Gibbons Law Alert
In the aftermath of the Supreme Court’s 2014 decision in Alice Corp. Pty. Ltd. v. CLS Bank International, the U.S. Court of Appeals for the Federal Circuit (CAFC) has rarely found Internet-based patent claims challenged under 35 U.S.C. § 101 and Alice to be patent-eligible. The Court’s recent decision in BASCOM Global Internet Servs., Inc. v. AT&T Mobility LLC marks just the third such occurrence.
On December 1, 2015, revised Federal Rule Civil Procedures went into effect and changed pleading requirements for patent cases. The new rules were adopted by the Supreme Court on April 29, 2015, based on recommendations of the Judicial Conference of the United States and will eliminate Form 18. Form 18 set for a bare bones requirement for patent infringement complaint and merely required the plaintiff to provide notice of its claims. Form 18 simply required: (1) an allegation of jurisdiction; (2) a statement that plaintiff owns the patents; (3) a statement that defendant has been infringing the patent by making, selling and using the device embodying the patent; (4) a statement that plaintiff has given the defendant notice of its infringement; and (5) a demand for injunction and/or damages.
Recently, the Supreme Court adopted proposed amendments to the Federal Rules of Civil Procedure, that barring any modification by congressional action, may eliminate the difference in pleading standards between patent infringement actions and all other federal actions. However, such standardization of pleading requirements may be short lived in view of the reintroduction of the Innovation Act, H.R. 9, in the House of Representatives, which proposes heightened pleading standard for patent infringement actions.
All branches of government have worked to decrease frivolous litigation by non-practicing entities (“NPEs”), or patent trolls, in order to both encourage developing technology and allow businesses to utilize that technology without a looming threat of disruptive and costly litigation. In the course of our coverage of these efforts, we have seen state and federal legislative bodies, as well as the United States Patent and Trademark Office (“USPTO”), the executive branch, and the courts, suggesting potential solutions. Congress is currently weighing a revamped version of House Judiciary Committee Chairman Bob Goodlatte’s Innovation Act bill, which seeks to reform patent litigation by focusing on pleading standards.
We previously reported on the United States Patent and Trademark Office’s issuance of new interim examination guidance in December for evaluating subject matter eligibility under 35 U.S.C. § 101. At the time, the USPTO included examples of allowable claims for nature-based products in light of previous Supreme Court rulings in Mayo and Myriad. On Tuesday, January 27, the USPTO followed up by releasing claim examples relating to abstract ideas in response to the Supreme Court’s decision earlier this year in Alice.
On December 16, the United States Patent and Trademark Office issued new interim examination guidance for evaluating subject matter eligibility under 35 U.S.C. § 101. This guidance, entitled the “2014 Interim Guidance on Patent Subject Matter Eligibility” (“Interim Guidance”), was developed in view of the recent Supreme Court decisions in Alice, Myriad, and Mayo. The Interim Guidance supplements the June 25, 2014 Preliminary Examination Instructions that we previously discussed, and supercedes the March 4, 2014 Guidance following Myriad and Mayo.
On November 12, 2014, the United States Court of Appeals for the Federal Circuit held that Ultramercial, LLC’s patent covering an eleven step process of watching a commercial as a condition of accessing free media content is invalid as covering patent ineligible material. The patent at issue, U.S. Patent No. 7,346,545 (“the ’545 patent”), claimed a method for distributing copyrighted products (such as songs, movies, books) over the Internet where the consumer receives a copyrighted product for free in exchange for viewing an advertisement, and the advertiser pays for the copyrighted content. The Federal Circuit had held the ’545 patent claimed patent eligible subject matter twice before and both times was reversed by the United States Supreme Court. This iteration saw the Federal Circuit uphold the grant of a motion to dismiss claims of infringement by the United States District Court for the Central District of California on the basis of patent-ineligibility.
We have previously posted on proposed federal and state legislation aimed at addressing the toll of patent troll litigation on the U.S. economy. To date, twenty-five states have passed or are considering legislation aimed at curbing bad-faith patent assertion through state law, either based in consumer protection or through laws directed at bad business practices. From Vermont, one of the first states to adopt such legislation, MPHJ Technology Investments LLC (“MPHJ”), an alleged patent troll, seeks the opinion of the Court of Appeals for the Federal Circuit on the issue of federal patent law preemption.
Concerns about shake-down patent assertion have prompted response at federal and state levels, from all branches of government. Proposed legislative solutions have included bills that would penalize bad faith claims, impose fines on patent assertion entities (“PAEs”) that send letters with vague allegations of infringement, or make the awarding of attorney’s fees standard in PAE patent litigations. While no legislative proposal answers all the unique challenges patent trolls represent, these lawmaking efforts have highlighted the issue and are prompting other stakeholders to meaningfully assess the holes in the current patent system.
On Friday, the Supreme Court granted a writ of certiorari in Alice Corp. v. CLS Bank Int’l (Docket No. 13-298). In this case, the Court will take up the issue of: Whether claims to computer-implemented inventions – including claims to systems and machines, processes, and items of manufacture – are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court.