Retroactive changes to patent eligibility law suggest patents are not a property right

By Gene Quinn
April 6, 2015

Conflict Management

 

One might think that just about everything that can be said about Alice has already been said, but whenever there is an Alice themed presentation or webinar the room, or phone line, is packed. Patent attorneys and innovators are struggling to understand what needs to be done. We will gladly comply with whatever the Courts want to see in a patent application, just tell us!

And therein lies the real problem. Many of the patents that are failing because the claims do not exhibit patent eligibility subject matter were written many years ago at a time when the claims obtained would clearly have satisfied the tests in place at the time. To me this is one of the most fundamentally unfair aspects of the patent law that applies to software patents. As the law has evolved things that were once clearly patent eligible are now patent ineligible, but that doesn’t mean that the underlying innovations aren’t commercially valuable or innovative. It means that applications were written to one standard and then evaluated by a different standard that came into being many years later.

The best advice for innovators is to understand that there is no such thing as a quick, cheap and easy software patent any more. Perhaps there never should have been, but you really cannot blame patent attorneys for writing software patent applications in ways that explained software as a method. Yes, it is now clear that Courts, particularly the Supreme Court, will not allow software method claims. But if we want to be intellectually honest software is best described as a method.

Software is not an abstract idea, and it is not some product of nature. Software instructs a machine to operate in a specific way to accomplish a specific task. The fact that judges cannot understand the nature of software doesn’t change the reality that software is best understood by a method. What this means is we have to now describe software with extremely detailed disclosures, dense technological disclosures akin to a design document. Show the algorithms, explain the interoperability, and include the nuanced details. The focus cannot be on someone of skill in the art. The focus must be to overwhelm the average lay judge into understanding that there really is a technological advance, even if that isn’t specifically a requirement set forth in the Patent Act, or one even particularly well announced by the Supreme Court of Federal Circuit.

In short I’m saying that patent attorneys and innovators must anticipate that the law will change. When the law changes it will be applied retroactively. Every time the law changes more disclosure and technical specifics are required. I just don’t think you can write software patent applications to satisfy any particular standard that may exist at the moment, even if you could understand what the test of the moment is. Patent attorneys must engage as if we are playing chess – the way to succeed is to see the board several moves ahead. That will require onerous disclosures, greater expense, but it should lead to a generation of exceptionally strong, valuable patents in the future.

Of course, before we can look several moves ahead it would be helpful to understand the current state of the law. Sadly, that isn’t easy given conflicting Federal Circuit cases and an Alice decision that raises multiple questions with few useful answers.

“The reasoning is impenetrable,” said retired Federal Circuit Chief Judge Paul Michel speaking about Alice at the ABA spring IP meeting. Judge Michel says he doesn’t necessarily have an issue with the claims in Alice being declared unpatentable, but the Supreme Court decision results in an unpredictable test. “There is a shifting sand approach… When I get to the end of Alice I have no test,” Michel explained. He would go on to say that Alice is “great for litigators, but bad for business people, bad for inventors and bad for investors… It is a killer for investment.”

The Alice decision is “not very logical, not very rational and cannot be consistently applied,” Judge Michel went on. “We have a morass of uncertainty.” Unfortunately, the Federal Circuit may not be able to dig out of this mess because “the Supreme Court may have painted themselves into a corner,” Michel explained, relating to the unfortunate reality that the Supreme Court has selectively applied precedent in ways that make it impossible to reconcile all the decisions that the they somehow believe are all still good law.

Judge Michel is not the only highly regarded jurist to point out that it is difficult to harmonize Supreme Court patent eligibility decisions. “I have great difficulty rationalizing the Supreme Court’s opinions in Flook and Diehr,” Judge Richard Linn told me in an interview in November 2014. “In many regards I think those decisions are irreconcilably in conflict.”

