For those in the patent law world who may have been hiding under a rock, we have been flooded recently with lower court rulings on patent-eligibility under 35 U.S.C. § 101 after Alice Corp. v. CLS Bank International. Like a tsunami, these lower court rulings are uniformly sweeping away any patent in its wake as being directed to merely an “abstract idea” that doesn’t provide “something more.” Those quoted words are taken from Our Judicial Mount Olympus’ two-part test in Alice which is derived largely in part from the so-called “framework” of Mayo Collaborative Services v. Prometheus Laboratories, Inc. for separating patent-ineligible “claims to laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts.” See Ignorance Is Not Bliss: Alice Corp. v. CLS Bank International*
Briefly, the two-part Alice test says: (1) “determine whether the claims at issue are directed to one of those patent-ineligible concepts”; and (2) “search for the ‘inventive concept’ —i.e., “an element or combination of elements that is “sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.” In every court case I’ve read so far, all of those lower court rulings have dogmatically (and restrictively) applied this two-part Alice test to rule the patent claims on systems and/or methods (all involving so-called “business methods”) to be patent-ineligible under 35 U.S.C. § 101. In fact, I’ve only seen one reported PTAB decision (U.S. Bancorp. v. Solutran, Inc.) where patent claims on systems and/or methods involving these so-called “business methods” passed muster under this two-part Alice test.
That all these lower court rulings have found patent claims on such systems and/or methods to be patent-ineligible might be sheer coincidence, but I think not. Instead, in my opinion, it reflects an utterly broken test for judging patent-eligibility under 35 U.S.C. § 101, one where Our Judicial Mount Olympus: (1) provides no objective standard for judging patent-eligibility, especially for patent claims relating to systems/methods involving data processing/data management (which are often characterized as “business methods”); (2) fails to define key terms of this Alice test (i.e., what do “abstract idea” and “something more” mean?) other than by analogy to patents in prior cases; (3) fails to provide any meaningful and logical guidance for how to reach the “patent-eligibility zone,” especially for systems/methods involving these so-called “business methods”; (4) provides conflicting patent-eligibility standards with respect to their own prior precedents, most notably those of Diamond v. Diehr and Diamond v. Chakrabarty; (5) is “tone deaf” to Congress’ intent by brazenly overreaching its constitutional authority to interpret (not make) law, including asserting “policy” considerations to support the two-part Alice test that are the province of Congress (not Our Judicial Mount Olympus), as well as having no support in the factual record before it; and (6) focuses on the so-called “inventive concept,” and thus improperly comingles patent-eligibility under 35 U.S.C. § 101 with what is more appropriately an issue of patentability under 35 U.S.C. § 102 and/or 35 U.S.C. § 103.
My indictment of the two-part Alice test can largely be found in the lower court rulings that have applied it, two of which, Planet Bingo, LLC v. VKGS LLC and Buysafe, Inc. v. Google, Inc., were Federal Circuit panel decisions authored by Judge Taranto (one a two-judge panel decision from which former Chief Judge Rader was dropped from the panel). But most telling for my points (1) through (3) above for why the Alice two-part test is broken is a motion to dismiss ruling by the Central District of California in Eclipse IP, LLC v. McKinley Equipment Corporation where Judge Wu held a communications method for computer-based notifications patent-ineligible as being essentially no more than an “abstract idea” that was implemented “in connection with” a general computer system:
- Provides no objective standard for judging patent-eligibility. In Eclipse IP, Judge Wu says the “the two-step [Alice] test may be more like a one step test evocative of Justice Stewart’s most famous phrase,” citing and quoting Justice Stewart’s concurring opinion in Jacobellis v. State of Ohio: “I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description [referring to “obscenity”]; and perhaps I could never succeed in intelligibly doing so. But I know when I see it . . . .” In fact, Judge Wu further says “so far, the two-part test for identifying an abstract idea appears to be of limited utility.” In other words, the two-part Alice test is completely subjective.
- Fails to define key terms of this Alice test, especially what an “abstract idea” and “something more” in this test mean, other than by analogy to patents in prior cases. In Eclipse IP, Judge Wu also says “comparisons to previously adjudicated patents – or more precisely, to past cases’ characterizations of those patents – have done the heavy lifting,” citing Bilski v. Kappos. Judge Wu also cites Alice where Our Judicial Mount Olympus said: “In any event, we need not labor to delimit the precise contours of the ‘abstract ideas’ category in this case.” In other words, other than by resort to analogy to specific patented inventions in prior cases, there is no definition of what “abstract idea” or “something more” means in the Alice test.
- Fails to provide any meaningful and logical guidance for how to reach the “patent-eligibility zone.” Perhaps “tongue in cheek,” Judge Wu makes reference to Justice Holmes oft-quoted phrase “[t]he life of the law has not been logic: it has been experience.” (By the way, I’m not a fan of Justice Holmes for this very reason, as for example, his decision granting baseball an exemption from the anti-trust laws as being a “profession,” not a “business.”) But without some meaningful and logical guidance for how to reach the “patent-eligibility zone,” and especially some concrete examples of what are not “abstract ideas,” as well as what does constitute “something more,” us “mere mortals” are left with entirely unhelpful (negative) analogies for reaching the “patent-eligibility zone.” So far, Our Judicial Mount Olympus has provided no such concrete examples in Bilski, Mayo or Alice that lead the lower courts to anything other than patent-ineligibility.
