Posts Tagged: "software patent"

I don’t really know why we need the Federal Circuit anymore. Witness the denial of en banc rehearing in Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC on July 3. This denial of rehearing provoked eight separate opinions, with no single opinion achieving more than four judges in support. With 12 judges deciding whether to rehear the case en banc that means no single opinion gained support from more than one-third of the Court. And that opinion that gained the most support was a dissenting opinion, meaning those judges wanted to rehear the case and specifically said that the claims “should be held eligible”.  In fact, as Retired Chief Judge of the Federal Circuit, Paul Michel, noted yesterday, “all 12 active judges agreed that the Athena patent should be deemed eligible, even though seven judges apparently felt helpless in view of Mayo.”  The truth is the Federal Circuit is not helpless. The Federal Circuit is choosing to interpret Mayo—on the life science side—and Alice—on the software side—expansively. The Federal Circuit has one primary job, which is to bring stability and certainty to U.S. patent laws. It would be easy to distinguish both Mayo and Alice, but rather than recognize the peculiar facts of these cases as representing the most trivial of innovations, the Federal Circuit has used Mayo to destroy medical diagnostics and Alice to destroy software. More analytical prowess would be expected from a first-year law student.

It has been more than two years since I last wrote here that the U.S. Supreme Court’s 2014 Alice Corp. v. CLS Bank decision has left the IP bar without a clear and reliable test to determine when exactly a software (or computer-implemented) claim is patentable versus being simply an abstract idea “free to all men and reserved exclusively to none.” It is now mid-2019, and the USPTO’s newest Section 101 guidelines interpreting Alice—and the accompanying examples—have not cleared the confusion, and Alice continues to distract the USPTO, courts, and practitioners from focusing properly on Sections 102 (novelty) and 103 (obviousness). The net effects still being increased cost, lower patent quality, lower patent portfolio valuations, wasted patent reform lobbying dollars and, in many instances, the denial of patent protection for worthwhile software inventions. Meanwhile, in the real world, which is experiencing the Fourth Industrial Revolution—where even the average modern car contains roughly 150 million lines of code—the importance of software is undebatable.

The Investpic v. SAP America case (Supreme Court Dkt. No. 18-1199), which is the 44th patent eligibility case to be considered for certiorari since the notorious Alice Corp. decision, was announced earlier this week. Cert. denied. Unlike almost any other case, the Investpic decision represents a hostility to the patent rights of software developers based on capricious foundations. The Federal Circuit’s holding is inconsistent with the statutory language of Section 101, the holding is hostile to Section 112(f), and the holding has no nexus to preemption. Investpic is just one of Judge Taranto’s latest monstrosities that holds that a patent must be based on a “physical realm improvement” of the sort that has an “inventive concept.” Investpic also holds that one isn’t allowed to use functional claim language, and that algorithms are unworthy of patent protection.

Panelists in this past Thursday’s IPWatchdog webinar, “Dissecting Alice,” gave credit to the U.S. Patent and Trademark Office (USPTO) for the steps it has taken to minimize the damage caused by the courts’ lack of action on patent eligibility, but expressed concern that it simply isn’t enough. USPTO Commissioner for Patents Drew Hirshfeld joined the webinar to report on the progress made since the decision came out and said that, while Alice undoubtedly caused some confusion and disarray for practitioners, “we’re in a better place today than we were two or five years ago.” Hirshfeld explained that the Office’s initial approach to providing guidance for examiners on Alice was to use a “case law matching process,” which eventually became untenable after years of case law had built up. He said that the January 2019 Guidance—which Hirshfeld noted is also binding on the Patent Trial and Appeal Board—was developed over an intensive eight-month period by a small team of people that included Director Andrei Iancu himself and involved at least one full Sunday. He added that the examiner training effort for the 101 Guidance has also been more thorough than any he’s seen in his 25 years at the USPTO. The Office is currently in the process of developing additional concrete case examples for examiners and practitioners to work with in order to further enhance the guidance.

When it was announced that I would be testifying to the Senate Judiciary Subcommittee on IP about Section 101, I was surprised. Not only did they grant a critic of the 101 roundtables a chance to speak, but not one inventor who used patents to fund a startup has testified in any patent-related hearing in decades. This gave me faith that Senators Tillis and Coons are serious about fixing 101 right by considering what inventors need. When the hearing was announced, several inventors contacted me. They wanted to personally tell their stories to Congress. They trusted the government to protect them, but instead lost their careers, their secrets, and their investments of hard work and money. A few even lost their families, their home, or their health. The inventors were happy about eliminating all 101 exceptions, but the draft language of 100(k) and 112(f) transfer the damage to those sections.

