More good news for the foes of business method patents in the Versata decision handed down June 11 by the Patent Trial and Appeal Board. The case involved a challenge to US Patent No. 6,553,350, owned by Versata Development Group, Inc., pursuant to section 18 of the Leahy-Smith America Invents Act (AIA). Section 18, the Transitional Program For Covered Business Method Patents, allows for the challenge of a “covered business method patent” – defined as a patent that claims a
method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.

According to the Board, Versata’s ’350 patent is directed to a method and apparatus for pricing products and services, wherein the central concept involves hierarchies and the hierarchal arrangement of data.  SAP challenged claims 17 and 26-29 as unpatentable under 35 U.S.C. §101 stating that the claims are directed to an unpatentable abstract idea. Versata maintained that its claims are directed to a specific, practical, and advantageous way to determine a product price using hierarchical groups of customers and products.  The ’350 patent had previously been held valid and infringed by SAP by a district court and the Court of Appeals for the Federal Circuit.

This decision follows what has become the standard playbook to invalidate “business method” patents that has three steps:

1.  Label the “inventive contribution” as an abstract idea.

2.  Find that the implementation of the “abstract idea” as a computer process or apparatus was accomplished with routine skill on a commonplace computer and added no inventive “technical” contribution that might itself qualify as patentable subject matter.

3.  Find that the computer apparatus itself did not “count” toward bringing the “abstract idea” into the realm of patentable subject matter.

I have several observations about this analysis, and the patent in general:

A.  In the Board’s analysis, “abstract idea” is nothing more or nothing less than an euphemisum for “non-technical idea.”  In this instance, the evidence that it was non-technical in nature was that it could hypothetically be performed in the human mind.  This conclusion would be highly suspect other than the fact that the claims perhaps did not strictly require the data processing aspects of the invention to be performed on a computer.  Nonetheless, it’s not clear that even if the claims had been more concrete in that direction, it would have made a difference.

B.  It is interesting to note that the Board, and of course even the Supreme Court, would appear to have thrown the Diamond v. Diehr “claim as a whole” approach to Section 101 out the window.  While this may be fair game where the Supreme Court is concerned, it is pretty darn illogical, which is highly ironic when consdering that the subject matter is a logic-driven computing process.

C.  While the logic is tortured, the result is clear if this approach to 101 sticks:  i. the point of novelty approach to Section 101 is now the de facto approach to 101 analysis; and ii) that if the invention can arguably be performed in human mind, no manner of computer implementation will save it.

D.  On the other hand, had the ’350 invention been presented as a method to speed up the retrieval and processing of a particular type of data to enhance the speed of processing a certain type of data, through the use of a specific manner of storing data in a relational databased, and a specific manner of retrieving it and using it, and making no mention of pricing information, this invention may have lived to see another day.

Here is the rundown on the facts and the actual reasoning of the Board.

The claims of the ’350 patent are as follows:

17.     A method for determining a price of a product offered to a purchasing
organization comprising:

arranging a hierarchy of organizational groups comprising a plurality of branches such that an organizational group below a higher organizational group in each of the branches is a subset of the higher organizational group;

arranging a hierarchy of product groups comprising a plurality of branches such that a product group below a higher product group in each of the branches in a subset of the higher product group;

storing pricing information in a data source, wherein the pricing information is associated, with (i) a pricing type, (ii) the organizational groups, and (iii) the product groups;

retrieving applicable pricing information corresponding to the product, the purchasing organization, each product group above the product group in each branch of the hierarchy of product
groups in which the product is a member, and

each organizational group above the purchasing organization in each branch of the hierarchy of organizational groups in which the purchasing organization is a
member;

sorting the pricing information according to the pricing types, the product, the purchasing organization, the hierarchy of product groups, and the hierarchy of organizational groups;

eliminating any of the pricing information that is less restrictive; and

determining the product price using the sorted pricing information.

26.     A computer readable storage media comprising: computer instructions to implement the method of claim 17.

27.     A computer implemented method for determining a price of a product offered to a purchasing organization
comprising:

retrieving from a data source pricing information that is (i) applicable to the purchasing organization and (ii) from one or more identified organizational groups, within a hierarchy of organizational groups, of which the purchasing organizatio is
a member;

retrieving from the data source pricing information that is (i) applicable to the product and (ii) from one or more identified product groups, within a hierarchy of product groups, of which the product is a member; and receiving the price of the
product determined using pricing information applicable to the one or more identified organizational groups and the one or more identified product groups according to the hierarchy of product groups and the hierarchy of organizational groups.

28.     A computer readable storage media comprising: computer instructions to
implement the method of claim 27.

29.     An apparatus for determining a price of a product offered to a purchasing organization comprising:

a processor;

a memory coupled to the processor, wherein the memory includes computer program instructions capable of:

retrieving from a data source pricing information that is (i) applicable to the purchasing organization and (ii) from one or more identified organizational groups, within a hierarchy of organizational groups, of which the purchasing organization is a member;

retrieving from the data source pricing information that is (i) applicable to the product and (ii) from one or more identified product groups, within a hierarchy of product groups, of which the product is a member; and

receiving the price of the product determined using pricing information applicable to the one or more identified organizational groups and the one or more identified product groups according to the hierarchy of product groups and the hierarchy of organizational groups.

