Supreme Court Will Hear Arguments On Section 101 Software Patent Eligibility

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By Tony Dutra  

Dec. 6 --The Supreme Court granted a petition for writ of certiorari on Dec. 6 in a case challenging software method and system patent eligibility under 35 U.S.C. §101, in Alice Corp. Pty. Ltd. v. CLS Bank Int'l ( U.S., No. 13-298, review granted, 12/6/13).

The question presented by the patent owner in the case is:

Whether claims to computer-implemented inventions--including claims to systems and machines, processes, and items of manufacture--are directed to patent-eligible subject matter within the meaning of 35 U.S.C. §101 as interpreted by this Court?  

 

The high court did not announce a decision on a cert petition in a related case, WildTangent, Inc. v. Ultramercial, LLC, No. 13-255 (U.S., review sought Aug. 23, 2013), and is now likely to hold off on that petition until the CLS Bank case is decided.

Fractured Federal Circuit

The CLS Bank case is controversial because the U.S. Court of Appeals for the Federal Circuit, sitting en banc, failed to reach enough agreement on patent eligibility of computer-related claims to supply precedential jurisprudence. CLS Bank Int'l v. Alice Corp. Pty. Ltd., 717 F.3d 1269, 2013 BL 124940, 106 U.S.P.Q.2d 1696 (Fed. Cir. 2013) (en banc) (92 PTD, 5/13/13).

Alice Corp. asserted four patents (U.S. Patent Nos. 5,970,479; 6,912,510; 7,149,720; and 7,725,375) directed to the formulation and trading of risk management contracts against alleged infringer CLS Bank International.

The en banc court was 7-3 against patent eligibility of the method claims and 5-5 as to the system claims. Since the lower court had ruled that the system claims were ineligible, that judgment stands and all of Alice's claims are ineligible unless the Supreme Court overturns the decision. Eight members of the en banc court said that method and system or media claims should rise or fall together, but not for the same reasons.

The Alicecert petition, filed by Carter G. Phillips of Sidley Austin LLP, Washington, D.C., appealed the split decision (173 PTD, 9/6/13).

Friends of the court filed 11 briefs urging the Supreme Court to address software patent eligibility generally and resolve the split (202 PTD, 10/18/13).

But according to a Nov. 6 brief on behalf of CLS Bank opposing the petition, filed by Mark A. Perry of Gibson Dunn & Crutcher LLP, Washington, D.C., the patent ineligibility result here is correct (220 PTD, 11/14/13).

CLS Bank relied considerably on language from the Supreme Court's decision in Mayo Collaborative Services v. Prometheus Laboratories Inc., 132 S. Ct. 1289, 101 U.S.P.Q.2d 1961 (2012) (54 PTD, 3/21/12).

“Absent an inventive concept, a method of performing well-understood economic activity is not patent-eligible under 35 U.S.C. §101,” CLS Bank said in its rephrasing of the question presented. The risk management economic concept at issue in this case is merely an abstract idea, the brief said, dooming the method claims. Further, it said, “The additional requirements of the media and system claims--such as a hard drive--are conventional, not inventive.”

And despite the appeals court's split, CLS Bank argued that standards for software patent eligibility “would benefit from further percolation in the Federal Circuit.”

Only Method Claims in WildTangent

The WildTangentpetition, filed by Gregory G. Garre of Latham & Watkins LLP, Washington, D.C. (167 PTD, 8/28/13), challenges the June 21 decision by the Federal Circuit that method claims of an Internet advertising patent are patent eligible. Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335, 2013 BL 164761, 107 U.S.P.Q.2d 1193 (Fed. Cir. 2013) (121 PTD, 6/24/13).

Alleged infringer WildTangent Inc.'s petition asked: “When is a patent's reference to a computer, or computer-implemented service like the Internet, sufficient to make an unpatentable abstract concept patent eligible under 35 U.S.C. §101?”

In contrast to CLS Bank, WildTangent came before the Federal Circuit on an appeal of a case dismissal, only method claims are at issue, and the court ruled that Ultramercial LLC's patent (U.S. Patent No. 7,346,545), on a method for allowing Internet users to view copyrighted material free of charge in exchange for watching certain advertisements, met patent eligibility requirements under Section 101.

This is the second time the high court has seen a petition in this case. The Federal Circuit ruled in favor of patent eligibility in 2011 (182 PTD, 9/20/11), and WildTangent filed a petition for writ of certiorari in February 2012. A month later, the Supreme Court decided Mayo v. Prometheus, and on May 21, 2012, it granted WildTangent's cert petition, vacated the Federal Circuit's opinion, and remanded the case for reconsideration in light of Mayo.

The appeals court did not schedule oral argument on remand and issued the June 21 decision with the same result as in 2011. Though the panel was unanimous, a concurring opinion chastised the majority for applying its own Section 101 standards rather than following the Supreme Court's lead.

Eight amicus briefs were filed urging the Supreme Court to grant WildTangent's second petition for cert (202 PTD, 10/18/13).

The patent owner waived the opportunity to file a brief in opposition. Lawrence M. Hadley of McKool Smith Hennigan P.C., Los Angeles, represents Ultramercial.

 


Alice cert petition is available at http://pub.bna.com/ptcj/130298petition.pdf.

CLS opposition brief is available at http://pub.bna.com/ptcj/130298response.pdf.

WildTangent cert petition is available at http://pub.bna.com/ptcj/130255petition.pdf.

 

To contact the reporter on this story: Tony Dutra in Washington at adutra@bna.com

To contact the editor responsible for this story: Naresh Sritharan at nsritharan@bna.com