polls
If you don’t see the survey, click here.
Tag Archives: Subject Matter Eligibility
Guest Post by Prof. Michael Risch: The Securitization of Patents
Guest post by Michael Risch, Associate Professor of Law, Villanova University School of Law.
My forthcoming article in Duke Law Journal, The Securitization of Patents, argues that the best way to create patent markets might be to start treating portfolios as securities. A full draft is accessible at this SSRN page. The article makes four basic points:
- Aggregation and trading is not limited to non-practicing entities – everyone is doing it.
- Companies are trading aggregated patent portfolios as they do other patent instruments, either through sale or licensing.
- Aggregation is beneficial, even critical, for efficiency; this is directly contrary to the conventional wisdom.
- Based on the above, markets might be improved by applying securities treatment to patent portfolios.
[NB: I focus on portfolios, not individual patents. I also focus on sale and licensing of patents, not the initial patent grant. The paper explains why in more space than I have here.]
When I first wrote Patent Troll Myths, there was very little empirical data about NPEs. Since then, such research has exploded, with new data every week seemingly counting the number of NPEs and their cases. This data, though helpful, leaves a lot to be desired, I think. First, there is a rarely a real apples-to-apples comparison with the activity of product companies (and when there is, the comparison is not very granular). To that end, I’ve been developing a matched data set for my Patent Troll Myths data so we can test what real differences in quality and quantity, if any, exist. Second, the data largely ignores licensing practices, which can be quite similar. To be fair, licensing data is difficult to come by, but without it, normative determinations are difficult. Third, studies like mine, which look at the provenance of NPE patents, are rare.
These issues lead to my first point: aggregation is not just for trolls anymore, if it ever was. The public is becoming a bit more aware of this with new focus on privateering, the outsourcing of patent enforcement by product companies to licensing and assertion specialists. The idea that aggregation is just fine when a product company does it, but suddenly evil when those same patents transferred to a third party has never sat well with me. And regardless of moral considerations, the fact of the matter is that patent aggregation is everywhere.
My second point follows from the first: aggregated portfolios are being used as assets, and traded as such by all sorts of companies. This is nothing new; people have been writing about patents as a new asset classes for a while now. Transactions are getting bigger, however, and they are hitting the news. Perhaps no transaction better illustrates my point than the recent Kodak patent auction. First, Kodak offered its patents for sale as a financing strategy in bankruptcy. Second, the eventual buyer was a consortium including, among others, Microsoft (a product company); Intellectual Ventures (a licensing company, but also one that litigates, but also one that aggregates defensively; and RPX (a defensive aggregator). This one transaction is my argument in a nutshell: everyone is aggregating, and they are doing so in buy/sell type transactions for financial purposes.
My third point is that such aggregation is not always (or necessarily often) a bad thing. This is decidedly against the conventional wisdom. Companies with large portfolios surely have the ability to cause “royalty stacking,” but in practice this is less likely than if many separate parties enforced those same patents. Litigation looks much the same; regardless of the size of the portfolio, courts are just not going to hear a case asserting 1000 patents. Only a few (at most 5 or 10) patents will be at issue, and then the aggregator looks like anyone else. Similarly, in negotiations, the parties usually haggle over a few “lead” patents. This is little different than negotiation with the owner of few patents – with one big exception. When you come to terms with the aggregator, you can settle and license hundreds or maybe thousands of patents at once. Not so with single-patent owners. These folks line up one after another, asserting a few patents at a time. The biggest NPEs will often assert patents obtained by individual inventors; would product makers really rather that the inventors assert their own patents separately? Maybe, before a time when people figured out a viable mechanism for funding patent assertion, but now that individuals might seek funding for enforcing their own patents, a single aggregator must surely be a better option than many inventor plaintiffs.
There is one difference with aggregated portfolios, of course. When the parties are done haggling over the lead patents, the portfolio owner always has more to discuss while the small patent holder has none. But rather than being the greatest cost of the portfolio, a seemingly bottomless portfolio is its greatest benefit.
And that is my fourth point: when parties are trading portfolios, the haggling should be over price instead of quality and infringement. In a large enough portfolio holding patents directly related to a particular product, there will surely be some number of patents that are both valid and infringed. The question is how many, and how much it will cost to find them. A central thesis of my article is that treating portfolios as securities will help lower transactions costs in a variety of ways by limiting the litigation costs of finding those infringing patents and instead better pricing patents in the market. For you legal sticklers, I didn’t just make this up: the paper looks at portfolios under the Supreme Court’s famous Howey test and concludes that such treatment is at least plausible under the law.
How might securities laws benefit markets? Not in the traditional “public offering” way. I suspect that most transactions would be excluded from the registration requirements. However, such transactions might be regulated as dark pools, and require clearinghouse treatment that makes such transactions public. Further, stock fraud laws might require the disclosure of information that might affect portfolio value. For example, patent holders who know of anticipatory prior art might be required to disclose it rather than keep it secret. Perhaps most important, accepting that portfolios are simply financial transactions might drive efforts to develop objective portfolio pricing. The goal of such pricing schemes is to determine a portfolio’s price even though the parties cannot agree on the price of any of the particular patent in the portfolio. I examine several pricing strategies that might work (and several destined to fail) in the paper.
There is obviously much more in this paper than I can write here. I detail my arguments in the full paper.
AMP v. Myriad Gene Patenting Oral Arguments
By Dennis Crouch
Association for Molecular Pathology v. Myriad Genetics, 12-398 (Supreme Court 2013) oral argument transcript.
The Supreme Court held oral arguments today in the much watched Gene patent case pending before the US Supreme Court. Myriad Genetics and the University of Utah own several patents covering particular isolated human genes, seemingly man-made complementary DNA that mimics the natural DNA sequence, methods for obtaining the DNA, and methods for using the DNA to test for disease. The major breakthrough made by the Myriad Scientists was to discover the naturally occurring sequence of DNA that codes for early-onset breast cancer. These are the so-called BRCA1 and BRCA2 genes. This was a huge breakthrough and has been applied to save many lives. However, historic patent law is clear that the mere information discovered is not patentable. That information could be classified as both a natural phenomenon and an abstract idea—both of which lack patent eligibility. So, instead of patenting the information, the researchers applied molecular biology tools (conventional at the time) to isolate the DNA, and create cDNA. It was those structures and methods that Myriad patented, although the innovative heart of each patent claim remained the particular unpatentable genetic sequence. A group of public-minded researchers and groups challenged the patents. Arguing on their behalf is Chris Hansen of the ACLU. Myriad called patent law expert Greg Castanias for its arguments. And, acting as amicus curae, Donald Verrilli argued on behalf of the US Government.
My take is that the court is likely to find cDNA patentable because of the man-made nature of the molecule and hold that purely isolated molecules will only be patentable if their function is significantly altered because of the isolation. This result depends upon the court buying Myriad's argument that cDNA is the equivalent of recombinant DNA whose sequence is designed by the inventors. One risk of the decision for patentees is that the court appears poised to place additional weight on the obviousness analysis. Here, it is also clear that the court does not trust the USPTO to make these determinations. As Justice Kagan mentioned "the PTO seems very patent happy".
AMP's attorney Chris Hansen began his argument with the strongest possible approach – arguing that Myriad's recognition that the BRCA genes "correlate with an increased risk of breast or ovarian cancer . . . [was] made by nature . . . [and] Myriad does not deserve a patent for it." Mr. Castanias disagreed – "What Myriad inventors created in this circumstance was a new molecule that had never before been known to the world."
A first focus of the argument was on whether the isolated DNA has a new function – different from that found in the human body.
JUSTICE ALITO: Isolated DNA has a very different function from the DNA as it exists in nature. And although the chemical composition may not be different, it — it certainly is in a different form. So what is the distinction?
MR. HANSEN: Well, I don't think it has a new function, Your Honor, with respect. I believe that what — Myriad has proffered essentially three functions for the DNA outside the body as opposed to inside the body. The first is we can look at it. And that's true, but that's not really a new function. That's simply the nature of when you extract something you can look at it better.
The second two rationales that Myriad has proffered are that it can be used as probes and primers. Three of the lower court judges found that full-length DNA, which all of these patent claims include, cannot be used as probes and primers. But more important, finding a new use for a product of nature, if you don't change the product of nature, is not patentable. If I find a new way of taking gold and making earrings out of it, that doesn't entitle me to a patent on gold. If I find a new way of using lead, it doesn't entitle me to a patent on lead.
As I mentioned, everyone recognizes that Myriad made a major advance in our understanding of human genetics. The focused then turned to how Myriad should be rewarded.
JUSTICE KAGAN: Mr. Hansen, could you tell me what you think the incentives are for a company to do what Myriad did? If you assume that it takes a lot of work and takes a lot of investment to identify this gene, but the gene is not changed in composition, and what you just said is that discovering uses for that gene would not be patentable even if those new — even if those uses are new, what does Myriad get out of this deal? Why shouldn't we worry that Myriad or companies like it will just say, well, you know, we're not going to do this work anymore?
MR. HANSEN: Well, we know that would not have happened in this particular case, Your Honor. We know that there were other labs looking for the BRCA genes and they had announced that they would not patent them if they were the first to find it. We also know that prior to the patent actually being issued, there were other labs doing BRCA testing and Myriad shut all that testing down. So we know in this particular case that problem would not have arisen.
But the point of the whole — the whole point of the product of nature doctrine is that when you lock up a product of nature, it prevents industry from innovating and — and making new discoveries. That's the reason we have the product of nature doctrine, is because there may be a million things you can do with the BRCA gene, but nobody but Myriad is allowed to look at it and that is impeding science rather than advancing it.
MR. HANSEN: [Further], taxpayers paid for much of the investment in Myriad's work. I [also] think you get enormous recognition.
SCALIA: Well, that's lovely.
MR. HANSEN: But I think that we know that that's sufficient. We know it's sufficient with respect to these two genes. We also know it's sufficient with respect to the human genome.
JUSTICE KENNEDY: But I just don't think we can decide the case on the ground, oh, don't worry about investment, it'll come. I just don't think we can do that.
The patented cDNA is not found in the human body, but instead was manufactured by the researchers by using a discovered enzyme to convert mRNA created in the body back in to the more stable DNA form.
JUSTICE SOTOMAYOR: [cDNA] is artificially created in the laboratory, so it's not bound in nature. It's not taking a gene and snipping something that's in nature. And yet you claim that can't be patented. The introns are taken out, the exons are left in, and they're sequenced together. Give me your brief argument on that. I read your brief, but it is not a product of nature; it's a product of human invention.
MR. HANSEN: There are two big differences between cDNA and DNA. The first is exactly the one Your Honor just discussed, which is that the introns, the noncoding regions, have been removed. That is done in the body, by the body. That's done in the process of DNA going to mRNA. What the scientist does who's creating the cDNA is they take the mRNA out of the body and then they simply have the natural nature-driven nucleotide binding processes complement the mRNA. So that if the mRNA has a C, the scientist just puts the corresponding nucleotide in there and nature causes them to bind up. The scientist does not decide -
JUSTICE BREYER: I know, but I don't see the answer, because I gather, if I — if I've read it correctly, that when you have an R — the messenger RNA does not have the same base pairs. There's a U or something instead of an A or whatever it is.
MR. HANSEN: Yes.
JUSTICE BREYER: So when you actually look, if you could get a super-microscope and look at what they have with the cDNA, with their cDNA, you would discover something with an A, not a U. Is it AU? Is that the one?
MR. HANSEN: Yes.
JUSTICE BREYER: Okay. Okay. So — so you would discover something with an A there, you see, and you wouldn't discover something with a U there. And there is no such thing in nature as the no-introns AGG, whatever, okay? It's not there. That's not truly isolated DNA. But you can go look up the Amazon, wherever you want. Hence the question. Now, on that one, how? How is that found in nature? The answer is it isn't.
MR. HANSEN: Well, but I would suggest, Your Honor, that the question is not whether it is identical to something in nature. The question is whether there was a human invention involved, whether it is markedly different from what is found in nature.
JUSTICE SOTOMAYOR: But that goes to obviousness. That does not in my mind go to the issue of whether it's patent eligible. You may have a very strong argument on obviousness, but why does it not -it's creating something that's not found in nature at all.
. . . CHIEF JUSTICE ROBERTS: But I — I thought the basic general approach here was we have a very expansive view of what is patent eligible and then we narrow things through things — issues like obviousness and so on. Why — wouldn't it make more sense to address the questions at issue here in the obviousness realm?
. . . . JUSTICE ALITO: This case has been structured in an effort to get us to decide this on the broadest possible ground . . . it's just about 101, it's not about any other provision of the Patent Act. Why should we do that?
