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The War over Subject Matter Patentability (or 'Eligibility') Continues!!

The Feds have vacated their previous decision CLS Bank Int'l v. Alice Corp. Pty. Ltd. (Fed. Cir. July 9, 2012), which was their first decision interpreting the Supremes' March 20, 2012 Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U. S. ___ (2012)—the case where the Supremes clarified that patent claims "must add enough" to natural processes/natural laws in order to be patentable under §101 (subject matter), but failed to clarify how any other court can determine what is "enough." See, e.g., Right Result, Wrong Reason.

The lower court in the CLS Bank appeal had ruled that the computerized trading method, system, and media claims were invalid for failing to claim eligible subject matter. CLS Bank Int’l v. Alice Corp., 768 F. Supp. 2d 221 (D.D.C. 2011). In CLS Bank Int'l v. Alice Corp. Pty. Ltd. (Fed. Cir. July 9, 2012), the majority (Linn, author, and O'Malley) of the Federal Circuit 3-person panel reversed the trial court's ruling, holding "that the system, method, and media claims at issue are not drawn to mere 'abstract ideas' but rather are directed to practical applications of invention falling within the categories of patent eligible subject matter defined by 35 U.S.C. §101" (p. 2).

The third judge, Prost, dissented, stating not only that "the asserted patent claims are abstract ideas repackaged as methods and systems," but that the majority was effectively ignoring "the Supreme Court’s unanimous directive to apply the patentable subject matter test with more vigor" (referring to Mayo). CLS Bank Int'l, dissent, pp. 1, 2.

Today, the Feds' vacated the split CLS Bank decision, and requested the parties (and the PTO and anyone else who cares to) address the following questions:

a. What test should the court adopt to determine whether a computer-implemented invention is a patent ineligible "abstract idea”; and when, if ever, does the presence of a computer in a claim lend patent eligibility to an otherwise patent-ineligible idea?

b. In assessing patent eligibility under 35 U.S.C. § 101 of a computer-implemented invention, should it matter whether the invention is claimed as a method, system, or storage medium; and should such claims at times be considered equivalent for § 101 purposes?

Here's another question one might ask: does this have anything to do with yesterday's N.Y. Times article The Patent, Used as a Sword, making the argument (based, as usual, on anecdotes and one or two "expert" opinions) that the "software patent system ... is so flawed that it often stymies innovation." That article did refer to Judge Richard A. Posner's recent anti-patent decision (dismissing the N.D.Ill. Apple v. Samsung case), recent anti-patent article (Why There Are Too Many Patents in America - The Atlantic - July 12, 2012), and several personal email responses and a telephone interview from Judge Posner himself.

Past a Certain Point, Contracts are Only Words on Paper (Part 2)

This follows up on a previous blog entry (Past a certain point, contracts are only words on paper) concerning a personal bugbear of mine: the assumption, by some attorneys, of the absolute power of the words of a contract. They aren't, they never were, and they never will be.

This is a pretty minor example, but I think a telling one. In Mitek Sys. v. United Services Automobile Assoc., D.Del. 12-cv-462 (2012-08-30) (Sleet, J.), the forum selection clause of the licensing agreement between the parties stated:

[A]ny suit or action filed to enforce or contest any provision of this Agreement, or the obligations imposed, shall be brought and prosecuted in a court of competent jurisdiction sitting in the State of Delaware.

Judge Sleet held that the first-filed rule trumped the contract and ordered the case transferred to the Western District of Texas, where USAA had filed suit against Mitek two weeks before. Id., p. 5 (" ... the court will not enforce the Delaware forum selection clause of the License Agreement ... ").

What I find telling is that USAA didn't even focus on the public policy arguments for ignoring the forum selection clause—it appears the judge made those arguments pretty much by himself, while USAA instead argued that other agreements (with Texas forum selection clauses) superseded the contract with the Delaware forum selection clause. In other words, USAA's lawyers were so blinded by the clear wording of the contract with the Delaware forum selection clause (and their assumption that such words in a contract are absolute) that the only way they saw out of it was to argue other agreements must apply. Judge Sleet, knowing the law and possessing common sense, didn't waste his time:

The parties' devote a significant amount of their briefing to this issue, but for the moment the court will assume that the 2006 License Agreement, with its Delaware forum selection clause, was not superseded by the later Confidentiality Agreement and does control here.
[The court completely rejects] Mitek['s] argu[ment] that the presence of the [forum selection] clause defeats the ordinary application of the first-filed rule ...
No [exceptions] are presented here to justify a departure from the ordinary rule favoring the forum of the first-filed action.
Id., pp. 5, 6-7 (emphasis in orginal)

Contracts are not absolute; they never were, and they never will be.

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