The Patent Eligibility Restoration Act of 2023 -- Will it make over the finish line?

Senator Thom Tillis’ Patent Eligibility Restoration Act of 2023 is moving through the U.S. Senate.  It appears to be a compromise to earlier patent eligibility reform legislation.  Here are the main provisions of the act. 

 

§ 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 sub 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.

U.S. International Trade Commission Covid-19 Diagnostics and Treatment Development and Access Report

The U.S. International Trade Commission released a corrected version of its COVID-19 Diagnostics and Therapeutics: Supply, Demand and TRIPS Flexibilities Report in December of 2023.  Chapter 7 is a summary of views of interested parties.  I found that interesting, particularly the section on jobs related to the pharmaceutical and biotech industries.  The following is an excerpt from the Executive Summary:

The TRIPS Agreement sets minimum standards for the protection and enforcement of IP rights. It also includes flexibilities. Persons providing input to the Commission disagreed about the extent to which the 2022 Ministerial Decision expands flexibilities and whether the decision should be extended to COVID-19 diagnostics and therapeutics.

Determining a definitive scope of what products are covered by the terms “diagnostics” and “therapeutics” as they pertain to COVID-19 and what constitutes relevant COVID-19 diagnostics and therapeutics covered by patents is complicated and subject to interpretation. Based on definitions in the medical field of “diagnostics” and “therapeutics,” a COVID-19 diagnostic is a good used to diagnose or identify how patients respond to treatments for COVID-19, and a COVID-19 therapeutic is a good used to treat COVID-19. The universe of COVID-19 diagnostics and therapeutics covered by patents or in development that fall within those definitions is broad and varied. There are various parameters that could be applied, individually or in combination, to identify relevant COVID-19 diagnostics and therapeutics, including whether the product is covered by patent, whether the product is directed to COVID-19 (virus-directed), and whether the product has received regulatory approval or authorization; application of each comes with its own challenges.

The development and commercialization of COVID-19 diagnostics and therapeutics occurred on an extremely compressed timeline. Manufacturing of diagnostics and therapeutics involves multiple stages, each of which requires careful attention to detail and strict quality control measures. The two fields of diagnostics and therapeutics are composed of different producers, inputs, know-how, and so on. Generally, COVID-19 diagnostics can be brought to market faster than COVID-19 therapeutics, and the knowledge and manufacturing base globally for small-molecule drugs is larger than for biologics. Research and development of virus-directed COVID-19 diagnostics and therapeutics primarily occurred in HICs, but manufacturing of diagnostics and therapeutics occurred in countries of all income levels except for LICs. As of summer 2023, China (UMIC) reportedly had the highest number of manufacturers of COVID-19 diagnostics (247), and India (LMIC) had the largest number of reported therapeutics manufacturers (56). It is difficult, however, to ascertain how much COVID-19 diagnostics and therapeutics production came online or is still ongoing.

A variety of advantages and challenges are associated with the use of voluntary licenses to provide access to IP associated with COVID-19 therapeutics and compulsory licenses to access COVID-19 therapeutics and other patented pharmaceutical products. Voluntary licenses and compulsory licenses generally were not used to access IP associated with COVID-19 diagnostics. Voluntary licenses have been an important mechanism that was used to offer COVID-19 therapeutics for sale at reduced prices in LICs, LMICs, and some UMICs; however, many UMICs have been excluded from coverage under voluntary licenses. Voluntary licenses also provided a mechanism for technology transfer and knowledge sharing to support the manufacture and regulatory approval of less expensive licensed products. Compulsory licenses have been used by a small number of countries to access IP associated with certain COVID-19 therapeutics. The primary, commonly cited benefits for countries utilizing compulsory licenses are reduced costs and improved access. Another primary benefit of compulsory licenses reportedly is that they provide leverage to negotiate voluntary licenses. One of the main disadvantages is that they do not provide a basis for sharing knowledge.

The availability of supplies to meet global demand for COVID-19 diagnostics and therapeutics has been a moving target throughout the pandemic. Estimates or calculations of demand for these goods differ depending upon whether the metric is market demand or need. When infection rates rose sharply in early 2021, before manufacturers had scaled up production and regulators had granted approvals, access was limited and available only to a few HICs. During 2021, more products became available for procurement. By early 2022, infection rates and deaths from COVID-19 steadily declined as vaccination rates grew and natural immunity strengthened. By early May 2023, the World Health Organization (WHO) declared that COVID-19 would no longer be classified as a public health emergency of international concern. Today, market demand has waned in some countries, with several manufacturers no longer pursuing regulatory approval and stopping production altogether.

