Amicus Curiae Brief — InvestPic, LLC, Petitioner v. SAP America, Inc.

No. 18-1199

================================================================

In The

Supreme Court of the United States

-----------------------------------------------------------------INVESTPIC, LLC,

Petitioner,

v.

SAP AMERICA, INC.,

Respondent.

-----------------------------------------------------------------On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Federal Circuit

-----------------------------------------------------------------BRIEF OF AMICI CURIAE

US INVENTOR, JAY WALKER, GARY SHUSTER,

LAWRENCE GLASER, SEED IP LAW GROUP LLP,

SUTTON MAGIDOFF LLP, ARIE MICHELSON,

GEORGE GRAFF, ANDREW RAMER,

AND STEVENS LAW GROUP

IN SUPPORT OF PETITIONER

-----------------------------------------------------------------STEVEN W. SMYRSKI

SMYRSKI LAW GROUP, A P.C.

3310 Airport Ave., SW

Santa Monica, CA 90405

(310) 397-9118

steve@smyrski.com

Counsel for Amici Curiae

================================================================

COCKLE LEGAL BRIEFS (800) 225-6964

WWW.COCKLELEGALBRIEFS.COM

i

TABLE OF CONTENTS

Page

TABLE OF CONTENTS ......................................

i

TABLE OF AUTHORITIES .................................

ii

INTERESTS OF AMICI CURIAE .......................

1

SUMMARY OF ARGUMENT ..............................

4

ARGUMENT ........................................................

8

A.

What is “Abstract?” The Issue Presented

by the Alice Decision .................................

8

B.

Inventors, Inventions, Patents, and the

Patent System Have Been, and Remain,

Vital to the United States Economy .......... 11

C.

The Years Following Alice: Challenges Remain, and Sometimes Increase.................. 14

D.

The Present Case Adds Further Uncertainty in Determining Patentable Subject

Matter, Particularly for Claims Reciting

Computer Software Limitations ................ 20

E.

Yet More Uncertainty From the Federal

Circuit: The Nonprecedential Cleveland

Clinic Decision ........................................... 24

CONCLUSION..................................................... 27

ii

TABLE OF AUTHORITIES

Page

CASES

Alice Corporation Pty. Ltd. v. CLS Bank International, 573 U.S. 208 (2014) .............................. passim

Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788

F.3d 1371 (Fed. Cir. 2015) ......................................15

Ariosa Diagnostics, Inc. v. Sequenom, Inc., 809

F.3d 1282 (Fed. Cir. 2015) .......................................15

Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576 (2013)......................................9

BASCOM Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016) ..............21

Bilski v. Kappos, 561 U.S. 593 (2010) ................. passim

Cleveland Clinic Found. v. True Health Diagnostics LLC, No. 2018-1218, 2019 U.S. App.

LEXIS 9451 (Fed. Cir. Apr. 1, 2019) ........................25

Enfish, LLC v. Microsoft Corp., 822 F.3d 1327

(Fed. Cir. 2016) ........................................................21

Gottschalk v. Benson, 409 U.S. 63 (1972) ............. 21, 23

In re Johnson, 589 F.2d 1070 (C.C.P.A. 1978) ............21

Mayo Collaborative Servs. v. Prometheus Labs.,

Inc., 566 U.S. 66 (2012).................................... passim

Parker v. Flook, 437 U.S. 584 (1978) ..................... 21, 23

CONSTITUTIONAL PROVISIONS

U.S. Const. Art. I, § 8 ............................................ 11, 26

iii

TABLE OF AUTHORITIES – Continued

Page

STATUTES

35 U.S.C. § 100(b) ..........................................................8

35 U.S.C. § 101 .................................................... passim

RULES AND REGULATIONS

Sup. Ct. R. 37.6 .............................................................1

OTHER AUTHORITIES

2019 Revised Patent Subject Matter Eligibility

Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019) .......... 16, 17

Colleen Chien, The Impact of 101 on Patent Prosecution, PATENTLYO (Oct. 21, 2018), patentlyo.

com/patent/2018/10/impact-patent-prosecution.

html ................................................................... 17, 18

David O. Taylor, Patent Eligibility and Investment, CARDOZO L. REV. (forthcoming), available at ssrn.com/abstract=3340937 ..........................13

Hon. Maureen K. Ohlhausen, Patent Rights in a

Time of Intellectual Property Rights Skepticism, 30 HARV. J. OF LAW & TECH. 103 (2016) ........11

Meredith Addy, Alice at Age Four: Time to Grow

Up, IPWATCHDOG (Sept. 18, 2018) http://www.

ipwatchdog.com/2018/09/18/alice-age-four-growup/id=101447/ ..........................................................18

PATENT ELIGIBLE SUBJECT MATTER: REPORT ON

VIEWS AND RECOMMENDATIONS FROM THE PUBLIC, U.S. PATENT AND TRADEMARK OFFICE 30

(July 2017) ...............................................................15

iv

TABLE OF AUTHORITIES – Continued

Page

Robert Sachs, AliceStorm Update for Fall 2016,

BILSKI BLOG (Oct. 19, 2016), https://www.

bilskiblog.com/2016/10/alicestorm-updateturbulence-and-troubles-html/ .................................17

USPTO Memorandum to the Patent Examining

Corps (Apr. 19, 2018), available at http://

www.uspto.gov/sites/default/files/documents/

memo-berkheimer-20180419.pdf ............................18

USPTO Memorandum to the Patent Examining

Corps (June 25, 2014), available at http://

www.uspto.gov/sites/default/files/patents/

announce/alice_pec_25jun2014.pdf ........................18

USPTO Memorandum to the Patent Examining

Corps (May 19, 2016), available at http://www.

uspto.gov/sites/default/files/documents/ieg-may2016_enfish_memo.pdf ............................................18

USPTO Memorandum to the Patent Examining

Corps (Nov. 2, 2016), available at http://www.

uspto.gov/sites/default/files/documents/McRoBascom-Memo.pdf ...................................................18

1

INTERESTS OF AMICI CURIAE1

Amicus curiae US Inventor (USI) is a non-profit

organization dedicated to helping the innovators of tomorrow. USI teaches, promotes, and defends the invention process and business methods involved in

developing an idea, making a profit, and changing

lives, in this case as an amicus curiae.

Amicus curiae Jay Walker is a named inventor on

more than 450 issued and pending patents and applications. Mr. Walker founded Priceline.com, a travel-industry public company, and Synapse, a credit-card

processing network, and is chairman of Walker Digital,

a privately-held research and development laboratory

that has invented hundreds of business problem solutions, particularly around large-scale networks.

Amicus curiae Gary Shuster is a named inventor

on more than 180 issued United States patents. Mr.

Shuster’s patents cover distributed computing, identity theft prevention, encryption, copyright enforcement, e-mail authentication, and geolocation, among

others. Mr. Shuster graduated from Harvard Law

School and represents Fortune 50 companies and technology start-ups.

1

Pursuant to Supreme Court Rule 37.6, counsel for amici

certify that no counsel for a party authored this brief in whole or

in part, and no counsel or party made a monetary contribution

intended to fund the preparation or submission of this brief. No

person other than amicus made such a monetary contribution.

The parties have been given at least ten days’ notice of amici

curiae’s intention to file this brief and both parties have consented

to the filing.

2

Amicus curiae Lawrence Glaser is a prominent

inventor, having received over forty United States

patents. Mr. Glaser is the founder of ViraLogix, developing inventions dealing with infectious and oncogenic/

oncologic disease, and of Fortran Electric, developing

inventions in low, medium and high voltage, security,

communications, integration and custom programming.

Amicus curiae Seed IP Law Group LLP is a Pacific

Northwest intellectual property law firm with over

fifty patent attorneys. The firm provides legal services

to innovative companies and inventors on their patents, trademarks, copyrights, trade secrets, and technology-commercialization strategies.

Amicus curiae Sutton Magidoff LLP is an intellectual property boutique law firm with patent attorneys

representing clients in diverse industries in matters

related to IP licensing, technology transfers and joint

ventures, patent preparation and prosecution, and

complex IP litigation.

Amicus curiae Arie Michelson is a patent and litigation attorney and entrepreneur. Dr. Michelson

founded Lion Legal Products, a legal technology company, and LexLab.io, an online work-space environment for lawyers. Dr. Michelson is a Caltech Ph.D.,

graduate of the George Washington University Law

School, a former patent examiner, and a former law

clerk at the U.S. Court of Appeals for the Federal Circuit.

3

Amicus curiae George Graff is an arbitrator and

mediator on intellectual property matters and is a

member of the New York Academy of Mediators and

Arbitrators. Mr. Graff has forty years of experience in

dispute resolution, litigation, International Trade

Commission investigations, and appeals relating to the

ownership, licensing, and acquisition of intellectual

property rights.

Amicus curiae Andrew T. Ramer has been a

founder and executive at numerous technology and IPfocused companies. He is the co-founder and CEO of

Marqera Corporation, a global IP trading company,

was President of Ocean Tomo Auctions, LLC, acted

as Managing Director of the IP Division at Cantor

Fitzgerald, and led Motorola’s venture capital arm.

Amicus curiae Stevens Law Group is an Intellectual Property law firm focused on preparation and

prosecution of applications for patents, patent reexaminations, patent licensing, and patent infringement litigation. Its software services surround technologies

such as user interfaces, big data, signal processing,

communications, virtual reality, video games, and signal processing.

In the instant case, Petitioner has discussed the

error of the Federal Circuit’s ruling and analyzed the

“physical realm/non-abstract application realm” test

as well as the uncertain state of patent eligibility determination justifying this Court’s intervention. Amici

agree with Petitioner that the determination of patentable subject matter under 35 U.S.C. § 101 since the

4

Alice case injects significant uncertainty in the patent

system, frustrating the ability for inventors to obtain

protection for their valuable innovations, particularly

innovations in the field of computer science. Amici

are concerned that application of the “physical

realm/non-abstract application realm” requirement

would effectively abolish protection for a significant

number of, or possibly all, inventions in the area of

computer science, a conclusion in clear conflict with

precedents set by this Court and the Federal Circuit.

This “physical realm/non-abstract application realm”

requirement demonstrates the problems inherent in

leaving such assessments to different judicial panels

and administrative agencies such as the United States

Patent and Trademark Office to determine what is and

is not patentable subject matter without clear overriding guidance. The case below provides a clean vehicle

for clarifying the definition of an “abstract” idea in this

technological context, namely the protectability of inventions in part or in whole in the field of computer

science, and the applicability of the “physical realm/

non-abstract application realm” test, as the definition

of what is “abstract” and thus ineligible for patent protection was dispositive of Petitioners’ claim.

------------------------------------------------------------------

SUMMARY OF ARGUMENT

The 2014 Alice decision by this Court held that

claims to a system facilitating the exchange of financial obligations between two parties by using a computer system as a third-party intermediary were

5

“abstract,” but declined to delineate subject matter

that was and was not “abstract.”

The Alice opinion, and decisions from the Federal

Circuit and lower courts thereafter, have injected a significant level of uncertainty into the patent system.

Specifically, the question of what is patentable and

what is not, or more specifically what is “abstract” and

what is not, remain unclear and may be even more unclear than they were at the time this Court decided

Alice.

Persons who conceive of innovative ideas, including scientists, engineers, academics, and other inventors, benefit from a robust patent system, one wherein

a level of certainty is assured. The uncertainty that has

developed in the years since Alice has caused a number

of adverse results: with uncertainty as to whether patent claims to a particular invention are “abstract,” investors are inclined not to invest in promising but

expensive technologies, companies are unwilling to

dedicate capital to research and development, inventors are not hired to invent, the risk and cost of litigation increases and is in many cases unthinkable, and

fewer inventors can justify the time and effort required

to submit a patent application on their innovations.

Uncertainty in the patent system impedes the advancement of technology, and as a result of such uncertainty, fewer novel and societally beneficial inventions

come into existence.

In the five years since Alice issued, the Federal

Circuit, district courts, and the United States Patent

6

and Trademark Office have each attempted to adjudicate the question of patentable subject matter according to the principles articulated in this Court’s Bilski,

Mayo, and Alice decisions. These efforts have led to a

series of decisions that are inconsistent and can depend on the Examiner, judge, or judicial panel assigned

to the case. Inconsistency in decisions is prevalent, and

one body, such as a patent Examiner, may apply the

guidance and laws as understood and come to a conclusion that a patent claim is valid, while a second entity,

such as a Federal Circuit judicial panel, may come to a

completely different conclusion.

The underlying case adds another hurdle that

must be cleared by an applicant or patentee: satisfaction of the “physical realm” or “non-abstract application realm” test is necessary for an invention to be

considered protectable. Such a requirement arguably

obviates any and all advancements in or relating to the

field of computer science, despite the clear rulings of

this Court and the Federal Circuit that computer software is not always unpatentable. Bilski v. Kappos, 561

U.S. 593, 605 (2010). Further, the holding in the case

below adds more confusion to the inquiry; if an “abstract” idea is not defined, how can one know when a

patent claim has transitioned to the “non-abstract” application realm? The result is a haphazard application

of the standard in reviewing patent claims, an “I know

it when I see it” analysis applied by patent Examiners,

Patent Trial and Appeal Board judges, district court

judges, and Federal Circuit judges, each of whom may

7

have a different opinion regarding the eligibility of a

particular patent claim.

Both the United States Patent and Trademark Office and lower courts have had difficulty implementing

the patentable subject matter analysis from this Court

and the Federal Circuit. In some USPTO Group Art

Units, rejection rates in excess of 90% have occurred,

and “abstract” rejections grew from 25% to over 75% in

some art units after issuance of the Alice decision. Patent examiners, without clear guidance as to what was

“abstract,” began finding a great many claims “abstract.” Lower courts have, as of 2018, been invalidating claims based on subject matter considerations at a

rate of about 60% by one estimate.

The United States Patent and Trademark Office

has attempted to address patentable subject matter eligibility issues by promulgating a set of Guidelines

that takes this Court’s precedent and seeks to clarify

the second part of the two-part test articulated in

Alice. Such efforts are admirable. However, the Federal

Circuit has made at least one statement in a recent

nonprecedential opinion stating that the Federal Circuit is “not bound” by Guidelines provided by the

USPTO, adding a further layer of uncertainty to the

process. Amici are concerned that a novel, useful, and

nonobvious computer science-related innovation, for

example, may be claimed in a manner that is found acceptable under the 2019 USPTO Guidelines, only to

see that claim struck down in the lower courts or Federal Circuit after years of costly and time-consuming

litigation.

8

What is needed is clear, overarching guidance as

to what is and is not patentable, such as guidance expanding on this Court’s decisions in Bilski, Mayo, and

Alice, that decreases the likelihood that different tribunals or adjudicators will render different decisions

as to the “abstract” nature and eligibility of different

patent claims, particularly in the areas of computer

science and computer technology.

------------------------------------------------------------------

ARGUMENT

A. What is “Abstract?” The Issue Presented by

the Alice Decision

35 U.S.C. § 101 addresses the subject matter eligible for patent protection:

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.

35 U.S.C. § 100(b) defines the term “process” as a

“process, art, or method, and includes a new use of a

known process, machine, manufacture, composition of

matter, or material.”

Courts have created certain exceptions to 35

U.S.C. § 101 not expressly articulated in the statute.

“We have long held that this provision contains an important implicit exception: Laws of nature, natural

phenomena, and abstract ideas are not patentable.”

9

Ass’n for Molecular Pathology v. Myriad Genetics, Inc.,

569 U.S. 576, 589 (2013) (internal quotation marks and

brackets omitted).

In 2014, this Court decided the case of Alice Corporation Pty. Ltd. v. CLS Bank International, 573 U.S.

208 (2014). The Alice case addressed the patentability

under 35 U.S.C. § 101 of patent claims drawn to a system facilitating the exchange of financial obligations

between two parties by using a computer system as a

third-party intermediary. 573 U.S. at 208. Alice issued

approximately four years after Bilski v. Kappos,

wherein this Court addressed claims drawn to a procedure for instructing buyers and sellers how to protect

against the risk of price fluctuations in a discrete section of the economy. 561 U.S. at 598. This Court held

both the Alice and Bilski claims to be “abstract” and

thus invalid. Alice, 573 U.S. at 218; Bilski, 561 U.S. at

609.

Of great importance to many scientists, engineers,

academics, and other inventors, as well as their employers and investors, was: if the Alice and Bilski

claims were abstract and thus patent ineligible, what

claims were abstract and what claims were not? This

Court made the following statement on this question:

[W]e need not labor to delimit the precise contours of the “abstract ideas” category in this

case. It is enough to recognize that there is no

meaningful distinction between the concept of

risk hedging in Bilski and the concept of intermediated settlement at issue here. Both

10

are squarely within the realm of “abstract

ideas” as we have used that term.

Alice, 573 U.S. at 221.

As a result, scientists, engineers, academics, and

other inventors, their representatives, as well as lower

courts and the United States Patent Office, were left

without clear guidance as to what was and what was

not “abstract.”

This Court did articulate a test to determine

whether a claim would be patent eligible under 35

U.S.C. § 101: first, one determines whether the claims

at issue are directed to a patent-ineligible concept. If

the claims are directed to a patent-ineligible concept,

one examines the elements of the claim to determine

whether it contains an “ ‘inventive concept’ ” sufficient

to “transform” the claimed abstract idea into a patenteligible application. Alice, 573 U.S. at 221 (citing Mayo

Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S.

66, 72, 80 (2012)).

Even with this two-part test, scientists, engineers,

academics, and other inventors had no clear guidance

as to what constituted an abstract claim. The Court’s

characterization of the Alice and Bilski claims as abstract certainly applied to those particular claims, but

inventors and their representatives were left to wonder whether other claims, contemplated, on file, and/or

issued, were “abstract” as a result of their similarity to

the claims of Alice and Bilski, or were patent eligible.

11

Following Alice, was every claim to a computerbased programming method abstract? Was a claim

covering a device that performed a series of programmed functional steps abstract? Was a claim reciting a method including a series of programmed

functional steps abstract? What could and could not be

patented?

B. Inventors, Inventions, Patents, and the Patent System Have Been, and Remain, Vital

to the United States Economy

The ability for inventors to protect their inventions is based on the language of Article I, Section 8 of

the U.S. Constitution (“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.”).

Patents have historically been vitally important to

the economy of the United States, and patent protection, specifically the ability of an inventor to protect his

or her idea by a patent, has encouraged innovation and

created numerous economic benefits. See, e.g., Hon.

Maureen K. Ohlhausen, Patent Rights in a Time of Intellectual Property Rights Skepticism, 30 HARV. J. OF

LAW & TECH. 103, 131 (2016) (“[V]oluminous evidence

links stronger patents with greater R&D investment

at the firm level and richer macroeconomic growth.”).

Inventors benefit from their inventions in three

primary ways. First, engineers, scientists, academics,

and other inventors may be employed to invent

12

or otherwise solve problems or create new designs.

Second, inventors can benefit by licensing patents covering their inventions. And third, inventors may litigate their patents to prevent others from making,

using, or selling their inventions and may potentially

recover monetary damages. Each of these avenues for

profiting from the inventor’s ideas requires a stable

and predictable patent system. Without stability and

predictability, invention ceases to be lucrative for inventors, their employers, investors, and potential licensees. Litigation becomes untenable, investment into

new and expensive technologies decreases, and invention declines in the absence of a stable and predictable

patent system. Uncertainty decreases the incentive to

commit capital to new technologies and decreases the

demand for inventors and inventions. The result is

fewer inventions and fewer technological advances

benefitting society.

