Tag Archives: Subject Matter Eligibility

Why Isn’t Patent Law as Straightforward as Real Estate Law?: Maybe it Is

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by Dennis Crouch

Professor Adam Mossoff recently posted a draft of his essay Trespass Fallacy in Patent Law. The essay is quite short (17 pages) and accessible. Mossoff is able to encapsulate his basic idea in one paragraph. He writes:

One common refrain [from patent critics] is that patents fail as property rights because patent infringement doctrine is not as clear, determinate and efficient as trespass doctrine is for real estate. This essay explains that this is a fallacious argument, suffering both logical and empirical failings. Logically, the comparison of patent boundaries to trespass commits what philosophers would call a category mistake. It conflates the boundaries of an entire legal right (a patent), not with the boundaries of its conceptual counterpart (real estate), but rather with a single doctrine (trespass) that secures real estate only in a single dimension (geographic boundaries). Estate boundaries are defined along the dimensions of time, use and space, as reflected in numerous legal doctrines that secure estates, such as adverse possession, easements, nuisance, restrictive covenants, and future interests, among others. The proper conceptual analog for patent boundaries is estate boundaries, not fences. Empirically, there are no formal studies of how trespass or even estate boundaries function in litigation; thus, complaints about the patent system’s indeterminacy are based solely on an idealized theory of how trespass should function; it’s the nirvana fallacy. Furthermore, anecdotal evidence and related studies suggest that estate boundaries are neither as clear nor as determinate as patent scholars assume it to be. In short, the trespass fallacy is driving an indeterminacy critique in patent law that is both empirically unverified and conceptually misleading. 

In this essay, Mossoff makes an important contribution to the rhetoric of patent policy.  The most convincing element of his argument is that the trespass metaphor fails. In my view, his broader real estate metaphor also fails because it also does not fit well with the U.S. patent system except in its level of complication and dispute potential.  The reality is that all metaphors fail to fully mirror their subject — by definition a metaphor is something different from its subject.  With that in mind, I see the essay as raising a cautionary flag against over-reliance rather than a complete indictment.  

My more important critique of Mossoff's argument is derived from his suggestion that we hold-off improving the patent system until we know which metaphor is best and whether issued patents are more indeterminate than real estate deeds.  Mossoff writes: 

Until firm factual grounding for this normative critique is first established, commentators, legislators and courts might want to pause before continuing to make fundamental structural changes to the American patent system.

Even if Mossoff's base critiques of the trespass metaphor are all correct, we still know that the U.S. patent system has room for improvement.  The fact that the real estate market is in shambles should not serve as a justification for officials (or comentators) to fail in their duty to make our system the best that it can possibly be. 

 

Guest Post by Christal Sheppard: Solving a Knotty Problem: An Outrageous Call for Patent Reform Part Deux

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Dr. Sheppard is an Assistant Professor of Law at the University of Nebraska Lincoln College of Law.  Prior to joining the University of Nebraska, Dr. Sheppard was Chief Counsel on Patents and Trademarks and Courts and Competition policy for the United States House of Representatives Commmittee on the Judiciary. – Jason

By A. Christal Sheppard

Just over a week ago, Dennis Crouch stated on Patently-O that “[i]t is simply ridiculous that after 40 years of debate, we still do not have an answer to the simple question of whether (or when) software is patentable.”  The confusion on what is and what is not patentable is not a new debate but has come to a head in the last few years with the Supreme Court taking on certiorari multiple cases on the matter of patentable subject matter and the Court of Appeals for the Federal Circuit, arguably, disregarding Supreme Court precedent.

We all understand the problem[1], but what is the solution?  The question of what should be patentable is fundamentally a public policy decision.  This public policy decision is one that the framers of the Constitution contemplated and specifically tasked one specific entity with balancing the equities.  The Constitution states “The Congress shall have Power…[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”  Congress not the Courts was tasked to determine what should be eligible for the “embarrassment of a patent.”  However, the Courts, led by the Court of Appeals for the Federal Circuit, not the Congress, have driven the expansion of Patentable Subject Matter to “anything under the sun made by man.” 

Case law dictates that the intent of Congress was 1) that patentable subject matter is a requirement separate from that of the other requirements of the patent laws and 2) that Congress intended for anything under the sun made by man to be potentially patentable with the exception of laws of nature, natural phenomena and abstract ideas. Thus, the Courts have, by a stepwise expansion of patentable subject matter to software and business methods, created a situation whereby the high tech industry has been legally encouraged to tie itself into a Gordian knot.  A knot that, without overruling prior precedent, or creative interpretation of precedent, the Courts cannot resolve.

This blog post is to propose that the United States Congress immediately take an active role in the creation of the parameters for patentable subject matter.[2] Congress is the only entity that has the ability and the resources to resolve this conflict in a reasonable and responsible manner. It is also the entity charged by the Constitution with doing so.

I’m not unaware that using the terms “reasonable” and “responsible” in the same sentence with the United States Congress during an election year will globally elicit sound effects from chortles to foul language questioning my mental facilities.  However, below are a few points that are worth considering regarding who is best positioned to advance a solution to what most of the intellectual property community would consider a mess. 

  1. The Constitution does not require patents to be granted and while our international agreements do require minimum patent rights, software and business methods are not among them.[3]  Currently we have a Court created expansion of the definition of what is eligible for patent.  Congress has yet to wade into this morass of what should be eligible for a patent except to provide for exceptions to the Court-created expansion. Congress has created exceptions in piecemeal “fixes”, specific individual carve-outs, instead of addressing the broader issue head-on.[4]
  2. History shows that Congress once before stepped in when the Supreme Court and the predecessor to the Court of Appeals for the Federal Circuit were in discordance.  In the 1940s, the country was then also wrestling to establish a standard of invention.  The Administration appointed a Commission and the patent bar was up in arms.  As a result, section 103 – nonobviousness – was added to the statute by Congress in 1952 to inject a stabilizing effect that the Courts and general practice had not been able to accomplish over decades.  What is needed in the current situation is stabilization.  Today, the Courts are destabilizing the law of patentable subject matter rather than stabilizing it.
  3. Businesses need certainty to operate and to plan effectively. Only Congress can be prospective in its resolution.  For instance, if Congress decides that software and business methods are not patentable subject matter ONLY the Congress can make this prospective to not conflict with settled expectations.  If the Supreme Court narrows patentable subject matter, or patentability more generally, trillions of dollars of company valuation evaporate from the balance sheets with one Supreme Court decision.[5]  However, Congress can decide that starting on a date certain in the future that all patents granted or applications filed before that date are under the “old” common law rules and all patents post-implementation are under the new law.  Congress can provide finality on this issue without gutting company value.[6]  
  4. Only Congress can create an alternative method of protection, apart from patent, for items that they determine do not meet the test for “promoting the process of science.”  For example, concurrent with the delayed implementation of a narrower definition of patentable subject matter, Congress can provide sui generis protection for those fields they decide to carve-out.  Many such ideas have been proposed, such as shorter exclusivity duration and limited remedies.
  5. A Congress, unlike the Courts whose precedent binds future judges, cannot bind a future Congress.  Should the law of patentability need to expand for unknown advancements, Congress can do that in a way that is much less disingenuous than the Courts.   The framers of the Constitution contemplated this in their directive to Congress.  The language in the Constitutional defining  what should be eligible for the monopoly is malleable so that patent law can adjust as technology and the need for promotion for the advance of science changes over time. 

There are a multitude of very good reasons why calling on Congress is not a perfect solution.  But with Myriad and the patentability of gene sequences and genetic testing on the horizon, does the intellectual property community want the Courts or Congress to decide this public policy issue?  Businesses need certainty and only Congress can now provide that stabilizing influence without destabilizing entire industries.  Whether Congress will or not, ought not prevent the assertion that they should. 

Food for thought…

[1] The Supreme Court decisions have done nothing to clarify what is and what is not patentable.  At this juncture, not only is the Federal Circuit in rebellion against the Supreme Court; an influential judge from another circuit dismissed an entire high-tech case with prejudice and promptly penned an article entitled “Why There Are Too Many Patents in America”; the International Trade Commission is under siege from an explosion of technology cases and recently sought comment from the public as to whether certain patents should have limited remedies; the Administration (United States Patent and Trademark Office and the Department of Justice) have differing opinions regarding the patentability of genes and genetic tests; thermonuclear patent warfare between high tech companies is overloading our courts; market based solutions are spawning Fortune 500 companies as the new patent troll; and a patent valuation bubble reminiscent of the real estate market before the crash is driven ever forward as companies amass patents as a shield of paper armor not as an instrument of innovation. 

[2] One thing is certain, there will not be unanimous agreement on what should be patentable subject matter; however, someone should decide and should decide now.  Moreover, that decision should not negatively affect those who have relied upon the law as the Court defined and expanded it over the last 40 years only to now sound the horns of retreat. 

[3] I am not here advocating for any particular resolution, I am merely pointing out a fact.

[4] Prior user rights for business method patents in the 1999 American Inventors Protection Act; Human organisms, tax patents and creating a business method patent post-grant opposition procedure in the 2011 America Invents Act.  The Congress did not address the latter three as patentable subject matter issues, but in carving them out the Congress is showing that there are additional areas that they have determined should not be entitled to patents where the Courts have determined otherwise. 

[5] Of course patents are subject to case-by-case challenges but the Supreme Court seems to be signaling that whole categories of patents, while still technically eligible, would not meet the Courts inventiveness test as a practical matter.

[6] Congress can also provide some finality on the issue of whether patentable subject matter is a separate requirement from 102, 103 and 112.

Director Kappos: Some Thoughts on Patentability

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The following is a reprint from USPTO Director Kappos’ recent statement on patentable subject matter:

+ + + + +

The recent Federal Circuit decision CLS Bank International v. Alice Corporation raises some important points that offer insight on advancing prosecution of patent applications. In CLS Bank, the claims to a computer-implemented invention were found to fall within an eligible category of invention and not to mere abstract ideas. In answering the question of eligibility under § 101, I found it interesting that the court looked at the different roles of the various statutory provisions, § 101, 102, 103, and 112. Sections 102, 103 and 112 do the substantive work of disqualifying those patent eligible inventions that are “not worthy of a patent”, while § 101 is a general statement of the type of subject matter eligible for patenting. The court notes that, while § 101 has been characterized as a threshold test and certainly can be addressed before other matters touching on patent validity, it need not always be addressed first, particularly when other sections might be discerned by a trial judge as having the promise to resolve a dispute more expeditiously or with more clarity or predictability. The court in CLS Bank also recognized that the exceptions to eligibility—laws of nature, natural phenomenon, and abstract ideas—should arise infrequently.