. . . . JUSTICE BREYER: Ah. Then — then watch what you're doing. That's very, very interesting, because, really, we are reducing, then, 101 to anything under the sun, and — and that, it seems to me, we've rejected more often than we've followed it.
As it should, the discussion eventually worked its way to the patenting of ideas.
JUSTICE SOTOMAYOR: That's a failure of the patent law. It doesn't patent ideas.
MR. HANSEN: And it shouldn't patent ideas, and — but it also makes the point that isolated gene and the gene in the body are the same.
. . .
GENERAL VERRILLI: The claim that isolated DNA is a human invention rests entirely on the fact that it is no longer connected at the molecular level to what surrounded it in the body. But allowing a patent on that basis would effectively preempt anyone else from using the gene itself for any medical or scientific purpose. That is not true about a patent on cDNA. A patent on cDNA leaves the isolated DNA available for other scientists and other — and others in the medical profession to try to generate new uses. . . . [T]he position of the United States is that [as a conceptual matter] cDNA is patent eligible.
. . .
JUSTICE KAGAN: The first person who found a chromosome and isolated it, I think we can all say that that was a very useful discovery. And the question is, can you then — can the person who found that chromosome and isolated it from the body, could they have gone to the PTO?
A decision in the case is expected in June.
Do the Wright Brothers Deserve a Patent for their Flying Machine?: Why Eliminating Software Inventions from the Patent System Makes No Sense.
Guest Post by Martin Goetz
Imagine that the digital computer and the stored computer program (software) existed in the late 1800's. If so, there is a high probability that the Wright Brothers would have used a computer program to control the three-axis control system in their 1903 Flying Machine patent application. If they did, we would call the patent they received in 1906 a software patent. Further imagine that today's anti-patent zealots who preach that all software consists of abstract ideas, mental processes or mathematics were thrown back in time to the late 1800's. And finally imagine that they were successful in their stated goal to eliminate all software patents through an act of Congress. Had that really happened, the Wright Brothers would not have received a patent for what is recognized as one of the greatest inventions of the 20th century.
Think of all the great inventions in the 20th century. Many would have used a software program as they implemented and disclosed their inventions. Would we be better off today if there was no patent protection for those software inventions?
For the last 50 plus years, the nature of software and of software products has been significantly distorted by opponents of software patents. But their argument to eliminate all software patents makes no sense unless their goal is to eliminate the entire patent system.
Here's why it makes no sense….
Article 29 of the TRIPS guidelines covering "Disclosure Obligations" states "…An applicant for an invention shall disclose the invention in a manner sufficiently clear and complete for the invention to be carried out by a person skilled in the art and may require the applicant to indicate the best mode for carrying out the invention…." If the best mode includes software (a computer program), then that disclosure would describe the software through diagrams, flow charts, and descriptive text.
According to Wikipedia "there is no legal definition of a software patent". Let's look at two possible definitions.
Definition 1: If the definition of a software patent is that, if in the Disclosure of the invention, there is a description of a computer program (in whole, or in part) then the patent would be called "software patent". A "Software patent", under this definition, would be found in many industries, e.g., Software, Telecommunications, Manufacturing, Transportation, Appliances, Medical, Robotics—to name a few.
Said another way… In many industries inventions contain software programs as part of their disclosures. Take the Robotics/Medical Devices sector, where very sophisticated computer programs can control an artificial limb. How the artificial limbs are designed and constructed may be the invention. Or the invention may be how the computer program(s) interacts with the artificial limb. Or the invention may be a combination of both elements.
A more recent real life invention is the artificial retina, a robotics/medical device which offers partial vision for the blind. It's described as a camera, transmitter, and cable to video processor (software) connected to the brain.
So those that want to eliminate software patents, by design or by ignorance, would eliminate all robotic/medical device inventions where the disclosure includes a computer program.
Definition 2: Anti-Software patent zealots might argue that the definition of a "software patent" is when the disclosure of the invention only describes a computer program and a computer. And then their goal would be to have Congress change the Patent System to eliminate the issuance of "software only patents". But that would be catastrophic for the Software Industry, where many of their inventions are software only. This industry is made up of thousands of companies and is recognized as one of the top three manufacturing industries in the world .With annual worldwide revenues well over $ 300 Billion this industry needs (and wants) just as much patent protection as other industries.
Many software product companies can be thought of as high-technology manufacturing entities. Many of their products are state of the art, developed in a competitive, fast-moving environment that requires rapid response to meet user demand. Some of their products can be all software i.e., Google's search program or they could be a combination of software and hardware circuitry and/or devices i.e., Google's driverless car or the 3-D printer.
If the patent application contains a true invention it should be irrelevant whether or not the invention is disclosed as a "software only" implementation. The following are two examples of inventions from the Software Industry to illustrate my point of view
Back in November 2012 Microsoft stated in a press release "Microsoft researchers have demonstrated software that translates spoken English into spoken Chinese almost instantly, while preserving the unique cadence of the speaker's voice—a trick that could make conversation more effective and personal." Certainly the way Microsoft's researchers accomplished this complex translation is not obvious. And I have is little doubt that Microsoft will try to protect its research investment with a patent application. But its patent claims could not be that it invented "speech recognition" or "language translation", or even "voice to voice translations". Patents for Voice and Speech Recognition patents go back well over 30 years with IBM having over 200 speech recognition patents. And there have been language translation patents for many years But Microsoft could invent a new way to do voice recognition and language translations and at the same time retain the cadence of the speaker's voice. And, let's imagine, the invention would use a standard headphone and the headphone would not be part of the disclosure. Such a patent on that invention would be software only (and a computer) in its disclosure. But what if the invention needed a special set of headphones (a device), was integral to the invention, and was part of the disclosure? Is a speech recognition/translation/cadence and special headphone invention any more innovative than a "speech recognition/translation/cadence" software only invention?
In 2000, a renowned inventor, Ray Kurzweil received a patent named Reading System which Reads Aloud from an Image Representation of a Document. The patent disclosure shows a diagram of a monitor, scanner, speakers, and a PC computer composed of a processor, storage and a keyboard. The essence of the disclosure and the invention is a logic chart describing a machine system which interacts with a speech synchronizer and the various devices.
The first sentence of the abstract in the patent stated "a reading system includes a computer and a mass storage device including software comprising instructions for causing a computer to accept an image file generated from optically scanning an image of a document."
At that time, Ray Kurzweil's company, Kurzweil Educational Systems marketed a special purpose hardware/software system called the Kurzweil 3000 Reading Machine which was marketed to the blind and poor readers. They received a patent on this invention in 2000. Today the company sells a software only system called Kurzweil 3000 and continues to have the protection of the patent system through his original 2000 patent and with additional patents e.g., Reducing processing latency in optical character recognition for portable reading machine — another software only patent.
Few would argue that the Kurzweil 3000 Reading Machine was not an invention and not deserving of a patent.
What these zealots should be arguing is that many software patents issued by the US Patent Office, including most business-method patents, should never have been issued because of their obviousness. With that I heartily agree. To their credit, the Patent Office and the Courts are today grappling with how to recognize obviousness in a patent application. A very difficult challenge, to say the least.
But let's stop calling a true invention that includes a computer program in its disclosure a software patent. In fact, let's eliminate the phrase "a software patent" from our vocabulary.
END
Doctrinal Precedence Among the Hatch-Waxman Act, the Patent Act, and the Sherman Act
Guest post by Professor Brett M. Frischmann (Benjamin N. Cardozo School of Law)
On March 25, 2013, the Supreme Court will hear oral arguments in Federal Trade Commission v. Watson Pharmaceuticals, Inc., a case concerning reverse payment settlements of patent litigation. The court granted cert on the following issue:
Whether reverse-payment agreements are per se lawful unless the underlying patent litigation was a sham or the patent was obtained by fraud (as the court below held), or instead are presumptively anticompetitive and unlawful (as the Third Circuit has held).
In this brief post, I suggest a way to decide the issue in a manner that resolves the apparent tensions between the Hatch-Waxman Act, the Patent Act, and the Sherman Act. To my knowledge, the argument I make does not appear explicitly in the briefs, although Scott Hemphill made a related argument in his 2006 NYU Law Review article, Paying for Delay: Pharmaceutical Patent Settlement as a Regulatory Design Problem.
Hatch-Waxman should be given substantial priority in the analytical framework that courts employ when resolving antitrust claims about reverse payment settlements of patent litigation. Here is why. Both antitrust law and patent law are general-purpose, industry-agnostic legal regimes. Antitrust law regulates competition generally. It aims to sustain competition and constrain anticompetitive practices, and it does so with very general legal prescriptions that courts must apply in a wide range of different contexts. Patent law aims to encourage innovation by giving inventors the right to exclude others from a patented invention. Patent law also consists of very general legal prescriptions that the PTO and courts must apply in a wide range of different contexts. In both antitrust and patent, sector-specific, industry-specific, or even context-specific rules do arise over time in the courts or agencies. But the statutory law enacted by Congress is general-purpose.
Hatch-Waxman is special-purpose and industry-specific, and it also happens to be last-in-time. Congress enacted Hatch-Waxman to accomplish specific ends through specific means. Of course, Hatch-Waxman is a complex regulatory regime, and there are various tradeoffs reflected in the law that may have been necessary to get it passed. But Hatch-Waxman primarily aimed to induce competition in drug markets when such competition is feasible, and one of the central means for accomplishing this end is litigation over patent validity.1 Thus, Hatch-Waxman envisioned two particular types of competition—first, competition in courts between owners of drug patents and generic drug companies, and second, competition in drug markets between brand firms and generics. Reverse payment settlements stifle both types of competition.
What do I mean when I say that Hatch-Waxman should be given substantial priority in the analytical framework that courts employ when resolving antitrust claims about reverse payment settlements of patent litigation? The antitrust-patent interface has been the source of substantial consternation—how do we resolve tensions that might arise among competing legal principles and values? Regardless of how one comes out on how to resolve or understand the interface, it is largely irrelevant to this particular set of issues. Hatch-Waxman replaces general patent law in this context. As a result, it supplies the relevant principles and values, and it significantly narrows the range of relevant arguments that a court should entertain in an antitrust suit. Simply put, broad claims about principles and values derived from patent law should not carry much, if any, weight. For example, claims about the impact of reverse payment settlements, or their prohibition, on patent law's "incentives to innovate" are red herrings. Similarly, arguments about weak vs. strong patents are also red herrings because there is nothing in Hatch-Waxman itself that draws a distinction between weak and strong. (It is worth noting that even for "really strong" patents, litigation over patent validity also provides the public with greater certainty about the validity of those patents.) Finally, claims about the general judicial economy of encouraging settlement are also irrelevant because Hatch-Waxman directly employs litigation as a means to facilitate competition.
Antitrust scrutiny of reverse payment settlements of patent litigation need not get bogged down in discussions of patent law or judicial economy. Congress has spoken clearly and specifically and chosen to use patent litigation as a means to induce competition. Reverse payment settlements of patent litigation are precisely the sort of agreements that antitrust law directly regulates, usually through a rule that says such agreements are per se unlawful. An agreement not to compete in the forum specified by Hatch-Waxman is no different than competitors expressly agreeing not to compete in any other market; it looks like various types of cases where per se illegality is generally accepted as a legitimate rule (e.g., bid rigging, market division).
Accordingly, the Supreme Court could reasonably declare reverse payment settlements of Hatch-Waxman-based patent litigation per se unlawful. Alternatively, the Court could declare the settlements in question presumptively unlawful and then put the burden on the defendants to rebut the presumption.
Reverse payment settlements stifle both types of relevant competition noted above. Competition of the first type (competition in courts between owners of drug patents and generic drug companies) is always stifled. The same might be said about competition of the second type (competition in drug markets between brand firms and generics), although some argue that settlements sometimes may increase competition of the second type where a patent would be found valid (if actually litigated) because the settlement allows the generic company to enter the market earlier than otherwise would be the case. Presumably, the Court should choose between per se illegality and presumptive illegality based on its evaluation of this argument.
If the Court takes this latter route, the types of evidence and arguments relevant to rebutting the presumption should be limited substantially by Hatch-Waxman. As noted above, Hatch-Waxman specifies the types of relevant competition and if given the priority it deserves, it would preclude various generic arguments from being made.