Further, defending patents takes money and significant effort. If it is unclear whether a new idea is

“abstract” or will be upheld in litigation as being patentable, the incentive to invent and patent decreases.

Uncertainty as to the applicability of the “abstract”

designation to an idea denies justice to inventors,

startups, and/or investors by denying capital necessary

to fund innovation efforts and provide access to the

courts. If a patent is too risky to defend, the patent

effectively loses its status as a property right and

becomes incapable of securing investment. Without

investment capital available, inventors and their

employers lose the ability to commercialize new

13

technologies and/or defend their property rights. Uncertainty in the patent system thus takes away the incentive to fund innovations and the motivation to

invent. Anecdotal evidence suggests that many small

inventors in the U.S. have decreased or entirely

stopped inventing and many have stopped filing patent

applications.

A recent study evaluated whether recent patent

eligibility cases have changed the behavior of venture

capital and private equity firms. “Overwhelmingly investors reported that patent eligibility is an important

consideration when their firms decide whether to invest in companies developing technology,” with about

43% of respondents agreeing strongly with this sentiment.2 Further, “59% [of respondents] agreed that

their firms are less likely to invest given more difficulty obtaining patents, while only 22% disagreed.”3

Uncertainty and the resultant lack of faith in the

patent system leads to less investment in new technologies and materially harms the inventor community

and society as a whole. Uncertainty and lack of faith in

the patent system decreases investment in new technologies and the reaction is fewer innovations benefitting society.

2

David O. Taylor, Patent Eligibility and Investment,

CARDOZO L. REV. (forthcoming) (manuscript at 31), available at

ssrn.com/abstract=3340937.

3

Id. at 33.

14

C. The Years Following Alice: Challenges

Remain, and Sometimes Increase

In the intervening years since the Alice decision,

the Federal Circuit, district courts, and the USPTO

have attempted to ascertain the existence of patentable subject matter in patent claims pursuant to the

two-part Alice test, but to this day challenges and uncertainty remain. Criticisms of the patent eligibility

standards and the application of the standards by the

courts and USPTO are many:

Labeling the Mayo/Alice two-step test as

a “nightmare” and “hopelessly subjective and

unworkable,” [commentators] argued that it

is untenable and creates unpredictability in

the issuance and enforcement of patents. Several participants asserted that the problem

with the two-step test is that it is a negative

test. Others noted that the test fails to define

crucial terms, such as “abstract” and “substantially more.” Indeed, some commentators

urged that “[i]t is impossible to define ‘abstract idea’ with sufficient certainty to serve

as a legal standard for anything, let alone the

important determination of whether an invention is patent eligible.”

Many members of the public argued that

the two-part test provides an unworkable

framework for the USPTO to make patent eligibility determinations with any reliability.

They also observed that the new standard

yields unpredictable results in courts, leaving

the public unsure whether something patented today, will be patent eligible tomorrow.

15

In short, commentators expressed concern

that “the overall impact of recent rulings has

been diminished clarity regarding patent eligibility, which results in confusion among

patent-intensive industry sectors, individual

inventors and innovators.”4

Certain Federal Circuit judges have also expressed concern with this Court’s subject matter eligibility jurisprudence. See, e.g., Ariosa Diagnostics, Inc. v.

Sequenom, Inc., 788 F.3d 1371, 1381 (Fed. Cir. 2015)

(Linn, J., concurring) (finding claims ineligible while

stating that “[b]ut for the sweeping language in the Supreme Court’s Mayo opinion, I see no reason, in policy

or statute, why this breakthrough invention should be

deemed patent ineligible”); Ariosa Diagnostics, Inc. v.

Sequenom, Inc., 809 F.3d 1282, 1287 (Fed. Cir. 2015)

(Lourie, J., concurring in the denial of en banc

rehearing) (“[I]t is unsound to have a rule that takes

inventions of this nature out of the realm of patenteligibility on grounds that they only claim a natural

phenomenon plus conventional steps, or that they

claim abstract concepts.”). Judge Lourie also expressed

skepticism as to the “abstract” label for computer

software-based designs, stating “steps that involve machines, which are tangible, steps that involve transformation of tangible subject matter, or tangible

implementations of ideas or abstractions should not be

considered to be abstract ideas.” Id.

4

PATENT ELIGIBLE SUBJECT MATTER: REPORT ON VIEWS AND

RECOMMENDATIONS FROM THE PUBLIC, U.S. PATENT AND TRADEMARK OFFICE 30 (July 2017) (footnotes omitted).

16

The brief of Petitioner lists a number of district

court and Federal Circuit statements decrying the lack

of predictability and reliability of decisions rendered in

view of the intra-Federal Circuit split over the patentability of different types of processes. (Pet. Brf. at 32).

