Ray Niro on Patent Trolls, Obama Administration and SCOTUS

By Gene Quinn
July 20, 2014

Ray Niro

In this final segment of my conversation with Ray Niro we discuss the politics of patents, starting with the reality that the Obama Administration has for some time adopted the view of Google and other similarly situated tech companies that seem comfortable with an ever weakening patent system. We also discuss the Supreme Court’s recent decision in Alice v. CLS Bank, as well as the continuing and alarming trend toward expanding the definition of patent ineligible subject matter.

To begin reading the interview from the start please see A Conversation with Patent Defense Litigator Ray Niro.

QUINN: Given that the Obama Administration is already out in front anti-NPE, anti-patent troll, and seems to be taking the Google philosophy which is who their advisors are, it seems to me foolish to think the Patent Office is going to moderate that decision and limit it narrowly.

NIRO: Right. The Administration has become a shill for Google — you even have a Google person running the Patent Office. So you have a situation where any number of patents, tens of thousands of patents, are going to be affected by Alice and also by the Limelight decision on split infringement.

You know, I did the MuniAuction case. And when you look at the patent in that case, it was found valid and willfully infringed. The judge enhanced damages, doubled them up to around $85. And by the time the case was on appeal, damages were around $150 million that our client was entitled to recover.

It was a municipal bond auctioning process where you had one element of the claim was submitting a bid. Another element of the claim was viewing the results of the auction. And the third, fourth and fifth elements were manipulating the bid, ranking the bids, determining of priority and so on and so forth. It was that middle guy that we sued. And the defense was, well, all we do is the stuff in the middle. We don’t submit a bid and we don’t view the results of the bid. If you changed two words in that claim instead of “submitting” a bid, you say “accepting” a bid. And instead of saying “displaying the results,” you say “transmitting the results for viewing by a third party,” you’ve put everything inside the box. And the person that wrote the claim ten years before did it the way it was done then. Now you have tens of thousands of patents with this split infringement, where you have multiple parties necessary to infringe, that are gone. They can’t be asserted for infringement purposes. I mean that’s just taking people’s property away after the fact.

QUINN: I couldn’t agree with you more. And that’s the thing that I’ve had some difficulty explaining to people who don’t operate in the software space is they’re like, well, why did you write these claims that way? They seem abstract to me. We write them that way because that’s the way the courts told us to write them.

NIRO: Right.

QUINN: You know, this was not a construct that we just came up with and said, oh, let’s try this. They were telling us how to go into these claims and even after the machine or transformation test when you’re starting to put in, it has to be tethered to a machine. Okay, well, that’s fine, we can do that, but suddenly that isn’t enough. Ironically, in retrospect the machine or transformation test made a lot of sense, right? Although it would have been much better if they actually said a mental process, a purely mental process, isn’t patent eligible. Okay, we can argue about whether it should be that way but fine, it’s that way so we’re going to put these concrete tangible items that you can touch into claims and now that still is not enough. How a claim with tangible items recited can be an abstract idea is beyond me.

NIRO: Well, it boggles my mind when these judges say if you’d written the claims better or if your client had written the claims better, you wouldn’t have this problem. And I’m tempted to say, you know, Your Honor, with all the respect that I can give you, did you ever write a claim? Did you ever sit with an inventor and try to define a new invention? And I’ll bet you the answer is no. In hindsight, everything could be done differently and better. But what they do is they change the rules of the game and then they say well you could have fixed it. I mean that’s like saying in a baseball game, well, you know what, I don’t like the outcome. I think I’m only giving you one strike instead of three. And we’ll play only seven innings, not nine. I mean, come on. You play the game under one set of rules. You don’t change them and then change the result as a consequence of that change.

QUINN: Well, it’s interesting that you say that because another friend of mine who is in the software space said nothing shocks him about what the Supreme Court does any more because they were willing to change the rules in the middle of the game relative to eminent domain where they can take your real property and hand it over to some other private citizen. At what point in time are we going to cease believing that the Supreme Court is limited by principle?

NIRO: Well, is there any Supreme Court justice who’s spent a day in an engineering class? Probably not. Or in a science or technical arena? Probably not. And you have them talking about how simplistic and easy and obvious in hindsight this invention is. And you have them talking about disqualifying certain categories of invention from protection. And you know, I think back to the debate that existed when biotechnology first emerged and how this was horrible and we shouldn’t have patent protection on biotechnology. And it went to the Supreme Court in a different makeup of the Supreme Court; they said no, this technology is eligible. Look at what’s happened as a consequence of that. You have companies like Genentech, you have pioneers in the technologies creating new revolutionary pharmaceutical products that benefit mankind. Now, would that have happened without a strong patent system? History would say no. So what we’re doing is we’re taking an entire category of potential invention and we’re disqualifying that from protection because it hasn’t been defined properly. And that’s a huge risk here that you’re going to create a disincentive in one of the areas of technology that is booming.

QUINN: I agree with that as well. And on top of what you just said, what they actually say is just factually incorrect. I mean it’s a faulty premise. All these judges on whatever level seem to think that this is just easy, simple, trivial and even during the oral argument in Alice, Justice Kennedy said something to the effect that a high school student could code this up once you gave them the requirements. The reality is software doesn’t work that way. And it’s striking to me that they don’t get it. Because how many times do you start up your own computer and you’ve got this critical patch that absolutely needs to be downloaded because what you’ve got on your system is so horribly flawed. It’s like every week, every week. And for almost every piece of software you have. And I’ll tell you last weekend I got really worked up about the Alice decision because right ahead of the decision coming out we had been down due to server issues, denial of service attacks, people trying to log in brute force, malware, you name it. And it’s like for software that is so trivial to operate, you know, a webserver software, which is ubiquitous at this point, it just doesn’t work very well. Because at the end of the day, it is an engineering problem. Anything that can go wrong will go wrong – Murphy’s Law. People try and exploit it. And the innovation lies in the elegance of the design and the fact that it works. And these judges just don’t get that.

