27 July 2010

New Interim Guidance of the USPTO for Determining Patent Eligibility in View of Bilski

After the USPTO's Memorandum of June 28, 2010 for guidance of Patent Examiners and some debate on whether or not the memorandum involves a reversal of the burden of proof, the USPTO today published an "Interim Guidance for Determining Subject Matter Eligibility for Process Claims in view of Bilski v. Kappos" (Interim Bilski Guidance) for its personnel to use when determining subject matter eligibility under 35 U.S.C. § 101 in view of recent Supreme Court opinion Bilski v. Kappos. The Interim Bilski Guidance is effective July 27, 2010, and applies to all applications filed before, on or after that date.

The USPTO explicitly invites for review and written comments of the public on the Interim Bilski Guidance, particularly in response to the following questions related to the machine-or-transformation test and the abstract-idea-notion:
  1. What are examples of claims that do not meet the machine-ortransformation test but nevertheless remain patent-eligible because they do not recite an abstract idea?
  2. What are examples of claims that meet the machine-or-transformation test but nevertheless are not patent-eligible because they recite an abstract idea?
  3. The decision in Bilski suggested that it might be possible to ‘‘define a narrower category or class of patent applications that claim to instruct how business should be conducted,’’ such that the category itself would be unpatentable as ‘‘an attempt to patent abstract ideas.’’ Do any such ‘‘categories’’ exist? If so, how does the category itself represent an ‘‘attempt to patent abstract ideas?’’
The Interim Guidelines remind Examiners "that § 101 is not the sole tool for determining patentability where a claim encompasses an abstract idea, §§ 102, 103, and 112 will provide additional tools for ensuring that the claim meets the conditions for patentability", refering to this paragraph of the Bilski opinion:
The § 101 patent-eligibility inquiry is only a threshold test. Even if an invention qualifies as a process, machine, manufacture, or composition of matter, in order to receive the Patent Act’s protection the claimed invention must also satisfy ‘‘the conditions and requirements of this title.’’ § 101. Those requirements include that the invention be novel, see § 102, nonobvious, see § 103, and fully and particularly described, see § 112.
examiners should avoid focusing on issues of patent eligibility under § 101 to the detriment of considering an application for compliance with the requirements of §§ 102, 103, and 112, and should avoid treating an application solely on the basis of patent eligibility under Sec. 101 except in the most extreme cases,
and should also be aware of the fact that
under the principles of compact prosecution, each claim should be reviewed for compliance with every statutory requirement for patentability in the initial review of the application, even if one or more claims are found to be deficient with respect to the patent eligibility requirement of 35 U.S.C. § 101. Thus, Office personnel should state all non-cumulative reasons and bases for rejecting claims in the first Office action.
According to Gene Quinn and his related IP Watchdog blog post, this "should be music to the ears of the patent bar and applicants", since "the way that the Patent Office and many patent examiners have interpreted business methods and computer implemented methods over the last few years suggests that this change in examiner guidance could be monumental, [since] examiners and the Patent Office for years have [...] largely ignored basic principles of patent law".

26 July 2010

Known German Positions on the Unified EU Patent Court System

In a press release of the German Fedaral Patent Court dated July 19, 2010 it is reported on an patent law expert discussion that took place in the neo-barock Justizpalast of Munich (palace of justice) in which, by the way, the members of the White Rose were sentenced in 1943.

The event was invited by Federal Minster of Justice, Sabine Leutheusser-Schnarrenberger and Bavarian Minister of Justice Beate Merk and concerned the impact of a unified European patent court system on Germany.

As a bottomline message, Ms Merk recognised that the "future European patent jurisdiction is a great opportunity for the integration of the European internal market".

The plans of the European Commission and the Council to establish a European Patent Court for dealing with all the patents that are granted by the European Patent Office, have been explained by Ms Margot Fröhlinger, Director of Knowledge-Based Economy inside the DG Internal Market (see this post for a related talk of Ms Fröhliger).

Further participants were Mr Benoît Batistelli, President of the European Patent Office as of July 1, 2010, Cornelia Rudloff-Schäffer, President of the German Patent and Trademark Office (DPMA), and numerous other representatives of the judiciary, the patent offices, patent attorneys and other legal professions.

