Don’t fence us in. Our alpha-hunting readers, as a matter of routine, use a variety of settlement systems, and it is probably best for everyone – or most of everyone – if such practices as the use of an intermediary (and its computer systems) to reduce counter-party risk in the course of settlement remain where they have been, in the domain of common sense and ordinary prudence. They should not be subject to enclosure as somebody’s intellectual property. If that makes us a domain of patent doves, so be it.
Finance seems to be a common target for these fence-me-in tactics, as those who remember the 2010 Bilski decision will appreciate.
Accordingly, at AllAboutAlpha we’ve been following with some care the Alice litigation as it’s made its way through the court system. Our most complete statement of the underlying facts came here, click, just after the parties had made their arguments to the appeals court en banc.
What is amusing though is that in its recent decisions on business-method patents and related issues, the U.S. Supreme Court has lent heavily on the phrase “abstract idea.” The Patent Act doesn’t use the phrase, and SCOTUS, in labelling an idea “abstract,” acknowledges that it is venturing into metaphysics. We aren’t afraid to follow.
A unanimous decision: That’s something
Now, as to Alice Corp. specifically, the Supreme Court has decided the matter. Alice (a tech company owned in part by National Australia Bank Ltd.) made claims to a property right in a common business method. That method was too “abstract” and so the claim fails. An alpha hunter may continue to arrange to mitigate or eliminate settlement risk with its counter-parties through the use of a computer-endowed intermediary, without trepidation, and without having to pay for use of the idea.
The decision, by Justice Clarence Thomas, is available in full here. One of the good features of this decision is that it is unanimous. Yes, there were three concurring Justices [Sotomayor, Ginsburg, Breyer] who signaled that they would have preferred a different approach than Thomas’ – if I understand them, they would have preferred that he focus on the word “process” in the above quoted statutory language, and make it clear that this is not the sort of “process” intended there. Still, the judgment is unanimous and there is nothing akin to the contentious six opinions (and one set of “reflections”) produced by the appeals court below.
Thomas himself writes, “Deciding whether or not a particular claim is abstract can feel subjective and unsystematic, and the debate often trends toward the metaphysical, littered with unhelpful analogies and generalizations.” He has not given the debate a different turn, it will continue to trend toward the metaphysical etc.
So let us make the following statement, as much of metaphysics as of epistemology.
All software is abstract: one sense
I’m working at this moment with MS Word. Behind it stand a number of abstract ideas. For example, there is the idea that I ought to check the spelling of my words. Once upon a time, I did this with a dead-tree dictionary by my side. Now I do it with the help of squiggly red lines. But does Microsoft own the idea that a writer ought to check the spelling of his words? Surely not. That being so: does that abstract idea become patent eligible by virtue of being clothed in computer language?
It would seem not: the idea of an intermediary in the settlement of a financial transaction doesn’t become eligible when a computer in invoked (Alice tells us clearly): why should the idea of checking one’s spelling become patent eligible with no further addition?
Other aspects of MS Word instantiate other abstract ideas (that it is a good idea to insert tables or charts in a text, that a writer wants a choice of fonts): but do abstract ideas become a patentable machine or process when they are bundled together?
All software is abstract: another sense
All software is abstract in another sense. It is all designed to run not on one particular machine but on a large number thereof, and to remain the same regardless of which machine it runs on. My MS Word is now running on or perhaps “in” hardware manufactured by Gateway. Its name is on a box. That box could as easily have been created by Dell. Likewise, inside the box there are components that were in fact manufactured by Intel, but that could have been manufactured by AMD for all it matters to the software. Given certain very broad parameters in the hardware, the same software can run and still be in a strong sense the same.
That is the essence of abstraction. The hardware is that which is abstracted from: the software, running happily within that realm, those parameters, is itself abstract.
Compare that to the life of a human being. We might in a speculative spirit say that Christopher Faille’s consciousness – his awareness, his intentionality, his what-have-you – is so much software, and that the body in which it runs, especially the central nervous system of that body, is the associated hardware. But in this case the software is not severable from the hardware. The software is constantly aware of back aches, for example, and of “his” age. His age is his hardware’s age, and his backaches derive from the infirmities of a very concrete particular back. Though someone else may have in some ways a similar personality, it is not an abstraction from their two bodies, which have two distinct personalities, similar as you like but not in any significant sense the same.
My own conclusion, then, is that software is not like human personality, precisely in that the latter is concrete and the former is abstract. Which brings us back to this question: can MS Word—a bundle of abstractions in one sense, itself a single ghostly abstraction in another – remain intellectual property at all in the face of the Alice decision?
Well, sure it can. And it probably will. But all that will prove is that the life of the law is not logic.