The inventions described in Bancorp’s US Patents 5,926,792 and 7,249,037 concerned methods, media and systems for administering and tracking the value of life insurance policies. A representative claim reads:
A life insurance policy management system comprising:
a policy generator for generating a life insurance policy including a stable value protected investment with an initial value based on a value of underlying securities of the stable value protected investment;
a fee calculator for calculating fees for members of a management group which manage the life insurance policy;
a credit calculator for calculating credits for the stable value protected investment of the life insurance policy;
an investment calculator for determining an investment value and a value of the underlying securities of the stable value protected investment for the current day;
a policy calculator for calculating a policy value and a policy unit value for the current day;
digital storage for storing the policy unit value for the current day; and
a debitor for removing a value of the fees for members of the management group which manages the life insurance policy.
The Bancorp Services case involved two patents, U.S. Pat No. 5,926,792 (the ‘792 patent) and U.S. Pat No. 7,249,037 (the ‘037 patent), relating to methods, systems, and computer-readable media for administering and tracking the value of life insurance policies in separate accounts. Both the ‘792 patent and ‘037 patent share a common patent specification having a priority date going back almost 16 years (September , 1996). Also, this is not the first time the Federal Circuit has grappled with ‘792 patent. There was an earlier 2004 Federal Circuit decision which reversed a grant of summary judgment of invalidity of the ‘792 patent based on “indefiniteness,” as well as a 2008 Federal Circuit decision which vacated a judgment of noninfringement of the ‘792 patent.
On Friday, July 20, the Federal Circuit heard oral arguments in the remand of the AMP et al. v. USPTO et al. appeal – the case better known as the Myriad Genetics “gene patent” case. The supplemental briefing in this case, and the oral argument itself, continue to reveal how those with diverse perspectives on DNA patents misunderstand each other. Scientists are making dubious assumptions about the operation of patent law. Patent lawyers are making inaccurate assumptions about how the science works. And those who are neither patent lawyers nor scientists just go by what they’ve been told. The Department of Justice’s (DOJ) supplemental amicus brief and oral argument in this case are a good example of the widening disconnect.
“Kitschy, Not Catchy”
Readers will recall that this is not the first time DOJ appears in this case. Two years ago when the Myriad case first reached the Federal Circuit, DOJ filed an unsolicited brief, replete with hypothetical examples of elemental lithium, cotton, coal, isolated electrons, and other things having nothing to do with molecular biology, siding in part with the American Civil Liberties Union (ACLU), and arguing that Myriad’s claims to BRCA-encoding DNA molecules are patent-ineligible under Section 101.
In the immortal words of baseball great Yogi Berra, “It’s déjà vu all over again”. A little more than a year after they previously heard AMP v. USPTO, the CAFC panel of Judges Lourie, Bryson and Moore have once again taken up the question of whether isolated DNA and related methods are patent eligible subject matter under 35 U.S.C. §101.
To recap, last year, the same panel ruled that the composition claims reciting isolated DNA were patent eligible, with Judges Lourie and Moore supporting patent eligibility and Judge Bryson dissenting. All three Judges also agreed method claims involving “analyzing” or “comparing” DNA were not patent eligible. Lastly, all three Judges agreed that a screening claim (claim 20 of the ‘282 patent) was patent eligible. For a full discussion of last year’s decision (in English and Japanese), please click here. After the decision, AMP appealed to the Supreme Court, who later vacated the CAFC decision and remanded the case to the CAFC for further consideration in view of their Mayo decision (English summary;Japanese summary).
The Board recognized multiple characteristics that differentiate the claimed invention in the “674 patent from the prior art combination of Song and Handong. Among these, the Board specifically determined that the claimed invention possessed a “supporting arm” and that the safety wheels of a resultant combination of Song and Handong would be raised off the ground, unlike what is depicted in the ‘674 patent and recited in the claims. Still, the panel determined that the claims were invalid. How is it possible to find an invention obvious when not all of the elements are within the prior art? This is unfortunately a disturbing trend that has been brought about by a misreading of KSR.
The decision of the Supreme Court in Prometheus has been predicted to have implications for business method patentability, but the decision in what will surely become known as the Alice case provides an early indication that the CAFC may endeavour to limit its scope. Whether the claimed subject matter lies in the reality of patent-eligible subject-matter or is more correctly located in the Wonderland of abstract ideas is an issue that has been debated on both sides of the Pond, and on which the Dodo or the King of Hearts in his judicial capacity would surely have had an opinion if it had been brought to their attention. In the US there appears to be ample scope for further debate.
The patentees Alice Corporation are based in Australia and are a joint venture between a private company and National Australia Bank Limited. Their website  explains that they were established in Melbourne in 1995 and have applied for and obtained patents on their financial market innovations worldwide, including in the US, UK and other major financial centres. The patented innovations cover the trading of risk, investment, lending, exchanging and similar products. Alice exploits its inventions by licensing selected entities. Neither Alice nor Ian Shepherd who was the inventor has a significant web presence, and in contrast to the situation in Prometheus there appears to be no back-story that throws light on the merits or otherwise of the alleged invention.
After the Supreme Court ruled in Bilski v. Kappos that a claimed method for managing (hedging) the risks associated with trading commodities at a fixed price was patent-ineligible under 35 U.S.C. § 101, the Federal Circuit has gone “hither and yonder” in trying to determine when other business methods and systems reach (or don’t reach) the patent-eligibility zone. At the patent-ineligible end is CyberSource Corporations v. Retail Decisions, Inc. where 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. At the patent-eligible end is Ultramercial, LLC v. Hulu, LLC (recently vacated and remanded by the Supreme Court for reconsideration by the Federal Circuit) where Chief Judge Rader (joined by Judges Lourie and O’Malley) ruled that a claimed method for monetizing and distributing copyrighted products over the Internet was patent-eligible. See Throwing Down the Gauntlet: Rader Rules in Utramercial that Breadth and Lack Specificity Does Not Make Claimed Method Impermissibly Abstract.
