Today Representatives Kevin Kiley (R-CA) and Scott Peters (D-CA) introduced the Patent Eligibility Restoration Act (PERA), bipartisan legislation mirroring a proposed law introduced last year by Senators Thom Tillis (R-NC) and Chris Coons (D-DE). The proposed law seeks to restore patent eligibility to inventions across many fields and affirms the basic principle that the patent system is central to promoting technology-based innovation.
Is such legislation a good idea? Representative Kiley has provided a summary of his reasons for introducing it.
Patents currently operate under a two-tiered system. Some novel inventions are allowed the benefits of the patent system, and some (especially in software and medical diagnostics) are deemed “ineligible” for this privilege. Understandably, this is frustrating to the inventors and companies developing these inventions. Why the different tiers? The distinction arose because some judges believed that some inventions are too universal or too abstract to warrant the multi-decade exclusivity of a patent—even if these inventions met the other legal requirements for receiving a patent, such as being new, useful, and fully disclosed in the patent application.
The underlying law interpreted by these judges, 35 U.S.C. § 101, is relatively permissive, stating in its text that anyone may receive a patent for any invention that falls within four broad categories: machines, manufactures, processes, and compositions of matter. In the early days of the statute, this meant that patents could be granted for “everything under the sun made by man.” The statute’s language reaches back to the 1793 Patent Act, but Courts have also applied various non-statutory “exceptions” to what inventions or discoveries are eligible for patenting. One controversial exception prohibits attempts to patent what the courts call “abstract ideas.” The Supreme Court’s recent decisions in the 2012 Mayo and 2014 Alice cases further strengthened the barriers prohibiting some inventors and industries from obtaining protection under the patent system.
The law newly proposed in the House (PERA), attempts to tackle the problems of the two-tiered system.
The Senate Judiciary Committee held a hearing on PERA on January 23, 2024. Among its many provisions, PERA would amend Section 101 to provide that:
. . . any process that cannot be practically performed without the use of a machine (including a computer) or manufacture shall be eligible for patent coverage.
This would likely be interpreted by the courts as allowing software and medical diagnostic patents that present law does not allow. A similar “practicality” standard was previously proposed by former U.S. Patent and Trademark Office director Andrei Iancu, referenced in previous guidance from the USPTO to its examiners, and has roots in case law more than a century old:
It is true that a patent can not be sustained for a mere principle. For instance, Sir Isaac Newton’s discovery of the principle of gravitation could not be the subject of a patent. But it is equally true, that a principle may be embodied and applied, so as to afford some result of practical utility in the arts and manufactures, and that under such circumstances a principle may be the subject of a patent. It is, however, the embodiment and the application of the principle which constitute the grant of the patent.
Wintermute v. Redington, 30 F. Cas. 367, 370–371 (C.C.N.D. Ohio 1856).
Proponents of PERA emphasize that enacting the law would restore 35 U.S.C. § 101 to its previous status as a basic threshold test, and allow patents to be further evaluated under the standard historical tests set forth in 35 U.S.C. §§ 102, 103, and 112.
PERA is a compromise, however, because it codifies some aspects of judge-made law, such as denying eligibility to any invention of “a process that is substantially economic, financial, [or] business,” excluding, as patent ineligible, what are known today as “business method” patents. This is a change from historical patent law that granted such patents. It also differs from previous patent statutes by categorically excluding patents on particular discoveries, such as of a “gene [as it] exists in the human body,” contrary to the affirmative statement of permitted categories in § 101.
These compromises have led some to believe PERA is a mistake. They argue that it removes incentives for development in future unknown fields, and that it will put the U.S. at a competitive disadvantage to other countries that have more permissive patent eligibility requirements. Other arguments against PERA arise from a general hostility to patents, because they are perceived as being barriers to innovation rather than an integral part of our Constitution-based incentive system to encourage innovation.
If passed, PERA will substantially impact the U.S. patent system. Interested inventors, patent holders, and patent professionals should weigh in during the legislative process.
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