A Software Patent History: The Algorithm Cases

By Gene Quinn
January 1, 2015

This is part 6 of a multi-part series exploring the history of software patents in America. To start reading from the beginning please see The History of Software Patents in the United States. For all of our articles in this series please visit History of Software Patents

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Before jumping to discuss Alice v. CLS Bank we need to take a pit-stop at the Federal Circuit to discuss what are known as the “Algorithm Cases.” Here we will primarily focus on the United States Court of Appeals for the Federal Circuit decision in Noah Systems, Inc. v. Intuit, Inc., which addressed very similar issues to those raised in Ergo Licensing, LLC v. CareFusion 303, Inc. In both Ergo and Noah, the outcome rested upon whether means-plus-function claims in a software patent were indefinite and, therefore, invalid. Both cases followed the ever growing body of law on the topic from the Federal Circuit, which requires an algorithm to be presented in the disclosure in order to satisfy the disclosure requirements invoked along with claims written pursuant to 35 USC § 112(f).  In both cases the claims were lost.  I strongly disagreed with the rulings in Ergo, and while I would have come down differently on Noah Systems at least the Court in this case explained themselves.

These cases are very important though because they give us the best glimpse yet into understanding the disclosure requirements for software patents that utilize means-plus-function claim language. Understanding this particular aspect of patent drafting may be crucial moving forward given that some believe that means-plus-function claiming may be one way to get at least some patent claim coverage in the wake of Alice. Therefore, given that the extraordinarily strict disclosure requirements mandated by employing means-plus-function claiming, this technique may well be the future for software patents. Certainly adhering to the extreme disclosure requirements in the Algorithm cases will be a best practice moving forward even if you do not employ means-plus-function claiming, and it will likely remain a best practice until some statutory or common law relief from Alice is achieved.

The appeal in Noah arose out of an action brought by Noah against Intuit for infringement of the U.S. Patent No. 5,875,435. The ’435 patent relates to an automated financial accounting system. The system allows a business or individual to connect to the computers of companies with which that entity conducts business so that information regarding financial transactions can be transmitted between them. Noah asserted that Intuit’s Quicken and QuickBooks products infringe system claims 12–17, 29–38, and 40–56. All of the asserted claims contained an “access means” limitation. The parties agreed that this is a means-plus-function limitation performed by a processor. Thus, the appeal turned on whether the specification discloses an algorithm to perform the function or functions associated with the “access means” limitation.

As a result of using means-plus-function claiming in a software patent the specification of the ’435 patent needed to contain an algorithm that performs the function associated with the “access means” limitation, otherwise the limitation is indefinite and the claim invalid.  Ultimately, the Federal Circuit would determine that the algorithm disclosed was incomplete.  This lead the Court to explain that when the specification discloses an algorithm that only accomplishes one of multiple identifiable functions performed by a means-plus-function limitation, the specification is treated as if it disclosed no algorithm. Indeed, an incomplete algorithm means no algorithm at all, which means that what one of ordinary skill in the art would understand from the disclosure is no longer relevant. Means-plus-function claims have always been about what someone of ordinary skill in the art would appreciate, but that is not the case with respect to computer software unless and until 100% of the algorithm is disclosed in the specification.

Noah alleged that Intuit’s products infringe independent claims 12, 52, 53, and 56. Representative independent claim 12 recites:

A financial accounting system for a first entity such as an individual or a business, said system comprising:

a financial accounting computer having at least one file;

a financial transaction computer for receiving data inputs, said data inputs including electronically recorded financial transactions made between said first entity and a second entity;

first communication means for transferring said data inputs from said financial transaction computer to said file of said financial accounting computer; and

means for providing access to said file of said financial accounting computer for said first entity and/or agents of said first entity so that said first entity and/or said agent can perform one or more activities selected from the group consisting of entering, deleting, reviewing, adjusting and processing said data inputs.

The parties agreed that the emphasized language is the “access means” limitation.

Although the parties disputed the construction of many terms, the parties agreed that this limitation was a means-plus-function claim that invoked 35 USC § 112(f). The parties also agreed that the function performed by the “access means” is “providing access to the file of the financial accounting computer for the first entity and/or agents of the first entity so that the first entity and/or the agent can perform one or more of the activities selected from the group consisting of entering, deleting, reviewing, adjusting and processing the data inputs.”  The parties did dispute, however, what structure performed this function.