===
FN1: As Scott Hemphill put it, "the Hatch-Waxman Act is a deliberate effort to promote consumer access through litigated challenges." See C. Scott Hemphill, Paying for Delay: Pharmaceutical Patent Settlement as a Regulatory Design Problem, 81 NYU L. Rev. 1553 (2006), available at http://ssrn.com/abstract=925919. He goes on: "Since litigation is the instrument by which the regulatory arrangement accomplishes its ends, it is difficult to argue that an end-run on the instrument is consistent with the scheme." Much of the argument I am making derives from ideas in Scott's article and conversations we have had over the years.
CLS Bank v. Alice Corp: Oral Arguments Lead to More Questions
By Dennis Crouch
CLS Bank v. Alice Corp (Fed. Cir. 2013)
On February 8, 2013, the Federal Circuit held oral arguments en banc in this important subject matter eligibility dispute that focuses on the extent that software can be patented. Under Federal Circuit rules, en banc rehearings include all of the regular circuit court judges as well as any other judge who sat on the original panel. For this case, the nine regular members of the court were joined by Senior Judge Richard Linn who sat on the original panel and penned the opinion of the court that has offended so many anti-software-patent advocates. In the opinion, Judge Linn cabined-in the definition of “abstract” with regard to computer implemented inventions and also indicated that §101 should only be used to invalidate a claim when that result is “manifestly evident.” [UPDATED] With a ten-member panel the accused infringer (CLS Bank) needs six votes to overturn the original panel decision. With a ten member panel, six votes are needed to win. Since the original appellate decision was vacated, this appeal comes directly from the district court. As such, a five-five tie will affirm the lower court holding of invalidity. While I suspect that Linn’s language putting Section 101 on the back burner will not survive, I suspect that at least some claims will be seen to pass muster under Section 101.
The parties are in relative agreement on many points. None of the parties seriously argue that software per se is patentable – apparently assuming that software apart from its computer implementation always embodies an abstract idea. All of the parties also agreed that a computer specially designed to perform a particular function can also be patentable. The dispute centers on what test should be used to determine when you have such a “specialized computer” and on whether Alice Corp’s claimed invention meets that standard.
Most notably absent from the oral arguments was any discussion of the meaning of an “abstract idea.” Of course it is the ambiguity in the definition of abstract idea that is causing most of the confusion regarding subject matter eligibility.
For decades, patent attorneys have known that software can be patentable if properly claimed in a way that directs attention away from the software nature of the invention. I suspect that the rule-of-thumb for patent eligibility will focus on complexity of the relationship between software and hardware. And, if that is the case patent attorneys will renew their reputation for taking simple ideas and making them appear quite complex.
Mark Perry represented the accused infringer (CLS Bank) and argued that one starting point for subject matter eligibility is the notion that a process accomplished “entirely in the human mind or made with pen and paper” cannot be patent eligible. Further, merely speeding-up that process by using a computer does not somehow transform the process into a patentable invention – “it simply accelerates the process.” The bulk of the questioning focused whether CLS had overgeneralized the claims. For instance, when Mr. Perry began reading from the patent’s invention summary he was stopped by Judge Linn who responded that every claim can be distilled to an abstract summary but “that’s not the way that we assess patent eligibility or patentability.”
Judge Moore focused the questioning on the CLS Bank claim that included the most physical structure. Claim 26 of the ‘375 patent reads as follows:
26. A data processing system to enable the exchange of an obligation between parties, the system comprising:
a communications controller,
a first party device, coupled to said communications controller,
a data storage unit having stored therein
(a) information about a first account for a first party, independent from a second account maintained by a first exchange institution, and
(b) information about a third account for a second party, independent from a fourth account maintained by a second exchange institution; and
a computer, coupled to said data storage unit and said communications controller, that is configured to
(a) receive a transaction from said first party device via said communications controller;
(b) electronically adjust said first account and said third account in order to effect an exchange obligation arising from said transaction between said first party and said second party after ensuring that said first party and/or said second party have adequate value in said first account and/or said third account, respectively; and
(c) generate an instruction to said first exchange institution and/or said second exchange institution to adjust said second account and/or said fourth account in accordance with the adjustment of said first account and/or said third account, wherein said instruction being an irrevocable, time invariant obligation placed on said first exchange institution and/or said second exchange institution.
Judge Moore rightly suggested that a computer by itself is clearly a machine and subject-matter eligible. She queried then, how can a more particular invention – the computer with particular functionality – be ineligible? Perry offered two responses. First, he argued that the claim here is really method claim masquerading as a machine claim – that method itself is an abstract idea and the addition of the computer hardware does not make the claims eligible. Further, Perry argued that the claims here are not directed to any particular computer but instead a generic system. Judges Moore and Newman then queried whether the real focus should be on obviousness. Perry admitted that the claims may also be invalid under Section 103, but that the Supreme Court has indicated that Section 101 is a threshold inquiry. In addition, he argued, Section 101 inquiries are often easy because they do not require substantial discovery.
Perry also suggested that the requirement for extensive particular hardware rightly favors companies like CLS Bank and Google who spend millions of dollars to build systems that actually work rather than companies like Alice who merely develop a “McKinsey Report” and file for patent protection.
With Ray Chen on the sideline pending confirmation of his Federal Circuit judicial nomination, Deputy Solicitor Nathan Kelley stepped up and primarily sided with CLS Bank – arguing that software per se cannot be patent eligible because it is an abstract idea and that merely connecting software to a computer is likewise patent ineligible. The oddball test suggested by the PTO borrows the separability concept from copyright law. In copyright, a useful article is only copyrightable if the original expression is at least conceptually separable from the utility of the article. The PTO argues that an inseparability requirement should be put in place for computer implemented inventions. Under that construct, a computer implemented invention that applies an abstract idea would only be patent eligible if the computer is inseparably and inextricably linked to the invention. In oral arguments, Kelley suggested that the approach requires the “fact finder” to “go deeper” in considering whether an inextricable link exists. Mr. Kelly did agree (on questioning from Judge Moore) that the focus in this process should be on the language of the claims.
What the PTO wants out of this is a practical test that its examiners can follow rather than just the notion of an “abstract idea.” I believe that the agency would have been better served if he had focused on that point rather introducing a new concept into the law that does little or nothing to resolve ambiguity.
Adam Perlman argued for the patentee (Alice Corp) and likewise did not defend software patents. Rather, Perlman argued that his client’s patents were technology-focused inventions that wove together software and hardware in a way that “creates a new machine” that clearly satisfies the requirements of Section 101.
There was some back and forth about preemption. Neither party mentioned this, but a point relevant to preemption is likely CLS’s allegations at the district court level that it did not infringe the patents.
The Federal Circuit will likely take a few months to decide this appeal. An important issue will be to see whether the court decides this case quickly or waits for the Supreme Court to release its decision in Myriad. Although not computer implemented, the outcome of Myriad case could impact the law here.
En Banc Arguments This Week
by Dennis Crouch
On February 8, 2013 (this Friday), the Federal Circuit will sit en banc and hear arguments on two important patent cases. In CLS Bank v. Alice Corp the court will focus on the patenting of inventions implemented through software. The two particular questions highlighted in the en banc order are:
a. What test should the court adopt to determine whether a computer-implemented invention is a patent ineligible “abstract idea”; and when, if ever, does the presence of a computer in a claim lend patent eligibility to an otherwise patent-ineligible idea?; and
b. In assessing patent eligibility under 35 U.S.C. § 101 of a computer-implemented invention, should it matter whether the invention is claimed as a method, system, or storage medium; and should such claims at times be considered equivalent for § 101 purposes?
In addition to the parties, the Federal Circuit has also granted leave for the USPTO to participate at oral arguments. The USPTO’s brief focused on practical mechanisms for the process of determining § 101 eligibility. The agency wrote “the essential question under § 101 is whether the claim, properly construed, incorporates enough meaningful limitations to ensure that it amounts to more than a claim for the abstract idea itself . . . This Court should identify a non-exhaustive list of factors for district courts and examiners to consider in resolving that essential question on a case-by-case basis.”
The second patent case (argued first on the 8th) is that of Robert Bosch v. Pylon Mfg. In Bosch, the court is focusing on the “final judgment rule” that limits a losing party’s right to appeal until the district court judgment is finalized. Particularly, 28 U.S.C. § 1292(c)(2) indicates that the Federal Circuit has jurisdiction over patent appeals once the case is “final except for an accounting. The basic question on appeal is: Define “an accounting.” The en banc order asks two particular questions:
a) Does 28 U.S.C. § 1292(c)(2) confer jurisdiction on this Court to entertain appeals from patent infringement liability determinations when a trial on damages has not yet occurred?
b) Does 28 U.S.C. § 1292(c)(2) confer jurisdiction on this Court to entertain appeals from patent infringement liability determinations when willfulness issues are outstanding and remain undecided?
In its brief of the case, the U.S. Government argued that “accounting” encompasses the damage award. As such, the Government argues that appeal is appropriate once liability is determined.
At the Supreme Court, oral argument in Bowman v. Monsanto (patent exhaustion doctrine) is scheduled for February 19; and FTC v. Watson (reverse payment settlements) is scheduled for March 25. Arguments for Association for Molecular Pathology v. Myriad Genetics, Inc.
have not yet been scheduled.
2012 Trends: New Life in the Doctrine of Equivalents
Guest post by Donald S. Chisum, Chisum Patent Academy
Looking back at the approximately 125 precedential decisions on patent law of the Federal Circuit in 2012, I asked myself: are there any new trends? One trend smiled back: an increase in the number of decisions on the doctrine of equivalents. There were eight, and, surprisingly, four of them showed judicial favor toward application of the doctrine.
Since 1997, the Federal Circuit, with the encouragement of the Supreme Court, has developed various restrictions and limitations on the doctrine. This has led some commentators to assert that the doctrine of equivalent is “dead.” See Allison & Lemley, The (Unnoticed) Demise of the Doctrine of Equivalents, 59 Stan. L. Rev. 955 (2006-2007). That obituary may have been premature. The Supreme Court created the doctrine in 1850 and twice rejected frontal assaults: in 1950 and 1997. The 2012 Federal Circuit decisions show that well supported assertions of equivalency cannot be dismissed.
In particular, Chief Judge Rader wrote two opinions, expanding beyond what was necessary to decide the cases before him. In one, he emphasized that “the Supreme Court declined to let numerous contentions bury the doctrine.” Deere & Co. v. Bush Hog (Dec. 4, 2012). In Deere, Judge Rader attempted to clarify “misperceptions” about the “vitiation” limitation on the doctrine of equivalents. For a comment on Judge Rader’s discussion of vitiation, see Dennis Crouch, Reviving the Doctrine of Equivalents, Patently-O at https://patentlyo.com/patent/2012/12/rader-reviving-the-doctrine-of-equivalents.html.
In the other case, Judge Rader stressed that the doctrine is particularly appropriate when an accused equivalent is made possible only by technological improvements after a patent’s effective filing date. Energy Transportation Group v. William Demand Holdings (Oct. 12, 2012). Judge Rader has long espoused the view that the doctrine should be available when equivalents are not foreseeable but not when the opposite was true. A competent draftsperson should write claims to cover literally equivalents that were foreseeable at the time the application for the patent was prosecuted.
Also significant were two opinions by other judges. In one, the court addressed the recurring issues of equivalency applied to numerical and range limitations and to qualifiers such as “substantially.” Pozen Inc. v. Par Pharmaceutical (Sept. 28, 2012). The majority, by the recently-appointed Federal Circuit Judge Wallach, held that a claim, which required that a drug tablet layer have “substantially all” of an ingredient, and which was construed to mean “at least 90%,” was properly found infringed by equivalency by an accused tablet that had only 85% of the ingredient in the layer.
In another case, the court, in an opinion by Judge Prost, held that a district court erred in applying the “disclosure-dedication” rule and thus erred in granting summary judgment of no infringement under the doctrine of equivalents. Sandisk Corp. v. Kingston Technology Co., Inc. (Oct. 9, 2012).
In the other four cases, the Federal Circuit concluded, essentially, that asserted equivalents were not sufficiently equivalent or involved completely missing claim limitations or failure to claim literally well-known interchangeable elements. Technology Patents LLC v. T-Mobile Ltd. (Oct. 17, 2012); Mirror Worlds, LLC v. Apple Inc. (Sept. 4, 2012); General Electric Co. v. U.S. Int’l Trade Comm’n (July 6, 2012); Wm. Wrigley Jr. Co. v. Cadbury Adams USA LLC (June 22, 2012).
One may ask: why would there be renewed judicial interest in the doctrine of equivalents? One possibility: developments in other areas of patent law, such as the “abstract idea” restriction on Section 101 patent eligible subject matter, are creating pressures on patent applicants to formulate claims that are specific and narrow in literal scope. Courts may use a more robust doctrine of equivalents to provide a scope of protection that is determined to be appropriate in view of the patent’s disclosure, the prior art, and the development of the pertinent technology after a patent’s effective filing date.
