Surviving alice in the age of software innovation

©2015 INNOGRAPHY, INC. : : CONFIDENTIAL 1 ©2015 INNOGRAPHY, INC. :: CONFIDENTIAL OCTOBER 2, 2015

Surviving Alice in the Age of Software

Innovation

https://www.innography.com/

©2015 INNOGRAPHY, INC. : : CONFIDENTIAL 2

Host and Participants

• President atIPWatchdog

• Host of today’swebinar

Gene Quinn

• Partner atDrinker, Biddle& Reath

• Data correla>onengineer atInnography

Bob Stoll Maneesha Joshi

To watch the full webinar, click here.

https://go.innography.com/2015.05.28SurvivingAliceintheAgeofSoftwareInnovation_OnDemand.html



Introduction

We will discuss: •  How you can draB claims differently aBer Alice to ensure patent eligibility

•  How to respond to patent eligibility rejec>ons aBer Alice

•  Do the interim eligibility guidelines published by the USPTO provide any clues or insight into what applicants can and should do?



Background: Alice Corp vs. CLS Bank International



Maneesha: I decided to just write a sad tale just to recap the case:

Wrote Alice to the Bank: ‘License – this is no prank!’ Said the Bank to Alice: ‘I have no malice. Let us both go to law. I will prosecute you. Come I’ll take no denial. We must have a trial for really, right now I have nothing to do.

’ Seven years of complaint, claims and counterclaims, court filings, appeals and no deals; the court supreme did intervene and declared the patents abstract and Invalid.



Maneesha: “Alice corpora>on owns four patents on electronic methods and computer programs for financial trading systems and they wrote to CLS bank in 2007 asking them you know if they could license their technology and what followed was a series of complaints, counter complaints things went to the district court, the court of appeals and finally last summer the supreme court declared the patents invalid.”

2007 -‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐2014

CLS files complaint -‐à Alice counterclaims à District court àCourt of Appeals à Supreme Court declares patents invalid.

Alice Corp vs. CLS Bank International



Patent Subject Matter Eligibility Maneesha: “So the USPTO came up with some interim-‐-‐2004 interim-‐-‐guidelines on what is patent subject ma]er eligible and there are two steps to the process: Step 1 is to determine whether it’s a process, machine, manufacture or composi>on ma]er. And then step 2 involves the ques>on of whether it is a law of nature, natural phenomenon, or an abstract idea and if so-‐ what the USPTO will look at is to ensure that the claim amounts to significantly more than the judicial excep>on.”



GPS/Autonomous vehicle technology and Class 705 grants

Maneesha: “I did as Gene men>oned… looked at data that are generally related to computer programs, computer algorithms and specifically class 705. As you can see [in the graph on the next page] the trend is towards increasing grants that are of class 705 and then if you look at the [general] category not just 705 but computer programs algorithms you see that there’s a defined increasing trend. Again, not all computer programs related to class 705 so Gene had a very good idea that we look at technology such as GPS, or automated driving systems which are really the in vogue these days everybody’s talking about it you’ve seen Google-‐-‐so I’ve also decided to look at the GPS technology when it comes to computer programs and computer algorithms and again what we see here is there is an up>ck in in GPS and autonomous vehicle technology patents and those that are related to class 705 are really a small percent of this technology.”



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GPS and autonomous vehicle technology And US Class 705

GPS/Autonomous vehicle technology and Class 705 grants



Class 705 Text Clusters for All vs. Litigated Patents (1996-2014)

Maneesha: “What I also did was look at the class 705 text clusters which you can do in Innography for all the patents that were U.S. class 705 as well as just li>gated patents, and what you can tell is that the credit card category is larger in the li>gated patents versus just all of them and that’s probably obvious just because it’s related to financial transac>ons which is what 705 is about and you know that’s probably what was being li>gated.”



Litigation Cases per Court per Filing Year

Maneesha: “What I next looked at was li>ga>on cases per court per filing year for the years 1996 through last year. What you see overall is there has been an increase in li>ga>on what is interes>ng here is since the PTAB came into existence in 2012 you see that PTAB has been taking over a lot of the cases and the number of cases being filed in the district courts has gone down while the PTAB has really shot up.”

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Patents

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Texas Eastern D C

Delaware D C

PTAB

Illinois Northern D C

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PTAB Trials (Sept 2012- present)

Maneesha: “Next what I looked at was – for the PTAB cases for the PTAB trials -‐-‐the covered business method reviews as well as the IPRs and what you see here is that CBMs weren’t as many and then you see an up>ck around 2013 and then they’ve taken – you know its been more than it was when it first started perhaps CBMs are something we might want to inves>gate see what happens in the near future.”

