I’m surprised that the Supreme Court dismissed the LabCorp case without deciding the patentable subject matter question in the case, or, at the very least, vacating the Federal Circuit’s decision and remanding the case for a “do over” (much as they did this past Monday a criminal law case, Youngblood v. West Virginia, as Orin Kerr decribes here). [ I'm going to leave to others the procedural question whether the Court should have decided the case on the merits. ]

I’m not at all surprised, however, at Justice Breyer’s views in his dissent from the dismissal order. Writing for himself and Justices Stevens and Souter — the same 3 justices who signed on to Justice Kennedy’s business-method- patent-skeptical concurrence in eBay v. MercExchange — Justice Breyer makes a number of points that should encourage accused infringers to fully litigate the “patentable subject matter” question before the Federal Circuit and on petition to the Supreme Court. Indeed, Justice Breyer’s opinion deserves close scrutiny because it states the views of 3 justices (i.e., 60% of the 5 votes one needs to win a case, and 75% of the 4 votes one needs to get the Court to grant review). It would merit close scrutiny even if he did not state that, for this trio, the case is an easy one on any approach to the patentable subject matter doctrine: “But this case is not at the boundary. It does not require us to consider the precise scope of the ‘natural phenomenon’ doctrine or any other difficult issue. In my view, claim 13 is invalid no matter how narrowly one reasonably interprets that doctrine.”

Continuing the generally skeptical perspective of his dissent Eldred v. Ashcroft, 537 U.S. 186 (2003) (upholding the constitutionality of the Sonny Bono Copyright Term Extension Act), Justice Breyer appears to treat the claim for i.p. protection as the one that most needs to prove itself. In other words, i.p. protection is the exception to open use of and competition in ideas, not the other way around. In this case, Justice Breyer focuses on a core theme in all of intellectual property law — namely, the need for balance at the sweet spot between too much i.p. protection and too little. He also strikes a new theme that I think runs through this Term’s two full decisions in patent cases (Illinois Tool Works and eBay) — namely, the need for a generalist (rather than specialist) approach to patent law doctrine. [ The Unitherm Food case, altough arising in the patent litigation context, is really about the rigors of Fed. R. Civ. P. 50, not about patent law. ]

More below the fold.

Justice Breyer states that “[t]he relevant principle of law ‘[e]xclude[s] from … patent protection … laws of nature, natural phenomena, and abstract ideas.’ Diamond v. Diehr, 450 U.S. 175, 185 (1981).” The principle’s existences isn’t all that controversial, although it’s notoriously hard to get a predictable handle on it. Justice Breyer is quite explicit about the implementation challenge the principle presents: “I concede that the category of non-patentable ‘phenomena of nature,’ like the categories of ‘mental processes,’ and ‘abstract intellectual concepts,’ is not easy to define. After all, many a patentable invention rests upon its inventor’s knowledge of natural phenomena; many ‘process’ patents seek to make abstract intellectual concepts workably concrete; and all conscious human action involves a mental process. Nor can one easily use such abstract categories directly to distinguish instances of likely beneficial, from likely harmful, forms of protection.” Given that, again, he sees the case as an easy one, he is prepared to apply what he calls “the ‘law of nature’ principle” to the facts of this case.

Balance

He starts with fundamental policy. (Federal Circuit, please take note — patent law doctrine requires reasoning about fundamental policy, as I’ve discussed before.) Specifically, Justice Breyer anchors the “law of nature” exclusion in the need to walk the line between too much patent protection and too little. According to Justice Breyer,

[t]he justification for the principle does not lie in any claim that “laws of nature” are obvious, or that their discovery is easy, or that they are not useful. To the contrary, research into such matters may be costly and time-consuming; monetary incentives may matter; and the fruits of those incentives and that research may prove of great benefit to the human race. Rather, the reason for the exclusion is that sometimes too much patent protection can impede rather than “promote the Progress of Science and useful Arts,” the constitutional objective of patent and copyright protection. U.S. Const., Art I, § 8, cl. 8.

The problem arises from the fact that patents do not only encourage research by providing monetary incentives for invention. Sometimes their presence can discourage research by impeding the free exchange of information, for example by forcing researchers to avoid the use of potentially patented ideas, by leading them to conduct costly and time-consuming searches of existing or pending patents, by requiring complex licensing arrangements, and by raising the costs of using the patented information, sometimes prohibitively so.

Patent law seeks to avoid the dangers of overprotection just as surely as it seeks to avoid the diminished incentive to invent that underprotection can threaten. One way in which patent law seeks to sail between these opposing and risky shoals is through rules that bring certain types of invention and discovery within the scope of patentability while excluding others. And scholars have noted that “patent law['s] exclu[sion of] fundamental scientific (including mathematical) and technological principles,” (like copyright’s exclusion of “ideas”) is a rule of the latter variety. W. Landes & R. Posner, The Economic Structure of Intellectual Property Law 305 (2003). That rule reflects “both … the enormous potential for rent seeking that would be created if property rights could be obtained in [those basic principles] and … the enormous transaction costs that would be imposed on would-be users.” Id., at 305-306; cf. Nichols v. Universal Pictures Corp., 45 F.2d 119, 122 (2d Cir. 1930) (L. Hand, J.).

Thus, the Court has recognized that “[p]henomena of nature, though just discovered, mental processes, and abstract intellectual concepts are … the basic tools of scientific and technological work.” Gottschalk v. Benson, 409 U.S. 63, 67 (1972). It has treated fundamental scientific principles as “part of the storehouse of knowledge” and manifestations of laws of nature as “free to all men and reserved exclusively to none.” Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948). And its doing so reflects a basic judgment that protection in such cases, despite its potentially positive incentive effects, would too often severely interfere with, or discourage, development and the further spread of useful knowledge itself.

