A Stanford dropout, Elizabeth Holmes captivated the attention of investors with her innovative invention: blood sampling requiring only a drop of blood. Profitable, if the invention actually works– one would think…
In 2003, Holmes filed her patent application, describing “medical devices and methods capable of real-time detection of biological activity and the controlled and localized release of appropriate therapeutic agents.” Of the voluminous applications she filed, many were granted. (See U.S. Patent No. 7,291,497). And from the invention, Holmes’ startup, Theranos, grew to be a $9 billion company. Now, Theranos is worth nothing and big investors are dissatisfied to say the least.
How could this be?
In theory the invention was a good idea, but ultimately it did not accomplish what it promised. The test results from the Theramos were inaccurate and used other machines for most of it’s testing.
As for Elizabeth Holmes, her image in the public eye has plummeted. Holmes went from being depicted as comparable to Steve Jobs to criminally charged for “massive fraud.” According to the complaint filed against her and former chief operating officer and president Ramesh ‘Sunny’ Balwini, both were accused of, “raising more than $700 million from investors through an elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance.” Holmes was indicted on nine counts of wire fraud and two counts of conspiracy to commit wire fraud.
The approval of Holmes’ “novel” technology shows how the patent examination system in the United States is overburdened and under-resourced. The “USPTO today is overwhelmed with patent applications and, as a result, patent examiners do not have adequate time or resources to thoroughly examine the applications. The agency receives more than 600,000 patent applications per year and patent holders are constantly pressuring for quicker deliberation in approving their applications . . . Because of the high volume of applications an examiner must process . . . it has been estimated that 70 percent of examiners have less time than necessary to thoroughly complete an examination.” Elizabeth Holmes’ fake patent is an example of what can go wrong when patents are wrongfully approved. In this instance, the alleged fraudulent company negatively impacted investors and placed their patients at risk in relying on the technology’s faulty test results.