Posts Tagged: "Alice Corp. Pty. Ltd. v. CLS Bank Intern"

In 2001, the U.S. Supreme Court ruled for the first time that plants could be protected with utility patents. J.E.M. Ag Supply, Inc., v. Pioneer Hi-Bred International, Inc. 534 U.S. 124. This landmark decision, originating in the agricultural heartland of Iowa, was the last time the Supreme Court effectively increased patent protection for inventors and patent owners. Most, if not all, of the Supreme Court’s patent rulings in the past two decades have not been favorable to patent owners. Rather, these “recent” decisions have restricted patent rights and made it more difficult to enforce these rights against infringers.

Representative Thomas Massie (R-KY) on November 5 introduced a bill, titled the Restoring America’s Leadership in Innovation Act of 2021 (RALIA), HR 5874, that would repeal the Patent Trial and Appeal Board (PTAB), return the patent system to a “first-to-invent” model, rather than first-to-file, and would end automatic publication of patents. Inventor groups such as US Inventor and conservative groups are supporting the legislation.

Consumer 2.0, Inc. d/b/a Rently has filed a petition with the U.S. Supreme Court asking it to review a U.S. Court of Appeals for the Federal Circuit decision holding its patent claims ineligible for patent protection under 35 U.S.C. § 101. The claims are directed to “the use of lockboxes able to recognize time-limited codes and coordination of those codes with software to facilitate secure automated entry.” Rently’s petition was filed just as the High Court kicked off its new term by denying certiorari yesterday in Chamberlain v. Techtronic, which also sought review of a Section 101 eligibility decision.

The Federal Circuit has been criticized for creating categories of abstract ideas when applying Alice v. CLS’s two-prong framework and for refusing to define the contours of an abstract idea. Naturally, this causes uncertainty for those drafting patent claims. A typical view is that claims can be drafted by analogizing to them to the decisions. However, analogical reasoning has limited utility where the Federal Circuit continues to define new abstract ideas. This article argues that Alice’s definition of a patent-eligible claim is consistent with the Federal Circuit’s decisions and that this definition can be a useful analytical tool while drafting claims.

The United States Patent and Trademark Office (USPTO) Chief Economist today released a report, “Adjusting to Alice: USPTO patent examination outcomes after Alice Corp v. CLS Bank International,” outlining the effect of recent USPTO actions on patent eligibility determinations in certain technology areas most affected by the Alice decision. According to a USPTO press release, the conclusion is that these actions “have brought greater predictability and certainty” to these tech areas. “We have heard anecdotally from both examiners and applicants across the entire spectrum of technologies that our 2019 guidance on Section 101 greatly improved the analysis in this important area of patent law,” said Andrei Iancu, Under Secretary of Commerce for Intellectual Property and Director of the USPTO in the press release. “The Chief Economist’s report now confirms this general perception, especially with its critical finding that uncertainty decreased by a remarkable 44%.” 

Last week, the U.S. Court of Appeals for the Federal Circuit issued a Rule 36 judgment in a patent eligibility case, Consumer 2.0, Inc. v. Tenant Turner, Inc., No. 19-1846 (Fed. Cir. 2020). The ruling affirmed the findings of the U.S. District Court for the Eastern District of Virginia that the claims of a a patent for a “method employing a combination of hardware and software for secure, automated entry of real property” were invalid for being directed to an abstract idea and, thus, were ineligible for patent protection under 35 U.S.C. § 101. The patented method essentially allows a user to enter a “durational” – rather than static – code on a lockbox in order to view a rental property without a realtor being present.

The U.S. District court for the Northern District of Texas, Dallas Division, overturned a $10.1 million jury verdict on January 17 against Japanese gaming giant Nintendo under the Supreme Court’s Alice test, which the High Court recently declined to clarify amidst confusion. In August of 2017, a Texas jury entered a verdict against Nintendo, finding that the company had infringed upon a patent asserted by Texas-based medical tech firm iLife Technologies Inc. The jury agreed that iLife proved that it was owed $10.1 million in a lump sum royalty for the sales of a series of games for Nintendo’s Wii U console. The jury also found that Nintendo didn’t prove invalidity of the asserted patent. In its analysis overturning the jury verdict, the district court reasoned that “[a]t its core, Claim 1 is directed to the abstract idea of ‘gathering, processing and transmitting…information.’”

A petition for certiorari was filed on October 1 in the case of Athena Diagnostics v. Mayo Collaborative Services asking the question: “Whether a new and specific method of diagnosing a medical condition is patent-eligible subject matter, where the method detects a molecule never previously linked to the condition using novel man-made molecules and a series of specific chemical steps never previously performed.” The petitioners hinge their argument throughout the brief on the novel beneficial utility of their claimed method…. However, benefit has not always carried the day in recent eligibility analyses….. Patent eligibility, considered to be the most important question facing the patent system, poses insidious problems under current jurisprudence to some of the most beneficial cutting-edge technology available today. What is most curious is that this problem apparently can be solved simply by reaching back to the foundations of modern patent law and the underlying requirement that inventions be “useful,” a term that has been baked into the statutory provisions since the first patent act.

