IP: The tug of war over abstract patents

The Federal Circuit’s tug of war with the Supreme Court leaves us in limbo on a key issue

Much of what lawyers do involves arguing about the meaning and scope of concepts that are inherently vague and subjective. For example, what makes someone’s actions negligent, or when is there sufficient evidence to prove something occurred beyond a reasonable doubt? While many examples of this abound in day-to-day legal issues, perhaps none is proving more elusive, and even a tad ironic, than the restriction on patenting of abstract ideas.

It has been well established for many years that patents cannot be granted on abstract ideas or laws of nature. The question always was, “How do we know when a patent is trying to protect merely the abstract idea of an invention as opposed to a concrete and tangible application of it?” This question has been getting increased scrutiny in recent years with the heavy patenting of software and business methods, inventions, which are—as compared to mechanical or electrical devices or pharmaceuticals—inherently closer to being represented as ideas rather than something concrete and tangible. And this issue has been the subject of a tug of war between the Federal Circuit, which handles all patent appeals, and the Supreme Court.

First, as an attempt to solve this problem, the Federal Circuit established the machine-or- transformation test. This test allowed for patents on inventions as long as they were limited to use of a specific machine or transformed something tangible. However, in the 2010 decision in Bilski v. Kappos, the Supreme Court threw out the notion of using this as a single specific test. While affirming that business methods could be patented, and while acknowledging that the machine-or-transformation test was a useful tool in the analysis, the court reverted back to the previously existing test of whether an invention is merely an abstract idea.

In the next exchange between these two courts, the Supreme Court again overturned the Federal Circuit. In the 2012 decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., the Supreme Court further deemphasized the importance of the machine or transformation test, particularly in cases where a patent implicates laws of nature. In this case, which involved patents on the use of drugs to treat autoimmune diseases, the Federal Circuit found the invention to be patentable as satisfying the machine-or-transformation test but the Supreme Court reversed this and found the patents invalid as merely covering a law of nature. So now the issue was back in the Federal Circuit’s court, to try to figure out how we’re all supposed to understand when something is merely an abstract idea and thus not patentable.

In a decision just issued on July 9, the Federal Circuit took another shot at it. In CLS Bank Int'l v. Alice Corp. Pty., the court pointed out that ambiguity surrounding the abstract idea exception has created major problems for determining when inventions are patentable. So, the Court said if it is not manifestly evident that a patent is directed to an abstract idea, that patent must not be deemed to be unpatentable.

Putting it another way, unless the single most reasonable understanding is that a patent is directed to nothing more than a fundamental truth or disembodied concept, with no limitations in the patent claims attaching that idea to a specific application, it is inappropriate to hold that the claim is directed to a patent ineligible abstract idea.

Got it? Is it clear now? Try reading it again. All those double and triple negatives in the test making it harder to follow? Is it still too … abstract?

Given the Supreme Court’s penchant for rejecting the Federal Circuit’s attempts to established tests for, it seems likely that the court will take an opportunity, in this case or another, to continue this tug of war with the Federal Circuit, leave us all in limbo on a key issue.

Contributing Author

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Seth Ostrow

Seth Ostrow is a founder and managing partner of the law firm of Ostrow Kaufman LLP, a patent boutique based in NY which specializes in...

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