In the past seven years, the United States Supreme Court has issued four decisions that significantly changed patent eligibility law,1 and prompted substantial public debate. In the wake of these decisions, the USPTO held two roundtables in 2016:2 one focused on the examination guidance developed by the USPTO to implement the recent case law; and a second focused on the impact of the decisions and recommendations on what measures should be taken to address that impact. Over 250 participants from industry, private practice, and academia attended roundtable 2, which was held in December 2016, at Stanford University.3 In July 2017, the USPTO published, Roundtable 2 ―Exploring the Legal Contours of Patent Eligible Subject Matter, a 48-page report ( “the Report”) summarizing the views presented at the second roundtable and views submitted through written comments. The Report focuses on two technology areas that are particularly affected by the recent development of law, life sciences and computer technologies.4
Patent subject matter eligibility in other IP5 patent offices
To provide global context to the issue, the Report includes a comparison of the patent eligibility laws and practices in the world’s five largest patent offices (the “IP5” patent offices), which includes those of the United States, China, Japan, Korea, and Europe. These IP5 offices receive approximately 80 percent of the world’s patent applications, and the laws and practices of those jurisdictions are of particular importance to inventors and businesses.5 The Report reveals that the other four IP5 jurisdictions treat diagnostic methods and naturally occurring products in life sciences technologies differently from how the United States does.6
In Europe, for instance, a diagnostic method claim is patent ineligible only if the claim includes all the steps necessary for a clinical diagnosis.7 As a result, a diagnostic method, which involves data acquisition and does not lead to a particular clinical diagnosis, may be eligible for patenting.8 Similarly, Japan, Korea, and China all recognize that certain diagnostic methods may be patent eligible when they are not claimed in conjunction with diagnosing a disease.9 Regarding the natural occurring products, all IP5 jurisdictions prohibit the patenting of naturally occurring products existing in their natural form.10 Unlike the United States, however, Japan, Korea, Europe and China recognize that certain naturally occurring products that have been isolated from their natural environment, can be patent eligible.11 According to the Report, the inconsistency between the US patent eligibility law and the international norm has put the US at an economic disadvantage12 because many biopharmaceutical inventions that are patent eligible in other countries are not eligible for protection in the United States, e.g., isolated natural products.
Public Views on the Current Patent Eligibility Law
According to the Report, during the roundtable and in written comments, members of the public expressed very different views on patent eligibility jurisprudence, with computer-related technology industries often applauding, and the life sciences industry often criticizing, the Supreme Court’s two-step test.13
The Report suggests that the computer-related technology industries generally praise the Supreme Court’s decisions because the newly established eligibility standard has helped weed out vague and overly broad patents covering software and electronic commerce.14 In addition, the Supreme Court’s decisions would block those patent applications that simply claim a result. In the context of software patents, for example, an application that does not disclose the particular way the software is invented, e.g., an algorithm, should be ineligible for further examination. Furthermore, many in computer-related technologies view the Supreme Court’s jurisprudence as particularly useful against patent assertion entities.15 By using a patent ineligibility defense in litigation, many defendants in this this field have successfully extricated themselves from lawsuits at the pleading stage.
The Report also suggests that representatives of the life sciences community generally hold negative views on the Supreme Court’s decisions. Some expressed the concern that the two-step eligibility test has disproportionately affected the biopharmaceutical sector given the industry’s great reliance on patent rights to protect the huge investment costs associated with developing new medicines and obtaining regulation approval.16 In particular, some members of the industry argued that the Supreme Court’s decisions are not only legally flawed and create overly broad exceptions, but that the two-step test itself is unclear and unpredictable, and the new eligibility standard conflates 101 with other patentability provisions and stifles innovation.17
The Report indicates that the negative impact of the Supreme Court’s decisions has led some members of the life sciences industry to explore other types of protection such as trade secret.18 However, in their views, trade secret is not an adequate substitute for patents due to the possibility of reverse engineering as well as the need to comply with federally mandated disclosures.19
Proposed Legislative Reform
In addition to summarizing public views on the current patent eligibility law, the Report also reviewed the recommendations made by the public on what measures should be taken to address the recent changes in patent eligibility. According to the Report, although some recommended either allowing the judiciary to further develop case law or advocated for reliance on administrative measures, the majority have pushed for legislative reforms.20 In particular, commentators from the life sciences industry expressed the view that the Supreme Court demonstrated its unwillingness to revisit its eligibility test by denying certiorari in Sequenom, which has prompted them to consider legislative reforms.21
In general, four legislative reforms were proposed, including replacing the two-part test with a technological or useful art test; explicitly defining exceptions to eligibility; distinguishing 101 eligibility from other patentability requirements (e.g., novelty); and establishing a research exemption to infringement.22
The Intellectual Property Owners Association (IPO), for example, proposed replacing the judicial-created exceptions (abstract ideas, laws of nature, and natural phenomena) with a single narrow exception to eligibility:
A claimed invention is ineligible … if and only if the claimed invention as a whole, as understood by a person having ordinary skill in the art to which the claimed invention pertains, exist in nature independently of and prior to any human activity, or exists solely in the human mind.23
This proposed amendment would ensure that US eligibility law is consistent with the international norm, and recognize that certain natural occurring products that that have been isolated from their natural environment are indeed patent eligible.
While the USPTO avoids expressing its preference on any of the public recommendations and comments, and only provides a neutral summarization of public’s views and reactions to the recent Supreme Court’s decisions, the Report does suggest that the majority of the public, especially representatives from the life sciences industry, urge legislative reforms that will redefine the dividing line between eligible and ineligible subject matter to better provide patent protection that is critical for innovation and business development.24
1 See Bilski v. Kappos, 561 U.S. 593 (2010); Mayo Collaborative Servs. v. Prometheus Labs., Inc., __U.S.__, 132 S. Ct. 1289 (2012); Ass’n for Molecular Pathology v. Myriad Genetics, Inc., __U.S.__, 133 S. Ct. 2107 (2013); Alice Corp. v. CLS Bank Int’l, __U.S.__, 134 S. Ct. 2347 (2014).
2 Notice of Roundtables and Requests for Comments Related to Patent Subject Matter Eligibility, 81 Fed. Reg. 71,485 (October 17, 2016).
3 United States Patent and Trademark Office, Patent Eligible Subject matter: Report on Views and Recommendations from the Public, 1 (2017).
4 Id. at 2.
5 Id. at 17.
6 See Id. at 19-21.
7 Id. at 20.
10 Id. at 21.
12 Id. at 33.
13 Id. at 23.
14 Id. at 24.
15 Id. at 25-26.
16 Id. at 35.
17 Id. at 47.
18 Id. at 36.
20 Id. at 41.
22 Id. at 46.
23 Id. at 44 (emphasis added).
24 Id. at 48.
ABOUT BAKER BOTTS L.L.P.
Baker Botts is an international law firm of approximately 700 lawyers practicing throughout a network of 12 offices around the globe. Based on our experience and knowledge of our clients' industries, we are recognized as a leading firm in the energy, technology, and life sciences sectors. Since 1840, we have provided creative and effective legal solutions for our clients while demonstrating an unrelenting commitment to excellence. For more information, please visit bakerbotts.com.