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Can Judge Michel and John Duffy Convince the Supreme Court to Revisit Subject Matter Eligibility?

By Kevin E. Noonan --

Einstein's aphorism that doing the same thing over and over again and expecting a different outcome is a hallmark of madness (or at least an inability to learn from the past) inevitably comes to mind when perusing the recent history of attempts to persuade, cajole, or shame the Supreme Court to revisit its recent subject matter jurisprudence.  While the many certiorari petitions have amply demonstrated the dysfunctional nature of the jurisprudence (at least in its application by the lower courts) it has seemed that no matter how the evidence was presented, or the outrageousness of the application (see "Supreme Court Denies Cert in American Axle"), or how many times the government joins the call in response to a request for the views of the Solicitor General (see, e.g., "Solicitor General Weighs In On Patent Eligibility Question"), the Court has been steadfast in denying cert.

But it is also the case that sometimes the way of getting a different outcome can be in how the question is presented to the Court (and it is certainly true that the arguments made in the over 60 cases where cert was denied have been similar to the point of repetitiveness).  While it is too soon to tell (or to raise any hopes) in this regard, it may be significant that a recent amicus brief on behalf of former Federal Circuit Chief Judge Paul Michel and Professor John Duffy in CareDX v. Natera has prompted the Court to ask the Respondent (the prevailing party who espoused the Court's decisions and analytical structure to invalidate the patent on subject matter ineligibility grounds) to address their arguments.  (It also may be significant that Professor Duffy was instrumental in convincing the Court to review the Federal Circuit's application of obviousness law in KSR Int'l v. Teleflex several years ago.)  The resulting indication of the Court's interest, intellectual curiosity or belated sense of responsibility for the utter mess that is subject matter eligibility law (particularly with regard to diagnostic methods) certainly merits consideration of the arguments raised in this amicus brief.

The difference in the Michel/Duffy approach is to focus on what they characterize as a clear instance of Congress overruling "judge-made law" in enacting the 1952 Patent Act and the "continuing trend of uncertainty and inconsistency in patent-eligibility jurisprudence" engendered by how the lower courts have been implementing the Court's subject matter eligibility decisions to contradict those statutory commands.  And of course this state of affairs resulting in an undermining of the "innovation-promoting goals of U.S. patent law."

The statute at issue has been codified under 35 U.S.C. § 100(b) which defines a subject matter eligible "process" to "include a new use of a known process."  This definition was included in the 1952 Act, amici argue, to expressly overrule 19th Century judge-made law that held a new use of known technology was patent-ineligible, constituting a "clear example in which the judicial gloss on patentable subject matter has been legislatively rejected," citing John F. Duffy, Rules and Standards on the Forefront of Patentability, 51 Wm. & Mary L. Rev. 609, 632 (2009).  The Federal Circuit erred, the brief argues, in its determination that the methods recited in the claims were "conventional" despite the fact that "none of [them] are found in nature (and many of which were not even possible within living memory)."  (It will be recognized that if persuasive this argument would severely limit if not abolish the second step of the Mayo/Alice test as enunciated by Justice Breyer in Mayo Collaborative Services v. Prometheus Laboratories, Inc., that "inventiveness" was negated where the application of a natural law was "routine, well-understood or conventional.")  Amici argue that this purported "conventionality" is "irrelevant to the patent-eligible inquiry when the process is directed to statutorily defined patent-eligible (rather than patent ineligible) subject matter."

The brief argues that the law of patent-eligibility needs "clarification," citing the litany of cases illustrating the disarray in this area of the law.  This includes reminding the Court that the Justices themselves have asked for the Solicitor General's views in five recent cases (Tropp v. Travel Sentry, Inc., 143 S. Ct. 361 (2022); Interactive Wearables, LLC v. Polar Electro Oy, 143 S. Ct. 78 (2022); Am. Axle & Mfg., Inc. v. Neapco Holdings LLC, 142 S. Ct. 2902 (2022); Hikma Pharm. v. Vanda Pharm., Inc., 140 S. Ct. 911 (2020); and HP Inc. v. Berkheimer, 140 S. Ct. 911 (2020)).  The brief also cites statements from Chief Judge Moore (in Am. Axle & Mfg., Inc. v. Neapco Holdings, LLC, dissenting), Judge Dyk (Ariosa Diagnostics, Inc. v. Sequenom, Inc.), and Judge Hughes (Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC) in their opinions asserting the need for "further explication of eligibility standards" from the Court, as well as similar sentiments from the U.S. Patent and Trademark Office.  The issue is framed as a conflict with the Executive Branch, which "continues to issue patents only to see them invalidated in the Federal Circuit."  Outside the government, the brief cites observations from legal academics ("[t]he law of patentable subject matter is a mess," Mark Lemley, testifying before the Senate Judiciary Committee on June 4, 2019) and "[n]umerous others in the business and legal communities," citing testimony from those hearings.

Moreover, the brief argues, the decision is wrong for "overlook[ing] the Patent Act's text and conflict[ing] with th[e] Court's precedent."  On the facts, the brief argues that the decision "disregarded the specific, technologically advanced steps of the claimed processes" as well as relying on "conventionality" of the recited methods, which (as has long been recognized even in the briefing by the government in Mayo) "conflat[ed] patent eligibility (under § 101) with the requirements for patentability (in §§ 102, 103, and 112)."  In doing so, amici argue that the Federal Circuit acted contrary to the Court's mandates in Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980) (quoting United States v. Dubilier Condenser Corp., 289 U.S. 178, 199 (1933)), that "courts should not read into the patent laws limitations and conditions which the legislature has not expressed" (while recognizing in other precedent that there are "implicit exceptions" to patent eligibility including the meaning of the term "process").

Starting with the text of the statute (which "must be the starting point") the standard is that a new and useful process or improvement thereof is recited in Section 101 and the term "process" defined in Section 100(b) as a "process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material."  Taken together, amici argue, "a new process that is presented as an improvement on a known useful process is presumptively patent eligible."  And in enacting this definition of "process" they argue that merely because a process was known or, in the Court's language, "conventional" was not enough to per se determine the process to be patent-ineligible subject matter.  The brief recognizes that conventionality is a relevant consideration for novelty or obviousness but states that:

To interpret § 101 as imposing a strict "non-conventionality" standard for patentable subject matter—while not respecting the definition of§ 100(b) and the explicit roles of § 102 and § 103—is to wander so far from the words of the Patent Act as to end up in the wilderness of atextualism.

The brief cites the Court's decision in Diamond v. Diehr as "an instructive example" of how to reconcile the implicit judicial exceptions to subject matter eligibility with the statutory text.  Even though the claimed rubber-curing process in Diehr was "conventional" that was not dispositive, because the improvement (using the Arrhenius equation) was an application of a scientific principle to improve a known process, producing a new process for curing rubber (a judicial principle also recognized in Cochrane v. Deener, 94 U.S. 780 (1876) according to the brief).  None of these principles or considerations were cited or addressed in the Federal Circuit's opinion according to the brief, important due to the similarities between the claimed invention at issue and the patent-eligible claims in Diehr:

Both processes involve complex chemical transformations, not performed in nature, and they both utilize scientific principles to create "new and useful improvement[s]" of known processes.  They both incorporate data analysis to yield a useful result.  They both offer specific technological solutions to a problem that remained unsolved for many years.

The argument is presented as being capable of a narrow focus (albeit with broad implications), wherein the Court could "delineate when improvements of technological processes are patent eligible and to correct a decision that conflicts with the statutory text and this Court's precedent."

The brief further explicates reasons why the Federal Circuit erred in its decision, including that the claims "involve specific, complex biochemical reactions that do not occur in nature and occur only through the provision of human ingenuity" without preempting any "fundamental natural phenomenon" (extensively explicating these differences).  The brief also notes that the recited "specific, complex biochemical reactions" in many instance have themselves been patented in "[t]oo any examples" to be listed in the brief.  And the inclusion of conventional steps is not in itself enough to invalidate an "otherwise novel and nonobvious technological process" under Diehr, amici argue.  The Federal Circuit's analytical error was in creating an "overly simplistic 'summary' of the claimed processes" that "present[ed] the invention at a level of abstraction that eviscerates key features of the claimed processes."  The brief sets forth as an illustration of a better alternative by analogy methods for refining and analyzing precious metals and presents a detailed comparison with patented methods on this subject matter (for which the brief argues "there is no reasonable dispute about patent eligibility").  In doing so, the brief illustrates how these patent-eligible processes could themselves be presented at a sufficiently high level of abstraction so as to be deemed patent-ineligible.  And this is something that the Federal Circuit has done consistently with regard to diagnostic method claims, amici argue, even in instances (such as Ariosa Diagnostics) where what is claimed is a "new diagnostic method [that] is novel and unforeseen, and is of profound public benefit— 'a significant contribution to the medical field,'" Newman, J., dissenting).  The brief also contains argument regarding the doctrinal impropriety of conflating Section 101 requirements with those of Sections 102, 103, and 112, making reference to arguments by the Solicitor General in its Tropp brief.  And the brief cites the consequences of holding to be patent-ineligible "biological and chemical processes that are designed to provide life-saving diagnostic results," that are "not products of nature" and do not claim "the fundamental, scientific principle" but instead "solve[] a technological problem."

It should be noted the care with which amici approach the imputed basis for the need for the Court to provide guidance, wherein the brief states that "[t]his reassessment [by the Court, requested by amici and others] need not overrule the Alice/Mayo test, but it would allow a more faithful application of this Court's precedent to achieve the objective of the Constitution's Patent Clause and would respect the text of the Patent Act."  In this regard, the brief also notes the Court's reliance in Mayo and Alice on pre-1952 decisions and how those decisions were directed to "patentability" and not patent "eligibility," and that the citation in Mayo of Parker v. Flook with regard to an "inventive concept" was based on only two uses of the term and no reliance on any precedent for what the term meant.  The brief also mentions that the term "inventive concept" was absent in Funk Brothers Seed Co. v. Kalo Co., 333 U.S. 127, 130 (1948), and Mackay Radio & Telegraph Co. v. Radio Corp. of America, 306 U.S. 86, 94 (1939), as well as Benson v. Gottschalk, and that in this regard the Court's decision in Diehr overruled Flook until it was rehabilitated (or resurrected) in Mayo.  But "'inventive Concept' as a key requirement for patent eligibility finds little support in this Court's historical precedent," amici argue, and yet that is what the Federal Circuit relied upon in invalidating the claims below.

Finally, the brief argues that this case is "an excellent vehicle" for the Court's reconsideration and reassessment of the proper eligibility test for processes because it is directed to a diagnostic methods which are "critically important" to innovation and for consistency with the constitutional mandate that the patent laws "promote progress."  According to a USPTO report, the current state of patent eligibility "has a direct [(negative)] impact on investment, research, and innovation," citing A. Sasha Hoyt, The Impact of Uncertainty Regarding Patent Eligible Subject Matter for Investment in U.S. Medical Diagnostic Technologies, 79 Wash. & L. Rev. 397, 398 (2022).  These uncertainties are illustrated in the brief by citation of Federal Circuit decisions upholding or invalidating diagnostic method claims in different cases without any consistency, citing CardioNet, LLC v. InfoBionic, Inc., 955 F.3d 1358, 1367 (Fed. Cir. 2020); Exergen Corp. v. Kaz USA, Inc., 725 Fed. App'x 959, 966 (Fed. Cir. 2019); and Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., 827 F.3d 1042, 1044 (Fed. Cir. 2016), that found eligibility versus Genetic Veterinary Scis., Inc. v. LABOKLIN GmbH & Co. KG, 933 F.3d 1302, 1319-20 (Fed. Cir. 2019); Roche Molecular Sys., Inc. v. CEPHEID, 905 F.3d 1363, 1381 (Fed. Cir. 2018); Cleveland Clinic Found. V. True Health Diagnostics LLC, 859 F.3d 1352, 1363 (Fed. Cir. 2017); Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1381 (Fed. Cir. 2015), that did not.

Whether this brief prompts the Court to address patent subject matter eligibility or not, the arguments therein could motivate Congress to exercise its authority to mandate application of Section 100(b) consistent with the basis for enactment of the statute to overrule "judge-made" ineligibility for broad classes of inventions (i.e., new uses for old methods).  The Constitution gives Congress the power to grant patents (and to decide whether to have a patent system that does so), and so long as Congress does not exceed this authority the Court is subject to how Congress exercises this authority.  Whether Congress can muster the will or intestinal fortitude to do so is another matter.

Stanford Asks Supreme Court to Revisit Subject Matter Eligibility on Diagnostic Claims

By Kevin E. Noonan --

"Hope springs eternal [in the human breast]" (Alexander Pope) and "Insanity is doing the same thing over and over and expecting different results" (the latter attributed variably to Albert Einstein and Werner Erhart) are two aphorisms that irresistibly come to mind with the recent filing of a petition for certiorari by patentees in CareDX, Inc. v. Natera, Inc. and CareDx, Inc. v. Eurofins Viracor, Inc.

To recap, the case arose over CareDx's assertion of the claims in U.S. Patent Nos. 8,703,652, 9,845,497, and 10,329,607 directed to "methods to help predict the status or outcomes of transplant recipients through sequencing of cell-free nucleic acids ("cfDNA") found in the bodily fluids of a recipient."  The rationale behind the invention was that rejection of a transplanted organ in a recipient is accompanied by cell death, which releases donor-specific DNA into the recipient's bodily fluids.  Claim 1 of the '652 patent, claim 1 of the '497 patent, and claim 1 of the '607 patent were illustrative:

Claim 1 of the '652 patent recites:

1.  A method for detecting transplant rejection, graft dysfunction, or organ failure, the method comprising:
    (a) providing a sample comprising cell-free nucleic acids from a subject who has received a transplant from a donor;
    (b) obtaining a genotype of donor-specific polymorphisms or a genotype of subject-specific polymorphisms, or obtaining both a genotype of donor-specific polymorphisms and subject-specific polymorphisms, to establish a polymorphism profile for detecting donor cell-free nucleic acids, wherein at least one single nucleotide polymorphism (SNP) is homozygous for the subject if the genotype comprises subject-specific polymorphisms comprising SNPs;
    (c) multiplex sequencing of the cell-free nucleic acids in the sample followed by analysis of the sequencing results using the polymorphism profile to detect donor cell-free nucleic acids and subject cell-free nucleic acids; and
    (d) diagnosing, predicting, or monitoring a transplant status or outcome of the subject who has received the transplant by determining a quantity of the donor cell-free nucleic acids based on the detection of the donor cell-free nucleic acids and subject cell-free nucleic acids by the multiplexed sequencing,
    wherein an increase in the quantity of the donor cell-free nucleic acids over time is indicative of transplant rejection, graft dysfunction or organ failure, and wherein sensitivity of the method is greater than 56% compared to sensitivity of current surveillance methods for cardiac allograft vasculopathy (CAV).

