Posts Tagged: "patentability requirements"

Earlier this year the Supreme Court issued a ruling in Alice Corp. v CLS Bank Int’l, which applied the Mayo 2-part test to computer-implemented subject matter.[2] The 2-part test asks: (1) whether the claims at issue are directed to patent-ineligible concepts; and (2) if yes, is there something “significantly more” in the claim to ensure that the claim is not…

The judge made exception to §101 for laws of nature, natural phenomena, and abstract ideas exists because a patent on these would impede innovation more than promote it, contrary to the primary objective of patent law. As the Supreme Court emphasized, we must distinguish between claims to the building blocks of human ingenuity versus those that integrate the building blocks into something more. The former would risk pre-empting or disproportionately tying up the use of the underlying ideas – to the detriment of progress in the useful arts. Basically, the purpose of the Mayo test is to ensure that patent law not inhibit further discovery by preempting or improperly tying up the future use of building blocks of human ingenuity.

Since the Alice Corp. decision, rejections under 35 U.S.C. 101 have become substantially more common in business-method art units, and notices of allowance have become substantially more rare in these art units. Meanwhile, 101 rejections made even pre-Alice were amongst the poorest quality for business-method art units as compared to those from other computer-oriented art units. Thus, it appears as though the patent prospects for applications assigned to business-method art units are grim. Given that the United States has traditionally been a leader in software and that software applications are frequently assigned to business-method art units, it seems unfortunate that the patent office is so unwilling to grant protection to innovation in this area.

It is really incorrect to say that the Federal Circuit eliminated the business method exception in State Street Bank, although the same net effect admittedly occurred regardless of how you characterize the ruling. It is better to say that the Federal Circuit went out of its way to explain that the business method exception had really never existed in the first place. The court explained that neither it nor its predecessor court, the CCPA, had ever applied the business method exception to a single case. Furthermore, Judge Rich explained that the cases relied upon to support the existence of the business method exception were In re Maucorps and In re Meyer were both rendered prior to the Supreme Court’s decision in Diehr, and prior to the Federal Circuit’s abandonment of the Freeman-Walter-Abele test. Furthermore, the Maucorps and Meyer cases were decided not on the business method exception, but on the mathematical algorithm exception.

The problem with this analytical approach lies not in the two-step Mayo “algorithm,” but rather in framing the analysis in terms of subject matter eligibility under Section 101 rather than patentability under 103. Section 101 is intended to deal with the eligibility of the claimed subject matter for patent protection as a class (i.e., genus or sub-genus) of inventions, rather than the contribution of the particular invention (i.e., species) defined by the claim vis-a-vis the prior art. So why did the Supreme Court frame the inquiry in terms of patent-eligible subject matter, rather than proceeding directly to the question of obviousness?

The big banks have backed Schumer for years, which makes sense since he is the senior Senator from the States of New York, which is where all the bankers are located (i.e., on Wall Street). But given all the vitriol aimed at software patents, particularly those in the financial services sector, there is a real irony that big banks are able to get software patents that explicitly cover computer implemented methods in the wake of Alice v. CLS Bank when so many others aren’t. So much of this anti-software patent hysteria was started by the big banks but they seem unaffected. That is an unfortunate theme in America. The big banks on Wall Street destroyed the economy with reckless disregard and yet not a single person went to jail and big bonuses continued to be paid to the very bankers and executives responsible for the economic meltdown that lead to the Great Recession.

KNOWLES: “We are seeing a strong anti-innovation sentiment in the U.S. not just on the issue of obviousness but also on patent eligibility. We’re seeing a rewriting of patent law through judicial decisions which have draconian effect on the industry that judges have not given full consideration of the larger impact of. And I might go even further to say that judges are not sufficiently trained or authorized to overhaul the patent system through the judiciary. The judiciary is taking over the job of Congress. I think that’s what we are seeing.”

In the latest decision (“Ultramercial-3”), the panel reached the opposite conclusion and affirmed the dismissal. This apparent turnaround was based on two intervening events: (1) the Supreme Court’s Alice decision in June; and (2) the fact that Chief Judge Rader was no longer on the court, and his place on the panel was taken by Judge Mayer. Much has, and will be, written about the first of these factors, so I would like to focus on the second, and in particular, the diametrically opposed views of Judges Rader and Mayer on a very important procedural issue; namely, whether the lack of patent-eligible subject matter should be a basis for dismissing a case at the outset based only on the “intrinsic” evidence, i.e., the patent itself and its prosecution history in the USPTO, without any discovery, expert testimony and/or claim construction.

The Supreme Court is simply not knowledgeable about patent law. And that’s not to say that the Justices couldn’t become knowledgeable, but even in this active state they’re only handling six or eight patent cases a year at most and so a lot of those deal with contracts and that sort of thing. So they’re not ever going to do enough patent cases to develop a specialty. They’re allergic to bright line rules despite the fact that in our space we have 10,000 front line decisions makers between the patent examiners, the Board, the district courts, and the Federal Circuit. You can’t have that many decisions makers without bright line rules, which should be self-evident to anybody including those that went to Ivy League schools and wear black robes. But apparently it’s not.