The Supreme Court’s recent decision on patent venue, TC Heartland LLC v. Kraft Foods Group Brands, may actually turn out to be a good thing for patentees when it comes to Section 101. But before we get to that, let’s do the AliceStorm numbers: The overall Alicestorm index of percentage of Section 101 ineligibility outcomes in the federal courts is up 0.6% from March, at 67.6%. The Federal Circuit contributed the most to the increase, issuing eight separate decisions finding patent eligible subject matter, with six of these decisions being Rule 36 affirmances. The number of motions on the pleadings index are up as well, by 1.2% from March, at 63.3%. Turning to the monthly numbers, after the record number (35) of Section 101 decisions in March 2017 things returned to “normal” with just 15 decisions: The bump in March contributed to a marked increase in the three-month average of ineligible decisions, jacking it up from 62% to 73%. But beneath that, we can also see that the raw number of ineligible decisions in April (13) is about the same as the high marks since August 2016, and that the raw number of eligible outcomes (2) is at its lowest level since October 2015. This puts the ratio of ineligible to eligible decisions in April 2017 at 6.5, the highest it’s been since June 2015. Whether this signals a real uptick in favor of patent defendants or just a temporary blip in the overall downward trend in ineligible outcomes remains to be seen. Continue Reading #AliceStorm: April Update and the Impact of TC Heartland on Patent Eligibility
As has been well documented, the Supreme Court’s decision in Alice Corp. v. CLS Bank has had a dramatic impact on the allowability of computer implemented inventions. This second article in our series explores the dynamics of that impact on the e-commerce arts. Our first article showed that in the finance arts (e.g. banking and insurance) Alice had an immediate and substantial impact reducing allowances per month by a factor of 10. A similar but more complicated impact was felt in e-commerce. Allowances per month immediately dropped but then recovered only to drop again. We will present an analysis of what is being allowed today as a guide to practitioners filing applications in this field.
Art Unit Organization by Subclasses
E-Commerce patents fall under the general category of business methods and are examined in work groups 3620 and 3680. Table 1 below shows the technologies they encompass as well as the associated “old” US patent classifications and the examining art units. The old US patent classifications are referenced because they are still used to assign applications to art units. The primary class of e-commerce and business method patents is class 705. The “e-Commerce subclasses” in the table below is based on the majority subclasses being examined in each art unit. The subclass designations generally account for at least 80% of the applications being examined in a given art unit. Interestingly, a significant minority of applications in these art units are not classified as 705 applications. According to conversations I’ve had with examiners, these are cases that were originally assigned to other work groups but were later referred into these work groups because the classifications done by the contractor were not correct. Apparently even after reassignment into these work groups, the original class/subclass designations stayed in the PAIR records for the applications.
On April 17, Mozilla and Stanford Law held a panel to discuss the role of the First Amendment in the patent law, and specifically the impact on the patent eligibility of software and genes sequences.
Joining me on the panel were Dan Burk, a professor at the UC Irvine School of Law; Sandra Park, senior staff attorney at the ACLU Women’s Rights Project; and Wendy Seltzer, strategy lead and policy counsel at the World Wide Web Consortium, as well as moderator Elvin Lee, Mozilla’s Product and Commercial Counsel.
We discussed how IP law and the First Amendment intersect in IP disputes, eligibility tests, and the balance of interests between patent holders and users.
The debate over the First Amendment and boundaries of patent protection became a hot topic for discussion after Circuit Judge Haldane Mayer issued his 2016 opinion in Intellectual Ventures I LLC v. Symantec Corporation.
We discussed and debated both sides, and also talked about topics such as whether patent law creates conflicts with the First Amendment and whether subject-matter eligibility tests created by the Supreme Court (e.g., Alice) mitigate or impact any potential First Amendment issues. We also explored how the First Amendment’s intersection with patent law compares to other IP and regulatory contexts and the different competing interests for IP owners and creators.
On April 12th, the Federal Circuit, in a per curiam order, denied SHzoom’s motion to make the Trading Technologies opinion precedential. The order of course gave no reasons for the decision. Even so, the underlying decision is still a good one for patentees and applicants. While not binding on the USPTO, it can nonetheless be argued as persuasive authority to examiners where the facts in the application “uniquely match” those in the case. Prosecutors should consider arguing this case to examiners where they have specifically claimed graphical elements that provide specific functionality. The case is noteworthy because it is the first true “business method” patent that the Federal Circuit has upheld. The claims of the patents specifically recited steps for placing trade orders in electronic exchanges. Claim 1 of Trading Technologies’ US 6,766,304 is shown here as example: Continue Reading Federal Circuit Denies SHzoom’s Bid to Make Trading Technologies Decision Precedential, But the Case is Still Good Law
The most significant Federal Circuit decision in March was Thales Visionix, Inc. v. United States, another case finding eligible subject matter. What distinguishes this case—and demonstrates the inherently subjective I-know-it-when-I-see-it nature of the Alice test—is the extraordinary breadth of the claims. Consider claim 22, a single-step method claim:
A method comprising determining an orientation of an object relative to a moving reference frame based on signals from two inertial sensors mounted respectively on the object and on the moving reference frame.
