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`No. 19-353
`
`In The
`Supreme Court of the United States
`
`-------------------------- ♦ ---------------------------
`
`TRADING TECHNOLOGIES INTERNATIONAL, INC.,
`Petitioner,
`
`
`
`
`v.
`
`
`
`IBG, LLC AND INTERACTIVE BROKERS, LLC,
`Respondents.
`
`-------------------------- ♦ --------------------------
`On Petition for a Writ of Certiorari to the United
`States Court of Appeals for the Federal Circuit
`
`-------------------------- ♦ --------------------------
`
`BRIEF OF AMICUS CURIAE IGT
`IN SUPPORT OF PETITIONER
`
`-------------------------- ♦ --------------------------
`
` Todd P. Blakely
` Counsel of Record
`Douglas W. Swartz
`Matthew R. Ellsworth
`Matthew C. Holohan
`SHERIDAN ROSS P.C.
`1560 Broadway, Suite 1200
`Denver, CO 80202
`(303) 863-9700
`Counsel for
`Amicus Curiae IGT
`
` Dated: October 18, 2019
`
`THE LEX GROUPDC (cid:105)(cid:105) 1050 Connecticut Avenue, N.W. (cid:105) Suite 500, #5190 (cid:105) Washington, D.C. 20036
`(202) 955-0001 (cid:105) (800) 856-4419 (cid:105) www.thelexgroup.com
`
`
`
`i
`
`QUESTIONS PRESENTED
`
`inventions
`1. Whether computer-implemented
`that provide useful user functionality but do not
`improve the basic functions of the computer itself are
`categorically ineligible for patent protection.
`
`
`its
`the Court should overrule
`2. Whether
`precedents recognizing the “abstract idea” exception
`to patent eligibility under the Patent Act of 1952.
`
`
`
`
`
`ii
`
`TABLE OF CONTENTS
`
`
`
`Page
`
`QUESTIONS PRESENTED ........................................ i
`TABLE OF AUTHORITIES ...................................... iii
`INTEREST OF AMICUS CURIAE ............................ 1
`SUMMARY OF ARGUMENT .................................... 1
`REASONS FOR GRANTING THE PETITION ......... 3
`I. The Court Should Grant Review to Restore
`Consistent Patent Protection to Software
`Innovations. .......................................................... 3
`A. The Federal Circuit Has Created
`
`Chaos in the Field of Software
`
`Patents. .......................................................... 3
`B. The Federal Circuit’s Section 101
`
`Chaos Is Harming American Innovation. .... 9
`C. Review by this Court is Necessary
`
`to Clarify Section 101 Law. ......................... 14
`II. The Court Should Revisit the “Abstract
`Idea” Exception. ................................................. 17
`CONCLUSION ......................................................... 23
`
`
`
`
`
`
`
`iii
`
`TABLE OF AUTHORITIES
`
`Page(s)
`Cases
`Aatrix Software, Inc. v. Green Shades Software, Inc.,
`882 F.3d 1121 (Fed. Cir. 2018) ................................ 4
`Alice Corp. Pty. Ltd. v. CLS Bank Int’l,
`573 U.S. 208 (2014) ....................................... passim
`American Axle & Mfg., Inc. v. Neapco Holdings LLC,
`___ F.3d ____, 2019 WL 4865832
`(Fed. Cir. 2019) ...................................................... 17
`Ancora Techs., Inc. v. HTC Am., Inc.,
`908 F.3d 1343 (Fed. Cir. 2018) ................................ 4
`
`Ass’n for Molecular Pathology v.
