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12.18.17

Alice v CLS Bank (SCOTUS, 2014) Has Had a Profound Effect on 2017 as Nearly No Software Patents Upheld at a High Level

Posted in America, Law, Patents at 3:04 am by Dr. Roy Schestowitz

The Court of Appeals for the Federal Circuit (CAFC), which birthed software patents, no longer wants them

The year 2014

Summary: As 2017 nears its end (less than two weeks left), a look back reveals a terrible year for proponents of software patents and a milestone for opponents of software patents

THE latest battle is won, but not yet the war. Following Alice the USPTO rejects many software patents and CAFC, the highest court below the US Supreme Court (SCOTUS), is no longer interested in software patents. It rejects these virtually all the time. Lawyers are still shaken by this de facto end/ban of software patents (in the US at least) because it harms their income. They only care about their cash register. 6 days ago a leading publication of patent lawyers wrote about it as follows:

I’m gonna weasel out and say they’re both good points. Some software patent owners do continue to press claims that might arguably have been eligible five or 10 years ago, but clearly are not any more. As of August, the Federal Circuit had summarily affirmed more than 50 ineligibility opinions, according to research by Boston University’s Paul Gugliuzza and Stanford’s Mark Lemley. By the time those cases reached appeal (and probably far sooner), those patent owners were forging ahead with slim to no chance.

On the other hand, U.S. District Judge Gregory Sleet of Delaware socked Inventor Holdings with fees for all of the litigation dating back to when the Supreme Court decided Alice v. CLS Bank in 2014.

To affirm, the Federal Circuit indulged a fictional world where the law of patent eligibility became crystal clear the day Alice was decided, at least for patent claims involving “implementations of economic arrangements using generic technology,” such as the Inventor Holdings patent.

Alice v CLS Bank was one among several relatively recent (in SCOTUS terms) decisions in which SCOTUS overturned a CAFC decision. Where CAFC had promoted/emboldened patent maximalists the Justices at SCOTUS put an end to that. Faruki Ireland Cox Rhinehart & Dusing PLL wrote about Impression v Lexmark a few days ago. It’s one among the very latest SCOTUS decisions to overturn CAFC decisions. SCOTUS is pretty clear about patents; these monopolies have gone way too far in terms of scope, venue-shifting and so on. Justices at SCOTUS recognise this. They are gradually putting an end to that.

So what has the patent microcosm got left to do? Usually finding loopholes. They try to patent software in spite of the restrictions. Here’s a new example that says: “Securing intellectual property (IP) can be a major hurdle for startups at the best of times. But software – and in particular AI — brings its own unique challenges.”

“AI” is just another buzzword and law firms try to exploit it to patent software even though software patents are pretty much banned (not officially).

How about blockchain patents? We wrote quite a lot about these earlier this year and it seems pretty clear that it’s a bubble. Well, here’s a new press release that shows the ongoing gold rush [1, 2]. Never mind if such patents are most likely void. Maybe these sneak past examiners. Maybe past PTAB, too. Maybe district courts. But CAFC is not likely to tolerate these anymore.

The times are changing. Tough time for patent maximalists, no doubt…

See what happened in Amgen v Sandoz (CAFC) some days ago:

The Federal Circuit has ruled that Sandoz did not forfeit its preemption defence and the BPCIA preempts state law remedies in its biosimilars dispute with Amgen. The decision makes clear that brand biologic companies have no remedies available against a biosimilar applicant who is refusing to engage in the patent dance

Here’s another patent maximalist weighing in:

On remand, the Supreme Court directed the Federal Circuit to determine whether the failure to provide the information and data [under § 262(l)(2)(A)] is a violation of California law of unfair competition and conversion.

In its decision here, the Federal Circuit holds that the BPCIA preempts any state laws that would create liability for failure to comply with the requirement for providing information and data.

This isn’t about § 101, but it’s still interesting as it shows a change in views. CAFC is no longer what it used to be. Not even close… Rader is out and the tune has changed.

