January 3, 2024
Patent-Eligible Subject Matter Reform: An Overview
The U.S. patent system is designed to encourage
• a method of mitigating settlement risk in financial
innovation. The types of inventions that can be patented,
transactions using a computer (Alice Corp. Pty. v. CLS
however, may affect the patent system’s ability to
Bank, 2014).
incentivize innovation in certain fields, especially in
As a result of these cases, fewer inventions are patentable,
emerging technology sectors like artificial intelligence (AI)
particularly in areas such as computer software, business
and biotechnology. This In Focus summarizes and analyzes
methods, and biotechnology.
recent judicial, administrative, and legislative developments
related to the standards for determining patent-eligible
The Alice/Mayo Framework
subject matter.
The Supreme Court decisions referenced above established
Section 101 of the Patent Act
what has come to be known as the two-step Alice/Mayo test
for patentable subject matter. The first step of the
Patent-eligible subject matter generally refers to the types
Alice/Mayo test addresses whether the patent claims are
of inventions that may be patented. Section 101 of the
“directed to” an ineligible concept (i.e., a law of nature, a
Patent Act (35 U.S.C. §101) sets out four categories of
natural phenomenon, or an abstract idea). To be directed to
patentable inventions: “any new and useful [1] process, [2]
an ineligible concept, the focus of the claims must be a
machine, [3] manufacture, or [4] composition of matter.”
patent-ineligible concept, as opposed to a technological
Through Section 101, Congress sought to ensure the
process. If the patent claims are not directed to an ineligible
patentability of “anything under the sun made by man” that
concept, then the claims are patent-eligible.
meets all of the other requirements for patentability found
in the Patent Act, such as novelty, enablement, and
If the claims are directed to an ineligible concept, then the
nonobviousness.
invention is not patentable unless the patent claims have an
inventive concept under the second step of the Alice/Mayo
The statutory definition of patent-eligible subject matter
test. Step two considers the elements of each patent claim,
under Section 101 has remained essentially unchanged for
both individually and as an ordered combination, in
more than two centuries. Nonetheless, the scope of patent-
determining whether they contain additional aspects that
eligible subject matter has waxed and waned over time,
“transform the nature of the claim” into a patent-eligible
depending on the trends in judicial decisions.
application of an ineligible concept. Claim limitations that
Recent Supreme Court Jurisprudence on are conventional, routine and well understood, such as
Patent-Eligible Subject Matter
implementing an abstract idea on a generic computer,
cannot supply an inventive concept.
The Supreme Court has long held that Section 101 contains
implicit exceptions. Specifically, the Court’s 19th- and 20th-
Stakeholder Views on Patent-Eligible
century cases established that “laws of nature, natural
Subject Matter Jurisprudence
phenomena, and abstract ideas,” when claimed as such, are
Stakeholder views vary on whether the Alice/Mayo
not patentable. These three types of nonpatentable
framework has positively or negatively affected the patent
discoveries are sometimes called the judicially developed
system’s ability to encourage investment in technology and
exceptions to patent-eligible subject matter.
encourage innovation. In June 2022, the U.S. Patent and
Trademark Office (USPTO) submitted a report to Congress
Decisions of the U.S. Court of Appeals for the Federal
that reviewed public comments on patent subject matter
Circuit in the 1990s had construed the judicially developed
eligibility from stakeholders, including legal associations,
exceptions narrowly, such that Section 101 rarely presented
industry organizations, advocacy groups, nonprofit entities,
a barrier to patentability. Beginning in 2010, the Supreme
businesses, law firms, practitioners, academics, and
Court issued a series of decisions that narrowed patent-
inventors. The variability in stakeholder views underscores
eligible subject matter by broadening the scope of the
an important aspect of patent and innovation policy:
judicially developed exceptions. In this series of decisions,
changes to patent policy often affect innovation differently
the Supreme Court held that patents on the following
depending on many factors, including, among other things,
claimed inventions were all ineligible under Section 101:
the economic sector, industry, and firm size in question.
• a business method for hedging price-fluctuation risk
(Bilski v. Kappos, 2010);
Several groups reported that recent interpretations of patent
•
subject matter eligibility standards are having positive
a method for calibrating the dosage of a particular drug
effects on innovation. For example, civil liberties and
(Mayo Collaborative Servs. v. Prometheus Labs., 2012);
nonprofit organizations generally supported the current
• isolated human DNA segments (Association for
legal exclusions on patentability, which they asserted help
Molecular Pathology v. Myriad Genetics, 2013); and
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Patent-Eligible Subject Matter Reform: An Overview
foster invention and innovation by preventing monopolies
Introduced Legislation on Patent-Eligible
on basic research tools and concepts.
