423 RECENT DEVELOPMENTS IN THE PATENT-ELIGIBILITY OF SOFTWARE AND NAVIGATING THE UNCERTAINTY FROM A PATENT DRAFTER’S PERSPECTIVE Steven W. Gutke† TABLE OF CONTENTS I. Introduction ..........................................................................................424 II. Background ..........................................................................................424 III. Analysis................................................................................................425 A. Recent Cases Dealing with Patent Eligibility of Software Innovations ...................................................................................425 1. Bilski v. Kappos: Machine-or-Transformation Test Is Not the Sole Test for Patent-Eligibility ........................................ 426 2. CyberSource Corp. v. Retail Decisions, Inc.: Computer- Readable Medium Claims May Be Patent-Ineligible ............ 428 3. Ultramercial, LLC v. Hulu, LLC: Narrowing of the Abstract Idea Exception......................................................... 430 4. Mayo Collaborative Services v. Prometheus Laboratories: Concerned About Preemption................................................ 433 5. CLS Bank International v. Alice Corporation: A Fractured Decision ................................................................................. 433 6. Ultramercial, LLC v. Hulu, LLC ........................................... 436 B. Application of the Law at the USPTO .........................................437 1. Interim Guidelines in Response to Bilski: A Factor-Based Inquiry to Patent-Eligibility ................................................... 437 2. August 2012 Updated Examiner Training ............................. 440 IV. Recommendation .................................................................................441 V. Conclusion ...........................................................................................443 † Steven W. Gutke is a graduate (summa cum laude, Order of the Coif) of the College of Law at the University of Illinois at Urbana-Champaign. Mr. Gutke is also an honors graduate of Utah State University with a B.S. in Electrical Engineering and a B.A. in German. Mr. Gutke is a Registered Patent Attorney and an associate at TraskBritt, PC, in Salt Lake City, Utah. This Recent Development is intended to be a discussion of current issues related to the patentability of software patents and should not be understood as representing the opinion of TraskBritt or any of its clients.
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423
RECENT DEVELOPMENTS IN THE
PATENT-ELIGIBILITY OF SOFTWARE AND
NAVIGATING THE UNCERTAINTY FROM
A PATENT DRAFTER’S PERSPECTIVE
Steven W. Gutke†
TABLE OF CONTENTS
I. Introduction .......................................................................................... 424 II. Background .......................................................................................... 424 III. Analysis................................................................................................ 425
A. Recent Cases Dealing with Patent Eligibility of Software
Innovations ................................................................................... 425 1. Bilski v. Kappos: Machine-or-Transformation Test Is Not
the Sole Test for Patent-Eligibility ........................................ 426 2. CyberSource Corp. v. Retail Decisions, Inc.: Computer-
Readable Medium Claims May Be Patent-Ineligible ............ 428 3. Ultramercial, LLC v. Hulu, LLC: Narrowing of the
Abstract Idea Exception ......................................................... 430 4. Mayo Collaborative Services v. Prometheus Laboratories:
Concerned About Preemption ................................................ 433 5. CLS Bank International v. Alice Corporation: A Fractured
Decision ................................................................................. 433 6. Ultramercial, LLC v. Hulu, LLC ........................................... 436
B. Application of the Law at the USPTO ......................................... 437 1. Interim Guidelines in Response to Bilski: A Factor-Based
Inquiry to Patent-Eligibility ................................................... 437 2. August 2012 Updated Examiner Training ............................. 440
IV. Recommendation ................................................................................. 441 V. Conclusion ........................................................................................... 443
† Steven W. Gutke is a graduate (summa cum laude, Order of the Coif) of the College of Law at the
University of Illinois at Urbana-Champaign. Mr. Gutke is also an honors graduate of Utah State University
with a B.S. in Electrical Engineering and a B.A. in German. Mr. Gutke is a Registered Patent Attorney and an
associate at TraskBritt, PC, in Salt Lake City, Utah. This Recent Development is intended to be a discussion
of current issues related to the patentability of software patents and should not be understood as representing
the opinion of TraskBritt or any of its clients.
424 JOURNAL OF LAW, TECHNOLOGY & POLICY [Vol. 2013
I. INTRODUCTION
The scope of 35 U.S.C. § 101—and its interpretation of patent-eligible
subject matter—is perhaps the most hot-button issue in patent law today.1
With respect to computer software, there is an ongoing debate as to whether
software should be patent-eligible—not just from a legal standpoint but also
from an innovation standpoint.2 This Recent Development discusses whether
computer software is patent-eligible under the Patent Act, what limitations
might exist, and what lessons can be learned from recent decisions that might
improve patent practitioners’ efforts in protecting software. This Recent
Development is also meant to assist those potential applicants desiring patent
protection on software in understanding the current state (and to a large extent,
the uncertainty) of patents involving software innovations.
