COJK’s Take on Bilski

Here’s the client alert that my firm is sending out for Bilski, hot off the presses!

Today the U.S. Supreme Court released its long-awaited decision in Bilski v. Kappos, a case that was expected to have wide-reaching impact in deciding the bounds of patentable subject matter, especially with regard to patents relating to business methods and software.  The Court affirmed that business methods and software are eligible for patent protection unless they are written to cover “laws of nature, physical phenomena, and abstract ideas.”  The Court held that the ‘machine-or-transformation’ test used by the Court of Appeals for the Federal Circuit is not the only test for determining patent eligibility. The decision appears to preserve the status quo and leaves the door open for patents directed to software and business methods.

The claims of the Bilski patent application are directed to a business method relating to hedging risk in the energy market.  Previously, the Federal Circuit held that the claims of the Bilski application were not eligible for patent protection, stating that a claim to a process must either (1) be tied to a particular machine or apparatus, or (2) transform a particular article into a different state or thing.  The Federal Circuit held that this “machine-or-transformation test” was the sole test for determining patent eligibility of a process.

In an opinion written by Justice Kennedy, the Supreme Court agreed, as expected, that the claims of the Bilski application are not patent-eligible subject matter.  In interpreting Section 101 of the U.S. patent laws, the Court held that “the machine-or-transformation test is a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under § 101,” but that the test is “not the sole test for deciding whether an invention is a patent-eligible ‘process.'”  The Court also held that “Section 101 similarly precludes the broad contention that the term ‘process’ categorically excludes business methods.”

While the Supreme Court left open the door to patent eligibility, it did little to clarify how to pass through that door.  Today’s opinion referred to legal principles given by the Court in its previous decisions in Benson, Flook, and Diehr.  Claims to software or business methods that do not pass the machine-or-transformation test may nevertheless be eligible for patent protection if an argument for patent eligibility can be made under those principles.  Nevertheless, it remains unclear exactly where the line is drawn.

In sum, it appears that the Supreme Court passed on the opportunity to make any large change in the patentability of software or business methods.  For software companies and other entities involved with patents in this area, this opinion appears to preserve the status quo.

A lot of the internal debate centered around whether the machine-or-transformation test is actually valid anymore. The Court never explicitly came out and said that it shouldn’t be used any more, but they did obliquely state that it is “atextual” and “not the sole test.”

It seems to me that, going forward, you can only rely on it to a point. An Examiner can reject a claim that passes the test, or allow a claim that doesn’t pass the test, so long as there is a compelling reason against or for the claim covering more than an abstract idea. If you’re fighting a rejection based on a failure to pass the test, arguing that it is or is not an abstract idea might be the way to go, even though crafting such an argument seems to be more than a little abstract in itself.

BPAI Upholds Process Claim under Bilski by Looking at Entire Claim

The Florida Patent Lawyer Blog pointed out a BPAI decision released today, upholding a claim directed to a method for displaying customer information and coupons at a weigh station.  Here’s the claim at issue:

17. A method for providing customer-specific information for a customer to a weigh station, the method comprising:

a) obtaining customer identification information for identifying a customer to be served at the weigh station;

b) storing a plurality of customer profiles for a plurality of customers  wherein each customer in the plurality of customers has an associated customer profile; and,

c) when the customer is in the plurality of customers, retrieving the associated customer profile for the customer using the customer identification information and providing associated customer-specific information based on the associated customer profile to a weigh station display, wherein the associated customer profile comprises, for each customer in the plurality of customers, a unique associated customer identifier, the customer-specific information comprises associated reward information, and the associated reward information specifies at least one of an associated coupon and an associated discount to be provided to the customer.

This claim was upheld under the “machine-or-transformation” test from Bilski.  Mark pointed out a basic takeaway from this case:

The lesson learned in this case is that although a claim may not explicitly and positively recite a structural element, the claim may require a specific structure to perform the steps of the claim. If that structure satisfies the machine prong of the machine-or-transformation test, an Examiner’s 35 U.S.C. §101 non-statutory subject matter rejection may be reversed under Bilski.

I’d like to dive a little deeper into a subtle point, here.  When analyzing a claim for patent-eligible subject matter, it seems that examiners will sometimes review each element separately, decide whether that element alone would pass the “machine-or-transformation” test, and move on to subsequent elements.  If none of the elements alone would pass the test, the examiner would reject the claim.  Here, couldn’t that have happened?

