Posts Tagged: "Alice v. CLS Bank"

The disparity between the art units is confused even more so when we consider the total number of Alice rejections in each art unit, rather than just counting the total number of applications receiving an Alice rejection. Doing that, we can see that, while 3622 and 3623 have almost equal numbers of applications with Alice rejections, 3623 actually has more in total. This means that applications in that art unit are more likely to receive multiple Alice rejections and take longer to prosecute.

In March 2016, Vehicle Intelligence filed a petition for writ of certiorari with the Supreme Court arguing that the two-part Alice test is “a universal pesticide to kill and invalidate virtually all patents.” Vehicle Intelligence has posed the following questions: (1) whether the Mayo/Alice test states that use or application of an abstract idea is automatic, conclusive proof of preemption of the abstract idea; (2) whether the Mayo/Alice test requires that any patent which improves on technology existing in the prior art to be retaught in a vacuum in order to present inventive concepts to satisfy the second step of the Mayo/Alice test; and (3) whether a patent would satisfy the second step of the Mayo/Alice test by having independent claims that include multiple explicitly-stated inventive concepts.

Many defendants to patent troll suits have never heard of the patent owner or its patent(s), and will have never received notice of infringement until service of the lawsuit. Typically patent trolls have no product to mark, since they are non-manufacturing entities. In that situation, the patent troll must take reasonable steps to ensure that its licensees mark their licensed products – if it has licensees. If a patent troll plaintiff has not required its licensees to mark, the defendant may be able to defeat past damage claims without spending thousands in legal fees mounting a defense on the merits to an infringement claim. This, at the very least, minimizes potential exposure to a patent infringement defendant.

Earlier this month, attorneys and patent practitioners from all over the nation, and far corners of the globe, descended upon Bethesda, Maryland for the 31st Annual Intellectual Property Law Conference of the American Bar Association (ABA). A panel of three distinguished practitioners, Tim Bedard of Visa, Eric Sutton of Oracle, and Gene Quinn, debated The Post-Alice Landscape. The presentation included…

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. Schecter would go on to say that we are at a point where a legislative fix seems necessary.

The Supreme Court’s own precedents provide overwhelming authority for interpreting § 101 broadly and, conversely, interpreting its judicial exceptions to § 101 narrowly. These precedents provide ample support for the Cluster Argument: (1) observing that the term “abstract idea” constitutes a legal term of art that, according to stare decisis, properly refers to looped mathematical algorithms and old and fundamental business practices and (2) declining to expand the set of “abstract ideas” beyond these two clusters without a signal from Congress.

Several questions every patent attorney should be asking before responding to an Alice rejection are: (1) How many Alice rejections has the examiner issued? (2) What does he or she consider to be the sticking points of the decision? (3) How many applications that received an Alice rejection were eventually allowed? Once an attorney has the answers to these questions in hand, the path to success in responding to an Alice rejection is considerably clearer.

Although categorizing abstract ideas could be helpful, the use of categories expands the risk of overbreadth, especially when the categories have little definition, include sub-categories, and lack negative examples. The PTO should refine the categories of “judicial descriptors,” and do so both negatively and positively, to avoid overbroad application of Alice by examiners. The use of “judicial descriptors” not supported adequately by court decisions has the potential to do great mischief in the area in which I practice frequently, i.e., software and Internet-related patent applications.

While Justice Scalia served on the Supreme Court for nearly three decades, his contributions to the area of intellectual property law were quite limited. Scalia did famously refer to patents as “gobbledegook” during the KSR v. Teleflex oral arguments. Scalia was the only Justice not to sign onto an opinion in Bilski v. Kappos that would have recognized that at least some software is patent eligible. But Justice Scalia did not author any of the major patent decisions considered by the Court during his tenure. The passing of Justice Scalia does not seem likely have much of an impact on intellectual property cases, particularly patent cases. Having said this, I could see legislative history becoming more relevant than anyone would have anticipated just a week ago when the Supreme Court considers Cuozzo Speed Technologies v. Lee.

Addressing the problem would be responsive to the overwhelming bulk of commenters who expressed opinions on the PTO’s most recent July 2015 Update on Subject Matter Eligibility (Section 101), who have agreed that the PTO has been applying Alice too vigorously and has been making more rejections than warranted, and that the excess rejections are reflected in the statistics. Examiners would welcome such efforts, because they would better know whether and when to make Alice-type abstract idea rejections under Section 101, in contrast with current guidance, which allow them to find reasons to make such rejections in virtually all cases. A more systematic approach to consideration of such rejections might look like this…

If you were buying patents in 2015, you likely did better than any previous year. The patent market, and, in particular, the brokered patent market, continues to be a robust market for buying and selling patents. Prices are down unless an EOU is available. Sales rates are up, and sales are tending to happen earlier. Caselaw impacted the market but not as much as you might have expected (Alice impacted fintech patents much more than software patents). With an estimated $233M in patent sales, we think the patent market will continue to provide interesting opportunities for both patent buyers and sellers.

It is poor patent policy to have broad areas of technology deemed patent-ineligible entirely, or ineligible without the high cost of attorney time to argue, and likely appeal, amorphous Alice-type rejections. This is particularly so as to technology that is central to the United States economy. Invention is central to U.S. economic might, and as our economy moves away from the “old line” manufacturing strength of the past, the U.S. has become especially strong in fields dependent on software technology and business methods. Strengths of the current U.S. economy include social media, the Internet, and the service economy, especially financial services. We are also strong in biotech. Yet those are precisely the fields most heavily damaged by Section 101 Alice-type rejections.

Alice certainly has dealt a huge blow to patent market, reversing the growth momentum of most market players, big or small. However, the decline in patent sales revenue has significantly decelerated to 5% in 2015, based on the estimated data. Not all segments of IP industry have weathered the Alice storm equally well. Most NPEs have seen their share prices plunging half to nearly 100%. There will be more restructuring and further consolidation in NPE business in 2016.

On December 18, 2015, several amici filed a brief in support of appellants in Netflix, Inc. v. Rovi Corp. et al., No. 15-1917 at the Federal Circuit. The amici Broadband iTV, Inc., Double Rock Corporation, Island Intellectual Property, LLC, Access Control Advantage, Inc., and Fairway Financial U.S., Inc. are all former practicing entities and patent holders that built, developed, and commercialized computer-implemented technology and maintain an interest in the patented results of their research and development that solved real world problems faced by their respective businesses. The district court found the five patents-at-issue in this case, generally relating to video-on-demand technology, patent-ineligible as allegedly directed to the abstract ideas.

The patent market had an amazing bull run from the late 1980’s through 2012. The peak was 2011 to 2012 when we saw a number of multi-billion dollar patent sales and patent-driven acquisitions. The patent market started slowing down substantially shortly thereafter. Many blame the America Invents Act (AIA), which introduced a variety of ways to inexpensively challenge the validity of patents in administrative proceedings at the patent office. All of a sudden the confidence that once a patent was issued it was valid was shaken. However, the AIA was only part of the problem.