One Weird Trick to Beat Alice Rejections (Examiners HATE This)

Alice v. CLS Bank has had a tremendous impact on how the patent office treats applications for business method inventions. Indeed, since the Supreme Court’s decision in Alice, the allowance rate for class 705 (Data Processing: Financial, Business Practice, Management, or Cost/Price Determination) dropped from a pre-Alice high of 31.2% in 2013, to 23.5% in 2014, 9.4% in 2015, and 4.7% in 2016. In a previous article I explained that one way to try and deal with this was to avoid claims which described something which sounded like a business method, even if doing so meant that the claims had to be somewhat vague. However, that may not be possible in all cases, and so the question becomes what to do when you’ve already been pigeonholed as a business method and need to overcome a rejection based on Alice.

The allowance rate statistics for class 705 reflect how difficult it is for a patent applicant to overcome an Alice rejection, but a close reading of the Federal Circuit’s opinion in Enfish, LLC v. Microsoft Corporation suggests a way forward. In that case, the Federal Circuit reversed a determination that a claim was directed to ineligible subject matter because “the district court oversimplified the self-referential component of the claims and downplayed the invention’s benefits.” However, the “self-referential component” wasn’t explicitly recited in the claim in question. Instead, it was incorporated as part of the supporting structure for a “means for configuring” that the claim actually did recite. Given that how a claim’s limitations should be treated when determining what it is “directed to” is often a point of contention when analyzing subject matter eligibility, the fact that means + function limitations are required by statute to be construed as covering the supporting structure described in the specification and its equivalents could provide a useful tool for responding to Alice rejections.

So can using means + function language in this way actually overcome Alice rejections? Yes, but examiners hate it. In one example from my practice, we were able to overcome an Alice rejection using a pre-appeal brief by pointing out that the rejection relied on improperly interpreting a software implemented means + function limitation as simply “a computer configured to perform processes.” Unfortunately, rather than this leading to the application being allowed, the result was that prosecution was re-opened with an 89 page long office action that attacked the means + function language at length for (allegedly) being both indefinite and not properly supported. Ultimately, we were able to overcome those rejections as well, but it required submission of a declaration walking through the corresponding structure in the specification and explaining how it would be understood by one of ordinary skill in the art. I believe the fact that we got the rejections in the first place and had to make such a submission to overcome them reflects a significant level discomfort on the part of the examiner (which I believe is much less the exception than the rule within the PTO) with software implemented means plus function limitations. Nevertheless, despite the fact that it might require dealing with an unfamiliar mode of analysis, if you’re faced with an Alice rejection, means + function language might just be the one weird trick you need to get a patent.

For a version of this post with supporting citations, see here.

What's happened to software inventions? Five unexpected facts that will change how you see patent eligibility.

The third quarter of 2016 was a busy one for the Federal Circuit when it comes to subject matter eligibility – with Federal Circuit issuing more opinions addressing Alice in 3Q2016 than it had in the preceding three calendar quarters combined. After such a flurry of activity, it seems reasonable to wonder what remains of what we thought we knew about subject matter eligibility, especially since there seems to be some controversy even within the Federal Circuit itself. However, after looking at the cases the Federal Circuit has decided since Alice, I concluded that there are at least five things we now know about subject matter eligibility, starting with…

5. The name of the game is no longer the claim
Judge Giles Rich (about whom more later) famously stated that “the name of the game is the claim.” While the accuracy of that aphorism may have been arguable in the past, it has been effectively abjured in the Federal Circuit’s subject matter eligibility jurisprudence. Regardless of the ultimate conclusion, the Federal Circuit has turned time and again to the remainder of the specification when evaluating eligibility. Of course, that’s not to say that the claims are completely irrelevant to the subject matter eligibility determination. The Federal Circuit still at least ostensibly considers claim language when applying § 101, and their recent decisions have illustrated that…