NIRO: Well, that’s right. And the MuniAuction case is another good example. Here are a couple of guys in Pittsburgh who worked in the municipal bond auctioning business and saw first-hand all the problems that were taking place because of the non-electronic nature of the process that people couldn’t read the fifth decimal point. There were fights about whether the fax was at 12:01 versus 11:59. And you know, you had all of this nonsense going on because of the mechanical nature of the auctioning process. And they came up with this idea to do an electronic auctioning process using the Internet. And it was phenomenal. It became a huge instant success, revolutionized the whole space. And if you want to put this after the fact under a microscope to say, what’s the invention here? All they did was take some old ideas and put them on the Internet. Hey, but nobody had thought of doing that. Nobody—they were trudging around doing it in a different way. So what you’re seeing from judges and justices is 20-20 hindsight. Oh, it’s easy, it’s simple. Well, you know, if it’s so easy and simple why didn’t somebody do it?

QUINN: Well, that’s true. And you know I really get worked up when they talk about how the Apple pinch and swipe and that sort of thing is just simple and it really shouldn’t be patented. And the history of it is it took them seven years to figure out how to do that. And once they did it, and once they came out with it then everybody copied them, you know? I mean it seems to me the obviousness law along with everything else is just messed up. Because, yes, has it made it more difficult to get these “trivial inventions” or “stupid things” patented? Yes. But what it’s also done is is it’s made it really more difficult on a lot of levels to get and keep a patent on something that is truly innovative. After something becomes ubiquitous, keeping the patent is extremely difficult. We should be celebrating inventions so important that they become ubiquitous, not invalidating them because they are allegedly obvious.

NIRO: Well, I like to tell juries that invention is like the lost purse along the highway. Hundreds pass it by until somebody more observant sees it, finds it, and returns that purse to its owner. That’s the problem here. You have trivializing of inventions because they didn’t take forever to figure out and they weren’t the product of massive amounts of research. I mean Judge Posner would disqualify from patent protection anything that was the result of instantaneous discovery. How about penicillin? Penicillin was discovered by accident. So, too, with “Post-Its,” “NutraSweet” and lots of other inventions.

QUINN: Yes.

NIRO: A mold growing on a Petrie dish. Yet it saved millions of lives. Why would you not want to protect something like that? Accidental or whatever—it was an invention, it was a huge invention, it was a tremendous discovery. And look at the product. Look at the result. So I think that we’ve got things backwards because people making the decisions unfortunately have never had to sit and study and work through some of the things that those of us who chose an engineering or science background in their lives at one point had to do. And I think that that skepticism, that ego, that it’s “easy,” it’s “simple” is bad. And you see it in the Alice decision. It’s nothing but an abstract idea. Can’t be patentable. That’s an interesting play on words. But when you dig beneath what went on to create this new idea, I’m not so certain it so easy and obvious and why it should be disqualified from protection.

QUINN: No, I don’t either. And frankly I don’t know how in our system of laws you can have something that has a name, the abstract idea doctrine, without it being defined.

NIRO: Right.

QUINN: What that means is patent eligibility today is purely subjective. If you don’t think it deserves protection, then you just call it an abstract idea. It is perfect really because no one knows what it means, so the patentee can’t hope to really meaningfully rebut it. It is so frustrating.

NIRO: Right.

QUINN: And the laws were specifically changed in 1952 to try and eliminate that subjectivity, but everyone forgets that, or perhaps better to say that many judges choose to ignore that inconvenient truth.

NIRO: Yes. When you look at KSR, there are portions of KSR that suggest that, if all you have is a combination of old elements, it can’t be patentable. I mean that disqualifies from protection just about everything.

QUINN: Yes, you have to have a pioneering paradigm shifting invention if KSR is applied literally.

NIRO: Right. And if you apply that logic to music, you wouldn’t have a single song that’s new, since they’re all starting with the same eight notes and they’re all old and they’ve all been available forever.

QUINN: Right.

NIRO: And you wouldn’t have a new novel either because all the words are old. It’s so ridiculous that it doesn’t pass the giggle test. It’s just craziness.

QUINN: So when you said earlier you think this is not a matter of months but this is a matter of years. If you had to predict, what do you think we’re looking at over the next couple years? Intermediate and then long term.

NIRO: Well, I think the quick effect will be immediate, you’re going to see fewer and fewer individual inventors and small entrepreneurial type companies able to maintain cases against the big guys. I don’t think they’re going to be able to afford it. I don’t think they can assume the risk. Now there may be insurance options where people will start insuring risks on fees and that could happen. But I think short range you’re going to see fewer individual inventors and small companies bringing patent cases. Longer range, I think you’re going to see people, the inventors, begin to retreat and, not having a strong patent system, you’re going to see fewer and fewer of the new ideas emerging. That’s going to affect our country badly because you’re going to have less of an entrepreneurial spirit. You know, if you’re an entrepreneur and you create a new idea and then you find out that the big guy can just take it from you and you can’t do anything about it, what incentive do you have to keep doing that? You don’t. So I think that’s going to take a little time to play out. And it’s also going to take a little time for the big guy who has a portfolio of patents, the IBMs, the Microsofts, the Apples and so forth, to realize that their portfolios have been devalued significantly because of some of these decisions. And I think that’s about a ten year time frame before the pendulum swings the other way. I hope it’s not that long, but that’s my prediction if I had to guess.

