Tag Archives: Abstract Idea

Genus-Species; Doctrine of Equivalents; and Patentable Subject Matter

Claim Construction, Declaratory Judgment, Doctrine of Equivalents, Patent, Patent Cases 2010, Patentable Subject Matter, ,

By Dennis Crouch

For many, the most interesting aspect of this case comes at the end in Judge Dyk’s dissent. Dyk makes the case that genes should not be patentable. 

* * * *

Intervet Inc. v. Merial Limited (Fed. Cir. 2010)

In 2006, Intervet filed a complaint against Merial — asking the DC District Court for a declaratory judgment that Intervet’s Porcine Circovirus vaccine (PCV-2) did not infringe Merial’s gene patent.  Merial’s patent claims both the isolated DNA molecule of PCV-2 and a vector that contains the DNA.  The application includes a listing of several different sequences that all fall within the PCV-2 category. 

Although Intervet also uses a PCV-2 vector. The DJ plaintiff argues that its DNA molecule is different from the one described and deposited by Merial. The district court agreed — holding that the Intervet product was only 99.7% homologous to the closest deposited sequence and therefore outside of the literal claim scope. The district court also applied prosecution history estoppel to rejected Merial’s claims of infringement under the doctrine of equivalents (DOE). On appeal, the Federal Circuit reversed on both claim construction and DOE.

Genus Not Limited to Examples: The asserted claim includes a limitation of a “PCV-2” DNA molecule. The District Court limited that term to cover only the DNA sequences that were deposited with the PTO. On appeal, the Federal Circuit rejected that construction as overly limiting. Rather, the appellate panel held that the deposited sequences serve as a representative sample of PCV-2 DNA sequences. “Sequences are representative of the scope of broader genus claims if they indicate that the patentee has invented species sufficient to constitute the genera. Here, the deposited strains are representative species of the larger ‘type II’ genus, where the genus is identified and claimed as the invention.” In describing its invention, the specification noted that the PCV-2 desposited sequences had a 96% homology and that the invention did not cover PCV-1 sequences that at most shared 76% homology with the deposited sequences.  Taking those quantitative limits from the specification, the Federal Circuit ruled that the claimed PCV-2 molecule should be construed as being “about 96% or more homologous with the … sequences disclosed in the present specification, and about 76% or less homologous with the [disclosed PCV-1] sequence.”

What is Equivalents are Surrendered by a Narrowing Amendment: An accused infringer may still be liable even though its product does not literally infringe every element of an asserted patent claim.  Under the doctrine of equivalents (DOE), a patentee may be able to provie infringement by showing that one or more elements of the accused product are equivalent to elements in the claim.  Under the limiting doctrine of prosecution history estoppel (PHE), a patentee will ordinarly be estopped from claiming DOE over a claim element that was narrowed during prosecution. (A narrowing amendment made for purposes related to patentability creates a rebuttable presumption that estoppel applies.)

Here, one of Merial’s original claims was directed to a markush group of open reading frames (ORFs) that had been described in the specification as “ORFs 1–13.”  In an initial rejection, the examiner suggested that the limitation could refer to ORFs of non-PCV-2 molecules. Although the patentee argued that the claim was clear, it still added the limitation that the claimed ORFs were PCV-2 ORFs.  The Federal Circuit held that this was a narrowing amendment substantially related to patentability. That narrowing amendment therefore created a presumption that the patentee had surrendered all equivalents that relate to non-PCV-2 ORFs. The district court erred, however, in holding that this narrowing amendment would estopp the the patentee from asserting that the claims cover a non-claimed PCV-2 ORF as an equivalent. “Such a draconian preclusion would be beyond a fair interpretation of what was surrendered. The rationale for the amendment was to narrow the claimed universe of ORFs down to those of PCV-2, and bore only a tangential relation to the question of which DNA sequences are and are not properly characterized as PCV-2.”

Dissenting-in-part, Judge Dyk discussed his argument that the claims directed toward the isolated form of a naturally occurring gene are likely unpatentable under 35 U.S.C. § 101.

[T]he isolated DNA claim raises “substantial issues of patentable subject matter under 35 U.S.C. § 101. . . . Neither the Supreme Court nor this court has directly decided the issue of the patentability of isolated DNA molecules. Although we have upheld the validity of several gene patents, none of our cases directly addresses the question of whether such patents encompass patentable subject matter under 35 U.S.C. § 101. . . .

I think that such patents do in fact raise serious questions of patentable subject matter. The Supreme Court’s recent decision in Bilski v. Kappos has reaffirmed that “laws of nature, physical phenomena, and abstract ideas” are not patentable. No. 08-964, slip op. at 5 (U.S. June 28, 2010) (quoting Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980)); Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948). Just as the patentability of abstract ideas would preempt others from using ideas that are in the public domain, see Bilski, slip op. at 13, so too would allowing the patenting of naturally occurring substances preempt the use by others of substances that should be freely available to the public. Thus, “a new mineral discovered in the earth or a new plant found in the wild is not patentable subject matter. Likewise, Einstein could not patent his celebrated law that E=mc2; nor could Newton have patented the law of gravity.” Chakrabarty, 447 U.S. at 309. These aspects are properly conceptualized as representing a public domain, “free toall men and reserved exclusively to none.” Id. (quoting Funk Bros., 333 U.S. at 130) (quotation mark omitted).

In Funk Brothers, the Court considered the patentability of a mixture of several naturally-occurring species of bacteria. 333 U.S. at 128-31. The patented product was a mixture of bacteria used in agricultural processes, enabling plants to draw nitrogen from the air and convert it for usage. The inventor discovered that certain strains of the bacteria were effective in combination with one another, and contrary to existing assump-tions, did not exert mutually inhibitive effects on each other. The Court held that the invention was not pat-entable subject matter. Id. at 131. The inventor “did not create a state of inhibition or of non-inhibition in the bacteria. Their qualities are the work of nature. Those qualities are of course not patentable.” Id. at 130. The Court furthermore noted:

The qualities of these bacteria, like the heat of the sun, electricity, or the qualities of metals, are part of the storehouse of knowledge of all men. They are manifestations of laws of nature, free to all men and reserved exclusively to none. He who discovers a hitherto unknown phenomenon of na-ture has no claim to a monopoly of it which the law recognizes. If there is to be invention from such a discovery, it must come from the applica-tion of the law of nature to a new and useful end.

Id.

In Chakrabarty, the Court considered whether a human-made microorganism is patentable subject matter under section 101. 447 U.S. at 305. The microorganism in question was a bacterium that had been genetically engineered to break down crude oil. In concluding that the man-made bacteria was patentable, the Court observed that the claim “is not to a hitherto unknown natural phenomenon, but to a nonnaturally occurring manufacture or composition of matter.” Id. at 309. The Court went on to distinguish Funk Brothers on the ground that the Chakrabarty bacterium possessed “markedly different characteristics from any found in nature. . . . His discovery is not nature’s handiwork, but his own; accordingly it is patentable subject matter under § 101.” Id. at 310 (em-phasis added).

Thus, it appears that in order for a product of nature to satisfy section 101, it must be qualitatively different from the product occurring in nature, with “markedly different characteristics from any found in nature.” It is far from clear that an “isolated” DNA sequence is qualita-tively different from the product occurring in nature such that it would pass the test laid out in Funk Brothers and Chakrabarty. The mere fact that such a DNA molecule does not occur in isolated form in nature does not, by itself, answer the question. It would be difficult to argue, for instance, that one could patent the leaves of a plant merely because the leaves do not occur in nature in their isolated form.

 

 

Guest Post: USPTO Must Amend Examiner Guidelines On Bilski

Guest Post, Patent, Patentable Subject Matter,

by Paul Craane of Marshall Gerstein & Borun

In the wake of Bilski, the United States Patent and Trademark Office has provided unclear, and potentially incorrect, guidance to the Examining Corps regarding the application of 35 U.S.C. 101. The guidance instructs examiners to reject claims if the claims fail to meet the machine-or-transformation (MoT) test, absent some "clear indication that the method is not directed to an abstract idea." This application of Bilski effectively ignores the guidance provided by the opinion to the effect that the MoT test is not the sole test for patent-eligible processes under Section 101.

According to existing precedent, the examiner has the burden to make out a prima facie case before the burden shifts to the applicant. Given that the examiner has the burden and given that the MoT test is not the sole test, a failure to meet the MoT test should not automatically result in rejection of a claim. In fact, if failure to meet the MoT test did necessarily result in the rejection of a claim, then the USPTO would be using the MoT test as the sole test for patent-eligibility, contrary to Bilski.

Of course, the guidance does not suggest a rejection based solely on the MoT test, in that the examiner must still look for a clear indication that the method is not directed to an abstract idea. Even though there is an additional step, this procedure would appear to shift the burden from the examiner to show patent-ineligibility to the applicant to affirmatively show patent-eligibility before the examiner has made out a prima facie case of patent-ineligibility. According to Bilski, there are only three exceptions to patent-eligibility: laws of nature, physical phenomena, and abstract ideas. In accordance with Bilski, unless one of these exceptions is shown, the examiner can hardly be said to have made out a prima facie case of patent-ineligibility, such that the burden should shift to the applicant.

Consequently, the USPTO should amend its guidance to clarify that the examiner has an obligation to show that the claim recites an abstract idea (or law of nature or physical phenomena) to reject the claim, rather than simply indicating that if they should reject after applying the MoT test if they fail to find a clear indication that it does not recite an abstract idea.

Note: As per our usual rule, this post does not necessarily reflect opinions of Mr. Craane's firm or its clients.

Patently-O Bits and Bytes

Bits and Bytes, Patent,

I worked with my former firm MBHB on a special Bilksi edition of their newsletter.

  • Snippets can be downloaded here: http://www.mbhb.com/snippets/bilski
  • Topics include:
    • Viewpoints on Life After Bilski v. Kappos 
    • With Bilski Having Come and Gone, It's Time to Get Back to Work 
    • Avoiding Abstract Claims by Broadly Defining the Problem 
    • A Critique of Bilski's Textual Analysis 
    • Questions Surrounding a Shift to an "Abstract Idea" Test
    • Bilski v. Kappos: Effects on Biotechnology Patents

Some New IP Blogs:

Old Stand-by IP Blog:

Patent Law Pro Bono and the Federal Circuit Bar Association

  • The Court of Appeals for the Federal Circuit handles several distinct types of cases.  The largest dollar-value cases typically involve patents.  The veteran and government personnel appeals are usually worth much less.  Many patent litigators have begun handling these lower-value appeals on a pro bono basis.  Professional representation in these cases helps insure that justice is served. In a recent ceremony, Federal Circuit Chief Judge Rader and CAVC Chief Judge Greene honored the volunteers for their service.  Four particular attorneys deserve special praise for their efforts: Ron Smith, Blair Taylor, Dion Messer, and Paul Eaglin (as well as Jim Brookshire of the FCBA).  Others who were recognized at the ceremony include: Mark Abate, Alan Anderson, Michelle Armond, Reynaldo Barcelo, Alyson Barker, Dawn Marie Bey, Elizabeth Brenner-Leifer, Carl Bretscher, William H. Burgess, John Bustamante, Kurt Calia, Mary Calkins, Steve Carlson, Virginia Carron, Yar R.Chaikovsky, Connor Civins, Bradley Coburn, David Cohen, Kristin M. Cooklin, Donald Curry, Steve Daniels, Lauren A. Degnan, Kirk Dorius, John Dragseth, Helen Dutton, Paul Eaglin, Geoffrey Eaton, Brian Edmunds, Sam Ernst, James Erwin, Cecilia Fex, Bob Fuhrer, Anthony Garza, Shane Glynn, Daniel Graham, Joshua Graham, Maximilian Grant, Frederick Hadidi, Thomas Halkowski, Jason Harp, Cathy Harris, Edmund Haughey, Nathan Henderson, Dan Herzfeld, Todd Hettenbach, Christopher Hower, Richard Hung, Christopher Ryan Johnson, Harold Johnson, Lawrence Kass, Lisa Kattan, Rudy Kim, Brian Kramer, Kevin T. Kramer, Deanna Kwong, Brad Lane, Steve Lauff, Lewis E. Leibowitz, Greg Lipper, Christopher Liro, John Livingstone, Christopher Longman, Doug Lumish, Chris Martiniak, Duane Mathiowetz, Aaron Maurer, Scott P. McBride, Scott McCaleb, Michael McCaleb, Ryan McCarthy, Richard McLaren, Dion Messer, John Molenda, Brian Pandya, Chad Pannell, Lee Perla, Matthew Phillips, Janet Phipps Burkhead, Thomas Puppa, George Quillin, Courtland Reichman, Edward Reines, Elizabeth Roesel, Elizabeth Rogers Brannen, Joshua Rothman, Adam Samansky, Jeff Schwartz, Beth Shaw, Chad Shear, William J. Simmons, Michael Sink, John Skenyon, Ronald Smith, Eric Sophir, Robert Stanley, Henry Su, Blair Taylor, Bryan Vogel, Keith Vogt, Daniel Volchok, Steven Warner, Scott C. Weidenfeller, Andrew Woodmansee, Jennifer Wu, and Hunter Yancey.
  • If you are interested in pro bono service, contact Nece Jordan at jordan@fedcirbar.org. 

