Patently-O Law Blog
Federal Circuit: Now is Not the Time to Judge the Constitutionality of the First-to-File Patent Regime
By Dennis Crouch
MadStad Enginering v. USPTO (Fed. Cir. 2014)
In 2012, MadStad and its owner Mark Stadnyk filed a declaratory judgment lawsuit against the USPTO alleging that the new first-to-file regime implemented by the America Invents Act of 2011 (AIA) was unconstitutional. See Crouch, Constitutional Challenge to the First-to-Invent Rule
(2012), and Crouch, Constitutionality Question Looms as USPTO Implements Regime that favors a “Filers” over “Inventors”
(2013). In discussing the case, I wrote:
MadStad’s basic argument is that when the U.S. Constitution speaks of exclusive rights for “inventors” it should be interpreted to mean “first and true inventor.” Under this analysis, the AIA fails because it purposefully rewards the first-to-file a patent application rather than the first-to-invent.
Further, MadStad argues that the new law allows non-inventors to obtain patents on inventions that they learned-of because the law no longer requires that the applicant be an inventor.
Rather than reaching the merits of MadStad’s allegations, the district court rejected the case for lack of standing. The Federal Circuit has now affirmed that decision — holding that MadStad’s potential injury due to the legal change is too speculative. MadStad’s alleged injuries due to the change are creative, but ultimately the court determined that they lacked sufficient concreteness. The alleged injury included increase cost of computer security to avoid hacking that – if not blocked – could result in stolen ideas that the thief could patent under the new regime. A second alleged injury is increased time and effort to file additional patent applications before the invention’s value is properly understood.
The key precedent relied upon by both the Federal Circuit and the District Court is the secret FISA court case of Clapper v. Amnesty International USA, __ U.S. __, 133 S. Ct. 1138 (2013). In that case Amnesty Int’l did not have proof that the NSA was tapping its conversations (because the activity is secret) and the Supreme Court held that the threat was too speculative. In my view, the direct applicability of Clapper here is somewhat attenuated because it is clear that MadStad’s new patent applications would be governed under the new regime and the separation-of-powers issues are not so great.
Next steps: Regardless of the merits of this decision, by now there should be at least some patent applications that have been rejected due under the new first-to-file regime that would not have arguably been patentable under the old regime. Applicants injured in that way would certainly have standing to bring this challenge.
= = = = =
The decision by Judge O’Malley also includes an interesting discussion of Federal Circuit Jurisdiction. The law provides that the Federal Circuit has jurisdiction over appeals that arise under the patent law statutes. Here, however, the claim is based upon the U.S. Constitution.
- An Open Letter from Judge Rader (Crouch)
- Taming the Mongrel: Aligning Appellate Review of Claim Construction with its Evidentiary Character in Teva v. Sandoz (Menell, Anderson, Rai)
- Panel asks Highmark Litigants for Additional Briefing on Remand (Rantanen)
- Federal Circuit will again review the Subject Matter Eligibility of Ultramercial’s Internet Advertising Patent (Crouch)
- Alice in Patent Land (Powles)
- Opening of the Rocky Mountain Patent Office Raises Denver’s Profile as Center of Innovation (Posthumus)
- Tom Bell on Copyright
- Teva v. Sandoz: Teva’s Opening Merits Brief (Rantanen)
- Teva v. Sandoz: Standard of Review for Claim Construction(?) (Rantanen)
June 30, 2014 is Judge Rader’s final day on the bench. Judge Rader has – and I suspect will remain – a lightning rod for both criticism and support. What I love is that his continued focus is on the law and what we can do to improve its function. Judge Rader forwarded the following letter to his Federal Circuit colleagues and gave me permission to distribute its contents to Patently-O readers.
My Dear Colleagues (for the last time I presume to call you “colleagues”),
Over three and a half decades ago, I sat across from Howard Markey, Chief Judge of the Court of Customs and Patent Appeals, in my Senate Judiciary Committee office. In a meeting I recall with stunning clarity, he showed me the vision of a court dedicated to the uniformity, consistency, and strength of vital areas of commercial law to be entrusted to the new Federal Circuit. Inspired by his dreams, I set out to work vigorously for the enactment of the Federal Courts Improvement Act of 1981. To this day, I regret that I allowed judges from the Ninth Circuit to dissuade me from offering an amendment to include copyright and trademark cases within the jurisdiction of the Federal Circuit. To this day, however, I rejoice that I obeyed Chief Judge Markey’s request that I hear cases every month without a break as a circuit judge.
Less than a decade after that first meeting with Chief Judge Markey, after two years as a trial judge, I took a seat on the court that I had helped to create. You can imagine my feelings of awe as I took a seat on the bench beside the legends, Howard Markey, Giles Rich, and Daniel Friedman. As the years passed, I delighted to recount both in my own private deliberations and in public events the great wisdom I absorbed from those masters of the judicial office.
Time flies on wings of lightning. Before you can comprehend, many of you will be delighted to recount both in your own private deliberations and in public events the great wisdom you absorbed at the feet of the legends, Polly Newman, Alan Lourie, and Bill Bryson. Yet another page will turn and some of our current law clerks and interns will occupy judge’s chairs and recount both in their own private deliberations and in public events the great wisdom of the legends, Evan Wallach, Ray Chen, and Todd Hughes.
With the passing of each judicial generation, I hope that the Federal Circuit perpetually renews Markey’ s vision of a judicial institution unlike any other in the world. To no other court does a nation, let alone the most powerful economic nation in the world, entrust legal decisions that shape world trade, innovation, and core commercial policies. Yet I can vigorously attest that this vast responsibility could not rest in more secure and capable hands. At some distant point in the future, I hope to sit again across from Howard Markey; I will assure him that his vision has been realized. . . and sustained!
Now in a few minutes, I will start my car and ascend the ramp to H Street for the last time. At the top of the ramp, I will step out of my car for a moment to embrace my law clerks. With that embrace, I wish to symbolically embrace and commend the greatest bar in the world. No practicing lawyers anywhere in the world contribute more to the competent jurisprudence of their court than the lawyers who make up the Federal Circuit bar. Just as legendary judges pass perpetually the torch to new judges, so too Don Dunner, Bill Lee, Seth Waxman and others have set standards of excellence that will be matched by newer attorneys who will become themselves legends of reason and persuasion.
Then, there at the top of the ramp, I will slap a “high five” to the security officers on duty at the gate. With that salute, I wish to symbolically honor and recognize the entire staff of the Federal Circuit — the Administrative Services personnel under Dale Bosley, the Technical officers under Mona Harrington, the Library staff under Pat McDermott, the General Counsels under Doug Steere, the Clerk’s office and the entire staff led so marvelously by Circuit Executive Admiral Dan O’Toole. No court staff anywhere can exceed these incomparable professionals who, as much as any judge, have contributed to the superb reputation that the Federal Circuit will carry into coming decades.
With eyes misted over with magnificent memories, I will then turn my gaze to the horizon. I will hope to find new ways to contribute to the uniformity, efficiency, and predictability of the law. No matter what opportunities I receive in my next legal “life,” I know that no honor can ever exceed the opportunity that I had to contribute to the United States Court of Appeals for the Federal Circuit. Thank you, brothers and sisters, for the vast honor of sitting at your side. God save this honorable court!
Your friend for life, rrr
Taming the Mongrel: Aligning Appellate Review of Claim Construction with its Evidentiary Character in Teva v. Sandoz
In its seminal Markman decision, the Supreme Court sought to usher in a more effective, transparent patent litigation regime through its ruling that “the construction of a patent, including terms of art within its claim, is exclusively within the province of the court.” Markman v. Westview Instruments, Inc. (Markman II), 517 U.S. 370, 372 (1996). Notwithstanding the constitutional right to patent jury trials, the Court ruled that claim construction would no longer be conducted by lay jurors in shrouded deliberations. Rather, based on historical analysis of the role of juries in patent cases, characterization of the nature of claim construction, and a comparative assessment of judicial institutional capabilities, the Court concluded that the Seventh Amendment right of trial by jury did not extend to claim construction and that trial judges were better equipped than juries to resolve the mixed fact/law controversies inherent in construing disputed patent claim terms.
