Tag Archives: Broadest Reasonable Interpretation

A First IPR Decision on the Merits

Garmin v. Cuozzo Speed Tech, IPR2012-00001 (PTAB 2013)  Download Final decision-59

In its first full merits decision in an inter partes review case, the Patent Trial and Appeal Board (PTAB) has sided fully with the petitioner Garmin and ordered the three challenged claims cancelled. As you may discern from the docket number, this case was also the first IPR case filed on September 16, 2012 (the first day that such filings were allowed). The patent at issue is No. 6,778,074 and a parallel infringement lawsuit between Garmin & Cuozzo is pending in New Jersey District Court. Although the district court did not stay that case, Magistrate Judge Dickson has slowed the process to avoid making substantive decisions until the PTAB decision. In particular, the claim construction arguments have been delayed.

The patent itself is directed toward a speed-limit indicator tied to a GPS system that provides a signal to the driver when the care is moving faster than the speed-limit. Couzzo has accused several device makers (such as Garmin) as well as automobile manufacturers (such as Chrysler) of infringing the patent.

Garmin's IPR request actually challenged 17 claims of the '074 patent, but the PTAB only instituted the review for claims 10, 14, and 17 as such, it likely that Cuozzo will continue to pursue the litigation with a focus on the remaining claims. Those three claims were all found obvious by the PTAB. Based upon my quick read of the claims, independent claim 10 was the broadest in the patent and its elimination may give Garmin the opportunity to avoid infringement by pushing for a narrow construction of the remaining claims.

Four Reference Rejection: Patent attorneys regularly see obviousness rejections that hinge on the combination of four references.  However, the conventional wisdom is that those complex factual arguments are much less likely to fly in disctrict court litigation.  Here, the PTAB took on the challenge and found the patent obvious based upon four prior art references.  The take-away here is that the PTAB is ready and willing to handle complex invalidity arguments that might not work at the district court level. 

 

Claim Construction: One interesting aspect of the case is the way that the pending parallel litigation is clearly in the forefront of each decision by the parties. One limitation found in each claim of the patent is that a speedometer be "integrally attached" to a speeding-indicator. Couzzo that the proper construction of that term would require that the speedometer and speeding-indicator both be part of the same single component (i.e., shown on the same screen). On that point, the Board sided with Garmin – finding instead that the broadest reasonable interpretation of the claim scope required two separate components. In addition to making the claim more subject to prior art, the seeming result is also that a single Garmin device GPS cannot infringe unless somehow integrated with and integrally attached to a separate vehicle speedometer. Moving forward it will be interesting to see what level of respect the district court gives the PTO decision. I suspect that it will be given a great deal of respect.

Unable to Prove Early Conception  or Diligence: Two of the important prior art references used by the board presumptively qualify as 102(e) prior art in that the references are published US patent applications that were filed prior to Couzzo's application. Under the old first-to-invent rules, the law allows Couzzo prove a prior invention date. Here, Couzzo's proof failed because (1) his conception evidence was based solely on inventor testimony which is never sufficient without corroboration; and (2) his evidence of submission to the "Invention Submission Corporation" was insufficient because the date of submission was not corroborated by any testimony. Thus, the PTAB found that the earliest provable date of conception was December 2000 when the ISC patent attorney sent a letter to Couzzo referencing Couzzo's invention disclosure. Because Couzzo had not yet reduced his invention to practice as of that December 2000 date, the law also requires that he act with "reasonable diligence." Here, Couzzo received a search report from the patent attorney in January 2001; did not respond until March 2001; and did not explain why it took two months to provide comments or his daily progress on the matter. Then, later in March 2001 he received a new favorable patentability report from the patent attorney who stated he would begin work once Couzzo paid a $3,500 fee. However, he did not pay that fee until August 2001. Couzzo stated that he did not have the money at the time, but did not provide any daily progress reports showing what he was doing to get the money. The PTAB found that each of these gaps showed failure of diligence. As such, his attempt to antedate the references was rejected. The unfortunate problem here is that it looks like it was the complexity and tricks of the system that failed Couzzo and that, had he been blessed with more cash-on-hand and more sophisticated patent counsel then he would have avoided these key prior art references either by filing the patent application earlier or by ensuring documentation of conception and diligence. Soon after Couzzo's case was filed, the USPTO went after the Invention Submission Corporation as a scam. My understanding is that InventHelp is the successor-in-interest to ISC.

 

USPTO: Software Composition Inventions are Unpatentable under §101 unless they Clearly Disavow that the Storage Mechanism is a Transitory Wave or Signal

By Dennis Crouch

Ex parte Mewherter (PTAB 2013)

The USPTO has recently designated Ex parte Mewherter as a precedential decision with regards to its treatment of rejections under 35 U.S.C. § 101. The opinion basically holds that standard Beauregard claims (computer readable storage media) are not patent eligible because they could encompass transitory signals that are unpatentable under the Federal Circuit’s Nuijten decision.

IBM’s Patent Application Serial No. 10/685,192 is directed to a “system for converting slide show presentations” that converts each slide into “raster imagery” and then extracts contextual data (such as titles) and places those “in proximity to the raster imagery.” The claim at issue here is claim 16, that is written as follows:

16. A machine readable storage medium having stored thereon a computer program for converting a slide show presentation for use with a non-presentation application, the computer program comprising a routine of set instructions for causing the machine to perform the steps of:

Extracting a slide title for a first slide in a slide show presentation produced by a slide show presentation application executing in memory of a computer;

Converting said first slide with said slide title into a raster image;

Disposing both said slide title and said raster image of said slide in a markup language document; and

Repeating said extracting, converting and disposing steps for a selected group of other slides in the slide show presentation.

The examiner rejected the claim under 35 U.S.C. § 101 as claiming non-statutory subject matter. In particular, the examiner indicated that the instructions could be imbedded in a signal or wave and are therefore unpatentable under In re Nuijten (Fed. Cir. 2007). In its appeal to the PTAB, IBM argued that its claimed “machine readable storage medium” is sufficiently fixed to avoid the transitory concerns expressed by the Federal Circuit in Nuijten. In the appeal, however, the PTAB affirmed the examiner’s rejection – finding that under the “broadest reasonable interpretation” a “machine readable storage medium” continues to encompass unpatentable transitory signals. Here, the specification does not particularly define the claim term and IBM did not offer any promise that the claim is limited to non-transitory signals.

In its 2012 examination training, the USPTO offered parallel guidance:

When the specification is silent (no special definition of a CRM provided in original disclosure):

– It is acceptable to amend the claims to exclude the signal embodiment by adding “non-transitory” to modify the computer readable media.

– See “Subject Matter Eligibility of Computer Readable Media” (Jan. ’10)

“Non-transitory” is not a requirement, but simply one option.

– Applicant can choose other ways to amend the claim in accordance with the original disclosure.

– Not acceptable to just add “physical” or “tangible”

– Nuijten’s ineligible signals were physical and tangible.

– Not acceptable to add “storage” absent support in original disclosure because the broadest reasonable interpretation of computer readable storage media based on common usage covers signals/carrier waves.

The bottom line here is that patent applicants must now specifically disclaim transitory waves or signals as their compositional carrier of any software claims.

Working out the Kinks in Post-Issuance Reviews: Versata v. SAP

By Dennis Crouch

The Versata saga provides an important case history showing the power of the new post-grant review procedures before the USPTO and the Office’s seeming new power to operate without fear of judicial review. However, over the next year the Federal Circuit will have its opportunity to review the PTAB’s controversial decisions.

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Versata’s hierarchical pricing engine software had strong sales in the mid 1990’s, that ended when SAP and others added the component to their product line – an extra add-on was no longer needed. SAP indicated that its software replaced the need for Versata’s add-on and actively discouraged customers from using Versata.

Versata’s In-Court Victories: Versata eventually sued SAP in 2007 and won a first jury verdict and then a second jury verdict (finding that SAP’s “patch” did not cure the infringement) with a $300 million + damage award. That final decision was later affirmed on appeal.

Petition for Post-Grant Review of Covered Business Method: Meanwhile, following the district court’s second finding of infringement (but prior conclusion of the aforementioned appeal), SAP filed a petition for Post Grant Review available to “Covered Business Methods” as part of the America Invents Act. SAP had clearly been anxious to use this approach and filed the PGR petition at its first opportunity on September 16, 2012 (the first day such petitions were allowed). CBM2012-0001.

If you remember, post-grant review (including CBM review) allows for challenge on “any ground that could be raised under paragraph (2) or (3) of section 282 (b) (relating to invalidity of the patent or any claim).” This has been interpreted by the PTO to include validity challenges raised under 35 U.S.C. § 101, 102, 103, or 112. But see Can a Third Party Challenge Section 101 Subject Matter Eligibility in the USPTO’s new Post-Grant Review Procedure?

SAP’s petition challenged the patent claims as (1) directed toward unpatentable subject matter under §101; (2) lacking written description; (3) indefinite; and anticipated.

USPTO Grants Petition for Post Grant Review: In a January 2013 order, the USPTO’s Patent Trial & Appeal Board (PTAB) granted the petition after finding that the challenged claims are “more likely than not unpatentable.” In particular, the PTAB allowed the challenge to move forward on the Section 101 and 102 grounds.

The PTAB made two additional important rulings:

What is a Covered Business Method?: First, the Board ruled that the ‘350 patent claims qualified as covered-business-methods because the claims are directed to a method for the “management of a financial product or service” and are not “technological inventions.” The PTO’s working definition of “technological” is rather unhelpful in that it simply asks whether the claim recites a new “technological feature” or “solves a technical problem using a technical solution.” Relevant claims of the patent (U.S. Patent No. 6,553,350) are shown below (claims 17 and 26). And, you will note that the method claim 17 does not recite any steps that could not be done with pencil and paper.

Issue Preclusion / Collateral Estoppel Does Not Apply: The ordinary rule in federal courts is that preclusion applies following final judgment by a district court. The fact that an appeal is pending does not impact the finality of the district court judgment unless & until the appellate court takes some action. In Pharmacia, the Federal Circuit wrote that the “vast weight of case law” supports the notion that a judgment should be given its full preclusive effect even when an appeal is pending. Pharmacia & Upjohn Co. v. Mylan Pharm., 170 F.3d 1373 (Fed. Cir. 1999). Here, Versata argued that the PTO should follow that general rule and since SAP already had a full and fair opportunity to challenge the patent validity and had lost its federal lawsuit resulting in final judgment. The PTAB rejected Versata’s argument finding instead that it would would not respect any final judgment subject to a pending appeal to the Federal Circuit.

As the final judgment in the related Versata v. SAP litigation is currently on appeal to the Federal Circuit, we hold that the district court’s judgment is not sufficiently firm to be accorded conclusive effect for purposes of 37 C.F.R. 42.302 as it is still subject to reversal or amendment.

On this issue, it is interesting to note that the appeal brief filed by SAP did not challenge district court’s validity finding. Thus, although the district court decision in general could have been rejected on appeal (it wasn’t), there was simple no chance even in January 2013 that the appellate panel was going to opine on patent validity issues.

At this point, in January 2013, the PTAB was beginning its review of the ‘350 patent’s validity and, in parallel the Federal Circuit was considering SAP’s appeal that focused on noninfringement and remedy arguments.

No Challenge to PTO Decision to Grant Post-Issuance Review Petition: Versata also opened a third-front – filing suit in Virginia district court to overturn the PTO’s decision to grant the post-issuance review petition. In a recent decision, the Virginia court rejected that request in Versata Development v. Rea (as Director of USPTO) and SAP AG, 2013 WL 4014649 (E.D. Va. 2013) (no subject matter jurisdiction). The AIA indicates that the PTO’s determination of whether or not to institute post-grant proceedings are “final and nonappealable.” 35 U.S.C. 324. Versata argued that “nonappealable” in the statute should be seen as merely limiting direct appeals to the Federal Circuit and that its request for review was akin to a “civil action” under 35 U.S.C. 145 and not an “appeal.” Bolstering that argument is the language of 35 U.S.C. 329 and 141 that define appeal in post-issuance proceedings as appeals to the Federal Circuit. However, the district court rejected Versata’s argument and held that the court lacked jurisdiction under the statute and that, in any case, the decision to grant the review was only an interlocutory decision. It is unclear, but Versata may appeal this decision soon. [As an aside, the language of the district court opinion suggests that petition is denied

Federal Circuit Decision (Largely) Affirms Lower Court: The next event in this long saga came in May 2013 when the Federal Circuit affirmed the district court’s determination of infringement and the damages award. The only modification of the judgment was to ask the lower court to be more particular in injoining infringement without injoining sales of SAP products in general.

PTAB Final Judgment: The following month in June 2013, the PTAB came out with its final ruling holding that the patent claims are invalid under 35 U.S.C. §101 as unpatentably abstract. This decision obviously temporally follows both the district court decision and that of the Federal Circuit. Yet, the PTAB found itself to differ on both claim construction and validity.

In particular, the PTAB determined that it would apply the “broadest reasonable interpretation” (BRI) standard to claim construction during post-issuance proceedings even though the terms had already been construed by the district court in a final judgment. The PTO’s rational is that (1) it is not bound by the district court judgment since “appeals from this proceeding are exclusively the Federal Circuit rather than to district courts” and that (2) the patentee’s ability to amend claims during review suggests that BRI should apply.

In the 101 analysis, the panel found that the claimed method of determining a price using product group hierarchies was a “disembodied concept” capable of being performed mentally, on paper, or on a general purpose computer. The PTO final judgment did not substantially revisit the issues of preclusion or whether the PTO has standing to challenge the patent under Section 101.

At the PTAB, the current status is that the Board is considering a rehearing request by Versata with the primary new focus being on the Federal Circuit’s Ultramercial decision. Versata again raised the contention that §101 is not a permissible ground for post grant review. Versata writes “Because § 101 is not a condition for patentability, much less specified as such as required by 35 U.S.C. § 282(b)(2), it is not reviewable in a post-grant review (or CBM review).”

All these issues are likely to come to a head as the case is appealed to the Federal Circuit over the next year.

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Claims at Issue:

17. A method for determining a price of a product offered to a purchasing organization comprising: arranging a hierarchy of organizational groups comprising a plurality of branches such that an organizational group below a higher organizational group in each of the branches is a subset of the higher organizational group; arranging a hierarchy of product groups comprising a plurality of branches such that a product group below a higher product group in each of the branches in a subset of the higher product group; storing pricing information in a data source, wherein the pricing information is associated, with (i) a pricing type, (ii) the organizational groups, and (iii) the product groups; retrieving applicable pricing information corresponding to the product, the purchasing organization, each product group above the product group in each branch of the hierarchy of product groups in which the product is a member, and each organizational group above the purchasing organization in each branch of the hierarchy of organizational groups in which the purchasing organization is a member; sorting the pricing information according to the pricing types, the product, the purchasing organization, the hierarchy of product groups, and the hierarchy of organizational groups; eliminating any of the pricing information that is less restrictive; and determining the product price using the sorted pricing information.

26. A computer readable storage media comprising: computer instructions to implement the method of claim 17.

Federal Circuit gets Technical with PTAB Failures

By Dennis Crouch

In re Guiffrida (Fed. Cir. 2013) (non-precedential)

Great Lakes NeuroTechnologies is a spin-off of Cleveland Medical Devices (CMDI) and focuses on therapy systems for movement disorders. The new company took control of a handful of CMDI patents when it was formed back in 2011. However, the patent application in question would be their first post-formation patent issuance, and the company’s first patent issued listing its president (Joe Guiffrida) as an inventor.

The preamble of Guiffrida’s first claim is directed toward a “portable therapy system,” although the claims body does not provide any further portability related limitation. In its decision, the PTAB had rejected the claim as anticipated over a single prior art reference (Shields). Shields does not make any remarks regarding portability, but the PTAB found the limitation disclosed because Shields does “not appear to contain any structure confining it to a particular location.” On appeal, the Federal Circuit rejected that analysis – finding that the prior art’s failure to disclose non-portability is not the equivalent of disclosing portability.

An anticipating reference must disclose every claim limitation, either expressly or inherently [and i]nherent disclosure requires that the prior-art reference necessarily include the unstated limitation. . . .

The Board found that Shields inherently discloses a portable system because Shields does “not appear to contain any structure confining it to a particular location.” But that observation does not indicate that Shields “necessarily” includes a portability limitation, or even that Shields must necessarily be free from “confin[ement] to a particular location.” On the contrary, a finding that Shields does not say that its system is not portable—which is all that the Board’s statement implies—is just a restatement of the fact that Shields does not expressly disclose a portability limitation. It does not suggest anything about what Shields inherently discloses that would suffice to shift the burden to Giuffrida to disprove inherency.

A confusing aspect of patent claims is that a claim preamble is often seen as non-limiting. Here, any confusion was eliminated because the PTO and the applicant agreed that the portability limitation is limiting. In the appeal, the Federal Circuit accepted that interpretation without comment.

Broadest Reasonable Interpretation Requires Consideration of Specification: The parties did not wholly agree on the meaning of portability. For its part, the PTO applied its wrong-headed “broadest reasonable interpretation” to suggest that a portable device is one that “can be carried.” Although irrelevant for this case, the Federal Circuit took the PTO to task for applying that “dictionary definition” of the claim term rather than construing the term “in light of the specification as it would be interpreted by one of ordinary skill in the art.” Quoting Phillips v. AWH. According to the appellate panel, the specification provides that a portable system is one that is “capable of being transported relatively easily.” In fact, the specification states that “By portable it is meant among other things that the device is capable of being transported relatively easily.” The Federal Circuit seems to have skipped over the wiggle-words “among other things” that were certainly inserted in order to open the term to a much wider variety of definitions.

