When it comes to the history of software patents it seems that everyone believes they are an expert. Unfortunately, few in the popular press actually take the time to get the story correct. In fact, there is a popular misconception in media that the Federal Circuit was the court that first authorized software patents. I have dealt with this nonsense in the past, and now have to deal with it once again. None other than the Wall Street Journal has published an article on the topic that is simply fiction.
The clearly erroneous Wall Street Journal article in question was published on December 15, 2013, under the title Jimmy Carter’s Costly Patent Mistake. The article, written by Gordon Crovitz, seems to take the position that patents stifle innovation, although Crovitz thesis is not explicitly stated. It would be erroneous enough to state that patents stifle innovation when all of the evidence is to the contrary, but that isn’t the major Crovitz sin in this article, although it is a whopper of a lie often told by patent critics.
Before proceeding, allow me to state what should otherwise be obvious: if patents stifle innovation you would expect run-away innovation in places where there is no patent system, but that isn’t what you see. You see extraordinary poverty, no economy and zero innovation where there are not patent rights. Likewise, you see economies established, domestic innovation and innovation from overseas flowing into countries that adopt strong patent rights. Furthermore, the entire point of a patent system is to grant exclusive rights that force creative, inventive and entrepreneurial individuals who are blocked to design around, which is exactly what happens. Designing around patents leads to enormous leaps in innovation. See Forfeiting Our Future Over Irrational Fear of Software Patents. And for those who don’t get it and erroneously state that we are seeing historic levels of patent litigation, read your history. There were close to 600 patent litigations associated with the invention of the telephone, and smart phone litigation has been but a small fraction of that number. Furthermore, the smartphone as we know it came out in 2007. In the past six years have the over abundance of patents stopped smartphone innovation? Hardly, and everyone who is at all honest knows that to be 100% true. So why the pretending about patents stopping innovation? Obviously there is real patent hatred and critics, like Crovitz, simply ignore facts and prefer their own brand of fantasy over truth.
As ridiculous as it is to suggest that patents stifle innovation, this ill-defined Crovitz thesis isn’t the major issue with the fiction published by the Wall Street Journal. There is objective and verifiable error in his article that even those with an agenda will have to admit.
Greetings patent world. A very, very, important case relating to software has again made its way to the Supreme Court for decision. The United States Court of Appeals for the Federal Circuit (CAFC) badly muffed their chance to clearly set forth what thresholds should be implemented for software patentability and the Supreme Court now must step into the breach. Good thing too; but, not without lots of anxious handwringing on the part of true believers in the patent system who favor its worthwhile and broad applicability. Hence; this series of open letters/articles written for consumption by the Justices and their clerks as a primer for this case.
I know— it is presumptuous on my part that this would have any influence, but these pages are an important forum to air out these issues. If we can do this in a non-hysterical erudite fashion, these pages will be read and help inform on this issue. No doubt, every person with a dog/pup/minnow/free electron in this fight will file amici. Too bad they cannot all receive the same level of attention as the effort they take to write, but such are the practicable limits of time and comprehension of those who will make and write the decisions. My hope here is to write about this topic in a way that is both engaging and elucidating.
In the beginning… seriously we need to go back that far to bring perspective to the issues. Business methods were always thought to be outside what was patent eligible in the U.S. The historic practice of crony capitalism based on “patents” granted by the Crown made these business practice monopolies not something that would be useful or even acceptable to the then new U.S. The Constitution simply confined the patent system to the ”useful arts”. On occasion, various Supreme Court decisions have referenced the antipathy to monopolies that undergirds their thinking as to patents and what ought to be in or out on the patent eligibility front. This sidelining of business methods was fairly easily implemented right up until the digital revolution.
The development of alternative fuels to generate electricity for societies around the globe has been a major focus among technology innovators in recent years. By now, everyone is familiar with the doomsday predictions involved with carbon-based fossil fuels, how they’re quickly running out and how they’re causing great harm to our environment.
Deriving energy from the sun has been aggressively, albeit periodically, pursued since at least the 1970s when the U.S. suffered through several gas shortages. But over time gas prices decreased, the technology could not compete with cheap alternatives, so interest waned, although it never thoroughly disappeared. Once again as the environment and climate change has become more of a mainstream issue there is renewed interested in harvesting energy from the sun through the use of photovoltaic (PV) systems. Here at IPWatchdog, we’ve taken a look at some interesting solar energy innovations in the past, but just how close are we to seeing widespread implementation of this technology?
