Bilski Blog

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

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)  

An Exchange with Michael Risch: Do the Facts Matter in Patent Eligibility?

By: Robert R. Sachs

In my recent analysis of the Alice decision, I wrote the following:

In Benson, the Court believed (wrongly it turned about, but that’s beside the point) that the claims covered the basic algorithm for converting binary coded decimal to binary, something that appeared “fundamental” to the domain of computer science and mathematics. Similarly, in Mayo, the Court believed (again, wrongly, but again that’s beside the point) that Prometheus’s claim covered a so-called “law of nature,” something “fundamental” to the domain of medicine and biology. (It’s ok that the Court was wrong on the facts in Benson and Mayo, because what really matters for the future application of § 101 is the methodology and underlying theory, not the specific facts.)

Michael Risch, Professor Law at Villanova School of Law, responding to the last sentence commented that:

This can't be right. Being wrong on the facts of what is abstract or natural half the time is the core of the problem! This is where lower courts will screw up!

Michael is of course right that being wrong on the facts in patent cases, including patent eligiblity is the core problem, and that the lower courts are likely to decide an eligiblity question incorrectly if they "screw up" the facts.

Ultramercial back to Federal Circuit. Accenture & Bancorp done

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.