Cryptic PTAB Decisions: In an earlier essay, I wrote about the Board’s new approach of writing shorter opinions. Here, the Federal Circuit gave some credence to that approach. Noting that cryptic obviousness rejections can be upheld where the analysis can be “reasonably discerned.” Here, the court noted that the board can rely upon the examiner’s brief in its decision.

Board made a number of obviousness rejections and those were affirmed on appeal except for claim 24 that I will discuss below. On remand, the PTO may also replace the reversed anticipation rejections (discussed above) with obviousness rejections – especially since the result of this case is that many of the here-adjudged novel claims have dependent claims that are here-adjudged as obvious.

Claim 24 in the patent application adds a limitation that some of the system components communicate using “a two-way RF link.” I don’t think that anyone (even a Federal Circuit judge) believes that a two-way RF communication limitation would normally transform an unpatentable system into one that is non-obvious (without something more). But, here the Federal Circuit reversed the rejection – finding that the PTO had failed to prove-up its burden.

[The proffered prior art’ uses ultrasound transducers that communicate with a compact unit, which, in turn, communicates with a computer. Those communications are twice referred to as “wireless,” but the document says little else about them. It does not mention a radio frequency (RF) link, a two-way or bidirectional link, the retransmission of data over such a link, or any benefits from such retransmissions. We have been pointed to no substantial evidence that Zheng teaches such features.

Nor has the Director persuasively explained why Zheng [the prior art] renders those limitations from claim 24 obvious. On the contrary, the reasoning within the PTO has been inconsistent and conclusory in this matter. In stating that it “fail[ed] to see how a system that can both receive signals from sensors and deliver them to, for example, FES systems, could operate absent a two-way link,” the Board cited a paragraph in Zheng that mentions a wireless link between units embedded in the body and an “outside control unit.” The Examiner invoked different paragraphs from Zheng to find that a two-way link is “implied” or “required.” Broad-brush statements based on Zheng’s generic references to a “wireless” link are insufficient to support the conclusion that Zheng renders obvious a claim calling for the “wireless[ ] retransmi[ssion] [of sensor signals] over a two-way RF link.” We therefore reverse the rejection of claim 24.

On remand, the PTO should be able to find some prior art that shows wireless RF two-way communication that fits this case.

A few recent Section 101 cases at the PTAB

By Dennis Crouch

Patenting Software: Ex Parte Betts [Computer Associates], 2013 WL 3327142, Appeal 2010-004256, Application 11/132,649 (PTAB 2013) (“[W]e conclude claims 14-26 encompass software without physical embodiment, i.e., software per se, which is an abstract idea and not a “process, machine, manufacture, or composition of matter,” as required by § 101.”)

Patenting Software: Ex Parte Krause [HEWLETT-PACKARD], 2013 WL 3246398, Appeal 2010-012129, Application 10/442,401 (PTAB 2013) (Claims directed to an “end station” within a network having an “aggressive timer.” “Appellant contends that the Examiner erred in rejecting [the] claims … under 35 U.S.C §101 because the claims recite an “end station,” which is defined as hardware. Appellant’s argument does not cite evidence to rebut the Examiner’s interpretation that the claim encompasses either hardware or software. Accordingly, we decline to reverse the rejection.”)

Patenting Software: Ex Parte Barsness [IBM], 2013 WL 3362954, Appeal 2010-011009, Application 11/316,285 (PTAB 2013) (Claim directed to “computer-executable instructions tangibly recorded on a computer-readable media” construed to include “non-statutory, transitory embodiments.” “[W]e find the Specification states the invention is capable of being distributed in the form of a wireless signal when exchanged from one signal-bearing medium to another. This falls within a propagating electromagnetic signal per se and thus, is not directed to one of the statutory categories.”)

Patenting Software: Ex Parte Svendsen [Concert Tech], 2013 WL 3363110, Appeal 2011-001873, Application 11/837,876 (PTAB 2013) (Claimed media “control system” could be implemented as software. “As such, we are not persuaded by Appellants’ argument that the mere recitation of a “control system” (even if the Specification describes it as being associated with a memory) is sufficient to make the claims patent-eligible under 35 U.S.C. § 101 . . . as it does not play a significant part in the performance of the claimed steps.” In short, the broadest reasonable interpretation of the claim language leads us to construe the “control system” as being directed to a computer program per se, which, as drafted, renders the claimed subject matter not patentable under 35 U.S.C. § 101. See Gottschalk v. Benson, 409 U.S. 63, 72 (1972).”

Patenting Method that Could be Performed by a Human: Ex Parte Xu [HEWLETT-PACKARD], 213 WL 3363011, Appeal 2010-009107, Application 10/767,075 (PTAB 2013) (“[C]laim 1 as a whole is directed to a sequence of steps that can be performed by a person. Accordingly, claim 1 is drawn to patent-ineligible subject matter and invalid under § 101.”)

Patenting Device Attached to a Human is OK: Ex Parte Robert S. Bray, 2013 WL 3293616, Appeal 2011-013427, Application 11/686,054 (PTAB 2013) (“The claims recite a device positioned between two vertebrae not, for example, a human comprising a positioned device. The claims relate only to the correct placement of the device in the human patient, and as a whole, do not encompass a human organism. There is nothing in the statute, and we are unaware of any case, that categorically excludes such devices.”)

When a Functional Claim Limitation is the “Essence of the Invention”

by Dennis Crouch

In re Jasinski (Fed. Cir. 2013)

Jasinski’s patent application is owned by IBM and directed to a method of testing computer memory devices. Application No. 10/906,508.  The USPTO examiner rejected the claims as anticipated and that rejected was affirmed by the USPTO’s internal review board.  On appeal here, the Federal Circuit reversed based upon a claim construction issue.

I have reproduced claim 1 below:

A method for verifying the accuracy of logical-to-physical mapping software designed for testing memory devices, said method comprising:

[a] providing a built-in self test (BIST) fail control function to generate multiple simulated memory fails at various predetermined locations within a
memory array of a memory device;

[b] testing said memory array via a memory tester;

[c] generating a bit fail map by said logical-to physical mapping software based on all memory fails indicated by said memory tester, wherein
said bit fail map indicates physical locations of all fail memory locations derived by said logical-to-physical mapping software; and

[d] comparing said fail memory locations derived by said logical-to-physical mapping software to said various predetermined memory locations to verify the accuracy of said logical-to-physical mapping software.

The USPTO refused to give patentable weight to either the preamble statement of purpose “verifying the accuracy” or the final functional clause indicating that the purpose of the final comparing step is “to verify the accuracy.”  Rather, the USPTO argued that those statements of intended purpose of a step rather than placing any actual limitation on the step itself. According to the USPTO, if the patentee wanted to include a verifying step then it could have done so by positively reciting that step. See Minton v. Nat’l Ass’n of Securities Dealers, Inc., 336 F.3d 1373 (Fed. Cir. 2003) (a whereby “clause in a method claim is not given weight when it simply expresses the intended result of a process step positively recited.”)

On appeal, the Federal Circuit agreed with the notion that a clause that merely indicate the purpose of a limitation does not add patentable weight.  However, the court disagreed the USPTO’s conclusion that the “to verify the accuracy” clause merely indicated the purpose of the step.  Rather, the court found that the “to verify the accuracy” clause refers to the “essence of the invention” and “provides the criteria by which the previously-recited comparing limitation is analyzed.” For this point, the court cited Vizio, Inc. v. Int’l Trade Comm’n, 605 F.3d 1330 (Fed. Cir. 2010) (“[T]he ‘for decoding’ language . . . is properly construed as a limitation, and not merely a statement of purpose or intended use for the invention, because ‘decoding’ is the essence or a fundamental characteristic of the claimed invention.”).

The decision by Judge Moore is important on several fronts:

1) Judge Moore is may well be the most claim-focused member of the Federal Circuit.  Yet, the opinion relies upon the “essence of the invention” to lead to its result rather than merely focusing on the claim language. At least on the academic side we continue to have a broad debate over whether the “cult of the claim” is appropriate.

2) From a practical perspective, this decision places additional power in the hands of patent applicants who reject the USPTO’s broadest reasonable interpretation of its patent claims.  Here, the PTO’s motivation was really that the applicant amend its claims to avoid ambiguity, but its approach was blocked by the court. Moving forward we will likely see continued growth in the use of functional claim language.

3) Functional claim language has been under attack since the Supreme Court rejected Samuel Morse’s broad Claim 8.  The patent act particularly allows for functional claim limitations under 35 U.S.C. 112(f), but that provision includes strict limits on the scope given to such limitations.  More recently, we have seen increased calls to take steps to limit the use of functional claim language.  As Prof Rantanen discussed yesterday, Mark Lemley has proposed that the court should begin interpreting functionally claimed elements as also being bound by 112(f). 

  

Inter Partes Review: Winning by Losing

By Dennis Crouch

Garmin v. Cuozzo, IPR2012–00026, (P.T.A.B. 2013) Download Notice-15

In what appears to be the first Inter Partes Revew petition decided on the merits, the USPTO Patent Trials and Appeal Board (PTAB) has granted Garmin's petition for inter partes review of only claims 10, 14, and 17 of US Patent 6,778,074 owned by Cuozzo Speed Technologies LLC.  [See UPDATE BELOW] This is a mixed opinion because Garmin had requested IPR of claims 1–20. Inter Partes Review is a spawn of the America Invents Act (AIA) and serves as a more robust and rapid version of inter partes reexamination. In order to grant an IPR petition, the USPTO must determine that the petition shows "a reasonable likelihood that the petitioner would prevail." Now that the petition has been granted, the PTAB will move forward with the trial to determine whether those three claims are valid. Under the statute, the PTAB's determination as to whether to institute a PGR cannot be appealed. 35 U.S.C. § 314.

Cuozo originally sued Garmin, Tom Tom and several automakers for patent infringement in a New Jersey federal court. That lawsuit is still in the early stages of discovery, but the basic allegation is that Garmin's navigation systems infringe the '074 claims that are directed toward the use of encoded speed limit indicators. 

For Garmin, this may be a case of winning-by-losing.  In its IPR petition, Garmin suggested that the PTO use the broad claim construction suggested by Couzo's infringement allegations for the claim requirement that a "speedometer" and a "colored display" be "integrally attached".

The Patent Owner has taken a very broad view of the meaning of the claims based upon the allegations set forth in its complaint against the products of the real parties in interest here. The "broadest reasonable construction" of the challenged claims must be consistent with the allegations set forth in Patent Owner's civil complaint. Petitioner submits, for the purposes of the IPR only, that the claim terms are presumed to take on their ordinary and customary meaning that the term would have to one of ordinary skill in the art in view of Patent Owner's civil complaint and the Specification of the '074 Patent.

The PTO rejected the notion that the patent owner's post-patent-issuance civil complaint has any bearing on the claim construction and also found that the claim scope suggested unduly broad.

Petitioner does not make known its construction of "integrally attached." Instead, Petitioner states that the term has to mean, in this proceeding, what the Patent Owner asserts it means in the infringement suits the Patent owner has filed against various parties including Petitioner. That argument is without merit. The meaning of claim terms is not governed by what the Patent Owner says they mean in filing an infringement suit based on the '074 Patent. There is no reason to assume that the Patent Owner's litigation position is correct. Litigation positions taken subsequent to issuance of the patent are unreliable. . . .

On this record, we construe "integrally attached" as applied to the colored display and the speedometer in the context of the disclosure … as meaning that the two elements are discrete parts physically joined together as a unit without each part losing its own separate identity. In the combined unit, the colored display is still the colored display and the speedometer is still the speedometer; each retains its own separate identity.

The PTAB went on to particularly find that a single display screen showing both the speedometer and colored display would not satisfy the integrally attached limitation as construed above.

The single electronic display screen of Aumayer showing both the image of a speedometer and a colored scale mark indicating the current speed limit does not meet the claim recitation "integrally attached" as applied to a speedometer and a colored display. There, the speedometer and the colored display are not discrete and separately recognizable parts that are "integrally attached" to each other. Rather, the liquid crystal display screen is itself a single component which performs the function of both the speedometer and colored display.

In the context of the inter partes review, the result is that the suggested references do not show the claims unpatentable. Garmin's gambit, however, is that the same narrow claim construction will carry-over to the litigation and result in a finding of non-infringement. Although the district court will not be bound by this construction, it is likely to be instructive and at least cognitively limiting to the New Jersey judge – especially since the PTO's interpretation is the 'broadest reasonable construction.'

UPDATE: It turns out that the PTAB has released at least one earlier petition decision – in IPR2012–00026 involving Microsoft’s challenge of ProxyConn’s Patent No. 6,757,717. In that decision, the PTAB granted the IPR for claims 1, 3, 10, and 22–24, but denied the petition to review claims 11, 12, and 14.

= = = = =

Under 35 U.S.C. § 316, the USPTO has one year from now to make a final determination in the case. The USPTO has scheduled for the trial to be complete in August 2013.

Reviewing PTO Claim Construction: Calls for De Novo Review of Proper Standard

By Dennis Crouch

Flo Healthcare v. Kappos and Rioux Vision (Fed. Cir. 2012), Inter Partes Reexamination No. 95/000,251.

In an interesting three-way opinion, the Federal Circuit has affirmed the USPTO’s rejection of Flo’s reexamined patent claims. In the process, however, the court provided significant additional guidance for the PTO on when claim elements that do not include the magical word “means” should nevertheless be interpreted as means-plus-function elements. See 35 U.S.C. 112(6). Here, the court found that the claim term “height adjustment mechanism” as used in the context of the patent specification should not be interpreted as a means-plus-function element.

Senior Judge Plager wrote the unanimous majority opinion and also filed a concurring opinion with “additional views” regarding appellate review of PTO claim construction Judge Plager argued that Federal Circuit precedent is unclear:

[W]e now appear to have two contradictory lines of authority on the question of how this court reviews Board claim constructions—a deferential “reasonable” (arbitrary/capricious-type) review, and a no-deference “pure” law type review. [Compare In re Morris, 127 F.3d 1048 (Fed. Cir. 1997) with In re Baker Hughes, 215 F.3d 1297 (Fed. Cir. 2000).] The fact that the APA now governs our review of PTO decisions does not provide guidance on which is the right standard. This is because the APA itself provides one standard for “pure” questions of law—which are reviewed without deference—and different, more deferential, standards for questions of fact and for mixed questions of fact and law.

The question then becomes whether claim construction by the Board is to be considered a question of “pure” law—the way this court treats claim construction in district court litigation under Cybor—and thus to be reviewed without deference; or whether it is something else, a blend of law and fact and judgment—as the Supreme Court said in Markman, a “mongrel practice”—in which case it is at least arguably subject to the “arbitrary and capricious” standard of APA § 706. Interestingly, none of the cases applying the Baker Hughes no-deference standard has paused to explain why that is the preferable standard as a matter of law or policy, or how it relates to the review standard that the Board uses.

Three additional factors weigh relatively in favor of deference toward PTO claim construction decisions even if court claim construction decisions continue to be reviewed de novo. First, claim construction at the PTO is decided initially by technical fact finders (patent examiners) and then by mixed fact/law specialists (PTAB judges). Second, the PTO’s form of claim construction “broadest reasonable construction” is a factual standard as is (virtually) any reasonableness judgment. Finally, the Supreme Court’s placement of decision making authority with a judge rather than a jury (Markman) that led to the Cybor no deference standard is tangential to the PTO’s role in claim construction. The decision makers in patent prosecution are defined by statute and codified rules rather than by the Supreme Court.

Judge Plager does not here suggest that one approach is correct, but does argue in favor of en banc rehearing to provide clear guidance to patentees and others concerned with patent rights. Judge Plager also offers an apology for the confusion since he authored the Morris opinion and was on the Baker Hughes panel.

This case involves a direct challenge to PTO claim construction decisions. The next step removed will involve collateral challenges during infringement litigation. In that case, what deference should be given to PTO conclusions at the time of the patent grant?

Judge Newman also agreed with the majority decision and provided her own additional views on the topic of the “broadest reasonable interpretation” standard used in patent prosecution. Judge Newman argues that the PTO should conduct claim construction applying the same standard as a court would later in litigation. The problem, according to Judge Newman is that the “broadest reasonable interpretation” is being applied as a standard of claim construction whereas it is actually merely an “examination protocol, not a rule of law.”

In its implementation, the examiner starts with a blank slate on which the applicant has described the subject matter he wishes to patent. The examiner is charged with searching the entire world knowledge, and to decide what the applicant is entitled to claim, as a matter of law. See Manual of Patent Examining Procedure §706 (“After the application has been read and the claimed invention understood, a prior art search for the claimed invention is made.”). In this demanding process, the examiner views the applicant’s presentation broadly, in order to assure that all possibly relevant prior art is explored. That is the role of “broadest reasonable interpretation”: it is an examination tool whereby the applicant and the examiner work together to determine and define the “invention” to be claimed.

