Removing judicial exceptions to section 101 without codifying them is vital to competitiveness

Failed Patent Eligibility Pushed China Dangerously Ahead Of The U.S.

The Supreme Court destroyed patent eligibility for entire swaths of tech innovation critical to our national security and economic growth in a 2014 decision called Alice Corp. v. CLS Bank International (Alice)

Alice created an unintelligible and undefined exception to patent eligibility called the “abstract idea.” Because nobody knows what qualifies as an abstract idea, Alice gutted the patent protection for most inventions in artificial intelligence, cybersecurity, quantum computing, blockchain, 5G/6G, enterprise systems, and much more. These technologies are critical to our national security and economic growth and are the bulk of the 37 of 44 technologies in which China now leads the world.

It is impossible to know exactly how many tech inventions Alice has destroyed, but the number is in the thousands. The courts invalidate around 50% of patents challenged as abstract ideas, and the United States Patent and Trademark Office (USPTO) has refused to issue thousands of meritorious patents whose companion applications are patented in China or Germany.

Failed Patent Eligibility Created Big Tech Monopolies

Not only did Alice enable China to eclipse the U.S. in these critical technologies, but it also enabled Big Tech to monopolize.

Since the beginning of the tech industry, new tech companies with better technology have knocked out lethargic incumbents. Most tech companies last only a few years before new technology eliminates them. But some monopolized a sector of the market only to be eventually knocked out by a startup with better technology a few years later. For example, in the 1980s, IBM monopolized personal computers. But in the 1990s, Microsoft and Intel broke IBM’s hold and created their own personal computer oligopoly. Later, Apple and Google broke that oligopoly up with their own monopolistic versions of mobile devices.

It used to be that every tech giant felt threatened by a startup with better-patented technology. That competitive environment drove American innovation. But now, Big Tech is just growing bigger.

Big Tech knows it is much more efficient to steal technology than to develop it. So, it fabricated false political narratives intended to drive all levels of government to gut the patent system, eliminating its startup competition. Somehow, this false narrative infiltrated the Supreme Court, which bought it and gave us Alice.

Today, Big Tech multinationals simply steal the unprotected inventions of startups and run them out of business using their massive markets, deep pockets, and patent lawfare.

PERA Codifies The Abstract Idea

Big Tech is not monolithic. The massive corporations that make up the Big Tech cabal have very different needs. For example, Big Tech social media giants, like Facebook or TikTok, do not care much about chip design patents, but Qualcomm and Intel do. They all care about software patents but in different ways.

Some software is integral with a computer. As an example in low level software, a BIOS process cannot be performed without the processor because BIOS controls how ones and zeros go in and out of the processor. You can’t separate the processor from the BIOS because a processor is required for all its operations.

But social media inventions are different. They operate on the outer edge of technology in a browser or a phone app. While computers are required for these inventions to work, several layers of software are removed from the processor. For that reason, claim language is written functionally with functions like send, receive, or save.

There is a legal concept called insignificant extra-solution activity, which seems to have originated with a case called Parker v Flook in 1978. It is a method of evaluating patent claims most often applied to patent eligibility analysis. (It is important to understand that it is a method of evaluating patent claims, not a judicial exception to eligibility.)

This method of evaluating claims “can be understood as activities incidental to the primary process or product that are merely a nominal or tangential addition to the claim.” In software patenting, this means that common computer functions like send, receive, or save are considered insignificant extra-solution activity.

In practice, insignificant extra-solution activities are removed from the claim language, and whatever is left is examined. But once you remove all the normal computer functions, the invention is no longer connected to a computer or anything else in the real world. As a result, meritorious inventions are deemed to be abstract ideas and not eligible for patent protection.

But here is the crux of PERA’s problem. PERA eliminates all judicial exceptions, including the abstract idea. However, it does not eliminate evaluation under insignificant extra-solution activity.

PERA then creates a new complicated eligibility exception for software inventions in sections B(i) and B(ii). In this two-part test, the inventor must prove multiple negatives. The test begs for an evaluation of insignificant extra-solution activity. The preamble of PERA states, “for example, ‘do it on a computer’ shall not establish such eligibility,” which effectively instructs the courts to evaluate the claims under insignificant extra-solution activities to see if the claims “do it on a computer.”

There can be no doubt that the courts will apply insignificant extra-solution activity evaluation under this new test. The result is to codify the effects of the abstract idea. PERA changes nothing.

PERA Perpetuates Big Tech Social Media Monopolies

Not all software patents will be affected in the same way. Computer hardware companies may be okay with PERA because low-level software inventions will be eligible for patent protection, but those at a higher level will not.

PERA risks codifying the damage to U.S. innovation that made patent-ineligible inventions in artificial intelligence, cybersecurity, quantum computing, blockchain, 5G/6G, enterprise systems, and much more. As previously stated, these technologies represent the majority of the 37 of 44 technologies in which China has achieved global leadership.

PERA not only denies patent protection to startups capable of direct competition with Big Tech social media giants, but it also denies patent protection to small company products sold on Big Tech app stores.

Big Tech will still be able to ambush startups by encouraging them to develop products for their app stores. But once the startup’s product is proven successful, Big Tech can simply copy it and kick the startup out of the app store thereby killing the startup and taking their technology for themselves.

If sections B(i) and B(ii) are removed from PERA, these problems disappear. Once again, startups will be able to protect their new technologies and bring them to market, thus creating competitive markets for Big Tech monopolies and restarting America’s innovation engine so we can take the lead back from China.

If sections B(i) and B(ii) are not removed from PERA, PERA must not become law.