Flaws in the Supreme Court’s §101 Precedent and Available Ways to Correct Them

ERROR OF JUDGMENT red Rubber Stamp over a white background.Amid the crush of patent-eligibility case law, see 35 U.S.C. §101, patent lawyers and even courts can lose sight of the key principles and precedents that serve as the foundation of the eligibility analysis. Or they may not have appreciated in the first place the underlying bases for these §101 cases and whether, for example, those cases accord with precedents they cite from decades before. In any event, this article addresses these foundational Supreme Court precedents for §101 and the Mayo-Alice ineligibility regime that dominates the patent landscape today. In particular, we trace the Court’s precedents from nearly 50 years ago, with an emphasis on key cases separated by some 30 years but tied together by the Court’s representation that it has faithfully followed (and not overruled) any such precedent. After analyzing the precedent in this light, with due emphasis on the Supreme Court’s decisions in Diamond v. Diehr, 450 U.S. 175 (1981) and Mayo Collaborative Servs. v. Prometheus Laboratories, Inc., 132 S.Ct. 1289 (2012), the article briefly examines the U.S. Patent and Trademark Office’s 2019 Patent Eligibility Guidance on §101—the Article II branch’s response to the §101 sea change wrought by the Article III courts. Finally, based on these authorities, the article offers a mix of points and observations for patent litigators and judges to consider as they continue to shape §101’s eligibility law.

I. The Multi-Step, “Conventional,” and Eligible Claims in Diehr (1981)

Diamond v. Diehr is the main case from a nine-year period (1972-1981) in which the Supreme Court addressed §101 on four precedential occasions. In Diehr, the Court specifically addressed the patent eligibility of a claimed multi-step process for curing synthetic rubber. 450 U.S. at 177. The claimed steps recited use of both a well-known mathematical equation (the “Arhennius equation”) and a “digital computer” to implement it, “in conjunction with” multiple steps for heating the rubber, determining the “amount of time” for opening the rubber mold, and removing the rubber therefrom. Id. at 177-78. The PTO examiner, however, rejected the claims as ineligible for patent protection under 35 U.S.C. §101. Id. at 180-81. The examiner reasoned that the steps in the claim “carried out by a computer” were ineligible under the Court’s precedent, and that all the other steps on rubber-curing were “conventional and necessary to the process and cannot be the basis of patentability.” Id. at 178 (emphases added throughout unless otherwise noted). The PTO’s appellate board affirmed the examiner but the Court of Customs and Patent Appeals (CCPA) reversed. Id.

In an opinion that still carries wide precedential value today, the Supreme Court affirmed, confirming the patent-eligibility of the Diehr claims. Notwithstanding the “judicially created” or “implied” exceptions to §101, Diehremphasized that the same interpretation principles applied to the patent-eligibility statute as with any other provision: The “common and ordinary meaning” of the words used therein applied, and “courts could not read into the patent laws limitations and conditions which the legislature has not expressed.” Id. at 182 (citation omitted). Diehr also reiterated that it must interpret §101 mindful of Congress’s intent that “statutory subject matter includes anything under the sun that is made by man.” Id. at 182 (quoting Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980); S. Rep. 1979, 82ndCong. 2d Sess., 5 (1952); H.R. Rep. No. 1923, 82nd Cong., 2nd Sess. 6 (1952)). And it referred to the “historical purposes of the patent laws and §101 in particular,” Diehr, 450 U.S. at 181, indicating courts must interpret §101 consistent with the Founders’ vision for “liberal[ly]” encouraging “ingenuity,” Chakrabarty, 447 U.S. at 308-09 (“The [Patent] Act embodied Jefferson’s philosophy that “ingenuity should receive a liberal encouragement.”) (quoting 5 Writings of Thomas Jefferson 75-76 (Washington ed. 1871)).

Given this wide patent-eligibility berth, Diehr recognized that a “claim drawn to subject matter otherwise statutory,” i.e., eligible, does not become ineligible “simply because it uses a mathematical formula, computer program, or digital computer.” Id. at 187. Indeed, Diehr rejected the notion that having even “several [claimed] steps” on a “mathematical equation and a programmed digital computer” (i.e., ineligible subject matter) necessarily rendered the claim ineligible. Id. at 185. Instead, Diehr recounted classic examples for the three longstanding but “implied exceptions” to § 101’s eligibility criteria, illustrating that patent protection doesn’t extend to an abstract idea “of itself,”or for a law of nature or natural phenomenon “itself.” Id. Thus:

[A] new mineral discovered in the earth or a new plant found in the wild is not patentable subject matter. Likewise, Einstein could not patent his celebrated law that E=mc[2]; nor could Newton have patented the law of gravity. Such discoveries are “manifestations of . . . nature, free to all men and reserved exclusively to none.”

Id. (“An idea of itself is not patentable,” …. “A principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented …”) (citations omitted).


A. Diehr Distinguishes Flook (1978) and Benson (1972).

Moreover, Diehr explained that the Court’s then-recent precedents on these §101 exceptions stood “for no more than these [same] long-established principles.” Id. Indeed, in each of Parker v. Flook, 437 U.S. 584, 587 (1978) and Gottschalk v. Benson, 409 U.S. 63, 64, 72 (1972), the PTO examiner indisputably found and the parties agreed that the respective claims there were “in practical effect on the formula itself” for computing an “updated alarm limit” (Flook) and, “in practical effect … on [an] algorithm itself” “for converting binary-coded” numbers (Benson). In each case, the Supreme Court concluded that claims such as these were ineligible. Id. The dispute and analysis in those cases focused then on a point which no one disputes today, viz., whether an algorithm “itself” was ineligible subject matter. E.g., Benson, 409 U.S. at 67-72.

“In contrast,” said the Court, Diehr’s multi-step claims “do not seek to patent a mathematical formula or other patent-ineligible concept. Instead, they seek protection for a [multi-step] process of curing rubber:

[Diehr’s claimed] process admittedly employs a well-known mathematical equation, but they do not seek to pre-empt the use of that equation. Rather, they seek only to foreclose from others the use of that equation in conjunction with all of the other steps in their claimed process [for curing rubber] …. Obviously, one does not need a “computer” to cure natural or synthetic rubber, but if the computer use … significantly lessens the possibility of “overcuring” or “undercuring,” the process as a whole does not thereby become unpatentable subject matter.