Part II of this Recent Development briefly summarizes the current state of
confusion with regard to the patent-eligibility of software. Part III of this
Recent Development discusses selected recent Federal Circuit and Supreme
Court cases that may have an impact on the patentability of software
innovations. These selected cases are presented chronologically. From a legal
standpoint, these cases appear to at least agree that software—at least
computer-implemented innovations involving software—can possibly be
patentable.3 There remains, however, much uncertainty and disagreement
within the judiciary as to how to determine whether a patent claim recites
patent-eligible subject matter, where the lines are drawn, and even what
methods of analysis should be used. Part III further discusses the current
application of the law at the USPTO, including guidelines and training for the
Patent Examining Corps. Part IV gives recommendations for practitioners and
potential applicants going forward in this climate of uncertainty. Part V
presents conclusions.
II. BACKGROUND
So, what is the current state of the law with respect to patent-eligibility of
software? In a recent opinion (seven opinions to be exact) on the matter by the
Federal Circuit rendered in May 2013, Chief Judge Rader of the Federal
Circuit perhaps summed it up best:
1. The debate regarding patent-eligible subject matter is not just related to software patents. Most
recently, the Supreme Court has also addressed the patent-eligibility of genes (e.g., isolated DNA). See Ass’n
for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013).
2. For example, there are numerous groups that believe that software patents stifle innovation and
harm economic growth, with such groups being dedicated to putting an end to software patents. See, e.g., END
SOFTWARE PATS., http://endsoftpatents.org/ (last visited Sept. 24, 2013). Others, including former United
States Patent and Trademark Office (USPTO) director David Kappos, argue that software innovations are
important and should be eligible for patenting. David Kappos, Dir., U.S. Patent & Trademark Office, Keynote
Address at the Center for American Progress: An Examination of Software Patents (Nov. 20, 2012), available
at http://www.uspto.gov/news/speeches/2012/kappos_CAP.jsp.
3. Mayo Collaborative Servs. v. Prometheus Labs, Inc., 132 S. Ct. 1289 (2012); Bilski v. Kappos, 130
S. Ct. 3218 (2010); CLS Bank Int’l v. Alice Corp., 717 F.3d 1269 (Fed. Cir. 2013); Ultramercial, LLC v. Hulu,
No portion of any opinion issued today other than our Per Curiam Judgment garners a majority. The court is evenly split on the patent eligibility of the system claims. Although a majority of the judges on the court agree that the method claims do not recite patent eligible subject matter, no majority of those judges agrees as to the legal rationale for that conclusion. Accordingly, though much is published today discussing the proper approach to the patent eligibility inquiry, nothing said today beyond our judgment has the weight of precedent.
4
The answer to the question about the current state of patent-eligibility of
software is: confusion. How did it get there? There was a time when the
doctrine regarding what constitutes patent-eligible subject matter could very
broadly be summed up as “anything under the sun that is made by man.”5 But
now we have a situation where Chief Judge Rader laments that he and his
fellow judges have “little, if any, agreement . . . even though the statute has not
changed a syllable.”6 This statement comes even after the Supreme Court
decided multiple cases in this past decade that considered issues related to
patent-eligible subject matter. The clear split at the Federal Circuit, and the
accompanying uncertainty, provides another opportunity for the Supreme
Court to take up the issue of clarifying the law with respect to computer
software.7
III. ANALYSIS
The following analysis discusses the statutory standard of patent-
eligibility, as well as recent court decisions and USPTO practices that have
attempted to interpret that standard with regard to computer-implemented
innovations. In particular, Part II.A discusses selected recent court decisions
chronologically beginning with Bilski v. Kappos,8 decided by the Supreme
Court in 2010, up through CLS Bank International v. Alice Corp.9 and
Ultramercial v. Hulu,10
which were decided by the Federal Circuit in 2013.
Part II.B discusses application of the court decisions at the USPTO, including
interim guidelines published in 2012 in response to Bilski, as well as additional
examiner training in 2012.
A. Recent Cases Dealing with Patent Eligibility of Software Innovations
35 U.S.C. § 101 sets forth the statutory standard for patent-eligibility as:
4. CLS Bank Int’l, 717 F.3d at 1292 n.1 (Rader, C.J., concurring-in-part and dissenting-in-part).
5. Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980) (quoting the committee reports accompanying
the 1952 Patent Act).
6. CLS Bank Int’l, 717 F.3d at 1335 (Rader, C.J., filing additional reflections).
7. Congress had an opportunity to clarify some of the issues regarding what should or should not be
patent-eligible in the recently enacted America Invents Act of 2011. Unfortunately, Congress chose to be
silent on these issues facing the courts.
8. Bilski, 130 S. Ct. at 3225.
9. CLS Bank Int’l, 717 F.3d at 1335.
10. Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 1335 (Fed. Cir. 2013).
