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Are Computer-Implemented Inventions Patentable? Go Ask Alice Corp.

The following is a student written article on an upcoming Supreme Court case – Alice Corporation Pty. Ltd. v. CLS Bank International. The SCOTUSBlog page for the case can be found here. Oral argument is scheduled for March 31, 2014. 

Author: C. Dylan Turner, c-turner2015@nlaw.northwestern.edu, Northwestern Law J.D. 2015

Amici have been pouring in recently in anticipation of oral arguments before the Supreme Court in Alice Corp. Pty. Ltd. v. CLS Bank Intern, scheduled to take place on March 31st. The stakes are high; the sundry decisions of Federal Circuit judges suggested that recent rulings from the Supreme Court, including Bilski v. Kappos, have put the patentability of some software at risk. The Federal Circuit’s en banc court agreed that Alice’s claims to “the management of risk relating to specified, yet unknown, future events” were invalid. This is because the Court’s rulings show that an abstract idea, implemented with no more than “insignificant postsolution activity,” is not patentable subject matter under 35 U.S.C. § 101.

One such amicus brief was filed jointly by giants of the technology sector including Google, Facebook, and Amazon.com. The brief’s opening statement reveals these companies’ stance on the issue: “Patents that merely claim abstract ideas implemented on computers or over the Internet are invalid under 35 U.S.C. § 101.” Their position is unambiguously against patentability of vague software patents. “[R]igorous and timely application of this Court’s Section 101 jurisprudence is especially important in this context because abstract software patents have become a plague on computer-related industries,” they claim.

Doctrinally, the brief draws heavily on the Court’s recent decisions, arguing that the Court’s decision in Mayo v. Prometheus applies to all areas of technology. Following the Court’s recent precedent, the companies call for an inventive step on top of an abstract idea. As for Alice’s claims to systems for carrying out risk-hedging methods, the companies argue that the claims do not reveal a specific manner of implementing the methods because how a computer carries out the method is not specified. Implementing the methods would not require a novel or complex program, and only ordinary programming knowledge would be necessary to do so. The claims are merely abstract ideas in a specific technological environment, the companies argue.

The companies also note the Federal Circuit’s reluctance to respect the Court’s decisions concerning § 101. They argue that subject matter eligibility would be eviscerated by allowing clever drafting to evade its requirements. Further, the “new and useful” requirement means that the Court’s insistence on an inventive concept is warranted by statute. Anticipation and nonobviousness requirements are insufficient to screen abstract idea patents, because, as pointed out in Mayo, a newly-discovered law of nature or abstract idea could well be found novel.

The limits of the companies’ view of abstract ideas is discussed. “The difficult, valuable, and often groundbreaking part comes next: designing, analyzing, building, and deploying the interface, software, and hardware to implement that idea in a way that is useful in daily life.” Thus, they regard the real innovation to occur in the creation of fully realized, consumer-oriented technologies. These practical applications allow others to invent around each other, they argue, encouraging new and improved products. They point out that the software industry grew and prospered before patents in the area became common starting in the late 1980s. Such prosperity is at risk due to the proliferation of weak software patents.

The companies also argue for a procedural change, asserting that subject matter eligibility should be decided at the outset of cases, and that the ruling should be as a matter of law. They call for early determination, arguing that no factfinding is needed. They noted that the Myriad Genetics decision was handed down without conduct of discovery. Finally, the companies argue against a clear and convincing evidentiary standard, since, as mentioned, they regard subject matter eligibility as a pure question of law.

“Far from promoting innovation, abstract software patents have impaired it by granting exclusive rights over high-level ideas and thereby blocking others from undertaking the truly innovative task of developing specific applications.” The ruling in Alice v. CLS Bank will reveal if the Supreme Court agrees with the sentiment of these technology giants.

2014 WL 828041 (U.S.) (Appellate Brief)

ALICE CORPORATION PTY. LTD., Petitioner, v. CLS BANK INTERNATIONAL, et al., Respondents. No. 13-298. Supreme Court of the United States.

 

Intellectual Property Law Association of Chicago – Winter Social!

JTIP is happy to promote the following Intellectual Property Law Association of Chicago (IPLAC) event.

The Intellectual Property Law Association of Chicago (IPLAC) will be hosting its third annual Winter Social on March 11th to introduce non-members to the organization. In particular, we encourage newly-admitted attorneys, attorneys practicing for a few years, patent agents, paralegals, and law students with an interest in intellectual property law to come meet current members of IPLAC and learn more about the organization along with the benefits of membership.

The event will be held on Tuesday, March 11, 2014, at Hubbard Inn, 110 W. Hubbard St. from 6:00-8:00 pm. There is no cost to attend the event.

