Alice and Vint never dated and do not have a marriage certificate. Yet, they are inexorably linked to each other in a confused cloud created by the Supreme Court that has negatively impacted the ability to obtain an enforceable patent for a computer program or software. The implications to FinTech, Saas, and IoT are far reaching. This 3-part article takes a look at the impact of the Supreme Court on IP over the last 5 years and how your company’s intellectual property can be better protected.
Vint Cerf, noted “Father of the Internet” developed the addressing scheme for what is now the World Wide Web while working for DARPA in the late 1970’s.
The “Internet Protocol” (IP) and its sibling the Transmission Control Protocol (TCP) eventually matured and outlasted dozens of standards and alternatives eventually allowing Siri and Alexa to talk to both you and your refrigerator, as well as, having the economies and communication of the world riding on them.
As an entrepreneurial technologist and executive at Loom Enterprises, I now focus on another “IP” that is even more ubiquitous throughout all sectors of industry, that is “Intellectual Property” (IP). IP comes in many forms but is always a work or invention that is the result of creativity. The US Patent and Trade Office (USPTO) is where inventors of “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” can obtain a patent. The exceptions are any laws of nature, natural phenomena, natural occurring substances, or abstract ideas. With the internet, the breadth of software and computer programs that attempt to reduce an “abstract idea” to an “invention” are literally part of all e-commerce and every internet connected device ranging from your finances to your refrigerators.
In the landmark case Alice Corp. Pty. Ltd. V. CLS Bank International (2014) the Supreme Court determined that in order for an abstract idea to become patent eligible, the abstract idea had to make the leap to becoming an “inventive concept”, not just a routine, conventional, or generic implementation. Nearly all FinTech, Saas, and IoT “works of creativity” that rely on software begin as an abstract concept. What qualifies them to make the leap to “inventive concept”?
Therein lies the confusion which the Supreme Court did not readily resolve in the marriage of Vint’s IP enabled world and Alice’s IP defining challenge. One year after the Alice the USTPO rejected well over 85% of all e-commerce patent applications. In 2015 alone, district courts invalidated 70% of all patents challenged under Alice and. The trend of successful Alice challenges is down to roughly 50% and appears to be declining.
The USPTO has provided 46 examples to attempt to clarify the USC Section 101 guidelines regarding Alice to no avail. Court and inventors have become distracted from Section 102 (novelty) and Section 103 (obviousness). The net effect has been fear of a stifling of innovation and creativity involving software products that could put the US at a distinct disadvantage in global technology leadership.
In the next 2 posts I’ll explore what your company can do to mend the relationship between Vint and Alice so that your company can better protect your IP based IP. For those of you with a more legal and scholarly bent, I’ve attached this article from Touro Law Review regarding Alice and its impact.