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Federal Circuit Appeals Court Limits Business-Method Patents
Posted by
timothy
on Thu Oct 30, 2008 05:05 PM
from the sounds-smart-so-far dept.
from the sounds-smart-so-far dept.
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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McDonalds Files To Patent Making a Sandwich 346 comments
I Don't Believe in Imaginary Property writes "McDonalds has applied for patent WO2006068865, which carries the title 'METHOD AND APPARATUS FOR MAKING A SANDWICH.' John Montagu, the fourth Earl of Sandwich, can eat his heart out (unless that's been patented, too). Undoubtedly, some people are contemplating whether there's anything novel in this patent that is somehow obscured by its generic title. Feel free to examine their flowchart for yourself and see exactly how novel their sandwich 'subroutines' are. The good news is that, given that it only mentions generic sandwich making 'tool(s),' rather than any specific machine, it might not survive after the In Re Bilski decision, which was meant to put a stop to absurdities such as this. But until McDonalds's application is rejected or invalidated, make sure you don't use their flowchart when making sandwiches. After all, if you 'apply appropriate condiments to appropriate compartment,' you might infringe upon their IP."
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The Post-Bilski Era Gets Underway 94 comments
bfwebster writes "A set of pharmaceutical process patents for 'evaluating and improving the safety of immunization schedules' (Classen v. Biogen et al.; see US Patents 6,420,139; 6,638,379; 5,728,385; 5,723,283) were held to be invalid due to unpatentability. The decision was appealed to the US Court of Appeals for the Federal Circuit, but was upheld with a terse citation to In re Bilski (which decision we discussed here). Here's the entire text of the appeals decision: 'In light of our decision in In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), we affirm the district court's grant of summary judgment that these claims are invalid under 35 U.S.C. 101. Dr. Classen's claims are neither "tied to a particular machine or apparatus" nor do they "transform a particular article into a different state or thing." Bilski, 545 F.3d at 954. Therefore we affirm.' It will be interesting to see what happens when these same standards start getting applied to software-related patents."
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Bilski Patent Case Appealed To Supreme Court 175 comments
An anonymous reader writes "The landmark ruling of a few months ago that limited patents to inventions which include a machine or which transform physical matter has been appealed up to the Supreme Court. 'On the one side of this controversy... are those... who argue that patents must be available to encourage innovation in devising new ways to conduct business in the global information-based economy, including encouragement for new ways of digitizing business methods. On the other side are consumer advocacy groups and free-market devotees who worry that patent monopolies could tie up methods of creative thought processes, including teaching, judging, creative writing, making medical judgments, or picking juries (some current, real examples of claims).' The Bilski decision has already had an impact on potential software and biotech patents, in addition to the obvious limitations on business method patents. The petition (PDF) argues that the 'machine-or-transformation' test conflicts with the broad language of the patent statute and with congressional intent. It's entirely within the Supreme Court's discretion to take the case or not, but for now it looks like the issue is far from decided."
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News: Amazon Sued Over E-Book DRM Patent 84 comments
I Don't Believe in Imaginary Property writes "Discovery Communications, the parent company of the Discovery Channel, is alleging that Amazon's Kindle e-book reader infringes upon their patent for DRM-encumbered e-books (Discovery's complaint, PDF). The patent in question was filed back in 1999 and issued in 2007 — coincidentally one day after Kindle 1.0 went on the market — and has claims for DRM implemented with a great many particular symmetric key ciphers and key exchange algorithms, (the patent has 171 claims). Unlike most software patents, this one goes into quite a lot of detail about how the encryption is to be performed. But it will still be interesting to see if it can pass the 'machine or transformation' test now that In Re Bilski is being accepted as precedent. After all, it seems like all of these encryption and e-book distribution schemes could be run on a general-purpose PC, so is the 'invention' actually tied to a 'particular machine or apparatus' just because an e-book 'viewer' (not to mention 'home system', 'library', and 'kiosk') happens to be specified in the patent's claims? Or can the encryption of an e-book be claimed as some kind of 'transformation' when the law in that area is especially murky — when no one knows how In Re Bilski may affect the precedent of In Re Schrader?"