These polar opposite decisions in CyberSource and Ultramercial illustrate how fractured the Federal Circuit’s patent-eligibility landscape has now become for business methods and systems. The most recent split decision in CLS Bank International v. Alice Corp. Pty. Ltd. where a claimed trading platform for exchanging business obligations survived a validity challenge under 35 U.S.C. § 101 epitomizes this problem. As CLS Bank International unfortunately shows, an objective standard for judging the patent-eligibility of business methods and systems remains elusive, subject to an ever growing “tug-of-war” between the “inclusive” and “restrictive” patent-eligibility factions of the Federal Circuit. In particular, after CLS Bank International, we are no closer to having a judicially accepted definition of what is (or is not) an “abstract idea” when it comes to claiming business methods and systems.
Yesterday I wrote about the petition for en banc rehearing that I recently filed in Plasmart v. Kappos. See Petition for Rehearing en banc filed in Plasmart v. Kappos. The case arose from what was originally an inter partes reexamination of U.S. Patent No. 6,722,674. The patent examiner ultimately concluded that claims 20-33 were patentable. The Board agreed that claims 20-33 were patentable as not being obvious, but also determined that claim 1 was patentable as well. Then at the Federal Circuit, in a nonprecedential decision, the panel determined that none of the claims were patentable.
I question whether it is appropriate to have a nonpredential opinion after the USPTO has gone through the time and expense of an inter partes reexamination. Based on the decision I specifically raised as an issue whether the original panel provided proper deference to the Board’s finding of facts, or instead merely substituted their own view. A view that I don’t believe was properly explained with the required specificity under KSR.
On Friday, July 6, 2012, the United States Court of Appeals for the Federal Circuit issued a decision in General Electric Co. v. ITC. The Federal Circuit, per Judge Newman with Chief Judge Rader and Judge Linn, did not give GE a total victory, but victory enough over Mitsubishi. The Federal Circuit affirmed in part and reversed in part the original decision of the ITC, and remanded the case for further proceedings consistent with the decision.
GE appealed the decision of the United States International Trade Commission, which held that certain variable speed wind turbines imported by Mitsubishi Heavy Industries, Ltd. and Mitsubishi Power Systems Americas, Inc. (together “Mitsubishi”) did not violate section 337 of the Tariff Act, 19 U.S.C. §1337. The patents at issue were U.S. Patent No. 7,321,221, U.S. Patent No. 5,083,039 and U.S. Patent No. 6,921,985. On February 1, 2011, the ’039 patent expired, and the Federal Circuit dismissed that portion of the appeal as moot, vacating the Commission’s rulings relative to the ’039 patent. The appeal continued relating to the ‘221 patent and the ‘985 patent, which were the subject of this latest Federal Circuit decision.
On Monday, April 30, 2007, the United States Supreme Court issued its final decision in the matter of KSR v. Teleflex, which overruled the Federal Circuit’s application of the so-called “teaching, suggestion, motivation” rule (or simply TSM) as it applies to determining whether an invention is obvious. This 5th Anniversary of the ruling provides an opportunity to revisit the decision and where we have come since. This will be a recurring theme this week on IPWatchdog.com as we look at the law of obviousness in the wake of this infamous decision.
At least for the last generation (and likely longer) no other Supreme Court case in the patent arena has been nearly as influential as the Court’s decision in KSR v. Teleflex. This is because obviousness is where the rubber meets the road for the patentability of inventions. It is not enough that the invention is different; it also must also be non-obvious. TSM sought to inject objectivity into the obviousness analysis, and did so rather successfully. There were from time to time patents granted on inventions that would make you scratch your head and wonder, but was that any reason to remove objectivity from the obviousness analysis? No, but that is what the Supreme Court did when they issued the KSR decision, taking many by surprise.
Maybe it is the result of the case being of such little importance to the patent system as a whole (See Jump the Shark Patent Style), or maybe it is just evidence that even a blind squirrel finds a nut every once in a while. Whatever the case may be, the United States Supreme Court yesterday did get it right in a patent case. Now if they can only build on this momentum and go back and reconsider all the truly awful, illogical and silly rulings of the past. [INSERT CHUCKLE AND YOUR OWN JOKE HERE]. Right… I’m not holding my breath either!
From a procedural standpoint, Kappos v. Hyatt came to the Supreme Court after an en banc decision by the United States Court of Appeals for the Federal Circuit. The question presented and considered by the full Federal Circuit was whether new evidence (i.e., evidence not previously presented to the USPTO) can be presented to the District Court when challenging a decision of the BPAI. The short answer was — YES. However, the Federal Circuit said that without new evidence at the District Court the Federal Circuit must continue to give deference to the USPTO on further appeal. See CAFC Rules New Evidence OK in BPAI Appeal to District Court.
Over the last several weeks I have been rather irritated by two algorithm cases decided by the United States Court of Appeals for the Federal Circuit. See Show me the Algorithms and CAFC Kills Means-Plus-Function. In these cases the Federal Circuit was determining the validity of software patent claims written in “means-plus-function” style, which is authorized pursuant to 35 U.S.C. 112, ¶ 6. Essentially, means-plus-function claiming allows the drafter to claim the invention based on the functionality rather than the more traditional (and preferred) claim technique that employs structure within the body of the claim itself.
A claim term is functional when it recites a feature by what it does rather than by what it is. There is nothing intrinsically wrong with the use of such claim language, although it is becoming more and more apparently (if it wasn’t already apparent enough) that the Federal Circuit frowns upon means-plus-function claiming.