The Federal Circuit in a decision handed down today invalidated claims of 4 patents, the oldest of which was issued in 1999, under § 101 grounds following Bilski and
Mayo stating that the claims cover ineligible subject matter. Alice's claims were to "a computerized trading platform used for conducting financial transactions in which a third party settles obligations between a first and a second party so as to eliminate 'counterparty' or 'settlement' risk."
CLS Bank Int'l v. Alice Corp., No. 2011-1301 (Fed. Cir., May 10, 2013) This platform essentially allowed financial institutions to conduct online transactions with each other without having to worry that the other side won't follow through.
The court issued no bright line rule instead stating to use an included "flexible method" to determine subject matter eligibility for future cases. A clearly exasperated Chief Judge Rader effectively filed 3 dissents to this decision. Below is our attempt at breaking down this "flexible method" into something useable.
1) Does the claimed invention fits within one of the four statutory classes set out in § 101?
2) Does the claim raises § 101 abstractness concerns?
3) Is there a judicial exception to subject-matter eligibility?
4) Does the claim pose any risk of preempting an abstract idea? To which the court says "In most cases, the answer plainly will be no." but clearly if you're doing this analysis you don't know.
5) Identify and define whatever fundamental concept appears wrapped up in the claim so that the subsequent analytical steps can proceed on a consistent footing. "Conducting a claim construction analysis before addressing § 101 may be especially helpful in this regard by facilitating a full understanding of what each claim entails."
6) There must be an "inventive concept." "[A]n "inventive concept" under § 101—in contrast to whatever fundamental concept is also represented in the claim—must be 'a product of human ingenuity.' … that human contribution must represent more than a trivial appendix to the underlying abstract idea.
7) Perform a § 101 preemption analysis by evaluating the balance of the claim to determine whether in practical terms it covers the full abstract idea itself. Don't forget to consider additional substantive limitations that narrow, confine, or otherwise tie down the claim. The § 101 preemption analysis centers on the practical, real-world effects of the claim; limitations that represent a human contribution but are merely tangential, token, trivial limitations, vague limitations cast in 'highly general language,' routine, well-understood, conventional, bare field-of-use limitations, or limitations that in practice fail to narrow the claim relative to the fundamental principle therein, cannot confer patent eligibility where the claim as written still effectively preempts all uses of a fundamental concept within the stated field.
The following is the Court's example of a § 101 preemption analysis: "For example, the 'administering' and 'determining' steps in Mayo might have appeared to be concrete limitations representing true human contributions to the claimed methods; it is difficult to see how giving a particular man-made drug to a patient or drawing and testing blood could be considered purely abstract or preordained. Yet the Court held that those steps failed to render the claims patent eligible because, as a practical matter, they were necessary to every practical use of what it found to be a natural law and therefore were not truly limiting."
Are you as exasperated as Judge Rader?
Big tech companies like Google, Blackberry, Red Hat and EarthLink are joining forces to combat patent trolls or, “Patent Assertion Entities” (PAEs), wherever they may be lurking. This past April, the aforementioned companies submitted joint comments to the Department of Justice and the Federal Trade Commission outlining their frustration and the data surrounding trolls’ disruptive activities. And according to them, “the worst is yet to come.”
The statistics are alarming; over 2/3 of patent litigation is clogged by PAEs and the total cost of PAEs' patent litigation rings in at a cool $80 billion when, "accounting for all costs – direct and indirect." In a recent blog post, Matthew Bye, Google's Senior Counsel, recently outlined the fact that companies are now more apt to outsource their patents to PAEs. This practice, commonly known as, "patent privateering" increases the likelihood they will pursue patent litigation against their competitors. Bye argued that this new normal in the patent world disturbs the precious, "patent peace" and is fundamentally inconsistent with the objectives of the patent system. One of the crucial aspects of this nefarious IP practice is that trolls can sue at will because, in many scenarios they cannot be countersued (since they don't make anything).
We in the IP community will continue to await a response from Congress and the antitrust agencies. After President Obama's recent comments stating that PAEs "hijack" and "extort" the hard work of others, we hope it is only a matter of time until the U.S. Government takes a pragmatic approach to eradicate PAE practices and restore the patent peace.
