Tag Archives: Subject Matter Eligibility

Dealertrack v. Huber: Unpatentable “computer aided” claims

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By Jason Rantanen

Dealertrack v. Huber (Fed. Cir. 2012) Download 09-1566
Panel: Linn (author), Plager (concurring in part and dissenting in part), and Dyk

The Federal Circuit's opinion in Dealertrack adds to the evolving law on subject matter patentablility of computer-related inventions. It should be read in connection with two other recent decisions in this area, Ultramercial v. Hulu, 657 F.3d 1323 (Fed. Cir. 2011) and CyberSource Corp. v. Retail Decisions, 654 F.3d 1366 (Fed. Cir. 2011).

At issue was the subject matter patentability of claims 1, 3, and 4 of Patent No. 7,181,427.  Claim 1 is representative:

1. A computer aided method of managing a credit application, the method comprising the steps of:
[A] receiving credit application data from a remote application entry and display device;
[B] selectively forwarding the credit application data to remote funding source terminal devices;
[C] forwarding funding decision data from at least one of the remote funding source terminal devices to the remote application entry and display device;
[D] wherein the selectively forwarding the credit application data step further comprises:
[D1] sending at least a portion of a credit application to more than one of said remote funding sources substantially at the same time;
[D2] sending at least a portion of a credit application to more than one ofsaid remote funding sources sequen-tially until a finding [sic, funding] source returns a positive funding decision;
[D3] sending at least a portion of a credit application to a first one of said remote funding sources, and then, after a predetermined time, sending to at least one other remote funding source, until one of the finding [sic, funding] sources returns a positive funding deci-sion or until all funding sources have been exhausted; or,
[D4] sending the credit application from a first remote funding source to a second remote finding [sic, funding] source if the first funding source de-clines to approve the credit application.

On appeal, the CAFC agreed with the district court that these claims are "directed to an abstract idea preemptive of a fundamental concept or idea that would foreclose innovation in this area," and thus are invalid under 35 U.S.C. §101.  In its simplest form, the court reasoned, the claimed process explains the basic concept of processing information through a clearinghouse.  "Neither Dealertrack nor any other entity is entitled to wholly preempt the clearinghouse concept."  Slip Op. at 35. 

Nor was the link to a computer sufficient to limit the claims to an application of the idea.  "The claims are silent as to how a computer aids the method, the extent to which a computer aids the method, or the significance of a computer to the performance of the method.  The undefined phrase "computer aided" is no less abstract than the idea of a clearinghouse itself."  Slip Op. at 35.  "Simply adding a computer aided limitation to a claim covering an abstract concept, without more, is insufficient to render the claim patent eligible."  Id. at 36.  In essence, the claimed process was akin to the unpatentable binary-coded decimal to pure binary conversion in Gottschalk v. Benson, 409 U.S. 63 (1972), and covered a clearinghouse process "using any existing or future-devised machinery."

This opinion completes a trio of recent opinions dealing with the patentability of computer-related inventions, the others being Ultramercial and CyberSource.  In Ultramercial, authored by Chief Judge Rader and joined by Judges Lourie and O'Malley, the court concluded that a process for monetizing copyrighted products using a computer fell on the patentable side of the abstract ideas versus patentable application divide.  Reaching the opposite result on the issue of abstractness, the CyberSource panel of Judges Bryson, Dyk (author) and Prost concluded that a method of verifying a credit card transatction over the Internet constituted an unpatentable process.  In Dealertrack, the court drew upon the reasoning in CyberSource while distinguishing Ultramercial.

The court also addressed issues of claim construction and indefiniteness. Particularly noteworthy was the court's conclusion that "i.e.:" in the context of a patent-in-suit could not be read definitionally. Slip Op. 17-20.

Towards a more efficient judicial process:  Writing in partial dissent, Judge Plager disagreed with the majority's decision to address subject matter patentability:

[A]s a matter of efficient judicial process I object to and dissent from that part of hte opinion regarding the '427 patent and its validity under §101, the section of the Patent Act that describes what is patentable subject matter.  I believe that this court should exercise its inherent power to control the processes of litigation, Chamberes v. NASCO, Inc., 501 U.S. 32, 43 (1991), and insist that litigants, and trial courts, initially address patent invalidity issues in infringement suits in terms of the defenses provided in the statute: "conditions of patentability," specifically §§102 and 103, and in addition §§112 and 251, and not foray into the jurisprudential morass of §101 unless absolutely necessary.

Judge Plager appears to be thinking in the same direction as suggested by Professors Crouch and  Merges in their recent article Operating Efficiently Post-Bilski by Ordering Patent Doctrine Decision-Making, 25 Berkeley Tech. L.J. 1673 (2010), in which they proposed that "the § 101 issue of Bilski be considered only when doing so is absolutely necessary to determine the validity of a claim or claims in a patent. We believe any claim that can be invalidated under one of the less controversial and less complex requirements for patentability—§§ 102, 103, and 112, for instance—ought to be disposed of without considering subject matter patentability. In other words, the Bilski issue should be avoided wherever it is not strictly necessary."

Guest Post: Where do Processes of Nature End and Processes of Human Invention Begin?

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The following excerpt comes from Professor Robin Feldman's forthcoming Harvard University Press book Rethinking Patent Law which will be released in 2012. The excerpt is reproduced with permission from Harvard and Professor Feldman.

Looking from the perspective of preemption can be helpful in developing an approach to many of the questions generated by the emerging field of personalized medicine. Personalized medicine is an area of applied research devoted to developing tests that operate on biological and clinical data from a patient (e.g., protein levels, genetic mutations, medical history) to provide diagnoses, prognoses, and treatment regimens specific to the patient. Cases arising in this field include LabCorp, which concerned correlating elevated homocysteine levels with certain deficiencies, and Prometheus, which concerned determining metabolite levels after administering a particular class of drugs for gastrointestinal disorders and adjusting the dosage of the drug based on the metabolite levels.

As discussed earlier, the Federal Circuit's decision in Prometheus seemed to suggest that most life science inventions would satisfy the requirements of patentable subject matter, while the PTO's application of Prometheus could lead to the rejection of numerous inventions in this arena. Neither extreme is necessary if one focuses on preemption of laws of nature and natural phenomena as the primary concern.

For example, LabCorp was a relatively simple application of personalized medicine. It involved one biomarker and a reasonably straightforward correlation for treatment. In contrast, most personalized-medicine diagnostics are developed using whole genome expression or sequencing arrays to identify hundreds or even thousands of biomarkers that can be used to diagnose a specific disease state. The machine learning algorithms used to identify these markers do not operate on statistical concepts as simple as linear correlation, which for some of us is complicated enough. Machine learning algorithms employ statistical models to identify different combinations or "patterns" of markers that correlate with a specific disease state. Usually these markers are selected and statistically modeled to compensate for human genetic and environmental variation.

Thus, most personalized-medicine programs are tremendously complex compared even to logistic regression and other simple forms of statistical analysis. They are not simply a reflection of a natural phenomenon; they are an interpretive model of nature. Nor are they analogous to or preemptive of human thought. It would be quite improbable for a physician to be able to sit down with a pen and paper and work out a diagnostic by applying a machine learning algorithm or logistic regression to hundreds of biomarker levels.i

Consider the first person who discovered that human chorionic gonadotropin (hCG) levels indicate pregnancy when they are elevated above a certain level, and assume that the inventor also created a home pregnancy test for measuring the hCG. One could think of this as a simplistic personalized diagnostic device in which a particular nongenetic marker is measured to identify a state of health. The inventor could certainly patent the kit, which would consist of the physical device with its particular components. The inventor should not, however, be allowed to patent the process of testing human urine for an elevated level of hCG and correlating that level with the state of pregnancy. The core of the invention, the fact that hCG above a particular level confirms pregnancy, is a simple reflection of nature rather than an interpretive model. To understand the difference, compare the process of measuring one marker by looking for a simple level to the average personalized invention. The modern personalized invention may utilize hundreds of biomarkers analyzed by means of statistical patterns. Even if the complex process involved in identifying the relevant biomarkers yields a limited number of biomarkers to consider for a relevant patient, that information does not relate directly to anything. For example, with a personalized medicine invention involving only a few biomarkers, each of those markers generally has confidence intervals assigned to indicate the likelihood that the presence or absence of a factor or the particular level of that marker will translate into a particular diagnosis or successful treatment. Once biomarkers are collected from a relevant patient, they must be processed by statistical modeling to determine how the various factors and confidence levels for this particular patient should be interpreted. The complexity and variability of individual humans ensures that a model like this can never be a simple reflection of nature. Rather, it is no more than an interpretation of nature, albeit one that is extremely important in the treatment of a specific disease.

In contrast, the inventor of the method of measuring hCG is looking at only one marker, and it is a marker that is elevated in the same range for pregnant women in general. Thus, it requires no complex modeling and is a direct reflection of a phenomenon of nature. As a result, it would not be patentable subject matter on the grounds that the core of the invention is no more than the discovery of a natural phenomenon.

The hCG invention should also fail on the grounds that performing the test is no more than a mental step. The method does not require complex computer analysis to interpret the data; it requires observing a particular level of a substance and reaching a conclusion from that level. Preventing human beings from looking at information and concluding something threatens to preempt simple thought.

Personalized medicine, with its marriage of biology and computer technology, provides a wonderful opportunity to understand and tease out some of the threads of patentable subject matter. These inventions demonstrate how early misconceptions about the nature of computer programs and the nature of mathematics are causing problems in modern case law.ii

Part of the difficulty can be traced to confusion between the content of something that is being expressed and the language in which it is expressed. For example, we know that laws of nature are not patentable. Some of these laws are familiar to us in the formulaic language in which we normally see them expressed. Most people, for example, would recognize one of Einstein's laws of physics expressed as E = MC2. One could express that same law in prose, however, rather than formulaic language by explaining the way in which matter and energy are interchangeable.

The choice of language is irrelevant.iii We disallow patenting of E = MC2 not because it is expressed in mathematical form but because it represents one of the building blocks of scientific exploration and endeavor. Patenting that law would preempt scientific exploration by occupying a basic concept.

In addition to laws of physics, other things can be expressed in formulaic language. Expressing something in formulaic language, however, does not mean that what is being expressed is a law of nature. Thus, the fact that computer programs are expressed in a formulaic language that looks somewhat like math to the layperson does not mean that the concepts underlying a particular program are analogous to math, let alone analogous to a law of nature. Two things expressed in the same language or the type of same language are not necessarily analogous. Comic books and the Constitution are both expressed in the English Language, but they are hardly analogous. Our focus should remain on the content of what is being expressed and on the preemptive effect that might result from patenting that type of content.

