Despite what the United States Patent and Trademark Office suggested in their initial guidance to patent examiners, the Supreme Court’s decision in Alice v. CLS Bank has substantially changed the prosecution landscape for computer implemented inventions (i.e., software).
At least initially, the USPTO guidance to examiners seemed extremely patentee friendly. In a memo to the patent examining corps, the USPTO explained that the reason Alice’s claims were determined to be patent ineligible was because “the generically-recited computers in the claims add nothing of substance to the underlying abstract idea.” The USPTO then went on to point out to patent examiners that there is no new category of innovation that is patent ineligible, nor is there any new or special requirements for the eligibility of either software or business methods. Deputy Commissioner for Patent Examination Policy Andrew Hirshfeld explained: “Notably, Alice Corp. neither creates a per se excluded category of subject matter, such as software or business methods, nor imposes any special requirements for eligibility of software or business methods.”
Hirshfeld also explained that there is now a slight change in the way applications are to be examined when claims involve abstract ideas. Essentially, it was said, Alice stands for the proposition that the same analysis should be used for all types of judicial exceptions and the same analysis should be used for all categories of invention. Still, even recognizing this shift in analysis, Hirshfeld told examiners: “[T]he basic inquiries to determine subject matter eligibility remain the same as explained in MPEP 2106(I).” (emphasis added). Therefore, this initial guidance clearly took the position that nothing has changed from a substantive law point of view as far as the USPTO was concerned.
The United States Supreme Court recently issued two much-anticipated decisions on fee shifting in patent litigation. While any cases issued by the Supreme Court are important and relevant, these two decisions have the potential to significantly impact pending patent legislation in Congress. Fee shifting has been articulated as one of the chief driving forces for more patent legislation so quickly after the massive America Invents Act (AIA) changes.
The decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc., was the primary decision because the Court explained that the ruling formed the basis of their decision in Highmark, Inc. v. Allcare Health Management System, Inc. In other words, the Supreme Court decided Octane Fitness and then applied that decision, together with the new law, to resolve Highmark.
In a nutshell, with Octane Fitness, the Supreme Court changed the law as previously announced by the Federal Circuit to make it easier for district courts to sanction plaintiffs for bringing meritless patent infringement suits, while Highmark makes it more difficult for the Federal Circuit to reverse district court decisions under the statute. Both cases were closely watched by both the private sector and Congress, which has been pursuing efforts to quash the perceived problem of patent cases filed by non-practicing entities.
On Monday, March 31, 2014, the United States Supreme Court held oral arguments in the much-anticipated software battle between patentee Alice Corporation, the petitioner, and CLS Bank, the respondent who was victorious below thanks to an equally divided Federal Circuit.
Oral arguments are but one piece of the overall puzzle, so we can easily make too much of their importance, but they are the only way the concerned public can see behind the curtain at the Supreme Court. By many accounts, oral arguments are the least significant piece of the puzzle with many, if not most, Justices relying most heavily on the briefs. Indeed, during oral argument, Justice Breyer specifically stated that he had read each of the amici briefs, which seems a near herculean task given the number of other cases the Supreme Court considers and the sheer volume of briefs filed in this case.
Even with oral arguments being less important than they may seem, there will be all kinds of attempts to predict what the likely outcome will be based on this sneak peek. Of course, it is impossible to know how a Justice will decide based on the questions asked during oral argument. Case in point — did anyone think the Chief Justice would rule in favor of Obamacare? But for now, the oral argument transcript is all we have to rely on. So with that in mind, here are three things that piqued my interest during the oral arguments.
On March 31, 2014, the United States Supreme Court will hear oral arguments in a case that could determine the fate of software patents in the United States. Recently, IBM filed an amicus brief at the United States Supreme Court in the case of Alice Corporation Pty. Ltd. v. CLS Bank International. While many attorneys contributed to this brief, former Solicitor General of the United States Paul D. Clement is the Counsel of Record on behalf of IBM.
I think it is fair to say that the IBM brief can be summarized as follows: ‘The abstract idea doctrine is unworkable.’ Bravo! If the Supreme Court cannot define the term “abstract idea,” which they have never done, how can it be at all appropriate for the Court to apply the doctrine as if it has meaning? At least with respect to software, there is also no uniform application of the patent laws, which at least conceptually should raise concerns of disparate treatment of those similarly situated.
Something needs to be done to once and for all acknowledge that software is patent eligible. Even having to say that and hope it is what ultimately happens is truly saddening in the year 2014. Software is all around us and empowers practically everything, and according to a Government Accountability Office (GAO) report from August 2013, somewhere between 50% to 60% of all patent applications filed deal in some way with software. Software is the very backbone of innovation and the fact that we have to wonder whether it is patent eligible more than 46 years after the first software patent issued is really an indictment of the judicial system as it relates to patent law and jurisprudence.
To many, Soverain v. Newegg is just another obviousness dispute; so why would the Supreme Court get involved? It is really more than your typical obviousness dispute, though. Increasingly, patent claims are held valid in a variety of different forums — they are initially granted, they are litigated in district court and at the ITC, and litigated again and again at the USPTO. In some instances, after all that litigation, and even after multiple successful reexaminations in favor of the patentee, the Federal Circuit will find the claims invalid as being obvious.
How is this the case? That is a good question. It stems from the fact that obviousness, which is supposed to be a mixed question of fact and law, is reviewed de novo by the Federal Circuit. It seems the Federal Circuit, which as an appellate court is not well-equipped to deal with determining facts, reviews the underlying facts de novo as well.