QUINN: I’m holding out hope that it’s not that long. And the one wild card in all of this I think could wind up being in an odd way something that has nothing to do with the patent system or intellectual property. But I wonder what the impact of Sarbanes-Oxley is going to be on all of this because I do think that a lot of companies just had their patent portfolios devalued by an extraordinary amount.   You take Google who spent a lot of money, billions and billions of dollars acquiring patents. I mean how many of those now are really just worthless? How many would be worth anything if ever challenged in a proceeding at the PTAB? And if they don’t explain that to shareholders, then it seems to me that they were violating the law.

NIRO: Yes.   I mean Google’s whole play on getting the Motorola patents was to balance Apple getting the Nortel patents. So I think that people fail to realize that they’ve created a monster under the guise of eliminating or punishing “trolls,” whatever those entities are. And you know they’re sweeping in just about everything and everybody. But under the guise of fixing the system, they’re actually destroying the system. And I think you’re going to see the consequences of that. Both immediate and long range. And maybe these special interest guys are going to start looking at their portfolios and ask why did we spend billions of dollars buying these patents when 90% of them are worthless?

QUINN: To be honest, I threw out the Sarbanes-Oxley issue. I don’t think any of them are going to look at it that way. What I do think could wind up getting interesting would be is if you had some attorneys trying to bring some creative shareholder derivative lawsuits.

NIRO: Oh, that’s interesting. I hadn’t thought of that.

QUINN: I don’t believe there’s a direct action under Sarbanes-Oxley, but I don’t know that you could present evidence from coming in that what was going on really did violate that law. And people hate lawyers; you know that, I know that. But at the end of the day, vehicles don’t blow up because lawyers pursue those companies who are indifferent.

NIRO: Right, right, right. If anything, it was the product liability lawyers that made products safer by holding people accountable.

QUINN: And I think maybe it may be lawyers from a different discipline that ultimately wind up turning the tide.

NIRO: Yes. You may be right. I hope it’s the patent bar that makes a difference. We will see.

QUINN: Well, Ray, I really appreciate you taking the time. I know we’re out of the time that we agreed to but it’s always great to talk to you.

NIRO: Well, thank you, Gene, but one further thought I want to share on this whole business of patent trolls.  To me, these are just words used by anti-patent advocates to undermine the rights of individual inventors and the small businesses they create — people I have largely represented for the past 20-30 years.  And it bothers me that the big, rich, elitist, special-interest groups are willing to do just about anything, and spend massive sums of money doing it, to destroy the ability of individual inventors and their companies to have a fair opportunity to be heard, not in back alleys, but in courts with judges and juries.  It’s what our founding fathers fought so hard 240 years ago to protect.  What these guys and their big-firm lawyers are doing, quite simply, is undermining innovation in our country.  I say: shame on them all.

QUINN: I couldn’t agree more. We should be celebrating innovators, not treating them like they are the problem. I really appreciate you taking the time to chat with us again.

NIRO: Thanks for the opportunity to talk about some of these things.

QUINN: Sure.

NIRO: I think you provide an opportunity for people to say some things that need to be said.

QUINN: Thanks Ray. I appreciate that.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 37 Comments comments.

  1. step back July 20, 2014 9:25 am

    Gene and Ray:

    Your above discussion brings to mind an argument that Thomas Jefferson made a long time ago about the powers of the US Supreme Court:

    “[Re SCOTUS decision in Marbury:] You seem to consider the judges as the ultimate arbiters of all constitutional questions; a very dangerous doctrine indeed, and one which would place us under the despotism of an oligarchy. Our judges are as honest as other men, and not more so. They have, with others, the same passions for party, for power, and the privilege of their corps…. Their power [is] the more dangerous as they are in office for life, and not responsible, as the other functionaries are, to the elective control. The Constitution has erected no such single tribunal, knowing that to whatever hands confided, with the corruptions of time and party, its members would become despots. It has more wisely made all the departments co-equal and co-sovereign within themselves.”

    source:
    http://en.wikipedia.org/wiki/Marbury_v._Madison#Criticism

    In the case of Alice v. CLS it should be recalled that the US Constitution leaves to the Congress, the job of “*** securing*** for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

    To this end (of “securing” rights), Congress passed 35 USC 101.

    Now comes a despotic SCOTUS with aim and act of de-securing IP rights already granted by the Executive branch via the US Patent office.

    How does SCOTUS have powers even beyond that granted to Congress (of “*** securing*** for limited Times to …. Inventors the exclusive Right to their respective …. Discoveries.”) ?

  2. patent leather July 20, 2014 1:37 pm

    I know this is not another Alice thread, but that part of the oral arguments Gene mentioned really killed me. Where Kennedy said that ” it [Alice’s invention] would be fairly easy to program.” and Phillips’ bizarre response was, “I don’t disagree.” Truth is, it shouldn’t make any difference how long it would take to code. The claims in Edison’s famous patent on his improved light bulb (which by the way requires only conventional parts) could be practiced by anyone in a matter of minutes.

    Kennedy equates an abstract idea with being easy to actually reduce to practice, but with that logic the light bulb (and most inventions) are also abstract ideas.