Claim 1 of the '497 patent recites:

1.  A method of detecting donor-specific circulating cell-free nucleic acids in a solid organ transplant recipient, the method comprising:
    (a) genotyping a solid organ transplant donor to obtain a single nucleotide polymorphism (SNP) profile of the solid organ transplant donor;
    (b) genotyping a solid organ transplant recipient to obtain a SNP profile of the solid organ transplant recipient, wherein the solid organ transplant recipient is selected from the group consisting of: a kidney transplant, a heart transplant, a liver transplant, a pancreas transplant, a lung transplant, a skin transplant, and any combination thereof;
    (c) obtaining a biological sample from the solid organ transplant recipient after the solid organ transplant recipient has received the solid organ transplant from the solid organ transplant donor, wherein the biological sample is selected from the group consisting of blood, serum and plasma, and wherein the biological sample comprises circulating cell-free nucleic acids from the solid organ transplant; and
    (d) determining an amount of donor-specific circulating cell-free nucleic acids from the solid organ transplant in the biological sample by detecting a homozygous or a heterozygous SNP within the donor-specific circulating cell-free nucleic acids from the solid organ transplant in at least one assay,
    wherein the at least one assay comprises high-throughput sequencing or digital polymerase chain reaction (dPCR), and
    wherein the at least one assay detects the donor-specific circulating cell-free nucleic acids from the solid organ transplant when the donor-specific circulating cell-free nucleic acids make up at least 0.03% of the total circulating cell-free nucleic acids in the biological sample.

Claim 1 of the '607 patent recites:

1.  A method of quantifying kidney transplant-derived circulating [cfDNA] in a human kidney transplant recipient, said method comprising:
    (a) providing a plasma sample from said human kidney transplant recipient, wherein said human kidney transplant recipient has received a kidney transplant from a kidney transplant donor, wherein said plasma sample from said human kidney transplant recipient comprises kidney transplant-derived circulating [cfDNA] and human kidney transplant recipient-derived circulating [cfDNA];
    (b) extracting circulating [cfDNA] from said plasma sample from said human kidney transplant recipient in order to obtain extracted circulating [cfDNA], wherein said extracted circulating [cfDNA] comprises said kidney transplant-derived circulating [cfDNA] and human kidney transplant recipient-derived circulating [cfDNA];
    (c) performing a selective amplification of target [DNA] sequences, wherein said selective amplification of said target [DNA] sequences is of said extracted circulating [cfDNA], wherein said selective amplification of said target [DNA] sequences amplifies a plurality of genomic regions comprising at least 1,000 single nucleotide polymorphisms, wherein said at least 1,000 single nucleotide polymorphisms comprise homozygous single nucleotide polymorphisms, heterozygous single nucleotide polymorphisms, or both homozygous single nucleotide polymorphisms and heterozygous single nucleotide polymorphisms, and wherein said selective amplification of said target deoxyribonucleic acid sequences is by polymerase chain reaction (PCR);
    (d) performing a high throughput sequencing reaction, wherein said high throughput sequencing reaction comprises performing a sequencing-by-synthesis reaction on said selectively-amplified target [DNA] sequences from said extracted circulating [cfDNA], wherein said sequencing-by-synthesis reaction has a sequencing error rate of less than 1.5%;
    (e) providing sequences from said high throughput sequencing reaction, wherein said provided sequences from said high throughput sequencing reaction comprise said at least 1,000 single nucleotide polymorphisms; and
    (f) quantifying an amount of said kidney transplant-derived circulating [cfDNA] in said plasma sample from said human kidney transplant recipient to obtain a quantified amount, wherein said quantifying said amount of said kidney transplant-derived circulating [cfDNA] in said plasma sample from said human kidney transplant recipient comprises using markers distinguishable between said human kidney transplant recipient and said kidney transplant donor, wherein said markers distinguishable between said human kidney transplant recipient and said kidney transplant donor comprises single nucleotide polymorphisms selected from said at least 1,000 single nucleotide polymorphisms identified in said provided sequences from said high throughput sequencing reaction, and wherein said quantified amount of said kidney transplant-derived circulating [cfDNA] in said plasma sample from said human kidney transplant recipient comprises at least 0.03% of the total circulating [cfDNA] from said plasma sample from said human kidney transplant recipient.

The District Court granted Natera's motion for summary judgment that the claims were invalid under Section 101 for lack of subject matter eligibility (the petition noting that the District Court characterized the state of Section 101 law as being "fraught, incoherent, unclear, inconsistent, and confusing, and indeterminate and often leading to arbitrary results"), and the Federal Circuit affirmed.  The panel found that the claims failed the first prong of the Alice eligibility test for being directed to a natural phenomenon and failed the second prong of the test by reciting only conventional, well-understood, and routine methods that did not rise to the ineluctable "something more" required for eligibility.  The Federal Circuit relied upon disclosure in the specification that was similar to the disclosure that supported the Court's affirmance of ineligibility in Ariosa v Sequenom, specifically that the disclosed methods applied to detect cfDNA specific for the transplanted organ were conventional, the panel citing the following disclosure from the '652 patent in support of their conclusions:

• col. 9 ll. 8–14, which stated that "[d]etection, identification and/or quantitation of the donor-specific markers (e.g.[,] polymorphic markers such as SNPs) can be performed using real-time PCR, chips (e.g., SNP chips), high throughput shotgun sequencing of circulating nucleic acids (e.g.[,] [cfDNA]), as well as other methods known in the art");

• col. 10 ll. 11–12, which stated that, to obtain cfDNA samples, "any technique known in the art may be used, e.g. a syringe or other vacuum suction device");

• col. 13 ll. 51–53, which stated that step 2 of claimed methods can be performed "using existing genotyping platforms know[n] in the art");

• col. 15 ll. 6–8, which stated that techniques recited in step 2 of claimed methods "can be accomplished through classic Sanger sequencing methods which are well known in the art");

• col. 13 ll. 58–61, which stated that "[c]ompanies (such as Applied Biosystems, Inc.) currently offer both standard and custom designed TaqMan probe sets for SNP genotyping that can in principle target any desired SNP position for a PCR based assay");

• col. 20 ll. 31–34 (stating that genotyping recited in claimed methods "may be performed by any suitable method known in the art including those described herein such as sequencing, nucleic acid array or PCR");

• col. 15 ll. 22–65 (discussing commercial high throughput sequencing products);

• col. 14 ll. 58–67 (citing articles from 2006 and 2007 as supporting the statement that "digital PCR is a much more accurate and reliable method to quantitate nucleic acid species");

• col. 18 l. 55–col. 19 l. 2 (stating that "[m]ethods for quantifying nucleic acids," including high throughput genotyping, "are known in the art"); and

• col. 21 ll. 5–9 (stating that "[t]he presence or absence of one or more nucleic acids from the transplant donor in the transplant recipient may be determined by any suitable method known in the art including those described herein such as sequencing, nucleic acid arrays or PCR").

(Despite this litany, the petition faults the District Court for relying on a sole statement in the specification that "the methods 'employ[], unless otherwise indicated, conventional techniques'" and disregarding the qualifier "unless otherwise indicated" in assessing the purported conventionality of the disclosed detection methods.)  The opinion stated summarily that "[t]he claimed methods are indistinguishable from other diagnostic method claims the Supreme Court found ineligible in Mayo and that we found ineligible on multiple occasions," including Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC, 915 F.3d 743 (Fed. Cir. 2019); Genetic Veterinary Scis., Inc. v. LABOKLIN GmbH & Co. KG, 933 F.3d 1302 (Fed. Cir. 2018); Roche Molecular Sys., Inc. v. Cepheid, 905 F.3d 1363 (Fed. Cir. 2018); Cleveland Clinic Found. v. True Health Diagnostics LLC, 859 F.3d 1352 (Fed. Cir. 2017); and Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir. 2015).

The Federal Circuit's appreciation of the similarity to the Ariosa decision (which in some ways propelled the Court down this path of per se ineligibility) was express:

Here, as in Ariosa, the claims boil down to collecting a bodily sample, analyzing the cfDNA using conventional techniques, including PCR, identifying naturally occurring DNA from the donor organ, and then using the natural correlation between heightened cfDNA levels and transplant health to identify a potential rejection, none of which was inventive.  The claims here are equally as ineligible as those in Ariosa.

Petitioner CareDx and Stanford argue in their certiorari petition that the District Court and the Federal Circuit erred in this conclusion of conventionality to distinguish this case from the earlier precedent, and assert as analytical error in the Federal Circuit's application of the Supreme Court test under Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012), and Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 573 U.S. 208, 217 (2014), consideration of conventionality (and thus Section 103 issues) in the first prong of the Mayo/Alice test.

The focus of Petitioner's argument is that the invention is an improvement on prior art methods that were ineffective, and that it is this improvement as expressly recited in the statute ("or any new and useful improvement thereof") that supports eligibility.  According to this argument, this improvement distinguishes the invalidated claims from the natural phenomenon that cfDNA from a transplanted organ exist in a recipient's blood or that such cfDNA could be detected therein.  The petition sets forth the history of efforts to detect organ rejection in transplant patients, from "invasive and expensive tissue biopsies from the organ" to detecting increased evidence of cfDNA in patients undergoing organ rejection, including cfDNA specific for Y chromosomes or human leukocyte antigen (HLA) gene fragments, none of which were effective "after ten year of unsuccessful attempts" and all of which were admitted prior art in the common specification of the patents-in-suit.

The petition emphasizes the specific technical solutions of "high-throughput" and "multiplex" sequencing coupled with digital polymerase chain reaction technology using single nucleotide polymorphism detection to identify transplanted organ-specific cfDNA in recipient blood.  (These choices, the petition contends, are significant because the technologies were developed after the failed attempts by others and the targets, while not new, were not the targets used in earlier, failed attempts.  It should not escape the reader's attention that these considerations are also ones relevant to non-obviousness.)  The petition also notes that patentee disclaimed discovery of the natural phenomenon and preexisting methods for measuring it.

The petition's asserted reasons for the Court to grant certiorari frankly tell the Court that it "needs to take another Section 101 case" based on the Justices calling for the views of the Solicitor General five times in the past five years (citing Hikma Pharm. v. Vanda Pharm., Inc.; HP Inc. v. Berkheimer; Am. Axle & Mfg., Inc. v. Neapco Holdings LLC; and most recently in Tropp v. Travel Sentry, Inc. and Interactive Wearables, LLC v. Polar Electro Oy) and that the SG has counseled the Court that they should grant cert "in an appropriate Section 101 case."  This, according to the petition, is that case, even more so that Interactive Wearables or Tropp.  The reasons petitioner asserts in advocating for the Court to choose this case is that while it raises many of the same issues as in Tropp and Interactive Wearables, in this one "the problems are even worse."  Those cases are abstract-idea cases which, the petition argues "have not been the source of considerable controversy."  Not so application of the natural phenomenon eligibility exception in medical diagnostics claims, where the petition notes both the SG and the Federal Circuit have called for the Court's intervention (citing Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC; Am. Axle & Mfg., Inc. v. Neapco Holdings LLC; Interval Licensing LLC v. AOL, Inc.).  In those cases the circuit's judges have termed the subject matter eligibility question to be "baffling," leaving them "at a loss as to how to uniformly apply § 101," that it is "near impossible to know with any certainty whether [an] invention is or is not patent eligible," and that this situation "ha[s had] a serious effect on the innovation incentive in all fields of technology."  Similar sentiments from district courts and the U.S. Patent and Trademark Office and former Directors of the agency are cited in support of this argument.  The objective evidence for this state of affairs is the Federal Circuit's track record, wherein that Court has invalidated "every single diagnostic method patent it has encountered since Mayo[]."  Moreover, the petition notes that the cumulative effect of the Federal Circuit's jurisprudence on subject matter eligibility for medical diagnostics claims is that these claims are virtually per se ineligible (including citations to Cleveland Clinic Found. v. True Health Diagnostics LLC and Roche Molecular Sys., Inc. v. CEPHEID along with those cases cited earlier in the petition).  These decisions have "powerfully undercut[] the incentive to innovate and invest in life-saving medical diagnostics" consequently.

In addition, the petition argues that this case is one where the claimed invention was "on specific improved methods for measuring the relative proportion of the donor's DNA [that] ensures the absence of any preemption concerns" because "[p]atents that claim specific improvements upon preexisting processes for applying a previously known natural phenomenon cannot monopolize the underlying phenomenon itself, because other methods already exist to apply it and thus remain outside the scope of the patent."  These circumstances, the petition states, provide the Court with an opportunity to "reinvigorate the role of Section 101's statutory text in a manner consonant with the preemption concerns that animate this Court's precedents."  The petition notes in support for this argument that the Court has not considered the application of Section 101 to such improvements "upon a preexisting useful process" and that this case provides such an opportunity.  The petition cites the Court's decision in Tilghman v. Proctor, 102 U.S. 707 (1880), as being consistent with these arguments by being "a particular mode of bringing about [a] desired result" (and perhaps being a basis for the Court to be persuaded by them).  And petitioners emphasize that claims to such an improvement do not claim either a natural phenomenon nor preexisting methods which are expressly in the prior art.

Finally, the way the District Court and Federal Circuit considered issues of "conventionality" for both the first and second prongs of the Mayo/Alice test (the petition argues) was error needing Supreme Court correction.  Concerns over the (im)proper application of conventionality in the Mayo/Alice test was voiced by the Solicitor General in Interactive Wearables with regard to Step 2 but is arguably more erroneous here according to the petition, where the lower courts relied on conventionality in both Step 1 and Step 2 (the Federal Circuit going so far as to state that it had "repeatedly analyzed conventionality at step one," citing Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC and Universal Secure Registry LLC v. Apple Inc. in support of this practice).  (This argument has greater force than the corresponding argument regarding Step 2, where considerations of conventionality go hand in hand with the Supreme Court's instruction for courts to search for an "inventive concept," although the petition bravely argues that such conflation of Section 103 issues in a Section 101 determination is equally improper.)  The petition contends that the Federal Circuit's practice in this regard "collapses the entire Section 101 inquiry into 'a search for an inventive concept'" and "effectively conflat[es] Section 101 with the statutory requirements of novelty, 35 U.S.C. 102, nonobviousness, 35 U.S.C. 103, and enablement, 35 U.S.C. 112" (which while a persuasive argument for much of the patent bar may be less so for the Court, which has tended in earlier decisions to consider patent law with much less granularity; see Mayo).  And petitioners assert that in doing so the Federal Circuit "circumvented important protections guaranteed by this Court's obviousness precedents under Section 103," citing Graham v. John Deere and KSR Int'l Co. v. Teleflex Inc.  The petition characterizes the invention at issue here as being closer to an application of a law of nature as sanctioned by the Court's decision in Diamond v. Diehr than the invention in Mayo and notes that the Court held in Ass'n for Molecular Pathology v. Myriad Genetics, Inc. that "new applications of knowledge about" natural phenomena are patent-eligible.

Finally, the petition asks the Court "at a minimum" to hold the case until the Court has decided the outcome of the Interactive Wearables and Tropp cases.

The arguments in the petition thus thread a very narrow needle in giving the Court a reason to grant certiorari and emphasize (as has been emphasized before) the need to do so.  Earlier in the petition the Court's attention is directed albeit somewhat obliquely to the "heav[y] investment CareDx made in bringing this technology to market" and the frankly infringing behavior of both Natera and Eurofin in bringing their own "copycat" products to market.  Those hoping for a certiorari grant (and positive outcome) have reason for such hopes if the Court is listening to these circumstances and the importance and negative consequences to innovation in the medical diagnostic arts that the lower courts' interpretations of their subject matter eligibility jurisprudence has produced over the past decade.

