Readers may recall that in our July newsletter we reported on the wonderland Supreme Court decision in Alice v. CLS Bank. The offspring of the mischief that decision created have now formed a deluge of cases during the past month and a half (for example, see the above article).
To briefly review, the Court has grafted onto statutory (Congress enacted) patent law the concepts that one cannot obtain a patent on a law of nature, a natural phenomenon, or an abstract idea. In particular, the Court has refused to define what it means by “abstract.” In fact, in Alice, the Court expressly refused to delimit the contours of what an abstract idea is. Like its previous case of In Re Bilski, which also concerned an “abstract” business method, the Court in Alice decided another well established business method was abstract. Further, the Court said that merely using a generic computer to implement the abstract method does not make the method patentable. One could conclude that well established business methods were abstract and the matter could end there.
However, the language in Alice can and has been read more generally to suggest that methods of organizing human interactions are mere ideas and therefore are abstract. Following this suggestion in Alice, the lower courts have been having a field day declaring that granted patents are invalid because they merely implement an abstract idea with a computer. So far approximately (at last count) 12 issued patents have been declared invalid during August and September. A few examples: 1) a method of guaranteeing a financial transaction over the internet; 2) a method of playing bingo repetitively with many numbers; 3) a method for exchanging identities between anonymous parties on the internet; 4) a method of up-selling over the internet (pointing out additional items a buyer may want); 5) a method of exchanging loyalty points accrued from one vendor with another vendor; 6) a computerized method for rounding-up credit and debit transactions to the nearest dollar and then using the money for special use; and finally, 7) a non-business method claim for a method to animate lip synchronization with sound and facial expressions of animated characters.
Where this will all end is up in the air. We will continue to pay close attention to the currents of the developing case law in order to best advise our clients. Needless to say, a lot of time, money, and effort expended by inventors to obtain their patents has been undercut by the Court without statutory basis or clear guidance. It may well be time for Congress to step in and try to clean up the mess.
— Laurence Weinberger, Esq.