On Thursday, June 19, 2014, the United States Supreme Court issued its much-anticipated decision in Alice v. CLS Bank. In a unanimous decision authored by Justice Thomas the Supreme Court held that the claims were drawn to a patent-ineligible abstract idea, thus they were not eligible for a patent under Section 101.
Using the so-called Mayo framework, which comes from the Supreme Court’s decision in Mayo Collaborative Services v. Prometheus Laboratories, the Supreme Court explained that first decision makers must determine whether the claims at issue are directed to a patent-ineligible concept (e.g., an abstract idea). Second, the elements of the claim must be examined to determine whether it contains an inventive concept sufficient to transform the claimed abstract idea into a patent-eligible application. Ultimately, the Supreme Court ruled that the claims did no more than simply instruct the practitioner to implement an abstract idea on a generic computer. The systems claims at issue in the case fared no better.
Surprisingly, the Supreme Court failed to use the word “software” even a single time in the decision despite the fact that the holding in Alice has already and will continue to render many software patent claims invalid. While the Supreme Court didn’t seem to want to make this decision about software, the holding necessarily was about software because each of the ways software has been traditionally claimed were ruled to result in patent ineligible claims.
The fact that the Supreme Court did not use the word “software” has led some experts to conclude either that the decision was not as bad as many have claimed, or even that the decision was good, based on the belief that it could have been much worse and the Supreme Court could have said that software was patent ineligible.
But is the Supreme Court’s decision in Alice good? According to Scott Alter, a partner with Faegre Baker Daniels and Chair of the American Bar Association’s Post-Alice Task Force, whether the Alice decision is good or bad largely depends on your perspective.
“It depends on who you are and what your goals are,” Alter explained in a telephone interview. “If your concern is keeping trolls from your door it is a good decision because it is probably going to help you do that, particularly if you are a software or financial company. However, if your primary interest is in a strong patent system that protects and rewards innovation, it’s arguably not a good decision.”
Alter also went on to tell me that he thinks there are better ways to deal with the patent troll issue than with Alice, which he likened to the rebirth of Parker v. Flook. “This two-part test is from Justice Stevens’ decision in Flook,” Alter said. “Alice could have said Diamond v. Diehr was overruled, it could have said that software was patent ineligible, it could have said that business methods were patent ineligible. So it could have been worse, that is absolutely true, but I don’t know if that makes it a good decision.”
Driving home this point Alter said: “You can have a meteor that wipes out half of earth’s population, but I’m not sure you could characterize it as a good meteor just because it didn’t wipe out the entire population.” He would then go on to liken Alice to a medical treatment that has both good and bad elements, saying that the decision in Alice is over broad and “akin to bad chemo therapy. Yes, it is killing the bad cells, but it is also killing off too many healthy cells.”
Since the Supreme Court’s ruling in Alice the Federal Circuit has issued what appear to be diametrically opposed opinions in Ultramercial and DDR Holdings. See Federal Circuit Finds Software Patent Claim Eligible and Exploring Judge Lourie’s Flip Flop in Ultramercial. The United States Patent and Trademark Office has also recently issued patent eligibility interim guidance to patent examiners, and published a set of 8 illustrative examples that explain how patent examiners should apply the abstract idea doctrine when examining claims directed to software.
These USPTO abstract idea hypothetical examples will be “potentially useful tools to assist practitioners to get cases allowed,” said Alter. However, he would go on to question whether they are truly consistent with the case law, saying: “If you look at them with respect to whether they are consistent with case law you might have a different perspective.”
For example, in the first hypothetical example, the Patent Office said it is not directed to an abstract idea because it is inextricably tied to a computer, which makes it seem like they are thinking about DDR Holdings, but DDR Holdings explained that there was also something else (i.e., something “more”) that was not conventional. “So I’m not sure that hypothetical is true to the case law it seems aimed at interpreting,” Alter explained. “Of course, while the Patent Office examples may not be entirely consistent with case law, the case law itself doesn’t seem to be consistent either.”
With the patent market reeling, we have more questions than answers at this point. As we wait for additional points of information that will inform our understanding we must continue to advise clients, prepare and file patent applications, and prosecute patent applications drafted when the standard was quite different. We must also continue to advise businesses with respect to patent acquisition, patent litigation, what maintenance fees should be paid, and how to traverse what is a highly uncertain landscape.