Some unfortunate language in the Supreme Court's Diehr opinion, which flows from this misperception, makes it more difficult to properly separate software claims that should be patentable from ones that should not. In searching for logic to explain why the rubber-molding invention at issue was patentable while other apparently similar inventions had failed, the Court made the following comment: "A mathematical formula as such is not accorded the protection of our patent laws, and this principle cannot be circumvented by attempting to limit the use of the formula to a particular technological environment."iv

Other courts have jumped on the language to declare that so-called field of use restrictions cannot save software patents.v Even the recent Supreme Court opinion in Bilski wandered into the same territory when referencing its earlier decision in Flook:

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

It is true, as a general matter, that if one were to claim a law of nature, the claim would not be rendered patentable by limiting use of that law of nature to a particular field. Thus, for example, an inventor could not save a claim to all uses of E = MC2 by limiting the claim to "all uses of E = MC2 in the construction field."

Sliding the analogy over to software, however, involves logical errors. The logic that appears to have been used is the following. Computer programs are mathematical formulas, and mathematical formulas are laws of nature. We know that laws of nature cannot be rendered patentable by limiting their application to a particular field of use. Computer programs, therefore, cannot be rendered patentable by limiting their application to a particular field of use.

This sequence contains a number of logical errors. Computer programs may be expressed in a language that looks like math, and some do involve calculations, but they are not necessarily analogous to mathematical formulas. Most important, they are not analogous to natural laws just because both are expressed in formulaic languages. One must look to the content of the computer program and its potentially preemptive effect to determine patentability.

As described earlier, the term "algorithm" in computer science means a series of steps performed on input data by a computer. This process may or may not raise preemption concerns. Some computer "algorithms" are based on properties inherent in types of input and output data. Such broad, generic algorithms, which can be used on a variety of types of input data, may raise threats of preemption. In other words, if an inventor asks for a patent on a software program that works with whole sets of numbers or entire types of data, such a patent would not be patentable subject matter. Particularly in light of the bargaining potential that would come with such a grant, the patent would risk tying up entire types of data rather than constituting something applied.

This does not mean that all software is unpatentable. Claims to programs that are applied to a specific type of data in the pursuit of particular types of outputs do not present the same level of preemption threat. For example, a personalized medicine algorithm (i.e., series of steps) that employs a specific type of statistical model using a fixed set of markers to produce a very specific diagnosis would not threaten to preempt other methods of performing the same diagnosis that use different markers or novel types of statistical models. Such an invention should be patentable.

Computer programs may be many things, including methods of creating useful models of the world around us, methods of providing interpretations of information, and methods of sorting information. When methods of creating a particular type of model are described at a very general level, they may threaten to preempt the broad activity of exploration. However, when claimed at the level of a specific method of sorting a particular type of information for a particular pursuit, they should constitute an applied invention. Such specificity is the hallmark of what separates unpatentable abstractions from applications of those abstractions in the useful arts in a way that is worthy of patent protection.

* * * * *

i One scholar has suggested that even LabCorp could have survived as patentable subject matter if the claims drafter had chosen a narrower description. See Patricia Dyck, "Post-Bilski Personalized Medicine: At Home on the Range" (forthcoming) (manuscript on file with author) (presenting an empirical survey of the most frequently claimed biomarkers in personalized medicine and discussing problems in allowing claims for sets of biomarkers that are small and not limited to the diagnosis of a specific disease state or condition).

ii I have discussed some of the misconceptions described here in the context of patenting genes. See Feldman, "Whose Body Is It Anyway?" 1400–1402.

iii One could easily argue that all math is invented. It is a human-made method of imposing order and structure on the natural world. For an interesting and accessible discussion of Wittgenstein's view that all mathematics is a human invention and various responses to that argument, see Ludwig Wittgenstein, Wittgenstein's Philosophy of Mathematics §3.1, http://plato.stanford.edu/entries/wittgenstein-mathematics.

iv Diamond v. Diehr, p. 191 (citation omitted).

v See, e.g., In re Bilski, p. 957 (noting that mere field-of-use limitations are generally insufficient to render an otherwise ineligible process claim patent eligible).

vi Bilski v. Kappos, p. 3231.

Chisum on the New Rules of Patent Priority

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Don Chisum was already a leader in the patent field when his multi-volume treatise – Chisum on Patents – was first published in 1978. His authoritative explanation of the law has been cited by hundreds of court opinions and thousands of law review articles. Mr. Chisum has recently turned his attention to the Leahy-Smith America Invents Act and penned a new article titled Priority Among Competing Patent Applicants Under the American Invents Act. Although he had hoped to produce a straightforward explanation of the new priority rules, Chisum found a series of ambiguities and gaps in the new law that will be important for patent strategists. In a message to Congress, he concluded the paper as follows:

If the America Invents Act were a term paper submitted by a student in a patent law seminar, an instructor would, undoubtedly, send it back with a note: SOME GOOD IDEAS, SOME MUDDLED AND UNSUPPORTED IDEAS, POOR GRAMMAR: PLEASE REVISE AND CLARIFY.

Download the article here.

Summary of Mayo v. Prometheus Oral Argument

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Guest Post by Jonas Anderson, Assistant Professor at American University Washington College of Law

Yesterday morning I attended the highly anticipated oral argument in Mayo v. Prometheus at the Supreme Court.  The case raises the question of whether a patent claim that covers correlations between blood tests and patient health is 'patentable' under 35 U.S.C. § 101. 

I assume most PatentlyO readers are familiar with this case, but will provide a very brief background before diving into today's argument.  Prometheus is the owner of a patent that covers a method of analyzing the effectiveness of thiopurine drugs for treating gastrointestinal disorders.  Claim 1 of the relevant patent reads as follows:

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

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

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

wherein the level of 6-thioguanine less than about 230 pmol per 8×10^8 red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and

wherein the level of 6-thioguanine greater than about 400 pmol per 8×10^8 red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.

Prometheus offers a blood test which analyzes metabolite levels in patients.  Mayo sought to offer a competing blood test at a lower price.  Prometheus promptly sued Mayo for infringement.

I have divided my review into 7 topics.  The topics are ranked based on my impression of the importance that the justices appeared to give to each topic.  Although I have tried to transcribe the key statements made by the justices and advocates as accurately as possible, all quotations are approximate.

1.  The preemption question

The justices and the parties focused much of their discussion on the issue of preemption.  One of Mayo's principal arguments in its brief and at oral argument is that Prometheus's patent preempts the use of a law of nature — namely, the relationship between metabolite levels and patient health. 

Justice Kennedy began the preemption questioning by asking whether a system of measurements that continually monitor drug retention would be patentable.  Mayo's counsel responded that it would depend on the breadth of the claims.  "Claim specificity is key."  According to Mayo, if Prometheus's patent had provided competitors room to develop different, more accurate metabolite levels it may have passed the 101 test.  But, in this case Prometheus's patent preempted any reduction in dosage if a patient's metabolite levels were above 400 pmol.  In Mayo's view, "incidental" steps added to a natural phenomenon were insufficient to avoid preemption.  Thus, any patent consisting only of a natural phenomenon and "incidental steps" would be preempted under Mayo's test.

Justice Breyer, the author of the famous LabCorp dissent, focused nearly all of his questions on the issue of differentiating between a patentable application of a law of nature and an unpatentable law of nature.  He pressed both parties to identify a process by which the court could discern the difference.  Mayo's counsel first suggested that a preemption test could be used to ferret out unpatentable laws of nature.  Later, he suggested that Bilski suggests that courts can determine if the non-novel elements of a claim are "incidental."  "You're getting warmer," Justice Breyer quipped.

Justice Scalia interrupted the exchange and scoffed "I'm not comfortable with that.  It depends on how broad it is?  Is up to 700 [pmol]? Is that OK?  550?  830?  How are we supposed to apply that kind of rule?  It just seems to me not a patent rule that we could apply."  It seems fair to say that Scalia was not convinced by either party that a 101 standard based on preemption could be reliably applied by courts.

Despite Scalia's concerns, preemption seemed to carry the day — with both sides.  Justice Breyer continued the preemption line of questioning with Prometheus's counsel.  "What has to be added to a law of nature to make it a patentable process?  If you put too little to the answer to that question, I believe I can take things like e=mc2 and make them patentable, and if you put too much in you'll wreck your case."  Prometheus's counsel also advocated a preemption test, but its test would be much more limited than Mayo's.  Whereas Mayo would consider any natural phenomenon with "incidental" transformational steps as preempted subject matter, Prometheus would only find preemption when no applicative steps were added.  Prometheus repeatedly cited to the Morse telegraph case as a classic example of preemption under 101.

Of course, Prometheus's suggested application of the preemption test has an obvious problem: Bilski.  The patented hedging method in Bilski was not a naked claim to an abstract idea; the claim was limited by both industry and analysis techniques.  Prometheus's counsel acknowledged this difficulty, but argued that Bilski's abstract idea was merely coupled with other abstract ideas.

2.  The 'creep' of novelty and obviousness

Many of the Justices, but primarily the Chief Justice, expressed concern about the blurred relationship between novelty, non-obviousness and the 101 inquiry.  Chief Justice Roberts wanted to know what efficiencies would be gained, if any, by relying on Section 101 instead of obviousness or novelty to reject invalid patents.  Mayo made the case that 101 is a much more manageable and predictable doctrine than 102 or 103.  Prometheus countered by reference to the very case before the court — clearly Section 101 had not led to a quick resolution of this long-running case.

The Chief Justice asked Prometheus's counsel whether he was advocating for the elimination of a Section 101 limitation on patentability.  In response, counsel conceded that he was urging that courts rely on other patent doctrines in most cases, but that there would be some instances, such as the Morse case, in which 101 would be the proper vehicle for rejecting or invalidating a patent.

3.  The impact (or lack thereof) of LabCorp

In my view, one of the most surprising statements of the day came about as a result of Mayo's suggestion—in response to a question from Justice Scalia—that Justice Breyer's dissent in LabCorp could guide some of the analysis in this case.  Justice Breyer quickly interrupted and seemed to distance himself from his dissent.  Although he was convinced that the patent claims in the LabCorp case were merely directed to an observation of a law of nature, the dissenting opinion, he said, "lacked an explanation of why [the claims in that case were not] an application of the law of nature."

Throughout the argument, he was clearly wrestling with how much "extra" is needed in order to patent a newly discovered natural law.  If, as many have predicted, Justice Breyer pens part of the Prometheus decision, I expect that he will attempt to give some guidance to this most difficult question.

4.  The innovation question.

A healthy amount of discussion centered around the impact on innovation that a decision in this case will have.  Justice Breyer, who had been extremely skeptical of diagnostic method patents in his dissent in LabCorp, noted that discovering laws of nature can be an incredibly expensive process.  His search for a line between phenomenon and application seemed to center around balancing the incentive to discover new laws of nature with a desire to allow access to those laws to follow-on innovators. 

