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.
The law as it relates to software has been in flux over the last 10 years. Many older patent applications simply do not have enough detail to satisfy the current requirements to obtain a patent, although when drafted they would have been sufficient to satisfy the requirements then in place. Describing software as a pure method claim has not worked for a long time despite the fact that in reality software is really a method. Much more than a cursory description of software as a series of steps is required in order to have hope of obtaining patent protection for software.
Indeed, ever since the Federal Circuit en banc decision in Bilski, claims have been required to be tethered to tangible components, such as data storage devices, processors, databases, controllers, servers and the like. Unfortunately, however, the Patent Trial and Appeals Board at the United States Patent and Trademark Office now has taken the position that they will ignore the tangible components within a computer implemented method claim and then look to see what remains before determining whether the claim is patent eligible. See PTAB Kills Software.
Of course, after you remove or ignore the tangible components what remains is a naked process, which is patent ineligible. Thus, deciding to ignore tangible components leads to the inescapable conclusion that no software is patent eligible. Such disingenuous reasoning has the effect of punishing applicants for writing claims as the Patent Office has mandated ever since the machine-or-transformation test was first announced by the Federal Circuit in Bilski. The test announced in SAP/Versata, which was the first covered business method review decision announced by the PTAB, cannot be the correct test, and ultimately the decision (or at least the rationale) will be reversed. Any test that has the net effect of rendering all software patent ineligible, like the SAP/Versata test, is simply not correct as I will explain more clearly below.
One of the things that makes protecting computer related inventions tricky is that first you have to define the invention, and defining the invention is not something that is altogether easy when the invention is a computer process or relates to software. Sure, it is easy enough to define a list of desired functionality, and if you have some computer programming skills it is easy enough (after investing the requisite time) to write the code that will enable the functionality, but that which can be protected via patent lies somewhere between the desired functionality and the code, making the defining of the invention rather elusive for some, particularly those who are new to the patent arena.
Further complicating the matter is the reality that over the last several years the law of patent eligibility in the United States has been in flux. It did become largely settled with respect to software and business methods thanks to Bilski v. Kappos, which was decided by the United States Supreme Court. This case left the industry with 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. The Supreme Court determined in Bilski that the machine-or-transformation test is not the only test for patent eligibility, but rather that it was an important clue. But what exactly does that mean?
Bob Stoll (right) at the White House, Nov. 2010, with then USPTO Deputy Director Sharon Barner.
On July 19, 2012, I interviewed Bob Stoll, former Commissioner for Patents of the United States Patent and Trademark Office. The interview took place in a conference room at Drinker Biddleon K Street in Washington, D.C. After 29 years working for the USPTO and a total of 34 years working for the government, Stoll retired on December 31, 2011. He then started his new, second career as a private citizen and all around patent specialist at Drinker Biddle in the firm’s Intellectual Property Group.
In part 1 of my interview with Stoll we discussed his adjusting to life in the private sector, the fact that he doesn’t enjoy the billable hour part of private practice (just like every other attorney I know) and we discussed politics a bit, as well as the U.S. economy and innovation policy. Part 2 of my interview, which appears below, picks up where we left off discussing Presidential politics and the buzz that engulfs D.C. every 4 years. We then move on to talk about how innovation drives the U.S. economy and I get his thoughts on why we haven’t seen a great new technology that has spawned an entirely new industry as we have coming out of so many recessions in the past. We then finish part 2 discussing changes to the patent examination process and how to streamline the examination process.
One week ago, on July 18, 2012, Justice Antonin Scalia of the United States Supreme Court sat down for an interview with Piers Morgan of CNN. See Scalia interview transcript. During the interview Morgan asked Scalia what his hardest decision has been while on the Supreme Court. This was the back and forth that ensued:
MORGAN: What has been your hardest decision, do you think?
SCALIA: My hardest?
SCALIA: You don’t want to know.
MORGAN: I do want to know.
SCALIA: No, it’s the dullest case imaginable. They — there is — there is no necessary correlation between the difficulty of a decision and its importance. Some of the most insignificant cases have been the hardest. And…
MORGAN: What has been the one that you…
SCALIA: It would probably be a patent case.
You want me to describe it really?
