IBM Calls for an End to the ‘Legal Fiction’ of Current 101 Law

This marks the final installment in my four-part interview with IBM Vice President and Assistant General Counsel Mark Ringes and IBM Chief Patent Counsel Manny Schecter. I found our conversation fascinating and want to thank them both again for their time and insight. Below, we conclude with an in-depth discussion on how the U.S. patent system is affecting startups and the state of enforceability following Director Iancu’s Section 101 Guidance.

QUINN: We were talking previously about the fact that more sophisticated companies seem to have a better chance than SMEs at getting their software patents past the USPTO because they are at a different stage in their development. And there’s nothing wrong with that necessarily, it just seems to me to be, historically, a very European view of the patent system, as it would favor the larger entities. This is not to poke at IBM, because you guys innovate like you’re a smaller entity. You do have a portion of your budget that is devoted to speculative stuff that a lot of other companies just would never undertake. So, a portion of what you do has a very startup-driven mindset, but for the true startup, the U.S. system is very difficult to navigate.

SCHECTER:  Yeah, although, in fairness I would say there’s lots of things about being a startup that you could make that same argument about, right?  I mean, a larger organization always has more learning behind it and more resources in place within the entity.

QUINN:  Yes, but that has never been how the U.S. patent system worked. Our patent system has always been the way that startups grew to become the next big thing—not guaranteed obviously, but you could use the patent system as your leverage point.

RINGES:  And without patents, the startups will get starved of investment funds, right? And that’s one of the purposes of the whole system—to enable money to flow to new inventions, wherever they come from.

SCHECTER:  Of course, not only that, but what people often lose sight of is that patents actually help the little companies and entrepreneurs protect themselves from the large companies. It’s easy for a large company to swoop in when they see a small entity innovating in what they see as a profitable way and implement it for themselves. What stops the large entity from doing that?

QUINN:  Right. Well, we went through it in the 1980s. You would also have the large companies swoop in and just buy whole companies, and then with the patents and the technology and everything, they would have a competitive edge themselves, having bought that against their other larger competitors. That was the whole ecosystem that we had created, and I fear that some of these minor moves on the global chessboard seem to have disproportionately changed the way that business is done in the high-tech world.

SCHECTER:  Well, and data is starting to emerge that shows early stage startup funding is shifting. It may still be growing in most places—it kind of grows normally year to year just because of inflation—but if you look at a lot of the emerging technologies, you are seeing increasing proportions of the early stage funding going to places like China.

QUINN:  Yes, you can’t look at the top line number, you have to look at the pieces of the pie—where is it going?

RINGES:  The proportions, yes; exactly.

SCHECTER:  An increasing portion is going to China, and if they are not ahead in a lot of those areas now, they are on a trajectory where they are clearly going to be.

QUINN:  That’s why I say, if you were going to start your patent system from zero to try and become the dominant system in the world, you would be hard pressed to come up with a better strategy than what China is implementing. And this is not to say that they’ve got it all right, and they are going to make mistakes along the way, but they seem to be moving certainly in the right direction.

RINGES:  They’ve come a long way in an incredibly short period of time. There’s no doubt about that.


Enforceability Post-PTO Guidance

QUINN:  Both of you have mentioned enforceability, so I want to come back to that. I want to throw it out there as a topic, just generally speaking, because Director Iancu has issued some good new guidance—but is that going to matter on the enforceability end?

SCHECTER:  So, two things come to my mind. The first is, with respect to what Director Iancu is doing, he is clearly trying to bring more certainty, and that’s absolutely what he ought to do and I think is the right thing. But what worries me is, no matter how closely we think the language that the USPTO uses in the guidance aligns to what the Supreme Court words were in its case law, I think most of us have a sense that the Supreme Court is trying to be somewhat more restrictive, and we don’t really know at the end of the day whether the effect of what the USPTO does will actually be accepted by the Supreme Court. –

RINGES:  Or the Federal Circuit for that matter.

SCHECTER:  I worry that if the USPTO’s guidance takes us back to that point in time where the Supreme Court seemed to be unhappy with the state of the patent system, the Supreme Court is not going to accept it. That’s still a wildcard that we don’t know. Just how acceptable is what the USPTO has rolled out to the Supreme Court? I just don’t know.

QUINN:  I get what you’re saying, and I have to agree with it. The thing, though, is I think somebody has to do something, right?  Because the Supreme Court seems to have very intentionally said we’re not going to define “abstract idea.” What the Supreme Court has said is, “oh, well, the inferior courts or lower courts or people who aren’t us, will figure it out.” And now we’ve got the Federal Circuit saying, “well, if they don’t have to define it, then we don’t have to define it, we just do a matching game. Is it more like something that was abstract or not?” That’s what Judge Hughes said in Enfish and I think that was–in DC terminology—a gaff, because it was honest; it was the truth.

