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USPTO: No Change to Software Patentability Evaluation


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: May 22, 2013 @ 7:35 am
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In a one-page memorandum to the Patent Examining Corps dated May 13, 2013, Deputy Commissioner for Patent Examination Policy Drew Hirshfeld had a simple message to respond to the Federal Circuit’s en banc non-decision in CLS Bank v. Alice Corp. The message was this: “there is no change in examination procedure for evaluating subject matter eligibility.” (emphasis in the original)

This is hardly a surprise given that there were 7 different opinions with only one opinion garnering more than 5 out of 10 Judges. The sole opinion that achieved a majority was a mere 58 words in length and did nothing more than explain that given the fracture of the Court all that could reasonably be said was that the decision of the district court had been affirmed by an equally divided Court, which unfortunately rendered the claims all patent ineligible.

In his opinion Chief Judge Rader explained in footnote 1: “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.”

Indeed, the Federal Circuit has made a mess out of software. The only hope is that the Supreme Court will step in and clear things up, which I full well understand is a scary thought.

In any event, here is what the USPTO memo to Patent Examiners had to say about the Court’s decision:

CLS Bank Decision

The patents in suit relate to a computerized trading platform used for conducting financial transactions in which a third party settles obligations between a first and a second party so as to eliminate “counterparty” or “settlement” risk. The district court found all of the claims invalid because they were directed to an ineligible abstract idea under 35 U.S.C. § 101. The Federal Circuit heard the case en banc and affirmed the district court in a divided decision.

Along with the decision, the Federal Circuit also issued six separate opinions by various members of the court concurring, dissenting, and offering reflections on the decision. Despite the Court’s sharp divide voiced in the six separate opinions, several important themes emerged, such as:

  • There was agreement that the test for eligibility is not a rigid, bright line test and must be made by evaluating a claim as a whole, on a case-by-case basis, using a flexible approach.
  • Many of the judges explicitly noted that the test for eligibility is a separate and distinct inquiry from other patentability concerns, particularly novelty and obviousness.
  • It was generally agreed that when evaluating the claims as a whole the claim must be analyzed to determine whether the additional limitations add significantly more, or in other words add meaningful limits, to the abstract idea or law of nature.

Given the multiple divergent opinions, the USPTO is continuing to study the decision in CLS Bank and will consider whether further detailed guidance is needed on patent subject matter eligibility under 35 U.S.C. § 101.

As I sat reading this at first I thought it was very reasonable, and it is about as clear a summary of this mess as possible I suppose. What is sad, however, is that “[m]any of the judges explicitly noted that the test for eligibility is a separate and distinct inquiry from other patentability concerns…” There should be complete unanimity of agreement across the entire industry that patent eligibility is a separate inquiry. That the simplicity of the Patent Act is now being ignored by some is thanks to the Supreme Court’s decision in Mayo v. Prometheus.

So as we hope for the Supreme Court to step in let’s not kid ourselves. Of late the Supreme Court has gotten a number of easy cases correct — Microsoft v. i4i, Hyatt v. Dudas and Monsanto v. Bowman. But when it comes to patent eligibility this particular Supreme Court has a mixed record at best. If they get Myriad right there may be cautious optimism.

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Posted in: Gene Quinn, IP News, IPWatchdog.com Articles, Patent Prosecution, Patents, Software, USPTO

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

 


10 comments
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  1. Hey Gene,

    I too am not surprised by this USPTO memorandum on the en banc decision in CLS Bank International. I’m still parsing through this 135 page mess. All I can say is that I’m flabbergasted by Judge Lourie’s concurring opinion which is essentially convoluted drivel. Lourie’s opinion in Mayo that was overturned by SCOTUS was pretty the same convoluted drivel.

  2. Gene,

    What do you think would be the ‘right’ answer in the Myriad case, and why?

  3. Anon-

    I think isolated DNA has to be patent eligible. If that is not the case then SCOTUS will have to effectively overrule Chakrabarty, although they will claim it is still good law even if they gut it.

    I also think that if the Court actually concerns themselves with claims (unlike what the CAFC now apparently does… ignoring claims and trying to get a feel for what the invention is… a la CLS Bank) then the outcome has to be that the claims are patent eligible. cDNA has to be patent eligible and the claims seem to incorporate a composite cDNA made up of hundreds of patients, which is obviously unique and obviously patent eligible.

    Of course, SCOTUS will be vilified if they do the right thing. 60 minutes will pretend that humans are patent eligible despite the express prohibition in the statute and the fact that what Myriad patented does not occur naturally.