Ms Leutheusser-Schnarrenberger emphasised the relevance of the planned reforms: "the European patent jurisdiction will reder EU-wide patents cost-effectively and efficiently enforcible. The whole market will benefit from this, and especially Germany as 'European patent champion'. A strong patent law is the motor of innovation." She further said that "we have held intensive negotiations in Brussels and are on the right track with the regulatory proposals for the European Patent Court. I await with great interest the opinion of the European Court of Justice regarding the EU-judical framework of the proposed court model."

Ms Merk was pleased with the overwhelming interest in the event: "High-profile guests attended the event and the hall was filled to the limit with 200 further guests. This shows that the topic is of great importance and closely followed by the Munich patent community with utmost interest". She stressed that "the future of the European patent jurisdiction is a great opportunity for a further integration of the European internal market. It raises, however, also a number of issues regarding the national patent courts, patent chambers and patent offices. It is of particular interest, where the chambers of the European patent court will be situated. With respect to this issue, Munich is in a good position. As the home of numerous patent-related institutions and the strong patent activity of Bavarian companies, the "capital city of patents" of Munich recommends itself as the domicile of the future European patent jurisdiction."

Mr. Raimund Lutz, President of the Federal Patent Court (BPatG) stressed that, fortunately, the current draft European patent jurisdiction adopts many elements of the German patent court system and added "we are one of the few specialised courts for intellectual property protection in Europe. As such, we are prepared to contribute with our knowledge and experience to the European patent court system."

Frankly speaking, a German Minister considering Germany as 'European patent champion', a Bavarian Minister considering Munich as the 'capital city of patents' and a German Court President considering the German court system as a model for Europe is not even worth a press release. Like always, the more intesting discussions were presumably held off the record. Maybe a fellow blogger attended the event and finds the time for a report.

20 July 2010

Further Bilski Guidance from the USPTO

In my earlier posting regarding the USPTO's approach to the recent Bilski opinion of the US Supreme Court, I found, like others (see here and here), that the interim guidance for patent examiners, in which USPTO examiners were adviced that "if  a claimed method does not meet the machine-or-transformation test, the examiner should reject the claim under section 101" unless the applicant manages "to explain why the claimed method is not related to an abstract idea", sounds as reversal of the burden of proof.

Now, there is a report on Brian Flecher's Patentability blog, according to which Robert L. Stoll, Commissioner for Patents at the USPTO, told at the NAPP 2010 Annual Meeting that updated, more detailed interim guidance was in the review and approval process and that Mr Stoll hopes to have it available for use within the next few weeks. 
Regarding the reversal-of-burden-of-proof issue, he apparently emphasized that 
it was never the intent of the current interim guidance to shift the burden of proving patentability to the applicant and that examiners still have the burden of presenting a prima facie case of unpatentability.
Mr Stoll added that "the USPTO would be soliciting public comments and closely monitoring court decisions in an attempt to create and maintain up-to-date examination guidance regarding patentable subject matter". 

18 July 2010

EU Patent would be Good for Patent Offices (except German PTO) and Applicants but bad for Attorneys

According to this posting, published on VoxEU.org, a policy portal set up by the Centre for Economic Policy Research (CEPR), the autors Jérôme Danguy and Bruno van Pottelsberghe de la Potterie found that "the EU patent would drastically reduce patenting costs for applicants and generate more income for both the European Patent Office as well as most national offices, all the while saving €120 million in legal fees" (see Danguy and van Pottelsberghe 2009).

Below, the outcome of the study is briefly sketched with regarding to the issues "income generated by the EU patent", "increase of income for (most) national patent offices", and "decrese of costs for applicants", whereas the study relied on interesting findings of earlier studies:
  • With the creation of an EU patent and a centralised litigation system, at least €120 million would be lost by patent lawyers (no more parallel litigations), and hence spared by the business sector (see Harhoff 2009).
1.  Income generated by the EU patent. The total revenue generated by a patent depends on renewal fees and maintenance rates, whereas the latter, as a key parameter for calculating a patent's revenue, depends on many other factors (see Cornelli and Schankerman 1999, Harhoff et al. 2009).

The maintenance rate is the higher, (i.) the hight a countrie's GDP, (ii.) the younger a patent, (iii.) the stronger the patent system, and (iv.) the lower the renewal fees, whereas the renewal fees schedule is a key policy leverage in practice and more than a simple way to cover the operating costs of patent offices. Based on simulated maintenance rates and different fees schedules for the EU patent, the authors were able to calculate the renewal fees’ income that would be generated by an average post-grant EU patent over its life time.

