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Twilight Zone: The Solicitor General’s Brief in Alice v. CLS Bank


Written by Gene Quinn
Patent Attorney & Founder of IPWatchdog, Inc.
Principal Lecturer, PLI Patent Bar Review Course
Posted: March 7, 2014 @ 7:38 am

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In a few weeks the United States Supreme Court will hold oral arguments in Alice v. CLS Bank. At stake in this case is the future of software patents. Half of the Federal Circuit de facto ruled that software is patent ineligible.  Of course they could not come right out and say that because it would contradict both settled Supreme Court precedent and patent laws enacted by Congress and codified in Title 35 of the United States Code. Nevertheless, the undeniable position of half of the Federal Circuit was that software is not patent eligible because to these Judges none of the claiming techniques that are used to write software patent claims result in patent eligible subject matter being claimed.

In preparation for the oral arguments we are shifting through the briefs. I have already written about the IBM brief, see Supreme Court “Abstract Idea Doctrine” is Unworkable.  We plan multiple articles leading up to the oral argument that discusses the various briefs filed, and complete coverage of the oral arguments. Today, however, I write about the brief of the United States Government filed by the Solicitor General, which is simply disingenuous.

Truthfully, to call the Solicitor’s brief disingenuous is being charitable. The logic, if you can call it that, necessary for the Solicitor’s arguments to be correct is extraordinarily tortured, not to mention circular and dependent upon itself for support. The premise of the argument made by the Government is simply false. The Solicitor tells the Supreme Court that the patent claims in question are to an abstract idea, which is flat wrong. But in a bizarre twist the Solicitor pivots to then say that what is covered is not an abstract idea but it is not necessary for there to be an abstract idea protected in order for the claim to be patent ineligible as an abstract idea. Sadly, I’m not making this up.

The Solicitor’s Brief

Why the Solicitor General would make such an obviously and provably incorrect statement is a bit of a mystery, but does continue to shed light on the way that the White House and the Department of Justice view patents and the patent system. After having initially appointed David Kappos to run the Patent Office, who was undeniably one of the best Directors of the Patent Office ever, the Obama Administration has increasingly embraced an anti-patent sentiment. Not surprisingly, the high water mark in the Obama Administration’s support of the patent system was just days prior to when Director Kappos suddenly and unexpectedly announced he was leaving the Office. Kappos has just given a strong pro-patent software speech, and since that time it has been all down hill.

I suspect there will be many who quibble with my characterization of the Obama Administration as anti-patent, and that is fine. But let’s take a look at the specific statements in the Solicitor General’s brief that we can easily demonstrate to be false.

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The brief of the Federal Government states:

“Petitioner’s method claims are drawn to an abstract idea. Considered apart from any computer implementation, the method claims are addressed to the manipulation of abstract legal and economic concepts.”

Presumably, the Solicitor General’s Office knows that you cannot talk about the patentability of an invention in a vacuum since “inventions” are not in and of themselves patented. The patent claims granted by the USPTO define the exclusive rights granted, so when determining “whether a patent” should have issued or if “a patent should be declared invalid,” what the law actually requires is a claim by claim analysis. So let’s take a look at the claims, shall we?

The Solicitor states in the brief that claim 33 of U.S. Patent No.  5,970,479  is representative of the method claims. Claim 33 covers (with emphasis added):

A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:

(a) creating a shadow credit record and a shadow debit record for each stakeholder party to be held independently by a supervisory institution from the exchange institutions;

(b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;

(c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party’s shadow credit record or shadow debit record, allowing only these transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order; and

(d) at the end-of-day, the supervisory institution instructing ones of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.

At first glance there does not appear to be any tangible structure recited, but CLS Bank conceded both at the Markman hearing and during oral argument at the Federal Circuit that the terms “shadow credit record” and “shadow debit record” recite a transaction that is electronically implemented on a computer or some other electronic device. See page 5 of the opinion of Judges Linn and O’Malley in CLS Bank v. Alice. With that admission during claim construction then claim 33 must conclusively and finally be construed to specifically recite a computer implementation or an electronic device, both of which are very tangible. So unless you think a computer or an electronic device is imaginary there is no way that the method claims are abstract.

