CLS Bank v. Alice is not about 'the death of software patents': it's more like Bilski Reloaded

Four years ago people advocating the abolition of software patents made a lot of noise, including a movie named Patent Absurdity, about a case pending then before the Supreme Court of the United States: Bilski v. Kappos. They hoped that the Supreme Court would not only affirm the Federal Circuit's holding that Bilski and his co-inventor Warsaw weren't entitled to a patent on a risk-hedging business method, but that it would interpret 35 U.S.C. § 101, the statutory definition of which inventions are eligible for patent protection in the U.S. (applications must still meet all other patentability criteria such as novelty and non-obviousness), in a way that would render many, if not most or even all, software patents invalid.

The Supreme Court's June 2010 opinion fell far short of those hopes and expectations. The Bilski stuff was held patent-ineligible on the grounds of being too abstract, but the court declined to provide further guidance of the restrictive kind some had argued for. On page 9 of the Bilski ruling, a more restrictive approach was rejected because it "would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals". While that passage was based on a reference to amicus briefs submitted by pro-software-patent organizations, the way the SCOTUS refers to those concerns leaves no doubt that the justices who supported the passage agreed that the Bilski decision shouldn't cause collateral damage in those areas. At the very least it showed that the court had been perfectly aware of some people's abolitionist hopes and dreams, but declined their invitations to legislate from the bench on an issue it simply didn't have to reach.

Four years later history appears to be repeating itself as a result of the Supreme Court's grant of certiorari (i.e., decision to hear the case) in CLS Bank v. Alice. And I venture to predict a similar outcome: the ruling will, once again, be very narrow because, just like in Bilski, the facts of the case don't lend themselves to a decision of broad scope.

These are the four Alice patents at issue:

• U.S. Patent No. 5,970,479 on "methods and apparatus relating to the formulation and trading of risk management contracts"

• U.S. Patent No. 6,912,510 on "methods of exchanging an obligation"

• U.S. Patent No. 7,149,720 on "systems for exchanging an obligation"

• U.S. Patent No. 7,725,375 on "systems and computer program products for exchanging an obligation"

Don't be misled by words like "apparatus", "systems", and "computer program products". These are business method patents, not software patents in the sense of patents relating to software, or "computer-implemented" (another term that appears in those patents), innovation. The Alice patents relate to the very basic idea of having a third party ensure, like an escrow, that a transaction between two parties only takes place if the mutual obligations are met. That's what Alice seeks to monopolize. Some of these claims are downright business method claims (though the parties stipulated before the district court that they should be interpreted as requiring computer implementation); the others are business method claims camouflaging as system or program claims.

What has created the widespread perception of this being a software patents case is primarily that two opposing camps, for disparate reasons, place the emphasis in their argument on what implications this case allegedly has for software patents:

1. The first group consists of those who don't want patents like the Alice patents to be invalidated on the grounds of patent-ineligibility under § 101. There are two subgroups of this group:

   • (1a) those who absolutely want business methods to be(come) patentable by declaring them as computer-implemented invention (CII) patents, and

   • (1b) those who would probably invalidate the Alice patents anyway on non-novelty or obviousness grounds, but who don't want § 101 to be the vehicle for invalidation.

2. The second group already wanted Bilski to result in a restrictive ruling that didn't happen then and won't happen now.

I have some examples:

• Alice Corporation is, obviously, in group 1a. In its petition for certiorari, Alice grossly overstated the key issue to be reviewed as follows:

  "Whether claims to computer-implemented inventions--including claims to systems and machines, processes, and items of manufacture--are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court?"

  Alice knows that judges will be more receptive to the idea of patenting software than that of patenting abstract business methods. And it hopes to get support from some of those who fear that if business method patents fall, software patents might be next in line. Those facts still don't make this anything other than a case involving business method patent claims that make only token references to computer hardware. A more honest question on review would have looked like this:

  "Can an otherwise-unpatentable abstract business method be patented in circumvention of 35 U.S.C. § 101 by mentioning magic words such as 'computer-implemented', 'computer' or 'program' in the claims?"

  While honest, this would be a no-go, which is why Alice prefers to blow things out of proportion.

  Circuit Judge Newman, who dissented from the Federal Circuit's majority in Bilski and wanted even that ultra-abstract patent application to pass the test, may also be part of this group. She may be more comfortable than others with the notion of a patent system without any meaningful boundaries.

• Circuit Judge Moore wrote an alarmist dissent-in-part:

  "I am concerned that the current interpretation of § 101, and in particular the abstract idea exception, is causing a free fall in the patent system. [...] And let's be clear: if all of these claims, including the system claims, are not patent-eligible, this case is the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents." (emphasis added)

  At the end of an even more alarmist footnote, she writes: "There has never been a case which could do more damage to the patent system than this one."

  Statements like these do nothing to discourage abolitionists from filing briefs in this context. But the actual intention of this 1b group of people is to warn against excessive use of § 101 (as opposed to other means of killing bad patents). Just like Alice and its fellow proponents of business method patents, they feel that the specter of software patent abolition will scare U.S. judges, who are well aware of the significance of the IT industry to the American economy. That agenda still doesn't change the substance of Alice's patent claims.

• The Electronic Frontier Foundation (EFF) is part of the second group but makes an interesting point in the amicus brief it filed in support of a SCOTUS review of the Federal Circuit decision:

  "Indeed, that failure [by the Fed. Cir.] to provide guidance led to a wrong and dangerous ruling in WildTangent, Inc. v. Ultramercial LLC, et al., No. 13-255. A petition for certiorari in that case is also currently pending before this Court; amicus believes that the WildTangent case would provide a better vehicle than this one to resolve how Section 101 applies to computer-implemented inventions. Brief of Amicus Curiae Electronic Frontier Foundation in Support of Petitioner, WildTangent, Inc. v. Ultramercial, LLC, et al., No. 13-255. However, the question surrounding the scope of Section 101 needs to be addressed by this Court, and this case, too, provides an opportunity for that to happen."

  So the EFF admits that CLS Bank v. Alice is a suboptimal context for raising the issue of software patent-eligibility. By the way, the patent at issue in the WildTangent case relates to advertising-financed online video viewing. It's also a business method patent, though it involves a digital media business as opposed to a financial services business.

I wouldn't read too much into the fact that the Supreme Court accepted to take a look at CLS Bank v. Alice. The Federal Circuit was hopelessly divided. It affirmed the decision to invalidate all of Alice's asserted claims, which I agree with the EFF was the right outcome, but only on the basis of affirmance by an equally divided court, not a substantive decision that received majority support. Only a minority of the circuit judges would have upheld the method patent claims. But there was also a majority that argued the method and system claims should rise or fall together -- and a few judges actually wanted to uphold the method claims as well. Regardless of whether the Supreme Court necessarily finds any important issue in CLS Bank v. Alice that goes beyond Bilski, it may have seen a need to speak out on this difficult issue.

In Bilski, the message to software patent abolitionists was that the U.S. patent system was intended by Congress to be inclusive and expansive. Between the lines, the SCOTUS told abolitionists that they needed to talk to Congress. Circuit Judges O'Malley and Linn wrote a dissenting opinion that makes a clear distinction between what the law is today and what some people, right or wrong, might prefer it to be. Notably, these two circuit judges would have considered even Alice's method claims patent-eligible, but they tell abolitionists that this case does not provide an opportunity for them to bring about the change they desire:

"We finally note that certain Amici express concern regarding the proliferation and aggressive enforcement of low quality software patents. [...] They seem to believe that patents on early generation technology inhibit technological advances. [...]

We do not discount Amici's concerns, we just disagree with what they ask us to do to quell them. Congress can, and perhaps should, develop special rules for software patents. It could, for instance, limit their life by limiting the term of such patents. [...] Or, Congress could limit the scope of software patents by requiring functional claiming. Or, it could do both, or devise some other rule. But broadening what is a narrow exception to the statutory definition of patent eligibility should not be the vehicle to address these concerns. While Congress may, this court may not change the law to address one technological field or the concerns of a single industry."

For the final part of this post I'd like to get back to what those Alice patents are really about. Circuit Judge Moore's alarmist words relate to Circuit Judge Lourie's opinion that all of Alice's patent claims-in-suit are ineligible. I don't mean to take a position here on which of these opinions is right (I've already said that I'm against those Alice patents). There are some interesting points in all of the different opinions provided by this fractured Federal Circuit (except that Circuit Judge Newman in my view totally misunderstood the concern of some people about patents in certain fields: she thought that people were concerned about limits on experimentation, when the concern is actually about incremental innovation, which requires real products to be developed and distributed). But since the Lourie opinion is of concern to some who say it is tantamount to the death of software patents, let's look at certain passages in the Lourie text that show this impact assessment blows things out of proportion:

"The concept of reducing settlement risk by facilitating a trade through third-party intermediation is an abstract idea because it is a 'disembodied' concept, [...] a basic building block of human ingenuity, untethered from any real-world application."

