Judge Lourie, who was joined by Judges Dyk, Prost, Reyna and Wallach, in CLS Bank v. Alice Corp. wrote: “At its most basic, a computer is just a calculator capable of performing mental steps faster than a human could. Unless the claims require a computer to perform operations that are not merely accelerated calculations, a computer does not itself confer patent eligibility.”

One way that Judges probe generalized statements is to look for the boundaries to test the logic. If the statement cannot be stretched to apply to even similar scenarios then the logic of the statement is questioned and believed to be faulty and self-serving. So let’s see if the above statement can withstand even modest scrutiny.

The statement above, by any fair reading, says that if the core of the invention is something that a human could do but slower then the subject matter is patent ineligible. So what about robots? Robots are more efficient, stronger and faster than humans, but a human can do what a robot can do. So are robots patentable?

Chief Judge Rader’s band De Novo should play a dirge tonight.

On May 10, the Federal Circuit issued its en banc opinion in CLS Bank.  Within 48 hours, I had twice read the 135 page decision.  It may be a bullet to the head of the software industry.  Don’t take my word for it:  four different judges say so:

And let’s be clear: if all of these claims, including the system claims, are not patent-eligible, 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. If all of the claims of these four patents are ineligible, so too are the 320,799 patents which were granted from 1998-2011 in the technology area “Electrical Computers, Digital Processing Systems, Information Security, Error/Fault Handling.” Every patent in this technology category covers inventions directed to computer software or to hardware that implements software. In 2011 alone, 42,235 patents were granted in this area. This would render ineligible nearly 20% of all the patents that actually issued in 2011. If the reasoning of Judge Lourie’s opinion were adopted, it would decimate the electronics and software industries. There are, of course, software, financial system, business method and telecom patents in other technology classes which would also be at risk. So this is quite frankly a low estimate. There has never been a case which could do more damage to the patent system than this one.[1]

That parade of horribles is not entirely fair to Judge Lourie’s concurrence.  Judge Lourie based his opinion on the fact that the disputed patent is directed not just to electronics, but to an insignificant use of modern electronics to implement an arguably basic financial transaction.  I doubt that Judge Lourie would expand the holding in CLS Bank far beyond that specific fact pattern.  Nevertheless, as quoted above, the dissenting judges do not share even this much optimism.

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

While the Supreme Court has done away with the “useful, concrete and tangible result” test from State Street Bank v. Signature Financial, in Bilski v. Kappos, 8 out of 9 Justices (i.e., everyone except Justice Scalia) signed onto an opinion that recognized that the patent claims in State Street displayed patent eligible subject matter. Indeed, the dissenters in Bilski specifically acknowledged that the claims at issue in State Street did not deal with processes, but dealt with machines. See Footnote 40 of the Steven’s dissent.

The import of this is that machines are specifically patent eligible subject matter, so if the claims of State Street are to machines then claims that are similarly configured would also be directed to machines and therefore patent eligible. So if the systems claims at issue in CLS Bank v. Alice Corp. are configured similarly to those that now stand invalid that would mean that Judges Lourie, Dyk, Prost, Reyna and Wallach have ignored the Supreme Court. Any fair comparison of the claims, as shown below, demonstrates this rather conclusively.

Similarly, the United States Supreme Court famously ruled in Diamond v. Diehr, that the United States Patent and Trademark Office inappropriately rejected claims to a computerized process for molding raw, uncured synthetic rubber into cured precision products. Ultimately, thanks to the decision of the Supreme Court the inventors, Diehr and Lutton, received U.S. Patent No. 4,344,142. If the claims in Diamond v. Diehr are similar to those that now stand invalid that would be further proof the Federal Circuit as a whole has ignored the Supreme Court.

By now most are likely already familiar with the unfortunate reality that the United States Court of Appeals for the Federal Circuit issued a non-decision in CLS Bank v. Alice Corporation on Friday, May 10, 2013. There were 10 judges who heard the case en banc, with 7 of the 10 finding that the method claims and computer-readable medium claims were not patent eligible. While there may be reasonable room for a difference of opinion relative to those claims, it was the system claims that specifically and clearly recited tangible structure that has thrown the patent law of software into such disarray. 5 Judges would have found that the systems claims were patent ineligible (Judges Lourie, Dyk, Prost, Reyna and Wallach), and 5 Judges would have found the systems claims were patentable subject matter (Chief Judge Rader, Judges Newman, Moore, Linn and O’Malley). For more see Federal Circuit Nightmare in CLS Bank and 5 CAFC Judges Say Computer Patentable, Not Software and Did the CAFC Ignore the Supreme Court in CLS Bank?

