35 U.S.C. §101 – A Primer

For inventors, a revered section of the U.S. Constitution is Article One, section 8, clause 8, which states, “The Congress shall have Power…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.”  This is often referred to as the Patent and Copyright Clause of the Constitution, and is the bedrock of intellectual property protection in the form of copyrights for authors, and patents for inventors.

Patent law in the United States is set forth in Title 35 of the United States Code.  The first section of 35 U.S.C. is Section 101, which defines what patentable subject matter is: “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.”  The four classes of patentable subject matter are thus clearly presented by this definition.

But there are exceptions: a patent cannot be granted of subject matter that falls under a “judicially recognized” exception, i.e., an exception defined by a court decision.  The three exceptions are laws of nature, physical phenomena, and abstract ideas.  The first two exceptions are quite clear, and well accepted.  For example, it seems reasonable that although Watson and Crick figured out the structure of DNA, they could not obtain a patent on it.

Where trouble has arisen is in the last exception – the abstract idea.  Ponder that briefly.  You have an idea.  Is it abstract?  Or is it non-abstract?  How do you know?  At the earliest stages, aren’t all ideas inherently abstract, until the details to execute them are worked out?  At what point in the inventive process does an idea graduate from being abstract to non-abstract, and matures into an invention, and thus patentable subject matter?

For many inventions that are essentially “physical” things – material compositions, mechanical/electrical/optical machines, articles, and processes of using them – it seems intuitive when such inventions extend beyond an abstract idea and become physical, and should thus be considered patentable.  But for other inventions, the decision is far from simple.  We’ve entered an age of incredible technological change, with amazing advances in artificial intelligence, life sciences, and communications, to name a few.  Underlying these advances are often software programs, the computers (machines) that execute them, and the physical machines and other devices that the computers control.  Particularly with software and computer technologies, at what point does an abstract idea become concrete?

Alice in Chaosland

In 2014, a major decision was issued by the Supreme Court in Alice Corp. v. CLS Bank International¹.  The issue in dispute was whether claims for a computer-implemented, electronic escrow service for facilitating financial transactions were merely abstract ideas, and therefore not patentable.  Prior to the SCOTUS ruling, the case had worked its way up through federal District Court in D.C., and through the Court of Appeals for the Federal Circuit, with rulings being made and then overturned, and judges having widely divergent opinions.

The Supreme Court ruled that the patents were invalid because the claims were drawn to an abstract idea, and implementing the claims by using a computer was insufficient to transform that idea into patentable subject matter.  While the Court’s ruling did not specifically mention software, the case has become widely viewed as applicable to software patents, and business method software patents in particular.  Also conspicuous in the ruling, by its absence, was clear guidance on when a patent claim is merely an abstract idea.

In principle, following a Supreme Court ruling, the lower courts should then have sound case law upon which to base future rulings.  In addition, the USPTO should have clear direction on examining patent applications with regard to Section 101, and determining whether claims are patent eligible, and patent practitioners should know how to draft claims that pass muster under Section 101.  Perhaps most importantly, businesses and inventors in cutting edge tech fields should have confidence with investing time and money to pursue patents, and further confidence that any patents that may issue will be strong enough to withstand litigation, and strong enough to discourage would be infringers.

Things have not worked out that way.  On one hand, there has been a general consensus that many business method software patents should not have been granted, and should have been found invalid.  Post-Alice, hundreds of such patents have since been invalidated in federal District Court.  Additionally, the USPTO has issued far fewer business method patents since the Alice ruling.  On the other hand though, the effect of Alice has spilled over into many other technical fields, including artificial intelligence, robotics, autonomous vehicles, image processing, biotechnology, and medical diagnostics and treatments.  These are all critical fields in the present innovation economy, and most share a common feature in that many are software-based and computer-implemented.

