How the patent office's lax standards gave Elizabeth Holmes the BS patents she needed to defraud investors and patients

Originally published at: https://boingboing.net/2019/03/04/weaponized-design-fiction.html

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This is an interesting case of fraud, I can’t recall any other case where the fraudster in a technical patent case was a woman. Anyone know of others?
It’s usually deluded guys who believe that they are right and entitled to do what ever they damn well want.

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When legendary grifter Elizabeth Holmes was 19 years old, she conceived of a medical device that could perform extensive diagnostics in an eyeblink from only a single drop of blood; she had no idea how such a device would work or whether it was even possible, but that didn’t stop her from drawing up a patent application for her “invention” and repeatedly submitting to the patent office until, eventually, she was awarded a patent for what amounted to a piece of uninspiring design fiction.

It’s like she ran a Dungeons & Dragons campaign, except with patent applications and venture capital instead of monsters and treasure.

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You mean like the late Jerry Lemelson? Billionaire who patented what amounted to the very idea of machine vision, then as science progressed he added details from people’s papers and kept going until the whole thing approached commercial viability and let the patents issue? (There were many, many more. Machine vision was just the one that ran up against inventors who were willing to lose money by challenging the Lemelson Foundation in court rather than license their own work.)

Him?

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Andrea Rossi’s Leonardo Corporation has received a United States Patent that could cover his Ecat low energy nuclear reaction (LENR). Interestingly enough the patent US 9,115,913 B1 dated August 25, 2015, does not mention LENR, cold fusion or the words Ecat or energy catalyzer.

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That, and in the US’s misogynist culture, men are seen as more authoritative than women, regardless of knowledge (and even presentation). So men have an advantage, even in fraud.

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the USPTO helped her out by trumpeting the importance of patents to “inventors” like Holmes, comparing her to Benjamin Franklin in their public communications.

I was hoping this was an exaggeration, but no, seems the director actually said that the patent offered some kind of “proof”. Seems she later resigned without being entrenched in some kind of scandal or another, if anyone’s wondering.

The sentence only makes sense when you realize that the patent bargain is utterly broken. The people who work within the patent system realize it.
[…]
Toward the end, the company stayed alive thanks to a loan from Fortress Investment Group LLC. That $100 million loan was guaranteed by Theranos’ patents.

I might have thought that the investors would be among those who would realize that the system is broken. But then, as recently noted, I suppose this is another instance of one of those big ol’ shell games where everyone aspires to pass the buck to someone else who knows less.

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So, to give it its proper name, it ought to be called the Science Fiction Office.
I’d go for that, so we could rename sci-fi to be ‘Patent Fiction’ - which would, at last, actively exclude fantasy from being lumped together with it. (Oh, wait … darn!)

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In another life I worked as a junior level stockbroker/lackey. One of the ‘big’ stocks we were pushing on customers was a ‘new’ type of 3D television technology. It too went through the patent process. They kept both the patent ‘files’ and the so-called prototypes in a giant vault displayed proudly in the middle of a warehouse. Like there was gold bullion inside. Well - this happened: https://www.wired.com/2003/01/3-d-tech-exec-looks-at-jail-time/

I was there. Now I work in healthcare to erase the stain upon my soul.

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Counterpoint: If the patent office has to analyze the patent application to determine if it will work, rather than just whether it is new and non-obvious, each patent application will take significantly longer to review. As a result, patents will become much more expensive to apply for, and the process will be much more involved and will often get into a court case to determine whether in fact the invention works if the patent office thinks it will not. This will mean that getting a patent will be even more the domain of big corporations, and smaller inventors will probably be left out unless they can find a big corp to fund them (and take ownership of the invention). Small inventors probably won’t be able to afford the lawyer to take the USPTO to court to argue that yes, the new invention actually does work, even though it contradicts previously established science – sometimes previously established science is wrong! So the “basement inventor” will be even more dead than it already is.

Making sure the inventions are enabled by the specification is important, and it is fair to argue that the USPTO doesn’t do enough of that. But if you can build the apparatus, or formulate the composition as described in the patent application, it really shouldn’t be the USPTO’s job to figure out whether it does what the inventor believes it will do.

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They have issued patents for perpetual motion machines frequently and as recently as the 2000s.

Counter-Counterpoint: Cotropia, Quillen, and Webster at the Richmond School of Law have done us a great service by tracking the performance of the USPTO since about 1996. If you follow the link at the bottom of that page you can see that when Holmes got her patent, the USPTO had an eventual grant rate of about 93% (see figure 7 on page 9.)

So, it’s not that the USPTO failed to reject her fraudulent patent for lack of utility. It failed to reject almost everything. It could have been worse. The eventual grant rate the year before was 99%. You had to REALLY screw up to fail to get a US patent back in 2001.

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Off topic, but I am wondering if this fraud got going partly due to a sort of conjunction fallacy.
With Holmes’ mythology there were just too many likeable factors to resist getting on the bandwagon, young+school dropout+female entrepreneur+saviour complex+media savvy+record growth+famous investors etc.
Kahneman has proven that as you add on more traits/categories the likelihood of the person existing in reality decreases, however your brain just wants it to be true, as you’ve trained yourself to think in stereotypes and broad generalisations.

