All posts by Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law

Amending 101?

Some have been considering a statutory overruling of Mayo and Alice Corp. What would this amendment do?:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title. Patent eligibility extends to the full extent permitted by the Constitution.

Finding the limits of ineligibility

by Dennis Crouch

It is safe to say that hundreds of thousands of U.S. patents rely upon the manipulation of information or laws of nature as fundamental aspects of their respective inventions. Many of these patents rest on shaky ground following the Supreme Court’s recent decision in Alice Corp. v. CLS Bank (2014).  Alice Corp.  has the potential of being broadly interpreted, but a major problem with the opinion is that it offers few limiting principles for the definitions of ‘abstract idea’ and ‘law of nature.’  Federal District Court Judge Wu most recently pessimistically described the new test as “I know it when I see it.”  As such, patent attorneys working in the software and biotechnology fields wonder if the sky is falling.  Although storm-clouds have gathered for some, the sky is not falling for the patent system. And, the new scope of eligibility is more well defined than many think.

The critical step for understanding Alice Corp. is to recognize that the case was not decided in a vacuum. Rather, the Supreme Court has a long and multi-generational history of wrestling with concepts of patent eligibility.  Alice Corp. fits within that precedent as an incremental addition, but without rejecting or even modifying the Supreme Court’s own prior precedent.  Rather, what Alice Corp. has rejected is the prior analysis of the Federal Circuit and US Patent Office that seemingly allowed for the patenting of systems and processes whose inventors relied upon only an iota of hardware to separate the patented invention from an underlying abstract idea or law of nature. The new cohort of Alice Corp. (2014),  Myriad (2013), Mayo (2012) and Bilski (2010) collectively wipe-away thirty years of Federal Circuit precedent on eligibility, but at the same time, revive 150-years of Supreme Court doctrine on the topic. Although somewhat cyclic, throughout this time inventors have continually been able to obtain new patents to cover their inventions and enforce those patents against would-be free-riders.  This has been the situation for decade upon decade and will continue.  As Chisum writes, the patent laws “have been interpreted so as to cover most of the new technologies that evolved during the last 200 years.” Chisum on Patents Section 1-1 (2014).

Moving forward a key approach is to look again for the limiting principles of the last cohort of eligibility cases — Diamond v. Diehr, 450 U.S. 175 (1981); Diamond v. Chakrabarty, 447 U.S. 303 (1980), Parker v. Flook, 437 U.S. 584 (1978); and Gottschalk v. Benson, 409 U.S. 63 (1972).  Of course, these cases were decided in a different technological age – before even the birth of many contemporary inventors and need to be understood and given credence in a way that fits with the direction of technological innovation. However, care should be taken not to simply whitewash their holdings.  And, although these pre-CAFC decisions by the court appear historical, they are relatively new when compared with the Supreme Court’s body of eligibility decisions.  The principles laid down by the Supreme Court’s Pre-CAFC decisions were already known and discussed in dozens of prior cases.  As you read these old cases, the language and patterns become repetitive and more predictable, if also nuanced.  See, e.g., Le Roy v. Tatham, 55 U.S. (14 How.) 156 (1852); Burr v. Duryee, 68 U.S. (1 Wall.) 531, 570 (1863); O’Reilly v. Morse, 56 U.S. (15 How.) 62, 112-20 0853); Cochrane v. Deener, 94 U.S. 780 (1876); Munson v. Mayor of New York City; Kewanee Oil v. Bicron Corp., 416 U.S. 470, 483 (1974);  Jacobs v. Baker, 74 U.S. (7 Wall.) 295, 19 L. Ed. 200 (1869); Corning v. Burden, 56 U.S. 252, 267 (1853); Risdon Iron & Locomotive Works v. Medart, 158 U.S. 68, 72-73 (1895); Am. Wood-Paper Co. v. Fibre Disintegrating Co., 90 U.S. 566, 593-96 (1874); Cochrane v. Badische Anilin & Soda Fabrik, 111 U.S. 293, 311-12 (1884); Smith v. Snow, 294 U.S. 1, 5-6 (1935); Waxham v. Smith, 294 U.S. 20, 22 (1935); J.E.M. AG Supply, Inc. v. Pioneer Hi-Bred Int’l, Inc., 534 U.S. 124, 130 (2001); Mackay Radio & Tel. Co. v. Radio Corp., 306 U.S. 86, 94 (1939); Rubber-Tip Pencil v. Howard, 87 U.S. 498, 507 (1874); Great Atlantic & Pac. Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147 (1950); etc.

As Bilski suggests, the historic cases offer clues to understanding our revived approach to patent eligibility.  For some, the answers uncovered from will be frustrating because we are far from the pithy expanse of “anything under the sun made by man” that has – at times – been supported by the Federal Circuit.  And certainly, a number of patents will be invalidated. However, this policy shift does not foretell the death of our system and likewise, it does not offer a free-for-all to invalidate any patent on a whim.  Of course, in order to avoid those results, the next steps need to be re-identifying and categorizing our years of precedent with an eye to applying them today and tomorrow.

Why FRAND Commitments are Not (usually) Contracts

Guest Post by Professor Jorge L. Contreras

There has been a fair amount of controversy recently over commitments that patent holders make to license patents on terms that are “fair, reasonable and non-discriminatory” (FRAND).  As I have previously written here and here, FRAND commitments generally arise when a patent holder wishes to assure the marketplace that it will not seek to block implementation of a common technology platform or product interoperability standard.  Making such a public commitment encourages widespread adoption of these technologies, which is often beneficial for both the patent holder and the market.  As such, it is important that these commitments be enforced.

The dominant theory that several U.S. courts and commentators have adopted to justify the enforcement of FRAND commitments is common law contract.  The argument goes like this:  the patent holder makes a promise to a standards-development organization (SDO) that it will license its essential patents to others on FRAND terms.  The SDO accepts this promise as consideration for permitting the patent holder to participate in the relevant standardization effort.  Hence, the common law elements of offer, acceptance and consideration are all present.  Then, after the relevant standard is adopted and a vendor incorporates it into a product, the vendor can insist that the patent holder grant it a patent license on FRAND terms.  Even if the vendor was not a member of the SDO, it can seek to enforce the patent holder’s promise as a third party beneficiary.  This line of reasoning was accepted by the federal district courts in Microsoft v. Motorola (W.D. Wash. 2012) and Apple v. Motorola (D. Wis. 2012), by the Federal Trade Commission in its settlement with Google/Motorola, and by several commentators.

