Tag Archives: Abstract Idea

Microsoft v. AT&T: Extraterritorial Enforcement of US Patents

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Microsoft Corp. v. AT&T Corp., 550 U. S. ____ (2007).

In a 7-1 decision, the Supreme Court held that Section 271(f) of the Patent Act does not extend to cover foreign duplication of software.

There is no such thing as a world-wide patent. Rather, patent law is territorial. A US patent covers infringing acts that occur in the US but generally disregards extraterritorial activity. The lone statutory exception is Section 271(f) of the Patent Act, which calls for infringement liability for the unauthorized supply of "components" of a patented invention for "combination" abroad.

Todays business reality has considerably dulled the teeth of 271(f) in the area of manufacturing -- few physical components are shipped abroad from the US.  Through Microsoft and others, the US continues to be a leader in software development and the export of software.  Of course, Microsoft does not export its software by loading millions of CDs on a cargo ship. Rather, it sends only a few copies to foreign OEM distributors who load copies of the software onto PCs for sale.

AT&T is the assignee of a patent covering a computer for encoding and compressing recorded speech. In the US, a computer with Microsoft WIndows installed infringes the patent. The question in this case, is whether the foreign installed software can be considered a "component" supplied from the US under 271(f). 

The question before us: Does Microsoft's liability extend to computers made in another country when loaded with Windows software copied abroad from a master disk or electronic transmission dispatched by Microsoft from the United States? Our answer is "No."

As can be seen from the various amici briefs, reasonable minds can differ regarding two statutory elements: (1) whether software -- without being tied to a physical medium -- can be classified as a "component;" and (2) whether the foreign-made copy was "supplie[d]" from the US. Abiding by its principle against extraterritorial application of laws -- especially patent laws -- the Supreme Court answered both of these questions in a restrictive fashion:

  • Abstract Software: Until it is expressed as a computer-readable "copy," e.g., on a CD-ROM, Windows software indeed any software
    detached from an activating medium remains uncombinable. . . . Abstract software code is an idea without physical embodiment, and as such, it does not match §271(f)'s categorization: "components" amenable to "combination."     [DDC: Software is never without a physical embodiment?]
  • Supply of Copies: [T]he very components supplied from the United States, and not copies thereof, trigger §271(f) liability when combined abroad to form the patented invention at issue. Here, as we have repeatedly noted,  the copies of Windows actually
    installed on the foreign computers were not themselves supplied from the United States.     [Therefore no liability for foreign-made copies]

Dissent by Justice Stevens: In my view, Justice Stevens - in a solo dissent - has the more sensible view of component.

[I]f a disk with software inscribed on it is a "component," I find it difficult to understand why the most important ingredient of that component is not also a component.

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USPTO Releases New Business Method Guidelines: Requires “physical transformation” or “concrete and tangible result”

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In the wake of the Lundgren case, the USPTO has released a set of interim examination guidelines for determining subject matter eligibility of patent applications. (Link).  The guidelines will be used by examiners “in determining, on a case-by-case basis, whether a claimed invention falls within a judicial exception to statutory subject matter (i.e., is nothing more than an abstract idea, law of nature, or natural phenomenon), or whether it is a practical application of a judicial exception to statutory subject matter.”

The crux of the new guidelines is that an invention falls within the scope of 35 U.S.C. 101 “if the claimed invention physically transforms an article or physical object to a different state or thing, or if the claimed invention otherwise produces a useful, concrete, and tangible result.”  The application itself should enable one of ordinary skill in the art to understand the utility of the invention.

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Metabolite Labs versus LabCorp — Request for Certiorari.

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The Metabolite Labs case is procedurally interesting because the Supreme Court appears to be focused in a question that is quite different from the one raised by Metabolite in its petition for certiorari.  From a practical standpoint, this case has the potential to once again shatter our current notion of patentable subject matter.

In February, the Court invited the Solicitor General to file a brief expressing the views of the United States on the question of whether a medical diagnosis method patent is invalid as non-patentable subject matter under Diamond v. Diehr, 450 U.S. 175, 185 (1981) (holding that one cannot patent laws of nature, natural phenomena, and abstract ideas).  The patent at issue claims a method of detecting a vitamin deficiency in a human body by using a device to determine whether there is an elevated amino acid level.

The court expressed its interest in the patentability question at a point that was too late for amicus to file briefs on the issue, however, some parties have been lobbying the office of the Solicitor General to submit a brief in their favor. The Public Patent Foundation, for instance, has issued a statement outlining its lobbying efforts asking the government to support the proposition that the method is unpatentable and invalid. Of course, to my knowledge, PubPat has never been publicly in favor of the validity of any patent. 

In the opinion below, the CAFC (Rader, J.) affirmed jury verdict of indirect infringement and breach of contract, and affirmed the district court’s award of over $8 million in damages to Metabolite (including damages for willfulness).  The dissent (Schall, J.) argued that claim interpretation had been mishandled. Metabolite Laboratories, Inc. v. Laboratory Corp. of America Holdings, dba as LabCorp., 370 F.3d 1354 (Fed. Cir. 2004) (read my summary).  The question that the High Court is now considering does not appear to have even been addressed by the CAFC decision.  The Court’s docket shows that the case has already been distributed for conference five times since January 1, 2005.  

The SG is expected to file a brief in the case.  However, even with SG support, the court is still unlikely to take this one up.

For general information, Professor Eileen Kane’s article on the patentability of Genes and DNA provides an excellent analysis of issues surrounding patentable subject matter. Kane argues that the genetic code should be characterized as a law of nature. Available at SSRN, 71 Tennessee Law Review 707.

 

Eight is Enough: Eight important patent cases for Spring 2005

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There are lots of great cases on the Federal Circuit's spring calendar.  Several cases pending at either the Federal Circuit or Supreme Court that are 'worth a special look,' according to Hal Wegner.  Here are some highlights of Mr. Wegner's list, with my own comments.

  • Merck v. Integra, Supreme Court decision by June 27, 2005.
  • LabCorp v. Metabolite, petition for cert submitted, Supreme Court has requested Solicitor General's Opinion on Cert.  The case involves a patentability question -- whether Metabolite's patented method of detecting vitamin B deficiency should be invalid as "because one cannot patent laws of nature, natural phenomena, and abstract ideas." 
  • Purdue Pharma v. Endo, CAFC heard oral arguments in early November on the question of whether patentee's conduct was 'inequitable' for failing to disclose that results used to establish patentability were prophetic rather than experimental. A decision is expected soon.
  • SmithKline Beecham v. Apotex, awaiting decision on petition for rehearing.  This case now revolves around the question of whether use of an invention to confirm utility for FDA approval is an 'experimental use' that saves a patent from anticipation under 102(b).
  • Phillips v. AWH, awaiting en banc decision on claim construction methodology.
  • Eolas Technologies v. Microsoft, Federal Circuit decision awaited, hopefully discussing the scope of 271(f). The upcoming appeal of AT&T v. Microsoft presents the same 'golden master disk' scenario as Eolas, and will become important if Eolas is decided on other grounds.
  • Independent Ink v. Illinois Tool Works, In January, the CAFC determined that, in an antitrust tying case, a patent presumptively defines the relevant market as the nationwide market for the patented product itself.  There is some potential for cert in this case.
  • NTP, Inc. v. Research in Motion, Ltd., there is a good chance for a rehearing in this case involving RIM's BlackBerry product.  This case will be important in defining extraterritorial application of U.S. patent laws in the modern era of networked computing systems.
  • In re Fisher is not yet on the CAFC calendar.  In this case, the BPAI affirmed a rejection for lack of utility and enablement (101 and 112 p1) because the specification lacked a specific teaching of a substantial utility.  According to the decision, without a specific teaching of substantial utility, then virtually all chemicals would meet the requirements of section 101 as at least "useful in research."

Although not patent litigation, Sarah Stirland (one of the few reporters focusing on intellectual property) at the National Journal has written a nice article regarding the potential for legislation in the 109th Congress.

Printable Version

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