CLS Bank v. Alice Corp: Software Patentability On the Briefs
by Dennis Crouch
Briefing continues in the CLS Bank software patent case. The accused infringer (CLS Bank) has filed its brief arguing that the Alice patent lacks any core inventive concept and therefore lacks subject matter eligibility under Section 101 of the Patent Act. Briefs in support of CLS and those nominally in support of neither party have also been filed. Alice will file its brief in January and I expect a set of additional briefs in support. As in the Bilski case, Alice's asserted claim here is one that appears invalid on other grounds — namely obviousness. However, the district court ruled on summary judgment (and before claim construction) that the claim was invalid as lacking patent eligiblity under Section 101.
The text of the asserted claim is below:
A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:
(a) creating a shadow credit record and a shadow debit record for each stakeholder party to be held independently by a supervisory institution from the exchange institutions;
(b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;
(c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party's shadow credit record or shadow debit record, allowing only these transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order; and
(d) at the end-of-day, the supervisory institution instructing ones of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.
In its first opinion, the Federal Circuit reversed the lower court ruling – finding that the claim did not merely encompass an abstract idea but instead embodied a practical implementation that fits within the scope of patent eligible subject matter. In a subsequent en banc order, the court asked that the parties focus on two particular questions of law:
I. What test should the court adopt to determine whether a computerimplemented invention is a patent ineligible “abstract idea”; and when, if ever, does the presence of a computer in a claim lend patent eligibility to an otherwise patent-ineligible idea?
II. In assessing patent eligibility under 35 U.S.C. § 101 of a computerimplemented invention, should it matter whether the invention is claimed as a method, system, or storage medium; and should such claims at times be considered equivalent for § 101 purposes?
I have attempted to extract some core elements of each brief. I should note that all of these brief have much more nuance than is shown. I attempted to categorize the briefs filed on behalf of neither party. My approach was quite subjective and I am confident that others would have classified them in a different manner.
Practical keys here are (1) whether subject matter eligibility is about the inventive concept or instead more focused on the scope of a well construed claim; (2) invention
Party Brief:
In Support of CLS (Defendant)
-
File Attachment: BSA Software Alliance–ISO CLS.pdf (169 KB) Business Software Aliance believes that software should be patentable, but not the software at issue here.
"Simple economics makes clear that, if patent protection for software were curtailed, the adverse consequences would be swift and severe. . . . Two factors are of particular significance—whether a claim can be implemented solely via a mental process or necessarily relies upon a machine for execution; and whether the claim uses an abstract idea or law of nature in a way that is novel, useful, and limited. When an invention falls short under both of these standards, it most likey is not patentable under Section 101. . . . Assessed under this framework, the software at issue here is not patentable. . . . It is plain that credit intermediation long preexisted computer implementation, and that it is a process that can be performed in the human mind, or by a human with pencil and paper. In addition, the computer aspect of the claims here does not add anything of substance to the mental process at issue. The computer implementation of the abstract idea is not limited in any fashion. And there is no suggestion that the process here is in anyway dependent upon computer technology to accomplish the directed end."
- Download EFF–ISO CLS Patents are causing more harm than benefit. This is especially true for software patents that regularly include broad functional claims. However, Section 101 analysis is problematic because of its ambiguity. The EFF brief argues that the way to cure this is to more broadly interpret 35 U.S.C. § 112(f) (2012) so that functional software claims be given limited scope under the Federal Circuit's Means-Plus-Function doctrine. This approach stems from a recent article by Mark Lemley and fits directly within the avoidance doctrine that Professor Merges and I suggested in our 2010 article.
- File Attachment: CCIA–ISO CLS.pdf (200 KB) Prometheus requires an inventive concept to pass 101.
- File Attachment: Clearing House Ass'n–ISO CLS.pdf (819 KB) Banking industry brief argues that "threshold" language means that "the Section 101 inquiry is the first step in the legal framework to determine patentability" and should be rigorously enforced.
- File Attachment: Google et al.–ISO CLS.pdf (982 KB). Google acknowledges the difficulty with the abstract idea test because the term "abstract" is so difficult to define. However, Google argues that the abstract ideas are much easier to identify individually than to define generally. This is roughly the same as know-it-when-you-see-it test for obscinity. Google also writes that "abstract patents are a plague on the high-tech sector."
- File Attachment: Stites Amicus Brief.pdf (262 KB) "The software patent game is a less than a zero sum game for the participants and has a large inhibiting effect on software innovation." Stites argues that the court should simply eliminate software patents.
In Support of Neither Party, but Promoting a Stronger § 101 Requirement
- File Attachment: British Airways et al–ISO Neither Party.pdf (191 KB) Supreme Court has rejected the "course-filter" "manifestly-evident" approach offered by the original CLS panel. Whether a claim fails under Section 101 can ordinarily be determined very early in a case and without and detailed claim construction.
- File Attachment: Profs Hollaar & Trzyna–ISO Neither Party.pdf (217 KB) The only way to draw a clear and reasonable line on subject matter eligibility is to focus on its link to technology.
- File Attachment: Juhasz Law Firm–ISO Neither Party.pdf (285 KB) "The test to determine whether a computer-implemented invention is a patent ineligible "abstract idea" should be whether steps that are central to the claim (i.e., not token extra-solution activity) have a "physical" or "virtual" link to a specific real or tangible object."
- File Attachment: Koninklijke Philips–ISO Neither Party.pdf (549 KB) An applicant and patentee should have the burden of proving that the claimed software implementation is subject matter eligible.
- File Attachment: Internet Retailers–ISO Neither Party.pdf (2454 KB) Simply rewriting a method claim as a system or storage medium cannot render the claim subject matter eligible. The Federal Circuit should empower district courts to make 101 determinations very early in cases – well before claim construction or the completion of discovery. "The savings to the parties in money and the courts in time are self-evident. And those savings are more likely to be obtained in precisely those cases in which the patents are least likely to be valid or valuable, cases brought under low-quality patents. Judicious application of Section 101 is likely to winnow out the worst patents at the lowest cost."
In Support of Neither Party, but Promoting a Weaker § 101 Requirement
- File Attachment: IP Owners Ass'n–ISO Neither Party.pdf (301 KB) Software is generally patentable under Section 101. However, a claim "must describe the use of [a] computer with sufficient detail to avoid preempting other uses of the idea and the computer implementation must be a meaningful and significant element of the invention." A detailed claim construction is ordinarily necessary to determine whether that claim is directed to statutory subject matter.
- File Attachment: CLS-Bank_v_Alice_USA-amicus-ISO-Neither-Party.pdf (311 KB) See this.
- File Attachment: Sigram Schindler–ISO Neither Party.pdf (474 KB) The abstract idea test is sufficiently defined.
- File Attachment: NY IP Law Ass'n–ISO Neither Party.pdf (735 KB) Efforts in some decisions to dissect the claim into old and new parts or computer and non-computer elements, should be rejected as squarely inconsistent with the Supreme Court's holdings in Diamond v. Diehr, 450 U.S. 175 (1981), and Bilski. "NYIPLA does not agree that method, system and storage medium claims should ipso facto rise and fall together. Rather, each claim (regardless of its type) should be considered independently as a whole to determine whether it is directed to patent-eligible subject matter."
- File Attachment: IP Law Ass'n of Chicago–ISO Neither Party.pdf (1024 KB) Subject matter eligibility should be broad and flexible. IPLAC's test is similar to the government's factor's in its brief. However, the tone of the IPLAC questions suggest broader eligibility. When a claim includes a computer program, IPLAC would ask: "(a) Are the claims drawn to subject matter otherwise statutory, because if so, they do not become nonstatutory simply because they use a mathematical formula, computer program or digital computer. Diehr. (b) Are process claims, as a whole, without regard to the novelty of any element or steps, or even of the process itself, nothing more than a statutory process and not an attempt to patent a mathematical formula, because if so, they are not nonstatutory. (c) Do the claims implement or apply a formula in a structure or process which, when considered as a whole, is performing a function which the patent laws were designed to protect (e.g., transforming or reducing an article to a different state or thing), because if so, the claims are statutory. (d) Do the claims apply the laws to a new and useful end, because if so, they are statutory."
- File Attachment: Conejo-Valley-Bar-Assn–ISO-Neither-Party.pdf (1589 KB) There is no need for a strong section 101 eligibility requirement because the other sections of the patent act do the work already.
- File Attachment: IBM–ISO Neither Party.pdf (1624 KB) "In the exceptional case when the patent eligibility of a computer implemented invention is not readily apparent, the functional requirement of a computer counsels in favor of patent eligibility." Methods are different from systems and are different from storage media. As such, the subject matter eligibility issues are also different and thus, a system claim might be patent eligible while its parallel method claim may be ineligible.
Patenting Software: Obama Administration Argues “Sometimes”
By Dennis Crouch
CLS Bank Int'l v. Alice Corp (Fed. Cir. 2012)
The US Government has filed its amicus brief in the pending en banc CLS Bank case that focuses on the patentability of software systems. Download CLS-Bank_v_Alice_USA-amicus-ISO-Neither-Party. The brief generally rejects the idea that software per se represents patentable subject matter but is favorable toward the patenting of computerized applications that either improve computer performance, use technology in a unique technological way, or transform the local environment.
Unlike some recent briefs, this has been filed with the support of both the USPTO and the DOJ. The brief suggests a claim-by-claim subject matter analysis that begins with claim construction and only then asks "whether the challenged claim, properly construed, incorporates enough meaningful limitations to ensure that it amounts to more than a claim for the abstract idea itself." The brief then lists a set of factors that the government sees as important in making that determination:
- Is the computer only nominally or tangentially related to the performance of the invention?
- Is the computer generically recited or, instead are specific, unconventional computer equipment or tools required?
- Is the invention focused primarily on non-technological fields or does the invention improve the ability of a computer to function as a computer?
- Is the computer used generically for its automation or communication functions or does the computer manipulate particular data in particular, specific, and useful ways?
- Is the abstract idea merely described within a particular environment or is the abstract idea part of an invention that transforms its environment.
- Are the computer related elements merely conventional steps described at a high level of generality in a way that would be employed by anyone wanting to apply the abstract idea.
Each of these determinations is riddled with problems as is the potential weighting in an overall abstract-idea analysis. However, the overall approach adds substantially to the the
The brief suggests that all claimed features can contribute to subject matter eligibility, but some caution should be used to not allow "mere 'drafting effort designed to monopolize [an abstract idea] itself'" (quoting Mayo). Regarding the product/process divide, the government writes that the form of the claim should not impact subject matter eligibility because those differences come from the "draftsman's art" rather than the invention itself.
Perhaps attempting to endear itself to the Federal Circuit, the brief implicitly criticizes Supreme Court patent decisions by arguing that "the §101 inquiry should focus on the actual language of each challenged claim, properly construed, not a paraphrase or parody of the claims. Unfortunately, the government does not have any Supreme Court precedent to back-up this argument.
As a final point, the government brief argues that the presumption of validity associated with patent rights lead to a conclusion that a patent can only be invalidated on subject matter eligibility grounds based upon "clear and convincing evidence." Reading between the lines, this seems to mean that any conclusions draw from the factors above must be proven with clear and convincing evidence. While §101 eligibility may be a question of law, the government additionally argues that it is a factual question as to whether "limitations recited in a claim do not, in practice, impose any meaningful limitations on their claim scope." Of course, prior to issuance or during post-grant review there is no presumption of validity.
Moving Away from Beauty as a Factor in Design Patent Validity
Guest Post by Professor Andrew W. Torrance. This post is a shortened version of Professor Torrance’s recently published article titled Beauty Fades: An Experimental Study of Federal Court Design Patent Aesthetics, Journal of Intellectual Property, Volume 19, Issue 2 (2012) available at http://ssrn.com/abstract=2156943.
Introduction
Courts are rarely asked to judge beauty. Such a subjective practice would normally be anathema to the ideal of objective legal standards. However, one area of federal law has a long tradition of explicitly requiring courts to make aesthetic decisions: the law of design. Examination of design patent law offers unique insight into how aesthetic considerations have been, and are currently, employed by courts to make legal decisions.
