The Time is Now—Why the Supreme Court or Congress Must Act to Clarify What is Patent Eligible

Aug 5, 2020 | James T. Nikolai

Two Supreme Court cases, one decided in 2012 and another decided in 2014, have caused nothing but confusion related to patent eligibility.  It is now time either for the Supreme Court to revisit these cases or for Congress to act.

Mayo v Prometheus, 566 U.S. 66 (2012), involved patents covering the use of thiopurine drugs in the treatment of autoimmune diseases, such as Crohn's disease and ulcerative colitis, and more specifically tests used to measure metabolites of these drugs and thereby determine the proper dosage for a particular patient.  The U.S. Supreme Court called the correlation between the naturally produced metabolites and therapeutic efficacy and toxicity to be an unpatentable "natural law."

Alice Corp. v. CLS Bank Int’l, 573 U.S. 208 (2014), involved a patent covering computer-implemented, electronic escrow services for facilitating financial transactions.  The Supreme Court found that an abstract idea could not be patented just because it is implemented on a computer.  In doing so, the Court used a two-part test for determining patent eligibility.  Under this test, one must first determine whether the patent claim under examination contains an abstract idea (or relies on a law of nature).  Second, one must determine whether the patent adds to the idea "something extra" that embodies an "inventive concept."

35 U.S.C. § 101 is the statute governing patent eligibility and provides:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

No reference is made in this statute to laws of nature or abstract ideas.  These are judicially created exceptions to patent eligibility. 

The Supreme Court has long held that the “standard approach of construing a statutory exception narrowly to preserve the primary operation of the general rule” should be applied to these implicit statutory exceptions.  Commissioner v. Clark, 489 U.S. 726, 727 (1989).  “In construing provisions . . . in which a general statement of policy is qualified by an exception, we usually read the exception narrowly in order to preserve the primary operation of the provision.”  Clark, 489 U.S. at 739 (citing Phillips, Inc. v. Walling, 324 U.S. 490, 493 (1945)).  As stated in Phillips, “To extend an exemption to other than those plainly and unmistakably within its terms and spirit is to abuse the interpretative process and to frustrate the announced will of the people.” 324 U.S. at 493.

Since Alice, however, the judicially created exceptions have been used as a sledgehammer by the courts to beat granted patents to death and by the U.S. Patent and Trademark Office (“USPTO”) to deny patents directed to a wide variety of inventions.  The Federal Circuit Court of Appeals, which hears virtually all patent appeals from the courts and the USPTO, has held ineligible 86% of all patent claims it has confronted facing a challenge under these judicial exceptions since Alice was decided.  Robert Sachs, Alice: Benevolent Despot or Tyrant? Analyzing Five Years of Case Law Since Alice v. CLS Bank: Part I, Table 1.  Thus, the judicially created exception is swallowing the rule established by Congress.

The reasons are clear.  The two-part test used by the Supreme Court in Mayo and Alice is ambiguous.  The ambiguity of the Mayo/Alice test is easily explained, but difficult for the USPTO and the courts to resolve. 

Regarding the first part of the Mayo/Alice test, every invention, to some extent, relies upon some law of nature.  All of chemistry is based on how a set of elements will react.  All mechanical, electrical, and optical inventions relate to some law of physics.  All medical innovations relate to how the body functions.  Further, every invention can be characterized as an abstract idea.  “The primary meaning of the word ‘invention’ in the Patent Act unquestionably refers to the inventor’s conception rather than to a physical embodiment of that idea.” Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 60 (1998).  Every invention is itself a conceived idea and, therefore, every invention can be characterized as an abstract idea at some level.

Regarding the second part of the Mayo/Alice test, "something extra" that embodies an "inventive concept" provides little guidance regarding what is and what is not patent eligible.  This is aptly demonstrated by a case currently on appeal to the U.S. Supreme Court, Chamberlain Grp., Inc. v. Techtronic Indus. Co., 935 F.3d 1341, 1344 (Fed. Cir. 2019). 

In Chamberlain, a jury determined that the claims of a patent were inventive over the prior art reference which discloses wirelessly communicating status information about a system.  935 F.3d at 1349-50.  A combination of claim elements sufficient to render a claim inventive over an idea should also be “‘sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [idea] itself.’” Alice, 573 U.S. at 305 (quoting Mayo, 566 U.S. at 72-73).  The Federal Circuit, however, overruled the jury’s findings and the District Court’s judgment of patent eligibility and validity, holding “no inventive concept exists in the asserted claims sufficient to transform the abstract idea of communicating status information about a system into a patent-eligible application of that idea.”  935 F.3d at 1349. 

Even the USPTO agrees the Mayo/Alice test is ambiguous.  See Brief for the United States as Amicus Curiae, at 18, Hikma Pharm. USA, Inc. v. Vanda Pharm, Inc., 140 S.Ct. 911 (2020) (No. 18-817), cert. denied.  How can the USPTO possibly reach conclusions that are not arbitrary if it believes the Supreme Court’s test is ambiguous?  And how can any court reviewing a decision by the USPTO give the decision any deference given the USPTO’s explicit recognition of the ambiguity of the test it is to apply?  While all patents granted by the USPTO are presumed valid, a “reviewing court shall . . . hold unlawful and set aside agency action, findings, and conclusions found to be . . . arbitrary.”  See 35 U.S.C. § 282 and 5 U.S.C. § 706. 

The USPTO has struggled mightily since Alice to deal with this ambiguity.  According to Senate testimony provided by former USPTO Director David J. Kappos, the “USPTO is expending many thousands of hours per year on the irreconcilable mess of 101 - time that could be much more productively spent on issues that should be the focus of quality patent examination, as they are for our economic competitors.”  The State of Patent Eligibility in America, Part I, Before the Subcomm. on Intellectual Property, 116th Cong. (2019) (Testimony of David J. Kappos, former USPTO Director), available here.  Further, he urged lawmakers that “our national preoccupation with 101 puts us at a quality disadvantage against our economic competitors who deploy their patent examination resources at the real issues affecting patent quality: novelty, nonobviousness, enablement, written description.”  Id.

Hopefully, the Supreme Court will grant certiorari in Chamberlain and use it as an opportunity to clarify when these judicially created exceptions apply.  As Randall R. Rader, former Chief Judge of the Federal Circuit wrote in an amicus brief submitted in Chamberlain, the Supreme Court’s “guidance is needed sooner, rather than later” because “uncertainty surrounding patentability of emerging technologies . . . hampers investment and risks America’s global competitiveness in these fields.”  Brief for the Honorable Randall R. Rader and Chargepoint, Inc. as Amici Curiae Supporting Petitioner, at 2, The Chamberlain Group, Inc. v. Techtronic Indus. Co. Ltd., (No. 19-1299), 2020 WL 4005663 (July 2020).