Alice at SCOTUS (the software patents eliminator) causes trouble not only for classic patent trolls but for a variety of entities which exist solely for litigation purposes. Even Kluwer Patent Blog, which typically focuses on Europe, wrote about it four days ago:

Affirming the district court’s decision, the Federal Circuit agreed with the district court’s reasoning that, once the Supreme Court issued its decision in Alice Corp. v. CLS Bank International in June 2014. 134 S. Ct. 2347 (2014), the patent infringement claims were objectively without merit and should have been voluntarily withdrawn.

This is the effect of Alice. The patent microcosm tries to ‘scandalise’ Alice, but it was a rational and long-overdue decision. The CCIA’s Josh Landau, writing in Patent Progress 3 days ago, tackled the use of the term “Alice Storm” — a term which is being spread by proponents of software patent (who still try to ‘scandalise’ SCOTUS).

Landau said this:

You might be familiar with Bob Sachs’ term “Alice Storm.” Sachs and his co-authors over at Bilski Blog argue that “Alice Corp. v. CLS Bank has had a dramatic impact on the allowability of computer implemented inventions.”

I disagree, and some newly released data from the Patent Office seems to back me up. Alice has had a limited impact overall, and much of that impact is centered on patent applications that were drafted before Alice (and her Federal Circuit children, like DDR Holdings and McRO) was decided. For the “Alice Storm”, you don’t even need an umbrella.

And on it goes…

Alice was a case of justice, not politics. It was not a “storm” but a ruling at the highest level. Don’t let the patent extremists distract from that…

CAFC was also mentioned in relation to Arendi and § 103 a few days ago. IP Watch explained that “[s]ince the U.S. Court of Appeals for the Federal Circuit issued its opinion in Arendi S.A.R.L. v. Apple Inc. last August,[1] many patent commentators have asserted that the decision marked a significant change in the analysis of obviousness under 35 U.S.C. § 103, especially as a weakening of single-reference obviousness grounds. Notwithstanding this decision, petitioners and the Patent Trial and Appeal Board have continued to rely on single-reference obviousness to assert and find that claims are obvious.”

Well, the the Patent Trial and Appeal Board (PTAB), which we covered in the previous post, has become an Alice-enforcing mechanism and more generally a SCOTUS-enforcing mechanism. SCOTUS will likely cement PTAB’s role in the new year. That’s the consensus even among PTAB foes.

And speaking of PTAB foes, the most anti-PTAB site, Watchtroll, has just promoted this long new article from Gene Quinn, who is speaking to the choir (comments are pro-software patents). “Software Patent Eligibility at the Federal Circuit 2017″ is his headline and it’s a long list of software patents rejections, including for example RecogniCorp, LLC v Nintendo Co. Quinn fails to reveal his bias; he starts by whining about SCOTUS and only then lists the cases:

The judicial exception at play when computer implemented inventions are claimed is the abstract idea exception. Unfortunately, the Supreme Court has never defined the phrase abstract idea, and neither has the United States Court of Appeals for the Federal Circuit. Similarly, there is no definition for significantly more. Therefore, in practice, deciding whether a claimed invention is directed to an abstract idea and/or adds significantly more than the abstract idea has proved to be rather subjective. Notwithstanding, the United States Patent and Trademark Office has created a Quick Reference Guide based on current case law.

[...]

[On RecogniCorp, LLC v Nintendo Co.:] The patent in question, U.S. Patent No. 8,005,303, sought to encode images in a way that required less memory and bandwidth.

There’s no conclusion in this article, maybe as the conclusion would have to be that software patents are very dead at CAFC and Watchtroll does not wish to spell it out.

RecogniCorp, LLC v Nintendo Co. (Supreme Court) was also recalled by Patently-O a few days ago. There are no patents on algorithms anymore, so no ‘joy’ for RecogniCorp. That’s just the new reality. Whether patent extremists accept it or not should not matter; they’re not, after all, arbiters of law.

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