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

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.

For Holmes, the patent was key to convincing investors, partners, and patients that her massive, years-long fraud (a company called 'Theranos' bilked investors out of hundreds of millions of dollars) was legit; the USPTO helped her out by trumpeting the importance of patents to 'inventors' like Holmes, comparing her to Benjamin Franklin in their public communications.

Patents are only supposed to be issued for devices with 'utility' -- that is, they have to actually work before you can get a patent for them. But it's been decades since the USPTO has paid meningful attention to this criterion when evaluating applications, handing out patents for imaginary 'inventions' to con artists, delusional hucksters, and other 'inventors' who are willing to pay the filing fees that keep the lights on at the Patent Office. And since most people only have a vague idea of the rigor used in patent examination, these patents for design fiction can be used as impressive 'proof' when crooks set out to deceive their marks.

(Another real problem with these fake patents: allowing con-artists to patent 'inventions' that they have no idea how to make means that when someone really does invent that gadget, the con-man can use their bogus patent to threaten and extort real inventors).

Daniel Nazer, my colleague from the Electronic Frontier Foundation, has written a stirring op-ed for Ars Technica connecting the dots between the USPTO's malpractice and crimes like Holmes's.

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.”

Yet more than a decade after Holmes’ first patent application, Theranos had still not managed to build a reliable blood-testing device. By then the USPTO had granted it hundreds of patents. Holmes had been constructing a fantasy world from the minute she started writing her first application, and the agency was perfectly happy to play along.

Theranos: How a broken patent system sustained its decade-long deception [Daniel Nazer/Ars Technica]