The Physician's Immunity Statute: a botched operation or a model procedure?

• Author: Rundle, Jeff S.

1. INTRODUCTION II. BACKGROUND OF 35 U.S.C. [section] 287(c) A. Origins of [section] 287(c): Concerns Prompting the Amendment B. Statutory Construction of [section] 287(c) 1. The Development of [section] 287(c) 2. Immunity 3. Exceptions to Immunity C. Concerns Resulting from the Adoption of [section] 287(c) III. ANALYSIS A. Research Hypothesis B. Survey Methodology C. Survey Results 1. Overall Awareness of the Physician's Immunity Statute 2. Attitudes Towards the Patentability of Medical Procedures and the Physician's Immunity Statute 3. Effects of the Statute on Daily Strategic Business Decisions D. Adequacy of the Current Legislative Solution 1. Adequacy of [section] 287(c) 2. Adequacy of the Immunity Exceptions E. Flaws of [section] 287(c) F. Section 287(c) as a Learning Experience: Addressing Access to Patented Biotechnology IV. RECOMMENDATIONS A. Immunity for Health Care Providers That Use Patented Biotechnology for Diagnosis B. Development of Federal Biotechnology Patent Pools C. Advantages and Criticisms of Patent Pools D. Recommendation Summary V. CONCLUSION I. INTRODUCTION

   The American patent system stems from Article I, Section 8, of the United States Constitution, which authorizes Congress "[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." (1) When Congress exercised this new grant of power in 1790, it charged Thomas Jefferson, the Secretary of State, with overseeing the development of the fledgling patent system. (2) The fundamental idea driving the patent system was that Congress wanted to reward inventors with the right to exclude others from making, using, selling, or offering to sell their invention in exchange for the inventors' voluntary disclosure of the detailed workings of their discovery to the public. (3) To enforce these exclusive rights, Congress empowered patent holders to bring an infringement suit against persons using, practicing, selling, or offering to sell the invention without obtaining permission from the inventor.

   It is unlikely that Jefferson or the Framers of the Constitution foresaw the day when the government would issue patents for medical procedures, such as a particular incision or suture. (4) It is even less likely that the Framers foresaw the day when physicians would bring infringement suits against one another to prohibit the performance of patented medical procedures. That day came, however, in 1993, when Dr. Samuel Pallin brought an infringement suit against fellow physician, Dr. Jack Singer, for performing Pallin's patented cataract surgery incision. (5) Although the suit ultimately failed, it garnered significant national attention from both Congress and health care interest groups. The suit ultimately led to congressional adoption of the Physician's Immunity Statute. (6)

   This Note argues that the Physician's Immunity Statue is a flawed legislative solution to the problems associated with medical procedure patents, and that Congress has the opportunity to learn from these mistakes as it addresses health care provider use of patented biotechnology in subsequent legislation. Part 11 examines the legislative history and concerns that prompted Congress to adopt [section] 287(c), as well as the resulting criticisms from the legal and academic communities. Part III synthesizes interviews with professionals in the medical, insurance, and legal fields, and draws conclusions on how much impact the Physician's Immunity Statute has on their daily business decisions, as well as their thoughts on the adequacy of the statutory solution. Part IV identifies the fundamental flaws of [section] 287(c) and uses these insights as a baseline for recommendations as to effective future legislation governing health care providers' use of patented biotechnology.

2. BACKGROUND OF 35 U.S.C. [section] 287(c)

   1. Origins of [section] 287(c): Concerns Prompting the Amendment

      At its 1994 House of Delegates Meeting, the American Medical Association (AMA) issued one of the first major responses to Pallin v. Singer by adopting a resolution to "vigorously condemn the patenting of medical and surgical procedures and work with Congress to outlaw this practice." (7) The AMA joined forces with numerous medical specialty associations, such as the American Optometric Association, in lobbying efforts that ultimately resulted in Congress adopting 35 U.S.C. [section] 287(c), commonly referred to as the Physician's Immunity Statute. (8) An examination of the concerns these groups sought to address is critical to understanding the statutory provision.

