text: T he statutory language governing patent-eligible subject matterâthat is, the types of inventions that may be patentedâhas remained remarkably constant over the nearly 250-year history of U.S. patent law. Under the Patent Act of 1793, which Thomas Jefferson authored, "any new and useful art, mac hine, manufacture or composition of matter, or any new and useful improvement [of the same]" was patentable. Current lawâSection 101 the Patent Act of 1952âpermits the patenting of "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." Through these four expansive statutory categories, Congress sought to ensure that nearly "anything under the sun made by man" is patentable if it meets all the requirements for patentability, such as novelty, enablement, and nonobviousness. Consistent with the broad statutory language, Section 101 permits patenting in fields of applied technology such as pharmaceuticals, biotechnology, chemistry, computer hardware and software, electrical engineering, agriculture, mechanical engineering, and manufacturing processes. However, the Supreme Court has long read Section 101 to categorically prohibit patents on three types of discoveries: "laws of nature, natural phenomena, and abstract ideas." Even if "not required by the statutory text" of Section 101, the Court has held that these three judicial exceptions "define[] the reach of the statute as a matter of statutory stare decisis going back 150 years." In a recent series of decisions, the Supreme Court relied on Section 101 to reject patent claims on a method for hedging price-fluctuation risks in commodity markets; a method for measuring metabolites in human blood for the purpose of calibrating the dosage of particular drug; isolated human DNA segments; and a method of mitigating settlement risk in financial transactions using a computer. These decisions established a two-step test for patentable subject matter sometimes called the " Alice/Mayo test" or the " Alice / Mayo framework." These cases have been widely recognized to effect a significant change in the scope of patentable subject matter, restricting the sorts of inventions that are patentable in the United States. The Alice / Mayo framework has thus shifted, for better or worse, the balance between providing incentives to innovate and the social costs of exclusive rights that is at the heart of patent law. The effects of this change have been particularly pronounced in the fields of computer technology and biomedical technology. As a result, there is a significant and ongoing debate about the effects of Alice / Mayo framework, with a number of patent law stakeholders raising concerns about recent patentable subject matter rulings. Critics argue that the Alice/Mayo framework is vague, unpredictable, and not administrable ; muddies patent law by confusing patent eligibility with distinct patent law concerns, such as nonobviousness ; reduces incentives to innovate and invest in particular industries, such as biotechnology; or puts the U.S. industry at a disadvantage with respect to international competitors. Other stakeholders defend the Alice / Mayo framework, arguing that the Court's recent decisions are a part of the ordinary common law development of Section 101; an important tool for combating unmeritorious litigation or preventing overbroad or otherwise harmful patents ; or beneficial to American consumers by lowering prices. In response to the concerns of some stakeholders, there have been several significant recent administrative and legislative developments that aim to clarify and/or reform the law of Section 101. On January 7, 2019, the Patent and Trademark Office (PTO) issued Revised Patent Subject Matter Eligibility Guidance designed to assist PTO patent examiners in determining patent eligibility with greater clarity and predictability. On April 17, 2019, Senators Thom Tillis and Chris Coons, along with Representatives Doug Collins, Hank Johnson, and Steve Stivers, released a "bipartisan, bicameral framework" for legislative Section 101 reform. On May 22, 2019, following feedback on their first draft framework, the same group of Members released a "bipartisan, bicameral draft bill" to reform Section 101. After the release of the draft bill, the Senate Judiciary Committee's Intellectual Property Subcommittee held a series of three public hearings on Section 101 reform, soliciting the views of 45 patent law stakeholders. Senators Tillis and Coons continue to seek input from stakeholders following the hearings, and are expected to make further changes before introducing a formal bill. This report provides the necessary background and context to understand the legal and practical effects that these legislative reforms would have if enacted. First, the report reviews the basic legal principles of the U.S. patent system. Second, it examines the historical development and current state of patentable subject matter law. Third, it reviews several articulated rationales for Section 101 and theoretical options for Section 101 reform. Finally, it examines the specifics of the PTO guidance and proposed legislative reforms to Section 101. Patent Law Background Congress's authority to grant patents derives from the Intellectual Property (IP) Clause of the U.S. Constitution, which grants Congress the power "[t]o promote the Progress of Science and useful Arts, by securing for limited Times to . . . Inventors the exclusive Right to their . . . Discoveries." Patents are generally available to any person who "invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." Patent rights do not arise automatically. Rather, to obtain patent protection under the Patent Act, an inventor must formally apply for a patent with the PTO, beginning a process called patent prosecution. During prosecution, a patent examiner at the PTO evaluates the patent application to ensure that it meets all the applicable legal requirements to merit the grant of a patent. To be patentable, an invention must be (1)Â directed at patent-eligible subject matter, (2)Â useful, (3) new, (4)Â nonobvious, and (5) adequately disclosed and claimed in the patent application. If the PTO finds these requirements met, it will issue (i.e., grant) the patent. Patents typically expire 20 years after the date of the initial patent application. The current law of patent-eligible subject matter will be discussed separately in detail below. The remainder of this section briefly reviews the other requirements for patentability, the scope and effect of patent claims, and the legal rights granted to the holder of a valid patent. Requirements for Patentability Section 101: Utility In addition to subject matter requirements, Section 101 also contains a requirement that a patented invention must be "useful." In particular, courts have held that an invention must have both a specific and substantial utility to be patentable. The utility requirement derives from the Constitution's command that patent laws exist to "promote the Progress of . . . useful Arts." The constitutional purpose of patent law thus requires a "benefit derived by the public from an invention with substantial utility," where the "specific benefit exists in currently available form." This standard for utility is relatively low, however, requiring only that the claimed invention have some "significant and presently available benefit to the public" that "is not so vague as to be meaningless." Section 102: Novelty Perhaps the most fundamental requirement for patentability is that the claimed invention must be new . Specifically, the PTO will not issue a patent if "the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention." In other words, if every limitation of the claimed invention is already disclosed in the "prior art"âthe information available to the public at the time of the patent applicationâthen the alleged inventor "has added nothing to the total stock of knowledge," and no valid patent may issue to her. Section 103: Nonobviousness Even if a claimed invention is novel in the narrow sense that it is not "identically disclosed" in a prior-art reference (such as an earlier patent or publication), the invention must further be nono bvious to be patentable. Specifically, an invention cannot be patented if "the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious . . . to a person having ordinary skill" in the relevant technology. When determining obviousness, courts may evaluate considerations such as "commercial success, long felt but unsolved needs, [or] failure of others . . . to give light to the circumstances surrounding the origin of the subject matter sought to be patented." By its nature, obviousness is an "expansive and flexible" inquiry that cannot be reduced to narrow, rigid tests. Nonetheless, if an invention merely combines "familiar elements according to known methods," yielding only "predictable results," it is likely to be obvious. Section 112(a): Written Description, Enablement, Best Mode Finally, the Patent Act imposes several requirements relating to the technical disclosures in the patent application. These provisions are intended to ensure that the patent adequately describes the invention such that the public can use the invention after the expiration of the patent term. Section 112(a) of the Patent Act requires that patents must contain a "specification" that includes a written description of theÂ invention , and of the manner and Â processÂ of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to .