Patent Eligibility in Unsettled Times

Ten years ago if you said that patent eligibility would become one of the most important, hotly debated issues in the patent field most in the industry probably would have thought you simply didn’t know what you were talking about. Five years ago some saw the issues percolating, but still many in the trenches with their day-to-day practice life would likely still have raise a cautious eyebrow and questioned why you thought even the Supreme Court might turn its back on a solid generation of well established patent law. The tone was perhaps cautious, but most couldn’t imagine that the Supreme Court and the Federal Circuit would cease their expansive view of patent eligibility.

Oh how times change!

Today, after several years of substantial turmoil, patent eligibility in a variety of economically significant technologies is extremely uncertain, including software, natural products, medical diagnostics and personalized medicine. It is with great irony that one of the few things we know with any degree of certainty is that business methods are patent eligible. We likewise know that at least some cDNA is patent eligible, except that man-made cDNA that happens to be identical to what occurs in nature. Of course, that raises more questions than it answers.

After Chakrabarty how is anything that is man-made patent ineligible? Would this mean that a perfectly replicated kidney would be patent ineligible because it is identical to a naturally created kidney? What will that do to personalized medicine? Isn’t the whole point to create organs some day that are identical to the receivers originally given organ so as to prevent rejection and the for copious amount of anti-rejection drugs? Of course it is!

But how are companies going to get the funding for this extraordinarily daunting task without the promise of a return on investment? Don’t fool yourself, universities and federal labs are in the business of  scientific theory, not commercialization or applied science. So without substantial private sector investment these and other truly paradigm shifting innovations won’t happen. Who in their right mind would invest hundreds of millions or billions of dollars only to have it stolen by free-riders? Only the most ignorant ideologues would even pretend that exclusive rights are not an absolute prerequisite to the game-changing innovations that are on the horizon.

But let’s not talk in generalities. How about a prosthetic arm? That has to be patent eligible, right? They are electronic, mechanic and part robot, so they are a machine and patent eligible. Dean Kamen, for example, has been working to develop a new prosthetic, robotic arm for soldiers who have lost limbs. The arm created can pick up small objects, even a grape without crushing it. See YouTube video. Certainly this would be patent eligible.  But what if someone were to create a wholly regenerated arm? That task would be one that would be infinitesimally more complicated, yet under the Supreme Court’s reasoning in Myriad it wouldn’t be patent eligible because it is identical to a human arm. How ridiculous!

For decades, and perhaps much longer, anti-patent forces have complained about how the patent system rewards incremental innovations. And now the Supreme Court, and some on the Federal Circuit too, are actually saying that the most ground-breaking innovations imaginable are not patent eligible. Everyone — even the Supreme Court — recognizes that these things are man-made. Is it because they are perfect insofar as we can tell that they are not patent eligible? The pursuit of innovation is becoming so successful and useful that we just can’t patent it? Make up your mind! It is intellectually impossible to on one hand say the patent system is intended to promote ground-breaking innovation and then simultaneously argue that the most sophisticated innovations imaginable are not what the patent system intended to protect. Talk about hypocritical!

Are we afraid of the “god question”? It seems to me we are. Patent law is forcing courts to consider whether it is a patentable innovation to create something wholly man-made, but which is identical to nature. Why couldn’t you just claim: “A man-made human kidney comprising…” That together with sufficient prosecution history statements to disclaim any and all coverage for kidneys that are created by god, or nature if you prefer, would clearly be sufficient to cover the man-made kidney or arm and not the one that occurs naturally.

These are critical questions and the answers matter because we know from history that companies locate where patent protection is available. Once upon a time, for example, the Europe was a dominant player in the biotech industry, but that has changed. The United States, thanks in big part to far more favorable patent laws, took the dominant position. Today the United States is also dominant in software, but with the rather ridiculous decisions from the Federal Circuit that question whether any software can be protected via any claiming technique continued U.S. dominance in the software area is in doubt.

If you haven’t noticed, overwhelming portions of the U.S. economy are tied to the biotechnology and software sectors. Are we about to throw away our economic leadership? There are already some lawyers talking openly with clients about whether they may be able to in some cases actually get broader, more certain protection outside the United States.

At the end of the day, software is and will be patent eligible. The Supreme Court in Bilski explained that business methods are patent eligible at least in part because the Patent Statute mentions business method patents, which means Congress must have known about business method patents and since they were not prohibited at least some must be patent eligible. The Patent Statute makes even more reference to software, including most recently when the patent laws were updated in the America Invents Act (AIA).

Tax strategy patents are still patent eligible subject matter pursuant to Section 101, but for purposes of evaluating an invention under section 102 or 103 of title 35, any strategy for reducing, avoiding, or deferring tax liability, whether known or unknown at the time of the invention or application for patent, is deemed insufficient to differentiate a claimed invention from the prior art.