Mayo repeatedly urged the court to overturn the patent at issue by arguing that Promtheus could limit others from developing new, improved, and cheaper alternatives to their blood test and was therefore preemptive.  Mayo argued that if the claims incorrectly correlated metabolite levels and outcomes, "the public is stuck with the erroneous information."  In response, Prometheus stated that there are ways that follow-on innovators can improve on Prometheus's patent; namely, by acquiring an improvement patent or by challenging Prometheus's patent under Section 101's utility requirement.

Finally, as any good appellate attorney would, Mayo's counsel attempted to limit the perceived impact of a reversal.  When asked by Justice Sotomayor how many patents would be impacted by a ruling favoring Mayo, counsel responded "only a couple."

5.  The scope of Prometheus's patent

The newest Justices, Sotomayor and Kagan, directed nearly all of their questions to the scope of the patent claims at issue.  Although claim construction was no longer at issue, the Justices probed the extent to which Prometheus's patent foreclosed competitors.  Justice Kagan wanted to know what, in Mayo's opinion, Prometheus's patent attorney could have done to make their invention patent-eligible.  Mayo's counsel responded by saying that a claim with a more narrow range of relevant metabolite levels and a specified treatment protocol would satisfy 101.  Justice Kagan followed-up by asking whether "the difference is the scope of the ranges, or the treatment protocol."  "Both," Mayo responded.

Justice Kagan followed up with Prometheus.  When asked why the patent drafter had failed to include a therapeutic step (which Mayo conceded would have made the claim patent-eligible), Prometheus's counsel responded that it was unnecessary.  He pointed to numerous patents that merely claimed a method of gathering information: patents on identifying ore deposits (but not requiring removal); patents on navigating boats in fog (but not requiring redirecting the ship); patent to find leak in a water main (but not requiring repair).

6.  Prior decisions: are they helpful?

Justice Scalia seemed genuinely dismissive of the Court's precedents that have held that laws of nature (or natural phenomenon) are not patentable.  "Tell me why you can't patent nature?" he asked Mayo's counsel early in the proceeding.  "Doesn't any medical patent rely on natural processes?  Even if you invent a new drug, what that new drug does is natural.  Whatís the difference [from this case]?"  When Mayo's counsel responded that the specificity would be the key test for preemption, Justice Kennedy responded "I thought your answer to Justice Scalia would be…that [the claims here cover] the measurement of a result.  That's how I would have answered the question.  But that's obviously not the right way to do it."

In a related vein, Justice Breyer openly questioned whether the holdings in Flook and Diehr can be reconciled.  "If you look at the Court's cases, they seem to say Flook, one thing, and Diehr another thing."

7.  The transformation question

Almost no time was devoted to discussing whether the claims at issue meet the machine or transformation test. In fact, I can't recall hearing the words "Machine or Transformation" escape from the Justices.  Perhaps the Court is going to distance itself from the MOT test — or at least give courts another "clue."

Conclusion

Predicting the outcome of Supreme Court rulings in patent cases is a treacherous hobby.  If anything, the argument today revealed a Court troubled by the fact that both sides have urged an application of Section 101 that centers on preemption, but with little guidance on how to apply such a test.  While I would expect a ruling to have some mention of preemption, none of the justices seemed comfortable with either side's suggested application of such a test, while Justice Scalia was dismissive of such an idea. 

Perhaps most surprising was that the Court's most vocal critic of diagnostic patents, Justice Breyer, appeared to distance himself from LabCorp.  I get the feeling that he is still troubled with the idea of granting patent rights covering natural phenomenon, he is genuinely concerned with the impact of the Court's decision in this case on the medical innovation community. 

Recent patentable subject matter decisions at the BPAI

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By Dennis Crouch

Here are several recent BPAI decisions on patentable subject matter eligibility.

New Rejection in Answer: Examiner’s Answer raised new a new Section 101 issue, but applicant failed to respond in the reply brief. BPAI Holding: “We therefore summarily sustain this rejection.” Ex Parte Maeng, 2011 WL 6012458 (BPAI November 30, 2011).

Delay in Adjudication: L’OREAL claims a “method for recommending a beauty product” that includes several steps, including applying a beauty product to a person and then seeing how the person looks under various simulated lighting environments. The examiner rejected the claim as unpatentable based upon its failure to satisfy the machine-or-transformation test. On appeal, the BPAI reversed the rejection, holding that “a full analysis as outlined in Bilski v. Kappos … should have resulted in a finding by the Examiner that the claimed subject matter either was or was not an abstract idea, and hence, respectively, that the claimed subject matter was not patent eligible or was patent eligible in this particular instance.” This case highlights a problem with the growing backlog at the BPAI. The Examiner’s final rejection was mailed in 2009 and she mailed the Examiner’s Answer in February 2010, a few months prior to the Supreme Court’s decision rejecting the machine-or-transformation test as a determinative test of patentable subject matter eligibility. Ex Parte Hessel, 2011 WL 6012477 (BPAI November 30, 2011)

CyberSource Rejections: Citing the Federal Circuit’s recent decision in CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1371 (Fed. Cir. 2011), the BPAI has affirmed a Section 101 rejection of an IBM application that claims a “computer-implemented method for partitioning a domain dataset.” Despite the “computer implemented preamble, the BPAI held that the claimed process was not patent eligible because it “could be performed by a human writing on a piece of paper.” The Board quoted CyberSource for the proposition that “a method that can be performed by human thought alone is merely an abstract idea and is not patent-eligible under § 101.”

IBM had also include claims directed to a “system for partitioning” that included “nominal recitations of conventional hardware in the body of the claim (e.g., ‘a memory’ and ‘a processor’).” As instructed by CyberSource, the court considered the “underlying invention for patent-eligibility purposes” rather than particular nominal claim limitations. Here, the BPAI found that the true invention was the process and that the system claims were simply reformulated versions of the method and therefore, that the system claims should be interpreted as process claims.

In analyzing the underlying invention of independent “system” claims 26, 27, and 28 as a process, we again conclude that the scope of the recited functions (steps) covers functions that can be performed in the human mind, or by a human using a pen and paper (e.g., claim 26: “establish an evaluation function” and “partition said domain subset”). Therefore, we conclude that unpatentable mental processes fall within the subject matter of independent claims 26-28.

IBM also include “Beauregard claims” directed to an “article of manufacture” comprising “a computer readable medium.” The BPAI likewise found those claims unpatentable under 35 U.S.C. §101 as interpreted by CyberSource. Ex Parte Vilalta, 2011 WL 6012377 (BPAI November 29, 2011). On the flip side of this, the BPAI has also been holding that claim scope must be determined before Section 101 analysis can be complete. See Ex Parte Black, 2011 WL 6012476 (BPAI November 28, 2011).

Software Not Patentable: OPNET Tech’s patent application is directed toward a “network monitoring system” that includes a set of “collectors”, “analyzers”, and “reporters” as well as an “automated engine” configured to control the applications in achieving a target task. In the specification, the applicant wrote that each element of the system could be created in software and the Board concluded that “the invention can exist solely as software.” Citing the Federal Circuit’s 1994 Warmerdam decision, the Board held that a claim that covers a “purely software embodiment” cannot be patentable subject matter. Ex Parte Cohen, 2011 WL 6012432 (BPAI November 29, 2011). On the flip side, the BPAI held that a “web based system” is patent eligible because such a network based requires “more than software per se, because a web, upon which a web-based system is based, is physical, in addition to software, in that it requires computers and routers and telecommunications equipment to operate.” Ex Parte Vogel, 2011 WL 6012447 (BPAI November 21, 2011).

Providing, Receiving, and Manufacturing: Small paper manufacturer Grays Harbor has seemingly spent a small fortune prosecuting its patent application No. 09/849,504. The invention relates to their computerized system for processing paper and was filed back in 2001. One step of rejected method claim 11 was written as follow “receiving a promotions order from a third-party advertiser to place promotional material on an enclosure…” OK, nothing brilliant in this limitation (or another limitation involving “providing instructions”) with regard to inventiveness, but the Board’s rejection was odd – holding that that the claim’s “recitation of the steps of receiving and providing are merely abstract ideas because each step is recited in the future tense of ‘to place’, ‘to create’, ‘to deliver’, and hence is only contemplated, rather than executed.” Ex Parte Quigg, 2011 WL 6012448 (BPAI November 22, 2011)

Ongoing Battles over Patentable Subject Matter

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By Dennis Crouch

In Ultramercial v. Hulu, the Federal Circuit held that Ultramercial's asserted Patent No. 7,346,545 fit within the subject matter eligibility guidelines of 35 U.S.C. § 101 and was not merely an unpatentable abstract idea. The patent claims a method of distributing copyrighted products (such as a movie) over the internet. The novel idea is that the copyrighted product be both (1) offered for sale and (2) delivered for free if the consumer agrees to view an advertisement. The district court held the patent invalid under section 101. On appeal, however, the Federal Circuit reversed – holding that the patent claims a "practical application" of the idea that "advertising can serve as a currency." An important element of the decision was the finding that "[v]iewing the subject matter as a whole, the invention involves an extensive computer interface."

Now, WildTangent (one of the accused infringers) has petitioned for a rehearing en banc. The public interest organization Electronic Frontier Foundation (EFF) has filed a brief in support of the rehearing – arguing that an en banc determination is necessary in light of (1) the court's failure to follow Bilski v. Kappos; (2) inconsistencies in application of the law apparent from the court's recent decisions in Ultramercial, Classen Immunotherapies v. Biogen IDEC, and CyberSource Corp. v. Retail Decisions, Inc.; and (3) a growing intra-circuit division regarding patentable subject matter jurisprudence. This filing ties-in closely with the pending Supreme Court case of Mayo v. Prometheus, which questions the patentability of a method of personalizing the dosage of a pharmaceutical and the pending case of AMP v. Myriad, which questions the patentability of isolated human DNA. Other pending Section 101 cases include DealerTrack, Inc. v. Huber (App. No. 2010-1544) (Claims 1, 3, and 4 of U.S. Patent No. 7,181,427); FuzzySharp Tech., Inc. v. 3DLabs Inc. (App. No. 2010-1160) (U.S. Patent Nos. 6,172,679 and 6,618,047); CLS Bank Int'l. v. Alice Corp (App. No. 2011-1301) (Patent No. 7,725,375); Cognex v. ITC (App. No. 2011-1098) (Patent Nos. 7,016,539 and 7,065,262); and Fort Properties, Inc. v. American Master Lease LLC (App. No. 2009-1242) (Patent No. 6,292,788).

Operating Efficiently Post-Bilski by Ordering Patent Doctrine Decision-Making

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Last year, Professor Merges and I co-authored this short article on the administration of Bilski. In light of the pending Section 101 cases and Judge Rader's opinion in Classen Immunotherapies v. Biogen, I thought I would post it here again. Download the twenty-page essay from SSRN.

Here is the introduction:

Now that the Supreme Court has decided Bilski v. Kappos, there is an enormous amount of speculation about the case's impact on patent applicants, litigants, and other participants in the patent system. Most of the commentary is concerned with the holding in Bilski, how this holding will be applied by courts and the Patent Office, and ultimately, the effect of the holding on inventors, and those who hold and seek patents.

We take a different approach; rather than try to cut through the complexity of Bilski, or predict how it will be applied, we talk about how to avoid it. We are interested in how to minimize the cost and confusion that accompany a review of patents for § 101 subject-matter eligibility. To be specific, we propose that the § 101 issue of Bilski be considered only when doing so is absolutely necessary to determine the validity of a claim or claims in a patent. We believe any claim that can be invalidated under one of the less controversial and less complex requirements for patentability—§§ 102, 103, and 112, for instance—ought to be disposed of without considering subject matter patentability. In other words, the Bilski issue should be avoided wherever it is not strictly necessary. To support this conclusion, we present a set of empirical data that indicates that the vast majority of patent claims challenged on subject matter eligibility grounds were also challenged on other patentability issues.

We set the stage for our proposal in Part II, which briefly reviews the history behind Bilski and explains its open-ended holding and individualized approach. The difficulty of applying the Bilski ruling to different types of patent claims leads us to Part III, in which we call into question an accepted (if largely implicit) principle of patent law—that the lexical priority of statutory provisions in the 1952 Patent Act dictates a necessary logical sequence of invalidity tests. We reject this widespread assumption. There is nothing in the statute that requires this.

Indeed, in Part III we argue that in many ways the very idea of a sequence of discrete patentability requirements is conceptually misleading. Claims can be and often are rejected by the Patent Office for multiple reasons, suggesting that at least certain claims suffer from defects that transcend specific statutory validity requirements. We argue further that the policy underpinnings of various requirements overlap in complex ways, so that in reality patentability doctrine does not test for a series of discrete and independent qualities that are distinct from and mutually exclusive of each other. In the same way, transcendent qualities of an invention can influence multiple doctrines simultaneously, with pioneering inventions (due to both a liberal treatment under enablement, and a broad reach under infringement doctrines) being a prime example. This demonstrates again that there is not and should not be a strong separation between various patent law doctrines. Another argument along these lines recognizes that while patentability doctrines are not discrete entities, neither is "the invention" whose validity is being considered. Patent applicants routinely present multiple, overlapping claims, all of which cover fine-grained variations on a central inventive insight or advance. So it is inaccurate to visualize patentability as a stepwise series of tests applied to a single "invention." It is not true for example that "invention X" passes § 101 and should thus proceed in logical sequence to be tested under § 102. One claim growing out of inventive insight X might present no § 101 problems at all, yet another claim in the same patent application might raise a difficult issue under this provision. Each claim, being a unique slice of the overall inventive insight, ought to be considered on its own terms, and in whatever order makes the most sense. Put another way, the mental model of a stepwise sequence of patentability determinations overlooks the highly granular nature in which different slices of the inventive concept are presented for validity testing.

This analysis is further developed in Section III.A. When a claim fails to pass muster under any single test of validity, that claim should be invalidated. No further tests should be applied. We describe this as "chain" theory of validity: once one link in the chain is broken, the claim fails, and there is no reason to proceed further. Beyond that point, any expenditure of resources on validity questions is inefficient. Pragmatic considerations enter at this point. Issues of cost, justiciability, and spillover effects are perfectly appropriate in determining the actual sequence in which validity tests are applied with respect to any particular patent claim. The non-linearity of patent validity tests, together with the principle of efficient administration, yields a simple rule: start with chain links that are, in general, easiest and cheapest to test, and when the chain fails, stop the process. That way, the costliest and most complex doctrines—the trickiest "links in the chain"— are often avoided, and in any event are put off until later. Therefore, § 101 should often be avoided, both at the Patent Office and in the courts. We justify this not only on efficiency grounds, but also by analogy to the Supreme Court rules of avoidance.

In Part IV, we apply this simple principle. It leads to several recommendations. First, though the PTO has good reasons for its longstanding practice of rejecting claims for multiple reasons, we recommend that §101 be used only as an exception or last resort even at the PTO. Next, we contend that the courts should proceed in a stepwise fashion, beginning with §§ 102, and 103, and 112, changing the order of doctrines as dictated by pragmatic considerations, and stopping as soon as a claim is conclusively invalidated. In all cases, the complex and costly process of deciding whether a claim presents patentable subject matter under § 101 should be deferred until very late in the process. Therefore, we recommend, courts should in effect hold off on the difficult task of evaluating claims under § 101—ideally deploying the full § 101 analysis only when that is essential, i.e., when a claim passes muster under the other validity doctrines.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1953512. Thanks!

Mayo v. Prometheus: the Patentee’s Section 101 Argument

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Mayo Collaborative Services v. Prometheus Labs., Inc. (Supreme Court 2011)

The briefing continues in this patentable subject matter case pending before the US Supreme Court. (Read Professor Golden's discussion of the first round of merits briefs).  In its newly filed merits brief, Prometheus attempts to refocus attention on the "concreteness" of its patented method of personalizing the dosage of a particular drug treatment. The refocus begins with the statement of the question presented.  Download 2011-10-31_Prometheus Merits Brief. 

Mayo, the petitioner challenging the patent, opened briefing with a question of whether a patent that "covers observed correlations between blood test results and patient health, so that the patent effectively preempts use of the naturally occurring correlations, simply because well-known methods used to administer prescription drugs and test blood may involve "transformations" of body chemistry."  This language of Mayo's question is directly suggestive of the decisions of Benson and Flook — both of which held claimed methods to be unpatentable.

In its brief, Prometheus restates the question in a way that instead highlights the concrete and practical application language found in Diehr and Brenner v. Manson. Prometheus asks: "Whether the Federal Circuit correctly held that concrete methods for improving the treatment of patients suffering from autoimmune diseases by using individualized metabolite measurements to inform the calibration of the patient's dosages of synthetic thiopurines are patentable processes under 35 U.S.C. §101."

Prometheus describes its challenged invention as follows:

First, most of the claims begin with the administration of a thiopurine compound to a patient with an autoimmune disorder. As noted, the thiopurine converts within the body into metabolites that do not otherwise exist in nature.

Second, the patient's metabolite levels are determined. Because "metabolite levels are not detectable in raw human tissue," all methods for measuring their concentration require "significant chemical and physical alteration of blood or human tissue" and sophisticated laboratory equipment and machines. Some of the dependant claims, for example, specify the use of high pressure liquid chromatography (HPLC), which entails an intricate series of operations on the blood (including heating, centrifuging, separating, and adding various reagents), running the resulting solution through a computer-controlled chromatography instrument, calculating the peak height or peak area, and feeding those figures into an equation, which finally outputs the metabolite levels.

Third, the metabolite measurements are compared to the patents' reference levels, "warning" the physician about the potential efficacy or toxicity of the patient's dosage.

Several important points are hidden by the patentee's statement of its invention: First, although most of the patented claims do require administration of thiopurine some claims do not include that particular step.  Second, although current technological methods of measuring metabolite levels apparently require the extraction of human tissue and the use of "sophisticated laboratory equipment," the broadest claims only require "determining" of the metabolite levels.  Finally, it is likely important to recognize that the claimed method is about tweaking the dosage of thiopurine and at the time of the invention most of the individual elements of the claim were already well known: It was well known that thiopurine could be used to treat IBD; it was well known that that the body converted thiopurine to the claimed metabolite; it was known that individuals had varying responses to thiopurine; and it was known that dosage should be adjusted so that it would be both effective and nontoxic.

Summary of the Prometheus argument:

First, to be patent-eligible, a process must really be a process—a series of steps that involve physical action in the real world, as opposed to merely an idea or principle stated in the abstract. Second, that process must be described at a narrow and specific enough level of generality that it does not preempt abstract ideas or basic building blocks of science that go far beyond what the patentee actually invented: A process for using a telegraph is patentable; the basic idea that information might be transmitted at a distance by exploiting laws of electromagnetism is not.

A. Prometheus's patented methods describe concrete methods for improving treatment of seriously ill patients with specific synthetic drugs. These patents do not claim the "correlations" they employ in the abstract, but as part of specific physical processes employing drugs and machines. . . . As the Federal Circuit recognized, the patents-in-suit pass [the machine-or-transformation] test with flying colors and easily satisfy the requirements of §101. Mayo attempts to avoid that conclusion in three ways, none of which has merit. First, Mayo invites this Court to discard the two initial steps (administering the thiopurines and determining the resulting metabolite levels) because they were "well known" in the art. But this Court rejected that "point-of-novelty" approach over 30 years ago in Diehr and again recently in Bilski. Second, Mayo argues that those same two initial steps should be disregarded because, according to Mayo, they are not "central" to the patents' purpose. Mayo does this only by ignoring the Federal Circuit's settled construction that the claims are limited to patient treatment (a question not presented here) and that those two steps are essential to that purpose. Third, Mayo invites this Court to invent, out of whole cloth, a categorical rule that processes ending with the provision of useful information cannot be patentable—even if preceding steps involve machines and physical transformations. That argument also is inconsistent with Bilski, and it would impose an arbitrary and (in the information age) absurd limitation on patentability.

B. The patents-in-suit do not preempt natural phenomena in any relevant sense. Their "correlations" concern certain properties attending certain uses of non-natural thiopurine compounds, which would not exist but for the handiwork of man. A patent system that recognizes thiopurine compounds themselves as potentially patentable subject matter, allowing preemption of all uses of these compounds, cannot be concerned that a process patent may preempt some of their uses. . . .

C. Prometheus agrees with the United States that the Patent Act's express statutory criteria for patentability—under 35 U.S.C. §§102, 103, and 112—make expansive judicial lawmaking under §101, of the sort invited by Mayo's arguments, unnecessary. But the application of those provisions is not before the Court in this case, and presents difficult and fact-bound questions that the lower courts should address in the first instance on remand.

II. Mayo proposes to transform §101 into an invitation for ad hoc, case-by-case evaluation of whether granting a particular patent will promote or retard the progress of the useful arts. That would create an unadministrable morass for courts and patent examiners, doom any hope for consistent administration of the patent laws, and usurp Congress's authority to determine the appropriate scope of the patent laws.

