In January, the USPTO announced it would seek comments on the new Guidance it had published on patent subject matter eligibility. We have previously discussed this Guidance and won’t repeat ourselves here. Instead, this post will highlight the wide range of views expressed by the thousands of comments that the USPTO received. Although the comment

On May 4, the USPTO issued a new memorandum for patent examiners, “Formulating a Subject Matter Eligibility Rejection and Evaluating the Applicant's Response to a Subject Matter Eligibility Rejection” (“Examiner Instructions”)  along with a new set of five example claims, this time in the life sciences and chemistry arts.   The Examiner Instructions are a positive step forward in refining the examination process, but leave open many questions.  

The Examiner Instructions are primarily procedural in nature—how the examiners are to draft § 101 rejections and respond to arguments—rather than addressing substantive issues such as the scope of abstract ideas, laws of nature or natural products  This comes, I believe, in response to many of the public comments to the Interim Guidance and the July Update that focused on having examiners provide more complete and thorough rejections.  There is a widespread perception, backed up by real evidence, that a large percentage of examiners issue boilerplate § 101 rejections that simply identify some alleged abstract idea, and then formulaically assert that there is no inventive concept because all of the claims limitations recite well-known, routine and conventional steps or the functions of a generic computer.  


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On September 4, a Massachusetts district court issued an interesting ruling that calls into question many of the recent preliminary stage Alice-based invalidations we’ve seen over the past year.  The decision, the latest round in ongoing litigation between DataTern and numerous defendants, is notable for the following reasons:

  • It expressly recognizes that the

Part II:  See Part I #AliceStorm: July is Hot, Hot, Hot…and Versata is Not, Not, Not

What Is a “technological invention”?

The other part of the CBM definition at issue in Versata is the exclusion of a technological invention from the scope of CBM review. Correctly, the Court noted that the USPTO’s circular definition of technological invention as “essentially one having a “technological” feature that solves a “technical” problem using a “technical” solution,” “does not offer much help.”  But instead of defining what was technological, the Court looked to what PTAB said was not technological, that is “certain characteristics which, if present, did not help support a finding” that an invention was technological.  Here are PTAB’s exclusionary factors:

1) mere “recitation of known technologies”; 2) “reciting the use of known prior art technology”; and 3) “combining prior art structures to achieve the normal, expected, or predictable result of that combination.”

As a general rule you do not define a word by what it is not: the definition of mammal is not creatures that do not have scales, cold blood, and lay eggs.  Similarly, the use of exclusions does not effectively differentiate between technological inventions and non-technological inventions.
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It's been one year since the Supreme Court's decision in Alice Corp. v. CLS Bank. On its face the opinion was relatively conservative, cautioning courts to "tread carefully" before invalidating patents, and emphasizing that the primary concern was to avoid preemption of "fundamental building blocks" of human ingenuity.  The Court specifically avoided any suggestion that software or business methods were presumptively invalid.  But those concerns seem to have gone unheeded.  The Court's attempt to sidestep the tricky problem of defining the boundary of an exception to patent eligibility—"we need not labor to delimit the precise contours of the "abstract ideas category in this case""—has turned into the very mechanism that is quickly "swallow[ing] all of patent law.” The federal courts, the Patent Trial and Appeal Board, and the USPTO are using the very lack of a definition to liberally expand the contours of abstract ideas to cover everything from computer animation to database architecture to digital photograph management and even to safety systems for automobiles.

Let's look at the numbers to present an accurate picture of the implications of the Supreme Court’s decision. My analysis is a data-driven attempt to assess the implications of Alice one year out. It is with an understanding of how the Supreme Court’s decision is actually playing out in the theater of innovation that we can better project and position ourselves for what the future holds.

Alice at Court

Table 0 Fed Courts

As of June 19, 2015 there have been 106 Federal Circuit and district court decisions on § 101 grounds, with 76 decisions invalidating the patents at issue in whole or in part.  In terms of patents and claims, 65% of challenged patents have been found invalid, along with 76.2% of the challenged claims. 