At trial, on the basis of the special master’s recommendation, the district court concluded that the ’435 patent’s specification did not disclose an algorithm for performing the function associated with the “access means” limitation. This determination lead to a decision rendering all of the asserted claims indefinite because they lacked the required corresponding structure. Accordingly, the district court entered summary judgment of invalidity in favor of Intuit. Ultimately the Federal Circuit would find that the district court erred in determining that no algorithm was present, because at least a partial algorithm was present, but did not disturb the ruling because of the determination that a partial algorithm is as good as no algorithm at all for purpose of interpreting means-plus-function claims in a software patent.

On appeal, Noah raised two different, albeit closely related, arguments. Noah argued that the district court erred when it: (1) construed the “access means” limitation in a manner that rendered it indefinite; and (2) granted summary judgment of invalidity without requiring Intuit to present expert testimony regarding how one of ordinary skill in the art would view the sufficiency of the disclosure in the ’435 patent.

The Federal Circuit pointed out that means-plus-function claiming involves a quid pro quo.  In exchange for being able to draft a claim limitation in purely functional language, the applicant must describe in the patent specification some structure that performs the specified function. Importantly, the functional claim language covers only the corresponding structure, material, or acts described in the specification and equivalents thereof, which confines the breadth of protection otherwise seemingly provided by purely functional claiming.

The Federal Circuit also acknowledged that it is undisputed that the question of whether a claim is indefinite is based on how the claim limitation would be understood by one of skill in the art. The Court went on to say, however, that the testimony of one of ordinary skill in the art cannot supplant the total absence of structure from the specification.  These two statements seem logically inconsistent, to put it politely.  It is impossible for means-plus-function definiteness to be about what one of skill in the art would understand and then to simply refuse to ask what one of skill in the art would understand. The Federal Circuit has set up a logical impossibility, which is why this must be treated as a special rule as applied to software patents that utilize means-plus-function claiming.

If someone of skill in the art would appreciate something based on the disclosure then there has to be something there to lead that person to the appropriate understanding.  If there is nothing that would lead one of skill in the art to an understanding then it would be impossible to understand.  Whether the Federal Circuit likes it or not, the reality is they are supplanting their own determination about what is disclosed in computer software patents for the understanding of one of skill in the art.  If we were dealing with tangible embodiments the illogical nature of the syllogism would be obvious, but because we are dealing with intangibles like whether a disclosure teaches a claim even without an algorithm the lack of logic flourishes. There is clearly a significant and specific corollary to the traditional means plus function law when the claims relate to software.

In any event, the Federal Circuit explained that current case law regarding special purpose computer-implemented means-plus-functions claims is divided into two distinct groups: (1) cases where the specification discloses no algorithm; and (2) cases where the specification does disclose an algorithm but a defendant contends that disclosure is inadequate. The distinction is important because if an algorithm is disclosed then it matters what one of skill in the art would understand.  If no algorithm is disclosed, or as a result of this case if a partial algorithm is disclosed, it is irrelevant whether one of skill in the art would understand the disclosure.

Contrary to the district court’s conclusion and Intuit’s arguments, the Federal Circuit did determine that the ‘435 patent specification disclosed an algorithm for the passcode function associated with the “access means.” Notwithstanding, there are two functions recited in the claim, namely: (1) providing access to the file; and (2) once access is provided, enabling the performance of delineated operations. In order to get to whether someone of skill in the art would understand the disclosure the Federal Circuit explained that there must be an algorithm present that addresses both aspects of this functional language.  Unfortunately for Noah, they sought to rely upon what someone of skill would understand rather than having explicit teachings, focusing on aspects of the disclosure that were not precisely related to the key aspects of the claims to provide a rounded-out disclosure that would inform.  Noah’s attempt to explain that multiple methods would accomplishing this would be known by those of skill in the art were unavailing, and were even harmful.  “That various methods might exist to perform a function is precisely why the disclosure of specific programming is required,” the Federal Circuit explained.

According to the Federal Circuit, “the algorithm requirement is necessary because general purpose computers can be programmed to perform very different tasks in very different ways. Without disclosing any corresponding structure, one of skill simply cannot perceive the bounds of the invention.”  (citations omitted). It is unclear how any Court or Judge could know that to be true without asking one of skill in the art, which is prohibited unless the Court of Judge themselves is capable of identifying 100% of the algorithm.

The Algorithm cases will likely be very important for patent practitioners moving forward. One thing being discussed by experts is whether means plus function claiming of software could satisfy the current Alice test. It seems logical that a means plus function claim, which will read in the full extent of the innovation disclosed in the specification, could be one that is patent eligible and not considered merely an abstract idea. Of course, in order to utilize means plus function claims the specification will need to be extraordinarily detailed, disclose 100% of all algorithms, and be thick with technical disclosure.

