Software Patent Law | Patents4Software.com

I don’t want to be overly dramatic, but if the Ultramercial, LLC et al. v. Hulu, LLC, et al., decision (U.S. District Court for the Central District of California)  (Ultramercial Decision) holds up on review at the Federal Circuit, the Bilski v. Kappos decision may become an unstoppable death star for any computer-related invention that hinges on an “abstract idea.”  

The inventions at issue (US Patent 7,346,545 — US07346545) are both expressly claimed as methods for distribution of products over the Internet and are clearly and unequivocably limited to use with the Internet, an Internet web site and interactive messages.  Although the claim could be more explicit, it would also be reasonable to interpret many of the steps specified in the claims as Internet-implemented.  Notwithstanding the express limitations tying the invention to an Internet implementation, the Court found that the claims were not “meaningfully” limited to machine implementation and, accordingly, did not pass muster under the machine prong of the machine or transformation test. The claims also failed the transformation test as well according to the Court.

I think the following passage from the opinion fairly well sums up Judge Klausner’s thinking about the value of limiting claims to computers or computer networks in order to pass the machine test: 

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I have been a patent attorney since 1981 and have always been interested in software as a hobby, as an investor, as an entreprenuer, and most predominantly as an intellectual property attorney who has helped countless software companies establish the intellectual property procedures and protections they needed in order to try to build a viable enterprise.   Along the way, I have recommended many different strategies to my clients running the gamut from giving away their code, making their code open source but subject to license restrictions, keeping their source code trade secret and licensing only object code under a restrictive license, and including sometimes a recommendation to make patent protection a core protection strategy.  The approach a company takes will depend greatly on the demands of the industry they seek to compete in and the amount of risk the company must take to establish an ongoing concern.

Unfortunately, I have seen many of these start-up software companies go under — many after years of a hard fight to get traction.  Not a single one ever died because they were sued for patent infringement or even because there was a danger of patent infringement or being sued.  No, the real problem facing software companies, contrary to notions promoted by certain anti-patent organizations, is not the risk of infringing a patent but rather the risk of not being able to find any customers who want to buy, or sometimes even use, their software.  As Bob Dylan sings in the song Workingman Blues, “Sometimes no one wants what we got, Sometimes you can’t give it away.”  As Bob knows from experience, the first thing an author worries about is just getting someone to want their stuff, and if that ain’t happening, they won’t be worried too much about getting sued for infringement.  The reality is that most of new innovation just can’t find profitable traction in the marketplace — not even enough “profit” to keep one programmer going.  In other words, its the lack of sales that kills innovative new products, not software patents.

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The interim guidance published by the USPTO last month (see my postings of last week) noted that the day after deciding Bilski, the Supreme Court denied certiorari in Ferguson v. Kappos, U.S. Supreme Court No. 09–1501, while granting, vacating, and remanding two other Federal Circuit section 101 cases. The USPTO guidance surmised that the denial of certiorari left intact the rejection of all of Ferguson’s claims, and that although the Federal Circuit had applied the machine-or-transformation test to reject Ferguson’s process claims, the Supreme Court’s disposition of Ferguson made it likely that the Ferguson claims also run afoul of the abstract idea exception.  As such, if you have not yet seen Ferguson’s claim 1, which is representative, here it is:

1. A method of marketing a product, comprising:

developing a shared marketing force, said shared marketing force including at least marketing channels, which enable marketing a number of related products;

using said shared marketing force to market a plurality of different products that are made by a plurality of different autonomous producing company [sic], so that different autonomous companies, having different ownerships, respectively produce said related products;

obtaining a share of total profits from each of said plurality of different autonomous producing companies in return for said using; and

obtaining an exclusive right to market each of said plurality of products in return for said using.

Clearly this claim does not require any physical steps per se, or require the use of any “mechanisms”, as its core limitations constitute the abstract concepts of marketing, obtaining exclusive rights and sharing profits.