Sequoia Technology LLC v. Dell Inc. (Fed. Cir. 2023)

By Michael Borella --

The patent statute requires that, to be patentable, the subject matter of an invention must be at least one of a process, machine, article of manufacture, or composition of matter.  It is hard to find examples of things that do not fall into these broad categories, though signals in motion and data at rest are two.  The former has been well-litigated at this point and it is accepted that various forms of computer-readable medium (CRM) claims must recite that the medium is non-transitory.  Consider the 2007 Federal Circuit decision of In re Nuijten as the standard bearer in this regard.

Nonetheless, disputes over the interpretation of CRM language do pop up from time to time, as was the situation in this case.

Sequoia asserted U.S. Patent No. 6,718,436 against Dell and several other companies (most notably, Red Hat, which is a subsidiary of IBM) in the District of Delaware.  The parties butted heads over claim construction issues in district court with Sequoia coming up on the losing end.  Thus, they stipulated non-infringement under this construction.  The District Court also found that claims 8-10 were ineligible under § 101 due to construction of the term "computer-readable recording medium" to include transitory media.  Sequoia appealed.

Claim 8 of the '436 patent reads:

8.    A computer-readable recording medium storing instructions for executing a method for managing a logical volume in order to support dynamic online resizing and minimizing a size of metadata, said method comprising the steps of:
    a) creating the logical volume by gathering disk partitions in response to a request for creating the logical volume in a physical storage space;
    b) generating the metadata including information of the logical volume and the disk partitions forming the logical volume and storing it the metadata to the disk partitions forming the logical volume;
    c) dynamically resizing the logical volume in response to a request for resizing, and modifying the metadata on the disk partitions forming the logical volume; and
    d) calculating and returning a physical address corresponding to a logical address of the logical volume by using mapping information of the metadata containing information of the physical address corresponding to the logical address;
    wherein the metadata includes,
        a disk partition table containing information of a disk partition in which the metadata is stored;
        a logical volume table for maintaining the information of the logical volume by storing duplicated information of the logical volume onto all disk partitions of the logical volume;
        an extent allocation table for indicating whether each extent in the disk partition is used or not used; and
        a mapping table for maintaining a mapping information for a physical address space corresponding to a logical address space which is a continuous address space equal in size of storage space to an entirety of said logical volume.

As noted, the main part of the § 101 dispute was over the interpretation of the term "computer-readable recording medium."  The Federal Circuit immediately noted that this term explicitly recites a "recording medium storing instructions" and that "a person of ordinary skill would not understand transitory signals, such as carrier waves, to record or store instructions in memory systems."  This understanding is supported by other claim elements, such as "creating the logical volume in a physical storage space" and "storing [sic] the metadata to the disk partitions forming the logical volume."  All of this establishes that the computer-readable recording medium of claim 8 does not encompass non-persistent or transient storage.

The Court found further support for its position in the specification.  Particularly, the specification provides several examples of hardware-only computer-readable media including RAM, CDROM, and various types of disk drives.

One of the defendants, Red Hat, argued that the specification does not exclude transitory media.  But the Court pushed back, noting that the claim itself recites a "storage medium" and that Red Hat's proposed interpretation would contradict the teachings of the specification and render the invention inoperable.

The Court also found that Red Hat's expert's testimony was "inconsistent with the intrinsic evidence and also based on different express definitions of CRM in patent specifications directed to different inventions."  Notably, the expert looked to 34 other patent applications to help define the claim term.  The Court was not amused:

This evidence merely shows that in thirty-four other specifications, the inventors chose to be their own lexicographers and expressly defined CRM or like terms to include transitory media.  The inventors here chose otherwise.  That other inventors chose to be their own lexicographers and define CRM to include transitory signals does not demonstrate what CRM means in the context of the '436 patent.  Nor does it establish the plain and ordinary meaning of the claim term "computer-readable recording medium for storing."

In a similar manner, Red Hat also relied on the Court's decision in Mentor Graphics Corp. v. EVE-USA, Inc., where the Court found that a claimed "computer readable medium" included transitory signals.  But this conclusion was based on that specification expressly including carrier waves in its definition of the term.  Accordingly, the Court found that how a term is defined other patents and applications cannot be used to contradict how it is defined in the specification at hand.  Specifically, the Court wrote "[s]imply put, extrinsic evidence of what other inventors chose to do cannot surmount the intrinsic evidence of what the inventors chose here; context is key in claim construction."  Thus, the Court discounted the testimony of Red Hat's expert and the relevance of these extrinsic documents.

Finally, Red Hat pointed to the USPTO's 2010 memo on computer-readable medium claims, alleging that it establishes that the term in question should be interpreted broadly enough to include transitory media.  But, as the Court pointed out, this memo merely states that the broadest reasonable interpretation of a claim during prosecution may result in claims being interpreted to cover transitory media.  However, this does not provide the plain and ordinary meaning of the term to be used in litigation, nor does it mean that there is a presumption that claim 8 reads on transitory media.

Given all of this, the Court concluded that the District Court erred, and reversed the finding of invalidity under § 101.

A practice note from all of this is that you should explicitly recite in your CRM claims language that clearly establishes that the CRM is non-transitory.  This does not need to be the exact words "non-transitory" but however your language is defined in the specification should make that point clear and unambiguous.

Unlike the claimed invention, this victory for Sequoia turned out to be transitory -- it lost on other claim construction issues and the Court ultimately affirmed the determination of non-infringement.

Sequoia Technology LLC v. Dell Inc. (Fed. Cir. 2023)
Panel: Circuit Judges Lourie, Dyk, and Stoll
Opinion by Circuit Judge Stoll

On Alice Rejections per USPTO Technical Center

By Michael Borella --

The U.S. Patent and Trademark Office (USPTO) organizes its examining corps into technical centers (TCs).  Each TC is dedicated to one or more general technical fields.  In some cases, one TC may include two or more unrelated fields, while some fields (software, for example) are represented in multiple TCs.  Currently there are nine TCs, not counting one dedicated to reissues.

Each TC is further subdivided into art units (usually 4-10) and examiners are assigned to these art units.  Thus, examiners tend to focus their efforts on examining patent applications within a fairly narrow field.

Over the nine years since 2014's Alice Corp. v. CLS Bank Int'l Supreme Court case, the number of 35 U.S.C. § 101 rejections has dramatically increased throughout the USPTO.  Anecdotally, however, many practitioners believe that certain TCs are much more likely to result in 101 rejections than others.  In practice, it is generally accepted that TC 3600 -- the TC to where most business-related inventions are routed -- issues the most Alice-based 101 rejections.

We tested this hypothesis by gathering data on Alice rejections per TC from 2020.  We had to look back this far due to the USPTO's 18-month publication delay causing not all relevant data from 2021 to be available.  Here, an Alice rejection is a rejection of at least one claim on the grounds of the claim(s) not meeting the judicial patent eligibility requirements of Alice.  This is a slightly narrower scope than § 101 rejections in general, which include claims rejected on grounds of failing to meet the statutory requirements and grounds of double patenting.

While the raw numbers of Alice rejections per TC in 2020 were not hard to obtain, they were also not very insightful when considered in isolation.  To be able to compare Alice rates across TCs, we also collected a count of § 103 rejections per TC in 2020.  By considering the ratio of § 103 rejections to Alice rejections, we are able to obtain a clearer understanding of how "difficult" each TC is with respect to § 101.  Particularly, using § 103 rejections (which are quite common) as a baseline, we can get a clear understanding of how many Alice rejections to expect per § 103 rejection.

As shown above, the ratio of § 103 to Alice rejections varies wildly across the TCs.  For instance, in TC 1600, you can expect one Alice rejection for about every fifteen § 103 rejections.  On the other hand, in TC 3600, you can expect one Alice rejection for about every three § 103 rejections.  Indeed, TC 3600 has the highest likelihood of an Alice rejection by far when compared to § 103 rejection volume.  This appears to confirm our anecdotal observations.

Other TCs that have relatively high rates of Alice rejections are 1600 and 2100.  Both of these TCs receive a high volume of software applications.  In contrast, TCs 1700, 2600, and 2800 have the lowest rates, with 1700 being quite low.

Based on experience, we expected a higher rate of Alice rejections in TC 3700.  In particular, gaming inventions get routed to this TC, and we have seen frequent Alice rejections for their applications.  This TC, however, also examines mechanical and medical inventions, which typically are not subject to § 101 challenges as often.  Thus, across TC 3700 as a whole, Alice rates fall about in the middle of the field.  This suggests that it might be informative to further break this data down by art unit in a follow-on exercise.

A word of caution -- while this data suggests that TC is highly influential on whether an application is going to receive a § 101 rejection, there are other factors.  By their very nature, some inventions (e.g., business methods, data processing) are more prone to a § 101 rejection than others (e.g., mechanical devices, chemical compounds).  Inventions with a high likelihood of triggering an Alice analysis may receive a § 101 rejection regardless of its TC.

Still, if a goal is to avoid TCs with higher Alice rates, this data provides a compelling view of just how much each TC relies on Alice rejections when compared to § 103 rejections.  As such, TC prediction and steering tools can be advantageous when used in conjunction with the numbers above.

ITC Takes Section 101 to Its Illogical Extreme

By Michael Borella --

Hat tip to Prof. Lefstin who wrote a detailed analysis of this case on Patently-O.  We will keep our review short and to the point (pun intended, see below).

We are all familiar with the rhetorical device of a parade of horribles -- a series of very bad things that could happen if some action is (or isn't) taken.  Often, these parades involve a degree of hyperbole.  In other cases, they underestimate just how horrible the horribles actually are.

The Supreme Court's Alice Corp. v. CLS Bank Int'l decision set off such a parade.  It started with certain computerized financial transactions being ruled ineligible, to more general forms of software inventions being held similarly invalid.  The exceptions to the broad statutory categories of patent subject matter now include audio/video streaming, wirelessly-controlled garage door openers, electric vehicle charging stations, cameras, methods of tuning drive shafts, and cardiac monitoring devices.

In a decision that came down last October but somehow managed to avoid attention until recently, the International Trade Commission (ITC) affirmed an administrative law judge's decision that patent claims directed to an article of manufacture are abstract ideas under Alice.  An example of one of these claims recites:

A polycrystalline diamond compact, comprising:
    a polycrystalline diamond table, at least an unleached portion of the polycrystalline diamond table including:
        a plurality of diamond grains directly bonded together via diamond-to-diamond bonding to define interstitial regions, the plurality of diamond grains exhibiting an average grain size of about 50 μm or less;
        a catalyst occupying at least a portion of the interstitial regions;
        wherein the unleached portion of the polycrystalline diamond table exhibits a coercivity of about 115 Oe or more;
        wherein the unleached portion of the polycrystalline diamond table exhibits an average electrical conductivity of less than about 1200 S/m; and
        wherein the unleached portion of the polycrystalline diamond table exhibits a G_ratio of at least about 4.0×10⁶; and
    a substrate bonded to the polycrystalline diamond table.

In plain English, a polycrystalline diamond compact (PDC) "can be used in drilling tools (e.g., cutting elements, gage trimmers, etc.), machining equipment, bearing apparatuses, wire-drawing machinery, and in other mechanical apparatuses" and "have found particular utility in cutters in rotary drill bits."  So the invention here is the business end of a drill.

The ITC's main problem with the above claim resides in the wherein clauses.  Indeed, the ITC wrote:

It is clear from the language of the claims that the claims involve an abstract idea—namely, the abstract idea of a PDC that achieves the claimed performance measures (G-Ratio and thermal stability) and has certain measurable side effects (specific magnetic saturation, coercivity, and specific permeability), which, as discussed below, the specifications posit are derived from enhanced diamond-to-diamond bonding in the PCDs.

Here, the ITC seems to find that the claimed characteristics of the unleached portion are "performance measures" and appear to discount or ignore, for purposes of eligibility, the physical PDC properties that these characteristics represent.  Instead, the ITC stated that "[t]he Federal Circuit has explained that the patent eligibility inquiry requires that the claim identify how a functional result is achieved by limiting the claim scope to structures specified at some level of concreteness."

This is a misstatement of the law.  Functional claiming is explicitly permitted by the patent statute, and using it is subject to well-known caveats, none of which are ineligibility.

Finding the claims abstract, the ITC went on to conclude that "[t]he elements of the asserted claims—individually and as an ordered combination—do not transform the nature of the claims into something patent-eligible" because they "recite results-oriented language and the recited physical elements are conventional."  What the ITC munges in its analysis is that the claims are alleged to provide a performance improvement over prior techniques -- they even take that as given, stating that the stronger PDCs of the claim "that achieve certain performance measures and desired magnetic and electrical properties" are still abstract.

The Supreme Court and Federal Circuit have stated that providing improvements to a technology can render an otherwise abstract invention eligible.  But the ITC appears to want the claim to recite the exact PDC structure that causes it to have the claimed characteristics, regardless of any improvement provided.

It is very hard to square this outcome with a number of Federal Circuit decisions.  For example, in Thales Visionix Inc. v. U.S., that Court found the following claim eligible because it encompassed a technological improvement:

A system for tracking the motion of an object relative to a moving reference frame, comprising:
    a first inertial sensor mounted on the tracked object;
    a second inertial sensor mounted on the moving reference frame; and
    an element adapted to receive signals from said first and second inertial sensors and configured to determine an orientation of the object relative to the moving reference frame based on the signals received from the first and second inertial sensors.

This claim is arguably even broader and more functional than the PDC claim above.  The ITC, however, relied on the reasoning in American Axle & Mfg. v. Neapco Holdings LLC that used a bastardized version of the Alice test made up out of thin air to find a functionally-drafted claim ineligible.  So add this case to the parade.

A silver lining to this thundercloud is that Commissioner Schmidtlein dissented from her colleagues' reasoning and would have found the claim eligible.  Commissioner Schmidtlein focused on the improvements over the prior art that were not persuasive to her colleagues, noting that the claimed PDC "exhibits improved mechanical and/or thermal properties and performs better in high-abrasion applications, such as earth-boring drill bits."

She also looked to the specification's teaching that the claimed characteristics relating to coercivity, conductivity, magnetic saturation, and specific permeability "reflect the extent to which the diamond grains have bonded and formed large diamond grains thereby displacing the metal catalyst in the diamond matrix."  As a result, the invention is claimed "in terms reflecting its structure, including its microstructure quantified by various measurements."

Commissioner Schmidtlein explicitly considered the claims as a whole rather than dividing the elements into structure and measurements.  In a detailed review of the specification, she asserted that the characteristics that the majority found to be measurements were in fact tied to the improved performance of the structure.  In finding the claims directed to an eligible composition of matter, she wrote:

Labeling certain claim elements merely as "performance standards," "results," "side effects," or "not a design choice," in my view, fails to appreciate that the claimed parameters are concrete, objective measurements for defining the invention and which reflect the diamond microstructure.  Many properties of patented materials could be described the same way.  As is often the case in materials science and chemistry, intrinsic properties like density, pH, conductivity, and melting point result from other design choices, such as the choice of chemical inputs, processing parameters, and finishing steps.  The claimed PDC involves a composition of matter that the inventors characterized based on what it is.  That a particular material property of this composition of matter "results" from other design choices does not render it abstract.

She also found a distinction between the tangibility of the claimed invention and the precedent used by the majority, which was largely drawn to ineligible software claims involving intangible information.[1]  She further distinguished the invention over that of American Axle, in that the advance of the claimed PDC is a physical structure rather than a law of physics with unbounded parameters.

