Sept. 22, 2010Patenting Computer-Related Inventions - RJMorris1 3rd Annual Information Technology Law Seminar The Patentability of Computer-Related Inventions.

Sept. 22, 2010 Patenting Computer-Related Inventions - RJMorris 1

3rd Annual Information Technology Law Seminar

The Patentability of

Computer-Related Inventions

by Roberta J. MorrisLecturer, Stanford Law School


For today, the slides will be posted at http://stanford.edu/~rjmorris/icle.ppt

The final version, including survey results,

will be linked on http://stanford.edu/~rjmorris. Search for “September 2010”

http://stanford.edu/~rjmorris/icle.ppt

http://stanford.edu/~rjmorris


Patentability of Computer-Related Inventions

I. Life before 6/28/10 Part 1 - The Bilski ApplicationA. The Invention and Claim 1 B. What Happened (and Didn’t Happen) at the PTO

II. Life before 6/28/10 Part 2– Judicial DecisionsA. Recent Life: Benson-Flook-Diehr (Sup.Ct. 1972-78-81), Chakrabarty (Sup. Ct. 1980), State

Street (Fed. Cir. 1998), Metabolite (Sup. Ct. 2006, Breyer’s dissent from DIG) B. Ancient Life: Statutory language from 1623 to 1952 (or 1999); the disfavored status of

processes; O’Reilly v. Morse; business method patents’ long history of dissing dictaC. The Federal Circuit’s En Banc Decision (Michel’s Majority, Dyk’s Concurrence, Dissents by

Newman, Mayer and Rader) III. Life on 6/28/10 -The Supreme Court’s [Non]Decision

A. The Kennedy Majority, The Kennedy Plurality, What Scalia Could Not Agree WithKennedy’s Message: The Machine-or-Transformation Test is a fine test, but not

the only test, and please don’t ask us what the other tests are or what would make a good test. B. The Stevens Minority concurring in the judgment; The Breyer Concurrence, What Scalia

Could Agree WithIV. Life After 6/28/10 Part 1 - The PTO’s Response

The 7/27/10 Interim Guidance, a supplement to the August 2009 Interim InstructionsV. Life After 6/28/10 Part 2 - The Buzz, and What It All Means

NB: Bilski lost in the PTO, the Federal Circuit, and the Supreme Court

Outline. Page 8-1.


Preliminary Questions

• Can [clever, persevering, lucky] people get patents on computer-related inventions*?

• Has the Supreme Court’s decision in Bilski v. Kappos changed the answer? – As a matter of law? – As a matter of lore?

• What’s happening?

• But first: who are YOU? * POCRI is nicer than CRP


1 2 3 4

0% 0%0%0%

15

0 of 31

1. Prosecution2. Litigation3. Licensing /

Transactional Work

4. None of the above / Do not work with patents

Does your work involve PATENT: (Please pick just one, on whatever basis you like)


Results of Last Year’s Surveys -Audience

4/5 practiced law full time

1/4 were registered to practice before the PTO (whether as attorneys or agents)

Slightly more than 2/3 were lawyers who were not registered with the PTO

3:2 was the ratio of those whose job did : did not involve patents

About 1/4 had written a patent applicationAbout 1/10 were inventors on a patent application

A little less than 1/4 had never looked at any patents

A little more than 1/4 had looked at many patents (>100)

More than 2/3 were comfortable with the term PRIOR ART


1 2 3

0% 0%0%

15

0 of 30

1. Yes

2. No, but I looked at the materials

3. No

Did you hear my talk last year?


Patent Law by the Numbers:Are you familiar with 101, 102, 103 and 112?

1 2

0%0%

15

0 of 31

1. Yes

2. No


Guide to the Numbers101: Patentable Subject Matter (and other things)

102: “Novelty and Loss of Right.” Defines categories of PRIOR ART.

Rejections under 102 are based on a SINGLE piece of prior art.

103: Obviousness.Rejections under 103 are based on 2+

pieces of prior art.

112: “Specification”: Requirement to describe and ENABLE [the making and using of] the claimed inventions (and other things)

Quotation Marks are used because those very words are in the provision’s title in 35 USC.