Please RSVP by March 7, 2014 to Melaina Jobs at mjobs@mccrackenfrank.com.

NJTIP Symposium 2014

I am very pleased to announce JTIP’s 2014 Symposium begins tomorrow! We here at JTIP have been working extremely hard to bring this special event together and can’t wait to see you in attendance!

We’ve got a great schedule of panels and networking opportunities this year, so take a look at our full schedule below! My personal highlight will be Professor Peter DiCola’s participation in the “Aereo and Public Performance Rights Panel” on Friday @ 1:30 PM in Lincoln Hall. Aereo’s business model brings out some truly fascinating questions of copyright law and technology.

Also, JTIP will be live tweeting the event at our twitter. Feel free to “tweet in” your comments and thoughts under the hashtag #JTIP2014.

Registration and archival information can be found here and, as a final note, practicing lawyer will be pleased to learn that they can earn up to 3.75 CLE credits (1.25 per panel) just by attending the Symposium!

THURSDAY, FEBRUARY 27TH

6:00 PM Welcome Reception

Sponsored by Northwestern Law School’s Master of Science in Law, a one-year Master’s degree in law for scientists and engineers.  

Wieboldt Hall #440, 340 E. Superior Street

6:00 PM

7:00 PM Dinner and Keynote Speech with Commissioner F. Scott Kieff, USITC

F. Scott KieffInternational Trade Commission

Wieboldt Hall #440, 340 E. Superior Street

7:00 PM - 9:00 PM

Friday, February 28th

7:30 AM Check-In and Breakfast

Lowden Hall, Northwestern University School of Law

7:30 AM - 8:45 AM

9:00 AM Patent Assertion and Non-Practicing Entities Panel

Michael D. FriedmanOcean Tomo, LLC
Jay P. KesanUniversity of Illinois at Urbana-Champaign
Matthew LevyComputer and Communications Industry Association
Laura Beth MillerBrinks Gilson & Lione
K. McNeill TaylorRound Rock Research, LLC
Andrew WilliamsMcDonnell Boehnen Hulbert & Berghoff, LLP

Lincoln Hall, Northwestern University School of Law

9:00 AM - 10:15 AM

10:30 AM Gene Patenting Panel

Rebecca DresserWashington University at St. Louis
Bonnie Weiss McLeodCooley LLP
Kevin NoonanMcDonnell Boehnen Hulbert & Berghoff, LLP
Harry OstrerAlbert Einstein College of Medicine, Montefiore Medical Center
Laura Pedraza-FariñaNorthwestern University School of Law

Lincoln Hall, Northwestern University School of Law

10:30 AM - 11:45 AM

12:00 PM Special Luncheon Lecture by Professor Daniel Spulber on Innovation Economics

Daniel SpulberSearle Center on Law, Regulation, and Economic Growth

Lincoln Hall, Northwestern University School of Law

12:00 PM - 1:20 PM

1:30 PM Aereo and Public Performance Rights Panel

Peter DiColaNorthwestern University School of Law
Stephen R. EffrosEffros Communications
Jane C. GinsburgColumbia Law School
Andrew L. GoldsteinFreeborn & Peters LLP
Matthew SagLoyola University Chicago School of Law

Lincoln Hall, Northwestern University School of Law

1:30 PM - 2:45 PM

3:00 PM Networking Reception (co-sponsored with Intellectual Property Law Society)

Lowden Hall, Northwestern University School of Law

3:00 PM - 5:00 PM

A Second Student Look at Verizon v. FCC

The following is a student written case summary of Verizon v. FCC, 2014 WL 113946 – available on WestLaw here.

Author: Elena Endrukaite, e-endrukaite2015@nlaw.northwestern.edu, Northwestern Law J.D. 2015,

On January 14, 2014 the United States Court of Appeals – D.C. Circuit issued an opinion concerning another FCC attempt to regulate the internet communications. FCC’s interest was to compel broadband providers to treat all Internet traffic the same regardless of source—or to require, as it is popularly known, “net neutrality.”

Net neutrality, or more generally, Internet openness, concerns the relationship between broadband and edge providers. The FCC worries that the broadband providers might prefer their own content over the content of edge providers by degrading the quality of the end-user access and/or increasing fees for providing quality services. Because of this worry, FCC repeatedly attempted to regulate the communications network. Verizon challenged FCC’s recent attempt at regulation — Open Internet Order — in this case.

The Open Internet Order establishes two sets of “prophylactic rules” designed to incorporate longstanding openness principles that are generally in line with current practices. One set of rules applies to “fixed” broadband providers; the other set of requirements applies to “mobile” broadband providers.

