Alice Update: How SCOTUS' Decision Continues to Impact Patent Law

May 2, 2017 Tara Klamrowski

We are approaching the three-year anniversary of the Supreme Court’s decision in Alice Corp. v. CLS Bank. This decision has had a large impact on patent prosecution and litigation, in particular, whether an invention is patent eligible subject matter under §101. Alice continues to present hurdles for applicants and litigants alike. To better understand how this important SCOTUS decision is still impacting the patent system, here is a brief survey of current cases involving the Alice standard.

Hope of Clarifying Alice Ends With SCOTUS Denial

In Concaten, Inc. v. AmeriTrak Fleet Solutions, LLC, No. 16-1112, 2016 WL 5899749 (Fed. Cir. 2016), five patents were invalidated by the District of Colorado under the Alice standard, with the federal circuit affirming the lower court’s decision. The petitioner relied on an eligibility test set forth in Diamond v. Diehr to uphold their patents, which many practitioners see as irreconcilable with the Supreme Court’s holding in Alice.

The court in Diehr held that computer-implemented improvements to processes are qualifying subject matter under §101, while the court in Alice held the exact opposite.

Many had hoped that the Supreme Court would give some much-needed clarification to the Alice ruling in light of Diehr by granting writ of certiorari for Concaten’s petition, but unfortunately that was not the case.  

Music Giant Sonos Relies on Alice to Invalidate Competitor Patents

Wireless speaker company Sonos is currently embroiled in a patent battle against competitor Denon Electronics and its parent company D&M Holdings. D&M Holdings Inc. et al., v. Sonos Inc., case number 1:16-cv-00141 (D. Del. 2017).

Initially, D&M relied on Alice to try and get four of the twelve Sonos patents it was accused of infringing thrown out. The patents covered grouping and adjustments of volume levels on Sonos wireless devices, which D&M argued was patent ineligible subject matter because it was abstract idea implemented by a computer. However, in an ironic twist, Sonos was successful in getting D&M’s patents thrown out also using the Alice standard. While the D&M patents were not part of the original patents-in-suit, they have been spun off into a separate case.

The case demonstrates how Alice can be a double-edged sword, and is largely left up to the interpretation of the related court.

The Federal Circuit’s Attempts to Clarify Alice

Despite the above, not all of the news is pro-Alice. For example, software patent claims were upheld as patent eligible subject matter under §101 in DDR Holdings, LLC v. Hotels.com, LP 773 F.3d 1245 (Fed. Cir. 2014) and in Enfish, LLC v. Microsoft Corp. 822 F. 3d 1327, 1336 (Fed. Cir. 2016). The DDR case was the first case to uphold software claims as patent eligible post Alice, and Enfish was the second. Since Enfish, there have been several other federal circuit cases that are promising for software patents, including Bascom Global Internet v. AT&T Mobility LLC, 827 F.33d 1341 (Fed. Cir. 2016) and McRO, Inc. v. Bandai Namco Games America Inc., 837 F.3d 1299, 1306 (Fed. Cir. 2016).   

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