    Anyway Ray, I have a client whose patent I prosecuted for him is being infringed, we will probably be calling your firm in the near future.

  3. Joachim Martillo July 21, 2014 12:04 am

    As far as I can tell, the Supreme Court is saying something fairly simple in Alice. A patent should not be granted in the case where claims assert nothing more than the computerization (either via software or via logic circuitry) of a known formula or process. To tell the truth such computerization simply is not particularly innovative however difficult the program might be to code or the logic circuitry to design.

    I am not opposed to software patents. Back in the 80s I worked on the X window system, and I suggested that MIT should patent the network transparent virtual high resolution raster graphics device (in a device and not in a system or method patent).

    But in the 90s the PTO issued a lot of ridiculous software method patents with generally incomprehensible claims often written in bad English and approved by examiners, whose command of English was arguably deficient.

    The 90s and early 2000s produced a mess attributable to language problems and to the unfamiliarity of software to many examiners. The Supreme Court has been trying to clean up the mess, and the recent Alice decision will probably help.

  4. step back July 21, 2014 2:07 am

    Joachim,

    There lies the rub.
    You and SCOTUS both have the same naive but incorrect understanding of what patent claims are and what they are supposed to do.

    SCOTUS does not know their 103 from their 101 or their 112 and neither do you.
    Sad for them and us.
    Understandable for you (given that you are not a lawyer who reads the actual law = 35 USC sections 100, 101, 102, 103, 112.)

  5. J July 21, 2014 11:44 am

    Step back:

    I agree that SCOTUS’ logic in the 101 cases puts the entire patent analysis (101, 102, 103, ect.) into one big step, which is a terrible legal rule. But I think, even using the old machine or transformation test, that Alice’s patent still fails. In this way, I agree with Joachim that the Court’s conclusion is straightforward.

    Mr. Niro mentioned Limelight. The Federal Circuit has made a mess of this law. I do not understand why structure and method claims have different rules on who is an infringer. For structures claims, the person who completes the assembly is the infringer, and those who helped him induced infringement. Why not say, for method claims, that the person who completes the last step is the infringer, and those who did the intervening steps induced infringement? The answer I get, most often, is that we don’t want to make consumers as infringers. But that makes no sense because consumers can be infringers for the structural claims (and consumers are never sued for patent infringement).

  6. Joachim Martillo July 21, 2014 12:03 pm

    I have been reading patent law and regulations since upper management at Bell Labs back in the early 1980s concluded that it might be useful if I worked with the patent lawyers.

    Why do you think I have the same naive but incorrect understanding of patent claims as the Supreme Court?

    (It takes a lot of hubris to call SC justices naive wrt the law.)

    I was just trying to explain what I thought the Supreme Court was trying to do in Alice and why.

    I was not providing an analysis of patent law.

  7. step back July 21, 2014 4:39 pm

    Joachim @ 6

    You write:
    It takes a lot of hubris to call SC justices naive wrt the law.

    I didn’t say all law, just patent law.
    And right you are. It take some modicum of guts and hubris.

    But here’s the deal, Just cause they are called “supreme” doesn’t mean that in all areas of knowledge and intellect they are supreme. They put their pants on one leg at a time just like the rest of us. They are fallible just like the rest of us.

    When SOTUS decided Graham v. Deere (back in their more cautious days), it is clear that they understood they were stepping into an area of law that was outside their normal ken. They carefully followed the law, the statute passed by Congress via the 1952 act. Section 103 said “differences”. They reasoned with careful logic that “differences” implies a subtraction operation of some sort. Therefore one must first determine the scope of the prior art. Then one must determine the scope of the properly construed claim (taken as a whole). And finally one identifies ALL the “differences” between one and the other. That’s sticking to the words and logic of the statute.

    When SCOTUS got to KSR v. Teleflex, they decided to jump the shark and ignore the statute. There is no mention in 103 of “common sense”, finite number of options, etc. SCOTUS appears to have pulled it out of their hat.

    Now comes Alice v. CLS. There is no mention in 101 of claims being “drawn” to something, or of “abstract ideas” or of saying as a simpleton, apply it. SCOTUS appears to have pulled all of it out of their collective hat, throwing caution to the winds of their wild imaginations.

    So hubris?
    Yes.
    But then again, they deserve it.

  8. Anon July 21, 2014 6:26 pm

    J,

    Just curious, are you referring to the machine or transformation test that all nine Justices in Bilski said was not a requirement (was not required), and was only a clue?

    Be careful then with the word “test,” as it may not have the impact that you think it has.

  9. wow July 22, 2014 3:20 am

    what I like about this site is that the authors are typically logical and honest about their observations. another good article. thanks

  10. NWPA July 22, 2014 9:42 am

    J, “But I think, even using the old machine or transformation test, that Alice’s patent still fails.”

    It was a machine. It does not fail under 101, but 103. There is no valid 101 argument under the 1952 Patent Act.

    Hubris statement regarding the SCOTUS: don’t be ridiculous. We have the right to criticize the justices. Their understanding of science and technology is abysmal. And, they lack the basic skills necessary to analyze a patent claim. (In my opinion, Alice illustrates why we should not be appointing 9 people with no science background to the SCOTUS.) The Royal Jelly 9 shame this nation.

  11. NWPA July 22, 2014 9:45 am

    And actually Joachim I find your remarks offensive and antithetical to the Constitution. They are supposed to be serving. They do not deserve respect because their office. They should earn our respect based on their behavior. They have not done so. They do not deserve our respect, but our contempt. All 9 should be removed for incompetence.

