A growing sense of panic among those who profit from software patents bureaucracy

Summary: A look at recent developments in the software patents scene in the United States, with increased focus on (or fear of) the Patent Trial and Appeal Board

THE USPTO has been coming under greater scrutiny for patent scope as of late. Even branches of the government [1, 2] have chastised the Office for abandoning patent quality in favour of greater profits -- the same error which many patent offices are tempted to make for short-term gains. David Kappos was a terrible Director at the Office and now he is a corporate lobbyist for software patents in the US because Alice, which came to the Supreme Court after he had departed, effectively ended a lot of software patenting. This post is an outline of several of the latest developments in this area, gathered over the past week as part of our ongoing 10-year (almost decade-long) research.

We start this outline with several pointers to articles from Patently-O, a site which in spite of the long summer vacation has been very active this past week. Watch Professor Dennis Crouch ranting about PTAB, the large (and growing) group of people who trash software patents. He wrote: "Decisions by the Patent Trial & Appeal Board are rarely overturned on appeal. I expect that result is largely due to the fact that the Patent Office has staffed the Board with highly trained and skilled patent law experts. The other important factor though, is the standard of review. Factual findings made by the Board are reviewed for “substantial evidence” — meaning that the findings need not be “correct” but rather rather merely supported by “more than a mere scintilla of evidence.” Thus, patentees are hard-pressed to get a reversal based upon erroneous factual conclusions." Considering the utterly bad quality of patents granted by the USPTO in recent years, it oughtn't take much for the PTAB to correctly and justifiably invalidate these. PTAB is just cleaning up the mess left behind by Kappos et al. It's well overdue. In reference to Cuozzo [1, 2, 3] and PTAB Patently-O says:

Following Cuozzo, I largely wrote-off GEA Process (“GPNA”) v. Steuben as having any chance for certiorari. However, the petitioner’s newly filed reply brief offers an opportunity for revival.

In its decision on an IPR appeal, the Federal Circuit held that it lacked jurisdiction to review claims that the PTAB exceeded the PTO’s statutory authority by “terminating and vacating five instituted and near-final IPR proceedings, without determining patentability vel non as Congress had intended.”

In another (probably last) article in this series about PTAB and IPRs, Patently-O said that "[i]n a timely motion, Aqua moved to amend three of the claims to include the limitations found in the non-instituted claims. (In particular, the patentee asked to substitute claims 1, 8, and 20 with claims 22-24 respectively. The PTAB agreed that these new claims satisfied the formal requirements of Section 316(d), but refused to enter the amendment – finding that the patentee’s motion had failed to show that the substitute claims were distinguishable over the prior art." Good. So the PTAB staff has a backbone and unlike the examiners of the USPTO, there's no overt bias in favour of granting (even if in doubt). Strictness would serve the USPTO in the long run as it can help enforce/reintroduce the perception of patent quality, suggesting that it is being improved and things are being tightened or cleaned up retroactively as well. According to this new article titled "Has Rochester lost its patents edge?" -- an article which was published a couple of days ago -- "patents granted to Rochester-area inventors fell by 21 percent last year, from 1,537 to 1,217."

It sounds like patent quality is improving then. The number of patents is a very poor indicator of innovation. Now, see the part where patent lawyers interject their bias:

"The law in this area swings back and forth," said Justin Petruzzelli, a patent lawyer and partner with the Rochester firm Rossi, Kimms and McDowell. He points to a 2014 case, Alice Corporation v. CLS Banking, where the Supreme Court laid out the criteria for computer-related inventions to be considered patent eligible.

"Some of the drop we've seen is from uncertainty created by the Alice decision," Perruzzelli said, "and perhaps an overreaction on applying for patents related to software and business methods."

It is not an "overreaction", Mr. Petruzzelli, but you would rather mislead people so that you get more business, right? This is just propaganda/marketing interjected into a so-called 'article'. People have got common sense and they know that being granted software patents is nowadays very hard. That's why Petruzzelli is a little nervous. That's why he wants articles like these.

The statement from Petruzzelli is overshadowed by facts and we see similar statements from others who are in the patent microcosm. Mind a patent attorney who says "Patent for Recording and Indexing Images Survives Alice: http://assets.law360news.com/0825000/825427/show_temp%20(53).pdf" (this is the case between Iron Gate and Lowe's Companies in a District Court, which is a relatively low and Alice-hostile level; Alice is mentioned a lot in this 31-page decision). Also mind the most vocal pro-software patents site out there. It says:

Electric Power Group LLC v. Alstom S.A., 2015-1778 is a precedential case from the U.S. Court of Appeals for the Federal Circuit that holds that claims directed to collecting and presenting information from a power grid, though “lengthy and numerous,” “do not go beyond requiring the collection, analysis, and display of available information in a particular field.” Rather, the claims state “those functions in general terms, without limiting them to technical means for performing the functions that are arguably an advance over conventional computer and network technology. The claims, defining a desirable information-based result and not limited to inventive means of achieving the result, fail under §101.”

§ 101 is scary to these people. The likes of Petruzzelli know that if the public knew about it, there would not be much more business left for their firms. Here is another new article on this topic [via]. It's titled "Section 101 Blocks Caller ID Patent" and it says that "Judge Seeborg’s decision offers some examples of considerations that will support a successful § 101 challenge—not least of which is a patentee’s allegations making a patent sound less inventive rather than more."

So here again we have a reminder of the strength of § 101 and why software patents quickly lose their luster even in the United States.

"Thankfully, PTAB is working at an accelerated pace to undo the damage, much to the fear of the patent microcosm which dubbed PTAB "death squads" (as if patent quality assessment is the moral equivalent of mortal execution)."In Patently-O, another new article (this one by Jason Rantanen for a change) speaks about the Court of Appeals for the Federal Circuit (CAFC), which brought software patents to the US in the first place. Patently-O also refers to Halo [1, 2, 3] and reminds us that one possible takeaway from Halo v Pulse (not a CAFC case but a SCOTUS case) is that we should never read patents as more damages would be incurred as a result of that (article by Dennis Crouch). "On remand," he notes, "the district court will be hard-pressed to find that the infringement was not willful – based upon the apparently unchallenged verdict. Still, it will be within the district court’s discretion to decide whether the willfulness warrants enhanced damages under Section 284. If enhanced damages are warranted, the district court must then determine how much to award (with an upper limit of treble damages)."

If one embraced a policy of not reading any patents, then proving lower liabilities and compellingly demonstrating this (by citing the policy) would be simple. Here is MIP's new article about Halo v Pulse. "The Federal Circuit directs district court to decide whether "an enhancement of the damages award is warranted" in Halo v Pulse," the summary says. Had they not bothered with reading any patents at all, they would be better off for sure.

Another last Patently-O article speaks of indefinteness and notes that "the Federal Circuit has affirmed that Icon’s asserted patent claims are invalid because they “fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.” Although indefiniteness is a question of law subject to de novo review, the starting point of that review is almost always the district court opinion – thus the court here looked for errors in the district court decision. That is especially true here where the district court decision was based in part on underlying factual conclusions that receive deference under Teva."

Putting it in simpler terms, scope of a particular patent (how much it covers, breadth of coverage) plays an important role, not just patent scope in its own right. It sure looks like poor quality control at the USPTO left a horrible legacy where many patents are simply unfit for purpose (too broad or too abstract, even not novel). Thankfully, PTAB is working at an accelerated pace to undo the damage, much to the fear of the patent microcosm which dubbed PTAB "death squads" (as if patent quality assessment is the moral equivalent of mortal execution). ⬆