Posts Tagged: "software patents"

As an update to my posts from 2017, 2019, and 2020, it has now been more than seven years since the U.S. Supreme Court’s 2014 Alice Corp. v. CLS Bank decision. Yet the debate still rages over when a software (or computer-implemented) claim is patentable versus being simply an abstract idea “free to all men and reserved exclusively to none” (as eloquently phrased over 73 years ago by then-Supreme Court Justice Douglas in Funk Bros. Seed Co. v. Kalo Inoculant Co.). Further, it has been 10 years since famed venture capitalist Marc Andreessen wrote an influential op-ed piece in the Wall Street Journal titled “Why Software Is Eating the World.” This digital transformation where software is “eating the world” is undeniable.

On Tuesday, March 2, a jury verdict  entered into the Western District of Texas awarded $2.175 billion in damages to VLSI Technologies for patent infringement committed by multinational tech firm Intel. The verdict, which includes one of the largest damages amounts ever awarded for patent infringement in a U.S. district court, comes less than two years after VLSI began the lawsuit and arguably marks an important milestone in the effort to address corporate business models employing “efficient infringement” techniques to earn dominant market positions, not as innovators, but as tech implementers.

Since the Supreme Court’s Alice decision in 2014, inventors have faced extra hurdles trying to protect their software-related inventions with patents. A chief obstacle has been satisfying the two-part test for eligibility under Section 101 set forth in Alice and Mayo. To meet this test, claimed subject matter must not be directed to a judicial exception, such as an abstract idea, (Step One), and if it is, must add “significantly more” to provide an inventive concept (Step Two)…. Theodore Rand reported in IPWatchdog last week, a disturbing but not surprising trend. Rand found that, in 2020, 81% of software-related patents on appeal for subject matter eligibility in decided precedential cases (22 of 27) were found invalid. But in three cases, software-related patents were found drawn to eligible subject matter for patent purposes. Id. In each of the three cases, the appeals court pointed to aspects of the patent specifications themselves. Looking more closely at the representative claims and court’s comments with respect to the corresponding patent specification is illuminating. In particular, the court looked to the specifications for evidence of performance improvements over conventional systems, description of a technical problem/solution, and technological advantages.

In Part I of this article, I explained that the CAFC invalidated almost every software patent on appeal for eligibility in 2020 and recapped the first 13 such cases of the year. Despite the many software eligibility cases decided last year, there is still some uncertainty about what passes muster under the Alice two-step framework. Below is a recap of the remaining 14 cases considered by the CAFC in 2020 with respect to software patent eligibility.

Last year was an active one at the United States Court of Appeals for the Federal Circuit (CAFC) for software eligibility. It also was a brutal year for patent owners, as the CAFC invalidated almost every software patent on appeal for eligibility. Despite the many cases decided last year, there is still some uncertainty about what passes muster under the Alice two-step framework promulgated by the Supreme Court in 2014. But one thing that has become increasingly clear is that the CAFC wants to see how a particular result is achieved or how a problem is solved. This desire for a “how” or rule set from the claims creates an evident tension with the traditional notion that patent claims should recite structure, not functional language. These recent CAFC cases have also made it clear that courts will look to the specification for implementation details, even if these details do not emerge in the claims. This analysis has previously been reserved for the written description requirement under Section 112 but found its way into the Alice two-step.

The Federal Circuit’s recent Uniloc v. LG Electronics decision (April 30, 2020) may be very helpful for subject matter eligibility. This Federal Circuit panel (Moore, Reyna & Taranto) held software patent claims to be patent eligible subject matter. I find the decision clearly written, with many interesting aspects. What strikes me most, though, is that seemingly very broad software patent claims were held eligible. Additionally, the decision highlights the perils of concession in a 12(b)(6) motion to dismiss.

As an update to my posts from 2017 and 2019, it has now been more than six years since the U.S. Supreme Court’s 2014 Alice Corp. v. CLS Bank decision. Still, the IP bar awaits a clear and reliable 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.” The USPTO’s Section 101 guidelines interpreting Alice—and the accompanying 46 examples—have not cleared the confusion, and Alice continues to distract the USPTO, courts, and practitioners from focusing properly on Sections 102 (novelty) and 103 (obviousness). The net effects still being increased cost, lower patent quality, lower patent portfolio valuations, wasted patent reform lobbying dollars and, in many instances, the denial of patent protection for worthwhile software inventions.

On Tuesday, the Supreme Court heard oral arguments in Romag Fasteners v. Fossil, Inc., Fossil Stores, I. Inc., Macy’s Inc, and Macy’s Retail Holdings, Inc. to decide whether a successful trademark plaintiff must establish that infringement was willful as a hard prerequisite to an award of the infringer’s profits, rather than being just one of multiple factors to be weighed when determining entitlement to a profits award. Under the latter scheme, profits may be awardable even if the infringement was not willful. Taking the Justices’ comments at face value, it seems likely that Romag will prevail and profits may be disgorged for less-than willful infringement.

