Last month, I co-authored an article on IPWatchdog.comabout the legal, technical and academic communities’ over-a-decade long debate about the boundaries, legality and wisdom of software patents. Now, on June 19, 2014, the U.S. Supreme Court has issued a decision in its review of the U.S. Court of Appeals for the Federal Circuit’s en banc May 10, 2013, decision in CLS Bank v. Alice. Unfortunately, the clarity that many had hope for has not come to fruition!
What we do know for sure — for at least a 150 years now — is that U.S. Patent Law recognizes four broad categories of inventions eligible for patent protection: processes; machines; article of manufacture; and compositions of matter. 35 U.S.C. Section 101. We also know for sure, despite the oft-quoted recognition that the patent laws were made to cover “anything under the sun that is made by man,” Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980) (quoting S. Rep. No. 1979, 82d Cong. 2d. Sess., 5 (1952)), the U.S. Supreme Court has long recognized that there are three exceptions to these four broad patent-eligibility categories: laws of nature; physical phenomena; and abstract ideas. Id. This is where the certainty ends.
The Supreme Court’s Alice decision has again left the IP bar without a clear, repeatable test to determine when exactly a software (or computer-implemented) claim is patentable versus being simply an abstract idea “free to all men and reserved exclusively to none,” Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948). This is perhaps not surprising as Alice is a case more about so-called “business method” patents than software patents! (In fact, three justices in a succinct, 116-word concurring opinion indicated that they would impose a per se ban on patenting business methods!) With respect to software patents, however, we still find ourselves with a myriad of USPTO Section 101 guidelines, flowcharts and presentation slides – the latest of which is a March 4, 2014, 19-pager which may very well get fatter after Alice!
We can return to the beginning of the analysis and revisit preemption. As stated, the Court sees § 101 as protecting the big ideas that are fundamental to commerce, science, and technology, patents that would preempt and “block” innovation. The Court realizes that every patent preempts and blocks in some degree, because that’s what patent claims do. Rather, the risk of preemption must be “disproportionate.” Alice,slip op. at 5. This is a definitely a much higher bar than the standard set forth in the CLS plurality opinion, “Does the claim pose any risk of preempting an abstract idea?” CLS, 717 F.3d at 1282 (Lourie, J., concurring),cited approvingly in Accenture Global Services, GmbH v. Guidewire Software, Inc., 728 F.3d 1336 (Fed. Cir. 2013).This requirement for a high level of preemption risk is necessary because we can never know a priori (e.g., when a patent application is filed, when it is reviewed by a patent examiner) exactly what will happen in the future, and how important and preemptive the patent will be in regards to other developments in the same field or in other fields. Most truly fundamental “building block” inventions are not recognized as such for many years after the fact. Thus, we must tolerate preemption in two ways:
The kind of preemption that is inherent or recognizable based on the claim language. To borrow a phrase from Donald Rumsefld, this is the “known known” risk of preemption.
The “known unknown” preemption that we cannot determine because we cannot know what will happen in the future: whether the technology will be successful in the marketplace, whether others will adopt it, or design around it, or any other myriad factors that influence how “fundamental” an invention will be.
If a patent claim is ineligible if there is “any risk” of preemption, then the “exclusionary principle . . . will swallow all of the patent law.” Alice,slip op. at 5. A court or a patent examiner certainly cannot evaluate the level of “known unknown” preemption, and hence should not use speculations (or hand-waving) about this kind of preemption risk to invalidate a patent. The disproportionate risk of preemption only comes from patents that claim Abstract Ideas in the sense of fundamental building blocks, not just run-of-the-mill abstract ideas. It’s only when the known known type of preemption covers an Abstract Idea that the claim is ineligible. The ordinary type of preemption that comes from patent claims is an accepted part of the patent system—that’s the whole point of claims, to define the metes and bounds of the invention so that others are preempted from making, using, and selling what’s inside the bounds.
~ ‘The report of my death was an exaggeration’ –Mark Twain
Mark Twain, American humorist.
With apologies to the great humorist, the report of the death of software patents is an exaggeration. Some commentators quite quickly suggested that the Supreme Court’s decision in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. ___, No. 13-298 (June 19, 2014), will “invalidate the majority of all software patents in force today” and is “bad news for software patents”. That interpretation may make good copy, but it is simplistic and overblown. While the Court invalidated Alice’s patents, the decision certainly does not invalidate the majority, or even a large percentage, of software patents, nor does it radically restrict the kinds of inventions that can be patented going forward. The decision is a modest and incremental clarification in the patent law, and a not wholesale revision.
