Bilski Blog

Comments on USPTO’s Interim Patent Eligibility Guidance (Part I)

By: Robert R. Sachs 

 On December 16, 2014 the USPTO issued its 2014 Interim Guidance on Subject Matter Eligibility. In the introduction, the Guidance states that it “is responsive to the public comments received pertaining to the March 2014 Procedure and the June 2014 Preliminary Instructions.”  The Office received comments from forty seven submitters in response to the Preliminary Instructions.[1]

To its credit, the Office responded to a number of the concerns raised by the submitters. Most importantly, as noted at the January 21, 2015 Patent Eligibility Forum, the Interim Guidance altered the explanation of the Mayo test from the Preliminary instructions to state that “the application of the overall analysis is based on claims directed to judicial exceptions (defined as claims reciting the exception, i.e., set forth or described), rather than claims merely “involving” an exception.”  The Office also provided succinct explanations of some of the Supreme Court and Federal Circuit eligibility cases, and most importantly, included a treatment of DDR Holdings, LLC v. Hotels.com, L.P., the first post-Alice Federal Circuit case to find patent eligible subject matter in computer-implemented inventions.

In Parts 1 and 2, I will focus on the analyses and recommendations that were raised by a significant number of submitters and that the Interim Guidance did not adequately address. In Part 3, I will analyze the various ones of the patent eligibility case summaries and examples provided by the USPTO, and offer some overall observations about the Office’s approach to guiding the examiners through the “murky morass” of Section 101.[2]

#Alicestorm: Patent Invalidations and USPTO Practice After Alice

By: Robert R. Sachs

 The Pineapple Express storms that hit California last December were the largest since January 2008.  The joke going around the Bay Area was that the first thing San Franciscans do when a big storm is coming is think up a new hashtag; #hellastorm apparently took top place.

Looking at the number of patents that have been invalidated in the six-plus months since the Supreme Court’s decision in Alice Corp. v. CLS Bank [1], the only thing that adequately describes the situation is #Alicestorm. 

Since Alice was issued on June 19, 2014, here’s what the Federal courts have done:[2] [3]

 

New Federal Circuit judges Taranto (on panel in buySafe, Content Extraction, Planet Bingo) and Hughes (on panel in buySafe, Digitech, Planet Bingo) appear to have aligned with judges Prost, Bryson, Dyk, Lourie, Reyna, and Mayer in taking an aggressive and restrictive stance on patent eligibility.

The district courts have been active as well:

The District of Delaware accounts for eleven of the lower court invalidity decisions, with the Central District of California close behind with ten. 

December, 2014 was particularly “stormy”: 11 patents (858 claims) invalidated compared to 4 patents (159 claims) not invalid.

The Day the Exception Swallowed the Rule: Is Any Software Patent Eligible After Ultramercial III?

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.

The Alice Guidance Categories of Potential Abstract Ideas

The Alice Guidance lists four example categories of abstract ideas:

• fundamental economic practices
• methods of organizing human activities
• an idea of itself (sic), and
• mathematical relationships/formulas. 

Each of these examples has supporting footnotes to the Alice decision and other Supreme Court cases.  But it should be understood that these categories are for potential Abstract Ideas.  That is, something in one of these categories may or may not be an Abstract Idea. Taken superficially and out of context, some of these examples sweep too broadly, and will be too easily misused by examiners.  

Analysis of Preliminary Examination Instructions in view of the Supreme Court Decision in Alice Corp. v. CLS Bank.

By: Robert R. Sachs

On June 25, 2014, just six days after the Supreme Court decided Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014), the USPTO  issued its Preliminary Examination Instructions (“Guidance”) in view of the case.   Subsequently, the Office asked for public comments on the Guidance.   Over forty companies, associations, law firms and individuals submitted comments, including myself.  This series of posts is based on the comments I submitted to the Office.

