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Alice decision continues to crush software patents

9/7/2015

 
Alice Corp. vs. CLS Bank Int'l (2014) is really the Dred Scott of patent law when it comes to software patents.   You can certainly find a handful of academics, government agents, and other cheerleaders in full support of this decision, arguing that the position of software patents has actually been strengthened by Alice because the Supreme Court of the United States (SCOTUS) did not categorically prohibit software patents when it had every chance to.   

Let's return to planet Earth.  Since Alice was decided, the rejection rate of patent applications in USPTO Technology Center 2100 (the Technology Center responsible for handling software patents) has surged to over 70%, which mirrors a surge in rejection rates of issued patents at district courts and at the Federal Circuit [1].  Many officials/agents of the USPTO, the Patent Trial and Appeal Board, and the Federal Circuit have taken the Alice decision to mean that software which does not improve the performance or capabilities of some tangible item/hardware device is nothing more than an "abstract idea," and since "abstract ideas" are ineligible for patent protection, it follows then that such software is ineligible for patent protection. 

In Alice, the SCOTUS was very much bothered by the fact that the technological steps at issue were "purely conventional." However, whether the claimed steps were conventional (i.e., whether they were already known by persons of ordinary skill in the art at the time the invention was made) was really a 35 U.S.C. 102 analysis (novelty), not a 35 U.S.C. 101 analysis (statutory eligibility).  Many, if not most legal scholars who have reviewed Alice agree that the SCOTUS conflated two distinct legal issues in rendering this decision.  One comment in particular stated that if this shoddy legal analysis had been presented on a law school final exam, that law student who wrote it would receive (and justifiably deserve) an F in Patent Law.   

What is more mind-numbing is that both parties in Alice specifically asked the Court to not issue a broad ruling which might have a binding effect on all patents (presumably, because both parties held other patents that they did not want to jeopardize).  Instead, both parties requested the Court to limit the scope of its decision to the single patent at issue in this case. Nevertheless, the SCOTUS took it upon itself to issue a broad ruling affecting all patents. 

For the last twenty years, there was never any real issue by U.S. Congress or the courts as to whether software should be deemed patent eligible.  As long as your process steps were tied to a machine or device, or stored within a computer readable medium (i.e. memory) you had satisfied your 35 USC 101 requirements.  As IP Watchdog points out, software is mentioned throughout Title 35 as well as in the America Invents Act of 2011 [2].  It's clear that Congress intended software to be patent eligible.   

And yet instead of looking at Congress's own language in Title 35 and in the America Invents Act, instead of relying on precedent/the doctrine of stare decisis, the SCOTUS instead decided to double-down on a new legal framework for determining patent eligibility, first announced in another poorly decided case, Mayo Collaborative Servs. vs. Prometheus Labs.  And not only did the SCOTUS fail to provide any guidance on their own standard regarding when an invention should be deemed to be directed to an "abstract idea", they went a step further and explained how merely claiming conventional steps run on a general purpose computer or on a computer readable medium would not transform statutorily ineligible claims into eligible ones.

Of course, this runs contrary to both common sense and better reasoned jurisprudence. No one with a straight face (except apparently, this unanimous SCOTUS) would argue that a machine that functions for its intended purpose is merely an "abstract idea."  Rather, a functioning machine is a physical, tangible object -- that is about as "concrete" as you can get.   A computer with functional code stored inside its memory is likewise "concrete."  Quite frankly, in does not matter that the code itself can be broken down into a series of steps that a human can perform mentally, since that would not suddenly transform a concrete device into "an abstract idea."  Indeed, you can break down a great number of functional circuits or devices into a series of steps that can be performed mentally.   A calculator, for example, has the ability to add two numbers together.  Human beings also have the ability to add these same numbers inside of their heads.  The fact that human beings can add these numbers in their head does not somehow make the calculator "an abstract idea."    

Even creating a distinction between software and hardware is a fool's errand, because logic for performing a function can be implemented as a series of circuits (hardware), or it can be implemented as compiled code (software).  In fact, it has often been stated by various engineers and computer scientists that any logic you can implement as hardware, you can also implement as software, and vice-versa.  Of course, not a single one of the nine Supreme Court Justices has any training in electrical engineering or computer science, so perhaps it is little wonder why they would find distinctions where none exist in the first place.
 
The original prohibition on patenting "abstract ideas" was tied with the fear that thoughts could be patented, and that one day people would be liable just for practicing certain mental steps.  However, once thoughts are embodied into a physical device, or instructions are stored within a computer readable medium such as memory, they are no longer within the realm of "abstract ideas".  That's really all there is to it; that should have been the end of the 101 inquiry.  Any concerns about the "conventionality" of the claimed steps, while highly relevant to a 35 U.S.C. 102 novelty analysis, have absolutely no place in the 35 U.S.C. 101 statutory eligibility analysis.
    
Needless to say, in Alice the SCOTUS found conventionality highly relevant in their 35 U.S.C. 101 analysis, and used that as a basis for arriving at their conclusion that the claims at issue were directed to an "abstract idea".  Thus, with a single stroke of his pen, Justice Thomas (with the full support of all other eight other Supreme Court Justices) completely wiped out hundreds of thousands of patents, trillions of dollars of corporate investments dedicated to preparing, acquiring, licensing, and maintaining such patents, reversed dozens of years of jurisprudence which had generally found software to be patent eligible (including the time-tested "Beauregard" claims), went against the explicitly stated intent of Congress in Title 35 and the America Invents Act of 2012, and introduced a massive vortex of uncertainty where none existed before.  

On top of this, patent practitioners now have to get used to the fact that the SCOTUS can reverse its own course on the drop of a dime.  That is to say, a patent which validly satisfies all of the technical and legal requirements for patentability on the day it is filed may be invalidated at any point in the future if the SCOTUS ever decides to "change its mind" and require a heightened standard. The requirements for establishing a patent are therefore a moving target.   And there is a asymmetry here, for while the SCOTUS can apply new standards at any point in time based upon its own capricious whims, patent law prohibits patent applicants from supplementing their applications with "new matter" which might otherwise satisfy newly minted requirements subsequently issued by the SCOTUS.

Also, if the SCOTUS ever wanted to reverse itself sometime in the future, it remains an open question as to what will happen to all these software patents which were wrongly invalidated in the wake of this Alice decision.  Would this amount to a 5th amendment "taking" of property without just compensation, that is to say, would the U.S. government be on the hook for trillions of dollars in unrealized royalties?  Can claims that were once barred due to invalidity later be reinstated after such a correction?   In all likelihood, the holders of these patents will not be able to find any recourse in the wake of this Alice decision.

Your tax money hard at work.

[1] - Bilskiblog, "#Alicestorm:  The Summertime Blues Continue," Robert R. Sachs, August 29, 2015, 
[2]-  IP Watchdog, "A Software Patent Setback:  Alice vs. CLS Bank," Gene Quinn, January 9, 2015

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