State of Innovation

Patents and Innovation Economics

Supreme Court Alice v. CLS Decision

The long awaited decision by the Supreme Court in Alice v. CLS Bank came out on June 19, 2014, while I was away giving a talk at Atlas Summit 2014, which is why this post has been delayed.  Even in the statement of the question presented in the case the Court got it wrong:

The question presented is whether these claims are patent eligible under 35 U. S. C. §101, or are instead drawn to a patent-ineligible abstract idea.

Abstract ideas are not an exception to section 101, despite a long line of nonsense by the court.  Every invention is an abstract idea in that it describes a class of things, not a specific instance.  The failure (purposeful) of the Court to define what they mean by an “abstract idea” has resulted in an incomprehensible standard.

An abstract idea is a thought or conception that is separate from concrete existence or not applied to the practical.  From this definition, it is clear that if an inventor were to describe an “abstract idea” it would be a section 112 issue, not a 101 issue.  In this case, Alice describes and claims a concrete existence that is applied to the practical problem of settlement risk that saves billions of dollars a year.  Note using any rational definition of abstract idea, means it would not be a “process, machine, manufacture, or composition of matter.”  Therefore the abstract ideas exception is just redundant.  But the Court is unable to think logically, so instead of applying the statute, they make up the law as they go along.

In any event, we need not labor to delimit the precise contours of the “abstract ideas” category in this case. It is enough to recognize that there is no meaningful distinction between the concept of risk hedging in Bilski and the concept of intermediated settlement at issue here. Both are squarely within the realm of “abstract ideas” as we have used that term.

Biliski did not claim or describe “risk hedging” and Alice did not describe “intermediate settlement” any more than the patent for the LASER described “light making.”  The Court’s characterization of these inventions with two word tag lines is intellectually dishonest.

Note the Court admits that they refuse define what they mean by abstract idea.  Failure to define one’s terms is the hallmark of charlatans and tyrants.  The Court’s statement means that no one can know what will be considered an abstract idea until the Supreme Court rules.  This is a judicial power grab.

Below the Court tries to justify what is clearly an absurd position.

The fact that a computer “necessarily exist[s] in the physical, rather than purely conceptual, realm,” Brief for Petitioner 39, is beside the point. There is no dispute that a computer is a tangible system (in §101 terms, a “ma­chine”), or that many computer-implemented claims are formally addressed to patent-eligible subject matter. But if that were the end of the §101 inquiry, an applicant could claim any principle of the physical or social sciences by reciting a computer system configured to implement the relevant concept.

But what petitioner characterizes as specific hardware—a “data processing system” with a “communications controller” and “data storage unit,” for example, see App. 954,958, 1257—is purely functional and generic. Nearly every computer will include a “communications controller” and “data storage unit” capable of performing the basic calculation, storage, and transmission functions required by the method claims.

A computer is a machine and those are covered by 101.  The Court is intellectual dishonest or just plain stupid when they state “an applicant could claim any principle of the physical or social sciences by reciting a computer system configured to implement the relevant concept.”  Alice never said any such thing, but because the Justices are incompetent in reading claims and computer technology, they ignore the claims and description, and come up with their own characterization.

Here they again prove they cannot read the claims and instead paraphrase them, of course ignoring any part they find inconvenient.

The representative method claim in this case recites the following steps: (1) “creating” shadow records for each counterparty to a transaction; (2) “obtaining” start-of-day balances based on the parties’ real-world accounts at exchange institutions; (3) “adjusting” the shadow records as transactions are entered, allowing only those transactions for which the parties have sufficient 8resources; and (4) issuing irrevocable end-of-day instructions to the exchange institutions to carry out the permitted transactions. See n.2, supra.

The Court then proceeds to suggest that there is some sort of balancing test to 35 USC 101.

The former “would risk disproportionately tying up the use of the underlying” ideas, id., at ___ (slip op., at 4), and are therefore ineligible for patent protection. The latter pose no comparable risk of pre-emption, and therefore remain eligible for the monopoly granted under our patent laws.

Balancing tests are inherently unconstitutional.  A nation of laws is based on Natural Rights and clearly delineated laws.  A balancing test turns that into a nation of men.  Judges like them because they are the “men” so it is an inherent power grab.  The Constitution requires the Rights of Inventors be secured.  It does not allow for judicial balancing of inventors’ rights.

