June 27, 2019 Senators Tillis and Coons Release

June 27, 2019
Senators Tillis and Coons Release Statement on Recent Patent Reform Hearings





As we have previously covered, the Senate Subcommittee on Intellectual Property recently held hearings on proposed revisions to 35 U.S.C. § 101 and related sections of the patent statute. Chairman Thom Tillis (a Republican from North Carolina) and Ranking Member Chris Coons (a Democrat from Delaware) heard testimony from 45 individuals earlier this month. These witnesses, including industry executives and groups, inventors, a former Federal Circuit judge, former USPTO officials, and law professors, discussed the pros and cons of the senators' proposal. The purpose of the revisions and the hearings was to address the series of Supreme Court decisions in the last decade (most recently Alice Corp. v. CLS Bank Int'l) that has made it more difficult to obtain patents on certain types of inventions, most notably those related to software, business methods, and life sciences.

The Senators introduced a draft bill that eliminates the current two-part Supreme Court § 101 test, removes judicial exceptions to eligibility, draws a strict line between the inquiries of §§ 101, 102, 103, and 112, and would result in virtually any invention that "provides specific and practical utility in any field of technology through human intervention" being eligible. The draft bill also changes § 112(f) in a fashion that narrows the interpretation of functional claim language.

On June 24, Senators Tillis and Coons released a statement regarding their takeaway from the hearings. If anything, it reflects an understanding that the law needs to change, the Senators are committed to doing so, and that they are still working out some of the details.

The statement unequivocally acknowledges that there is a problem:

The hearings reinforced what we've been hearing for years — the U.S. patent system with regard to patent eligibility is broken and desperately needs to be repaired. The U.S. Supreme Court has confused and narrowed Section 101 of the Patent Act to the point that investors are reluctant to pursue the innovations that propel our country forward. We heard about studies showing that investors familiar with the current lack of clarity invest less in critical research and development in areas like medical diagnostics and artificial intelligence, at least in the United States.

The current director of the USPTO recently noted that inventors and judges alike struggle on a daily basis to determine "what is in and what is out" and wondered whether even Thomas Edison's famous phonograph patent would survive the courts' recent tests for eligible subject matter.

Likewise, two former USPTO directors testified to this disturbing lack of clarity, and the former chief judge of the U.S. Court of Appeals for the Federal Circuit characterized patent eligibility as "the number one problem in our patent system today." He noted that, despite having personally drafted over 800 patent opinions, he struggled to predict the results in any given case. His view is shared by current Federal Circuit judges, one of whom recently wrote that the lack of clarity in the law made it "near impossible to know with any certainty whether the invention is or is not patent eligible."

Given that, the Senators note that the Supreme Court has had ample opportunity to clarify the law, but has denied over 40 petitions for certiorari regarding § 101 since the Alice decision came down. Thus, Senators Tillis and Coons have concluded that the ball is in Congress's court.

But reform will not be easy. The Senators acknowledge that some witnesses like the state of § 101 as it is and the draft bill could open up areas of patenting that some suggest should be verboten. But they are adamant that this will not derail their efforts:

Not everyone agrees that reform is needed. Some witnesses cautioned that the status quo provides a mechanism to terminate baseless patent infringement lawsuits quickly and efficiently. We hear these concerns, and we invite suggestions to mitigate them. We cannot permit the courts, however, to destabilize our patent system for the sake of deterring nuisance litigation. We can consider legislative provisions directly targeting the behavior of bad actors, and we welcome additional feedback on this point.

Several witnesses urged us not to permit patenting of scientific research per se, mere abstract ideas and nontechnical methods of doing business. It is not our intent to do so. To be clear, our patent system was never intended to protect artistic creations, methods of investing, or items found in nature. Our framework attempts to provide a positive definition of eligibility to focus courts on subject matter that is eligible while eliminating the confusing and unreliable judicially created tests that dissect patent claims looking for "abstract ideas" and "inventive concepts."

Notably, the Senators signal that they are looking for ways to address nuisance litigation that does not involve the throwing-out-the-baby-with-the-bathwater approach of Alice, where legitimate technical and scientific advances are as easily invalidated as broad, vague claims with questionable novelty. Furthermore, Senators Tillis and Coons write "we proposed amendments to other portions of the Patent Act to guard against the types of overly broad, functional patent claims frequently cited by those concerned about abuse." This is a reference to the proposed changes to §§ 100 and 112(f), both of which promise to simplify the § 101 inquiry by taking on some of its baggage. But the danger in doing so is that it may be difficult to limit functional claiming without enabling "those seeking to profit on trivial modifications" to a claimed invention.

The Senators also cast the need for § 101 reform as a matter of American competitiveness and national security. Senators Tillis and Coons echo several witnesses when they decry "the uncertainty surrounding patent eligibility is affecting the development of technologies like 5G, quantum computing and artificial intelligence — innovations that not only promise to make life better for Americans, but also to protect our national security." Implicitly referencing studies that some emerging technologies are much easier to patent in other countries, the Senators state that "inventions like these are receiving patents in Europe and China, but not in the United States."

The trick here is where to draw the line on patentability. The dichotomy between inventions directed to "business" or "abstract" concepts and those that are "technical" is often false. If the Senators propose a ban on business methods in the next iteration of the bill, does that include packet processing accelerators for financial transactions or innovative user interfaces for traders? While both of these hypothetical inventions might have a business-oriented goal, they also rely on technological advances for their very existence and may involve groundbreaking ways of solving respective problems. And what about artificial intelligence? Looking from one angle, it is a pile of complex, abstract mathematics. But from another angle, human ingenuity has recognized how to use these inherent mathematical properties in clever combinations to obtain results not otherwise attainable by humans or computers.

Building a wall between what is too abstract / business-oriented and what is patentable will be challenging, and may need to be taken on a case-by-case basis. But the Alice test's attempt to do so resulted in an inquiry so vague and subjective that straight-faced arguments could be made for both the eligibility and the ineligibility of virtually any invention in which software takes a leading role.

Furthermore, any categorical exclusion to patentability needs to be tempered with the understanding that we do not know where the next great scientific and technical advances are coming from or what they will look like. By definition, one cannot put a fence around innovation because inventiveness requires drawing outside the lines.

Clearly, Senators Tillis and Coons have some work to do, and codifying a softer variation of Alice may send reform efforts down a rat-hole.

Thus, while reaffirming the subcommittee's interest in § 101 reform, the statement in and of itself does not move the ball forward in a substantive fashion. We will need to wait for the next version of the bill, which the Senators have previously indicated that they hope to have ready by the end of summer. In the meantime, the statement asks repeatedly for feedback on the current draft and suggestions for its successor. Serious proposals for addressing abusive litigation outside the ambit of § 101, a balanced approach to software patents, and how to define the scope of functional claims will almost certainly be welcome.

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