As an empirical legal scholar, I am pleased to report that Sasha Hoyt has done what very few law students—and even many law professors—could achieve. She successfully conducted a novel empirical study to assess the real-world impact of a U.S. Supreme Court decision, Mayo Collaborative Services v. Prometheus Laboratories, Inc., on venture capital (VC) investment in startups and other companies that develop medical diagnostic technology.
As Ms. Hoyt notes, patent protection is particularly important for startup companies, as it can help protect their innovations from unauthorized use, attract funding and other investments, and foster collaboration with third parties. In the Mayo case, the Supreme Court made it extremely difficult for medical diagnostic companies to obtain patent protection for their technology, no matter how novel or useful it is. Using a sophisticated difference-in-difference methodology to evaluate the impact of the Supreme Court’s decision in Mayo on VC funding for medical diagnostic startups, Ms. Hoyt finds that medical diagnostics firms received almost $10 billion less in VC funding that they would have compared to other industries that were unaffected by the decision. And importantly, this result is statistically significant using an ordinary least squares (OLS) regression analysis. In short, Ms. Hoyt’s Note is a valuable contribution to the literature on patent eligibility and its impact on innovation, and policymakers should take note of her study.