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. 

Continue Reading The One Year Anniversary: The Aftermath of #AliceStorm

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%

Continue Reading Tracking #AliceStorm: Spring Showers Continue to Rain Patent Destruction

Between January 1, 2015 and January 23, the USPTO issued 247 patents in class 705, the overall business methods classification.   I reviewed the file histories of every single one of these patents.  I found only four that had post-Alice Section 101 rejections.  Between October 1, 2014 and December 31, 2014 there were 872 class 705 patents issued.  I found none (zero) that had post-Alice rejections.

In both groups, the vast majority had no Section 101 rejections, or if they had any, they were pre-Alice, based on Bilski.  The vast majority of these pre-Alice rejections were made before 2014, some as far back as 2011–and yet the notice of allowances only came in mid or late 2014.  As you likely know, the pre-Alice rejections were easily overcome by adding "processor" limitations to the method claims, and adding "non-transitory" to computer program product claims.

Generally, the rejections themselves were the form paragraphs we've all seen, with little or no specific  analysis of the alleged abstract idea, and zero discussion of the limitations of the claims with respect to "inventive concept," or why the claims limitations do not recite "significantly more" than the abstract idea itself.

On the other hand, the responses varied:

  1. Form rebuttal, the claims are not abstract. 
  2. Failure of examiner to make prima facie case of ineligibility.
  3. Substantive arguments that claims are not abstract and include inventive concepts.
  4. Failure of examiner to make prima facie case, along with substantive arguments that the claims were not abstract and include "inventive concepts."

What follows is a detailed look at each of the cases.

Continue Reading Post-Alice Patents in Ecommerce, Banking and Finance

Fenwick & West has launched an interactive PTAB Database that details proceedings filed with the USPTO’s Patent Trial and Appeal Board – providing quick and easy access to information about PTAB decisions.

With the creation of PTAB by the U.S. Patent and Trademark Office, core aspects of resolving validity disputes are now governed by newly designed post-grant opposition proceedings. Fenwick’s database offers a searchable tool to follow the latest developments in the post-grant space and to examine key takeaways from recent PTAB decisions.

PTAB Database Proceedings
The PTAB database is designed to help users draw insights into post-grant proceedings trends as they begin to emerge. Currently, the bulk of cases deal with prior art issues, but in both Covered Business Method (CBM) proceedings and in Post-Grant Review proceedings issues of patent eligibility under Section 101 arise. Information about new cases will be added to the database regularly.

The dots on the graph represent recent PTAB decisions. The dots are sorted chronologically by decision date and color coded by issue category. Users choose categories by checking the corresponding box and scrolling over each dot to view details about that proceeding, including the decision date, case name and key takeaways.

PTAB Database Categories
To access the PTAB database, click here: PTAB Database

By: Stuart P. Meyer

A recent episode of NPR’s “Planet Money” was entitled “The Case Against Patents.”  Several notable commentators in that episode questioned whether patents help or hinder innovation, whether history supports the benefits of a patent system, and whether patent terms should be tinkered with to determine the amount of protection that is optimal from various socio-economic perspectives.  I am delighted every time this issue is brought up, since the appropriate balance of rights between innovators and society is anything but static.  As reasonable royalty rates fluctuate under case law, as infringement and validity standards shift, and as patents become commodities traded outside of traditional M&A situations, the fulcrum is certain to shift in one direction or the other. 

The Supreme Court gave more than a little consideration to such issues in Alice v. CLS Bank.  In fact, the very focus of this unanimous opinion was on this balance:

We have described the concern that drives [the judicially-created exclusion for laws of nature, natural phenomena and abstract ideas] as one of pre-emption.  … Laws of nature, natural phenomena, and abstract ideas are “‘”the basic tools of scientific and technological work.”’” (slip op. at 5-6)  

Continue Reading Where are You, Congress? Alice v. CLS Bank and “The Case Against Patents”

By: Robert R. Sachs

On the final day of its 2013 term, the Supreme Court issued some interesting orders in Section 101 cases dealing with computer-implemented business methods. 

