Clear Congressional standards are vital to investment, joint development, and disclosure

Narrowing eligibility standards for inventions undermines the patent system's ability to foster collaboration and discourages public disclosure of inventions. Congress should override the judicially created requirements and take steps to ensure the test for patent eligibility is more clear and predictable. Without the changes made by the draft bill, the following problems created by the current confusion in the law of eligibility will continue.

1. The ability to protect inventions is reduced. As recognized by President Lincoln, who was an inventor, the patent system adds "the fuel of interest to the fire of genius." n9 When the government grants patents to inventors, it gives them the right to exclude others from practicing the patented inventions. By enabling inventors to exclude others from practicing their inventions, and allowing inventors to generate a return on their investment of sweat and treasure, the patent system incentivizes creativity and the generation of new inventions.

Patent protection facilitates attracting investment capital for R&D in all fields, including computer implemented inventions. Investors naturally want to see a return on their investment. In today's economy, where the main value created often takes the form of intellectual property (which very often regards software), companies need to show that the intellectual property they have created through R&D expenditures can be adequately protected. If not, other entities will be able to take advantage of their innovations without compensation to the innovator, in which case investors will direct less capital into this field. This is of particular importance in emerging technologies such as quantum computing, artificial intelligence, blockchain, and the internet of things.

As discussed above, the Supreme Court's case law has created uncertainty in the courts that has narrowed the ability to obtain and enforce patents, especially in cutting edge areas of innovation. In some cases, patent eligibility seems to swallow up all of patent law. In ChargePoint v. SemaConnect, n10 for example, the issue was the eligibility of an invention relating to a distributed network of charging stations for electronic vehicles. The claims recited various hardware elements (such as electric supplies, electric vehicles, transceivers, servers, wide area networks, etc.). After evaluating the conventionality of claim elements, parsing the claims to their gist, and searching for inventive concepts, the Federal Circuit found these network claims ineligible. The patent owner was forced to spend time and money litigating (unsuccessfully) the eligibility of claims that most observers considered to be statutory subject matter. n11

Moreover, we are concerned about the ripple effect throughout the broader economy, as artificial intelligence and other advanced software innovations are increasingly infused across all industries, such as automotive, healthcare, and manufacturing. In his 2011 essay "Why Software is Eating the World," technology entrepreneur Marc Andreessen explained how software enabled innovations had become the main value driver throughout our economy. n12 That is true more than ever today, and software is expected to play an even bigger role in the future. In other words, it is not just the traditional software industry or the "technology sector" that benefits from computer-related inventions. Rather, innovations in almost every economic sector generally involve and are embodied in computer technology (e.g., software). Even simple objects, such as a pencil, may be first specified using computer aided design tools or manufactured using the software tools underlying 3D printing.

This is why we believe it is vital for Congress to improve certainty in the law and to restore balance around the role of patent eligibility. IBM supported many of the reforms that the patent system has seen over the last decade, but the current lack of clarity undercuts the potential of the information technology industry.

2. The dissemination of knowledge is reduced. One of the important features of the patent system is that it requires inventors to disclose to the world their invention and how to make and use it. As it is uncertain whether a new invention constitutes eligible subject matter under the current vague test, inventors are more likely to keep an invention secret instead of filing a patent application, thus depriving the public from learning about the invention. Since Congress passed the Defend Trade Secrets Act of 2016, creating a general Federal law of trade secrets, there has been renewed focus on using a trade secret approach to protect a company's innovations. While trade secret law has its place in an overall strategy, the lack of predictability in patent eligibility, especially for many computer implemented inventions, will steer some innovators away from patent filing and toward keeping their inventions from the public.

In addition, patent protection facilitates collaboration because partners typically rely on pre-existing patents to prevent the other party to a collaboration from taking the innovations disclosed. As today's research initiatives are highly technical and complex and the costs too high for most organizations to go it alone, companies routinely enter into joint development agreements (JDAs) with research partners. Through these JDAs, partners typically cross-license each other's patents, but only for the purposes of that research effort. If there are background patents on the underlying technology, the partners would likely need to grant a broader cross-license in order to commercialize the resulting technology. If it is difficult or impossible to enforce patents on a particular subject matter, such as computer implemented inventions, there is increased risk that disclosure of innovations to a research partner may result in that partner commercializing those innovations without just compensation. This holds back collaboration and retards the progress of technology.

