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.
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.
BEAR: In Judge Michel’s brief, he writes about not confusing §101 with §102 and §103. I’m also looking at this and thinking that patentability questions regarding “abstract ideas” may, perhaps, be better handled under §112 on specificity grounds. What do you think about that?
QUINN: I totally agree. And I think that that was the way that Director Kappos meant it when he was at the Patent Office and the Bilski case came out. That was what he was urging the examiners to do. Do not to make this a §101 issue but instead get the §112 issue. I think that’s the exact right approach because the real question I think they’re struggling with is whether there is an invention there. You can’t know whether there is an invention there until you ask what does somebody of skill in the art understand by reading the disclosure. And what some want to do is make it a §101 question so that they don’t have to do any analysis or heavy lifting.
Eric Gould Bear knows software. He is a successful inventor, has spent over 25 years working with numerous Fortune 500 corporations and he is also a testifying expert witness for patent infringement cases. With the oral argument in Alice v. CLS Bank scheduled for Monday, March 31, 2014, we recently sat down to talk about the briefs filed and issues in the case. In part 1 of our conversation we discussed the false distinction that is erroneously made between hardware and software, as well as the ACLU amicus brief, which he called “embarrassing.”
In part 2, which follows below, we discuss why software start-up companies need patents. Bear also further analyzes the briefs filed, including the one filed by LinkedIn, Netflix, Twitter, Yelp and Rackspace, which he characterizes as taking “a fairly radical stance.”
Without further ado, here is part 2.
QUINN: I was hoping you might be able to give us an idea of how a software startup company uses patents as an asset to leverage building, growing, and further innovating?
BEAR: Sure. Startups have to move with velocity and with a high level of excellence simultaneously. And they’re fiscally challenged for the most part, so have to operate very lean. There’s a challenge with regards to patent filing because the costs are hard to justify as having any immediate benefit. And when you weigh your weekly or daily burn, it’s really hard to swallow the costs of investing in patents. That’s certainly the case for startups like the ones I advise at the Capital Factory incubator in Austin. Most don’t know with certainty if they’re even going to survive to the next year.
Eric Gould Bear is an inventor on over 100 patents and patent applications in the software space. He has spent over 25 years working with numerous Fortune 500 corporations with respect to assisting them in the creation of new user experiences. He is also a founder of the design studio MONKEYmedia, who signed onto the Trading Technologies amici brief filed in Alice v. CLS Bank at the Supreme Court. Bear is also a testifying expert witness for patent infringement cases. He is an expert in the software/patent space, and has seen the industry from multiple different angles over the years.
With the oral argument in Alice v. CLS Bank scheduled for Monday, March 31, 2014, I reached out to Bear to see if he would go on the record to discuss the issues he saw in the various briefs filed, what was good, what was problematic, and how he as a software expert would try and convey the issues to a layperson, or scientifically untrained jurist such as the Justices on the Supreme Court. He agreed and we spoke on the record about the issues, using as our focal point several of the high profile amici briefs filed.
What appears below is part 1 of my 3 part substantive software converation with Bear. In part 1 we discuss the false distinction between hardware and software, and Bear goes into deal with examples, saying at one point that most of the innovation today relates to software. He also takes issue with the ACLU amicus brief, calling it “embarrassing.”
There are numerous briefs listed on the ABA’s brief publication webpage for Alice Corp. v. CLS Bank that are filed in support of the respondent, most of which make specious claims about software patents blocking innovation, or which make arguments that claims that specifically recite computers, data storage units, devices and more are somehow abstract and imaginary. These arguments should be easy enough to dispose of as ridiculous on their face, but who knows how the Supreme Court will respond. Still, one would hope that the Supreme Court would notice that neither patents generally or software patents specifically have done anything to block innovation in the smartphone industry.
Whereas the Alice supporters feel that the U.S. Patent and Trademark Office’s issuance of software patents are important for protecting and spurring innovation in many fields, the supporters of CLS Bank have largely responded that software patents hurt innovation. But that can’t be! One of the areas critics always say has been allegedly hamstrung by patents, the smartphones industry, is barely over 6 years old. Have patents stopped innovation of smartphones? Hardly. In fact, with every new version companies tout just how much more the phones do and how they are so far superior to the previous model. Thus, it is easy to see that those claiming that software patents block innovation simply ignore market reality and how the functionality of current devices (which is thanks to software) match up with previous generations of devices over the last 6 years. Corporate critics must also ignore their own marketing of new smartphones, which directly contradicts the ridiculous claim that software patents are preventing innovation. Still they make these and other specious arguments as if they are true.
Much of this negativism is based on the poor job the US patent examiners have done in weeding out those many patent applications where the so-called invention is just one of the almost infinite, but obvious, ways one can automate a manual or semi-automatic process or procedure. But there are also true inventions that use a computer as part, or all, of the implementation of the invention. There is no reason to throw out the baby with the bathwater. So it is of utmost importance that we examine the many falsehoods related to software patents.
In this new article I intend to provide facts about software and the software industry to debunk these misnomers, myths, misconceptions, and just pure misunderstandings about “software patents”.