
Appeals court ruling could be 'death' of software patents - LandoCalrissian
http://www.networkworld.com/news/2013/051013-appeals-court-ruling-could-be-269658.html?hpg1=bn
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grellas
As noted in my analysis below (posted when the Federal Court agreed to hear
this case _en banc_ , a term explained below), this case is _not_ about
killing off software patents or other forms of business methods.

That said, it _is_ very significant in that the Federal Circuit has elected
not to go wildly back in the direction of upholding loose patents and in
mitigating the damage that would have been caused by a potentially pernicious
approach to upholding software patents that had been adopted by the panel
whose decision it reviewed. The result is basically an uncertain hodge-podge
that will not in itself work to kill off software patents.

To give some legal context to those who may be interested, my technical
analysis from 7 months ago follows:

"1. The _CLS Bank v. Alice_ case, though raising an issue of vital importance,
is not about 'whether software is patentable.'

2\. Over the years, the Federal Circuit has notoriously broadened the scope of
patent eligibility, most conspicuously in its 1998 _State Street_ decision
which essentially opened the floodgates to the modern rush of business method
patents by holding that virtually any business method was patentable so long
as 'it produces a useful, concrete and tangible result.' In 2010, the U.S.
Supreme Court, in the _Bilski_ case, repudiated the _State Street_ test for
patent eligibility and, though upholding software and business method patents
generally, directed courts to be much more vigilant to ensure that no one gain
patent rights to what are mere 'abstract ideas,' however much they may
incidentally be tied to some computer mechanism in their implementation. In a
follow on decision ( _Prometheus_ ), the U.S. Supreme Court similarly cut back
sharply on the permissible scope of patent eligibility for claimed inventions
that constituted nothing more than laws of nature.

3\. In this _CLS Bank_ case, the claimed patent involves a method for
eliminating certain types of risk associated with an escrow closing and used a
technological process by which to mimic a phantom version of the closing as a
security check before allowing the real transaction to close. In essence, the
technological aspect of this 'invention' is routine and so the question is
whether anything beyond that is simply another way of trying to patent nothing
more than an abstract idea. If so, it should fail under _Bilski_ ; if not, it
would potentially pass the test for patent eligibility.

4\. The lower court in _CLS Bank_ held as a matter of law that the 'invention'
was nothing more than an abstract idea and held it invalid as being ineligible
for patent protection. On appeal, a divided panel of the Federal Circuit
reversed and reinstated the patent. It did so, however, by setting out a brand
new procedural rule whose effect would be to gut much of _Bilski_ and reopen
the floodgates to huge numbers of business method patents under a very loose
standard - to wit, by holding, that, if it 'is not manifestly evident [my
emphasis] that a claim is directed to a patent ineligible abstract idea,' then
the court essentially treat the claim as eligible. What the Federal Circuit
panel did, then, was to take the Supreme Court's directive for lower courts to
be much stricter in evaluating dubious business method patents for patent
eligibility and recast that directive in a form that said, if you as a court
see that something is obviously nothing more than an abstract idea, then go
ahead and reject it but you are otherwise to treat as being eligible for
patent protection. In other words, the new strictness found in _Bilski_ for
evaluating such claims was once again to be transformed by the Federal Circuit
into a loose standard that would let such claims coast by unimpeded.

5\. Of course, this has set off alarm bells because, in effect, it represents
yet one more revolt by the Federal Circuit against attempts by the Supreme
Court to rein it in by bringing patent issues back to some semi-sane state.
Following the panel decision (which was rendered over a sharp and stinging
dissent), the losing party petitioned for a rehearing en banc (meaning by the
full panoply of Federal Circuit judges as opposed to merely a 3-judge panel)
and this was granted. Thus, we shall see whether the Federal Circuit is
prepared once again to stick its thumb in the eye of the Supreme Court or
whether it will temper its extreme pro-patent proclivities and follow the law
as it has been directed.

So, this is a very important case affecting the trend of patent enforcement in
a profound way but does nothing to challenge the idea of software or business
methods being patentable in a general sense. For anything to change in that
regard, Congress must act."

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btilly
_So, this is a very important case affecting the trend of patent enforcement
in a profound way but does nothing to challenge the idea of software or
business methods being patentable in a general sense. For anything to change
in that regard, Congress must act."_

Considering that it wasn't action by Congress that lead to this situation, why
is action by Congress required to fix it?

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rayiner
Because 35 USC 101 reads as follows: "Whoever invents or discovers any new and
useful process, machine, manufacture, or composition of matter, or any new and
useful improvement thereof, may obtain a patent therefor, subject to the
conditions and requirements of this title."

Business methods are surely processes, and this simple and general language
does not admit a lot of ad-hoc, judicially created exceptions like ("but no
software patents.")

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btilly
35 USC 101 read that way long before _State Street Bank & Trust v. Signature
Financial Group_ in 1998 got business process patents going. And we have over
a century of jurisprudence prior to that on the proper meaning of the word
"process" which did not point towards business methods being patentable
processes.

Furthermore my understanding is that the Supreme Court has punted on this
issue. But since the ruling precedent is from United States Court of Appeals
for the Federal Circuit, the window is open for the Supreme Court at some
point to disagree with business method patents. (Though _Bilski_ showed no
evidence that they are eager to tackle that issue.)

