Patent Owners versus the Supreme Court: Changing the Law Underlying Patent Eligible Subject Matter.

• Author: Winborn, Brett

1. Introduction II. Background A. The Foundations of Patent Eligible Subject Matter B. The Supreme Court Builds its Framework for Patent Eligible Subject Matter C. The Supreme Court Creates a Test for Patent Eligible Subject Matter D. The Mayo Framework Application in the Lower Courts III. Analysis A. Proposals from the IPO and AIPLA 1. The Joint Proposal's Proposed Changes to Section 101, in the Form of a New Section 101(a) 2. A New Section 101(b) Sole Exceptions to Subject Matter Eligibility 3. The Proposed New Section 101(c) Sole Eligibility Standard B. Proposal from the ABA 1. ABA 's Proposed Changes to Section 101, in the Form of a New Section 101(a) 2. A New Section 101(b) Exception--the ABA 's Solution C. How the Mayo, Myriad, and Alice Decisions Would Have Been Affected D. Summary and Brief Comparison of Proposals IV. Recommendation A. Restoring the Role of Section 101 B. The Reasoning of the Supreme Court C. Resistance from Congress and the Public D. Patent Owners Should Support the ABA Proposal V. Conclusion I. INTRODUCTION

   Intellectual property protections, including patents, drive innovation in our society. Patents represent a bargain between inventors and the public--the inventor will teach his invention in exchange for a period of exclusivity to make and sell that invention. Certain limitations are placed on what inventions are deserving of the period of exclusivity. The placement of the line separating the deserving and undeserving is a matter of debate with great economic consequences.

   In attempting to draw the line in a logical location, Congress laid out criteria for what constitutes a patentable invention in 35 U.S.C. Section 101 (Section 101), and the courts have limited the broad language of that section with three judicial exceptions to patent eligible subject matter: (1) laws of nature, physical phenomena, and abstract ideas. (2)

   Case law, especially in the last seven years, has set some of the boundaries for those three judicial exceptions. Importantly, many methods of medical diagnosis fall within the exception of natural laws. This means that entities that discover a disease marker are not eligible for intellectual property protection, a determination with huge financial impacts. A similar result stems from the wide breadth of inventions considered to be physical phenomena or abstract ideas, especially impacting methods used by biotechnology and software companies.

   This limitation on patent eligible subject matter has elicited several responses from interested parties. Notably, organizations dedicated to an efficient patent system (or rather, a system that favors inventors, in the eyes of critics) are pushing Congress to amend Section 101.

   This Note argues that the American Bar Association's (ABA) proposal to change Section 101 takes the most prudent approach to addressing patent eligible subject matter. This Note will first describe the evolution of patent eligible subject matter and the Supreme Court's rationale underlying the judicial exceptions. It will then analyze and compare the proposals of three leading intellectual property organizations: the ABA Section of Intellectual Property, Intellectual Property owners Association (IPo), and American Intellectual Property Law Association (AIPLA). Finally, this Note will argue why patent owners and applicants should support the ABA proposal.

2. BACKGROUND

   1. The Foundations of Patent Eligible Subject Matter

      The United States patent system owes its origins to power granted to Congress by the Constitution to establish the system in order to encourage technological innovation. (3) The Patent and Copyright Clause of the Constitution declares this purpose: "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." (4)

      Pursuant to its constitutional powers, Congress laid out the patent system in Title 35 of the United States Code. Patent eligible subject matter is addressed in Title 35, Section 101 of the United States Code: "Whoever 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." (5) Judicial interpretation of Section 101 significantly impacts the patent system and those who rely upon it. (6)

      The courts have added limitations to Section 101 regarding what constitutes patent eligible subject matter through a series of decisions. Section 101 allows patents for four categories of inventions: processes, machines, manufactures, and compositions of matter. (7) However, the courts have added three judicial exceptions to what is patentable: natural phenomena, laws of nature, and abstract ideas. (8) Four cases decided by the Supreme Court in the 20th century illustrate some of the bounds placed on patent eligible subject matter by the Court. (9)

   2. The Supreme Court Builds its Framework for Patent Eligible Subject Matter

      Although the doctrine of patent eligible subject matter originated long ago, (10) its current shape began to take hold in the last 50 years.