This is one of the points I raised on the panel I participated in at the ABA meeting. The problem with decisions from the Federal Circuit, Patent Trial and Appeal Board and District Courts isn’t that they don’t scrupulously follow the law. If anything many decision makers are too scrupulously following the broad, generalized guidelines embodied in one or more Supreme Court patent eligibility decisions without enough consideration of the unique facts and circumstances of those before them. While I don’t think judges do the system any favors by merely trying to divine the intent of the Supreme Court, the real problem facing the industry is that we have no idea, which precedent judges are going to follow.

There is simply no way to reconcile all of the Supreme Court’s patent eligibility cases. A decision maker has to pick and choose which precedent to ignore and which precedent to follow. Once you know which cases they will treat as authoritative you know the outcome. This lack of certainty and predictability is the enemy of business and investment. It is also the enemy of common sense and any rational sense of justice and fair play. It is further the enemy of a property rights regime.

With patents we are ostensibly talking about a property right, but every several years the law changes. These new legal pronouncements get applied retroactively to kill patents. The real tragedy is that in many instances, if not most instances, the innovations that are now rendered patent ineligible could have been articulated and claimed as patent eligible inventions if only we knew what test would be used to evaluate them later.

Eric Gould Bear, a prolific inventor and expert witness in software and hardware user interfaces, suggests considering the use of the term “statutory” in claims themselves. He explains, “I’ve often thought that there should be a way to build in flexibility. Just think of all the headaches we could have saved around non-transitory signals by claiming ‘statutory computer readable media.’” Whether such a practice would satisfy courts that sometimes seem all too willing to invalidate patent claims is unclear. However, Bear offers an imminently reasonable solution – give patent owners a period of time to conform the language of previously issued patents to new standards without losing past priority rights. “That would be a smart way of grandfathering within a system that has reasonable motivation to evolve,” Bear explains.

Without offering something like Bear’s proposed cure period, this is exactly why with property rights, such as real estate, laws are typically not applied retroactively but only applied prospectively. People handle their affairs according to the law, as it exists. Changing the rules of the game is fundamentally unfair, which would be obvious to everyone if we were talking about football, soccer or playing a board game. Somehow common sense is abandoned when dealing with patents. Changing patent laws in midstream seems particularly un-American, both because it disturbs vested property rights and because it is quintessentially anti-inventor.

For some reason changes to patent law that directly change the rules affecting the very existence of the property right have always been applied retroactively. This is not something that would ever happen to real estate, and if it did the market for real estate would collapse because there would be no way anyone could be certain that the real property they own today would be theirs in the future. That kind of uncertainty paralyzes owners. We know this to be the case based on what we have repeatedly observed in developing countries. When they recognize strong personal rights to own real estate the economic outlook changes dramatically.

The fact that changes in the law retroactively apply to patents to render a once valid patent claim invalid is proof that patents are not truly a full-fledged property right in the view of many judges. Sadly, patents are treated as a red headed stepchild of the property world, fated to hang in the wind at the whim of judges and Congress. This is particularly disturbing given that we are talking about a property right of constitutional importance. Where are the Constitutional conservative leaders and jurists?

If we want to maximize a property rights regime it must be certain, stable and predictable. Patents are no exception.

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.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 28 Comments comments.

  1. angry dude April 6, 2015 1:42 pm

    I was saying for years that patent system is turning into some kind of legal game only the largest corps can play
    Now the sh1t finally hit the fan

  2. Anon April 6, 2015 1:46 pm

    angry dude,

    i4i wold like to have a word with you.

  3. Gene, but not Gene Quinn April 7, 2015 8:05 am

    The problem of courts not understanding software lies not so much in the invalidation of crappy patents as in the manner that they articulate their opinion. I think the courts are being fair to invalidate crap because they can “sense” crap on their radar, but I agree that they are not providing much guidance.