426 JOURNAL OF LAW, TECHNOLOGY & POLICY [Vol. 2013
“[w]hoever invents or discovers any new and useful process, machine,
manufacture, or composition of matter, or any new and useful improvement
thereof, may obtain a patent therefor, subject to the conditions and
requirements of this title.”11
The Patent Act further defines the “process”
category as meaning a “process, art or method, and includes a new use of a
known process, machine, manufacture, composition of matter, or material.”12
Courts have further stated that “[i]n choosing such expansive terms . . .
modified by the comprehensive ‘any,’ Congress plainly contemplated that the
patent laws would be given wide scope.”13
These two statutes set the standard
starting point for analysis in nearly every case deciding the bounds of
patentable subject matter of software innovations.14
In addition to the statutes, most cases (including the cases discussed
below) expressly recognize that there are three exceptions to the broad
treatment of what constitutes patent-eligible subject matter—“laws of nature,
natural phenomena, and abstract ideas” are not patentable.15
The Supreme
Court has recognized that “too broad an interpretation of this exclusionary
principle could eviscerate patent law. For all inventions at some level embody,
use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract
ideas.”16
What happens from there is where the real action occurs.
1. Bilski v. Kappos: Machine-or-Transformation Test Is Not the Sole Test
for Patent-Eligibility17
Although the patent in question in Bilski would more likely be
characterized as a “business method” patent than a “software” patent, Bilski had a major effect on the manner in which all methods are evaluated, which
affects the analysis of software-type patents. Bilski briefly discussed software
patents and did not categorically exclude software from being patent-eligible
subject matter.
Prior to Bilski, method claims were generally evaluated under the
machine-or-transformation test, which determined that a process is patent
eligible if “(1) it is tied to a particular machine or apparatus, or (2) it
transforms a particular article into a different state or thing.”18
The Court, as in
11. 35 U.S.C. § 101 (2006).
12. Id. § 100(b).
13. Bilski, 130 S. Ct. at 3225 (quoting Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980)).
14. See, e.g., id. at 3227–28 (discussing concerns found in amicus briefs based on emerging
technologies, such as software, which must be analyzed under 35 U.S.C. § 101); Diamond, 447 U.S. at 307–08
(stating that the court is required to construe 35 U.S.C. § 101 to determine whether a party’s micro-organism
“constitutes a ‘manufacture’ or ‘composition of matter’ within the meaning of the statute”); Ultramercial, LLC
v. Hulu, LLC, 657 F.3d 1323, 1328 (Fed. Cir. 2011) (discussing whether “a method for monetizing and
distributing copyright products over the internet” satisfied 35 U.S.C. §§ 100 and 101); CyberSource Corp. v.
Retail Decisions, Inc., 654 F.3d 1366, 1369–70 (Fed. Cir. 2011) (discussing whether the patentee’s claims on a
process for verifying Internet credit card transactions and the computer program instructing the execution of
this process are considered processes under 35 U.S.C. § 101).
15. Bilski, 130 S. Ct. at 3225 (quoting Diamond, 447 U.S. at 309).
16. Mayo Collaborative Servs. v. Prometheus Labs Inc., 132 S. Ct. 1289, 1293 (2012).
17. Bilski, 130 S. Ct. at 3227.
18. In re Bilski, 545 F.3d 943, 954 (Fed. Cir. 2008); see also Parker v. Flook, 437 U.S. 584, 588 n.9
No. 2] PATENT-ELIGIBILITY OF SOFTWARE 427
other recent patent cases, was reluctant to introduce a bright line rule or
exclusive test for application of the law. The Court, rather, determined that
“the machine-or-transformation test is not the sole test for deciding whether an
invention is a patent-eligible ‘process.’”19
Instead, the Court called the
machine-or-transformation test “a useful and important clue, an investigative
tool, for determining whether some claimed inventions are processes under §
101.”20
To some extent, the machine-or-transformation test might have been good
for software patent applicants in that it offered some predictability and kept
patent examiners bound by a test without giving them freedom to venture into
uncharted territory.21
On the other hand, the machine-or-transformation test
did eliminate certain types of claims from being allowed for inventions in the
information age.22
In fact, certain pro-software patent groups had filed amicus
briefs that argued that the machine-or-transformation test creates “uncertainty
as to the patentability of software, . . . inventions based on linear programming,
data compression, and the manipulation of digital signals.”23
In that sense,
having some leeway for subject matter to potentially be patentable, even if it
does not meet the machine-or-transformation test, could be good for software
patents.24
In practice, however, giving patent examiners more freedom to stray
from the machine-or-transformation test may result in more rejections of
software claims based on concepts such as abstract ideas.25
Courts and patent
examiners appear to be freer to reject claims that are drafted in a way that
would technically meet the machine-or-transformation test if the core of the
claim is too much of an abstract idea.26
(1978) (“An argument can be made, however, that this Court has only recognized a process as within the
statutory definition when it either was tied to a particular apparatus or operated to change materials to a
‘different state or thing.’”).
19. Bilski, 130 S. Ct. at 3227.
20. Id.
21. See generally Mark A. Lemley et al., Life After Bilski, 63 STAN. L. REV. 1315, 1319 (2011)
(asserting the prevalence of the machine-or-transformation test).
