July 01, 2018

An Unacceptable Threat to Startups and Innovators from Our Patent System

By Scott F. Partridge

Unpredictability, uncertainty, and ambiguity are some of the expected risks for any startup, innovator, and new business. But an unexpected source of additional risk exists today due to the uncertainty and ambiguity in the law of patent eligibility. That additional risk is not a fair, appropriate, or acceptable addition to the normal business risks that innovators and their investors expect to face in introducing new technologies to the marketplace. The existing law on patent eligibility is neither predictable nor certain, and in fact the ambiguity that results is harmful to the long-term health of the patent system.

Over the last several years, the problem has persisted and arguably grown unabated. The judicial system has seemed unwilling or perhaps incapable of fixing the precedent that has created ambiguity and uncertainty, and the legislative system has so far opted to duck rather than to confront this serious weakness in the U.S. patent system. Legislators, fearful of taking any political heat, appear to say, “come to us with a solution that is acceptable to everyone who uses the system, and we’ll fix it.” And this precursor in turn invites those benefiting from the current system to easily block any progress toward a solution.

Understanding the path to today’s test for patent eligibility must begin, as many U.S. legal precepts do, with its roots in English law. In addressing a basic scientific principle in Househill Co. v. Neilson (1843), the House of Lords (the ultimate authority in English law at the time) stated that “if the principle is stated to be applicable to any special purpose, so as to produce any result previously unknown, in the way and for the objects described, the patent is good.” Other expressions in Househill make the same point that if the invention claimed is directed to a special purpose or result, then the subject matter is of a type recognized by patent law.

In the early days of Supreme Court precedent, the Court arguably took an approach in O’Reilly v. Morse (1853) similar to Househill. The Morse case essentially claimed the use of electromagnetic energy to cause printing (preferably at a distance). Here the Supreme Court found Morse’s claimed invention “too broad” and thus void. The Supreme Court characterized the patent statute as follows:

Whoever discovers that a certain useful result will be produced, in any art, machine, manufacture, or composition of matter, by the use of certain means, is entitled to a patent for it; provided he specifies the means he uses in a manner so full and exact, that any one skilled in the science to which it appertains, can, by using the means he specifies, without any addition to, or subtraction from them, produce precisely the result he describes. And if this cannot be done by the means he describes, the patent is void. And if it can be done, then the patent confers on him the exclusive right to use the means he specifies to produce the result or effect he describes, and nothing more.

The Court characterized Morse’s claim as being so broad that he “[did] not confine his claim to the machinery or parts of machinery, which he specifies; but claims for himself a monopoly in [electromagnetism’s] use, however developed, for the purpose of printing at a distance.” Also, the Court noted that such a claim would grant to Morse ownership of future “new discoveries in the properties and powers of electromagnetism which scientific men might bring to light.” Thus, the Court found against Morse because the breadth of his claim would entitle him to “an exclusive right to use a manner and process which he has not described and indeed had not invented, and therefore could not describe when he obtained his patent. The Court is of opinion that the claim is too broad, and not warranted by law.”

In effect, this was the beginning of the Court’s concern about patent claims written so broadly that those claims would enable the patent holder to preempt any and all uses by others of a basic principle of science. Indeed, in the following 150+ years the philosophical underpinning of the Supreme Court’s jurisprudence on patent eligibility has consistently been expressed as the avoidance of preemption of a basic principle of science (subsequently characterized as laws of nature, natural phenomena, and abstract ideas).

Today, Househill’s simple statement of a basic patent eligibility test has now been largely lost in the evolution of the current convoluted, complicated, and arguably intellectually weak tests for patent eligibility.

No patent lawyer would question whether patent protection should be allowed to cover raw, fundamental concepts of science, such as gravity or relativity, or even abstract thought or ideas (as contrasted with ideas expressed in concrete or physical terms). No serious person could contend that the laws of the universe exclusively belong to him or her for even a limited duration absent the identification and claim for a practical use thereof. So, it is truly remarkable that an observation so unequivocally correct, when subsequently expressed as a legal principle and test, could eventually result in something so ambiguous and unpredictable (and thus so wrong) as the current patent eligibility test. And this is where we are after years of considering so many different patent eligibility circumstances. It could be that the failure of current patent eligibility law has at its core the avoidance of the use of the simple philosophical principle at the foundation of Supreme Court precedent—that is, preventing preemption of all practical uses of a fundamental scientific principle as the essential test.

Common law has thus far failed in providing a clear, predictable test for patent eligibility; it has failed badly by conflating statutory law on novelty and obviousness with common law on patent eligibility. Even strict constructionists have joined the activists to pen the common law of patent eligibility without concern for what other statutory provisions provide and how those provisions might apply to deny patents on questionable invention claims. We must question whether judges are so skeptical of the U.S. jury system’s ability to throw out bad patents as lacking in novelty and failing the obviousness test that they feel compelled to maintain as a matter of law their discretion to throw out patents they do not like based on a patent eligibility test that contains an inventive concept step. And this may also be the rationale behind allowing judges to throw out patent claim limitations as routine or conventional that otherwise would get in the way of finding a law of nature or abstract idea as the essence of the patent claim. It is virtually impossible for a fair-minded person to avoid concluding that the current common law on patent eligibility is result oriented.

If the courts are unlikely to correct themselves, which seems evident, then what solace might we find in the possibility of a legislative fix? And do we have reason to be confident that Congress might act any time soon, or at all? As noted above, while some legislators may be heard to say, “we cannot get this done unless outside entities like the American Bar Association and other bar associations and corporate entities come to us with a common solution,” no matter how “common” a solution among such entities may be it is not likely to be politically palatable if it abrogates section 101, introduces equally uncertain new terminology, or totally ignores the legitimate concerns that first arose in the courts more than 100 years ago.

To be sure, to fix a broken patent eligibility test will take most of us. And that likely means private parties and intellectual property attorneys stepping up with concrete examples of harm to investments in innovation that they effectively communicate with politicians and others. It means political courage in Congress to resist the lobbying (and possibly forgo some campaign contributions) and instead take a stand for what’s best for the patent system. At some point, fixing the patent eligibility debacle will require some profiles in courage among judges, legislators, administrators, and the user community. If not, the drop in the strength of the U.S. patent system as reported by the Chamber of Commerce and others will be a harbinger of further bad news to come. Investors will start investing in countries with better IP protection than we have in the United States, and the need for preventing theft of our intellectual property by other countries will continue to grow as an issue influencing the political climate. Ultimately, voters will speak, and they will not stand for the potential loss of the U.S. lead in the development of new technologies.

This is a call for all interest groups to place the good of the patent system above any potential short-term interests some may realize due to the current unpredictable, uncertain, and ambiguous patent eligibility standard. In the interim, the ABA-IPL Section will continue to diligently work with the administration, Congress, other bar associations, interest groups, corporations, and individual inventors to achieve a lasting, sensible, understandable, and predictable patent eligibility test. No result will be perfect, but the current standard only offers enormous room for improvement. You can find the Section’s proposed legislative fix to patent eligibility on our website at ambar.org/ipllegislativeadvocacy. n

By Scott F. Partridge

Scott F. Partridge is chair of the ABA Section of Intellectual Property Law. He is a partner at Baker Botts LLP in Houston, Texas. He can be reached at scott.partridge@bakerbotts.com.