December 10, 2013
Law360
By Linda J. Thayer
Authored by Linda J. Thayer
On Dec. 6, the U.S. Supreme Court signaled its willingness to wade back into the murky area of patent eligibility when it announced it would review the Federal Circuit's decision in CLS Bank Int'l. v. Alice Corp.1 Proper interpretation and application of 35 U.S.C. § 1012 of the Patent Act, which addresses only patent eligibility, not overall patentability, is important to all industries—but has been a particularly thorny subject for computer-implemented inventions.
In May, the Federal Circuit hopelessly confused patent practitioners and the tech industry with its CLS Bank decision, a 135-page collection of six opinions representing the viewpoints of 10 judges3 that eloquently framed the issues but provided no clear test for determining patent-eligible subject matter.
By granting review, the Supreme Court could offer much-needed guidance on the two fundamental and important questions addressed, but not answered, by the en banc CLS Bank court: (1) what test should be used to determine eligibility of a computer-implemented invention; and (2) in assessing patent eligibility, "should it matter whether the invention is claimed as a method, system, or storage medium?"4 Or, in other words, should such claims raise and fall together?
The Federal Circuit's CLS Bank decision presents plenty of material for the court to consider. The two main opinions, one authored by Judge Alan Lourie (and joined by Judges Timothy Dyk, Sharon Prost, Jimmie Reyna and Evan Wallach) and the other by Chief Judge Randall Rader (joined by Judges Richard Linn, Kimberly Moore and Kathleen O'Malley), each begin with thoughtful sections on legislative history and precedential Section 101 cases from the Supreme Court along with a thorough analysis of each of the claims-at-issue.
Judge Pauline Newman wrote separately, but advocated for perhaps the broadest interpretation of § 101 (she would have found all of the method, computer-readable medium, and system claims patent-eligible), making her more closely aligned (although not identically) with the Rader group5 Even though both groups relied on the same legislative and judicial guidance, they advocate different tests and reach conflicting conclusions.
The Lourie group, citing the Supreme Court's reasoning in the Mayo v. Prometheus, favors a bottom-up preemption analysis in which the test would consist of first identifying the core abstract idea of the claims and then determining if the claims contain sufficient substantive limitations to prevent the patentee from covering the full scope of the abstract idea itself (i.e., the Lourie group asks, what is the "human contribution" or "inventive concept"?)6 The human contribution must be "significantly more" than merely routine, conventional, tangential, trivial, or insignificant post-solution activity.7
The Rader group prefers a top-down "whole claim" approach. According to the Rader group, Congress intended for § 101 to be broad to correct the problem existing in 1952 that too many inventions were being found ineligible for patenting because of a lack of "inventiveness."8 Because determining "sufficient inventiveness" was too subjective, Congress intended for all new things, whether invented or discovered, to be eligible.9 Determining inventiveness was relegated to §§ 102 and 103.10 The Rader group urges that the claim should be considered "as a whole," and not stripped down by removing all concrete limitations one at a time, which would render practically any claim abstract.11
According to the Rader group opinion, while the mere reference to a general-purpose computer will not by itself save otherwise ineligible claims, a computer that plays a meaningful role in the performance of the claimed invention, like other practical applications, would not preempt an entire field, and should be patent-eligible.12
Monday morning quarterbacks may disagree over whether CLS Bank was the "right" case at the "right" time for the Supreme Court to take up, but there seems to be widespread agreement that the issues need clarification, and soon. The Federal Circuit was formed by Congress in 1982 to provide the uniformity in patent laws that had been lacking when the regional circuits handled patent appeals.13 In recent times, however, the Federal Circuit has been inconsistent on the issue of patent eligibility, issuing a series of decisions since 2010 whose outcome was more dependent on the panel than the merits of the case. Ultramercial LLC v. Hulu LLC and WildTangent Inc.,14 which was also on petition for review on Dec. 6, and Accenture Global Services Gmbh v. Guideware Software Inc.15 were two such cases. Bancorp Servs. LLC v. Sun Life Assurance Co. of Can. (U.S.),16 decided in 2012 before CLS Bank, is another.