Nevertheless, as I discuss in a forthcoming article, common law contract is a poor fit for the enforcement of most FRAND commitments, and relying too heavily on it is likely to have unwelcome results.  Contract law fails as a general-purpose FRAND enforcement theory on several grounds.  First, the simplified offer-acceptance-consideration model laid out above does not reflect the actual manner in which most FRAND commitments are made.  Most of these commitments are not set forth in an agreement between the patent holder and the SDO.  Rather, they are contained in SDO policies, bylaws and other types of statements.  In addition, many of these policies (including those adopted by leading SDOs such as IEEE) do not actually require the patent holder to commit to license its patents on FRAND terms, but only to disclose to the SDO the terms on which it will, or on which it intends to, license its essential patents.  Moreover, FRAND commitments are typically a sentence or two in length, and fail to set forth any of the relevant details of the promised license agreement, whether they be royalty rates, grant-back requirements, terms on which the license may be suspended or terminated, and the like.  As such, whatever “contract” is formed is likely void for want of detail, a mere “agreement to agree”.  Finally, the attempt to extend third party beneficiary rights to every product vendor in the world, whether or not it competed in the relevant business, or even existed, when the promise was made, stretches this venerable doctrine beyond any sensible boundaries.  As a result, except perhaps in a few cases in which standards are developed by small groups of firms that have actual contractual arrangements amongst themselves, common law contract is a poor choice as a general enforcement mechanism for FRAND commitments.

At least one Administrative Law Judge at the International Trade Commission has recently come to the same conclusion in the ITC’s case against Interdigital (337-TA-868, June 18, 2014), expressly ruling that the FRAND policy adopted by the European telecom SDO ETSI “is not a contract”, and merely “contains rules to guide the parties in their interactions with the organization, other members and third parties.”  I couldn’t agree more.

I am not arguing, of course, that FRAND commitments should not be enforced.  I feel quite the opposite, and have argued that these promises form an important subset of a larger category of “patent pledges” that ought to be enforced for the benefit of the market.  However, there are many more sound and coherent theories for enforcing patent pledges, and FRAND commitments in particular, than common law contract.  These include various antitrust and competition law approaches, which have been advanced by the FTC and others, as well as my personal favorite, a modified variant of promissory estoppel that I call “market reliance”.  The market reliance theory is grounded in the fact that patent pledges are promises, whether or not they fulfill the requirements of common law contract, and promises ought to be enforced.  The theory overcomes the requirement that specific and actual reliance be proved in promissory estoppel cases by introducing a presumption of reliance based on the “fraud on the market” theory used in Federal securities law.

But whichever theory eventually prevails for the enforcement of FRAND commitments and other patent pledges, it seems fairly clear that common law contract is useful, at most, in a small subset of these cases.

Section 101 Invalidates Another Financial Services Patent

In what is beginning to look like a deluge, another district court has invalidated a set of asserted patents as lacking eligible subject matter under 35 U.S.C. 101 as interpreted by the Supreme Court in Alice Corp. (2014).

Every Penny Counts (EPC) v. Wells Fargo Bank (M.D. Fla. September 2014) EveryPennyCounts101

EPC’s invention is a computerized method for rounding-up credit and debit transactions to the nearest dollar and then putting the extra money to a special use. See U.S. Patent Nos. 8,025,217 and 7,571,849.

Claim 1 of the ‘217 patent is listed as follows:

1. A system for accumulating credits from a customer account belonging to the customer and managed by an institution and placing the credits into a provider account, comprising:

an information processor; said information processor including a data store with data identifying the customer, the rounding determinant, the managed institution, and the account;

said data store including machine readable instructions authorizing the processor to access and read the customer account;

said data store including machine readable instructions to calculate rounders after receiving a plurality of payment transactions from the read customer account and to calculate an excess based on the rounders;

said data store including machine readable instructions to withdraw the excess from the customer account;

said data store including machine readable instructions to transfer the withdrawn excess to the provider account.

In a previous decision (pre-Nautilus), District Court Judge Merryday had found the claim to “lack definiteness” but yet not fall to the standard set by the Federal Circuit for a finding of invalid-as-indefinite.  Under the Supreme Court’s Nautilus decision the claim may in-fact be legally indefinite.  However, Judge Merryday shorted the invalidity decision by finding all of the claims of both asserted patents invalid as indefinite.

In judging this claim under the two-step Alice Corp approach, Judge Merryday first identified the abstract idea that the claims are “drawn to” as “the concept of routinely modifying transaction amounts and depositing the designated incremental differences into a recipient account.”  The court explained that this concept is an abstract idea because as in Alice and Bilski, it is a “basic concept” and a “fundamental economic practice long prevalent in our system of commerce.”  Judge Merryday took steps to provide a variety of examples of how the concept has been historically known and used. Since an abstract idea was identified within the claim, the court then moved to the second step of the Alice Corp analysis — determining whether the claim contains an ‘inventive concept’ sufficient to transform the claimed abstract idea into a patent eligible application.  On that point, the court found that each step in the method included “purely conventional” uses of a computer to do the type of tasks that you would expect a computer to be used for such as receiving data, rounding, adding, etc. As such, those steps were insufficient to overcome the step-two hurdle.

In sum, the ’849 patent, a method patent, is invalid under Section 101 because the patent claims an abstract idea that is implemented by “well-understood, routine, conventional activities previously known to the industry.” Alice (2014).  Similarly, the ’217 patent, a system patent, is invalid under Section 101 because the patent merely implements – on a generic, unspecified computer – the ’849 patent’s (unpatentable) method.

What we’re still looking for is a post-Alice court decision that upholds a computer-method patent under Section 101.

The Abele test

Just before the dawn of the Court of Appeals Federal Circuit, its predecessor court, the Court of Customs and Patent Appeals (CCPA) decided the eligiblity case In re Abele684 F.2d 902 (August 1982).  In that case, Philips Medical sought protection for a method of transforming of a data-field to in order to highlight portions of the data with the most contrast.  To me, the transformation seems to be the digital equivalent of a multi-dimensional derivative with the outcome displayed in greyscale.  Claim 5 is limited to this method of transformation and display. Dependent claim 6 adds the limitation that the data is “X-ray attenuation data produced in a two dimensional field by a computed tomography (CT) scanner.”

In considering eligibility, Judge Nies distinguished between these two claims — finding 5 ineligible and 6 eligible.  Nies explained that the calculating step – if it were alone – recites an ineligible algorithm and little was added by the display step. However, claim 6 brought something more because, with those express limitations, we now have an improvement to the CAT scan process. Similarly, the court found the apparatus-claim that was parallel to claim 5 ineligible.

What I don’t know is how these claims would be treated under the doctrines expounded by the Supreme Court in Alice Corp. and Mayo.

The claims:

5. A method of displaying data in a field comprising the steps of

calculating the difference between the local value of the data at a data point in the field and the average value of the data in a region of the field which surrounds said point for each point in said field, and

displaying the value of said difference as a signed gray scale at a point in a picture which corresponds to said data point.

6. The method of claim 5 wherein said data is X-ray attenuation data produced in a two dimensional field by a computed tomography scanner.

The questions are: (a) is the algorithm recited in claim 5 an abstract idea; and (b) do the limitations of claim 6 provide a sufficient inventive concept?

