The Battle for Patent Eligibility Reform

By Russell Pigg

Back in 2019, Senator Coons (D-Delaware) and Senator Tillis (R-North Carolina) began their efforts to pass legislation on patent eligibility reform.

Eligibility is the subject matter that is in a category that can even be considered for a patent.

They had a hearing in that same year in which they discussed patent eligibility and 35 U.S.C. § 101 with a number of witnesses, most of which agreed the current system is a mess that needs change.

For nearly 5 years now these two senators have been working to reform the patent system.

In June of 2023, Coons and Tillis introduced the Patent Eligibility Restoration Act (PERA) which they hope will overhaul the patent eligibility system making eligibility more clear and consistent (Patent Eligibility Restoration Act of 2023, S.2140, 118th Congress (2023-2024)).

The Senate passed the Patent Act back in 1952, codified in section 35 of US code, which last amended regulations for patent eligibility.

According to 35 U.S.C. 101, “[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”(35 U.S.C. § 101). This statute is the baseline for patent eligibility.

The Supreme Court has had a few impactful cases in the last 15 years that have completely changed the landscape of patent eligibility.

Following the 2014 Alice Corporation v CLS Bank International Supreme Court case (Alice Corp. v. CLS Bank Int’l, 573 U.S. 208 (2014)), many believe patent eligibility to be unclear.

The Alice case created a two-step test for patent eligibility. Step one is whether a claim is directed at a patent-ineligible subject such as an abstract idea, and step two is whether the claim is an inventive concept.

The Federal Circuit has seemingly been inconsistent with the application of this new Alice test for patent eligibility leading to many surprising rulings and difficulty for the USPTO to apply these rulings in their examinations.

Now, just a few weeks ago on January 23, 2024, the Senate had a hearing led by Senators Coons and Tillis about the state of patent eligibility and PERA (The Patent Eligibility Restoration Act – Restoring Clarity, Certainty, and Predictability to the U.S. Patent System: Hearing Before the Subcomm. on Intellectual Property, 118th Cong. (2024)).

Tillis expressed his belief that legislation is not always the best way to solve a problem, but after over a hundred denials from the Supreme Court to hear a case involving 101, it is now necessary for the Legislature to act.

Under PERA, “[a]ll judicial exceptions to patent eligibility are eliminated” and “[a]ny invention or discovery that can be claimed as a useful process, machine, manufacture, or composition of matter, or any useful improvement thereof, is eligible for patent protection.”

Each of the following are also outlined to be not eligible for patent protection: “[a] mathematical formula that is not part of an invention that is in a category described in subparagraph,” “[a] mental process performed solely in the mind of a human being,” “[a]n  unmodified human gene, as that gene exists in the human body,” “[a]n unmodified natural material, as that material exists in nature,” and “[a] process that is substantially economic, financial, business, social, cultural, or artistic.”

The Senators believe that PERA will allow for clearer guidelines and put an end to the confusing laws regarding important aspects of innovation including precision medicine, quantum computing, artificial intelligence and 5G wireless.

PERA would not allow mere ideas, discoveries of what already exists in nature, and social or cultural content to be patented.

Witness Andre Iancu, former USPTO director, was highly in favor of the patent reform.

He stated that there was great uncertainty with the current system following the Alice decision and within the courts. No one will know how the courts are going to rule.

The current system is a system that is not fostering innovation, investment, or growth in American invention.

David Kappos, another former USPTO director, felt very similar to Iancu. Kappos and Iancu believe the Court to have made a mess of the patent system and legislation is the answer to the problem.

The two witnesses that were against the legislation were Richard Blaylock of Invitae Corp, a genetic testing company, and David Jones, Executive Director at High tech Inventors Alliance.

Blaylock disagreed with the common idea that the current system was unpredictable, but rather believed there to be a “substantial degree of predictability.”

 Blaylock had no serious issues with the current system, and actually believed that the system was functioning well.

He went on to state that the discussion over the legislation is a disagreement over preference and not simply just an issue with the current system.

He brought up how prices in the medical field for different tests have gone down dramatically following the Alice decision.

Jones agreed with Blaylock that there was predictability with the current system and laws in place.

He also stated that the proposals made by PERA could make nearly any human activity patent eligible, including two examples he brought up in football plays and marriage proposals.

These ideas were said to be ridiculous by other witnesses and Senator Tillis. Jones also gave his own proposals for possible changes that could benefit the system.

One of the main concerns brought up with the bill was the wording.

Those who are not in favor of PERA believe that the words “practical” and “substantial” being used in connection with what makes an invention patent eligible will make the courts more unpredictable with their rulings.

Those in favor of PERA, including Tillis and Coons, argue that the judges in the federal system have used and applied those words for centuries and they are very familiar with the words. Ruling consistently is not seen as a problem in the view of the supporters of the bill.

The other debate was over consumer versus inventor.

The lack of patent protections and rights does lead to a decrease in prices for consumers as brought up by Blaylock, which was admitted as well by those in favor of PERA.

However, those in favor of PERA believe that a lack of patent protections causes a lack of innovation and ingenuity.

They believe the country benefits more overall from patent protections, even if it leads to higher prices in some markets.

The history of patent protections are to protect the inventors and promote growth, not to keep prices down for consumers.

A large many feel that the current patent eligibility law needs to be reformed.

The courts struggle to find consistency in their rulings and many egregious examples of patent applications being rejected have occurred in recent years.

The Patent Eligibility Restoration Act gives a possible solution to the issues the patent system is facing today.

References:

Text - S.4734 - 117th Congress (2021-2022): Patent Eligibility Restoration Act of 2022 | Congress.gov | Library of Congress (https://www.congress.gov/bill/117th-congress/senate-bill/4734/text)

The Patent Eligibility Restoration Act –... | United States Senate Committee on the Judiciary (https://www.judiciary.senate.gov/committee-activity/hearings/the-patent-eligibility-restoration-act_restoring-clarity-certainty-and-predictability-to-the-us-patent-system)

Witnesses Clash Over Potential Pros and Cons of PERA in Senate IP Subcommittee Hearing (ipwatchdog.com) (https://ipwatchdog.com/2024/01/23/witnesses-clash-potential-pros-cons-pera-senate-ip-subcommittee-hearing/id=172334/)

US Senate IP Committee Hears Testimony on Patent Eligibility (natlawreview.com) (https://www.natlawreview.com/article/senate-holds-hearing-legislative-initiative-address-patent-eligibility)