The disparity among countries of different income groups is wide in terms of access and availability to COVID-19 diagnostics and therapeutics. About 80 percent of government procurements were by HICs, 14 percent by UMICs, and 5 percent by LMICs. No government purchases were made by LICs, although products were made available to them through multilateral organizations. The wide disparity among countries in their ability to access COVID-19 diagnostics and therapeutics is the result of multiple factors, including access to IP, prices and affordability, regulatory approvals, healthcare infrastructure, and the healthcare priorities of governments. The importance of each of these and other factors impacting availability and demand varies greatly among countries, although high prices and the lack of price transparency appear detrimental to many countries seeking access.

Academic literature on the effects of patent protection, compulsory licenses, and the MPP is limited and would benefit from additional research. From the available evidence, patent protection is generally found to be more beneficial to innovation in the health sector for developed countries and less so for developing countries. Patent protection is often found to result in higher prices for medicines, which decrease access, but patent protection can also have some counteracting effects, such as increases in international trade flows of pharmaceuticals and faster drug launches in markets, that help improve access. Researchers have found that compulsory licenses and the MPP are associated with increased generics and lower prices, and increased access to pharmaceuticals. Researchers have not studied the relationship between compulsory licenses and the MPP and access to COVID-19 diagnostics and therapeutics.

The Subcommittee on IP in U.S. Senate Reinstated; First Action is Patent Eligible Subject Matter Reform

Recently, several members of Congress have reinstituted the Subcommittee on Intellectual Property in the U.S. Senate.  This, in and of itself, is relatively big news.  We can expect a good amount of proposed legislation moving out of this subcommittee concerning intellectual property in the near future.  

The first document to issue from the subcommittee (and includes support from members of the House of Representatives as well as the Senate) is essentially a framework for Section 101 patent eligible subject matter reform.  Patent eligible subject matter has been a controversial topic in the United States for years, and attempts to cabin the U.S. Supreme Court Alice v. CLS Bank/Mayo v. Prometheus decisions by the United States Patent and Trademark Office and some judges of the U.S. Court of Appeals for the Federal Circuit has led to a relatively messy and some may argue contradictory set of guidelines, rules and precedent.  This may be unhelpful to promote investment and innovation. 

A Press Release from Senator Christopher Coons from Delaware sets forth the outline of the framework:

·         Keep existing statutory categories of process, machine, manufacture, or composition of matter, or any useful improvement thereof.

·         Eliminate, within the eligibility requirement, that any invention or discovery be both “new and useful.” Instead, simply require that the invention meet existing statutory utility requirements. 

·         Define, in a closed list, exclusive categories of statutory subject matter which alone should not be eligible for patent protection. The sole list of exclusions might include the following categories, for example: 

·         Fundamental scientific principles;

·         Products that exist solely and exclusively in nature;

·         Pure mathematical formulas;

·         Economic or commercial principles;

·         Mental activities. 

·         Create a “practical application” test to ensure that the statutorily ineligible subject matter is construed narrowly.

·         Ensure that simply reciting generic technical language or generic functional language does not salvage an otherwise ineligible claim.

·         Statutorily abrogate judicially created exceptions to patent eligible subject matter in favor of exclusive statutory categories of ineligible subject matter.

·         Make clear that eligibility is determined by considering each and every element of the claim as a whole and without regard to considerations properly addressed by 102, 103 and 112. 

While this list appears to serve as a list of the broad strokes of the new legislation, it clearly appears to roll back the Alice/Mayo test.  Some of the parts of the framework appear to be concessions to some groups who might be opposed to broad subject matter eligibility, such as some technology companies.  For an IP legislative wish list by the AIPLA, please see, here.  A Congressional Research Service report on patent eligibility reform by Professor Jay Thomas is available, here.  The CRS report predates some of the more recent U.S. Court of Appeals for the Federal Circuit and USPTO decisions concerning eligibility, and includes a discussion of patent eligibility reform proposals from major IP trade associations.  If patent eligibility legislation is passed along the lines of the framework, it nicely sets up the question of how we should reform nonboviousness law, which will have increased importance as the major policy lever policing patentability. 

Here are some of the statements of Congressmen supporting patent eligibility reform:

“Today, U.S. patent law discourages innovation in some of the most critical areas of technology, including artificial intelligence, medical diagnostics, and personalized medicine,” said Senator Coons. “That’s why Senator Tillis and I launched this effort to improve U.S. patent law based on input from those impacted most. I am grateful for the engagement of all stakeholders participating in our roundtables, as well as the bipartisan and collaborative efforts of colleagues in both the Senate and the House. I look forward to continuing to receive feedback as we craft a legislative solution that encourages innovation.”

“Senator Coons and I requested to re-instate the Senate Judiciary Subcommittee on IP because we saw a need to reform our nation’s complicated patent process, starting with section 101,” said Senator Tillis. “The release of this framework comes after multiple roundtables and extensive discussions with stakeholders who would be affected by reforming Section 101. Senator Coons and I look forward to receiving feedback from the release of this framework and encourage anyone who might potentially be affected to contact our office and offer us input.”