22. Bilski, 130 S. Ct. at 3227.
23. Id.
24. See id. (“Section 101 is a dynamic provision designed to encompass new and unforeseen
inventions.’’ (citing J.E.M. Ag Supply, Inc. v. Pioneer Hi–Bred Int’l, Inc., 534 U.S. 124, 135 (2001))). “A
categorical rule denying patent protection for ‘inventions in areas not contemplated by Congress . . . would
frustrate the purposes of the patent law.’” Id. (quoting Diamond v. Chakrabarty, 447 U.S. 303, 315 (1980)).
25. See id. at 3229 (“Indeed, if the Court of Appeals were to succeed in defining a narrower category or
class of patent applications that claim to instruct how business should be conducted, and then rule that the
category is unpatentable because, for instance, it represents an attempt to patent abstract ideas, this conclusion
might well be in accord with controlling precedent.”).
26. See id. at 3229–30 (“Rather than adopting categorical rules that might have wide-ranging and
unforeseen impacts, the Court resolves this case narrowly on the basis of this Court’s decisions in Benson,
Flook, and Diehr, which show that petitioners’ claims are not patentable processes because they are attempts
to patent abstract ideas.”).
428 JOURNAL OF LAW, TECHNOLOGY & POLICY [Vol. 2013
2. CyberSource Corp. v. Retail Decisions, Inc.: Computer-Readable
Medium Claims May Be Patent-Ineligible27
In August of 2011, a three-judge panel of Judge Bryson, Judge Dyk, and
Judge Prost affirmed a district court decision granting summary judgment of
invalidity of Claims 2 and 3 of U.S. Patent 6,029,154 under 35 U.S.C. § 101
for failure to recite patent-eligible subject matter.28
Claim 2 recited the following (as amended during reexamination):
A computer readable medium containing program instructions for detecting fraud in a credit card transaction . . . 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.
29
Claim 3 recited the following:
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
51. Ultramercial, LLC v. Hulu, LLC (Ultramercial I), 657 F.3d 1323 (Fed. Cir. 2011).
52. Id. at 1324, 1330.
53. Id. at 1326. Like Chief Judge Rader, others have shared the view that some courts’ struggles with §
101 are attributed to the court trying to decide a case on grounds of patent-eligibility rather than on novelty,
obviousness, or enablement. See generally Stephen Pulley, An “Exclusive” Application of an Abstract Idea:
Clarification of Patent-Eligible Subject Matter After Bilski v. Kappos, 2011 BYU L. REV. 1223.
54. Ultramercial I, 657 F.3d at 1326.
No. 2] PATENT-ELIGIBILITY OF SOFTWARE 431
long-standing exceptions (e.g., a law of nature, physical phenomena, or an
abstract idea) as established precedent, he was very careful to repeatedly refer
to the exceptions numerous times as “judicially created,” “judge-created,”
“non-statutory,” and “exceptions [that] are not required by the statutory text.”55
This tone was not used by the panel of CyberSource, illustrating the stark
divide in the philosophies of the different judges on the Federal Circuit with
regard to patent-eligible subject matter.
Claim 1 of U.S. Patent No. 7,346,545 recited the following:
A method for distribution of products over the Internet via a facilitator, said method comprising the steps of:
a first step of receiving, from a content provider, media products that are covered by intellectual property rights protection and are available for purchase, wherein each said media product being comprised of at least one of text data, music data, and video data;
a second step of selecting a sponsor message to be associated with the media product, said sponsor message being selected from a plurality of sponsor messages, said second step including accessing an activity log to verify that the total number of times which the sponsor message has been previously presented is less than the number of transaction cycles contracted by the sponsor of the sponsor message;
a third step of providing the media product for sale at an Internet website;
a fourth step of restricting general public access to said media product;
a fifth step of offering to a consumer access to the media product without charge to the consumer on the precondition that the consumer views the sponsor message;
a sixth step of receiving from the consumer a request to view the sponsor message, wherein the consumer submits said request in response to being offered access to the media product;
a seventh step of, in response to receiving the request from the consumer, facilitating the display of a sponsor message to the consumer;
an eighth step of, if the sponsor message is not an interactive message, allowing said consumer access to said media product after said step of facilitating the display of said sponsor message;
a ninth step of, if the sponsor message is an interactive message, presenting at least one query to the consumer and
55. Id. This attitude becomes even clearer in CLS Bank, where he pleads with the court to “consult the
statute!” CLS Bank Int’l v. Alice Corp., 717 F.3d 1269, 1335 (Fed. Cir. 2013) (Rader, C.J., filing additional
reflections).
432 JOURNAL OF LAW, TECHNOLOGY & POLICY [Vol. 2013
allowing said consumer access to said media product after receiving a response to said at least one query;
a tenth step of recording the transaction event to the activity log, said tenth step including updating the total number of times the sponsor message has been presented; and
an eleventh step of receiving payment from the sponsor of the sponsor message displayed.