      The Court delivered its rationale of preventing preemption of the use of ideas when, in Gottschalk v. Benson in 1972, the Court held that a method to convert binary-coded-decimal (BCD) numerals to pure binary numerals was not patent eligible subject matter. (11) The Court reasoned, "[i]t is conceded that one may not patent an idea. But in practical effect that would be the result if the formula for converting BCD numerals to pure binary numerals were patented in this case." (12) That reasoning hints at the three judicial exceptions to patent eligible subject matter: laws of nature, natural phenomena, and abstract ideas. The Court also gives a hint to one policy rationale behind those exceptions, "here the 'process[]' claim is so abstract and sweeping as to cover both known and unknown uses of the BCD to pure binary conversion." (13) That is, allowing patent-dependent exclusivity over the excepted matters would limit their use, and, thus, progress. (14)

      The Court began to explain what would transform a non-patentable idea to a patentable process in 1978 with its decision in Parker v. Flook (15) The patent at issue dealt with a mathematical formula that could be used to adjust alarm limits during catalytic conversion. (16) The only difference between the process at issue and the prior art was the mathematical formula. (17) The Court determined that permitting the patent would be to permit a monopoly on the formula itself and ruled the formula to be non-patent eligible. (18) However, it did foreshadow the idea of an inventive concept that would allow a patent claim to involve such a formula by saying, "[y]et it is equally clear that a process is not unpatentable simply because it contains a law of nature or a mathematical algorithm." (19)

      In 1981, in Diamond v. Diehr, the Court found such a process--one containing a law of nature--to be patent eligible subject matter. (20) The patent involved a method to cure rubber that used a mathematical formula to determine the timing of the curing process. (21) The inventors claimed that "their contribution to the art [resides] in the process of constantly measuring the actual temperature inside the mold." (22) They explained that their process combined the mathematical formula with several novel steps, including "the continuous measuring of the temperature inside the mold cavity, the feeding of this information to a digital computer which constantly recalculates the cure time, and the signaling by the computer to open the press." (23) The Court found that the process included a mathematical formula that was not by itself patent eligible subject matter, but that the patent covered the steps of using the formula rather than the formula itself. (24) The Court explained that when a patent claim involves a mathematical formula, the test is whether the claim seeks protection for the mathematical formula itself. (25) Bringing up a theme that would be revisited by future courts, the Diehr Court held that "insignificant post-solution activity will not transform an unpatentable principle into a patentable process." (26) The concept of what will transform a patent ineligible invention to a patent eligible one are thus mentioned by the Diehr Court, but what would constitute "insignificant post-solution activity" is still a matter of debate and uncertainty. (27)

      Finally, two of the most central concepts to the patent eligible subject matter question were laid out in Diamond v. Charkrabarty in 1980. (28) The Court stated that the range of patent eligible subject matter is broad, but supported judicial exceptions to patent eligible subject matter. (29) The Court first explored 35 U.S.C. Section 101, stating that "[i]n choosing such expansive terms as 'manufacture' and 'composition of matter,' modified by the comprehensive 'any,' Congress plainly contemplated that the patent laws would be given wide scope." (30) However, the Court then set forth the three currently recognized judicial exceptions to patent eligible subject matter: laws of nature, physical phenomena, and abstract ideas. (31) The Court found that the engineered microorganism at issue was patent eligible subject matter because it had been engineered and was thus a new organism not produced by nature. (32)

      The view of patent eligible subject matter expressed in Chakrabarty, allowing patenting of a modified natural product--as opposed to a natural product--was favorable to patent seekers. All patents rely in part on at least one of the judicially excepted subject matters--all inventions build upon what was previously known and are ultimately based on natural phenomena, laws of nature, and abstract ideas. The Court's view seemed to permit patenting as long as the excepted subject matter had been modified in...