In the United States, patent law offers protection for inventions originating within diverse fields of endeavor. In addition to utility and plant patents, design patents represent a third category of patent rights, which are available to inventors of "any new, original and ornamental design for an article of manufacture . . . ." (35 U.S.C. §171). Since they were first made available in 1842, more than 630,000 design patents have issued in the United States. The very first design patent was issued to George Bruce in 1842 to protect a new "Type" font (U.S. Patent No. D1). Later design patents issued to protect such iconic designs as the Statue of Liberty (D11,023, granted to Auguste Bartholdi) and the Coca-Cola bottle (D48,160, granted to H. Samuelson). Over the past several years, design patents have enjoyed a resurgence in popularity, with applications to the United States Patent and Trademark Office increasing markedly (Steven L. Oberholtzer, The Basic Principles Of Intellectual Property Law 6, 2d ed. 2009).
Not unsurprisingly, many courts have interpreted U.S. design patent law to require an element of artistry. Although no such requirement was explicitly present in the original design patent statute, the Patent Act of August 29, 1842 (ch. 263, 5 Stat. 543), judicial interpretations of the ornamentality requirement often appeared to necessitate that designs possess features that were aesthetically pleasing to the human eye. In Blisscraft of Hollywood v. United Plastics Co., 294 F.2d 694, 696 (2d Cir. 1961), the court mandated that "[a patented design must] be the product of aesthetic skill and artistic conception." As recently as 1989, in dicta from Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 148, the U.S. Supreme Court echoed the view that, to be patentable, designs must be visually attractive, explaining that, "[t]o qualify for protection, a design must present an aesthetically pleasing appearance that is not dictated by function alone, and must satisfy the other criteria of patentability." Thus, the legal requirement that a design patent be "ornamental" was long interpreted to necessitate artistry or an aesthetically pleasing effect.
Roughly coincident with the creation of the Court of Appeals for the Federal Circuit ("CAFC") in 1982, design patent law doctrine appeared to change direction, as aesthetic considerations were deemphasized in deciding the validity of designs claimed in patents. This shift was decisively heralded a decade later, in Seiko Epson v. Nu-Kote International, 190 F.3d 1360, 1368 (1999), when the CAFC stated "the 'ornamental' requirement of the design statute means that the design must not be governed solely by function. . . ." So well accepted has the non-artistic interpretation of the law become that law firms now generally counsel their clients that aesthetic considerations hold little relevance for design patents. To illustrate how well accepted this principle is, consider the following statement about design patent law on page 7 of The Basic Principles of Intellectual Property Law (Second Edition, 2009), a primer of intellectual property law freely distributed to potential clients by the venerable law firm, Brinks Hofer Gilson & Lione: "There is no requirement that the design be artistic or pleasing to the eye." The trend away from aesthetic interpretations of the ornamentality requirement has brought U.S. design patent law closer to that in other jurisdictions, such as the European Union and Canada, where aesthetic considerations appear to play little role in determining the validity of design patents or registrations.
Experiment and Results
An experimental approach was used to test the hypothesis that aesthetic considerations in design patent law have, indeed, diminished over the last thirty years. All design patents from 1982 (that is, the creation of the CAFC) to 2010 in which a court made a final determination of validity or infringement were identified, and each design patent therein scored for validity and infringement. Then, in a controlled experiment, human subjects were asked to score the attractiveness of all the patented designs at issue in these cases.
The experimental results indicate that, at the beginning of the time period considered, patents claiming the least attractive designs were most likely to be found invalid, those claiming designs of intermediate attractiveness fared better in terms of validity, but were found to have been infringed relatively less often, and patents claiming the most attractive designs were most likely to be found both valid and infringed. In other words, aesthetically pleasing designs claimed in patents tended to fare better in court than did less attractive designs. However, the results also indicate that, while the attractiveness of patented designs found valid, whether infringed or not, has changed little since 1982, the average attractiveness of patented designs found invalid has risen markedly over time. In fact, in contradistinction to the situation early in the time period surveyed, the attractiveness of a design claimed in a patent has now become a poor predictor of judicial outcome. Design beauty appears to have ceased to be a useful predictor of judicial outcome in design patent litigation.
A few of the experimental results of this study are illustrated below. Complete results for all litigated design patents, by type of court (that is, all federal courts, federal district courts, and the CAFC), and litigation outcome (that is, validity, invalidity, infringement, and non-infringement) can be found in the full version the article, available as a free download at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2156943.
FIGURE 1 is a scatterplot graph that depicts the mean attractiveness of all design patents according to the year in which a court ruled on their validity or infringement. FIGURE 1 also shows the results of a linear regression of these data. The regression analysis shows very little change (y = 0.0132x – 21.511, R² = 0.0146) in the attractiveness of patented designs from 1982 to 2010.
FIGURE 2 is a scatterplot graph that depicts the mean attractiveness of all design patents found invalid by a court by year of court ruling. FIGURE 2 also shows the results of a linear regression of these data. The regression analysis shows a more substantial rise (y = 0.0495x – 93.82, R² = 0.2183) in the attractiveness of patented designs found invalid from 1982 to 2010.
Discussion
a. Overall stability in attractiveness
For most of the categories of outcome and types of courts considered there was little change in the measured attractiveness of patented designs from 1982 to 2010. These results apply to patented designs found to be (1) valid but not infringed and (2) both valid and infringed, and pertain to results from both federal district courts and the CAFC. These data show little evidence that the attractiveness of patented designs held valid (whether infringed or not) changed from 1982 to 2010 across most categories of outcome and types of court.
b. Rise in attractiveness of PATENTED designs HELD INVALID
The most striking pattern in the data involves patented designs finally found invalid by a court. The data indicate a marked rise in measured attractiveness of these patented designs from 1982 to 2010. This pattern is remarkably consistent whether considered across all federal courts (y = 0.0495x – 93.82, R² = 0.2183), in federal district courts (y = 0.0442x – 83.227, R² = 0.213), or in the CAFC (y = 0.0968x – 188.48, R² = 0.2363). These results roughly match an observed shift in design patent doctrine away from an aesthetics requirement occurring since the advent of the CAFC. From 1982 to 2010 courts became increasingly likely to find attractive patented designs invalid. By contrast, the data suggest that, during the early years of the time period studied, less aesthetically attractive patented designs were more likely to be found invalid while more aesthetically attractive patented designs were more likely to found valid. This trend away from aesthetics as a factor in invalidity is mirrored in both the doctrine and the data.
c. Policy implications
There may be policy advantages to dropping the requirement for aesthetics, chief among which may be improved consistency in making decisions about design patent validity. Judgments about attractiveness are inherently subjective, depending as they do on the personal aesthetic sensibilities of the judges who determine design patent validity. Relying, instead, on a more objective test of ornamentality, such as lack of functionality, is likely to lead to improved consistency in validity determinations, not only in court and at the USPTO, but also among design patent owners considering infringement litigation and defendants attempting to avoid such actions.
A second salutary implication for policy involves the harmonization of U.S. design patent law with standards of intellectual property law prevailing internationally. The weakening of the aesthetics requirement in its design patent law has moved the United States towards the design protection laws that predominate in most other jurisdictions, such as the European Union and Canada. Access to a similar test of design patent (or design registration) validity across jurisdictions may afford design patent owners advantages of efficiency, since determinations of validity in one jurisdiction would be more likely to hold true in others.
Conclusions
Coinciding approximately with the inception of the CAFC, design patent doctrine appears to have begun to shift away from an aesthetic interpretation of the statutory ornamentality requirement. In particular, the measured attractiveness of patented designs finally found invalid by courts has increased substantially over the last three decades. Both legal doctrine and experimental results agree that beauty appears to have faded as a requirement for design patent validity.
Andrew Torrance is a Professor at the University of Kansas School of Law, a Visiting Scholar at MIT Sloan School of Management, and a Research Fellow at the Gruter Institute.
Two recent 101 Cases at the PTAB
By Dennis Crouch
Ex parte Thomsen (PTAB 2012) (App S.N. 11/314,709)
SAP’s patent claims are directed to a “method to determine statistics for a field of a database table.” In the appeal, the claim in question has three particular steps:
- determining that the field of the table is associated with a field of a check table;
- determining a relationship between a number of distinct values of the field in the table and a number of distinct values of the field in the check table; and
- determining the number of distinct values of the field in the table based on the relationship and on the number of distinct values of the field in the check table.
In its recent decision, the PTAB affirmed the examiner rejection of this claim on statutory subject matter grounds. The panel wrote:
Considering the language of independent claim 1 as a whole, we agree with the Examiner that the process of claim 1 does not meet Bilski‘s “machine or transformation test” and could be performed within the human mind or by a human writing on a piece of paper. The claim recites a number of steps that are not tied to a particular machine — the claim does not recite any machine performing the functions of the steps, e.g., a processor. Nor do these steps transform data into a different state — the claim simply recites: (1) “determining that the field of the table is associated with a field of a check table;” (2) “determining a relationship between a number of distinct values of the field in the table and a number of distinct values of the field in the check table;” and (3) “determining the number of distinct values of the field in the table based on the relationship and on the number of distinct values of the field in the check table. See In re Bilski, 545 F.3d 943, 962-63 (Fed. Cir. 2008) (en banc), aff’d sub nom. Bilski v. Kappos, 130 S.Ct. 3218 (2010).
Here, to the extent any transformation takes place, the transformation is of one type of data into another type of data — (a) determining an association, (b) determining a relationship, and (c) determining a number. This is not a “transformation or reduction of an article into a different state or thing constituting patent-eligible subject matter.” In re Bilski, at 962; see id. at 963-64 (discussing patent-eligible data transformations). More importantly, the claim is entirely devoid of any mention of a “machine.” While Appellant urges that “[t]he claimed database tables, fields and values necessarily involve the use of a computer or machine” in actuality the “determining” steps could be accomplished within one’s mind or utilizing a pen and paper.
Our reviewing court guides that “a method that can be performed by human thought alone is merely an abstract idea and is not patent-eligible under § 101.” CyberSource, 654 F.3d at 1373. Because we conclude that the scope of claim 1’s method steps covers functions that can be performed in the human mind, or by a human using a pen and paper, we conclude that unpatentable abstract mental processes fall within the subject matter of claim 1.
In the past year, the BPAI has similarly cited CyberSource in several dozen cases.
=====
Ex parte Battles (PTAB 2012) (App. S.N. 10/859,029)
HP’s patent application is directed to a “computer-readable medium that stores a program that, when executed by a digital camera causes the camera to perform” various functions associated with a histogram of light information from a photo-sensor on the camera.
The PTAB has affirmed the examiner’s Section 101 rejection – finding that the claim unduly includes patentable subject matter because the computer-readable medium might be a signal.
Appellant contends that the “computer readable medium,” as recited in claim 21, is drawn to statutory subject matter because the computer readable medium is further recited to store programs, and that transitory, propagating signals cannot store programs. We agree with the Examiner that the “computer readable medium,” as recited in claim 21 and as construed in light of the disclosure is drawn to non-statutory subject matter.
In the originally filed disclosure, Appellant discloses, “a ‘computer readable medium’ can be any means that can store, communicate, propagate, or transport the data … [and it] can be, for example, but not limited to … infrared… or propagation medium now known or later developed.” Per the originally filed disclosure, the claimed “computer readable medium” can be a transitory, propagating signal and transitory, propagating signals are ineligible. In re Nuijten, 500 F.3d 1346, 1357 (Fed. Cir. 2007).
Nuijten continues to be regularly cited by the PTAB – with almost 500 citations in the past five years.
Making Software Patents Transparent and Understandable: Begin by Determining Whether Software is Patentable
By Dennis Crouch
One major problem with software patents is their forced lack of transparency. The USPTO has granted hundreds of thousands of patents that should rightfully be termed “software patents,” but almost none of those patents include a claim directed to “software.” Rather, the innovative software is being hidden by innuendo and obfuscation because of the perceived ban on patenting software per se.
I contend that if we are going to allow software patents, we should do so openly and honestly. In that world, patent claims would be able to match the words of the computer scientist inventors and might simply be written as “Software comprising …” or “A computer program comprising …” We are not in that world.
In the 1960’s the USPTO began pushing against the patenting of bare computer software. Its 1968 guidelines formalized the USPTO’s position against computer programs as unpatentable mental steps under 35 U.S.C. § 101. That approach was largely vindicated by the Supreme Court cases of Gottschalk v. Benson (1972) and Parker v. Flook (1978). However, the combination of Diamond v. Diehr (1981); new leadership at the USPTO; and the formation of the Federal Circuit all rejuvenated the patenting of computer software. Many still hold to the idea that software per se cannot be patented because the software is not a machine or apparatus and because the software only becomes a non-abstract patentable process once implemented on a particular device. In Bilski v. Kappos (2010), the court rejected categorical exclusions of business method patents (and thus presumably software patents). At the same time, however Bilski and the subsequent case of Mayo v. Prometheus (2012) serve to revive the pre-Federal-Circuit case law and create further direct tension with software patents.