The United States Patent and Trademark Office

has articulated its concerns with the uncertainty resulting from patent eligibility rulings. See 2019 Revised Patent Subject Matter Eligibility Guidance, 84

Fed. Reg. 50, 52 (Jan. 7, 2019) (“The legal uncertainty

surrounding Section 101 poses unique challenges for

the USPTO, which must ensure that its more than

8500 patent examiners and administrative patent

judges apply the Alice/Mayo test in a manner that produces reasonably consistent and predictable results

across applications, art units and technology fields.”).

Seeking to address this “legal uncertainty,” the

USPTO issued a revised subject matter eligibility test

that attempts to clarify step two of the test articulated

in Alice. The Patent Office summarized its new Guidelines as follows:

The 2019 Revised Patent Subject Matter

Eligibility Guidance revises the procedures

for determining whether a patent claim or patent application claim is directed to a judicial

exception (laws of nature, natural phenomena, and abstract ideas) under Step 2A of the

USPTO’s Subject Matter Eligibility Guidance

in two ways. First, the 2019 Revised Patent

Subject Matter Eligibility Guidance explains

that abstract ideas can be grouped as, e.g.,

17

mathematical concepts, certain methods of

organizing human activity, and mental processes. Second, this guidance explains that a

patent claim or patent application claim that

recites a judicial exception is not ‘‘directed to’’

the judicial exception if the judicial exception

is integrated into a practical application of the

judicial exception. A claim that recites a judicial exception, but is not integrated into a

practical application, is directed to the judicial exception under Step 2A and must then

be evaluated under Step 2B (inventive concept) to determine the subject matter eligibility of the claim.

2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. at 50.

The efforts of the United States Patent and Trademark Office in this regard are to be admired. However,

§ 101 examination by the Examining corps of the

USPTO has been problematic for years. Patent examiners, without clear guidance as to what was “abstract,” began finding a great many claims “abstract.”

Certain Group Art Units in the USPTO, particularly

the software Group Art Units, rejected patent applications at rates above 90% as purportedly claiming

“abstract” ideas.5 Further, the USPTO has issued

5

Colleen Chien, The Impact of 101 on Patent Prosecution,

PATENTLYO (Oct. 21, 2018), patentlyo.com/patent/2018/10/impactpatent-prosecution.html (for Group Art Units 362X, 3661, 3664,

368X, 369X, “the 101 rejection rate grew from 25% to 81% in the

month after the Alice decision, and has remained above 75%

almost every month since then); Robert Sachs, AliceStorm Update for Fall 2016, BILSKI BLOG (Oct. 19, 2016), https://www.

18

guidance in the past on subject matter eligibility,6 but

some Group Art Units have continued to reject claims

as “abstract” at rates in excess of 75%.7 Whether the

2019 USPTO Guidelines result in fewer “abstract” idea

Examiner rejections remains to be seen.

Concerns exist with decisions at the district court

level as well. In 2018, approximately 60% of district

court decisions addressing patent eligibility found

claims unpatentable, with many of these patent claims

invalidated without evidence or testimony.8

The result is a haphazard application of the standard in reviewing patent claims, an “I know it when I

see it” analysis applied by patent Examiners, Patent

Trial and Appeal Board judges, district court judges,

bilskiblog.com/2016/10/alicestorm-update-turbulence-and-troubleshtml/ (reporting rejections in excess of 90% in various Group Art

Units as of 2016).

6

USPTO Memorandum to the Patent Examining Corps

(June 25, 2014), available at http://www.uspto.gov/sites/default/

files/patents/announce/alice_pec_25jun2014.pdf; USPTO Memorandum to the Patent Examining Corps (May 19, 2016), available

at http://www.uspto.gov/sites/default/files/documents/ieg-may-2016_

enfish_memo.pdf; USPTO Memorandum to the Patent Examining

Corps (Nov. 2, 2016), available at http://www.uspto.gov/sites/

default/files/documents/McRo-Bascom-Memo.pdf; USPTO Memorandum to the Patent Examining Corps (Apr. 19, 2018), available

at http://www.uspto.gov/sites/default/files/documents/memoberkheimer-20180419.pdf.

7

Chien, The Impact of 101 on Patent Prosecution, supra.

8

Meredith Addy, Alice at Age Four: Time to Grow Up, IPWATCHDOG (Sept. 18, 2018) http://www.ipwatchdog.com/2018/09/

18/alice-age-four-grow-up/id=101447/ (“[S]ince Alice, over 810 district court decisions have addressed patent eligibility . . . about 60

[percent] found claims unpatentable under Section 101.”).

19

and Federal Circuit judges, each of whom may have a

different opinion regarding the eligibility of a particular patent claim.

The fundamental issue in the minds of many inventors remains: what is patentable and what is not?

Can I get a patent on a unique design that at some

level involves and specifically claims computer software, processing using hardware, or processing that

somehow improves the functionality of an apparatus?

Courts and the USPTO, as well as patent practitioners,

struggle with this question, and inventors, who tend to

be educated on patent issues in many cases but are

typically not legally trained, are uncertain where the

line is drawn between patentable and unpatentable inventions.

The challenges here are admittedly not trivial.