Regardless of the path used to get there, Judge Newman argues, the claim construction is either correct or it is incorrect and it is the Federal Circuit’s role to make that determination accurately and uniformly. Thus, Judge Newman sees an acute problem in situations such as this case “where the same issue can be finally adjudicated to different appellate outcomes, depending on the tribunal from which it came.” An en banc hearing is also requested to remedy this “pernicious” conflict.

Notes:

  • The infringement lawsuit between these parties was filed in 2007 (the same year as the inter partes reexamination request). That litigation settled in 2010, but there is not a clear mechanism for settling inter partes reexaminations once they get rolling. The new inter partes reviews can be settled.

MPEP 2106 Patent Subject Matter Eligibility [R-9]

There are two criteria for determining subject matter eligibility and both must be satisfied. The claimed invention (1) must be directed to one of the four statutory categories, and (2) must not be wholly directed to subject matter encompassing a judicially recognized exception, as defined below. The following two step analysis is used to evaluate these criteria.

I.   THE FOUR CATEGORIES OF STATUTORY SUBJECT MATTER

Step 1: Is the claim directed to one of the four patent-eligible subject matter categories: process, machine, manufacture, or composition of matter? The subject matter of the claim must be directed to one of the four subject matter categories. If it is not, the claim is not eligible for patent protection and should be rejected under 35 U.S.C. 101 , for at least this reason. A summary of the four categories of invention, as they have been defined by the courts, are:

  • i. Process – an act, or a series of acts or steps. See Gottschalk v. Benson, 409 U.S. 63, 70, 175 USPQ 673, ___ (1972) ("A process is a mode of treatment of certain materials to produce a given result. It is an act, or a series of acts, performed upon the subject-matter to be transformed and reduced to a different state or thing." (emphasis added) (quotingCochrane v. Deener, 94 U.S. 780, 788, 24 L. Ed. 139, 1877 Dec. Comm'r Pat. 242 (1876)); NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1316, 75 USPQ2d 1763, ___(Fed. Cir. 2005) ("A process is a series of acts." (quoting Minton v. Natl. Ass'n. of Securities Dealers, 336 F.3d 1373, , 336 F.3d 1373, 1378, 67 USPQ2d 1614, ___ (Fed. Cir. 2003))). See also 35 U.S.C. 100(b)Bilski v. Kappos, 130 S. Ct. 3218, 95 USPQ2d 1001 (2010).
  • ii. Machine – a concrete thing, consisting of parts, or of certain devices and combination of devices. Burr v. Duryee, 68 U.S. (1 Wall.) 531, 570, 17 L. Ed. 650 (1863). This includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result. Corning v. Burden, 56 U.S. 252, 267, 14 L. Ed. 683 (1854).
  • iii. Manufacture – an article produced from raw or prepared materials by giving to these materials new forms, qualities, properties, or combinations, whether by handlabor or by machinery. Diamond v. Chakrabarty, 447 U.S. 303, 308, 206 USPQ 193, ___ (1980) (emphasis added) (quoting Am. Fruit Growers, Inc. v. Brogdex Co., 283 U.S. 1, 11, 51 S. Ct. 328, 75 L. Ed. 801, 1931 (Dec. Comm'r Pat. 711 (1931))).
  • iv. Composition of matter – all compositions of two or more substances and all composite articles, whether they be the results of chemical union, or of mechanical mixture, or whether they be gases, fluids, powders or solids, for example. Chakrabarty, 447 U.S. at 308.

    Non-limiting examples of claims that are not directed to one of the statutory categories:

  • i. transitory forms of signal transmission (for example, a propagating electrical or electromagnetic signal per se), In re Nuijten, 500 F.3d 1346, 1357, 84 USPQ2d 1495, ___ (Fed. Cir. 2007);
  • ii. a naturally occurring organism, Chakrabarty, 447 U.S. at 308;
  • iii. a human per se, The Leahy-Smith America Invents Act (AIA), Public Law 112-29, sec. 33, 125 Stat. 284 (September 16, 2011);
  • iv. a legal contractual agreement between two parties, see In re Ferguson, 558 F.3d 1359, 1364, 90 USPQ2d 1035, ___ (Fed. Cir. 2009) (cert. denied);
  • v. a game defined as a set of rules;
  • vi. a computer program per seGottschalk v. Benson, 409 U.S. at 72;
  • vii. a company, Ferguson, 558 F.3d at 1366; and
  • viii. a mere arrangement of printed matter, In re Miller, 418 F.2d 1392, 1396, 164 USPQ 46, ___ (CCPA 1969).

    A claim that covers both statutory and non-statutory embodiments (under the broadest reasonable interpretation of the claim when read in light of the specification and in view of one skilled in the art) embraces subject matter that is not eligible for patent protection and therefore is directed to non-statutory subject matter. Such claims fail the first step and should be rejected under 35 U.S.C. 101 , for at least this reason.

    For example, machine readable media can encompass non-statutory transitory forms of signal transmission, such as, a propagating electrical or electromagnetic signal per se. See In re Nuijten, 500 F.3d 1346, 84 USPQ2d 1495 (Fed. Cir. 2007). When the broadest reasonable interpretation of machine readable media in light of the specification as it would be interpreted by one of ordinary skill in the art encompasses transitory forms of signal transmission, a rejection under 35 U.S.C. 101 as failing to claim statutory subject matter would be appropriate. Thus, a claim to a computer readable medium that can be a compact disc or a carrier wave covers a non-statutory embodiment and therefore should be rejected under 35 U.S.C. 101 as being directed to non-statutory subject matter.

    If the claimed invention is clearly not within one of the four categories, it is not patent eligible. However, when the claim fails under Step 1 and it appears from applicant's disclosure that the claim could be amended to be directed to a statutory category, Step 2 below should still be conducted.

    II.   JUDICIAL EXCEPTIONS TO THE FOUR CATEGORIES

    Step 2: Does the claim wholly embrace a judicially recognized exception, which includes laws of nature, physical phenomena, and abstract ideas, or is it a particular practical application of a judicial exception? See Bilski v. Kappos, 561 U.S. ___, 130 S. Ct. 3218, 3225, 95 USPQ2d 1001 (2010) (stating "The Court's precedents provide three specific exceptions to § 101's broad patent-eligibility principles: 'laws of nature, physical phenomena, and abstract ideas.'") (quoting Diamond v. Chakrabarty, 447 U.S. 303, 309, 206 USPQ 193, ___ (1980)).

    Determining whether the claim falls within one of the four enumerated categories of patentable subject matter recited in 35 U.S.C. 101 (i.e., process, machine, manufacture, or composition of matter) does not end the analysis because claims directed to nothing more than abstract ideas (such as mathematical algorithms), natural phenomena, and laws of nature are not eligible for patent protection. Diamond v. Diehr, 450 U.S. 175, 185, 209 USPQ 1, 7 (1981); accord, e.g., Chakrabarty, 447 U.S. at 309, 206 USPQ at 197; Parker v. Flook, 437 U.S. 584, 589, 198 USPQ 193, 197 (1978); Benson, 409 U.S. at 67-68 , 175 USPQ at 675. "A principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right." Le Roy v. Tatham,, 55 U.S. (14 How.) 156, 175 (1852). Instead, such "manifestations of laws of nature" are "part of the storehouse of knowledge," "free to all men and reserved exclusively to none." Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130, 76 USPQ 280, 281 (1948).

    Thus, "a new mineral discovered in the earth or a new plant found in the wild is not patentable subject matter" under Section 101Chakrabarty, 447 U.S. at 309, 206 USPQ at 197. "Likewise, Einstein could not patent his celebrated law that E=mc2; nor could Newton have patented the law of gravity." Ibid. Nor can one patent "a novel and useful mathematical formula," Flook, 437 U.S. at 585, 198 USPQ at 195; electromagnetism or steam power, O'Reilly v. Morse, 56 U.S. (15 How.) 62, 113-114 (1853); or "[t]he qualities of … bacteria, … the heat of the sun, electricity, or the qualities of metals," Funk, 333 U.S. at 130, 76 USPQ at 281; see Le Roy, 55 U.S. (14 How.) at 175.

    While abstract ideas, physical phenomena, and laws of nature are not eligible for patenting, methods and products employing abstract ideas, physical phenomena, and laws of nature to perform a real-world function may well be. In evaluating whether a claim meets the requirements of 35 U.S.C. 101 , the claim must be considered as a whole to determine whether it is for a particular application of an abstract idea, physical phenomenon, or law of nature, and not for the abstract idea, physical phenomenon, or law of nature itself. Diehr, 450 U.S. at 188-178.

    In addition to the terms laws of nature, physical phenomena, and abstract ideas, judicially recognized exceptions have been described using various other terms, including natural phenomena, scientific principles, systems that depend on human intelligence alone, disembodied concepts, mental processes and disembodied mathematical algorithms and formulas, for example. The exceptions reflect the courts' view that the basic tools of scientific and technological work are not patentable.

    The claimed subject matter must not be wholly directed to a judicially recognized exception. If it is, the claim is not eligible for patent protection and should be rejected under 35 U.S.C. 101 . However, a claim that is limited to a particular practical application of a judicially recognized exception is eligible for patent protection. A "practical application" relates to how a judicially recognized exception is applied in a real world product or a process, and not merely to the result achieved by the invention. When subject matter has been reduced to a particular practical application having a real world use, the claimed practical application is evidence that the subject matter is not abstract (e.g., not purely mental) and does not encompass substantially all uses (preemption) of a law of nature or a physical phenomenon. See, e.g., Ultramercial v. Hulu, 657 F.3d 1323, 1329, 100 USPQ2d 1140,1145 (Fed. Cir. 2011)(stating that the patent "does not claim a mathematical algorithm, a series of purely mental steps, or any similarly abstract concept. It claims a particular method . . . a practical application of the general concept.").

    A.   Practical Application of Machines, Manufactures, and Compositions of Matter (Products)

    If the claimed product falls within one of the three product categories of invention and does not recite judicially excepted subject matter, e.g., a law of nature, a physical phenomenon, or an abstract idea, it qualifies as eligible subject matter. If a judicial exception is recited in the claim, it must be determined if the judicially excepted subject matter has been practically applied in the product.

    Eligible machines, manufactures, and compositions of matter are non-naturally occurring products typically formed of tangible elements or parts that embody a particular or specific, tangible practical application of the invention. Thus, for these product categories, a particular practical application is often self-evident based on the claim limitations that define the tangible embodiment. This is because an idea that is tangibly applied to a structure is no longer abstract, and a law of nature or physical phenomenon that is practically applied to a structure is limited to that particular application of the concept. For example, a cup is the tangible application of the abstract idea of containing a liquid and is one limited embodiment of that idea (which is no longer abstract). As another example, a magnetic door latch is the tangible application of the concept of magnetism and does not wholly embrace the concept of magnetism but, rather, is one limited application of the concept.

    A claim that includes terms that imply that the invention is directed to a product, for instance by reciting "a machine comprising…", but fails to include tangible limitations in accordance with its broadest reasonable interpretation is not limited to a practical application, but rather wholly embraces or encompasses the concept upon which the invention is based. This is impermissible as such claim coverage would extend to every way of applying the abstract idea, law of nature or physical phenomenon.

    A claim that includes judicially excepted subject matter and whose broadest reasonable interpretation is directed to a man-made tangible embodiment (i.e., structure) with a real world use is limited to a practical application (the subject matter has been practically applied). The reason is that the claim as a whole must be evaluated for eligibility in the same manner that a claim as a whole is evaluated for patentability under 35 U.S.C. 102103 and 112.

    Once a practical application has been established, the limited occurrence of preemption must be evaluated to determine whether the claim impermissibly covers substantially all practical applications of the judicially excepted subject matter. If so, the claim is not patent-eligible. If the claim covers only a particular practical application of the judicially excepted subject matter, it is patent eligible.

    The following examples show the difference between a tangible embodiment that is evidence of a particular practical application and an abstract concept that has no practical application.

  • (a) A claim that is directed to a machine comprising a plurality of structural elements that work together in a defined combination based on a mathematical relationship, such as a series of gears, pulleys and belts, possesses structural limitations that show that it is a tangible embodiment, providing evidence that the mathematical relationship has been applied (a practical application). Additionally, that tangible embodiment is limited by the claimed structure and would not cover all substantial practical uses of the mathematical relationship. The claim would be eligible for patent protection.
  • (b) On the other hand, a claim that is directed to a machine ("What is claimed is a machine that operates in accordance with F=ma.") and includes no tangible structural elements under the broadest reasonable interpretation, covers the operating principle based on a mathematical relationship with no limits on the claim scope. Thus, as no tangible embodiment is claimed, there would be no evidence of a practical application. The claim would wholly embrace the mathematical concept of F=ma and would not be eligible subject matter.
  • (c) As another example, a claim to a non-transitory, tangible computer readable storage medium per se that possesses structural limitations under the broadest reasonable interpretation standard to qualify as a manufacture would be patent-eligible subject matter. Adding additional claim limitations to the medium, such as executable instructions or stored data, to such a statutory eligible claim would not render the medium non-statutory, so long as the claim as a whole has a real world use and the medium does not cover substantially all practical uses of a judicial exception. The claim as a whole remains a tangible embodiment and qualifies as a manufacture. As explained above, the additional claim limitations would be evaluated in terms of whether they distinguish over the prior art.

    B.   Practical Application of Processes (Methods)

    The Supreme Court in Bilski v. Kappos, 561 U.S. ___, 130 S. Ct. 3218, 95 USPQ2d 1001 (2010), clarified the requirements for a claim to be a statutory process. Not every claimed method qualifies as a statutory process. A process claim, to be statutory under 35 U.S.C. 101 , must be limited to a particular practical application. This ensures that the process is not simply claiming an abstract idea, or substantially all practical uses of (preempting) a law of nature, or a physical phenomenon. See MPEP § 2106.01 for further guidance regarding subject matter eligibility determinations during examination of process claims that involve laws of nature/natural correlations.

    A claim that attempts to patent an abstract idea is ineligible subject matter under 35 U.S.C. 101 . See Bilski, 130 S. Ct. at 3230 (''[A]ll members of the Court agree that the patent application at issue here falls outside of § 101 because it claims an abstract idea.''). The abstract idea exception has deep roots in the Supreme Court's jurisprudence. See Bilski, 130 S. Ct. at 3225 (citing Le Roy v. Tatham, 55 U.S. (14 How.) 156, 174–175 (1853)).

    Bilski reaffirmed Diehr's holding that ''while an abstract idea, law of nature, or mathematical formula could not be patented, 'an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.''' See Bilski, 130 S. Ct. at 3230 (quoting Diamond v. Diehr, 450 U.S. 175, 187 (1981)) (emphasis in original). The recitation of some structure, such as a machine, or the recitation of some transformative component will in most cases limit the claim to such an application. However, not all such recitations necessarily save the claim: ''Flook established that limiting an abstract idea to one field of use or adding token postsolution components did not make the concept patentable.'' See Bilski, 130 S. Ct. at 3231. Moreover, the fact that the steps of a claim might occur in the ''real world'' does not necessarily save it from a 35 U.S.C. 101 rejection. Thus, the Bilski claims were said to be drawn to an ''abstract idea'' despite the fact that they included steps drawn to initiating transactions. The ''abstractness'' is in the sense that there are no limitations as to the mechanism for entering into the transactions.

    Consistent with the foregoing, Bilski holds that the following claim is abstract:

    1. A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:

    • (a) Initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;
    • (b) Identifying market participants for said commodity having a counter-risk position to said consumers; and
    • (c) Initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.

    Specifically, the Court explains:

    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 Bensonand 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.

    Bilski also held that the additional, narrowing, limitations in the dependent claims were mere field of use limitations or insignificant postsolution components, and that adding these limitations did not make the claims patent-eligible. Claims 1–9 in Bilski are examples of claims that run afoul of the abstract idea exception. The day after deciding Bilski, the Supreme Court denied certiorari in Ferguson v. Kappos, U.S. Supreme Court No. 09–1501, while granting, vacating, and remanding two other Federal Circuit 35 U.S.C. 101 cases. The denial of certiorari left intact the rejection of all of Ferguson's claims. Although the Federal Circuit had applied the machine-or-transformation test to reject Ferguson's process claims, the Supreme Court's disposition of Ferguson makes it likely that the Ferguson claims also run afoul of the abstract idea exception. A representative Ferguson claim is:

    1. A method of marketing a product, comprising:

    • Developing a shared marketing force, said shared marketing force including at least marketing channels, which enable marketing a number of related products;
    • Using said shared marketing force to market a plurality of different products that are made by a plurality of different autonomous producing company [sic], so that different autonomous companies, having different ownerships, respectively produce said related products;
    • Obtaining a share of total profits from each of said plurality of different autonomous producing companies in return for said using; and
    • Obtaining an exclusive right to market each of said plurality of products in return for said using.

    The following guidance presents factors that are to be considered when evaluating patent-eligibility of method claims. The factors include inquiries from the machine-or-transformation test, which remains a useful investigative tool, and inquiries gleaned from Supreme Court precedent. See In re Bilski, 545 F.3d 943, 954 (Fed. Cir. 2009) (stating that "[a] claimed process is surely patent-eligible under § 101if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing."); and Bilski, 130 S. Ct. at 3227 (stating, "This Court's precedents establish that the machine-or-transformation test is 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.'").

