Navigating Uncharted Waters

What do a hedge fund manager, used car dealer, cancer researcher and internet gaming site operator have in common? This may sound like the start of a bad lawyer joke, but the punch line is no laughing matter for those who are impacted by the ongoing debate within the U.S. Supreme Court and the U.S. Court of Appeals for the Federal Circuit over what constitutes patent-eligible subject matter. Innovators in a wide range of industries are living with uncertainty as to whether the fruits of their labor will be deemed appropriate for the grant of a U.S. patent, and whether countless issued patents—some of which may cover key products or services, or be the subject of important license arrangements—are susceptible to challenge under §101 of the Patent Act. While there are still more questions than answers, and few bright line rules by which parties may plan a course of action, a number of helpful guideposts exist that parties may utilize to navigate the uncharted waters of §101 in a post-Prometheus world.

In Bilski v. Kappos, 130 S.Ct. 3218 (2010), the Supreme Court grappled with the question of patent eligibility under 35 U.S.C. §101 for the first time in decades. While many hoped that the court would set forth a definitive test for whether and when process claims meet the threshold requirements for patentability under §101, the court essentially did the opposite: It held that the Federal Circuit’s “machine or transformation” test (MOT) was not the exclusive test for identifying patentable subject matter. What the court did make clear in Bilski is that a trio of venerable Supreme Court cases should serve as “guidepost precedents.” Numerous post-Bilski decisions by varying panels of the Federal Circuit reveal that these guideposts may not mark the trail as clearly as the Supreme Court had hoped. Thus, all eyes were again on the Supreme Court when it decided Mayo Collaborative Services v. Prometheus Labs, 132 S.Ct. 1289 (2012), just weeks ago. Prometheus is by no means a panacea for the uncertainty surrounding patentable subject matter. However, as discussed below, Prometheus sheds enough new light on the issues that pundits may start laying odds on where the §101 debate is headed.

‘Guidepost Precedents’