The Patent Eligibility Reform Act: Clarifying Patent Eligibility for the U.S. Patent System?

Join the Federalist Society for a discussion on the Patent Eligibility Restoration Act (PERA), legislation aimed at clarifying and restoring patent eligibility in the United States. Specifically, the bill seeks to restore patent eligibility to inventions that have been deemed ineligible by recent court decisions.
The panel brings together top voices in patent law: David Jones, Executive Director at High Tech Alliance; Joseph Matal, Principal at Clear IP; Jamie Simpson, Chief Policy Officer and Counsel at Council for Innovation Promotion; and Former Federal Circuit Judge Kathleen M. O'Malley. The conversation will be moderated by Earl Bright, President and General Counsel at ExploraMED Development.
Join this webinar to explore how PERA seeks to reform the framework for determining what types of inventions are eligible for patent protection in the United States.

Featuring:
David Jones, Executive Director, High Tech Inventors Alliance
Joseph Matal, Principal, Clear IP LLC
Hon. Kathleen M. O'Malley, Former Federal Circuit Judge
Jamie Simpson, Chief Policy Officer and Counsel at Council for Innovation Promotion
[Moderator] Earl Bright, President and General Counsel at ExploraMED Development

Episode Transcript

Speaker 1 (00:24):
Hello everyone, and welcome to this Federalist Society virtual event.
My name is Sarah Clark and I'm an assistant director
of Practice Groups with the Fowerless Society. Today we're excited
to host this bedsoft forum called the Pattern Eligibility Reformat
Clarin Patton Eligibility for the US Patent System. We're very

(00:45):
pleased to welcome David Jones, Joseph Mattal, Judge Kathleen O'Malley,
and Jamie Simpson as our excellent panelist for this discussion.
David Jones is the executive director of the High Tech
Inventor's Alliance. Mister Jones previously served as Assistant General Consul
for Pound Policy at micro Assoult, where he spent more

(01:07):
than a decade handling both domestic and international patent issues.
He's held multiple positions on Capitol Hill, most recently as
Antitrust and IP Council to Senator or in Hatch on
the Senate Junioritiary Committee. Joseph Mattall is the principal at
clear IPLLC. Mister Mattall has served as both the US

(01:30):
Pun and Trade Work Acting Director and Acting Solicitor. As
Acting Solicitor, he defunded the agency in intellectual property cases
before the US Court of Appeals for the Federal Circuit
and the U. S. Supreme Court. In his role in
the Solicitor's Office, he participated in briefing almost every major

(01:52):
case involving PTAB trials that have come before the Federal Circuit.
Judge Kathleen O'Malley was a federal judge for over twenty
seven years. She was appointed to the District Court in
nineteen ninety four at the age of thirty seven, and
was elevated to the Court of Appeals for the Federal
Circuit in twenty ten. She also has substantial experience and

(02:16):
intellectual property issues, copyright, terrain, work, trade, secret and the
intersection of IP and antitrust with other areas of federal law,
including securities, fraud, tax matters, and mass towards. Jamie Simpson
is the Chief Policy Officer and council for the Council
of Innovation Promotion, which is a bipartisan coalition dedicated to

(02:41):
promoting strong and effective intellectual property rights that drive innovation,
boost economic competitiveness, and improve lives everywhere. Miss Simpson has
almost twenty years of experience in policy and a specific
focus on IP related issues, served as Chief Counsel on

(03:01):
the House Judisiaries Committee and Courts IP and the Internet.
And special thanks to our moderator Earl Bright, who's a
founder of several companies, a pan attorney, and has served
on executive management teams of many startup companies and multiple capacities.
Mister Bright is a co founder of andsers on the

(03:23):
Alliance for US Startups and Inventors for Jobs Advisory Committee.
He is a former member of the US Pound and
Public Advisory Committee. Previously, he was Director of Intellectual Property
West Coast Operations, a guidance corporation, where he directed a
nine member team involved in litigation and the strategic development

(03:45):
of over thirteen hundred pound and trademark applications. If you
would like to learn more about today's moderator or speakers,
their full bios can be viewed on our website botsock
dot org. Throughout the program, we all turn to the
audience answer questions. If you have a question, please enter
it into the Q and A function at the bottom
of your zoom window, and we will do our best

(04:07):
to answer as many as we can. Finally, I know that,
as always, all expressions of opinion today are those of
our guest speakers, not of the Follerless Society. With that,
mister Bright, thank you so much for joining us today,
and I'll hand things over to you all right.

Speaker 2 (04:24):
Thank you very much, Thanks everybody for joining us where
we have a very important topic to discuss today and
one that is hotly debated. There is a lot of
strong opinions on the topic, and a lot of different
approaches and thought processes to try to address the issue,

(04:46):
and even some debate as to whether or not there's
any further clarification that needs to be done for patent
eligibility law. It's one of those very unique topics in
the sense that it is a very broad funnel and
it impacts very many different areas of the economy, very

(05:07):
many different types of technologies, and trying to come up
with a coordinated, you reasonable response for all of the
different segments of the economy that it impacts has proven
quite difficult. It's proven difficult for the courts to grapple with.
It's also proven difficult for Congress to grapple with. But

(05:32):
we're going to do our best in this hour to
try to bring some clarity to that and help explain
what the current state of trying to address the topic is.
So to get us kind of grounded, Jamie is going
to start off giving a short overview of what is
in the current bill that has been introduced in Congress

(05:55):
to try to bring some clarity to patent eligibility, and
then we'll get into a little bit of a discussion about
why that bill is actually needed in some people's view
and view the case law. So Jamie, I want to
give us the grounding.