The challenged claims are in substance directed to an apparatus and method for determining a price, i.e., a method of calculating, the method being implemented on computer hardware. Generally, claim 17 is directed to a method of determining price, claim 27 is a computer-implemented method of determining a price, and claims 26 and 28 are computer-readable storage media comprising computer instructions to implement the methods of claims 17 and 28. Similarly, while claim 29 is directed to an “apparatus” for determining a price, the apparatus includes computer program instructions capable of performing the same method steps that are recited in claim 27.

SAP contended that Versata’s claims were unpatentable under § 101 as they are centered on abstract ideas. SAP argued the abstract nature of the claims is demonstrated by the fact that the method steps can be performed in the human mind or by a human using a pencil and paper. SAP further stated that the claims merely recite “abstract ideas with nothing more than ‘well-understood, routine, conventional activity’ added.”

Versata disagrees with SAP’s characterization of the claims. According to Versata, the claims recite statutory processes and machines under § 101 and the claims do not “preempt” any abstract idea. In particular, Versata states that the determination of whether its claims are directed to patent-eligible subject matter under § 101 requires an analysis of all the elements or steps in the claimed process.

The Board agreed with SAP that each of challenged claims involves the use of an abstract idea: determining a price using organizational and product group hierarchies, which are akin to management organizational charts. The concept of organizational hierarchies for products and customers is abstract as it represents a “disembodied concept,” a basic building block of human ingenuity. Similarly, determining a price is also abstract as it is essentially a method of calculating. Standing alone, an abstract idea does not represent patent-eligible subject matter.

Accordingly, citing the Supreme Court’s Mayo decision (Mayo, 132 S. Ct. at 1297), the Board said it needed to further analyze Versata’s claims to determine whether they incorporate sufficient meaningful limitations to ensure that the claims are more than just an abstract idea and not just a mere drafting effort designed to monopolize the abstract idea itself.

Applying this analysis, the Board found:

a. Versata’s claims have no substantial practical application except in connection with a computer, and that “claims do not become patentable under § 101 simply for reciting a computer element,” citing to Benson, 409 U.S. at 68. It found that while the claim required a computer, “the underlying process that is implemented on such hardware could also be performed via pen and paper. Further, the Board stated that the “mere recitation of computer implementation or hardware in combination with an abstract idea, however, is not itself a significant, meaningful limitation on the scope of the claims.” Specifically, as apparent from Benson, implementation on a general purpose computer is not a meaningful limitation where there was “no
substantial practical application except in connection with a digital computer.” Benson, 409 U.S. at 68 and 71-72.

b. The claimed invention of the ’350 patent requires only routine computer hardware and programming, and that the ’350 patent makes clear that its contribution to the arts lies not in the type of computing device or processing environment employed. Thus, as with the “shift register” in Benson, the recitation of generic general purpose computer hardware (processor, memory, storage) in the challenged claims represents routine, well-understood conventional hardware that fails to narrow the claims relative to the abstract idea. Benson, 409 U.S. at 65 (“The general-purpose computer is designed to perform operations under many different programs.”).

c. Versata’s claims merely add insignificant, conventional and routine steps that are implicit in the abstract idea itself. For this conclusion, the Board found that to be patent-eligible, a claim reciting an abstract idea must add more than just  insignificant, conventional or routine steps to the idea lest the claim effectively cover the abstract idea itself. Cf., Mayo, 132 S. Ct. at 1298. Thus, the claims must include meaningful limitations beyond the abstract idea itself. Versata pointed out that the claims in question required a specific combination of steps that were not in the prior art, i.e., storing, retrieving, sorting, eliminating, and determining. The Board found that despite these computer process limitations, Versata failed to establish
that the additional “specific” steps that are appended to the abstract idea provide meaningful limitations. In short, in the Board’s view, Versata did not demonstrate that the additional steps are anything other than conventional, routine steps that are a consequence of implementing the abstract idea, citing to the Court in Flook, which held that a claim for an “improved” method is unpatentable where, putting the abstract formula to the side, there was no “inventive concept” in the claimed application of the formula. Flook, 437 U.S. at 594-595, n.18.21 Accordingly, in the Board’s view, even if the abstract idea and “specific” steps represent a marketplace improvement, the claims are not patent-eligible where the appended steps lack meaningful limitations that prevent the claim as a whole from covering the practical applications of the abstract idea.

Accordingly, the Board found that Versata’s claims do not add meaningful limitations beyond the recited abstract idea and, in practical effect, preempt the abstract idea.  Therefore, the claims were found invalid under Section 101 for claiming an unpatentable abstract idea.

For a thoughtful analysis on the symbiotic relationship of innovation and the patent system in the United States, please take time to read David Kappos recent article in Stanford’s Technology Law Review: Investing In America’s Future:How the Debate over the Smart Phone Patent Wars (Re) Raises Issues at the Foundation of Long-Term Incentive Systems

In the article, Mr. Kappos quotes Pasquale J. Federico, the famous USPTO patent judge and initial drafter of the 1952 Patent Act:

As I have noted before, the unquestionable success and dominance of the software industry in the United States, particularly compared to the rest of the world, is a fact that never seems to phase the opponents of software patents, who continue to drone on improbably that software patents are destroying the software industry.  Come on, seriously, after 30 years can we at least get a break from that prediction?

