Federal Circuit rules that cloned animals are not patentable

Author: Eddy D. Ventose (School for Graduate Studies and Research, University of West Indies)

In Re Roslin Institute (Edinburgh) Fed Cir 2014, 8 May 2014

Journal of Intellectual Property Law & Practice (2014) doi: 10.1093/jiplp/jpu151, first published online: September 30, 2014

The Federal Circuit has held that a cloned animal, namely Dolly the Sheep, is not patent-eligible under s 101 of the US Patents Act.

Legal context

The claims at issue related to the '233 patent application, entitled ‘Quiescent Cell Populations for Nuclear Transfer’. The '233 patent application claimed the products of a particular cloning method for cattle, sheep, pigs and goats. Claims 155 and 164 were representative of the claims found in the '233 application. Claim 155 claimed a live-born clone of a pre-existing, non-embryonic, donor mammal, wherein the mammal is selected from cattle, sheep, pigs and goats. Claim 164 claimed the clone of any of claims 155–159, wherein the donor mammal is non-foetal.

On 10 November 2008, the examiner issued a non-final rejection of the '233 application holding that they were directed to non-statutory subject matter under s 101 of the US Patents Act as well as anticipated and obvious under ss 102 and 103. The Patent Trial and Appeal Board (Board) affirmed this decision on 7 February 2013. Although noting that the claimed clones ‘may be called a composition of matter or a manufacture’ as required by s 101, the Board concluded that the claimed subject matter was ineligible for patent protection under s 101 because it constituted a natural phenomenon that did not possess ‘markedly different characteristics than any found in nature.’ The applicant, Roslin Institute, appealed to the United States Court of Appeals for the Federal Circuit.

The opinion of the Federal Circuit

The technology

The Federal Circuit noted that Keith Henry Stockman Campbell and Ian Wilmut successfully produced the first mammal ever cloned from an adult somatic cell: Dolly the Sheep. It explained the technology used to create Dolly the Sheep as follows: a clone is an identical genetic copy of a cell, cell part or organism. The cloning method Campbell and Wilmut used to create Dolly constituted a breakthrough in scientific discovery. Known as somatic cell nuclear transfer, this process involves removing the nucleus of a somatic cell and implanting that nucleus into an enucleated (ie without a nucleus) oocyte. A somatic cell is any body cell other than gametes (egg or sperm). An oocyte is a female gametocyte (an egg cell prior to maturation), and a nucleus is the organelle that holds a cell's genetic material (its DNA). Often referred to as ‘adult’ cells, somatic cells are differentiated, ie, they are specialized to perform specific functions. For example, liver, heart and muscle cells are all differentiated, somatic cells. To create Dolly, Campbell and Wilmut fused the nucleus of an adult, somatic mammary cell with an enucleated oocyte. Specifically, Campbell and Wilmut found that if the donor, somatic cell is arrested in the stage of the cell cycle where it is dormant and non-replicating (the quiescent phase) prior to nuclear transfer, the resulting fused cell will develop into a reconstituted embryo. Once the nucleus of a somatic, donor cell is removed, that nucleus is fused with an oocyte, which develops into an embryo. The embryo can then be implanted into a surrogate mammal, where it develops into a baby animal. The resulting cloned animal is an exact genetic replica of the adult mammal from which the somatic cell nucleus was taken.

Patentability: first principles

The Federal Circuit observed, citing Mayo Collaborative Servs v Prometheus Labs, Inc, 132 S Ct 1289 (2012), that an invention that fell within one of the categories of patentable subject matter enumerated in s 101 of the Patents Act might still be ineligible for patent protection if it met one of three exceptions. Laws of nature, natural phenomena and abstract ideas, in its view, were not eligible for patent protection. It noted that, as recently as 2013, the Supreme Court in Association for Molecular Pathology v Myriad Genetics, Inc, 133 S Ct 2107 (2013) made clear that naturally occurring organisms were not patentable. And, as early as 1948, in Funk Bros Seed Co v Kalo Inoculant Co, 333 US 127 (1948), the Supreme Court held that a patent that claimed a mixture of naturally occurring strains of bacteria that helped leguminous plants extract nitrogen from the air and fix it in soil was not patent-eligible because the patentee did not alter the bacteria in any way. In other words, while the method of selecting the strains of bacteria might have been patent-eligible, the natural organism itself—the mixture of bacteria—was unpatentable because its ‘qualities are the work of nature’ unaltered by the hand of man.

