Abstracting justice


The Supreme Court’s decision in Alice v CLS Bank provided a test for the eligibility of software inventions for patents, but courts continue to argue over its application

Following the 2014 US Supreme Court decision in Alice v CLS Bank, ‘abstract ideas’ became words to fear in software patenting and litigation. Since Alice was handed down, decisions in favour of the validity of software patents have become rare, casting doubt over the eligibility of software inventions for patent protection.

Crucially, the Alice decision didn’t bar software from patent protection, but a new two-part test was fashioned to give district courts better guidance on evaluating claims against the exceptions outlined in Section 101 of the Patent Act.

The Supreme Court’s two-part test stressed that the district court, when considering patent eligibility, must decide whether the claim is directed to a patent-ineligible concept such as an abstract idea, and then determine whether any element of the claim is enough to ensure that the claim covers something more than the judicial exception (see box-out for expanded version of test).

In September of this year, the Court of Appeals for the Federal Circuit issued a ruling in McRO v Bandai Namco Games America, a much-anticipated patent infringement lawsuit relating to a way of automating a 3D animation method.

The invention essentially automates lip synchronisation of animated characters so that their speaking appears realistic, genuine and allows for lip reading. Initially, the case was decided in the US District Court for the Central District of California in September 2014, where the analysis adopted by the Supreme Court in Alice was used to decide that the patents at issue were unpatentable subject matter, as their claims were directed to an abstract idea.

Judge George Wu said that the patents were invalid under the analysis because they simply automated animation processes using a computer.

But the Federal Circuit reversed Wu’s decision and found that the claims were directed towards patentable subject matter and had passed the first step of the Alice analysis, ruling that the invention was a patent-eligible process for automatically animating characters.

Alice and subsequent decisions had shown that automating a process via a computer is not enough to give the claims a patent-eligible status. But the Federal Circuit’s decision in McRO clarified this and provided further explanation.

The Federal Circuit warned the lower court to avoid “oversimplifying the claims” and that the patent “focused on a specific asserted improvement in computer animation”.

It said: “We disagree with [defendant] Bandai Namco’s arguments that the claims simply use a computer as a tool to automate conventional activity.”

“While the rules are embodied in computer software that is processed by general-purpose computers, Bandai Namco provided no evidence that the process previously used by the animators is the same as the process required by the claims.”

Mark Raskin, partner at Mishcon De Reya, who served as trial counsel for McRO, says the decision is a “clear signal that software is patentable—where properly claimed”.

“Software developers who want patent protection for their inventions have another schematic for how to craft a specification and set of claims that is more likely than before to be allowed by an examiner. Had this decision gone the other way, many in the industry feared that allowance of software patents would be even rarer than it has been since Alice.”

A month later, the decision in McRO was used in conjunction with Alice as case law, formulating the opinion in FairWarning IP v Iatric Systems, which was decided in October.

The case should also affect the US Patent and Trademark Office’s (USPTO) Section 101 patent eligibility guidelines, according to Raskin. He says that it may result in examiners viewing claims as an “ordered combination” during the Section 101 analysis, as well as resulting in increased importance and applicability in “non-preemption” arguments. Additionally, “the application of a ‘genus’ approach to rule-based claims should also likely give patent prosecutors more flexibility”.

David Kappos, partner at Cravath, Swaine & Moore and former director of the USPTO, says that the McRO decision can further inform the USPTO’s analysis, and can be used “as an opportunity for the agency to refine its guidance and apply such guidance to ensure that meritorious inventions are not denied patent protection”.

The USPTO offered preliminary guidance on subject matter eligibility following the decision in McRO, as well as BASCOM Global Internet Services v AT&T Mobility, on 2 November.

Its memorandum said that these decisions do not change the basic subject matter eligibility framework, but provide additional information about finding eligibility in software claims. Further, it used McRO as a basis for extended patent prosecution advice, stating: “Examiners should consider the claim as a whole under Step 2A of the USPTO’s subject matter eligibility guidance, and should not overgeneralise the claim or simplify it into its ‘gist’ or core principles, when identifying a concept as a judicial exception.”

“An ‘improvement in computer-related technology’ is not limited to improvements in the operation of a computer or a computer network per se, but may also be claimed as a set of ‘rules’ (basically mathematical relationships) that improve computer-related technology by allowing computer performance of a function not previously performable by a computer.”

The USPTO also looked at the decision in BASCOM, in which the Federal Circuit vacated a judgement and argued that a district court failed to properly perform the second step of the Alice test.

It said: “In Step 2B of the USPTO’s subject matter eligibility guidance, examiners should consider the additional elements in combination, as well as individually, when determining whether a claim as a whole amounts to significantly more, as this may be found in the non-conventional and non-generic arrangement of known, conventional elements.”

Despite the moves to clarify eligibility, not all think that software patents should be given these assurances. In a patent infringement lawsuit between Intellectual Ventures and Symantec, decided in September, Judge Haldane Robert Mayer said that patents are a “terrible fit” for software.

Judge Mayer said: “It is well past time to return software to its historical dwelling place in the domain of copyright.”

“[A] problem with software patents is that they provide incentives at the wrong time. Because they are typically obtained at the ‘idea’ stage, before any real inventive work has been done, such patents are incapable of effectively incentivising meaningful advances in science and technology.”

His argument centres on the First Amendment. He said: “Essential First Amendment freedoms are abridged when the USPTO is permitted to Balkanize the internet, granting patent owners the right to exact heavy taxes on widely-used conduits for online expression.”

Raskin says that while Judge Mayer’s First Amendment argument is interesting, it’s unconvincing. “While he directs it to software patents, the fact remains that the underlying basis for his arguments can be applied to many different technological areas that are clearly patent-eligible. His argument could apply to internet switching technologies or mobile phone technologies just as easily as software.”

He adds: “Besides, any engineer can tell you what is embodied in hardware can be executed in software, and vice-versa. And no one argues that a hardware implementation would be unpatentable.”
Providing his insight, Kappos says: “I see no more need to discriminate against algorithmic inventions that may happen to be implemented in software, than against any other algorithmic invention—like the algorithm implemented by a mechanical cam. Software is merely a medium of expression—a language for describing algorithms.”

“It makes no more sense to discriminate against process inventions that are described in software than it does to discriminate against inventions that are described using French, or Chinese, or English. We need to move beyond the form and focus our energies on the substance—the inventiveness and clarity of the algorithm.”

Despite these cases offering interpretations of the Alice decision, Raskin doesn’t believe that they will have much significance.

He says that Alice will remain the key case for how to determine whether an invention is directed to ineligible subject matter.

Kappos, however, is positive that future decisions will “continue to build on McRO, providing patent protection to important technical inventions implemented in software”.

“The McRO decision adds helpful interpretation to Alice on the part of the Federal Circuit, guiding the district courts, the USPTO and patentees regarding subject matter eligibility under section 101.”

Until then, Raskin says that patent applicants should bear in mind that combinations of hardware-plus-software claims are more likely to get approval than purely software claims.

Kappos recommends utilising claim language that “reflects the positive decisions like McRO” and “be specific in claims, especially regarding the substance of the invention, and provide a complete, clear specification that fully describes the invention for which protection is sought”.

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