In Re Bilski Decided

As many of you already know, the CAFC decided In Re Bilski this week. Some, including the PLI, claim that the decision spells the end of software patents. I completely disagree. In fact, the majority addressed the continued patentability of software specifically:

"although invited to do so by several amici, we [also] decline to adopt a broad exclusion over software or any other such category of subject matter beyond the exclusion of claims drawn to fundamental principles set forth by the Supreme Court."

The number of incorrect reports and predictions surrounding this decision is really quite remarkable. Bloomberg is reporting that "In today's ruling, the appeals court overturned a 1998 decision involving State Street Corp. that made clear that business methods are entitled to patent protection." Not so. I agree with Peter Zura, who states that "State Street remains good law ...." While it is true that Bilski curtailed the scope (and called into question the validity of) so called "pure business" method patents, the fundamental policy rationale of State Street remains good law (On this topic, the majority stated: "[i]n State Street, as is often forgotten, we addressed a claim drawn not to a process but to a machine.")

The Bilski decision dealt specifically with a method of hedging risks in commodities trading. Regarding these so-called "pure" business methods, the majority stated:

"[p]urported transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances."

In order to be patentable after Bilski, the claimed method must meet the "machine or transformation" test. This test is not a physicality test – i.e., a claim can still be patentable even if it does not recite sufficient "physical steps." On the other hand, Bilski holds that "a claim that recites 'physical steps' but neither recites a particular machine or apparatus, nor transforms any article into a different state or thing, is not drawn to patent-eligible subject matter." Thus, a claimed process where every step may be performed mentally is unpatentable.

"Of course, a claimed process wherein all of the process steps may be performed entirely in the human mind is obviously not tied to any machine and does not transform any article into a different state or thing. As a result, it would not be patent-eligible under § 101."

Given the conventions of most "software" patent claims drafted within the last decade, including claims drawn to "computer readable medium," "computer systems," and other similar claims including claims to "computer networks," the vast majority of these patents remain unaffected by Bilksi ... for now. The Supreme Court has yet to weigh in on this issue.

BPAI Raises Stakes for In Re Bilksi and the Future of Software Patents

An excellent article by John Duffy, professor of law at George Washington University Law School, explains that two recent decisions from the USPTO's Board of Patent Appeals and Interferences (BPAI), Ex parte Langemyr (May 28, 2008) and Ex parte Wasynczuk (June 2, 2008) substantially raise the stakes for all interested parties in the Federal Circuit's en banc review of In re Bilski, a decision set to review the scope of patentable subject matter under 35 USC section 101.

I think this article, and others like it will lead the Federal Circuit to come to the right conclusion in the Bilski case, and that is patentable subject matter under 101 should not be restricted. Instead, the better way to curtail software patents lacking in any creativity or innovation is to reject them as obvious under 35 USC section 103. Prior art searching capabilities for software have improved and will continue to improve. Moreover, mandatory second reviews, peer review systems, and the like are proving effective at making sure that only the most innovative software patents are allowed to issue.

The effects of curtailing patentable subject matter to exclude software innovation and require physical transformations or a ties to a "particular computer" will be extremely damaging to existing businesses and the long-term impact in software innovation will be palpably negative: there will be little incentive to build a business around software innovation if the Federal Circuit curtails the scope of patentable subject matter under section 101.

Peer To Patent Project Is Catching On

In a previous post, I argued for the continued patentability of software. I recognize the existence of "bad" software patents or patents on software that were improvidently granted. I also recognize the economic inefficiencies created by legal patent monopolies for software methods and systems that are old or obvious. Notwithstanding these problems, I still believe that getting rid of all software patents would be bad for the economy and bad for the industry. Instead of restricting the scope of patentable subject matter to exclude certain classes of technology, we (patent lawyers, software engineers, and anyone interested in technology as an industry) should endeavor to increase the quality of patent examination, especially in terms of searching for prior art.

The USPTO recognizes this and in June of this year it started a pilot project in coordination with New York Law School's Do Tank, with the stated mission "to prove that organized public participation can improve the quality of issued patents." The project is called the "Peer to Patent Project" and it involves "1) review and discussion of posted patent applications, 2) research to locate prior art references 3) uploading prior art references relevant to the claims, 4) annotating and evaluating submitted prior art, and 5) top ten references, along with commentary, forwarded to the USPTO."

According to a recent post on the Peer-to-Patent Blog the project has had 186,043 page views from 32,457 unique viewers in 126 different countries/territories. Currently, 1737 people have signed up to be reviewers and have cited 106 instances of prior art on 22 applications.
There are currently 17 active patent applications for review.

1) Honey monkey network exploration
2) Dynamic readjustment and interpolation of progress method and system
3) Methods of enhancing media content narrative
4) Systems and methods for clinical decisions crawler agent
5) System and method for managing storage system performance as a resource
6) Method and apparatus for selectively executing different executable code versions which are optimized in different ways
7) Crossbar arithmetic processor
8) Smart drag-and-drop
9) Methods and apparatus to implement annotations based thunking
10) Method of obtaining data samples from a data stream and of estimating the sortedness of the data stream based on the samples
11) Security systems for protecting an asset
12) Method for configuring a windfarm network
13) Technique to modify a timer
14) Cross-cutting detection of event patterns
15) User interface paradigm for manufacturing applications
16) Computer compliance system and method
17) Vector length tracking mechanism
18) Relocating page tables

This project is particularly noteworthy for its ability to bring together the industry's Hatfields and McCoys. Project Sponsors include Intellectual Ventures, IBM, Microsoft, and Computer Associates, HP, GE, and Red Hat. The project is also obtaining broad grass-roots support from the likes of the Electronic Frontier Foundation. This post from the EFF calls for participation in gathering prior art for one published patent application, the Smart Drag and Drop application owned by Yahoo!.

