USPTO Director Iancu Proposes Revised 101 Guidance

In remarks at the annual IPO meeting today, USPTO Director Andrei Iancu said "the USPTO cannot wait" for "uncertain" legislation on patentable subject matter and is "contemplating revised guidance" to help examiners apply this doctrine. Few are likely to object to his general goal of "increased clarity," but the USPTO should be sure that any new guidance is consistent with precedent from the Supreme Court and Federal Circuit.

As most readers of this blog are well aware, the Supreme Court's recent patentable-subject-matter cases—Bilski (2010), Mayo (2012), Myriad (2013), and Alice (2014)—have made it far easier to invalidate patent claims that fall under the "implicit exception" to § 101 for "laws of nature, natural phenomena, and abstract ideas." Since Alice, the Federal Circuit has held patents challenged on patentable-subject-matter grounds to be invalid in over 90% of appeals, and the court has struggled to provide clear guidance on the contours of the doctrine. Proponents of this shift call it a necessary tool in the fight against "patent trolls"; critics claim it creates needless uncertainty in patent rights and makes it too difficult to patent important innovations in areas such as medical diagnostics. In June, Rep. Thomas Massie (R-KY) introduced the Restoring America’s Leadership in Innovation Act of 2018, which would amend § 101 to largely undo these changes—following a joint proposal of the American Intellectual Property Law Association (AIPLA) and Intellectual Property Owners Association (IPO)—but Govtrack gives it a 2% chance of being enacted and Patently-O says 0%.

In the absence of legislation, can the USPTO step in? In his IPO speech today, Director Iancu decries "recent § 101 case law" for "mush[ing]" patentable subject matter with the other patentability criteria under §§ 102, 103, and 112, and he proposes new guidance for patent examiners because this mushing "must end." The problem is that the USPTO cannot overrule recent § 101 case law. It does not have rulemaking authority over substantive patent law criteria, so it must follow Federal Circuit and Supreme Court guidance on this doctrine, mushy though it might be.

Under the Supreme Court's patentable-subject-matter inquiry, as summarized in Alice, once a patent claim is determined to fall within a statutory category of a "process, machine, manufacture, or composition of matter," step 1 is to "determine whether the claims at issue are directed to a patent-ineligible concept," and if so, step 2 is to "examine the elements of the claim to determine whether it contains an inventive concept sufficient to transform the [ineligible concept] into a patent-eligible application"—where "simply appending conventional steps, specified at a high level of generality" is "not enough."

Director Iancu questions whether a claim can be "nonobvious enough to pass 103, yet lack an 'inventive concept' and therefore fail 101," but this inquiry into a claim's "inventive concept" is part of the doctrinal test, and the Supreme Court has explicitly "decline[d] the Government's invitation to substitute §§ 102, 103, and 112 inquiries for the better established inquiry under § 101."

Instead, Iancu proposes a new inquiry into whether an exception to patentable subject matter "is integrated into a practical application"—if so, "the claim passes 101 and the eligibility analysis would conclude." It is unclear how the proposed guidance might define "practical application," but the phrase seems unfortunate: the Supreme Court held a binary-to-digital conversion system with "practical application" on a computer to be patent ineligible in Gottschalk v. Benson (1972). And it is hard to imagine a definition of "practical application" that excludes all of the claims held to be patent ineligible by the Federal Circuit post-Alice, including on the method for detecting cell-free fetal DNA in Ariosa v. Sequenom, the method of assessing CVD risk in Cleveland Clinic v. True Health, the method of screening email in IV v. Symantec, the method of real-time performance monitoring of an electric power grid in Electric Power Group v. Alstom, etc.

I am sympathetic to the difficult position Director Iancu is in, with stakeholders clamoring both for more consistency in how § 101 is applied and for changes to the substantive standard. But the agency must ensure that any revised guidance on patentable subject matter is consistent with the relevant judicial precedent. And despite the outcry from the patent bar, I have seen little evidence that the recent shift in patentable-subject-matter doctrine has in fact created a crisis for U.S. innovation. Perhaps the USPTO's first step should be to focus on this empirical question of how § 101 case law has affected R&D—and then legislative or judicial reform of the doctrine could be targeted at wherever there is an actual problem.