Today, however, I want to write about one of the more bizarre passages I have ever seen in any decision, and then pose an almost unthinkable question: Is IBM’s Watson still patent eligible in the view of Judges Lourie, Dyk, Prost, Reyna and Wallach?

First, let’s start with the passage. Judge Lourie, who was joined by Judges Dyk, Prost, Reyna and Wallach, actually wrote: “At its most basic, a computer is just a calculator capable of performing mental steps faster than a human could. Unless the claims require a computer to perform operations that are not merely accelerated calculations, a computer does not itself confer patent eligibility.”

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.

On March 25, 2013, I spoke on the record with Eric Gould Bear (left) about all things software, from designing software, to drafting patent applications to litigating. Bear is a successful inventor with over 100 patents and patent applications to his name and a testifying expert witness. He has worked with numerous Fortune 500 companies and has a unique perspective of expert, creator and fan of those who innovate in the software space.

In Part I of our interview, titled Designing Into the Path of Disruptive Technology, we discussed the journey from ideas to designs that establish a technology platform. In Part II, titled Software Patents: Drafting for Litigation and a Global Economy, we discussed (among other things) the unfortunate reality that the top technology innovators simply won’t listen to licensing overtures unless they are first sued. In the final segment, Part III, which appears below, we conclude our discussion of litigation, discuss working with patent examiners and then end with a discussion relating to the reality that an engineering mentality is very different from an experience design mentality, at least relative to development of software.

On March 25, 2013, I spoke on the record with Eric Gould Bear (left) about software innovations, software patents and the trials and tribulations of litigating software patents long after they were first written. Bear, among other things, is a leading authority on the creation of new user experiences, an accomplished inventor with over 100 patents and patent applications to his name and a testifying expert witness.

In Part I of our interview, titled Designing Into the Path of Disruptive Technology, we discussed the journey from ideas to designs that establish a technology platform that could realistically be useful 5, 10 or more years down the road. In Part II of our interview, which appears below, we discuss drafting software patent applications with an eye toward litigation and the unfortunate reality that the top technology innovators simply won’t listen to licensing overtures unless they are first sued.

QUINN: What separates having an interesting product from one that is worth really going forward and trying to get a patent on – to be able to parlay that product into something greater than just the sum of the immediately available market?

On March 25, 2013, I spoke on the record with Eric Gould Bear (left) about software innovations, software patents and the trials and tribulations of litigating software patents long after they were first written.

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, which recently launched a patent infringement lawsuit against Apple that we will discuss in Part II of the interview. MONKEYmedia also has litigation pending against Sony, Disney and others. And on top of all of this, Bear is a testifying expert witness for patent infringement cases. Simply, there is little in the software/patent space that Bear hasn’t seen or been a part of over his career.

In Part I of our conversation, which appears below, we discuss the journey from ideas to designs that sit in the path of disruptive technology and could realistically be useful 5, 10 or more years down the road.

Without further ado, my conversation with software expert and prolific inventor Eric Gould Bear.

Collecting the information necessary to prepare a patent application covering a computer related invention can be quite challenging. Typically, most computer related inventions today relate at least in some way to software, which is at the core of the challenge. This software challenge stems from the fact that the software code is not protected by patent law, but rather how the software operates is protected. This means that the description needs to be one that can be replicated by others regardless of how they choose to write code to accomplish the necessary tasks.

A patent does not need to be a blueprint, but it needs to direct. For example, you do not need to provide the code for the scripts, although that is certainly one way to make sure it is described adequately, and perhaps something you may want to consider if you have a working prototype that you want to protect (more on this later).

Generally speaking, the goal is to provide enough description so that someone who is “skilled in the art,” which is a legal term that refers to those who would be expected to possess the knowledge and understanding appropriate to comprehend the invention, can make and use the invention after reading the patent application. In order to satisfy the patent law description requirements the explanation of the software in a patent application must give the programmer enough information to be able to sit down and know how to write the code having only read the description contained in the patent application.

