Posts Tagged: "Alice v. CLS Bank"

Reading the recent opinion of Judges Prost and Taranto in Yu and Zhang v. Apple and Samsung, Appeal Nos. 2020-1760, 1803 (Fed.Cir. June 11, 2021), I’m reminded of something Mark Twain never said: “There’s a lie, there’s a damned lie, and then there’s an Alice-Mayo decision.” Granted, it is hard to tell one Alice-Mayo decision from another. At face value, the Yu decision appears to be merely the latest absurdist fiction in a collection of short stories based on the abandonment of conventional law. Yet, the Yu decision is more than the typical Alice-Mayo scenario where logical construction and argument give way to irrationality in a senseless judiciary.

Alice in Wonderland syndrome is a medical condition for which there is no known treatment. It causes a disturbance of perception and has a serious impact on the life of those afflicted, and I suspect on those who surround those afflicted. Of course, those in the patent community who work on software implemented innovations know all of this too well. Think this is a joke? Sadly, no. Alice in Wonderland syndrome is a real thing.

If you’re reading this blog, then you likely are an avid follower of the Section 101 saga. The most recent episode in this saga, Chamberlain v. Techtronic at the Federal Circuit, is about so much more than a garage door operator being an abstract idea. It’s about the fact that we still have no clue what’s supposed to happen in the 2A and 2B steps of the judicially-created Alice/Mayo test. The Chamberlain panel applied the Alice/Mayo test completely backwards compared to what the Berkheimer panel said. First, the question of improvement was assessed in Chamberlain’s “Step One” (or 2A). Not only that, the panel then immediately went on to find that “(t)he specification admits that the act of transmitting data wirelessly is ‘well understood in the art,’ and no other changes to the generically claimed movable barrier operator are recited in the asserted claims or described in the specification.” 

On August 15, Trading Technologies International, Inc. (TT) petitioned the Federal Circuit again for panel rehearing and rehearing en banc of its recent decision that found TT’s Ladder Tool invention to be subject to the USPTO’s Covered Business Method (CBM) review process and abstract under Section 101. TT argues that the PTAB did not follow the precedent of the Supreme Court or Court of Appeals for the Federal Circuit (CAFC) when reviewing its patent claims. The latest brief relates to U.S. Patent No. 7,725,382 (the ‘382 patent), while TT’s request for rehearing filed July 31 related to U.S. Patent No. 7,693,768.

A Federal Circuit panel comprising Judges Lourie, O’Malley and Chen issued a precedential opinion yesterday, August 21, in part reversing a district court’s finding that certain claims of Chamberlain Group, Inc.’s (CGI’s) patent for a “moveable barrier operator” (for example, a garage door opener) were not abstract under Section 101. The United States District Court for the Northern District of Illinois denied Techtronic Industries’ (TTI’s) motion for judgment as a matter of law that the asserted claims were patent-ineligible and granted CGI’s motions for enhanced damages and attorney fees. The district court disagreed with TTI’s assertion that the claims at issue were directed to the abstract idea of wireless transmission of content, instead finding that “[h]ere, the ’275 patent claims are not directed to the transmission of data, but to garage door openers that wirelessly transmit status information.”

This is the first in a thirteen-part series of articles authored by Kilpatrick Townsend that IPWatchdog will be publishing over the coming weeks. The series will examine industry-specific patent trends across 12 key patent-intensive industries. Companies are frequently faced with high- and low-level decisions concerning patenting. What should an annual patent budget be and/or how many new applications should be filed each year? Which technologies should be emphasized in the portfolio? For a given innovation, should a patent application even be filed? These questions are frequently evaluated by looking at internal factors, such as recent enterprise-wide profitability, executive sentiments towards patenting, and/or the perceived importance of individual projects. However, the effect of a patent is to exclude others from a given innovation space. If no other entity was or would be interested in making, using, selling, or importing a patented invention, one could argue that the patent was valueless. Conversely, if many others are actively developing technology within a space, a patent portfolio in that area may be particularly valuable. Thus, patenting decisions should factor in the degree to which others have interest in a given technology is trending-up or -down. Patenting data can serve as one indicator for this type of interest. However, it is difficult to collect patenting data at an industry level. While the patent office assigns an art unit and a class to each patent application, using one or more art units and/or classes as a proxy for an industry is both under- and over-inclusive. For example, a patent application related to an Internet of Things (IoT) industry may also relate to traffic lights, such that, even if there were art units specifically and only associated with either IoT or traffic lights (which there is not), statistics would be inaccurate: statistics pertaining only to an IoT art unit would not account for data corresponding to applications and assigned to the hypothetical traffic-light art unit, while statistics pertaining to both art units would be based on non-IoT applications assigned to the latter art unit.

The Electronic Frontier Foundation (EFF) is at it again, this time with what they refer to as a Save Alice campaign. The EFF does not like the Revised Patent Eligibility Guidance published by the United States Patent and Trademark Office (USPTO) in January 2019 and is charging USPTO Director Andrei Iancu with attempting to subvert the United States Supreme Court and essentially ignore Alice v. CLS Bank. These assertions are bogus, and truthfully, they are hardly worth the consideration of thoughtful individuals interested in a meaningful dialogue about the state of the U.S. patent system. Director Iancu has issued guidance that strictly follows exactly what the Supreme Court ruled in Alice, period. Over the years patent examiners, Administrative Patent Judges, district courts, and the Federal Circuit have dramatically expanded Alice. It was admitted in Alice that the “invention” could be coded over a weekend by a second-year college student, which means it was extremely trivial and not innovative.