The Court then ignores the 1952 Patent Act and deconstructs the claims, which not only violates 35 USC 103, but is illogical (every invention is a combination of existing elements – conservation of matter and energy).  In addition, it brings back the discredited idea of “inventive concept”, which the 1952 Patent Act specifically was directed at eliminating.

To answer that question, we consider the elements of each claim both individually and “as an ordered combination” to determine whether the additional elements “transform the nature of the claim” into a patent-eligible application. Id., at ___ (slip op., at 10, 9). We have described step two of this analysis as a search for an “ ‘inventive concept’”—i.e., an element or combination of elements that is “sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.” Id., at ___ (slip op., at 3).

It would be nice if the Justices could actually read a statute.

The following statement shows the intellectual dishonesty of the court.

A claim that recites an abstract idea must include “additional features” to ensure “that the [claim] is more than a drafting effort designed to monopo­lize the [abstract idea].” Id., at ___ (slip op., at 8–9). Mayomade clear that transformation into a patent-eligible application requires “more than simply stat[ing] the [ab­stract idea] while adding the words ‘apply it.’Id., at ___ (slip op., at 3).

Alice’s patent application never said any such thing.  The Justices should be impeached for this sort of outrageous characterization.

Here again, the Justices prove they have no idea how to read a claim.

On their face, the claims before us are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk. Like the risk hedging in Bilski, the concept of intermediated settlement is “ ‘a fundamental economic practice long prevalent in our system of commerce.’” Ibid.; see, e.g., Emery, Speculation on the Stock and Produce Exchanges of the United States, in 7 Studies in History, Economics and Public Law 283, 346–356 (1896) (discussing the use of a “clearing-house” asan intermediary to reduce settlement risk).

The claims are not drawn to anything.  This is just an attempt to ignore the limitations of claims to smear the invention.  The LASER is a part of the fundamental practice of creating light that has been known before for millions of years.  Does that mean it should not have been patentable?

 

Conclusion

The bottom line on this case is the Court is opposed to patents that cover financial products.  Alice and Biliski are Wall Street protection act decisions.  It is impossible to draw any conclusions broader than the Court will not allow patents on financial products.  This is not logic and it is not law.  It is time that we withdraw the Supreme Court’s jurisdiction over patent cases.  Not one of the Justices or their aides are legally or factually competent to be patent attorneys, and the consequences of their incompetence are just too high.

 

Advertisements

July 2, 2014 - Posted by | -Law, -Philosophy, Patents | ,

5 Comments »

  1. Dale,

    As pointed out in my blog posting:
    http://patentu.blogspot.com/2014/06/perky-parrots-of-patent-haters-club.html

    The malificient nine are merely lifting from the briefs of chosen ones of the frenemies of the court.

    Comment by step back | July 2, 2014 | Reply

  2. Dale,

    Is there going to be 2014 video of your talk to match the Where is JG now video?
    http://www.atlassociety.org/as/where-john-galt-carla-gericke

    Let us know when it comes up
    Thanks

    Comment by step back | July 2, 2014 | Reply

  3. HI Step back,

    I was told a video of my talk should come out by the end of summer. I will post it, when I am told it is up.

    It is so sad to see our industry destroyed by such a bunch on nit wits.

    Comment by dbhalling | July 2, 2014 | Reply

  4. Dale,

    I suspect that at the end of the day we are all perceived by some group of “others” as nit wits.
    Luckily, the case with most of us is that we are harmless NW’s. Not so with SCOTUS though.
    Not so with POTUS and Congress too.

    They can unwittingly do great harm by for example, ripping down the well thought out scheme behind the 1952 Patent Act and replacing it with a charade. How long will it take before inventors around the country realize the US government is making false promises, i.e. disclose your invention to the public first and then trust us that we will “secure” for you exclusive rights in your invention?

    Comment by step back | July 3, 2014 | Reply

  5. Step back,

    There is an objective reality and logic, both of which it is clear the Justices did not follow. That opinion would get an F in any freshman english composition class.

    The 1952 Act was still a political compromise. Section 101 should be re-written, 103 should be eliminated, and a coherent definition of what an invention is, should be added to the statute. Note 102 & 103 are not about whether something is an invention, but who is the inventor. Oh yeah and a clear definition of what an inventor is and no Congress cannot come up with any arbitrary definition.

    Comment by dbhalling | July 3, 2014 | Reply


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: