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I'll have Mayo with my Myriad: the effect of Mayo Collaborative Services v. Prometheus Laboratories, Inc. and Association for Molecular Pathology v. U.S. Patent and Trademark Office on patent licensees and licensors.

  I. INTRODUCTION
 II. BACKGROUND
     A. Patent-Eligible Subject Matter Under 35 U.S.C. [section] 101
     B. Mayo Provides Limits in Method Patents Relating to Laws of
        Nature
     C. The Federal Circuit Adds to Section 101 Patent Eligibility
        Analysis in Myriad
        1. Genetic Background
        2. Myriad's Discussion of the Claim's Patent Eligibility
           Under Section 101
     D. MedImmune Further Adds to Licensing Issues
III. ANALYSIS
     A. Preemption of Laws of Nature After Mayo and Myriad
     B. Licensee Strategy After Mayo and Myriad
     C. Licensor Strategy After Mayo and Myriad
 IV. RECOMMENDATION
     A. The Tapering Effect of Myriad on Mayo and Further Limitations
        of Sections 102, 103, and 112 on the Impact of Section 101
        Patent Ineligibility
     B. Appropriate Actions for Those Dealing With Patent Licenses
        Relating to Laws of Nature
        1. Possible Courses of Action for a Licensee When the Patent
           Is Potentially Patent-Ineligible
        2. Possible Courses of Action for a Licensor When a Patent Is
           Potentially Patent-Ineligible
        3. Courses of Action for Licensees and Licensors if the Patent
           Is Patent-Eligible
  V. CONCLUSION


I. INTRODUCTION

The United States patent industry is both robust and valuable; recently, the Economics and Statistics Administration and the United States Patent and Trademark Office (PTO) estimated that patent-intensive industries directly accounted for 3.9 million jobs (1) and 34.8% of U.S. GDP, or $763 billion. (2) Additionally, the same report estimated that "patent-intensive industries supported an additional 3.3 million workers indirectly." (3) Given both the size and value of the patent industry, any court decision that affects this industry as a whole can have major repercussions. one concern central to this industry is how U.S. patent law affects future innovation. (4) Patent decisions from the Supreme Court and Court of Appeals for the Federal Circuit (hereinafter the Federal Circuit) commonly motivate scholars to address the theoretical underpinnings of the decisions and their effect on the law and on future innovation. But it is less common for scholars to address the practical foundations relating to those holding patent licenses unless the issue within the case directly deals with patent licenses. (5)

Two recent cases, Mayo Collaborative Services v. Prometheus Laboratories, Inc., (hereinafter Mayo) (6) and Association for Molecular Pathology v. U.S. Patent & Trademark Office (hereinafter Myriad), (7) address the role patent law should play in the U.S. patent industry. Both of these cases provide a robust analysis of the statutory, common law, and policy theory underlying the holding in each case. (8) However, neither case provides practical guidance to licensors or licensees on what actions to take regarding their licenses in light of their holdings.

This Note analyzes the consequences that the recent decisions in Mayo and Myriad will likely have on patent licensing, with a focus on specific actions licensors and licensees might take in response. Part II explains the statutory basis underlying the decisions in Mayo and Myriad, (9) the Supreme Court's holding and reasoning in Mayo, (10) and the Federal Circuit's holding and reasoning in Myriad. (11) Part III of this Note discusses Mayo's and Myriad's implications on the preemption of natural laws; (12) the potential effects of Mayo and Myriad on patent licensees and possible courses of action for those licensees; (13) and the likely effect of Mayo and Myriad on the patent licensors and possible courses of action for those licensors. (14) Finally, Part IV of this Note recommends actions both licensees and licensors may take to maximize their interests in light of the potential benefits and risks associated with Mayo and Myriad. (15)

II. BACKGROUND

To understand the impact of the Supreme Court's recent decision in Mayo and the Federal Circuit's decision in Myriad on entities practicing or planning to practice patent licensing, this Note will first discuss the background and present state of patent-eligible subject matter under 35 U.S.C. [section] 101. Part A will discuss 35 U.S.C. [section] 101 and its role in patent-eligible subject matter. Part B will explain Mayo and its relation to [section] 101, and Part C will discuss Myriad and the Federal Circuit's reasoning concerning why Mayo did not alter its holding in Myriad.

A. Patent-Eligible Subject Matter Under 35 U.S.C. [section] 101

Title 35 U.S.C. [section] 101 (hereinafter Section 101) provides that "[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title." (16) While the scope of patent-eligible subject matter under Section 101 is broad, common law has limited its breadth. (17) These limits, recognized by the Supreme Court, deem "laws of nature, natural phenomena, and abstract ideas" to be patent-ineligible subject matter under Section 101. (18) This general exception to subject matter eligibility is not new--the Supreme Court has recognized it since the mid-1800s. (19) While laws of nature are not patent-eligible, "an application of a law of nature ... to a known structure or process may [qualify for] patent protection." (20) Thus, as courts often repeat, Einstein's law that E = m[c.sup.2] by itself cannot be patented; (21) on the other hand, a claim for an application of Einstein's law to a non-natural situation could be patent-eligible. (22) Yet one cannot merely take a law of nature and apply it to receive patent eligibility. (23) Instead, a claim must contain a separate "inventive concept" such that the patent does not merely represent a patent on the law of nature itself. (24) A useful--but not definitive--test for patent eligibility is the "machine-or-transformation test." (25) The machine-or-transformation test requires a patent to be "tied to a machine or to transform an article" to be patent-eligible under Section 101. (26)

B. Mayo Provides Limits in Method Patents Relating to Laws of Nature

In Mayo, the Court held that the Prometheus' (the patent holder's) method patent, which explained the steps in a drug treatment, was too close to a law of nature and was therefore patent-ineligible subject matter. (27) The claimed method involved a process directed at helping doctors administer thiopurine drugs to patients with autoimmune diseases by informing the doctor when the dosage was too high or too low. (28) The problem the patent attempted to solve was that, although the human body metabolizes thiopurine, thereby creating metabolites in the blood, an equivalent quantity of thiopurine in different persons results in varying effects. (29) This creates difficulties for doctors seeking to administer thiopurine without administering too much (creating dangerous side effects) or administering too little (and failing to be effective). (30)