In my view, the Guidance does not correctly interpret the Supreme Court’s decision, and does not provide specific guidance to the 7,000 examiners who will have to implement them on a daily basis.  The Court’s decision was not written as a manual for how examiners are to evaluate patent applications, and so simply quoting and paraphrasing the decision (along with scrupulous footnoting) is not sufficient to provide a cohesive, workable framework for the examination of patent applications, particularly for computer implemented inventions.  The core problem remains that examiners will be left to their own subjective evaluation and opinion of the patent eligibility of the claims before them.  Already, the patent community is observing very different approaches from different examiners.  This lack of uniformity leads to increased costs and delays in the examination of patents, as well as increased uncertainty by innovators as to the eligibility of their inventions in technologies that have been traditionally considered patent eligible.

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)  

Alice, The Illusory Death of Software Patents

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....

Alice v. CLS: More Questions Than Answers

By: Robert R. Sachs

Alice Corp. v. CLS Bank is out and the result is not unexpected:

1) Alice's patents for computer-implemented methods and systems for financial risk intermediation are invalid.

2) The patents claim abstract idea, but the Court will not "labor to delimit the precise contours of the "abstract ideas" category." That leaves unanswered the primary problem that has plagued the lower courts, identifying in a particular case whether the claims recite an abstract idea. As Judge Lourie said in his plurality opinion below, "deciding whether or not a particular claim is abstract can feel subjective and unsystematic, and the debate often trends toward the metaphysical, littered with unhelpful analogies and generalizations." CLS Bank v. Alice Corp, 717 F.3rd 1269, 1277. Today's decision only continues the trend towards glosses and legal mysticism, with the Court expressing concern over patents on the "building blocks" of "human ingenuity" or the "modern economy," or covering "fundamental practices" "long prevalent" in the field.  What is a "building block"? What is "fundamental"? How is a court or a patent examiner supposed to figure that out?

Fenwick & West and George Mason University Patentable Subject Matter Roundtable Recap

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. 

Of Pies and Patent Eligibility: A Dialogue

By: Robert R. Sachs

You are heading to Grandma’s house for yet another family gathering. Upon entering the front door, you are belted by a thunderclap of the smells of mothballs, yellowed plastic sofa covers, cat hair and foot powder. As you regain your bearings, the mellifluous under notes of Grandma’s apple pie reach you: tiny, moist, fragrant, individually encapsulated particles of Granny Smiths, butter and sugar, all borne upon the dry, hard air like foam upon breaking waves. You beeline to the kitchen, bypassing the hubbub of family, friends and distant cousins congregating in the living room.

Alice Corp. v. CLS Bank Amicus Briefs Filed, Reckoning Day Approaches

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

TESLaw Lecture Series Roundup: A Meeting of Patent Minds

By: Robert R. Sachs

As mentioned in my September 13 post, Fenwick sponsored UC Davis’ fifth annual Lecture Series in Technology, Entrepreneurship, Science and Law (TESLaw) on September 27, 2013. A video recording of the event is available at the following link: On the Frontier of the Future: Innovation and the Evolution of Patentable Subject Matter.   

This year’s program featured spirited discussion among scholars and practitioners in the patentable subject matter debate, with a particular focus on the software and life sciences spaces. The panelists addressed problems in the Supreme Court’s approach to laws of nature and abstract ideas, and discussed different ways that the courts could address the issue. At the end of the life sciences panel, I questioned panelists Kevin Emerson Collins and Rebecca Eisenberg as to why they felt it necessary to reinterpret Prometheus as talking about per se categories, rather than taking it at face value for being about laws of nature, in which event the Court should be cognizant of what scientists and philosophers of science think about laws of nature. See the discussion starting at 01:20:40. I moderated the afternoon panel on abstract ideas, which panelist Pam Samuelson called a “feisty debate.” 

It has truly been an honor for my Fenwick partners and I to co-host this symposium with UC Davis over the past five years, and we look forward to collaborating with the university in the future.

Trading Technologies Seeking Co-Signers for Amicus Brief in Support of Alice Corporation

By: Robert R. Sachs

As many of you know, Alice Corp. filed for certiorari from the Federal Circuit’s en banc decision in CLS Bank v. Alice Corp.  The deadline for amicus briefs in support of the petition is October 7, 2013. Trading Technologies will be filing an amicus brief in support, and is looking for additional companies to sign on to their brief. Their brief does not take a position on the merits, but argues that “several important and closely-watched decisions of the Federal Circuit have further confused the law in this area,” and that “market participants are faced with a legal landscape that is uncertain and unmanageable.”

