Academic Podcast Discusses Bilski

A relatively new site called the Intellectual Property Colloquium is posting round table "NPR-like" discussions relating to IP. The most recent show, hosted by Doug Lichtman from the UCLA School of Law, discusses In Re Bilski, and includes guests John Duffy (GWU) and Rob Merges (UC Berkley).

The podcast is slickly produced and is definitely worth a download. You also don't need an iPod to listen to the show - streamed audio is also available. Also, you can request CLE credit for listening.

For more, click here.

In Re Bilski: Did Computer and Software "Machines" Get a Pass?

One certain takeaway from the Bilski opinion is that, if you expected any sort of closure whatsoever on 35 U.S.C. §101, you were sorely disappointed (see Rader dissent on that). While most practitioners have scoured Bilski to divine meaning from the opinion for computer software, it is becoming apparent that Bilski was not intended to resolve issues pertaining to computers, and especially ones considered "machines" for the purposes of section 101.

The issue before the CAFC in Bilski was broadly stated to cover "what the term 'process' in §101 means, and how to determine whether a given claim . . . is a 'new and useful process.'" However, it became apparent early in the opinion that this broad question was going to be chiseled into narrower subsets. The court immediately began to formulate and set aside narrowing rules that seemed to spiral out of control halfway through the majority opinion, and ended up in a Jacobellis-like impression that a patentable process was like pornography: we can't define it, but we know it when we see it.

Did the CAFC blow an opportunity to clarify 35 U.S.C. §101? Probably, but you can't really blame the court, given the circumstances of the case.

On problem the court had to deal with was Bilski's "all-in" approach towards the claim limitations and the resulting appeal. Bilski (just like Comiskey) openly conceded that computers/machines were not needed in the claimed process, and the CAFC used the concession to doom the application. Thus, Bilski opinion's unremarkable conclusion is that patents covering person-to-person business and/or legal transactions are not patentable.

But what if the Appellants argued (and the specification supported) that the process could also be performed on a computer?

The CAFC's majority opinion quietly punted this issue. What was very interesting was the opinion's observation in footnote 23: "We also note that the process claim at issue in this appeal is not, in any event, a software claim. Thus the facts here would be largely unhelpful in illuminating the distinctions between those software claims that are patent-eligible and those that are not." Well.

The majority opinion carefully avoided addressing software explicitly and directly (the word "software" only appears in the footnotes). Just as the CAFC needed to clarify in Bilski that State Street "addressed a claim drawn not to a process but to a machine," (see footnote 18), it is not unreasonable to conclude that Bilski was meant to address processes not tied to a specific machine. Indeed, the court was careful to point out the "issues specific to the machine implementation part of the test are not before us today" (p. 24). Since Bilski conceded that machine implementation was nonexistent, the court's invalidating decision was based only on the "transformation" leg of the Benson test (see p. 27: the operative question before this court is whether Applicant's claim 1 satisfies the transformation branch of the machine-or-transformation test").

So what types of "transformations" qualify as patentable subject matter? Well, if you're physically manipulating "stuff" in a process (e.g., curing rubber, reducing fats into constituent acids and glycerine), you're safe. If you're manipulating "public or private legal obligations or relationships, business risks, or other such abstractions", with nothing more, you are in trouble.

Certainly, computer software may satisfy the "transformation" test (see, e.g., claims 5-6 in Abele), but chances are that practitioners, in a practical sense, would rather rely on the "machine" leg of the Benson test. Alas, the CAFC will have to address this test another day:

[W]e agree that future developments in technology and the sciences may present difficult challenges to the machine-or-transformation test, just as the widespread use of computers and the advent of the Internet has begun to challenge it in the past decade. Thus, we recognize that the Supreme Court may ultimately decide to alter or perhaps even set aside this test to accommodate emerging technologies. And we certainly do not rule out the possibility that this court may in the future refine or augment the test or how it is applied.

NOTE: Given the opinion in Bilski and the test requiring "transformation or reduction of an article to a different state or thing," would a Method For Swinging On A Swing be patentable subject matter? You decide.

1. A method of swinging on a swing, the method comprising the steps of:

a) suspending a seat for supporting a user between only two chains that are hung from a tree branch;

b) positioning a user on the seat so that the user is facing a direction perpendicular to the tree branch;

c) having the user pull alternately on one chain to induce movement of the user and the swing toward one side, and then on the other chain to induce movement of the user and the swing toward the other side; and

d) repeating step c) to create side-to-side swinging motion, relative to the user, that is parallel to the tree branch.

CAFC Decides Bilski, Rules In Favor Of the USPTO

Read all the opinions (9-3, 132 pages) here

HIGHLIGHTS:

** Freeman-Walter-Abele "inadequate" and "should no longer be relied on"

*** HOWEVER, "'useful, concrete and tangible result' inquiry is [also] inadequate." Noted the CAFC: "As a result, those portions of our opinions in State Street and AT&T relying solely on a 'useful, concrete and tangible result' analysis should no longer be relied on (emphasis added)."

**** CAFC reaffirms Benson approach : claims are patent eligible under 101 if (1) it is tied to a particular machine or apparatus, or (2) transforms a particular article into a different state or thing

State Street still good law, but methods must be implemented on a machine. Noted the court in footnote 18: "In State Street, as is often forgotten, we addressed a claim drawn not to a process but to a machine."

"PURE" BUSINESS METHODS IN JEOPARDY:

From p. 28 of the opinion:

Purported transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances.

RETURN OF "TECHNOLOGICAL ARTS" TEST?

