Working Paper No. 10-42:
The Rules and Standards of Patentable Subject-Matter

Author(s):

Tun-Jen Chiang

Date Posted: September 2010

Availability:
Abstract (below) | Full text (most recent) on SSRN

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.