Based on my experience, I appreciate the wisdom of the court’s discussion relating to resolving disputed claims by focusing initially on patentability requirements of § 102, 103, and 112, rather than § 101. I have found that when claims are refined to distinguish over the prior art, recite definite boundaries, and be fully enabled based on a complete written description, they do not usually encounter issues of eligibility based on reciting mere abstract ideas or broad fundamental concepts. Put another way, every business looks for opportunities to sequence workflow so that the first issues addressed are the ones that can simplify or completely resolve other issues. This is good basic management for businesses, and for patent offices.

While courts can resolve patent disputes in the most expeditious manner given the facts of the case, the Office has the unique duty of ensuring that all patentability requirements are met before issuing a patent. Applications that are presented in the best possible condition for examination with clear and definite claims that are believed to distinguish over the prior art and are supported by a robust disclosure will most likely not encounter rejections based on eligibility. Avoiding issues under § 101 can have a very positive effect on pendency and help examiners focus on finding the closest prior art, leading to strong patent protection. Hopefully, the guidance supplied by the Federal Circuit in CLS Bank can help us as we continue to work on reducing pendency and enhancing quality of issued patents.

CLS Bank v. Alice: The “Nothing More Than” Limitation on Abstract Ideas

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By Jason Rantanen

CLS Bank International v. Alice Corporation Pty. Ltd. (Fed. Cir. 2012) Download 11-1301
Panel: Linn (author), O'Malley, Prost (dissenting)

Despite two recent opinions by the Supreme Court, the issue of patent eligible subject matter continues to sharply divide the Federal Circuit.  CLS Bank v. Alice Corporation illustrates this point neatly, even going a step further.   Unlike other recent opinions involving questions of patent eligible subject matter that have approached the issue in a relatively narrow, case-specific manner, here the majority implements a sweeping rule with significant implications for future cases – a rule that the dissenting judge criticizes as being irreconcilable with Supreme Court's precedent.

Background: Alice sued CLS for infringement of four patents covering, in the majority's words, "a computerized trading platform for exchanging obligations in which a trusted third party settles obligations between a first and second party so as to eliminate 'settlement risk'.  Settlement risk is the risk that only one party's obligation will be paid, leaving the other party without its principal."  Slip Op. at 2.  The patents included method, system, and computer program product claims. Claim 1 of Patent No. 7,149,720 is representative of the system claims:

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 granted summary judgment of invalidity based on a failure to claim patent eligible subject matter.  Alice appealed.

The majority's "nothing more than" limitation: In reversing the district court, the majority focused on the "abstract ideas" exception to patent eligible subject matter.  Examing the concept of "abstract ideas," the majority concluded that despite substantial precedent and commentary, its meaning remains unclear and its boundary elusive.  There is, of course, some guidance in the precedent, notably the machine or transformation test and concerns about preempting an entire field of innovation.  There are also computer-specific opinions, which the majority distilled down into the rule that "a claim that is drawn to a specific way of doing something with a computer is likely to be patent eligible whereas a claim to nothing more than the idea of doing that thing on a computer may not."  Slip Op. at 18 (emphasis in original). But even this rule allows for "great uncertainty" as to the meaning of "abstract ideas."

Against this backdrop, the majority did not attempt to define the concept of "abstract ideas."  Instead, it implemented a new rule that minimizes the need to make such a determination and strongly favors a conclusion of patentable subject matter when claims involve anything that might be characterized as an abstract idea.  The majority's rule:

"this court holds that when—after taking all of the claim recitations into consideration—it is not manifestly evident that a claim is directed to a patent ineligible abstract idea, that claim must not be deemed for that reason to be inadequate under § 101…Unless the single most reasonable understanding is that a claim is directed to nothing more than a fundamental truth or disembodied concept, with no limitations in the claim attaching that idea to a specific application, it is inappropriate to hold that the claim is directed to a patent ineligible “abstract idea” under 35 U.S.C. § 101."

Slip Op. at 20-21 (emphasis added).  Applying this rule, the majority concluded that Alice's claims were directed to patent eligible subject matter.  In reaching this conclusion, it emphasized the need to look at the claim as a whole rather than to generalize the invention as the district court did.  Applying this approach, the majority concluded that the computer limitations "play a significant part in the performance of the invention" and that the claims are "limited to a very specific application of the concept of using an intermediary to help consummate exchanges between parties." Id. at 26. 

The majority also emphasized a theme previously discussed on PatentlyO: that district courts have the discretion to determine the order in which to assess questions of validity, and may execise that discretion in the interests of judicial efficiency: "Although § 101 has been characterized as a “threshold test,” Bilski II, 130 S. Ct. at 3225, and certainly can be addressed before other matters touching the validity of patents, it need not always be addressed first, particularly when other sections might be discerned by the trial judge as having the promise to resolve a dispute more expeditiously or with more clarity and predictability."  Slip Op. at 13 (emphasis added).

Judge Prost's Dissent: Writing in dissent, Judge Prost sharply criticized the majority for "responding to a unanimous Supreme Court decision against patentability with even a stricter subject matter standard."  Dissent at 8.    "The majority resists the Supreme Court’s unanimous directive to apply the patentable subject matter test with more vigor. Worse yet, it creates an entirely new framework that in effect allows courts to avoid evaluating patent eligibility under § 101 whenever they so desire."  Id. at 1.  Judge Prost was equally critical of the majority's departure from the Supreme Court's case-specific approach to questions of patent eligible subject matter.  "The majority has failed to follow the Supreme Court’s instructions—not just in its holding, but more importantly in its approach."  Id. at 3.

Central to Judge Prost's dissent is the view that the Supreme Court in Prometheus required that to be patent eligible the subject matter must contain an "inventive concept."  "Now there is no doubt that to be patent eligible under § 101, the claims must include an “inventive concept.”  Dissent at 3. Finding nothing inventive in the claims – they consist of the abstract and ancient idea together with its implementation via a computer – the dissent concludes that they cannot constitute patent eligible subject matter.

The Heart of the Dispute: One interpretation of the divide between majority and dissent is that it flows from fundamentally different approaches to the question of what the "invention" is for purposes of § 101.  The majority sees the "invention" as rigidly defined by the claims: "ignoring claim limitations in order to abstract a process down to a fundamental truth is legally impermissible," and accuses the dissent of doing just that.  Slip Op. at 23.  In contrast, the dissent, while recognizing the importance of the claims, strips them of jargon in order to ask "So where is the invention"?  Dissent at 5.  The majority's approach resembles the standard patent law approach to dealing with the concept of the invention; the dissent's is much more similar to how the Supreme Court analyzes questions of patentable subject matter. 

In any event, given the fundamental disagreement between the majority and dissent, this will be a case to keep a close eye on.

Correction to original post: Judge Lourie was joined by Judge O'Malley, not Judge Moore.

Endowed Chair in IP and Junior Faculty Workshop at the University of Indiana McKinney School of Law

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By Jason Rantanen

Two announcements today from the University of Indiana McKinney School of Law.  The first is about IU's candidate search to fill its new IP Chair; the second is for a Junior Faculty Workshop on Intellectual Property Issues in the Pharmaceutical Industry that IU will hold in December 2012.

Endowed Chair in Intellectual Property
Indiana University Robert H. McKinney School of Law is pleased to announce that it is launching a search for the first endowed chair created by the gift of Robert H. McKinney to the (aptly named) Indiana University Robert H. McKinney School of Law.  The chair will be in Intellectual Property and will also serve as the Director of our Intellectual Property and Innovation Center.  The law school is looking for a tenured scholar with a distinguished record of teaching, research, and service.  Please forward a cv or any questions to Gerard Magliocca (gmaglioc@iupui.edu).

Junior Faculty Workshop on Intellectual Property Issues in the Pharmaceutical Industry
The Indiana University McKinney School of Law is pleased to announce this year’s Junior Faculty Workshop, on Intellectual Property Issues in the Pharmaceutical Industry. Scheduled for December 7 and 8, 2012, this two-day Workshop offers a unique opportunity for untenured scholars to present their draft scholarship for in-depth critique and commentary by respected senior scholars in the field. The Workshop is perfectly timed for junior faculty participants to revise their articles in time for a spring submission for publication. Indiana University will cover both travel and lodging expenses for all participants.

Any untenured scholars interested in participating in this intensive workshop should submit a detailed abstract or the first several pages of their articles, along with a brief CV, to Nic Terry (npterry@iupui.edu) or Emily Michiko Morris (emmmorri@iupui.edu), by June 22, 2012. Works already in progress are ideal for this workshop and will be given preference. Topics for the workshop may focus on any of a range of intellectual property issues as they relate to the pharmaceutical industry, broadly defined. Acceptable topics may therefore include, but are not limited to, issues involving patent and regulatory exclusivity; patent linkage; the Hatch-Waxman Act; the BPCIA; TRIPs; the Bayh-Dole Act; the AIA; public-private collaborations; and more.

Applicants should also submit the names of established scholars in their area of scholarship who would be able to provide meaningful commentary on their drafts. Junior faculty applicants selected for the workshop must commit to producing complete drafts of their articles well ahead of the workshop (i.e., before Halloween), so that senior faculty participants may have time to review them. Selected participants will be notified by July 1, 2012.

 

Patentable Subject Matter: Supreme Court Challenges Chief Judge Rader’s Broad Notion of Software Patentability

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by Dennis Crouch

WIldTangent v. Ultramercial (Supreme Court 2012) Docket No 11-962

The Supreme Court has rejected another Federal Circuit patentable subject matter decision with a GVR and has ordered the appellate court to review its patentability decision with further consideration of Mayo Collaborative Services v.Prometheus Laboratories, Inc., 566 U.S. ___ (2012). In its standard GVR language, the Supreme Court wrote:

The petition for a writ of certiorari is granted [G]. The judgment is vacated [V], and the case is remanded [R] to the United States Court of Appeals for the Federal Circuit for further consideration in light of Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ___ (2012).

The patent at issue in this case claims a particular method for distributing copyrighted products over the Internet. Patent No. 7,346,545. The basic gist of the invention is that the consumer receives a copyrighted product in exchange for viewing an advertisement — and it all takes place over the internet and with a particular monetization scheme.

In its broadly written opinion, the Federal Circuit (Rader, C.J.) found the claimed invention patentable under Section 101 based upon the requirement that a computer be used to perform the method and the programming complexity required to carry out the claimed elements. The court wrote that while “the mere idea that advertising can be used as a form of currency is abstract, just as the vague, unapplied concept of hedging proved patent-ineligible in Bilski,…the ‘545 patent does not simply claim the age-old idea that advertising can serve as a currency. Instead, the ‘545 patent discloses a practical application of this idea.”

Following the Federal Circuit decision in Ultramercial, the Supreme Court decided Mayo v. Prometheus. In that case, the Supreme Court rejected the Prometheus patent as effectively encompassing an unpatentable law of nature. That revives the historic notion that the scope of knowledge held in the prior art is an important aspect of the Section 101 analysis.

The Supreme Court issued a parallel GVR in the gene-patent case of Myriad Genetics. Other pending 101 appeals include Fort Properties v. American Master Lease (en banc petition); Accenture Global v. Guidewire; Bancorp Services v. Sun Life; and others.

Claim one the ‘545 patent reads as follows:

1. A method for distribution of products over the Internet via a facilitator, said method comprising the steps of:

a first step of receiving, from a content provider, media products that are covered by intellectual-property rights protection and are available for purchase, wherein each said media product being comprised of at least one of text data, music data, and video data;

a second step of selecting a sponsor message to be associated with the media product, said sponsor message being selected from a plurality of sponsor messages, said second step including accessing an activity log to verify that the total number of times which the sponsor message has been previously presented is less than the number of transaction cycles contracted by the sponsor of the sponsor message;

a third step of providing the media product for sale at an Internet website;

a fourth step of restricting general public access to said media product;

a fifth step of offering to a consumer access to the media product without charge to the consumer on the precondition that the consumer views the sponsor message;

a sixth step of receiving from the consumer a request to view the sponsor message, wherein the consumer submits said request in response to being offered access to the media product;

a seventh step of, in response to receiving the request from the consumer, facilitating the display of a sponsor message to the consumer;

an eighth step of, if the sponsor message is not an interactive message, allowing said consumer access to said media product after said step of facilitating the display of said sponsor message;

a ninth step of, if the sponsor message is an interactive message, presenting at least one query to the consumer and allowing said consumer access to said media product after receiving a response to said at least one query;

a tenth step of recording the transaction event to the activity log, said tenth step including updating the total number of times the sponsor message has been presented; and

an eleventh step of receiving payment from the sponsor of the sponsor message displayed.

Book Discussion: Frischmann Predicts Prometheus

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Guest post by Professor Michael Burstein.  This review is cross-posted on the Concurring-Opinions blog.

In his new book Infrastructure: The Social Value of Shared Resources (OUP 2012), Brett Frischmann explores how infrastructural resources contribute to social welfare. He defines a set of resources — infrastructure — in terms of the manner in which they create value and then examines the conditions under which such resources ought to be managed as a commons. He develops a framework for understanding the demand for infrastructure and the advantages and disadvantages of managing infrastructure in a nondiscriminatory manner. Prof. Frischmann then applies this framework to a variety of infrastructural resources — roads, telecommunications networks, the environment, and, of particular interest to readers of this blog, cultural resources including those which are protected by patent and copyright law.

I'm going to focus my comments on Frischmann's theory of intellectual infrastructure and how it relates to the structure of intellectual property law. Just a few days after the release of Infrastructure, the Supreme Court handed down its decision in Mayo Collaborative Services v. Prometheus Laboratories. That case presented the question whether certain diagnostic claims were within the scope of patentable subject matter under section 101 of the Patent Act. The Court held that they were not, in a manner that is strikingly consistent with Frischmann's theory. Hence the title of my post. But Frischmann's theory may also go a long way toward bringing some order to an area of patent law that has long been confused.

Let's start with the concept of intellectual infrastructure. Frischmann explains that intellectual or cultural resources can be infrastructural in the same manner as physical goods. So long as the resource is a "nonrival input into a wide variety of outputs" (275), it satisfies the characteristics of infrastructure that Frischmann so richly describes. In turn, that suggests that the case for managing the resource as a commons is strong. Frischmann then explains how this concept applies to ideas. Ideas, he writes, often are infrastructure (subject to a number of complications that I'll put to the side). So in his view, intellectual property should protect implementations of ideas but not the ideas themselves (286). To sort one from the other, Frischmann turns to the concept of abstraction in copyright law and argues that patent law should follow a similar path.

Now consider Prometheus. The inventors in that case discovered a correlation between the effectiveness of a drug and the amount of certain metabolites of that drug in a patient's blood. Their patent claimed a method of optimizing the dosage of the drug based on that correlation. The method was simple: (1) administer the drug; (2) determine the amount of metabolites in the patient's blood; (3) make an inference about drug dosage based on the correlation. Doctrinally, the question before the Court was whether this amounted to a claim on a "natural law" – the correlation between drug dosage and metabolism that happens in the human body – which would be unpatentable under a long-standing exception to the scope of patentable subject matter, or a patentable application of that law.

Substitute "idea" for "natural law" and the analogy to Frischmann's analysis becomes clear. Indeed, there is no reason why a "natural law" cannot be an "idea" as Frischmann describes it. A natural law is the articulation of a principle; whether that principle is an infrastructural idea turns on its characteristics, not its origins. In Prometheus, the Court, with Justice Breyer authoring the unanimous decision, held that the patent claimed the natural law itself and not an application of that law. The Court held that the the patent claims did not "add enough to their statements of the correlations . . . to qualify as patent-eligible processes that apply" those correlations (slip op. 8). The "administering" and "determining" steps, in the Court's view, comprised "well-understood, routine, conventional activity already engaged in by the scientific community" and so were "not sufficient to transform unpatentable natural correlations into patentable application of those regularities" (slip op. 11). Or, in Frischmann's terms, the patent claims did not amount to an implementation of an idea; they claimed the idea itself.

The rationale underlying the Court's decision also resonates with Frischmann's argument. Justice Breyer cast the decision in expressly functional terms. The danger, he wrote, is that because natural laws are "the basic tools of scientific and technological work," patents on natural laws "foreclose[] more future invention than the underlying discovery could reasonably justify" (slip op. 17). So too, the rationale for managing infrastructural resources as commons turns on the demand-side benefits: the spillovers and externalities that non-rival consumption of infrastructure resources enables. In this way, Prometheus is quite consistent with Frischmann's injunction against propertizing ideas.

Frischmann's theory also suggests some provocative solutions to problems that have long plagued the doctrine of patentable subject matter. Section 101 of the Patent Act defines as patentable any "new and useful process, machine, manufacture, or composition of matter." But the Supreme Court has long carved out from those categories several broad exceptions. They are usually described by the terms "laws of nature, natural phenomena, and abstract ideas," but at times appear also to encompass "products of nature," "mental processes," "mathematical formulae," "algorithms," and the like. Infrastructure may offer a unifying principle for choosing to exclude these things from the scope of patentable subject matter. Frischmann writes that "[t]he Supreme Court should stop referring to abstract ideas" in its patentable subject matter jurisprudence and should instead "make clear that ideas are not patentable" (300). Viewed through the lens of infrastructure, Prometheus is a step in this direction. The correlations at issue in that case were actually quite narrow. At the very least, they were not "abstract" in the sense that the "concept of hedging risk" found to be unpatentable in Bilski v. Kappos was abstract. Yet the correlations in Prometheus and the concept of hedging in Bilski are both ideas. And they are ideas that have the characteristics of infrastructure — nonrival inputs into a wide range of outputs. The Court's functional analysis suggests that the problem in both cases was that granting exclusive rights to ideas that have the characteristics of infrastructure might foreclose future innovation.

I would go even further. The next big patentable subject matter case is likely going to be the Public Patent Foundation's ongoing challenge to gene patents held by Myriad Genetics. Doctrinally, the question raised in that case — whether the patents claim "products of nature" – is different than the question whether a patent claims an idea. But to the extent that genes can be characterized as infrastructure — and I think there is a reasonable case that they can be — the functional analysis described above should apply. The exclusion of products of nature from the scope of patentable subject matter may therefore be consistent with the exclusion of ideas from the scope of patentable subject matter.

It has also been a matter of debate among academics and practitioners whether and to what extent the inquiry into patentable subject matter serves a function different from other requirements of patentability like novelty or nonobviousness. To the extent that infrastructural resources ought to lie beyond the scope of patent protection for functional reasons, the patentable subject matter screen will capture this insight in a way that other patentability doctrines will not. But this is a topic for further exploration.

Frischmann's book is an important contribution across a wide range of fields. It is a terrific achievement and I think its influence will continue to grow as we grapple with the implications of its analysis.

Concurring Opinions has been hosting a symposium to discuss Prof. Frischmann's book and includes posts by Marvin Ammori, Adam Thierer, Barbara A. Cherry, Frank Pasquale, Michael Burstein, Timothy B. Lee, Tim Wu, Laura DeNardis, Andrew Odlyzko, Deven Desai, and Brett Frischmann himself.

Gene Patent Debate Returns to the Federal Circuit

Patent,

by Dennis Crouch

Association for Molecular Pathology v. USPTO and Myriad Genetics (Fed. Cir. 2012)

The Supreme Court recently issued a GVR order in this case with instructions for the court to reconsider its decision in light of Mayo v. Prometheus.  The Federal Circuit has now released a new briefing schedule — asking the parties to file supplemental briefs by June 15, 2012 addressing the issue: What is the applicability of the Supreme Court’s decision in Mayo to Myriad’s isolated DNA claims and to method claim 20 of the ’282 patent? Non-parties may file briefs of  up to 15–pages in length that are due on the same date.  Oral arguments will be held July 20, 2012.

Claim 1 of Myriad’s patent is directed to “an isolated DNA coding for a BRCA1 polypeptide” with a particular amino acid sequence.  DNA coding for BRCA1 is a naturally occurring mutation and is clearly unpatentable. The catch here is that Myriad claims “isolated DNA” that the patent defines as “substantially separated from other cellular components which naturally accompany a native human sequence.”