Finally, Commissioner Schmidtlein wrote "finding claims reciting a specific, definable composition of matter as ineligible . . . suggests that the ID [final initial determination] and Majority have strayed from the preemption concerns that motivate the judicial exception to patent eligibility."

In other words, a drill bit is not an abstract idea.

Commission Opinion

[1] Screaming into the void once again, I remind the world that all software has a tangible representation and that, when executed by hardware, has a tangible effect. 

Chromadex, Inc. v. Elysium Health, Inc. (Fed. Cir. 2023)

By Kevin E. Noonan --

Judge Giles Sutherland Rich, famous for many things (including being the principal author of the 1952 Patent Act and in particular Section 103, which cabined at least for a while the Supreme Court’s penchant for invalidating patents to such an extent that Justice Jackson remarked that the only valid patent was one the Court had not had an opportunity to invalidate, Jungersen v. Ostby & Barton Co., 335 U.S. 560, 572 (1949)) is perhaps most well-known for his aphorism that "the name of the game is the claim."  An illustration of the wisdom of this phrase is the recent decision by the Federal Circuit affirming the District Court's invalidation of asserted claims on subject matter eligibility grounds in Chromadex, Inc. v. Elysium Health, Inc.

The case arose over U.S. Patent No. 8,197,807, directed to dietary supplements comprising nicotinamide ribonucleotide (which is converted in the body to nicotinamide adenine dinucleotide, or NAD+), a co-enzyme commonly known as vitamin B3:

Representative claim 1 at issue was set forth in the opinion:

1.  A composition comprising isolated nicotinamide riboside in combination with one or more of tryptophan, nicotinic acid, or nicotinamide, wherein said combination is in admixture with a carrier comprising a sugar, starch, cellulose, powdered tragacanth, malt, gelatin, talc, cocoa butter, suppository wax, oil, glycol, polyol, ester, agar, buffering agent, alginic acid, isotonic saline, Ringer’s solution, ethyl alcohol, polyester, polycarbonate, or polyanhydride, wherein said composition is formulated for oral administration and increased NAD+ biosynthesis upon oral administration.

After construing the term "isolated nicotinamide ribonucleotide" (or "[NR]") to mean "[NR] that is separated or substantially free from at least some other components associated with the source of [NR]," the District Court granted summary judgment to defendant Elysium for failure of the claims to recite patent eligible subject matter under 35 U.S.C. § 101, on the grounds that isolated nicotinamide ribonucleotide is a product of nature declared ineligible under the rubrics set forth by the Supreme Court in Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 589 (2013).

The Federal Circuit affirmed in an opinion by Judge Prost joined by Judges Chen and Stoll.  The opinion sets forth a comparison between the elements of the claim and milk, a natural product the panel considered manifestly patent ineligible as a product of nature:

The opinion characterizes the claims as being "very broad" and to read on milk with only one difference, i.e., that the nicotinamide ribonucleotide is not isolated.

The Federal Circuit relied on the Supreme Court's Myriad decision and contrasted it with the Court's decision in Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980), in reaching its decision.  In Chakrabarty, the claimed microorganism was not naturally occurring, having been genetically manipulated to encode enzymes capable of digesting "multiple components of crude oil," inter alia, in oil spills, citing as the standard that the claimed bacterium was "a nonnaturally occurring manufacture or composition of matter—a product of human ingenuity having a distinctive name, character and use."  Here, as in Myriad, the claimed nicotinamide ribonucleotide while having been "isolated" was not different and distinct enough "structurally or functionally from its natural counterpart in milk" to be patent eligible.  The Federal Circuit recognized in this opinion one important distinction expressly introduced into subject matter eligibility considerations for natural products by the Supreme Court in its Myriad opinion, that "mere" isolation is not enough to confer eligibility.  This rubric was at odds with how Judge Rich understood natural product eligibility to be determined; after all, in his most famous eligibility case (the companion to Chakrabarty, a case captioned In re Bergy) there was no question raised that "merely" isolated lincomycin antibiotic was eligible.

The opinion also references another post-Myriad natural product opinion, Natural Alternatives Int'l, Inc. v. Creative Compounds, LLC, 918 F.3d 1338, 1342 (Fed. Cir. 2019), where the Federal Circuit held the claims patent eligible.  In Natural Alternatives, the Court recognized that claims to a natural product (beta-alanine) were patent-eligible for reciting "specific treatment formulations that incorporate[d] natural products" and that those formulations "ha[d] different characteristics and c[ould] be used in a manner that beta-alanine as it appears in nature cannot."  Moreover, in that case "natural products ha[d] been isolated and then incorporated into a dosage form"—"between about 0.4 grams to 16 grams"—"with particular characteristics"—namely, to "effectively increase[] athletic performance."  The Court found those "markedly different characteristics distinguished the claimed supplements from natural beta-alanine and preserved the claims' validity."

Those distinctions made all the difference for the Federal Circuit, wherein the opinion noted that the distinctions argued by Chromadex did not require that the claimed composition contained any minimum quantity of nicotinamide ribonucleotide or that the claimed composition increased NAD+ biosynthesis (something that milk itself also did).  The primary deficiency recognized by the panel is that "the claims simply do not reflect the distinctions Appellants rely on," including that "they do not require any specific quantity of isolated NR" and that the term nicotinamide ribonucleotide as construed by the District Court did not require purification from lactalbumin whey protein argued as a distinction by Chromadex.

Having arrived at its determination, the panel went on to apply the formalism of the two-part test enunciated by the Supreme Court in Mayo Collaborative Servs. Prometheus Labs., Inc., 566 U.S. 66, 77–80 (2012), and Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 573 U.S. 208, 217 (2014), in support of its decision.  Not surprisingly, the Federal Circuit came to the same conclusion, finding reliance on the "natural law" that nicotinamide ribonucleotide compositions cause an increase in NAD+ in vivo.

There may be some comfort for the patentee in that the application resulting in this patent has an earliest priority date of April 20, 2005, many years prior to the Supreme Court's Myriad decision, or that there is another patent in the family, U.S. Patent No. 8,383,086, that claims oral pharmaceutical formulations of nicotinamide ribonucleotide.  But an analysis that patent lawyers have been doing long before Myriad's enhanced considerations of subject matter eligibility were those concerning novelty and non-obviousness.  The table contained in the opinion suggests that the claims had "bare-bones" novelty at best and the lone distinction, incorporation of "isolated" nicotinamide ribonucleotide, appears a thin reed to support an assertion of non-obviousness.  While this is just another illustrative example of how the Court could have reached the policy goals in Mayo and Alice (and perhaps Myriad, come to that) using other portions of the patent statute, it also shows that Justice Breyer's apprehension about the "clever draftsman" were both warranted and perhaps the best (only?) bulwark innovators have against summary invalidation of their patents under Section 101.

Chromadex, Inc. v. Elysium Health, Inc. (Fed. Cir. 2023)
Panel: Circuit Judges Prost, Chen, and Stoll
Opinion by Circuit Judge Prost

PTAB Remains Hostile to Section 101 Appeals

By Michael Borella and Ashley Hatzenbihler --

There is ample evidence that patent examiner allowance rates vary dramatically from examiner to examiner and art unit to art unit.[1]  This has resulted in the general understanding that there are "easy" examiners and "tough" examiners.

Naturally, there is little complaining about "easy" examiners (until you are defending against a patent with very broad claims, at least).  But when patent attorneys stand around the coffee machine at work (or, more accurately, are on Zoom or Teams calls), there is a not small amount of eye rolling and wringing of hands over "tough" examiners.

Over the last several years, a particular type of "tough" examiner has emerged -- one that will reject just about any claim as ineligible under 35 U.S.C. § 101 . . . and never withdraw the rejection.[2]  In other words, if you get a 101 rejection from one of these examiners, prosecution is basically over.  Interviews don't help.  Arguments and amendments go nowhere, with the examiner engaging in vigorous goalpost-shifting.[3]  More often than not, the natural habitats of such examiners are the verdant plains of technology centers 1600 and 3600.

The USPTO's Patent Trial and Appeal Board (PTAB) is often a last resort for patent applicants who cannot afford further appeals to the federal judiciary.  Therefore, should not the PTAB lay the judicial smack down on these errant plains-dwellers?  If only.

Last year, we studied all substantive 101 decisions from the PTAB that came down in 2021.  The results were puzzling, striking, and, not in small part, abysmal.  The PTAB affirmed examiners' 101 rejections 87.1% of the time, whereas the overall affirmance rate across all grounds of rejection was 55.6%.  Why the discrepancy?  The data does not provide that information, though it could be due to the notorious vagueness of the test set forth in Alice Corp. v. CLS Bank Int'l, the Federal Circuit's conflicting case law, and/or the PTAB not following the USPTO's 101 guidance.

Regardless of cause, the numbers do not lie.  The PTAB is a brutal tribunal for applicants attempting to argue that an examiner's 101 rejection is in error.

But was 2021 an outlier or a blip on the radar?  Does the data from 2022 exhibit a similar affirmance rate or has there been a "regression to the mean" of sorts?

To answer this question, we once again reviewed every substantive 101 appeal decided by the PTAB in 2022.  As was the case for the 2021 data, this required a particular search strategy as well as manually combing the text of each decision.

From the PTAB's search interface, we specified the following criteria:  decision dates between January 1, 2022 and December 31, 2022, a proceeding type of "appeal", a decision type of "decision", and an issue type of "101".  Even so, the results were over-inclusive, returning decisions that just mentioned 101 in passing.  Thus, we further filtered these decisions to focus only on those in which the applicant appealed an examiner's Alice-based 101 rejection and the PTAB ruled on this grounds of appeal.  This took the 634 decisions returned by the search engine down to 482 -- the substantive 101 decisions.[4]

Of these, 426 were examiner affirmances, for an affirmance rate of 88.4%.  Yep, the PTAB got a little worse for applicants in 2022.  The month-by-month and total statistics are provided in the table below.

Not unlike 2021, the examiner affirmance rate fluctuated with no clear month-over-month trend.  For example, the lowest 101 affirmance rate was in May (77%) while the highest was in October (100%).[5]  Also like 2021, there is a slight downward trend in the number of appeals from Q1 to Q4.  The monthly average of appeals on 101 grounds was 49.5 for the first four months of the year and 34.25 for the last four months of the year (as compared to 78.25 and 49.25, respectively, for 2021).

But one data point that sticks out is that the total number of appeals has dropped significantly year-over-year.  In 2021, 708 substantive 101 decisions were handed down, while in 2022 this number was -- as noted above -- just 482.  That is better than a 30% decline.  From our (admittedly anecdotal) experience, this is not because examiners are getting easier.  The opposite appears to be the case.  It seems more likely that applicants have determined that appealing 101 rejections to the PTAB has betting odds akin to those of the Cleveland Browns making it to the Super Bowl.

Given that the PTAB does not provide much of a recourse for applicants stuck with a 101 rejection from an unrelenting examiner, we next wondered what grounds of rejection are popular with the PTAB.  For the abstract idea exception to patentable subject matter, the three main categories are mathematics, mental processes, and methods of organizing human activity.  In other words, a claim is deemed ineligible for patenting if it is directed to mathematics, a mental process,[6] or a method of organizing human activity[7] without significantly more.

Of all substantive affirmances of 101 rejections by the PTAB, 14.1% were based on mathematics, 58.4% on mental processes, and 64.6% on methods of organizing human activity.  Use of the latter two categories is quite widespread among PTAB judges, with many decisions incorporating new grounds of rejection to accentuate the examiner's mental process rejection with a method of organizing human activity rejection or vice-versa.  Indeed, grounds of both mental processes and methods of organizing human activity were found in 31.9% of all affirmances.

Another factor we looked into was whether certain PTAB panels or judges were making formulaic rejections -- in other words cutting and pasting large sections of their reasoning for the 101 rejections from case to case and only changing the discussion of the facts.  It was not too difficult to identify a few instances of this.

For example, Appeal 2021-002509 (decided January 31, 2022) and Appeal 2021-002913 (also decided January 31, 2022) involve two different applicants claiming two different technologies, but the decisions rely on reasoning that is largely word-for-word the same.  The deciding PTAB panels had two judges in common and both decisions were written by the same judge.  Another example of liberal cutting-and-pasting can be found in Appeals 2021-002840 and 2021-002807, also both decided on the same day by a panel with two judges in common.

It is important to understand that this does not imply laziness or malfeasance on the part of anyone involved in these decisions.  Instead, this is more evidence that it is very easy to find virtually any invention ineligible by robotically deconstructing the claims into small enough parts and ignoring the advantage or improvements provided the claims as a whole.  Not convinced?  Try our rationale for invalidating the eligible claims of Diamond v. Diehr that is based on observed USPTO reasoning.

There is a false narrative that has been floating around for the better part of two decades.  It implies that broad claims on obvious technological variants can be easily obtained from the USPTO.  There may have been some small truth to this notion in the 1990s, but today the pendulum has swung so far in the other direction that narrowly-scoped, complex, innovative technologies are often denied patentability just because they involve software.

As a consequence, the irrational arbitrariness of Section 101 provides limited access to patenting for individual inventors as well as small and mid-sized companies.  Maybe someday the PTAB will lay the judicial smack down in a less one-sided fashion, but for now it appears that 101 appellants need to be wary against flying elbows of ineligiblity.

[1] See the histogram of examiner grant rates compiled by Patent Bots, for example.

[2] Okay, the word "never" is admittedly somewhat hyperbolic, but not far from the truth.

[3] Again, we want to emphasize that most examiners are reasonable, even with their 101 rejections.  Some are quite clear in terms of what they deem to be sufficient to overcome a 101 rejection.  But there is a notable contingent who are not, and anecdotally it seems as if the size of this contingent has grown since early 2021.

[4] Many of these decisions also reviewed rejections on other grounds (e.g., Sections 102 or 103).  We did not consider anything but the 101 determinations.  We also omitted rejections based on laws of nature or natural phenomena, which accounted for only 10 of the decisions and did not impact the results in any significant fashion.

[5] Ouch.  Just ouch.  At least relatively few appeals were decided in October. 

[6] We have previously detailed how illogically and broadly that this category is being construed.

[7] This is another overly-broad category.  What isn't a method of organizing human activity at some level?

Top Four Stories of 2022

By Donald Zuhn –-

After reflecting upon the events of the past twelve months, Patent Docs presents its 16th annual list of top patent stories.  For 2022, we identified ten stories that were covered on Patent Docs last year that we believe had (or are likely to have) a significant impact on patent practitioners and applicants.  On Monday and Tuesday, we counted down stories #10 to #8 and stories #7 to #5, and today we count down the top four stories of 2022.  As with our other lists (2021, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012, 2011, 2010, 2009, 2008, and 2007), links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look.  As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with anything we included, please let us know.  In addition, we will be offering a live webinar on the "Top Patent Law Stories of 2022" on January 24, 2023 from 10:00 am to 11:15 am (CT).  Details regarding the webinar, which will focus on a few of the most important stories on this year's list, can be found here.

