Software Patent Law | Patents4Software.com

The judges of the U.S. Court of Appeals for the Federal Circuit are again bickering among themselves about when Section 101 (patent eligible subject matter) should be considered.  In MySpace, Inc. v. GraphOn Corp., Judge Plager steered the court clear of “the murky morass that is § 101 jurisprudence.”  No. 2011-1149, slip op. at 17 (Fed. Cir. Mar. 2, 2012).  The court instead disposed of the patents-in-suit under 35 U.S.C. 102 (novelty) and 35 U.S.C. 103 (obviousness).  Much like the patents at issue in Eolas, the patents-in-suit here encompass technology that is widely used by many popular Internet sites.  And, also like Eolas, this case was disposed of without reaching the Section 101 issue.

MySpace, Inc. and craigslist, Inc. (collectively, the “Plaintiffs”) each filed declaratory judgment suits, which were consolidated, that certain patents (the “Patents”) owned by GraphOn Corporation (“GraphOn”) were invalid and, accordingly, not infringed by Plaintiffs.  Id. at 2.  These patents “relate[] to the ability to create, modify, and store database records over a computer network.”  Id. at 3; see also MySpace, Inc. v. GraphOn Corp., 756 F. Supp. 2d 1218 (N.D. Cal. 2010); U.S. Patent 6,324,538 (July 7, 1998); U.S. Patent 6,850,940 (Sept. 14, 2001); U.S. Patent 7,028,034 (May 11, 2004); U.S. Patent 7,269,591(May 11, 2004).  Each of the Patents claims “priority to a parent application, filed on December 14, 1995, and subsequently issued as U.S. Patent No. 5,778,367.”   MySpace at 5; see also U.S. Patent No. 5,778,367 (Dec. 14, 1995).  The idea of allowing a user to create records in a database via website certainly seems obvious and commonplace in 2012.  Bear in mind, however, that in 1995 manually curated web indexes were a common mechanism for finding information on the web.  The inventors of the Patents set out to address problems relating to typos and mischaracterization of sites in those indexes.  See MySpace at 5.  The invention described in the Patents allows users to “create a database entry with their own text and graphics and then choose or create searchable categories that best matched the information.”  Id.

Unfortunately for GraphOn, the Mother of all Bulletin Boards (“MBB”), which “was first made available for public use in November 1993[,] . . . provided the ability to have online Internet catalogues that could grow through user input without the need for intervention by a webmaster or administrator.”  Id. The MBB stored all of its entries in a hierarchical file system.  Id. Accordingly, the novelty and obviousness of the Patents must be considered in light of the MBB.

Since each of the claims in the Patents include the term database, if that term is constructed to include hierarchical file systems then those claims would as a matter-of-law be invalidated “as either anticipated under 35 U.S.C. § 102 or obvious under § 103.”  Id. at 7.  GraphOn argued that the term database is limited to relational databases.  Id. A relational database “separates the stored data into multiple relations or ‘tables’ and connects them through the use of identification . . . fields.”  Id. at 4.   If database covers only relational databases, however, summary judgment would be inappropriate because “there would be a genuine issue of disputed fact on the question of invalidity.”  Id. at 7.

After de novo review, the court affirmed the construction of database as “a collection of data with a given structure that can be stored and retrieved.”  Id. In reaching this conclusion, the court noted that the “Background of the Invention” section of the Patents mentioned “databases of various kinds,” which suggested a non-limiting interpretation was appropriate.  Id. at 8.  It also noted that the preferred embodiment discussed a “tree structure,” which it concluded was “more consistent with the organizational structure of a hierarchical database rather than a relational database.”  Id. In light of this construction of database, the court affirmed the district court’s grant of summary judgment of invalidity. Id. at 12.

The court’s disposition of the case without considering patent eligibility under Section 101 elicited a fiery separate opinion from Judge Mayer.  It argues that “the subject matter eligibility requirements contained in 35 U.S.C. § 101 is an ‘antecedent question’ that must be addressed before this court can consider whether particular claims are invalid as obvious or anticipated.”  MySpace, slip op. at 1–2 (Mayer, J., dissenting).  But it also apparently agreed that the Patents are invalid, calling the scope of the Patents staggering.  Id. at 3.

