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November 21, 2008 - The Board of Patent Appeals and Interferences released its first decision regarding the patentability of a computer readable medium claim (or a “Beauregard Claim”) under 35 U.S.C. § 101 since the decision by the U.S. Court of Appeals for the Federal Circuit in In re Bilski. The claim at issue in U.S. Application No. 10/463,287 is listed below:
“42. A computer program product, comprising a computer usable medium having a computer readable program code embodied therein, said computer readable program code adapted to be executed to implement a method for generating a report, said method comprising:
providing a system, wherein the system comprises distinct software modules, and wherein the distinct software modules comprise a logic processing module, a configuration file processing module, a data organization module, and a data display organization module;
parsing a configuration file into definition data that specifies: a data organization of the report, a display organization of the report, and at least one data source comprising report data to be used for generating the report, and wherein said parsing is performed by the configuration file processing module in response to being called by the logic processing module;
extracting the report data from the at least one data source, wherein said extracting is performed by the data organization module in response to being called by the logic processing module;
receiving, by the logic processing module, the definition data from the configuration file processing module and the extracted report data from the data organization module; and
organizing, by the data display organization module in respone to being called by the logic processing module, a data display organization of the report, wherein said organizing comprises utilizing the definition data received by the logic processing module and the extracted report data received by the logic processing module.”
The Examiner rejected claim 42 under 35 U.S.C. § 101 by finding that “[t]he final step of the claim, ‘organizing’, does not output a report; it merely prepares it for output. Thus, the invention claimed by claim 42 does not produce a tangible result.” The Board found that the Examiner was following the ‘useful, concrete and tangible result’ as indicated in State St. Bank & Trust Co. v. Signature Fin. Group, Inc. The Board further held that patentability turned “on whether the outputting of a report is necessary to render claim 42 statutory.”
The Board used In re Bilski to simply dispense with the Examiner’s rejection. “In accordance with In re Bilski the arguments of State Street will no longer be considered dispositive of this issue.”
The Board then reaffirmed the use of Beauregard Claims and found that the combination of the Beauregard Claim and a number of software modules on a computer readable medium constituted statutory subject matter. “In the analysis of In re Nuijten, 500 F.3d 1346 (Fed. Cir., 2007), the Federal Circuit considers the four statutory classes for a signal, and bases the determination of statutory subject matter on that basis. It has been the practice for a number of years that a ‘Beauregard Claim’ of this nature be considered statutory at the USPTO as a product claim. (MPEP 2105.01, I). Though not finally adjudicated, this practice is not inconsistent with In re Nuijten. (Ibid.). Further, the instant claim presents a number of software components, such as the claimed logic processing module, configuration file processing module, data organization module, and data display organization module, that are embodied upon a computer readable medium. This combination has been found statutory under the teachings of In re Lowry, 32 F.3d 1579 (Fed. Cir., 1994). In view of the totality of these precedents, we decline to support the rejection under 35 U.S.C. § 101.”
This decision seems counterintuitive in that under the old “useful, concrete and tangible result” test the claim was rejected, while under the new In re Bilski machine-or-transformation test the claim was found to be statutory. It should be noted, however, the Board did not explicitly apply the machine-or-transformation test. Instead the Board simply found that since In re Nuijten held that a Beauregard Claim is statutory and In re Lowry held that a number of software modules on a computer readable medium is also statutory, the rejected claim must be statutory.
Implicit in this holding is that neither In re Nuijten nor In re Lowry is overruled by In re Bilski. Is it also implicit, therefore, that a number of software modules constitutes an apparatus or machine under the machine-or-transformation test?
October 31, 2008 - On October 30, 2008 in In re Bilski the Federal Circuit significantly narrowed the test for the patentability of processes under 35 U.S.C. 101. In short the court limited the inquiry to the machine-or-transformation test first enunciated by the Supreme Court in Gottschalk v. Benson, 409 U.S. 63, 67 (1972).
The Federal Circuit begins its opinion by reaffirming that "patent-eligible subject matter under section 101 is a threshold inquiry, and any claim of an application failing the requirements of section 101 must be rejected even if it meets all of the other legal requirements of patentability." The court then turns to the meaning of section 101. The court recites the language of the statute and then says that the statute provides "for four categories of patent-eligible subject matter: processes, machines, manufactures, and compositions of matter." Since the case at hand is directed to a process for hedging risks, the court clearly defines the issue of the case as determining "what the term 'process' in section 101 means, and how to determine whether a given claim... is a 'new and useful process.'"
What does the term "process" mean? The court looks at the dictionary definition and says that under such a definition the applicants in the present case would clearly have a patent-eligible process. However, the court points out that the Supreme Court narrowed the definition of a patent-eligible process in Diamond v. Diehr, 450 US 175, 185 (1981). The Supreme Court "held that a claim is not a patent-eligible 'process' if it claims 'laws of nature, natural phenomena, [or] abstract ideas.'" Therefore, the court finds that the true issue is "whether Applicants are seeking to claim a fundamental principle (such as an abstract idea) or a mental process." Further the court finds that the legal question is what test "governs the determination by the Patent and Trademark Office ('PTO') or courts as to whether a claim to a process is patentable under section 101 or, conversely, is drawn to unpatentable subject matter because it claims only a fundamental principle.
The court reviews Diehr. The application in Diehr claimed a process for producing cured synthetic rubber products that included taking temperature readings during the process and using a known mathematical equation to calculate the duration of curing. Noting that a mathematical equation alone is not patentable, the Supreme Court "nevertheless held that the claimed process was patent-eligible subject matter." The Court pointed out that the claim did not seek to pre-empt the use of a mathematical equation. Instead, the Court found that the use of the mathematical equation only foreclosed others from using it in conjunction with other steps of the process.
In contrast, the Federal Circuit reviews Benson. The application in Benson claimed "a process of converting data in binary-coded decimal ('BCD') format to pure binary format via an algorithm programmed onto a digital computer." The Supreme Court held the claims to be unpatentable. The Court found that because the algorithm had no other uses, " the claims pre-empted all uses of the algorithm and thus they were effectively drawn to the algorithm itself."
The Federal Circuit finds that determining whether a claim reciting a fundamental principle "would pre-empt substantially all uses of that fundamental principle if allowed" is too difficult a standard to employ for cases between Diehr and Benson. As a result, the court returns to the test enunciated by the Supreme Court in Benson. "A claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing." The court finds that the claims in Diehr met both tests.
The court reviews other cases and finds them consistent with the test. For example, the court cites Morse, 56 U.S. (15 How.) at 113 in which a "process of using electromagnetism to print characters at a distance that was not transformative or tied to any particular apparatus" is held unpatentable. The court also finds that "Benson presents a difficult case under its own test in that the claimed process operated on a machine, a digital computer, but was still held to be ineligible subject matter." However, the court holds that "in Benson, the limitations tying the process to a computer were not actually limiting because the fundamental principle at issue, a particular algorithm, had no utility other than operating on a digital computer. Thus, the claim's tie to a digital computer did not reduce the pre-emptive footprint of the claim since all uses of the algorithm were still covered by the claim."
The Federal Circuit found two corollaries from the Diehr case to be of note. 1. "As a corollary, the Diehr Court also held that mere field-of-use limitations are generally insufficient to render an otherwise ineligible process claim patent-eligible." 2. "The Diehr Court also reaffirmed a second corollary to the machine-or-transformation test by stating that 'insignificant postsolution activity will not transform an unpatentable principle into a patentable process.'" For example, in Parker v. Flook the Supreme Court found that "A competent draftsman could attach some form of post-solution activity to almost any mathematical formula; the Pythagorean theorem would not have been patentable, or partially patentable, because a patent application contained a final step indicating that the formula, when solved, could be usefully applied to existing surveying techniques." Therefore, the Federal Circuit finds that "even if a claim recites a specific machine or a particular transformation of a specific article, the recited machine or transformation must not constitute mere 'insignificant postsolution activity.'"
