Patents 101: Making Cents Off Ideas

By: Mark Stepanyuk

Patent Law and Section 101 Overview

The Patent Act was enacted pursuant to Article I, Section 8, Clause 8 of the Constitution, which allows for Congress “[t]o Promote the Progress of Science and useful Arts, by securing for limited Times to  . . .  Inventors the exclusive Right to their  . . .  Discoveries.” This utilitarian basis underpins the modern patent system as codified in Title 35 of the United States Code. Among other requirements, to secure a patent, the subject matter of the patent must be eligible under Section 101. The Patent Act lists subject matter eligibility for patentability as the first step in the patent process, and some have even argued that it would be inefficient not to apply the subject matter patentability screen first in assessing the patentability of an invention or discovery. 

35 U.S.C. Section 101 states that “[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.” Congress intended for the eligible subject matter to “include anything under the sun that is made by man” (i.e., to be as broad as possible). Indeed, historically, the Supreme Court has concocted only three exceptions to this otherwise broad provision concerning subject matter patentability: laws of nature, physical phenomenon, and abstract ideas. 

Behind this subject matter patentability screen is the basic assumption that granting a patent on these relatively ineffable concepts would ultimately not “[p]romote the Progress of Science and useful Arts.” That is, since part of the patent bargain between an inventor and society includes the grant of a 20-year monopoly (from the date of filing), if that patent was given to an inventor for any of these conceptual exceptions, society would be getting the short end of the stick in the exchange. In Funk Brothers Seed Co., the United States Supreme Court uses fancy language to describe these concepts as “part of the storehouse of knowledge of all men” and “free to all men and reserved exclusively to none,” but functionally, the worry is one of pre-emption. As echoed by the Court on many occasions, the fundamental concern is inhibiting future innovation by “improperly tying up the future use of laws of nature,” and this reasoning is consistent with the utilitarian framework of the constitutional provision underpinning the patent system in the first place.

Section 101 and its Ambiguity

Since the dawn of the software and biotech age, it has become more difficult for courts to distinguish between patentable and unpatentable subject matter under section 101. Although courts have consistently struggled to assess the risk of preemption directly or indirectly, that task has become especially tricky for relatively novel, emerging, and dynamic industries such as software and biotechnology. From Mayo and Alice, the Supreme Court has devised a two-step test to determine patent subject matter eligibility under 35 U.S.C. § 101: the court determines (1) whether the claims at issue are directed to one of those patent-ineligible concepts; and if so, the court asks (2) what else is there in the claims? To answer that, the court considers elements of each claim both individually and “as an ordered combination” to determine whether the additional elements “transform the nature of the claim” into a patent-eligible application. In Alice, the court said that this second step amounts to a search for an “inventive concept,” and a court commonly ascertains an inventive concept by asking whether the step was “well-understood, routine, and conventional to a skilled artisan.” Berkheimer clarified that although patent eligibility is a question of law, whether the inventive concept is “well-understood, routine, and conventional to a skilled artisan” is a question of fact, leading to less invalidation of patents in early stages of litigation. As it stands, this Alice has proven to be quite confusing. 

What does it mean for a claim to be directed to a patent-ineligible idea? What exactly constitutes an inventive step? Nobody knows. The current state of section 101 jurisprudence is highly unpredictable and the main determinant for patent eligibility in this area seems to be the claim drafting skills of the prosecutor and the skills of the litigator in the courtroom. Courts have noted that since essentially every routinely patent-eligible invention of physical products and actions involve, in various degrees, some law of nature, natural phenomena, or abstract idea, it’s difficult to draw the line as to when that claim amounts to nothing more than ineligible subject matter. Some courts have dealt with this by considering the claims as a whole and asking whether their character is directed to the excludable subject matter. Again, this is an evolving area of law with no clear answers. In fulfilling patent law’s constitutional utilitarian imperative, courts will likely think about the field’s relative novelty and dynamism, the effect of granting the patent on market entry by competitors, invention and discovery costs borne by the patentee, whether the claims are directed to a genus or species, etc., all in an attempt to gauge the relative impact of preemption. 

