After days, weeks, and months of anxious waiting, the U.S. Supreme Court (finally) issued its ruling in Bilski v. Kappos. Not surprisingly (and as many predicted, including me), the Federal Circuit’s “machine or transformation” test was relegated to “second class” status as too inflexible, much like the “teaching, suggestion and motivation” (TSM) test in KSR International v. Teleflex. Also not surprising (and as predicted), the U.S. Supreme Court affirmed the PTO ruling that Bilski’s claimed method for hedging risks was not “patent-eligible” under 35 U.S.C. § 101 because it was an “abstract idea,” as was suggested by Judge (now Chief Judge) Rader’s dissent in Bilski.
So much for the easy (and predictable) part of Justice Kennedy’s opinion for the Supreme Court in Bilski. Where this decision takes on a surreal quality is how the various Justices viewed the impact of 35 U.S.C. § 273 in determining whether “business methods” (which Bilski’s claimed method was characterized as) are patent-eligible. (After all, Bilski, asked this very question in his petition for certiorari.) In my view, Justice Kennedy and 4 other Justices (Roberts, Alito, Thomas, as well as Scalia by implication) were very CORRECT that 35 U.S.C. § 273 is an implicit, if not explicit, recognition and acceptance by Congress that “business methods” (however you characterize them) ARE patent-eligible subject matter under 35 U.S.C. § 101. Conversely, Justice Stevens and 3 other Justices (Ginsburg, Breyer and Sotomayor) are completely WRONG in treating 35 U.S.C. § 273 as if this statute doesn’t exist.
The Copyright Act of 1976 provides that copyright ownership “vests initially in the author or authors of the work.” 17 U. S. C. § 201(a). This is a simple enough statement of law, but it frequently presents significant problems when individuals and companies assume that they understand who the “author” is and under what circumstances commissioning a work results in copyright ownership vesting in someone other than the author. This problem particularly manifests itself in the world of custom software creation and Web site development.
Several years ago the United States Court of Appeals for the Second Circuit decided a copyright infringement case requiring them to address whether the developer or the company was the owner of underlying copyrights. In Krause v. Titleserv, Inc., a disgruntled programmer who had been hired as an independent contractor by Titleserv and who had not assigned his copyrights, refused to allow the company who paid for the software to modify his work. This independent contractor chose rather to assert copyrights in an attempt to prevent the company from modifying the software they paid to be created. In other words, the programmer chose to sue by the company rather than give them the required permissions to modify the code that he had written. That this became an issue was all due to the failure of the company to contractually set expectations at the start of the relationship.
Having had some time, although admittedly not much time, to digest the Supreme Court’s decision in Bilski v. Kappos I am increasingly of the belief that the Supreme Court did an admirable job, at least insofar as they go. While I will reserve my right to change my mind, I am pleased by the Supreme Court decision, and bolstered in this belief by the fact that industry organizations such as BIO and LES are praising the decision, while at the same time anti-software patent advocates are apoplectic. So the Supreme Court must have done something right.
Yes, it certainly would have been nice for the Supreme Court to actually give us a test and not merely point out that the Federal Circuit got it wrong. We already knew the Supreme Court thought the Federal Circuit got it wrong when they granted cert. in the case. There is simply no other reason for the Supreme Court to choose to hear a case from the Federal Circuit given there could never be a split among the Circuits given that all patent cases go to the Federal Circuit. Having said that, I am glad the Supreme Court followed the physicians motto — do no harm — and if getting no test was required in order for there to be no harm then I suppose we ought to be well enough thankful. But what does the decision in Bilski v. Kappos actually mean?
I have just received a copy of the United States Patent and Trademark Office’s first Memorandum to the Patent Examining Corps regarding the United States Supreme Court’s decision earlier today in Bilski v. Kappos. The memo was authored by Robert W. Bahr, Acting Associate Commissioner for Patent Examination Policy. This is the first communication to Patent Examiners, telling them what they should know about the decision and how to handle the thorny issues that will no doubt be presenting themselves. The memo concludes by explaining the the “USPTO is reviewing the decision in Bilski and will be developing further guidance on patentable subject matter eligibility under 35 U.S.C. § 101.” Ultimately, the USPTO is going to need to issue Bilski Guidelines, but that cannot be expected on day one right after the Supreme Court essentially eviscerated the machine or transformation test as has been used by Patent Examiners since the Fall of 2008 when the Federal Circuit issued its own decision in Bilski.
