From our “Muddled Thinking?” Department comes this recent post on guest post on Patently-O, which we will repeat and then dissect with commentary.
Guest Post by Christal Sheppard: Solving a Knotty Problem: An Outrageous Call for Patent Reform Part Deux
Dr. Sheppard is an Assistant Professor of Law at the University of Nebraska Lincoln College of Law. Prior to joining the University of Nebraska, Dr. Sheppard was Chief Counsel on Patents and Trademarks and Courts and Competition policy for the United States House of Representatives Commmittee on the Judiciary. – Jason
By A. Christal Sheppard
Just over a week ago, Dennis Crouch stated on Patently-O that “[i]t is simply ridiculous that after 40 years of debate, we still do not have an answer to the simple question of whether (or when) software is patentable.” The confusion on what is and what is not patentable is not a new debate but has come to a head in the last few years with the Supreme Court taking on certiorari multiple cases on the matter of patentable subject matter and the Court of Appeals for the Federal Circuit, arguably, disregarding Supreme Court precedent.
We all understand the problem, but what is the solution? The question of what should be patentable is fundamentally a public policy decision. This public policy decision is one that the framers of the Constitution contemplated and specifically tasked one specific entity with balancing the equities. The Constitution states “The Congress shall have Power…[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Congress not the Courts was tasked to determine what should be eligible for the “embarrassment of a patent.” However, the Courts, led by the Court of Appeals for the Federal Circuit, not the Congress, have driven the expansion of Patentable Subject Matter to “anything under the sun made by man.”
Case law dictates that the intent of Congress was 1) that patentable subject matter is a requirement separate from that of the other requirements of the patent laws and 2) that Congress intended for anything under the sun made by man to be potentially patentable with the exception of laws of nature, natural phenomena and abstract ideas. Thus, the Courts have, by a stepwise expansion of patentable subject matter to software and business methods, created a situation whereby the high tech industry has been legally encouraged to tie itself into a Gordian knot. A knot that, without overruling prior precedent, or creative interpretation of precedent, the Courts cannot resolve.
This blog post is to propose that the United States Congress immediately take an active role in the creation of the parameters for patentable subject matter. Congress is the only entity that has the ability and the resources to resolve this conflict in a reasonable and responsible manner. It is also the entity charged by the Constitution with doing so.
I’m not unaware that using the terms “reasonable” and “responsible” in the same sentence with the United States Congress during an election year will globally elicit sound effects from chortles to foul language questioning my mental facilities. However, below are a few points that are worth considering regarding who is best positioned to advance a solution to what most of the intellectual property community would consider a mess.
- The Constitution does not require patents to be granted and while our international agreements do require minimum patent rights, software and business methods are not among them. Currently we have a Court created expansion of the definition of what is eligible for patent. Congress has yet to wade into this morass of what should be eligible for a patent except to provide for exceptions to the Court-created expansion. Congress has created exceptions in piecemeal “fixes”, specific individual carve-outs, instead of addressing the broader issue head-on.
- History shows that Congress once before stepped in when the Supreme Court and the predecessor to the Court of Appeals for the Federal Circuit were in discordance. In the 1940s, the country was then also wrestling to establish a standard of invention. The Administration appointed a Commission and the patent bar was up in arms. As a result, section 103 – nonobviousness – was added to the statute by Congress in 1952 to inject a stabilizing effect that the Courts and general practice had not been able to accomplish over decades. What is needed in the current situation is stabilization. Today, the Courts are destabilizing the law of patentable subject matter rather than stabilizing it.
- Businesses need certainty to operate and to plan effectively. Only Congress can be prospective in its resolution. For instance, if Congress decides that software and business methods are not patentable subject matter ONLY the Congress can make this prospective to not conflict with settled expectations. If the Supreme Court narrows patentable subject matter, or patentability more generally, trillions of dollars of company valuation evaporate from the balance sheets with one Supreme Court decision. However, Congress can decide that starting on a date certain in the future that all patents granted or applications filed before that date are under the “old” common law rules and all patents post-implementation are under the new law. Congress can provide finality on this issue without gutting company value.
- Only Congress can create an alternative method of protection, apart from patent, for items that they determine do not meet the test for “promoting the process of science.” For example, concurrent with the delayed implementation of a narrower definition of patentable subject matter, Congress can provide sui generis protection for those fields they decide to carve-out. Many such ideas have been proposed, such as shorter exclusivity duration and limited remedies.
- A Congress, unlike the Courts whose precedent binds future judges, cannot bind a future Congress. Should the law of patentability need to expand for unknown advancements, Congress can do that in a way that is much less disingenuous than the Courts. The framers of the Constitution contemplated this in their directive to Congress. The language in the Constitutional defining what should be eligible for the monopoly is malleable so that patent law can adjust as technology and the need for promotion for the advance of science changes over time.
There are a multitude of very good reasons why calling on Congress is not a perfect solution. But with Myriad and the patentability of gene sequences and genetic testing on the horizon, does the intellectual property community want the Courts or Congress to decide this public policy issue? Businesses need certainty and only Congress can now provide that stabilizing influence without destabilizing entire industries. Whether Congress will or not, ought not prevent the assertion that they should.
Food for thought…
 The Supreme Court decisions have done nothing to clarify what is and what is not patentable. At this juncture, not only is the Federal Circuit in rebellion against the Supreme Court; an influential judge from another circuit dismissed an entire high-tech case with prejudice and promptly penned an article entitled “Why There Are Too Many Patents in America”; the International Trade Commission is under siege from an explosion of technology cases and recently sought comment from the public as to whether certain patents should have limited remedies; the Administration (United States Patent and Trademark Office and the Department of Justice) have differing opinions regarding the patentability of genes and genetic tests; thermonuclear patent warfare between high tech companies is overloading our courts; market based solutions are spawning Fortune 500 companies as the new patent troll; and a patent valuation bubble reminiscent of the real estate market before the crash is driven ever forward as companies amass patents as a shield of paper armor not as an instrument of innovation.