In Diamond v Chakrabarty, 447 US 303, 309 (1980), the Supreme Court held that a claim to a genetically engineered bacterium (that was capable of breaking down various components of crude oil), which was created by adding four plasmids to a specific strain of bacteria, was patentable because it was ‘new’ with ‘markedly different characteristics from any found in nature and one having the potential for significant utility.’ In other words, the patentee's ‘discovery [was] not nature's handiwork, but his own.’

After reviewing Mayo, Funk and Chakrabarty, the Federal Circuit observed that discoveries that possess ‘markedly different characteristics from any found in nature’ were eligible for patent protection, adding that, in contrast, any existing organism or newly discovered plant found in the wild was not patentable. It also noted that, in Myriad, the Supreme Court held that claims for two naturally occurring, isolated genes (BRCA1 and BRCA2), which could be examined to determine whether a person might develop breast cancer, were invalid under s 101. In the Supreme Court's view, the BRCA genes themselves were unpatentable products of nature.

Application of first principles

The applicant, while not disputing that the donor sheep whose genetic material was used to create Dolly could not be patented, argued that the copies (clones) were eligible for protection because they were ‘the product of human ingenuity’ and ‘not nature's handiwork, but [their] own’. In addition, it argued that such copies were either compositions of matter or manufactures within the scope of s 101. However, the Federal Circuit countered that Dolly herself was an exact genetic replica of another sheep and did not possess ‘markedly different characteristics from any [farm animals] found in nature.’ It held that Dolly's genetic identity to her donor parent rendered her unpatentable. The Federal Circuit referred to the decision of the Supreme Court in Myriad that concluded that ‘isolated’, naturally occurring DNA strands were ineligible for patent protection. It explained that this case, as in Myriad, Roslin ‘did not create or alter any of the genetic information’ of its claimed clones, ‘[n]or did [Roslin] create or alter the genetic structure of [the] DNA’ used to make its clones. Instead, Roslin's chief innovation was the preservation of the donor DNA in such a way that the clone was an exact copy of the mammal from which the somatic cell was taken. Consequently, such a copy was not eligible for patent protection.

The applicant stated that, for three reasons, the clones were patent-eligible because they were distinguishable from the donor mammals used to create them. The first was that ‘environmental factors’ lead to phenotypic differences that distinguished its clones from their donor mammals. In the Federal Circuit's opinion, these phenotypic differences (which were the result of environmental factors uninfluenced by Roslin's efforts) did not confer eligibility on their claimed subject matter. The second reason was that there existed differences in mitochondrial DNA, which originated from the donor oocyte rather than the donor nucleus. The Federal Circuit replied that (a) there was nothing in the claims, or even in the specification, that suggested that the clones were distinct in any relevant way from the donor animals of which they were copies and (b) the clones were defined in terms of the identity of their nuclear DNA to that of the donor mammals. It continued by emphasizing that having the same nuclear DNA as the donor mammal might not necessarily result in patent ineligibility in every case. However, in this case, the claims did not describe clones that had markedly different characteristics from the donor animals of which they were copies. The third was that the clones were time-delayed versions of their donor mammals, and therefore different from their original mammals. The Federal Circuit, applying the reasoning of the Board that the time-delayed characteristic simply meant that the clone was a true of any copy of an original, held that this distinction alone did not confer patentability.