I am sure that the justices of the Supreme Court did not anticipate the confusion they created when they issued their controversial decision in Alice Corporation v. CLS Bank in 2014. That case effectively upended well-established precedence when the Court unanimously held that a computer-implemented scheme for mitigating settlement risk was not patent eligible subject matter because the claims were drawn to an abstract idea, and that merely requiring generic computer implementation fails to transform the claims to eligible subject matter. The Court itself said their holding was to be narrowly construed, but in providing a vague, two-step test to determine whether something is patent eligible, they unleashed a world of hurt on some of our domestic industries seeking patents in cutting-edge technologies. The application of the Alice test to some of our health-related industries is having disastrous effects. On February 6, 2019, in a split decision, the United States Court of Appeals for the Federal Circuit (CAFC) found in Athena Diagnostics v. Mayo Collaborative Services that diagnostic methods are not patent subject matter eligible unless they embody a separate technical improvement beyond the correlation of certain antibodies in bodily fluids to particular diseases. In a footnote, the majority lamented that they felt compelled by Supreme Court precedence to render their decision, but recognized that protection of diagnostic methods would be for good for society. The Athena case does not portend well for the CAFC adoption of the recent USPTO guidance on Section 101. The courts will eventually be able to either put their imprimatur on those guidelines or discard them. The sooner that is done, the better.

The Licensing Executives Society (LES) 2017 High Tech Deal Term & Royalty Rate Survey is a milestone event for at least three reasons. First, it was the third survey since the inaugural survey in 2011, and the three surveys fully covered the time period of a decade—from 2008 to 2017. Second, the 2017 Survey marked the fifth anniversary of Inter Partes Review (IPR) procedure and the third anniversary of the Supreme Court’s ruling in Alice v. CLS Bank. Third, at the time of the Survey, a new USPTO Director was nominated by the Trump Administration, bringing a fresh glut of uncertainties, anxieties, and hopes to the already jittery IP market.

When the Supreme Court believes that the Federal Circuit has made an error, they will reverse and remand with broad guidance, but often are not able to determine what the proper test should be. The Supreme Court wants, and expects, the Federal Circuit to determine the proper test because, after all, it is the Federal Circuit that is charged with being America’s chief patent court. But the Federal Circuit has become myopic. It is getting tiring to read in case after case— where real innovation is involved—the Federal Circuit saying that they are constrained, even forced by either Alice or Mayo, to find the very real innovation to be declared patent ineligible. This madness has to stop! It is time for the judges of the Federal Circuit to stand up and fulfill their Constitutional Oaths. They must interpret Supreme Court precedent—all of it—consistent with the statute and the Constitution.

Here we go again! Another patent whose claims have been invalidated at the Federal Circuit—predictably, another medical diagnostic patent. Athena Diagnostics v. Mayo Collaborative (Fed. Cir. Feb. 6, 2019). This is getting old, tired and fundamentally ridiculous. The statute, which is all of one-sentence long, specifically lists discoveries as patent eligible. So why are discoveries being declared patent ineligible? To the extent these decisions are mandated by the Supreme Court, they directly contradict the easy to understand and very direct language of the statute. The Federal Circuit is wrong, period. Perhaps they are so close to these cases and trying so hard to do what they think is right that they have lost perspective, but these rulings are fundamentally saying that discoveries are not patent eligible. We are told repeatedly that they are mandated by Supreme Court precedent. Obviously, that cannot be correct. The statute says: “Whoever invents or discovers… may obtain a patent…” Clearly, Congress wants discoveries to be patented, and in our system of governance, Congress has supremacy over the Supreme Court with respect to setting the law unless the law is unconstitutional. 35 U.S.C. 101 has never been declared unconstitutional, so discoveries must be patent eligible, period. It is time to face the facts—the Supreme Court has considered only bad cases, with bad facts, where there was really no innovation presented in the claims, or even in the patent application as a whole. These decisions have absolutely no meaning or proper application with respect to any inventions, let alone inventions of monumental complexity such as true artificial intelligence, autonomous vehicles, or new medical diagnostics that allow risk-free testing of common ailments, where previously existing tests required potentially catastrophic risk.

During the interview with Technology Center Director Tariq Hafiz we discussed whether it is realistic to expect patent examiners to perform a complete Section 101 analysis, including comparing a claimed invention to concepts that have been found patentable and not patentable under Section 101 in Federal Circuit and Supreme Court decisions. Unfortunately, this has often involved examiners pigeonholing claims at issue into completely unrelated court decisions that found claims to be directed to an abstract idea. In the new guidance, the USPTO plainly states that the approach of examiners comparing claims to a growing number of court decisions involving Section 101 has “become impractical.”

The examiner concluded the claims were directed to the abstract idea of rules for playing a game, which fell within the realm of methods of organizing human activities. The examiner further found the claims were unpatentable as obviousness over old and well known to dice games, applying the printed matter doctrine… Marco also contended that its claimed method of playing a dice game could not be an abstract idea because it recites a physical game with physical steps. The Court rejected this argument “because the abstract idea exception does not turn solely on whether the claimed invention comprises physical versus mental steps.” Since the only arguably unconventional aspect of the recited method of playing a dice game was found to be printed matter, thus falling outside the scope of § 101, the rejected claims did not recite an “inventive concept” sufficient to “transform” the claimed subject matter into a patent-eligible application of the abstract idea.

The U.S. Supreme Court has muddied the waters about patent eligibility in a way that threatens American innovation.  Capitol Hill is beginning to discuss this as a possible legislative issue for 2019.  Some would say it is as important as the intellectual property disputes in the tariff war with China… Intellectual property legislation traditionally is nonpartisan, which may make it a little easier to find a solution.  All members of Congress will support preserving the patent system’s incentives for innovation if they understand what is at stake for the country.