June 2010 Archives

It is important to emphasize that the Court today is not commenting on the patentability of any particular invention, let alone holding that any of the above-mentioned technologies from the Information Age should or should not receive patent protection. This age puts the possibility of innovation in the hands of more people and raises new difficulties for the patent law. With ever more people trying to innovate and thus seeking patent protections for their inventions, the patent law faces a great challenge in striking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of general principles. Nothing in this opinion should be read to take a position on where that balance ought to be struck.

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 to make the machine-or-transformation test exclusive precisely because its case law had not adequately identified less 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 Act and are not inconsistent with its text. The judgment of the Court of Appeals is affirmed.

The Supreme Court has finally released the much anticipated Bilski v. Kappos.  The machine or transformation test was upheld, but it is not the only test to determine if something is patentable under 101.  A look at the factors of Diehr, Benson and Flook is also required.  From SCOTUSblog, which covered the release of Bilski live:

Amazon has recently been awarded U.S. Patent No. 7,739,139 for a "Social Networking System."  Friendster has previously patented a very similar social networking method and actually has 7 patents in total related to social networking that cover similar matter.  It is unclear exactly what overlap there is, but it seems like there could be some.

If you read the claims of the Amazon patent, it reads an awful lot like Facebook.  For instance, in claim 1:

"providing a user interface for users to establish contact relationships with other users of the service such that each user can have one or more contacts, said user interface enabling a user to identify other users of the service, and to selectively initiate the generation of requests to establish contact relationships with the identified users"

"Generation of requests to establish contact relationships" = "Friending someone" ?

Claim 9:

"9. The method of claim 1, wherein the method comprises providing functionality for the first user to grant different permission levels to different contacts of the first user, such that some contacts of the first user are provided access to different types of personal data of the first user than others contacts of the first user."

Adjustable Facebook privacy settings?

Also, claim 12:

12. The method of claim 1, wherein the personal data of the first user comprises an identification of a school attended by the first user and an associated date range of attendance, and the method further comprises the server computer system using said personal data to identify, and inform the first user of, other users of the service who attended said school in said date range.

"Identification by school with associated date range of attendance" sounds essentially the same as sorting people by college and graduating year.

The whole situation has a sort of "cold war" feel to it.  This is clearly a posturing by Amazon, but it is unclear what they have in mind.  It will be interesting to see where Amazon goes with the patent.  The patent also comes right when Bilski might be on deck, which could invalidate the entire thing altogether.

The Supreme Court released five opinions today; however, Bilski was again not amongst them.  Schwab v. Reilly was released today and, while Schwab has nothing to with IP, the significance is that Bilski is now the only case remaining from the November argument sitting.

At this point, it has to be considered a realistic possibility that the Supreme Court will hold the decision over till next term.

According to an article on IPWatchdog, Solo Cup "successfully rebutted the presumption of deceptive intent" in Pequignot v. Solo Cup Co. by seeking advice of counsel and taking the "good faith step of replacing worn out molds with unmarked molds."The Federal Circuit affirmed the grant of summary judgment by the district court.

This decision could halt the momentum qui tam suits have been gaining since the Forest Group decision, holding that the false marking penalty accessed is assessed per item marked.  While merely denying knowledge of the false marking is not sufficient to rebut the presumption of deceptive intent, Solo Cup's showing here was fairly unremarkable and, thus, it looks like the bar has been lowered for rebutting the presumption with this decision.

In the absence of legislation reforming false marking suits, it also seems that this decision is indicative of a tough line being drawn by the Federal Circuit.  It will be interesting to observe subsequent decisions by the CAFC on false marking and see if this tougher stance continues.

The ITC is now going to investigate HTC's claim to determine if Apple products (iPhone, iPad, iPod, etc.) infringe on HTC's patents.  This comes after Apple sued HTC for alleged infringement of 20 its patents in March.

The battle between HTC and Apple is part of a larger war between Apple and Google.  Phones utilizing Google's Android operating system compete with the iPhone, which is one of the largest, if not the largest, revenue streams for Apple.  HTC makes a variety of phones that run the Android operating system and, consequently, Apple likely wants to squeeze them out the market and make potential market entrants more hesitant to enter.

HTC, as well as other players in the smart phone market, will increasingly have the strength of the patents, as well as their "design-arounds", tested as Apple continues to aggressively defend their intellectual property.  We will continue to monitor developments in the litigation between Apple and HTC.

We are still waiting for Bilski v. Kappos and are now 217 days removed from oral argument.  The opinions for today have all been released and Bilski is not amongst them. 

Maybe this Thursday?  According to SCOTUSBlog, more opinions may be released then.  For the next few days, however, we will just have to continue waiting.

Under "New Patent Litigations" on PriorSmart today were several new qui tam marking cases recently filed by the same plaintiff against some notable companies.  Links to the PriorSmart page with a portion of the complaint are provided below:

McNamara v. Country Life, LLC et. al.

McNamara v. Natural Organics, Inc. et. al.

McNamara v. Vitamin Shoppe, Inc.

McNamara v. Elizabeth Arden, Inc.

We mentioned in a previous blog post the rise of qui tam suits that has occurred since the Forest Group decision (we also discuss the issue more in-depth here).  It looks qui tam marking suits are here to stay until reform legislation cuts them off.

TiVo has recently gotten two of their claims struck down by the PTO during reexamination.  The rejection was made on obviousness grounds.  Most importantly, the two claims struck down were the two claims that the jury in 2006 found that Dish infringed.  Although TiVo can now file a continuation, this is still a blow to TiVo, as two of the most important claims for the case for infringement against Dish Network are now in doubt.

TiVo's stock dropped from $7.74 per share to $7.22 per share at the closing bell, a drop of 6.7% during Wednesday trading.  As mentioned before, the enormous value of IP cannot be more apparent than here, where reexamination proceedings can cause such dramatic fluctuations in the stock price.  We will continue to monitor any further developments in the case.

We are now 211 days removed from oral argument in Bilski v. Kappos.  In comparison, KSR v. Teleflex took 153 days.  Commentators everywhere are speculating about the reason for the delay.  Some are considering it indicative of numerous dissents and concurrences, with no real consensus.  Others are suggesting that the Supreme Court is in "over their head," as this case will require challenging line drawing in the gray area of patentability.

Many commentators are seemingly urging the Supreme Court to "just go ahead and make a decision already."  At this point, the uncertainty has certainly reached the point of hampering productivity.  An entire branch of technology is in somewhat of a "holding pattern" while awaiting the decision of the Supreme Court.  However, it is important to be mindful of how important this decision actually is.  Technological progress in these fields could be severely impeded without a well thought out opinion here.

When a decision finally comes down, we will make sure to follow up with reaction.

David Kappos recently blogged about the importance of reexamination proceedings.  He acknowledges while there are plenty of "jobs locked up in [the] backlog," there are also "lots and lots of jobs riding on the patents we have in reexamination."

Reexamination proceedings grew every single year in the period from 2000-2004 and the period from 2006-2009.  This is in part due to numerous developments, including the Central Reexamination Unit and the decision in KSR v. Teleflex (lowering the standard for obviousness), which have made reexamination a more effective tool for challenging the validity or scope of patents or using it as a defense in an infringement case.

Kappos also provided a link to the "Best Practices" for reexamination.

While #5 seems to be somewhat common sense, #1 is notable as part of an overall emphasis Kappos has put on interviews since taking over as director.  Overall, Kappos really seems to be stressing cooperation between Examiners and practitioners (see also #2).  "Put[ting] it In English" (#4) refers to poorly translated applications, which Kappos remarks "frustrate examiners and unnecessarily delay prosecution.

The allowance rate is significantly on the rise.  PatentlyO recently discussed this trend and cited an increase from under 50% to around 65% over the past few months.

While it is unclear what the actual cause of this increase is, the increase may be due to an overall less adversarial approach by the PTO.  Since David Kappos has taken over as director, there have been numerous initiatives designed to promote cooperation between the examiner and the applicant that may have directly impacted the allowance rate.  The First Action Interview Pilot Program, essentially allowing applicants to have an interview with the Examiner prior to the issuance of a first office action, was implemented with the purpose of getting the applicant and the Examiner on the same page regarding the nature of the invention earlier in the process.  Getting the Examiner and the applicant on the same page earlier in the process may have increased the allowance rate, as Examiners can get a clearer idea earlier about which parts of the application are allowable subject matter.

"Project Exchange," allowing applicants with multiple applications pending at the PTO to withdraw an application in exchange for expedited examination of another application, is another initiative that may have had a direct impact on the allowance rate by allowing applicants to prosecute their most pressing, and likely best, applications right away.  Even initiatives like the Patent Ombudsman Program, while not directly impacting the allowance rate, are indicative of an overall more cooperative approach by the PTO since Kappos took office.

The economy may have also played a role in the rising grant rate.  As the economy worsened, companies downsized, likely allowing some applications to go abandoned and decreasing the allowance rate.  However, when the economy improved somewhat towards the end of 2009, companies reinvested in R&D and used additional resources to prosecute existing applications.  When companies resumed prosecution, the allowance rate could have conceivably increased as a result.

Recently, David Kappos discussed in his blog the importance of the written description requirement for patent applications.  He described how, despite the impression from practitioners in the patent field that the requirement is "little used," the requirement provides an essential "backstop" against overly broad claims.

The written description requirement is distinct from the enablement requirement, which requires that the specification enable one skilled in the art to make and use the invention claimed, in that for the written description requirement, the specification must instead demonstrate to one skilled in the art that the inventor has possession of the invention.

The written description has come into play during litigation recently as well.  In the litigation between Anascape and Nintendo, in which Anascape sued Nintendo for a game controller that Anascape contended infringed on their patent.  Anascape wanted to rely on a provisional application that would have antedated the prior art, the Sony "Dualshock" controller.

However, the court ruled that Anascape could not use the provisional application to antedate the reference because the disclosure of the provisional application did not sufficiently support the claims of the non-provisional per the written description requirement.  In other words, the provisional application did not sufficiently demonstrate that the inventor had possession of the invention at the time of the provisional application.  A provisional application cannot be used for priority if the disclosure does not adequately demonstrate possession of the invention at the time of the provisional.