But let’s not stop there, because where things really get interesting is with the system claims. Here are a couple of the systems claims in question. Claim 1 of U.S. Patent No. 7,725,375 recites (with emphasis added):

data processing system to enable the exchange of an obligation between parties, the system comprising:

first party device,

data storage unit having stored therein

(a) information about a first account for a first party, independent from a second account maintained by a first exchange institution, and

(b) information about a third account for a second party, independent from a fourth account maintained by a second exchange institution;

and a computer, coupled to said data storage unit, that is configured to

(a) receive a transaction from said first party device;

(b) electronically adjust said first account and said third account in order to effect an exchange obligation arising from said transaction between said first party and said second party after ensuring that said first party and/or said second party have adequate value in said first account and/or said third account, respectively; and

(c) generate an instruction to said first exchange institution and/or said second exchange institution to adjust said second account and/or said fourth account in accordance with the adjustment of said first account and/or said third account, wherein said instruction being an irrevocable, time invariant obligation placed on said first exchange institution and/or said second exchange institution.

Now look at claim 26 of the ’375 patent (again with emphasis added):

data processing system to enable the exchange of an obligation between parties, the system comprising:

communications controller,

first party device, coupled to said communications controller,

data storage unit having stored therein

(a) information about a first account for a first party, independent from a second ac- count maintained by a first exchange institution, and

(b) information about a third account for a second party, independent from a fourth account maintained by a second exchange institution; and

computer, coupled to said data storage unit and said communications controller, that is configured to

(a) receive a transaction from said first party device via said communications controller;

(b) electronically adjust said first account and said third account in order to effect an exchange obligation arising from said transaction between said first party and said second party after ensuring that said first party and/or said second party have adequate value in said first account and/or said third account, respectively; and

(c) generate an instruction to said first ex- change institution and/or said second ex- change institution to adjust said second account and/or said fourth account in accordance with the adjustment of said first account and/or said third account, wherein said instruction being an irrevocable, time invariant obligation placed on said first exchange institution and/or said second exchange institution.

Notice that the system claims recite a data processing system in the preamble, and then go on to incorporate undeniably tangible items such as “a computer,” “a data storage unit,” and “a communications controller.” Those items are NOT abstract, and you don’t even have to rely on an admission that these specifically recited limitations are tangible objects. Thus, what becomes clear is that it is a objectively erroneous assert that the system patent claims in question cover only an abstract idea. Only if the Solicitor believes that computers, storage devices and communications devices are abstract, not tangible and imaginary could the legitimately and non-frivolously state otherwise.

So let me ask you this: Is the computer or device you are reading this article on real and tangible, or is it imaginary? The Obama Administration seems to be of the belief that the device you are using right now is not tangible, but rather is abstract, non-existent and like a mirage only a fabrication of an overactive imagination.

But surely even anti-patent zealots couldn’t believe that the claims in question are abstract ideas, right? Well, Microsoft made the same ridiculous argument (more on that in coming days). But you would be right to some extent to question things, but get ready because the Government’s argument takes a turn for the bizarre in a big way!

Perhaps realizing the ridiculous nature of a blanket and obviously incorrect statement that boils down to tangible items are really abstract, the Solicitor General then argues:

“Although the claims include a relatively detailed set of steps, and therefore do not preempt all uses of third-party intermediaries to mitigate settlement risks, this Court has not limited the abstract- ideas exception to ideas expressed at a high level of generality.”

So not everything is pre-empted, and the claims cover an abstract idea because the Supreme Court hasn’t limited the abstract idea doctrine to… well… abstract ideas. Really? Sadly yes. The Solicitor is arguing it is an abstract idea because despite not being an abstract idea it is still nonetheless patent ineligible as an abstract idea. You really can’t make this up.