 

Patently-O Bits and Bytes

Bits and Bytes, Patent,

I worked with my former firm MBHB on a special Bilksi edition of their newsletter.

  • Snippets can be downloaded here: http://www.mbhb.com/snippets/bilski
  • Topics include:
    • Viewpoints on Life After Bilski v. Kappos 
    • With Bilski Having Come and Gone, It's Time to Get Back to Work 
    • Avoiding Abstract Claims by Broadly Defining the Problem 
    • A Critique of Bilski's Textual Analysis 
    • Questions Surrounding a Shift to an "Abstract Idea" Test
    • Bilski v. Kappos: Effects on Biotechnology Patents

Some New IP Blogs:

Old Stand-by IP Blog:

Patent Law Pro Bono and the Federal Circuit Bar Association

  • The Court of Appeals for the Federal Circuit handles several distinct types of cases.  The largest dollar-value cases typically involve patents.  The veteran and government personnel appeals are usually worth much less.  Many patent litigators have begun handling these lower-value appeals on a pro bono basis.  Professional representation in these cases helps insure that justice is served. In a recent ceremony, Federal Circuit Chief Judge Rader and CAVC Chief Judge Greene honored the volunteers for their service.  Four particular attorneys deserve special praise for their efforts: Ron Smith, Blair Taylor, Dion Messer, and Paul Eaglin (as well as Jim Brookshire of the FCBA).  Others who were recognized at the ceremony include: Mark Abate, Alan Anderson, Michelle Armond, Reynaldo Barcelo, Alyson Barker, Dawn Marie Bey, Elizabeth Brenner-Leifer, Carl Bretscher, William H. Burgess, John Bustamante, Kurt Calia, Mary Calkins, Steve Carlson, Virginia Carron, Yar R.Chaikovsky, Connor Civins, Bradley Coburn, David Cohen, Kristin M. Cooklin, Donald Curry, Steve Daniels, Lauren A. Degnan, Kirk Dorius, John Dragseth, Helen Dutton, Paul Eaglin, Geoffrey Eaton, Brian Edmunds, Sam Ernst, James Erwin, Cecilia Fex, Bob Fuhrer, Anthony Garza, Shane Glynn, Daniel Graham, Joshua Graham, Maximilian Grant, Frederick Hadidi, Thomas Halkowski, Jason Harp, Cathy Harris, Edmund Haughey, Nathan Henderson, Dan Herzfeld, Todd Hettenbach, Christopher Hower, Richard Hung, Christopher Ryan Johnson, Harold Johnson, Lawrence Kass, Lisa Kattan, Rudy Kim, Brian Kramer, Kevin T. Kramer, Deanna Kwong, Brad Lane, Steve Lauff, Lewis E. Leibowitz, Greg Lipper, Christopher Liro, John Livingstone, Christopher Longman, Doug Lumish, Chris Martiniak, Duane Mathiowetz, Aaron Maurer, Scott P. McBride, Scott McCaleb, Michael McCaleb, Ryan McCarthy, Richard McLaren, Dion Messer, John Molenda, Brian Pandya, Chad Pannell, Lee Perla, Matthew Phillips, Janet Phipps Burkhead, Thomas Puppa, George Quillin, Courtland Reichman, Edward Reines, Elizabeth Roesel, Elizabeth Rogers Brannen, Joshua Rothman, Adam Samansky, Jeff Schwartz, Beth Shaw, Chad Shear, William J. Simmons, Michael Sink, John Skenyon, Ronald Smith, Eric Sophir, Robert Stanley, Henry Su, Blair Taylor, Bryan Vogel, Keith Vogt, Daniel Volchok, Steven Warner, Scott C. Weidenfeller, Andrew Woodmansee, Jennifer Wu, and Hunter Yancey.
  • If you are interested in pro bono service, contact Nece Jordan at jordan@fedcirbar.org. 

 

Mayo v. Prometheus Labs: Bilski and Medical Methods

Invalidity, Patent, Patentable Subject Matter, ,

Mayo v. Prometheus Labs (On Remand to the Federal Circuit 2010)

The Federal Circuit’s first full post-Bilski decision may come in the case of Mayo v. Prometheus Labs. That case had been pending on a petition for a writ of certiorari to the Supreme Court. In a June 29 order, the Court granted the petition and then summarily vacated the decision with a remand to the Federal Circuit to reconsider the case “in light of Bilski v. Kappos, 561 U.S. ___ (2010).”  The Supreme Court regularly uses this grant-vacate-remand (“GVR”) proceeding for pending cases are impacted by a decision.

In the case, the Mayo Clinic has challenging the validity of two Prometheus patents based upon suspect patentable subject matter. (U.S. Patents 6,355,623 and 6,680,302). 

The Prometheus patents claims an iterative approach to dosing that involves three steps: (1) first administer a drug to a subject; (2) then determine the level of drug in the subject; and (3) finally decide whether the next dose should be the same, higher, or lower. The decision on the next dose is made by comparing the the level of the drug in the subject against predetermined thresholds. Claim 1 of the '302 patent adds additional detail including identifying the active ingredient (6-thioguanine), the diagnosis (a GI disorder), and the predetermined thresholds (e.g., 230 pmol of drug per 8108 red blood cells). Claim 46 of the '623 is a broad claim in that it does not not require the administration step (step 1 from above).

The Federal Circuit held the method patentable under its Bilski test by finding that the required administration of the drug transformed an article into a different state or thing — essentially creating a per se rule that a method requiring administration of a drug will be deemed patentable subject matter under Section 101. The court also held that the "determining the level" step was necessarily transformative since "those levels cannot be determined by mere inspection." 

On remand, the focus will shift from the machine-or-transformation test to the broader question of whether the claims are directed to a statutory “process” and/or whether the claim scope is impermissibly abstract. Of course, the machine-or-transformation test may still be instructive in answering these question.

Abstract Idea and Broad Functional Language: The claims are written in broad functional language without tying the the claimed methods to any particular technology. Thus, the "administering" step could potentially be accomplished by any effective method (that has or will be invented) of getting the drug into the subject. Likewise, the patent offers potential methods of "determining the level" of drug in the body (e.g., liquid chromatography) but the claim is broadly written to seemingly cover any mechanism that fulfills that method. 

Novelty Involves the Mental Step: Of course, the general iterative process is well known, what makes the Prometheus claims novel is that they identify the particular thresholds that are important (e.g., 230 pmol). In practice, the process of comparing the thresholds to the subject's drug level is done in the mind of a physician. As Mayo explains, this merely involves the physician's mental recognition of a natural correlation between metabolite levels and patient condition.

The case also represents a growing trend of pitting patient advocates (who want cheaper access to medicine) against innovators (who create better treatments).

Note: In the same Post-Bilski order, the Supreme Court also issued a GVR in the case of Classen Immunotherapies, Inc. v. Biogen IDEC.  On remand, the Federal Circuit will be asked to decide whether the following claim fits within the scope of 35 USC 101:

Claim: A method of determining whether an immunization schedule affects the incidence or severity of a chronic immune-mediated disorder in a treatment group of mammals, relative to a control group of mammals, which comprises immunizing mammals in the treatment group of mammals with one or more doses of one or more immunogens, according to said immunization schedule, and comparing the incidence, prevalence, frequency or severity of said chronic immune-mediated disorder or the level of a marker of such a disorder, in the treatment group, with that in the control group.

Guest Post: Why Bilski Benefits Startup Companies

Amicus Brief, Guest Post, Patent, Patentable Subject Matter, Survey, , , ,

pic-98.jpg

I asked Professor Ted Sichelman to provide his thoughts on how the Bilski decision impacts start-up companies and their incentive to innovate. DC

By Ted Sichelman, University of San Diego School of Law

Before practicing law and becoming a professor, I founded and ran a small software company that sells speech recognition software to taxicab companies. After my company designed its technology, we filed for patents. Later on, when raising financing from angel and venture capital investors, they reviewed our pending applications carefully and considered them a way to stop potential competition. Indeed, in a recent survey of startup firms, the Berkeley Patent Survey—which I conducted with Robert Merges and Pamela Samuelson of UC Berkeley School of Law and Stuart Graham (now Chief Economist at the PTO)—startup executives reported that nearly 70% of venture capital firms and 50% of angel investors said that patents were important to their investment decisions. Relatively broad patentable subject matter assists startups in raising needed funds. As I have argued elsewhere, another reason for broad subject matter is that startups engage in substantial amounts of post-invention—but pre-commercialization—innovation that is not always technological in nature. For instance, many startups generate marketing, financial, legal, and other types of non-technological innovations during the costly commercialization process. Providing IP protection for these innovations not only can produce more of them, but also can help drive technology commercialization.

Assuming the Federal Circuit and the PTO do not go astray in implementing Bilski—which admittedly leaves many doors open to do so—the opinion will allow startups to continue to use patents to garner financing and will, hopefully, set an appropriate balance on the patentability of non-technological inventions. In particular, as I urged in an amicus brief with Professors Mark Lemley, Michael Risch, and Polk Wagner—Bilski rightly adheres to the 150-year old tradition that as long as the claimed invention is a machine, manufacture, composition of matter, or a process, only natural phenomena, laws of nature, and abstract ideas should be excluded from eligible subject matter.

One might contend that by allowing business methods—as well as software and other “intangible” innovations—to be patented, startup firms will encounter a greater “thicket” of patents, making it more difficult for them to enter particular markets. For example, an amicus brief in Bilski filed on behalf of “entrepreneurial and consumer advocates” argued that “if the PTO is permitted to grant broad business and service process patents, small start-up businesses would face an entirely new regime of business regulation – essentially requiring businesses to request private permits to operate from their competitors who have patents, independent of whatever technology the new business uses to compete.” Justice Stevens’ echoed this view by writing in his concurrence that business methods patents “can take a particular toll on small and upstart businesses.”

In actuality, under the Federal Circuit’s previous State Street Bank opinion, in operation for a decade prior to Bilski, the PTO regularly granted “broad business and service process patents” and there is little evidence that these patent-holders required startups to license them in any significant numbers. The Berkeley Patent Survey found that only 8% of the population of respondent software companies and 12% of venture-backed software companies had licensed-in even one patent. In sum total, a relatively low percentage, 0.6% and 3%, respectively, reported licensing a patent solely to avoid a lawsuit. And while Bilski ultimately holds that business methods are not per se unpatentable, the practical effect of the outcome will be to place unapplied business methods into the precluded “abstract idea” category. If implemented properly, such an approach will ensure that startups—and, indeed, larger and more established companies—are not unnecessarily subject to overly broad patents while maintaining robust incentives to innovate.

