What should we do about Alice?

On Tuesday morning, April 19, 2016, Manny Schecter, who is IBM’s chief patent counsel, gave a keynote presentation at the Innography Insights 2016 conference in Austin, Texas. The title of his presentation was simple and straightforward: What should we do about Alice?

Although most of Schecter’s presentation was on defining the problems presented by Alice, he ended saying he thinks we are at a point where we need a legislative fix to 101. I tend to agree.

Showing a bowl of spaghetti on one of his first few PowerPoint slides set the tone. The law as it applies to software patent eligibility is a tangled mess. “The Supreme Court has continually taken cases in this area and rather than clarify they have continued to hang on,” Schecter explained referencing the fact that the Supreme Court seems committed to the belief that their 101 jurisprudence is consistent and reconcilable. Of course, that is not the case. “There are too many cases that conflict with each other.” He is right.

Indeed, Judge Richard Linn of the Federal Circuit told me the same thing in an interview in the Fall of 2014, saying: “I have great difficulty rationalizing the Supreme Court’s opinions in Flook and Diehr, and in many regards I think those decisions are irreconcilably in conflict.” That conversation I had with Judge Linn was after the Supreme Court’s Alice decision, but before many in the industry were willing to accept just how challenging the Alice decision would become.

According to Schecter, since Alice, some 65.75% of patents challenged in the district courts have been invalidated under 101, with the success rate even worse at the Federal Circuit. Since Alice 91% of patents have been invalidated under 101 at the Federal Circuit, with the Court’s decision in DDR Holdings representing the sole case where a patent eligible computer implemented invention was found to exist.

During his presentation Schecter lamented a point I have frequently brought up myself – the lack of a definition for the term “abstract idea.” I have asked this simple question repeatedly: How is it fair under our system of laws to have a doctrine that is used to strip away property rights when the key term within that doctrine isn’t defined?

“I would say [the Supreme Court] didn’t tell us what it means because they can’t, so they punted it to the lower courts. This has been going on for decades,” Schecter explained. Once again, Schecter is right. The Supreme Court has created judicial exceptions to patent eligibility even though there is not even the most remote hint in the statute that the courts have the authority to create any exceptions. Nevertheless, one of those judicial exceptions says that you cannot patent an abstract idea. In Alice the Supreme Court took another step down the abstraction path by proclaiming that a patent could still be obtained if there is something significantly more at the heart of the claim than merely that abstract idea.

For Schecter this leads to a critical important question: “How can you know if there is something more than something that is significantly abstract if you don’t know what it means to be abstract?” A very good question! Obviously, you cannot evaluate a patent claim with this undefined, circular Supreme Court test. “It would be great if you could [evaluate a claim with this test], but you just can’t,” Schecter told the audience.

In Alice the Supreme Court did seem at least somewhat cognizant of the fact that they were embarking upon a path that risked swallowing patent law whole, after all, every invention starts with an idea. The Supreme Court cautioned against allowing that to happen, but the test they conceived, lacking definition and unbounded by earthly logic, seemed to do the exactly opposite, if you ask me.

“They are looking for a light touch here,” said Schecter, “they just don’t know how to do it.” And that might be one of the most accurate, and pithy, observations about Alice I’ve ever heard. It seems unlikely that even the Supreme Court wanted to effectively rule that software is not patent eligible, but for all intents and purposes that seems to be the practical effect of the fall out of the Alice decision, at least for a lot of pockets of computer implemented innovation.

Schecter said that when he first read Alice he didn’t really think it was that bad, which is something I’ve heard from many patent attorneys. Over time he has come to think it is quite bad based on how it is being implemented and how the test is completely unpredictable. “If you read the case the Supreme Court seems to think that software must be patentable, but the problem is they gave us a test that doesn’t lead to that being the case.”

Some will quibble with the suggestion that software is not patentable, because software is still patented. Whether those patents will remain patentable when challenged is another story. Still, trying to be objective Schecter acknowledged the alternative view. He explained that according to Bart Eppenauer, computer implemented inventions that have a technical aspect are upheld two-thirds of the time in district courts when challenged under 101. Assuming that is true, “that still means that one-third of patents in the computer implemented innovation area that clearly have a technical aspect are being found patent ineligible, which is simply too far over shooting the mark,” Schecter explained.