56
Chief Judge Rader focused on the third and fourth steps that require
“specific application to the Internet” and “intricate and complex computer
programming.”57
Perhaps this reference to the complexity of the programming
was an indirect way (without citation or discussion) of distinguishing from the
result in CyberSource, in which the computer-implemented software and
patent-ineligible claim was not particularly complex in comparison. However,
Chief Judge Rader noted that “[t]his court does not define the level of
programming complexity required before a computer-implemented method can
be patent-eligible,” and using the Internet to practice a method is neither
necessary nor sufficient in every case for such a method claim to be patent-
eligible.58
In essence, Chief Judge Rader took more of a factor-based approach
that weighed against the method being an abstract idea, and the relative
complexity of the programming and the controlled interaction between a
consumer and the Internet rose to the level of being patent-eligible.
Finally, Chief Judge Rader specifically distinguished the present claim
from the claims in CyberSource in that the claims of the “545 patent [do] not
claim a mathematical algorithm, a series of purely mental steps, or any
similarly abstract concept.”59
Chief Judge Rader made clear that he considered
this sub-group of an abstract idea to be very narrowly limited to purely mental
steps, and that “the presence of [some] mental steps . . . does not detract from
the patentability of other steps” in the claim.60
Ultramercial I only addressed
method claims and not apparatus claims, such as Beauregard claims or system
claims.61
Therefore, Ultramercial I does not address the question of whether
apparatus (e.g., Beauregard, system, device, etc.) and/or method claims must
rise or fall together depending on the level of abstractness of the underlying
process.
56. Ultramercial I, 657 F.3d at 1324–25 (citing U.S. Patent No. 7,346,545 col. 8 ll. 5–48 (filed May 29,
2001)).
57. Id. at 1328.
58. Id.
59. Id. at 1329.
60. Id. at 1330 (quoting Prometheus Labs., Inc. v. Mayo Collaborative Servs., 628 F.3d 1347, 1358
(Fed. Cir. 2010)).
61. See id. at 1323 (explaining that petitioner’s “action alleg[ed] infringement of their patent for method
for monetizing and distributing copyrighted products over the internet”).
No. 2] PATENT-ELIGIBILITY OF SOFTWARE 433
4. Mayo Collaborative Services v. Prometheus Laboratories: Concerned
About Preemption62
Prometheus is not a software or abstract idea case. Rather, the question
before the Supreme Court was whether Prometheus’s patents fell within the
judicial exclusion of a law of nature even though there were some additional
claim elements recited attempting to apply the natural law.63
Nevertheless, the
reasoning in Prometheus may have application to software claims and abstract
ideas. The Court invalidated the claims as non-patentable subject matter
because steps recited by the claims in addition to the natural laws “add[ed]
nothing of significance to the natural laws themselves” and “the patents tie[d]
up too much future use of laws of nature.”64
Such reasoning could also apply
to abstract ideas with respect to software. For example, applying Prometheus
to software, the following questions could be asked: (1) Are there additional
elements to the claim other than just the abstract idea? (2) Do these additional
elements add significance to the natural law or are they merely insignificant
and conventional steps? (3) Does the claim tie up too much future use (i.e.,
preempt) of the abstract idea?
5. CLS Bank International v. Alice Corporation65
: A Fractured Decision
Despite the various decisions surrounding software and patent-eligible
subject matter, the high point of confusion came from the recent Federal
Circuit decision in CLS Bank. In CLS Bank, the vote at the Federal Circuit was
an even 5-5 split with no majority opinion.66
Instead, there were six opinions
written and even an “Additional Reflections” written by Chief Judge Rader. In
total, the opinions resulted in 135 pages without any of the opinions
constituting a majority or having the weight of precedent.67
Only Opinions 1
and 2 are discussed herein as they provide the most analysis to draw from in
terms of how practitioners might prepare patent applications and how
innovators of software might make decisions regarding patent protection
during this time of uncertainty.
a. Opinion 1
The first opinion presented in CLS Bank attempted to provide an
“integrated approach” to summarize “several common themes that run
throughout the Supreme Court’s decisions.”68
The first theme is preemption.
In particular, Opinion 1 noted that there “is an abiding concern that patents
62. Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012).
63. See id. at 1297 (“The question before us is whether the claims do significantly more than simply
describe these natural relations.”).
64. Id. at 1302.
65. CLS Bank Int’l v. Alice Corp., 717 F.3d 1269 (Fed. Cir. 2013) (en banc).
66. Id.
67. Id.
68. Id. at 1280.
434 JOURNAL OF LAW, TECHNOLOGY & POLICY [Vol. 2013
should not be allowed to preempt the fundamental tools of discovery”69
and
further that “[g]uarding against the wholesale preemption of fundamental
principles should be [the] primary aim in applying the common law exceptions
to § 101.”70
The second theme identified by Opinion 1 is that “the cases repeatedly
caution against overly formalistic approaches to subject-matter eligibility that
invite manipulation by patent applicants.”71
Examples of such “draftsman’s
art” that Opinion 1 seems concerned about are “claim drafting strategies that
attempt to circumvent the basic exceptions to § 101 using, for example, highly
stylized language, hollow field-of-use limitations, or the recitation of token
post-solution activity . . . .”72
When drafting claims, patent practitioners
should keep in mind that the additional non-abstract elements are more than
just hollow or token elements. By ignoring certain claim elements for
purposes of patent-eligibility, Opinion 1 essentially unilaterally restructures
claim language. It is somewhat ironic that the approach of Opinion 1 appears
to allow courts to restructure claim language when patent practitioners exercise
a high level of skill in claim drafting, while other cases are not forgiving and
do not allow courts to restructure claims when patent practitioners draft ill-
conceived claims.73
Another theme Opinion 1 addresses is that the “cases urge a flexible,
claim-by-claim approach to subject-matter eligibility that avoids rigid line
drawing.”74
For example, Opinion 1 refers to the Supreme Court rejecting
exclusive use of the machine-or-transformation test or categorical exclusions to
business method patents.
