2023 Version of Patent Eligibility Restoration Act Introduced - Part 1: What's Different from 2022?

Introduction

On June 22, Senators Thom Tillis (R-NC) and Chris Coons (D-DE) introduced the Patent Eligibility Restoration Act ("PERA") of 2023. Coons and Tillis are the Chair and Ranking Member, respectively, of the Senate Judiciary Subcommittee on Intellectual Property. Thus has come to pass a May 15 prediction from retired Federal Circuit Judge Paul Michel of "imminent" Congressional action to address the ineligibility plague in U.S. patent law interpreting § 101 of the Patent Act.

As characterized by Bloomberg Law: "It's an updated version of Tillis' proposal from the last Congress [(the PERA of 2022)], which he said he introduced because of US Supreme Court inaction on the issue. That proposal sparked backlash from some attorneys and advocacy groups." A June 22 press release from Tillis closes with a statement that the PERA of 2023 "addresses concerns regarding inappropriate eligibility constraints by enumerating a specific but extensive list of excluded subject matter." A similar press release from Coons recites the same quote.

My August 5, 2022 post covered the PERA of 2022, and reference to that post is made for some of the particulars of that legislation. There, I shared parting thoughts that the 2022 legislation:

introduces some ambiguities and some cause for concern, as made apparent from discussions and insights that are beyond the scope of this article, resulting in a less-than-perfect Section 101. However, the patent community will hold out hope that as the legislative process takes its course, amendments will occur that will further clarify and strengthen proposed § 101 in favor of patentees. At the very least, PERA represents a significant step - the very first - toward obtaining meaningful patent law reform.

The PERA of 2023 represents the hoped-for clarifying and strengthening amendment of the PERA of 2022. This Part 1 addresses the question: how exactly does the PERA of 2023 do this? In Part 2 (to be posted separately), I will address the question: is there still room for improvement?

What's Different in 2023?

The PERA of 2023 substantively differs from its 2022 predecessor by: 

(1) inserting a new Section 2 in the bill listing Congressional findings preceding the statutory revisions recited in Section 3 of the bill; 

(2) following the term "A mathematical formula," substituting the expression "that is not part of a claimed invention in a category described in subsection (a)" for the predecessor PERA's expression "apart from a useful invention or discovery"; 

(3) substituting the term "substantially" for the predecessor PERA's nebulous expression "non-technological" recited in a proposed § 101 exception to eligibility;

(4) adding a new subsection in § 101 that effectively defines "substantially" as meaning that a process can be practically performed "without the use of a machine or manufacture"; and

(5) deleting a § 101 subsection from the 2022 version that had recited a "machine or transformation" eligibility standard but that had also denied eligibility for "machines or manufacture" that involved "merely storing and executing, the steps of the process that the machine or manufacture perform."

Change (1): The Congressional Findings. New Section 2 of the PERA of 2023 recites a list of Congressional findings (also called a "preamble" in various case law), which conclude with a close paraphrasing of the updated proposed statutory revisions recited in Section 3 of the bill. Preceding such paraphrasing are critiques of the current state of patent ineligibility law and the role of the Supreme Court of the United States in fostering that state through creation of "judicial exceptions" to § 101 of the Patent Act. Accordingly, the Congressional findings declare: "All judicial exceptions to patent eligibility are eliminated." They also declare that no other Patent Act sections addressing patentability will be used in assessing patent eligibility, an intention already reflected in both the 2022 and 2023 versions of PERA in the proposed revisions to § 101 itself.

Change (2): The Proposed "Mathematical Formula" Exception to Eligibility. This can be best understood through a partial reproduction of proposed amended § 101, recited in Section 3 of the PERA of 2023, with underlined font added to indicate text additions, and boldfaced square brackets added to enclose text that has been deleted from the 2022 version.

§ 101. Patent eligibility

          (a) IN GENERAL.—Whoever invents or discovers any useful process, machine, manufacture, or composition of matter, or any useful improvement thereof, may obtain a patent therefor, subject only to the exclusions in sub-section (b) and to the further conditions and requirements of this title.