Speaker 3 (06:13):
Great, well, thanks, and it's great to be here today
with all of you. Thanks for inviting me here. So
I'm going to give a little bit of background on
this topic and the bill that we're going to discuss today,
the Pan and Eligibility Restoration Act. I know many of
you probably are familiar with this topic, so I'm going
to try and move quickly but point you to areas

(06:35):
you might want to go if you want to get
a little bit more background and to avoid any spoilers.
I am in the camp that we do really need
this bill, and I will provide some explanation as I
explain the bill and where it came from that supports that.
But I think we'll get into more of that discussion later.

(06:59):
So to get us start that, I'm going to share
a few slides, all right, So before I go into
the slides and the operative language of the bill, I

(07:19):
just kind of want to situate on what we're talking
about in the context of pad law. So we're talking
about Section one oh one of the Patent Act, which
defines what innovations belong in the patent system and what
ones do not. So it's, as I'm kind of mentioned,

(07:39):
a very foundational part of the patent law, but it's
only the first step in deciding whether or not an
innovation would get a patent. So it's kind of the
gatekeeper statute. You decide whether or not this is something
we even want to consider further or not, and then
we move on to the next steps of the patentability analysis,

(08:00):
which look at issues such as is this innovation really new,
is it obvious? Did the inventor disclose enough to warrant
patent protection? And all of these other steps that are
necessary to decide whether or not you get a patent.
Section one oh one is just the first step, but

(08:20):
it's a very important step. So why are we here.
This part of the statue has been around since virtually
the beginning of the country. The first pac passed in
seventeen ninety second pat next seventeen ninety three. In this
part of the statue, it has almost the same wording

(08:42):
as it had back in those days. It's very broad,
and there have been a number of Supreme Court cases
over the centuries looking at that. But within the last
ten to fifteen years, the Supreme Court decided a series
of four cases. Is that really changed the scope of

(09:02):
what this part of the pat nec does. So now
I'm going to move to the next slide and let
you know kind of where we ended up after these
four cases. We ended up with what some people call
a shorthand the two part Alice Test from the name
of the case that was the last one of these
four cases. And it basically imposed upon the statute how

(09:27):
to assess these judicial exceptions that are grafted onto the
statute and decide whether or not an innovation qualifies under
the first part of the Patent Act. So it asks
it asks the patent examiner or the cord if they're
looking at an issue patent, to consider, is this innovation

(09:49):
directed to one of three judicial exceptions and that's unpatentable?
Law of nature, natural phenomenon, or abstract idea. So does
it fall into one of those three buckets? And next
if it does, is there's an inventive concept sufficient to
transform the otherwise unpatentable concept into something that is patentable.

(10:13):
So this sounds short and simple maybe, but I would
argue that, unfortunately, it is not in two major ways.
One is that if you look at the word abstract idea,
part of the problem is abstract ideas never defined. It
wasn't defined by the Supreme Court and it's never been

(10:34):
defined by lower courts either, and it's kind of proven
to be a moving target. And I would argue that
that has injected a lot of uncertainty into the law,
especially in areas of computer implemented inventions, which are very
important to our economy for obvious reasons. So it's created

(10:56):
this gray area that's made a lot of patents in
apparently unstable in this area, even if they get granted.
It's a subjective test, subject to a lot of second guessing.
Subject to it, I'd argue our cases that come out
different ways on very similar facts. On the other end
of the spectrum, you have these other two categories of

(11:19):
judicial exceptions, laws of nature, natural phenomenon and those impact
the life sciences, and there's I would say less uncertainty
and how these have had an impact, But it's been
equally dramatic and problematic for our innovation economy in that
it's made it very hard, if not impossible, in some instances,

(11:42):
to get patents in areas of new medical diagnostics, which
again are really critical part of the economy and probably
more importantly just critical to human well being. We want
people to invest in research into diagnostics, but it's hard
to get companies to devote resources if they spend a

(12:04):
lot of money and their diagnostics can be easily copied
once they're on the market, and that's the whole point
of pen protection, and this test, the way it's been implemented,
has really just led to the elimination of a lot
of these pens that were already issued and prevented the

(12:26):
issuance of future ones. So then we're going to turn
to the pen and eligibility restoration, at which I would
say would solve these two problems that I've just identified.
To give you a little bit of the background about
the bill, it's a bipartisan by camera bill that has
been introduced in this Congress, was also introduced the last

(12:50):
Congress and arose out of a number of roundtables that
were hosted by Senator Tom Tillis spanning backumber of years.

Speaker 2 (13:00):
Now.

Speaker 3 (13:01):
I know other people on this panel were involved in this,
So there's a lot of talk that went into trying
to come to some consensus on what should happen in response,
and this was the result. And I'm just going to
say very quickly, hear what the bill does, and then
we'll turn also quickly to the language of the bill.

(13:24):
So what it does para is it basically reinstates the
same basic statutory categories of eligibility that had been on
the books since the seventeen nineties, This very broad statutory
language that's always been there. But it changes the als
tests that I just mentioned and eliminates that in favor

(13:47):
of five statutory instead of judicial categories of areas where
further scrutiny is warranted and where patents might not be
issued if it's not the sort of an that the
patent system is meant to encourage. Within those five areas,
the bill also provides further guidance for inventions that might

(14:09):
kind of be borderlined to say when or what should
you be aiming for to get into the patent system.
So I would say one of the huge benefits of
this bill is it provides a much more workable system
for what this jurisprudence under section one oh one should be.