The Federal Circuit has handed down their en banc decision in the CLS Bank case, and to say its less than definitive would be a gross understatement.  The claims at issue were found unpatentable by a narrow margin, and the differences in positions of the camps was dramatic.  A quick summary follows:

Per footnote 1 of the Rader/Linn/Moore/O’Malley opinion, none of the writings are precedential, only the affirmance.

Lourie/Dyk/Prost/Reyna/Wallach (plurality opinion):
The software claims in question are directed to the abstract idea of escrow and do not add “significantly more” to the abstract idea.  The opinion threatens all software patents by its statement that

Because of the efficiency and ubiquity of computers, essentially all practical, real-world applications of the abstract idea implicated here would rely, at some level, on basic computer functions—for example, to quickly and reliably calculate balances or exchange data among financial institutions. At its most basic, a computer is just a calculator capable of performing mental steps faster than a human could. Unless the claims require a computer to perform operations that are not merely accelerated calculations, a computer does not itself confer patent eligibility. In short, the requirement
for computer participation in these claims fails to supply an “inventive concept” that represents a nontrivial, nonconventional human contribution or materially narrows the claims relative to the abstract idea they embrace.

Furthermore, since the plurality opinion determines that system claims directed to computers implementing software should be treated the same as the method or medium claims, the plurality determines that the system claims do not have greater patent-eligibility despite being “formally drawn to physical objects.”  The plurality wants to prevent “clever claim drafting” to avoid the restrictions of Section 101, and thus chooses to analyze the system claims for preemption of an abstract idea under the same rubric as used for the method claims.

Rader/Linn/Moore/O’Malley:
Following In re Alappat, the system claims are patentable because they recite a special-purpose machine.  The claims do not preempt all uses of the abstract idea of an escrow, and even if some of the broad claims did, some of the narrower dependent claims are in means-plus-function format and thus are limited to specific implementations disclosed in the specification.  This opinion argues that if the plurality opinion is the law, then all existing software patents are invalid:
And let’s be clear: if all of these claims, including the system claims, are not patent-eligible, this case is the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents.1
1 If all of the claims of these four patents are ineligible, so too are the 320,799 patents which were granted from 1998-2011 in the technology area “Electrical Computers, Digital Processing Systems, Information Security, Error/Fault Handling.” See U.S. Patent & Trademark Office, Selected Technology Report, available at http://www.uspto.gov/web/offices/ac/ido/oeip/taf/ec_dps_is_
efh.htm. Every patent in this technology category covers inventions directed to computer software or to hardware that implements software. In 2011 alone, 42,235 patents were granted in this area. Id. This would render ineligible nearly 20% of all the patents that actually issued in 2011. If the reasoning of Judge Lourie’s opinion were adopted, it would decimate the electronics and software industries. There are, of course, software, financial system, business method and telecom patents in other technology classes which would also be at risk. So this is quite frankly a low estimate. There has never been a case which could do more damage to the patent system than this one.

Rader/Moore:
Method and medium claims are not patent-eligible because the recited steps are all inherent in an escrow.  [[DLI Note: I’m not entirely clear on what the difference is between the Rader/Moore position and the plurality position on this point, but it was enough to prevent them from combining to write a majority opinion.  Perhaps someone with a greater understanding of the nuance of Section 101 can chime in?]]

Moore/Linn/Rader/O’Malley:
A second opinion by these four judges, arguing that the system claims should be eligible, and asking the Supreme Court to take this case:
It has been a very long time indeed since the Supreme Court has taken a case which contains patent eligible claims. This case presents the opportunity for the Supreme Court to distinguish between claims that are and are not directed to patentable subject matter.

Newman:
Judge Newman believes that the Supreme Court was wrong to create an “abstract idea” exception, and that the claims should be found patent-eligible under Section 101.

Linn/O’Malley:
The plurality erred by giving a broad interpretation to the method and medium claims.  Had the plurality or the court below construed the claims properly in light of the specification and the stipulations of the parties, they would have found the claims to be directed to a special-purpose computer, and thus be patent-eligible for the same reasons as discussed for the system claims in the Rader/Linn/Moore/O’Malley opinion.

My thanks to Domenico Ippolito for his help in preparing this post.

Is the increase in software patents over the last 30 years due to a patent system run amok, or is it simply because software has become ubiquitous?

According to the IEEE Global History Network, over 4 billion microcontrollers are sold each year worldwide.  (http://www.ieeeghn.org/wiki/index.php/Microcontroller) Yes, that is billion.  And that does not include microprocessor sales – sales of ARM based microprocessors total more than 6 billion a year. (See http://en.wikipedia.org/wiki/ARM_architecture)  Combined, that totals over 10 billion software-driven devices sold each year.  The sales of these devices alone, not to mention the software used to control them, comes to hundreds of billions of dollars.  Moreover, these microcontrollers and microprocessors have made possible one of the greatest waves of new innovation in the history of the world.

