Harming the economy with over-aggressive, haphazard Alice-based 101 rejections

Alice problem, what is abstract under 35 USC 101, and what is not?
Alice in Wonderland – Mad Tea Party

What to do about “Alice”? The US Supreme Court’s “Alice” decision has invited us all to a Mad Tea Party.  What fun! But, as previously discussed, if you like logical coherency, or even just want to keep from crashing the economy, there are a few problems with this decision.

Attorney Louis Hoffman, writing in ipwatchdog.com, sums up some of these recent”Alice” problems nicely.

Damaging the economy: As Louis points out, some of the most important areas of US technology are based on software, business methods, and biotechnology.  The USPTO has recently taken upon itself to reject many patents in this area.  However, this loss of patent coverage can impede the economy by making investments difficult, and/or by driving inventions underground in the form of trade secrets.

https://www.ipwatchdog.com/2016/02/07/uspto-harms-over-aggressive-and-haphazard-application-of-alice/id=65810/

What about actual (written) patent law? Article I, Section 8, Clause 8 of the US Constitution has empowered Congress to:  “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

Congress has done so, and has determined under 35 USC 101 that:  “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”

The US Supreme Court has given itself the power to override Congress, however.  In Alice, they chose to exercise this power.  In this regard, Attorney John Duffy writes in Scotusblog:  “The uncertain expansion of judge-made exceptions to patentability” points out some interesting implications of this decision.

If you want to know what’s important about this case, it’s right there: the Court’s acknowledgement that the judge-made “exclusionary principle” has the potential to “swallow all of patent law” because “all patents” are at some level based on the very things that can’t be patented under the judge-made doctrine.

Decisions, decisions: So the Alice decision, read too broadly, produces an unconstitutional result.  At some point, there will be likely corrective action.  However, the practical question that some inventors, particularly business method inventors, have to address today is: file a patent and risk an “‘Alice” rejection, or don’t file a patent and be certain that the invention will become public domain?

Alice update — need true neutral party review

Need for impartial judges

In my opinion, part of the “Alice”, 35 USC 101 patent eligibility problem is that few true impartial (i.e. neutral or objective) judges have really been involved yet.

Both the USPTO and Federal judges have at least a subconscious incentive to get complex patents off of their respective desks with a minimum of time and effort.  Why fill your head with complex matters — just say the patent is “abstract”, and the problem is gone.  Instant relief!  So perhaps there is an inherent conflict of interest built into the legal system in this regard.

So, as the Supreme Court itself warned, “Alice” will continue to swallow up more and more patent law. At least until it finally reaches an opposing force.  Given our legal system, what might this opposing force be?

The Supreme Court is not likely to be this opposing force. It is is not really a neutral party, because it created this mess.  As a rule, the Supreme Court does not like to admit error.

I had hoped that this opposing force might be formed by a group of middle-to-large sized companies, or by the Federal Circuit doing its job and actually cleaning up patent law. This hasn’t happened yet, however. Rather, each Federal Circuit ruling has narrowly focused on a single case, without much regard to making consistent rulings between cases.

The USPTO has observed this inconsistency and has attempted to introduce some consistent patent eligibility rules. The problem is that the Federal Courts have made it clear that they consider themselves superior to the USPTO. So far, they have tended to ignore USPTO attempts to reconcile their many inconsistent rulings.

The only remaining true objective party is Congress.  There have been a number of congressional efforts in this regard. The problem here is that there are so many other issues that it is hard to get congressional attention.

Future generations will likely find the whole thing to be amusing. It is indeed worthy of Monty Python. The logical problems with Alice are a bit like the parrot in the dead parrot sketch.

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.