Ted Sichelman is an Assistant Professor at the University of San Diego School of Law, where he teaches patent law and other intellectual property courses.

Bilski v. Kappos and the Anti-State-Street-Majority

CAFC, Patent, Patent Cases 2010, Patentable Subject Matter,

The 1998 Federal Circuit decision in State Street Bank opened the door to patent protection on a wider variety of innovations — especially in the fields of business methods and software. State Street held that an invention should be patent eligible under 35 U.S.C. §101 if it involves some practical application and “it produces a useful, concrete and tangible result.”

Although not rejected by the majority opinion, it is clear that the broad “useful, concrete, and tangible result” test is dead. That test is conclusively rejected by what I term the Anti-State-Street Majority — a majority created by the combining the two concurring opinions in Bilski and their five-justice majority. The result is that the scope of patentable subject matter is certainly narrowed from its 1998 high-water-mark.

* * * * *

In Bilski v. Kappos (2010), the majority opinion neither endorses nor rejects State Street — writing instead that “nothing in today’s opinion should be read as endorsing interpretations of §101 that the Court of Appeals for the Federal Circuit has used in the past. See, e.g., State Street, 149 F. 3d, at 1373; AT&T Corp., 172 F. 3d, at 1357.”

The two concurring opinions in Bilski (2010) both explicitly reject the Useful-Concrete-And-Tangible-Result test of State Street. Justice Stevens writes that “it would be a grave mistake to assume that anything with a ‘useful, concrete and tangible result,’ may be patented. (Justice Stevens concurrence at FN 1). Justice Breyer reiterated his prior statement that “if taken literally, the statement [that anything which produces a useful, concrete, and tangible result, is patentable] would cover instances where this court has held the contrary.” (Justice Breyer concurrence). The two concurrences are in agreement on this point and are signed by five Supreme Court Justices — leading to a second majority on that particular point.

Of course, in its In re Bilksi decision, the Federal Circuit already repudiated State Street as inadequate and "insufficient to determine whether a claim is patent-eligible under § 101."

Cumulatively, this means that the broadest notion of patentable subject matter as represented by State Street is not the law. Although not "the test" it appears that the USPTO will continue to use the machine-or-transformation test as a "tool" for determining whether particular process claims fit within Section 101. A recent Post-Bilski notice to examiners indicated as much:

Examiners should continue to examine patent applications for compliance with section 101 using the existing guidance concerning the machine-or-transformation test as a tool for determining whether the claimed invention is a process under section 101. If a claimed method meets the machine-or-transformation test, the method is likely patent eligible under section 101 unless there is a clear indication that the method is directed to an abstract idea. If a claimed method does not meet the machine-or-transformation test, the examiner should reject the claim under section 101 unless there is a clear indication that the method is not directed to an abstract idea. If a claim is rejected under section 101 on the basis that it is drawn to an abstract idea, the applicant then has the opportunity to explain why the claimed method is not drawn to an abstract idea.

I'm sure that our notion of the law will continue to develop as the Bilski decision makes its way into daily practice.

Bilski v. Kappos

Patent, Patentable Subject Matter, Software, , ,

Although Bilski's claims were held unpatentably abstract, the Supreme Court has re-affirmed that the door to patent eligibility should remain broad and open.

Bilski v. Kappos (Supreme Court 2010)(08-964)

The Supreme Court has issued its opinion in Bilski v. Kappos. In the decision, the Supreme Court affirmed that Bilski’s risk-management method was not the type of innovation that may be patented. However, rather than using the Federal Circuit's "machine-or-transformation test", the court simply relied on prior precedent to find the claimed method unpatentably abstract. Justice Kennedy authored the majority opinion. Justices Breyer and Stevens both wrote concurring opinions.

Business as Usual: In general, the opinion offers no clarity or aid for those tasked with determining whether a particular innovation falls within Section 101. The opinion provides no new lines to be avoided. Rather, the outcome from the decision might be best stated as "business as usual."

Today, the Court once again declines to impose limitations on the Patent Act that are inconsistent with the Act’s text. The patent application here can be rejected under our precedents on the unpatentability of abstract ideas. The Court, therefore, need not define further what constitutes a patentable “process,” beyond pointing to the definition of that term provided in §100(b) and looking to the guideposts in Benson, Flook, and Diehr.

By refusing to state any particular rule or categorical exclusion, the Court has almost certainly pushed Section 101 patent eligibility to the background in most patent prosecution and litigation.

Business Methods: Section 101 does not categorically exclude business methods from patentability. Rather, the court noted that the prior-use defense found in Section 273(b)(1) of the Patent Act "explicitly contemplates the existence of at least some business method patents. . . . [B]y allowing this defense the statute itself acknowledges that there may be business method patents."
Software: Although the court expressly refused to rule on the patentability of software, it appears that software will largely remain patentable. At minimum, the decision would bar any categorical exclusion of software patents. The court neither endorsed nor rejected the Federal Circuit's past interpretations of Section 101 — Noting that "nothing in today’s opinion should be read as endorsing interpretations of §101 that the Court of Appeals for the Federal Circuit has used in the past. See, e.g., State Street, 149 F. 3d, at 1373; AT&T Corp., 172 F. 3d, at 1357."

Abstract Idea: The one thing that all nine justices agreed upon is that Bilski's method of hedging risk was not patentable because it is an abstract idea "just like the algorithms at issue in Benson and Flook."

 

The concept of hedging, described in claim 1 and reduced to a mathematical formula in claim 4, is an unpatentable abstract idea, just like the algorithms at issue in Benson and Flook. Allowing petitioners to patent risk hedging would preempt use of this approach in all fields, and would effectively grant a monopoly over an abstract idea.

Petitioners’ remaining claims are broad examples of how hedging can be used in commodities and energy markets. Flook established that limiting an abstract idea to one field of use or adding token postsolution components did not make the concept patentable. That is exactly what the remaining claims in petitioners’ application do. These claims attempt to patent the use of the abstract idea of hedging risk in the energy market and then instruct the use of well-known random analysis techniques to help establish some of the inputs into the equation. Indeed, these claims add even less to the underlying abstract principle than the invention in Flook did, for the Flook invention was at least directed to the narrower domain of signaling dangers in operating a catalytic converter.

It is unclear to me how patent office examiners will be able to apply the test for abstract ideas in any meaningful way. I suspect that they will not. Rather, the best advice for the USPTO is to focus on Section II-A of Justice Kennedy's opinion. There, the opinion recognizes that Section 101 patent eligibility is "only a threshold test." To be patentable, the invention must also "be novel, see §102, nonobvious, see §103, and fully and particularly described, see §112."

What is the test?: 35 USC 101 offers patent protection for "any new and useful process, machine, manufacture, or composition of matter." Here, the focus was on the definition of a "process" because Bilski's patent application was written to claim a method of hedging risk. Although the majority opinion refused to define the term process, it did write that the machine-or-transformation test developed by the Federal Circuit does not define what is (and is not) a patentable process. Rather, the Court held that the machine-or-transformation offers "a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under §101. The machine-or-transformation test is not the sole test for deciding whether an invention is a patent-eligible process." As a "clue," the machine-or-transformation test likely correlates with the existence of patentable subject matter. However, some patent claims that fail the test will still be patentable and other patent claims that pass the test will still be ineligible.   

Read the Opinion

Bilski, Kenny Rogers and Supreme Court Rule 46

Guest Post, Patent, Patentable Subject Matter, , , ,

by Professor John F. Duffy, George Washington University Law School

You got to know when to hold 'em, know when to fold 'em
Know when to walk away, know when to run                       
                                                       — Kenny Rogers in The Gambler
_____________________________

Kenny Rogers’ hit song The Gambler provides some wise strategic advice, valid not only in cards and but also in law and perhaps in life generally:   If “fold ’em” is an option, sometimes it is the best one. Supreme Court Rule 46 on “Dismissing Cases” provides petitioners in Supreme Court cases the opportunity to “fold ’em,” and in the days remaining before the Supreme Court delivers an opinion in its Bilski v. Kappos case, the most puzzling question in the case has become this: Why won’t the petititoners in Bilski fold?

From the perspective of the petitioners, the case for seeking dismissal seems overwhelmingly strong. In the months since the oral argument in Bilski, every Justice save Justice Stevens has delivered an opinion from the set of cases argued in the November sitting. Bilski remains the only case not decided from that sitting. Because only one case remains undecided and only one Justice has yet to deliver an opinion from that month, there is widespread agreement among those familiar with Supreme Court practice that Justice Stevens is writing the Court’s opinion in Bilski. Thus, the petitioners are now reduced to hoping that Justice Stevens, who once argued in dissent that all software should be outside patentable subject matter, will author an opinion that will be more pro-patent than the positions taken by all but one of the Federal Circuit judges.

But there’s more. Not only do petitioners have no realistic hope of winning anything in the case, they also have much to lose by persisting in the appeal. Petitioners—the named inventors in the application, Bernard Bilski and Rand Warsaw—and their firm WeatherWise have other patent claims, some issued and some pending, that pass the machine-or-transformation test but that may not pass whatever test Justice Stevens is busy constructing.

That’s a quick summary of the case for the petitioners seeking dismissal of Bilski. The details only make the case stronger. Then again, there is also a distinct possibility that petitioners’ side of the case may want to lose.

The Petitioners’ Chances for Victory: Nil.

Any rational consideration of persisting in a legal case should begin with a frank assessment of the chances for gain and loss.   I’ll begin with the chances for gain, for they are as close to zero as can be imagined.

Good poker players learn to read other players’ “tells,” subtle clues which give hints about the likely outcomes if the hand is played to completion. In Bilski, the Supreme Court has also given some awfully clear “tells” that do not bode well for the petitioners.

Most importantly, the assignment pattern of the Court’s opinions strongly suggests that Justice Stevens is writing the opinion. The assignment of opinions in the Court is typically done with two goals in mind: (1) to give each Justice the chance to author at least one majority opinion from each sitting; and (2) to average out the number of majority opinions written by each Justice. Twelve separate cases were argued in the November sitting, including Bilski. (This counts two cases—Graham v. Florida and Sullivan v. Florida—as effectively one case, as the two cases involved the same issue and were eventually decided the same day.) Every Justice has delivered a majority opinion from that month, with the exception of the Justice Stevens. Thus, most Supreme Court watchers would predict that the one remaining opinion from the month—Bilski—was assigned to Justice Stevens.

There is some uncertainty about this result, however. Pursuant to Supreme Court Rule 46, one of those twelve cases (Pottawattamie County v. McGhee) was dismissed two months after the oral argument, so the Justice assigned to write the opinion in that case is not publicly known. Still, Stevens still remains the most likely candidate to have been assigned the Bilski opinion because of the larger pattern of assignments from the Court’s first three sittings (September, October and November). During those three months, 26 cases were argued. If the Court were trying to average out the workload among the Justices, then every Justice save one should have been assigned three majority opinions to write.

By now, all Justices have delivered three majority opinions from those first sittings with the exception of Justices Stevens and Sotomayor. Justice Stevens has delivered only one majority opinion (a case argued in October); Justice Sotomayor has delivered two majority opinions (one each from October and November). It seems highly likely that Justice Stevens was assigned only two majority opinions to write from the first three sittings because Stevens was also writing the principal dissent in Citizens United v. FEC, the hugely important campaign finance case to which the Court gave expedited consideration.   (If, however, Justice Stevens was originally assigned three majority opinions, then he would have definitely been assigned Bilski.) Assuming Justice Stevens was assigned only two majority opinions, then the assignments to write majority opinions in Bilski and the now-dismissed Pottawattamie County case would have been distributed to Stevens and Sotomayor. Sotomayor would seem like the natural for Pottawattamie County, which involved the immunity of state prosecutors from civil liability, because Sotomayor served as a state criminal prosecutor under New York City’s Robert Morgenthau. Stevens, by contrast, was an antitrust lawyer before becoming a judge, and he has shown significant interest in patentable subject matter.