    While the Supreme Court in Bilski did not set forth detailed guidance, there are many factors to be considered when determining whether there is sufficient evidence to support a determination that a method claim is directed to an abstract idea. The following factors are intended to be useful examples and are not intended to be exclusive or limiting. It is recognized that new factors may be developed, particularly for emerging technologies. It is anticipated that the factors will be modified and changed to take into account developments in precedential case law and to accommodate prosecution issues that may arise in implementing this new practice.

    Where the claim is written in the form of a method and is potentially a patentable process, as defined in 35 U.S.C. 100(b), the claim is patent-eligible so long as it is not disqualified as one of the exceptions to 35 U.S.C. 101 's broad patent-eligibility principles; i.e., laws of nature, physical phenomena, and abstract ideas.

    Taking into account the following factors, the examiner should determine whether the claimed invention, viewed as a whole, is disqualified as being a claim to an abstract idea. Relevant factors—both those in favor of patent-eligibility and those against such a finding—should be weighed in making the determination. Factors that weigh in favor of patent-eligibility satisfy the criteria of the machine-or-transformation test or provide evidence that the abstract idea has been practically applied. Factors that weigh against patent-eligibility neither satisfy the criteria of the machine-or-transformation test nor provide evidence that the abstract idea has been practically applied. Each case will present different factors, and it is likely that only some of the factors will be present in each application. It would be improper to make a conclusion based on one factor while ignoring other factors.

    With respect to the factors listed below, a "field-of-use" limitation does not impose actual boundaries on the scope of the claimed invention. A field-of-use limitation merely indicates that the method is for use in a particular environment, such as "for use with a machine" or "for transforming an article", which would not require that the machine implement the method or that the steps of the method cause the article to transform. A field-of-use limitation does not impose a meaningful limit on the claimed invention. Insignificant "extra-solution" activity means activity that is not central to the purpose of the method invented by the applicant. For example, gathering data to use in the method when all applications of the method would require some form of data gathering would not impose a meaningful limit on the claim.

    1.   Factors To Be Considered in an Abstract Idea Determination of a Method Claim

    (a)   Whether the method involves or is executed by a particular machine or apparatus

    "The machine-or-transformation test is a useful and important clue, and investigative tool, for determining whether some claimed inventions are processes under § 101." Bilski v. Kappos, 561 U.S. ___, ___, 130 S. Ct. 3218, 3227, 95 USPQ2d 1001, ___ (2010). If so, the claims are less likely to be drawn to an abstract idea; if not, they are more likely to be so drawn. With respect to these factors, a "machine" is a concrete thing, consisting of parts, or of certain devices and combination of devices. This includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result. This definition is interpreted broadly to include electrical, electronic, optical, acoustic, and other such devices that accomplish a function to achieve a certain result. An "apparatus" does not have a significantly different meaning from a machine and can include a machine or group of machines or a totality of means by which a designated function or specific task is executed.

    Where a machine or apparatus is recited or inherent in a patent claim, the following factors are relevant:

    (a) The particularity or generality of the elements of the machine or apparatus; i.e., the degree to which the machine in the claim can be specifically identified (not any and all machines). Incorporation of a particular machine or apparatus into the claimed method steps weighs toward eligibility.

    For computer implemented processes, the "machine" is often disclosed as a general purpose computer. In these cases, the general purpose computer may be sufficiently "particular" when programmed to perform the process steps. Such programming creates a new machine because a general purpose computer, in effect, becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software. In re Alappat, 33 F.3d 1526, 1545, 31 USPQ 1545, ___ (Fed. Cir. 1994); see alsoUltramercial v. Hulu, 657 F.3d 1323, 1329, 100 USPQ2d 1140, 1145 (Fed. Cir. 2011) (stating "a programmed computer contains circuitry unique to that computer"). However, "adding a 'computer-aided' limitation to a claim covering an abstract concept, without more, is insufficient to render [a] patent claim eligible" where the claims "are silent as to how a computer aids the method, the extent to which a computer aids the method, or the significance of a computer to the performance of the method." DealerTrack v. Huber, ___ F.3d ___, ___, 101 USPQ2d 1325, 1339-40 (Fed. Cir. 2012). To qualify as a particular machine under the test, the claim must clearly convey that the computer is programmed to perform the steps of the method because such programming, in effect, creates a special purpose computer limited to the use of the particularly claimed combination of elements (i.e., the programmed instructions) performing the particularly claimed combination of functions. If the claim is so abstract and sweeping that performing the process as claimed would cover substantially all practical applications of a judicial exception, such as a mathematical algorithm, the claim would not satisfy the test as the machine would not be sufficiently particular.

    (b) Whether the machine or apparatus implements the steps of the method. Integral use of a machine or apparatus to achieve performance of the method weighs toward eligibility, as compared to where the machine or apparatus is merely an object on which the method operates, which weighs against eligibility. See Cybersource v. Retail Decisions, 654 F.3d 1366, 99 USPQ2d 1960 (Fed. Cir. 2011) ("We are not persuaded by the appellant's argument that claimed method is tied to a particular machine because it 'would not be necessary or possible without the Internet.' . . . Regardless of whether "the Internet" can be viewed as a machine, it is clear that the Internet cannot perform the fraud detection steps of the claimed method").

    (c) Whether its involvement is extrasolution activity or a field-of-use, i.e., the extent to which (or how) the machine or apparatus imposes meaningful limits on the execution of the claimed method steps. Use of a machine or apparatus that contributes only nominally or insignificantly to the execution of the claimed method (e.g., in a data gathering step or in a field-of-use limitation) would weigh against eligibility. See Bilski, 138 S. Ct. at 3230 (citing Parker v. Flook, 437 U.S. 584, 590, 198 USPQ 193, ___ (1978)), and Cybersource v. Retail Decisions, 654 F.3d 1366, 99 USPQ2d 1690 (Fed. Cir. 2011) ("while claim 3 requires an infringer to use the Internet to obtain that data . . . [t]he Internet is merely described as the source of the data. We have held that mere '[data-gathering] step[s] cannot make an otherwise nonstatutory claim statutory.'" In re Grams, 888 F.2d 835, 840, 12 USPQ2d 1824, ___ (Fed. Cir. 1989) (quoting In re Meyer, 688 F.2d 789, 794, 215 USPQ 193, ___ (CCPA 1982)))…

    (b)   Whether performance of the claimed method results in or otherwise involves a transformation of a particular article

    "Transformation and reduction of an article 'to a different state or thing' is the clue to patentability of a process claim that does not include particular machines." Bilski v. Kappos, 561 U.S. ___, 130 S. Ct. 3218, 3227, 95 USPQ2d 1001 (2010)(quoting Gottschalk v. Benson, 409 U.S. 63, 70, 175 USPQ 673, ___ (1972). If such a transformation exists, the claims are less likely to be drawn to an abstract idea; if not, they are more likely to be so drawn.

    An "article" includes a physical object or substance. The physical object or substance must be particular, meaning it can be specifically identified. An article can also be electronic data that represents a physical object or substance. For the test, the data should be more than an abstract value. Data can be specifically identified by indicating what the data represents, the particular type or nature of the data, and/or how or from where the data was obtained.

    "Transformation" of an article means that the "article" has changed to a different state or thing. Changing to a different state or thing usually means more than simply using an article or changing the location of an article. A new or different function or use can be evidence that an article has been transformed. Manufactures and compositions of matter are the result of transforming raw materials into something new with a different function or use. Purely mental processes in which thoughts or human based actions are "changed" are not considered an eligible transformation. For data, mere "manipulation of basic mathematical constructs [i.e,] the paradigmatic 'abstract idea'," has not been deemed a transformation. Cybersource v. Retail Decisions, 654 F.3d 1366, 1372 n.2, 99 USPQ2d 1690, 1695 n.2 (Fed. Cir. 2011)(quoting In re Warmerdam, 33 F.3d 1354, 1355, 1360 (Fed. Cir. 1994). However, transformation of electronic data has been found when the nature of the data has been changed such that it has a different function or is suitable for a different use. In re Bilski, 545 F.3d 943, 962-63 (Fed. Cir. 2009)(aff'd sub nom Bilski v. Kappos, 130 S. Ct. 3218 (2010)).

    Where a transformation occurs, the following factors are relevant:

    (a) The particularity or generality of the transformation. The Supreme Court has stated that an invention comprising a process of "'tanning, dyeing, making waterproof cloth, vulcanizing India rubber [or] smelting ores' . . . are instances . . . where the use of chemical substances or physical acts, such as temperature control, changes articles or materials [in such a manner that is] sufficiently definite to confine the patent monopoly within rather definite bounds." Gottschalk v. Benson, 409 U.S. 63, 70, 175 USPQ 673, ___ (1972) (discussing Corning v. Burden, 15 How.(56 U.S.) 252, 267-68). A more particular transformation would weigh in favor of eligibility.

    (b) The degree to which the recited article is particular; i.e., can be specifically identified (not any and all articles). A transformation applied to a generically recited article would weigh against eligibility.

    (c) The nature of the transformation in terms of the type or extent of change in state or thing, for instance by having a different function or use, which would weigh toward eligibility, compared to merely having a different location, which would weigh against eligibility.

    (d) The nature of the article transformed, i.e., whether it is an object or substance, weighing toward eligibility, compared to a concept such as a contractual obligation or mental judgment, which would weigh against eligibility.

    (e) Whether its involvement is extrasolution activity or a field-of-use, i.e., the extent to which (or how) the transformation imposes meaningful limits on the execution of the claimed method steps. A transformation that contributes only nominally or insignificantly to the execution of the claimed method (e.g., in a data gathering step or in a field-of-use limitation) would weigh against eligibility.

    (c)   Whether performance of the claimed method involves an application of a law of nature, even in the absence of a particular machine, apparatus, or transformation

    An application of a law of nature may represent patent-eligible subject matter even in the absence of a particular machine, apparatus, or transformation. See, e.g., Bilski v. Kappos, 561 U.S. ___, 130 S. Ct. 3218, 3227, 95 USPQ2d 1001 (2010)(citing Diamond v. Diehr, 450 U.S. 175, 187, 209 USPQ 1, ___ (1981)) (stating that the Court had previously "explicitly declined to 'hold that no process patent could ever qualify if it did not meet [machine or transformation] requirements.") (quoting Gottschalk v. Benson, 409 U.S. 63, 67, 175 USPQ 673, ___ (1972)). If such an application exists, the claims are less likely to be drawn to an abstract idea; if not, they are more likely to be so drawn. See MPEP § 2106.01 for further guidance regarding subject matter eligibility determinations during examination of process claims that involve laws of nature/natural correlations.

    Where such an application is present, the following factors are relevant:

    (a) The particularity or generality of the application. Application of a law of nature having broad applicability across many fields of endeavor weighs against eligibility, such as where the claim generically recites an effect of the law of nature or claims every mode of accomplishing that effect, such that the claim would monopolize a natural force or patent a scientific fact. See O'Reilly v. Morse, 56 U.S. 62 (1853)(finding unpatentable a claim for "the use of electromagnetism for transmitting signals at a distance"); The Telephone Cases, 126 U.S. 1, 209 (1888)(discussing a method of "transmitting vocal or other sound telepgraphically … by causing electrical undulations, similar in form to the vibrations of the air accompanying the said vocal or other sounds," stating "[Bell] had detected a secret of nature . . . .[H]e proceeded promptly to patent, not only a particular method and apparatus for availing of that law, but also the right to avail of that law by any means whatever. Thus considered he has been able to monopolize a natural force, and patent a scientific fact.").

    (b) Whether the claimed method recites an application of a law of nature solely involving subjective determinations; e.g., ways to think about the law of nature. Application of a law of nature to a particular way of thinking about, or reacting to, a law of nature would weigh against eligibility. See The Telephone Cases, 126 U.S. at 210 (stating "[counsel for defendant] argued, that in all the cases upholding a claim for a process, the process was one capable of being sensually perceived, verified and proved by oath — not as a matter of opinion, but as a matter of fact."), id. at 211 (discussing Tilghman v. Proctor, 102 U.S. 707 (1880) ("[t]here was a process, all of which lay within ordinary means of observation and verification.").

    (c) Whether its involvement is extrasolution activity or a field-of-use, i.e., the extent to which (or how) the application imposes meaningful limits on the execution of the claimed method steps. An application of the law of nature that contributes only nominally or insignificantly to the execution of the claimed method (e.g., in a data gathering step or in a field-of-use limitation) would weigh against eligibility.

    (d)   Whether a general concept (which could also be recognized in such terms as a principle, theory, plan or scheme) is involved in executing the steps of the method

    The presence of such a general concept can be a clue that the claim is drawn to an abstract idea. Where a general concept is present, the following factors are relevant:

    (a) The extent to which use of the concept, as expressed in the method, would preempt its use in other fields; i.e., that the claim would effectively grant a monopoly over the concept.Bilski v. Kappos, 561 U.S. ___, ___, 130 S. Ct. 3218, 3231, 95 USPQ2d 1001, ___ (2010).

    (b) The extent to which the claim is so abstract and sweeping as to cover both known and unknown uses of the concept, and be performed through any existing or future-devised machinery, or even without any apparatus. Gottschalk v. Benson, 409 U.S. 63, 68, 175 USPQ 673, ___ (1972) (stating "[h]ere the process' claim is so abstract and sweeping as to cover both known and unknown uses of the BCD to pure binary conversion. The end use may (1) vary from the operation of a train to verification of drivers' licenses to researching the law books for precedents and (2) be performed through any existing machinery or future-devised machinery or without any apparatus").

    (c) The extent to which the claim would effectively cover all possible solutions to a particular problem; i.e., that the claim is a statement of the problem versus a description of a particular solution to the problem. See The Telephone Cases, 126 U.S. 1, 161-162 (1888) (discussing Tilghman v. Proctor, 102 U.S. 707 (1880)("'The claim of the patent [in Tilghman] is not for a mere principle.' . . . In that case there was a problem. Find a way, if you can, to combine each atom of water with an atom of acid. If you can do that, then you can reach this important result of resolving the neutral fats into glycerine and acids. And Tilghman's solution of it was: Heat the water under such pressure that the water shall not pass into steam. This was his process; and he claimed, and the court justly allowed, great latitude in its application.")).

    (d) Whether the concept is disembodied or whether it is instantiated; i.e., implemented, in some tangible way. A concept that is well-instantiated weighs in favor of eligibility.

    See, e.g., Bilski, 138 S. Ct. at 3230 (stating that the Court in Diehr "concluded that because the claim was not 'an attempt to patent a mathematical formula, but rather [was] an industrial process for the molding of rubber products,' it fell within § 101's patentable subject matter." (citing Diehr, 450 U.S. at 192-193)). Accord Research Corp. Technologies v. Microsoft Corp., 677 F.3d 859, 868-869, 97 USPQ2d 1274, ___ (Fed. Cir. 2010) (stating that the claims here "'do not seek to patent a mathematical formula'" but rather a process of halftoning in computer applications, presenting "functional and palpable applications in the field of computer technology" such that applicant's claimed invention requires instantiation (in some claims) through "a 'high contrast film,' 'a film printer,' 'a memory,' and 'printer and display devices'"); Ultramercial v. Hulu, 657 F.3d 1323, 1328, 100 USPQ2d 1140, 1144(Fed. Cir. 2011)(stating that the patent "does not simply claim the age-old idea that advertising can serve as currency, [but instead] a practical application of this idea.").

    A concept that is not well-instantiated weighs against eligibility. See DealerTrack v. Huber, ___ F.3d ___, 101 USPQ2d 1325 (2012) where in the court stated:

    The claims are silent as to how a computer aids the method, the extent to which a computer aids the method, or the significance of a computer to the performance of the method. The undefined phrase "computer-aided" is no less abstract than the idea of a clearinghouse itself. Because the computer here "can be programmed to perform very different tasks in very different ways," it does not "play a significant part in permitting the claimed method to be performed." Simply adding a "computer aided" limitation to a claim covering an abstract concept, without more, is insufficient to render the claim patent eligible… "In order for the addition of a machine to impose a meaningful limit on the scope of a claim, it must play a significant part in permit-ting the claimed method to be performed, rather than function solely as an obvious mechanism for permitting a solution to be achieved more quickly, i.e., through the utilization of a computer for performing calculations."

    Dealertrack, ___ F.3d at ___, 101 USPQ2d at 1339-40 (citations omitted). Furthermore, limiting an abstract idea to one field of use or adding token postsolution components does not make the concept patentable.

    (e) The mechanism(s) by which the steps are implemented; e.g., whether the performance of the process is observable and verifiable rather than subjective or imperceptible. Steps that are observable and verifiable weigh in favor of eligibility. The Telephone Cases, 126 U.S. at 211 (discussing Tilghman v. Proctor, 102 U.S. 707 (1880) ("[t]here was a process, all of which lay within ordinary means of observation and verification").

    (f) Examples of general concepts include, but are not limited to:

  • • Basic economic practices or theories (e.g., hedging, insurance, financial transactions, marketing);
  • • Basic legal theories (e.g., contracts, dispute resolution, rules of law);
  • • Mathematical concepts (e.g., algorithms, spatial relationships, geometry);
  • • Mental activity (e.g., forming a judgment, observation, evaluation, or opinion);
  • • Interpersonal interactions or relationships (e.g., conversing, dating);
  • • Teaching concepts (e.g., memorization, repetition);
  • • Human behavior (e.g., exercising, wearing clothing, following rules or instructions);
  • • Instructing ''how business should be conducted.''