    Your views Joachim are like a little baby servant sucking up to the master.

  12. A Rational Person July 22, 2014 10:52 am

    “As far as I can tell, the Supreme Court is saying something fairly simple in Alice. A patent should not be granted in the case where claims assert nothing more than the computerization (either via software or via logic circuitry) of a known formula or process. To tell the truth such computerization simply is not particularly innovative however difficult the program might be to code or the logic circuitry to design.”

    But Section 101 is not supposed to be used to determine whether the subject matter of a claim is “innovative”. For over 50 years, up until the Mayo v. Prometheus decision, Section 101 had been been interpreted by the Supreme Court to only determine whether a patent claim claimed “patent eligible subject matter” not whether a claim claimed “innovative subject matter.” Given that the language of Section 101 had not changed in decades, why should the Supreme Court’s interpretation of Section 101 change?

    And, I think I speak for most patent professionals on this board in agreeing with you that merely computerizing a known process is almost always not innovative. But the decision that computerizing a known process is not innovative should be based on Section 103, not Section 101.

    The concern I and many other patent professionals have is that the fact a process that is performed by software as opposed to hardware makes any difference from the standpoint of patent eligibility. For example, if I invent a black box that when connected to my car’s engine causes my car to get 40 mpg instead of 20 mpg. Why should it matter from a Section 101 standpoint if the black box accomplishes this feat using: (1) gears, (2) cams, (3) tubes, (4) discrete, (5) switches, (6) discrete transistors, (7) printed circuits, or (8) a generic laptop computer running specialized software contained in the black box?

  13. EG July 22, 2014 11:18 am

    “We have the right to criticize the justices. Their understanding of science and technology is abysmal.”

    Completely agree, NWPA.

  14. J July 22, 2014 11:29 am

    Anon: I was referring back to the time before Bilski, actually, when it was an actual test. (I am right that it was an actual test before then, right?)

    NWPA:

    I didn’t say it would fail under 101, I said it would fail. I feel like, in context of my post, that was clear. What I was saying, if we could all take a giant step back, was I agree with Joachim’s point that the Supreme Court’s ultimate result was correct. A Rational Person says, “I think many professionals agree that merely computerizing a known process is almost always not innovative”… but do all the patent examiners know this? Does the Federal Circuit know this?

    Here is the problem guys, there is a social cost in granting patents. (I’m not saying there is a net social cost, but just saying there is one.) Sure, if they are struck down, then we don’t face the social cost for 20 years, but we have some social cost. And for patents like the one in Myriad and Mayo, the social cost might be people’s lives. (AGAIN, I AM NOT ANTI-PATENT, I am just pointing out that patents do indeed have social costs). The Supreme Court knows this, and is frustrated that such unworthy patents, and social costs associated with them, are allowed to linger for years in court. SCOTUS wants these patents to be killed in their cradle–that is why they want a more robust 101 analysis.

    I know some will disagree with me and argue that these patents should be ultimately valid. I really don’t want to get into that debate today. I just wanted to point out what I think is the Supreme Court’s logic.

    I really would have rather someone respond to the induced infringement point.

  15. NWPA July 22, 2014 12:21 pm

    12. Rational Person “Why should it matter ….”

    Exactly right. It shouldn’t. And in my practice putting some things in circuits and some in software is common and it would be trivial to design around almost any electrical circuit if you can get around the patent by digitizing signals and then processing them and generating new signals (so just do that for a part of the circuit.)

    Fact is, that what they have done is make almost every EE patent unenforceable or invalid.

  16. step back July 22, 2014 1:15 pm

    One (“A”) Rational Person @12

    We all think of ourselves as being “rational” creatures.

    The science, however, demonstrates that all of us are irrational. Some more so than others.

    Various scientific experiments can demonstrate that most of us do not know what we are talking about when it comes to one subject matter area or another. Take you pick: chemistry, health issues (i.e. which “holistic” herbs work?), physics, thermodynamics, electrical engineering (i.e. what is the definition of “electricity”?), etc. We “merely” have the feeling, the delusion, that we know even a smidgen with regard to what we make noises about. What is your definition of the word “computer”. No fair looking one up and copying from the dictionary. I want to know “your” definition right now as you speak of it. What is your definition of the phrase “generic computer”? Is that definition a constant or does it change from minute to minute as the bubbles of hot air drift away?

  17. Anon July 22, 2014 1:22 pm

    J, at 14.

    No. You were not correct. That is why the this issue percolated back up to the Supreme Court. If you were right, then the issue would not have percolated up.

  18. Anon July 22, 2014 1:41 pm

    J,

    The problem (the legal problem) at the bottom line is that the Court is acting ultra vires by inserting its judgement in a purely statutory regime.

    It is not the role of SCOTUS to determine “the social cost” – that is an item whose authority has been given to the legislature. The role of SCOTUS is not to change patent law based on its view of what should be worthwhile. What is worthwhile has already been determined in the words of Congress.

    The “right result” by the wrong means is anathema to lawyers, as it violates what many hold precious: the rule of rule. Others, tangentially viewing the art, sees a third grade view and may think “good enough.” In reality, THIS IS JUST NOT SO.

  19. Gene Quinn July 22, 2014 1:59 pm

    Anon-

    It looks like you had 2 comments in a row go live without me needing to do anything! Keeping my fingers crossed that our comment issues may be behind us, at least for now. Have been doing some spring cleaning of the server.

