Restoring the Patent System: Countering Supreme Court Attacks on What Can be Patented David Kappos Robert Armitage Bruce Sunstein Denise Kettelberger, moderator September 9, 2016

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Topics How it started: Prometheus, Myriad, Alice Sequenom v. Ariosa: the Court is sticking to its guns Leaky life rafts from the Federal Circuit The environments for patent eligibility: PTO, federal trial courts, and their effect on infrastructure How should the problem be fixed? What to do in the meantime 3 3

Prometheus, Myriad, Alice Held: claimed subject matter is not patent- eligible: - (1) if it is deemed “directed to” a law of nature, a natural phenomenon, or an abstract idea, - (2) unless the claim taken as a whole defines an “inventive concept” that is “significantly more” than the law of nature, natural phenomenon, or abstract idea itself. Rationale: to prevent “improperly tying up the future use of’ these building blocks of human ingenuity” 4

The two-step test is not in the Patent Act Section 101 of the Patent Act makes patent- eligible “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” The Supreme Court says that its two-step test is based on an “implicit exception” to the Patent Act So some inventions that are eligible under section 101 are ineligible according to the Court 5 5

Sequenom v. Ariosa: Court is sticking to its guns Methods for detecting paternally-inherited fetal DNA in maternal blood samples, and performing a prenatal diagnosis based on such DNA, held patent-ineligible by the Federal Circuit Court of Appeal based on Prometheus In response to Sequenom’s petition for review to the Supreme Court, supported by 22 friend–of- court briefs, the Court issued a one-sentence summary denial of review 6 6

Leaky life rafts from the Federal Circuit DDR Holdings, Enfish, Bascom Global Internet Services, and CellzDirect found patent-eligible subject matter But in a sea of cases holding just the opposite: as of June 16, 2016, 95% of the Federal Circuit’s decisions affirmed patent-ineligibility determinations based on Prometheus, Myriad, and Alice with no dissents 7 7

The environments for patent eligibility In the Patent and Trademark Office In the federal district courts The effect of these environments on research and development, business, and the technological infrastructure in the United States 8 8

How should the problem caused by the Supreme Court be ultimately fixed? Legislation—More options than consensus - Abrogate—rely on remaining patentability requirements to address the Court’s policy concerns with patents relating to concepts and expressly overrule any § 101 “implicit exception.” - “Safe harbor”—leave the Mayo/Alice framework in place, but afford a statutory “safe harbor,” for claims meeting the safe-harbor requirements to be deemed outside the “implicit exception.” - Abrogate and Restate—abrogate any § 101 “implicit exception,” and restate select existing patentability requirements as new patent-eligibility limitations. - Codify a Substitute Framework—codify a substitute framework for administering the “implicit exception,” e.g., based upon a technological arts (useful arts) subject matter eligibility limitation. - Codify Enumerated Exceptions—develop an enumerated listing of subject matter to be statutorily ineligible for patenting, e.g., human genes, methods of doing business, human organisms, et cetera (list to be continued). 9 9 Desirability—Viability

How should the problem caused by the Supreme Court be ultimately fixed? Judicial—Can the “breaker” be the “fixer”? - Positioning the Supreme Court to again address its Mayo/Alice framework. - Building a consensus at the USPTO, Commerce, and the DOJ that this is an international issue where U.S. law is woefully out of step. - Identifying the single best “ask” of the Court—if not abrogation, then what alternative framework, e.g., the J. Stevens “technological” approach that would bar business method and other patents. - Creating the right vehicle—Sequenom was ideal, but garnered no traction— not even a Solicitor General referral—and another Sequenom may be hard to come by. - Preparing the law in the meantime—if we assume abrogation is the answer, the Federal Circuit must assure its interpretation of § 103/§ 112 take up any slack. - Garnering more published academic and empirical support that the status quo is an intolerable burden on innovation. 10

What to do in the meantime? Patent prosecution strategy: - build a factual record with declarations to tell the story of why the patent claims are not directed to a natural law or phenomenon or an abstract idea and, taken as a whole, are directed to “significantly more” than the exception - emphasize “technological” aspects of the invention - be mindful of clearly meeting the other patentability tests— e.g., disclosure/definiteness. Education of the public and Congress 11

Thank You