Does Alice Target Patent Trolls?

Abstract

The five years since Alice Corp. v. CLS Bank International, 573 U.S. 208 (2014) have witnessed an explosion in patentable subject matter decisions ‐‐ and in political controversy over the doctrine. To its critics, Alice renders important inventions in medical diagnostics, biotechnology, and information technology unpatenable and therefore discouraging investment in critical market sector innovation. To its defenders, Alice offers a reliable, quick, and cheap way to invalidate weak patents owned by patent trolls, reducing patent holdup and protecting innovators. In response to these debates, we explore how the courts actually use Alice. We construct a unique dataset of every district court and federal circuit decision on patentable subject matter from July 2014 through June 2019 and categorize the patent plaintiffs in each case using the Stanford NPE Litigation Database. Once in court, patentable subject matter challenges are far more common in software/IT cases, and biotech/life science innovations are more likely to survive. Surprisingly, the entities most likely to lose their patents are not patent trolls but individual inventors and inventor‐started companies. Our findings have important implications for current legislative and judicial disputes over patent reform as some of the patent owners most impacted may be overlooked.