Senator Coons Discusses the Stronger Patents Act on CNBC

June 22nd, 2017

The Stronger Patents Act was recently introduced by Senator Coons, and includes a number of provisions that would curb abuses of Inter Partes Reviews.  You can find Senator Coons’ interview on CNBC here:

https://www.coons.senate.gov/news/videos/watch/senator-coons-discusses-the-stronger-patents-act-on-cnbc-june-21-2017

LinkedIn Patent Story

June 15th, 2017

Check out IAM’s story on LinkedIn’s patent history, repeated on IP Watchdog:  http://www.ipwatchdog.com/.  The evolution of thinking on patents that occurred at LinkedIn is fairly typical of fast growing, baby behemoth, companies like LinkedIn.  That is, while in a company such as LinkedIn can typically fly under the patent radar for some years even as it grows rapidly (i.e., not attract much attention from large patent holders, or even trolls for that matter), once it passes a certain size, it is expected to respect the patent portfolios of other companies with substantial patent positions in the space.  This respect is typically paid with royalties if a company has little or no portfolio of its own, and later can be paid at least on part with cross-licensing of its own patents, if it has a solid patent position.

Sick Stats for Medical Software Innovations

May 29th, 2017

Robert Sachs recently posted an interesting update on Section 101 prosecution stats:  http://www.bilskiblog.com/blog/2017/05/surviving-alice-in-the-e-commerce-arts.html

One of the most disturbing stats related to medical software innovation.  Inexplicably, it has been targeted as constituting largely only “abstract ideas” not worthy of patenting.   This is another strong indication that the U.S. patent system is sorely in need of a legislative solution to the Section 101 problem that is now a runaway train on course to do major damage to the U.S. patent system and U.S. competitiveness in the technical software arts.

Quoting from Mr. Sachs’ blog on this point:

“There apparently is very little in the field of health care management innovation that these art units consider to be statutory.  Yet it’s hard to imagine a field more crucial to the welfare of the people of the United States.   Political solutions alone won’t solve our skyrocketing health care costs.  Radical, high risk innovation by the private sector is also needed.  If radical high risk innovation can put a smart phone in everyone’s pocket, it certainly can help make health care more universally affordable.  This is the type of innovation that patents are designed to promote.  Table 3 below gives you an idea of the innovations in health care management that, in all likelihood, will not get patented in our current post Alice environment.”

My thanks to Mr. Sachs for continuing to shed a light on Section 101 developments in the USPTO.

 

Kudos to China on Software Patents

March 1st, 2017

Kudos to the Chinese patent system!  According to newly clarified rules, business method inventions that include a technical feature will be patentable in China.  It is surprising to me and many others that China and the EP now offer more predictable protection for software patents than the U.S.

For more information on the eligibility of software subject matter in China, see Richard Huang’s post — https://www.linkedin.com/pulse/china-lift-curbs-software-patents-april-1-2017-sipo-richard-huang

USPTO Applicants face dismal odds in finance-related arts, but odds good outside the US

January 30th, 2017

As reported recently in The Bilski Blog (http://www.bilskiblog.com/blog/2017/01/surviving-alice-in-the-finance-arts-1.html), finance-related patent filings are being allowed at very low rate — 2.6% — so low in fact that the the “median number of allowances per examiner in the two years since Alice is one.”  That means 1/2 case allowed per examiner per year.

Aside from highlighting the dismal odds applicants face in Classes 705/035 through 705/045, as well as 705/004 (Insurance), these stats also demonstrate the utter futility of using examiner analytics for applications in Work Group 3690.  More specifically, it would appear your best chances would be less than about 1/20 even with a “loose” examiner, hardly odds worth fighting for.  Is your client going to green light a case because the examiner you are working with has allowed 2 cases in a year (4 times the median), vs 1/2 a case?

On the bright side, patent protection for finance-related applications with technical hooks are being allowed with ever greater regularity in other major industrialized countries, and these countries are quickly becoming the preferred destination for US companies seeking to protect their innovations.

 

 

 

BARRIER TO BUSINESS PATENTS SOFTENING IN CHINA

November 7th, 2016

On October 27, 2016, the State Intellectual Property Office (SIPO) published a Draft of Revisions to the Patent Examination Guidelines that would appear to reduce the barrier to software and business method patents in China. The draft has been published for public consultation and comments can be submitted by 27th November 2016.

 Article 25(2) of the Patent Law of the People’s Republic of China states that patent rights shall not be granted for rules and methods for intellectual activities. This section of Article 25 is often used as a basis for rejecting computer implemented business method patents.