On April 17, 2013, the USPTO’s Patent Trial and Appeal Board (PTAB) held the first ever covered business method (CBM) review trial hearing. CBM reviews are a new transitional proceeding created by the America Invents Act (AIA) and are regarded by statute as a post-grant review. CBM reviews became available on September 16th, 2012, and are available to parties that have been sued for infringement of a CBM patent as a means to challenge the patent’s validity.
SAP filed its petition for a CBM review of Versata’s U.S. Patent No. 6,553,350 on the first day it was made available. The patent relates to a system that organizes various pricing tables and price adjustment tables and various products and purchasing organizations based on "who" (i.e. which purchasing organization) is purchasing "what" (i.e. which product). The system and method organizes various purchasing organizations and products into hierarchical tables. These hierarchical tables are called organizational groups and product groups. Various price adjustments may be specified for each level of the organizational groups and product groups hierarchies. Back in May of 2011, Versata secured a $391 million dollar verdict in the Eastern District Court of Texas against SAP for infringement of the ‘350 patent. The verdict is currently on appeal to the Court of Appeals for the Federal Circuit (CAFC).
Just to be eligible for CBM review the petitioner must establish: 1) the patent claims involve “the practice, administration, or management of a ﬁnancial product or service,” and (2) the patent is directed to a “technological invention.” Previously in the proceedings, the PTAB panel of Administrative Patent Judges, Sally C. Medley, Michael P. Tierney, and Rama G. Elluru, construed these perquisites broadly and held that the challenged claims of the ‘350 patent did constitute CBMs. By granting SAP’s petition and initiating CBM review, the PTAB panel has indicated the statutory threshold for review, which requires the petitioner to demonstrate that it is more likely than not that the claims of the patent are unpatentable, has been met.
If Versata had not yet taken the initiation of the CBM review as a serious signal of their ‘350 patent’s impending invalidity, the line of questioning posed by the PTAB panel in today’s hearing should definitely put to rest any lingering sense of hope of validity. Today’s trial hearing certainly reinforces the notion that any party that has been sued for infringement of a patent that might be characterized as relating to a covered business method may be well advised to consider seeking CBM review of the patent claims asserted against them. Stay tuned, in future posts we will delve into the specific issues faced by Versata in defending the ‘350 patent.
A recent report published by the Brookings Institution reveals that America's innovators are highly confined to only a few metropolitan areas- 20 to be exact. The report cites some obvious contenders like high-tech hot spots in the California corridor of Silicon Valley and San Francisco, along with lesser known urban locations with large universities such as Boulder, Colorado and Rochester, Minnesota. Unsurprisingly, the largest subcategories of patents include communications, biotechnology and computer hardware.
In greater detail, Brookings' report serves as one of the first projects to track patenting trends on a regional level starting in 1980 through 2012. The report tries to answer questions like: "Why are some areas of the US more inventive than others?" and "How does patent traffic serve as an indicator of the economic health of the nation?" Additionally, the report reveals important trends and facts like:
- The rate of patenting in the US has been growing in recent history
- 2/3 of patents in the US are produced by people residing in roughly 20 metro areas
- The ecosystem most conducive to patent creation in metro areas is one with a STEM oriented workforce and research-centered universities.
While the USPTO's new satellite offices in places like Denver, Dallas-Fort Worth, Detroit and Silicon Valley mirror the report's findings, post grant patent procedures including patent reexamination, derivation proceedings and the latest patentability trials under AIA, will exclusively remain at the Alexandria, VA headquarters.
The graphics below demonstrate key features of the report which track patents granted per capita beginning in 1790 as well as the relationship between geographic locations and their patent clout.
History of patented U.S. inventions per capita
Total granted patents and patenting rate by metropolitan area
Brookings offers an informative analysis of innovation in the US and its corresponding geographic trends over time. While its conclusions may seem obvious to some: "patenting is associated with higher metropolitan area productivity," and "patents cause growth," the intense debate concerning whether or not innovation is waning in America continues. Peter Thiel, founder of PayPal and initial investor in Facebook, described America's ability to innovate as, "somewhere between dire straits and dead," an idea further explored in a recent article in The Economist titled, "Has the ideas machine broken down?" Thiel's sentiment is mirrored by many of his peers who fantasized of ground breaking innovations that would combat some of humanity's greatest challenges like poverty and disease, rather than apps for personalized restaurant picks and digital chirps of 140 characters or less. It was George Mason University economist Tyler Cowen, author of "The Great Stagnation" who wrote in the first lines of his book that, "America is in disarray and our economy is failing us."