(14:30):
So turning to the language of the bill itself, like
I said, I'm not going to go through every word
of this, but I'm just going to walk you through
the major parts of the bill. The first part of
the bill is the findings. It kind of goes through
what the sponsors believe is the problem here and their
explanation of how this bill will address it. And I

(14:51):
want to point you to the parts that are kind
of colorized here that I think try to say in
plane language what the operative parts of the bill do,
the five categories that are going to get more scrutiny,
and then a little bit more of an explanation of
what that means in certain cases under subparagraph either. Okay,

(15:13):
So then turning to the operative language of the bill,
this is just starting at the beginning. I'm not going
to spend a lot of time here, but this is
kind of amending and restating the first part of the bill,
and then the second part of the operative language is
really where the important part takes place. So this is

(15:36):
the statement of the five categories that replace the judicial exceptions.
They draw on some of the case law, but they
provide more concreteness to this idea of this abstract idea,
so you can see and be that instead of the
term abstract idea, which doesn't appear in here. One of

(15:58):
the things that would get greater scrutiny is a process
that is substantially economic, financial, business, social, cultural, or artistic.
So that's kind of I would say, trying to codify
this kind of common sense notion that the patent system
is intended to promote technological advance, So artistic advance in

(16:18):
its pure form, for example, has the copyright system and
other areas of protection. It's not meant to be protected
by the patent system. But as I mentioned, this bill
also tries to address borderline cases. So you might think
of something that allows you to do art on a computer,
like there are a number of computer programs that would

(16:41):
allow you to draw things on a computer, or to
make animations or something like that, and that's where you're
kind of combining something that has maybe an artistic flavor
to it, but involves a substantial amount of technology. And
so that is where you look to the the paragraph

(17:01):
two here conditions and the sub paragraph A is the
one that's relevant here, and it talks about a machine
being practically necessary for the performance of what the invention is.
So even though there might be some artistic part in
this example, if it's really describing technology, it really requires

(17:23):
a machine, then it might in fact be patent eligible.
And again this is only the first step in the
panability analysis. So is it PAN eligible, then you would
proceed to assess the rest of patentability. And so just
to look at the rest of these areas, you have

(17:45):
the first one mathematical formulas, which is kind of a
longstanding judicial exception that would now finally be codified. The
same is true for sub paragraph CE a mental process
or a process that occurs holy in nature. Than the
less two are directed to the other judicial exclusions that

(18:05):
are relevant to the life sciences. So this would be
restoring a clear amount of PAN eligibility for things that
until the last ten to fifteen years have always been
pant and eligible here and are in fact PAN eligible
in all of our pure economic countries and restoring clear

(18:28):
pant eligibility for diagnostics and related things like that. So
now I'm going to turn to the rest of the
bill just to make you aware of it. This part
of it provides some guidance to the courts in how
they're meant to apply on this analysis and of particular relevance.
I just want to point to the end of this

(18:49):
section where it says infringement action in general, and it
says a court is welcome to decide this issue at
any point in the case if it feels it's appropriate,
which is something courts do now because this is considered
a question of law, that can decide it on emotion
to dismiss, they can decided on a summary judgment motion.
This is preserving the court's ability to do that in

(19:12):
cases where the court feels it's appropriate. Finally, the bill
ends with these rules of construction, which we can talk
about more in more detail if there are questions about it,
or we get to it. And with that I'll conclude.

Speaker 2 (19:27):
Thank you, thank you, thank you. Jamie, and David. I
want to hear from you in just a bit because
you've been involved with this discussion and debate about whether
or not a statute is needed or not and view
the case law. But before that, Judge, I was wondering
if you could give us a little bit of perspective
on first of all, why are we even talking about

(19:49):
judicial exceptions to a statute? How does it come about
that the judiciary has come up with its own category
of exceptions outside of statutory language. And where does that
that come from?

Speaker 4 (20:07):
You're right now, it really just comes from from what
the Supreme Court decides that it wants to do.

Speaker 5 (20:18):
I mean, this has been an issue from the very beginning.

Speaker 4 (20:20):
There's always been a tension between those people who believe
that we should have encourage innovation with a strong patent
system that really protects the inventors and the inventions that
they come up with. And then there then there is
a whole other group that thinks that patents by themselves

(20:45):
are sort of antithetical to our principles against antitrust or
against complete control of the economy or of even a
particular industry. So what has happened over the years is
that the Supreme Court apparently is not in complete agreement
with what Congress keeps deciding. Because Congress thought they had

(21:07):
addressed all this in the fifty two Act. So the
Supreme Court has said, we need to step in and
we need to just draw some lines. Certain things should
not be patentable, certain things should be more open to
the world and to anyone who wants to build the
economy with them. And so the Supreme Court has felt

(21:31):
that its job, in part is to rein in the
patent system in a way that Congress itself did not
believe was necessary. And so that's the tension really is
between whether who is who's in charge? Is it Congress
who's to say what the patent system is and to
define it that seems to be what the founders had

(21:54):
in mind, or is it the Supreme Court who who
can say, for reasons related to their concerns with anti
trust principles, that the patent system needs to be narrower.
So that's where these come from. Over the years, there

(22:14):
have been efforts by the Congress to pull back on that, but.

Speaker 2 (22:19):
The Supreme is the Supreme Court finding their authority for
that in the Constitution. Is that why they think that
they can essentially overrule the will of Congress? And the
follow on question is do you think the language in
this particular bill will be an adequate protection against them

(22:41):
deciding a new set of exceptions outside of this bill.

Speaker 4 (22:47):
I actually don't think that they're grounding their exceptions in
the Constitution as clearly as I think they believe.

Speaker 5 (22:55):
Maybe they are.

Speaker 4 (22:58):
Again, I think this is just a question, you know,
where do they fall on whether patents are a good
thing or a bad thing.

Speaker 5 (23:05):
And that's a debate.

Speaker 4 (23:06):
That's been raging since, you know, since the founding fathers.
I tend to think that a strong patent system is
very important, but there should be limits on it, and
I think Congress is the place where those limits should
come from.

Speaker 5 (23:24):
Will the Court.

Speaker 4 (23:25):
Continue to battle if Congress passes this bill. I think
that perhaps Congress needs to be a little more express
in making it clear that these should be the only exceptions,
and that I hope there'll be enough legislative history so

(23:45):
that the Supreme Court will at least think twice before
it wades back into this dilemma.

Speaker 2 (23:52):
So, David, you have a heavy background, and you know
Congress and then more recently you know in one particular
high text Societ. You know part of the economy and
focused on software and electronics and whatnot. The from from
your standpoint, should software be patentable, should there be some

(24:20):
level of protection with regard to that type of development,
or is with respect to the primary industries that you've
worked in the last couple of years, it's more of
a impediment than it is an enabler.

Speaker 6 (24:37):
So so my members tend to believe that. And I
should just start off by saying, my members include the
largest patent owners in the world, including the very largest
patent owned the world. So they've they've spent you know,
hundreds of millions, if not billions of dollars pursuing their
own patents, and they believe very strongly in the patent system.
What we don't believe adds to innovation as having patents

(25:02):
on things like cultural processes, artistic processes, business methods. These
things are problematic. And you know, going back to you know,
the reasons why this bill may or may not be necessary,
I think you know, I'm a very data driven person, right,
so I tend to believe that humans are fallible and
I have opinions on it. If you know me, you

(25:24):
know that I have an opinion on everything in the world,
most of them ill informed, right, So I try to
inform myself with data whenever possible. And I think the
main argument that has been made is that this is
uncertain it's unworkable. We just can't do this. It's hugely problematic.
But all the data I've been able to find points

(25:44):
in exactly the opposite direction. Right. For example, the one
oh one rejections that the PTO are lower now in
almost every art area than they were prior to Alice.
And if you look back historically what happened with the rejections,
there's a spike, there is a period of uncertainty, very
quickly it comes back down to below historic norms. Now
that's impossible. Well, there are two possibilities for that kind

(26:07):
of spike and then returning to blow norms. One is
the PTO is just not applying the law at all.
I hope that's not the case. That would be very
troubling for the patent system as a whole. The other
is that applicants are able to predict with reasonable certainty
what the office will allow. And so you've got allowance
rates that are at or above historic norms and rejection

(26:29):
rates that are below historic norms. And you know, if
you don't want to believe the rejection numbers. Then you
can look at the internal quality control numbers that the
PTO puts together. According to the PTO, they apply that
the rate of compliance in the application of Section one
oh one, which is this issue patent knowledgeability, is higher,
not lower, than one oh two, one oh three, and

(26:50):
one twelve, which are the three other main kind of
statutory requirements. So according to the PTO, at least it's
doing it is easier to apply one on one than
the other requirements, not harder, And there's no significant uncertainty there.
And if you don't believe that, you could ask academics. Right,
so there are a couple of academics I think it's

(27:12):
dats off and Rent Handan actually did a took a
look at the federal circut case a lot to see
if it was unpredictable using the three kind of most
settled ways of assessing unpredictability and uncertainty and pullit decision making,
and found that, you know, contrary to what they thought
they were going to find, there was no greater uncertainty

(27:35):
with respect to Section one O one than there words,
you know, with respect to other major patent doctrines, and
quite often there was much much less and this has
been repeated over and over. You had another academic that
gave claim language to practitioners and said, can you know
predict if this is eligible or not eligible? And at
a very high rate of being able to predict it.
You've had at least I think three major economic studies

(27:57):
to see if this affected the economy, did affect innovation,
did it affect investment in R and D and all three? Well,
they're either two or three. I'm blinking on the third,
so let's say two, just just to be conservative. Both
of those concluded that there was no negative impact here.
And in fact, there have been other economic studies that
said that the Alice decision and this kind of line

(28:19):
of cases, at least for tech. And I'm not a
life science guy, so for the most part will not
comment on that, but at least for tech, for both
small and large software firms and tech firms, this was
a boon. And then let me like one last study
that I just like to address that I think maybe
makes the point of why I think patents are great

(28:41):
and necessary and drive innovation, but not in every instance
and not in every art area. There was a study
that was done post Alice of applicants that had been
getting lots of business method bets, and the authors of
this study wanted to see what happened once business method
patents were much less available under the AALYS decision, and

(29:03):
what they found was that they increase their investment in
technical resources. They added technical staff, they increased their investment
in R and D, which is exactly what we hope
the patent system does. But in this instance, at least
with respect to what I would consider non technological inventions
in the areas of art, culture, society, business, sociology, psychology, anthropology,

(29:29):
there seems to be an inverse impact where people obtain
patent protection in lieu of investing in R and D,
and quite often the patents that they get don't reflect
any investment. Right, it's merely an idea. As the Supreme
Court we call it an abstract idea that didn't require
any R and D investment. So the patent system at

(29:50):
best serves no useful purpose in my view with respect
to those and at worst actually hurts investment in what
I would consider actual technology, the places where we need investment,
making better computers, making better drugs, making it you know,
that type of thing. I don't I just fundamentally don't
believe that we need the patent system to encourage investment

(30:12):
in cultural innovation for example. I just I just don't,
although I'm happy to debate it, and who knows, maybe
I could be wrong.