The Patent Twilight Zone — Software Style

As you contemplate this mind-numbing argument your eyes will begin to get heavy, you will start to see the screen wiggle at first and then start to fade toward black as a kaleidoscope of colors appears and lures you in… three… two… one… Flash of bright lights!!!!!

— You are about to begin a journey through space and time, into another dimension where up is down, left is right, and that which is tangible represents nothing more than the imagined.  On this odyssey you will encounter a wondrous land whose boundaries are ill defined, yet sadly predictable, because after all no invention is worthy of the mantle of a patent, at least not if it has to do with software, genes or personalized medicine.  The vastness of this timeless infinity forms a middle ground between bewilderment and reality, superstition and science, and repugnance and rapture.   It lies at the heart of all of your worst fears, but holds the key to the doorway of eternal incomprehension and oblivion.  You are about to enter the Twilight Zone — the software patent edition!

As your eyes glaze over and you become prepared for more mind-numbing quotes from the Solicitor’s brief, let’s recognize that much of their analysis, if you can call it that, is devoted to the method claims and computer readable medium claims. Then in order to handle the messy reality that the system claims, illustrated above, are clearly not abstract under any intellectually honest definition, they merely say that if the method and computer readable medium claims are not patent eligible neither are the system claims because… well just because. It seems inventions rise and fall based on what the applicant really wants to protect, not the claims, but claims are still required, ostensibly still define the exclusive right and are examined by patent examiners. Sigh…

The Solicitor’s brief mightily tries to justify the argument that clear tangible system claims are not patent eligible because method claims are not patent eligible. Of course, this ignores that methods and devices (i.e., systems) are independently patentable under the explicit terms of 35 U.S.C. 101, but let’s not concern ourselves with facts and the law, which would only completely unravel the Solicitor’s argument. I say that not because it would be fun to step by step legally dismantle the Solicitor’s argument, but rather because we don’t even have to get to the law to show how ridiculous the argument is from a logical standpoint.

The Solicitor argues (again with emphasis added):

Petitioner’s system and media claims rise or fall with its method claims. This Court has made clear that, when a patent on a particular series of steps would amount in practical effect to a patent on a law of nature or abstract idea, the patent is invalid, even though the series of steps constitutes a Section 101 “process.”  The same analysis applies to petitioner’s system and media claims, which are in substance efforts to patent a method of organizing human economic activity, even though they are drawn to what are literally a “machine” and a “manufacture.”

I don’t want to dwell on the fact that this conclusively proves that the Solicitor’s Office doesn’t understand patent law because patents cannot be invalid, but rather the real question is whether one by one patent claims themselves are invalid. Still, that statement is otherwise telling, isn’t it? No patent for you despite the fact that your claims constitute an otherwise patent eligible process under 35 U.S.C. 101! Unbelievable that they would actually write that! Read that statement again: “the patent is invalid, even though the series of steps constitutes a Section 101 ‘process.'” In other words, the patent (presumably meant to be patent claims) is invalid even though the law requires a finding to the contrary!

So the method claims are patent ineligible even though the Solicitor acknowledges they do not preempt the field and they do not cover an abstract idea. What this translates to mean is this: The method and computer readable medium claims in question are abstract despite the fact that they are not abstract!

But how can this be possible given that the Supreme Court has never defined what is an abstract idea? This is rather crazy since applicants are deprived rights under the abstract idea doctrine that has NEVER been defined. It is amazing that a bunch of Judges and Ivy League educated lawyers do not see a Constitutional infirmity in holding people to a standard that isn’t defined. Clearly there would be a problem if it were a criminal matter, but I suppose ever since the Supreme Court said they weren’t going to define obscenity and would just know it when they saw it the pretense of fairness has been nothing more than a charade.

Nevertheless, even without a definition for the critical term “abstract idea,” everyone who is at all intellectually honest has to admit that the system claims recited above unquestionably incorporate identifiable, tangible items that are in no way, shape or form abstract. Yet, these non-abstract system claims are really abstract because the method and computer readable medium claims that are not abstract are abstract because…well… just because it seems.