Abstract Idea: I know it when I see it

Eclipse IP v. McKinley Equipment (C.D. Cal. 2014) EclipseIP101

In a interesting and somewhat darkly-comic opinion, Judge Wu has dismissed EclipseIP’s infringement lawsuit on the pleadings – finding that the patentee has no case because the asserted claims lack eligible subject matter under 35 U.S.C. §101.  In the process of invalidating the claims, Judge Wu also offers some criticisms of the law.  Most pointedly, Judge Wu describes the Supreme Court’s test as offering pure unstructured judicial authority

First, describing the two-step process from Alice Corp, Judge Wu writes:

[T]he two-step test may be more like a one step test evocative of Justice Stewart’s most famous phrase. See Jacobellis v. State of Ohio, 378 U.S. 184, 197 (1964) (Stewart, J. concurring) (“I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it . . . .); cf. Alice, 134 S.Ct. at 2357 (“In any event, we need not labor to delimit the precise contours of the ‘abstract ideas’ category in this case.”).

This sort of test is obviously problematic – and especially in the context of patent examination where the discretion is handed to patent examiners.  Judge Wu also goes on to caution against overzealous use of the preemption argument — presenting two reasons: First, the reality is that every patent provides some amount of preclusive impact — that is the point of the exclusive rights offered under the law and Constitution.  Second, we should recognize that the effort in working around patent rights is an important innovative process and patents should not be eliminated under Section 101 simply because it is a cheaper alternative than to invent around.

But the patent law does not privilege the leisure of an infringer over the labors of an inventor. Patents should not be casually discarded as failing § 101 just because the infringer would prefer to avoid the work required to develop non-infringing uses of the abstract idea.

Despite his caution, Judge Wu found that the law still supports invalidity here.

The patents at issue are the creation of inventor Scott Horstemeyer, who is also a patent attorney and founding partner of the Thomas|Horstemeyer firm.  Horstemeyer’s asserted patents claim priority back to a 2003 filing and are related to a method of sending & receiving messages. Patent Nos. 7,064,681, 7,113,110, and 7,119,716.

Asserted claim 1 of the ‘716 patent is here:

1. A method for communications in connection with a computer-based notification system, comprising the steps of: initiating a notification communication to a personal communications device associated with a party; receiving a response communication from the party’s personal communications device, indicating that the party has received the notification communication and is now occupied with a task associated with the notification communication; and refraining from sending any further notification communications to the party’s personal communications device, until detection of one or more events that indicate that the party is no longer occupied with the task and can perform another task associated with another notification communication.

The abstract idea categorized from this claim is as follows: “asking someone if they are available to perform a task and then either waiting for them to complete
it or contacting the next person.”  Further, folks will recognize that the steps can be performed by someone talking on the telephone.

Tying the case to Morse, Judge Wu sees the claims here as likewise not limited to any “specific machinery or parts of machinery described in the foregoing specification.” As a result, the claims cannot “overcome the abstractness problem” and are invalid under 35 U.S.C. 101.

Moving Toward a Better Patently-O Ecosphere

Patently-O Comment Policy:

Over the past few years, Patently-O readers have posted over 200,000 comments to the site. Many of these comments have been excellent, thought provoking additions to the discussion of the patent law issues.  As an example of this, a number of comments from the blog have been cited in articles (or to me informally) as the inspiration for further proactive work.  My hope is that the comments can help to build a community, share ideas between diverse groups, and negotiate toward workable solutions to the real issues facing the patent system today.

At the same time, the comments have often strayed away from proactive discussion of law, policy, and practice — moving instead into the less productive rhetoric of meta-bickering and inside-shorthand only accessible the handful of individuals who constantly monitor the site.  I have never watched any party win these arguments and the eventual result is offense to the participants and Patently-O.  This situation has discouraged many from reading the comments and has discouraged even more from participating in the discussion by writing their own comments.  And, it has put me in the unenviable position of de facto comment editor and nanny.  The anonymity factor of internet communications has, in my view, encouraged frank discussions but has also allowed for bad behavior.

With all this in mind, I want to ask Patently-O readers to help in moving forward with a better community of comments. Thoughtful, respectful comments are welcomed and encouraged on Patently-O, but we’re also not going to tolerate repeated disruptive behavior.

For commentors, here are a few ideas to work toward:

  • As you post, think about the tone of your comments.  Be polite and avoid all name-calling (both implicit and explicit).
  • Think about writing longer more substantive comments rather than one-liner criticisms and, when you disagree, do not be rude but instead provide constructive and helpful feedback.
  • Recognize that the weight of patent law is not sitting on your shoulders. [See http://xkcd.com/386/] There is no need to challenge every comment with which you disagree — especially when the challenge is snarky or itself lacks positive substance.  Rather, gather that time to prepare a post that truly explains your position or question.
  • Recognize very few (if any) readers read all of the comments and most of us (including myself) do not understand shorthand references to arguments found on other threads or obscure cases.
  • Re-read your comment before you hit submit–think before you send! And, although you may be writing anonymously, post written work that you would be willing to attach to your professional name.
  • Do not launch an avalanche of comments in quick succession.
  • Stay on topic (of patent law, policy, and practice) and avoid meta-bickering
  • When you can, provide positive statements (what is correct about another post/comment or correct about the way to think about an issue) rather than only criticisms. That gives us something to build from rather than only tearing-down.  To be clear, I want to encourage debate and sometimes the best outcome is to be able to define the points on which we agree/disagree.
Let me know if you have any thoughts on this! Folks who repeatedly fail to adhere to these ideals will be blocked from further commenting – either temporarily (with restriction) or permanently.
Some interesting discussion of these topics: here

Sequenom v. Ariosa: Invalidating the patent on Non-Invasive Pre-Natal Genetic Testing

Sequenom’s Patent No. 6,258,540 is really fascinating. The inventors (Oxford Professors Lo and Wainscoat) had previously discovered that human fetal DNA existed in small quantities within the pregnant mother’s blood plasma.  That discovery was important because it would allow for non-invasive prenatal genetic testing without risking the health and safety of the unborn child.  However, a sticking point was the difficulty in separating-out the very small number of fetal-DNA from the large quantity of mother-DNA.  That problem was solved by recognizing the fundamental genetic difference between mother and child DNA is the addition of DNA from the biological father.  With that insight the inventors were able to use 1997 PCR technology to particularly amplify DNA that included elements inherited from the father.  Those amplified nucleic acid molecules can then be tested for various potential genetic anomalies. The test (commercialized by Sequenom) is hugely popular because it does not involve sticking a needle through the placenta and the resulting significant likelihood of miscarriage.

The patent here does not actually cover the diagnostic tests done on the fetal DNA but instead covers simply the method of finding the fetal DNA in the first place.  Thus claim 1 includes two steps: (1) “amplifying” the paternal-inherited DNA from the maternal plasma then (2) “detecting” the presence of the paternally-inherited DNA.  Independent claims 24 and 25 provide some further limitations such as fractioning the maternal blood sample to isolate only the plasma.