Finally, Opinion 1 asserts that there needs to be an inventive human
contribution present that is “more than a trivial appendix to the underlying
abstract idea.”75
In other words, limitations that represent a human
contribution that are “merely tangential, routine, well-understood, or
conventional, or in practice fail to narrow the claim relative to the fundamental
Using these themes to guide their analysis, the judges joining Opinion 1
concluded that the method, computer-readable media, and system claims were
invalid under § 101 for failing to recite patent-eligible subject matter.77
69. Id.
70. Id. at 1281 (emphasis added).
71. Id.
72. Id.
73. E.g., BMC Res., Inc. v. Paymentech, L.P., 498 F.3d 1373, 1381 (Fed. Cir. 2007) (“In this case . . .
BMC could have drafted its claims to focus on one entity . . . . However, BMC chose instead to have four
different parties perform different acts within one claim . . . . [T]his court will not unilaterally restructure the
claim or the standards for joint infringement to remedy these ill-conceived claims.”).
74. CLS Bank Int’l, 717 F.3d at 1281.
75. Id. at 1283.
76. Id.
77. Id. at 1292.
No. 2] PATENT-ELIGIBILITY OF SOFTWARE 435
b. Opinion 2
Opinion 2 goes into great detail about the breadth of § 101 in its statutory
interpretation to achieve the constitutional goals of patent law.78
More
pertinent for this Recent Development is the focus on whether the claim, as a
whole, is patentable. Its criticism of Opinion 1 is that Opinion 1 looks at each
claim, element by element and determines which elements are abstract and
which elements are not.79
Opinion 2 states that “[a]ny claim can be stripped
down, simplified, generalized, or paraphrased to remove all of its concrete
limitations, until at its core, something that could be characterized as an
abstract idea is revealed.”80
Such an approach would “if carried to its extreme,
make all inventions unpatentable because all inventions can be reduced to
underlying principles of nature which, once known, make their implementation
obvious.”81
The second theme of Opinion 2 is that “[t]he relevant inquiry must be
whether a claim includes meaningful limitations restricting it to an application,
rather than merely an abstract idea.”82
Opinion 2 further recognizes
preemption as a requirement, but limits its reach to only be “a subject matter
eligibility problem when a claim preempts all practical uses of an abstract
idea,”83
recognizing that all patents preempt future innovation to some extent,
as that is the limited monopoly right to exclude granted by the patent.84
Meaningful limitations also “do more than recite pre- or post-solution activity,
they are central to the solution itself.”85
When analyzing a computer-implemented claim according to Opinion 2,
the key inquiry is “whether the claims tie the otherwise abstract idea to a
specific way of doing something with a computer, or a specific computer for
doing something.”86
Another major point of disagreement is that Opinion 2
does not agree that “inventiveness” is required by § 10187
and that Opinion 1 is
inappropriately conflating the requirements of novelty and non-obviousness
into the threshold question of patentable eligibility.88
Under this analysis, Opinion 2 determines that the system claims are
patent eligible. The system claims are eligible because the computers are
machines that are specifically programmed in a specific way to solve a
complex problem and, thus, become special purpose processors.89
Opinion 2
78. See id. at 1276 (“Congress intended that the statutory categories [of § 101] would be broad and
inclusive to best serve the patent system’s constitutional objective of encouraging innovation.” (citing
Diamond v. Chakrabarty, 447 U.S. 303, 308–09 (1980))).
79. See id. at 1285–92 (examining each claim and its elements).
80. Id. at 1298.
81. Id. (quoting Diamond v. Diehr, 450 U.S. 175, 189 n.12 (1981)).
82. Id. at 1299.
83. Id. at 1300.
84. Id.
85. Id. at 1301.
86. Id. at 1302.
87. Id.
88. Id. at 1302–03.
89. Id. at 1307.
436 JOURNAL OF LAW, TECHNOLOGY & POLICY [Vol. 2013
was impressed by the numerous flow charts illustrating the method showing
the complex processing performed by the application program that is part of
the computer.90
Opinion 2 determined that the method and computer-readable
media claims were ineligible for patenting.91
6. Ultramercial, LLC v. Hulu, LLC92
In response to a petition for certiorari, the Supreme Court vacated the
decision of Ultramercial I and remanded back to the United States Court of
Appeals for the Federal Circuit for further consideration in light of
Prometheus.93
Upon remand, the Federal Circuit again found that the claims
did not contain patent-eligible subject matter, reversing the judgment of the
Central District of California for a second time.94
In Ultramercial II, Chief Judge Rader performed a similar analysis of
claim construction to the one that he had previously done and emphasized:
[B]ecause eligibility requires assessing judicially recognized exceptions against a broad and deliberately expanded statutory grant, one of the principles that must guide our inquiry is these exceptions should apply narrowly. Indeed, the Supreme Court has cautioned that, to avoid improper restraints on statutory language, acknowledged exceptions thereto must be rare.
