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.)
Just as all of us have slowly started to absorb the implications of the remand in Prometheus Laboratories, Inc. v. Mayo Collaborative Services, as well as the triumvirate of opinions in Association for Molecular Pathology (AMP) v. USPTO, on the standard for patent-eligibility under 35 U.S.C. §101, the Federal Circuit (finally) issued its long awaited (by some of us) remand decision in Classen Immunotherapies, Inc. v. Biogen IDEC. That there was a majority (and a dissenting) opinion in the remand of Classen wasn’t surprising. But that there was yet a third “additional views” opinion would likely not have been predicted by anyone. And it is that “additional views” opinion, along with the majority and dissenting opinions, that will certainly generate a “firestorm” through the Federal Circuit, and which may eventually reach the Supreme Court. The judicial donnybrook on the question of what the standard is (or should be) for patent-eligibility under 35 U.S.C. §101 is about to begin in earnest.
As my fellow patent attorney, Kevin Noonan, poignantly says on Patent Docs, the Classen remand decision “[couldn’t] be more different from the Federal Circuit’s earlier decision.” That earlier decision (with Judges Moore and Newman on the panel), which came out not long after the Federal Circuit’s famous (and some would say “infamous”) en banc Bilski decision, is astounding for its brevity (one paragraph of 69 words), or as Kevin also poignantly observed, the claimed method was longer than the opinion by 20 words. As I also commented when that earlier opinion came out, it was ghastly for completely failing to explain how the “new” Bilski “machine or transformation” test was applied to the claimed method. See CAFC: Method for Calibrating Drug Dosage is Transformative.
Justice Stephen Breyer wanted to decide the case, thankfully enough others didn't.
Court Watchers know that there are approximately 8,000 petitions filed with the Supreme Court each year and an additional 1,200 applications of various kinds are filed per year that can be acted upon by a single Justice. There is simply not enough time to consider each case where Supreme Court review is sought, so the Court has historically been very selective in choosing cases, normally only issuing full opinions in roughly 85 cases each year. Notwithstanding, this Supreme Court has shown great interest in patent matters, particularly questions of fundamental importance such as what is patent eligible subject matter (See Bilski v. Kappos and Mayo v. Prometheus), what is considered obvious (See KSR v. Teleflex) and the appropriate level for the presumption of validity of an issued patent (See Microsoft v. i4i). The Roberts Court is no doubt placing its stamp on patent law, and it does not appear as if that will cease any time soon.
Notwithstanding, tomorrow is an anniversary of a peculiar Supreme Court event. Five years ago the United States Supreme Court decided not to issue a ruling in the case of Laboratory Corporation of America v. Metabolite Laboratories. This may not seem like an appropriate event to revisit, or even a noteworthy decision at all, but the issue in the case — what is patent eligible subject matter — has continued to be a question of great concern to the courts, including the Supreme Court. Indeed, with the Supreme Court recently granting cert. in Mayo v. Prometheus, it seems that it is only a matter of time before the issues in Lab Corp. make their way to a decision on the merits by the Supreme Court.
Take a knee, sports fans, we have some issues to discuss. The National Football League (“NFL”) team owners and the players’ union have been squabbling over how to divvy up the dough (a paltry $9 billion a year). They couldn’t come to an agreement (because $185 million is really hard to split) so on Friday, they broke off labor negotiations, decertified the union, and 10 players sued the owners in federal court in Minneapolis. See NFLPA decertifies. Normally, I really couldn’t care less about a bunch of billionaires arguing with a bunch of millionaires. But this case has major antitrust and intellectual property issues and that makes me very happy. So now I’m paying attention. It all stems back to a teeny little case called American Needle and a unanimous United States Supreme Court (“USSC”) decision that appeared to all but greenlight antitrust suits against the NFL. Finally! A sports related intellectual property issue that has some staying power. Let’s just jump right in, shall we?
Although much remains unclear after the U.S. Supreme Court’s decision in Bilski v. Kappos, one thing is certain: software remains patent-eligible in the U.S. This result may not be entirely clear from a quick read of the opinions in the case. Therefore, I present the following pieces of evidence that the Supreme Court in Bilski effectively re-affirmed the patent-eligibility of software (listed, for the sake of simplicity, in the order in which they appear in the decision).
As Alice once said things are growing “curioser and curioser.” I just opined about the “fuzzy” looking glass called Bilski v. Kappos for determining what is (or remains) patent-eligible subject matter under 35 U.S.C. § 101. See Through the Fuzzy Bilski Looking Glass: The Meaning of Patent-Eligible under 35 U.S.C. § 101 . After reading King Pharmaceuticals, Inc. v. Eon Labs, Inc., I’m now ready to throw my Ouija board though that Bilski looking glass. With an opportunity to render some order out of the Bilski chaos, the Federal Circuit instead completely ducked the patent-eligibility issue clearly presented in King Pharmaceuticals. The Federal Circuit then created (and I do mean “created”) the new “an anticipated method claim doesn’t become patentable if it simply includes an informing step about an inherent property of that method” doctrine. With this new “doctrine,” we have now “jumped down the rabbit hole” into a surreal “Bilski in Patentland” world.