III. Any change in the Court's §101 jurisprudence that permitted a ruling in Mayo's favor, on whatever grounds, would have drastic and unfortunate consequences. It would upend settled expectations by invalidating thousands of diagnostic and personalized treatment patents. And it would stifle investment and innovation in the nascent field of personalized medicine. Contrary to Mayo's understanding, government funding does not translate pure academic research into practical products that benefit patients, and doctors themselves cannot bring to bear the resources necessary to fuel innovation and commercialize inventions on a large scale. Mayo's contention that patents like these hinder medical care is also unpersuasive. The United States is the world leader in biotechnology and personalized medicine, in part because investors have committed billions of dollars in capital in reliance on the prospect of patents like these. Thousands have been issued, including many to Mayo itself. Mayo's short-sighted view would exchange long-term innovation (including cost reductions) for ephemeral savings. In any event, Congress already considered Mayo's invitation to broadly restrict patent protection for medical diagnostic and treatment methods—and chose to adopt a limited personal immunity for doctors instead.

VS Tech v. Twitter: Patentable Subject Matter

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VS Tech v. Twitter, 11–cv-0043 (E.D. Virginia 2011)

Trial is set for this week in the patent infringement lawsuit between VS Tech and Twitter.  VS’s asserted U.S. Patent No. 6,408,309 claims a “method of creating an interactive virtual community of people in a field of endeavor” and has a February 2000 filing date.  The inventor is Dinesh Agarwal who has also been a patent attorney since 1985.  VS Tech was formed to pursue the lawsuit and is headquartered in Mr. Agarwal’s law office address. The first two claims of the patent are reproduced below:

What is claimed is:

1. A method of creating an interactive virtual community of people in a field of endeavor, comprising the steps of:
a) selecting a field of endeavor;
b) compiling a list of members in the selected field;
c) selecting a member from the compiled list of members based on a preselected factor;
d) obtaining biographical information about the selected member;
e) processing the biographical information in a preselected format to create a personal profile of the selected member;
f) publishing the profile of the selected member on a machine readable media; and
g) allowing the selected member to interact with the profile.

2. The method of claim 1, wherein the step (f) comprises publishing the profile of the selected member on a network of computers.

In his most recent judgment in the case, Judge Morgan denied Twitter’s motion for summary judgment of invalidity under 35 U.S.C. 101, 102 & 103 and non-infringement.

The section 101 decision is interesting in that the judge treated the machine-or-transformation test as a question of fact to be determined by the jury.  “In light of all of the foregoing considerations, the Court finds that the evidence is sufficient for a reasonable juror to conclude that the ‘309 patent is linked to a particular machine or apparatus.”  Like claim construction and obviousness, patentable subject matter is treated by the courts as a question of law. However, unlike claim construction, the appellate courts have never held that it must be the judge who decides section 101 issues.

When the case was filed in January, Patent Law reporter Joe Mullin wrote “The central role of patent lawyers in suits like this raises questions about the health of the U.S. patent system. Patent lawyers are insiders in this system, and an increasing number of them aren’t satisfied just with being very-expensive service providers to patent owners. They’re seeing the millions made by so-called patent trolls and are eager to get into the game themselves. The patent office simply isn’t set up to say no to a persistent applicant, and the patent lawyers know that as well as anybody.  Mike Masnick filed his story under the “bang-head-slowly dept.”

The following is the text of Twitter’s proposed jury instructions on what it terms “unpatentable subject matter”:

Even if an invention is both new and not obvious, a patent claim may be invalid if its subject matter is not patentable. The law establishes three categories that are not eligible for patents: laws of nature, physical phenomena, and abstract ideas.

Twitter contends that the asserted claims of the ‘309 patent claim an unpatentable abstract idea. Methods which can be performed mentally, or which are the equivalent of human mental work, are abstract ideas which cannot be patented. An abstract idea is unpatentable even if the patent claim limits the idea’s use to a particular technological environment, or adds insignificant post-solution activity. Systems that depend for their operation on human intelligence alone cannot be patented.

A useful and important clue for determining whether a patent claims unpatentable subject matter is whether the claim is tied to a particular machine or apparatus, or transforms a particular article into a different state or thing. This is called the “machine or transformation test.” To satisfy the machine prong of this test, the use of the machine must also impose meaningful limits on the claim’s scope. If the claim does not satisfy the machine-or-transformation test, this indicates that the claim may be invalid because it claims unpatentable subject matter.

 

 

Ultramercial v. Hulu: Computer Programs and Patentable Subject Matter

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By Jason Rantanen

Ultramercial, LLC v. Hulu, LLC (Fed. Cir. 2011)
Panel: Rader (author), Lourie, O'Malley

The line between patentable processes and unpatentable abstract ideas continues to trouble the Federal Circuit even as the Supreme Court prepares to address the issue for the second time in four years in Mayo v. Prometheus.  In Ultramercial, the court—led in this instance by Judge Rader, whose views on patentable subject matter are clear and well known—rejected a challenge based on lack of patentable subject matter in an opinion that draws the line between steps that can be performed in the human mind or by a human using pencil and paper (unpatentable) as opposed to those that require a computer (patentable).

Patent No. 7,346,545 claims a method for distributing copyrighted products over the Internet where the consumer receives a copyrighted product for free in exchange for viewing an advertisement and the advertiser pays for the copyrighted content.  The district court granted the accused infringer's motion to dismiss on the ground that the '545 patent does not claim patentable subject matter.

Patentable application not an abstract idea
On appeal, the CAFC reversed. After noting the broadly permissive nature of Section 101, and placing the '545 invention in the "process" category, the court looked to the abstractness of the invention claimed by the '545 patent.  Eschewing the "machine or transformation test," the court focused instead on the programming complexity required to carry out the claimed elements.  The claimed invention, the court determined, constituted a patentable application rather than an unpatentable abstract idea. 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."   Slip Op. at 10.  This statement is followed by identification of the specific steps for monetizing copyrighted products set out in the claims, many of which involve complex computer programming.  "Viewing the subject matter as a whole, the invention involves an extensive computer interface."  Slip Op. at 11.

Software is patentable
Layered on top of this finding is the court's rejection of the argument that software programming amounts to abstract subject matter.  "The digital computer may be considered by some the greatest invention of the twentieth century, and both this court and the Patent Office have long acknowledged that "improvements thereof" through interchangeble software or hardware enhancements deserve patent protection.  Far from abstract, advances in computer technology—both hardware and software—drive innovation in every area of scientific and technical endeavor."  Slip Op. at 12.

This holding is in tension with the Federal Circuit's recent opinion in Cyber Source Corp. v. Retail Decisions, Inc., No. 2009-1358 (Fed. Cir. Aug. 16, 2011), in which a panel consisting of Judges Bryson, Dyk and Prost concluded that a method of verifying a credit card transaction over the Internet constituted an unpatentable process.  While the panel in Ultramercial recognized this tension, it distinguished Cyber Source as an instance of "purely mental steps."  Ultramercial Slip Op. at 13 (emphasis in original).  The line, at least from the point of view of this panel, thus lies somewhere between logical steps that humans can perform without the aid of a computer versus those that require a computer to carry out.

Classen Immunotherapies v. Biogen: The Broad, Broad Scope of Statutory Subject Matter

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By Jason Rantanen

Classen Immunotherapies, Inc. v. Biogen Idec (Fed. Cir. 2011) Download 06-1634-1649
Panel: Rader (offering "additional views"), Newman (author), Moore (dissent)

There is no doubt that the Federal Circuit continues to struggle mightily with Section 101.  If Myriad were not enough evidence of this, Classen Immunotherapies – and Judge Rader's additional views in particular – should remove all doubt.

Classen Immunotherapies holds three patents that it contends are infringed by virtually everyone: Patent Nos. 6,638,739; 6,420,139; and 5,723,283.  According to the patents, their inventor, Dr. Classen, has discovered that "the schedule of infant immunization for infectious diseases can affect the later occurrence of chronic immune-mediated disorders…and that immunization should be conducted on the schedule that presents the lowest risk with respect to such disorders."  Slip Op. at 5. Claim 1 of the '739 patent is illustrative of Classen's broad claim scope:

1. A method of immunizing a mammalian subject which comprises:

(I) screening a plurality of immunization schedules, by

(a) identifying a first group of mammals and at least a second group of mammals, said mammals being of the same species, the first group of mammals having been immunized with one or more doses of one or more infectious disease-causing organism-associated immunogens according to a first screened immunization schedule, and the second group of mammals having been immunized with one or more doses of one or more infectious disease-causing organism-associated immunogens according to a second screened im-munization schedule, each group of mammals having been immunized according to a different immunization schedule, and

(b) comparing the effectiveness of said first and second screened immunization schedules in pro-tecting against or inducing a chronic immune-mediated disorder in said first and second groups, as a result of which one of said screened immuni-zation schedules may be identified as a lower risk screened immunization schedule and the other of said screened schedules as a higher risk screened immunization schedule with regard to the risk of developing said chronic immune mediated disorder(s),

(II) immunizing said subject according to a subject immunization schedule, according to which at least one of said infectious disease-causing organism-associated immunogens of said lower risk schedule is administered in accordance with said lower risk screened immunization schedule, which administration is associated with a lower risk of development of said chronic immune-mediated disorder(s) than when said immunogen was administered according to said higher risk screened immunization schedule.

Classen asserts that the '139 and '739 patents are infringed "when a health care provider reads the relevant literature and selects and uses an immunization schedule that is of lower risk for development of a chronic immune-mediated disorder."  Slip Op. at 7.  According to Classen, this includes "the act of reviewing the published information, whether or not any change in the immunization schedule is made upon such review."  Id. The '283 patent is similar, except that it does not include the subsequent step of selecting an immunization schedule.  Classen asserts that the '283 patent is infringed "when a person reviews relevant information, whether the person is a producer of vaccines, a health care provider, or a concerned parent."  Slip Op. at 8.  The three patents list several hundred preexisting references relating to immunization schedules, the occurrence of immune-mediated disorders, and studies and reports from the field.

The district court granted summary judgment of invalidity of the asserted claims on the ground that they claimed an abstract idea.  On initial appeal, the CAFC affirmed, with Judge Moore penning an extremely short affirmance.  Following Bilski, the Supreme Court grant-vacate-remanded the case to the Federal Circuit, where it was assigned to the panel of Rader, Newman, and Moore.

 The Majority: Writing for herself and Judge Rader, Judge Newman concluded that while the '283 patent failed to satisfy Section 101, the '139 and '739 patent did.  Although the '139/'739 patents included a mental step, "precedent has recognized that the presence of a mental step is not of itself fatal to § 101 eligibility."  Slip Op. at 15.  Because the claims of these patents include the physical step of immunization, the majority held, they were directed to a "specific, tangible application."  Slip Op. at 18.  This was sufficient to assure the majority, which declined to offer any additional reasoning, of their subject matter patentablity.    On the other hand, the majority held, the '283 patent attempted to claim an abstract idea unfettered to any physical steps.  Thus, it was invalid under Section 101.

The Dissent: Judge Moore disagreed entirely.  "While I confess the precise line to be drawn between patentable subject matter and abstract idea is quite elusive, at least for me, this case is not even close."  Dissent at 6.  All three claims simply constitute abstract subject matter: "Having discovered a principle – that changing the timing of immunization may change the incidence of chronic immune mediated disorders – Classen now seeks to keep it for himself."  Dissent at 8.  While Judge Moore reserves her harshest criticism for the '283 patent, her views on the '139/'739 reach the same conclusion.  "The immunization step of the '739 patent, like updating the alarm limit in Parker v. Flook, 437 U.S. 584 (1978), is nothing more than post-solution activity."  Id. at 9.  That post-solution activity "does not transform the unpatentable principle – that a correlation exists between vacination schedules and incidence of chronic immune disease – into a patentable process.'  Id. at 10.

Judge Rader's Additional Views:  In an unusual move, Judge Rader, joined by Judge Newman, wrote separately to express frustration with the constant use of Section 101 challenges by accused infringers. 

In the last several years, this court has confronted a rising number of challenges under 35 U.S.C. § 101. The language of § 101 is very broad. Nevertheless, litigants continue to urge this court to impose limitations not present in the statute.

For a variety of policy reasons, Judge Rader urges, "[t]his court should decline to accept invitations to restrict subject matter eligibility."  Rader additional views at 2.  Chief among these is the problem that "eligibility restrictions usually engender a health dose of claim-drafting ingenuity," evasions that "add to the cost and complexity of the patent system and may cause technology research to shift to countries where protection is not so difficult or expensive."  Id. at 3.  

Comments: I am troubled by several aspects of the court's opinions.  Particularly concerning is the majority's apparent desire to abdicate the subject matter inquiry altogether, a desire expressed both implicitly, in the majority opinion's unwillingness to offer any substantive reasoning to support its ruling on the '139/'739 patents, and explicitly in Judge Rader's policy statement.  This approach seems problematic on its own, but becomes even more so when coupled with the numerous Supreme Court opinions relating to the issue of subject matter patentability – an area of traditional significance in the patent sphere.  While the Court may have repeatedly suggested that broad categorical rules may be inpermissible, it has nowhere suggested that subject matter arguments lack merit as a class, or that subject matter arguments must fail as a matter of course.  In particular, I find it difficult to see how the '139/'739 patents possibly survive scrutiny under Parker v. Flook, 437 U.S. 584 (1978).  The mental step itself is not a patentable subject, so how can combining it with an act (or the lack of an act) that has previously been done without the mental step make it patentable?   

Nor does Section 101 seem to present such a unique problem that the Federal Circuit should adopt a policy of declining to address arguments relating to it.  Even as Judge Rader criticizes the case law limiting subject matter patentablity because it encourages costly legal design-arounds, he joins with an opinion that does precisely that by drawing the line between the two sets of claims.  Mental step claims are now clearly out; mental step plus claims are now in.  And since every process is simply a link in a longer process, claim drafters need only look one step forward to avoid the effects of the majority's ruling.  Nor should the effects of Judge Rader's parade of horribles be limited to Section 101 – they strike me as equally applicable to Section 102, Section 103, and especially Section 112. 

 

 

 

 

If the software method is not patentable, then neither is the “computer readable medium”

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CyberSource Corp. v. Retail Decisions, Inc. — F.3d — (Fed. Cir. 2011)

In an important decision, the Court of Appeals for the Federal Circuit has rendered many broadly written software patents invalid under 35 U.S.C. § 101 as interpreted by Bilski v. Kappos, 130 S. Ct. 3218 (2010). Most patent decisions involve questions of whether an invention is obvious under 35 U.S.C. § 103(a) or sufficiently described under 35 U.S.C. § 112. Section 101 asks a slightly different question – whether the patented invention is the type of innovation that properly fits within our patent system. In language virtually unchanged for over 200 years, Section 101 indicates that a patent should be awarded to the inventor of “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” Over the years, courts have repeatedly held that Section 101 bars the patenting of ‘laws of nature, physical phenomena, and abstract ideas.’

CyberSource’s patented invention is simple: when validating online credit card purchases, use IP address information (such as IP addresses) as a check against fraud. Thus, the patented method might raise a red flag if someone attempts to make a large internet purchase through an IP address that had previously been used for a fraudulent transaction.

In the lawsuit, CyberSource only asserted two claims: Claim 3 is the method of fraud detection roughly described above and Claim 2 is directed to a “computer readable medium containing program instructions” for causing a computer to perform the method. Claim 2 is written in “Beauregard” form. See In re Beauregard, 53 F.3d 1583 (Fed. Cir. 1995).

The claimed method is written as follows:

3. A method for verifying the validity of a credit card transaction over the Internet comprising the steps of:

a) obtaining information about other transactions that have utilized an Internet address that is identified with the credit card transaction;

b) constructing a map of credit card numbers based upon the other transactions and;

c) utilizing the map of credit card numbers to determine if the credit card transaction is valid.

Machine-or-Transformation: As written, the claim does not require the use of any machine and it does not require the transformation of any article into a different state or thing. Here, the court repeated its stance that mere data gathering steps such as “obtaining information” cannot be sufficient to “make an otherwise nonstatutory claim statutory.” And, although the patent is designed to facilitate transactions over the internet, nothing in the claim actually requires that the internet be used. Finally, data structures such as the claimed “information” and “map of credit card numbers” will not be considered technical because they could be simply written down using pencil and paper. Thus, at the outset the claim fails the Machine-or-Transformation test that the Supreme Court identified as an important clue of patentability under 35 U.S.C. § 101.

Because the machine-or-transformation test offers only a legal clue to patentability, the court went on to consider additional indicia that led to the conclusion that the claim does not qualify for patenting under Section 101. In particular, the court focused on prior case law holding that mental processes standing alone are not patentable. CyberSource’s claimed method is such a mental process because it can be “performed … by a human using a pen and paper.” Thus, the claim is invalid.

Beauregard Claims: CyberSource’s claim 2 comes in a different form. However, the court interpreted it as “nothing more than a computer readable medium containing program instructions for executing the method of claim 3.” The most natural implementation of the invention is using software and the claimed “computer readable medium” is the storage device that holds the software.

The claim:

2. A computer readable medium containing program instructions for detecting fraud in a credit card transaction between a consumer and a merchant over the Internet, wherein execution of the program instructions by one or more processors of a computer system causes the one or more processors to carry out the steps of:

a) obtaining credit card information relating to the transactions from the consumer; and

b) verifying the credit card information based upon values of plurality of parameters, in combination with information that identifies the consumer, and that may provide an indication whether the credit card transaction is fraudulent, wherein each value among the plurality of parameters is weighted in the verifying step according to an importance, as determined by the merchant, of that value to the credit card transaction, so as to provide the merchant with a quantifiable indication of whether the credit card transaction is fraudulent,

wherein execution of the program instructions by one or more processors of a computer system causes that one or more processors to carry out the further steps of;

[a] obtaining information about other transactions that have utilized an Internet address that is identified with the credit card transaction;

[b] constructing a map of credit card numbers based upon the other transactions; and

[c] utilizing the map of credit card numbers to determine if the credit card transaction is valid.

Claim Form Versus the Underlying Invention: CyberSource argued that the claim is patent eligible per se because it is directed to a man-made article of manufacture – “a computer readable medium.” The court rejected that technical distinction. Instead, for patent eligibility purposes, the court directed focus away from the claim’s literal statutory category and instead focus on the “underlying invention.”

Regardless of what statutory category (“process, ma-chine, manufacture, or composition of matter,” 35 U.S.C. § 101) a claim’s language is crafted to literally invoke, we look to the underlying invention for patent-eligibility purposes. Here, it is clear that the invention underlying both claims 2 and 3 is a method for detecting credit card fraud, not a manufacture for storing computer-readable information. This case is thus similar to In re Abele, 684 F.2d 902 (CCPA 1982). In Abele, claim 5 of the patent at issue recited “[a] method of displaying data” comprising the steps of “calculating the difference” between two numbers and “displaying the value.” Id. at 908. The court concluded that claim 5 was not directed to patent-eligible subject matter because it claimed an abstract idea. Id. However, claim 7 was argued to be different because it recited an “[a]pparatus for displaying data” comprising “means for calculating the differences” between two numbers and “means for displaying the value.” Id. at 909 (emphases added). Though claim 7 literally invoked an “[a]pparatus,” the court treated it as a method claim for the purpose of its § 101 analysis. Due to its “broad” and “functionally-defined” nature, the court found that treating claim 7 as an apparatus claim would “exalt form over substance since the claim is really to the method or series of functions itself.” Id. (citation omitted). Accordingly, the court placed “the burden . . . on the applicant to demonstrate that the claims [were] truly drawn to [a] specific apparatus distinct from other apparatus[es] capable of performing the identical functions.” Id. (citation omitted).

Here, the patentee was unable to provide suitable reasoning why the computer readable medium invention was fundamentally different from the method claim.

Pen, Paper, Computer: Following precedent set by Benson and Abele, the court here held that an unpatentable mental process remains unpatentable even when restricted to use on a computer.

Abele made clear that the basic character of a process claim drawn to an abstract idea is not changed by claiming only its performance by computers, or by claiming the process embodied in program instructions on a computer readable medium. Thus, merely claiming a software implementation of a purely mental process that could otherwise be performed without the use of a computer does not satisfy the machine prong of the machine-or-transformation test.

That purely mental processes can be unpatentable, even when performed by a computer, was precisely the holding of the Supreme Court in Gottschalk v. Benson.

Holding: Invalidity affirmed. Neither the method nor the computer readable medium qualify as patentable subject matter.

Peripheral Disclosure

Patent,

By Jason Rantanen

This week I will be attending the Intellectual Property Scholars Conference, where I will be enjoying many other IP scholars' work, some of which I will discuss in subsequent posts, and presenting my own work in progress entitled Peripheral Disclosure.  In this Essay, I argue that that the disclosure function of patents has been greatly undervalued, not because patents succeed at forcing inventors to disclose useful information about their inventions in the patent document, but because patents free inventors to voluntarily share information about their inventions in forms other than the patent itself while retaining the ability to monetize their inventions.  

The abstract is below.  For those who are interested, a copy of the paper is available on SSRN here (it's currently a relatively short piece).  As this project is very much a work in progress, all comments are appreciated.

Peripheral Disclosure

The requirement that inventors disclose their inventions in return for a patent is one of the primary justifications for the patent system. Yet that justification has been subject to substantial criticism, and with good reason. Conventional disclosure scholarship focuses on inventor’s disclosure within the patent itself, a document that often fails to provide meaningful information to others. As a result, conventional disclosure theory has largely been relegated to the category of a straw man that scholars address perfunctorily when criticizing the patent system.

This Essay rejects the idea that patents serve little to no disclosure function, not by demonstrating that patents themselves convey useful information, but by pointing to other information exchanges that would not occur but for the existence of a patent system, a concept I call "peripheral disclosure." This information plays a critical role in encouraging prospective technological invention. In essence, I argue that the greatest benefit of patents is not in the information they contain, but rather in the numerous peripheral disclosures they permit, from scientific papers about new inventions to marketing materials containing technical content to the informational benefits of self-disclosing inventions. Without patents, none of these disclosures – all of which may provide crucial information to future inventors – would be possible.

Update: DePaul law student Daniel Rogna will be live-blogging IPSC at http://ebookisms.com/category/ipsc/. This is a terrific conference to follow, as it is frequently a forum where  significant new scholarship is revealed, such as last year's Lemley, Cotropia, Sampat piece on applicant submitted prior art.

Recent Patent Law Scholarship

Patent, , ,

By Jason Rantanen

Several interesting new articles are currently making the rounds.  Two particularly noteworthy ones are summarized below:

James Bessen, A Generation of Software Patents
Do patents benefit software firms? James Bessen examines this issue through both a survey of existing literature and a new empirical study.  Bessen finds that although the number of software-related patents has grown rapidly over the past decade, the share of those patents obtained by software firms has remained relatively small, and is largely accounted for by the activity of a small number of large software firms.  In other words, most software patents go to firms outside the software industry.  Bessen also provides data that brings into question the value of patents to startup software firms and examines changes in the probability that a software patent will be involved in litigation during the first four years of its patent life.

The complete article is available via ssrn here.

Mark Lemley, The Myth of the Sole Inventor
In his most recent major article, Mark Lemley challenges the canonical story of the lone genius inventor while proposing a novel justification for the patent system.  Professor Lemley first breaks down the idea that invention occurs independantly, created by a handful of extraordinary inventors, through a series of vignettes about famous inventions: the steam engine, steamboats, the cotten gin, and other classic examples of pioneering inventions.  Rather than lone inventors, Lemley argues, history is replete with examples of simultaneous invention, calling into question the traditional incentive justification for the patent system.  Nor do any of the other conventional justifications for the patent system work, Lemley suggests.  What is needed instead is a new theory, which he offers: patents encourage patent racing, which drives innovation to occur faster, and in a more diverse manner, than it otherwise would.

The complete article is available via ssrn here.  Written Description blog offers a more in-depth discussion of the article.

Recent Patent Law Scholarship

Patent, , ,

By Jason Rantanen

Several interesting new articles are currently making the rounds.  Two particularly noteworthy ones are summarized below:

James Bessen, A Generation of Software Patents
Do patents benefit software firms? James Bessen examines this issue through both a survey of existing literature and a new empirical study.  Bessen finds that although the number of software-related patents has grown rapidly over the past decade, the share of those patents obtained by software firms has remained relatively small, and is largely accounted for by the activity of a small number of large software firms.  In other words, most software patents go to firms outside the software industry.  Bessen also provides data that brings into question the value of patents to startup software firms and examines changes in the probability that a software patent will be involved in litigation during the first four years of its patent life.

The complete article is available via ssrn here.

Mark Lemley, The Myth of the Sole Inventor
In his most recent major article, Mark Lemley challenges the canonical story of the lone genius inventor while proposing a novel justification for the patent system.  Professor Lemley first breaks down the idea that invention occurs independantly, created by a handful of extraordinary inventors, through a series of vignettes about famous inventions: the steam engine, steamboats, the cotten gin, and other classic examples of pioneering inventions.  Rather than lone inventors, Lemley argues, history is replete with examples of simultaneous invention, calling into question the traditional incentive justification for the patent system.  Nor do any of the other conventional justifications for the patent system work, Lemley suggests.  What is needed instead is a new theory, which he offers: patents encourage patent racing, which drives innovation to occur faster, and in a more diverse manner, than it otherwise would.

The complete article is available via ssrn here.  Written Description blog offers a more in-depth discussion of the article.

Recent Patent Law Scholarship

Patent, , ,

By Jason Rantanen

Several interesting new articles are currently making the rounds.  Two particularly noteworthy ones are summarized below:

James Bessen, A Generation of Software Patents
Do patents benefit software firms? James Bessen examines this issue through both a survey of existing literature and a new empirical study.  Bessen finds that although the number of software-related patents has grown rapidly over the past decade, the share of those patents obtained by software firms has remained relatively small, and is largely accounted for by the activity of a small number of large software firms.  In other words, most software patents go to firms outside the software industry.  Bessen also provides data that brings into question the value of patents to startup software firms and examines changes in the probability that a software patent will be involved in litigation during the first four years of its patent life.

The complete article is available via ssrn here.

Mark Lemley, The Myth of the Sole Inventor
In his most recent major article, Mark Lemley challenges the canonical story of the lone genius inventor while proposing a novel justification for the patent system.  Professor Lemley first breaks down the idea that invention occurs independantly, created by a handful of extraordinary inventors, through a series of vignettes about famous inventions: the steam engine, steamboats, the cotten gin, and other classic examples of pioneering inventions.  Rather than lone inventors, Lemley argues, history is replete with examples of simultaneous invention, calling into question the traditional incentive justification for the patent system.  Nor do any of the other conventional justifications for the patent system work, Lemley suggests.  What is needed instead is a new theory, which he offers: patents encourage patent racing, which drives innovation to occur faster, and in a more diverse manner, than it otherwise would.

The complete article is available via ssrn here.  Written Description blog offers a more in-depth discussion of the article.

Supreme Court: Inventors Can Retain Rights Even for Federally Funded Inventions

Patent, , , ,

StanfordImageStanford v. Roche, 563 U. S. ____ (2011)

In a 7-2 decision, the Supreme Court has ruled that a federally funded contractor does not necessarily own the patent rights to inventions resulting from funded projects. Here, the Board of Trustees of the Leland Stanford Junior University unsuccessfully argued that such rights automatically vest under the Bayh-Dole Act of 1980.

Ownership of patent rights and inchoate pre-filing rights are somewhat confusing because they involve a mixture of federal patent law and state laws of contracts, employment, and trade secrets. Here, the majority led by Chief Justice Roberts has held that US patent rights have always (since 1790) initially vested in “the inventor” and that the non-specific language of the Bayh-Dole Act does nothing to change the original setup.

The Bayh-Dole Act has revolutionized the way that universities look at technology and innovation by allowing research institutions to “elect to retain title” to inventions generated through federal funding. 35 U.S.C. § 202(a). Today, most major research universities hold dozens if not hundreds of patents and have extensive licensing offices. The Association of University Technology Managers (AUTM) now boasts more than 3,500 members.

This case involves a Stanford researcher (Mark Holodniy) who was under a prior contractual duty to assign invention rights to Stanford but who actually assigned rights to Cetus. When Stanford sued Roche (Cetus’ successor in interest) for patent infringement, Roche’s defense was that a co-owner could not be held liable for patent infringement. The Court of Appeals for the Federal Circuit agreed with Roche — holding that Holodniy’s duty to assign rights to Stanford did not block him from actually assigning rights to Cetus and that Roche therefore held rights in the invention.

At the Supreme Court, Stanford argued that the contractual rights did not matter and instead that its statutory right to “elect to retain title. . . any invention of the contractor” conceived or reduced to practice under a federally funded agreement gave it precedence over Cetus/Roche. The court rejected Stanford’s argument as both against the tradition of patent law and not in accord with the statute.

Stanford’s reading of [the Statute] is plausible enough in the abstract; it is often the case that whatever an employee produces in the course of his employment belongs to his employer. No one would claim that an autoworker who builds a car while working in a factory owns that car. But, as noted, patent law has always been different: We have rejected the idea that mere employment is sufficient to vest title to an employee’s invention in the employer. Against this background, a contractor’s invention—an “invention of the contractor”— does not automatically include inventions made by the contractor’s employees.

This case is largely a moot point because the Federal Circuit has established a particular federal-patent-law interpretation of employment agreements that allows contracting parties to choose language that optionally includes either a promise to cooperate and assign rights or else an automatic assignment that occurs constructively at the moment of invention. If Stanford had chosen the more stringent automatic assignment language for its employment contract, then it would have automatically taken rights. The only problem, of course, is whether Universities have the bargaining power to require its employees to sign the more stringent contracts.

At the same time, however, the decision here offers some cause for caution in relying fully on the Federal Circuit’s usurpation of exclusive jurisdiction over this employment and contract law issue. In Footnote 2, the Supreme Court noted that, in this decision, the court had “no occasion to pass on the validity of the lower court’s construction of those agreements.” As discussed below, Justice Breyer explicitly criticized the Federal Circuit’s contract interpretation.

In dissent, Justice Breyer wrote:

Ultimately, the majority rejects Stanford’s reading (and the Government’s reading) of the Act because it believes that it is inconsistent with certain background norms of patent law, norms that ordinarily provide an individual inventor with full patent rights. But in my view, the competing norms governing rights in inventions for which the public has already paid, along with the Bayh-Dole Act’s objectives, suggest a different result.

Breyer also challenged the Federal Circuit rule distinguishing between a promise to transfer and an automatic transfer agreement. Relying upon history and tradition, Justice Breyer saw the initial contract as creating equitable title in the invention and then looked to old decisions historically did not enforce contracts to automatically transfer of legal title to patent rights.

Given what seem only slight linguistic differences in the contractual language, this reasoning seems to make too much of too little. Dr. Holodniy executed his agreement with Stanford in 1988. At that time, patent law appears to have long specified that a present assignment of future inventions (as in both contracts here) conveyed equitable, but not legal, title. See, e.g., G. Curtis, A Treatise on the Law of Patents for Useful Inventions §170, p. 155 (3d ed. 1867) (“A contract to convey a future invention . . . cannot alone authorize a patent to be taken by the party in whose favor such a contract was intended to operate”); Comment, Contract Rights as Commercial Security: Present and Future Intangibles, 67 Yale L. J. 847, 854, n. 27 (1958) (“The rule generally applicable grants equitable enforcement to an assignment of an expectancy but demands a further act, either reduction to possession or further assignment of the right when it comes into existence”).

Under this rule, both the initial Stanford and later Cetus agreements could have given rise only to equitable interests in Dr. Holodniy’s invention. And as between these two claims in equity, the facts that Stanford’s contract came first and that Stanford subsequently obtained a postinvention assignment as well should have meant that Stanford, not Cetus, would receive the rights its contract conveyed.

