Thursday, April 9, 2015

Auditing Patent Portfolios in the Wake of Alice

The patent landscape has been evolving rapidly in the wake of the US Supreme Court’s decision in AliceCorp. Pty. Ltd. v. CLS Bank Int’l last June.

Both patent owners and law firms that represent patent holders need to be proactive about the new risks and obligations in this post-Alice world.

The patents at issue in the Alice case disclosed a computer-implemented scheme for mitigating settlement risk using a third-party intermediary. The question presented to the Court was whether the claims were patent-eligible under 35 U.S.C. § 101 or whether they were drawn to an abstract idea and thus not patent-eligible.

Some feared (or hoped) that the Supreme Court would invalidate all software patents, and perhaps business method patents as well, in its Alice decision. That didn’t happen. However, challenges to patents based on § 101 have markedly increased since Alice.

A recent study found that during the 27 months before the Alice decision district courts made about 1.4 rulings related to § 101 per month. Since Alice, that figure has reached 5.4 rulings per month.

Vulnerable Patents

Software and business method patents are seen as increasingly vulnerable to invalidation, both via the interpartes and post grant review processes at the Patent Trial and Appeal Board (PTAB) and in the federal district courts.

Hundreds of pending patent applications were withdrawn in the wake of Alice. At least 20 software patents have been struck down by federal courts, according to Reuters, and only a handful have withstood a § 101 challenge since Alice.
According to the National Law Review,

A review of the six post-Alice Federal Circuit panel decisions on the “abstract idea” exclusion confirmed that claims will fail if they merely append “generic” computer or Internet implementation to a business idea.

A recent blog post in Intellectual Asset Management (IAM) reported that tens of thousands of patent assets owned by major companies could be vulnerable under Alice.

Research commissioned by IAM estimated that 76% of Oracle’s patents, 58% of Google’s, and 55% of Microsoft’s are potentially affected by Alice. Ironically, even tech companies that supported the Supreme Court’s decision in Alice are finding themselves victims of it.

Time for a Patent Audit

What does Alice mean for patent holders and the law firms that represent them?

According to IAM,

It would be an unwise publicly-traded tech company in the US that is not currently doing a full audit of its patent portfolio to assess where it stands in this post-Alice world.

As discussed in the IPWatchdog blog,

From a valuation and financial reporting perspective, there needs to be a serious examination of the post-Alice landscape implications on the value of patents as corporate assets. The results of such examination may lead to further action – which could range anywhere from additional disclosure requirements by regulators, all the way to actual corporate asset write-offs.

How can an Advanced IP Management System help?

Both corporations and law firms can leverage the portfolio management tools of a system like

Anaqua to do an “Alice Audit” of their portfolios or their client’s portfolios. ANAQUA’s Portfolio Management works across all modules to provide an integrated environment for strategic planning, management and analysis of intellectual asset portfolios. The Portfolio Management suite includes a number of core tools that can be leveraged to determine how existing or proposed Software and business method patents will measure up against the new considerations that should be considered in a post-Alice world.

To learn more about how Anaqua’s patent portfolio management tools can be used to conduct a patent audit, please click

No comments: