One of the most controversial and largely litigated issues in US patent action is whether an invention is eligible to form the base of a patent or whether the claimed invention is an" abstract" conception that's undeserving of patent protection. This issue is especially pronounced in the environment of software patents, where precedent holds that simply performing a given process through the use of computers is abstract, and therefore unpatentable, but specialized advancements to computer technology may not be abstract.( 1)
The Supreme Court's 2014 decision in Alice Corp v CLS Bank International( 2) was meant to bring clarity to this vexing issue by setting out a two- part test for patent eligibility. In practice, still, Alice has spawned dozens if not hundreds of inconsistent opinions as courts struggle to apply the Supreme Court's test for patent eligibility and, particularly, the unformed conception of an invention being" abstract". Patent eligibility rulings, especially for software patents, tend to vary, depending on the quarter court where the case is being litigated, with courts in Delaware and California being more aggressive in thinking patents ineligible than courts in Texas. Indeed the judges on the Federal Circuit Court of prayers – the appellate court charged with handling prayers of all patent action – have described the Alice frame as
" incoherent"( 3)
" unpredictab( le)"( 4)
" nearly insolvable to apply constantly"( 5) and
eventually," destabiliz( ing) technological development in important fields of commerce".
The Federal Circuit has indeed asked the Supreme Court to give fresh guidance, which has not been forthcoming.
It is, thus, important for technology companies – and especially software companies – to understand the generalities of patent eligibility and image and how they can impact patent controversies and action.
Section 101 and Alice test
The conception of patent eligibility is predicated in section 101 of the Patent Act( 35 United States Code( USC) section 101), which provides that patents may be attained for any useful process, machine manufacture or composition of matter. still, civil courts have created a judicial exception, pursuant to which certain inventions aren't eligible for patent protection. These include inventions that claim laws of nature, natural marvels, and abstract ideas.( 6) As bandied over, the ultimate exception, for abstract ideas, has come a source of contestation and expansive action.
The Supreme Court has created a test, generally known as the" Alice test" or the" Alice two- step test", to give guidance to courts and petitioners who are faced with the question of whether a patent is eligible. In the first step of the test, the court asks whether the patent is" directed to" a judicial exception, similar asabstractness.However, the court considers the alternate step of the test, which asks whether" the rudiments of each claim both collectively and as an ordered combination, If so... transfigure the nature of the claim into a patent- eligible operation". still, it's only when the alternate step is also answered in the affirmative that the invention is eligible to be patented, If the first step has been answered in the affirmative.
Challenges of applying Alice step one
Step one of the Alice test( ie, whether a patent is" directed to" a judicial exception) has proved to be delicate to apply, especially if the applicable exception is" image". The heart of the problem is that there's no clear and fluently applied description of what it means for an invention to be" abstract".
The United States Patent and Trademark Office( USPTO) has tried to organise abstract ideas into three orders
certain modes of organising mortal exertion; and
But other than extreme exemplifications, similar as claiming a fine formula as one's own, these orders tend to raise further questions than they answer. For illustration, when does an constructed system to perform an action cross over from a patentable enhancement into an unpatentable" internal process"? Where can you draw the line – particularly in the environment of software – between ground- breaking advancements and bare" modes of organizing mortal exertion"?
Courts have tried to standardise the image inquiry by breaking it down into a number ofsub-inquiries, similar as
Are the claims directed to a result, rather than a process of reaching that result?
Do the claims ameliorate the functionality of computers or networks?
Are the claims specific enough to explain what the invention is, rather than just a result?
But, eventually, questions like these suffer from the same problems bandied over. They're vague and answering them involves judgment calls that can vary between the USPTO, individual judges and courts.
Challenges of applying Alice step two
At step two, the courts try to decide whether the patents transfigure the nature of the claim into a patent- eligible invention. Then, the courts concentrate on whether the claim limits" involve further than performance of well- understood, routine, and conventional conditioning preliminarily known to the assiduity".( 7) In other words, the courts assess whether there's an" inventive conception" in the patent claims.
One of the biggest problems that courts face when adjudging step two is that the analysis is occasionally conflated with questions of obviousness under 35 USC section 103. Both analyses involve comparing the claim against the status quo figure, and it can be delicate for a court to compartmentalise its view of whether the claim was" egregious" under previous art when analysing whether an invention was" well- understood, routine and conventional". also, sections 101 and 103 have different purposes, tests and analyses.
A alternate issue is whether the Alice step- two test can be resolved at the prayer stage( eg, on apre-answer stir to dismiss the complaint) or whether it involves claim construction or factual questions that can be resolved only on a complete record after discovery. Defendants frequently argue that, grounded on the face of a patent, the execution history, and precedential case law, a court can resolve the Alice step- two questions beforehand in the case. Complainants, on the other hand, generally argue that questions of what was" well- understood, routine and unconventional" rise issues of fact that should be resolved in complainants' favour at the prayer stage. In practice, whether a court will consider Alice step two soluble at the prayer stage is largely dependent on a number of variables, including
the nature of the patent;
the language of the claims;
the robustness of the execution history;
the extent to which case law addressed analogous patents; and
in large part, the specific court's gospel and preferences on when and how section 101 issues are stylish arbitrated.
Counteraccusations of Alice
Alice has not succeeded at furnishing clear guidance, or predictable issues, for issues of patent eligibility. It has also failed to check the large number of suits brought bynon-practicing realities( NPEs) and patent pixies, as numerous prognosticated it would.
rather, Alice has sired case law that's each over the diapason on substantial issues( eg, which types of inventions are abstract and ineligible) and procedural issues( eg, which issues can be resolved as a matter of law, and which bear factfinding). The unpredictability of whether a patent will be supposed ineligible – particularly for software patents – has real- world counteraccusations for numerous companies
First and utmost obviously, it's decreasingly delicate for companies to directly assess action pitfalls and set reserves.
Second, in the environment of business deals, negotiating parties need to overcome frequently dramatically different views of a patent's eligibility.
Third, rank execution has come more complex and precious in certain fields – and it frequently takes longer for patents to issue.
Fourth, companies face query as to the degree to which crucial inventions are adequately defended by their patents.
Consequently, numerous companies are now assessing whether trade secret protection is a better system to cover their intellectual property.
numerous in the patent community had hoped the Supreme Court would step by and clarify the Alice test and the law of patentability. A recent, high- profile illustration is a solicitation for certiorari that was filed in American Axle & Mfg, Inc v Neapco effects LLC,( 8) which had the backing of the solicitor general. still, toward the end of the 2022 term, the Supreme Court denied the solicitation, meaning that it'll not take the case. As a result, there's little stopgap for farther guidance and clarity from the Supreme Court in the near term.
In the action environment, defendants should assay whether asserted patents can be subject to section 101 challenges. Over the once decade, NPEs have acquired numerous questionable patents, and it can be important to demonstrate to an NPE that their patents are subject to ineligibility findings. Defendants who can make a compelling section 101 argument can occasionally convert NPEs to either settle for a nominal quantum or to drop the case altogether when brazened with the genuine threat of nullification of their patents.
Companies pursuing patent protection should precisely draft not only their claims but also their specification. They should work with outside counsel who are deeply familiar with section 101 issues and can draft the patents in a way to ameliorate the liability that the patent is supposed eligible and avoid known risks. Companies should also assess whether their inventions are better campaigners for trade secret protection, and they should know that there are numerous differences between trade secrets and patents.
Petitioners should also consider the significant part that the venue plays in determining section 101 challenges. The liability of a patent getting abrogated under section 101 – especially at the prayer stage – is largely dependent on the governance and the judge.( 9) This creates a farther position of query that requires advance planning.