By Lawrence Hoffman
J.D. B.S.E.E. and Computer Science, U.S. Patent Attorney
Patent Eligibility: Alice (and the CAFC) in Wonderland
Lewis Carroll would have to admire the modern Wonderland created in the field of patent eligibility for life science and information technology inventions wrought by the decisions of the U.S. Supreme Court in Mayo Collaborative Services, v. Prometheus Laboratories, Inc., 566 U. S. ___, Alice Corp. v. CLS Bank, : 573 U. S. ____ (2014). These two decisions gave rise to a two-part test for patent eligibility (the “Alice test”) according to which a court must first determine if the claims are directed to subject matter that is not patent-eligible (laws of nature, natural phenomena, and abstract ideas) and if so, whether the claims include “something more” that imparts patent eligibility. Applying the Alice test has not been easy for the district courts and the CAFC especially in cases involving information technology.
A July decision of the of U.S. Court of Appeals for the Federal Circuit (CAFC) in Rapid Litigation Management Ltd. v. Cellzdirect, Inc. along with a trio of May and June decisions, Enfish, LLC, v. Microsoft Corporation, In Re: TLI Communications LLC Patent Litigation, and Bascom Global Internet Services, Inc., v. AT&T Mobility LLC discussed below illustrate the problem. Before we get to that, a bit of history as this author sees it may be helpful.
To be fair, the Mayo and Alice Courts didn’t create the problem. It did, however, have an opportunity to keep it from growing out of control but chose not to do so. Congress started the modern Wonderland in the 1952 codification of Title 35 when it decided that §101 should only repeat the long-standing definition of what could be patented (i.e., a process, machine, manufacture, or composition of matter) but should not also list and perhaps explain the equally long-standing exceptions.
The Supreme Court in Mayo and Alice Courts did two things that turned Congress’ decision into the big problem it has become. First in Mayo, the Court affirmed its decision in the 1981 decision in Diamond v. Diehr that §101 issues are separate from novelty and obviousness issues. Then in Alice, the Court left to the district courts and the CAFC the task of making sense out of the concepts of “abstract idea” and “something more than just apply it”. As it turned out, the second step of the Alice test has become a search for inventiveness. There is an irony here’ Section 103 was written in terms of obviousness to do away with the concept of inventiveness as a limit on patentability of novel inventions.
It has also turned out to be easier for the CAFC to reach a decision by a credible legal analysis when the case can be decided, as in Enfish and Cellzdirect with reference to only the first step of the Alice test.
In Enfish, the CAFC explained that the first-step issue is not whether the claims involve a patent-ineligible abstract idea, but whether the claims are directed to a physical or process embodiment of the idea. Here, the court found in the claims a specific asserted improvement in computer capabilities, From this; it held that the claims were not just an articulation of the abstract idea in which a computer was involved merely as a tool. Consequently, there was no need to consider the second step of the Alice inquiry. On that basis, the finding that the claims were not directed to an abstract idea looks easy and unassailable.
The CAFC followed a similar approach in Cellzdirect:
it is enough in this case to recognize that the claims are simply not directed to the ability of hepatocytes to survive multiple freeze-thaw cycles. Rather, the claims of the ’929 patent are directed to a new and useful laboratory technique for preserving hepatocytes. This type of constructive process, carried out by an artisan to achieve “a new and useful end,” is precisely the type of claim that is eligible for patenting.
Again, simple and unassailable.
But look at what happened when the second step came into play in the TLI case. The district court held that the TLI patent was directed only to an abstract idea and that its implementation using computer technology did not satisfy the ‘something more’ requirement of the second step of the Alice inquiry.
The CAFC agreed with the district court that the claims were not directed to a specific improvement to computer functionality, but to the use of conventional or generic technology.
Although the words the CAFC used in applying the second step of the Alice test are not the same ones it used at step one, careful reading shows that the facts the court said were missing would have make the claims patent-eligible under the first step were the same ones that would have made them patent-eligible under step two. In effect, the two steps of the Alice test coalesced into one step.
It got even worse in Bascom, a patent directed to an internet content filtering system and method. The district court found that the invention as claimed was directed to an abstract idea and that its implementation was merely conventional use of computer technology.
The CAFC reversed. Essentially, the court said “compared to our decisions in earlier software method cases, this one is more like the few that we blessed than it is like the ones we banished to eternal damnation”. That approach, though expressly sanctioned in Mayo, is troubling because it isn’t based on any sort of legal analysis. Determining patent eligibility in this manner seems like a crap-shoot.
Nor does it look like this “we did it this way before so it’s ok to do it this way again” approach is going to be abandoned. In an opinion issued on July 25, 2016 in LendingTree, LLC v. Zillow, Inc. the CAFC did the same thing as in Bascom.
Is there a better way? One possible solution would be for Congress to amend §101 to list and define ineligible subject matter areas and to expressly require that the “something more” issue be determined according to the novelty and obviousness of the combination of features and/or methods which embody the invention. At least that will give us interpretive rules (flexible as they may be) which are certainly better than asking are the facts here more like those in prior case A or prior case B.
Patents As A Benefit to Society:
Every so often another defense of IP protection as a driving force for innovation, economic growth, etc. appears in the literature. An article published last month, for example, looks at the U.S. patent system from a historical viewpoint and refers to modern technical concerns such as dealing with climate changes and motivating advances in the life sciences as adding urgency to the need to maintain a strong patent system in the U.S. Of course, the same justification applies world-wide. The historical reference basis for this article is interesting.