SCHECTER:  A matching game is doomed to failure.

QUINN:  Well, it’s doomed to failure, but that’s what they are doing.

SCHECTER:  What we are doing here by definition is dealing with things that somebody thinks are new.

QUINN:  I agree.

SCHECTER:  A matching game is looking in the rearview mirror and it can only take you so far.

RINGES:  And on top of that, I don’t know if there is any single mind in the Federal Circuit among those judges as to what the right test ought to be. They are all over the map, and there are some who think that 101 should be a very broad filter and others who would like to see 101 used to shut down most patent infringement litigation. And so, when you have a body that has no consistent view, you’re not going to get consistent answers. There’s no hope of getting a good perspective. You’ve heard the comments from many in the industry that say “you don’t know what your answer is until you see who is on your panel.”

QUINN:  That is exactly right. And so that’s why the Supreme Court won’t do it and the Federal Circuit won’t do it, so that leaves—

RINGES:  That leaves one answer; that is the legislature.

QUINN:  Well, I mean, yeah, right. I mean, the legislature has got to fix it, but in the meantime—


QUINN:  The USPTO. And I wonder if—

RINGES:  Well, Director Iancu has got a specific problem that he has got to deal with, and he says it this way: “I’ve got to examine these patents, that’s what my job is.”

QUINN:  “You guys aren’t helping me.”

SCHECTER:  “And I can’t wait for anybody else.”

RINGES:  “I can’t wait for an answer from whoever might give one, so I’ve got to come up with a response and give them my guidance, and I think he’s doing the right thing. He’s got to provide guidance to his examiners to help them solve this problem. Whether that guidance will have any influence on the Federal Circuit or the Supreme Court, who knows? And my guess is, when we hear the Supreme Court saying that they are not giving any credence to what the administrative agencies do, that seems to be the position the majority of the judges are taking. Then, I don’t know that we can expect that they’re going to pay any attention to what Director Iancu and the patent office says.

The 101 Roadblock

SCHECTER:  Right, so can we come back to enforceability? I was going to make two points before, I want to get to the other point. I know you asked about it and I don’t want to lose it here. I often hear people say you seem to be getting patents, so it can’t be so bad, but what they overlook is the collateral damage that is done on one’s ability to enforce patents, right? When you have uncertainty in the courts, you have the kind of crapshoot mentality for the defendants that no matter what, no matter how credible a patent you bring, no matter how great an invention, no matter how well you document the evidence of infringement, they are going to bring a 101 defense. Right?  You remember how it used to be that every time you enforce the patent, you got an ethics defense. You got a duty of candor issue. Now, I hear lawyers say, well, it’s practically malpractice not to bring a 101 defense if it’s at all close.

So we absolutely see that, every time we try to enforce a patent, we get a 101 defense that comes back at us. And that 101 defense is a terrible stigma that is damaging the really worthy patents being enforced. You can still enforce them, but you have to put up with all the extra arguments you have to make to quash the 101 defense. You have to deal with the delay and the extra expense of outside counsel.

RINGES:  And even if you’re not in court yet, when you are having a licensing conversation, the 101 issue comes up and there’s no clear answer. The licensing target will raise the issue, saying they don’t think it’s subject matter eligible and there’s no way to counter that because of case law. So, you just have an endless dialogue, but no resolution, and that discussion goes nowhere, and you end up having entities continue to practice the patent and dare you to take them to court because they know it’s expensive and there is considerable risk around Section 101. So, at the end of the day, you never know where you are going to end up.

QUINN:  I have two thoughts. The first thought that is most pertinent and direct is the law works best when it is set up so that it keeps people out of court. And right now, we have a law that is forcing people into court.

RINGES:  Absolutely agree.

SCHECTER:  That is a fair description.

QUINN:  That’s one observation. And then the second one is that I was at an event in Chicago at the John Marshall Law School and we were talking about 101 some of the people there wanted change, some didn’t want change, and there were litigators who were there saying all matter-of-factly, “well, yeah, we can have change, we can reform 101, as long as you don’t do anything that will stop me from bringing a motion to dismiss successfully.” But that is the problem.

RINGES:  That’s exactly the point.