Conclusion

It is right about here that I normally talk readers down from the cliff and pull them back ever so slowly from the Twilight Zone, frequently ending with something like Hakuna Matada! Unfortunately, a happy ending is not guaranteed and there is no reason to pretend that we aren’t living in the Twilight Zone when something that is not abstract is found to be abstract despite everyone knowing it isn’t abstract. And don’t think the Supreme Court won’t make this type of logical error. This is the same Court that last term in Myriad found that the claims at issue did not cover anything that occurred naturally in nature, that there was human creation, but the claims were still nonetheless patent ineligible because they covered a law of nature. Yes, the old not a law of nature but is a law of nature “logic” prevailed.

Assuming you have snapped back from the Twilight Zone yourself you may be hearing in your head the clanking of coconuts as several Monty Python players exit stage left in search for the holy grail! Of course, regardless of whether the coconuts migrate, those coconuts are are obviously abstract and not tangible, clearly not patent eligible and a fiction of your imagination. Therefore, you really can’t be hearing the coconut clanking noise because imaginary non-migratory coconuts that don’t exist can’t be banged together to make a sound. Please!

Seriously, the fact that something is real and tangible must necessarily prevent it from also simultaneously being abstract and ephemeral. And with that in mind, the patent claims at issue in this case are CLEARLY patent eligible! There really shouldn’t be any honest or intellectual debate otherwise. If these claims are to be declared invalid they should be evaluated to see if they lack novelty (a 102 issue), or if they cover an obvious (a 103 issue) embodiment, or if there is some defect in the specification, which means that the invention is not sufficiently and adequately described (a 112 issue).

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Posted in: Computers, Gene Quinn, IP News, IPWatchdog.com Articles, Patentability, Patents, Software, US Supreme Court

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.

 

19 comments
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  1. Gene,

    Astonishing piece of malarkey is the Solicitor’s amicus brief. I also guess if you buy into the nonsensical logic in the Solicitor’s amicus brief , you would also believe that the moon is made of green cheese or that our world is flat.

  2. Gene, what else would you expect from the administration in hock to Google, etc?

    Law?? Law?? We don’t need no stinkin’ law…we got the White House and the power to issue executive orders.

  3. Well-written, Gene. Loved it.

  4. To use an example that I have used before, but slightly modified:

    Provide a PC network. The network is patent-eligible under 101 because it comprises apparatus but is unpatentable under 102 because it is old.

    Now load the postulated software into it. The network is new under 102 because it has novel software in it but is patent-ineligible under 101 because the software relates to a business concept.

    Now delete the software. The network has changed from its patent-ineligible novel state to a patent-eligible non-novel state. You can play the game as many times as you like.

    There is a fundamental inconsistency here. We have our troubles in Europe, but arguably practice under the EPC is more consistent.

  5. … which raises this curious question:

    Any reason(s) why we all should henceforth utilize only system claims in our U.S. patents … to avoid them being “poisoned” by (the) corresponding method claims?

  6. From MPEP 2106

    “For example, a cup is the tangible application of the abstract idea of containing a liquid and is one limited embodiment of that idea (which is no longer abstract). As another example, a magnetic door latch is the tangible application of the concept of magnetism and does not wholly embrace the concept of magnetism but, rather, is one limited application of the concept.”

    I have to admit that I am simply baffled by some of the language used in discussing these issues possibly because I am trained as a physicist and as an engineer.

    Is containing a liquid an abstract idea or a specific action with an unspecified implement? Is magnetism a concept or a well-defined force?

    When physicists talk about concepts, they usually mean something like Lorentz’ relativistic invariance or like Einstein’s equivalence principle.

    It makes much more sense to use the terminology of definite and indefinite than that of abstract and non-abstract — the term tangible sometimes substituted for non-abstract even though logically tangible and non-abstract are hardly equivalent.

