Archive for June, 2010

USPTO Issues Guidelines in View of Bilski

Tuesday, June 29th, 2010

Interim Guidelines – Bilski

Jim Hallenbeck provided me with these direction to Examiners is to use the Machine or Transformation test to reject method claims unless it is clear the claims are directed to more than an abstract idea.

In re Bilski — “So You’re Telling Me There is a Chance…”

Tuesday, June 29th, 2010

While the initial reaction to In re Bilski was one of relief that the Court did not put an outright kabosh on business method patents, the reality may be that the majority opinion differs little in practical effect than the Stevens dissent.  In fact, the “hope” it leaves for protecting business methods reminds me a lot of one of my favorite “hope against hope” comedy scenes in “Dumb and Dumber” (Lloyd played by Jim Carrey and with Loren Holly as Mary):

Lloyd: What do you think the chances are of a guy like you and a girl like me… ending up together?

Mary: Well, Lloyd, that’s difficult to say. I mean, we don’t really…

Lloyd: Hit me with it! Just give it to me straight! I came a long way just to see you, Mary. The least you can do is level with me. What are my chances?

Mary: Not good.

Lloyd: You mean, not good like one out of a hundred?

Mary: I’d say more like one out of a million.


Lloyd: So you’re telling me there’s a chance… *YEAH!*

In my estimation, any celebration for business method patent protection based on Bilski is about as misplaced as Loyd’s excitement to hear he had a one out of a million chance for a date.  In fact, the Court’s decision is far closer to the outright ban urged by Justice Stevens’ dissent than it is even a limited victory for business method patents.  In fact, by categorizing the claim in Bilski as an “abstract idea” the Court achieved something broader than a narrow ban on business method patents, as it also cast doubt on any claim, business method or not, that can be characterized as claiming something conceptual in nature that would “effectively grant a monopoly over an abstract idea” and additionally “preempt use of [risk hedging] … in all fields.” 

If we look again at the actual claim in question, we see a number of steps that do not appear “abstract” in the ordinary sense one might think of it.  In Merriam-Webster’s, “abstract” is defined as:

1 a : disassociated from any specific instance <an abstract entity> b : difficult to understand : abstruse <abstract problems> c : insufficiently factual : formal <possessed only an abstract right>

2 : expressing a quality apart from an object <the word poem is concrete, poetry is abstract>

3 a : dealing with a subject in its abstract aspects : theoretical <abstract science> b : impersonal, detached <the abstract compassion of a surgeon — Time>

4 : having only intrinsic form with little or no attempt at pictorial representation or narrative content <abstract painting> :

When we look at one of the Bilki claims, it is hard to see why it covers an “abstract idea.”  After all, it requires real people to perform real actions that result in real contractual obligations and real risk of capital, including:

a) performing a series of transactions between said commodity provider and consumers of said;

 b) identifying market participants for said commodity having a counter-risk position to said consumers; and

c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.

These claim steps define a process that is not easily seen to be  “disassociated from any specific instance”, “difficult to understand”, or “insufficiently factual.”  The claim recites a specific instance of hedging risk for commodities, is not difficult to understand and is not insufficiently factual, as it is certainly enabling.  Nor can I see how it is outside Section 101 because it “expresses a quality apart from an object.” Perhaps you could say it is expressed only in “intrinsic form with little or no attempt . . . at narrative context” but that doesn’t seem to be applicable either. 

That leaves only definition number 3 in play, i.e. that the Bilski claim “[deals] with a subject in its abstract aspects” only and therefore is not within Section 101.  But this leaves us with the question as to why the claimed process is considered abstract.  Perhaps it is because its steps primarily involve or are predicated on legalities of commercial transactions and contracts, and that these transactions and agreements by themselves are “abstract” in the sense that they exist only as conceptual constructs enforced by an agreement amoung men or citizens of a society, and have no existence outside of this abstract realm.  But then again, who really knows what the Court was thinking, as they did not provide any helpful logical analysis as to this crucial requirement of ruling a process inside or outside the realm of the abstract.

