US Inventor Position on 35 USC Section 101
Title 35 USC is the governing law on patents. It defines the requirements of obtaining a patent, among other things. Within 35 USC, Section 101 is effectively the door into the patent system. Without any exceptions, 101 defines what is considered patentable subject matter:
“Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”
As is stated, just making it through 101 does not mean that the invention is patented. It must be examined under “the conditions and requirements” of 35 USC. These “conditions and requirements” are primarily Section 102 whether the invention is anticipated, Section 103 whether the invention is obvious, and Section 112 whether the invention is enabled.
Supreme Court and Federal Circuit decisions have fundamentally changed the meaning of Section 101 by creating three exceptions to patentable subject matter: abstract ideas, natural phenomena, and laws of nature. These exceptions have no basis in statutory law, nor were they the intent of Congress in enacting Section 101. They are purely a creation of the courts. In fact, Section 101 was written into the Patent Act of 1952 in an effort to limit similar exceptions created in the preceding years by the courts, and it was never intended to be a standard of patentability.
Several court decisions defining the exceptions have thrown the meaning of Section 101 into chaos by failing to define what is or is not an abstract idea, and conflating analysis intended for 102, 103 and 112 into Section 101’s analysis. Today what is patentable is completely in the eyes of the beholder and often different branches of government come to different conclusions.
Some examination groups in United States Patent and Trademark Office (USPTO), particularly those in technical areas of software, reject patent applications at rates above 90% under the abstract idea. Lower courts invalidate 54% of patents challenged as abstract ideas. Many of these patents are invalidated in preliminary motions without defining the meaning of the patents and without any evidence or testimony. Trial courts simply look at the patent and make arbitrary decisions on whether or not it is an abstract idea.
The Federal Circuit has upheld the vast majority of lower court invalidations, often without comment therefore providing no further guidance on what is or is not and abstract idea. The Supreme Court has refused to take multiple cases that could provide concrete guidance.
Many patents invalidated as abstract ideas would likely have been invalidated under sections 102, 103 or 112 had the patents been evaluated in accordance with law, which means that many invalidations under the abstract idea are unnecessary and confuse patent law. Unfortunately, there are a significant number of patents that are patentable under the statutory analysis of under sections 102, 103 or 112, yet are nevertheless invalidated as abstract ideas under 101.
In summary, there is no longer due process of law regarding the invalidation of a property right, and there is no longer a presumption that a patent is a valid property right as is defined in black letter law. The abstract idea has expanded the net of unpatentable subject matter far beyond the scope of the law and far beyond Congress’s intent when writing the law. Statutory law is in direct conflict with case law and this is creating substantial commercial uncertainty which has destabilized patent rights.
Yet commercial certainty is vital to American new job creation. For inventors and startups, those who create the majority of new American jobs, commercial certainty is an outright requirement to commercialize new technology, thus creating new jobs. Commercial uncertainty created by the abstract idea denies justice to inventors, startups or their investors by denying capital necessary to access the courts. If a patent is too risky to be defended, as is the case today, it is not a property right and it is incapable of attracting investment. With no investment, inventors cannot fund companies that commercialize our next generation of technology or defend their private property from theft. This takes away incentive to invent and many small inventors have stopped inventing and stopped filing patents, at least in the United States.
While commercial certainty of U.S. patents has been nearly eliminated, commercial certainty of Chinese patents has become stronger. China now leads the world in patent filings and venture capital investment has dramatically shifted to China. The U.S. is losing its greatest economic engine. Soon we will not only be purchasing goods made in China, but they will be invented there as well.
Patent driven innovations cure deadly diseases, solve world energy problems, defend freedom, entertain us, and improve things we already use. They also fuel most of our job creation and generate much of our national wealth. The damaging effects of the Supreme Court’s abstract idea jurisprudence to these economic and social benefits are extraordinary. Today the validity of all patent rights are in question, and the courts are not willing to correct or explain their own errant case law. Congress must act.
US Inventor proposes legislative changes to 35 USC Section 101 to restrict the courts ability to invalidate patents as abstract ideas, thus focusing analysis to Sections 102, 103, 112 and other existing sections of 35 USC. These changes would bring back stability and commercial certainty to patent rights thus helping to capitalize the startups and thereby create new American jobs.
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