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5 CAFC Judges Say Computers Patentable, Not Software


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: May 12, 2013 @ 12:54 pm
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UPDATED 5/12/2013 at 3:31pm

In what can only fairly be characterized as utterly ridiculous, 5 of the 10 judges on the Federal Circuit to hear CLS Bank v. Alice Corporation en banc would find that claims that satisfy the machine-or-transformation test are not patentable. While I think it is inappropriate to find the systems claims patent ineligible that isn’t what makes the decision utterly ridiculous. The decision is an embarrassment because 5 other judges would have found the systems claims patent eligible. Thus, we have an even split of opinion at the Federal Circuit.

The Federal Circuit decision in CLS Bank v. Alice Corp. is now being horribly mischaracterized in the media, which will now only further complicate the matter in the court of public opinion. This decision offers no precedent whatsoever regarding systems claims because it was a tie. Alice Corporation loses the systems claims not because that is the law of the land announced by the Federal Circuit, but rather because a single district court judge determined that the systems claims were patent ineligible. Had that same district court judge found the systems claims patent eligible then Alice would have prevailed.

In other words, the Federal Circuit is essentially abdicating its authority relative to whether systems claims are patentable to the district courts and presumably also to the Patent Trial and Appeals Board at the United States Patent and Trademark Office. Whatever the district court or PTAB does is just fine. Well, not quite.

It would actually be preferable if the decisions of the district court or PTAB were final relative to systems claims because at least then we would have some level of finality. But truthfully we have no certainty or finality. For many years now attorneys have openly discussed and litigants have noticed and exploited the fact that there is a complete lack of uniformity of patent laws. The decision you will receive on appeal at the Federal Circuit is nearly 100% dependent on the 3 judges randomly assigned to hear your appeal. Nowhere is that more obvious now than with respect to system claims.

If you are before 2 or more of the following judges software is not patentable and the patentee will lose all claims: Judges Lourie, Dyk, Prost, Reyna and Wallach.  If you are before 2 or more of the following judges at least some of your software claims, if properly written to recite tangible structure, will be patent eligible: Chief Judge Rader, Judge Moore, Judges Newman, Linn and O’Malley.



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Chief Judge Rader goes around the lecture and CLE circuit constantly preaching the importance of certainty and the ability to give a CEO a straight answer; not having to tell the CEO that if you spend millions of dollars I can get you an answer in 3 to 5 years, perhaps longer. Chief Rader is 100% correct. Without certainty business cannot move forward. Without a way to know that the rights you obtain are valid why obtain the right in the first place? Lack of certainty is killing the business community in the United States. Regulations upon regulations, a tax structure that is never settled for more than half a political cycle and a patent litigation system that is wholly incapable of providing justice.

For crying out loud patents are supposed to be a property right. Does any of this look like property? Let me explain some objectively true fundamentals about the law. When a statute is passed, such as the AIA, applications filed under the old statute are governed under the old statute, not the new statute. When Courts, including the Supreme Court, issue a ruling changing property rights dealing with real estate the changes are applied prospectively, not retroactively. But case after case after case changes the law relative to software and then that new law of the moment is applied against patent applications written and issued over a decade ago. How can anyone reasonably hit a moving target like this?

Had I been on the Federal Circuit my decision probably would have looked a lot like the opinion of Chief Judge Rader on some issues, and more like Judges Newman, Linn and O’Malley overall. I agree with Chief Rader and Judge Moore that we can and should go claim by claim to determine patent eligibility, since the question is whether the claims are valid.

I would go claim by claim and not let any other claiming technique influence my determination. We are supposed to go claim by claim to determine whether a claim is allowable and if allowed whether it is invalid. So why group claims together across multiple patents and say if one is bad then all are bad? Notwithstanding, because the defendant made certain admissions at the Markman hearing and before the Federal Circuit during oral argument it is much easier to understand understand why Judges Newman, Linn and O’Malley determined that if one set of claims is found patent eligible then all of them should be patent eligible.

Judge Lourie explained:

For some systems claims, the abstract ideas exception may indeed be plainly inapplicable, and such claims will face little difficulty passing through the §101 filter. But applying a presumptively different approach to system claims generally would reward precisely the type of clever claim drafting that the Supreme Court has repeatedly instructed us to ignore. As illustrated by the obvious parallels between the method and system claims now before us, it is often a straightforward exercise to translate a method claim into system form, and vice versa. That much has long been recognized. Thus, when §101 issues arise, the same analysis should apply regardless of claim format: Does the claim, in practical effect, place an abstract idea at risk of preemption? And, if so, do the limitations of the claim, including any computer-based limitations, add “enough” beyond the abstract idea itself to limit the claim to a narrower, patent-eligible application of that idea? Or, is it merely a Trojan horse designed to enable abstract claims to slide through the screen of patent eligibility?