In the end, it was probably the great difficulty in defining what is or isn’t a “business method” that led the majority away from a rule that required such a definition. It is much easier to label a particular business method as an abstract idea than it is to define the universe of prohibited business methods.  Fortunately or unfortunately, depending on how you look at it, the Court has invited the Federal Circuit to attempt to provide such a definition:

“In searching for a limiting principle, this Court’s precedents on the unpatentability of abstract ideas provide useful tools. See infra, at 12–15. Indeed, if the Court of Appeals were to succeed in defining a narrower category or class of patent applications that claim to instruct how business should be conducted, and then rule that the category is unpatentable because, for instance, it represents an attempt to patent abstract ideas, this conclusion might well be in accord with controlling precedent. See ibid.  But beyond this or some other limitation consistentwith the statutory text, the Patent Act leaves open the possibility that there are at least some processes that can be fairly described as business methods that are within patentable subject matter under §101.””

Stay tuned for Bilski part II.

In re Bilski: Supreme Court Clips Wings of Business Method Patents, but Still Lets Them Fly

Monday, June 28th, 2010

While it is not surprising that the Supreme Court affirmed the result in Bilski, it is somewhat surprising (at least to this commentator) that it held that business methods were candidates for patent protection so long as they did not fall within the well established existing judicially created exceptions to patent eligibility “for laws of nature, physical phenomena, and abstract ideas.”  Moreover, the Court held that Section 101 was a “dynamic provision” and not limiting the scope of subject matter that may be patented other than the well established exceptions.

All in all, this is an expansive decision for patentable subject matter and casts doubt on a few of the Federal Circuit’s more recent decisions, In re Nuijten being one of them.

Key holdings of the Court include:

1) The method of hedging risk claimed in Bilski is not a “process” under §101.  The concept of hedging risk and the application of that concept to energy markets are not patentable processes but attempts to patent abstract ideas. 

2) However, business methods are not categorically outside the scope of Section 101.

3) The machine-or-transformation test is not the sole test for patent eligibility under §101.  Section 101 is a dynamic provision and should be read broadly.  As such, although the machine-or-transformation test may be a useful and important clue or investigative tool, it is not the sole test for deciding whether an invention is a patent-eligible “process” under §101.  In holding to the contrary, the Federal Circuit violated two principles of statutory interpretation: Courts “ ‘should not read into the patent laws limitations and conditions which the legislature has not expressed,’ ” Diamond v. Diehr, 450 U. S. 175, 182, and, “[u]nless otherwise defined, ‘words will be interpreted as taking their ordinary, contemporary, common meaning,’ ” ibid. The Court is unaware of any ordinary, contemporary, common meaning of “process” that would require it to be tied to a machine or the transformation of an article.  U. S. 124, 130, and nothing about the section’s inclusion of those other categories suggests that a “process” must be tied to one of them.

4) Nothing in the opinion should be read as endorsing the Federal Circuit’s past interpretations of §101  (e.g., State Street, 49 F. 3d, at 1373), leaving past precedent with little weight going forward.

Interesting Excerpts from the opinion:

“Adopting the machine-or-transformation test as the sole test for what constitutes a “process” (as opposed to just an important and useful clue) violates these statutory interpretation principles. Section 100(b) provides that “[t]he term ‘process’ means process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.”  The Court is unaware of any “‘ordinary, contemporary, common meaning,’” Diehr, supra, at 182, of the definitional terms “process, art or method” that would require these terms to be tied to a machine or to transform an article. ”