95
Chief Judge Rader also attempted to define what an “abstract idea” is,
whereas most of the previous decisions seemed to take the definition of
“abstract” for granted or discussed the concept of an abstract idea in terms of
examples rather than an actual definition.96
In particular, Ultramercial II states, “[a]n abstract idea is one that has no reference to material objects or
specific examples—i.e., it is not concrete.”97
The analysis focuses on whether
the claim has meaningful limitations in addition to an abstract idea, such that
the claim is directed to an application of the abstract idea rather than the
abstract idea itself, and that the claim does not preempt all uses of an
underlying abstract idea.
Applying that analysis to computer-implemented inventions,
Ultramercial II states:
When assessing computer implemented claims, while the mere reference to a general purpose computer will not save a method claim from being deemed too abstract to be patent eligible, the fact that a claim is limited by a tie to a computer is an important indication of patent eligibility . . . . This tie to a machine moves it farther away from a claim to the abstract idea itself. Moreover, that
90. See id. (referring to flow charts in the opinion).
91. Id. at 1292.
92. Ultramercial, LLC v. Hulu, LLC (Ultramercial II), 722 F.3d 1335 (Fed. Cir. 2013).
93. Wild Tangent, Inc. v. Ultramercial, LLC, 132 S. Ct. 2431 (2013).
94. Ultramercial II, 722 F.3d at 1354.
95. Id. at 1342.
96. Id. at 1343.
97. Id.
No. 2] PATENT-ELIGIBILITY OF SOFTWARE 437
same tie makes it less likely that the claims will pre-empt all practical applications of the idea.
98
A significant emphasis is also placed on the so-called Alappat Rule discussed
above.99
Finally, Ultramercial II notes that the patent in question “does not claim a
mathematical algorithm, a series of purely mental steps, or any similarly
abstract concept . . . . Unlike the claims in CyberSource, the claims here
require, among other things, controlled interaction with a consumer over an
Internet website, something far removed from purely mental steps.”100
B. Application of the Law at the USPTO
In response to the Supreme Court’s Bilski decision, the USPTO issued
“Interim Guidance for Determining Subject Matter Eligibility for Process
Claims in View of Bilksi v. Kappos.”101
The 2010 interim guidelines and the
most recent training at the USPTO with regard to patent-eligibility can help
guide practitioners, at least in the short term, as to how pending applications
are being examined. Of course, the current guidelines and training do not
reflect the decision (perhaps “indecision” is the more appropriate term) of CLS Bank. In response to CLS Bank, the USPTO recently issued a memorandum to
the Patent Examining Corps.102
The memorandum stated that there were
“multiple divergent opinions” in CLS Bank and that there would be “no change
in the examination procedure for evaluating patent eligibility.”103
Thus, the
interim guidelines and subsequent examiner training are the best indicators of
the current application of the law at the USPTO.
1. Interim Guidelines in Response to Bilski: A Factor-Based Inquiry to Patent-Eligibility
The Interim Guidelines introduced a factor-based approach that was later
inserted into the Manual for Patent Examining Procedures (MPEP). The
factor-based approach considers the following factors:
(a) Whether the method involves or is executed by a particular machine or apparatus.
(b) Whether performance of the claimed method results in or otherwise involves a transformation of a particular article.
(c) Whether performance of the claimed method involves an
98. Id. at 1348.
99. See supra note 49 and accompanying text.
100. Ultramercial II, 722 F.3d at 1354.
101. Memorandum from Robert W. Bahr, Acting Assoc. Comm’r for Patent Examination Policy, to
Patent Examining Corps Regarding Interim Guidance for Determining Subject Matter Eligibility for Process
Claims in View of Bilski v. Kappos (July 27, 2010) [hereinafter Bilski Memo], available at
102. Memorandum from Andrew H. Hirshfeld, Deputy Comm’r For Patent Examination Policy, to
Patent Examining Corps Regarding Federal Circuit Decision in CLS Bank et al. v. Alice Corp. (May 13, 2013)
[hereinafter CLS Bank Memo], available at http://www.uspto.gov/patents/law/exam/clsbank_20130513.pdf.
103. Id.
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application of a law of nature, even in the absence of a particular machine, apparatus, or transformation.
(d) Whether a general concept (which could also be recognized in such terms as a principle, theory, plan or scheme) is involved in executing the steps of the method.
104
The first two factors (i.e., factors a and b) are directed toward the
machine-or-transformation test. The next two factors (i.e., factors c and d) are
directed toward evaluating the practical application of the abstract idea.
