February, 2016

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Getting Past Alice

Manny Schecter Chief Patent Counsel, IBM schecter@us.ibm.com

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Agenda

§  Introduction

§ Alice

§ Subsequent case law and patent examination

§ Status

§ Going forward

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Agenda

§  Introduction

§ Alice

§ Subsequent case law and patent examination

§ Status

§ Going forward

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Quotes From Law360, June 17, 2015 “Where Do We Stand One Year After Alice”

“No U.S. Supreme Court patent case has ever had so large an effect in so short a time…” Ken Adamo, Kirkland & Ellis “[P]ublic companies…will have to consider writing down the value of their portfolios…” Richard Baker, New England IP “[R]adically changed patent litigation…” Maya Eckstein, Hunton & Williams “[W]e remain in a confusing state where validity under §101 is unclear…” Barry Goldsmith, Miles & Stockbridge “[S]parked a fire that continues to rage…” John Jarosz, Analysis Group “The destructive wake of Alice…” Dr. Scott Kamholz, Foley Hoag “[A] game changer…” Patricia Martone, Law Office of Patricia Martone “[A]nimated a defense to patent assertions…” Paul Roeder, HP “[A] very blunt instrument…” Gary Rosen, Law Offices of Gary Rosen “[T]remendous value was destroyed…” Jaime Siegel, Acacia Research

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Full Disclosure: IBM Amicus Brief

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In the

Supreme Court of the United States ________________

ALICE CORPORATION PTY.LTD., Petitioner,

v. CLS BANK INTERNATIONAL AND CLS SERVICES LTD., Respondents.

________________

On Writ of Certiorari to the United States Court of Appeals for the Federal Circuit

________________

BRIEF OF AMICUS CURIAE INTERNATIONAL BUSINESS MACHINES CORPORATION IN SUPPORT OF NEITHER

PARTY

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IBM Amicus Brief

§ Uncertainty regarding patent-eligibility of computer-implemented inventions endangers critical part of our economy

§ Abstract idea doctrine unworkable in the computer-

implemented invention context

§ Concerns generally better addressed under other sections of statute

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Agenda

§  Introduction

§ Alice

§ Subsequent case law and patent examination

§ Status

§ Going forward

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Test for Patent Subject Matter Eligibility (USPTO Flowchart)

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Supreme Court’s Decision in Alice (2014)

§ Unanimous decision: all claims ineligible abstract ideas

§  “[W]e need not labor to delimit the precise contours of the abstract ideas category…”

§  “[W]e tread carefully in construing this exclusionary principle lest it swallow all of patent law.”

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The Crux of the Problem

If all inventions rely on an abstract idea, how do we determine whether an invention is significantly more than an abstract idea we do not know how to delimit?

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General Acknowledgement of Legitimacy of Computer Implemented Inventions

§ Did not find software and/or business methods to be generally ineligible

§  “There is no dispute that a computer is a tangible system…, or that many computer-implemented claims are formally addressed to patent-eligible subject matter.”

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Need to Recite More Than Mere Computer

§  “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.”

§  “[T]he mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.”

§  “The introduction of a computer into the claims

does not alter the analysis at Mayo step two.”

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Examples of Abstract Ideas from Alice

§ Fundamental economic practice long prevalent in our system of commerce

§ Certain methods of organizing human activities

§ An idea of itself § Mathematical relationships/formulas

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Significantly More Than Abstract Idea Itself

§  Improvements to another technology or technical field

§  Improvements to function of computer itself

§ Application with or via particular machine

§ Transformation to different state or thing

§ Limitation not well-understood, routine, conventional

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Agenda

§  Introduction

§ Alice

§ Subsequent case law and patent examination

§ Status

§ Going forward

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Subsequent Case Law

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0

10

20

30

40

50

60

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 *2015

District court 101 invalidity findings by termination date (*through 8/13/15)

Source: Lex Machina, district court cases with at least one finding of invalidity under 101, filed on or after January 1, 2000.

Bilski Mayo

Alice

Increasing §101 Invalidations

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Lower Court Results

§ Lower courts since Alice: ~65-75% invalidity rate on §101 grounds

§ Federal Circuit since Alice: ~90-95% invalidity rate on §101 grounds

§ DDR is the only computer implemented invention case since Alice in which the Federal Circuit upheld subject matter eligibility

§ More dispositions on motion Source: Robert Sachs, Fenwick & West, Bilskiblog/Alicestorm

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Are the Lower Court Results Deceptive?

§ Computer implemented invention optimists argue technical patents are upheld in 2/3 of district court §101 decisions

§ Higher rate of invalidity for business methods

§ But what about the other 1/3 – why are those patents invalid?

Source: D. Bartley Eppenauer, Shook, Hardy & Bacon in Law360, June 17, 2015

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Which Is Patent Eligible Subject Matter?

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None!