In 1991, however, the Federal Circuit, in FilmTec, adopted the new rule quoted above—a rule that distinguishes between these equitable claims and, in effect, says that Cetus must win. The Federal Circuit provided no explanation for what seems a significant change in the law. Nor did it give any explanation for that change in its opinion in this case. The Federal Circuit’s FilmTec rule undercuts the objectives of the Bayh-Dole Act. While the cognoscenti may be able to meet the FilmTec rule in future contracts simply by copying the precise words blessed by the Federal Circuit, the rule nonetheless remains a technical drafting trap for the unwary. It is unclear to me why, where the Bayh-Dole Act is at issue, we should prefer the Federal Circuit’s FilmTec rule to the rule, of apparently much longer vintage, that would treat both agreements in this case as creating merely equitable rights.

Justice Breyer realized that his argument regarding equitable title had not been briefed by the parties and therefore indicated his preference to remand for briefing of that issue.

Patently-O Bits & Bytes by Lawrence Higgins

Patent, , ,

Apple iPhone Developers Sued

  • Lodsys has filed a patent infringement suit against several developers of applications for Apple. [Complaint] Lodsys claims that patent numbers 7,620,565 and 7,222,078 were used by the developers without their consent. The suit was filed after Apple sent a warning letter to Lodsys, telling Lodsys to leave the developers alone. Apple claims that the license that they received from Lodsys allows the developers to use the patented technology for making Apps for Apple products. The Apps that the complaint reference are Twitterrific, Labyrinth, and Quickoffice Connect just to name a few. [Link]

USPTO’s Patent Experience Externship Program (PEEP)

  • This year the USPTO will have its largest student program ever; over 200 students (including myself) have been accepted to work at the USPTO. The PEEP gives future patent attorneys and students a view into the day to day operations at the USPTO. Also the PEEP helps the USPTO identify and recruit future patent examiners. The PEEP integrates theories learned at universities with real-world practice and implementation of those theories. The PEEP officially started on June 1 and will run until the middle of August. [Link]

New Secretary of Commerce?

  • President Obama has nominated John Bryson as the next Secretary of Commerce. The current Secretary of Commerce Gary Locke will become the new Ambassador to China. John Bryson is the former CEO of Edison International and co-founder of the Natural Resources Defense Council. [Link]

New Patent Blog!

  • www.ipreglaw.com is a new patent blog started by Scott Bialecki. The blog's purpose is to offer practical advice and insight from a former Federal Trade Commission (FTC) staffer that became an IP litigator. Scott was with the FTC for over 5 years, and brings his regulatory knowledge to the Intellectual Property world to offer great advice on his blog.

Patent Jobs:

  • Toler Law Group is searching for patent attorneys to work in their Austin, TX office. Toler Law group is evaluating both lateral and newly graduated attorneys. [Link]
  • Solazyme is seeking an IP attorney with 4-5 years of experience to work at their San Francisco location. [Link]
  • Sterne, Kessler, Goldstein & Fox is looking for a biotechnology patent attorney with at least 3 years of experience to work in their Washington, DC office. [Link]
  • Choate, Hall & Stewart is searching for an attorney, patent agent or staff scientists with an EE background and 2 years of patent prosecution experience. [Link]

Upcoming Events:

  • The Biotechnology Industry Organization (BIO) will hold its annual BIO International Convention on June 27-30 in Washington, DC. BIO brings together 15,000 – 17,000 industry experts from over 60 countries. The convention will hold several sessions strictly related to IP. [Link]
  • The American Conference Institute (ACI) will hold a Hatch-Waxman Boot Camp July 18-19 in San Diego. ACI’s Hatch-Waxman Boot Camp has been designed to give counsel and advisors to brand name and generic drug critical insights into commercialization and the pre-approval process, and also provide an in-depth review of Hatch-Waxman and other IP basics relative to small molecules and biologics. [Link]
  • American University Washington College of Law will host the first annual Global Congress on Public Interest Intellectual Property August 25-27 in Washington DC. The Global Congress on Public Interest Intellectual Property will serve as a site for the sharing of research, ideas and policy proposals for how international intellectual property law should be constructed to better protect the full range of global public interest concerns. [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

 

Patently-O Bits & Bytes by Lawrence Higgins

Patent, , ,

Apple iPhone Developers Sued

  • Lodsys has filed a patent infringement suit against several developers of applications for Apple. [Complaint] Lodsys claims that patent numbers 7,620,565 and 7,222,078 were used by the developers without their consent. The suit was filed after Apple sent a warning letter to Lodsys, telling Lodsys to leave the developers alone. Apple claims that the license that they received from Lodsys allows the developers to use the patented technology for making Apps for Apple products. The Apps that the complaint reference are Twitterrific, Labyrinth, and Quickoffice Connect just to name a few. [Link]

USPTO’s Patent Experience Externship Program (PEEP)

  • This year the USPTO will have its largest student program ever; over 200 students (including myself) have been accepted to work at the USPTO. The PEEP gives future patent attorneys and students a view into the day to day operations at the USPTO. Also the PEEP helps the USPTO identify and recruit future patent examiners. The PEEP integrates theories learned at universities with real-world practice and implementation of those theories. The PEEP officially started on June 1 and will run until the middle of August. [Link]

New Secretary of Commerce?

  • President Obama has nominated John Bryson as the next Secretary of Commerce. The current Secretary of Commerce Gary Locke will become the new Ambassador to China. John Bryson is the former CEO of Edison International and co-founder of the Natural Resources Defense Council. [Link]

New Patent Blog!

  • www.ipreglaw.com is a new patent blog started by Scott Bialecki. The blog's purpose is to offer practical advice and insight from a former Federal Trade Commission (FTC) staffer that became an IP litigator. Scott was with the FTC for over 5 years, and brings his regulatory knowledge to the Intellectual Property world to offer great advice on his blog.

Patent Jobs:

  • Toler Law Group is searching for patent attorneys to work in their Austin, TX office. Toler Law group is evaluating both lateral and newly graduated attorneys. [Link]
  • Solazyme is seeking an IP attorney with 4-5 years of experience to work at their San Francisco location. [Link]
  • Sterne, Kessler, Goldstein & Fox is looking for a biotechnology patent attorney with at least 3 years of experience to work in their Washington, DC office. [Link]
  • Choate, Hall & Stewart is searching for an attorney, patent agent or staff scientists with an EE background and 2 years of patent prosecution experience. [Link]

Upcoming Events:

  • The Biotechnology Industry Organization (BIO) will hold its annual BIO International Convention on June 27-30 in Washington, DC. BIO brings together 15,000 – 17,000 industry experts from over 60 countries. The convention will hold several sessions strictly related to IP. [Link]
  • The American Conference Institute (ACI) will hold a Hatch-Waxman Boot Camp July 18-19 in San Diego. ACI’s Hatch-Waxman Boot Camp has been designed to give counsel and advisors to brand name and generic drug critical insights into commercialization and the pre-approval process, and also provide an in-depth review of Hatch-Waxman and other IP basics relative to small molecules and biologics. [Link]
  • American University Washington College of Law will host the first annual Global Congress on Public Interest Intellectual Property August 25-27 in Washington DC. The Global Congress on Public Interest Intellectual Property will serve as a site for the sharing of research, ideas and policy proposals for how international intellectual property law should be constructed to better protect the full range of global public interest concerns. [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.

 

Patently-O Bits & Bytes by Lawrence Higgins

Patent, , ,

Apple iPhone Developers Sued

  • Lodsys has filed a patent infringement suit against several developers of applications for Apple. [Complaint] Lodsys claims that patent numbers 7,620,565 and 7,222,078 were used by the developers without their consent. The suit was filed after Apple sent a warning letter to Lodsys, telling Lodsys to leave the developers alone. Apple claims that the license that they received from Lodsys allows the developers to use the patented technology for making Apps for Apple products. The Apps that the complaint reference are Twitterrific, Labyrinth, and Quickoffice Connect just to name a few. [Link]

USPTO’s Patent Experience Externship Program (PEEP)

  • This year the USPTO will have its largest student program ever; over 200 students (including myself) have been accepted to work at the USPTO. The PEEP gives future patent attorneys and students a view into the day to day operations at the USPTO. Also the PEEP helps the USPTO identify and recruit future patent examiners. The PEEP integrates theories learned at universities with real-world practice and implementation of those theories. The PEEP officially started on June 1 and will run until the middle of August. [Link]

New Secretary of Commerce?

  • President Obama has nominated John Bryson as the next Secretary of Commerce. The current Secretary of Commerce Gary Locke will become the new Ambassador to China. John Bryson is the former CEO of Edison International and co-founder of the Natural Resources Defense Council. [Link]

New Patent Blog!

  • www.ipreglaw.com is a new patent blog started by Scott Bialecki. The blog's purpose is to offer practical advice and insight from a former Federal Trade Commission (FTC) staffer that became an IP litigator. Scott was with the FTC for over 5 years, and brings his regulatory knowledge to the Intellectual Property world to offer great advice on his blog.

Patent Jobs:

  • Toler Law Group is searching for patent attorneys to work in their Austin, TX office. Toler Law group is evaluating both lateral and newly graduated attorneys. [Link]
  • Solazyme is seeking an IP attorney with 4-5 years of experience to work at their San Francisco location. [Link]
  • Sterne, Kessler, Goldstein & Fox is looking for a biotechnology patent attorney with at least 3 years of experience to work in their Washington, DC office. [Link]
  • Choate, Hall & Stewart is searching for an attorney, patent agent or staff scientists with an EE background and 2 years of patent prosecution experience. [Link]

Upcoming Events:

  • The Biotechnology Industry Organization (BIO) will hold its annual BIO International Convention on June 27-30 in Washington, DC. BIO brings together 15,000 – 17,000 industry experts from over 60 countries. The convention will hold several sessions strictly related to IP. [Link]
  • The American Conference Institute (ACI) will hold a Hatch-Waxman Boot Camp July 18-19 in San Diego. ACI’s Hatch-Waxman Boot Camp has been designed to give counsel and advisors to brand name and generic drug critical insights into commercialization and the pre-approval process, and also provide an in-depth review of Hatch-Waxman and other IP basics relative to small molecules and biologics. [Link]
  • American University Washington College of Law will host the first annual Global Congress on Public Interest Intellectual Property August 25-27 in Washington DC. The Global Congress on Public Interest Intellectual Property will serve as a site for the sharing of research, ideas and policy proposals for how international intellectual property law should be constructed to better protect the full range of global public interest concerns. [Link]

Contact Lawrence.Higgins@patentlyo.com with leads for future Bits and Bytes.