"Apart from the idea of third-party intermediation, the claim's substantive limitations require creating shadow records, using a computer to adjust and maintain those shadow records, and reconciling shadow records and corresponding exchange institution accounts through end-of-day transactions. None of those limitations adds anything of substance to the claim."

"First, the requirement for computer implementation could scarcely be introduced with less specificity; the claim lacks any express language to define the computer's participation."

"Furthermore, simply appending generic computer functionality to lend speed or efficiency to the performance of an otherwise abstract concept does not meaningfully limit claim scope for purposes of patent eligibility. [...] That is particularly apparent in this case. Because of the efficiency and ubiquity of computers, essentially all practical, real-world applications of the abstract idea implicated here would rely, at some level, on basic computer functions--for example, to quickly and reliably calculate balances or exchange data among financial institutions. At its most basic, a computer is just a calculator capable of performing mental steps faster than a human could. Unless the claims require a computer to perform operations that are not merely accelerated calculations, a computer does not itself confer patent eligibility."

"Whether the instructions are issued in real time, every two hours, or at the end of every day, there is no indication in the record that the precise moment chosen to execute those payments makes any significant difference in the ultimate application of the abstract idea."

If the Lourie opinion had become precedent (which it has not) or if this line of reasoning became effectively precedent after the SCOTUS decision, the paragraphs I quoted above (and they are just a subset of what could have been selected) contain more than enough ammunition for those defending or upholding true software patents -- for one example, patents on software techniques that enhance performance.

Circuit Judge Lourie and those joining in his opinion did not mean to abolish genuine software patents. They just don't want fake software patents to pass the § 101 test. In the particular context of Alice's system claims, the following question is raised:

"[D]o the limitations of the claim, including any computer- based limitations, add 'enough' beyond the abstract idea itself to limit the claim to a narrower, patent-eligible application of that idea? Or, is it merely a Trojan horse designed to enable abstract claims to slide through the screen of patent eligibility?"

The SCOTUS can close the door to Trojan horses without abolishing software patents. I guess it will find a way to do the former without collateral damage. It carefully avoided unintended consequences in Bilski. There may be even more noise now than there was four years ago, but U.S. substantive patent law hasn't changed since.

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Follow-up on New Zealand: patent offices and judges don't interpret patent law like geeks do

My tale-of-caution post on yesterday's adoption of a patent reform bill in New Zealand has been one of my most popular writings this month -- popular in terms of the interest it has drawn, not in terms of the message that certain Internet crowds would have preferred. The stated goal of that post was not to curry favor with any audience, but to discuss the matter responsibly.

This follow-up post has two distinct parts. In the first part I'll explain the discrepancy between mainstream media reports that New Zealand has banned/outlawed/whatever software patents and the more nuanced and cautious opinions expressed by IP-focused writers, including a couple with whom I don't always agree. In the second part I'll try to explain with what kind of mindset one has to approach a piece of substantive patent law when trying to assess the effect it will have further down the road. What may appear crystal clear to a geek usually doesn't have its broadest meaning when patent offices and courts of law have to make sense of it. I think there are some easy ways to show why that New Zealand law isn't tantamount to the abolition of software patents.

Disconnect between mainstream media and IP-focused writers

Most media reports on the decision have been misguided, and have in turn misguided the readers of those articles. Interestingly, even an overtly (and sometimes shrill) anti-IP blog named Techdirt has been far more measured and closer to accuracy this time than all those mainstream IT media, saying that "New Zealand Sort Of Bans Software Patents" (emphasis mine) and that "while the intentions appear to be good, some of the language in the bill may open some loopholes, so we'll be interested to see how the bill is actually interpreted, and what happens within the actual tech sector". This more cautious take by Techdirt should give all those people pause who attributed, in certain discussion forums, my analysis, which was more than anything else an effort to prevent people from making false business decisions in reliance on political spin, to the fact that I have (voluntarily and proactively) disclosed consulting relationships with industry players Microsoft and Oracle, who presently support strong IP protection for software. It should also be food for fought for those who dismiss Intellectual Asset Management magazine's analysis as biased because its readers are mostly patent lawyers.

There's an undeniable discrepancy between the assessments of IP-focused blogs/websites on the one hand and mainstream media on the other hand. Now, whom should you trust if you don't have the time and background to research the whole issue for yourself? That's your choice, but you should at the very least be cautious when you see that IP-focused people throughout the political spectrum -- from radically anti-IP (Techdirt) to moderate (this blog, because I used to campaign against software patents but do understand the industry's perspective as well) to consistently pro-IP (IAM Magazine's Joff Wild and I disagree from time to time, such as on standard-essential patents) -- do not portray the New Zealand decision in the simplistic black-or-white manner in which mainstream IT media do. Even in case you assume that Techdirt's Mike Masnick (who said he was surprised when it turned out he had received funding, indirectly, from Google), IAM's Joff Wild and I are agenda-driven while mainstream media are not (or to a lesser degree), the presumed agendas of the three of us IP bloggers cover the entire spectrum.

Substantive patent law (the rules of patentability, including patent-eligibility) is a highly specialized subject. Patent law is way more specialized and, to the general public, far less accessible than most (if not all) other fields of law, and substantive patent law is a thin vertical slice, and by far the most abstract part, of patent law. In my anti-software-patent lobbying efforts I once met a Member of the European Parliament who's a law professor and he asked me questions about this for almost two hours because he wanted to understand the intricacies of software patentability rules. Keep this in mind when choosing which kind of sources to trust.

The Internet is huge, but you won't find a reporter for a totally independent mainstream publication who really understands this particular field.

Before we get to the question of competence: mainstream journalism isn't always as independent as you might think. Some publishers have stricter disclosure rules than others. Even where the rules are in place, you won't find 100% compliance across an entire industry. IT websites are typically advertising-funded. It's not advisable to assume that editorial decision-makers never care about the interests of the major advertisers who fund them. And journalists always depend on their readers. Populist headlines are quite useful for link-baiting, even if inaccurate. Just to be clear, most of the journalists I know seem perfectly honest, so most of the time the problem is just that they have to do several stories a day on a variety of subjects. They simply can't, even if they give it their best, have the same detailed understanding of a given topic as people who've been focusing on these complex issues and processes for years. Furthermore, they have space constraints and must keep things short and simple for an audience, but even experts frequently can't be accurate and short/simple at the same time.

I often get asked why my blog doesn't allow comments, and why comments are deactivated on almost all of my Google+ posts. (I do, of course, get responses on Twitter, and sometimes I answer there.) That's because there's too much half-knowledge out there that is too time-consuming to address. I'd have to debunk stupidity after stupidity to prevent readers from getting confused by pretenders -- people who use specialized terminology, invoke laws and cite to judicial decisions but actually don't know what they're talking about. I believe my time is better spent on other activities, and this blog is basically a by-product of, and promotional tool for, my work as a consultant.

To be clear, independent journalism is important, and there are literally hundreds of journalists I've been in contact with just over the last few years, most of whom I totally respect and try to help with information when they request it. They do an important job, and their efforts and mine are complementary, except that there can be situations in which I disagree with mainstream media. For one example, let me refer you to Philip Elmer-Dewitt's article on how I was right and mainstream media were wrong on the March 1, 2013 Apple v. Samsung damages ruling. Philip notes that "[a]lmost lost in the flood of 'Apple setback' headlines was the lone voice of FOSS Patent's Florian Mueller, who pointed out that what was being described as a drastic cut in a $1.05 billion award could, in theory, turn out to be an increase". By now, everyone knows that I was right because Samsung acknowledged it. I was even being conservative: Samsung says Apple is claiming "vastly greater damages" in the retrial. If you insisted on the broadest definition of independence, you'd have had to rely on the mainstream press, which told you that Apple was going to get less money out of this case. But, with the greatest respect, independence does not compensate for incompetence. I always say what I believe in, and even if people suspect that I want to do clients a favor, there are examples when I get things right that others get wrong. A more recent example is the scope of a U.S. import ban Apple won against Samsung. Most of the initial media reports said that only certain older devices were banned. But the import ban would also apply to any newer (including future) devices that infringe in the same way. I published the letter the ITC sent to U.S. Customs because it leaves no doubt about the potential scope of the order.

Let me close this first section by conceding that there is a conundrum facing everyone trying to obtain information on these cases. On the one hand, mainstream media get certain things in these highly-specialized contexts completely wrong, and I've talked to various lawyers involved with the smartphone disputes (mostly when I saw them in German courts, where U.S. counsel is frequently also present) who told me they find my blog fundamentally more reliable on their cases than even the most reputable financial papers, which sometimes don't even understand who's actually won a lawsuit (if there's a mixed ruling). On the other hand, the kinds of people who specialize on these issues -- even anti-IP activists like the Techdirt author or a certain European anti-software patent organization -- will sooner or later have some financial relationship of some sort with some industry player, even if indirectly, such as through membership fees paid to industry associations or donations made to non-governmental organizations. These major players are like an elephant in a room: they're everywhere. You'd also be hard-pressed to find a professor in the relevant fields (law, economics, computer science) who's never ever represented or advised a client, never taken money for a study, never appeared in court as an expert witness. The holy grail of someone who's competent enough to have consulting and other opportunities with large organizations but stays totally independent -- and still finds enough time to stay up to date on all the details of an issue -- simply doesn't exist. That's the number one reason why specialized blogs like this one not only exist but thrive.

