On Thursday, June 19, 2014, the United States Supreme Court issued its much-anticipated decision in Alice v. CLS Bank. In a unanimous decision authored by Justice Thomas the Supreme Court held that the claims were drawn to a patent-ineligible abstract idea, thus they were not eligible for a patent under Section 101.
Using the so-called Mayo framework, which comes from the Supreme Court’s decision in Mayo Collaborative Services v. Prometheus Laboratories, the Supreme Court explained that first decision makers must determine whether the claims at issue are directed to a patent-ineligible concept (e.g., an abstract idea). Second, the elements of the claim must be examined to determine whether it contains an inventive concept sufficient to transform the claimed abstract idea into a patent-eligible application. Ultimately, the Supreme Court ruled that the claims did no more than simply instruct the practitioner to implement an abstract idea on a generic computer. The systems claims at issue in the case fared no better.
Surprisingly, the Supreme Court failed to use the word “software” even a single time in the decision despite the fact that the holding in Alice has already and will continue to render many software patent claims invalid. While the Supreme Court didn’t seem to want to make this decision about software, the holding necessarily was about software because each of the ways software has been traditionally claimed were ruled to result in patent ineligible claims.
The fact that the Supreme Court did not use the word “software” has led some experts to conclude either that the decision was not as bad as many have claimed, or even that the decision was good, based on the belief that it could have been much worse and the Supreme Court could have said that software was patent ineligible.
But is the Supreme Court’s decision in Alice good? According to Scott Alter, a partner with Faegre Baker Daniels and Chair of the American Bar Association’s Post-Alice Task Force, whether the Alice decision is good or bad largely depends on your perspective.
“It depends on who you are and what your goals are,” Alter explained in a telephone interview. “If your concern is keeping trolls from your door it is a good decision because it is probably going to help you do that, particularly if you are a software or financial company. However, if your primary interest is in a strong patent system that protects and rewards innovation, it’s arguably not a good decision.”
Alter also went on to tell me that he thinks there are better ways to deal with the patent troll issue than with Alice, which he likened to the rebirth of Parker v. Flook. “This two-part test is from Justice Stevens’ decision in Flook,” Alter said. “Alice could have said Diamond v. Diehr was overruled, it could have said that software was patent ineligible, it could have said that business methods were patent ineligible. So it could have been worse, that is absolutely true, but I don’t know if that makes it a good decision.”
Driving home this point Alter said: “You can have a meteor that wipes out half of earth’s population, but I’m not sure you could characterize it as a good meteor just because it didn’t wipe out the entire population.” He would then go on to liken Alice to a medical treatment that has both good and bad elements, saying that the decision in Alice is over broad and “akin to bad chemo therapy. Yes, it is killing the bad cells, but it is also killing off too many healthy cells.”
Since the Supreme Court’s ruling in Alice the Federal Circuit has issued what appear to be diametrically opposed opinions in Ultramercial and DDR Holdings. See Federal Circuit Finds Software Patent Claim Eligible and Exploring Judge Lourie’s Flip Flop in Ultramercial. The United States Patent and Trademark Office has also recently issued patent eligibility interim guidance to patent examiners, and published a set of 8 illustrative examples that explain how patent examiners should apply the abstract idea doctrine when examining claims directed to software.
These USPTO abstract idea hypothetical examples will be “potentially useful tools to assist practitioners to get cases allowed,” said Alter. However, he would go on to question whether they are truly consistent with the case law, saying: “If you look at them with respect to whether they are consistent with case law you might have a different perspective.”
For example, in the first hypothetical example, the Patent Office said it is not directed to an abstract idea because it is inextricably tied to a computer, which makes it seem like they are thinking about DDR Holdings, but DDR Holdings explained that there was also something else (i.e., something “more”) that was not conventional. “So I’m not sure that hypothetical is true to the case law it seems aimed at interpreting,” Alter explained. “Of course, while the Patent Office examples may not be entirely consistent with case law, the case law itself doesn’t seem to be consistent either.”
With the patent market reeling, we have more questions than answers at this point. As we wait for additional points of information that will inform our understanding we must continue to advise clients, prepare and file patent applications, and prosecute patent applications drafted when the standard was quite different. We must also continue to advise businesses with respect to patent acquisition, patent litigation, what maintenance fees should be paid, and how to traverse what is a highly uncertain landscape.
Acknowledging that there has been an enormous shift in the law of patent eligibility, Alter remains optimistic. “We have to keep in mind that things have shifted and things can shift again. So just like I have claims of various scope with respect to prior art, I also have claims of various scope with respect to patent eligibility. I like to have claims similar to those in Diamond v. Diehr, and I also like to have some claims that push the envelope a little.”
Of course, based on the few decision points we have so far it seems that the courts will place disproportionate weight on the sufficiency of the specification when making decisions about patent eligibility. This trend differs from traditional patent law norms because the sufficiency of the specification has historically been a question under 35 U.S.C. 112, but for now the 101 and 112 analysis seems to be collapsing together, which means patent applications and issued patents must have robust technical disclosure to even stand a chance of getting through the patent eligibility threshold. But there is more to consider. Cutting back on claim formats that have been deemed suspect could be a very wise move so as to not unnecessarily contaminate good claims with adequate disclosure. Of course, it will continue to make sense “to have the disclosure in the specification to make those claims later,” Alter explains. After all, if history has taught us anything about software patents it is that the law can change, perhaps several times, before an application filed today will be examined and certainly before it’s litigated.
Against this backdrop of uncertainty, I’ve invited Scott Alter to join me for a free webinar discussion titled The Road Forward: Software Patents in the Post-Alice Market. This webinar will take place on Wednesday, March 4, 2015, at 12pm ET. This is part of our Innography sponsored webinar series.
In addition to taking your questions, we will discuss the following:
- Was the Alice decision as bad as many originally thought, or is there a silver lining as some have suggested?
- Is there any rational way to distinguish the Federal Circuit’s decisions in Ultramercial and DDR Holdings?
- Do the interim eligibility guidelines published by the USPTO provide any clues or insight into what applicants can and should do?
- What claiming techniques should applicants consider using in light of Alice, and what, if anything, needs to change with respect to technical disclosure in the specification?
- What prosecution strategies might be useful to stall a decision at the USPTO until there is greater certainty? How much of a concern is laches?
- How can you identify “software patents” that likely will not be negatively impacted by the Supreme Court’s decision in Alice?
- Which patents should be maintained and which patents should be allowed to enter the public domain for failure to pay maintenance fees?
- Is it necessary (or desirable) for Congress to get involved to fix the statute?
To join for this discussion click here to register.