America Must be the Leader in Patenting Innovations, Including Software

By Gene Quinn
March 2, 2015

BartEppenauer-tie

Bart Eppenauer

Bart Eppenauer is a partner in the Intellectual Property Group at Shook, Hardy & Bacon. About 18 months ago Eppenauer rejoined the firm after serving as Microsoft’s Chief Patent Counsel for more than a decade. In his role as Chief Patent Counsel of one of the top patenting companies in the world, Eppenauer led the Microsoft Patent Group, managing over 100 patent professionals offering patent counseling and product development support across all of Microsoft’s business and research divisions. Eppenauer and his team were responsible for developing Microsoft’s patent portfolio of over 35,000 issued patents worldwide. Under his guidance, Microsoft’s patent expanded and continued to be the basis for an increasingly successful IP licensing program that drives upward of $1 billion a year to the company.

Recently Eppenauer provided a guest contribution relating to his belief that the Federal Circuit should not consider the issue of willful infringement en banc. After that article published I asked if he would be interested in doing an interview for publication. He agreed. What follows is part 1 of our discussion, which took place Tuesday, February 10, 2015. In this segment we spend much of our time talking about software patent eligibility, the uncertainty facing the industry, how the Federal Circuit really needs to provide clearer guidance as to how to describe innovations to pass 101 muster, and how the U.S. is in for a tough time if we cease to be the world leader in patenting innovations.

Without further ado, what follows is part 1 of my interview with Bart Eppenauer.

 

QUINN: Thanks for taking the time to chat with me today, Bart. There are a number of interesting topics in our space and I suspect you have an interesting perspective on probably the two biggest topics at the moment that are on everyone’s mind, namely patent eligibility and patent reform. Perhaps we can start with patent eligibility and go from there. I know you spent a lot of time at Microsoft, and Microsoft has been quite involved in the patent eligibility cases filing amicus briefs with some pretty strong opinions. I know you don’t speak for Microsoft any more, but with your front row seat for many years, what can you tell us about your view on where we stand at the moment on the issue of patent eligibility?

EPPENAUER: Well sure, thanks Gene. I appreciate you taking the time to talk with me. You know, where I think we stand is there’s no question that there are many changes going on right now – and for the last couple of years there’s been really a lot of uncertainty. I would say that the state of affairs is shifting, but I don’t believe it’s degrading. I’m not a doom and gloom person in this regard. And I think that with each new Federal Circuit decision that comes out, hopefully those will add more to the body of knowledge to the point where we can get some clarity on this.

But no doubt it’s difficult times, and I think really what it means is patent owners and applicants need to do their best job when they’re writing patent applications with software inventions to put in as much technical disclosure as they possibly can and then write claims that encompass and embody that. And if they do that I think that ultimately they’re going to be okay.

One thing that I have long seen is sort of a confluence or a collapse of terms – some people like to interchangeably use the phrases “business method patents” and “software patents.” I can see how that may be appealing. I think that some people will look at some of the cases that have come out since Alice in the District Courts and some of the Federal Circuit decisions and, because they happen to have computers involved, they will call those software patents. I’d probably call them just business method patents that have token reference to computers. I think things are a lot harder on that side of the house. And I think that a lot of the District Court decisions since Alice have really weeded out some of those types of cases where there’s just really not much technical disclosure and only nominal reference to computers or software, and those patents are falling away. So it’s going to be interesting to see how some of the cases come out where there is some real technological disclosure and how the courts address those cases going forward.

QUINN: I would agree with that. The thing that worries me about the state of the law, where we’re at right now, is we’re doing this under Section 101 and it seems increasingly as if you can distinguish the decisions based on the technological disclosure and the specifications. Is there really an invention there or is it really, as you just said, this token reference to a computer and you’re now trying to patent a process that has been known for quite a long time. But it strikes me that that’s not a Section 101 issue. That really has never been about patent eligibility.

This type of decisional analysis has always been under Section 112 and asks about the sufficiency of disclosure. It strikes me that the Kappos Patent Office may have had it right when they came out after Bilski and said get pass Section 101 whenever you can. Use it only as a very coarse filter that captures just the most egregious claims and get to Section 112 to see if there is an invention disclosed. What do you think about that and do you think that that maybe where we’re heading back to that?

EPPENAUER: Well I do agree from the Kappos era perspective and some of the Federal Circuit decisions, at least pre-Mayo, pre-Bilski, or maybe post-Bilski or pre-Mayo, that were trying to talk about Section 101 as being a coarse filter. I happen to subscribe to that view as well. I think that so many of these issues should be dealt with under Section 112 or Section 103. And the Patent Office or the Courts can arrive at the same place in terms of addressing these patents and then you don’t have all of the potential unintended consequences when new technologies emerge and it’s unclear whether you should be able to patent that stuff. You bypass those things.

So I do believe it is unfortunate that’s not the way things unfolded at the Supreme Court and I had hoped that the decisions would come out differently. I think it’s workable and we’ll be okay. But looking at what could have been different — I do feel that the whole notion of trying to find an “inventive concept” is really challenged. While the Supreme Court I think went out of its way to say we are really not putting Sections 102 or 103 in here, I think what’s happening is the Courts are basically trying to do that. And they’re looking deeply into prior art in some cases to knock out patents under Section 101 and whittle away the invention, and trying to find the abstract idea by doing a prior art analysis, and I think that’s troubling. It’s going to be real interesting to see if the Federal Circuit can contain that approach, and I think they really need to try to do that.