“NEW” – a word in 101 – means novel AND non-obvious

http://www.uspto.gov/web/offices/pac/mpep/documents/appxl_35_U_S_C_101.htm





About 2/3 had heard of Bilski already. Of those:

about 1/3 of those had an opinion about the case, AND

almost 3/5 believed there was (probably/absolutely) invalidating prior art to the Bilski claims

Results of Last Year’s Survey: Bilski 1


Results of Last Year’s Survey: Bilski 2

Oct. 29, 2009 Patenting Software and Business Methods - RJMorris

25

SHOULD this invention be patentable?

1 2 3 4

38%

7%

20%

35%

Ignore the law as it is, and assume Bilski's claims are valid over the prior art and are fully enabled.

1. Yes2. No3. No opinion4. I can’t answer

because the assumptions are too unbelievable.


1 2 3

0% 0%0%

15

0 of 30

Is your understanding of the Supreme Court’s decision in Bilski v. Kappos:

1. Firsthand: I looked at / read / skimmed / all or some of it.

2. Secondhand: I read or heard about it on blogs, news reports, talks, etc.

3. Nohand (no knowledge)


1 2 3

0% 0%0%

15

0 of 30

Even if you answered Nohand, you can answer this: After the Supreme Court’s decision, are the

chances of the PTO issuing POCRIs:

1. MORE likely

2. LESS likely

3. AS likely as before


1 2 3

0% 0%0%

15

0 of 30

If you answered 1 or 2, is that because

1. The 101 Test is easier/harder

2. COMPACT PROSECUTION: The PTO will look for prior art and consider enablement and not rely exclusively on 101

3. Other(if you choose OTHER,

let’s talk!)


Patentability of Computer-Related Inventions – Part I









Outline. Page 8-1.


NB: Bilski lost in the PTO, the Federal Circuit, and the Supreme Court.


Dates – Recent PastOctober 30, 2008: The Federal Circuit decides In re Bilski, 545 F.3d 943 (en banc) October 29, 2009: ICLE IT Meeting

November 9, 2009: The Supreme Court hears oral argument in Bilski v. Kappos

June 28, 2010: The Supreme Court decides Bilski v. Kappos

July 27, 2010: The PTO issues its Interim Guidance


Upcoming Dates

Tomorrow, 9/23/10: PTO’s Annual Business Methods Partnership Meetinghttp://www.uspto.gov/patents/resources/methods/bm_partnetship_2010.jsp

Monday, 9/27/10: Last day for comments to the Interim Guidance

http://www.uspto.gov/patents/resources/methods/bm_partnetship_2010.jsp

http://www.uspto.gov/patents/resources/methods/bm_partnetship_2010.jsp











Outline. Page 8-1.


NB: Bilski lost in the PTO, the Federal Circuit, and the Supreme Court.


Claim 1 of the Bilski Application

A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price

comprising the steps of:(a) initiating a series of transactions

between said commodity provider and consumers of said commodity

wherein said consumers purchase said commodity at a fixed rate based upon historical averages,

said fixed rate corresponding to a risk position of said consumer;

(b) identifying market participants for said commodity

having a counter-risk position to said consumers; and

(c) initiating a series of transactions between

said commodity provider and said market participants

at a second fixed rate such that said series

of market participant transactions balances the risk position of said series

of consumer transactions.


The Bilski Application

Original specification and the other claims: http://www.patentlyo.com/bilskiapplication.pdf

(Dennis Crouch (PatentlyO) in August 2009:http://www.patentlyo.com/patent/2009/08/bilskis-patent-application.html

Crouch notes that the application is in the parties’ Appendix to the Federal Circuit appeal.

Original Application: 8 claims

Final rejection (BPAI: 2006 Pat App Lexis 51)11 claims

Basis of rejection: 101 ONLY

http://www.patentlyo.com/bilskiapplication.pdf

http://www.patentlyo.com/bilskiapplication.pdf

http://www.patentlyo.com/patent/2009/08/bilskis-patent-application.html

http://www.patentlyo.com/patent/2009/08/bilskis-patent-application.html



I. Life before 6/28/10 Part 1 - The Bilski Application

A. The Invention and Claim 1

B. What Happened (and Didn’t Happen) at the PTO

Outline. Page 8-1.

BILSKI LOST.

101 probably was the ONLY basis for rejection ever.


Patentability of Computer-Related Inventions – Part III. Life before 6/28/10 Part 1 - The Bilski Application

A. The Invention and Claim 1 B. What Happened (and Didn’t Happen) at the PTO

III. Life on 6/28/10 -The Supreme Court’s [Non]Decision A. The Kennedy Majority, The Kennedy Plurality, What Scalia Could Not Agree With

Kennedy’s Message: The Machine-or-Transformation Test is a fine test, but not the only test, and please don’t ask us what the other tests are or what would make a good test.

