After the Federal Circuit issued its en banc decision on May 10, 2013 in CLS Bank v. Alice Corp, the patent owner Alice Corp must be feeling like Alice in Alice in Wonderland, bewildered and frightened by the fantastical situation in which they find themselves:

(1) “bewildered” because an equally divided Federal Circuit affirmed the district court’s holding that Alice’s claimed system to tangible machine components including a first party device, a data storage unit, a second party device, a computer, and a communications controller, programmed with specialized functions consistent with detailed algorithms disclosed in the patent, constitutes a patent ineligible “abstract idea;”

(2) “frightened” because, as Judge Moore puts it, “this case is the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents” (Moore Op. at 2); and

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.

UPDATED: 2:07pm ET

Well, the United States Court of Appeals for the Federal Circuit sort of decided CLS Bank v. Alice Corporation earlier today. Truthfully, all the important questions that we thought might be answered remain completely and totally unanswered because there were only 10 judges who sat on the en banc tribunal and no more than 5 judges signed on to any one opinion.

The only thing we know is this — the Federal Circuit issued an extraordinarily brief per curiam decision, which stated:

Upon consideration en banc, a majority of the court affirms the district court’s holding that the asserted method and computer-readable media claims are not directed to eligible subject matter under 35 U.S.C. § 101. An equally divided court affirms the district court’s holding that the asserted system claims are not directed to eligible subject matter under that statute.

Thus, all of the asserted claims are not patent eligible. At the moment I am completely flabbergasted and don’t know what to say.

This final installment of my interview with Judge Linn of the United States Court of Appeals for the Federal Circuit. In part I of the interview we discussed a number of general background issues, including how the Judge got into the field of patent law and became a Judge on the Federal Circuit. In part II of the interview we discussed the Inns of Court and the Richard Linn Inn Alliance, as well as civility (or lack thereof) in litigation.

In this final segment of the interview, which appears below, we move into the issues of the day: the changing patent laws and Supreme Court interest in patents. We also discuss Judge Linn’s decision to take senior status, the fact that he won’t be able to sit en banc unless he was on the original panel, and the Judge’s idea that only few cases really should be designated as precedential opinions.

On Friday, February 8, 2013, I had the honor to interview Judge Richard Linn of the Federal Circuit. We met in his chambers with the recording going for approximately 60 minutes. In Part I of the interview we discussed Judge Linn’s early interest in patent law and how he found himself appointed to replace the recently deceased Judge Giles Sutherland Rich. We then discussed engaging as a lawyer with civility while still zealously representing clients. That brought us to a topic near and dear to the Judge’s heart — the Inns of Court and the many patent focused Inns across the country that together make up the Richard Linn Inn Alliance.

In Part II of the interview, which appears below, we pick up with the discussion of the Inns of Court and further discuss civility and “Rambo style lawyering,” which Judge Linn explains was really the genesis behind the forming of the Inns of Court.

QUINN: I’m a member of the Pauline Newman Inn that meets at the Patent Office, and we’re members of the Linn Inn Alliance.  I mean, first off how does that feel?   How did it come about, I guess, maybe, first off.  Second is how does that feel that the entire industries, the lawyers, are lining up in droves to join the Linn Inn Alliance?  I would think that that is great evidence of what the industry does think of you and that this is really promulgated out of one Inn.

LINN: Well, I’ve been actively involved in the Inns of Court since I came onto the Court.   The American Inns of Court is a unique organization.  It plays a unique and important role in promoting ethics, civility and professionalism, and that’s what appeals to me.  In 2000, I started attending meetings of the Giles Rich Inn, which meets here at the Federal Circuit every month.  I’m lucky enough to fill the seat once occupied by Judge Rich.  We’re sitting here in my chambers, which once were Judge Rich’s chambers.  And when I first came on to the Court I felt a special responsibility to conduct myself in a way that would have made him proud, because he was always an icon in my eyes.