If you are interested in supporting Trading Technologies’ brief, please contact Steve Borsand at steve.borsand@tradingtechnologies.com or Jay Knobloch at jay.knobloch@tradingtechnologies.com. 

Copies of their brief and their explanatory cover letter are linked below.

Trading Technologies Brief

Trading Technologies Cover Letter

Software Development and the Use of Abstractions

By: Robert R. Sachs

The process of developing software typically involves the use of abstractions of concrete concepts to describe the operations performed by a computer and objects of such operations. Some software abstractions are so familiar that we do not even realize that we are dealing with them: desktop, window, file, folder, document, icon and button. Is there really a “desktop” in a computer? Of course not, but we readily accept the use of the desktop metaphor, as an abstraction of a concrete concept because it serves useful functional and structural purposes. We use the computer desktop as a place (structure) to organize (function) our files and folders, along with our applications, based on how we use a physical desktop. Similarly, we accept the abstraction of folder as a place to store documents, another abstraction.  But even though these are abstractions, they are all concrete and metaphorical in nature.

On the Frontier of the Future: Innovation and the Evolution of Patentable Subject Matter

By: Robert R. Sachs

It's been a busy year for Section 101, with the Myriad, CLS, Ultramercial and Guidewire decisions, along with the end-of-summer certiorari petitions of Alice Corp. and WildTangent to the Supreme Court to resolve the apparent “deadlock” in the Federal Circuit. No “may” about it: We in fact live in interesting times. 

Thus, it's the perfect setting for Fenwick & West's fifth annual Lecture Series in Technology, Entrepreneurship, Science and Law, held in conjunction with UC Davis School of Law. The event, “On the Frontier of the Future: Innovation and the Evolution of Patentable Subject Matter,” will be held on Friday, September 27, 2013, 9:30 a.m. - 3:30 p.m., at UC Davis School of Law. We will be taking an in depth look at these legal developments, along with their practical and strategic impacts. Keynote speakers include David Kappos (Former Director of the USPTO) and Chief Judge Randall Rader of the Federal Circuit. We will have two panels, one focusing on biotechnology and one focusing on software and business methods.

I will be moderating the software/business methods panel, which will include Michelle Lee (Director USPTO Silicon Valley), Mark Lemley (Stanford), Pam Samuelson (Berkeley), Earl Rennison (Trovix) and Steve Vassallo (Foundation Capital). The biotech panel will be moderated by Peter Lee (UC Davis School of Law) and will include my partner Andrew Serafini, Kevin Collins (Washington Univ. School of Law), Rebecca Eisenberg (Univ. of Michigan School of Law) and Mat Gordon (Myriad).

Without a doubt this will be an engaging and insightful discussion of many of the legal, business and technological issues involved in the fundamental patent law question of our time: What are the boundaries of patent-eligible subject matter?

Hope to see you there.

Applying Can Openers to Real World Problems: The Failure of Economic Analysis Applied to Software Patents

By: Robert R. Sachs

A shepherd is tending a huge flock of sheep in a field beside a country road. A man comes walking down the road and approaches the shepherd. "I bet you $100 against one of your sheep that I can tell you the exact number in this flock." The shepherd thinks it over; it's a big flock, so he takes the bet. The man pulls out a notepad and looks the flock over, assessing how wide and how deep it extends into the field. He retrieves a small thermometer and barometer from his briefcase and measures the temperature and air pressure. He consults some tables in his notepad, jots some equations and then looks up at the shepherd. "973," says the man. The shepherd is astonished, because that is exactly right. "I don’t know how you did it, sir, but you are spot on,” says the puzzled shepherd. “I'm a man of my word; take an animal." The man picks one up and begins to walk away. "Wait," cries the shepherd. "Let me have a chance to get even. Double or nothing that I can guess your exact occupation." The man is intrigued by this proposition and nods in assent. "You are an economist for a government think tank," says the shepherd flatly. "Amazing!" responds the man. "You are exactly right! But tell me, how did you deduce that?" "Well," says the shepherd, "put down my dog and I will tell you."