In the aftermath of Markman II, the Federal Circuit adhered to its Markman decision, Markman v. Westview Instruments, Inc. (Markman I), 52 F.3d 967 (1995) (en banc) – that claim construction is a “purely legal issue” subject to plenary de novo review, see Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448, 1451 (Fed. Cir. 1998) (en banc) – downplaying the Supreme Court’s more nuanced description of claim construction as a “mongrel practice” merely “within the province of the court.” Markman II, 517 U.S. at 372, 378. Over nearly two decades of experience in the post-Markman era, it has become apparent that the Federal Circuit’s adherence to its Markman I plenary de novo appellate review standard has frustrated district courts’ distinctive capabilities to apprehend and resolve the factual disputes inherent in claim construction determinations, undermined the transparency of the claim construction process, discouraged detailed and transparent explanations of claim construction reasoning, and produced unusual and at times alarming levels of appellate reversals. These effects have cast doubt on the predictability of patent litigation, discouraged settlements, delayed resolution of patent disputes, and run up the overall costs of patent litigation.
The Supreme Court’s Markman II decision points toward a balanced, structurally sound, legally appropriate, hybrid standard of appellate review that would promote more accurate and efficient patent dispute resolution. Factual determinations underlying claim construction rulings should be subject to the “clearly erroneous” standard of review, while the Federal Circuit should retain de novo review over the ultimate claim construction decision. In this manner, district court judges, in their capacity as fact-finders, could better surmount the distinctive challenges posed by the technical, mixed fact/law controversies inherent in patent claim construction. A hybrid standard would encourage district judges to identify the “person of ordinary skill in the art” and, where appropriate, build fuller, more transparent records to support their claim construction decisions. These effects would promote clearer substantive analysis, more settlements following claim construction and trial, more effective appellate review, and fewer reversals and remands.
A hybrid appellate standard is unlikely to undermine the national uniformity of the patent system. In any event, concerns about national uniformity and clarity of patent claims are more appropriately addressed through improvements to the patent prosecution process, meaningful implementation of the 35 U.S.C. §112(b) claim indefiniteness standard, post-grant review and reexamination procedures, consolidation of claim construction through multi-district litigation, and adjustments to substantive claim construction jurisprudence.
Our brief filed in Teva v. Sandoz can be accessed at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457958
Peter S. Menell is the Koret Professor of Law and Director of the Berkeley Center for Law & Technology at the University of California at Berkeley School of Law (Boalt Hall), J. Jonas Anderson is an Assistant Professor of Law at American University Washington College of Law, and Arti K. Rai is the Elvin R. Latty Professor of Law and Co-Director of the Duke Center for Innovation Policy at Duke Law School.
Federal Circuit will again review the Subject Matter Eligibility of Ultramercial’s Internet Advertising Patent.
By Dennis Crouch
For the second time, the Supreme Court has issued a GVR decision in the patent subject-matter-eligibility case of WILDTANGENT, INC. v. ULTRAMERCIAL, LLC. The first GVR asked the Federal Circuit to review its pro-patentability decision based upon Mayo v. Promethius. Following that, the Federal Circuit reaffirmed the subject-matter-eligibility of Ultramercial’s patent claims. Now, the Supreme Court has ordered the Federal Circuit to re-review its decision based upon the recent outcome in CLS Bank v. Alice Corp.
The petitioner (accused infringer) asked:
When is a patent’s reference to a computer, or computer-implemented service like the Internet, sufficient to make an unpatentable abstract concept patent eligible under 35 U.S.C. § 101?
Here, Ultramercial’s patent claim covers an eleven step process for “distribution of products over the internet via a facilitator.” None of the eleven steps are particularly innovative or technologically sophisticated. However, taken as a whole, they offer at least a detailed program of operation. Claim 1 is written as follows:
1. A method for distribution of products over the Internet via a facilitator, said method comprising the steps of:
a first step of receiving, from a content provider, media products that are covered by intellectual-property rights protection and are available for purchase, wherein each said media product being comprised of at least one of text data, music data, and video data;
a second step of selecting a sponsor message to be associated with the media product, said sponsor message being selected from a plurality of sponsor messages, said second step including accessing an activity log to verify that the total number of times which the sponsor message has been previously presented is less than the number of transaction cycles contracted by the sponsor of the sponsor message;
a third step of providing the media product for sale at an Internet website;
a fourth step of restricting general public access to said media product;
a fifth step of offering to a consumer access to the media product without charge to the consumer on the precondition that the consumer views the sponsor message;
a sixth step of receiving from the consumer a request to view the sponsor message, wherein the consumer submits said request in response to being offered access to the media product;
a seventh step of, in response to receiving the request from the consumer, facilitating the display of a sponsor message to the consumer;
an eighth step of, if the sponsor message is not an interactive message, allowing said consumer access to said media product after said step of facilitating the display of said sponsor message;
a ninth step of, if the sponsor message is an interactive message, presenting at least one query to the consumer and allowing said consumer access to said media product after receiving a response to said at least one query;
a tenth step of recording the transaction event to the activity log, said tenth step including updating the total number of times the sponsor message has been presented; and
an eleventh step of receiving payment from the sponsor of the sponsor message displayed.
John Posthumus has been instrumental making the Denver Office of the USPTO a reality – having spent more than 1,000 pro bono hours on this effort. I asked him to write a guest post to commemorate the June 30 opening. D.C.
By John Posthumus
The opening of the Rocky Mountain Regional Satellite office in Denver on June 30 marks an unprecedented and historic moment for the U.S. Patent and Trademark Office. Never in its history has the USPTO had a base of operations that extended beyond the Eastern Time zone. The USPTO has operated exclusively for more than 200 years in the Washington, D.C. area until July 2012, when the USPTO opened its first satellite office in Detroit.
While the Detroit office was a small step geographically speaking (Detroit is 525 miles from Washington, D.C.), the Denver office is a huge step toward a national presence by the USPTO. Its central U.S. location will provide unprecedented access to inventors and entrepreneurs in the western part of the country, satisfying an important Section 23 objective of the America Invents Act (AIA) – better connecting patent filers and innovators with the patent office. The Denver office is expected to have state-of-the-art video conferencing facilities available to applicants. Thus, a significant part of the U.S., and the entire Rocky Mountain region, will be able to travel to Denver to complete examiner interviews and return home the same day.
The opening of the Denver office will also enable the USPTO to recruit examiners and board judges from pools of talented individuals they cannot access in Alexandria, VA. Colorado, for example, is the second-most highly educated state in the nation, is among the top 10 for adults with degrees in science and engineering, has four major research universities, and is home to 24 federally funded research laboratories. The opening of the Denver office provides a great opportunity to recruit candidates that have recent and relevant technical and industry experience that they will bring to the examining and board judging roles. As a result, the Denver office is expected to provide better quality examinations and decrease the number of patent applications waiting for examination, and satisfy another criteria in Section 23.
The new office is also expected to improve recruitment of patent examiners, another Section 23 factor, because of Colorado’s favorable cost of living and quality of life factors. As Acting Director Michelle Lee stated recently, “In addition to creating jobs for intellectual property professionals throughout the region, the permanent Denver satellite office will be an indispensable resource for regional inventors, entrepreneurs and businesses.” The benefits of the new USPTO satellite office will extend beyond creating jobs. The opening of the office will also have a positive economic impact in the region. According to a study by the University of Colorado Leeds School of Business, the Denver-based office is expected to provide a $440 million economic impact to the region in the first five years of operation.
The Denver office also gives the USPTO an opportunity to think outside the box and presents an historic opportunity to set aside the baggage that comes from operating in one location for over 200 years. For example, the Denver satellite patent office could be used to run small-scale pilot projects in conjunction with local public/private partners, such as a one-month filing to issuance pilot or a collaborative examination by two examiners, that if successful could be scaled ultimately changing how the USPTO operates. In this regard, perhaps the most exciting prospects of the satellite offices are yet to come.
Professor Bell provides his view on “Intellectual Privileges” rather than “Intellectual Property.” Although Bell’s ideas are directed at copyright law, it does not take an inventive step to to cross them over into patent law policy.
Bell’s book fully covers the topic from his perspective: http://mercatus.org/intellectualprivilege/Intellectual-Privilege.html.
