In the case of Bowman v. Monsanto Co., Farmer Bowman may have believed that the “third time” would be “charm.”  In two prior cases, Monsanto Co. v. Scruggs[1] and Monsanto Co. v. McFarling,[2] the Federal Circuit had ruled in favor of Monsanto, the owner of the patented Roundup Ready^® soybeans, and against Farmer Scruggs and Farmer McFarling.  Even so, Farmer Bowman, as probably did his legal counsel, may have believed that the Supreme Court’s 2008 decision in Quanta Computer, Inc. v. LG Electronics, Inc.[3] would undermine the Federal Circuit’s view that patent exhaustion didn’t apply to Monsanto’s patented Roundup Ready^® soybeans.  But in a unanimous decision, the Supreme Court affirmed the Federal Circuit’s 2011 ruling[4] that Farmer Bowman’s unlicensed planting of these patented Roundup Ready^® soybeans (sold for commodity use only) was an infringing use that was not subject to the doctrine of patent exhaustion.  Alas, Farmer Bowman found no solace in Quanta.

To understand the ruling in Bowman, you must first understand Monsanto’s patented Roundup Ready^® soybean technology, its Technology Agreement with purchaser’s of those soybeans delineating the licensed use thereof, as well as the fairly complex fact situation of Farmer Bowman’s use (or more appropriately wily misuse) of the “commodity” soybeans he purchased from a local grain elevator and subsequently planted for the express purpose of harvesting the resulting seed.[5]  Monsanto’s patented technology involved genetically modified soybeans that exhibited resistance to N-phosphonomethylglycine-based herbicides (commonly known as “glyphosate” or “glyphos”), such as Monsanto’s Roundup^® herbicide product.  These genetically modified soybeans were known as Roundup Ready^® soybeans because of their resistance to such herbicides.

Judge Lourie, who was joined by Judges Dyk, Prost, Reyna and Wallach, in CLS Bank v. Alice Corp. 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.”

One way that Judges probe generalized statements is to look for the boundaries to test the logic. If the statement cannot be stretched to apply to even similar scenarios then the logic of the statement is questioned and believed to be faulty and self-serving. So let’s see if the above statement can withstand even modest scrutiny.

The statement above, by any fair reading, says that if the core of the invention is something that a human could do but slower then the subject matter is patent ineligible. So what about robots? Robots are more efficient, stronger and faster than humans, but a human can do what a robot can do. So are robots patentable?

Chief Judge Rader’s band De Novo should play a dirge tonight.

On May 10, the Federal Circuit issued its en banc opinion in CLS Bank.  Within 48 hours, I had twice read the 135 page decision.  It may be a bullet to the head of the software industry.  Don’t take my word for it:  four different judges say so:

And let’s be clear: if all of these claims, including the system claims, are not patent-eligible, this case is the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents. If all of the claims of these four patents are ineligible, so too are the 320,799 patents which were granted from 1998-2011 in the technology area “Electrical Computers, Digital Processing Systems, Information Security, Error/Fault Handling.” Every patent in this technology category covers inventions directed to computer software or to hardware that implements software. In 2011 alone, 42,235 patents were granted in this area. This would render ineligible nearly 20% of all the patents that actually issued in 2011. If the reasoning of Judge Lourie’s opinion were adopted, it would decimate the electronics and software industries. There are, of course, software, financial system, business method and telecom patents in other technology classes which would also be at risk. So this is quite frankly a low estimate. There has never been a case which could do more damage to the patent system than this one.[1]

That parade of horribles is not entirely fair to Judge Lourie’s concurrence.  Judge Lourie based his opinion on the fact that the disputed patent is directed not just to electronics, but to an insignificant use of modern electronics to implement an arguably basic financial transaction.  I doubt that Judge Lourie would expand the holding in CLS Bank far beyond that specific fact pattern.  Nevertheless, as quoted above, the dissenting judges do not share even this much optimism.