The court defended its avoidance of the Section 101, noting that the Section 101 issue was not “raised by the parties or decided by the trial court.”  MySpace at 13.  It also referred to Section 101 as “the patent law analogy to the Bill of Rights of the Constitution” and explained that “[t]he Supreme Court has wisely adopted a policy of not deciding cases on broad constitutional grounds when they can be decided on narrower, typically statutorily limited, grounds.”  Id. at 18–19.   And much like addressing Constitutional issues, “every time [Section 101] is presented as a defense . . . each case requires the search for a universal truth.”  In essence, the court chose not to contribute another Section 101opinion in “the face of what has become a plethora of opinions” in the Section 101 jurisprudence.  Id. at 13.

This back-and-forth between judges is reminiscent of Dealertrack, Inc. v. Huber.  In that decision, Judge Plager wrote a separate opinion that argued that “as a matter of efficient judicial process” litigants and courts should consider the “conditions of patentability” in Sections 102, 103, 112, and 251 before “foray[ing] into the jurisprudential morass of § 101.”  Dealertrack, Inc. v. Huber, Nos. 2009-1566, 2009-1588, slip op. at 2 ( Fed. Cir. Jan. 20, 2012) (Plager, J., concurring-in-part and dissenting-in-part).

Here, unlike in DealerTrack, Judge Plager is in the majority.  Although seeming to reach opposite procedural conclusions, these decisions are consistent because both address the issue that was appealed.  On appeal in DealerTrack, was a summary judgment motion of invalidity as patent ineligible subject matter.  DealerTrack at 5–6.  Here, a “summary judgment that all of the claims were invalid as anticipated or obvious” was appealed.  MySpace at 6.

One is left to wonder whether Judge Plager’s approach (avoid, if possible, the murky morass of Section 101), Judge Mayer’s approach (Section 101 is an “antecedent question”), or the court’s flexible approach (address the issue that has been raised on appeal) will be applied in future decisions.  There is certainly wisdom in avoiding the tough questions (i.e., Section 101 interpretation) until they are presented squarely.  Here, however, it was easy to avoid Section 101 because it was not the issue being appealed.  There will be future cases where the Section 101 issue cannot be avoided as easily.  If a factual question must be answered before a judgment may be reached under Sections 102 and 103, a party may seek summary judgment under Section 101 to avoid the time and expense of trial.  Under Dealertrack, the court would certainly consider the Section 101 issue.  It remains to be seen whether this decision will change that.

[Brian Wallenfelt contributed to this posting.]

A recent paper by Christina Mulligan and Timothy B. Lee entitled “Scaling the Patent System” (Mulligan, Christina and Lee, Timothy B., Scaling the Patent System (March 6, 2012). NYU Annual Survey of American Law, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2016968) raises some legitimate issues about the difficulty in performing freedom to operate studies in the software area.  While I have not studied their paper in detail yet, I wanted to compliment them on their scholarship, and also add a few thoughts to the discourse.  Some of these thoughts are anecdotal observations, and some are based on statistics gleaned from practical experience in doing FTO searches on a routine basis, many of them in the software patent space.  First, my observations on the practical aspects of the topic in general, and then a couple of conclusions, for what they are worth to those interested in the topic.

Observations on patent trolls, software patent indexing and freedom to operate (patent clearance) studies:

1. Often you hear that patent trolls “cost the economy” money.  This of course depends on the economy you are talking about.  If the patent troll is a US company collecting royalties from a foreign entity, it costs the foreign economy money, but brings money to the US economy.  If the US is a leader in world innovation, or at least one of the dominant players, on balance US-based trolls should be bringing money to the US economy, not costing it money.
2. Even if the transfer of wealth is within the US economy, a licensing payment merely moves the money from one US entity to another, and presumably for the benefit of innovators, an important group to reward.  Yes, it costs money to achieve this transfer (patent lawyers, licensing lawyers, technologists), but there is a lot of overhead in the sale of any product or service.
3. Ironically, it is very difficult to invent something that gets adopted by others, much less adopted widely in such a way that a “troll”, or more fairly a “non-practicing entity”, would be able to economically license the invention, if even find an infringer.  Were these threatening software patents as easy to get as the fear-mongoring press is so apt to suggest, there would be a multitude of software developers living on easy street.  In fact, that is not the case — not even close.  True, a software patent can be extremely valuable IF the invention finds its way into the mainstream marketplace (and that is always the goal for software inventors) but the reality is that a very large percentage of software inventions/companies fail.  But sometimes these companies fail not because the innovation had no value, but because there was no way to bring it to market due to one or more factors.  So, the invention/patent (if one is obtained) may still have value, and while it usually won’t be worth as much as the money and time lost on the failed commercialization, at least its a consolation prize.
4. Due to the nature of patenting, the vast majority of patents are narrow in scope.  This is due to the novelty and obviousness requirements, and due to the fact that there is, after all, tons of prior art, much of which is freely available to find on the Internet.  This means that, both in theory and in practice, it is improbable that any software developer will accidentally infringe a patent, unless that patent is one of very few that are truly broad in scope.  If software patents were a minefield for developers, the mines would generally be at least 5 miles apart, making accidentally stepping on one a very low probability occurrence.  If it is a patent on “internal functionality” that would not normally be discernible by observing the software operate or using it, the odds of the patent owner finding out you stepped on their mine are smaller yet.
5. Due to the “space” between patents, the primary use of software patents is to discourage copyists from closely replicating the functionality of existing software products that are in the marketplace and that have established users/customers.  But there is usually no reason this type of copying is necessary, and if it is, perhaps the would-be competitor would be better off inventing something new instead of duplicating what is already in the market.
6. The rare, broad patent, most often, if not in the vast majority of cases, covers a technology that takes upwards to ten years or more to achieve widespread adoption in the marketplace.  This means such a patent will lay fallow or dormant for a number of years before  it is recognized to have value.  Again, not exactly an easy business model for inventors or trolls to predict the future of technology ten years out, file a bunch of patents, and then wait to get rich.
7. On the topic of freedom to operate studies in particular, the cost of an FTO study for a well defined new product is quite reasonable for a well funded enterprise.  For any given software product, the developing entity is only adding value/innovation at a particular layer/customization of the software product they are implementing.  The developing entity need only focus on the software patents applicable to that layer, not to all the sub-components they purchase from other parties, such as database software or web servers or programming languages and libraries, etc…  Each player in the software ecosystem is, generally speaking, responsible for their own part of the overall software “stack” if you will, which reduces greatly the combinatorial complexity of the FTO required for any particular software invention.
8. For most software start-ups, where the ability to fund FTO is most strained, the core innovative concepts of the proposed software design can be thoroughly researched for under $25,000.00, and the results of that FTO study can be used both to design around, most often, most of the pertinent patents, and also ascertain whether the proposed design will be eligible for its own patent protection.  Given that it typically takes many millions of dollars for a software product to make it to market, this is a small expense.  And, if it takes much less money to get to market than that, the downside risk of reducing the scale or eliminating the FTO study altogether, is proportionately less.  For example, it would make little sense to do an expansive FTO study to launch an app that costs only $10,000.00 to develop, but certainly it would be quite simple to at least check any patents/applications noted on the documentation for a directly competitive app.
9. As far as FTO goes, it is not very difficult to find virtually all patents that may be relevant to any given software innovation or new product.  There are number of well established and highly reliable methodologies for doing so that can easily overcome differences in terminology, but admittedly  these are not readily known to the amateur sleuth trying to do a “do it yourself” patent clearance search.  It takes an experienced attorney to do it, but it is very simple to do with the right tools.
10. On another point, I have made before, I have NEVER seen a software start-up get shut down due to being sued for infringement.  I’m sure it happens about .1% of the time, but I’d genuinely be surprised if it is more than that.  Almost all fail due to the inability to get to market, for a wide variety of reasons.  The reality is that no one is going to waste their time suing an entity that is not year in the marketplace.  Even if in the marketplace, about the only time you will ever see a small company get sued is if they are a second or third comer to a product space and have deliberately ignored a preexisting patent held by an incumbent.  But now days most investors, or even software developers willing to invest their time as seed capital, are not interested in blatantly disregarding the patent rights of another party that is likely to defend its turf and has the money to do so.
11. Now an important observation.  It is actually far from impossible to index patents to make them easier to review for an FTO study.  In fact, if the USPTO or another entity spent as little as $200 per patent indexing the actual claim coverage of the patents to make them easier to research and avoid for infringement purposes, the cost to innovators to do FTO searches could be enormously reduced.  There are systems and methods for doing so that are already in the marketplace (for example see www.lucidpatent.com – which my firm helped develop to make it easier to do FTO’s), but have not yet been scaled to cover each and every issued patent.  But systems like those offered by Lucid Patent, LLC, can make it much, much easier to navigate through a large number of patents with minimal effort once those patents are indexed.