 The proposed amended guidelines provide two paragraphs of relevance to software and business method patents.

 Claims related to business methods that contain both business rules and methods and technical characteristics, shall not be excluded from the possibilities of obtaining patent rights be Article 25 of the Patent Law.”

 In the second line of Part II, chapter IX, section 5.2, paragraph 1, the third sentence of the Patent Examination Guidelines are amended from, “and describe in detail which parts of the computer program are to be performed and how to perform them” to provide that “The components may not only include hardware, but may also include programs.”

 The first paragraph would appear to provide clear guidance to examiners that so long as the claims include technical features then the claims should not be rejected under Article 25(2) as a mere rule or method for intellectual activity. This appears to set a very low standard for allowable subject matter, particularly when compared to the US Alice I standard.

 The second paragraph appears to strengthen the applicants position for software inventions by allowing the software components to be considered equally to hardware components.

 When these two paragraphs are considered together in light of the current practice of SIPO, it would appear that the already lenient position of SIPO to patent eligible software and business methods is likely to move even further in favour of applicants. Companies generating software and business method inventions should therefore consider grasping the opportunities available to them in China.

Thanks to John Collins, Schwegman, Lundberg & Woessner, P.A.

USPTO issues new guidance on 101

November 2nd, 2016

USPTO issued new guidance on recent Federal Circuit decisions involving patent eligible subject matter under section 101.

The memo is available on USPTO.gov.

Avoid oversimplifying the claims – McRO

The new guidance discusses the McRO and BASCOM decisions. Regarding McRO, the guidance emphasizes not overgeneralizing the claims and considering whether the subject matter allows a computer to perform a function not previously performable by a computer. In reference to McRO, the guidance also highlights use of the specification to interpret the claims and whether they solve a technical problem, which may be indicative of the claims not being directed to an abstract idea.

Consider the combination – BASCOM

The new guidance encourages examiners to consider claim elements in combination, as well as individually, when determining whether the claim as a whole amounts to significantly more. In BASCOM the court found that the individual elements were generic computer, network and Internet components, but found the combination amounted to significantly more.

Preemption – more to come…

The update includes a short discussion of “preemption” as potential additional evidence indicative of whether the claims are directed to an abstract idea. However, the update stops short of providing any definitive guidance, but does say guidance on this point is forthcoming.

Finally, the update suggests use of non-predential decisions (e.g., SmartGene and Cyberfone) should be limited only to cases that closely match the facts in those decisions.

My thanks to Greg Stark for this post.

More good news for software patents: Amdocs (Israel) Limited v. Opnet Telecom, Inc., 2015-1180, Fed. Cir. (November 1, 2016)

November 1st, 2016

In a spate of recent decisions, the Federal Circuit seems to be loosening the reins on 101 software subject matter disqualifications.  In Amdocs, the Federal Circuit considered whether the district court was in error when it found, on the pleadings, that Amdocs claims were invalid as directed towards and abstract idea.[1] The Federal Circuit restated the Alice/Mayo two-part framework for determining patent eligibility under § 101.[2] The court noted that there can be overlap in the determination and there is no “single, succinct, usable definition or test” that informs whether a detailed analysis should be completed under step-one or step-two of the Alice/Mayo framework.[3] The court began its analysis by accepting, for the sake of argument, that the district court’s identification of the abstract idea at issue was correct.[4]

Representative claim:

  1. A computer program product embodied on a computer readable storage medium for processing network accounting information comprising:

computer code for receiving from a first source a first network accounting record;

computer code for correlating the first network accounting record with accounting information available from a second source; and

computer code for using the accounting information with which the first network accounting record is correlated to enhance the first network accounting record.

(’065 patent at 16:4–14.)

In analyzing the claims, the court considered claims found to be ineligible in Digitech, Content Extraction, and In re TLI as well as claims found to be eligible in DDR Holdings and BASCOM.[5] The court found the claims to be more like the claims at issue in DDR Holdings and BASCOM because, even though the claims arguably involved generic computer components, the claims, as a whole, represented an unconventional technical solution to a technical problem.[6] The court leaned on the claims’ enhancement element and recitation of a distributed architecture, as described in the claims and written description, to determine that the claims represented an unconventional technical solution narrowly tailored to address a technological problem specific to computer networks.[7] Thus, even if the claims were directed to an abstract idea, the court found that the claims amount to significantly more than an abstract idea.