`Myriad Genetics, Inc.,
`569 U.S. 576 (2013) ............................................... 15
`
`Athena Diagnostics, Inc. v. May Collaborative
`Servs., LLC,
`Case No. 19-430 ....................................................... 8
`Berkheimer v. HP Inc.,
`890 F.3d 1364 (Fed. Cir. 2017)
`(Lourie, J., concurring) ................................ 7, 19, 20
`Bilski v. Kappos,
`561 U.S. 593 (2010) ......................................... 18, 22
`Bridge and Post, Inc. v. Verizon Comms., Inc.,
`No. 2018-1697, 2019 WL 2896449
`(Fed. Cir. July 5, 2019) .................................... 3, 5, 6
`
`
`
`iv
`
`Cellspin Soft, Inc. v. Fitbit, Inc.,
`927 F.3d 1306 (Fed. Cir. 2019) ................................ 4
`Chamberlain Group, Inc. v. Techtronic Indus. Co.,
`935 F.3d 1341 (Fed. Cir. 2019) .............................. 17
`ChargePoint, Inc. v. SemaConnect, Inc.,
`920 F.3d 759 (Fed. Cir. 2019) ................................ 17
`Cleveland Clinic Found. v. True Health
`Diagnostics LLC,
`760 Fed. Appx. 1013 (Fed. Cir. Apr. 1, 2019) ... 15, 16
`Diamond v. Chakrabarty,
`447 U.S. 303 (1980) ............................................... 21
`Diamond v. Diehr,
`450 U.S. 175 (1981) ....................................... passim
`Eldred v. Ashcroft,
`537 U.S. 186 (2003) .......................................... 11-12
`Federal Trade Comm’n v. Actavis, Inc.,
`570 U.S. 136 (2013) (Roberts, C.J., dissenting) .... 11
`Halo Elecs., Inc. v. Pulse Elecs., Inc.,
`136 S. Ct. 1923 (2016) (Breyer, J., concurring) .... 11
`In re Gitlin,
`775 Fed. Appx. 689 (Fed. Cir. June 13, 2019) ........ 4
`Interval Licensing LLC v. AOL, Inc.,
`896 F.3d 1335 (Fed. Cir. 2018)
`(Plager, J., concurring-in-part and
`dissenting-in-part) ............................................. 7, 19
`Kewanee Oil Co. v. Bicron Corp.,
`416 U.S. 470 (1974) ............................................... 12
`
`
`
`v
`
`Mayo Collaborative Servs. v. Prometheus Labs., Inc.,
`566 U.S. 66 (2012) ..................................... 11, 15, 19
`Mazer v. Stein,
`347 U.S. 201 (1954) ............................................... 12
`Parker v. Flook,
`437 U.S. 584 (1978) ............................................... 15
`Sears, Roebuck & Co. v. Stiffel Co.,
`376 U.S. 225 (1964) ............................................... 12
`
`Smart Sys. Innovations, LLC v.
`Chicago Transit Auth.,
`876 F.3d 1364 (Fed. Cir. 2017)
`(Linn, J., dissenting in part and
`concurring in part)................................................... 7
`Solutran, Inc. v. Elavon, Inc.,
`931 F.3d 1161 (Fed. Cir. 2019) ................................ 3
`SRI Int’l, Inc. v. Cisco Sys., Inc.,
`930 F.3d 1295 (Fed. Cir. 2019) ........................ 4, 5, 6
`
`State Street Bank & Trust Co. v.
`Signature Fin. Group, Inc.,
`149 F.3d 1368 (Fed. Cir. 1998) .................. 13, 14, 22
`Uniloc USA, Inc. v. ADP, LLC,
`772 Fed. Appx. 890 (Fed. Cir. May 24, 2019) ......... 4
`Univ. of Fla. Res. Found., Inc. v. General Elec. Co.,
`916 F.3d 1363 (Fed. Cir. 2019) ................................ 4
`Voit Techs., LLC v. Del-Ton, Inc.,
`757 Fed. Appx. 1000 (Fed. Cir. Feb. 8, 2019) ......... 4
`
`
`
`vi
`
`Constitutional Provisions
`U.S. Const., Art. I, § 8 .......................................... 2, 11
`Statutes
`35 U.S.C. § 101.................................................. passim
`35 U.S.C. § 102.......................................................... 20
`35 U.S.C. § 103.......................................................... 20
`Other Authorities
`H.R. Rep. No. 1923, 82d Cong., 2d Sess. (1952) ...... 21
`https://mailchi.mp/7577d6bb6612/collins-calls-
`for-new-patent-eligibility-test-following-
`flawed-court-ruling ................................................ 17
`https://www.tillis.senate.gov/services/files/E8ED
`2188-DC15-4876-8F51-A03CF4A63E26 ................. 9
`S. Rep. No. 1979, 82d Cong., 2d Sess. (1952) ........... 21
`Sens. Coons and Tillis and Reps. Collins,
`Johnson, and Stivers Release Section 101
`Patent Reform Framework, Apr. 2019,
`https://www.coons.senate.gov/news/press-
`releases/sens-coons-and-tillis-and-reps-collins-
`johnson-and-stivers-release-section-101-
`patent-reform-framework ....................................... 8
`U.S. GOV’T ACCOUNTABILITY OFFICE,
`GAO-13-465, INTELLECTUAL PROPERTY:
`ASSESSING FACTORS THAT AFFECT PATENT
`INFRINGEMENT LITIGATION COULD HELP
`IMPROVE PATENT QUALITY 12 (2013) ............... 13, 14
`
`
`
`vii
`
`Rules
`SUP. CT. R. 37.6 ........................................................... 1
`Regulations
`2019 Revised Patent Subject Matter Eligibility
`Guidance. 84 Fed. Reg. 4 (Jan. 7, 2019) ........ 16, 22
`
`
`
`
`
`1
`
`INTEREST OF AMICUS CURIAE
`IGT is the world leader in gaming technology
`creation and development. IGT and its related
`companies holds thousands of patents to gaming
`innovation, including patents covering innovative
`features of gaming systems, gaming machines and,
`lottery gaming systems. IGT has licensed portfolios
`of its patents to other noteworthy companies in the
`gaming industry. This case presents questions about
`the eligibility of software as patentable subject matter
`under 35 U.S.C. § 101 (“Section 101”) which may
`impact patents for certain features of IGT’s products.
`The Court’s decision in this case could have an impact
`on patents that IGT owns and has licensed to other
`companies.1
`SUMMARY OF ARGUMENT
`This case presents an important opportunity for the
`Court to address the serious damage being inflicted
`on a large swath of American industry that relies on
`software innovation including agriculture, artificial
`intelligence, computer security, education, energy,
`healthcare, gaming, financial services, internet and
`telecommunications, brought about by the Federal
`Circuit’s tortured and inconsistent application of the
`patent eligibility requirements of Section 101.
`Contrary to this Court’s precedents and clear and
`binding statutory law, the Federal Circuit has created
`
`1 Pursuant to SUP. CT. R. 37.6, IGT affirms that no counsel for a
`party authored this brief in whole or in part and that no person
`other than IGT and its counsel made a monetary contribution to
`its preparation or submission. Counsel of record for all parties
`received notice at least 10 days prior to the due date of the
`intention of amicus to file this brief. All parties consented to the
`filing of this brief.
`
`
`
`2
`
`an improper per se test for patent eligibility for
`software-based inventions under Section 101, viz.,
`that software innovations are eligible for patent
`protection only if such innovations improve the basic
`functions of the computer itself. This test has no basis
`in law, thwarts the fundamental intent of Article I,
`Section 8 of the Constitution and its implementation
`leaves extremely important software innovations with
`significantly reduced protection under U.S. patent law.
`The situation is so dire that Federal Circuit judges
`have implored intervention and guidance to clarify
`Section 101 jurisprudence. The need for this guidance,
`so deeply felt across nearly every aspect of the
`American economy in the years since the Court’s
`decision in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573
`U.S. 208 (2014), has now been expressed by the sole
`Court of Appeals charged with interpreting U.S.
`patent law. Respectfully, it is time for this Court to
`once again clarify Section 101 eligibility as it applies
`to software innovations.
`irreconcilable
`The Federal Circuit’s deeply
`precedents in this area prove that this Court’s
`judicially-created “abstract idea” exception to Section
`101 patentability is unworkable in its present form.
`The current test is so completely subjective and
`unpredictable that it has reduced the once vaunted and
`valuable U.S. Letters Patent to a highly questionable
`property right that at times is not worth the paper it
`is printed on. For example, by conflating the novelty
`requirements of the Patent Act with the eligibility
`requirements, the Court has created confusion in a
`fundamental area of patent law. This disregard for the
`structure of the Patent Act is but one of many issues
`
`
`
`3
`
`plaguing Section 101 jurisprudence. The Court should
`reconsider or clarify the “abstract idea” exception.
`REASONS FOR GRANTING THE PETITION
`I. The Court Should Grant Review to
`Restore Consistent Patent Protection
`to Software Innovations.
`A. The Federal Circuit Has Created Chaos
`in the Field of Software Patents.
`As explained in the petition for certiorari, the
`Federal Circuit’s decision below demonstrates that
`the court has effectively created a per se test for
`Section 101 eligibility as to software innovations – A
`software-based invention is patentable only if it
`improves the basic functions of the computer itself.
`Not only is the per se test itself improper under this
`Court’s precedents, but the test has not been applied
`consistently,
`creating
`chaos among American
`innovators.
`A sample of recent decisions from the Federal
`Circuit applying Section 101 to software illustrates
`the inconsistency of that court’s jurisprudence. For
`example, patents directed to the following technologies
`have been rejected under the “abstract idea” test: a
`“system and method for electronically processing
`paper checks,”2 “processing data sent from a user of a
`client computer over a network,”3 “implementing a
`
`
`2 Solutran, Inc. v. Elavon, Inc., 931 F.3d 1161, 1164 (Fed. Cir.
`2019).
`3 Bridge and Post, Inc. v. Verizon Comms., Inc., No. 2018-1697,
`2019 WL 2896449, at *4 (Fed. Cir. July 5, 2019).
`
`
`
`4
`
`multi-dimensional interpolation,”4 “using a desktop
`interface to access an application server,”5 “converting
`[a] physiologic treatment data from a machine specific
`format into a machine independent format within a
`computing device remotely located from said bedside
`machines,”6 and “entering, transmitting, locating,
`compressing, storing, and displaying data (including
`text and image data) to facilitate the buying and
`selling of items.”7
`In other cases, however, similar technologies have
`been upheld as at least potentially patentable
`notwithstanding the “abstract idea” exclusion. These
`include: “hierarchical event monitoring and analysis
`within an enterprise network,”8 “capturing and
`transmitting data from one device to another,”9
`“limiting a computer’s running of software not
`authorized for that computer to run,”10 and “data
`processing system for designing, creating, and
`importing data into, a viewable form viewable by the
`user of the data processing system.”11
`
`4 In re Gitlin, 775 Fed. Appx. 689, 690 (Fed. Cir. June 13, 2019).
`5 Uniloc USA, Inc. v. ADP, LLC, 772 Fed. Appx. 890, 899 (Fed.
`Cir. May 24, 2019).
`6 Univ. of Fla. Res. Found., Inc. v. General Elec. Co., 916 F.3d
`1363, 1368 (Fed. Cir. 2019).
`7 Voit Techs., LLC v. Del-Ton, Inc., 757 Fed. Appx. 1000, 1002
`(Fed. Cir. Feb. 8, 2019).
`8 SRI Int’l, Inc. v. Cisco Sys., Inc., 930 F.3d 1295, 1301 (Fed. Cir.
`2019).
`9 Cellspin Soft, Inc. v. Fitbit, Inc., 927 F.3d 1306, 1315 (Fed. Cir.
`2019).
`10 Ancora Techs., Inc. v. HTC Am., Inc., 908 F.3d 1343, 1344 (Fed.
`Cir. 2018).
`11 Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d
`1121, 1123 (Fed. Cir. 2018).
`
`
`
`5
`
`There are many more decisions, but this sampling
`illustrates the core lack of consistency among the
`Federal Circuit’s decisions. Legal principles that
`place “entering, transmitting, locating, compressing,
`storing, and displaying data” and “designing,
`creating, and importing data into a viewable form” on
`opposite sides of the patent eligibility divide do not
`provide the courts, the U.S. Patent and Trademark
`Office (“USPTO”), or inventors with the proper
`guidance to make a determination whether or not a
`software innovation is eligible for a patent. The
`Federal Circuit’s “basic functions” test attempts to
`provide guidance, but that test is unclear in its
`application. For example, must a patent claim an
`improvement to the core functions and components of
`a computer itself (e.g., the processor, memory,
`input/output devices, etc.), or is it sufficient that a
`patent claim an improvement on a function that a
`computer is designed to do (e.g., process data or
`monitor security)? Compare Bridge and Post, 2019
`WL 2896449 at *5 (rejecting the eligibility of the use
`of a computer to track users) with SRI Int’l, 930 F.3d
`at 1304 (affirming the eligibility of an improved use of
`a computer to monitor network security). These
`questions have baffled inventors and their attorneys,
`as well as Federal Circuit judges, district court
`judges, and USPTO examiners, in the years since this
`Court’s Alice decision due to the unpredictable nature
`of Federal Circuit decisions.
`irreconcilable
`these
`No
`innovator studying
`precedents could approach any court, let alone the
`USPTO, with sufficient confidence
`that
`their
`innovation would be afforded reliable predictability of
`patent eligibility by the U.S. legal system. Such
`unpredictability dissuades innovators from not only
`
`
`
`6
`
`seeking patents from the USPTO but also investing the
`substantial resources in research and development
`necessary to create the invention in the first place,
`and, even if they are granted a patent, from enforcing
`their rights in the courts. This situation is untenable
`and must be corrected.
`
`Even Federal Circuit judges are having difficulty
`implementing, and note the inconsistency resulting
`from, the per se test for Section 101 eligibility, as
`illustrated by the fact that many of these decisions
`have come from split panels. In SRI Int’l, for example,
`Judge Lourie criticized the majority for drawing a
`distinction from precedent that he believed did not
`exist. SRI Int’l, 930 F.3d at 1313 (Lourie, J.,
`dissenting). Likewise, in Bridge and Post, Judge
`Bryson differed from the majority as to one of the
`patents deemed ineligible, identifying a string of that
`court’s precedents that found similar claims eligible.
`Bridge and Post, 2019 WL 2896449 at *11 (Bryson, J.,
`concurring in part and dissenting in part). Such splits
`reaching diametrically opposite conclusions from
`strings of precedential citations have become
`commonplace in the Federal Circuit’s Section 101
`decisions. And as a result, the outcome of a Section
`101 appeal depends largely on the composition of the
`panel. The learned judges of the Federal Circuit have
`diligently sought to apply this Court’s precedents in
`Alice and other decisions, but unfortunately the
`varying tests and analyses applied by different panels
`have created a miasma of confusion in a fundamental
`area of patent law. The uniformity of U.S. patent law
`intended by Congress in establishing the Federal
`Circuit as the nation’s sole Court of Appeals for patent
`matters is thwarted by this inconsistency, and this
`
`
`
`7
`
`Court should exercise its supreme authority to restore
`this lost uniformity.
`Judges of the Federal Circuit have explicitly
`requested guidance regarding Section 101 on
`numerous occasions. For example, Judge Plager
`lamented that Section 101 law “renders it near
`impossible to know with any certainty whether the
`invention is or is not patent eligible,” and invited
`clarification of the law “‘by a higher authority,
`perhaps by Congress, to work its way out of what so
`many in the innovation field consider are § 101
`problems.’” Interval Licensing LLC v. AOL, Inc., 896
`F.3d 1335, 1348, 1353 (Fed. Cir. 2018) (Plager, J.,
`concurring-in-part and dissenting-in-part) (quoting
`Berkheimer v. HP Inc., 890 F.3d 1364, 1374 (Fed. Cir.
`2017) (Lourie, J., concurring)). Judge Plager echoed
`an earlier sentiment expressed by Judge Lourie who,
`in an opinion concurring in the denial of en banc
`review, stated that “Section 101 issues certainly
`require attention beyond the power of this Court.”
`Berkheimer, 890 F.3d at 1374. Similarly, in an
`earlier concurrence, Judge Linn noted that the
`inventions at issue were “the result of human activity
`and facilitate the use of bankcards for a new purpose
`heretofore considered practically foreclosed.” Smart
`Sys. Innovations, LLC v. Chicago Transit Auth., 876
`F.3d 1364, 1383 (Fed. Cir. 2017) (Linn, J., dissenting
`in part and concurring in part). But because,
`“[r]egrettably . . . our precedent leaves no room for
`such an argument,” Judge Linn concurred with the
`majority’s decision barring the invention from patent
`protection under the “abstract idea” exception. Id.
`Judge Linn “disagree[d] with such a categorical
`exclusion” but was “constrained to concur with the
`majority’s holding of patent ineligibility.” Id. Implicit
`
`
`
`8
`
`in Judge Linn’s grudging concurrence was a desire for
`this Court to set Section 101 jurisprudence back on
`track.
`Most recently, the frustration of Federal Circuit
`judges with the
`judicially-created Section 101
`exceptions was on display regarding the closely-
`related “natural law” exception to patent eligibility.
`As explained in the pending Petition for a Writ of
`Certiorari
`in Athena Diagnostics, Inc. v. May
`Collaborative Servs., LLC, Case No. 19-430, “[a]cross
`eight separate opinions in which the court divided 7-
`5 on denying en banc review, the Federal Circuit
`issued an unprecedented cry for help from this Court
`to clarify the patent eligibility of medical diagnostic
`tests.” The Petitioner in that case, like the Petitioner
`here, invites the Court to provide “much-needed
`guidance on the proper application of the judicially-
`created exceptions to Section 101 of the Patent Act.”
`Id. The Federal Circuit has thus made clear that
`guidance from this Court is required to clarify the
`“abstract idea” test and related judicial exceptions to
`patent eligibility.
`The situation regarding patent eligibility has also
`drawn the attention of Congress, with two Senators
`and
`three Representatives proposing possible
`legislative reforms to Section 101.12 The text of the
`proposal includes a clear statement that “[t]he
`provisions of section 101 shall be construed in favor of
`eligibility,” and even explicitly abolishes the “abstract
`
`12 Sens. Coons and Tillis and Reps. Collins, Johnson, and Stivers
`Release Section 101 Patent Reform Framework, Apr. 2019,
`https://www.coons.senate.gov/news/press-releases/sens-coons-
`and-tillis-and-reps-collins-johnson-and-stivers-release-section-
`101-patent-reform-framework.
`
`
`
`9
`
`ideas,” “laws of nature” and “natural phenomena”
`exceptions to eligibility under Section 101.13 This
`proposal indicates that frustration with Section 101
`jurisprudence has reached Congress. However,
`America’s innovators cannot and should not await
`Congressional action on a statute that is clear on its
`face and can be easily clarified with appropriate
`guidance from the Court. The problem of Section 101
`resides in the federal judiciary and the solution lies
`before this Court. In particular, the “abstract idea”
`exception is a judicially-created doctrine and thus the
`Court is better positioned to correct the application of
`the test, rather than compelling inventors and
`industry to await an overhaul of Section 101 by
`Congress.
`B. The Federal Circuit’s Section 101 Chaos
`Is Harming American Innovation.
`The operation of Section 101 is fundamental to
`patent
`law, defining
`the category of human
`innovations that might possibly be patented before
`the additional requirements such as novelty and non-
`obviousness are reached. But the Federal Circuit’s
`decisions have caused innovators to stumble at this
`threshold, creating concrete, real-world harm in the
`American economy.
`As a pioneer in the gaming industry, IGT has felt
`the strain of the Federal Circuit’s jumbled and over-
`reaching Section 101 precedents. As a provider of
`gaming systems, gaming machines and
`lottery
`gaming systems, IGT and its related companies’
`business relies heavily on software innovations. For
`
`13 See https://www.tillis.senate.gov/services/files/E8ED2188-
`DC15-4876-8F51-A03CF4A63E26.
`
`
`
`10
`
`far more
`is
`today
`floor of
`example, casino
`technologically sophisticated than the casino floor of
`50 years ago. While gaming systems such as slot
`machines have been a fixture for the entire time,
`the standard slot game with three mechanical reels
`that paid winnings based on symbols appearing along
`one horizontal line in the center have been largely
`replaced by a nearly endless variation of more
`complex video-based slot and other gaming machines.
