On June 22, 2023, Sens. Thom Tillis and Chris Coons proposed the Patent Eligibility Restoration Act of 2023 (the Act). The new legislation is intended to clarify patent eligibility under 35 U.S.C. § 101 in view of the Supreme Court’s Alice opinion and the ensuing uncertainty in the law. Numerous stakeholders have requested a solution to the uncertainty created by Alice for many years.
Background
Section 101 provides that an individual may patent only “new and useful process, machine, or composition or matter, or any new and useful improvement thereof.” 35 U.S.C. § 101. The Supreme Court has interpreted this provision as excluding patents on “laws of nature, physical phenomena, and abstract ideas.” Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980). The Supreme Court developed the modern two-step patent eligibility test in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (2014).
In applying the test, a court must first determine whether the patent claims at issue are directed to a law of nature, natural phenomenon, or abstract idea. Alice, 573 U.S. at 217–18 (citing 566 U.S. at 71–80). If the claims are directed to an excluded subject matter, the court proceeds to the second step in the inquiry and must determine whether the claims include an “inventive concept” sufficient to “transform the nature of the claim into a patent-eligible application.” Id. at 217–18 (quoting Mayo, 566 U.S. at 82) (internal quotations omitted).
The Alice test is ubiquitous. More than 700 motions addressing § 101 issues have been filed in view of the Alice opinion. But despite the volume of filings addressing this issue, Federal Circuit judges have continued to lament the uncertain state of the law under Alice. As recently as 2020, the Federal Circuit noted that despite being “the nation’s lone patent court, [the Federal Circuit is] at a loss as to how to uniformly apply § 101.” Am. Axle & Mfg., Inc. v. Neapco Holdings LLC, 977 F.3d 1379, 1382 (Fed. Cir. 2020) (Moore, J., concurring).
The Proposed Legislation
Sens. Tillis and Coons have explored the idea of patent eligibility since 2019. Sens. Tillis and Coons and Reps. Collins, Johnson, and Stivers Release Draft Bill Text to Reform Section 101 of the Patent Act, Thom Tillis: Press Releases (May 22, 2019). In the time since, the two have drafted numerous bills regarding eligibility after soliciting feedback from various “stakeholders, industry representatives, and individual inventors.” Id.
The proposed legislation, which is a revised version of similar legislation that Sen. Tillis introduced in 2022, revises the § 101 patent eligibility requirements by eliminating the judicial exceptions and expressly defining subject matter excluded from § 101. The newly defined exceptions include:
- a mathematical formula that is not part of a claimed invention
- a process that is substantially economic, financial, business, social, cultural, or artistic, even though not less than step 1 in the process refers to a machine or manufacture
- However, this does not include a process that cannot practically be performed without the use of a machine or manufacture.
- a process that is:
- a mental process performed solely in the human mind or that occurs in nature wholly independent of, and prior to, any human activity
- an unmodified human gene, as that gene exists in the human body
- an unmodified natural material, as that material exists in nature
Patent Eligibility Restoration Act of 2023, S. 2140, 118th Cong. § 3 (2023).
Through these newly defined exceptions, the legislation seeks to “restore patent eligibility to important inventions across many fields,” such as “medical diagnostics, biotechnology, personalized medicine, artificial intelligence, 5G, and blockchain.” Tillis, Coons Introduce Landmark Legislation to Restore American Innovation, Thom Tillis: Press Releases (June 22, 2023).
Impact
The proposed legislation will likely impact litigation by allowing courts to more easily assess eligibility under the revised statute instead of the Alice test, but it will remain to be seen how patents found invalid under the current test as directed to abstract ideas would be assessed under the new test. The application of the new legislation in district court litigations could lead to fewer opportunities for defendants to invalidate meritless patents at the pleading stage, although the Act expressly states, “In an action brought for infringement under this title, the court, at any time, may determine whether an invention or discovery that is a subject of the action is eligible for a patent under this section, including on motion of a party when there are no genuine issues of material fact. This will likely lead to an increase in NPE [non-practicing entity] filings.” Patent Eligibility Restoration Act of 2023, S. 2140, 118th Cong. § 3 (2023).
The Act will also impact innovation by expressly ensuring that industries struggling to navigate the patent landscape under the current judicial exceptions to § 101 will be incentivized to seek patent protection on their innovations. For instance, as intended, the Act seems to provide more room for innovation in medicine because it limits the categories of unpatentable subject matter to only “unmodified human genes.” See S. 2140 § 3 (emphasis added). Likewise, the Act may fuel innovation in tech spaces by explicitly expanding eligibility to processes that “cannot practically be performed without the use of a machine or manufacture.” Id. As such, the Act will likely encourage more innovation and better reflect the nature of digital industries in the 21st century.
The application of the new legislation will ultimately need to balance these concerns, among others, to ensure that industry participants receive certainty regarding the scope of patent-eligible subject matter. The Act does leave many issues for the courts, including questions like what is a process “that cannot practically be performed without the use of a machine or manufacture” and what is a process that “is substantially social [or] cultural” in nature? Nonetheless, the Act does preliminarily address issues that have made this a very unpredictable area of the law.
Contacts
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Amadou Kilkenny Diaw
Partner - /en/people/r/raince-arsh
Arsh Raince
Associate