The Patent Eligibility Restoration Act (PERA) of 2024: From Oz to Earth

by Dennis Crouch

As its name suggests, the Patent Eligibility Restoration Act (PERA) is designed to substantially overturn the Supreme Court’s decisions in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012), and Alice Corp. v. CLS Bank International, 573 U.S. 208 (2014). Together those cases created a firestorm of invalid patents and challenges for the patent office and patent holders alike.  The bipartisan proposal was introduced in the Senate (Coons/Tillis) earlier this term and most recently introduced to the US House of Representatives (Kiley/Peters).   Although Alice and Mayo doctrine created substantial confusion, much of that confusion has now died down in the past decade.* The bigger issue is that it is substantially harder to obtain patents and easier to invalidate issued patents — particularly in cases where the invention lies in software or diagnostic methods.  This post examines the proposed PERA and its potential impact — along with providing a bit of data.

* Although the extreme confusion is gone, there is still plenty to go around.  A case in point is the Federal Circuit’s September 3, 2024 decision in BBiTV v. Amazon. In that case, the court showed its linguistic flexibility in distinguishing the claimed user interface (deemed ineligible) from those in Core Wireless and Data Engine (deemed eligible).

Before digging into the legislation, I wanted to provide the chart above that helps frame the issue regarding Section 101 and eligibility.  The chart shows the number of Federal Court decisions that cite to Section 101 going back to the 1952 Patent Act.  Recall, Section 101 includes the utility doctrine as well as subject matter requirement.  You’ll note the relatively steady state up until the mid 2000’s, with a sharp rise in 2014 and beyond following the Alice Corp. decision where the Supreme Court doubled down on its prior Mayo holding. Note that the numbers for 2024 are for 2/3 of the year and so do not represent a decline in cases.

This dramatic surge in Section 101 decisions reflects not just increased litigation, but a fundamental shift in patent law practice, with the eligibility doctrine becoming a sharpened tool for invalidating patents and reshaping our understanding of what innovations qualify for patenting.

Tremendous Impact: If passed, the Patent Eligibility Restoration Act (PERA) would be a landmark piece of patent legislation with an impact on the same scale as the America Invents Act.  David Jones, in testifying against the legislation explained that “virtually all the patents that have been invalidated under Alice would be deemed eligible under PERA.”  Jones is executive director of the High Tech Inventors Alliance (HTIA) whose members are all very large tech companies with large but fairly weak patent portfolios, including Google, Microsoft, and Oracle.

Creating a Statutory Framework for Eligibility: The current eligibility doctrine is astatutory. Although courts have grounded the doctrine to a statute – 35 U.S.C. § 101 – that tether reminds me of the ropes holding down the Great Wizard’s balloon.  At its core, PERA proposes to amend § 101 to establish a statutory framework for subject matter eligibility by indicating that the “only” exclusions are the ones specifically listed within the statute.  These exclusions include:

(A) A mathematical formula that is not part of a [useful process, machine, manufacture, or composition of matter];

(B) .. a process that is substantially economic, financial, business, social, cultural, or artistic, even though … the process refers to a machine or manufacture [however, it cannot be excluded if] “the process cannot practically be performed without the use of a machine or manufacture.”

(C) A process that— (i) is a mental process performed solely in the human mind; or (ii) occurs in nature wholly independent of, and prior to, any human activity.

(D) An unmodified human gene, as that gene exists in the human body.

(E) An unmodified natural material, as that material exists in nature.

This approach of codifying specific judge made law is part of a long tradition in American law, as we have moved from a system that was mostly judge-made common law into one that is largely statutory.  PERA goes further than the typical codification by explicitly stating that these are the only exceptions, effectively abrogating past  (and potentially future) judicial exceptions.

The bill also particularly addresses gene patents, and would partially overturn Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576 (2013), in favor of greater eligibility. PERA clarifies that while “unmodified human genes” are not eligible for patenting, genes that are “isolated, purified, enriched, or otherwise altered by human activity” or “employed in a useful invention or discovery” cannot be excluded on eligibility grounds.

New Definitions: Moving beyond § 101, PERA proposes new definitions in § 100. It expands the definition of “process” to include “a use, application, or method of manufacture of a known or naturally-occurring process.” This change appears to broaden the scope of patent-eligible processes, potentially overturning precedents like Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948).

Although the utility doctrine has not seen significant litigation in recent years, PERA introduces a definition for the previously undefined term ‘useful’:

[Useful means] that the invention or discovery has a specific and practical utility from the perspective of a person of ordinary skill in the art to which the invention or discovery pertains.

This definition largely codifies the current standard from cases like Brenner v. Manson, 383 U.S. 519 (1966). But its definition serves an important role of recognizing that this utility test already handles some amount of the abstractness problem that has concerned the Supreme Court.

It was Just a Flook: The bill also provides explicit guidance on how eligibility determinations should be made. It requires that eligibility be determined “by considering the claimed invention as a whole and without discounting or disregarding any claim element.” This provision appears to be a direct response to the “inventive concept” analysis required by Mayo and Alice — and perhaps originated in Flook — which has been criticized for potentially parsing claims and discounting conventional elements.  Furthermore, PERA explicitly states that eligibility should be determined “without regard to the manner in which the claimed invention was made; whether a claim element is known, conventional, routine, or naturally occurring; the state of the applicable art, as of the date on which the claimed invention is invented; or any other consideration in section 102, 103, or 112.” This provision seems designed to separate eligibility analysis from novelty, non-obviousness, and enablement considerations, addressing another common criticism (or blessing, depending on your stance) of the Mayo/Alice framework.

The “why” behind these proposed changes is explicitly stated in the bill’s findings section. This is a difference from the 2022 version of the Bill. The proposal includes a set of Congressional findings, including that judicial exceptions have “rendered an increasing number of inventions ineligible for patent protection” and that efforts to apply these exceptions have “led to extensive confusion and a lack of consistency throughout the judicial branch of the Federal Government and Federal agencies; and among patent practitioners.”   These findings are important from a statutory interpretation perspective. They represent Congress’s official understanding of the current state of patent eligibility law and its shortcomings in a much stronger way than committee statements or statements from individual Senators.

PERA represents a significant shift in power over the eligibility doctrine. The current statute is almost unchanged from the Patent Act of 1793, and our understanding of the nuance comes exclusively from the numerous court decisions.  Moving from the courts to the legislation represents a major power shift.  One issue that comes to mind is whether the Supreme Court would fully accept the new doctrine.  Although the most recent Court decisions do not indicate that eligibility exceptions are a Constitutional requirement, those seeking to reduce patent rights would certainly raise this challenge to the Supreme Court. They would have backing from 19th century caselaw — from cases where the court repeatedly stated that that the ‘promote the Progress’ clause serves as an important backstop.

Odds: These bills have a low chance of passing this presidential election year. If anything, it would be in a last-minute post-Election December rush.

I have not written previously about the two house members who introduced this legislation, Representatives Kevin Kiley (R-CA) and Scott Peters (D-CA).  Kevin Kiley, a Republican representing California’s 3rd Congressional District, is a relatively new member of Congress, having been elected in 2022.  He worked as an IP attorney at Irell & Manella before moving into politics.  Scott Peters, a Democrat representing California’s 50th Congressional District in San Diego, has been in office since 2013. He is also a lawyer – with his practice focusing mostly on environmental law.