    “Many of the patents that are failing because the claims do not exhibit patent eligibility subject matter were written many years ago at a time when the claims obtained would clearly have satisfied the tests in place at the time. To me this is one of the most fundamentally unfair aspects of the patent law that applies to software patents.” Who’s fault is it that “the tests in place at the time” were so weak? The lawyers, because those lawyers themselves did not understand software, and instead of submitting technological distinctions they fell back on their non-techie lawyerly skills and argued, argued, argued with non-lawyer examiners that claimed functions were not disclosed in the prior art, thereby lowering the patentability threshold by slow erosion until it was lower than the crap being shoveled over it.

    You cannot notice the slow erosion while you’re watching it but if you are a court that looks at a software case once every ten or twenty years it’s a big difference and those judges are left wondering what the hell happened to patents.

    The point of the software=hardware position is that you must claim the hardware even though your inventor wrote software and never touched hardware, but non-techie people fall back on claiming functions because it’s lazi-, I mean easier.

  4. Gene, but not Gene Quinn April 7, 2015 8:28 am

    “Software instructs a machine to operate in a specific way to accomplish a specific task. The fact that judges cannot understand the nature of software doesn’t change the reality that software is best understood by a method. What this means is we have to now describe software with extremely detailed disclosures, dense technological disclosures akin to a design document. Show the algorithms, explain the interoperability, and include the nuanced details. The focus cannot be on someone of skill in the art.”

    there are a hundred or more levels of detail between high level functional language and “dense technological disclosures akin to a design document” for sofware. patent attorneys make decisions every day as to what level of detail satisfies enablement. so when I hear someone claim that there are about two levels of detail for software, that’s just polarized binary crap.

  5. Joachim Martillo April 7, 2015 10:15 am

    I have not checked all the patents being invalidated, but those I have certainly deserved invalidation and should never have been granted in the first place.

    Here is a software method patent (US5018137 Transparent load sharing for parallel networks) from the late 80s and early 90s that certainly should have been granted, and if it were innovative today, the claims (1 independent claim for a software method and 1 independent claim for device which has a major software component) should certainly be allowable.

    http://www.google.com/patents/US5018137

  6. step back April 7, 2015 12:19 pm

    To Gene who is the real Gene:

    You still don’t want to step forward and call the game for what it is at its bare bottom: SCOTUS legislating when they have no legal right under the Constitution to legislate (that right vests exclusively with the Congress) and SCOTUS legislating in an area where they have no subject matter competence which is why we get incomprehensible gobbledygook like Alice. Shame on us all for not calling the out of bounds game play for what it is.

  7. Anon April 7, 2015 12:52 pm

    Completely agree step back.

    It is vexing to hear so much “well, we cannot change it so let’s just deal with it” from the professional societies.

    History does tell a very different story, as the Act of 1952 germinated in a rather similar Supreme Court anti-patent mindset.

    As I had posted prior to the Alice decision, I was truly hopeful for a Chakrabarty reflection post Benson-Flook and was ultimately highly disappointed in the weakness of our judiciary to understand and play their designated role. Not only did we continue to see legislation from the Bench, but we see a failing “Void for Vagueness” legislation.

    In some sense, I believe that our country would have been better off with a Court decision that was more outright (flagrant even) in setting aside the words of Congress instead of the slowly-boiling-frog gamesmanship that we have been given. I know that I can see the bigger picture and I can see what is really going on, but there is still too much smoke and mirrors, too much “interpretation” that is not really interpretation and too much “scrivining” from the Court to not bring Congress to full alert that it is their delegated authority that has been violated.

  8. step back April 7, 2015 5:14 pm

    Anon,

    What do you mean by “more flagrant”?

    Congress legislated a law called 112.
    It says the inventor is the one who defines that which he regards as his invention by means of the words of the claim taken as a whole.

    SCOTUS legislated a new law called, we don’t care. We don’t care what the inventor and his crafty evil attorney put into the claim. We control the horizontal. We control the vertical. We decide how abstract and ineligible it all is. We and no other.

