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11.15.18

Berkheimer or No Berkheimer, Software Patents Remain Mostly Unenforceable in the United States and the Supreme Court is Fine With That

Posted in America, Law, Patents at 12:38 pm by Dr. Roy Schestowitz

Summary: 35 U.S.C. § 101, which is based on cases like Alice and Mayo, offers the ‘perfect storm’ against software patents; it doesn’t look like any of that will change any time soon (if ever)

THE NEW management of the U.S. Patent and Trademark Office (USPTO) is rather hostile towards 35 U.S.C. § 101, which it is hoping to change in complete defiance of caselaw or by cherry-picking Federal Circuit decisions (only those which suit the Director’s bias). The USPTO must raise patent quality, not lower it.

“They try to overturn or at least override Alice. 4.5 years later they’re still not successful.”A few days ago Watchtroll’s Steve Brachmann said that the “Supreme Court Refuses Another 101 Patent Eligibility Appeal” (this was the headline. Yes, Alice is here to stay. SCOTUS gives the middle finger to software patents, even after Trump added a couple of new Justices. “On Monday, November 5th,” Brachmann noted, “the U.S. Supreme Court denied a petition asking the Court to take up Real Estate Alliance Ltd. v. Move, Inc., et. al. on appeal from the Court of Appeals for the Federal Circuit (CAFC). The case becomes just another example in a long line of patent appeals involving questions of patent eligibility the Supreme Court has decided to sidestep instead of offering clarity for what some believe has become an unintelligible test for patent eligibility.”

They will carry on trying; each time there’s a petition like this sites like Watchtroll, IAM, Patently-O and so on try hard to solicit briefs. They try to overturn or at least override Alice. 4.5 years later they’re still not successful. Chasing shadows.

Then there’s the Berkheimer case, which the above sites boosted for almost half a year before they finally gave up. As we noted several times before, citing relevant/supporting data, Berkheimer has not really changed invalidation rates of abstract software patents; it could, in theory, but it did not (or barely did, if at all, for reasons we explained before). Weaker patents aren’t even being enforced anymore because confidence associated with their validity is very low.

The “EFF, together with the R Street Institute,” the EFF said yesterday, “has filed an amicus brief [PDF] urging the Supreme Court to grant certiorari, and fix yet another flawed Federal Circuit decision.” To quote:

This year, we celebrated the fourth anniversary of the Supreme Court’s landmark ruling in Alice v. CLS Bank. Alice made clear that generic computers do not make abstract ideas eligible for patent protection. Following the decision, district courts across the country started rejecting ineligible abstract patents at early stages of litigation. That has enabled independent software developers and small businesses to fight meritless infringement allegations without taking on the staggering costs and risks of patent litigation. In other words, Alice has made the patent system better at doing what it is supposed to do: promote technological innovation and economic growth.

Unfortunately, Alice’s pro-innovation effects are already in danger. As we’ve explained before, the Federal Circuit’s decision in Berkheimer v. HP Inc. turns Alice upside-down by treating the legal question of patent eligibility as a factual question based on the patent owner’s uncorroborated assertions. That will just make patent litigation take longer and cost more because factual questions generally require expensive discovery and trial before they can be resolved.

Even worse, Berkheimer gives patent owners free rein to actually create factual questions because of its emphasis on a patent’s specification. The specification is the part of the patent that describes the invention and the background state of the art. The Patent Office generally does not have the time or resources to verify whether every statement in the specification is accurate. This means that, in effect, the Berkheimer ruling will allow patent owners to create factual disputes and defeat summary judgment by inserting convenient “facts” into their patent applications.

[...]

Our brief explains that Berkheimer is wrong on the law and bad for innovation. First, it exempts patent owners from the rules of federal court litigation by permitting them to rely on uncorroborated statements in a patent specification to avoid speedy judgment under Alice. Second, it conflicts with Supreme Court precedent, which has never required factfinding deciding the legal question of patent eligibility. Third, it threatens to undo the innovation, creativity, and economic growth that Alice has made possible, especially in the software industry, because Alice empowers courts to decide patent eligibility without factfinding or trial.

So the EFF wants to overturn Berkheimer, we get it, but at what cost/risk? If Berkheimer was to be upheld at this level (with two new Justices), that might jeopardise the status quo. Berkheimer can be mostly ignored because as we last noted about a fortnight ago, it’s barely even mentioned anymore (only about once a week, despite being the same year).