Another clue to the authorship of Bilski comes from the lengthy delay in announcing the opinion. As previously mentioned, Justice Stevens wrote the principal dissent in the Citizens United case, which was heard and decided on an expedited basis by the Court because of the case’s importance to the spring primary season. Stevens’ impassioned dissent in that case ran for 90 pages, and that opinion seems to have delayed the release Stevens’ other majority opinions. Indeed, for two months after the January decision in the Citizens United case, Justice Stevens was the only Justice on the Court not to have delivered any majority opinion during the entire Term.

If, as seems likely, Justice Stevens is writing the majority opinion in Bilski, that is an awful omen for the petitioners. Justice Stevens wrote the majority opinion for the Court in Parker v. Flook (1978), which created the enigmatic rule that certain forms of “post-solution activity” cannot transform an unpatentable principle into a patentable process. Justice Stevens is also one of the few Justices ever to attempt to draw bright-line rules for excluding whole fields from the patent system. His dissent in Diamond v. Diehr, 450 U.S. 175, 193 (1981), sought to promulgate “an unequivocal holding that no program-related invention is a patentable process under § 101 unless it makes a contribution to the art that is not dependent entirely on the utilization of a computer.” 450 U.S. at 219.

In addition to the Court’s fairly clear “tell” that Justice Stevens will deliver the opinion of the Court, there are other signs that the petitioners’ chances for ultimate success are nil. The oral argument did not go well at all for petitioners’ counsel (to put it mildly), and a significant portion of the government’s argument was devoted to arguing that the Court should not impose a more restrictive rule than that sought by the PTO (e.g., a complete ban on business method patents, whether machine implemented or not). See Transcript of Argument at 40-50. In addition, at the Federal Circuit, even Judge Rader—one of the two judges willing to take a more comprehensive view of patentable subject matter—stated explicitly that he would agree the petitioners’ claims were unpatentable as abstract ideas.

Finally, if more evidence were needed, there is the PTO’s extraordinary record of success at the Supreme Court in patent cases. Two recent articles, one by Colleen Chien of Santa Clara University and one of my own, have independently noted that, since the creation of the Federal Circuit, the government’s substantive positions on patent law have always prevailed at the Supreme Court. See Colleen Chien, Patent Amicus Briefs: What the Courts’ Friends Can Teach Us About the Patent System (2010); John F. Duffy, The Federal Circuit in the Shadow of the Solicitor General, 78 G.W.U. L. Rev. 518 (2010).   The petitioners in Bilski must hope that the Supreme Court will finally rule against the government, and in an opinion by Justice Stevens, stake out a much more pro-patent position than every judge on the Federal Circuit save one.

The Value of Dismissal.

The impossibly slim odds of winning would not matter to the petitioners if they had nothing to lose from persisting in the appeal. But petitioners Bilski and Warsaw have at least two pending patent applications on business methods for hedging risk. See U.S. Pat. App. 200030233323 A1 (Dec. 18, 2003); U.S. Pat. App. 20040122764 A1 (June 24, 2004). Furthermore, Petitioner Warsaw also is the named inventor on several issued claims in a patent assigned to the firm WeatherWise.   See U.S. Pat. No. 6,785,620 (2004). Many of the claims in that patent would seem to pass the machine-or-transformation test, as the claims cover “system[s]” that include various modules for storing and manipulating data. Some claims are also directed to a “computer-readable medium having stored thereon instructions,” which is a form of claim for covering business software that the government currently views as permissible but that could be jeopardized by an unfavorable Supreme Court opinion in Bilski.   

If the Bilski case were dismissed, a decision about patentable subject matter would be left for the future. From the standpoint of petitioners, the future would better for two reason. First, Justice Stevens would be replaced by a new Justice, likely Elana Kagan. That change has to favor those on the side of the petitioners since Justice Stevens takes a more restrictive view of patentable subject matter than many of the other Justices on the Court. By contrast, the Solicitor General’s Office under Kagan expressly endorsed the position (stated during the Bilski oral argument) that the Federal Circuit had correctly decided State Street Bank v. Signature Financial. See Transcript of Oral Argument at 44. The future also presents the possibility of a different case, with perhaps more attractive facts.

Dismissal: Still Time?

Supreme Court Rule 46.1 allows any case to be dismissed, even after the oral argument, by agreement of the parties. The Rule directs that, upon filing of such an agreement, the Clerk of the Court, “without further reference to the Court, will enter an order of dismissal.” Furthermore, Rule 46.2 allows petitioners unilaterally to seek dismissal by agreeing to pay all the court costs and fees due. (Such costs and fees are not attorneys’ fees but merely the minor costs associated with the appeal that are paid by the losing party in any case.) The grounds on which respondents may object to such a filing are strictly “limited to the amount of damages and costs in this Court alleged to be payable or to showing that the moving party does not represent all petitioners or appellants.” The Clerk of the Court is directed “not [to] file any objection not so limited.”

The Rule reflects a very clear policy that the Court will not plunge ahead to decide a case if the petitioners have decided to “fold ’em,” and that policy makes perfect sense from the Court’s perspective. The Supreme Court has plenty of cases to decide, and important issues eventually percolate back up to the Court if they really need to be decided. Indeed, in the November sitting alone, the Pottawattamie County case was dismissed even though argument had been heard two months earlier and the case involved an important issue about the scope of prosecutors’ immunity.

True, if the Solicitor General’s Office were unwilling to agree to the dismissal, it is unclear what would happen. At oral argument, however, the advocate for the Solicitor General’s Office emphasized that the government thought the Court should never have taken the case because it was an “unsuitable vehicle” to decide questions of patentable subject matter. Transcript of Argument at 48. Moreover, the Solicitor General’s Office is very much a repeat player at the Supreme Court, and thus the Office tends to be willing to follow not just the letter but also the spirit of the Court’s rules. Since those rules reflect a fairly clear policy that petitioners’ dismissals should not be opposed unless the petitioner either is not willing to pay costs or does not represent all petitioners, the Solicitor General’s Office seems unlikely to attempt to thwart dismissal where the petitioners comply with the conditions of Rule 46.

A Final Point: A Desired Defeat?

All of the above makes the crucial assumption that the petitioners in Biski want to sustain the patentability of business method patents such as their own. But that assumption may be wrong. The patent application at issue is no longer owned by Bernard Bilski, Rand Warsaw or even WeatherWise, the small start-up company that holds similar patent claims on hedging energy consumption risks and is merely a licensee of the patent application at issue in the case (see Paul Schaafsma news article noting the licensing relationship). As the petitioners’ briefs in the Supreme Court disclose, the real party in interest in the case is Equitable Resources Inc., renamed EQT Inc. during the pendency of the case. See Petitioners’ Reply Brief at (i). That corporation has market capitalization of $5.4 billion (see EQT Financial Report). A quick search of the PTO’s database does not show any issued patents owned by this corporation, and the company’s most recent annual report filed with the SEC makes no mention of patents or intellectual property. It is not at all clear that such a company really wants to have patent protection for innovative ways to manage energy costs or risks, or for any other form of business method. Large companies are often the targets of patent infringement litigation, and start-ups often see patents as a means to compete against established firms. Indeed, the Warsaw patent on hedging risk—which is assigned to WeatherWise, not EQT—could itself provide a reason why the petitioners’ side of the case would welcome defeat.

It remains a puzzle why the petitioners in this case are persisting in an appeal that seems not only doomed but also capable of establishing new and unpredictable restrictions to the scope of patentable subject matter. I had previously thought that “irrational exuberance” provided the best answer—that the Bilski petitioners were likely to remain unrealistically optimistic about their chances for success right up to the end. But the presence of a multibillion-dollar corporation controlling the litigation decreases the chances that the strategy is due to simple inventor over-optimism. Perhaps the entity controlling the petitioners’ side of the case is really quite wily, for there would be no cause to “fold ’em,” if the petitioners’ side would view thorough defeat as victory. That would explain much.  

The Requirement that the Written Description be Concise

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ProlixBy Dennis Crouch

The Patent Act requires that the written description of an invention be “concise.”  35 U.S.C. 112p1. The meaning of that requirement is unclear, but but the language of Section 112 at least suggests that a written description needs to be concise in order to satisfy the enablement requirement. Of course, there is a tension between providing a disclosure that is “concise” and at the same time “full.” In Markman v. Westview, the Supreme Court recognized this tension — noting that the description must be “complete yet concise.”

In a 1967 district court case, the court focused briefly on the requirement — noting that the “descriptions contained in the patent in suit are sufficiently concise and clear to enable one skilled in the art to construct that which is taught by the patent.” San Marino Electronic Corp. v. George J. Meyer Mfg. Co., 155 U.S.P.Q. (BNA) 617 (C.D. Cal. 1967).

In my brief search, I found no cases invalidating a patent because its description was not concise. The most on-point case appears to be a pre-1952 Eighth Circuit case where the court came close to invalidating a family of patents based on their wordiness:

We think that the patents are unnecessarily prolix in verbiage and there should have been fewer claims more simply stated. They border on failure to comply with the statutory requirements concerning succinct description and particular pointing out and claiming. But consideration of the file wrappers and the trial court record has persuaded that those skilled in the art have understood them and the courts have had them explained.

National Aluminate Corp. v. Permutit Co., 145 F.2d 175 (8th Cir. 1944). It is interesting that part of the court’s problem with the patents was that they had too many claims. The USPTO does reject individual claims that it deems overly wordy or “prolix.” The idea behind those rejections is that sometimes overly-wordy claims may have the “net result of which is to confuse rather than to clarify.” However, the USPTO prolix rejections are grounded in Paragraph 2 of Section 112 — for failing the requirement of “particularly pointing out and distinctly claiming the subject matter.”

The probably more accepted use of the “concise” requirement is explained in the decision captioned Application of Knowlton, 481 F.2d 1357 (C.C.P.A. 1973). In that case the precurser to the Federal Circuit relied on the requirement to limit the power of the enablement requirement.

[I]t must be borne in mind that the disclosure need not only be full, clear and exact to satisfy the statute, it must also be concise, and that the disclosure is directed to those skilled in the art. The amount of precision necessary in any given case is always a matter of degree. Absent special circumstances it is not required that every nut, bolt and rivet actually used in mechanical inventions be described, or, in chemical cases, that the electron orbital patterns for a claimed compound be set forth.

In the right case, a defendant may well convince a court to give the concise requirement its full weight and invalidate a patent whose specification is written in confusing and overly-wordy language.

Notes:

  • I searched the BPAI database of decisions (1997–2009) and found only one case reviewing a rejection where the Examiner found claims invalid as prolix “since they contain long recitations or unimportant details which hide or obscure the invention.” Ex parte Nagano, App. No. 1996–4094 (Bd. Pat. App. Inter. 1999). In Nagano, the Board reversed the rejection – finding no support for the Examiner’s generalized assertions that the claims were confusing because of their length or contained unimportant details.

Bilski v. Kappos: Supreme Court Arguments

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Bilski v. Kappos (Supreme Court 2009) (oral arguments)

The transcript from the hour-long oral arguments are available online here. The following is the five-minute version of the questions and statements that I found most interesting. They are a bit out-of-order.

 

JUSTICE SCALIA: Well, if the government says that the — that the term on which it hangs its hat is the term useful arts and that that meant, originally, and still means manufacturing arts, arts dealing with workmen, with — you know, inventors, like Lorenzo Jones, not — not somebody who writes a book on how to win friends and influence people. What is wrong with [the] analysis, that …”useful arts” … always was thought to deal with machines and inventions?

