Archive for September, 2011

Ultramercial: Federal Circuit Upholds Subject Matter Patentability of Internet Advertising Software

Thursday, September 29th, 2011
  • Unanimous Ultramercial  Court finds “complex computer programming” required to implement claimed software steps persuasive factor in upholding software patent on internet advertising method 

On September 15, 2011, the Federal Circuit rendered its decision in Ultramercial v. Hula, which provides further needed guidance on how to determine whether software claims are subject matter patentable under 35 U.S.C. 101.  In Ultramercial, the Federal Circuit was asked to decide whether a method for distributing copyrighted products over the Internet was subject matter patentable.  In a unanimous decision written by Chief Judge Rader, the Court reversed the lower court in finding the 7,346,545 patent “process” claims to be patent-eligible subject matter within the meaning of 35 U.S.C. 101.

As the Court opined, these claims were subject matter patentable because they required “complex programming” to implement and they recited a “specific application to the Internet and a cyber-market environment”.  Slip Op. 11  The Court explained that “one clear example is the third step, “providing said media products for sale on an Internet website,” and another is that “they must be “restricted” – step four – by complex computer programming as well.”  Id.  The Court was careful to point out that the limitation of a software claim to a “specific application to the Internet” is not a measure of subject matter patentability in all cases; even though this factor is one that contributed to the finding of the Court that the ‘545 patent contains patent-eligible subject matter.  “Complex computer programming”, on the other hand, provides that measure of subject matter patentability the Court impliedly explained when stating that “[t]his court does not define the level of programming complexity required before a computer-implemented method can be patent-eligible.”  Id.  (“Viewing the subject matter as a whole, the invention involves an extensive computer interface.” Id.)

Still, the Court appears reluctant to expressly pronounce “complex computer programming” as the measure for gauging subject matter patentability of software, perhaps wary that limiting the measure to any one test might be viewed as a “bright-line rule” that recent history has shown to find disfavor with the Supreme Court.

Ultramercial is also significant in the absence of any discussion of the “functional and palpable test”, which was articulated by Chief Judge Rader in Research Tech last December for use in determining subject matter patentability questions.  This may indicate a growing realization of the Court about the subjectivity of the “functional and palpable test” for use as a yardstick for measuring subject matter patentability questions; a concern that we voiced as well in our Juhasz Law Blog on Research Tech.  While more subjective than the “functional and palpable test”, the “complex computer programming test” of Ultramercial still begs the question of just what amount of programming is required before the computer programming may be deemed to be “complex computer programming” sufficient to allow the software claims to pass through the subject matter patentability filter.  In our Juhasz Blog on Cybersource, we voiced the same concern with the “performed in the human mind, or by a human using a pen and paper” test espoused by the Court in Cybersource (i.e., just how many calculations must the claim perform before a software claim satisfies that test).  Thus, Ultramercial, like its predecessor Cybersource, is likely to go down only as an important next step in the evolution of jurisprudence in this area toward a test that can be more objectively applied and lead to more consistent results.

At Juhasz Law, we have suggested in the past that the test for accurately defining the boundary line beyond which a business, software, or diagnostic method preempts a fundamental idea may lie in whether the method steps recite a physical or virtual link to something real. There must be a physical or virtual link of data manipulated by the software, for instance, to a physical or tangible object.  That is, a real or tangible object must be manipulated by data as in Diehr.  Or data representing a real or tangible object must be manipulated as in the Fifth claim of Morse. Both Ultramercial and Cybersource cases appear to support this view that the link of data to, that is, the manipulation of, something “real” may provide the clue to the patent eligibility of a business, software, or diagnostic method.  For more on “virtual links” and “physical links” and their use, go to Physical and Virtual Links.

As yet another sign that the Court may be stepping away from the use of “bright-line” rules in Federal Circuit jurisprudence is Chief Judge’s discussion in Ultramercial of the role of claim construction in determining subject matter patentability questions.  As Chief Judge Rader explained, “[t]his court has never set forth a bright line rule requiring district courts to construe claims before determining subject matter eligibility” (Slip Op. 4, 5), before the Court went on to deciding that the subject matter of the ‘545 patent does not require claim construction.  Id.  At Juhasz Law, we believe that claim construction helps to clearly frame the Bilski subject matter patentability question.  For that reason, we draft claims for our clients with this in mind; specifically building into the claims the physical and virtual links that we believe minimize the exposure of the claims to a Bilski challenge.

