Archive for May, 2013

Investing in America’s Future – why the patent system and software patents are key to our future

Thursday, May 30th, 2013

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:

“Since the beginning of our country science and invention have been inextricably interwoven with the patent system. To endeavor to separate them in retrospect and examine each independently of the other would be futile, despite the fact that occasionally the comment is heard that our industrial progress would have been as great regardless of whether this country maintained a patent system. Such commentators predicate their remarks upon nothing stronger than idle conjecture and baseless assertion. No one can faithfully say what the industrial history of this country would have been without a patent system, but this much can be said, that with one it has been greater than that of any other country. As long as these principles apply, namely, that our industrial development is the greatest on the face of the globe, and secondly, that such development is and has been inseparably connected with the patent system, time consumed in speculating on the ability of one of these factors to survive without the other should be time wasted.”

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?

CLS Bank v. Alice: Chasing the rabbit down the Bilski hole.

Friday, May 10th, 2013

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.

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
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.

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?]]

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.

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.

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.

Massive Growth in Software Usage the Real Reason for More Software Patents, not Abuse.

Thursday, May 9th, 2013

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.  ( Yes, that is billion.  And that does not include microprocessor sales – sales of ARM based microprocessors total more than 6 billion a year. (See  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.