Peter Sklar and Microsoft Resolve Patent Dispute

Individual patent holder Peter Sklar and Microsoft resolved their dispute over infringement allegations stemming from claim 5 of U.S. Patent Nos. 6,025,843 and in claims 11 and 19 in 6,243,094. The parties entered a stipulation dismissing all claims with prejudice. The case was pending in the ED of Texas, case No. 2:06-CV-7, before Judge Leonard Davis. In July, Judge Davis entered a claim construction ruling favorable to Sklar, which prompted a motion to reconsider by Microsoft, which was promptly denied. Those orders are attached below. From the looks of the case history and the claims construction ruling, one can speculate that some kind of settlement was reached. The claims at issue were drawn to user interfaces. From Judge Davis' claims construction order:

"Sklar co-developed an improved user interface for performing computer database searches
and filtering search results that resulted in U.S. Patent No. 5,790,121 (“the ‘121 patent”). The
improved user interface uses selective clustering of the items to be displayed. Selective clustering is a way for the user interface to group items that will not fit side-by-side in the display area due to crowding, while leaving ungrouped those items that can be displayed without interfering with one another."
SklarclaimconstructionOrder.pdfSklarreconsidDeniedOrder.pdf

In Defense of Software Patents

Software patents are under attack and have been for quite some time. The debate is most polarized between small software start-ups and large multi-national technology companies who rely on software either as a direct source of revenue or to increase profits in other ways. The momentum against patenting software is greatest in the open-source community. More and more politicians are engaging in the patent debate and surely will be asked to take a position one way or another on the issue of patenting software. Anyone working in technology has an opinion about whether software should be patented. Some Justices of the U.S. Supreme Court seem against patenting software. At February's oral argument in the ATT v. Microsoft case, Justices Breyer and Stevens raised the issue, which was merely collateral to the issues on review.

MR. OLSON [For Microsoft]: The '580 patent is a program, as I understand it, that's married to a computer, has to be married to a computer in order to be patented.
JUSTICE SCALIA: You can't patent, you know, on-off, on-off code in the abstract, can you?
MR. OLSON: That's correct, Justice Scalia.
JUSTICE SCALIA: There needs to be a device.
MR. OLSON: An idea or a principle, two plus two equals four can't be patented. It has to be put together with a machine and made into a usable device.

...

JUSTICE BREYER: I take it that we are operating under the assumption that software is patentable? We have never held that in this Court, have we?
MR. JOSEFFER: No, but . . . that's not relevant here . . .

...

JUSTICE STEVENS: Your time is up, but I want to ask you one yes or no question. In your view is software patentable?
MR. JOSEFFER: Standing alone in and of itself, no.

. . .

MR. WAXMAN [For AT&T]: The code is not patentable.

It appears to be only a matter of time before the Court enters the fray surrounding software patents. Last year, the Court granted certiorari in LabCorp v. Metabolite, a medical method case that many (myself included) saw as potentially damaging to the patentability of software. The petition in LabCorp was dismissed in response to numerous amicus briefs, including one I helped write on behalf of the Federal Circuit Bar Association. In short, many patent lawyers, legal scholars, and businesses thought LabCorp was an inappropriate case for Supreme Court jurisdiction. The Court should not have taken the case in the first place, so it was properly dismissed. The dismissal of the petition in LabCorp only swelled fear and anxiety among those who own or pursue patent protection for software. They know all to well what could happen if the Court decides to change the way patent law has viewed software over the last 25 years.

In a word, restriction to the scope of patentable subject matter in a way that would exclude software inventions as they are now and have been claimed for the last 25 years (in method steps, or tied to "systems" "articles of manufacture," such as "a computer readable medium") would be devastating. Devastating not just in terms of the financial loss that would be suffered by those who own patented software, but also devastating to the economy which (despite statements to the contrary) depends on a strong patent system to provide incentives for innovation and adequate disclosure of otherwise secret inventions.

The arguments for restricting the scope of patentable subject matter (to exclude software)simply do not hold water. First, it should be recognized that only Congress (not the Courts) have Constitutional authority to define the scope of patentable subject matter. They did so in 1952 by enacting (among other provisions) 35 USC Section 101, which states in relevant part that one who "invents or discovers any new and useful process, machine, manufacture, or composition of matter . . . may obtain a patent, subject to the conditions and requirements of this title." I emphasize the last part of the statute because this is the language most commonly overlooked by those who argue against software as a class of invention subject to protection by patent law. It is not enough for the invention to be "new and useful," it must also be nonobvious and adequately disclosed. What makes some software patentable is not the mere fact that it exists in a "machine" "method" or "article of manufacture," but because (in some cases) it is sufficiently nonobvious and adequately described and disclosed in a patent to merit protection. I will readily admit that many software patents do not meet the tests for obviousness and disclosure. The patent office also is responding to this problem and has initiated a number of pilot projects aimed at improving the quality of examination. Anyone who currently prosecutes software patents can confirm that the allowance rate these days is very very low. I think it is somewhere under 10%.

In short, the way to get rid of bad software patents is not to scrap all of them, but to be more selective and to endeavor to increase the quality of examination. Getting rid of software patents all together would have many deleterious effects on the economy including encouraging parties to seek protection under trade secret law and deprive the public with important knowledge concerning advances in software. Also, there is no easy way to interpret 35 USC Section 101 (without a Congressional amendment) in a way that would not spill over into other technologies, and therefore harm (or eliminate all together) the important incentives for innovation in existing or emerging technologies. In order to function, the incentives created by the patent system must be broadly available to all sectors of technology, lest they exclude some unforeseen or emerging advancement in science or engineering.