IMPACT OF RECENT DECISIONS ON SOFTWARE PATENT MATTERS
Introduction
This article explores the impact that Alice Corporation Pty. Ltd. v. CLS Bank International et al. 573 U.S.___, 13 S. Ct. 2347 (2014) (“Alice”) has on strategies that may be adopted in the US software industry. Next, this article examines the issues raised in the later decision of Enfish, LLC v. Microsoft Corp. 2016 U.S. App. LEXIS 8699 (Fed. Cir. May 12, 2016). (“Enfish”). Finally, it discusses the ways in which the circumstances in the Enfish judgment differ from Alice as to warrant a different outcome.
Impact of Alice on strategies of the US software industry
As seen in Alice, the petitioner adopted the following strategies, although they subsequently failed to achieve the desired effects.
First, in order to prevent others from designing around its invention, Alice applied not just for a method claim, but also a system claim and a media claim, which essentially were adaptations of the method claim. This was probably so that in the event that one claim was invalidated or was found to be anticipated by prior art, there would still be two other claims to protect the invention to some extent. While this strategy seemed prima facie like an astute one, its effectiveness (or lack thereof) came to light when the Court in Alice considered the system claims as no different from the method one. This was accompanied by Alice’s concession that its media claim rose or fell with its method claim, which was something Alice should not have done since it would defeat the purpose of having two different claims to protect the same invention. As seen from the caution against the interpretation of §101 “in ways that ma[d]e patent eligibility ‘depend simply on the draftsman’s art’”, the courts are not hesitant about looking beyond the form of claims and giving effect instead to the substance.
Secondly, during the litigation stage, Alice argued that the interpretation of “abstract ideas” should be restricted to “pre-existing, fundamental truth[s]” which “exis[ted] in principle apart from any human action”. Such an interpretation would buttress an argument that because the mitigation of settlement risk was not a fundamental truth that existed apart from human action, it was not an “abstract idea” and was therefore patent eligible. However, this “strategy” was countered by the Court, which considered “fundamental economic practices” as being under the category of “abstract ideas”. As seen, the Court was not ready to limit the interpretation of “abstract ideas” as narrowly as Alice would have preferred.
Given the uncertainty surrounding the phrase “abstract ideas”, one wonders what measures, if any, can be taken by players in the software industry to increase the odds of software inventions being deemed patent eligible. As suggested by acclaimed inventor and patent law expert Shim Young Taek, the following steps, which can be gleaned from the judgment in Alice, would come in useful:
First, an inventor should, to the best of his capabilities, include more specific information regarding the structure and details of the invention. This should ideally include a comprehensive discussion of any hardware parts and devices, if any, that are salient to the invention, as well as important limitations that go beyond confining the use of abstract ideas to a particular technological environment. Also, the inventor should provide specific technical features of the claim that when considered individually and as an ordered combination, amount to “more than a drafting effort designed to monopolize the [abstract idea] itself”.
Secondly, given that as stated by the Court in Alice, “the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention”, the inventor must thus show that his invention goes beyond a mere implementation of something that can be executed by a person. Steps that cannot be executed by a person, as well as any transformation of data or matter involved in the invention, should be highlighted in the claims.
Thirdly, the inventor should not use claim language that would make his invention appear to be similar to “abstract ideas” which have been determined by the US courts previously. This would require the inventor’s diligent scrutiny of US case precedents.
It should be noted that even if inventors are unable to seek recourse for infringement because their patents have been invalidated by the courts, they may still rely on other avenues to protect their interests. For instance, as stated by Dabney Carr, an inventor may be able to rely on actions for (a) breach of confidence; (b) contractual breach; (c) copyright infringement; (d) tortious interference; and/or (e) civil conspiracy when claiming against other parties, subject to the respective requirements for each action that is relied upon being fulfilled.
Discussion of Enfish, LLC v. Microsoft Corp
The Court of Appeals recognized that “much of the advancement made in computer technology consist[ed] of improvements to software that, by their very nature, m[ight] not be defined by particular physical features but rather by logical structures and processes” and clarified that whether an improvement took the form of hardware or software was immaterial. This statement has brought some relief to inventors of software that were previously concerned about software patent eligibility in the US. If this case were to be recognized by subsequent courts as good law, it would mean that there would be any dire need for a hardware component to be added to each claim so as to render the claim patent eligible, as stated by Donald Zuhn.
Next, the Court’s manner of justifying the patent eligibility of the claims in question is notable.
First, the Court focused on the degree of specificity of the claim, i.e., the fact that the claim was drafted in such detail as to be specifically directed to a self-referential table for a computer database rather than to any table that could contain data.
Secondly, the Court gave weight to Enfish’s statements on the improvements that Enfish’s invention had over the existing relational database model, which transcended mere recitations of conventional processes executed by generic computer systems. The Court also did not analogize the self-referencing database with concepts that were previously held by the courts to be abstract ideas. This was probably due to the level of detail found in the claim as aforementioned.
Thirdly, the Court took into account the several advantages that accompanied Enfish’s invention, which was something not done by patentees in similar cases previously.
