By Seán Finan
Last month, the Court of Appeals for the Federal Circuit (“CAFC”) handed down their decision on the case of McRO, Inc. v. Bandai Namco Games Am. Inc (Fed. Cir. Sep. 13, 2016) (“McRO”). Commentators have already hailed the decision as providing significant clarity and guidance on subject-matter eligibility for patents under 35 U.S.C. §101 (“§101”) and on pre-emption. It has been lauded by Erich Andersen of Microsoft for providing key guidance for software developers. Others have remarked on the implications for those seeking patents on methods of medical diagnosis. Though not binding on the Supreme Court (and by no means a guarantee of the direction that Court might eventually take), I believe inventors in the medical arena can draw critical guidance on drafting patent claims from McRO. The decision might also signal a shift in attitude in the CAFC, towards a much more welcoming view of diagnostic patents.
In this post, I’ll briefly address the facts and decision in McRO. During that discussion, I believe a discussion of the facts and decision of last year’s CAFC case of Ariosa Diagnostics, Inc. v. Sequenom, Inc. 788 F.3d 1377 (Fed Cir. 2015) (“Sequenom”) will be illustrative. I’ll then briefly compare the two and discuss what the implications might be for biomedical patents moving forward.
McRO: the Facts
The claims in McRO related to the lip-synchronization of a 3D animated figure with recorded speech. Animators work by transitioning between a character’s resting expression (the “neutral model”) and various other expressions (“morph targets”). Each morph target corresponds to the shape of the character’s face and mouth as the character makes certain sounds. Previously, animators directed and timed the transitions by hand; a highly subjective and time-consuming process. The claim detailed a method of automating this process with a computer program that used a set of rules for the transitions between expressions. The rules dictated the transition based on the series of sounds being pronounced. McRO argued that the method was faster and more accurate than encoding the transitions by hand.
McRO: the Decision
Two main objections were presented against the claim. First, that the claim was directed to an abstract idea and, as such, was ineligible for patent protection under 35 U.S.C. §101 (“§101”). Second, that even if the subject matter was prima facie patent eligible, the claim was too broad in that it covered all applications of the abstract idea of using rules in the animation process and was ineligible for patent protection on the grounds that it pre-empted the field. Both arguments were rejected by the CAFC and the patent was allowed.
McRO: The First Objection – Excluded Subject Matter and Alice
The CAFC noted that an invention that makes use of a judicial exclusion under §101 is not excluded from patentability per se. The governing two-step test for subject matter eligibility was laid down in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S., 132 S.Ct. 1289, 182 L.Ed.2d 321 (2012) (“Mayo”) and affirmed in Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014) (“Alice”). The first limb of the test asks whether the claim is directed to a judicial exclusion, such as an abstract idea, a law of nature, a mathematical concept, etc. If it is, the second limb asks whether the claims contain an inventive concept sufficient to “transform the nature of the claim into a patent eligible application” of the judicial exclusion (Alice, at 2355) (emphasis added).
The CAFC strongly emphasized the importance of not oversimplifying the claim when assessing whether it is directed to an abstract idea. This suggests a fascinating development in judicial policy. In 2015, Burk criticized the Supreme Court for “abstracting away” claims in cases like Mayo and Alice. The Supreme Court, he argued, has an unfortunate tendency to equate claimed subject matter to its “wild” (naturally occurring) counterpart, while ignoring key distinctions (see, for example, the exclusion of gDNA in Association for Molecular Pathology v. Myriad Genetics, Inc. U.S.. 133 S. Ct. 2107, 186 L.Ed.2d 124 (2013) (“Myriad”)). He notes that the CAFC in In re Roslin Institute 750 F.3d 133 (Fed. Cir. 2014) (“Roslin”) took this approach. There, the CAFC denied a patent on the cloning process that produced Dolly the Sheep, on the basis that the DNA at issue was identical to that found in the wild. As such, the CAFC concluded, the patent attempted to claim a naturally occurring phenomenon. Burk counters by remarking that “genetically identical animals are not what one finds in the wild”.
Sequenom: the Facts
The CAFC displayed a different attitude just one year after Roslin in Sequenom. The claim related to a new diagnostic method that allowed the detection of possible birth defects without using highly intrusive means. The claimed method involved isolating cell-free foetal DNA (“cffDNA”) from maternal plasma and subjecting it to certain “conventional steps”. The CAFC found that the claim was excluded from patentability under the Mayo/Alice paradigm but strongly criticized the approach that they felt themselves bound to take.