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Rovi v Netflix Media Synch

Across Devices

Synopsis v Mentor Graphics Circuit Logic Synthesis

for EDA

Thales Visionix v USA Helmet Mounted Inertial

Tracking

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Thales Visionix v. USA and Elbit Systems (Ct. Fed. Clm. 2015)

“[Regarding Alice Step 2] the system claim fails to transform the method claim into a patent-eligible invention. The plain language of Claim 1 describes generic, fungible inertial sensors that admittedly have already gained “widespread acceptance” in the field of motion tracking. Like the computer elements in Alice, these inertial trackers, when considered as an ordered combination in the claimed system, add nothing transformative to the patent. Although the concept of tracking the motion of a moving object relative to a moving reference frame may have been novel and nonobvious, the claimed system does nothing to ground this abstract idea in a specific way. The claims allow for the application of the navigation equation in almost endless environments, and are not limited to a fighter jet and a pilot’s helmet.”

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Lingering Case Law Issues

§ Conflation of 35 USC §101 v. §102/103/112

§ Preemption v. parsing v. as a whole

§ Hindsight

§ Consistency

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Subsequent USPTO Activity

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Patent Trial & Appeal Board (PTAB)

§ Glass half full or half empty?

§ Same aggressive results used by both optimists and pessimists

§ Demonstration of prevalence of bad patents v. hostile patent environment

§ Not necessarily the product of Alice

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Rate of §101 Rejections in Patent Examination Over Time

Source: Robert Sachs, Fenwick & West, Bilskiblog/Alicestorm

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0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Jan-12 Oct-12 Aug-13 May-14 Jul-14 Feb-15 Mar-15 Apr-15 May-15

2100-Comp. Arch 3600-Trans, E-Comm

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USPTO Patent Subject Matter Eligibility Guidelines

§ Focus on each individual claim as a whole

§ Prima facie case must be clearly articulated

§  Ineligibility conclusion may be supported by general knowledge (examiner notice) – rejection must include reasons but not necessarily evidence

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USPTO Patent Subject Matter Eligibility Guidelines

§ Aspirationally appropriate

§ Collaborative and iterative

§ Continuing examiner education

§ Collecting and posting examples

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How Many Examples Are Needed?

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Lingering Issues in Patent Examination

§  Examiners just as confused as everyone else

§  Examples focus on what is not eligible

§  Form paragraph rejections lack specificity (and lack evidence and consistency) §  Just how is ineligibility properly demonstrated?

§  After Alice – IBM survey indicates modest examination improvement – OPQA indicates no increase in examiner errors

§  Lack of clarity in Alice will likely impact efficiency

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Agenda

§  Introduction

§ Alice

§ Subsequent case law and patent examination

§ Status

§ Going forward

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Summary of Case Law for Patent Eligibility of Computer Implemented Inventions

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Cases Before Alice Cases After Alice

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Lack of Alignment

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Courts

PTAB

Examiners

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Where Are We Now?

§ Warning: USPTO interpretation does not have force of law!

§ Greater uncertainty

§ §101 defense to assertions nearly automatic in impacted technologies

§ More difficult to obtain and enforce patents – Reduced filing in most impacted technologies – Higher quality and lower volume of assertions and litigation

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Computer ease of use working against patent eligibility?

Inflection point on relative strength of geo patent systems?

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Agenda

§  Introduction

§ Alice

§ Subsequent case law and patent examination

§ Status

§ Going forward

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Claiming Tips

§  Focus claim language on technology, not business

§  Avoid mere economic claim language

§  Include more technical content and hardware in apps

§  Emphasize improvement to computer

§  Technical preambles? Bare bones preambles?

§  Include dependent claims covering valuable specific embodiments

§  M+F claims to incorporate disclosure into claims?

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Prosecution Tips

§  Interview early

§  Delay prosecution

§  Distinguish abstract idea from claims

§  Ask for proof in response to examiner notice

§  Leverage prior similar and desired results

§  Consider reissue/reexamine to improve claims

§  Keep pending continuations (hard to amend during PTAB challenge)

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Litigation Tips

§ Defendants – Alice adds significantly more to your defense!

– Early PTAB challenges stay litigation

§ Plaintiffs – Vet patents before assertion

– Consider success of §101 defense in potential jurisdictions

§ What if you are a defendant with a significant patent portfolio?

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Remediation?

§ Never-ending search for clarity goes on

§ Other forms of IP are inadequate

§ Alice cannot simply be ignored

§ Another (clarifying) Supreme Court case?

§ Legislation to clarify 35 USC §101?

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Legislation?

§ Better to do nothing?

§ Codification of worst fears?

§ Elimination of judicial exception never fully assured

§ Need for community consensus

§  Intersection with pending patent reform legislation and current Congressional climate

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Principles For Potential Legislation

§ Technology neutral

§ Claim considered as a whole

§  Independent of 35 USC §102, 103, and 112

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Software Industry

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Source: BSA

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Thank You. Questions?