“This Court’s precedents establish that the machine-or- transformation test is a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under §101. The machine-or-transformation test is not the sole test for deciding whether an invention is a patent-eligible “process.” F. 3d, at 966–976 (concurring opinion). But times change. Technology and other innovations progress in unexpected ways. For example, it was once forcefully argued that until recent times, “well-established principles of patent law probably would have prevented the issuance of a valid patent on almost any conceivable computer program.” Diehr, 450 U. S., at 195 (STEVENS, J., dissenting). But this fact does not mean that unforeseen innovations such as computer programs are always unpatentable.  See id., at 192–193 (majority opinion) (holding a procedure for molding rubber that included a computer program iswithin patentable subject matter).  Section 101 is a “dynamic provision designed to encompass new and unforeseen inventions.” J. E. M. Ag Supply, Inc. v. Pioneer Hi-Bred Int’l, Inc., 534 U. S. 124, 135 (2001).  A categorical rule denying patent protection for “inventions in areas not contemplated by Congress . . . would frustrate the purposes of the patent law.”  Chakrabarty, 447 U. S., at 315.” (emphasis added)

“Section 101 similarly precludes the broad contention that the term “process” categorically excludes business methods. The term “method,” which is within §100(b)’sdefinition of “process,” at least as a textual matter and before consulting other limitations in the Patent Act and this Court’s precedents, may include at least some methods of doing business. See, e.g., Webster’s New International Dictionary 1548 (2d ed. 1954) (defining “method” as“[a]n orderly procedure or process . . . regular way or manner of doing anything; hence, a set form of procedure adopted in investigation or instruction”).  The Court is unaware of any argument that the “‘ordinary, contemporary, common meaning,’” Diehr, supra, at 182, of “method” excludes business methods. Nor is it clear how far a prohibition on business method patents would reach, and whether it would exclude technologies for conducting a business more efficiently.  See, e.g.,Hall, Business and Financial Method Patents, Innovation, and Policy, 56 Scottish J. Pol. Econ. 443, 445 (2009)  (“There is no precise definition of . . .  business method patents”).  . . .  The argument that business methods are categorically outside of §101’s scope is further undermined by the fact that federal law explicitly contemplates the existence of at least some business method patents.  Under 35 U. S. C. §273(b)(1), if a patent-holder claims infringement based on“a method in [a] patent,” the alleged infringer can assert adefense of prior use.  For purposes of this defense alone, “method” is defined as “a method of doing or conductingbusiness.” §273(a)(3). In other words, by allowing this defense the statute itself acknowledges that there may bebusiness method patents.  Section 273’s definition of “method,” to be sure, cannot change the meaning of a prior-enacted statute.  But what §273 does is clarify the understanding that a business method is simply one kindof “method” that is, at least in some circumstances, eligible for patenting under §101.”

“In searching for a limiting principle, this Court’s precedents on the unpatentability of abstract ideas provide useful tools. See infra, at 12–15. Indeed, if the Court of Appeals were to succeed in defining a narrower category or class of patent applications that claim to instruct how business should be conducted, and then rule that the category is unpatentable because, for instance, it represents an attempt to patent abstract ideas, this conclusion might well be in accord with controlling precedent. See ibid.  But beyond this or some other limitation consistentwith the statutory text, the Patent Act leaves open thepossibility that there are at least some processes that can be fairly described as business methods that are withinpatentable subject matter under §101.”

“In light of these precedents, it is clear that petitioners’ application is not a patentable “process.”  Claims 1 and 4 in petitioners’ application explain the basic concept of hedging, or protecting against risk: “Hedging is a fundamental economic practice long prevalent in our system of commerce and taught in any introductory finance class.” . . . The concept of hedging, described in claim 1 and reduced to a mathematical formula in claim 4, is an unpatentable abstract idea,just like the algorithms at issue in Benson and Flook. Allowing petitioners to patent risk hedging would preempt use of this approach in all fields, and would effectively grant a monopoly over an abstract idea.”

