Alice: Potent, Though Not Prolific—and Still Maturing

Two years after the Supreme Court’s Alice decision, we’re starting to get some idea of its limits as well as its overall impact so far. A recent Bloomberg Businessweek article cites RPX data indicating that Alice invalidity motions succeeded 76% of the time when filed in the earliest stages of litigation and 66% when filed closer to trial. That’s a pretty strong showing. Still, Alice has not been very prolific; only about 5% of all patent litigation campaigns since mid-2014 have seen an Alice decision in one of their cases. Together, the numbers suggest Alice will become a powerful but focused doctrine.

So Alice appears to be having its intended effect, on many levels. Most Alice challenges have been confined to patents involving subject matter that the decision was expected to be most potent against: those involving business methods or generic, ancillary software.

There are some examples, though, of cases where Alice’s potency might have crept into more surprising subject matter. Some observers believe Alice is being used to neutralize patents outside the scope contemplated by the Court’s opinion. Former USPTO Director David Kappos’s assessment is that Alice has “gone too far”.

But a major decision like Alice will likely take more time to gel in the lower courts, given the lack of Supreme Court guidance on where to impose limits on the ruling’s seemingly simple holding. Regardless, even while Alice matures, its effects are real. As part of its ongoing review of Alice cases, RPX took a closer look at decisions in software-centric industries, and noted some examples worth considering in the discussion of this issue.

Synopsys v. Mentor Graphics

The case of Synopsys v. Mentor Graphics involves software technology that is ubiquitous in modern hardware design. Plaintiff Synopsys was one of the first players in the field of Electronic Design Automation, and was the top EDA company by revenue as recently as 2014, according to PricewaterhouseCoopers. EDA is a key technology field that has permitted massive increases in the complexity of semiconductor circuit design by freeing engineers from the considerable constraints of manual circuit layout. Today, chip designers rely on EDA software to create highly optimized layouts for the millions of circuit elements that now fit on a single, centimeter-sized processor. The three patents asserted by Synopsys, with its co-founder Brent Gregory named as inventor, cover an aspect of EDA called logic synthesis, which uses software to infer complex logic circuit designs based on a human designer’s higher-level description.

After nearly three years of litigation, which also included a separate infringement suit filed by Mentor Graphics against Synopsys, District Judge Maxine Chesney granted summary judgment in favor of Mentor Graphics, ruling that the three Gregory patents were invalid under Alice. Judge Chesney ruled that the invention was abstract because a human being could perform the necessary calculations by hand, despite the irony of that reasoning. In so ruling, the judge declined to accept Synopsys’s arguments that the patents involved a foundational technology in the EDA field, that the claims were “directed primarily to a computer”, and that “no human would follow the process” claimed. An appeal by Synopsys is currently pending, and it is unclear whether, and how, subsequent Section 101 case law such as Enfish might impact the outcome.

Protegrity

The Patent Trial and Appeal Board (PTAB) has also demonstrated a willingness to apply Alice liberally. One company so affected is Protegrity, a provider of various software and services related to data security, which in 2008 began asserting a portfolio of five patents related to data encryption and protection in a variety of district court lawsuits against various competitors. By 2014, following the resolution of multiple cases, two patents remained at issue in a consolidated multidistrict litigation.

In August, October, and November 2014, three of the remaining defendants, Epicor, Informatica, and Square, challenged the two patents in seven petitions for Covered Business Method (CBM) review, asserting that each was invalid for claiming the abstract idea of rule-based data access. The PTAB accepted the petitioners’ reasoning as to abstractness in final decisions issued in April, May, and June 2016. In each order, the Board rejected Protegrity’s arguments that the claimed method of data storage across multiple databases added an inventive step sufficient to save the patents. The PTAB canceled all remaining claims at issue in the campaign. Protegrity has since stipulated that it will not appeal the PTAB’s decisions, which have already resulted in six litigation dismissals.

Looking Forward

Alice has cleared away many generic software patents, probably for the better. But is it so confined, and—if not—when will its boundaries solidify? Some are already developing: the Federal Circuit’s May 2016 Enfishdecision upheld a patent on self-referential database tables—another technology grounded in software—that fell in the lower court. Enfish and the earlier DDR Holdings decision mark the first Federal Circuit checks on Alice, and we’re bound to see more. The bottom line is that Alice still has plenty of maturing to do before its long-term effects become clear.