Considering that software is found in the pocket of virtually every adult in the US, in virtually every home and business in the US, in every car in the US, and in a multitude of other places and devices in every city and town, should we really be obsessing about an average of about 700 patent suits a year?   I think not.

Moreover, considering that nearly 300,000 patents are issued each year, it appears that that no more about than one in 500 ever gets asserted.  That hardly makes it seem like the USPTO has run amok issuing ridiculous patents.  Quite to the contrary, those that work in front of the USPTO in the software arts almost uniformly agree that the USPTO is anything but easy on examination of software patents.  That is pure, unsubstantiated, urban legend.

Last week, Google submitted comments to the USPTO pertaining to the enhancement of the quality of software-related patents.  Google’s position is that proper application of 35 U.S.C. § 112(f) would solve many of the problems being experienced with software patents.  These problems include preemption, over breadth, and lack of clarity as to the boundaries of the claim scope.  Google points out many flaws in current examination procedures and offers solutions that would require changes to the MPEP and policy at the USPTO.

Google claims that many software patents contain functional claim elements without providing sufficient structure, either in the claims or the specification, to satisfy section 112(f).  A number of methods that applicants have used to avoid analysis under 112(f) are discussed in detail.  These methods include reciting a general-purpose computer, general-purpose software, or coining new terms (i.e., selector, validator, etc.) that do not add to the level of disclosure.  Google asserts that these types of claims are functional and should be subject to rigorous review by the USPTO under section 112(f).

Google offers a few different strategies that could be used to solve the problems with software patents.  First, Google suggests that examiners should have to determine if section 112(f) applies for all software patent applications.  Currently, unless certain buzzwords are used, the MPEP embraces a rebuttable presumption that section 112(f) does not apply.  This gives applicants the opportunity to avoid analysis under section 112(f) by simply not using the identified functional language in the MPEP.  Most of the functional terms that are offered as examples in the MPEP do not readily apply to software.  Google suggests that the USPTO should not rely on the presumption against section 112(f) application for software patents.

Google also addressed the evidence that should be considered for analysis under section 112(f) and how the analysis should be recorded.  Google suggests that intent evidence should not carry weight under section 112(f) analysis. The only relevant inquiries into whether a claim recites sufficient structure are to look at the statute and the disclosure.  Google supports the USPTO’s proposal that the examiners require all applicants to particularly point out supporting structure in the specification for claim elements subject to section 112(f).  Google also suggests that the discussion between the examiner and the applicant should be included, in its entirety, in the record.  This would result in many applications being amended during prosecution rather than resolving the ambiguity in litigation.  Google also asserts that algorithms must be included with every software patent, including both system and method claims, in order for it to satisfy the requirements under section 112(f).  The algorithm must identify the inputs, the outputs, and enough detail to allow someone to take the actions necessary to generate the outputs from the inputs.  This requirement cannot be satisfied by including a high-level flow chart because, while this may enable a skilled artisan to implement a claimed function, this does not satisfy the definiteness requirement of section 112(f).  Google stresses that the purpose of section 112(f) is to define the bounds of the claim and to prevent patentees from claiming all possible means of achieving a function.

Lastly, Google recommends that changes to the MPEP be made and examiners receive new training as to how to apply section 112(f) more thoroughly to software patent applications.  Specifically, Google states that the presumption against section 112(f) analysis should be removed from the MPEP and training should be provide for analysis of functional claims in the software context.

From time to time it is instructive to review how the BPAI is dealing with software § 101 issues.  Thirteen recent decisions are summarized further below.  A few observations from these cases include:

1. Almost all claims on appeal for § 101 issues involved method claims or program product claims that did not include a limitation to a “non-transitory” medium.
2. Claims that were clearly limited to computer apparatus implementations were found § 101 compliant.
3. Program product claims that were not limited to non-transitory mediums were found non-statutory.
4. Software limitations that are not expressly tied to execution on a computer or other machine, even if they imply computer implementation, will invite § 101 rejections, and may render the claim non-statutory in the Board’s view.
5. At least one method claim to a business related process, in this case an order management process, was rejected under § 101 even though it appeared to be clearly limited to an “electronic” implementation -  see notes on Serial No. 11/758,521 below.  In this particular case, the Board affirmed the rejection of the subject claim under § 101 by disqualifying a number of the limitations as mere “data gathering steps” or “data output steps.”  On a different day, or with a different panel, its conceivable this case could have just as easily passed muster under § 101 as opposed to being rejected.  On the other hand, it did involve method claims not tied to a machine implementation per se.

Presented below are the case summaries:

11/563,897 – Affirmed

This application was directed to apparatus and methods for facilitating communication between a managed system and multiple management systems.  The examiner rejected the following claims under § 101:

7.  A method, comprising:

updating a logical system entity in response to an attribute value change indication from a physical system entity; and

in response to updating the logical system entity, triggering a protocol entity of a protocol agent to send at least one notification to a management system using a protocol associated with the protocol agent, wherein the protocol entity is triggered using at least one mapping between the logical system entity and the protocol entity.
9. The method of claim 7, wherein the at least one mapping between the logical system entity and the protocol entity comprises a mapping between (1) at least one of an object, an attribute, and an attribute value of the logical system entity, and (2) at least one of an object, an attribute, and an attribute value of the protocol entity.

