USPTO Director's Blog Post Extolling Certainty in § 101 Determinations Paradoxically Increases Uncertainty

By Kevin E. Noonan --

Kathi Vidal, Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office (at right) released a blog post on the USPTO's Director's Blog on Monday addressing the fraught subject of subject matter eligibility under 35 U.S.C. § 101 as interpreted over the past decade by the U.S. Supreme Court and implemented by the Office in light of those decisions.

As with much of Director's public pronouncements the tone of the post is mostly upbeat, extoling the Office's efforts in accommodating sometimes confusing if not contradictory instructions from the courts (particularly the Federal Circuit, which is somewhat understandable in view of the occasionally Delphic language on the issue by the High Court).  Director Vidal references the Office's 2022 report to Congress on "Patent eligible subject matter: Public views on the current jurisprudence in the United States" and the message therein that "across the spectrum, stakeholders generally agreed that the law on patent eligibility—like other areas of patent law—needs to be clear, predictable, and consistently applied."  The Director also recites innovation canon in saying that "[t]his clarity and consistency will allow innovators to attract the investment and collaborations that bring more innovation to impact, in turn creating more jobs and solving world problems."

While the sentiments voiced by the Director are admirable (and it would be hard for her to be credible if she didn't subscribe to them) the devil in this instance is not just in the details but in the process of effectuating eligibility determinations within the strictures of recent case law.  To this end, the post mentions the Deferred Subject Matter Eligibility Response (DSMER) pilot program (crediting the impetus for this initiative to Senators Thom Tillis (R-NC) and Tom Cotton (R-AK)) and describing the program as being "designed to evaluate whether examination efficiency and patent quality can be improved by delaying the complete evaluation of subject matter eligibility until other patentability criteria are evaluated as opposed to addressing all requirements for patentability at the same time" and reminding stakeholders that it will expire on July 30, 2022 although patent applications involved in the program will persist during the course of their prosecution.  Regarding its adoption, the Director's statistics state that about one-third of the 600 invitations the Office has sent have been accepted, the Director drawing no conclusions nor making any statements regarding whether this frequency was expected or consistent with the Office being able to draw any conclusions regarding its effectiveness.

Next the Director notes the series of Guidances, including the 2019 Revised Patent Subject Matter Eligibility Guidance, the October 2019 Patent Eligibility Guidance Update, and the Berkheimer Memo, all of which can be found in Section 2106 of the latest version of the Manual of Patent Examining Procedure.  In association with these assertions, the Director provides the encouraging statistic that "the corps-wide eligibility rejection rate [has dropped] from about 25% in 2018 to about 8% today," although it is certainly likely that at least a portion of this improvement is due to applicants adapting to PTO and Federal Circuit standards that have evolved since the Supreme Court began its subject matter eligibility crusade in 2012 with its decision in Mayo Collaborative Services v. Prometheus Laboratories.  The Director also references the Office's October 2020 Report on "Public Views on Artificial Intelligence and Intellectual Property Policy" and its "Adjusting to Alice" report on patent examination outcomes released in April 2020.  These Reports support the conclusions of the Chief Economist that the 2019 revisions to the Office's eligibility guidance produced a 25% decrease in the frequency of Alice-affected technologies to receive a first Office Action asserting a Section 101 rejection, and that "uncertainty about determinations of patent subject matter eligibility for the relevant technologies decreased by a remarkable 44% as compared to the previous year."