The result from this long history is that we still have software patents but they are hidden under the surface. They are harder to find, harder to examine, harder to understand, and thus much more problematic than they need to be. After fifty years of controversy; meandering administrative practice; and inconsistent Supreme Court decision making, it is time for the courts to take a stand and deliver the law in a way that is clear and precise. Finally answer the question: Is software patentable?
Federal Circuit To Announce Whether Software is Patentable?: En Banc Rehearing on Section 101 Issues
By Dennis Crouch
CLS Bank Int’l v. Alice Corp, App. No. 2011-1301 (Fed. Cir. 2012) (en banc order)
The Federal Circuit has refocused its attention on the question of patentable subject matter and has ordered an en banc rehearing of CLS Bank Int’l. v. Alice Corp. (Fed. Cir. 2012). In its initial panel opinion, the Federal Circuit held that, when considered as a whole, the claimed data processing invention was patent eligible. Judge Linn wrote the majority opinion suggesting that a court should only reach Section 101 issues when subject matter ineligibility is “manifestly evident”. Judge Prost wrote in dissent and argued that the majority improperly ignored the Supreme Court’s most recent statements on the topic found in Prometheus. The patentable subject matter question in CLS Bank is virtually indistinguishable from the parallel issue in Bancorp v. Sun Life. In that case, however, the Federal Circuit ruled the invention ineligible.
In its en banc order, the court reformulated the questions presented as follows:
a. What test should the court adopt to determine whether a computer-implemented invention is a patent ineligible “abstract idea”; and when, if ever, does the presence of a computer in a claim lend patent eligibility to an otherwise patent-ineligible idea?
b. In assessing patent eligibility under 35 U.S.C. § 101 of a computer-implemented invention, should it matter whether the invention is claimed as a method, system, or storage medium; and should such claims at times be considered equivalent for § 101 purposes?
The Federal Circuit has asked for the USPTO to file a brief as amicus curiae. Further amicus briefs may be filed without consent of the parties or leave of the court but must otherwise follow Federal Circuit’s Rule 29.
More Reading:
- CLS Bank v. Alice Corp: Patenting Software Ideas
- CLS Bank v. Alice: The “Nothing More Than” Limitation on Abstract Ideas
- Ongoing Debate: Is Software Patentable?
- Ongoing Battles over Patentable Subject Matter
- Director Kappos: Some Thoughts on Patentability
- If the software method is not patentable, then neither is the “computer readable medium”
- Ultramercial v. Hulu: Computer Programs and Patentable Subject Matter
The Removal of Section 102(f)’s Inventorship Requirement; the Narrowness of Derivation Proceedings; and the Rise of 101’s Invention Requirement
By Dennis Crouch (October 5, 2012)
In a prior Patently-O essay, I wrote that the removal of the inventorship requirement of Section 102(f) opens the door to patenting obvious variants of inventions created by someone else. In that essay, I mentioned the newly designed derivation proceedings, but opined that they would not be much use in this situation. I wrote that "it appears to me that those actions (even if timely filed by the originator) would be unsuccessful because derivation proceedings are limited to cases where the derived claims are "substantially the same" as the originator's innovation. The substantially the same limitation is much narrower in scope as compared with the potential wide variety of obvious variants." 102(f) Essay.
I received a response to that essay from Professor Sarnoff who reports that he and Chico Gholz have a soon-to-be-published article in IP Today addressing the PTO's new rules for triggering derivation proceedings. The punch line of their article is that the legal scope of derivation proceeding is even narrower than I suggested—thus allowing for a third party to patent quite minor variations of ideas obtained from someone else. (I encourage you to read the article once it is published.)
The America Invents Act of 2011 (AIA) entirely rewrote the section 135 of the patent act. That provision previously detailed the interference process and now focuses exclusively on derivation proceedings as they will apply to patent applications filed on or after March 16, 2013. New section 135(a) limits derivation proceedings to instances where an alleged wrongdoer files an earlier patent application "claiming" the original inventor's (but late filer's) "claimed invention." In their article, Gholz and Sarnoff correctly argue that there is not much room for variation here. Under the statute, the derived invention (as claimed) must be for the same subject matter as the original invention (as claimed), even if their language differs. This further confirms what I see as the problematic naming of "derivation proceedings." In my mind, the meaning of the word derivation suggests some amount of modification. While a derivation depends upon having an original source, the final results are ordinarily a modification of that source. With Gholz-Sarnoff, we learn that this ordinary meaning does not fit to the Derivation Proceedings as defined by the AIA. A better term for the AIA defined action might be "False Inventorship Claim Proceeding."
Gholz and Sarnoff recognize that the PTO took a different view when it codified the rules at 37 C.F.R. §42.405(a)(2). That provision broadly authorizes derivation proceedings when the petitioner's claims are "substantially the same" as the alleged deriver's claims, with "substantially the same" defined in 37 CFR 42.401 as "patentably indistinct." Gholz and Sarnoff argue that the PTO is wrong in this interpretation and that the Federal Circuit will eventually overrule the PTO's misapplication of the law.
Further, as noted by Sarnoff in his Patently-O article and as reiterated in the new Gholz-Sarnoff article in response to the views of Armitage, the original inventor may not have conceived of the obvious variant and thus may not be able to provide the required oath in regard to the obvious-variant claim so as to trigger the derivation proceeding.
In our prior e-mail communications (repeated here with permission), Sarnoff has also explored other ways to block patenting of the obvious variants. He writes:
- A person who conceives of an obvious variant is normally treated as an inventor of an invention (just of an obvious one), so lack of inventorship under Section 101 may not be a successful approach to invalidating the claim made by the deriver, although the deriver will likely be entitled at least to joint-inventor status; and
- Current inventorship law may not necessarily treat the originator of the underlying invention as a joint-inventor of the obvious variant of which the originator did not conceive, even if the originator added a significant contribution to conception by the deriver, and thus it may not always be possible to correct inventorship to permit the originator to obtain joint inventor status and joint ownership of the obvious variant.
- However, the courts have sometimes extended unpatentability to obvious variants even when the statute does not clearly provide for it, as they did in In re Foster, 343 F.2d 980 (C.C.P.A. 1965) (extending Section 102(b) to claims that were obvious in light of statutory bar art). [Note, this explains Professor Sarnoff's prior equivocation that I discussed here. DC.]
The bottom line here that I began with my recent essay and continue with this additional discussion revealed by Gholz and Sarnoff is that the elimination of section 102(f) and the narrow scope of derivation proceedings have created a potential problem by offering a roadmap for bad behavior. The law now apparently sanctions the patenting of minor variations of innovations created by someone else. This raises several levels of concern. Most directly, we are concerned about (1) how the obvious variant patent negatively impacts the idea originator and (2) how the obvious patent burdens the public who must either license or avoid infringement.
The current law basically places the burden on the idea originator to protect his or her rights by (1) keeping the idea secret and then relying on contract and trade secret law to protect that secrecy; (2) quickly filing for patent rights; or (3) quickly going public with the idea in a way that creates prior art. Any of these overlapping choices can be sufficient to block or invalidate an obvious variant patent. I am also not overly concerned that this approach unduly shifts a burden to the idea originator. My problem with that approach – as suggested by Anon – is that the idea originator might not be proactive enough to take the actions necessary to protect the public's interest in not being burdened by patents covering obvious innovations.
New Pressure on Section 101: This whole scenario then puts tremendous pressure on courts (including the Supreme Court) to expand the powerful (but ungainly) tool of 35 U.S.C. § 101 and use that fundamental statute to block these derived variant patents that are not otherwise prohibited by statute. The Supreme Court is unlikely to stand for the patenting of obvious variants of ideas derived from another. And, the most straightforward way for the court to act is with the return of something akin to the invention requirement that was thought to have been eliminated by the 1952 Patent Act. That action would likely add steel to the link between newness and subject matter eligibility in a way that many of us see as problematic. (Perhaps under the framework of "inventive contribution.") The better approach is a statutory change that shifts rights with fewer ripple effects.
Sarnoff's perspective is that Section 101 should have an active and engaged role in the patent eligibility doctrine. In his recent article on the post-1952 invention requirement, Sarnoff writes (with apologies to Dr. Strangelove): "[T]o those who believe in using private property to motivate creative advance, using eligibility determinations to restrict access to the patent system is the bomb that threatens our future viability. For the reasons discussed [in the article], I believe we need to learn to stop worrying and to love that bomb." Joshua Sarnoff, Patent Eligible Inventions after Bilski: History and Theory, 63 Hasting Law Journal 53 (2011).
Notes:
- In addition to raising this interesting topic, I should (and do) also thank Gholz and Sarnoff for their editorial suggestions on this essay.
With 102(f) Eliminated, Is Inventorship Now Codified in 35 U.S.C. 101? Maybe, but not Restrictions on Patenting Obvious Variants of Derived Information.
By Dennis Crouch
Before the America Invents Act (AIA), the Patent Act included a specific prohibition on patenting something the purported inventor did not actually invent. According to the statute, “[a] person shall be entitled to a patent unless … 102(f) he did not himself invent the subject matter sought to be patented.” 35 U.S.C. § 102(f) (pre-AIA). When that provision was eliminated, Congress was assured by various parties that the inventorship requirement was sufficiently protected by the U.S. Constitutional reference to “inventors” and by the “[w]hoever invents or discovers” preamble of 35 U.S.C. § 101. This position is exemplified by Joseph Matal in his recent article on the creation of the AIA.
Some may think that, because § 102(f) has been repealed, there is no longer any legal requirement that a patent for an invention be obtained by the inventor. Not so. Both the Constitution and § 101 still specify that a patent may only be obtained by the person who engages in the act of inventing. Indeed, even commentary on the 1952 Patent Act noted, with respect to § 102(f), that “[t]his paragraph is perhaps unnecessary since under § 101 it is ‘Whoever invents …’ who may obtain a patent and later sections provide that the inventor must apply for the patent and execute an oath of inventorship.”
Joseph D. Matal, A Guide to the Legislative History of the America Invents Act: Part I of II, 21 FED. CIR. B.J. 435 (2012).
To be clear, even under this duplicative construct we should recognize that Section 102(f) does have the important effect of eliminating 102(f)/103 prior art defined by the 1997 OddzOn Prods decision. The 102(f)/103 scenario is probably best termed a “derived knowledge” situation that occurs when an applicant learns of an invention created by someone else and then comes-up with an obvious variant of that invention. Under pre-AIA law, the resulting patent would properly be invalidated on 102(f)/103 obviousness grounds even if the prior-invention had never been made public or the subject of a sale. By removing 102(f), the AIA also removes the prospect of 102(f)/103 prior art. In his AIA article, Robert Armitage writes “subsection [102(f)] had become, as far as the courts were concerned, a prior art provision for assessing obviousness.” Understanding the America Invents Act its Implications for Patenting, 40 AIPLA Q.J. 1 (2012). Armitage explains why the change is particularly fitting as part of the move-towards transparency embodied by the AIA first-to-file rules.
Moreover, putting a “prior art” provision of pre-AIA § 102(f) ilk into the new law would have undone the transparency/objectivity reforms that its elimination by the AIA worked to perfect. Congress simply rejected the notion that every individual named as an inventor on a patent application should be queried to determine what secret or private information the inventor was already aware of, from the work of someone else, at the time the invention was made by that individual. Congress rejected the notion that the inventor’s private knowledge learned from others should then be provided to patent examiners to determine whether the inventor’s claimed invention could be nonetheless regarded as “obvious” (perhaps in combination with other prior art).
Armitage at 98. Armitage and Matal were both instrumental in the development and passage of the AIA. Their well written articles explain the choices made in the AIA legislation and attempt to explain their visions for how ambiguities should be interpreted. Professor Sarnoff agrees with Armitage here that the AIA removes knowledge that a putative inventor obtained from another is no longer prior art. In his Patently-O Patent Law Journal Article, Sarnoff wrote:
By eliminating existing § 102(f), the new act removes the substantive prior art basis that used to prevent patents on derived inventions that are the same as or obvious in light of the derived knowledge. Because § 102(f) was treated as prior art for obviousness, it provided substantive grounds for denying or invalidating patents on obvious variants of a derived invention (e.g., applications or improvements of, or additions to or modifications of, a derived invention) as well as to the derived invention itself.
Joshua D. Sarnoff, Derivation and Prior Art Problems with the New Patent Act, 2011 Patently-O Patent Law Journal 12.
