Supreme Court Grants Cert. in Alice Corp. v. CLS Bank Intl.

By Michael Borella --

Today the Supreme Court granted certiorari in Alice Corp. v. CLS Bank Intl., opening the door once again for the Justices to further carve out the landscape of patent-eligible software and business method claims.

Triggering the Court's review was the Federal Circuit's six-opinion en banc decision this May, which illustrated a severe intra-circuit split.  Judge Lourie's concurrence was an attempt to synthesize the high court's 2012 Mayo v. Prometheus ruling into a procedure for analyzing claims that incorporate abstract ideas.  However, it was roundly criticized for failing to produce an objective, workable standard.  Chief Judge Rader wrote separately taking a somewhat more pragmatic approach, but one that exhibited a degree of internal inconsistency.  As a result, the Federal Circuit was unclear as to whether prior art should be considered in a 35 U.S.C. § 101 analysis, whether such an analysis should be applied to claims as a whole or to claim elements on a piecemeal basis, and whether recitation of general-purpose computer hardware (either as a claim element or as the statutory type of the claim) made a claim any less abstract.

Judges Lourie and Rader continued their dialog a few weeks later in Ultramercial, Inc. v. Hulu, LLC.  While both agreed that the claims at issue in this case were patent-eligible, Chief Judge Rader's majority opinion seemed limited to the facts of the case, and Judge Lourie's concurrence was terse and conclusory.  In late summer, the judges went at it again in Accenture Global Services, GmbH v. Guidewire Software, Inc.  This time, Judge Lourie wrote a majority opinion holding the claims invalid under 35 U.S.C. § 101, while Chief Judge Rader dissented.  Notably, the majority held that the claims, which recited disembodied functionality, where patent-ineligible even though they were couched in the language of a system or device.

The Federal Circuit's post-Prometheus 35 U.S.C. § 101 jurisprudence is unsettling in its subjectivity.  Prometheus instructs us to "identify and define whatever fundamental concept appears wrapped up in the claim."  However, few guidelines for doing so exist.  Two individuals could easily obtain two different variations of such an inventive concept for the same claim, one leading to the conclusion that the claim meets the requirements of § 101, the other not.

The Supreme Court has an opportunity to clarify the law of § 101, and perhaps even to provide an analysis that addresses the issues that split the Federal Circuit.  But with the recent Prometheus decision looming in the near past, doing so may be a delicate proposition.  The problems with the Alice, Ultramercial, and Accenture cases stem from Justice Breyer's Prometheus opinion and the guidance therein.  While it may seem aesthetically pleasing to conduct a § 101 analysis by dividing a claim into abstract and non-abstract parts as Justice Breyer suggested, doing so in practice has proven to be highly problematic.  Nonetheless, out of concern for judicial consistency, the Court may not want to walk back Prometheus or otherwise overturn Breyer's approach just yet. 

The question presented by Alice is "Whether claims to computer-implemented inventions -- including claims to systems and machines, processes, and items of manufacture -- are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court?"  This is an extremely broad issue statement that goes well beyond the dispute inside the Federal Circuit.  Already, the news and blogs are predicting that this case could result in the death of software and business method patents.  Not so fast, people.  First of all, the Court already rejected categorical exclusion of software and business methods from patent-eligibility just three years ago in Bilski v. Kappos.  Second, the Court routinely decides cases on much narrower grounds than those encompassed by the question presented. 

It is possible, if not likely, that the Supreme Court will provide an opinion focused on the facts of the case, narrow in scope, and just different enough from Prometheus to oblige the Federal Circuit to conduct yet another round of § 101 soul searching. 

Comments

[owen hogarth]

While this might seem small, I think that it's the right step to reform patent laws. Right now these repressive laws are killing innovation. I think we need to re-examine the patent laws as they stand.

[EG]

Dear Michael,

I'm holding my breath on this one. SCOTUS can either render clarity in CLS International Bank, or can create further chaos on patent-eligibility under 35 USC 101 as happened in Bilski: Either is possible.

[6]

"Two individuals could easily obtain two different variations of such an inventive concept for the same claim, one leading to the conclusion that the claim meets the requirements of § 101, the other not."

Not true at all. Perhaps you'd like to provide an example. The only situation where this would occur is where one of the claims has sufficiently hidden the abstract idea that it is never the less preempting to get the person making the decision to miss it. And in that event, that is simply error on that person's part for missing the abstract idea being preempt.

[6]

"While it may seem aesthetically pleasing to conduct a § 101 analysis by dividing a claim into abstract and non-abstract parts as Justice Breyer suggested, doing so in practice has proven to be highly problematic."

What problems has it generated? I've yet to see any problems arise in my application of that approach, or the CAFC's application of that approach. The only problems generated are people that don't like the approach muking up CAFC decisions with dissents.

"Nonetheless, out of concern for judicial consistency, the Court may not want to walk back Prometheus or otherwise overturn Breyer's approach just yet. "

Well that and the fact that it's been the law for some hundred years or so.

"The question presented by Alice is "Whether claims to computer-implemented inventions -- including claims to systems and machines, processes, and items of manufacture -- are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court?" This is an extremely broad issue statement that goes well beyond the dispute inside the Federal Circuit."

Yeah no kidding.

"Already, the news and blogs are predicting that this case could result in the death of software and business method patents. Not so fast, people. "

It's a beautiful thing isn't it?

"First of all, the Court already rejected categorical exclusion of software and business methods from patent-eligibility just three years ago in Bilski v. Kappos. Second, the Court routinely decides cases on much narrower grounds than those encompassed by the question presented. "

Mmmmm, not necessarily on 1, but maybe, at least regarding business methods, as opposed to software. And as to 2. that's true.

I'm pretty sure they'll just hold like they always do: to the extent that the claim is preempting judicially excepted subject matter it is invalid.

[AAA JJ]

Any hope that the Supremes are going to bring any clarity whatsoever to eligibility under 101 is a fool's errand. Not going to happen. In fact, I'm sure they'll muddy it even further.

[Skeptical]

Just as Chakrabarty reeled back from the excesses of Benson and Flook, can a 'fool' hope that Prometheus is reeled back in (at least as far as the judicial activism level goes)?

Alas, I too am...

[Richard Stern]

Michael, you did not mention that in addition to granting Alice v CLS the Supreme Court requested a response from Ultramercial to WildTangent's petition (to be filed by Jan 6). This leaves open the possibility of not just a hold on WildTangent v Ultramercial but a joint argument of both cases back to back (as occurred in Graham v Deere). I wonder if you and others would care to speculate on how that might affect the ultimate opinion(s), and whether one or the other case more clearly presents the issues that need to be resolved. (I think that the Ultramercial case may be a better vehicle because the invention or technology is easier to understand and less likely to confuse.)