Before Prometheus developed the patents at issue, scientists had previously discovered general correlations between thiopurine-produced metabolites in the bloodstream and the likelihood of either dangerous side effects or the dosage being ineffective. (31) They had not, however, discovered the specific levels of metabolites that correlated to dangerous side effects or ineffectiveness. (32) Prometheus claimed rights to apply these correlations in a method patent containing three steps: (1) "administering" the drug; (2) "determining" the level of the drug in the patient; and (3) increasing the amount of drug administered if below a threshold or decreasing the amount of drug administered if above a certain level. (33) Prometheus filed for the patent on April 8, 1999, and the Patent and Trademark Office granted the patent on March 12, 2002. (34)

After Prometheus obtained a patent on this method, Mayo Clinic Rochester and Mayo Collaborative Services (hereinafter Mayo) bought the test from Prometheus and used it for a period of time before Mayo announced it would develop and use its own test based on the method Prometheus patented. (35) Prometheus then sued Mayo for patent infringement. (36) The District Court ruled that "the patents effectively claim natural laws ...--namely the correlations between thiopurine metabolite levels and the toxicity and efficacy of thiopurine drug dosages--and so are not patentable." (37) The Federal Circuit reversed, explaining that the method involved administering a drug and determining metabolite levels, which passed the "machine or transformation test" and sufficiently "confine[d] the patent monopoly within rather definite bounds." (38)

The Supreme Court overturned the Federal Circuit's holding when it held that Prometheus' patent was not patent-eligible subject matter. (39) It reasoned that while Prometheus' patent "takes a human action" by administering a thiopurine drug, "the relation itself exists in principle apart from any human action." (40) The Court emphasized its preference for avoiding the monopoly protection of a patent over a law of nature by simply drafting the claim to "apply it." (41) The Court found the "administering" and "determining" insufficient to transform the claim from one covering merely a law of nature. (42) The Court held that the "administering" step only covered doctors administering thiopurine drugs to autoimmune-diseased patients, a previously known process, and also that the prohibition against patenting a law of nature cannot be avoided by simply "applying it" to a technological environment. (43) The Court further reasoned that the "determining" step only had doctors engage in "well-understood, routine, conventional activity" previously used in the field, and such "[p]urely 'conventional or obvious' 'pre-solution activity'" is usually insufficient to transform a law of nature into a patentable application of the law. (44) The Court concluded that when it viewed all the steps in a patent as a whole, instead of viewing them as individual steps, there still was nothing inventive to the claim, and thus the method claim consisted of patent-ineligible subject matter. (45) The Court also discussed the public policy concern of granting excessively broad protections to patents merely "applying" a law of nature, which would result in important laws of nature being essentially barred from future use because of patent protection. (46)

C. The Federal Circuit Adds to Section 101 Patent Eligibility Analysis in Myriad

In Myriad, the Association for Molecular Pathology et al. brought an action to invalidate a series of patents related to genetics held by Myriad Genetics Inc. (hereinafter Myriad). (47) The Federal Circuit initially ruled that isolated DNA sequences were patent-eligible subject matter, but the Supreme Court vacated the ruling and remanded to the Federal Circuit for reconsideration in light of the subsequently decided Mayo. (48) On remand, the Federal Circuit ruled: (1) that isolated DNA molecules containing sequences associated with breast cancer were patent-eligible subject matter; (2) that comparing and analyzing different DNA strains for mutations and possible cancer indicators was not patent-eligible subject matter because it merely claimed laws of nature, adding nothing more than "apply[ing] it" to an area of science; and (3) that discovering new cancer therapeutics by comparing growth rates of transformed cells (transformed with an altered gene) in the presence and absence of a potential therapeutic and comparing the growth to ordinary cells was patent-eligible subject matter because the cells used were transformed by human inventiveness. (49) On ruling that comparing growth rates of transformed cells was patent-ineligible subject matter, the Federal Circuit explained that the human inventiveness of cell transformation substantially separated the cells from those found in nature, so they were not subject to the exclusion from patent-eligible subject matter for being a law of nature. (50)

1. Genetic Background

To fully understand the claims, holding, and analysis in Myriad, this Part provides a brief background in the genetics at issue in the case. The human genome, comprised of thousands of individual genes, is comprised of a molecule called deoxyribonucleic acid (DNA). (51) These genes store the hereditary material in humans. (52) Most genes control the production of polypeptide chains, which later form proteins. (53) Proteins are formed by first "transcribing" a gene sequence into a different nucleic acid--ribonucleic acid (RNA)--that mirrors a single strand of DNA. (54) The RNA molecule is structurally different than DNA both because it contains one different nucleotide base (although it shares 19 nucleotide bases with DNA) and because molecules cut out introns (non-coding portions of the gene that are contained in DNA) from RNA leaving only exons (coding portions of the genes). (55) Scientists refer to this exon-only RNA as mRNA. (56) In Myriad, the Federal Circuit described the process of removing DNA from a cell, as follows:

   Genomic DNA can be extracted from its cellular environment using a
   number of well-established laboratory techniques. A particular
   segment of DNA, such as a gene, can then be excised or amplified
   from the DNA to obtain the isolated DNA segment of interest. DNA
   molecules can also be synthesized in the laboratory. One type of
   synthetic DNA molecule is complementary DNA ("cDNA"). cDNA is
   synthesized from mRNA.... The process results in a double-stranded
   DNA molecule with a sequence corresponding to the sequence of an
   mRNA produced by the body. Because it is synthesized from mRNA,
   cDNA contains only the exon sequences, and thus none of the intron
   sequences, from a chromosomal gene sequence. (57)


Using genetic analysis, Myriad was able to find the location of certain genes in the human genome linked to breast cancer (the BRCA-1 and BRCA-2 genes). (58)

2. Myriad's Discussion of the Claim's Patent Eligibility Under Section 101

On remand from the Supreme Court, the Federal Circuit first held the patents for isolated BRCA DNA to be patent-eligible subject matter under Section 101, (59) just as it had done before the Supreme Court vacated its decision in light of Mayo. (60) The Federal Circuit reasoned that isolated DNA molecules do not exist in nature, are chemically different from chromosomal DNA because they lack introns, and are man-made through human ingenuity. (61) It distinguished these isolated DNA molecules from the methods at issue in Mayo because the DNA molecules are compositions of matter and thus inherently not laws of nature. (62) The Supreme Court reversed this composition of matter claim, finding the cDNA to be man-made because the cDNA contained only exons, whereas naturally occurring DNA also contained introns. (63) However, this analysis was limited to the composition of matter claims, and fails to address the method claims analyzed by the Federal Circuit.