Sarnoff absolutely agrees with Armitage that the law will no longer prevent an applicant who derived an invention from obtaining a patent on an obvious variant of that invention. I.e., the USPTO has no tools to prevent a third party from patenting obvious variants of information obtained from another. Now, the AIA does provide for a third party to initiate a derivation proceeding or a civil action for derivation. However, it appears to me that those actions (even if timely filed by the originator) would be unsuccessful because derivation proceedings are limited to cases where the derived claims are “substantially the same” as the originator’s innovation. The substantially the same limitation is much narrower in scope as compared with the potential wide variety of obvious variants. Sarnoff largely agrees with my analysis here, but in a more equivocal manner.
The new derivation procedure and civil action also may be inadequate to prevent the deriving applicant from obtaining the patent on an obvious variant even when the originator does file a derivation petition, when the original inventor learns about the obvious variant from the deriver (and had not earlier conceived of the obvious variant). And in litigation defending against the deriver’s patent on an obvious variant, an unrelated third party may be unable to challenge the deriver’s patent for obviousness (although it may be able to challenge it for improper inventorship, but only if the elimination of § 102(f) has not undermined the substantive basis for such invalidation.
Sarnoff (emphasis added).
Unlike Armitage & Matal, Mark Stadnyk is a total Washington DC outsider. His company MadStad designs and sells after-market motorcycle parts (mainly windshields and accessories). MadStad and Stadnyk filed suit in 2012 challenging the AIA as an unconstitutional modification of the US patent laws and asking the federal court to render the law null and void. One of the argument MadStad presents is that the statutory elimination of 102(f) is problematic because it runs contrary to the IP enabling clause of the US Constitution. The US Constitution empowers Congress to develop a patent system that grants rights to “inventors.” And, according to MadStad, the new AIA creates a system where (1) non-inventors can apply for patent and (2) rights wrongly granted to non-inventors cannot be challenged in court by negatively affected third-parties.
In its response to MadStad, the USPTO recently presented its idea regarding inventorship. The USPTO rejects MadStad’s argument and instead follows Matal’s “duplicative” theory. (Matal is now an assistant solicitor at the USPTO.)
The USPTO writes:
The AIA does not sanction the award of patents to anyone but inventors. Retained verbatim—unaltered by the AIA—section 101 continues to restrict the grant of patents to inventors. Section 101 states: “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” 35 U.S.C. § 101 (emphasis added); see AIA, passim (no changes to § 101). By retaining section 101, the AIA still requires as a condition of patentability that the named inventor actually invent the claimed subject matter.
Nevertheless, Plaintiffs remarkably allege that the AIA eliminates the inventorship requirement and thus will allow an individual who is not an inventor to obtain a patent. The basis of their claim is that the AIA deletes section 102(f), which provides that a person will not be entitled to a patent if he “did not himself invent the subject matter sought to be patented.” 35 U.S.C. § 102(f). Plaintiffs accordingly allege that, without section 102(f), “being an inventor is no longer a condition of patentability” nor “a requirement of patent validity under Section 282 of the Patent Act,” which establishes the defenses in any action involving the validity or infringement of a patent. Plaintiffs’ allegations are legally incorrect. Both the Supreme Court and the Federal Circuit have concluded that §101—which the AIA retains—is a condition for patentability and can be used as a defense in an action involving patent infringement and validity.
Thus, according to the USPTO, the AIA’s deletion of the redundant requirement in 35 U.S.C. § 102(f) is irrelevant, as section 101 will continue to require that a patent only be awarded to an inventor.
Moving forward, the question is what work do the US Constitution and Section 101 actually do on the inventorship front? The link between patents and their inventors is strong and deeply rooted. As such, it is unlikely (in my view) that MadStat is correct in its argument that Section 102(f) was the only provision guaranteeing continuation of that link. An important question, however, is what to do about the inventorship requirement of the IP empowering clause. Are the limits of that clause implicitly embedded into the conditions and requirements of patentability or, instead, do we use those limits to invalidate legislation that fails to conform to the constitutional restrictions.
Prior to the 1952 patent act, lack-of-inventorship was a condition for patentability under the precursor to our Section 101 and was explicitly listed as a defense that a defendant charged with infringement could plead under the precursor to our Section 282. Thus, “the defendant may plead … That [the patentee] was not the original and first inventor or discovered of any material and substantial part of the thing patented.” See RS § 4920 (Patent Act of 1870).
There are real ongoing questions that stem from the elimination of section 102(f): Is Armitage correct in his assessment of the law that a third party can now patent an obvious variation of an idea secretly learned from the true inventor? Is the USPTO correct that a patent can be challenged for improper inventorship as a violation of 35 U.S.C. 101?
Notes:
-
Scott Pierce substantially adds to the discussion with his article titled The Effect of the Leahy-Smith America Invents Act on Collaborative Research, 94 J.P.T.O.S. 133 (2012).
Pre-Issuance Submissions
Ex Parte Patent Prosecution: Most of the American legal system is designed to operate in an adversarial environment. Each side presents their arguments and pokes holes in opposing arguments. A disinterested judge then considers these arguments and makes a ruling. The system works well because a financial award is typically associated with winning the argument – this aligning of incentives encourages each party to identify and present the best possible arguments to the judge. Patent prosecution does not follow this model – especially at the initial examination stage. Patent prosecution follows an ex parte model where one party (the patent applicant) has a strong interest in receiving a patent but where there is no interested party on the other side. Instead, the patent examiner is tasked with both seeking to identify arguments against patentability and then also determining whether those arguments are sufficient. Interestingly, patentees often argue that this system is problematic because of the potential bias associated with an examiner judging the quality of her own arguments. Third parties who may suffer under the patent rights also argue that the system is problematic – though for a different reason. They argue that the non-adversarial nature of the system means results in insufficient push-back on patentability questions and thus that many patents issue that should not have issued.
Third Party Intervention in the Prosecution Process in the Form of Preissuance Submissions: Up until now, there has been essentially no mechanism for a third party to participate in the original examination of a patent – that is changing (in a minor way) with the availability of third-party pre-grant submissions for pending patent applications. As of September 16, 2012, anyone has standing to submit documents to the USPTO that relate to pending patent applications.
Allowing for the Submission of Any Printed Publication of Potential Relevance: Most commonly, I suspect that applicants will submit prior art that they have identified as relevant to the pending application. However, the new rules allow the submission of any printed publication. In particular, the statute provides that “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.” 35 U.S.C. § 122(e)(1). Thus, the printed publication is not limited prior art documents, but could relevant to other questions. Thus, for instance, a dictionary definition could be submitted for the question of indefiniteness; a court decision could be submitted for the question of patentable subject matter; a portion of the MPEP could be submitted on the question of improper revival; etc. The USPTO has suggested in its implementation regulations that documents prepared and published solely for the purpose of a pre-grant submission will not be accepted. I would argue, however, that restriction would violate the law passed by Congress and codified in 35 U.S.C. § 122(e) that only requires the document be a “printed publication of potential relevance to the examination of the application.”
Guiding the Examiner with a Brief on the Merits: An important element of the new provision is that the preissuance submission must be accompanied by a brief explanation of why the various documents have been submitted. This is essentially a brief on the merits or skeleton argument akin to what would be filed by opposing counsel in litigation. As written, the law requires this submission in the form of “a concise description of the asserted relevance of each submitted document.” Thus, the brief might include a table that shows how the prior art relates directly to the invention claimed; explain how a particular term is unduly ambiguous; how already recognized prior art fits the claims; or how a claim as drafted improperly claims an abstract idea or product of nature. Now, to be clear, this is not litigation and is not an inter partes action. Once the documents and brief is filed, the third party no longer has standing to make any statements or arguments on the record. And, attempts to do so will lead to disciplinary action by the OED. That said, it appears that the USPTO is ready and willing to consider briefs that are accurate and get to the point – especially if done in a way that saves examiner time.
Timeline for Submissions: There are some strict guidelines on the timing of preissuance submissions as goverened by §122(e)(1). That statute indicates that the submission must be:
made in writing before the earlier of—(A) the date a notice of allowance under section 151 is [mailed]; or (B) the later of— (i) 6 months after the date on which the application for patent is first published … or (ii) the date of the first rejection under section 132 …
35 U.S.C. § 122(e)(1). Thus, a submission may only be filed after an application is publication and cannot be filed in non-published cases. Unless a patent is issued very quickly, third parties have at least six months from publication to file a preissuance submission. In areas suffering under a long backlog delay, the submission could be filed much later – so long as it is filed before the first action on the merits. Under the USPTO’s implementation regulations, a restriction requirement on its own will not trigger the deadline.
The best practices approach is to identify problematic applications as soon as possible following publication and create conservative docket for filing preissuance submission. Because of the statutory deadline, the PTO has indicated that it is unwilling to grant any extensions of time for delays in filing.
Are you afraid?: Attorneys at Williams Mullen have urged caution to their clients – indicating that:
[I]ssues remain as to whether it is advisable to prepare such submissions due to the deference that can be given to USPTO examination and the potential prejudice to raising the same prior art in a later proceeding. Third party submissions at this stage will require caution and careful consideration before filing. Moreover, it remains unclear as to what effect these submissions will have on the examination of existing applications.
Williams Mullen is correct to urge caution, although I believe it is overstated. My view is that well written briefs submitted with the documentation will likely impact the prosecution by limiting the scope of the claim that eventually issues. This is a free submission that can be done anonymously (although your name would come out in litigation discovery) or through an organization. The most likely potential reward is that the claims will be narrowed before being attached with a presumption of validity that can only be overcome with clear and convincing evidence.
The short statute governing preissuance submissions reads as follows:
§ 122(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.
In house attorneys will likely want to try-out a few to test the effect before an important case comes again. Richoh’s App. No. 13/042,288 (Pub. No. 2012-0233658) offers a good place to start. The published application claims:
- A method for generating a log of stroke data, comprising:
capturing stroke data from a user that inputs the stroke data into a portable computing device;
identifying a location of the user;
identifying acceleration of the user;
generating a log of stroke data that includes a time of input; and
generating a log of location and accelerometer history.
CLS Bank v. Alice Corp: Patenting Software Ideas
By Dennis Crouch
"Settlement risk" is real in almost every transaction. When a lawyer does legal work, how does she know that she'll get paid. Conversely, if a client pays up-front, how does he know that the work will actually be performed. There is always a possibility of filing a lawsuit to demand fulfillment. However, most businesses would prefer a system that better guarantees a more immediate positive result. A trusted (and bonded) escrow agent can help relieve the problem, but even an escrow agent needs assurances. Further, in the age of electronic funding of transactions, we should be able to take advantage of features of a computer network that might not have been available in an offline world.
The recent Federal Circuit decision in CLS Bank v. Alice Corp. focuses on the subject matter eligibility of Alice's claim to a computer system for assisting with closing financial transactions in a way that avoids settlement risk. The system includes two elements: (1) data storage with various "shadow" variables stored therein; and (2) a computer that is programmed to conduct the transaction. Basically, the transaction is initially conducted in the shadow (i.e., mock) system and then, if the shadow system shows that the parties have sufficient funds to conduct the transaction, post the obligation to the real exchange institution.
The claim reads as follows:
1. A data processing system to enable the exchange of an obligation between parties, the system comprising:
a data storage unit having stored therein information about a shadow credit record and shadow debit record for a party, independent from a credit record and debit record maintained by an exchange institution; and
a computer, coupled to said data storage unit, that is configured to (a) receive a transaction; (b) electronically adjust said shadow credit record and/or said shadow debit record in order to effect an exchange obligation arising from said transaction, allowing only those transactions that do not result in a value of said shadow debit record being less than a value of said shadow credit record; and (c) generate an instruction to said exchange institution at the end of a period of time to adjust said credit record and/or said debit record in accordance with the adjustment of said shadow credit record and/or said shadow debit record, wherein said instruction being an irrevocable, time invariant obligation placed on said exchange institution.
The district court initially ruled that the patent claim lacked subject matter eligibility. I wrote about that decision in a 2011 post entitled Bilski Applied to Invalidate Computer System Claims. In 2012, a divided Court of Appeals for the Federal Circuit revered – holding that that, when considered as a whole, the claim is patent eligible. Judge Linn wrote the majority opinion that was joined by Judge O'Malley. In many ways, Judge Linn's opinion follows the advice that Professor Rob Merges and I gave in our paper titled Operating Efficiently Post-Bilski by Ordering Patent Doctrine Decision-Making. Judge Linn's approach is to only reach Section 101 issues when subject matter ineligibility is "manifestly evident". Judge Prost wrote in dissent and argued that the majority improperly ignored the Supreme Court's most recent statements on the topic found in Prometheus. Professor Jason Rantanen wrote a nice post on the Federal Circuit decision titled CLS Bank v. Alice: The "Nothing More Than" Limitation on Abstract Ideas.