HT to Stephan Kinsella
By Jason Rantanen
Teva recently filed its merits brief in Teva v. Sandoz (previous PatentlyO discussion here and here). It’s main argument on the issue of claim construction is that claim construction involves making findings of fact and Rule 52(a)(6) of the Federal Rules of Civil Procedure states that “[f]indings of fact, whether based on oral or other evidence, must not be set aside unless clearly erroneous.” In support of the first part of this argument, the brief points to determinations about the perspective offered by a person of ordinary skill in the art and the use of extrinsic evidence to resolve ambiguities; these, the brief argues, are inherently factual determinations for which deference should be given to the district court.
A key issue will be whether these types of judicial determinations are actually factual findings, or whether they are something else. Certainly reviewing courts make determinations about some types of historical evidence all the time – one need only look at Justice Breyer’s discussion of legislative history and Congressional intent in Aereo for recent example – without invoking deference. These determinations aren’t limited to “purposivists”: Justice Scalia’s originalist approach to interpreting legal statutes, for example, involves looking to how the text would have been understood at the time it was issued, something that can involve historical linguistic research. Figuring out whether the “facts” involved in claim construction are akin to something like legislative history or the historical determinations involved in an originalist approach, or instead are the type of “facts” encompassed by Rule 52 is central to the invocation of that rule. Much of Teva’s brief seeks to tackle this challenge, arguing that the facts involved in claim construction are exactly the kinds of facts that are encompassed by Rule 52.
Of these arguments, I found the most compelling to be the point that even as determinations such as the knowledge of a person of ordinary skill in the art are factual and reviewed with deference in one context (such as obviousness and enablement), they are reviewed without deference in claim construction. It will be interesting to see how Sandoz responds.
One important tension that the brief fails to resolve, however, is the key question of how deference on factfinding plays into decisions about claim construction. If the ultimate determination of the meaning of claim terms remains one of law, does that basically invite an obviousness-like determination wherein certain subsidiary issues – such as the knowledge possessed by a PHOSITA and content of extrinsic evidence – are reviewed with deference, but the reviewing court makes the final determination, weighing each of the various pieces of information, without deference? Or is it something else?
The brief does seem to indirectly offer a vision of how deference to factual findings should work, but it strikes me as leaving no place for the other side of the mongrel practice: the legal component. The vision offered by the brief appears in Part IV., on pages 53-54, where Teva argues that the Federal Circuit erred by not granting deference to the district court on the “understanding of Figure 1, of SEC technology,
and of the prosecution history.” In other words, Teva’s view of deference manifests as the lens through which the interpreter of the legal doctrine looks at not just the extrinsic evidence (the SEC technology), but also the patent document itself and the prosecution history. If this is the correct approach to deference – that the reviewing court must give deference to the district court’s interpretation of the patent document and prosecution history – it is hard for me to see anything left that isn’t entitled to deference. (Maybe the ordinary meaning of the claims themselves? But that’s “the ordinary meaning to a person of skill in the art,” so that doesn’t work.). This “lens” approach to deference seems to go too far, in my mind, and is fundamentally at odds with the way other factual findings and deference work in patent law doctrines such as nonobviousness and enablement.
The brief also challenges the various rationales for reviewing factual issues in claim construction de novo: “Markman requires it” argument, the interpretation of legal documents is a question of law argument, and the uniformity argument. It also argues that allowing de novo review of facts on appeal produces poorer decisions and is costly to the patent system, citing to the reversal rate data. (Although this latter point seems to depend heavily on how deference is actually implemented – it would seem that the de novo review of certain subsidiary elements of claim construction, alone, would have only a very marginal effect on decision quality and litigation cost).
You can download a copy of the brief here: Teva’s Opening Brief
By Jason Rantanen
While many eyes will be on the Supreme Court on Monday when it releases its decision in Hobby Lobby v. Sebelius, the term is over for patent cases. Over the past few months, the Court issued an astonishing six patent law-related opinions (almost 10% of the Court’s docket), covering ground from claim definiteness (Nautilus) to the exceptional case standard in Section 285 (Octane, Highmark) to multi-actor infringement (Limelight) to the burden of proof in noninfringement declaratory judgment actions (Medtronic) to the ever-present patentable subject matter case (Alice). Three of these opinions (Alice, Highmark, and Limelight) resolved deep intra-circuit splits at the Federal Circuit. Altogether, this term profoundly altered the landscape of patent law jurisprudence. Perhaps more important than the substance of the Court’s opinions was the change itself: through opinions such as Nautilius and Alice, the court made it clear to participants that the law of patents can be a dynamic, changing thing, an organicness that forward-thinking patent attorneys and agents – even more than litigators – will be forced to grapple with.
I’ll be talking more about this year’s developments in patent law at the Wisconsin State Bar Association’s annual Door County Intellectual Property Academy in a few weeks, and the Supreme Court will certainly take center stage. Dennis will be there as well.
For now, though, the next major event in patent law jurisprudence is likely to be the Court’s opinion in Teva v. Sandoz, in which the Petitioner posed the question:
Whether a district court’s factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Rule 52(a) requires.
But this case is more complex than the (relatively) simple issue of deference in appellate review of claim constructions. At the trial court level, the district judge did not simply construe the claim in a way unfavorable to Sandoz, the accused infringer. Rather, the district judge rejected Sandoz’s argument that the claim term “Average Molecular Weight” was indefinite and construed the claim in Teva’s favor. On appeal the Federal Circuit reviewed the issue of claim definiteness without deference and concluded that the term was indefinite (applying it’s pre-Nautilus standard of “not amenable to construction” or “insolubly ambiguous”).
Herein lies the sticky part: If one takes the view that questions of claim definiteness and claim construction are effectively one and the same, then this case squarely presents a question about the appropriate standard of review for claim construction. This seems intuitive: both revolve around determining claim meaning.
But treating issues of claim definiteness and construction as if they are just different sides of the same coin runs into a glitch if there is a factual component: one issue (definiteness) arguably comes with a “clear and convincing” evidentiary standard while the other (claim construction) does not. (While there is a canon that claims should be interpreted to preserve their validity, it’s a weak one that only operates as a last resort. See Phillips v. AWH Corp., 415 F.3d 1303, 1327 (Fed. Cir. 2005) (“While we have acknowledged the maxim that claims should be construed to preserve their validity, we have not applied that principle broadly, and we have certainly not endorsed a regime in which validity analysis is a regular component of claim construction.”).) If different evidentiary standards are being applied to the factual components of each, then claim definiteness and claim construction must be separate issues.
If this logic is sound and claim definiteness and construction are distinct issues, then Teva v Sandoz is really only about the standard of review on the issue of claim definiteness, not about the standard of review of claim construction. But the observation about evidentiary standards notwithstanding, it seems counterintuitive to say that the question of whether “a patent’s claims, viewed in light of the specification and prosecution history, inform those skilled in the art about the scope of the invention with reasonable certainty” is somehow different from how those skilled in the art would interpret the claims. And Teva’s Brief, which I’ll summarize tomorrow, treats indefiniteness and claim construction as if they were the same thing.
How, then, could the Court escape this conundrum of different evidentiary standards for what is essentially the same determination, aside from concluding both are pure issues of law, a position that would be at odds with Markman and probably Nautilus? First, the Court could conclude that indefiniteness does not implicate the clear-and-convincing evidence standard. The Court went halfway there in Nautilus, observing that the “presumption of validity does not alter the degree of clarity that §112, ¶2 demands from patent applicants,” but left open the question of whether subsidiary issues of definiteness trigger the clear-and-convincing evidence standard. A second possibility would be for the Court to implement a “clear-and-convincing” evidentiary standard for issues of fact in claim construction (although how that would work in a form other than the current pro-validity canon, I have no idea).
There are also some less-than-helpful options that would further churn up the muddy bottom of patent law. It’s entirely possible that the Court could issue an opinion solely addressing the issue of whether or not the appellate court must grant deference to district court factual findings on the issue of indefiniteness, and leave unanswered the question of whether deference is appropriate in the context of claim constructions. Or, it could avoid discussing the appropriate evidentiary standards for claim construction and indefiniteness (as it did in Nautilus), instead leaving folks to ponder whether they are the same or different.