3. Patent protection for cutting-edge computer related inventions is diminished. This nation's founders recognized that patents promote technological progress, n13 and for more than two centuries a strong U.S. patent system has been a central part of the U.S. economic engine that has led the world in the creation of new technology. While there is always room for improvements in any system, no one can credibly suggest that we would be better off without patents. But the judicially created eligibility hurdles have made it more difficult to obtain and enforce patents for worthy inventions. Although a central feature of the patent system has historically been that it is technology neutral, the current law of statutory subject matter favors some technologies over others. The incentives for creating any software-implemented innovation should be the same as for any other type of innovation. As then-USPTO Director David Kappos noted, "patent protection is every bit as well-deserved for software-implemented innovation as for the innovations that enabled man to fly, and before that for the innovations that enabled man to light the dark with electricity, and before that for the innovations that enabled the industrial revolution." n14 There is no reason that the patent system should disfavor software innovation.

The judicially imposed patent eligibility requirements prejudice computer related inventions because abstraction is one of the fundamental principles of software engineering. As a professor of computer science explained, "computing is all about constructing, manipulating, and reasoning about abstractions." n15 Abstract concepts and mathematical principles are important to all fields of science and engineering, but they are more directly at the root of computer related innovation. For this reason, the current judicially created eligibility test has a more direct impact on computer related inventions than on other types of technologies except, perhaps, for the life sciences. Thus, the majority of the subject matter eligibility cases over the past few years have involved inventions that are implemented on a computer. (But note that, as discussed above, software is the medium of innovation for almost every industry today).

Like many other companies, IBM is dedicated to innovating in the field of information technology and we rely on the patent system to protect past inventions and help incentivize future innovation. Advances in information technology have literally changed the world during our lifetimes, but there are still many great frontiers on the horizon and we should not withdraw benefits of the patent system from this space by imposing vague and overly restrictive subject matter eligibility requirements. The patent system should not abandon the technology neutral principles that have fueled the U.S. economy for more than two centuries - any bias against computer implemented innovations should be eliminated.

E. Congress Has a Vital Role to Play

Congress, not the courts, should set eligibility requirements. Defining the metes and bounds of the patent system is fundamental to our country's innovation policies, and major changes to patent eligibility like those created by the courts are the province of Congress to make - or correct - by hearing from stakeholders and weighing the effect on our economy. As the Supreme Court put it in Microsoft v. i4i Ltd., the courts are "in no position to judge the comparative force of these policy arguments." n16 Further, "[i]ndividual cases, whether heard by [the Federal Circuit] or the Supreme Court, are imperfect vehicles for enunciating broad principles because they are limited to the facts presented." n17

This is borne out by the past forty years of failed attempts by the courts to devise a test for patent eligibility of computer implemented inventions. n18 The Federal Circuit recently noted in Amdocs v. Openet that there is no "single, universal definition of 'abstract idea.'" n19 As the Amdocs panel acknowledged, the failure to develop a definition that is at least usable or workable "is not for want of trying; to the extent the efforts so far have been unsuccessful it is because they often end up using alternative but equally abstract terms or are overly narrow." n20 Congress should act rather than wait for the courts to try to sort this out.

The USPTO has improved the application of the eligibility test during patent examination, particularly by issuing the 2019 revised guidance, but the USPTO is not empowered to define the law of patent eligibility. It is still an open question as to how the evolving and inconsistent analysis among the courts will comport with the USPTO's 2019 revised guidance, but the Federal Circuit recently made clear that it does not feel bound by the USPTO positions on this issue. n21 If courts view the eligibility analysis differently from the USPTO, the revised guidance could unfortunately lead not to more certain patent rights, but rather to a great expenditure of applicant and agency resources resulting in patents that the courts consider ineligible. This has happened before. In 1996, the USPTO issued guidance under which a claim was considered to represent patentable subject matter if "it is limited by the language in the claim to a practical application in the technological arts," which has some similarity with the 2019 revised guidelines. n22 After CLS Bank v. Alice and subsequent court decisions, thousands of patents that were examined under the USPTO's 1996 guidance were held or assumed to be ineligible under section 101. While IBM welcomed the USPTO's 2019 revised guidance as a better tool for patent examiners, the guidance still contains ambiguity. For example, the "practical application" test at the heart of the 2019 revised guidance left unclear how applications transition from being "impractical" to being "practical."

Congress has an important role to play to restore predictability to the law of patent eligibility. The draft bill text is a great advance toward achieving those objectives.