  7. Joachim – At first I was excited to see your post here, thinking you may have finally clarified some matters on another thread as well.

    Then as I dug through (and the thread is about to go to page 6), my enthusiasm waned.

    As to the terms, one trained in one world must be diligent about the legal realm’s use of the term may very well be different.

  8. I am sorry, but I freely admit that I am not a lawyer.

    I am just simply baffled — perhaps because I have been working in computer networking.

    Routing is not tangible (is routing abstract?), but it is something definite.

    Are the devices, systems, or methods claimed in these patents patent-eligible/patentable today?

    Logical routers US 7415507 B1

    Mechanism for implementing multiple logical routers within a single physical router US 7630358 B1

  9. Joachim,

    Your admission here that you are not a lawyer draws some serious doubt to the positions you advanced on the previous thread, and strengthen the counter points raised against your views.

    Please return to that thread and try to grasp the simplified legal lesson I provided.

  10. Gene, your analysis was spot on. Keep up the good work.

  11. Anon,
    It shouldn’t be a negative ding that Joachim is not a “lawyer”.
    However, when he exhibits total lack of comprehension of physics, namely, that electrons are “real” (not abstract) and that the routing of electrical signals requires the pushing around of electrons and consumption of physical (real) energy to do so, then that failure in scientific literacy is the thing that alarms and deserves a loud ringing of the gong bell.

  12. step back,

    Thanks – See the thread now in the archives at page 6 that the comment is in reference to ( http://www.ipwatchdog.com/2014/02/13/supreme-court-abstract-idea-doctrine-is-unworkable/ )

  13. step back might have a case if I had written packet switching instead of routing. Routing is an application of graph theory and not an electromagnetic phenomenon.

    It is always good to take a short walk before posting a comment. I just did.

  14. Joachim,
    How would you like your email “routed”?
    Over a polar coordinates graph or a hyperbolic curves graph?

    (And in both cases we expect you to have your computer totally disconnected from any electromagnetic power source given that routing is pure math “and not an electromagnetic phenomenon;-)

  15. Just as non-lawyers should be careful about making assertions about legal issues, non-tech people should be careful about making assertions about tech issues.

    Email is addressed, but it is not routed. IP packets are routed a few protocol layers down the networking stack.

  16. Joachim,

    I think the point step back was making was that your version of ‘email’ yielded a useless item when in reality ‘email’ must include more. He put “routed” in quotes to indicate that the term may mean more – in the present context – than the strictly technical term you used. I think he wanted to correct you in that it is not just graph theory – that the application necessarily involves more – and more of the type that has the end legal effect beyond graph theory and involving real life items.

    In shorter words, pure math is wrong – real things must be involved.

    And this is a technical understanding (or assertion) – in legal context.

  17. You may be correct wrt step back’s intention, but I am not sure what value is created be conflating the terminology of routing and that of transmission theory.

    In any case, if we look at the patents that I identified as examples in comment 8, there is an issue with the nature of routing as an application of graph theory, but I have to ask. Does the “containing liquid” example of MPEP 2106 apply to “associating” as used in 7,630,358 (granted Dec. 8, 2009)?

    Nothing in the body of the patent specification tells us how the “associating” takes place.

  18. Joachim – look at your own use: theory and application.

    Application simply is more – and that is the point that step back (if I may be so bold as to speak for him) was making.

    You are only thinking in a purely theoretical sense – but any actual notion of the word involves more than that.

    It is not correct to say that this is conflation. This is merely application.

  19. Joachim –

    It appears to me (I may be wrong) that you attended some class where a teacher proclaimed that he, the supreme one, owns all dictionaries and his Humpty Dumpty definition of what words (like “route”, “address”, etc.) mean is the only legitimate one. No one else can determine what is meant by the words that come out of their very own mouths.

    Well, get over it.
    That’s not the way the world works.
    That’s not the way US patent law works.
    It is axiomatic in patent law that each patent applicant can act as his own lexicographer.