Â .Â .Â make and use the same, and shall set forth the best mode contemplated by the Â inventorÂ orÂ joint inventor Â of carrying out the Â invention. This statutory language yields three basic disclosure requirements for patentability. First, to satisfy the written description requirement , the specification must "reasonably convey[] to those skilled in the art that the inventor had possession of the claimed subject matter as of the filing date" of the patent application. Second, to satisfy the enablement requirement , the specification must contain enough information to teach a person skilled in the art how "to make and use the invention without undue experimentation." Finally, to satisfy the best mode requirement , if the inventor knew of a preferred way of practicing her invention at the time of the patent application, the specification must disclose that "preferred embodiment[]" of the invention. Patent Claims Section 112(b): Definiteness If granted, the legal scope of the patent is defined by the patent claims , a sequence of statements that formally defines the legal scope of the patentee's asserted rights. In essence, while the specification explains the invention in a technical sense, the claims set forth the legal effect of the patent. Much as a deed may describe the boundaries of a tract of land, the claims define the "metes and bounds" of the patent right. Patent claims must be sufficiently definite to be validâthat is, they must "particularly point[] out and distinctly claim[] the subject matter which the inventor . . . regards as the invention." In other words, when the claims are read in context, they must "inform, with reasonable certainty, those skilled in the art about the scope of the invention." Section 112(f): Functional Claiming For the most part, the current Patent Act uses a system of peripheral claiming , in which the patent claims formally set out the outer boundaries of the patentee's rights. However, the Patent Act still retains elements of its former system of central claiming , in which the patentee would describe the core principles or examples of what he had invented, but need not formally delineate the outer boundaries of his rights. For example, under the doctrine of equivalents, an accused infringer may be found liable even if his product does not literally meet every element of the patent claims, if the differences between a claim element and its alleged equivalent in the accused product are "insubstantial." A potential danger of a peripheral claiming system is that patentees may seek to claim more than they invented by couching the patent claims in broad, functional languageâthat is, by claiming a result or goal without limitation to any specific structure or device that accomplishes the result. In Halliburton Oil Well Cementing Co. v. Walker , the Supreme Court limited this practice, invalidating as indefinite a "functional" patent claim, in which the inventionâan apparatus for determining the location of an obstruction in an oil wellâwas claimed not in terms of specific machinery, but instead as a "means for" performing various functions. Functional claims (also known as "means-plus-function" claims) such as those in Halliburton may be convenient for the patentee, who can express a claim element in terms of a general end, as opposed to an "exhaustive list" of every possible apparatus that could be used to perform that goal. On the other hand, as Halliburton recognized, functional claims may be overbroad and ambiguous, or permit the patentee to claim more than he actually invented. In the Patent Act of 1952, Congress enacted current Section 112(f) as a compromise for functional claims, overruling Halliburton but providing a standard to make functional claims more definite. Under Section 112(f), a patentee may opt to express a claim element as "a means or step for performing a specified function without the recital of structure, material, or acts in support thereof." If the patentee chooses to claim functionally, however, the claim is construed not to cover all possible means of performing the function, but only "the corresponding structure, material, or acts described in the specification and equivalents thereof." Courts have held that a patentee is presumed to invoke Section 112(f) when the term "means" is used in the claims. Conversely, there is a presumption that the patentee does not invoke Section 112(f) if she does not use the term "means," but that presumption may be overcome, such that Section 112(f) will apply to any claim that fails to recite a "sufficiently definite structure" for performing a function. Rights of Patent Holders With some exceptions, a patent is generally granted "for a term beginning on the date on which the patent issues and ending 20 years from the date on which the application for the patent was filed." The Patent Act includes provisions that may modify the 20-year term, including to account for excessive delays in patent examination at the PTO, or delays associated with obtaining marketing approval from other federal agencies. Once granted, the holder of a valid patent has the exclusive right to make, use, sell, or import the invention in the United States until the patent expires. Any other person who practices the invention (i.e., makes, uses, sells, offers to sell, or imports it) without permission from the patent holder infringes the patent and is potentially liable for monetary damages and injunctive relief if sued by the patentee. To obtain relief from infringement, the patentee must generally sue in court. Patent law is an area of exclusive federal jurisdiction, and the traditional forum for most patent disputes is federal district court. Although patent suits may be filed in any district court across the country with jurisdiction over the defendant and proper venue, a single specialized court, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit), hears all appeals in patent cases. Defending Against Patent Suits Parties accused of patent infringement may defend on several grounds. First, although patents benefit from a presumption of validity, the accused infringer may assert that the patent is invalid . To prove invalidity, the accused infringer must show, by clear and convincing evidence, that the PTO should never have granted the patent because it failed to meet the requirements for patentability. Thus, for example, the accused infringer may argue that the invention lacks novelty, is obvious, or claims nonpatentable subject matter; that the patent fails to enable the invention; or that the patent claims are indefinite. Second, the accused infringer may claim an "absence of liability" because of noninfringement . In other words, even presuming the patent is valid, the patentee may fail to prove that the activities of the accused infringer fall within the scope of the patent claimsâthat is, the accused infringer is not making, using, selling, or importing the patented invention. Finally, the accused infringer may argue that the patent is unenforceable based on the inequitable or illegal activities of the patent holder, such as obtaining the patent through fraud on the PTO. Following the passage of the 2011 Leahy-Smith America Invents Act (AIA), the Patent Trial and Appeal Board (PTAB) has become an increasingly important forum for patent disputes. The AIA created several new administrative procedures for challenging patent validity, including (1) post-grant revie w (PGR), which allows any person to challenge patent validity based on any of the requirements of patentability if the PGR petition is filed within nine months of the patent's issuance; (2) inter partes review (IPR), which allows any person other than the patentee to challenge patent validity on limited grounds (novelty or obviousness based on prior patents or printed publications) at any time after nine months following the patent's issuance; and (3) a transitional program for covered business method patents (CBM), a PGR-like process limited to certain patents claiming "business methods" that will be available only through September 2020. Of these procedures, IPR is by far the most widely used. The Current Law of Section 101 At the most general level, there are two basic requirements for an invention to claim patent-eligible subject matter. First, the invention must fit into one or more of the four statutory categories in Section 101âthe claimed