Emerging Litigation Podcast: Last Days of Patent Eligibility Confusion

Host: Tom Hagy
Guest: Ryan Phelan (Patent Attorney, Marshall Gerstein)
Release Date: November 21, 2024

Episode Overview

This episode delves into the ongoing confusion and legal uncertainty surrounding patent eligibility in the United States. Tom Hagy interviews Ryan Phelan, a seasoned patent attorney, about the Patent Eligibility Restoration Act—a proposed bill aiming to resolve ambiguities left by landmark Supreme Court decisions. Their conversation spans the historical context, practical effects on inventors and businesses, the substance and limitations of the proposed bill, and predictions for its future.

Key Discussion Points & Insights

1. Background and Historical Context

• Importance of patent eligibility: Tom sets the stage by referencing famous inventors and patent battles, notably the “War of Currents” (Edison vs. Westinghouse/Tesla) to show how innovation and legal systems co-evolve.

  “Invention is 1% inspiration and 99% perspiration.” — Thomas Edison (07:26)

• From broad eligibility to growing restrictions:
  • Early 2000s: State Street Bank decision opened door to broad patenting of computer-related inventions.
  • 2014: SCOTUS decisions (Mayo & Alice) introduced tighter restrictions via “judicial exceptions” for abstract ideas and natural laws.

2. Current Patent Eligibility Law & Its Impact

• Ambiguity and unpredictability post-2014:
  • Patent attorneys and inventors face confusion and risk when judging if inventions (especially in software, AI, and biotech) are patentable.
  • Tom: “So from a very ground level perspective, this is like an inventor or a business… they're either not clear on what can be patented in some cases, or they want to challenge something.” (17:09)
• Supreme Court’s inaction:
  • No new clarifying decisions since Alice/Mayo.
  • Ryan: “The Supreme Court has not taken up any substantial patent eligibility case up since 2014. So we're 10 years out from that case. And there's been a lot of frustration...” (15:51)

3. What the Patent Eligibility Restoration Act Proposes

• Goals:
  • Erase current judicial exceptions and re-set the standard for Section 101 of the Patent Code.
  • Provide clarity, greater predictability, and thus encourage innovation and investment.
  • Specifically addresses challenges in software, AI, and biotechnology.
• Substance:
  • Introduces statutory “eligibility exclusions,” aligned with prior judicial exceptions, but attempts to be more concrete.
  • Focused exclusions (Ryan’s categorization):
    • A–C: Computer/software-related inventions
    • D–E: Biotech inventions
  • Ambiguities remain: Terms like “substantially” in the text could still fuel courtroom debate.
  • Ryan: “Anytime you have in statutory text an ambiguous word like ‘substantially’, what does that mean? And that can be debated.” (18:02)
• Potential impact:
  • Would reset the patent landscape; judges and examiners would apply new textual standards rather than patchy court precedents.

4. Potential Drawbacks and Challenges

• Ambiguity persists:
  • Despite clarifications, subjective terms might invite more litigation.
  • Ryan: “Perhaps in one sense it could create more questions than it alleviates... But I would say that it does provide much more clarity than what the current Supreme Court case leaves us with.” (20:16)
• Dependence on further case law:
  • New statutory language will require interpretation; courts will still need to flesh out meaning.
  • It may take years and multiple cases to build a usable doctrine.

5. Implications for Innovators and Businesses

• Practical advice for clients:
  • Attorneys would parse proposed exclusions with inventors to ensure patent applications avoid enumerated ineligible subject matter.
  • Ryan: “If I was advising you as an inventor, we would go through these [exclusions] one by one and make sure that we're not claiming any of these things...” (27:06)

6. Likelihood and Timing of Change

• Bill’s legislative outlook:
  • Previous attempts to reform Section 101 have stalled.
  • The enduring expectation that SCOTUS will clarify on its own has not been met.
  • Ryan: “It seems like everyone's waiting for the Supreme Court to take up a decision and add clarity so that Congress doesn't have to act... But it's been a decade and that has not happened.” (25:31)
• Transition period:
  • Even if passed quickly, full implementation and widespread effects will require years for courts and the Patent Office to process new standards.

Notable Quotes & Memorable Moments

• On judicial ambiguity:

  “The law in this area has gotten less little abstract, so to speak.” — Ryan Phelan (10:54)

• On the ALICE/Mayo decisions' impact:

  “It was a very sleepy area of the [law].” — Ryan Phelan, on patent eligibility before 2014 (15:36)

• On legislative language:

  “Whenever I hear words like ‘substantial’ or ‘reasonable’, it just feels like whoever's drafting something is like, yeah, lawyers and judges can figure that out.” — Tom Hagy (20:07)
  “That's exactly right.” — Ryan Phelan (20:16)

Timestamps for Key Segments

• Patent Eligibility Restoration Bill Overview – 10:38-11:05
• History: State Street to Alice/Mayo – 11:13-15:36
• Defining Abstract Ideas & Judicial Exceptions – 13:12-14:46
• Bill's Specifics, Exclusions, and Drawbacks – 18:02-22:05
• Role of Technology/Societal Change – 22:05-24:29
• Outlook for Legislation and Implementation – 25:28-26:52
• Practical Patent Filing Guidance – 27:06-28:13

Overall Tone & Takeaways

• The conversation is thoughtful, pragmatic, and laced with dry legal humor.
• Both host and guest express skepticism about the possibility of legislative “finality,” but welcome efforts toward greater clarity.
• Takeaway: Patent eligibility remains in flux. The proposed bill is a major step but will not end debate overnight. Practitioners must stay vigilant and flexible, even as Congress tries to draw brighter lines.