Posts in US Supreme Court

The Supreme Court’s Alice decision has again left the IP bar without a clear, repeatable test to determine when exactly a software (or computer-implemented) claim is patentable versus being simply an abstract idea “free to all men and reserved exclusively to none,” Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948). This is perhaps not surprising as Alice is a case more about so-called “business method” patents than software patents! (In fact, three justices in a succinct, 116-word concurring opinion indicated that they would impose a per se ban on patenting business methods!) With respect to software patents, however, we still find ourselves with a myriad of USPTO Section 101 guidelines, flowcharts and presentation slides – the latest of which is a March 4, 2014, 19-pager which may very well get fatter after Alice!

With apologies to the great humorist, the report of the death of software patents is an exaggeration. The Court set forth a two-step test grounded in Bilski v. Kappos and Mayo v. Prometheus. While the Court may not have defined a clear boundary for so called “abstract ideas” specifically, it did squarely place this case within the “outer shell” of the law set forth in Bilski and Mayo. In doing so it articulated an approach that focuses not on finding the boundary line, but rather on the core properties of an ineligible patent claim.

Using an all too familiar “logical” construct, the Supreme Court determined that what Aereo did was not a public performance within the meaning of the Copyright Act, but was still infringement because it was a public performance. This construct, which often appears in patent cases, is logically absurd, but without anyone to review the Court’s decisions they seem completely comfortable rendering internally inconsistent and logically flawed decisions, particularly when dealing with intellectual property. The Supreme Court likely struggles with intellectual property because the Court is simply not comfortable with technology. In the past…

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 Court held that because the claims are drawn to a patent-ineligible abstract idea, they are not eligible for a patent under Section 101. In what can only be described as an intellectually bankrupt opinion, the Supreme Court never once used the word “software” in its decision.

The Supreme Court reversed a decision from the Ninth Circuit that held that within the realm of labeling for food and beverages, a Lanham Act claim asserting that the label is deceptive and misleading is precluded by the Federal Food, Drug, and Cosmetic Act (FDCA). This case arose relating to the belief of POM that claims made by the Coca-Cola Company were misleading with respect to a juice blend sold by Coca-Cola’s Minute Maid division. The juice sold by Coca-Cola prominently displays the words “pomegranate blueberry,” but in truth the product contains only .3% pomegranate juice and only .2% blueberry juice.

In a decision barely reaching 11 pages, a unanimous Supreme Court in Limelight Networks, Inc. v. Akamai Technologies reversed and remanded the Federal Circuit’s per curiam majority ruling in Akamai Technologies and McKesson Technologies. That the Supreme Court overturned the Federal Circuit’s per curiam majority ruling is not a surprise. But what is truly shocking are the factually inaccurate statements, as well as the problematical reasoning that appears in Justice Alito’s opinion for this unanimous Supreme Court. With all due respect, Alito’s opinion is an abysmal ”comedy of errors.”

Akamai argued Limelight ”provides instructions and offers technical assistance” to its customers regarding how to tag. The Federal Circuit dodged the question about whether there was direct infringement under 35 U.S.C. 271(a), but instead found that there was induced infringement under 35 U.S.C. 271(b). The problem with this ruling was that it was a legal impossibility. Well settled law had long stood for the proposition that there can be no induced infringement if there is not indirect infringement. Thus, this bizarre ruling by the Federal Circuit had those in the patent community scratching their head. It was easy to predict a Supreme Court reversal.

The district court determined that the term was indefinite, the Federal Circuit reversed. According to the Federal Circuit, a claim is indefinite “only when it is not amenable to construction or insolubly ambiguous.” Under that standard, the majority determined, the ’753 patent survived and was not indefinite. The Supreme Court characterized this test as the Federal Circuit tolerating “some ambiguous claims but not others.”

Given the anti-patent climate that has been created by major Silicon Valley technology companies, the Obama Administration and certain Members of Congress, the news that Judge Rader will step down as Chief Judge comes at a difficult time… While I do hope the Federal Circuit can find common ground, there is no doubt that making sense of Supreme Court precedent on patent law issues is virtually impossible. The remedy for this is not to dismantle the Federal Circuit. The remedy would be for the Supreme Court to get a clue, or to take patent cases only to the extent that there is an irreconcilable split within the Federal Circuit. That would be far more consistent with the intent of the Federal Circuit when it was created.

I think that the Supreme Court decision will be enough to prevent the so-called “patent reform” from gaining any traction in the Senate. The cynical view is that there is so much lobbying money flowing why would Congress want to turn that spigot off when it could easily flow into the next Congressional term? Further, there has been a growing and steady effort by those opposed to the pending patent legislation. Opponents were already making their case heard as the Senate continued to time after time postpone dissemination of the Manager’s Amendment, signaling the consensus that some Senators desperately wanted to reach was illusive, if not impossible. Now with the Supreme Court decisions in these two cases those on the Hill who were already skeptical have more than enough ammunition to slam on the brakes, at least for now, to see what the ultimate ramifications of the decisions will be on the reality of patent litigation.

35 U.S.C. § 285, which is an extremely short statute, authorizes a district court to award attorney’s fees in patent litigation to the prevailing party. In its totality, § 285 states: “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” With such a simple statute you might wonder how or why it was necessary for the Supreme Court to step in and provide clarity. Because in 2005 the Federal Circuit departed from three decades of case law and made it difficult, if not impossible, for prevailing parties to demonstrate entitlement to attorneys fees.

Many, many, many patents have issued to cover the physical elements and intuitive steps to make this familiar sequence possible and increasingly reliable and refined. Mechanical elements, i.e., rotating shafts with a gears on each end, have been replaced by a toothed wheel and magnetic sensor and a wire, but the information about where the engine is in its cycle of rotation is the same… To illustrate to the lay person that just because software is the ”tool” being used to “do” things, we are still ”doing” the same things in the same ways for the same reasons. To wit: That, in the modern era, the execution of the ”useful arts” is done using software does not change what is done or the fact that it is a ”useful art”; and, the patentability thereof should be unaffected simply because we ”do” it differently now as compared with how we ”did” it then.

AIPLA believes that the so-called “single entity” rule for deciding method claim infringement under 35 U.S.C. § 271(a), where multiple actors perform the claim steps, as set out in recent Federal Circuit panel decisions as well as in the instant case, is based both on an incorrect construction of Section 271(a) and of the statutory structure of Section 271 as a whole. In concluding that only principles of agency law determine the ambit of such infringement liability, the Federal Circuit has mistakenly strayed from the traditional tort law basis of patent infringement and has created loopholes for method claim infringement that drastically reduce the exclusive rights conferred by validly issued patents – it has, in effect, reduced the scope of method patents until they have little relevancy… Direct infringement should not be limited only to an agency-type relationship between parties…

It seems undeniable that Alice missed many opportunities to score easy points. Indirect arguments were made by Alice that didn’t seem very persuasive. Indeed, if one is to predict the outcome of the case based on oral arguments alone it did not go well for Alice today. Only three things give Alice supporters hope after this oral argument as far as I can tell. First, the government seems to be asking the Supreme Court to overrule precedent in Bilski that is not even four years old, which simply isn’t going to happen. Second, the egregious overreach and outright misleading nature of the CLS Bank argument should raise a legitimate question or two in the mind of the Justices. Third, the reality simply is that at least the systems claims recite numerous specific, tangible elements such that it should be impossible to in any intellectually honest way find those claims to cover an abstract idea.