A Train Called Alice? Better Call It a Train Wreck.

SCOTUS’s warped analysis in Alice continues to demand that patent practitioners educate and support the Federal Circuit, the PTO, and the Congress—to restore confidence in the art and practice of invention.

Before writing his world-famous post-nuclear-apocalypse novel On the Beach in 1957, English novelist Nevil Shute—by then an emigré to Australia—published a novel called A Town Like Alice. Maybe you’ve seen the movie. It’s a well-made tale, and all ends well.

What will the fate be of that other Australian Alice? The plaintiff in the now infamous case Alice Corp. v. CLS Bank Int’l.? I fear the decision was less well-made. Who knows how it will end. 

Many of us remember that by 2013, the U.S. Court of Appeals for the Federal Circuit had been wrestling for some time with how to provide guidance on what types of inventions should be patent-eligible. That year, the Federal Circuit granted en banc review in Alice Corp. v. CLS Bank Int’l. It then spectacularly failed to answer its own question about a workable test for eligibility of computer-implemented inventions. Pinned by SCOTUS?

In June 2014, on appeal of the CAFC’s having slapped the mat, the U.S. Supreme Court issued its own deservedly maligned decision in Alice Corp. v. CLS Bank Int’l., in which it sought to offer guidance on patent eligibility under 35 U.S.C. § 101. But that decision in succeeding years failed the test of the manifest reality of innovation in our current technology-driven environment. 

Four years later, the patent landscape demonstrates that Alice—an obtuse decision subject to widely varying interpretations—has not aged well. In truth, it’s a train wreck for innovation. 

In this article posted on IPWatchdog.com last fall, I surveyed the damage wrought by litigants and trial courts in applying flawed interpretations of Alice. I pointed out that since the Alice ruling, over 810 district court decisions had addressed patent eligibility and of those 810, around 480 decisions found claims unpatentable under Section 101.

Of those 480 invalidations, 355 of them, or about 74%, resulted from a Motion under Federal Rule of Civil Procedure 12(b)(6) or 12(c). So, in a scant four years, 355 district court decisions invalidated patents on nothing more than a pleading, without looking into what PHOSITA would think, much less conducting claim construction. How could this have happened when a patent is by statute and precedent presumed valid? When factual issues under Rule 12 are to be resolved in favor of the patentee? Go ask Alice.

Sure, patent cases are notoriously complicated. Unsurprisingly in retrospect, Alice’s novel allure of an early dismissal enticed the district courts time and again to ignore established practices. Judges blithely bypassed specific statutory sections, avoided application of patent precedent to complicated technologies, and ignored interpretation of patent claim terms.

After the Supreme Court’s decision, the CAFC abdicated its responsibility to interpret Alice—an abdication I characterized last year as a sort of perverse Machiavellian creativity. By mid-year 2018, over 90% of cases appealed to the Federal Circuit on patent ineligibility grounds had been affirmed. By the end of last August, the Federal Circuit had reversed or vacated only nine.  That imbalance was damaging to inventors; only now is it beginning to be corrected. In most cases, the Court declined to craft any sort of explanatory opinion, relying instead on its ability to issue a one-word decision: Affirmed.

My article (with its notes) can be read in full on Gene Quinn’s site. In it, I took a closer look at the fate of those more than 480 district court invalidations holding a patent ineligible under Section 101. The news wasn’t good; it still isn’t. More than half the time, simply by filing a patent infringement complaint, the patentee not only lost the litigation, but also lost its patent right. And 75% of those losses were not appealed.

Later last year, the Federal Circuit finally awakened from its slumber. In two opinions, Aatrix v. Green Shadesand Berkheimer v. HP, the Federal Circuit embraced long-established procedural rules and patent doctrines, recognizing first that there may be underlying factual determinations in patent eligibility, especially when a patent is presumed valid, and also, that a motion to dismiss on the pleadings fails if the non-movant raises factual discrepancies.

A hopeful movement toward correcting past deficiencies—and imposing some rigor on the lower courts. These two recent cases offer hope that we can return to having sensible, cogent precedent for district courts and the PTO to follow on Section 101. The debacle represented by Alice is reversible over time, but the Congress, a governmental agency, and even the court system itself are not likely to resolve the challenge to innovators without the assistance of the bar and the industry. Drafting fewer but stronger patent applications will be a worthwhile start. 

We can’t leave developing precedent to the courts: we patent attorneys also have to take the field. Like the heroine in Shute’s novel, we have to seek to build a better world—and in my post for IPWatchdog, I include suggestions on how to do that. Give it a read!



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