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Research Tech, H&R Block, and Bancorp Decisions and Bilski – The Link of Manipulated Data to Something “Real” May Provide the Clue to the Patent Eligibility of Software.

Wednesday, March 2nd, 2011

The test for accurately defining the boundary line beyond which software preempts a fundamental idea may lie in defining what data are manipulated by the software instructions.  It is in the “link” of the data to a physical or tangible object that may lie the patentability of software.  Software  that manipulates a real or tangible object does not cross the boundary line of abstractness and so is patentable per Diehr.  The same goes for “virtual links” where the data are representations of a physical or tangible object as in the Fifth claim of Morse.  The link of data to something “real” may provide the clue to the patent eligibility of software.

The Supreme Court has explained that software is patentable while abstract ideas are not.  Bilski1, Diehr2   Software that does not preempt a fundamental abstract idea is patentable while software that amounts to abstract ideas are not.  Computer hardware will be given weight in the patentability threshold inquiry if the hardware is central to the claim; insignificant post-solution activity is given no weight. See Bilski, Diehr, supra.

With the threshold for software patentability thus clear, the new challenge faced by lower courts is applying that threshold of patentability on a case-by-case basis.  The challenge simply put is where should the boundary line be drawn within which the abstract ideas in software do not preempt a fundamental principle useable by all.  In one after another post-Bilski decision, however, the lower courts have struggled to define this boundary line as evidenced by the “functional and palpable” test in Research Tech ( Federal Circuit)3; the “meaningful limits” test in H&R Block (E.D. TX)4; and arguably the “practical applications” test in Bancorp (E.D. MO)5. 

The absence of a test for defining the threshold for software patentability in a way that is understandable, uniform to apply, and leads to consistent results true to Bilski makes the boundary lines being drawn by these courts no more precise than lines drawn in the sand.  Each is ripe for reversal by the Supreme Court to the extent they exclude/include patentable subject matter.

The test for accurately defining the boundary line beyond which software preempts a fundamental idea may lie in defining what data are manipulated by the software instructions.  It is in the “link” of the data to a physical or tangible object that may lie the patentability of software.  Software that manipulates a real or tangible object (i.e., contains a “physical link”) does not cross the boundary line of abstractness and so is patentable per Diehr.  The same goes for “virtual links” where the data are representations of a physical or tangible object as in the Fifth claim of Morse6.  The link of data to something “real” may provide the clue to the patent eligibility of software.  For more on “virtual links” and their use, and on footnoted references (1) through (6) go to Mar 2011 Juhasz Law Advisory – Data Links to Something Real Provides SW Patentability Clues.

Bilski 101 Double-Header – “I Know It When I See It”: Research Corp. Tech. v. Microsoft; and “Back to the Future”: Prometheus Laboratories v. Mayo

Thursday, January 20th, 2011
  • Software Patent Eligibility: Inventions that address a need in a simple and precise manner to accomplish the result presents “functional and palpable applications” in the field of computer technology
  • Diagnostic Method Patent Eligibility: The “transformation” of a chemical may establish that a diagnostic method claim does not preempt a fundamental principle after all

December was a big month for major post-Bilski decisions.  On December 8, the Federal Circuit decided Research Corp. Tech. v. Microsoft Corp.,[1] a software patent case.  Then on December 17, the Federal Circuit decided Prometheus Laboratories,[2] a case involving two diagnostic method patents.

Before the Federal Circuit in Research Corp. were software claims directed to “image halftoning technology used in computers and printers.   The lower court found the claims at issue that recite “the production of an image as a result of the comparison numbers” to be transformative.[3] (emphasis added)  However, the claims at issue that merely “assembl[ed] … gray scale images to generate final dot profiles” were not transformative because they did not “mandate a further visual display or image….”[4] (emphasis added)

On appeal, the Federal Circuit upheld the patentability of the claims that merely “assembl[ed] … gray scale images to generate final dot profiles” but that were not transformative because they did not “mandate a further visual display or image”; but under arguably yet a new standard for determining the eligibility of a software process for a patent – to wit, a “functional and palpable applications” test.[5] As the court explained “[t]he invention presents functional and palpable applications in the field of computer technology”, because the inventions address a need for halftone rendering of gray scale images in a simple and precise manner to accomplish the halftone rendering.[6] (emphasis added)

