From All Sides:

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Nov 15, 2013 (3 years and 9 months ago)

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From All Sides:

The Erosion of Patent Rights

By Gene Quinn

IPWatchdog.com


Our Agenda Today

The history of the problem (thanks SCOTUS)

Question & Answer Segment

Recent Cases (CAFC, PTAB and SCOTUS)

Patent Trolls and Patent Politics

The History of the Problem

For a very long time there has been a
believe that
innovation simply happens
.


S
ome innovations (even if useful, new
and
nonobvious
)
don’t deserve a patent
.


Whenever a patent is granted something
has been
taken

from the public domain.


Traces all the way back to at least the
flash of creative genius
.



Flash of Creative Genius

We may concede that the functions performed by Mead's combination
were new and useful. But that does not necessarily make the device
patentable. Under the
statute… the
device must not only be "new and
useful," it must also be an "invention" or
"discovery
.”
Since
Hotchkiss
v
.
Greenwood
, decided in 1851, it
has been recognized that, if an
improvement is to obtain the privileged position of a patent, more
ingenuity must be involved than the work of a mechanic skilled in the
art.

Perfection
of workmanship, however much it may increase the
convenience, extend the use, or diminish expense, is not patentable
.
The
principle of the
Hotchkiss

case applies to the adaptation or
combination of old or well known devices for new uses.

That
is to say,
the new device
, however useful it may be,
must reveal the flash of
creative genius
, not merely the skill of the calling. If it fails, it has not
established its right to a private grant on the public domain.

Cuno

Engineering Corp.
v
. Automatic Devices Corp.
, 314 U.S. 84 (1941)

Fast Forward… to 2006

Familiar principles
of equity

should
apply to

patent disputes.


Translation
: the

well
-
established rule
that an injunction
should issue

absent
the presence of a sound reason for
denying
it was
erased in favor of the traditional four
-
factor
test for granting injunctions.




Need to
demonstrate: (1)

suffered
an irreparable injury; (2)

remedies
available at law, such as monetary damages, are
inadequate;
(3)

considering
the balance of hardships
between the plaintiff and defendant, a remedy in equity is
warranted; and (4)

public
interest would not be disserved by
a permanent injunction
.

eBay, Inc.
v
.
MercExchange
, LLC,
547 U.S. 388 (2006)


http://www.ipwatchdog.com/2011/05/15/happy
-
5th
-
anniversary
-
ebay
-
v
-
mercexchange/id=16894/


Fast Forward… to 2007

KSR Int’l Co.
v
. Teleflex, Inc.,
550 U.S. 398 (2007)

The unfortunate

statement
that if an invention is “common sense” then it is
obvious has lead to real mischief in certain scenarios. Some

(i.e., examiners
and Judges) incorrectly
interpret this statement to mean that if
they

think it is
common sense then they can reject an application or find a claim invalid even
if each and every aspect of the invention is not in the prior art
.


One
of the primary objectives of the now defunct

Teaching
-
Suggestion
-
Motivation (TSM) approach
was to prevent the application of
hindsight.


In
KSR the Supreme Court really quite directly ignored Congress, the 1952
Patent Act and the legislative history accompanying the 1952 Patent Act
.


Applied literally the Supreme Court decision in KSR takes us backwards to a
test even more restrictive than

flash
of creative genius
. Up
until KSR “obvious
to try” rejections were categorically prohibited precisely because it is

ridiculous
to say that if an inventor were

actually motivated
to
try,
the
resulting discovery or
innovation would
be
unpatentable
.

http://www.ipwatchdog.com/2012/04/29/ksr
-
the
-
5th
-
anniversary
-
one
-
supremely
-
obvious
-
mess/id=24456/


Fast Forward… to 2010

Bilski

v
.
Kappos
,
561 U.S. ____ (2010)

http://www.supremecourt.gov/opinions/09pdf/08
-
964.pdf

The Supreme Court held that the machine
-
or
-
transformation test is not the
sole test for patent eligibility under
§
101, and that the Federal Circuit erred
when it ruled that it was the singular test to determine whether an invention
is patentable subject matter
.


Kennedy explained that Section 101 does not categorically preclude business
method patents.


T
he
categorical exclusion argument

was undermined
by the
fact that federal law


35 USC
§
273(b)(1)


explicitly contemplates the
existence of at least some business method patents: Under
§
273(b)(1), if a
patent
-
holder claims infringement based on a method in a patent, the alleged
infringer can assert a defense of prior use
.


All 9 Justices agreed that the
Bilski

application was properly rejected, with the
majority agreeing that it was properly rejected because it was an abstract
idea, and the concurring minority simply wanting to say that business
methods are not patent eligible unless tied to an otherwise patentable
invention (see Stevens footnote 40).