Id. at 187. Accordingly, the Court repeatedly described Diehr’s claims as drawn not to an ineligible concept, such as an equation, but instead to a “physical and chemical process for molding” and curing rubber products. 450 U.S. at 180, 184. As it reasoned, this claimed rubber-molding process in turn related to the “[i]ndustrial processes … which have historically been eligible to receive the protection of our patent laws.” Id. And it concluded that “[b]ecause we do not view [the Diehr] claims as an attempt to patent a mathematical formula, but rather to be drawn to an industrial process for the molding of rubber products, we” uphold the claims’ eligibility. Id. at 192-93.

B. Diehr Uses “Directed to,” “Drawn to,” and “Recited” When Referring to the Narrow Scope of Claims Subject to a §101 Implied Exclusion, unlike Flook.

Beyond the analysis above, Diehr used arguably more restrictive phrases than Flook when describing the claimed matter subject to the §101 “exceptions.” For example, whether purposefully or not, Diehr used the terms “drawn to,” “directed to,” and “recited” interchangeably, indicating again that a claim was subject to an implied §101 exclusion if written on, essentially on, or “in practical effect on” an abstract idea “itself,” or law of nature or natural phenomena itself. See, e.g., 450 U.S. at 181 (recounting procedural history and Diehr’s multi-step rubber-molding claim as a “claim drawn to subject matter otherwise statutory does not become nonstatutory because a computer is involved. [Diehr’s] claims were not directed to a mathematical algorithm [although “several steps” recited its use] or an improved method of calculation but rather recited an improved process for molding rubber articles”); id. at 186 (summarizing Flook, supra, as having “claimsdrawn to a method for computing an ‘alarm limit’”); see also id. at 187. To that same end, Diehr instructed that courts conducting this §101 analysis must consider a patent’s “claims … as a whole” and especially “a process claim because a new combination of steps in a process may be patentable even though all the constituents of the combination were well known and in common use before the combination.” Id. at 188.

On the other hand, the Flook decision itself used a range of terms, both narrow and broad, when referring to the claimed matter subject to a §101 judicial exclusion—terms such as what the claims “cover,” “are directed essentially to,” “involved in,” and “describe.” See, e.g., 437 U.S. at 586 (“The [Flook] claims cover any use of [Flook’s] formula … involved in a process comprising the catalytic chemical conversion of hydrocarbons. They do not, however, cover every conceivable application of the formula.”); id. at 587 (recounting that PTO examiner found that “a patent on this method ‘would in practical effect be a patent on the formula or mathematics itself” and that the “examiner concluded that the claims did not describe a discovery that was eligible for patent protection”); id. at 590 (describing the “algorithm” or “mathematical formula involved in” Gottschalk v. Benson, supra, and that recited the formula “itself”); id. at 595 (quoting with approval the CCPA’s analysis that “if a claim is directed essentially to a method of calculating, using a mathematical formula, even if the solution is for a specific purpose, the claimed method is nonstatutory”) (citation omitted). Benson similarly used “cover” and “involved” to refer to ineligible claims whose body recited only the algorithm itself, as further reflected in the opinion’s appendix and by the PTO examiner’s “itself” fact-finding. 409 U.S. at 64, 68, 71-72.

C. Under Diehr, §102-103 and What was “Well-known” and Conventional are “Irrelevant” to Whether the Claimed Subject Matter is §101 Eligible.

Diehr reached one other key holding, still extant today. Examining §101’s text and legislative history, Diehrheld that considerations of what claim elements “were well known and in common use” before the claimed invention—or whether those claims were “novel” or “non-obvious”—had “no relevance in determining whether the subject matter of a claim” was §101-eligible. Id. at 189-90. As Diehr explained, those sections on patentability, such as §102 on “novelty,” addressed what was “well known” and conventional. Id. And the PTO could still determine “later” that the claims didn’t deserve patent protection because they couldn’t meet the “statutory conditions of novelty under §102 or non-obviousness under §103. But rejection on either of these grounds [doesn’t] affect the determination” that the claims recite patent-eligible subject matter under §101. Id. at 191. Consistent with this holding, the Diehr majority made no mention of an “inventive concept” analysis, first raised in Flook, supra, that perforce required analysis of what was “well-known,” “conventional,” and new or obvious.

D. Justice Stevens’ Dissent Highlights that Diehr Rejected Flook’s “Inventive Concept” Test and Limited the “Implied” Exceptions to §101.

As the author of Flook, supra, Justice Stevens’ lengthy dissent in the Diehr case is telling for several reasons. First, while tracing the history of presidential commissions, the PTO’s, the CCPA’s, and the Court’s treatment of computer technology, his dissent made clear that the Diehr majority had overruled and even “trivialize[d]” Flook and Benson, supra. See Diehr, 450 U.S. at 205. Specifically, said Justice Stevens, Flook had “clarified” Benson such that its §101 analysis “was not limited” to claims that “wholly preempt[]” an algorithm or that claim an “algorithm itself.” Id. at 204. But as the dissent admitted, the parties in those cases agreed, and the PTO indisputably found, that the respective claims-at-issue were “in practical effect” on such an “algorithm itself.” See, e.g., id. at 211-14.

Second, Justice Stevens urged that his Flook opinion had explained the “correct” §101 test for assessing the eligibility of a patent claim “employing” an algorithm—viz., the “inventive concept” test not used or even mentioned by the Diehr majority. 450 U.S. at 204. As he noted, the CCPA had not “enthusiastically received” Flook’s “inventive-concept” test, with the CCPA decisions saying Flook had “erroneously commingled distinct statutory provisions which are conceptually unrelated.” Id. at 204. And he expressly faulted the Diehr majority for “fail[ing] to focus upon what Diehr claims to have discovered” and invented. Id. at 212-13, n.36.

Third, in proceeding to apply (or “commingle”) the “irrelevant” inventive-concept test nonetheless, Justice Stevens assessed what was known at the time about the rubber-curing process. Id. at 208. In so doing, he found it “difficult to believe” that Diehr’s rubber-curing patent application disclosed anything “novel.” Id. Despite this, Justice Stevens turned and criticized the Diehr majority for “completely disregard[ing]” the “distinction between the [eligibility] issue” under §101 and whether the invention “is in fact novel” under §102. Id. at 211-12.