    See, e.g., Bilski, 138 S. Ct. at 3231 (stating "[t]he concept of hedging, described in claim 1 and reduced to a mathematical formula in claim 4, is an unpatentable abstract idea."), In re Ferguson, 558 F.3d 1359, 90 USPQ2d 1035 (2009) (cert. denied Ferguson v. PTO, June 29, 2010)(finding ineligible "methods . . . directed to organizing business or legal relationships in the structuring of a sales force (or marketing company);" Benson, 409 U.S. at 67 (stating "mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work."); Bilski, 130 S. Ct. at 3231 (quoting Le Roy v. Tatham, 14 How. (55 U.S.) 156, 175 ("[a] principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right")). See also Bilski, 130 S. Ct. at 3259 (Breyer, J. concurring).

    2.   Making the Determination of Eligibility

    Each of the factors relevant to the particular patent application should be weighed to determine whether the method is claiming an abstract idea by covering a general concept, or combination of concepts, or whether the method is limited to a particular practical application of the concept. The presence or absence of a single factor will not be determinative as the relevant factors need to be considered and weighed to make a proper determination as to whether the claim as a whole is drawn to an abstract idea such that the claim would effectively grant a monopoly over an abstract idea and be ineligible for patent protection.

    If the factors indicate that the method claim is not merely covering an abstract idea, the claim is eligible for patent protection under 35 U.S.C. 101 and must be further evaluated for patentability under all of the statutory requirements, including utility and double patenting (35 U.S.C. 101 ); novelty (35 U.S.C. 102); non-obviousness ( 35 U.S.C. 103 ); and definiteness and adequate description, enablement, and best mode (35 U.S.C. 112). 35 U.S.C. 101 is merely a coarse filter and thus a determination of eligibility under 35 U.S.C. 101 is only a threshold question for patentability. 35 U.S.C. 102103 , and 112 are typically the primary tools for evaluating patentability unless the claim is truly abstract, see, e.g., Bilski v. Kappos, 561 U.S. ___, ___, 130 S. Ct. 3218, 3229, 95 USPQ2d 1001, ___ (2010). (''[S]ome business method patents raise special problems in terms of vagueness and suspect validity.'').

    If the factors indicate that the method claim is attempting to cover an abstract idea, the examiner will reject the claim under 35 U.S.C. 101 , providing clear rationale supporting the determination that an abstract idea has been claimed, such that the examiner establishes a prima facie case of patent-ineligibility. The conclusion made by the examiner must be based on the evidence as a whole. In making a rejection or if presenting reasons for allowance when appropriate, the examiner should specifically point out the factors that are relied upon in making the determination. If a claim is rejected under 35 U.S.C. 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. Specifically identifying the factors used in the analysis will allow the applicant to make specific arguments in response to the rejection if the applicant believes that the conclusion that the claim is directed to an abstract idea is in error.

    III.   Establish on the Record a Prima Facie Case

    USPTO personnel should review the totality of the evidence (e.g., the specification, claims, relevant prior art) before reaching a conclusion with regard to whether the claimed invention sets forth patent eligible subject matter. USPTO personnel must weigh the determinations made above to reach a conclusion as to whether it is more likely than not that the claimed invention as a whole either falls outside of one of the enumerated statutory classes or within one of the exceptions to statutory subject matter. "The examiner bears the initial burden … of presenting a prima facie case of unpatentability." In re Oetiker, 977 F.2d 1443, 1445, 24 USPQ2d 1443, 1444 (Fed. Cir. 1992). If the record as a whole suggests that it is more likely than not that the claimed invention would be considered a practical application of an abstract idea, physical phenomenon, or law of nature, then USPTO personnel should not reject the claim.

    After USPTO personnel identify and explain in the record the reasons why a claim is for an abstract idea, physical phenomenon, or law of nature with no practical application, then the burden shifts to the applicant to either amend the claim or make a showing of why the claim is eligible for patent protection. See, e.g., In re Brana, 51 F.3d 1560, 1566, 34 USPQ2d 1436, 1441 (Fed. Cir. 1995); see generally MPEP § 2107 (Utility Guidelines).

    Under the principles of compact prosecution, each claim should be reviewed for compliance with every statutory requirement for patentability in the initial review of the application, even if one or more claims are found to be deficient with respect to the patent-eligibility requirement of 35 U.S.C. 101 . Thus, Office personnel should state all non-cumulative reasons and bases for rejecting claims in the first Office action.

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    2106.01    ** > Subject Matter Eligibility Analysis of Process Claims Involving Laws of Nature [R-9]

    I.   SUMMARY

    The following guidance is intended for use in subject matter eligibility determinations during examination of process claims that involve laws of nature/natural correlations, such as the claims in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. __, 132 S.Ct. 1289, 101 USPQ2d 1961 (2012) (Mayo). Process claims that are directed to abstract ideas, such as the claims in Bilski v. Kappos, 561 U.S. ___, 130 S. Ct. 3218, 95 USPQ2d 1001 (2010), should continue to be examined using the guidance set forth in MPEP § 2106.

    The guidance set forth in this section should be followed for examination of process claims in which a law of nature, a natural phenomenon, or a naturally occurring relation or correlation (collectively referred to as a natural principle in the guidance) is a limiting element or step. In summary, process claims having a natural principle as a limiting element or step should be evaluated by determining whether the claim includes additional elements/steps or a combination of elements/steps that integrate the natural principle into the claimed invention such that the natural principle is practically applied, and are sufficient to ensure that the claim amounts to significantly more than the natural principle itself. If the claim as a whole satisfies this inquiry, the claim is directed to patent-eligible subject matter. If the claim as a whole does not satisfy this inquiry, it should be rejected under 35 U.S.C. 101 as being directed to non-statutory subject matter.

    II.   ESSENTIAL INQUIRIES FOR SUBJECT MATTER ELIGIBILITY UNDER 35 U.S.C. 101

    After determining what applicant invented and establishing the broadest reasonable interpretation of the claimed invention, conduct the following three inquiries on the claim as a whole to determine whether the claim is drawn to patent-eligible subject matter. Further details regarding each inquiry are provided below.

  • 1. Is the claimed invention directed to a process, defined as an act, or a series of acts or steps?

    If no, this analysis is not applicable. For product claims see MPEP § 2106. If yes, proceed to Inquiry 2.

  • 2. Does the claim focus on use of a law of nature, a natural phenomenon, or naturally occurring relation or correlation (collectively referred to as a natural principle herein)? (Is the natural principle a limiting feature of the claim?)

    If no, this analysis is complete, and the claim should be analyzed to determine if an abstract idea is claimed (see MPEP § 2106). If yes, proceed to Inquiry 3.

  • 3. Does the claim include additional elements/steps or a combination of elements/steps that integrate the natural principle into the claimed invention such that the natural principle is practically applied, and are sufficient to ensure that the claim amounts to significantly more than the natural principle itself? (Is it more than a law of nature plus the general instruction to simply "apply it"?)

    If no, the claim is not patent-eligible and should be rejected. If yes, the claim is patent-eligible, and the analysis is complete.

    III.   DETAILED GUIDANCE FOR USING THE INQUIRIES

    A.   

    Determining What Applicant Invented and the Broadest Reasonable Interpretation

    Review the entire specification and claims to determine what applicant believes that he or she invented. Then review the claims to determine the boundaries of patent protection sought by the applicant and to understand how the claims relate to and define what the applicant has indicated is the invention.

    Claim analysis begins by identifying and evaluating each claim limitation and then considering the claim as a whole. It is improper to dissect a claimed invention into discrete elements and then evaluate the elements in isolation because it is the combination of claim limitations functioning together that establish the boundaries of the invention and limit its scope.

    Establish the broadest reasonable interpretation of the claims when read in light of the specification and from the view of one of ordinary skill in the art. This same interpretation must be used to evaluate the compliance with each statutory requirement. SeeMPEP § 2111 and § 2173 et seq. for further details of claim construction and compliance with 35 U.S.C. 112, second paragraph, respectively.

    B.   

    INQUIRY 1: Process

    Under this analysis, the claim must be drawn to a process. A process is defined as an act, or a series of acts or steps. Process claims are sometimes called method claims.

    C.   

    INQUIRY 2: Natural Principle

    Does the claim focus on use of a natural principle, i.e., a law of nature, a natural phenomenon, or naturally occurring relation or correlation? (Is the natural principle a limiting feature of the claim?)

    A natural principle is the handiwork of nature and occurs without the hand of man. For example, the disinfecting property of sunlight is a natural principle. The relationship between blood glucose levels and diabetes is a natural principle. A correlation that occurs naturally when a man-made product, such as a drug, interacts with a naturally occurring substance, such as blood, is also considered a natural principle because, while it takes a human action to trigger a manifestation of the correlation, the correlation exists in principle apart from any human action. These are illustrative examples and are not intended to be limiting or exclusive.

    For this analysis, a claim focuses on a natural principle when the natural principle is a limiting element or step. In that case, the claim must be analyzed (in Inquiry 3) to ensure that the claim is directed to a practical application of the natural principle that amounts to substantially more than the natural principle itself. So, for instance, a claim that recites a correlation used to make a diagnosis focuses on a natural principle and would require further analysis under Inquiry 3.

    If a natural principle is not a limitation of the claim, the claim does not focus on the use of a natural principle and requires no further analysis under this procedure. If the claim focuses on an abstract idea, such as steps that can be performed entirely in one's mind, methods of controlling human activity, or mere plans for performing an action, refer to MPEP § 2106 to evaluate eligibility.

    D.   

    INQUIRY 3: Practical Application and Preemption

    Does the claim include additional elements/steps or a combination of elements/steps that integrate the natural principle into the claimed invention such that the natural principle is practically applied, and are sufficient to ensure that the claim amounts to significantly more than the natural principle itself? (Is it more than a law of nature plus the general instruction to simply "apply it"?)

    A claim that focuses on use of a natural principle must also include additional elements or steps to show that the inventor has practically applied, or added something significant to, the natural principle itself. See Mayo, 101 USPQ2d at 1966. To show integration, the additional elements or steps must relate to the natural principle in a significant way to impose a meaningful limit on the claim scope. The analysis turns on whether the claim has added enough to show a practical application. See id. at 1968. In other words, the claim cannot cover the natural principle itself such that it is effectively standing alone. A bare statement of a naturally occurring correlation, albeit a newly discovered natural correlation or very narrowly confined correlation, would fail this inquiry. See id. at 1965, 1971.

    It is not necessary that every recited element or step integrate or relate to the natural principle as long as it is applied in some practical manner. However, there must be at least one additional element or step that applies, relies on or uses the natural principle so that the claim amounts to significantly more than the natural principle itself. Elements or steps that do not integrate the natural principle and are merely appended to it would not be sufficient. In other words, the additional elements or steps must not simply amount to insignificant extra-solution activity that imposes no meaningful limit on the performance of the claimed invention. See id. at 1966. For example, a claim to diagnosing an infection that recites the step of correlating the presence of a certain bacterium in a person's blood with a particular type of bacterial infection with the additional step of recording the diagnosis on a chart would not be eligible because the step of recording the diagnosis on the chart is extra-solution activity that is unrelated to the correlation and does not integrate the correlation into the invention.

    Along with integration, the additional steps must be sufficient to ensure that the claim amounts to significantly more than the natural principle itself by including one or more elements or steps that limit the scope of the claim and do more than generally describe the natural principle with generalized instructions to "apply it." See id. at 1965, 1968. The additional elements or steps must narrow the scope of the claim such that others are not foreclosed from using the natural principle (a basic tool of scientific and technological work) for future innovation. Elements or steps that are well-understood, purely conventional, and routinely taken by others in order to apply the natural principle, or that only limit the use to a particular technological environment (field-of-use), would not be sufficiently specific. See id. at 1968. A claim with steps that add something of significance to the natural laws themselves would be eligible because it would confine its reach to particular patent-eligible applications of those laws, such as a typical patent on a new drug (including associated method claims) or a new way of using an existing drug. See id. at 1971; see also 35 U.S.C. 100(b). In other words, the claim must be limited so that it does not preempt the natural principle being recited by covering every substantial practical application of that principle. The process must have additional features that provide practical assurance that the process is more than a drafting effort designed to monopolize the law of nature itself. See id. at 1968.

    A claim that would fail this inquiry includes, for example, a claim having a limitation that describes a law of nature and additional steps that must be taken in order to apply the law of nature by establishing the conditions under which the law of nature occurs such as a step of taking a sample recited at a high level of generality to test for a naturally occurring correlation. See id. at 1970. Adding steps to a natural biological process that only recite well-understood, routine, conventional activity previously engaged in by researchers in the field would not be sufficient. See id. at 1966, 1970. A combination of steps that amounts to nothing significantly more than an instruction to doctors to "apply" applicable natural laws when treating their patients would also not be sufficient. See id. at 1970.

    Claims that do not include a natural principle as a limitation do not raise issues of subject matter eligibility under the law of nature exception. For example, a claim directed to simply administering a man-made drug that does not recite other steps or elements directed to use of a natural principle, such as a naturally occurring correlation, would be directed to eligible subject matter. Further, a claim that recites a novel drug or a new use of an existing drug, in combination with a natural principle, would be sufficiently specific to be eligible because the claim would amount to significantly more than the natural principle itself. However, a claim does not have to be novel or non-obvious to qualify as a subject matter eligible claim. Moreover, a claim that is deemed eligible is not necessarily patentable unless it also complies with the other statutory and non-statutory considerations for patentability under 35 U.S.C. 101 (utility and double patenting), 102103112, and non-statutory double patenting.

    The weighing factors used in MPEP § 2106 are useful tools for assisting in the evaluation. For convenience, these factors and how they may assist in the analysis are summarized below.

    E.   

    RELEVANT FACTORS USEFUL FOR INQUIRY 3

    The following factors can be used to analyze the additional features in the claim to determine whether the claim recites a patent-eligible practical application of a natural principle and assist in answering Inquiry 3 above. Many of these factors originate from past eligibility factors, including the 'Machine-or-Transformation' (M-or-T) test. However, satisfying the M-or-T factors does not ensure eligibility if the claim features that include a particular machine or transformation do not integrate the natural principle into the claimed invention to show that the natural principle is practically applied, and are not sufficient to ensure that the claim amounts to significantly more than the natural principle itself.

  • • Appending conventional steps, specified at a high level of generality, to a natural principle does not make the claim patent-eligible.
  • • Steps that amount to instructions that are well-understood, routine, conventional activity, previously engaged in by those in the field add nothing specific to the natural principle that would render it patent-eligible.
  • • A claim that covers known and unknown uses of a natural principle and can be performed through any existing or future-devised machinery, or even without any apparatus, would lack features that are sufficient for eligibility.
  • • A particular machine or transformation recited in more than general terms may be sufficient to limit the application to just one of several possible machines or just one of several possible changes in state, such that the claim does not cover every substantial practical application of a natural principle. This can be contrasted with only adding features that limit the application to a certain technological environment (e.g., for use in catalytic conversion systems), which would cover every substantial practical application in that field.
  • • Additional limitations that are necessary for all practical applications of the natural principle, such that everyone practicing the natural principle would be required to perform those steps or every product embodying that natural principle would be required to include those features, would not be sufficient.
  • • A particular machine or transformation recited in a claim can show how the natural principle is integrated into a practical application by describing the details of how that machine and its specific parts implement the natural principle (e.g., the parts of an internal combustion engine apply the concept of combustion to produce energy) or how the transformation relates to or implements the natural principle (e.g., using ionization in a manufacturing process).
  • • A machine or transformation that is merely nominally, insignificantly, or tangentially related to the steps or elements, e.g., data gathering or data storage, would not show integration. For example, a machine that is simply incidental to execution of the method (using a computer as a counter balance weight and not as a processing device) rather than an object that implements the method or a transformation that involves only a change of position or location of an object rather than a change in state or thing does not show that these additional features integrate the natural principle into the invention as they are incidental to the claimed invention.
  • • Complete absence of a machine-or-transformation in a claim signals the likelihood that the claim is directed to a natural principle and has not been instantiated (e.g., is disembodied or can be performed entirely in one's mind.)
  • • A mere statement of a general concept (natural principle) would effectively monopolize that concept/principle and would be insufficient. This can be contrasted with a tangible implementation with elements or steps that are recited with specificity such that all substantial applications are not covered. Such specificity may be achieved with observable and verifiable steps, for example, rather than subjective or imperceptible steps.

    IV.   

    SAMPLE ANALYSIS

    A.   

    Sample Claim Drawn to a Patent-Eligible Practical Application - Diamond v. Diehr

    1. A method of operating a rubber-molding press for precision molded compounds with the aid of a digital computer, comprising:

    providing said computer with a data base for said press including at least, natural logarithm conversion data (ln), the activation energy constant (C) unique to each batch of said compound being molded, and a constant (x) dependent upon the geometry of the particular mold of the press,

    initiating an interval timer in said computer upon the closure of the press for monitoring the elapsed time of said closure,

    constantly determining the temperature (Z) of the mold at a location closely adjacent to the mold cavity in the press during molding, constantly providing the computer with the temperature (Z),

    repetitively calculating in the computer, at frequent intervals during each cure, the Arrhenius equation for reaction time during the cure, which is ln v = CZ + x where v is the total required cure time,

    repetitively comparing in the computer at said frequent intervals during the cure each said calculation of the total required cure time calculated with the Arrhenius equation and said elapsed time,

    and opening the press automatically when a said comparison indicates equivalence.

