Senator Tillis: Here’s the Answer to Section 101

In early August, Senator Tillis (R-NC) proposed legislation called the Patent Eligibility Restoration Act of 2022, (S. 4734). US Inventor wrote a response to this legislation showing how it will destroy already damaged patent protection for U.S. software inventors and startups. Included in this destruction will be some of the most important inventions to U.S. technological development, economic growth and national security, like artificial intelligence, security systems, block chain, quantum computing, and much more, including anything that could compete with Big Tech’s core technology.

This legislation is dangerously misguided.

In a recent interview with IP Watchdog, Tillis was asked about some of the fatal concerns we identified in our response. Tillis brushed those concerns off by saying that he doesn’t want to hear complaints without solutions.

Fair enough.

While US Inventor’s views may be unknown to Tillis, we have repeatedly made them known to Tillis’ 101 task force, his staff, in Senate testimony, and in articles on US Inventor and IP Watchdog since the very beginning.

Why Did 101 Get Screwed Up in the First Place?

Big Tech lobbyists created two false narratives and steam rolled them through the halls of Congress, the courts and the administration until they acted on these fairy tales.

The first is the patent troll lie. This cartoonish narrative has been debunked here, here, here, and in many other places. The truth is that there is no such thing as a patent troll. What Big Tech lobbyists and their sycophants describe as a patent troll is any entity suing Big Tech for patent infringement. However, these entities are often the remnants of a startup and its investors who are simply trying to recover losses caused by Big Tech infringement, or, ironically, a Big Tech multinational’s patent portfolio sold to investors to monetize.

The other lie is that there are bad patents running around attacking poor Big Tech monopolies. This false narrative has also been thoroughly debunked here, here and in other places.

A bad patent can only be bad if it has a negative effect. If the patent is infringed, it cannot be bad because the invention is useful and marketable, and therefore promotes the progress, which is the very purpose of the patent system. If it is not infringed, it cannot be litigated, so there can never be a negative effect.

In either case, there is a positive effect because the inventor helped fund the U.S. Patent and Trademark Office (USPTO) by paying fees and likely hired a lawyer thus supporting the larger economy.

It is important to understand that a negative effect can only happen if the patent is litigated. Since the patent holder does not participate in a decision to infringe their own patents, this negative effect is caused solely by the infringer who made that decision.

The bad patent narrative flips reality on its head by blaming the patent rather than the infringer. The truth is a so-called bad patent can only be one that is infringed, and the bad actor can only be the infringer.

Nonetheless, in 2014, the Supreme Court bought these false narratives hook, line and sinker, and legislated an exception to the word “any” in Section 101 called an “abstract idea” in Alice v. CLS Bank.

All-of-Government Failure

Section 101 originated in the Patent Act of 1952. Under Section 282, 101 is deliberately excluded as a means to challenge the validity of a patent, but the courts ignore this black letter law, thus allowing illegitimate 101 challenges anyway.

One of those 101 challenges resulted in Alice, which amounts to a power grab by the Supreme Court of the policy making authority that is the sole and exclusive domain of Congress. Congress should have taken their authority by abrogating Alice back in 2014, and the USPTO should have ignored it.

But they played along instead, and that all-of-government failure destroyed the presumption of validity of all patents, which is required to attract investment into early-stage startups.

Big Tech opened the spigot on infringement, so many startups competing with Big Tech were forced to sue them for patent infringement only to lose their patents and often everything invested in the startup. For others, their investors stopped investing and moved on to better pastures like real estate. Still others could not get their patents granted by the USPTO.

This all-of-government failure led to the destruction of thousands of tech startups, the monopolization of Big Tech, and the exodus of early-stage investment from U.S. startups to Chinese startups.

The Problems of Alice v. CLS Bank

Alice created an exception to the word “any” called the “abstract idea” in Section 101’s description of patent eligible subject matter. However, the Supreme Court did not define what an abstract idea is. Instead, they left it to the lower courts to figure out. The U.S. Court of Appeals for the Federal Circuit (CAFC) also failed to define what an abstract idea is. In the vast majority of appeals, the CAFC issued one-word Rule 36 affirmances. In those few cases where the CAFC answered the appeal, it provided vague and conflicting rulings.

Trial courts were left sorting through the 101 chaos that higher courts created and then ignored. The worst trial courts used 101 as a docket-clearing mechanism, unjustly invalidating many patents as abstract ideas. Even responsible trial courts can’t figure out what is or isn’t an abstract idea and often invalidate meritorious patents.

This muddled mess causes almost all 101 decisions to conflate one or more of the statutory constructs of patentability (Sections 102, 103 and 112) into their 101 analysis. It makes no sense logically or legally, and it destroys the presumption of validity required under 282.

Shamelessly, the courts stand willfully blind to their role in creating the havoc even as the next generation of emerging technology flees to China and Big Tech monopolies grow far too powerful.

Prior and Current Legislative Proposals Attempt the Impossible

Big Tech lobbyists have proffered multiple legislative remedies, each protecting their monopolies, and none protecting the software industry and its startups who would one day supplant them.

The first was to codify Alice as it is.  But “as it is” is the problem. Almost as soon as it was proposed, it was scuttled and replaced by a new proposal to eliminate exceptions while enhancing Sections 100 and 112.  But this required that software patents be written to the code level. With thousands of programming languages, nobody could encompass all possible ways of coding it. In an attempt to do so, software patents would be thousands of pages long, yet remain, like Swiss cheese, full of holes.

1. 4734 now takes us back to the beginning by codifying exceptions, but in a different way and with much more complexity.

This back and forth shows that Congress is obviously dancing around something that it cannot avoid. That something is that 101 worked before Alice, but since Alice, it doesn’t. And trapping any just solution in the shredding room is Big Tech’s powerful lobby with lots of big bucks, influence and arm twisting.

It’s a repeating loop Congress can’t seem to escape. But if Congress doesn’t get this 101 issue resolved soon, we can kiss our once great and vibrant software industry goodbye.

There is a Petri dish effect taking place in China that builds and concentrates capital and know-how as they invent and commercialize new technology, which will keep that tech in China for a generation.

It’s been eight years since Alice was handed down. If we delay much longer, Big Tech monopolies will grow so powerful that not even antitrust laws will be able to break them up, and the United States will forever be in second place to China technologically, economically and militarily.

Fix It Right

Since nobody can know the future, nobody knows what inventions will come next. For that reason, in the Patent Act of 1952, Congress used the word any to encompass any future inventions. The word any worked just fine for more than 60 years, bringing huge advancements in U.S. technology to the world.

Today, Congress is obsessing on the wrong problem. It is trying to fix Judas Goat patent trolls and bad patents—narratives that are bold-faced lies created by Big Tech multinational corporations to perpetuate their monopolies by leading Congress to pass suicidal laws that send our most important industries to slaughter.

Just look at the results since Alice in 2014. Prior to Alice, established tech corporations were routinely run out of business by startups with better technologies. For example, Google sent Alta Vista and Yahoo into the dustbin of tech history. Apple and Samsung ran just about all their competitors out of the smartphone market. There are thousands of other examples. But since Alice, that creative destruction, once so prevalent in the technology industry, now hardly exists.

Look at the technological rise of China. Yes, they steal it and extort it in exchange for market access, but they are now developing new technologies faster than we are. The latter happened only after Alice.

So, Senator Tillis, here is the solution we have shared with your staff, the 101 task force, the Senate, and published on IP Watchdog and US Inventor:

Override the Supreme Court and restore 101 to its original meaning by eliminating all exceptions while ensuring that the statutory constructs of patentability do their job as they did so well for over six decades.