Alice

A friend of mine, The Patent King, pointed out to me that the recent court decisions on patents are going to change what software can be patented. This is both a forward and a backward statement. In fact, all of the court cases are backward looking cases, and the Patent Office in its consideration of future patents will be forward looking. These new considerations are collectively called “Alice” primarily after:

  • Alice: Alice Corp. Pty. Ltd. v. CLS Bank Int’l (2014)

but quite a few other court cases come into play. The references below, all of which I found enlightening, cite such cases.

The technology issue is: What software is patentable? The two-step answer starts simply enough. Step 1: The claim must be directed to a process, machine, manufacture, or composition of matter. This is not new. Typically software patents are directed to processes or to machines, and this post will focus on these.

New is Step 2: You are almost out of luck if your claim is directed to a law of nature, a natural phenomenon, or an abstract idea; however, Alice provides some wiggle room for dealing with these “judicial exceptions.” Your claim must identify the exception and must state explicitly how your invention, as a whole, amounts to significantly more than the exception.

Of course the trick is to satisfy “significantly more”. This is similar to the Potter Stewart test for hard core pornography, “I know it when I see it.” As technologists interested in an issued or a future patent, we must work with our patent attorneys to review as many similar cases as we can and make our arguments accordingly.

The rest of this post considers some interesting exceptions mostly of type “abstract ideas”. These include mathematical formulas, mitigating risk (hedging), using advertising as currency, processing information through a clearing house, authentication, organizing information, formulas for updating alarm limits, comparing new and stored information to identify options for action, etc. The “et cetera” means there is no end to the types of abstract ideas.

Returning to the Alice case itself, the patent was about a computer system that acted as an intermediary to maintain and adjust account balances to satisfy business obligations and settlement risk. Since this is a long standing commercial practice, and the patent cites this abstract idea, it is a judicial exception. However, viewing the claim as a whole, it failed to add significantly to the abstract idea. In other words, just crunching the numbers on a computer system is not patentable.

The Ultramercial patent 7,346,545 (the “545 patent”) provided an interesting case. The patent concerned an eleven step process whereby a consumer receives copyrighted material in exchange for viewing an advertisement. Ultramercial sued Hulu, YouTube, and WildTangent for patent infringement. This case bounced around the courts, but after Alice, it was determined that each of the eleven steps as a whole merely implemented the abstract idea of using ads for currency and did not add significantly more to this abstract concept. The 545 patent was ultimately declared invalid.

The case Bilski v. Kappos (2010) concerned Bilski’s patent on hedging to mitigate settlement risk. This patent was deemed too broad and covered well-known practices in a comprehensive way. Fundamentally, one cannot patent an invention that covers an entire abstract and well-known idea.

Mayo Collaborative services v. Prometheus Labs. Inc. (2012) provides an example where an action (raising or lowering the amount of a drug administered) was taken based on a blood test (for metabolites). The action would be normal for any well informed doctor. This case actually falls under the law of nature exception, but the principle applies elsewhere. If all your software does is automate what a trained practitioner does normally, then it is not patentable.

Ancora Technologies, Inc. v. Apple, Inc. is interesting and is not yet resolved by the Supreme Court. Ancora’s invention was to put authentication software in the flash reserved for the BIOS. This would make it more difficult for a hacker to get around the authentication check. Ancora sued Apple for infringement of their patent 6,411,941 (the “941 patent”). If it is accepted that authentication checks are abstract ideas, then is putting such a check in the BIOS flash significantly more than other implementations of this abstract idea? If putting such a check on a hard disk is not patentable, then why should putting such a check in the BIOS flash be patentable? Is the method of putting the check in the BIOS flash and not screwing up the BIOS a patentable significant extension of the abstract idea? Apple has appealed to the Supreme Court.

There are some interesting ramifications of Alice to the cloud, data analytics, and cyber-security worlds. Look for future posts on these topics.

Recommended Reading:

Go Ask Alice – Delightful paper by Berkeley law professor Joe Merges

Patent Eligibility in the Wake of Alice – Nice analysis by Berkowitz and Schaffner

Summary of Ancora v. Apple – by IP firm Sughru Mion

Apple appeals Ancora Ruling – News flash from Law360

USPTO 2014 Interim Alice Training – Very good slide-set tutorial

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