After the Federal Circuit issued its en banc decision on May 10, 2013 in CLS Bank v. Alice Corp, the patent owner Alice Corp must be feeling like Alice in Alice in Wonderland, bewildered and frightened by the fantastical situation in which they find themselves:

(1) “bewildered” because an equally divided Federal Circuit affirmed the district court’s holding that Alice’s claimed system to tangible machine components including a first party device, a data storage unit, a second party device, a computer, and a communications controller, programmed with specialized functions consistent with detailed algorithms disclosed in the patent, constitutes a patent ineligible “abstract idea;”

(2) “frightened” because, as Judge Moore puts it, “this case is the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents” (Moore Op. at 2); and

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. Diehr are 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.”

UPDATED 5/12/2013 at 3:31pm

In what can only fairly be characterized as utterly ridiculous, 5 of the 10 judges on the Federal Circuit to hear CLS Bank v. Alice Corporation en banc would find that claims that satisfy the machine-or-transformation test are not patentable. While I think it is inappropriate to find the systems claims patent ineligible that isn’t what makes the decision utterly ridiculous. The decision is an embarrassment because 5 other judges would have found the systems claims patent eligible. Thus, we have an even split of opinion at the Federal Circuit.

The Federal Circuit decision in CLS Bank v. Alice Corp. is now being horribly mischaracterized in the media, which will now only further complicate the matter in the court of public opinion. This decision offers no precedent whatsoever regarding systems claims because it was a tie. Alice Corporation loses the systems claims not because that is the law of the land announced by the Federal Circuit, but rather because a single district court judge determined that the systems claims were patent ineligible. Had that same district court judge found the systems claims patent eligible then Alice would have prevailed.

In other words, the Federal Circuit is essentially abdicating its authority relative to whether systems claims are patentable to the district courts and presumably also to the Patent Trial and Appeals Board at the United States Patent and Trademark Office. Whatever the district court or PTAB does is just fine. Well, not quite.

UPDATED: 2:07pm ET

Well, the United States Court of Appeals for the Federal Circuit sort of decided CLS Bank v. Alice Corporation earlier today. Truthfully, all the important questions that we thought might be answered remain completely and totally unanswered because there were only 10 judges who sat on the en banc tribunal and no more than 5 judges signed on to any one opinion.

The only thing we know is this — the Federal Circuit issued an extraordinarily brief per curiam decision, which stated:

Upon consideration en banc, a majority of the court affirms the district court’s holding that the asserted method and computer-readable media claims are not directed to eligible subject matter under 35 U.S.C. § 101. An equally divided court affirms the district court’s holding that the asserted system claims are not directed to eligible subject matter under that statute.

Thus, all of the asserted claims are not patent eligible. At the moment I am completely flabbergasted and don’t know what to say.

Back in January, Scott Daniels pondered the question of whether patent applicants and patentees have a chance of success when appealing Patent Office rejections to the Court of Appeals for the Federal Circuit. The sad and candid truth is “not much of a chance.” As Scott pointed out, where the Federal Circuit is reviewing a validity decision from the district courts, the Federal Circuit reviews the claim construction de novo. The Federal Circuit also chooses not the most likely meaning, but the broadest reasonable meaning for disputed claim language. That is, the claim construction most likely to invalidate the claim in question. Now, we ask whether the same fate is likely to befall claims that are being asserted in a patent infringement action. Asked differently, does the Federal Circuit choose the claim construction most likely to lead to a conclusion of no infringement? Saffran v. Johnson & Johnson seems to suggest that the answer is sadly, yes.

Dr. Bruce Saffran (“Saffran”) is the owner and sole inventor of U.S. Patent No. 5,653,760 (the “’760 patent”). The ’760 patent describes an apparatus for spurring the repair of bone fractures by containing tissue fragments and tissue growth-promoting macromolecules within the fracture site. A single-layered sheet, which is selectively impermeable to the macromolecules and the tissue fragments, is affixed to the injured bone tissues. The selective barrier properties of the sheet prevent macromolecules from leaking out into neighboring tissues, thus concentrating the macromolecules at the fracture site.

In addition, drugs facilitating tissue regeneration can be bonded via hydrolysable chemical bonds to the inner surface of the single-layered sheet. This inner surface faces the injured tissues. Water molecules present at the fracture site causes lysing of the chemical bonds, which in turn releases and delivers the drugs into the fracture site. Bond lysis occurs at a constant rate, which enables the steady and controlled release of the drugs.