Whereas the actual fees income generated by an average current EP patent granted by the EPO is a bit more that €11,000, the total renewal fees’ income generated by an average EU patent would vary with the level of fees from nearly €13,600 up to €16,600.

Consequently, the EU patent would generate at least the same amount of fees’ income as the EP patent, but probably substantially more, thanks to higher fees and higher maintenance rates.

2.  Increase of income for (most) national patent offices. The extent the EU patent would actually affect each national patent office’s (NPOs) income obviously depends on the adopted distribution key between offices.  Among the existing proposals for distribution keys, the (i.) “council proposal” weighting scheme reflects the outcome of political negotiations and is quite complex, the (ii.) population weighting scheme would reward large countries but not their innovation or economic performances, while (iii.) GDP or (iv.) R&D weighting schemes seem to be the simplest, fairest, and most effective distribution keys.

In sum, it appears that the European Patent Office and most national offices would actually gain more with the EU patent than with the EP patent thanks to a much higher total income generated by one average EU patent.

In fact, according to all schemes, the EPO would win 31%, the German Office would significantly lose (-15% to -48%) and Offices of larger countries (e.g. FR, UK, IT, ES) would win between minor and significant amounts as well. However, whether the change of income of Offices of smaller countries (e.g. NL, AU) would be positive or negative, would depend on the actual scheme adopted (see Table 1 of the posting).

3.  Decrese of costs for applicants: The EU patent would also reduce the relative patenting costs since it will cover the European market of about 500 million of inhabitants.

For an EU patent, the cost per claim per capita (size of market) indicator would place Europe between Japan and the US (see Figure 3 of the posting). The 45% decrease in relative prices due to the implementation of the Community patent would therefore induce a 14% increase in the demand for patents at the EPO, all else being equal.

Conclusion: The authors conclude, that the EU patent with a unified jurisdiction would reduce both the costs and uncertainty, while quality in the examination process would be held stable thanks to relatively high absolute renewal fees. The beneficial effects of the Community patent (cost savings, construction of the single market, lower complexity) would make the patent system more accessible for SMEs and for universities in Europe. At the same time it would make the European market much more attractive for both domestic and foreign companies.

17 July 2010

"Software per se" as New post-Bilski Ground of Rejection under 35 U.S.C §101

On 7 July 2010 the US Board of Patent Appeals and Interferences (BPAI) has decided its first decision after the Supreme Court's opinion on Bilski v. Kappos (see earlier posting here or here). In the the case ex parte Proudler (Hewlett Packard) the BPAI rejected all of the pending claims under 35 U.S.C. §101 as a new Bilski-related ground of rejection and remanded the case to the Examiner.

The application relates to secure computing and the claims (two methods, computer readable medium, computer apparatus) teach applying individualized security rules to data items. Claim 1 reads:
A method of controlling processing of data in a computer apparatus, wherein the data comprises a plurality of usage rules for a plurality of data items stored by said computer apparatus, and comprising:
- applying individualised usage rules to each of the data items based on a measurement of integrity of a computing entity to which the data items are to be made available, said data items being logically grouped together as a set of data items, and
- instantiating the set of data items at the computing entity depending upon the integrity of the computing entity and the usage rule applicable to each data item in said set.
The Board of Appeals found that
the claimed invention is directed to software per se, abstract ideas, abstract concepts, and the like, including data per se, data items, data structures, usage rules, and the abstract intellectual processes associating them within the claims on appeal. [...] The manner in which the so-called 'computer apparatus' of the preamble of independent claim 50 is recited in the body of this claim is characterized as directly reciting in its two clauses 'programming for' achieving a certain abstract functionality. Thus, no true hardware structure is recited.
This new rejection based on Bilski's abstract idea notion may be seen as a "software per se" rejection that will certainly remind European patent practitioners of Art. 52 (3) EPC, which defines that programs for computers "as such" are excluded from patentability.

