“The Athena case does not portend well for the CAFC adoption of the USPTO guidelines. The courts will eventually be able to either put their imprimatur on those guidelines or discard them. The sooner that is done, the better, as we are still drafting claims and need to know what will happen.”
I am sure that the justices of the Supreme Court did not anticipate the confusion they created when they issued their controversial decision in Alice Corporation v. CLS Bank in 2014. That case effectively upended well-established precedence when the Court unanimously held that a computer-implemented scheme for mitigating settlement risk was not patent eligible subject matter because the claims were drawn to an abstract idea, and that merely requiring generic computer implementation fails to transform the claims to eligible subject matter. The Court itself said their holding was to be narrowly construed, but in providing a vague, two-step test to determine whether something is patent eligible, they unleashed a world of hurt on some of our domestic industries seeking patents in cutting-edge technologies. The application of the Alice test to some of our health-related industries is having disastrous effects.
Two Steps to Trouble
The Court did not rely on statute in excluding some subject matter from patent eligibility. Instead, they relied on Court-created judicial exceptions to exclude laws of nature, natural phenomena, and abstract ideas from patent protection. And the Court did not avail itself of actual sections of the statute related to anticipation, obviousness, clarity, enablement or written description to more deftly reject claims that should not issue.
Instead, the Court provided a two-step analysis to determine whether subject matter is eligible for patent. In the first step, we analyze whether a claim recites a judicial exception. That includes determining whether a claim is “directed to” one of the patent ineligible concepts. If the claim is not directed to the patent ineligible concept, it passes through the coarse filter of subject matter eligibility and must meet the other requirements of the statute. If the claim is directed to a patent eligible concept, it moves to the second step of the test. In the second step we must consider each claim element individually, and in combination with other claim elements, to determine if the additional elements add something “significantly more” than the ineligible concept.
During the ensuing five years, we have seen lower court decisions eviscerate our cutting-edge technologies in diagnostic methods and personalized medicines by overusing the Alice test to the point that funding for research in life-saving technologies is drying up and foreign countries, including China, are granting more patents in these areas than we are.
That is not to say that the courts aren’t sporadically finding some claims eligible, but the numbers tilt against patentability. One recent bright spot was the decision in Berkheimer v. HP in February of 2018, which concluded that the determination as to whether something was well-understood, routine or conventional, and therefore a factor in determining whether the claim added “substantially more,” could be a matter of fact. That need to investigate could stop those challenging patents as invalid under patent subject matter eligibility from getting summary judgment. But the Supreme Court has asked the Solicitor General whether that factual determination unreasonably restricts patent subject matter challenges, so who knows what will ultimately happen to the Berkheimer decision.
On January 7, 2019, the Director of the United States Patent and Trademark Office (USPTO), Andrei Iancu, issued thoughtful guidance purported to summarize case law to examiners when handling subject matter eligibility questions. The guidance was effective immediately and applies to all applications pending at the USPTO and to all employees, including Patent Trial and Appeal Board (PTAB) judges. But the guidance is not substantive rule-making, and courts are not bound by it.
The new guidance splits the first step of the Alice test into two prongs. In the first prong, we analyze whether the claim recites a judicial exception to patentability. Again, if it doesn’t, we move on to other sections of the statute. If it does, then we proceed to the second prong to determine whether the judicial exception is integrated into a practical application of the judicial exception. If it is integrated into a practical application, we are done with the new guidance. If not, we move to the analysis of the second step of the Alice test, which remains relatively unchanged. One clarification in the guidance for the second step is that examiners are explicitly instructed to take official notice or provide support for their determination of whether something is conventional. If the official notice is challenged by the applicant, the examiner must revert to other evidence to support his/her position. The guidance also defines an abstract idea as a mathematical concept, certain methods of organizing human behavior and mental processes. While there may still be confusion as to what “certain methods of organizing human behavior” are, now we at least have a working definition of an abstract idea. The guidance also applies in technologies related to natural phenomena and laws of nature, but more guidance in these areas is needed (as the guidance mostly focuses on abstract ideas).
Hope is Not a Plan
All-in-all, the USPTO guidance is a great attempt to provide much-needed certainty in the realm of patent subject matter eligibility. But that certainty still seems elusive.
On February 6, 2019, in a split decision, the United States Court of Appeals for the Federal Circuit (CAFC) found in Athena Diagnostics v. Mayo Collaborative Services that diagnostic methods are not patent subject matter eligible unless they embody a separate technical improvement beyond the correlation of certain antibodies in bodily fluids to particular diseases. In a footnote, the majority lamented that they felt compelled by Supreme Court precedence to render their decision, but recognized that protection of diagnostic methods would be for good for society. They read the claims as impermissibly directed to a law of nature and invalidated the claims. However, the dissent objected to the majority position and stated that the decision enlarged the inconsistencies and exacerbated the judge-made disincentives of new diagnostic methods. The dissent also pointed out that patent subject matter eligibility should be determined for the claim considered as a whole, and that, when considered that way, the claims were directed to new multi-step methods of diagnosing disease and not drawn to a pure law of nature. The dissent points to a meaningful way to differentiate the outcome that the majority laments.
The Athena case does not portend well for the CAFC adoption of the USPTO guidelines. The courts will eventually be able to either put their imprimatur on those guidelines or discard them. The sooner that is done, the better, as we are still drafting claims and need to know what will happen, recognizing that we are stuck with the specifications we file. The opinion of the majority seems to indicate that those judges hope there will be a legislative fix to the problem with patent subject matter eligibility. Firstly, hope is not a plan! Secondly, legislation on patent subject matter eligibility is unlikely in any reasonable time frame since there are so many differing positions and many other issues taking the attention of the members on the Hill.
In the meantime, the problems to the diagnostic industry could be fixed if judges did significantly more to distinguish from Supreme Court precedent. Judges should use tools in their expansive arsenals to differentiate Alice or render a strong, unified decision to provide a good case to take back up to the Supreme Court. Otherwise, our health and our economy will continue to suffer.
Join Bob Stoll and IP Watchdog.com Founder and CEO Gene Quinn on Thursday, March 7, 2019 at 12:00 PM EST for a free webinar discussion of bioinformatics patents and the state of patent eligibility in light of Athena Diagnostics v. Mayo Collaborative Services. Joining Gene and Bob will be Dr. Kate Gaudry, a partner at Kilpatrick Townsend, and John White, patent expert, lecturer and partner with Berenato & White.