I’ll also make the observation that after the Court granted certiorari in this case, it issued Nautilus v. Biosig, which lowered the standard for finding claims indefinite. Even if the Court were to reverse in this case – ruling that factual issues in claim construction and claim definiteness are entitled to deference – it would seem that the inevitable result would be a remand to the Federal Circuit, and then probably to the district court, to apply the new standard.
By Jason Rantanen
Today, the patent office issued new instructions (download: PTO Alice Instructions) for patent examiners to follow when examining claims for compliance with Section 101. This practice is similar to those it followed after the Court issued other substantive patent law opinions. One important component of the new instructions are that they make it clear that going forward, the PTO will be applying the Mayo v. Prometheus framework to all types of inventions:
[T]he following instructions differ from prior USPTO guidance in two ways:
1) Alice Corp. establishes that the same analysis should be used for all types of judicial exceptions, whereas prior USPTO guidance applied a different analysis to claims with abstract ideas (Bilski guidance in MPEP 2106(1I)(B)) than to claims with laws of nature (Mayo guidance in MPEP 2106.01).
2) Alice Corp. also establishes that the same analysis should be used for all categories of claims (e.g., product and process claims), whereas prior guidance applied a different analysis to product claims involving abstract ideas (relying on tangibility in MPEP 2106(Il)(A)) than to process claims (Bilski guidance).
In addition, the PTO provides a bit of guidance for determining whether a claim will fail one of the two steps. For the first step (determine whether the claim is directed to an abstract idea), the memorandum provides four examples of abstract ideas referenced in Alice:
- Fundamental economic practices;
- Certain methods of organizing human activities;
- “[A]n idea of itself; and
- Mathematical relationships/formulas
If an abstract idea is present in the claim, the examiner should proceed to the next step, determining whether any element or combination of elements in the claim sufficient to ensure that the claim amounts to significantly more than the abstract idea itself. Examples of limitations that may be sufficient to qualify as “significantly more” include:
- Improvements to another technology or technical fields;
- Improvements to the functioning of the computer itself;
- Meaningful limitations beyond generally linking the use of an abstract idea to a particular technological environment.
Examples of limitations that are not enough to qualify as “significantly more” include:
- Adding the words “apply it” (or an equivalent) with an abstract idea, or mere instructions to implement an abstract idea on a computer;
- Requiring no more than a generic computer to perform generic computer functions that are well-understood, routine and conventional activities previously known to the industry.
wait until you read Aereo.
By Jason Rantanen
American Broadcasting Cos., Inc. v. Aereo, Inc. (2014) Download ABC v Aereo
This morning the Supreme Court issued the much-awaited opinion in American Broadcasting Cos. v. Aereo, in which a 6-3 majority concluded that Aereo’s subscription television service, which uses thousands of small antennas and other equipment housed in a warehouse, violates the petitioners’ exclusive rights to perform their copyrighted works publicly within the meaning of the Transmit Clause. Writing for the majority, Justice Breyer eschewed formal distinctions, instead reasoning that if it’s basically the same as a duck, it’s a duck:
In other cases involving different kinds of service or technology providers, a user’s involvement in the operation of the provider’s equipment and selection of the content transmitted may well bear on whether the provider performs within the meaning of the Act. But the many similarities between Aereo and cable companies, considered in light of Congress’ basic purposes in amending the Copyright Act, convince us that this difference is not critical here. We conclude that Aereo is not just an equipment supplier and that Aereo “perform[s].”
Much of the critiques and discussion immediately following the release of the opnion focused on the difficulty in applying this “looks-like-cable-TV” rule to the vast ecosystem of current and emerging content access, distribution and dissemination technologies. These criticisms mirror points made by Justice Scalia in dissent (who used the “looks-like-cable-TV” term):
III. Guilt By Resemblence
The Court’s conclusion that Aereo performs boils down to the following syllogism: (1) Congress amended the Act to overrule our decisions holding that cable systems do not perform when they retransmit over-the-air broadcasts; (2) Aereo looks a lot like a cable system; therefore (3) Aereo performs.  That reasoning suffers from a trio of defects
(Internal citation omitted).
While Aereo unquestionably has profound implications for the technology sector generally, for patent law purposes it offers another insight into how the Judges might approach the issue of claim construction that is currently being briefed in Teva v. Sandoz. Aereo involved a question of statutory interpretation – itself undeniably a question of law. Here, the majority adopted a legislative history/legislative intent/legislative purpose that resulted in something akin to the “essence” of the statute being what was really important. The dissent would have applied a much more formal textualist approach in ascertaining its scope. It is the first of these two approaches that seems to me to be strikingly similar to how the Court has approached patent claims in recent opinions when directly confronted with substantive issues in cases such as KSR, Bilski, and Alice. If the Court does embrace a more purposivist approach to claim construction in Teva, it would be dramatically alter the landscape of patent claims even more than its decisions on substantive doctrines such as nonobviousness and patentable subject matter.
Of course, the question presented in Teva is nominally only about the question of whether deference to district courts on issues of claim construction is appropriate, not about claim construction philosophies generally. That said, it seems to me that it will be difficult for the Court to avoid interjecting its views on claim construction into whatever opinion it issues on deference.
Dennis is on vacation and said I could post so I’m running with it!
The analysis everyone suggests is right under 101 (recall I don’t think it’s an invalidity defense; not sure what impact, if any, it has on patentability) goes something like this:
Is the claim “directed to” some natural law/natural thing/abstract idea?
If so, there must be more than ‘conventional’ application of it.
Applying that to a lot of medical method claims (Ariosa v. Sequenom is discussed by others below), the problem is that, before the discovery of the natural thing/idea/law, no one knew that you could apply anything to do whatever the claim says. Nothing was “conventional” with respect to the newly discovered thing/law/idea.
By asking what’s conventional, we are importing hindsight.
Thoughts, or am I not yet awake and Dennis should come back and get this ship righted?
One last thought for those of you who think “invention” has meaning beyond 103. I think the legislative history is beyond clear, as is the statute, but here’s a committee report:“The major changes or innovations in the title consist of incorporating a requirement for invention in § 103 and the judicial doctrine of contributory infringement in § 271.”
Today continues our mini-symposium on Alice v. CLS Bank with a guest post by Jeffrey A. Lefstin, Professor at the University of California, Hastings College of the Law.
Alice Corp. marks the Supreme Court’s eighth subject-matter eligibility case since the 1952 Act. Without question, the most problematic aspect of the Supreme Court’s § 101 jurisprudence has been discerning the actual test for patent-eligibility. In Mayo v. Prometheus, the Court purported to establish a general framework for subject-matter eligibility: that to be patent-eligible, a claim must include an “inventive concept” beyond an underlying fundamental principle, such as a law of nature, natural phenomenon, or abstract idea. The Court’s omission of significant reference to Mayo in Association for Molecular Pathology raised some doubt as to whether Mayo defined a universal test for eligibility under § 101. Yet Alice Corp. appears to confirm that Mayo is a universal framework for discriminating between ineligible principles and patent-eligible applications.
Mayo’s ambiguity led to the Federal Circuit’s fracture when it heard CLS Bank en banc. Mayo suggested three possible tests for patent-eligibility, without committing definitively to any one of them: inventive application, pre-emption, and “more than just apply it.” Justice Thomas’s opinion in Alice does not expressly commit to a single interpretation of Mayo. Yet Thomas’s presentation of Mayo, his framing of the Court’s prior precedent, and his application of Mayo to Alice’s claims all indicate that Alice endorses the last aspect of Mayo: that a claim must do more than set forth a fundamental principle and add a generic instruction to “apply it.” If this interpretation is correct, then Alice may in the long run be more significant for fields such as biotechnology, where Mayo’s “inventive application” aspect has cast doubt on the patent-eligibility of many discovery-based inventions.