The Juhasz Law Firm can help you to better understand the effect of Ultramercial on your software patents.  For more information regarding these cases and advice on how these decisions may affect your patents, please contact The Juhasz Law Firm. Your patents may be your most important asset. To help you protect your patents contact Juhasz Law, the firm committed to Guiding Your Patent Beyond The Horizon℠.

Classen v. Biogen: Federal Circuit Imposes “Subject Matter Patentability Filter” In Striking Down Transformation Claim in a Diagnostic Method Impliedly as an Insignificant Post-solution Activity

Wednesday, September 7th, 2011
  • 2-1 Classen majority imposes “subject matter patentability” filter in transformation-type claims in striking down a transformation claim in a diagnostic method impliedly as an insignificant or token activity

On August 31, 2011, the Federal Circuit rendered its decision in Classen v. Biogen Idec. which may become the gold standard for making subject matter patentability determinations in cases involving transformative steps; squarely addressing the issue of “insignificant or token activity” (e.g., “insignificant post solution activity”) raised by the Supreme Court in Bilski  but now in connection with subject matter involving transformations.  

In Classen, the Federal Circuit was asked to decide whether three patents on a method for improving an immunization schedule involving method claims directed to identifying a safe vaccine regimen and involving a step of immunizing mammals is patentable subject matter.  The patents before the Court were U.S. Pat. Nos.  6,638,739; 6,420,139; and 5,723,283.

In a 2-1 majority, the Court reversed the lower court in finding the ‘139 and ‘739 patents to contain subject matter patentable under 35 U.S.C. 101 while affirming the lower court finding that the ‘283 patent is not patentable subject matter.  Following an unremarkable analysis of the case under its “functional and palpable test” (“If the specified method is “functional and palpable,” the court stated, the claims are drawn to statutory subject matter.” Slip Op. 17), the Classen court went on to analyze the claims in what may be the real take-away from this decision – namely, the implied replacement of the traditional notion that generally all transformative steps are patentable subject matter with a “subject matter patentability filter” through which all transformation steps in a claim must pass. Slip Op. 19  In Classen, claims of one of the three patents before the court, the ‘283 patent, failed to pass the “subject matter patentability filter” impliedly because they amounted to an insignificant or token activity.  Id.  As the court explained, “[t]he “immunizing” in the ’283 patent refers [only] to the gathering of published data, while the immunizing of the ’139 and ’739 patent claims is the physical implementation of the mental step claimed in the ’283 patent.”  Id.

The different treatment given by the Court to the two sets of patents turned on how the immunization step was construed by the Court.  In the ‘139 and ‘739 patents the recitation occurred after a screening step was performed to derive an immunization schedule for use in the immunization step and in the ‘283 the immunization step was recited before a comparing step to generate data for use in the comparison step.  While facially both sets of patents recited “immunization steps” that were transformative, the court opined that the “immunizing step” of the ‘283 patent failed to pass through the “subject matter patentability filter”   Slip Op. 19, 20.  A transformation for data gathering purposes to develop a body of knowledge as was recited in the ‘283 is not patentable the court held while a transformation that “puts this knowledge to practical use” as was recited in the ‘139 and ‘739 patents comports with 35 U.S.C. 101. Slip Op. 21  As explained by the court, “The principles applied in Prometheus support the patent eligibility of the Classen claims that include such transformative steps, but are not relevant to claims that require no more than referring to known information but do not include immunization in light of that information.” Slip Op. 22

In her dissent, Judge Moore found disfavor with the court’s use of the “functional and palpable” test pointedly questioning: “How do we determine whether any given method or claim is “functional” or “palpable?”  Dissent 12.  In our Juhasz Blog on Research Tech, we too posed the same question.  There we said that this “functional and pulpable” standard in defining whether a claim preempts a fundamental idea (“palpable” is defined by Merriam-Webster dictionary to mean “capable of being touched or felt”) provides little guidance on determining the preemption issue and is reminiscent of the phrase made famous by Justice Potter Stewart in the obscenity case of Jacobellis v. Ohio that “I know it when I see it”. 