“Today, the Court once again declines to impose limitations on the Patent Act that are inconsistent with the Act’s text. The patent application here can be rejected under our precedents on the unpatentability of abstract ideas.The Court, therefore, need not define further what constitutes a patentable “process,” beyond pointing to the definition of that term provided in §100(b) and looking to the guideposts in Benson, Flook, and Diehr. And nothing in today’s opinion should be read as endorsing interpretations of §101 that the Court of Appeals for the Federal Circuit has used in the past.  See, e.g., State Street, 149 F. 3d, at 1373; AT&T Corp., 172 F. 3d, at 1357. It may be that the Court of Appeals thought it needed tomake the machine-or-transformation test exclusive precisely because its case law had not adequately identifiedless extreme means of restricting business method patents, including (but not limited to) application of our opinions in Benson, Flook, and Diehr. In disapproving an exclusive machine-or-transformation test, we by no means foreclose the Federal Circuit’s development of other limiting criteria that further the purposes of the Patent Actand are not inconsistent with its text. The judgment of the Court of Appeals is affirmed.”

Bilski Decision

In re Bilski — Monday, Monday, can’t trust that day…

Thursday, June 24th, 2010

OK, the Supreme Court says it is releasing its Bilski decision on Monday.  Are you anxiously looking forward or dreading the moment?  To be honest, I am not quite sure how I feel about it, but I am sure of one thing:  its going to be a very entertaining day!  As I said back a few weeks ago, I fully expect business method patents to be put out of business.  The trick will be how it gets done, and the ramifications for the gray areas around business methods.  I also expect a more flexible test of what is statutory and what isn’t.  Who knows, maybe the Supreme Court will give In re Nuijten “signals” a second chance while killing business methods! 

For those of you over 40 or so, here is the lyrics to the Mommas and the Papas “Monday, Monday” — consider “business method patents” the love lost in this song:

Monday Monday, so good to me,
Monday Monday, it was all I hoped it would be
Oh Monday morning, Monday morning couldn’t guarantee
That Monday evening you would still be here with me.

Monday Monday, can’t trust that day,
Monday Monday, sometimes it just turns out that way
Oh Monday morning, you gave me no warning of what was to be
Oh Monday Monday, how could you leave and not take me.

Every other day, every other day,
Every other day of the week is fine, yeah
But whenever Monday comes, but whenever Monday comes
You can find me cryin’ all of the time

Monday Monday, so good to me,
Monday Monday, it was all I hoped it would be
Oh Monday morning, Monday morning couldn’t guarantee
That Monday evening you would still be here with me.

Every other day, every other day,
Every other day of the week is fine, yeah
But whenever Monday comes, but whenever Monday comes
You can find me cryin’ all of the time

Monday Monday, …

In re Nuijten Revisited Yet Again — If only Einstein was a Federal Circuit Judge

Thursday, June 24th, 2010

In my recent post I reviewed the reasoning behind In re Nuijten, which came down to this, more or less:

“All signals within the scope of the claim do not themselves comprise some tangible article or commodity. This is particularly true when the signal is encoded on an electromagnetic carrier and transmitted through a vacuum—a medium that, by definition, is devoid of matter. Thus, we hold that Nuijten’s signals, standing alone, are not “manufacture[s]” under the meaning of that term in § 101.”

In my post, I concluded that as long as you accept the proposition that an electromagnetic signal has no mass you could at least possibly agree that it cannot be an article of manufacture. Well, can we really accept that an electromagnetic wave has no mass, and therefore incapable of being a tangible article, and in turn incapable of being a tangible article?  No we can’t according to my friend the physicist and Einstein.  In fact, Einstein would have found it downright silly to say that an “article” you can hold in your hand is any more tangible or has “mass” moreso than an electromagnetic wave.  So, if we accept E=mc means an electromagnetic wave has a mass and is tangible, is it an “article of manufacture” under the Sectin 101?  Well, if we look at at least one definition of “article” in a common dictionary it would seem like like.  For example, most common dictionaries define “article” as “1. An individual thing or element of a class.”  This language is pretty all-inclusive, so anything that is “manufactured” would seem to fall into it.  So what does “manufacture” mean?  One common definition is: “put together out of artificial or natural components or parts.” 

So, strictly going off of dictionary definitions, and not reading any other constraints into the definition from legislative history or case law, an “article of manufacture” by definition is “a thing put together out of artificial or natural components or parts.”  While we can parse “thing” further down, take my word for the fact “thing” is NOT defined to require tangibility or permance, so it can be just about anything.

