Tuesday, November 25, 2008

Are Inter-Partes Reexams Losing Their "Staying Power"?

ESN v. Cisco Systems, Inc., E.D. Tex., 5:08-CV-20, November 20, 2008

ESN sued Cisco for patent infringment. A few months later, Cisco successfully petitioned for an inter-partes reexamination (IPR). Shortly thereafter, the PTO issues a First Office Action rejecting every claim in the patent. Cisco then filed a motion to stay.

In support of its motion, Cisco argued that (1) the PTO has a mandate to resolve inter-partes reexaminations expeditiously, (2) ESN does not practice the patent, so money damages will be sufficient, (3) ESN has no claims in the lawsuit other than those based on the reexamined patent, and (4) estoppel will prevent the duplication of prior art issues.

ESN countered that (1) the excessive length of time for resolving IPR issues will result in a "clear case of substantial prejudice"; ESN also cited the study from the Institute for Progress (see 271 Blog coverage here) that alleged that PTO's reports on IPR's are "highly misleading" and that average IPR pendency is between 34 and 53 months, (2) given the PTO delay in IPR's, granting a stay would "write off half of the life of ESN's patent", and (3) citing the Supreme Court and Cisco's V.P. and General counsel, caution should be taken "against viewing non-practicing entities as incapable of showing irreparable harm."

Weighing the factors, the court sided with ESN:

The Court finds ESN would be significantly prejudiced and suffer tactical disadvantages by a stay in this case. Mark Chandler, Cisco’s V.P. and General Counsel perhaps said it best when he noted in testimony before the Senate Subcommittee on Intellectual Property in a hearing on patent post-grant review, “The principle that justice delayed is justice denied applies with full force to the patent process.” Staying this case for six-plus years when this Court can resolve the matter more expeditiously is unfairly prejudicial to ESN. Accordingly, this factor weighs heavily against granting the stay.

* * *

When the factors are considered collectively, the Court finds the unfair prejudice to ESN in granting this stay overshadows any potential simplification of issues. Further, although the stage of this litigation is fairly early, statistics indicate that the IPR process, assuming appeals are taken, will take much longer than the schedule currently set in this case. For all of the foregoing reasons, Cisco’s Motion to Stay Litigation Pending Reexamination of U.S. Patent No. 7,283,519. (Dkt. No. 35) is hereby DENIED.

Download/read a copy of the opinion here.

NOTE: For what it is worth, this happens to be the exact case that started the Patent Troll Tracker defamation brouhaha (link)

Monday, November 24, 2008

USPTO: It's OK To Start Filing Appeal Briefs Under New Format

As a reminder, the new USPTO Appeal Brief Rules will go into effect December 10, 2008. In the meantime, ambitious appellants have already filed Briefs under the new format, in anticipation of the change. Unfortunately, some of those briefs were flagged for being non-compliant.

In response, the PTO issued a clarification that formally allows submissions under the new rules:

[A]ppeal briefs filed before December 10, 2008, must either comply with current 37 CFR 41.37 (in effect before December 10, 2008) or revised 37 CFR 41.37 (in effect on or after December 10, 2008). Appeal briefs filed on or after December 10, 2008, must comply with the revised 37 CFR 41.37. A certificate of mailing or transmission in compliance with 37 CFR 1.8 will be applicable to determine whether the appeal brief was filed prior to the effective date in order to determine which rule applies. For any appeal brief filed in the new format under revised 37 CFR 41.37, the Office will provide an examiner’s answer in the new format under revised 37 CFR 41.39 if the
appeal is maintained.

Any appellant who has received a notice of non-compliant appeal brief may request that the notice of non-compliant appeal brief be withdrawn if the sole reason for noncompliance is that the appeal brief was presented in the new format.

Read the notice here.

Thursday, November 20, 2008

Thursday Shorts

Federal Circuit Updates Internal Operating Procedures - After providing proposed changes to the public on Internal Operating Procedures (IOPs), the court recently voted to approve the changes. In addition to general changes to update the IOPs, the Federal Circuit also added two new sections in response to suggestions from the public. First, the Federal Circuit added a new paragraph briefly explain how cases are assigned to merits panels. Second, the Federal Circuit added a new paragraph that briefly explains how precedential opinions are circulated before issuance. Download a copy of the procedures here.

