In Part I of my recent interview with IBM, I spoke with Mark Ringes, IBM Vice President and Assistant General Counsel, and Manny Schecter, Chief Patent Counsel, about the company’s commitment to innovation and approach to patenting. Our conversation took place at the IBM offices on Madison Avenue in New York City and touched on topics ranging from Section 101 to startups to the USPTO. Below, the conversation continues with an in-depth discussion of Section 101 law, software patents, and how the Federal Circuit and Supreme Court have contributed to the situation in which we find ourselves today.

QUINN: Manny, what brought this conversation about was we know that the IPO and the AIPLA seemed to be getting a little bit closer to language that they both agree on with respect to amending Section 101, and now some of the local and State IP bar associations are signing on to that type of language as well. So, I wanted to have a conversation about what IBM might be thinking about 101 in general, or if there’s any specific language you like or don’t like, and what your thoughts might be on moving forward with patent eligibility changes. I know it’s a big, broad question, but I like to start that way so that we can just let the conversation go where it might want to go.

SCHECTER: Well, I’ll say a couple of things to start. The first thing is to clarify that AIPLA and IPO aren’t just close, they are together on a single resolution that they’ve agreed upon to amend Section 101. So, we are supportive of the IPO-AIPLA resolution and we believe it is important to bring more certainty around Section 101.

We have a statute that nobody knows how to apply. The examiners struggle with it. The Federal Circuit Justices—I’m pretty sure you know this—some of them have actually called for legislation, or at least complained that Section 101 is a big problem in their opinions. Even outside of their opinions, when you see some of the Federal Circuit justices in public and somebody asks them about Section 101, they say things like, “Gee, it’s a really challenging environment,” and everybody in the audience giggles because they know just how challenging it really is and what they are actually saying.

Director Iancu has also acknowledged that we need more certainty. So, we absolutely think something needs to change. The Supreme Court doesn’t seem to be willing to entertain more cases to make changes, and frankly, they are the ones who created the situation in the first place, so, I don’t have a lot of confidence that they really are motivated to fix this. It’s a policy matter that really should be decided by Congress. So, absolutely, we believe that a legislative proposal needs to come forward.

QUINN: Yes, and going back several years, when I interviewed Judge Linn at about the time when he was going to take senior status, he told me on the record that he didn’t really know how you could interpret all of these cases consistently with one another, going all the way back to Flook, and in a way where the Supreme Court seems to see them all as being something that does fit together in a puzzle.

RINGES: I think that’s a pretty clear perspective. We just don’t know, especially with the more recent decisions, how they can coexist with each other and say there is a consistent body of law around 101. I don’t think anyone can make the argument that 101 is clear and understood by practitioners.

QUINN: The thing that has been frustrating for me is that it seems like we all agree on what the Supreme Court said. We all agree on what the test is, and otherwise intelligent, rationale people can come to two completely diametrically opposed views on agreed-upon facts.

RINGES: Well, we know what the test is, but the test is so subjective that it can lead to almost any answer that you want. That is the challenge that we have.

SCHECTER: Yeah, I agree, and going back to your point about the long string of cases from the Supreme Court that have to be twisted in order to somehow fit them together, maybe you could call that consistency, maybe not, but that to me is evidence of the problem, right? I mean, as long as we’ve been practicing intellectual property law, this problem has existed, and even many years before. How many bites at the apple do you get where each bite fails to satisfy before you finally agree you should try something else?

QUINN: I agree with you completely. You remember the Freeman Walter Abele line of cases? I feel like we’re living back during that timeframe; although, none of those were Supreme Court decisions. The Federal Circuit did have some more flexibility to realize that they had a completely subjective test where rational people can come to completely different decisions. And we have a totally subjective test right now where it doesn’t seem like the Federal Circuit is collectively willing to do anything about it.

I say it that way simply because I think, in prior iterations of the Federal Circuit, at various times throughout the history of that court, they may have been more willing to look at say, Mayo, and conclude those claims were pretty weak. Everybody I talk to in the biotech area says that those claims should have fallen under Sections 102 or 103. Well, what good does that do us with respect to 101 then? And with Alice, I think those claims should have been eligible. The problem with software and Alice issues becomes—and I’d like to get both of your perspectives on this—we use the same word, “software” to describe Watson and also to describe the app I’m using right now on my iPhone to record this interview. And they are orders of magnitude different.

SCHECTER: Yeah, it’s true; people use software differently. When people refer to a software patent, or a software invention, they don’t necessarily mean the same thing—anymore than they interpret the word “abstract” to be the same. And that’s long been a problem.

