If the Court of Appeals for the Federal Circuit had a summer
picnic, here's one topic the judges avoided when they picked
partners for three-legged races: patent eligibility under
Section 101 of the Patent Act. The issue of what qualifies an
idea or invention for patent protection has not only driven a wedge between the U.S. Supreme Court and the Federal Circuit,
it's also created internal divisions on the appellate bench,
where different judges seem to have quite different ideas about
how to interpret the Supreme Court's recent directives.
That's an untenable situation, according to a pair of briefs
filed Wednesday at the Federal Circuit by well-known Supreme
Court litigators. Both briefs -- each of which requests en banc
consideration of the eligibility of a computer-implemented
business method patent -- argued that it's time for the entire
Federal Circuit to resolve what's now a muddle of contradictory
holdings on the appropriate standard for patentability.
In one of the briefs, WildTangent's lawyers at Latham &
Watkins asked the full Federal Circuit to decide whether
Ultramercial deserves a patent on a process for requiring online
viewers to watch an ad before being permitted access to
copyrighted content. Ultramercial's patent was previously upheld
by a three-judge Federal Circuit panel, which said that it
described "the application of an abstract idea to a 'new and
useful end.'" That decision proved to be very controversial in
the tech world, since it seemed to suggest that unpatentable
abstract ideas -- such as linking advertising to copyrighted
content -- were patentable once the Internet was invoked in a
patent application. The Supreme Court had enough doubts about
the Ultramercial patent that in May, after the high court's
ruling in Mayo v. Prometheus Laboratories, the justices vacated
the Federal Circuit's decision and remanded the case for reconsideration in light of Mayo, which reiterated the principal
that abstract ideas and laws of nature are not eligible for
patent protection.
WildTangent's new en banc petition (weighing in at 180
pages!) argued that Ultramercial can't get past the bar on
patenting an abstract idea simply by applying that idea to the
Internet. But, more broadly, the brief -- signed by former
acting solicitor general Gregory Garre of Latham -- argued that
despite the Supreme Court's directives earlier this year in Mayo
and in 2010 in Bilski v. Kappos, the Federal Circuit seems more
conflicted than ever about the eligibility of
computer-implemented patents. That uncertainty is crippling
innovation, WildTangent argued; for good measure, its lawyers
pointed to an attached amicus brief Google and Verizon submitted
in support of WildTangent's petition for certiorari earlier this
year at the Supreme Court.
"It's obvious that the Federal Circuit is internally
conflicted on the scope of Section 101," WildTangent counsel
Garre told me in an email. "Remarkably, the conflict and
confusion only has gotten worse in the wake of the Supreme
Court's unanimous decision in Mayo and the Court's telling
in Ultramercial in light of Mayo. And as technological
leaders like Google and Verizon have stressed, the growing
conflict and confusion is a real drag on innovation in this
important area. In other words, it's a perfect storm
necessitating en banc review."
Ultramercial counsel Lawrence Hadley of McKool Smith
Hennigan said in an email that WildTangent's en banc petition
"appears to be a premature effort to bypass the Federal Circuit
panel that decided the case in the first place, and may be
inconsistent with Federal Circuit procedure." The appeals court
hasn't yet given any indication of how it intends to proceed in
the case, Hadley said, and denied WildTangent's bid for en banc
review in the case's first trip to the Federal Circuit. "I
expect it to be denied again," he said.
Not if the Federal Circuit heeds the argument of CLS Bank,
which suggested in the other en banc petition filed Wednesday
that the appeals court hear both cases together. (WildTangent
actually made the same proposal in its brief.) CLS's new lawyers
at Gibson, Dunn & Crutcher raised similar assertions in the
bank's en banc petition to those put forward by WildTangent,
although the CLS case is in a different procedural posture: This
is its first en banc consideration, and CLS has the advantage of
a stinging dissent from one of the judges on the panel that
upheld Alice Corporation's business method patent on a
computer-implemented middleman in financial transactions. As
I've previously reported, the dissenter, Judge Sharon
Prost, accused the majority, judges Richard Linn and Kathleen
O'Malley, of disregarding Supreme Court precedent when they said
Alice's process was eligible for a patent. "The majority resists
the Supreme Court's unanimous directive to apply the patentable
subject matter test with more vigor," Prost wrote. "Worse yet,
it creates an entirely new framework that in effect allows
courts to avoid evaluating patent eligibility ... whenever they
so desire," she continued. "The majority has failed to follow
the Supreme Court's instructions -- not just in its holding, but
more importantly in its approach."
According to the CLS petition, signed by Gibson Dunn Supreme
Court veteran Mark Perry, the majority created an entirely new
standard for patent eligibility that "dramatically weakens"
Section 101's screening test and would permit patents on
"virtually every computer-implemented method," including those
that the Supreme Court invalidated in Bilski. "There is simply
no way," the brief asserted, "to reconcile the majority's new
test with the Supreme Court's decisions in Bilski and Mayo."
CLS counsel Perry told me in an interview that the only way
for the Federal Circuit to clear up the confusion is through an
en banc ruling that forces the entire court to agree on a
standard. "Our hope is that the Federal Circuit, sitting en
banc, will get these things sorted out. The Supreme Court has
given them the tools," Perry said. I noted that, according to
both the d i ssenting judge in the CLS case and the gene patent
challengers who lost the Myriad case (again) last week at the
Federal Circuit, some judges on the appeals court don't seem to
want to use the tools the Supreme Court has provided.
"It's clear there's a dialogue going on between the Supreme
Court and the Federal Circuit on the question of patent
eligibility," Perry said (treading carefully). "It's also clear
that that dialogue is not completed."
Alice counsel Adam Perlman of Williams & Connolly declined
to comment.
(An earlier version of this post misidentified Alice's
counsel.)
(Reporting by Alison Frankel)
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