Claim 20 of the patent is directed to the scientific method of finding a cancer treatment that involves (1) growing a host cell that has been genetically modified to include a BRCA1 gene and then (2) testing to see whether any compound particularly inhibits the growth of those cells.  A key question for this claim is whether its breadth effectively extends to cover an abstract idea — namely, using the scientific method to discover a treatment for BRCA1 cancer. 

Guest Post by Dr. Shine Tu: Luck/Unluck of the Draw: An Emprical Study of Examiner Allowance Rates

Patent,

Dr. Shine Tu is an Associate Professor of Law at the West Virginia University College of law.  For the past year, Dr. Tu, a former patent attorney with Foley & Lardner, has conducted a massive empirical examination of patent prosecution.  Massive, in the sense that Dr. Tu and his assistants examined the prosecution behavior of every patent issued in the last ten years.  In Luck/Unluck of the Draw: An Empricial Study of Examiner Allowance Rates, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1939508 and forthcoming in the Stanford Technology Law Review, Dr. Tu discusses some of the findings from his study. – Jason

Luck/Unluck of the Draw: An Emprical Study of Examiner Allowance Rates

Dr. Shine Tu

One of the greatest banes of a patent applicant is the examiner who will not allow an application that should be allowable.  During a trip to the PTO for an Examiner interview, I passed by the office of Examiner X with a sign that stated “0% allowance rate ☺ [ed.: smiley face].”  Evidently, the smiley face was inserted to add insult to injury.  I asked the examiner that I was with if Examiner X really had a 0% allowance rate, and she said “yes.”  (I later verified that this was correct)  I asked why this was the case, and she stated, “some examiners believe an allowance is an affront to their being.”  Of course, our patent system would be a complete failure if the ability to get a patent was solely determined by which examiner you were lucky/unlucky enough to draw.

In an attempt to determine the extent of this behavior, I set out to comprehensively study allowance rates of specific examiners by art unit, technology center and the PTO as a whole.  To be as comprehensive as possible, I coded over 1.5 million patents in an attempt to code every patent ever issued in the last 10 years (from January 2001-July 2011).

The results of this study were surprising.  I found two interesting populations of examiners.  First, I found a significant population of examiners who on average, issue a disproportionately small number of patents per year (low allowance rate examiners).  Second, I found a small but significant population of examiners, who on average, issue a disproportionately large number of patents per year (high allowance rate examiners).

The first population of low allowance rate examiners consist mainly of secondary examiners (junior examiner usually with less than 5 years of experience and no signatory authority).  These examiners, on average, issue a very small number of patents per year (less than 5 patents per year).   For example, between 2002-2011 in technology center 3700, approximately 17% (306 examiners) of the examiners issued less than 0.35% (823 patents) of the patents in this art unit.  Accordingly, these low allowance rate examiners issued approximately 2.7 patents per examiner.

In contrast, I found a second population of high allowance rate examiners that consist mainly of primary examiners (senior examiners usually with more than 5 years of experience and full signatory authority).  These examiners, on average, issue a high number of patents per year (more than 50 patents per year).  For example, between 2002-2011 in technology center 3700, approximately 12% (215 examiners) of the examiners issued approximately 51% (120,822 patents) of the patents in this art unit.  Accordingly, these high allowance rate examiners issued approximately 561.9 patents per examiner.

There are many good reasons why an application should not be allowed.  However, one reason that should not play a role is an uneven / inconsistent application of patentability rules.  Examiners should be consistent in the way they apply patentability rules within their own docket.  Additionally, examiners should be consistent in the way they apply patentability rules compared to examiners within their art unit.  This study suggests that examiners even within the same art unit may be applying the rules of patentability in an inconsistent manner. 

There are many limitations with this study.  First, I note that there is no ideal allowance rate.  Second, I note that this is only descriptive data.  Finally, I note that I focus only on issued patents.  I could not obtain data related to the total number of filed applications for each art unit, thus I cannot calculate the percentage allowance rate per art unit (because I do not have a denominator of “filed applications”).  This is a significant limitation because all of these results are limited by the “denominator” problem.

Additionally, it is possible both populations of examiners are doing an outstanding job.  That is, it is possible that the low volume examiners are simply getting harder cases (but I am skeptical of this explanation).   Additionally, it is possible that the low volume examiners are “doing a more thorough job” since they are mainly secondary examiners and thus have more time to spend per application for review and detailed analysis.  Furthermore, it is possible that high volume examiners are doing an adequate job because they are simply more experienced and not only know the field better, but know how to quickly make “good” rejections.  In order to obtain some substantive answers to overcome these limitations, I am currently reviewing a sample of prosecution histories to determine if these two populations of examiners truly are applying the patentability rules in an inconsistent manner. 

A full draft of “Luck/Unluck of the Draw: An Empirical Study of Examiner Allowance Rates” is available on SSRN at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1939508 and is forthcoming in the Stanford Technology Law Review.  Comments are appreciated.

The Impact of Mayo v. Prometheus: Three Weeks In

Patent,

By Dennis Crouch

It has been three weeks since the Supreme Court decided Mayo v. Prometheus, and in that time four additional decisions have been released that rely on the Supreme Court opinion.

  1. In Association for Molecular Pathology (AMP) v. Myriad Genetics, Inc., the Supreme Court granted certiorari, vacated the Federal Circuit decision and remanded for further consideration of patentability of Myriad’s claims to isolated DNA strands based upon the outcome of Mayo v. Prometheus.
  2. In SmartGene v. Advanced Biological Laboratories, a DC District Court relied upon Mayo v. Prometheus to invalidate a patent claiming a system and method using a computer program to guide the selection of therapeutic treatments. In that case, the court noted that the steps of the claims were invalid because they added nothing “specific” to the abstract idea of choosing a therapy “other than what is well-understood, routine, conventional activity, previously engaged in by those in the field.”
  3. In Nazomi Communications, Inc. v. Samsung Telecommunications, the patent claimed a method of “executing an instruction” that resolves a reference when needed and updates a data structure to indicate that the reference has been resolved. The N.D. California district court found that the claims do not violate the patentable subject matter limitation of Section 101 because they “do more than recite an abstract idea and say ‘apply it.'”
  4. In L.A. Printex Industries, Inc. v. Aeropostale, the Court of Appeals for the 9th Circuit was asked to determine whether a lower court had correctly dismissed a copyright infringement lawsuit over a floral fabric design. In a footnote, the court cited the Mayo decision in support of the notion that “ideas, first expressed by nature, are the common heritage of humankind” and not protectable as intellectual property rights.

Punishing Prometheus: Part V – The Long Punt and the Improbable Return

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Guest Post by Robert R. Sachs of Fenwick & West LLP
Read Part I; Part II; Part III; and Part IV.

The Bilksi decision punted on the question of what is an abstract idea, leaving it the Federal Circuit to devise a test. Judge Rader and Judge Dyk proposed different versions of an “I know it when I see it” test. Sadly, the Prometheus decision is of a piece with Judge Dyk’s approach—boiling the claim down to a point where the court can say it’s nothing more than _____  [pick at least one: abstract idea, law of nature, natural phenomena].

But interestingly the Court punted even more deeply in Prometheus—and perhaps, just perhaps, gave inventors and us crafty patent attorneys an out, a chance for a long return. A key premise of the Court’s analysis is that all of the claim elements, apart from the alleged law of nature, were “well­ understood, routine, conventional activity.” This not the normal state of affairs, either before the USPTO or before a court in patent litigation. The Court thus held out for another day:

We need not, and do not, now decide whether were the steps at issue here less conventional, these features of the claims would prove sufficient to invalidate them.

This sentence, a model of clarity, not it is.  It seems to suggest that had the other steps been “unconventional,” that is non-obvious, the claim would have stood a chance. This is how the Court rationalized the Diehr decision, noting that the steps of “installing rubber in a press, closing the mold, constantly determining the temperature of the mold, constantly re- calculating the appropriate cure time through the use of the formula and a digital computer, and automatically opening the press at the proper time” were “nowhere suggested” as being “obvious, already in use, or purely conventional.” But of course the Diehr court never “suggested” that because the novelty and obviousness of that process was not before the Court then, and it (wisely) did not frame the discussion in that way, no less because it has already stated that it was not going to dissect the claim into old and new parts.  To position Diehr in this way is highly disingenuous of the Court.  Moreover, I have a very strong feeling that even 54 years ago in 1968, putting rubber in mold, putting the mold in the oven, and taking it out of the oven when it was done was pretty well known in the art. 

In any event, if this hint is correct, then there remains a path to patent eligibility, one that seems both relatively straight forward and fraught with complexity, much like any long punt return: just run the ball all the way down the field.  On our playing field, you need only (!) make sure that there are at least some elements that “apply” whatever law of nature is in your claim in an “unconventional” manner.  

Surely, good advice. Alas, there are several problems with such a facile rule. First, once you start dissecting a claim and evaluating each element by itself, it becomes very easy to map each element onto some prior art. That is after all, what many patent examiners do; I’m just sayin’.

Second, some claims, like those in Prometheus, are by designed to reflect the business operation of the inventor and his company, and avoid problems such as multi-actor infringement. For example, had Prometheus added more “unconventional” limitations to the claims, in particular reciting steps relating to the manner of treating the patient based upon the thiopurine level, the claim would have had significantly less commercial value, if any, since Prometheus was in the business of testing for diseases, not in the business of treating them.

This is, of course, something for which the Court does not evidence an understanding or a concern. But it is something that the Court should both understand and care about—since the entire purpose of the patent law is to encourage innovation through economic incentives.  If that is the theory, then the incentives to patent must be aligned with the value proposition that the innovator seeks to exploit.  It follows that reducing the value of the incentive should reduce the level of innovation. (I’m not saying here that in fact this is true; I’m merely stating this as hypothesis).

What is the Law?