Concerning the method claims, the Federal Circuit held the patent claim for methods of analyzing and comparing DNA--without a more inventive step--to be patent-ineligible subject matter under Section 101. (64) The Federal Circuit originally held this method for comparing DNA patent-ineligible subject matter, which it reaffirmed on remand. (65) The Federal Circuit reasoned that the method claimed was only an abstract mental process and was therefore patent-ineligible under Section 101. (66) It found that comparing and analyzing two sequences for differences could not overcome the rules against patenting abstract ideas through mere application to a "particular technological environment." (67) It also found that Mayo supported the initial ruling because, unlike Mayo, Myriad's claim possessed merely a "determining" step and did not add an inventive step to comparing and analyzing DNA to the extent that Mayo's methods did. (68)

Third, the Federal Circuit held claims for the process of screening potential cancer drugs in human-transformed cells to be patent-eligible subject matter under Section 101. (69) The court reasoned that when humans transformed those cells with BRCA genes and then tested for growth among various potential drugs--where a slower growth rate represents a potential treatment drug--the fact that humans transformed the cells was sufficiently far from the abstract idea of comparing growth rates to warrant the finding of patent-eligible subject matter. (70) The Federal Circuit further ruled that Mayo supported this holding because the scientists in Myriad did more than just apply a law of nature that certain cells grow faster in the presence of some drugs; instead, Myriad applied human ingenuity in transforming cells into non-natural creations and then performed these growth tests. (71) Adding a law of nature to a composition of matter that would already have been patent-eligible under Section 101 did not make that method patent-ineligible, as opposed to merely applying a law of nature without a human transformed composition of matter, which would have been patent-ineligible. (72)

D. MedImmune Further Adds to Licensing Issues

While this Note focuses on Mayo and Myriad's effect on Section 101 patent eligibility, a brief synopsis of MedImmune will aid in understanding modern licensee strategy. (73) In MedImmune, the Supreme Court held that a licensee did not have to break its patent license agreement before suing for a declaratory judgment that the patent in the license was invalid. (74) The Court reasoned that because the defendant, by practicing the patent even while paying royalties, faced the imminent injury of the patent-holding licensor enforcing the patent and becoming entitled to treble damages, there was a sufficiently imminent, substantial controversy warranting judicial relief. (75) After MedImmune, licensees in current patent licensing agreements could sue for declaratory judgment before breaking the licensing agreement. (76)

III. Analysis

Cases such as Mayo and Myriad have the potential to create vast effects within the trillion-dollar biotechnology industry. (77) Therefore, it is important to examine both the law these decisions created and how affected individuals could respond to this new law. This Part will: (1) analyze the Supreme Court's traditional views of preemption with regards to Mayo and Myriad and how they affect entities practicing method patents relating to laws of nature; (2) discuss the potential effects of licensee strategy after Mayo and Myriad; and (3) explore likely potential licensor responses after Mayo and Myriad.

A. Preemption of Laws of Nature After Mayo and Myriad

As science progresses, the judicial methods of analyzing patents covering those sciences become increasingly important. (78) Defining the bounds of method claims relating to laws of nature using traditional patent eligibility analyses emerges as problematic as scientists delve further into the underpinnings of molecules and other natural phenomena. (79) A significant issue in any test for defining the bounds of method patents covering laws of nature is the extent of preemption, (80) or the extent the patent prevents others from using the claims within the patent. (81) The Supreme Court has repeatedly refused to uphold claims drafted broadly enough to preempt laws of nature. (82) Patents that would preempt a law of nature prevent anyone, including future scientists, patent holders, and potential licensees, from developing his or her own innovations using that law of nature. (83) The Supreme Court has expressed concern that such preemption limits public access to broad scientific principles and risks stifling innovation. (84)

In Mayo, the Court held that a method patent claim relating to the law of nature of a drug interacting with the human body that added steps of "administering" and "determining" was insufficient to transform the claim from one covering merely a law of nature. (85) The Court, concerned the patent would preempt a natural law, (86) found the patent's methods to be patent-ineligible subject matter. (87) The Court, however, failed to clearly articulate the threshold of application necessary for a method patent concerning a law of nature to be patent eligible. (88) In addition, the Court failed to provide an example of what Prometheus could have added to its patent to make it patent-eligible under Section 101. (89) This lack of affirmative guidance creates additional uncertainty for both those holding patent licenses and those who seek to create them in the future. (90)

Furthermore, some academics have posited that tightening the limits on subject matter patent eligibility under Section 101 could potentially create a troubling, destabilizing effect. (91) Effects could include the invalidation of overly broad method patents (92) as well as patent license renegotiation. (93) Invalidation of overly broad patents could also have positive effects by freeing up areas once preempted by those patents and leading to increased development in the field of diagnostics. (94) But because these patents were likely unpatentable under 35 U.S.C. [section] 102 and [section] 103, this destabilizing effect might not exist. (95) Additionally, some have argued Mayo will only commercially affect diagnostic businesses focused on testing rather than having a wider impact on the patent industry. (96)

The Federal Circuit added to Mayo's analysis in Myriad when it held (on remand) that claims for a process for screening potential cancer drugs are patent-eligible subject matter under Section 101 because humans transformed the cells used in testing for the therapeutic. (97) Although some experts believed that Mayo's holding might have caused the Federal Circuit to find this claim patent-ineligible, (98) the Federal Circuit rejected the claim that this method was a law of nature that merely stated that slow growth rates of cancerous cells in the presence of a potential therapeutic indicated the therapeutic might treat cancer. (99) The Federal Circuit distinguished applying laws of nature to a patent-eligible, transformed composition of matter: here, a cell. (100) However, given that the Supreme Court has previously ruled that genetically transformed cells are patentable, (101) some have argued that the Federal Circuit merely maintained the status quo. (102) While this may be so, Myriad, like Mayo, fails to offer a clear threshold for what is "transformative," potentially causing difficulty drafting method claims in such a fashion as to ensure patent eligibility. (103)

The Federal Circuit in Myriad also held that methods that merely compared and analyzed different DNA sequences were patent-ineligible under Section 101. (104) Because the Federal Circuit held that this method claim was patent-ineligible under Section 101 before the Supreme Court remanded the case in light of Mayo, and it reached the same conclusion in Myriad, (105) this holding does not appear to add to the analysis of Section 101. (106) Instead, this appears only to reaffirm the holding in Mayo; (107) therefore, this Note will not discuss it. Similarly, the Federal Circuit in Myriad held that isolated segments of DNA were patent-eligible compositions of matter, which it distinguished analytically from the method patents in Mayo. (108) The Supreme Court similarly addressed only composition of matter claims, and failed to clarify its stance on method claims, in Myriad. (109) Therefore, because the analytical framework for determining if method patents are patent-eligible are different than for composition of matter claims, (110) it is beyond the scope of this Note's examination of methods' patent eligibility.