QUINN: So, what’s the solution? In Alice, they didn’t even use the word software. I don’t even know how to frame the question. It seems like I’m going to wake up from this dream at some point in time, because how could a case where they didn’t even use the word software in the decision unravel so many tens of thousands if not hundreds of thousands of software patents and cause such real damage to the software industry—or at least the software startup economy? And maybe you could put some perspective on the other part of the economy as well. I know in the startup economy, people are not getting money, they’re not getting investors. They are not starting or even trying. But what’s it like at the other end of the marketplace?

SCHECTER: Well, let me change it a bit afield from what you just said. Software is in everything. It’s not just the software business and it’s not just software startups, it’s everything.

RINGES: It’s in manufacturing, it’s in retail. You name it, software is everywhere.

SCHECTER: Software is now ubiquitous. Right? I mean, the appliances in the home can talk to each other. The toaster has software in it, or at least some of them do. You look at the life sciences business, and we now have 3D bioprinting. People can print living tissue. We know that software enables all the analytics and tools used in life sciences. We have bioinformatics. Marc Andreessen’s comment that software is eating the world is really true in that it’s the development platform, not just for the software business, but for just about everything. Even a simple device, a hammer for example, is probably designed on some sort of computer-aided design tool before it actually goes into manufacturing. So, at the end of the day, whatever problem we’ve created within the software business, within software related patents, is a problem that affects everything. It doesn’t just affect the software startup world or the big software companies. It affects everything in our economy—or just about everything.

QUINN: I totally agree with that, but the thing I also find a little bit interesting is and maybe it’s just me being oversensitive to this issue, but I see when I look at the refrigerator that has software on it that is going to say, talk to your garbage can like that commercial makes fun of, right? I see things that go through the patent office, and what they see is, “Oh, it’s a refrigerator,” and they see, “Oh, it’s a garbage can. Well, we’ve always patented refrigerators. We’ve always allowed garbage cans that are different and unique to be patented.” The fact that it has software on it, that doesn’t change the fact that it’s a refrigerator and refrigerators are patented. When in fact, it’s not the refrigerator that is unique, it’s the software that is making it unique.

RINGES: It’s the innovation in the software that is unique.

QUINN: Right, and this is where I think it was Judge Plager who said the emperor is wearing no clothes in that one dissent he issued. He basically was saying, wait a minute, it’s just software; why do we have a problem with it if we don’t have problems with it in other areas, in other places? When it’s a device that implements software, why is that not just as problematic as it is if it is just software itself? Because I think, frankly, if everybody was having these same issues, then it would be a little bit more problematic. Congress would have to do something about it. They couldn’t just sit on the sidelines.

SCHECTER: Well, the way we look at it is Section 101 was meant to be more of a sorting exercise. Do you have a method, do you have an article of manufacture? And if you had one of those things, you should pass through the 101 filter. We can argue about whether there should be some exceptions, but I personally don’t see why software should be one. It seems to be almost a holdover from the early days when people had a hard time understanding just what software really was. But now I think we get it and we should simply move forward past the sorting exercise and use the sections of the statute that were really meant to do the heavy lifting for determining whether you have a patentable invention or not—102, 103 and 112—and I think that would resolve the vast majority of the problems.

QUINN: Well, that’s what Justice Rehnquist said in Diamond v. Diehr.

SCHECTER: But Justice Rehnquist isn’t on the court anymore.

QUINN: Well, right, and that part of the case seems to have been overruled without them actually saying it was overruled. Clearly, Mayo overruled that piece of it because now they have brought in “well-known, routine, or conventional” into 101, which is what Diehr says don’t do. I believe it’s in Judge Newman’s Bascom opinion, and if you listen to her talk occasionally, she brings it up as well, that if you get to 102 and 103 and I think she also mentions 112, or maybe more generically patentability and the patentability issues, that always resolves 101. I think I agree with that in that if there is a “there” there for 112, then how could it possibly be abstract? And if there is not prior art that would invalidate it, or prevent it from issuing, either as being novel or obvious, then how can it be routine or conventional?

SCHECTER: Well, I’m not quite sure I understand your question, but I’ll say this: I think the problem comes not from whether 102, 103 and 112 can or should resolve the problem, but whether or not the prior art that is needed under some of those sections is documented and findable in a way that we have considered to be acceptable. It becomes a practical problem of the examiners, or, later, the parties to a litigation, getting their hands on the right thing that is acceptable as prior art.

RINGES: Well, that’s the practical side of it, right—but theoretically, I think we tend to agree that 102, 103 and 112 can resolve all these issues. If you go back and you look at each of those cases that threw these patents out on eligibility and apply 102, 103 and 112, you come to a decision very consistent with what the results of the case were, but you would apply the portion of the statute that should have been applied to get to that resolution.

QUINN: Right, and you wouldn’t have to overrule that part of Diehr in doing it.

RINGES: Exactly; you can stay consistent with Diehr.

In Part III of my interview with IBM, we will discuss prior art, patent trolls, the evolution of the patent systems in China and Europe, and how patent drafting has changed in recent years.

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