The Federal Circuit appears to be increasingly using the written description to interpret the claims as part of the analysis under § 101. In BASCOM and Amdocs, the court used the specification as evidence of the unconventional nature of the solution presented in the claims. These decisions appear to provide additional support for including a complete description of the technical problem and solution in the specification if § 101 may be a concern. In addition, providing additional structural elements, even if they are generic, may help in an eligibility determination if the arrangement of the elements represents a unique approach that is beneficial over the art.

One major take away from this case is that this panel of the CAFC clearly believes software is patent eligible subject matter.  At least some of the representative claims discussed (e.g., claim 1 of the ‘065 patent, page 20) is a computer readable medium claim reciting computer code for performing a series of operations.  This is very welcome after comments in recent cases from certain judges suggesting that software should be per se unpatentable.

 In fact, the eligibility analysis at least partially relies on the fact that the claims recite “computer code for” doing something specific (see page 22).  Of course, this same section includes an arguably dubious claim construction reading relatively significant additional limitations into the facially broad claims.  The claim construction aspect, is where the majority relies heavily on the specification to interpret the technical nature of the claims.  Without the majority digging into the specification to determine the nature of the invention being claimed, the representative claim appears far too broad to survive any recent district court or PTAB eligibility analysis.

 The majority opinion continues by contrasting the interpreted representative claim against ineligible subject matter:

In contrast to the claims in Digitech, the majority finds “claim 1 of the ‘065 patent is tied to a specific structure of various components (network devices, gatherers, ISMs, a central event manager, a central database, a user interface server, and terminals or clients).”  Please note, NONE of the structure recited by the majority is literally recited in the representative claim.

In contrast to the claims in Content Extraction, the majority finds “claim 1 of the ‘065 patent depends upon a specific enhancing limitation that necessarily incorporates the invention’s distributed architecture–an architecture providing a technological solution to a technological problem.”  Again, the majorities distinction over prior precedent relies entirely on a very favorable construction of the claim language (the representative claim merely recites “computer code for using the accounting information with which the first network accounting record is correlated to enhance the first network accounting record,” with no additional recitations to characterize what “enhance” means).

The majority then favorably compares the representative claim to DDR Holdings and BASCOM:

“[C]laim 1 solves a technological problem (massive data flows requiring huge databases) akin to the problem in DDR Holdings (conventional Internet hyperlink protocol preventing websites from retaining visitors). … Claim “1 involves some arguably conventional components (e.g., gatherers), but the claim also involves limitations that when considered individually and as an ordered combination recite an inventive concept through the system’s distributed architecture.”  Remember, the representative claim is a computer-readable medium claim correctly drafted from the perspective of a single machine.  Accordingly, it is unclear how the claim involves a distributed architecture.

 Similar to BASCOM, “the benefits of the ‘065 patent’s claim 1 are possible because of the distributed, remote enhancement that produced an unconventional result–reduced data flows and the possibility of smaller databases.”  This entire line of argument from the majority can only be supported through heavily interpreting the claims in light of the specification.

 While the majorities analysis of the ‘065 patent is the best example, the eligibility analysis of all four of the patents at issue seems to rely very heavily on a strong interpretation of the claim in light of the specification.  Initially, it was surprising that Judge Reyna dissented in this case, after writing a very favorable eligibility decision in MCRO, which also used some interpretation of the claims in light of the specification in support of eligibility.  However, the majority in this decision goes far beyond the MCRO decision in use of the specification and claim construction to support eligibility.

 This AMDOCS decision is useful in reinforcing the importance of clearly defining a technical solution to a technical problem within the specification as well as providing some good sound bites for prosecution.  However, I would not expect this decision to represent a shift in eligibility analysis within the courts or the USPTO, this case is likely to be an outlier at least for now.  I think most panels of the CAFC and PTAB are currently likely to agree with the dissenting opinion that the specification may disclose a network monitoring system eligible for patenting, but that the claims are directed at nothing more than abstract ideas.  Of course, we can hope that this will represent a movement towards interpreting the claims in light of the specification to determine eligibility.

[1] Amdocs (Israel) Limited v. Opnet Telecom, Inc., 2015-1180, pp. 6 & 7, (Fed. Cir. November 1, 2016).

[2] Id. at pp. 7 & 8.

[3] Id. at pp. 8 & 9.

[4] Id. at p. 34.

[5] Id. at pp. 12–19.

[6] Id. at pp. 22 & 23.

[7] Id. at p. 24.

My thanks to Eric Bachinski and Greg Stark of Schwegman, Lundberg & Woessner, P.A., for this posting.

