Imagine that you have invested your time and money in the development of an innovative software product, and after a few years, the rights to your invention were practically useless due to the decision of the US Supreme Court.
But that’s exactly what happened to the Baltimore-based mortgage lender, who invented an app to expedite the approval process for mortgage applications after the Supreme Court ruled in 2014. “Alice Corp.” Against CLS Bank the decision that some abstract ideas cannot be patented on their own and therefore opens the door to copying by third parties.
“When the Alice 101 decision was made, it invalidated anything that was considered abstract. But the principles of determining whether a patent is abstract are meaningless. And that’s why he’s appealing, ”Larry Porter told MarylandReporter.com. “It doesn’t make any sense. And this is destroying the industry. “
Porter, who has been in the mortgage lending business for over 30 years, said his patent was approved in October 2013 after his application was mysteriously “lost” by the United States Patent and Trademark Office (USPTO) for eight years before than they found the error and fixed it.
Alice’s decision was made about eight months after Porter’s patent was approved. However, according to Porter, it took about three years before the USPTO was able to “cram its teeth” into the widespread implementation of the decision. “We continued to pursue violators. We were awarded $ 40,000 for one offender. And then everyone and the attorneys who represented the infringers returned with Alice 101. And my patent was invalidated because it was considered abstract. “
The software was expensive to build, Porter said.
“It cost me $ 337,000 to pay for all the technology. It took patent engineers to write the code. The cost of the system was about $ 250 per lender. And I had 30 lenders, six processors, and two managers. This is ridiculous. Today you just plug it in. And everyone has a phone. It doesn’t cost anything. But then it was a state. “
And when the patent office lost his application, the financial burden became even greater, Porter explained.
“We rocked and skated and we are doing well. And suddenly everyone starts to do what I do. Besides, I don’t have a patent because the document was lost by the patent office before 2011. But everyone used my technology. So I no longer had the advantage. “
But it was the 2008 financial crisis that ultimately pulled Porter and many other mortgage brokers out of business.
“The industry has just closed. All the subprime lenders closed their doors … It was a mess. It was terrible. And I had no advantage over the competition because everyone was using my patent. “
Thomas Bassolino, a patent attorney from Frederick, said Porter’s experience with Alice is fairly common.
“I’ve heard this story a lot. And I got a lot of 101 rejections from the patent office after Alice’s opinion was published. It seems that the patent office has gotten better over time since Alice made the decision to deal with software applications in accordance with the law. But nevertheless, it is still a mess. “
Bassolino added: “The jurisprudence under Title 101 of the Patent Act, which is simply a statute of eligibility, is a complete mess. Not only for software applications, but also in the life sciences. “
Bassolino clarified that many of the problems with Alice are not the fault of the USPTO itself, but are related to the guidance associated with the decision and the applicable statute.
Alice’s decision “essentially threw a wrench into any software-related application, especially if it relates to any kind of data organization / financial management technology,” Bassolino explained.
And those who have lost the most to Alice are often the most vulnerable entrepreneurs, Bassolino said.
“It really hurts small clients and small businesses, unlike the world’s Fortune 500 companies. Because they have the power to hire a bunch of lawyers like me to work on filings for hours to try to argue in the office why 101 is not justified. in any specific statement. “
Bassolino said the best solution to the problem for Congress is to rewrite the 101 patent statutes.
And lawmakers can consider this course of action, as evidenced by the March letter from U.S. Senator Tom Tillis, RN.C., Tom Cotton, R-Ark., Chris Koons, D-Del., And Mazie Hirono, D-Hawaii. , wrote to the USPTO asking for further clarification on how Alice should interpret other patent laws.
“If the United States is going to continue to lead in all of these technology sectors, we can no longer ignore the fact that current eligible legal practice has had a dramatic negative impact on investment, research and innovation. Lack of clarity has not only discouraged investment in critical new technologies, but has also resulted in courts completely denying protection to some important inventions in the diagnostic, biopharmaceutical and life sciences industries, ”the senators wrote.
They added: “At a time when the United States is struggling to contain and treat the worst global pandemic in more than a century, it is amazing that current jurisprudence makes it nearly impossible to obtain many patents for diagnostic and precision medicine. sectors. It’s time for Congress to address this issue. To help us consider what legislative action should be taken to reform our admissibility laws, we ask you to post a request for information on the current state of the jurisprudence regarding patent eligibility in the United States, evaluate the responses, and provide us with details. a summary of your findings. “
MarylandReporter.com has reached out to Senators for additional comments about Alice, but has not received a response by the deadline for this article.
As for Porter, he filed Standard Form 95 as part of the first steps to file a federal lawsuit against the USPTO. But for now, this is a wait and see, what will happen to Alice’s rule.
“The patent office has six months to come back to you and say, ‘You can’t sue us.’ Of course, that time has passed – in years. “