B. Licensee Strategy After Mayo and Myriad

One technique licensees have used in recent years is challenging the validity of the licensor's patent without breaking the contractual license relating to that patent. (111) As discussed in Part II.D, in the recent case MedImmune, Inc. v. Genentech, Inc., the Supreme Court held that a licensee could challenge the validity of a patent before refusing to pay royalty agreements. (112) This decision gives the licensee a powerful weapon to challenge the validity of a patent he or she has licensed by seeking a declaratory judgment action without risking liability for infringement. (113) This applies to all types of patent licenses, including the licenses involving method patents relating to laws of nature in both Mayo and Myriad. (114) This situation is actually what happened in Myriad, where the plaintiffs--patent licensees--challenged the validity of Myriad's patents while still paying royalties. (115) Although Myriad challenged this issue, the Federal Circuit followed MedImmune and allowed the plaintiffs to bring the action for declaratory judgment. (116)

Another related issue raised by MedImmune is a licensee's ability to renegotiate the patent license in light of Mayo and Myriad. (117) Licensees can use their ability to sue for declaratory judgment of patent invalidity without risking patent infringement damages to attempt to initiate negotiations for a more favorable patent license. (118) This power to renegotiate the license depends on the likelihood that a court would deem the patent at issue patent-ineligible. (119)

C. Licensor Strategy After Mayo and Myriad

The decisions in Mayo and Myriad will also affect patent licensors. (120) While licensors will likely have to deal with different efforts by the licensees to improve their terms of the patent license, (121) licensors have many strategies--both before and after creating a patent license--available to them in reaction to Mayo and Myriad. (122) Before they have created a license, method licensors can use such strategies as: contractually prohibiting challenges to patent validity or eligibility through the patent licensing agreement; (123) contractually terminating the licensing agreement upon challenge of the patent's validity or ineligibility; (124) creating prepaid royalties; (125) or requiring increased royalties in the event the licensee challenges the validity or eligibility of the patent. (126) An avenue a licensor can take if he has already created a license agreement is renegotiating the license to implement more favorable terms such as limiting future challenges to the validity or eligibility of the patent. (127) Limiting future challenges to a license can minimize risk to the licensee, (128) and, in general, certainty in contracts has significant value to its participants. (129) As Paul Donahue stated about contracts--which can easily be applied more narrowly to patent law contracting such as licensing--"[Certainty in contract law increases wealth, depending only on the common and plausible assumption of risk-aversion." (130)

IV. RECOMMENDATION

Because the Supreme Court's decision in Mayo and the Federal Circuit's decision in Myriad are binding on all future infringement cases, both entities licensing patents and those developing licenses must create a workable, forward-looking solution. Specifically, those entities dealing with patents related to laws of nature must be cognizant of both Mayo and Myriad and the effect on their specific patents. This Note first concludes that Mayo and Myriad did not have a large effect on patentable subject matter under Section 101. Next, this Note recommends actions a licensee should take given his relatively more favorable position after Mayo and Myriad. This Note also recommends actions a licensor should take given his relatively less favorable position after these cases.

A. The Tapering Effect o/Myriad on Mayo and Further Limitations of Sections 102, 103, and 112 on the Impact of Section 101 Patent Ineligibility

Before discussing the actions licensees and licensors may take, it is important to note that Myriad arguably has a mitigating effect on Mayo, lessening both its scope and number of patents affected by the decision. (131) Furthermore, even without Myriad's tapering effect, Mayo represented the outer boundaries of what can be patented, and other sections of the patent code will likely invalidate patents that courts feel are on the borderline between patent-eligible and patent-ineligible under Section 101. (132) Because of both the tapering effect of Myriad on Mayo and the effect of Sections 102, 103, and 112 on otherwise-ineligible patents under Section 101 as processes dealing with laws of nature, it seems unlikely that Mayo will cause the drastic negative effects that some predicted. (133) Consequently, Mayo and Myriad will likely have only a moderate impact on practicing entities because these decisions will affect relatively few patents. (134)

Additionally, the uncertainty arising out of the lack of guidance from the Supreme Court for a standard to apply Section 101 (135) may lead potential users of a patent to seek a license to avoid potential lawsuits. Actors facing this kind of risk will typically be cautious, (136) and potential infringers uncertain of whether they infringe another patent are likely to want to minimize risk of litigation. This could result in Mayo having an exaggerated positive effect on licensors, even in light of Myriad's tapering and the potential invalidations of Sections 102, 103, and 112. However, given that licensees can now challenge patent validity before refusing to pay royalty agreements, (137) many potential licensees may first seek a license agreement and then challenge the patent's validity. This process would avoid potential infringement damages while determining if the underlying patent is eligible under Section 101, and therefore whether the licensee would need to continue paying royalties. The uncertainty about infringement may cause licensees to acquire more patent licenses from patent holders; however, it also may lead more licensees to challenge the validity of patents that are subject to their licenses through actions for declaratory judgment.

B. Appropriate Actions for Those Dealing With Patent Licenses Relating to Laws of Nature

While the decisions of Mayo and Myriad will likely affect relatively few patents, (138) both patent licensors and licensees should analyze their patents to determine if their patent is affected. The surest way to accomplish this is through an attorney who can analyze the likelihood that either Mayo or Myriad will have an effect on the patent's eligibility under Section 101. This determination dictates the recommended course of action suggested in this Part. This Part will first recommend courses of action that the licensee take when the patent involved in the license is likely patent-ineligible, and then will do the same for licensors.