Speaker 2 (30:20):
Yeah. So, Joseph, you spent a lot of time with
the PTO, and David mentioned the run of one rejections
compared to other rejections and things. So there was an
effort by the Patent Office to put out guidance to
the examiners, you know, following the series of court decisions

(30:42):
and things. So from the Patent Office perspective, is this
type of proposed bill helpful? Would it be necessary? What
what is your view and what would be the Patent
Office's implementation and view on the helpfulness of having clarification

(31:04):
with statute?

Speaker 7 (31:06):
Well, I mean that the Patent Office will do whatever
the courts and Congress tell them to do. You know,
there was about a sixteen year period when business methods
were patentable in the United States after the State Street
decision in nineteen ninety eight. You could literally get a
patent on an innovative business method or you know, any
other kind of sociological invention and the Patent Office just

(31:29):
followed the rules and cheerfully issued you know, created art
units for business methods and you know, related things and
cheerfully issued those patents. And that came to a crashing
halt in twenty fourteen with the Alice decision, which to me,
the most important part of Alice is the part that
says you can't get patents for quote methods of organizing

(31:49):
human activity. And they made clear economic practices fit within that,
which basically killed patenting of business methods. The particular invention
and Alice was a way of conducting a financial securing
a financial transaction by basically using escrow. You have a
third party controlling the money and nothing is sent until

(32:11):
people send their you know, send out their money. And
it was computer implemented, and the Supreme Court said, we
don't care. It's you know, the real the only real
innovation here is the business method You're just using off
the shelf computer technology for its its standard functions. And
that doesn't you know that that doesn't confer eligibility. You know,

(32:32):
Haarrah pretty clearly would at the very least rivers Alice.
It has that language that says a process you can't
patent a process that is substantially economic, financial, business, social, cultural,
or artistic, which is all good. That's you know, basically
the Alice test. But then PARAH has this exception in

(32:54):
paragraph two A that says you can patent such things
if the claimed invention cannot practically be performed without the
use of a machine or manufacture.

Speaker 8 (33:05):
It's not I can't.

Speaker 7 (33:07):
Tell you exactly what that language means because it's not
a term of art that's used in the current case law,
so there's no definitive construction of this language. But in
the hearings on PARA, advocates for the bill have made
clear that this would bring back, for example, the invention
in Alice the way that invention was claimed. Envision money
being sent around banks in real time all around the world,

(33:29):
and you can't you can't practically do that without using,
for example, telecommunications technology or computers to store data and
things like that. And according to the advocates, that that
would fit within this cannot practically be.

Speaker 8 (33:43):
Performed without it.

Speaker 7 (33:45):
So, as I read pair of the principal effect would
be to make non technological inventions patentable again as long
as you need to use some kind of machine or manufacture.
Some kind of for example, communications technology in order to
execute the invention.

Speaker 8 (34:01):
And you know, in my view, that.

Speaker 7 (34:03):
Largely makes you know, the limit on business methods a
matter of drafting, of how you draft your claim. If
you draft your claims in a way that you're sending
information around the world in the same day, for example,
suddenly all of those you know, economic, cultural, artistic, and
everything else inventions become patentable. It's a pretty radical broadening

(34:24):
of eligibility, pretty similar to where we were.

Speaker 8 (34:27):
In State Street.

Speaker 7 (34:28):
And then it just a question of it as a
matter of policy, do you think, you know, patenting should
be limited to non technological inventions? Just confining myself to
just the legal issue of you know, is that what
the current statute says. I'd argue that the text and history,
you know, for all the talk of like, oh, courts
created this, et cetera, I'd argue that the text and

(34:49):
history of the statute pretty strongly indicate that patenting was
intended to be limited to technological advances, to technological inventions.
The you know, the story of our patent acts. It
was obviously modeled on the Statute of Monopolies from sixteen
twenty four in England. The founders pretty clearly consciously had
that statute in mind. That was a statue that actually

(35:13):
restricted the king's ability to grant patents. At the time,
the king was granting some pretty silly patents to friends
for things like, you know, method of playing cards or
things like that, for things that weren't innovative, and the
Statute of Monopolies restricted patenting to a quote new manufacturer.

Speaker 8 (35:31):
You had to show you what it was a new manufacture.

Speaker 7 (35:33):
And for you know, the history since then was pretty
clearly it has to be some kind of technolog technological innovation.
It pretty clearly grounded the patent system in this kind
of industrial technological environment. About I guess century and a
half later, you get the first US or the seventeen

(35:54):
ninety three Patent Act that uses the language machine, manufacture,
composition of or process. These aret at the time change
to process. It's pretty clearly a direct descendant. I'd argue
that that also kind of creates this industrial technological context,
which is where patenting is intended to be confined. And

(36:16):
you know, the history is consistent with that. Business methods
have been around for you know, as long as the
Statute of monopoly.

Speaker 8 (36:21):
Some very important ideas.

Speaker 7 (36:24):
Came up in the seventeenth From the eighteenth century, I
think that's when the Dutch came up with the joint
stock company, for example, so that a company doesn't die
when the you know, when the founder dies. Very important
evolution and business organization. But no one ever patented those things.
It was, i'd argue, pretty broadly understood that patenting is
only for technological inventions.

Speaker 2 (36:47):
Yeah, you mentioned the style of claiming. I mean even
the Supreme Court, I mean that's their focus is claimed
So the their their beef is is when somebody writes
a really broad claim that's not tied down to technological things.
So it's always about claim drafting. So the the the
bigger question is whether or not the any one of

(37:12):
these particular claim drafting styles is allowing certain technological areas
to be patentable or not. I mean, in the life
sciences area, the fact that the Supreme Court President right
now has basically has eliminated as substantial swaths of diagnostic

(37:32):
techniques is a big problem. I mean, they're they're fundamentally
saying that that that is an area that of even
technological invention that is not allowed to be patented. At
the at the highest level, irrespective of whether or not
it's novel or not obvious. They're just saying that category

(37:54):
is not patentable.