QUINN:  That is the problem, because when they say it almost glibly like that, and they weren’t being glib, I’m being glib now, but they were being serious. They were laughing about it in a way because I think they couldn’t help but realize just how it sounded I suppose, but they were being serious. They were saying, “Our clients need the motion to dismiss.”  So, you can’t take that away, but when you stop and you think about it, it’s like, just how stupid does that sound?  What other area of law do lawyers sit around fretting about whether or not you’re going to make it past a motion to dismiss. And for the non-lawyer, they say, “oh well, yeah, if there is no merit to it, just get rid of it,” but that’s not what motions to dismiss are about.

SCHECTER:  And specifically in the case of what we’re talking about, it seems ironic. It doesn’t make sense to me to dismiss a case based on Section 101 when you haven’t even figured out what the claim means yet.

QUINN:  Amen.

SCHECTER:  You’re basically eliminating what seems like due process that is needed as part of the patent record.

QUINN:  Why hasn’t anybody made that argument yet? I haven’t seen it raised yet and I don’t know why, because they are construing the claims in order to determine what the claim is directed to, but how can you possibly know what the claim is directed to if you don’t know what the claim covers?  If you haven’t construed the claims?

SCHECTER:  And then what you end up with is are these silly parsings that we see that just make no sense to any of us.

QUINN:  So, I don’t know. Hopefully we will start to see that. I get frustrated because sometimes lawyers will send me stuff before they file things asking “can you take a look at this” or “can you take a look at that?”  And I’ll take a look and I will say, “well, I really would encourage you to do this or don’t do that” and frequently they say, “OK, thank you very much, but, we decided not to do that.”  So, I’m thinking to myself, so in other words, you are going to say no to the winning argument and you’re going to continue forward with this losing argument, and it gets frustrating for me to see because I think there are winning arguments that could possibly be made if they would just be raised.

RINGES:  Well, I think another challenge that we deal with is the District Court judges other than, perhaps Delaware, the eastern district of Texas, and the northern district of California, many of these District Court judges don’t just see a lot of patent cases, so they don’t know how to deal with them and they don’t know how to wrestle these issues to the ground.

QUINN:  Yeah, and I don’t know that one would win at District Court, just to be clear, and it wouldn’t win certainly if you didn’t have the right panel of the Federal Circuit, which you’re not going to know until the day you walk in. But you’ve at least got, what, probably a 50-50 shot?

Sometimes I think what I need to do is sit down and say, “please start making these arguments” and write the arguments up for them, and just say, “cut and paste this into your briefs.”

RINGES:  Well, in some ways the Berkheimer decision has taken us down that path, right?  Because there are factual issues that need to be decided that are not appropriate to decide in a motion to dismiss. It will be very interesting to see whether that case gets taken up by the Supreme Court on cert. Who knows?

Looking Ahead

QUINN:  I really appreciate you taking the time to chat with me today about this. This has been great. But before we go, I’d like to give both of you a chance, a final chance to give me your parting thoughts, if you will, on 101, whether it be where we are now or where you see us going in the next year. Manny?

SCHECTER:  I would just say the time has come for us to do away with a legal fiction that has been foisted upon us that 101 should be a tool to get rid of some patents that people don’t like. Virtually every case I read about Section 101 gets into inventiveness. That’s the domain of the other sections of the law. We ought to just get off trying to bend 101 into an inventiveness determination. It’s not.

RINGES:   I think what I’d like to say is that I’m encouraged that we are starting to see some momentum. It’s very early stages, but there is some momentum around moving toward a legislative approach to add clarity. We’re hearing some positive messages from Congress, from Senator Coons and Tillis, especially. Director Iancu is certainly using his office to highlight the need for clarity in the patent system. We’ve got some agreement around approaches with AIPLA and IPO, so I am starting to feel some momentum. I realize there is a long slog ahead of us before we get to where we need to be, but I’m encouraged, and I think the narratives that are opposing changes to 101 are more easily swatted down, the troll issue is much less of an issue than it has been for many years through a number of mechanisms, such as post-grant procedures and others, so, I believe that, in 2019, we should be seeing some more encouraging approaches toward getting us to where we need to be. We are still a long way from being there, but as compared to where we were a year and a half or two years ago, I think we’re heading on the right path, which is something that makes me feel better about where the system is.

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Join the Discussion

13 comments so far.

  • [Avatar for Ron Hilton]
    Ron Hilton
    February 6, 2019 01:56 pm

    anony @8, I would not advocate for compulsory licensing in general. In most cases it is not only unnecessary, but would undercut the whole incentive upon which the patent system is based. Rather, it should be applied sparingly, on a case-by-case basis, when it can be shown that an industry incumbent is actually preventing innovation by exploiting market monopoly power derived from one or more standard-essential patents.

  • [Avatar for mark martens]
    mark martens
    February 4, 2019 05:54 am

    Thoughtful chat, thank you Gene Quinn.