Stevens Footnote 40… Key to the Future?

Bilski

v
.
Kappos
,
561 U.S. ____ (2010)

“… Judge
Rich authored the State Street
opinion that some have understood to
make business methods patentable. But
State Street dealt with whether a piece of
software could be patented and addressed
only claims directed at machines, not
processes. His opinion may therefore be
better understood merely as holding that
an otherwise patentable process is not
unpatentable

simply because it is directed
toward the conduct of doing business

an
issue the Court has no occasion to address
today
.”

Claim at Issue in
State Street


Claim 1 of Patent No. 5,193,056, at issue in State Street, recites:


A
data processing system
… comprising:


(a)
computer processor
means for processing data;


(
b
)
storage means
for storing data on a
storage medium
;


(
c
) first means for initializing
the storage medium
;


(
d
) second
means

for processing data… ;


(
e
) third
means

for processing data…;


(
f
) fourth
means

for processing data… ; and


(
g
) fifth
means

for processing data...

Recent Cases

1.
Mayo
v
. Prometheus


2.
CLS Bank
v
. Alice Corporation


3.
SAP America
v
.
Versata

Development Group


4.
Association of Molecular Pathology
v
. Myriad Genetics


5.
Ultramercial

v
.
Hulu



Mayo
v
. Prometheus

566 U.S. ____ (2012)

http://www.supremecourt.gov/opinions/11pdf/10
-
1150.pdf

SCOTUS proclaimed
that they “decline the
Government’s
invitation to substitute
§§
102, 103, and 112
inquiries
for the
better established inquiry under
§
101.”



First, it is
not an invitation to use 102 and 103 for novelty and
non
-
obviousness; it is absolutely required by

Title 35.


Second
, 101 is not the “better established inquiry” because in
the
200
years leading up to
Mayo
v
. Prometheus
it had
NEVER

been used by any court to find a patent claim invalid because it
lacked novelty, which is exactly what the Supreme Court did
when it acknowledged that the claims did not cover a law of
nature but rather only added conventional steps.



CLS Bank
v
. Alice Corp.

Federal Circuit,
en banc
, decided May 10, 2013

http://www.cafc.uscourts.gov/images/stories/opinions
-
orders/11
-
1301.Opinion.5
-
8
-
2013.1.PDF

The Federal Circuit issued an extraordinarily brief
per
curiam

decision, which stated:


“Upon consideration en banc, a majority of the court
affirms the district court’s holding that the asserted
method and computer
-
readable media claims are not
directed to eligible subject matter under 35 U.S.C.
§

101.
An equally divided court affirms the district court’s
holding that the asserted system claims are not directed
to eligible subject matter under that statute.”


Thus, all of the asserted claims are patent ineligible.

CLS Bank
v
. Alice Corp.

Federal Circuit,
en banc
, decided May 10, 2013

http://www.cafc.uscourts.gov/images/stories/opinions
-
orders/11
-
1301.Opinion.5
-
8
-
2013.1.PDF

The 5 judge concurring opinion written by Judge
Lourie

found
that there is “nothing in the asserted method claims represent
significantly more than the underlying abstract idea for purposes
of
§

101.”


Chief Judge Rader and Judge Moore agreed that the method and
media claims are patent ineligible, although for different reasons.


The systems claims in the asserted patents are patent ineligible
because that is what the district court held and there was a 5 to 5
split.


Judges Linn, O’Malley and Newman would have found all of the
asserted claims patent eligible.

Claim at Issue in
CLS Bank


Claim 1 of U.S. Patent No. 7,725,375, at issue in
CLS Bank
, recites:


A
data processing system


comprising:


a first party
device
,


a
data storage unit
having stored therein…


and a
computer
, coupled to said
data storage unit
, that is
configured to


(a)
receive a transaction from said first party
device



Looks a LOT like the claim at issue in
State Street
, which
even the dissent in
Bilski

unambiguously suggested was
patent eligible as a machine.


CLS Bank
v
. Alice Corp.

Federal Circuit,
en banc
, decided May 10, 2013

http://www.cafc.uscourts.gov/images/stories/opinions
-
orders/11
-
1301.Opinion.5
-
8
-
2013.1.PDF

Judge
Lourie
, who was joined by Judges
Dyk
, Prost, Reyna and
Wallach, actually wrote:


“At its most basic, a computer is just a calculator capable of
performing mental steps faster than a human could. Unless
the claims require a computer to perform operations that are
not merely accelerated calculations, a computer does not
itself confer patent eligibility.”