How patent examiners and judges interpret substantive patent law in practice

When laypeople read in the New Zealand bill that something isn't patentable if the invention lies solely in it being a computer program, they think that this can be interpreted in only one way: no more software patents. But they have to understand that legal professionals and software engineers are divided by a common language, to the extent that even the meaning of words like "invention" and "computer program" differ greatly between everyday use and legal use. If a given company told its software developers that they can no longer obtain patents on inventions matching that criterion, they'd stop filing any patent applications because it would look to them like a waste of time -- but if the same company sent the same instructions to its patent department, the lawyers would simply conclude that they have to draft around the exclusion, and that's what they would do from there on out.

What additionally complicates this is bias. More than 2,000 years ago, Julius Caesar wrote in his Commentary on the Gallic War (parts of which I had to translate from Latin in high school) that "fere libenter homines id quod volunt credunt" -- people believe quite readily that what they want to be the case is the case. Even if it's not. The Romans capitalized on this through certain stratagems, making their enemies believe that they were on a retreat, only to launch a massive assault once their enemies relaxed. It worked again and again.

In theory, patent examiners and judges should read substantive patent law without any bias. And many of them try hard to. And the one thing they certainly won't have is an anti-patent bias. New Zealand's patent office is not going to be interested in interpreting the law in a way that would require it to lay off half or more of its staff. It will have to apply the law, and it may receive instructions from the executive government. But it won't approach this new piece of legislation with a "good riddance" mindset.

The patent prosecution process is inevitably skewed because it's easier for a patent examiner to grant an application than to reject it. If you grant it, anyone against whom it's asserted later has to deal with the problem. As long as you reject it, the patentee's patent attorney will keep trying to persuade you to grant it, and will amend the claims and other parts of the documents until you're satisfied.

The foregoing is not a consideration for the courts who rule on the validity of a patent. Still, you can't expect any judicial activism of the abolitionist kind. Judges look at it from both angles. On the one hand, there must be limits to what is patentable. On the other hand, they know that patent law also means innovators are entitled to protection, provided that their inventions meet certain criteria.

When you have to balance boundaries with entitlement, New Zealand's new law doesn't provide nearly the degree of clarity that mainstream media would have you believe. A phrase like "lies solely in it being a computer program" is very interpretable; the examples of one patent-eligible and one patent-ineligible invention are worlds apart and not clear enough; and when you then see that lawmakers intended to keep "embedded" software within the scope of patent-eligible subject matter, but consider that the question of whether software is "embedded" can in most cases not be answered based on a technical solution for which someone seeks a patent (just like software developers who write "embedded" software may very well use code in it that they previously used in non-embedded software, or the other way round), then you know that all of the line drawing that needs to be done is now your job. This happens all the time, not just in connection with patents: politicians can't reach a consensus on a clear-cut, sharp set of rules, so they produce something vague and leave it to the courts to sort it out. And courts tend to find that an invention is not subject to an exclusion if the exclusion isn't sufficiently clear. That's the way it works, most of the time.

The NZ patent reform bill is not clear. I'll tell you what would be clear, or relatively speaking, clearer:

• If New Zealand had adopted Richard Stallman's proposal of a broad exclusion from enforcement, then it would simply be impossible to sue software developers and users over patents, regardless of what those patents cover. (This would, of course, depend on whether the exclusion from enforcement is phrased clearly by lawmakers, but I just assumed so for the sake of the argument.)

• The NZ law would at least be a whole lot clearer if the examples of a patent-eligible and a patent-ineligible kind of invention were closer to each other. The example of an auto-complete application using a database and forms doesn't mean much: based on that description alone, the rather permissive European Patent Office wouldn't grant you a patent, and even the most permissive USPTO most probably wouldn't.

  The auto-complete example misses the point. The tricky area in which to draw the line involves software that makes a technical contribution, such as a file system that stores data more efficiently, a database that runs certain types of searches more quickly, security software that detects attempts to hack a system, video codecs -- and those inventions can be implemented in hardware as well, so an exclusion that merely refers to computer programs (and uses an auto-complete program as an example) doesn't really capture them.

  Video codecs, which I just mentioned, are a particularly good example: the NZ patent reform bill doesn't say that graphics adapters are no longer patentable. Now, if someone patents a technique that can be used in a graphics adapter, but someone else implements it in software, then he may get a software patent in the sense of a patent that software developers and users may be found to infringe. The patent office can't reject the patent application because the law doesn't say that innovations relating to graphics adapters are no longer patent-eligible (this also was never the intention of any UK court, by the way). But at the enforcement stage, there's no exclusion in NZ of the kind that Richard Stallman advocates. So the patent can be granted, and an infringer can ultimately be held liable, with all that it entails.

I'm confident that these explanations have already furthered many people's understanding of the issue. It's a difficult subject, and I encourage everyone with an interest in understanding this in more detail to study the European situation. The U.S. approach (which the Supreme Court described as inclusive in its Bilski opinion) is that the scope of patent-eligible subject matter has boundaries, but no exclusions of the kind that Europe has had for several decades now, and that people overrate in connection with the New Zealand patent reform bill. Of course, most of the people who reported and commented on the New Zealand decision have never even read a single European court decision on patent-eligible subject matter. (By the way, just this month I've requested the Federal Patent Court to let me inspect the record of roughly two dozen pending nullity -- i.e., invalidation -- cases.)

Almost a decade ago, the Council of the European Union adopted a proposal on software patents that I was fighting hard against. If you believe that the New Zealand law abolishes software patents, how would you have liked this article from the European proposal, for example?

"Article 4.A

A computer program as such cannot constitute a patentable invention.

A computer-implemented invention shall not be regarded as making a technical contribution merely because it involves the use of a computer, network or other programmable apparatus. Accordingly, inventions involving computer programs, whether expressed as source code, as object code or in any other form, which implement business, mathematical or other methods and do not produce any technical effects beyond the normal physical interactions between a program and the computer, network or other programmable apparatus in which it is run shall not be patentable."

Doesn't that sound even better than the NZ law? And it gets even better, seemingly, if I show you how the European proposal defined "technical contribution", a term that also comes up in the article I quoted above:

"Article 2b

(b) 'technical contribution' means a contribution to the state of the art in a field of technology which is new and not obvious to a person skilled in the art. The technical contribution shall be assessed by consideration of the difference between the state of the art and the scope of the patent claim considered as a whole, which must comprise technical features, irrespective of whether or not these are accompanied by non-technical features."

Well, even the above language, which appears at first sight to constitute a clearer exclusion of software inventions from patent law, would have allowed for most software patents to be granted. You don't have to take my word for it. I'll just refer you to the analysis published at the time by the Foundation for a Free Information Infrastructure (FFII), the NGO that started the European anti-software-patent movement. Here's how the FFII commented on Article 4.A of the European proposal:

"This article is based on a JURI amendment (= amendment from the people who also run the Council's working party) that made it through the EP Plenary Session only because it is meaningless and therefore harmless. The Council's additions however make this amendment harmful. They use the wording of Art 52 EPC and insinuate that a 'program as such' is only the 'expression' side of this program, i.e. narrow copyright-style claims that nobody would write into a patent anyway. This interpretation does not conform to the usual requirements of interpretation of laws and is not currently in use at the patent courts. It deprives Art 52 EPC of all limiting meaning."

You may now be confused, but hopefully at a higher level. Don't take exclusions from the scope of patent-eligible subject matter at their face value. It's a lot more complex than that.

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New Zealand Parliament adopts UK approach to software patents, allows broad swaths of them

I just learned on Twitter, from a patent attorney supporting software patents who is very happy about this outcome, that the New Zealand Parliament has adopted a patent reform bill containing a compromise wording on the patent-eligibility of software inventions. Three years ago I commented on the legislative process in New Zealand and cautioned people that abolition wasn't certain because there were clear signs of political support for software patents. For example, the proposal that was on the table at the time said in a footnote that smartphone inventions, almost all of which are software patents, should remain patentable. Based on today's decision I can say with certainty that abolition absolutely positively did NOT happen. (Formally, a third parliamentary reading occurred after that tweet, but it was merely a formality).