Atlanta patent attorney Karen G Hazzah explained on her All Things Pros blog that the Board seemed to rely on two statements in the specification. One was the abstract, which restated the method claim and mentioned a "computing entity". Another statement in the specification said that "a computing entity, either hardware or software, is often called a 'node' and this term will appear hereinafter". As to claim 1, the Board used that reasoning to find that it was directed to an abstract idea, since it recited "computing entity" in the body.
Ms Hazzah had two interesting comments on ex parte Proudler:
  • Firstly, the Board did not use the machine-or-transformation test but exclusively relied on the notion of "abstract ideas", since "no true hardware structure was required", which immediately poses the question on the difference between an "abstract idea" and the machine-or-transformation test, according to which processes that are not "tied to a particular machine" are considered non-eligible. 
  • Secondly, US Examiners, the BPAI, and US courts seem to think that the term "software" implies "not tied to hardware". If a claim sounds like "software" – even without explicit mention of that term – the BPAI might redesignate it as a claim directed to "software per se", i.e. "software in the abstract" or "abstract idea", whereas, technically, the term "software" means "instructions executing on a processor", i.e. software is tied to hardware, and, as such, is not "abstract" at all.
Quite naturally, FOSS-advocate Pamela Jones of Groklaw finds ex parte Proudler encouraging, since the "abstract idea" argument utilised therein is itself so abstract that anything can be subsumed under a "software per se" rejection. In reply to Ms Hazzah's analysis, Ms Jones emphasised that software is maths and algorithms - and that's abstract and can't be anything but that.

As a reason for the diverging interpretation of the nature of software between software developers (i.e. technical experts) and lawyers (i.e. technical laypersons), Ms Jones identified that "there's a need for educating lawyers on the tech" and, quite coherently, recommends a (quite "abstract") Groklaw article on computational theory (!) that "we hope will help lawyers to understand what software is and why it should not be patentable".

One may add, that the nature of software and the impact on patent-eligibility is such a high-level intellectual problem, that it might not help to only identify a "need for education" on the other side. By the way, other than general software developers or lawyers (attorneys at law), patent attorneys are both technical and patent-judical experts.

The FOSS Community's Mixed Feelings about the US Supreme Court's Bilski Opinion

After the Supreme Court of the United States decided in its long awaited Bilski opinion of June 28, 2010, that both business methods and software-related inventions may still represent eligible subject matter according to 35 U.S.C. §101, the free and open source software (FOSS) community and other software-affine parties quickly began to express their mixed emotions about the ruling.

In Bilski v. Kappos the Supreme Court held that the machine-or-transformation test is not the sole test for determining patent eligibility but only a useful and important clue or investigative tool. However, a claim may be patent-eligible even if it does not satisfy the machine or transformation test as the Supreme Court held that
the CAFC incorrectly concluded that this Court has endorsed the machine-or-transformation-test as the exclusive test. 
In summary, the ruling can be interpreted such that both business methods and software remain, in principle, patentable subject-matter, as long as it does not relate to an abstract idea but to a concrete teaching. However, what exactly an "abstract idea" is and what tests other that the machine-or-transformation test may be appropriate to determine patent-elgibility of software remains to be seen. From an objective point of view, though, the Supreme Court is more open towards software patents than the CAFC was, as long as the claimed teaching does not relate to an abstract idea only.

Since the Bilski ruling leaves plenty room for interpetation, that may be smartly utilised by both software patent advocates and opponents, it comes as no surprise that the FOSS community (or at least its intellectual opinion leaders) discusses the ruling in a rather controvsal way:

I.   According to The H Blog of Germany-based open source oriented Heise Publishers, hopes had been pinned within the free software community on the court confirming the lower courts' rulings, as this would have opened up a route to challenging software patents which could often fail the exclusive "machine or transformation" test, while Eben Moglen, Chairman of the Software Freedom Law Center (SFLC) and pro bono syndic of FSF said "the confusion and uncertainty behind today’s ruling guarantees that the issues involved in Bilski v. Kappos will have to return to the Supreme Court after much money has been wasted and much innovation obstructed". Daniel Ravicher, SFLC's legal director, added that the court had missed an opportunity to "send a strong signal that ideas are not patentable subject matter" and that the rejection of the Bilski patent "got rid of a symptom, but failed to treat the real cause".

II.   Florian Müller, a prominent anti-patent campaigner now running the FOSS patents blog, found the Bilski decision a major disappointment since it does not invalidate even one patent. While Mr Müller hoped that the Supreme Court would not only uphold the decision of the previous instance but that a reasonably restrictive set of rules would be established that would ideally prevent software patents in the future, the Supreme Court's position is "about the most liberal reasoning that it could have been".