I want to make it clear that I am not saying that FTO is a trivial exercise for software developers.  And also I think that all patents, not just software patents, could be much better indexed for the purpose of infringement analysis.  On the other hand, the practical reality of the way software is built from tools and components produced by various entities in the software ecosystem, makes it much easier to navigate software patents than it would first appear, with each entity in the software ecosystem minding their particular corner of innovation for FTO, leaving the aggregator of software components to worry only about the combinations of those components they seek to pursue, which is a very manageable task not much different than most other areas of technology face.

This post reviews recent decisions from the Board of Patent Appeals and Interferences that relate to software patents.  For the most part the appellants lost in these decisions and the claims remain rejected.

Ex Parte Warkentine represents the only successful appellant in the decisions we reviewed.  Here, although a machine was not expressly claimed, the machine or transformation test was passed because the claimed step of “to display” required a machine and could not be performed solely in the mind.

Many of the claim rejections were unsurprising, including a number of rejections for claiming transitory signals (“A computer readable medium” in Ex Parte Perkins and Ex Parte Sawyer; and “A computer-readable medium” in Ex Parte Gonzales-Tuchmann).  More surprising was the decision in Ex Parte Keohane that “a recording medium” with “means, recorded on said recording medium” also could be “reasonably construed” to encompass a transitory signal.  It is arguably a stretch to say that the claim covers a transitory signal given the plain meaning of the language:  (“To set down for preservation in writing or other permanent form.” Record, TheFreeDictionary, http://www.thefreedictionary.com/record (last visited Mar. 2, 2012)).  Claims were also rejected for being directed only at “non-functional descriptive material” (Ex Parte D. and Ex Parte Gonzales-Tuchmann).  Finally, in Ex Parte Alverson claims were rejected as abstract because the specific steps claimed encompassed “human thought and processing.”

A summary of each of these decisions is available below.

 

Ex Parte Warkentine (Appl. #11/752,105, Tech Center #: 3700)
Example Claim:
1. A method for placing a pelvic implant in a patient, said pelvic implant including a cup having a predetermined cup component and a femoral stem having a predetermined stem component, comprising:

obtaining image data corresponding to the cup and femoral stem;

using the image data to display a geometrical relationship between the cup and the femoral stem corresponding to a location of the cup and femoral stem in the patient; and

virtually positioning at least one of the cup within the patient’s pelvis and the stem within the patient’s femur such that a combined anteversion between the predetermined cup component and the predetermined femoral stem component corresponds to a predetermined combined anteversion.

Ex Parte Warkentine, No. 2010-010619 (B.P.A.I. Feb. 21, 2012) at 2.

Decision:
Claims allowed under §101.  “When the image data is transformed to display a geometrical relationship, that transformation and resultant display cannot solely occur in the mind of the surgeon, or the image data is not displayed.”  Id. at 5.  Accordingly, the claimed invention is not merely an abstract idea/mental process.

Tip: A claim will not be rejected as abstract if it includes steps that cannot be performed solely in the mind.

 

 

Ex Parte Perkins (Appl. #10/085,927, Tech Center #: 2400)
Example Claim:
9. A computer readable medium having instructions for:

providing an interface having instructions to send association data;

identifying an identity service using the association data, the identity service managing resource data; and

locating a resource using the resource data.

U.S. Patent Publication No. 2003/0163575A1 (Published Aug. 27, 2003).