First, in WildTangent, Inc. v. Ultramercial, LLC (13-255), the Court granted certiorari, vacated, and remanded back to the Federal Circuit for reconsideration in view of Alice.  This is important because the Federal Circuit twice affirmed the patent eligibility of Ultramercial's claims, first back in 2011, Ultramercial, LLC v. Hulu, LLC, 657 F.3d 1323 (Fed. Cir. 2011), and then again in 2013 after the Supreme Court vacated that decision and remanded in view of Mayo.  Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335 (Fed. Cir. 2013).  In the second decision, Judge Rader attempted to reconcile his theory of patent eligiblity with that of Judge Lourie.  Now that Judge Rader has retired, the case will be decided by just Judges Lourie and O'Malley.  If these judges do not agree on the eligiblity of Ultramercial's claim–a likely outcome–then an additional judge will be assigned.  How Ultramercial turns out will very likely depend on which judge is assigned–resulting in yet another panel dependent outcome.  

Continue Reading Ultramercial back to Federal Circuit. Accenture & Bancorp done

By: Robert R. Sachs

~ ‘The report of my death was an exaggeration’ –Mark Twain

Mark Twain, American humorist.

With apologies to the great humorist, the report of the death of software patents is an exaggeration. Some commentators quite quickly suggested that the Supreme Court’s decision in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. ___, No. 13-298 (June 19, 2014), will “invalidate the majority of all software patents in force today” and is “bad news for software patents”. That interpretation may make good copy, but it is simplistic and overblown. While the Court invalidated Alice’s patents, the decision certainly does not invalidate the majority, or even a large percentage, of software patents, nor does it radically restrict the kinds of inventions that can be patented going forward. The decision is a modest and incremental clarification in the patent law, and a not wholesale revision.

The Court set forth a two-step test grounded in Bilski v. Kappos and Mayo v. Prometheus.While the Court may not have defined a clear boundary for so called “abstract ideas” specifically, it did squarely place this case within the “outer shell” of the law set forth in Bilskiand Mayo. In doing so it articulated an approach that focuses not on finding the boundary line, but rather on the core properties of an ineligible patent claim. In Part I of this two-part post, I will focus on just the first step of the test, whether a claim recites a patent-ineligible “abstract idea.” In Part II, I’ll address issues regarding preemption, mental steps, and the application of Alice to software patents.

Read the rest on IPWatchdog….

By: Robert R. Sachs

On January 31, 2014, Fenwick & West and the Center for the Protection of Intellectual Property (CPIP) at George Mason University School of Law held a roundtable on Patentable Subject Matter at Fenwick’s Silicon Valley office. 

Our approach to this roundtable was different from the typical conference or roundtable on patent eligibility. As I have made clear in other posts, the question of patent eligibility reaches outside of the strict confines of the courtroom, the Patent Office and the patent statute; it is intimately grounded in science and philosophy, in the nature of human creativity and in the types of things that can be said to be the subject of human creation. In particular, the fundamental questions of patent eligibility—what is a law of nature, an abstract idea, or a natural phenomena—are questions that are ancient in origin, and that have been addressed in considerable detail outside the boundaries of the law.  

Accordingly, in addition to the usual suspects, such as law professors and patent practitioners, we included in our roundtable experts in a number of extra-judicial disciplines. Mark Turner, professor of Cognitive Science at Case Western Reserve University, is one of the leading theorists and researchers in studying the nature of human cognition, and one of the originators of the theory of Conceptual Blending, which describes how we combine abstractions from different domains to understand and imagine. Gregory Salmieri, visiting fellow in Philosophy at Boston University, provided insights on the historical and analytical issues underlying abstract ideas and laws of nature. Ted Brown, Emeritus Professor of Chemistry at University of Illinois at Urbana-Champaign, discussed the role of metaphor in scientific thinking, and how chemists and physicists think about laws of nature. Steve Rosenberg, Ph.D., Chief Scientific Officer at CardioDx, and an inventor on over 20 patents, brought his expertise in biochemistry and genetics to bear on these topics as well.

Our academic contingent included Adam Mossoff, Mark Schultz, Matthew Barblan, co-directors of CPIP; Kristin Osenga, professor of law at University of Richmond School of Law, with expertise in the role of linguistics in patent law; Christopher Holman, professor of law at University of Missouri-Kansas City, who has extensive experience in biochemistry and molecular biology; Andrew Chin, professor of law at the University of North Carolina, a specialist in the mathematical considerations under debate; and Saurabh Vishnubhakat, post-doctoral associate at Duke Law School and an expert advisor to the USPTO on patent policy. 

Our practitioners included myself, Courtney Brinckerhoff, partner at Foley & Lardner LLP, an expert in biotechnology patent issues and James Calkins, Vice President and Global Head of Patent Support at Sanofi (and former clerk to J. Giles Rich of the Federal Circuit), who explained the impact that the uncertainty in patent eligibility has on investments by companies in biotech innovations.

