Does the Presumption of Validity Apply to Section 101 Subject-Matter-Eligibility Questions?

By Dennis Crouch

One issue put before the en banc Federal Circuit in CLS Bank v. Alice is whether the presumption of validity applies to subject matter eligibility questions. The statute, 35 U.S.C. § 282 indicates that "A patent shall be presumed valid" and in Microsoft Corp. v. i4i Ltd. Partnership, 564 U.S. (2011), the Supreme Court confirmed that presumption can only be overcome with clear and convincing evidence of invalidity. However, in cases like Mayo and Bilski the Supreme Court has not provided even one suggestion supporting the notion that subject matter eligibility challenges are treated with such a presumption.

There are a few reasons to think that the strong presumption of validity does not apply to subject matter eligibility questions.

Subject matter eligibility is a question of law and is normally based on very few factual determinations. It is that setup that allowed the district court to rule on CLS Bank's Section 101 so early in the present case. As Justice Breyer wrote in his i4i concurring opinion, "evidentiary standards of proof apply to questions of fact and not to questions of law." Under Justice Breyer's construct, any facts that serve as a basis for an eligibility challenge would need to be justified with clear and convincing evidence, but with questions of law we demand that the judge apply the correct legal standard and do away with any other evidentiary burden. The particular facts in this case further weigh against the a strong presumption of validity in this case because the patent prosecution history file show that the PTO applied a less rigorous patent eligibility test than that required by Bilski and Mayo.

In its reply brief, CLS Bank picks up on Professor Hricik's 2012 essay where he questioned whether courts are correct in their assumption that a patent issued on non-patentable subject matter is invalid and my follow-on essay questioning whether a third party can challenge subject matter eligibility in the new Post-Grant Review procedure. Both essays looked at the defenses identified by 35 U.S.C. § 282 and argued that Section 101 may well fall outside the scope of those statutory defenses. At first blush, our arguments appear to favor the patentee by saying that an issued patent cannot be challenged on Section 101 grounds. However, CLS Bank provides an interesting twist that begins with the understanding that we know from Mayo that issued patents can definitely be challenged under Section 101. In its brief, CLS Bank reconciles these competing factors with the suggestion that the 101 challenge is an eligibility challenge rather than a validity challenge.

CLS Bank writes:

More generally, the presumption of validity does not apply to patent eligibility challenges. The Supreme Court did not even mention the presumption in Mayo, Bilski, Diehr, Flook, or Benson. That makes sense because what Congress named the "[p]resumption of validity" applies only to the statutory bases for invalidating a patent. As the Supreme Court has explained, Section 101 is a "threshold test." Bilski. It defines subject-matter eligibility for patenting and is judicially enforceable before any bases for invalidity are ever reached. Mayo.

The Supreme Court's consistent practice finds support in the text of the Patent Act. The Act applies the presumption explicitly to Section 102, 103, 112, and 251, and "[a]ny other fact or act made a defense by [the Act]." 35 U.S.C. § 282. Section 101 is conspicuously missing. Nor is Section 101 a "fact or act made a defense by [the Act]," because its drafting reflects that it is an eligibility "threshold." See Bilski.

This second argument is perhaps too clever by half – especially when you read the penultimate sentence of Mayo where the court writes that "[t]he claims are consequently invalid." In this most recent pronouncement, the Supreme Court appears to believe that the eligibility question is indeed a validity question. Assuming Mayo forecloses the eligibility-not-validity argument, CLS Bank is left in the uncomfortable position of simply arguing that eligibility questions do not qualify as a proper defense.

30 thoughts on “Does the Presumption of Validity Apply to Section 101 Subject-Matter-Eligibility Questions?

  1. The answer to the title of this post is yes. “A patent shall be presumed valid.” No part of this is ambiguous and only academics, judges and lawyers, seeking to rewrite the law into something that it is not, because they are unwilling to obtain a change in the legislature, would use the complicated reasoning in this post to suggest that the statute does not mean what it says. If we are unwilling to use textualism as a basis to resolve even a question as simple as this one, the entire utility of a legislature and a code-based society is frustrated.

    The absence of commentary by the Supreme Court is meaningless and unimportant. Either they assumed the answer was yes, or the parties did, and did not raise or brief the issue.

  2. Thanks much for the kind words Dennis. I enjoyed writing that article, as RMail is taking a “heretical” position. I’ve been a “heretic” my entire life when it comes to “dogma,” be it legal or otherwise. I’ve also coined what I call “The 4 C’s of Paradigms”: they must be Created, they must be Challenged, and then they must be Confirmed (if still valid), or else they must be changed (if no longer valid).