Despite the patent, Ariosa launched its competing fetal sampling services and in 2011 filed for declaratory judgment of invalidity of the patent. On Summary Judgment, the district court agreed with the DJ plaintiff – finding the claimed invention ineligible under 35 U.S.C. 101.  That case is now on appeal before the Federal Circuit. (Docket 14-1139).

In invalidating the patent, the district court followed the two-step method of Mayo:  First finding that the presence of fetal-DNA within the maternal plasma is an unpatentable natural phenomena; and Second finding that the PCR methods used to take advantage of the phenomena used lacked sufficient inventiveness. In the patent document, the patentee had identified these methods as conventional. The court also considered preemption – and determined that the patents carry “substantial risk” of preemption because there was no evidence any of the alternative methods of finding fetal-DNA (proposed to the court by the patentee) were both available at the time of the application filing and also currently commercially practical.

In the appeal, the patentee makes several arguments:

1. Sure, it is a natural phenomena that fetal-DNA is present in maternal blood plasma DNA. However, the core invention here is the process of detecting the fetal-DNA from the blood plasma that had previously been discarded as waste and uses technology to solve the medical dilemmas created by amniocentesis.

2. The practical limits found in the the claim are themselves inventive because no-one had ever accomplished the combinations of claimed steps.

3. The PCR process actually creates new DNA molecules – this case should be analyzed under Myriad not Mayo.

4. There are several scientifically validated methods of accomplishing the goals of the invention that do not infringe the patent — thus, the claims are not preemptive.

MBHB attorney Kevin Noonan has filed an Amicus brief on behalf of BIO supporting the patentee’s position. The primary thrust of Noonan’s argument is to show a strong policy argument that this type of innovation is important and that the research should be supported by patent protection. Noonan also highlights the district court’s commercially viable” requirement as problematic and not historically required in the law. (but query the “substantial practical application” language of Benson). A responsive amicus brief filed by the genetic testing company Invitae pushes back against Dr. Noonan’s arguments and argues that allowing this type of patent will “bury” the genomics industry and that (if they were ever useful) patents are no longer needed to research in this area because of the fallen price of genetic lab work and data anlaysis. SDIPLA also filed a brief making an interesting point: Here, the diagnostic process was only found ineligible because the subject matter being detected was a natural phenomena. If instead, the same process was being used to detect the presence of a man-made compound then the test would not be challenged on 101 grounds.  SDIPLA then argues that distinction does not make sense.

In its responsive brief, the patent challenger pushes in several ways. Most squarely, the brief recognizes that the discovery of a natural phenomena may be very important, but even when a critical breakthrough, that discovery is not patent eligible. Rather, to make something patent eligible, the inventors must then take the discovery and apply it in a way that adds substantial and inventive limitations. The argument here is that the patentee’s addition (the process of detection) was well known at the time of the patent filing and offered no inventiveness.  Ariosa seemingly does not defend the “commercially viable” requirement for preemption, but does indicate that the time-focus of preemption should be at the time the patent application was filed.

The outcome of this case will be fascinating.

= = = =

  • This same case was previously before the Federal Circuit with regard to a preliminary injunction (Federal Circuit vacated lower court’s denial of preliminary relief to the patentee). That decision was written by Judge Rader and joined by Judges Dyk and Reyna. On appeal, I believe that the case will go back to Judges Dyk and Reyna with a third judge added based upon the Federal Circuit’s internal operating procedure.
  • I apologize, but I accidentally deleted the briefs (can someone email them to me?).

101 Decision on the Pleadings: ECommerce Patent Ineligible

by Dennis Crouch

In Tuxis Tech v. Amazon, Delaware District Court Judge Andrews has invalidated asserterted claim 1 of Tuxis Tech’s Patent No. 6,055,513 – finding that the claim lacks eligibility under 35 U.S.C. 101.  2014 WL 4382446 (D.Del September 2014) (TuxisDecisionOnPleadings). Like other decisions this week, this case was decided on the pleadings.

The patent claim is related to a computerized method for individualizing up-selling based both on the identity of the purchaser and the original product being purchased.  This generalized idea (the ‘gist’) is quite old in our market economy with sellers first obtaining a commitment for an initial purchase and then use that anchor to seek to add-on purchases based upon what the seller thinks might work for the buyer.  Amazon does this regularly and thus was an obvious target for infringement allegations.

Of course, the ‘gist’ as described above is not what was particularly claimed, rather the claim walks through a multi-step algorithm of electronic communication and data processing. Those steps are at a fairly high level of abstraction — using action verbs such as “obtaining … transaction data”, “generating an upsell offer”, “utilizing … transaction data”, etc.

Here, Tuxis agreed that the mere notion of “upselling” is an abstract idea and with that in-hand, the court moved forward with the question of whether the claims offer an inventive concept that goes beyond upselling — answering that in the negative.

None of the limitations recited by Tuxis, however, are “meaningful.” Although the claim elements have some narrowing effect on the scope of claim 1, the practical effect is insubstantial. . . .

Claim 1 requires nothing more than suggesting an additional good or service, in real time over an electronic communications device, based on certain information obtained about the customer and the initial purchase. Shrewd sales representatives have long made their living off of this basic practice.

A simple hypothetical is instructive: A man enters a clothing store to purchase a new pair of dress slacks (“a user initiated primary transaction for the purchase of a good or service”). The sales representative assists the man in finding a pair of pants, and in the process learns that the man is a banker (“a second data element relating to the [identity of the customer]”). Knowing that suspenders are fashionable in the banking profession, the sales representative offers the banker a pair of suspenders that match his pants (“utilizing at least in part the primary transaction data including the identity of the good or service of the primary transaction and the second data element [related to the customer] and determining at least one item for a prospective upsell”). The customer agrees with the sales representative and purchases the suspenders (“receiving an acceptance of the offer … in real time”). This type of marketing strategy is at the heart of claim 1 and has been practiced as long as markets have been in operation. Conduct this transaction on “an electronic communications device” instead of in a physical store and it would be an infringing sales practice if claim 1 were valid. This cannot be permitted, as it would “tend to impede innovation more than it would tend to promote it.” Mayo.

Claim invalid.

One thing is clear – the short-circuiting of the litigation process here is a powerful tool in the hands of defendants.

= = = =

Claim 1 is as follows:

1. A method for providing offers in real time of an item constituting a good or a service in the form of offers for purchase of the item to prospective customers as users of the system, utilizing an electronic communications device, comprising the steps of:

establishing a communication via the electronic communications device between the user and the system for purpose of a user initiated primary transaction for purchase of a specific good or service,

obtaining primary transaction data with respect to the primary transaction, including the identity of the prospective customer and of the good or service for purchase in the primary transaction,

generating an upsell offer as a result of the user initiated primary transaction by:
utilizing the identity of the prospective customer to obtain at least a second data element relating to the user,

utilizing at least in part the primary transaction data including the identity of the good or service of the primary transaction and the second data element and determining at least one item for a prospective upsell transaction with the prospective customer, and

offering the item to the prospective customer and receiving an acceptance of the offer from at least one user in real time during the course of the user initiated communication.

