Revising Section 101 of the Patent Act: What’s at Stake?

Following several high-profile Supreme Court decisions about patent eligibility, the American Bar Association Section of Intellectual Property Law has recently proposed revised legislation to U.S. Patent and Trademark Office. Earlier this year, the Intellectual Property Owners Association drafted its own legislation regarding patent eligibility, which found support among several industries.

Section 101 of the Patent Act is currently at stake, which the ABA and IPO both argue has not been clearly interpreted. The ABA proposal seeks to outline those narrow conditions under which inventions are not eligible for patents. They contend that eligibility for patent should not be based on anticipation or obviousness, but rather whether rights would preempt others from using basic ideas or natural phenomenon.

Erick Palmer of Mayer Brown’s IP practice, sat down with IPWatchdog to discuss clarification on the more contested Supreme Court rulings and how patent litigation has been affected by these new and changing precedents. With support for some sort of revision to Section 101, he gave us insights on what is at stake for companies and reactions we might expect.

Since 2010, the Supreme Court has reshaped patent eligibility jurisprudence through four important cases including: Bilski v. Kappos (2010), Mayo v. Prometheus (2012), Association for Molecular Pathology (AMP) v. Myriad (2013), and Alice v. CLS Bank (2014). Prior to 2010, the Federal Circuit determined patent eligibility using the “machine-or-transformation” test. The Supreme Court rejected this test in Bilski and seemed to impose §§ 102 and 103 considerations on the patent eligibility analysis. In the subsequent Mayo, Myriad, and Alice cases, the Court developed a two-part test for determining patent eligibility that is now used today.

“First, are the claims directed to a patent-ineligible concept” Palmer said. “And, second, if so, do the claim’s other elements transform it into a patent-eligible application? Under the second step, routine or conventional steps are not sufficient to render the claim patent-eligible.”

The Court’s two-part test has significantly impacted patent practice, according to Palmer. In fact, under the “machine-or-transformation” test, a patent eligibility defense was rarely successful in district court litigation even in fields most prone to eligibility attacks, such as business methods and financial services – Bilski and its progeny changed that.

“Today, it is common to see a § 101 defense raised in an early motion to dismiss and succeed, oftentimes even before discovery,” he explained. “It has also become more difficult to obtain patents under the Court’s new standard, as applicants are now experiencing more eligibility rejections during prosecution requiring more creative claim drafting strategies.”

Some have voiced concern that the Court’s patent eligibility standard may be having a chilling effect of patent rights in the lower courts, risking the incentives for private companies to invest in research and development, per Palmer. For example, one case Ariosa v. Sequenom involved a patentee who discovered that fetal DNA is present in the mother’s blood and could be amplified using the father’s DNA. The claim was directed to a method of detecting paternally inherited nucleic acid comprising amplifying the paternal DNA and then detecting it.

“This discovery was a major advance because it provided a safe method for obtaining fetal DNA,” he explained. “Nonetheless, the district court found the claim patent ineligible under the Court’s two-part test. The fact that fetal DNA is present in the mother’s blood is a natural phenomenon and the additional steps of amplifying and detecting DNA were already routinely performed in the art.”

The Federal Circuit affirmed, confirming that “groundbreaking, innovative, or even brilliant discoveries” can be excluded from patent eligibility under the new test. The notion that groundbreaking discoveries otherwise patentable under §§ 102, 103, and 112 requirements may not be patent eligible has given a lot of patent practitioners pause.  Additionally, a concern is that the Court’s two-part test is often ambiguous and difficult to apply, according to Palmer. This creates uncertainty in decisions relating to the procurement and enforcement of patent rights and the value of patent assets being purchased and sold in mergers and acquisitions. Therefore, patent organizations are mobilizing to change the statutory language of § 101.

Although they are worded differently, the ABA and IPO’s proposed revisions seek to ultimately achieve the same primary goals.

“First, they would codify what has long been the law: that you cannot patent a law of nature or abstract idea—essentially adopting the first step of the Court’s patent eligibility standard,” he said. “Second, they would reject the Court’s use of §§ 102 and 103 considerations and save those for the question of patentability—essentially rejecting the Court’s second step. Third, they would require that patent eligibility be assessed by considering the invention as a whole, which is designed to eliminate the parsing of individual claim elements into either natural phenomena or conventional activity.”

The ABA believes that the Court’s two-part test goes too far and risks foreclosing patent protection for inventions encompassing practical applications employing laws of nature. It proposes to limit patent ineligibility only to those claims that would preempt others’ use of all practical applications of the law of nature or abstract idea. “This is significant because although the Court has held that total preemption is a factor that can render a claim patent-ineligible, it is not currently a requirement on which eligibility is based,” explained Palmer. “The ABA’s proposal is more exacting that the IPO’s in that sense.”

These revisions favor patent owners, according to Palmer, but not everyone is supportive. For instance, Bilski, Mayo, Myriad, and Alice have given several accused infringers an additional tool for fighting non-practicing entities. So. the level of support for these revisions will depend where you fall on this spectrum. That being said, Palmer does not think the Court will change its eligibility analysis in the foreseeable future, and Congress is not likely to take up these anytime soon.

He added, “Patent owners will need to learn to live with the Court’s two-part eligibility test and develop and implement prosecution strategies designed to maximize patent protection. I do not believe the PTO will take a position on these proposed revisions absent action from Congress.”