JUSTICE BREYER: You know, I have a great, wonderful, really original method of teaching antitrust law, and it kept 80 percent of the students awake. … And I could probably have reduced it to a set of steps and other teachers could have followed it. That you are going to say is patentable, too?

JUSTICE SCALIA: . . . Let’s take training horses. Don’t you think that — that some people, horse whisperers or others, had some, you know, some insights into the best way to train horses? And that should have been patentable on your theory.

JUSTICE SOTOMAYOR: So how do we limit it to something that is reasonable? Meaning, if we don’t limit it to inventions or to technology, as some amici have, or to some tie or tether, borrowing the Solicitor General’s phraseology, to the sciences, to the useful arts, then why not patent the method of speed dating?

JUSTICE SOTOMAYOR: But a patent limits the free flow of information. It requires licensing fees and other steps, legal steps. So you can’t argue that your definition is improving the free flow of information.

 

MR. JAKES: . . . I think that we should go back to the first principles that were enunciated in Diehr and other cases, that abstract ideas per se are not patentable. That’s my position, and what I would advocate in this case and any case…

MR. STEWART: Well, I think the Court could say — could do essentially what was done in Benson and Flook, namely acknowledge that there had never been a case up to this point in which a process had been held patent eligible that didn’t involve a machine or a transformation. It could leave open the possibility that some new and as yet unforeseen technology could necessitate the creation of an exception.

 

MR. JAKES: [L]ooking at what are useful arts, it does exclude some things. It does exclude the fine arts. Speaking, literature, poems, I think we all agree that those are not included, and there are other things as well. For example, a corporation, a human being, these are things that are not covered by the statutory categories. . . . Now, the patent on the data, that’s another category that’s not included in the subject matter of those four categories. The data itself is not patentable, but if it is a series of steps, it should be eligible as long as it meets the other statutory requirements as a process.

 

CHIEF JUSTICE ROBERTS: Well, but your Claim 1 it seems to me is classic commodity hedging that has been going on for centuries.

MR. JAKES: Your Honor, if that were true, then we should run afoul of the obviousness provision under section 103.

 

JUSTICE BREYER: There are actually four things in the patent law which everyone accepts. There are two that are plus and two that are minus. And the two that are plus is by giving people a monopoly, you get them to produce more. As you said, you get them to disclose. The two minuses are they charge a higher price, so people use the product less; and moreover, the act of getting permissions and having to get permission can really slow things down and destroy advance. So there is a balance. In the nineteenth century, they made it one way with respect to machines. Now you’re telling us: Make it today in respect to information. And if you ask me as a person how to make that balance in respect to information, if I am honest, I have to tell you: I don’t know. And I don’t know whether across the board or in this area or that area patent protection will do no harm or more harm than good.

 

MR. STEWART: And you know, Justice Scalia, you mentioned how to win friends and influence people. I think at a certain level of generality you could describe both Dale Carnegie and Alexander Graham Bell as people who devised methods of communicating more effectively. The reason that Bell’s method was patentable was that it operated in the realm of the physical. Bell had devised a process implemented through machines by which sound was transformed into electronic current. The current was then transmitted over a distance and transformed back into sound. Innovations as to new techniques of public speaking, new techniques of negotiations, techniques that go to the substance of what is said may be innovative. They may be valuable. They are not patent eligible because they don’t deal in the realm of the physical —

 

JUSTICE SOTOMAYOR: How about if we say something as simple as patent law doesn’t cover business matters

MR. STEWART: I think that would be incorrect, and it would create problems of its own. . . . So to say that business methods were ruled out would itself be a fairly sweeping holding.

JUSTICE SCALIA: Also you could say business methods apart from machines are not patentable. How about that?

MR. STEWART: If the Court said that in the limited area of business methods, if there is no machine or transformation there is no patent eligibility —

 

CHIEF JUSTICE ROBERTS: Mr. Stewart, I thought I understood your argument up until the very last footnote in your brief. And you say this is not –simply the method isn’t patentable because it doesn’t involve a machine. But then you say but it might be if you use a computer to identify the parties that you are setting a price between and if you used a microprocessor to calculate the price. That’s like saying if you use a typewriter to type out the — the process then it is patentable. . . . that takes away everything that you spent 53 pages establishing. . . . [I]f you look at your footnote, that involves the most tangential and insignificant use of a machine. And yet you say that might be enough to take something from patentability to not patentable.

MR. STEWART: And all we’ve said is that it might be enough; that is, hard questions will arise down the road as to where do you draw the line, to what extent must the machine or the transformation be central —

CHIEF JUSTICE ROBERTS: So you think it’s a hard question. If you develop a process that says look to the historical averages of oil consumption over a certain period and divide it by 2, that process would not be patentable. But if you say use a calculator, then it — then it is?

MR. STEWART: I think if it’s simply using a calculator for its preexisting functionality to crunch numbers, very likely that would not be enough. But what we see in some analogous areas is that the computer will be programmed with new software, it will be given functionality it didn’t have before in order to allow it to perform a series of calculations, and that gets closer to the line. . . . I guess the point I’m trying to make is simply that we don’t want the Court, for instance, in the area of software innovations or medical diagnostic techniques to be trying to use this case as the vehicle for identifying the circumstances in which innovations of that sort would and would not be patent eligible, because the case really doesn’t present any — any question regarding those technologies.

 

JUSTICE KENNEDY: How would you come out in the State Street case today, if all of the arguments were made under your test?

MR. STEWART: Well, under our test, we would come out the same way because the computer would be a machine. The only question would be whether the programming of the computer with new software caused it to be a patentable different machine from the one that existed previously.

 

JUSTICE STEVENS: It’s not on a computer, which the only difference from the old computer is it’s using a new program. You can’t say that’s a new machine.

MR. STEWART: [The] PTO agrees … that programming a computer by means of software to produce — to perform new functions can create a novel —

JUSTICE BREYER: But then all we do is every example that I just gave, that I thought were examples that certainly would not be patented, you simply patent them. All you do is just have a set of instructions for saying how to set a computer to do it. Anyone can do that. Now, it’s a machine.

MR. STEWART: … we recognize that there are difficult problems out there in terms of patentability of software innovations and medical diagnostics.

JUSTICE KENNEDY: You thought we — you thought we would mess it up.

MR. STEWART: We didn’t think the Court would mess it up. We thought that this case would provide an unsuitable vehicle for resolving the hard questions because the case doesn’t involve computer software or medical diagnostic techniques, and therefore, we thought the Court would arrive at the position that I think, at least some members are feeling that you have arrived at, that you will decide this case, and most of the hard questions remain unresolved.

Supreme Court Hears Bilski v. Kappos

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As she has done with past cases, Jill Browning provides the following same-day analysis of the Supreme Court oral arguments in Bilski v. Kappos.

By Jill Browning

The Federal Circuit, sitting en banc, affirmed the Patent Office's decision that the applicant's claims directed to a method of hedging risk in the field of commodities trading did not meet the patent eligibility standard of  35 U.S.C. § 101.  The Federal Circuit found that a "process" must be tied to a particular machine or apparatus, or must transform a particular article into a different state or thing (the "machine-or-transformation" test), to be eligible for patenting under 35 U.S.C. § 101.

The Supreme Court heard oral argument on the appeal from the Federal Circuit today, wherein the central issue is whether the Federal Circuit erred by holding that a "process" must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing ("machine-or-transformation" test), to be eligible for patenting under 35 U.S.C. § 101. 

Justices Sotomayor, Kennedy and Breyer were particularly active, with only slightly lesser participation by Justices Scalia and Ginsburg and Chief Justice Roberts. The Justices appeared to be struggling to come up with the "right" answer and appeared to be mindful of the potential consequences their ruling may have.

Justice Scalia initially indicated that the "useful arts" should mean the manufacturing arts, but not someone who writes a book on "how to win friends and influence people."  Justice Sotomayor followed up with a question regarding the difficulty in where to draw the line if there is no tie to science/technology, reciting the parade of horrors of potentially patentable methods for estate plans or tax avoidance.  Justice Breyer followed up with a question asking whether the framers of the Constitution intended for every  "new" method that helps the business owner to conduct business should be patentable, intimidating that the petitioner's proposed test could be too encompassing and asking for an alternative to limit it to something more reasonable, such as "useful arts."  Justice Sotomayor asked whether a method to cure someone that involves only human activity would fall within the Patent Act.  In response, Petitioner responded that yes, many of these things, if there were new and useful and met the other requirements of the Patent Act, should be patentable, giving the specific example of surgical methods.

Justice Breyer asked for a proposed "back up" principle if the Court "hypothetically" decided to reject the test that "any steps" may potentially be patentable.  Chief Justice Roberts and Justice Kennedy both followed up with comments indicating that certain "ideas" that are abstract should not be patentable, indicating that it would be difficult for him to think that the actuarial tables used in the insurance industry should have been limited to 1 person.  

Justice Ginsburg appeared to be in favor of something similar to the European system, which, she understood to require that the invention be tied to "science or technology".  The petitioner pointed out that the United States is different and that it would be difficult to define "technology based" in the United States.  Petitioner indicated that Europe defines "technology based" to exclude business methods.   Justice Scalia asked why, in a horse-based economy (in the 1800's) there were no patents directed to methods of training horses, as this would certainly have been useful at the time.

Justice Sotomayor indicated that "how" to approach a problem can't be enough to make it patentable, rather, it has to involve some transformation.  She also asked how to discern Congressional intent.  Further to the "intent" issue, Justice Stevens asked whether the original drafter of the Patent Act had any comments on this issue.

Justice Breyer indicated that there were four things to consider when making this ruling, two positive and two negative.  The two positives were the monopoly power the patent provides and the disclosure to the public.  The two negatives were the higher prices that result when a monopoly is in play and having to get a license or permission to practice a patented invention takes time and slows progress.  He indicated that in the past, we respected machines, now, this was asking to respect information, and he was grappling with whether providing patent protection would do more harm than good.

Justice Sotomayor commented that maybe it be sufficient to patent useful knowledge if it were tied to some transformation and the patenting of the Morse Code was discussed.

This concluded the Petitioner's opening argument.

The Respondent began by indicating that the Federal Circuit's test was not "inflexible," but only required some link between the method and the transformation.  At least Justice Sotomayor expressed concern regarding applying a  rigid exclusive test, in that potential patentable subject matter would be excluded from the patenting process.  Justice Ginsberg was curious regarding whether the Federal Circuit sua sponte came up with the test or whether the Government proposed the test during briefing.

The Respondent indicated a couple of different times during the argument that there would be many difficult questions to answer in the future, but that the test could accommodate the difficult questions and allow for exceptions to the machine or transformation test.

The State Street case was discussed and Justices Stevens, Scalia and Breyer wanted to know whether this case would come out the same way if the Federal Circuit's test were utilized.  The Justices appeared to expect a "no" answer, but Respondent indicated that State Street would have ended with the same result because the claims were directed to a machine (a computer).

This led to a discussion regarding the Respondent's apparent position, set forth in its last footnote on its brief, which Chief Justice Roberts was troubled about, that if the method is simply tied to a calculator or a computer, then it would be patentable, and this seemed to place form over substance.  Both Justices Kennedy and Stevens were curious with respect to what was "transformed" by the State Street computer program, indicating that it appeared to be merely a new process on an old machine.  The Respondent did not have a ready answer, deflecting the question by indicating that hardware could be present which would transform the machine.

In rebuttal, the Petitioner stressed its position against a rigid test, which could be avoided by simply looking at whether the "invention" is attempting to patent an abstract idea.