  • [Avatar for Mike]
    February 2, 2019 07:39 pm



    Who gets to define “what an invention is directed to” (a) and where is this done (b)?


    Well it looks like that would be none other than
    a) the inventor, and
    b) in the claims.

    The inventor(s)’ testimony as being the voice for defining “what the invention is directed to” is provided by 35 USC 112(b) indeed.

    No where do I see in the statute where this was provided to the Court at all. Has anyone appealed a 101 decision based on an improper entity (e.g. the Court, an “expert witness”, or a defendant) being the entity deciding “what the invention is directed to”, when Congress said it is the inventor(s) per 35 USC 112(b)?

  • [Avatar for Anon]
    January 31, 2019 08:33 pm

    JTS @ 9,

    Does the patentee get to enforce the gist of a claim?

    Congress spoke to – and provided both a benefit accompanied with a duty – exactly WHO gets to define “what an invention is directed to.”

    And that was not provided to the Court.

    That was provided to the applicant per 35 USC 112.

    This is yet another plank that can be added to my recent detailed expose of the errors of the Supreme Court in their attempts to run roughshod over statutory law and instead invoke the scrivining of their own policy making.

  • [Avatar for JTS]
    January 31, 2019 07:11 pm

    Gene: nice interview.
    Manny and Mark: thank you for taking the time.

    “It doesn’t make sense to me to dismiss a case based on Section 101 when you haven’t even figured out what the claim means yet.” Yes. A claim is supposed to be interpreted as it would be by an ordinary artisan — how can a judge do that? There is so much thought that goes into a patent claim. To see limitations just dismissed is grossly unfair to the patentee. Does the patentee get to enforce the gist of a claim? No, every limitation offers an infringer a way out.

  • [Avatar for anony]
    January 31, 2019 01:35 pm

    Ron @ 5

    This is where some sort of mandatory patent licensing board could be beneficial, an idea that is way outside the box of current thinking. E.g., BigCo pulls what you described. You develop your product/service anyway and register it with the patent licensing board, which requires that the greater of X% of revenue or X% of cost of the product/service that has been sold be paid to the patent licensing board. The patent licensing board then distributes the proceeds to the patent holders that have proved up infringement of their patents by the registered product/service. In the case where more than Y patents are infringed by a product/service, the proceeds are distributed equally to each proved up patentee. Your payment to the patent licensing board is the same no matter how many patents are infringed and so you don’t care how may patentees assert against your product/service. Other patentees may step in and try to prevent a new patentee from proving up infringement to protect their licensing revenue. X and Y can be adjusted or chosen to strike an appropriate balance between patentees and licensees. Several other details would need to be discussed, described, and debated, but this would be the basic gist.

  • [Avatar for Pro Say]
    Pro Say
    January 31, 2019 01:33 pm

    Thanks for the interview guys; worthwhile for sure.

    Re: “A matching game is doomed to failure.”

    Justice by analogy is no justice at all.

    Either define “abstract” and “something more” or stop using them.

    Judicial exceptions are unconstitutional. Plain and simple.

    If you don’t like the patent laws as the legislative branch has written them, then, respectfully, kindly take off your robes and run for office.

    B — read your excellent briefs (except your petition; which doesn’t seem to be available yet).

    Your clients were robbed.


  • [Avatar for anony]
    January 31, 2019 12:55 pm

    It can be argued that Alice itself is legal fiction: Thomas, in Alice, splits the baby in half, in the one half are the features that perform intermediated settlement, and in the other half are the features that recite modern computer technology. When these pieces are considered individually, it is no surprise that Thomas states he cannot find an inventive concept. Thomas waxes on and on, paragraph after paragraph, covering up this horrific logic with the Mayo two step, espousing platitudes, and denigrating draftsman. However, the performance of intermediated settlement with modern computers *is* the inventive concept that Thomas states he cannot find. One of the primary reason courts cannot find inventive concepts in the claims of modern patent applications (assuming the written text of 101 is satisfied) is because modern courts are not looking for an inventive concept. Rather, courts are looking for an excuse to throw out the patent and it is much easier to split the baby, cover your eyes, and scream that you don’t see an inventive concept at the top of your lungs than it is to do a proper analysis under 112, 102, or 103 and accept the result. (Especially when the result under 112, 102, and 103 is that the claims are valid and enforceable).

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 31, 2019 12:32 pm

    I have a great deal of respect for IBM’s technical prowess, but having personally founded a startup that was quashed by IBM patent litigation, there is one issue that this interview did not address – defacto industry-standard essential patents. In other words, a large company like IBM can create a defacto industry standard over time, as opposed to a standard explicitly developed by a multi-company consortium or organization. Startups that try to innovate around and improve upon that defacto standard in a way that threatens the market dominance of the incumbent standard can easily be blocked by their withdrawing patent licensing from and then suing the startup (which is what happened to my company).