Method Requiring Physical Action not Claiming an Abstract Idea

October 27th, 2016

Green Mountain Glass (Green Mountain) filed a patent infringement lawsuit of patent 6,230,521 against Saint-Gobain Containers, Inc., d/b/a Verallia North America, known as Ardagh Glass Inc. (“Ardagh”). The court denied a summary motion filed by Ardagh, finding that the claims of ’521 patent were not directed towards an abstract idea. In doing so, the court made a distinction between claims that could be performed mentally and those requiring physical involvement. The court explains:

[Claim 1 includes] the acts of “selecting virgin glass,” “determining percentages of at least said selected components of said mixed color glass cullet,” and “creating recycled glass products from said calculated composition” are not steps that are typically considered abstract. . . . Instead, they recite steps grounded in physical action. For example, the glass-maker must select the raw materials that will be used from a list of options. . . As a whole, the claims of the ‘521 patent describe a manufacturing process for recycling batches of mixed colored cutlet glass into glass bottles with desired properties. The claims require steps that the glass-maker must physically carry out-he cannot simply use his mind or a pen and paper to perform them.

The court disagreed with Ardagh’s attempt to analogize the ‘512 claims to Flook stating that “The [Flook] court found that, at its core, the patent claimed only a method of measuring and calculating, using a mathematical formula-an abstract idea that, without an inventive or physical application.” Instead, the court found the claims to be similar to those in Diehr: “Here, the ‘521 patent, similar to the patent-at-issue in Diehr, claims a step-by-step industrial process for creating a one-color glass end-product from recycled, mixed-color glass.”

Thanks to Joe Williams, Principal, Schwegman, Lundberg & Woessner, P.A., for preparing this post.

Federal Circuit Affirms 101 Ineligibility of a Patent Claiming Detection of Unauthorized Access to Medical Information

October 11th, 2016

A Federal Circuit Panel of Judges Lourie, Plager, and Stoll, has again affirmed a District Court decision to dispose of a patent dispute on the pleadings using Alice. In FairWarning IP, LLC, vs. Iatric Systems, INC., No. 15-1985, 2016 (Fed. Cir. Oct. 11, 2016), the Federal Circuit agreed that FairWarning’s claims on fraud and misuse detection of patient medical records are “‘directed to or drawn to the concept of analyzing records of human activity to detect suspicious behavior.’ FairWarning, 2015 WL 3883958, at *2.”[1]

The court here contrasted FairWarning’s claims with both the recent McRO, Inc. v. Bandai Namco Games America Inc., No. 15-1080, 2016 WL 4896481 (Fed. Cir. Sep. 13, 2016) and Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1337 (Fed. Cir. 2016) decisions. The more interesting distinctions made by the court involved the following characterizations of the claims in McRO versus FairWarning’s claims:

The claimed rules in McRO transformed a traditionally subjective process performed by human artists into a mathematically automated process executed on computers….As such, we explained that “it [was] the incorporation of the claimed rules, not the use of the computer, that ‘improved [the] existing technological process’”

…FairWarning’s claims merely implement an old practice in a new environment. See Alice, 134 S. Ct. at 2356. The claimed rules ask whether accesses of PHI, as reflected in audit log data, are 1) “by a specific user,” 2) “during a pre-determined time interval,” or 3) “in excess of a specific volume.” ’500 patent col. 16 ll. 34–36. These are the same questions (though perhaps phrased with different words) that humans in analogous situations detecting fraud have asked for decades, if not centuries. Although FairWarning’s claims require the use of a computer, it is this incorporation of a computer, not the claimed rule, that purportedly “improve[s] [the] existing technological process” by allowing the automation of further tasks.[2]

The emphasized portions illustrate that the court appears to base the patentability decision on whether the claimed rules have already been used by people. The “subjective nature” of animators suggests that, even if the rules are the same, perhaps having no previously identified mechanism to perform a task (e.g., written rules) means that any rule claimed would be a patent eligible improvement. In contrast, the court found that the rules claimed by FairWarning were the same rules used by people for “decades, if not centuries.” This is, however, an interesting position to take given that a well-known formula connected to a well-known machine was found patentable in Diamond v. Diehr, 450 U.S. 175 (1981), and a new formula, or rules, was at the heart of Parker v. Flook, 437 U.S. 584, 585–86 (1978).

Aside from adding another specific example of ineligible subject matter, FairWarning suggests that new rules and generic computers are patent eligible as long as the rules are not later found to be followed by people.

Thanks to Bill Kaweit of Schwegman, Lundberg & Woessner, P.A., for this post.

[1] FairWarning, at 5.

[2] FairWarning, at 7–8 (emphasis added).