The Court has spliced together disparate, essentially contrary opinions into a legal virus, a self-validating meme that cannot be defeated by logic or example. I said earlier that the Court’s analysis was “not even wrong.”  The Court’s reliance on claim dissection, on hand waving rules of “is it enough?” and “does it add something significant?”; its confusing of statistical relationships with “natural laws;” and its shear daftness in believing that Section 101 must lord over Sections 112, 102 and 103 all combine to create a powerful “means for” invalidating any patent, now extant or in the future.  Give me any patent claim, and I can craft an argument using the Court’s Prometheus analysis that it is invalid. And like any theory that is not falsifiable—that is not even wrong—you could not logically defeat my argument: for I could always say: “it’s not enough.” 

Zeus punished Prometheus for stealing fire—knowledge—from the gods of Mount Olympus and giving it to Man: chaining him to a rock so his innards may be eaten by a bird of prey. So too has the Court sat in judgment of the modern Prometheus, for “stealing” a small bit of knowledge from the equivalent—and equivalently false—god, the laws of nature. Like their namesake, this Prometheus has had its innards exposed for the taking, and its discovery is now available for anyone to feast upon.

There may or may not be laws of nature. Even Einstein’s theory of relativity is not immune to criticism. But there is a law which is universal, immutable and everlasting, a law that will be confirmed yet again by this decision: The law of unintended consequences. 


 

Guest Post: Prometheus v Mayo – A European view

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Guest post by Paul Cole, European Patent Attorney, Lucas & Co.

How is the Prometheus invention viewed by the EPO, and what are the differences between the reasoning of EPO appeal boards and of the US Supreme Court concerning patent eligibility?

An indication is that the EPO granted EP-B-1114403 (Seidman) which corresponds to US 6355623 and has a main claim that reads:

An in vitro method for determining efficacy of treatment of a subject having an immune-mediated gastrointestinal disorder or a non-inflammatory bowel disease (non-IBD) autoimmune disease by administration of a 6-mercaptopurine drug, comprising

determining in vitro a level of 6-thioguanine in a sample from said subject having said immune-mediated gastrointestinal disorder or said non-inflammatory bowel disease (non-IBD) autoimmune disease,

wherein said treatment is considered efficient if the level of 6-thioguanine is in the range of about 230 pmol per 8×108 red blood cells to about 400 pmol per 8×108 red blood cells.

The above claim is not an outlier. The forward references of the '633 patent include US 7524851, whose equivalent EP-B-1695092 has a main claim that reads:

A method for monitoring azathioprine therapy in an individual, said method comprising

measuring the level of 6-thioguanosine diphosphate and 6-thioguanosine triphosphate in a sample from said individual, and

calculating a concentration ratio of 6-thioguanosine triphosphate to 6-thioguanosine triphosphate and 6-thioguanosine diphosphate,

wherein a concentration ratio greater than 0.85 is indicative of superior clinical responsiveness to azathioprine therapy, and wherein a concentration ratio less than 0.85 is indicative of inferior clinical responsiveness to azathioprine therapy.

In a communication dated 26 October 2007 and available in the EPO's online file the Examining Division decided that the '851 claim was novel and inventive based on the technical effect of improved therapeutic efficiency. In accordance with EPO practice, from that effect a technical problem based on the Seidman disclosure as starting point could be reconstructed which was to provide an improved method of monitoring azopurine therapy.

If the '403 patent had been challenged e.g. in an opposition the EPO would have been bound to follow established case law and hold that the claimed method was patent-eligible firstly because it is carried out on a sample from the subject and secondly because an in vitro measurement is made, see the Enlarged Appeal Board decision in G 3/08 PRESIDENT'S REFERENCE in which the long-standing practice of the Appeal Boards was approved. An argument that the "wherein" features should be disregarded for assessment of novelty or inventive step taking into account the exclusions under art. 52 EPC as a mere discovery or mere presentation of information would have been likely to fail because, as seen above, improvement in therapeutic efficiency is treated at least at first instance as a technical effect.

The CAFC in its opinion on remand of 17 December 2010 reasoned in broadly similar terms to what would be expected from an EPO Appeal Board dealing with patent-eligibility. It held that treatment and optimization formed part of an inherently patent-eligible treatment protocol (opinion, page 20) and continued:

We agree with the district court that the final "wherein" clauses are mental steps and thus not patent-eligible per se. However, although they alone are not patent-eligible, the claims are not simply to the mental steps. A subsequent mental step does not, by itself, negate the transformative nature of prior steps. Thus, when viewed in the proper context, the final step of providing a warning based on the results of the prior steps does not detract from the patentability of Prometheus's claimed methods as a whole. The data that the administering and determining steps provide for use in the mental steps are obtained by steps well within the realm of patentable subject matter; the addition of the mental steps to the claimed methods thus does not remove the prior two steps from that realm.

As to the overall significance of the "wherein" clauses in the context of the claim as a whole, the CAFC appears to have accepted that they helped define a technical result (opinion at pp.22-23):

Although the wherein clauses describe the mental processes used to determine the need to change the dosage levels of the drugs, each asserted claim as a whole is drawn to patentable subject matter. Although a physician is not required to make any upward or downward adjustment in dosage during the "warning" step, the prior steps provide useful information for possible dosage adjustments to the method of treatment using thiopurine drugs for a particular subject. Viewing the treatment methods as a whole, Prometheus has claimed therapeutic methods that determine the optimal dosage level for a course of treatment. In other words, when asked the critical question, "What did the applicant invent?," Grams, 888 F.2d at 839 (citation omitted), the answer is a series of transformative steps that optimizes efficacy and reduces toxicity of a method of treatment for particular diseases using particular drugs.

From a European standpoint the key ruling of the Supreme Court is that the reasoning of the CAFC and the EPO Appeal Boards should not be followed. Its reasons are set out in the slip opinion pp. 20-21:

Third, the Government argues that virtually any step beyond a statement of a law of nature itself should transform an unpatentable law of nature into a potentially patentable application sufficient to satisfy §101's demands… The Government does not necessarily believe that claims that (like the claims before us) extend just minimally beyond a law of nature should receive patents. But in its view, other statutory provisions—those that insist that a claimed process be novel, 35 U. S. C. §102, that it not be "obvious in light of prior art," §103, and that it be "full[y], clear[ly], concise[ly], and exact[ly]" described, §112—can perform this screening function.

This approach, however, would make the "law of nature" exception to §101 patentability a dead letter …

What role would laws of nature, including newly discovered (and "novel") laws of nature, play in the Government's suggested "novelty" inquiry? Intuitively, one would suppose that a newly discovered law of nature is novel. The Government, however, suggests in effect that the novelty of a component law of nature may be disregarded when evaluating the novelty of the whole… But §§102 and 103 say nothing about treating laws of nature as if they were part of the prior art when applying those sections. Cf. Diehr, 450 U. S., at 188 (patent claims "must be considered as a whole").

If the CAFC/EPO approach is to be abandoned, what is the alternative? The rule followed by the Supreme Court is that the claimed combination of features must amount to significantly more than the natural law itself and that limiting the law to a particular technological environment or adding insignificant post-solution activity does not suffice. The Court was aware of the need for caution and warns in its opinion:

The Court has recognized, however, that too broad an interpretation of this exclusionary principle could eviscerate patent law. For all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.

In effect the Mayo rule corresponds to the "contribution approach" suggested at first instance in the UK in Merrill Lynch's Application [1988] R.P.C. 1 which was to consider whether the inventive contribution resided only in excluded matter. That approach also has its difficulties and it was rejected by the UK Court of Appeal in Genentech's patent [1989] R.P.C. 147 where it was observed that:

Such a conclusion, when applied to a discovery, would seem to mean that the application of the discovery is only patentable if the application is itself novel and not obvious, altogether apart from the novelty of the discovery. That would have a very drastic effect on the patenting of new drugs and medicinal or microbiological processes.

The Supreme Court acknowledges that the rule ought not to be interpreted to cover newly discovered first or subsequent medical indications for a known substance (slip opinion at page 18):

Unlike, say, a typical patent on a new drug or a new way of using an existing drug, the patent claims do not confine their reach to particular applications of those laws.

It is, however, less than clear by what logic new drugs escape the rule in Mayo but the Prometheus test is caught by that rule. For example, nitroglycerin was first synthesized in 1847 and was used as an explosive. In 1878 it was introduced as a treatment for angina by Dr William Murrell. Suppose Dr Murrell had claimed a pharmaceutical composition for the treatment of angina or other heart conditions comprising nitroglycerin and a pharmaceutically acceptable carrier or diluent. The anti-angina activity of nitroglycerin could be regarded as a mere phenomenon of nature "though just discovered", the reference to treatment of cardiac disorder could be a mere limitation to a particular technological environment and formulation into tablets or other forms for convenient administration to the patient could be regarded as an insignificant post-solution activity since the incorporation of active ingredients into tablets or other dosage forms was well known long before 1878. The pharmaceutical composition claim which is in standard form for a first medical indication would block research into further formulations and further medical indications for nitroglycerin. Indeed, blocking further development was an objection raised in the 1790's to James Watt's patent for a steam engine. It might be said that the hypothetical Murrell claim confines the reach of what has been discovered to the particular application of pharmaceuticals but it might equally be said that the Prometheus claim confines the reach of what has discovered to the particular application of a blood test for metabolites of drugs of a particular family. If there is a distinction, arguably it is no more than pragmatism.

Such a conclusion is consistent with the arguments of Robert Sachs in Part III of his Guest Post, where he singles out relative terminology and conclusory statements. A question expressed as "doing significantly more" or "adding enough" is a matter of degree rather than of kind, and provides no unequivocal forward guidance. Indeed the Supreme Court accepted the limitations of its guidance (slip opinion at page 24) where it said:

In consequence, we must hesitate before departing from established general legal rules lest a new protective rule that seems to suit the needs of one field produce unforeseen results in another.

Perhaps the wisest course is to take the opinion at its word and accept that beyond disapproving the CAFC/EPO approach Mayo makes no new rule and does nothing positive to explain what is patent-eligible and what is not.

Paul Cole wrote more on the topic in a recent guest post on Warren Woessner's blog Patents4Life.

 

Punishing Prometheus: Part IV – Machine or Transformation, We Hardly Knew Thee…

Patent,

Guest Post by Robert R. Sachs of Fenwick & West LLP
Read Part I; Part II; and Part III. 

It seems like only yesterday the Court told us that the “machine or transformation” test was “a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under § 101.” The Court’s reasoning suggested that while passing MoT was not necessary, it was still a sufficient condition for patent eligibility, and if nothing else indicated that the invention was not an abstract idea, law of nature, or natural phenomena.