Chamber of Commerce Publishes Draft Report on "Fixing" the PTO - classifying the Office as an "agency in crisis", the 41-page draft outlines many of the problems, and provides recommendations on:

- Improving the quality of U.S. patents
- Providing adequate resources to do the job
- Reforming the patent examiner production system
- Improving timeliness of administrative actions
- Strengthening the PTO's relationship with the user community
- Enhancing organizational management
- Appointing a well-qualified under secretary and director
- Permitting applicants to defer patent examination
- Rethinking the current fee schedule
- Enhancing efficiency of the examination process by reforming examiner/applicant incentives.

Download the draft here (courtesy of Patent Hawk)

FTC Hearings on IP Marketplace - earlier studies (2003) by the FTC were cited copiously during last year's patent reform efforts, and now, the agency wants to update its information on IP and patents.

Beginning on December 5, 2008, in Washington, DC, the FTC will examine changes in IP law, patent-related business models, and new learning about the operation of the IP marketplace since the issuance in October 2003 of the Commission report To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy (link).

The Commission seeks the views of the legal, academic, and business communities on the issues to be explored at the hearings. In its Federal Register Notice the agency set out a list of specific questions on which it is particularly seeking comments. The agency will consider any comments received as it prepares for the hearings.

Get more details from the FTC website here.

View the agenda and press release.

The FTC is also making a Webcast available, where a live webcast will be available on the day of the event (bookmark this page and come back on December 5 to link to the webcast).

Tuesday, November 18, 2008

Post-Bilski at the USPTO: Is the BPAI Looking to Create a "Software Per Se" Exception?

"The United States is a nation of laws: badly written and randomly enforced."

- Frank Zappa (1940 - 1993)
Ex Parte Godwin, Appeal 2008-0130, November 13, 2008

This opinion issued from a Request for Rehearing that was filed before the Bilski decision, and the opinion followed after (side note: the original Notice of Appeal was filed June 6, 2006). It is not clear if this is one of those "bad" cases, but there are a number of troubling positions taken by the BPAI.

One of the claims rejected under 35 U.S.C. 101 follows:

7. A portal server system comprising:

a portal coupled to a plurality of portlets, each of said portlets having associated portlet rendering logic;

a portlet aggregator communicatively linked to said portlet rendering logic; and,

a visual service extension to said portlet aggregator programmed to process said portlet rendering logic to transform visual style attributes in said portlet rendering logic into markup language tags which can be rendered for display in a specified type of pervasive agent.

The BPAI, acknowledging Bilski, stated that the claim did not recite patentable subject matter, as it was "directed to purely software components."

What is, well, weird about the decision is the BPAI's reasoning for upholding the 101 rejection. Apparently, the BPAI believes that, given the broadest reasonable interpretation, a claim may be rejected if non-statutory matter can be injected into the claim. Additionally, one of the issues considered by the Board is "[h]ave Appellants shown that the claimed invention recited in claims 7 and 12 is not directed to software per se? " (Freeman-Walter-Abele anyone ?)

From the opinion:

While Appellants’ position is that the "broadest reasonable interpretation of the terms ‘portal server’ and ‘portal server system’ yields a claim construction that includes a hardware device which is statutory subject matter," (Request 8), we find paragraph [0036] of the Specification contravenes appellants’ contention ("The present invention can be realized in hardware, software, or a combination of hardware and software."). A hardware device (i.e., computer) is not positively recited . . . Claims 7 and 12 do not sufficiently invoke a machine or a transformation of subject matter, and are therefore unpatentable under 35 U.S.C. § 101.

[A]s per our discussion above, in the context of a software embodiment, we maintain that a server is broadly but reasonably interpreted as a provider of services. Therefore, we are not persuaded by Appellants’ argument that the scope of independent claims 7 and 12 requires hardware (i.e., a machine) in addition to the recited software components. We also note that software components can be communicatively linked in the abstract sense.
And get ready for more weirdness. The Appellants submitted that the proper question to be asked is whether the claimed subject matter encompasses statutory subject matter, and not whether the claimed subject matter includes non-statutory subject matter. Here is how the BPAI responded, in its entirety:

[W]e note that our reviewing court has clearly stated that "[t]he four categories [of § 101] together describe the exclusive reach of patentable subject matter. If a claim covers material not found in any of the four statutory categories, that claim falls outside the plainly expressed scope of § 101 even if the subject matter is otherwise new and useful." In re Nuijten, 500 F.3d 1346, 1354 (Fed. Cir. 2007).