The growing debate over the effects of patents on the rising price of pharmaceuticals continues to encourage the introduction of drug pricing-focused bills in Congress over the past few months. Most recently, a pair of proposed bills have been introduced which seek to limit the ability to patent follow-on innovations involving medicines which have already received patent protection in one level of dosage or method of administration. On June 12, a press release announced the introduction of the Terminating the Extension of Rights Misappropriated (TERM) Act into the U.S. House of Representatives. The bill is sponsored by a bipartisan coalition including Representatives Hakeem Jeffries (D-NY), Doug Collins (R-GA), Debbie Mucarsel-Powell (D-FL) and Ben Cline (R-VA). According to the release, this proposed law looks to change the burden of proving patentability of a drug-related invention under existing patent statute from generic drugmakers challenging drug patents to the pharmaceutical research and development firms filing patent applications.

Since the Supreme Court issued its decision in Alice v. CLS Bank five years ago today, patent eligibility jurisprudence and practice have become increasingly chaotic—at least in the opinion of many IP stakeholders and the members of Congress who are spearheading the effort to rectify the situation. Today, to commemorate Alice’s five-year anniversary/ birthday, IPWatchdog posed the following—admittedly somewhat leading—statement to a cross-section of the IP community, and gave them a chance to agree or disagree with it. Many did not respond—including the Electronic Frontier Foundation and Google—perhaps because of the sensitive moment in the history of patent eligibility law in which we find ourselves right now. However, the responses below do reflect a range of views on the impact of the case so far.

“It is, to me at least, regrettable that because these apparently simple words [computer programs … as such] have no clear meaning both our courts and the Technical Boards of Appeal at the EPO have stopped even trying to understand them. However, we are so far down that road that “returning were as tedious as go o’er”. Instead we are now engaged on a search for a “technical contribution” or a “technical effect”. Instead of arguing about what the legislation means, we argue about what the gloss means. We do not even know whether these substitute phrases mean the same thing […].” – Lewison LJ, in HTC Europe Co Ltd v Apple Inc [2013] EWCA Civ 451 [143]. This extract has inspired this article, in an effort to scrutinize whether the critique by Lewison LJ is still controversial today, six years after that judgment was rendered in the United Kingdom. In doing so, the article analyzes the two divergent approaches on determining whether a particular subject matter is patentable under UK and EU patent law, focusing specifically on the patentability of computer programs/software. First, I discuss the “technical contribution/effect approach” by the UK courts (“UK approach”) and the “any hardware approach” by the European Patent Office (“EPO approach”). The differences between these two approaches become apparent in comparing the former to the latter, in light of HTC Europe v. Apple, and by attempting to define the legal terminology addressing “computer programs” and “technical contribution’/‘technical effect”.

To kick off the month in which Alice v. CLS Bank will turn five, the Senate Judiciary Committee’s Subcommittee on Intellectual Property will hold its first two hearings on “The State of Patent Eligibility in America.” The hearings are scheduled for Tuesday, June 4 and Wednesday June 5, both at 2:30 PM in the Dirksen Senate Office Building, and the Subcommittee has now published the rosters for both hearings. As mentioned in a Senate press release last week, there will be three hearings held in total, on June 4, 5 and 11, featuring three panels of five witnesses each, for a total of 45 witnesses over three days. Overall, it is quite balanced between those who will argue for and against reform. This is quite a change in and of itself; congressional hearings on patent legislation over the past decade have largely favored those arguing against pro-patent reforms. IPWatchdog will cover these hearings, and several of the witnesses testifying next week — Chief Judge Paul Michel, Sherry Knowles and Phil Johnson —will be speaking later in the month at our Patent Masters™ Symposium titled Alice Five Years Later. 

Senators Coons and Tillis and a group of Representatives recently proposed an admirable piece of legislation to amend the Patent Act to abrogate Supreme Court Section 101 cases on patent eligible subject matter. I like that they propose a fix to Section 101. So far, so good. Alice was an interpretation of Mayo, which was an interpretation of Flook, which was an interpretation of Benson, which was supposed to be an interpretation of what Congress meant by the short and crisp statement of Section 101 of the Patent Act. But just as a photocopy of a photocopy of a photocopy gets more distorted with each generation, so did Supreme Court rulings. The judicially-invented residue left behind not only errs by failing to capture the plain and unambiguous scope of Section 101 and patent-eligible subject matter, but also catastrophically undermines and invalidates important patents that, until then, protected breakthrough inventions. Congress is right to step in. Inventors of breakthroughs need protections to form companies and create new jobs. What the senators propose is not perfect, but at least as far as Section 101 is concerned, will restore fairness to many future outcomes.But there’s an extra bit. To call it alarming would be an understatement. That extra bit would sharply and sweepingly limit the property rights of all technology patents. The proposal (as currently drafted) amends Section 112 to require any patent claim limitation that names any function “without the recital of a structure, material or act in support thereof” to be interpreted as limited to the structural embodiment in the patent specification that practices that function (plus equivalents).