    -Gene

  20. J July 22, 2014 3:12 pm

    Anon:
    After some more reading, and I must say that, if not explicit, it was implied that if it passed the machine or transformation test you would pass 101 analysis. So I don’t think I deserved to be rebuked when I said that the machine or transformation test was once used–I think it was widely accepted by practitioners. In fact, as Gene argued himself, it is still considered a “safe harbor” test. http://www.ipwatchdog.com/2013/02/16/a-guide-to-patenting-software-getting-started/id=35629/. (I respectfully disagree and think the test is not useful for anything with the current state of the law.) Nonetheless, my point is that, even with such a test, Alice’s patent would eventually fail under 103.

    As far as the judicially created exceptions to 101 analysis… I think it is correct to have those judicially created exceptions. I don’t see 35 U.S.C. as a pure statutory regime, and think that there are important policy rationales to justify the rules that have been created. I know you like to hurl insults to such blasphemy. The debate is the result of our common law system.

    Regardless, these exceptions were not created by the current Court, just built upon. Some, like me, don’t like the state of the building right now. Some, like you (and Gene), hate that there is a building in the first place. The Court in the past 30 years have sided with having the judicially created exceptions, and this Court made clear back in Bilski it wasn’t going to change. What you are doing right now is what some Democrats were doing back in the 2004 election–arguing about what happened in Florida in 2000.

  21. A Rational Person July 22, 2014 3:20 pm

    J, at 14.

    “I think many professionals agree that merely computerizing a known process is almost always not innovative”… but do all the patent examiners know this? Does the Federal Circuit know this?”

    With respect to patent examiners: I am aware of no part of the Manual of Patent Examining procedure that states that merely computerizing a known process makes the process patentable under 35 USC 103.

    With respect to the Federal Circuit, I am aware of no opinion by a Federal Circuit judge indicating that computerizing a known process makes the process patentable under 35 USC 103.

    And turning around your question:

    The current Supreme Court standard for patent eligibility under 35 USC 101 requires that a claim:
    (1) Not cover an abstract concept, AND
    (2) Not cover the application of a natural law.

    1. Could you please identify a single piece of technology in the last 100 years that employs neither an abstract concept nor an application of a natural law?
    2. What objective test could an Examiner possibly use to meet the Supreme Court’s standard and find any claim to cover patent eligible subject matter.

  22. J July 22, 2014 4:42 pm

    A Rational Person:

    I look at Mayo, Myriad, and Alice and think, “how can an examiner grant a patent on that?” Then, “how can any judge on the Federal Circuit agree that this is patentable?” Those should have all been trashed under 103 (by application of the blue pencil rule). What I’m saying is that If the examining core, and the Federal Circuit, did a better job of doing just that, maybe we don’t have the mess that we have under 101. The Court hates those patents and wants a robust 101 to stop them.

    If I may, let me rephrase the framework to more precisely quote Alice. (1) Is it directed to an abstract idea and (2) of the framework as requiring an inventive step sufficient to transform the claimed abstract idea into a patent-eligible application. I’m not sure if how you say it is correct…

    (1) I actually think most claims do not “direct” themselves to an abstract idea, especially in the mechanical arts.

    (2) This is a 103 analysis… probably going to fail it if you failed (1).

  23. step back July 22, 2014 7:11 pm

    Gene Q @19,

    I think you meant to say “mere spring cleaning” of your servers because all things involving one’s ‘generic computational contraptions’ is a mere-man or mere-maid or mere-person thing. Is that not so? The Medievally-robed 9 on our Mount SCOTUS appear to believe so and so do many here who speak of “merely computerizing” this or that. Mere is as mere does. 😉

  24. NWPA July 22, 2014 7:32 pm

    J, you are a judicial activist to say the least. Not only that but your own statements illustrate how absurd the new SCOTUS 101 test is. The new 101 test is nothing more than I will do whatever I want test with no evidence and no law. They made federal common law. Simply shameful behavior.

    Plus much of the problem you describe is one that the Fed. Cir. has tried to fix by TSM. But, the SCOTUS burnt that down. TSM was a very good test that was capable of being implemented objectively and gave the examiners a goal (and an objective fail as in here was a TSM you didn’t find.) KSR is a joke. The SCOTUS put their arrogant noses into the picture without the right and without understanding TSM or the patent system. What they did was put their common law above the statute. The Fed. Cir. was made to interpret the 1952 statute.

  25. Anon July 22, 2014 8:13 pm

    J at 20

    We do not have a common law system when it comes to patent law.

  26. Anon July 22, 2014 8:14 pm

    J @ 20,

    We do not have a common law system when it comes to patent law.

  27. A Rational Person July 23, 2014 10:38 am

    J at 22:

    “(1) I actually think most claims do not “direct” themselves to an abstract idea, especially in the mechanical arts.
    (2) This is a 103 analysis… probably going to fail it if you failed (1).””

    But these claims would apply one or more natural laws and therefore fail the Supreme Court’s 35 USC 101 patent eligibility test and therefore, are not patent eligibility. The Supreme Court’s 101 test requires that a claim both (1) NOT cover an abstract idea AND (2) NOT apply a natural law. (1) and (2) are both requirements under the Supreme Court’s 35 USC 101 standard.

    Once again, I ask, “Could you please identify a single piece of technology in the last 100 years that employs neither an abstract concept nor an application of a natural law?” And keep in mind, that if a claim applies a natural law, by the Supreme Court’s standard, the claim is patent ineligible.