Now, less than two years later, the Court diminishes the test further: “we have neither said nor implied that the [machine-or-transformation] test trumps the ‘law of nature’ exclusion.” What this means in practice is that even if a claim satisfies the MoT test, it could still be deemed unpatentable subject matter, especially by a fact which follows this Court’s method of a) stripping claims down to ”instruction manual” glosses, and b) finding the presence of “natural relations” to be dispositive evidence of a “natural law” in the claim.

In short, before Prometheus, you could assert that your claim was patentable subject matter because it satisfied MoT.  Now MoT does you little if any good—it’s gone from a sufficient condition to a mildly interesting one.

Standing Up for the Patent Bar

For some reason the Court seems to delight in denigrating the role of patent counsel in drafting claims, treating patent attorneys as either mere scriveners or crafty manipulators of words and phrases, clauses and conjunctions. “Those cases warn us against interpreting patent statutes in ways that make patent eligibility depend simply on the draftsman’s art.”  Indeed, in calling patent attorneys draftmen, apparently the Court believes that all we do is make fancy pictures.   Name me another legal discipline in which there is a special bar exam, not to mention to a requirement of an engineering or science degree.  What is it about patent law that makes the Court think we’re not lawyers? 

Second, I ask you: what’s wrong with making patent eligibility depend on our skill?  The patent is a contract, a quid quo pro:  disclose the invention and in exchange obtain the exclusive right.  The patent act requires patents to recite claims that define the invention, the USPTO examines the claims, and infringement is based on the claims. The validity of every other legal document depends on the “draftsman’s art,” upon the skill of the lawyer—just ask any licensing attorney, securities lawyer, or trusts and estate attorney.  Why are patent attorneys somehow not given the same level of recognition by the Court, that what we do is a legal activity, that claims are first and foremost legal definitions? That we are charged not just with describing the implementation of an invention to meet the legal test of an enabling disclosure—but with defining by way of a claim the “metes and bounds” of the invention.  We are trusted with carefully carving out a space for the broadest yet most precise statement of the invention, surrounded on all sides by the prior art, using nothing more than a single sentence.  Where other legal writers suffer no consequence for employing laundry lists of verbs, nouns, adjectives—to throw in the kitchen sink of do not fold, spindle, mutilate, tear, shred, distort, etc.—we are compelled by case law to consider every word as critical.  A misplaced comma, the use of “the” instead of “a,” “at least one” instead of “each,” can spell the difference between a patent worth millions and patent worth less than wallpaper.  The California Civil Code includes a section of codified Maxims of Jurisprudence; my favorite is “Superfluidity does not vitiate.”  True for every attorney but patent attorneys.  Show me another area of legal drafting that is as highly constrained in both form and substance as patent claim writing.

The Court also seems to think that inventors arrive at the patent attorney’s door step with their inventions fully formed, fully understood, and fully explained and explainable. In some cases, in some fields, that may be true—say for those funny hats with fans, beer cans, and scrolling LEDs. But for the majority of technologies, the patent attorney is an active and necessary participant in the creation of the patent and its value. Many inventors simply do not know what they have invented, they lack the framework for understanding their inventions, first in the context of the prior art, and second in the context of how the USPTO and the courts analyze inventions under the law.  Senior patent attorneys often have significantly more exposure and breadth of experience in their particularly technology areas than the inventors that they advise. They combine their understanding of the patent law, the technology, and the business goals of the inventor to create something that did not previously exist: an intellectual property right. This is no mere scrivener’s recording, from the inventor’s lips to the patent examiner’s ear to the court’s gavel.  This is legal counseling and crafting at its best. 

Punishing Prometheus: Part III – Conclusions Masquerading as Analysis

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Guest Post by Robert R. Sachs of Fenwick & West LLP; Read Part I and Part II. 

Patent attorneys are trained to draft claims using clear and precise language, and in particular to not rely upon relative terminology to define an invention–terms like “about,” “substantially,” “superior,” “better,” “good,” “sufficient” etc.  See, Manual of Patent Examination Procedure (MPEP), § 2173. After all, claims are definitions and indefiniteness is fatal.

So when the Court articulates expresses what is ostensibly a rule of analysis—a definition of what is patentable—patent attorneys naturally look for precision and clarity. Alas, we find a jumble of relative terminology and conclusory statements masquerading as legal reasoning. Consider the following samples:

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.

[T]hose 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.

The Court has repeatedly emphasized this last mentioned concern, a concern that patent law not inhibit further discovery by improperly tying up the future use of laws of nature.

What is “significant” or “enough” or “sufficient?” What would be “properly tying” up future uses? It is “not enough” to say that what’s in Prometheus’s claim is “not enough,” especially when, at the same time, the Court makes sweeping statements that the presence of “entirely natural processes” indicate that the patent recites a “natural law.”  These various statements or criteria are not functional tests—they are conclusions and nothing else.  This leads us to the next problem.

So Long Technology, Hello Business Methods!

The Court pays lip service to the principle that “all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.”  Indeed, any invention in the “hard sciences” of electronics, physics, chemistry, biology, engineering, etc. would perforce comply with the laws—or more properly—descriptive paradigms of the domain. An invention for a new electronic circuit clearly operates according to Maxwell’s equations. An invention for a new way of making a chemical compound necessarily recites steps that in essence are nothing more than chemical reactions—laws of nature in the Court’s book.

Let’s take a look the core of the Court’s analysis of the Prometheus claim and see what happens when we transport it to the domain of electronics, to a simple device such as loudspeaker:

Prometheus

While it takes a human action (the administration of a thiopurine drug) to trigger a manifestation of this relation in a particular person, the relation itself exists in principle apart from any human action. The relation is a consequence of the ways in which thiopurine compounds are metabolized by the body—entirely natural processes. And so a patent that simply describes that relation sets forth a natural law.

A loudspeaker

While it takes a human action (the activation of the amplifier) to trigger the output of the sound from the loudspeaker in response to an electrical signal, the relation itself exists in principle apart from any human action. The relation is a consequence of the ways in which electrical impulses are converted to mechanical movement—entirely natural processes. And so a patent that simply describes that relation sets forth a natural law.

There are—or should I say, were—by my estimate, approximately 10,000 patents on various types of loudspeakers. This is only one example, and a trivial one at that. A similar example could be constructed in any field of technology. And if that is the case, then no patent is immune from this line of attack. Well, no patent except one for a business method.

Business methods, being entirely the province of arbitrary human behavior such as advertising, finance and the like, are the one class of inventions clearly not based upon or using laws of nature and natural phenomenon. Yes, all inventions comply with the law of thermodynamics, etc., and perhaps all human behavior could be explained if we truly could model the regularities that govern the behavior of all fundamental particles, and as result we divorced ourselves from a persistent macro-phenomenon as free will and consciousness.   If we get that far, then we will have a more difficult problem on our hands, whether we can patent non-obvious applications of those laws.   Whether these methods are “abstract ideas” is another matter—but as should be clear from the above, it is my view that a method used in a business is not an abstract idea. If you can sell it, it’s patent-eligible. 

 

Punishing Prometheus: Part II – What is a Claim?

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Guest Post by Robert R. Sachs of Fenwick & West LLP; Read Part I

Yes, I said that: the Court does not understand the nature of patent law—more precisely, it does not understand what claims do. Reading the Court’s treatment of Prometheus’ claim, one would think that claims are some type of qualitative instruction manual, a recipe that speaks to “audiences” such as doctors, about which things are “relevant to their decision making.” Claims are no such thing: they are definitions that articulate a specific combination of steps or structures. They are objective in form and design, not subjective or advisory. The notion that the claims here “trust” doctors to “use those laws” is at best silly, and at worst badly misguided. Reducing the claim to this “instruction manual” allows the Court to analogize the claim to Einstein “telling linear accelerator operators about his basic law”—a low point in modern legal reasoning.

In this decision, as well as in Bilski, Benson, and Flook, the Court simply does not “get” what claims are about. The entire preemption analysis, born of a conflation of “algorithms” with “scientific truths” in Benson, is based on this misunderstanding. By definition claims preempt, that is what they are designed to do: to preclude one from making, using, selling, etc., the invention. A broadly drafted claim preempts broadly. And it is this further confusion—between “breadth” or “abstraction” and “abstract ideas”—that is the second damaging mistake the Court made (and continues to make).

(more…)

Punishing Prometheus: The Supreme Court’s Blunders in Mayo v. Prometheus

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Guest Post by Robert R. Sachs of Fenwick & West LLP

“Not even wrong.” So said Wolfgang Pauli about a proposed analysis by a young physicist, meaning that the arguments were not subject to falsification, the basic tool of scientific analysis. So too it can be said about the Supreme Court’s decision in Mayo v. Prometheus. The Court’s analysis creates a framework for patent eligibility in which almost any method claim can be invalidated. Like so many pseudo-sciences in which every phenomenon can be rationalized and in which there is no test that can show the theory to be incorrect, under Prometheus seemingly anything can be “explained” as being unpatentable subject matter.

Let me say at the outset that I’ve been a student of patent law, and patent eligibility in particular, since 1993. My clients have frequently been those whose inventions bumped up against the boundaries of patentable subject matter—in software, e-commerce, finance, business operations, user interfaces, and bio-informatics to name a few—so I have become intimately acquainted with both the legal and practical implications of this question. As such my personal reaction to this decision is very strong, and I will be quite blunt in what follows.

Over the next several days I will address just some of the logical and legal errors in the Court’s decision.

What’s a Law of Nature?

The first critical mistake is the Court’s assumption that Prometheus’ claims recited a “law of nature:” “The claims purport to apply natural laws describing the relationships between the concentration in the blood of certain thiopurine metabolites and the likelihood that the drug dosage will be ineffective or induce harmful side-effects.” The facile assumption that this relationship is a “law of nature” is incorrect, and potentially the most damaging misstep by the Court.