The Classen court provides further useful insight as to what the “functional and palpable test” means when it predicated its analysis under the test using phrases like “specific, tangible application” (Slip Op. 18) and “concrete, physical step (Slip Op. 20).   In her dissent, again critical of such reasoning, Judge Moore pointedly questioned: “Is this a return to the rejected notions of “useful, concrete, and tangible?”  We too find the Court’s use of  “concrete, physical step” and the “specific, tangible application” type of analytical framework in its analysis to be eerily reminiscent of the “useful, concrete, and tangible result” test that the court used in deciding State Street and AT&T, a decision that the dicta of the Supreme Court in Bilski made clear that “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.”  For more go to Juhasz Law Blog on State Street Bank and AT&T Lessons.

The Classen decision showcases the continuing struggle of the Court to define the boundary line beyond which a claim preempts a fundamental principle.  The problem, as the Court explained is that “[t[he Court in Bilski v. Kappos did not define “abstract,” and Justice Stevens observed in concurrence that “[t]he Court, in sum, never provides a satisfying account of what constitutes an unpatentable abstract idea,” 130 S. Ct. at 3236.”  Slip. Op. 16.  The solution in the eyes of the Federal Circuit is the “functional and palpable” test which provides that definition. Slip Op. 17.

Still, Classen is likely to become the gold standard for making subject matter patentability determinations in cases involving transformative steps; squarely addressing the issue of “insignificant or token activity” (e.g., “insignificant post solution activity”) raised by the Supreme Court in Bilski  but now in connection with subject matter involving transformations. Classen impliedly may have signaled the end to the general presumptive patentability of transformation claims.  Transformative steps that are mere data gathering steps may now be treated no differently than a general computer is treated in a software patent, that is, as an insignificant post-solution activity.  Classen also points to the wisdom of the Supreme Court in striking down the Federal Circuit’s “machine-or-transformation” test as the exclusive test for determining subject matter patentability.  The transformative step that was deemed to be unpatentable subject matter under Classen could likely have been found to be patentable subject matter under the MOT test. 

In reforming the treatment of transformation steps, Classen is likely to have a big impact on diagnostic methods and chemical process patents by extension. Classen Immuno v. Biogen Idec is a must read for practitioners dealing with Bilski issues.  For a more comprehensive discussion of Classen Immuno v. Biogen Idec and take-aways including suggested tips for use in drafting diagnostic and chemical method claims, go to the September 2011 Juhasz Law Advisory.

The Juhasz Law Firm can help you to better understand the effect of Classen Immuno v. Biogen Idec on your biotechnology, diagnostic, and chemical patents.  For more information regarding these cases and advice on how these decisions may affect your patents, please contact The Juhasz Law Firm. Your patents may be your most important asset. To help you protect your patents contact Juhasz Law, the firm committed to Guiding Your Patent Beyond The Horizon℠.

Cybersource: Software Subject Matter Patentability Turns on Question “Can It Be Performed in the Human Mind, or By a Human Using a Pen and Paper?”

Wednesday, September 7th, 2011
  • Unanimous Cybersource  majority finds software method that can be performed in the human mind, or by a human using a pen and paper and its Beauregard claim counterpart unpatentable  

On August 16, 2011, the Federal Circuit rendered its decision in Cybersource v. Retail Decisions which provides needed guidance on how to determine whether claims are subject matter patentable under 35 U.S.C. 101.  In Cybersource, the Federal Circuit was asked to decide whether a method and a Beauregard claim directed to detecting credit card fraud which utilizes information relating credit card transactions to particular “Internet addresses” was subject matter patentable.  In a unanimous decision, the Court affirmed the lower court in finding claims 2 and 3 of the 6,029,154 patent invalid under 35 USC 101 for failing to recite patent-eligible subject matter. 

Following an unremarkable machine-or-transformation test analysis, the Cybersource  Court went on to analyze the claims in what may be the real take-away from this decision – namely, an analysis of claims for subject matter patentability using the model provided by the Bilski  Supreme Court.  That model involves defining the patentability boundary line for these claims beyond which claims of this type preempt a fundamental principle and within which these claims may be patentable subject matter.  The court defined that boundary line with these claims by the question “Can it be performed in the human mind, or by a human using a pen and paper?” 

