Thoughts on the Course of the Federal Circuit After Its Denial of En Banc Rehearing in Athena v. Mayo

“I note that all 12 active judges agreed that the Athena patent should be deemed eligible, even though seven judges apparently felt helpless in view of Mayo. Is Mayo really that broad and inflexible? In my view, not unless one treats dicta as if it were binding precedent.”

https://depositphotos.com/104971406/stock-photo-rear-view-business-man-standing.htmlThe Court of Appeals for the Federal Circuit was created to provide much-needed clarity and consistency to the nation’s patent law. In prior decades, the law had become hopelessly confused and incoherent due to disparate decisions of the regional courts of appeals. Two successive presidential commissions called for rectifying the situation because U.S. industrial competitiveness was lagging, and industries were faltering as a result of the weakness that had compromised the effectiveness of the patent system. For the previous century-and-a-half it had helped transform the country from a poor, agrarian land into the most advanced, powerful and wealthy nation on earth. In the 20th Century, nearly every significant scientific invention was created in America. But that was beginning to fade in the 1970s and beyond. Congress responded in 1982 by creating the Federal Circuit to hear all patent appeals.

Within a decade, the economy recovered and then science surged forward with advanced computers, smart phones and much more in the 1990s and beyond. The Federal Circuit helped all this by clarifying and rationalizing the patent law and, being the sole arbiter of patent law, greatly boosting uniformity. These welcome developments increased incentives to invest in expensive research and development and the even more costly process of commercializing new inventions, putting new cures, products and services into the public’s hands and onto store shelves. But investors, whether internal to a company or external, such as venture capitalists, have many options. When the expected return on investment falls too low, they divert investment away for R&D and commercialization. Therefore, the incentives need to be maintained at levels that they see as adequate.

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A Backwards Trajectory

In just the last few years, those incentives have lagged again due to sudden increases in uncertainty in the patent system, particularly regarding eligibility. Because of the Federal Circuit’s application of broad statements in recent decisions of the Supreme Court, experienced patent lawyers can no longer reliably advise industry executives and investors whether a given patent will survive inevitable challenge as ineligible even if clearly new, non-obvious, and distinctly and adequately described, as required by the Patent Act.

Five years ago, in 2014, the High Court in Alice announced that its decision two years earlier in Mayo applied to all patents in all technology areas, not just medical diagnostics, the subject of Mayo. In the years since, the Supreme Court has declined to review any of the dozens of eligibility cases presented to it, leaving the Federal Circuit to decide scores of such cases without clear guidance. Because the scope of Mayo/Alice was ambiguous, the appeals court did its best to apply those precedents, as it created many of its own. At least for diagnostic method patents, the results have been uniform, and uniformly harmful in the view of many: all challenged diagnostic patents were invalidated as ineligible.

Ironically, method of treatment patents fared much better, affording little help to patients since early and accurate diagnosis is the best hope of avoiding, controlling and curing the innumerable disorders and diseases that affect humans.

In my view, the Supreme Court trapped itself in language going back over 100 years, although it concerned not eligibility but what since the 1952 Act is called obviousness, a major change in the law deliberately injected by the Congress to promote predictability and rigor into adjudications of validity. The Federal Circuit, as a subordinate tribunal, was likewise trapped by this old and off-point dicta. In its application of the Mayo/Alice regime, however, a bad situation has been made even worse. Now, the appeals court has trapped itself in its own precedents, also featuring broad and vague language and concepts that undermine predictability in many areas, even while broadly excluding diagnostic methods.

After Athena, What Now?  

Studies show that already many inventions declared ineligible here have been ruled eligible throughout Europe and in major Asian nations, including China. Venture capital records reveal an out-migration of VC funds to entertainment from technology and out of the United States to nations with broader eligibility standards. How much longer can the country wait for reform?  In the Senate, the IP Subcommittee promises in July or August to propose a legislative fix, but Congress typically takes years to enact a completely new bill, even when, like this one, it has bipartisan and bicameral support. I hope it can act far faster here.