Thus, Judges Lourie, Dyk, Prost, Reyna and Wallach decided that the system claims are patent ineligible because the method and computer readable medium claims were, in their opinions, patent ineligible.

So what is the point of having claims then? I know the statute requires claims, but claims are obviously superfluous in the with respect to a §101 patent eligibility inquiry, at least as far as Judges Lourie, Dyk, Prost, Reyna and Wallach are concerned.

Also, did you notice above how Judges Judges Lourie, Dyk, Prost, Reyna and Wallach turn the question of preemption on its head. They don’t want to ask whether there is or will be preemption, but rather whether there is a risk of preemption. Not even whether preemption is likely, but whether there is a risk of preemption. Breathtaking!

Judges Judges Lourie, Dyk, Prost, Reyna and Wallach also define the question relative to the systems claims:

The question we must consider is whether a patent claim hat ostensibly describes such a system on its face represents something more than an abstract idea in legal substance. Claims to computers were, and still are, eligible for patent. No question should have arisen concerning the eligibility of claims to basic computer hardware under §101 when such devices were first invented. But we are living and judging now (or at least as of the patents’ priority dates), and have before us not the patent eligibility of specific types of computers or computer components, but computers that have routinely been adapted by software consisting of abstract ideas, and claimed as such, to do all sorts of tasks that formerly were performed by humans. And the Supreme Court has told us that, while avoiding confusion between §101 and §§102 and 103, merely adding existing computer technology to abstract ideas — mental steps — does not as a matter of substance convert an abstract idea into a machine.

So computer hardware is unquestionably patent eligible? This shows an extraordinarily naive view of computers and software. Do these Judges actually believe that it is computer hardware that makes everything possible? Are they so hopelessly living in the past that if they can’t see it and touch it then it can’t be patent eligible?

Perpetuating the myth that the computer is where the magic lies does nothing other than ignore reality. Software is what makes everything happen. Perhaps the IT people at the Federal Circuit should remove the software from the computers of Judges Judges Lourie, Dyk, Prost, Reyna and Wallach (and their clerks too). Then perhaps they will understand that the computer is a dumb terminal wholly incapable of performing virtually any functionality absent software.

Sure, the computer monitor can act as a nice holder of sticky notes, and it can also be a giant (albeit clumsy) paper weight without software installed. But try and do anything useful with a computer without software and then those Judges just might realize that it is software that drives the machine.

For crying out loud, software drives a multitude of machines! Maybe the auto mechanic for Judges Judges Lourie, Dyk, Prost, Reyna and Wallach should remove the software from their cars. Perhaps as they are stranded and forced to walk to work they might have time to contemplate the world they seem to want to force upon the rest of us; a world that clings to mechanical machines completely non-reliant on software. That will be great for the economy!

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Posted in: Computers, Federal Circuit, Gene Quinn, IP News, IPWatchdog.com Articles, Software

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

17 comments
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  1. The life of 35 USC 101: Macbeth Act V, Scene V

    “Out, out, brief candle! Life’s but a walking shadow, a poor player that struts and frets his hour upon the stage and then is heard no more: it is a tale told by an idiot, full of sound and fury, signifying nothing.

    Emphasis added.

    Sadly.

  2. It is madness. What scares me is that the new Obama nominations do not appear to have experience with patents. So, they appear not to have the capacity to sort through these issues. Although, O’Malley somehow has managed to understand these issues.

  3. “Perhaps the IT people at the Federal Circuit should remove the software from the computers of Judges…”

    Perhaps the computers should be removed from all the others instead.

    Software does nothing. It is just written mathematical instructions.

    Without the active element (the processor) software just sits there, unread.

    You can’t even touch software. It is abstract. You can touch disks/tapes/flash… even a processor; but that isn’t software, that is hardware.

  4. >>You can’t even touch software. It is abstract.

    @Jesse: if you can’t touch it and it is just abstract why does the computer perform differently with different software? How is that possible? Two machines exactly the same (according to you) and yet they operate differently.

