Posts in IPWatchdog Articles

One reason I was quite interested in Bilski was because the Supreme Court (not surprisingly) ruled that the Federal Circuit’s “machine or transformation” test was too inflexible, much like the “teaching, suggestion and motivation” (TSM) test in KSR International v. Teleflex. So why my intense interest in the Supreme Court (aka the Judicial Mount Olympus) relegating the “machine or transformation” (aka MoT) test to “second class status” in Bilski? Besides the inanity of MoT as the sole test for patent-eligibility, I am interested because of Judge Sweet’s ill-advised reliance on MoT (now smitten by the thunderbolts from our Judicial Mount Olympus in Bilski) for invalidating Myriad’s method claims using its BRCA1 and BRCA2 gene sequence technology.

USPTO Director David Kappos made one of his rare excursions outside of the US at the end of June when he flew to Munich to take part in the IP Business Congress, organised by IAM – the magazine which I edit. Speaking to 450 delegates, many of them heads of IP at large corporations and SMEs, Kappos was clear that he has a major task in getting the USPTO fit for purpose and able to meet the myriad challenges it faces. I also discussed many of these with him in an interview we recorded at the congress.

At the start of the new year I pledged that I would start to try and expand the scope of IPWatchdog.com to touch upon intellectual property matters outside the United States. In part this means trying to add an international flavor where appropriate, which is certainly always possible in part through discussion of the Patent Cooperation Treaty (PCT). In another facet it means profiling interesting stories relating to foreign intellectual property laws.

The reality is that individuals and companies fuel the piracy market. Simply stated, if there were no demand there would be no supply, so it is quite disingenuous for us to only point the finger at the supplier, but rather we ought to acknowledge that there is plenty of blame to go around, which may be a hard pill to swallow. And while there may an intellectual distinction between sharing software or music with a friend or family member, there exists a cultural indifference that borders on contempt for the rights of creators.

I have wondered out loud why we don’t have more of a bounce coming off this Great Recession. Certainly the historical dysfunctionality of the Patent Office prior to Director Kappos has something to do with that. It seems to me that open source has also lead many otherwise capable individuals to turn away from innovating. They are not looking for paradigm shifting open spaces and instead toward copying, or simply being blissfully ignorant about whether they are advancing or simply reinventing what others have already invented. The march forward has ceased in part due to the Patent Office backlog and due to an infatuation with open source and reinventing the wheel.

Now that the Supreme Court has vacated and remanded both the Classen and Prometheus decisions, the Federal Circuit must revisit these issues. For Prometheus, the decision may be simpler, because the claims were already held to meet the machine-or-transformation test. Although the Supreme Court’s Bilski decision held that the M-or-T test was not the only test by which patent-eligibility can be determined, the Supreme Court seemed to have agreement from all nine Justices that the machine-or-transformation test was still a useful tool and valid option. See, e.g., Bilski, slip. op. at 2 of J. Breyer’s concurrence. Although a claim that does not meet the M-or-T test may still be patent-eligible under other theories, one can presume that the M-or-T test is still a “safe harbor” for claims that meet its provisions. The Federal Circuit’s re-visitation of Prometheus will be the first opportunity for this presumption to be tested.

It is hardly news to anyone in the United States that fireworks are associated with a proper celebration of July 4th. But why exactly do we use fireworks to celebrate the 4th of July? The reality is that we do it because fireworks are known to be festive in nature and appropriate to celebrate any special occasion, which back in 1777, the first celebration of our Independence, was very special. The young nation didn’t know for several years whether its independence would actually be won, so the fact that it had been a year and the Nation still endured, separated from the British Empire, was worth celebrating for sure.

The day-long symposium included discussion of online copyright policy in the United States, specifically the impact of current copyright laws, existing and emerging techniques used to illegally distribute and obtain protected works, the extent and economic impact of infringement, and the role of emerging business models for legitimate distribution of content. During the symposium, it was announced that the Department of Commerce will issue a Notice of Inquiry (NOI) this month seeking public comment on the effectiveness of copyright law, and ultimately will issue a report which will contribute to the Administration’s domestic policy and international engagement in the area of online copyright protection.

Where this decision takes on a surreal quality is how the various Justices viewed the impact of 35 U.S.C. § 273 in determining whether “business methods” are patent-eligible. Justice Stevens and 3 other Justices (Ginsburg, Breyer and Sotamayor) are completely WRONG in treating 35 U.S.C. § 273 as if this statute doesn’t exist. Even Scalia, who obviously doesn’t like patents on “business methods” (by his refusal to join Part II B-2 of Kennedy’s opinion) couldn’t stomach rendering the language of 35 U.S.C. § 273 a nullity.

Companies enter into software development deals with independent contractors without adequately addressing copyright ownership. Many times, it is assumed by the programmer that the copyright, including the right to modify and prepare derivative works, remains with her or him. From the company side it is generally assumed that when someone is paid to create copyrighted material that flows from the original creation those copyrights will be owned by the commissioning party. Neither assumption is true, which means that when a dispute arises, litigation ensues and unnecessary expenses mount.

Who knows what goes through the minds of anyone, let alone a cloistered Justice of the United States Supreme Court. What we do know, however, is that 5 Justices, namely Justices Kennedy, Roberts, Thomas, Alito and Scalia all agreed that business methods are patentable subject matter. All 9 Justices agreed that the Federal Circuit misread previous Supreme Court decisions when they mandated that the machine or transformation test be the only test for determining whether a process is patentable subject matter. 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).

Who knows what will happen, but this early announcement form the USPTO seems helpful. They recognize that business methods are patentable unless they represent abstract ideas, as Bilski was determined to encompass. It is also recognized that satisfying the machine-or-transformation test is heavy evidence of satisfying the requirements of 101, and an interim process is put in place whereby the burden will be shifted to the applicant to demonstrate that the claimed invention is not simply drawn to an abstract idea if a machine-or-transformation rejection is given.

“In our amicus brief, BIO urged the Supreme Court to overturn the lower court’s rigid new test for determining whether a method or process is eligible for patenting. We are pleased that the Justices crafted a narrow opinion that does just that. The Court was clearly conscious of the potential negative and unforeseeable consequences of a broad and sweeping decision,” stated BIO President and CEO Jim Greenwood. “This ruling specifically states that the ‘machine-or-transformation test is not the sole test for patent eligibility’ and recognized that the lower court’s ruling could have created uncertainty in fields such as advanced diagnostic medicine techniques.”

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. Delivering the opinion for the Court was Justice Kennedy. There were no dissents, only concurring opinions, which is in and of itself a little surprising. In any event, Kennedy explained that the Federal Circuit decision ignored well established rules of statutory interpretation, and further explained that there is no ordinary, contemporary common meaning of the word “process” that would require it to be tied to a machine or the transformation of an article. Nevertheless, the machine or transformation test may be useful as an investigative tool, but it cannot be the sole test.

It is true that math itself is not protected, because it has been deemed (and rightfully so) an abstract idea, but the use of math in other processes and inventions is different. If you or I come up with a useful process that includes a mathematical calculation as one of its essential steps, then that calculation can be patented as part of the process.

Just because algorithms are processed mathematically by a computer, doesn’t mean the results have any mathematical value. The electrical charges that zip around inside a computer only have value because we assign it to them, not because they have any inherent value of their own. A piece of software is usually not designed to make mathematical calculations for the purpose of obtaining numerical results, but rather to transform information represented numerically into other pieces of information that do have value to us.