`Led by companies like IGT, the gaming industry has
`developed a multitude of new features and game-play
`improvements that have made slot machines more
`exciting, more enticing, and more engaging for
`players. Many of these innovations rely on software
`for implementation and points of novelty, whether
`they comprise improvements in game functionality,
`display, security, or other aspects of the user
`experience. These inventions represent concrete and
`particularized
`improvements that have had a
`tangible and meaningful impact on the industry.
`Since its founding, IGT has regularly filed for and
`obtained U.S. patent protection on its inventions,
`and IGT now leads the gaming industry with over
`3,200 U.S. patents covering new game machines
`with new functionality and/or features, new player
`award systems and new lottery innovations. IGT’s
`substantial investment in innovation has been
`recognized through numerous awards and numerous
`licenses with its competitors. The unpredictability of
`whether a particular software innovation is eligible
`for patent protection poses a significant risk to IGT’s
`business.
`Companies like IGT make significant investments
`in research and development directed toward
`
`
`
`11
`
`primarily software-based innovations in the gaming
`industry. The consumer appeal of complex video-
`based gaming relies heavily on user experience, which
`is highly visible to the outside world and thus subject
`to reverse-engineering. Accordingly, effective patent
`protection is critical to protect these innovations from
`competitors who can easily copy and
`imitate
`successful software-based games.
`Fundamental to the American patent system is the
`understanding that protections against copying are
`necessary to “promote the progress of science and
`useful arts.” Patent Clause of the U.S. CONST. ART. I
`§ 8 Cl. 8. That is, without patent protection creators
`will be disincentivized to innovate because their
`creations will simply be copied by competitors without
`a comparable investment in development. Not only
`will such a situation inhibit the ability of creators and
`inventors to maintain gainful employment, but
`consumers will be harmed by a lack of access to new
`and innovative products and services. The Court has
`recognized these fundamental principles of patent
`law numerous times. See, e.g., Halo Elecs., Inc. v.
`Pulse Elecs., Inc., 136 S. Ct. 1923, 1937 (2016)
`(Breyer, J., concurring) (“Through a complex system of
`incentive-based laws, patent law helps to encourage
`the development of, disseminate knowledge about,
`and permit others to benefit from useful inventions.”);
`Federal Trade Comm’n v. Actavis, Inc., 570 U.S. 136,
`161 (2013) (Roberts, C.J., dissenting) (“The point of
`patent law is to grant limited monopolies as a way of
`encouraging innovation.”); Mayo Collaborative Servs.
`v. Prometheus Labs., Inc., 566 U.S. 66, 92 (2012)
`(“[T]he promise of exclusive rights provides monetary
`incentives that lead to creation, invention, and
`discovery.”); Eldred v. Ashcroft, 537 U.S. 186, 216
`
`
`
`12
`
`(2003) (“Patents are not given as favors ... but are
`meant to encourage invention by rewarding the
`inventor with the right, limited to a term of years
`fixed by the patent, to exclude others from the use of
`his invention.”) (quoting Sears, Roebuck & Co. v.
`Stiffel Co., 376 U.S. 225, 229 (1964)).
`Indeed, the Court has recognized that the Patent
`Clause ensures a robust economy to the benefit of
`American citizens. As Chief Justice Burger explained:
`The stated objective of the Constitution
`in granting the power to Congress to
`legislate in the area of intellectual
`property is to ‘promote the Progress of
`Science and useful Arts.’ The patent laws
`promote this progress by offering a right
`of exclusion for a limited period as an
`incentive to inventors to risk the often
`enormous costs in terms of time, research,
`and development. The productive effort
`thereby fostered will have a positive effect
`on society through the introduction of new
`products and processes of manufacture
`into the economy, and the emanations by
`way of increased employment and better
`lives for our citizens.
`Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 480
`(1974); see also Mazer v. Stein, 347 U.S. 201, 219
`(1954) (“The economic philosophy behind the clause
`empowering Congress to grant patents and copyrights
`is the conviction that encouragement of individual
`effort by personal gain is the best way to advance
`public welfare through the talents of authors and
`inventors in ‘Science and useful Arts.’”).