Perhaps speculation of America's ability to continue to innovate may actually be an issue of time. Forbes suggests that the time between investments and innovation in regards to IT and communications, lasts anywhere from 5 to 15 years. This may especially hold true for industries such as energy and security, where results from "big data" have only begun to make tangible inroads.
Regardless of economic sector, we consider intellectual property to be one of the most vibrant expressions of human ingenuity and creativity and a reliable benchmark by which to measure mankind's ability to continue to perfect the world around us.
(Image credits: Brookings Institution)
On October 5, 2012, the Supreme Court decided to hear a case centered on the interpretation of intellectual property rights. That case, Bowman v. Monsanto, is set to begin with oral arguments commencing on February 19, 2013, here in Washington. The dispute occurs between Vernon Hugh Bowman, an Indiana soybean farmer, and Monsanto, the world's largest seed company whose "cash crops" include genetically modified corn, cotton and soybeans.
Some of the central questions presented in the case concern whether the first-sale doctrine permits the buyer of patented material to make, use and sell an unlimited number of new copies of the patented invention that have never been sold. In addition, how patent law is applied to the biological offspring of patented plants?
Plant patents, according to the USPTO , must be reproduced asexually and are valid for 20 years from the application's filing date:
Plant patents are issued for a new and distinct, invented or discovered asexually reproduced plant including cultivated sports, mutants, hybrids, and newly found seedlings, other than a tuber propagated plant or a plant found in an uncultivated state, it permits its owner to exclude others from making, using, or selling the plant for a period of up to twenty years from the date of patent application filing.
Monsanto, a passionate patent protector, argues that Bowman infringed on its patents when he saved the "second generation" of Monsanto's patented, genetically modified seeds, he had previously purchased and replanted without paying proper "technology fees". Bowman is appealing a 2011 decision by the U.S. Federal Circuit Court of Appeals to uphold a damages award totaling approximately $85,000 for Monsanto.
As reported by NPR, the Judge that first heard the case in Indiana, the Honorable Richard Young, highlighted the need for a discussion of policy in regards to the patentability of genetically modified crops; "Monsanto's domination of the soybean seed market," he wrote, means that all the cheap "commodity" soybeans that farmers might want to use for seed are now laden by patents.
According to the American Soybean Association, "soybeans were planted on 75 million acres in 2011, producing 3.056 billion bushels of soybeans. The average price paid to farmers was $11.70 per bushel. The total 2011 crop value exceeded $35.7 billion."
It remains to be seen which of the parties, akin to David and Goliath, will emerge victorious; however, it will surely prove a landmark case in patent litigation, whose decision will have an impact on the IP community in the United States and beyond.
The case is Bowman v. Monsanto Co et al, No. 11-796 a.
On January 3, 2013, via the Federal Register, the USPTO published a notice calling for comments and collaboration from software community members in order to facilitate and improve the system of software related patents. The notice outlines key aspects where software patents could potentially be improved and proposed a series of bullet points which will help steer the scheduled "Software Partnership" discussion that is to take place in New York and San Francisco in February 2013.
In the first point, "Establishing Clear Boundaries for Claims That Use Functional Language," it appears the UPSTO hopes to discuss means-plus-function (mpf) claims and their range in relation to software patents. Means-plus-function claims, which differ from typical patent claims, depending on the interpretation, can encompass a wider presentation of inventive features. It is possible that the USPTO hopes to narrow the scope of future software patents by giving applicants less room to assert a multitude of means-plus-function claims.
The USPTO has published a request in the Federal Register requesting comments on a patent small claims proceeding. The USPTO is seeking comments both on whether a need exists for such a proceeding and on which characteristics the proceeding would have, such as venue, subject matter jurisdiction, procedure, and available remedies.