B. The Stevens Minority concurring in the judgment; The Breyer Concurrence, What Scalia Could Agree With

IV. Life After 6/28/10 Part 1 - The PTO’s ResponseThe 7/27/10 Interim Guidance, a supplement to the August 2009 Interim Instructions

V. Life After 6/28/10 Part 2 - The Buzz, and What It All Means

NB: Bilski lost in the PTO, the Federal Circuit, and the Supreme CourtOutline. Page 8-1.




Newman, Mayer and Rader


Patentability of Computer-Related Inventions – Part II

Outline. Page 8-1.




Newman, Mayer and Rader


Patentability of Computer-Related Inventions – Part II-A

Outline. Page 8-1II-A.

II. Life before 6/28/10 Part 2– Judicial DecisionsA. Recent Life: Benson-Flook-Diehr (Sup.Ct. 1972-78-81), Chakrabarty (Sup. Ct. 1980),

State Street (Fed. Cir. 1998), Metabolite (Sup. Ct. 2006, Breyer’s dissent from DIG)

BENSON – binary to decimal conversion. Applicant LOST. Anti-PAT: Majority: Stevens, Bennan, White, Marshall, Blackmun, Powell. Pro-PAT: Dissent: Stewart, Burger, Rehnquist.

FLOOK –METHOD for calculating an alarm limit (temperature, most often) in catalytic conversion. Applicant LOST. Anti-PAT: Majority: Stevens, Brennan, White, Marshall, Blackmun, PowellPro-PAT: Dissent: Stewart, Burger, Rehnquist.

DIEHR – very similar invention to Flook’s. Applicant WON. Anti-PAT: Dissent: Stevens, Brennan, Marshall, Blackmun Pro-PAT: Majority: Rehnquist, Burger, Stewart, White, Powell

CHAKRABARTY – engineered oil-eating bacteria. Applicant WON. Anti-PAT: Dissent: Brennan White Marshall Powell Pro-PAT: Majority: Burger Stewart Blackmun Rehnquist Stevens

72

78

80

81



Outline. Page 8-1II-A.



STATE STREET (Rich, Plager, Bryson). Financial METHOD claims.

Mathematical Algorithms are OK.

BMPs are OK.

Test – citing DIEHR as interpreted by ALAPPAT (Rich) – requires a “useful,concrete and tangible result.” UCT was, per STATE STREET, the ALAPPAT court’s interpretation of “practical application” – words also not found in DIEHR.





METABOLITE: Dissent does not mind that Accused Infringer Lab Corp (represented by Roberts’ firm after trial) had NEVER argued 101, not even in its petition for cert.

Dissent ignores the fact that Patent Owner won a jury trial.

Is 101a SUBJECT MATTER JURISDICTION provision such that it can never be waived by a litigant?

Breyer focuses on the fact that Lab Corp invoked unpatentability of ‘scientific facts’ in connection with a 112 vagueness argument.

In the petition for cert., it mentions cases like Diehr in connection with its argument about induced infringement.

Lab Corp also never argued that there was no single entity that would infringe. There were 2 steps, one performed by a lab, one by a doctor.


Patentability of Computer-Related Inventions – Part II.B

Outline. Page 8-1.

Yup. DISSING DICTA.

Those old cases relied on for the proposition that “business methods are not patentable” pretty much all end

HELD: THIS PATENT IS OBVIOUS.

II. Life before 6/28/10 Part 2– Judicial Decisions

B. Ancient Life: Statutory language from 1623 to 1952 (or 1999); the disfavored status of processes; O’Reilly v. Morse; business method patents’ long history of dissing dicta


Patentability of Computer-Related Inventions – Part II.C


C. The Federal Circuit’s En Banc Decision (Michel’s Majority, Dyk’s Concurrence, Dissents by Newman, Mayer and Rader

Last year many of you said your own opinion was closest to dissenting Judge Newman’s.

This year Justice Stevens’ opinion was closest to concurring Judge Dyk’s.

Oct. 29, 2009 Patenting Software and Business Methods - RJMorris

23

Whose opinion in In re Bilski is closest to your own?

