NOTE CONTENTS INTRODUCTION 2180 I. SUBJECT-MATTER ELIGIBILITY: A PRIMER 2187 A. The History and Function of Subject-Matter Eligibility 2187 B. Recent Doctrinal Attempts to Flesh Out [section] 101 2191 C. The Effects of the Current Doctrinal "Mess" and Emerging Congressional Interest in Reform 2193 II. THE USPTO'S USE OF GUIDANCE DOCUMENTS 2196 A. The Federal Register 2197 B. The USPTO Website 2200 C. Major Guidance "Moments" 2201 1. 1996 Examination Guidelines for Computer-Related Inventions 2202 2. 2005 Interim Guidelines 2204 3. 2009/2010 Interim Guidance in Light of Bilski 2206 4. 2014 Interim Guidance and 2015/2016 Updates 2207 5. 2018 Berkheimer Memorandum 2209 6. 2019 Revised Patent Subject-Matter-Eligibility Guidance 2210 D. The USPTO's Guidance Practices 2211 III. COURTS' USE OF GUIDANCE 2212 A. The Federal Circuit 2213 B. District Courts 2215 C. The PTAB 2216 IV. THE SUBSTANCE OF THE USPTO'S "NON-SUBSTANTIVE" GUIDANCE 2217 A. Substantive Rulemaking and the Traditional Paradigm 2219 B. The 1987 Guidance and Animal Legal Defense Fund 2223 C. The 2009 Guidance and Mikkilineni 2225 D. The 2019 Guidance 2226 CONCLUSION 2229 INTRODUCTION
In April 2018, the United States Patent and Trademark Office (USPTO) issued the Berkheimer memo to its patent-examining corps. (1) The memo, written in response to a recent high-profile decision from the Federal Circuit, (2) provides guidance to patent examiners on policing the line between patentable and unpatentable subject matter and supporting their determinations. Just nine months later, the Patent Office spoke again on the subject by publishing "Revised 2019 Patent Subject Matter Eligibility Guidance" in the Federal Register. (3)
Practitioners were quick to note that these documents represented "a big departure from current practice" (4) and "a drastic course correction for how patents... are examined." (5) Some practitioners, for instance, pointed to a drop in the rate at which patent examiners were rejecting patent applications as a direct result of the Berkheimer memo, (6) while others asserted that the 2019 guidance made it "easier and faster for Examiners to find claims eligible." (7)
These developments look from a distance to be the products of traditional agency rulemaking. Indeed, the Patent Office solicited feedback from regulated parties on these documents in a manner that resembled notice-and-comment rulemaking under the Administrative Procedure Act (APA). (8) The only problem with this picture is that the USPTO lacks the statutory authority to promulgate legislative rules on patentability. (9)
This Note highlights the degree to which these guidance documents have allowed the Patent Office to shape the law of subject-matter eligibility. Unlike the majority of scholarship on subject-matter eligibility, (10) which casts the USPTO in a passive role, (11) this Note argues that the Patent Office has long played an indispensable role in adapting the law of subject-matter eligibility to technological change. (12) But in arguing that much of this guidance resembles legislative rulemaking, this Note also raises questions about whether the USPTO is defying both its authorizing statute and the procedural safeguards enumerated in the APA. This Note thus adds to the emerging discussion about the proper role of the Patent Office within the modern administrative state and provides an additional case study on its competence to engage in both legislative and interpretive rulemaking. (13)
The USPTO's recent guidance initiatives can only be understood in light of the problem they were trying to solve. It is well established that patents can only be granted on new inventions. Less known is that courts have read [section] 101 of the Patent Act (14) to categorically preclude entire classes of inventions from patent protection, even if they are genuinely novel. (15) While scholars have debated the theoretical underpinnings of this reading, the most discussed rationale for the policy is ensuring that firms cannot obtain oppressive monopolies on ideas as broad and foundational as the law of gravity or the very building blocks of nature, like the naturally existing human genome. (16)
Line-drawing in the area of patentable subject matter has substantial implications for litigants. Slight changes in the doctrine can bar entire fields of study from using the patent process. Indeed, many of the most dynamic and impactful areas of scientific research struggle to prove that their discoveries claim patentable subject matter. For example, the Supreme Court's decision in Alice Corp. v. CLS Bank International, which held that computer-implemented processes for risk hedging are unpatentable subject matter, (17) has been estimated to render invalid over eighty percent of existing software patents. (18) Similarly, the Court's decision in Mayo Collaborative Services v. Prometheus Labs, which classified a method for measuring drug dosages as unpatentable subject matter, (19) "cast a shadow of uncertainty over the validity of patents on diagnostic inventions." (20)