II. Justice Breyer’s 2006 Corp. Dissent from the Supreme Court’s DIG

Diehr thereafter stood as the Court’s last word on §101 for essentially 30 years. That timeframe may reflect that Diehr had stabilized §101 law and “liberally” promoted investment and innovation. It may also reflect that the Court was content to leave the issue to the new “patent” court that went into existence the year after Diehr, namely, the Federal Circuit.

Whatever the reason, in 2006, Justice Breyer issued a notable 14-page dissent in a §101 case that the Court dismissed as improvidently granted, reasoning the petition had not specified §101 as the basis of its appeal. Lab. Corp. of Am. Holdings v. Metabolite Labs., Inc., 548 U.S. 124, 134 (2006) (Breyer, J., dissenting). Joined by Justices Stevens and Souter, Breyer urged that “clarification of the scope of patentable subject matter” presented “an important” question of “public interest,” requiring a Court decision “sooner rather than later.” Id. Beyond that, Breyer emphasized his views on the §101 merits, liberally citing Diehr and Flook, supra, and presaging the analysis that was to come in his 2012 Mayo opinion. His dissent urged, for example:

  • That the claimed diagnostic test in Corp. merely alerted doctors to the “natural phenomena” of the “correlation between homocysteine and vitamin deficiency,” id. at 134-35;
  • Doctors could “use any test at all” to obtain these results and, per the claims, merely had to consider or “think about them” when treating patients, at 136-37;
  • If permitted to stand, §101 and patents such as these would allow a greater patent thicket to develop—one where “too much patent protection can impede rather than ‘promote’” “the free exchange of information, for example by forcing researchers to avoid the use of potentially patented ideas, by leading them to conduct costly and time-consuming searches of existing or pending patents, by requiring complex licensing arrangements, ….,” at 126-27 (emphasis in original).

Given this, Justice Breyer’s dissent concluded that the claimed invention is “invalid, no matter how narrowly one reasonably interprets that ‘natural phenomena’ doctrine.” Id. at 134-37. His extensive foray into the merits said nothing about claims needing to demonstrate an “inventive concept” to prove §101-eligible. That made sense. After all, while joining Breyer’s dissent here, Justice Stevens had also repeatedly made clear in his own Diehr dissent some 25 years earlier that the Diehr majority opinion itself had abrogated the “inventive concept” test.

III. The Next Generation of §101 Cases: Bilski’s Machine-or-Transformation “Clue”

The Court, of course, and Justice Breyer in particular eventually got their §101 chance, leading to the controlling Mayo-Alice regime today. But it first decided Bilski, holding in a splintered 5-4 decision that the Federal Circuit’s “machine-or-transformation” test for a process claim was merely an “important clue” to §101 eligibility, notthe lone test. Bilski v. Kappos, 130 S. Ct. 3218, 3227 (2010). Writing for the majority, Justice Kennedy indicated this test might not widely apply in the “Information Age,” although it suggested that claims to “inventions grounded in a physical or other tangible form” may well qualify under §101. See id. at 3227. Otherwise, Bilski emphasized that the “ordinary meaning” of the Patent Act’s terms applied; that “[a]ny suggestion” to the contrary “in this Court’s case law” has served only to explain the existence of the three “implied” §101 exceptions; and that, given this ordinary-meaning principle, the Act didn’t permit the machine-or-transformation test to stand as the only test for assessing eligibility. Id. at 3226-27. The Court nevertheless applied the machine-or-transformation test, affirmed the ineligibility judgment, but offered no controlling test or guidance. See, e.g., id. at 3231.

A. After 30+ Years, Mayo Dramatically Changes the Law on U.S. Patent-Eligibility—All While Claiming It was Following Precedent.

But Justice Breyer’s unanimous 2012 opinion in Mayo did supply a controlling §101 framework—and dramatically changed the U.S. patent laws as a consequence.

Citing Flook, Mayo first indicated it must interpret the Act (and judicial “exceptions” thereto) skeptically, with notions that the patent “draftsman” could evade the §101 exceptions merely by adding conventional elements or other such “post-solution activity” to a claim. See, e.g., 132 S. Ct. at 1294. Mayo otherwise said nothing about the “ordinary meaning” principle that Bilski and Diehr emphasized, although it recognized that the “exclusivity” of the patent laws provides the “monetary incentives” to invest and “invent[].” Id. at 1305.

Moreover, Mayo emphasized it was not overruling or yielding to “any temptation to depart from” the Court’s §101 precedents, including the two cases “most directly on-point”: Diehr and Flook. 132 S. Ct. at 1298, 1302. From the outset, however, Mayo pronounced that the §101 cases “insist” on an assessment of a claim’s “inventive concept,”citing Flook—i.e., the very “inventive concept” case that Justice Stevens himself recognized, in dissent, had been “trivialized” and overruled (at least in part) by the Diehr majority. 132 S. Ct. at 1294.

Mayo also expanded the sweep of its “inventive concept” test to patent claims beyond those that were merely on an ineligible concept “itself”—as was characterization of the claims-at-issue in Benson and Flook, supra. See, e.g., id. at 211-14 (citing Flook, 437 U.S. at 586; Benson, 409 U.S. at 71-72.) Indeed, Mayo now required that a patentee demonstrate an “inventive concept” for any claim that “focuses on” such an ineligible idea or natural law. 132 S. Ct. at 1294. And for all such claims, held Mayo, a patentee must show how the “other elements or combination of elements” in the claim “amounts to significantly more than a patent upon the natural law” or ineligible idea itself—i.e., an “inventive concept.” Id.

A. Mayo’s Treatment of Diehr’s “Conventional” Findings and Holdings

In justifying these changes to §101 law, Mayo not only disregarded the Diehr holdings described above, but also mis-described Diehr’s core facts and analysis, described below.

First, according to Justice Breyer in Mayo, Diehr had “nowhere suggested” that the multiple steps recited in the Diehr claim for rubber curing “were in context obvious, already in use, or purely conventional.” 132 S. Ct. at 1299. But the PTO in Diehr expressly found that the claimed rubber-curing steps there were “conventional and necessary to the process and cannot be the basis of patentability”—findings left undisturbed on appeal. 450 U.S. at 178.