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Supreme Court To Review "Business Method" Patents 181 comments
xzvf alerts us to big news on the patent front: the Supreme Court decided today to review the validity of "business method" patents. In particular, the Supremes will look over the "In re: Bilski" case, which we have discussed before. "By agreeing to weigh in on the case, the high court is venturing into controversial terrain. Critics of business-method patents say it was never the intent of the law to protect such things, which in their view are often far closer to abstract concepts or mathematical algorithms rather than physical inventions. Proponents say they are key to promoting innovation in today's knowledge- and service-based economy. ... The court's decision to review the Bilski case caught many observers by surprise. The Bilski patent claims are widely viewed as vulnerable to challenge on a number of grounds, and the sense among some experts was it would make a poor test case. ... The Supreme Court won't hear arguments in Bilski until its next term, which begins in October. A ruling is likely during the first half of 2010."
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Supreme Court Review of Bilski Heats Up 121 comments
I Don't Believe in Imaginary Property writes "The Supreme Court's review of In Re Bilski (discussed here numerous times) is heating up, having attracted no less than 44 friend-of-the-court briefs from almost everyone with a stake in the patent system. Patently-O provides a nice summary of who is arguing against Bilski. The two questions before the Supreme Court are whether or not a process must satisfy the particular machine or transformation test, and whether this test improperly excludes many business methods in spite of the wording of 35 U.S.C. 273, which specifically allows business-method patents. So far, the case has attracted legal filings from nearly every large company or group whose patents might be threatened. You can read briefs from Yahoo, IBM, Borland, Dolby Labs, the BSA, and many others, even one from some guy claiming to speak on behalf of the State of Oregon."
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To patent something... (Score:5, Funny)
It helps to be first
re: I'm a Democrat .. (Score:3, Interesting)
If all you socialists get into power we'd all be broke
Give a man $10 he's a free-loader
Re: I'm a Democrat .. (Score:5, Insightful)
$10 he's a free-loader .. give a man $700 billion he's a captain of industry ...
Those two are not mutual exclusive...
Parent
Re: (Score:2, Interesting)
Re: (Score:2, Insightful)
"but the substance needs to be there and in the right form for approval"
Franz Kafka tried to sue you for infringement of his humor.
Re:To patent something... (Score:4, Interesting)
Parent
Re: (Score:3, Interesting)
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,
Re: (Score:3, Funny)
I work full-time and make $68,000 per year, and I'm a Democrat.
Wow, you're poor......... for a Democrat.
Full text as HTML (Score:4, Informative)
Champagne bottles popping at Groklaw (Score:4, Informative)
It's not a full victory, as mentioned. But it's a step in the direction of sanity versus a congress that's been overly influenced by the IP troll communities.
The victory seems solid, but SCOTUS has a different palette of judges to look at this with. We'll see if it becomes the law of the land or not, then, a few years from now should it be appealed-- and my guess is that it will be despite its strong tone.
Re:Champagne bottles popping at Groklaw (Score:4, Informative)
We'll see if it becomes the law of the land or not, then, a few years from now should it be appealed-- and my guess is that it will be despite its strong tone.
Or it could be something that they deliberately don't appeal, and they and other companies avoid going against in other cases so as to avoid an even stronger SCOTUS precedent. Kinda like when in Microsoft vs AT&T, they got close enough to the issue of software patent-ability that one of the Justices questioned whether they were assuming it to be the case, as they'd(SCOTUS) never held software to be patentable before, and the counsel for both sides backed way off so as to avoid any possible ruling for or against software patents. Seems especially prudent when the Justice semi-implies what the answer would be.
So it could go either way. Apparently the issue of whether software or business methods are patentable has never reached the Supreme Court before. It'd be rather sad if the whole software patent regime that's caused so many problems over the last couple decades was just a legal fluke that never should have happened. On the other hand, one of the main limits on Judicial power is that they can only rule on issues that come before them.
Parent
Re: (Score:3, Insightful)
It's important to pick the right battles, that's for sure-- but this one already has years, and lots of money spent on it. Maybe it's not the right time for them to pursue it, we'll agree, but there's a lot invested here-- including those patents that summarily become invalidated should it be tested again. Only SCOTUS has the final say beyond a new law-- that's the thing to fear most. Big guns will cry in a bad economy, and get sympathetic ears. That frightens the hell out of me.
Re:Champagne bottles popping at Groklaw (Score:4, Insightful)
We agree on 35 USC 101.
Then there's:The Congress shall have power ... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.
