America has a chance to regain the innovation lead

Like it or not, the United States and China are locked in high-stakes global competition over trade, technology, and national security. Ironically, at this crucial time, China appears to have found an unwitting ally in the US Supreme Court.

The challenge couldn’t be more serious. But if Congress can move with bipartisan resolve, a legislative solution is at hand. Sen. Thom Tillis of North Carolina has a plan for that.

First, the context. The Patent Act, under Section 101, spells out the categories of inventions eligible for patenting; however, a series of Supreme Court decisions between 2010 and 2014 changed the test for what could be patented. It expanded the list of what would be ineligible, chiefly among abstract ideas, mathematical formulas, and products of nature. The tests involve highly subjective decisions for which the Supreme Court has provided no further guidance.

Together, the Supreme Court rulings have led to inconsistent case decisions. The resulting uncertainty has acted like kryptonite in innovation and investment communities. Patent rights across nearly all technologies have become much less reliable. Worse, inventors’ ability to obtain patents in sectors of crucial importance to the United States — including computer software, AI, and life sciences — has been virtually wiped out.

Not only are foreign governments well aware of America’s self-inflicted restrictions on patent eligibility, but they have seized upon the judicially created opportunity to their own competitive advantage. Many of the inventions the United States deemed ineligible are being patented in China and Europe.

Between 2014 and 2019, more than 17,000 US patent applications were rejected based on ineligibility, according to an analysis by George Mason University Law Professor Adam Mossoff. He found that 1,694 of those applications were subsequently granted patents in China or the EU.

China currently leads in 37 of 44 critical and emerging technologies, according to a study funded by the US State Department. There is no shortage of know-how or inventors in the United States, yet it’s stunning to think that the United States is ceding the global technology race because of dubious court decisions.

It doesn’t have to be that way. Current and retired judges on the US Court of Appeals for the Federal Circuit have expressed deep concerns over the patent eligibility chaos, as have the Solicitor General and Patent & Trademark Office directors. And in our deeply divided Congress, there’s a broad, bipartisan call for reforms to reestablish America’s global primacy in innovation and technology.

Tillis understands that if the United States is to beat China in emerging technologies — such as artificial intelligence, advanced computing, biotechnology, medical diagnostics, and 5G — we must make sure we aren’t depriving our top inventors of the free-market incentives and rewards that drive our competitive advantage.

That’s why he introduced S.2140, the Patent Eligibility Restoration Act, with Senate Judiciary IP Subcommittee Chairman Chris Coons of Delaware. Tillis’s bipartisan bill would resolve confusion by retaining Section 101’s existing statutory categories for patent-eligible subject matter (i.e., process, machine, manufacture, and composition of matter) and by replacing the ambiguous judicially created exceptions with more clearly defined exceptions.

Tillis’ PERA legislation provides specific exceptions to eligible subject matter and ensures that they will be the only exceptions. These exceptions include pure mathematical formulas, certain economic or social processes, processes that can be performed solely in the human mind, processes that occur in nature independent of human activity, unmodified genes, and unmodified natural material.

Tillis’s bill also clarifies the narrow conditions under which otherwise unpatentable processes, genes, and materials may be patentable. For example, under PERA, a process that cannot be practically performed without the use of a machine or computer may be patentable. The bill also clarifies that human genes and natural materials that are “isolated, purified, enriched, or otherwise altered by human activity” or “employed in a useful invention or discovery” are patent-eligible.

PERA would simplify eligibility determinations by requiring patent claims be read as a whole and prohibiting the consideration of other patentability factors (e.g., novelty and nonobviousness), ensuring Section 101 focuses solely on subject-matter eligibility. Under current law, patent examiners and courts determining whether a claimed invention is eligible for a patent under Section 101 must consider vague factors, including whether portions of a claim include elements that are “conventional” or “routine.”

Confusing, constricted and unclear patent eligibility court rulings have stymied the nation’s innovative progress. Tillis’s PERA bill lays down clear, consistent rules about what subject matter is eligible. Adding more certainty to the process ensures greater confidence in IP investments, which will grow America’s economic pie and raise the standard of living in our country. At a time of emerging challenges to US national security, Congress should make passage of PERA an urgent priority.