10. The method of claim 7, wherein the logical system entity forms a portion of a protocol-independent information model.

11. The method of claim 7, wherein the protocol agent comprises a protocol-specific information model associated with the protocol, wherein the at least one notification is formatted using the protocol-specific information model.

The examiner, relying on the machine-or-transformation test, determined that no machine is present and asserts that the “managed system” is not hardware but the type of data being processed.  The Board affirmed the examiners determination because the “managed system” in the claims is not performing any step of the claimed method.  The Board also notes that there is no other machine in these claims that is necessary for the performance of the method.

11/850,192 – Affirmed

This application claimed computer readable medium without including the limitation of “non-transitory.”

10. A computer readable medium comprising code segments to be executed by a computer . . . .

The examiner gave the claims the broadest reasonable interpretation and rejected the claims under § 101.  The applicant did not attempt to amend the claims to include the limitation.  There is not much here for discussion by the Board because it must affirm the examiner in this situation.

11/758,521 – Affirmed

This application was directed to an order management system.  The claims rejected under § 101 are method claims.

1. A method of rendering a progress, through a plurality of separate entities each linked by a network to a display and a data repository, of an order of a user for a custom made product carried in inventory, the method comprising:

electronically receiving, via said network, purchase order information:

associated with the order that is generated by a first said entity of the plurality of separate entities; and

including:

a specification of the user for the custom made product; and

a delivery address of the user;

electronically receiving, via said network, order status information associated with the order that is generated by a second said entity of the plurality of separate entities;

electronically receiving, via said network, manufacturing status information associated with the order that is generated by a third said entity of the plurality of separate entities;

electronically receiving, via said network, shipper status information associated with the delivery of the custom made product to the delivery address, wherein the shipper status information is generated by a fourth said entity of the plurality of separate entities;

electronically storing in the data repository the received purchase order information, the order status information, the manufacturing status information, and the shipper status information; and

in response to an input of the user, forming a first transmission for delivery via the network, wherein the first transmission includes data sufficient to electronically rendering, on the display, a current status of at least one of the purchase order information, the order status information, the manufacturing status information, and the shipper status information.

1. The method of claim 1, wherein the user is an end customer purchasing the custom made product.

The Board determined that: (1) the receiving steps were mere data gathering, which represent insignificant extra-solution activity, (2) the storing steps could be performed by a person mentally based on the broadest reasonable construction, and (3) the forming step was determined to merely perform an output step.  The dependent claims were determined to include field-of-use limitations that were not sufficient to render the process patent-eligible.

11/540,769 – Reversed

This application was directed to a system and method to implement real-time bidding using instant messaging.  The first group of rejected claims recited an instant messaging server that included instructions to communicate with a market place environment and a client machine.

1. A system comprising:

an instant messaging (IM) server including at least one processor and memory including instructions to:

communicate with a market place environment via a first communication channel and to communicate with a client machine via second communication channel, the first and second communication channels using a real-time communication protocol, at least one of the first and second communication channels being a secure channel;

communicate an event notification instant message in response to detecting a predetermined event including at least a bid placed on a listing watched by a user to the client machine; and

communicate a bid to the market place environment via the secure channel.

The second groups of rejected claims recited a processor-implemented method for real-time bidding:

1. A processor-implemented method comprising:

at a network-based commerce system including at least one processor and memory storing instructions, the at least one processor executing the instructions to perform the operations of:

detecting a predetermined event including at least a bid placed on a listing watched by a user;

communicating an event notification related to the detected predetermined event via a first communication channel between the network-based commerce system and a client machine of the user using a real-time communication protocol; and

accepting a bid in response to the event notification via a second communication channel between the network-based commerce system and the client machine of the user using the real-time communication protocol, the second communication channel being a secure channel.

The Board reversed the examiners rejection because the examiner essentially combined § 101 and § 112 in his analysis.  The Board also rejected the examiners assertion that propagating signals were within the scope of the recited instructions because physical memory within the server was explicitly recited for storing.  The Board also found that the second set of claims is narrower than an abstract concept because it is directed to a processor-implemented method that is performed on a particular machine.

12/055,540 – Reversed

This application was directed to networked mail processing systems that operate to increase efficiency.  The claims rejected under § 101 were method claims.  The rejected independent claim was:

9.         A method for providing a sender of a mail piece with a recipient address within a recipient entity, the sender and recipient entity each having a respective mail processing system coupled to a network, the method comprising:

receiving at the recipient entity mail processing system a request from the sender mail processing system for the recipient address within the recipient entity;

comparing, in the recipient entity mail processing system, information included in the request with information stored in a database to determine, based on the information included in the request, a correct recipient address; and

providing the correct recipient address from the recipient entity mail processing system to the sender mail processing system.

The examiner concluded that this method failed the machine-or-transformation test because the “mail processing system” is not particular in the context of the claim and fails to disclose a transformation.  The Board disagreed because the steps of the method required the use of the processing system.  The Board reached this conclusion by looking to the specification, which included a specific discussion of the processing that is performed.  The mail processing system was determined to be a special purpose computer or “particular machine” sufficient to satisfy § 101.

