precedents drew a hard line between devices, like catheters and x-ray machines, and procedures, like blood transfusions or cardiopulmonary resuscitation (CPR). Devices could be patented, but procedures could not. The longstanding view was highlighted over a century ago in the landmark 1862 case Morton v. New York Eye Infirmary, in which an inventor tried to claim ownership of the burgeoning medical practice of using ether as an anesthetic for surgery. The court invalidated the patent, dismissing it as nothing more than the “naked discovery of a new effect, resulting from a well-known agent, working by a well-known process.”
Before the advent of the knowledge-based economy, the rationale for drawing a distinction between procedures and devices seemed clear and easy to accept. Developing a medical machine or instrument often requires the inventor to invest significant capital. By granting a patent, the government allows the inventor the opportunity to recoup the cost-thereby encouraging the continued development of medical innovations. The refinement of new treatments, or biomedical insights, on the other hand, rarely entailed such costs, and rarely involved just one inventor or company. Instead, most of the advances came from researchers and practicing doctors sharing knowledge and further developing each other’s insights.
The consensus was so strong that the idea of patenting medical knowledge could seem absurd. For example, in 1954, when Jonas Salk developed a polio vaccine, his funder, the March of Dimes, prohibited patenting or receipt of royalties on the results of its research projects. The notion of Salk individually owning rights to the discovery never entered the picture. When Edward R. Murrow, the renowned TV commentator of the day, asked, “Who will control the new pharmaceutical?” Salk scoffed in reply that the discovery belonged to the public. “There is no patent,” he said. “Could you patent the sun?”
Yet ironically, even as Salk was asking his audacious rhetorical question, the Patent Office’s distinction between devices and procedures was beginning to erode, in concert with an expansion of the accepted notion of intellectual property in many disparate high-tech fields. Beginning with a fateful 1954 patent on a technique to treat hemorrhoids, the Patent Office became increasingly indifferent to the distinction between devices and procedures.
By the early 1990s, many doctors and medical researchers had seen the potential financial benefits of seeking patents on procedures, techniques, and observations, and were petitioning for patents in record numbers. In 1996, Medical Economics claimed that the Patent Office was issuing patents on medical procedures at a rate of 100 per month, double the rate of a decade before. Other estimates put the number far higher.
Unfortunately, developing more precise estimates of how many such patents there are is difficult. Patents in the medical field frequently involve both devices and methods in their claims. The category covering surgery does have a subclass explicitly devoted to surgical methods, and it catalogs 485 patents. However, one law firm’s search estimated that as many as 134,000 other surgery-related patents likely contain ownership claims on techniques or methods in conjunction with the use of an instrument or device.