invention must be a (1) process, (2) machine, (3)Â manufacture, or (4) composition of matter. Given the (intentionally) expansive nature of these terms, nearly all claimed inventions will satisfy this requirement. Nonetheless, exceptions to this rule do exist. For example, in In re Nuijt en , the Federal Circuit held that a transitory electromagnetic signal was neither a process, manufacture, machine, or composition of matter, and was therefore not patent-eligible subject matter. Because most claimed inventions fit into one of the four statutory categories, the second requirement tends to be more practically important, and receives most of the attention. The second patentable subject matter requirement is that the invention cannot claim one of the judicially created categories of ineligible subject matterâthe claimed invention must not be a (1)Â law of nature; (2) natural phenomenon; or (3) abstract idea. As explained below, the modern Supreme Court has articulated a two-step test for this second requirement, known as the Alice / Mayo framework. The Supreme Court has justified the three ineligible categories as necessary to prevent patent monopolies on the "'basic tools of scientific and technological work,'" which "might tend to impede innovation more than it would tend to promote it." Thus, the Court has explained that "a new mineral discovered in the earth or a new plant found in the wild is not patentable subject matter. Likewise, Einstein could not patent his celebrated law that E=mc 2 ; nor could Newton have patented the law of gravity." At the same time, the Court has said that even if a mathematical formula or law of nature is not patentable "in the abstract," a practical application of such a principle or law "to a new and useful end" is patent-eligible. Beyond such broad illustrations, it is not easy to precisely define what an "abstract idea," "law of nature," or "natural phenomenon" is. Because these exceptions to patent-eligible subject matter are judicially created, they have no formal statutory definition; their meaning has instead been developed through two centuries of "common law" case-by-case adjudication in the federal courts. As such, the scope of patentable subject matter has waxed and waned over time, depending on the trends of recent judicial decisions. This section overviews the leading Supreme Court cases addressing patent-eligible subject matter, beginning with formative cases from the 19th century and culminating in the series of recent Supreme Court decisions that have led some to call for legislative reform of Section 101. Table 1 summarizes the facts and holdings of the major cases. Historical Development of the Judicial Exceptions to Patent-Eligible Subject Matter Nineteenth Century The 1853 case of Le Roy v. Tatham , the "fountainhead" of American patentable subject matter jurisprudence, concerned a patent on machinery to manufacture metal pipes that exploited a newly developed property of lead. Although the Court ultimately did not decide the case on subject matter grounds, Le Roy relied on influential English patent cases to set forth a basic distinction between abstract "principles" and natural laws (which may not be patented) and practical applications of those principles (which may be patented). The Court stated that "[a] principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right." On the other hand, a "new property discovered in matter, when practically applied, in the construction of a useful article of commerce or manufacture, is patentable," for the "invention is not in discovering [the natural principles], but in applying them to useful objects." In its next term, the Court applied this rule in the famous case of O'Reilly v. Morse , concerning Samuel Morse's patent on the telegraph. Although the Court found that Morse was the first inventor of the telegraph and sustained much of his patent, the Court rejected Morse's eighth claim to any "use of the motive power of the electric or galvanic current . . . however developed for marking or printing intelligible characters, signs, or letters, at any distances, being a new application of that power of which I claim to be the first inventor or discoverer." Observing that "the discovery of a principle in natural philosophy or physical science, is not patentable," Chief Justice Taney's majority opinion held that Morse's eighth claim was "too broad" because he had not discovered "that the electric or galvanic current will always print at a distance, no matter what may be the form of the machinery" used, but only that the specific "complicated and delicate machinery" disclosed in the patent specification would do so. In the second half of the nineteenth century, the Court issued a series of important decisions on the patentability of processes. The end result of these cases was a move away from an earlier rule that prohibited "pure" method patents as ineligible (i.e., a process claimed independently of the specific machinery used to accomplish the method) either by construing nominal process patents as claiming a machine or limiting the process patents to the machinery disclosed and its equivalents. In Cochrane v. Deener , which involved a patent on an improved manufacturing process for flour, the Court defined a patentable process as "a mode of treatment of certain materials to produce a given result. It is an act, or a series of acts, performed upon the subject-matter to be transformed and reduced to a different state or thing." Cochrane held that such methods are patentable "irrespective of the particular form of the instrumentalities used." Similarly, in Tilghman v. Proctor , the Court held that a method for separating fat into glycerin and fatty acids using water, pressure, and heat was patentable. In The Telephone Cases , the Court distinguished Morse to allow Alexander Graham Bell's patent claim on a "method of and apparatus for transmitting vocal or other sounds telegraphically, as herein described, by causing electrical undulations, similar in form to the vibrations of the air accompanying the said vocal or other sounds, substantially as set forth." Chief Justice White interpreted Morse as holding that "the use of magnetism as a motive power, without regard to the particular process with which it was connected in the patent, could not be claimed, but that its use in that connection could." The Court found that Bell's claim, in contrast to Morse's, did not reach uses of electricity to transmit speech that are "distinct from the particular process with which it is connected in [Bell's] patent," and upheld the claim, so construed. Twentieth Century In the first half of the 20th century, the Court decided two major cases on the patentability of natural phenomena. In American Fruit Growers v. Brogdex Co. , the Court rejected patent claims on citrus fruit treated with a solution of borax to render it resistant to mold. The Court held that treated fruit was not a "manufacture" under Section 101, but a patent-ineligible "natural article"; treatment with borax did not "change in the name, appearance, or general character of the fruit" or imbue it with a "new or distinctive form, quality, or property." In Funk Brothers Seed Co. v. Kalo Inoculant Co. , the Court rejected patent claims on an inoculant for leguminous plants consisting of multiple species of bacteria, where the particular bacterial strains were selected so as not to inhibit each other (as prior multispecies combinations had). Because the patentee's combination "produces no new bacteria [and] no change in the six species of bacteria," Justice Douglas's majority opinion held that it was only "the discovery of some of the handiwork of nature and hence is not patentable." From 1972 to 1981, the Supreme Court decided four patentable subject matter cases. In Gottschalk v. Benson , the Court held that an algorithm for converting binary-coded decimal numerals into pure binary numerals (either by hand, or, more practically, on a computer) was patent-ineligible. Justice Douglas reasoned that "one may not patent an idea" and that upholding this patent would "wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself." Second, in Parker v. Flook , the Court rejected a patent on a method for updating alarm limits during catalytic conversion of hydrocarbons (such as petroleum), which relied in part on a mathematical formula, because the only novel feature of the method was the mathematical formula. Third, in Diamond v. Chakrabarty , the Court upheld a patent on a genetically engineered bacterium useful in breaking down oil (e.g., in cleaning up oil spills). Chief Justice Burger distinguished American Fruit Growers and Funk Brothers because this bacterium, although a living organism, was human-made and possessed "markedly different characteristics from any [bacteria] found in nature." Finally, in Diamond v. Diehr , the Court distinguished Flook to uphold a patent on a process for molding