Read the decision on Request for Rehearing here.

Read the original BPAI decision here.

USPTO Releases Fiscal Year-End Numbers

The USPTO FY2008 report is out, and, unsurprisingly, "the USPTO met and, in some cases, exceeded its patent pendency, production, and quality targets."

According to the report,

- Patents "maintained a high level of patent quality by achieving an allowance compliance rate of 96.3 percent, exceeding its goal."

- Patents increased production by an additional 14 percent over FY 2007 by examining 448,003 applications—the highest number in history.

- Production has increased by 38.6 percent over the past four years, compared to a 21.3 percent increase in application filings during the same period.

- Patents received a record number of utility patent applications filed electronically (332,617), and achieved a record rate (72.1 percent) of applications filed electronically as well.

- Patents achieved an average first action pendency of 25.6 months and an average total pendency of 32.2 months.

- Patents received 1,765 patent application filings through the Accelerated Examination Program, 173 percent more than in the program’s introductory year of FY 2007. A 12-month or less pendency rate was also maintained for every application, with an average time to final action or allowance of 186 days.

Read/download the 162-page report here

Monday, November 17, 2008

SBA Publishes Study Regarding Impact of Small Business Patenting

Anthony Breitzman and Diana Hicks have published a report for the Small Business Administration (SBA), titled "An Analysis of Small Business Patents by Industry and Firm Size." The study is the third in a series that examines small business patent activity.

The study specifically looked at "innovative firms" that were selected from a database of 1,293 technology firms having 15 or more patents issued between 2002 and 2006. Using this database, the authors analyze the relative strengths of small and large technology businesses, including information such as the industry and technology within which the firm patents and the importance of the patent. What did the study find?

The results demonstrate that small businesses that innovate are indeed special and that the technology they create helps define the cutting edge in a number of industries. The report presents a convincing case that small firms in emerging industries are one of the greatest engines of American economic growth.

More specifically, the study found

• Of the 1,293 firms reviewed in this study, 504 had 500 or fewer employees, 760 had more than 500 employees, and no size information could be obtained for 29 firms. Thus, 40% of the firms with 15+ patents were small firms. This number is slightly lower that 2004 (41%) but significantly higher than 2003 (33%).

• Small firms obtain many more patents per employee than do large firms. This result is quantified to show that this is not a small-firm large-firm phenomenon, but is actually a firm size issue at all levels. In particular, even within the small firm domain, companies with fewer than 25 employees will have a higher patent-to-employee ratio on average than firms with 50 employees, which will in turn have a higher patent-to-employee ratio than firms with 100 employees, and so on.

• Small firm patents "outperform" large firm patents on a number of impact metrics including growth, citation impact, patent originality, and patent generality. The metrics have been validated and shown to correlate with increases in sales, profits, stock prices, inventor awards, and other positive outcomes. "This suggests that the patents of small firms in general are likely to be more technologically important than those of large firms."

• Although small firms make up only 6.5 percent of all the patents in the database, they patent at a higher rate in some technologies, particularly health-related. Ranked by broad technology areas, most small firms fall in health-related technologies (biotechnology, pharmaceutical, and medical devices) and information technology categories communications/telecommunications, semiconductors, computer hardware and software).

Read/download the (68 page) report here.

NOTE: The study also has an interesting section on "Hot Patent" and "Emerging Cluster" methodologies for evaluating patents that is worth a read.

Patent "Bounties" Attempting a Comeback

Borrowing from a page book of Peer-to-Patent and the long-defunct Bountyquest, the company Article One Partners, LLC has launched "a new global community to legitimize the validity of patents."

Basically, the system works to recruit community members (also known as "Advisors") to search and report prior art against high profile patents. Article One then analyzes the prior art to determine whether it can invalidate a specific patent. If Article One forms an opinion that patents are invalid, Advisors earn up to U.S. $50,000, with $1,000,000 total being offered for launch. Advisors who actively build the community also earn premium compensation in Article One's Profit Sharing Plan of about five percent (5%) of the company's net annual profit.

According to Article One, "the result is a highly-rewarded community providing a citizen's review of U.S. patents to justify monopoly pricing for true innovation and energize U.S. patent reform."

Read the press release here.

