Clinical Software, Innovation, and Alice v. CLS Bank

by Jerome Carter on February 2, 2015 · 0 comments

A few years ago, a defense attorney for an EHR vendor being sued for a patent violation contacted me about being an expert witness. After hearing about the case, I was shocked at what was being asserted as a patent.   Circumstances prevented my being able to take the case. However, a little while later, curiosity got the best of me, and I tried looking up the patent online. In reading through the patent (mind-numbing), I saw nothing that was novel. The patent covered something that was not only obvious, but something that happens all the time in any practice setting. Basically, someone had written code to look up an item in an EHR database and cross-reference it with another database. That’s all. How obvious is that??? No complex queries were involved, just two simple queries and the presentation of the results.

According to patent rules, three of the five properties that an invention must have to be patentable are novelty, non-obviousness, and utility.  Why the patent office would allow a patent for a process that has been done using paper charts for years in offices everywhere is both perplexing and irritating. These types of blatantly obvious patents hamper innovation and are a tax on new companies.  They harbor the threat of lawsuits from out of the blue while awarding monopolies on common business practices simply because they have been computerized. Even if claims are thrown out, it still costs a lot to defend a suit (according to this CNET article, 650K for a claim of 1 million dollars or less), which can be enough to coerce small companies into settling to avoid litigation costs.   One reason for hanging on to my old code is to preserve “prior art” possibilities should I end up on the wrong end of a patent suit.

I am not against patents and would certainly file for one if I ever invented something worth patenting; I simply want the PTO to stick to the requirements. Patents were intended to promote invention by awarding time-limited monopolies.  Inventors benefit for a while, and then everyone gets use of the invention.   Over the last 20 years, software patents have taken off and are used by large companies or patent trolls to intimidate small ones because defending claims is costly.

Finally, there seems to be a bright spot for the little guys and common sense.   In June, the SCOTUS, ruling in Alice vs. CLS Bank, invalidated a patent, and the reasoning used should help decrease software patent abuse. Ars Technica describes the gist of the ruling:

The court ruled unanimously that all of patent-holder Alice Corp.’s claims were invalid, because they simply added computer language to a basic idea: using a financial intermediary to create trust in transactions. The 9-0 opinion, written by Justice Clarence Thomas, is the clearest statement yet from the Supreme Court that adding technological-sounding language to existing ideas isn’t enough to get a patent.

The effects on patent cases quickly became evident.   By September, 11 patent infringement cases in various courts ended with the patents being declared invalid, based on the criteria from the June ruling.   Even better, within that same three-month period, filings of software patent infringement cases dropped by 40% compared to 2013. This is GREAT news!!!

The Alice ruling does away with the worst offending software patents — those that take existing processes and automate them.  The patent in the case I was contacted about should no longer be valid under this ruling. Software patents are still possible, but it will be harder for companies to justify spending the money on a patent that could be quickly invalidated.

There is an even brighter spot in all of this. Companies that are already earning income from licensed patents will be reluctant to file suits because having a patent invalidated would result in a loss of current income. So, any questionable patents that have already been licensed are not likely to be the source of suits—probably accounting for the 40% drop in infringement filings.

Alice vs. CLS Bank is exactly what is needed to bring new companies into HIT.   Do a search using “electronic health records” in the Patent and Trademark Office database. Read a few patents and note how many could be (have been) done manually.   How many are searches, cross-references, lookups, or data transformations?   How many seem obvious? How many replicate something you have been doing for years?

According to Tim Lee, Alice vs. CLS Bank is the first SCOTUS ruling on software patents in 33 years—and it is about time!   HIT needs to get better, and that requires more minds working on hard problems. Diminishing the threat of costly patent litigation makes it more likely that new vendors will enter the market. Obviously, my interest in iOS development makes me wary of patent “gotchas.” As I plug away at my iOS app, I’m encouraged — clinical software innovation has been given a major boost.  Hmmm… wonder how this will affect the demand for expert witnesses?

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