Live coverage on cspan. All of our witnesses on the first and second panel are participating today. I apologize for being a few minutes late. We were in the middle of a two vote series so all of us at some point will get up and go vote and come back in my hope is we will be able to use this hearing regardless. I would like to particularly thank my Ranking Member and friend, senator tillis, and his staff for working so well together and putting this hearing together on a consensus basis. Today we are examining the patent eligibility act, our second drive through this ticket, and i am looking forward to a return. To a reconsideration of the court issues. More than 70 years ago, Congress Passed the patent act, and that law defined patent law subject matter very clearly. Congress intended to allow anything under the sun as made by man to be patentable. Other provisions in the act require that it should be novel, not obvious. Written descriptions served as defined filters, and that all changed roughly a decade ago when the Supreme Court announced a new two step test for determining patent eligibility. Judges have to determine whether an invention is directed to a patent ineligible concept like the law of nature or abstract idea, and if so, the examiner or judge has to consider whether the patent claim contains an inventive concept. The results to my fewer inventions are patent eligible in the United States, particularly in rapidly advancing fields, medical diagnostics, software, artificial intelligence. Those same inventions are still eligible for patent protection abroad, which means if innovators and investors dont have confidence in our ability to protect inventions in the United States, they may or will take their skills and investments elsewhere. This new test does not just with the u. S. At a competitive disadvantage, it is also quite difficult for judges to apply with any degree of certainty. Here is how judges on the federal circuit described the state of u. S. Eligibility law. Incoherent, fraught, unclear, inconsistent, and confusing. Things are so bad that the chief judge has made an unprecedented plea for guidance from the Supreme Court. Multiple solicitors general of the u. S. Have asked the court to clarify this law, and the Patent Trademark Office has said the illegal uncertainty has caused unique challenges. In 2019, senator tillis and i had a marathon three days of hearing and heard from 45 witnesses on the issue of patentability. Almost every witness agreed that eligibility law was a mess and needed further clarity and guidance. The Supreme Court has consistently refused to step in, denying every one of the roughly 100 petitions raising this question over the past decade. With the Supreme Court unwilling come unlikely to act, legislation is the best and may be the only path forward, which is why i was happy to once again join senator tillis in introducing something that will return patentability to important inventions. It will be clear what is not patent eligible, ideas, discoveries of what already exists in nature, like unmodified human genes, and social or cultural content, things that everyone agrees is beyond the scope. To be able to a compass this in three ways, first, abolish those set forth in the Supreme Court two step test. Second, clarify eligibility determinations are made by considering every claim element of the patent as a whole and without regards to novelty nondisclosure requirements, and a list of excluded subject matter while maintaining the existing statutory categories. I look forward to continuing this work with senator tillis and with the wide range of stakeholder groups presented by witnesses here today as we move forward. We have assembled two panels with diverse views and perspectives views and perspectives pro and con. I will introduce the first panel of witnesses in a moment, but first i will turn it over to senator tillis of north carolina. Ranking member tillis thank you, mr. Chairman, and thanks everyone for being here. These are two of the most significant issues we must address within the patent community. Today we focus on patent eligibility reform. While i do believe i dont always believe the best fix is allegedly to fix, but i think we reached a point where legislation is needed. As a result of a series of u. S. Supreme Court Decisions which created categories of judicial exceptions, patent eligibility law has become confused, constricted, unclear, and unclear over the years. Inconsistent case decisions, and certainty innovation, and investment communities, at unpredictable business outcomes. This lack of clarity threatens to hinder innovation and to unseat the United States as the World Innovation leader especially in medicine, artificial intelligence, computing, and 5g wireless and beyond. This impacts individual inventors and businesses both large and small. Furthermore, this lack of clarity has the potential to cripple our Economic Growth and will leave our country vulnerable to foreign bad actors, primarily the Chinese Communist party who wish to undermine ip rights. In 2021, i worked with david and a judge to file an amicus brief in the american axle case. I was disappointed to see the Supreme Court declined this opportunity to offer clarity on patent eligibility. There was another reason why this is another reason why Congress Must act and why i introduced the patent eligibility restoration act of 2023 along