On Friday, February 8, 2013, I had the honor to interview Judge Richard Linn of the United States Court of Appeals for the Federal Circuit. Those in the industry know that Judge Linn is one of a small group of Judges who are patent attorneys. He is one of us in so many ways. He is a very real and genuine person, he is a great believer in the patent system, and he has long been a friend to patent groups and a mentor to many. Judge Linn started his a career as so many patent professionals have — as the newest patent examiner at the United States Patent and Trademark Office. We learn in the interview that his interest in patent law started well earlier, thanks to his Uncle who was a patent illustrator.

After leaving the Patent Office Judge Linn rose through the ranks to become a prominent patent attorney in Washington, DC. Ultimately, he was in the right place at the right time, and he was fortunate enough to be recognized by the right people. He was appointed to the Federal Circuit to replace the legendary Giles Sutherland Rich. Big shoes to fill no doubt, but in terms of influence on the Court and impact on the profession few can compare to Judge Linn. He has, and continues, to carve out his own legacy as one of the preeminent patent leaders in the United States.

We spent approximately 60 minutes on the record with my iPhone recorder on, meeting in his chambers at the Federal Circuit, which overlooks Lafayette Park. Judge Linn recently took senior status, and lives full-time in Florida. He returns approximately every other month, sometimes more frequent, to hear cases. He will soon be giving up this office once the President’s appointments to the Court are confirmed. Judge Linn assures me he will remain active with the Federal Circuit.

When I sit down to interview someone I sometimes have a sense where things may lead, but inevitably interesting topics arise, sometimes based off a seemingly innocuous question. In Part I, which is below, I asked a familiar question: Do you find that the harder you worked the luckier you got? Judge Linn used this to discuss the importance of practicing law with integrity while managing to be a zealous advocate and without sacrificing civility. This theme carriers over into Part II of the interview and should, in my opinion, be mandatory reading for law students and associates. In fact, it is a good reminder for more senior attorneys who sometimes might lose sight of the forest for the trees.

On January 25 2013, the United States Court of Appeals for the Federal Circuit (CAFC) issued its opinion in the case of Hall v. Bed Bath & Beyond, which was authored by Judge Newman who was joined by Judge Linn; Judge Lourie filed an opinion dissenting in part. The appeal arose from the United States District Court for the Southern District of New York. The CAFC ultimately reversed the district court’s dismissal of the plaintiff’s complaint counts for patent infringement, Lanham Act unfair competition, and New York unfair competition and misappropriation.

The patent in question — U.S. Design Patent No. D596,439  (the ’439 patent) — covers a Tote Towel which is essentially a large towel that has padding around the edges, and “zippered pockets at both ends, and an angled cloth loop in the middle.” Mr. Roger Hall (“Mr. Hall”) filed the patent application on November 17, 2008.

Mr. Hall contacted Bed Bath & Beyond (BB&B) in hopes of having them resell his Tote Towel in its stores nationwide. At the time of the meeting with BB&B, the patent application was pending and packaging on Mr. Hall’s Tote Towel reflected so. Instead of entering into a contractual relationship to resell the Tote Towel, BB&B which still had a prototype of Mr. Hall’s Tote Towel, decided to mass produce its own version manufactured in Pakistan.

On Friday, October 26, 2012, at the Gala dinner event at the Annual Meeting of the American Intellectual Property Law Association (AIPLA), Judge Pauline Newman of the United States Court of Appeals for the Federal Circuit received the 2012 AIPLA Excellence Award.

The Program for the event explained that the Excellence Award was presented to Judge Newman “in recognition of extraordinary leadership and service to the Intellectual Property Community, which is representative of a distinguished career marked by intellect, integrity, and an unwavering commitment to the administration of justice.”

The AIPLA has honored a number of excellent and worthy winners in the past including Chief Judge Howard T. Markey, Chief Judge Paul Michel, Judge Rich and Donald Dunner to name but a few.  Judge Pauline Newman is now a recipient of this top industry recognition, and if you ask me she is deserving of being on the Mount Rushmore of this exclusive club.

