Suggestions to amend or abolish 35 U.S.C. § 101 of the
Patent Act are increasing in light of the number of software and
biological patents invalidated after the Supreme Court's
Alice Corp. v. CLS Bank Int'l, 134 S. Ct. 2347 (2014)
and Mayo Collaborative Servs. v. Prometheus Labs., Inc.,
132 S. Ct. 1289 (2012) decisions, which have been used aggressively
to challenge the subject matter eligibility of patents. Section 101
defines patent eligible subject matter to be "any new and
useful process, machine, manufacture, or composition of
matter." Courts have created judicial exceptions to patent
eligible subject matter so that a patent will not wholly preempt a
natural law, natural phenomenon or product, or an abstract idea,
and thereby foreclose future innovation.
In a rare instance since Alice, earlier this week a court
denied a motion for summary judgment that a software patent is
directed to unpatentable subject matter. In SRI Int'l
Inc. v. Cisco Sys. Inc., No. 1-13-cv-01534 (D. Del. Apr. 11,
2016), Judge Robinson held that SRI's network security patents
satisfied both steps of the Alice test.
First, the claims were not directed to a patent ineligible concept
(laws of nature, natural phenomena, or abstract ideas). The
Court stated: "That Cisco can simplify the invention enough to
find a human counterpart ...does not suffice to make the concept
abstract, as '[a]t some level, all inventions ...embody, use,
reflect, rest upon, or apply laws of nature, natural phenomena, or
abstract ideas.'" Second, the claims provide an inventive
concept by describing a specific and non-routine solution that is
"more complex than 'merely recit[ing] the performance of
some business practice known from the pre-Internet world along with
the requirement to perform it on the Internet,' and are better
understood as being 'necessarily rooted in computer technology
in order to overcome a problem specifically arising in the realm of
computer networks.'" In particular, Judge Robinson
used DDR Holding, LLC. v. Hotels.Com, L.P., 773 F.3d 1245
(Fed. Cir. 2014) as a benchmark for its explanation of the second
step of the Alice analysis, noting: "Since
providing that explanation, the Federal Circuit has not preserved
the validity of any other computer-implemented invention under
§ 101."
Implicitly acknowledging the rarity of its non-invalidity ruling,
the Court remarked: "At their broadest, the various
decisions of the Federal Circuit would likely ring the death-knell
for patent protection of computer-implemented inventions . . .
." The Court's "death-knell" remark is
supported by statistics that show how effectively Section 101 has
been used recently to invalidate patents. Overall, courts have
granted over 70% of motions related to invalidity under Section
101, the average number of patents invalidated each year based on
Section 101 has increased eight times since Alice was
decided, and the Patent Trial and Appeal Board has invalidated 100%
of the patents under the Covered Business Method reviews that were
based on Section 101 challenges. Further, during an audience
polling exercise at the recent Federal Circuit Judicial Conference,
a high percentage of the attendees indicated that the application
of Section 101 is a significant concern in patent law.
In response to the considerable impact Section 101 has had of late,
an increasing number of IP professionals are suggesting to amend
Section 101 or abolish it altogether. Eli Lilly & Co. and
several other pharmaceutical companies filed an amicus brief
arguing that the Supreme Court should remove the judicial
exceptions to Section 101 because other areas of the Patent Act can
function to prevent patenting laws of nature, natural phenomena,
and abstract ideas. In a comment made during the Federal
Circuit Judicial Conference, the former director of the U.S. Patent
and Trademark Office, David Kappos, echoed a similar sentiment,
pointing out that Europe and Asia do not have the equivalent of
Section 101 and manage to constrain patent eligible subject
matter. Some organizations are proposing that Congress amend
Section 101 to define patent eligible subject matter more broadly,
require evaluation of patent eligible subject matter for the
invention as a whole, and prohibit considering issues related to
other areas of the Patent Act (Sections 102, 103, and 112) when
determining patent eligibility under Section 101.
Based on the recent application of Section 101 and the strong
opposition it is provoking, we will continue to monitor further
developments. In the meantime, many patents, particularly in the
life sciences, business methods and software fields, continue to be
at risk.
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