Speaker 8 (37:55):
And that's well. But my friend, I'm going to disappoint
you on this one.

Speaker 7 (37:59):
I agree that Mayo was wrongly decided, and that to me,
the diagnostics are clearly in advance in technology and should
be patentable. Mayo is the product of a kind of
weird branch of case law that goes back to the
Funk Brother's decision in the nineteen forties, and in that
in Funk Brothers, for the first time, the court said, well,
if the invention would be obvious once you understood the

(38:22):
science that controls it, then it's not eligible.

Speaker 8 (38:24):
And that decision just.

Speaker 7 (38:25):
Doesn't make any sense, and you know, they need to
overrule Mayo at some point. I mean everything, virtually every
technological invention becomes obvious once you understand all the scientific
principles behind. It's an argument without any limits to it.
I agree that you know this is obviously a field
of technology diagnostics and should be eligible under the general rule.

Speaker 5 (38:53):
You had a lot of time. Let me say there's
a lot. There's a lot that's been said that I
don't agree with.

Speaker 4 (39:00):
I'm not going to go through all of it, but
just suffices to say, you know, especially David, there was
a lot that you were quoting and pointing to that
I don't agree with, as you know.

Speaker 5 (39:09):
But let me just address two things. One is, with respect.

Speaker 4 (39:13):
To me, I completely agree, and that was just poorly
decided and I don't know what they're thinking or what
they were thinking. And that the Federal Circuit has struggled
with it because Federal Circuit doesn't agree with it, but
it has no choice.

Speaker 5 (39:28):
So but then to go back.

Speaker 4 (39:30):
To the other point, which is what the Supreme Court
should have done in Alice, is just just say Street
Bank was rolling decided under the statute, because I mean,
and I like to say that I was not there
when State Street Bank was decided.

Speaker 5 (39:48):
I would not have agreed with it.

Speaker 4 (39:49):
At the time, the District Court had written a very clear,
careful opinion about why these things should not be patentable,
referenced things like other portions of the statute one twelve,
one two, one on three, which I think are all
completely capable of dealing with this parade of horribles that

(40:12):
everybody keeps pointing to so I think that the Supreme
Court couldn't control itself and decided and issued an opinion
with respect to this whole abstract idea that was unnecessary.
It could have done it on a Most court decisions
are based on the issues that are before it and
the facts that are before it, without trying to necessarily

(40:35):
say we're going to decide this wide swath of items.
This was very much based on the Supreme Court having
listened too much to the parade of horribles about patent trolls,
and in fact, it even said so in various of
its opinions. So I think that I don't disagree with

(40:56):
respect to the fact that State Street Bank should have
been overturned, but I think that's where the Supreme Court
should have stopped and then waited for the next case
to present itself. So so I don't agree with a
lot of what's been said, and I just don't want
to leave it out there. That's somehow it by not
saying something, I'm agreeing with the details.

Speaker 8 (41:18):
Yep.

Speaker 2 (41:18):
So Jamie owen to come to you and just saying
But I want to ask Dave Fallo up question real quick. So, David,
do you think that one twelve could be just as
effective of a tool to you know, basically get out
this abstract idea problem versus it being excluded at the

(41:38):
one oh one approach.

Speaker 6 (41:41):
I think if one twelve the one twelve church prints
were fixed, it could do part of the job, at
not all of the job. And then let me explain
what I think the core problem here, That the core
dispute is whether if you have some sort of conceptual
or abstract innovation, for example, an innovation and say the
fine arts, can you render that patent eligible or should

(42:03):
you be able to render that patent eligible by basically
just adding on a computer at the end of the claim. Right,
if you add on the computer at the end of
the claim, then it necessarily requires a computer and it
satisfies at least according to my reading, these sort of
exception tests in the current version of the statute. And
that really is the problem, and I think that can

(42:24):
be solved outside of one oh one. I actually probably
would prefer that it be solved outside of one oh one.
And the easiest way to do it is probably the
European approach, where they say only the technological features of
a patent claim can be considered for purposes of establishing
inventive step, which is their version of non obviousness. Now,

(42:46):
that would work very well. I think is probably more
consistent with the statutory scheme. And we have proposed that
over and over. We've proposed change like minor changes to
one twelve, that small change to section one oh three,
and those have been consistently rejected in this debate, which
leads me to believe that at least a portion of

(43:06):
the advocates of these and maybe the loudest advocates of
this particular bill, I actually intend to create a system
where if if you just add on a computer or
over the internet, or using a network, or with a football,
or with the car, you know, any physical object in
essence that you can name any machine or manufacturer, so

(43:27):
not any physical object, but any physical object that was
that was created by man. That that would render something
patent eligible. And to me, that just seems like chaos.
That's not the patent system in any other country. It's
not the patent system that's ever existed in this country.
And I think at a minimum, we would be taking
a huge risk by making those changes. I'm sorry I

(43:49):
wandered a little there, Did I answer your question.

Speaker 2 (43:52):
Yes that works, so Jamie, so yeah, go ahead, sure
my screen again.

