Theranos: How a broken patent system sustained its decade-long deception

From ARS Technica, a jaw-dropping indictment of the US patent system:

But Holmes’ 2003 application was not a “real” invention in any meaningful sense. We know that Theranos spent years and hundreds of millions of dollars trying to develop working diagnostic devices. The tabletop machines Theranos focused on were much less ambitious than Holmes’ original vision of a patch. Indeed, it’s fair to say that Holmes’ first patent application was little more than aspirational science fiction written by an eager undergraduate.

So how did Holmes’ unrealistic application lead to real patents, like US Patent No. 7,291,497? If you look through that patent’s application history, you can see that the examiner did review it closely. The examiner made two non-final rejections and two final rejections before eventually allowing the claims. (At the USPTO, a “final” rejection is not really final). The rejections were based on prior art and other technical grounds. What the examiner did not do, however, was ask whether Holmes’ “invention” actually worked.

Two legal doctrines are relevant here. The “utility” requirement of patent law requires that the invention work. And the “enablement” requirement means that the application has to describe the invention with enough detail to allow a person in the relevant field to build and use it. If the applicant herself can’t build the invention with nearly unlimited time and money, it does not seem like the enablement requirement could possibly be satisfied.

The USPTO generally does a terrible job of ensuring that applications meet the utility and enablement standards. In practice, unless an application claims an obviously impossible device (like a perpetual motion machine), the examiner will not question whether it works. To some extent, this is understandable. Examiners only have a few hours to review each application, and they can hardly be expected to run complex experiments to check the applicants’ claims. But this practice can lead to serious errors.

In early 2014, around the same time that Theranos was beginning to grow its profile, the USPTO was criticized for awarding a patent to a Korean researcher for work that was already known to be fraudulent. The applicant had even been convicted for falsifying the relevant results. A USPTO spokesperson told The New York Times that the agency “operates on an honor code and that patent examiners cannot independently verify claims.” In response, Professor James Grimmelmann commented: “The USPTO is an armory handing out legal howitzers on the honor system. What could possibly go wrong?”

To answer Professor Grimmelmann’s rhetorical question—Theranos is what could go wrong. Holmes’ original patent application became a key part of the company’s mythology. For example, an infamous Fortune article from 2014 reverently tells the story of Holmes staying up late to write her application and suggests that Theranos was founded on that original vision. And if you had visited Theranos’ website in 2014, you would have found an “Our Mission” page that said Holmes left Stanford to “build Theranos around her patents and vision for healthcare.”