Second, Mayo alleged Diehr had applied the Mayo-Flook “inventive concept” test, rather than abrogated it. More specifically, Justice Breyer in Mayo alleged that, in Diehr, the “other [claim] steps apparently added [something inventive] to the formula” in the claimed rubber-curing process and must have thereby “transformed [Diehr’s claimed] process into an inventive application.” 132 S. Ct. at 1299. But Diehr repeatedly undercuts this Mayo assertion as well, holding that Diehr’s multi-step claims were not “an attempt to patent a[n] [ineligible] mathematical formula, but rather [were claims] drawn to an industrial process for the molding of rubber products,” 450 U.S. at 192-93, or to a “physical and chemical process for molding” and curing rubber products, id. at 180, 184. In other words, the multi-step claims in Diehr were not “drawn to” a formula or any other ineligible concept in the first place, precluding any need to reach the “inventive concept” test—even if Diehr had not rejected it. See, e.g., id. Moreover, Justice Stevens’ Diehrdissent recognized the Diehr majority had overruled this “inventive concept” test.

Third, and relatedly, Mayo ignored Diehr’s unqualified holding that an analysis of the prior art, novelty, obviousness, and what elements of the claim “were well known and in common use” is “irrelevant” to §101. Citing Flook again, Mayo instead analyzed the prior art and considered what was “conventional and obvious” and “well-understood, routine, and conventional”—the term of art now applicable to the “inventive concept” step of the two-step Mayo-Alice test. See 132 S. Ct. at 1297-98. As Mayo conceded, the §101 eligibility analysis may “overlap” after all with the §102 “novelty” analysis. Id. at 1304.

B. Mayo’s New §101 Test and Application to Diagnostic Testing Claims

On the merits of its new §101 test, Mayo also rejected as ineligible the claimed diagnostic test for “administering” thiopurine drugs to a “subject” and measuring the body’s reaction in the bloodstream to determine whether doctors should “increase” or “decrease” a therapeutic drug for auto-immune disease. Id. at 1297. As it explained, the claims merely described the natural “correlation” between the body’s reaction to an administered compound (“thiopurine”), meaning the claims were “focused” on a natural law. Id. at 1296-97. And their recitation of additional steps on “administering” the drug and of measuring the results—“through whatever [test or] way the doctor or the laboratory wishes”—were not “inventive,” but merely an instruction to make doctors aware of this natural relation and take this information “into account when treating his patient.” Id. at 1298. And as in Lab. Corp., supra, Justice Breyer emphasized that the Mayo ruling would cut against the “vast thicket of exclusive rights” that otherwise “might impede the flow of information  that might permit, indeed spur, invention ….” Mayo, 132 S. Ct. at 1304.

The Bilski “machine-or-transformation” test didn’t change this outcome, held Mayo. That test is merely an eligibility “clue” and couldn’t supplant the “natural law” exception to §101. Id. at 1303. Notably, Mayo also addressed with approval but distinguished a well-known “English case,” Nielson, that had upheld the eligibility of claims where a “very valuable” machine had specifically applied the natural law or principle at issue. Id. at 1299-1300 (citation omitted). Cases dating back to O’Reilly v. Morse in 1854 have similarly evaluated cases abroad for determining §101-eligibility issues. See, e.g., 56 U.S. 62, 112-21 (1854).

C. Alice Refines Mayo and Applies the “Directed to” Eligibility Framework

With Mayo having restored (and even expanded) various Flook-based principles, the Court’s 2014 opinion in Alice then refined Mayo to fashion the familiar two-part “framework” used in all §101 cases today; namely, (1) whether the claims-at-issue “are directed to” a patent-ineligible concept, i.e., an abstract idea, law of nature, or natural phenomenon; and (2) if so, whether the additional claim elements, when considered “individually or as an ordered combination,” demonstrate an “inventive concept,” i.e., elements “sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.” Alice Corp. Pty Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014). As in Mayo, Alice cautioned that courts must “tread carefully in construing this exclusionary principle, lest it swallow all of patent law.” Id. at 2354. To that point, Alice reiterated that “an invention is not rendered ineligible for [a] patent simply because it involves an abstract concept.” Id. (citation omitted).

In referring to this framework, Alice appears to be the first of the §101 cases that repeatedly used “directed to,”as opposed to phrases such as “drawn to,” “cover,” “directed essentially to,” “describes,” “involved in,” and the like, as used in Diehr, Flook, and Benson, supra. Otherwise, Alice itself, like the other recent §101 precedents, used various “directed to” stand-ins when referring to it—such as “drawn to” and “involves”—thus appearing to make its meaning and boundaries more difficult to discern. See, e.g., id. at 2353, 2356. More concretely, Alice held that the two-part ineligibility test applied to “abstract ideas” that included well-known business methods—methods such as the claimed scheme at issue there for “mitigating ‘settlement risk,’ i.e., the risk that only one party to an agreed-upon financial exchange will satisfy its obligation.” Id. at 2352, 2356 (describing “intermediated settlement” as a “fundamental economic practice long prevalent in our system of commerce”). Alice otherwise declined to “delimit the precise contours of the ‘abstract ideas’ category,” adding there existed “no meaningful distinction” between this “settlement” practice and the abstract idea of “risk-hedging” in Bilski, supra. 134 S. Ct. at 2357.

As to step two of its framework, Alice held that such abstract or presumptively ineligible claims couldn’t demonstrate an “inventive concept” merely because a “generic computer” helped implement them. E.g., id. at 2358. That analysis might differ, however, said Alice, if “for example” the claims “purport to improve the functioning of the computer itself,” or improve “any other technology or technical field.” Id. at 2359-60. But the Alice “intermediated settlement” claims there did no such thing, the Court concluded, as it used “some unspecified, generic computer.” Id.

D. The PTO issues its Guidance on §101—and “Additional” Guidance in Response.

As is well-known, the Mayo-Alice framework has effectuated a massive change in patent law, leading to numerous rulings that have rendered ineligible claims at (for example) the Rule 12(b) motion-to-dismiss stage, the summary-judgment stage, and stages in between and after (including appeal). While litigation has sought to change this course, the Executive Branch has not stood by silent. Following a 2016 memorandum, the PTO in January 2019 issued a revised Patent Eligibility Guidance (“PEG”) on how its examiners would conduct the §101 analysis. In so doing, the PTO made plain that it was seeking to improve the “predictability,” “stability,” and “consistency” in the patent-eligibility analysis—goals that many have opined have been sacrificed since Mayo and that have in turn undermined the invest-and-innovate objectives of U.S. patent law. As part of this January 2019 Guidance, the PTO detailed its view of the Mayo-Alice process or “prongs” to follow and identified numerous examples for each of the three main “Judicial Exceptions” to §101 (i.e., the implied exceptions for “abstract ideas,” natural laws, and natural phenomena), as well as judicial cases that the Office considered helpful or not helpful.

