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Federal Circuit Appeals Court Limits Business-Method Patents 73

Zordak writes "The Court of Appeals for the Federal Circuit has just issued its much-anticipated opinion in In Re Bilski [PDF]. This was a re-visit of the State Street issue of what constitutes patentable subject matter (including whether software and business methods are patentable). In summary, the court has affirmed and strengthened the 'machine-or-transformation' test, upholding the patent office's rejection of claims on a method for hedging risk in the field of commodities trading. Although the court refused to exclude software patents categorically, it is likely that the reasoning of this decision will be used to reject many software patents (note that some of the dissenting judges would have completely overturned State Street and tossed out all software and business method patents). Although not as sweeping as some had hoped for, it is certain that this decision, along with the Supreme Court's KSR decision last year, will lay a difficult mine field for those who want to patent software and business methods."
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Federal Circuit Appeals Court Limits Business-Method Patents

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  • Patent Office (Score:3, Interesting)

    by truthsearch ( 249536 ) on Thursday October 30, 2008 @05:18PM (#25575549) Homepage Journal

    So, will this change policy at the patent office? Or does it change the potential outcome of patent related lawsuits?

    If the patent office doesn't change what applications they approve, then the battles will still need to be fought in courts, right?

    (Is it obvious IANAL?)

  • by rs232 ( 849320 ) on Thursday October 30, 2008 @05:26PM (#25575687)
    "I work full-time and gross $19,200/year and I'm a Democrat. What's your excuse?"

    If all you socialists get into power we'd all be broke .. oh ... wait ... :]

    Give a man $10 he's a free-loader .. give a man $700 billion he's a captain of industry ...
  • by princessproton ( 1362559 ) on Thursday October 30, 2008 @05:40PM (#25575867)
    Slightly inaccurate. The US is a "first to invent" system, as opposed to "first to file" system (which is how the rest of the world operates), and proof is required. In addition, patent application reviewers are actually reviewed, judged, and promoted by the number of patents that they REJECT. There are very visible and acknowledged rejection quotas that the employees must meet. The only patents that are simply approved are the 1-year provisional patents, which are usually just stamped and thrown in a file. True, USPTO employees are usually completely overwhelmed, underpaid, and at times underqualified to understand the substance of the patent applications, but the substance needs to be there and in the right form for approval.
  • by kaltkalt ( 620110 ) on Thursday October 30, 2008 @06:04PM (#25576235)
    The problem is that Congress decided not to fund the USPTO and allow it to fund itself through application fees, processing fees, and all whatever other fees the USPTO wants to charge. So, the more patents they review and grant, the more money they make. This was the primary cause of the patent explosion - it suddenly became in the Patent and Trademark Office's best interests to allow and grant as many patents as possible. Take the $500 application fee (or whatever it is), charge a review fee, charge a patent issuance fee, and leave it up to the courts sort out whether or not a patent on a method of removing snot from a nose with a finger is a valid patent or not. That's what's been going on. My solution is for congress to fund the USPTO, but that they should only be allowed to issue, say, 100 patents per year. All patent applications are held and reviewed and at the end of the year, the top 100 are granted patents. Frankly, 100 is too generous, I'd rather it be 20 to 30. These days there are nowhere close to 100 truly innovative and nonobvious inventions per year. Maybe 5 or 6, at the most. So 20 patents per year is more than adequate, and 100 is allowing crap that shouldn't otherwise be patentable. Once new patents become a rarity, the number of patent applications will drop exponentially. It should not be a valid business model to own a portfolio of ridiculous patents and sit around waiting for someone to infringe them. That does not foster innovation - quite the opposite.

    So, give the USPTO $100,000 or so in federal funding, grant 100 patents per year (a board can pick the top 100), and by all means don't give the USPTO financial incentives to grant as many patents as it can, only to leave the actual work of determining patent validity up to the judiciary. Our courts are clogged enough without people suing over patent infringement for nosepicking methods.
  • by postbigbang ( 761081 ) on Thursday October 30, 2008 @06:08PM (#25576311)

    Why should there be one at all? Having even one would seem to violate lots of tenets and philosophies.

  • by alexborges ( 313924 ) on Thursday October 30, 2008 @06:15PM (#25576397)

    Are "friendly dems" the kind that actually took microsoft to court in the 90's only to be saved by baby bush?