The “weigh station” in the preamble would not likely be given patentable weight, because it is in the preamble.  Step (a) recites “obtaining information,” which is often considered insignificant pre- or post-solution activity.  Step (b) recites “storing” information, which can also be considered pre- or post-solution activity.  Neither of these steps are tied to the weigh station, since the weigh station does not perform either of the steps.  Step (c) recites “retrieving” information and “providing” the information to a weigh station display.   Since the weigh station is merely provided the information, no display is actually occuring in the claim, and the “weigh station display” is not required to perform any actions by the claim.

Given the current trend of disallowing claims that explicitly recite generic hardware performing steps of the claim as nevertheless not being directed to a “particular” machine, what makes this claim different?

Well, the board explains that, as a whole, the claim is tied to a weigh station:

Independent claim 17 recites a method for providing information to a weigh station. Claim 17 further requires that the weigh station include a weigh scale and a weigh station display, where customer specific information is provided to the weigh station display. That is, claim 17 recites a manner of entering data to a weigh station and displaying the inputted information. As such, claim 17 requires a specific structure that captures, stores, and displays specific data. This specific structure ties the recited method to a particular machine, in that the method recites how to operate a weigh station with a weigh station display. . . . This is one of those cases where looking at the claim as a whole may lead to a different conclusion than analysis of the parts.

While I’m not sure why the claim language quoted above requires a “weigh scale,” the board’s point about taking the claim as a whole is instructive.  Even though each part of the claim might not itself look tied to a particular machine, as a whole, the argument that the claim is at least somehow related to something more particular than a general purpose computer and any generic data is more convincing.

So, something for the argument toolbox: when dealing with a Section 101 rejection of a method claim, try to argue that the claims as a whole are tied to a particular machine, even if it’s difficult to make the argument for individual recitations.

Facebook awarded patent with “News Feed” and “Social Network” in title. EVERYBODY PANIC!

The blogosphere is buzzing with reports about a patent issued to Facebook this week, entitled “Dynamically providing a news feed about a user of a social network.”  As usual, everybody promptly went off the deep end.

Here’s an illustrative example:

While we’re going to take some time to really dig into this patent, is basics are simple enough. The patent awards Facebook protection for technology “dynamically providing a news feed about a user of a social network.”

Apparently, the title is what defines the scope of a patent.  No, wait! Maybe it’s the abstract!

Here is the abstract in its full form:

“A method for displaying a news feed in a social network environment is described. The method includes generating news items regarding activities associated with a user of a social network environment and attaching an informational link associated with at least one of the activities, to at least one of the news items, as well as limiting access to the news items to a predetermined set of viewers and assigning an order to the news items. The method further may further include displaying the news items in the assigned order to at least one viewing user of the predetermined set of viewers and dynamically limiting the number of news items displayed.”

As we see it, this patent is focused on the technology that displays the news feed, rather than the delivery of status updates that often compose them.

The abstract and the title describe something really broad, so the patent must be assertable against the entire Internet!  Run for the hills!

OK, back to reality: please remember that, for the most part, the enforceable scope of a patent is defined by the claims.  There are some details that change this based on the path the patent took through the Patent Office, but to a first approximation, it is safe to say that the language of the claims defines the scope of protection.

Here’s an example:  I’ve worked on applications with such titles as “VIDEO ENDOSCOPE,” “DISK DEVICE,” or, my favorite, “VEHICLE” (the Examiner made us make that one more descriptive, for some reason).  Does this mean that my clients managed to patent the general idea of a video endoscope, or a disk device?  Of course not.  My clients patented whatever is described in the claims.

For the record, here’s a representative independent claim from the Facebook patent:

1. A method for displaying a news feed in a social network environment, the method comprising:

monitoring a plurality of activities in a social network environment;

storing the plurality of activities in a database;

generating a plurality of news items regarding one or more of the activities, wherein one or more of the news items is for presentation to one or more viewing users and relates to an activity that was performed by another user;

attaching a link associated with at least one of the activities of another user to at least one of the plurality of news items where the link enables a viewing user to participate in the same activity as the another user;

limiting access to the plurality of news items to a set of viewing users; and

displaying a news feed comprising two or more of the plurality of news items to at least one viewing user of the predetermined set of viewing users.

I won’t comment on the scope of these claims, but just keep in mind that, in order for Facebook to get you for infringement of this patent, they’re going to have to show that you are doing all of these things (again, a first approximation, but basically true).

So, no, the social networking sky is not falling.  There’s always Bilski to worry about, too.

