Senate Proposal for Section 101 Reform: Effect on Biotech/Pharma Inventions

By Kevin E. Noonan --

The parlous state of patent law as applied to biotechnology (and to a slightly lesser extent, pharmaceuticals) generally over the past several years has been thoroughly explicated here and elsewhere, and the recalcitrance engendered by stare decisis principles at numerous district courts and the Federal Circuit (and the Supreme Court's unwillingness to grant certiorari and address the issues its patent eligibility jurisprudence has created) has made it evident that only a legislative remedy may be capable of correcting the state of the law on this issue.  There have been several proposals, by the Intellectual Property Owners (IPO), the American Intellectual Property Law Association (AIPLA), the Intellectual Property Law Section of the American Bar Association (ABA-IPL), and other bar groups, for changes in 35 U.S.C. § 101 that would address the problem.  Over the past months, Senators Tillis (R-NC), Chairman of the Intellectual Property Subcommittee of the Senate Judiciary Committee, and Senator Coons (D-DE), the Ranking Member of the Subcommittee, have had a series of Roundtables with various stakeholders and have announced general considerations ("a framework") for proposed legislation on revising Section 101.  Yesterday, these Senators, along with Rep. Johnson (D-GA 4th), Chairman of the House Judiciary Committee, Rep. Collins (R-GA 9th), Ranking Member of the House Judiciary Committee, and Rep. Stivers (R-OH 15th), released a "bipartisan, bicameral" draft of specific legislation based on these efforts.  Specifically, Sections 100, 101, and 112 would be changed under their proposal, as follows:

Section 100:

(k) The term "useful" means any invention or discovery that provides specific and practical utility in any field of technology through human intervention.

Section 101:

(a) Whoever invents or discovers any useful process, machine, manufacture, or composition of matter, or any useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

(b) Eligibility under this section shall be determined only while considering the claimed invention as a whole, without discounting or disregarding any claim limitation.

Section 112

(f) Functional Claim Elements—

An element in a claim expressed as a specified function without the recital of structure, material, or acts in support thereof shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.

In addition, the proposal is accompanied by "other legislative provisions" to the effect that:

• The provisions of section 101 shall be construed in favor of eligibility.

• No implicit or other judicially created exceptions to subject matter eligibility, including "abstract ideas," "laws of nature," or "natural phenomena," shall be used to determine patent eligibility under section 101, and all cases establishing or interpreting those exceptions to eligibility are hereby abrogated.

• The eligibility of a claimed invention under section 101 shall be determined without regard to: the manner in which the claimed invention was made; whether individual limitations of a claim are well known, conventional or routine; the state of the art at the time of the invention; or any other considerations relating to sections 102, 103, or 112 of this title.

These Senators will be holding hearings on June 4, 5 and 11 on the proposal, which is why the language of the proposed bill is not final (particularly regarding the "other" provisions).

The question is whether such legislative corrections will provide a solution for claims to the two types of subject matter that have been most affected by the Supreme Court's recent cases: diagnostic methods and natural products.  And an important subsidiary question is whether the Court will take its congressional medicine in stride or will find ways either to reject correction outright or parse the amended statutory language to reach the same murky results.

With those considerations in mind, the current proposed amendments to section 101 remove the temptation to mix novelty and patent eligibility concepts in that section by removing the word "new" from this part of the statute, which is unlikely by itself to effect a significant change in how the Court performs its eligibility analysis.  The other change is more promising, because it codifies the Court's own holding in Diamond v. Diehr and provides a promise of a remedy for the parsing of claims encouraged by the "routine, well-understood, and conventional" language found in Mayo Collaborative Services v. Prometheus Laboratories, Inc. (and used with patent-invalidating effect in cases such as Ariosa v. Sequenom, by the district court and the Federal Circuit).  It remains to be seen whether stronger language prohibiting application of Justice Breyer's language in Mayo is included in the final draft, but it is clear this course is contemplated by the bill's sponsors as part of the "other legislative provisions" portion of the draft.

The proposed addition of section 100(k) can be understood to be an attempt to put a "technology" and "human intervention" requirement into the patent eligibility section through the definition of "useful," rather than burdening section 101 with these concepts.

