Interview with Professor Peter Lee, Professor of Law at King Hall
Anthony Parenti
Peter Lee | UC Davis School of Law
Posted Monday, May 8, 2017

Hello Professor Lee, can you tell us a little about your background?

I teach Property, Intellectual Property, International IP and Developments, and am the faculty advisor for the IP externship. In particular most of my writing is focus on Patents in the Life Sciences and University/Industry technology transfer.

What are some of the bigger upcoming challenges you see for the IP field in general specifically in relation to patents?

There have been a lot of Supreme Court cases recently on Patentable Subject Matter. Patentable Subject Matter is a threshold of whether is something that is even patentable at all. I can patent an aircraft engine, I cannot patent E=MC2 or a law of nature. There have been some recent Supreme Court cases that have attempted to clarify patentable subject matter, but unfortunately they have muddied the waters. For instance there is a case called Mayo v. Prometheus, which involves whether a process for enhancing the therapeutic efficacy of a drug is patentable subject matter. The court said this particular technology was not patentable, that it encompassed a law of nature, which is not patentable. So this has caused a lot of consternation over whether diagnostic methods are going to be patentable at all. Similarly there was a recent case that held that isolated DNA, DNA removed from its genomic environment, is not patentable subject matter. This is odd because the PTO has been issuing thousands of gene patents for decades. So this has caused a lot of consternation over where exactly you draw the line for patentable subject matter.

I am seeing a future with a future in personalized medicine playing a big role in our society with things like stem cell biology, where you can use a patient’s own tissues to derive stem cells, and personal DNA sequencing for individualized medicine, and I am wondering if you could speak to whether the patent system we have is prepared to handle the wealth of technology and data that can come from them?

I would say no. We do have a lot of uncertainty regarding patentable subject matter. Because of the gray area of patentable subject matter, particularly arising from the Myriad case, we don’t really know what types of stem cell inventions are really patentable subject matter. Things that look like natural things, even if they have some synthetic background, may not actually be patentable subject matter because it’s a natural product.

On that note, do you think that many of the stem cell patents we have today, like Induced Pluripotent Stem cells or Embryonic Stem Cells, will be upheld today?

My sense is that Induced Pluripotent Stem Cells would remain patentable subject matter because of the synthetic nature of their being, but something like human Embryonic Stem Cells, if they are just extracted and isolated from and embryo, post Myriad that may not be patentable subject matter. We just don’t know with great precision whether they are patentable subject matter and what the business community always wants is clear rules, whether it is patentable or not. The worst answer is, I don’t know, and unfortunately that is a very common answer.

So, how do we fix the system?

More clarity is helpful. If the Supreme Court actually heard a case involving stem cells that would be helpful. But keep in mind the patent system is only one plank in a very broad innovation ecosystem. A lot of innovation happens outside the patent system and in conjunction with the patent system. I have always been a big advocate of focusing on federal funding of scientific research as a very important, and often underappreciated, mechanism for advancing the sciences. Arguably that might get you a better result where we don’t want these foundational technologies to be patented.

Recently UC Davis Law Review held a Symposium called “Future Proofing the Law.” At that symposium, one of the panelists argued that when the Embryonic Stem Cell patents were litigated, it was decided that one institution would hold all of the intellectual property, and that actually stifled innovation and the dissemination of the technology. We are in a similar situation where two institutions, UC Berkeley and Harvard’s Broad Institute, are in a patent battle over the landmark CRISPR technology, which gives scientists a simple way to edit our genomes. Do you think that awarding a single institution all of the intellectual property stifles innovation?

I would say that there are two different questions here. How do you allocate the property rights? And, what is the nature of the holders of those property rights and what they do with them? I do think it’s problematic that various foundational technologies are subject to intellectual property, particularly those that bump up against natural laws, which shouldn’t even be eligible for patenting. That being said if the patents are held by, to use a loaded term, “Enlightened Institutions” that are willing to non-exclusively license them widely, it is not as problematic. For instance, Stanford held the Recombinant DNA patents, and they could have tried to squeeze every last penny of profit, but they non-exclusively licensed these patents very widely so a lot of academic and research institutions could use them. So it is not necessarily problematic if the patentees that have these patents are willing to non-exclusively license them at a low fee. The problem is that even universities these days are quite profit orientated. They are not the “enlightened institutions” of yesteryear. So, the allocation of property rights and the normative commitments of the institutions holding them have been problematic.

With regards to the America Invents Act (AIA), it seems like a large change in the patent system changing from a first to invent to a first to file system. Do you think the change to the first to file system is a good thing?

I would say yes. We had the first to invent system for a long time, but objectively a first to file system is a lot easier to administer. Getting into dates of invention is very difficult, if you consider conception, due diligence, there are a lot of evidentiary issues. Now, we are more harmonized with the rest of the world, which I see as an advantage in terms of international IP rights. In addition, there has been a study, which showed that the first to invent is often the first to file, so we aren’t really losing much accuracy with the new system.

One of the complaints from smaller inventors is that the changes in the AIA disproportionately favor larger institutions. Do you agree with that?

I would say that I agree with that to a certain extent. It costs a good deal of money to apply for a patent. If that’s going to be the marker of you being the first, then it is going to disadvantage parties that do not have a lot of capital as compared to just being able rely on invention dates. This is mitigated though because independent inventors and universities lobbied for lower fees for small entities, so it won’t be that onerous of a burden.

From an outside perspective, the patent system seems very mysterious. Is there something about the patent system that is a commonly misunderstood?

A lot of people focus on the grant of exclusive rights as a way of promoting innovation. The idea being that I am not going to invest in research and development unless I get exclusive rights so I can recoup my research and development costs in the market. This is a very important aspect of the patent system. But, the patent system also relies on a very robust public domain. So it is the denial of exclusive rights, the expiration of exclusive rights, that also promotes the progress of science.

We hear a great deal about patent trolls in the media today. What are your thoughts on patent trolls and what can we do to mitigate the problems they pose?

When you have a proliferation of patent rights that are being asserted by non-practicing entities who are not engaged in any type of productive manufacturing, I think that is highly problematic. However, I think that patent trolls get a bad wrap, but really they are a symptom of systemic failures in the patent system. We grant patents on a lot of inventions that really are not patent worthy. About 40% of litigated patents are deemed to be invalid. So we are not doing a good job at screening patents and making sure that only worthy patents get through. If we did a better job, then there would be much fewer patents available in society and the leverage born by patent trolls would be lower. Further, for a long time we offered relatively strict damages upon patent infringement. It is a situation that is ripe for a patent trolls. If we took a more rational approach to damages it would severely undermine the leverage of patent trolls.

Last, the U.S. Court of Appeals for the Federal Circuit is the court that hears all patent cases. Do you think that these are the people that are best situated to hear cases that range in scope from the patentability of DNA to the limits of artificial intelligence?

I have actually written a lot about this and the short answer is yes. There is a valuable function played by the U.S. Court of Appeals for the Federal Circuit. The back-story of the court is that there were different interpretations of patent law in different circuits, which was a big mess. We needed some uniformity. While it is not a requirement that the U.S. Court of Appeals for the Federal Circuit judges be experts in technology, many of them are, and they develop an expertise by virtue of seeing these types of cases over and over again. That being said, they have developed a pro patent bias. So I think there is a valuable role to be played by the Supreme Court, which is in some ways very ill suited to hear patent cases, but they are a nice generalist counter weight to the Federal Circuit.

Well thank you for talking with us and educating all of us on the quirks and intricacies of the U.S. patent system.

Thank you, you are welcome.