Pulling this altogether then, is an electromagnetic signal “a thing put together out of artificial or natural components or parts.”  Sure seems like it to me, especially since you can kill people with them.  Moreover, is there any policy reason to preclude a novel. man-made electromagnetic signal from protection?  Not that the In re Nuitjen case mentioned.

Recent Pendency Statistics for USPTO Tech Centers 2100, 2400, 2600, 2800 and 3600

Sunday, June 20th, 2010

The following statistics were provided by the USPTO to the AIPLA Electronics and Software Patent Committee, and may be available elsewhere.  Much thanks to the USPTO for providing these statistics.  The stats show a very modest increase or small decrease in the number of cases pending in April 2010 compared to September 2009.  It would appear that either the PTO or the economy has for now stopped or greatly reduced the growth of backlog in the PTO.  Let’s hope the PTO can get the funding it needs to continue to implement the improvements in technology and training being sought by Director Kappos.

Technology Center pendency statistics:

 Technology Center 2100 

Average pendency to first action                      32 months

Average total pendency                                   41.3 months

Number of pending cases as of 04.30.10          61,024

Number of pending cases as of 09.30.09          60,882

Staffing – 639 examiners, 47 supervisors

Technology Center 2400

Average pendency to first action                      29 months

Average total pendency                                  43.9 months

Number of pending cases as of 04.30.10          44,037

Number of pending cases as of 09.30.09         39,669

Staffing – 688 examiners, 56 supervisors

Technology Center 2600

Average pendency to first action                     33 months

Average total pendency                                  42.7 months

Number of pending cases as of 04.30.10         121,836

Number of pending cases as of 09.30.09         127,956

Staffing – 785 examiners, 70 supervisors

Technology Center 2800

Average pendency to first action                     22.3 months

Average total pendency                                  30.6 months

Number of pending cases as of 04.30.10         123,012

Number of pending cases as of 09.30.09         123,122

Staffing – 1000 examiners, 75 supervisors

Technology Center 3600

Average pendency to first action                     26.9 months

Average total pendency                                  35.1 months

Number of pending cases as of 04.30.10         84,442

Number of pending cases as of 09.30.09         83,535

Staffing – 639 examiners, 47 Supervisors

 Overall, filings are flat for FY10

New Zealand Looking to Bring Software Patents back From Brink of Extinction?

Sunday, June 20th, 2010

Jim Hallenbeck of Schwegman reports that New Zealand may be turning back from banning software patents.

Yangaroo v. Destiny Media Tech (E.D. Wisc. 2010): Drafting Method Claims to Invoke the Benefits of Section 271(g) in Software Cases

Saturday, June 19th, 2010

On June 7, the U.S. District Court for the Eastern District of Wisconsin found that downloadable files produced by the following method do not constitute “products” under 35 USC Section 271(g):

1. A method of distributing content to a plurality of recipients over a distributed computer network, each recipient having a recipient terminal connected to the network, comprising the steps of:

(a) storing, in server, a user profile for each recipient, each user profile comprising login information and a unique identifier;

(b) receiving and storing, at the server, a content file, a release condition, a release state, and a distribution list associated with said content file, the receiving step being performed from a provider terminal connected to the network, wherein the distribution list contains unique identifiers of specific authorized recipients of the content file;

(c) receiving a request for access from one of the recipient terminals, the request containing login information;

(d) in response to the request for access; a. comparing the received login information to the stored login information to verify that the request came from one of the recipients, b. based on the comparing step, retrieving the stored unique identifier from the user profile, c. verifying that the distribution list includes said one of said recipients by comparing the retrieved unique identifier to the distribution list; and

(e) providing access to the content file at said one of the recipient terminals based on the release condition and the release state.

Using this method, a distributor of music, audio, video, or other content can encrypt and transmit such content in digital form to a server from which authorized recipients, such as radio station personnel, can decode and download the content pursuant to the predetermined terms and conditions of the distributor.