The Federal Circuit reviews the tests it developed in its precedents. It holds the Freeman-Walter-Abele test to be inadequate. It then reviews the "useful, concrete, and tangible result" language associated with State Street. The court finds that "the 'useful, concrete and tangible result' inquiry is inadequate "and reaffirms "that the machine-or-transformation test outlined by the Supreme Court is the proper test to apply." The court reconciles State Street and other cases by holding that "a process tied to a particular machine, or transforming or reducing a particular article into a different state or thing, will generally produce a 'concrete' and 'tangible' result as those terms were used in our prior decisions."
'The Federal Circuit holds that "technological arts test" has never been "explicitly adopted by the Supreme Court, this court, or our predecessor court" and will not been done so here. The court also rejects categorical exclusions such as the "business method exception."
The Federal Circuit finds that there are two considerations that are applicable to the machine-or-transformation test. 1. "The use of a specific machine or transformation of an article must impose meaningful limits on the claim's scope to impart patent-eligibility." 2. "The involvement of the machine or transformation in the claimed process must not merely be insignificant extra-solution activity." Since the case at hand does not involve a machine the court decides to leave it to other decisions to elaborate on "the precise contours of machine implementation."
The Federal Circuit does elaborate on the contours of a transformation. The court holds that: "A claimed process is patent-eligible if it transforms an article into a different state or thing. This transformation must be central to the purpose of the claimed process. But the main aspect of the transformation test that requires clarification here is what sorts of things constitute 'articles' such that their transformation is sufficient to impart patent-eligibility under section 101. It is virtually self-evident that a process for a chemical or physical transformation of physical objects or substances is patent-eligible subject matter. The raw materials of many information-age processes, however, are electronic signals and electronically-manipulated data. And some so-called business methods, such as that claimed in the present case, involve the manipulation of even more abstract constructs such as legal obligations, organizational relationships, and business risks. "
The Court reviews examples:
1. In Abele the court "held unpatentable a broad independent claim reciting a process of graphically displaying variances of data from average values. In contrast, we held one of Abele's dependent claims to be drawn to patent-eligible subject matter where it specified that 'said data is X-ray attenuation data produced in a two dimensional field by a computed tomography scanner.' Thus, the transformation of that raw data into a particular visual depiction of a physical object on a display was sufficient to render that more narrowly-claimed process patent-eligible. We further note for clarity that the electronic transformation of the data itself into a visual depiction in Abele was sufficient; the claim was not required to involve any transformation of the underlying physical object that the data represented."
2. "This court and our predecessor court have frequently stated that adding a data-gathering step to an algorithm is insufficient to convert that algorithm into a patent-eligible process. E.g., Grams. For example, in Grams we held unpatentable a process of performing a clinical test and, based on the data from that test, determining if an abnormality existed and possible causes of any abnormality. 888 F.2d at 837, 841. We rejected the claim because it was merely an algorithm combined with a data-gathering step. Id. at 839-41. We note that, at least in most cases, gathering data would not constitute a transformation of any article. Further, the inherent step of gathering data can also fairly be characterized as insignificant extra-solution activity."
3. "Similarly, In re Schrader presented claims directed to a method of conducting an auction of multiple items in which the winning bids were selected in a manner that maximized the total price of all the items (rather than to the highest individual bid for each item separately). 22 F.3d 290, 291 (Fed. Cir. 1994). We held the claims to be drawn to unpatentable subject matter, namely a mathematical optimization algorithm. Id. at 293-94. No specific machine or apparatus was recited. The claimed method did require a step of recording the bids on each item, though no particular manner of recording (e.g., on paper, on a computer) was specified. Id. But, relying on Flook, we held that this step constituted insignificant extra-solution activity. "
February 29, 2008 - On February 26, 2008 the Federal Circuit asked a district court to review its decision to award treble damages to an inventor who had won a patent infringement suit against Microsoft. Microsoft was seeking to reduce the award from $0.12 to $0.04 per copy of the infringing software. Amado v. Microsoft Corp. In its 2006 annual report, Microsoft listed its liabilities for infringing this patent at $5.9 million. No matter what the district court decides, this is clearly a valuable patent. It is also valuable in that, according to the Wall Street Journal, it is the only patent that has caused Microsoft to alter one of its products.
