CLS Bank v. Alice Corporation II: more cutting-edge legal confusion

Alice and legal confusion
Confused? So is everyone else!

Legal confusion:  There remains a lot of legal confusion in the US regarding the question, are software inventions patentable? How to answer this question? We could, of course, look at the letter of the law (e.g. 35 USC 101), which would give us the rather boring answer that software is patentable. But if someone doesn’t want software to be patentable (and a number of large powerful companies do not), that’s not the answer they want.

How else might we get an answer? In ancient Greece, we might consult the Oracle at Delphi, or perhaps sacrifice a goat and examine its entrails. However, in the modern US, we know that this is silly. As we all know, the modern US way to decide this is to put this question to a small panel of elderly individuals who know nothing about software, science, technology, or patent law. We call this small panel the Supreme Court of the United States (SCOTUS).

To answer questions, the Oracle at Delphi inhaled vapors, fell into a trance, and then spoke in riddles. These were then interpreted by various priests. In much the same way, SCOTUS (hopefully without the aid of vapors) has given us some confusing and inconsistent rulings, such as the CLS Bank v. Alice Corporation decision, that in essence are riddles that must be interpreted by various priests (e.g. lower courts, the USPTO).

So in “Alice”, SCOTUS told us that “abstract ideas” are patent ineligible, and also told us that “In any event, we need not labor to delimit the precise contours of the “abstract ideas” category in this case. It is enough to recognize that there is no meaningful distinction between the concept of risk hedging in Bilski and the concept of intermediated settlement at issue here. Both are squarely within the realm of “abstract ideas” as we have used that term.

So the ruling, in essence, is the riddle: “abstract ideas are not allowed“, and “abstract ideas are undefined”. This is a pretty good riddle. So the next step is, now that the Oracle (err… SCOTUS) has spoken, how are the various priests (err… the USPTO and lower courts) going to interpret this riddle?

The USPTO has thousands of patent examiners, and collectively they examine thousands of patents a day.  They can’t run each patent application by SCOTUS and wait for 5 out of 9 judges to make a decision.

The USPTO problem has been further compounded by the fact that lower federal courts, over hundreds of different trials, have issued hundreds of often contradictory patent eligibility rulings. For every ruling that clarified an issue, there are at least one or two other rulings that amplify the confusion. As a result, all anyone has to do to support their desired outcome is to pick and choose among the hundreds of cases. Then string together an argument using these selected cases.

Federal agencies can’t legally operate like this.

The USPTO has made many valiant efforts to cope with this legal confusion. They frequently (several times a year) update their patent eligibility examination guidelines with updated guidelines and examples. These efforts include a webpage with the latest patent eligibility guidelines and a frequently updated Manual of Patent Examination Procedure (MPEP) with a frequently updated MPEP section 2106 on patent subject matter eligibility. So the USPTO examination guidelines continue to change every few months.

Some USPTO examiners update their analysis based on the latest guidelines, and some do not. Some are so conservative that they won’t approve a given claim as patent-eligible unless it is almost identical to a small list of approved patent-eligible claims.

The courts ignore the USPTO guidelines and continue to do whatever they want.  Each new ruling adds to the legal confusion. Nobody reads the actual, Congress passed, 35 USC 101 law anymore.

The “Alice” case was aptly named, but “Wonderland” is not a nice place.

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