Study Casts New Light on Possible Impact of Alice Ruling

Like many in the patent world, we have been pleased to see the Supreme Court taking a more active role in defining and sharpening interpretation of patent law. This term, the Court is hearing six cases, which we think reflects an encouraging trend toward a more predictable patent system.

One case before the Court, Alice Corp. Pty. Ltd. v. CLS Bank International, has court watchers and patent professionals keenly concerned about how the ruling might (depending on the commentator’s perspective) strengthen or weaken the principles of patent rights.

It’s a somewhat controversial case, so we decided to take a hard look at the heart of the case to determine just how wide-ranging the Court’s ruling could be.

The question before the Court in Alice is whether “claims to computer-implemented inventions – including claims to systems and machines, processes, and items of manufacture – are directed to patent-eligible subject matter within the meaning of 35 USC § 101 as interpreted by this Court?” To determine just how many litigations actually turn on this definition, we tasked three RPX experts – two patent attorneys and a patent agent – to analyze a statistically-significant cohort of asserted patents.

Specifically, our team assessed claims in 825 patents. The pool comprised 433 randomly selected patents asserted by operating companies in 2012, and 392 randomly selected patents asserted by NPEs in 2012.

The results of the study indicate that claims to computer-implemented inventions were common, with 39% of the analyzed patents including at least one claim that should be categorized as such. Further, the study showed that NPEs were more likely than operating companies to assert patents with at least one claim to computer-implemented invention (58% of the NPE sample set vs. 21% of the operating company sample).

While conducting the study, our team also assessed whether the claims, like those in Alice, appear to be subject to a petition for covered business methods review, the procedure introduced by the America Invents Act for challenging the validity of certain patents directed to financial products and services. Using this narrower criterion, the experts concluded that three percent of the sample set included at least one claim that could be categorized as a covered business method.

While we think this study offers useful insight into the potential impact of the Court’s upcoming decision, we also remind readers that the study does not address the quality or inherent value of claimed inventions. Our goal was to quantify in general terms the scope of the issue and determine how broadly litigated software patents actually are. As the Court readies its decision in Alice, it is worth remembering that there are many examples of machine-implemented inventions – from MP3 file encoding to public-key cryptography – that would seem to be unique, significant and patent-worthy technological advances. Not all software patents are created equal, and that realization is likely to be reflected in any changes that emerge post-Alice.

Readers interested in further discussion of the study findings or in learning more about the methodology we used are invited to view the study here or contact us at whitepaper@rpxcorp.com