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.