The U.S. Court of Appeals for the Federal Circuit (CAFC), in an opinion authored by Judge Chen, on Friday November 15 reversed a ruling of the District Court for the District of Delaware holding Koninklijke KPN N.V.’s (KPN’s) U.S. Patent No. 6,212,662 (the ‘662 patent) ineligible under Section 101. The patent covers a method that varies “check data” to reduce systematic errors in electronic transmissions. KPN sued Gemalto M2M GMBH (Gemalto) in the district court and Gemalto moved under Rule 12(c) for a judgment on the pleadings, arguing that claims 1-4 of the ‘662 patent were ineligible under 35 U.S.C § 101, which the district court granted. KPN appealed on claims 2-4, stating that they present “a non-abstract improvement in the functionality of an existing technological process and not simply an abstract idea of manipulating data.”

It has been one year since my software patent was invalidated in the U.S. District Court for the Southern District of New York.  Now, this intellectual property is considered worthless and my dream of paying off extensive student loans with the proceeds from patent licensing fees are in the past. The irony being that if it were not for these extensive student loans, this invention, most likely, would not have come to into being. My patent No. 6,769,915, issued in 2003, was invalidated under Section 101 and struck down on appeal. The patent covers “a user-interactive behavior modification system” that is in competition with technology pursued by the companies including Nike, FitBit, Apple, and Samsung.  The rules that existed when I applied for this software patent in 2000 no longer guarantee myself and hundreds of other independent inventors the right to collect patent licensing fees. This right was granted to all with The Patent Act of 1790. Yet, over the last 15 years, the U.S. patent laws have been changed drastically by extremely well-financed lobbyists on behalf of the U.S. Patent and Trademark Office’s (USPTO’s) largest customers— global corporations, including the Big Tech industry. This has relieved Apple, Google, Facebook, etc. from the necessity of having to pay independent inventors software licensing fees. With this shift in intellectual property laws, the once small startups of Silicon Valley have become the large monopolies they are now.

The European Patent Office (EPO) recently published its Guidelines for Examination 2019, which came into force on November 1. Compared to previous years, the volume of changes is much smaller, and this witnesses the effort by the EPO in past years to arrive at a more stable text of the Guidelines, particularly concerning the software patentability sections. Yet some changes have been made to software patentability guidelines as well as to other important sections, such as the numerical ranges and clarity matters. Continuing the trend of past years, the Guidelines continue to be enriched with helpful examples.

Trading Technologies International, Inc. (TT) has filed a second petition with the U.S. Supreme Court asking it to review a Federal Circuit holding that computer-implemented inventions that do not improve the basic functions of the computer itself are directed to abstract ideas and therefore patent ineligible. The present petition relates to U.S. Patent Nos. 7,685,055 (the “’055 patent”); 7,693,768 (the “’768 patent”); and 7,725,382 (the “’382 patent”). The petition TT filed in September relates to Patent Nos. 7,533,056, 7,212,999, and 7,904,374. The patents are all from the same family as three other patents found patent eligible by the CAFC in 2017. The latest petition argues that the Federal Circuit “simply declined to address conflicting Federal Circuit authority involving the same patent family or the line of other Federal Circuit decisions adopting and applying that authority’s reasoning,” and, therefore, clarification is needed from the High Court. The company’s argument may also get a boost from another petition filed recently appealing the controversial decision in ChargePoint v. Semaconnect, in which the Federal Circuit held that a vehicle charging station was not patent eligible.

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.

Something has happened at the United States Court of Appeals for the Federal Circuit over the past six months. After inching forward in a positive direction on patent eligibility, the entire court, including those judges who had been on the pro-patent eligibility wing of the court, have fallen, slipped, or just given up. The precisely correct characterization remains elusive given the traditional, characteristic and appropriate secrecy that surrounds judicial tribunals. As constitutional officers charged with independently deciding cases, judges take few speaking engagements. Even when they do, they generally speak off the record, and never speak about specific issues or cases that may at some point come before them. In this industry, that means little discussion is had between the bench and bar relating to matters of patent eligibility outside the record, which is itself unfortunate. If the judges of the Federal Circuit would sit through a conference exploring patent eligibility as it applies to the software and biotechnology industries, they would learn much about the uncertainty their decisions are causing. Still, something undeniably has changed.

Patent application drafters are front-line participants to some of the most amazing innovations in the world today. A recent WIPO paper on Artificial Intelligence (AI) outlines how we are filing for patents on knowledge automation at an increasing rate. Our current tools, however, do not reflect the innovations with which we are so familiar. Historically—and to this day—the process of drafting a patent application has been a manual task. It is a task that takes, on average, 40 hours of a highly-skilled patent application drafter’s time. Anyone who has drafted any volume of patent applications for a client knows that the drafting process typically involves the use of boilerplate language and substantial copy and paste operations. While performing these repetitive tasks, we have all thought: “there must be a better way.” While we find ourselves surprised by the lack of tools to help with patent application drafting, we recognize the challenges that must be overcome. Different attorneys, firms, and clients often have different styles and preferences when it comes to the way patent applications are drafted. Thus, any automation tools would necessarily need to handle these different styles and preferences. But these challenges notwithstanding, the days of drafting a patent application completely manually by a single patent drafter are coming to an end.