The Zombie Apocalypse of Patent Eligibility Reform and a Possible Escape Route

McDonnell Boehnen Hulbert & Berghoff LLP

McDonnell Boehnen Hulbert & Berghoff LLP

The hopes of anyone in favor of patent reform targeting 35 U.S.C § 101 have been officially dashed -- or at least put on hold.  In an interview with the Intellectual Property Owner's association (IPO) last week, Senator Thom Tillis, Chair of the Senate's Subcommittee on Intellectual Property, indicated that the body would not be completing its work on legislatively addressing patent eligibility.

Tillis stated that "[g]iven the reasonable concerns that have been expressed about the draft as well as the practical realities of the difficulty of passing legislation, absent stakeholder consensus I don't see a path forward for producing a bill—much less steering it to passage—in this Congress."  He suggested that the Subcommittee is not against reform, but that it needs to be provided with a clearer plan for next steps.  He would "encourage all stakeholders to work with Senator Coons and [him] to develop a consensus driven approach."  Indeed, it seems as if such an approach is a requirement for entry.  "If we're going to get anything done on this issue, everyone will have to compromise," he said.  "Anything less than that is dead on arrival."

This is in stark contrast to a joint statement released last year by Senators Tillis and Coons.  Just a few months ago, they wrote that "the U.S. patent system with regard to patent eligibility is broken and desperately needs to be repaired," and "[w]e feel confident that, working together, we can ensure that the United States patent system reclaims its reputation as the gold standard for promoting innovation."

But soon after this statement made the rounds, rumblings began about § 101 reform not happening.  Conspiratorial theories suggested that lobbyists from powerful and deep-pocketed parties had convinced the senators that it would not be in their best interests to continue their efforts.  But Senator Tillis chalks up the difficulties to disagreement and stubborness amongst the stakeholders.

Thus, patent legislation seems to be off the table for 2020.  The Subcommittee plans to look into other matters, such as copyright and counterfeiting.  This leaves us with eligibility reform in an undead state -- ostensibly alive but not currently breathing.

Despite members of all three branches of government acknowledging that § 101 is a significant problem as currently interpreted, two of those branches are not planning on addressing the issue further, and the third is trying but lacks the authority to make the substantial changes needed.

In January, the Supreme Court denied certiorari on eight § 101 petitions (five two weeks ago and three more last week), including several that were well-situated for appeal.  It seems clear that the Court is happy to let patent eligibility percolate in the Federal Circuit and district courts a while longer.

The U.S. Patent and Trademark Office (USPTO) has finally acknowledged the § 101 dilemma under Director Andrei Iancu, and it rolled out new patent eligibility guidance a little over a year ago.  But even after a recent update, problems remain, and the USPTO's efforts are the application of a band-aid on a patient needing surgery.  Moreover, fixing the § 101 quagmire should be the job of the courts (realizing that they made a mistake and that the blast radius of Alice v. CLS Bank and its progeny is much wider than is reasonable and continues to grow) or Congress (legislative overruling that line of cases).  But neither have stepped up.

At the core of the dispute is policy.  Do we want a broad and extensive patent law that encompasses software and business method inventions that largely process information, should these types of innovations be excluded from patenting, or is there a happy middle ground?

Ultimately, patent eligibility is a binary decision -- a claim is valid under § 101 or it is not.  On one side are stakeholders that believe the current interpretation of § 101 is so unworkably vague that it fails its public notice function; that is, from reading the statutes and case law, even a reasonably well-educated individual cannot determine whether certain types of inventions fall within the eligible or the ineligible bucket.  On the other side are those who consider the law to be just about right because it allows rapid dismissal of potentially specious infringement lawsuits.

Part of the problem with trying to find a compromise position between these two camps (arguably there are more than two camps, but the majority of patent professionals, patentees, and technologists will fall in one or the other) is that they each see § 101 as having a different purpose.  The pro-reform contingent views the statute as only defining what inventions and discoveries are or are not eligible for patenting, thus providing direction for applicants seeking to make difficult technological and financial investment decisions.  The anti-reform group views it as a tool to avoid costly litigation.