4. It’s better for a claim to be vague than to describe something that sounds familiar or like a business method
What do you get for describing an invention as one which bases the management of records on rules rather than one which uses rules in patient record management? The answer is ten times more likely to get a patent, since “policy, rule-based management of records, files and documents” is included in class 707 (database and file management or data structures) while “patient record management” is included in class 705 (financial, business practice, management, or cost/price determination), and as of writing, the allowance rates for those classes are, respectively, 42.1% and 4.7%. There’s a similar difference between describing an invention as a way for organizing data, and as a way of organizing a particular type of data that a judge is likely to be familiar with – i.e., pictures. The former type of description is arguably covered by the holding that a model for organizing data in a database isn’t an abstract idea, while the latter type of description would result in an invention being deemed ineligible because organizing a specific type of data which is likely to be familiar to a judge – i.e., pictures – is an abstract idea. This is a big change from the days when vague claims would have hurt the chances for a patent to be upheld or issued, but that’s not the only change that’s stemmed from our current subject matter eligibility jurisprudence because…

3. Subject matter eligibility is exorcising the ghost of Judge Rich
Until the current line of subject matter eligibility cases, the impact of Judge Giles Rich on the patent law was undeniable. He was one of the architects of the 1952 patent act, and authored the decisions which established that patent eligibility hinged on the presence of a “useful, concrete and tangible result” and formally ended the practice of treating business methods as per se unpatentable. However, the current subject matter eligibility cases are directly undoing Judge Rich’s legal changes. This is somewhat ironic, since during the oral arguments for Bilski v. Kappos, Justice Stevens professed to admire Judge Rich, and asked if he had written anything on what methods should be patentable. Nevertheless, current subject matter eligibility jurisprudence rejects Judge Rich’s subject matter eligibility decisions in State Street and Alappat, and the necessity of identifying an “inventive concept” to establish a claim’s eligibility has reintroduced an amorphous “invention” requirement that Judge Rich had specifically criticized and that the 1952 act had sought to eliminate. You might imagine that the courts wouldn’t be undoing the life’s work of a hugely influential and well-respected figure in patent law unless there was a good reason, but you’d be wrong because …

2. There is no reason for what we’re doing
In Alice, the Supreme Court explained that the reason for treating certain subject matter as ineligible is to avoid pre-emption. However, current subject matter eligibility jurisprudence is clearly not limited to only invalidating claims where necessary to avoid preemption. Some opinions have also hinted at policy-based reasons for aggressively policing subject matter eligibility – e.g., that certain classes of patents, like those claiming the use of a computer to perform well-known business methods, don’t protect real innovation and therefore should be eliminated – which may be closer to the truth for why the law has developed as it has. However, other rules – such as the rule that simply performing a known business process in a particular commonplace technical environment is obvious – were already in place before we started focusing on eligibility, and could have been used to eliminate non-innovative patents without having to create an entirely new body subject matter eligibility law. Of course, it’s possible that some opinions’ inclusion of dismissive references to the “draftsman’s art,” or warning against the “in terrorem power of patent trolls” may reflect a distrust of patent attorneys and a desire to protect innovators from the cost and difficulty of dealing with them. However, if we’re trying to do is protect innovators, aggressively policing subject matter eligibility makes no sense because …

1. We’ve been down this road before, and the end result will be to transfer resources to attorneys while making patents more opaque
This isn’t the first time courts have tried to issue new rules to rein in what they see as an out of control patent system. Claim construction is treated as a matter of law because the Federal Circuit saw juries as being unpredictable and wanted to minimize their role in patent cases as a matter of policy. The result was to increase expense to patent litigants by making claim construction into a separate trial within a trial in virtually all cases, and to make patents more difficult/expensive to prepare and interpret by spawning rules such as that saying what the invention is or what features are important could result in narrow protection. Indeed, this isn’t even the first time aggressive policing of subject matter eligibility has been used to try and limit the patenting of software. In the 1960s, the patent office strongly opposed the patenting of software, and issued guidance that computer programming was unpatentable. The result was that the nascent software industry didn’t stop trying to get patents, but instead started describing their patents as being directed to something other than software. Is there any evidence that the current aggressive policing of subject matter eligibility will have similar effects? Well, we already know that, like treating claim construction as a matter of law, it’s generated a new kind of trial within a trial – the subject matter eligibility determination – which patent litigants have to go through and pay their attorneys to handle. We also know that aggressive policing of subject matter eligibility hasn’t stopped the number of patent application filings from increasing year over year for each of the past five years, but that it has resulted in recommendations to omit features – like a high-level summary or a discussion of economic benefits – that could otherwise make patents easier to read and understand. While we can’t be certain that history will repeat itself, if you think that policing subject matter eligibility will necessarily make the patent system easier, cheaper, or more efficient, or even that policing subject matter eligibility makes sense when evaluated on its own terms, may want to consider this history as a reason to change how they think of subject matter eligibility. For a version of this article with supporting citations, see here.