And note how, in using the fundamental need for balance (neither to little protection nor too much) to anchor the patent exclusion for laws of nature, Justice Breyer makes use of Gottschalk v. Benson and Funk Bros., two decisions that Federal Circuit jurisprudence ignores in favor of Diehr’s “anything under the sun made by man” statement.

On the merits, the Breyer Trio flatly rejects the Federal Circuit’s recasting of Diehr, in State Street, as a “useful, concrete, and tangible result” test. Justice Breyer observes, of State Street, that

[t]hat case does say that a process is patentable if it produces a “useful, concrete, and tangible result.” 149 F.3d at 1373. But this Court has never made such a statement and, if taken literally, the statement would cover instances where this Court has held the contrary. The Court, for example, has invalidated a claim to the use of electromagnetic current for transmitting messages over long distances even though it produces a result that seems “useful, concrete, and tangible.” Morse, supra, at 16. Similarly the Court has invalidated a patent setting forth a system for triggering alarm limits in connection with catalytic conversion despite a similar utility, concreteness, and tangibility. Flook, supra. And the Court has invalidated a patent setting forth a process that transforms, for computer-programming purposes, decimal figures into binary figures-even though the result would seem useful, concrete, and at least arguably (within the computer’s wiring system) tangible. Gottschalk, supra.

Even were I to assume (purely for argument’s sake) that claim 13 meets certain general definitions of process patentability, however, it still fails the one at issue here: the requirement that it not amount to a simple natural correlation, i.e., a “natural phenomenon.” See Flook, supra, at 588, n. 9 (even assuming patent for improved catalytic converter system meets broad statutory definition of patentable “process,” it is invalid under natural phenomenon doctrine); Diehr, 450 U.S. at 184-85 (explaining that, even if patent meets all other requirements, it must meet the natural phenomena requirement as well).

At most, respondents have simply described the natural law at issue in the abstract patent language of a “process.” But they cannot avoid the fact that the process is no more than an instruction to read some numbers in light of medical knowledge. Cf. id. at 192 (warning against “allow[ing] a competent draftsman to evade the recognized limitations on the type of subject matter eligible for patent protection”). One might, of course, reduce the “process” to a series of steps, e.g., Step 1: gather data; Step 2: read a number; Step 3: compare the number with the norm; Step 4: act accordingly. But one can reduce any process to a series of steps. The question is what those steps embody. And here, aside from the unpatented test, they embody only the correlation between homocysteine and vitamin deficiency that the researchers uncovered. In my view, that correlation is an unpatentable “natural phenomenon,” and I can find nothing in claim 13 that adds anything more of significance.

Here, too, the Trio revives not only Gottschalk, but Parker v. Flook (which many think is, after Diehr, a dead letter). Confident of their approach, they would strike the balance, in this case, against patent protection.

Generalist Approach

The Federal Circuit, with its heavy diet of patent cases, naturally comes to see the virtue in legal rules that are specially crafted to fit patent law’s needs — or, at least, their consensus view of patent law’s needs. If these specially crafted patent law rules come to disadvantage a particular group systematically, that group can urge the generalist judges of the Supreme Court to take the case on the ground that the Federal Circuit has taken patent law too far away from generalist law. This argument from the generalist virtues is, moreover, likely to get a sympathetic hearing from a generalist Court. First, a generalist approach keeps the Supreme Court in the patent law game, whereas a specialized approach could leave them with much less power over the Federal Circuit. Second, the Supreme Court’s prior precedents are generalist and, when deciding whether to take a case and, if taken, how to decide it, the Supreme Court focuses on its own precedents far more seriously than decisions of the courts of appeals.

Justice Breyer’s dissent from the dismissal order here demonstrates the powerful pull of the generalist approach. The high value he places on generalism is reflected in three things, two small and one large. The small things are (a) the reliance on analogies to copyright law’s idea/expression dichotomy (see slip op. at 3), and (b) the short shrift he gives to the fact that the Supreme Court does not have the benefit in this case of a Federal Circuit analysis of the patentable subject matter issue (see slip op. at 10). The big thing is the close of the opinion itself. Justice Breyer identifies the generalist judge as a key player in patent policy:

In either event, a decision from this generalist Court could contribute to the important ongoing debate, among both specialists and generalists, as to whether the patent system, as currently administered and enforced, adequately reflects the “careful balance” that “the federal patent laws … embod[y].” Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 146 (1989). See also eBay Inc. v. MercExchange, L.L. C. (2006) (slip op., at 2) (Kennedy, J., concurring); FTC, ch. 4, at 1-44; Pollack, The Multiple Unconstitutionality of Business Method Patents: Common Sense, Congressional Consideration, and Constitutional History, 28 Rutgers Computer & Technology L.J. 61 (2002); Pitofsky, Antitrust and Intellectual Property: Unresolved Issues at the Heart of the New Economy, 16 Berkeley Technology L.J. 535, 542-546 (2001).

Justice Breyer invokes both themes here … the importance of finding the right balance between too little patent protection and too much, and the value to patent law of generalism. The Bonita Boats decision, recall, struck down a Florida state statute that protected vessel hull designs from copying, on the ground that the Florida law conflicted with, and was thus preempted by, the Patent Act. I blogged some excerpts from Bonito Boats here.

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Justice Breyer’s opinion LabCorp is a gold mine for litigants in future cases who have a serious patentable subject matter defense. They will, no doubt, use is.