Visit Article One's website here.

Friday, November 14, 2008

Obama Transition Team Member Is No Fan of the U.S. Patent System

Yesterday, it was reported by Condé Nast Portfolio that President elect Barack Obama is setting up agency review teams for his transition to the White House. The teams will be responsible for reviewing all the major U.S. government departments, advise the Obama administration on policy prior to inauguration day, and keep the new administration's nominees prepped and informed as they make their way through the confirmation process in Congress.

One of the team members is Reed Hundt, who was Bill Clinton's FCC Chair from 1993 through 1997. Hundt is slated to work on the agency review team in charge of international trade and economics agencies. Since his stint at the FCC, he has taught at Yale and written several books about information politics and U.S.-China economic relations.

Here is what Hundt had to say in an op-ed piece in Forbes magazine on Janury 30, 2006:

America's patent system is a mess . . . The U.S. ought to chuck this 18th-century relic and start all over again. Here's what the ideal system would look like.

First, we should slash the number of patents granted each year by 90%. In 2004 the U.S. Patent &Trademark Office issued 165,000 patents. Sixteen thousand is more like an optimal number. This should be easy to accomplish because most technology should not be patentable.

* * *

Second, we need to spend more money on the system. The budget of the U.S. Patent & Trademark Office is $1.5 billion. That ought to be tripled to $4.5 billion . . . We don't want grossly overworked professionals trying to figure out whether specific algorithms used to refresh the pixels on a computer monitor screen ought to be patented.

* * *

Third, we should introduce an element of privatization into this public system. Firms ought to be able to pay for fast-track patent approval and for the ability to challenge a patent after it's been issued. Currently it can cost hundreds of thousands of dollars to file and prosecute a patent application. For a set dollar amount--say, $500,000--a firm ought to be able to buy a guarantee that its patent application will be reviewed and accepted or rejected within one year. The average application now takes 29 months to be processed.

* * *

Fourth, all patent case awards should be forward looking and linked to lost sales. In other words, plaintiffs who win patent-infringement challenges should be able to enjoin only future competition. They shouldn't reap rewards from past violations . . . If we can radically revamp our patent system, we'll be much more effective at the international bargaining table. We have a horribly expensive system, with huge backlogs and a daunting litigation risk. No wonder the Chinese don't want to adopt it. Let's get rid of it and start from scratch.

Read Hundt's op-ed in its entirety here.

D. Del.: "Sustainable, Reasonable" Defenses Enough to Negate Willfulness

Honeywell International Inc. v. Universal Avionics Systems Corp., No. 02-359-MPT, November 12, 2008

Honeywell sued Universal over five patents dealing with aviation warning systems. After trial and appeal to the CAFC, the case was remanded. On remand, Universal filed a motion for summary judgment of no willful infringement.

Honeywell opposed the motion for a number of reasons:

-- Universal admitted that it knew of Honeywell's patent when it released its own system ("TAWS");

-- Universal claimed that a noninfringement opinion was obtained (pre-litigation), but no written record existed to corroborate the findings, and no explanation could be given why no legal issues existed with the patent;

-- During earlier negotiations with a 3rd party (Collins), Universal was asked for, but did not provide, a noninfringement opinion letter. Universal did agree to indemnify for patent infringement.

Universal countered that (1) Honeywell had, and failed to meet, the burden of establishing willful infringement by clear and convincing evidence, and (2) the defenses raised by Universal during litigation showed that they behaved in an objectively reasonable manner.

The district court agreed with Universal:

The unrefuted testimony . . . shows that before going to market with the TAWS product, Universal performed a patent review which included technical and legal analyses . . . After consulting with patent counsel, Universal understood that no legal issues arose in relation to TAWS for any patent that was reviewed. That understanding is confirmed by Glaze's uncontroverted testimony that further implementation of the TAWS product by Universal would not have continued if the system infringed a third party's patent. A prelitigation patent review may be more relevant to the second prong of the Seagate test (whether the alleged infringer knew or should have know of the objectively-defined risk of infringement); however, performing a patent review before entering the market with a new device evidences that Universal's conduct was not reckless. Further, knowledge of a patent does not mean willfulness.