  5. jesse,

    Let me inform you that you are in thin ice with your views here. Not only are they not correct from a legal standpoint, which you are apparently do not care about, they are not correct from a physical and factual standpoint.

    It was one thing to discuss philosophy. It was quite another to simply climb atop a soapbox and throw out rhetoric that is firmly false. There are plenty of websites that you can do that at. I know Gene Quinn keeps a shorter leash here – and the site is much better for that shorter leash.

    Be careful of stepping over that line and simply repeating false rhetoric.

  6. Gene,

    Note that I’m only commenting in part – the part I think is most important.

    It would actually be preferable if the decisions of the district court or PTAB were final relative to systems claims because at least then we would have some level of finality. But truthfully we have no certainty or finality. For many years now attorneys have openly discussed and litigants have noticed and exploited the fact that there is a complete lack of uniformity of patent laws. The decision you will receive on appeal at the Federal Circuit is nearly 100% dependent on the 3 judges randomly assigned to hear your appeal. Nowhere is that more obvious now than with respect to system claims.

    Agree 100%. Inconsistent law isn’t public law, it is privelige, or private law, law which is bought by those with the most money.

    Chief Judge Rader goes around the lecture and CLE circuit constantly preaching the importance of certainty and the ability to give a CEO a straight answer; not having to tell the CEO that if you spend millions of dollars I can get you an answer in 3 to 5 years, perhaps longer. Chief Rader is 100% correct. Without certainty business cannot move forward. Without a way to know that the rights you obtain are valid why obtain the right in the first place? Lack of certainty is killing the business community in the United States. Regulations upon regulations, a tax structure that is never settled for more than half a political cycle and a patent litigation system that is wholly incapable of providing justice.

    In this Judge Rader is wrong. His responsibility is to the Constitution and the American people, not the CEOs, except inasmuch as they fall under Constitutional protections. Privilege.

    For crying out loud patents are supposed to be a property right. Does any of this look like property?

    Sorry Gene, that isn’t what the Constitutuon says.

    Let me explain some objectively true fundamentals about the law. When a statute is passed, such as the AIA, applications filed under the old statute are governed under the old statute, not the new statute. When Courts, including the Supreme Court, issue a ruling changing property rights dealing with real estate the changes are applied prospectively, not retroactively. But case after case after case changes the law relative to software and then that new law of the moment is applied against patent applications written and issued over a decade ago. How can anyone reasonably hit a moving target like this?

    What if a court ruling is later determined to be in error, such as State Bank?

    Had I been on the Federal Circuit my decision probably would have looked a lot like the opinion of Chief Judge Rader on some issues, and more like Judges Newman, Linn and O’Malley overall. I agree with Chief Rader and Judge Moore that we can and should go claim by claim to determine patent eligibility, since the question is whether the claims are valid.

    I agree, claims are important. Problem is I keep seeing claims that are total crap. How the PTO issues some of his junk s beyond me.

    I would go claim by claim and not let any other claiming technique influence my determination. We are supposed to go claim by claim to determine whether a claim is allowable and if allowed whether it is invalid. So why group claims together across multiple patents and say if one is bad then all are bad? Notwithstanding, because the defendant made certain admissions at the Markman hearing and before the Federal Circuit during oral argument it is much easier to understand understand why Judges Newman, Linn and O’Malley determined that if one set of claims is found patent eligible then all of them should be patent eligible.

    That depends. If it is determined that something really is a problem, do you ignore it?

    Simple answer is you can’t. Problem is, how do you know if something is a problem? Currently it appears that the courts are the only answer. Are the courts a good answer? Probably not. Even the Federal Circuit doesn’t know technology, though it might know law.

    Wayne

  7. Anon, I’ll let Gene speak to what he allows on this site. But 5 out of 10 members of the Federal Circuit agree with a variant of Jesse’s views, at least as far as they apply to the case at hand. (If Senior Judge Linn weren’t randomly selected to be on the original panel, he wouldn’t have been on the en banc panel, and the Lourie opinion would be the law of the land.) The Supreme Court could very well write an opinion that sounds a lot like the Lourie opinion (and if they don’t take the case, the composition of the next en banc panel to face the issue will probably be more favorable to the Lourie opinion).

    One would hope that an opinion that could very well become the law of the land in a year (notwithstanding your personal views on its legal and factual accuracy) would not be so out of bounds that it would be censored.

  8. Jon,

    With all due respect, you vastly overstate that the court agreed with a ‘variant’ of what jesse has been posting.