 “Upgrading the patent eligibility test is critical if we want American innovation to continue to lead worldwide,” said Rep. Collins. “Encouraging innovation in Georgia and throughout our country means restoring confidence for inventors and investors that their patent rights will be upheld in court.”

“I’m pleased to participate in this important and relevant roundtable. Many have voiced concerns about uncertainties in in this area of patent law jurisprudence, and I’m interested in hearing from all stakeholders as we continue to work towards a consensus solution,” said Congressman Hank Johnson, who serves as Chairman of the Judiciary Subcommittee on Courts, IP and the Internet. “I particularly look forward to—and welcome—feedback on the outline proposal we’re considering here today.”

“In my home state of Ohio, leaders in the fields of biologics research and diagnostics will deliver the cures of tomorrow. This is only possible if we can protect those innovations with the patent protection that rewards the risks and investment necessary to discover the next great idea,” said Rep. Stivers. “We have the opportunity to advance our society in so many exciting and unknown ways, and we need to ensure we have a patent system that encourages that kind of game-changing innovation, instead of stifling it.”

Judges Lourie and Newman of the Federal Circuit Critique Alice/Mayo and Myriad

The U.S. Court of Appeals for the Federal Circuit, in AatrixSoftware, Inc. v. Green Shades Software, Inc., recently denied a rehearing en banc concerning two cases that may make it more difficult to dismiss a claim challenged for lack of patent eligible subject matter under the Alice/Mayo test because of factual issues.  This leaves intact the ability of counsel to raise factual issues which may avoid early resolution of a patent infringement action on patent eligible subject matter grounds.  Notably, Judges Lourie and Newman, both of whom have graduate degrees in technical fields and are very experienced members of the Federal Circuit, requested in a concurring opinion that the U.S. Congress revisit patent eligible subject matter, particularly in light of the Alice/Mayo test and the U.S. Supreme Court “abstract idea gloss.”  Judge Lourie states:

The case before us involves the abstract idea exception to the statute.  Abstract ideas indeed should not be subject to patent.  They are products of the mind, mental steps, not capable of being controlled by others, regardless what a statute or patent claim might say.  Gottschalk v. Benson, 409 U.S. 63, 67 (1972) (“[M]ental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work.”).  No one should be inhibited from thinking by a patent.  See Letter from Thomas Jefferson to Isaac McPherson (Aug. 13, 1813) (“[I]f nature has made any one thing less susceptible, than all others, of exclusive property, it is the action of the thinking power called an Idea.”).  Thus, many brilliant and unconventional ideas must be beyond patenting simply because they are “only” ideas, which cannot be monopolized.  Moreover such a patent would be unenforceable.  Who knows what people are thinking?  

But why should there be a step two in an abstract idea analysis at all?  If a method is entirely abstract, is it no less abstract because it contains an inventive step?  And, if a claim recites “something more,” an “inventive” physical or technological step, it is not an abstract idea, and can be examined under established patentability provisions such as §§ 102 and 103.  Step two’s prohibition on identifying the something more from “computer functions [that] are ‘well-understood, routine, conventional activit[ies]’ previously known to the industry,” Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2359 (2014) (alteration in original) (quoting Mayo, 566 U.S. at 73), is essentially a §§ 102 and 103 inquiry.  Section 101 does not need a two-step analysis to determine whether an idea is abstract.   I therefore believe that § 101 requires further authoritative treatment.  Thinking further concerning § 101, but beyond these cases, steps that utilize natural processes, as all mechanical, chemical, and biological steps do, should be patent-eligible, provided they meet the other tests of the statute, including novelty, nonobviousness, and written description.  A claim to a natural process itself should not be patentable, not least because it lacks novelty, but also because natural processes should be available to all.  But claims to using such processes should not be barred at the threshold of a patentability analysis by being considered natural laws, as a method that utilizes a natural law is not itself a natural law.

Judge Lourie also criticized the U.S. Supreme Court’s decision in Myriad Genetics:

[F]inding, isolating, and purifying such products are genuine acts of inventiveness, which should be incentivized and rewarded by patents.  We are all aware of the need for new antibiotics because bacteria have become resistant to our existing products.  Nature, including soil and plants, is a fertile possible source of new antibiotics, but there will be much scientific work to be done to find or discover, isolate, and purify any such products before they can be useful to us.  Industry should not be deprived of the incentive to develop such products that a patent creates.  But, while they are part of the same patent-eligibility problems we face, these specific issues are not in the cases before us.   Accordingly, I concur in the decision of the court not to rehear this § 101 case en banc.  Even if it was decided wrongly, which I doubt, it would not work us out of the current § 101 dilemma.  In fact, it digs the hole deeper by further complicating the § 101 analysis.  Resolution of patent-eligibility issues requires higher intervention, hopefully with ideas reflective of the best thinking that can be brought to bear on the subject.

