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By Michael Borella —

On May 22, a bipartisan and bicameral group of senators and representatives released a draft bill that proposes significant changes to 35 U.S.C. § 101 and the law of patent eligibility.  This draft bill follows a framework that the group released in April.

Patent eligibility has been a source of much controversy and complaint since the Supreme Court’s rulings in Mayo v. Prometheus and Alice v. CLS Bank Int’l, both of which effectively made it more difficult to patent certain types of inventions — particularly, diagnostic methods, software, and business methods.  The consternation over the Court’s opinions rests not only in how it limited the ability to protect critical innovations that drive the U.S. economy, but also how vague the Justices left the line between inventions that are eligible for patent and those that are not.

While there was some hope that the Federal Circuit might be able to clarify the substantive law, this has not happened.  As an exercise to the reader, try to rectify the holdings in McRO, Inc. v. Bandai Namco Games America Inc., Recognicorp, LLC v. Nintendo Co. Ltd., Electric Power Group, LLC v. Alstom S.A., Synopsys Inc. v. Mentor Graphics Corp., and Amdocs (Israel) Limited v. Openet Telecom, Inc.  Have fun.

And while the U.S. Patent and Trademark Office’s new § 101 Examination Guidance is an earnest effort by Director Iancu and his staff to clarify and harmonize how that body is to apply the eligibility inquiry, it effectively replaced the Court’s test with its own similar test that is to be used in more limited situations.  While this appears to have eliminated many of the more tenuous § 101 rejections from prosecution, applicants are still contending with nitty ambiguities of the judicial exceptions (what exactly is the scope of „methods of organizing human activity” anyway?) and what it takes to integrate one of these exceptions into a practical application thereof.

And before anyone concludes that those railing against the current state of § 101 are just a bunch of patent attorneys making self-serving arguments for stronger patent laws, a number of federal judges have strongly criticized Alice and its progeny.  Judge Wu of the U.S. District Court for the Central District of California panned Alice for setting forth an „I know it when I see it” test.  Judge Pfaelzer, a colleague of Judge Wu, wrote that the Supreme Court’s patent eligibility cases „often confuse more than they clarify [and] appear to contradict each other on important issues.”  More recently, Judge Plager of the Federal Circuit wrote that the post-Alice § 101 inquiry „renders it near impossible to know with any certainty whether the invention is or is not patent eligible.”  Former Chief Judge of the Federal Circuit Paul Michel stated that Alice „create[d] a standard that is too vague, too subjective, too unpredictable and impossible to administer in a coherent consistent way in the patent office or in the district courts or even in the federal circuit.”  And these are just a few examples of judicial confusion.  There are more.

In any event, the need for clarification of § 101 and a workable patent eligibility test is critical.  Small businesses and individual inventors have been hit particularly hard by Alice, as these entities and individuals often lack the resources for the long, drawn-out process of overcoming USPTO § 101 rejections or defending an issued patent against a § 101 challenge.  In contrast, larger organizations have deeper pockets to take up the fight and can hedge their chances of allowances and litigation victories across a portfolio of dozens or hundreds of patents.  So, to some extent, the patent eligibility battle has become one of large versus small.

The framework set forth in April defined a closed list of exceptions to the four statutory categories of § 101 that were roughly modeled after those of Alice and Mayo.  Also like Alice, the framework attempted to „[e]nsure that simply reciting generic technical language or generic functional language does not salvage an otherwise ineligible claim.”  But following these principles would effectively codify a variation of the Alice test.  This variation would be similar to that of the USPTO’s new guidance, and thus would suffer from a number of the same ambiguities and be similarly difficult to apply consistently.

The draft bill, however, goes in a different direction.  The proposed modification to § 101 reads as follows:

Section 101:

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

(b)    Eligibility under this section shall be determined only while considering the claimed invention as a whole, without discounting or disregarding any claim limitation.

The draft bill also proposes a definition of the term „useful”:

Section 100:

(k)    The term „useful” means any invention or discovery that provides specific and practical utility in any field of technology through human intervention.

The draft bill further clarifies how these new provisions are to be interpreted:

The provisions of section 101 shall be construed in favor of eligibility.

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.

The eligibility of a claimed invention under section 101 shall be determined without regard to: the manner in which the claimed invention was made; whether individual limitations of a claim are well known, conventional or routine; the state of the art at the time of the invention; or any other considerations relating to sections 102, 103, or 112 of this title.

These last two points represent the most significant changes — completely eliminating the notion of a judicial exception to patent eligibility as well as clarifying that the § 101 inquiry is (as it was until Mayo) separate from those of §§ 102, 103, and 112.  In other words, patentable subject matter under the draft bill would likely be as broad or even broader than the „anything under the sun that is made by man” language of Diamond v. Chakrabarty.

If passed as is, the draft bill would have an immediate and significant impact on software and business method inventions.  Patent eligibility would likely no longer be a barrier to obtaining protection for mathematical equations and pure software processes executing on general purpose computer hardware, as well as financial transactions and other types of business methods.  Further, there is no „mental process” exception that prevents patenting a series of steps that can be carried out in the human mind.  That is not to say, of course, that all such inventions would be patentable, as they would still have to be novel, non-obvious, definite, and described such that a person skilled in the art could make and use them.

As a consequence, one must wonder whether the proposed language is too broad — do we really want to grant patents on purely mental processes, and if so how does one detect infringement?  Perhaps the definition of „useful” is meant to pump the brakes in that regard.  This term requires that a claimed invention have three distinct properties to be patent eligible: (1) it provides specific and practical utility; (2) in a field of technology; and (3) through human intervention.  One may be able to resurrect the Alice-derived arguments that mental processes, business methods, and certain types of software do not address a „technological” field, and that broad claims thereto are not „specific and practical” enough.  Such arguments would be subject to the same lack of clarity exhibited by the Alice test in general.

Regardless, the language of the draft bill is an interesting step in a direction that potentially overcomes a significant portion of the problems with today’s application of § 101.  On June 4, 5, and 11, the Senate Judiciary Subcommittee on Intellectual Property will hold hearings to „solicit additional stakeholder feedback and to hear from a diverse set of witnesses on the problems different industries are facing with our nation’s patent eligibility laws.”

No doubt, powerful stakeholders with strong lobbying efforts will attempt to make this proposed legislation seem apocalyptic, contending that it breathes new life into non-practicing entities and so-called frivolous lawsuits that were curtailed by Alice.  Hopefully, Congress takes a balanced approach and recognizes that Alice hurt practicing entities as well as those that are non-practicing, and that the latter category includes many legitimate interests (such as university researchers and small inventors with limited resources).  There are ways that Congress can address bad actors in the patent space without harming U.S. innovation.  If anything, the last seven years has established that § 101 is the wrong tool for that job.