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It's been six weeks since my last AliceStorm update, and we've had plenty of action: twelve §101 decisions, and fourteen patents invalidated in just that period. That said, the success rate of motions on the pleadings is dropping, now down to a mere 69.6%. At PTAB, ten new institution decisions, all of which were granted on ineligibility grounds. And PTAB continues with its 100% kill rate, with seven (!) final decisions invalidating patents.

Here's the data.

Total

Total Invalid

% Invalid

+/-

Fed. Cir and 
Dist. Ct. Decisions

90

63

70.0%

-3.9%

Patents

215

131

60.9%

-10.4%

Claims

4,497

3,282

73.0%

-7.3%

Motions on Pleading

46

32

69.6%

-7.6%

PTAB CBM Institution Decisions on 101

51

44

88.5%

1.52%

PTAB CBM Final
Decisions on 101

27

27

100%

 0%


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By: Robert R. Sachs

The Supreme Court has consistently cautioned that the judicial exceptions to patent eligibility need to be carefully applied:

At the same time, we tread carefully in construing this exclusionary principle lest it swallow all of patent law. Mayo, 566 U. S., at ___. At some level, "all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.”

Alice Corp. v. CLS Bank International, 573 U.S. __, 134 S. Ct. 2347, 2352 (2014) (citations omitted).

On November 14, 2014, exception did in fact swallow the rule in the Federal Circuit’s decision Ultramercial, Inc. v. Hulu, LLC, 2010-1544, 2014 U.S. App. LEXIS 21633 (Fed. Cir. Nov. 14, 2014) (“Ultramercial III”). Judge Lourie, writing for the panel of Judges O’Malley and Mayer, found Ultramercial’s patent claims ineligible. Along the way to that ending the court observed:

[W]e do not purport to state that all claims in all software-based patents will necessarily be directed to an abstract idea. Future cases may turn out differently.

2014 U.S. App. LEXIS, at *11.

This phrasing is precisely how one would state an exception to a rule. Instead of saying that software is generally not directed to abstract ideas, and that in some cases may be, this phrasing implies the opposite: software is presumed to be an abstract idea (hence ineligible) though there may be some case in the future in which it is not. This approach turns the entire patent eligibility framework on its head. This essay explores how Ultramercial III reaches this inversion and its potential consequences.


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The Palo Alto Area Bar Association (PAABA) and the International Technology Law Association (ITechLaw) are teaming up to provide a luncheon panel discussion on the practical implications of the Alice v. CLS Bank decision. In her dissent to the Federal Circuit Alice decision, Judge Moore predicted that the majority view would result in “the death

By: Stuart P. Meyer

There has been significant commentary, both before and after the Supreme Court’s decision in Alice, that the various judicially created exceptions to patentability under 35 USC § 101 are not only sound, but are also constitutionally mandated.  For instance, a major thesis of the ACLU’s amicus brief in Alice was that the First Amendment naturally limits § 101, as “patents giving control over intellectual concepts and abstract knowledge or ideas—and thus limiting free thought—would violate the First Amendment.”

The Court may have already given some guidance in this area, and lower courts appear to be listening.  In a September 4 decision, one judge in the Central District of California had no difficulty dismissing, via FRCP 12(b)(6), an infringement complaint because the court found that the three patents-in-suit did not satisfy § 101, based on the judicially created exceptions as taught by AliceEclipse IP LLC v. McKinley Equipment Corp., Case No. SACV 14-742-GW (C.D. Cal. September 4, 2014).  Judge George Wu observed that Justice Kennedy in Bilski, delivering the opinion of the Court explained the limitations on  § 101.  The pertinent portion of Bilski reads:  “While these exceptions are not required by the statutory text, they are consistent with the notion that a patentable process must be ‘new and useful.’  And, in any case, these exceptions have defined the reach of the statute as a matter of statutory stare decisis going back 150 years.”


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