With respect to my point (4) above, no matter how much Our Judicial Mount Olympus says their two-part Alice test (as well as the “framework” from Mayo for that test) is consistent with their prior precedent, especially Diehr, that’s simply disingenuous sophistry. There is absolutely no logical or objective way to reconcile the two-part Alice test with Diehr’s principles for patent-eligibility:
In determining the eligibility of respondents’ claimed process for patent protection under 101, their claims must be considered as a whole. It is inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis. (Emphasis added.)
The first part of the Alice test does exactly what Diehr’s principles explicitly say not to do: dissect the claims to find out whether it contains an “abstract idea.” In fact, Diehr warns very clearly about the danger of carrying out the first part of the Alice test with respect to process/method claims:
This is particularly true in a process claim because a new combination of steps in a process may be patentable even though all the constituents of the combination were well known and in common use before the combination was made. The “novelty” of any element or steps in a process, or even of the process itself, is of no relevance in determining whether the subject matter of a claim falls within the 101 categories of possibly patentable subject matter. (Emphasis added.)
With respect to my point (5) above, the so-called “exceptions” (including “abstract ideas”) to patent-eligibility expressed in Bilski, Mayo, and Alice are nowhere to be found in 35 U.S.C. § 101. In my opinion, that is not accidental, but is, in fact, the intent of Congress to leave those so-called “exceptions” out when 35 U.S.C. § 101 was enacted in 1952. Frankly, I grow weary of Our Judicial Mount Olympus, and now the Federal Circuit in Buysafe woodenly incanting that “§ 101 and its predecessors . . . for more than 150 years” have been interpreted to “‘contain an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable.’” That suggests, instead, that Our Judicial Mount Olympus is completely “tone deaf” to Congress’ intent as to what is and is not patent-eligible. Indeed, subsequent to Bilski and Mayo, Congress has, in fact, spoken on what so-called “business methods” may be patent eligible in the AIA, and has said (explicitly) that only “business methods” involving “tax avoidance schemes” are to be excluded. Such blithe ignorance by the Royal Nine of Congress’ intent is not how a principled judiciary operates, but is, instead, unprincipled judicial activism (at best), and a brazen overreach (at worst) by the Royal Nine into Congress’ constitutional authority (and responsibility) to “Promote the Progress of the Useful Arts.”
With respect to my point (6) above, the second part of the Alice test (i.e., the search for the “inventive concept”) essentially (and in my opinion improperly) commingles patent-eligibility under 35 U.S.C. § 101 with the issue of patentability that includes novelty under 35 U.S.C. § 102, as well as obviousness under 35 U.S.C. § 103. See Ignorance Is Not Bliss: Alice Corp. v. CLS Bank International* In fact, the second part of the Alice test simply encourages the courts (as well as patent examiners at the USPTO) to engage in unrestricted dissecting of the claimed invention into its component parts in search of that illusive “inventive concept” which Diehr (wisely) warns shouldn’t be done. Even worse, several lower court opinions after Alice have tried to resolve what that “inventive concept” is early in the litigation process (e.g., at summary judgment) with minimal (or possibly no) factual record to establish (and especially support) what is really “known” or “old” in the art.
In addition, Our Judicial Mount Olympus pays, at best, lip-service to Chakrabarty’s observation that, in enacting 35 U.S.C. § 101 in 1952, Congress chose the statutory classes (in Chakrabarty, referring specifically to “composition” and “manufacture” but which would be equally applicable to “apparatus” (i.e., machines) and “process”) to be given an “expansive” and “broad” construction. That command in Chakrabarty would suggest that rulings of patent-ineligibility under 35 U.S.C. § 101 would be the exception, not the rule. By contrast, this unending stream of patent-ineligibility rulings from the lower courts after Alice suggests a serious disconnect, showing no adherence to, or even observance of this command by Chakrabarty to construe 35 U.S.C. § 101 to be “expansively” and “broadly” inclusive, but to be instead very restrictive. As former Chief Judge Rader might characterize it, this restrictive two-part test of Alice has made 35 U.S.C. § 101 not a “coarse screen,” but instead an extremely “narrow funnel.” In other words, the draconian two-part test of Alice was broken from the start.
The so-called “policy” to support the restrictive patent-eligibility standard of this two-part Alice test is also all too frequently based upon sheer speculation, and is certainly not based on anything within the factual record of the Alice case, what Hal Wegner rightly calls the “mythology.” One of those “myths” that is repeated in the Buysafe case is that patents “inhibit research.” As Hal Wegner correctly observes: “The idea that patents block research is contrary to two centuries of case law dating back to Joseph Story [referring to Story’s 1813 cases of Whittemore v. Cutter and Sawin v. Guild]: There is a fundamental right of the public to experiment on a patented invention.” (Hal’s observation is also ironic, given that Our Judicial Mount Olympus in Alice, as well as the Federal Circuit in Buysafe also refer to the so-called “exceptions” to patent-eligibility (e.g., “abstract ideas”) as being around for 150 years or so). Even more problematic is that the factual record for patents allegedly “inhibiting research” is nowhere to be seen (or referred to) in these cases that rely upon this “mythology.”