Mayo’s first test of patent-eligibility is a test for inventive, or non-obvious, application of a fundamental principle. Drawing from Flook, where Justice Stevens wrote that “conventional and obvious” post-solution activity cannot transform an unpatentable principle into a patentable process, and Funk Brothers, where Justice Douglas held that a composition of matter was not patentable because the patentee’s application was “a simple step” once his discovery was assumed away, Justice Breyer invalidated Prometheus’s claims because the steps of the claimed method beyond the underlying natural law were merely “well-understood, routine, conventional activity already engaged in by the scientific community.” Breyer contrasted those steps with the additional steps claimed in Diamond v. Diehr, which in context were not “obvious, already in use, or purely conventional.” The Mayo Court drew support for this test from the Court of Exchequer’s 1843 opinion in Neilson v. Harford, where the patent was said to have been sustained because the patentee implemented his newly discovered principle “in an inventive way.”* This view of Mayo – that obvious applications of fundamental principles are not patent-eligible – was the one taken by the Northern District of California in the Ariosa v. Sequenom litigation, where Judge Ilston invalidated Sequenom’s claims largely because once Sequenom’s discovery of cell-free fetal DNA in the maternal bloodstream was assumed to be known, the application in the form of a test for fetal abnormalities required only routine and well-known methods of DNA amplification.
The second test of eligibility suggested by Mayo is a test of pre-emption. The Court explained that subject-matter exclusions were grounded in pre-emption, echoing Benson’s concern that patents should not monopolize “the basic tools of scientific and technological work.” Mayo seemed to state that pre-emption was analytically secondary to categorical exclusion: the concern that Prometheus’s claims would tie up too much future use of the underlying natural laws “simply reinforces our conclusion” that the claimed processes were not patent-eligible. Yet Breyer’s opinion intertwined pre-emption with inventive application as a criterion for patent-eligibility: Diehr was described as a case where the patentee had not sought to pre-empt the use of the Arrhenius equation. While the patentee in Flook had failed to “limit the claim to a particular application,” the supposedly unconventional steps in Neilson had “confined the claims to a particular, useful application of the principle.” This interpretation of Mayo was followed by the majority of the Federal Circuit when it heard CLS Bank en banc. Both Judge Rader and Judge Lourie rejected the notion that Mayo’s “inventive concept” demanded “inventiveness” in the sense of a non-obvious application. And while they disagreed on the proper framework, both Judge Lourie and Judge Rader founded their analyses on the question of whether Alice’s claims would pre-empt every practical application of the underlying abstract idea.
But Mayo suggests a third test beyond inventive application or pre-emption: that a claim must represent more than a mere direction to apply a fundamental principle. According to Justice Breyer, one could not transform a law of nature into a patent-eligible application by simply disclosing the law of nature, and adding the words “apply it;” Einstein or Archimedes, for example, could not have patented their famous discoveries by merely appending an instruction to apply them. This aspect of Mayo has received the least attention in subsequent cases and commentary. And yet in Justice Thomas’s opinion in Alice, it is this aspect of Mayo that becomes the core of the doctrine.
In Alice’s framework, once it has been determined that a claim is drawn to an abstract idea, ‘step two’ of the Mayo test is to determine whether it contains an “inventive concept” sufficient to transform the claim into a patent-eligible application. But in contrast to Flook and Mayo, “inventive concept” in Alice bears little trace of “inventiveness.” Justice Thomas does describe the computer implementation in Alice as “conventional.” But nowhere does he label it non-inventive, and the word obvious is conspicuously lacking from the opinion. And while Alice hardly addresses the Federal Circuit’s opinions at all, it may be significant that Thomas never contradicts Judge Lourie’s and Judge Rader’s rejection of “inventiveness” as an aspect of “inventive concept” in their CLS Bank opinions.
The contrast between Alice and Mayo is most apparent in their treatment of Diehr. In Mayo, the claims in Diehr represented an inventive application of the Arrhenius equation, and were not “obvious, already in use, or purely conventional.” But in Alice, the claims in Diehr were sustained not because they were non-obvious, but because “they improved an existing technological process,” and achieved a result the industry had not been able to obtain. Likewise, in Mayo, the failing of the Flook claims was that the steps of the claim were well-known, conventional or obvious; in Alice, while Thomas notes that the Flook implementation was purely conventional, Flook primarily stands for the proposition that limitation to a particular technological environment does not render an abstract idea patent eligible.
As for pre-emption, which intertwined so closely with inventive application in Mayo, is hardly present for ‘Mayo step two’ in Alice. Again the characterization of precedent is telling: in Mayo, the claim in Benson was vulnerable because it was “overly broad.” In Alice, Benson requires a “new and useful” – but not inventive – application of an idea for patent eligibility, but the lesson of Benson is that simply implementing a principle on a computer is not a patentable application.
For Justice Thomas, the ‘step two’ inquiry involves neither inventiveness nor pre-emption, but revolves around Mayo’s proscription against “more than just apply it.” Alice follows Flook and Mayo in holding that “conventional” activity cannot transform a principle into a patent-eligible application, but in Alice “conventional” seems to connote generic more than it connotes obvious. Thus Thomas introduces ‘step two,’ the search for an inventive concept, by invoking the third aspect of Mayo: patent-eligible application requires more than a statement of the abstract ideas plus the words ‘apply it.’ And while Thomas notes that the measuring steps in Mayo were “well known in the art,” he again quotes the ‘more than apply it’ language from Mayo to establish that those steps adding nothing of significance to the underlying natural law.
Most significantly for the Alice analysis, Thomas ends his summary of Mayo by quoting language that played little role in Mayo itself: it was not that conventional steps cannot supply an ‘inventive concept,’ but “conventional steps, specified at a high level of generality” (emphasis added) could not supply an inventive concept. For it is genericness, not lack of invention or pre-emption, that dominates the remainder of Thomas’s opinion. His summary of the Court’s § 101 jurisprudence touches upon the notion of pre-emption, but emphasizes above all else the requirement of “more than generic” application:
These cases demonstrate that the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention. Stating an abstract idea “while adding the words ‘apply it’” is not enough for patent eligibility. Nor is limiting the use of an abstract idea “‘to a particular technological environment.’ ” Stating an abstract idea while adding the words “apply it with a computer” simply combines those two steps, with the same deficient result. Thus, if a patent’s recitation of a computer amounts to a mere instruction to “implemen[t]” an abstract idea “on . . . a computer,” that addition cannot impart patent eligibility. This conclusion accords with the pre- emption concern that undergirds our §101 jurisprudence. Given the ubiquity of computers, wholly generic computer implementation is not generally the sort of “additional featur[e]” that provides any “practical assurance that the process is more than a drafting effort designed to monopolize the [abstract idea] itself.”
Similarly, Alice’s application of the test to the claims in suit emphasizes “more than apply it” and generic application; the question for Justice Thomas “is whether the claims here do more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer.” Thomas does describe the functions performed by the computer as “routine, conventional, and well-known in the field,” but his characterization serves to support the conclusion that the claimed steps do nothing more than define generic computer implementation. And taken as a whole, the claims at issue fail not because they lack inventiveness, nor because they reach too broadly, but because they amount to “’nothing significantly more’ than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer.
So Alice may fail to provide clear boundaries for the eligibility of computer-implemented inventions. But it could clarify something more important. As I have described in a recent paper, the actual test for patent-eligibility in cases like Neilson v. Harford, and in American jurisprudence for the next century, was a requirement that the patentee claim a specific mode of application of a fundamental principle, rather than a generic claim to the principle as applied. If Alice does indeed endorse the third aspect of Mayo, then the test for patent-eligibility is not a question of non-obvious application, nor a question of pre-emption, but a question of whether the claim does significantly more than state a fundamental principle coupled with an instruction to “apply it.” Embracing that aspect of Mayo could signal a return to the historical standard of patent-eligibility.
*As I discussed in a previous post, the Court’s reliance on Neilson in Mayo and Flook was entirely misplaced. The patent in Neilson was sustained not because the patentee’s implementation was inventive, but precisely because it was entirely conventional and well-known in the art.
The Supreme Court’s Alice Decision on Patent Eligibility of Computer-Implemented Inventions: Finding an Oasis In the Desert
Guest Post by Donald S Chisum, Director of the Chisum Patent Academy and author of Chisum on Patents.
