Undoing decades of profoundly misguided policy

Summary: The U.S. Patent and Trademark Office (USPTO) continues along the same path -- an encouraging path wherein Section 101 is generally accepted, albeit not by the Director, and the Patent Trial and Appeal Board (PTAB) typically approves/affirms Section 101 rejections; failing that, the courts do the job

THE Open Invention Network (OIN), which has just been described as a "patent protection group", is perhaps just that. It's protecting software patents from people like us. Our stance on OIN changed some years back because of Alice, which OIN fails to exploit and IBM actively fights against. IBM is still the most influential player in OIN and it's not interested in the end of software patents; quite the contrary in fact.

Here are Steven J. Vaughan-Nichols' views on the latest additions or the latest news from OIN, namely or notably Alibaba. He even uses propaganda terms like 'IP' -- a term which no doubt this publisher is happy to promote. To quote the opening paragraph:

The American and Chinese trade war is near to boiling. The American attempt to extradite Huawei CFO Meng Wanzhou has failed; China might be behind the Marriott data breach; and China might've caused a massive internet disruption. But one perpetual sore point between the US and China -- intellectual property (IP) abuse -- is taking a step for the better. Alibaba and its affiliate Ant Financial are joining the Open Invention Network (OIN), the pro-open source and Linux patent-protection group.

This adoption of cross-licensing-type attitudes rather than abolishing software patents (i.e. not PTAB-like methods) or eliminating them one by one at PTAB isn't a good sign. Why not work towards elimination? It shouldn't be so hard anymore.

Janal Kalis keeps looking for the relatively rare cases where PTAB reverses a decision to grant or reverses a rejection; there's an effort to demonstrate a disparity and a sort of 'controversy', then alleging that the underlying assessment, usually based on Section 101, is problematic. Some days ago he found out that "PTAB [had] Reversed an Examiner's [Section] 101 Rejection of Claims for a Navigation System in a Patent Application Owned [sic] by Honeywell: https://e-foia.uspto.gov/Foia/RetrievePdf?system=BPAI&flNm=fd2018000027-11-27-2018-1 …"

So a monopoly got assigned as those above the examiner considered it valid based on Section 101. What would courts say? It's not likely to ever get that far.

It is rather pathetic that Anticipat, an overzealous opponent of PTAB (no longer so vocal either, so one wonders if it's a failed/failing business), now resorts to nitpicking -- namely selecting one of those relatively rare reversals of an examiner's decision -- to make it sound like an encouraging development which merits "hope" (for patent maximalists). These people generally understand that software patents and business method patents are a waste of time and money, especially in courts. To quote:

There has been much energy focused on the flawed nature of the current Alice/Mayo framework for evaluating patent-eligibility. Even the well-intentioned [sic] desires of USPTO director Andrei Iancu’s to move away from this framework has its limits.

In a recent decision, Ex Parte Pasupulati et al, the Board reversed an abstract idea rejection to a claim directed to integrating an API-based mechanism to a merchant’s website without the merchant having to understand the API or having to know how to code in a language specific to the API. The Board rebuffed the Examiner’s position for both steps.

So it's a similar situation to the above from Kalis, but it is rare. Ankur Parekh asked Kalis: "Do you have an intuitive sense of reversal and affirmance percentages for 101 at PTAB the last couple of months? Thanks."

"The latest post on Bilski blog reports that examiners have been affirmed in 92% of 101 appeals recently decided by the PTAB," Kalis responded. "I think the % of 101 reversals peaked last summer."

This means that only about 1 in 13 would be reversed. That's very low actually and we used to write about those things quite routinely early in the year and last year. Courts are even stricter than this, but not many cases get that far because it's expensive and thus financially risky. But what about lower courts? Welcome to the universe where a nontechnical jury sometimes gets to decide on technical matters. In the following recent example the jury ignored the technical PTAB (its ruling that a patent was invalid). Just like that they got to decide on a case with tens of millions of dollars on the line.

A Delaware jury finds Edwards Lifesciences infringed a transcatheter heart valve technology patent, which was ruled invalid by the PTAB earlier this year

A District of Delaware jury has awarded Boston Scientific $35 million against Edwards Lifesciences in a case involving multiple patents related to transcatheter heart valve technology.

The way things stand, however, abstract patents would rarely get past PTAB and result in any 'damages' payment.

Brittany Knight and Anthony Sabatelli wrote for Patent Docs a typical kind of article (for that site), insinuating that a law they do not like needs to "evolve" (i.e. get watered down). Patent maximalists, usually trolls and law firms, still moan about the demise of software patents because of 35 U.S.C. ۤ 101; what they keep saying about Berkheimer is rather meaningless because it has not statistically changed much, especially when one takes into account decreased interest in litigation with software patents, seeing the lack of success in such cases.