Those of us who even suggest that the Our Judicial Mount Olympus has misinterpreted what patent-eligibility means under 35 U.S.C. § 101 with the broken two-part Alice test, or especially has overstepped its constitutional authority by doing so are often told to stop griping and deal with this test. There are two problems with that comment. First, no one is above the law, and that includes the Royal Nine. Constitutional overreach (as well as statutory misinterpretation) is no less abhorrent when it is committed by our judiciary, and that includes the Royal Nine engaging in what I (and others) believe to be unprincipled judicial activism. Put it this way: if Our Judicial Mount Olympus is above such criticism, then who, pray tell, can tell the Royal Nine that they are not “infallible”?
Second, if the only result that any lower court can come to by applying the two-part Alice test is patent-ineligibility, how are we to logically (and especially rationally) counsel our clients on how to claim their data processing/data management technology so that it has any chance (much less a “reasonable chance”) of reaching the “patent-eligibility zone”? Telling us to focus on Diehr’s rubber molding process is small comfort, given that the two-part Alice test ignores the “prime directive” of Diehr (i.e., don’t dissect claims into allegedly “old” and “new” components), as well as having no rulings yet from the lower courts (only one PTAB decision) that apply the two-part Alice test so as to reach “patent-eligibility zone.” In other words, if all we’ve got now for how to apply the two-part Alice test is by analogy to patents in prior cases (as Judge Wu suggests in Eclipse IP is what we’re currently forced to do by the Alice test), not having any post-Alice court case that provides at least one “success story” for how to reach the “patent-eligibility zone” leaves us completely adrift with no positive point of reference, only many negative points that don’t get us to that “zone.”
Accordingly, in my opinion, the two-part Alice test is so completely broken as to be unsalvageable, unless all you’re looking for is an endless stream of patent-ineligibility decisions that will provide absolutely no objective guidance whatsoever on how to reach the “patent-eligibility zone.” Instead, what is required is a return to the principles enunciated in Diehr and Chakrabarty: (1) patent-eligibility should be judged by what is defined by the claims as a whole (from the Diehr standard) and which absolutely prohibits the claim dissection which is rampant in Alice, as well as Mayo; (2) the claimed subject matter will be presumed to be patent-eligible if it falls within at least one of the current statutory classes (from the Chakrabarty standard), and without regard to whether its characterized as encompassing an “abstract idea,” “product of nature,” “business method,” “software,” etc., unless the claimed subject matter “as a whole” merely defines a “law of nature, natural phenomena, or abstract idea” (from former Chief Judge Rader’s standard in Research Corp. and Ultramercial that the claimed subject matter must be “manifestly abstract” to be patent-ineligible under 35 U.S.C. § 101); and (3) without respect to what the so-called “inventive concept” is, i.e., leave that issue to current 35 U.S.C. §§ 102/103 to deal with. In other words, patent-eligibility will be an objective “coarse screen” as former Chief Judge Rader correctly suggests (and Chakrabarty says) 35 U.S.C. § 101 should be, not a subjective “narrow funnel” as has happened with the broken Alice test.
Unfortunately, I see no current hope that the Royal Nine will recognize the brokenness of two-part Alice test, and, in fact, may prefer that test with all its “subjective” brokenness. (From the first two decisions by the Federal Circuit in Planet Bingo and Buysafe, I see nothing to suggest that the judges of the Federal Circuit will do anything but to meekly comply with the current mandate from the Royal Nine to apply that two-part Alice test restrictively.) That leaves Congress to tell the Royal Nine to “cease and desist” from engrafting onto the patent-eligibility standard any “exceptions” not explicitly stated in 35 U.S.C. § 101, and to interpret patent-eligibility more expansively and generously according to the principles of Diehr and especially Chakrabarty. Given that Congress is more politically focused on the so-called “patent troll” problem, our hope for relief from “Alice in Patentland” by the federal legislature may be dim, but is certainly more promising than expecting Our Judicial Mount Olympus to change course. (The last time Our Judicial Mount Olympus reversed course from a restrictive patent-eligibility standard under 35 U.S.C. § 101 was the time between Parker v. Flook and Diehr, or 12 years, i.e., over a decade.) So at least asking Congress for relief from “Alice in Patentland,” even with less than cheery prospects, is certainly better than a “snowball’s chance in hell” of getting the Royal Nine to change its mind anytime soon. Frankly, I find enduring (for potentially a decade or so) the broken two-part Alice test for patent-eligibility an even less palatable alternative.
*© 2014 Eric W. Guttag. Posted September 25, 2014 on IPWatchdog.com.