Acknowledging that there has been an enormous shift in the law of patent eligibility, Alter remains optimistic. “We have to keep in mind that things have shifted and things can shift again. So just like I have claims of various scope with respect to prior art, I also have claims of various scope with respect to patent eligibility. I like to have claims similar to those in Diamond v. Diehr, and I also like to have some claims that push the envelope a little.”
Of course, based on the few decision points we have so far it seems that the courts will place disproportionate weight on the sufficiency of the specification when making decisions about patent eligibility. This trend differs from traditional patent law norms because the sufficiency of the specification has historically been a question under 35 U.S.C. 112, but for now the 101 and 112 analysis seems to be collapsing together, which means patent applications and issued patents must have robust technical disclosure to even stand a chance of getting through the patent eligibility threshold. But there is more to consider. Cutting back on claim formats that have been deemed suspect could be a very wise move so as to not unnecessarily contaminate good claims with adequate disclosure. Of course, it will continue to make sense “to have the disclosure in the specification to make those claims later,” Alter explains. After all, if history has taught us anything about software patents it is that the law can change, perhaps several times, before an application filed today will be examined and certainly before it’s litigated.
Against this backdrop of uncertainty, I’ve invited Scott Alter to join me for a free webinar discussion titled The Road Forward: Software Patents in the Post-Alice Market. This webinar will take place on Wednesday, March 4, 2015, at 12pm ET. This is part of our Innography sponsored webinar series.
In addition to taking your questions, we will discuss the following:
- Was the Alice decision as bad as many originally thought, or is there a silver lining as some have suggested?
- Is there any rational way to distinguish the Federal Circuit’s decisions in Ultramercial and DDR Holdings?
- Do the interim eligibility guidelines published by the USPTO provide any clues or insight into what applicants can and should do?
- What claiming techniques should applicants consider using in light of Alice, and what, if anything, needs to change with respect to technical disclosure in the specification?
- What prosecution strategies might be useful to stall a decision at the USPTO until there is greater certainty? How much of a concern is laches?
- How can you identify “software patents” that likely will not be negatively impacted by the Supreme Court’s decision in Alice?
- Which patents should be maintained and which patents should be allowed to enter the public domain for failure to pay maintenance fees?
- Is it necessary (or desirable) for Congress to get involved to fix the statute?
To join for this discussion click here to register.
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14 comments so far.
ConnorJuly 18, 2015 12:50 am
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Saint CadMay 20, 2015 10:13 pm
I was reading Alice and I have a question. In (b)(2)(i) on page 2, it discusses ‘a method already “well known in the art”’. So if your method is completely unique and not already used in other places, does Alice still apply?
Joachim MartilloMarch 1, 2015 09:12 am
In re: Is there any rational way to distinguish the Federal Circuit’s decisions in Ultramercial and DDR Holdings?
I wonder whether the courts and patent professionals are sufficiently taking into account technological developments in distributed Internet computing.
Recently, I helped an IT employee at a law firm that engages me.
Basically, he had to analyse databases maintained on two different web servers to create and update a database on a client system.
Exactly what that means is not important, but the key point is the following. Node.js conceals all aspects of the distributed system, and each of the three databases is identified by a URI (a generalization of a URL) on the command line.
Nothing in the code takes into account whether the application is running on a single computer or in a distributed environment.
In other words the Internet is viewed in this sort of programming as a giant distributed NORMA (NO Remote Access Memor Architecture) computer system, and the browsers running on client devices in the distributed computer system are simply output devices of the single distributed computer system.
Now in this case the system was accessing and creating or modifying databases, but using programming systems like Angular the (implicitly) distributed program could easily have been automatically generating and distributing web pages (or more complex objects) among servers and client devices hosting browsers, but the actual coding cannot distinguish whether the computer system corresponds to a single computer or the entire Internet.
In other words, Judge Chen is simply incorrect when she states: “do not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet. Instead, the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.”
The Internet programming environments solve the distributed computing problem, and the claims only appear patent-eligible because of the draftsman skill of the claim writer.
Gene QuinnFebruary 28, 2015 01:12 pm
I’d love for you to explain yourself. The quote you seem to have problems with is perfectly correct and the fact that you don’t understand that to be the case suggests to me that you are the one who doesn’t know what you are talking about. Of course, your comment provides no insight, information or analysis, so it is impossible to know whether you have a point and just refuse to articulate it or if your comment is the type of drive-by nonsense seen all too frequently on the Internet.
CuriousFebruary 26, 2015 09:32 am
Spoken like someone who doesn’t know what they’re talking about…
Spoken by someone who likely hasn’t work with businessmen who are capable of making sound business decisions.
AnonFebruary 26, 2015 07:50 am
Thank you for the added clarity Curious.
I agree with you 100%.
Further, I think it clear from the Prometheus decision that the Court insists on refusing to get the message. They have made it clear that they will not let the direct words of Congress make a dead letter of their implicit writings.
Your aspersion just does not fit. Since you offer nothing but the aspersion, I cannot tell where in your “thinking” you have gone astray. Perhaps it is because you have done no actual thinking, and that you are reacting instead to other portions of the statements made by Curious (the Benson abomination perhaps). It would not be the first time that an anti-software pundit reacted without thinking or without understanding of the legal terrain that they would venture into.
Ted EFebruary 26, 2015 02:24 am
“Litigation happens when the two sides are so far apart, the money spent on their attorneys is worth the risk. However, when there is little separating the two sides, deals get done very quickly because the money spent on the attorneys isn’t worth it.”
Spoken like someone who doesn’t know what they’re talking about…
CuriousFebruary 25, 2015 10:25 pm
a funny way to reduce spurious litigation
Litigation happens when the two sides are so far apart, the money spent on their attorneys is worth the risk. However, when there is little separating the two sides, deals get done very quickly because the money spent on the attorneys isn’t worth it.
What causes two sides to be so far apart? Uncertainty in the law is a huge factor. Right now, we have patent owners believing (hoping) that their issued patents are still valid, while we have alleged infringers arguing that the patents are invalid (under 101) and the value of the litigation is $0. In this situation, you cannot have the two sides any farther apart. Moreover, nobody (smart) can say with any certainty whether one patent will be declared invalid under 101 or not given the complete lack of meaningful guidance by SCOTUS.
Starting with the abomination of a decision that was Benson, SCOTUS cannot keep their hands out of the cookie jar. As a result, we are left with confusing (and seemingly irreconcilable decisions) that go out of their way to avoid giving us a bright line to work with (although 35 USC 101 provides such a bright line). With a bright line to work with, patent holders and accused infringers will be closer together and will have more incentive to settle than to litigate. I wonder if SCOTUS will ever get that message?
Simon ElliottFebruary 25, 2015 09:01 pm
The problem with the recent SCOTUS decisions on IP is that they give no guidance, and have broad and inconsistent statements. The meteor hit, but we are not sure if we are dead. Its a great way to keep us lawyers employed, but a funny way to reduce spurious litigation.
CuriousFebruary 25, 2015 05:38 pm
I am presuming that by species already wiped out you mean business methods
You would be incorrect in that presumption. The operative statement by SCOTUS is Like the risk hedging in Bilski, the concept of intermediated settlement is “ ‘a fundamental economic practice long prevalent in our system of commerce.’”
My point about “business methods” is that both the USPTO and the Federal Circuit has gone way overboard to re-characterize the narrowly-defined species within Alice into a genus (i.e., business methods).
Nat ScientistFebruary 25, 2015 05:32 pm
“(Andrew) Jackson abolished the Bank of America chiefly because he could not understand banking.” I’m thinking the Court represented by Judge Thomas’ understanding of the consequences of the definitions of the word ‘abstract’ being placed in the same box as perpetual motion machines and laws of nature is wholly inadequate. When will Justice Thomas’ folly and the Fire and Ice Age in patent protection end?
AnonFebruary 25, 2015 12:55 pm
Last I checked Curious (and I am presuming that by species already wiped out you mean business methods), the Court has expressly not only failed to wipe out business methods (a minority position of only 4 votes in Bilski), but have actually lost ground (obtaining only 3 such votes in Alice).
Am I missing some nuance of your point?
CuriousFebruary 25, 2015 11:49 am
Driving home this point Alter said: “You can have a meteor that wipes out half of earth’s population, but I’m not sure you could characterize it as a good meteor just because it didn’t wipe out the entire population.”
Bad analogy. The Supreme Court could have wiped out the entire population. Many briefs asked (begged) them to wipe out the entire population. Instead, the Supreme Court wiped out a species because it said it was nearly identical to this other species that it had already wiped out.
The problem with the Alice decision is that it gave no guidance for other Courts or the USPTO, who have taken the lack of guidance as a license to kill any species even remotely related to business methods.
angry dudeFebruary 25, 2015 10:50 am
To summarize long article in one sentence:
“Alice is not too bad after all … if one can afford good lawyers”