The Patent Law System and the Future of Section 101

In the United States, the law is a disjointed field of outcomes and approaches, and its patent system is no different. Institutions playing a role in the U.S. patent system also shape section 101 judicial value judgments.  The Supreme Court of the United States (which generally has the final say on patent cases), the United States Court of Appeals for the Federal Circuit (established in 1982 and operated as an appellate-level court for patent cases), the United States Patent and Trademark Office (which usually operates as the first system to interface with patents), and district courts (which operate as the most common venues for resolving patent disputes) all leave indelible marks on the law of patents in the U.S. In interpreting rules such as section 101, these institutions do not necessarily work with the same set of interests; indeed, the political economy of operational processes (such as internal docket management), personnel’s relative expertise, the institution’s stated objective, and other functional mechanics, create a different set of incentives in approaching patents and disputes. Additionally, Congress tends to exist as a wild card player that can speak at any point to clarify an approach to interpreting section 101 of the Patent Act.

Whatever the reason for the current state of section 101 jurisprudence, many want some clarity–including the Federal Circuit. Section 101 litigation has drastically increased since the Alice ruling, and it looks like there is no end in sight. But there may be some hope! Currently, there is a case pending certiorari with the Supreme Court that involves a method for manufacturing driveshafts to reduce interior cabin vibration in vehicles. If granted cert. by the Supreme Court, this case could provide clarity on important questions like what is the appropriate standard for determining whether a patent claim is “directed to” a patent-ineligible concept? Although this clarification has some potential to help future courts make sense of which ideas are patent-eligible, it would also not be inconceivable for some other version of Alice to eventually come along and shake things up all over again in this dynamic field of law.

Artificial Nature: Will the astounding become common?

leafBy Robin Hammond

From artificial leaves to digital rodent brains, computer scientists are successfully implementing processes from the natural world. Does the Alice ruling on software patentability provide a glimpse into how these technologies will be treated in the future? In 15 years, will computer-implemented natural processes be patent-ineligible?

The utilization of natural processes in computing is astounding. Recently, researchers in Melbourne developed a solar-power device that is close to simulating photosynthesis. The Energy and Environmental Science journal published these details in an article; in the article, researchers claim “This simple and adaptable system addresses key criteria for the large-scale deployment of an artificial photosynthesis device” to “provide a cheap, clean and renewable source of hydrogen as the ultimately sustainable fuel.” In August, news broke that IBM had created a digital equivalent of a small rodent’s brain, a type of chip with neuro-synaptic architecture, called TrueNorth. Both the chips and subsequent software recreate a brain’s neurons and synapses. The TrueNorth chip is another leap forward for computing through ‘deep learning’. Deep learning operates in two stages: “First, companies … must train a neural network to perform a particular task. If they want to automatically identify cat photos, for instance, they must feed the neural net lots and lots of cat photos. Then, once the model is trained, another neural network must actually execute the task. You provide a photo and the system tells you whether it includes a cat. The TrueNorth, as it exists today, aims to facilitate that second stage.”

It has taken many years, but the courts are finally addressing the realities of software patentability. In Alice, the Supreme Court did an about-face in terms of the validity of business-method and software patents. No longer are ideas or processes patentable because a computer executes them. While the opinion did not itself mention software, it has heralded in a new age of hostility at the U.S. Patent and Trademark Office toward business-method and software patents, with many courts overturning patents under the new standard of Alice.

In 15 years, will natural processes that are merely implemented by computers be novel enough to qualify for patents? Or will the two-step inquiry applied in Alice be similarly interpreted once these processes become commonplace? The analysis under Alice begins with the question: does the invention consist in significant part of a patent-ineligible concept—for example, a law of nature, natural phenomenon or abstract idea? If so, the invention is patent-eligible only if the remaining parts of the invention have an “inventive concept”—one or more elements that ensure a patent on the invention amounts in practice “to significantly more than a patent upon the ineligible concept itself. In Alice, the patents at issue were for computerized escrow. The court decided that the abstract idea of escrow was patent-ineligible and performing escrow on a computer was not sufficient to provide an inventive concept: “A mere instruction to implemen[t an abstract idea] on … a computer … cannot impart patent eligibility.”

Does the shift in the patentability of software patents in Alice foretell the future of the patentability of artificial nature? One could foresee a future where the idea of brain functioning (arguably a natural phenomenon) is in itself not patentable, and the mere implementation of specific neuro-synaptic architecture by a computer would not rise to the level of inventive concept. Or will future courts embrace Judge Rader’s broad interpretation of the applicability of §101? Where natural laws are restricted to “universal constants created, if at all, only by God, Vishnu, or Allah”; “even gravity is not a natural law“; and the slightest bit of labor mixed with nature is property under Lockean reasoning.

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