When I consider this claim, a few thoughts arise:
-
This is a system claim rather than a method claim. However, the structure of the claim is such that the system is designed around the method that it is intended to perform. This makes me think that the teaching of Bilski and Mayo v. Prometheus cannot be ignored here even though those cases were focused on the eligibility of method claims.
-
The claim requires computer hardware as an integral portion of the invention. However, the particularly claimed computer hardware is entirely conventional and being used in an unsurprisingly conventional manner. Further, if we relax the claim requirements of a computer and "electronic" communications then this same transaction could be fully conducted offline with paper as the data storage unit and contracts creating the time invariant obligation.
-
Use of the system does not require any physical transformation recognized by the courts (unless you interpret the claim to be limited to only include data storage units that work by physical transformation). The claim does require changes in bank account values and legal obligations, but those have not traditionally been seen as qualifying transformations in the patent eligibility context.
-
Finally, and most importantly for me, the invention is designed to solve a particular problem in industry and claims a system that operates by performing a series of identified steps to address that particular problem.
Many of you know that, in my view, the Supreme Court precedent on subject matter eligibility has not been internally reconciled. That ongoing precedential conflict coupled with the fuzziness of boundary lines continue to fuel debate on the topic both within and outside of the courthouse. On balance, both sides of this debate have strong arguments based upon patent law history and precedent and I can understand why someone versed in Supreme Court patent eligibility precedent could end up with a conclusion on either side.
Despite the Federal Circuit opinion, this case has not gone away. In recent days, the accused infringer (CLS Bank) has filed a request for rehearing and that request is supported by three amicus briefs. CLS Bank's main point in its brief is that the CLS Bank computer system claim is unpatentable when fully analyzed against Bilski and Prometheus. The brief asks two questions:
-
Whether the new test for patent-eligibility articulated by the panel majority is inconsistent with Bilski's and Mayo's approach to 35 U.S.C. § 101; and
-
Whether the method, system, and media claims at issue are patent ineligible because, albeit computer-implemented, they recite no more than an abstract fundamental mechanism of financial intermediation with no inventive concept.
The CLS Bank brief was filed by Mark Perry and his team at Gibson Dunn in DC. This is a change from the Kaye Scholer firm that represented CLS Bank at the district court and in the original appeal.
An amicus brief filed on behalf of a diverse group of five companies including British Airways and LinkedIN (and who all tend to be defendants in patent cases) spelled out how the "course filter" approach used by Judge Linn went against both recent and old Supreme Court precedent. That brief asks two additional questions:
- Should courts enforce the patent eligibility requirement evenhandedly without imposing a "manifestly evident" or "coarse filter" hurdle on the patent challenger?
- Is patent eligibility a threshold requirement well suited for decision on the pleadings and on early summary judgment?
John Vandenberg of Klarquist Sparkman filed the BA/LinkedIN brief.
Daryl Joseffer of King & Spalding filed a second amicus brief on behalf of Google, HP, Red Hat and Twitter. The brief explains how Mayo identifies four "guideposts" for determining whether an invention lacks subject matter eligibility under the prohibitions of abstract ideas and laws of nature. The four clues all begin with the notion that a patentable invention must be "significantly more than an abstract idea." Thus, if you begin with an abstract idea, "(1) adding steps that are conventional or obvious is insufficient to confer patentable subject matter (Mayo at 1294, 1298, 1299); (2) adding steps that are so general and non-specific that they do not significantly limit the claim's scope is insufficient (id. at 1300, 1302); (3) limiting an idea to a particular technological environment is insufficient (id. at 1294, 1297); and (4) claims that fail the machine-or-transformation test are likewise dubious (id. at 1296, 1303). Explaining the first point, the brief argues that a claim must contain an "inventive concept" apart from the identified law of nature or abstract idea.
The EFF brief filed by Julie Samuel reminds the court of the extensive literature concluding that software patents are bad – especially when in the hands of "patent trolls."
The patentee's responsive brief is due later this month.
*****
*****
At least two additional software patent cases are pending at the Federal Circuit. In Bancorp v. Sun Life, a different panel of Federal Circuit judges considered software patents similar to those in CLS Bank but found the claims ineligible under Section 101. In WildTangent v. Ultramercial, the Federal Circuit initially ruled that patented method of distributing copyrighted media was eligible. However, that case was vacated and remanded by the Supreme Court following its decision in Mayo and with instructions to reconsider the holding based upon the new Supreme Court precedent. WildTangent has also requested an en banc hearing. WildTangent's petition asks: "When does a patent's reference to the use of a general purpose computer or an Internet website transform an otherwise unpatentable abstract concept into a process that satisfies the subject-matter eligibility requirement of 35 U.S. C. § 101?" Arguing from the other side (asking for its patent to be revalidated), Bancorp identifies the conflict with CLS Bank and argues that the "manifestly abstract" standard should be applied to its case.
*****
Judge Linn, author of the CLS Bank decision has announced his move to Senior Status in November 2012. Senior judges ordinarily do not decide whether to hear cases en banc and do not sit en banc. The one significant exception to that rule is that a senior judge will be a part of the en banc panel if that judge was a part of the original panel that heard the case. For this particular contentious issue, Judge Linn's status may well impact the results.
*****
Counting votes is always difficult and may not be worthwhile, but I pulled-up seven recent software patent eligibility decisions and classified the results based upon how the various panel member voted on the eligibility question. If I leave out judges Schall and Plager (Senior judges), the result is that three of the judges sit on the "claims eligible" side (Chief Judge Rader and Judges O'Malley and Newman); five of the judges are on the "claims ineligible" side (Judges Prost, Bryson, Dyk, Moore, and Wallach); two have decisions on both sides (Judges Linn and Lourie); and one is not in my sample (Judge Reyna).
|
Case |
Claims Eligible |
Claims Ineligible |
|
WildTangent |
Rader, Lourie, O'Malley |
|
|
CLS Bank |
Linn, O'Malley |
Prost |
|
Bancorp |
Lourie, Prost, Wallach |
|
|
RCT v. Microsoft |
Rader, Newman, Plager |
|
|
Cybersource |
Bryson, Dyk, Prost |
|
|
Dealtracker* |
Plager |
Linn, Dyk |
|
Fort Properties |
Prost, Schall, Moore |
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 se, Gottschalk 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 101. Chakrabarty, 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. 102, 103 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. 102, 103 , 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.
<
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), 102, 103, 112, 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. <
The Proposed Unified Patent Court for Europe: conditio sine qua non for a Unitary Patent or unavailing venture into the unknown?
The following is an invited guest post by William Bull. Mr. Bull is a researcher at the Maastricht European Private Law Institute (M-EPLI) at Maastricht University in the Netherlands
European countries have now almost reached agreement on the creation of a European Union patent with unitary effect and a 'Unified Patent Court' (UPC) to be established (primarily) in Paris in 2014 or so. The plan is to introduce a patent right valid throughout the territory of 25 of the 27 EU Member States (Italy and Spain remaining outside the process due to objections to the proposed linguistic regime) and, in tandem, a single patent court at European level with exclusive jurisdiction in infringement and revocation proceedings covering the same territory, in lieu of domestic courts. The UPC is to consist of two divisions; a Court of First Instance and a Court of Appeal. The former is to be further sub-divided into a Central Division (located in Paris, albeit itself with 'thematic branches' in London and Munich!) and additional regional and local divisions situated in various Member States.
It is by now de rigueur for any commentary on the European patent project to begin with a reminder of its protracted history. The idea of creating some form of common European patent system can be traced all the way back to the 1960s, and has been plagued by drawbacks and delays ever since. The most recent attempt to revive the project came in 2000 with a proposal for a Regulation on a Community Patent (following on from the Regulation establishing a Community Trade Mark (CTM) adopted some years earlier), and continued with an accompanying proposal for a Community Patent Court of 2003. The former would introduce a unitary patent right covering the entire European Union, while the latter would lead to the creation of a unified patent court with exclusive jurisdiction over both the new patent right and existing 'European' patents (that is, bundles of national patents) obtained under the European Patent Convention (EPC) system. Together, these proposals were to be the 'building blocks' for a future EU system, designed to overcome the difficulties posed by the need to acquire and litigate patent rights in different Member States.
Of course the European legislator is faced with this core dilemma in virtually any of the areas of law in which it has some competence to act, and European intellectual property law is by no means the only field where there have been lengthy deliberations over the need, form and likely success of measures seeking to instigate some 'harmonisation' of the law (in one way or another). The debate on the harmonisation of European private law (and particularly contract law) immediately springs to mind as an example, for this also began some decades ago, leading to the drafting of various academic principles, from the Principles of European Contract Law (PECL) in the course of the 80s and 90s, through the Draft Common Frame of Reference in the 2000s, and culminating in a proposal for a Common European Sales Law only last year. What makes the European patent project unique is the fact that it has focused on the introduction of an apposite pan-European court system as well as on matters of substantive law. The creation of a unified patent court for the EU is considered by many – not least the European Commission – to be a conditio sine qua non for the proper functioning of the proposed unitary patent. This is the case even though such a court would be unprecedented, and was not seen as necessary for either the CTM or the Community design introduced in 2002 (both of which are adjudicated upon by designated national courts collaborating with the Court of Justice of the EU (CJEU) via the general EU preliminary reference procedure). So it is the importance attached to this aspect of the patent debate that will readily come as a surprise to those operating in other areas of European law, including the sphere of European private law (EPL).
In spite of the many parallels that can be drawn between the debate on harmonisation of European IP law and that of private law more generally (not to mention other areas of EU law), however, there is a distinct lack of interaction among actors in the various subfields. This means that often similar arguments are used, but without benefiting from insights in the other field. It is therefore against this backdrop of academic fragmentation that we would encourage further comparison between the European harmonisation debate in areas such as patent law and contract law, as this should lead to lessons on what to encourage or to avoid in developing the two fields. In particular, since in EPL there has been hardly any discussion about the introduction of a European court in order to ensure uniform interpretation, we cannot help but wonder whether the significance of this issue in patent law is not overestimated. This is a particularly worthwhile question bearing in mind that if an alternative to the unified patent court could be found, this would greatly help the present political process, which now appears to be stuck on the issue of involvement of the CJEU.
In our view, there is nothing against splitting the two building blocks: in a paper that I wrote together with Jan Smits (available on SSRN) I argue that it may indeed be useful to introduce the unitary European patent, but I do not see the advantage of creating the proposed European patent court system, given a) the disadvantages of such a system and b) the possible alternative. First: the disadvantages of the proposed patent court system. From the perspective of end users, a rational patent litigation system depends on three main factors; expertise of the judges, the ability to make a speedy decision, and low costs. We doubt whether the new system would be able to provide these, certainly (but not only) in the short- to medium-term. Given that the regional and local divisions of the Unified Patent Court will be spread across Europe and necessarily composed of multi-national panels with the discretion to decide whether or not to bifurcate proceedings, it is difficult to see why the UPC as it is envisaged would fare much better against the obstacles to efficient litigation and uniform interpretation of differing levels of judicial expertise, patent cultures and language barriers. Second, a possible alternative to the now proposed unified patent court could consist of a competitive model of convergence of patent law. This model is based on the present European practice in which 50 to 70% of all patent cases in Europe end up before the courts of a very limited number of countries (and in particular before the German courts, of which the Düsseldorf district court is seen as market leading, dealing with more than 600 new infringement cases every year from all over Europe). The popularity of the German court system among European litigants apparently stems from its speed, high quality, commercial sense and the fact that the staying of an infringement procedure due to revocation is only rarely allowed.
In short, our point is that successful harmonisation of IP law may indeed be dependent on uniform interpretation of European rules, but this uniformity need not come from a common European court. It can also be provided by a national court, as long as individual claimants are allowed to choose the court of their liking. In fact, in the absence of any meaningful political compromise on a European court system in the last 40 years, such a market for patent litigation has already partly come to exist. Of course that is not to say that such an alternative is not without its own problems, but we believe that a competitive model of convergence has a lot of merit over the proposed European court system, which could easily prove to be an unavailing venture into the unknown.
* * * * *
These questions are discussed in detail in the working paper by Jan M. Smits and William Bull entitled 'European Harmonisation of Intellectual Property Law: Towards a Competitive Model and a Critique of the Proposed Unified Patent Court', available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2117835.