Heck no. The CAFC clearly rebuffed the PTO in this regard:

[W]hile we agree with the PTO that the machine-or-transformation test is the correct test to apply in determining whether a process claim is patent-eligible under § 101, we do not agree, as discussed earlier, that this amounts to a "technological arts" test . . . Neither the PTO nor the courts may pay short shrift to the machine-or-transformation test by using purported equivalents or shortcuts such as a "technological arts" requirement. Rather, the machine-or-transformation test is the only applicable test and must be applied. (p. 29)

UPDATE:

The PLI Blog is pronouncing "Federal Circuit Decides Software No Longer Patentable" - I disagree with this completely. The opinion clearly provides that if some machine exists and a well-defined data structure is manipulated, 101 will be satisfied. The large majority of software patents will be just fine.

Bloomberg is reporting that "In today's ruling, the appeals court overturned a 1998 decision involving State Street Corp. that made clear that business methods are entitled to patent protection." Again, this is not correct - the CAFC clearly stated that State Street remains good law (i.e., nothing was overturned).

I won't get into the preliminary reactions from the anti-software patent crowd, but they may want to read the opinion a little more closely before popping their champagne corks . . .

Friday Shorts: Bilski, Troll Tracker, Patent Reform

Bilski Oral Arguments Aweigh! Yesterday, the CAFC heard oral arguments for In re Bilski, No. 2007-1130 to consider what, and what is not, patentable subject matter. To listen to an MP3 of the oral arguments, click here.

Eyewitness accounts are rolling in - over at the PLI Blog, Gene Quinn has a good play-by-play of the oral arguments (link). Josh Sarnoff over at the AU Program on Information Justice and Intellectual Property Blog (link) has an eyewitness account and some additional thoughts. Charley Mecedo kindly emailed me his account of the argument

InformationWeek also has an article here (link), and the Associated Press weighed in here (link).

No one has a sense of how the CAFC will exactly rule on this issue. The consensus, at this point, is that State Street will likely be intact, software will still be patentable, and we can expect another layer of analysis to be added to the onion skin of patentable subject matter (e.g., post-solution activity, etc.).

Patent Troll Tracker Litigation Update: Joe Mullin has the latest on the fireworks surrounding the defamation lawsuit against Frenkel (aka The Patent Troll Tracker). There's a lot in his latest post (link), including commentary from none other than Ray Niro.

Is Patent Reform Getting Ready For a Tapout? From the Economist: "While the arguments rage in the courts, Congress seems content to do nothing at all about patent reform. On May 5th the Senate removed the bipartisan Patent Reform Act from its calendar."

Monday Shorts - Business Method Challenge at the CAFC

Bye Bye Business Methods? The CAFC decided, sua sponte, to order an en banc rehearing of In Re Bilski. The following 5 questions were presented:

1. Whether claim 1 of the 08/833,892 patent application claims patent-eligible subject matter under 35 U.S.C. § 101?

2. What standard should govern in determining whether a process is patent-eligible subject matter under section 101?

3. Whether the claimed subject matter is not patent-eligible because it constitutes an abstract idea or mental process; when does a claim that contains both mental and physical steps create patent-eligible subject matter?

4. Whether a method or process must result in a physical transformation of an article or be tied to a machine to be patent-eligible subject matter under section 101?

5. Whether it is appropriate to reconsider State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), and AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999), in this case and, if so, whether those cases should be overruled in any respect?

See more details over at Patently-O (link), along with related briefing on similar matter in the Metabolite v. LabCorp case (link1, link2, link 3)


Chief Judge Michel Weighs In (Again) On Patent Reform: Chief Judge Michel gave the keynote speech at the Association of Corporate Patent Counsel on January 28, 2008. The following is an excerpt of the address:

When I joined the court almost 20 years ago, 90 percent of our cases were from completed trials, bench trial or jury trial. Now, today, between 70 and 80 percent of our cases are from summary judgments. So we already have a huge number of interlocutory [appeals], i.e., pretrial appeals where the critical issue is claim construction. So the question becomes, well, do we need a lot more of those? Are we missing a large portion of the cases in which the claim construction is so decisive that we better have an immediate appellate review of the district judge’s construction? Well, maybe so but it’s not obvious to me that it’s the case and the [Senate] report, at least as I read it, doesn’t make much of a case, and it certainly shows no awareness at all of the fact that the vast majority of our appeals are pretrial appeals and do turn on claim construction.

Read the entire transcript here (link).


PTO Releases Prior Copies of MPEP: On February 7, the PTO announced that all prior editions and revisions of the MPEP are available in PDF format on the MPEP webpage (link). An interesting quote from the original 1949 MPEP (section 3) :

An art, process or method is a mode of treatment of certain materials to produce a given result. It is an act, or a series of acts, performed upon the subject matter to be transformed an reduced to a different state of thing. Cochrane v. Deener, 1877 C.D. 242. A method which produces an intangible result, such as transmitting speech by a telephone comes within this definition also.

PTO Updates Declaration Docs and Other Forms: On February 13, the USPTO has modified its Declaration form (PTO/SB/01) to include a checkbox which provides the applicant with the option to preauthorize the EPO and JPO to access its US application(s) [in order to obtain priority documents]. Essentially, this updated Declaration form bypasses the need to file a separate form PTO/SB/39, "Authorization to Permit Access to Application by Participating Offices." See other form updates here, courtesy of I/P Updates.


CBO Estimates Cost of Patent Reform: On February 15, the CBO estimated the costs of enacting S. 1145:

CBO estimates that enacting the bill would increase direct spending by $26.9 billion and revenues by $25.5 billion over the 2009-2018 period. Much of that change would result from making permanent PTO’s authority to collect and spend certain fees, thus shifting the collections and spending out of PTO’s appropriation account. In total, those changes would increase budget deficits (or decrease surpluses) by $1.4 billion over the 2009-2018 period.

View the entire report here (link)