Alice Lost in Wonderland
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1 Alice Lost in Wonderland September 2016 Presented by Darin Gibby Partner, Denver Kilpatrick Townsend & Stockton LLP t dgibby@kilpatricktownsend.com 2015 Kilpatrick Townsend
2 What is Alice? What is the Alice decision, and should you care? My company doesn t sell software so this decision doesn t impact us. 2
3 The PTO Thinks This Is An Abstract Idea 3
4 Agenda U.S. Supreme Court Alice Decision The Swinging Pendulum of Patentable Subject Matter Trend of Decisions in Federal Circuit, District Courts and the Patent Trial and Appeal Board Strategies for Handling 4
5 Patentable Subject Matter 35 U.S.C. 101 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. Exceptions [L]aws of nature, natural phenomena, and abstract ideas are not patentable. Mayo Med. Labs., et al. v. Prometheus Labs., Inc. 566 U.S. (U.S. 2012) 5
6 Ineligible Subject Matter Over the Years Electromagnetism for printing characters at a distance O Reilly v. Morse, 56 U.S. 62 (1854) Algorithm for binary coded decimal Gottschalk v. Benson, 409 U.S. 63 (1972) Computing alarm limits in catalytic conversion Parker v. Flook, 437 U.S. 584 (1978) Hedging against financial risk of price fluctuations Bilski v. Kappos, 561 U.S. 593 (2010) Administering drug in optimal dose Mayo Med. Labs., et al. v. Prometheus Labs., Inc. 566 U.S. (U.S. 2012) *Isolated DNA that was otherwise naturally occurring Ass n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. (2013) 6
7 Eligible Subject Matter Over the Years Arrhenius equation applied to rubber-molding press Diamond v. Diehr, 450 U.S. 175 (1981) Data processing system for mutual funds that pool funds in central hub State Street Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998) Digital halftoning of gray scale images Research Corp. Techs. v. Microsoft Corp., 536 F.3d 1247 (Fed. Cir. 2010) *Isolated cdna Ass n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. (2013) 7
8 Alice-Mayo 2-Step Test Step 1 Is the claim to a process, machine, manufacture or composition of matter? Step 2a Is the claim directed to a law of nature, a natural phenomenon, or an abstract idea? Step 2b Does the claim recite additional elements that amount to significantly more than the judicial exception? 8
9 Quiz The two step test instituted by Alice requires patent examiners to first determine whether the invention is directed toward an abstract idea, and if it is an abstract idea, then to determine whether it is significantly more than an abstract idea. A- True B- False 9
10 The Swinging Pendulum Patentable Unpatentable 10
11 Federal Circuit Post-Alice Summary of Decisions Favorable to Patent Holder Not Abstract Significantly More Unfavorable to Patent Holder Abstract Idea PTAB 11 PTAB 8 PTAB 185 Federal Circuit 1 District Court 12 Federal Circuit 14 District Court 8 District Court 80 11
12 Quiz Where is the pendulum now? A or B? B - Unpatentable A - Patentable 12
13 Is There Any Hope? What can you do if you are trying to get a patent? 13
14 Strategies for Dealing With Alice Don t let your case into 3600 Remove offending language from claims and specification more like the European approach Religiously follow case law and use favorable cases Argue the claim is not an abstract idea Argue your claim is significantly more Interview but Expect prolonged and expensive prosecution Be creative possibly an expert declaration or clever ways to disguise method steps 14
15 Avoiding the Business Method Group If it goes into Group 3600, it s not coming out Other groups don t see near the amount of Alice rejections How to draft an application to avoid this group: Focus specification on technical effect of innovation Describe hardware layer for invention Weave abstract idea into the hardware layer Concentrate on how hardware layer behaves uniquely Draft claims that weave innovation into hardware elements For pure software, do calls by the processor to execute different code 15
16 Offending Terms The patent office often flags cases based on the terms listed in the specification or claims Here is a short list of terms that are sure to raise concerns: Account Transaction Financial Risk Merchant Sale But note that even eliminating these is no guarantee 16
17 Recent Cases Favorable to Patent Applicants Several recent cases have tried to clarify use of the two step test. These appear to be an attempt by the Federal Circuit to move the pendulum back. Examples include Bascom, Enfish, Rapid Litigation Management Here is the latest patent office position with respect to these cases. 17
18 Enfish, LLC v. Microsoft Corp. Federal Circuit stated that certain claims directed to improvements in computer-related technology, including claims directed to software, are not necessarily abstract Some improvements in computer-related technology, such as chip architecture or an LED display, when appropriately claimed, are undoubtedly not abstract Software can make non-abstract improvements to computer technology just as hardware can Claims were eligible because they were not directed to a judicial exception (Step 2A inquiry in Office guidance) Court relied on the focus of the claims, which was on the specific asserted improvement in computer capabilities (i.e., the self-referential table for a computer database) Court distinguished Alice Corp. and Bilski where claims were focused on a process that qualified as an abstract idea for which computers were invoked merely as a tool 18
19 May 19, 2016 Memorandum Clarified Step 2A: An examiner may determine that a claim directed to improvements in computer-related technology is not directed to an abstract idea under Step 2A (and thus is eligible) without performing Step 2B analysis A claim directed to an improvement in computer-related technology can demonstrate that the claim does not recite a concept similar to previously identified abstract ideas Examiners should look to the teachings of the specification to make the determination of whether the claims are directed to an improvement in existing technology Improvement in Enfish offered benefits over conventional databases: increased flexibility, faster search times, and smaller memory requirements Improvement does not need to be defined by reference to physical components Improvements can be defined by logical structures and processes, rather than particular physical features 19
20 Arguing the Idea is Not Abstract If you do get an Alice rejection, first need to argue the claim is not an abstract idea (a judicial exception) Argue: The invention is not a fundamental economic practice The claim does not preempt a building block of human ingenuity Point out that the inventor is not claiming the world Also remind the examiner that he or she can t just look at one element and need to examine claim as a whole Mention that directed to means the abstract idea must be spelled out in the claim Argue the claim is directed to an improvement in operation of the computer (Enfish) Call out the examiner. Most of the cited cases are bogus. Show your claims versus what the examiner is using. 20
21 Arguing the Idea is Significantly More Show it is like a case the courts have said is patent eligible (e.g. DDR), as the 2015 guidelines say the examiner must show how it is similar to a case that was denied For something more, if there are no 102 or 103 rejections, then there must be something more to get over prior art Could have an expert say rooted in computer technology to show not abstract Best is to pigeon hole into a case since the revised guidelines require that. And, as mentioned before, more and more favorable cases are being decided. 21
22 Other Possible Approaches Interview Anecdotal Stories Expect prolonged and expensive prosecution Be creative possibly an expert declaration Appeal and wait for more favorable decisions 22
23 and Other Issues to Consider When Amending to Avoid Alice No indirect infringement without direct infringement Limelight Networks, Inc. v. Akamai Technologies, Inc., 572 U.S. (S. Ct. June 2, 2014) If you amend to include multiple pieces of hardware working on a network, you ll likely end up with a claim that can t be infringed 23
24 Questions Darin Gibby 24
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