In a moment of extreme weakness, I agreed to Gene’s request to doing a primer on Paragraph IV Certifications under the Drug Price Competition and Patent Term Restoration Act, commonly referred to as Hatch-Waxman.  I don’t know if you would call me an expert, but I’ve studied many, many cases involving Paragraph IV Certifications under Hatch-Waxman.  The courts have found Hatch-Waxman to be a hydra-like monster with a labyrinth of sections that are frequently confusing (or worse yet, conflicting).  Paragraph IV Certifications are a particular trouble spot in Hatch-Waxman.  So if you’re up to diving into the “belly of this beast,” let’s examine the characteristics of this most infamous of the Hatch-Waxman monsters.

To understand Paragraph IV Certifications, you must first address what an Abbreviated New Drug Application (ANDA) is.  ANDAs are how generic drug manufactures expedite the approval of their generic drugs.  To use the language of the Federal Circuit, “[g]eneric drug companies are not required to conduct their own independent clinical trials to prove safety and efficacy, but can instead rely on the research of the pioneer pharmaceutical companies.”  See the 2008 Federal Circuit case of Janssen Pharmaceutica, N.V. v. Apotex, Inc.[1] which provides an excellent explanation of what the ANDA and Paragraph IV certification process is all about.  Instead, in the ANDA process, the generic drug company may rely upon this clinical safety and efficacy of the “pioneer pharmaceutical company” if it can “show show bioequivalence of its generic drug to the NDA drug.”  “Bioequivalence” is defined by the FDA as “the absence of a significant difference in the rate and extent to which the active ingredient or active moiety in pharmaceutical equivalents or pharmaceutical alternatives becomes available at the site of drug action when administered at the same molar dose under similar conditions in an appropriately designed study.”[2]  I’ll get to where those “pioneer pharmaceutical companies” and “NDA drugs” enter the ANDA approval process next.

As readers of IP Watchdog are aware, Federal Circuit Chief Judge Rader recently delivered an important and noteworthy defense of the U.S. patent system at the recent annual meeting of the Association of University Technology Managers (AUTM). I did not attend the event, but others have recounted that Chief Judge Rader’s remarks reminded attendees that the patent system is intended to promote innovation and asserted that patent litigation abuse is the main problem of our patent system.

According to Chief Judge Rader, patent litigation abuse (which he referred to as “litigation blackmail”) occurs when a plaintiff patent owner attributes a high value to an asserted patent with the intention of extracting a small settlement from an alleged infringer defendant. He went on to outline a four step approach to curb patent litigation abuse, summarized simply as:

A patent practitioner prosecuting an application would not normally worry about an issued patent having a much later filing date. The CAFC’s Hubbell decision shows, however, that such a patent can create a problem under the doctrine of obviousness-type double patenting, that prevents the earlier-filed application from issuing.

Details:

Hubbell is an inventor of U.S. Application 10/650,509. Hubbell appeals from the decision of the Board of Patent Appeals and Interferences affirming the Examiner’s final rejection of his claims for obviousness-type double patenting over U.S. Patent No. 7,601,685, which also names Hubbell as an inventor. The ‘509 application was filed on August 27, 2003, but claims benefit of a provisional application filed in 1997 when Hubbell was a professor at CalTech. Thus, the ‘509 application is assigned to CalTech.

Hubbell left CalTech and joined the faculty at Eidgenossische Technische Hochschule Zurich (“ETHZ”) in 1998. The application which issued as the ‘685 patent was filed on December 17, 2002 and is jointly assigned to ETHZ and Universitat Zurich. It is undisputed that the ‘509 application and the ‘605 patent do not have identical inventive entities, nor do they have common assignees. It is also undisputed that the ‘685 patent is not available as prior art under 35 USC §§ 102 or 103. The Patent Office concluded that the ‘685 patent claims “are a species of the instantly claimed invention and thus anticipate the claimed invention,” in making its obviousness-type double patenting rejection.

This final installment of my interview with Judge Linn of the United States Court of Appeals for the Federal Circuit. In part I of the interview we discussed a number of general background issues, including how the Judge got into the field of patent law and became a Judge on the Federal Circuit. In part II of the interview we discussed the Inns of Court and the Richard Linn Inn Alliance, as well as civility (or lack thereof) in litigation.