Five years ago, on Thursday, September 20, 2007, the United States Court of Appeals for the Federal Circuit issued two decisions that provoked much debate, and which deserve to be remembered.  One the Court got right  and, sadly, one the Court got excruciatingly wrong.

The first case, In re Comiskey, seemed rather straight forward and certainly not earth shattering, except perhaps for one issue – namely that the Federal Circuit issued its decision on patentable subject matter grounds without patentable subject matter ever being an issue during prosecution or on appeal.

In Comiskey, one set of claims were directed to the purely mental process of arbitrating a matter and deciding the outcome. The Federal Circuit did not waste time pointing out that arbitration is extremely well known and could hardly be considered patentably new or nonobvious, rather they cut to the chase and explained that the law does not allow patents to be issued on particular business systems that depend entirely on the use of mental processes, deciding that “the application of human intelligence to the solution of practical problems is not in and of itself patentable.”

Recently the United States Court of Appeals for the Federal Circuit issued two decisions that relate in ways to indirect infringement.  The first was the Court’s en banc decision in Akamai Technologies, Inc. v. Limelight Networks, Inc.  (Fed. Cir., August 31, 2012). The second was the Court’s decision in Mirror Worlds, LLC v. Apple, Inc. (Fed. Cir., Sept. 4, 2012).

Some have said is seems bizarre that the panel decision in Mirror Worlds did not mention or cite Akamai, and while that is perhaps a fair point at first glance, the cases are quite different.  It seems to me that people are putting to much emphasis and question where it doesn’t belong.  At the end of the day in Mirror Worlds the panel simply agreed with the district court that the plaintiff did not offer evidence sufficient to allow a reasonably jury to find in their favor.  While a passing reference to Akamai might have been nice, it seems to me as if it was hardly required given the procedurally dispositive issues associated with a JMOL due to failure to offer required proof.  See Apple Operating System Does Not Infringe.

In Part I, I discussed the per curiam majority opinion in en banc decision in Akamai Technologies and McKesson Technologies.  See CAFC’s Joint Infringement Conundrum. In Part II, I’m going to discuss Judge Linn’s and Judge Newman’s dissenting opinions, followed by some concluding remarks.

Although Judge Newman’s dissenting opinion came next in the en banc decision, I’m going to discuss Judge Linn’s dissenting opinion first.  That Judge Linn was the author of this dissenting opinion is unsurprising, given that he had authored the now overruled BMC Resources opinion, as well as the panel opinion in McKesson Technologies.  What is somewhat surprising is the strident tone that Judge Linn used to characterize the per curiam majority opinion:  “this court assumes the mantle of policy maker.”  Not satisfied with applying that moniker alone, Judge Linn also accused the per curiam majority of “effectively rewrite[ing]” 35 U.S.C § 271(a) and 35 U.S.C § 271(b).  (In that regard, I think Judge Linn’s accusation goes a bit overboard).

In challenging the correctness of the per curiam majority ruling, Judge Linn’s dissenting opinion makes four points.  Point No. 1 is that the per curiam majority’s approach “is contrary to both the Patent Act and the Supreme Court’s longstanding precedent that “if there is no direct infringement of a patent there can be no contributory infringement,” citing Aro Manufacturing and Deepsouth Packing, as well as the Federal Circuit’s Joy Technologies.  But as discussed above, none these cases specifically holds that direct infringement of the claimed method for the purposes of liability for indirect infringement requires that all steps of the claimed method must be performed by a single actor.  Judge Linn’s further assertion that, in enacting 35 U.S.C §§ 271(e)(2), (f), and (g), “Congress did not give the courts blanket authority to take it upon themselves to make further policy choices or to define ‘infringement’” still doesn’t address why direct infringement for the purposes of indirect infringement liability requires all infringing acts to be performed by a single actor.  (As I discuss below, enactment of 35 U.S.C §§ 271 (f) and (g) also reflects Congress’ intent to close “loopholes” in the primary infringement statute, 35 U.S.C §§ 271 (a)).  Judge Linn also makes the comment that Congress “removed joint-actor patent infringement liability from the discretion of the courts” in 1952, but cites to absolutely no legislative history to support this comment.