Sequenom: the Decision
Under the CAFC’s interpretation of the claim, it failed both steps of the Mayo/Alice test; the first part of the claim encompassed the cffDNA, a natural phenomenon, and failed the first limb of the test. The second part of the claim was a “general instruction to doctors to apply routine, conventional techniques” (Sequenomn, at 4) and failed the second limb of the test. However, as the CAFC was at pains to point out, “the fact that steps are well known…does not necessarily make them abstract” (Sequenom, at 3). It was strongly emphasised that the particular use made of the cffDNA was both “innovative and practical” (Sequenom, at 6) and that the use of the known techniques for prenatal diagnoses was not routine or conventional.
In essence, the claim took two judicial exclusions: a natural phenomenon (cffDNA) and an abstract idea (diagnostic steps) and combined them to give a novel and useful result. However, the CAFC, “[a]pplying Mayo, (was) unfortunately obliged to divorce the additional steps from the asserted natural phenomenon to arrive at the conclusion that they add nothing innovative to the process”. The CAFC gave a stern warning about the possible consequences of the approach they found themselves bound to take:
“It is said that the whole category of diagnostic claims is at risk. It is also said that a crisis of patent law and medical innovation may be upon us, and there seems to be some truth in that concern.”
(Sequenom, at 4)
McRO and Sequenom
So how does this relate back to this year’s McRO decision? It seems to me that, if we “abstract away” some of the specificity for a moment, the claims are very similar. Both take an existing process (isolation of cffDNA on one hand and lip-synchronization on the other) and apply a known example of an excluded category (diagnostic techniques and computer algorithms) to arrive at a novel and improved result (prenatal diagnosis and faster, more accurate animation). However, on one interpretation of the McRO claim, it could have gone the way of Sequenom. The claim, it could be argued, did little more than apply a “natural law” (the rules for transitions) to the prior art. This was the essence of the applicant’s argument under Parker v. Flook, 437 U.S. 584 (1978). However, the CAFC opted instead for an approach reminiscent of Diamond v. Diehr, 450 U.S. 175 (1981). The McRO claims, the CAFC found, did not attempt to patent an abstract idea but a novel application of an abstract idea that improved a technical process.
McRO: The Second Objection – Pre-Emption
The CAFC, having concluded that the subject matter was prima facie patent-eligible, turned to the pre-emption claim. This too was dismissed. On a broad view, the CAFC argued, the claims did not pre-empt every method of automating the animation of 3D characters. On a more narrow view, the claims did not even pre-empt every method of automating the animation of 3D characters using rules: plenty of other basis for arriving at equivalent rules were conceivable. The CAFC did not even find it significant that the claims covered an entire type of rules: a patent over a genus, rather than a species, is permissible so long as the claim is sufficiently specific and limited in scope.
The Future of Diagnostic Patents
So what does this all mean for the future of patents on diagnostic methods? McRO seems to confirm the approach proposed by Judge Dyk in Sequenom.
Speaking obiter, Judge Dyk examined the inconsistency, as it appeared to him, between the Mayo/Alice approach and the Myriad approach (an inconsistency put in sharp relief by Burk) and proposed what appears to be a slight modification of the Alice framework, to be used where, as was the case here, a new aspect or use of a known natural phenomenon is discovered;
“[I]f the breadth of the claim is sufficiently limited to a specific application of the new law of nature discovered by the patent applicant and reduced to practice, I think that the novelty of the discovery should be enough to supply the necessary inventive concept. My proposed approach would require that the claimed application be both narrow in scope and actually reduced to practice”.
It must be acknowledged that the obvious distinguishing feature between the facts in Sequenom and McRO is the one relied on by the CAFC: that Sequenom began with a natural phenomenon – the cffDNA – while McRO began with a modification to a technical process. However, as Judge Lourie noted in Sequenom, the claim could have easily been framed as an improvement to an existing technical process.
The upshot, then, is this: those seeking to patent diagnostic methods, look to your draftsmen. McRO confirmed that pre-emption, not tangibility, is the primary concern of §101 (McRo, at 25). Claims should be narrow in scope and reduced to practice to avoid these concerns, even if the claim is over a genus of tests. Claims which apply an abstract idea to an existing process, like McRO, should be framed to emphasize the improvement to a technical process. Claims which apply an abstract idea to a natural phenomenon should emphasize the novel result.
Medical innovators might take solace in the fact that the CAFC seems to have given up abstracting claims. It remains to be seen whether the Supreme Court will do the same