  • by princessproton ( 1362559 ) on Thursday October 30, 2008 @07:49PM (#25577385)
    I recently took an IP law class (taught by a patent attorney) and he mentioned this fact. He also said that the best way to get a patent through is to contact the patent reviewer assigned to your application near the end of the month, agree to a rejection on specific grounds (even if they are minor, simply to help them fill their quota), and then resubmit the next month with a response to those issues. The reviewer assigned to your case is always the same, so they will recognize your application and approve it on its second time through as a quid pro quo. So yes, there's no denying there are issues and opportunities for corruption within the approval process, but it's actually more natural for the reviewers to reject rather than approve to make a dent in their caseload. Also, the grounds for objection (obviousness, for example) can be very subjective so it is possible to reject many patents based on a combination of several pieces of prior art and the assumption that it could have been discovered or invented by anyone with ordinary skill in the art, even if this might be unlikely in reality.
  • by Grond ( 15515 ) on Thursday October 30, 2008 @08:10PM (#25577597) Homepage

    I'm not proposing eliminating software patents, so I don't need to provide such a line. I don't actually have a problem with software patents, so long as they are actually new, useful, nonobvious, and accompanied by a written description that adequately discloses the invention. The problem is not software patents: the problem is bad patents, and I can make several recommendations for cutting down on those.

    First, the presumption of patent validity should be eliminated, making it easier to overturn bad patents. The large numbers of patents that are invalidated shows that the presumption of validity no longer makes sense.

    Second, the patent office should make it easier for those with computer science backgrounds to become patent agents and patent attorneys. By bringing in more people educated in the field, better patents will be written and bad patents will be more easily overturned.

    Third, courts and examiners should (and have started to) make more of the fact that all claims (even, or perhaps especially, broad ones) must be backed up by disclosure in the specification. As an example, if I disclose only one compression algorithm in my specification, then I should not be able to claim something as broad as "compressing data by eliminating redundant information." Instead, I should only be able to claim the algorithm I disclosed. Too many overly broad patents are granted, and this is especially common among software patents because the examining corps doesn't have enough competent computer scientists to weed out the chaff.

  • by Anonymous Coward on Thursday October 30, 2008 @09:24PM (#25578193)

    Completely FALSE. Do you have any evidence of this? Please show me in the MPEP (Manual of Patent Examining Procedures) where it says that patent examiners are reviewed, judged, and promoted based on rejections.

    I work at the U.S. patent office and you do not have quotas set for how many rejections you do.

    You have so many COUNTS per week that you have to do. The first time you look at a case and make a decision you get a count (A First Action On the Merits FAOM, whether you reject it or allow it). When a final disposal is made (patent is granted or is abandoned or inventor pays additional money to continue prosecution [RCE]) you get a disposal count.

    If you allowed patents on first go around you'd get two counts your first action and your disposal. So a patent examiner who wants to do the least amount of work would want to allow everything. You'd get more counts plus you can do an allowance in a page or two of writing instead of 20-40 pages of writing for a rejection.

    Your quality is looked at for both rejections and allowances. They do care if you allow a case that shouldn't have been more, but it can not be said that if you allowed a lot of cases (which were allowable) that you would not get promoted.

    As for pay in 5 years if you get all your promotions you would make around 110,000. A person with 15 years of experience or a supervisor around 150,000 [a representative to the U.S. house makes 169,000 for comparison, although I would say that most patent examiners are smarter than the House reps but who on slashdot isn't Parent thread excluded). The government couldn't pay more if they wanted to as the top grade level/step is capped by congress for all federal employees.

    Best Regards,

    Anonymous Coward Examiner

  • by Dachannien ( 617929 ) on Friday October 31, 2008 @06:15AM (#25581203)

    He also said that the best way to get a patent through is to contact the patent reviewer assigned to your application near the end of the month, agree to a rejection on specific grounds (even if they are minor, simply to help them fill their quota), and then resubmit the next month with a response to those issues.

    "Agree to a rejection"? As an applicant, you don't have any say in whether your application gets rejected or not, aside from doing your best to ensure that the application meets the statutory requirements when you file it or amend it. You could contact the examiner, I suppose, and say that you happily accept a rejection, but the examiner still has to write up a rationale for the rejection. Once you get the office action describing the rejection, you have some time to submit a response, and at that point, it's up to you to decide to be a dick about it or not.

    Also, PTO quotas become more important at the end of a quarter and particularly at the end of a fiscal year. Some agents will pester examiners for interviews around that time in the hopes that the examiner will be more amenable to allowance, since allowance = disposal = a count.

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