The deeming of tax strategies, known or unknown, as being within the prior art does not does not apply to that part of an invention that (1) is a method, apparatus, technology, computer program product, or system, that is used solely for preparing a tax or information return or other tax filing, including one that records, transmits, transfers, or organizes data related to such filing; or (2) is a method, apparatus, technology, computer program product, or system used solely for financial management, to the extent that it is severable from any tax strategy or does not limit the use of any tax strategy by any taxpayer or tax advisor. Thus, you can still patent technologies, including software related innovations, that relate to the preparation of tax filings and the like.

Thus, Congress must have intended for computer programs (i.e., software) to be patented. There is simply no other explanation. Still, many judges on the Federal Circuit inexplicably ignore claim language and find every attempt to describe software as leading to a patent ineligible invention. They don’t ever even acknowledge that software is and must be patent eligible, nor do they provide any alternative suggested claiming to make this happen despite the clear articulation that software is patentable in the Patent Statute. So where does this leave us? Ultimately software will be deemed patent eligible just like business methods, and for the same reason. In the meantime we need to continue to use every possible claiming strategy we can muster so that we can nail down rights. This is tricky since we don’t know what the test will ultimately be, and it unnecessarily creates uncertainty, which raises costs. That is bad patent policy and terrible for the economy.

How we got to this point with software is well recognized, but the path forward is anything but clear. Since a failed attempt at en banc reconciliation in the CLS Bank v. Alice Corporation case members of the Court have gone in diametrically opposite and irreconcilable directions, so that a litigant’s outcome depends almost entirely upon the makeup of her CAFC panel.

And, while many think that Myriad lost at the Supreme Court in Association of Molecular Pathology v. Myriad Genetics, the company continues to aggressively assert its patents, in the face of widespread assumption that their claims are clearly invalid. The claims being asserted were not invalidated, but still there is a stench surrounding the case. Myriad is not doing the industry, or themselves, any favors if you ask me. This is why if you have clients who have an interest you absolutely must encourage them to become engaged. You cannot assume that others will fight the battles, because they won’t, and when they do they often times fight it poorly. Sometimes very poorly. For example, the critics made a big deal in the case about Myriad’s test costing $3,000. But did you know that Myriad never denied anyone the test even if they couldn’t pay? I was at a conference where a high level executive made that assertion, but it never found its way into the case or record. Sounds like the winning argument was buried.

While it might be OK for Myriad to lose on their own for whatever reason, the industry lost as well. You must get involved and not let others fight the fight if you have an interest. That means recommending clients, or groups of similarly situated clients come together to fund the filing of amicus briefs. The Supreme Court increasingly relies upon them, for evidence no less. The Federal Circuit says they can be quite helpful to provide context and raise issues not otherwise addressed. In short, they matter! Also consider recommending clients engage in lobbying Congress. If you are going to lobby Congress successfully, however, that means getting involved early. By the time it hits the broader news it is too late. Lobbying requires early attention.

Manus Cooney of American Continental Group is one of the top lobbyists in DC on intellectual property issues. He is a former Chief Counsel to the Senate Judiciary Committee, and a former  Senior Vice President and Policy Counsel for the file-sharing company Napster, Inc. Cooney is well seasoned in the art of legislation and trying to help clients who have interest in the outcome of legislative efforts. Here is what he explained to me after passage of the AIA and why so many found it impossible to jump in and have their concerns taken seriously late in the game:

By the time a bill reaches the floor, most of the significant decisions have already been made.  And most of the significant informed stakeholders have already taken a position one way or the other on that product.  And then it’s just a matter of executing the fight.  Trying to come into o the debate on any bill when  a measure is on the floor or during markup and expecting to be able to affect that product at that given time is really tough. It’s fighting windmills at that point.  You’re a day late and a dollar short.  You need to be engaged much farther in advance.

See A Conversation with Manus Cooney — Patents and Lobbying.

The message is clear. If it matters get involved and do so early. The anti-patent forces are engaged and continue to push their agenda year after year.

If you or your clients don’t have the budget to lobby independently Bob Stoll, former Patent Commissioner who is now with Drinker Biddle, says to seek out groups and coalitions with similar views and join along with their efforts. It can and does make a difference. Stoll says that Members of Congress are particularly interested in issues that affect individuals and companies in their district. If nothing else at least consider having your patent attorney work to draft a letter to your Member of Congress to get your side of the issue out there. If patents are a key to your business success and that can be translated into jobs and economic opportunity Members of Congress will take notice to at least some extent.

Although it may seem a little like shoveling water back into the ocean, if everyone did at least a little it would make a huge difference. An unexpected amicus brief here, a letter or two there, a coalition of like minded clients engaging a lobbyist, joining an already established coalition, it all helps. Even just telling your family and friends why clients need patents and what it means when they can’t get funding because their innovations are not patentable can matter. It won’t feel like it is helping, but that is the power of the crowd. If we aren’t willing to even engage in that low level effort then things are lost and the pendulum has not yet started to swing back toward equilibrium.