Challenging the Constitutionality of Gene Patents: Ass’n for Medical Pathology v. USPTO

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Association for Medical Pathology & ACLU v. USPTO & Myriad, 09-cv-4515 (S.D.N.Y. 2009)

Earlier this year, a group of organizations and individuals filed suit against the USPTO, Myriad, and individual directors of the University of Utah Research Foundation (ex parte Young action) demanding that the breast cancer gene patents (BRCA1 & BRCA2) be found invalid or unenforceable and that the PTO’s policies and practices with respect to genetic patents be declared unconstitutional. The federal lawsuit argues (1) that the genes are not patentable because they are “products of nature” and (2) that the patentee’s use of patent rights to limit scientific research on the genes violates constitutional First Amendment protections. The defendants moved to dismiss based on various standing and jurisdictional issues. In an 85 page opinion, Southern District of New York Judge Robert Sweet has denied all of the defendants’ motions to dismiss.

Judge Sweet recognized this case as important:

This action is unique in the identity of the parties, the scope and significance of the issues presented, and the consequence of the remedy sought. . . . The challenges to the patents-in-suit raise questions of difficult legal dimensions concerning constitutional protections over the information that serves as our genetic identities and the need to adopt policies that promote scientific innovation in biomedical research.

Jurisdiction & Standing to Sue the USPTO: The court found that the overarching statutory scheme of the Patent Act did not preempt the court’s jurisdiction over the PTO in this case since the Patent Act does not “provide a remedy for persons who complain about the constitutionality of patents issued by the USPTO and/or the policies and practices of the USPTO. . . . The novel circumstances presented by this action against the USPTO, the absence of any remedy provided in the Patent Act, and the important constitutional rights the Plaintiffs seek to vindicate establish subject matter jurisdiction over Plaintiffs’ claim against the USPTO.”

The court also found that the plaintiffs have standing to sue the USPTO for their Constitutional grievances; declaratory judgment jurisdiction over Myriad and the Directors, and personal jurisdiction over the Directors as representatives of the State of Utah.

In the final few pages, Judge Sweet outlined plaintiffs’ case against the USPTO:

In this case, the Plaintiffs have pled sufficient factual allegations to satisfy the standard set forth in Iqbal. The Complaint alleges the existence of a specific, written policy for the patenting of genes and the parameters of the policy. . . . The Complaint further alleges that the information encoded in the BRCA1/2 genetic sequences, rather than being the result of an inventive process, exists in nature. . . . Based on these factual allegations, the Plaintiffs assert that the patents-in-suit grant Myriad ownership rights over products of nature, laws of nature, natural phenomena, abstract ideas, and basic human knowledge and thought in violation of the First Amendment’s protections over freedom of thought. In addition, the Plaintiffs assert that Myriad’s ownership of correlations between certain BRCAl/2 mutations and an increased risk of breast and/or ovarian cancer has inhibited further research on BRCA1/2 as well as genes that interact with BRCA1/2. As a result, the patents-in-suit are alleged to violate Article I, section 8, clause 8 of the Constitution which directs Congress to “promote the Progress of Science and useful Arts . . . .”

The facts alleged in the Complaint are plausible, specific, and form a sufficient basis for Plaintiff’s legal arguments. Consequently, the pleading requirements as set forth in Iqbal are satisfied.

The next decision in the case is expected in January based on the Plaintiffs’ motions for summary judgment.

MTD decision.pdf

Bilski Briefs: Supporting the Government (In Name)

Patent, Patentable Subject Matter, , , ,

UPDATE: More briefs added Oct 5, 2009, 11:30 am

The final round of amicus briefs have been filed in the pending Supreme Court case of Bilski v. Kappos. Mr. Bilski is appealing the Federal Circuit's en banc rejection of his patent application. In that decision, the court held that Bilski's claimed method of hedging risk did not qualify as patentable subject matter under 35 U.S.C. 101 because the method was neither tied to a particular machine nor transformative of any physical article. Bilski challenges this "machine-or-transformation" test as unduly narrow. Bilski's legal position was supported in a large set of amicus briefs including a strong textualist argument made by Professor John Duffy.

Briefs supporting the government position have been filed. As summarized below, the vast majority of briefs also reject the Federal Circuit's machine-or-transformation test as the sole test of patentable subject matter for a claimed process. In my summaries, I have attempted to capture what I learned from each brief, of course the briefs and arguments are much more extensive and nuanced than my squibs suggest.

Electronic Frontier Foundation (EFF) and the Kauffman Foundation: Business method patents are harmful and should not be allowed. The long history of US patentable subject matter indicate that a patentable process must provide a technological advance. Likewise the mere fact that a process uses a machine or computer does not immediately render the process patentable subject matter. Rather to be patentable, the advance must be a technological advance. EFF etc amicus brief.pdf.

Red Hat: Software methods do not become patentable simply because they are tied to a computer. Benson. Download 08-964bsacRedHatInc.

William Mitchell College of Law IP Institute: This case does not properly present the issue of patentability of claims that include a mix of statutory and non-statutory subject matter. The court should wait for an appropriate case to decide that issue. Parsing Section 101 provides few real answers as to patentable subject matter. Download 08-964 William Mitchell College of Law Intellectual Property Institute.

SFLC (Moglen and Ravicher): Standing alone, software is not patentable. This result is derived from the Supreme Court's decision in Microsoft v. AT&T that “[a]bstract software code [uninstalled in a machine] is an idea without physical embodiment.” 550 U.S. 437, 449 (2007). Download 08-964 Software Freedom Law Center.

SIIA: The patent eligibility of software is well established and should not be disturbed. Download 08-964 Software & Information Industry Association.

Knowledge Ecology Int'l: The goal of the system is to encourage progress, not to reward inventors. Further, patent protection is not a "necessary policy intervention to reward successful investment in new medical technologies. . . . [M]any of the greatest medical advances have benefited significantly, and in some cases exclusively, from mechanisms that exist completely outside of the patent system." Download 08-964 Knowledge Ecology International.

Mark Landesmann: The evidence of the negative social impact of business method and software patenting is properly directed at the PTO's allowance of patents that were not substantially novel and that were not properly disclosed or claimed. There is no evidence that patents on novel, non-obvious and properly disclosed business-method process inventions create any harm. Download 08-964 Mark Landesmann.

Nevada State Bar Ass'n: The machine-or-transformation test harms emerging Nevada businesses – especially in the growing areas of solar energy, gaming, and digital communications. Download 08-964bsacintellectualpropertysectionnevadastatebar.

American Bar Ass'n: The court should use an incremental approach to excluding claims to subject matter where patenting does not make sense and creates a problem. Categorical limits such as the machine-or-transformation test may limit innovation. That said, the "[p]atent law should not interfere with the exercise of human intellect by granting a monopoly on processes in which thinking is central." A specific target of the ABA is to eliminate patents covering tax planning methods. Download 08-964 American Bar Association.

American Insurance Ass'n: Regardless of their novelty, insurance policies should not be the subject of patent protection – even when combined with a computer. Download 08-964 American Insurance Association.

Bank of America, Google, et al.: The patent laws should bar patentability of "accounting methods, tax mitigation techniques, financial instruments, and other means of organizing human behavior—or software used to implement those methods." Download 08-964 Bank of America et al..

Bloomberg: Limiting a method to use on a general purpose computer should not render the method patentable. Download 08-964 Bloomberg.

CCIA: It is important that the Federal Circuit eliminated the overbroad State Street test. The current tension in the patent system can largely be traced to that unprecedented over-expansion of the system. Tight limits on patentable subject matter are important because (inter alia) of the strict liability nature of patent infringement. "Tying patentability to physical subject matter is not a perfect solution. However, it limits the reach of patents in important ways that can significantly reduce the risks of inadvertent infringement and the scope of potential liability."Download 08-964 Computer & Communications Industry Association.

FFII: Patents on business methods have been considered and were rejected by the Statute of Monopolies in 1623. Patents greatly harm the Free & Open Source Software (FOSS) movement. Download 08-964 Foundation for a Free Information Infrastructure.

Professors Menell and Meurer: The Constitution creates a real limit on patentable subject matter – i.e., the subject matter of the patent must be within the "useful Arts." Economic evidence indicates that business method patents (especially internet related business methods) are harmful. 08-964 bsac Menell.pdf.

Law Professors and the AARP (Including Josh Sarnoff): Patents should only cover "inventions in the application." Patents can not cover "non-inventive applications of public domain science, nature, and ideas." The right interpretation of the statute requires that the invention "reside in the application, rather than in a discovery preceding or employed by it. This is because the science, nature, or ideas must be treated as if they are already in the prior art, i.e., are publicly known and free for all to use. Absent invention in applying such discoveries, there is simply no invention to patent." 08-964 bsac Brief of Eleven Law Professors and AARP.pdf.

Microsoft, Philips, and Symantec: Nobody (except Bilski) believes that his claims deserve patent rights. The machine-or-transformation test should not be seen as the exclusive test of patentable subject matter of a process claim – in part because the test has already "proven overly difficult to implement in practice." Like Professor Hollaar, Microsoft would simplify the test by requiring that the invention "involve one or more disclosed physical things." Today's computers – although complex – are not fundamentally different from Babbage's 1836 mechanical computer. Process claims that use computers should be patentable. Am Brief.pdf.

Professor Hollaar and the IEEE: Just restating the general principles of patentable subject matter is unhelpful. Rather, clear rules are needed – especially because the subject matter question is most frequently addressed by patent examiners who have little legal training and little time to ponder abstractions. A clear and time-tested rule would be: A process is patentable subject matter when it involves making or using a machine, manufacture, or composition of matter. This means that software method patents that require a computer would be patentable, but Bilski's method of hedging would not be patentable. bilski-sc-amicus.pdf.

American Medical Association: The machine-or-transformation test should not supplant the requirement that a patent claim "address a technology." A patent should not be allowed to cover "every possible application of a scientific observation." Rather, claims should be limited to "a particular new and useful application or use of the observation. The Supreme Court should use this case to make a statement especially directed to "overreaching claims in the life sciences. . . . Such patents chill research, and patents such as those in Labcorp and Prometheus chill talking and thinking of ideas by making talking and thinking into a tort." 08-964 bsac The American Medical Association.pdf.

Adamas Pharma and Tethys: Section 101 should be interpreted in a way that is objective, predictable, and not duplicative of the other patentability requirements. The machine-or-transformation (MoT) test does not meet any of these requirements. The Federal Circuit test also violates US treaty obligations under TRIPS and NAFTA and potentially subject the US to trade disputes adjudicated at the World Trade Organization (WTO). Under these US-initiated treaties member countries agreed to offer patent rights "in all fields of technologies." A major purpose of the agreements was to ensure that countries offered a full scope of patent rights, and by limiting the scope of rights, the US "will no longer be able to credibly argue in Special 301 trade disputes that failure to protect healthcare inventions made by cutting-edge U.S. companies constitutes inadequate protection of intellectual property rights." Some Congressional intent can be gleaned from the legislative history of Section 287(c) of the patent act. As originally proposed, that provision would have limited the subject matter eligibility of medical and diagnostic methods. After some debate, a compromise was reached to continue to allow their patenting, but to limit the remedies available. 08-964 bsac Adamas Pharmaceuticals.pdf.

Robert Sachs and Daniel Brownstone: Software should be patentable and has been for a long time. The Federal Circuit test greatly confuses the issue. Although software is an abstraction from the physical world, it is not "abstract." SF-5270929-v1-Bilski_v_Doll_Amicus_Brief_of_R_Sachs_and_D_Brownstone_as_amici_curiae_2009-08-06.PDF.

Big Internet Retailers, including Crutchfield, Overstock, and LL Bean: Patent Trolls are hurting online retailers and one way to stop them is to eliminate business method patents (including software business method patents). In effect, business method patents amount to a tax on Internet commerce. (The companies don't mention – unlike offline retailers – internet companies are often exempt from paying sales tax…) Internet Retailer Amicus Brief.pdf.