In Alice (June 19, 2014), the Supreme Court held that the two step framework for determining the Section 101 patent-eligibility of a patent claim, which the Court previously articulated in the 2012 Mayo decision on the patentability of a diagnostic method, applied to computer-implemented inventions. Thus, one determines: (1) does the claim recite an ineligible concept (natural phenomena, natural law or abstract idea), and (2) if so, does the claim recite sufficient additional elements to make the claim one to an application of the concept, rather than to the concept itself?
On Mayo step one, Alice held that the claims at issue were to an abstract idea, an “intermediated settlement.” On step two, it held that “merely requiring generic computer implementation” did not “transform that abstract idea into a patent-eligible invention.” Thus, claims to a method, a computer system configured to carry out the method, and a computer-readable medium containing program code for performing the method all fell invalid under Section 101.
I considered but then reconsidered entitling this comment “Alice in Wonderland.” For, indeed, the Supreme Court’s chain of decisions creating a judicial exception to the statute defining patent eligible subject matter (35 U.S.C. § 101) and holding unpatentable claims to algorithms and abstract ideas, stretching from Benson in 1972 to Alice in 2014, is wondrous. But I will not here review the “big picture,” including the fundamental flaws in the chain; I and others have already done that.
Instead, my focus is on the “small picture,” the every day problem: does the Alice opinion provide some meaningful guidance to fill the near void left by the Court in its prior Mayo and Bilski decisions? Those decisions provided no definition of an “abstract idea” (or “law of nature”) and little direction on, precisely, how much “more” was required for the transformation.
The Court’s fuzz left stranded in a desert of uncertainty an array of feet-on-the-ground decision makers, from inventors to rights owners to patent professionals drafting and amending claims to examiners to PTO officials to licensing negotiators to litigators to district court judges to federal circuit judges to treatise authors.
Positive news. At least on first analysis of Alice, I find some additional guidance, perhaps enough to lead us toward an oasis in the desert.
In particular, the Alice opinion supports the following proposition: a novel and unobvious solution to a technical problem is not an “abstract idea,” and a claim drawn to such a solution, even if broad, is not subject to the Mayo framework (though, of course, it is subject to scrutiny for disclosure support).
The Alice opinion does not state the proposition directly. The Court expressly indicated that it did not need to “delimit the precise contours of the `abstract ideas’ category” because the concept at issue was so similar to that in Bilski. But the proposition is fairly inferred from the Court’s rejection of the patent owner’s argument that the intermediated settlement concept in its claims was not an “abstract idea” within the implicit exception to Section 101 and from its novel description of the prior Diehr decision.
Based on prior Supreme Court cases and language in Mayo, the patent owner argued that the definition of “abstract ideas” for Section 101 was: “preexisting, fundamental truths that exist in principle apart from any human action.” The Court disagreed because that definition did not fit Bilski, which held that risk hedging was an abstract idea. Hedging was a “longstanding commercial practice” and a “method of organizing human activity,” but not a “truth” about the natural world that “always existed.” Hedging and the similar concept of intermediated settlement were abstract ideas because they were “fundamental economic practices.”
Thus, concepts that constitute abstracts ideas fall into two categories. First are mathematical equations, mathematical formulae and algorithms (at least ones of a mathematical nature, and, I would emphasize, not all algorithms are mathematical or numerical). Second are methods of “organizing human activity,” at least if they constitute a fundamental economic practice “long prevalent in commerce.”
What’s left out of the “abstract idea” category? The Court in Alice declined to say explicitly, but there are hints in its discussion of the 1981 Diehr decision in connection with the second Mayo step. The Court noted that Diehr had held a computer-implemented process for curing rubber was patent eligible, not because it involved a computer but rather because “it used that equation in a process designed to solve a technological problem in `conventional industry practice.” It reiterated: “the claims in Diehr were patent eligible because they improved an existing technological process, not because they were implemented on a computer.” In contrast, the claims in Alice did not “improve the functioning of the computer itself” or “effect an improvement in any other technology or technical field.”
The Court had discussed and distinguished the Diehr case before, in both Bilski and Mayo, but never on the basis that Diehr entailed a technological improvement. Thus, the Alice discussion of Diehr in terms of a solution to a technical problem is important new ground.
Hence there are strong grounds for the proposition that a patent claim reaches a safe harbor from Section 101 abstract idea scrutiny, including the Mayo second question for an “inventive concept,” if the claimant establishes that the claim is directed to a solution of a technological problem. This definition of abstract idea as excluding applied technology accommodates the case law treating pure mathematical statements, economics and finance, and schemes of a non-technical character (“methods of organizing human activity”) as “abstract ideas” that must be include additional elements to achieve patent eligibility (Mayo step two).
Is this shift in focus to “technological” an oasis of greater clarity? No doubt there will be arguments about what is technological and what is not. But there are at least three advantages to the verbal change. First, technology is the historic core of the patent system, especially given the Constitutional phrase “useful Arts,” which is 18th century terminology for “technology” in 21st century terminology. Thus, an inquiry about the technological is much less of an alien intruder than prior Supreme Court language about the abstract idea exception to Section 101. Second, evaluating the Section 101 abstract idea prohibition in terms of technological versus non-technological conforms to the language Congress used in Section 18 of the America Invents Act in setting up special PTO review of business method patents. Finally, a technology test aligns the United States standard with the language used in Europe and elsewhere to address exceptions to patent eligible subject matter.
By Jason Rantanen
SCOTUSblog is publishing a series of essays on Alice v. CLS Bank. Current participants include:
From the perspective of the parties involved, this week’s Alice Corp. v. CLS Bank decision held that a process that lessens settlement risk for trades of financial instruments is too abstract for patenting. However, to the leagues of interested onlookers holding their collective breath across our country and indeed around the world, the Supreme Court’s unanimous ruling subtly conveyed a much more significant judgment: software, as a class, is every bit as worthy of patent protection as any other medium in which innovation can be practiced.
Robert Merges – Go ask Alice — what can you patent after Alice v. CLS Bank?
Those of us who sweat in the clammy gymnasia of patent law have been waiting – with a mix of excitement, dread, and cynical disregard – for the Alice v. CLS Bank decision. The idea was, when the Court took the case, that we would finally have an answer to the question whether software can be patented under U.S. law. To say we did not get an answer is to miss the depth of the non-answer we did get. Reading the opinion reminds me of a famous passage in The Hitchhiker’s Guide to the Galaxy. Acolytes wait at the feet of a giant supercomputer, which 7.5 million years before had been asked “What is the meaning of life?” Finally, after eons of waiting, the computer spoke. Its answer was: “42.” The acolytes went forth, armed with this non-answer. And life went on. So it is with us, in the patent field. We have met our “42,” and its name is Alice. Now life must go on.
Justin Nelson – For patent litigants, Court affirms status quo
The reaction from patent litigants to the Supreme Court’s decision yesterday in Alice Corp. v. CLS Bank was one big shrug. The decision was exactly as expected. While the Court made clear that abstract ideas remain unpatentable, it “tread[ed] carefully” in construing patentability. Indeed, the most notable part of the decision was that it shied away from any grand pronouncements. Rather, it relied heavily on prior cases such as Bilski v. Kappos, Mayo Collaborative Services v. Prometheus Laboratories, Inc., and Association for Molecular Pathology v. Myriad Genetics. As the Court correctly concluded, “[i]t follows from our prior cases, and Bilski in particular, that the claims at issue here are directed to an abstract idea.” Yet it went no further than necessary: “[W]e need not labor to delimit the precise contours of the ‘abstract ideas’ category in this case. It is enough to recognize that there is no meaningful distinction between the concept of risk hedging in Bilski and the concept of intermediated settlement at issue here.”
Sandra Park - The Supreme Court as promoter of progress
Yesterday’s Supreme Court decision in Alice Corp. v. CLS Bank International revisits a fundamental question about our patent system: which patents promote the progress of science?
There’s also a detailed analysis and commentary by John Duffy that begins:
Although Alice Corp. v. CLS Bank was identified by this website and many other commentators as a major case on patent law, the Supreme Court’s unanimous resolution of the case does little to change, or even to clarify, pre-existing law. The case becomes the fourth Supreme Court decision since 2010 to hold patent claims invalid based on judicial exceptions to patentability. While Alice Corp. is only an incremental addition, the continuation of that larger trend is hugely important because, as the Court itself acknowledges, the judge-made doctrine in this area has the potential to swallow all of patent law.