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Maneesha: “Unfortunately data is a lagging indicator of what’s going on out there, what people are doing right now to adjust their IP strategy and IP management as far as the supreme court decision regarding Alice and other cases are concerned. So with all this data, you know, you don’t know what to do with it and going back to Alice in Wonderland it would be so nice if something made sense for a change and that’s kind of the reason why we have our expert panel today to kind of help us understand what this data means and perhaps make changes to our current IP strategy and management and be proac>ve about our strategies. Back to you Gene.”



Drafting Successful Claims



Gene: •  “Maneesha goes and shows what the PTAB is doing and

overwhelmingly those are class 705s par>cularly the CBMs, so that’s one thing, is if you’re in 705, you’re in a lot of trouble.

•  Number two, I don’t think it should be that way because there are some patents under a]ack and…

•  Number three is genng all the greatest guidance the patent office can give only ma]ers if the examiners are actually going to apply it and we hear stories all the >me about how examiners are simply not following the test I mean this flow chart – if the patents are eligible under step 2A they are not claiming a law of nature natural phenomenon or abstract idea the claims are supposed to be allowable at that stage and examiners I hear in office sec>ons are finding that well its not but s>ll go on to part 2B anyway. What do you make of all this?”

I think you have some merit to your comments but let me talk to the prac>>oners out there. I think that a skilled a]orney can draB claims so that they’re not something that would be classified in class 705, remember computer implemented inven>ons are all over the patent and trademark office, chemical plants are operated by soBware, airplanes have soBware, automobiles have soBware, soBware is basically a part of every technological inven>on, not every, but most technological inven>ons we have. So, draBing your claims in a manner that puts them in an area that finds more [allowability] is important and you and I have both looked at Patent Core which shows you allowance rates from different art units and par>cularly different examiners and we recognize that there are areas where they’re more sympathe>c to allowing cases than others. The other is prac>>oners need to put more substance into their specifica>on because I think that for example, if you have a well defined complex algorithm in your specifica>on then a func>onal claim would be supported so that’s another technique that you can use to make sure that you are one end up with a patent at the end of the day. And the third is, if there is an issue with respect to the way the examiner is handling an applica>on, I totally believe in either going to the SPE or working your way up to the manager chain of command or going to a QUAS which is a quality assurance person who will help you to convince the examiner that in fact they are not following patent office prac>ce. So you can’t sit back and just go for the ride or you’re going to not help your client in the manner that would be most efficient, you need to take ac>on to make sure that we at least during this period of very complex handling of the issue and an issue that is subject to change, I think you need to take every ac>on you possibly can to advocate for your client.



Bob: “I think that a skilled a]orney can draB claims so that they’re not something that would be classified in class 705, remember computer implemented inven>ons are all over the patent and trademark office, chemical plants are operated by soBware, airplanes have soBware, automobiles have soBware, soBware is basically a part of every technological inven>on, not every, but most technological inven>ons we have.” “So, draBing your claims in a manner that puts them in an area that finds more [allowability] is important and you and I have both looked at Patent Core which shows you allowance rates from different art units and par>cularly different examiners and we recognize that there are areas where they’re more sympathe>c to allowing cases than others.”



Bob: “The other is prac>>oners need to put more substance into their specifica>on because I think that for example, if you have a well defined complex algorithm in your specifica>on then a func>onal claim would be supported so that’s another technique that you can use to make sure that you are one end up with a patent at the end of the day.” “And the third is, if there is an issue with respect to the way the examiner is handling an applica>on, I totally believe in either going to the SPE or working your way up to the manager chain of command or going to a QUAS which is a quality assurance person who will help you to convince the examiner that in fact they are not following patent office prac>ce. So you can’t sit back and just go for the ride or you’re going to not help your client in the manner that would be most efficient, you need to take ac>on to make sure that we at least during this period of very complex handling of the issue and an issue that is subject to change, I think you need to take every ac>on you possibly can to advocate for your client.”