Decision:
Claim Rejected.  The specification says “[t]he computer readable medium can comprise any one of many physical media such as, for example, electronic, magnetic, optical, electromagnetic, infrared, or semiconductor media.”  Ex Parte Perkins, No. 2009-007029 (B.P.A.I. Feb. 16, 2012) at 4.  Accordingly, “the computer readable medium recited in these claims covers non-statutory transitory signals, namely electronic, magnetic, optical, electromagnetic, or infrared media.”  Id. at 5.  Because the “claims embrace patent-ineligible signals, they are therefore non-statutory under § 101.”  Id.

Tip: Avoid claiming transitory signals by, for example, expressly claiming either a non-transitory computer readable medium or a computer readable storage medium.

 

 

Ex Parte Alverson (Appl. #11/101,436, Tech Center #: 3600)
Example Claim:
1. A contractor certification system for obtaining lines of credit for a building contractor comprising:

a. survey means comprising a questionnaire stored in a computer database, which is provided to selected candidates within different organizational levels of a building contractor’s business for electronically gathering answers concerning information detailing business and financial practices, said answers being used for assessing business and financial practices of said contractor’s practices by an independent third party, said financial practices being used to predicate risk ranking when securing lines of credit for said contractor’s business, said business practice information comprising management structure, reporting structure, internal communications procedures, safety and labor management practices, said financial practice information comprising current projects, funding, gross margins and close out procedures;

b. said different organizational levels comprising at least one worker, foremen, project manager, engineer, and principal;

c. mapping means for studying said answers provided to said questionnaire on said computer database to select job site visits and candidates for interviews, said mapping means comprising examining and correlating said answers to determine matches, discrepancies and inadequate details;

d. on-location assessment means for determining business and financial practices at the contractor’s operations, said assessment means comprising asking questions to each of said candidates selected through said mapping means and observing examples of the contractor’s business practices and financial procedures, said assessment means further comprising visiting several active job sites at which said contractor is involved;

e. comparison means for assessing business and financial practices by way of software evaluation of results obtained from steps a-d, and electronically ranking the contractor in comparison with industry standards; and

f. reporting means for providing a grade indicative of said contractor’s rank, said reporting means further comprising computer generation of a comparative report that provides a listing of key risk factors and highlights said business and financial practices and risk factors of said contractor in comparison of said risk factors, said risk factors comprising said operational structure, marketing of new projects, current projects, details of project execution, safety procedures, statutory compliance, project administration, mediation / arbitration procedures and past litigation.

Ex Parte Alverson, No. 2010-008459 (B.P.A.I. Feb. 15, 2012) at 2–3.

Decision:
Claim rejected.  The invention “claims coverage of a human as an element of the system/apparatus per se.”  Id. at 9.  “Since the broadest reasonable interpretation of the claimed invention as a whole encompasses a human being, the claimed invention is directed to nonstatutory subject matter.”  Id. at 9–10.  For example, Claim 1 “effectively covers an abstract idea because it incorporates human thought and processing to effect claim functions . . . and the recited computer based solution activity is of insufficient cause to avoid preempting an abstraction under 35 U.S.C. § 101.”  Id. at 10.

Tip: Focus claims on reciting specific steps that use a computer or other apparatus, rather than human activity.

 

 

Ex Parte D. (Appl. #10/620,044, Tech Center #: 2400)
Example Claim:
20. An article of manufacture comprising a computer-readable storage medium encoded with one or more data structures comprising information characterizing one or more traffic flows associated with at least one traffic generator, represented as a string which includes a global header followed by one or more frames each having an associated frame header, wherein the global header comprises a clock speed field indicating a clock speed of an associated output interface.
U.S. Patent Application No. 10/620,044 (filed July 15, 2003) (as amended Apr. 9, 2008).

Decision:
Claims rejected.  The BPAI was not persuaded by the argument that “the claimed data structure defines a ‘physical or logical relationship among data elements’ and as such, the claims are drawn to statutory subject matter.” Ex Parte D., No. 2009-013829 (B.P.A.I. Feb. 15, 2012) at 4 (quoting the Appellant’s Brief).  It instead noted that “the claims merely recite non-functional descriptive material.”  Id.