One of the barriers to enforcing intellectual property is the enormous cost of patent litigation, a barrier that affects smaller entities substantially more than large corporations. This is especially true when the remedy sought is relatively small and comparable to (or less than) the costs to enforce patent rights. This problem and the accompanying proposed solution are not new. Over 20 years ago, at a conference at the Franklin Pierce Law Center, the idea of a patent small claims court for streamlining the patent litigation process was examined. Soon thereafter, both AIPLA and the ABA's IP section adopted measures to support a patent small claims court. More recently, in 2012, the USPTO and the Copyright Office co-sponsored a discussion at the George Washington Law Center to discuss a possible small claims proceeding for patents and copyrights. Now, the USPTO is seeking comments from the public.
One issue which will surely be raised is how to integrate this idea with the new AIA proceedings. The new inter partes review and forthcoming post grant review proceedings are both new tools in the field of patent litigation, and it remains to be seen how they will affect litigations in the long-term. A small claims proceeding would create an additional option that smaller entities can choose.
The USPTO's request for comments states no particular goal or driving force behind the idea of establishing small claims proceedings, but asks for any and all comments that may be relevant. The posting can be found at 77 Fed. Reg. 74830.
On January 2nd, the USPTO and EPO announced the formal launch of the new Cooperative Patent Classification (CPC) system. The CPC is a global classification system for patent documents designed to harmonize the PTO and EPO systems.
The new CPC system is based on the International Patent Classification (IPC) system and is meant to replace the current schemes in use by the US and Europe for classifying patents and technical documents. This new system will make it easier for patent examiners in different countries to easily access, refer to, and share the same information, making the examination procedure more efficient, especially for international applications.
An overview of the system including definitions, downloadable content, and more information can be found on the CPC website , which is jointly managed by the EPO and USPTO. The two Offices have been collaborating on this project since October of 2010.
On January 1st, the House of Representatives accepted the Senate's amendment to H.R. 6621 from last week, clearing the bill for the President's signature. The Senate's amendment deleted a provision for discovering information on pre-GATT applications which are still pending before the PTO. These patents, sometimes referred to as "submarine patents" would still retain their 17-year term upon granting. The deleted provision had raised concerns in the House over the breach in confidentiality expected on patent applications filed prior to the requirement for publication in the American Inventors Protection Act of 1999.
The AIA Technical Amendment bill is designed in large part to remove the post-grant dead zone for issued patents which are filed on or after March 16, 2013.
The newly registered 8,306,892 patent, deemed the "Global
Advantage Bond Index" (GLADI), is an example of a potential shift in how
developing countries may be evaluated as places with attractive investment
opportunities. The GLADI has taken a different position in regards to its
investment decisions: weighing countries based on of the size of their
economy, rather than the market capitalization of their debt. Newport Beach,
California-based Pacific Investment Management Co. or Pimco, which has a
stately $1.92 trillion in assets and manages the world's largest mutual fund,
hopes to develop new perspectives and strategies that will enable it to better
navigate evolving international economic markets according to a December 4
article from Bloomberg News. The firm describes their newest index as an "innovative
fixed income benchmark designed to better capture investment opportunities in a
New Normal investment landscape."
The patent , which cites Pimco founder Bill Gross
and the firm's Global Co-Head of Emerging Markets Ramin Toloui as its
inventors, describes the index as, "An embodiment of a computer-implemented
method of generating a financial index includes storing in a computer memory a
regional weight for each of one or more regions, and, for each of the regions,
a category weight for each of one or more categories of financial instruments
issued from the region."
While this shift in emphasis may
produce more investing confidence in the developing world and its markets, it
is important to mention that some critics are cautious about going all-in. A
recent study by TheCityUK states that more than 70% of approximately $80
trillion of mutual, insurer and pension assets are still based in Europe, Japan
and the United States. On the same note, a recent Reuters article cited Citi Private Bank's Chief Investment Officer Richard Cookson,
as he described some of the realities of investing in the developing world: "After
decades of crises, you may ask what's with the emerging world? The answer is
rule of law, property rights, corruption, failed institutions. How much of that
has changed? Not much."
While many in the international
financial sectors will continue the debate of how best to comprehend and
capitalize on emerging markets' potential, Pimco's newest patented technology
is an important aspect in the world of global investing today. It remains to be
seen if focusing on GDP instead of a country's debt will prove to be a popular
trend; however, Maier & Maier, PLLC is an internationally recognized and
experienced IP firm and will continue to observe the impacts of Pimco's newest
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