New Abstract Ideas?

In the recent spate of abstract idea cases, the identified abstract ideas have been concepts that are old and well known such that the court can easily take judicial notice of their antiquity.  The courts particularly point to the long heritage of an idea as evidence of its abstractness.  However, that antiquity-limitation does not appear to be a requirement. Rather, it seems correct to say that a “newly discovered” abstract idea is also an ineligible abstract idea.  My question here then is what importance or relevance should be given in the abstract-idea analysis as to whether or not the central idea is old or new?  Or, is my assumption wrong and abstract ideas (in this context) are only those that are old?

Judge Bryson: Computerized Loyalty-Point Conversion System Not Patent Eligible

Loyalty Conversion Systems v. American Airlines (E.D. Texas 2014) LoyaltyConversion101Decision

Data processing and business method patents continue to fall like dominoes. In this case, Federal Circuit Judge Bryson – sitting by designation in the Eastern District of Texas – has determined on the pleadings that Loyalty’s reward-program patent is ineligible based upon the recent Supreme Court cases of Alice Corporation Pty. Ltd. v. CLS Bank International, 134 S.Ct. 2347 (2014) and Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 1289 (2012).

Loyalty’s two patents are recently issued but claim priority back to a 2006 filing. U.S. Patent Nos. 8,313,023 (“the ′023 patent”) and 8,511,550 (“the ′550 patent”).  The inventors appear to be corporate lawyer Sean McGhie and patent attorney Brian Buchheit. The litigation is apparently being controlled by ITUS Corp (Robert Berman) although no assignments are listed for the patents in the US Patent Office website.

The basic goal behind the invention is to open-up the buying power of customer reward points. This goal is accomplished by allowing customers to transfer reward-points (and their typical limited buying power) for a more negotiable instrument.  The claims include a number of computers sending, displaying and storing messages back and forth in order to accomplish the aforementioned goal.  However, the patent proposes no advance in computer technology per se, other than perhaps being the first to propose the sending and storing of messages in the particular sequence identified.

Judge Bryson writes:

Notwithstanding the prolixity of the claims, they recite a very simple invention: a computer-driven method and computer program for converting one vendor’s loyalty award credits into loyalty award credits of another vendor. In principle, the invention is thus the equivalent of a currency exchange as applied to loyalty award credits such as airline frequent flyer miles or hotel loyalty award points. The Court concludes that the invention claimed in the ′023 and ′550 patents is not fundamentally different from the kinds of commonplace financial transactions that were the subjects of the Supreme Court’s recent decisions in Bilski v. Kappos, 130 S. Ct. 3218 (2010), and Alice Corporation Pty. Ltd. v. CLS Bank International, 134 S.Ct. 2347 (2014), in which the Court held patent claims invalid for failing to recite patentable subject matter. This case falls squarely within the principles announced in those cases. Accordingly, the Court holds that the asserted claims of the ′023 and ′550 patents are invalid. . . .

In light of Bilski and CLS Bank, the resolution of the section 101 issue in this case is straightforward. At their core, the asserted claims of the two patents in suit are directed to the conversion of loyalty award points of one vendor into loyalty award points of another. That core idea plainly would not be patentable without more, as it is indistinguishable in principle from the simple and familiar financial or business operations that were at issue in Bilski and CLS Bank, as well as similar financial operations at issue in various Federal Circuit decisions in which the claims were held to be invalid under section 101. See Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336 (Fed. Cir. 2013) (“system for generating tasks to be performed in an insurance organization”); Bancorp Servs., L.L.C. v. Sun Life Assurance Co., 687 F.3d 1266 (Fed. Cir. 2012) (method for managing a life insurance policy, including generating the policy, calculating fees, and determining the surrender value and investment value of the policy); Dealertrack, Inc. v. Huber, 674 F.3d 1315 (Fed. Cir. 2012) (method for processing credit applications); Fort Props., Inc. v. Am. Master Lease LLC, 671 F.3d 1317 (Fed. Cir. 2012) (method for creating a real estate investment instrument adapted for performing tax-deferred exchanges); CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366 (Fed. Cir. 2011) (method for verifying the validity of credit card transactions). If anything, the conversion process at the core of the claims in this case is simpler and more commonplace than some of the methods held unpatentable in the cases cited above.

Regarding the computer technology elements of the claim, Judge Bryson dismissed those as “largely functional in nature” and that the resulting claims “do little more than set forth the general concept of currency exchange, as applied to loyalty awards, and then announce the use of ‘one or more’ computers to obtain various efficiencies in the process of converting one type of loyalty award credits into another.”  In the decision, Judge Bryson stepped through each of the technological limitations of the asserted claims and concluded that none offered the ‘something more’ required by the Supreme Court.

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Procedurally, this case is important as a dismissal-on-the-pleadings — i.e., quite early in the case.  For defendants – this means a major cost savings.

The standard for this type of dismissal are defined by Rule 12(c) of the Federal Rules of Civil Procedure and  is “designed to dispose of cases where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts.” Great Plains Trust Co v. Morgan Stanley, 313 F.3d 305 (5th Cir. 2002). The approach is akin to summary judgment and considers: “whether, viewed in the light most favorable to the plaintiff, the complaint states a valid claim for relief.”

The dismissal on the pleadings is somewhat workable here because subject matter eligibility is a question of law that is largely based upon an introspective look at the patent document.  Of course some outside reference points are: is it an inventive concept? Further, a case potentially turn on claim construction.  In his opinion, Judge Bryson recognized these complications but noted that the parties “have not pointed to any factual issues that could affect” the eligibility analysis.  Further, Judge Bryson waited to make his decision until after a claim construction hearing to likewise ensure that claim construction would not affect the outcome of the 101 analysis.