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rayiner
> 35 USC 101 read that way long before State Street Bank & Trust v. Signature
> Financial Group in 1998 got business process patents going

35 USC 101 was always read very broadly--it's just been relatively recently
(for obvious reasons), that business method patents have become relevant.

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btilly
_35 USC 101 was always read very broadly..._

It could always have been read broadly, but was it in practice?

Wikipedia brought up the 1908 _Hotel Security Checking Co. v. Lorraine Co_ and
the 1950 _Joseph E. Seagram & Sons v. Marzell_ as examples of cases where
courts rejected patents on business methods. Furthermore the USPTO for many
years would not accept such patent applications. Not out of capriciousness,
but because they really thought that such patents would not pass legal muster.

These stand as examples showing that 35 USC 101 was not always read as broadly
as it is being read today.

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enraged_camel
This is interesting. I'm not a lawyer, but I wonder if this might offer a
faint glimmer hope for the software industry. Ultimately, I hope we become
like New Zealand with regards to software patents.

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rayiner
We're unlikely to become like New Zealand with regard to software patents. Its
easy for New Zealand to not recognize software patents categorically, its not
a major export for them. It is for the US and that's going to carry a lot of
weight with policymakers.

That said, I think what Judge Moore calls a "narrow" exception to
patentability needs to become bigger. It shouldn't be possible to recite some
basic boilerplate and patent an abstract idea so long as you tie it to a
specific hardware platform. I think this ruling helps set the stage for a
reasonable decision by the Supreme Court on the issue, in the vein of its very
measured patent jurisprudence over the last decade.

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steve19
Is software patent licensing a major export? Software exports certainly are.
How much revenue is lost by our industry because of patents? More than is
gained by the exporters of patent licenses I would think.

~~~
rayiner
Licensing isn't a major export, but products that are made harder to copy with
patented software technology. The algorithms implemented on a DSP in a cell
phone baseband are also subject to software patents. Also, think of something
like Google's (patented) self driving car algorithms.

We've lost our competitive edge in manufacturing due to cheap overseas labor.
The future of our economy is going to be IP and services export.

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DannyBee
FYI There were _7_ different opinions (out of 10 judges) authored for CLS Bank
vs. Alice. It's a bit of a mess right now to figure out what's up.

The method and computer readable media claims were held ineligible by a
majority of the court The systems claims had an equally divided court, and the
result there is to affirm the district court judgement.

See [http://www.cafc.uscourts.gov/images/stories/opinions-
orders/...](http://www.cafc.uscourts.gov/images/stories/opinions-
orders/11-1301.Opinion.5-8-2013.1.PDF)

This was an en banc (IE whole court) opinion, which to the degree it was a
majority, is binding on not just lower courts, but all future 3 judge panels
(the normal size) of the appeals court. To the degree it was an equally
divided court, it is not binding precedent.

Also, what usually happens in patent cases this is that the future 3 judge
panels that disagree with the decision twist the hell out of it to avoid it.

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Tekker
IMO, there's not need for a patent on an algorithm to "allow one window to
display partially occluding another" or "method to display multiple items on a
drop-down menu".

I can understand patenting things like file formats (e.g.: PSD) but general
computer operation "controlling tones over a device connected to telephone
lines to initiate a connection between a remote computer and a local one" or
the more stupid GUI patents or obvious usage patents.

I have no problem if they all go away.

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eurleif
>I can understand patenting things like file formats (e.g.: PSD) but general
computer operation "controlling tones over a device connected to telephone
lines to initiate a connection between a remote computer and a local one"

The former is a format. The latter sounds like a protocol. Formats should be
patentable but protocols shouldn't?

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mtgx
I'm sure thankful all the Internet protocols weren't patented.

~~~
eurleif
And I'm sure thankful formats like HTML aren't patented.

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guelo
This doesn't seem to be anywhere near a conclusive ruling on software patents.
But imagining a world where such a ruling _were_ handed down, the software
giants would be writing down massive losses as their patent warchests
evaporated. Mostly fake money but still, Wall Street wouldn't be happy. But
ultimately it would be a good thing when you consider the massive distortion
of the market caused by things like Google's purchase of money-losing Motorola
for $12 billion.

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tbrownaw
« I know, I'll patent "being a trusted middleman to stop people cheating
eachother... _on a computer_ ". »

Somehow I think the possibility of this stopping all software patents is a bit
exaggerated. And since half the judges disagreed about _why_ these patents
were invalid, it sounds like the quoted EFF lawyer is probably right: _"No one
understands what the hell is or isn't patentable, including the ... federal
circuit."_

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wahsd
I think the thing that bothers me most about these kinds of things is that the
status quo system will find rationalizations to make sure that logic will not
be followed to its conclusion.

Don't worry, a way will be found that can fit the minimum justification
necessary to uphold a fake framework of legitimacy. It always happens that way
in our society, if consequences are too uncomfortable, well, let's just make
sure the consequences don't happen and tell ourselves that it's legitimate
that we just changed the rules of the game in order to triumph.

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graiz
This paired with the notion that you "can't patent math" could give a
compelling argument against software patents.

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o0-0o
If software patents die, and there is no grandfather clause. What are the
patents that matter the most?

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mtgx
So what does this mean for the "thousands" of patents Microsoft is "licensing"
to Android manufacturers for using the open source Android OS, and what about
Apple's lawsuits? I remember some of their patents were "stuff you can do on a
computer", too.

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piyush_soni
So may be now, gradually, we will be able to get rid of ridiculous patents
like "Slide to unlock"?