The decision of the Supreme Court in Prometheus has been predicted to have implications for business method patentability, but the decision in what will surely become known as the Alice case provides an early indication that the CAFC may endeavour to limit its scope. Whether the claimed subject matter lies in the reality of patent-eligible subject-matter or is more correctly located in the Wonderland of abstract ideas is an issue that has been debated on both sides of the Pond, and on which the Dodo or the King of Hearts in his judicial capacity would surely have had an opinion if it had been brought to their attention. In the US there appears to be ample scope for further debate.

The patentees Alice Corporation are based in Australia and are a joint venture between a private company and National Australia Bank Limited. Their website [1] explains that they were established in Melbourne in 1995 and have applied for and obtained patents on their financial market innovations worldwide, including in the US, UK and other major financial centres. The patented innovations cover the trading of risk, investment, lending, exchanging and similar products. Alice exploits its inventions by licensing selected entities. Neither Alice nor Ian Shepherd who was the inventor has a significant web presence, and in contrast to the situation in Prometheus there appears to be no back-story that throws light on the merits or otherwise of the alleged invention.

I have been doing a lot of research and writing on obviousness and KSR v. Teleflex lately, but not for publication on the blog so far.  Last Friday, July 6, 2012, I filed a petition for rehearing en banc in Plasmart v. Kappos.  I represent the Appellee-Patentee.  The case arose out of what was originally an inter partes reexamination of U.S. Patent No. 6,722,674. The patent examiner found some of the claims allowable, the Board found all of the claims allowable, and then in a nonprecedential opinion the Federal Circuit overturned the Board.

This case intrigued me from the start because it seemed rather odd that there should be a nonprecedential opinion in an appeal to the Federal Circuit necessitated by a completely adjudicated inter partes reexamination at the United States Patent and Trademark Office. Moreover, the original panel concluded that the combination of known elements resulted in a predictable result.  The problem with that reasoning, however, is that not all of the elements were found within the prior art.  In fact, the Board found that there are no fewer than three (3) meaningful structural differences between the invention as claimed and the prior art.

On Friday, July 6, 2012, the United States Court of Appeals for the Federal Circuit issued a decision in General Electric Co. v. ITC.  The Federal Circuit, per Judge Newman with Chief Judge Rader and Judge Linn, did not give GE a total victory, but victory enough over Mitsubishi.  The Federal Circuit affirmed in part and reversed in part the original decision of the ITC, and remanded the case for further proceedings consistent with the decision.

GE appealed the decision of the United States International Trade Commission, which held that certain variable speed wind turbines imported by Mitsubishi Heavy Industries, Ltd. and Mitsubishi Power Systems Americas, Inc. (together “Mitsubishi”) did not violate section 337 of the Tariff Act, 19 U.S.C. §1337. The patents at issue were U.S. Patent No. 7,321,221, U.S. Patent No. 5,083,039 and U.S. Patent No. 6,921,985.  On February 1, 2011, the ’039 patent expired, and the Federal Circuit dismissed that portion of the appeal as moot, vacating the Commission’s rulings relative to the ’039 patent.  The appeal continued relating to the ’221 patent and the ’985 patent, which were the subject of this latest Federal Circuit decision.

Last week the United States Court of Appeals for the Federal Circuit issued a curious decision in Ergo Licensing, LLC v. CareFusion 303, Inc.  This decision should send chills down the spine of everyone who has patents in the software space, and needs to be carefully considered by all those who draft patent applications in the software space.  The panel was made up of Judges Newman, Linn and Moore.  The opinion was delivered by Judge Moore, and a dissent filed by Judge Newman.

Judge Newman explained in dissent that the way in which the Ergo patent was drafted was similar to the way that thousands of similar patents are drafted and that this decision upsets the overwhelming weight of Federal Circuit precedent on the issue.  Judge Newman is correct.  Whether this becomes one of those decisions that is an aberration of is something to be afraid of remains to be seen, but moving forward your software patent applications should become far more detailed in an effort to deal with this case.