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< | Did Alice Jurisprudentially Kill Software Patents? | >
> | Why Alice Should be the End of Software Patents | | | | |
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< | -- By ElizabethBrandt - 01 Nov 2016 | >
> | -- By ElizabethBrandt - 03 Jan 2017 | | |
Introduction | |
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< | There are many policy reasons, some of which we’ve discussed in class, to either support or oppose patents directed to software. This post sets aside the policy aspects of software patents and seeks to understand whether software patents are jurisprudentially dead after the Supreme Court’s opinion in Alice Corp v. CLS Bank International. This post argues that Alice already declared software as ineligible for patenting despite the Supreme Court’s lack of clarity. I first explore the jurisprudence leading up to the Alice decision, then discuss Alice_’s holding itself, and finally touch on the recent _Intellectual Ventures case in the Federal Circuit. | >
> | The Federal Circuit (CAFC) and Supreme Court have created tension-filled jurisprudence in regards to patent eligible subject matter under 35 U.S. Code §101. This post argues that the Court should simplify the jurisprudence by removing the allowance for software patents that improve a generic computer created under Alice Corp. v. CLS Bank International. | | | | |
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< | Pre Alice §101 Jurisprudence | >
> | Background and Holding of Alice | | | | |
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< | To understand the holding in Alice, one first needs to look at the Supreme Court’s prior holdings in patent law discussing 35 U.S. Code §101, which describes the types of inventions that are patentable under United States law. On the words of the statute, which allows for the patenting of “any new and useful process, machine, manufacture, or composition of matter,” computer software seems like a patentable subject matter under the statute’s coverage of processes. However, United States courts read a number of exceptions into §101 in early cases by looking to British precedent disallowing the patenting of natural laws. While the early jurisprudential support for the exception of abstract ideas seems indefinite, the exception is well settled and oft-repeated in cases such as Benson, Diehr, Chakrabarty, and Bilski. | >
> | After a complicated and tension-filled §101 jurisprudence between the CAFC and the Supreme Court (see Benson, Chakrabarty, Diehr, Bilski, and Mayo), the Supreme Court again took up software patents and the exception for abstract ideas in Alice Corp. v. CLS Bank International. At issue in the case was a computer program that independently monitored transactions of both parties in order to mitigate settlement risk. | | | | |
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< | Chakrabarty seemed to provide a boon to software patent supporters by describing the purpose of the patent system as providing protection for the unknown and embracing new technology. The case symbolically rejects Flook, in which the court held an algorithm unpatentable on broad grounds. Chakrabarty comes to stand for the position that Congress wrote the patent statute broadly and the judicial exceptions are narrow. | >
> | In Alice, the court determined that intermediate settlement was an abstract idea similar to the hedging program in Bilski. Under Mayo's threshold §101 test, a patent applicant can overcome such a finding only with a showing that they sufficiently transform the excepted subject matter into a patent-eligible invention. In Alice, the Court held that if a patent does nothing more than use a "generic computer to perform generic computer functions," the invention fails this test and is ineligible for patenting. | | | | |
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< | However, courts have struggled with software under the statutory consideration for processes. First of all, §100(b) defines “process” as including a “process, art, or method.” The majority of the Supreme Court in Bilski says that the exception for abstract ideas flows from the language of §101 because abstract ideas are not useful. While this should seem clearly incorrect, particularly to lawyers, the court somewhat avoids this problematic language by ultimately holding that the hedging at issue in Bilski falls under the exception of abstract ideas and, therefore, is not patentable on that ground. Justice Stevens led the concurrence in agreeing that the hedging software was unpatentable, but sought to make all business methods unpatentable. This tension in the court begins to form the difficult question of how to determine what an abstract idea is and how influential the exception is on the patentability of software. | >
> | Had the Court stopped there, the resulting §101 jurisprudence, at least with respect to software patents would be relatively straightforward. However, the Court left open the possibility for software patents in the event that the software “improves the functioning of the computer itself.” Now, hopeful patent applicants seek to extricate themselves from Alice by claiming that their software improves some aspect of a generic computer. | | | | |
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< | Background and Holding of Alice | >
> | This result is pure semantics in claim drafting. By definition, software is the application of an abstract idea to a computer, usually to more efficiently carry out that abstract idea. This is evident in both Bilski and Alice, cases in which the patent holders applied the concepts of hedging and intermediate settlement, respectively, to the novel environment of computers. It is difficult to imagine software that does not involve such an abstract idea given the court’s broad net set forth in the cases discussed above, which is precisely where the Court should have landed under Alice.
