07.23.17

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Alice/U.S.C. § 101 is a Done Deal, Meaning Software Patents Are Effectively Dead in the US

Posted in America, Courtroom, Patents at 4:32 am by Dr. Roy Schestowitz

The US Supreme Court has meanwhile moved on to tackling patent trolls and won’t revisit patentability of software

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Summary: A look back at this summer’s patent cases where software patents are consistently (almost without exception) invalidated by courts, owing to § 101 (U.S.C./SCOTUS/Supreme Court)

THE past few months brought a lot of good news from the US. Not only did the US Supreme Court rule to narrow patent scope; US courts also invalidated quite a few software patents; appeal boards did the same (at record numbers). Patent trolls’ fate seems gloomy, more so after TC Heartland. Even if the USPTO continues to grant dubious patents, the ability to enforce these is vastly reduced now.

We have decided to catalog or document some of the recent news that we previously lacked time to cover. These are clustered by topic/theme below.

Patent Law Firms’ Faked Optimism

Nicola Borthwick from Charles Russell Speechlys recently wrote about “[t]he term “as such” [which] has the effect that an invention is not necessarily excluded from patent protection” (for example in the EPO). Here is what she said:

The term “as such” has the effect that an invention is not necessarily excluded from patent protection just because it contains an element which cannot be patented. So, for example, if the application of the software contains a technical feature which provides a technical solution to a technical problem, then it may be patentable. Likewise, a technical invention which results in an improvement in business efficacy will not necessarily be excluded as a business method.

These are just the classic loopholes we have seen in Europe, India, and New Zealand. In the US too, more so after Alice, applicants will resort to such loopholes. But will these help when judges and technical expert witnesses come forth? We don’t think so.

The matter of fact is, legal firms try to reassure clients that they can still pursue software patents, even if the resultant patents are weak and likely bunk (easily-invalidated).

We have written a lot about this before. Any advice from such firms should be taken with a barrel of salt (if taken at all). Their interest lies in patent maximalism, not potency. They profit either way; even if the patents get invalidated in court proceedings…

In a sense, weak patents are good for patent law firms and especially for prosecutors because those are the patents which would be challenged (by the defendant) in a court, necessitating heavy legal fees (their toll).

Courts in the US Invalidate Software Patents

As noted above, once properly challenged (the higher the court or the greater the number of appeals, the better) software patents are rarely upheld. Even in the US, the original home of software patents.

It’s rather amusing to see how patent lawyers’ sites try to twist or spin stories; Take this new one for example. The headline says “Judge Kills Electrical Monitoring Patents Under Alice,” but judges don’t kill, they simply check the law and say that these software patents are bunk. The patent microcosm has long attempted to associate justice with killing, death, and assassination (even calling PTAB a “death squad”). We responded to these gross mischaracterisations many times before.

Here is what the body of the report says:

A California federal judge has ruled parts of four Power Analytics Corp. patents covering software for monitoring electrical systems are invalid under the Supreme Court’s Alice test, resolving part of a patent infringement and antitrust case it brought against competitors.

In a decision Thursday, U.S. District Judge John A. Kronstadt granted a motion from Operation Technology Inc., which does business as ETAP, and Schneider Electric USA Inc., finding the asserted claims of four Power Analytics patents were invalid.

No loaded language there like “kills”, so why the dramatic headline? As we shall show later, there’s a theme here; they try to discredit judges who simply do the right thing, equating their ethics to ethics of assassins.

Misuse of language by the patent microcosm is a subject that merits broader debates; the military industry does similar things, especially at times of war, in order to ‘perfume’ the act of murder (with words like “defense”, “stability” and so on). A lot of that is very subtle and it has become so banal that people fail to see through the perception management tactics.

How about this report from 4 days ago? It speaks of “inefficient industry of patent development and focus on building products…”

What do they mean by “patent development”? They mean writing. There is no development of patents per se. There’s development; then there may be an application for a patent pertaining to that development.

