Reflections on Potential Legislative Reform of the Patent Eligibility Standard

The bill is very much a work in progress, as it was the subject of three days of hearings this month, with 45 witnesses testifying before the Senate Judiciary Committee's subcommittee on intellectual property. The witnesses included former governmental officials, trade groups, individual inventors, members of industry and other interested stakeholders such as the ACLU. The bill itself was a product of months of meetings with various stakeholders and comments received from several leading IP organizations such as the American Bar Association's intellectual property law section, (American Intellectual Property Law Association (AIPLA) and IPO. At the final day of hearings June 11, Tillis indicated that the bill will be revised further to, among other things, ensure that abstract ideas, laws of nature and natural phenomena are not patent eligible, and refine the proposed revisions to Section 112(f). The new bill is expected to be released this month.

The recent congressional activity is important to consider in the context of patent origin and purpose. U.S. patents originated in the Constitution, which provides in Article I, Section 8, Clause 8 that Congress shall have the power “to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” Thus, patents are really less about protecting inventors and more about driving innovation. Indeed, patents are a property right granted by the government (specifically, the right to exclude others from making, using or selling the patent holder's invention for a period of time, typically 20 years), in exchange for which the inventor discloses details of their invention to the public. However, the goal of such disclosures is to encourage others to learn from them, innovate around them and ultimately practice the invention once the patent term ends.

The U.S. Constitution does not address, however, what is and what is not eligible for patenting. Instead, this decision was left to Congress. Currently the standard for patent eligibility comes from Section 101 of the Patent Act, which 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.” The current language of Section 101 comes from the Patent Act of 1952, which itself varied little from the prior statutory language.

Clearly, then, the language of the statute itself is not what led to the current state of the law and the subsequent controversy. Instead, the issue is one of interpretation and application. While the Supreme Court had opined on the meaning of Section 101 previously, the largest shift came with the decisions in Myriad, Mayo and Alice. As developed in these cases, the test for patent eligibility is: first determine whether the claims of the patent are directed to an abstract idea (one of the “patent ineligible concepts”); and if the patent's claims are directed to an abstract idea, then determine whether — when the elements are considered both individually or as “an ordered combination” — the claims contain an inventive concept to “transform the nature of the claim into a patent-eligible application.” In addition, as noted in the draft bill, there are several judge-made exceptions to patent eligibility including for abstract ideas, laws of nature and natural phenomena.

The application of the Alice test has been fraught with problems, leading to differences of opinion between the U.S. Patent and Trademark Office and the Federal Circuit, as well as increasingly uncertainty even among case law. As retired Judge Paul Michel of the U.S. Court of Appeals for the Federal Circuit commented on Day 1 of the hearings:

“In my view, recent cases are unclear, inconsistent with one another and confusing. I myself cannot reconcile the cases. That applies equally to Supreme Court and Federal Circuit cases. Nor can I predict outcomes in individual cases with any confidence since the law keeps changing year after year. If I, as a judge with 22 years of experience deciding patent cases on the Federal Circuit's bench, cannot predict outcomes based on case law, how can we expect patent examiners, trial judges, inventors and investors to do so?”

Myself and others believe a legislative solution is appropriate and required. Perhaps the outcome should and will be that the Alice test and the judicial exceptions to patent eligibility it creates will be adopted, but it is indisputable that decisions about eligibility should be decided by Congress and not the courts. A further consideration of the history of the origins of patents and what they covered historically illustrates why.

As explained by one legal scholar, patents originated at least as early as 15th century Venice, with the purpose of fostering the development of new industries and encouraging individuals and businesses to take on new, commercially risky ventures. Patents were thereafter used similarly in England, in an ad hoc manner at first but then, under Elizabeth I, in a more organized fashion, which has been viewed as the first true modern patent system. Importantly, “for Elizabeth, innovation meant bringing new technology to the realm (particularly from the continent), rather than invention as we understand the meaning of that term today, as patents were granted both to new inventors and those who first introduced an invention into the realm through importation.” This concept of invention continued under the subsequent English Statute of Monopolies. While the English patent system was the basis for the U.S. system, it is Congress that determines what is patentable, not English common law, and the concept of “novelty” was first introduced into U.S. patent law with the Patent Act of 1952. Nonetheless, as has been observed, there is nothing in the history of patenting that sets out bright line tests for what should or should not be patentable, as the historical goal for patenting was to encourage the development of innovation, and the introduction of new ideas and technologies within a country. As such, it was less about driving absolutely new inventions, and more about promoting and increasing commerce in particular countries. Thus, when viewed historically, there is no “required” or objective set of inventions that can or cannot be patented.

Also, what has been patentable needs to be considered in the historical context of industrial development and technical innovation. Historically, as we all know, many if not most innovations were tangible, especially during the “Industrial Age.” We are now, of course, in the Information Age, and as that continues, innovation has moved into less tangible forms, the contours of which are often hard to define — especially when we think about the judicially created exceptions for laws of nature, products of the human mind and abstract ideas and the inventions that might arguably fall within the scope of these exceptions. As some of the individuals testified during the recent hearings, examples of where the boundaries are blurred are important inventions in fields such as artificial intelligence, bioinformatics, and personalized medicine, which can have real benefits for society, yet are hard to distinguish in words from generalized concepts that might be deemed patent ineligible.

A foundation of our legal system is that policy setting should be the province of Congress, expressed through legislation, while application of legislative policy is the province of the courts. In my view (and others), at least in the last five years, the courts have instead began wading into policy setting without the tools and resources to fully consider all the issues and various interests. Thus, the recent  congressional efforts to consider these questions is welcome and, frankly, overdue. It is likely that this will be a long, slow road to conclusion, but the recent draft legislation and hearings are a great start.

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Nicole D. Galli is the founder and managing partner of the Law Offices of N.D. Galli, a business litigation and intellectual property law firm with offices in Philadelphia and New York. Galli's practice focuses on commercial and IP litigation, strategic IP counseling and trade secret protection. She is also the founder and president of Women Owned Law (WOL). She can be reached at [email protected].