    The above claim was found to be a patent-eligible practical application in Diamond v. Diehr, 450 U.S. 175 (1981). Recently, the Supreme Court looked back to this claim as an example of a patent-eligible practical application as explained in the following excerpt from Mayo:

    The Court pointed out that the basic mathematical equation, like a law of nature, was not patentable. But it found the overall process patent eligible because of the way the additional steps of the process integrated the equation into the process as a whole. Those steps included "installing rubber in a press, closing the mold, constantly determining the temperature of the mold, constantly recalculating the appropriate cure time through the use of the formula and a digital computer, and automatically opening the press at the proper time." [ ] It nowhere suggested that all these steps, or at least the combination of those steps, were in context obvious, already in use, or purely conventional. And so the patentees did not "seek to pre-empt the use of [the] equation," but sought "only to foreclose from others the use of that equation in conjunction with all of the other steps in their claimed process." [ ] These other steps apparently added to the formula something that in terms of patent law's objectives had significance—they transformed the process into an inventive application of the formula. See Mayo at 1969 (emphasis added).

    This claim would pass Inquiries 1-3 in the above analysis as it is a process that includes the Arrhenius equation as a limitation, with additional steps that integrate the Arrhenius equation into the process and are sufficient to narrow the scope of the claim so that others are not foreclosed from using the Arrhenius equation in different applications.

    B.   

    Sample Claim Drawn to Ineligible Subject Matter - Mayo v. Prometheus

    1. A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:

    (a) administering a drug providing 6-thioguanine to a subject having said immune-mediated gastrointestinal disorder; and

    (b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder,

    wherein the level of 6-thioguanine less than about 230 pmol per 8×108 red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and

    wherein the level of 6-thioguanine greater than about 400 pmol per 8×108 red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.

    The above claim was found to be ineligible in Mayo. The Supreme Court determined that the claim focused on use of a law of nature that was given weight during prosecution of the claim – specifically the relationships between concentrations of certain metabolites in the blood and the likelihood that a dosage of a thiopurine drug will prove ineffective or cause harm. See id.at 1967. The Court analyzed the claim as follows:

    The question before us is whether the claims do significantly more than simply describe these natural relations. To put the matter more precisely, do the patent claims add enough to their statements of the correlations to allow the processes they describe to qualify as patent-eligible processes that apply natural laws? We believe that the answer to this question is no. See id. at 1968.

    The upshot is that the three steps simply tell doctors to gather data from which they may draw an inference in light of the correlations. To put the matter more succinctly, the claims inform a relevant audience about certain laws of nature; any additional steps consist of well understood, routine, conventional activity already engaged in by the scientific community; and those steps, when viewed as a whole, add nothing significant beyond the sum of their parts taken separately. For these reasons we believe that the steps are not sufficient to transform unpatentable natural correlations into patentable applications of those regularities. See id. at 1968.

    This claim would pass Inquiries 1-2 and fail Inquiry 3. It is a process claim that includes a natural principle that was construed as a limiting feature of a claim during prosecution – the natural principle being the naturally occurring relationships noted above, which are a consequence of the ways in which thiopurine compounds are metabolized by the body. The Court emphasized that while it takes a human action to trigger a manifestation of this relation in a particular person, the relation itself exists in principle apart from any human action. See id. at 1967. The additional steps integrate the relationship into the process as the administering step involves the thiopurine drug, the determining step establishes the thiopurine drug level and the wherein clauses set forth the critical levels. The steps are not sufficient, however, to narrow the application such that others could still make use of the naturally occurring relationship in other practical applications. The claim essentially sets forth a law of nature with generalized instructions to apply it.

    C.   

    Making a Rejection

    After performing the appropriate Inquiries, a claim that fails Inquiry 3 should be rejected under 35 U.S.C. 101 as not being drawn to patent-eligible subject matter. When making the rejection, identify the natural principle, identify that the claim is effectively directed to a natural principle itself, and explain the reason(s) that the additional claim features or combination of features, when the claim is taken as a whole, fail to integrate the natural principle into the claimed invention so that the natural principle is practically applied, and/or fail to be sufficient to ensure that the claim amounts to significantly more than the natural principle itself.

    A sample rejection of the following claim could read as follows:

    Claim 1. A method of determining effective dosage of insulin to a patient, comprising the steps of administering a dose of insulin to a patient, testing the patient's blood for the blood sugar level, and evaluating whether the insulin dosage is effective based on the blood sugar level.

    Analysis:

    The claim passes Inquiry 1 because it is drawn to a process.

    The claim passes Inquiry 2 because a naturally occurring correlation between insulin and blood glucose levels is a limitation of the claim.

    The claim does not pass Inquiry 3 because, although the additional steps integrate or make use of the correlation in the process by administering insulin in one step and testing for the correlation in another step, the steps are not sufficient to ensure that the claim amounts to significantly more than the correlation itself since every application of the correlation would require an administration of insulin and testing of blood to observe the relationship between insulin and blood glucose levels.

    The rejection:

    Claim 1 is rejected under 35 U.S.C. 101 because the claimed invention is directed to non-statutory subject matter because it is not a patent-eligible practical application of a law of nature. The claim is directed to a naturally occurring correlation between insulin and blood glucose levels. The combination of steps recited in the claim taken as a whole, including the steps of administering insulin to a patient and testing blood sugar levels, are not sufficient to qualify as a patent-eligible practical application as the claim covers every substantial practical application of the correlation.

    D.   

    Evaluating a Response

    A proper response to a rejection based on failure to claim patent-eligible subject matter would be an amendment adding additional steps/features or amending existing steps/features that integrate the natural principle into the process (by practically applying or making use of the principle) and are sufficient to limit the application of the natural principle to more than the principle itself + steps that do more than simply "apply it" at a high level of generality. Examples of both eligible and ineligible hypothetical claims follow. It would also be proper for the applicant to present persuasive arguments that the additional steps add something significantly more to the claim than merely describing the natural principle. A showing that the steps are not routine, well-known or conventional could be persuasive.

    For example, a claim that uses the natural disinfecting properties of sunlight would require additional steps beyond exposing an item requiring disinfection to sunlight. The additional steps could involve constructing a sanitizing device that uses ultraviolet light for disinfection with steps that integrate the ultraviolet light into the device and are sufficient to confine the use of the ultraviolet light to a particular application (not so broad as to cover all practical ways of applying ultraviolet light). A claim that sets forth the relationship between blood glucose levels and the incidence of diabetes would require additional steps that do significantly more to apply this principle than conventional blood sample testing or diagnostic activity based on recognizing a threshold blood glucose level. Such additional steps could involve a testing technique or treatment steps that would not be conventional or routine.

    See the 2012 Interim Procedure for Laws of Nature guidance memo issued July 3, 2012 and posted on the USPTO web site (http://www.uspto.gov/patents/law /exam/2012_interim_guidance.pdf) for additional examples. <

Survey Response: Does the Amendment Violate the Written Description Requirement?

by Dennis Crouch

In an earlier post, I mentioned recently issued U.S. Patent No. 8,196,213.  During prosecution, the examiner rejected the pending claims as improperly claiming unpatentable subject matter under 35 U.S.C. 101.   In particular, the PTO submitted that the claimed “computer readable storage medium” could encompass transitory signals, which are themselves unpatentable.  In response, the applicant (Microsoft) amended the claims by adding an express limitation excluding “signals” from the claim scope.  The amended claim begins: “1. A computer readable storage medium excluding signals . . . ” This change satisfied the PTO and the patent quickly issued.   The original patent application document did not discuss signals or directly define computer readable media other than having the functional qualities of being able to “store data that is accessible by a computer.” However, the application did list several examples of computer readable media, including “magnetic cassettes, flash memory cards, digital video disks, Bernoulli cartridges, random access memories (RAMs), read only memories (ROMs) and the like.”

In a one-question survey, I asked Patently-O readers “does this patent claim violate the written description requirement?”  As discussed below, most readers (~75%) agreed that amendment did not invalidate the claim.

Of the 850 responses, almost half (46%) suggested that the claim is valid because the amendment does not go beyond what was originally described in the specification.  In its 2012 memo to examiners, the USPTO argued as much:

A claim drawn to such a computer readable medium that covers both transitory and non-transitory embodiments may be amended to narrow the claim to cover only statutory embodiments to avoid a rejection under 35 U.S.C. 101 by adding the limitation “non-transitory” to the claim. . . . Such an amendment would typically not raise the issue of new matter, even when the specification is silent because the broadest reasonable interpretation relies on the ordinary and customary meaning that includes signals per se. The limited situations in which such an amendment could raise issues of new matter occur, for example, when the specification does not support a non-transitory embodiment because a signal per se is the only viable embodiment such that the amended claim is impermissibly broadened beyond the supporting disclosure.

See 1351 Off. Gaz. Pat. Office 212 (Feb 23, 2012).  I have some amount of difficulty understanding the explanation given by the PTO — that no new matter problem is created by the amendment “because the broadest reasonable interpretation relies on the ordinary and customary meaning that includes signals per se.” While the USPTO’s interpretation of the law is important during the prosecution process, no deference is given to this type of analysis when a court later considers a patent’s validity.

Another 22% also suggested that the claim is valid because “negative limitations such as this need not be disclosed in the original application.”  And 4% argued that the limitation should be ignored because it is found in the claim preamble.

Only one option in the survey led directly to an invalidity conclusion. 26% of responses suggested that the claim limitation excluding signals from the scope was improper because that limitation was not disclosed in the original application and that the claim is therefore invalid under the written description requirement. 

In my mind, this entire discussion is ridiculous.  The invention in this case (as in several hundred thousand other cases) is a bit of software. Yet, because of these odd rules setup by the U.S. Supreme Court (and their interpretation by the PTO) applicants feel they cannot be straightforward enough to simply obtain a patent on the software. 

*****

In the above discussion, I jump quickly between “new matter” and “written description” doctrines. During patent prosecution, the two doctrines are relatively inseparable. The PTO tends to issue new matter rejections under 35 U.S.C. 132.  Once a patent issues, the facts that would have created a new matter rejection at the PTO lead courts to invalidate claims for failing the written description requirement of 35 U.S.C. 112.

The Path Forward for Intervening Rights: Presaging the En Banc Decision in Marine Polymer v. Hemcon

Guest Post by Scott McKeown, Greg Gardella, and Lisa M. Mandrusiak all of OBLON, SPIVAK, MCCLELLAND, MAIER & NEUSTADT, L.L.P.[1]

The Court of Appeals for the Federal Circuit is currently considering en banc the panel decision in Marine Polymer Technologies, Inc. v. Hemcon, Inc. The panel decision can be interpreted as suggesting that intervening rights can arise from an argument made during a post grant patent proceeding, such as a patent reexamination proceeding,[2] even if the patent owner is merely urging a claim interpretation that is consistent with the manner in which the term would have been understood at the time the underlying patent application was filed. In cases where the post grant record simply clarifies the way in which a skilled artisan would have understood a claim term at the time of filing, or reiterates the positions of the previous intrinsic record, the scope of the claims cannot properly be said to have been altered during the subsequent proceeding.

Post grant PTO patent proceedings often focus on the meaning of different aspects of originally issued claim language than were considered during the earlier application prosecution. Therefore, much of the argument made by the patent owner during the subsequent PTO proceeding is directed to new issues not previously considered by the PTO. It is to be expected that re-opening the intrinsic record via post grant file histories will often include substantively new discussion of various claim terms.

For example, during post grant proceedings patent claims are accorded the broadest reasonable interpretation ("BRI"). Determining the BRI requires a different analysis than carried out in a district court during claim construction, and notably, there is no requirement that the PTO consider the earlier prosecution record in ascertaining the BRI and meaning of an originally issued patent claim. This often places patent owners in the position of having to re-argue distinctions which were implicitly or explicitly accepted by the previous patent examiner. When the PTO requires amendment of a claim in post grant proceedings the amendment may in fact be a simple restatement of previously agreed upon claim scope, which should not give rise to intervening rights.

The rule adopted by the Court should be flexible so as to accommodate the foregoing situations and permit intervening rights only in the appropriate circumstances. The application of argument-based intervening rights should be limited to situations in which the patent owner clearly and unambiguously revises the issued claim scope by urging that a limitation has a meaning that is plainly at odds with the interpretation a court would have given the originally issued claim language.

(more…)

Guest Post: Should you Submit Third-Party Prior Art?

By Paul Morgan

Introduction and Summary

On January 5 the PTO proposed a new 37 CFR §1.290 in the Federal Register for third party pre-issuance submissions of prior art in patent applications of others. The new rule is needed to implement the new statutory provision – 35 U.S.C. §122(e) – found in Section 8 of the AIA [Leahy Smith America Invents Act]. 35 U.S.C. §122(e) will be effective as of September 16, 2012, and will be usable against any pending applications [including reissues but not reexaminations] filed before or after that date. It will permit anyone to submit patents, published patent applications, or other printed publications, to the USPTO for consideration and inclusion in the record of a patent application as long as the submission includes a "concise statement of relevance" and meets some other paperwork requirements, which need not be discussed here since they will be clearly spelled out in the final PTO rules. As discussed below, §122(e) includes a significant expansion of the time period for submitting prior art documents to be put into someone else's pending application. The statute also expands what you can say about the documents (accompanying explanations and arguments) well beyond the present limitations found in 37 CFR §1.99. The submission process will remain cheap and simple, but it will still present the same conundrums as to whether or not you should use it?

In the same Federal Register is the proposed PTO rulemaking for amending 37 CFR §1.501 to accommodate the amendment of 35 U.S.C. §301. This amendment will slightly expand what information anyone can submit to the USPTO for inclusion in an already issued patent file when accompanied by a written explanation regarding the "pertinency and manner of applying" the information to at least one patent claim. That expand [new] information which can be put into an issued patent file will include written statements made by the patent owner before a Federal court or the Office regarding the scope of any claim of the patent. But the Office's use of such written statements will be limited to determining the meaning of a patent claim in reexamination proceedings and post grant review proceedings. This provision is also effective on September 16, 2012.

The Present Situation [PRE AIA]

First keep in mind that the PTO considers it to be actionable unethical conduct to put any papers into anyone else's ex parte [normal] patent application file unless there is an express statutory basis for doing so. Furthermore, papers attempted to be filed in a reexamination in which you are not a party [other than just the initial request papers for an ex parte reexamination], will not be entered. Adverse prior art submissions for anything in the PTO are quite restricted.

37 CFR §1.291 "Protests by the public against pending applications" and 37 CFR §1.292 "Public use proceedings" have existed for many years, but have been rarely used, and I suspect that few PTO practitioners or PTO personnel have ever seen one. Some senior PTO officials I asked at a CLE meeting several years ago doubted if there had been more than a handful per year. The rare Rule 292 proceedings are mostly used in connection with a parallel interference. Rule 291's potential usage was significantly restricted when the statute providing for U.S. 18 month application publications went into effect, ending Rule 291 "protest" filing opportunities after an application publication date.

The PTO at that time also put severe rule constraints that were not statutorily required into a 37 CFR §1.99 limiting what could be submitted and when. Rule 99 has a short time limit of only two months following the application publication date. Rule 99 also expressly states at (d) that a "submission under this section shall not include any explanation of the patents or publications, or any other information. The Office will not enter such explanation or information if included in a submission under this section." There is also a limit of 10 submitted documents. The PTO even threatened to reject submitted prior art patent copies if they were merely marked or high-lined to show the examiner where the relevant teaching or disclosure was buried in the patent! It seemed obvious to me at that time that the PTO did not really want to be bothered with any extra examiner work from third party prior art submissions. [The AIA has now at least made it clear that that is not quite what Congress has in mind.] An English language translation must be provided for all relevant portions of any listed non-English language document to be considered by the examiner, and that requirement will continue under the proposed new rules. Some patent attorneys reportedly consider it preferable to just send prior art to an applicant's patent attorney by registered mail and rely on the inequitable conduct concerns of that patent attorney to get that patent attorney to file the prior art the application, or to set up an IC defense if they do not.

35 U.S.C. §301 above [with its original 37 CFR §1.501] was enacted years ago accompanying the first [ex parte] reexamination system. It is simply to allow people to place prior art in an issued patent file without having to initiate a reexamination, so that the art might hopefully be considered if anyone subsequently requested a reexamination. It is understood that §301 has rarely been used, and I am not aware of any PTO statistics to the contrary, even though §301 says that it can be done anonymously. My very limited experience was that the PTO clerical staff did not know what to do with the [rare] §301 submittal and it was not placed in the patent file until we made follow-up efforts. [A copy of the PTO submittal mailed to the patent owner was helpful for a licensing discussion, but I wouldn't count on that happening often.]

What's New?