Even though the law on patent eligibility is unsettled, it remains to be seen if the industry will be any happier after a Supreme Court ruling. Since the decision to review was announced on Dec. 6, the wires have been flooded with alarmist articles that imply that the court's decision will likely mean certain death for software patents. Indeed, in her dissenting opinion in CLS Bank, Judge Moore opined that affirmance of the rejection of Alice's claims could mean the "death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents."17 In making this statement, however, Judge Moore is taking issue with the Lourie group's "lumping together of the asserted method, media, and system claims," not signaling any belief that the Supreme Court will find all computer-implemented inventions unpatentable.18
Fears that software patents could be categorically excluded from patent eligibility by judicial decree are misplaced. The Supreme Court's consideration of CLS Bank will be its third foray into Section 101 jurisprudence since Bilski v. Kappos19 in 2010, although it has not dealt squarely with computer-implemented inventions since Diamond v. Diehr in 1981.20
Bilski dealt with "business methods" and the considered claims did not require the use of a computer at all.21 Although the court rejected the "machine-or-transformation" test as the sole test for determining patenteligibility, the Bilski court cautioned that the rejection did "not mean that unforeseen innovations such as computer programs are always unpatentable."22 In fact, the Bilski court appeared hesitant to adopt or condone any test that put the patentability of "software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals" at risk, acknowledging instead that "times change" and that the Patent Act was meant to flex with the times.23
In Mayo v. Prometheus,24 the court considered a method claim that could be performed entirely by a human, indeed, by a doctor in treating patients.25 The court found that the claims if patent-eligible would improperly "tie up the doctor's subsequent treatment decision."26 In CLS Bank, the Lourie group pointed to the Mayo court's concern that "patent law not inhibit further discovery by improperly typing up the future use of laws of nature," in rejecting Alice Corporation's claims.27
While the Mayo court affirms that § 101 should continue to be used as a screening device,28 there is little in Mayo to indicate the court intended for § 101 to become an impenetrable door for computer-implemented inventions. In fact, as Judge Moore points out in her dissenting opinion: "The Supreme Court has never cast doubt on the patentability of claims such as those at issue in In re Alappat or the system claims at issue in this case. Indeed, Alappat's reasoning is completely consistent with Bilski, Prometheus, and the Supreme Court's other § 101 cases."29 In Myriad, the court did not interpret the "abstract idea" exception at all.
Many question whether the claims in CLS Bank provide the proper vehicle for getting guidance on the patent-eligibility of true "software" claims. In its brief opposing review, CLS Bank described the Alice claims as covering a "fundamental economic practice" and likened the Alice claims to the "business method" claims in Bilski, which the court found patent-ineligible.30
Those who favored grant of certiorari in Ultramercial felt that those claims were better examples of "software claims" that would allow the court to set better boundaries. Ultramercial, however, addressed only the patentability of a computerized method claim. Review in CLS Bank, on the other hand, allows the court to address the full range of claim types—computerized method claims, computer-readable medium claims and system claims requiring computer hardware, as well as the question of whether such claims should raise and fall together.
It seems unrealistic to expect that the Supreme Court will announce any bright-line test for patent eligibility, but it also appears unlikely that the court would categorically exclude software from patent eligibility. It is more likely that—as advocated in Bilski—the court will seek "balance" or a "middle ground" that strikes a "balance between protecting inventors and not granting monopolies."31 Given Section 101's important role as the first hurdle for patent applications at the USPTO and its increasing importance in post-issuance validity disputes, this case will certainly be one to follow. Oral argument should take place in the spring and decision to follow by June 2014.
Endnotes
1 717 F.3d 1269 (Fed. Cir. 2013).
2 35 U.S.C. 101 states: "Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title."
3 Judge Taranto did not participate in the decision. Judge Chen did not assume duties on the Federal Circuit until August 5, 2013; Judge Hughes not until September 30, 2013.
4 717 F.3d at 1293 (Rader, J., concurring-in-part, dissenting-in-part).