synthetic rubber that relied on a mathematical formula (the Arrhenius equation). Justice Rehnquist's majority opinion reached back to Cochrane v. Deener , holding that the process at issue was patentable because it transformed an article (uncured rubber) into a different state or thing. Even though the method used a mathematical formula, the patent in Diehr did not claim the formula itself and would not "pre-empt the use of that equation" in other fields. After Diehr , the Court did not decide a major patentable subject matter case for nearly 30 years. Development of the patent-eligible subject matter law was primarily left to the Federal Circuit, whose decisions generally expanded patentable-eligible subject matter, such that by the late 1990s Section 101 became perceived as "a dead letter." The Modern Alice/Mayo Framework In 2010, the Supreme Court reentered the field of patent-eligible subject matter, deciding four cases on the issue within five years. These cases established the two-step Alice / Mayo test for patentable subject matter. The first step of the Alice / Mayo test addresses whether the patent claims are "directed to" an ineligible concept: a law of nature, a natural phenomenon, or an abstract idea. The inquiry at step one focuses on the "claim as whole." To be "directed to" an eligible concept at step one of Alice / Mayo , the claims must not simply inv olve a patent-ineligible concept. Rather, the "focus on the claims" must be a patent-ineligible concept, as opposed to the improvement of a technological process. If the patent claims are not directed to an ineligible concept, then the subject matter is patent-eligible. If the claims are directed to an ineligible category, then the invention is not patentable unless the patent claims have an "inventive concept" under the second step of the Alice / Mayo test. Step two of Alice / Mayo considers the elements of each patent claim both individually and as an ordered combination in the search for an "inventive concept"âadditional elements that "transform the nature of the claim" into a patent-eligible application of an ineligible concept. To have an "inventive concept," the patent claims must contain elements "sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself." Claim limitations that are "conventional, routine and well understood," such as generic computer implementation, cannot supply an inventive concept. Bilski v. Kappos , the Supreme Court's first modern foray into patentable subject matter doctrine, concerned a patent on a business method for hedging against price-fluctuation risks in energy and commodity markets. The Federal Circuit had held that this method was not patentable as a "process" under Section 101 because it failed the "machine-or-transformation test"âthat is, it was neither "tied to a particular machine or apparatus" nor "transform[ed] a particular article into a different state or thing." All nine members of the Supreme Court agreed with that resultâthat the business method at issue was not patent-eligibleâbut differed significantly as to their reasoning. Writing for five Justices, Justice Kennedy held that the machine-or-transformation test was not the "sole test" for determining whether a process is patent-eligible but nonetheless "a useful and important clue." While the majority rejected the "atextual" notion that business methods were categorically unpatentable under Section 101, it relied on Benson and Flook to conclude that this particular patent attempted to claim an unpatentable abstract idea: the "concept of hedging risk." Concurring only in the judgment, Justice Stevens wrote for four Justices who would have held, based on the history of the Patent Act and its constitutional purpose, that business methods were categorically patent-ineligible. In Mayo Collaborative Services v. Prometheus Laboratories , the Court addressed the scope of the "law of nature" exception. The patent in Mayo claimed a method for measuring metabolites in human blood in order to calibrate the dosage of thiopurine drugs in the treatment of autoimmune disorders. Writing for a unanimous Court, Justice Breyer's opinion held that the patent claims were addressed to a law of nature: "namely, relationships between concentrations of certain metabolites in the blood and the likelihood that a dosage of a thiopurine drug will prove ineffective or cause harm." Because the claims were little "more than an instruction to doctors to apply the applicable laws when treating their patients," the patent lacked any inventive concept and was held to be patent-ineligible. The next case, Association for Molecular Pathology v. Myriad Genetics, Inc. , concerned the applicability of the "natural phenomena" exception to the patentability of human DNA. The inventor in Myriad had discovered the precise location and genetic sequence of two human genes associated with an increased risk of breast cancer. Based on this discovery, the patentee claimed two molecules associated with the genes: (1) an isolated DNA segment and (2)Â a complementary DNA (cDNA) segment, in which the nucleotide sequences that do not code for amino acids were removed in the laboratory. Justice Thomas's unanimous opinion in Myriad held that isolated DNA segments were nonpatentable products of nature because the patent claimed naturally occurring genetic information. The Court concluded, however, that cDNA, as a synthetic molecule distinct from naturally occurring DNA, was patentable even though the underlying nucleotide sequence was dictated by nature. Most recently, Alice Corp. v. CLS Bank International examined the scope of the "abstract idea" category of nonpatentable subject matter. Alice concerned a patent on a system for mitigating "settlement risk"âthe risk that only one party to a financial transaction will pay what it owesâusing a computer as an intermediary. The Court first held, relying on Bilski , that the invention was directed at "the abstract idea of intermediated settlement." Although this idea was implemented on a computer (which is, of course, a physical machine), the patent lacked an inventive concept because the claims merely "implement[ed] the abstract idea of intermediated settlement on a generic computer." Table 1 summarizes the facts and holding of the Supreme Court's major patentable subject matter cases, in reverse chronological order. The Debate Over Alice/Mayo and Section 101 Reform A substantial group of patent law stakeholders, including inventors, academics, industry representatives, patent attorneys, current and former Federal Circuit judges, and former PTO officials, has criticized the Alice / Mayo framework on various grounds. However, other patent law stakeholders defend the Supreme Court's recent Section 101 decisions. Criticisms of the Alice/Mayo Framework Generally, critics of the Court's recent patentable subject matter jurisprudence raise four principal concerns. First, the Alice / Mayo framework is criticized as excessively vague, subjective, and/or unpredictable in application. For example, the Federal Circuit has indicated that when determining whether a patent claim is "directed to" an ineligible concept at step one, the court must determine whether the "focus" of the claims is on that concept. At the same time, the Federal Circuit has cautioned that this "focus" must be articulated "with enough specificity to ensure the step one inquiry is meaningful." But the appropriate level of specificity can vary from patent to patent and from judge to judge. Thus, in the view of many stakeholders, the Supreme Court's patentable subject matter case law and the Federal Circuit's implementation of the Alice / Mayo framework fail to articulate "objective, predictable criteria" for making patent-eligibility determinations. Key terms, such as what an "abstract idea" is, or precisely how claim elements can make an invention "significantly more" than an ineligible category (the "inventive concept"), are largely left undefined, making it difficult for patent applicants and litigants to know whether their patent claims will survive judicial scrutiny. Moreover, the Federal Circuit has explicitly recognized that the two steps of the analysis are not clearly defined and may overlap. As a result, many observers characterize the court's Section 101 jurisprudence as a "highly subjective," "I know it when I see it" approach. This subjectivity, in the view of critics, injects unpredictability and uncertainty into whether an invention is of a type that is patentable. Second, the Alice / Mayo framework is criticized as legally flawed on various grounds. Some stakeholders argue that the Alice / Mayo framework misinterprets Section 101, imposing "extra-statutory" requirements for patent eligibility, contrary to congressional intent or the constitutional purpose of patent law. Others argue that Mayo 's requirement of an "inventive concept" rests on a historically inaccurate understanding of 19th century