Both viewpoints have merit.  The reason for the clash, however, speaks to the ambiguity of the standard.  Applicants just don't know what might or might not be eligible with any degree of certainty, so they file and prosecute patent applications in the expected manner -- flirting around the edges of eligibility.  This results in the USPTO issuing some of these applications as patents, a few of which will be asserted.  The accused infringer, of course, usually wants to get out of court as quickly as possible, and is therefore motivated to contend that these patents are ineligible.  In this way, the interests have become tied together.  But this does not have to be the case.

A possible solution that addresses both concerns can be based on the following observation:  many if not most patent eligibility invalidations are based on the claims being broad, vague, or reciting elements well-known in the prior art.  In other words, § 101 has become a less sophisticated way of applying a conclusory §§ 102, 103, or 112 analysis.

If you accept that this is the case (and it is -- just look to ChargePoint v. SemaConnect, The Chamberlain Group v. Techtronic Industries, and American Axle v. Neapco Holdings) then here is a modest proposal:  (i) let § 101 reform happen, abrogating Alice, Mayo v. Prometheus, and essentially all § 101 jurisprudence since the 1952 Patent Act, so that there are no more ill-defined judicial exceptions, and (ii) allow rapid, limited-scope, pre-discovery motions for claim invalidity in district courts.

The first part of the proposal addresses the "what is eligible?" question by taking us back to a more cogent and predictable regime elucidated in Diamond v. Chakrabarty -- eligible inventions are "anything under the sun that is made by man."  The confusion and debate over § 101 will largely be a thing of the past, and we only need consider whether the claims are to a process, machine, article of manufacture, or composition of matter.

The second part tackles the situation where a plaintiff aggressively asserts a questionably-issued patent.  The reason for pushing this concern out of § 101 is based on the observation that most claims invalidated under § 101 are likely to be subject to prior art, enablement, or written description challenges (see the interpretation of Alice prong two in Berkheimer v. HP and Judge Moore's dissent in American Axle, for example).  Those not as vulnerable to non-§ 101 issues almost invariable should have been found eligible (see Ultramercial v. Hulu and most diagnostic method and graphical interface patents, for example).

A district court judge would have discretion allow these rapid, limited-scope, pre-discovery motions for invalidity under §§ 102, 103, and/or 112.  The defendant would be given one shot at any of these motions.  For prior-art-based contentions, the defendant gets to use only one reference or one combination of references, so long as the motivation to combine is straightforward and clear.  For written description or enablement contentions, the defendant gets one argument.  The level of skill in the art would need to be apparent on the record or otherwise clearly understood.

Since those in favor of the current murky state of § 101 often claim that there are many so-called "bad patents" that are clearly invalid, they get to put their money where their mouth is.  If a patent so clearly subject to invalidity, it should be almost trivial to find the prior art or make the § 112 arguments.

Of course, the contours of these motions would have to be fleshed out by the presiding judge on a case by case basis.  But if these non-§ 101, limited-scope invalidity contentions cannot be made, then the case should not be dismissed on the pleadings.

In sum, this proposal is an attempt to reduce and hopefully eliminate the practice under Alice of taking patent rights away from inventors and patentees based on conclusory reasoning and an incomplete view of what has been invented.

Perhaps Senator Tillis believes that Congress cannot act on § 101 reform because a proposed solution like this one may go beyond the scope of what Congress can legislate.  Courts have control over their dockets and it would likely be unconstitutional for the legislative branch to start telling district court judges how to manage their caseload.

In that case, maybe § 101 reform failed because it cannot succeed in its current form.  There very well may be no legislative compromise solution that makes all stakeholders in the patent-eligibility debate ready to sign on.  Instead, a more holistic approach requires a certain degree of effort and cooperation from all branches of government.  The USPTO needs to reduce the number of low-quality patents that it issues, while simultaneously not holding up high-quality inventions for years in prosecution.  Congress needs to return § 101 to its basics.  The courts need to refrain from killing off patents based on overgeneralizations and unfounded presumptions, while also allowing low-quality patents that slip through the USPTO to be invalidated without putting an undue burden on defendants.

Hopefully, all of the above would not end up being the patent law equivalent of pushing Jello uphill.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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