5 Id. at 1321-27 (Newman, J., concurring-in-part, dissenting-in-part).
6 Id. at 1283 (Lourie, J., concurring).
7 Id.
8 Id. at 1295-96 (Rader, J. concurring-in-part, dissenting-in-part).
9 Id.
10 Id.
11 Id. at 1315.
12 Id. at 1302.
13 See http://www.cafc.uscourts.gov/the-court/court-jurisdiction.html (history of the Federal Circuit).
14 722 F.3d 1335 (Fed. Cir. 2013). The Supreme Court took no action on WildTangent's petition for review as of Monday, December 9.
15 728 F.3d 1336 (Fed. Cir. 2013). Accenture filed a petition for rehearing en banc before the Federal Circuit of its case.
16 687 F.3d 1266 (Fed. Cir. 2012)Bancorp submitted its Petition for Certiorari to the Supreme Court on November 8, 2013. See Bancorp Services, LLC v. Sun Life Assurance Co. of Canada (U.S.), et al., No. 13-584.
17 CLS Bank, 717 F.3d at 1313 (Moore, J. dissenting) ("If all of these claims, including the system claims, are not patent-eligible, this case is the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents.").
18 Id.
19 130 S. Ct. 3218 (2010).
20 Diamond v. Diehr, 450 U.S. 175 (1981). In Diehr, the Supreme Court ordered the Patent Office to grant a patent on a method for determining how rubber should be heated in order to be best "cured" even though the invention was implemented in software. In support of its decision, the Court explained: "[T]he respondents here do not seek to patent a mathematical formula. Instead, they seek patent protection for a process of curing synthetic rubber. Their process admittedly employs a well-known mathematical equation, but they do not seek to pre-empt the use of that equation. Rather, they seek only to foreclose from others the use of that equation in conjunction with all of the other steps in their claimed process."
21 130 S. Ct. 3218 at 3223-24 (the patentee conceded the claims were not limited to any kind of machine in order to implement the invention).
22 Id.
23 Id., at 3227 ("As numerous amicus briefs argue, the machine-or-transformation test would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals. See, e.g., Brief for Business Software Alliance 24– 25; Brief for Biotechnology Industry Organization et al. 14–27; Brief for Boston Patent Law Association 8–15; Brief for Houston Intellectual Property Law Association 17–22; Brief for Dolby Labs., Inc., et al. 9–10.")
24 132 S. Ct. 1289 (2012).
25 The Mayo court held that claims directed to a method of giving a drug to a patient, measuring metabolites of that drug, and with a known threshold for efficacy in mind, deciding whether to increase or decrease the dosage of the drug, were not patent eligible subject matter.
26 Id.
27 717 F.3d at 1280 (Lourie, J., concurring).
28 132 S. Ct. at 1303-04.
29 717 F.3d at 1280 (Moore, J., concurring).
30 Brief for Respondent at 12, Alice Corp. v. CLS Bank Int'l, No. 13-0298 (U.S., Nov. 6, 2013).
31 Bilski v. Kappos, 130 S. Ct. 3218, 3228 (2010) ("With ever more people trying to innovate and thus seeking patent protections for their inventions, the patent law faces a great challenge in striking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of general principles. Nothing in this opinion should be read to take a position on where that balance ought to be struck.")
Originally printed in Law360 (www.law360.com). Reprinted with permission. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
June 10-12, 2024
San Francisco
Lecture
Patent Protection for Software-Related Inventions in Europe and the USA Training Course
June 5, 2024
Hybrid
Due to international data regulations, we’ve updated our privacy policy. Click here to read our privacy policy in full.
We use cookies on this website to provide you with the best user experience. By accepting cookies, you agree to our use of cookies. Please note that if you opt not to accept or if you disable cookies, the “Your Finnegan” feature on this website will be disabled as well. For more information on how we use cookies, please see our Privacy Policy.
Finnegan is thrilled to announce the launch of our new blog, Ad Law Buzz, devoted solely to breaking news, developments, trends, and analysis in advertising law.