These proposed changes do not directly address the problems certain biotechnology inventions have faced, specifically diagnostic methods and products of nature (the former claims have been challenged more frequently and fared more poorly than natural product claims; the main impediment to eligibility of the latter is the Court-imposed proscription against patenting natural products that have "merely" been isolated from nature).  Prospects for addressing these issues can be found in the "other" provisions, but these are also the provisions most likely to provoke the most vociferous backlash, from the Court as well as those stakeholders who believe that the recent constrictions on subject matter eligibility are in their best interests.  As intimated by the draft, the bill may contain a provision expressly abrogating the judicial exceptions ("abstract ideas," "laws of nature," or "natural phenomena"), that abrogation applying both prospectively and retrospectively (does Sequenom get its patents back?).  But this raises the issue of whether the Court can invalidate any such change as being outside the scope of the powers conferred upon Congress under Article I, Section 8, clause 8 of the Constitution.  It is good to recall that the judicial exceptions (occasional effects not to the contrary) are not judicial whims:  the Court firmly believes that they are necessary to prevent Congress from exceeding its Constitutional authority to grant patents only on inventions that "promote progress."  This is consistent with the Court's role in our system of government, and at best the consequence of any such abrogation will be that it is ignored in practice, and at worst it could motivate the Court to recite even more stringent and strictly applied limitations on Congress's power to grant patents.  The Court's forays into patent policy making have been unfortunate to say the least; anything that encourages these tendencies is unlikely to end well for U.S. innovation.

A more complete assessment of the prospects of proposed legislation to resolve the current morass of district court, Federal Circuit, and Supreme Court case law on subject matter eligibility under the Patent Act will depend, and will be performed, once a bill is introduced.  But that of course is just the opening salvo; it is certain that stakeholders who disagree than there is anything amiss under current circumstances will oppose and, at best, extract some concessions of their own before meaningful legislation will advance (and of course there is no telling what the Trump administration's position will be on the issue).

There is one outside-the-box yet summary solution to the issue (advanced so often by a contributor to this blog under the nom-de-blog "Skeptical" that we investigated it).  Article III sets forth the jurisdiction of the Supreme Court very plainly:

The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority;—to all Cases affecting Ambassadors, other public Ministers and Consuls;—to all Cases of admiralty and maritime Jurisdiction;—to Controversies to which the United States shall be a Party;—to Controversies between two or more States;--between a State and Citizens of another State;--between Citizens of different States;--between Citizens of the same State claiming Lands under Grants of different States, and between a State, or the Citizens thereof, and foreign States, Citizens or Subjects.

In all Cases affecting Ambassadors, other public Ministers and Consuls, and those in which a State shall be Party, the supreme Court shall have original Jurisdiction.  In all the other Cases before mentioned, the supreme Court shall have appellate Jurisdiction, both as to Law and Fact, with such Exceptions, and under such Regulations as the Congress shall make.  Article III, Section 2 [emphasis added].

Taken at face value, this provision empowers Congress to withdraw the appellate jurisdiction of the Court over patents.  While there is academic disagreement with this interpretation (see Calabresi and Lawson, "The Unitary Executive, Jurisdiction Stripping, and the Hamdan Opinions: A Textualist Response to Justice Scalia), there is also support, for example in Ex Parte McCardle, 74 U.S. 506 (1869), The Francis Wright, 105 U.S. 381, 386 (1881), and National Insurance Co. v. Tidewater Co., 337 U.S. 582, 655 (1949).  Heretofore, it was unlikely that anything this radical could have any real chance of being enacted.  But in the current political climate, it would be foolhardy to summarily reject any outcome contemplated by the Constitution under the right circumstances.  The question is, have those circumstances yet arrived?

Comments

[EG]

"It is good to recall that the judicial exceptions (occasional effects not to the contrary) are not judicial whims: the Court firmly believes that they are necessary to prevent Congress from exceeding its Constitutional authority to grant patents only on inventions that 'promote progress.'"

Hey Kevin,

With all due respect, I disagree. These so-called "exceptions" are just "whims" by these Justices to "rewrite" Section 101 because they frankly don't like patents. Since when have those Justices ever said that these so-called "exceptions" are Constitutionally required? Enactment of legislation pursuant to the Patent Clause is committed solely to Congress, not SCOTUS. Go read Adam Mossoff's WHO CARES WHAT THOMAS JEFFERSON THOUGHT ABOUT PATENTS? to understand how far SCOTUS has strayed from its proper role as to what the Patent Clause means and to which branch it is committed.

[Devesh Srivastava]

While long overdue, it is promising that Congress has taken steps to attempt to correct the meandering created by a Supreme Court which created uncertainty, rather than clarity, in patent law this decade. Solicited discussion will be helpful to hopefully remove ambiguity for both the USPTO and the federal courts.

[Skeptical]

Thank you Dr. Noonan.