Utterly astonishing. Innovations relating to faster and more
efficient processing have always been patentable. In fact, many
methods that do nothing more than speed up the end result have
been patented for hundreds of years, and many inventors are in
the Inventors Hall of Fame for such inventions.

CLS Bank
v
. Alice Corp.

Federal Circuit,
en banc
, decided May 10, 2013

http://www.cafc.uscourts.gov/images/stories/opinions
-
orders/11
-
1301.Opinion.5
-
8
-
2013.1.PDF

Chief Judge Rader and Judge Moore wrote: “Looking at these
hardware and software elements, it is impossible to conclude
that this claim is merely an abstract idea.


Chief Judge Rader also correctly points out that if all of the
asserted patents in this case are invalid that will mean that
hundreds of thousands of patents are now lost. He wrote:


“[
I]f

all of these claims, including the system claims, are not
patent
-
eligible, this case is the death of hundreds of
thousands of patents, including all business method, financial
system, and software patents as well as many computer
implemented and telecommunications patents.”

CLS Bank
v
. Alice Corp.

Federal Circuit,
en banc
, decided May 10, 2013

http://www.cafc.uscourts.gov/images/stories/opinions
-
orders/11
-
1301.Opinion.5
-
8
-
2013.1.PDF

What about GPS Navigation?
But there is no way that a human
could perform real
-
time GPS navigation of a missile, for example.
Even infinite time over infinite lifetimes wouldn’t allow for real
-
time GPS navigation of a missile.


Is IBM’s Watson patent eligible?
Watson is an artificially
intelligent computer system that is capable of answering
questions presented in natural language. It is, in essence, the
modern day equivalent to the all knowing Star Trek computer. It is
flat out ridiculous to even be asking whether the
Star Trek
omnipotent computer could be patent eligible, but that is where
we find ourselves because what makes the computer unique is
the software that
makes it possible for Watson to perform 80
trillion operations per second!

Claim 20 in Watson Patent No. 8,275,803

A
system

for generating answers to questions based on a corpus of
data comprising:


a
memory storage device
;


a
processor

in communication with said memory storage
device and configured to perform a method comprising…


analyzing all of said documents and each document’s
metadata, in a
candidate answer generation module
, to
generate a set of candidate answers…


wherein a further score comprises a deeper analysis score
obtained by said
processor

implementing executable
instructions for determining the meaning of the supporting
passages and input queries by analyzing lexical or semantic
relations.

SAP
v
.
Versata

PTAB decision on June 11, 2013; first CBM review decision

http://ipwatchdog.com/blog/SAP
-
CBM
-
PTAB
-
final
-
decision.pdf

Ignored all
the recited tangible computer elements embodied in
the claims.



Once
the specifically articulated

structure
is ignored

PTAB
concludes the
claims protect only an abstract idea
.


“[
T]he

underlying process that is implemented on such hardware
could also be performed via pen and paper
.”


“The… invention
may be implemented in any type of computer
system or programming or processing environment…
Thus… the
recitation of generic general purpose computer hardware
(processor, memory, storage) in the challenged claims represents
routine, well
-
understood conventional hardware that fails to
narrow the claims relative to the abstract idea.




AMP
v
. Myriad Genetics

U.S. Supreme Court, June 13, 2013

http://www.supremecourt.gov/opinions/12pdf/12
-
398_1b7d.pdf




cDNA

is not a product of nature and is patent eligible under
§
101,
except

insofar as very short series of DNA may have no intervening
introns

to remove when creating
cDNA
. In that situation, a short strand
of
cDNA

may be indistinguishable from natural DNA.”




“Nor are Myriad’s claims saved by the fact that isolating DNA from the
human genome severs chemical bonds and thereby creates a
nonnaturally

occurring molecule
.”




But
Chakrabarty

said: “[
R]espondent’s

micro
-
organism plainly qualifies
as patentable subject matter. His claim is not to a hitherto unknown
natural phenomenon, but to a
nonnaturally

occurring manufacture or
composition of matter


a product of human ingenuity…






Ultramercial

v
.
Hulu

Federal Circuit, June 21, 2013

http://www.cafc.uscourts.gov/images/stories/opinions
-
orders/10
-
1544.Opinion.6
-
19
-
2013.1.PDF



“First, it will be rare that a patent infringement suit can be
dismissed at the pleading stage for lack of patent
-

able subject
matter.”




“Second, as is shown more fully below, the analysis under
§

101,
while ultimately a legal determination, is rife with underlying
factual issues.”




“Third, and in part because of the factual issues involved, claim
construction normally will be required.”




“Finally, fourth, the question of eligible subject matter must be
determined on a claim
-
by
-
claim basis.”