4.  Supreme Court Refuses to Grant Certiorari in American Axle v. Neapco Holdings

In May, there was a brief moment of hope in the patent community when the Solicitor General provided the government's views to the Supreme Court in an amicus brief in American Axle & Manufacturing, Inc., Petitioner v. Neapco Holdings LLC.  In the first sentences of the Discussion section of the brief, the Solicitor General writes:  "The court of appeals held that claim 22 of the '911 patent, which claims a method of manufacturing automobile driveshafts that uses specific mechanical structures and calibrates particular physical properties, is patent-ineligible under Section 101.  That holding is incorrect."  Thus, the Solicitor General expressed the government's view that the Supreme Court should grant certiorari with respect to Question 1 of the Questions Presented.  That moment of hope, however, was cut short by the Supreme Court in June, when the Court denied certiorari in American Axle, thereby refusing (once again) to address the morass in patent subject matter eligibility created by its decisions in Bilski v. Kappos; Mayo Collaborative Services v. Prometheus Laboratories; Alice Corp. v. CLS Bank International; and Association for Molecular Pathology v. Myriad Genetics, Inc.  For a Court whose political inclinations became more evident in 2022, the chorus of dissent regarding the state of subject matter eligibility law from the patent community, industry groups, the U.S. Patent and Trademark Office, members of Congress, half (at last count) of the judges on the Federal Circuit, and the Solicitor General has fallen on particularly deaf ears, the Court's refusal in American Axle being the latest.  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.

For information regarding this and other related topics, please see:

• "In re Smith (Fed. Cir. 2022)," September 15, 2022
• "Think Twice About Appealing a § 101 Rejection to the PTAB," September 13, 2022
• "Realtime Adaptive Streaming LLC v. Netflix, Inc. (Fed. Cir. 2022)," July 31, 2022
• "USPTO Director's Blog Post Extolling Certainty in § 101 Determinations Paradoxically Increases Uncertainty," July 26, 2022
• "CareDx, Inc. v. Natera, Inc. (Fed. Cir. 2022)," July 19, 2022
• "The Supreme Court Sidesteps America's Patent Eligibility Crisis," June 30, 2022
• "Supreme Court Denies Cert in American Axle," June 30, 2022
• "Solicitor General Provides Government Views in American Axle & Mfg. Inc. v. Neapco Holdings Co.," May 24, 2022
• "Repifi Vendor Logistics, Inc. v. Intellicentrics, Inc. (Fed. Cir. 2022)," March 23, 2022
• "Mentone Solutions LLC v. Digi International Inc. (Fed. Cir. 2021)," February 8, 2022

3.  WTO Waiver Permits Use of COVID-19 Vaccine Patents -- But WTO Declines to Extend Waiver (For Now) to COVID-19 Diagnostics and Therapeutics

In March, it was reported that the United States, European Union, India, and South Africa had reached an agreement on a waiver with respect to patents for COVID-19 vaccines.  Progress on the compromise appeared to have been made during a meeting of the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS).  And then only a few months later, the World Trade Organization (WTO) Ministerial Conference issued a June 17 Ministerial Decision, which permits an eligible Member, defined as including all developing country Members, to "limit the rights provided for under Article 28.1 of the TRIPS Agreement . . . by authorizing the use of the subject matter of a patent required for the production and supply of COVID-19 vaccines without the consent of the right holder to the extent necessary to address the COVID-19 pandemic."  The "subject matter of a patent" is defined in the Decision as including the ingredients and processes necessary for the manufacture of COVID-19 vaccines.  Eligible Members can apply the provisions of the Decision until 5 years from the date of the Decision (i.e., June 17, 2027).  The Decision also included a provision that "[n]o later than six months from the date of this Decision, Members will decide on its extension to cover the production and supply of COVID-19 diagnostics and therapeutics."  Despite a December request from nine delegations (Argentina, Bangladesh, Bolivia, Egypt, India, Indonesia, Pakistan, South Africa, and Venezuela) calling on the WTO General Council to extend the June 17 Decision to COVID-19 therapeutics and diagnostics, the WTO instead further extended the deadline to decide whether to extend the June 17 Decision.

For information regarding this and other related topics, please see:

• "WTO TRIPS Council Recommends That General Council Extend Waiver Deadline," December 18, 2022
• "Nine Countries Seek Extension of WTO Waiver to COVID-19 Therapeutics and Diagnostics," December 11, 2022
• "Status of Proposed Extension of TRIPS Waiver in WTO," December 8, 2022
• "C4IP Presents Webinar on COVID Waiver Extension," December 5, 2022
• "Moderna Sues Pfizer and BioNTech over mRNA Vaccine Technology," August 31, 2022
• "U.S. Trade Representative Releases 2022 Special 301 Report," April 28, 2022
• "U.S. Chamber of Commerce Supports House and Senate Legislation Prohibiting Biden Administration from Negotiating Modifications to WTO TRIPS Agreement Without Congressional Authorization," April 24, 2022
• "Senators Send Letter to Commerce Secretary Regarding WTO Waiver Compromise," March 28, 2022
• "The Proposed WTO IP Waiver: Just What Good Can It Do? -- An Analysis," March 24, 2022
• "IP Associations "Concerned" by Reports of TRIPS Waiver Compromise," March 24, 2022
• "More on Leaked WTO COVID-19 Vaccine Patent Waiver Compromise," March 21, 2022
• "Compromise Reportedly Reached on COVID-19 Vaccine Patent Waiver," March 16, 2022

2.  Supreme Court to Address Scope of Disclosure Necessary to Satisfy Enablement Requirement of 35 U.S.C. § 112(a)

In November, the Supreme Court surprised the patent community by granting Amgen's petition for certiorari in Amgen v. Sanofi on the second of the Questions Presented in its petition:

2.  Whether enablement is governed by the statutory requirement that the specification teach those skilled in the art to "make and use" the claimed invention, 35 U.S.C. §112, or whether it must instead enable those skilled in the art "to reach the full scope of claimed embodiments" without undue experimentation—i.e., to cumulatively identify and make all or nearly all embodiments of the invention without substantial "'time and effort,'" Pet.App. 14a [emphasis added].

This Question, and how the Court has been petitioned to address it, directly concerns the scope of disclosure necessary to satisfy the statutory requirements of 35 U.S.C. § 112(a), a question of particular importance for genus claims in pharmaceutical and biotechnology patents.  As always, it is impossible to discern the Court's reasoning for granting certiorari.  Here the Court will wade into a question that involves balancing the scope of genus claims and their preclusive preemptive effect on future development of related but not expressly disclosed species, on the one hand, and the need for a patentee of an invention capable of a multiplicity of (relatively) minor structural changes to be able to protect an invention from trivial infringers, on the other hand.  How this issue is addressed will likely make our top stories list for 2023.

For information regarding this and other related topics, please see:

• "Supreme Court Grants Certiorari in Amgen v. Sanofi," November 6, 2022

1.  Impact of Russian Invasion of Ukraine on Global Patent Systems

On February 24, 2022, Russia invaded Ukraine in a major escalation of the Russo-Ukrainian War, which began in 2014.  The invasion has resulted in tens of thousands of deaths on both sides.  It has caused Europe's largest refugee crisis since World War II, with 8 million Ukrainians being displaced within their country by late May, and more than 7.9 million having fled the country as of the beginning of the year.  Many countries imposed sanctions on Russia, affecting the economies of Russia and the world, and provided humanitarian and military aid to Ukraine, totaling over $80 billion from 40 countries as of August 2022.

The impact of the invasion was also felt by the global patent community.  In March, the U.S. Patent and Trademark Office announced that it had "terminated engagement with officials from Russia's agency in charge of intellectual property, the Federal Service for Intellectual Property (commonly known as Rospatent), and with the Eurasian Patent Organization [EAPO]," noting that the termination of engagement with Rospatent and EAPO was in keeping with guidance issued by the U.S. Department of State.  As part of that termination, the USPTO announced that it would no longer grant requests to participate in the Global Patent Prosecution Highway (GPPH) at the USPTO when such requests are based on work performed by Rospatent as an Office of Earlier Examination under the GPPH.  Russia responded to the actions of the USPTO and other patent offices by issuing a Resolution permitting uncompensated use of certain patents without patentee consent -- the patents at issue being held by patent holders who are "associated with foreign states" that commit "unfriendly actions" in relation to Russian legal persons and individuals.

In March, the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury issued a General License authorizing "U.S. persons . . . to pay taxes, fees, or import duties, and purchase or receive permits, licenses, registrations, or certifications" for a limited time when such activities relate to transactions involving the Central Bank of the Russian Federation ("Bank of Russia").  According to the General License, transactions that were "ordinarily incident and necessary to such persons' day-to-day operations in the Russian Federation" were authorized "through 12:01 a.m. eastern daylight time, June 24, 2022."  As a result of the General License, Applicants prosecuting applications before Rospatent or paying annuities on Russian patents would have had to make some difficult decisions regarding the prosecution of those applications and maintenance of those patents by June 24.  But in May, the U.S. Patent and Trademark Office announced that the OFAC's publication of General License No. 31 "authorize[d] certain intellectual property-related transactions in Russia, including the filing and prosecution of any application to obtain a patent, trademark, or copyright, as well as renewal and maintenance fees."  Shortly after the USPTO's announcement, the Intellectual Property Owners Association (IPO) noted that General License No. 31 "clarifies previously issued General License No. 13, which left unresolved whether such payments constituted permissible 'payments for registrations, certifications, and licenses to conduct day-to-day operations' or were prohibited by Russian Harmful Foreign Activities Sanctions Regulations."

Shortly after Russia invaded Ukraine, the Ukrainian Institute of Intellectual Property (Ukrpatent) issued a statement declaring "that during this extremely difficult time for the country, during the military aggression of the Russian Federation against Ukraine, which became the reason for the imposition of martial law . . . the State Enterprise 'Ukrainian Institute of Intellectual Property' (Ukrpatent) continues to operate on a full-time basis providing all the necessary functions and continuous operation of the state system of legal protection of intellectual property."  Although the functions of the National Intellectual Property Authority from Ukrpatent were transferred to the Ukrainian National Office of Intellectual Property and Innovation (UANIPIO) in November (as part of Ukrainian IP reform begun in 2016; see announcement on UANIPIO website), patent protection in Ukraine has not ceased as a result of the conflict.

For information regarding this and other related topics, please see:

• "USPTO News Briefs," June 6, 2022 (Rospatent terminated as ISA/IPEA)
• "Treasury Department Issues General License Authorizing Certain Transactions Related to Patents, Trademarks, and Copyrights," May 10, 2022
• "U.S. Trade Representative Releases 2022 Special 301 Report," April 28, 2022
• "Treasury Department Authorizes Transactions Involving Bank of Russia Until June 24, 2022," April 10, 2022
• "USPTO News Briefs," April 4, 2022 (Rospatent PPH termination)
• "USPTO Provides Advice Regarding Dealings with Rospatent," March 22, 2022
• "Georgian and Estonian Patent Offices Join Other IP Offices in Expressing Support for Ukraine," March 13, 2022
• "Several Law Firms Close Russian Offices," March 13, 2022
• "Russia Permits Uncompensated Use of Certain Patents without Patentee Consent," Match 11, 2022
• "Lithuanian Patent Office and EUIPO Join Other Patent Offices in Expressing Support for Ukraine," March 10, 2022
• "USPTO Terminates PPH with Rospatent and Terminates Engagement with NCIP," March 10, 2022
• "Life Sciences Business Leaders Call for Immediate and Complete Economic Disengagement from Russia," March 9, 2022
• "PRH Joins Other Patent Offices in Expressing Support for Ukraine," March 9, 2022
• "USPTO Terminates Engagement with Rospatent and EAPO," March 7, 2022
• "Ukrpatent Continues Normal Operations Despite Russian Aggression," March 6, 2022

Top Stories of 2022: #8 to #10

By Donald Zuhn –-

After reflecting upon the events of the past twelve months, Patent Docs presents its 16th annual list of top patent stories.  For 2022, we identified ten stories that were covered on Patent Docs last year that we believe had (or are likely to have) a significant impact on patent practitioners and applicants.  Today, we count down stories #10 to #8, and later this week we will count down the remaining top stories of 2022.  As with our other lists (2021, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012, 2011, 2010, 2009, 2008, and 2007), links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look.  As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with anything we included, please let us know.  In addition, we will be offering a live webinar on the "Top Patent Law Stories of 2022" on January 24, 2023 from 10:00 am to 11:15 am (CT).  Details regarding the webinar, which will focus on a few of the most important stories on this year's list, can be found here.

10.  Federal Circuit Denies En Banc Review in GlaxoSmithKline LLC v. Teva Pharmaceuticals USA

The 2020 decision by a divided Federal Circuit panel in GlaxoSmithKline LLC v. Teva Pharmaceuticals USA regarding the extent to which an ANDA applicant who obtained regulatory approval under the carve-out provisions of 21 U.S.C. § 355(j)(2)(A)(viii) could be liable for inducement of infringement under 35 U.S.C. § 271(b) caused something of an uproar, leading to a panel rehearing on the matter but ultimately coming to the same conclusion.  Both decisions were issued in the face of a strong dissent by Judge Prost, in the first decision while she was Chief Judge.  In February, the Federal Circuit decided not to rehear the matter en banc, over the dissenting opinions of three of the judges (including Judge Prost).  The decision by the full Court was announced in a simple Order to that effect, noting that Judges Lourie and Cunningham did not participate in the decision.  The Order was accompanied by three written dissents:  one by Judge Prost, joined by Judges Dyk and Reyna; another by Judge Dyk writing alone, and the third by Judge Reyna.  The majority consisted of Chief Judge Moore and Judges Newman (who was the third member of the original panels), O'Malley, Taranto, Chen, and Stoll.  Provided that the panel decision does not significantly inhibit "skinny-label" practice, these issues are sure to recur and be the subject of additional Federal Circuit decisions which will make the consequences of this decision, and the Federal Circuit's decision not to review the panel opinion en banc, more evident.

For information regarding this and other related topics, please see:

• "GlaxoSmithKline LLC v. Teva Pharmaceuticals USA (Fed. Cir. 2022)," February 15, 2022

9.  New York Times Reopens Attack on U.S. Patent System

Over the years, this blog has found itself at odds with The New York Times on the issue of patenting.  See, e.g., "Anti-Patent ("Sullivan?") Malice by The New York Times," January 29, 2007; "Science Fiction in The New York Times," February 13, 2007; "The Anti-Patent Beat Goes on at The New York Times," July 1, 2007; "The Continuing Assault on Innovation at The New York Times," July 15, 2007; "New York Times to Innovation: Drop Dead," April 30, 2008; "New Attack on Patenting in The New York Times," September 7, 2008; "More Patent Nonsense from The New York Times," April 17, 2011.

In April, The New York Times published an editorial opinion entitled "Save America's Patent System," in which the paper bemoaned the purported prevalence of "bad patents" -- including "uninspiring tweaks" to existing products -- that supposedly undermine innovation.  The Times Editorial Board decided that it was time to announce that the "United States Patent and Trademark Office is in dire need of reform."  Were that the case, the Times' rhetoric would deserve serious consideration; as it is, the paper continues a history of wrongheaded, faux populist rhetoric that comes to the entirely wrong conclusion.