  28. A Rational Person July 23, 2014 10:57 am

    J at 22

    “I look at Mayo, Myriad, and Alice and think, “how can an examiner grant a patent on that?” Then, “how can any judge on the Federal Circuit agree that this is patentable?” Those should have all been trashed under 103 (by application of the blue pencil rule). What I’m saying is that If the examining core, and the Federal Circuit, did a better job of doing just that, maybe we don’t have the mess that we have under 101. The Court hates those patents and wants a robust 101 to stop them.”

    So are saying is that because Examiners make mistakes with respect to determining patentability under 35 USC 103, possibly because the Examiners have have sufficient time/budget to do a proper job of determining patentability under 35 USC 103 because of fee diversion by Congress, the Supreme Court should free to rewrite Federal Statutes any way the Supreme Court wants?

    If so, then why have federal statutes?

  29. Anon July 23, 2014 1:34 pm

    J,

    Serious question (and not meant in any manner to be condescending):

    You are not an attorney, are you?

    The reason why I ask is that you appear to treat law in a very cavalier manner. You seem to appreciate neither the structure nor the history of law. Your comments like “we have a common law system” and “I don’t see 35 U.S.C. as a pure statutory regime” appear to confuse opinion and law. Make no mistake, patent law is pure statutory law. Do not be confused that within 35 U.S.C. there are portions where the statute delegates aspects from the legislature (i.e. pure statutory) to the judiciary (i.e. allowing the use of equity in determining damages). But such legislative permissions do not change the basis of the law.

    In law, the end result is by far not the most important thing. Non-lawyers (especially technically-minded non-lawyers) often have a very difficult time understanding the importance of this concept.Sure, for the immediate parties involved in any one lawsuit, that decision is of utmost importance. But “law” and the effect of “law” that is most important is that effect that spreads to everyone else. In this manner, a conclusion may “sound right” and accord to a lay person’s common sense – and even in some real sense “be” right – and yet, in law, be “wrong.”

    To this end, your characterization of Gene’s and my concern of “state of the building” or “hurling insults” misses the mark of what we have to say. If you find yourself “insulted,” you should stop and ask what specifically do you find to be insulting. The passion that you see in our comments “of the law” have to do with the bigger picture than just one decision, of just the merits between the two parties whose case is being decided. Our passion (if I may be so bold to speak for Gene) comes from our dedication to the law as a concept to itself. In this view, the process of law, how law is decided, which branch of the government is doing what – and why – and do they have the authority to do as they may wish to do drive a deeper passion than a mere lay person’s view of “that sound’s fair.” This is no sleight of lay persons, or the ability of a lay person to have an opinion. But I ask you to understand that law is not opinion. Please do not confuse the two.

  30. J July 23, 2014 3:07 pm

    Anon: I am an attorney. We are a common law legal system, versus a civil law legal system. I am not saying that there is Federal common law, I’m saying this is a common law system in which past decisions are a great part of the law. Compare the European patent statute and then compare 35 U.S.C. One is meant to be a Code, and the other is not. The difference is that a code is written to cover every eventuality. As much as the 1952 statute and AIA changed the law, and I think it did, it was not written to reverse a 150 year history of the patent law system. Therefore, it is not a pure statutory regime… this isn’t judicial activism, this is a necessity given the structure of the statute itself.

    I mentioned that Bilski ended the debate on the judicially created exceptions. Congress had every opportunity to create a statutory regime that would have overturned that line of case law when it passed the AIA. What did the legislature do to overturn that line of case law? Nothing, as far as I can tell. In our legal tradition, that is typically a green-light to continue a line of cases. The judicial exceptions to patent eligibility remain because of Congress’ choice/failure to do anything about it.

    The substance of our little debate here is as old as Adams (pro-English system) v. Jefferson (pro-French system). You see my analysis as cavalier, I see it as flexibility in the legal system that is particularly important when we are talking about an area of law that must change constantly as the technology itself changes. To your comment that I am “cavalier” is not true, I just tend to agree with the overall policy objectives of the judicially created exceptions to 101. I’m quite consistent on what those policies should be, and therefore do not view cases on an ad hoc basis. I tend to weigh against bright-line rules made by the Federal Circuit… as does the Supreme Court.

    Rational Person:

    I disagree with your characterization of what the test is. Only some patents direct themselves to an abstract concept, others that simply contain the abstract concept are patent eligible. See, for example, in Myriad, when Thomas points out that the patent description focuses on the efforts to find the scientific knowledge, rather than application of the scientific knowledge.

    You straw-manned me. I’m not saying the Supreme Court should rewrite the statute or do whatever is necessary to put forward their agenda. I’m saying they are attempting to continue the line of cases, created by their predecessors, of the judicially created exceptions to patent eligibility in such a way as to prevent the shoddy patents such as the ones that have made it to the Supreme Court from ever being issued. This is so important to them that they have put aside the need to examine eligibility and novelty sequentially. They have decided between two policy judgments, not rewritten the statute.

  31. J July 23, 2014 4:00 pm

    Just to finish my last post… I understand that patent law is purely a statutory construction (because there is no “natural right” to a patent)… without 35 U.S.C. there is no patent system. When I say it is “not a purely statutory regime”, I mean that the source of the law doesn’t come from the text of the statute alone.

  32. Anon July 23, 2014 7:42 pm

    Thanks J

    I see that you are referencing only a large scale view of the “system” which necessarily means that your view of the patent system is incomplete at best, or formed in knowing error at worst. As an attorney, you should be aware of the separation of powers doctrine, and specific sections of law that are outside of the larger common law system parameters.