On Friday, April 12, 2013, I was at American University Washington College of Law for a program titled Patent Subject Matter Eligibility Today: Software, Genomics, and Business Methods. I participated on a panel titled CLS Bank en band: Are Software Methods Patentable? What I want to write about today, however, is not our panel presentation, but rather the Keynote presentation by Suzanne Michel (no relation to Chief Judge Michel), a former deputy director of the FTC who is Senior Patent Counsel at Google, Inc., working in Google’s policy office in Washington, DC.

It is no great surprise probably, but I disagreed with practically everything she said, although I did enjoy her presentation. I love to debate the issues, and she is extremely knowledgeable and well briefed on what is happening in the trenches. Those of us who disagree with the proffered narrative that the patent system is broken can’t ignore competent advocates like Michel. She is not a patent-hater and her message is sharp, crisp and clear, although I do think it is misleading. The patent system is not broken, and for reasons I can only guess the best and brightest leaders in much of the big-tech industry are pursuing paths not calculated to succeed; at least if the goal is to stem the rise of patent litigation and innovate for the future.

With this in mind, what follows is a summary of Michel’s presentation, which if not titled was certainly themed — Fixing Problems of the Patent System to Improve Innovation. I also provide my thoughts and comments in the format of comments from the peanut gallery, or perhaps as a patent law equivalent to Mystery Science Theater 3000.  In order to differentiate my thoughts/comments from Michel’s presentation, my comments are italicized, colored, indented and tagged with the IPWatchdog logo.

On Friday, April 12, 2013, i will be at American University Washington College of Law for a program titled Patent Subject Matter Eligibility Today: Software, Genomics, and Business Methods. I will be participating on a panel that begins at 10:15am, which is titled CLS Bank en band: Are Software Methods Patentable? The event is free to attend. To register to attend you can visit WCL Event Registration.

Topic for Discussion

The following is what our panel will discuss regarding application of Section 101 to software:

(1)  For many years, a large segment of the software industry viewed patent protection as inappropriate for software, relying instead on a mixture of copyright and trade secret law.  At a high level, should software be patentable?

(2)  Two common criticisms of software patents, as compared to patents in the pharmaceutical and biotech sectors, are (a) the relatively low cost of invention; and (b) the relative ease of implementation.  Are these the right factors for us to be considering for purposes of inventiveness?

One of the things that makes protecting computer related inventions tricky is that first you have to define the invention, and defining the invention is not something that is altogether easy when the invention is a computer process or relates to software. Sure, it is easy enough to define a list of desired functionality, and if you have some computer programming skills it is easy enough (after investing the requisite time) to write the code that will enable the functionality, but that which can be protected via patent lies somewhere between the desired functionality and the code, making the defining of the invention rather elusive for some, particularly those who are new to the patent arena.

Further complicating the matter is the reality that over the last several years the law of patent eligibility in the United States has been in flux. It did become largely settled with respect to software and business methods thanks to Bilski v. Kappos, which was decided by the United States Supreme Court. This case left the industry with the so-called “machine or transformation” test, which requires a process to be tied to a particular machine or apparatus, or transform an article into a different state or thing, in order to be patentable subject matter. The Supreme Court determined in Bilski that the machine-or-transformation test is not the only test for patent eligibility, but rather that it was an important clue. But what exactly does that mean?

On January 21, 2013, I interviewed Manny Schecter, Chief Patent Counsel for IBM. In Part I of the interview we discussed IBM’s commitment to remaining the top patenting company in the United States, their commitment to research and development and the process by which decisions are made on what patents to keep and which to let fall into the public domain.

In Part II of the interview, which is the final segment, we discuss how IBM keeps a watchful eye on the industry to learn from the mistakes of others, what the conversion to first to file will mean for IBM patents, how Watson is being deployed and David Kappos leaving the USPTO.

QUINN: Let me pick up on that for a minute.  As you know we talk about this with some frequency, and I’ve always been interested in the IBM model because it’s successful.  And I always try to tell small business, why would you ever try and pick a company that has not been successful and imitate them?  And one of the things I keep thinking about more and more lately — I wonder whether one of the tricks in life and in business is to create systems of infrastructure that in some way save you from yourself.  Realizing what you just said that even Babe Ruth is going to strike out.  So even IBM no matter how careful you guys are are going to make some mistakes.  But if you have the infrastructure in place and the processes and procedures in place to guard against that and to give you a longer horizon to let things develop, as the result of process you’re going to minimize those mistakes.