The Most Anticipated Patent Case Ever

Last year, Microsoft was hit with a $1,500,000,000 verdict in a patent infringement suit related to Mp3 technology (see here, later thrown out). In 2006, RIM agreed to pay over $600,000,000 to settle litigation related to the ubiquitous blackberry (see here). Last year Vonage agreed to a $100,000,000+ settlement with Verizon over patents for VOIP technology (see here). The bottom line is that patents for software are big money, which was why In re Bilski, a decision the Federal Circuit issued today, was so anticipated. You see, many people had thought that Bilski might put an end to software patents, or at least curtail patent protection for business methods.

My take on the subject was somewhat different. As I explained in this guest post at Patent Baristas I felt that it was unlikely Bilski would have much effect, and that even if the Federal Circuit wanted to, it couldn't eliminate software patents. The reason was the Supreme Court's decision in the case of Diamond v. Diehr said that a patent couldn't be invalidated on the basis that it included software, as long as the claimed invention as a whole performs a function the patent laws were designed to protect (e.g., transforming or reducing an article to a different state or thing). As I wrote in that guest post,
"I can easily tie almost any process I write claims for to a computer, and it would be a trivial task to require that the computers make a physical change in an article (e.g., printing an invoice)," which meant that, based on Diamond v. Diehr, software patents were safe.

So, what did the Federal Circuit do in Bilski? Well, everyone who had anticipated the death of software patents was undoubtedly disappointed. The Federal Circuit specifically addressed and smashed that hope: "we decline to adopt a broad exclusion over software or any other such category of subject matter beyond the exclusion of claims drawn to fundamental principles set forth by the Supreme Court." Bilski, FN 23. It also adopted a "machine-or-transformation" test for patent eligibility (from page 10 of the opinion): "A claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing" - exactly the approach I had recommended in my guest post for obtaining patent protection for software inventions. The Federal Circuit's reasoning was also strikingly similar to my guest post, including an extended discussion of Diamond v. Diehr (see pages 7-9 of the opinion) and used that case to answer potential objections based on arguably contrary Supreme Court precedent (see FN 8: "To the extent it may be argued that Flook did not explicitly follow the machine-or-transformation test first articulated in Benson, we note that the more recent decision in Diehr reaffirmed the machine-or-transformation test. See Diehr, 450 U.S. at 191-92. Moreover, the Diehr Court explained that Flook 'presented a similar situation' to Benson and considered it consistent with the holdings of Diehr and Benson. Diehr at 186-87, 189, 191-92. We thus follow the Diehr Court's understanding of Flook.").

The bottom line is that Bilski reaffirmed the patentability of computer software, and did so in a manner which was strikingly similar to what I had predicted some 7 months previously (the guest post went up on March 6, while the actual decision came down October 30). For the future, this can be a lesson: if there's a billion dollar patent law question, you can either wait for the court to decide it, or you can ask me, and I'll tell you the answer.

NOTE: While I'm aware that this blog primarily focuses on the law related to information security and data privacy, when I read Bilski I had an almost irresistible urge to crow about my previous analysis being validated. Thus, given that blogs are basically tailor made platforms for self promotion, I felt that this would be as good a platform as any to engage in a bit of self-congratulation.

Bilski: Not a big deal

While I generally write here on information security and data privacy law, in my legal career I also do a good deal of work as a patent attorney. Right now, the patent law community (and a fair portion of the mainstream media) is up in arms over a case which supposedly threatens to end the era of software and business method patents. Frankly, I think that the case, commonly referred to as Bilski, isn't going to be that big a deal. I explain why in this guest post over at Patent Baristas.