      The AMA articulated four primary concerns that fueled the legislative development of [section] 287(c). (9) The first was that the ability to patent medical procedures would give patent owners the ability to exclude others from practicing the protected procedure and would lead to inadequate patient care. (10) The medical community feared that exclusivity would limit a physician's field of options from all known procedures to only those that were known and unpatented, potentially eliminating patented procedural advances that would help the patient. (11) In addition, existing procedures, such as the basic suture, or minor variations thereof, may be subject to patent protection and widely used procedures may be withdrawn from the general field of available treatment procedures, thus reducing a physician's repertoire. (12)

      Commentators suggest that while this concern is technically correct as a statement of law and garners persuasive strength from the fears of all would-be patients, this dire hypothetical situation will likely never become a reality. (13) Critics explain that a patent owner has a financial incentive to license the protected procedure, and even if the owner chose not to license, a court is unlikely to enjoin a physician from performing a life-saving procedure. (14) Indeed, there are no known cases in which the owner of a medical procedure patent has refused to license the right to perform the patented procedure. (15) As an example of a court's treatment of a physician that performs the procedure and is later accused of infringement, the Pallin court focused its scrutiny on the validity of the patent as opposed to the liability of the physician that performed the patented procedure. (16) While the physician in this case failed to obtain a license to perform the procedure in advance, the court did not find the physician guilty of infringement ex post facto. (17)

      The AMA's second concern was that medical procedure patents would increase already expensive health care costs. (18) Licensing and litigation expenses associated with obtaining and enforcing patent rights would drive up costs and leave health care providers or insurers to make a difficult decision between the patient's well being and the bottom line. (19) Commentators note that this concern is likely the most credible, and agree that health care providers would likely pass the added costs of royalties and attorney's fees on to consumers through higher medical insurance premiums. (20)

      Private and government health insurers finance a majority of American health care, and both types of insurers limit the amount they will spend on medical procedures. (21) Proponents of [section] 287(c) claim that additional licensing costs would inevitably prevent some patients from choosing insurance plans that cover patented procedures and could encourage physicians to use less aggressive methods of treatment to keep their services affordable. (22) This possibility could deter patent owners from seeking exorbitant royalties because insurers place restrictions on a patient's choice of physician and the insurance provider may exclude a licensing hospital's physicians from a patient's potential list of choices because of higher costs. (23)

      The third concern associated with medical procedure patents is that patient confidentially might be compromised if a patent owner forced a physician and hospital to litigate. (24) The AMA contended that patients' records and personal medical history would be on display if physicians were required to give a procedure-by-procedure accounting in an infringement suit. (25) Commentators view this as the weakest argument set forth by the AMA because it is already common practice to redact patient information in medical litigation or review sensitive documents in camera to reduce unwanted breaches of confidentiality. (26) Numerous courts in situations outside the context of patent litigation have dealt with this problem successfully. (27) Commentators suggest no reasons to believe that these same courts would not handle confidentiality issues successfully in patent infringement proceedings as well. (28)

      The final argument advanced by the AMA was that the medical community does not need the personal financial incentives of patents because the respect and recognition that accompany publication in medical journals are sufficient to encourage innovation. (29) The AMA argued that medical procedure development is the product of intellectual curiosity instead of the pursuit of financial gain. (30) In addition, the Medical Ethics Code requires physicians to share information freely as a cornerstone of ethical medical practice. (31)

      Commentators note that patent rights do not necessarily go hand-in-hand with personal financial gain at the expense of the medical profession as a whole or with the diminished exchange of knowledge through journal publication. (32) Patent ownership does not require the owner to charge royalties, and many inventors consider patent ownership alone to be a prestigious accolade. As noted earlier, one of the fundamental ideas of the patent system is that inventors fully disclose their invention in a way that enables others to practice their discovery in exchange for the right to exclude. (33) Patent rights enhance the incentives of...