While I can see on Twitter that the movement pushing for abolition declares victory, that's not only inaccurate but also an irresponsible thing to do. From the perspective of abolitionists (and I know a thing or two about this because I founded and used to run the European NoSoftwarePatents campaign), the glass in New Zealand is not even half-full. It's still almost entirely empty. I understand that politicians and political movements like to overstate their achievements only to please their supporters/voters, and in this case the spin-doctoring may be driven by a desire to influence political debates in other jurisdictions and the evolution of case law in New Zealand, where there will obviously be some degree of uncertainty now, in some areas, as the courts have to apply the first patent reform bill in decades.

I advocate realism and rationality here because it's the only responsible thing to do. If people are misled to believe that New Zealand has (largely or entirely) abolished software patents, they will make decisions that they will sorely regret when they find out the truth too late. Some innovators will be discouraged from filing applications for software patents, and later they may be sued by those who know that software is still largely patent-eligible in New Zealand and won't have patents of their own to defend themselves with. And some people will believe they are free to infringe -- until they get sued and a court holds them liable. I can't prevent others from engaging in reality distortion, but my conscience doesn't allow me to tell anything other than the truth on this.

I'm now going to explain why the New Zealand outcome is far from large-scale abolition, and why the "compromise" is mostly a victory for those promoting, not those opposing, software patents.

Three years ago, the bill contained a broad statement that "[a] computer program is not a patentable invention" (§ 15-3A). It turned out to be unworkable, and clarifications like smartphones being patentable showed that the intent never really was to do away with all software patents. But a broad statement it was, and the compromise adopted today contains the European "as such" wording. In Europe, hundreds of thousands of software patents have been granted because an exclusion of computer programs "as such" is not an exclusion of patents on software inventions that make a technical contribution. Simply put, "as such" excludes certain aspects of software from patent-eligibility, but not all of them. It largely excludes parts that are protected by copyright law anyway, as opposed to the technical solutions to technical problems that are the province of patent law. The supplementary order adopted in New Zealand says this:

Subsection (1) [which says, like the 2010 bill, that a computer program is not an invention] prevents anything from being an invention or a manner of manufacture for the purposes of this Act only to the extent that a claim in a patent or an application relates to a computer program as such.

[emphasis mine]

Again, "as such" alone doesn't really mean a huge difference between U.S. and European rules on patent-eligibility. The U.S. approach of "everything under the Sun made by Man" being patent-eligible is obviously the most permissive one, but I follow litigation on a cross-jurisdictional basis and in the smartphone patent disputes I watch the vast majority of software patents asserted in the U.S. also exist, or could have been successfully applied for if the patentee had so elected, in Europe.

The New Zealand compromise doesn't stop there, and it then seeks to clarify "as such":

A claim in a patent or an application relates to a computer program as such if the actual contribution made by the alleged invention lies solely in it being a computer program.

[emphasis mine]

The order then goes on to provide examples of what falls within the scope of patent-eligibility in accordance with this sentence. That sentence on it own would not really mean anything. Most of those hundreds of thousands of European software patents also don't cover inventions that lie solely in being a computer program. There's a clear technicity requirement.

The bill provides two examples, one of an invention meant to be patentable under the compromise bill (a washing machine that does a better job at washing clothes) and one meant to be excluded ("a process for automatically completing the legal documents necessary to register an entity", using standard computer hardware). These examples still don't really provide much clarification because these are two extremes, and for line-drawing you need a narrow corridor, not the broadest one imaginable. If the improved washing machine was excluded from patent-eligible subject matter, the patent system would be confined to little more than molecular pharmaceutics. As for the auto-completion of legal documents, the bill only says that "[t]he hardware used is conventional" and that "[t]he only novel aspect is the computer program", and that "[t]he mere execution of a method within a computer does not allow the method to be patented", but most of the hundreds of thousands of software patents we have in Europe are patented because of a technical contribution that goes beyond what this description says. In fact, the auto-complete example in the New Zealand bill is so vague that, without a greater degree of specificity, it wouldn't even be useful for the purpose of illustrating differences between U.S. and European software patent-eligibility rules.

It would be an understatement to say that there is a broad corridor between the two extreme examples contained in the New Zealand bill. The courts in New Zealand are now left to do all of the line-drawing work because politicians, who ultimately realized that they couldn't deprive domestic inventors of protection and isolate their country on the international scene by violating the TRIPS agreement, didn't really do so. At best, one can read between the lines of that bill that there was some pressure to be restrictive in connection with software patents -- but restriction is a fundamentally different thing than abolition.

The story that is being told by New Zealand politicians and lobbyists/activists is that the New Zealand patent reform bill adopts the UK case law on software patents, which is described as the most restrictive one in Europe. In the smartphone patent cases I watch, challenges to the validity of patents are regularly brought in UK courts, typically in hopes of influencing decisions by German courts, where most European infringement complaints are filed. And the UK is anything but a "no software patents" jurisdiction. Therefore, New Zealand won't be a "no software patents" country either.

The rate of success of defendants in infringement proceedings, or plaintiffs in declaratory judgment complaints seeking the invalidation of patents, is indeed very high in the UK, but that's not because of patent-eligibility rules. There are various reasons for this. One thing I noticed in various smartphone cases is that UK judges tend to frequently find patents obvious over "common general knowledge", while German courts (particularly the German courts hearing infringement cases, in which the validity of a patent is looked at cursorily but not actually adjudicated) want to see evidence in the form of prior art references (documents, products etc.).

For a case study that shows what the UK approach really comes down to (and what future New Zealand patent-eligibility case law may very well look like after today's patent reform vote), I recommended an HTC v. Apple case. The England and Wales High Court threw out four Apple patents, but even though HTC claimed that every one of them was a software patent and therefore covered an ineligible invention, it prevailed only once -- and even that finding of patent-ineligibility was reversed on appeal! As a result, one of the two claims of that patent survived, and the other one was still found invalid, but only on obviousness grounds. The lower court had basically found that the patent in question, EP2098948 on a "touch event model", didn't have a technical effect but merely made life easier for programmers by giving better structure to code. This is very similar to the New Zealand concept of an invention lying solely in it being a computer program: there's something about it that is limited to the intangible realm of code, not the real world of programmed devices. And even that reasoning wasn't affirmed on appeal.

I'm in no position to predict what the New Zealand courts are going to make of this bill, but I can tell you based on my intimate knowledge of the European situation (I'm based in Germany and follow patent disputes in many countries, including several European countries, which obviously include the UK) that the courts and the patent office in New Zealand still have massive wiggle room to allow software patents, so if I were a corporate executive who cared about the New Zealand market, I would definitely continue to file software patent applications, and I wouldn't consider it responsible to assume that I can just go ahead and infringe.

When all of this settles out, some of the people who celebrate today will be very disappointed to find that the New Zealand patent reform bill isn't nearly as restrictive, let alone abolitionist, as they used to think. By the time they find out, many of today's politicians may not be in office anymore.

[Update] I did a follow-up post the next day that explains all of this further. I'd like to stress that the NZ patent reform bill doesn't disallow patents on graphics adapters, so, for one example, it's still possible to patent video compression techniques, which can later be asserted against infringing software. That's an example that also came up in the European software patentability debate about a decade ago, in which I participated rather actively. [/Update]

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At least 9 Apple patents asserted against Nokia in UK and Germany are European software patents

It's a common misconception that software patents are an exclusively American phenomenon and don't exist in Europe. There are different definitions of what constitutes a software patent. My definition of software patents certainly includes the following nine European patents asserted by Apple in its lawsuits against Nokia in the UK and in Düsseldorf, Germany:

• EP0664021: menu state system

• EP0760131: method and apparatus for distributing events in an operating system

• EP0760126: pattern and color abstraction in a graphical user interface

• EP0760122: switching between appearance/behavior themes in graphical user interfaces

• EP0769172: method and apparatus for handling I/O requests

• EP0727076: object-oriented graphic system

• EP0664027: program modeling system

• EP0719487: object-oriented telephony system

• EP1964022: unlocking a device by performing gestures on an unlock image

All of those patents make reference to hardware components -- the "object-oriented telephony system" patent and the unlock patent do so very extensively. But the hardware components aren't novel. All the difference is made by software-related ideas.

The fact that Apple holds those patents and is suing Nokia over them doesn't mean that they are indeed enforceable. In fact, Nokia disputes the validity of those patents, and the German manifestations of those European patents (note that European patents are bundles of national patents) will be reviewed by the Federal Patent Court of Germany next year. But German courts tend to uphold software patents.

Last May I blogged about a landmark case in which the highest German court in patent (and many other) matters, the Bundesgerichtshof, upheld a Siemens patent on an XML document generator and explained that software inventions taking into account the characteristics of a computer on which they are running (such as memory and CPU speed constraints) are potentially patentable.

Nokia and Apple are embroiled in a huge, world-spanning patent dispute that may take years but could also be settled anytime. The Federal Patent Court of Germany has scheduled its first hearing in the nullity proceedings instituted by Nokia for February 9, 2012, so if the case isn't settled before, this conflict could also lead to some further clarity concerning the status of software patents in the largest European market.