During the licensing discussions between Universal and Collins, Honeywell filed the present action. Since this litigation followed on the heels of Collins' request for an opinion of counsel on infringement, the court does not see how Universal not producing such a letter constitutes objective recklessness or an admission of infringement. Production of such a letter to a third party would operate as a waiver of the attorney client privilege, and could directly effect litigation strategy . . . Universal's indemnification offer refutes the second prong of Seagate, that it knew, believed or should have known that TAWS could infringe.

[T]he present matter is not just at the first summary judgment stage, but has undergone a summary judgment, trial and post trial review by this court, as well as, a review by the Federal Circuit. The legal issues in the case have already been vetted by two courts. This court, under its claim construction, found that Universal did not infringe. It also held that a number of the patent claims were anticipated. Such findings validate that Universal had legitimate defenses to Honeywell's infringement claims. Although this court did not agree with Universal on its other invalidity defenses, an exhaustive analysis was required, particularly of the onsale and public use bars, to reach a conclusion. This court's analysis of Universal's defenses to the patents show that its arguments were "substantial, reasonable, and far from the sort of easily-dismissed claims that an objectively reckless infringer would be forced to rely upon."
Motion for summary judgment granted

Read/download the opinion here

Thursday, November 13, 2008

Wegner: 10 Steps to Reform Inter Partes Reexamination

Currently, one of the most significant flaws of inter partes reexamination is that the PTO has failed to meet the "special dispatch" statutory mandate to conclude all reexaminations within 12-18 months from filing. Since the beginning of inter partes reexaminations, there has never been even one merits appeal to reach the Federal Circuit in an inter partes reexamination.

So what can be done? Hal Wegner has circulated a proposal for reform that borrows in part from Japan's post-grant review system, where the entire process (up to a judicial appeal) averages about 7 months. The following is his 10-step proposal:

(1) Allow the Board to control all parts of the proceeding - by empowering the Board to oversee the proceedings, needless "ping-ponging" between the Board and the examiner may be eliminated.

(2) Enable electronic filing on a special website

(3) Make requester propose the first action, and limit the proceedings to the request - make the examiner more of a "judge" than an examiner. Issues for reexamination will be simplified by limiting review to only the issues raised by the requester.

(4) Make requester responsible for initial presentation of evidence - declarations, tests, etc. should be filed initially by requester. Later evidence may be allowed, but only in response to issues raised by patentee.

(5) Patentee's Response and Order - patentee may contest the order or waive; after 3 months examiner issues requester's office action, or dismisses - no new prior art searching!

(6) Patentee's First Action Response - the first action response should be the main - and perhaps only - opportunity for the patentee to amend or present new evidence via declaration.

(7) Requester's Main Response - one month from patentee's response to add counter-arguments. When new issues are presented, this may be the first (and perhaps only) time to challenge new issues raised by patentee.

(8) Examiner's Final Decision - as a judge, the examiner should conclude proceedings on the specific challenge. If examiner agreed in toto with either party, he/she may simply adopt the party's statement. Alternately, the examiner may provide a brief statement explaining his/her viewpoint.

(9) Appeal - appeals should be expedited; complex issues shoudl trigger early involvemenet by the Board

(10) Reexamination e-Certificate - no paper publication will save time

Read Hal's 10-step proposal in greater detail here.

CAFC: "Graham Analysis" Not Always Required For Double-Patenting

In Re Basell Poliolefine Italia S.P.A., November 13, 2008, No. 2007-1450.

Basell appealed two decisions of the BPAI resulting from a Director-ordered reexamination of Basell's patent. The Board affirmed the rejections of all the claims of the patent as unpatentable under 35 U.S.C. §§ 102(b) and 103(a) and the doctrine of obviousness-type double patenting.

The patent, issued in 2002, claimed priority to a chain of applications going back to an Italian application filed in 1954. During prosecution however, the BPAI determined that Basell was not entitled to claim priority back to 1954.

On appeal, Basell argued that the Board erred because it failed to conduct an analysis under Graham as of the earliest filing date, and that the Board erred by failing to apply a two-way obviousness-type double patenting analysis.

In determining double patenting, a one-way test is normally applied, in which "the examiner asks whether the application claims are obvious over the patent claims." In re Berg, 140 F.3d 1428, 1432 (Fed. Cir. 1998). In unusual circumstances, where an applicant has been unable to issue its first-filed application, a two-way test may apply, in which "the examiner also asks whether the patent claims are obvious over the application claims." Id. . . . the two-way test may be appropriate "in the unusual circumstance that the PTO is solely responsible for the delay in causing [a] second-filed application to issue prior to [a] first." Id. at 1437.