    What distinguishes the system is the source of authority. You do not seem to give proper credence to this aspect. Were you aware that the legislature had given some common law authority to the courts to help define invention in the early statutes? This was an allowed sharing of power that does not change the overall power structure. This then is one aspect that forms my opinion that you do not appreciate the history of law. Perhaps you do appreciate more than you show.

    As far as continuing post Bilski – you are in error. Look to the limited business method review section of the AIA – and note that certain language has in fact been added to stop the changes by the Courts.

    The difference (what you seem to think as acceptable) is that you would ignore the separation of powers doctrine for convenience of flexibility. I brook no such view as anything allowable in our government set-up. Judicial policy to write statutory law is not allowed (directly – as in, without Congress’s consent) on this particular enumerated power. Sorry, but the Constitution did not grant such authority to the judiciary that you seem quite OK with. Congress did allow it for a limited time. That time passed in 1952.

  33. wow July 25, 2014 5:13 am

    Its indeed a serious problem when you have judges that hold so much power suddenly decided not to play by the rules they had created and seek to protect. Is software still patentable? Honestly I don’t think anyone knows the answer.

    How do patent attorneys advise their clients or potential client after Alice since the law has become so unclear now??

  34. step back July 25, 2014 7:11 am

    wow @33

    The Federal government of the United States of America has 3 (and a half) co-equal branches, none of whom, alone or even together are above the Constitution of the USA:

    The Executive Branch (The President and the Departments under his control)
    The Legislative Branch (which is further broken into the Senate sub branch and the House o’ Representatives sub branch)
    The Judiciary
    (and the various alphabet soup Administrative Agencies SEC, IRS, FDA, EPA, … USPTO)

    Given this structure, not even the top court (SCOTUS) has the lawful power to take over the enumerated and limited powers granted exclusively to the Legislative Branch under Article 1, Section 8 of the Constitution:

    http://en.wikipedia.org/wiki/Article_One_of_the_United_States_Constitution#Section_8:_Powers_of_Congress

    where the latter includes:

    To promote the Progress of Science and useful Arts, by securing for limited Times to … Inventors the exclusive Right to their respective … Discoveries;

  35. Anon July 25, 2014 9:52 am

    One minor correction Step:

    the various alphabet soup Administrative Agencies fall under the Executive branch (you have them listed after the Judicial branch).

    Other than that, your message of separation of powers is dead on accurate (It’s also the heart of my reply to J @ 32).

    As far as your comment about the “1/2” branch – are you referring to the notion that our form of government has morphed because the legislature has been “aggressively” giving away its powers in the creation of administrative agencies that are created with seemingly erased lines between the normal separation of powers doctrines?

    Administrative agencies that are executive in their primal role, but that have been granted authority to write binding rules (like the legislative branch) and then also adjudicate matters with Article I court powers (the judicial function)? Our founding fathers would likely find such creations an abomination as they deeply feared such ability to wrap the different powers into one entity.

    I think the EPA was one early such “Fourth Branch” creation – but in our neck of the woods, the AIA’s providing of more power to the Patent Office does raise those types of concerns.

    As a fan of political history, there are notions of constitutional protections at risk with Fourth Branch creations. It would indeed be foolish to dismiss what our founding fathers easily recognized.

    I am also extra leery of any populist argument that relies heavily on the opinion-“policy” reasoning (which is often mere code words for a certain group having STRONG feelings about something) when those advocating from such a “reasoning” base seem oblivious to the political structure restrictions we have in place. The separation of powers doctrine is there to protect us from ourselves, and is not a doctrine to be placed to one side when STRONG feelings would find it convenient to do so.

  36. step back July 25, 2014 4:29 pm

    Anon @ 35

    We are in full agreement here.

    In order to “secure” for inventors the exclusive rights to their respective public un-coverings (dis-coverings, dis-closures) per Article 1 , section 8, clause 8 of the US Constitution (the supreme law of the land), the US Congress passed 35 USC 101:

    35 U.S.C. 101 Inventions patentable.
    Whoever invents or discovers ANY new and useful process, machine, manufacture, or composition of matter, or ANY new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

    Also in order to “secure” for inventors the exclusive rights to ***their*** respective public dis-coverings per Article 1 , section 8, clause 8 of the US Constitution (the supreme law of the land), the US Congress passed 35 USC 112:

    35 U.S.C. 112 Specification.
    The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention.

    The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter ***which the applicant regards as his invention.****

    Section 112 does not saying anything about claims being “drawn” or “directed” to a concept called “abstract idea”. There is no lawful basis by which SCOTUS can re-write 112 (re-legislate it) to add “and the claim shall not be drawn/directed to that which SCOTUS deems to be an abstract idea”.

  37. J July 29, 2014 5:06 pm

    Anon,

    Are you referring to section 18? Because section 18(e) states that “nothing in this section shall be construed as amending or interpreting categories of patent-eligible subject matter set forth under section 101 of title 35, United States Code.” I’m going to have to ask you to cite to the AIA if you want me to read a particular part. It costs time and money to research the law.

    As far as separation of powers… I’m just going to say that Marbury v. Madison went over the power of the courts, and it did not end with the passage of the 1952 patent act. Honestly, I deal better in particulars than general judicial philosophy. If a particular part of the statute is clear, than the language must be followed. But of course, and patent attorneys should be keenly aware of this, there is always a limit to language… what might be clear to one might not be clear once there is a controversy related to that language (patent law in a nutshell, right?)