To that Constitutional power of jurisdiction stripping I would note the nuances that the specific item being stripped is to be outside of what is considered “original jurisdiction,” as well as Congress need abide for having SOME Article III review (to abide by the Marbury case); perhaps by re-crating a CAFC body (the current one has been far too brow-beaten, or simians-in-a-cage-firehosed to be of any use).

I have also advanced of late a different mechanism. This different mechanism is one for the Court itself to apply (and it might apply if only to save face and “preserve” its stature).

That mechanism may be called the Kavanaugh Scissors.

One shear of those scissors comes from the holding of the recent Supreme Court Schein case (providing for the idea that even the Supreme Court does not have authority to add caveats or exceptions to statutory law). The other shear was first generated from the oral arguments in the Supreme Court California Franchise Tax Board v Hyatt case, and is reflected in the holding of that case (providing a multiple step ‘roadmap’ for the Court to sua sponte extract itself from its own past decisions).

Putting these two shears together would provide a tool for the Court to cut through the Gordian Knot that its own legislating from the bench has created (and worth noting: ALL three branches of the government have EXPLICITLY noted this Common Law Gordian Knot).

As I have noted, for the Court to take THIS path, they would have to recognize (and subtlety admit) that THEIR meddling HAS created a very real problem. Opponents of strong patents (and make no mistake, there are some very powerful opponents) will not want either of these two paths. The benefit to the Court of their using the Kavanaugh Scissors is that the Court could “spin” the action as one of their own volition and control, as opposed to having another Branch bringing a very strong (and very legal) smackdown which MAY cause the Court to massively lose face.

[Skeptical]

... I did forget to note that the Marbury case merely provides judicial review for the Article III Branch, and its holding does NOT require Supreme Court review.

Worth noting as well the contribution of EG on this topic, as EG pointed out that when first formed, the “patent specific**” lower court did NOT provide a path to the Supreme Court.

** - to be more accurate, that formation may be described as “mostly patent specific.”

[Greg DeLassus]

"Heretofore, it was unlikely that anything this radical could have any real chance of being enacted."

I think that we really need to get over this idea that jurisdiction stripping is at all "radical." The CAFC's predecessor court---the Court of Customs Appeals---was created *without* a mechanism for SCotUS' appellate review. The judiciary act had to be amended to create a path for cert. review of CCA judgments in the SCotUS. United States v. Aetna Explosives Co., 256 U.S. 402, 403 (1921).

In other words, there is nothing exotic or unprecedented about this. To take the CAFC out of the SCotUS' certiorari jurisdiction would be no more than to put the court back into the same situation as its predecessor court.

[Skeptical]

EG @1,

The attempts to tie the exceptions to be some type of “Constitutionally required” has been thoroughly dismantled over at the IPWatchdog blog.

Presented there (awhile back now), was an extremely detailed multi-prong rebuttal based on Constitutional law principles that eviscerates the notion that the Court has any type of legitimate Constitutional standing to take a prospective, subjective, and shadowy “May,” based on a thin preamble effect, and do so in such a ham-fisted, Separation of Powers violating, Void for vagueness manner.

I think that the more attention that is paid to the infirmities of the Court’s attempted re-writing of statutory patent law and the less nigh-automatic genuflection to the Court simply for being the highest level of the judicial branch (with the concomitant recognition that our checks and balances system places ALL THREE branches beneath the Constitution), the more likely that the Court itself may gravitate to extracting itself from its own Gordian Knot created fiasco over 35 USC 101.

Of course, one manner of this extraction may well be by the way do my coined term of Kavanaugh Scissors.

I think that the Court “may” see the scrivining on the wall, as ALL three branches of the government have caught on to the fact that the Court’s path of Common Law development has created that Gordian Knot of hopelessly self-conflicted and contradictory case law.

The ONLY hurdle that I see is that it would take some serious “spin” or some serious humility (or maybe some combination of the two) for the Court to actually be able to break its addiction to sticking their fingers into this particular nose of wax.

[Model 101]

The simean in a cage firehosed comment above should apply to the inventors whose patents were stink bombed by the Federal Circuit over the last decade. In my case...which you've written about a couple of times...claim construction, expert testimony, and specification references were all ignored. The Federal Circuit also reversed themselves 180. The most important thing is the new bill is made to retroactivly apply like the America Invents Act. Kill a generation of patents unconstitutionally for no reason. Why? Is it so the mega companies can stay mega to the detriment of the innovators? The past decade has produced the biggest companies ever. They should pay the innovators instead of hiding behind 101. Kill the patents of the last decade or make the big stinkers pay... that's the question this bill should be addressing.