English patent law, first imported into American jurisprudence in cases such as Le Roy and Morse . Finally, many commentators and stakeholders argue that the Alice / Mayo framework confuses patent law by conflating eligibility under Section 101 with policy concernsâsuch as the obviousness of the invention and claim breadthâthat are better addressed by other provisions in the Patent Act, such as Sections 102, 103, and 112. For example, patent claims have been found to lack an inventive concept at Alice / Mayo step two where they implement an abstract idea on conventional computer hardware. Issues about what was "conventional" or "well-understood" at the time of the invention, however, are questions usually reserved for novelty or nonobviousness analysis. Third, the Alice / Mayo framework is alleged to have detrimental effects on incentives to innovate, especially in the biotechnology and computer software industries. Given the patent claims at issue in Alice (a computer-implemented business method), Myriad (an isolated human DNA segment), and Mayo (a drug dose optimization method), most observers agree that these two industries have been the most affected by the Supreme Court's recent Section 101 rulings. In the biotechnology industry, stakeholders argue that the Alice / Mayo framework has limited their ability to obtain patents on diagnostic methods and kits, personalized medicine, and isolated natural substances. Views in the computer industry are "sharply divided," but at least some stakeholders argue that Alice has devalued their patents and/or created uncertainty for their business. In both fields, some stakeholders argue that the law of Section 101 is reducing incentives to innovate in these areas and driving investment elsewhere. Finally, the uncertainty and unpredictability caused by Alice/Mayo is alleged to put the United States at a disadvantage relative to international competitors. Some stakeholders argue that U.S. competitiveness may be harmed because a lack of patent availability will drive investment in certain industries to other countries where such inventions are more clearly patent-eligible. Others argue that one effect of Alice / Mayo is a loss of any patent protection for certain inventions, which will enable competitors to "free ride" off of American innovation. Defenses of the Alice/Mayo Framework Defenders of the current law of Section 101 respond that these criticisms of Alice / Mayo are overstated, and/or that the Supreme Court's reinvigoration of Section 101 has important benefits for the patent system. As to the subjective or unpredictable nature of Section 101 doctrine, there is some indication that the Alice / Mayo framework is not quite as unpredictable as is sometimes claimed. Some commentators also observe uncertainty in patentable subject matter law is hardly a new phenomenon, and may even be "inevitable." A subjective or "amorphous" approach to patentable subject matter, on this view, may have certain benefits, including flexibility and adaptability to new technologies. Moreover, even if one views the current state of the law as unacceptably vague, courts may eventually clarify or change Section 101 doctrine in line with the long history of common law development in this area. As to legal correctness of Alice / Mayo , defenders of the framework note that while the judicially created categories are not directly grounded in the text of Section 101, they have been treated as part of the law "as a matter of statutory stare decisis going back 150 years." As to Mayo 's reliance on 19th century English patent law, some commentators defend the Supreme Court's "inventive application" requirement as a faithful reading of this precedent. Finally, although the Alice / Mayo framework may overlap with other patent law doctrines, several commentators and judges of the Federal Circuit argue that Section 101 serves purposes that are distinct from Sections 102, 103, and 112. For example, even if the invention in Myriad âan isolated human DNA sequence discovered to be associated with increased breast cancer riskâwas novel, nonobvious, and sufficiently disclosed, some commentators would still argue that the invention should not be patented based on detrimental effects for future innovation or moral concerns about patenting human DNA. As to the alleged detrimental effects of the Court's recent Section 101 law on innovation, some stakeholders point to countervailing benefits in either certain industries or more generally. In particular, some stakeholders in industries (such as computer software) affected by litigation by patent assertion entities argue that Section 101 is a useful and important tool for weeding out overly broad or vague patents at the outset of litigation. Other commentators point to general utilitarian or moral benefits of robust exclusions for patents on basic discoveries in science and nature. As to concerns about the Alice / Mayo framework's effect on international competitiveness, some commentators view these changes as good for the United States as a geopolitical matter. In particular, restricted patent-eligibility standards may benefit U.S. consumers if a lack of patent protection leads to increased competition and lower prices for certain products without harming innovation. Potential Rationales for Section 101 More broadly, there is a long-running and thoughtful debate over the functions and purposes that Section 101 serves in the patent system. For its part, the modern Supreme Court has largely settled on the "preemption rationale" for the judicially created subject matter exclusions. Recent decisions assert that abstract ideas, laws of nature, and natural phenomena should not be patentable because permitting a monopoly on the "'basic tools of scientific and technological work' .Â . . might tend to impede innovation more than it would tend to promote it," in that such patents would "significantly impede future innovation." The gist of the preemption rationale is that Section 101 functions to prevent patents that reach so broadly that they "threaten downstream innovation" by preempting all uses of a natural law, abstract idea, or fundamental research tools. The preemption rationale is not the only potential justification for Section 101, however. Although a complete survey of the various rationales proffered for Section 101 is beyond the scope of this report, at least four broad categories of rationales for Section 101 have been proposed. First, some commentators argue that Section 101's purpose is to identify certain patents or categories of patents that should not be granted because their economic harms exceed their benefitsâthat is, their net social costs are negative with respect to innovation, or more generally. Preemption theory, which claims that certain overbroad patents should be denied patent protection under Section 101 because of their negative effects on downstream innovation, is an example from this group. Secondâin what is in some sense a special case of the first rationaleâother commentators assert that Section 101's purpose is to identify and deny patents to categories of inventions that would have been developed even without a patent incentive. For example, several commentators have argued the patents on business methods should be excluded under Section 101 either because they affirmatively harm innovation and the economy, or because they are simply unnecessary because sufficient incentives to create business methods would exist even if patents are unavailable. Third, some commentators assert that Section 101 (or elements of Section 101 doctrine) are based not on economic considerations but on moral or ethical concerns. For example, the judicial prohibition on patenting products of natureâsuch as human DNA sequencesâmay be motivated by noneconomic, deontological notions of human dignity, or the inviolability of natural creation. Finally, some commentators believe that Section 101 serves no independent purpose in patent law not already better served by other patentability requirements. On this view, Section 101's judicially created exceptions to patentable subject matter should simply be eliminated as an independent requirement for patentability, in favor of a rigorous application of the other patentability requirements in Sections 102, 103, and 112 of the Patent Act. Potential Options for Section 101 Before examining the particular approaches introduced by the PTO and in the 116th Congress, this section will review some of the general ways in which Section 101 may or may not be reformed. These different paths are introduced to contextualize the current Section 101 reform proposals within the universe of possible reforms. This list is not exhaustive, nor are each of these options necessarily mutually exclusive. At a general level, most of the proposed paths forward for Section 101 fall into one of four categories. First, some oppose any legislative intervention, proposing