  9. Anon April 7, 2015 5:26 pm

    What I mean by more flagrant would have been words to the effect of slapping Congress across the face hard enough for them to stop their petty Repub-Dem-stuff-cash-in-our-pockets ways, at least for a little while.

  10. step back April 8, 2015 5:23 am

    Anon,

    I am not disagreeing with you.

    … merely pointing out that we already there
    … at the stage where there is complete and utter disregard for the US Constitution and for the federal laws legislated by Congress pursuant to that Constitution, especially that part that urges Congress to promote the progress of science and the useful arts.

    The law passed by Congress says (paraphrasing slightly): “ANY new and useful machine, ANY new and useful process, ANY new and useful composition of matter”.

    SCOTUS has added, unless we say otherwise.

  11. Anon April 8, 2015 10:44 am

    step back,

    I know that you and I are of accord on the judicial malfeasance (and that’s being polite), but respectfully, our Congress is most definitely not “already there.”

    I noticed on “that other blog” that Mr. Ron Katznelson has petitioned the government to retrench itself from its propaganda. This mirrors the fine work that he and Mr. Boundy have done in the past in protecting our innovation system, and – perhaps – this will serve as a wake-up call to our legislative branch that their dominion has been invaded.

  12. step back April 8, 2015 3:59 pm

    Anon,

    I wish I could agree with you on your stance about our Congress being most definitely not “already there.

    But respectfully, I suggest we already have the best Congress that corporate lobbyist money can buy. Witness for example how Senator Schummer of New York got that covered business method clause into the AIA Act. There is little debate that he does the bidding of the banking industry.

    Note also that Alice was about a small upstart going up against a too-big-to-fail bank called CLS. Did that influence some minds on the SCOTUS bench. I can’t say for sure yes. But neither can I say no.

    The patriotic efforts of Mr. Ron Katznelson and others are to be lauded. However, they are going up against a giant and well-funded anti-inventor lobby.

    There is no shortage of lobbyists who are willing to sell out our country (and its Constitutional mandate for promoting progress and the useful arts) for a buck or two. There is no shortage of shallow-thinking members of the judiciary and of the legislative branch who are willing to accept any kind of feel-good emotional pitch that the lobbyists throw at them. Sad. 🙁

  13. Anon April 8, 2015 4:41 pm

    step back,

    I mourn with you, but alas, my “there” is most definitely not the same “there” that you recite, but rather the opposite “there” and one of principle and reason that would reflect the will to resist an anti-patent Court and restore protection of innovation as the Constitution calls out.

    We need a similar movement as that one which spawned the Act of 1952.

  14. step back April 8, 2015 5:09 pm

    And we need Congress persons and Judicial persons who have some realistic background in science, technology and the hard work that goes into inventing rather than unquestioning belief in magical thinking.

    Witness for example the oral arguments of the Alice v. CLS case where the Supremes espouse a belief that you can walk into any Silicon Valley coffee shop on a Friday afternoon, explain your “idea” in a few short sentences to some Java-sipping nerds, say “make it so” and the nerds will have it implemented on a “generic computer” by Monday morning. They are totally clueless and not willing to hear otherwise. There lies the rub. (It’s a salt mine sized rub and not merely a pinched fingers kind of rub.)

  15. Gene Quinn April 8, 2015 6:38 pm

    Step-

    I agree with you when you say we need people in Congress and on the bench who understand science and technology issues. Further, your pointing to Alice oral arguments is perfectly accurate and reasonable. I jokingly make fun of that misguided belief myself. As if a second year engineering student could simply write the code necessary to bring anything commercially relevant into being over a weekend. It is absurd.

    Having said that, the bigger problem in my mind isn’t that Justice Kennedy asked a really stupid question during oral argument that exposed his utter lack of knowledge, but rather that the attorney didn’t push back. As I heard Justice Kennedy ask that question in real time I thought initially it was a lay-up. It should have been. “NO, your Honor, that is not correct…” should have been the words out of his mouth. Instead he agreed.