As a result, it is useful to take a closer look at the patent involved in this case. This patent is patent no. 5,293,615.
Claims
What is most striking from the very start is the length of the independent claims. Patent attorneys and agents are often taught to keep independent claims as short and succinct as possible. I was taught the pencil rule. If an independent claim (double spaced and with elements on separate lines) is longer than a pencil, it is probably not worth anything. Well, this patent either proves that rule wrong or is an exception to the rule.
In addition to the length, the type of claims used is unusual. This is, for all intents and purposes, a software patent. The patent is directed to a method for exchanging data between a spreadsheet and a database. As a result, one would expect at least one method claim. One would be wrong. This patent only has apparatus claims. Again, patent agents and lawyers are taught to draft method claims (especially for software applications), because they are generally broader. This very valuable patent breaks another rule.
Specification
Most large companies will tell you to keep the background section as short as possible. The background section of this patent is almost nine columns in length. Patent agents and lawyers are always balancing providing just enough information to make the application enabling with not providing too much information to limit the scope of the invention. Once again, this patent breaks the mold. The specification in incredibly detailed. The specification includes 40 normal columns of information and over 300 total columns, including a glossary and a listing of program code. The total application, including the drawings, is over 200 pages.
Analysis
How can a patent that defies the conventional wisdom be so valuable? Without analyzing the more than 200 pages of the patent, reviewing the file wrapper history, and piecing together the case history, I can make a few educated guesses. First of all, this was a real invention that the inventor carefully researched and a meticulously reduced to practice. Secondly, this inventor, unlike a troll, was not trying to obfuscate what was invented. On the contrary, he used a huge amount of detail to make clear what the invention was and that it was his. Finally, an inventor this well versed in reducing his invention to practice probably makes a very credible witness in front of a jury.
August 27, 2007 - On August 20, 2007 in In re Seagate the Federal Circuit clarified the scope of the waiver of attorney-client privilege, raised the standard for willful infringement, and eliminated the obligation to obtain opinion of counsel in order to avoid willful infringement.
Background: In 2000, Convolve, Inc. and MIT sued Seagate Technology, LLC alleging infringment of two patents. Their complaint was later amended to include a third patent. Seagate retained a patent attorney, who ultimately prepared written opinions on all three patents. All three opinions were obtained after the initial complaint had been filed, but the patent attorney was retained before the initial complaint was filed. There was no dispute that trial counsel and opinion counsel operated independently at all times. In 2003, Seagate notified Convolve that it intended to rely on the three opinions to avoid willful infringement. Convolve then moved to compel discovery of Seagate's other counsel, including trial counsel. The trial court concluded that Seagate waived the attorney-client privilege for all communications between it and any counsel, including its trial attorneys and in-house counsel. Based on this ruling, Convolve sought production of trial counsel opinions relating to infringement, invalidity, and enforceability of the patents, and also noticed depositions of Seagate’s trial counsel. After the trial court denied Seagate’s motion for a stay and certification of an interlocutory appeal, Seagate petitioned the Federal Circuit for a writ of mandamus. The Federal Circuit stayed the discovery orders and sua sponte ordered an en banc review of the petition. The en banc order set out three questions. 1. Should a party’s assertion of the advice of counsel defense to willful infringement extend waiver of the attorney-client privilege to communications with that party’s trial counsel? 2. What is the effect of any such waiver on work-product immunity? 3. On the issue of waiver of attorney-client privilege, should this court reconsider the duty of care standard itself?