Rader’s Olive Branch: Ultramercial II Resolves the Judicial Deadlock of CLS Bank

By: Robert R. Sachs

The Federal Circuit’s en banc decision in CLS Bank Int’l v. Alice Corp., __  F.3d __, No. 2011-1301, 2013 WL 1920941 (Fed. Cir. May 10, 2013) was roundly criticized as a “nightmare,” further cementing the impression that the court was confused and in conflict over the requirements of patent eligibility under 35 U.S.C § 101. The six non-precedential opinions were seen as leaving patent applicants and owners alike without guidance, let alone predictability, as to whether their patents were valid. Alice Corp.’s patents covered computer-implemented methods and systems for a third-party intermediary to ensure real-time settlement of currency exchange transactions between counterparties. Judges Lourie, Dyk, Wallach, Reyna and Prost appeared to take a hard stand against such software-based financial inventions, finding that neither the method nor system claims were patent-eligible. Under Lourie’s “integrated approach,” the patent claims lacked any “meaningful limitations” and thereby preempted all “practical applications” of the abstract idea of third-party settlement. Taking a middle position, Judges Rader, Moore, Linn and O’Malley agreed that the method claims were not patent-eligible, but argued that the system claims were patent-eligible because they contained limitations that were not necessary and inherent in the abstract idea. At the other end of the bench, Judges Linn and O’Malley argued that the method claims were indeed patent-eligible because they included limitations that prevented the claims from being “unduly preemptive.”

The Normative Stance of Patent Eligibility

By: Robert R. Sachs

Judge Mayer, along with Judges Dyk, Prost, Lourie, are "Normativists," who see § 101 as defining what inventions and claims "ought" to be. The Normative approach imposes an extrinsic value judgment—from a source unspecified—as to what kinds of innovations count as "inventive" and what kinds do not. This approach is of a piece with the Supreme Court, which holds in Prometheus that a process "that focuses upon the use of a natural law also contain other elements or a combination of elements, sometimes referred to as an "inventive concept," sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the natural law itself."

In particular, the Normativists believe that the use of computers to deliver useful "human" functionality has no inherent inventive value per se, that there is no "human ingenuity" in designing computerized solutions. This view is based in part on the view that computers are so common, so woven in the modern life, using them to do something useful is not inventive.

CLS v. Alice: The Federal Circuit at a Jurisprudential Deadlock

By: Robert R. Sachs

dead·lock  [ded-lok]

    noun

    1.  a state in which progress is impossible, as in a dispute, 
    produced by the counteraction of opposing forces; standstill; 
    stalemate: The Federal Circuit has reached complete deadlock 
    in its Section 101 jurisprudence.

The Federal Circuit’s decision to take CLS Bank v. Alice Corp., (No. 2011-1301, May 10, 2013), en banc was expected by many to result in a significant decision on eligibility of software for patent protection, setting forth some objective standard for evaluating whether claims for software-implemented inventions are abstract ideas. Instead, we have a court that is radically and perhaps hopelessly split in “judicial deadlock.” As Judge Newman laments “In deciding to rehear the patent dispute between CLS Bank and Alice Corporation, the en banc court undertook to remedy distortions flowing from inconsistent precedent on section 101. This remedial effort has failed.” “With today’s judicial deadlock, the only assurance is that any successful innovation is likely to be challenged in opportunistic litigation, whose result will depend on the random selection of the panel.” Newman, dissent at 2.

While seven judges agreed that the method claims in suit were not patent eligible, they did so for conflicting and incompatible reasons. And the court was evenly split (5-5) on whether the claims for a computer system implementing the method were patent eligible. Judge Lourie, joined by Judges Dyk, Wallach, Reyna and Prost, attempts to set forth an “integrated approach” to Section 101 that synthesizes all of the Supreme Court’s decisions into a nice complete package. As expected, the decision is seen by some as undermining the legitimacy of software patents, and a nightmare for patentees.

The Confusion between Abstractions and Abstract Intellectual Ideas

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.