Why IPO Is Wrong About Section 101

It certainly seems that the technology industry is producing better and more exciting products than ever. Virtual reality is becoming, well, a reality; we have drones, self-driving cars, better artificial intelligence, amazing new games, and smarter smartphones. These innovations are all driven by software, even though the landscape for software patents has changed over the last few years due in part to several decisions by the Supreme Court.

This changing landscape has escalated the debate over the role of patents in promoting software innovations. Should we have limits on software patents? Are some “inventions” too abstract to qualify for patent protection? The Supreme Court has answered “yes” to both of those questions.

Bilski v. Kappos, which set the current course for subject matter eligibility under 35 U.S.C. § 101, was decided six years ago. Since then, the Supreme Court has decided two more major cases on patent eligibility, Mayo v. Prometheus and Alice Corp. v. CLS Bank. The U.S. technology sector has, despite a general economic slowdown, done fairly well in that time.

And yet, there is a group insisting that innovation is grinding to a halt in the U.S. because of those recent developments in patent law. To hear these folks speak, you wouldn’t recognize the world we actually live in:

[D]ue to a series of poorly considered and frequently misapplied Supreme Court decisions, applicants in key technologies such as biotech and software are now facing more stringent criteria for obtaining and keeping patent protection in the U.S. than they are in China, the European Union and other jurisdictions, which reduces America’s global competitiveness. – Bob Stoll

Invention is central to U.S. economic might, and as our economy moves away from the “old line” manufacturing strength of the past, the U.S. has become especially strong in fields dependent on software technology and business methods. Strengths of the current U.S. economy include social media, the Internet, and the service economy, especially financial services. We are also strong in biotech. Yet those are precisely the fields most heavily damaged by Section 101 Alice-type rejections. – Louis Hoffman

Aggressive use of 101 was never contemplated as being appropriate because it cuts off hope for nascent innovation from the very start because most 101 patent eligibility concerns only ever present for truly new, truly groundbreaking classes of innovation. – Gene Quinn

The Intellectual Property Owners Association (IPO) has gone so far as to propose an amended version of Section 101 that would completely do away with any limits on patent eligibility (new text is underlined in red, removed text is struck out and in blue):

101(a) ELIGIBLE SUBJECT MATTER

Whoever invents or discovers, and claims as an invention, any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereto, may obtain shall be entitled to a patent for a claimed invention thereof, subject only to the exceptions, conditions, and requirements of set forth in this Title.

101(b) SOLE EXCEPTION TO SUBJECT MATTER ELIGIBILITY

A claimed invention is ineligible under subsection (a) if and only if the claimed invention as a whole, as understood by a person having ordinary skill in the art to which the claimed invention pertains, exists in nature independently of and prior to any human activity, or exists solely in the human mind.

101(c) SOLE ELIGIBILITY STANDARD

The eligibility of a claimed invention under subsections (a) and (b) shall be determined without regard as to the requirements or conditions of sections 102, 103, and 112 of this Title, the manner in which the claimed invention was made or discovered, or the claimed invention’s inventive concept.

This is a solution in search of a problem. As I mentioned at the start, the technology sector is continuing to innovate, and there’s no evidence that changes to patent eligibility have affected innovation or investment in any meaningful way.

Of course, some disagree:

As you know, startups and companies in emerging areas of electronic technology create a disproportionate number of new jobs in this economy.  We need to protect this process through a strong intellectual property system that will encourage investment and creation of real wealth.

My experience is that without strong intellectual property, the business community will invest in less risky ventures outside of high technology electronics.

Oh wait, that was Robert Sterne in 1994, testifying at a USPTO hearing. That’s right, we’ve been hearing the same thing for over twenty years, that strong patent protection is what creates innovation. Without allowing anyone to patent nearly anything, we’ll basically be back in the Stone Age.

Although, the IPO’s vision of the Stone Age is something like this:

Looking at the IPO’s proposal in more detail, it’s clear that the language is a smoke screen. This amendment would essentially do away with any limits to software patenting. The “exception” that IPO’s proposal leaves open is so narrow as to be non-existent, at least in the technology sector. It excludes from patent-eligibility only those inventions that “exist solely in the human mind.” With the possible exception of patent applications being transmitted telepathically, any invention that’s written down exists outside the human mind. With all seriousness, anything that involves a computer even minimally would fall outside the exception.

The hedging system of Bilski v. Kappos and the escrow system of Alice Corp. v. CLS Bank would both be patent-eligible under the IPO’s proposal, because they both exist “outside the human mind.” Even Morse’s claim to all means of using electro-magnetism to transmit letters and symbols would be patent-eligible.

IPO would be effectively wiping out 150 years of case law, all while claiming to be removing unpredictability. Writing a century and a half of case law off the books is hardly making things more predictable.

The bottom line is that there’s no evidence of an actual decline in innovation due to Mayo and subsequent cases. Creating chaos because a few patent lawyers are unhappy is hardly good policy. The reality is that the Federal Circuit is doing a generally good job of interpreting Alice, and we should let the court keep going.

Matt Levy

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Matt Levy is Patent Counsel at the Computer and Communications Industry Association, where he handles legal, policy advocacy, and regulatory matters related to patents and is lead blogger for CCIA’s Patent Progress. He is recognized as an expert on patent litigation reform and is cited and quoted widely on the issue.

Matt joined the CCIA in 2013 from private practice, where he got first-hand experience in both patent prosecution and patent litigation, including defending clients against patent assertion entities.