Ruling: Petition granted. 1. Because willful infringement in the main must find its basis in prelitigation conduct, communications of trial counsel have little, if any, relevance warranting their disclosure, and this further supports generally shielding trial counsel from the waiver stemming from an advice of counsel defense to willfulness. Asserting the advice of counsel defense and disclosing opinions of opinion counsel do not constitute waiver of the attorney-client privilege for communications with trial counsel. 2. The Supreme Court has approved of narrowly restricting the scope of work product waiver. Relying on opinion counsel’s work product does not waive work product immunity with respect to trial counsel. 3. The duty of care standard previously followed fails to comport with the general understanding of willfulness in the civil context and allows for punitive damages in a manner inconsistent with Supreme Court precedent. Accordingly, the new standard for willful infringement permitting enhanced damages requires at least a showing of objective recklessness. Because the affirmative duty of due care is abondoned, it is reemphasized that there is no affirmative obligation to obtain opinion of counsel.
Analysis: The Federal Circuit's rulings in this case are sweeping and show the court's new found deference for Supreme Court rulings, having been reversed a number of times recently. The Federal Circuit has now shielded the communications and work product of trial counsel. Even more importantly, they have significantly raised the standard for willful infringement and eliminated the need for written opinions of counsel in order to avoid willful infringment. The court implied that the old lower standard for willful infringement was needed when patent holders had a hard time enforcing their patent rights. Now, however, the court's ruling suggests that the pendulum has swung the other way. Oddly, the Federal Circuit did not take the opportunity to decide whether or not in-house counsel should be shielded in the same way as trial counsel. These rulings are likely to reduce enhanced damages in patent cases and reduce the number of written patent opinions produced.
April 20, 2007 - First Accelerated Exam patent issued
The USPTO announced on March 15, 2007 that first patent to be granted under the new 12-month accelerated examination program had issued on March 13, 2007 (Press Release). The patent, 7,188,939, issued in 6 months in an art area with an average examination time of 24.5 months. That means it reduced the overall examinatin time by more than 75%. That is a remarkable achievement.
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December 28, 2006 - Google's New Patent Search
Google's new Patent Search is the latest buzz in the patent search field. At first glance, it looks like Google's patent search might be very helpful to patent prosecutors. One nice feature is the ability to search the published patents (including the drawings!) for keywords. Google even gives you the page number and highlights the keyword. This is very useful in responding to office actions. Now if they only gave you the column and line number also. A few minor problems: The page number shown at the top of the screen and the page number link of the keyword search result do not match. There are no PDFs for downloading or printing. December 13 Press Release
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November 2, 2006 - USPTO Accelerated Examination Webcast
The USPTO held a Webcast on Accelerated Examination today. Information about Accelerated Examination can be found at the USPTO's Accelerated Examination Web page. Highlights of the Webcast: Program became effective August 25, 2006. There are 51 applications in the program so far. They recommend using petition to make special form PTO/SB/28 version 2.0 and Adobe Reader 7.0.8. You must use EFS-Web for both the application and follow-on office actions. Non-final office actions are given a 1 month shortened statutory period and there are few exceptions. One exception might be a death in the family for a sole practitioner, for example. Pending applications can enter the program through a continuation, but do not use a preliminary amendment. Only 3 independent claims and 20 overall claims are allowed.
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October 27, 2006 - Court grants certiorari Microsoft Corp. v. AT&T Corp.
Issue: Is an infringer liable for foreign sales of the infringing product?
Case: AT&T sued Microsoft for infringment of its patents on digital speech compression code. The parties settled, but agreed to litigate the question of foreign sales. The Federal Circuit decided in AT&T's favor ruling that foreign sales were governed by U.S. patent law.
Notes: The Court asked the government to weigh in. The U.S. Solicitor General sided with Microsoft and argued that U.S. patent law should not be extended to foreign markets, otherwise U.S. Software companies would be at a competitive disadvantage. Chief Justice Roberts recused himself, because he owns Microsoft stock.