The Supreme Court Sidesteps America's Patent Eligibility Crisis

By Michael Borella --

In an order that is clearly less impactful and damaging than a number of opinions that the Supreme Court has disgorged in the last two weeks, the justices have denied certiorari in American Axle & Mfg. Inc. v. Neapco Holdings LLC.  To many, American Axle represented the Gordian Knot in patent-eligibility that had been unartfully tied by the Court with help from the Federal Circuit.  The case was possibly the best opportunity yet to clarify what was meant by the remarkably vague two-part test set forth in Alice Corp. v. CLS Bank Int'l.

Complaints about the opaque and harmful nature of Alice began shortly after it was issued, and have continued for the eight years since.  Notably, criticisms did not just come from patent attorneys and patentees -- federal judges, sitting U.S. senators, and law professors have also spoken up against the opinion and its erratic interpretation by the federal courts and the USPTO.  Former Chief Judge Paul Michel of the Federal Circuit summed the situation up by stating that Alice "created a standard that is too vague, too subjective, too unpredictable and impossible to administer in a coherent consistent way in the patent office or in the district courts or even in the federal circuit."

The current state of patent-eligibility under 35 U.S.C. § 101 has deviated far afield from the plain language of the statute and even from the less plain language of Alice.  The Federal Circuit has interpreted the eligibility test to require consideration of the daylight between the claimed invention and the prior art, as well as whether the claims sufficiently recite how to practice the invention with enough specificity.  These notions were formerly the exclusive domain of other sections of Title 35 -- but no longer.  And the Court is apparently okay with the current state of affairs despite these affairs violating principles of statutory interpretation.

As a result, garage door openers, electric vehicle charging stations, and mobile phones -- inventions that should pass the § 101 inquiry with flying colors -- are now too abstract for patenting.  In practice, this means that it can be immensely difficult for an inventor, a business, a patent attorney, a patent examiner, or even a judge to predict whether an invention is viable.  The validity of certain types of claims, those involving software in particular, are perpetually in an indeterminate state until examined in the USPTO or challenged post-issuance.

Some of us were hoping that the Court might take up American Axle so patent law no longer had to share a box with Schrodinger's Cat.  But now it looks like that will not happen, possibly for a long time.  Fixing Alice has proven remarkably difficult despite its obvious problems.  Congress tried three years ago and gave up.  The USPTO tried to clarify the Alice test through examination guidance but only made it more complicated.

The vagaries of patent eligibility produce clear winners and losers.  The economics favor patentees with deep pockets who can persist through multiple rounds of examination and litigation.  These large companies can file hundreds of patents per year, with the understanding that even losing 10-20% to Alice is just a cost of doing business.  Individual inventors and startups are budget-constrained, often having to bet the farm on a single patent application.  All it takes is an unreasonable patent examiner at the USPTO to make obtaining protection virtually impossible.

Viewed this way, there is a throughline in the Court's recent rulings -- protecting the interests of the powerful over those of the weak.  This misguided consistency is harmful in general and not what drives an economy that is more and more based on innovation and intangible assets.

In any event, given that we are where we are and that the current state of § 101 is unlikely to change, what can we do?  Are there any best practices to put into place now that the Court has declined to revisit Alice?  In short, yes, there are a few things that a patentee can do to insulate themselves.

The easiest way to deal with Alice is to not deal with Alice.  Thus, you should consider the nature of the invention when making the decision of whether to file.  If the invention is not sufficiently technical in nature (where technical inventions improve the operation of machines rather than that of businesses or people) or if the invention is not thoroughly fleshed out, it might not be the best candidate for a patent application.  But if the invention is technical and understood in detail, this technical character and such details should be discretely called out in the specification and recited by the claims, as should the differences between the invention and the prior art.  It has been established that the courts look for these three factors (technicality, specificity, and novelty) in both parts of the § 101 analysis.

For pending applications under examination, you have to work with what you have.  You cannot modify the specification, but you can amend the claims.  By placing specific, technical features that distinguish over the prior art in the claims (assuming that such features are supported by the specification), you can move the odds in your favor.

When determining whether to assert a granted patent, the same calculus is involved.  If the claims recite a specific, technical advance over the prior art, then they are in reasonably good shape to survive an eligibility challenge in court.  If not, you may have an uphill battle.

While these factors are not 100% determinative, they are the best guideposts for navigating the Alice labyrinth.  At this point, we have to assume that the Court and Congress are unlikely to reassess patent eligibility for years.  And given the well-placed lack of faith in these institutions, it is not out of the question that such a reassessment could result in a framework that is even worse than the mess we are stuck with today.

Comments

[Greg DeLassus]

"The case was possibly the best opportunity yet to clarify what was meant by the remarkably vague two-part test set forth in Alice Corp. v. CLS Bank Int'l."

No way. Ariosa v. Sequenom was the best vehicle yet by which the Court could have done a course-correction. The fact that the Court passed on Sequenom made me skeptical that they would take American Axle.

The bottom line is that they have had many, *many* good opportunities by now to fix the mess that they made, but they have passed on all of them. The Court (wrongly) does not regard §101 as presently broken, and thus they (wrongly) do not perceive a need to fix it.

For better or worse, any solution that will arrive in the next century will come from the Congress. The Court *likes* the current status quo, and has no desire to change it.

[Greg DeLassus]

"Fixing Alice has proven remarkably difficult despite its obvious problems. Congress tried three years ago and gave up."

They "gave up" because the community of patent professionals stopped them. *We* sabotaged the §101 fix because it came packaged with a §112 reform. Perhaps some day we will grow up and learn that half a loaf is better than nothing. So long as we take the my-way-or-the-highway approach to statutory fixes, however, we are doomed to stall out in the status quo.

[skeptical]

I would counter Mr. DeLassus's assertion in that the "because it came packaged with a §112 reform." was not somehow a legitimate rejection.

It has been well pointed out that the "packaged with a §112 reform" was nothing more than a disastrous poison pill - a trojan horse that would have been far worse than even the current §101 debacle.