Richard Lloyd

Since the Supreme Court handed down its decision in Alice, many in the US patent community have been searching for a case that provides greater clarity on the justices’ thinking or, at the very least, doesn’t simply see the Court of Appeals for the Federal Circuit (CAFC) affirm a lower court ruling invalidating the patent in question. Those cases have been few and far between, but there was some encouragement this week in the CAFC’s decision in Enfish LLC v Microsoft, when the majority ruling explicitly stated that Alice did not simply eliminate broad swathes of software-related inventions from patent eligibility.

Such has been the drift in the jurisprudence around Section 101 from its original moorings that any confirmation that software is indeed patentable is a welcome relief to most patent owners. For some, the suspicion remains that knocking out patents on 101 grounds using the two step process that was first established in SCOTUS’s Mayo decision and extended under Alice, has become a way for district court judges to clear patent cases from their docket – after all, the feeling is that most judges don’t actually like hearing patent cases.  

In the Enfish decision the CAFC disagreed with the lower court ruling that the patent claims in question were not patent eligible. The claims, which Enfish alleged Microsoft had infringed, relate to a “self-referential database”. In terms of the decision’s broader significance for the patent community, here’s the piece that has received perhaps the most attention:

“We do not read Alice to broadly hold that all improvements in computer-related technology are inherently abstract and, therefore, must be considered at step two. Indeed, some improvements in computer-related technology when appropriately claimed are undoubtedly abstract such as chip architecture, an LED display, and the like. Nor do we think that claims directed to software, as opposed to hardware, are inherently abstract and therefore only properly analysed at the second step of the Alice analysis. Software can make non-abstract improvements to computer technology just as hardware improvements can, and sometimes improvements can be accomplished through either route. We thus see no reason to conclude that all improvements in computer-related technology, including those directed to software, are abstract and necessarily analysed at the second step of Alice, nor do we believe that Alice so directs.”

That is certainly encouraging for the anti-Alice brigade, but for more detail on the ramifications of the decision I asked a handful of prominent academics and former Chief Judge of the CAFC Paul Michel for their thoughts. Here’s what they had to say:

 

I think the Federal Circuit will increasingly seek to distinguish between software patents that seem directed at real improvements in computer technology and those that simply claim the implementation of a general idea using computer technology.  The court viewed this claim as directed at real technology.  I think it also helped that the claim was a means-plus-function claim, so the actual technology disclosed in the specification got read into the claim.

Professor Mark Lemley, Stanford Law School

 

Software patent holders should be breathing a sigh of relief after the Federal Circuit’s decision today in Enfish v. Microsoft.

The case pushes the courts to take seriously the Supreme Court’s notion that software patents directed to improving the functioning of computers themselves may be patentable. 

But don’t hold your breath. The Supreme Court has a history of rejecting the Federal Circuit’s views on anything related to patentable subject matter. (Recall that in Bilski, Supreme Court Justices essentially said they disagreed with everything the Federal Circuit has ever said about patentable subject matter.)

In Enfish, the Federal Circuit waved a red flag for the Supreme Court, which is a dangerous thing to do. The Supreme Court has established a two-part test, putting improvements in the functioning of computers into the second step. The Federal Circuit moved that question into step one of the test, making it much easier for software patent holders to survive. This is the type of dance the Supreme Court has frowned on.

Professor Robin Feldman, University of California Hastings College of the Law

 

I do think it's a good decision, but I don't think it will necessarily move the current 101 jurisprudence in the right direction overall. As a general matter, the Enfish decision now prevents courts, examiners, and PTAB boards from simply asserting that a computer-implemented technology is "abstract" under the first step of the Mayo-Alice test. If they are going to reach this decision, they have to do some work now, explaining why it is abstract. As such, the Enfish decision will hopefully bring to an end the conclusory assertions that a patent on a computer-implemented technology is abstract, end of story.

