Last week, a bunch of banks won a major federal appellate court victory. That’s no surprise, of course, but the case nonetheless signals slow but steady progress in the otherwise dismal field of patent law, particularly as it applies to patents involving matters of abstract reasoning like computer software and business methods.


First, a refresher. Surely you remember how a bill becomes a law. But what happens when the bill doesn’t say much, and it’s left to the Executive Branch and the Judiciary to figure out what it means?


That, in a nutshell, is what has happened with the Patent Act. Congress passed a law way back in 1793 providing patent protection for “any new and useful art, machine, manufacture or composition of matter and any new and useful improvement on any art, machine, manufacture or composition of matter.” The only real difference after 1952 is the addition of the term “process” in lieu of “art,” with a definition of “process” so expansive — e.g., the “term ‘process’ means process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material” — that it makes the word virtually limitless.


Back in 1952, Congress enacted a couple changes around the fringes — without reconsidering the core text of the statute — for a variety of reasons, including because, when it came to assessing whether an invention really deserved a patent, “judges did whatever they felt like doing according to whatever it was that gave the judge his feelings—out of the evidence coupled with his past mental conditioning—and then selected those precedents which supported his conclusions.” George M. Sirilla & Hon. Giles S. Rich, 35 U.S.C. 103: From Hotchkiss to Hand to Rich, the Obvious Patent Law Hall-of-Famers, 32 J. Marshall L. Rev. 437, 501 (1999). The 1952 Act was supposed to fix that by replacing judicially-created standards for “inventiveness” and the like with an objective test for “obviousness.”


That’s pretty much been the course ever since then: Congress hasn’t made much effort to define the limits of patent law, and so it’s determined by way of a strange triangulation between the U.S. Patent Office, which issues patents in the first place, the Federal Circuit Court of Appeals, the one and only court to which plaintiffs in patent cases have a right to appeal, and, the Supreme Court, which occasionally grants certiorari and gives the lower courts guidance. It is not a healthy way to run a patent system; neither executive agencies nor courts are particularly well-suited to consider and to address large societal changes like, say, the rise of the digital computer, which took place almost entirely after the last major revision to the Patent Act more than half a century ago.


Yet, somebody has to do the job, and the bulk of that work has fallen to the Federal Circuit. Last week, they issued a doozy of an en banc opinion in CLS Bank v. Alice Corp. The JURIST’s Paper Chase has links to the software patents at issue. Frankly, it’s hard to call any of them “inventions.” The “inventors” didn’t actually make anything; instead, they tried to shoehorn some ideas for software code — which is already protected by copyright — into the definition of a “process” or a “machine.” This is only allowed because courts have said it’s allowed, not because of any indisputable argument for calling a general description of  software running on a computer a “process” or a computer with a certain type of software on it a “machine” in the same ways those terms were understood in 1952.


The opinion, in which seven of the ten Federal Circuit judges agreed the “inventions” in the patents weren’t really worthy of patent protection, has garnered significant press. It’s unfortunate that there wasn’t any agreement by a majority of judges for why the inventions weren’t eligible for patent protection, but it’s quite fortunate that a significant majority of the Federal Circuit held that the abstract claims at issue in the case — in essence, the “inventions” were nothing more than general descriptions of how to make software that help financial traders in particular circumstances — shouldn’t have been granted patents. 


Judge Kimberly Moore filed a dissent claiming that “if all of these claims, including the system claims, are not patent-eligible, this case is the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents.” Frankly, many people (including myself) would consider that a good thing. The EFF, which filed an amicus brief, has asked the Supreme Court to pick up the case and clarify again — as Bilski v. Kappos failed to do — the scope of patentability.


If you want a more detailed review, consider Patently-O or IPWatchDog. I write more to address Chief Judge Rader’s “Additional Reflections” at the end of the opinion, where, as part of his argument that the court should consider some types of software patents to be within the scope of patentability, he recommends the court “consult the statute!” To wit:


The statute offers a patent to both inventions and discoveries, including simply an improvement on a known process or product. The statute further directs that even the mere new use of an old machine is eligible for patenting, with, of course, a high obstacle of meeting the conditions of patentability set forth in Sections 102 and 103 of the Patent Act ahead. … [T]he Supreme Court long ago held that Section 101 is not a “condition of patentability.”

[T]o inject the patentability test of “inventiveness” into the separate statutory concept of subject matter eligibility makes this doctrine again “the plaything of the judges who, as they became initiated into its mysteries, delighted to devise and expound their own ideas of what it meant; some very lovely prose resulting.” Giles S. Rich, Principles of Patentability, 28 Geo. Wash. L. Rev. 393, 404 (1960).


I commended Chief Judge Rader two months ago for his pragmatic understanding of how patent trolls work, and there is a superficial appeal to his “consult the statute” argument, but the truth is that we are a long way from 1952, both of terms of the inventions that drive — and hinder — our economy, and in terms of the considerable baggage of precedent now attached to the Patent Act. Given Congress’ decision not to legislate with any further detail, patent law is already “the plaything of the judges,” and they should not absolve themselves of responsibility by pretending otherwise.