WASHINGTON (Legal Newsline) – David Stevens doesn’t know what to tell his clients these days.
Stevens, the head of a Silicon Valley law firm – Stevens Law Group in San Jose, Calif. – provides intellectual property counseling, licensing, litigation, strategic planning and management; reexaminations; patent procurement; due diligence studies and IP audits.
But in the days since the U.S. Supreme Court issued its decision in Alice Corporation Pty. Ltd. v. CLS Bank International and CLS Services Ltd., answers are difficult to come by.
In its June 19 ruling, the nation’s high court said the claims in Alice were drawn to an abstract idea.
Implementing those claims on a computer was not enough to transform the idea to a patentable invention, the justices ruled.
Stevens – who represents some Fortune 10 companies, smaller startups and inventors – said the Supreme Court’s ruling has created a “murk” for him and other practitioners to see through.
“Here, they’re pulling these patent applications from issuance, sending out rejection letters and reopening prosecution,” he said of the U.S. Patent and Trademark Office. “They’re rejecting them based on Section 101 (of the Patent Act) and Alice, but it’s not clear exactly why the claims are being rejected. They don’t say why.
“So, then what do we tell our clients? We keep telling them we just don’t know.”
About a week after Alice, the PTO’s Deputy Commissioner for Patent Examination Policy, Andrew Hirshfeld, issued preliminary guidance to all patent examining corps.
In it, Hirshfeld pointed out there is no new category of innovation that is patent ineligible. Also, he noted, there are no new eligibility requirements for either software or business methods.
Soon after, the PTO sought public comment on the preliminary guidance – even though it wasn’t required to do so.
The final guidance still is being written.
Stevens said his larger clients are doing their best to wait for further guidance from the PTO before making any moves.
“Startups are different,” he said. “They can’t afford the late fees.”
Either way – large company or small inventor – they can wait for only so long, Stevens said.
“This is what’s going to kill innovation,” he said of the ruling and subsequent lack of guidance.
The patent troll rhetoric, he contends, is much to blame.
Generally speaking, a non-practicing entity, patent assertion entity or patent monetization entity purchases groups of patents without an intent to market or develop a product.
In some cases, but not all, the entity then targets other businesses with lawsuits alleging infringement of the patents it bought. Often, these are referred to as “patent trolls.”
“The reason why they want to kill these patents is because that’s what the trolls are enforcing,” Stevens said. “They’re sort of saying they want to throw the baby out with the bath water.
“But what they don’t realize is that they’re going to affect a lot of industries.”
Ron Katznelson – an inventor, patentee and the founder and president of Bi-Level Technologies – could end up being one of those affected.
But even he doesn’t know for sure yet.
“What does it mean for me? Well, the problem is that we don’t know what it means,” he said. “We don’t know because it’s such a wide open set of parameters. There’s no guidance for anything. There’s nothing to hang on.”
While the PTO isn’t giving guidance, neither did the Supreme Court, Katznelson pointed out.
“We have new, younger people on the court, and they’re less understanding of inventions and technology,” he said, calling the ruling “irresponsible.”
“Even if you don’t understand patent law, there’s an obligation to give guidance. They could’ve done something, but they have decided to do nothing about it.”
As a result, there’s going to be chaos, he said.
“There’s no guidance, no logic,” he said. “There’s no definition of what an abstract idea is, so you can pin it on any donkey.”
What is needed is structure, a set of rules, Katznelson said.
He said without it, fewer applications – and, most likely, appeals – will be filed.
“We’re already seeing it now,” he said. “The uncertainty is just enough to have a chilling effect.”
He continued, “It really changes the complexion of the types of businesses that people find safe to engage in. Not to mention the effort businesses, like my own, are now going to have to go through.”
Faith Driscoll, who started writing patent applications in the 1960s, agreed.
“These firms already have written these patents to satisfy the requirements of the patent statutes, and many of them only contain high levels of description (in very high levels),” she said. “Now, they’re going to have to go back to writing patents including much more detailed descriptions illustrating the applications or implementations of the inventive ideas.
“This is going to make it more costly to obtain patent protection.”
Driscoll, who spent much of her career writing applications for computer-based patents, said what is even more worrisome is just how many will end up feeling the effects.
“It’s every industry,” she said. “Everything is run by computers these days. I mean, everybody’s got a phone that’s a computer.
“It’s going to affect everybody. And if they don’t think so, well, it’s only a matter of time.”
From Legal Newsline: Reach Jessica Karmasek by email at email@example.com.