Posts Tagged: "state street"

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.

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.

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.

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.

As a result of the useful, concrete and tangible result test and in conjunction with the disposition of the business method exception that never existed in the first place, software could come out of the closet and out into polite patent society. Gone were the days that patent attorneys would protect software by pretending that it was the hardware that presented the magic. So rather than claim a machine that accomplished a certain task patent attorneys could acknowledge that the machine is not the piece that makes things unique, but rather the software that drives the machine is the patentable innovation, of course presuming that it is new and nonobvious.

It serves no purpose to retroactively kill patents and applications that could have satisfied the standard announced in In re Bilski, but were written to satisfy the now defunct State Street test. That is changing the rules in mid-stream and violates all ideals of fundamental fairness and due process.

Unlike Gene I did not really plan very well. I did not have credentials and am not (yet) a member of the Court. So, I was in line with the public. A patent centric public, but the public none-the-less. My fellow line standers included: Law students headed to taking the patent bar; a Finnegan partner (made me feel a little…

Several years after Arrhythmia, the Federal Circuit seemingly abandoned the Freeman-Walter-Abele test. Sitting en banc in Alappat the Federal Circuit did not apply the Freeman- Walter-Abele test, rather opting for the mathematical subject matter exception.