The memo sent to Patent Examiners briefly goes through the Supreme Court’s decision and wastes no time in getting to what will be music to the ears of patent attorneys and agents:
Significantly, the Supreme Court also indicated that a business method is, at least in some circumstances, eligible for patenting under section 101.
Decision Recognizes ‘Machine or Transformation” Test May Not Apply To Biotech and Other New Technologies
Washington, D.C. (June 28, 2010) – The Biotechnology Industry Organization (BIO) released the following statement in reaction to the Supreme Court’s decision to uphold the lower court’s ruling in Bilski v. Kappos.
“In our amicus brief, BIO urged the Supreme Court to overturn the lower court’s rigid new test for determining whether a method or process is eligible for patenting. We are pleased that the Justices crafted a narrow opinion that does just that. The Court was clearly conscious of the potential negative and unforeseeable consequences of a broad and sweeping decision,” stated BIO President and CEO Jim Greenwood. “This ruling specifically states that the ‘machine-or-transformation test is not the sole test for patent eligibility’ and recognized that the lower court’s ruling could have created uncertainty in fields such as advanced diagnostic medicine techniques.”
Bilski v. Kappos has finally been handed down by the United States Supreme Court, in what has become the most highly anticipated patent decision of all time. The questions presented to the Court for consideration were: (1) whether the Federal Circuit erred by creating the so-called “machine or transformation” test, which requires a process to be tied to a particular machine or apparatus, or transform an article into a different state or thing, in order to be patentable subject matter; and (2) whether the machine or transformation test contradicts Congressional intent (pursuant to 35 U.S.C. 273) to allow for business methods to be patented.
The Supreme Court held that the machine-or-transformation test is not the sole test for patent eligibility under §101, and that the Federal Circuit erred when it ruled that it was the singular test to determine whether an invention is patentable subject matter. Delivering the opinion for the Court was Justice Kennedy. There were no dissents, only concurring opinions, which is in and of itself a little surprising, at least at first glance until you realize that the Justices all agreed Bilski’s invention ought not to be patentable, but some, such as Justices Stevens and Breyer would have found all business methods unpatentable. In any event, Kennedy explained that the Federal Circuit decision ignored well established rules of statutory interpretation, and further explained that there is no ordinary, contemporary common meaning of the word “process” that would require it to be tied to a machine or the transformation of an article. Nevertheless, the machine or transformation test may be useful as an investigative tool, but it cannot be the sole test.
Unlike many of the visitors and contributors on this site, I am not a lawyer. I am a programmer who found this blog while chasing links across the Internet looking for information on software patents and what has now become one of the most anticipated Supreme Court decisions ever; Bilski v. Kappos. That was almost eight months ago at a time when I held what is probably a common view of software patents among programmers. Specifically, that they are immoral, unfair, and restrictive to innovation and creativity. I have since found that things are not as black and white as they appear and I’d like to share with you the problems as I see them, from a programmer’s point of view.
The communication between lawyers and programmers is admittedly poor. I can’t imagine very many people jumping through all the hoops to become a patent lawyer if they didn’t believe in the power of the patent system to help grow the economy. On the other hand, programmers who are frustrated with declining job security, declining benefits, and declining pay, often turn to leaders in their field, who demonize software patents. Those industry leaders who support software patents are usually the ones doing the laying off, cutting salaries, and outsourcing jobs, so it is understandable that they have questionable credentials when it comes to the opinions of the common programmer. How can we start to heal the wound and repair the damage that has already been done? We need to encourage more communication between the two parties if we are ever to end the “cold war” over software patents.
BraBall® the patented bra saver. A project Richardson did for a client.
Ideas are first created in the mind’s eye and then sketched out on paper. Then the creator of the idea quite often cobbles together a crude working prototype to give the idea form and to test the first physical aspects of the idea. This is generally referred to as a “Proof of Function” prototype. This process of testing and improving the Proof of Function prototype goes on until the inventor is satisfied that the prototype works as envisioned.
Today 3 Dimensional modeling is gaining popularity. While it is true that 3D modeling has been around for quite a number of years, it was very expensive and was used mainly by large corporations, at least until recently. In the past 10 years the cost of the 3D modeling software has been drastically reduced, the use of 3D software to control computer controlled milling machines is widespread in manufacturing. As a result 3D modeling is the standard method of communication in manufacturing.
