Decision on risk reduction patents boosts prospects for personalised medicine

On July 9, 2012, the Federal Circuit in CLS Bank v. Alice Corporation¹ softened the sting of the Supreme Court’s recent Mayo v. Prometheus² decision on the patent-eligibility of inventions involving an abstract idea or natural law.  The Federal Circuit held that a claim could only be deemed ineligible for patenting as an abstract idea if, considering the claim as a whole including all its features, it is “manifestly evident” that the claim is directed solely to an abstract idea.

The Supreme Court’s Prometheus decision had disappointed the personalized medicine industry by invalidating two patents in the field, relying on the prohibition against patenting a law of nature.  The Prometheus case has been criticized for containing sweeping statements with little guidance for other patent claims, and for conflating patent eligibility with novelty and obviousness.  The Prometheus case involved claims that were drafted very broadly and could have been invalidated on other, clearer legal grounds.

The Federal Circuit’s Alice Corp. decision involved a different technology (risk reduction in financial instrument trading) from Prometheus, but Alice Corp. dealt with the same issue of patenting an abstract idea or natural law.  While Prometheus involved measuring a biomarker in a patient to optimize treatment of a gastrointestinal disorder, Alice Corp. involved using “shadow credits/debits” to reduce the risk that a party could not meet its financial obligation after the 2-day period between agreement and execution of a trade.

Patentable subject matter

In an encouraging reading of Prometheus, the Federal Circuit in Alice Corp. cited an earlier Supreme Court case Diamond v. Diehr, 450 U.S. 188, 198-90 (1981) in declining to consider novelty in evaluating patent eligibility (“The ‘novelty’ of any element or steps in a process, or even of the process itself, is of no relevance in determining whether the subject matter of a claim falls within the § 101 categories of possibly patentable subject matter … [Prometheus] imposes no ‘novelty’ or “nonobviousness” inquiry into the patent eligibility analysis under § 101”).  The Supreme Court in Prometheus had appeared to acknowledge that it was allowing overlap between the novelty requirement and the doctrine regarding unpatentable subject matter.

The Federal Circuit issued its Alice Corp. decision on the heels of the U.S. Patent and Trademark Office U.S. Patent and Trademark Office (USPTO) Guidance Memo³ to its patent examiners dated six days earlier on July 3, 2012, just before America’s Independence Day holiday.  The USPTO guidance memo gave examiners a procedure for evaluating claims under Prometheus and gave examples of claims that would be eligible for patenting.  Thus, the USPTO Guidance Memo was significantly more informative than the earlier USPTO memo⁴ to examiners issued the day after Prometheus with little more than quotes and paraphrasing of the general statements in Prometheus.  The USPTO Guidance Memo emphasized the importance of novelty and non-obviousness, which may require revisiting in light of Alice Corp.’s rejection of this approach.

Indeed, Alice Corp. suggests that any features of a claim restricting scope to a particular application of the abstract idea/natural law could avoid a Section 101 bar:

Unless the single most reasonable understanding is that a claim is directed to nothing more than a fundamental truth or disembodied concept, with no limitations in the claim attaching that idea to a specific application, it is inappropriate to hold that the claim is directed to a patent ineligible “abstract idea” under 35 U.S.C. § 101.3

Inventive concept

The Alice Corp. decision was not unanimous, with one of the three judges dissenting vigorously, arguing that the majority diverged from Prometheus in declining to require that the claims include an “inventive concept”.  The dissent argued that the claims merely referred to using an “intermediary” in a financial transaction, which was not only an abstract idea but also an ancient concept.

Neither the majority nor the dissent provided a meaningful definition of an “abstract idea” (or a “natural law” as similarly undefined in Prometheus) to limit the potentially enormous scope of affected patents.  The Alice Corp. decision noted, however, the warning in Prometheus that “too broad an interpretation of [the exceptions to § 101] could eviscerate patent law. For all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas”.

Alice Corp. indicates that the Federal Circuit will not shy away from its duty to develop the law in view of Prometheus and will likely provide further guidance and clarification in deciding the Myriad case⁵ involving patents on a gene biomarker and related diagnostic methods.  At issue in Myriad were claims to an “isolated” human gene and diagnostic methods involving the gene.  The vigorous dissent in Alice Corp. suggests that the Federal Circuit may face another battle of wills in deciding Myriad.

By Rouget F. (Ric) Henschel of Foley & Lardner LLP

[1] http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1301.pdf.

[2] Mayo v. Prometheus, 566 U. S. ____ (2012).

[3] 2012 Interim Procedure/or Subject Matter Eligibility Analysis of Process Claims Involving Laws o/Nature (2012 Interim Procedure/or Laws o/Nature), http://www.uspto.gov/patents/law/exam/2012_interim_guidance.pdf.

[4] http://www.uspto.gov/patents/law/exam/mayo_prelim_guidance.pdf.

[5] Assoc. for Molecular Pathology v. USPTO and Myriad Genetics, 653 F.3d 1329 (Fed. Cir. 2011).  After deciding Prometheus, the Supreme Court, which had been requested to review Myriad, vacated the Federal Circuit’s decision and asked the Federal Circuit to issue a new decision in Myriad taking into account the Supreme Court’s ruling in Prometheus.