We will publish a white paper on the roundtable shortly. 

By: Robert R. Sachs, Daniel R. Brownstone

Last week, we filed two amicus briefs with the Supreme Court in Alice Corp. v. CLS Bank, one on behalf of Advanced Biological Laboratories (ABL), and one for Ronald M. Benrey (Benrey). It goes without saying that this is the bellwether case for the patent eligibility of software. The question presented by the Court and the parties was whether claims to computer-implemented inventions—including claims to systems and machines, processes and items of manufacture—are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court.

Our two briefs focused on different aspects of the issue. The ABL brief set forth a new framework for patent eligibility called “objective preemption.” The core thesis is that patent eligibility is a question of law, but must be predicated on objective analysis based on POSITA, the person of ordinary skill in the art. This conforms the analysis to how obviousness is determined, a question of law based on the Graham factors, as well as claim construction, enablement, written description and doctrine of equivalents infringement. In all of these, POSITA is used to ground the analysis in objective factors, not the subjective beliefs of the Court based on what it had for breakfast. The brief explains how POSITA would be used to understand the scope of the claim, and whether the claim preempts all practical applications of some abstract idea. The brief concludes by showing that Alice’s claims, which were held invalid by the district court and the Federal Circuit, are valid under objective preemption.

The Benrey brief is more narrowly focused. Benrey is the author of Understanding Digital Computers (1964). This book was cited by the Solicitor General to the Supreme Court in Gottschalk v. Benson in support of the proposition that computers perform mental steps like humans. This became a core principle over the years and persists today; Judge Lourie of the Federal Circuit has repeatedly stated it as a fact and continues to use it to invalidate software patents. The problem is that Benrey never suggested that computers in fact operate like human minds.  Benrey’s brief explains that he was quoted out of context, that computers do not perform mental steps, and that mathematical formulas are not scientific truths per se as apparently believed by the Court. Benrey’s brief goes on to explain that the mental steps doctrine was extended to computers only on the basis of this misunderstanding of the nature of computers and mathematics. It further shows that the notion that general purpose computers cannot impart patent eligibility is scientifically unsound, based on the work of Alan Turing.

Copies of the briefs are available at the links below. We look forward to further discussion with those on all sides of the issue over the coming weeks, and ultimately, resolution regarding this question that remains critical to the future of innovation.

Oral argument is set for March 31, 2014.  We’ll be there.

Brief for Amicus Curiae Advanced Biological Laboratories, SA in Support of Petitioner

Brief for Amicus Curiae Ronald M. Benrey in Support of Neither Party

By: Robert R. Sachs

In July 2012, two panels of Federal Circuit issued decisions regarding patentable subject matter for computer implemented business methods, CLS Bank Int’l v. Alice Corp. No. 2011-1301 (Fed. Cir. July 9, 2012), and Bancorp Services v. Sun Life Assurance Co. of Canada, No. 2011-1467 (Fed. Cir. July 26, 2012). The decisions demonstrated conflicting approaches various members of the court apply to this question. On what appears to be similar business methods patents, the two panels came to opposite decisions—the CLS panel finding the claims patent-eligible, and the Bancorp panel holding not.

In October 2012, the Federal Circuit vacated the CLS panel decision, granted CLS’s motion for en banc review. The en banc order posed two questions for the parties to address:

a. Whether a computer-implemented invention is a patent ineligible “abstract idea”; and when, if ever, does the presence of a computer in a claim lend patent eligibility to an otherwise patent-ineligible idea?

b. In assessing patent eligibility under 35 U.S.C. § 101 of a computer-implemented invention, should it matter whether the invention is claimed as a method, system, or storage medium; and should such claims at times be considered equivalent for §101 purposes?

On February 8, 2013, the court heard oral arguments from CLS, Alice, and the Solicitor General. Most surprisingly, no one attempted to actually answer the underlying questions here: What is an abstract idea? How do you know when a claim recites one? Instead, what was offered up as a “test” by both parties was whether the claim recites “significantly more” than just having a computer apply a (still undefined) abstract idea. This is just another ‘I know it when I see it test,’—just like Potter Stewart’s test for obscenity in Jacobellis v. Ohio. “Significantly more” provides no objective, analytical method to identify what is patent eligible. In this series of posts, we will explore some of the issues and problems raised by these questions, and offer the outlines of an objective answer and methodology.

Continue Reading The Confusion between Abstractions and Abstract Intellectual Ideas