    I understand there are a handful of attorneys who have SCOTUS credentials, but when the case deals with science or technology it is very dangerous to have an attorney argue the case who doesn’t know those issues and have the ability to convey them to a lay person. After all, Justices on the Supreme Court are no different than any other lay person on the street when it comes to science and technology.

    -Gene

  16. step back April 8, 2015 8:28 pm

    Gene,

    Also we should point out to the readers of your excellent blog that in the case of Alice v. CLS it wasn’t “a” (generic) computer that needed programming but rather a complex network having many computers and obviously having appropriate security for carrying out financial transactions between the escrow holder and the many transactors over the network.

    Not something to be casually done over the weekend by pre-grad engineering students.

  17. Ned Heller April 9, 2015 7:02 am

    Gene, there is no doubt that the Supreme Court jurisprudence regarding 101 is both unclear and hard to reconcile. But it is also true that software as applied to conventional processes, see Diehr, or larger systems, Alappat, has always been eligible. The problems begin to occur when a computer is being used to perform math, as in Benson/Flook. The Supreme Court has never gone that far.

    So when you contend the law has changed, what you are talking about really is State Street Bank, a Federal Circuit decision that was never approved by the Supreme Court, and which was recognized as a outlier at the time.

    If there is complaint here, it is this: Why didn’t the Supreme Court review State Street Bank or its line of cases sooner? They denied cert. in 1999, only to take the issue up in response to In re Bilski.

  18. Samson Corwell April 13, 2015 4:10 pm

    I agree that IP isn’t property solely for the reason that it is intangible. It’s just the wrong word to use. This doesn’t have any particular implication for me. It’s just how I see it.

    As for the people complaining SCOTUS “legislating from the bench”, that’s how a a common law legal system works.

  19. Ned Heller April 13, 2015 9:20 pm

    Mr. Corwell, but the Supreme Court has often ruled that a patent is subject to the protection of the “Takings Clause” such that the government must compensate for acquisition or use under eminent domain. The compensation for use must be based on implied contract, not tort. There is no right to an injunction.

    A patent protects an invention. An invention surely is the property of the inventor. But what is that — an inchoate right to a patent provided the formalities are complied with. John Marshall thought the right to a patent inhered in the first inventor as a matter of constitutional law.

  20. Anon April 13, 2015 10:17 pm

    Samson Corwell, your observation of “that’s just how a common law legal system works” would be pertinent if patent law were common law.

    As it is, it is not.

    Patent law is expressly statutory law and not common law. Sure, the original statutory law did authorize some judicial common law development, and in truth, some common law power still exists – where the statute is clear that such power is so designated.

    As far as property and tangible/intangible, I am afraid that these too are legal terms of art, and your “common” understanding is simply not up to the task. Stating that this is “just how you see it” is certainly “illuminating,” if only to point out that you are not seeing this correctly.

    I will stress that it does NOT take a lawyer to understand the law, but it does require one to recognize that it is indeed law (and thus legal terms of art control).

  21. Samson Corwell April 15, 2015 7:23 pm

    In reply to Ned Heller:

    “Mr. Corwell, but the Supreme Court has often ruled that a patent is subject to the protection of the ‘Takings Clause’ such that the government must compensate for acquisition or use under eminent domain. The compensation for use must be based on implied contract, not tort.”

    That’s fine. IP just isn’t what I’d call property in my mind. That’s all.

    “There is no right to an injunction.”

    I’m unclear as to what you are talking about here.

    In reply to Anon at #20:

    “Patent law is expressly statutory law and not common law. Sure, the original statutory law did authorize some judicial common law development, and in truth, some common law power still exists – where the statute is clear that such power is so designated.”