How the information came to light

It's much easier to obtain information on lawsuits in US federal courts (via PACER) than on their European counterparts. Usually, complaints filed with European courts are not published. But Apple's Düsseldorf complaint against Nokia was published on the website of the European Patent Office in connection with a reexamination request.

Besides the list of patents it also contains the interesting information that Apple moved to set the value in dispute (the amount relative to which the court determines its fees) to 5 million euros for each of the nine patents, or 45 million euros in total. And that's just for Germany -- not for the entire European market.

Last week Nokia published its annual report for its fiscal year 2010. Its pages 166 and 167 talk about Nokia's ongoing litigation with Apple, and make it clear that the 9 patents asserted by Apple in Düsseldorf and the 9 patents asserted in London (before the High Court of England and Wales) are identical sets:

"On September 27, 2010, Apple commenced proceedings against Nokia in the Düsseldorf District Court in Germany. Apple alleges infringement of the same nine patents asserted in the UK action."

That's the fragmented European patent system: at this stage there isn't any way to litigate over a European patent in one court; instead, patent holders have to enforce the local manifestations of those European patents in different markets. In this case, Apple made the UK and Germany its strategic priorities. Nokia counterclaimed in those countries and additionally filed a lawsuit in the Netherlands.

Different outcomes even over the same issues are possible. For example, the German manifestation of a European patent could be upheld while the UK equivalent is thrown out. Similarly, Nokia or Apple could be found to infringe a valid patent in the UK but not in Germany.

Nokia's European patent assertions

I haven't been able to obtain any of Nokia's European complaints. All the information I have about the asserted patents is this Nokia press release issued on December 16. It describes the European patents asserted against Apple as being related to "touch user interface, on-device app stores, signal noise suppression and modulator structures", "antenna structures, messaging functionality and chipsets", "on-device app stores, caller ID, display illumination and the integration of multiple radios", and "data card functionality".

Some of those patents are probably also patents of the kind I refer to as software patents, but at least several of those patents will be hardware patents. Nokia has always been careful to describe the claimed inventions for which it seeks patent protection in Europe as "computer-implemented inventions". By contrast, Apple's patent applications appear to have been drafted with the requirements of the US Patent and Trademark Office in mind, and the USPTO generally considers software inventions patentable. In other words, Apple jumped high enough for the hurdle that exists in the US but possibly not high enough for the European requirements.

This could give Nokia a strategic advantage in Europe because Article 52 of the European Patent Convention doesn't allow patents on "programs for computers [...] as such". While that exclusion hasn't prevented tens of thousands (or by some counts, even hundreds of thousands) of software patents from being granted in Europe, it's key for patentees to draft their patents carefully around that formal exclusion. Comparing Apple's patents-in-suit to the general descriptions of Nokia's patents-in-suit, I believe Apple faces a considerably higher risk than Nokia that some of those patents could be declared invalid in Europe. Nokia probably did a better job at positioning its innovations as "technical" inventions that just happen to have a software component, as opposed to software being the essence of the claimed inventions, which is rather obvious in the case of most (if not all) of Apple's nine patents-in-suit listed above.

What I just explained could play a very important role in the further process. Since both Apple and Nokia haven't been too successful with their ITC complaints against each other so far, it's possible that the first actually enforceable court decision in that dispute will be handed in Europe, not in the US (where it all started in 2009). And the first one to hold an injunction against his rival in his hands will be in a strong position to negotiate a favorable settlement in exchange for lifting the blockade.

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Bad week for Google's position vis-à-vis Oracle

Last week, Google's hopes of settling Oracle's Java patent suit on sweet terms were dealt important blows on two fronts.

One part of the bad news for Google is that a Federal Circuit ruling indicates software patents still can't be invalidated categorically on the grounds of "abstract" subject matter, a defense Google's answer to Oracle's amended complaint emphasized rather aggressively.

The other key development is the Apache Software Foundation's divorce from the Oracle-led Java Community Process (the Java standard-setting process). It's time to forget about possible concessions by Oracle to the open source community from which Google could indirectly benefit (since its Dalvik virtual machine is derived from a part of Apache's Harmony project).

Before I go into more detail on those latest developments, I'd like to reiterate an observation I already shared last month: unlike the other defendants in major smartphone patent cases, Google still hasn't countersued Oracle for infringement. Meanwhile, four months have passed since Oracle's lawsuit. Other defendants struck back within about two months, in some cases within one month. It's ever less likely that Google will do so. I guess it just can't.

All of this doesn't bode too well for Google and its Android mobile operating system.

101 isn't Google's lucky number

The number 101 connects Google and Oracle in two different ways. From the Googleplex in Mountain View, the fastest route to Oracle (Redwood Shores) is to take Highway 101 North. But § 101 of US patent law (35 U.S.C.) isn't the fast track to the invalidation of Oracle's Java patents that Google would like it to be, or that it would like the open source community to believe that it is.

I pointed out in a previous post that I couldn't see much of a point in Google's "abstract subject matter" defense (which it redundantly repeated), other than pandering to impressionable parts of the open source community who may be led to believe Google fights against software patents in general.

There are a few notorious disinformers out there who portray the US Supreme Court's Bilski opinion as the (potential or actual) beginning of the end for software patents. Contrary to what those propagandists claim (I doubt they even believe it themselves), that ruling (handed in June 2010) didn't do anything to turn US software patents into an endangered species. It was a decision in favor of continuity and a patent system that expands as technology evolves.

Google makes an unambiguous reference to the "abstract [...] subject matter" part of Bilski but there's no particular reason to assume that Oracle's Java patents would be non-statutory on that basis, or that such a defense would be stronger post-Bilski than it used to be pre-Bilski.

To me, the fact that Bilski didn't move the goalposts was immediately clear. I've spent a lot of time discussing substantive patent law with politicians and experts, so I can tell when a position on patent-eligible subject matter is liberal (such as Bilski) or restrictive. Steven J. Vaughan-Nichols, a markedly open-source-friendly journalist, viewed its impact essentially the same way. Bradley Kuhn, a leading free software activist, stated on this blog that "[p]ost-Bilski, it's become obvious that software patents can only be ended with legislative change." That's similar to what I had written in another follow-up to Bilski.

But anyone who believed those dreamers and disinformers instead of the more realistic and honest assessments I just mentioned would now have to grant me that I was right. The first ruling on a § 101 defense against software patents by the Federal Circuit (that's the instance right below the Supreme Court) since Bilski undoubtedly proves that software technologies continue to be patentable in the US subject to the same criteria as before.

CAFC decision on RCT v. Microsoft interprets Bilski

The United States Court of Appeals for the Federal Circuit (CAFC) heard an appeal in Research Corporation Technologies [RCT] vs. Microsoft, a case related to digital image halftoning (a set of techniques for improving display and print quality). Last Wednesday (08 December 2010), the CAFC announced its decision, a part of which disagreed with a district court's finding that "the asserted claims of [two of RCT's] patents were invalid under 35 U.S.C. § 101".

I haven't formed an opinion as to those particular patents. When I read the ruling, I was just interested in what principles it establishes for the patent-eligibility of software in general.

The CAFC points out that inventions are patent-eligigble unless expressly excluded from patentability by Congress:

Therefore, the Supreme Court has "more than once cautioned that courts ‘should not read into the patent laws limitations and conditions which the legislature has not expressed.’" Diehr, 450 U.S. at 182 (quoting Chakrabarty, 447 U.S. at 308). The Supreme Court has articulated only three exceptions to the Patent Act’s broad patent-eligibility principles: “laws of nature, physical phenomena, and abstract ideas.” Chakrabarty, 447 U.S. at 309.

The first part of that was also cited in the Bilski opinion, and what I quoted from Brad Kuhn is exactly what it means: if you want to do away with software patents, talk to politicians, not to judges. Of the three exceptions stated in the second part of the above quote, the first two are irrelevant to software patent issues and only the last one -- "abstract ideas" -- might play a role in a case like RCT v. Microsoft, or Oracle v. Google for that matter.

The CAFC then notes that the Supreme Court threw out its more restrictive approach to the Bilski patent application:

Indeed, the Supreme Court re-cently emphasized this statutory framework and faulted this court’s “machine or transformation” test for eligibility as nonstatutory. Bilski, 130 S. Ct. at 3227.

Therefore, the CAFC "perceives nothing abstract in the subject matter of the processes claimed in the [relevant] patents" and states that "[t]he invention presents functional and palpable applications in the field of computer technology."

That's the difference between patenting a mathematical algorithm and patenting a way to apply such an algorithm. Those who claim that software is mathematics and therefore too abstract to be patented don't take into consideration that such patents may be infringed by software that implements certain algorithms, but that is intellectually different from monopolizing mathematics per se:

These algorithms and formulas, even though admittedly a significant part of the claimed combination, do not bring this invention even close to abstractness that would override the statutory categories and context. The Supreme Court has already made abundantly clear that inventions incorporating and relying upon even "a well known mathematical equation" do not lose eligibility because "several steps of the process [use that] mathematical equation." Diehr, 450 U.S. at 185.