  3. Anon,

    RMail is only pending case at this point, so I’ve got no cite, as my IPWatchdog article discusses a partial motion for summary judgment by RMail to remove the 101 defense from this case. The attorney for RMail, Robert Greenspoon, filed an amicus brief in support of this argument in this CLS Bank International case which can be found at: link to ipwatchdog.com, and also posted an article (Murky Morass: Is It Time for a Patent Eligibility Paradigm Shift) on IPWatchdog which may be found at: link to ipwatchdog.com . Hope this is helpful.

  4. There is absolutely no Chevron deference because the PTO has no power to make rules about patent-eligibility or patentability.

  5. LOL – yes, because your use of “poetry” was meant to be a lesson in the applicant being their own lexicographer…

    Did you rip your shoulder apart with that reach? Or was that another teaching moment in dissembling?

  6. Not having seen the claims this is speculation, but the characterization as “stabilization algorithms” suggests something beyond merely a software algorithm. Moreover, the PTO is not infallible–a fact that employs lots of patent attorneys and litigators.

  7. You need any claim construction for a claimed poem….?

    You need to understand what the term means, in light of the claims and the specification. Applicants can be their own lexicographers.

    In any event, it was just a very simple example to make it clear what sort of claims I was referring to when I wrote “in trivial cases… a bare minimum of claim construction and no consideration of the prior art” is necessary.

    Your comment is yet another example of your sociopathological need to find ANY excuse to argue sn insult others.

    This is why I advise you to see a shrink or, if you refuse to do that, just GFY.

  8. Excellent analysis in my opinion Dennis. It seems to me as if the *challengers* should figure out which way is the best to go, and then go there. Given the several new ways to potentially invalidate patents, if it were me I would try to cut the whole issue off at the pass, by trying to get the whole concept declared patently ineligible for consideration.

    As anon hints at, perhaps the wrong questions are being asked for who knows what reasons. Probably only the Shadow knows, but I haven’t seen him around here lately.

    Best regards,
    Stan~

  9. LOL – still smarting from my showing that you were wrong as to what the dead letter comment referred to?

    Hint: don’t pick the scabs.

    And maybe you can tell me why the SC is so very careful to find some implicit wording in 101 as it’s base of authority…? (careful here, this might involve some higher brain functions over the Beavis level you are so used to engaging).

  10. CLS Bank:

    As the Supreme Court has explained, Section 101 is a “threshold test.” Bilski. It defines subject-matter eligibility for patenting and is judicially enforceable before any bases for invalidity are ever reached. Mayo.

    I like CLS’s wording here: it certainly isn’t the case that 101 issues can only be considered prior to an analysis of validity. It’s entirely possible for a 101 issue to become apparent only after the relationship of the claimed invention to the prior art is understood. But once the claim is finally deemed ineligible, questions of novelty and non-obviousness under the remaining patent statutes are moot.

    At the same time, it’s possible in trivial cases to determine ineligibility with a bare minimum of claim construction and no consideration of the prior art whatsoever (e.g., “A new poem, wherein said poem comprises the word glingalingabingbong”; “A number, said number expressed in numerals 64.9989894848912221″; etc.).

    As for whether a failure to satisfy 101 is a “defense” to a claim of patent infringement, it’s either a way to invalidate the patent, it’s a way to render the patent unenforceable, and/or it’s a way to show that the alleged patentee lacks standing to bring the suit. The idea that once the patent issues the eligibility of the claimed subject matter becomes an “unchallengeable” fact is absurd on its face … Is that really what is being suggested by some professors and litigants? I guess it’s if legal to throw a basketball with one arm between your legs the length of the court if your other arm is broken and you are flying out of bounds … Good luck?

  11. Just look at Prometheus – is wasn’t the law itself that “just could not let become a dead letter,” but rather, it was the Court’s own finger-in-the-patent-pie judicial exceptions that “just could not let become a dead letter.”

    Under our Constitutional framework, I’m not aware of any difference between “the law itself” and the Supreme Court’s interpretation of that law (in this case, the law being 35 USC 101).

    Maybe there is a fascinating District Court case suggesting the opposite.

  12. LOL – you think?

    Just look at Prometheus – is wasn’t the law itself that “just could not let become a dead letter,” but rather, it was the Court’s own finger-in-the-patent-pie judicial exceptions that “just could not let become a dead letter.”

    The Court was basically asking you to read between the fingers (with the thumb and pinkie tucked).

  13. Perhaps someone should bring a case before the Supreme Court to determine if the Supreme Court has gone beyond its constitutional authority. I have a feeling that the Supreme Court will hold that the Supreme Court is operating within constitutional bounds.

  14. As Justice Breyer wrote in his i4i concurring opinion, “evidentiary standards of proof apply to questions of fact and not to questions of law.”