Federal court rulings on patents and patent applications where abstract ideas are at issue have been inconsistent, difficult to understand, and in conflict with each other.  The USPTO has had to repeatedly revise and reissue its “Subject Matter Eligibility Guidance” on how patent examiners must evaluate claims to assess whether they are directed to an abstract idea and thus not patent eligible.

In summary, we may have arrived at a point where 21^st century technology is not that well served by 20^th century law.  This uncertainty, without further definition and guidance from the judicial branch of government, could even have a chilling effect on the willingness of investors and entrepreneurs to take risks in starting and growing companies in emerging tech fields.  The past 20 years have taught us that the big breakthroughs may not be from the Fortune 100, but rather the FANGs² in their early stages.  Clear and strong patent rights will continue to ensure that the future will have more of this major wealth creation that is vital to our economy.  Unfortunately, it appears unlikely that there will be any further rulings in the Supreme Court that will provide clarity on the abstract idea issue.

Congress to the Rescue?

Lately, Congress has been doing plenty of promoting, but unfortunately, promoting the progress of science by securing to inventors the exclusive right to their discoveries has been sorely lacking in recent years.  Nonetheless, it is an obligation of Congress to address these patent law issues.  Five years after the Alice ruling, the early stages of legislation have finally begun.  In March Rep. Bill Foster (D-IL) and Rep. Steve Stivers (R-OH) introduced the Support Technology & Research for Our Nation’s Growth and Economic Resilience (STRONGER) Patents Act in the House of Representatives. Additionally, legislation of the same name co-sponsored by Sen. Chris Coons (D-DE), Sen. Tom Cotton (R-AR), and others is pending in the Senate.  Most of the proposed legislation addresses inter partes review (IPR) and post-grant review (PGR) proceedings used to challenge patent validity at the Patent Trial and Appeal Board under the America Invents Act of 2011, and the unintended consequences of IPR and PGR in weakening patent protection in the U.S.  (That is a sore subject as well, and a topic for an entirely separate column.)

Section 101 reform is also a topic for lawmakers.  Lobbying from all sides has been intense.  Independent inventor associations and small business organizations are advocating for strong limits (or elimination) of IPR and PGR, and revisions to Section 101 that will lead to clarification of the abstract idea issue.  The FANGs would prefer to keep the status quo.  Although they have accumulated substantial patent portfolios, they also know their own histories, and that major future innovations will likely come from small companies that they themselves were not so long ago.  So not having to license or acquire the patents of pesky disruptors, and instead, being able to challenge them easily in the USPTO or in court would suit them just fine.

Reviews on the initial proposed revisions to Section 101 have not been encouraging to inventors and small tech startups, with some saying that the revisions will likely make things worse.  Since then, further changes are being considered, and on July 9^th, Senator Coons and Rep. Stivers reintroduced the STRONGER Patents Act in both the Senate and the House in a bicameral hearing that was to include “other co-sponsors, inventors, university representatives, and tech industry supporters of the legislation.”

It remains to be seen what, if any, legislation will be enacted into law.  We are hopeful that the STRONGER Patents Act, unlike the America Invents Act, will actually live up to its name.  But we’re waiting to be impressed.³

1. Alice Corp. v. CLS Bank International, 573 U.S. 208, 134 S. Ct. 2347 (2014).
2. Facebook, Apple, Netflix, Google.
3. Paraphrasing Allan Quatermain in The League of Extraordinary Gentlemen.

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GRAPHIC  CREDIT:  “A Tangible Object Containing Abstract Ideas Sprinkled With Some Magnetics”. Copyright 2019.  Robert Gunderman.

Authors John M. Hammond P.E. (Patent Innovations, LLC www.patent-innovations.com) and Robert D. Gunderman P.E. (Patent Technologies, LLC www.patentechnologies.com) are both registered patent agents and licensed professional engineers.  Copyright 2019 John Hammond and Robert Gunderman, Jr.

Note:  This short article is intended only to provide cursory background information, and is not intended to be legal advice.  No client relationship with the authors is in any way established by this article.