    Beyond that, I think you vastly overstate the result of this case, and suggest that from a legal perspective, that you dwell on the words of the Chief Judge, as to the precedence established, which in the end, is embarrassingly, well, (not to put to fine a point on it), nothing.

    As to flouting facts, this is evidently not my site, and my words of advice hold true: do not mistate facts – especially knowingly so (censorship is simply the wrong word).

  9. Anon,

    I did not mean to suggest that the Lourie opinion was precedent. As you say, none of the opinions have any legal consequence (aside from the per curium judgment).

    On the other hand, if the computer that put Judge Linn on the panel used a random number generator with a different seed, the Lourie opinion might very well be the law of the land. This isn’t to say that it is, or even that it definitely will eventually become the law of the land. Perhaps the SCOTUS will side with Rader and the others, putting Lourie’s opinion in the dustbin of history. I just brought it up to show the silliness of any rule that would prevent someone from having such views on a blog.

  10. @NWPA

    >>You can’t even touch software. It is abstract.

    @Jesse: if you can’t touch it and it is just abstract why does the computer perform differently with different software? How is that possible? Two machines exactly the same (according to you) and yet they operate differently.

    The same way two movies look different when shown by two projectors that are exactly the same. Both are abstract, but they affect the user/viewer differently. Yet the two projectors is still the same.

    In the software, the processor is the active object. In the projector, the projector is the active object. They only do what they were designed to do. One is to project images. The other is to manipulate symbols. Provide different movies, get different displays. Provide different symbols to manipulate, get different results.

    In both cases (movie/software), you cannot touch the abstract. In the case of the movie, you can only touch the medium. In the software you can also only touch the medium.

  11. Jon,

    With continued due respect, jesse is posting things that are simply untrue. There is nothing wrong with a principled discussion, but that is not what jesse is doing. Note on the sister thread to this, that jesse has now resorted to misrepresenting what I have posted, somehow turning my statement of “not merely a writing” into a statement of “not a writing,” which of of course is nonsensical given that I had just previously made the point that software is not the same thing as thinking. He continues on the other thread making statements of law that are simply untrue (i.e. his post at 140 concerning the ability to copyright any written work.

    This forum is for principled discussions. There is room for disagreement. There is not room for blatant (and repeated) errors of law and fact. All I am saying is that jesse needs to understand this before his leash is yanked. He needs to understand that he does not have free reign to make up or disregard law or ignore facts.

    jesse,

    A quick consideration for you:
    1) You say copyright is enough, correct?
    2) What is a requirement of copyright that distinguishes your position and forces you to consider (accurately) what I have posted? (the answer is “fixed in tangible media”).
    3) Are you aware of the law regarding patent eligibility of written items that are fixed in tangible media? The concept (which covers legal and actual, physical, factual circumstances) is called the exception to the printed matter doctrine.

    I suggest you try to understand the law as it is.

  12. @Jesse: >>In the software, the processor is the active object. In the projector, the projector is the active object.

    The movie does not control the projector. The movie cannot compute all possible computable functions, which includes everything that Jesse can do.

    The very nature of innovation is that we do not need to make an analogy to past inventions to understand new inventions.

  13. Open invitation (Jon, jesse, and even those who may have simply slept in a Holiday Inn last night):

    Feel free to express your views and desires. But please, don’t make false statements thinking that others here don’t know the technology or that the law is not what it is. False statements of fact or law are very easy to challenge and only weakens the end result you may want to achieve.

  14. Since there seems to be a lack of understanding about the claims involved in the case and erroneous belief that the Alice claims somehow could actually be done by a person manually I decided to publish the article I had for tomorrow morning today. See:

    http://www.ipwatchdog.com/2013/05/13/did-the-federal-circuit-ignore-the-supreme-court-in-cls-bank/id=40267/

    Clearly, the Alice Corporation claims were tied to a machine and could simply not be performed by a human without a machine.

    -Gene

  15. Remeber we do have open source software and that software can still be copyrighted, so saying that without patents on software (which I do not know enough about as I am a chemical man) we will be relegated to machines without it seems a little disingenuous. Both of course are necessary software and hardware.

  16. Daniel,

    As a chemical man, what would you think about the logic that since all elements at known (elements are the language of chemistry), that there are no chemical inventions eligible?

    That is essentially what we are seeing with software.

  17. This article alleges that the Patent Office is not required for innovation. Can someone please debunk this garbage.

    http://c4sif.org/2013/05/does-innovation-require-the-patent-office/