But with growing concern regarding China possibly eclipsing the U.S. in R&D of emerging technologies, there is a renewed impetus to fix at least some of the ambiguities introduced by the Supreme Court in Alice Corp. v. CLS Bank Int'l and Mayo Collaborative Services v. Prometheus Laboratories, Inc.  Those decisions, which came down in 2014 and 2012, respectively, led to the current state of affairs in which diagnostic methods are effectively unpatentable and software patents can be invalidated based on fuzzy, conclusory reasoning.

The Proposal

§ 101. Patent eligibility

(a) IN GENERAL.—Whoever invents or discovers any useful process, machine, manufacture, or composition of matter, or any useful improvement thereof, may obtain a patent therefor, subject only to the exclusions in section (b) and to the further conditions and requirements of this title.

(b) ELIGIBILITY EXCLUSIONS.—

(1) IN GENERAL.—Subject to paragraph (2), a person may not obtain a patent for any of the following, if claimed as such:

(A) A mathematical formula, apart from a useful invention or discovery.

(B) A process that—

(i) is a non-technological economic, financial, business, social, cultural, or artistic process;

(ii) is a mental process performed solely in the human mind; or

(iii) occurs in nature wholly independent of, and prior to, any human activity.

(C) An unmodified human gene, as that gene exists in the human body.

(D) An unmodified natural material, as that material exists in nature.

(2) CONDITIONS.—

(A) CERTAIN PROCESSES.—Notwithstanding paragraph (1)(B)(i), a person may obtain a patent for a claimed invention that is a process described in such provision if that process is embodied in a machine or manufacture, unless that machine or manufacture is recited in a patent claim without integrating, beyond merely storing and executing, the steps of the process that the machine or manufacture perform.

(B) HUMAN GENES AND NATURAL MATERIALS.—For the purposes of subparagraphs (C) and (D) of paragraph (1), a human gene or natural material that is isolated, purified, enriched, or otherwise altered by human activity, or that is otherwise employed in a useful invention or discovery, shall not be considered to be unmodified.

(c) ELIGIBILITY.—

(1) IN GENERAL.—In determining whether, under this section, a claimed invention is eligible for a patent, eligibility shall be determined—

(A) by considering the claimed invention as a whole and without discounting or disregarding any claim element; and

(B) without regard to—

(i) the manner in which the claimed invention was made;

(ii) whether a claim element is known, conventional, routine, or naturally occurring;

(iii) the state of the applicable art, as of the date on which the claimed invention is invented; or

(iv) any other consideration in section 102, 103, or 112.

(2) INFRINGEMENT ACTION.—

(A) IN GENERAL.—In an action brought for infringement under this title, the court, at any time, may determine whether an invention or discovery that is a subject of the action is eligible for a patent under this section, including on motion of a party when there are no genuine issues of material fact.

(B) LIMITED DISCOVERY.—With respect to a determination described in subparagraph (A), the court may consider limited discovery relevant only to the eligibility described in that subparagraph before ruling on a motion described in that subparagraph.

This text is a mouthful, having over an order of magnitude more words than the 36 of the current section.  So let's break it down.

The Exclusions

Section (b)(1) states that mathematical formulas, mental processes, and naturally occurring processes are not eligible for patenting.  But there are limits the scope of these exclusions.  Specifically, mathematical formulas that are an element of a useful invention or discovery presumably would not doom the entire invention.  Likewise, mental processes as notions of abstract thought are not patentable, but a mental process implemented on a computer ostensibly could qualify.  Similarly, naturally occurring processes outside of the human experience are not patentable while human-made processes involving some aspects of natural processes could also qualify.

Along the same lines, unmodified natural material and unmodified human genes are not patent eligible, though such material "that is isolated, purified, enriched, or otherwise altered by human activity, or that is otherwise employed in a useful invention or discovery" could qualify.  This provision appears to codify and expand upon the holding of Association for Molecular Pathology v. Myriad Genetics, Inc.

But things get sticky in Section (b)(i)(B)(i), which states that a "non-technological economic, financial, business, social, cultural, or artistic process" would also be an exclusion.  The problem with this language is that these terms are not defined and potentially quite broad.  Alice, as interpreted by the Federal Circuit, provides an exception for "methods of organizing human activity."  This current exclusion is a gotcha for patentees.  As someone who has spent too many hours arguing with patent examiners over whether inventions implemented solely on computers are "organizing human activity," I can only imagine how the courts and the USPTO might misuse the exclusion of Section (b)(i)(B)(i).

Moreover, Section (b)(2)(A) does little to reign in the scope of this exclusion.  The language "if that process is embodied in a machine or manufacture, unless that machine or manufacture is recited in a patent claim without integrating, beyond merely storing and executing, the steps of the process that the machine or manufacture perform" suggests that a machine or manufacture must "integrate" the process . . . into what exactly?  The proposal is silent.

Eligibility Procedure

Section (c)(1) addresses what should and should not be considered while carrying out the eligibility inquiry.  Notably, one must take into account "the claimed invention as a whole and without discounting or disregarding any claim element."  This is a welcome provision, as there is a long track record of judges and patent examiners conveniently ignoring claim elements on their way to declaring claims ineligible.

Further, one must not consider "whether a claim element is known, conventional, routine, or naturally occurring . . . the state of the applicable art, as of the date on which the claimed invention is invented [or] any other consideration in section 102, 103, or 112."  This is also a welcome provision, as it overrules the problematic prong two of Alice while bringing back the more logical pre-Mayo separation between §§ 101, 102, 103, and 112 of the statute.

One point is unclear, however, in that Section (c)(1)(B)(ii) tells us that eligibility shall be determined without regard to whether a claim element is naturally occurring.  On the other hand, Section (b)(1)(D), excludes naturally occurring inventions from patentability.  One possible interpretation of these sections is that individual claim elements being naturally occurring does not impact the eligibility analysis unless the entire invention (i.e., all elements) is naturally occurring.

Litigation

Section (c)(2) codifies the "quick kill" under § 101 (the main reason why some parties will tell you that Alice is just fine) by stating that a court "at any time, may determine whether an invention or discovery that is a subject of the action is eligible for a patent under this section."  Thus, invalidation of patents during the pleading stage would still be possible, but only "when there are no genuine issues of material fact."  To this latter point, "the court may consider limited discovery relevant only to the eligibility" of the claims when ruling on such a motion.

Conclusion

In sum, Senator Tillis' proposed revisions to § 101 seem to be two steps forward and one step back.  It is an attempt to find a middle ground between varying stakeholder concerns by overruling some aspects of the Supreme Court's recent eligibility jurisprudence and codifying other aspects.  It is unlikely that any one stakeholder will be entirely satisfied with this proposal, but as a starting point we could do much worse.

The main substantive problem with the proposal is use of unclear terminology and a lack of recognition of how broadly courts and the USPTO have viewed the exclusions to patent eligibility in the past (and how the courts have expanded the exclusions over the years since Alice).  If these issues could be buttoned up, this legislation has the potential to be a modest course correction for American innovation.