Meanwhile, the Supreme Court continues to deflect all opportunities for addressing what it had created—a “mess” according to the recent Senate testimony of former USPTO Director David Kappos. The question for our country and its economy then becomes: is there nothing useful the Federal Circuit can do to at least reduce the ongoing harm?  By a 7 to 5 vote to deny the en banc petition in Athena, the answer for now seems to be no. But there may be further petitions in 101 appeals, including for diagnostics. Might the balance of voting shift? I earnestly so wish, for I myself cannot reconcile the divergent 101 precedents that proliferate beyond the category of diagnostic methods. And while the fate of diagnostics is clear and consistent, it is bad innovation policy. Imagine how business executives and investors and their counsel must feel.

I note that all 12 active judges agreed that the Athena patent should be deemed eligible, even though seven judges apparently felt helpless in view of Mayo. Is Mayo really that broad and inflexible? In my view, not unless one treats dicta as if it were binding precedent. And not in the view of the current USPTO director, Andrei Iancu, whose guidelines for the Office suggest Mayo can properly be given a narrower interpretation than by the courts to date, while still following its mandate.

The chaos of eligibility urgently needs elimination. Realistically, the Federal Circuit may be the agency that can act the soonest and the most adroitly, while Congress and the Supreme Court are contemplating their options. Let’s hope that, unlike the en banc vote, it will act in concert, and promptly.

 

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The Author

Judge Paul Michel

Judge Paul Michel became a private citizen on June 1, 2010 for the first time since he graduated from law school at the University of Virginia in 1966. Upon graduating from law school he became an Assistant District Attorney in Philadelphia, thus embarking upon the career of a public servant from 1966 to his retirement from the United States Court of Appeals for the Federal Circuit in 2010. Michel served on the Federal Circuit, which is the main patent appeals court in the United States, from 1988 to 2010, serving as Chief Judge from 2004 to 2010.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 8 Comments comments. Join the discussion.

  1. America killed its own IP to serve the few July 8, 2019 9:48 pm

    It’s easy to beat around the bush, but to give it Truth seems not political enough. Let’s call it what it is Corporatocracy leads the charge. Silicon Valley since they brought in the AIA Act and PTAB also bringing in Ms Lee to stack anti patent judges to rule in favor of infringers so people like her old employer Google could avoid paying patent licensing fees and keep the profits for them selves. TC Hearland, Alice, Mayo, Oils case have all been created by the elites and influenced by companies Apple, Google and Amazon to continue their theft and dominance and feed its shareholders with stollen revenues from inventors. To many cowards not calling a spade a spade. We know they will try to fix 101 but we will see a back door loophole for Silicon Valley to continue their theft. Chin and Germany are the new superpowers America sold its soul to the corporations. RIP democracy.

  2. Paul Cole July 9, 2019 10:49 am

    “I note that all 12 active judges agreed that the Athena patent should be deemed eligible, even though seven judges apparently felt helpless in view of Mayo. Is Mayo really that broad and inflexible? In my view, not unless one treats dicta as if it were binding precedent. And not in the view of the current USPTO director, Andrei Iancu, whose guidelines for the Office suggest Mayo can properly be given a narrower interpretation than by the courts to date, while still following its mandate.

    The chaos of eligibility urgently needs elimination. Realistically, the Federal Circuit may be the agency that can act the soonest and the most adroitly, while Congress and the Supreme Court are contemplating their options. Let’s hope that, unlike the en banc vote, it will act in concert, and promptly.”

    Well said! I have been arguing much the same in postings and comments for the past 7 years. In Ariosa, Judge Linn memorably wrote: “I join the court’s opinion invalidating the claims of the ’540 patent only because I am bound by the sweeping language of the test set out in Mayo Collaborative Services
    v. Prometheus Laboratories, Inc., 566 U.S. ___, 132 S. Ct. 1289 (2012).” With respect, given the problem before the Supreme Court in Prometheus and the cautionary language of Justice Breyer, an astute practitioner could have driven a 42-ton semi-trailer truck between the true rule of law derivable from Prometheus and the factual position in Ariosa. Not only was it a failure of the CAFC judges to see the point, but also a failure of the relevant litigation attorneys to guide the court to the correct decision, especially where members of the court being newly appointed had little knowledge of technology and were inexperienced in patent law.