instead to allow the courts to continue to develop and refine the standards for patent eligibility. Second, some propose replacing the Alice / Mayo framework with an explicit list of subject matter that is patent-eligible or -ineligible, perhaps along the lines of an approach that is used for European patents. Third, some propose replacing the Alice / Mayo framework with a different, usually lower, standard for patent eligibility, such as a requirement that the invention result from human effort, exist outside the human mind, or contribute to the technological arts. Fourth, some propose to do away with any limitations on patentable subject matter, beyond the four statutory categories and other existing statutory patentability requirements. Continued Common Law Judicial Development One option is for Congress to leave Section 101 as it is, and allow the courts (and/or the PTO) to continue developing the law of patent-eligible subject matter. Stakeholders and commentators may support this option for several different reasons. Some may disagree that the Alice / Mayo framework is as indeterminate or as harmful to innovation as the critics claim. Other commentators, even if they accept the criticisms directed at Alice / Mayo , may nonetheless believe that the courts will eventually refine, clarify, or otherwise improve the law of patentable subject matter given more time for judicial development. Still other commentators support the current law of Section 101 as affirmatively good for innovation and society because it precludes property rights in fundamental aspects of science, nature, and ideas, or serves as an important mechanism to weed out overly broad patents or obtain early dismissal of unmeritorious patent litigation. Supporters of continued judicial development may point to the recent administrative guidance put forth by the PTO and significant Section 101 decisions of the Federal Circuit over the past five years as promising steps in the administrative and common law development of Section 101 after the Alice , Mayo , and Myriad decisions. Opponents of maintaining the legal status quo, for their part, observe that the Supreme Court has not shown much interest in revisiting its Section 101 jurisprudence despite many opportunities, and that several current and former Federal Circuit judges have called for legislative amendment of Section 101. Specific Statutory List of Included or Excluded Subject Matter Categories Another potential route for reform would be to amend Section 101 to replace the Alice / Mayo framework with a more specific list of subject matter that is patent-eligible and/or patent-ineligible. Currently, Section 101 contains a broad list of included subject matter categories (processes, machines, manufactures, and compositions of matter), but most of the doctrine focuses on the three judicially created ineligible categories: laws of nature, natural phenomena, and abstract ideas. The "laundry list" approach would seek to make Section 101 clearer and more predictable by specifically defining categories of eligible and/or ineligible subject matter. Depending on how this sort of proposal is structured, it would retain the notion of ineligible classes of subject matter, but define such categories differently, more precisely, and perhaps more narrowly than the common law exceptions under the Alice / Mayo framework. The European Patent Convention's (EPC's) approach to patent eligibility offers a potential model for this type of approach. Under EPC article 52(1), patent-eligible subject matter reaches "all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application." However, EPC article 52(2) defines specific subject matter that is not patentable when claimed "as such": (a) discoveries, scientific theories and mathematical methods; (b) aesthetic creations; (c) schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers; (d) presentations of information. EPC article 53 further denies patents on inventions that are "contrary to [public order] or morality," or that claim "plant and animal varieties," or "methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practised on the human or animal body." Assuming that the new statutory categories are more clearly delineated than existing judicial categories like the "abstract idea" exception, a potential virtue of the laundry-list approach is greater clarity and predictability in the sort of inventions that are patentable. This approach would also more firmly ground subject matter determinations in explicit statutory language. On the other hand, the list-of-specific-exclusions approach would potentially be less flexible and less able to adapt to unforeseen new technologies than other reform options. It might also, to some degree, replace case-by-case judicial judgments of eligibility with more categorical legislative ones, which may be a virtue or a vice depending upon one's perspective. Replace Judicial Exceptions with a Different Standard A third group of proposed Section 101 reforms seeks to replace the Alice / Mayo framework with a new statutory standard for assessing patent eligibility. Proposals in this category are fairly diverse, but common elements in proposed new standards would limit patent eligibility to inventions that result from human effort; contribute to the technological arts; have practical utility or application; cannot be solely performed in the human mind; do not preempt all practical uses of a law of nature, abstract idea, or natural phenomenon. Usually, the proposed new patentability standard would supersede the three judicially created subject matter exclusions and the two-step Alice / Mayo test. Several proposed new standards blend more than one of these elements. For example, the American Intellectual Property Law Association has submitted a Section 101 reform proposal that replaces the Alice/Mayo framework with a single exception to patent eligibility if an invention "exists in nature independently of and prior to any human activity" or "is performed solely in the human mind." A 2017 proposal by the American Bar Association would explicitly allow patenting "practical applications" of laws of nature, natural phenomena, and abstract ideas, so long as the patent claim does not "preempt the use by others of all practical applications of the law of nature, natural phenomenon, or abstract idea." It is difficult to generalize given the significant differences among the various proposals in this category, but commentators may debate whether proposed new standards would provide greater clarity and predictability in patent-eligibility law, while still being flexible enough to adapt to new technologies. Eliminate Implied Patentable Subject Matter Limits A final option is to eliminate the Alice / Mayo framework and judicially created exceptions to patent eligibility altogether, without replacing them with a new standard. Several commentators have argued that patent-eligibility doctrine serves no purpose that is not already served by the existing statutory patentability requirements of utility, novelty, obviousness, written description, definiteness, and enablement. On this view, the appropriate course would be for Congress to simply eliminate the nonstatutory eligibility requirements (i.e., the judicial prohibitions on patenting laws of nature, natural phenomena, and abstract ideas) in favor of "rigorous" application of the patentability requirements of Sections 102, 103, and 112 of the Patent Act. Supporters of this approach argue that it advances the underlying policy concerns motivating Section 101 law, but does so in a "more consistent and more rigorous" manner. Opponents argue that Section 101 serves important purposes that are distinct from the other patentability requirements, which would be lost if the judicial exceptions were entirely eliminated. Proposed Reforms to Section 101 The Supreme Court's recent patentable subject matter jurisprudence has inspired a number of proposed Section 101 reforms from academics, practitioners, and other stakeholders. The specifics of many of these proposals have been reviewed elsewhere. This section examines two major developments in this area in 2019. First, it reviews the PTO's Revised Subject Matter Eligibility Guidance, which seeks to offer clearer guidelines to PTO patent examiners in making Section 101 determinations. Second, this section examines a series of draft legislative proposals put forth by a bipartisan and bicameral group of legislators, which have been the subject of a series of roundtables and congressional hearings on patentable subject matter reform. PTO's 2019 Patent Subject Matter Eligibility Guidance On January 7, 2019, the PTO issued Revised Patent Subject Matter Eligibility Guidance (the PTO's Revised Guidance) to assist PTO patent examiners in determining subject matter eligibility for patent applications. The PTO noted that the "legal uncertainty" surrounding the Alice / Mayo framework "poses unique challenges" for the agency, which has thousands of patent examiners who must make patent-eligibility determinations on hundreds of thousands of applications each year. Accordingly, the PTO issued revised guidance to its patent examiners to provide "more clarity and predictability" in their Section 101 determinations. The PTO's Revised Guidance made two major changes to how patent examiners evaluate whether a patent application claims patent-ineligible subject matter. First, the guidance attempts to provide a clearer definition of what constitutes an ineligible "abstract idea." Previously, examiners would make that determination by comparing the patent claim at issue to those found to be ineligible "abstract ideas" in previous judicial cases. The PTO found that this approach had become "impractical" because of an expanding volume of sometimes contradictory Section 101 case law. The PTO's Revised Guidance "synthesizes" the case law into three categories that examiners will treat as "abstract ideas": (a) Mathematical conceptsâmathematical relationships, mathematical formulas or equations, mathematical calculations; (b) Certain methods of organizing human activityâfundamental economic principles or practices (including hedging, insurance, mitigating risk); commercial or legal interactions (including agreements in the form of contracts; legal obligations; advertising, marketing or sales activities or behaviors; business relations); managing personal behavior or relationships or interactions between people (including social activities, teaching, and following rules or instructions); and (c) Mental processesâconcepts performed in the human mind (including an observation, evaluation, judgment, opinion). Under the Revised Guidance, patent claims that do not recite matter that falls into one of these three groupings should not be treated as an "abstract idea" except in "rare circumstance[s]." Second, the PTO's Revised Guidance clarifies when examiners will treat a patent claim as "directed to" an ineligible category (abstract ideas, laws of nature, or natural phenomena) under step one of the Alice / Mayo test. In particular, the PTO will not treat a claim as "directed to" an ineligible concept if "the claim as a whole integrates the recited judicial exception into a practical application of the exception ." If the claim does integrate such a practical applicationâsuch as improving the functioning of a computer, effecting a particular treatment for a disease, or implementing the exception into a particular machine or manufactureâthen the PTO will treat the claim as patent-eligible, without having to examine the patent application for an "inventive concept" under step two of the Alice / Mayo framework. PTO's Revised Guidance was generally perceived as lowering Section 101 barriers to patentability, especially with respect to computer-related inventions. Some commentators praised the Revised Guidance for providing greater clarity to patent examiners, while other stakeholders criticized the guidance as inconsistent with the Supreme Court's Section 101 decisions. Although the PTO's Revised Guidance changes how PTO examiners review new patent applications, it is important to note that the guidance, unlike judicial decisions or statutory reforms, lacks formal legal forceâthat is, the guidance is not binding on the courts when patents are challenged in litigation. The PTO lacks general substantive rulemaking authority, and Revised Guidance itself states that it is only a "tool for internal [PTO] management" that lacks "the force and effect of law." Although the Federal Circuit has issued somewhat contradictory signals on this point, the Guidance would receive, at the most, "some deference" if a court found its reasoning to be persuasive. Legislative Efforts in the 116th Congress: The Tillis-Coons Proposals The First Tillis-Coons Proposal On April 17, 2019, Senators Tillis and Coons, along with Representatives Collins, Johnson, and Stivers, released a "bipartisan, bicameral framework" for legislative Section 101 reform (the First Tillis-Coons Proposal). The framework's release followed multiple roundtables with patent law stakeholders on Section 101 and the impact of the Alice/Mayo framework on, for example, innovation in artificial intelligence, medical diagnostics, and personalized medicine. The First Tillis-Coons Proposal would have retained the four statutory categories of patentable inventions, but removed the requirement that the invention or discovery be "new and useful" from Section 101. Patent eligibility would have instead been determined "by considering each and every element of the claim as a whole and without regard for considerations properly addressed by [Sections] 102, 103 and 112 [of the Patent Act]." In place of the judicially created exceptions to patent eligibility, which the First Tillis-Coons Proposal would have abrogated by statute, the proposal would have defined, "in a closed list," five "exclusive" categories of patent-ineligible subject matter: (1) fundamental scientific principles; (2) products that exist solely and exclusively in nature; (3) pure mathematical formulas; (4) economic or commercial principles; and (5) mental activities. Effectively, this would have codified the judicial exceptions in a narrower form, with the first two ineligible categories roughly corresponding to the "law of nature" and "natural product" judicial exceptions, and the final three to the types of "abstract ideas" identified by the PTO in its 2019 Guidance. The Proposal would have narrowed the construction of these ineligible categories by creating a "practical application" test, presumably along the lines of the ABA proposal to expressly permit patenting of a practical application of ineligible subject matter. However, "simply reciting generic technical language or generic functional language" would have been insufficient to "salvage an otherwise ineligible claim." The First Tillis-Coons Proposal thus blended elements of the PTO's 2019 Revised Guidance with a "laundry list" approach of specific ineligible categories, plus new statutory standards for how to apply the list of exceptions to patentable subject matter. The overall effect would be to lower Section 101 barriers to patentability, while still retaining more narrowly defined classes of ineligible subject matter. Reactions to the First Tillis-Coons Proposal were mixed. Some argued that the draft proposal was a promising start for much-needed congressional intervention. On the pro- Alice side of the debate, the Electronic Frontier Foundation, for example, criticized the First Tillis-Coons Proposal as a "disaster" for innovation because it would eliminate a powerful tool to combat bad patents and patent troll litigation. On the other side of the debate, critics of the Alice/ Mayo framework argued that the First Tillis-Coons Proposal did not go far enough, and urged elimination of any ineligible categories of patentable subject matter. The Second Tillis-Coons Proposal On May 22, 2019, following feedback on their first draft framework, the same group of Members released a "draft bill" to reform Section 101 (the Second Tillis-Coons Proposal). The Second Tillis-Coons Proposal was released in advance of a series of three hearings held in June before the Senate Judiciary Committee's Subcommittee on Intellectual Property, which were designed to solicit feedback on the draft legislative language. In the subsequent hearings, 45 witnesses testified over three days, with representatives from industry, academia, bar associations, and trade groups; former Federal Circuit Judges and PTO officers; and other patent law stakeholders expressing various views on Section 101 reform. As compared to the first proposal, the Second Tillis-Coons Proposal, generally speaking, would make more sweeping changes to Section 101 to expand patent eligibility. Like the First Tillis-Coons Proposal, the draft bill has several provisions that would attempt to separate the Section 101 inquiry from other patentability requirements. Specifically, the draft bill would strike the word "new" from Section 101 and establish that patent subject matter eligibility must be determined "considering the claimed invention as a whole" and without regard to "considerations relating to section 102, 103, or 112 of [the Patent Act]." The Second Tillis-Coons Proposal would further provide that eligibility determinations shall not depend on the "manner in which the claimed invention was made; whether individual limitations of a claim are well known, conventional or routine; the state of the art at the time of the invention." The draft bill also explicitly provides that Section 101 "shall be construed in favor of eligibility." Instead of codifying and narrowing the judicial exceptions to patentability, the Second Tillis-Coons Proposal would eliminate them altogether. The draft bill provides that No implicit or other judicially