Each year the World Intellectual Property Organization releases a report titled World Intellectual Property Indicators. The latest edition of the report, the 2019 version, is a look back on the filing statistics for 2018. The report is eye-opening and should be mandatory reading for policy makers and legislators in the United States. For the first time since 2009, the United States saw a decline in the number of patent applications filed. This remarkable statistic comes at a time when patent applications are growing in number across the rest of the world. And let’s not forget that 2009 was a time of particular economic crisis both in the United States and around the world due to the global financial crisis and Wall Street meltdown brought on by the housing market collapse.  

Insurance is a highly regulated field. New approaches to innovation are sorely needed. The need for innovation itself is undeniable as the tech world runs head long into the world of insurance. For example, the regulation of insurance is hundreds of years in the making and steeped in arcane regulation. However, the patent system—ostensibly an engine of innovation—has been notably hostile to insurance innovations, especially since the Supreme Court’s 2014 decision in Alice Corp. Pty Ltd. v. CLS Bank Intern. Indeed, the USPTO’s latest guidance on applying Alice specifically lists insurance as a type of fundamental economic practice that should be treated as unpatentable. While the federal patent system may be restricting the protection available for insurance innovations, there are other ways of supporting innovation, and Kentucky is leading the way with its recently passed regulatory sandbox for insurance innovation.

Athena Diagnostics filed its petition for certiorari with the U.S. Supreme Court yesterday in Athena Diagnostics v. Mayo Collaborative Services. There is a strong argument for the Court to grant the petition, and patent stakeholders on all sides are sure to weigh in via amicus briefs over the next month. The petition could represent the best chance for clarifying Section 101 law in the near-term, since patent reform efforts on the topic have been seemingly stalled. Below are a few initial reactions from the patent community to Athena’s arguments.

In Part I of this analysis, I discussed litigation trends before and after the Supreme Court’s decision in Alice Corp Pty Ltd v. CLS Bank Int’l., which turned five this year. In Part II, I will break down the data further by examining how the court decide Section 101 motions according to the underlying patented technology. Your interpretation of these facts depends on your point of view—a suitably post-modern outcome for some, less so for others. If you are a rights holder or licensor who depends on the objective certainty of patent rights, then the numbers are merely a grim confirmation that bad patents and bad science make for bad law. The consistency that Alice brings to litigation is, at best, the epistemic certainty that a patent on just about any kind of technology can be subject to a motion to dismiss for ineligible subject matter—and that nearly 60% of such attacks succeed in the district courts and are then affirmed over 85% of the time on appeal to the Federal Circuit.

The Federal Circuit recently vacated and remanded a decision by the Northern District of California granting a motion on the pleadings that claims related to “toolbars” on computers were ineligible under 35 U.S.C. § 101. The Court, holding that the district court failed to address a claim construction dispute, was “hesitant to construe patent claims in the first instance on appeal” and remanded for further proceedings. Judge Lourie authored a dissent, finding the claims to be “clearly abstract, regardless of claim construction,” and opined that he would have affirmed the district court’s holding. See MyMail, Ltd. v. ooVoo, LLC, Nos. 2018-1758, 2018-1759, 2019 U.S. App. LEXIS 24430 (Fed. Cir. Aug. 16, 2019) (Before Lourie, O’Malley, and Reyna, Circuit Judges) (Opinion for the Court, Reyna, Circuit Judge) (Dissenting opinion, Lourie, Circuit Judge).

It’s been five years since the Supreme Court remade the law of patent eligibility in Alice Corp Pty Ltd v. CLS Bank Int’l. As we all know, in Alice the Supreme Court dictated that patent-eligible subject matter is determined based on a two-step test. The application of this test under Queen Alice’s reign has drastically altered the patent landscape. Over 1,000 patents have been invalidated by the federal courts and the U.S. Patent and Trademark Office’s (USPTO’s) Patent Trial and Appeal Board (PTAB), while over 60,000 patent applications have been abandoned before the USPTO following rejections for patent ineligible subject matter. Patents and portfolios in many fields – particularly software and biotechnology – have declined in value or simply become unsaleable at any price. Defenders of Queen Alice and her critics go back and forth endlessly, driven by differing permutations of ideology, technology, judicial philosophy and business goals. I have contributed my share to those discussions, no doubt. But today, let’s get down to data and see what has really happened under Queen Alice’s rule.