Statistics coming out of the U.S. Energy Information Administration show that solar energy generation has increased dramatically in the course of a few years. Solar collection should continue to grow to about 14 gigawatts by the end of this year, according to this Wall Street Journal article.
If you’re trying to draft a patent application for a computer-related invention, you’re basically left in a mess of opinions that the Federal Circuit refers to as CLS Bank Int’l v. Alice Corp. The decision, described by Judge Rader as a failure of his institution, left us wanting for just a tad –by a tad I actually mean a ton– more predictability. For now, we can only try to parse out why the opinions differed, take cues from our historical backdrop, and revise our prosecution strategy accordingly.
“A lot of times when we talk about patent eligibility we really need to know what the claims look like, so I thought we could spend four or five hours discussing this claim. Oh not enough time,” says Bruce Sunstein, founder of Sunstein, Kann, Murphy, and Timbers LLP at the 2013 AIPLA Annual Meeting. Fair point, Sunstein. So here’s the gist of CLS Bank. We have a computer readable medium claim in a format we’re accustomed to and that seems to be perfectly acceptable— program code for this program code for that. There are system claims that also would seem completely okay. Finally, there’s a method claim, which notably doesn’t include the word “computer.” Unfortunately for us, seeming completely okay was clearly not the test for patent eligibility. This was an en banc decision. The 10 available votes came out as follows:
Seven judges say method claims are not patent eligible.
Three judges say method claims are patent eligible.
Five judges say systems claims are not patent eligible.
Five judges say systems claims are patent eligible.
Judge Lourie writing with Dyk, Prost, Reyna, and Wallach says none of the claims are patent eligible. They reject the method claims for being too abstract. Then they say the storage and systems claims are just method claims in disguise, and so are also not patent eligible.
Ten years ago if you said that patent eligibility would become one of the most important, hotly debated issues in the patent field most in the industry probably would have thought you simply didn’t know what you were talking about. Five years ago some saw the issues percolating, but still many in the trenches with their day-to-day practice life would likely still have raise a cautious eyebrow and questioned why you thought even the Supreme Court might turn its back on a solid generation of well established patent law. The tone was perhaps cautious, but most couldn’t imagine that the Supreme Court and the Federal Circuit would cease their expansive view of patent eligibility.
Oh how times change!
Today, after several years of substantial turmoil, patent eligibility in a variety of economically significant technologies is extremely uncertain, including software, natural products, medical diagnostics and personalized medicine. It is with great irony that one of the few things we know with any degree of certainty is that business methods are patent eligible. We likewise know that at least some cDNA is patent eligible, except that man-made cDNA that happens to be identical to what occurs in nature. Of course, that raises more questions than it answers.
Not surprisingly, the decision of the latest Federal Circuit case on software patent eligibility – Accenture Global Services, GMBH v. Guidewire Software, Inc. – could be predicted from the makeup of the CAFC panel. Judge Lourie, joined by Judge Reyna, issued the majority opinion that the system claims were invalid. The Court followed the analysis for determining patent eligibility from CLS Bank,, 717 F.3d 1269 (Fed. Cir. 2013) and affirmed the district court’s finding that the system claims of U.S. Patent No. 7,013,284 (“the ‘284 patent”) were ineligible. Judge Rader dissented.
Accenture appealed the district court’s holding that system claims 1-7 and method claims 8-22 were invalid as not directed to patentable subject matter. Interestingly, Accenture only appealed the ruling on the system claims, thus waiving its appeal on the method claims.
Recently U.S. Patent No. 8,515,829(the ‘829 patent) came to my attention. It is a patent issued to Google, which is titled Tax-free gifting. See Google Patents Tax-Free Gifting. The invention is interesting in its own right, but as I reviewed the patent I noticed an interesting figure — Figure 14 really caught my attention. Before proceeding to discuss the importance of Figure 14, allow me to provide some background information about this particular patent.
Generally speaking, the invention relates to a system and related techniques for gifting, and paying for, digital content, including media, such as audio and video. The core of the invention, as suggested by the title, relates to giving someone something tax-free. While the title may suggest the invention is potentially nefarious, or at least aimed at exploiting some tax loophole, that is not the case. The government is not going to be cheated out of collecting taxes. Instead, the invention relates to a method that allows for the giver of the gift to pay for the tax imposed by the jurisdiction where the gift (i.e., gift card) is redeemed.