Software Patents are Unnecessary
The Court should have left out their dictum regarding software that improves a generic computer because software patents are unnecessary to the industry. This is so for several reasons.
Poor Match of Product and Process | | | | |
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< | The Supreme Court next took up software patents and abstract ideas in Alice. At issue in this case was a computer program that mitigated settlement risk by independently monitoring the transactions of both parties to ensure each obligation could be met. | >
> | The patent prosecution process developed when most inventions were physical objects, or machines. The process worked relatively well for these types of inventions because they can be built, seen, and typically understood relatively easily through descriptive language. Software, on the other hand, is a poor match for the patent prosecution process developed for machines. Software is language itself, and is inherently abstract. | | | | |
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< | In this case, the court agreed that intermediate settlement was an old concept and was, therefore, an abstract idea similar to the hedging program in Bilski. Under §101, a patent applicant or holder can overcome such a finding by showing that they sufficiently transform the excepted subject matter into a patent-eligible invention. In Alice, this transformation requirement went unmet because the patent holder simply tried to overcome the exception by using it in a novel environment, specifically, on a computer. The court determined that this was insufficient to overcome the exception to the abstract idea of intermediate settlement and ultimately held that if a patent did nothing more than use a “generic computer to perform generic computer functions” was ineligible. | >
> | Similarly, software industries are so fast-paced that the administrative burdens of applying and securing a patent through the PTO are a poor match for the economic reality of the field. Software is merely code, and code is changed at regular intervals, usually as part of a regularly scheduled "code deployment." As Judge Mayer recently concluded in Intellectual Ventures, software patents are often filed before the inventors have even attempted the project, which can lead to the problem of the patent applicants claiming more than their contribution to the field - in essence, an abstract idea. If a software patent applicant claims only their contribution, the patent is worthless as it's easily invented around. | | | | |
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< | While the Supreme Court insisted that this did not kill all software patents, read in this way, Alice seems to create a new exception to §101 process patents by holding that software patents are ineligible for patenting. By definition, software is the application of some semblance of an abstract idea to a computer, usually to more efficiently carry out that abstract idea. This is evident in both Bilski and Alice, cases in which the patent holders applied the old concepts of hedging and intermediate settlement, respectively, to the novel environment of computer programming. It is difficult to imagine a computer program that does not involve such an abstract idea given the court’s broad definition set forth in the cases discussed above. | >
> | Finally, the patent prosecution process is complex and expensive. Software is relatively cheap to produce and produced at a brisk pace. The current patent procedures simply do not match the economic or practical realities of the software industries and, therefore, offer poor protection for software inventors. | | | | |
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< | Subsequent Jurisprudence | >
> | The Availability of Software Patents Promotes Waste | | | | |
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< | Alice and the preceding cases have at least somewhat stifled patent applications from the software community, anecdotally evidenced by my boss’ stipulation this past summer that patenting their algorithms was too difficult and uncertain and that keeping their products as trade secrets was a safer and easier way to conduct business.
Recently, in Intellectual Ventures, the Federal Circuit held a patent ineligible under §101 on similar grounds to Alice. While the majority opinion did not go so far as to say that all software patents are ineligible for patenting under §101, a concurring opinion from Judge Mayer did. Judge Mayer seemed to rely more heavily on policy considerations about computer programming as language and the lack of economic benefits from and even made the First Amendment argument that we discussed briefly in class. However, he also made the argument that the ruling in Alice sufficiently killed software patents and that the constitutional (and, presumably, policy) arguments are not necessary to a holding that software patents are ineligible under the patent requirements of §101.