In April 2019, the Federal Circuit held that this §101 Guidance and the examples therein didn’t bind the court, require Skidmore deference, or otherwise save the patentee’s case from the trial court’s Rule 12(b)(6) dismissal on §101 grounds. See Cleveland Clinic Foundation v. True Health Diagnostics LLC, 2018-1218, at *12-14 (Fed. Cir. April 1, 2019) (non-prec.). Among other reasons, the PTO’s Guidance didn’t have formal rulemaking effect and the court had to consistently apply its own Article III precedent. Id. As a result, the court again held ineligible another claimed diagnostic test—one that it found nearly indistinguishable from the diagnostic tests described in its other §101 precedent. Id.

Thereafter, in mid-October 2019, the PTO issued its additional PEG on §101. This PEG continues to set forth the procedure and analysis that the PTO examiners should follow in applying the Office’s view of §101 and the Mayo-Alice “prongs” and “Judicial Exceptions” thereto. Unlike the January 2019 PEG, however, this Guidance no longer takes the case-comparison approach taken earlier, given concerns that judicial rulings on §101 have now become too numerous and too inconsistent to predictably and uniformly apply. Accordingly, and as the authors here respectfully agree, this Guidance takes a step back and instead applies the “firmly rooted” precedents and principles on § 101 by the Supreme Court.

IV. The Supreme Court’s §101 Precedents—Practical Points and Observations for Patent Litigators and Judges

With this precedential foundation, we believe that the controlling §101 case law lends itself to consideration of the following points and observations—for patent litigators and judges alike.