Practical significance

The decision of the Federal Circuit reaffirms salient principles of patent eligibility emerging from the recent jurisprudence of the Supreme Court, namely (a) laws of nature, natural phenomena and abstract ideas are not eligible for patent protection; (b) naturally occurring organisms/products of nature are not patentable and (c) to be patentable, the claimed naturally occurring organism/product of nature must have ‘markedly different characteristics’ from any found in nature and must have the potential for significant utility. In the instant case, Dolly the Sheep was an exact replica of another sheep and it did not have any ‘markedly different characteristics’ from any of the farm animals found in nature. In other words, there was no new or changed genetic structure of the DNA used to make the clones—the claimed method was simply a process to preserve the donor DNA so that the clone was an exact copy of the mammal from which the DNA was derived.

The important point about this decision is that products of nature/naturally occurring organisms are not patentable per se but, to be patentable, the claimed invention must contain ‘markedly different characteristics’ from that found in nature and have potential for significant utility. The critical question, then, is: what are the criteria for determining when a clone would have those ‘markedly different characteristics’? Patentees should recite what those differences are in the patent specification, and even minor differences should be noted, even though they might prove insignificant if they are only meaningless limitations. Future Federal Circuit decisions might provide the necessary guidance on the criterion relating to ‘markedly different characteristics’. If the reasoning of the Federal Circuit is applied fully, there might arguably be no patent protection for stem cells grown in a laboratory (that replicate human stem cells) or even human organs also grown in a laboratory (if it were possible).

The Federal Circuit did however leave open the possibility that, notwithstanding this decision, patent protection might be available for clones when it remarked that ‘having the same nuclear DNA as the donor mammal may not necessarily result in patent ineligibility in every case’.

How is patent eligibility of computer-implemented inventions to be determined in the United States in view of Alice v CLS Bank?

Author: Susan Keston (HGF Limited)

Alice Corporation Pty Ltd v CLS Bank International and others, Docket No 13-298, Supreme Court of the United States, 19 June 2014

Journal of Intellectual Property Law & Practice (2014) doi: 10.1093/jiplp/jpu154, first published online: September 18, 2014

The US Supreme Court has issued its eagerly awaited decision on whether or not claims to computer-implemented inventions are directed to patent-eligible subject matter, avoiding any pronouncement that either business methods or software inventions are patent ineligible per se, but holding that if claims are directed to a patent-ineligible concept such as an abstract idea, generic computer implementation or recitation of conventional computer hardware is not sufficient to provide the ‘inventive concept’ needed to transform the abstract idea into a patent-eligible invention.

Legal context

In the USA, in contrast to Europe, there is no statutory exclusion from patentability of either computer programs or business methods per se. The claimed invention must, first, be directed to one of the four statutory categories of 35 United States Code (USC) § 101, and, secondly, must not be wholly directed to subject matter encompassing a judicially recognized exception. Quoting from 35 USC § 101:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

The judicially recognized implicit exception is that laws of nature, natural phenomena and abstract ideas are not patentable, as noted in US Supreme Court decision (Docket No 12–398) in Molecular Pathology v Myriad Genetics, Inc (2013).

United States case law on computer-implemented inventions has evolved through a series of tests for patent eligibility under 35 USC § 101. In 1981, patentable subject matter was assumed to have the legislative intent of ‘anything under the sun made by man’ in Diamond v Diehr, 450 US 175 (1981), referencing Diamond v Chakrabarty, 447 US 303, 309, 206 USPQ 193, 197 (1980). The decision of the Court of Appeals for the Federal Circuit in State Street Bank and Trust Company v Signature Financial Group, Inv, 149 F 3d 1368 (1998) expanded the scope of patentable subject matter in the USA to include business methods, provided that they produce ‘a useful, concrete and tangible result’. This tangible result test was rejected in favour of the ‘machine or transformation test’ by the Court of Appeals for the Federal Circuit in Bilski v Kappos, 545 F 3d 943, 959–60 (2008). However, the Supreme Court in Bilski, 561 US 593 (2010) disagreed that this was the sole test for determining patent eligibility of a process, deciding it merely provided an ‘important clue’ and decided by a narrow 5:4 majority that business methods are not categorically excluded from patentability.