Brief of CASRIP (U. Washington): The US Constitution sets a bound on the scope of patentable subject matter – limiting them to the Constitutionally proscribed "useful Arts" as that term was understood at ratification. For new methods, one key is to consider the purpose of the method. Methods of entertaining a cat using a laser and telling a joke into a microphone should not be patentable regardless of their tie to particular machines because neither of those functions have ever "been considered a useful Art, and surely . . . is not the kind of discovery that the Patent Clause contemplates." Some methods also exist that should be patentable even though they fail the machine-or-transformation test. Despite its problems, the machine-or-transformation test is "superior to its competitors in filtering out preemptive claims to basic principles." However, it should not be the sole test of eligibility. Bilski's claim is unpatentable because hedging against price inflation (the purpose of the method) is not within the useful Arts. CASRIP am cur brf.pdf.

An Initial Comment on Prometheus: The Irrelevance of Intangibility

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By Kevin Emerson Collins, Associate Professor of Law, Indiana University Maurer School of Law—Bloomington [BIO][Articles][PDF Version of this Post]

Background: The Machine-or-Transformation Test of Bilski

Last fall, the Federal Circuit articulated the “machine-or-transformation” test for patent eligibility in its landmark case In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc). It held that a method is eligible for patent protection only if it is either (a) limited to a “particular machine” or (b) responsible for transforming a “particular article” into a different state or thing. Id. at 954. Additionally, in a classic example of language that adds judicial wiggle room, the machine or transformation that satisfies either of these prongs “must impose meaningful limits on the claim’s scope,” it “must be central to the purpose of the claimed process,” and it must not be part of “insignificant extra-solution activity” or a “mere data-gathering step.” Id. at 961–62 (emphases added).   

The Supreme Court has accepted certiorari in Bilski, but the impending Supreme Court opinion has not stopped the Federal Circuit from issuing what is perhaps its most important case to date applying the machine-or-transformation test: Prometheus Laboratories, Inc. v. Mayo Collaborative Services. There have been two distinct types of claims that have taken center stage in recent debates over the section 101 doctrine of patent eligibility: “business methods” and what I will call “determine-and-infer methods.” The claim at issue in Bilski describes a classic business method. In contrast, Prometheus involves a determine-and-infer method. The Federal Circuit’s opinion in Prometheus opens a new window into the import of the machine-or-transformation test. Regardless of one’s views of the soundness of Federal Circuit’s reasoning in Prometheus, herein lies one of the opinion’s greatest virtues. By issuing Prometheus before the Court’s oral arguments in Bilski, the Federal Circuit has helped to clarify the stakes of the Court’s decision to sanction, reformulate, or reject the machine-or-transformation test.   

(more…)

Bits and Bytes No. 128: BRCA Gene Patents

Patent,
  • Patentable Subject Matter During Prosecution: The PTO has asked for public comments on its interim examination instructions for evaluating patent subject matter eligibility. [PTO Request][Patently-O Discussion]
  • Breast Cancer Gene Patent Challenge:
    • The ACLU, PUBPAT, and others continue their fight against patents covering the breast cancer genes BRCA1 and BRCA2 held by Myriad and the University of Utah. The federal lawsuit argues (1) that the genes should not be patentable as “products of nature” and (2) that the patentee’s use of patent rights to limit scientific research on the genes violates constitutional First Amendment protections.
    • A key to ACLU’s argument is to look at what the patent prevents – i.e., making or using the isolated gene. The organization argues that “human genetic sequences and the scientific inquiry of looking at a gene or comparing two human genes constitute natural phenomena, laws of nature, and abstract ideas and thus are not patentable subject matter under 35 U.S.C. § 101.
    • The First Amendment argument has some merit because of the Supreme Court’s penchant for sharing principles between patent and copyright law. In copyright law, the idea-expression dichotomy is often used to ensure that First Amendment rights are protected. See Harper & Row v. Nation, 471 U.S. 539, 555-560 (1985). In patent law, the ACLU argues that “there can be little doubt that patenting of abstract ideas or thought or an entire body of knowledge would violate the First Amendment” protections of freedom of thought and speech. There are many interesting issues here – one in particular is a question of whether the bare patent could create a first-amendment violation, or does it also require aggressive enforcement.
    • Downside of eBay: Unfortunately, the cancer cells continue to ignore Myriad’s repeated warnings to stop making and using the gene. [joke]
    • Links: [ACLU Discussion][ACLU Summary Judgment Motion][Sarnoff’s Discussion][Holman’s Discussion]

Guest Post: The Applied/Abstract Distinction is the Key to §101 Patentability

Patent, , ,

Guest Post by Polk Wagner (Professor at the University of Pennsylvania School of Law)

Mark Lemley, Michael Risch, Ted Sichelman, and I have authored an amicus brief in the Bilski v. Doll case currently pending before the US Supreme Court. (Get the full brief here [pdf].) In that brief, we argue that the Court's precedents establish that the key to eligible subject matter is ascertaining whether an idea is claimed as applied–in which case it is eligible for patentability (assuming it is not a natural phenomenon or law of nature)–or merely in the abstract–in which case it is not.

We start with the proposition that while the range of subject matter available for patenting is very broad, it is not unlimited. But the restrictions imposed by the Supreme Court, we think, have not focused on the technology, form, or physicality of the claimed invention–the critical mistake made by the Federal Circuit in Bilski. Rather, the Court has uniformly recognized that the key to eligible subject matter is ascertaining whether an idea is claimed as applied, or claimed in the abstract.

This applied/abstract distinction has a long history in Supreme Court caselaw. It can be most clearly seen in the O'Reilly v. Morse case from 1854, where the Court invalidated a claim to all communication by electrical signal as abstract, but allowed a claim to the application of the communications method to stand. 56 U.S. 62, 112-21 (1854). That is, where Morse claimed the idea of communication by electrical signal, the claim was disallowed. But the Court did uphold Morse's claim to a system (e.g., "Morse Code") that applied the communication-by-electricity idea in a practical, concrete way.

One can discern the applied/abstract thread throughout twentieth-century Supreme Court decisions involving §101 subject matter. In Mackay Radio, the Court upheld a claim to a mathematical principle (related to the reception of radio waves) as applied to an antenna, noting that "[w]hile a scientific truth, or the mathematical expression of it, is not patentable invention, a novel and useful structure created with the aid of knowledge of scientific truth may be." 306 U.S. 86, 94 (1939). In Gottschalk v. Benson, the Court denied patentability to an "abstract and sweeping" claim: the mathematical conversion of binary coded decimals into pure binary format. 409 U.S. 63, 66-67 (1972). And finally, in Diamond v. Diehr, the applied/abstract approach drove the analysis–in upholding the claims, the Court noted that the subject matter was not "directed to a mathematical algorithm or an improved method of calculation but rather recited an improved process for molding rubber articles by solving a practical problem which had arisen in the molding of rubber products." 450 U.S. 175, 181 (1981) (emphasis added). Indeed, in Diehr, the Court makes our argument for us:

It is now commonplace that an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection. . . . Arrhenius' equation is not patentable in isolation, but when a process for curing rubber is devised which incorporates in it a more efficient solution of the equation, that process is at the least not barred at the threshold by §101.

Id. at 187-88 (emphasis in original).

We also argue that echoes of this applied/abstract distinction can be seen in the related-but-distinct caselaw considering the patentability of products of nature. Here, the Supreme Court has repeatedly emphasized in this context that the patent law is designed to protect applications of human ingenuity, not simply "natures' handiwork." Thus, while a man-made organism is eligible for patentability, see Diamond v. Chakrabarty, 447 U.S. 303, 310 (1980), a natural bacterium is not, see Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 131 (1948). The boundary here is neither the form of the invention nor its ability to transform nature; instead the analysis turns on whether the patent claims describe the application of human knowledge to a practical end. In this way, a claim to an abstract idea is like a claim to a product of nature: unmoored to real-world applications of human inventiveness, and thus ineligible for patenting.

Finally, we note that the applied/abstract analytic framework nicely harmonizes Section 101 with Section 112's enablement requirement. Much like Section 101, Section 112 safeguards the essential function of the patent system: the dissemination of real-world, practical human knowledge. Claims to abstract mathematical concepts (like claims to natural products or physical phenomena) violate this tenet, by failing to demonstrate that the inventor is adding to the storehouse of useful, practical human accomplishment. (Indeed, the subject matter and enablement requirements were formerly part of the same statutory section. Patent Act of 1836, Ch. 357, 5 Stat. 117, § 6 (July 4, 1836).)

In sum, we argue that the patent statutes were wisely drafted with an expansive vision of patentable subject matter. Efforts to graft judicially created limitations onto that expansive scope in the past have proven fruitless and indeed counterproductive. This Court should not impose a requirement that patentable inventions require a machine or the physical transformation of some material. It should instead maintain the rule that patents are available for anything under the sun made by man, including discoveries of ideas, laws of nature, or natural phenomena so long as they are implemented in a practical application. In short, the test should be as it has been: where an idea is claimed as applied, it is eligible for patentability, but if it is claimed merely in the abstract it is not.

Bilski’s Patent Application

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The Supreme Court is reviewing Bernard Bilski’s patent application to consider whether the application appropriately claims “patentable subject matter” under 35 U.S.C. 101 as interpreted by the Supreme Court. Much of the focus in the case is on the Federal Circuit’s exclusive “machine or transformation” test. However, I thought it would also be important to look at the underlying Bilski patent application because of how it may drive the debate at the Court.

Bilski’s application is not published. However, a copy of the 14-page application was included in a joint appendix submitted to the Federal Circuit during the en banc appeal. The application includes one independent claim; eight subsequent dependent claims; no drawings; and a priority claim to a 1996 provisional application. It appears that Buchanan Ingersoll (Pittsburgh) led the prosecution. The BPAI opinion rejected eleven claims – indicating that some amendments occurred during prosecution. (A docket sheet also indicates that drawings were later added.) Amazingly, Bilski’s case is based on an appeal from a March 2000 final rejection.

The Invention focuses on a method of managing consumption risk by commodity trading something that – in 1996 was “not currently managed in energy markets.” According to Bilski there was a “need for a fixed bill product to manage total energy costs including the consumption of risk.” The general idea of using commodity trading as a hedge against risk has been well known for years. However, Bilski proposes that consumers purchase commodities “at a fixed rate based on historical averages.” In a dependent claims, Bilski indicates that the risk to be avoided is a “weather-related price risk.” Later, that risk is drilled-down to focus on temperature shifts (heating and cooling degree days). Another dependent claim spells-out the equation for calculating the fixed cost based on prior fixed and variable costs, transportation costs, local delivery costs, and a location specific weather indicator. Additional dependent claims require specific Monte Carlo simulations and statistical tests to better calculate the fixed rate. In some claims, the commodity being traded is identified as “energy” and the market participants as “transmission distributors.”

The Claims do not focus on any particular machine or software implementation. Rather, they are organized as “methods” followed by a series of steps such as “initiating a series of transactions . . . “; “performing a Monte Carlo simulation . . .”; and “continuing to re-price the margin in the transaction until the expected portfolio margin and likelihood of portfolio loss is acceptable.”

No Machine: Even an amateur implementation of these methods would make extensive use of software and computer hardware. However, those elements are not present in the claims. Why did Bilski not include software and computer hardware in his application? My speculation: First, it does not appear – at least from the patent application – that he invented any software application of his hedging theory. Second, perhaps Bilski believed that a computer implementation element would unduly limit the scope of his invention.

Obvious and Not Enabled: The claims are likely obvious based on extensive prior art in the industry. In addition, the claims may well fail the tests of enablement and/or written description (if it survives Ariad v. Eli Lilly). However, the PTO worked-hard to properly couch this case as a test of patentable subject matter.

