Why Alice v. CLS Bank is a Victory for Software Patents

By Martin Goetz
February 6, 2015

I have been asked for my opinion based my long history in the software industry and from my perspective as someone that has followed that controversial question “Is Software patentable”? That question first began to be publicly debated when I received the first software patent in 1968 for an invention on a new way of sorting data on a computer. Shortly thereafter a publication printed a page one headline “First Patent is Issued for Software, Full Implications Are Not Yet Known.”

Forty five years later a variation of that question was again before the Supreme Court when it agreed to hear the appeal of the Alice v. CLS Bank case. On December 6, 2013 the Supreme Court granted certiorari on the following question that was framed by Alice:

“Whether claims to computer-implemented inventions—including claims to systems and machines, processes, and items of manufacture—are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court?”

But in the oral arguments on March 3, 2014 and in the Court’s 9 to 0 decision on June 19th that question was never directly answered. Indirectly they answered “yes” when they wrote that “inventive concepts” are the basis for a patent. And the Patent Office expanded on “inventive concepts” when they issued their Preliminary Examination of the Alice Decision on June 25, 2014. The Patent Office first stated: “Notably, Alice Corp. neither creates a per se excluded category of subject matter, such as software or business methods, nor imposes any special requirements for eligibility of software or business methods.” They went on to state that “improvements to another technology or technical field” and” improvements to the functioning of the computer itself” were examples of patentable subject matter.

 

Based on the Supreme Court decision and the Patent Office guidelines it is clear to me that the Alice Supreme Court decision is a major victory for patenting computer-implemented (software) inventions.

But when one reads the very many lower Court decisions since the Alice decision, the many negative articles by some IP lawyers and the press, one might believe that I am living in a fantasy world.

It is true that since the Alice decision the lower courts set a new record for rejecting software patents and the press wrote that “Courts have recently grown increasingly hostile to software patents” (see The Courts Set a New Record for Rejecting Software Patents in 2014). But that’s a good omen because of the many, many obvious patent applications that should have never been approved by the Patent office.

Prior to the June 19, 2014, Alice v. CLS Bank Supreme Court decision I published three articles in IPWatchdog giving my views on this important Supreme Court case. In those articles I believe many of my arguments were represented in the amicus briefs that were provided by the many companies that had a stake in the outcome of the case.

Below is a summary of those articles which contain many of the factual arguments that I believe the Supreme Court considered when it made its historic 8 to 0 decision.

 

Article 1: In my January 21, 2014 article Why the Supreme Court in the CLS Bank v. Alice Case Should Not Answer the Question on Computer-Implemented Invention (which was an open letter to the Supreme Court), I argued that just because software is mentioned (or described) in the Specification section of the patent application it should in no way be the basis for accepting or rejecting a patent application. I went on to discuss the equivalence of computer software and hardware circuits and referenced the article Hardware/Software Tradeoffs: A General Design Principle? That article stated that the decision to put certain features in hardware and others in software is based on such factors as cost, speed, reliability and frequency of change. The abstract of the article concluded with the statement “Today’s software is tomorrow’s hardware, and vice versa.”

I argued that a better question before the Supreme Court would have been…

“Is an invention that is patentable when specified in hardware, equally patentable when specified in software?”

I argued that true inventions — whether specified in hardware, software, solar power, gears, or what have you — must stand on their own two feet and meet the test of an invention as specified in the US Patent law. And that the USPTO states that an invention is defined in its claims and not by its specification. (See Determine What is an Invention).

I suggested that the Supreme Court should find a way to distinguish “true inventions” from those very questionable inventions (like Amazon’s one-click patent), and I gave four examples that could be classified as computer-implemented inventions. They were: An Artificial Retina invention; A Voice and Speech Recognition invention; A Reading Machine for the Blind invention; and my 1968 Sorting System invention.

I concluded that the Supreme Court should simply affirm, as it has in the past, that including software in the Specification (formally called the Disclosure) Section of a patent application is perfectly permissible. (In1981 in the Diamond v Diehr Supreme Court decision they stated —“… the mere presence of a software element did not make an otherwise patent-eligible machine or process un-patentable.”)