The court held that this claim was patent eligible, because it was not directed to an abstract idea in Step 1 of the Alice test:
As many of you know, the Federal Circuit’s decision in Trading Technologies was the first time a graphical user interface had been found patent eligible by the Federal Circuit. The defendant CQG moved for both panel rehearing and enbanc rehearing.
My client SHzoom filed a request to make the Trading Technologies decision precedential. CQG attempted to leverage that motion as a further reason for the case to be reheard, arguing in their respose that “SHzoom’s Motion requesting that the panel’s decision in this case be made precedential should be denied. Its arguments further illustrate why CQG’s Petition for rehearing en banc should be granted.”
The Federal Circuit did not bite and today denied CQG’s petitions for rehearing. We’ll likely see their decision on SHzoom’s motion shortly.
With the close of the first quarter of 2017, there have been some interesting patterns developing in AliceStorm. Let’s start with the big picture: There was a flurry of activity in March, with a record number of Section 101 decisions. The Federal Circuit issued 11 decisions alone (its highest monthly output), and the district courts contributed another 24 (third highest month). However, the overall percentages of invalidity outcomes are stable as compared to last month, which is really more a reflection of the law of large numbers: there have been so many Section 101 decisions that the total percentages are not going to change significantly month to month. Continue Reading AliceStorm Update for Q1 2017
On January 18, 2017 the Federal Circuit issued an opinion in Trading Technologies Int’l., Inc. v. CQG, Inc., its first decision finding a user interface to be patent eligible subject matter. The court designated the opinion as non-precedential. On Monday SHzoom LLC filed a motion under Federal Circuit Rule 32.1(e), which allows any person to request that the court reissue a decision as precedential. The text of the motion is set forth below. Fenwick represented SHzoom.
Third party SHzoom LLC (“SHzoom”) hereby moves this court to reissue its January 18, 2017 decision (Dkt. No. 73), in Trading Technologies Int’l., Inc. v. CQG, Inc., No. 2017 U.S. App. LEXIS 834 (Fed. Cir. Jan. 18, 2017) (“Trading Technologies”) as precedential, pursuant to Federal Circuit Rule 32.1(e). As the appellant CQG, Inc. (“CQG”) has filed a petition for Rehearing En Banc, Shzoom’s request is filed to meet the stated deadline of Rule 32.1(e), and as such need only be considered if CQG’s request is denied. The parties to the case have been notified of this request.
As many of my readers noticed, I didn’t publish any of my own blogs in January and February. As it turned out, I suffered from a peculiar form of seasonal affective disorder (SAD), what I would call SMIAD: Subject Matter Ineligible Affective Disorder. The unrelenting rains here in San Francisco, a similar torrent of Section 101 rejections from the USPTO, and an uptick in the rate of court decisions invalidating patents, converged to put me in a dour and de-inspired mood. With the return of the sun and some interesting decisions from the Federal Circuit, it’s time to get back to tracking AliceStorm. First, an update on the overall AliceStorm numbers, through the end of February, 2017: Compared to the December numbers, the changes are mixed. The Federal Circuit ineligibility rate increased 1.9% to 90.9%, while the district court rate declined 1.2% to 61.8%. There’s been a 1% drop in the overall percentage of patents invalidated as well, down to 59.3%. The success rate on motions on the pleadings (including both motions to dismiss and motions for judgment on the pleadings) is down 0.6% to 62.3%. Continue Reading AliceStorm Update February 2017
The U.S. Supreme Court’s 2014 decision in Alice Corp. v. CLS Bank (“Alice”)[i] has had a dramatic impact on the allowability of computer implemented inventions, especially in the finance arts (e.g. insurance, banking, etc.). This series of articles explores the dynamics of that impact in different computer implemented arts as a useful guide to help patent practitioners navigate the new realities of post-Alice prosecution. In Technology Center 3600, art units 3691-3696 within Work Group 3690 examine applications in finance, banking and insurance (“Finance Art Units”). These art units have been the most heavily impacted by Alice.
Figure 1 shows the total number of allowances per month, abandons per month and appeals per month for patent applications examined in Work Group 3690, from January 2014 to March 2016. The data is from the USPTO’s public PAIR[ii] system. PatentAdvisor™[iii] was used to collect and process the data. There are currently about 80 examiners in this Work Group. The Work Group produces about 8400 office actions on the merits per year (i.e. nonfinal rejections, final rejections and allowances). Prior to Alice, about 2100 of the actions per year were allowances (25% of the total actions). Post Alice, only 220 of the actions per year have been allowances (2.6% of the total actions). Continue Reading Surviving Alice in the Finance Arts