Is the Pendulum Swinging Back?

Jun 14, 2019 | James T. Nikolai

The issue of “patent eligible subject matter” received little attention in the U.S. Then the Supreme Court stepped in and created chaos where certainty previously existed. Now, there is an effort in Congress to restore order and, at the same time, reassert Congressional power.

Patent-eligible subject matter in the U.S includes five statutory categories. These are identified in § 101 of the Patent Act as “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” Over time, the courts created several well understood, and uncontroversial, exceptions to § 101. Specifically laws of nature, natural phenomenon and abstract ideas were found not patent eligible under various court rulings.

Three Supreme Court cases, Bilski v. Kappos, 561 U.S. 593 (2010), Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012) and Alice Corp. v. CLS Bank International, 573 U.S. 208 (2014), tightened the reigns on when an invention is to be considered “patent eligible subject matter.” In Bilski and Alice, the Court created a two-step test for determining patent eligibility: (1) determine whether the claims are directed to a patent-ineligible concept such as an abstract idea; and (2) determine whether the claim’s elements, considered both individually and as an ordered combination, transform the nature of the claims into a patent-eligible application.

With regard to the first step, the Supreme Court declined to establish a definitive rule for determining what constitutes an “abstract idea.” Instead, courts compared any claims at issue to claims already found to be directed to an abstract idea. In the wake of Alice, lower courts and the U.S. Patent and Trademark Office (USPTO) were, almost routinely, finding patent claims directed to software to be “patent ineligible.” Inventions related to medical tests were also found to be patent ineligible on the theory that they were based on laws of nature or natural phenomenon and there was not the requisite transformation. The Alice test was also employed to invalidate patents related to other technologies.

Earlier this year the USPTO issued new guidelines for applicants and examiners to use to determine patent eligibility. PendulumMany praised the new guidelines as a positive step toward restoring clarity. Within three months, however, the Court of Appeals for the Federal Circuit, which has appellate jurisdiction over most patent matters, held that the courts are not “bound by [the USPTO’s] guidance” and that any deference to be given to the decisions of the USPTO is outweighed by “consistent application of [§ 101] case law”. Cleveland Clinic Foundation v. True Health Diagnostics LLC (Fed. Cir. Apr. 1, 2019).

With the executive branch (USPTO) and the courts clearly at odds with each other, members of Congress from both parties are stepping into the fray. Several are looking to amend § 101 of the Patent Act to restore clarity.

A draft bill is being circulated. Perhaps the most interesting part of the draft bill is a provision that reads “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.”

If passed, Congress would be sending a clear message to the courts. Determining patent eligibility is exclusively the province of Congress and a court’s role is to interpret and apply the rules enacted by Congress rather than create exceptions to those rules not found in the patent statutes.