A View From The Trenches: Section 101 Patent Eligibility Challenges In The Post-Bilski Trial Courts

  1. Introduction

    "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."1 A "magisterial statute [of] sweeping inclusion,"2 35 U.S.C. § 101 is simply worded, yet has generated three trips to the United States Supreme Court in just three years,3 and a soon-to-be fourth trip after causing a "judicial deadlock" by the United States Court of Appeals for the Federal Circuit sitting en banc.4

    While much has been written about the continuing dialogue between the U.S. Supreme Court and the Federal Circuit concerning precisely which inventions meet the statute's "coarse eligibility filter,"5 considerably less attention has been devoted to how trial court judges have handled "the murky morass that is § 101 jurisprudence"6 since the Federal Circuit's 2008 In re Bilski decision.7 This article surveys the trends that have emerged from the roughly 65 post-Bilski decisions issued by United States District Courts or the International Trade Commission (ITC) that have considered a § 101 patentability challenge to a U.S. patent.

  2. It's Not Just Business Method Patents Being Challenged

    In Bilski v. Kappos, the U.S. Supreme Court concluded that petitioner's business method patent, directed to "hedging risk in the energy market," was "not a patentable 'process'" under U.S. patent law.8 While Bilski produced sharply divergent opinions on whether business method patents categorically are excluded from § 101 patent eligibility,9 all nine Justices agreed that Mr. Bilski's putative invention was not patent-eligible subject matter.10 The Bilski decision had been expected to be a death knell for business method patents, but it is clear - more than 3 years out from that decision - that business method patents have neither monopolized recent § 101 jurisprudence at the trial courts, nor have they universally suffered the same fate as Mr. Bilski's methods for hedging against risk in the energy market.

    For this analysis, patent claims challenged in district court or at the ITC on § 101 patentability grounds were divided into three broad categories: (1) business method patents; (2) medical diagnostic or treatment patents of the type at issue in the Supreme Court's Prometheus decision;11 and (3) a catch-all category of technology-based patents, including hardware and software patents.12 Of the roughly 65 decisions analyzed, 7 cases considered diagnostic/treatment patents and 27 considered business method patents.13 The business methods challenged in these decisions ranged from "the transfer of data regarding insurance cases from one electronic file to another,"14 to "administering and tracking the value of separate-account life insurance policies,"15 to "computing a price for the sale of a fixed income asset and generating a financial analysis output."16 But, for all the press devoted to business method patents in the immediate aftermath of the Bilski cases, these patents represent less than half of all patents challenged on § 101 grounds at the district courts and ITC in the post-Bilski era.

    The take-away from this statistic: fully half of the challenged claims fell into that latter category of technology-based patents, including patents with software and hardware limitations. These challenged patents claimed widely-divergent technology, e.g.:

    transmitters used to send secure signals to garage door openers;17 a "method for determining machining instructions to cut the root sections of turbine blades";18 "parsing information into packets based upon 'context-insensitive' parsing";19 and "an industrial process for manufacturing a semiconductor device using claimed manufacturing equipment."20 Consistent with U.S. Supreme Court precedent, whether a § 101 patentability challenge to these patents succeeded depended on the degree to which the alleged mental process claimed in the patent was "manifestly abstract,"21 and/or how specific and integral to the claimed method the recited machine components were.22 Claims that "depend on sophisticated software running on particular machines"23 - or whose machine components were not merely "added as an afterthought"24 and thus "constitute[] the very heart of the invention"25 - were likely to survive a § 101 patentability challenge. But claims merely reciting a "general purpose computer that has been programmed in an unspecified manner"26 or "simply generic computer components ... [insufficient] to take the patents out of the realm of the abstract"27 were often invalidated on a motion to dismiss or at summary judgment. Simply put, the more specific a claim is regarding its recited machine components - and the more integral those components are to the overall claimed system or process - the more likely that claim is to survive a § 101 challenge.28

    Specificity, moreover, appears to be the lifeline for business method patents challenged on § 101 grounds in the post-Bilski era. The narrow window of patentability for business method patents left open by the Supreme Court in Bilski29 has since remained open in the district courts. Although business method patents now appear categorically suspect, a small number of these patents have withstood recent validity challenges in trial-level courts on substantive, as opposed to procedural, grounds.30 These business method patents survived dispositive motions primarily because their hardware and/or software limitations, or field-of-use restrictions, were deemed sufficiently specific to take their claims "beyond an abstract idea and into an actual practical application."31

    Section 101 defies bright line rules, so every § 101 patentability challenge ultimately will turn on the actual claim language at issue. But it is clear from the recent district court and ITC cases that a variety of patents beyond business method patents are being targeted for § 101 challenges, and that business method patents - although of dubious validity since the Bilski decisions - can withstand a § 101 challenge. Rumors of their demise are somewhat overstated.

  3. A Majority of Challenged Claims Survive § 101 Validity Motions

    The Supreme Court has reviewed several recent Federal Circuit § 101 decisions "and, in each instance, concluded that the claims at issue were not patent-eligible."32 The Federal Circuit has been somewhat more generous to patent holders in the post-Bilski era, sustaining the validity of about 50% of the patents substantively analyzed for § 101 patent eligibility.33 Patentees, however, have fared better in the district courts and at the ITC in recent years, with a roughly 56% overall success rate in defeating § 101 challenges. These victories are primarily at the pleadings or summary judgment stages, as shown in Chart 1:

    District courts and the ITC have granted about 44% of § 101 invalidity motions, overwhelmingly by summary judgment or summary determination:

    The 56% overall success rate for patentees in withstanding a § 101 patentability challenge, however, masks a disparity in the types of patents...

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