Best practices in terms of writing a disclosure will have you write your disclosure to satisfy the disclosure requirements in these Algorithm cases even if you don’t employ means-plus-function claiming initially. With that in mind, it will be critical understand with as much comprehensive detail as possible the programming, hardware and processes associated with the delivery, acceptance and manipulation of information. You will want to have as much information as possible about algorithms/routines used to carry out each part of the process. This type of detailed information will be critical because with inventions of this type the nuances of how the system/method programmatically provides the functionality from a technical level is where the patentability resides, and also what will be required to make sure that the recited invention in the claims is real, concrete, tangible and, therefore, not merely an abstract idea. You will want to overwhelm the reader with technical details, the kind you would include in a thesis or development document. Being able to provide illustrative examples, while not required, will be quite helpful in that it will again work to show that the innovation disclosed is not merely abstract, but does exist.

Disclosures should always include multiple flowcharts, schematic diagrams and illustrative examples that highlight the core uniqueness and functionality to the greatest extent possible. In essence, you want the technical disclosure to be so comprehensive that no Federal Judge could ever hope to understand the technology at play. If they understand what you write from a technical standpoint you run the real risk that the claims will either be patent ineligible or obvious. Of course, you do need to make sure they can identify the presence of the algorithms.

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[1] See, for example, USPTO 112 guidelines, 76 Fed. Reg. 7162 (9 February, 2011). See also A Primer on Indefiniteness and Means Plus Function.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 13 Comments comments.

  1. Curious January 1, 2015 4:52 pm

    some believe that means-plus-function claiming may be one way to get at least some patent claim coverage in the wake of Alice
    First, Lemley wrote that which means (IMHO) that is of questionable value to begin with. Second, a MPF claim does nothing for Part 1 of the Mayo test (i.e., is the claim directed to an exception). Third, a MPF claim does nothing for Part 2 of the Mayo test (i.e., claiming significantly more than judicial exception). A MPF claim is simply a reworded process claim. E.g., “a process, comprising step 1, step 2, and step 3″ becomes An apparatus, comprising means for step 1, means for step 2, and means for step 3.” If the process claim doesn’t pass muster, the MPF claim won’t either.

    One thing being discussed by experts is whether means plus function claiming of software could satisfy the current Alice test. It seems logical that a means plus function claim, which will read in the full extent of the innovation disclosed in the specification, could be one that is patent eligible and not considered merely an abstract idea.
    I disagree. If Alice’s claims can be kicked out, then so can any other claim, MPF or not, regardless of what is disclosed in the specification.

  2. Gene January 2, 2015 8:15 am

    “Importantly, the functional claim language covers only the corresponding structure, material, or acts described in the specification and equivalents thereof, which confines the breadth of protection otherwise permitted by purely functional claiming.”

    what would you say is the best source of law supporting the argument that “purely functional claiming” is permitted? do you happen to know if judge rich was in favor of “purely functional claiming”? to my mind, software patents have been on a downhill ride in terms of quality disclosure since about the mid 1990’s precisely because of lazy drafting of the patent spec, relying more and more on describing functions and results, which laziness oozed into the drafting of the claims. now the bubble has burst. some folks knew it had to happen.

    P.S. i think you over exaggerate what is necessary to disclose an algorithm. a programmer/inventor who has written and tested code can easily describe the algorithm to a patent attorney in short order. a hopeful programmer/inventor who hasn’t yet written the code (e.g. an R&D employee) is just winging it and the patent attorney in that case may be dragged into a losing battle.

  3. angry dude January 2, 2015 11:15 am

    Gene,

    you do understand that with this type of requirements to “algorithm” patents you outlined such patents are
    not worth anything: a very expensive and tedious patent drafting and prosecution process, followed
    by an enourmously expensive and endless litigation…

    Why bother ?

    Trade secret is much stronger and cheaper protection:
    Hide compiled code inside the device (e.g. ASIC) , use code encryption, use hardware enabled encryption etc.

  4. Gene Quinn January 3, 2015 2:28 pm

    Angry dude-

    Patents that employ means plus function claiming are certainly NOT worthless. In fact, that may be the best way to make sure that at least some claims will remain valid even in a post-Alice environment.