10/866,433

This appeal was filed prior to the Bilski opinion.  The Board left the § 101 question to the examiner if there was to be further prosecution.  The claims to be subjected to 101 analysis were all claims to computer-readable storage medium.

14.       A computer-readable storage medium carrying on or more sequences of instructions which, when executed by one or more processors, causes the one or more processors to perform the method recited in Claim 1.

As noted in one of the opinions above, these claims were indicated § 101 compliant if the limitation “non-transitory” was inserted.  Other claims to a computer-implemented method for detecting changes to the result query expression computed by a database server passed under § 101 and were rejected under §§ 102 and 103.

11/009,339 – Affirmed

This is another application that claimed a computer readable storage medium without the “non-transitory” language.

25.       A computer readable storage medium comprising computer code for implementing a method of sharing access to a cluster of computers, the method of sharing access to the cluster of computer comprising the steps of . . . .

11/483441 – Affirmed

This application was directed to a computer client application for interfacing with an online dating database of profiles.

1. A dedicated computer client application for interfacing with an online dating database of profiles, comprising:

a window displayed on a client computer desktop of an operating system executing in a computer, the window being displayed in connection with an online dating computer application executing by the operating system, the window covering only a portion of the computer desktop and no more than one-quarter of the computer desktop;

a summary profile from an online dating database communicatively coupled to the computer over a computer network, the profile being displayed in said window, said summary profile being derived from a profile of a member in the online dating database matching a criterion; and

a button disposed in said window and associated with said summary profile, said button inviting said member to add the user to a match list of the member and the user.

During prosecution, the examiner determined that the claimed application encompassed software per se and is not statutory.  There was confusion as to whether the claims were to a process or a machine.  The applicant asserted in the Appeal Brief that the “client application” constituted a process.  However, the applicant stated that the “client application” was a machine in the Reply Brief.  The Board determined the argument that the “client application” was a machine was not timely filed and was not considered.  Therefore, the Board affirmed the examiner’s rejection.  The rest of the claims in the patent application depend from claim 1 and were also rejected under § 101.

11/875,758 – Affirmed

The claims rejected under § 101 were directed to a system for managing multiple email addresses, but were written as method claims.  The claim language is:

8.         A system for managing multiple email addresses, the method comprising:

email addresses selected, on a user computer system having an email client interface, for an email to be sent through a computer system in communication with the mail server, wherein the email addresses comprise an email distribution list;

an interrogation module, associated with the email client, for querying, before sending the email, for duplicate contacts associated with any of the email addresses in the email distribution list for the email;

an update module, associated with the interrogation module, for updating the email distribution list to the email addresses left in a remaining email distribution list produced through removal, if any, of the duplicate contacts identified by the querying by the interrogation module; and

a completion module for sending the email to contacts associated with each of the email addresses in the remaining email distribution list in communications with the mail server.

The examiner determined that this independent claim did not contain a concrete structure so it did not merely claim software in the abstract.  The applicant argued that the “user computer system having an email client interface” constituted hardware.  The Board agreed with the examiner that the “computer systems” were not tied to any of the modules and were not otherwise claimed as part of the system.  The Board stated that the “email addresses” were the system component and are software.  The Board also stated that none of the modules recited include hardware.  All other claims dependent on claim 8 were rejected too.

10/854,532 – Reversed

The claim rejected under § 101 was directed to a telecommunication system.

11.       A telecommunication system, comprising a first endpoint for compressing application messages to be transmitted on a transport layer, and a second endpoint for decompressing application messages received from the transport layer, wherein

said first endpoint is configured to transfer from at least one application client at least one application message to a compression entity configured to compress application messages according to a signalling compression method; compress said at least one application message according to said signalling compression method; transfer the at least one compressed application message back to said at least one application client; and transfer the at least one compressed application message to a transport layer to form a transport layer data packet stream including at least one application message compressed according to said signalling compression method;

said second endpoint is configured to receive transport layer data packet stream including application messages, at least one of the application messages being compressed according to said signalling compression method; transfer the received transport layer data packet stream to at least one application client; identify uncompressed application messages directed to said at least one application client; transfer unidentified application messages to a decompression entity configured to identify and decompress application messages compressed according to said signalling compression method; decompress said at least one application message compressed according to said signalling compression method; and transfer the decompressed application messages back to said at least one application client.

The examiner found that the claimed system comprising of endpoints is software per se after consulting the Specification.  As written in the claim, the endpoints do not contain physical components.  However, the Board determined that the Specification defined the endpoints as “user equipment.”  The Board determined that the endpoints were articles of manufacture and not pure software.

10/876,215 – Affirmed

The majority of claims rejected under § 101 were directed to a method for schedule shifting.

34.       A method for scheduling shifts, the method comprising:

establishing parameters for a first program in a multi-institution scheduling system, the parameters including a list of other programs associated with the first program; and

creating a shift for the first program including selecting other programs from the list of associated programs that have access to the shift for scheduling at the same time as the first program has access to the shift for scheduling.

The examiner determined that the method was not tied to a particular machine or apparatus and did not transform an article into a different state or thing.  A “multi-institution scheduling system” is listed in the independent claim and this system is described in the Specification as “clearly a machine or apparatus” according to the applicant.  The Board stated there was not a tie to the method and refused to import limitations from the Specification.  This seems to be at odds with how the Board panel handled the 10/854,532 application.