with senator coons. This will secure inventions across several key areas of technology. The existing categories of eligible subject matter worked well over two centuries, and it addresses concerns regarding inappropriate eligibility constraints by enumerating a specific but extensive list of excluded subject matter. This reform will directly and meaningfully impact all stages of patent lifecycle from prosecution to litigation. I look forward to continuing to work with stakeholders to develop a proposal that strikes the right balance and most importantly can pass the senate and become law. I encourage everyone to reach out and engage with my office regarding this bill, especially those who oppose it. And again, i will make my traditional disclaimer. Just come at us with good arguments. Dont try and undermine it behindthescenes. It never ends well. We have said many times before it is better to be at the table than on the table. Lets get this right because often times when you come with a point of view with the data to back it, we will try to accommodate it. Mr. Chair, thank you again for holding the hearing. I look forward to continuing to work closely with you and your staff to move them through the senate together. Now i look forward to hearing your testimony. Thank you, mr. Chair. Chair coons thank you, senator tillis. Thank you, senator, for joining us. Today, we welcome two panels of witnesses to testify. Our first witness this andrei iancu is andrei iancu. Welcome. We second have richard blaylock, an ip strategist for an genetic testing company. Thank you, richard. We have courtenay c. Brinckerhoff, a partner who has been advising life sizes clients for more than 25 years in obtaining and defending licensing and enforcing patents. Finally, we were here from philip johnson. A coalition of patent owners from a wide range of industry sectors. Mr. Johnson has been a leading voice in patent law for more than 40 years. Briefly about the mechanics after i swear in this panel of witnesses, you will each have five minutes to make an opening statement. We will proceed to questions and each senator will have five minutes. We will likely have a second round of questions, then we will recess and bring in the second panel. But first to be sworn in. Could all the witnesses please stand . Please raise your right hand. Do you swear and affirm the testimony you will give before this testimony will be the truth, the whole truth, and nothing but the truth, so help you god . Thank you. Mr. Iancu, you may proceed. Mr. Iancu thank you, mr. Chairman, Ranking Member tillis, members of the subcommittee. Good afternoon, and think it really to discuss and thank you for the opportunity to discuss. I want to thank the subcommittee for undertaking the task of modernizing the statute which in essence first appeared in the patent act of 1793, and when madison and jefferson were drafting patent laws. A lot has changed in the world of Technology Since 1793, and courts will be forgiven for struggling to apply an 18thcentury statute with 21st century technology. Our Founding Fathers were brilliant. But even they did not anticipate dna processing or the internet. The current state of section 101 law is the result of many quick decisions over the many decades trying to determine whether these modern technologies fit into categories defined in 1793 or whether they are subject to certain exceptions courts have imposed since then. These quick decisions also have resulted in certain de facto rules such as diagnostic techniques for example generally not eligible for patent in the United States. This congress has never considered, debated, or passed in the law. If the United States does not recognize patents for certain categories of inventions, they would otherwise be part of categories outlined by congress, than it is up to congress to make that rule. In other words, congress defined the categories of invention that are eligible for patents. If there are to be exceptions to those categories, they must likewise come from congress. One of the biggest errors is the Court Decisions have recently poured into section 101 analysis other parts of patent law such as questions of novelty, which are dealt with in section 102, questions addressed in section 103, questions of specificity and disclosure, which would be addressed in section 112 analysis. All of this has even sown confusion among the expert ranks of the hardworking patent examiners and the u. S. Pto. To address this issue, the Patent Office for beleaguered guidelines in 2019 that synthesize and provided a significantly improved framework for analyzing eligibility under 101. This is dramatically improving the analysis at the u. S. Pto. For example, a study has shown that uncertainty of section 101 decisions for the relevant technologies decreased by 44 in just that first year following publication of the guidelines. It is working really well. Courts however are independent and not bound by administered of guidelines, so they persist. They persist in their approach, which has caused profound uncertainty in the lower courts and among inventors, investors, and patent law practitioners alike. As a result, congressional action is needed to determine affirmatively which categories of invention should be deemed statutorily patentable or unpatentable. Here is the most important point. Congress needs to create clear rules. Whatever those rules may end up