In this final segment of the interview, which appears below, we move into the issues of the day: the changing patent laws and Supreme Court interest in patents. We also discuss Judge Linn’s decision to take senior status, the fact that he won’t be able to sit en banc unless he was on the original panel, and the Judge’s idea that only few cases really should be designated as precedential opinions.

On Friday, February 8, 2013, I had the honor to interview Judge Richard Linn of the Federal Circuit. We met in his chambers with the recording going for approximately 60 minutes. In Part I of the interview we discussed Judge Linn’s early interest in patent law and how he found himself appointed to replace the recently deceased Judge Giles Sutherland Rich. We then discussed engaging as a lawyer with civility while still zealously representing clients. That brought us to a topic near and dear to the Judge’s heart — the Inns of Court and the many patent focused Inns across the country that together make up the Richard Linn Inn Alliance.

In Part II of the interview, which appears below, we pick up with the discussion of the Inns of Court and further discuss civility and “Rambo style lawyering,” which Judge Linn explains was really the genesis behind the forming of the Inns of Court.

QUINN: I’m a member of the Pauline Newman Inn that meets at the Patent Office, and we’re members of the Linn Inn Alliance.  I mean, first off how does that feel?   How did it come about, I guess, maybe, first off.  Second is how does that feel that the entire industries, the lawyers, are lining up in droves to join the Linn Inn Alliance?  I would think that that is great evidence of what the industry does think of you and that this is really promulgated out of one Inn.

LINN: Well, I’ve been actively involved in the Inns of Court since I came onto the Court.   The American Inns of Court is a unique organization.  It plays a unique and important role in promoting ethics, civility and professionalism, and that’s what appeals to me.  In 2000, I started attending meetings of the Giles Rich Inn, which meets here at the Federal Circuit every month.  I’m lucky enough to fill the seat once occupied by Judge Rich.  We’re sitting here in my chambers, which once were Judge Rich’s chambers.  And when I first came on to the Court I felt a special responsibility to conduct myself in a way that would have made him proud, because he was always an icon in my eyes.

On Friday, February 8, 2013, I had the honor to interview Judge Richard Linn of the United States Court of Appeals for the Federal Circuit. Those in the industry know that Judge Linn is one of a small group of Judges who are patent attorneys. He is one of us in so many ways. He is a very real and genuine person, he is a great believer in the patent system, and he has long been a friend to patent groups and a mentor to many. Judge Linn started his a career as so many patent professionals have — as the newest patent examiner at the United States Patent and Trademark Office. We learn in the interview that his interest in patent law started well earlier, thanks to his Uncle who was a patent illustrator.

After leaving the Patent Office Judge Linn rose through the ranks to become a prominent patent attorney in Washington, DC. Ultimately, he was in the right place at the right time, and he was fortunate enough to be recognized by the right people. He was appointed to the Federal Circuit to replace the legendary Giles Sutherland Rich. Big shoes to fill no doubt, but in terms of influence on the Court and impact on the profession few can compare to Judge Linn. He has, and continues, to carve out his own legacy as one of the preeminent patent leaders in the United States.

We spent approximately 60 minutes on the record with my iPhone recorder on, meeting in his chambers at the Federal Circuit, which overlooks Lafayette Park. Judge Linn recently took senior status, and lives full-time in Florida. He returns approximately every other month, sometimes more frequent, to hear cases. He will soon be giving up this office once the President’s appointments to the Court are confirmed. Judge Linn assures me he will remain active with the Federal Circuit.

When I sit down to interview someone I sometimes have a sense where things may lead, but inevitably interesting topics arise, sometimes based off a seemingly innocuous question. In Part I, which is below, I asked a familiar question: Do you find that the harder you worked the luckier you got? Judge Linn used this to discuss the importance of practicing law with integrity while managing to be a zealous advocate and without sacrificing civility. This theme carriers over into Part II of the interview and should, in my opinion, be mandatory reading for law students and associates. In fact, it is a good reminder for more senior attorneys who sometimes might lose sight of the forest for the trees.