How about this recent report about Tesla, which was openwashing using patents 3 years ago? It says this:

The strategy adopted by Tesla was to release all their cutting-edge software patents to the public domain…

It says software patents; Tesla did this around the same time of Alice (summer of 2014), so these patents were probably worthless or close to worthless anyway…

Going back to the “kill” theme, watch Patent Buddy (of the patent microcosm) carry on with his typical tweeting. As noted in the latest tweets from him (he blocked me for merely criticising software patents), software patents are generally “dying” (his term). Here is one example where he says: “US Pat 7988046, Vehicle violation enforcement system; Killed by Alice…”

“Invalidated” is the right term.

This is the new norm.

As this article from the end of May put it, “at the end of the day the validity of a lot of patents is questionable, especially software patents…”

Obviously.

Here is another one from Patent Buddy: “US Pat 7950570, Parking environment management system; Killed by Alice…”

Again that word: “killed…”

These are very bad times for software patents in the US, irrespective of USPTO grants.

Here is another recent example:

Patents Claiming Method for Parking Violation Enforcement Via Self-Release Booting System Invalid Under 35 U.S.C. § 101

The court granted plaintiffs’ motion to dismiss because the asserted claims of defendant’s parking enforcement patents encompassed unpatentable subject matter and found that the claims were directed toward an abstract idea.

Spot the pattern? We aren’t even ignoring cases that are contrary to this; they’re just so rare…

The US Supreme Court won’t be overturning or challenging Alice any time soon, i.e. software patent remain dead in the water for now. It’s a dark territory for a patent holder to explore.

Here is Patent Buddy again: “The S.Ct. [US Supreme Court] Refused to Hear the Broadband iTV Case Seeking a Definition of “Abstract Idea”: https://dlbjbjzgnk95t.cloudfront.net/0926000/926683/052217zor_4gd5.pdf”

Well, it seems safe to say that such cases are only ever upheld in rare circumstances/occasions; it would be a waste of the Supreme Court’s time to reassess them.

Another new example:

Federal Circuit Finds Claims Directed to Encoding and Decoding Image Data Patent-Ineligible

The Federal Circuit recently held in RecogniCorp, LLC v. Nintendo Co., Ltd. (Fed. Cir. 2016) that claims directed to encoding and decoding image data were not patent-eligible under 35 U.S.C. § 101. This ruling further highlights the evolving analysis of patent eligibility in the post-Alice era. This ruling may further provide guidance regarding the impact of patent claims and the specification when distinguishing between patent-eligible improvements to a computer and patent-ineligible abstract ideas under Section 101.

So why even bother with such patents?

Any news about software patents “surviving” (their term) a high court is put on a golden platter/pedestal by the patent microcosm; that has not happened in a long time.

Patent Law Firms Pay to Dominate the media

In some rare cases (very rare) the appeals staff (PTAB/appeal boards or appeals for short) overturn examiners’ decision to invalidate/reject software patents and watch how the patent microcosm ‘spams’ the media about it. It first pushed it as a paid press release in May and later. In July it did this yet again, spreading the same message as though it was shouting from the rooftops. The title was always the same and it was self-promotional (“Ex Parte Hafner Provides Clarity in Assessing Patent Subject Matter Eligibility for Software Patents”). It was posted again in July, for the third time, this time adding the text “Note: an Addendum has been added to this previously published article.”

“In Ex Parte Hafner,” it says, “the U.S. Patent and Trademark Office Patent Trial and Appeal Board (the “Board”) reversed the Examiner’s rejection that claims directed to an energy transaction plan were subject-matter ineligible.”

Did they really have to pollute the media for 2 months, with about 5 identical press releases (that we found in news feeds), just to say this? Such is the nature of the patent microcosm.

Back to Alice

As we said above, many software patents are being invalidated these days. Patently-O, a proponent of software patents, rarely writes about those, but here is an exception from May. “In this case,” it said, “the appellate court affirmed summary judgment that all of the asserted claims of five EasyWeb patents are ineligible under the Mayo/Alice interpretation of 35 U.S.C. 101 and therefore invalid.”