Speaker 3 (44:08):
Yes, I think relevant to what Dave just said, I
think the drafters of this bill are trying very hard
not to simply allow the quote unquote doing it on
a computer to be sufficient where the computer is not
really relevant to the parts of a claim, to the
extent that they clearly put this in the findings under

(44:30):
some paragraph E where it says, for example, do it
on a computer shall not establish such eligibility when it's
coupled with performing dance moves. So I mean, I think
that this is a good case of where the language
of the statue and I'm going to go back to
the operative language is very important. So the point is

(44:56):
that you're trying in these kind of borderline cases is
where something might be economic but is done on a computer,
and the question is is it integrated in the computer enough?
And clearly that this is going to be something that
courts are going to have to look at closely because
these are borderline cases. But what I think the advantage

(45:20):
of PARA is compared to the current juris prudence is
there's kind of just a clear analytical framework that this
bill or if it becomes a law would direct the
courts to apply, which is asking first whether something substantially
economic and then whether or not a computer is practically necessary.

(45:42):
And there are going to be cases where it's not
practically necessary. You could do it something just by talking
to people, if it's a really simple business exchange, or
it seems like a computer is an insignificant extra solution activity,
which is closer to.

Speaker 2 (45:58):
A term of art.

Speaker 3 (45:59):
I don't know that I'm putting it exactly. When you
get into something, and I think this is what Joe
was talking about. When you're talking about doing something in
real time or something more complicated like that, you might
still have some borderline cases, but you're kind of getting
into a realm where you're talking about something that technology

(46:20):
is allowing you to do that you couldn't do beforehand.
And that's, in my view, exactly what we want the
patent system to be doing. So I see this bill
as very much talking about when do you have enough
technology to make something eligible. So I think we've heard
kind of dissent saying that you don't want the patent

(46:43):
system to just promote artistic innovation. I don't think the
bill does that. I think it says something artistic is
put off to one side. If you're putting something on
a computer, then the question is how much. And I
think that's a really appropriate question because all seen how
computers in all areas of our lives have have done

(47:04):
things that I think, you know, forty years ago people
wouldn't have thought possible. And that's the result of real
innovation and real work, and that's what the PAN systems
meant to promote. Oh and one more, if I could, sorry,
let me exit screen sharing, if I could just say,

(47:24):
you know, I think Dave Jones also mentioned data, and
I've seen data that does two things. One this might
not be as disputed, but a clear decline in investment
in medical diagnostics following Mayo. Second thing that I think
is more relevant to the tech side of the debate,

(47:46):
as you've seen a shift in where money is going
to away from things like hard, hard innovation that requires
a lot of R and D that is then easily copied,
and towards things like more social apps or just you know,
it's kind of innovation in that realm that I would
say is you know, I mean, I use a ton

(48:07):
of apps and they're great, but I think what we
want the patent system to be doing is to be supporting,
you know, the next wave of you know, six G,
seven G whatever is going to come next, really R
and D intensive next generation animation tools, and that doesn't

(48:28):
come if you don't offer a certain amount of protection
to it.

Speaker 2 (48:32):
So I'll stop there. Thanks. So, while I was gonna
ask you why you had that language up, so Professor
Duffy was asking the question whether or not section two
five D, if it was to be enacted, would it
be the first explicit statutory exclusion of large categories of
subject matter?

Speaker 3 (48:52):
You want me to put I'll try and put that
back up two five D.

Speaker 8 (49:04):
You must you see on a different version.

Speaker 2 (49:06):
Of the bill he might be, but that essentially, that's
what he's getting at, is, you know, the the unmodified
human genes, the the unmodified natural material, those specific mathematical
formulasm process. He's asking, you know, is this the essentially

(49:26):
the first explicit time that those those types of things
have been large categories of subject matter have been excluded
by statute?

Speaker 6 (49:38):
And I assume his answer was yes.

Speaker 2 (49:42):
No, he's asking us if that is yes, to my
to my knowledge, it is the first time it's been excluded,
I would say, because.

Speaker 3 (49:54):
Then, right, I would agree with that directly by a statute.
It's some of these kind of tie into earlier aspects
of judicial exceptions that I think were incorporated in the
most recent Supreme Court cases. But mathematical formulas standing on
their own have been excluded for a long time by

(50:15):
the judiciary, but not in the statute.

Speaker 6 (50:18):
As far as I know now, the statue has changed
relatively little, other than the change from art to process
in I don't know, two hundred and somewhad years.

Speaker 2 (50:27):
Yeah, all right, so another another question.

Speaker 4 (50:37):
Can I can I just respond a little bit more
to John. I think that that the problem with the
question is that it it doesn't necessarily take into account
the fact that any one of those any one of
the things in those categories would still be subject to

(50:58):
one twelve one or two one of three, and so
they wouldn't be excluded by statute as a category. But
I would think that many of the many inventions that
would fall under those categories would have been ineligible for
other reasons.

Speaker 6 (51:13):
Yeah, and there's also an interesting question, and this may
drive John, who is a very old friend of mine, crazy,
Professor Duffy, I guess I should call him in this instance.
I mean, I think there's also you know, with respect
to the courts versus statue, like who should make the
who should make the determination? In my view, there's a
pretty good argument that since the IP clause uses the

(51:35):
word inventor, that the Supreme Court actually could constitutionalize this
issue and say, well, an inventor is someone who comes
up with an invention. Then so as a drive of matter,
we are able to define invention and do everything that
they have done in interpreting one oh one in instead
interpreting the IP clause to place limits on the Patent Act.

(52:00):
But John as much how I'll admit right now, John
is much smarter than I am, and much deeper on
the history on this, so he should feel free to disagree, all.

