Posts Tagged: "state street"

Patent ‘gold rush’ to blame for patent sharks, patent trolls

Patent trolls – as well as calls for changes to the law to prevent them – date back to at least the 1800’s. A look at their history suggests that they have more to do with fluidity in the definition of patentable subject matter than any unique feature of a particular class of inventions… A change in a fundamental definition of what comprised patentable subject matter, and that change brought a major building block of commerce into the ambit of the patent system. In the age of the sharks, the farm remained the core of the U.S. economy, driving a gold rush of new patents covering every element of the farming process. Such a rush also encourages the formation of patent thickets, as speculators scramble for any potentially protectable chunk of the market. The same phenomenon drove the development of modern tech and software patents. In the aftermath of State Street, once again the market found that the machinery that undergirded the economy was suddenly open to being patented, leading to a similar gold rush.

1998: Federal Circuit Says Yes to Business Methods

It is really incorrect to say that the Federal Circuit eliminated the business method exception in State Street Bank, although the same net effect admittedly occurred regardless of how you characterize the ruling. It is better to say that the Federal Circuit went out of its way to explain that the business method exception had really never existed in the first place. The court explained that neither it nor its predecessor court, the CCPA, had ever applied the business method exception to a single case. Furthermore, Judge Rich explained that the cases relied upon to support the existence of the business method exception were In re Maucorps and In re Meyer were both rendered prior to the Supreme Court’s decision in Diehr, and prior to the Federal Circuit’s abandonment of the Freeman-Walter-Abele test. Furthermore, the Maucorps and Meyer cases were decided not on the business method exception, but on the mathematical algorithm exception.

Did the Federal Circuit Ignore the Supreme Court in CLS Bank?

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.

Why Bilski Re-Affirms the Patent-Eligibility of Software

Even a very conservative reading of the opinions indicates that the Justices intended to leave the status of software as patent-eligible subject matter unchanged, and for further refinements to be worked out by the lower courts and USPTO. A more liberal reading indicates an intent to enable the scope of patent-eligible subject matter to expand in light of technological developments. In either case, the decision in Bilski fails to provide patent examiners and defendants in patent cases with any substantial new ammunition for rendering software patent claims unpatentable or invalid for lack of patentable subject matter, and weakens the ammunition previously in their arsenals. Therefore, despite any ambiguities which may exist in the language of the decision, the practical effect of Bilski will almost certainly be to bolster the patent-eligibility of software both in patent prosecution and in litigation in the U.S.

Section 273 is NOT a Red Herring: Stevens’ Disingenuous Concurrence 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” are patent-eligible. Justice Stevens and 3 other Justices (Ginsburg, Breyer and Sotamayor) are completely WRONG in treating 35 U.S.C. § 273 as if this statute doesn’t exist. Even Scalia, who obviously doesn’t like patents on “business methods” (by his refusal to join Part II B-2 of Kennedy’s opinion) couldn’t stomach rendering the language of 35 U.S.C. § 273 a nullity.