It’s unclear if Intellectual Ventures will attempt to appeal to the Supreme Court, but given that court’s general hostility towards patents in the past, it seems unlikely that they would succeed in an appeal. However, this case would provide the Supreme Court to clarify their seemingly tension-filled contention that software patents are valid and that abstract ideas placed onto computers are ineligible for patenting. Like Judge Mayer, I would argue that the Supreme Court already ended the patent eligibility of software in 2014.
But that isn't what
Judge Mayer said. He said that the CAFC and Supreme Court should
conclude that's what happened. I don't see that's happened yet.
From Bilski to Alice Corp. the Court has reserved a space
between the "machine or transformation" test that resulted from its
reading of Diamond v. Diehr and Parker v. Flook and the set of
all potentially patentable inventions involving software. In _Alice
Corp._, the Court accepts by implication in passing a suggestion
made by IBM in its amicus brief, that an invention within patent
scope can occur if software "improves the performance" of a
general-purpose computer. That apparently significantly expands the
possibility of computer-related patentable inventions that involve
neither a special-purpose machine or a transformation of matter.
Judge Mayer thinks that it would be wise for everyone to conclude
that the scope of software patentability has been fully defined by
the Court in Alice Corp. The world's leading patenters in IT have
no such intention. They do not regard the Bilski test as
satisfactory, they do not think that Alice Corp. ends the process,
and they have no use for the "machine or transformation" test. At
the moment, the hottest place of contestation is India, where the
statute excludes "algorithms" and "software per se" from scope, and
the current Patent Office guidelines (which my law partner Ms
Choudhary played a large role in writing) track the Supreme Court
cases. Neither the large multinationals nor the large Indian
software houses are prepared to accept the status quo, and they are
arguing hotly about a category of "software-defined hardware"
allegedly prevented from coming innovatively into existence under
these rules.
The apparent purpose of this essay is descriptive, to argue not that
something should happen, but that it has. There is no sign whatever
that this argument is correct in fact. Normatively, if you were
correct I would regard the outcome as satisfactory: if the Court had
closed the gap between the constitutional requirement of more than
an idea to make a monopoly and the requirement for patentability of
a special purpose mechanism or a material outcome, people who just
want to make and share software would be safe, as mathematicians are
safe, from patent aggression. But neither are we there now nor are
we likely to arrive there, whatever country we are in, anytime soon.
So my sense of the routes to improvement here are either to get
closer to facts and argue that your view of the current legal
situation can be seen in the real world, not in a smattering of CAFC
and PTO decisions, or to take up the normative question, and explain
why this cobbled-together approach to the limits of patenting
should be the long-term rule. | >
> | Given that there is no competitive advantage to securing a patent, all efforts to obtain such a patent are wasteful. Particularly for fledgling software companies, the time of a founder or senior software developer is the company's most valuable asset. The more time is wasted discussing, explaining, and making a decision of whether or not to apply for a patent, the less time is available for creating and deploying a product. | | | | |
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> | Not only does the current confused state of software jurisprudence create waste by necessitating someone spend time understanding and deciding whether a patent is the right protection for a given piece of software, it also creates waste through frivolous litigation and administrative hurdles. Once a patent is secured, a company must expend resources in maintaining and defending their property right. Finally, from an alleged infringer's perspective, a potential lawsuit wastes an incredible amount of resources through research and risk analysis. | | | | |
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> | There is Better Protection Available for Software | | | | |
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> | As Judge Mayer also acknowledged in Intellectual Ventures, assuming we determine that software deserves protection, copyright is likely a better fit given its close similarities with written endeavors. Much like a screenplay, software is merely a digitized description of actions performed by another entity. When a software developer codes a particular line or action, they typically do not contribute in some fundamental way to the field of software development, but have utilized their existing skills to perform some task or create some desired result. The software developer should be entitled to security against others taking their idea and merely copying it for use elsewhere, if they wish, but they should not be granted a state-sponsored monopoly over the abstract idea of creating their project. | | | | |
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> | Conclusion | | | | |
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> | Given the aforementioned poor fit of patents in software, the waste that the current process encourages, and the fact that copyright is a more logical fit for software development than the patent process, the Court should clarify that Alice's dicta allowing for some software patents in limited circumstances was both unnecessary to Alice's overall holding and incorrectly suggested that not all software is made up of abstract ideas applied to a generic computer. |
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