By Dennis Crouch
On his blog, USPTO Director David Kappos has posted a response to my recent essay titled Can a Third Party Challenge Section 101 Subject Matter Eligibility in the USPTO’s new Post-Grant Review Procedure? My essay was an extension of Prof. Hricik’s post on a similar topic but with a litigation focus. In the response, Kappos provides his conclusion (and thus that of the USPTO) that the new Patent Trial and Appeal Board (PTAB) has the power and duty to consider patentable subject matter challenges brought under 35 U.S.C. § 101 in post-grant review proceedings or covered business method review proceedings.
The problem with the statute is that the scope of these post-grant proceedings is defined by reference to another provision – 35 U.S.C. § 282(b)(2) and (3). Those provisions in §282 in turn reference “Part II” of the 1952 Patent Act that roughly includes 35 U.S.C. §§ 100 – 199 (skipping gaps). In addition, challenges can only be brought if “identified in part II as a condition for patentability” or as a “requirement of section 112, except failure to disclose the best mode.” Everyone is in agreement that the anticipation and obviousness elements of Sections 102 and 103(a) count as conditions for patentability. The language of the statute suggests that the requirements of Section 112 are not conditions for patentability. Most of us would probably think that Section 113’s requirement of drawings where necessary is also not a condition for patentability but instead only a requirement.
Now, the difference between a condition and a requirement is that conditions for patentability can legally serve as invalidity defenses in patent litigation and, under the AIA can also serve as the basis of a post-grant review. On the other hand, the USPTO can still refuse to issue a patent based upon failure to meet a mere requirement. But, once the patent issues such a failure cannot serve as invalidity defenses.
The big question that we raised (and that Dir. Kappos has responded to) is what to do with the traditional elements of 35 U.S.C. § 101. For its part, the USPTO argues that all requirements of Section 101 are conditions for patentability and thus are proper subject of post-grant review proceedings. Director Kappos writes:
As we described in our final rules implementing post-grant review and covered business method review in the Federal Register, in our view the “grounds available for post-grant review include 35 U.S.C. 101 and 112, with the exception of compliance with the best mode requirement.” 77 Fed. Reg. 48,680, 48,684 (Aug. 14, 2012). This interpretation is consistent with both the relevant case law and the legislative history.
Both the Supreme Court and the Federal Circuit have concluded that § 101 is a condition for patentability. In Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 12 (1966), the Supreme Court stated that the 1952 Patent Act “sets out the conditions of patentability in three sections,” citing 35 U.S.C. §§ 101, 102, and 103. The Supreme Court has also addressed invalidity under § 101 when it was raised as a defense to an infringement claim under § 282. See Mayo Collab. Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1305 (2012).
If that were not clear enough, the Federal Circuit expressly rejected the argument – raised by the dissenting judge in the case – that § 101 is not a “condition for patentability” under § 282, stating that “the defenses provided in the statute, § 282, include not only the conditions of patentability in §§ 102 and 103, but also those in § 101.” Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1330 n.3 (Fed. Cir. 2012) (internal quotation marks omitted) (citing Aristocrat Techs. Austl. PTY Ltd. v. Int’l Game Tech., 543 F.3d 657, 661 (Fed. Cir. 2008)).
The Federal Circuit in Dealertrack also made clear that the use of the term “Conditions for patentability” in the titles of §§ 102 and 103, but not § 101, did not change the result, relying on the Supreme Court’s pronouncement in Pennsylvania Department of Corrections v. Yeskey, 524 U.S. 206, 212 (1998) (quoting Trainmen v. Baltimore & Ohio R.R. Co., 331 U.S. 519, 528-529 (1947)), that a statute’s title “is of use only when it sheds light on some ambiguous word or phrase” in the statute and that it “cannot limit the plain meaning of the text.” Id. (quoting Trainmen v. Baltimore & Ohio R.R. Co., 331 U.S. 519, 528-529 (1947)).
The legislative history of the AIA also makes clear that Congress intended the PTAB to consider challenges brought under § 101 in post-grant reviews. For example, a key House Committee Report states that “the post-grant review proceeding permits a challenge on any ground related to invalidity under section 282.” H.R. Rep. No.112-98, at 47 (2011). On the Senate side, Senator Kyl also included “section 101 invention issues” among those “that can be raised in post-grant review.” 157 Cong. Rec. S1375 (daily ed. Mar. 8, 2011).
So, the courts and Congress have indicated quite clearly, in our view, that the PTAB should consider patentability challenges brought under § 101 in post-grant and covered business method reviews. Unless the courts or Congress tell us otherwise, we will do so.
Now, for reasons discussed in prior posts, I disagree with Director Kappos that the answer is so clear. Basically, the precedent cited is dicta and not controlling. However, I do agree with Director Kappos’ ultimate conclusion that Section 101 issues are (and will continue to be) be treated as conditions for patentability. I suspect his viewpoint will be vindicated within a couple of years as the issue reaches the Federal Circuit