Facts

Alice, an Australian company, is the assignee of four related patents covering a computerized trading platform for conducting financial transactions in which a third party mitigates settlement risk. Three of the four patents were issued after the State Street Decision of 1998, but before the Federal Circuit Decision in Bilski, while the fourth patent issued just prior to the Bilski Supreme Court decision. The Alice patents comprise between them independent claims to: a method; a data processing system including a computer and a data storage unit; and computer-readable media containing program code. By way of contrast, the Supreme Court decision in Bilski dealt with method claims only.

In the USA, litigation commenced with CLS Bank challenging the validity of the Alice patents, and Alice countersued CLS Bank for infringement. At first instance, the District Court decided that each of the asserted claims of the Alice patents was invalid for not claiming patent-eligible subject matter. A panel of three judges in Court of Appeals for the Federal Circuit (CAFC) subsequently reversed the District Court decision and granted an en banc rehearing before a panel of ten judges at CAFC.

In the en banc CAFC decision, a majority of the judges affirmed the District Court's holding that Alice's method and computer-readable media claims were not patent eligible under 35 USC § 101. However, there was no single consistent legal rationale for this majority decision. Furthermore, the court was evenly split in affirming the District Court's holding that the asserted system claims were not directed to patent eligible subject matter. Given the lack of legal certainty, Alice petitioned the Supreme Court to decide:

Whether claims to computer-implemented inventions—including claims to systems and machines, processes, and items of manufacture—are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court.

The Supreme Court decided unanimously in favour of CLS Bank, holding that the asserted method claims were directed to the abstract idea of intermediated settlement and thus not patent eligible under 35 USC § 101. This conclusion followed from Bilski, because intermediated settlement, like the risk hedging of Bilski, is a fundamental economic practice long prevalent in commerce. The system (or apparatus) claims and the computer-readable media claims of the Alice patents were also found to be patent ineligible under § 101. The court's reasoning was that the method claims recite an abstract idea implemented on a generic computer; the system claims recite a handful of generic computer components configured to implement the same idea.

Analysis

The Supreme Court's rationale in applying the § 101 exception was motivated by ensuring that the basic tools of scientific and technological work, such as laws of nature, natural phenomena and abstract ideas should not be monopolized, because the grant of a patent to such ‘fundamental building blocks’ might impede, rather than promote, innovation. However, they were careful not to construe the § 101 exception so broadly that it would swallow all of patent law, referring to the finding in Mayo, that at some level ‘all inventions … embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas’.

The Supreme Court applied a two-part test for patent-eligibility, adapted from Supreme Court decision in Mayo Collaborative Services v Prometheus Labs, Docket No 10-1150 (2012), as follows:

Part 1: Are the claims at issue directed to a patent ineligible concept (in this case, an abstract idea)?

Part 2: If the claims at issue are directed to an abstract idea, then determine whether or not the claim's elements, considered both individually and as an ordered combination, transform the nature of the claim into a patent-eligible application.

Applying this test specifically to the Alice method claims, the Supreme Court reasoned that mitigation of settlement risk was an abstract idea. Requiring ‘generic computer implementation’ in the method claims failed to transform the abstract idea into a patent-eligible invention. The claims at issue amounted to ‘nothing significantly more’ than an instruction to apply the abstract idea of intermediated settlement, using a generic computer.

Practical significance

Alice v CLS Bank does not pronounce either that software inventions or business methods inventions are patent ineligible per se, but reinforced Bilski and Mayo. The Alice decision expands upon Bilski by providing that method, apparatus and computer-readable media claims are likely to rise or fall together, the recitation of ‘generic computer hardware’ being insufficient to evade patent ineligibility under § 101.

The two-part Mayo framework is already being used by the US Patent and Trademark Office (USPTO) for claims involving the laws of nature/natural phenomena categories of implicit exceptions to patent eligibility. The same test will now be applied to the abstract ideas implicit exception. This test is likely to be difficult to apply in practice and thus falls short of the goal of providing significantly improved legal certainty in the assessment of § 101 patent-eligibility by the USPTO and by the lower courts.