Tip: Make sure that the encoded data claimed in a Beauregard claim correlate to an aspect of a computer or data transfer process.

 

 

Ex Parte Sawyer (Appl. #11/264,619, Tech Center #: 2100)
Example Claim:
1. A computer readable medium having embodied thereon a program, the program being executable by a computing device for performing a method for providing an allowed input range in a user interface window, the method comprising:

receiving a document transferred between a server and a user interface, wherein the document comprises a set of data objects and at least one rule for the allowed input range; and

creating the user interface window to correspond to a selected one of the set of data objects and the at least one rule for the allowed input range;

wherein the user interface window provides the allowed input range for the selected one of the data objects,

wherein the allowed input range is determined by the selected one of the data objects received from the document and the at least one rule received from the document.

Ex Parte Sawyer, No. 2009-012254 (B.P.A.I. Feb. 12, 2012) at 2.

Decision:
Claims rejected.  “Claim 1 given its broadest reasonable interpretation, does not preclude the ‘computer readable medium’ from being transitory. Accordingly, we construe claim 1 as embracing a transitory propagating signal, and, therefore, directed to nonstatutory subject matter.”  Id. at 5.

Tip: Avoid claiming transitory signals by, for example, expressly claiming either a non-transitory computer readable medium or a computer readable storage medium.

 

 

Ex Parte Keohane (Appl. #10/777,646, Tech Center #: 2400)
Example Claim:
11. A computer program product for providing electronic message filing recommendations comprising:

a recording medium;

means, recorded on said recording medium, for filtering an electronic message to determine at least one suggested folder for filing said electronic message from among a plurality of filing folders in a messaging filing directory; and

means, recorded on said recording medium, for distinguishing said at least one suggested folder from a remainder of said plurality of filing folders, such that a recommendation of relevant folders for filing said electronic message is provided.

U.S. Patent Publication No. 2005/0198153 A1 (Sep. 8, 2005)

Decision:
Claim rejected under 35 U.S.C. § 101 as a new ground of rejection.  “[A] computer program product included on a recording medium may take the form of transmission media, such as acoustic or light waves generated during radio frequency or infrared data communications.”  Ex Parte Keohane, No. 2009-014258 (B.P.A.I. Feb. 12, 2012) at 8.  It further explained that a “‘computer program product . . . comprising: a recording medium . . .’ can be broadly, but reasonably construed to encompass no more than a transitory, propagating signal.”  Id.

Tip: Avoid claiming transitory signals by, for example, expressly claiming either a non-transitory computer readable medium or a computer readable storage medium.

 

 

Ex Parte Gonzales-Tuchmann (Appl. #10/700,152, Tech Center #: 2100)
Example Claim:
14. A computer-readable medium having a dataflow development system comprising:

a library of components, some of the components being scalar and comprising a data transformation, some of the components being composite, and comprising a hierarchy of other components representing data transformations;

a compiler to develop and assemble components into an executable dataflow application linking components subject to schema and properties constraints;

an executor which executes the dataflow application in parallel; and

tools for accessing the functionality of the compiler, executor and component library.

U.S. Patent Publication No. 2008/0052687 A1 (Feb. 28, 2008)

Decision:
Claim rejected.  The claim does not “clearly and unambiguously recite the necessary functional and structural interrelationship between the software elements and the remaining elements of a computer.”  Ex Parte Gonzales-Tuchmann, No. 2009-013551 (B.P.A.I. Feb. 9, 2012) at 4.  Further, “‘having’ a particular environment does not necessarily imply storage of an executable program capable of causing a computer to carry out the described functionality.”  Id. In addition, “the claims are not limited to an article of manufacture or any other category of statutory subject matter, because they do not preclude a computer-readable medium that is medium, such as a propagation medium, bearing a transitory signal.”  Id. at 5.

Tip: Tie the various software and data elements of the claim together in a functional relationship that is achieved by execution of the software on a computer, as opposed to listing a collection of vaguely interrelated software components.  And avoid claiming transitory signals by, for example, expressly claiming either a non-transitory computer readable medium or a computer readable storage medium.

[Brian Wallenfelt contributed to this posting.]