Tuesday, April 1, 2014

Software will undoubtedly remain patent-eligible after Supreme Court ruling in Alice v. CLS Bank

It's quite a coincidence that the software patent trial of the year (Apple v. Samsung II in California) started on the same day -- yesterday -- as the seemingly software patents-related appellate hearing of the year (the Supreme Court hearing in Alice v. CLS Bank). Both cases have something else in common: despite all the noise about and around them (the only reason for both occurrences of the words "of the year" in this paragraph), they are greatly unimpressive at a closer look and won't ultimately change much.

When all is said and done including any appeals, Apple is not going to get an average damages award of $400 million per patent in a country whose chief patent judge said a $300 million damages claim against Apple over "one patent in a crowded field" was "crazy". Samsung will remain the global market leader no matter what Judge Koh and the jury will do or what effect certain methods of indoctrination will have, and Android will continue to be the most popular mobile platform in the world among end users and developers. In more than four years of litigation Apple has not been able to prove Steve Jobs's allegation of Android being a "stolen product", and the five patent claims in California aren't strong enough to change this. Similarly, when all is said and done in Alice v. CLS Bank, which is only a matter of months, the scope of patent-eligible subject matter will be the same and any additional guidance provided will, at best, relate to thinly-veiled business methods such as those covered by Alice's asserted claims.

The Alice hearing transcript indicates that the patents-in-suit will be invalidated, but most probably (as I predicted) without any collateral damage. I agree with Patently-O's analysis and have only a few observations to add.

Counsel for Alice was clearly unable to make a positive case for patent-eligibility (see the final paragraph of the Patently-O post I just linked to), so just like in Alice's pleadings, the message came down to saying: "You may not consider these the greatest patent claims, but, whether you like it or not, you have to consider them patent-eligible because otherwise the U.S. software industry will be deprived of patent protection." Basically, Alice did the next best thing to admitting that it's trying to abuse the system, arguing that this kind of abuse would have to be taken into account for the greater good of patenting software. However, the world's largest software company, Microsoft, which according to an analyst estimate generates $2 billion a year in Android-related software patent license fees, submitted an amicus curiae brief in support of affirmance, which shows that some major software patent holders believe their patents (at least their most valuable ones) are clearly dinstinguishable from Alice's claims in terms of subject matter.

But other major software patent holders and filers like IBM were a bit more concerned, as is Gene Quinn, a patent attorney and author of the IPWatchdog blog. I don't want to brush aside all of their concerns -- I just think they're more concerned than they have to be, but that doesn't mean they're totally wrong.

In the context of business methods, what always comes up is the question of whether something can be done by head and hand. In other words, whether a claimed method is not a technical implementation strategy but would work just as well as a mental process. In some cases, including Alice, this question would lead to the correct answer all by itself. But the question is then whether a mental/manual process would ever be fast enough to do the job. CLS Bank's counsel noted that Alice's claims-in-suit relate to individual transactions and not to high-volume operations. At the other end of the spectrum there would be a technology like video codecs. You could encode or decode bitmaps on paper. You would, however, never be fast enough to display full-motion video even in (reasonably) slow motion. There, however, the claims also typically relate to relatively small amounts of data (small numbers of pixels), not high-volume operations.

Once again it was clear that it's very difficult and often impossible to separate the patentability criterion of novelty (and possibly also non-obviousness) from the question of (abstract) subject matter, which is supposed to be a coarse filter. In the cases I watch in Europe, patent-eligibility is also rarely the basis for a decision. The important technicity requirement that we have here tends to be evaluated on a claim-limitation-by-claim-limitation basis.

No one really proposed a new test that would be clearly superior over previous ones. The most specific proposal for a new test was submitted by the Obama Administration but had no traction at yesterday's hearing:

CHIEF JUSTICE ROBERTS: [...] you mentioned a while ago the need for greater clarity and certainty in this area. And I'm just wondering, in your brief, you've got a non-exhaustive of factors to consider, and there are 6 different ones. And I'm just doubtful that that's going to bring about greater clarity and certainty.

Apart from the lack of a helpful proposal, the court is unconvinced of a need to address software patent-eligibility issues in this case and even the attorney who represented the U.S. government, Solicitor General Verrilli, had to concede that there is no such need:

JUSTICE SOTOMAYOR: Why do we need to reach this in that -- reach software patents at all in this case?


JUSTICE SOTOMAYOR: What's the necessity for us to announce a general rule with respect to software?

There is no software being patented in this case.


JUSTICE SOTOMAYOR: Do you think we have to reach the patentability of software to answer this case?

GENERAL VERRILLI: Well, I think you can -- I think the answer to that question is no, not necessarily. You can decide it by saying that -- that Bilski answers the question whether this is an abstract idea, because this form of hedging is really no different than the form of hedging as a conceptual matter at issue in Bilski. And then Mayo answers the question of whether the use of a computer in this case adds enough to the abstract idea beyond conventional steps, because here all we have, after all, is just conventional use of computing technology, no computer innovation, such that you don't qualify under 101. You could take that approach.

I believe those who want the Supreme Court to address software patent-eligibility will need to appeal real software patent cases all the way up on patent-eligilibity grounds. In recent years software patent critics have tried twice to raise software patent-eligibility issues in business method cases, Bilski and now Alice, and they haven't even moved the goal posts with a view to technical software patents.

Google, Amazon, Facebook and others were realistic at the outset. Their brief didn't suggest bright-line rules that would involve software, but they did express their concerns over the impact of low-quality software patents anyway.

Red Hat, too, must have known that nothing was going to change but it also knows that large parts of the open source community don't understand the issues well enough and will for ideological reasons appreciate its sporadic anti-software patent submissions regardless of whether there is even the slighest chance that they could have any impact.

What could have real impact and in the not too distant future is the ongoing patent reform effort in Congress. This week the Senate Judiciary Committee will mark up its proposal, and there is some hope now that fee shifting will be included (I really hope it will be).

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