For information regarding this and other related topics, please see:

• "Faux-Populist Patent Fantasies from The New York Times," April 17, 2022
• "Before You Complain About So-Called Bad Patents, Read This," April 17, 2022

8.  Senator Tillis Releases Proposal to Reform 35 U.S.C. § 101

In August, Republican Senator Thom Tillis of North Carolina released a new proposal to reform the text of 35 U.S.C. § 101.  The Senator's last effort in doing so died on the vine in 2019, purportedly due to stakeholders being too far apart in their visions of what patent eligibility should be all about.  But there seems to be a renewed interest in addressing at least some of the ambiguities introduced by the Supreme Court in Alice Corp. v. CLS Bank Int'l and Mayo Collaborative Services v. Prometheus Laboratories, Inc.  Those decisions, which came down in 2014 and 2012, respectively, led to the current state of affairs in which diagnostic methods are effectively unpatentable and software patents can be invalidated based on fuzzy, conclusory reasoning.  Senator Tillis' proposed revisions to § 101 attempt to find a middle ground between varying stakeholder concerns by overruling some aspects of the Supreme Court's recent eligibility jurisprudence and codifying other aspects.  It is unlikely that any one stakeholder will be entirely satisfied with this proposal, but as a starting point the patent community could do much worse.

For information regarding this and other related topics, please see:

• "The EFF is Patently Wrong," August 24, 2022 (Tillis bill)
• "More on Professor Sarnoff's Perspective on Tillis Patent Eligibility Bill," August 9, 2022
• "Professor Sarnoff Provides His Perspective on Tillis Bill," August 8, 2022
• "Senator Tillis' Patent Eligibility Reform Proposal: A Biopharma Perspective," August 3, 2022
• "Senator Tillis Proposes Patent Eligibility Reform (Again)," August 3, 2022

The Existence of ChatGPT Does Not Justify Attempts to Equate Human and Machine Cognition

By Michael Borella --

In a recent article, we argued that patent law's current subjective and inconsistently-applied mental process doctrine is erroneously based on a false equivalence between human and machine cognition.  Notably, inventions that would require machine implementation to be of any practical use at all are mistakenly barred from patentability because they are allegedly directed to "mental" processes.  This mental process doctrine has been growing and expanding over the last 50 years despite having at best a poor grounding in both fact and law.

In the meantime, the talk of the Internet these days is ChatGPT, a large language model that is capable of producing remarkably human-like text.  Trained on a corpus of millions of human language documents, ChatGPT can generate impressive results from a simple prompt.

For example, I asked ChatGPT to "write a rap song about trickle-down economics invoking Adam Smith and Ronald Reagan."  It came back with the following (from which two verses and the chorus are excerpted):

Adam Smith and Ronald Reagan,
Two icons of the trickle down scene.
They preached the gospel of supply and demand,
And said the economy would be freed from government's hand.

The theory goes like this: the rich invest,
And the benefits of their success will be expressed.
Through higher wages and more jobs, it's a win-win,
But some say the reality is much more grim.

It's the trickle down, the trickle down,
Where the wealth flows from the top to the ground.
It's the trickle down, the trickle down,
Where the rich get richer and the poor get poorer, it's the trickle down.

Not bad.  ChatGPT can also explain the difference between a patent and a trademark:

A patent is a form of intellectual property that gives the person who holds the patent the exclusive right to prevent others from making, using, selling, and importing an invention for a limited period of time, usually 20 years from the filing date of the patent application.  Patents are granted for new, useful, and non-obvious inventions or discoveries.

A trademark is a word, phrase, symbol, or design, or a combination of these, that identifies and distinguishes the source of the goods or services of one party from those of others.  A trademark can be a brand name, slogan, logo, or other distinctive mark that is used in connection with a product or service.  Trademarks are used to protect brand identity and ensure that consumers can easily identify and distinguish one company's products or services from those of another.

In summary, a patent protects an invention, while a trademark protects a brand or logo.

Also not bad.  In addition, ChatGPT can write text in the style of a particular author, essays on virtually any topic, and even computer code.[1]  It can also answer questions.  Thus, the text that it generates encompasses the functionality of search engines and Wikipedia, but adds a new aspect -- it can create.  That is where things get sticky.

Not only are ChatGPT creations cogent enough to make school teachers reach for their aspirin bottles, they may suggest to naïve users that ChatGPT is intelligent, wise, and human-like.  While ChatGPT would not pass the Turing Test in its current incarnation, it is good enough to fool the easily fooled.

And those, naïve, easily fooled types might attempt to use ChatGPT's impressive performance on some tasks to justify patent law's mental process doctrine.  After all, ChatGPT output sure seems to be based on something at least similar to human cognition.

But even if it quacks like a duck that does not mean that it flies south for the winter.  ChatGPT's internal operation is little like that of a human brain, even if you limit your analysis of the human brain to language.

In short, ChatGPT is autocomplete on steroids.  Underlying ChatGPT is a transformer-based large language model that is trained by a massive amount of text to predict the next word of a sentence given the first n words of that sentence.  In order to get it to respond to queries, a second model is trained, one in which thousands of prompts and associated responses are generated (some automatically, some manually), and human reviewers rate the quality of each response with respect to its prompt.  A further model is trained to predict how well a human would rate each response.  Then, ChatGPT is trained to generate responses that would be highly-rated by a human.[2]

This does not resemble our current understanding of human cognition.  For example, as far as we know human beings use cognitive models to represent real-world objects and their behavior.  Based on these models, humans can make predictions of what these objects would do in new situations.  Thus, a child might (hopefully) be able to infer that a stove hot enough to boil water will be painful to touch.

In contrast, modern computer language models struggle making such predictions.  This is a general problem in artificial intelligence -- unless a model is specifically programmed or trained with data representing a scenario, its prediction of what may occur or what it should do in that scenario may be way off the mark.

For an example of this, ask ChatGPT to write a review of a well-known movie, such as Star Wars or Titanic.  The result will be impressive.  Then ask it to write a review of a lesser known, newer movie.  Prepare for disappointment.  A number of comical and disturbing ChatGPT fails have been noted.

Further, human beings have a theory of mind, in that we assign mental states to other persons in order to understand their behavior.  ChatGPT does not do this and therefore cannot modulate its output based on the emotions exhibited by a user.  Despite the fact that ChatGPT can provide you with a definition of a person, it does not actually understand what a person is and it lacks the ability to emote.  It might be able to simulate various emotions but it does not have the ability to have emotions of its own or to exhibit true empathy.[3]

Moreover, ChatGPT does not know whether it is generating text that represents the truth.  It has no concept of "truth" and no way of verifying that what it is saying is accurate, much less a moral compass to guide its actions.  And it has been known to generate very convincing falsehoods.

So don't ask ChatGPT for psychological help, dating advice, or who to vote for.  And if you do, take its output with a huge dose of skepticism.  ChatGPT creations are merely sophisticated pastiches of the writing on which it was trained.

What this all leads to is the inevitable conclusion that ChatGPT's often remarkable language skills are not anything like a human mental process.  Therefore, using the existence of ChatGPT to justify mental process doctrine in patent law is disingenuous at best.  So let's cut off that avenue of inquiry before anyone foolishly decides to venture down its path.

[1] On the other hand, I asked ChatGPT to "write an article about Alice v CLS Bank in the style of Kurt Vonnegut," and the result was rather bland with mild sarcasm sandwiching a textbook description of the case.  So it goes.

[2] See https://pub.towardsai.net/chatgpt-how-does-it-work-internally-e0b3e23601a1 for a more detailed technical description.

[3] Here, I am not trying to contend that there is something magical about human beings, just that AI models still have a long way to go in their ability to simulate human intelligence and may continue doing so in a way that is quite distinct from human cognition.

Alternative Reasoning for Supreme Court's Life Sciences Subject Matter Eligibility Jurisprudence

By Kevin E. Noonan --

Last week, IP Law360 published an erudite and provocative article by Joseph Matal and his colleagues regarding the Supreme Court's recent subject matter jurisprudence in the context of earlier decisions in the 19th and early 20th Centuries (see "How Mayo V. Prometheus Strays From Patent Precedent").  These decisions included Le Roy v. Tatham, 55 U.S. 156 (1852) (manufacture of lead pipes); Burr v. Duryee, 68 U.S. 531 (1863) (hat-making machinery); Mitchell v. Tilghman, 86 U.S. 287 (1874) (methods for making fat-acid and glycerin from natural fats); and Eibel Process Co. v. Minnesota & Ontario Paper Co., 261 U.S. 45 (1923) (related to paper-making machines) as examples.  While not every one of these cases held that the patent at issue recited eligible subject matter, the article maintains that together they set forth consistent, well-established principles of subject matter eligibility.  In particular, these authors argued that the principle that discovery of a "law of nature" did not preclude patentability of an application thereof was so well-established that Mr. Matal and his colleagues quote the Rivise and Caesar treatise to the effect that "'where the inventor was . . . also the discoverer of the law or force utilized,' the claimed invention was patentable even if 'it appeared that the application or utilization of the law became self-evident as soon as the principle was formulated.'"  Charles W. Rivise & A.D. Caesar, Patentability and Validity §33-34 (1936).

The article identifies the Court's decision in Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948), as the case where the Court's eligibility jurisprudence turned (wrongly), leading to later cases culminating in the Court's decision in Mayo Collaborative Services v. Prometheus Laboratories Inc., 566 U.S. 66 (2012), which decision Mr. Matal asserts "is at war with the rest of the Supreme Court's eligibility jurisprudence and with core premises of the patent system."  This is a sentiment with which many patent practitioners would agree.  The remainder of the article is a respectful explication of why the Court's recent subject matter eligibility decisions are inconsistent with the earlier precedents discussed therein.

But there is perhaps another perspective.  Perhaps stare decisis (or doctrinal consistency), particularly when considered in a historical context measured in centuries, is not the proper role of the Court (while recognizing the necessity for such consistency over shorter timeframes to avoid serious societal disruption; see, e.g., Dobbs v. Jackson Women's Health Organization, 597 U.S. ___ (2022)).  Strict compliance with earlier precedent would have prevented the Court from deciding Brown v. Board of Education the way it did in view of Plessy v. Ferguson, after all.  It may be better to think about the role of the Court in the "checks and balances" constitutional scheme is to remain a constant check on how or whether the other branches have exceeded their constitutional authority, and regarding subject matter eligibility that is certainly a strong basis for the current state of the law.

Mr. Matal and his colleagues are correct, of course, in identifying Funk Bros. v. Kalo Inoculants as a break point in the Court's considerations of the proper scope of subject matter eligibility, and that the Court's decision in Mayo (and Myriad) were consistent with this decision (albeit being inconsistent with the earlier precedent cited by Mr. Matal).  This leads straightforwardly to a consideration of why the Court has taken this tack, and a comparison of the earlier cases cited by Mr. Matal regarding their eligible subject matter with the ineligible subject matter under Funk Bros., Mayo, and Myriad provides a suggested common thread.

And that thread is subject matter, and its underlying natural laws, related to biological inventions.  It is entirely possible that without subscribing completely to District Court Judge Sweet's rationale for why a gene should not be patent-eligible (being the "physical embodiment of biological information") the Court is concerned with permitting patenting of biological inventions based on natural laws regarding biology.  Professor Andrew Torrance has advanced this argument in his paper "Nothing under the Sun That Is Made of Man" (Torrance, Andrew W., 2021, "Nothing Under the Sun that is Made of Man," 2020 Mich. St. L. Rev.).  (This thinking can be extended to include a basis for the Court's distaste for inventions implicating human thought, no matter how attenuated it may be in practice.)  In addition, it is evident that Justice Breyer in particular has such concerns in his dissent in LabCorp v. Metabolite and Mayo (see Noonan, K.E., 2022, "Justice Breyer: No Friend to IP Law,  21 UIC Rev. Intell. Prop. L. 58).  Thus, one method for determining whether there is such a prejudice against biological invention would be to make a hypothetical comparison or two between those cases that the Court would have been likely to have found to be eligible in the era discussed by Mr. Matal and colleagues and what the Court has decided since Funk Bros.

Hypothetical claim 1

A method for predicting a nuclear power plant reactor failure, comprising the steps of assaying pressure in a reactor coolant tank and correlating pressure fluctuations with the likelihood of failure, wherein a pressure fluctuation of +/- 7% indicates a greater than 90% likelihood that the reactor will fail.

It is unlikely that such a claim would be considered ineligible for many of the reasons enunciated in the earlier Supreme Court cases cited in Mr. Matal's article.  The claim involves an application of a law of nature -- the effects of high pressure created by the heat generated by nuclear fission in a reactor -- under circumstances entirely created by man (i.e., man-made nuclear fission in a man-made reactor).  The claim takes advantage of an application of this law of nature under circumstances that do not arise naturally, thus providing no basis for the application of the Court's recent subject matter eligibility proscriptions.

Hypothetical claim 2

A method for predicting escalation of a hurricane to Category 5 status, comprising the steps of assaying ocean temperature along a predicted storm track, wherein the hurricane is predicted to achieve Category 5 status if the ocean temperature changes by more than 5 degrees Celsius over less than 100 miles of the storm track.

This claim presents a closer case, because it involves a natural phenomenon -- a hurricane -- and the relationship between ocean temperature and future severity of the storm.  However, it is also a clear application of that law of nature for a human purpose -- predicting future hurricane severity and obtaining the benefits thereof -- specifically applied to this particular phenomenon.

Myriad – Claim 2 of U.S. Patent No. 6,033,857, invalid under Mayo

A method for diagnosing a predisposition for breast cancer in a human subject which comprises comparing the germline sequence of the BRCA2 gene or the sequence of its mRNA in a tissue sample from said subject with the germline sequence of the wild-type BRCA2 gene or the sequence of its mRNA, wherein an alteration in the germline sequence of the BRCA2 gene or the sequence of its mRNA of the subject indicates a predisposition to said cancer.

This claim, invalidated by the Federal Circuit in applying the rubrics from Mayo, shares many of the characteristics of the hypothetical claims, specifically by making a prediction of a future eventuality -- breast cancer incidence -- based on the relationship between the presence of certain mutations in the BRCA2 gene with such incidence (a discovery of a natural law).  As with the relationship between heat and pressure in Hypothetical 1 and between ocean temperature and hurricane intensity in Hypothetical 2, the relationship between BRCA gene mutations and disease is a natural phenomenon that can be (and has been) exploited for human benefit.  Note that this application of the consequences of genetic analysis does not involve nor require any rights to the underlying gene to be expropriated, which was at least the apparent basis for the challenge to "gene patents" that resulted in the Myriad decision (see, e.g., Contreras, 2021, The Genome Defense).

What this assessment indicates is that the Court at this time has decided that claims that so intimately implicate fundamental biological laws (particularly but not exclusively involving human biology) should be restricted in scope.  There is precedent for this legal distinction already in U.S. patent law, specifically in the differential treatment of medical (especially surgical) methods under 35 U.S.C. § 287(c).  There are certainly arguments to be made why this is unnecessary for any fundamental legal or moral principle and, indeed, may be contrary to such principles, insofar as the recent Supreme Court decisions have impeded development of genetically based diagnostic tests.  But relying on the inconsistencies of these decisions with earlier Supreme Court precedent seems to miss the more fundamental fact that the Court does not appreciate there to be any such inconsistency and indeed believes these decisions to be entirely consistent with its role in cabining Congress's subject matter eligibility within proper constitutional grounds in order to promote progress.