If am right about this then same probably goes for that Jessie Smollet guy; famous+gay+black+bleach+MAGA cap+noose etc. The more factors added to the narrative the more hooked you get. And you worry that if you turn down one aspect of it, such as the weird detail about the bleach, you risk being perceived to reject the other factors as well, i.e. that you’re secretly a homophobe for example.

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It would be nice if they even did that.

Yup.

ETA:

But as the article points out - you can’t. The apparatus described cannot in fact be built. Theranos spent staggeringly unimaginable amounts of money proving that.

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Quicker is preferable, all else being equal; but if the longer review got better results it would still be very much worth a look.

What I’d be concerned about is the ‘mythbusters’ issue:

There are a variety of apparatus and methods that do work; but are fiddly as hell (the poor souls involved in grad and above benchtop chemistry of my acquaintance have told me some stories, and there are plenty of other areas). Even if the USPTO bulked up its R&D and applied science people signficantly there would still be a strong likelihood of them encountering a lot of cases where ‘yup, some guy who read the patent can’t make it work where the guy who has been prodding it 18 hours a day for the past few years can’ as well as ‘USPTO verifies it without issue at benchtop scale because a full scale verification of someone’s claimed method for a continuous flow process that scales nicely to chemical plant size would cost $100 million; turns out that the claim is bullshit and that nobody knows how to make it work efficiently above benchtop scale’.

If the USPTO can swat the impossible in passing that seems like a plus; and having them head off people who establish ‘priority’ with a then-impossible claim and use it to shake down the people who subsequently make whatever it is work is an obvious good; but I’m not sure that they are well positioned to do ‘does it work’ verification; especially when the claim is specifically for something wildly expensive(like a process-chemistry scale version of a reaction nobody else has yet scaled up; but which is considered easy enough at small scale).

All that said, since the USPTO is not in a good position to check certain claims; people should probably run screaming from anyone who claims that their patent is proof of anything aside from successfully putting through a patent application.

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I’m not a huge fan of patents as practiced; but the one thing to be cautious about in looking at grant rates is that they don’t (on their own) tell you whether the process is just just a real softball or whether the people applying for patents have a good idea of what will or won’t make it through review and their clients are paying them for results rather than for spray 'n pray.

The ‘excellent understanding’ case isn’t necessarily a good one, especially if it arises from a massive revolving door or the USPTO reviewers being hugely outgunned by the outside patent laywers; but to know if a low rejection rate is a sign of softball standards you’d have to know if there’s a strong ‘we shouldn’t even file this, it has no hope’ filtering step that never makes it into the stats; or whether it’s just a ‘if you’ve got enough results for us to fill out 15 pages or so, we can ram it through’ thing.

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What’s missing from this whole discussion , both the article and the Comments, is tthe role of the media. Maybe I should go back and research whether Boing Boing was like all the other cheerleaders in the Press who just couldn’t say enough about what a whiz kid Elizageth HOlmes was. Now they can’t say enough abot what a fraud she was/is. “Cheerleading” doesn’t come close. The article and the Coments are saying that the Patent Office is’t crticial enouhg; wow, talk abot casting the first stone and living in a glass house.
I hold US Pat No 8,063,026 on a cre for bladder infections. I can tell you that becase of the credibility problem that the Article is telling us about, just about nobody is impressed with my discovery; ie the grant of a patent is greeted by the public right off the top with “Yeah but a lot of those patentws dont even work”.

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I am of a quite different opinion. I don’t think that patents are evidence that a particular invention is going to bring profits and I would say that if investors thought otherwise they deserved to lose their investment. I have a feeling that, in that particular story, we have another case of investors wanting public warranty against risks and I feel that this is a much bigger problem than the patent problem.

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Well there is a handy search feature…:mag:

which would seem to indicate: no.

And a few more I see!

I think these two quotes deserve to be looked at together.

Patents are not a guarantee of profit.

But I think people (and investors are still people even if they are filthy rich) should be able to be reasonably confident that if someone has a patent, that it is likely enough to actually do what it claims, that it’s worth them spending some money checking that it does.

Alternatively, you can just have a system whereby someone can get a legal monopoly over a process by claiming to have a new invention and meticulously setting out the details.

As the article says that’s the traditional pay-off. The inventor gets a time-limited monopoly on explotation in return for making the details available to everyone to use after their monopoly period expires.

If your patent application can be so vague that people can’t actually replicate it (no matter how skillful or lucky) because you’ve kept details out of the patent description - that no longer applies.

Equally if people cannot have any more confidence in your patent than in the chap who pops round claiming to have a commercially viable method for extracting gold from urine, the system is not working.

There doesn’t need to be much more confidence but there should be something.

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That is the system that was used in France (and I believe still is). France used what is called a registration system, you just got a patent by filing it. The trick is that courts would easily invalidate your patent.