A lot has already been written about the recent Supreme Court decisions
in Limelight Networks, Inc. v. Akamai Technologies, Inc.
and Alice Corp. v. CLS Bank Int’l .
This posting will not go into the details of either case, as that has
already been done by others.
Instead, this post will try to make some sense out of the recent
interest displayed in patent cases by the Supreme Court, using this pair of
cases as a point of reference.
First, both of these cases were appealed to the Supreme Court from the
Court of Appeals of the Federal circuit (CAFC).
The CAFC was created when Congress passed the Federal Courts
Improvement Act of 1982. The Act merged the United States Court of Customs and
Patent Appeals with the appellate division of the United States Court of Claims.
The CAFC is the only Federal court with jurisdiction based upon subject
matter rather than location. With regard to patents, the CAFC hears appeals
from the Patent Trial and Appeal Board (PTAB; formerly Board of Patent Appeals
and Interferences (BPAI)) of the USPTO as well as appeals from the various
United States District Courts.
This means that CAFC decisions in patent cases are binding precedent on
all of the lower federal courts which are the courts of first instance for
infringement litigation. It also means that the USPTO, including the PTAB, shapes
policy in consideration of CAFC decisions.
The Supreme Court is, of course, the highest court in the land with
respect to patent related matters, as for all other matters. However,
traditionally the Supreme Court has accepted patent cases infrequently and has
often granted certiorari only to vacate the decision of the CAFC and
remand the case for further consideration by that court (as happened in Alice
Corp. v. CLS Bank Int’l), usually in light of one or more Supreme Court Decisions.
My own initial reaction to the pair of cases under discussion is that Limelight
v. Akamai represented a return to the status quo in which the
Supreme court gave back to us something we had come to cherish, while Alice v.
CLS Bank represented a disruption in the status quo in which something
we had come to cherish was taken from us by the Supreme Court. That initial
reaction led to the “give and take” title of this posting.
After giving the matter more thought, it seems more correct to say
that the Supreme Court has, in both cases under consideration, preserved the status
quo, at least from the viewpoint of the Court.
More specifically, when the en banc CAFC decided Limelight
v. Akamai., in 2012 that court ruled that induced infringement could occur
even in the absence of direct infringement by a single party. This represented
a significant departure from the previously accepted definition of induced
infringement which required that a single actor induce a second actor to commit
direct infringement.
The CAFC acknowledged this departure from previous policy and
explicitly stated that the court was overturning its own previous policy as
exemplified by BMC Resources v Paymentech (2007) and Multiauction v
Thomson (2008) and earlier CAFC decisions and promulgating a concept of divided
infringement in which induced infringement occurs when an infringing act is induced
by a single actor that influences two or more other actors to perform acts
which, together, infringe a patent claim.
The CAFC acknowledged that Supreme Court precedent required that
indirect (i.e. induced) infringement can only occur if direct infringement
occurs citing Deepsouth Packing v Laitram (1972); Aro Mfg. v Convertible Top
Replacement (1961) and Henry v A.B. Dick (1912) but side-stepped the issue
by noting that the Supreme Court had never expressly ruled that the direct
infringement must be attributable to a single actor. As the CAFC put it “Requiring
proof that there has been direct infringement as a predicate for induced
infringement is not the same as requiring proof that a single party would be liable
as a direct infringer.” This was a clear departure from both CAFC and
Supreme Court precedent.
In Limelight v. Akamai the CAFC was reversed by the higher
Court because the Supreme Court felt that insufficient attention had been paid
to precedent. This case was clearly a swift return to the status quo.
Turning our attention now to Alice v. CLS Bank, the situation
here is more complicated. The CAFC heard this case twice. A first panel (Linn,
Prost and O’Malley) heard the case in July 2012 and concluded that the claims
at issue were directed to patent eligible subject matter under § 101.
The CAFC panel ruled that “…when-- after taking all of the claim
recitations into consideration—it is not manifestly evident that a claim is directed
to a patent ineligible abstract idea, that claim must not be deemed for that
reason to be inadequate under § 101.” ;
while noting:
“When it comes to subject matter patentability, we do not write on
a blank slate. Just a few months ago, the Supreme Court reversed us in a § 101
case for a second time in its last three terms, hinting (not so tacitly) that our
subject matter patentability test is not sufficiently exacting. [Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012); Bilski
v. Kappos, 130 S. Ct. 3218 (2010); see also WildTangent, Inc. v. Ultramercial, LLC,
(No. 11-962), 2012 WL 369157 (2012), granting cert., vacating, and remanding Ultramercial,
LLC v. Hulu, LLC, 657 F.3d 1323 (Fed. Cir. 2011).]”
A petition for en banc rehearing was granted by the CAFC in
October 2012. An en banc court heard the case and a divided court
decided in May 2013 that the same claims were not directed to
patent eligible subject matter under § 101. In addition to the per curiam
opinion of the court, a concurring opinion, three opinions which dissented in
part and a dissenting opinion, as well as “additional reflections” by Chief
Judge Rader were filed. Following this en banc reversal, the case was
appealed to the Supreme Court, which upheld the CAFC’s (second) decision.