Indeed, Claim 1 in the ‘829 patent specifically includes a limitation specific to the payment of the tax that would otherwise be imposed when the gift is redeemed. Claim 1 recites (emphasis added):
Recently we published a five-part series that debunked many prevalent myths about patent trolls. See A Fractured Fairy Tale: Separating Fact and Fiction on Patent Trolls, written by Steve Moore of Kelley Drye. While a bit long, it should be considered mandatory reading if you want to understand the underlying facts instead of just buying into the hype and hyperbole associated with the so-called “patent troll problem.” Similarly, if you want to get a good, non-biased view of patent litigation in the United States you absolutely have to read the recent report of the Government Accountability Office, which is an independent, nonpartisan agency that works for Congress.
Moore, with co-authors Marvin Wachs and Timothy Moore, concludes that when you really look at the facts and underlying dynamics of patents and patent litigation, there really isn’t a problem at all. The GAO report released on August 22, 2013 confirms the extensive research by Moore. The GAO report explains that the number of patent litigations only slightly fluctuated between 200o and 2010, with a one-third increase in 2011, which the report attributed to changes to patent laws ushered in by the America Invents Act and not as the result of any problematic increase in litigations initiated by patent trolls. This increase in patent litigation was by design. While Congress may not have been aware that an increase in litigation would occur, the truth is that the design of the AIA was guaranteed to lead to one of two things. First, the joinder and consolidation provisions of the AIA would either substantially curb patent trolling because it is now much more difficult, if not impossible, to bring a single lawsuit with many dozens (or hundreds) of defendants. Second, increase in the number of patent infringement lawsuits because patent owners must sue infringing defendants one at a time, or at least in much smaller groups. It would seem that the AIA did not stop patent litigation, so the result is a greater number of lawsuits. See alsoThe America Invents Act at Work.
Still further, the GAO found that “companies that make products brought most of the lawsuits and that nonpracticing entities (NPE) brought about a fifth of all lawsuits.” So there isn’t a patent troll problem at all despite the protestations of the Silicon Valley elite who think every patent they get sued on is invalid and every patentee plaintiff is a patent troll.
In the United States, attorneys, judges and others have struggled for decades to determine when, if ever, computer programs or software should be eligible for patent protection. In the 1960’s the U.S. Patent Office declared that software could not be patented. Since then, a series of court decisions have rejected that view and established that one may definitely patent software in the U.S., although the exact requirements remain unclear and critics increasingly demand that it should not be patentable.
As a starting point, 35 U.S.C. §101 provides that any new and useful process, machine, manufacture, or composition of matter, or new and useful improvement thereof, is eligible for patent protection, subject to other requirements of the Patent Act (that is, §101 is just the threshold test for patentability). Congress has never stated any limitations to the patentable categories of §101 and case law has only recognized three categories of exceptions – subject matter that may not be patented: laws of nature, physical phenomena and abstract ideas. Computer software is often found to be ineligible on the ground that it comprises abstract ideas, but courts have struggled to provide a precise formula or definition for abstract ideas.
The law as it relates to software has been in flux over the last 10 years. Many older patent applications simply do not have enough detail to satisfy the current requirements to obtain a patent, although when drafted they would have been sufficient to satisfy the requirements then in place. Describing software as a pure method claim has not worked for a long time despite the fact that in reality software is really a method. Much more than a cursory description of software as a series of steps is required in order to have hope of obtaining patent protection for software.
Indeed, ever since the Federal Circuit en banc decision in Bilski, claims have been required to be tethered to tangible components, such as data storage devices, processors, databases, controllers, servers and the like. Unfortunately, however, the Patent Trial and Appeals Board at the United States Patent and Trademark Office now has taken the position that they will ignore the tangible components within a computer implemented method claim and then look to see what remains before determining whether the claim is patent eligible. See PTAB Kills Software.
Of course, after you remove or ignore the tangible components what remains is a naked process, which is patent ineligible. Thus, deciding to ignore tangible components leads to the inescapable conclusion that no software is patent eligible. Such disingenuous reasoning has the effect of punishing applicants for writing claims as the Patent Office has mandated ever since the machine-or-transformation test was first announced by the Federal Circuit in Bilski. The test announced in SAP/Versata, which was the first covered business method review decision announced by the PTAB, cannot be the correct test, and ultimately the decision (or at least the rationale) will be reversed. Any test that has the net effect of rendering all software patent ineligible, like the SAP/Versata test, is simply not correct as I will explain more clearly below.