Recently, a bipartisan, bicameral draft bill was introduced as part of an ongoing effort to reform U.S. patent subject matter eligibility law. In this alert, we discuss relevant background leading up to the draft bill, the draft bill itself, and actions and events that may shape the scope of reform and likelihood of passage into law.

Background

Starting in 2010, a group of U.S. Supreme Court, and many subsequent Federal Circuit cases, changed how patent subject matter eligibility is determined, and whether certain inventions met the patent subject matter eligibility bar. While the evolving case law on patent subject matter eligibility is nuanced, complex, and fact specific, the changes can be encapsulated by summarizing three Supreme Court cases:

Bilski (2010). Bilski was important for at least two reasons. First, the Bilski Court rejected the long standing Machine-or-Transformation (MOT) test as the sole test for determining patent subject matter eligibility of a process. Under the MOT test, if a process was tied to a particular machine or apparatus, or if the process transformed an article from one state to another, then the process was patent eligible subject matter. Bilski rejected the MOT test as the sole test for patent subject matter eligibility, relegating the MOT test to being instead an important and useful clue.

Second, the Bilski Court determined that patented claims in question were directed to a Court created patent subject matter eligibility exception (i.e., a judicial exception)—in this case an abstract idea—and then held that for this reason these claims were patent subject matter ineligible. Judicial exceptions are laws of nature, abstract ideas, and natural phenomena—sometimes called products of nature or natural products.

Myriad (2013). In Myriad, the Court held e.g., that a naturally occurring DNA segment is a product of nature (a judicial exception) and not patent eligible merely because it has been isolated, but complementary DNA (cDNA) is patent eligible because it is not naturally occurring.

Alice (2014). In Alice, the Court introduced a new two-part test for patent subject matter eligibility to take the place of the earlier rejected MOT test. The two-part test, called the Alice test, first asked if a process claim was directed to a judicial exception. If the answer was yes, the second Alice test prong then asked if the claim contained an inventive concept—that is, additional elements that ensure the claim amounts to something significantly more than claiming the judicial exception.

These three Supreme Court cases, in aggregate, rejected the MOT test for patent subject matter eligibility and replaced the MOT test with a different patent subject matter eligibility test—the Alice test. The cases also made the presence of a judicial exception a central component of determining whether a claim was patent eligible subject matter, and set the stage for broadly interpreting the scope of judicial exceptions. For example, a law of nature need not be something as fundamental as a Newtonian law of motion, but rather more broadly included many correlations found in nature—which has subsequently created opportunities for patent subject matter eligibility challenges to at least some diagnostic, isolated natural product, software, and business methods claims. Finally, these cases, subsequent interpretations of them, and holdings based on these, resulted in some uncertainty whether some claims were, or were not, patent subject matter eligible.

It is worth pointing out that diagnostic tests are the cornerstone of personalized precision medicine; software and algorithms are involved in much of the modern world; many beneficial pharmaceuticals are isolated and purified natural products; and conducting business is central to a strong economy. The evolving patent subject matter eligibility landscape has created uncertainty. Against this backdrop, many have called upon Congress to provide clarity through legislation.

The Draft Bill

The draft bill was introduced based upon “feedback from dozens of stakeholders, industry representatives, and individual inventors.” Senator Tom Tillis (R-NC) stated in part that the draft “represents a true balance that will restore integrity, predictability, and stability to our nation’s patent system, while also preventing the issuance of overly broad patents.” Representative Doug Collins (R-GA) noted we “must reform the patent system to ensure our nation remains number one in innovation.” Congressman Hank Johnson (D-GA) stated, in part that section “101 of the Patent Act is foundational to the patent system, but recent court cases have upset what should be solid ground.” And, Senator Chris Coons (D-DE) noted that “[s]trengthening our intellectual property laws to encourage and reward research and innovation is critical to our leadership in developing cutting-edge technologies and safeguarding our national security.”

The draft bill proposes many changes that, if adopted, would make the patent subject matter eligibility standard more predictable. This, in turn, would be expected to significantly positively impact the patentability of diagnostic, isolated natural product, software, and business method inventions. Proposed changes include:

• Requiring that eligibility be determined “only while considering the claimed invention as a whole, without discounting or disregarding any claim limitation”;
• Requiring that “the provisions of section 101 shall be construed in favor of eligibility”;
• Removing the judicial exceptions—that is, laws of nature, natural phenomena, and abstract ideas—from being used to “determine patent eligibility under section 101”;
• Removing “bleed in” from novelty, obviousness, and some other statutory requirements (e.g., written description and enablement) into the patent subject matter analysis; and
• Abrogating all cases establishing or interpreting those exceptions to eligibility.

Future Actions

On June 4, 5, and 11, the Senate Judiciary Subcommittee on Intellectual Property plans to hold hearings regarding the state of patent subject matter eligibility in the U.S.

Conclusion

Less than two percent of all bills become law. This draft bill may stand a higher chance of being introduced and becoming law because of the number of stakeholders who were consulted, and because of its bipartisan and bicameral support. The draft bill represents a possibility for patent subject matter eligibility legislative reform. However, there is relatively strong opposition to the draft bill as well.

Accordingly, interested parties can attend the June hearings. Interested parties may also contact their representatives and senators to provide input.

Charles Andres and Prashant Girinath contributed to the preparation of this WSGR alert.