Patent Eligibility Restoration Act Would Fuel US Competitiveness

America’s most brilliant scientists and engineers are battling a surprising opponent in their quest to dominate critical fields such as artificial intelligence and biotechnology—the US Supreme Court.

For over a decade, misguided Supreme Court decisions have resulted in denial of patent protections to several categories of inventions that were previously eligible. Those rulings, which have no basis in statute and contain no exceptions to eligibility, have made it far more difficult for startups and others to raise capital for research and development in key strategic sectors.

Fortunately, Congress is considering a bill that would effectively overturn those decisions and empower US innovators to compete with their rivals in China and Europe on a level playing field.

Consider the harm inflicted by the Supreme Court’s 2012 decision in Mayo Collaborative Services v. Prometheus Laboratories. The justices ruled that inventions based on “laws of nature” are ineligible for patenting, and lower courts have applied that principle to block patents on virtually all medical diagnostic innovations.

This has had a dramatic effect on diagnostic investment. In just the first four years following the Mayo decision, investment in diagnostics fell by an estimated $9 billion compared with what it would have been without the decision.

The post-Mayo decline in venture capital investment in diagnostics has likely led startups in the space to reconsider pursuing new diagnostic innovations. Many diagnostic companies went out of business or simply quit the diagnostic field. This is especially harmful, as early and accurate diagnosis of health conditions is key to effective treatment.

Another notable case is Alice Corp. v. CLS Bank, in which the Supreme Court asserted that “abstract ideas” can’t be patented but refused to define “abstract.” Lower courts have interpreted this vague directive to deny patents on many software-based inventions, disrupting innovation in fields such as AI.

Indeed, the US Patent and Trademark Office rejected most AI patent applications it received in 2018—as well as every abandoned application it received for quantum computing programming from 2014 to 2019—due to ineligibility, as former USPTO Director David Kappos revealed.

These rulings continue to undermine US competitiveness. China is pulling away on many technological frontiers. Backed by the Chinese government, firms such as DeepSeek are challenging US leadership in AI and other vital technologies. One study found that from 2019 to 2023, China led the US in 57 out of 64 critical technology sectors spanning AI and algorithms, quantum communication, and biological manufacturing.

Boosting competitiveness depends heavily on patents and private investment. We must ensure our patent system incentivizes ample investment in cutting-edge technologies.

The recently reintroduced, bipartisan Patent Eligibility Restoration Act would do exactly that. By reestablishing clear patent eligibility for cutting-edge technologies, PERA would reinvigorate tech investment and deliver a much-needed boost to the US’ global competitiveness. The bill has been referred to the Judiciary Committee in both the House and Senate, where it awaits hearings before it can advance toward passage.

This new version of PERA incorporates several revisions to better ensure the bill supports true innovation without encouraging any frivolous or illegitimate patent applications, thereby improving the likelihood of support from Congressional members. Two changes stand out.

First, the latest version of the bill makes clearer what is and isn’t patent-eligible. For example, it specifies that isolated human genes aren’t eligible for patenting.

The bill previously prohibited the patenting of a naturally existing gene as it was found in the human body. The current version goes further by stating that simply isolating a human gene doesn’t make it eligible for a patent—reflecting that the human genome has already been sequenced and is no longer considered novel.

On the other hand, a test that uses a new scientific approach to detect genetic conditions that predispose patients to a particular type of cancer would be patent-eligible and patentable if the other statutory requirements are met.

Second, the bill includes additional language, with a new rule of construction, specifying that the mere involvement of a computer is insufficient to make an invention patent-eligible—helping to curb overly broad or speculative patent claims.

This limitation was already in the bill’s findings and operative language. But because many critics mischaracterized this part of the bill, the new language is a welcome effort to underscore the proposal’s intended (and reasonable) scope.

By restoring patent eligibility for categories of inventions that courts have wrongly declared ineligible—and establishing clear guidelines to prevent future uncertainty—PERA would once again give US inventors and companies confidence to invest in technologies that will define our future. After over a decade of ongoing harm, it is time for Congress to fix the Supreme Court’s mistakes.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Paul Michel is board member of the Council for Innovation Promotion. He served on the US Court of Appeals for the Federal Circuit, and as its chief judge from 2004 to 2010.

Kathleen O’Malley is board member of the Council for Innovation Promotion. She served on the US Court of Appeals for the Federal Circuit and the US District Court for the Northern District of Ohio.

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