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Clarity on Patent Eligibility Sought From Courts, Congress, PTO

July 5, 2022, 8:40 AM

A recent study by the US Patent and Trademark Office regarding the current state of patent eligibility jurisprudence is a good, if small step in the right direction, attorneys say.

The report, issued last week, found a split among practitioners on whether the current state of patent eligibility jurisprudence is tenable. Companies facing costly litigation related to “overbroad” patents, particularly in the software field, backed the status quo, while startups and life-sciences companies argued that limiting eligibility stifles innovation and favors large, entrenched companies.

What was missing, according to practitioners, was a clear indicator regarding the PTO’s stance or plans for further action to clarify the issue. Some attorneys are concerned that the uncertainty surrounding patent eligibility will discourage innovation in key fields due to lack of protectibility and that the lack of a definitive stance from the PTO will only further confusion regarding the issue.

“It can’t be the case that the lack of patents for diagnostics, diminishes innovation and simultaneously leads to more innovation,” DePaul University Law Professor Joshua Sarnoff said. “Somebody’s wrong, and the patent office needs to actually analyze the competing claims and give its opinion on which is correct.”

Unpredictable Standard

The PTO issued the report in response to a March 2021 letter from Sens. Thom Tillis (R-N.C.), Mazie Hirono (D-Hawaii), Tom Cotton (R-Ark.), and Chris Coons (D-Del.) calling for information on how patent eligibility jurisprudence has harmed innovation in certain sectors, specifically in the context of the Covid-19 pandemic.

Courts have struggled to apply a string of Supreme Court decisions issued from 2010 to 2014 that nixed patent eligibility for abstract ideas or naturally occurring events, the PTO found. This has created uncertainty for practitioners.

“The biggest concern with the patent eligibility doctrine today is its indeterminacy and unpredictability for innovators, especially given its willy-nilly application by courts,” said George Mason University law professor Adam Mossoff.

“To the extent that there is any predictability, it is of the sort that your patent will be invalidated by courts,” Mossoff said.

Though the report found some support for the Supreme Court’s current jurisprudence, several stakeholders argue that curtailing patent eligibility harms innovation.

“When you shut off certain fields of technology or certain types of inventions from the patent system altogether, there’s no possibility of having an incentive, at least for patents,” said Corey Salsberg, the global head of intellectual property affairs for healthcare company Novartis. “In many cases, that means that those who invest in innovative fields aren’t going to put the investment there.”

“We’ve now gotten to a point where... it’s pretty clear, the entire field of diagnostic tests in the United States is now no longer patent eligible, including Covid tests,” Salsberg said, adding that he’s concerned that the trajectory of the law is on a potential collision course with the future of medicine.

American Axle Denial

It’s not just cutting-edge medicine that’s at risk. The current patent eligibility standards have been used to exclude “classic 19th century innovations” such as methods for making automobile axles “and other types of classic industrial products and processes that have traditionally been secured by the patent system and have been drivers of the US innovation economy for 200 years,” Mossoff said.

The 2014 Supreme Court decisions in Alice v. CLS Bank and Mayo v. Prometheus laid out a two-part test that says inventions are ineligible for patents if they fall under any of three exceptions: laws of nature, natural phenomena, and abstract ideas. Applicants can get around that bar only by demonstrating that the invention is an eligible application of such a patent-ineligible concept.

Since then, attorneys and applicants have been looking to the high court to clarify patent eligibility standards, most recently through the American Axle & Manufacturing, Inc., Petitioner vs. Neapco Holdings LLC, No. 20-891, 6/30/22 case which deals with the patent eligibility of a driveshaft. The Supreme Court last week declined to hear that case, leaving judges and attorneys to continue waiting for an answer.

The denial marks the second time the court has disregarded the US solicitor general’s recommendation to clarify patent-eligibility confusion.

“The problem in part is that the Supreme Court doesn’t tell you whether it has implicitly overruled inconsistent past precedents, and that makes it hard for lawyers to apply the law,” said Sarnoff.

He doubts the court’s ability to provide meaningful guidance on the issue, even if they were to take up a patent-eligibility case in the future.

“I fear that the Supreme Court doesn’t have any respect for precedent anymore, as reflected in the three most recent important decisions on gun rights, on religious prayer, and on abortion,” said Sarnoff. “So, if they don’t have respect for precedent and aren’t willing to clearly say when they’re impliedly overturning inconsistent precedent, I think that whatever they do is likely to provide less clarity than would be desired.”

The American Axle denial could reinvigorate congressional efforts to provide clarity in the absence of guidance from the Supreme Court.

“The ball will clearly be back in Congress’s court to enact a legislative fix,” said Mossoff.

In the meantime, Ropes & Gray partner Regina Penti predicts that attorneys will be able to look to the PTO for further guidance, building on their report.

“If I were looking into kind of my crystal ball, we can expect that the USPTO will take steps to clarify these issues,” she said.

“And if it does, and if the laws that come out are materially clearer, more certain, and more predictable,” Penti said, “we can expect to see hopefully a reversal of some of the—at least from a patent owner standpoint—undesirable effects of having a system that was so difficult to rely on.”

To contact the reporter on this story: Riddhi Setty in Washington at rsetty@bloombergindustry.com

To contact the editor responsible for this story: Adam M. Taylor at ataylor@bloombergindustry.com