Speaker 2 (52:10):
Right, So uh that you know that it does kind
of bring up an interplay between you know, one oh one,
one twelve one or two one oh three. So some
of the judicial decisions that's come out, the language has
appeared to muddy each of those separate requirements a little

(52:32):
bit and has started to infuse. For example, some of
one o three analysis were one twelve analysis into a
one oh one analysis. Jamie do you feel like that
the language is being proposed now, or the findings that
are you know, at the beginning of the bill, are

(52:52):
going to help delineate those and keep them from being
combined and con or what is the sense of the
of the you know, the drafters when they've been trying
to develop the language.

Speaker 3 (53:08):
Yeah, that's a really good question and good point, and
that's maybe a criticism of the current jurisprudence. We haven't
focused on a lot yet, which is that some of
it is melding together a lot of inquiries that I
think are analytically better addressed in a more rigorous fashion
under different parts of the statute. So the second part

(53:31):
of the elis test asking about whether or not there's
an inventive concept sufficient to bring something back into the
patent system. It's kind of another way of asking whether
or not there's something new, and that's really an inquiry
that should be happening under section one O two and
one O three in a more rigorous fashion looking at

(53:52):
the prayer art, et cetera. And I think it's the
pretty clear intention of the drafters of this bill to
try and re establish those clear analytical lines. So one
oh one is looking, as the judge said, at categories
that would now not be pad knowledgeable. And then it's saying,

(54:13):
and it does say this in the findings, that you
should be not conducting any of the inquiries under the
other statutes under one oh one. And I think another
way that the bill kind of underscores that this is
what should be happening is its eliminated use of the
word new in section one oh one. So it's another

(54:35):
minor amendment to the way that the language is currently
drafted to kind of reinforce that questions of newness should
happen elsewhere in the statute. So I think the idea
is really to kind of just restore a certain amount
of what I think of as judicial rigor to each

(54:55):
one of these. And why that's important, I think, is
because I think that will really help promote predictability, certainty,
and stability, because the way the patent system works is
you're going to the panent examiner first and they're applying
what should be the same laws as a court would
later apply if you try to enforce the patent. And

(55:17):
the more that you have a clear systematic way of
how everyone should be looking at the same question, the
more likely you are to come out to the same answer.
And I think a big part of the problem with
the current juris prudence is something like the judicial exception
of the abstract test is just too subjective. You can

(55:38):
get different decision makers coming out in different ways and
they can feel that they have done the analysis correctly
because there's just not a very rigorous analysis that's going on.

Speaker 2 (55:50):
Okay, it's one of the topic I wanted to cover.
So the other you know, this is the large funnel
at the top about what patent eligible, what isn't that
gets into the system the other is and it's being
used and in enforcement. So it's really been being used
on infringement and knocking out cases on what otherwise would

(56:18):
it be enforcement on the fart on the other end. So,
so I work in medical devices, and in the early
to mid nineties there was concern about ophthalmologists who had
gotten a patent on a method of you know, making
a a essentially an incision in the eyeball as part
of a of a method. For many, many years, Europe

(56:39):
has not allowed surgical methods to be patented, and the
United States has dominated for the most part medical device
development and technology over the the you know our history
to the extent that there are some large European companies
that come up with new medical instruments and whatnot.

Speaker 8 (56:57):
It's primarily because they're relying.

Speaker 2 (56:59):
On patent building in the US to drive the investment
and secure their investment. But with this concern over the
enforceability of an optimologist being able to stop his competitor
across town from being able to do the same procedure
that he was doing for his patients, and that all
patients would be directed to him, rather than Congress adopting
the approach that they would forbid the patenting of surgical methods, instead,

(57:25):
they passed a statute that says the enforceability of surgical
methods against individual doctors and their employer is not allowed.
So you can still bring a direct infringement case, and
you can still stop other people from inducing infringement, of
manufacturer from inducing infringement or contributory infringing by providing tools

(57:51):
that would infringe the method. So you still have a
decent amount of patentability of patent protection, And so why
not David limit this issue rather than trying to knock
off huge categories upfront of saying they're not patent eledgeable.
Why not just limit enforceability in certain categories of electronics

(58:15):
source software on the back end.

Speaker 6 (58:19):
The way, I think that would be a difficult line
to draw and be I'm going to oddly agree with
Jamie here. I think analytically doing this through one oh three,
I mean, the point is not to knock any particular
type of art advancement out of the Patent Act in
my view. In my view, it is to draw a

(58:40):
line between science and technology and to respect the United
States Constitution, which says the patent systems to promote the
progress of the useful arts.

Speaker 8 (58:48):
Right.

Speaker 6 (58:48):
So to me, the whole enterprise is to draw a
line between technology and non technological inventions. Which is why
I tend to favor I mean, this is not really
been an option, but I tend to favor doing this
under one oh three. If only the technological features of
a claimed invention were considered in making the obviousness determination,

(59:11):
I think that solves this problem. And it solves in
a way that it is both consistent with the Constitution,
with the intent of the statute, and with the economic
evidence that says that in non technological fields, you know,
patent protection can actually be counterproductive.

Speaker 2 (59:29):
With one minute left, does anybody want to have the
last words?

Speaker 3 (59:37):
Oh?

Speaker 2 (59:38):
Okay, all right, well, thank you everybody for joining us.
Thanks for great discussion, really appreciate it. Go ahead, Sarah
on behalf of the Federalist Society.

Speaker 1 (59:53):
Thank you so much to mister Jones, mister Mattall, Judge O'Malley,
and miss Simpson for speaking with us today, and for
mister Bray for moderating. We're so grateful for your time
and expertise on this important topic. Thank you to our
audience for joining us. We really appreciate your participation. You
can also stay up to date with other announcements and

(01:00:15):
upcoming webinars on our website bedsock dot org. We're on
all major social media platforms. Thank you once more for
tuning in, and we are adjourned.