New 35 U.S.C.122(e)(1) and its proposed new rule 37 CFR §1.290 will greatly expand when you can legally put prior art into someone else's pending application file. As shown below, that is awkwardly expressed as "before the earlier of .. or the later of" three events in an application. But clearly it will normally be available for a much longer time period than the mere 2 months after a patent application is published of present Rule 99. It may be submittable for several years for applications not yet having a first office action with a claim rejection, as long as there is as yet no notice of allowance. Nor can the present unreasonable Rule 99 prevention of any explanations or comments on the submitted art remain, since "a concise description of the asserted relevance of each submitted document" is specifically required by this new statute:

(e) Preissuance Submissions by Third Parties-

(1) IN GENERAL- Any third party may submit for consideration and inclusion in the record of a patent application, any patent, published patent application, or other printed publication of potential relevance to the examination of the application, if such submission is made in writing before the earlier of–

(A) the date a notice of allowance under section 151 is given or mailed in the application for patent; or

(B) the later of–

(i) 6 months after the date on which the application for patent is first published under section 122 by the Office, or

(ii) the date of the first rejection under section 132 of any claim by the examiner during the examination of the application for patent.

(2) OTHER REQUIREMENTS- Any submission under paragraph (1) shall–

(A) set forth a concise description of the asserted relevance of each submitted document;

(B) be accompanied by such fee as the Director may prescribe; and

(C) include a statement by the person making such submission affirming that the submission was made in compliance with this section.

As noted, the proposed amended 37 CFR §1.501 for the AIA amendment of 35 U.S.C. §301 will just slightly add to the information can be submitted to the PTO to merely put into an issued patent file. That information can now comprise or include written statements made by the patent owner before a Federal court or the Office regarding the scope of any claim of the patent, and that information can supposedly be used in subsequent actual reexaminations. However, even if that made sense tactically or strategically in some situation, perhaps in anticipation of a potential ex parte reexamination initiated by the patent owner itself, I fail to see how that kind of material can affect that many reexaminations? The Fed. Cir. requirement that claim scope in a reexamination apply a "broadest reasonable interpretation" test is not the same as claim interpretation in patent litigation.

But Do You Really Want To Do It & How Likely Is the Overall Usage?

How likely is it that this somewhat increased opportunity to cite prior art in applications or patent files of others will be used? That depends largely on whether you think doing so is really a good idea or not. That obviously includes guessing how likely is a regular examiner in normal ex parte patent examination [not a reexamination] going to consider and apply that prior art to reject claims? A prior statistical study published by Prof. Crouch on his Patently-O blog of a low examiner usage rate of prior art cited by the applicants themselves is not encouraging. But perhaps a novel third party submission is more likely to get an examiner's attention and claim rejections than routine applicant IDS dumps?

Even if that effectiveness was predictable, there is clearly a serious risk in third party submissions of art into applications of others under any system. It will case the application owner to think that someone else thinks their patent application is important enough be worth attacking its claim scope. That is logically going to cause the patent application owner to put extra effort into getting that application allowed, with broad and variable scope claims, including possible RCE's and appeals if necessary, and possibly filing and keeping divisionals and continuations pending. Furthermore, the claims can be amended to distinguish the third party cited art without incurring "intervening rights" as would be the case in a reexamination. While the third parties citing the prior art do not face dangerous estoppels [as in inter partes reexaminations or PGR] they do risk greatly strengthening the enforceability of the resultant patent against that or similar prior art if not all potentially infringed claims are finally rejected.

The rare use of any of the present third party prior art submission systems does not suggest their likely future use, [unlike the increasing use of reexaminations]. The PTO has apparently never kept statistics on the number of prior art filings in other peoples patent applications under present 37 CFR 1.99 (in force since 2000), or otherwise. But I was cognizant of a docketing operation that was handling thousands of pending patent applications, and only one such third party prior art submission was ever identified as being filed against any of those thousands of U.S. applications [excluding those in interferences] and it was not successful in getting any claims rejected.

Perhaps there will be somewhat higher usage and success rates for the new 35 U.S.C.122(e)(1) and 37 CFR §1.290 because it will allow attached explanations of the relevance of the cited art. But until that is demonstrated, the conservative tendency of patent attorneys to save prior art defenses until they think they can be used more effectively later, especially in an inter partes reexamination [where the patent owner cannot make completely unchallenged ex parte arguments against the cited art] seems likely to prevail.

There is of course an academic myth, supported by some companies presumably for its PR value, that was at play in the lead-up to these AIA changes. Namely a strange inherent assumption that large numbers of the public have nothing better to do with their time and money than to undertake the tens of thousands of prior art searches and claim-relevant submissions that would be needed to have any significant effect on patent examination quality for the more than 500,000 patent applications a year, even though they are not aware of any that could ever threaten any of their products. A mere couple of hundred patent applications were provided with prior art submissions under a pilot "Peer to Patent" system, despite all its publicity, of which only a minority resulted in claims being rejected using the submitted prior art.

As usual, I would appreciate comments from others with relevant information on these subjects.

The BPAI’s Precedent: Most Cited Cases by the Board

The following list provides the most-often cited cases in BPAI decisions thus-far in 2011.

The vast majority of BPAI decisions involve a patent applicant appealing an examiner's final rejection and the most common patentability issue on appeal is obviousness. Thus, it is not surprising that many of the cited cases involve obviousness and claim construction issues. These cases have influenced the court in the past and are likely to continue to do so.

  1. KSR v. Teleflex, 550 U.S. 398 (2007) (Standard for obviousness);
  2. In re KAHN, 441 F.3d 977 (Fed. Cir. 2006) (Reasons for obviousness determination must be articulated);
  3. In re AMERICAN ACADEMY OF SCIENCE TECH CENTER., 367 F.3d 1359 (Fed. Cir. 2004) (Claims should be given their broadest reasonable interpretation);
  4. In re OETIKER, 977 F.2d 1443 (Fed. Cir. 1992) (The examiner has the burden of presenting a prima facie case for rejection);
  5. Graham v. John Deere, 383 U.S. 1 (1966) (Methodology for determining obviousness);
  6. In re Keller, 642 F.2d 413 (C.C.P.A. 1981) (A rejection premised upon a combination of references cannot be overcome by attacking the references individually);
  7. In re Morris, 127 F.3d 1048 (Fed. Cir. 1997) (Claims should be given their broadest reasonable interpretation consistent with the specification);
  8. Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (ordinary meaning of claim);
  9. In re Merck, 800 F.2d 1091 (Fed. Cir. 1986) (Non-obviousness cannot be established by attacking references individually where the rejection is based upon the teachings of a combination of references);
  10. In re Best, 562 F.2d 1252 (C.C.P.A. 1977) (When the PTO identifies prior art that is the same or substantially the same as claimed subject matter, the burden shifts to the applicant to come forward with evidence and argument showing that the prior art products do not necessarily or inherently possess the characteristics of the claimed product);
  11. In re Zletz, 893 F.2d 319 (Fed. Cir. 1989) (Claims must be interpreted as broadly as their terms reasonably allow but limitations should not be read into claims);
  12. In re Schreiber, 128 F.3d 1473 (Fed. Cir. 1997) (claim structure form primary claim limitations; elements of anticipation);
  13. In re Spada, 911 F.2d 705 (Fed. Cir. 1990) (process of proving anticipation);
  14. In re Gurley, 27 F.3d 551 (Fed. Cir. 1994) (Teaching away; A known or obvious composition does not become patentable simply because it has been described as somewhat inferior to some other product for the same use); and
  15. In re Warner, 379 F.2d 1011 (C.C.P.A. 1967) (The PTO must produce factual basis for its decisions).

To create the table, I first parsed all of the BPAI decisions that have been released thus far in 2011 in order to create a table of authority for each case. I then ranked the cited cases to find those that were most-often cited.

As an interesting tidbit, I also looked for correlation between the citation of a particular case and the outcome of the BPAI decision. As you might expect, some cases are better for patent applicants. Two examples of this are In re Warner and In re Gurley. In cases citing Warner, the examiner's rejections are affirmed less than 10% of time. On the flip side – cases citing Gurley affirm the examiner rejection in more than 80% of cases.

Patentable Subject Matter at the Board of Patent Appeals

The work of the Board must go on . . . . In several recent decisions, the Board of Patent Appeals (BPAI or Board) has continued to affirm rejections of claims on patentable subject matter eligibility grounds under 35 U.S.C. § 101.

In Ex parte Kelkar, App. No. 2009–004635 (BPAI, September 24 ,2010), the applicant had claimed a method of determining the similarity between two genetic profiles and a computer program stored on a recordable medium for accomplishing the method. The method involves the broad steps of iteratively matching gene expression profile pairs in clusters until a best match is found. Because the method neither recites any particular machinery nor transforms an article into a different state or thing, the Board held that it failed the machine-or-transformation test. Citing Flook (1978), the Board then held that the claim was improperly directed to an abstract algorithm because the underlying innovation was the unpatentable mathematical algorithm. Some of the method claims included a preamble statement that the method occurred “in a computer.” The Board found that limitation at most a “a field-of-use limitation that is insufficient to render the otherwise ineligible process . . . patent eligible.”

The Board went on to affirm the rejection of the computer program claims that were “stored on a recordable medium.”  The Board agreed with the examiner that those the storage medium limitation was broad enough to encompass unpatentable “carrier wave storage.” (See Nuijten (Fed. Cir. 2007)). The Board wrote:

When the broadest reasonable interpretation of a claim covers a signal per se, the claim must be rejected under 35 U.S.C. § 101 as covering nonstatutory subject matter. See In re Nuijten, 500 F.3d 1346, 1356-57 (Fed. Cir. 2007) (transitory embodiments are not directed to statutory subject matter). See also, Subject Matter Eligibility of Computer Readable Media, 1351 Off. Gaz. Pat. Office 212 (Feb. 23, 2010).

In Ex parte MacKenzie, App. No. 2009–-7332 (BPAI, October 4, 2010), the Board issued a new grounds of rejection under Section 101 because the claimed method was directed to an abstract process under Bilski. MacKenzie's rejected claim 1 reads as follows:

1. A method for use in a device associated with a first party for performing a signature operation on a message substantially based on the digital signature algorithm (DSA), the method comprising the steps of:

generating in the first party device a first component associated with the signature operation based on assistance from a device associated with a second party, wherein the assistance from the second party device is received as a first message from the second party device;

transmitting the first component to the second party device;

generating in the first party device a second component associated with the signature operation based on further assistance from the second party device, wherein the further assistance from the second party device is received as a second message from the second party device, wherein the second message comprises results generated using the transmitted first component; and

outputting a form of the first component and the second component as a result of the DSA signature operation.

Although MacKenzie's claim does recite various devices, the Board saw these as “nominal” limitations to “generic devices.” The Board wrote:

As the unpatentability of abstract ideas was reaffirmed by the U.S. Supreme Court in Bilski (2010), clever claim drafting involving the nominal addition of generic structures cannot circumvent the principles articulated by the Court. That is, even when a claim appears to apply an idea or concept in combination with a nominal claim to generic structure(s), one must ensure that it does not in reality seek patent protection for that idea in the abstract.

In Ex parte Venkata, App. No. 2009–007302 (BPAI, October 5, 2010), the Board held that “the claim’s body recites nothing more than software [and therefore] lacks statutory subject matter.” Venkata's claim was directed to a “system” that included two “discovery agents” that operate either via a local network or via an Internet host.

Kelkar's patent application is owned by IBM and prosecuted by its in-house patent department. MacKenzie's patent application is owned by Lucent and prosecuted by the small firm of Ryan, Mason & Lewis. Venkata's patent application is owned by Nokia and prosecuted by the small firm of Hollingsworth & Funk.

Notes:

The USPTO's January 2010 guidance on the Subject Matter Eligibility of Computer Readable Media is repeated as follows. I would argue that the Nuijten decision – if read to categorically exclude transitory embodiments, is no longer good law post-Bilski.

The United States Patent and Trademark Office (USPTO) is obliged to give claims their broadest reasonable interpretation consistent with the specification during proceedings before the USPTO. See In re Zletz, 893 F.2d 319 (Fed. Cir. 1989) (during patent examination the pending claims must be interpreted as broadly as their terms reasonably allow). The broadest reasonable interpretation of a claim drawn to a computer readable medium (also called machine readable medium and other such variations) typically covers forms of non-transitory tangible media and transitory propagating signals per se in view of the ordinary and customary meaning of computer readable media, particularly when the specification is silent. See MPEP 2111.01. When the broadest reasonable interpretation of a claim covers a signal per se, the claim must be rejected under 35 U.S.C. § 101 as covering non-statutory subject matter. See In re Nuijten, 500 F.3d 1346, 1356-57 (Fed. Cir. 2007) (transitory embodiments are not directed to
statutory subject matter) and Interim Examination Instructions for Evaluating Subject Matter Eligibility Under 35 U.S.C. § 101, Aug. 24, 2009; p. 2.

The USPTO recognizes that applicants may have claims directed to computer readable media that cover signals per se, which the USPTO must reject under 35 U.S.C. § 101 as covering both non-statutory subject matter and statutory subject matter. In an effort to assist the patent community in overcoming a rejection or potential rejection under 35 U.S.C. § 101 in this situation, the USPTO suggests the following approach. A claim drawn to such a computer readable medium that covers both transitory and non-transitory embodiments may be amended to narrow the claim to cover only statutory embodiments to avoid a rejection under 35 U.S.C. § 101 by adding the limitation "non-transitory" to the claim. Cf. Animals – Patentability, 1077 Off. Gaz. Pat. Office 24 (April 21, 1987) (suggesting that applicants add the limitation "non-human" to a claim covering a multi-cellular organism to avoid a rejection under 35 U.S.C. § 101). Such an amendment would typically not raise the issue of new matter, even when the specification is silent because the broadest reasonable interpretation relies on the ordinary and customary meaning that includes signals per se. The limited situations in which such an amendment could raise issues of new matter occur, for example, when the specification does not support a non-transitory embodiment because a signal per se is the only viable embodiment such that the amended claim is impermissibly broadened beyond the supporting disclosure. See, e.g., Gentry Gallery, Inc. v. Berkline Corp., 134 F.3d 1473 (Fed. Cir. 1998).

DAVID J. KAPPOS
Under Secretary of Commerce for Intellectual Property and
Director of the United States Patent and Trademark Office

Judge Plager: “The Walls Surrounding the Claimed Invention [Should] be Made of Something Other than Quicksand”

Enzo Biochem and Yale University v. Applera Corp. (Fed. Cir. 2010)

The district court initially held Enzo’s patent claims invalid as indefinite because of the ill-defined term “not interfering substantially.” On appeal, the Federal Circuit reversed — finding that the someone of skill in the art “would understand what is claimed.”

Applera requested a panel rehearing and rehearing en banc which the Federal Circuit recently denied. However, as part of that denial, Judge Plager penned an important dissent — arguing that indefiniteness law should be given more teeth and that claim construction commands too large of a role in the litigation process.

“In my view, this court’s definiteness doctrine could go considerably further in promoting that objective than it currently does, with the not inconsequential benefit of shifting the focus from litigation over claim construction to clarity in claim drafting. . . . The court now spends a substantial amount of judicial resources trying to make sense of unclear, over-broad, and sometimes incoherent claim terms. It is time for us to move beyond sticking our fingers in the never-ending leaks in the dike that supposedly defines and figuratively surrounds a claimed invention. Instead, we might spend some time figuring out how to support the PTO in requiring that the walls surrounding the claimed invention be made of something other than quicksand.”

PatentLawPic990Read the full dissent here:

Judge Plager: I respectfully dissent from the denial of the petition for panel rehearing on the question of indefiniteness.

Despite the varying formulations that this court has used over the years in describing its “indefiniteness” jurisprudence . . . , the general conclusion from our law seems to be this: if a person of ordinary skill in the art can come up with a plausible meaning for a disputed claim term in a patent, that term, and therefore the claim, is not indefinite. At least not so indefinite as to run afoul of the statutory requirement that claims shall “particularly point[ ] out and distinctly claim[ ] the subject matter which the applicant regards as his invention.” 35 U.S.C. § 112, second paragraph.

The corollary derived from this understanding is that if several persons of ordinary skill come up with competing but plausible interpretations of a disputed terms is typically the case with competing “expert witnesses” in patent infringement litigation—the problem is not one of an inherently ambiguous and potentially indefinite claim term, but rather the problem becomes simply one of picking the “right” interpretation for that term. Since picking the “right” interpretation—claim construction—is a matter of law over which this court rules, and since the view of the trial judge hearing the case is given little weight, so that the trial judge’s view on appeal becomes just a part of the cacophony before this court, it is not until three court of appeals judges randomly selected for that purpose pick the “right” interpretation that the public, not to mention the patentee and its competitors, know what the patent actually claims. The inefficiencies of this system, and its potential inequities, are well known in the trade.

The United States Patent and Trademark Office (“PTO”), by contrast, appears to be taking steps to give the statutory requirement real meaning. In 2008, the patent examining corps was given a five-page instruction on “Indefiniteness rejections under 35 U.S.C. 112, second paragraph.” The memo initially observes that “[t]he primary purpose of the definiteness requirement for claim language is to ensure that the scope of the claims is clear so that the public is informed of the boundaries of what constitutes infringement of the patent.” The memo reviews in detail a recent opinion of this court, following which the memo states the position of the PTO: “If the language of a claim, considered as a whole in light of the specification and given its broadest reasonable interpretation, is such that a person of ordinary skill in the relevant art would read it with more than one reasonable interpre-tation then a rejection of the claim under 35 U.S.C. 112, second paragraph, is appropriate.”

