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

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.

What a coincidence that the disputed patent in Harris Corp. v. Fed Ex Corp., decided by the CAFC last month, involved a plane’s black box technology!  Of course, both the majority and the dissent of this Federal Circuit panel scrupulously follow the interpretative roadmap of Phillips v. AWH, 415 F.3d 1303 (Fed. Cir. 2005) (en banc), but ultimately, neither the majority’s “entirely reasonable” explanation nor the minority’s views on “natural” and “intuitive” interpretation provide a convincing analysis.  We are left with the definite impression that the appellate judges, while giving lip service to Phillips, kept the real determinants of their thought process hidden inside the proverbial black box.

Summary:

Over a dissent by Judge Wallach, Judges Clevenger and Lourie strictly interpreted the “antecedent basis” in the claims, resulting in a reversal of the trial judge’s claim interpretation, and a remand for him to reconsider his patent infringement judgment.

Harris’s patents cover methods and systems for using spread spectrum radio signals to send flight data from a plane’s “black box” to an airport receiver at the end of the flight.  The invention includes steps of generating, accumulating and storing flight data in the plane during the flight, followed by a step of “transmitting the accumulated, stored generated aircraft data” once at the airport.

On January 25 2013, the United States Court of Appeals for the Federal Circuit (CAFC) issued its opinion in the case of Hall v. Bed Bath & Beyond, which was authored by Judge Newman who was joined by Judge Linn; Judge Lourie filed an opinion dissenting in part. The appeal arose from the United States District Court for the Southern District of New York. The CAFC ultimately reversed the district court’s dismissal of the plaintiff’s complaint counts for patent infringement, Lanham Act unfair competition, and New York unfair competition and misappropriation.

The patent in question — U.S. Design Patent No. D596,439  (the ’439 patent) — covers a Tote Towel which is essentially a large towel that has padding around the edges, and “zippered pockets at both ends, and an angled cloth loop in the middle.” Mr. Roger Hall (“Mr. Hall”) filed the patent application on November 17, 2008.

Mr. Hall contacted Bed Bath & Beyond (BB&B) in hopes of having them resell his Tote Towel in its stores nationwide. At the time of the meeting with BB&B, the patent application was pending and packaging on Mr. Hall’s Tote Towel reflected so. Instead of entering into a contractual relationship to resell the Tote Towel, BB&B which still had a prototype of Mr. Hall’s Tote Towel, decided to mass produce its own version manufactured in Pakistan.

Given the remand of the Federal Circuit’s original panel decision for reconsideration in view of Mayo Collaborative Services v. Prometheus Laboratories, Inc., I’m not surprised that the Supreme Court granted the ACLU’s/Pubpat’s petition for certiorari in AMP v. Myriad.  What is somewhat surprising is that the Supreme Court granted certiorari only as to the first question (“Are Human Genes Patentable”) posed by the ACLU/PubPat.  The patent-eligibility under 35 U.S.C. § 101 of Myriad’s claimed method of screening potential cancer therapeutics that was (again) unanimously upheld by the Federal Circuit panel, but will not be before the Supreme Court.  Nor will the issue of “lack of standing” with respect to but one of the plaintiffs be considered.

I’ve been following the various meanderings and wanderings of the Myriad case for almost three years now.  One unfortunate aspect of this case is that, from the beginning, the ACLU/PubPat has manipulated and fabricated what this case is about in terms of the applicable “science,” as well as the applicable “patent law.”  In fact, in distorting what this case is really about (i.e., the patent-eligibility of Myriad’s claimed “isolated” DNA sequences under 35 U.S.C. § 101), the ACLU/PubPat has also tried to hide the fact that the real plaintiffs in the Myriad case are none other than the ACLU/PubPat themselves; that has become readily apparent, given that all but one of the “alleged” plaintiffs have been knocked out of this case on “lack of standing” grounds.

Before the Myriad case becomes further obscured by the “pseudoscientific” nonsense foisted by the “real plaintiffs,” as well as the PR smokescreen of “politics, policy and philosophy” that the ACLU/PubPat has used to manipulate the applicable “patent law,” the Supreme Court needs to understand, to use Judge Lourie’s words, what this case “is not about.”

On Friday, October 26, 2012, at the Gala dinner event at the Annual Meeting of the American Intellectual Property Law Association (AIPLA), Judge Pauline Newman of the United States Court of Appeals for the Federal Circuit received the 2012 AIPLA Excellence Award.

The Program for the event explained that the Excellence Award was presented to Judge Newman “in recognition of extraordinary leadership and service to the Intellectual Property Community, which is representative of a distinguished career marked by intellect, integrity, and an unwavering commitment to the administration of justice.”

The AIPLA has honored a number of excellent and worthy winners in the past including Chief Judge Howard T. Markey, Chief Judge Paul Michel, Judge Rich and Donald Dunner to name but a few.  Judge Pauline Newman is now a recipient of this top industry recognition, and if you ask me she is deserving of being on the Mount Rushmore of this exclusive club.