The Court set forth a two-step test grounded in Bilski v. Kappos and Mayo v. Prometheus. While the Court may not have defined a clear boundary for so called “abstract ideas” specifically, it did squarely place this case within the “outer shell” of the law set forth in Bilski and Mayo. In doing so it articulated an approach that focuses not on finding the boundary line, but rather on the core properties of an ineligible patent claim. In Part I of this two-part post, I will focus on just the first step of the test, whether a claim recites a patent-ineligible “abstract idea.” In Part II, I’ll address issues regarding preemption, mental steps, and the application of Alice to software patents.
At least initially, the USPTO instructions to examiners seems extremely patentee friendly, which I must say comes as a surprise given the largely anti-patent rhetoric that has come from the White House over the last 16 months. Indeed, the USPTO has told examiners that the reason Alice’s claims were determined to be patent ineligible was because “the generically-recited computers in the claims add nothing of substance to the underlying abstract idea.”
The USPTO then went on to point out to patent examiners that there is no new category of innovation that is patent ineligible, nor is there any new or special requirements for the eligibility of either software or business methods. Hirshfeld explained: “Notably, Alice Corp. neither creates a per se excluded category of subject matter, such as software or business methods, nor imposes any special requirements for eligibility of software or business methods.”
Hirshfeld also explained that there is now a slight change in the way applications are to be examined when claims involve abstract ideas. Essentially, Alice stands for the proposition that the same analysis should be used for all types of judicial exceptions and the same analysis should be used for all categories of invention. Still, even recognizing this shift in analysis, Hirshfeld told examiners: “[T]he basic inquiries to determine subject matter eligibility remain the same as explained in MPEP 2106(I).” (emphasis added). Therefore, nothing has changed as far as the USPTO is concerned.
On Thursday, June 19, 2014, the United States Supreme Court issued its much anticipated decision in Alice v. CLS Bank. In a unanimous decision authored by Justice Thomas the Supreme Court held that because the claims are drawn to a patent-ineligible abstract idea, they are not eligible for a patent under Section 101.
In what can only be described as an intellectually bankrupt opinion, the Supreme Court never once used the word “software” in its decision. This is breathtaking given that the Supreme Court decision in Alice will render many hundreds of thousands of software patents completely useless. While the Supreme Court obviously didn’t want to make this decision about software, the holding does make it about software because each of the ways software has been claimed were ruled to result in patent ineligible claims. On first read I don’t see how any software patent claims written as method or systems claims can survive challenge. For example, these claims to IBM’s Watson computer, which is really akin to the first generation omnipotent Star Trek computer, seem to be quite clearly patent ineligible. See Is IBM’s Watson Still Patent Eligible. It is impossible to see how the Watson claims remain patent eligible in light of this ruling and how the Alice claims were written. The only potential solace for IBM and others would be if the Federal Circuit narrowly interprets this decision noticing that the Supreme Court seemed almost preoccupied by the fact that the patent claims covered a financial process. Still, the structure of the claims are nearly identical, with Alice’s claims actually having more recited structure, if anything.
More difficult to understand is how the Court could issue a decision that doesn’t even use the word software. Software is clearly patent eligible if you read the patent statute. Software is mentioned throughout the statute. It was specifically mentioned in the America Invents Act in 2011. Tax strategies are not patent eligible in and of themselves, but the AIA says that software is not patent ineligible just because it incorporates a tax strategy. This is the type of analysis the Supreme Court engaged in the Bilski decision finding that business methods are patentable.
For more than a decade, the legal, technical and academic communities have debated the boundaries, legality and wisdom surrounding the issue of software patentability. The debate, to say the least, has been spirited with many organized movements, websites, articles, blogs and law review articles, as well as a lot of lobbying dollars, devoted to both sides of the debate. Yet, as the U.S. Supreme Court currently reviews the U.S. Court of Appeals for the Federal Circuit’s en banc May 10, 2013, decision in CLS Bank v. Alice, we take the opportunity here to dispel some myths, state some of facts and offer a test with respect to software patentability.
This is not your Parent’s Software Industry
There are those who argue against the patentability of software as a whole – never mind finding a test as to what software (or computer-implemented) claims should be patentable. We disagree. Why? Well, the notion that software should not be patentable necessarily indicates that the software industry itself is not capable of innovation worthy of patent protection! Yet, in a country where patent rights are guaranteed by the Constitution, should not all fields of innovation be treated equally under the law? Should we not avoid becoming a country where one field of endeavor (e.g., pharmaceuticals or electronics) is deemed more “patent worthy” than other fields (i.e., computer science and information technology)!? To answer these questions in the negative seems silly to us.
Earlier today the United States Court of Appeals for the Federal Circuit ruled that Dolly the cloned sheep, and any other genetic clones, are patent ineligible in the United States because the “claimed clones are exact genetic copies of patent ineligible subject matter.” The case decided was In re Roslin Institute(Fed. Cir. May 8, 2014).