These considerations explain to some degree the Court's refusals to grant certiorari in the many Federal Circuit decisions applying the Court's subject matter eligibility framework to diagnostic method claims.  They also suggest that the Court's next foray into questions involving scope of biologically related patent claims, the upcoming Amgen v. Sanofi case, is unlikely to result in any expansion of claim scope and that the Court will look favorably on the Federal Circuit's recent decisions requiring the scope of a validly granted claim to be restricted to what has been expressly disclosed.  Such a decision, if it comes to pass, will require patent practitioners' noted cleverness in crafting claims that are sufficient to protect commercial embodiments of inventions having extraordinarily high costs to bring to market.  It also may, in its own way, impede innovation in some inventions as much as the Court's recent subject matter eligibility jurisprudence has.

In re Smith (Fed. Cir. 2022)

By Michael Borella --

In a ruling that should surprise absolutely nobody, the Federal Circuit rapidly scrapped an appeal of a PTAB decision that affirmed a 35 U.S.C. § 101 rejection of a business method claim.  This is the latest in a series of cases going back years in which the Court tends to find inventions that improve business processes ineligible for patenting, even if computer implementation is required.

At issue was representative claim 1 of U.S. Patent Application No. 14/786,244, which recites:

A method for facilitating asset acquisition, asset management and asset maintenance whereby customers can purchase from multiple vendors comprising:
    providing to vendor and customer users access to consortium management software;
    providing and maintaining in said consortium management software relational data base tables which are linked together, including a vendor/customer database table, whereby vendor users and customer users can enter their identifying and personal data, and a searchable product catalogue database table;
    providing in said searchable product catalogue database for receipt from vendor users, product, product pricing and product maintenance data;
    providing an inventory database table and a customer asset management database table;
    providing customer users access to said searchable product catalogue database, whereby a customer searches the catalogue data base and purchases from any vendor user product selected from said product catalogue database;
    providing for association of any said user's identifying data with information in any database table, which information is pertinent only to a particular said identified user with said users identifying data; [and]
    linking the purchasing customer's identifying information from the customer/vendor database table, and the product, product pricing and product maintenance data for the selected product or products, to one or both of said inventory database table and/or said customer asset management data base table, such that the customer can retrieve, use and manipulate the product, product pricing and product maintenance data in connection with the management of the assets purchased.

In Alice Corp. v. CLS Bank Int'l, the Supreme Court set forth a two-part test to determine whether claims are directed to patent-eligible subject matter under § 101.  One must first decide whether the claim at hand involves a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further decide whether any element or combination of elements in the claim is sufficient to ensure that the claim includes an inventive concept amounting to significantly more than the judicial exclusion.  But elements or combinations of elements that are well-understood, routine, and conventional will not lift the claim over the § 101 hurdle.  While this inquiry is generally carried out as a matter of law, factual issues can come into play when determining whether something is well-understood, routine, and conventional.

In practice, either part of the Alice test can be satisfied when a claim recites a specific, technical advance over the prior art.  The Federal Circuit made this explicitly clear for part two in Dropbox Inc. v. Synchronoss Techs. Inc., holding that "an inventive concept exists when a claim recites a specific, discrete implementation of the abstract idea where the particular arrangement of elements is a technical improvement over the prior art."  Similar reasoning can be pieced together for part one through a synthesis of Federal Circuit decisions since 2014.

During prosecution, the Examiner rejected all of Smith's claims as directed to patent-ineligible subject matter.  The Examiner's rationale, tersely set forth, was that the claimed invention was drawn to an abstract method of organizing human activity without reciting significantly more than that.  The PTAB agreed, finding that the claim recited "collection, display, and manipulation of data and was thus directed to an abstract idea, and that it contained no inventive concept that would make it patent eligible."  Regarding the lack of an inventive concept, the PTAB stated that "any such additional elements include only conventional computer components and that these elements, when considered individually and as an ordered combination, are well-understood, routine, conventional activity in the field and are not specified beyond a high level of generality."

On appeal to the Federal Circuit, the Court found no error in the PTAB's reasoning.  The Court observed that claims "directed to collection of information, comprehending the meaning of that collected information, and indication of the results, all on a generic computer network operating in its normal, expected manner are claims to abstract ideas."  The Court went on to determine that there was no dispute that claim 1 did not improve the functioning of a computer.

Nonetheless, Smith made an unusual (and ultimately ill-advised) argument that "the first step in analyzing a claim to a new process or an improvement thereof must be to determine whether it is useful" and if so "it is by law patent eligible."  The Court rejected this notion in full, stating that "utility is not the test for patent eligibility" and that this argument was "inconsistent with the framework set out in Alice."

A somewhat more relevant argument was that the "Board failed to consider the claims as a whole."  The case law has never established exactly what it means to consider claims as a whole.  Often the § 101 inquiry ignores or downplays this requirement, merely allowing conclusory reasoning to win the day.  The PTAB's reasoning was not completely conclusory but it did not go into any significant detail.  Nonetheless, what the Court was likely looking for here is a contention (supported by evidence in the claim itself or in the specification) that the invention improves a computer or some other technological component or process.  Since the PTAB stated that the claim involved, at best, "an improvement in business practice for which generic computer components are used in their ordinary capacity," this was enough for the Court to affirm the rejection.

In re Smith (Fed. Cir. 2022)
Nonprecedential disposition
Panel: Circuit Judges Lourie, Dyk, and Hughes
Per curiam opinion

Think Twice About Appealing a § 101 Rejection to the PTAB

By Michael Borella and Ashley Hatzenbihler* --

The U.S. Patent and Trademark Office (USPTO) established its Patent Trial and Appeal Board (PTAB) in September 2012.  As mandated by the America Invents Act, the PTAB conducts administrative trials, such as inter partes reviews, and handles appeals from examiner rejections of patent applications.

Regarding the trials, former Federal Circuit Judge Randall Rader nicknamed the PTAB a "death squad" for patents, as PTAB judges were tasked with invalidating patents that had been duly issued by the examining corps.  The accuracy of this moniker is debatable, as the latest published trial data for fiscal year 2022 indicates that only 34% of all patents undergoing such a trial eventually have at least some claims invalidated.  But if we eliminate those for which the trial settled or was dismissed early for some reason, this number jumps to 49%.  And if we only consider final written decisions, the number is 83%.

On the appeals side, the latest published appeal data for fiscal year 2022 indicates that the PTAB affirmed examiners 55.6% of the time, and affirmed examiners in part 9.1% of the time.  Still, there has been growing anecdotal evidence that appeals of rejections made on grounds of subject matter eligibility -- addressing the requirements of 35 U.S.C. § 101 as interpreted by the courts -- had abysmally low win rates for applicants.  Indeed, Professor Dennis Crouch published a short blog post stating that the PTAB affirmed examiners a whopping 92% of the time for § 101 appeals decided in the June/July 2021 time frame.

If true, this statistic should give us pause -- applicants should be aware that their chances of winning a § 101 appeal are somewhere around that of the proverbial snowball in Hell.  Also, USPTO administrators might want to determine why this number is so extreme.

Professor Crouch did not provide a description of his methodology for coming up with this 92%, though it appears that he used a third-party analytics tool.  From experience, our gut instinct was that this affirmance rate is higher than expected, and that a larger data set would likely find it to be between 75% and 80%.  So we decided to undertake that analysis.

We searched the USPTO's PTAB decision database for all § 101 appeals decided in calendar 2021.  When taking a first pass through the data, we found that it needed some filtering to be meaningful.  Using the database's search function resulted in just about any appeal that involved § 101 in some fashion.[1]  Therefore, we only considered appeals that matched the following criteria:

1.  The decision was published between January 1, 2021 and December 31, 2021.

2.  The decision was not for a request for rehearing.

3.  The appeal was over a § 101 rejection that invoked Alice Corp. v. CLS Bank Int'l, and not just a purely statutory or double patenting § 101 rejection.

4.  The applicant appealed on grounds of § 101 and the PTAB rendered a substantive § 101 opinion.  This eliminates cases where the applicant appealed a § 101 rejection, but the examiner subsequently withdrew the rejection, as well as cases where the applicant did not appeal on § 101 grounds but the PTAB provided new grounds of rejection on the basis of § 101.

5.  For purposes of categorizing whether an examiner was affirmed, if the PTAB affirmed the examiner's § 101 rejections on as little as one claim, we considered the examiner to be affirmed.  In practice, relatively few decisions resulted in some claims being held ineligible and others eligible.

Once these criteria are applied, in theory we are left with three possible outcomes of each appeal:  (i) the examiner is affirmed, (ii) the examiner is reversed, or (iii) the examiner's § 101 rejections are reversed but the PTAB issues new grounds of rejection under § 101.  In looking at the decisions, we did not identify any appeals falling into the third category, so the outcomes are either affirmance (applicant loses) or reversal (applicant wins).

Our results are in the table below, broken out by month.  For each month, we provide the total number of appeals that came up in our search, and identify those that are disqualified according to our criteria.  The remaining are the total appeals on § 101 grounds.  These are broken out into those that were affirmed and those that were reversed.  The effective affirmance rate is the number of § 101 appeals affirmed divided by the total appeals on § 101 grounds.

Jumping straight to the payoff -- Professor Crouch's one-month analysis is not far off for 2021 as a whole.  In 2021, the PTAB affirmed § 101 rejections from examiners 87.1% of the time.  Put another way, in about 7 out of every 8 such appeals, the applicant lost.  All things the same, this gives the applicant about the same odds as drawing either three of a kind, a straight, or a flush in 7-card poker.

But the effective affirmance rate varied from month to month.  It was at a low point in January (76.6%) and a high point in July (96.2%), though there was no clear month-over-month trend.  For the most part, the percent hovered in the mid to high 80s.  On the other hand, the number of total appeals on § 101 grounds trended downward throughout 2021, with the monthly average being 78.25 for the first four months of the year and 49.25 for the last four months of the year.  This suggests that fewer applicants are filing appeals, probably due to the rather disappointingly low likelihood of obtaining a positive outcome.

So what does this mean for applicants?  One obvious recommendation is to avoid appealing § 101 rejections to the PTAB unless you have a very strong case.  Instead, try to work with the examiner to the extent possible.  The problem with this approach, however, is that some examiners issue § 101 rejections on a regular basis and rarely withdraw such rejections.  Sometimes, this reticence is based on gamesmanship rather than application of the applicable law.[2]  Thus, applicants may be incentivized to file continuations or continuations-in-part in attempts to get another bite at the apple with a new (and hopefully more reasonable) examiner.  Nonetheless, the best way of dealing with § 101 is avoiding having to deal with § 101 altogether.  If possible, drafting claims and a specification that cover the technical aspects of the invention in a specific fashion that sets forth its advances over the prior art is the best way to dance around the Alice quagmire.

But our observations should be considered by USPTO administration as well.  Is this level of examiner affirmance justifiable given that the affirmance rate for § 103 appeals is around 50%?  Are these § 101 appeals for claimed inventions that clearly do not qualify as patent-eligible under Alice and the subsequent case law (e.g., do the claims lack a specific, technical improvement over the prior art)?  Are PTAB judges under undue pressure to affirm or have they developed a culture that improperly favors affirmances?  Are the judges fully considering the technical advances set forth in the claims and/or the specification?  Are applicants' analogies to patent-eligible cases being given the appropriate amount of weight?

The bottom line is not good news for anyone dealing with a § 101 rejection.  The usual route that an applicant can take when at an impasse with an examiner is to appeal.  But that route has been narrowed to a dirt road traversing the edge of a cliff with no guardrails . . . and there may be a death squad blocking your path.

[1] For example, a search by Proceeding Type (Appeal), Decision Type (Decision), and Issue Type (101) results in a list of cases that is overly inclusive and often containing some that had nothing to do with § 101 at all.

[2] We want to emphasize that the vast majority of examiners are honest, hardworking, and at the very least attempt to apply the law in a cogent, rational, and fair basis.  Nonetheless, the vagary of § 101 in particular opens the door for shenanigans.

* Ashley Hatzenbihler is an associate with MBHB.  Ashley recently graduated from Loyola University Chicago School of Law, where she was an associate editor of the Loyola University Chicago International Law Review.  Prior to law school, Ashley received a Bachelors in Mechanical Engineering with a minor in Mathematics from Marquette University, and a Masters of Science in Mechanical Engineering from Marquette University.

More on Professor Sarnoff's Perspective on Tillis Patent Eligibility Bill

As promised in our earlier post (see "Professor Sarnoff Provides His Perspective on Tillis Bill"), here we turn to Professor Joshua Sarnoff's thoughts on the portions of Senator Thom Tillis' (R-NC) bill regarding diagnostic method patents.  Those thoughts were presented in abbreviated form in the earlier post because we did not have the space the discussion deserved.  Here they are in full, followed by Kevin Noonan's response.

Professor Sarnoff:  Kevin posits that Mayo (and implicitly Myriad) have adversely affected innovation in diagnostic methods.  Perhaps Kevin is right in regard to venture and other capital investments in developing such methods (but see below that such investment has not been diminished in regard to diagnostics).  But the data shown below tell a different story in regard to whether the restrictions on eligibility have been bad for innovation, at least in the diagnostics space.

To make the point, I quote from the submission of the Association for Molecular Pathology (a trade association for diagnostics developers) on the 2021 PTO Jurisprudence Study request for comments, explaining why innovation and access have expanded, not contracted, for diagnostic tests post-Myriad and Mayo.  This is the only natural experiment that has been conducted in recent memory, so simply stating that investment has declined is not a meaningful response to the argument that innovation has nevertheless increased.  Hopefully, Kevin can respond with actual data to show that the AMP is wrong; if not, hopefully he will revise his views and accept that Myriad and Mayo should be preserved (at least for diagnostics).

AMP strongly supports the Supreme Court decisions in Mayo Collaborative Services Inc. v. Prometheus Laboratories Inc. (Mayo), Association for Molecular Pathology v. Myriad Genetics (Myriad), Inc., and Alice Corp. v. CLS Bank International (Alice).  As professionals developing, validating, and performing laboratory tests, we see no evidence that these court decisions have had a "dramatic negative impact on investment, research, and innovation" as it relates to molecular laboratory testing.  We present the following information to demonstrate that due to the protection afforded by these cases, the field of molecular diagnostics is innovating, growing, and thriving.

In 2001, a survey of 122 clinical laboratory professionals performing genetic testing demonstrated that most felt the patent environment was negatively impacting the cost, access, and development of genetic tests.  Ninety-one respondents said that their laboratories needed to obtain a license to use a patented method, device, or reagent.  A quarter of the respondents had stopped performing a test altogether because of a patent or license.  Moreover, fifty-three percent (53%) of respondents decided not to develop a new clinical genetic test because of a patent or license.  In a thorough assessment by the U.S Department of Health and Human Services Secretary's Advisory Committee on Genetics, Health, and Society (SACGHS) in 2010, the Committee recognized the burden associated with negotiating numerous licenses and how the cost of these endeavors may render a clinically valuable test unworthy of financial investment.  As scientific understanding of genetics and genomics has increased over time, so has an appreciation of the polygenic (involving more than one gene) nature of disease.  In 2021, the prospect of negotiating numerous licenses for multiple genes threatens standard medical practices that have evolved since Mayo, Myriad, and Alice.

Today, in a post-Mayo, Myriad, and Alice world, we are fortunate to have an environment where molecular professionals are not restricted by the existence of gene patents when developing and employing clinical laboratory tests in their practice.  We implore you consider these experiences and case studies . . . .