  • [Avatar for B]
    January 31, 2019 11:08 am

    ” I think what I’d like to say is that I’m encouraged that we are starting to see some momentum. It’s very early stages, but there is some momentum around moving toward a legislative approach to add clarity.”

    Can anyone tell me what is unclear about s101 as it is currently written?

    “Judge Plager also astutely observed “judicial exceptions” are not gospel, writing, ‘The modern Supreme Court inherited this body of formulaic doctrine.'”

    No, they did not. The Supreme Court ignored the Legislature’s fix replacing “invention” with nonobviousness under 103 — while expressly defining what is patent-eligible under s101 — in the 1952 Patent Act.

  • [Avatar for B]
    January 31, 2019 11:01 am

    @ Gene ” Why hasn’t anybody made that [due process] argument yet? I haven’t seen it raised yet and I don’t know why,”

    The USPTO doesn’t care what the claims mean nor does the Federal Circuit. The Federal Circuit also DOES NOT CARE if there’s no record in a file wrapper to support a 101 rejection.

    I just filed a SCOTUS petition Monday that touches on this point. I have claims where FIVE separate limitations were declared as previously unknown and nonobvious under 102/103, but were nonetheless “abstract” because (get this) the claims include the word “automatic,” which must mean math and computers are used.

    There was NEVER n assertion by the USPTO or the CAFC that the whole, ordered combination of claim limitations were well-understood, routine, and conventional under 101. The closest the CAFC got to this concept was by using the word “familiar.”

    The CAFC (like the USPTO) didn’t bother to address the claim limitations as a whole, ordered combination. They merely concluded they saw no “inventive concept” based on a feeling (not evidence).

    If IBM is serious and not merely blowing smoke to look like good guys, I respectfully ask for an amicus at the SCOTUS as the SCOTUS is still pondering whether to take up Berkheimer, and Berkheimer addresses a very narrow issue. While Berkheimer’s counsel did address the abstract idea nonsense in a most brilliant way (a must read), the issue b/f the SCOTUS in Berkheimer is narrow.

    I’m going after the totality of USPTO/CAFC nonsense. They ignore claim limitations, they fabricate evidence, they don’t follow the basics of Alice/Mayo, they commit prejudicial acts, most frustratingly “inventive concept,” not preemption, is now the sole criteria for determining exceptions to 101.

  • [Avatar for anonymous]
    January 31, 2019 10:53 am

    “Sometimes I think what I need to do is sit down and say, “please start making these arguments” and write the arguments up for them, and just say, “cut and paste this into your briefs.”

    Yes, Gene, this is what you ought to do. But it must be terse. The page limit in responding to a motion to dismiss might be 20 pages, and the argument competes for space with necessary rebuttals to a defendant’s “kitchen sink” motion. Defendants routinely define an abstract idea overbroadly, misrepresent which limitations fall within that incorrectly defined abstract idea, misapply Alice Step 2, including by misrepresenting facts, and on and on. It takes precious space just to counter all of the trash defendants invariably raise, and multiple patents with multiple independent claims takes even more space.

    I think the legal arguments you suggest have merit, but it is hard to make all of them, convincingly, in two pages.

    No judge wants to be the first to say that Henry Schein overruled the judicial exceptions of Alice/Mayo. Arguing against Alice is an uphill battle, but Judge Plager invites it in Interval Licensing, writing, “It will take a special effort by the judges and the patent bar to gain the Court’s attention.”

    Judge Plager also astutely observed “judicial exceptions” are not gospel, writing, “The modern Supreme Court inherited this body of formulaic doctrine, and we now expect the Court to make sense of it. That they have failed is less a commentary on their efforts than on the absence of recognition of the problem on the part of the lawyers and judges who continue to treat these doctrines as if they were gospel.”

    Director Iancu had the bravery to start to right the ship in the executive branch, now we need some wise district court judges to do the same.

  • [Avatar for Anon]
    January 31, 2019 10:00 am

    first time skim through (will read again when I have more time) indicated to me one of the prime arguments that I have presented as to the Supreme Court’s scrivining of the words of Congress when that Supreme Court interfered with patent eligibility to put in place their own policy objectives:

    Void for Vagueness.

    There are at least two other critical — and by critical, I mean fundamental Constitutionally infirm — avenues that the Supreme Court’s rewriting of patent law can be attacked through (as can be seen in several other recent thread discussions).

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