Friday, March 20, 2015

What the PTO should do about Alice

Last week I had the very good fortune to be a speaker at a Bloomberg BNA conference in San Francisco on the Impact of the Supreme Court on Patent Enforcement. I was invited by Wiley & Rein partners Brian Pandya, a former student of mine, and James A. Wallace. Along with Bloomberg BNA's Steffan Welch, they put together an excellent program.

I was on the panel on "Ineligibility of Abstract Ideas, Business Methods, and Naturally Occurring Substances" moderated by Jim Wallace. The slides I prepared to accompany some brief remarks are here.

I am not a fan of 101 or of the latest phrase associated with it, patent ineligibility. Ineligibility is invalidity without bothering with messy things like proof.

The only sensible part of 101 is the final phrase "subject to the conditions and requirements of this title." Those conditions and requirements are found in 102, 103, and 112. Like Annie Oakley when she compared herself to Frank Butler, those sections can sing to 101, "Anything you can do, I can do better."

Likewise, 101's judicially-created implicit exceptions -- "laws of nature, natural phenomena, and abstract ideas" -- do not need to be exceptions, implicit or otherwise. That's because there has never yet been a patent claim that passes the tests of 102, 103 and 112 that is nevertheless offensive for attempting to patent one of those exceptions. Or anyway, nobody has been able to show me such a claim. No, not even the Supreme Court, not in the most recent 101 cases and not in any earlier ones.

Whenever these judicially-created implicit exceptions have been invoked, it has been to combat advances in technology that patent examiners and judges find scary. These are cases where unfamiliarity breeds fear which is then masked as contempt.

But none of that matters if my suggestion* for the Patent Office is put into effect. Yes, I know, the PTO has ignored my advice about 101 law in the past. (See, e.g., Urgent Letter and Time-Sensitive Proposal to then-new PTO Director David Kappos, posted right before the oral argument at the Supreme Court in Bilski v. Kappos.) But the PTO/DOJ brief in Mayo gave me hope (Argument II: "The disputed claims ... are likely invalid under 35 U.S.C. 102 or 103") and regime change gives me more.
*  Because of time constraints at the San Francisco conference, I was unable to present my "What would you do about it" slides (32-53). The idea for this post is on slide 34 item C and slide 35 item A.
Many at the conference seemed happy with 101 especially because it has become a weapon to resolve cases quickly, in some cases without discovery. My suggestion should be even faster and less costly for the parties and the taxpayers, without knuckling under to the 101-first wrong-headedness. Here's how it would work:

Step 1. As soon as an Accused Infringer (AI) asserts a 101 defense in court, whether by a Rule 12 motion to dismiss or a Rule 56 motion for summary judgment, or perhaps even after an early status conference, the court notifies the PTO.
There is an alternative that would not involve direct communication between the trial judge and the PTO. By statute (35 USC 290), the clerks of the district courts must notify the PTO when a patent lawsuit is filed. The PTO could monitor all such dockets so that it would know when an AI filed a pleading with a 101 defense.
Step 2. The PTO, sua sponte, throws the patent into reexam.

The Director of the PTO has the statutory right to begin reexamination proceedings. 35 USC 303; see also 37 CFR 1.520. True, the Director has to identify relevant prior art. That, however, should not be hard if the AI has argued that the claims-in-suit cover one of the implicit exceptions combined only with well-understood, routine, conventional activities.

As mentioned in slide 12 of my talk, that phrase from Mayo, quoted with approval in Alice, has the acronym WURCA, a plural noun. The associated adjective is WURC. Finding prior art should be easy: WURCA -- if truly WURC -- will be documented in patents, patent applications, journal and media articles, websites, product advertisements and specifications, tweets, etc.

WURCA and obviousness prior art are very similar. The main difference is that obviousness prior art is identified with specificity and considered in a careful manner with intellectual rigor and honesty. WURCA are whatever a decision-maker -- judge or patent examiner -- believes they are, no evidence required, and intellectual rigor impossible by the very nature of the legal standard.

Step 3. As soon as the reexamination is declared, the court entertains a motion to stay proceedings until the reexam is completed. Absent unusual circumstances -- so unusual I can't imagine any at the moment -- the court grants the motion.

Benefits: This suggestion benefits the parties, the courts and the public because it:

a. frees up court time. Judges would not have to write Rule 12 opinions or hold status conferences or anything else until the reexamination is completed and the time has run out for all possible appeals;

b. gets rid of the baloney patents so wittily described by panelist Morgan Chu. Claims that are invalid under 103 are just as dead as claims that are patent ineligible under 101;

c. brings the matter back to the PTO, whose search the first time may have been nonexistent or inadequate;

d. gives the patent owner (PO) a chance to narrow the claims. That might save some claims from attacks under both 103 and 101;

e. discourages use of 101 as a delaying tactic or legal boilerplate with only a minor relationship to the substance of the controversy;

f. helps everyone -- courts, PTO, inventors, competitors, the public -- return to an appreciation of 103 and its powerful, intelligent standard, the HOA-TA (hypothetical ordinary artisan, time appropriate, pron. WHAT-uh), which inherently keeps pace with technological change. See slides 23-24 and, e.g., slides 20-21 in my 2012 talk to the Oregon Patent Association; and

g. saves taxpayer money because, with respect to pubic funding, the PTO is probably a much less expensive forum than is a federal district court.

Advantages over AI-initiated reexamination: Having the PTO Director start the reexamination rather than putting the onus on the AI has additional advantages in terms of fairness, efficiency and justice:

a. No waiting: The Director acts predictably and early in the litigation;

b. the PO interacts with the PTO without the AI having first characterized the prior art and the claims;

c. the AI saves the filing fee and the lawyer bills associated with the reexamination, possibly a life-saving savings for young, financially-strapped AIs;

d. the PTO gets a chance to do its job right in the specific case and to collect data concerning searches in all the cases of Director-initiated reexamination so that improvements can be made; and

e. examiners have no incentive to whitewash these patents. Compare: when the AI initiates the reexam, examiners may want to make the original issuance look good; when the Director initiates the reexam, examiners may want to do it to get it right, not just to get it done (see this post for more about the getting it right/getting it done continuum).

Now, how can I convince the PTO and courts to work together on this?
March 20, 2015; rev 0321-27, 0402