We believe the court’s holding of the Research Corp. claims to be patentable subject matter to be faithful to the Supreme Court’s concern that a claim not preempt a fundamental principle. However, a “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[7] that “I know it when I see it”.  Just as it took years for the Supreme Court to evolve meaningful guidance on what amounts to obscenity as clarified in Miller v. California[8], so too it may take more time for the Federal Circuit to evolve more meaningful guidance on what software subject matter is patent eligible. We believe though that meaningful guidance may lie in the “reaching out and touching” by the electrical signals generated by the software of physical and tangible objects whether physically (i.e., actually) as in Diehr[9] or virtually, that is to say, by electrical signals generated by the software instructions representing physical and tangible objects, as was the case in Research Corp. Tech. (e.g., the electrical signals virtually represent an image of a physical and tangible object)  See Morse[10].  (For more on this topic, see The Future of Software Patents – Reading the Bilski Tea Leaves; The State Street Bank and AT&T Lessons blog dated November 8, 2010.  Also watch for the January 2011 Edition of the IP Litigator exploring the effects of the Supreme Court’s Bilski decision on software patents.)

In Prometheus Laboratories, the Federal Circuit held administering and determining steps in a diagnostic method claim to be transformative and central to the claims rather than merely insignificant extra-solution activity. [11] On June 29, 2010, the Court granted certiorari, vacated the federal circuit’s decision, and remanded, in light of Bilski.[12] On remand, the Federal Circuit again held the method claims to recite patent-eligible matter.  The court explained that the inventive nature of the claimed methods stems not from preemption of all use of these natural processes, but from the application of a natural phenomenon in a series of steps comprising particular methods of treatments.  As the court observed, “[o]ther drugs might be administered to optimize the therapeutic efficacy of the claimed treatment.[13]

The court’s analysis did not end there, however.  The court instead returned to the transformation test it had used in its pre-Bilski decision in explaining that “[i]t is virtually self-evident that a process for a chemical or physical transformation of physical objects or substances is patent-eligible subject matter.”[14] Citing Bilski, 545 F.3d at 962.  In so doing, the federal circuit may have signaled its intent to go back to the transformation test to get to the future of the subject matter patent eligibility of diagnostic method claims that involve a chemical action.  For a more comprehensive discussion of Prometheus and suggested tips for use in drafting diagnostic method claims involving chemical action, go to Jan 2011 Juhasz Advisory – Back to the Future for Diagnostic Method Patents.

The Juhasz Law Firm can help you to better understand the effect of Research Corp. and Prometheus Laboratories on your software and diagnostic 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 Positioning Your Patent Beyond The Horizon℠.

For more on Prometheus Laboratories go to the Jan 2011 Juhasz Advisory – Back to the Future for Diagnostic Method Patents.

[1] Research Corp. Techs. v. Microsoft Corp., No. 2010-1037, slip op. (Fed. Cir. 2010); appeal from No. CV-01-658, 2009 WL 2413623. (D. Ariz. July 28, 2009).

[2] Prometheus Laboratories, Inc. v. Mayo Collaborative Services, No. 08-1403, slip op. (Fed. Cir. 2010); remand of 581 F.3d 1336 (Fed. Cir. 2009) on which cert. granted, judgment vacated, and remanded, 78 U.S.L.W. 3254 (U.S. June 29, 2010).

[3] Research Corp. Techs. v. Microsoft Corp., No. CV-01-658, 2009 WL 2413623, at *15. (D. Ariz. July 28, 2009).

[4] Id., at *10.

[5] See Research Corp., slip op., at 15.

[6] Ibid.

[7] Jacobellis v. Ohio, 378 U.S. 184 (1964)

[8] Miller v. California, 413 U.S. 15 (1973).

[9] Diehr, 450 U. S. 175 (1981)

[10] O’Reilly v. Morse, 56 U.S. 62, 82 (1853).

[11] Prometheus, Id., at 16.

[12] Prometheus Laboratories, Inc. v. Mayo Collaborative Services, 581 F.3d 1336 (Fed. Cir. 2009), cert. granted, judgment vacated, and remanded, 78 U.S.L.W. 3254 (U.S. June 29, 2010)

[13] Prometheus, supra, at 16.

[14] Id., at 18.