IP insider: Out from the ‘murky morass’

The Supreme Court heard an unprecedented six patent cases in its most recent term, demonstrating the federal judiciary’s willingness to take the reins in clarifying US patent law in the wake of the America Invents Act.

Yet while it is encouraging to see the judiciary work the contours of US patent law, there is cause for concern with its excessive focus on statutory subject matter. The judicial branch seems to have recently made Section 101 the issue of patent validity, at times to the exclusion of all others. ‘Section 101’ has become ‘patents 101’ – a sort of prerequisite survey that courts lumber through before taking up the more advanced levels of patent law. If there is a problem with the America Invents Act, it is that it did not change Section 101 to Section 999 – so that it might more readily serve as a backstop rather than a gateway.

The problem with Section 101’s overuse is that this historically coarse filter is now doing fine-grained work better performed by Sections 102, 103 and 112. While a hammer can be an invaluable tool, it is a poor substitute for a screwdriver. Unfortunately, the jurisprudence that courts are hammering home on patentable subject matter feels a lot like ‘I know it when I see it’. Courts seem to have lost patience with scrutinising patent claims, instead observing only the overall gist of an invention and subjecting this to a substantially unrefined test for abstractness. This is too sweeping for a body of law as nuanced as that governing the patent system.

The Supreme Court patent decision of the last term with the greatest impact has proven to be Alice v CLS Bank. The basic holding itself – that operating a process on a computer does not transform an abstract idea into a patentable invention – is far from earth shattering. Yet lower courts seem to have interpreted Alice to be urging a fundamental realignment of priorities, despite its express warning to tread carefully in construing Section 101’s exclusionary principle “lest it swallow all of patent law”. A post-Alice Federal Circuit concurrence in Ultramercial v Hulu was particularly strident in pronouncing a seismic shift, stating that “subject matter eligibility is the primal inquiry” and equating validity rulings without Section 101 scrutiny with constitutionally impermissible advisory opinions.

As this shift in priorities has cascaded through the court system, district court decisions in the wake of Alice are increasingly short-circuiting serious consideration of patent claims in favour of sweeping analogical reasoning. While high-level characterisations may be appropriate for a syllabus, when a court crafts shorthand descriptions of patented inventions and then endows those descriptions with legal effect – all as a matter of law prior to meaningful discovery and claim construction – dispute resolution becomes superficial.

Take Cogent Medicine v Elsevier. Without articulating its reasoning, the district court characterised the disputed technology as “maintaining and searching a library of information” – broader than what was urged even by the defendant. The court then made an analogy with a physical library, determining that the claims pointed to an abstract idea and that their implementation in software merely automated work previously done manually by librarians. It found that there was no inventive concept and thus no patent eligibility.

Yet if the patent added nothing to established principles of library science, it would necessarily fail for lack of novelty or non-obviousness. Were the claims overbroad, it would fail for lack of claim definiteness. Ultimately, reliance on Section 101 was likely unnecessary for a finding of invalidation.

One might ask that if the claims are indeed invalid, what does it matter if they are scrapped under Section 101 or some other part of the statute? If the hammer works, what need for precision tools? Yet it does matter. How we adjudicate patent disputes greatly determines where we will see substantial investment in innovation – and where we will see less. Section 101 overreliance blunts the incentivising purpose of patent protection, deterring investment. When courts take the ‘I know it when I see it’ approach, resources are diverted from innovation in industries that fall on the wrong side of the litmus test – including those vital inventions which, precisely because they are at the frontiers of technology, are difficult to define in familiar terms and particularly susceptible to being labelled as ‘abstract’.

When evaluating the efficacy of trends in patent adjudication, we must consider the practical impact on the patent system’s incentivising purpose. Cogent, decided on other grounds, might have appropriately discouraged mere repackaging of old ideas in the guise of new media or drafting overbroad claims. Instead, the sweeping Section 101 analysis yields a sweeping takeaway: improvements to existing technology implemented through software are scarcely protectable.

Unfortunately, the denigration of increasingly vital software technology is already taking place. One study of 40 decisions applying the Alice framework found that of the 72 patents considered (66 computer or software related), fewer than 17% survived. Eight-five per cent of the time, the court’s characterisation of the patented concept (as opposed to the patent claim itself) was critical to the decision. It is crucial that innovators in the software industry and other dynamic fields such as biotech, big data and three-dimensional visualisation can operate with the confidence that as long as they play by the rules applicable to all other fields, they will be afforded as much protection.