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Claim 1 of the 550 patent is as follows:

  1. A method comprising:

a computer serving a set of one or more Web pages for a loyalty program of an entity to one or more remotely located client machines, wherein the Web pages are able to be rendered within a client-side browser as a graphical user interface on the one or more client machines, wherein upon being rendered within the client-side browser said graphical user interface shows a quantity of nonnegotiable credits, wherein said non-negotiable credits are loyalty points of the loyalty program possessed by a member, wherein upon being rendered within the client-side browser the graphical user interface comprises a conversion option to convert at least a subset of the shown non-negotiable credits into a quantity [of] entity independent funds, wherein said entity independent funds are different loyalty points of a different loyalty program of a commerce partner, wherein said entity independent funds are possessed by the member, wherein an agreement exists between the entity and the commerce partner, wherein the agreement permits members to convert the non-negotiable credits to the entity independent funds in accordance with a fixed credits-to-funds conversion ratio, wherein the agreement specifies that the entity is to compensate the commerce partner in an agreed upon amount of cash or credit for conversions of non-negotiable credits to entity independent funds, wherein said agreed upon amount is a multiple of a quantity of converted non-negotiable credits, wherein the entity independent funds are redeemable per the different loyalty program for commerce partner goods or for commerce partner services, wherein the commerce partner is not said entity, wherein in [the] absence of being converted the non-negotiable credits are not accepted as payment for commerce partner goods or for commerce partner services;

the computer responsive to receiving a message indicating a selection of the conversion option, processing the selection to effectuate changes in the served set of Web pages; and

responsive to the processing, the computer serving one or more Web pages or Web page updates that include the effectuated changes to the one or more remotely located client machines, wherein upon being rendered within the client-side browser the graphical user interface is updated with the effectuated changes, wherein the updated graphical user interface shows a reduced quantity of non-negotiable credits possessed by the member in the loyalty program, said reduced quantity resulting at least in part from the subset of non-negotiable credits being converted into the quantity of entity independent funds in accordance with the fixed credits-to-funds conversion ratio.

Australia: Myriad Gene Patents Look Good

Guest post by Ben McEniery.  McEniery is a Senior Lecturer in Law at the Queensland University of Technology and a Barrister who specialises in Intellectual Property Law matters.

On Friday the Full Court of the Federal Court of Australia in D’Arcy v Myriad Genetics Inc [2014] FCAFC 115 upheld the validity of Myriad Genetics’ Australian BRCA1 gene patent over isolated DNA sequences.

The five judges who constituted the court in a joint judgment unanimously held that isolating a DNA sequence from its surrounding genetic material involves more than simply taking the nucleic acid out of the cell, and instead involves structural and functional changes that create a new composition of matter. The court thus took the view that the patent in question claims something other than subject matter that had previously existed in nature, and as such, the isolated nucleic acid, including cDNA, constitutes patentable subject matter.

The expressly court rejected the conclusion reached last year by the US Supreme Court in AMP v Myriad Genetics that isolated genes and the information they encode are not patent eligible. Instead, it adopted the reasoning of Judges Lourie and Moore in the Federal Circuit below, finding that isolated genes are not naturally-occurring substances but are “the products of man”. At paragraph [212] the court said that:

What is being claimed is not the nucleic acid as it exists in the human body, but the nucleic acid as isolated from the cell. The claimed product is not the same as the naturally occurring product. There are structural differences but, more importantly, there are functional differences because of isolation.

Although the court characterised isolated DNA as material derived from naturally occurring material, it held that this is not a reason for it to be excluded from patentability. In this regard, the court by reference to precedent explained the distinction between a discovery (and an idea in the abstract) and an invention at paragraphs [111] to [113]. The court thus took the view that in determining whether an invention is patentable subject matter, there is no requirement for a consideration of whether a claimed composition of matter is a “product of nature” or whether a microorganism is “markedly different” from something that already exists in nature. The court also noted at paragraph [155] that “the analysis should focus on differences in structure and function effected by the intervention of man and not on the similarities [with what is found in nature]”.

The court, for the purposes of Australian law, sought to delineate patentable and non-patentable subject matter by stating that, “[a] mere discovery is not patentable and an idea is not patentable, but a “manner of manufacture”, as that term has been developed, is.” In doing so, the court rejected any suggested that there is a “product of nature” subject matter exclusion in Australian law.

Unlike the US Supreme Court, the Full Federal Court considered that the correct approach when determining patentable subject matter is to focus on the products of human ingenuity claimed (in this instance being the isolated nucleotide sequences) and not on the information that they contain. In this regard, the court criticised the US Supreme Court noting at paragraph [215] that:

It is difficult to reconcile that Court’s endorsement of the reasoning in Chakrabarty, with its rejection of isolated nucleic acid as eligible for patentability. With respect, the Supreme Court’s emphasis on the similarity of ‘the location and order of the nucleotides’ existing within the nucleic acid in nature before Myriad found them is misplaced. It is the chemical changes in the isolated nucleic acid which are of critical importance, as this is what distinguishes the product as artificial and economically useful.

Unlike in places such as the United States and Canada where subject matter eligibility is defined by reference to enumerated classes of subject matter, the scope of patentable subject matter in Australia is defined by reference to whether an invention is a “manner of manufacture” of the kind envisaged by s 6 of the Statute of Monopolies 1623.

While it is difficult to fault the Full Federal Court’s reasoning, it is unlikely that this will be the final chapter in Myriad’s defense of its Australian patent. Rather, it is likely that the unsuccessful applicant in this instance will appeal to the High Court of Australia, Australia’s final court of appeal, and that that the High Court will give leave (a statutory equivalent to certiorari) to hear the appeal given the importance of the subject matter concerned.

New Section 101 Decisions: Patents Invalid

The Supreme Court’s decisions from Alice and Mayo are beginning to really have their impact. A few examples:

  • Walker Digital v. Google (D. Del. September 2014) (data processing patent invalid under 101 as an abstract idea) (Judge Stark).
  • Genetic Tech v. LabCorp and 23AndMe (D. Del. September 2014) (method of predicting human performance based upon genetic testing invalid under 101 as a law of nature) (report and recommendation from Magistrate Judge to Judge Stark)
  • Ex parte Cote (P.T.A.B. August 2014) (computer method and hardware for ‘phase shifting’ design data invalid under 101)
  • Ex parte Jung (P.T.A.B. August 2014) (diagnostic method associated with epigenetic risk factors invalid under 101).

Some of the claims invalidated are listed below:

Walker:

1. A method for operating a computer system to facilitate an exchange of identities between two anonymous parties, comprising the steps of:
receiving from a first party first data including an identity of said first party;
receiving from said first party at least two first-party rules for releasing said first data including a rule for releasing said identity of said first party;
receiving from a second party a search request comprising at least one search criterion;
receiving from said second party second data including an identity of said second party;
receiving from said second party at least two second-party rules for releasing said second party data including a rule for releasing said identity of said second party;
processing said search request to determine if said first data satisfies said search criterion; and
if said first data satisfies said search criterion, then
exchanging said first and second data, except said identities of said first and second parties, between said first and second parties in accordance with said first-party and second-party rules,
after said exchanging step, upon satisfying said first-party rule for releasing said identity of said first party, transmitting said identity of said first party to said second party, and
after said exchanging step, upon satisfying said second-party rule for releasing said identity of said second party, transmitting said identity of said second party to said first party.

Genetic Tech:

1. A method to predict potential sprinting, strength, or power performance in a human comprising:
a) analyzing a sample obtained from the human for the presence of one or more genetic variations in a-actinin-3 (ACTN3) gene;
b) detecting the presence of two 577R alleles at the loci encoding amino acid number 577 of the a-actinin-3 (ACTN3) protein; and
c) predicting the potential sprinting, strength, or power performance of the human, wherein the presence of two copies of the 577R allele is positively associated with potential sprinting, strength, or power performance.