The problems Alice has created are many, but Schecter highlighted several in particular.

“Does it strike you as odd that an invention could start its life as something that is patent eligible and then become so popular that it is no longer patent eligible? That doesn’t make sense to me.” This subject of ubiquity is one that Schecter has written about before, including an article on IPWatchdog.com titled Abstraction in the Commonplace: The Use of Ubiquity to Determine Patent Eligibility. Indeed, it does seem that the more commonplace an invention is at the time it is challenged the more likely it will be viewed by Judges as being patent ineligible. Rather than appreciating how extraordinarily difficult it may have been to bring the invention into being at the time of original innovation the fact that there is widespread infringement almost seems to suggest to some that the invention isn’t particularly worth protecting. That seems exactly backwards to me. If ubiquity can be used to demonstrate an invention is patent ineligible then that means widespread infringement of groundbreaking innovations becomes a silver bullet defense. How can massive and unprecedented infringement be a legitimate (or intellectually honest) defense to a charge of infringement? Unfortunately, that does seem to be where we are today.

Another problem Schecter pointed to the fact that Judges and patent examiners are doing exactly what the law prohibits them from doing, which is cherry picking words from claims rather than interpreting the claim as a whole. “Judges and examiners are pulling a few words out of the claims and saying the claim covers a concept that is abstract,” said Schecter. “They are also applying hindsight.” To drill this point home Schecter relied on Thales Visionix v. USA and Elbit Systems, which dealt with a system for tracking the motion of an object relative to a moving reference frame and is used for a helmet-mounted display system and an F-35 fighter jet. The Court of Claims found the claims patent ineligible because they said the claims were abstract and not specifically limited to use with a helmet-mounted display and an F-35 fighter jet. While the claims may not have been so limited in the specific language of the claims, what is abundantly clear is that the claims did not cover an abstract idea despite what the Court of Claims ruled. The claims specifically required two different sensors and an orientation relative to a moving reference frame. So as much as many might like for this claim to be abstract is just isn’t. I’ve said it before and I’ll say it again – how can a claim that specifically incorporates tangible components be found to be abstract? In my mind decisions like this are intellectually bankrupt. Clearly sensors exist, they are not imaginary, they are not abstract, we know what they are and the claims are not limitless. But again, this is what passes for thoughtful judicial decision making in the Alice generation thanks to a wholly unworkable test courtesy of the Supreme Court.

How did we get here? “We’ve made computers so easy to use that we’ve convinced the courts that the inventions that go into making computers easy to use aren’t worthy of patents,” Schecter explained. He would go on to say that these inventions are not easy to create, and many of them do deserve to be patented, themes of his recent op-ed article published in re/code titled The Downside of Making Innovation Look Easy.

So where do we go from here? Schecter thinks it may be time to get serious about the need for Congress to step in with a legislative fix to 101. Although former USPTO Director David Kappos has reportedly recently called for 101 to be abolished; Schecter told the audience he didn’t think we have to go that far. “We could just amend it to fix this problem, I don’t think we necessarily have to abolish it.”

“We are at the point where I think we need legislation,” Schecter explained. “This is a golden goose industry… don’t let the courts mess it up.”

I tend to agree with Schecter. The Supreme Court has embarked on a clearly anti-patent trajectory over the last five years, and the Federal Circuit seems unwilling (or perhaps just unable) to muster the energy to apply the Mayo-Alice framework with an eye toward the subtleties each new innovation requires. Instead, the Federal Circuit, and consequently the overwhelming number of district courts, seem to be channeling the Supreme Court and striking down patents with alarming frequency, grossly over applying the abstract idea doctrine to find things that are clearly not abstract to somehow still be abstract within the meaning of the undefined doctrine set forth by the Supreme Court.

Over the next few months we will learn whether the Federal Circuit will be willing to find truly innovative computer implemented innovations patent eligible or whether we have a de facto rule that software is patent ineligible. If the Federal Circuit does not change course soon the only option will be a legislative fix to 101 despite the risk that will bring and the reality that new legislation doesn’t guarantee the Supreme Court will follow the law any more than they do now.