Looking at the facts of the present case, the CAFC found that any delay was squarely attributed to the applicant, thus precluding any hope of two-way obviousness:
[S]ince 1954, the patentees repeatedly submitted claims directed to claims covering other inventions, urged the examiner to declare interferences for unrelated inventions, and repeatedly filed continuing applications without appeal. During the critical co-pendent period of the applications . . . [the inventor] could have filed the present claims. [The inventor's] actions, or inactions, had a direct effect on the prosecution and thus were responsible for any delay in prosecution. We find no error with regard to the Board’s findings and agree with the Board that the two-way test for double patenting does not apply.

Regarding the Graham analysis, the CAFC affirmed that, under the one-way test, the Graham factors did not need to be expressly addressed by the Board:
Indeed, "this court has endorsed an obviousness determination similar to, but not necessarily the same as, that undertaken under 35 U.S.C. § 103 in determining the propriety of a rejection for double patenting." In re Braat, 937 F.2d 589, 592-93 (Fed. Cir. 1991). Hence, we find no basis for reversing the Board’s decision merely because the Board failed to expressly set forth each of the Graham factors in its analysis.


Newman's Dissent:
I write in dissent, first because the reexamination here conducted was in violation of the reexamination law as it then existed. Such violation should not be condoned, for the PTO is as bound by the law as are those who practice before it. If this improper reexamination were to be tolerated, as do my colleagues on this panel, it at least warrants strict scrutiny. Yet the panel majority defers to unsupported findings, permits the PTO to ignore all of the expert evidence, and joins in the PTO’s unfair allocation to the inventors of blame for the extreme delays here illustrated.

Wednesday, November 12, 2008

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.

USPTO To Increase PCT Transmittal and Search Fees

From the PTO:

The Office is adjusting the PCT transmittal and search fees to recover the estimated average cost to the Office of processing PCT international applications and preparing international search reports and written opinions for PCT international applications.

Specifically, the PTO is reducing transmittal fees from $300 to $240. However, search fees and supplemental search fees will be increased $280 from $1800 to $2080.

The fee increase is scheduled to be effective on January 12, 2009.

Read the entire notice here.

Tuesday, November 11, 2008

USITC Study Concludes Industrial Biotech Patents are "Facilitating and Not Stifling Innovation"

A new staff research study by the U.S. International Trade Commission's ( ITC ) Office of Industries looks at innovation with regard to industrial biotechnology in the U.S. The report, titled "Patenting Trends and Innovation in Industrial Biotechnology" uses patent data, survey results, and profiles of firms in two emerging sectors ( cellulosic ethanol and bio-based plastics ) to "paint a new picture of innovation" in industrial biotechnology.

Specifically, the study's findings include:

• The USPTO issued 20,428 patents with a primary classification related to industrial biotechnology from January 1975 through December 2006. Industrial biotechnology patents were about one fifth of all biotechnology patents issued during the period.

• Industrial biotechnology patents issued each year climbed steadily beginning in the mid- 1980s, peaked in 1999, declined from 2000 through 2005, and rebounded in 2006. Although most patents were issued to domestic and foreign corporations, the share of patents issued to U.S. universities increased sharply over the period.

• New firms of all sizes are steadily entering the industrial biotechnology field by obtaining patents. Small firms, and particularly university spinoffs, hold valuable patent portfolios in the emerging areas of cellulosic ethanol and bio-based plastics. In general, firms patenting in industrial biotechnology hold a relatively small number of patents, especially when compared to other high tech sectors.

• Strategic alliances among firms, universities, and the U.S. government are prominent in the profiles of industrial biotechnology firms.

According to the study,

Patents provide an important mechanism for the transfer of knowledge between
alliance partners and are facilitating the movement of industrial biotechnology from research and development stages to commercialization.This study's findings that industrial biotechnology patents are not controlled by a small number of firms, and that patents are facilitating transfers of technology and knowledge, are consistent with survey results. According to more than 70 percent of biofuel and chemical company representatives responding to an ITC survey, "patent barriers" are one of the least significant impediments to the research, development, and commercialization of industrial biotechnology products and processes.
Download the 62-page report here.

Tuesday, November 04, 2008

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.

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