Tech, Retail Industries Say No To Patent Eligibility Reforms

A coalition of tech companies, retailers and tech activist groups lined up on Monday in opposition to the latest legislative effort to limit patent invalidation in the courts, warning that unseating legal precedents over eligibility would lead to a coming “wave of crippling litigation.”

Called the Patent Eligibility Restoration Act of 2023, the law would create new boundaries for when a patent can be invalidated under Section 101 of the Patent Act that would wipe away a decade of judicial decisions on eligibility that attorneys often say are unpredictable. The industry groups, joined also by more activist-bent advocacy groups like the Electronic Frontier Foundation and the center-right think tank the R Street Institute, painted a grim picture of a world with more patent rights.

“PERA would turn the U.S. patent system upside down, severing patent rights from their historic mooring to improvements in technology. PERA would lead to a wave of crippling litigation,” they claimed Monday.

Representatives for U.S. Sens. Thom Tillis, R-N.C., and Chris Coons, D-Del., ranking member and chair, respectively, of the intellectual property subcommittee who are backing the bill, did not immediately comment on the letter Monday, though Will Baskin-Gerwitz, a Coons spokesman noted that “it’s technically [Tillis’] bill.” In a later email, Baskin-Gerwitz called the proposed patent reforms the “best and only path forward” after Supreme Court rulings have “narrowed the types of inventions eligible for U.S. patents,” including some that are “eligible for patent protection in Europe and China.”

Through a spokesman on Wednesday, Tillis told Law360 that he welcomes “those who have concerns to come to the table with legitimate solutions to their concerns. However, mischaracterizing the language of the bill and conflating patent eligibility and patentability sadly only furthers to muddy that which is already unclear.”

The letter largely didn’t cite language in the bill itself, but instead pointed to testimony from a hearing in January in front of the subcommittee, where “a leading supporter of PERA testified that the bill would make patentable, for example, any invention that requires storing large amounts of data or transmitting information at a distance.”

David Jones, executive director of one of the industry groups behind the letter called the High Tech Inventors Alliance, told Law360 Monday that “we were referring to … [David] Kappos,” a former U.S. Patent and Trademark Office director who is now at Cravath Swaine & Moore LLP.

Most of the eight witnesses at the two-hour hearing in January had spoken in favor of the legislation, including Kappos and Andrei Iancu, another former USPTO director who is now a partner at Sullivan & Cromwell LLP.

According to this letter, Kappos told lawmakers that “the bill would make patentable, for example, any invention that requires storing large amounts of data or transmitting information at a distance” because it would unseat the U.S. Supreme Court’s landmark 2014 Alice decision, which dictates that patent laws can’t be used to cover certain kinds of “abstract” ideas. At the hearing, Kappos had criticized the “vagueness and randomness” of how the Alice ruling is read by the courts.

According to his own testimony at January’s hearing, Jones is concerned about a section of the bill that would provide that any novel process that is “substantially economic, financial, business, social, cultural, or artistic” in nature can be granted a patent if “the process cannot practically be performed without the use of a machine or manufacture.”

The groups argued in Monday’s letter that the bill would overrule critical high court decisions dating as far back as 1853 that dictate a patent can’t “simply claim a result or objective.”

“We think this law would allow people to get the worst patents again,” said Joe Mullin, an activist who works for the EFF, which he said normally doesn’t see itself allied with tech giants like Google and Meta. But the threat of more patent litigation made quick bedfellows in the tech sector.

“The average patent lawsuit is coming from a company you and I could not identify without deep research,” he said Monday.