1 2 3 4 5 6 7

6%8%

19%

47%

4%

11%

6%

1. Majority (Michel)

2. Concurrence (DYK, joined by LINN) : "organizing human activity“ is unpatentable under 101

3. Dissent by Newman

4. Dissent by Mayer: overrule State Street and AT&T

5. Dissent by Rader

6. None

7. No opinion



BILSKI (FED CIR): The Machine or Transformation Test is the SOLE test for patentability of method claims under 101:

The Supreme Court, however, has enunciated a definitive test to determine whether a process claim is tailored narrowly enough to encompass only a particular application of a fundamental principle rather than to pre-empt the principle itself. A claimed process is surely patent-eligible under § 101 if:

(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.

See Benson, 409 U.S. at 70 ("Transformation and reduction of an article 'to a different state or thing' is the clue to the patentability of a process claim that does not include particular machines."); Diehr, 450 U.S. at 192 (holding that use of mathematical formula in process "transforming or reducing an article to a different state or thing" constitutes patent-eligible subject matter) 545 F.3d at 954

So that means you can get claims to a method if you are also getting claims to a machine anyway.



BILSKI (FED CIR): Majority also rejected:

- Freeman-Walter-Abele

- “Useful, concrete and tangible result” of State Street/Alappat,

- categorical exclusions and

- requirement of physical steps (Comiskey, as misinterpreted…)




C. The Federal Circuit’s En Banc Decision (Michel’s Majority, Dyk’s Concurrence, Dissents by Newman, Mayer and Rader

Only Newman wanted the PTO to go and examine the claims since everyone was dancing around the fact that claim 1 at least was OBVIOUS.


Patentability of Computer-Related Inventions – Part III

Outline. Page 8-1.



B. The Stevens Minority concurring in the judgment; The Breyer Concurrence, What Scalia Could Agree With

Scalia didn’t write an opinion.

Scalia did not join IIB2 and IIC2 of the Kennedy opinion, but did join II of the Breyer opinion.


Patentability of Computer-Related Inventions – Part III.A.1

Outline. Page 8-1.



Majority: Machine or Transformation Test is an OK test but not the SOLE Test

The useful-concrete-tangible test Judge Rich made up in State Street is NG.

We’re not ready to say that ALL business methods are unpatentable.


Patentability of Computer-Related Inventions – Part III.A.2



IIB2 and IIC2 – Scalia did not join. Why not? What are they about?

IIB2: M/T is sort of an industrial age test and we’re post-industrial

IIC2: Judge Dyk’s logic (and thus Justice Stevens’) isn’t so post-industrial, either.

Judge Kennedy is concerned about the future (PROGRESS?!) and Scalia is not?


III. Life on 6/28/10 -The Supreme Court’s [Non]Decision B. The Stevens Minority concurring in the judgment; The Breyer Concurrence, What Scalia

Could Agree With

Patentability of Computer-Related Inventions – Part III.B.1

Outline. Page 8-1.

STEVENS (joined by GINSBURG, BREYER and SOTOMAYOR):

I sort of concede that all the law about BMPs being unpatentable is dicta, but then I forget.



Could Agree With


Although courts occasionally struggled with defining what was a patentable "art" during those 160 years [1790-1952], they consistently rejected patents on methods of doing business. The rationales for those decisions sometimes varied. But there was an overarching theme, at least in dicta: Business methods are not patentable arts. [String cite.]

STEVENS, J. concurring in the judgment. 130 S.Ct. 3218, 3245-6.



Could Agree With


Breyer’s Concurrence: Part II is a review of jurisprudence on

1. 1012. Diehr and the CLUE (M/T)3. THIS Court never said SOLE, and4. Useful, concrete, tangible is NG.

The purpose of part II, per part I, is to show how much everyone on the Court agrees.Scalia might agree with that that, but Part begins “I agree with Justice Stevens…that BMPs are not patentable … and join him in full.”


Patentability of Computer-Related Inventions – Part IV

Outline. Page 8-1.

IV. Life After 6/28/10 Part 1 - The PTO’s ResponseThe 7/27/10 Interim Guidance, a supplement to the August 2009 Interim Instructions

The 7/27 Interim Guidance. We have until 9/27 to comment. Go ahead!


Patentability of Computer-Related Inventions – Part V - 1

Outline. Page 8-1.

V. Life After 6/28/10 Part 2 - The Buzz, and What It All Means

Claim in such a way as to pass the machine or transformation test.

If you can’t, have a practical application for your abstract idea. (Like you could enable someone to use the abstract idea WITHOUT a practical application?)