Another independent claim rejected under §101 was directed to a computer readable medium.

44.       An article of manufacture comprising:

a computer readable medium bearing code embodied therein for a multi-institution scheduling system and including . . . .

The Board affirmed the rejection here because the applicant did not limit the scope of this claim to only include non-transitory signals.

10/460,955 – New Ground for Rejection

This opinion was different than the others because the Board entered a § 101 rejection as a new ground of rejection.  The rejected claims were directed to methods for responding to queries and generating an abstraction hierarchy.

25.       A method that facilitates generating responses to queries, comprising:

receiving a query;

processing the query for informative terms; and

mapping the query into an abstraction hierarchy in accordance with a distribution of potential answer terms, to facilitate identifying an answer term to the query.

38.       A method of generating responses to queries, comprising:

receiving a question;

extracting a term from the question;

generating a table of potential answers from a question/answer hierarchy, the table including the potential answers in which the term occurs;

testing the table of potential answers for a discriminating term;

storing the discriminating term as an informative term;

ranking a plurality of the informative terms by relevance to a potential answer to the question; and

utilizing one of the informative terms to find the potential answer.

41. A method of generating an abstraction hierarchy, comprising:

receiving an existing abstraction hierarchy of nodes of questions and corresponding informative terms;

receiving a new question;

generating informative terms for the new question;

calculating a similarity value between the new question and every question in the existing abstraction hierarchy; and

grouping the new question with the most similar question in the existing abstraction hierarchy based on the similarity value.

The Board determined that all of the steps of the independent claims could be performed in the human mind.  The claims also failed to expressly require the method to be performed by any machine.

11/011,373 – Affirmed

The claims rejected under §101 were directed to a method of playing a casino game.

1.         A method of playing a casino game, comprising:

(a) receiving at least a first wager for at least a first playing mode, the first playing mode being compulsory; and

(b) receiving at least a second wager for at least a second playing mode, wherein the second playing mode is without a house advantage;

(c) dealing playing cards to at least one player, dealing at least one non-player card, and forming a player hand;

(d) resolving the first wager according to a poker rank of the player hand against a payout scale; and

(e) resolving the second wager without a house advantage according to the poker rank of the player hand against a poker rank of another player hand.

The examiner determined that claims did not satisfy either prong of the machine-or-transformation test.  The only arguable step was that of “dealing playing cards.”  The relationship of the cards to the method depends only on the information displayed, not the machine or apparatus conveying the information.  The Board held that “dealing playing cards” did not tie the method to a particular apparatus or machine.  The Board stated that this was an attempt to preempt the use of all machines and processes employing this particular manner of wagering.  The applicants only argument seemed to be that the machine-or-transformation test was dismissed by Bilski.

My thanks to Kyle Helgemoe from William Mitchell College of Law for researching and summarizing the cases.

http://notonlyluck.com/2013/03/29/software-patents-for-startups/

“Patents can offer valuable business leverage, offering a limited-time monopoly to those that invent and go through the patent process.  Several of the founders of AccelerEyes were granted a patent late last year, which we first filed in 007. It can take a LONG time for patents  to actually be reviewed and granted. We view our patent as very important to our business, offering us the limited monopoly to monetize our inventions.  Of course, this is all independent of how I think the political system with respect to software patents should evolve. My point is simply to say that independent of one’s views on the system, the reality is that software patents should definitely be considered by startups inventing new ways of doing things, due to the valuable business benefits, competitive protection, and tangible asset.”

This posting is for those that say software innovation moves too fast to be protected by a slow moving patent system.  The demo in the hyperlink below was presented to about 1000 computer professionals in Silicon Valley in 1968.  Englehart has been a prolific inventor in computer sciences of everything from the mouse to GUI to word processing, and it’s all on this demo.  Nearly 50 years later the mouse-driven, word processing interface lives on.  Had Englehart filed a patent in 1968 it would have been nearly expired by the time the technology he invented made it to the commercial market.

http://www.nakedcapitalism.com/2013/03/the-mother-of-all-demos-presented-by-douglas-engelbart-1968.html

The Court of Appeals for the Federal Circuit recently heard oral arguments for the en banc rehearing of CLS Bank v. Alice Corp.  The questions to be focused on pertained to a test for determining when computer implemented inventions are abstract ideas and whether the form of the claim (method, system, or storage medium) was relevant to eligibility under Section 101.  Based on the oral arguments, it appears that some Judges would be uncomfortable declaring claims that recite systems as ineligible subject matter under Section 101.  However, the Judges seemed more receptive to the idea that method claims of computer implemented inventions could be ineligible.  The following is a synopsis of the arguments and comments from the hearing:

Arguing for CLS, Mr. Perry asserted that the claimed methods in Alice’s patents are abstract ideas and the tangible elements (computer) were added solely for the purpose of passing the eligibility requirement at the time.  In other words, the computer is neutral to the claims and does not add enough for the claim to be to significantly more than an abstract idea.  He also asserted that the patent was issued under the wrong standard of review at the PTO.