Ultramercial

v
.
Hulu

Federal Circuit, June 21, 2013

http://www.cafc.uscourts.gov/images/stories/opinions
-
orders/10
-
1544.Opinion.6
-
19
-
2013.1.PDF



“As
§

101 itself expresses, subject matter eligibility is merely a
threshold check; patentability of a claim ultimately depends on ‘the
conditions and requirements of this title,’ such as novelty, non
-
obviousness, and adequate disclosure.

(citing
Bilski
)




“[
T]his

court must not read
§

101 so restrictively as to exclude
unanticipated inventions because the most beneficial inventions are
often unforeseeable. Broad inclusivity is the Congressional goal of
§

101, not a flaw.”
(
citing
Chakrabarty
, J.E.M. Ag Supply)




“Any attack on an issued patent based on a challenge to the eligibility
of the subject matter must be proven by clear and convincing
evidence.”
(citing
Microsoft
v
. i4i)




Ultramercial

v
.
Hulu

Federal Circuit, June 21, 2013

http://www.cafc.uscourts.gov/images/stories/opinions
-
orders/10
-
1544.Opinion.6
-
19
-
2013.1.PDF



“The Court has long
-
recognized that any claim can be stripped down,
simplified, generalized, or paraphrased to remove all of its concrete
limitations, until at its core, something that could be characterized as an
abstract is revealed. A court cannot go hunting for abstractions by
ignoring the concrete, palpable, tangible limitations of the invention the
patentee actually claims. Instead,
the relevant inquiry is whether a
claim, as a whole, includes meaningful limitations restricting it to an
application, rather than merely an abstract idea
.”
(no cite)






Ultramercial

v
.
Hulu

Federal Circuit, June 21, 2013

http://www.cafc.uscourts.gov/images/stories/opinions
-
orders/10
-
1544.Opinion.6
-
19
-
2013.1.PDF



“[A] claim is meaning
-
fully limited if it requires a particular machine
implementing a process or a particular transformation of matter.”

(citing
Bilski
, Prometheus and
Diehr
)





A claim also will be limited meaningfully when, in addition to the
abstract idea, the claim recites added limitations which are essential to
the invention.”
(no cite)




“At bottom, with a claim tied to a computer in a specific way, such that
the computer plays a meaningful role in the performance of the
claimed invention, it is as a matter of fact not likely to pre
-
empt
virtually all uses of an underlying abstract idea, leaving the invention
patent eligible.”

Patent Trolls

White House Initiative


June 4, 2013

LEGISLATIVE RECOMMENDATIONS


The Obama Administration recommended that Congress 7 legislative
measures that they claim will have immediate effect on major problems
innovators face.



1.
Require disclosure of the “Real Party
-
in
-
Interest.”

2.
More discretion in awarding fees to prevailing parties in patent cases.

3.
Expand the PTO’s transitional program.

4.
Protect off
-
the
-
shelf use by consumers and businesses.

5.
Change the ITC standard for obtaining an injunction.

6.
Use demand letter transparency to help curb abusive suits.

7.
Ensure the ITC has adequate flexibility in hiring.

White House Initiative


June 4, 2013

EXECUTIVE ACTIONS


The Obama Administration announced 5 steps it is taking:


1.
Making “Real Party
-
in
-
Interest” the New Default.


2.
Train examiners on the proper scrutiny to give functional
claiming techniques.

3.
New education and outreach materials on the USPTO
website, including an accessible, plain
-
English web site
offering answers to common questions.

4.
Expansion of the PTO Edison Scholars Program.

5.
Interagency review of existing procedures that Customs and
the ITC use to evaluate the scope of exclusion orders.

Some Legislative Proposals

1.
Patent Quality Improvement Act of 2013 (S. 886)


Schumer

Expands the term “covered business method patent” all software.


1.
Patent Abuse Reduction Act of 2013 (S. 1013)


Cornyn


Fee shifting cost of litigation to losing party. Exception if losing party’s position and conduct
were objectively reasonable and substantially justified.


1.
Saving High
-
Tech Inventors from Egregious Legal Disputes Act of
2013 (H.R. 845)


Defazio


Directs courts to award the recovery of full costs to any prevailing party asserting invalidity or
noninfringement
.


1.
End Anonymous Patents Act (H.R. 2024)


Deutch


Requires any sales or transfers of patents to be disclosed to the PTO


2.
Patent Litigation and Innovation Act of 2013


Jeffries/
Farenthold


Mostly grandstanding by Junior Members of the House. For example, would authorize
sanctions under Rule 11 of FRCP.



Question & Answer Segment

The End

Gene Quinn

Patent Attorney

Founder of IPWatchdog.com

Email: gquinn@IPWatchdog.com

Phone: 703
-
740
-
9835