Examiners are also provided factors that weigh in favor of patent-
eligibility (factors that satisfy the criteria of the machine-or-transformation test
or provide evidence that the abstract idea has been practically applied) versus
factors that do not weigh in favor of patent-eligibility (factors that do not
satisfy the criteria of the machine-or-transformation test or provide evidence
that the abstract idea has been practically applied).
Specifically:
Factors Weighing Toward Eligibility:
Recitation of a machine or transformation (either express or inherent).
o Machine or transformation is particular.
o Machine or transformation meaningfully limits the execution of the steps.
o Machine implements the claimed steps.
o The article being transformed is particular.
o The article undergoes a change in state or thing (e.g., objectively different function or use).
o The article being transformed is an object or substance.
The claim is directed toward applying a law of nature.
o Law of nature is practically applied.
o The application of the law of nature meaningfully limits the execution of the steps.
The claim is more than a mere statement of a concept.
o The claim describes a particular solution to a problem to be solved.
o The claim implements a concept in some tangible way.
o The performance of the steps is observable and verifiable.
105
Factors Weighing Against Eligibility:
No recitation of a machine or transformation (either express or inherent).
o Insufficient recitation of a machine or transformation.
o Involvement of machine, or transformation, with the steps is merely nominally, insignificantly, or tangentially related to the performance of the steps, e.g., data gathering, or merely recites a field in which the method is intended to be applied.
o Machine is generically recited such that it covers any machine capable of performing the claimed step(s).
o Machine is merely an object on which the method operates.
o Transformation involves only a change in position or location of article.
o “Article” is merely a general concept (see notes below).
The claim is not directed to an application of a law of nature.
o The claim would monopolize a natural force or patent a scientific fact; e.g., by claiming every mode of producing an effect of that law of nature.
o Law of nature is applied in a merely subjective determination.
o Law of nature is merely nominally, insignificantly, or tangentially related to the performance of the steps.
The claim is a mere statement of a general concept (see notes below for examples).
o Use of the concept, as expressed in the method, would effectively grant a monopoly over the concept.
o Both known and unknown uses of the concept are covered, and can be performed through any existing or future-devised machinery, or even without any apparatus.
o The claim only states a problem to be solved.
o The general concept is disembodied.
o The mechanism(s) by which the steps are implemented is subjective or imperceptible.
106
Examiners are instructed to view the claim as a whole to balance these
factors.107
It is important to note that it is not required for all factors that favor
eligibility to be present and that a conclusion should not be based on one
factor, ignoring the other factors.108
These interim guidelines are still in effect
at the patent office despite the many additional decisions that have come after
Bilski.109
In a memorandum dated May 13, 2013, to the Examining Corps, the
USPTO emphasized that “there is no change in examination procedure for
106. Id.
107. USPTO, MPEP ch. 2106.
108. Id.
109. CLS Bank Memo, supra note 102.
440 JOURNAL OF LAW, TECHNOLOGY & POLICY [Vol. 2013
evaluating subject matter eligibility. Current procedure detailed in MPEP 2106
should continue to be followed.”110
2. August 2012 Updated Examiner Training
The USPTO is currently taking a similar analysis approach as the courts
by starting with the four statutory categories of invention and the three
judicially-created exceptions.111
With regard to the exceptions, the USPTO
states that the terms of this group “are typically used by the courts to cover the
basic tools of scientific and technological work, such as scientific principles,
naturally occurring phenomena, mental processes, and mathematical
algorithms.”112
The USPTO states that “claimed inventions that fall within the statutory
categories must still avoid the judicial exceptions to be eligible.”113
In
addition, a claim that can be reasonably broadly interpreted to cover both
eligible and ineligible subject matter should be rejected under § 101.114
The
USPTO is training the Examining Corps on preemption as a condition for
determining whether an exception is met by instructing them to “[d]etermine
whether the claim covers all substantial applications of the exception and
thereby forecloses future innovation based on the law of nature, natural
phenomenon, or abstract idea.”115
Specifically discussing the exceptions, the
USPTO is emphasizing that claims falling within the judicial exceptions “are
not patentable, even when claimed as a process, machine, manufacture or
composition of matter.”116
Thus, the USPTO appears to be expanding the
reach of the abstract idea exception into apparatus-type claims in its training,
even if the Interim Guidelines of 2010 is the most recent official statement on
the matter. Even within the USPTO, there may be different standards that
apply depending on the stage of prosecution of the application. The
Examining Corps are generally required to perform their examination
according to the Interim Guidelines and other training.117
Because of the
difficulty in training such a large number of examiners, the USPTO may be
reluctant to issue new guidelines based on each new and conflicting case.
Thus, the standard being used for regular examination may still resemble some
of the older case law rather than the newer cases. For example, obtaining
allowable system and Beauregard claims may still prove to be somewhat easier
than obtaining allowable method (process) claims for software innovations,
whereas certain judges may be willing to treat these two types of claims
identically if the core of the invention is essentially the same for each claim