1. Possible Courses of Action for a Licensee When the Patent Is Potentially Patent-Ineligible

If the patent license is already in place and the licensee determines the patent is likely patent-ineligible, then the licensee will have the power to sue for a declaratory judgment of patent invalidity without risking patent infringement damages. (139) The licensee can also attempt to renegotiate more favorable terms in the license. (140) Because both of these situations can put the licensee in a better position financially, any licensee in this position should attempt one or both of these techniques. Suing for patent invalidity has an advantage over renegotiating the license because if a court holds the patent ineligible, the licensee does not have to continue paying any royalties. However, patent litigation is notoriously expensive, so a licensee should use a cost-benefit analysis to determine which technique is more financially sound. (141)

2. Possible Courses of Action for a Licensor When a Patent Is Potentially Patent-Ineligible

A patent licensor should attempt to secure the most favorable rights possible within the license contract and be prepared for the possibility that a court could determine the patent ineligible even if the patent license is already in place. Specifically, the licensor needs to prepare for the licensee suing for declaratory judgment of patent invalidity (142) or the licensee using the threat of a suit to bring about more licensee-favorable terms. (143) A licensee could attempt to renegotiate its contract (144) or the licensor could attempt to call the licensee's bluff--if the licensor believes the licensee will not sue for declaratory judgment--and continue to operate without a response; however, a licensor should use this technique with caution because of the risk that the licensor mistakenly determined the licensee was bluffing when it was not. Furthermore, pressing the licensee's bluff could cause the licensee to change its decision and actually sue for a declaratory judgment.

An additional issue may arise when, after a court holds a patent invalid, the patent licensor cannot recover the money it spent to obtain the patent. The licensor could have incurred the costs of research and development of the patent or of purchasing patent rights. Economists call non-recoverable costs such as these "sunk costs." (145) If the licensor acquired the patent rights by incurring such sunk costs, and if a court were to declare that the patent involved patent-ineligible subject matter, then the licensor could not recoup the money spent for researching and developing the invention using government-issued monopoly, i.e. the patent. Although this outcome is unfavorable to the specific licensor, the Supreme Court in Mayo explained that leaving important building blocks such as laws of nature available for free use is important to future innovators, (146) including, potentially, the licensor. A possible option to recoup part of the costs devoted to research and development would be to further develop the patent so that it adds an "inventive concept ... sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the natural law itself," and is thus a subject-matter-eligible patent. (147) This patent could be renegotiated and allow the licensor to recover some of its costs.

3. Courses of Action for Licensees and Licensors if the Patent Is Patent-Eligible

If a patent is likely patent-ineligible, both licensees and licensors should follow the steps outlined in Part IV.B.1-2. If, however, the patent license is already in place, and either the licensee or licensor determines that Mayo and Myriad will not reasonably affect the patent's Section 101 eligibility, then both the licensee and the licensor will likely be unaffected. In such a case, the licensor and licensee need take no action beyond determining that Mayo and Myriad do not affect their patent eligibility.

V. CONCLUSION

This Note argues that even though Mayo and Myriad will not have the broad-reaching influence some have thought, both decisions will still affect both patent licensors and patent licensees dealing with patents involving applications of the laws of nature. Generally, these decisions put patent licensees in a stronger contractual position because of the potential invalidation of the licensed patent, and the patent licensee should respond by attempting to renegotiate a friendlier license by trying to invalidate the patent. Conversely, Mayo and Myriad put patent licensors affected in a weaker contractual position because of the potential invalidation of their patent, and the patent licensors should use various contractual techniques to increase the predictability of the patent license while securing as much value as possible from the patent.

Finally, as with any judicial decision, it is possible for the law to change or further clarify the holdings concerning method patents in Mayo, Myriad, or both. Entities licensing patents should be mindful of future changes in the law of method patent ineligibility under Section 101 and be ready to adapt to whatever new decisions arise. This is especially true in this situation, where some have determined that the Federal Circuit is not following the Supreme Court's mandate to enforce Section 101 more vigorously, in part because the Supreme Court itself provided little guidance to the Federal Circuit on how to do so. (148) Indeed, the Supreme Court again reversed the Federal Circuit concerning DNA patents in a composition of matter claim--not a method claim. (149) Such reversals add uncertainty to an already uncertain system, and seem likely to continue. Therefore, patent licensees and licensors should be mindful of the potential for these and other future decisions to affect the rules and interactions among licensors and licensees this Note discusses.

(1.) U.S. Dep't of Commerce, Intellectual Property and the U.S. Economy: Industries in Focus 40 (2012), available at http://www.uspto.gov/news/publications/IP_Report_March_2012.pdf.

(2.) Id. at 45.

(3.) Id. at 43.

(4.) See Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1292 (2012) (describing future innovation as an important factor in patent law); U.S. Dep't of Commerce, supra note 1, at 1 (quoting Barack Obama as saying that U.S. innovation is "essential to our future").

(5.) See generally Liza Vertinsky, Reconsidering Patent Licensing in the Aftermath of Medimmune, 45 Hous. L. Rev. 1609 (2009) (discussing both the theoretical underpinnings of the Supreme Court case and the practical effects the decision had on licensors and licensees); Sean M. O'Connor, Using Stock and Stock Options to Minimize Patent Royalty Payment Risks After Medimmune v. Genentech, 3 N.Y.U. J. L. & BUS. 381 (2007) (recommending a specific solution to patent licensing issues following a Supreme Court decision that had major effects on patent licensing). It is common knowledge that academic scholars write extensively about Supreme Court decisions. The breadth of this scholarship can be illustrated by a simple search for "549 U.S. 118," the citation to the recent Supreme Court patent law case entitled MedImmune, Inc. v. Genentech, Inc., on WestlawNext's secondary sources database, which reveals that 485 law review and journal articles cite to the case. Citing References to MedImmune, Inc. v. Genentech, Inc., WestlawNext, http://www.westlawnext.com (click on the "Citing References" tab after conducting the search for "549 U.S. 118") (last visited Jan. 26, 2014).

(6.) Mayo, 132 S. Ct. 1289.

(7.) Ass'n for Molecular Pathology v. U.S. Patent & Trademark Office, 689 F.3d 1303 (Fed. Cir. 2012), cert. granted in part, 133 S. Ct. 694 (2012), and aff'd in part, rev'd in part sub nom. Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013) [hereinafter Myriad]. The Supreme Court's grant of certiorari and subsequent opinion concerned the composition of matter claim and not the method claim that is the subject of this Note. Myriad, 133 S. Ct. at 2116, 2119.

(8.) See generally Mayo, 132 S. Ct. at 1290 (discussing extensively 35 U.S.C. [section] 101, its precedent, and the policy considerations that support its holding); Myriad, 133 S. Ct. 2107 (discussing the same as well as how its holdings are congruent with Myriad).

(9.) Infra Part II.A.

(10.) Infra Part II.B.

(11.) Infra Part II.C.

(12.) Infra Part III.A.

(13.) Infra Part III.B.

