Perspective: Weakening Alice Will Weaken the U.S. Patent System’s Second Engine of Innovation

Today is Alice’s fifth birthday; some may not be celebrating, but as a birthday gift, John Vandenberg argues the decision was not new law and should not be abrogated.

On the third day of the U.S. Senate Judiciary Committee – IP Subcommittee’s hearings this month on whether to radically revise the standards for patent eligibility, I testified on behalf of our patent system’s under-appreciated second engine of innovation. Below are some of the key arguments I made in my oral and written testimony and my thoughts on why the Alice Corp. v. CLS Bank decision was good law that should not be abrogated.

I. Sec. 101 Reform Risks Weakening Our Patent System’s “Second Engine of Innovation”

Much of the anti-Alice commentary touts our patent system’s first engine of innovation, which uses the lure of monopoly profits or royalties to incentivize innovation and the public disclosure of those innovations. Today’s Sec. 101 jurisprudence is said to harm that first engine of innovation, particularly in life sciences where it is easier to get a patent in Europe and China than in the U.S., causing investment in personalized therapy and medicine R&D in the U.S. to suffer. While some question those factual premises, the “101 status quo” camp primarily responds that Alice (along with IPRs) has curtailed abusive patent troll litigation, cutting patent litigation costs by 40% or more. But, another important point has received little attention: expanding what can be patented, and how claimed, risks harming our patent system’s second engine of innovation.

The second engine of innovation starts the day a patent issues. The patent incentivizes others to design around the patent by inventing a new and perhaps better solution that they can commercialize without having to pay the patent owner a penny. The Patent Act is carefully crafted to advance this second engine of innovation.

The clarity and precision demand of Sec. 112(b) advances this second engine of innovation by prohibiting an innovation-chilling zone of uncertainty around the boundary of a patent claim. The written description requirement of Sec. 112(a) advances it by prohibiting patents claiming more than they contribute. Sec. 112(f) advances this second engine of innovation by making it easier to draft claims limited to particular solutions, allowing the follow-on innovator to commercialize a different solution without fear of infringement liability. And, the patent-eligibility exclusions implicit in Sec. 101 advance this second engine of innovation by prohibiting patenting of mental processes, mathematical algorithms, mere manipulations of information, and mere desired functions or results without being limited to a particular way (how) to accomplish them—all of which inherently deter more follow-on innovation than necessary to induce the first innovation.

The “abstractness” exclusion implicit in Sec. 101 is the Federal Circuit’s primary tool to invalidate patents claiming desired results, not specific solutions for accomplishing the result. E.g., Univ. of Fla. Research Found., Inc. v. Gen. Elec. Co., 916 F.3d 1363 (Fed. Cir. 2019) (“Neither the … patent, nor its claims, explains how the drivers do the conversion …. [T]he drivers are described [in the specification] in purely functional terms: they ‘facilitate data exchanges,’ ‘convert received data streams to a format independent of any particular bedside machine,’ ‘translate the data stream,’ ‘interpret data streams,’ ‘facilitate communications with the bedside machine,’ and ‘interpret [discrete] segments’ in a ‘data stream for the machine.’”); Affinity Labs of Tex., LLC v. DIRECTV, LLC, 838 F.3d 1253 (Fed. Cir. 2016) (“There is nothing in claim 1 that is directed to how to implement out-of-region broadcasting on a cellular telephone. Rather, the claim is drawn to the idea itself.”); Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343 (Fed. Cir. 2015) (“the end result of ‘maintaining the state’ is described as the innovation over the prior art,” but “claim 1 contains no restriction on how the result is accomplished. The mechanism for maintaining the state is not described, although this is stated to be the essential innovation.”).

II. The Draft Bill Text Allows Innovation-Harming Abstract Claims

In May 2019, Huawei obtained 210 U.S. utility patents. Thanks to centuries of common law establishing the “abstractness exclusion” to patent eligibility, Huawei and others cannot obtain computer or processor claims directed to useful and innovative mathematical algorithms, mental processes, information manipulation, or results without specifying how to accomplish the result. The draft bill text would change that.

The following draft bill text language expressly instructs courts that what today is considered an “abstract idea” is no longer ineligible for patenting (so long as other requirements are met):

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.

Does Sec. 100(k) of the draft bill text resurrect these abrogated eligibility exclusions?

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

No. This “specific and practical utility” language already is the law, and is toothless. An invention lacks specific and practical utility only if it is “totally incapable of achieving a useful result.” Brooktree Corp. v. Advanced Micro Devices, Inc., 977 F.2d 1555, 1571 (Fed. Cir. 1992). And processors are in a “field of technology” and programmed by “human intervention.”

More broadly, I question the premise that we can erase centuries of common law, including more than a dozen Supreme Court decisions and more than 80 post-Alice Federal Circuit decisions, enforcing limits on patent-eligible subject matter in order to maintain the delicate balance between the first and second engines of innovation, but then find a few words that somehow preserve the mathematics, mental process and other eligibility exclusions, and do so with increased predictability.

A narrower solution has been suggested by Judge Dyk: “if the breadth of the claim is sufficiently limited to a specific application of the new law of nature discovered by the patent applicant and reduced to practice, I think that the novelty of the discovery should be enough to supply the necessary inventive concept.” Ariosa Diagnostics, Inc. v. Sequenom, Inc., 809 F.3d 1282, 1291(Fed. Cir. 2015) (Dyk, concurring in denial of rehearing en banc.)

