Posts Tagged: "CLS Bank"

Article written by Martin Goetz… Over the years the term “software” has been terribly abused when a patent application has a computer in its specifications. We hear the terms abstract, ideas, laws of nature, mathematical algorithms when those against “software patents” argue their case. But true inventions — whether specified in hardware, software, solar power, gears, or what have you — must stand on their own two feet and meet the test of an invention as specified in the US Patent law. Additionally, the USPTO states that an invention is defined in its claims and not by its specification. Unfortunately, many USPTO examiners have been issuing patents for very questionable inventions that only computerize (or automate) a manual process or computerize a new, but obvious, use of a computer.

A computer is, at a fundamental level, simply a clump of electrical switches each of which are in either an on or an off position. Whether and when a given switch is on or off is the result of the code that configures the switche(s) to be on/off and the subsequent result of passing small amounts of electrical charge through these switches (gates) and observing the output…. Software (and a power supply) is what makes a computer what we have, by now, come to know as a “computer”, i.e., our smart phone, laptop, or tablet. A computer, as a bundle of configurable switches; it is the “clay” a programmer uses to “sculpt” possibilities of outcomes based on a predigested set of inputs. The more the clay, the more the possibilities and the more “capable” a computer can become. Hence, each new chip with more switches, provides more possibilities, i.e., more and faster clay. The computer is the sculpted clay we hold in final form as determined by the program. The programmer, then, is the “artist” that creates the form, i.e, the utility. A program cannot manifest except on a computing device and the program running on a that computer is what defines that device (i.e., Windows, Mac, etc.). Will it ever think? Not in the same way you or I think, but maybe that is not a bad thing. We self program based on morality and context that we learn through a variety of inputs and adopt or reject as we roll through life. The circumstances that led to one decision when we were 18 lead, thankfully, to a different decision now!

We’ve got a couple cases following CLS Bank that give us clues as to what a computer-related claim should look like post-CLS Bank. In the Ultramercial v. Hulu case, Rader and Lourie are surprisingly on the same side. The patent covers a method relating to a user seeing an advertisement before getting exposure to his desired media content. A point that I’ll circle back to in a minute is that there were 11 steps recited in the method claims in Ultramercial. As expected, Rader writes an opinion saying this stuff goes on in a computer so we find it’s patent eligible– think Diehr/CLS Bank logic. What’s interesting is Lourie writes a concurring opinion, using as precedent his oh-so-decisive plurality opinion in CLS Bank. He found that unlike in CLS Bank where intermediation was too abstract a concept and the claims added nothing inventive, in this case the limitations represent significantly more than the underlying abstract idea of using advertising.

This section does not say anything about the claims and while the claims define the invention they are not the invention. To suggest otherwise is to confuse reality and elevate the draftsman’s art above the inventor’s work. The CAFC and the Supreme Court are being contradictory when they state that the manner or cleverness of drafting the claims cannot overcome a 35 USC 101 issue and then examine those same claims to make a 35 USC 101 determination.

In a one-page memorandum to the Patent Examining Corps dated May 13, 2013, Deputy Commissioner for Patent Examination Policy Drew Hirshfeld had a simple message to respond to the Federal Circuit’s en banc non-decision in CLS Bank v. Alice Corp. The message was this: “there is no change in examination procedure for evaluating subject matter eligibility.”

All the Judges rely on the same Supreme Court precedents in Gottschalk v Benson, Parker v. Flook, Diamond v. Diehr, Bilski v. Kappos, and Mayo v. Prometheus. All the Judges recognize the same judicial exception to statutory subject matter under §101 for laws of nature, natural phenomena, and abstract ideas. All the Judges recognize that a claim must include “meaningful limitations” that go beyond an abstract idea. Hollow field-of-use limitations and insignificant pre or post-solution activity don’t count. However, this is where their similarities end.

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.

Perpetuating the myth that the computer is where the magic lies does nothing other than ignore reality. Software is what makes everything happen. or crying out loud, software drives a multitude of machines! Maybe the auto mechanic for Judges Judges Lourie, Dyk, Prost, Reyna and Wallach should remove the software from their cars. Perhaps as they are stranded and forced to walk to work they might have time to contemplate the world they seem to want to force upon the rest of us; a world hat clings to mechanical machines completely non-reliant on software. That will be great for the economy!

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, the asserted claims are not patent eligible.

For this inaugural edition of ?Biggest Moments in IP? we have a variety of reflections on a wide array of IP issues. Former Commissioner for Patents Bob Stoll walked through some of the biggest items on the patent docket for the year. Former staffer to Senator Leahy (D-VT) and current lobbyist Marla Grossman reflects on Senator Leahy’s decision to refuse the Chairmanship of the Senate Appropriations Committee to stay on as Chair of the Judiciary Committee. IP attorney and frequent feature contributor to IPWatchdog.com Beth Hutchens focuses on several copyright and first amendment issues. Then Stephen Kunin of Oblon Spivak gives us his Top 10 list in David Letterman style.

It is arguable that neither view is beyond criticism and that any emergent legal test as to patent-eligibility demands further development. There is much to commend the majority view that each of §§101, 102, 103 and 112 serves a different purpose and presents different questions and that under §101 only when it is apparent that the claimed subject-matter is a manifestly ineligible abstract idea should that subject-matter be excluded. Significant involvement of a computer in the working of the invention points towards invention.

For at least the past 15 years, the legal, technical and academic communities have been debating the patentability of business methods and software. Despite much negative press ink, talk, legislative activity and court opinions, the answer with respect to patent eligibility is still a resounding and categorical “yes.” That’s the easy part. What types of business methods and software exactly are patentable? That is the difficult question to answer.

The decision of the Supreme Court in Prometheus has been predicted to have implications for business method patentability, but the decision in what will surely become known as the Alice case provides an early indication that the CAFC may endeavour to limit its scope. Whether the claimed subject matter lies in the reality of patent-eligible subject-matter or is more correctly located in the Wonderland of abstract ideas is an issue that has been debated on both sides of the Pond, and on which the Dodo or the King of Hearts in his judicial capacity would surely have had an opinion if it had been brought to their attention. In the US there appears to be ample scope for further debate.

These polar opposite decisions in CyberSource and Ultramercial illustrate how fractured the Federal Circuit’s patent-eligibility landscape has now become for business methods and systems. The most recent split decision in CLS Bank International v. Alice Corp. Pty. Ltd. where a claimed trading platform for exchanging business obligations survived a validity challenge under 35 U.S.C. § 101 epitomizes this problem. As CLS Bank International unfortunately shows, an objective standard for judging the patent-eligibility of business methods and systems remains elusive, subject to an ever growing “tug-of-war” between the “inclusive” and “restrictive” patent-eligibility factions of the Federal Circuit. In particular, after CLS Bank International, we are no closer to having a judicially accepted definition of what is (or is not) an “abstract idea” when it comes to claiming business methods and systems.