A little over a year ago the United States Supreme Court issued its decision in Bilski v. Kappos. The critical question presented to the Court for consideration was whether the Federal Circuit erred by creating 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 held that the machine-or-transformation test is not the sole test for patent eligibility under §101, but rather that it was an important clue, thereby overruling the Federal Circuit who had earlier ruled that the machine or transformation test was the singular test to determine whether an invention is patentable subject matter.

But what practical effect did the Supreme Court ruling in Bilski v. Kappos have? Truthfully, not much at least in terms of the day to day approach of patent attorneys and the U.S. Patent and Trademark Office.  Certainly, the decision was important in that it preserved the patentability of at least some business methods and preserved the patentability of software, both of which continue to remain patentable in the United States.  What has transpired since the Supreme Court’s decision, however, is not much different, if at all different, than what happened day-to-day prior to the decision.

Earlier this week, on April 5, 2011, Apple, Inc. was awarded U.S. Patent No. 7,921,187, titled “Newsreader for mobile device.”  The patent application was originally filed June 28, 2007, and as a result of delay by the Patent and Trademark Office Apple will be entitled to a patent term that is extended by 830 days.  While patent term extension seems to be a growing problem due to the backlog of applications, let’s not focus on the patent term, but rather look at the core of what is being protected and how this patent was obtained.  I’m not going to defend the patentability of this invention, but rather try use this as an illustration of how to read a patent and search for clues in the file history regarding how and why claims are awarded.  It should also adequately demonstrate how easy it can be to distinguish prior art references and overcome rejections if you know what you are doing or are represented by someone who does.

At least initially, President Obama was keenly interested in exploring how the United States government could use open source software rather than rely on proprietary software. President Obama was so interested in pursuing open source software solutions that on his second day in Office he asked Scott McNealy, a co-founder of Sun Microsystems, to lead his open source charge.  In fact, President Obama reportedly asked McNealy to prepare a report on how the federal government could employ open source software, but as yet, some 26 months later there has been no mention of the report or across the board government adoption of open source software.

Open source advocates praised the fact that President Obama wanted to transition the U.S. government away from proprietary solutions and into open source, but now that the report has seemingly stalled and the White House has done little more than release open source Drupal code, what does the open source community have to show?

The United States Patent and Trademark Office is radically updating the Patent Bar Examination starting in April 2011.  Since I teach the PLI Patent Bar Review Course that has required John White and I to revise our materials.  One of the new things tested will be the recently released 112 Guidelines, which are full of great information and explanation, particularly relating to computer implemented processes; what many would call software.  Being the “software guy” one of my responsibilities has been to work on the 112 Guidelines and the Bilski Guidelines for the PLI course.  So I thought I would take this opportunity to write, once again, about how to disclose computer implemented inventions to satisfy the disclosure requirements, which are embodied specifically in 35 U.S.C. § 112.

The statutory requirements for computer-implemented inventions are the same as for all inventions.  That means that in order to be patentable the invention must meet the patent eligibility test in 35 U.S.C. § 101, the invention must be new (§ 102), it must be non-obvious (§ 103) and it must be adequately described (§ 112).  Since the United States Supreme Court announced its decision in Bilski v. Kappos, the United States Patent and Trademark Office has continually urged patent examiners to get beyond the § 101 inquiry except in extreme cases.  Prior to the Supreme Court’s Bilski decision many examiners would simply see a computer-implemented method and issue a blanket and rather non-specific rejection asserting that the invention was not patent eligible subject matter under § 101.  The USPTO focus on getting past § 101 and to the meat of the invention means that such rejections are no longer the norm.  It also means that the Patent Office is pushing the real question about whether an patentable invention is presented into the adequate description space pursuant to § 112.  Thus, a thorough and complete description is absolutely essential when your invention relates to a computer-implemented method, whether it is software, an Internet processes or a business method.

Picking up where we left off in Part 1 —

4.            High Court Rules on Trade Mark ‘Use’

What? A ruling of Australia’s top court on what is required for a trade mark to be ‘used’ in Australia.

Why does it rate #4? For being the more significant one of only two cases yet to be accepted by the High Court under the Trade Marks Act 1995 (the other of which was also decided in 2010).

Although Australia’s current Trade Marks Act has been in-force since 1995, the High Court of Australia (the top court in the land, equivalent to the US Supreme Court) had never granted leave to appeal a decision made under the Act.  Was it, perhaps, that the legislation was so perfect that it did not require interpretation at the highest judicial level?  Or maybe the Federal Court was doing such a good job that no higher review was necessary.  In any event, the situation changed in 2010, when the High Court issued two opinions in relation to the Trade Marks Act 1995.  The more significant of these was E&J Gallo Winery v Lion Nathan Australia Pty Limited [2010] HCA 15 addressed the issue of what constitutes ‘use’ of a trade mark in Australia, sufficient to defend against removal of the mark from the register on grounds of non-use.

What do you think of my jumping buddy over there?  Pretty cool, huh?  Let’s call him “George”.

George is just one example of the enormous number of inventions being made to serve our newly emerging social networking economy.  George was created using a patent pending process called Evolver.  He’s an avatar that can be transported to any number of different full immersion virtual world networking sites.  Many new companies are forming to commercialize these new social networking innovations.  They are also filing patent applications.  They have many challenges ahead of them to get those patents.

