By America was the first country to recognize copyrights and patents in its constitution, and industries built on intellectual property produce over 40 percent of US GDP whilst supporting tens of millions of jobs. Now, however, a handful of Supreme Court decisions have excluded entire categories of invention from patentability. US investment in diagnostic technologies fell $9.3 billion below expected levels, as a result of depriving American innovators of rights and protections enjoyed by their counterparts in Asia and Europe.
In one much-cited example, a molecular diagnostics company developed non-invasive prenatal testing that allowed fetal DNA to be collected from the mother’s blood, replacing invasive in-utero testing that risks pregnancy loss. The judge called it a “meritorious invention” but was compelled to invalidate patents because the circulating DNA is a natural phenomenon, and the test was well understood. The discovery was beyond the reach of patent eligibility. Competitors were immediately empowered to duplicate the technique.
The result has been a decline in innovation, ceding America’s global leadership in critical areas like medical diagnostics to our foreign partners and rivals. The bipartisan Patent Eligibility Restoration Act of 2025 (PERA) attempts to rectify this by clarifying what inventions can be protected under the US Patent Act Section 101. PERA is before the Senate Judiciary Committee and would define clear statutory exceptions to patentable subject matter that would replace broad and vague judge-made exceptions.
The Patent Act allows useful and new manufactured products, machines, processes, compositions of matter, and improvements to these to be patented, so long as they are novel and non-obvious. The goal is to incentivize inventors, researchers, and investors to allocate the substantial time, resources, and talent it takes to bring about scientific and technological advancements by granting them a temporary monopoly.
Unlike trade secrets, patents are publicly disclosed, allowing anyone with the means to replicate and reproduce the inventions after the patent expires, or to license them from the owner during the patent period. Protections against infringement give innovators confidence to share inventions with manufacturers, distributors, and other commercial partners.
Historically strong patent rights have made America both a leader in pharmaceutical research that creates new cures, as well as a leader in speedy and abundant availability of generic drugs, which account for over 90 percent of US prescriptions. Manufacturers would have nothing to replicate if inventors and investors did not have the incentive and ability to recoup R&D investments. Patents also encourage inventors to make useful improvements to their existing works to secure new patents.
By 2014, the Supreme Court held that abstract ideas, laws of nature, and natural phenomena could not be patented even though these categories are not mentioned in the Patent Act. Alice, Mayo, and Myriad were well-intentioned rulings. Since these are discoveries rather than inventions, the court reasoned that making them patentable subjects would restrict or penalize use of the building blocks of human ingenuity. This would defeat IP’s constitutional purpose of promoting “the Progress of Science and useful Arts.” Patent claims tied to one of these categories must include an “inventive concept” placing them outside the banned category. Since these rulings, medical diagnostics, certain biotechnologies, and software and AI tools have become difficult if not impossible to patent despite their economic value and the substantial investment and research it often takes to discover them.
PERA addresses the Supreme Court’s rationale while encouraging innovation. It would replace the Court’s broad non-patentable subject categories with narrower statutory prohibitions against patenting unmodified genes and natural compounds, human thoughts, laws of nature, mathematical formulas and abstract methods. PERA affirms the patent-eligibility of diagnostic tests, extracted chemical compounds, modified genes, and computer processes requiring a “machine or manufacture.” By restricting patent protection to novel, non-obvious innovations, it maintains guardrails against weak or frivolous patents.
Computer processes using standard programming or off-the-shelf Large Language Models (LLMs) remain difficult to patent. To qualify, computer processes must offer something novel to programmers of ordinary skill—beyond what exists in GitHub repositories, academic papers, or open-source documentation. Applicants must publicly disclose their algorithms, code, and training methodologies. This transparency encourages developers to innovate “around” existing work without infringing, similar to how Instagram replicated TikTok’s “Reels” and Google replicated Microsoft Word to create “Docs.”
The EU and China did not copy America’s 2012-13 judicial restrictions on patenting diagnostics. Since 2012, investment in diagnostics in the US has dropped $9.3 billion below what it would have otherwise been. Europe’s In-Vitro Diagnostics market, which was in decline until 2013, has subsequently grown 2.7 percent yearly on average. Today, 40 percent of molecular diagnostic kit manufacturers are in Asia, while the United States is home to just 29 percent — on par with Europe even though the United States has a significant lead in other innovation metrics. If broad patent eligibility for diagnostics stymied innovation, we would expect the opposite result.
Unlike the United States, the EU and China did not restrict patenting diagnostics in 2012–13. Europe’s In-Vitro Diagnostics market grew 2.7 percent annually following that period. Because 74 percent of investors prioritize patent eligibility, Supreme Court decisions likely drove investment away from U.S. diagnostic research firms toward Europe and Asia. Today, Asia hosts 40 percent of molecular diagnostic kit manufacturers, while the United States hosts only 29 percent. If broad patent eligibility hindered innovation, we would expect the opposite result.
Protecting novel, useful innovations from broad, sweeping exemptions will strengthen America’s patent system and economic competitiveness. Conversely, ceding leadership to China and Europe through overbroad IP restrictions threatens jobs and opportunities for American innovators, entrepreneurs, and researchers.