 

Article 2: In my March 20, 2014 article Misnomers, Myths, Misunderstandings and Misconceptions about Software Patents” I first explain why the term “Software is a misnomer and that there is a good reason why there is no legal definition of a software patent. I then looked closely at the Artificial Retina (Visual Prosthesis) invention which I described in my first article. That patent description included a pair of glasses attached to a video camera unit, a computer and software. If one looks at the Claims and Specifications in the issued patent there are 12 claims and there is never a mention of software or a computer program. Most of the specification discusses how the information from a video camera is transformed into signals that are transmitted wirelessly to a receiver that is surgically implanted in and around the eye

I argued that one would be hard pressed to call the Artificial Retina patent a software patent and that many medical device and prosthesis inventions have the potential of losing their patent protections with an adverse decision from the Supreme Court.

I then covered the myth that software is mathematics, a mental process, laws of nature or abstract. I referred to Wikipedia which gives a solid definition of software and that the words “mathematics, mental process, laws of nature and abstract” never appear in its description. I then explained why software is not a law of nature or abstract any more than a computer circuit or computer chip is. In reviewing the six phases in the software product development life cycle I explained why software products are very much like any other manufactured product.

I continued the article by reviewing a common misconception that copyright protection can substitute for patent protection. Patents protect an inventive machine process, while copyrights do not. And that under patent law, only inventions can be patented — not software or computer programs.

I concluded the article debunking the common misconception that software has a short lifespan and that therefore software companies are not in need of patent protection. My article gives statistics about the Software Products and Services Industry and explains that many software products are in the high-technology category and their marketability is greater than the 18 years of patent protection.

 

Article 3: The third article on May 6, 2014 was Why E-mail & Word Processing Were Not Computer-Implemented Inventions: A Response to Alice v CLS Bank Oral Arguments. During the one hour Supreme Court oral arguments there were many references to e-mail and word processing programs and there was the general belief that sometime in the past both word processing and e-mail were inventions which deserved patent protection.

I wrote that article because my previous company, Applied Data Research (ADR) had developed and marketed both a word processing product and an e-mail product in the 1970’s and 80’s and never applied for a patent. ADR first developed a word processor for in-house use for developing manuals for its products. Later on they developed an e-mail system for their in-house use because ADR had expanded to eleven domestic offices and the offices were networked together through leased lines. The ADR development staff then expanded their word processing program so that they could replace their domestic TWX machines (which were tied to the leased lines) with a system for electronic mail transmission using IBM 3270 terminals.

The purpose of this third article was to give an example of how a company can go from an idea to a successful product without inventing anything. I asked the question… Did the ADR developers invent anything and was ADR remiss in not seeking patent protection? I believe they were not since the implementations of those ideas were obvious.

I concluded the article on a discussion of ideas and abstract ideas. Are they one and the same? I ended the article by stating there are many professionals, in and out of the legal profession, that believe that separating “ideas” from” abstractions” is only a play on words (see The Paradox Of “Abstract Ideas”).

 

So where are we today: When one reads some of the headlines of articles and text that have been published recently, like the Wall Street Journal article entitled “Hard Times for Software Patents,” it can confuse the general public. It was only hard times for those thousands of patents that were abstract and/or obvious and where there was no inventive concept.

The Alice v CLS Bank Supreme Court decision in June 2014 was a great victory for those that believe that inventors that use a digital computer to innovate can get a patent on their invention. It is also a victory for those people and organizations that recognize how the patent System has been abused for many years by trolls and others where there was no invention. Since the Supreme Court decision in June, thousands of patents that should never have been issued are now being deemed invalid by the US Courts and by the Patent Office.

The Patent Office has given its patent examiners and the world a template on how to decide if there is a patentable invention through a two-step analysis (see USPTO Letter to Patent Examiners). Computer-Implemented inventions are becoming more and more important. In the article Top 10 Patents for 2014, an analysis of those patents showed that 6 of the 10 could be classified as computer-implemented inventions.

As David Kappos, the former head of the Patent office concluded in his article Supreme Court leaves patent protection for software innovation intact

“it is clear that maintaining appropriate incentives and protections for software-based technological advancement is critical to innovation in every sector of the U.S. economy. We are living in the Age of Software, as the Supreme Court’s decision in Alice Corp. bears testament.”

Under the US Patent System that was enacted in 1790 one gets a patent only on inventions. When the Supreme Court unanimously agreed that the critical issue is whether there is an inventive concept (and not on how an invention is implemented) the Supreme Court finally ended the debate on whether computer-implemented inventions are patentable.