This memo was followed later in the year by a rare precedential opinion issued by the Board of Patent Appeals and Interferences (“Board”) in Ex parte Miyazaki. The Board noted that this court has in post-issuance patent infringement cases held “that the definiteness requirement ‘does not compel absolute clarity’ and ‘[o]nly claims “not amenable to construction” or “insolubly am-biguous” are indefinite.’” Recognizing that this court has never set forth a different standard of review for indefiniteness under 35 U.S.C. § 112, second paragraph, for pre-issuance pending claims as compared with post-issuance patent claims, the Board concluded that the Federal Circuit’s reading of the indefiniteness requirement was counter to the PTO’s broader standard for claim construction during prosecution. Accordingly, the Board announced that, “rather than requiring that the claims are insolubly ambiguous, we hold that if a claim is amenable to two or more plausible claim constructions, the USPTO is justified in requiring the applicant to more precisely define the metes and bounds of the claimed invention by holding the claim unpatentable under 35 U.S.C. § 112, second paragraph, as indefinite.”

The Board is clearly right in recognizing that the circumstances are different between pre-issuance and post-issuance application of the definiteness standard with regard to claim terms. At the same time, the PTO and the Board are clearly right in insisting that, if the public notice function of the patent law is to be honored, claim terms must particularly point out and distinctly claim the subject matter of the invention. In my view, this court’s definiteness doctrine could go considerably further in promoting that objective than it currently does, with the not inconsequential benefit of shifting the focus from litigation over claim construction to clarity in claim drafting.

To begin the discussion of how this court could move in that direction, I would grant the petition for panel rehearing. The court now spends a substantial amount of judicial resources trying to make sense of unclear, over-broad, and sometimes incoherent claim terms. It is time for us to move beyond sticking our fingers in the never-ending leaks in the dike that supposedly defines and figuratively surrounds a claimed invention. Instead, we might spend some time figuring out how to support the PTO in requiring that the walls surrounding the claimed invention be made of something other than quicksand.

I respectfully dissent from the loss of that opportunity through the panel’s denial of rehearing.

Substantially: As a claim limitation, “substantially” is being used less frequently than ever before. The chart below shows the percentage of issued patents that include “substantially” as a claim limitation. The data is grouped accourding to the patent issue year. (For the 1980’s and 1990’s, I grouped the data by decade.)

PatentLawPic991

PatentLawPic992

 

 

 

Interpreting Claims in an Interference: USPTO Rules Now Follow the Law

The USPTO has cancelled 37 C.F.R. § 41.200(b). That rule required the BPAI to give claims their “broadest reasonable construction in light of the specification of the patent or application in which it appears” but applied only to interference proceedings.

In interferences, one party typically copies claims from the opposition’s application/patent in order to provoke an interference. The copy is then interpreted to have the same claim scope as the original. In Agilent Technologies, Inc. v. Affymetrix, Inc., 567 F.3d 1366 (Fed. Cir. 2009), the Federal Circuit held that Rule 41.200(b) was contrary to this rule of interpretation – thus, the rule was already dead from a legal standpoint.

75 FR 19558

Microsoft v. i4i: Relevance of the Pending Reexamination

[This post continues the discussion of emergency stays pending appeal that was begun here]

i4i Ltd. v. Microsoft Corp. (Fed. Cir. 2009)

Pending Reexamination: Microsoft has submitted its motion for a stay of injunctive relief pending the outcome of its appeal to the Federal Circuit.  Oddly, the first sentence of Microsoft's introduction begins with a statement that the PTO "already had provisionally rejected upon reexamination as anticipated and obvious." By 'provisionally rejected' Microsoft means that a non-final office action has been mailed out in the ex parte reexamination that it requested in November 2008 (the litigation was filed in March 2007).

The opening is odd because of its irrelevance. The vast majority of third party requests for ex parte reexaminations are granted (over 95%) and then 'provisionally' rejected (83% of those). That usual course is simply the beginning of a typically long reexamination process. Even amongst reexaminations that received a non-final rejection – most resulted in a reexamination certificate that confirmed the patentability of at least one original claim. Of course, the final resolution of the reexamination is likely years away. (The figures are based on my own study of 5,000 ex parte reexamination file histories).

The opening is also odd because, to my knowledge, the Federal Circuit has never placed any weight on the fact that a co-pending reexamination has been provisionally rejected.

Finally, the opening is odd because it does not relate to Microsoft's arguments for a stay. In particular, the company does not argue for a stay pending outcome of the reexamination. Microsoft does argue anticipation and obviousness, but those arguments are based on the district court claim construction. As discussed on Patently-O extensively last month, claim construction in court has no direct legal link with the claim construction used at the patent office during reexamination. [Link]

The reexamination request by Microsoft focuses on two prior art references: U.S. Patent No. 6,101,512 ("DeRose") is apparently 102(e) prior art because it was filed prior to i4i's application, and i4i is unable to antedate the reference and a published description of the "Rita" SGML editor. Both of these references were considered by the jury in its analysis. In addition, Judge Davis reviewed the jury determination and found no cause for a JNOV. Interestingly, Microsoft never moved for summary judgment on any of its invalidity arguments based on these references.

To be clear, Microsoft's brief is still well written and presents compelling arguments. The only problem is that its first argument may lead the court astray. A ruling is expected prior to the October 10. 

Documents:

  • Microsoft Motion for Emergency Stay: Download 2009-1504 [Note – A complete brief was due August 25, for that brief, Microsoft was granted permission to file an 18,000 word brief instead of the normal 14,000 word brief]
  • Judge Davis Memorandum: Download 20090817i4imemo 
  • Documents from the Reexamination Download 90010347 

Notes:

  • An important aspect of this case from a policy perspective is that it the patent covers XML software whose function is to facilitate interoperability.  The patent enforcement is looking largely block (or at least control) that function.
  • As the role of reexaminations continue to rise as a litigation strategy, understanding the interplay and conflict between Federal Court decisions and USPTO decisions will become critical.  Important questions involve: waiver; preclusion; and deference.

Diverging Claim Constructions

Yesterdaypic-53.jpg raised a valuable discussion on claim construction with many excellent comments on the Cotropia-Bey article. The issue is obviously important since claim construction disputes arise in virtually every attempt to enforce a patent. One problem with claim construction in litigation is that the district court follows a completely different process of claim construction than do PTO examiners. The rules suggest that the two claim construction scopes should form concentric circles with the PTO’s broad construction and the Court’s narrower construction. The reality is that it is hard to form these concentric circles — especially with complex claims. And, it is virtually impossible to form concentric circles of construction using such distinct construction processes. Instead of nested constructions, in many cases the outcome of the district court tends to diverge from that suggested during prosecution.   

It seems odd that the patent prosecution process does not focus on determining the correct meaning of the claims. The better approach may well be to allow the original examination to determine the correct meaning of claims in a way that can be followed by courts down the line. I suspect that this approach would actually lead to more valid patents — especially if examiners applied a stronger hand on issues of indefiniteness.

Notes:

  • Joel Miller’s 2006 JPTOS article in the Broadest Reasonable Interpretation standard is available here.
  • Mark Lemley and Dan Burke recently wrote a paper arguing that we should admit defeat and move to a central claiming system. Their analogy is that claims might be better used as sign-posts rather than fence-posts. [Link]
  • Lemley’s 2005 article on The Changing Meaning of Patent Claim Terms is also a good read. [Link]

The Unreasonableness of the Patent Office’s ‘Broadest Reasonable Interpretation’ Standard

Chris Cotropia (Richmond Law) and Dawn-Marie Bey (King & Spalding) have an interesting draft article out on the PTO’s “broadest reasonable interpretation” standard for interpreting claims during patent prosecution. The article notes that the increase in post-grant reviews (reexaminations) running concurrently with infringement litigation raises the stakes of the PTO’s standard.

From the abstract:

Although there has been much commentary on patent claim interpretation methodology in general, very little has been written about the unique interpretation approach the Patent Office employs. The courts, starting with the Court of Customs and Patent Appeals and continuing with the Federal Circuit, instruct the Patent Office to give every applied-for claim its ‘broadest reasonable interpretation’ (BRI) during patent examination. This Article explores this special standard and concludes that not only are the previously articulated rationales behind the BRI standard severely lacking, the standard is also contrary to both the patent statutes and the concept of a unitary patent system. The BRI standard additionally allows patent examiners to avoid difficult claim interpretation issues, leads to improper and uncorrectable denials of patent protection, and is incurably ambiguous.

Notes:

OVERVIEW OF USPTO PROCEEDINGS FOR THE REEXAMINATION OF A U.S. PATENT

Effect of a Pending Reexamination — Each claim of a patent is presumed valid under 35 U.S.C. 282 and may be enforced notwithstanding the presence of a pending reexamination proceeding. See Ethicon v. Quigg, 849 F.2d 1422, 1428, 7 USPQ2d 1152, 1157 (Fed. Cir. 1988); See also Viskase Corp. v. Am. Nat’l Can Co., 261 F.3d 1316, 1328, 59 USPQ2d 1823, 1831 (Fed. Cir. 2001); In re Etter, 756 F.2d 852, 857, 225 USPQ 1, 4 (Fed. Cir. 1985)(en banc). Although litigation may move forward in parallel with a reexamination proceeding, at the district court’s discretion, the results of the reexamination proceeding may have an effect on the litigation. See e.g., In re Translogic, 504 F.3d 1249 (Fed. Cir. 2007). Under 35 U.S.C. 307, a patent is not revised by any amendment or cancellation of a claim made during a reexamination proceeding until a reexamination certificate is issued.

Ex Parte Reexamination – A proceeding in which any person may request reexamination of a U.S. Patent based on one or more prior patents or printed publications. A requester who is not the patent owner (i.e., a “third party requester”) has only limited participation rights in the proceeding. [MPEP 2209]

Inter Partes Reexamination – A proceeding in which any person who is not the patent owner and is not otherwise estopped may request reexamination of a U.S. Patent issued from an original application filed on or after November 29, 1999 based on one or more prior patents or printed publications. Both patent owner and third party requester have participation rights throughout the proceeding, including appeal rights. [MPEP 2609]

Reexamination Granted – An Order Granting Reexamination is not a determination of claim patentability. An Order that one or more claims of a U.S. Patent will be reexamined because the request has established the existence of at least one SNQ based upon prior patents and/or printed publications. [MPEP 2247.01]

In ex parte reexamination, the Order, whether granting or denying reexamination, must be mailed within three months of the filing date of the request for reexamination. [MPEP 2241]

In inter partes reexamination, the Order must be mailed not later than three months after the request is filed.   [MPEP 2641]

Reexamination Denied – An Order Denying Reexamination is also not a determination of claim patentability. An order denying reexamination of any of the claims of a U.S. Patent because the Office has determined that no SNQ has been established in the request for reexamination. [MPEP 2247.01]

Substantial New Question of Patentability (SNQ) – A request for reexamination must establish the existence of at least one new technological teaching affecting any claim of the patent for which reexamination has been requested that was not considered by the Office in a prior Office proceeding involving the patent. The SNQ is established based on prior patents and/or printed publications. [MPEP 2242]

Notice of Filing of Request for Reexamination – Notice that a request for reexamination has been filed and accorded a filing date is published in the Official Gazette. [MPEP 2215]

Rejection (Non-Final) – The initial Office action on patentability.

In ex parte reexamination, the initial action is not mailed with the Order Granting Reexamination; the patent owner may file optional comments, to which the third party requester may respond, prior to the initial Office action. Therefore the Office must await the expiration of the periods for such comments and responses thereto before mailing the initial action. [MPEP 2262]

In inter partes reexamination, the initial action may optionally be mailed together with the Order Granting Reexamination, but even if not, no party comments are permitted prior the mailing of the initial action. Patent owner files a response to a non-final action that includes argument and/or an evidentiary showing and/or amendments, and the response will be entered as a matter of right. Third party requester may thereafter respond with written comments directed to the Office action and to the patent owner’s response. [MPEP 2260]

Rejection (Final) – A second or subsequent action on patentability in an ex parte reexamination may be made “final.” While responsive arguments may be considered, entry of an amendment or consideration of additional evidence is not a matter of right in a final rejection. Patent owner may appeal to the USPTO Board of Patent Appeals and Interferences (BPAI). [MPEP 2271]

Action Closing Prosecution (ACP) – The second or subsequent action on patentability in an inter partes reexamination proceeding. Patent owner may respond with argument and/or an evidentiary showing and/or amendments. Alternatively, patent owner may choose not to respond. If patent owner does file a response,
then third party requester may thereafter file written comments directed only to the patent owner’s submission. Entry of the patent owner response is not a matter of right. Neither party may appeal at this point in the proceeding. [MPEP 2671.02]

Right of Appeal Notice (RAN) – After (1) considering any patent owner response to an ACP, and any third party requester written comments thereto, or (2) the expiration of the time for patent owner to file a response and no response has been filed, the examiner will either re-open prosecution if necessary, or issue a RAN. The RAN sets time periods in which the parties may appeal to the BPAI. The RAN also closes prosecution. Any amendment filed after a RAN will not be entered. [2673.02]

It is possible for the Office to issue a RAN after a patent owner response to the initial Office action on patentability if both parties stipulate that the issues are appropriate for a final rejection and or a final patentability determination.

Appeal to the BPAI – Ex Parte Reexamination – A notice of appeal is a proper response to a final rejection in an ex parte reexamination. Only patent owner may appeal. The appeal process is similar to that in a non-provisional patent application. [MPEP 2273]

Appeal to the BPAI – Inter Partes Reexamination – Either party may file a notice of appeal as a proper response to a RAN in an inter partes reexamination. If some clams are rejected and some claims are allowed or confirmed as patentable, both parties may appeal those determinations, file appeal briefs, respondent’s briefs directed to the other party’s appeal brief, and, after the examiner files the examiner’s answer to those briefs, file a rebuttal brief directed to the examiner’s answer. [MPEP 2674]

Subsequent (Court) Appeals – Ex Parte Reexamination – If the request for reexamination was filed prior to November 29, 1999, patent owner may appeal the decision of the BPAI to either the U.S. District Court for the District of Columbia, or to the Court of Appeals for the Federal Circuit. If the request for reexamination was filed on or after November 29, 1999, patent owner may appeal only to the Federal Circuit. [MPEP 2279]

Subsequent (Court) Appeals – Inter Partes Reexamination – Either party who was a party to an appeal to the BPAI and is dissatisfied with the result may appeal only to the Court of Appeals for the Federal Circuit. [MPEP 2683]

Concurrent Reexamination and Litigation – If there is concurrent litigation and reexamination on a patent, and the request for reexamination was filed as a result of court order, or the litigation has been stayed for the purpose of reexamination, the Office will expedite the proceedings by taking the case up for action at the earliest possible time, setting shorter response times, and permitting extensions of time only upon a strong showing of sufficient cause. [MPEP 2286]

Effect of Concluded Litigation on Reexamination

A court decision holding that a patent claim is valid will not preclude the Office from continuing to reexamine such claim in an ex parte reexamination proceeding, even if the court decision is final and non-appealable. The Office applies the “broadest reasonable interpretation” for claim language in a reexamination proceeding, because claims may be amended during the proceeding. Courts apply a less liberal standard of claim interpretation, and therefore, the Office may conclude that a claim held valid in a court proceeding is unpatentable or invalid in an ex parte reexamination proceeding. [MPEP 2286]

A final, non-appealable court decision holding that a patent claim is invalid will preclude the Office from ordering any reexamination proceeding for such claim, or, will result in termination of any reexamination proceeding previously ordered as to such claim. [MPEP 2286]

It should be noted that with respect to inter partes reexamination, a final, nonappealable holding in litigation that a patent claim is valid may operate to estop a party from even requesting inter partes reexamination of that claim, or from maintaining a previously ordered inter partes reexamination of that claim. Estoppel may also operate to preclude a party who has obtained an Order Granting Inter Partes Reexamination of a patent claim from asserting invalidity of that claim in litigation under Section 1338 of Title 28 on grounds that such party raised, or could have raised, during that inter partes reexamination, if that claim has been finally determined to be patentable in the inter partes reexamination proceeding. [MPEP 2686.04(V)]

Notice of Intent to Issue Reexamination Certificate (NIRC) – Reexamination proceedings do not become “abandoned.” Rather, an NIRC is mailed to inform the parties that a reexamination proceeding has been terminated, whether by the failure of a party to timely file a required response, or by the natural resolution of all outstanding issues of claim patentability. The NIRC lists the status of all claims that were subject to reexamination, including any patent claims that have been canceled and any claims added during the proceeding that were not part of the patent that were reexamined and determined to be patentable. The NIRC also indicates which patent claims, if any, were not reexamined. An NIRC may include an examiner’s amendment, and must include reasons for confirmation of any patent claims that were determined to be patentable without amendment, and reasons for allowance of any amended patent claims or any newly added claims. [MPEP 2287]

Reexamination Certificate – A reexamination proceeding is concluded by publication of a reexamination certificate. The certificate amends the text of the patent that was reexamined, in a manner analogous to a certificate of correction. The Reexamination Certificate will contain the text of all changes to the text of the patent that was the subject of the reexamination proceeding. [MPEP 2288 and 2290]

Notice to the Public of Reexamination Certificate – Publication of a reexamination certificate is announced in the Official Gazette. [MPEP 2691]