Are the Supreme Court’s exceptions to patentability mandated by the Constitution, or are they just "statutory stare decisis"?

By: Stuart P. Meyer

There has been significant commentary, both before and after the Supreme Court’s decision in Alice, that the various judicially created exceptions to patentability under 35 USC § 101 are not only sound, but are also constitutionally mandated. For instance, a major thesis of the ACLU’s amicus brief in Alice was that the First Amendment naturally limits § 101, as “patents giving control over intellectual concepts and abstract knowledge or ideas—and thus limiting free thought—would violate the First Amendment.”

The Court may have already given some guidance in this area, and lower courts appear to be listening. In a September 4 decision, one judge in the Central District of California had no difficulty dismissing, via FRCP 12(b)(6), an infringement complaint because the court found that the three patents-in-suit did not satisfy § 101, based on the judicially created exceptions as taught by Alice. Eclipse IP LLC v. McKinley Equipment Corp., Case No. SACV 14-742-GW (C.D. Cal. September 4, 2014). Judge George Wu observed that Justice Kennedy in Bilski, delivering the opinion of the Court explained the limitations on § 101. The pertinent portion of Bilski reads: “While these exceptions are not required by the statutory text, they are consistent with the notion that a patentable process must be ‘new and useful.’ And, in any case, these exceptions have defined the reach of the statute as a matter of statutory stare decisis going back 150 years..

Judge Wu paused on the term “statutory stare decisis,” commenting in a footnote that it was apparently used for the first time by Justice Scalia in 2007 and adopted by Justice Ginsburg thereafter. After pointing to the several uses of this term and, in particular, its use in CSX Transp., Inc. v. McBride, 131 S. Ct. 2630, 2641 (2011), Judge Wu made the following note: “The context there makes clear that the phrase refers to the principle that ‘[c]onsiderations of stare decisis have special force in the area of statutory interpretation, for here, unlike in the context of constitutional interpretation, the legislative power is implicated, and Congress remains free to alter what we have done.’ Patterson v. McLean Credit Union, 491 U.S. 164, 172-173 (1989).

Judge Wu dutifully applied the Alice two-step test to invalidate the patents-in-suit. In so doing, however, he appears to have been at least somewhat critical of the approach. First, he stated, “Describing this as a two-step test may overstate the number of steps involved.” After a brief explanation of the test, he observed, “So, the two-step test may be more like a one step test evocative of Justice Stewart’s most famous phrase. See Jacobellis v. State of Ohio, 378 U.S. 184, 197 (1964) (Steward, J. concurring) (‘I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it . . . .’). Judge Wu concluded, “Thus, so far, the two-part test for identifying an abstract idea appears to be of limited utility, while comparisons to previously adjudicated patents—or more precisely, to past cases’ characterizations of those patents—have done the heavy lifting. It remains true that ‘[t]he life of the law has not been logic: it has been experience.’ Oliver Wendell Holmes, Jr., The Common Law 1 (1881).” (Citations omitted).

Judge Wu further questioned whether the cases on which the exceptions are based can even be reconciled with one another. In one place, he appears to share a concern of one of the amicus briefs from Alice: “Scholars have argued that ‘the Mayo decision has revived the Flook approach, although without displacing Diehr or explaining how the two apparently contradictory decisions can be reconciled.’” In another place, he observed, “Indeed, in the USPTO’s view, Alice’s embrace of the Mayo framework for abstract idea cases was such a significant change or clarification that it has withdrawn issued notices of allowance . . . .”

Even though Judge Wu had little difficulty invalidating the patents before him, he warned that “we must be wary of facile arguments that a patent preempts all applications of an idea. It may often be easier for an infringer to argue that a patent fails § 101 than to figure out a different way to implement an idea . . . . Patents should not be casually discarded as failing § 101 just because the infringer would prefer to avoid the work required to develop non-infringing uses of the abstract idea.”

The Eclipse IP case can therefore be seen as a cry out to Congress to address this matter, as well as an explanation that the judicially created exceptions to § 101 are merely “statutory stare decisis” rather than constitutionally mandated limitations. Constitutional issues are frequently raised as defenses in IP cases. The classic example is the First Amendment affirmative defense to copyright infringement that frequently appears, but numerous other examples arise. For instance, just this week, a district court dismissed a declaratory judgment action brought by a patent owner, based on its First Amendment rights, regarding the Federal Trade Commission’s investigations into its enforcement tactics. MPHJ Technology Investments, LLC v. Federal Trade Commission, Case No. W-14-CV-011 (W.D. TX September 16, 2014).

Particularly in view of the protections provided by §§ 102, 103 and 112, those arguing that the Constitution mandates judicial narrowing of § 101 may have a difficult time. That issue may not be relevant at all if Congress chooses to endorse the limitations that have developed through Supreme Court case law. If, however, Congress chooses instead to state that such limitations were never in fact intended to be read into § 101 (for instance because the § 101 language was intended to be permissive rather than limiting), whether the current judicial limitations are statutory stare decisis or constitutional requirements will arise as a foundational issue.

*The perspectives expressed in the Bilski Blog, as well as in various sources cited therein from time to time, are those of the respective authors and do not necessarily represent the views of Fenwick & West LLP or its clients.