`
`
`
`13
`
`The relationship between federal patent law
`precedent and innovation is not simply a matter of
`economic theory. Its real-world effects are well-
`established. For example, in State Street Bank &
`Trust Co. v. Signature Fin. Group, Inc., 149 F.3d
`1368, 1372 (Fed. Cir. 1998), the Federal Circuit held
`that any claimed software invention that involved
`some practical application and “ produce[d] a useful,
`concrete and tangible result” is eligible for patent
`protection. In particular, the court affirmed the
`patentability of
`“the
`transformation of data,
`representing discrete dollar amounts, by a machine
`through a series of mathematical calculations into a
`final share price,” which “constitutes a practical
`application of a mathematical algorithm, formula, or
`calculation.” Id. This broad formulation of patent
`eligibility confirmed the patentability of software
`innovations.
`The State Street decision came amid the technology
`boom of the 1990s, when technical innovations – many
`in the form of software applications – permanently
`transformed the U.S. economy. The decision led
`directly to a sharp increase in the number of software-
`related patents granted each year, from approximately
`25,000-35,000 per year before State Street to
`approximately 50,000-75,000 per year in the ensuing
`years, increasing to approximately 125,000 per year
`by 2011. U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-
`13-465, INTELLECTUAL PROPERTY: ASSESSING
`FACTORS THAT AFFECT PATENT
`INFRINGEMENT
`LITIGATION COULD HELP IMPROVE PATENT QUALITY 12
`(2013). It is undeniable that the increase in software
`patents was connected to a dramatic increase in
`software-based technological innovation. “According
`to legal commentators, the number of software-
`
`
`
`14
`
`related patents grew as computers were integrated
`into a greater expanse of everyday products.” Id. at
`12-13. Thus, the State Street decision enabled the
`USPTO to reward increased innovation in computer
`technology with robust patent protection. Id. at 13
`(“According to PTO officials, the agency interpreted
`[State Street and Diamond v. Diehr, 450 U.S. 175
`(1981)] as limiting their ability to reject patent
`applications for computer processes.”).
`
`Today’s Section 101 jurisprudence is undoing
`these economic gains in the software industry by
`injecting uncertainty into the fabric of software
`patent protection. The state of Federal Circuit law
`leaves the software industry with sharply curtailed
`legal protections for its innovations solely due to the
`form those innovations take – software. This cannot
`have been the intent of Congress in passing Section
`101, and this Court should return American patent
`law to its proper course.
`
`C. Review by this Court is Necessary
`to Clarify Section 101 Law.
`
`The Federal Circuit’s confounding Section 101
`framework is flatly contrary to statutory law and this
`Court’s precedents, and
`thus
`correction and
`clarification by this Court is appropriate. The Federal
`Circuit is ignoring this Court’s clear precedent
`counseling against an overly rigid and expansive,
`exclusionary application of Section 101.
`
`For example, in Alice, the Court in discussing the
`“abstract idea” exception admonished that “we tread
`carefully in construing this exclusionary principle lest
`
`
`
`15
`
`it swallow all of patent law.” Alice, 573 U.S. at 217.
`The Court further advised that “an invention is not
`rendered ineligible for patent simply because it
`involves an abstract concept.” Id. Likewise, the
`Court in Mayo “recognized . . . that too broad an
`interpretation of this exclusionary principle could
`eviscerate patent law.” Mayo, 566 U.S. at 70. Indeed,
`the Court’s decisions concerning “abstract ideas” and
`related exceptions to patent eligibility generally
`include caveats against applying the rule to broadly.
`See, e.g., Ass’n for Molecular Pathology v. Myriad
`Genetics, Inc., 569 U.S. 576, 589 (2013) (“The rule
`against patents on naturally occurring things is not
`without limits . . . .”). The Court has also counseled
`against per se rules in this area, recognizing that “The
`line between a patentable
`‘process’ and an
`unpatentable ‘principle’ is not always clear.” Parker
`v. Flook, 437 U.S. 584, 589 (1978). Despite these
`precedents, the Federal Circuit has expanded the
`exclusionary effects of Section 101 and applied it in
`such a broad and rigid manner that has swallowed the
`patent law
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