  1. Use the Statute and Principles of Statutory Interpretation. While seemingly case law driven, bear in mind that §101 and the application of the “implied exceptions” thereto still often depend on interpreting and applying those statutory sources, both textual and “implied.” Thus, parties and judges would do well to recall, for example, the “ordinary meaning” principles applicable to the §101 text, what it says, and what it does not say, as the Court emphasized in Bilski and Diehr, supra. Similarly, parties can point to Congress’s “anything under the sun” intent as to the breadth of eligibility under §101—and conversely, to the narrowness of the implied exceptions thereto, see, e.g., Diehr; Chakrabarty, supra. The same goes for the precedents’ discussion on the goals of the U.S. Constitution and patent laws in wanting to promote “monetary incentives” to invent, Mayo, supra, and to “liberally encourage”invention, as explained by the Founders and Thomas Jefferson (the author of the first U.S. patent statute), Chakrabarty, 447 U.S. at 308-09. So too with the Mayo-Alice cautionary instruction that courts must “tread carefully” in applying this two-part framework, given risks that the “implied exceptions” might “swallow up” all of patent law. Those looking to narrow the exceptions might also reference other interpretative principles that reflect the law’s skeptical view of “implied” statutory terms—principles such as those that disfavor “implied” statutory repeals of sovereign immunity, for example, or that disfavor the “implied” preemption of state laws. Cutting the other way is the Mayo-Alice emphasis on applying these exceptions with a skeptical eye for the “draftsman’s art,”e., the notion that patent drafters will write claims in a way to obscure their reliance on an ineligible subject.
  2. The Scope of the “Directed to” Formulation. Unlike (it seems) the Supreme Court’s recent §101 case law, the Federal Circuit has sought to impose some rigor on the “directed to” test now routinely used in light of Alice. But both that Federal Circuit guidance on saying “directed to” means putting a “focus on the claimed advance,” see, e.g., Training Techs. Int’l v. IBG LLC, 921 F.3d 1378, 1384 (Fed. Cir. 2019), and the Supreme Court’s varying formulations (e.g., “recited,” “drawn to,” “cover,” “directed essentially to,” “focus on,” “involved in,” “described”), have quite arguably rendered the “directed to” formulation overly subjective and panel-dependent at the Federal Circuit.
    But it doesn’t have to be that way, and shouldn’t. After all, patent lawyers and judges alike could just focus more (so to speak) on the particular cases that more concretely illustrate what “directed to” (or whatever formulation the cases uses) may properly encompass. This includes the Supreme Court’s cases in not just Mayo and Alice, but also the “most directly on-point precedents” that Mayo emphasized it was honoring; namely, Diehr and Flook, supra, as well as Benson. As detailed above, Flook and Benson reflect that the proper scope for determining whether a claim is directed to an ineligible concept is whether the claim is essentially on the abstract idea, natural law, natural phenomenon “itself”—a formulation that approximates the “per se” standard for, e.g., British European patent laws.
    Other litigants and courts at a different stage—say, for an en-banc rehearing petition—may consider whether the Supreme Court precedents specifically foreclose debate on the “directed to” meaning itself, as opposed to its precedents merely illustrating and informing that phrase. As the Court has long held, a point of law, merely “assumed” in an opinion, not “squarely addressed,” is not authoritative, and leaves the next court (or panel) “free to address the issue on the merits.” Brecht v. Abrahamson, 507 U.S. 619, 631 (1993). As discussed earlier, the Court’s §101 precedents don’t appear to “squarely address” the meaning of this now-ubiquitous §101 phrase, meaning the Federal Circuit can still likely expound on the “directed to” scope accordingly.
  1. Applying Diehr as “Good Law” in All Respects—Or as Modified by Mayo. As also detailed above, the Court in Mayo expressly purported to adhere to Diehr and other precedents, without acknowledging that it had modified Diehr in critical respects. Accordingly, those looking to apply Diehr’s full slate of holdings across-the-board (for example) could still plausibly do so, in our view, given Mayo’s assertion that it merely followed the “directly on-point” Diehr And it appears that some lawyers and judges have taken this approach recently in the Federal Circuit, urging for example that Diehr’s “irrelevant” holding for §101 eligibility bars consideration of what was “conventional” and “standard” (or not “new” and “obvious”) for both steps of the MayoAlice framework. See, e.g., Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC, 915 F.3d 743, 761-62 (Fed. Cir. 2019) (Newman, J., dissenting). And that approach, to be sure, may gather force by virtue of certain jurisprudential commands. The Supreme Court, for example, has instructed in strident and even emphatic terms that lower courts are not to overrule the Court’s precedential holdings, even when it appears that the basis for that holding has eroded, or the holding itself seemed “unsounded when decided,” “moth-eaten,” or “increasingly wobbly.” State Oil Co. v. Khan, 522 U.S. 3, 20 (1997). The bottom line is that a court such as the Federal Circuit must still apply those holdings and leave it to the “Court’s prerogative alone to overrule,” modify, or uphold its own precedents. Id. Otherwise, parties looking to apply or distinguish a modified Diehr decision could so do by reference to the case law analysis set forth herein and what Mayohas done with Diehr and §101.
  2. Bilski’s Machine-or-Transformation Test and Other Bilski Principles are Available. Bilski’s machine-or-transformation test remains good law, albeit as an “important clue” to eligibility only. And Bilski itself, following that “clue” and without any other test to follow at the time, upheld the Federal Circuit’s application of it accordingly. Further, Bilski made clear that “inventions grounded in a physical or other tangible form” may qualify under §101 as well—a point that may become more important as the §101 case law attempts to expand beyond, for example, computer-implemented business methods and diagnostic tests—and into processes that might seem “mechanical” or “physical” and previously thought unlikely to fail under the Mayo-Alice See, e.g., AAM v. Neapco Holdings, 939 F.3d 1355, 1365-68 (Fed. Cir. 2019) (applying Mayo-Alice two-part test to a claimed process for manufacturing specific auto parts), rhr’g and rhr’g en banc petition pending. That said, based on a quick review of Federal Circuit §101 precedents since Bilski, few if any cases appear to have adopted the machine-or-transformation test, whether as a dispositive point or an “important” clue to eligibility.
  3. Eligibility Standards in Foreign Jurisdictions—e.g., China, Europe, England. Patentees facing this §101 issue also shouldn’t forget to reference foreign patent laws—and specifically, the more-favorable foreign patent laws on the patent eligibility for diagnostic testing, business methods and software, for example—in countries such as England, China, or the European Union. For more than 150 years, the Supreme Court has favorably evaluated cases from foreign jurisdictions—England, for example—in assessing whether a U.S. patent claim has qualified as statutorily eligible for patent protection. See, e.g., Mayo, 132 S. Ct. at 1299-1300 (assessing English Nielson case on eligibility issue); O’Reilly, 56 U.S. at 112-17 (1854) (same).
    Accordingly, the precedent invites reference by courts and litigators alike to foreign jurisdictions whose patent-eligibility criteria may inform the “implied” judicial exceptions under U.S. patent law. Patent owners, for example, may urge that, as to the scope and meaning of the Mayo-Alice “directed to” ineligibility step (i.e., Alice step one ), England and Europe apply a narrow “per se” test—as in, a claim is ineligible for patent protection if it claims an abstract idea “per se.” They may fairly argue for example that this English “per se” test comports with the Supreme Court’s Flookand Benson holdings, where the implied §101 exceptions similarly applied to claims that were essentially or in “practical effect” on the idea, natural law or phenomenon “itself.” Similarly, some of the world’s other large patent systems, such as China’s and Europe’s, have eligibility criteria that purportedly afford more patent protection than U.S. law to diagnostic testing and computer-implemented business methods. Notably, these foreign cases are also notdirectly informing a U.S. statutory text per se (if you will), namely, 35 U.S.C. §101, but rather the “implied” or judicially created exceptions to the statute. Thus, it seems to us that there would be no principled objection, as in years past, with using foreign law to inform such a judicially created ineligibility standard, as opposed to the U.S. Constitution or a federal statute.
  1. Alice’s “Examples” of Eligible Claim Elements That Recite an Improvement in the Functioning of Computer Technology or in Other “Technology or Technical Fields.Alice said that the ineligible computer-implemented idea there for “mitigating ‘settlement risk’” could have withstood Alice’s test in other circumstances, as noted above. Specifically, the claims could have demonstrated an “inventive concept” if its claim elements reflected an “improved functioning of a computer or in any other technology or field.” 134 S. Ct. at 2359-69. Patent litigators and Federal Circuit panels didn’t miss this Alice suggestion, as they have often raised this exception-to-the-exception for “improved computer functioning” or improved technical areas. See, e.g., DDR Holdings, LLC v. Hotels.com, 773 F.3d 1245 (Fed. Cir. 2014); Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016). Litigators and judges will surely continue to raise or explore the issue, particularly given the growing precedent that now backs it.
  2. The Scope or Meaning of Exceptions for an “Abstract Idea, Law of Nature, Natural Phenomenon. As with other decisions, Alice declined to define the “precise contours” of an “abstract idea,” and other decisions over time (both recent and dated) have split on whether the ineligible concept at issue did indeed constitute, for example, a “law of nature.” See, e.g., AAM, 939 F.3d at 1365-68. In any event, given the breadth by which courts and parties alike have invoked the Mayo-Alice framework, the issue whether the cited “ineligible concept” is “directed to” an “abstract idea” or “natural law,” for example—or whether the claim is directed to all or only a portion of such an ineligible “idea” or “law,” or maybe none at all—will continue to present itself for consideration by both sides.
  3. Judicial Deference or Disregard of the PTO Agency’s §101 Guidance? As recounted above, the Federal Circuit recently held in Cleveland Clinic v. True Health that the PTO’s §101 Guidance didn’t bind the court or trump its case law. As an application of first principles, Cleveland Clinic, supra, may well represent the type of rulings that the Federal Circuit will continue to issue in response to Guidance-supported §101 arguments. As others have pointed out, the Patent Office didn’t appear to promulgate these Guidance documents pursuant to the formal notice-and-comment rulemaking procedures required by the Administrative Procedures Act for “substantive” legal rules (e.g., rules that change the requirements for patentability). See, e.g., 5 U.S.C. §553(c). Further, as described therein, Cleveland Clinic did not present inter alia the Chevron-type ambiguity with the statute that might otherwise permit consideration of the “reasonableness” of the agency’s (the PTO’s) views or response on the topic. Instead, the Federal Circuit affirmed the trial court’s ruling even insofar as it held that the PTO’s §101 Guidance didn’t merit the lesser Skidmore