being after the legislative debate, at least the public deserves to know what the rules of the road are. Fortunately, it provides a legislative vehicle for the United States to correct the state of the law. It outlines the correct threestep framework for analysis. First, it maintains the broad categories of what qualifies as an invention in the u. S. In other words, what is in the patent system. It then expressly outlines certain categories that are not considered to be eligible for patents. In other words, what is out of the patent system. And further indicates . Not to create any other exceptions that are not in the statute. Third, it clarifies the excluded matter does not automatically destroy eligibility. Specifically an invention that combines excluded matter with eligible matter into a useful, practical application, and that combination may still be eligible. In the end, once the categories of included and excluded matter after debate and adjustment is appropriate are settled on and passed into law, it will bring immediate certainty to section 101. I commend the subcommittee for holding this hearing to bring muchneeded reform to section 101 and to set our nation on a path of innovation and success for the 21st century and beyond. Thank you again for the opportunity to testify, and i look forward to your questions. Chair coons thank you for your testimony. Mr. Blaylock members of the subcommittee, thank you for the opportunity to address the topic of patent subject matter eligibility. I am appearing on behalf of the corporation for whom i have been council since its formation in 2010. The clinical diagnostic community it serves is concerned the patent eligibility restoration act as introduced would stifle innovation and harm patient care in the field of diagnostic genetic testing and precision medicine. The Company Delivers information for both children and adults and has served over 4 million patients and its success in providing critical information has been fostered by the current patent eligibility jurisprudence in the United States. We have often heard the suggestion the publication of the human genome is rendered moot the need for concern relating to patents on human genes. The argument rests on the already had patented human genes have passed because the sequences of human genes are no longer new. This represented a fundamental misunderstanding of the risks to science and patient care caused by permitting natural phenomena to be patented. Under current law, natural phenomena are not patent eligible subject matter, nor are applications of conventional technology to natural phenomena. No person has the standard human genome. All of us have variants in our genetic sequences. Some are clinically significant. A wellknown example, the brca genes that would present indicate a substantially elevated lifetime risk of breast cancer, pancreatic cancer, prostate cancer, or other types of cancer. Variants such as these are natural biomarkers and this information, including its association with disease risk, is in unpatentable natural phenomena. Also technologies to detect the absence or presence is unpatentable permitted by contrast, nothing in the current lot patenting of new type gnostic techniques such as new tools for sequencing genes. While certain biomarkers have been discovered, the human genome moves fast and far more important biomarkers are to be discovered. Our sophistication in understanding these enter clinical relevance is substantial to the practice of personalized medicine. The patents on natural phenomena has not impaired innovation in the Genetic Diagnostics industry. Quite the opposite is true. In the last decade, the genetic Testing Industry has thrived. The cost of genetic testing and genetic sequencing has fallen dramatically. There are no barriers to innovation with new, clinically relevant biomarkers. New biomarkers are being recognized on a routine basis. Pera would permit the position of natural phenomena the privatization of natural phenomena such as those embodied by genetic pera which shut the door. A new Patent Covering newly discovered biomarkers would appear and impede Patient Access to such basic information. Because so many are engaged in identification of new biomarkers, a Diverse Group of new tutees stand in the way of clinicians efforts to conduct analysis of a patients Genetic Information because stateoftheart testing would require permission from all of them. None of them would be required to grant such permission. That was the reigning set of conditions before the decisions. Pera would take us back, back to a time when the total charge for access to biomarkers in just the two brca genes was 4400. Today, a test with more information cost a fraction of that amount. The patent system should afford the opportunity to afford the cure but not the disease. These natural biomarkers and this information including association with disease risk im sorry. The patent system is not now and should im sorry. The patent system does now and should permit the protection of invention but not mere discoveries of innovation, and it does and should reward innovation in the form of new therapies and new tools for detecting biomarkers but not the biomarkers themselves. We urge the committee to recognize natural phenomena such as biomarkers as precompetitive Information Available to all. This can be accomplished by requiring natural phenomena, natural