U.S.C. §101 Jurisprudence: Stil a Murky Morass

Gregory K. Gerstenzang Regina C. McCarthy

The Court of Appeals for the Federal Circuit (CAFC) was created in 1982 in part to bring greater uniformity to decisions related to patent law than had previously been brought by the various Federal District Courts. With regard to jurisprudence related to patent eligible subject matter under 35 U.S.C. § 101, the CAFC appears to be failing in that mission.

Consider the May 2013 en banc CAFC decision in CLS Bank v. Alice1 . The method claims of the patents at issue were generally directed to a computer-implemented method of performing certain financial transactions. The ten judges who heard the case were not able to reach a single majority opinion regarding the subject matter eligibility of the claims, but rather issued seven different opinions.

A verdict in the CAFC regarding whether a patent claim is subject matter eligible under § 101 may be highly dependent on the panel that hears the case2. Seventeen cases including questions regarding the subject matter eligibility of patent claims under § 101 were decided in the CAFC in the time period between the 2010 Supreme Court decision in Bilski v. Kappos3 and September 20134 . Three of these were on remand from the Supreme Court and one was an en banc rehearing. Eleven of these cases involved patents having claims directed to computer-implemented business methods, four involved patents having claims directed to methods of medical diagnosis or treatment, and two involved patents having claims directed to computer software. In each of the six cases heard by J. O’Malley, and in six out of the eight cases heard by J. Rader, the judges held the method claims at issue to be patentable subject matter eligible. In contrast, in four out of the five cases heard by J. Prost, the three cases heard by J. Mayer, and the three cases heard by J. Dyk where the judges expressed opinions on the subject matter eligibility of the patents at issue, the judges held the method claims at issue to be subject matter ineligible. A patentee facing a challenge to the method claims of a patent under § 101 would likely have a greater chance of success facing a panel including J. O’Malley and J. Rader, while the challenger would have a greater chance of success facing a panel including J. Prost, J. Meyer, and J. Dyk.

Perhaps the CAFC cannot be blamed for this lack of uniformity. The U.S. Supreme Court has been presented with several cases, including Bilski v. Kappos5, Mayo v. Promethius6, and AMP v. Myriad7, where it had the opportunity to set forth clear guidelines for determining subject matter eligibility under 35 U.S.C. § 101. The Court appears to have no problem with striking down previous subject matter eligibility standards, for example, in the Bilski v. Kappos8 decision where the Court struck down the “machine or transformation” standard previously used by the USPTO. The Court, however, has failed to provide any clear guidance on what standard should be used to determine subject matter eligibility, and has instead provided only vague guidelines which have been widely criticized and have proven difficult to interpret or apply.
Until clear guidelines regarding subject matter eligibility under § 101 are set, the CAFC will likely continue to issue inconsistent opinions, some of which will likely be appealed to the Supreme Court. This lack of certainty weakens the patent system by making patent holders or potential infringers unsure of the validity of many types of method claims, and results in a waste of judicial resources litigating such claims.
In the March 2012 CAFC decision in MySpace v. Graphon J. Plager referred to §101 jurisprudence as being a “murky morass.”9 It seems that little has since changed.
After just recently passing the America Invents Act, Congress is unlikely to revisit patent law to settle the uncertainty regarding subject matter eligibility any time soon. This may be a matter that needs to be settled in the Supreme Court. Petitions for certiorari to the Supreme Court were recently filed in both the Ultramercial v. Hulu and CLS Bank v. Alice cases. It remains to be seen if the Supreme Court will answer the call to address the questions of patentable subject matter eligibility presented in these cases, and if it does, whether any decisions issued will provide any meaningful guidance on how lower courts should decide questions of patentable subject matter eligibility under 35 U.S.C. § 101.

1CLS Bank Intern. V. Alice Corp. Pty. Ltd., 484 Fed.Appx. 559 (Fed. Cir. 2012).
2This was recognized by J. Newman in her opinion in CLS Bank v. Alice: “With today’s judicial deadlock, the only assurance is that any successful innovation is likely to be challenged in opportunistic litigation, whose result will depend on the random selection of the panel.”
3Bilski v. Kappos, 130 S.Ct. 3218 (2010).
4Ultramercial v. Hulu, 2013 WL 3111303, No. 2010‐1544 (Fed. Cir. June 21, 2013); CLS Bank v. Alice, 2013 WL 1920941, No. 2011‐1301 (Fed. Cir. May 10, 2013); Ass’n for Molecular Pathology v. USPTO, 689 F.3d 1303 (Fed. Cir. 2012); Bancorp v. Sun Life, 687 F.3d 1266 (Fed. Cir. 2012); CLS Bank v. Alice, 685 F.3d 1341 (Fed. Cir. 2012); Dealertrack v. Huber, 674 F.3d 1315 (Fed. Cir. 2012); Ultramercial v. Hulu, 657 F.3d 1323 (Fed. Cir. 2011); Classen Immunotherapies v. Biogen IDEC, 659 F.3d 1057 (Fed. Cir. 2011); CyberSource v. Retail Decisions, 654 F.3d 1366 (Fed. Cir. 2011); Ass’n for Molecular Pathology v. USPTO, 653 F.3d 1329 (Fed. Cir. 2011); Prometheus v. Mayo, 628 F.3d 1347 (Fed. Cir. 2010); Research Corp.v. Microsoft, 627 F.3d 859 (Fed. Cir. 2010); Alexsam v. IDT, 715 F.3d 1336 (Fed. Cir. 2013); Whiteserve v. Computer Pkgs,694 F.3d 10 (Fed. Cir. 2012); Highmark. v. Allcare Health Mgmnt Systems, 687 F.3d 1033 (Fed. Cir. 2012); Fuzzysharp v.3DLabs, 447 Fed. Appx. 182 (Fed. Cir. 2011); Accenture Global Services, GMBH v. Guidewire Software, Inc. (Fed. Cir.2013)
5Bilski v. Kappos, 130 S.Ct. 3218 (2010).
6Mayo Collaborative Services v. Prometheus Laboratories, 132 S.Ct. 1289 (U.S. 2011).
7Association for Molecular Pathology v. Myriad Genetics, Inc., 133 S.Ct. 2107 (2013)
8130 S.Ct. 3218 (2010).
9MySpace, Inc. v. GraphOn Corp., 672 F.3d 1250, 1260 (Fed. Cir. 2012).