Knight and Sabatelli start by explaining things as follows:

Software is a generic term to refer to a collection of data or executing code used by a computer to implement arithmetic operations or logical operations. Back in 1936, Allen Turing, in his landmark paper On Computable Numbers proposed the capable use of instructions (i.e., software) to execute functions through his Turing Machine, an early precursor of the general purpose computer[1]. Today the modern computer is instrumental for complex computations, data analytics, high-powered graphing, simulations, and so on. Although, the development and use of software for these computer functions has become mainstream, determining the patent eligibility of software inventions under 35 U.S.C. ۤ 101 has been less intuitive.

In the wake of the now famous Mayo and Alice decisions, patent subject eligibility is determined through a 2-step inquiry. The first step asks whether, the patent claim is directed to a natural phenomenon, biological process, or abstract idea. Software is generally categorized as being "abstract" because it does not fulfill the more concrete criteria for being a "thing": i.e., a process, machine, manufacture, or composition of matter. Because software claims often fail the first step of the Mayo/Alice inquiry, the inquiry is next directed to the second part, which determines whether the patent claims add "significantly more" to bring them back within the fold of eligibility. However, meeting this second step has proven challenging in the court of law when it comes to determining patent eligibility of modern computational tools.

Back in the very old days (maybe a decade ago) we still wrote a lot of articles about why software patents are something that should never have been patentable in the first place because it's more like a rendition and hence it's suitably covered by copyright law, economically too (no need to undergo a registration process).

Staying on Patent Docs, Michael Borella also wrote about SAP America, Inc. v InvestPic, LLC. The moral of the story? Dare sue a rival with software patents and you'll end up having to compensate your rival for your false accusation and your fake patent (which is now invalid, too):

We wrote about this case six months ago, regarding InvestPic's appeal to the Federal Circuit over having its patent invalided under 35 U.S.C. ۤ 101 in the Northern District of Texas. InvestPic did not get the outcome it was looking for. Here, the case is back in the District Court to consider SAP's motion for recovery of attorney's fees. As we will see, InvestPic ended up not only with its patent invalidated, but also owing a large chunk of money to SAP.

SAP was originally granted attorney's fees in 2017, after the District Court ruled, on the pleadings, that InvestPic's U.S. Patent No. 6,349,291 was invalid under ۤ 101. As noted above, InvestPic appealed and lost.

[...]

This proceeding, however, was put on hold by the Federal Circuit appeal. Now back in the District Court, an order granting much of what SAP requested was issued on December 4, 2018.

SAP requested a total of $939,306.61, which did not include any time from attorneys and staff that worked less than 10 hours on the case. But this amount included time that SAP's attorney spent on a petition for covered business method review which was never filed. The District Court declined to award fees for the petition.

Also, the District Court found that the rates charged by SAP's attorneys ("$745.00 – $1,175.00 per hour for partners to $405.00 – $650.00 per hour for associates") were excessive. In particular, the majority of the partner's rates were above the 90th percentile for Texas, and the District Court found no evidence to justify the rates being so high. Accordingly, the District Court reduced all partner rates by 35% and all associate rates by 15%. Based on these adjustments, the total amount actually awarded was $679,420.46.

[...]

To further drive home this point, not even the federal courts have been able to crack the ۤ 101 egg. It is well-known that multiple federal judges have commented on the record that Alice was hard to apply in practice. Judge Wu of the United States District Court for the Central District of California criticized Alice for setting forth an "I know it when I see it" test. Judge Pfaelzer, a colleague of Judge Wu, wrote that the Supreme Court's patent-eligibility cases "often confuse more than they clarify [and] appear to contradict each other on important issues." More recently, the Federal Circuit's Judge Plager, wrote that the post-Alice ۤ101 inquiry "renders it near impossible to know with any certainty whether the invention is or is not patent eligible." And these are just a few examples of judicial confusion. There are more.

Just a few months ago, the Federal Circuit ruled 2-1 that ۤ 101 jurisprudence was too murky to be used as the basis of an attorney's fees award. While the facts between that case and this one differ, the law does not.

Looking at another site of software patents proponents, Charles Bieneman comes to grip with the fact that his profession, patent litigation, will become rather hard now that software patents are worthless in the US and typically drain plaintiffs' pockets. To quote:

Patent claims directed to establishing online chat sessions are not patent-eligible under 35 U.S.C. €§101 and the Alice/Mayo test, said Federal Circuit Judge Bryson, sitting in the District of Delaware, in granting a defendant’s motion to dismiss. Epic IP LLC v. Backblaze, Inc., C.A. No. 1:18-141-WCB (D. Del. Nov. 21, 2018).