First, let us assume for the moment that there are in fact such things as “laws of nature.” What would their characteristics be? A first approximation would suggest that a law of nature is immutable and universal, that it is not subject to change, and it applies in all circumstances. See, Evidence Based Science. Thus, gravity and the speed light apply to you and me equally, and under all conditions. (I’m purposely using these two examples, for reasons that will become clear.)  However, this is not the case with the toxicity of any drug, including thiopurines, as acknowledged by the Court: the amount of a toxic dose varies between individuals for two reasons. First, different people metabolize at different rates, thereby producing different metabolite levels for a given dose. Second, individuals have differential responses to a given amount of the metabolites; a given level of the metabolites may be toxic in one person and not toxic in another. Thus, while the patent sets forth metabolite levels for toxicity and effectiveness, these levels are necessarily probabilistic, as some patients could experience toxicity at levels below or above those specified in the patent claims. This is inherent in the way toxicity is determined using a median lethal dose, LD50. This is exactly the same reason that one person can be drop dead drunk after five drinks and another can be stone cold sober at the same level. Indeed, Mayo’s test used a higher threshold for toxicity—evidence that there is no “law of nature” as to what is a toxic dose of thiopurine in all humans.

The “natural relation” that Prometheus claims is, itself, not immutable in an even deeper sense. This relationship is a byproduct of human (or perhaps more generally mammalian) biology, which from a logical point of view is a contingent relationship that could have been otherwise: we could have evolved in such a way that the toxicity range was higher or lower, or the drug was entirely ineffective. That is, it’s an arbitrary and contingent fact that humans evolved so that thiopurine drugs were effective at all for treating immune-mediated gastrointestinal disorders, or that we metabolize them in a manner that makes them toxic at specific dosing ranges. Indeed, given that humans are not exposed to thiopurine in nature, it is hard to understand how it can even be argued that it is a “natural law” that these drugs have a specific range of toxic or effective dosages at all. That these drugs are effective (or toxic) is a classic discovery in the truest sense of the term.

At best, the relationship between the dosage and toxicity level may be a “natural phenomenon.” Let us assume that is the case. Natural phenomena are a different class of things than laws of nature. Lightning, mirages, tornadoes, superconductivity, rainbows, these are natural phenomena: events that take place in nature (or in the lab) under specific and contingent conditions. While these events are of course dependent on the laws of nature, they are different from them in kind. The prohibition of patent claims in this regard is for claims on the phenomenon itself, not on the specific application of a phenomenon. Indeed, most patents in the chemical, biological, and electrical arts are based precisely on this distinction, being able to induce, apply, or control a natural phenomenon for a particular purpose. For example, there are thousands of patents that expressly claim a particular use of the Hall effect, natural phenomena discovered in 1879. The Court’s failure to appreciate this distinction puts many patents that harness natural phenomena at risk.

In short, the relationship of thiopurine dosage to toxicity is a contingent, empirical fact and subject to discovery. Like other empirical facts, it is precisely the type of subject matter that has been patented in this country since the very first patent issued by the USPTO: Samuel Hopkins’ patent on an improved method for making potash, based on the discovery that burning the raw ashes a second time increased their carbonate production. Hopkins’ discovery is no different in kind from Prometheus’ discovery: in both cases empirical “scientific” facts about the world.

But let us return to the core assumption: that there are laws of nature in the first instance. The Court makes the obvious reference to Einstein’s E=mc2 equation as an example. But the great scientist would have readily dismissed this appellation, knowing full well that what he set forth was a theory, a model, a description that was subject to falsification. Indeed, Einstein’s work has been criticized as being incomplete, or valid only in limited circumstances.

The view that there are laws of nature reflects an 18th century view of the world, based no doubt upon the classical, Newtonian view of a reality of absolute space and time governed by the three “laws of motion”—laws that were thought to be immutable and universal—and which Einstein among others showed not to be “laws” at all.

Most modern scientists do not view reality as defined by “laws”—indeed, the very idea that we could “know” what the “laws” are itself begs the very questions that philosophers since Plato have struggled with, the questions of epistemology (what is knowledge, what can we know) and ontology (what exists).

In several places, the Court lumps laws of nature together with “abstract ideas,” for example by leaning on the analysis in Bilski and Benson. But again, this is a category error: abstract ideas are very different from laws of nature, and must be treated separately. “Ideas,” classically speaking, are the “impressions in your head” when you think about something—the thing you think about is a “concept.” When you think about concepts that have instances in the world—cats, dogs, and thiopurine—you are thinking of “concrete” concepts, and your ideas are “concrete.”  Even when you think of a unicorn or a flying purple people eater, you are thinking of a concrete concept because it could have an instance in the world. However, when you think about concepts that do not (or could not) have instances in the world—justice, eternity, infinitesimal, invisible green four sided triangles—or metaphors—All the world’s a stage, and all the men and women merely players—the “idea” in your head is “abstract.” (Of course, I know that this is (1) a gloss, and (2) subject to debate as much as anything else in philosophy. Arguably, there are no “abstract” concepts at all. I’ll leave that debate for another day).

To wit: the abstract idea of say, immortality, is clearly not a “law of nature,” describing something that by definition cannot have examples in the world, since nothing can be immortal (there could be unicorns however, thus the concept of “unicorn” is concrete). Conversely, Ohm’s Law—that the current through a conductor between two points is directly proportional to the potential difference across the two points—describes something inherently and entirely physical and real. Ohm’s Law is a description of the world (and it turns out, not always correct). That the Court attempts to put these two square pegs in the same round hole reveals just how little the Court understands the nuances of science, philosophy and language—let alone the patent law itself.

Tomorrow:  What’s a Claim? and Patent-Eligibility vs. Patentability

 

 

Examining Subject Matter Eligibility under Mayo v. Prometheus

Patent,

By Dennis Crouch

In the wake of the Supreme Court’s decision in Mayo v. Prometheus, the US Patent & Trademark Office has distributed a short memorandum to examiners providing additional guidance. One problem with the Prometheus decision is that it does not appear to consider administrative practicality and there be an ongoing open question as to whether the USPTO will be able to successfully implement the proffered rule of subject matter eligibility. Regardless, the USPTO must follow the law to the best of its abilities and that means that it must examine patents using the Mayo standards.

In the three page “preliminary” document sent to the examining corps, the PTO’s chief examination policy guru Drew Hirshfeld described the USPTO’s conservative new approach:

As part of a complete analysis under 35 U.S.C. § 101, examiners should continue to examine patent applications for compliance with section 101 using the existing Interim Bilski Guidance issued July 27, 2010, factoring in the additional considerations below. The Interim Bilski Guidance directs examiners to weigh factors in favor of and against eligibility and reminds examiners that, while the machine-or-transformation test is an investigative tool , it is not the sole or a determinative test for deciding whether an invention is patent-eligible.

Examiners must continue to ensure that claims, particularly process claims, are not directed to an exception to eligibility such that the claim amounts to a monopoly on the law of nature, natural phenomenon, or abstract idea itself. In addition, to be patent-eligible, a claim that includes an exception should include other elements or combination of elements such that, in practice, the claimed product or process amounts to significantly more than a law of nature, a natural phenomenon, or an abstract idea with conventional steps specified at a high level of generality appended thereto.    

If a claim is effectively directed to the exception itself (a law of nature, a natural phenomenon, or an abstract idea) and therefore does not meet the eligibility requirements, the examiner should reject the claim under section 101 as being directed to non-statutory subject matter. If a claim is rejected under section 101 on the basis that it is drawn to an exception, the applicant then has the opportunity to explain why the claim is not drawn solely to the exception and point to limitations in the claim that apply the law of nature, natural phenomena or abstract idea.

The USPTO is continuing to study the decision in Mayo and the body of case law that has evolved since Bilski and is developing further detailed guidance on patent subject matter eligibility under 35 U.S.C. § 101.

The document describes the Mayo decision as follows:

The Supreme Court found that because the laws of nature recited by the patent claims – the relationships between concentrations of certain metabolites in the blood and the likelihood that a thiopurine drug dosage will prove ineffective or cause harm – are not themselves patent eligible, the claimed processes are likewise not patent-eligible unless they have additional features that provide practical assurance that the processes are genuine applications of those laws rather than drafting efforts designed to monopolize the correlations. The additional steps in the claimed processes here are not themselves natural laws, but neither are they sufficient to transform the nature of the claims.

In this case, 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. Those steps, when viewed as a whole, add nothing significant beyond the sum of their parts taken separately. The Court has made clear that to transform an unpatentable law of nature into a patent-eligible application of such a law, one must do more than simply state the law of nature while adding the words “apply it.” Essentially, appending conventional steps, specified at a high level of generality, to laws of nature, natural phenomena, and abstract ideas cannot make those laws, phenomena, and ideas patent-eligible.

… A claim that recites a law of nature or natural correlation, with additional steps that involve well-understood, routine, conventional activity previously engaged in by researchers in the field is not patent-eligible, regardless of whether the steps result in a transformation. On the other hand, reaching back to Neilson, the Court pointed to an eligible process that included not only a law of nature (hot air promotes ignition) but also several unconventional steps (involving a blast furnace) that confined the claims to a particular, useful application of the principle.

The document does not address whether examiners should use the same analysis when considering claims that include an “abstract idea” such as a mathematical algorithm (i.e., software).

I suspect that the USPTO will wait for additional movement on the Myriad case before releasing a full set of new guidelines to examiners.

Read the memo: /media/docs/2012/03/mayo_prelim_guidance.pdf

Federal Circuit Continues Split on Patentable Subject Matter

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by Dennis Crouch

Myspace, Inc. v. GraphOn Corp. (Fed. Cir. 2012)

In yet another case, the Court of Appeals for the Federal Circuit has identified the wide chasm separating members of the court on issues involving patentable subject matter under 35 U.S.C. § 101. The majority opinion here – penned by Judge Plager and joined by Judge Newman – argues that courts should avoid the metaphysical question of whether an invention is unpatentably abstract whenever possible and instead focus on the conditions of patentability found in §§ 102, 103, and 112 of the patent act.

Judge Plager writes:

[C]ourts could avoid the swamp of verbiage that is § 101 by exercising their inherent power to control the processes of litigation, Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991), and insist that litigants initially address patent invalidity issues in terms of the conditions of patentability defenses as the statute provides, specifically §§ 102, 103, and 112. If that were done in the typical patent case, litigation over the question of validity of the patent would be concluded under these provisions, and it would be unnecessary to enter the murky morass that is § 101 jurisprudence. This would make patent litigation more efficient, conserve judicial resources, and bring a degree of certainty to the interests of both patentees and their competitors in the marketplace.

