Dueling cert petitions give SCOTUS choice on software patent review

November 8, 2013

On Wednesday, CLS Bank filed a brief opposing U.S. Supreme Court review of a spectacularly controversial en banc decision from the Federal Circuit Court of Appeals. You probably remember the Federal Circuit ruling from last May in the CLS case: The en banc court held that Alice Corp’s computer-implemented escrow system is not eligible for patents, but couldn’t muster a majority to explain why. The 10 appellate judges ended up writing six different opinions, none of which attracted enough co-signers to provide long-sought clarity on a standard for the patent-eligibility of abstract ideas that are implemented via computers. As Alice’s lawyers at Sidley Austin explained in their certiorari petition in May, “The legal standards that govern whether computer-implemented inventions are eligible for patent protection … remain entirely unclear and utterly panel dependent.”

CLS’s counsel at Gibson, Dunn & Crutcher didn’t contest that assertion – the precedential muddle isn’t really debatable – but argued that the Federal Circuit reached the right conclusion when it found Alice’s escrow system ineligible for patenting. With three new judges on the Federal Circuit, CLS said, it makes more sense to give the new judges – Richard Taranto, a former senior partner at Farr & Taranto; Raymond Chen, the onetime solicitor general of the U.S. Patent and Trademark Office; and Todd Hughes, who most recently served in the Justice Department’s civil division – a chance to consider computer-implemented patent eligibility. “The reconstituted court is capable of settling its own internal divisions,” CLS’s brief said. Gibson Dunn actually uses seemingly irreconcilable post-CLS Federal Circuit panel decisions in Bancorp v. Sun Life and Accenture v. Guidewire to underscore its argument that the discussion of software patent eligibility is still percolating healthily in the Federal Circuit so the Supreme Court needn’t get involved.

If, however, the court does decide to take up the issue, CLS wants the justices to use Alice’s case as their vehicle. And here’s where things get interesting in the great debate over whether otherwise-unpatentable abstract ideas become eligible for patents when they’re implemented via computers. Alice isn’t the only party with a pending cert petition on software patent eligibility. The online game company WildTangent is asking for Supreme Court review of a Federal Circuit panel decision that, according to WildTangent’s counsel at Latham & Watkins, sets so low a bar for patent eligibility that just about every computer-implemented abstract idea would survive. The Alice and WildTangent cases really pose the exact same question for the Supreme Court. So which should the justices take?

You might be surprised to see what amici have to say about whether Alice or WildTangent is the better vehicle. Both Accenture and Bancorp – which were on the wrong end of Federal Circuit rulings that interpreted the Alice v. CLS precedent – filed amicus briefs urging the court to grant cert in Alice v. CLS. As the brief from an amicus group that includes Bancorp explained, the Federal Circuit chose the CLS case to be the pace-setter on computer-implemented patents. The CLS ruling came from an en banc court that considered not only a fully-developed factual record from the lower courts but also more than two dozen amicus briefs. Alice’s patents also cover a wide range of claims: computer-implemented method claims, computer-readable medium claims and system claims requiring computer hardware. Proponents of a cert grant to Alice rather than WildTangent argue that Alice v. CLS will permit the Supreme Court to address the entire spectrum of computer-implemented patent eligibility concerns, on a clean and complete record.

But the Electronic Frontier Foundation, and two groups of influential tech companies – one that includes Google and Hewlett-Packard and the other including Facebook and Twitter – argue in amicus briefs that the Supreme Court should grant cert in WildTangent v. Ultramercial. As all of the briefs point out, the WildTangent case has followed exactly the same procedural route as the last few patent-eligibility cases the Supreme Court has taken, in which the justices agreed to hear cases on their second trip to the high court, after the Federal Circuit purportedly ignored Supreme Court directives to reconsider prior rulings in light of new high-court precedent. EFF argued that because the Ultramercial patents at issue in the WildTangent case are so manifestly a computer-implemented application of an otherwise unpatentable idea (of using advertising to support copyrighted content) that the case presents a clean, clear question for the court.

The tech companies, represented by King & Spalding (Google group) and Durie Tangri (Facebook group), have another reason to support the WildTangent petition. That case came to the Federal Circuit on Ultramercial’s appeal of a dismissal ruling. According to the tech companies and WildTangent, the Federal Circuit’s decision contains language suggesting that patent-eligibility is too fact-specific a question to be decided on a motion to dismiss. The amicus briefs argue that, to the contrary, patent eligibility is a threshold question that ought to be addressed at the dismissal stage, or else patent holding companies will be able to use the leverage of continuing litigation costs to extract settlements. The amicus briefs turn what could be a disadvantage for WildTangent’s cert petition – that its case was decided without a full factual record below – into a reason for the justices to grant cert.

Meanwhile, Bancorp has a Friday deadline to file its own cert petition, and Accenture has asked for en banc rehearing by the Federal Circuit. The Supreme Court, in other words, has many paths to consider, including the possibility of waiting for the new Federal Circuit judges to weigh in. Pretty much everyone agrees that patent holders and operating companies need better answers about patent eligibility than they’ve gotten so far from the Federal Circuit. We’ll have to wait a month or so to find out whether those answers will come from the Supreme Court.

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