Congress Proposes to Fix Patent Eligibility

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Since 2012 the Supreme Court has made three landmark decisions banning certain types of inventions from being patented. First, Mayo v. Prometheus banned patents on methods of medical diagnosis and analysis. Then Association for Molecular Pathology v. Myriad Genetics (aka Myriad Genetics) banned patents for artificial DNA, if the artificial DNA is defined by a natural nucleic acid sequence. Finally, the Alice decision banned patents on computer hardware and software that are defined by a use for financial transactions or other “abstract concepts.” These decisions (collectively the “Alice” decisions), while welcomed by many anti-patent factions (notably Silicon Valley and the generic drug industry), have been harshly criticized by organizations that depend on innovation, including research universities, solo inventors, and biotechnology companies. The Alice trifecta also reverses over 100 years of contrary judicial precedent, puts the United States out of step with international norms for patenting, and violates Section 5 Article 27 Part 3 of the TRIPS agreement. Congress has finally proposed legislation to address the Alice trifecta.

To put the proposed legislation in context, patents are granted if the invention is new, useful, non-obvious, adequately described, and of the proper subject matter.  Subject matter that is eligible for patenting was set out by Congress in Section 101 of the Patent Act: any process, machine, manufacture, or composition of matter (the “congressional categories”). For centuries courts have recognized that some inventions do not fall into one of the four congressional categories. Examples of such inventions include abstract concepts, natural phenomena, and natural laws (the “judicial exceptions”). However, in the Alice decisions, the Supreme Court made a radical change in the way subject matter is analyzed: The Supreme Court now believes that an invention can fall under one of the four congressional categories, yet also be one of the judicial exceptions. For example, in Myriad, Justice Thomas concluded that artificial DNA is sometimes a “natural phenomenon” and is thus ineligible for patenting despite the fact that it is clearly a “composition of matter.” In Mayo, Justice Breyer concluded that testing a patient’s blood for drug residues and determining whether the patient is getting the right dosage of the drug is a “law of nature,” despite the fact that it is clearly a “process.” In Alice, Justice Thomas concluded that a computer, although a “machine,” is merely an “abstract concept” if it is programmed to perform financial transactions.

This creates a logical contradiction. The original logic was as follows:

  • Only things in the congressional categories can be patented.
  • The judicial exceptions are not in the congressional categories, therefore the judicial exceptions cannot be patented.

The new Alice corollary is

  • Some things in the congressional categories are judicial exceptions, therefore some things in the congressional categories cannot be patented.

The corollary is a logical error, because it depends on both the statements “A is not B” and “some A are B.” Both cannot be true.

This leaves the question of when a congressionally eligible invention is a judicially banned invention. In other words, if an invention falls under one of the four congressional categories, when does it also fall under one of the three judicially banned categories?

To answer this question, the Alice decision created a two-part test. The first step is dissecting the patent claim into constituent parts (“elements”) and deciding whether any element is in one of the judicially banned categories. If so, then the remaining elements must be analyzed. If all of the remaining elements that fall under the four congressional categories of eligible subject matter are “well-understood, routine, [and] conventional,” then the entire claim is no more than the judicial exception.  The term “well-understood, routine, [and] conventional” is undefined, and confusingly similar to the other requirements for novelty and obviousness.

The logical contradictions in the Alice standard and the difficult task of mentally dissecting patent claims have created public uncertainty and legal upheaval. As a result, lower courts frequently reverse the decisions of the U.S. Patent and Trademark Office, and appellate courts frequently reverse the lower courts. Numerous organizations have proposed legislative solutions to the Alice problem. On May 22, a bipartisan and bicameral group of representatives and senators proposed changes to the Patent Act that would resolve the situation, largely based on a proposal by the American Intellectual Property Association and the Intellectual Property Owners Association (IPO). Hearings are now underway.

The new proposal would amend Sections 100, 101, and 112 of the Patent Act.  It also contains “additional legislative proposals” that appear to be statements of intention or other provisions without proposed accompanying amendments.

The proposal would add a new Section 100(k) that defines the “usefulness” requirement more stringently, requiring “specific and practical utility in any field of technology through human intervention.” This is probably intended to preclude patents on natural things and ideas.

The proposal would slightly amend Section 101 to eliminate the term “new” in “new and useful” to clarify the distinction between novelty and subject matter eligibility. This should resolve the confusion created by the Supreme Court’s “well-understood, routine, conventional” standard. A new subsection (b) would be added that requires the eligibility determination to be made “only while considering the claimed invention as a whole, without discounting or disregarding any claim limitation” forbidding the Supreme Court’s new dissection approach.

The congressional proposal also lists factors that cannot be considered in evaluating the eligibility of an invention: the manner in which the invention was made; whether individual limitations are “well known, conventional, or routine;” the state of the art at the time of invention; or any other considerations under Section 102, 103, or 112 (novelty, obviousness, and clarity). This will eliminate the confusion created by Alice between novelty, obviousness, clarity, and subject matter eligibility.

The clearest statement in the proposal that the Alice rule is gone is “No implicit or other judicially created exceptions to subject matter eligibility, including ‘abstract ideas,’ ‘laws of nature,’ or ‘natural phenomena,’ shall be used to determine patent eligibility under section 101, and all cases establishing or interpreting those exceptions to eligibility are hereby abrogated.” This proposal would make very clear that anything useful that falls under the four categories in Section 101 is eligible for patenting, assuming it meets the other legal requirements of the Patent Act.

The proposal contains at least one concession to those who felt that pre-Alice law was resulting in excessively vague patents. It would amend Section 112 of the patent act as it pertains to “functional claiming” (defining parts of an invention by their function, not their structure). New Section 112(f) would broaden 112(f) to cover not only “combination” claims, but any functional claim that lacks reference to a structure, material or act. This would require patents with functional claims to list specific structures, acts or materials to support functional claims. For example, in software patents this will require actual samples of code for “modules” or subroutines that are claimed; otherwise the claims will be invalid. In the context of the life sciences, it could potentially require claim elements defined only by function, such as “a ligand of protein X,” be supported by actual examples that could serve that function. This might be a heavy burden for certain kinds of inventions, requiring needless “laundry lists” of certain classes of chemical (e.g., buffers, foaming agents, antimicrobial agents, etc.); on the other hand, it somewhat mirrors recent judicial decisions affecting biological molecules.

In any case, those interested in this issue should contact their representatives and senators in Congress to share their views.