So, the reasonable and practical question here becomes, and especially for patentee-advocates: Why bother citing to such agency Guidance at all, particularly at a time when notions of deference to government agencies have waned? And the answer is, first, that as a co-equal branch of government, the Executive Branch and the PTO therein certainly have the power and even the duty to issues its views on these important questions, including critical questions about the §101 laws and their meaning. After all, the PTO has as much a hand (maybe more) in interpreting and applying these statutory patentability requirements on a day-by-day basis as the federal courts. Moreover, the PTO’s Guidance here appears as an extensive and detailed notice that the agency has provided to the public about how it will interpret and apply a statute (§101). As the Supreme Court has held, agency interpretative documents such as these do not require notice-and-comment rulemaking or other formal APA procedures. E.g., Perez v. Mort. Bankers Ass’n, 135 S. Ct. 1199, 1204, 1206 (2015) (interpretative rules “advise the public of the agency’s construction of the statutes and rules which it administers”); Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1336-37 (Fed. Cir. 2008) (stating 5 U.S.C. §553 and 35 U.S.C. §2(b)(2)(B) do not require notice-and-comment rulemaking for “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice”). In other words, producing an agency interpretive document such as the PEG represents a valid and responsible exercise of the agency’s power.

Moreover, as Cleveland Clinic suggests, the PTO’s views on §101 warrant a degree of respect for the expertise they offer on often-difficult and arcane patent-law subjects, principles, and doctrines. Judge Lourie’s opinion in Cleveland Clinic thus appropriately referred to how the Federal Circuit “greatly respects the PTO’s expertise on all matters relating to patentability, including patent eligibility,” even though not bound by it. Cleveland Clinic, 2018-1218, at *13-14. The Supreme Court’s Skidmore principle, moreover, may afford “some deference” to “informal agency interpretations of ambiguous statutory” provisions, depending on the degree of “the agency’s care, its consistency, formality, and relative expertness,” and the “persuasiveness of the agency [PTO’s] position.” E.g., id. (citation omitted).

Accordingly, as reflected in Cleveland Clinic, supra, our sense is that practitioners and courts should appropriately re-raise and re-consider the PTO’s 2019 PEG and the “expertise” it offers on §101 and the Mayo-Alice framework—or otherwise be prepared to address it if opposed to their interpretation. By appearances and depth-of-analyses alone, the 2019 Guidance documents reflect that the Patent Office prepared them with due care, consistency, formality, and expertise—as one might expect for any patent issue addressed by the Patent Office, but most especially for a §101 issue of such overwhelming concern to the U.S. patent system. Generally speaking, then, it seems to us that the more a party or “side” can enlist the relevant expert agency—such as the PTO—to support its position on a particular §101 issue, the more likely over time that position may gain currency and become part of the law itself. And that seems all the truer still when, as discussed above, the debate on the issue could ultimately turn on a fair reading of the Supreme Court’s core §101 precedents.


Undoubtedly, the additional observations and points for ongoing consideration in patent litigation today are near-endless, and at minimum would surely include additional discussions on the scope of (for example) the “preemption” concerns that underlie the patent-eligibility criteria itself. Be that as it may, the broader point here is that lawyers and judges in the field still have considerable room to argue and address a multitude of key patent-law issues. They are of course fundamental not only to clients and parties, but to all the country—and its well-being and safety.


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ID: 147878811
By: chrisdorney


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Join the Discussion

13 comments so far.

  • [Avatar for Anon]
    May 3, 2020 09:28 am

    Night Writer,

    I see that you have taken a step back and rephrased (from ‘holding” to ‘reasoning’), so thank you, at least, for that.

    But this line of reasoning runs smack into OTHER conversations we have had (to which you have not given full credit to).

    This (unstated) ‘unconstitutionality’ position is ITSELF unconstitutional and a violation of at least three different Constitutional constraints on the Supreme Court:
    Separation of Powers
    Void for Vagueness
    Advisory Opinions

    I suggest that you dig back into the archives of this site and revisit my arguments in view of your latest comment of (emphasis added):

    If you read Alice carefully, you will see the reasoning is the following. The claims of the Alice case were granted unconstitutionally because they may tend not to promote due [to whatever reasons]”

    I see here that YOU seem to want to backtrack from our discussion and claim credit for my correcting your past positions: “That is argument. It is not a valid argument for many reasons that I have discussed before.

    Let’s give credit where credit is due, my friend.

    Maybe, if you start doing that, then you can actually fully engage on other disagreements that we may have, be those disagreements AI as conceiver (but not in the US Sovereign an inventor) or Trademark law (the necessary functionality of ‘Dot Com’ preventing MERELY that aspect alone, and without more, from moving a generic word to being non-generic in combination).

  • [Avatar for Concerned]
    April 30, 2020 04:38 pm

    Night Wright

    Agree 100%.

  • [Avatar for Night Writer]
    Night Writer
    April 30, 2020 09:52 am

    I think that the Scotus knew exactly what it was doing. This is just like the rule of reason. The Scotus decided to eviscerate antitrust laws and fabricated the rule of reason. The Scotus decided to eviscerate patent laws and came up with Alice.

    If you read Alice carefully, you will see the reasoning is the following. The claims of the Alice case were granted unconstitutionally because they may tend not to promote due to their breadth. That is argument. It is not a valid argument for many reasons that I have discussed before.

    But the key point is that what the Scotus did was just generate a rule that can be applied by the fact finder and that gives the fact finder complete power over what is patentable and what is not patentable. Just like in the rule of reason the judge can just make up whatever they want and conclude either everything is fine or it is not fine.

    That is the point. This was done intentionally by the Scotus. The only hope is Congress.

  • [Avatar for Patent Princess]
    Patent Princess
    April 28, 2020 08:24 pm

    Wow, Judge Paul Michel authoring is a tasty treat! I really respect Him.

    I also really like how this article gives solutions.

    My favorite solution is #5– i think storyboarding international IP mental models will prove to be super valuable. I cant wait to pass the patent bar so I can help correct 101 ??

    The US is a big melting pot, which should mean our inventions are continental, but this arbitrary Alice bar is really restricting us to bland, basic flavors.

    SCOTUS needs a major makeover. Im happy to help. And i will.

