Section 101 matters can be tough and almost impossible to judge correctly, according to one current and one former US district judge.
Speaking at the Protecting Innovations in the Financial Services Industry conference in New York, district court judge Joy Flowers Conti of the Western District of Pennsylvania and retired New Jersey district judge John Lifland said it was a “thorny time” for US courts.
They pointed out that, with some exceptions, most judges in the district courts are generalists and are not necessarily experienced enough with computer-implemented inventions to fully understand whether one has an inventive aspect or is simply an abstract idea.
Section 101 of the US Code sets out what is not patent eligible in the US, including laws of nature, natural phenomena and abstract ideas, and has severely limited the eligibility of software inventions since the 2014 US Supreme Court (SCOTUS) decision in Alice.
“We see the Supreme Court dealing with it and ruling that if something is just a computer doing processing then it is not patentable because it is abstract,” said Flowers Conti. “If you cannot show an inventive aspect to the invention, you will be out of luck.”
“I as a judge do not have a particular background in this technology or coding; we did not have that when we were in college or law school,” she added. “When looking at patents and asking if the technology is abstract, there is a concern with how to visualise with what people are talking about.”
“If counsel can see early in the case that there is a reason for it to not be there, judges would rather decide then rather than to have to go through discovery motions or claim construction, which is time consuming”
Joy Flowers Conti, senior district court judge of the Western District of Pennsylvania
Referring to the constant flow of new and diverging eligibility decisions coming out of the federal circuit, she said district judges feel as though they can never finish their work because they are getting bombarded with Alice submissions and the rules keep changing.
“These cases are really tough and almost impossible to get right,” she said.
Judge 101 worries
Lifland noted that he and his colleagues on the bench, both former and current, are deeply concerned by the Section 101 situation and what it might mean for innovation in the US.
“To add a thought that is not mine; Judge Paul Michel, who served on the federal circuit for 22 years, posed the question of where the funding for inventions is going to come from if those who hope to get a patent for an invention feel they will not get one,” he said.
“Businesses will not fund things that do not pay off. Michel also pointed out the irony rising from the Athena case, which denied patentability to a diagnostic test. Because of the relative ease of getting a method of treatment patents, doctors will be able to treat you, but they won’t be able to tell if you are sick in the first place.”
Both judges pointed to the number of rejections at the Patent Trial and Appeal Board (PTAB), the district courts and federal circuit to highlight their concerns.
Conti said: “You can see they have had a lot more rejection since Alice. I go to many patent events, including the federal circuit conference, and speak to many judges; they are concerned with what is happening in the US to patent validity.
“Despite what we heard about less rejections because of the USPTO guidance that came out early this year, there still are many.
“This is something Congress is going to have to deal with; legislation will go a long way to solving problem.”
Conti added that she has seen a decrease in litigation in her court because of Alice – which, according to statistics, is in line with what other courts have experienced. There will likely be A further decrease over time because of the TC Heartland decision, which put an end to ‘venue shopping’ in the US for patent-owner-sympathetic courts.
But she noted that she had seen an uptick in trade secret litigation, which is likely reflective of companies choosing to protect innovations by keeping them secret because of the difficulty of getting patent protection.
Lifland added that he had heard a lot of talk lately over whether trade secrets were a better avenue for protecting IP.
What they want to see
Speaking on the timing of 101 motions and whether counsel should immediately move to dismiss infringement actions under 101 or proceed with the litigation and try their luck with a summary judgment, Conti said judges prefer to move cases on.
“If counsel can see early in the case that there is a reason for it to not be there, judges would rather decide then rather than to have to go through discovery motions or claim construction, which is time consuming,” she said.
She added if the court needs to look at step two of the Alice test, where the claims could still be eligible for patent protection if they contain an inventive concept even if they are found to be directed to an abstract idea, expert testimony will be required from someone skilled in the art; which will waste counsel’s time and money if they could have had the motion dismissed under 101.
Conti also noted that district judges should be more considered when ruling on abstract ideas in light of this year’s Cellspin Soft v Fitbit federal circuit ruling. She said that the Northern District of California used scathing language in its ruling that the invention in question was clearly an abstract idea. The federal circuit under Judge Kathleen O’Malley, however, said there was indeed enough there to show plausible inventive concept.
“There is an example of a district court judge saying there is nothing there, and a circuit judge with a grasp of the practicalities of patenting saying, not so quick. That is a warning to district judges.”