III. Alice is Not New. Alice is Not a Mess. Alice Does Not Prevent Patenting Personalized Treatments

Several arguments favoring radical reform are contrary to fact.

Alice is not new law. The following is a good description of the Alice standard: “Even though a phenomenon of nature or mathematical formula may be well known, an inventive application of the principle may be patented. Conversely, the discovery of such a phenomenon cannot support a patent unless there is some other inventive concept in its application.” That was in 1978. Parker v. Flook, 437 U.S. 584, 594 (1978). Yes, the Patent Office and Federal Circuit chose to stray from that controlling precedent, leading to issuance of thousands of plainly invalid patents, and angst when those patents are declared invalid, but that does not make Alice’s embrace of that old law, new law.

Alice is not an unpredictable mess. On the contrary, patent ineligibility today is more predictable than claim construction, indefiniteness, and obviousness (even once the closest prior art is known). If it were a mess, we’d see a higher percentage of reversals for Sec. 101, but we see the opposite.SeeJeremy Anapol and Andrew B. Schwaab (Knobbe Martens), “How Unpredictable is the Alice Analysis?” (October 16, 2018)

Alice / Mayo do not hinder patenting personalized medical treatments. “The claims in Mayo were not directed to a novel method of treating a disease.” Vanda Pharma. v. West-Ward Pharma., 887 F.3d 1117, 1134 (Fed. Cir. 2018). “The claim in Mayo did not go beyond recognizing (i.e., ‘indicates’) a need to increase or decrease a dose. In Mayo, ‘a doctor . . . could violate the patent even if he did not actually alter his treatment decision in the light of the test.’ The claim was not a treatment claim.” Id. at 1135.

IV. The Draft Bill Text Makes Needed Improvements to the Safe Harbor of Sec. 112(f)

Where the draft’s revisions to Sec. 101 would disrupt the second engine of innovation, its revisions to Sec. 112(f) would strengthen it.

A patent claim that recites a desired result or function without being limited—expressly or via Sec. 112(f)—to a particular way of accomplishing that function or result, likely is invalid under Sec. 101, 112(a) and/or 112(b). Sec. 112(f) is a statutory safe harbor for inventors and their patent drafters to avoid such a fate.

Congress enacted Sec. 112(f) as a way for patent drafters to comply with Supreme Court precedents—protecting the second engine of innovation—that “functional” elements, particularly at a point of novelty, invalidate a patent claim for lack of particularity. Halliburton Oil Well Cementing Co. v. Walker, 329 U.S. 1, 12 (1946) (“[U]nless frightened from the course of experimentation by broad functional claims like these, inventive genius may evolve many more devices to accomplish the same purpose.”)

The draft bill text eliminates “means or step for performing” from Sec. 112(f). These words have misled courts. Courts have misconstrued “means or step for” as trigger words that patent drafters include in a patent claim to announce that they are triggering Sec. 112(f) or omit to announce that they are not triggering Sec. 112(f). But plainly that is not the purpose of this statute. On the contrary, the pro-inventor intent was to create a safe harbor from the invalidity fate awaiting “functional” patent claims.

The Federal Circuit has described the Congressional intent as follows:

In enacting this provision, Congress struck a balance in allowing patentees to express a claim limitation by reciting a function to be performed rather than by reciting structure for performing that function, while placing specific constraints on how such a limitation is to be construed, namely, by restricting the scope of coverage to only the structure, materials, or acts described in the specification as corresponding to the claimed function and equivalents thereof.

Williamson v. Citrix Online, LLC, 792 F.3d 1339, 1347 (Fed. Cir. 2015) (en banc).

The Court rejected the then existing “strong presumption” associated with these particular words, as having led to “a proliferation of functional claiming.” Id. at 1349. This was a good step but did not solve the problems identified by the Court. There is still uncertainty and a proliferation of functional claiming.

The draft bill text’s amendment to Sec. 112(f) will finish the job by eliminating the words that caused the confusion: “means or step for.”

Many object that the amendment would broaden the reach of Sec. 112(f) and that would be bad for inventors. But they have it backwards. Sec. 112(f) is a safe harbor against a facially “functional” claim element invalidating a patent claim under Sec. 101 (for claiming a result, not how to accomplish it), 112(a) (for lack of description support for the full scope of the “functional” claim element), or 112(b) (for failure to “particularly point out” the claimed invention).

In sum, while it would not undo the harm that would be caused by overturning the abstractness exclusion, removing “means or step for performing” from Sec. 112(f) would move us closer both to the goals of the en banc Federal Circuit in Williamson, and also to the original Congressional attempt to spur innovation by limiting patents to particular solutions, i.e., to how a function or result is accomplished.

V.  The Patent Office Should be Required to Identify Each Claim Element Construed Under Sec. 112(f)

Adding the following language would further improve Sec. 112(f): “The Director shall identify each such claim element in the record of the patent.”

The Patent Office already urges its examiners to do this, but it is not always done and not mandated by statute. See M.P.E.P. 2181 VI. While a court is not bound by any Patent Office determination whether a claim element is construed under Sec. 112(f), most courts are more likely to agree with the Patent Office if the Patent Office makes its determination on the record, as mandated by statute, allowing an inventor to either acquiesce in that construction or amend the claim to either trigger or not trigger Sec. 112(f). Therefore, this simple addition would give both patent applicants and would-be next innovators greater certainty about the scope of the patent’s claims.

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