SCIPR: patents (Alice/Nautilus)

Alice Corp. v. CLS Bank (Patentable subject matter of software-related inventions)

Nautilus v. Biosig Instruments (Patent indefiniteness)

Moderator: Thomas Pasternak, Partner, Steptoe & Johnson LLP

Panelists: Constantine Trela, Jr., Counsel to Alice Corp.; Partner, Sidley Austin LLP: Alice: We know that reciting computer components isn’t enough. Improving the operation of the computer, data handling, etc. seems to be PSM. Big area in between; not a lot of guidance on that. 

Mark Perry, Counsel to CLS Bank International, Partner, Gibson Dunn LLP: Is there enough guidance?  There is important guidance, but how much is enough?  SCt has been incremental.  Deliberately tried not to craft a fit-every-case, answer-every-question standard.

Professor Rebecca Eisenberg, University of Michigan Law School: we need to go back to Diamond to find a clear statement of what is PSM (other than cDNA); hopefully this will eventually show up with software.  Not very illuminating.

Professor Ronald Mann, Columbia Law School: disappointing pattern: take big cases, then become scared that they’ll ruin the economy if they say something big and say as little as possible. Fed. Cir. then tries to deal with it and eventually the opinions from Fed. Cir. make no sense because each judge is trying to pick the language from  the previous SCt opinion that they think is really the test. 

Perry: problem is in part overthinking. Bugs in the forest = not patentable.  Bugs built in the lab = patentable.  Economic principles = not.  But, you can find sentences in every opinion that will support anything and throws it open to the litigators.

Trela: Fundamental problem: if abstract idea is the trigger, Court is incredibly unclear about what an abstract idea is. Economic principles everyone knows may be obvious, but does that make them abstract? Algorithms, formulas, natural laws: rationales given for unpatentability are about withdrawing things from the storehouse of human knowledge, inherent in nature/mathematical relationships. Makes sense doctrinally, but when you get to economic concepts, they may be obvious, but if I come up with a wild idea like “make energy from cigarette butts” I may have an implementation problem but I haven’t withdrawn anything from the storehouse of human knowledge.

Perry: Part of the problem is, as Prof. Eisenberg said, that they’re working through the problem by telling us what’s not PSM but not what is. Fear of foreclosing technologies they don’t understand (cf. Aereo discussion at oral argument).  Doing it with a computer = not inventive because they have computers.

John Vandenberg, Counsel to Nautilus, Inc., Partner, Klarquist Sparkman LLP: SCt sees patents as a two edged sword. Q is whether the benefit from allowing claims of this sort outweighs the risk. 

Eisenberg: inventive concept is an unfortunate term.  Leaves impression that it’s more like 103, not what the Court intended.  PTO’s guidelines have offered a bunch of alternative factors to see whether there’s enough there beyond excluded matter.  If we had a clearer understanding of what an abstract idea/natural law/natural product maybe we wouldn’t have to collapse 101 into a seat of the pants 103 analysis.

Mann: abstractness may provide a less institutionally well suited way to dispose of cases than the other bars.  Judges say “this doesn’t sound inventive” but what do they know about business software?  It’s inherently situational.  Could use more contextual knowledge.

Eisenberg: agree (on this).  More interested in that on the nature side than the abstractness side. 102 has a discipline for figuring out the state of human knowledge to guide decisions, provide source of information. By contrast there’s no guide to figuring out what nature knows—isolated DNA is naturally occurring, but cDNA isn’t, per amicus briefs.  Imagining a magic microscope, but how do we know what that reveals?  We only have real microscopes.

Perry: only a problem at the tail end of the distribution (general groaning results).

Vandenberg: software patents no longer make sense for a small business—even if you get through the PTO you might be challenged.

Eisenberg: the only cases we’ve seen have been computer implemented business methods rather than broader software, but her expectation is that broadly claimed software patents are in trouble.

Mann: some patents are very specific, and we haven’t had cases about electronic inventions. Smartphone patent—completely intangible/electronic, but actually applied—you might see the Court have the nerve to say something’s patentable.  The patent in this case seemed the same as the patent in Bilski to them. They think the case means ‘we really meant it in Bilski.’

Perry: Google, BSA, etc. filed on the Bank’s side; didn’t view the case as threat to their industry, though some of them aren’t patent-reliant companies.  (Note from someone, sorry, that Microsoft is a defendant in half the software patent cases.)

Q: turn to Nautilus.

Vandenberg: Fed. Cir. test: if claim was amenable to construction, and not insolubly ambiguous, that was enough.  That language was curious and sent a message to trial courts that they shouldn’t waste time on indefiniteness. Chance of being reversed on claim construction is high enough anyway.  Only in means plus function was Fed. Cir. rigorous.  SCt: no one defended insoluble ambiguity.  We think Nautilus means not a post hoc approach. Not can you figure out, but can a follow on innovator look at the patent the day after issue and have reasonable certainty what’s covered.

Trela: Claim construction in theory tells you what claim meant to person of ordinary skill at the time. It’s only post hoc in the sense that all litigation is post hoc. What’s wrong with looking at claim construction?

Vandenberg: our patent was out of reexamination; pretty established that if you have reexamination you get to use the history of that too.  You can’t have a crystal ball to figure out what will happen. Fed. Cir. said “it’s clear because the reexaminer accepted this argument.”  Claim construction can be very hard; fact that it can be done shouldn’t tip scales against a finding of indefiniteness. There’s always a right construction, even when there isn’t really: because the claim must be construed.

Eisenberg: in order to exercise active appellate review, Fed. Cir. and SCt want to attribute meaning to the claim language; it becomes hard to say “this is ambiguous” even when a dct assigns one interpretation and a split appellate panel gives 2 more.  That’s ambiguity; if 3 different views are possible after studying the patent closely, then, even if each one is confident, indefiniteness exists. Likes focus on claim language as central and important and something applicants can do better on.

Mann: example of legal sociology.  What’s the difference between SCt standard and Fed. Cir. standard?  Probably nothing. Just keep “insolubly ambiguous” out of it.  They’ve accomplished a change in the status quo: dcts were told that if they invalidated on indefiniteness grounds they’d be reversed; now they won’t (necessarily) be.

Perry: this, unlike Alice, is really designed to influence primary conduct of patentees. Encourages them to write better and more claims.  Eisenberg mentioned claim by claim approach; we’ll see some claims getting wiped out while others survive. This ought to produce better patents down the road.

Mann: best part of briefs were discussion of the incentive to write indefinite claims in the hope that 20 years from now it would cover something.  That had a real effect on the Court.

Vandenberg: praises Gibson & Dunn for partnering on the briefs, but as a patent lawyer he contributed, among other things, a book of advice to patent lawyers/treatises & articles about the importance of including ambiguous claims. More ambiguous = more powerful, harder to innovate around; the zone of uncertainty was deliberate, and the Fed. Cir.’s standard encouraged that kind of practice.