CGP, WES, and WGS are made possible because information about thousands of genes and the role of various segments of genetic sequences in human health and disease can be incorporated into a single test.  Prior to Mayo, Myriad, and Alice, this was not possible as it would have required a laboratory to obtain a license for every gene patent that existed or to exclude potentially clinically relevant genes from the analysis.  Instead of promoting an environment for growth and innovation, patents on genetic information would have siloed testing and inhibited patient access to more comprehensive testing options.  In fact, since these court decisions, there has been increasing support by researchers and genetic testing laboratories to share and provide open access to information on genetic variants . . . .

The necessity for molecular professionals to operate, innovate, and developed testing for patients in an environment free of considerations related to the patent-status of SARS-CoV2 and COVID-19 disease are crystalized when considering the necessity of frequent shifts in testing strategy due to external challenges experienced repeatedly since February 2020.  AMP members have been on the frontlines of responding to the COVID-19 pandemic by developing and providing molecular-based diagnostics for patients across the United States.  We surveyed our membership multiple times over the course of 2020 and collected over 250 responses from molecular laboratory professionals to understand their successes and hurdles when developing and providing the crucial and timely diagnostic services that patients needed during the COVID-19 pandemic.  In August and April of 2020, respondents reported that supply chain interruptions were having a significant impact on their work -- in August, over 90% reported that interruptions delayed and/or decreased testing.  Similar responses across all laboratory types indicated that additional resources were needed to implement and/or maintain testing, with commercially-available testing kits and platform-specific laboratory consumables identified as the most needed items.  To overcome testing supply shortages and maintain their testing capacity, molecular professionals deployed multiple testing methodologies, i.e. they built redundancy in test protocols within their laboratories in order to switch to a different testing platform when a shortage compromised use of another one.  Many used more than three methods, which were often a combination of both commercially available testing kits and laboratory developed testing procedures that they designed and validated in their own laboratories.  Our findings indicated that testing diversity continues to play an important role in the public health emergency to meet the clinical need.  If laboratories and manufacturers needed to navigate multiple patent and licensing arrangements related to SARS-CoV-2 RNA sequence with each assay adjustment or introduction, the observed testing response would not have been possible.

Kevin Noonan's response:  Before turning to the contrary data, a few points are important.  Everyone's opinion is necessarily informed by their experience, and it is not surprising that doctors believe that their mission to save lives is paramount.  Fortunately, this does not extend to burglarizing pharmacies to get drugs for patients that cannot afford them, but there comes from many doctors a whiff of "white coat immunity" when making their arguments, particularly where patents are concerned.

Also, there are the considerations that companies like Myriad can do a more consistent job in providing reliable diagnostic information than "home brew" testing done by physicians, who after all are trained and thus much better at making differential diagnoses and giving appropriate treatments than they are at performing controlled diagnostic assays.  Which is why most diagnostic tests are performed by big companies like LabCorp and Quest Diagnostics rather than in university hospitals and clinics (and even in the latter case the tests are typically performed using test kits produced and sold by such companies).

Finally in this regard, the effect of the Mayo/Myriad/Alice trio of Supreme Court opinions has been that these companies now have the type of free rein all companies used to have regarding university-based research (including associated teaching hospitals) prior to enactment of the Bayh-Dole Act.  As a consequence, companies who licensed university technologies became easy prey to the biotechnology equivalent of "efficient infringers" and were subject to the expected consequences.  The poster child for these consequences is of course Sequenom, which lost so much of its value after its foundational patents for detecting cell-free fetal DNA in maternal blood were invalidated that it was acquired by LabCorp.

And I think it more productive to leave the COVID experience to another time, it being a black unicorn, once-in-a-century event that makes it less productive for understanding events in more normal times.

The countervailing evidence to the arguments made by AMP quoted by Professor Sarnoff is enumerated below.

Appropriately we begin with a law review article by David O. Taylor, Associate Professor of Law at the SMU Dedman School of Law (D.O. Taylor, Patent Eligibility and Investment, Cardozo Law Review 41: 2022-104 (2020).  In his article, Professor Taylor reviews recent Supreme Court case law on subject matter eligibility and its negative effects in cases like Ariosa v. Sequenom.  The Professor presents three principal findings regarding the effects of these cases on investment:

First, "the investors who responded to the survey overwhelmingly believe patent eligibility is an important consideration when their firms decide whether to invest in companies developing technology.  Indeed, overall, 74% of the investors agreed that patent eligibility is an important consideration in firm decisions whether to invest in companies developing technology; only 14% disagreed.  Likewise, investors reported that reduced patent eligibility for a technology makes it less likely that their firm will invest in companies developing that technology.  For example, overall 62% of the investors agreed that their firms were less likely to invest in a company developing technology if patent eligibility makes patents unavailable, while only 20% disagreed."

Second, "reduced patent eligibility correlates with particular investment behaviors in particular industries.  Investors overwhelmingly indicated, for example, that the elimination of patents would either not impact their firms' decisions whether to invest in companies or only slightly decrease investments in companies developing technology in the construction (89%), software and Internet (80%), transportation (84%), energy (79%), and computer and electronic hardware (72%) industries.  But investors, by contrast, overwhelmingly indicated that the elimination of patents would either somewhat decrease or strongly decrease their firms' investments in the biotechnology (77%), medical device (79%), and pharmaceutical industries (73%).  Thus, according to these investors, on average each industry would see reduced investment, but the impact on particular industries would be different.  And the life sciences industries are the ones most negatively affected."

Third, "[a]lmost 40% of the investors who knew about at least one of the Court's eligibility cases indicated that the Court's decisions had somewhat negative or very negative effects on their firms' existing investments, while only about 15% of these investors reported somewhat positive or very positive effects.  On a going-forward basis, moreover, almost 33% of the investors who knew about at least one of the Court's eligibility cases indicated that these cases affected their firms' decisions whether to invest in companies developing technology.  These investors reported primarily decreased investments, but also shifting of investments between industries.  In particular they identified shifting of investments out of the biotechnology, medical device, pharmaceutical, and software and Internet industries."

Fourth, "investors familiar with the Supreme Court's eligibility cases indicated different changes in firm investment behavior as compared to investors without this familiarity [albeit these data were garnered with regard to software and the Internet and are presented here for completeness]."

The article provides copious amounts of evidence for these conclusions that are of course outside the limits of this post.  But the Professor's conclusion is as succinct as it is depressing:

In the meantime, the major takeaway is clear:  The Supreme Court's "drastic and far-reaching experiment in patent eligibility standards" has likely resulted in lost investment in the life sciences that has delayed or altogether prevented the development of medicines and medical procedures.

A law student Note, having perhaps a little less gravitas, is in agreement.  In "The Impact of Uncertainty Regarding Patent Eligible Subject Matter for Investment in U.S. Medical Diagnostic Technologies Matter for Investment in U.S. Medical Diagnostic Technologies," Washington and Lee Law Review 79: 397-451, A. Sasha Lee focuses on the uncertainty the Supreme Court's Mayo/Myriad/Alice quarto (including Bilski for good measure) has engendered and the harm it has and will cause.  Ms. Lee characterizes her Note as "an empirical study of venture capital investment in disease diagnostic technologies before and after Bilski and Mayo."  The Abstract sets forth her conclusions:

This Note presents five key implications related to its central finding.  First, the data supports the recent calls to Congress for reform of § 101.  Second, it complements other key research regarding investment behavior following Mayo and Alice.  Third, the data raises the question whether remaining innovation in the diagnostics space will be enough to support the precision medicine movement.  Fourth, underinvestment in diagnostics and the discovery of disease biomarkers may lead to underinvestment in treatments.  Lastly, this Note's findings suggest that at least some venture capital firms employ greater caution when determining whether to invest in a company developing (or aiming to develop) diagnostics, which may spur hesitancy to form such companies in the first place.

The focus of these scholars is investment, which the AMP says is not important for developing diagnostic methods.  Perhaps, but perhaps only for well-established large diagnostics companies encouraged and enabled by academic research no longer protectable by patent and precluded by culture and ethics from being kept as trade secrets.  But it is good to remember that:

For better or worse, we live in a world that Myriad made.  In 1997, genetic diagnosis of cancer risk was in its infancy; traditional genetic linkage analysis had been successfully performed for diseases like Huntington's disease and other rare genetic diseases.  While some academic researchers had identified genes involved in cancer, these were typically loss-of-function mutations in several (~5-6) genes.  BRCA gene analysis was different, because it predicted with ~90% certainty that an affected woman would develop breast or ovarian cancer.  These biological consequences suggested radical prophylactic methods for prevention, each of which involved medical and personal costs.

Myriad was thus in the position of having to convince doctors that their test was beneficial and was sufficiently predictive to justify both the diagnosis and the treatment.  It also required that Myriad establish a network of genetic counselors capable of interpreting the genetic information and counseling affected women (and in the context of there being the "variations on unknown significance" that occurred at much higher frequency then than it does 16 years later).  And it required Myriad to lobby governments and private payers that the cost of Myriad's test was justified by the lower medical costs of prevention (which were not inconsiderable) than treatment of breast or ovarian cancer (because the personal costs were not the payers' problem and the alleviation of which not their perceived responsibility).

Myriad asserts that it spent about half a billion dollars to establish its business including all these ancillary costs on top of the scientific and technology costs.  Myriad did not spend this money due to altruism; like it or not, basing a society on the principle of "from each according to her abilities, to each according to her needs" was tried, famously, in the Twentieth Century with disastrous results.  But if we turn the clock back and let major medical centers in New York, and Boston, and San Francisco, and New Haven, and Bethesda develop BRCA testing, is there any hope or realistic expectation that women in Appalachia, or Oklahoma, or rural communities throughput the country would have had better, or even equivalent access to such testing?

See "Why Does Myriad Think It Can Win BRCA Gene Lawsuits?"

Turning to innovation instead of investment, and some of the arguments made in favor of the status quo of diminished eligibility thereupon, it would be good to consider these data:

• A 2002 study undertaken by the German government, to determine whether patents on DNA molecules impeded entry into particular fields of research in which isolated DNAs had been patented found that DNA patents created no such barriers to entry.  The great majority of those interviewed across the entire surveyed group clearly favored the so-called "absolute product patent protection" of genes.  Strauss et al., "Genetic Inventions and Patent Law: An Empirical Survey of Selected German R & D Institutions," Max Planck Institute for Intellectual Property, Competition and Tax Law (2002).  Similarly, in 2002, the OECD Working Party on Biotechnology Report (OECD Report), despite documenting a number of specific concerns held by researchers, failed to substantiate fears that growth in the number and complexity of biotechnology patents is preventing access to inventions for research purposes.  Organisation for Economic Co-operation and Development, Genetic Inventions, Intellectual Property Rights and Licensing Practices: Evidence and Policies (2002), 12–15.

• A 2005 survey of academic researchers conducted by Walsh, Cho, and Cohen concluded that "patenting does not seem to limit research activity significantly, particularly among those doing basic research," with only 1% of their random sample of 398 academic respondents reporting a project delay of more than a month due to patents on knowledge inputs necessary for their research, and none reporting abandoning of a research project due to the existence of patents.  John P. Walsh et al., Final Report to the National Academy of Sciences' Committee Intellectual Property Rights in Genomic and Protein-Related Inventions: Patents, Material Transfers and Access to Research Inputs in Biomedical Research (Sept. 20, 2005).

• In 2006, David Adelman and Kathryn DeAngelis published a detailed study of over 52,000 biotechnology patents granted in the U.S. between January 1990 and December 2004.  In the words of the two authors, their study described "the general trends in biotechnology patenting including patent counts, patent-ownership patterns, and the distribution of biotechnology patents across distinct areas of research and development."  They concluded:  "This analysis finds few tangible signs of patent thickets that define the anticommons" (Adelman and DeAngelis, Patent Metrics: The Mismeasure of Innovation in the Biotech Patent Debate).

• A 2006 report by the National Research Council found the "number of projects abandoned or delayed as a result of difficulties in technology access is reported to be small, as is the number of occasions in which investigators revise their protocols to avoid intellectual property issues or in which they pay high costs to obtain intellectual property."  Reaping the Benefits of Genomic and Proteomic Research: Intellectual Property Rights, Innovation, and Public Health at 134 (2006).

• Another 2006 study (Caulfield, Cook-Deegan, Kieff and Walsh, Evidence and Anecdotes: An Analysis of Human Gene Patenting Controversies, Nat. Biotechnol. 2006 Sep; 24(9): 1091, surveyed the current scholarship and concluded based upon existing conditions that policy recommendations for patent reform surrounding genetic patents have largely been driven by a small number of high-profile incidents and controversies and that these anecdotes do not accurately reflect the larger realities surrounding patenting in biotechnology.  Regarding the oft-stated fears of a developing anticommons logjam, Caulfield et al. concluded that the effects predicted by the anticommons problem are not borne out by the available data.

• A 2009 Canadian report on researcher perspectives on commercialization and patenting of genomic research similarly found that there is little evidence that the progress of research itself is in fact being seriously hindered or that gene patents are being aggressively enforced.  CJ Murdoch et al., "Commercialization, Patenting and Genomics: Researcher Perspectives," Genome Medicine 1:22 (2009).

• The FTC subsequently concluded that concerns that patenting upstream technology, or "research tools," would actually obstruct commercialization of new products and hinder follow-on innovation in biotechnology "has yet to materialize."  Emerging Health Care Issues: Follow-on Federal Trade Commission report on follow-on biologics, June 2009, at 32.

• Of some 40,000 DNA-related patents, only six have been litigated in the diagnostic testing area.  "Property rights: The granting of patents on human genes has so far not been the disaster it was predicted to be."  458 Nature 386 (2009).

• In a 2010 series of case studies on the impact of DNA patents on genetic research, diagnostic test development, and patient access to genetic testing services published as a special supplement in Genetics in Medicine (vol. 12 (4), April 2010), the authors, despite identifying several particularized concerns about licensing practices relating to some individual gene patents, found little systemic negative impact of gene patents on genetic research, test development, patient utilization, and pricing of testing services.

• An exhaustive 2019 study by Sampat and Williams concludes that human DNA patents do not appear to have hindered follow-on innovation, while on the other hand trade secrecy protection of human genetic sequences induced measurable declines in follow-on scientific research and product development.  The authors write that "this pattern of evidence suggests that changes to patent policy must carefully consider what strategies that firms will use to protect their discoveries in the absence of patents, and that an understanding of the relative costs and benefits of patent protection compared to [the alternative option of trade secrecy] is needed in order to evaluate the welfare effects of patent policy changes."  B. Sampat and H. Williams, "How Do Patents Affect Follow-On Innovation? Evidence from the Human Genome," American Economic Review 2019, 109(1): 203–36.

The facts seem to bear out that while some (particularly doctors) have raised possibilities that potential negative effects on innovation might arise due to patenting, these seem not to exist when scrutinized outside the biases carried by those discerning these possible negative outcomes.

It is clear this debate will be on-going, as this bill advances (although it is likely not to get to the House floor in the time remaining in this Congress).  But the effort to bring some clarity and certainty to subject matter eligibility is one that is both worthwhile and necessary and can be expected to continue.

Hat tip to everyone who provided some of the evidence set forth in this post, and thanks to Professor Sarnoff.