The Order first imposes a transparency requirement on both fixed and mobile broadband providers, to “publicly disclose accurate information regarding the network management practices, performance, and commercial terms of [their] broadband Internet access services.” Second, it prohibits fixed broadband providers from “block[ing] lawful content, applications, services, or non-harmful devices, subject to reasonable network management.” Third, the Order imposes an anti-discrimination requirement on fixed broadband providers only, stating that such providers “shall not unreasonably discriminate in transmitting lawful network traffic over a consumer’s broadband Internet access service. Reasonable network management shall not constitute unreasonable discrimination.”

Verizon challenged the Open Internet Order on several grounds, including that the Commission lacked affirmative statutory authority to promulgate the rules, that its decision to impose the rules was arbitrary and capricious, and that the rules contravened statutory provisions prohibiting the Commission from treating broadband providers as common carriers.

The court considered the challenge regarding the affirmative statutory authority, concluding that FCC’s current understanding of section 706(a) as a grant of regulatory authority represented a reasonable interpretation of an ambiguous statute. Court additionally concluded that the Open Internet Order the Commission made clear that this statutory provision does not limit the Commission to using other regulatory authority already at its disposal, but instead grants it the power necessary to fulfill the statute’s mandate.

While the court affirmed the FCC’s asserted statutory authority to regulate common carriers’ treatment of internet traffic, the court ultimately vacated the FCC’s anti-discrimination and anti-blocking rules. This was because the FCC failed to establish that these rules did not impose forbidden “per se common carrier obligations.” However, the court rejected Verizon’s challenge to the Open Internet Order’s disclosure rules; holding that (1) the disclosure rules were severable from the anti-discrimination and anti-blocking rules; and (2) were not, on their own, per se common carrier obligations.

Net Neutrality After Verizon v. FCC

The following is a student written case summary of Verizon v. FCC, 2014 WL 113946 – available on WestLaw here.

Author: C. Dylan Turner, c-turner2015@nlaw.northwestern.edu, Northwestern Law J.D. 2015

The Federal Communications Commission (FCC) is charged with regulating the nation’s telecommunications networks. In a broad sense, the FCC is granted jurisdiction over “all interstate and foreign communications by wire or radio.” A recent D.C. Circuit decision, Verizon v. FCC, has important implications for the FCC’s attempts to compel broadband providers to treat all internet traffic the same regardless of source; to require, as it is popularly known, “net neutrality.” Although the court blocked the FCC’s order, the court’s decision hinged on the Commission’s own designation of ISPs.

The case centered around the FCC’s recent order imposing neutral net practices in In re Preserving the Open Internet, 25 F.C.C.R. 17905 (2010) (“the Open Internet Order ”). The Open Internet Order set out rules restricting the way data is handled by Internet Service Providers (ISPs), including disclosure, anti-blocking, and antidiscrimination requirements. The court found the latter two restrictions to be per se common carrier obligations.

Specifically, the court framed the question it faced as “whether the Commission has demonstrated that the regulations fall within the scope of its statutory grant of authority.” The regulations proposed by the Open Internet Order included a transparency requirement: that an ISP should “publicly disclose accurate information regarding the network management practices, performance, and commercial terms of [their] broadband Internet access services,” anti-blocking requirements: it prohibited fixed broadband providers from “block[ing] lawful content, applications, services, or non-harmful devices, subject to reasonable network management,” and an antidiscrimination requirement: that an ISP “shall not unreasonably discriminate in transmitting lawful network traffic over a consumer’s broadband Internet access service.”

The FCC’s classification of ISPs proved to be the deciding fact in the Court’s finding that the FCC’s order was improper. The Court found substantial evidence that section 706 of the Telecommunications Act of 1996 gave the FCC authority to regulate common carriers’ treatment of internet traffic. However, the FCC’s classification of ISPs as information-service providers excluded them from the per se imposition of common carrier obligations.

Though the D.C. Circuit did not all the FCC to go forward with its current order, it left the Commission with a possible out—reclassification of ISPs. The law on classification of ISPs originated nearly two decades ago with the Telecommunications Act of 1996. This law retained a traditional distinction between two categories of entities, telecommunications carriers, which provide only simple transmission of data, such as phone service, and information-service providers, which also process as well as transmit data. The former were to be subject to common carrier regulation, while the latter were not. In 2000, the FCC designated cable ISPs as information-service providers, freeing them from common-carrier obligations. If the FCC changes this classification, it may be able to impose net neutrality after all.

Citation: Verizon v. FCC, 2014 WL 113946

 
 

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