(14.) Infra Part III.C.

(15.) Infra Part IV.

(16.) 35 U.S.C. [section] 101 (2012).

(17.) See Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980) (stating that there are limits to what is patentable, citing multiple cases that held that "[t]he laws of nature, physical phenomena, and absolute ideas" are not patentable).

(18.) Diamond v. Diehr, 450 U.S. 175, 185 (1981).

(19.) See id. at 185 (quoting Le Roy v. Tatham, 55 U.S. 156, 175 (1852)) ("A principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right.").

(20.) Id. at 187 (emphasis omitted).

(21.) Chakrabarty, 447 U.S. at 309.

(22.) See Chakrabarty, 447 U.S. at 309-10 (quoting Hartranft v. Wiegmann, 121 U.S. 609, 615 (1887)) (holding a patent on a new bacterium patent eligible and distinguishing that patent from situations such as Einstein's equation by saying the "claim is not to a hitherto unknown natural phenomenon, but to a nonnaturally occurring manufacture or composition of matter--a product of human ingenuity 'having a distinctive name, character [and] use.'"). For an example of when the PTO believes that a mathematical equation applied to a machine or process can be patented, see U.S. Patent & Trademark Office, Manual of Patent Examining Procedure [section] 2106 (2012), available at www.uspto.gov/web/ofiices/pac/mpep/s2106.html ("A claim that is directed to a machine comprising a plurality of structural elements that work together in a defined combination based on a mathematical relationship, such as a series of gears, pulleys and belts, possesses structural limitations that show that it is a tangible embodiment, providing evidence that the mathematical relationship has been applied (a practical application). Additionally, that tangible embodiment is limited by the claimed structure and would not cover all substantial practical uses of the mathematical relationship. The claim would be eligible for patent protection.").

(23.) See Gottschalk v. Benson, 409 U.S. 63, 71-72 (1972) (holding that, where the only practical application of a mathematical formula is in connection with a digital computer, such a formula is not patentable because mere application to a computer is not enough for it to be patent-eligible subject matter).

(24.) See Parker v. Flook, 437 U.S. 584, 589, 594 (1978) (stating that "the discovery of ... a phenomenon cannot support a patent unless there is some other inventive concept in its application," otherwise a patent would be on the phenomenon itself).

(25.) See Bilski v. Kappos, 130 S. Ct. 3218, 3225 (2010) (explaining that the "machine-or-transformation test" is satisfied only if the claim "is tied to a particular machine or apparatus" or "transforms a particular article into a different state or thing").

(26.) Id.; see also Brian P. Murphy & Daniel P. Murphy, Bilski's "Machine-or-Transformation" Test: Uncertain Prognosis for Diagnostic Methods and Personalized Medicine Patents, 20 Fordham INTELL. Prop. Media & Ent. L.J. 755, 757 (2010) (aggreeing with Bilski's proposition that, in the "machine-or-transformation" test, "the operative questions are whether the claimed process is tied to a particular machine or apparatus or whether it transforms a particular article into a different state or thing").

(27.) Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1291 (2012).

(28.) Id. at 1294.

(29.) Id. at 1295.

(30.) Id.

(31.) Id.

(32.) Mayo, 132 S. Ct. at 1295.

(33.) Id. at 1297.

(34.) U.S. Patent No. 6,355,623 (filed Apr. 8, 1999).

(35.) Mayo, 132 S. Ct. at 1295-96.

(36.) Id. at 1296.

(37.) Id.

(38.) Id. at 1296.

(39.) Id. at 1291.

(40.) Mayo, 132 S. Ct. at 1296-97 (stating as a law of nature that the "relationships between concentrations of certain metabolites in the blood and the likelihood that a dosage of a thiopurine drug will prove ineffective or cause harm ... in a particular person ... exists in principle apart from any human action").

(41.) Id. at 1297.

(42.) Id.

(43.) Id.

(44.) Id. at 1297-98 (quoting Parker v. Flook, 437 U.S. 584, 590 (1978)).

(45.) Mayo, 132 S. Ct. at 1298. The Court further rejected Prometheus' claim that case law supported patentability, finding that previous cases handling method patents and patents concerning laws of nature supported the holding that Prometheus's patents are invalid. Id. at 1298-301.

(46.) Id. at 1301-02.

(47.) Ass'n for Molecular Pathology v. U.S. Patent & Trademark Office, 689 F.3d 1303, 1309 (Fed. Cir. 2012), cert. granted in part, 133 S. Ct. 694 (2012), and aff'd in part, rev'd in part sub nom. Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013).

(48.) Id.

(49.) Id. at 1309, 1334-35.

(50.) Id. at 1309.

(51.) Id. (explaining also that DNA is a form of nucleic acid).

(52.) Myriad, 689 F.3d at 1310.

(53.) Id.

(54.) Id. at 1311.

(55.) Id.

(56.) Id.

(57.) Myriad, 689 F.3d at 1313-14.

(58.) Id. at 1314.

(59.) Id. at 1324-25.

(60.) Id. at 1309.

(61.) Id. at 1325.

(62.) Myriad, 689 F.3d at 1331.

(63.) Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2119 (2013). The Supreme Court did not grant certiorari on either of the method claims in Myriad, which is the focus of this Note. Ass'n for Molecular Pathology v. Myriad Genetics, Inc, 133 S. Ct. 694, 695 (2012).

(64.) Myriad, 689 F.3d at 1324, 1333.

(65.) Id. at 1333.

(66.) Id. at 1335.

(67.) See id. at 1334 (quoting Bilski v. Kappos, 130 S. Ct. 3218, 3230 (2009)) (finding that limiting the patent to "comparison to ... the BRCA genes" did not render the claims patent-eligible).

(68.) Id. at 1335.

(69.) Myriad, 689 F.3d at 1336.

(70.) Id. at 1335-37.

(71.) Id. at 1336.

(72.) Id.

(73.) MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 137 (2007).

(74.) Id.

(75.) Id. at 131, 137.

(76.) Id. at 137.

(77.) Industry Center-Biotechnology, Yahoo! Fin. (Feb. 4, 2014, 10:26 PM) http://biz.yahoo.com/ ic/515.html (estimating the biotechnology industry's market capitalization alone to be $7.443 trillion).

(78.) Eileen M. Kane, Patenting Genes and Genetic Methods: What's at Stake?, 6 J. BUS. & Tech. L. 1, 32 (2011).

(79.) Id.

(80.) Id. at 33.