         (b) ELIGIBILITY EXCLUSIONS.—

     (1) IN GENERAL.— Subject to paragraph (2), a person may not obtain a patent for any of the following, if claimed as such:

     (A) A mathematical formula[[, apart from a useful invention or discovery]] that is not part of a claimed invention in a category described in subsection (a).

These edits clarify the 2022 language by expressly stating that a mathematical formula would be patent-ineligible only if it: (1) were “claimed as such,” and (2) is not part of an invention directed to one of the categories of patent-eligible subject matter recited in § 101(a).

Changes (3) and (4): Substitution of the Newly-Defined Term "Substantially" for the Predecessor Expression "Non-Technological." This can be best understood through a reproduction of newly-proposed amended § 101(b)(1)(B)(i), addressing additional eligibility exceptions, using the same amendatory markings described above.

     (B) (i) Subject to clause (ii), a [[A]] process that[[—]]

      [[(i)]] is [[a non-technological]] substantially economic, financial, business, social, cultural, or artistic, even though not less than 1 step in the process refers to a machine or manufacture[[;]].

      (ii) The process described in clause (i) shall not be excluded from eligibility for a patent if the process cannot practically be performed without the use of a machine or manufacture.

Much of the criticism leveled at the PERA of 2022 was directed to the undefined term "non-technological" in its version of § 101(b)(1)(B), exemplified by inventor Paul Morinville: "What does ‘technological’ mean? The legislation offers no definition. It is doubtful that any definition of technological constructed today co[u]ld protect future inventions." The PERA of 2023 now deletes "non-technological," substituting the term "substantially," effectively defined in new subsection (ii). 

Change (5): Elimination of the "Machine or Transformation" Test and its Accompanying Ineligibility Statement for "Merely Executing the Steps of the Process" This is demonstrated below by amendatory markings identifying edits proposed for § 101(b)(2).

     (2) CONDITIONS.—

      [[(A) CERTAIN PROCESSES.—Notwithstanding paragraph (1)(B)(i), a person may obtain a patent for a claimed invention that is a process described in such provision if that process is embodied in a machine or manufacture, unless that machine or manufacture is recited in a patent claim without integrating, beyond merely storing and executing, the steps of the process that the machine or manufacture perform.]]

      [[(B) HUMAN GENES AND NATURAL MATERIALS.—]] For the purposes of subparagraphs [[(C) and]] (D) and (E) of paragraph (1), a human gene or natural material [[that is isolated, purified, enriched, or otherwise altered by human activity, or that is otherwise employed in a useful invention or discovery,]] shall not be considered to be unmodified if the gene or material, as applicable, is—

      (A) isolated, purified, enriched, or otherwise altered by human activity; or 

   (B) otherwise employed in a useful invention or discovery.

The above revisions eliminate all of former § 101(b)(2)(A), which had recited a "machine or transformation" eligibility test but which had denied eligibility for "machines or manufacture" that involved "merely storing and executing, the steps of the process that the machine or manufacture perform." That additional eligibility exception formed another basis for criticizing the PERA of 2022; for instance, Erick Robinson, Esq. stated: 

What does "merely storing and executing the steps of the process” mean? In essence, every software program does this. This could mean that no patent can simply recite an existing process and implement it into software, but this is not what the bill says. In short, I’m very worried that if implemented, district courts and the Federal Circuit would use this language to essentially ban all software patents.

The elimination of former § 101(b)(2)(A) thus eliminates additional ambiguous language that had spawned criticism of the PERA of 2022. 

Conclusion

As demonstrated above, several of the new § 101 revisions in the PERA of 2023 specifically targeted areas of criticism of its predecessor, producing a clearer § 101 that further enhances patent eligibility. Given these changes, it is easy to understand why the PERA of 2023 received the praise from Gene Quinn quoted below as well as a prompt endorsement from the Council for Innovation Promotion (C4IP), whose Co-Chair commented: "C4IP applauds this legislation and hopes that members of both parties help turn it into law." No doubt, many in the United States patent community share that hope.