My Latest EFF Amicus Brief: Trying to Solve the Abstract Patent Problem

Today EFF filed the latest amicus brief which I helped write.  The case is CLS Bank v. Alice Corp.  EFF's press release about the filing is here.

The case involves several business method patents that manage financial risk in commercial transactions.  The trial court held that the patents were invalid under 35 U.S.C. § 101, which limits the types of things that can be patented.  As EFF explains on its Abstract Patent Litigation page, things like laws of nature, natural phenomena, and abstract ideas can't be patented.  In recent years, both the Federal Circuit Court of Appeals and the U.S. Supreme Court have struggled on what § 101 means and how and when it limits what can be patented. 

In March 2012, the Supreme Court decided Mayo v. Prometheus, which held that medical diagnostic processes are not patentable.  The opinion gave some good guidelines about when processes aren't patentable: things that are "well-understood, routine, conventional activity" can't be patented.  However, all 12 active judges of the Federal Circuit don't agree on the proper test for when patents are abstract.  Some think that § 101 should strictly limit what is patentable, some think mostly anything should be patentable.  The outcome of any particular case depends on which 3 judges are selected to hear an appeal.

CLS Bank was first heard and decided before a 3-judge panel, in a July 2012 decision.   Two of the three judges upheld the patents against the § 101 challenge.  Their test was whether the patent claimed "nothing more than" an abstract idea, and that a patent was permitted unless it was "manifestly evident" that only an idea was claimed.  This is a very permissive test, to say the least.  The other judge dissented and said that the patents weren't permitted under the Supreme Court's test in Mayo.  The majority's rule was also plainly inconsistent with other recent cases holding similar patents to be invalid.

CLS Bank then asked all 12 judges of the court to hear the case (called an en banc hearing).  EFF filed an amicus brief supporting those efforts.  In October 2012, the full Federal Circuit agreed to hear the case.  Briefing is underway, and oral argument is scheduled in February 2013. 

EFF's amicus brief for the en banc hearing makes two principal points.  The first is that patent litigation has been greatly increasing during the last several years, particularly for software and business method patents, and for patents owned by non-practicing entities.  This litigation puts a great burden on innovative companies who actually sell a product.  Second, rather than try to decide the difficult question of whether something is "abstract," process patents should not be allowed to claim broad functionality, but rather should be limited to the particular ways a patent implements those processes, and equivalents.  On that point, we suggest that the court use an analysis by Professor Mark Lemley of Stanford.  If the patents are limited to what was actually invented, this both makes the abstractness test easier, and also makes them less of a threat to companies whose products work in a substantially different way.

UPDATE: Techdirt has this nice writeup on EFF's brief.  Patently-O has analyzed all of the opening round amicus briefs.