Unfortunately, the decision does not address the more fundamental problems in the new 101 doctrine in terms of its arbitrariness and indeterminacy. For instance, even after Enfish, judges and PTO officials can still break up a claim into its component elements, reducing a claim down to its foundational ideas that are inescapably abstract, and then concluding that the claim is abstract.  There is still nothing in the Mayo-Alice test that prohibits courts and officials from doing this, which is prohibited under the other patentability requirements, such as novelty and nonobviousness. It is doctrinal requirements like, requiring an assessment of the invention or claim only "as a whole," that restrains courts and PTO officials in reducing patents to unpatentable abstract ideas, and which is a key to the determinate functioning of the patent system in promoting and securing new innovation.

Professor Adam Mossoff, George Mason University School of Law

 

After reading Enfish LLC, I conclude that, although labouring mightily to give clarity and administrability to Mayo/Alice, the court has failed to impart meaningful predictability to the vast expanse of computer or software-related patent claims.  I estimate that hundreds of thousands of issued patents remain under a cloud of possible invalidity.  That is even worse than being plainly valid or plainly invalid.  The problem is that patent practitioners, examiners, judges, PTAB members and others charged with adjudicating eligibility or advising business executives cannot do so with any confidence at all.

That is not the fault of the Federal Circuit, but of the Supreme Court which has "legislated" a two-step inquiry that is fundamentally flawed. At step 1, one must decide what a claim is "directed to", a meaningless construct. So, in Enfish, the Federal Circuit tried to give it meaning by equating it with "focusing on" or "improving" compared to prior art, as revealed in the Written Description.

The only clarity I discern is that, as in DDR, since the claimed invention in Enfish touts improvements in the functioning of the computer itself or solves a problem particular to the computer arts, it escapes Alice, step 1. But we already knew that. And, DDR remains one of only a very few decisions upholding eligibility and thus validity. This "safe harbour" looks exceedingly small to me. But, it is better than none.

Therefore, innumerable claims issued before Mayo/Alice that were perfectively valid when issued will gradually fall, ultimately in massive numbers, because the Supreme Court suddenly, radically and retroactively upended the law of Section 101. That these two decisions pretend to follow Flook and Diehr is hollow because Diehr overruled Flook, as its authour (Stevens) made clear in his dissent in Diehr. When Mayo purported to reconcile Flook and Diehr, it was sheer sophistry. Then, Alice expanded on statements in Mayo and Bilski, compounding the chaos.

In addition to pervasive uncertainty, we now face fundamental unfairness as 8,300 examiners, 275 PTAB judges, 1000 District Judges and other adjudicators cannot possibly apply the law consistently, and they are not.  Many more thousands of patent attorneys cannot accurately advise clients, either.  Their clients, likewise suffer both the uncertainty, which makes business decisions impossible, and unfairness, which adds considerable additional costs to securing and enforcing patents when the costs were already excessive, and now are indeed unbearable, in combination, by smaller entities.  Yet, it is precisely those organisations (universities, research institutes, start-up, hospitals, emerging companies) that create most net new jobs, most economic growth, most new technologies.

I am sure the Supreme Court did not intend or foresee these damaging effects.  However, only it or the Congress can remedy the problem.  The Federal Circuit has been rendered ineffective, trapped by Supreme Court decisions filled with loose dicta, some of it tracing back many decades, even to the 1800s. We can see its frustration in its plea for the eligibility of the health diagnostic method in Sequenom, while invalidating it.

The recent "Guidelines" issued by the PTO are likewise unable to fix the problem; the PTO, like the Federal Circuit, has been given an impossible task: to make sense of illogical nonsense, unwittingly unleashed by the high court.

Worst of all is that this entire episode was unnecessary. Bad claims are readily invalidated under sections 102, 103, 112.  But, for whatever reason, Justice Breyer's opinion in Mayo assumed that the 101 inquiry is "better established" and the other sections not up to the task. In my opinion, it is just the opposite.

Even if the high court wanted to end the chaos, it could do so only gradually, one case at a time, over many years. Thus, as a practical matter, only Congress can end the nightmare, but it is still fixated on the greatly exaggerated, though real enough, "troll problem." 

The Federal Circuit will continue, valiantly, to contain, limit and marginally reduce the harm. But, it will not be enough. That is the lesson of Enfish.

Paul Michel, former Chief Judge of the CAFC