Cote:

1. A computer-readable storage device including code segments, to be executed by a computer, relating to a lithographic process technology, the computer-readable medium comprising:
a code segment for receiving a plurality of bins, each bin including a plurality of clusters corresponding to layout data, wherein each cluster represents a plurality of shapes in the layout data, the plurality of shapes having a proximity to each other determined by a grow operation; and
a code segment for phase shifting the plurality of clusters independently of one another.

3. A method of using clusters in electronic design automation, the method comprising:
receiving data for a plurality of bins, each bin including a plurality of clusters, each cluster representing a plurality of shapes in an original layout, the plurality of shapes having a proximity to each other determined by a grow operation; and
using a computer, preparing a phase shifting layout for the original layout by phase shifting each of the plurality of clusters independently of one another.

7. An electronic design automation program to be executed by a computer and stored on a non-transient computer-readable medium, the electronic design automation program comprising:
a source code segment designed to receive layout data in a bin and cluster format, wherein at least one bin includes a plurality of clusters, each cluster representing a plurality of shapes in the layout data having a predetermined spatial relationship to each other as determined by a grow operation; and
a source code segment designed to phase shift the plurality of clusters independently of one another.

Jung:

1. A computer-implemented method comprising:
receiving epigenetic information associated with at least one individual;
calculating, using a microprocessor, a risk utilizing the epigenetic information; and
transferring at least a portion of the risk utilizing the epigenetic information.

Federal Circuit Falls in Line: Supporting Strong Limits on Patent Eligibility

By Dennis Crouch

In buySAFE v. Google (Fed. Cir. 2014), the Federal Circuit has found the patentee’s computer-based-transaction patent to be invalid as an abstract idea lacking subject matter eligibility. The decision by Judge Taranto and Joined by Judge Hughes is somewhat unremarkable and the holding falls easily within the framework created by Alice Corp and Mayo.  At the same time, the Federal Circuit offers several nuggets that may provide broader fodder for future eligibility challenges.

In its recent software patent decision of Alice Corp., the Supreme Court identified its underlying policy motivation for denying patent rights to abstract ideas, laws of nature, and natural phenomenon. The high court’s concern is “that patent law not inhibit further discovery by improperly tying up the future use of these building blocks of human ingenuity.” Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S.Ct. 2347 (2014), quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 1289 (2012).

Bright Line Test as a Proxy for the Policy Goals: In Mayo, the Supreme Court explained that the exceptions to patentability (law of nature, abstract idea, product of nature) serve as proxies “for the underlying building-block concern.”  Although admittedly an inexact substitute for the particular policy concern, the named exceptions are “somewhat more easily administered” and also have the benefit of substantial tradition. By using a proxy for its underlying concern, the Supreme Court seems ready to admit that some excluded inventions will not have raised substantial building-block concerns, however, the court concludes that judges simply “are not institutionally well suited to making the kinds of judgments needed to distinguish between” them. Mayo.  Thus, the result is a “bright line” exclusion against abstract ideas, laws of nature, mathematical formulae, and natural phenomenon.

Narrowness of Idea Cannot be Judged: Of particular importance here, although the breadth of an abstract idea is relevant to its impact on future innovation, the court here is clear that the breadth or narrowness is not relevant to the application of the exclusionary rule itself.  Rather, the exclusionary rule applies “even if the particular . . . abstract idea at issue is narrow.”

The Process of Determining Eligibility: The process then for determining subject matter eligibility is: (1) determine whether the patent claim is “directed to subject matter in one of the three excluded categories;” and (2) if so, determine whether “the additional elements” of the claim supply an “inventive concept” that is “significantly more than” the ineligible matter itself.  In explaining this second step, the Federal Circuit expounded that the inventive concept must be “in the physical realm of things and acts – a ‘new and useful application’ of the ineligible matter in the physical realm.” Further, merely requiring a generic computer implementation of an ineligible idea does not move the invention “into section 101 eligibility territory.”

Physicality requirement?: You might query how the Federal Circuit’s physicality requirement comports with Bilski v. Kappos, 561 U.S. 593 (2010) (rejecting the machine-or-transformation test as determinative).  The Federal Circuit actually takes an odd interpretation of Bilski.  The court here suggests that the Supreme Court rule on business method patents is that they are certainly directed to abstract ideas (step 1 above), and that they are only patentable with additional inventive concepts tied to the physical realm.

What is an Abstract Idea?:  Up to now, the courts have avoided providing any solid definition for the abstract idea test.  And here, the Federal Circuit was also able to duck that issue because the particular claims at issue are somewhat parallel to those seen in Bilski and Alice. Namely, the claims focus on arrangement involving contractual relations between parties and involving “a fundamental economic practice long prevalent in our system of commerce.”

In the present case, the patented “transaction performance guarantee” is, according to the court here “beyond question of ancient lineage.” And, the patentee’s addition of the computer and computer program in generic terms were insufficient to meet the eligibility test outlined above.

Invalidity affirmed.

I should note that the court did not discuss the presumption of validity or the standard of evidence applied to the underlying elements of the Alice Corp eligibility test.

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Claim 1 of US Patent No. 7,644,019:

A method, comprising:

receiving, by at least one computer application program running on a computer of a safe transaction service provider, a request from a first party for obtaining a transaction performance guaranty service with respect to an online commercial transaction following closing of the online commercial transaction;

processing, by at least one computer application program running on the safe transaction service provider computer, the request by underwriting the first party in order to provide the transaction performance guaranty service to the first party,

wherein the computer of the safe transaction service provider offers, via a computer network, the transaction performance guaranty service that binds a transaction performance guaranty to the online commercial transaction involving the first party to guarantee the performance of the first party following closing of the online commercial transaction.

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An interesting element of this particular decision is that Judge Rader was originally a member of the panel but lost his vote when he retired in June 2014.  Most certainly Judge Rader’s presence on the panel would have impacted the language used to reach these results.

Guest Post: Knowing what is Known and Knowable

Guest post by Professor Sharon K. Sandeen

For several years now, I have been thinking about how the changes that the America Invents Act (the AIA) wrought to the definition of prior art will change trade secret practice. Specifically, were they intended to narrow the definition of prior art in ways that would make it easier for inventions to be kept as trade secrets and used commercially without triggering the one-year grace period in which to file a patent application?

My initial interest in this topic was sparked by the noticeable deletion of the word “known” from section 102. Former section 102(a) used to state that “[a] person shall be entitled to a patent unless the invention was known or used by others in this country. . . before the invention thereof by the applicant for patent.” Most of the language of “old” section 102(a) is now in “new” section 102(a)(1), but not the word “known.” Also, what is to be made of the added phrase “otherwise available to the public.”