  3. Anon July 9, 2019 1:11 pm

    Kind words, Mr. Cole, but misses the bigger picture in that the present decision absolutely shows that the CAFC will NOT be the body that provides the necessary clarity and elimination of chaos — and that the larger problem is that the Supreme Court is the one holding the firehose on the cage of simians.

    You put far too much “power” on attorneys to guide the courts with your comment of:

    especially where members of the court being newly appointed had little knowledge of technology and were inexperienced in patent law.

    As should be noted, many of those who would willfully ignore the law as actually written by Congress (and continue the Supreme Court’s malfeasance) are NOT newly appointed, and will do as they want to do regardless of any “attorney guidance.”

    Just ask Bud.

  4. B July 9, 2019 2:39 pm

    “Is Mayo really that broad and inflexible? In my view, not unless one treats dicta as if it were binding precedent.”

    Thank you Judge Mayer. I’ve personally been astounded at the CAFC’s interpretation of both Alice and Mayo. However, I view this nonsense as purposeful. Every 1-L learns to distinguish dicta from holding, and the CAFC is careful to administer only the anti-patent dicta as God’s truth.

    “In my view, the Supreme Court trapped itself in language going back over 100 years, although it concerned not eligibility but what since the 1952 Act is called obviousness”

    The requirement of “invention” being the worst. The bizarre twist is that the Graham v Deere decision holds that “invention” is improper for an analysis under 103, but apparently under Alice/Mayo its okay for 101.

    It doesn’t get more idiotic.

    Anyone at the CAFC ever state he/she knew what an “inventive” concept” is? I’ve been waiting for an answer to that for many years.

    @ Paul Cole “With respect, given the problem before the Supreme Court in Prometheus and the cautionary language of Justice Breyer, an astute practitioner could have driven a 42-ton semi-trailer truck between the true rule of law derivable from Prometheus and the factual position in Ariosa. Not only was it a failure of the CAFC judges to see the point, but . . . “

    Respectfully, Paul, the CAFC didn’t care about the law or the particular factual position in Ariosa. As incredibly lame as Jude Reyna’s holding was, it was instructive. Preemption and the exceptions to patent eligibility were officially declared as totally separate issues. A bold and decisive step . . . off a steep cliff. “Inventive concept” was revealed for the truly meaningless term it is. Ariosa is perhaps the most idiotic 101 decision to ever issue from the CAFC, and that’s a difficult feat.

    Don’t blame the attorneys. The fault lies solely with the courts.

  5. B July 9, 2019 4:27 pm

    Finally, a few comments of my own.

    My trust in the CAFC is diminished. Reading one decision after another I see: “Golly, decisions like this one will end up killing a lot of people for a lack of new diagnostic techniques, but we are just helpless.” Can you imagine standing before a judge stating “Of course those doctors could have saved that woman’s life but my interpretation of what my boss told me didn’t allow me to let those good people help the poor woman out” in a civil suit? The concurring decisions immoral as well as legally erroneous.

    You know how a single CAFC panel forces an en banc decision? Simple. Declare for patent eligibility and demand that the Supreme Court choose: (1) preemption and clarity or (2) their two-part test.

    Most stupid things said in Athena – Judges Dyk, Hughes, and Chen go so far as to infer that the Alice/Mayo test reduces uncertainty. Also, the majority of concurring opinions use the term “inventive concept” over a dozen times without once commenting on what the term means.

    Chen’s concurring opinion is perhaps the most bizarre opinion of all. He actually has a grasp of some of the issues, and appears to get the historical evolution of case law right. What I find disingenuous is his talk about addressing claims as a whole when he never does. Hey, Chen – read your own In re Guldenaar opinion where you dismiss the claims based on a non-existent “improvement” to the “technological arts” basis. How is improving the “look and feel” (DDR Holdings) of a web page an improvement in the technological arts? Adding virtual curtains and a few virtual throw pillows on every page of a website may be nice, but is it even technological? Aren’t computer games as technological as computer sales?

