Skilled in the Art: Two Judges Let Their Hair Down on Section 101 + Tech, Retailers Sound a Warning on Iancu
A Federal Circuit judge accused unnamed colleagues of waging "guerrilla warfare" against the Supreme Court's Alice decision.
March 11, 2019 at 09:45 PM
10 minute read
Welcome to Skilled in the Art. I'm Law.com IP reporter Scott Graham. There are appellate arguments where judges try to subtly signal their positions in the most nuanced way possible. And then there are times they just drop all the pretense and tell you exactly what they think. Trading Technologies v. IBG from the Federal Circuit is one of the latter, and I have details below. Also, United for Patent Reform is not buying into the Andrei Iancu patent revolution, and one of Silicon Valley's most prominent voices in the patent arena is moving in house. As always you can email me your thoughts and follow me on Twitter.
Tell Us How You Really Feel About Section 101, Your Honors
We already know from his concurring opinions what Judge Bob Mayer thinks about the state of patent eligibility case law. He's said repeatedly that the Supreme Court's Alice decision should have been the death knell for all software patents.
We also have a pretty good idea how his Federal Circuit colleague Kimberly Moorefeels. From occasional comments at conferences and oral arguments, it's pretty clear she's not the biggest fan of the U.S. Supreme Court's recent Section 101 decisions.
During arguments last week in the latest fight over online securities trading platforms, we got the full flavor. Mayer, a former chief judge of the circuit who now holds senior status, at one point accused unnamed Federal Circuit colleagues of waging “guerrilla warfare” against Alice.
Moore, meanwhile, floated the notion that the Supreme Court has changed the law of patent eligibility so dramatically that it may have resulted in unconstitutional takings of patents—especially now that Congress has put Section 101 in the hands of the Patent Trial and Appeal Board. When a DOJ attorney argued the Supreme Court hasn't changed the law of Section 101, only reinterpreted it, Moore was especially candid: “This is a change to the law. A judicially created exception is not the law,” she said. “There is no 'interpretation of the statute,' and the Supreme Court doesn't purport that there is one in Section 101.”
Wednesday's arguments in Trading Technologies v. IBG didn't come in a vacuum. They occur as Sens. Thom Tillis and Chris Coons are trying to find consensus on a potential legislative rewrite of Section 101. They're scheduled to hold the third in a series of private meetings with some 100 industry and patent bar stakeholders next week. The subject also could come up when PTO Director Andrei Iancutestifies at an oversight hearing before the Senate Judiciary IP subcommitteeWednesday. Trading Technologies' patents on online trading platforms have been before the court many times before. Just last month, the court found that four of its patents on a graphical user interface for trading represent technological inventions. They therefore never should have been subject to covered business method (CBM) review at the Patent Trial and Appeal Board, the court ruled in IBG v. Trading Technologies.
Baker & Hostetler partner Michael Gannon began Wednesday by arguing that Trading Technologies' 7,904,347 patent is from the same family and shares the identical specification, and therefore should not have been subject to CBM either. “The IBG case resolves the question of jurisdiction for the '374 patent in [Trading Technologies]'s favor,” Gannon said.
Mayer had a simple response: “That's all software.”
“That's all software, correct,” Gannon said.
“But I don't see any technical problem” to be solved, Mayer said. “What is the technology you're talking about?”
“It's a technical problem because it's a problem with the graphical user interface,” Gannon said.
“It's a technical problem because somebody said so,” Mayer shot back, apparently referring to the IBG opinion from last month. “I don't see it as a technical problem whatsoever. It's purely software.”
Gannon diplomatically noted that the Federal Circuit has said software-based solutions to technical problems can be patent eligible.
“Well, they've said it,” Mayer said. “It's sort of a guerrilla warfare against the Alicecase.”
Gannon explained that on previous interfaces, prices quoted on the market would change before a trader could lock them in. Trading Technologies' GUI solved that problem. “If you're improving the graphical user interface, you're improving the trading system,” he said.
“The more you talk, the less it sounds like technology and more coding,” Mayer said, virtually spitting out the last word. He said that under Gannon's approach, every patch for an iPhone bug would be eligible for a patent.
Gannon said he believes Alice meant to do nothing more than block the patenting of fundamental business practices that are implemented on generic computers. “It really comes down to, are we going to say, software inventions are not patent eligible,” he said.
Mayer cut to the chase. “Well I hope so someday.”
Moore, meanwhile, became exercised when DOJ attorney Katherine Twomey Allen addressed whether applying the America Invents Act retroactively to pre-AIA patents is an unconstitutional taking. It's a theory that Justice Clarence Thomas' opinion last year in Oil States explicitly left open, and that Trading Technologies has been raising in its appeals.
“I think this is really the key point,” Allen said. “The substantive criteria of patentability including section 101 are the very same criteria that existed when these patents were issued. A patent that was not eligible before the AIA is also not patent eligible after the AIA and vice versa.”