In holding claim 3 to fall outside the patentability boundary line and so to preempt an abstract idea, the Court explained that “[a]ll of claim 3’s method steps can be performed in the human mind, or by a human using a pen and paper. Claim 3 does not limit its scope to any particular fraud detection algorithm, and no algorithms are disclosed in the ’154 patent’s specification. Rather, the broad scope of claim 3 extends to essentially any method of detecting credit card fraud based on information relating past transactions to a particular “Internet address,” even methods that can be performed in the human mind.” Slip Op. 12.

In holding the Beauregard claim 2 to be unpatentable, the court explained that the claim recites nothing more than a computer readable medium containing program instructions for executing the method of claim 3.  Slip Op. 16  The method underlying claim 2 being clearly the same method of fraud detection recited in claim 3, the Court held claim 2 to be likewise invalid as unpatentable subject matter.

The court was unpersuaded by the argument that the Beauregard claim was a 35 U.S.C. §101 “machine” and not a “process” on which Bilski was decided.  The court deemed the Beauregard claim ultimately to be a claim on a process and the recited computer readable medium an insignificant post-solution activity. Slip Op. 17, 18.  “Here, the incidental use of a computer to perform the mental process of claim 3 does not impose a sufficiently meaningful limit on the claim’s scope. Slip 19  In so holding, the court appears to be heeding the Bilski Supreme Court caveat that “[t]o hold otherwise would allow a competent draftsman to evade the recognized limitations on the type of subject matter eligible for patent protection”.  For more on the likely spill-over effects of Bilski into categories of subject matter other than a “process”, read Juhasz White Paper - Bilski and Software.

The Federal Circuit seems intent on adhering to its “functional and palpable test”, a test that was articulated in Research Tech for use in determining subject matter patentability questions.  The Court in a contemporaneous case Classen made this crystal clear when it stated that “[i]f the specified method is “functional and palpable, the claims are drawn to statutory subject matter.” Classen, Slip Op. 17  But by deciding the software claims based on whether the steps of the software can be performed in the human mind, or by a human using a pen and paper and not on whether the software method was “functional and palpable”, the Cybersource Court may be indicating its own concern about the subjectivity of the “functional and palpable test” for use as a yardstick for measuring subject matter patentability questions.  In our Juhasz Law Blog on Research Tech, we voiced the same concern.  There we said that that the “functional and palpable” standard in defining whether a claim preempts a fundamental idea (“palpable” is defined by Merriam-Webster dictionary to mean “capable of being touched or felt”) provides little guidance on determining the preemption issue and is reminiscent of the phrase made famous by Justice Potter Stewart in the obscenity case of Jacobellis v. Ohio that “I know it when I see it”.  By analyzing these software claims in this way, Cybersource may be signaling the morphing of the very subjective “functional and palpable test” into arguably a more objective standard of “can it be performed in the human mind, or by a human using a pen and paper test”.

Still, Cybersource begs the question of just how many calculations must the claim perform before it is deemed to contain patentable subject matter because it cannot be “performed in the human mind, or by a human using a pen and paper”.  Thus, Cybersource is likely to go down only as an important next step in the evolution of jurisprudence in this area toward a test that can be more objectively applied and lead to more consistent results.

At Juhasz Law, we have suggested in the past that the test for accurately defining the boundary line beyond which a business, software, or diagnostic method preempts a fundamental idea may lie in whether the method provides a physical or virtual link to something real. There must be a physical or virtual link to a physical or tangible object.  That is, a real or tangible object must be manipulated by data as in Diehr.  Or data representing a real or tangible object must be manipulated as in the Fifth claim of Morse. Both Cybersource and Classen cases appear to support this view that the link of data to, that is, the manipulation of, something “real” may provide the clue to the patent eligibility of a business, software, or diagnostic method.  For more on “virtual links” and “physical links” and their use, go to Physical and Virtual Links.

Cybersource is a must read for practitioners dealing with Bilski issues.  For a more comprehensive discussion of Cybersource and take-aways including suggested tips for use in drafting diagnostic method claims, go to the September 2011 Juhasz Law Advisory.

The Juhasz Law Firm can help you to better understand the effect of Cybersource on your software patents.  For more information regarding these cases and advice on how these decisions may affect your patents, please contact The Juhasz Law Firm. Your patents may be your most important asset. To help you protect your patents contact Juhasz Law, the firm committed to Guiding Your Patent Beyond The Horizon℠.