Remember when law firms advised people to paint algorithms as "GUI" to get software patents and other patents that are abstract? Well, forget it. That too doesn't work. Bieneman's blog colleague Peter Keros wrote about a patent on “remotely monitoring and controlling irrigation equipment”:

Patent claims directed to a remote user interface displaying a plurality graphical user interfaces (GUIs) were held not patent eligible under 35 U.S.C. €§ 101 in Valmont Industries, Inc. v. Lindsay Corporation, No. 15-42-LPS (D. Del. Nov. 14, 2018). The Court found that the claims of U.S. Pat. No. 7,003,357 were directed to the abstract idea of “remotely monitoring and controlling irrigation equipment” without an inventive concept, granting a motion to dismiss under F.R.C.P. 12(b)(6).

Here's Bieneman on 35 U.S.C. ۤ 112:

Claims in a patent directed to medical diagnostics were indefinite under 35 U.S.C. ۤ112(b) and Nautilus, Inc. v. Biosign Instruments, Inc. (S. Ct. 2014), said a court in granting summary judgment of invalidity. Lecat's Ventriloscope v. MT Tool and Manufacturing, No. 1-16-cv-05298 (N.D. Ill. Nov. 20, 2018).

Last but not least, Bieneman writes about 35 U.S.C. €§ 112 and "a patent examiner’s rejections under 35 U.S.C. €§ 101 for lack of patent-eligibility". It's abundantly clear that software patents are very weak in US litigation (courts). To quote:

The Federal’s circuit has affirmed a Patent Trial and Appeal Board (PTAB) decision in turn affirming a patent examiner’s rejections under 35 U.S.C. €§ 101 for lack of patent-eligibility, and under 35 U.S.C. €§ 112 for lack of written description and indefiniteness, of a product-by-process claim directed to “a resource planning forecast product.” In re Downing, No. 2018-1795 (Fed. Cir. Dec. 7, 2018) (non-presidential).

[...]

Finally, and probably of absolutely no solace to the applicant, the court agreed that the recitation of “the end user” was not indefinite for lack of antecedent basis. Even though the term “the end user” was introduced “without an antecedent basis,” the claim only referenced one and user and it was clear who the end user would be. Therefore, the lack of antecedent basis for this term did not render the claim indefinite.

Even district courts, such as the Northern District of California's court in this particular case, learned to say "no" to abstract, bogus, fake patents or software patents. Bieneman's blog colleague Nathan Smith wrote about patent claims on "analyzing and automatically categorizing digital images":

The Northern District of California recently granted a motion to dismiss based on lack of patent-eligible subject matter, under 35 U.S.C. €§ 101 and the Alice/Mayo test, in claims of U.S. Patent No. 8,350,928, directed to “a system and method for the automatic analysis and categorization of images in an electronic imaging device.” Secure Cam, LLC v. Tend Insights, Inc., No. CV 18-02750-EJD (N.D. Cal. Nov. 14, 2018). The claims of the ‘928 patent were ineligible because, like In re TLI Communications LLC Patent Litigation, 823 F.3d 607, 613 (Fed. Cir. 2016), the claims were directed to the abstract idea of analyzing and automatically categorizing digital images. Further, like TLI, the claims include physical components, such as a digital camera, “but the physical components ‘merely provide a generic environment in which to carry out the abstract idea.’”

Last but not least, over at Watchtroll Robert Levy weighed in on licensing (fancier term for "paying for") bogus patents, i.e. patents that are not likely to withstand a challenge in a court, e.g. because of 35 U.S.C. ۤ 101/Alice. Levy cites the Alphacap case (covered here at the time):

All too often, the prospective licensee/purported infringer usually doesn’t begin its efforts to acquire the patent(s) until after making disparaging statements about them during negotiations. As an example, consider the time line discussed in the case of Gust, Inc. v. Alphacap Ventures, LLC, No. 2017-2414 (Fed. Cir. September 28, 2018) in which Alphacap Ventures, the purported infringer, demanded re-assignment of the patent owner’s patents as part of a settlement offer, but only after arguing for the invalidity of such patents under 35 U.S.C. €§ 101.

Eventually a lot of cases come down to this. The underlying patents don't pass muster and are therefore not worth pursuing in the first place. In the coming days if not weeks we'll give some more examples like these. It has gotten a tad tiring/dull because the outcomes are mostly the same. ⬆