The Roslin Institute of Edinburgh, Scotland (Roslin) is the assignee of U.S. Patent Application No. 09/225,233 (the ’233 application) and had appealed from a final decision of the Patent Trial and Appeal Board, which held that all of Roslin’s pending claims were unpatentable subject matter under 35 U.S.C. § 101. The Board also rejected Roslin’s claims as anticipated and obvious under 35 U.S.C. §§ 102 and 103. Having determined that genetic clones are not patent eligible the Federal Circuit, in a decision by Judge Dyk who was joined by Judges Moore and Wallach, did not reach the 102 or 103 issues, instead simply affirming the Board’s rejection of the claims under § 101.
To tell the story involved in this case we must travel back to July 5, 1996, when Keith Henry Stockman Campbell and Ian Wilmut successfully produced the first ever cloned mammal from an adult somatic cell: Dolly the Sheep. The cloning method Campbell and Wilmut used to create Dolly was a significant scientific breakthrough. Campbell and Wilmut obtained U.S. Patent No. 7,514,258 (the ’258 patent) on the somatic method of cloning mammals, which was been assigned to Roslin. The ’258 patent was not at issue in this case.
Washington– The U.S. Department of Commerce’s United States Patent and Trademark Office (USPTO) will host a public forum on May 9, 2014 at the USPTO headquarters in Alexandria, Virginia, to solicit feedback from organizations and individuals on its recent guidance memorandum for determining subject matter eligibility of claims reciting or involving laws of nature, natural phenomena, and natural products (Laws of Nature/Natural Products Guidance). The Laws of Nature/Natural Products Guidance implemented a new procedure to address changes in the law relating to subject matter eligibility in view of recent Supreme Court precedent.
“We are always interested in receiving feedback from the public and this forum will provide an opportunity for participants to present their interpretation of the impact of Supreme Court precedent on the complex legal and technical issues involved in subject matter eligibility analyses during patent examination.” said Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the USPTO Michelle K. Lee.
This is my third article, in a series, written to provide some useful aid for the Supreme Court and clerks in the wrapping of their minds and writing around the issues surrounding computers and software. I have already written two installments: Help for the Supreme Court in CLS Bank; and, What is a Computer? As predicted when I started, almost every patent person with a “dog” in the fight re software has written articles (or Amici) to be helpful. I only hope that what emerges from beneath the avalanche of writing is something that can get the patent system, and its relationship to computers/software, back to where it needs to be for the system to be an incentive and reward based enterprise as it was intended.
The object of this installment is not scholarly, in the sense that case citations are going to show up, but rather is another effort to give the lay person a chance to “get” what it is we in the patent community continue to babble about, in patent attorney code, when it comes to software. Of course, because, I am doing the writing, car analogies will be present because that is the only technology that I can readily relate to when characterizing computers/software/machines.
The story that begins the tale is me attending a small car show in Williamsburg, Virginia last summer. The selection of cars ranged from brass era to modern sports cars. As a part of the show, and to keep folks around, they had a schedule of “car starts” where a specific car would be fired up and the crowd would be given a short demo on the particular car. The one I waited for, specifically, was the Ford Model-T. It was the car that made modern America. It put thousands on the road and thousands to work. That “device” changed the course of our collective history. But, it was, none-the-less, a cantankerous beast. Henry Ford was quoted as saying, “I will give you the car for free if I can sell you the parts to keep it running!” (Hey, the first “freeware” sales model!) It was solid and, for its day, very reliable and capable. But the owner /operator had to be mechanically quite adept.
Justice Antonin Scalia, who seemed most favorable to Alice.
Once Chief Justice John Roberts said “[t]he case is submitted,” which occurred this morning at 11:05 a.m., the reading of the tea leaves began.
The Supreme Court was very hot Court, with a lot of questions on the mind of the Justices. After reviewing the transcript I am left believing the Court is likely wondering whether it is possible to find the Alice patent claims to be patent ineligible while also ruling that software patent claims are not all patent ineligible. Surprisingly, it seemed as if Justice Scalia was most persuaded by the patent eligibility of the claims, directly saying at one point that the issues circling the case seem to really be about 102, not 101.
While I support the patent eligibility of the patent claims, particularly the patent claims drawn to a system, it seems undeniable that Alice missed many opportunities to score easy points. Indirect arguments were made by Alice that didn’t seem very persuasive. Indeed, if one is to predict the outcome of the case based on oral arguments alone it did not go well for Alice today. Only three things give Alice supporters hope after this oral argument as far as I can tell. First, the government seems to be asking the Supreme Court to overrule precedent in Bilski that is not even four years old, which simply isn’t going to happen. Second, the egregious overreach and outright misleading nature of the CLS Bank argument should raise a legitimate question or two in the mind of the Justices. Third, the reality simply is that at least the systems claims recite numerous specific, tangible elements such that it should be impossible to in any intellectually honest way find those claims to cover an abstract idea.