There are numerous proposals for changing patent eligible subject matter before the U.S. Congress, for example, see the AIPLA proposal, here. 

Federal Circuit Pushes Back on U.S. Supreme Court’s Alice Decision on Procedure

In a pair of interesting software-related cases, the U.S. Court of Appeals for the Federal Circuit appears to push back on one of the supposed goals of the U.S. Supreme Court’s Alice v. CLS Bank International decision.  In Alice, the U.S. Supreme Court clarified and restated the Mayo Collaborative Services v. Prometheus decision’s test concerning patent eligible subject matter.  In doing so, the Supreme Court started a new era of U.S. patent law which made patent eligible subject matter a very important inquiry with respect to the patentability of inventions, particulary those in the software space—although Alice’s impact is felt in other technological areas.  Since Alice issued, the U.S. Court of Appeals for the Federal Circuit has clarified the Alice test and notably provided guidance to patent lawyers on how to “avoid” or “comply” with Alice. 

Importantly, one of the purported benefits of Alice was to allow for the early dismissal of claims based on patent eligible subject matter.  An alleged infringer could conceivably quickly raise patent eligible subject matter and get a claim dismissed on either a 12(b)(6) motion for failure to state a claim or a motion for summary judgment.  In additional push-back to Alice, the Federal Circuit in Berkheimer v. HP (February 8, 2018) has recently held that even after claim construction a motion for summary judgment on patent eligible subject matter may be improper because of genuine issues of material fact.  While this is standard law concerning motions for summary judgment, the case provides a blueprint for how genuine issues of material fact can be created with patent eligible subject matter.  Because of this possibility of creating that genuine issue of material fact, patentees will have additional settlement leverage to realistically threaten a case through trial—a costly endeavor.  What will the effect of this case be on Alice’s attempt to curb so-called patent troll litigation? 

In another recent case, the Federal Circuit in Aatrix Software v. Green Shades Software (February 14, 2018) remanded a case because the district court did not allow the patentee to amend its complaint to survive a 12(b)(6) motion on claim construction.  While the Federal Circuit was careful to note that a complaint can be dismissed on a 12(b)(6) motion to dismiss, this case cautions district court judges to carefully consider motions to amend complaints. 

It will be interesting to see if the Federal Circuit’s decisions about the procedural challenge of patents based on patent eligible subject matter in the courts will have an impact on the analysis in the pending Oil States case before the U.S. Supreme Court. 

Intellectual Property Owners Association Adopts Resolution to Amend Patent Eligible Subject Matter

The Intellectual Property Owners Association (IPO) board of directors has adopted a resolution which advocates for amending section 101 of the Patent Act in the U.S. to essentially overturn Mayo v. Prometheus and Alice v. CLS Bank.  The reason for the resolution is the development of inconsistent application of the so-called Alice/Mayo test.  Indeed, there have been a number of relatively recent decisions attempting to clarify Alice/Mayo which find patent eligible subject matter satisfied, including DDR, Enfish, McRO, Amdocs, and Cellz Direct.  How does this happen: the development of panel splits at the U.S. Court of Appeals for the Federal Circuit.  Notably, the United States Patent and Trademark Office (USPTO) has worked extremely hard in attempting to provide guidance to patentees and arguably is doing quite a good job.  I think the USPTO deserves a lot of credit for attempting to bring clarity and predictability to the field.  My personal opinion (shared by others) is that section 102 and 103 could provide a better gatekeeper than section 101 even though early resolution may be difficult.  I do think that the USPTO’s attempt to place certain claims in a “streamlined” analysis seems to be a good idea.  Claims drafting gamesmanship and looking at the claim as a whole will always raise issues though (that pesky Diamond v. Diehr!).  Here is the proposed language amending section 101:

101(a) ELIGIBLE SUBJECT MATTER
Whoever invents or discovers, and claims as an invention, any useful process, machine, manufacture, composition of matter, or any useful improvement thereto, shall be entitled to a patent for a claimed invention thereof, subject only to the exceptions, conditions, and requirements set forth in this Title.

101(b) SOLE EXCEPTION TO SUBJECT MATTER ELIGIBILITY
A claimed invention is ineligible under subsection (a) if and only if the claimed invention as a whole, as understood by a person having ordinary skill in the art to which the claimed invention pertains, exists in nature independently of and prior to any human activity, or exists solely in the human mind.

101(c) SOLE ELIGIBILITY STANDARD
The eligibility of a claimed invention under subsections (a) and (b) shall be determined without regard as to the requirements or conditions of sections 102, 103, and 112 of this Title, the manner in which the claimed invention was made or discovered, or the claimed invention’s inventive concept.