This is all well and good as far as it goes, the Director giving credit to prior Directors, administrators, and the examining corps in reducing somewhat the uncertainties caused by judicially created changes in subject matter eligibility law.  But the next sentences undo much of the good feelings produced by these achievements, the Director stating "[d]espite this progress to achieve a more consistent examination under Section 101, there is more work to be done.  Accordingly, we are revisiting our subject matter eligibility guidance."  To this end, the Director asks the public to provide comments on subject matter eligibility by September 15, 2022 to [email protected] and by participating in stakeholder listening sessions.  While it is certainly the case that subject matter eligibility law remains unsettled, to once again poll stakeholders seems a fool's errand (besides being completely redundant).  It is well-established that there are two generic species of applicant:  those who believe that the status quo is optimal for them and their business goals and are thus completely satisfied, and those who have been negatively affected by frank preclusion of certain innovative technologies (medical diagnostics being a principal example) and thus are completely dissatisfied (and have been forced to use trade secret and other means to protect their technologies, albeit imperfectly).  It is hard to see how another round of these efforts will be more successful than the ones that inauguration of this latest iteration indicates have been inadequate.

Some rays of hope may be found in the concluding statements in the blog post, regarding efforts to consult with counterpart offices in foreign countries, with regard to how those countries have largely avoided the confusion that has arisen in the U.S. (although it is likely that the simple reason for the clarity existing abroad on subject matter eligibility is due entirely to the absence of a Supreme Court in those countries that is involved in making patent policy).  To the extent that foreign counterparts can raise any issues current U.S. law or the interpretation thereof on subject matter eligibility that runs afoul of international obligations under the TRIPS agreement such discussions may be helpful.  The blog also notes cooperation between the PTO and the DOJ Solicitor General regarding efforts towards identifying "good vehicles" to achieve the goal of "creating more certain and predictable rights that foster innovation."

The simple fact is that the Supreme Court has shown no recognition that its subject matter eligibility jurisprudence needs to be revisited (even when encouraged to do so by the Solicitor General as in the American Axle case), the Federal Circuit has been unwilling to provide a useful counterbalance to the Court's dicta regarding eligibility, and the PTO does not have the authority under the law to bind judicial decision-making.  Congress is the answer, as frightening as that reality may be in the current political climate, and despite some efforts has not been able to enact legislation that would improve matters.  For the moment, only by taking up Justice Breyer's challenge to the clever draftsman (see "Mayo Collaborative Services v. Prometheus Laboratories -- What Should We Do? (or Can These Claims Be Saved?)") to craft claims sufficient to provide the maximum possible protection with the least risk of invalidation can the situation be ameliorated if not entirely remedied.

Comments

[Cass Singer]

I respectfully disagree that "Congress is the answer * * * ." The SC has based its utterly irrational subject matter jurisprudence on Constitutional grounds, not on statutory interpretation. Therefore, the only things Congress can do to correct this idiocy are (a) propose a change the Constitution and/or (b) change the SC. I don't see either happening.

[skeptical]

Is this in the vein of "The Lady doth protest too much, methinks"...?

[Easwaran]

I have to disagree with Kevin's view as well. There is much that can improve regarding the process for issuing 101 rejections, and most of the improvements should happen as a matter of good agency action, not cryptic 101 standards.

For instance, facts must have evidentiary support, even when those facts are supporting 101 findings (When is something well-understood, routine, conventional? When facts demonstrate it.). The courts get away with judicial notice only because they can, not because they should. No reason to let examiners do it, too. The USPTO should make examiners actually find evidence (it is literally the primary job qualification, after all...).

As another example, you should need to actually say what the judicial exception is if you want to reject a claim. The current guidance is construed as allowing examiners to simply copy/paste the majority of a claim and say it falls within this group or that group (where those groups are defined using overbroad language expanding case dicta far beyond its context). Examiners can't even articulate what idea they are alleging is abstract much of the time because of the way they use the current guidance. This is a process ripe for abuse, and it is abused.

I could go on, but the point is that there is some very low hanging fruit here: examiner guidance can require belt-and-suspenders work from examiners, and simple good governance will enhance predictability and reliability of 101 rejections without requiring "the authority under the law to bind judicial decision-making."

This is a good effort by the new Director.

[skeptical]

I agree with Easwaran - on both points:

1) I have even seen examiners deny that they are required to provide ANY evidentiary support (even in the face of the Berkheimer Memorandum).