It is no exaggeration, therefore, to say that the viability of entire fields of research and innovation hinges on the courts' ability to provide clear lines for patent protection. But the courts have failed the scientific community. One prominent commentator has described the courts' attempts to provide clear limits to patentable subject matter as a "march of failures," (21) and another has characterized the courts' performance as fairly poor. (22) In the rare instances in which courts have drawn lines, "those lines quickly eroded or had to be abandoned as unworkable." (23) The consequences of this failure may be severe. "The Supreme Court's recent treatment of the law of patent eligibility has introduced an era of confusion, lack of administrability, and, ultimately, risk of under-investment in research and development." (24)
The courts' struggles in this area can be explained, in part, by their general discomfort with judicial policy-making. (25) After all, the principal justification for patent law's restrictions on subject-matter eligibility is a concern for social welfare. Ideally, these restrictions balance the social benefits of incentivizing innovation with the social costs of allowing a monopoly on foundational ideas. (26) This land of policy decision--balancing the societal costs and benefits of particular policy choices--falls most naturally within the province of Congress. Yet Congress has historically been hesitant to engage with issues of patentable subject matter. (27) This hesitance is exemplified most clearly by Congress's abolition of the Office of Technology Assessment, an arm of the legislature that was once competent to make such judgments. (28) And while the newly revived Senate Judiciary Subcommittee on Intellectual Property has shown some interest in patent eligibility, (29) it is an open question whether the body will produce viable legislation. An additional consideration is that, even if Congress succeeded in legislative reform, it may not meaningfully improve on judicial action--in part because it may move too slowly relative to technological change. (30)
Against this backdrop, some have proposed that the Patent Office is a natural candidate to clean up this subject-matter eligibility mess. (31) Indeed, the very members of Congress tasked with legislating on this issue have praised the USPTO's "heroic efforts" in promulgating guidance on [section] 101. (32) The proposal to delegate to the Patent Office has been made most forcefully by John Golden, who has argued that Congress should give the USPTO substantive rulemaking authority over subject-matter eligibility. (33)
Golden's 2011 article provides a theoretical foundation for the value of subject-matter-eligibility analysis and the desirability of leaving those decisions with the USPTO. (34) But even as Golden tacldes important normative questions of what an ideal Patent Office should do, he places less emphasis on what the Patent Office has actually been doing. (35) While the article references several of the Patent Office's guidance initiatives, they are offered primarily as evidence of the USPTO's institutional competence. (36) To date, the existing scholarship on the topic has spent too little time on the Patent Office's current role. (37)
To fill that gap, this Note identifies six discrete rulemaking initiatives over the last twenty-five years, which I term "major guidance moments." (38) This research should dispel any notions that the USPTO's recent actions are unprecedented. The Office has been issuing guidance on [section] 101 for decades. At the same time, the increasing frequency of these moments--half of them occurred in the last five years alone--show how subject-matter eligibility rulemaking has expanded to fill the void left by the Supreme Court's recent doctrinal revival. (39) A close examination of the USPTO's guidance practices sheds light on its competence as a rulemaker. Although major guidance initiatives are announced in the Federal Register and comments are encouraged, the depth of engagement with these comments vary greatly across guidance initiatives.
Guidance from the USPTO wields considerable force. As Nicholas Parrillo has documented, regulated parties often follow guidance even though it is formally nonbinding. (40) Moreover, Article III courts and the Patent Trial and Appeal Board (PTAB) may place considerable reliance on the "non-substantive" words the Patent Office has written in making their own eligibility determinations. (41) On paper, the Federal Circuit has declined to accord the USPTO's subject-matter guidance much formal deference. (42) However, I point to substantial evidence that federal district courts regularly treat the guidance as persuasive evidence. Further, the PTAB regularly cites this guidance, which purports to bind all Patent Office officials, to uphold claim rejections on appeal.