More specifically, Judge William C. Griesbach found :

“What is claimed in the ‘712 patent is “a method of distributing content” that already exists. The ‘712 patent claims no method or process for the creation of the content that Yangaroo argues constitutes the product that is essential to establish infringement under section 271(g). It therefore follows that Yangaroo’s infringement claim must fail.”

In his analysis, Judge Griesbach reiterated the following case law:

1.            In Bayer AG v. Housey Pharm., Inc., the Federal Circuit held that the statutory prohibition on the importation or sale of a product “made” by a patented process applies only to “physical products” that are “manufactured,” and does not extend to “information” produced by a patented process. 340 F.3d 1367, 1371-72 (Fed. Cir. 2003).  In Bayer the Federal Circuit reasoned that because section 271(g) appeared directed toward “tangible objects and not intangibles such as information,” the production of information did not fall with the scope of the processes of “manufacture” discussed in the statute. Id. at 1372.

2.            In NTP, Inc. v. Research In Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005), in which NTP, Inc. (“NTP”) alleged that Research in Motion, Ltd.’s (“RIM”) BlackBerry™ system infringed NTP’s patents for a method of enabling mobile users to receive e-mail over a wireless network, the NTP court held that section 271(g) did not apply “[b]ecause the ‘transmission of information,’ like the ‘production of information,’ (in Bayer AG) does not entail the manufacturing of a physical product . . . .” 418 F.3d at 1323.

3.            In CNET Networks, Inc. v. Etilize, Inc., 528 F. Supp. 2d 985 (N.D. Cal. 2007), which concerned a patent that claimed methods and systems for automatically creating an electronic catalog of product information gathered from various internet websites, the district court rejected the defendant’s argument that under Bayer and NTP there could be no section 271(g) liability and denied the defendant’s motion for summary judgement because the infringing method in that case, the court held, was used to create a product, i.e., the catalogue, which was then imported into the United States.

4.            Likewise, in Ormco Corp. v. Align Technology, Inc., 609 F. Supp. 2d 1057 (C.D. Cal. 2009), the district court denied the defendant’s motion for summary judgment of noninfringement based on section 271(g), concluding that a three dimensional digital representation of teeth transmitted to recipients in the United States was a “‘creation’ produced by ‘practicing each step’ of a patented process.” 609 F. Supp. 2d at 1076 (footnote omitted).

From this case law, the District Court reasoned that “unlike the patents at issue in CNET and Ormco, however, the ‘712 patent does not claim a method of creating or manufacturing the digital content that is received in servers and then transmitted to authorized recipients. “  Instead, Judge Griesbach found that the sole method claim at issue in the ‘712 patent is “a method of distributing content” that already exists.”  As a result, the court found that the method did not produce a “product” as is essential to establishing  infringement under section 271(g).   This was found in spite of the fact that the actual process used an encryption process that encrypted the preexisting content for distribution.  This was no matter, however, because the court found that the ‘712 patent “does not claim such a process.”

So, what can patent attorneys drafting software cases learn from this case?  One lesson is that attorneys should always be looking for opportunities to invoke Section 271(g), and drafting claims that “make” a “program or data product” whenever possible.  While it is unclear from this case law whether merely encrypting a file before transmitting it would be good enough to constitute “making” of a data product under Section 271(g), certainly any steps in a method claim that at least transform the subject data in some way is better than none.  Moreover, if the invention can be honestly characterized at least in part as a method of producing a digital data file or program product, then this aspect of the invention should be fully explained in the specification to provide solid support for a corresponding claim.

Is Data Real or Abstract Part III: When Real, Physical and Tangible Isn’t Good Enough Under Section 101: In re Nuijten Revisited

Saturday, June 12th, 2010

In two recent postings I have been exploring the distinction between real and abstract data and how those distinctions play into the question of patentable subject matter under Section 101.  My thoughts on this topic included observing that “data” has both real and abstract connotations – it is real when it is processed in a computer (how else could it be processed?) but on the other hand the data typically represents some other entity, be it a physical entity such as a machine part in a CAD system, or an abstract idea, such as a human language word in an electronic dictionary.  I further observed that it’s important to keep these distinctions in mind when drafting claims so that at least some claims are limited to processing real data, as opposed to speaking only in terms of abstract data.