Subject Matter in the 117th and 118th
Congresses
Other respondents reported negative effects on innovation
Citing concern over the effects of patent subject matter
as a result of the expansion of ineligible subject matter,
eligibility standards on innovation, some patent law
especially in the life sciences sector. Some of these groups
stakeholders have called for the Supreme Court to revisit its
further warned of potential negative implications for the
patent-eligible subject matter jurisprudence. Since its 2014
United States’ position as a global leader in innovation. For
decision in Alice, the Supreme Court has received dozens of
example, one representative of the biotechnology industry
petitions for certiorari (i.e., requests that the Court hear an
stated that current interpretations of patent subject matter
appeal) on Section 101 issues. In some of these cases, the
eligibility standards had jeopardized the industry’s ability to
Supreme Court sought the views of the Solicitor General,
develop and deliver “precision medicine, pharmaceutical
who urged the Court to hear the cases to provide “much-
treatments, and diagnostics” to patients.
needed clarification” on Alice’s “abstract-idea exception
and the proper application” of the Alice/Mayo framework.
Innovation in emerging technology areas may face unique
The Supreme Court has declined to hear any of these cases.
challenges because of the restricted scope of patent-eligible
subject matter, as well as the variability in how such
In light of the Supreme Court’s apparent reluctance to
standards are interpreted by patent examiners and the
revisit Section 101, some stakeholders have called for
courts. For example, one area of policy concern relates to
Congress to enact legislation on the issue. Two relevant
patent-eligible subject matter standards as they apply to
bills were introduced in the 117th Congress. First, the Patent
innovations in AI. Though the number of patent
Eligibility Restoration Act of 2022 (PERA 2022; S. 4734)
applications pertaining to AI has increased over the past 10
would have abrogated the Alice/Mayo framework and
years, some stakeholders have reported concern that AI
replaced it with a closed list of narrower ineligible
inventions are at risk of patent ineligibility under the
categories. Second, the Restoring America’s Leadership in
current framework because “they may be characterized as
Innovation Act of 2021 (RALIA; H.R. 5874) contained a
methods of organizing human activity, mental processes, or
provision that would have abrogated the Alice/Mayo
mathematical concepts.”
framework and replaced it with a single, narrow statutory
exception for inventions that either exist only in the human
Given the growing importance of AI technologies, USPTO
mind or exist independently of any human activity.
analyzed patent examination data to study the effect of the
Alice/Mayo framework on AI. USPTO’s study evaluated
As of the end of 2023, one bill focusing on patent-eligible
whether the Supreme Court’s 2014 decision in Alice, which
subject matter has been introduced during the 118th
rejected a patent claim on a method of mitigating settlement
Congress: S. 2140, the Patent Eligibility Restoration Act of
risk in financial transactions using a computer, impacted the
2023 (PERA 2023). Like PERA 2022, the introduced
agency’s allowance rates for patent applications containing
version of PERA 2023 would replace the Alice/Mayo
AI. USPTO reported suggestive evidence that Alice
framework with an exclusive statutory list of narrower
impacted AI technologies differentially.
ineligible categories: mathematical formulas, purely mental
processes, purely natural processes, unmodified human
Post-Alice Changes to Patent
genes, and unmodified natural material. PERA 2023 would
Examination Processes by USPTO
also exclude from patentability any “substantially
USPTO responded to concerns about the patentability of
economic, financial, business, social, cultural, or artistic”
AI-related and other inventions in 2019 by issuing new
process, even if it involves a machine or manufacture.
guidance to patent examiners to clarify how to apply the
However, if the process “cannot practically be performed”
Alice/Mayo framework. USPTO later incorporated this
without the machine or manufacture, then it would be
guidance (the “2019 Guidance”) into the Manual of Patent
patent-eligible.
Examining Procedure, which guides patent examiners in
their review of patent applications. The 2019 Guidance was
PERA 2023 also contains provisions on how to read the
generally perceived as lowering Section 101 barriers to
exclusions for unmodified human genes or other
patentability, especially for computer-related inventions.
unmodified natural material. Specifically, PERA 2023
The 2019 Guidance appears to have led to an increase in the
explains that natural material would be considered modified
allowance rate for patent applications containing AI.
(and thus patentable) if it is “isolated, purified, enriched, or
otherwise altered by human activity” or “otherwise
Although the 2019 Guidance changes how USPTO
employed in a useful invention or discovery.” This
examiners review new patent applications, it is not binding
provision would appear to abrogate the Supreme Court’s
on the courts when issued patents are challenged in
Myriad decision to allow patenting of isolated DNA
litigation. The 2019 Guidance itself states that it lacks “the
segments, although unmodified human genes (i.e., genes as
force and effect of law.” Following its June 2022 report to
they exist in the human body) would remain unpatentable.
Congress on patent eligibility, USPTO issued a request for
comments on its 2019 Guidance and other patent subject
Emily G. Blevins, Analyst in Science and Technology
matter eligibility issues. The comment period closed in
Policy
October 2022. The USPTO Director has explained that the
Kevin J. Hickey, Legislative Attorney
office is “evaluating the comments to determine next
IF12563
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Patent-Eligible Subject Matter Reform: An Overview


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