Gene: “Well let me stop you there and let me play a li]le bit of devil’s advocate and pick your brain as a former commissioner because in certain of the art units you listen to people who work in those areas and its not necessarily the examiners that are the problem it’s the [SPEs] that are the problem and you have examiners in those art units and the [SPEs] in those art units that seem extremely proud, they don’t issue patents unless the board orders them to. Now, why they’re telling a]orneys that I could never know because if you’re going to be that kind of malicious I don’t think you ought to tell people that but they are, they’re telling people openly that “I don’t issue patents” and I mean look at the numbers. Some of these examiners haven’t issued patents in four or five years other than the ones that the board has directly ordered them to issue and that’s a problem. So before you get to how – and I want to circle back and talk how you work around that, but how do you even prevent that from happening, is there a way that you can write the claims or the spec in order to try and direct yourself to a more friendly art unit?”



Bob: “By the nature of the draBing of your claim you’re familiar with the classifica>on system, you know how it works, you know the hierarchy you are definitely capable of wri>ng claims that would take it out of 705 if you wanted to. But I don’t think you should have to do that… “…I am kind of offended that seems to be something that I seem to need to recommend at the moment. I think we need to a]ack the issue head on, if you’ve got [SPEs] that are not following the prac>ce of the patent and trademark office we need to start going to group directors and I’m very familiar with a few of the group directors and I’ve gone to them when I’ve seen these issues and they’ve involved themselves in these cases so I think more pressure needs to occur with respect to [SPEs] that are in fact not following the instruc>ons of the patent and trademark office.”



Responding to Patent Eligibility Rejections after

Alice

https://www.youtube.com/watch?v=Vnoz5uBEWOA


Gene: “But then now, let me ask you this; would you advise somebody – if you were to wind up categorized in 705 and maybe with an art unit that doesn’t have a high allowance rate, as soon as you found that out would you file a con>nua>on and do whatever you can with the claims – to get somewhere else?”

https://www.youtube.com/watch?v=Vnoz5uBEWOA


Bob: “No, I wouldn’t, I mean I would con>nue prosecu>on where I am and I would forcefully argue for my client and I would – I would tell you the first thing I would do is an interview. I always believe in an interview, that personalized rela>onship does have a tendency to move things along, and I find that some of the examiners even in those rough art areas are more than wiling to find limita>ons that they feel provide for [allowability].”



Bob: “So I am more than willing to prosecute in 705 but I’m also willing to take it up the food chain if I feel that I’m not being treated in a manner that I think the PTO should be opera>ng. So I do not think that you would necessarily take something out of 705, however, when draBing the claim to another – to put it into the applica>on, I would consider where it’s going to end up in the manner in which I draBed the claim. So, I would not file an RCE just to get one out, I would think about how I’m formula>ng the claim before I file it.”



The Future of Software Patents after Alice

Gene: “So Bob, lets talk about the future, what do you see happening in the future? Do you think more companies are going to be filing for soBware patents, less soBware patents; the courts aren’t done yet are they?” Bob: “They’re not done Gene, but I think that the pendulum swings both ways and I think that maybe we as prac>>oners got a li]le bit sloppy in the way we were draBing our applica>ons...”



Bob: “..and what we were claiming and what were punng into our specifica>ons. I think that with more bulked up specifica>ons and be]er claim boundaries, checkpoints in the patentable subject ma]er area. I think that the pendulum will eventually swing back so I am op>mis>c that at some>me in the future we will recapture some of the subject ma]er and in the interim we will be doing a be]er job in defining the boundaries of our inven>ons.”



Take Aways from this Webinar: Bob: “I would…

…in draBing my applica>on I would put them chalk full with respec>ve informa>on. I would s>ll be pursuing claims that I think are towards my inven>on.”

Write

…be interviewing my cases with the examiners.”

Interview

…be engaging with the organiza>ons that are looking at these issues and I would advocate for broad subject ma]er eligibility.”

Engage

…work my way up the chain of manager control in order to make sure that my case is being handled in a proper manner.”

Follow up



Maneesha: “What I would like to say is that it is amazing that you can see inflec>on points and you know trends and data in response to what happens with li>ga>on cases. So if you are looking to change your strategy, maybe you could search for patents similar to what you want—the area you’re looking at. Look for patents that have been granted to get clues on how you would craB the claim and you could use Innography to narrow your searches find out what’s out there and you know look at data trends.”

Take Aways for the Listener from this Webinar:



Thank you to our host and participants: Gene Quinn – President at IPWatchDog, Inc. Robert Stoll – Partner at Drinker, Biddle & Reath LLP Maneesha Joshi – Data Correlation Engineer at Innography, Inc.

To watch the full webinar, click here.

https://go.innography.com/2015.05.28SurvivingAliceintheAgeofSoftwareInnovation_OnDemand.html


Surviving alice in the age of software innovation

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Transcript of Surviving alice in the age of software innovation