    Yes, patent laws are passed by legislatures, but there is still such a thing as case law, like when SCOTUS rules on the incorporation doctrine, legal tests, and so forth. The two aren’t really opposed to one another.

    “As far as property and tangible/intangible, I am afraid that these too are legal terms of art, and your ‘common’ understanding is simply not up to the task. Stating that this is ‘just how you see it’ is certainly ‘illuminating,’ if only to point out that you are not seeing this correctly.”

    What? A guy can’t have opinions?

    “I will stress that it does NOT take a lawyer to understand the law, but it does require one to recognize that it is indeed law (and thus legal terms of art control).”

    I agree with the first part, but the second doesn’t make sense to me when you use “recognize”. I have no doubt the lawyers know more about the intricacies than me.

  22. Anon April 17, 2015 9:55 am

    Samson,

    You mistake the notion of case law as interpretive versus case law as common law in the actual law writing sense.

    The two are most definitely not equal. And they are most definitely opposed to one another.

    As to having opinions – I am also most definitely not saying that you cannot have them But if you want to have an informed opinion, then yes, something more is required. If you are unwilling to change your opinion after being informed, then your opinion is more clutter and unhelpful than it is helpful. You always have the choice of being helpful or unhelpful – you do not have the choice of ignoring being informed and then merely claiming that your opinion is helpful when it is not.

    As to making sense to you, well, that takes a certain willingness on your part to realize that in fact, naked opinions that remain steadfast based on pure belief systems and that are not willing to advance when being informed – that is, willing to recognize what “making sense” means and entails – are opinions that while perfectly able to “be had” are not the types of opinions that are worthwhile to “be had.”

  23. step back April 17, 2015 1:40 pm

    Maybe a simple example will help demonstrate the difference between legislating from the bench and interpreting from the bench.

    Let’s say Congress passed a law decreeing, “Henceforth all issued patents will use white paper and black ink.”

    Let’s say that the US Supreme court decreed, NO, henceforth all issued patents will use blue paper and yellow ink.

    That is legislating from the bench. Congress says white and SCOTUS says, no, blue.

    On the other hand the terms white and black are ambiguous. How white does white have to be? How black does black have to be? SCOTUS may use its adjudicative, interpretive powers to clarify what Congress intended.

  24. Mark April 19, 2015 1:00 am

    “Show the algorithms, explain the interoperability, and include the nuanced details. The focus cannot be on someone of skill in the art”

    Oh no, actually having to claim your invention. That’d be a shame. After all, who would want to simply claim a software system for clicking and dragging something into a software cart and not even have to worry about the details behind the scene

  25. Samson Corwell April 19, 2015 4:15 pm

    step back,

    I’ve never found the accusation to make any sense. Your example is just silly. SCOTUS does not and cannot legislate from the bench. The idea, like “judicial activism” is nonsense.

  26. Gene Quinn April 19, 2015 5:29 pm

    Samson-

    What is nonsense is believing that judicial activism is a myth. As for legislating from the bench, it happens all the time in the patent arena. All you have to do is look at the judicial exceptions of patent eligibility. No where in the statute do those exceptions exist. Moreover, the Supreme Court admits that they are legislating from the bench when they call them “judicial exception.”

    You need to wise up.

    -Gene

  27. step back April 22, 2015 1:30 pm

    Samson,

    When the US Congress says “ANY new and useful machine” and then
    SCOTUS says, except machines that we arbitrarily determine to be directed to an abstract idea, THAT is legislating from the bench.

    Like it or not, that is precisely what SCOTUS did in the Alice v. CLS case.

  28. Saint Cad May 27, 2015 9:40 pm

    What may be fair is to allow the invalidated claims to be rewritten to account for newer case law while enjoying protection back to when it was first filed. Suppose I patented the one click “Checkout as guest” method. I should be able to go back and claim how it saves memory on the database server since it does not have to store customer information. Presto! Valid claim without substantially changing the original claims that were valid before Alice.