So, if data is “real” and therefore not abstract, and therefore tangible, how can it be that data encoded in the “signal” of claim 14 in In re Nuijten not be statutory?  After all, it has to be real because it can be received and decoded.  Here is the claim:

14. A signal with embedded supplemental data, the signal being encoded in accordance with a given encoding process and selected samples of the signal representing the supplemental data, and at least one of the samples preceding the selected samples is different from the sample corresponding to the given encoding process.

I was surprised to find in reading the Nuijten decision it did indeed, according to at least one way to look at it, turn on the notion of whether the claim at issue was limited to covering a real, tangible signal, as opposed to a signal that was “devoid of matter.”  (page 17).   In essence, the Federal Circuit found:

1)      The “signal” claimed by Nuijten did indeed require a physical carrier

2)      The “signal” limitation was all-encompassing enough to cover electromagnetism as the physical carrier

3)      Electromagnetism is not “matter” as required under 101 to qualify as an “article of manufacture” or as a “composition of matter”

4)      The electromagnetism is fleeting and transient, although this characteristic was not necessary to support the reasoning of the case

So, is this good reasoning?  Can something “physical” not be “matter” under Section 101?  Is electromagnetism not “matter” within the scope of Section 101? 

It is interesting to note that the CAFC first grapples with whether claim 14 actually claims something physical at all, and concludes that it does, even thought the Board had found it did not:

“the signal . . . has no concrete tangible physical structure”; and “not composed of matter and [therefore] clearly not a ‘composition of matter.’”

“[t]he signal does not have any physical structure or substance and does not fit the definition of a ‘manufacture’ which requires a tangible object.”

The CAFC found otherwise, that the “signal” of claim 14 required a “physical carrier”:

“Nuijten’s position on this issue is correct in a limited way. A “signal” implies signaling—that is, the conveyance of information. To convey information to a recipient a physical carrier, such as an electromagnetic wave, is needed. Thus, in order to be a “signal,” as required by the claim, some carrier upon which the information is embedded is required. See Arrythmia Research Tech., Inc. v. Corazonix Corp., 958 F.2d 1053, 1059 (“The view that there is nothing necessarily physical about ‘signals’ is incorrect.” (quotation marks omitted)).

However, while the claims are limited so as to require some physical carrier of information, they do not in any way specify what carrier element is to be used. The only limitations in Claim 14 address the signal’s informational content. Specifically, the signal must encode some supplemental data, it must have been encoded according to a “given encoding process,” and a sample, or single data point, located before the location of the supplemental data must be different from the original. The text of the claims is not limited by any specified physical medium, nor do the dependent claims add any physical limitations. They again require only that the signal carry certain information—a watermark, video, or audio. Therefore, any tangible means of information carriage will suffice for all of the claims at issue. Nuijten’s claims can of course be embodied by conventional, known means, such as electrical signals, modulated electromagnetic waves, and pulses in fiber optic cable. So long as some object or transmission carries the information specified by Nuijten’s claim, it falls within that claim’s scope regardless of its physical form. In summary, some physical form for the signal is required, but any form will do, so long as a recipient can understand the message—the nature of the signal’s physical carrier is totally irrelevant to the claims at issue.”

However, the CAFC appears to do a logical 180 later in the opinion, when it says that, in essence, the “signal” of claim 14 is not necessarily physical matter sufficient to qualify as an “article of manufacture” or a “composition of matter.”

“All signals within the scope of the claim do not themselves comprise some tangible article or commodity. This is particularly true when the signal is encoded on an electromagnetic carrier and transmitted through a vacuum—a medium that, by definition, is devoid of matter. Thus, we hold that Nuijten’s signals, standing alone, are not “manufacture[s]” under the meaning of that term in § 101.”