Whether Enfish and the subsequent memorandum that was issued by the United States Patent and Trademark Office to patent examiners to provide updates on the significance of Enfish will have significant influence on the eligibility of software inventions for patent protection in the US is unclear. As much as the court in Enfish has adopted somewhat cogent reasoning to distinguish itself from similar previous cases, it should be noted that Enfish was a case heard before the Court of Appeals, and does not comport with a long line of case precedents since Alice. Until there is a similar pronouncement by the highest court of the land, i.e., the Supreme Court, nothing is cast in stone with regard to the eligibility of software patents. As eminent patent lawyer Gene Quinn said, patent examiners might just regard the Enfish judgment as “nothing more than a blip on the radar in the same way that DDR Holdings was a blip on the radar screen”. For all one might know, Enfish could just be a false dawn to those in the software industry.
A Comparison Between Alice and Enfish
Prima facie, it seems that the Court of Appeals in Enfish adopted the same framework in Mayo as the Supreme Court in Alice. However, there are several differences in the cases’ factual matrix, the courts’ respective application of the test as well as their reasoning. In fact, the Court of Appeals in Enfish departed from the decision in Alice and instead took on a direction of its own, resulting in only the second occasion since Alice whereby the courts have granted patent protection to software inventions. In the time period between Alice and Enfish, it has been estimated that the Federal Circuit invalidated software-related patents in approximately 25 instances, with only one case, DDR Holdings, LLC v. Hotels.com L.P., 773 F.3d 1245 (Fed. Cir. 2014) where the courts ruled otherwise, according to Joff Wild.
A question that naturally arises in such a discussion is in what ways were the circumstances in the Enfish judgment so different from Alice as to warrant a different outcome.
First, the court in Enfish interpreted and applied the Mayo framework differently from the court in Alice. In Alice, any improvements made in computer-related technology were considered only at the second step. There was a clear distinction between this step and the first one, which involved the determining of whether the claimed invention fell under the “abstract ideas” category or not. Conversely, in Enfish, improvements in computer-related technology could be considered at the first step if they were appropriately claimed.
It seemed that the court in the latter case, in effect, conflated the two steps in the Alice test into one, whereby courts could simply decide at once whether an invention improved a technical or technological process, or the functioning of a computer system. The requirement that the invention be appropriately claimed before any improvement of technology can be assessed at the first stage only engenders greater uncertainty for parties in the software industry. This is because the courts retain discretion as to what can be considered as “appropriately claimed” during the claim construction process, and there are no clear guidelines hitherto published that can provide guidance on how appropriate claims should be drafted.
As seen, the framework in Enfish was applied in a significantly different manner from that in Alice.
Secondly, the court in Enfish clarified that claims would not be invalidated just because the improvements therein were not defined with reference to hardware components. To rule otherwise might result in a revival of the clearly defined albeit inflexible machine-or-transformation test. Conversely, the court in Alice just stated that the addition of a generic computer system to implement the claimed method did not per se result in patent eligibility since the computer was a mere conduit in facilitating users’ access to the invention.
Thirdly, with regard to the specific facts of the case, the invention in Alice was aimed at helping users to mitigate settlement risk, which was a fundamental economic practice in response to a problem in the business arena. It might be argued that such an invention increased business users’ need for computers since the latter provided the means for implementation of the former, and therefore, the computer system gained even greater relevance to users as a result of the invention. Also, the ability of the computer to execute the invention was one additional function that the computer “gained” in the process.
However, such an interpretation is artificial, strained and, as seen from the court’s reasoning, evidently not consonant with what the court in Alice had in mind. Meanwhile, the invention in Enfish, was a solution that was directed at a problem in the technical realm, and the key purpose of its usage was precisely to enhance the functioning of the computer to a significant extent.
As seen, although the court in Enfish seemed to follow Alice in that it also applied the framework in Mayo, the clarification in Enfish that improvements in computer-related technology could be considered at the first step of the test, showed the court’s subtle departure from the position adopted in Alice, given that it seemed to, at best, blur the difference between the steps, and, at worst, conflate the two steps into one. Such a departure could perhaps have been influenced by policy reasons.
Previously, before Enfish (but after Alice), software inventors found it almost impossible to get their claims deemed as patent-eligible. This resulted in discontent among players in the software industry because incumbents were worried that their software patents might be invalidated, whereas parties with new software inventions were pessimistic about their chances of obtaining patent protection for their inventions. In the long run, inventors would likely be disincentivized from inventing, and even if they did come up with new inventions, they would rather keep their inventions confidential so that their inventions would qualify for trade secrets protection (or protection under the law of confidence) than publish their findings to the public via patent applications in the hope that they obtain patent protection. This policy reason might have propelled the court in Enfish to make a landmark decision that gave hope to both software patent holders as well as potential applicants for software patents.
At this juncture, it should be noted that the court in Enfish, being the Court of Appeals, is a lower court vis-à-vis the court in Alice, i.e., the Supreme Court. Therefore, the former court is bound by law to follow the judgments of the latter court, in accordance with the doctrine of stare decisis. However, what the former court has done in order to reach a different result, but without violating the doctrine of stare decisis, is to make “clarifications” to the Mayo framework and to distinguish the facts of the case in Enfish from Alice.
Whether the Court of Appeals or even the Supreme Court would endorse Enfish or instead affirm Alice in subsequent cases remains to be seen. However, for the time being, inventors can at least seek some respite in Enfish as they forge into the future with cautious optimism.