Archive for the ‘In re Nuijten’ Category

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 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.

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.