In our first article examining the 2018 patent market, we provided an overview of the data and found that prices were stabilizing across listings, buying and selling programs were becoming more streamlined, and there were more transactions overall. This trend extends to “patent packages” as well. At 591 packages (502 last year), listings have increased by 17.7%. The only year in which we saw more listings was the 2016 market. If the assets from Provenance Asset Group were included in these numbers, the numbers would show an all-time high. The number of total assets and of U.S.-issued patents also increased (see Table 2). We have benchmarked our deal flow with that of other large corporations and defensive aggregators and have found that the number of brokered packages we received is generally similar, so we are confident that our numbers reflect the market. Compared to prior years, the total number of U.S.-issued assets listed in packages increased twice as fast as the number of packages listed. Notably though, the total number of assets listed increased even more than the U.S.-issued assets. This signifies the continued importance of international assets and an elevated level of focus on elements of a package other than U.S.-issued assets. But, U.S.-issued assets are still the focus in most listings (see Figure 4). While we limit the types of package included in this dataset to the more common types (e.g. quasi-public/brokered packages containing 200 or fewer assets), we also track larger bulk deals and private deals.

On Wednesday, the USPTO held the first of three scheduled hearings prompted by the Study of Underrepresented Classes Chasing Engineering and Science (SUCCESS) Act, which requires the USPTO Director to provide Congress with a report on publicly available patent data on women, minorities, and veterans, and to provide recommendations on how to promote their participation in the patent system. The hearing featured emotional testimony from five inventors, one of whom has recently joined Debtors Anonymous as a result of her patent being invalidated in the Southern District of New York. The SUCCESS Act was signed into law by President Trump on October 31, 2018 and gave the USPTO a one-year period to study representation of women, minorities, and veterans groups in patents. The Office released a report in February which showed that the number of women named as inventors had not been increasing at the same rate as the number of women who were now in STEM professions. Deputy USPTO Director Laura Peter said at the hearing on Wednesday that the Office is seeking input from industry, lawyers, and academics at the public forums, the next two of which are scheduled in Detroit on May 16 and San Jose on June 3. “We’re looking for concrete ideas and action plans to increase the numbers of these groups applying,” Peter said, before explaining that she would be unable to stay for the remainder of the hearing.

In our fourth article studying patent trends data across industries, we turn to the computational biology and bioinformatics industry. Computers have transformed many aspects of our everyday lives. However, much of drug-discovery, treatment testing and biology research is performed using the same wet-lab techniques developed decades ago. Rather recently, biotech companies have begun to capitalize on the impressive computational power, sophisticated models and skilled workforce to integrate computers into their operation. This integration can facilitate generating more accurate hypotheses, conducting more efficient tests and more thoroughly evaluating results. For example, modeling can be used to identify a set of therapeutics that have a physical structure complementary to a target, to better define a screen. Given that this valuable technological area sits at the intersection of biology and computers—which traditionally are associated with very different types of applications, examination and applicants—it is important to be well informed about the patenting arena when identifying patenting strategies.Our study not only identified a set of applications that pertained to this industry, but also—for each application in this set—it was determined whether the application pertained to one or more of the categories shown in the topology below. If so, the application was appropriately tagged, such that it could be included in one or more category-specific data subsets for subsequent analysis.

In yesterday’s article, we introduced our patent-trends study (performed in a collaboration between Kilpatrick Townsend and GreyB Services) and provided high-level data across industries. Today’s article pertains to the Internet of Things (IoT) industry. With the prevalence of WiFi, cellular modems and devices configured for short-range connections, IoT systems are becoming all the more ubiquitous and exciting. No matter how powerful and sophisticated a single device is, its efficiency and usefulness will very often remain capped if it cannot “talk” to other devices. Only through these communications can the device gain a more comprehensive view (e.g., corresponding to where users are, what computations or controls may be helpful, what computations or actions other devices are already performing or coordinating). Thus, we can begin to start thinking about specifications (e.g., efficiency, speed, memory, accuracy) of a device and instead think about specifications of a system. This presents a large number of important use cases.

The Framework rolled out by Congress last week to fix Section 101 law in the United States will not improve the current 101 disaster. It codifies current exceptions and even adds an entirely new exception specifically intended to protect big tech monopolies. Congress is pitifully unserious about restoring our innovation engine. For more than 200 years, the U.S. patent system was the primary engine propelling the United States to lead the world in virtually every new technology. But over the last 15 years, activists in Congress, the courts and the administration pulverized this engine to benefit a few huge multinationals in exchange for political donations and favors. Today, the patent system is a complete failure causing technologies critical to our economy, job creation, global technological lead, and national security to flee the U.S. and go to China. In a brutal political irony, the Communist Chinese have a better property rights system than we do here in the U.S.