(81.) Ass'n for Molecular Pathology v. U.S. Patent & Trademark Office, 689 F.3d 1303, 1331 (Fed. Cir. 2012), cert. granted in part, 133 S. Ct. 694 (2012), and aff'd in part, rev'd in part sub nom. Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013).

(82.) Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1294 (2012); Gottschalk v. Benson, 409 U.S. 63, 71-72 (1972); O'Reilly v. Morse, 56 U.S. 62, 112-20 (1853).

(83.) Gottschalk, 409 U.S. at 71-72.

(84.) Mayo, 132 S. Ct. at 1301; see also Rochelle C. Dreyfuss & James P. Evans, From Bilski Back to Benson: Preemption, Inventing Around, and the Case of Genetic Diagnostics, 63 STAN. L. Rev. 1349, 1361 (2011) (explaining that "fostering business by protecting the competitive environment and ... promoting innovation by assuring public access to broad technological prospects" is a specific Court concern).

(85.) Mayo, 132 S. Ct. at 1297; supra note 40 and accompanying text.

(86.) Mayo, 132 S. Ct. at 1301.

(87.) Id. at 1302.

(88.) John Conley & Allison Williams Dobson, Prometheus Patents Struck Down, 9-0: Mayo Collaborative Services v. Prometheus Laboratories, Inc. Analysis, Genomics L. Rep. (Mar. 21, 2012), http://www.genomicslawreport.com/index.php/2012/03/21/prometheus-patents-struck-down-9-0-mayo-collaborative-services-v- prometheus-laboratories-inc-analysis/.

(89.) Id.

(90.) Id.

(91.) Id.

(92.) Rod S. Berman, Will Mayo v. Prometheus Be the Basis for the Invalidation of Broad Patent Claims and the Renegotiation of Royalties? Implications for Myriad Gene Case, PATENT Law. Blog (Mar. 22, 2012), http://patentlaw.jmbm.com/2012/03/for-those-in-the-diagnostic.html.

(93.) Id.; see also infra Part III.C (explaining that the potential invalidity of a patent gives leverage to a licensee to renegotiate a patent license for more friendly terms).

(94.) Berman, supra note 92.

(95.) Conley & Dobson, supra note 88.

(96.) Patrick Duxbury, Praxis Unico Conference: What's New in IP, WRAGGE & Co. 5 (June 14, 2012), www.praxisunico.org.uk/uploads/A1%20-%20Patrick%20Duxbury%20-%20Whafs%20New%20m%20IP.pdf.

(97.) Ass'n for Molecular Pathology v. U.S. Patent & Trademark Office, 689 F.3d 1303, 1335 (Fed. Cir. 2012), cert. granted in part, 133 S. Ct. 694 (2012), and aff'd in part, rev'd in part sub nom. Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013).

(98.) See Conley & Dobson, supra note 88 (explaining that the method claim in Myriad resembles the method claim in Mayo, which might be enough to hold the method claim invalid); Berman, supra note 92 ("[I]t would seem unlikely that the Supreme Court would treat the diagnostic claims in Myriad any differently than it treated those in Mayo.").

(99.) Myriad, 689 F.3d at 1335; Federal Circuit Breathes Life Back Into DNA Patents, McDermott Will & Emery (Aug. 21, 2012), www.mwe.com/Federal-Circuit-Breathes-Life-Back-Into-DNA-Patents-08-21-2012/?PublicationTypes=d9093adb-e95d-4f19-819a- f0bb5170ab6d [hereinafter Federal Circuit Breathes Life],

(100.) Myriad, 689 F.3d at 1336.

(101.) Diamond v. Chakrabarty, 447 U.S. 303, 318 (1980).

(102.) Bradley Arant Boult Cummings LLP, DNA Can Be Patented, but DNA Analysis Cannot: The Courts Finally Provide Clarity in Association for Molecular Pathology v. Myriad Genetics, Inc., JD Supra (Aug. 23, 2012), www.jdsupra.com/legalnews/dna-can-be-patented-but-dna-analysis-ca-03673/; see also Kevin E. Noonan, Association for Molecular Pathology v. United States Patent and Trademark Office (Fed. Cir. 2012), JD Supra (Aug. 17, 2012), www.jdsupra.com/legalnews/association-for-molecular-pathology-v-u-27359/ (explaining that the Federal Circuit's holding on this method patent is consistent with the holding in Mayo and thus does not add another dimension to [section] 101 analysis); Antoinette F. Konski, Personalized Medicine After the ACLU "Gene Patenting" Decision, JD Supra (Aug. 20, 2012), www.jdsupra.com/legalnews/personalized-medicine-afer-the- aclu-ge-20153/ (explaining that this method claim met the standard in Mayo, as opposed to distinguishing or altering the standard).

(103.) Konstantin Linnik, Federal Circuit Reaffirms (Again) Gene Patents in Myriad, JD SUPRA (Aug. 20, 2012), www.jdsupra.com/legalnews/federal-circuit-reaffirms-again-gene-p-75502/.

(104.) Myriad, 689 F.3d at 1324.

(105.) Id. at 1308.

(106.) Id. at 1333.

(107.) See id. at 1335 (finding this method patent claim "indistinguishable" from the method patent in Mayo); Federal Circuit Breathes Life, supra note 99 (same).

(108.) Myriad, 689 F.3d at 1325.

(109.) Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2119 (2013).

(110.) Myriad, 689 F.3d at 1325; Linnik, supra note 103.

(111.) Mark S. Holmes, Patent Licensing: Strategy, Negotiations & Forms [section] 11:3.1[A], (Practising Law Institute eds., 2d ed. 2013).

(112.) MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 118-19 (2001).

(113.) Holmes, supra note 111.

(114.) See id. and accompanying text (explaining that, in general, a licensee can challenge the validity of the licensor's patent through a declaratory judgment action without risking patent infringement liability).

(115.) Ass'n for Molecular Pathology v. U.S. Patent & Trademark Office, 689 F.3d 1303, 1319-23 (Fed. Cir. 2012), cert. granted in part, 133 S. Ct. 694 (2012), and aff'd in part, rev'd in part sub nom. Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2101 (2013).

(116.) Id.

(117.) See Holmes, supra note 111, [section] 11:3.1[B] (explaining that, after MedImmune, if a patent is potentially patent-ineligible, a licensee has more leverage to renegotiate the licensing agreement).

(118.) Id.