If you don’t know the story, Alice meets up with a hookah-smoking caterpillar who tells her that if she eats out of one “side” of a (round) mushroom, she’ll get bigger, but out of the other side, she’ll get smaller. He doesn’t fully explain to Alice what will happen to make her taller and shorter, and so here is a fun read:
This time Alice waited patiently until [the caterpillar] chose to speak again. In a minute or two the Caterpillar took the hookah out of its mouth and yawned once or twice, and shook itself. Then it got down off the mushroom, and crawled away in the grass, merely remarking as it went, ‘One side will make you grow taller, and the other side will make you grow shorter.’
‘One side of what? The other side of what?’ thought Alice to herself.
‘Of the mushroom,’ said the Caterpillar, just as if she had asked it aloud; and in another moment it was out of sight.
Alice remained looking thoughtfully at the mushroom for a minute, trying to make out which were the two sides of it; and as it was perfectly round, she found this a very difficult question. However, at last she stretched her arms round it as far as they would go, and broke off a bit of the edge with each hand.
‘And now which is which?’ she said to herself, and nibbled a little of the right-hand bit to try the effect: the next moment she felt a violent blow underneath her chin: it had struck her foot!
She was a good deal frightened by this very sudden change, but she felt that there was no time to be lost, as she was shrinking rapidly; so she set to work at once to eat some of the other bit. Her chin was pressed so closely against her foot, that there was hardly room to open her mouth; but she did it at last, and managed to swallow a morsel of the lefthand bit.
‘Come, my head’s free at last!’ said Alice in a tone of delight, which changed into alarm in another moment, when she found that her shoulders were nowhere to be found: all she could see, when she looked down, was an immense length of neck, which seemed to rise like a stalk out of a sea of green leaves that lay far below her.
Since law professors are, no doubt, going to beat the hell out of the Alice-in-Wonderland connection, I thought I’d stake my claim early. I’ve been reading a lot of law professor views, and several (if not many) think software patents are dead, or largely so. Kappos, in contrast, thinks Alice ate out of the side that’s going to make software patents larger, or at least not shrink. His view is here.
My guess is Alice is going to cause us all to bang our heads, stub our toes, and wander through Wonderland for many years to come.
Professor Mark P. McKenna of The University of Notre Dame Law School is one of the leading scholars of trademark law. Below, he provides his thoughts on the legal consequences of the TTAB’s decision in Blackhorse v. Pro-Football, Inc.
The Trademark Trial and Appeal Board (TTAB) just wrote another chapter in the long-running battle over the registration of the Washington Redskins trademarks. In Blackhorse v. Pro-Football, Inc., the Board cancelled 6 federal registrations of various Redskins marks (including stylized versions and logos – though not the one currently used by the team) on the ground they were disparaging to a significant proportion of Native Americans at the time of registration. As most readers of this blog likely know, this is the second time the TTAB has ordered cancellation of the marks – in 1999, after seven years of litigation, the Board cancelled the marks, finding them scandalous and disparaging. That ruling did not stand up on appeal, and the petitioners in this case are different. (Significantly, unlike the petitioner in Harjo, the petitioners’ claims here were not barred by laches.)
There are many things one could say about this ruling – about its societal significance, about the legal standard the TTAB applied (especially the focus on a “substantial composite” of the affected group), or about the likelihood that the decision with withstand appellate review. I am going to focus here on the legal consequences of the decision, assuming it stands. (The PTO will not actually remove the marks from the register until the team has exhausted its appeals.) Contrary to some of the press reports on the decision, cancellation does not entail loss of exclusivity of the marks. In particular it does not mean that the marks are not enforceable under federal law. It simply means that the marks will no longer be federally registered and therefore will not receive any of the benefits of registration.
The team will lose the benefits of the statutory presumption of validity and incontestability. And it will lose the benefit of nationwide constructive use. For many other parties, limiting protection to the geographic areas of actual use would be a significant consequence, but here that is unlikely to be important since the team very likely has nationwide rights by virtue of its actual use. Of perhaps greatest economic consequence, the government will no longer seize imported goods bearing any of the cancelled marks, since only goods bearing registered trademarks are subject to forfeiture. 19 U.S.C. § 1526. And none of the civil or criminal counterfeiting provisions will apply, as counterfeits are by definition making unauthorized use of registered marks. 15 U.S.C. § 1116; 18 U.S.C. § 2320.
These consequences are not meaningless, of course, but they are not nearly as significant as some have made them out to be. ESPN’s report, for example, claimed that the decision stripped the team of all federal rights, and that, if the decision stands, “any fan can produce and sell Washington Redskins gear without having to pay the league or the team for royalties and wouldn’t be in violation of any law for doing so.” It’s obviously not news that press reports mischaracterize legal decisions, but these kinds of statements pretty egregiously overstate things, in my view. That would be true even if there were no federal enforcement of the cancelled marks, since the logos themselves were not cancelled and any merchandise bearing both the word marks and the logos is almost certainly subject to enforcement. But it’s not even true that there will be no federal enforcement of the cancelled marks.
Of course, all of this depends on the assumption that courts do not interpret §2(a) to impose a limitation on one’s ability to enforce rights in an unregistered mark under §43(a). I would have thought that assumption was pretty uncontroversial, but some discussions of the new decision suggest that not all my colleagues in the academy share my view. One recent district court decision (Renna v. County of Union, N.J., 2014 WL 2435775, No. 2:11–3328 (D.N.J. May 29, 2014)) is on their side – that case held that marks barred from registration (in that case, under § 2(b)) could not be enforced under §43(a) either. (See here for Rebecca Tushnet’s analysis of the case). If that conclusion were generalizable, then today’s decision on the Redskins marks would have much more significant effect, since it would leave the football team with only state law rights, and those rights might be uncertain given courts’ general tendency to interpret state law as identical to federal law. But I think people are reading far too much into a single district court case, and that in any case Renna is wrong to conflate registrability under § 2 with protectability under §43(a).
Section 2 of the Lanham Act begins “No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless …”. Thus, to be registrable, the claimed designation must (1) be a trademark; and (2) not run afoul of any of the limitations in subsections (a)-(f). That is to say that only a subset of trademarks qualify for registration, and the subsections of § 2 identify the boundaries of that subset. When the Lanham Act was originally drafted, it was fair to say that the limitations on registrability demarcated the universe of trademarks that warranted federal protection. When the Lanham Act was passed, it was clear that only federally registered marks were enforceable under federal law; unregistered marks could be enforced, if at all, only through a common law unfair competition claim. Thus, the unfair competition cases primarily involved unregistrable marks. As I explained here, those common law unfair competition claims were, post-Erie, state law claims. But federal courts were (probably unjustifiably) concerned that this would give rise to a lack of uniformity in the law, and beginning around the mid-1960’s they began to interpret §43(a) to embrace a cause of action for infringement of unregistered marks. In other words, they expanded the federal statute to embrace the claims that previously would have been relegated to the common law.
With this very brief history in mind, one can see just how radical is the claim that the registration bars apply in § 43(a) cases – the claim fully conflates registered and unregistered marks, applying all of the same limitations to unregistered marks despite the fact that § 43(a) was expanded specifically for the purpose of providing a federal cause of action for unregistrable marks. That would be a truly remarkable departure, and one that draws no support from the text of § 43(a), which makes actionable use of “any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which … is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person.” Note that nothing in the section requires that the confusion result from use of a designation that meets the registrability requirements. There’s a reason for that.
It is therefore wrong, in my view, to say that the § 2 bars apply in § 43(a) cases, at least categorically. Nevertheless, one can understand why a court might be attracted to the argument that bars to registrability should be understood as bars to protection, full stop. After all, courts, with the active encouragement of trademark plaintiffs, have spent the last several decades eviscerating the substantive differences between trademark infringement and unfair competition. Indeed, the project has been so successful that courts and commentators alike now routinely say that registration status is largely irrelevant for purposes of enforcement. Such a sweeping claim is, of course, somewhat overstated, since registration obviously can affect priority and the geographic scope of rights in addition to the statutory presumptions and incontestability. Nevertheless, for most purposes courts have treated registered and unregistered marks the same, and the Supreme Court said in Two Pesos that “it is common ground that § 43(a) protects qualifying unregistered trademarks and that the general principles qualifying a mark for registration under § 2 of the Lanham Act are for the most part applicable in determining whether an unregistered mark is entitled to protection under § 43(a).”