The definition of ‘abstract idea’ relevant to Part 1 of the Mayo framework has been deliberately left open to interpretation by the Supreme Court. In Part 2 of the framework, what is required to transform the abstract idea into something significantly more than an implementation of the idea on a generic computer also lacks certainty. Improvements in the functioning of a computer or improvements in technology seem to be indicative of patent eligibility. These factors will be difficult to assess without reference to relevant prior art, but the court in Mayo rejected a conflation of novelty (§ 102) and non-obviousness (§ 103) with the patent-eligibility assessment of § 101.

Care ought to be taken when drafting new patent applications in the business methods and software fields to clearly describe the underlying technical innovation beyond use of conventional computer hardware.

Defendants in patent infringement disputes are likely to be encouraged by the uncertainties in interpretation of the two-part Mayo framework to raise patent-eligibility as a ground for invalidity at an early stage, such as via a Rule 12 of the Federal Rules of Civil Procedure motion to dismiss, perpetuating the increasing use of post-grant procedures such as post-grant review, inter-partes review or covered business method review, where available.

We can expect the definitions of ‘abstract idea’, ‘generic computer’ and ‘inventive concept’ required to transform the abstract idea into something patent-eligible to be hotly debated in forthcoming patent litigation in the USA.

‘Abstract idea’ exception to patent-eligible subject matter clarified

Author: Charles R. Macedo (Amster, Rothstein & Ebenstein LLP, New York, NY)

Research Corporation Technologies, Inc. v Microsoft Corporation, 627 F.3d 859, US Court of Appeals for the Federal Circuit, 8 December 2010 (RCT II)

Journal of Intellectual Property Law & Practice (2011), doi: 10.1093/jiplp/jpr026, First published online: March 15, 2011

The US Federal Circuit recognizes the broad reach of patent-eligible subject matter and narrow scope of the ‘abstract idea’ exception under 35 USC §101.

Legal context

Over the past few years, culminating in the US Supreme Court decision in Bilski v Kappos, the scope of what type of inventions are eligible for patent protection has been addressed and clarified. In the first significant decision since the Supreme Court decided Bilski, the Federal Circuit addressed patent-eligible subject matter, and the ‘abstract idea’ exception to patent-eligibility in particular. The Federal Circuit has now taken a big step towards providing more clarity to the scope of patent-eligible subject matter.

Facts

RCT is the owner of six related US patents directed to digital half-toning technology: 5,111,310, 5,341,228, 5,477,305, 5,543,941, 5,708,518 and 5,726,772. Almost a decade ago, RCT filed a patent infringement lawsuit against Microsoft in the Arizona federal court, alleging that Microsoft's operating systems, office suites, and other applications infringe these six RCT patents (Research Corp. Techs., Inc. v Microsoft Corp., No. 01-CV-658 (D. Ariz. filed 21 Dec. 2001)).

In prior proceedings, a District Court assigned to the case granted a series of summary judgment motions without opinions relating to non-infringement and invalidity in favour of the defendant, Microsoft. The District Court also issued a finding of inequitable conduct. These decisions were the subject of a prior appeal, which resulted in reversal and an order that on remand the case be assigned to a new District Court judge (Research Corp. Techs., Inc. v Microsoft Corp., 536 F.3d 1247, 1254 (Fed. Cir. 2008) (RCT I)).

On remand, the new judge assigned to the case held, inter alia, that the asserted claims of the '310 and '228 patents were invalid under 35 USC §101. This ruling (as well as others relating to the effective date of claims of four of the asserted patents) was appealed in the present appeal. This Current Intelligence addresses only the Section 101 issues raised in it.

Analysis

On appeal, the Federal Circuit again reversed the District Court's summary judgment, finding that the '310 and '228 patents did not claim patent-eligible inventions under 35 USC §101. In reaching this decision, the court (per Chief Judge Rader) provided a helpful state of the law on patent-eligibility after the Supreme Court's decision in Bilski.

RTC II begins its analysis with a restatement of Section 101 itself, and the statutory definition of ‘process’ found at 35 USC §100(b). Relying upon the Supreme Court's decision in Bilski v Kappos, 130 S. Ct. 3218, 3225 (2010), RTC II confirmed the broad words of the statute, and the ‘wide scope’ of patent-eligible subject matter. Drawing from Bilski's discussion of previous Supreme Court cases, RTC II, at 867–68 (citations omitted), explains:

the Supreme Court has “more than once cautioned that courts ‘should not read into the patent laws limitations and conditions which the legislature has not expressed.’” The Supreme Court has articulated only three exceptions to the Patent Act's broad patent-eligibility principles: “laws of nature, physical phenomena, and abstract ideas.” The Supreme Court reasoned that laws of nature and natural phenomena fall outside the statutory categories because those categories embrace “the basic tools of scientific and technological work.” Abstractness, also a disclosure problem addressed in the Patent Act in section 112, also places subject matter outside the statutory categories.

RTC II concludes that ‘section 101 does not permit a court to reject subject matter categorically because it finds that a claim is not worthy of a patent’. Id. at 868. Thus Section 101 is merely a ‘threshold’ test, and the other provisions of the US Patent statute (eg Sections 102, 103, and 112) serve better gate-keeping functions.

With respect to the case-at-hand, RTC II found that the claims at issue met the statutory aspects of Section 101 and the statutory definition of process found in Section 100(b). The court then considered whether the claims were subject to one of the three judicial exceptions. In this regard, the only issue raised was whether the ‘abstract’ exception applied. RTC II took this opportunity to follow the Supreme Court's mandate in Bilski to avoid applying a rigid formula or definition for abstractness but instead develop ‘other limiting criteria that further the purposes of the Patent Act and are not inconsistent with its text’. Bilski, 130 S. Ct. at 3231. Thus RTC II, at 868, held:

With that guidance, this court also will not presume to define “abstract” beyond the recognition that this disqualifying characteristic should exhibit itself so manifestly as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary attention on the patentability criteria of the rest of the Patent Act.

With this guiding principle, RTC II recognized that

In that context, this court perceives nothing abstract in the subject matter of the processes claimed in the ’310 and ’228 patents. The ’310 and ’228 patents claim methods (statutory “processes”) for rendering a halftone image of a digital image by comparing, pixel by pixel, the digital image against a blue noise mask. Id. (emphasis added).

RTC II found support for its conclusion in ‘[t]he fact that some claims in the ’310 and ’228 patents require a “high contrast film,” “a film printer,” “a memory,” and “printer and display devices” … .’ It also offered as a new touchstone ‘that inventions with specific applications or improvements to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act' Id. at 869 (emphasis added).

Relying upon the Supreme Court's decision in Diamond v Diehr, 450 U.S. 175 (1981), RTC II flatly rejected the notion that the inclusion in the claims of ‘algorithms and formulas, even though admittedly a significant part of the claimed combination, do not bring this invention even close to abstractness that would override the statutory categories and context’.

As a concluding note, returning to the court's original point that Section 101 does not replace the other requirements of the Patent Act, RTC II distinguished its holding that the claims at issue were not so abstract as to override the statutory language of Section 101 from a holding that the claims were concrete enough to meet the specificity requirements of Section 112:

In the context of the statute, this court notes that an invention which is not so manifestly abstract as to over-ride the statutory language of section 101 may nonetheless lack sufficient concrete disclosure to warrant a patent. In section 112, the Patent Act provides powerful tools to weed out claims that may present a vague or indefinite disclosure of the invention. Thus, a patent that presents a process sufficient to pass the coarse eligibility filter may nonetheless be invalid as indefinite because the invention would “not provide sufficient particularity and clarity to inform skilled artisans of the bounds of the claim.” Star Scientific, Inc. v R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1371 (Fed. Cir. 2008). That same subject matter might also be so conceptual that the written description does not enable a person of ordinary skill in the art to replicate the process. Id.

Practical significance

RTC II appears to offer a first taste of the new standard governing patent-eligible subject matter that we can expect to see coming out of the Federal Circuit with Chief Judge Rader in charge. In RTC II, the court rejects myopic rules that would unduly narrow the scope of patent-eligible subject matter, and keeps the focus on the other protections of the US Patent Act as mechanisms to protect against patent claims that are vague and of suspect validity.