Well, good. The Mayo/Alice interpretation (or Section 101) has become so scary to these people that they lobby with full force against it (we’ll cover that in a separate post). Thugs, trolls and liars try to undermine a Supreme Court’s decision in order to bring software patents back and some sites go as far as stating “Alice Under Threat” in the headline.

We don’t think Alice is under real threat. Sure, there are attempts to rub if off from history and as the article notes, IBM plays a major role in this. To quote:

Claiming that patents promote innovation, he calls for legislation to deal with the issue, claiming that patents.

It is worth recalling that when IBM was belatedly granted a patent recently on an “innovation” that was by no means new when the application was made and is now entirely mundane, a system for out of office notification via email, it disclaimed the patent. Discarding Alice would re-open the door to such absurd anomalies and give a field day to patent trolls.

Let’s have some common sense when it comes to patents so that we can avoid litigation.

We intend to cover this lobbying separately as there is plenty that we have to show and say. We don’t think this lobbying will get them anywhere; even patent extremists like IAM don’t think so. They’ll carry on trying nevertheless.

“Patent-Eligible Software Under ‘Alice’” was the title of this recent article from lawyers’ media. It’s paywalled, so most people can only read the title. The title itself (alone) can almost qualify as “fake news” because it biases readers’ perception. That’s like saying “edible air”. Alice makes software patents ineligible, not eligible. This title is akin to “man bites dog”.

Pressing on, a proponent of sofwtare patents (not developer but attorney) says “patent eligibility nightmare under Alice continues…”

Nightmare?

No.

PTAB continues throwing out/yanking away software patents (which should never have been granted after Alice) and sites of the patent microcosm say this:

The PTAB held that the claims in Ex parte Quimby, Appeal No. 2016-004681 (June 2, 2017) were directed toward unpatentable subject matter. Of particular interest given the claim language, the Appellant was unsuccessful with arguments that 1) the claims do not disproportionately tie up the use of any underlying idea, 2) the claim provides an improvement in the technological field of mass spectrometry, and, 3) with respect to dependent claim 3, that the claims tied the mathematical formula with technological field of mass spectrometry analyte detection. (citing Research Corporation Technologies Inc. v. Microsoft Corp., 627 F.3d 859 (Fed. Cir. 2010)).

So that’s another “dead” (or “killed” by their language) software patent. PTAB did the “killing” this time. According to these new figures presented by IAM, large corporations too are enjoying the service of PTAB. To quote:

With almost 100 more reviews filed than its closest rivals, Apple clearly seems to be playing a numbers game – looking to see what it can make stick at the PTAB. It is possible to look at this data and wonder why some of these players, which have the deepest pockets and some of the largest legal teams in corporate America, aren’t performing even better. If the PTAB was simply about eradicating bad patents then perhaps they would as they might more carefully pick the patents they challenged. But as the IPR process has become ever more popular it has become a part of the market maxim that a bad patent is simply one being asserted against you.

CAFC opponent Professor Dennis Crouch belittles all this and when PTAB (together with CAFC for affirmation) ‘junks’ a patent he calls it “precedential, but low quality opinion.”

So CAFC is throwing away utterly rubbish software patents; Crouch continues to whine, as usual, being the patent maximalist that he is; he just hates such rulings and preaches to the choir of patent maximalists.

Crouch, on another occasion earlier this month wrote this: “The Federal Circuit has denied OptumInsight’s petition for writ of mandamus on privilege waiver.”

He is generally focusing (more so nowadays) on the shaming of CAFC into patent maximalism. We therefore need to keep an eye on what he’s writing.

Now watch this recent report that says:

On May 23, 2017, the District Court for the Eastern District of Virginia (“District Court”) denied a motion for summary judgment that the patent claims asserted in a lawsuit brought by TecSec, Inc. (“TecSec”) are invalid under 35 U.S.C. § 101.[1]

District court are generally (statistically) quite software patents-friendly and the patent at hand — a patent on encryption — is definitely a software patent. § 101 should be able to invalidate it so it would not “survive” (as the biased language in the headline puts it) upon appeal to CAFC; judges higher up would almost definitely look deeper into it and quite likely toss this software patent in the trash (not just because of its high rejection rates for such patents).