 One thing is certain, there will not be unanimous agreement on what should be patentable subject matter; however, someone should decide and should decide now. Moreover, that decision should not negatively affect those who have relied upon the law as the Court defined and expanded it over the last 40 years only to now sound the horns of retreat.
 I am not here advocating for any particular resolution, I am merely pointing out a fact.
 Prior user rights for business method patents in the 1999 American Inventors Protection Act; Human organisms, tax patents and creating a business method patent post-grant opposition procedure in the 2011 America Invents Act. The Congress did not address the latter three as patentable subject matter issues, but in carving them out the Congress is showing that there are additional areas that they have determined should not be entitled to patents where the Courts have determined otherwise.
 Of course patents are subject to case-by-case challenges but the Supreme Court seems to be signaling that whole categories of patents, while still technically eligible, would not meet the Courts inventiveness test as a practical matter.
 Congress can also provide some finality on the issue of whether patentable subject matter is a separate requirement from 102, 103 and 112.
“The confusion over what is patentable and what is not.” is an artificial confusion, created as a straw man by those seeking to alter 200 years of constitutional law by making “discoveries” mean not “discoveries” but “discoveries in areas other than those where rewarding inventors is inconvenient to the rich and powerful people paying lobbyists to confuse us into denying rewards to inventors.”
“We all understand the problem”? First she says “we do not have an answer” and then “we all understand”. Typical Washington doublespeak.
She is wrong to say that Congress, not the Courts, is tasked to interpret the Constitution and laws. For 200 years since Marbury v Madison, the Supreme Court has been the ultimate interpreter of what the Constitution and laws mean. Congress is the elected legislative body which passes laws based on public policy considerations, or more truthfully based on financial election campaign contribution considerations. The Courts are there to keep Government, including the best Congress money can buy, in check by preventing public policy (i.e. campaign contribution) considerations from over-riding the Constitution and enacting fat cat legislation. The Courts are there to try to protect the people from oppression by their Government.
“Case law dictates that the intent of Congress was” – now there is an interesting about face, “case law” means Court decision. First she says Congress decides then relies of Court decisions to try to make her point. There is indeed confusion there, and it is in her muddled logic. With changing positions so often, she must be a Romney supporter like Jenna Jameson.
“Currently we have a Court created expansion of the definition of what is eligible for patent.” BS, we have a Congressional and Court created contraction of what is eligible. The Constitution says patents may be awarded for, without any limitation whatsoever, “discoveries”, whereas the Court has contracted that to exclude abstract ideas, laws of nature, and natural phenomena, which are discovered as having been created by God not man. Some of the most important discoveries are law of nature such as the Theory of Relatively, or natural phenomena such as The Higgs Boson (“the God particle”)..
“section 103 – nonobviousness – was added to the statute by Congress in 1952 to inject a stabilizing effect that the Courts and general practice had not been able to accomplish over decades.” That’s an interesting lie. She rewrites history to her liking. Nonobviousness was definded by the Supreme Court in Graham v John Deere and Giles Rich wrote it into the 1952 Patent Act to merely adopt the Graham v. Deere standard. Congress did not stabilize the law by injecting the “non-obviousness” standard, the Supreme Court did. Credibility goes out the window when you are caught rewriting history to try to push your political agenda.
“Only Congress can be prospective in its resolution.” More altered universe. The Courts are routinely prospective in their holdings. The non-obviousness standard in Graham v Deere, which she just miscredited to Congress, is one example. The bright-line machine or transformation test (that the CAFC attempted to impose and the Supreme Court muddled up by instead using a vague and nebulous commercial viability standard) was clearly prospective in intent. The purpose of having CAFC jurisdiction over patent cases was to encourage this prospective unification of court decisions to lend certainty to patent law. It is Congress and the Supreme Court that are mucking it up with uncertainty, as we never know what monied lobbyists will get Congress to do next, and we never know for sure what the non-patent lawyers of the Supreme Court will do to muddle patent law.
“Should the law of patentability need to expand for unknown advancements, Congress can do that in a way that is much less disingenuous than the Courts. The framers of the Constitution contemplated this in their directive to Congress.” Wishful thinking does not substitute for fact. Since when did Congress become anything other than disingenuous? Congress’s 9% approval rating shows how Americans feel about that. The framers set the Courts, not Congress, as the final authority on the Constitution and all the wishful thinking of how it would be nice if Congress was less disingenuous than the Supreme Court does not change the fact that it is the best Congress money can buy and no amount of money seems to be able to buy a Supreme Court justice, as Justice Roberts recently showed in his Obamacare decision. Congress is not working to do anything that is less disingenuous than the Courts, and that is just the way it is and why we have the Courts and not Congress as the final authority on the Constitution. What a crock that “Congress is less disingenuous” statement is!
“does the intellectual property community want the Courts or Congress to decide this public policy issue?” That presupposes the conclusion that Congress should handle Constitutional patent law issues. Easy for me. I think it’s a matter of constitutional law, not public policy, and I choose the Courts. Look at the AIA if you think Congress is competent to reform patent law. Congress is competent to do what big campaign contributors tell it to do unless the public outrage gets so severe that big campaign contributors can’t overcome the outrage.
” I am not here advocating for any particular resolution, I am merely pointing out a fact.” LOL. Get out the water hose your pants are on fire.