David Kappos, the former director of the United States Patent & Trademark Office (2009-2013), thinks that “[i]t’s time to abolish §101.” Kappos made these comments at the Federal Circuit Judicial Conference in Washington, DC, recently. Kappos’s comments illustrate the growing frustration facing innovators seeking protection for their ideas in a variety of technical areas, particularly in the fields of life sciences and software. Recent Supreme Court decisions in Mayo, Myriad, and Alice have left questions relating to patent eligibility unresolved. As highlighted by Kappos, we now consider the question – do we still need §101?
35 USC §101 states“[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” As noted by Kappos, when §101 was drafted in 1952 [1], patent law was less-developed, the state of technology had not reached the complexity of the patents and applications currently at issue in the courts, and the main amendments to the preceding statute were to replace the word “art” with “process.” Moreover, software patents were not of concern to the drafters at the time.
As additional hurdles to patentability, Congress passed 35 USC §§102-103, which respectively set forth novelty and non-obviousness requirements. During the patent examination process, Patent Examiners should conduct a search of domestic and foreign prior art, i.e., publicly known ideas, to ensure that any application for patent is not simply an old idea being recycled or an obvious combination of known ideas that did not deserve patent protection.
Regarding §101, the Manual for Patent Examining Procedure (“MPEP”) requires that Patent Examiners conduct their search of the prior art before evaluating the claimed invention under § 101. See MPEP §2013(II). Thus, if an Office Action includes a rejection under §101, logically, according to the MPEP, the Patent Examiner should have already looked for and found any relevant prior art.
Since the passage of the updated definition of patentability in 1952, the number of patent applications filed annually with the USPTO has grown from 64,554 filings in 1952 to 589,410 filings in 2015. With a vast number of applications disclosing ideas for patents, along with the rise of the internet and seemingly unlimited access to information available for review by Patent Examiners during examination, an argument can be made that performing the review under §§102-103 necessarily encompasses the intent of §101. In other words, if a Patent Examiner fails to find enough information to reject a claim under §§102-103, an idea may reasonably be considered novel and not obvious. If the claims are directed towards an idea with any value, the idea may also reasonably be considered to be useful. Thus, one could argue that §§102-103 render §101 unnecessary.
The courts also have enumerated judicially created exceptions to the plain language of §101. In particular, “[t]he Court’s precedents provide three specific exceptions to §101’s broad patent-eligibility principles: ‘laws of nature, physical phenomena, and abstract ideas.” See Bilski v. Kappos, 561 U.S.593, 601, 130 S. Ct. 3218, 3225, 95 USPQ2d 1001, 1005-06 (2010) (quoting Diamond v. Chakrabarty, 447 U.S. 303, 309, 206 USPQ 193, 197 (1980)). In identifying the judicial exceptions, the courts attempted to prevent private individuals from obtaining a limited monopoly on the basic tools of scientific and technological work. See also MPEP §2106. For example, a person cannot simply discover a new element during an excavation and then claim to have invented the new element. Such a new element may be both new and useful, but the courts decided that the discovery of a new element or law of nature should not be entitled to a patent. Some discoveries and inventions are therefore distinguished by these judicial exceptions.
Thus, the courts have revised §101 to note that only sometimes when a person “invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof,” may that person obtain a patent therefor.
A number of cases may be heard or decided shortly, including Sequenom, Versata Development Group, Cloud Satchel, Vehicle Intelligence Safety, McRO(Planet Blue), Intellectual Ventures, and Thales Visionix. These cases present opportunities for the Supreme Court and Federal Circuit to further explain and develop their vision of how “abstract ideas” and other judicial exceptions regarding subject matter eligibility should fit into the future of the patent landscape.
Returning to the decision in Alice, the Court rejected the claims at issue primarily because “the concept of intermediated settlement is ‘a fundamental economic practice long prevalent in our system of commerce’ and is a building block of the modern economy.” 134 S. Ct. 2347, 2356. In their discussion of a related case, Bilski, the Court noted that Bilski failed similarly for claiming a “fundamental economic practice” (hedging risk), and that, like the intermediated settlement claimed in Alice, both cases were directed to longstanding commercial practices.
The Court then explicitly states: “we need not labor to delimit the precise contours of the “abstract ideas” category in this case” and instead followed its own test from Mayo and examined whether the claims transform a longstanding practice into a patent-eligible invention. Id. at 2357. So, the Court has not clearly defined what constitutes an abstract idea, but rather simply questioned when claims appear to be directed to a longstanding commercial practice whether or not additional claim elements transform the application into something more.
If, like the Court found in Alice, the “improvement” recited in a patent application is nothing more than generic computer implementation, the Patent Examiner should have no problem discovering prior art describing a “longstanding” or “fundamental” economic practice and rejecting the application under at least §103. Such a rejection could be as simple as an article from an economic or finance magazine describing the allegedly longstanding economic practice combined with a generic computer with the reason for the combination being speed, computational power, or efficiency. As a result of Alice, Patent Examiners are increasingly faced with uncertainty regarding the meaning of §101 and are forced to reject claims which otherwise would be allowed. These rejections take the form of identified allowable subject matter, but for a rejection under Alice. Can this be what the authors of §101, the MPEP, and Alice intended?
How can the Patent Office take the position that the subject matter of the rejected claims is directed towards longstanding or fundamental practices if an extensive search of the prior art failed to turn up relevant material?
Removing §101 from consideration when reviewing patent applications might moot many of the issues resulting from the judicial exceptions created by the court system, including most recently with the Alice decision. However, within the next few months, the Supreme Court and Federal Circuit will have the opportunity to review the consequences of Alice. With some additional clarity, perhaps some assumedly unintentional consequences will be resolved and an answer to the question of §101’s continued value may be revealed without having to chance the patent landscape sans §101.
[1] 66 Stat. 797, July 19, 1952, ch. 950
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