Patent-ineligible software patents (under Alice/Section 101) are becoming so banal that many don’t bother reporting on them anymore. Instead, sites associated with (or controlled by) law firms prefer to focus on more ‘convenient’ cases.

Looking at PatentDocs, a loud proponent of software patents, here is coverage of Credit Acceptance Corp. v Westlake Services (a new CAFC case). Basically, yet another software patent has been declared invalid upon closer examination and it’s a precedential opinion. To quote:

In a precedential opinion, the Federal Circuit affirmed a final written decision of the Patent Trial and Appeal Board (“Board”) in a Covered Business Method (“CBM”) review proceeding in which claims were held to be directed to patent-ineligible subject matter under 35 U.S.C. § 101.

Credit Acceptance Corp. (“CAC”) is the assignee of U.S. Patent No. 6,950,807, which includes both system and method claims directed to providing financing for allowing a customer to purchase a product selected from an inventory of products maintained by a dealer. In one embodiment, the products are vehicles for sale at a car dealership. The invention involves maintaining a database of the dealer’s inventory, gathering financing information from the customer, and presenting a financing package to the dealer for each individual product in the dealer’s inventory.

Given all the above, examiners at the USPTO definitely need to start scrutinising all software patent applications, potentially rejecting every single one of them.

Robert Sachs, software patents profiteer (and casual lobbyist for these), actively tries to discourage USPTO workers from doing their job as per Supreme Court instructions. Watch him have a go:

After Alice, the USPTO’s various guidance memoranda included references to non-precedential Federal Circuit decisions, particularly Smartgene, Cyberfone, and Planet Bingo, as examples of patent-ineligible subject matter. Naturally, examiners cited these decisions in support of their Section 101 rejections.

He also wrote this piece about “surviving” [sic] Alice”, as if the Supreme Court is some kind of “killer”.

Such is the bias of the microcosm…

Covered Business Method (CBM) Also in Danger

Going back to Dennis Crouch, not too long ago he wrote about CBM (business methods), which should also be rejected (under Alice).

Andrews Kurth Kenyon LLP republished [1, 2] its piece about business methods, stating that: “Despite finding a range of business methods and software patents eligible for CBM review during the program’s early existence, the PTAB subsequently took conflicting approaches to assessing eligibility.”

Alice is Safe, Supreme Court Now Focused on Other Patent Aspects

A lot of the debate has already shifted to other cases, notably those pertaining to patent trolls and the “cheap handle, expensive blades” business strategy (using patents). Corporate media still occasionally writes about those cases. Here is one example:

The case has ominous implications for every business model that relies on selling cheap products but expensive supplies. As the Electronic Frontier Foundation points out, many manufacturers of gaming consoles depend on customers buying games from them and them alone, forever and ever. Many connected household products (the “internet of things”) function only if the consumer purchases a subscription from the manufacturer. Such loss-leader pricing strategies may no longer be viable after the Lexmark decision.

Don’t expect Alice to be overturned. Don’t expect software patents to suddenly become “great again” in the US. The Supreme Court isn’t even interested in revisiting the matter and the lobby against Alice is virtually gone from the news (since June).

In the mean time, don’t waste of money on software patents. They’re a lost cause after Alice.

This fairly new ‘advice’ speaks of “Software-related [patents],” adding that “Computer software has its own patent category.”

But what good are those patents?

The conclusion says this: “To understand how much does a patent cost, it’s important to know how the process operates. The patent system is set up to fuel innovation while protecting inventors from theft of their ideas. By following the proper steps and consulting with an attorney, you can protect your ideas with the appropriate patent. Just make sure to cover all of your bases when filing a patent, and spend the necessary money to file as strong a patent as possible.”

Well, guess who wrote this article…

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