“I think the entire patent world would disagree,” Moore said. “We've seen a major sea change over the last few years. So I am hard-pressed to imagine that at the time these patents issued, their eligibility could have ever been legitimately challenged at that time, based on the state of precedent.”
Allen argued that the Supreme Court's decisions in Bilski, Mayo, Myriad and Alicehaven't changed the law of eligibility. Instead, “the court is saying what the law has always been.”
“The words 'abstract idea' don't appear in Section 101, that's a judicially carved out exception,” Moore replied. “The statute would in fact dictate that all of these [Trading Technologies patents] are eligible because they are processes or methods of operation.”
Imagine, Moore said, that Congress had drawn up a brand new section of the Patent Act, called it Section 109, and then handed the PTAB authority to use it to cancel previous issued patents. Wouldn't that constitute a taking?
“I think that would present a much harder question than this case,” Allen said.
“I'd like to know what the government's thoughts are on that harder question,” Moore pressed.
“It would be a much harder case than this case because here we don't have a substantive change in the law,” Allen insisted.
Moore again questioned that premise. “I'm not sure we're in a different place,” she said. “I'm not sure this isn't that harder case.”
I don't think Moore is going to forge a majority to find a taking, any more than Mayer is likely to get a majority invalidating all software patents. But it's all grist for the mill as Congress and the Supreme Court continue to scrutinize this area of the law.
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Tech, Retailers Say Iancu is Tuning Them Out
I mentioned that Iancu will testify before the Senate Judiciary's newly reconstituted IP subcommittee tomorrow. United for Patent Reform, an organization of tech companies and retailers whose slogan is “Don't Bully My Business,” has already fired a warning shot.
“The USPTO's actions over the last year appear to reflect the views of a vocal group of patent owners, rather than the broad consensus of stakeholders whose businesses are affected by patents,” Stephanie Martz, co-chair of the group and general counsel of the National Retail Federation, said in a news release. “While PTO director Andrei Iancu has said it is best 'to weigh all points of view' in order to 'determine the overall best approach for the patent system as a whole,' many of his actions and speeches have ignored input from a broad range of stakeholders.”
United for Patent Reform's membership includes tech giants Google, Facebook and Cisco Systems, retailers like JC Penney and Walmart, plus more than 100 smaller companies, trade associations and think tanks. Most of them don't want to see the changes the Supreme Court has made to patent eligibility or that Congress has made to post-grant review rolled back.
EFF's Daniel Nazer Heads to Mozilla
One of Silicon Valley's wittiest and most passionate voices on patent issues is moving on from the Electronic Frontier Foundation. Daniel Nazer has served as an EFF staff attorney for six years, and as the Mark Cuban Chair to Eliminate Stupid Patents since 2014. He has taken a job as senior IP and product counsel at Mozilla.
Via Twitter, Nazer said his proudest moments involved helping invalidate a patent that threatened podcasters, staring down Zillow's threat to enforce copyright claims against a parody website, and being part of the team that defended Stephanie Lenz's dancing baby video.
Nazer made his last contribution to a Stupid Patent of the Month column column on Feb. 28 with EFF's Joe Mullin on a method for users to opt into data privacy agreements. “We shouldn't let private parties 'own' legal principles or use technical jargon to re-cast those principles as 'inventions,'” they wrote.
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Sovereign Immunity Spotlight Shifting to High Court
Last summer, when it ruled that Indian tribes can't invoke sovereign immunity at the PTAB, the Federal Circuit telegraphed that the same outcome is likely with state sovereign immunity.
As I wrote yesterday, the court has now further amplified those signals at oral argument in a case pitting the University of Minnesota against Ericsson, LSI, Avago Technologies and Gilead Sciences. The court sounded all but certain to rule that state sovereign immunity won't keep university patents out of the PTAB either.
Ropes & Gray partner Matt Rizzolo said he thought Wolf, Greenfield & Sacks partner Michael Albert did a good job articulating the states' case for immunity against a skeptical-sounding panel. “I think this is Supreme Court-bound,” he said.
I agree that it's hard to imagine the Supreme Court passing on such a high-stakes, high-profile issue of constitutional law set in an administrative context.
The question is which sovereign immunity case will the court want? The justices are already being asked to decide the tribal immunity issue in Saint Regis Mohawk Tribe v. Mylan. Mylan, Teva and Akorn pharmaceuticals filed a brief in opposition last week arguing that even if the Supreme Court thinks tribal immunity should apply, the Saint Regis case is “an extremely poor vehicle” for deciding it.
They point to evidence that Allergan maintains actual ownership of the patents and that the tribe is not an indispensable party. “Allergan's attempt to purchase sovereign immunity for cash is improper and abusive and thus cannot defeat federal jurisdiction,” they contend.
Cert votes are always a long shot, but it wouldn't surprise me at all if both cases eventually make their way onto the high court's docket.
That's all from Skilled in the Art today. I'll see you all again on Friday.
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