01/10/2017

Two Years After Alice v. CLS Bank


Two Years After Alice v. CLS Bank 

Jasper L. Tran

As of June 19, 2016, courts have examined 568 challenged patents brought under § 101 motions citing Alice, resulting in 190 valid patents and 378 patents invalidated with an average invalidation rate of 66.5%. Specifically, the Federal Circuit upheld 3 patents and invalidated 34 patents—an average invalidation rate of 91.9%. Also, courts have decided a total of 500 motions brought under § 101 citing Alice, resulting in 109 validation holdings and 391 invalidation holdings with an average invalidation rate of 78.2%. Specifically, the Federal Circuit has decided 26 motions, resulting in 2 validation holdings and 24 invalidation holdings with an average invalidation rate of 92.3%. The district courts have decided 251 motions, resulting in 84 validation holdings and 167 invalidation holdings with an average invalidation rate of 66.5%. The PTAB has decided 209 motions, resulting in 23 validation holdings and 186 invalidation holdings with an average invalidation rate of 89.7%.

Justice Stephen Breyer’s recent statement fully captured the U.S. Supreme Court’s view on software patents: “[T]here are these [] patent trolls, and [] the Patent Office has been issuing billions of patents that shouldn’t have been issued – I overstate, but only some.” On June 19, 2014, the Supreme Court decided Alice Corp. v. CLS Bank Int’l, raising the patentability standard for computer-implemented inventions under 35 U.S.C. § 101. The Court held that implementing an abstract idea on a computer is not enough to transform that idea into patentable subject matter. Put simply, Alice was a “noticeable judicial move[] to curb excessive patent assertion,” and § 101 post-Alice has proven “deadly” for software patents. For instance, between July 1 and August 15, 2014 (immediately after Alice), there were 830 patent applications related computer-implemented inventions withdrawn from the U.S. Patent and Trademark Office (“USPTO”).

At Alice’s one-year mark, I reviewed all lower court decisions that cited Alice to invalidate software patents. Specifically, as of June 19, 2015, there were a total of 272 court cases—198 Patent Trial and Appeal Board (“PTAB”) decisions, 63 district court decisions, and 11 Federal Circuit opinions—that cited Alice to invalidate software patents, accounting for an average invalidation rate of 82.9%. I also estimated that—without accounting for selection bias—out of roughly 240,000 software patents in force as of 2015, about 199,000 of those, if challenged, would likely be invalidated under Alice, leaving about 41,000 actually valid patents.

This Article continues my previous review at Alice’s two-year mark. As of June 19, 2016, courts have examined 568 challenged patents brought under § 101 motions citing Alice, resulting in 190 valid patents and 378 patents invalidated with an average invalidation rate of 66.5%. The Federal Circuit has upheld 3 patents and invalidated 34 patents—an average invalidation rate of 91.9%.

Courts have also decided a total of 500 motions brought under § 101 citing Alice, resulting in 109 validation holdings and 391 invalidation holdings with an average invalidation rate of 78.2%. Specifically, the Federal Circuit has decided 26 motions, resulting in 2 validation holdings and 24 invalidation holdings with an average invalidation rate of 92.3%. The district courts have decided 251 motions, resulting in 84 validation holdings and 167 invalidation holdings with an average invalidation rate of 66.5%. The PTAB has decided 209 motions, resulting in 23 validation holdings and 186 invalidation holdings with an average invalidation rate of 89.7%.

The Federal Circuit notably released Enfish, LLC v. Microsoft Corp., on May 12, 2016, marking the second Federal Circuit decision to uphold patent validity since Alice and shed more light on how to analyze § 101 under Mayo/Alice. In Enfish, the Federal Circuit made clear that it was “not persuaded that the invention’s ability to run on a general purpose computer dooms the claims.” The Federal Circuit then released BASCOM Global Internet Services, Inc. v. AT & T Mobility LLC on June 27, 2016, marking the third Federal Circuit decision to uphold patent validity since Alice.

This Article proceeds in four parts. Part I quickly recaps the Alice v. CLS Banks decision and Alice’s one-year statistics. Part II lays out and analyzes Alice’s two-year statistics. Part III reviews the Federal Circuit cases in Alice’s second year, including Enfish, TLI Communications, and BASCOM, with a quick coverage of the USPTO’s reaction post-Enfish. Part IV concludes. Additionally, Appendix A includes the information of the patents or patent applications that courts have upheld under Alice from June 20, 2015 to June 19, 2016.

98 J. Pat. & Trademark Off. Soc’y 354(2016)

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