Ten years ago if you said that patent eligibility would become one of the most important, hotly debated issues in the patent field most in the industry probably would have thought you simply didn’t know what you were talking about. Five years ago some saw the issues percolating, but still many in the trenches with their day-to-day practice life would likely still have raise a cautious eyebrow and questioned why you thought even the Supreme Court might turn its back on a solid generation of well established patent law. The tone was perhaps cautious, but most couldn’t imagine that the Supreme Court and the Federal Circuit would cease their expansive view of patent eligibility.
Oh how times change!
Today, after several years of substantial turmoil, patent eligibility in a variety of economically significant technologies is extremely uncertain, including software, natural products, medical diagnostics and personalized medicine. It is with great irony that one of the few things we know with any degree of certainty is that business methods are patent eligible. We likewise know that at least some cDNA is patent eligible, except that man-made cDNA that happens to be identical to what occurs in nature. Of course, that raises more questions than it answers.
Hamilton Beach and Sunbeam are direct competitors in the small kitchen appliance industry. Both Hamilton Beach and Sunbeam sell competing versions of “slow cookers,” which are electrically heated lidded pots that are used to cook food at low temperatures for long periods. Hamilton Beach sued Sunbeam for infringement of U.S. Patent No. 7,947,928. It was this patent that was at issue in the decision announced by the Federal Circuit yesterday in Hamilton Beach Brands, Inc. v. Sunbeam Products, Inc.. The dispute between the parties centered on whether the district court erred when it granted a motion for summary judgment finding claims 1 and 3-7 of the ’928 patent invalid.
The issue of interest in this case centered around whether there was a pre-AIA 102(b) on-sale bar. You might expect such issues not to be worthy of a Federal Circuit precedential opinion, but there was an issue with respect to whether there really was a contract in place before the critical date, but also an issue about whether the on-sale bar could apply when the offer for sale was from a Hamilton Beach supplier to Hamilton Beach themselves. The short answer is that the Federal Circuit, over a dissent by Judge Reyna, determined that there was a triggering offer for sale and it is of no concern whether the offer for sale was initiated by a supplier who was making the units at the request of the patent owner.
A patent is a proprietary right granted by the Federal government to an inventor who files a patent application with the United States Patent Office. There are three types of patents available in the United States: (1) a utility patent, which covers the functional aspects of products and processes; (2) a design patent, which covers the ornamental design of useful objects; and (3) a plant patent, which covers a new variety of living plant. Each type of patent confers “the right to exclude others from making, using, offering for sale, or selling” the invention in the United States or importing the invention into the United States.
It is important to note, however, that patents do not protect ideas, but rather protect inventions and methods that exhibit patentable subject matter. In other words, a patent can only protect something that is considered patent eligible. Generally speaking, in the United States the view of what is patent eligible is quite broad. Machines, compounds and processes are all patent eligible. Even living organisms that have been genetically engineered in a laboratory are patent eligible (see Diamond v. Chakrabarty). Business methods are also patent eligible in the United States (see Bilski v. Kappos; Patenting Business Methods in the U.S.; and Business Methods: Concrete and Tangible Description is a Must). Software is likewise patent eligible (see Ultramercial, LLC v.Hulu, LLCand Software Patents). Even modified DNA is patent eligible (see DNA patenting). Thus, it is typically more enlightening to discuss what is not patent eligible: laws of nature, abstract ideas, naturally occurring phenomena, so-called naked business methods (i.e., not tethered to any kind of machine or apparatus), inventions only capable of an illegal purpose and atomic weapons. Chances are that whatever you have can be characterized so that patent eligibility is not a significant impediment to receiving a patent.
As I read CLS Bank v. Alice, I wondered if 35 USC 101 is really a question about the claims or about the specification? 35 USC 101 states:
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.
This section does not say anything about the claims and while the claims define the invention they are not the invention. To suggest otherwise is to confuse reality and elevate the draftsman’s art above the inventor’s work.
While the Supreme Court has done away with the “useful, concrete and tangible result” test from State Street Bank v. Signature Financial, in Bilski v. Kappos, 8 out of 9 Justices (i.e., everyone except Justice Scalia) signed onto an opinion that recognized that the patent claims in State Street displayed patent eligible subject matter. Indeed, the dissenters in Bilski specifically acknowledged that the claims at issue in State Street did not deal with processes, but dealt with machines. See Footnote 40 of the Steven’s dissent.
The import of this is that machines are specifically patent eligible subject matter, so if the claims of State Street are to machines then claims that are similarly configured would also be directed to machines and therefore patent eligible. So if the systems claims at issue in CLS Bank v. Alice Corp. are configured similarly to those that now stand invalid that would mean that Judges Lourie, Dyk, Prost, Reyna and Wallach have ignored the Supreme Court. Any fair comparison of the claims, as shown below, demonstrates this rather conclusively.
Similarly, the United States Supreme Court famously ruled in Diamond v. Diehr, that the United States Patent and Trademark Office inappropriately rejected claims to a computerized process for molding raw, uncured synthetic rubber into cured precision products. Ultimately, thanks to the decision of the Supreme Court the inventors, Diehr and Lutton, received U.S. Patent No. 4,344,142. If the claims in Diamond v. Diehrare similar to those that now stand invalid that would be further proof the Federal Circuit as a whole has ignored the Supreme Court.
By now most are likely already familiar with the unfortunate reality that the United States Court of Appeals for the Federal Circuit issued a non-decision in CLS Bank v. Alice Corporation on Friday, May 10, 2013. There were 10 judges who heard the case en banc, with 7 of the 10 finding that the method claims and computer-readable medium claims were not patent eligible. While there may be reasonable room for a difference of opinion relative to those claims, it was the system claims that specifically and clearly recited tangible structure that has thrown the patent law of software into such disarray. 5 Judges would have found that the systems claims were patent ineligible (Judges Lourie, Dyk, Prost, Reyna and Wallach), and 5 Judges would have found the systems claims were patentable subject matter (Chief Judge Rader, Judges Newman, Moore, Linn and O’Malley). For more see Federal Circuit Nightmare in CLS Bank and 5 CAFC Judges Say Computer Patentable, Not Software and Did the CAFC Ignore the Supreme Court in CLS Bank?
Today, however, I want to write about one of the more bizarre passages I have ever seen in any decision, and then pose an almost unthinkable question: Is IBM’s Watson still patent eligible in the view of Judges Lourie, Dyk, Prost, Reyna and Wallach?
First, let’s start with the passage. Judge Lourie, who was joined by Judges Dyk, Prost, Reyna and Wallach, actually wrote: “At its most basic, a computer is just a calculator capable of performing mental steps faster than a human could. Unless the claims require a computer to perform operations that are not merely accelerated calculations, a computer does not itself confer patent eligibility.”
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