    Judge Moore’s dissent gets it right on all the issues. She even actually reads the text of 101 and construes the statutory text and the Mayo holding together. That’s a first in the last five years. As to policy, Judge Moore states: “The math is simple, you need not be an economist to get it: Without patent protection to recoup the enormous R&D cost, investment in diagnostic medicine will decline. To put it simply, this is bad.”

    Brilliant, Judge Moore. Absolutely brilliant.

    Judge Newman’s dissent is also informative. “No benefit has been suggested by excluding medical diagnostic methods from the patent incentive system.” Spot on in both policy and legal analysis.

    Judge Stoll’s dissent is rather interesting. In it she states: “by consistently bypassing en banc review of a critical issue that goes to the heart of this court’s jurisdiction, we are abdicating our responsibility.” I wrote an article about that circa a year ago. Her realization of the issue is pathetically slow. Beyond that Judge Stoll’s discussion of preemption is totally disingenuous given so many of her own 101 decisions are so PURPOSEFULLY removed from preemption they are beyond contempt. Like a lot of CAFC judges, Stoll decides patent eligibility, then uses bits and pieces of past 101 opinions like a legal buffet to justify decisions.

    Turning to O’Malley’s dissent, he criticizes the use of “inventive concept” calling it a “baffling standard and acknowledging that it was removed in the 1952 Patent Act.” Judge O’Malley’s dissent is spot-on and gives focus to what Judge Giles Rich said decades ago. “Invention” is nothing but a nonsense subjective test that allows judges to capriciously override the statutory patent law.

  6. Paul Cole July 9, 2019 5:11 pm

    Judge Reyna said that the amplified material in Prometheus was a natural product and that the claimed process began and ended with a natural product. On the face of his own opinion this was in error by a factor of between 1,000 and 1,000,000 showing egregious ignorance both of fact and of long-established principles of patent law. The Federal Circuit opinions on section 101 are largely based on a toxic combination of science fiction and legal fiction. Athena as a decision is equally counter-factual and toxic, and following Anon it is becoming difficult to see how anything short of Congressional action can remedy the situation.

  7. B July 9, 2019 5:26 pm

    “As should be noted, many of those who would willfully ignore the law as actually written by Congress (and continue the Supreme Court’s malfeasance) are NOT newly appointed, and will do as they want to do regardless of any “attorney guidance.”

    Just ask Bud.”

    I concur. Things like a factual record only get in the way and may be dismissed arbitrarily. Legal standards are optional. I pointed out to Judges Hughes, Prost, and Stoll that the USPTO refused to address the claims as a whole, pointed out there was no evidence under Berkheimer to support a rejection, and pointed out that the USPTO prejudiced my client. There was no argument by the USPTO Solicitor to the contrary except one slimy attempt to misrepresent the record. The USPTO refused THREE TIMES to address the claims as a whole under 101. Not surprising given the PTAB panel’s holding on the 112, 102, and 103 rejections. I sensed that, unlike other PTAB panels, the APJs I dealt with took pride in their work and refused to let ever lame rejection by an Examiner go, but in the end they weren’t allowed by management to let a single 101 rejection go reversed no matter how stupid they sounded. I really don’t blame the PTAB panel.

    That said, the PTAB’s holding should have been set aside by the CAFC under the APA as an issue of law.

    What happened? The CAFC refused to address any issue I set forth while outright misrepresenting that there was evidence to support limitations as conventional that the USPTO didn’t address under 101. This dishonest treatment by Judges Stoll, Hughes, and Prost is apparently not remarkable at the CAFC. Note that I take some chance in calling specific judges out for their various intentional misrepresentations, but someone besides Judge Michel (who admits there’s no downside for him) needs to call out the specific instances of misbehavior of the courts.

    You want to hear something outrageous? Listen to the Villena oral argument – particularly a question Judge Hughes asked me on rebuttal. It’s a true “D’Oh!” moment.

  8. Night Writer July 10, 2019 6:07 am

    https://www.ipo.org/wp-content/uploads/2019/07/2018-Top-300-Final.pdf

    Here is more evidence that the system is unraveling.

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