I was reminded of this question, often posed by my dad to remind me not to become a slave to statistics, by two dramatic things that happened last week. On the one hand, at the IAM 2017 Patent Law and Policy conference in Washington DC, investors spoke about waning interest in the U.S. market given the increasing frequency of patent invalidations. On the other hand, the Nasdaq composite index (consisting of 86% U.S. companies) hit record closing and intraday highs. Whom are we to believe: those who say weak patent coverage is threatening our economy or those who say that patents are not, in fact, necessary for economic strength?

Or is there a third possibility—that other factors overwhelm the economic importance of patents so we can’t really give too much weight to the statistics?

The speakers at the IAM conference cited PTAB invalidation rates and post-Alice hostility to 21st century technologies as reasons that they are looking more kindly on, for example, European, Chinese, and Canadian portfolio elements. Uncertainty regarding PTO examination norms and PTAB decisions, as well as apparently inconsistent panels of the Federal Circuit, have reportedly made it more difficult to value U.S. patent assets than those of other jurisdictions. The fact that the Supreme Court in the Oil States case is considering whether PTAB review of issued patents is even constitutional gives yet more pause.

Continue Reading Did You Hear About the Statistician Who Drowned in a Lake With an Average Depth of Two Feet?

This third article in the “Surviving Alice” series[1] examines how the USPTO’s Patent Trial and Appeal Board has responded to the U.S. Supreme Court’s June 2014 Alice decision[2].  It also shows how applicants can use the PTAB’s recent decisions to substantially increase their chances of success before the board.  We look at appeals coming out of the USPTO’s business method work groups 3620, 3680 and 3690. Applicants have had a difficult time getting business method patents allowed since Alice.  The Alice decision firmly established the two part “Alice/Mayo test” as the standard for determining whether a patent’s claims were statutory under 35 U.S.C. 101.  The two steps in the Alice/Mayo test are:

  1. “Determine whether the claims at issue are directed to a patent-ineligible concept” [3](e.g. abstract idea or fundamental economic practice); and
  2. If the claims are directed to a patent–ineligible concept then “search for an ‘inventive concept’-i.e., an element or combination of elements that is ‘sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself. “[4] (e.g. an improvement to another technology)

The business method work groups[5] at the USPTO implemented the Alice/Mayo test right after the Alice decision.  Allowances in some work groups (e.g. 3690 finance) plunged by a factor of 10 within a month of the decision.  Even three years later, there is still over a 90% chance that an office action on a business method patent application will have a 101 rejection[6].  In response to these repeated § 101 rejections by the examiners, many applicants have appealed their rejections to the PTAB.  We are just now seeing these appeals being decided by the board, and overall the results have not been good for applicants.  Only about 20% of the 101 rejections are being reversed.  Nonetheless, we are gaining a significant and rapidly growing body of PTAB decisions which we can learn from.  These decisions[7] are discussed below. Continue Reading Surviving Alice with an Appeal

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

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 Federal Circuit’s recent decision in McRO has been interpreted by many in the patent community as a further signal that the so-called “pendulum” is swinging back to a more favorable position for patentees.  There is some superficial evidence of this possibility.  Let’s look at the numbers. September 2016 was the first time since Alice that the number of federal court decisions finding eligible subject matter (16) exceeded those finding ineligible subject matter (13).  Those sixteen decisions also mark the highest number of eligibility decisions in a single month.  The most significant contribution to the switchover is that only two motions to dismiss under § 101 were granted in September, compared to nine that were denied, the largest gap since March 2016 (6 granted, 10 denied). Continue Reading AliceStorm Update for Fall 2016

Patent eligibility is not the only area in which the Federal Circuit’s rulings have impacted software patents.  The Court has also altered course in handing means-plus function claims in several recent cases including Eon v. ATT and Williamson v. Citrix. To learn how these rulings will effect software patents, your company’s IP portfolio and your overall business, please join me next week in a webinar hosted by the Intellectual Property Owners Association on Algorithms and Software Patents: USPTO and Litigation Perspectives, on Tuesday, July 14, at 2:00pm ET.   Carolyn Kosowski of the USPTO’s Patent Legal Administration at the USPTO will present the Office’s current framework for examining means-plus function claims, after which I and Douglas Luftman, Vice President of Innovation Services and Chief IP Counsel for NetApp, will offer the perspective of patent prosecutors and in house counsel.

 

Click here to register.

 

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

Today Fenwick & West launched a new website on which users can easily browse the Post-Alice decisions of the PTAB, the Federal Circuit, and the district courts to see how the law on patent eligibility is evolving. The purpose of this site is to allow those who want to learn more about the subject to easily browse cases and locate decisions that may be of interest to them, as well as to compare decisions involving different types of inventions and coming from different tribunals. We welcome comments from users on how we can grow this site to be of greatest use to the community.  

This is the second such website Fenwick has produced, the first being devoted to decoding PTAB decisions. Patent law continues to change week-by-week, and we want to make it as easy as possible for people impacted by those changes to best understand them. 

Check back on these sites frequently, as our team updates the contents regularly.

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 of hundreds of thousands of patents.” Since the U.S. Supreme Court affirmed that decision in June, it is now becoming clear that both courts and the US Patent and Trademark Office are treating the Alice decision as having changed the law on what types of inventions are eligible for patent protection.

The panel will explain this perceived change and offer practical suggestions for steering clients through these shifting seas, including:

  • How Alice has impacted patent applications at the USPTO, Covered Business Method post-grant proceedings at the PTAB, and invalidity arguments in district court
  • What the USPTO, district courts, and the Federal Circuit have done with the vague tests articulated by Alice regarding “abstract ideas” and “inventive concept”
  • What kinds of applications and patents are most vulnerable
  • What patent owners and applicants who are at risk can do to shore up their IP protection

November 11, 2014
12 – 1:30 pm PST 
Fenwick & West LLP, Mountain View

To register, click here.

Hosted by PAABA, ITechLaw and Fenwick & West LLP. CLE credit available.