Findings of PwC Study on Patent Damages Should Not Be Unduly Emphasized

The Against Monopoly blog cited to a PriceWaterhouseCoopers study about the success rate of nonpracticing entities at trial.  The blog uses the study’s finding that NPEs win higher patent damage awards at trial than practicing entities (which I’ll call “manufacturers”) to conclude that the patent system awards NPEs more for suing than it awards manufacturers for suing, and therefore the patent system is “sick.”  I realize that Against Monopoly is probably not trying to make a thoroughly vetted and supported comment on the issue, but I’ve seen this study quoted a couple of other places already and I think its scope is being misconstrued.

First, the study is limited to damages awarded in patent infringement actions that are decided on summary judgment or that proceed to final judgment at trial.  In other words, cases that settle before final judgment are not included in the study.  Taking as a given (because I am too lazy to look up the numbers) that a very small percent of disputes proceed to trial, and that a very small percent of that very small percent proceeds to final judgment, studying only cases that reach this stage does not seem like a good sample to use to analyze the system as a whole.

Second, since the study only looks at damages awards, it fails to consider benefits that manufacturers may obtain other than damages.  A NPE does not receive any benefit in terms of market position by obtaining an injunction against a competitor.  However, if a manufacturer is able to enjoin its competitors from entering a given market, the manufacturer may get an even greater economic benefit than they would be receiving a greater damage award.  This point speaks to the fact that NPEs and manufacturers are motivated by different goals, and the higher damage awards to NPEs may simply be because it is the only goal sought by the NPE.

Finally, it should be recognized that the study came to many conclusions, only some of which show that NPEs are more successful than manufacturers.  The study found that the median damage awards granted to NPEs have been double those for manufacturers in the last seven years, but also found:

• The median damage awards granted to NPEs and manufacturers from 1995 to 2001 were about the same.
• There have been no discernable trends in median damage awards overall (data is random?)
• Overall, NPEs were only successful 29% of the time, versus 41% of the time for manufacturers, due to a lack of success for NPEs at summary judgment (trial success rates were about the same between the two groups)
• Alleged infringers have had more success in declaratory judgment actions as the plaintiff against NPEs than against other manufacturers

So, yes, NPEs apparently get more damages in the rare occasion that damages are awarded.  However, I think that claiming this study shows the patent system is unfairly tilted to benefit NPEs badly misstates the findings of the study.

A Quick Shout-Out to Justice Scalia

Justice Scalia, in the Bilski oral arguments, wondered why there were no patents on methods of training horses, since we used to be a horse-based economy.

As usual, you can almost always be sure that there’ll be at least one issued patent about anything:

U.S. Patent No. 3,543,724, issued December, 1970:  Monitored and Controlled Conditioning and Exercise Method For Animals

An exemplary claim:

1. In a method of controllably conditioning an animal for periods of sustained optimum physical effort such as racing, the steps of exercising said animal by swimming during periods that are spaced by nonswimming recovery intervals during which the heart rate of the animal is allowed to reduce toward but not to normal, and monitoring the heart action of said animal continually during said periods and intervals, said monitoring step comprising continually observing the instantaneous heart rate of said animal during said periods and intervals to prevent rise of said heart rate above a predetermined safe maximum range during said periods and to start each succeeding period substantially immediately following a recovery interval at a point where the heart rate of the animal is in a relative high range as compared to normal but safely below said predetermined maximum range so that during the exercise periods following the initial period the animal exercises in a relatively high above normal heart rate condition.

MONITORED AND CONTROLLED CONDITIONING AND EXERCISE METHOD FOR ANIMALS

Major PTO Rules decision handed down today

Today’s big news in patent-land is that the Federal Circuit handed down a ruling in the litigation seeking to block the PTO’s recent rulemaking concerning limiting certain types of practice.  As always, Patently-O has the scoop.  From Patent Law Blog (Patently-O): Tafas v. Doll: Continuation Limits Invalid; Limits on Claims and RCEs are OK:

On appeal, the Federal Circuit has vacated-in-part – finding that some of the limitations on continuations improperly conflict with 35 U.S.C. § 120, but that the remaining limits [including limits on filing RCEs] are “within the scope of the USPTO’s rulemaking authority.”

The final outcome, of course, is still unclear, as the Obama Administration may choose to change strategy altogether.

Quick comment: I don’t fully understand an outcome where practitioners wouldn’t be able to file unlimited RCEs, but would be able to file unlimited continuations.  My understanding is that back in the day, there was no such thing as an RCE, and if further examination was required, an applicant would file a continuation.  RCEs were meant to eliminate some of this hassle.  So, if the results of this ruling were upheld, we’d just be going back to the old hassle that RCEs were meant to avoid?  That doesn’t seem logical.