2) boilerplate of "which group" has served as "notification" of what the abstract idea is. But that "group identification" is NOT what the case law dictates.

[Kevin E Noonan]

Easwaran: I admire your optimism, and agree with the comment above that the Court’s decisions are based on Constitutional grounds. As for what you propose the Director can do about the LHF, if that is the goal then the request for commentary seems unnecessary at this stage. The Office could craft guidance to that effect and then ask for commentary. I am skeptical that your apprehension of what the Director intends to do is accurate.

As for the constitutional bases for the Court’s decisions the same was true of obviousness until Congress enacted Section 103 in 1952. The lesson is that the constitutional principle wasn’t the problem it was how the Court had implemented it (or mandated it’s implementation). So there is room for Congress to cabin application of the principle here to avoid decisions like American Axle.

Congress is also the answer because the goal is not to obtain a patent but rather to obtain a patent that can be enforced. As shown expressly in the Cleveland Clinic case, Office policies don’t bind the courts.

Thanks for the comments

[Greg DeLassus]

"The SC has based its utterly irrational subject matter jurisprudence on Constitutional grounds, not on statutory interpretation."

I do not think that this is correct. Justice Stevens' *concurrence* in Bilski grounds the exceptions in the Constitution, but Justice Stevens was writing for a minority on the Court, not for the Court itself. Justice Kennedy's opinion for the Court in Bilski grounds the exceptions in statutory stare decisis, not the Constitution.

None of Benson, Flook, Diehr, Mayo, or Myriad even mention the Constitution. Alice and Chakrabarty both mention the Constitution as a sort of throw-away along the way to analyzing the statutory text. Neither of them purport to ground the so-called exceptions in any sort of Constitutional mandate.

In other words, it really is not the *Court* that has grounded the so-called exceptions in any sort of Constitutional requirement. There is a minority of *jurists* who have attempted that move, but the *Court* has never made such a pronouncement. Indeed, the Court is frustratingly vague about the *source* of the so-called exceptions.

[Kevin E Noonan]

Dear Greg: I think the constitutional issue is a subtext to the Court's decisions, the ultimate basis for the Court's authority. After all, to the extent granting patents is a power of Congress in Article I the only basis for the Court to have any opinion at all (outside due process, takings, etc.) over how Congress exercises its power is that the Court thinks permitting Congress to grant patents on natural laws, natural phenomena, and abstract ideas would not promote progress, which is the qualifier to the exercise of that power under Clause 8.

But if push came to shove (for instance, if Congress passed a law abrogating the judicial exceptions) I don't think it would take the Court long to render a decision based expressly on this rationale. Indeed, I think the genius of Giles Rich and PJ Federico in crafting Section 103 was to do so in a way that the Court thought they had codified the Court's gatekeeping over incremental innovation.

I also think that the emphasis needs to be on amending/redrafting Section 101 to be focused on process of how to effectively cabin the scope of patent-eligible subject matter to avoid the inhibiting progress bogeyman while at the same time reducing the capacity of courts to impose their idea of what should be eligible, analogous to the effect of Section 103 in tying obviousness to the prior art rather than subjective tests like flash of genius.

Thanks for the comment.

[Josh Sarnoff]

The Supreme Court has said that the judicial "exceptions" are historic _interpretations_ of the statutory language in 101 and its predecessor provisions (e.g., Flook's explicit statement that "process" in 101 did not include all commonly understood processes). So they are not in fact based on constitutional requirements (even if the constitutional purposes may have informed those statutory interpretations). I think it is much less clear that the Court would invalidate as contrary to the Authors and Inventors Clause (whether under the "promote the progress" preamble or the "discoveries of ... inventors" body language) an express legislative abrogation of the Court's interpretive precedents on 101. Personally, I would encourage them to do so. But I doubt we'll ever get there as that would require enacting such legislation.