The Rules and Standards of Patentable Subject-Matter

Abstract

Two arguments are commonly made against restricting patentable subject-matter. The first is that such restrictions are over-inclusive. If an invention is “new, useful, and non-obvious,” critics ask, why should it be denied patent incentives because it falls into some “wrong” category? The second criticism is that patentable subject-matter doctrine is difficult to administer, with no coherent principle to explain the case law in the area.

When viewed from a rules versus standards perspective, these arguments contradict each other. Over-inclusiveness is an attribute of rules. Difficulty of administration, vagueness, and inconsistent application are attributes of standards. A doctrine cannot be too rigid and too fuzzy at the same time.

This Article refutes both criticisms of subject-matter doctrine. The insight is that patentable subject-matter doctrine comes in two distinct types. The first is a rule-like categorical exclusion. The second is a standard-like scope limitation, which does not pose problems of over-inclusiveness, while sharing the same heightened administrative cost as other aspects of individualized examination. Since individualized examination is the only alternative to subject-matter restriction, flexible scope limits should not concern critics of subject-matter restriction.

The remaining concern is the over-inclusiveness of categorical exclusion. This Article argues that categorical exclusions can be justified if they create corresponding administrative cost savings that outweigh the over-inclusiveness cost, and this cost-benefit balance is an empirical question. For example, if 99% of business method patents are socially detrimental, it is likely better to categorically reject all business method patents using a simple rule, and accepting the loss of 1% of meritorious patents.

Keywords: abstract ideas, Bilski, claims, commodification, Dreyfuss, Duffy, excessive monopoly theory, Labcorp, laws of nature, Metabolite, natural, PTO, Patent Act, Patent and Trademark Office, phenomena, products, processes, propertization, public domain, scientific principles, Section 101, specification

JEL Classification: K11, O34