Only new legislation could restrict the scope of patentable subject matter beyond the Supreme Court's permissive stance. The ruling makes reference to an earlier decision, according to which the courts "should not read into the patent laws limitations and conditions which the legislature has not expressed". As a possible reason for that, Mr Müller pointed to the fact that "major corporations particularly from the IT industry issued warnings against any limitations of the scope of patentable subject matter", such that "against that kind of support from industry, it is hard to see how the opponents of software patents could successfully lobby the United States Congress".

Mr Müller concluded that "the free software and open source movements lost something even more important: a rare chance to achieve at least a partial victory", while "the anti-software-patent movement has clearly had a bad year, and it hasn't made any noticeable progress in a number of years".

In a further posting, Mr Müller lamented that the decision "unfortunately [was] a clear victory for those favoring an expansive patent system and the patent inflation it entails" and analysed that
there are many more losers besides applicants Bilski an Warsaw, among which are the FOSS community, SMEs, Linux Foundation, Open Invention Network etc, Red Hat, and IBM. While Mr Müller's list mainly notes politically motivated opponents of software patents, he assumes that while big industry is united behind the patent system, SMEs that build larger programs will suffer, since in a few hundred thousand lines of program code, any single line could theoretically infringe someone's software patent. As to RedHat, he commented that even the "world's leading open source contributer" (as RedHat likes to be seen) contributed to the mess since many of their commercial and political partners are proponents of software patents and they only contribute to about 10% of Linux development, which he considered to be somewhere between "parasitic" and "symbiotic".

In yet another posting Mr Müller sees a "silver lining" in the Bilski decision which, alegedly, is not where most people think, namely in the notion of "abstract idea" which was used by the Supreme Court to reject Bilski's business method claims. According to Mr Müller, the passage on top of page 10 of the Bilski opinion "contains a wonderful passage that is infinitely more helpful with a view to the future than the whole 'abstract idea' thing":
This age puts the possibility of innovation in the hands of more people and raises new difficulties for the patent law. With ever more people trying to innovate and thus seeking patent protections for their inventions, the patent law faces a great challenge instriking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of general principles.
Mr Müller interpretes the passage such "that the justices [...] understood very well that there may be a problem with software patents", whereas a majority of them didn't consider the Bilski case the right occasion to address this issue and believes that the "oppponents of software patents should focus on that part of the Bilski opinion". 

III.   In the meantine, Rob Tiller, vice president of RedHat, issued his own initial thoughts, according to which the Bilski opinion should not be understood as any kind of approval of software patents, since the case concerned a business method patent, rather than a software patent. Mr Tiller even found some positive points in the optinion, e.g. that machine-or-transformation test wasn't entirely rejected  and that, according to his understading, the rationale against Bilski' invention (abstract idea) "could easily be applied to void some software patents". 

IV.   Another prominent voice of the open source community is the Free Software Foundation (FSF) that saw in Bilski a "wonderful opportunity to increase awareness to the harm caused by software patents" and opines that "the software patent mess that the US finds itself in today is a product of the US judicial system and not Congress" followed by the demand that "we must continue to remind patent examiners that abstract ideas implemented as software on a general purpose computer don't magically transform such ideas into patentable devices". As expected, the FSF does not forget to mention that "the increasing damage being inflicted by monopolies on essential techniques in computer programming will continue to run its course in the US economy" and hopes both that "the number of voices opposing software patents will increase" and "congressional action that seemed unlikely before will receive new attention now".

V.   And, believe it or not, the Foundation for a Free Information Infrastructure (FFII) even was pleased with the Bilski ruling but felt "the Supreme Court did not go far enough in banning all patents on abstract ideas such as software" and, like others, demands that "the legislator must now take over [...] to fit modern software market realities and defend public interest", since "the system is unable to provide a cure".

