Intellectual property attorneys working with technology companies have been spending the four years since the U.S. Supreme Court’s decision in Alice Corp v. CLS Bank International evaluating how the U.S. Patent and Trademark Office would interpret subject matter eligibility under Section 101 of the U.S. Patent Act in light of the opinion.
While not saying so outright, that opinion effectively said much software was not eligible to be patented, as the court laid out a test to determine whether claims in a patent application are tied to an abstract idea. Since then, the question of whether software would overcome the test has been lingering over many inventors’ minds.
In January of this year, it seemed as though muddy waters were going to be cleared with guidance from the USPTO saying how it would define an abstract idea.
“Since the Alice/Mayo test was announced and began to be extensively applied, the courts and the USPTO have tried to consistently distinguish between patent-eligible subject matter and subject matter falling within a judicial exception. … Many stakeholders, judges, inventors, and practitioners across the spectrum have argued that something needs to be done to increase clarity and consistency in how Section 101 is currently applied.”
The guidance attempts to define what an abstract idea is under Section 101 and lays out how a patent claim that recites an abstract concept can still be patent eligible.
However, a panel of Federal Circuit judges on April 1 delivered a ruling in Cleveland Clinic Found. v. True Health Diagnostics reminding patent applicants and intellectual property law practitioners the courts don’t have to agree with the findings of patent examiners.
“While we greatly respect the PTO’s expertise on all matters relating to patentability, including patent eligibility, we are not bound by its guidance,” wrote Judge Alan Lourie, for the three-judge panel. “And, especially regarding the issue of patent eligibility and the efforts of the courts to determine the distinction between claims directed to natural laws and those directed to patent-eligible applications of those laws, we are mindful of the need for consistent application of our case law.”
And with that, a fresh clot of mud was thrown into the water.
“Since [Alice], there have been a lot of issues about what is an abstract idea … what can we protect, what can’t we protect,” said Merchant & Gould associate Mike Wagner who presented on the topic in late May at the Rocky Mountain Intellectual Property & Technology Law Institute. “With its guidance, the patent office is now getting into the area of providing clarity.” Now, Wagner said, IP law practitioners are again wondering whether the guidance will hold up. “[The Cleveland Clinic opinion] leads to uncertainty about what strategy to take: Should you go for patent protection or not to make that investment?”
He said the uncertainty causes some problems for inventors in deciding whether to pursue a patent. Should they fail to be granted by a patent by the USPTO — or be granted one and lose an appeal in the courts — they not only lose patent protection but will be unable to claim a trade secret as well.
“It’s an interesting scenario, and maybe the worst-case scenario if you come up with an invention. [As an attorney], you say, ‘yes under the new guidance, you should file it,’ … and then the court says it’s not bound by that guidance and invalidates it. In that example, we see why it matters to get clarity and consistency between the patent office and the courts.”
The courts might offer further guidance, though. Wagner acknowledged the frequency of new opinions from the courts and the possibility that a different panel of Federal Circuit judges even contradicts the Cleveland Clinic opinion as areas for further guidance.
But even if divergent opinions come, that could just make things more confusing.
One possibility for clarity is in a congressional bill that would reform Section 101. On May 22, sens. Thom Tillis (R-NC) and Chris Coons (D-DE), introduced a draft bill that would change the landscape. Regarding Section 101, the draft bill says: “Whoever invents or discovers any useful process, machine, manufacture, or composition of matter, or any useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title. [And] eligibility under this section shall be determined only while considering the claimed invention as a whole, without discounting or disregarding any claim limitation.”
“Section 101 of the Patent Act is foundational to the patent system, but recent court cases have upset what should be solid ground,” said ranking member of the House Judiciary Committee Hank Johnson (D-GA) in an announcement about the draft bill. The bill is still undergoing hearings in the Senate Judiciary Committee with a hearing scheduled for Tuesday.
Wagner said congressional guidance would provide clarity, but in the meantime, practitioners are erring on the side of caution, he said.
“If we’re near the line, and the line’s unclear, we need to make sure we’re further away from it on the eligibility side,” he said. “Clarity and predictability would help. Whether it comes from Congress or the courts, it would be greatly appreciated by practitioners.”
— Tony Flesor, [email protected]