materials, and abstract ideas be treated as prior to all patent applications. This would be the most efficient way to effectively codify the essence of current supreme work jurisprudence on patent subject matter eligibility. We stand ready to offer any assistance the subcommittee may request to approach patent law reform while preserving the vitality of the genetic Testing Industry innovation and reportedly Patient Access, the promise of thank you. Chairman cans, Ranking Member tellis, thank you for the opportunity to speak on this issue. I have many years of experience helping clients with patents on their convention. My testimony is personal to be to me. I want to touch on three issues. Inconsistencies, the impact on mobile technologies, and ongoing absurd t. There are inventions that cannot be patented in the u. S. I can still be pat ted and other countries. These include products such as vaccines, and that are useful in commercial and industrial applications. Although some countries have limited exception, most sit still grabbed patents on methods of testing new diagnostic markers. Because you have the disclosure invention to obtain a patent, this means that inventors have to disclose their inventions to the whole world but cannot protect them to the same extent in the u. S. Pera would bring u. S. Eligibility back in line with patents that can be granted in other countries. The current inbound and the quid pro quo for patents is technologies related to microorganism. That includes what bacteria, just to name a few examples. Order to satisfy the written description for a patent, the inventor has to deposit a sample of the bacteria with a facility such as the one in gaithersburg, maryland. Then they have to make samples available to the public. The patent only covered a specific method of using the bacteria, samples have to be made available to the public. Prior, it could be claimed made based on the bacteria but now it is more limited. This imbalance required requiring a specimen, this incentive i sixpack in this area and makes trade secret it is important that pera restore eligibility in this space to encourage continued investment in innovation. To the continued expansion and judicial exception, i compare two decisions. The 20 41 21 decision invalidated claims on even though the claims require lenses and sensors. A year earlier, the federal circuit reversed the District Court ruling claims to a device for detecting and reporting, where components were detectors, logic, and event generators. Every useful invention has a purpose could be described by analogy to you. But most can be claimed as a subject matter as a whole. But how can stakeholders predict which approach will be taken . The Patent Office has interpreted myriad as permitting patenting of Natural Products that have been modified in a conventional way, such as claims upheld by the Supreme Court, but some District Courts feel compelled to apply the framework to all claims and search for a separate inventive concept, but that approach becomes the law of the land. Innovators may not be able to patent specific formulations of drugs derived from Natural Products, or any Life Sciences inventions that you not also involve a new scientific technique. When judicial exceptions are applied in an unpredictable manner, the validity of a patented value of technologies are also unpredictable. Oneonone issues are considered and potential deals. Unpredictability can be a drag on valuations. It is imperative that legislative action like pera be taken. I thank you for your efforts in this regard. Mr. Johnson . Because otherwise it would sound like i somehow had gotten to see your opening remarks in advance. I appear here today in my capacity as chair of the committee for patent reform, which is a Diverse Coalition of american manufacturers who rely on is to protect our inventions, develop and manufacture products but to protect them by those patents, licensed patents to them from others in furtherance of their business objectives and when necessary assert their patents against infringements and or defend against patents asserted against them. Numbers of 21 c are therefore on both sides of these controversies. They are stuck in the middle. What they want to know is what is going to happen, what is predictable, and what is fair . They want fairness and predictability of all else, because to run their businesses, they need to know how to make important investments which make take take decade or more to come to fruition. As many others have state, patent eligibility in this country is a mix. No one involved knows in any given situation whether the invention will be eligible or not eligible. As we have heard, this comes from the Supreme Courts recent activity relating to laws of nature and abstract ideas, which was remarkable that they seized on that is the distinguishing characteristic, because they at the same time recognized that everyone at the inventions that we have relies to some degree on natural phenomena, laws of nature, or an abstract idea. Now the lower courts are denying eligibility to some of our best inventions, including inventions that they themselves see as groundbreaking breakthroughs and, as you have heard, not just biotechnology and diagnostics, many other important areas as well. It is important therefore that congress set in now, past pera pass pera or equivalent legislation, perhaps with