VI.   Further - rather controversal - statements from the FOSS and Linux community, mainly taken from Slashdot discussions, have been compiled by the Linux Insider:
  • A Beacon of Hope: "Legal threats should become less of an issue after SCOTUS rules on Bilski", predicted computer geek and proud Linux user Robert Pogson, but he had to learn that "the decision handed down last week was not the one many had hoped for".
  • I'm So Ticked Off, I Could Spit: Computerworld UK's technology writer Glyn Moody wrote, "it's a mess [since] the court instead was timid in the extreme [instead of clarifying] the ill-defined rules for patenting business methods and software in the U.S". Similarly, Michael Barclay of the Electronic Frontier Foundation (EFF) wrote that "the Supreme Court regrettably failed to provide guidance in the future about business method patents" and writer and editor Steven Vaughan-Nichols expressed his hopes "that the SCOTUS would do the right thing in the Bilski case and slap [...] software patents down once and for all" an added "I'm so ticked off, I could spit".
  • A Victory: FSF even regarded the Bilski ruling "a victory on the path to ending software patents" and also Groklaw was rather positive about the decision and opined  that "although they didn't specifically decide about software patentability as a category, they did provide some strong hints and some guidance that I view as helpful overall".
  • Linux Could Die by a Thousand Cuts: In the eyes of blogger Martin Espinoza the decision "seems anticlimatic, depressing and predictable" and slashdot blogger Hairyfeet agreed that "Bilski is just a symptom of a much larger cancer" including the fact that patents are "used as a minefield to ensure the little guy can't profit from his work [while] they were designed so the little guy could reap some profit". Since "Linux is [presumably] violating so many patents and copyrights [...] the implications for Linux could be grave" and "all it will take is some patent trolls [...] and Linux could easily die a death by a thousand cuts", he added. 
  • We're a Bit Better OffSlashdot blogger David Masover recognised "a fairly neutral outcome, that is, they haven't done anything to help the patent situation, but they also haven't given any support". Similarly, slashdot blogger Gerhard Mack opined that "we're a bit better off than we were [since] we're at least at the end of having people patent basic computing techniques", and Pogson recognised "a tie, so the status quo survives", since "the majority of justices did not endorse software patents".
  • Toothless Against FLOSS: Pogson also noted that Microsoft's "share price took a hit as those software patents deflated in value [such that] they are now toothless against FLOSS" and that "the courts are now well aware that putting something on a computer is not innovation".
  • A Major Ground Shift:Slashdot blogger Barbara Hudson doesn't "see why everyone is so glum", since the court's assertion that abstract ideas are unpatentable "is a major step in the right direction" and "a major ground shift", since, "if you're a patent troll, your ability to make threats just dropped, [which] in turn makes funding patent trolls more risky". The fact that there is no specific test any more is "too pessimistic", since now "there's even less ability to predict that any particular patent troll will ultimately be upheld in court, [which] is going to hurt their business at all levels".
  • See You in Court: Hudson further noted that without a specific test, "the USPTO now has to be more careful of what they allow to be patented" and trolls will find it hard to argue that their patent should be accepted "without specific guidance", which will embolen businesses "to say, 'see you in court' instead of paying protection money to patent trolls".While the courts "will have to slowly evolve new ways of interpreting the law" everyone opposed to business method and software patents will have "more time and opportunities to drive more nails into the coffin" she added. Hudson concluded that "business method and software patents have hit their apex".

16 July 2010

A Communication Pursuant to Rule 161 EPC is no "First Communication" According to Rule 36 (1) EPC

Rule 36(1) EPC and Rule 161 EPC have been amended as of 1 April 2010. In the meantime, among practicioners the question occured whether or not the issuance of the communication under Rule 161(1) EPC (by the examining division) marks the starting point of the new two-years time limit for filing mandatorey or voluntary divisional applications according to Rule 36(1) 

According to this notice of the EPO, the good (and predictable) news is that communication pursuant Rule 161 EPC is not a "communication" within the meaning of amended Rule 36(1) EPC.

The EPO explains in his notice that a communication pursuant Rule 36(1) EPC.
is understood to be a substantive communication which sets out the examining division's opinion as to whether the application or invention to which it relates meets the requirements of the Convention, [ whereas] a communication under Rule 161 EPC is not a substantive communication within the meaning of amended Rule 36(1) EPC and therefore does not cause the time limit for the filing of voluntary or mandatory divisional applications to start.
A communication under Rule 161 EPC, in fact, is essentially a formal communication referring to the opinions or examination/search reports issued during the international phase but does not yet contain the examining division's own substantive opinion.