The CAFC’s (second) decision, and the Supreme Court’s subsequent
confirmation, bring to an end the era of decisions influenced strongly by the
CAFC’s 1994 decision In re Alappat which held that a installation of
software on a computer to provide a new function creates (in effect) a new
machine which meets the § 101 standards for patent eligibility. The CAFC’s first
panel decision in Alice v. CLS Bank relied heavily on In re Alappat
while the CAFC’s second en banc decision in Alice v. CLS Bank
distanced itself from In re Alappat and gave more weight to historic
Supreme court decisions (Benson; Flook and Diehr) as well as the recent
§ 101 Supreme court decisions in Bilski and Mayo Collaborative
Services v. Prometheus Laboratories, Inc.
It is the loss of the Alappat principles that prompted the
“take” portion of the title of this post. However, seen through the eyes of the
Supreme court, the In re Alappat decision was a departure from the status
quo and the final resolution of Alice v. CLS Bank represents a
return to the status quo (albeit after 20 years).
Many colleagues are upset by the apparent conflation of §101 subject
matter eligibility with the requirement for an “inventive concept” which we
tend to equate with the §103 obviousness analysis.
However, the Supreme Court has long held this to be the proper analysis:
“Respondent's process is unpatentable under 101, not because it
contains a mathematical algorithm as one component, but because once that
algorithm is assumed to be within the prior art, the application, considered as
a whole, contains no patentable invention. Even though a phenomenon of nature
or mathematical formula may be well known, an inventive application of the
principle may be patented. Conversely, the discovery of such a phenomenon
cannot support a patent unless there is some other inventive concept
in its application. ” [PARKER v. FLOOK, 437 US 584
(1978)]; and
“In Flook, this Court clarified Benson in three significant
respects. First, Flook held that the Benson rule of unpatentable subject matter
was not limited, as the lower court believed, to claims which wholly pre-empted
an algorithm or amounted to a patent on the algorithm itself. 437 U.S., at 589-590.
Second, the Court made it clear that an improved method of calculation, even
when employed as part of a physical process, is not patentable subject matter
under 101. Id., at 595, n. 18. Finally, the Court explained the correct
procedure for analyzing a patent claim employing a mathematical algorithm.
Under this procedure, the algorithm is treated for 101 purposes as though it
were a familiar part of the prior art; the claim is then examined to determine whether
it discloses "some other inventive concept. Id., at 591-595. ” [Diamond v. Diehr - 450 US 175 (1981)].
The Supreme Court has even previously admonished the lower courts for
not adhering strictly to its precedents:
“Although the Court of Customs and Patent Appeals in several
post-Flook decisions held that program-related inventions were not patentable
subject matter under 101, see, e. g., In re Sarkar, 588 F.2d 1330 (1978); In re
Gelnovatch, 595 F.2d 32 (1979), in general Flook was not enthusiastically
received by that court. In In re Bergy, 596 F.2d 952 (1979), the majority
engaged in an extensive critique of Flook, concluding that this Court had
erroneously commingled "distinct statutory provisions which are
conceptually unrelated." 596 F.2d, at 959. In subsequent cases, the court
construed [450 U.S. 175, 205] Flook as resting on nothing more
than the way in which the patent claims had been drafted, and it expressly
declined to use the method of claim analysis spelled out in that decision. The
Court of Customs and Patent Appeals has taken the position that, if an
application is drafted in a way that discloses an entire process as novel, it
defines patentable subject matter even if the only novel element that the
inventor claims to have discovered is a new computer program. The court
interpreted Flook in this manner in its opinion in this case. See In re Diehr,
602 F.2d 982, 986-989 (1979). In my judgment, this reading of Flook - although
entirely consistent with the lower court's expansive approach to 101 during the
past 12 years - trivializes the holding in Flook, the principle that underlies
Benson, and the settled line of authority reviewed in those opinions.” [Diamond
v. Diehr supra]
Thus, from a historic perspective, the Supreme Court’s decision in Alice
Corp. v. CLS Bank Int’l is hardly a surprise.
The Supreme Court has again asserted its judicial superiority over the
CAFC, despite that lower court’s legislative mandate to function as a subject
matter specific court.
In terms of predicting how the Supreme Court will handle patent related matters in the future, the pair of cases analyzed here suggest that the Court has a low tolerance for statutory interpretations by lower courts that do not base themselves strictly on Supreme Court Precedent.
In terms of predicting how the Supreme Court will handle patent related matters in the future, the pair of cases analyzed here suggest that the Court has a low tolerance for statutory interpretations by lower courts that do not base themselves strictly on Supreme Court Precedent.
Hopefully, the Supreme Court's control over the CAFC in patent related matters will promote progress in the useful arts as
the founding fathers intended.
In the short term, it seems likely that a vast number of granted US
patents on computer implemented inventions will turn out to be invalid if they
are ever litigated due to the long standing disparity between the Supreme Court
view of §101 and a more expansive view taken by the CAFC.
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