Guest Post by Charles A. Lutzow, III
‘Tis better to have loved and lost than never to have loved at all.
-Alfred Lord Tennyson
For years, the United States Supreme Court (SCOTUS) ignored patent law, either because they felt patent law was in a good place, they trusted the Federal Circuit (which has exclusive jurisdiction over patent appeals), they forgot about it because there were no circuit splits, or because of a general desire to stay out of the much more technical patent field. In any case, starting with KSR v. Telefax Co. in 2007, SCOTUS has taken a much greater interest in patent law, much to the dismay of a significant portion of the patent bar.
Mark Cuban: Anti-Patent Crusader
On November 10, 2015, Dallas Mavericks owner, Shark Tank TV star, and billionaire Mark Cuban gave an interview with IP Watchdog regarding his ideas on the current state of patent law, software patents, patent trolls, and patent reform. The interview was conducted by Gene Quinn, founder of IP Watchdog, a prominent patent attorney, and a known critic of SCOTUS’s recent §101 precedents. The interview contains an illuminating exchange on Cuban’s thoughts on patent law, but possibly none more than this:
CUBAN: The greatest risk every tech company faces after execution and direct competition is the unquantifiable risk of patent litigation. On the flip side, get rid of software and tech patents and inventors would still invent. Coders will still code. Entrepreneurs will still start companies. That’s what we do. The goal of creation, no matter what it is, drives people. Money is a great reward, but people will find a way to make their inventions, code, companies happen without patents.
Essentially, what Mr. Cuban believes is that, at least in certain technology areas, patents inhibit invention, and that they do not provide an incentive for invention. If true, he might not only be correct, but he may be technically correct.
The Constitution Imposes Limits on Patent Law
Article I, Section 8, Clause 8 of the United States Constitution, known as the Copyright/Patent Clause, empowers the United States Congress:
To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.
So what does this explicitly say? Well, first patent terms cannot be infinite (although given the current term of copyrights no changes on the horizon would appear to be worrying on this front), and patent law must promote the progress of science and the useful arts. Typically, it has done this in several ways, first, inventors must disclose their invention to the public to receive patent protection, this enriches the public domain by providing inventors with new knowledge about state of the art technologies. Second, patents provide incentives for economically efficient research and development by securing a limited monopoly for inventors, without such a monopoly many creations would be cost prohibitive to research, and competitors would easily knock off the work of the initial inventor. And third, patents provide an incentive for other rivals to design competing devices without infringing the patent, this practice, known as “designing around,” spurs additional research as those rivals experiment with new avenues for solving the same or similar problems, further enriching the public.
What if a Patent Cannot be Designed Around? The Issue of Functional Claiming.
Patent law explicitly allows for functional claiming in patent claims through §112(f). Known as the means plus function provision, this allows a patentee to claim a feature with a function. However, when a patentee (or more likely an examiner) invokes §112(f) the patentee is only allowed to claim equivalents disclosed in his specification. Realistically, this means the patent is easy to design around unless you have disclosed all the realistic options for that feature. However, in the more recent SCOTUS cases, 112(f) was not invoked, instead the patentee asserted merely a function, and was not limited to means disclosed in the invention. In Bilski v. Kappos the representative claim recites the following steps:
- “(a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumers;
- (b) identifying market participants for said commodity having a counter-risk position to said consumers; and
- (c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.”
In Alice Corp v. CLS Bank it reads:
- “‘creating’ shadow records for each counterparty to a transaction;
- ‘obtaining’ start-of-day balances based on the parties’ real-world accounts at exchange institutions;
- ‘adjusting’ the shadow records as transactions are entered, allowing only those transactions for which the parties have sufficient resources; and
- issuing irrevocable end-of-day instructions to the exchange institutions to carry out the permitted transactions.”
What does tell us? It means that both these sets of claims (and others struck down recently using §101) claim functions at the point of novelty. In other words, they are merely reciting things that a person must necessarily do to perform a useful task: they are claiming the problem to be solved, not their individual solution.