change wording, but basically pass pera so others can understand what kinds of inventions can be eligible and where their time and effort will be rewarded. Pera accomplished this by prohibiting patentability in determinations. This is the most important area where people make mistakes. You will hear it when you hear people talk about it. Just because a patent and invention is the kind that is eligible for opacity eligible for patenting does not mean it is patentable. An equation is reached where they are treated if they are the as if they are the same. There are a number of additional criteria which must be met. We need to maintain this dichotomy and understand this is an eligibility goal. When someone says this bill is allowing the patenting of x, y, or z, not necessarily. I agree that it is essential that we are going to protect National Security and maintain our role as worlds technological leader. This area of patent law must be fixed. It is needed to restore critical incentives to the private sector to invest in development, innovation, job growth. What is often overlooked is that consumers will be the ultimate beneficiaries of these reforms. They will not only benefit from the new innovations which come from this stimulated research, but when a new innovation is introduced into a marketplace, it puts pressure on the existing alternatives and often prices would be lowered where other alternatives which are now somewhat outdated. We have seen this over and over in technology. As the next model comes out, the prior model is discounted. This will help consumers for whom prior models are appropriate. We need to keep that in mind. And to Pay Attention to this, because this is something that needs to be fixed. I look forward to answering your questions. In my testimony, i have described this in far more detail. Thank you, mr. Johnson. I will begin our first round of questioning. Mr. Johnson, your written testimony points to the Supreme Courts caution by interpreting the exclusionary principle too old bradley, because all broadly, because all inventions at some level may embody laws of nature or abstract ideas. How have courts done at applying this . Mr. Johnson very inconsistently and unfortunately i think they have interpreted the Supreme Court decisions in a way which has caused them to overly apply in eligibility of deserving inventions. I pointed to a number of these. Some are so plainly unpredictable, things like automotive transmissions and other things that have traditionally been patentable for a long time, including some of the things on diagnostics and edison, medicines, such as naturally occurring materials, which are not patentsa pass itable pa i think i cite hearing knowless testimony which provided an extensive list of naturally based drugs. If you look at the approvals, you will see the approvals for these kinds of drugs for one reason or another dropped off, starting about the same time as the Supreme Court cases. Sen. Coons i agree that the law of eligibility is indeed a mess. But that is the purpose of our hearing, to make progress on this. The courts applied eligibility law more predictably since our 2019 hearings. Have they made any significant progress since the guidelines that were propagated by the former pto director . The short answer is no, except the only predictability that we have is the diagnostic message are not patentable. We believe that patents promote investment and innovation in these industries. Literally every time a new decision comes out, we read it with trepidation to see how it is going to be on digital cameras or digital devices show that even the federal circuit is not applying exceptions in a consistent manner. Sen. Coons some have argued that current eligibility lot is sufficient because methods of using Natural Products are eligible. The agree . I disagree because when the inventor is the first person who discovered it and determined its usefulness, a patent on the specific method of use is not going to reflect or reward the contribution that person has made. When youre patent only covers a specific message, it is difficult to detect infringement or enforce your patent. You cannot stop others from selling the products, so you have to police labeling, packaging, marketing materials to see if youre patent is being infringed. For process patents, it can be even more difficult. There are a number of practical and legal reasons why it can be challenging to claim specific scope of method claim protection. Sen. Coons you have testified pera would impose effectively no limits on patents, genes and other natural materials. What about addressing nonnovelties. With those filters work to avoid the harms you flagging your testimonies . They would not. There is a reason why i concentrated on the concept of biomarkers. The biomarkers i am talking about are being discovered every day. They are therefore new, nonobvious. And it is easy to describe them and how to enable someone to use them and even to describe the best way to implement them. The rest of the requirements for patentability are real but they do not address the concern that pera would change the current environment and make the patenting of information, acknowledge the association between a genetic anomaly and it clinical significance. What would be patented would be merely the use of conventional, everyday techniques in order to get that information. In short, unfortunately, pera