'Alice Corp.' Is Already Making its Mark on Patent Law

'Alice Corp.' Is Already Making its Mark on Patent Law Jason Doiy Stanford Law School's Mark Lemley

Less than a month after the Supreme Court issued its much-debated Alice Corp. ruling on patent eligibility for abstract ideas, the decision is already making a mark on patent litigation and claims.

The U.S. Court of Appeals for the Federal Circuit invoked the June 19 decision in a July 11 ruling that invalidated a digital-imaging patent. And the U.S. Patent and Trademark Office issued a memorandum directing patent examiners to apply the Alice decision broadly.

“I think it will have a significant effect on pending litigation,” Stanford Law School professor Mark Lemley said. “The court said that just adding generic, functional hardware to an abstract idea doesn’t make it patentable. That describes at least half of the software patent claims being asserted in courts right now.”

Lemley represented the winning defendants in Digitech Image Technologies v. Electronics for Imaging Inc., the July 11 Federal Circuit ruling, in his role as a partner in the Durie Tangri law firm. “The Digitech case is the first example of the implications of Alice, but it won’t be the last,” said Lemley, adding that he spoke as an academic, not for his clients.

In Alice Corp. v. CLS Bank International, the high court ruled unanimously that taking an abstract idea and finding a way to implement it through a “generic” computer application was not a patent-eligible invention. But because the court did not rule out patent eligibility for all computer applications or software—it did not even use the word “software”—some observers predicted it would have limited effect.

But the Digitech ruling suggests that the Alice decision may be more important than anticipated, especially in curbing so-called patent “trolls” who have used patent claims like the ones prohibited in Alice to launch broad lawsuits claiming infringement. Digitech sued 32 companies involved in digital photography, claiming infringement of its patent. But the Federal Circuit, in the shadow of the Alice decision, knocked down its claim.

The Alice ruling affirmed that “fundamental concepts, by themselves, are ineligible abstract ideas,” Judge Jimmie Reyna wrote for the federal circuit panel. “Data in its ethereal, non-physical form is simply information that does not fall under any of the categories of eligible subject matter.”

Case Collard of Dorsey & Whitney said the Digitech decision shows that “the Federal Circuit took a hint from the Supreme Court and is going to be more likely to find claims unpatentable [under Section 101 of the Patent Act.] This is good for those that hope to rein in trolls.”

The PTO memorandum signed by Andrew Hirshfeld, deputy commissioner for patent examination policy, said that the Alice decision expanded the reach of Mayo Collaborative Services v. Prometheus Laboratories, a 2012 ruling that struck down a patent because it was based on a law of nature.

The Mayo framework, Hirshfeld said, is “currently being used by the USPTO to examine claims involving laws of nature, but had not been used for claims involving abstract ideas.” After Alice, he said, patent examiners should apply the Mayo test to “all categories of claims (e.g., product and process claims).” Under Mayo, a determination first has to be made whether the patent is directed at an abstract idea and, if so, whether the claim adds elements that transform it into a patent-eligible invention.

Proskauer Rose partner Baldassare Vinti said that while the patent at issue in Alice was clearly an abstract idea, “with the new preliminary instructions, the USPTO is trying to deal with patent claims that are not so clear cut. The USPTO’s attempt at providing guidance will certainly be welcomed by patent applicants searching to comport with the Alice decision.”

Brett Krueger, a partner Honigman Miller Schwartz and Cohn, said the PTO memorandum “helps harmonize the patent-eligibility analysis.” Kreuger’s advice to patent practitioners is to anticipate the Mayo test in their patent applications. “While it’s clear from Alice Corp. that we can still recite claims in patents directed toward computer software, the easiest way avoid the scrutiny under Alice Corp. is to avoid writing claims directed toward abstract ideas, if you can make that determination.”

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