    What do you think?

    -Gene

  4. This is a little outside my usual zone of comfort, but in general, I do not think mere isolation is enough to impart patent eligibility.

    As to general precedent, sure, there is Chakrabarty, but there is also Funk Brothers. I think that the Court (like it or not) has reverted to some sort of “gist of the invention.” and like Prometheus will demand “something more.”

    I think that just being unique does not satisfy 101 (that is more of a 102 question). You not only need to satisfy the sense of being unique, but you must also satisfy the sense that you are not effectively what is already there. In this sense, the plasmids of Chakrabarty were not effectively already there inside the modifed item, while the groups of microbes of Funk might be said to have been there.

    However, both of those cases touch on additions – and not subtractions. When looking at subtractions, I have to think the Court will focus on the Prometheun question of “Have you done enough?” And this is where my techinical understanding is too limited.

    If I were to venture a guess, I would say that the Court will not allow this patent and will reason that “not enough” was done. After all, the ‘gist’ of the patent is not the abbreviated form itself, but rather the alignment with the item in the human body. Without this alignment, the invention would not be useful and would not have been bothered to have been taken to court at all.

  5. Gene — seems most folks believe this will go to the Supreme Ct.

    But what if Alice elects to not appeal to them? What happens then? Does the CAFC “no decision” become . . . new case law?

  6. Steve,

    There is nothing there to become new case law. That is the meaning of the footnote one explaining what is precedential about the one page and what is not about the remaining 134 pages.

  7. Steve-

    There won’t be any case law on this really. District courts will likely view this non-decision as killing method claims and computer readable medium claims, but it says nothing about system claims other than there is an even split.

    If Alice doesn’t appeal and/or the Supreme Court doesn’t take the case the mess gets even bigger!

    -Gene

  8. “If I were to venture a guess, I would say that the Court will not allow this patent and will reason that “not enough” was done.”

    Anon,

    My guess is that the cDNA claims will pass muster under 35 USC 101. Even ACLU’s counsel essentially admitted that in oral argument. The “isolated” DNA claims are much more problematic in passing muster under 35 USC 101 as not being a difference in “kind” versus “degree.”

    Even if Myriad’s “isolated” DNA claims don’t pass muster, “one dimensional” DNA sequences of this type represent only ~2% of the human genome. In view of the more recent ENCODE theory on how the human genome is constructed, the other 98% of that DNA is very different in being essentially “three dimensional” (think of a mass of tangled and constantly in motion spaghetti). So whatever decision SCOTUS comes to on Myriad’s isolated BRCA DNA sequences passing/not passing muster under 35 USC 101 will only apply to the “tip” of the human genome “iceberg.”

  9. “This is a little outside my usual zone of comfort, but in general, I do not think mere isolation is enough to impart patent eligibility.”

    But the Myriad case is not mere isolation. If the DNA were merely “isolated” we would be talking about an entire chromosome being “isolated.”

    When you break one or two covalent bonds to extract a DNA sequence from a chromosome, you have created a new compound that does not exist in nature; the sequence is a different compound than the compound, the entire DNA strand of the chromosome, from which the sequence is separated.

    To understand how important breaking a covalent bond in a chemical compound can be, if you break one of the covalent bonds between one of the OH groups and the sulfur in sulfuric acid in the presence of sulfur, you can form water and sulfur dioxide from sulfuric acid. No chemist would consider water or sulfur dioxide the same compound as sulfuric acid. Anyone who has every seen what concentrated sulfuric acid can do would also not confuse sulfuric acid with water.

    The Supreme Court may rules that the Myriad claims are not patentable subject matter, but if the Supreme Court does so, they effectively has created a new judicial exception to the statute that either certain types of new compounds really are not new compounds and/or that the source material for making a new compound matters, i.e., a new compound created from material in a rock, dirt, a plant, etc. is a new composition, but a new compound created from material from a human may not be a new composition.

  10. If had to bet, I’d say they are going to hold it ineligible. I think that anon’s analysis is basically right. They have gone into a something more mode and discount information such as in Funk brothers. They want something from the iron age–not the information age as counting as new.

    So, they are going to say that what is isolated is just what is already there in the DNA and all the techniques to isolate it are old. The sequences are there in DNA. So, what have you got in iron age thinking? Nothing. You have something outside of the DNA that looks just like the DNA in its important parts and the parts that don’t are old. Ineligible. All the predictive power won’t count–information age. All the finding the sequence in the DNA won’t count–information.

    Going to be ugly. That’s my predication. 6-3 decision.

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