Judge Plager goes on to adopt the analogy to the Constitutional Avoidance Doctrine that Rob Merges and I suggested in our 2010 article titled Operating Efficiently Post-Bilski by Ordering Patent Doctrine Decision-Making.

In a sense, § 101 of the Patent Act can be thought of as the patent law analogy to the Bill of Rights of the Constitution. The latter sets in the broadest terms (“due process,” “equal protection”) the fundamental parameters of the citizenry’s legal right. In the context of patent law, § 101 similarly describes in the broadest terms the legally-protected subject matter an inventor can seek to patent: a “process, machine, manufacture, or composition of matter . . . .” The Supreme Court has wisely adopted a policy of not deciding cases on broad constitutional grounds when they can be decided on narrower, typically statutorily limited, grounds. Following the Supreme Court’s lead, courts should avoid reaching for interpretations of broad provisions, such as § 101, when more specific statutes, such as §§ 102, 103, and 112, can decide the case.

On the merits of the decision, the majority affirmed a lower court summary judgment holding that the asserted claims are invalid as anticipated and obvious under §§ 102 and 103(a) respectively.

In this case, the lower court never ruled on the question of patentable subject matter and none of the party briefs refer to Section 101, unpatentable abstract ideas, or Bilski v. Kappos. However, the majority felt compelled to discuss Section 101 based upon the dissenting opinion by Judge Mayer who opined that the patent intrinsically raises a threshold question of patentable subject matter that must be addressed.

Judge Mayer writes in dissent:

The issue of whether a claimed method meets the subject matter eligibility requirements contained in 35 U.S.C. § 101 is an “antecedent question” that must be addressed before this court can consider whether particular claims are invalid as obvious or anticipated. In re Comiskey, 554 F.3d 967, 975 n.7 (Fed. Cir. 2009). GraphOn Corporation (“GraphOn”) owns four patents, U.S. Patent Nos. 6,324,538 (the “‘538 patent”), 6,850,940, 7,028,034, and 7,269,591, which contain exceedingly broad claims to a system that allows users to exert control over the content of their online communications. This court must first resolve the issue of whether the GraphOn patents are directed to an unpatentable “abstract idea” before proceeding to consider subordinate issues related to obviousness and anticipation. See Bilski v. Kappos, 130 S. Ct. 3218, 3225 (2010) (noting that whether claims are directed to statutory subject matter is a “threshold test”); Parker v. Flook, 437 U.S. 584, 593 (1978) (“Flook”) (emphasizing that “[t]he obligation to determine what type of discovery is sought to be patented” so as to determine whether it falls within the ambit of section 101 “must precede the determination of whether that discovery is, in fact, new or obvious”); Comiskey, 554 F.3d at 973 (“Only if the requirements of § 101 are satisfied is the inventor allowed to pass through to the other requirements for patentability, such as novelty under § 102 and . . . non-obviousness under § 103.” (citations and internal quotation marks omitted)). I therefore respectfully dissent from the court’s judgment.

The dissent agrees with the majority (and our) suggestion that § 101 be treated as analogous to the US Constitution – but argues that the statute “is the standard expressed in the Constitution and it may not be ignored.” Rather, the dissent writes “a robust application of section 101 is required to ensure that the patent laws comport with their constitutionally-defined objective.”

Below, I have excerpted claim 1 of the patentee’s U.S. Patent No. 6,324,538 with a 1995 priority filing date:

1. A method of publishing information on a computer network comprising the steps of: creating a database entry containing information recieved from a user of the computer network, wherein the information includes data representing text, a universal resource locator, an image, and a user-selected category; generating a transaction ID corresponding to the database entry; password protecting the entries; displaying the entries in accordance with the user-selected category; presenting the information to a user in hyper text markup language in response to a user’s request.

The dissent is correct that the invention as claimed is incredibly broad.  However, this is the exact type of case that is just as easily eliminated on grounds of anticipation or obviousness.

Note for a later post — the majority opinion is also important for its statement on the theory and practice of claim construction.

Bar to Courts: Please Define “Unpatentably Abstract”

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By Dennis Crouch

Fort Properties, Inc. v. American Master Lease LLC, __ F.3d __ (Fed.Cir. 2012)(Judge Prost joined by Judges Schall and Moore.

American Master Lease (AML) owns a patent that covers a method of creating a tax-deferred real estate investment instrument. U.S. Patent No. 6,292,788. Claim 1 includes three primary steps: aggregating title to real property to form a real estate portfolio; encumbering the property in the real estate portfolio with a master agreement; and creating a plurality of deedshares by dividing title in the real estate portfolio into a set of tenant-in-common deeds with each of the deedshares subject to a reaggregation provision in the master agreement. This method is designed to take advantage of a federal income tax loophole that allows investment properties to be traded tax free in some circumstances.

This litigation arose after AML threatened Fort Properties with an infringement lawsuit and Fort Properties filed an action in the Central District of California asking for a declaratory judgment of invalidity. In a decision predating Bilski v. Kappos, the district court ruled the patent invalid for failing the machine-or-transformation test (MoT). On appeal, the Federal Circuit affirmed – finding the invention unpatentably abstract.

Unpatentably Abstract: Courts have long recognized patent claims as abstractions that tend to generalize and broaden the scope of a particular invention. That small level of abstraction is acceptable and encouraged. However, if a claim is too abstract then it becomes unpatentably abstract. At a conference this weekend, Chief Judge Rader, USPTO Solicitor Chen, and I held an interesting discussion on drawing that line. In my view, “preemption” is largely unhelpful because it falls into the same line drawing trap: A patent is only useful if it sufficiently preempts (i.e., excludes) others, but at some point too much preemption renders a claim unpatentably preemptive. I believe that all three of us see the current jurisprudence on abstract ideas as problematic. It leaves the courts and patent examiners without any real standards for determining an outcome other than asking whether the particularly claimed invention is “too much like Bilski, Benson, or Flook?”

Here, the appellate panel reviewed the tax strategy patent and decided that it counts as abstract because the invention is too much like Bilski.

We view the present case as similar to Bilski. Specifically, like the invention in Bilski, claims 1-31 of the ‘788 patent disclose an investment tool, particularly a real estate investment tool designed to enable tax-free exchanges of property. This is an abstract concept. Under Bilski, this abstract concept cannot be transformed into patentable subject matter merely because of connections to the physical world through deeds, contracts, and real property. . . . When viewing the claimed invention as a whole, the physical activities involving the deeds, contracts, and real property are insufficient to render these claims patentable.

Some of the claims included a computer limitation. However, the court held that limitation did not impose any meaningful limits on the claim scope for subject matter eligibility purposes. “AML simply added a computer limitation to claims covering an abstract concept—that is, the computer limitation is simply insignificant post-solution activity. Without more, claims 32-41 cannot qualify as patent-eligible.”

The problem with the court’s jurisprudence here is that “unpatentably abstract” is not defined. Rather, the court simply recited the core function of the invention and the conclusion that it is abstract.

BPAI On Statutory Subject Matter

Patent,

By Dennis Crouch

Two cases where the Board found statutory subject matter:

Ex Parte Hu, App. No. 2010-000151 (BPAI 2012). The examiner rejected claims under Section 101. On appeal, the BPAI held that the claimed “computer-readable storage medium” is “directed to a tangible storage medium, which can be read by a computer” and therefore fall “within one of the four statutory classes of 35 U.S.C. § 101” and qualify as patentable subject matter. The Board distinguished from a broader claim of a “computer readable medium” that would not qualify as tangible.

Ex Parte Svendsen, App. No. 2011-012505 (BPAI 2012). The claim included some machine-like elements such as a wired communication interface. However, the machine elements were all known in the prior art. The Examiner had thus rejected the claims as lacking patentable subject matter – noting that the physical ties were merely “extra-solution activity.” On appeal, the Board reversed – holding that the “extra-solution activity” doctrine “is more properly applicable to cases where Appellant is attempting to circumvent the prohibition on patenting abstract ideas by adding insignificant and unrelated activity. . . . Here, however, the storing and transmitting steps are clearly integral to the selection and delivery of media previews.”

Three cases where the Board found no statutory subject matter:

Ex Parte Rigoutsos, App. No. 2009-010520 (BPAI 2012). The Board affirmed a Section 101 rejection of the claimed “method for annotating a query sequence.” The method included three steps: “accessing patterns associated with a database comprising annotated sequences; assigning attributes to the patterns based on the annotated sequences; and using the patterns with assigned attributes to analyze the query sequence.” In its analysis, the Board found that the claimed method failed to satisfy the Machine-or-Transformation test and therefore failed satisfy the patentable subject matter test of Section 101. “Appellant’s argument does not identify a statutory transformation, and we will sustain the rejection of representative independent claim 1 and its dependent claims 2-17.”

Ex Parte Webb, App. No. 2010-008274 (BPAI 2012) The Board affirmed a Section 101 rejection of the claimed “method for playing a card game.” The method includes the seeming physically transformative step of “dealing two cards to a player.” However, the specification was clear that the cards could be either physical or virtual. In analyzing the meaning of “cards,” the Board determined that cards as claimed “are not an apparatus [or a] machine [but rather are] directed to a general concept that is abstract and sweeping as to cover both known and unknown uses of the concept and be performed through any existing or future-devised machinery.” This rejection is akin to the Supreme Court’s rejection of Morse’s telegraph patent that attempted to claim the use of electro-magnetism to transmit a signal – regardless of the machine used to generate, transmit, or decode the signal. Here, the Board found that the “card limitation” added no patentable subject matter hook because it contains “no limitations as to the mechanism for playing the game. The claimed method does not sufficiently recite a physical instantiation. We conclude that Appellant’s claims attempt to patent and preempt an abstract idea of the game in all fields, and thus is ineligible subject matter under 35 U.S.C. § 101.”

Ex Parte Edelson, App. No. 2011-004285 (BPAI 2012). Edelson’s patent application is directed to a “computer implemented method” for creating asset backed derivatives. Other than the preamble, the claims do not recite any particular link to a particular machine. Thus, the Board easily rejected the claim as reciting “no more than the abstract concept of issuing an abstract intangible asset. As in Bilski, a patent including these claims would allow the Appellant to pre-empt the use of this approach in all fields, and would effectively grant a monopoly over an abstract idea.”