Expect (I hope? In my dreams?) that any 101 rejection will be accompanied by 102/103/112 rejections. Meet those and – I like to think– the 101 arguments should disappear.



WHAT I HOPE:

The PTO will prevent any pure 101 case from reaching the courts ever again in my lifetime...

APPLICATIONS: Every final with a 101 rejection will also have a 102/103/112 rejection.

INFRINGEMENT LITIGATION: If an ACCUSED INFRINGER raises 101 as a defense, and there is a ruling on that issue alone, the PTO will find prior art and commence a reexamination sua sponte.

WHY? 102, 103 and 112 adapt to new technology, innovation, etc. Applying them requires hard work, not handwaving and philosophical posturing.

THEY are the reason we have, need, and love PATENTS and the PATENT SYSTEM. We (the people) want to reward those who come up with something NEW as long as they TEACH us.



WHY? 102, 103 and 112 adapt to new technology, innovation, etc. Applying them requires hard work, not handwaving and philosophical posturing.

THEY are the reason we have, need, and love PATENTS and the PATENT SYSTEM. We (the people) want to reward those who come up with something NEW as long as they TEACH us.


PTO’s RESPONSE

• 7/27/10 Memorandum, 75 FR 43922 (request for comments, due 9/27/10)

http://www.uspto.gov/patents/law/exam/bilski_guidance_27jul2010.pdf


PTO’s RESPONSE -1Factors Weighing Toward Eligibility• Recitation of a machine or transformation (either express or inherent). [AND]

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. [BUT]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. [AND]

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.


PTO’s RESPONSE-2


PTO’s RESPONSE-3Factors Weighing Against Eligibility:

***• 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.


Ferguson – Mentioned in Interim GuidanceFiling date: 9/1/99Claim 1: A method of marketing a product, comprising:

developing a shared marketing force, said shared marketing force including at least marketing channels, which enable marketing a number of related products;

using said shared marketing force to market a plurality of different products that are made by a plurality of different autonomous producing company, so that different autonomous companies, having different ownerships, respectively produce said related products;

obtaining a share of total profits from each of said plurality of different autonomous producing companies in return for said using; and

obtaining an exclusive right to market each of said plurality of products in return for said using.

See In re Ferguson, 558 F.3d 1359, 1361 (Fed. Cir. 2009) , cert. denied 6/29/10.

Is 101 the obvious problem with this claim?


Answers to Preliminary Questions

• Can [clever, persevering, lucky] people get patents on computer-related inventions*? Yup.

• Has the Supreme Court’s decision in Bilski v. Kappos changed the answer? Hmmm.– As a matter of law? Sort of.– As a matter of lore? Maybe a lot. Maybe

not.

• What’s happening? Not what should happen. Yet.


REWARDFor a few years, I’ve been offering a reward to anyone who can show me a complete patent application – not just a claim, not just hype, not just a law school hypothetical –

1.with a CLAIM are drawn to an abstract idea or a law of nature or a ‘mere’ concept

BUT2.whose SPECIFICATION fully enables someone to

MAKE AND USE this claimed invention AND 3.for which there is NO invalidating prior art.

A. The claim has been drafted by an expert prosecutor thoroughly aware of KSR and the closest prior art

B. A reasonable search by a motivated searcher thoroughly aware of KSR has found nothing.


REWARD - 2

If I find such an application or even a close case, I’ll discuss it on my blog: http://myunpublisheworks.blogspot.com.

Compare my search to the PTO’s: In the Request for Comments, the PTO is only asking people to submit CLAIMS. 75 FR at 43923.

http://myunpublisheworks.blogspot.com/


The LAWPage 6-5 to 6-6

The Constitution:ARTICLE I. Section 8.

The Congress shall have Power *** [clause 8] To promote the Progress of

Science and useful Arts, by securing for limited Times to

Authors and Inventors the exclusive Right to their respective

Writings and Discoveries.

Patent Law

Was this word INTENDED to exclude some INVENTIONS?


The LAW

35 USC 101. Inventions patentable.Whoever invents or discovers any new and useful

process, machine, manufacture, or composition of matter,

or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

Were these words INTENDED to exclude some INVENTIONS?

They have been around in patent statutes since ~1623.

Sept. 22, 2010Patenting Computer-Related Inventions - RJMorris1 3rd Annual Information Technology Law Seminar The Patentability of Computer-Related Inventions.

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