Section 101 Patent Challenges under the AIA and Bilski, CLS Bank, Mayo, and Myriad

Authored by Sarah E. Craven, Ph.D., Michael J. Flibbert, and Jennifer H. Roscetti

More patents may soon confront 35 U.S.C. § 101 patentability challenges shortly after issuance in proceedings before the Patent Trial and Appeal Board (PTAB), a panel of technically trained administrative law judges at the U.S. Patent and Trademark Office (PTO). Preparing your patent portfolio and evaluating challenges to your competitors' patents requires navigating the new PTO procedures as well as recent Supreme Court and Federal Circuit decisions on § 101.

The Leahy-Smith America Invents Act (AIA) created several new PTO procedures for challenging U.S. patents, effective September 16, 2012. Two of these procedures—post-grant review (PGR) and a transitional program for covered business method patents (CBM)—are the first agency proceedings to permit challenges to claims based on § 101, which defines the types of inventions patentable under U.S. law. PGR and CBM share many procedural features but apply to different patents at different times. CBM applies to patents asserted in a patent infringement suit and claiming a method or apparatus for data processing used in a financial product or service. PGR, in contrast, applies to patents regardless of subject matter, but only during the first nine months after issuance and only to patents issued under the AIA, i.e., patents containing at least one claim with an effective filing date on or after March 16, 2013. PGR petitions are expected to increase sharply as AIA patents begin to issue. A related proceeding, inter partes review (IPR), available for all patents for a narrower range of challenges based on prior art has already garnered much interest, with 394 petitions filed as of the end of July 2013.

In June 2013, the PTAB issued its first final written decision in SAP America, Inc. v. Versata Development Group, Inc., the first CBM filed under the AIA. A potential harbinger of CBM and PGR decisions to come, the PTAB held all the challenged claims unpatentable under § 101. The PTAB first applied the broadest reasonable construction to the claims, all directed to methods and apparatuses for pricing products and services, and then held, following Supreme Court § 101 precedents, that all the claims covered patent-ineligible abstract ideas without meaningful limitations to transform them into patent-eligible applications of those ideas.

Success at the PTAB thus requires an understanding of recent § 101 jurisprudence. The Supreme Court and the Federal Circuit en banc have recently addressed § 101 for computerbased, business method, and biomedical inventions. In all cases, the Courts have struck the claims down as directed to patent-ineligible abstract ideas or laws of nature.

The Supreme Court took up § 101 for the first time in approximately twenty years in Bilski. The Court held that, while business methods were not inherently unpatentable, Bilski's claims to a method of hedging the risk of price changes in an energy market were drawn to the basic concept of hedging and thus impermissibly preempted all use of that abstract idea. More recently, the Federal Circuit addressed patentability of business method patents implemented on computers en banc in CLS Bank. While the court affirmed that claims to lessening settlement risk using a trusted third party recited a patent-ineligible abstract idea, the court failed to provide a majority reasoning, leaving much uncertainty about the scope of patent protection available to computer-implemented inventions.

Following Bilski, the Supreme Court addressed the patentability of biomedical method and composition claims in Mayo and Myriad, respectively. In Mayo, the Court held unpatentable claims to optimizing treatment of an immune-related disorder by determining the level of drug metabolite in a patient's blood based on knowledge of effective levels. According to the Court, the claims recited an unpatentable natural law—the relationship between metabolite levels and the drug effectiveness—applied via well-understood and conventional steps, thus impermissibly preempting all use of that law. Next, in Myriad, the Court struck down claims to isolated DNA molecules as directed to unpatentable products of nature, distinguishing between patent-ineligible gene sequences found in nature and patent-eligible genetic sequences, such as complementary DNAs (cDNAs), created by scientists in the lab. 

These decisions significantly affect a company's patent portfolio strategy on many levels, including claim drafting; post-grant claim correction and reexamination; and, now, post-grant patent challenges. Facing the latter, patentees and patent challengers alike must consider early recruitment of experts to defend against and/or support possible § 101 challenges as well as counsel with experience before both the PTAB and the Federal Circuit.

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