Again, I can't comment on those RCT patents, but I have looked at the patents Oracle asserts against Google and in my opinion, those Java patents aren't any more abstract than RCT's patents or, for example, all of the Google patents I've seen so far. Digital imaging is an operation performed by a computer processor on data stored in memory, possibly a storage device. Those Java patents involve the same hardware components except that they don't make explicit reference to output devices. However, one could also implement digital halftoning in Java, which shows that there isn't an obvious way to draw a line in the sand between RCT's and Oracle's patents.

In its attempt to take down Oracle's Java patents, Google will have to look for other arguments (such as prior art) than the subject matter defense it stressed so prominently in its recent court filing.

Apache's divorce from Oracle's Java Community Process is final

Probably knowing that it's very unlikely to do away with all Oracle patents and to prove that it doesn't infringe the valid ones, Google has strongly played the open source Java card in its public reaction to Oracle's patent infringement suit as well as the answers it filed with the court. Google would like the court to conclude that Oracle's open source commitments related to Java allow Google to use those patents anyway.

I can't see a convincing theory for that, but what's obvious is that Google hopes to put pressure on Oracle via the open source community.

Even if that wouldn't ever change the legal facts concerning what Google has done so far, Google may hope that under enough public pressure Oracle would be more likely to let Google carry on with its Dalvik virtual machine. I said before (at the end of this post) that I believe Google is barking up the wrong tree by trying to pressure Oracle on that basis. Oracle's support for open source and "open standards" ends where its business interests begin. That impression was just affirmed three weeks ago when I listened to Oracle's VP for Standards Strategy and Architecture, Don Deutsch, at a standardization conference.

Google might have hoped that Oracle would grant a Java license to the Apache Software Foundation's Harmony project. Since Google's Dalvik virtual machine is derived from a part of the Harmony code, Google would have been, potentially, an indirect beneficiary of such a license. This was like the reverse concept of having a carpet pulled off from under one's feet. Google hoped to have a missing carpet inserted under its feet and gain a legal advantage at least with a view to the future. But as I expected, Oracle stands firm.

On Thursday (09 December 2010) the ASF announced its resignation from the JCP Executive Committee -- the steering body of the Java standards-setting process. Over a disagreement as to whether Oracle had legal obligations to grant a certain Java-related license to the Harmony project, the ASF wanted to (at least temporarily) block all further progress concerning Java. But only Apache, Google and an individual member named Tim Peierls voted that way, while eWEEK reported that six members voted unconditionally in favor of Oracle's proposal (HP, Ericsson, Fujitsu, VMware, Intel, and Oracle itself) and six other members (SAP, IBM, Eclipse, Red Hat, Credit Suisse, Werner Keil) disliked licensing restrictions but voted for Oracle.

I read a rumor on the Internet that Red Hat was actively discouraging other members from a vote that would amount to "shilling for Google". A statement Red Hat gave to internetnews.com certainly indicates the Linux distributor's allegiance to Oracle. That's not suprising since IBM supports Oracle, and Red Hat follows IBM on pretty much every occasion.

The Apache Software Foundation risks getting sued

After Apache and Google lost the vote, TheRegister already expected the ASF's resignation. Oracle didn't seem to be surprised either. Its call on the ASF to "reconsider its position" doesn't mean that Oracle holds out rosy prospects to Apache and Google: it just shows that Oracle believes that the ASF will sooner or later have to yield and live with the fact that Oracle wants to retain some control over the licensing of Java and, particularly, Java-related patents. It's not an offer to hold peace talks and work out a compromise. It means that the ASF can have peace only on Oracle's terms.

If Apache doesn't accept Oracle's terms, I wouldn't rule out the possibility of Oracle suing the ASF over its Harmony project at some point. Doing so would merely be consistent with Oracle's infringement suit against Google. Right now, Oracle puts on a friendly face, seemingly extending an olive branch. But who knows for how long. At some point Oracle may conclude that the ASF will continue its collision course forever unless Oracle asserts its rights.

These circumstances limit the options Google would have should it be found to infringe Oracle's patents. The indirect Apache road to salvation appears to be blocked for the foreseeable future. Replacing Dalvik with another infringing technology wouldn't make sense either. However, most (if not all) Android applications have been written in Java, and Google must find a way forward for its third-party app developers. It can't just tell them that all of their applications can no longer be legally executed on Android and that they'd have to rewrite them with a completely different development system.

The GPL avenue wouldn't work either. While Google could theoretically take Oracle's GPL'd Java code (OpenJDK and/or parts of phoneME) and build some new GPL'd software capable of executing existing Android apps, it has clearly been Google's approach so far to eschew the GPL and its "copyleft" principle according to which anything derived from or incorporating GPL'd code must be GPL'd as well.

If Google had to do that, it might help its app developers temporarily but at the expense of creating major complications for the business strategies of its key partners among device makers. Those strategies are centered around closed-source, proprietary extensions to Android, which effectively make the platform "open in name only".

This is Google's dilemma: it has to work out things with Oracle in a way that Android app developers and Android device makers can live with. If Oracle's legal position is indeed very strong, if Oracle's intentions are about control as opposed to just money and if Google continues to be unable to countersue for infringement of any of its own patents, then there may be no solution that averts devastating damage to the Android ecosystem.

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Google makes weak showing against Oracle: more than three months later, still no counterthreat

On Wednesday (10 November 2010), Google filed its answer to Oracle's amended complaint dated 27 October 2010.

Five weeks earlier, on 4 October 2010, Google had already responded to Oracle's original complaint dated 12 August 2010. I commented on that answer and wrote that I was "unsurprised and underwhelmed" by Google's defense. Looking at the current state of the case, I think everything is still going according to plan for Oracle and this dispute is going to cost Google dearly.

I'm much less worried about Google than about the Android ecosystem as a whole, which could suffer severely because Google fails to protect it. (By the way, I use a Samsung Galaxy S i9000.)

Besides those who are totally in the tank for Google, only the impressionable can conclude from Google's unsubstantiated and unsurprising defense that Oracle faces a serious obstacle. It doesn't.

Oracle has many strings to its bow: seven patents, some copyrights (a subject on which I commented in my previous posting), and presumably more patents in stock should there be a need to up the ante.

The only thing that could realistically redress or even tip the balance would be a serious countersuit. More than three months after Oracle threw down the gauntlet, Google still hasn't been able to mount a counteroffensive. At this stage it's increasingly likely that Google just can't: other defendants struck back within about a month or two of being sued.

For the Android community as a whole and especially for developers whose applications run on the Dalvik virtual machine, Google's toothlessness is reason for grave concern. There's a saying that "the best defense is a good offense". That's also the name of the game in patent disputes. If Google can't play that game, it may be in for a nightmare.

Google still hasn't managed to do what Apple, Motorola and even HTC pulled off

Google's weak showing is particularly disappointing when compared with how all the other defendants in the major smartphone patent suits fight back:

• Nokia filed a complaint against Apple in Delaware on 22 October 2009 over 10 patents. Seven weeks later, on 11 December 2009, Apple claimed in the same court that Nokia infringed 13 of its patents. If Google acted like Apple, it would already have countersued Oracle in late September or early October.

• Apple lodged complaints against HTC with the ITC as well as a Delaware court on 2 March 2010. HTC responded with an ITC complaint against Apple on 12 May 2010 (later it also countersued in Delaware). So there were ten weeks between the original complaint and the first counterstrike. At HTC's pace, Google would already have countersued Oracle in mid October.

• Microsoft lodged complaints against Motorola with the ITC as well as a court in Western Washington on 1 October 2010. Less than six weeks later, Motorola filed its unsurprising countersuits. If Google were Motorola, it would already have countersued Oracle before the middle of September.

It's not just the time line that's worrying about the absence of a Google countersuit against Oracle. It's also the procedural stage. Apple's counterclaims against Nokia were made as part of its answer to the original complaint. HTC and Motorola instigated their suits even prior to their defensive replies. Google has already responded to Oracle's original complaint and the amended one, but merely defensively.

Google has presented a number of defensive theories but may not be able to support any of them

I can appreciate that Oracle vs. Google is such an important and interesting litigation that several media have already reported on Google's answer to Oracle's amended complaint. But I missed two fundamentally important pieces of information in the reports I saw: a reference to the continued and increasingly worrying absence of a countersuit by Google, and a statement of the fact that a defensive theory presented in such a filing isn't necessarily supported by any evidence.

There's nothing unusual about Google presenting defensive theories at this stage without substantiating them in any reasonably specific way. Other defendants do the same thing all the time. But until Google presents facts that really give meaning to those theories, the mere mentioning of those theories doesn't change a thing. What we see in that court document is a skeleton, but it hasn't really been fleshed out yet.