The abstract reads as follows:

A method is provided for managing the risk-associated costs of a commodity sold by a commodity provider at a fixed price. Such risk-associated costs include the weather-related costs of a fixed price-energy bill. The commodity provider initiates a series of transactions with consumers of the commodity wherein the consumers purchase the commodity at a fixed rate based upon historical averages. The fixed rate corresponds to a risk position of the consumers. The commodity provider then identifies market participants for the commodity who have a counter-risk position to that of the consumers. The commodity provider then initiates a series of transactions with the market participants at a second fixed rate such that the series of market participant transactions balances the risk position of the series of consumer transactions.

Read the application here: BilskiApplication.pdf

Bilski Briefs [Updated with 44 Briefs]

Patent, , ,

The question of patentable subject matter has returned to the Supreme Court — this time with a focus on business methods. In January 2009, an en banc Federal Circuit implemented the “machine or transformation test” as the exclusive test for determining whether a claimed process qualifies as patentable subject matter under 35 U.S.C. 101. Now, the case is pending before the Supreme Court with two focused questions:

QUESTIONS PRESENTED

1. Whether the Federal Circuit erred by holding that a “process” must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing (“machine-or-transformation” test), to be eligible for patenting under 35 U.S.C. § 101, despite this Court’s precedent declining to limit the broad statutory grant of patent eligibility for “any” new and useful process beyond excluding patents for “laws of nature, physical phenomena, and abstract ideas.”

2. Whether the Federal Circuit’s “machine-or-transformation” test for patent eligibility, which effectively forecloses meaningful patent protection to many business methods, contradicts the clear Congressional intent that patents protect “method[s] of doing or conducting business.” 35 U.S.C. § 273.

In this post, I have attached recently filed briefs which either (1) support Bilski or (2) support neither party. The government brief in opposition is due Sept 25 and friendly brief in opposition due within seven days of that filing.

  • Yahoo (Bilski – Yahoo! Amicus Brief (S.Ct) (as filed) (8-6-09).pdf) The focus on physicality does not make sense in today’s technology.
  • IBM (08-964 IBM.pdf) The proper test looks for a “technological contribution.”
  • Regulatory Data Corp ( 08-964 Regulatory Datacorp et al..pdf) Brief by John Duffy focuses directly on the historical importance of the statutory test. “The government is now asking this Court to impose a formalistic restriction on definition of “process” that would create an unprecedented and uncertain judicial limitation on patentable subject matter. This Court should reject that invitation just as it did more than a third of a century ago, when the government unsuccessfully advanced the very same argument. See Gottschalk v. Benson, 409 U.S. 63, 71 (1972).”
  • Accenture (08-964 tsac Accenture and Pitney Bowes, Inc.pdf) Machine or transformation test is not a reliable indicator of anything relevant. The standard for patentability should “usefulness” as set forth in the Constitution, in the patent statute, and by the Court.
  • Austin IP Law Ass’n ( 08-964 Austin Intellectual Property Law Association.pdf) The patent statute explicitly defines process quite broadly in Section 100(b). The Federal Circuit’s version of “process” in 35 U.S.C. § 101 is far narrower than the broad definition of “process” in 35 U.S.C. § 100(b) (2008).   
  • Double Rock and other IP entities (08-964tsacdoublerockcorporation.pdf) The Federal Circuit test conflicts with Supreme Court precedent and Congressional intent.
  • Law Professors [Lemley et al.] (08-964ac20lawandbusinessprofessors.pdf) The distinction on patentable subject matter should be based on the distinction between applied and abstract inventions. Bilski’s claims fail this test.
  • Chakrabarty (08-964 Chakrabarty.pdf) Brief by Scott Kieff and Richard Epstein argue that patent rights operate “like a beacon in the dark” to start conversations between innovative entities and potential users.
  • Franklin Pierce Law Center (Bilski.pdf) Court should adopt the “useful, concrete, and tangible result” test.
  • TeleCommunication Systems (08-964nsactelecommunicationsystemsinc.pdf) Subject matter eligibility should be predictably broad.
  • BIO, AdvaMed, WARF and U of Calif (08-964 tsac Biotechnology Industry Organization et al..pdf) Any decision should be clear that biotechnology is patentable.
  • Conejo Valley Bar Ass’n (08-964.ac.Conejo Valley Bar Association.pdf) The substantive elements of the patent act (102, 103, and 112) do all the necessary work.
  • Novartis (08-964tsacNovartisCorporation.pdf) A process of diagnosis should be patentable.
  • Dr. McDonough (08-964_PetitionerAmCuTMcDounough.pdf) “American innovation is not confined to Industrial Age mousetraps and other cleverly contrived gadgets. The modern economic agent is more likely to encounter innovation today in the services they consume than in the contraptions they use. The present amicus curiae suggests that the decision of the Federal Circuit in this case is an attempt to apply an Industrial Age standard to address a perceived Services Age problem, a problem that the present amicus curiae suggests does not exist.”
  • State of Oregon (08-964_NeutralAmCuOregon.pdf) (The Patent Hawk filed this brief on behalf of all Oregonians – although apparently without any official state approval) The brief makes an important point: Although Section 101 comes first in the statute, it does not make sense to use it as a screening tool at the PTO. Rather, the PTO’s skills are in comparisons of prior art and ensuring that the elements of Section 112 have been satisfied.
  • Chicago IP Law Ass’n (08-964 ac Intellectual Property Association of Chicago.pdf) There are strong parallels here with KSR; CAFC rule is too rigid.
  • Borland (Amicus Curiae Brief (Borland Software Corporation).pdf) The CAFC test does not properly follow Supreme Court precedent.
  • Time Systems (08-964 ac On Time Systems.pdf) Some abstract ideas should be patentable.
  • Monogram BioSciences and Genomic Health (08-964 ac Monogram Biosciences Inc.pdf) Patentable processes can be non-physical.
  • Sachs and Brownstone (08-964 ac Robert R. Sachs.pdf) The CAFC test is limits the patenting of software, and a bad result.
  • Boston Patent Law Association (08-964tsacbostonpatentlaw.pdf) A broad scope of patentable subject matter better preserves the health of an innovative culture; many landmark inventions fail the Federal Circuit’s Bilski test.
  • Georgia Biomedical Partnership, Inc. (08-964 Georgia Biomedical Partnership Inc.pdf) The Supreme Court has consistently refused to offer a “rigid” test.
  • Dolby Labs (08-964 Dolby Laboratories et al..pdf) The important thing is to settle expectations.
  • Teles AG ( 08-964 Teles AG.pdf) Subject matter eligibility should be “dynamic.” “Further, the global nature of today’s economy strongly recommends that the United States patent system be harmonized with robust patent systems of other nations wherever possible.”
  • Medtronic (08-964 Medtronic.pdf) Provides specific examples of medical innovations that may be unpatentable under the Federal Circuit test
  • Intellectual Property Owners (08-964acintellectualproperty.pdf) Machine or transformation test is not the only test; In its transformation test for signals, the CAFC “unduly focuses on the contents of the data . . . rather than the manner in which those signals are generated;” a general purpose computer should be considered a “particular machine.”
  • AIPLA ( 08-964 American Intellectual Property Law Association.pdf) A new exclusionary test is not needed.
  • Houston IPLA (08-964 Houston IP Law Assoc..pdf) The test negatively impacts Dell’s “build-to-order” patent (5,963,743) ; AT&T’s linear programming patent (4,744,028); and Sperry Corporation’s LZW compression patent (4,558,302).
  • Armanta, Asentinel, Cybersource, and Hooked Wireless (08-964 Entrepreneurial Software Companies.pdf) Questions of patentability are causing software companies to lose value.
  • Mr. Meiers ( 08-964 Raymond C. Meiers.pdf) A patentable invention “applies manifestations of nature and achieves a useful result.” This is the tripartite system.
  • Univ. South Florida ( 08-964 University of South Florida.pdf)
  • Awaken IP ( 08-964 AwakenIP.pdf) The CAFC test is unworkable and is as bad as the vague idea/expression dichotomy of copyright.
  • BSA ( 08-964 Business Software Alliance.pdf) Section 101 has been consistently and correctly interpreted to cover software innovations.
  • PhRMA, etc. ( 08-964 PhRMA et al..pdf) Medical processes should be patentable.”
  • Caris Diagnostics ( 08-964 Caris Diagnostics, Inc.pdf) Diagnostic method patents are important and have been called into question by Bilski.
  • AIPPI (AIPPI SupremeCourt_3455697.pdf) A flexible test is better, and TRIPS requires a flexible standard.
  • FICPI ( 08-964 FICPI.pdf) “The § 101 analysis should focus on the section’s substantive utilitarian requirement, rather than retrospectively attempting to rigidly define the categories of patentable subject matter without the foresight of the particular form technological innovations may take in the future.

Update: More Briefs

  • Professor Collins (08-964 Prof. Kevin Emerson Collins.pdf) Professor Collins has written a number of very interesting PSM articles. In his brief, he argues that the test should focus on whether “the claim impermissibly seeks a patent on a fundamental principle or an abstract idea.” One concern of the CAFC test is that it takes us off the path toward international harmonization.
  • Legal Onramp (08-964 Legal OnRamp.pdf) “Pure” business methods should not be patentable. “Unlike traditional patents on technological advances, the patenting of pure business methods is a serious obstacle to innovation because it unduly impedes competition.”
  • Eagle Forum (08-964 Eagle Forum Education & Legal Defense.pdf) Reminds us of the important constitutional role of the patent clause. “The decision below usurps the legislative role and adds complexities to patent law that are neither welcome nor justified in the 21st century.”
  • Fed Cir Bar Ass’n (08-964 Federal Circuit Bar Association.pdf) The CAFC test does not follow Supreme Court precedent.
  • Washington State Patent Law Association (08-964 tsac WSPLA.pdf) The Court should focus on Chakrabarty and Diamond v. Diehr: “any,” “new,” and “useful” “process.”
  • San Diego IP Law Ass’n (08-964 ac San Diego Intellectual Property Law Assoc.pdf)

People (lots of) vs. The Breast Cancer Gene Patents

Patent, , ,

Assn for Medical Pathology v. USPTO & Myriad & the Directors of the University of Utah Research Foundation (S.D.N.Y. 2009)

A host of medical organizations, researchers, and cancer patients have filed a Section 1983 action against the USPTO, Myriad Genetics, and the University of Utah Research Foundation (via its directors) demanding that the BRCA gene patents be declared invalid as unpatentable under 35 USC Section 101.

“Because human genes are products of nature, laws of nature and/or natural phenomena, and abstract ideas or basic human knowledge or thought, the challenged claims are invalid under Article I, section 8 of the Constitution and 35 U.S.C. Section 101.”

In addition, the suit alleges that the patents are unconstitutional under the First and Fourteenth Amendments to the US Constitution.

Myriad’s patents allow the company to maintain a monopoly in the US over genetic testing for human BRCA1 and BRCA2 genes – markers for breast cancer. Claim 1 is directed to “an isolated DNA coding for BRCA1 polypeptide.” (The patent defines the amino acid sequence of the polypeptide).

PubPat and the ACLU are serving as attorneys for the plaintiffs.

Notes:

  • Read the Complaint: BRCA1 complaint.pdf
  • NYTimes Article
  • ACLU Blogs Here (with pictures of the plaintiffs).
  • The gene patenting debate has been interesting – emphasis here on has been. The genome has been mapped and sequences published. Very few new patents claiming isolated human genes are being filed. The ones already patented will expire within the next decade — most of them will expire before being put to any practical use.  
  • Caplan of CNN Says “Lawyers who work on patents in the pharmaceutical and biotechnology industries are sweating bullets today.” This is good, because the US is currently suffering under a bullet shortage.
  • On May 6, PubPat filed two other lawsuits.
  • PubPat v. Cumberland Packing (alleging false marking of its Sweet n Low sugar packets).
  • PubPat v. Iovate (alleging false marking of Xenadrine).