would make a dramatic change. Sen. Coons do you agree . Do you think we need additional legislative language to keep patentability separate . Titus disagree with him. I disagree with him. Pera addresses the fact that the pure, natural product itself and the statute says as such is not eligible. It is one of the exclusions. As soon as that is applied by human hand, the way practical application, such as diagnostic kits becoming a particular disease, that is human innovation and that should be eligible, whether it is patentable, then we need to decide whether it overcomes novelty, but it is really important to understand the fundamental concepts of what human invention is, all human invention. It is the manipulation of nature towards practical uses by humans on this planet. We can exclude nature itself, but any human intervention and manipulation, that is what human innovation and engineering is. That should be eligible for patents. Then we can apply the fine filters of 102, one of 3, 112 that sen. Thillis mr. Blalock . What would be required if you were to proceed with pera would be to recognize that national, those ideas should one should not be able to rely slowly on the novelty as a basis for privatizing that information and meditate obtaining a monopoly. Sen. Thillis 15 seconds to rebut . That is why we have the rest of the codes. Any time you apply a practical ingenuity to nature, you are already into the useful arts. It is not necessary to pull it out at this stage. Section 10 three, we know how to do the analysis, how to create combinations and see if it is only a minor improvement or if it is using things we already know how to do. That is already there. You do not need to keep it out of the section 101 level. Sen. Thillis you will find that i do debate club in these hearings. If you happen to hear something that you take exception to, raise your pan and we will give you an exception a reply. A lot of people criticize pera as something that will impede Scientific Research and innovation. You may have characterized it is slamming the doors shut on innovation, but it seems like too a certain extent it would be a lying ourselves aligning ourselves more with policy in europe where it seems like Academic Research is doing well and industry is out competing the u. S. Tell me what i am missing about the policy in europe. We have done the experiments. We have lived with the current patent eligibility law for over a decade. A generation of knowledge and innovation has not been forwarded. At the time that the male decision about, some commentators that the sky was falling. The sky is not following. We are doing well. We continue to outcompete europe. We draw more investment. We are the leading market for new innovations in Life Sciences. European Companies Want to come here much more than the reverse. Sen. Thillis does the current state in section 101 benefit or disadvantage larger or Smaller Companies . I think always the Smaller Companies will be more disadvantage. First of all, inventors and Small Companies are not aware of the state of the law. They invest in technologies before they discover they are not patent eligible. The lines courts are drying do not make sense. But also Smaller Companies are not in a position to hedge their bets and spread their risks and they do not have market power to commercialize products without the investment. Sen. Thillis doesnt that create a weak ecosystem in terms of smaller players or innovators . It is critical smaller players can get patents and count on them being upheld. If i could use two seconds of my time to respond to just one comment. Sen. Thillis i saw your pan raise. We have had 10 years to see how this all plays out, but i disagree with that. We did not understand that that diagnostic message cannot be patentable until barely five years ago. His been much shorter than 10 years. I am concerned about what we are going to see in the longterm once people recognize the fact that patents cannot longer be granted on this technology in the u. S. My clients are still able to protect their inventions in europe and japan. Sen. Thillis that is some good work on guidance. But i do not think guidance alone is enough. Do you agree that we really do have to move forward with pera to correct this . Absolutely. The courts have made it clear that they will not respect the work they have done. They feel constrained by the Supreme Court decisions. Until it is fixed by this body, we are going to have trouble. Thank you. Senator hirono . I would like to start by thanking the chair man and Ranking Member thills for having this hearing. As everyone has acknowledged, the Supreme Court decisions have created a mess, leading to patent does ability and the hope is that this legislation will provide some level or a lot of deductibility to the patent system. Nothing is ever particularly simple. Mr. Young co. Said that the manipulation of nature by human should be patentable. That sounds reasonable. Mr. Johnson, i think you mentioned that in a lot of things can be eligible but that does not mean a patent would be forthcoming. Would you say that that does not necessarily mean that a timed will ensue if it is eligible . Mr. Johnson absolutely. It may mean that the manipulation is not new. It may mean that it is obvious, or if a b that the invention is described pursuant to the requirements of section 112, it may fail for other