However, the present framework for evaluating patentability based on the decisions of the Federal Circuit, guidance from the United States Patent and

Trademark Office, and district court decisions, collectively result in significant uncertainty as to inventions

protectable under § 101. If a patent issues, its claims

survive challenges in multiple situations, but are ultimately invalidated by a previously unarticulated requirement, how can an inventor determine whether

pursuing her new idea is going to be worthwhile?

Significant risks face the inventor community as a

result, in addition to those who employ inventors and

those who invest in new technologies. These stakeholders must weigh the fact that patent Examiners are

20

asked to interpret Supreme Court, Federal Circuit, and

district court holdings, as well as USPTO Guidelines,

and try to consistently apply this complex body of law

and guidance to advanced technology concepts in each

patent application reviewed within a limited amount

of time. Patent Examiners are not required to be attorneys and many Examiners have no formal legal training. Once a patent issues, should the patent be the

subject of litigation, a judge may decide patent eligibility early in a case without a fully developed record

based on conflicting precedent. Businesses and investors face a heightened level of uncertainty in their research and development investments. As a result,

these stakeholders face significant hurdles when deciding to seek patent protection.

D. The Present Case Adds Further Uncertainty in Determining Patentable Subject

Matter, Particularly for Claims Reciting

Computer Software Limitations

In the underlying case, the patentable subject

matter test has been expanded from the Alice two-part

test to now include the additional “physical realm/

non-abstract application realm” requirement. This requirement presents a further challenge to determine

whether a patent claim, and specifically one tied to

computer science or computer software, is or is not patentable.

Computer technology has skyrocketed in the last

several decades, and the use of devices such as

21

smartphones, in-home assistants, smart watches,

health bands, and the like has proliferated. A number

of inventors conceive of new computer science innovations used in these and other devices, and the patentability of such innovations remains an open question.

The additional “physical realm/non-abstract application realm” requirement provided in the underlying

case is one that could arguably invalidate many or all

patent claims reciting computer software processes

currently in force, under examination, or contemplated

by an inventor.

As both this Court and the Federal Circuit have

held on several occasions, computer software is not

inherently unpatentable.9 However, this “physical

realm” or “non-abstract application realm” test could

9

See Bilski, 561 U.S. at 605 (“[U]nforeseen innovations such

as computer programs” are not “always unpatentable.”); Alice,

573 U.S. at 224 (“The fact that a computer ‘necessarily exist[s] in

the physical, rather than purely conceptual, realm’ ” is “beside the

point.”); Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335 (Fed.

Cir. 2016) (“[W]e [do not] think that claims directed to software,

as opposed to hardware, are inherently abstract. . . . Software can

make non-abstract improvements to computer technology just as

hardware improvements can, and sometimes the improvements

can be accomplished through either route. We thus see no reason

to conclude that all claims directed to improvements in computerrelated technology, including those directed to software, are abstract. . . .”); BASCOM Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016) (holding that patent

claims reciting limitations that improved prior art content filtering solutions by making them more dynamic, using computer software to improve the performance of the computer itself are valid);

In re Johnson, 589 F.2d 1070, 1076 (C.C.P.A. 1978) (“[T]he Court

in both Benson and Flook refused to hold computer programs nonstatutory subject matter per se.”).

22

potentially be interpreted by United States Patent and

Trademark Office personnel and the lower courts as a

directive to invalidate novel, nonobvious claims reciting a meritorious invention. Furthermore, the term

“non-abstract application realm” in and of itself contributes nothing beyond the initial question as to what

is “abstract.” If one does not define an “abstract” claim,

how can one establish when and whether a claim recites something in the “non-abstract application

realm”? The very language at issue in the underlying

case invites the inconsistent application of patent eligibility standards, and practically begs for different

interpretations and different results from a patent

Examiner, Patent Trial and Appeal Board judge, district court judge, and a Federal Circuit judge, as well

as by the inventor and his or her patent attorney.

Many of the current tests and guidelines represent

prohibitions that apply to invalidate clearly unpatentable concepts: claims to mathematical formulas, fundamental economic practices, and the like apply in a

number of situations to reject claims. For example, the

Alice case made the point that a claim that is an idea

of itself or is a fundamental economic practice is not

patentable. These limitations on patent eligibility are

useful in weeding out clearly unpatentable claims.

The problem lies in the nuance, or, in other words,

the devil is in the details. The clear-cut prohibitions in

Bilski, Mayo, and Alice do not address a vast number

of patent claim situations. Inventors rejected at the Patent Office or in the courts based on extensions of these

prohibitions to claims covering more complex concepts

23

can be left frustrated and without protection for their

novel ideas. A number of pending and issued claims recite technical limitations more detailed than the binary number conversion of Gottschalk v. Benson,10 the

alarm limit calculations claimed in Parker v. Flook,11

the risk hedging method of Bilski, and the computerbased escrow design of Alice.