Google's defensive theories per se are just what every other deep-pocket defendant facing a major threat would do: point to each and every defense possible, including absolute long shots that may completely fail to convince the court when the facts are on the table. There's no penalty for that other than the cost of the lawsuit, which is negligible when you have as much at stake as Google does with Android.

Google obviously wants to keep all options open and clutch at every straw while it can. That's normal and legitimate, but a knowledgeable unbiased observer can't be overwhelmed by that. No one would have expected Google to throw in the towel in the early stages of the game.

Nothing unusual about Google's defense

Against Oracle's patent infringement assertions, Google puts forward all the usual defenses that you can find in any of the answers to the other smartphone patent complaints.

For example, every such document I've recently looked at contained an invalidity defense, and every claim of the patents-in-suit being invalid listed every conceivable theory including a reference to 35 U.S.C. 101, the paragraph on patent-eligible subject matter. Everyone seems to try. Google places particular emphasis on that theory but there isn't any particular reason to assume that those Java patents lend themselves to invalidation on the grounds of being too abstract. Also, the Supreme Court's Bilski ruling didn't expand the scope of what is considered too abstract for patent-eligibility: it merely reaffirmed the standards previously applied.

So my best guess is that Google stresses that part of its invalidity defense to curry favor with software patent critics in the open source community. That approach of submitting to a court of law what is actually directed at the court of public opinion was already displayed by Google's answer to Oracle's original complaint in another context (the Java Community Process).

On the copyright side of the case, it's not a major surprise that Google claims that others contributed the relevant program code. In an open source context, one might try that, but in the posting I just linked to I explained that this would only make a gradual difference. It certainly wouldn't be an excuse for continuing to distribute infringing material.

It's also obvious that Google will try to get some mileage out of the fact that Oracle/Sun published certain program code on open source terms. Google will try to leverage that fact in the patent and the copyright part of the case. However, since the code in question was published under the GPL, it's hard to see how Google's code (under the Apache license) would benefit. Those are incompatible open source licenses.

Again, I don't blame Google for not presenting more evidence at this stage. It's just that if it doesn't put forward some real substance later on, it will lose, and at this juncture I haven't seen Google do anything that would surprise (let alone scare) Oracle. When the decision-makers in Redwood Shores looked at Google's answer, they must have been extremely relaxed and thinking to themselves that so far everything was going according to plan. Whatever that plan is -- it could have major negative consequences for the Android developer community -- remains to be seen. Google hasn't thwarted it, and I increasingly doubt that Google will prevent Oracle from getting its way. Whatever that way may be.

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Does the S in FSF stand for "spamming"?

The Free Software Foundation appears to be turning, slowly but surely, into the Free Spamming Foundation.

Recently I criticized the FSF's belated statement on Oracle's patent infringement suit against Google for a host of reasons. Mostly, I felt that it was misleading pro-GPL propaganda. Note that I vigorously defended MySQL's GPL-based business model and "copyleft" in connection with Oracle's acquisition of Sun. But I reject overstatements of the GPL's (especially the GPLv2's) ability to deal with patent attacks. In addition to that, I criticized the FSF's call to spam Oracle CEO Larry Ellison's email account.

Now I just saw that spamming indeed appears to be a cornerstone of the FSF's strategy concerning patents. Its newest target: the United States Patent and Trademark Office (USPTO).

Under the headline "Encourage the USPTO to stop issuing software patents; deadline September 27", the FSF issued an urgent call on the community to answer a request for comments by the USPTO concerning the interpretation of the Supreme Court's Bilski ruling. For the future evaluation of patent applications, the USPTO wants to write up new guidelines reflective of the Bilski decision.

The Bilski case was (or could have been) a very important one

The Bilski case was an important one indeed, and I reported on it from several angles. In an immediate reaction, I described it as a major disappointment for the NoSoftwarePatents cause; I listed the top ten Bilski losers, among them the FOSS movement; I explained that doing away with software patents on the grounds of them being too abstract is a losing strategy; I also commented on IBM's outrageously cynical submission spitting in the face of the FOSS movement and on Google's position, which definitely didn't speak out against the patentability of software.

So I don't deny that the conclusions the USPTO is now going to draw from the Bilski ruling are an important step. However, spamming the USPTO, whose only job it is to apply the law (not to make it), is an ill-conceived and counterproductive approach. It's like protesting against foot soldiers. It won't do away with a single software patent. It won't reverse the defeat that the Bilski decision was for the abolitionist movement. But it will for sure reflect very unfavorably on the FOSS movement as a whole.

What the USPTO wants is well-crafted professional input

Even though consultations such as this one are open to the general public, patent law is a complex subject requiring a vast amount of knowledge, so what the USPTO really hopes to receive is input from professionals. Let me quote from its request for comments:

The Office is especially interested in receiving comments regarding the scope and extent of the holding in Bilski.

In other words, this is about legal interpretation. The Supreme Court took a position on some aspects of substantive patent law (the rules for what is and what isn't patentable), though not on as many as a lot of people hoped. Now it's about drawing the right conclusions from it.

You can't outvote the law

This isn't going to be a "democratic" decision-making process. It's not a vote on a TV show. If the FSF mobilized a million people to call for the abolition of software patents, it still wouldn't change the basis on which the USPTO has to operate, which is the law as it stands and as the courts, especially the highest one of them in the US, interpret it. Spam doesn't contribute anything of substance. It's just an annoyance and a distraction.

It would be perfectly appropriate for the FSF to make a substantive submission to the USPTO, or to encourage FOSS-friendly patent professionals to do so. But instead of arguing the real issue, the FSF just provides copy-and-paste paragraphs and general guidance and asks the community to tell the USPTO -- among other things -- how software patents "take freedom away from all computer users". Software freedom is a vision I like, but it's not a legal concept. It's not in the Constitution, it's not in the Supreme Court's Bilski decision, and it won't play a role in the USPTO's new guidelines.

An email campaign like that is a nuisance (to put it diplomatically). The USPTO doesn't make the law; it doesn't have the authority to interpret it like a court; it simply has to operate within the given framework. The FSF tries to put some blame on the USPTO but doesn't understand that US patent law was indeed designed to evolve expansively as new technologies are invented and adopted. Restrictions require democratic decisions, and the USPTO isn't a democratic decision-making body. Those decisions are the prerogative of Congress.

The FSF apparently knows that it can't persuade Congress of its anti-IP agenda. So it firstly rested its hopes on the Supreme Court (which made it pretty clear in the Bilski decision that if you want to exclude anything from patent-eligibility, you have to talk to the lawmakers, not to the judges) and now tries to pressure the patent office.

Email campaigns can be legit -- but not in this case

Let me point out that there are indeed situations in which it makes sense to mobilize citizens for email campaigns. In particular, if lawmakers are in the process of forming opinions and preparing decisions, it's perfectly in line with democratic concepts to let citizens voice their wishes, hopes, fears, concerns, doubts, whatever. Our directly elected representatives should listen to us.

Of course, it also depends on how, when and on what scale such campaigns are conducted. There are many circumstances that one must consider. Wherever such a campaign is inappropriate, it backfires. It gives the impression that the ones conducting it have lost on the basis of reason and resort to desperate and defiant spam tactics.

In a case like this request for comments by the USPTO, the only appropriate (and the only productive) input will have to be presented professionally, and there's no strength in numbers.

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Google's Bilski brief didn't advocate the abolition of software patents

After Oracle filed its patent infringement suit against Google, most of the initial reactions in the community expressed disappointment over Oracle's action. However, the more time passes, the more people have second thoughts. It's noticeable in the blogosphere and in discussion forums.

I try hard to be fair and as objective as humanly possible. With this posting I want to shed some light on Google's amicus brief in the Bilski vs. Kappos patent case. The Supreme Court of the United Status (SCOTUS) took its decision in late June, and it was a major disappointment and a setback for the free software/open source movement.

Some large IT companies filed so-called amicus curiae briefs (submissions to tell their views to the judges), and since Google is now being sued over patent infringement, it's worth taking a look at what the "Don't Be Evil" company did in connection with Bilski.

Google partnered with financial services organizations

Google filed its amicus brief jointly with Bank of America, Barclays Capital, The Clearing House, The Financial Services Roundtable, Metlife and Morgan Stanley.

All of those organizations Google partnered with are part of, or represent parts of, the financial services sector. While financial services companies are large-scale software users, it would have been a major surprise to find them take a position on software patents. After all, the Bilski patent application wasn't technically a software patent filing. It claimed a method for managing certain risks related to price changes in the energy market.

Also, those banks have business relationships with large software companies that want patent protection. So it's easy to see that they had a narrow focus (just the Bilski type of business method) as opposed to a broader agenda concerning patents including technical software patents.

