Ensuring Fair Competition: Antitrust Considerations in the US Patent Eligibility Restoration Act of 2023

The Patent Eligibility Restoration Act of 2023 (PERA), introduced by Senators Thom Tillis and Chris Coons, aims to broaden the scope of patentable subject matter in the U.S. This Act addresses limitations from Supreme Court decisions like Alice Corp. v. CLS Bank International, which have restricted patent eligibility under Section 101 of the Patent Act. One year after its introduction, it is crucial to evaluate its impact on innovation and competition. By broadening patent eligibility, PERA has the potential to foster innovation. However, it also raises significant antitrust concerns. Expanded patent protections could allow dominant firms to amass extensive patent portfolios, creating barriers to entry and stifling competition from smaller firms. Ensuring that these broader protections do not lead to monopolistic practices is essential to maintaining a competitive market. Effective regulatory oversight and enforcement of antitrust laws are crucial to achieving this balance.

Clarifying Patent Eligibility

PERA seeks to clarify patent eligibility by defining statutory categories. Under Section 101 of the Patent Act, any invention or discovery that is a useful process, machine, manufacture, or composition of matter is eligible for patent protection. This change eliminates judicial exceptions that previously excluded abstract ideas and natural phenomena. However, the Patent Act includes several exclusions from patentability, such as mathematical formulas not part of a useful invention, processes that are primarily economic, financial, business, social, cultural, or artistic unless they require a machine, mental processes performed in the mind, naturally occurring processes, and unmodified natural materials.

By eliminating judicial exceptions and clearly defining statutory categories, PERA aims to provide a more predictable and stable patent eligibility framework. This is intended to foster innovation by offering clearer guidelines on what can be patented. However, this also means that certain inventions previously deemed ineligible due to their abstract nature or status as natural phenomena can now be patented if they fit within the statutory categories. This change could lead to an influx of patents in areas like biotechnology and software, which were previously constrained by judicial exceptions. While this might spur innovation, it also risks enabling dominant firms to secure broad patents. These firms could stifle competition, especially if they extensively patent foundational technologies or minor improvements.