Claims in the fields of computer science, quantum

computing, artificial intelligence, data science, robotics, cybersecurity, medical diagnostics, and computer

engineering frequently enter that grey area between

claims easily rejected and those deemed to comprise

patentable subject matter. For example, consider an invention directed to cryptocurrency and distributed

ledger technologies, such as blockchain. Arguably, this

technology is one that is completely software based,

but does not represent a “fundamental economic practice” “implemented on a generic computer.” What if an

inventor has a novel idea for improving blockchain

technology that makes blockchain operate more efficiently and has benefits to anyone transacting in cryptocurrency? One could envision claims that run afoul

of the prohibitions against fundamental economic

practices and ideas implemented on a generic computer, but one could also envision claims reciting complex cryptocurrency and distributed ledger attributes

that go beyond these basic prohibitions. Would such

a claim survive at all levels of examination and

10

11

Gottschalk v. Benson, 409 U.S. 63 (1972).

Parker v. Flook, 437 U.S. 584 (1978).

24

adjudication? Would a claim to a revolutionary advancement in distributed ledger technology be considered an “innovation in the non-abstract application

realm” as was required in the underlying case?

As a further example, an inventor who develops a

novel cybersecurity concept that is rejected or invalidated based on the conclusion that his idea is merely

one that “is not in the non-abstract realm” leaves the

hopeful inventor with nothing. Simply put, in view of

the current state of assessing patentable subject matter, and in further view of the “physical realm/

non-abstract application realm” requirement of the underling case, further refinement and articulation of the

requirements of § 101 is urgently needed.

Valuable claims in the aforementioned fields have

been unjustly rejected as “abstract” and little reason

exists to believe that more claims will not be rejected

based on the inconsistent application of patent eligibility standards, even in view of recent case law and

USPTO direction. It is this grey area that would

greatly benefit from overarching, refined patent eligibility guidance that would be uniformly applicable to

the USPTO, the Federal Circuit, and the lower courts.

E. Yet More Uncertainty From the Federal Circuit: The Nonprecedential Cleveland Clinic

Decision

While the Patent Office Guidelines appear to be

one step toward clarifying the issue, a recent nonprecedential Federal Circuit decision may represent two

25

steps in the opposite direction. Cleveland Clinic Found.

v. True Health Diagnostics LLC, No. 2018-1218, 2019

U.S. App. LEXIS 9451, at *16-17 (Fed. Cir. Apr. 1, 2019)

(nonprecedential), makes the following statement:

While we greatly respect the PTO’s expertise

on all matters relating to patentability, including patent eligibility, we are not bound by

its guidance. And, especially regarding the issue of patent eligibility and the efforts of the

courts to determine the distinction between

claims directed to natural laws and those directed to patent-eligible applications of those

laws, we are mindful of the need for consistent

application of our case law.

The Cleveland Clinic decision is nonprecedential.

However, it would be unsurprising to find the foregoing

as the position generally taken by at least some judges

of the Federal Circuit with respect to the 2019 Patent

Office Guidelines. The risk of the Federal Circuit refraining from applying the 2019 Patent Office Guidelines to claims being adjudicated is clear: an inventor

may obtain issued claims approved by the Patent Office as containing patentable subject matter according

to the 2019 Patent Office Guidelines. That same inventor litigating his Patent Office approved claims could

find, after expenditure of tens or even hundreds of

thousands of dollars defending his issued patent that

his claims do not pass muster in the eyes of the Federal

Circuit and are invalid.

*

*

*

26

The risk for inventors is therefore the uncertainty

inherent in applying for a patent on what is believed

to be a novel and nonobvious apparatus or method. The

current state of examination and adjudication in the

United States Patent Office, the district courts, and

the Federal Circuit is inconsistent and irreconcilable,

sometimes within these bodies.

There must be a better way. Guidance on these issues is needed. There must be some way to determine

clearer guidance on what constitutes an “abstract” idea

rather than leaving the decision to a particular Federal

Circuit panel, including a set of judges each with his or

her own idea of what is and what should be patentable

subject matter. In the present case, a Federal Circuit

panel has added another determination, the “physical

realm/non-abstract application realm,” that adds more

questions and uncertainty to the central inquiry of

great importance to all inventors and scientists: what

is and is not patentable? The underlying decision represents one more brick in the wall between inventors

and securing the rights to their innovations afforded to

them by Article I, Section 8 of the United States Constitution.

The present situation is one in need of intervention and clarification. Scientists, academics, engineers,

and others whose livelihoods and investments rely on

innovation depend on a level of certainty in the patent

system, and § 101 jurisprudence is anything but

27

certain. Clear guidance on the applicability of § 101

and what constitutes an “abstract” idea is warranted.

------------------------------------------------------------------

CONCLUSION

For the foregoing reasons, as well as for the reasons stated in the petition, the petition for writ of certiorari should be granted.

Respectfully submitted,

STEVEN W. SMYRSKI

SMYRSKI LAW GROUP, A P.C.

3310 Airport Ave., SW

Santa Monica, CA 90405

(310) 397-9118

steve@smyrski.com

Counsel for Amici Curiae