Can TomTom find its way out of its GPL mess?

Slashdot recently posted a story about Microsoft’s patent infringement allegations against TomTom.  The gist of it is, maybe Microsoft is trying to put TomTom in an impossible position: continue using an infringing version of Linux and be liable for damages for violating Microsoft patents, or license those same patents and violate the GPL, thereby losing the right to distribute Linux.

Glyn Moody goes into more depth in his own post, quoting a commenter from an earlier story:

It isn’t a case of cross-license and everything is ok. If Tom Tom or any other company cross licenses patents then by section 7 of GPLv2 (for the Linux kernel) they lose the rights to redistribute the kernel *at all*.

[ . . . ]

Tom Tom are the first company to publicly refuse to engage in this ugly little protection racket, and so they got sued. Had Tom Tom silently agreed to violate the GPL, as so many others have, then we’d only hear about a vague “patent cross licensing deal” just like the ones Microsoft announces with other companies.

As someone not entirely familiar with the GPL, it was somewhat hard to believe that it makes it impossible to cross-license patents if you’re using it.  But, here’s a couple of choice quotes from GPLv2.

Latest round of patent reform free-for-all

The latest attempt at legislative reform of US patent law hit the internet yesterday, this time in the form of a proposal that supposedly has bicameral, bipartisan support.

I’ll be honest: I don’t really have the time right now to go through the entire piece of proposed legislation and figure out what it all means.  However, I’m happy to share what others are saying:

• Patent Baristas has a quick summary of what’s included in the bill.
• Anticipate This!™ has a quick summary of links to other people’s coverage.
• Patent Baristas also has a good post describing some of the first reactions from various interest groups.

Finally, Promote the Progress has a quick “from-the-hip” analysis that is probably typical of practitioners who have been down this patent reform road before:

As a whole, the bill is largely ho-hum. Same stuff, different session. The tone is similar to that of the 110th Congress – this bill is a starting point and is intended to get the discussion off the ground, again. Where it goes from here is anybody’s guess.

One substantive comment: first-to-file seems almost certain to happen sooner or later, since we’re pretty much the only country that isn’t using it.  However, I’ll be sad to see first-to-invent go.  Yes, it leads to horrifically complicated fights that only a handful of practitioners even know how to navigate.  However, first-to-invent is fair.  If you invented something first, why should someone else get to patent it just because they got to the PTO before you did?  Bah.

While I’m not going to wade into further analysis at this point, I have a meta comment.  It seems impossible to find an unbiased opinion on patent reform, and all of the biases are so mundane.  Prosecutors want patents to be easy to obtain and to have as many strategic options available to them as possible.  Plaintiff’s litigators want scope to be as broad as possible and damages to be as high as possible.  Defendant’s litigators want scope to be as narrow as possible and damages to be low as possible.  Most “patent reform” groups would probably love to see patents disappear altogether, but will settle for them being impossible to obtain, uselessly narrow, easy to invalidate, and practically unenforceable.

I guess the meta comment is that almost all patent reform commentary centers around concrete effects that show there are things wrong with the patent system, and then suggests ways to eliminate those effects (if those effects conflict with the commentator’s biased viewpoint).  You hardly ever see commentary asserting that there are concrete effects that show there are things wrong with the patent system, and here’s how we can better serve the purpose of the patent system by either eliminating, changing, or enhancing those concrete effects.

Maybe that’s because the purpose of the patent system is different depending on your bias?  Most likely.  But it’d be nice to see some commentary that took seriously “[promoting] the progress of science and useful arts” as the true goal of the patent system, and looking at reform solely through that lens.

Knowing what to pay attention to

One of the things that this blog is going to look at is times when other people out there just don’t get it.  Case in point:

Microsoft Patents “Pg Up” and “Pg Dn”

I ran across this post on Slashdot, and it immediately drove me nuts:

An anonymous reader notes that Microsoft has been granted a patent on “Page Up” and “Page Down” keystrokes. The article links an image of an IBM PC keyboard from 1981 with such keys in evidence.

Seriously? That sounds like a dumb move by the Patent Office. And, of course, such stories spawn all sorts of comments about patents being evil, and how patent reform must happen NOW or else all innovation will cease and Western Civilization will grind to a halt, yadda, yadda.

Of course, it’s not true.