It is impossible to search for technology related news online anymore without being inundated with the days wave of open source news stories that are seemingly proliferating faster than a human engineered bacterium, which by the way is patentable subject matter in the United States. In any event, “open source” has become the new “cyberspace” or “technological age” or even “telecommunications.” All of these terms are certainly understood by every reader, but part of the beauty of the term is that it can mean all things to all people, without ever really conveying a standardized meaning that everyone can agree with; much like the term “compassionate conservative,” which was so frequently used by the Bush Administration. What is a “compassionate conservative”? I really have no idea, but it sounds like a good thing and something to aspire to! After all, how could being a compassionate anything be bad?

So what does “open source” mean? The term is nebulous at best and confusing at worst.  The term, however, has undeniably become associated with the easy to understand but always misleading term – “free.” Certainly everyone knows the meaning of “free,” a term so universally understood that men (who are from Mars) and women (who are from Venus) both accept the term as meaning the very same thing. Even children understand the meaning of “free,” which leads to a plurality of interesting ironies.

My writings about open source and software patents have earned me a special place in the hearts and minds of those who harbor irrational hatred of software patents. But I am here to tell you that open source is not all bad and, in fact, should be embraced. Open source, however, is hardly something new to the patent community. Perhaps it is better to say that where open source software is heading is nothing new, and it will come as a shock to those who hate patents, but patents will be completely necessary in order for the open source community to continue to advance and live up to its full potential.

Those who are in favor of open source frequently become near apoplectic at the thought that open source software can be, and in fact should be, patented.  The reality is that forward thinking companies that operate in the open source space do make use of the patent system.  A quick search of Freepatentsonline.com shows that Red Hat, Inc., one of the preeminent open source companies in the world, is named as the assignee on some 263 US patents or US patent applications.  So if you are about to make an enormous mistake and listen to the “open source means free” community, ask yourself why a highly successful company like Red Hat uses the patent system and acquires patents.  If patents are good for Red Hat, an open source company not at all enamored with the existence of software patents, then why are software patents bad for you?  Shouldn’t you model your business off successful companies?

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).

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 Bilski where 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 Bilski where 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.

When last we left off our History of Software Patents series we were talking about In re Alappat, which by implication did away with the Freeman-Walter-Abele test for patentable subject matter by not mentioning the test whatsoever. Shortly after Alappat, a three-judge panel once again resorted to and applied the Freeman-Walter-Abele test in In re Trovato, but that was quickly withdrawn by an en banc panel of the Federal Circuit. So it seemed relatively clear that the FWA test had been abandoned. This believe was bolstered by the famous, or infamous depending on your view, case of State Street Bank & Trust Co. v. Signature Financial Group, Inc. and ultimately in AT&T Corp. v. Excel Communications, Inc., where the Federal Circuit reaffirmed its decisions in State Street Bank and Alappat.

In State Street the patent in question was U.S. Patent No. 5,193,056, which issued to Signature Financial Group on March 9, 1993. The ’056 patent is generally directed to a data processing system for implementing an investment structure which was developed for use in Signature’s business as an administrator and accounting agent for mutual funds. In essence, the system, identified by the proprietary name Hub and Spoke®, facilitates a structure whereby mutual funds (Spokes) pool their assets in an investment portfolio (Hub) organized as a partnership. State Street was in talks with Signature Financial to acquire a license, and when talks broke down they brought a declaratory judgment action to have the ’056 patent claims declared invalid.

What I refer to as the “pen and paper myth” has once again resurfaced on IPWatchdog.com in a comment.  The pen and paper myth goes like this: software should not be patentable because anything that can be done with pen and paper is not an invention and exclusive rights should not be given to any one person or entity.  Presumably the thought process here is that if you patent software you would prevent someone from engaging in the method using pen and paper.  Of course, that is not true, but why would a little thing like reality get in the way of making an otherwise absurd and provably incorrect statement?  Such provably wrong statements are rampant in the patent world today, particularly in light of what appears to be an all out media assault on technology and innovation that would make the persecutors of Galileo proud.

So just sit right back and I’ll tell a tale, a tale of a fateful trip, which if followed would result in far more than the wreckage of a tiny ship.  The tanking of the US economy is at stake, so take a sip of coffee, sugar up and stretch so you will be able to stay away and pay attention.  I know this is preaching to the choir for many, but for those who seemingly seek to remain clueless, if you actually pay attention you might learn something!

I almost can’t stand it any more. The anticipation is killing me! When will the United States Supreme Court issue its much anticipated decision in Bilski v. Kappos? One thing is for certain, it will be soon, but how soon? The Court term ends at the end of June, and it would be extraordinary for the Supreme Court to hold over a decision from one term to the next. It has happened in exceptionally rare circumstances in the past, typically when there were enormous Constitutional implications, such as in Marbury v. Madison and Brown v. Board of Education. While Bilski could be earth shattering in the patent world, it doesn’t even come close to Marbury or Brown, and there is absolutely no reason to anticipate the Court will hold over the decision. So that means the end of June at the latest, but I am guessing sooner, much sooner.  My prediction: April 21, 2010.

UPDATE: Still no decision as of May 17, 2010 – for more see
Another Day Without Bilski Decision, What Does It Mean?