However, those who oppose software patents looked at the Bilski case as an opportunity for the SCOTUS to establish criteria for patentable subject matter ("patent-eligibility") that, ideally, would have caused collateral damage (or collateral benefit from the anti-software-patent point of view) to the patentability of software.

Google's choice of partners in this is an indication that I wanted to mention because it's easy to understand. If they had partnered with (for instance) Knowledge Ecology International, the likelihood of a truly anti-software-patent brief would have been hugely greater. But let me now explain the content of Google's brief and why it isn't an anti-software-patent position.

Against straightforward business method patents

Google's brief speaks out against "patents on methods of doing business" and "abstract methods and mental processes like [the Bilski application]". It describes the essence of the Bilski patent application as "the abstract idea of managing the weather-related risks associated with energy pricing".

Such an idea could be implemented -- and nowadays would typically be implemented -- in the form of (a part of) a computer program. That's why Google's brief also argues against "patents on [...] software that merely implements such methods".

But this doesn't mean opposition to software patents that relate to other subject matter than the automation of such business methods.

Amazon's patent on the one-click order is probably the most famous business method patent, at least in connection with the Internet. In a totally unconcealed fashion, it could be categorized as a patent on a business method or on "software that merely implements" one. So it's the kind of patent Google proposed to do away with.

Google gave some examples of such patents that the US Patent & Trademark Office has granted: "method and apparatus for tax efficient investment management," a "process for creating a financial plan for ... funding of college education," a "system for funding, analyzing and managing life insurance policies funded with annuities," and a "system, method, and apparatus for providing an executive compensation system."

However, I said before: "in a totally unconcealed fashion". That's what the one-click patent and the examples listed in the previous paragraph are. But if Amazon had to file the patent in an environment where business methods are formally unpatentable, its patent attorneys could try to draft around that restriction. For an example, they could describe it as a signal processing patent, and instead of the convenience for the buyer they could argue with a reduced number of signals (or if it's a "communications" patent, with reduced network traffic). In the end they might monopolize the underlying concept anyway. Maybe they would even obtain a broader monopoly.

That's what I'd call a disguised business method patent. I didn't find anything in Google's brief that stressed the need to do away with such patents as well.

Only against abstract software patents (not concrete ones)

Wherever Google's brief relates to software patents, it does one of three things:

1. complain that there are generally too many of them (which would be an argument for higher quality standards, not necessarily for abolition)

2. refer to the implementation of business methods in software (as discussed in the previous section)

3. limit the scope of statements on software patents with the word "abstract"

The third item means: if a software patent application is too abstract, it should be rejected, but if it's somewhat concrete, it may be fine.

Google's brief doesn't suggest exactly where to draw the line between an abstract software patent and a concrete one. There's no doubt that a patent on a computer program implementing the Bilski idea would be "abstract". But the brief doesn't argue that software is abstract by definition and should, therefore, not be patent-eligible (as many opponents of software patents claim). I don't believe in the strength of the "all software is abstract" argument anyway. So I don't blame Google for not subscribing to it either. I'm just trying to figure out where Google stands, based on its Bilski brief.

The question of whether a patent is too "abstract" has to do with the breadth of the claims (it's the claims where the scope of the time-limited monopoly is defined) and it may also have to do with disclosure (the extent to which an invention is truly explained). Generally, the more "abstract" a patent is, the broader, and the broader, the more valuable. So it's obvious that applicants and their attorneys will try to push something as abstract as possible through the system. It's up to the patent examiners (or to the judges, post-grant) to insist on a narrower and more concrete application, and on the disclosure of an actual solution.

This is isn't software-specific at all. Half a century ago the SCOTUS already stressed that "a patent is not a hunting license", meaning that it's not a monopoly on the right to solve a problem, but a reward for an actual solution.

Conventional vs. non-conventional programming of a computer

Google's brief describes quite clearly on page 10 of the PDF file where Google would draw the line between patentable and unpatentable subject matter. I'll quote and explain:

Rather, "the clue" to patent-eligibility

The term "patent-eligibility" means whether something falls under patentable subject matter. If software is excluded from patentable subject matter somewhere, then it's "not patent-eligible", or more elegantly, "patent-ineligible". The term is meant to distinguish subject matter from other patentability criteria (novelty, nonobviousness etc.). However, when we talked about patent-eligibility in the EU debate over software patents, we always just said "patentability [of software]".

is whether a process results in physical transformation or reduction of an article to a different state
or thing.

That's the "transformation" part of the machine-or-transformation test. Software all by itself can't do that, so it's an non-issue for us. Google cites the Gottschalk vs. Benson case, which we don't have to worry about here.

Where such transformation does not occur, the Court has recognized processes to be patent-eligible only when the claim, considered as a whole, is necessarily tied to the non-conventional use of a machine.

Google talks about conventional vs. non-conventional use of a machine (such as a computer) at several points. One might think that programming a computer is by definition a conventional use because being programmed is what computers are for. Unfortunately, that's wrong.

I know this in detail because in the EU software "as such" isn't patentable subject matter, but a lot of software patents get granted, and the reasoning will always have to do with theories that are the equivalent of "non-conventional use of a machine". For an example, optimizing the use of the limited number of pixels of a screen (such as by a tab control), accelerating a database operation (such as by a better sorting algorithm), compressing data, encrypting data... all those kinds of achievements go beyond a conventional use of a machine under the logic of patent law.

Why would Google be fine with patents on a non-conventional use of a machine? Because pretty much everything on which Google seeks patents meets -- or is at least intended to meet -- that requirement, not from a programmer's common sense point of view but under patent law. For an example, Google's patented PageRank algorithm would not be considered a "conventional" use of a computer by a patent examiner or court because it's so useful for the purpose of estimating the relevance of web pages.

To resolve this case — and to provide needed clarity regarding the scope of patentable subject matter — this Court need only reaffirm these long-established precepts.

There you have it: Google called on the SCOTUS to uphold a set of criteria under which the kinds of patents Google obtains are available. Let's face it: the kinds of patents over which Oracle sues Google now also fall in that "non-conventional use of a computer" category. Google is getting a taste of its own medicine.

Adaptability of patent law to future innovation

At the top of page 11 of the PDF file, a long sentence relates to "technological advancements" and supports the idea that new technologies should be patentable in principle. Google's brief just argues that the Bilski patent application, which isn't as technological as Google's PageRank patent, is a kind of subject matter that has "existed since the time of the first Patent Act." That law was passed in 1790. Of course, businesses and markets existed before, so the Bilski idea could, in theory, have come up in one shape or another more than 200 years earlier.

In terms of where Google stands, it's just important to realize that this kind of reasoning isn't an anti-software-patent position at all. Instead, it is consistent with the idea of an "expansive" patent system that covers ever more fields of technology with time.

An anti-software-patent theory in this context would argue that even though US patent law is meant to adapt to new technologies, patent law is only a means to an end, and for reasons A, B, C and D, software patents run counter to the lawmakers' original intent (including that one might even argue they're unconstitutional).

It would undoubtedly be a huge challenge to win that kind of an argument, but it would be theoretically possible because very few legal principles are absolute: in most cases, different principles and values have to be weighed off against each other. In this case, the idea of the patent system expanding is one principle and value, and one could bring others into play to argue against the compatibility of software patents with existing patent law and, possibly, the Constitution. I just want to highlight that Google doesn't do that.

References to patent-critical literature

In all fairness I have to say that Google does cite some very patent-critical authors, such as James Bessen and Michael Meurer. I know the former (we were sitting next to each other on a conference panel years ago and agreed on a lot of things). Google also recalls that in the early 1990s virtually all software companies opposed the patentability of software (ironically, that would also include Oracle). Quite accurately, Google points out that innovation in software occurred anyway and, at the time, didn't require patent protection.

Google deserves credit for having drawn the attention of the SCOTUS justices to such theories and eye-opening writings. While this wasn't the only amicus brief to do so, the combination of Google with several of the giants of the financial services industry certainly did lend a kind of credibility to those critical voices that, by contrast, a notorious communist without any track record in business, authoring a submission on behalf of non-commercial entities, never brings to the table.

Still, Google stopped far short of advocating the abolition of software patents. One may prefer to crack one nut at a time and do away with business method patents first, then deal with other software patents.

However, if you look at Google's unequivocal support of non-abstract patents on a "non-conventional" use of a computer and its failure to argue against an expansive patent system, there's just no way a person knowledgeable in the field of substantive patent law could say that Google's brief was an anti-software-patent submission. It was at best neutral with respect to the kinds of patents Google itself files for, and I think it's fair to say that on the bottom line -- especially in the most crucial context, the legal tests for patent-eligibility -- was pretty much pro-software-patent.

Also, it must be considered that Google has never spoken out against the patentability of software as a whole on any other occasion either. I'll comment on that some other time.

I don't support patent aggression, but perhaps Google has to learn about patents the Ellison way.

If you'd like to be updated on patent issues affecting free software and open source, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents.