The Patent Whisperers

Ray Van Dyke

By Raymond Van Dyke, LES Washington D.C. Chapter Chair, Van Dyke Law

Living in the Washington, D.C. area means that I can go to hearings and other proceedings concerning intellectual property, such as the Senate Hearings on patent eligibility. In a rare bipartisan effort to address serious concerns in patent law, Senators Tillis and Coons allocated three days of hearings in early June with a total of 45 witnesses testifying.

The rather small Senate Judiciary room caused many, including me, to wait in line to get in. Over the three days of testimony, the views expressed on the issue of patent eligibility were diverse, with patent experts, scholars, industry people and organizations opining on this rather obscure issue of patent law thrust into national prominence. Ray Van Dyke

Patent eligibility is directed to a threshold question on whether or not a particular invention, as set forth in a patent application, can enter the patent system. Patent eligibility is a very different requirement than the more conventional main hurdles of novelty or newness, and non-obviousness, both of which are separate and stringent barriers facing all innovations in the patent gauntlet. There are various other requirements as well before a patent can grant.

Until roughly 10 years ago, the patent eligibility threshold was a non-issue, and the governing statute, 35 U.S.C. Section 101, was considered a “coarse filter,” i.e., most innovations passed through and proceeded on to the far more rigorous patent tests, such as novelty. However, for various reasons Section 101 of late has been used as a cudgel to deny patentability to an increasing swath of innovation, with the U.S. Supreme Court complicit in this effort.

The incredible progress of innovation in the life sciences and software industries in the last few decades have transformed society, and created mega tech corporations such as Microsoft, Google, Amazon and others. The technologies of today are increasingly intangible, i.e., modern companies’ valuations are now primarily based on their intellectual property, which includes patents and brands, and less on equipment and other tangible assets. The biggest companies now are almost entirely based on intangibles, with Apple having crossed one trillion in valuation based primarily on their IP, i.e., patents, branding, etc.

This technological growth has not gone unnoticed by countless inventive minds in this nation and around the world. With the enormous rise in valuation, there was (and is) a huge interest of people and small companies with their own big ideas to partake in the patent process. So, they filed and obtained countless patents in these new areas. Since our Founders, in essence, democratized the patent system, anyone with a new idea can get a patent in this country even if they are not themselves manufacturers or have connections in the industry. The large companies, particularly the tech companies, continue to release products and services, including patent protected innovations of others embedded therein, and were thus sued for patent infringement by these patentees. Although some of these suits were frivolous, many big companies wanted a fix to allow them to operate without threat of litigation, i.e., stop these inventors from enforcing their patents and allow big tech to do what it wanted, as it wanted.

Considerable lobbying and patent reform, which resulted in the 2011 America Invents Act, dominated the scene, creating new ways to administratively invalidate patents, i.e., take the litigation out of the courts. Along with this new legislation, the issue of patent eligibility became muddied, particularly by the Supreme Court, creating confusion and unpredictability. The lower courts, desirous of easy ways to dispose of these complicated patent cases, eagerly employed these new tools of dismissals for failure of an invention to meet the now shifting patent eligibility standard, which primarily resulted from the Supreme Court’s Alice decision.

Senate Judiciary Room

Sadly, the USPTO went along with this ride and denied hundreds of thousands of inventions under Section 101 in patent prosecution and in the new administrative trials under the AIA. The coarse filter became a sieve, with numerous babies being thrown out with the bathwater, i.e., many valuable innovations were deemed no different than trivial inventions. More confusion and uncertainty developed. Along with the patent troll movement created by some tech companies to denigrate anyone suing them, this admixture created a toxic brew against inventorship itself, i.e., all inventors are but trolls that need to be stopped.

Strangely, the patent eligibility issue, although primarily and initially a software issue, soon metathesized into biopharma and many other technologies. This resulted in large numbers of patents across the diverse technological spectra to be attacked and deemed invalid for failure to meet Section 101 alone, e.g., medical therapeutics. A problem in these eligibility invalidations is that other separate sections of the Patent Act are conflated into the Section 101 consideration, e.g., even the U.S. Supreme Court improperly injected notions of novelty and inventive step into the heretofore coarse filter, i.e., the Court improperly injected a “worthiness” consideration. At the recent hearings, all of the witnesses agreed that the current state of Section 101 was confused.

The 45 hearing witnesses each spoke on these and related patent issues, particularly with regard to Senators Tillis’ and Coon’s legislative proposal for modifications to Section 101, clarifying the language to avoid the conflation problem and address other issues.

In general, there are two camps of thought. The first is that there has been an unfair carnage of modern innovations, whether software, biotech or other technologies, under Section 101, creating unpredictability in the patent system. This resulted in many companies being unable to stop infringement or obtain funding, with a broader loss of leadership by the U.S. in many technological areas. The second camp’s view is that the current milieu of Section 101 is fine, particularly since it keeps patent trolls at bay.

The first speaker, former Chief Judge Paul Michel of the Federal Circuit, noted the “unending chaos” caused by the Supreme Court and the America Invents Act of 2011 have produced “uncertainty, unpredictability,” and inconsistency in patent law, with “undue and harmful exclusions of new technologies.” Similar views were expressed by former USPTO Directors Dickinson and Kappos, and also by strategic patent advisors, Robert Armitage and Phil Johnson. The AIPLA, ABA IP Section and IPO added to this theme, and law school educators, Adam Mossoff of George Mason and David Taylor of SMU expressed like concerns. Representing inventors as a whole, Paul Morrinville was quite angry at the state of patent law for the small inventor community. Phil Johnson stressed that the current uncertainty, particularly in the life sciences and therapeutics research, would result in life and death issues because basic research, without the incentives to invest, is now compromised due to the inability to protect or obtain inventions using patents.

On the other side of the issue, i.e., the preservation of the Alice Section 101 status quo, were speakers such as Charles Duan of the R Street Initiative, who led off saying that the patent system has gone too far and, in effect, somehow caused the death of a 10 year-old girl. David Jones of the High Tech Inventors Alliance thought that the current framework was good, and surprisingly stated that their research showed that high tech innovations in AI were not affected by Section 101 issues. Professor Joshua Sarnoff of DePaul University spoke at length about the unconstitutionality of modifying Section 101 in the manner proposed, and if Section 101 were so modified, this would cause other uncertainty, be violative of human rights, and be immoral.

Even the ACLU got into the patent eligibility action, arguing that gene patents would be the bane of everyone. Others echoed this refrain. Senator Tillis eventually had to cry foul on this “false narrative” and emphatically stated that the proposed legislation would not create a gene or DNA patenting scenario.

The hearings ended with people such as Robert Deberadine, Chief IP counsel at Johnson & Johnson; Manny Schecter, Chief Patent Counsel at IBM; Laurie Self for Qualcomm, and others describing the havoc created by the market uncertainty and unpredictability caused by the wayward interpretation of Section 101 today, and the dire impediments to core research. As Mr. Deberadine said in his testimony, it is the job of the Patent Office to “weed out” bad patents, not the district courts.

Both Tillis and Coons were concerned about the threats to competition to American industries caused by the Section 101 problem, especially with the current worries about international players such as China. Senator Coons expressed his worries about Section 101 thwarting future technologies, many of which are at the cusp of innovation now. Citing the Cleveland Institute’s decision to not patent some innovations since they could not enforce them in this climate, Senator Coons said the law should not interfere in these matters.

The majority of the patent experts favored Section 101 reform, and most of the rest said the current interpretation was inadequate, i.e., almost all of the whisperers indicated a problem. Senator Tillis said that “further refinements” to the proposed legislation would be coming.

Looking at the above situation, I am reminded of the Seventies, the birth of the software industry, and the Supreme Court’s inability to then grasp that movement. Had a cogent software patenting paradigm been developed in the Seventies, handling abstraction, we would not be in this mess now. Instead, despite the decades of increasingly abstract innovations coming down the pipeline, we still fail to acknowledge the enormous benefit of many of these technologies, and the need for a stable platform for their marketing, licensing and selling.

Our Founders gave all Americans, not just corporate Americans, the right to partake in the patent system. They created our patent system not only to incentivize creators, but also benefit all Americans by encouraging innovation and ultimate entry of the advances into the public sphere. Any Section 101 fine-tuning should be with the eye to protect both innovation and innovators in this brave new world of quantum computing, nanotechnology and personalized medicine.

Just as in the Seventies, the Supreme Court is unable to help, and it is up to Congress to fix the Section 101 problem, restoring Section 101 as a coarse filter, not maintaining it as an innovation killer. …it is the job of the Patent Office to “weed out” bad patents, not the district courts.