Why is this an issue? In real world terms, imagine you are the first person to develop a new pill that cures breast cancer. Now, you surely could get a patent on this new pill, but could you claim it as “A pill that can cure breast cancer” or “A method of curing breast cancer comprising: administering a pill that can cure breast cancer?” Certainly not, if you could, you would have a 20 year monopoly on breast cancer cures! Instead, you are entitled to a patent on the composition of your pill, and methods for administering that specific pill and composition. This protects you from knockoffs, but also gives others incentives to develop other breast cancer cures before your 20 year monopoly runs out.
Interpreting Patent Law to Satisfy the Constitution
Although no Supreme Court case, whether it is the newest cases of Bilski, Alice, and Mayo, or the older cases of Morse, Benson, Flook, and Diehr, has explicitly stated this, a Constitutional mandate clearly appears to govern the rationale in their interpretations of §101 (Inventions Patentable), which is particularly broad and reads:
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.
Onlookers could interpret this in two ways: (1) The Supreme Court, generally, has Justices who believe that the patent law should serve the public interest, and thus interpret the law according to those beliefs; or (2) The Supreme Court is engaging in the longstanding practice of “Constitutional Avoidance.”
Judges (and the Justices) typically use the Doctrine of Constitutional Avoidance to avoid striking down key components of a law, or an entire law. Instead, the court will choose to interpret the law in accordance with the Constitution. (In)Famously Chief Justice John Roberts used this tactic to uphold the Patient Protection and Affordable Care Act (colloquially “Obamacare”) in NFIB v. Sebelius, where he construed Obamacare’s individual mandate as a tax instead of a penalty, thereby upholding the law. While this doctrine has never been invoked in patent cases, perhaps it should be, because the Court appears to consistently be reading limitations into the text that are simply not there.
These “judicial exceptions” of laws of nature, natural phenomena, and abstract ideas read very similarly to exceptions to a statute that would facially violate the Constitution. Thus, the Constitutional Avoidance strategy would provide several benefits over the current, more implicit, reasoning the Court employs. This is because (1) it would prevent Congress from overruling the decisions and allowing entire field preemption, (2) it may tame the Federal Circuit that seems dedicated to ignoring SCOTUS precedents on §101 and patent law, for example, see State Street Bank; CLS Bank v. Alice; Carlsbad Tech v. HIF Bio, wherein the Chief Justices Remarks at oral arguments “Well, they don’t have a choice, right? They can’t say, I don’t like the Supreme Court rule so I’m not going to apply it, other than the Federal Circuit.” And (3) it may quell some critics, such as the aforementioned Gene Quinn, who would have to go face-to-face with the invalidation with all patents issued since 1952 if they got their way.
Software Patents: It was a Good Run While it Lasted
The evidence points to the conclusion that Mark Cuban’s voice is winning out in the courts and at the Patent Office as hundreds, even thousands, of patents are being struck down, and even more never issued, because of SCOTUS’s new guidelines on patent eligibility. But, that doesn’t mean everyone with a software patent is a loser – for over a decade patent attorneys and their clients got software patents issued, and made money doing it. Some companies were built off these patents, and some, like Google, still exist and make money and innovations even without them. Although perhaps the Supreme Court will never adopt the rationale of Constitutional Avoidance when dealing with judicial exceptions, and never cite a young patent attorney’s esoteric blog on the issue, we can all rest assured that if the law ever reverses course such an argument may find its way in front of The Nine, and it might even win an unlikely upset. Just like a certain team from Dallas once did.
Charles A. Lutzow is a Registered Patent Agent with the USPTO and patent attorney at Meroni & Meroni, PC. He received his B.S. degree in Bioengineering Magna Cum Laude from the University of Pittsburgh in 2010, and graduated with honors from The John Marshall Law School in 2013. Charles loves discussing patent law over steak ‘n eggs while watching documentaries about hippos.