I think courts that say this mean to say that the distinctiveness and functionality rules are the same for registered and unregistered marks (save for the question of which party bears the burden), and that infringement is determined the same way in either context. In this respect it is telling that these kinds of statements nearly always precede general statements of legal principles and that they rarely, if ever, accompany any real statutory analysis. The reason is that the registrability requirements and fundamental questions of trademark validity are, and have long been, understood to be distinct issues. It is not simply that trademark rights arise through use such that one can develop trademark rights without having ever applied for a trademark registration. It is that the Lanham Act imposes requirements for registrability that simply do not apply to unregistered marks. (Some of the registrability requirements – non-genericness, for example – go to validity, and those obviously do apply in §43(a) cases, but not because they are registration requirements.)
It is, of course, possible that courts would import into § 43(a) cases some particular bars to registration for policy reasons, just as common law courts might have had policy reasons to refuse to provide unfair competition remedies in particular cases. And perhaps there are good policy reasons for courts to deny protection to disparaging marks in any context. But it is worth noting that nothing has precluded parties from making these policy arguments before, and hardly anyone has done so. We have not, for example, seen defendants disputing the validity of unregistered marks on the ground that they are primarily geographically deceptively misdescriptive. That could be because it has just taken a long time for litigants to discover these arguments, given how much § 43(a) has changed over time. But I think it’s much more likely that most people have assumed that arguments about registrability have no purchase in the context of enforcement of an unregistered mark.
Finally, even if one thought the § 2 bars ought to apply generally in § 43(a) cases, we should be reluctant to import the § 2(a) bars specifically, since barring enforcement of scandalous, immoral, or disparaging marks raises even more serious constitutional questions than does refusing registration. Section 2(a) has occasionally been challenged on the ground that it denies government benefits on the basis of the content of speech. Courts have rejected that argument primarily on the ground that § 2 only precludes registration and does not proscribe conduct or prevent use of a mark. That reasoning has always been suspect to me, but it is significantly more questionable if it is to be understood to mean that the restrictions are constitutional simply because they do not forbid use rather than because they leave the user with the ability to rely on use-based rights. If we can expect courts to start applying the § 2(a) bars in the context of unregistered marks, we can expect to see this issue litigated much more pointedly.
Mark P. McKenna is the Associate Dean for Faculty Development, Professor of Law, and Notre Dame Presidential Fellow at the Notre Dame Law School.
By Jason Rantanen
Alice Corporation Pty. Ltd. v. CLS Bank International (2014)
Download opinion here: Alice v CLS
This morning the Supreme Court issued its opinion in Alice, unanimously affirming the Federal Circuit and finding all claims drawn to patent ineligible subject matter under Section 101. Justice Thomas wrote for the opinion for the Court. It begins:
The question presented is whether these claims are patent eligible under 35 U. S. C. §101, or are instead drawn to a patent-ineligible abstract idea. We hold that the claims at issue are drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention.
The opinion includes both the actual language of representative claims (in a footnote) and the court’s interpretation of them (in the body of the opinion). The latter is primarily what the court focuses on:
In sum, the patents in suit claim (1) the foregoing method for exchanging obligations (the method claims), (2) a computer system configured to carry out the method for exchanging obligations (the system claims), and (3) a computer-readable medium containing program code for performing the method of exchanging obligations (the media claims). All of the claims are implemented using a computer; the system and media claims expressly recite a computer, and the parties have stipulated that the method claims require a computer as well.
The Court next summarizes the long-standing nature of the law of nature, natural phenomena, and abstract ideas exception to patent eligibility, and reiterates that these exceptions are driven by a concern about pre-emption, balanced against caution in allowing the exceptions to swallow all of patent law:
Accordingly, in applying the §101 exception, we must distinguish between patents that claim the “‘buildin[g] block[s]’” of human ingenuity and those that integrate the building blocks into something more, Mayo, 566 U. S., at ___ (slip op., at 20), thereby “transform[ing]” them into a patent-eligible invention, id., at ___ (slip op., at 3).
Next comes the first key part: the Court reiterates the framework described in Mayo v. Prometheus, including the inventive concept language:
In Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U. S. ___ (2012), we set forth a framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts. First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts. Id., at ___ (slip op., at 8). If so, we then ask, “[w]hat else is there in the claims before us?” Id., at ___ (slip op., at 9). To answer that question, we consider the elements of each claim both individually and “as an ordered combination” to determine whether the additional elements “transform the nature of the claim” into a patent-eligible application. Id., at ___ (slip op., at 10, 9). We have described step two of this analysis as a search for an “ ‘inventive concept’”—i.e., an element or combination of elements that is “sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.” Id., at ___ (slip op., at 3).3
Applying this framework, the Court first found the claims directed to an abstract idea.:
On their face, the claims before us are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk. Like the risk hedging in Bilski, the concept of intermediated settlement is “ ‘a fundamental economic practice long prevalent in our system of commerce.’”
It then concluded that the claims also failed the second step: “the method claims, which merely require generic computer implementation, fail to transform that abstract idea into a patent eligible invention.”
Here’s the second piece of key language, which relates to the computer-implemented nature of the claims:
These cases [Mayo, Flook, Benson, and Diehr] demonstrate that the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention. Stating an abstract idea “while adding the words ‘apply it’” is not enough for patent eligibility. Mayo, supra, at ___ (slip op., at 3). Nor is limiting the use of an abstract idea “‘to a particular technological environment.’” Bilski, supra, at 610–611. Stating an abstract idea while adding the words“apply it with a computer” simply combines those two steps, with the same deficient result. Thus, if a patent’s recitation of a computer amounts to a mere instruction to“implemen[t]” an abstract idea “on . . . a computer,” Mayo, supra, at ___ (slip op., at 16), that addition cannot impart patent eligibility.
It is irrelevant that a computer is a physical object:
There is no dispute that a computer is a tangible system (in §101 terms, a “machine”), or that many computer-implemented claims are formally addressed to patent-eligible subject matter. But if that were the end of the §101 inquiry, an applicant could claim any principle of the physical or social sciences by reciting a computer system configured to implement the relevant concept. Such a result would make the determination of patent eligibility “depend simply on the draftsman’s art,” Flook, supra, at 593, thereby eviscerating the rule that “‘[l]aws of nature, natural phenomena, and abstract ideas are not patentable,’” Myriad, 569 U. S., at ___ (slip op., at 11).
Applying this standard, the Court concluded that the claims at issue here did nothing “more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer.” Slip Op. at 14.
Note that the Court’s ruling applies to the method claims, the computer system claims, and the computer-readable medium claims. Here’s the third bit of key language; I predict it’s going to tie folks in knots:
As to its system claims, petitioner emphasizes that those claims recite “specific hardware” configured to perform“specific computerized functions.” Brief for Petitioner 53.But what petitioner characterizes as specific hardware—a“data processing system” with a “communications controller” and “data storage unit,” for example, see App. 954,958, 1257—is purely functional and generic. Nearly every computer will include a “communications controller” and “data storage unit” capable of performing the basic calculation, storage, and transmission functions required by the method claims. See 717 F. 3d, at 1290 (Lourie, J., concurring). As a result, none of the hardware recited by the system claims “offers a meaningful limitation beyond generally linking ‘the use of the [method] to a particular technological environment,’ that is, implementation via computers.”
Put another way, the system claims are no different from the method claims in substance. The method claims recite the abstract idea implemented on a generic computer;the system claims recite a handful of generic computer components configured to implement the same idea. This Court has long “warn[ed] . . . against” interpreting §101“in ways that make patent eligibility ‘depend simply on the draftsman’s art.’”
Justice Sotomayor, joined by Justice Ginsburg and Breyer, agreed that the method claims here were drawn to an abstract idea, but concurred to express agreement with Justice Stevens’ view in Bilski that a “claim that merely describes a method of doing business does not qualify as a‘process’ under §101.”