Alice enters another world through the looking glass
In Chapter 6 of Lewis Carroll’s Through the Looking Glass, Humpty Dumpty tells Alice scornfully “when I use a word, it means just what I choose it to mean – neither more nor less.” After reading and compositing the various opinions by the nine SCOTUS Justices in USPTO v. Bilski, I, like many others, are still wondering what is a patent-ineligible “abstract idea” (other than Bilski’s claimed method for instructing buyers and sellers how to protect against the risk of price fluctuations in a discrete section of the economy, i.e., hedge against such risks) and especially what does “patent-eligible” really mean under 35 U.S.C. § 101. The composite opinions by SCOTUS in Bilski concoct a standard for patent-eligibility that is as fuzzy and circular as the logic Humpty Dumpty employed on Alice.
As you might imagine, there are many takes on what the SCOTUS Bilski ruling actually says, including mine. See Section 273 is NOT a Red Herring: Stevens’ Disingenuous Concurrence in Bilskiwhere I waxed lyrical about now retired Justice Stevens’ disingenuous sophistry in his concurrence which treats 35 U.S.C. § 273 as if it didn’t exist, but which is, in fact, an implicit, if not explicit, recognition and acceptance by Congress that “business methods” (however you characterize them) ARE patent-eligible subject matter under 35 U.S.C. § 101. See also Foaming at the Mouth III: And Then Came Bilskiwhere I commented on the most recent “thunderbolt” from our Judicial Mount Olympus as SCOTUS summarily granted certiorari in Prometheus Laboratories, Inc. v. Mayo Collaborative Services and Classen Immunotherapies, Inc. v. Biogen Idec, and then vacated and remanded both cases to the Federal Circuit to reconsider (with equally “fuzzy” guidance) in light of SCOTUS’ ruling in Bilski.
One reason I was quite interested in Bilski was because the Supreme Court (not surprisingly) ruled that the Federal Circuit’s “machine or transformation” test was too inflexible, much like the “teaching, suggestion and motivation” (TSM) test in KSR International v. Teleflex. So why my intense interest in the Supreme Court (aka the Judicial Mount Olympus) relegating the “machine or transformation” (aka MoT) test to “second class status” in Bilski? Besides the inanity of MoT as the sole test for patent-eligibility, I am interested because of Judge Sweet’s ill-advised reliance on MoT (now smitten by the thunderbolts from our Judicial Mount Olympus in Bilski) for invalidating Myriad’s method claims using its BRCA1 and BRCA2 gene sequence technology.
It has long been anticipated that the Bilski v. Kapposdecision, though based on business method claims, would have implications that reached far beyond the business method world. Indeed, Justice Kennedy acknowledged that the M-or-T test would create uncertainty for new technologies of the Information Age, including, among other types of technologies, diagnostic medical testing techniques. (Bilski, Slip Op., p. 9.) The removal of the machine-or-transformation test as the sole test is good news for the biotech industry, particularly in the field of personalized medicine.
In the wake of the Supreme Court’s decision in Bilski on June 28, on June 29 the Supreme Court acted in two cases related to the patent-eligibility of diagnostic testing and methods of treatment – Mayo Collaborative Svcs., et al. v. Prometheus Laboratories and Classen Immunotherapies, Inc. v. Biogen Idec, et al. In both cases, petitions for certiorari were granted, immediately followed by a decision vacating the judgment below and remanding the case to the Court of Appeals for the Federal Circuit for further consideration in light of Bilski.
This article explores Prometheus and Classen in further detail. We first revisit relevant Federal Circuit history prior to these decisions. We then discuss the specific facts of each case, and conclude with how the Supreme Court’s Bilski decision is likely to affect the Federal Circuit’s actions on remand.
After days, weeks, and months of anxious waiting, the U.S. Supreme Court (finally) issued its ruling in Bilski v. Kappos. Not surprisingly (and as many predicted, including me), the Federal Circuit’s “machine or transformation” test was relegated to “second class” status as too inflexible, much like the “teaching, suggestion and motivation” (TSM) test in KSR International v. Teleflex. Also not surprising (and as predicted), the U.S. Supreme Court affirmed the PTO ruling that Bilski’s claimed method for hedging risks was not “patent-eligible” under 35 U.S.C. § 101 because it was an “abstract idea,” as was suggested by Judge (now Chief Judge) Rader’s dissent in Bilski.