reasons. Sen. Hirono what is eligible to be found, and what make clear does not mean that a patent will ensue. Mr. Johnson absolutely. Question for ms. Brinkerhoff and mr. Blalock, some critics of this legislation, notably the aclu, argues it would allow patents for human beings and other natural materials. Supporters of the bill on unmodified human genes and natural materials, but critics require that there is an exception making eligible any gene or natural material that has been isolated. A question to both of you what are some examples of genes are natural materials that you expect to be patent eligible under this legislation that are not eligible currently . I will start. Examples, as i mentioned, are isolated, when you discover a chemical from a plants that could have used as a therapeutic agent, that would be a natural product that would be restored to eligibility under pera. Other examples are the bacteria that i discuss where they may be found in certain areas of the world, cold tolerant bacteria may be found in the north pole. Those have specific, useful properties that make them useful in industrial applications. As a be stored to eligibility under pera that cannot be patented now. Sen. Hirono mr. Blalock, do you think that that is reasonable that the items that ms. Brinkerhoff has mentioned should be patentable. I do not. If i may, i would like to extend this to the concept of genes. To use that example that if one were to observe newly a particular genetic mutation with a disease risk that the question is how would pera make that patentable . The only thing that is new is that knowledge. Isolation, purification, and enrichment are ordinary aspects of conventional genetic sequencing technologies. One would take the blood sample from a human and it would isolate, purify, enrich the gene. Pera would allow passaging that would stop the exploitation of that new knowledge. There is no other human involvement other than recognizing the knowledge. Sen. Hirono s brinkerhoff, would you like to respond . I think he underestimates the contribution of figuring out that there is a new gene with a new purpose, a new function that has not been discovered before. I think that is in inventive act that warrants patent protection. Sen. Hirono things are not for both. But i think we all agree that the Current Situation is a mess. Thank you, mr. Chairman. Mr. Jensen you seemed eager to engage in that last round of discussion. Mr. Johnson listening to mr. Blalocks discussion about the isolated gene, i heard a lot about conventional this unconventional that and so on, which with saving me that those are novelty or obvious concerns. It may very well be that the isolated gene and what is done with it turns out not to need this. That should be enough. It is not, what we are worried about and what he has already acknowledged, there are some important things lurking in the genome that could be incredibly important for our wellbeing in the future. We should want to incentivize people to look for at and to spend the time and energy and money that is needed in order to find it. These things do not announce themselves. This takes hard work and insight and real invention. We should recognize that. When that happens, those inventions are otherwise deserving, they should be patented. A logical extension of that backandforth is reflected in your written testimony. You said pera would prevent people from engaging in research. Which you support this bill if it had a Research Use Exemption to Patent Infringement . With that move you in a positive direction . Mr. Johnson no, it would not. We would still be concerned that pera would enable the privatization of information. There is a difference between discovery of facts about the world and inventions. Nvite believes that inventions are and should be patentable, but the mere discovery of information relevant to human health should not be the sole point of novelty. Sen. Coons would it still not prevent the passing of something that was mere knowledge . No, it would not, because the hypothetical is newly apprehended knowledge about a particular genetic variants of has clinical relevance. That discernment of what they have discovered is new. That is what the patent applicant would rely upon, because all of the other elements of the client, the sequencing, the drawing the blood, all of that, is old. The novelty and obvious hurdles would be overcome, relying solely on the discovery. That is the reason why if you were to proceed with pera, nvite would urge the committee to consider the recognition of natural phenomenon, natural materials, abstract ideas in patents. Sen. Coons will be the consequence what would be the consequences . You are basically eliminating the patent system. I do not support that. Again, think about this. Thomas edison scoured the earth to find the materials that would create the lightbulb. He observed after loss of investment in research that if you take bamboo and you create a bamboo filament and you heat it up, vacuum too, it creates light. That is the knowledge and information that he observed. Mr. Blalock says it is bad to give patents if you observe a genetic mutation associated with a risk such as cancer. And then you isolate it and create a diagnostic kits. Human beings benefit greatly from that type of observation. That is the essence of invention. It takes time, money and investment to find that out. If we eliminate patents