It has been more than a year since the Supreme Court issued its decision in Alice Corp. Pty, Ltd. v. CLS Bank International, 134 S. Ct. 2347 (2014). Although a number of software patents have been invalidated for reciting non-patentable subject matter, the district courts have slowly started invalidating some patents where non-patentable subject matter (101) had been alleged. There is one Federal Circuit decision that found software claims that recite patentable subject matter: DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014). There is life after Alice.
The Supreme Court, following comments regarding preemption in a number of other cases on unpatentable subject matter, presented in Alice a framework for excluding subject matter from patentability. The underpinning of the exclusion of laws of nature, natural phenomena and abstract ideas from patentable subject matter is preemption.
“The concern that drives the exclusionary principle- exclude Laws of nature, natural phenomena, and abstract ideas- is one of pre-emption,” Alice, 134 S. Ct. at 2354.
Laws of nature, natural phenomena and abstract ideas are the basic tools for technological innovation.
“Monopolization of those tools through the grant of a patent might tend to impede innovation more than it would tend to promote it, thereby thwarting the primary object of the patent laws,” Alice, 134 S. Ct. at 2354.
The court connected preemption to the basic foundation of U.S. patent law. The court also advised caution since laws of nature, natural phenomena and abstract ideas can be found at some level in all invention.
In order to determine whether the recited claims preempted the use of one of the excluded categories, the court used the two-step test presented in Mayo v. Prometheus, 566 U.S., 132 S. Ct. 1289 (2012). Although the two-step test has received much attention and is secondhand to many of us, for reference sake, we summarize it below.
- In step one, it is decided whether the claim is directed to a patent ineligible concept. If the claim is not directed to a patent ineligible concept, the inquiry stops and the claim recites patentable subject matter. If the claim is directed to a patent ineligible concept, the inquiry moves to step two.
- In step two, it is determined whether the claim includes additional features sufficient to transform the claimed patent ineligible concept to ensure that the claim is more than (“amount to significantly more“ than) a drafting effort to monopolize the patent ineligible concept.
As is usual in most Supreme Court cases, there are a number of details that were not provided. Alice does not provide a definition of what is an abstract idea. However, such a definition would have the danger of being too broad or being too narrow. A definition that is too broad would render more claims unpatentable than are necessary to avoid preemption, while a too narrow definition would allow claims that preempt the use of abstract ideas. Given that quandary, it is unlikely that a court will provide us with a definition of what is an abstract idea. We will have to continue to create a body of examples from the court decisions.
Alice also does not provide what is required in order to “amount to significantly more” than a drafting effort to monopolize the patent ineligible concept. There is a danger that the analysis of the Alice step two can mix patentable subject matter (101) with anticipation (102) and obviousness/inventive step (103). (The Federal Circuit in the note 5 of DDR Holdings reminds us that many inventions are new combinations of old elements.) There is at least one case on the appeal at the Federal Circuit, McRo, Inc. dba Planet Blue vs. Bandai Namco Games America, Inc. et al., case No, 15-1080, that presents an opportunity for the Federal Circuit to provide some guidance as to what is required in order to “amount to significantly more” than a drafting effort to monopolize the patent ineligible concept.
Guidance on the determination of lack of preemption is also absent in Alice. The district courts have found that the two steps of the Alice/Mayo test are easier to separate in recitation than in application. Some district courts have used lack of preemption in step one. However, the Federal Circuit, in DDR Holdings v. Hotels.com, used preemption to satisfy step two…
“It is also clear that the claims at issue do not attempt to preempt every application of the idea… Rather, they recite a specific way to automate.. As a result [of preemption], the …patent’s claims include “additional features” that ensure the claims are “more than a drafting effort designed to monopolize the [abstract idea].” DDR Holdings, LLC, 773 F.3d at 1259.
An ounce of preemption is sufficient to render the claim non-patentable. However, the USPTO does not consider lack of preemption sufficient to render the subject matter patent (July 2015 Update: Subject Matter Eligibility, USPTO). There is a need for guidance from the courts on the determination of lack of preemption and its use in determining that a claim recites patentable subject matter.
Clearly, the one year old Alice has some growing to do. While we will have to live with uncertainty for a period of time, there are sufficient rays of light in the decisions of the district courts, the Federal Circuit and in some cases the PTAB, that the patentability of software related invention is still possible although we will have to change our approach to drafting in order to account for the uncertainty.