With that said, you could say that Alice might have been one of the best decisions for software patents simply because it explicitly acknowledges that many computer implemented claims are formally addressed to patent eligible subject matter. And then there have been a couple of cases where the Federal Circuit has echoed that sentiment. So for people that are saying software patents are ineligible, it’s clear where the Courts are going, I think that’s just wrong. And now we’re just trying to figure out how the law is going to be shaped to make it happen. So I guess to come back to your question, ultimately I wish that we were going more towards Sections 112 and 103, but I don’t think that’s going to happen in the near term.

QUINN: I would have to unfortunately agree with you there. There’s a couple of thoughts that jumped to mind. I was very worried about the Alice decision. Not maybe because of so much of what was said by the Supreme Court in that case but so much of what was not said in that case and I’m just really worried about it being misused both on the examiner level and on the District Court level because fundamentally we all know that that decision has great implication for software and I would think the Supreme Court had to know that too. So to issue the decision in a way that doesn’t use the word “software” really threw me for a loop particularly after the Bilski case, they went through and they explained, well business methods are mentioned in the statute, so therefore at least some business methods must have to be patent eligible. I do wish they had just come right out and said that. I think we’re getting to that place now with many District Courts and the DDR Holdings case is obviously a very important case for patent eligibility, but coupled with what they did not say in Alice and then this terrible Mayo framework, I still can’t get over the fact that in Mayo they wrote that they declined the government’s invitation to address these issues under Sections 102, 103 and 112. It wasn’t really a government invitation, it wasn’t the Solicitor just saying they should do that, but it comes from Congress. We have the different sections of the statute that are siloed to address different things and I really think the root of this problem stems from Mayo.

EPPENAUER: Well I think what is interesting there is perhaps the missed opportunity on taking up the government’s position and looking into the statute as a whole rather than reviving or recasting this inventive concept notion, and so it’s going to be very interesting to see what happens. My hope is that the Federal Circuit will not extend Alice any further in terms of broadening out the Section 101 inquiry, but really try to put rational constraints around it. I don’t think there’s a real appetite for the Federal Circuit to take on the Supreme Court on these issues, so it’s pretty clear that they are implementing the Mayo framework, the Alice framework, but hopefully they will be able to stay within the boundaries of that and continue to develop the law in the right way so that real software-based, technological-based innovation continues to thrive.

QUINN: Well let me ask you this, in 2014 after the Alice decision hits, I think a lot of people became depressed, maybe even despondent and I think you saw the patent market really dry up for at least a quarter, maybe almost through the end of the year and then there seemed to be people becoming more optimistic the patent market was open for business at the end of the year maybe to get deals closed before years’ end, who knows why that was. And then you get the DDR Holdings case and then you get Senator Durbin during Michelle Lee’s confirmation hearing saying that maybe we should tread lightly on patent reform and I think then a lot of people start thinking maybe the worse is over now and maybe we’re going to have an opportunity to go into a period where we can consolidate our understanding without constantly changing our understanding. What do you think about both 2014 when you look back and what is in store for the remainder of 2015?

EPPENAUER: Well I do believe in 2014, right after Alice, there was quite a bit of confusion and speculation going on and it was difficult to know where things were going to head. Again, I still held out hope that it was not a doom and gloom situation but we just needed to see some more decisions coming through. There certainly was a lot made of a decline in patent litigation in the second half of 2014 and questions raised around whether that was because of Alice, or was it because of the AIA. What was happening there?

Probably it’s fair to say that all of the reforms over the last several years may have had the impact that they were designed to have in terms of reigning in some of the activity in patent litigation abuse. But even if you look at the numbers, while there’s been a decline, it’s still relatively high. If you look back over the trend lines from the past five years, I think we’re still pretty high up there, not at the peak, but consistent with where things were a few years ago. And so I can understand why there’s still an appetite to address targeted litigation reforms and that’s where Congress is right now in 2015.

I do believe that so much has happened with the AIA and so much has happened with all of these Court decisions that we would be very wise to continue to let the impacts unfold on how all of that is evolving and where things are going to lead down the road. Certainly Inter Partes Reviews are going strong, the PTAB is quite busy, and so from an AIA perspective, I think there is success around that.   In 2015 for patent reform and now that the bill is back in Congress, I would say there’s still support for the bill, but perhaps not as strong support as there was last year and perhaps there are more opponents that are coming forward expressing their views and concerns. It will be really interesting to see whether Congress has the will to try to get the bill through.

I think it would be very difficult to bring any significant new issues forward. For some of the larger issues, for example patent subject matter eligibility, it would be very difficult since there are so many varying views on that. So if they stick to the bill or even narrower issues to only address real consensus driven litigation abuse areas, I think it will be fine and that could help overall. It certainly wouldn’t damage the patent system at large, but stepping back some, I do feel that in general right there’s a bit of a negative sentiment on patents overall, an environment generally hostile to patents overall, and that does concern me long term.

I’m a huge believer in the patent system and incentivizing innovation and R&D investment, and if America is not a leader in patenting innovation and R&D investment, then that’s going to have some difficult consequences. So I think it’ll be targeted reform and perhaps something will get done, but not as much support as there was last year.

CLICK HERE to CONTINUE READING… Up next we continue our discussion of patent reform. We then delve into the issue patent litigation abuse, a generalized judiciary that is asked to decide technology issues, and what changes he would make to improve the patent system. 

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

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