To date, the debate about whether the AIA intended to narrow the definition of prior art in ways that would heighten the ability of inventors to protect their inventions as trade secrets has focused on the meaning of “public use” and whether the phrase “otherwise available to the public” is a new category of prior art or was intended to modify the other listed categories. This makes sense when you consider that the previous “known” category focused on what others knew at the time of the invention, and the issue of whether the grace period is triggered concerns the acts of inventors. Thus, one way to look at the deletion of “known” is to realize that new section 102 simplified things by removing the only type of prior art that applied to “others” but not to the inventor. Now, all the categories of prior art listed in section 102(a)(1) apply to acts of others and inventors, and section 102(b) focuses on the acts of inventors.

I want to suggest another way of looking at the new section 102 and the deletion of the word “known” that helps make sense of both section 102(a) and 102(b). Under well-established trade secret doctrine, the prior art that prevents information from qualifying as a trade secret is expressed as that which is “generally known” and “readily ascertainable.”  What is generally known is broadly defined to include what is known to the general public and what is known within discrete industries or groups of individuals who are experts in the field. Information is readily ascertainable if, even though it is not generally known, it can be found without much time, trouble or expense. Among trade secret scholars, we say that the difference is between what is “known” to the public and what is “knowable.”

Applying the categorizations of “known” and “knowable” to the AIA, it can be seen that new section 102(a) refers to what is knowable. What is stated in a patent or a printed publication or what is in use or on sale, is probably not generally known, but it is readily ascertainable. Read this way, the phrase “otherwise available to the public” makes perfect sense because it captures the essence of the other listed categories and establishes that any information that is ascertainable before the effective filing date would constitute prior art. How readily available the information must be is an question that the AIA does not address directly and that will have to be determined by the courts.

Applying the trade secret concept of “known” to new section 102(b) helps make sense of the language of 102(b)(1)(B) which refers both to “the subject matter that was disclosed” and information that was “publicly disclosed” before such disclosure and, in a round- about way, establishes that section 102(a) does not require information to be generally known by the public. The language “the subject matter that was disclosed” must mean the information that is listed in section 102(a) which only needs to be “knowable.” Information that is “publicly disclosed,” in contrast, means information that was actually disclosed to the public (i.e., “generally known” in trade secret parlance).

Patent Grants

 

The chart below shows the number of utility patents issued each quarter with data through August 2014 (2014 Q3 uses an estimate for September 2014).  You will note that the number of patents issuing continues to rise.

The USPTO issues new patents each week on Tuesdays morning.  Of the top-twenty weeks with the most issued patents on record, all twenty occurred so far in 2014 (with one third of the year still remaining). PatentsPerQuarter2014

Calling Patent Attorneys to Pro Bono

The complexity of patent law and the restrictions on who is permitted to practice have served patent attorneys well — with the resulting generous incomes. The problem though is that these same complexities raise a barrier to entry for many small companies and individual inventors. Over the past few years, the USPTO has improved and formalized its pro bono programs. Get involved. (http://www.uspto.gov/inventors/proseprobono/)

Recent Patent Transfers

  1. Sandisk transferred a handful of patents and applications to newly formed company known as Sudek Technologies. The patents stem from the work of MusicGremlin – which was bought by Sandisk several years ago. How much would you pay for the following claim with a 2003 priority date?

1. An electronic device comprising:

an interface through which to communicate with a network; a memory; and processor in communication with the interface and the memory,

wherein the processor is operative to:

receive subscription information from a user, wherein the subscription information includes (i) a user-selection of one of a plurality of available subscription lists and (ii) a user-selected frequency at which an updated listing of digital media file titles from the selected subscription list is to be delivered from a server in the network to the electronic device, wherein the server stores a listing of one or more digital media file titles for the selected subscription list, which is updated periodically, wherein the delivery of the updated listing occurs repeatedly over time as the server updates the listing;

provide the subscription information to the server;

after an available connection to the network is detected:

automatically establish a connection to the server, wherein the connection to the server is established invisibly to the user; and

automatically receive an updated listing of digital media file titles from the server if it is time for the updated listing to be delivered, per the user-selected frequency in the subscription information, wherein the user manually selects the subscription list but particular digital media file titles from the subscription list are automatically selected and sent to the user.

  1. Japanese Konica-Minolta has transferred a set of 20+ patents to the Korean company Moneual (maker of a roomba competitor). The patents are all older (latest issued date is 2002) and relate to control systems for a mobile robot.
  2. The patent holding company known as “HOME RUN PATENTS LLC” has transferred all 16 of its patents to Palo Alto Networks. Earlier this year, Palo Alto Networks agreed to pay $175 million to settle a patent case with Juniper.
  3. RPX added a few more patents to its portfolio with a transfer from Hyperchip. The patents relate to fundamental aspects of network operations (such as congestion avoidance).
  4. Codexis just transferred a set of six patents to Pioneer Hi-Bred (DuPont) related to genetically modified plants with “pest resistance.” The patents were originally held by Maxygen and it is possible this transfer is simply a clean-up of a prior sale to DuPont.

What to do About All These Invalid Patents?

By Dennis Crouch

The recorder-of-deeds here in Boone County Missouri is pretty good at her job. Although there is an occasional error in the records, those errors are quickly remedied once found.  The property records are regularly relied upon and their correctness is important to ensure smooth operation of the real property marketplace.

Over the past few years, the Supreme Court has uncovered a few glaring errors in the patent records.  Namely – hundreds of thousands of patent claims have issued that are – in fact – not patentable.  These problematic claims either lack eligible subject matter under the patent common law and 35 U.S.C. § 101; are indefinite under 35 U.S.C. § 112; or are obvious under 35 U.S.C. § 103.  This results is prompted by the recent decisions in Supreme Court cases such as Alice Corp. v.. CLS Bank International, 134 S.Ct. 2347 (2014); Nautilus, Inc. v. Biosig Instruments, Inc., 134 S.Ct. 2120 (2014); Association for Molecular Pathology v. Myriad Genetics, Inc., 133 S.Ct. 2107 (2013); Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 1289 (2012); and KSR Intern. Co. v. Teleflex Inc., 550 U.S. 398 (2007).

Prior to these decisions, the USPTO had been issuing patents under more lenient standards. See, e.g. State Street Bank (Fed. Cir. 1998). For its part, the USPTO has quickly modified its approach effectuate the new precedent that offers more stringent tests of patent eligibility and patentability. The result is not necessarily fewer issued patents or a lower grant rate, but instead perhaps a modification (narrowing) of claim scope.

These decisions are all naturally retroactive in that they apply fully to the aforementioned problematic claims found in already issued patents.  However, the general approach thus far has been to leave those patents and their problematic claims on the patent rolls as if nothing had happened unless and until a third-party challenges their validity or the patentee abandons the protection.  Q: Is this a problem? A: Yes.

Next time: A few ideas for moving forward.