    Truthfully, it seems that your comment fails to take into account that code is not protected by a patent. Disclosing an algorithm doesn’t mean the patent rights are limited to any particular code.

    Trade secrets are good for some things, but software isn’t one of them. Once the secret is out in the open then there is no protection. Thinking that you can protect software as a trade secret is a bit naive. Sure, you can protect is for a while, but relying on trade secret protection in the software world isn’t likely a longer term strategy for success. It will also eventually result in very expensive litigation once employees move on to the next job.

    As for your suggest that you hide code or use encryption, that would be absolutely required in order to have any hope of keeping the secret, but the minute that someone defeats the encryption the secret is lost. Further, code is not what is protected in the first place. It is the process. Hiding a process and keeping it as a secret is very much different.

    If you don’t want to use means plus function claims then don’t. Best practices moving forward do include using at least some means plus function claims, which will require more robust disclosures.

    -Gene

  5. Joachim C Martillo January 3, 2015 11:22 pm

    “The Federal Circuit also acknowledged that it is undisputed that the question of whether a claim is indefinite is based on how the claim limitation would be understood by one of skill in the art. The Court went on to say, however, that the testimony of one of ordinary skill in the art cannot supplant the total absence of structure from the specification. These two statements seem logically inconsistent, to put it politely. It is impossible for means-plus-function definiteness to be about what one of skill in the art would understand and then to simply refuse to ask what one of skill in the art would understand. The Federal Circuit has set up a logical impossibility.”

    The Federal Circuit has not set up a logical impossibility. It has described a situation that occurs all the time in authentication and communications software.

    The classical situation in authentication software occurs when the specification states that a “password” must be minimally 7 characters long and one party implements a “password” that must be at least 7 characters long while another party implements a “password” that must be exactly 7 characters long.

    Both implementations meet the spec but may not interoperate. [Note that exactly what a character is also needs to be specified. Are the characters 5, 6, 7, 8, or 9 bits wide? Are the characters using ASCII or EBCDIC encodings?]

    The classical situation in communications software is typified by X.25 Level 3 which specified that interface restart and interface restart ack (ACKnowledgement) packets use VCID (Virtual Circuit IDentifier 0).

    Every single implementation implemented the restart procedure in the same way, but the French implementations of X.25 Level 3 permitted VCs to use VCID 0 while all other implementations throughout the world disallowed VCID 0 for data VCs.

    I suppose that in many cases the specification ambiguity might dovetail with the doctrine of equivalents, but in other cases, one must wonder whether the ambiguity is really allowing claim interpretation to cover really different security or communication protocols to the point of indefiniteness.

  6. Benny January 4, 2015 2:38 am

    Gene at 4:

    “The minute that someone defeats the encryption…” – if you have the skills to do that, you probably have the skills to develop your own algorithms.

    Actually, I see the problem from the other end – if my competitor is hiding his software behind encryption, I can’t prove he is infringing my patent.

  7. Anon January 4, 2015 9:39 am

    Benny,

    As he second half of your reply indicates, your first half of “skills to develop their own” is something that is useful for more than just “develop their own.”

  8. Benny January 4, 2015 9:43 am

    Anon,
    you give us too much credit. I work with a team of skilled and experienced engineers, but none of us can hack our way into an encrypted micro-controller.

  9. Anon January 4, 2015 11:23 am

    Benny,

    There is no giving your team too much credit in this discussion. You are being far too literal with the discussion elements.

  10. angry dude January 5, 2015 11:37 am

    Benny is right

    Getting inside one of those DSPs or microcontrollers with hardware enabled code encryption requires not just skills but state-of-the-art manufacturing facilities worth many millions
    If you can afford those then you can afford pretty much anything – buy all relevant patents outright, reverse engineer competitor products, litigate for decades, develop your own algorithms etc.

  11. Anon January 5, 2015 11:50 am

    angry dude,

    Benny is not right, because the “can do” is immaterial to the legal point.

    Yes, someone may be able to develop their own algorithms – but that says nothing at all concerning the protection afforded by patents (exclusivity of the legal nature to prevent others from doing so).

  12. Benny January 6, 2015 3:05 am

    Anon,
    The burden of proof is on you. Your (expensive) legal rights are worthless if you cannot prove that I have stolen your hard-earned IP. And you can’t do that without getting inside my micro-controller. Look at the practical side. I might have copied your algorithm, or I might have compiled a look up table, or I might have my own algorithm.

  13. Anon January 6, 2015 11:51 am

    Benny,

    Burden of proof has nothing to do with this discussion.

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