on observing how nature behaves when humans alter it and create new conditions for it, then you eliminate the patent system, because that is what humans do. Engineer use nature and they put them in different combinations to create new technologies. That is what patents are for. Sen. Coons thank you. Mr. Johnson, you will get the last word in my round. Mr. Johnson as to retarding the surge, i could not disagree more. The fact of the matter is first we have the exemption, which allows for Free Research as long as it is related to developing information for the eventual submission to the fda, but the experience has shown that people who discover and have these inventions do not privatize them. They naturally would like to commercialize them or at least get them spread out and used widely. In fact, when there have been dramatic advances done in the biotechnology area, licensees have been made available because it takes a village to do all of the research that is needed in different applications. These are widely licensed, nonexclusive or product specific basis. That ability to become licensed, i want to develop product x using this, then you are willing to invest that money because you have the protection of the patent behind the license. Sen. Coons he and only forgive me. Im going to run. I am leaving my very capable Ranking Member in charge of conducting debate. I will be back soon. I do not intend to go vote, so we will just continue the discussion. Mr. Blalock, i appreciate you being there. I am neither attorney nor a patent expert. I am a business person trying to make sure that the United States is set to be innovation later that we already are. But not being a patent expert or an attorney that understands patent law, it would seem like director iancus assertion would end the patent system. Why is he wrong . Mr. Johnson one, because what i am suggesting mr. Blalock one, what i am suggesting is that right now, one cannot rely upon a natural phenomenon or an abstract idea is the point of novelty in a patent application. The patent system has not round to a halt. The Patent Office continues to turn out real patents. Patents are held on a regular basis. I would say that there is a substantial degree of predictability that has settled into the patent system. As a consequence, it is a gross overstatement to suggest that that would be the end of the patent system. Right now, things are operating well, not poorly. Those who object have a different policy outcome. It is not a functional problem. It is a policy difference. We would urge the subcommittee to take seriously the possibility that the status quo actually is both manageable and serving the country well. Sen. Thillis i would like to note that we have the record from the 45 witness hearings. Among those were testimony from the American Association of universities, the general counsel of the mercy of michigan, who detailed how devastating this was to their activities. We heard from another witness that they had given up looking into diagnostic methods. This is clearly hurting earlystage insights that lead to inventions. Mr. Johnson we do not know what we do not know. With the status quo, to what extent are we missing out on opportunities because we do not have an environment that is worth the investment . Sen. Thillis you are right. We do not know what we do not know but we need could come from it. The Current System is not working well. The fact of the matter is that the federal circuit has observed, we have the de facto rule that diagnostic techniques in the u. S. Are not eligible for patent. That was not debated in any way and it was not decided by the United States that that should be the law. Yes, that is what we in a de facto matter right now. We have a situation where an automobile axle has particular characteristics that engineers worked long and hard to determine whether it would reduce vibration under certain conditions is not eligible for a patent. We do not know what the course will hold for the next invention. The problem we have now, sure, patents are being issued, upheld. But the problem we have is that we have rate unpredictability in the court system. That stymies investment and innovation. What mr. Blalock is suggesting that i was responding to is a further expansion of that to a large extent. Codifying, it would apply across all industries. That is what i think is not a good idea. Sen. Thillis i could go on forever. Mr. Blalock, i appreciate you being in the mix here. I appreciate you taking my debate club in the manner intended. These hearings are good data points but not where most of the work gets done. Mr. Blalock and those of you on the first panel, i hope that when you see an invitation for working sessions that you come forward. I do not want to impede any successful business that seems to think that the sensible is acceptable. But by the same token, i do believe that we want to make sure that we modernize or provide clarity, so that we have more inventions, more creators so that we maintain and reinforce our ship position globally our leadership position globally. I look forward to your continued gauge meant. I would like to appreciate the other witnesses. Mr. Johnson, good to see you again. We will allow the staff to make a transition to the second panel. I will swear them in and we will begin with the opening testimony. If chair coons comes back, we will let him take the gavel back