When last we left off our History of Software Patents series we were talking about In re Alappat, which by implication did away with the Freeman-Walter-Abele test for patentable subject matter by not mentioning the test whatsoever. Shortly after Alappat, a three-judge panel once again resorted to and applied the Freeman-Walter-Abele test in In re Trovato, but that was quickly withdrawn by an en banc panel of the Federal Circuit. So it seemed relatively clear that the FWA test had been abandoned. This believe was bolstered by the famous, or infamous depending on your view, case of State Street Bank & Trust Co. v. Signature Financial Group, Inc. and ultimately in AT&T Corp. v. Excel Communications, Inc., where the Federal Circuit reaffirmed its decisions in State Street Bank and Alappat.
In State Street the patent in question was U.S. Patent No. 5,193,056, which issued to Signature Financial Group on March 9, 1993. The ’056 patent is generally directed to a data processing system for implementing an investment structure which was developed for use in Signature’s business as an administrator and accounting agent for mutual funds. In essence, the system, identified by the proprietary name Hub and Spoke®, facilitates a structure whereby mutual funds (Spokes) pool their assets in an investment portfolio (Hub) organized as a partnership. State Street was in talks with Signature Financial to acquire a license, and when talks broke down they brought a declaratory judgment action to have the ’056 patent claims declared invalid.
Yet another day has come and gone without the United States Supreme Court issuing a decision in Bilski v. Kappos. According to Cover It Live, via the SCOTUS Blog, Chief Justice Roberts announced that the Court will have its final opinions on Monday, June 28, 2010, and that the Court’s term will close with the exception of remaining Orders in pending cases. (see 10:39 am mark of discussion at SCOTUS Blog). This is widely being interpreted as confirmation that Bilski will be issued on Monday, June 28, 2010, which admittedly seems extraordinarily likely, but call me crazy, I have a strange feeling something odd may be boiling behind the scenes.
Allow me to point out that everyone I have spoken to believes that Bilski will be decided this term and with only one day remaining everyone to a person believes the decision will be announced next Monday shortly after 10:00 am Eastern Time. But why wouldn’t the Chief Justice just come out and say that all pending cases will be decided and no cases will be held over until the next term? Why must he say things in ways that leave open the possibility that one or more cases could be held over? For example, the Court could have its “final opinions” issue on Monday, June 28, 2010 and the Court’s October 2009 Term could come to an end, and Bilski still not issue. That would make what Roberts said today true, and we would still have a case held over.
There has been yet another development in what is fast shaping up to be an epic patent battle between Apple Inc. (NASDAQ: AAPL) and High Tech Computer Corp.(PINK: HTCCF) (aka HTC Corp.), HTC (B.V.I.) Corp, HTC America, Inc. and Exeda, Inc. (collectively referred to as HTC). On Monday, June 21, 2010, Apple filed yet another complaint against HTC in the United States District Court for the District of Delaware. On March 2, 2010, Apple, Inc. filed two lawsuits against HTC Corp., alleging that HTC infringes some 20 Apple patents related to the iPhone’s user interface, underlying architecture and hardware.
The latest Apple complaint continues to allege direct infringement of Apple patents, this time four separate patents. The complaint also alleges indirect infringement; specifically contributory infringement and inducement to infringe. The patent asserted by Apple are US Patent No. 7,282,453 (Count I); US Patent No. 7,657,849 (Count II); US Patent No. 6,282,646 (Count III) and US Patent No. 7,380,116 (Count IV). The ’453 patent and the ’849 patent were both asserted previously by Apple (see what I have previously referred to as the second complaint filed March 2, 2010). It appears as if they are added here due to recently issued Certificates of Correction. The ’646 patent and the ’116 patent were not previously asserted in either of the two complaints filed March 2, 2010 in the District of Delaware.
The legal, business, and scientific communities eagerly await the Supreme Court’s ruling in Bilski v. Kappos and many scholars, business leaders, and legal professionals try their best to anticipate how the Court will rule. Many patent attorneys and patent agents are drafting two sets of claims for their clients and the one they file will depend on how the Supreme Court rules.
For all of the opinions, articles, and conjecture, all one need do is study the law and look at the precedents to know that anticipating how the Supreme Court will rule in a case is akin to trying to gaze into a crystal ball. So, what will be the future of business methods as patent-eligible subject matter? Will the machine-or-transformation test stand? What will be the fate of the Bilski patent? An educated guess is the best that one can hope for in this situation.
How to Write a Patent Application is a must own for patent attorneys, patent agents and law students alike. A crucial hands-on resource that walks you through every aspect of preparing and filing a patent application, from working with an inventor to patent searches, preparing the patent application, drafting claims and more. The treatise is continuously updated to address relevant Federal Circuit and Supreme Court decision impacting patent drafting.
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