The Author

Martin Goetz

Martin Goetz is a pioneer in the development of the commercial software industry, and is known within the industry as “the Father of Third Party Software.” He is also widely regarded as the inventor on the first software patent ever granted by the United States Patent and Trademark Office, U.S. Patent No. 3,380,029.

PBS Digital Studios profiled Goetz and his pursuit of the first software patent in the YouTube video below.

In 2007, Goetz was the “Unsung Innovator” of the computer industry by ComputerWorld. Goetz is also a member of the Mainframe Hall of Fame.

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 6 Comments comments.

  1. G Stark February 7, 2015 2:29 pm

    So how do we repeatable and non-subjectively determine when there is an “inventive concept”? Formerly it was commonly thought that satisfying 102 and 103 was how this was done. Alice and the USPTO guidelines have now added a almost entirely subjective “inventive concept” test under 101…

  2. Gene, but not Gene Quinn February 9, 2015 11:00 am

    “Since the Supreme Court decision in June, thousands of patents that should never have been issued are now being deemed invalid by the US Courts and by the Patent Office.”

    as i have been posting here for about a year now, applicants and examiners have been, since about the mid-1990’s, growing a bubble of issued-but-should-have-been-rejected patents using function-laden language and vague results-oriented language to describe and claim highly technical inventions. this has been a disservice to actual inventors because of poorly drafted claims for legitimate inventions, and a disservice to our profession by poorly drafting claims for illegitimate inventions and examiners allowing them. it has been a long slide down a slippery slope for close to twenty years.

    now, the bubble has burst, via Alice, and an opportunity to grow respect for our profession is at hand. stop writing vague crappy function/result focused software patents.

  3. Eric Zelepugas February 9, 2015 11:07 am

    “Did the ADR developers invent anything and was ADR remiss in not seeking patent protection? I believe they were not since the implementations of those ideas were obvious.”

    We’re the implementations obvious? Obvious to who? 103 is the statute governing obviousness. If a patent application falls due to a 103 rejection so be it, but imputing 103 into 101 is inappropriate and unnecessary. The application would be deemed unpatentable not because it was a method of communicating electronically between eleven domestic offices networked together through leased lines, but because it was an obvious innovation or improvement proven through a complete 103 obviousness analysis.

  4. Eric Zelepugas February 9, 2015 11:08 am

    “Did the ADR developers invent anything and was ADR remiss in not seeking patent protection? I believe they were not since the implementations of those ideas were obvious.”

    Were the implementations obvious? Obvious to who? 103 is the statute governing obviousness. If a patent application falls due to a 103 rejection so be it, but imputing 103 into 101 is inappropriate and unnecessary. The application would be deemed unpatentable not because it was a method of communicating electronically between eleven domestic offices networked together through leased lines, but because it was an obvious innovation or improvement proven through a complete 103 obviousness analysis.

  5. Anon February 9, 2015 12:33 pm

    A substantial “miss” being perpetuated (perhaps unwillingly or unknowingly) is that the entire subject of “inventive gist” or “inventive concepts” was addressed by Congress in the 1952 Act when it carved out of the pre-1952 paragraph two different sections of law: 101 and 103.

    The Court has erased that action by Congress with its insistence on retaining its pre-1952 Authority to set the definition of “invention” by the use of the tool of common law decision making.

    Quite plainly, this is not a debate for the Court to end – this is outside of their constitutional authority.

    To ANY extent that 101 is being used in place of 103 to effect a desired ends, the use of improper means is not – and can not – be justified.

    Period.

  6. step back February 10, 2015 9:40 am

    Anon @5,

    The Supreme Court did not “use” 101 in their Alice decision.
    The Supreme Court wiped out 101 and legislated their own law for “patent eligibility”.

    Nowhere in 101 does there exist the words, “and by the way, before permitting the Whoever to apply for a patent for ANY new and useful blah blah blah in the first place, the decision maker shall arbitrarily and capriciously decide what the claims are “directed to”; shall decide they are directed to an abstract idea and shall put the inventor to a waterboarding torture procedure of proving that the claims recite a never-reached, ‘something more’ “.

    People who applaud Alice and the Supreme Court action therein are actually applauding an overstepping of the Constitution where the latter vests the legislative power “exclusively” with the Congress. Under the US Constitution, SCOTUS did not have the right to do what they did in Alice. They did it anyway and no one cares.