The patent system is not, so to speak, an American invention. The actual origin of protection for inventions is obscure, with suggestions of protection for inventions even in ancient Greece. There is clear evidence of an informal patent system in renaissance Venice promoted by the local glass-making industry and spread of the underlying ideas by expatriate
Venetian artisans. In England, the 1624 Statute of Monopolies formalized the granting of patents for inventions.
Art. 1, Section 8 of the U.S. Constitution embodies the idea of granting exclusive rights to encourage advancement of science and the useful arts. James Madison, generally regarded as the father of the U.S. Constitution, wrote a series of articles entitled The Federalist Papers mainly intended to explain and encourage ratification of the Constitution. Madison addresses the question of IP protection only in paper No. 43. What he says, however, is quite interesting:
A power to promote the progress of science and useful arts, by securing, for a limited time, to authors and inventors, the exclusive right to their respective writings and discoveries. ”The utility of this power will scarcely be questioned. The copyright of authors has been solemnly adjudged, in Great Britain, to be a right of common law. The right to useful inventions seems with equal reason to belong to the inventors.
Madison’s statement that “the right to useful inventions seems…to belong to the inventors” brings to mind a statement by the U.S. Supreme Court in its 1917 opinion in Motion Picture Patents Co. v. Universal Film Mfg. Co. that “the primary purpose of our patent laws is not the creation of private fortunes for the owners of patents but is to promote the progress of science and useful arts” doesn’t seem to be exactly what Madison had in mind.
There is, of course, a legitimate tension between compensating inventors and protecting the public against bad patents and abuses of the system. Perhaps it’s time for Congress to take another look.
More on Cuozzo – Has Everyone Gone Wrong?
A recent posting (hereafter referred simply as the “post”) strongly disapproves of the U.S. Supreme Court’s decision in Cuozzo Speed Technologies v. Lee, 579 U. S. ____ (2016), and advocates that Congress step in to fix the mistake he says the Court made. For those not familiar with it, the Cuozzo case involved procedures for inter partes reviews (IPRs), the mechanism provided in the 2011 America Invents Act for reconsideration by the PTO of certain aspects of validity of issued patents. The main reason for the IPR provision was to give actual and potential defendants in patent infringement litigation a relatively fast and inexpensive way to challenge the validity of a patent in the PTO without having to do so in court.
The issue that provoked the post was the PTO’s rule that during an IPR, claims are to be given the broadest reasonable construction (BRC) consistent with the specification just as they are during examination of applications. In contrast, during litigation, claim construction is informed by giving claim terms their customary meaning in the art. The CAFC held that the BRC standard was a reasonable exercise of the rule-making power granted to the PTO for implementing the IPR process and the Supreme Court affirmed.
BRC claim interpretation during examination has been in use for over 100 years. The practice is justified on the basis that applicants have the opportunity to submit amendments to more sharply focus the scope and meaning of the claims. This opportunity, it is said, will result in better examination and ultimately, better patents. Use of BRC for IPRs is justified on the same basis. That seems like unassailable logic; after all, the IPR is a reexamination and not just a review, and its objective is to help assure that invalid claims are filtered out before costly and time-consuming litigation.
Cuozzo presented statistics suggesting that motions to amend during IPRs are rarely granted in practice. Cuozzo, in fact, submitted a motion to amend but it was denied because the proposed amendment enlarged, rather than narrowed the scope of the rejected claim, contrary to the law. Cuozzo argued that this resulted from application of the BRC, but not that denial of his motion under BRC was improper. His position was that under the proper (i.e., “customary meaning”) standard, the amendment would not have enlarged the scope of the claim.
The Court quite reasonably observed “…these numbers may reflect the fact that no amendment could save the inventions at issue, i.e., that the patent should have never issued at all”. This seems to eviscerate any argument that the BRC standard is improper in an IPR because the opportunity to amend is limited.
Application of the BRC during an IPR seems beneficial to the patentee in the long run. While the stricter standard may make it easier for the patent to be invalidated or at least limited in scope, a rigorous IPR is a better way for the patentee to find this out rather than at the end of a long and costly process of trial and appeal. Moreover, after the IPR, if the patent remains in force, its claims will be more in line with what they would have been if the Examiner had been aware of the IPR-cited art. To that extent, the patent will be strengthened.
Significantly, too, in court, invalidity will have to be proven by clear and convincing evidence. The petitioner in the IPR will have had a strong incentive to find the best prior art to assert as the basis for invalidity. This should reduce the likelihood that another alleged infringer will find art so much better than that involved in the IPR that it will satisfy the clear and convincing evidence standard.
Brexit and its Effect on the Unified Patent Court (UPC) is Still in the News:
In last month’s happenings, it was noted that the UK and Germany, along with one other state still needs to ratify the UPC enabling legislation for it to go into effect. In Germany, the approval process is well advanced and the approval process in the Netherlands is essentially complete. Theoretically, then with the UK still part of the EC, it could provide the missing ratification and the unified patent system could soon be a reality. As potentially appealing as that may seem, it is not likely. Nevertheless, the UPC Preparatory Committee is going forward with its work on the pre-Brexit schedule.
Additionally, the UK Intellectual Property Office (UKIPO) has finally gone public on the subject. A guidance document entitled IP and BREXIT: The facts. It essentially says that the UKIPO is looking into the implications of Brexit, but there will be no immediate changes.