So much for the easy (and predictable) part of Justice Kennedy’s opinion for the Supreme Court in Bilski. Where this decision takes on a surreal quality is how the various Justices viewed the impact of 35 U.S.C. § 273 in determining whether “business methods” (which Bilski’s claimed method was characterized as) are patent-eligible. (After all, Bilski, asked this very question in his petition for certiorari.) In my view, Justice Kennedy and 4 other Justices (Roberts, Alito, Thomas, as well as Scalia by implication) were very CORRECT that 35 U.S.C. § 273 is an implicit, if not explicit, recognition and acceptance by Congress that “business methods” (however you characterize them) ARE patent-eligible subject matter under 35 U.S.C. § 101. Conversely, Justice Stevens and 3 other Justices (Ginsburg, Breyer and Sotomayor) are completely WRONG in treating 35 U.S.C. § 273 as if this statute doesn’t exist.
Having had some time, although admittedly not much time, to digest the Supreme Court’s decision in Bilski v. Kappos I am increasingly of the belief that the Supreme Court did an admirable job, at least insofar as they go. While I will reserve my right to change my mind, I am pleased by the Supreme Court decision, and bolstered in this belief by the fact that industry organizations such as BIO and LES are praising the decision, while at the same time anti-software patent advocates are apoplectic. So the Supreme Court must have done something right.
Yes, it certainly would have been nice for the Supreme Court to actually give us a test and not merely point out that the Federal Circuit got it wrong. We already knew the Supreme Court thought the Federal Circuit got it wrong when they granted cert. in the case. There is simply no other reason for the Supreme Court to choose to hear a case from the Federal Circuit given there could never be a split among the Circuits given that all patent cases go to the Federal Circuit. Having said that, I am glad the Supreme Court followed the physicians motto — do no harm — and if getting no test was required in order for there to be no harm then I suppose we ought to be well enough thankful. But what does the decision in Bilski v. Kappos actually mean?
Straight from the Broken Record department, the United States Supreme Court has again not issued a decision in Bilski v. Kappos. At this point it seems that not having a decision is anything but surprising, and in fact rather predictable. Bilski has now been pending for nearly 7.5 months.
The Court issued four decisions this morning, which were:
What makes this “no Bilski day” at the Supreme Court particularly interesting and noteworthy is the fact that the Supreme Court did issue a terrorism and First Amendment decision in Holder v. Humanitarian Law Project today, a decision that many if not most would have thought to be harder and more important than the Bilski case. Chief Justice Roberts, joined by Justices Stevens, Scalia, Thomas, Alito and Kennedy, the Supreme Court held in Humanitarian Law Project that the preenforcement challenge to 18 U.S.C. 2339B does create a case or controversy capable of being addressed by the Courts under Article III of the United States Constitution. On the merits the Supreme Court held that the material-support statute is not unconstitutionally vague and the United States Court of Appeals for the Ninth Circuit improperly merged the vagueness challenge with the First Amendment challenge. Finally, the Supreme Court ruled that the material-support statute does not violate the plaintiffs First Amendment right to free speech or the First Amendment right to freedom of association.
It has been just over two months since the Supreme Court heard oral arguments in Bilski v. Kappos, and we likely have at least several more months to wait for a ruling. Notwithstanding, pundits and commentators are certainly trying to figure out what the Supreme Court will do, engaging in thought exercises and gazing into crystal balls. The crystal ball of preference is history, tied together with a healthy bit of speculation based on how similar cases and issues were previously addressed by the Court. No single case could be more telling with respect to how the Supreme Court may rule than a case in which they did not rule — Laboratory Corporation of America v. Metabolite Laboratories. In this case the United States Supreme Court decided not to issue a ruling, which may not seem noteworthy at first glance. After all, approximately 8,000 petitions are filed with the Supreme Court each year, and an additional 1,200 applications of various kinds are filed per year that can be acted upon by a single Justice. There is simply not enough time to consider each case where Supreme Court review is sought, so the Court has historically been very selective in choosing cases, normally only issuing full opinions in roughly 80 to 100 cases each year. But, as is frequently the situation with the Supreme Court, there is more than meets they eye with respect to Lab Corp.
John Paul Stevens, Associate Justice United States Supreme Court
Now that the Bilski oral arguments are complete and the case has been submitted to the Court for consideration the guessing game begins. Normally trying to figure out what a court will do is a waste of time, particularly so when that court is the Supreme Court, which is not bound by precedent of any kind given that they are the court of last resort. Having said that, the Bilski Federal Circuit decision is of such importance and inventors and clients cannot simply stand still waiting for a decision, holding themselves up until things become clear. You simply cannot wait to file a patent application in most cases, and there is the distinct possibility that the Supreme Court will not actually answer the questions or answer them in a way that provides clarity moving forward. The Supreme Court has been known to provide some guidance about what is not appropriate to bookend the limits of what is acceptable, then kicking a matter back down for lower courts to address the minutia. That is certainly frustrating, but in keeping with a small “c” conservative judicial approach where nothing more than is absolutely necessary has been said. If only the Federal Circuit had done that we wouldn’t be here. In trying to piece together what might happen I think we should dissect some of the patent writings of the Justices, so without further ado lets begin with Justice John Paul Stevens.
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