(119.) See id. (explaining that the likelihood of attempting to renegotiate depends on the strength of the challenge to the patent's validity); Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293 (2012) (explaining that Section 101 limits a method patent's eligibility and hence validity).

(120.) See Prometheus Unsound: America's Supreme Court Wallops the Biotech Industry, ECONOMIST (Mar. 24, 2012), http://www.economist.com/node/21551087 [hereinafter Prometheus Unsound] (stating that the biotechnology industry was particularly concerned with the impact of Mayo).

(121.) See supra Part III.B. (explaining that licensees can use their leverage to sue for invalidity without risking patent damages to renegotiate patent licenses).

(122.) See Holmes, supra note 111, [section] 17:3.1 (listing a plethora of options a licensor has in countering the adverse effects a ruling has on a patent in terms of validity).

(123.) Id. [section] 17:3.1[B].

(124.) Id. [section] 17:3.3[C].

(125.) Id. [section] 17:3.3[F].

(126.) Id. [section] 17:3.3[G]-[I].

(127.) Holmes, supra note 111, [section] 17:3.3[S].

(128.) See Diane Lourdes Dick, Confronting the Certainty Imperative in Corporate Finance Jurisprudence, 2011 Utah L. Rev. 1461, 1499 (2011) ("[T]he preservation of legal certainty minimizes risk in transactional dealings generally.").

(129.) See Sarah D. Katz, "Reputations ... A Lifetime to Build, Seconds to Destroy": Maximizing the Mutually Protective Value of Morals Clauses in Talent Agreements, 20 Cardozo J. INT'L & COMP. L. 185, 219-21 (2011) (explaining that certainty in contracts leads to increased predictability and "[a]s predictability and value operate in direct proportion, value stands the greatest chance of maximization when predictability is maximized"); Paul J. Donahue, The Rule of Sheldon v. Commissioner: Is It an Economically Efficient Evolution of the Sham Transaction Doctrine?, 13 Va. Tax Rev. 165, 185 n.67 (1993) (explaining that certainty in contract law increases wealth).

(130.) Donahue, supra note 129, at 181 n.67.

(131.) See Leading Cases, 126 Harv. L. Rev. 347, 357 (2012) (explaining that the Federal Circuit has yet to fully adopt the Supreme Court's broader view of the scope of [section] 101). But see Bradley Arant Boult Cummings LLP, supra note 102 (noting that DNA molecules can be patentable, but certain diagnostic methods cannot); Noonan, supra note 102 (noting that the Myriad holding on method patents is consistent with Mayo); Konski, supra note 102 (explaining that the method claim met the standard from Mayo).

(132.) See supra note 85 and accompanying text (explaining that even if the patent in Mayo was ruled patent-eligible under Section 101, courts will still likely hold it unpatentable under other sections of the patent code).

(133.) See Prometheus Unsound, supra note 120 (positing that Mayo "wallop[ed] the biotech[nology] industry" and that the biotechnology industry was in a "minor panic" following Mayo).

(134.) See supra note 85 and accompanying text (explaining both that patents such as these are "highly suspect" under other sections of the patent code leading to merely "potential' negative consequences, and that other patents and industries outside of biotechnology and information technology are not affected).

(135.) See supra text accompanying note 90 (explaining that the lack of guidance in Mayo and Myriad creates uncertainty in both entities using patent licenses and those seeking to use patent licenses relating to laws of nature).

(136.) See Citizens United v. Fed. Election Comm'n, 130 S. Ct. 876, 892, 896 (2010) (explaining that situations that call for an individual to analyze an ambiguous law in a "case-by-case" manner lead that individual to choose the course of action least likely to result in a lawsuit filed against him).

(137.) See MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 137 (2007) (holding that patent licensors may file a claim for declaratory judgment without withholding royalty payments).

(138.) Supra Part IV.A-B.

(139.) See supra text accompanying note 113 (explaining that MedImmune gave licensees a powerful weapon in allowing them to sue for declaratory judgment of patent invalidity without risking infringement damages).

(140.) See Holmes, supra note 111, [section] 17:3.1[B] (explaining that because a licensee can sue for declaratory judgment of patent invalidity without risking patent infringement damages, the licensee has leverage to negotiate for a more favorable patent license).

(141.) Licensees should be aware that sharing litigation costs with similarly situated companies, in this case fellow licensees, can decrease the costs of patent litigation. See J.P. Mello, Technology Licensing and Patent Trolls, 12 B.U. J. SCI. & Tech. L. 388, 397 (2006) (explaining that companies with similar interests in defeating a patent troll will decrease costs to each by sharing resources and that this will affect the cost-benefit analysis of pursuing legal remedies).

(142.) See Holmes, supra note 111 (explaining that licensees have a powerful weapon in suing for declaratory judgment of patent invalidity without risking infringement damages).

(143.) See id. [section] 17:3.1[B] (explaining that because a licensee can sue for declaratory judgment of patent invalidity without risking patent infringement damages, the licensee has leverage to negotiate for a more licensee-favorable patent license).

(144.) See supra note 127 and accompanying text (explaining that a licensor who has already created a patent license can renegotiate the license to implement more favorable terms, including restricting the licensee's ability to challenge the validity of the patent).

(145.) See Juliet P. Kostritsky, Bargaining with Uncertainty, Moral Hazard, and Sunk Costs: A Default Rule for Precontractual Negotiations, 44 HASTINGS L.J. 621, 627 n.15 (1993) (quoting RICHARD A. BREALEY & Stewart C. Myers, Priniciples of Corporate Finance 95 (3d ed. 1988)) (internal quotation marks omitted) (defining "sunk costs" as "past and irreversible outflows").

(146.) See Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293 (2012) (explaining that laws of nature are "basic tools of scientific and technological work" and that "monopolization of those tools through the grant of a patent might tend to impede innovation more than it would tend to promote it").

(147.) Id. at 1294 (internal citation omitted) (internal quotation marks omitted).

(148.) See Leading Cases, supra note 131, at 356-57 (arguing that the Supreme Court's decision in Mayo does not provide sufficient guidance to the Federal Circuit and that this will likely lead to another appeal of a Federal Circuit decision regarding [section] 101 patent eligibility).

(149.) Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2119 (2013).

John Forrest Vaubel, J.D. Candidate, The University of Iowa College of Law, 2014; B.S., The University of Iowa, 2009. I would like thank The Journal of Corporation Law and its staff for all their help developing and publishing my Note. Also, a special thanks to my parents who have always supported me and fostered my lifelong desire to learn.
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