“While one line of Federal Circuit decisions holds computer-implemented inventions to be ineligible if they do not make hardware-like improvements to computers’ basic functions, another line holds the opposite…. The post-Alice chaos has resulted in a patent system that now actively undermines the progress of science and useful arts.”
Trading Technologies International, Inc. (TT) has filed a petition for certiorari with the U.S. Supreme Court asking it to clarify U.S. patent eligibility law, including whether the Court should overrule its “abstract idea” precedents. The petition relates to the Federal Circuit’s April 2019 decision siding with the Patent Trial and Appeal Board (PTAB) that certain claims of TT’s patents for graphical user interfaces (GUI) for electronic trading were eligible for covered business method (CBM) review and also patent ineligible. IPWatchdog has written much about this and related Trading Technologies cases, most recently here and here.
Though earlier Federal Circuit panels had found other TT patents not eligible for CBM, as the court found they were directed to technological inventions, Judge Moore said in her April opinion that the patents at issue here—numbers 7,533,056, 7,212,999, and 7,904,374—”relate to the practice of a financial product, not a technological invention,” and that “the specification makes clear that the invention simply displays information that allows a trader to process information more quickly.”
Highlighting a Conflicted Court
Trading Technologies is asking the Supreme Court to consider the following two questions:
- Whether computer-implemented inventions that provide useful user functionality but do not improve the basic functions of the computer itself are categorically ineligible for patent protection.
- Whether the Court should overrule its precedents recognizing the “abstract idea” exception to patent eligibility under the Patent Act of 1952.
The High Court has notoriously avoided taking Section 101 cases in recent years, but TT argues that now is the time to resolve the intra-circuit split that exists. The petition notes:
While one line of Federal Circuit decisions holds computer-implemented inventions to be ineligible if they do not make hardware-like improvements to computers’ basic functions, another line holds the opposite. Several decisions have even upheld patent protection for interactive graphical interfaces, in plain and open conflict with the decision below.
Namely, Trading Technologies compares the line of cases beginning with Enfish, LLC v. Microsoft Corp., which has focused on the distinction between claims that “purport to improve the functioning of the computer itself” and those that are directed to the mere use of a computer to provide functionality to users, with a conflicting line of cases, such as Data Engine Technologies LLC v. Google LLC, which the petition says “correctly recognizes that the functionality provided to users by computer-implemented inventions provides a basis for patent eligibility, irrespective of whether those inventions improve the computer’s basic functions,” TT wrote in its petition.
Additionally, the Federal Circuit case law interpreting the term “abstract idea” is what Federal Circuit Judge Plager has described as “a ‘definitional morass’ that ‘renders it near impossible to know with any certainty whether the invention is or is not patent eligible.’” In addition to Plager, former Federal Circuit Judge Paul Michel and Judge Richard Linn have lamented the impossibility of the abstract idea concept and the state of patent eligibility law today. Citing two separate IPWatchdog articles, TT’s petition recounts Judge Michel’s statements in recent years alternately referring to patent eligibility jurisprudence as being in a state of “chaos” that is “devastating American business” and observing that “with ’22 years on the Federal Circuit and nine years since dealing with patent cases,’ ‘I cannot predict in a given case whether eligibility will be found or not found.’” TT further noted that in recent cases like Aatrix Software, Inc. v. Green Shades Software, Inc., the current Federal Circuit judges have begged for guidance. In Aatrix, Lourie said, “the law needs clarification by higher authority” than the Federal Circuit.
A Plea to Clean Up the Mess
TT’s brief concludes with a warning to the High Court about the effects of all this uncertainty on U.S. innovation. Since “computers are the steel of the Information Age,” as TT states earlier in its brief, the Federal Circuit’s conflicting jurisprudence threatens the United States’ “’long-held position as the world leader in promoting and securing new technological innovation,’” says the brief, citing a paper by Professors Kevin Madigan and Adam Mossoff. TT Also cites Government Accountability Office statistics showing that “over half of the 4,700 post-grant challenges filed between 2012 and 2016 targeted software patents, and a majority of patent cases in the courts involve software patents,” as well as sources that found that 90% of patents reviewed by the Federal Circuit under section 101 after Alice v. CLS Bank have been invalidated. The brief concludes:
The post-Alice chaos concerning patent eligibility has chased off investment in technological innovation and resulted in a patent system that now actively undermines the progress of science and useful arts. This Court’s intervention is necessary to restore Congress’s design and purpose in the Patent Act of fostering invention.
Steve Borsand, EVP, Intellectual Property at Trading Technologies, told IPWatchdog that the petition is different from other post-Alice petitions in its approach, and that he believes it presents a “strong argument” that “the judge-made [abstract ideas] exception conflicts with the Patent Act…. A decision recognizing as much would clean up what has been a very messy area of the law in recent years. We’re hopeful that the Court will take the case to answer that question once and for all.”
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