created exceptions to subject matter eligibility, including "abstract ideas," "laws of nature," or "natural phenomena," shall be used to determine patent eligibility under section 101, and all cases establishing or interpreting those exceptions to eligibility are hereby abrogated. This language would appear to overturn by statute not only the Alice / Mayo framework, but over two centuries of judicial decisions interpreting the "common law" exceptions to Section 101. The Second Tillis-Coons Proposal would replace the judicial exceptions with a new statutory definition of utility that incorporates elements of various prior proposals for a new Section 101 standard. To be patent-eligible subject matter under the Second Tillis-Coons Proposal, the invention would need to fit into one of the four statutory categories of eligible subject matter (which remain unchanged) and be "useful." To be "useful," an invention or discovery would need to provide "specific and practical utility in any field of technology through human intervention." Finally, to combat overbroad patent claims, the Second Tillis-Coons Proposal would alter the functional claiming rules under Section 112(f), which permits patentees to claim their invention in functional terms as opposed to reciting specific physical structures. In particular, the draft bill provides that if any patent claim element is "expressed as a specified function without the recital of structure, material, or acts in support thereof," then that claim element will be limited to the "corresponding structure, material, or acts described in the specification" and their equivalents. Consistent with a recent decision of the Federal Circuit, this language would clarify that Section 112(f) applies to any claim element that fails to sufficiently recite a structure for performing a function. This change would arguably make it more difficult for a patentee to avoid the limiting effects of Section 112(f), even if the words "means for" are not used in the claim language. As with the first proposal, reactions to the Second Tillis-Coons Proposal from patent law stakeholders were mixed. Critics of the Alice/Mayo framework generally applauded the draft bill as bringing much needed clarity and certainty to the law of patent eligibility, particularly with respect to biotechnology innovation. Opponents of the draft bill expressed concern that changes to the Alice / Mayo framework would eliminate an important tool against unmeritorious patent litigation. Critics also questioned the necessity and advisability of such a sweeping change to Section 101 law. Both supporters and opponents raised concerns about potential ambiguities in the proposed definition of "useful," particularly the terms "human intervention," "practical utility," and "field of technology." Stakeholders also debated the specific practical effects of the legislative changes at the hearings, such as the effect of elimination of the judicial exceptions on basic scientific research. One notable concern, raised by the American Civil Liberties Union in opposition to the draft bill, was that the Second Tillis-Coons Proposal, by abrogating the Myriad decision, would permit the patenting of human genes. Several witnesses denied that the draft bill would lead to that result because of the bill's "human intervention" requirement or other patent law principles. For their part, Senators Tillis and Coons made clear that they have "no intention" of overruling the holding of Myriad that no one may patent "genes as they exist in the human body." Following the hearings, Senators Tillis and Coons indicated that what they heard reinforced their view that "patent eligibility is broken and desperately needs to be repaired," and that there is a "necessity for Congress to intervene" to bring greater clarity to Section 101. Moving forward, they indicated they were "considering a provision that would exempt research and experimentation from infringement liability" in response to concerns about inhibiting scientific research. The Senators also indicated that they would continue to welcome input from all stakeholders and would seek to "clarify" the proposal regarding the eligibility of gene patents, and potentially "sharpen the 'field of technology' requirement to ensure that critical advances like artificial intelligence and medical diagnostics qualify [as patent-eligible]." At the same time, the Senators expressed their view that certain concepts should remain patent-ineligible under a revised Section 101, such as "economic transactions or social interactions." Observers expect a revised formal bill reflecting these provisions this fall.
target: The statutory definition of patent-eligible subject matter under Section 101 of the Patent Act has remained essentially unchanged for over two centuries. As a result, the scope of patentable subject matterâthat is, the types of inventions that may be patentedâhas largely been left to the federal courts to develop through "common law"-like adjudication. In the 20th century, the U.S. Supreme Court established that three main types of discoveries are categorically patent-ineligible: laws of nature, natural phenomena, and abstract ideas. Recent Supreme Court decisions have broadened the scope of these three judicial exceptions to patent-eligible subject matter. Over a five-year period, the Supreme Court rejected, as ineligible, patents on a business method for hedging price-fluctuation risk; a method for calibrating the dosage of a particular drug; isolated human DNA segments; and a method of mitigating settlement risk in financial transactions using a computer. These cases established a new two-step test, known as the Alice / Mayo framework, for determining whether a patent claims ineligible subject matter. The first step of the Alice / Mayo test addresses whether the patent claims are "directed to" a law of nature, natural phenomenon, or abstract idea. If not, the invention is patentable. If the claims are directed to one of the ineligible categories, then the second step of the analysis asks whether the patent claims have an "inventive concept." To have an inventive concept, the patent claim must contain elements that transform the nature of the claim into a patent-eligible application of the ineligible concept, so that the claim amounts, in practice, to something "significantly more" than a patent on the ineligible concept itself. If the invention fails the second step of Alice / Mayo , then it is patent-ineligible. The Supreme Court's decisions have been widely recognized to effect a significant change in the scope of patentable subject matter, restricting the sorts of inventions that are patentable in the United States. The Alice / Mayo test has been the subject of criticism, with some stakeholders arguing that the Alice / Mayo framework is vague and unpredictable, unduly restricts the scope of patentable subject matter, reduces incentives to invest and innovate, and harms American industry's competitiveness. In particular, the Alice / Mayo test has created uncertainty in the computer technology and biotechnology industries as to whether innovations in medical diagnostics, personalized medicine, methods of treatment, computer software, and artificial intelligence are patent-eligible. As a result, some patent law stakeholders, including academics, bar associations, industry representatives, judges, and former Patent and Trademark Office (PTO) officials, have called for the Supreme Court or Congress to act to change the law of patentable subject matter. However, other stakeholders defend the legal status quo, arguing that the Alice / Mayo framework provides an important tool for combating unmeritorious patent litigation, or that the revitalized limits on patentable subject matter have important benefits for innovation. Recently, there have been several substantial administrative and legislative efforts to clarify or reform patent-eligible subject matter law. In January 2019, the PTO issued revised guidance to its patent examiners with the aim of clarifying and improving predictability in how PTO patent examiners make Section 101 determinations. In April and May of 2019, a bipartisan and bicameral group of Members released draft legislative proposals that would abrogate the Alice / Mayo framework and transform the law of Section 101 and related provisions of the Patent Act. Following a series of hearings in June 2019, many expect a bill to reform Section 101 to be introduced this fall. These proposed changes could have significant effects as to the types of technologies that are patentable. The availability of patent rights, in turn, affects incentives to invest and innovate in particular fields, as well as consumer costs and public access to technological innovation. Understanding the legal background and context can aid Congress as it debates the legal and practical effects that legislative Section 101 reforms would have if enacted.