This is very interesting reasoning.  Let’s take a look at it:

1)      The “signal” of claim 14 does require a “physical carrier” which can be electromagnetic

2)      The electromagnetic “signal” can travel through a vacuum

3)      A vacuum is devoid of “matter”

4)      Therefore, the “signal” at least in one form within the meaning of the claim cannot be made of “matter”

5)      Because the “signal” is not necessarily limited to “matter”, it can’t be an article of manufacture

And, by extension, the CAFC is saying that something “physical” is not necessarily “matter” sufficient to qualify an invention as an “article of manufacture.”

So, is this really logical?  Can something that is admittedly “physical” not be “matter.”  Webster’s Merriam dictionary says:

1)      “Physical” means  “having material existence : perceptible especially through the senses and subject to the laws of nature <everything physical is measurable by weight, motion, and resistance — Thomas De Quincey> b : of or relating to material things.”   

2)      “Matter” means “the substance of which a physical object is composed b : material substance that occupies space, has mass, and is composed predominantly of atoms consisting of protons, neutrons, and electrons, that constitutes the observable universe, and that is interconvertible with energy”

3)      “Electromagnetism” means a fundamental physical force that is responsible for interactions between charged particles which occur because of their charge and for the emission and absorption of photons, that is about a hundredth the strength of the strong force, and that extends over infinite distances but is dominant over atomic and molecular distances —called also electromagnetic force”

Realizing that electromagnetic energy is “intercovertible” with “matter,” the Federal Circuit added in footnote 8: “We recognize the wave-particle duality as applied to electromagnetic energy. However, the fact that photons traveling at or near the speed of light behave in some ways like particles does not make them tangible articles.”

Well, to answer the question of whether it is logical to say that electromagnetism is “physical” and yet not be “matter” I would have to say yes, so long as you accept that an electromagnetic particle has no mass and therefore cannot be not “matter” by definition.

Interestingly, the In re Nuijten decision introduces yet another facet to the “abstract” vs. “tangible” analysis used to separate subject matter under Section 101:  the notion that tangible isn’t enough, that the tangibility has to be found in some kind of “matter” and not just a “force” like electromagnetism, or some other physical realm that has no matter.

So, coming full circle to the issue of whether “data” is real or intangible in nature, the question arises if the Nuijten court would have found the state of a charge in a transistor, or the magnetic state of a disk, to be “matter” or simply an intangible force.  I think here the answer is clear:  electrical charges in a circuit result from electrons, which do have mass, and magnetic storage is the result of the orientation of magnetic poles of atoms, which do have physical existence and mass.  Further, optical storage results in physical changes to the medium.  So, where data is stored in these and other physical forms it is “matter” within the logic of Nuijten.

Perhaps most importantly, the lesson to take away from Nuijten is to avoid, at least for now, attempting to claim data that is stored or encoded only into a medium that has no “matter.”  If you claim a form of signal that does have “matter”, then In re Nuijten arguably does not apply.  For example, a digital form of the signal in Nuijten, stored in a computer memory or on a magnetic disk, does have mass and is matter and therefore outside the prohibition of Nuijten.

As to the question of whether In re Nuijten asked the right questions to arrive at its result, or took too limited a view of what an “article of manufacture” should be under Section 101, tune in later and I will give you my view on that.

Musings on Banks, Wall Street and Patents on Mortgage Products

Friday, June 4th, 2010

Am I the only one who ocassionally amuses himself with the high irony of banking industry lobbyists pressuring Congress and filing Amicus briefs to put the kabosh on business method patents such as patents on mortgage products?   See for example:  (thanks to PatentlyO for this link).

While I am at best agnostic on business method patents per se (but bullish on patents for technology that supports a business process), I hardly think anyone can any longer argue with a straight face that slowing down the dissemination of “innovative” ideas like exotic (and highly toxic) mortgage backed securities would be a bad thing. 

Maybe we should require Wall Street to patent their new ideas and have the Government pay to enforce them so that we can limit the damage to our economy from these innovations as much as possible.  Perhaps Wall Street has shown us a new use for patents.