Patent Eligibility Reform Introduced in Congress Once Again: Is the Second Time the Charm?

In an ideal world, patent eligibility would be a simple, clear, and non-controversial inquiry.  After all, the purpose of 35 U.S.C. § 101 is to inform the public which types of inventions are eligible for patenting and which are not.  The law should draw a sharp line between these two categories with at most a minimal gray area in between.  Indeed, that had been the case until 2012, when the Supreme Court widened the gray area several times over in Mayo v. Prometheus [1] and then did so again two years later in Alice v. CLS Bank.[2]

The Federal Circuit has been unable to find an internal consensus as to the scope of patent eligibility in light of these decisions.  Most judges sitting on that court have admitted – in one way or another – that the case law is quite nebulous.

As a consequence, large and small companies have had to contend with a significant amount of uncertainty with respect to their patenting strategies.  In its current incarnation, § 101 has become an existential bogeyman capable of preventing otherwise innovative technologies from being patented and capable of invalidating patents granted on such technologies.  And these roadblocks are all too frequently based on fuzzy, conclusory reasoning on the part of patent examiners and judges.

In 2019, Senators Thom Tillis of North Carolina and Chris Coons of Delaware held a series of hearings in an effort to vet a rewrite of § 101 that would eliminate a large degree of its judge-made problems.  But this effort died on the vine, purportedly due to stakeholders being too far apart in their visions of what patent eligibility should be all about.

But with growing concern regarding China possibly eclipsing the U.S. in R&D of emerging technologies, there is a renewed impetus to fix § 101.  To that end, Senator Tillis has introduced a new bill that proposes doing so.  This text of the bill[3] is a mouthful, having over an order of magnitude more words than the 36 of the current section.  So let’s break it down.

The bill states that mathematical formulas, mental processes, and naturally occurring processes are not eligible for patenting.  But there are limits to the scope of these exclusions.  Specifically, mathematical formulas that are an element of a useful invention or discovery presumably would not doom the entire invention.  Likewise, mental processes as notions of abstract thought are not patentable, but a mental process implemented on a computer ostensibly could qualify.  Similarly, naturally occurring processes outside of the human experience are not patentable while human-made processes involving some aspects of natural processes could also qualify.

Along the same lines, unmodified natural material and unmodified human genes are not patent eligible, though such material “that is isolated, purified, enriched, or otherwise altered by human activity, or that is otherwise employed in a useful invention or discovery” could qualify.  This provision appears to codify and expand upon the holding of Association for Molecular Pathology v. Myriad.[4]

But things get sticky where the bill states that a “non-technological economic, financial, business, social, cultural, or artistic process” would also be excluded.  The problem with this language is that these terms are not defined and potentially quite broad.  Alice, as interpreted by the Federal Circuit, provides an exclusion for “methods of organizing human activity” that is a gotcha for patentees.  As someone who has spent too many hours arguing with patent examiners over whether inventions implemented solely on computers are “organizing human activity,” I can only imagine how the courts and the United States Patent and Trademark Office (USPTO) might misuse this particular exclusion.

Moreover, while the bill attempts to rein in the scope of this exclusion, it fails to do so in a cogent fashion.  The language – “if that process is embodied in a machine or manufacture, unless that machine or manufacture is recited in a patent claim without integrating, beyond merely storing and executing, the steps of the process that the machine or manufacture perform” – suggests that a machine or manufacture must “integrate” the process…into what exactly?  The proposal is silent.

The bill also addresses what should and should not be considered while carrying out the eligibility inquiry.  Notably, one must take into account “the claimed invention as a whole and without discounting or disregarding any claim element.”  This is a welcome provision, as there is a long track record of judges and patent examiners conveniently ignoring claim elements on their way to declaring claims ineligible.

On the other hand, one must not consider “whether a claim element is known, conventional, routine, or naturally occurring … the state of the applicable art, as of the date on which the claimed invention is invented [or] any other consideration in section 102, 103, or 112.  This is also a welcome provision, as it overrules the problematic prong two of Alice while bringing back the more logical pre-Mayo separation between §§ 101, 102, 103, and 112 of the statute.

One point is unclear, however, in that the bill states that eligibility shall be determined without regard to whether a claim element is naturally occurring.  But, it also excludes naturally occurring inventions from patentability.  One possible interpretation of these provisions is that individual claim elements being naturally occurring does not impact the eligibility analysis unless the entire invention (i.e., all elements) is naturally occurring.

The bill codifies the “quick kill” under §101 (the main reason why some parties will tell you that Alice is just fine) by stating that a court “at any time, may determine whether an invention or discovery that is a subject of the action is eligible for a patent under this section.”  Thus, invalidation of patents during the pleading stage would still be possible, but only “when there are no genuine issues of material fact.”  To this latter point, “the court may consider limited discovery relevant only to the eligibility” of the claims when ruling on such a motion.

In sum, Senator Tillis’s proposed revisions to § 101 seem to be moving in the right direction, yet still open new cans of worms.  The bill appears to be an attempt to find a sweet spot between varying stakeholder concerns by overruling some aspects of Alice and codifying other aspects.  It is unlikely that any one stakeholder will be entirely satisfied with this proposal, but as a starting point we could do much worse.

The main substantive problem with the proposal is the use of unclear terminology and a lack of recognition of how broadly courts and the USPTO have viewed the exclusions to patent eligibility in the past (and how the courts have expanded the exclusions over the years since Alice).  If these issues could be resolved, this legislation has the potential to be a modest course correction for American innovation.

Michael S. Borella, Ph.D., is a partner with MBHB and Chair of the firm’s Software and Business Methods Practice Group.

[1] Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012).

[2] Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (2014).

[3] S. _____, 117th Cong. (2022), available at https://www.tillis.senate.gov/services/files/AC4F15C8-8652-4760-8EB9-8D064616DB3B.

[4] Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576 (2013).

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