    I remember spending about a month trying to explain this to … Ned, maybe?

    You can’t be more convinced or less convinced on a question of law. A question of law has an answer. Judges are the best qualified people to answer pure questions of law, and there’s no reason they should abdicate their responsibility in favor of an administrative agency that specializes in the knowledge of technical facts.

  15. does it apply to a single non-attorney patent examiner not raising a 101 objection in a patent application?

    Interesting way to phrase the basis of the doctrine of Clear and Convincing burden.

    You make it sound as if the recent i4i case was decided in the opposite way that it was actually decided.

    Very pretty spin.

  16. No doubt the Chevron deference logically applies to PTO interpretation of the patent statute in PTO rulemaking, but does it apply to a single non-attorney patent examiner not raising a 101 objection in a patent application?

  17. Semi-good point – I do not think a patent application cease to be a patent application based on whether or not it is rejected.

    But the position is not that the paper is not a patent application, but that it is not a patent (conversely, yes, it does take agency action in the first place to make that determination, and yes, once made, any review of that determination is a question of law, and yes, that law must trace its authority somewhere).

    This reminds me of the whole “inchoate rights” discussion and the very large deference to setting the rules of the race given by the Supreme Court to the Congress (see generally Golan v. Holder). Every patent application has some inchoate right. Whether that turns into a choate right is determined under the statutory patent law. As I noted, even the exceptions drafted by the Supreme Court find their authority in the implicit words of the statute. There is no patent law beyond the statutory patent law.

    Does anyone think that the Supreme Court will let go? They won’t even let their artifices of judicial exceptions become dead letters.

    On a separate line of thought, the idea of revoking a patent on less than a Clear and Convincing basis does have legal footing. Look to the patent challenge laws wherein the C&C basis is removed and a preponderance standard is reinitiated.

  18. Dennis,

    The opposite side of this coin: The case of RMail v. Amazon.com where the patentee argues that 35 USC 101 cannot be raised at all as a defense in patent litigation, i.e., the presumption of validity under 35 USC 101 is absolute.

  19. p]resumption of validity” applies only to the statutory bases for invalidating a patent.

    You are very limited in actions concerning patent matters because the Constituion vests authority for making law in Congress, thus any action faces the Horns of either belonging to a statutory basis or being ultra vires.

    This is delicately reflected in the judicial exceptions to 101, being, as noted, the Justices provide as the very foundation of their authority the (albeit implicit) statutory writings of 101 – last I checked, 101 is a part of the statute.

    So in essence, the bank must face a clear and convincing hurdle or must lose the ability to even question the patent under 101.

    Since we have seen the Court refuse to take its fingers out of the patent pie, you can be guaranteed that the statutory basis will be (implicitly) found yet again. After all, Congress could not have meant to keep the Court from meddling in patent law, could it? That would take a flash of genius.

  20. The funny thing about patent law is that it is tied to physical reality of the inventions, so it tends to push back when people try to bend it to their desire to destroy it.

    Funny…I think in decisions like Benson we see the poor quality of character of some people.

  21. Well, the other ironic part is that they are saying it is de nova with no deference and yet they are then saying that the administrative agency’s criteria should be used despite the criteria changing for no given reason.

  22. Anyone else see the irony in the statement:

    The particular facts in this case further weigh against the a strong presumption of validity in this case because …

    Facts…
    Weigh…

    Further,

    patent prosecution history file show that the PTO applied a less rigorous patent eligibility test than that required by Bilski and Mayo.

    Wouldn’t such reasoning open all patents to re-judging post major decisions? KSR immediately comes to mind as has been noted many times on these pages that the patentability standard was radically changed with that decision, and yet EVERY legal intelligentsia has denied that any type of presumption change or other legal effect can inur to pre-KSR patents due to the Supreme Court decision (notwithstanding the dicta in some cases about ‘suspect’ patents – as that argument was recently put to bed in the i4i case).

  23. What is the test for 101? There is no agreed upon test. Certainly some of the tests require factual findings similar to 103 since whether something is new can be part of the test. Therefore, 101 should not be a purely legal issue any more than 103.

    Also, what about Chevron deference. Hasn’t the PTO made the determination that subject matter is eligible under 101? Is there no deference to an administrative agency –in general–if the complaint alleges that the administrative agency has no jurisdiction? But, there is a difference, I think, in that the patent act says that the PTO is supposed to examine patent applications. So, the PTO is doing that. I think to get out of Chevron deference you’d have to argue that the paper wasn’t a patent application.

  24. Maybe, just maybe, this is yet another indication that the Court(s) step beyond their constitutional power basis.

    Implicitly, perhaps.

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