And there's the perversion in IP law that SCOTUS might have to deal with. That's what I fear: new legislation, and the IP battle of titans to get software patents more deeply entrenched, or other business 'theory' concepts established in any way.
Parent
Groklaw link: (Score:4, Informative)
Parent
Re: (Score:3, Interesting)
Why should there be one at all? Having even one would seem to violate lots of tenets and philosophies.
Patent Office (Score:3, Interesting)
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?)
Re: (Score:3, Insightful)
Fund the US Patent office independently (Score:4, Interesting)
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.
Re: (Score:3, Informative)
That's not entirely true. All of the PTO's funding still has to be appropriated by Congress, but they generally give back roughly all the revenue that the PTO collects.
Also, since KSR v. Teleflex last year, allowance rates are down sharply.
Re: (Score:3, Insightful)
A Poor Piece of Jurisprudence (Score:4, Informative)
There is some more legally (as opposed to policy) oriented coverage of the decision at Patently-O [patentlyo.com].
The majority decision introduces a new, complex, and vague test for patentability of business methods and software that raises more new questions than it answers. The end result will likely be the discovery of several 'magic words' that patent applicants can insert into their applications to ensure patentability without materially affecting what the claims cover. Unfortunately, those magic words will likely only be discovered after millions of dollars are wasted on expensive legal battles.
The new test states that a business method or software-implemented invention must be either "tied to a particular machine" or "transform a particular article." The court does not define what a 'particular machine' is. It is possible that a general purpose computer is sufficient, but it may not be. If it is not, it is unclear how specific the patent must be about what kind of computer it is tied to.
The court also failed to define what was a suitable level of transformation or what kinds of articles would suffice. Maybe the transformation must be significant, or maybe any change in state at all is enough. Maybe it will depend upon the nature of the invention. Maybe some articles are physical enough while others are not. All of these questions will require millions of dollars and years of litigation to answer. In the meanwhile, the value of thousands of patents will be called into question.
The court did point out that the article need not be physical, as in the example of a CT scanner which manipulates data representing a patient's body but not the body itself. So perhaps as long as there is some ultimate tie-in to a physical object, the invention is patentable. It is unclear why the manipulation of data representing a patient's body is adequately tied to a physical article but the manipulation of data representing commodities (which are ultimately very real barges full of coal, for example) is not. Figuring out exactly where that line is will be very difficult.
In my opinion (and in the opinion of Judge Rader, who wrote one of the three dissenting opinions) , the law already provided plenty of reasons to deny the application in the case as well as other overly broad or overly vague business method and software patents. Inventing complicated new tests will do more to provide employment for patent attorneys than it will to streamline business and encourage innovation.
Of course, I would also call into question the requirement for a physical tie-in of any kind. So long as the business method or software patent is limited to a specific, useful application (and is new, nonobvious, etc), I see no reason why we shouldn't encourage the development of such inventions. For example, better that a hedge fund patent a new kind of derivative and the world see what they are doing than they keep it an in-house trade secret. Assuming the Supreme Court or Congress does not overrule it, this decision will do much to drive such complex financial methods into the shadows.
One other very real concern. This decision could very well spell the end of Google's Page Rank and AdWords patents. If that happens, expect Microsoft and Yahoo to announce new, improved versions of their search engines and ad-delivery systems...and expect Google's stock to tank. Almost all of Google's value is tied up in its intellectual property. This decision weakens some of the fundamental parts of its business. Without software patents, it will be much harder for Google (or the next clever startup) to challenge more established companies.
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I just finished reading the ruling, and I just was about to post many of the same points you just did. I completely agree with your analysis of this victory-for-confusion ruling. It's amusing to be in such complete agreement on the analysis, and be so diametrically opposed with your "I would also call into question the requirement for a physical tie-in of any kind..." followup.
The Supreme Court RULE, repeatedly stated and reaffirmed by the Supreme Court and repeated and reaffirmed in this ruling, is "Transf
Re:A Poor Piece of Jurisprudence (Score:4, Interesting)
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.
Parent
Given the course of events.... (Score:3, Insightful)
...it seems the patent office SHOULD have rejected the claim for "a method to hedging risk in the field of commodities trading" because it was non-useful.
Re: (Score:2, Interesting)
Are "friendly dems" the kind that actually took microsoft to court in the 90's only to be saved by baby bush?