Judge Moore stated that this reasoning is difficult to apply to the system claims at issue.  She believes that adding a limitation to a computer system should not render the claim ineligible under Section 101.  She also stated that the specification included how to configure a computer to perform the claimed methods.

CLS asserts that the claims of the Alice patents are not to software inventions at all.    This is evidenced by the fact that the methods claimed can be performed using pencil and paper, without a computer.  CLS emphasized that Alice has not written a program to perform the methods and does not sell a product that perform the methods.  CLS categorized Alice’s claims as business methods where a general computer is simply added to attain eligibility under Section 101.

Arguing for Alice, Mr. Perlman asserted that Alice has not claimed an abstract idea, but a specific way of using a computer to exchange obligations using a computer.  He also asserted that even without the computer implementation, the claimed methods would be eligible under Section 101.  Alice’s claims require the use of a specially configured computer and Alice asserts that the specification of its patents instruct how to configure a computer to perform the methods that are claimed.

Alice thinks the test should be: the claim, with all its limitations, taken as a whole, must be to significantly more than just the abstract idea.  As applied to the computer context: the computer must play a significant role in permitting the claimed invention to be performed and not simply there to increase speed or print a result.

Some Judges were interested as to whether end of the day netting can be performed without infringing Alice’s claim.  This line of questioning was pursued to determine whether Alice claimed the only way of performing end of the day netting, which would suggest the claims at issue were not as specific as Alice seemed to assert.

Arguing for the United States, Mr. Kelley asserted that simply adding a general purpose computer to an abstract idea should not result in the claim being eligible subject matter under Section 101.  He also asserted that the process of determining eligibility under Section 101 must include an analysis of the function of the computer in the claimed method.  He suggested investigation into whether the method is separable from the system as a possible avenue to pursue.

This post prepared with assistance from Kyle Helgemoe.

The USPTO’s recent initiative to hold hearings on software patents reminds us again that the software patent debate continues, as it has for over thirty years.  Most of us that have been around throughout this time continue to wonder why this issue never gets resolved.   Why does the opposition to software patents continue to be visceral among at least a vocal minority of software developers?  Why do software patents continue to aggravate many software companies, even if they are in favor of the system in general?  Twenty years ago, the cause of this frustration was laid at the feet of poor patent examination quality.  The USPTO responded to those criticisms by greatly increasing the quality of examination in the software patent arts, and arguably holding software innovation to a higher standard of patentability than other technologies.  Now, the attention is being focused on functional claiming as the boogie man.  See my previous post for what I think of that line of reasoning.

There are, however, reasons that this debate has continued on for so long, but I think they lie in a different dimension than patent quality.  Software is indeed different from many other technologies, and those differences do create a patent ecosystem that is different from most other technologies. This difference is not, however, in the nature of software innovation, i.e., that it is somehow fundamentally different than innovation in other technologies (e.g., electronics or robotic systems), but rather in the structure of the software industry.

First, software inventors and software enterprises are far more numerous and un-concentrated than in most if not all other high technology industries.  One estimate puts the number of software contracting entities or publishers in the US at five thousand or more, most with less than a dozen employees.   Moreover, there are approximately 1,000,000 programmers and software engineers in the US.  All of these entities are capable of software innovation and patenting.  Most if not all other high technology industries, by comparison, have an order of magnitude fewer ongoing operating entities or working engineers or technicians.   This means the ownership of software patents in the US is both relatively un-concentrated and that the owners are more likely to have little or nothing to lose enforcing their patents, since their enterprises are small with few customers.

Second, even a single developer can make, manufacture and widely distribute a software application without much other than a computer and an Internet connection.

Third, software is ubiquitous in the US – it is now used by virtually the entire population of the US, other than infants.

Fourth, there are ample non-practicing entities that are more than happy to help small software entities to enforce their patents, or buy them outright for enforcement purposes.

This industry structure and the ubiquity of software users could be said to be a volatile mix.  There are a relatively large number of software patent owners with little to lose enforcing their patents, and a large number of targets.  That may be more to blame for the large number of software patent suits than the quality or undue breadth of software patents.  Moreover, the solution to the software patent problem may lie more in the realm of reforms uniquely addressed to these factors, as opposed to patent quality.  No doubt reforms addressed to these factors may be difficult if not impossible to achieve, but at least someone should be thinking about it.

There is one more factor that makes software very unique — because a single person can successfully develop and distribute software applications, the experience with the system is highly personalized for a large number of developers.  Software patents, in a sense, and almost unlike all other technology areas, restrict what feels like our treasured personal freedom, and understandably thus generate a visceral reaction to those so affected.  In almost all other mainstream industries, inventors do not act as manufacturers, but are employed by them.  This decouples and depersonalizes infringement concerns from the inventor/developer.  In actual practice, it is extremely rare that a small developer would ever be sued for infringement by any entity other than a direct competitor.  In this instance, the developer would be able to quite easily see it coming, but there is a possibility that they could be sued and not see it coming.  So, I can understand why smaller developers would feel personally threatened by software patents.  And even software developers in large companies often still fancy themselves as independent souls who, in their dreams, find fame and fortune founding a start-up and striking it rich.  So, they too, often can take umbrage as much as an independent developer.