    – 1 Angry Woman

  • [Avatar for Anon]
    April 28, 2020 01:12 pm

    Mr. Adamo,

    Were it only so easy. You turn a blind eye to the fact (pronounced by ALL THREE BRANCHES of the government) that the so-called “fully in accord with the relevant caselaw” is a mirage, a phantom, an apparition, itself non-existing given that that same caselaw is riddled with irreconcilable contradictions.

    Shame on any one at this point who either does not know of this, or — even worse, knowing and still pretending otherwise.

  • [Avatar for George D. Morgan]
    George D. Morgan
    April 28, 2020 12:18 pm

    What about legislatively addressing patent eligibility? Isn’t it time to?

  • [Avatar for Bradley Olson]
    Bradley Olson
    April 28, 2020 12:12 pm

    Excellent chronicle on the rise and fall of subject matter eligibility under Section 101. Thank you both for this edifying and frankly alarming retrospective.

  • [Avatar for Pro Say]
    Pro Say
    April 28, 2020 12:10 pm

    Big +1 Ternary. Thanks for your valuable contribution.

    Congress: It’s 2020. Where are you? American innovation needs you.

  • [Avatar for AAA JJ]
    AAA JJ
    April 28, 2020 09:03 am

    “Only Congress can and should do something meaningful about this.”

    True. The rest is all sound and fury, signifying nothing.

  • [Avatar for Ken Adamo]
    Ken Adamo
    April 28, 2020 08:40 am

    Suggest – strongly – that one should read In re Rudy , Appeal No. 19-2301 , slip op.( Fed Cir . April 24, 2020 ) [ Prost, O’Malley & Taranto ] , at 3 – 6, and contrast it with the non-precedential Cleveland Clinic decision that is relied upon in point 8 et seq above. ( re Cleveland Clinic , see slip op. 5 – 6 ) . Also , Director Iancu’s comments during his April 24th AIPLA interview are worth re-listening to, where he substantially echoed – twice – the points made by CJ Prost , writing for the Rudy panel .( See, eg. , ” We agree with Mr. Rudy that the Office Guidance is not, itself, the law of patent eligibility , does not carry the force of law , and is not binding in our patent eligibility analysis ” , slip op. at 4 ; ” We are not , however, bound by the Office Guidance, which cannot modify or supplant the Supreme Court’s law regarding patent eligibility , or our interpretation and application thereof “, slip op. at 5; ” Accordingly, we apply our law and the relevant Supreme Court precedent , not the Office Guidance , when analyzing subject matter eligibility . To the extent the Office Guidance contradicts or does not fully accord with our caselaw, it is our caselaw , and the Supreme Court precedent it is based upon that must control ” , slip op. at 6 ) . But cf. slip op. at 6 ,” Turning to Mr. Rudy’s case , we conclude that although a portion of the Board’s analysis is framed as a recitation of the Office Guidance , in this particular case the Board’s reasoning and conclusion are nevertheless fully in accord with the relevant caselaw. ” ) .

  • [Avatar for Concerned]
    April 28, 2020 05:03 am

    Great article and thank you for your efforts!

    In layman terms, the courts seem more concerned on how a problem was solved, then the fact a problem was solved. Would society really care if an inventor put a generic computer on a shoebox and the combination magically cured a horrible pandemic?

    The motivations for such nonsense are highly suspect. and explain a great deal.

  • [Avatar for Ternary]
    April 27, 2020 10:01 pm

    An excellent article. A great recap of leading cases. It seems though that most arguments against Alice end up not being considered where it counts. Especially arguments that traverse the “preemption allegation” are generally not considered. Not in the USPTO and not in the Courts.

    Trying to reverse Alice and its ill effects in the Courts seems to be somewhat of a fool’s errant. We are still talking about it and we are still unable to resolve it. I cannot recall the millions of arguments, both scientific and legal, that have been offered and tried against preemption allegations. To no avail. I see nothing of the careful assessment of this article anywhere else where it would matter. Well, that is not entirely true. Director Iancu tried. Causing a slap on the wrist by the Federal Circuit.

    It is time we align patent law with the state of technology. Get away from legal history, which mainly shows wrong decisions, based on a misinterpretation of technology. Including Morse, Mackay Radio, Benson, etc. Diehr provided a clear signal how computer technology was about to change everything it touched. Benson clearly provided an example how an implemented algorithm improved the working of a computer (despite what the court decided).

    We will see, after we survive the current crisis, that more diagnostic, preventive and therapeutic medicine will be developed on computer models of the human body. Optimized supply chains depend on complex computer models. Almost any control system nowadays is based on computerized formulas. Computer cryptography is almost pure mathematics, based on intractable problems. Digital electronics goods (including phones and TVs) are basically very fast calculating machines. I don’t even want to start on Artificial Intelligence. Inventive concepts nowadays are largely abstract ideas. We should be happy we can still understand them. This may not be the case when computers seriously start inventing.

    The fact is that many of the leading inventions have their roots in what the Ancients consider “abstract ideas” and they drive huge parts of the economy. Alice has in effect opened Pandora’s Box and released and validated an “anti-science” or perhaps to be fair a “mechanical science” mentality that is not of this time. For some explainable reason, our legal system is unable to adequately deal with technological change. Rather than leading the way in understanding technology, patent decisions seem to reflect the reverse. It has more or less codified what should be considered not a “real” invention, basically by inserting the term “directed to” in decision making. While the article identifies these issues and points a way to possibly resolve issues, it requires to reverse opinions. Which clearly is not going to happen as ideological positions on this have hardened.

    I appreciate Judge Michel’s and John Battaglia’s valiant effort to salvage the debacle called the US Patent System from its demise under its own paradoxes to protect incumbents as well as inventors (and incumbents more than inventors). I am sorry to say that I believe that the American patent system (at least as intended by the Constitution) is no more. And it all has been the doing (and continuing doing) of the courts. Not because of Congress or science, which play no role of significance at all in this.

    Only Congress can and should do something meaningful about this.

  • [Avatar for Pro Say]
    Pro Say
    April 27, 2020 08:48 pm

    Thanks much guys. A superb, keeper explication indeed.

    . . . and to think that our own Congress could drain this innovation-, job-, and life-killing Section 101 / eligibility swamp with but a short, sweet, and simple bill.

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