Alice/35 U.S.C. § 101 has actually been a very positive development; as per Professor Chien's (and Jiun Ying Wu's) paper, the litigation 'industry' very habitually spreads lies and sensationalises 35 U.S.C. § 101 (to make it seem as though all patents are suddenly void and the sky is falling). Professor Michael Risch, citing Colleen Chien (Santa Clara) and her student Jiun Ying Wu, has just written about “Measuring Alice’s Effect on Patent Prosecution,” citing a paper by the wrong URL. His outline of it:

The essay is a short, easy read, and the graphs really tell you all you need to know from a differences-in-differences point of view – there was a huge spike in medical diagnostics rejections following Mayo and software & business patent rejections following Alice. We already knew this from the Bilski Blog, but this is comprehensive. Interesting to me from a legal history/political economy standpoint is the fact that software rejections were actually trending downward after Mayo but before Alice. I’ve always thought that was odd. The Mayo test, much as I dislike it, easily fits with abstract ideas in the same way it fits with natural phenomena. Why courts and the PTO simply did not make that leap until Alice has always been a great mystery to me.

Another important finding is that 101 apparently hasn’t destroyed any other tech areas the way it has software and diagnostics. Even so, 10% to 15% rejections in other areas is a whole lot more than there used to be. Using WIPO technical classifications shows that most areas have been touched somehow.

In a Patent Trial and Appeal Board (PTAB) inter partes review (IPR) just noted by James Korenchan, the notorious Eastern District of Texas (EDTX/TXED) rejected a 35 U.S.C. § 101 challenge; time to escalate this to CAFC then?

Plaintiff CyWee Group Ltd. (“CyWee”) sued Defendants Samsung Electronics Co., Ltd. and Samsung Electronics America, Inc. (collectively, “Samsung”), asserting various claims of U.S. Patent No. 8,441,438 (the ’438 patent) and U.S. Patent No. 8,552,978 (the ’978 patent) (a child of the ’438 patent). Samsung responded with a motion for summary judgment of invalidity of all asserted claims under 35 U.S.C. § 101. Last week, Circuit Judge William C. Bryson (sitting by designation in the Eastern District of Texas) denied the motion.

The claims of the asserted patents generally involve using a particular combination of sensors of a “3D pointing device” to gather raw data points representative of a position of the device, and then inputting those data points into a mathematical formula to determine an orientation of the device in a spatial reference frame. As an example, a 3D pointing device can be a mouse or other controller used to play video games such that, when a user moves the device, a pointer on the screen moves along with the orientation of the device.

As we noted in our previous post, it is nowadays fashionable to bash the courts, including CAFC. Dennis Crouch continues to belittle the Federal Circuit (the court) and SCOTUS (TC Heartland) because he supports patent trolls and harassers; he fails to even hide that…

His latest rant is titled “Get that Case Out of Here! Federal Circuit Continues to Allow Mandamus Actions to Cure Improper Venue” and the tone resembles his many rants about decisions with no written opinions/decisions. To quote this latest one:

The outcome of this case is simple: Oath doesn’t have to defend a patent infringement lawsuit in E.D.N.Y. because that location is an “improper venue.”

Under TC Heartland (2017), patent owners in patent cases now have a fairly limited set of options for filing infringement actions.

[..].

TC Heartland falls directly in line with the prior supreme court decision in Fourco Glass (1957). However, during the interim, the Federal Circuit had expanded its definition of proper venue to include any court that has personal jurisdiction over the defendant. Thus, for someone who studies only Supreme Court law, TC Heartland was a continuation of an unchanged law. On the other hand, the case was a major shift for those of us whose gaze is directed to the Federal Circuit (and practical district court litigation). The Federal Circuit has identified the latter frame of reference as appropriate — holding that TC Heartland was a change in the law. In re Micron Technology, Inc., 875 F.3d 1091 (Fed. Cir. 2017). The Micron decision was important because it prompted district courts to revisit the venue question even if the issue was seemingly waived.

What’s the alternative? CAFC ignoring the higher court? The highest court, too? Perhaps Dennis Crouch would like to join his friends at Watchtroll and routinely attack the Supreme Court, too. Wouldn’t that be classy?

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