MORGAN: No, I don’t.
SCALIA: No. Of course. (LAUGHTER)
I thought it might be fun to ask some industry insiders what their guess was as to the unnamed case Justice Scalia was thinking of as the “hardest decision.” Some of those I asked didn’t offer a guess, but rather took the opportunity to discuss the aforementioned Scalia statements more generally. Those “musings” will be published tomorrow.
In the recent patent case of Mayo vs. Prometheus Labs, the United States Supreme Court continued its pattern of restricting the scope of patentable subject matter under 35 US 101. Historically, patents had been strictly limited to processes, machines, compositions of matter and articles of manufacture. Excluded from eligibility were business methods, software, laws of nature, naturally occurring phenomena and mathematical formulas. Then the US Court of Appeals for the Federal Circuit began to expand the patent eligibility rules.
In Diamond v. Diehr, decided in 1981 by the United States Supreme Court, established that an un-patentable formula could be transformed into a process by the addition of method steps after the formula. Most would agree, however, that software did not widely become patent eligible until 1994 when the Federal Circuit in the Alappat case held that a programmed computer was essentially a machine and when that same computer was programmed differently, it became a second different machine – both patentable. The Alappat holding led to the acceptance of “software plus token hardware” as being patentable. Ultimately, the Alappat ruling would give rise to the State Street Bank case, decided in 1998 by the Federal Circuit, which held that business methods were patentable.
Yesterday The Hartford announced via press release that it had invented a faster way to deliver life insurance, which is now patent pending. Can you that be true? As with many things associated with the law, particularly patent law, a simple, straightforward answer is not possible. In a nutshell, it is possible that one could patent a method of more quickly delivering life insurance if the process is new and non-obvious. However, given the law that the United States Patent and Trademark Office is required to apply there will need to be much more than a real world business method, or “pure business method” as they are sometimes referred to.
“Today’s consumers are used to buying products online and receiving them at home within 48 hours,” said Brian Murphy, who heads The Hartford’s life insurance business. “We see no reason why they should have to wait more than a month to receive a new life insurance policy. By creating a new way of assessing a person’s risk factors and reordering the underwriting process, we can now provide consumers with life insurance coverage in a fraction of the time it used to take.” But surely a reordering of the underwriting process isn’t enough for a patent, is it?
In CyberSource Corporations v. Retail Decisions, Inc., Judge Dyk (joined by Judges Bryson and Prost) ruled that a method and system for detecting credit card fraud in Internet transactions was patent-ineligible under 35 U.S.C. §101. But in Ultramercial, LLC v. Hulu, LLC, Chief Judge Rader (joined by Judges Lourie and O’Malley) just ruled that a claimed method for monetizing and distributing copyrighted products over the Internet was patent-eligible. In fact, our good Chief Judge has “thrown down the gauntlet” at his Federal Circuit colleagues by stating “breadth and lack of specificity does not render the claimed subject matter impermissibly abstract.” Wow! That “judicial donnybrook” I mentioned in my recent article on the remand decision in Classen Immunotherapies, Inc. v. Biogen IDEC (see CAFC on Patent-Eligibility: A Firestorm of Opinions in Classen ) on what the standard is (or should be) for patent-eligibility under 35 U.S.C. §101 has now broken out.
In Ultramercial, the patentee (Ultramercial) asserted that U.S. Pat. No. 7,346,545 (the ‘545 patent) was infringed by Hulu, LLC (“Hulu”), YouTube, LLC (“YouTube”), and WildTangent, Inc. (“WildTangent”). The ‘545 patent,relates to a method for distributing copyrighted products (e.g., songs, movies, books, etc.) over the Internet for free in exchange for viewing an advertisement with the advertiser paying for the copyrighted content. What is interesting in this case is that Claim 1 of the ‘545 patent that is allegedly infringed by Hulu, YouTube, and WildTangent recites a method having not one, not two, but eleven total steps. (Side note: One might wonder how anyone can infringe an eleven step method.) WildTangent’s motion to dismiss for failure to state a claim was granted by the district court based on the claimed method being patent-ineligible under 35 U.S.C. § 101. (Hulu and YouTube were dismissed from the case apparently for other reasons.)