A new decision of the Federal Circuit (Lourie, Prost and Wallach) concerning a business-method invention — Bancorp Services LLC v. Sun Life Assurance of Canada — was handed down on 26^th July and provides a companion case to CLS Bank v Alice.

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.

Two weeks ago, I wrote about how fractured the Federal Circuit’s patent-eligibility landscape has now become for business methods and systems, as evidenced by the split decision in CLS Bank International v. Alice Corp. Pty. Ltd. See CLS Bank International: A Fractured Landscape of Patent Eligibility for Business Methods and Systems*. In CLS Bank International, I observed that each decision by the Federal Circuit on patent-eligibility under 35 U.S.C. § 101 “appears to hinge completely on the ‘luck of the draw’ as to which Federal Circuit judges make up the respective panel.” The latest ruling by a Federal Circuit panel in Bancorp Services, L.L.C. v. Sun Life Assurance Company of Canada (U.S.) reinforces that view and is yet more evidence of the further fracturing of the patent-eligibility landscape for business methods and systems.

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.

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).

Last week 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 and How Much Deference Should the CAFC Give the USPTO?  The case arose from what was originally an inter partes reexamination of U.S. Patent No. 6,722,674. In the reexamination proceeding the patent examiner found claims 20-33 to be patentable.  The Board agreed that claims 20-33 were patentable as not being obvious, but also found claim 1 patentable as well.  Then the Federal Circuit, in a nonprecedential decision, determined that none of the claims were patentable.  That was when I became involved in the case.

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.

In USPTO v. Bilski, U.S. Supreme Court confronted us with a “fuzzy” composite of opinions about the standard for patent-eligibility under 35 U.S.C. § 101.  See Through the Fuzzy Bilski Looking Glass: The Meaning of Patent-Eligible under 35 U.S.C. § 101 where I noted five key “takeaways” from those composite opinions, including what to make of Justice Scalia joining the Opinion of the Court except for Part II B-2 and C-2.  The Federal Circuit is also not immune from composite opinions that make you scratch your head as to what the final ruling is.  See Ariad Pharmaceuticals, Inc. v. Eli Lilly & Company where an en banc ruling by the Federal Circuit on whether there is a separate “written description” requirement under 35 U.S.C. § 112, first paragraph, spawned (in addition to the Opinion of the Court), four additional concurring and dissenting-in-part opinions.  In affirming the judgment of the district court “by an equally divided court,” the recently issued Marine Polymer Technologies, Inc. v. Hemcon, Inc. case requires yet some more figuring about another “muddled” Federal Circuit en banc decision.

The “muddle” that became the en banc decision in Marine Polymer revolved around two primary questions:  (1) the meaning of the claim term “biocompatible”; and (2) when does “intervening rights” apply to reexamined claims?  See CAFC: Intervening Rights for Claims Unamended During Reexam* where I discussed both of these questions in the Federal Circuit panel decision in Marine Polymer.  In the en banc decision, and by a 5 “yea” to 5 “nay” vote (with Judges Moore and O’Malley not taking part), the Federal Circuit deadlocked over the district court’s interpretation of “biocompatible” to mean “low variability, high purity, and no detectable biological reactivity as determined by biological reactivity as determined by biocompatibility tests.”  In jurisprudential parlance, such a “tie vote” means the district court interpretation prevails by default.

 

In the recently issued case of ClearValue, Inc. v. Pearl River Polymers, Inc., Judge Moore, writing for the Federal Circuit panel, distinguished the holding in the 2006 case of Atofina v. Great Lakes Chemical Corp. In ClearValue, Judge Moore ruled that a process having a claimed raw alkalinity of “less than or equal to 50 ppm” was anticipated under 35 U.S.C. § 102 by a prior art process disclosing an alkalinity of “150 ppm or less.” I believe Judge Moore was correct in ruling that the claimed alkalinity of “less than or equal to 50 ppm” was anticipated by the art disclosed alkalinity of “150 ppm or less.” But her basis for distinguishing Atofina in ClearValue is very problematic in a number of respects, and could create further unnecessary confusion as to when a narrower claimed range in a process is anticipated by a broader range disclosed by the prior art.

As illustrated by the ClearValue and Atofina cases, one area where the Federal Circuit sometimes struggles in articulating clear doctrine is when is a narrower claimed range in a process is anticipated under 35 U.S.C. § 102 by a broader range disclosed by the prior art. A significant contributor to this problem is the unfortunate and interchangeable use by the Federal Circuit of the phrases “overlapping” and “encompassing.” (I have also found patent examiners fail to understand the difference between these phrases.) In my view, the phrase “overlapping” should be used only when the claimed and the art disclosed ranges partially overlap or share at least one common end point. By contrast, when a narrower claimed range fits within a broader range disclosed by the prior art, the term “encompassing” is more appropriate to describe the relationship of the claimed narrower range to the disclosed broader range. (Some refer to an “encompassed” range as a “sub-range.”)