08 July 2010

The USPTO's Approach to Bilski

On the very same day the US Supreme Court handed down its long awaited Bilski v. Kappos opinion, the USPTO issued a memorandum for guidance of Patent Examiners, authored by Robert W. Bahr, Acting Associate Commissioner for Patent Examination Policy, according to which:
Examiners should continue to examine patent applications for compliance with section 101 using the existing guidance concerning the machine-or-transformation test as a tool for determining whether the claimed invention is a process under section 101. [...] If a claimed method does not meet the machine-or- transformation test, the examiner should reject the claim under section 101 unless there is a clear indication that the method is not directed to an abstract idea. [In this case,] the applicant then has the opportunity to explain why the claimed method is not drawn to an abstract idea.
This interim guidance for patent examiners, however, sounds as reversal of the burden of proof to me, since it means that, even though the Supreme Court ruled that the machine or transformation test is not the only possible test to determine whether or not a method represents eligible subject matter, the USPTO will still reject a claim if it does not meet the requirements of the machine or transformation test, while the applicant then has the burdon to explain to the USPTO, why his claim is not an abstract idea.

In fact, Peter Zura noted on the 271 Patent Blog that "this approach to examination appears to be contrary to Oetiker which held that 'the examiner bears the initial burden, on review of the prior art or on any other ground, of presenting a prima facie case of unpatentability.' In re Oetiker, 977 F.2d 1443, 1445 (Fed. Cir. 1992) (see MPEP 2106(IV)(D)).

Matt Osenga added on his Inventivestep Blog, that, in the same context, Hal Wegner noted that the above-sketched section of the USPTO's memo turns patent examination on its head and places the burden on the applicant to prove that his claims are directed to patentable subject matter:
Thus, contrary to the Supreme Court’s opinion, the USPTO will continue to presume that claims that don’t meet the machine-or-transformation test are patent ineligible until the applicant meets the burden of proving that the claim is not directed to an abstract idea.  I have no idea where Bahr gets that from the Supreme Court opinion.
Mr Wegner apparently also speculated that the discussion about eligible subject matter simply is the USPTO’s way of avoiding examination on the merits, much in line with AIPLA's amicus curiae brief in Bilski and Kristen Osenga's view that the genesis for the preoccupation with § 101 patent-eligibility had much to do with avoiding a merits examination. (see Ants, Elephant Guns, and Statutory Subject Matter, 39 Ariz. St. L.J. 1087 (2007)).

Further guidance may be on the way, since the Patently-O Blog already identified the first Bilski test cases, namel "Research Corporation Technologies v. Microsoft" (Fed. Cir. 2010), " In Re Bonnstetter" (Fed. Cir. 2010) and "Accenture Global Servs. GmbH v. Guidewire Software" (D. Del. 2010).

01 July 2010

EU Commission's Proposal for EU Patent Language Regime is Doomed to Fail

The translation regime currently is a major obstacle to the EU Patent, as Margot Fröhlinger, Director of Knowledge-Based Economy inside the DG Internal Market of the European Commission, explained last month at the IP Business Congress in Munich, where she also announced that the adoption of a proposal for a language regine is planned on June 30, 2010.

Yesterday, the European Commission published its proposed translation arrangements for a future EU Patent:
The Commission's proposal builds on the existing language regime of the EPO. The Commission proposes that EU Patents will be examined and granted in one of the official languages of the EPO - English, French or German. The granted patent will be published in this language which will be the authentic (i.e. legally binding) text. The publication will include translations of the claims into the other two EPO official languages. The claims are the section of the patent defining the scope of protection of the invention. 

No further translations into other languages will be required from the patent proprietor except in the case of a legal dispute concerning the EU patent. In this case, the patent proprietor may be required to provide further translations at his or her own expense. For example, the proprietor may have to supply a copy of the patent into the language of an alleged infringer, or into the language of the court proceedings when this is different from the language of the patent.
However, as Ms Fröhlinger further explained, this proposal probably has only very little chances to be adopted by the member states, since there is a strong Southern European group that will not accept an EU patent based only on claim versions in three predetermined languages. This strong group appears to comprise at least Spain and Italy, such that the patent attorneys in these countries will continuously enjoy a comfortable living providing translations for their clients.

In this context, it is speculated on the IPJur blog, that it is no accident that the language proposal was published exactly just on the first day of Belgian EU Presidency, since the outgoing presidency had been controlled by the Spanish Government, and that is the instance that pleases itself by some sort of non-stop performance as European troublemaker concerning the languages issue.

As is emphasised on the IAM blog, European companies - employing tens of millions of Europeans and generating billions of Euros/pounds/dollars etc in revenues in Europe and beyond - will be disappointed should the EU patent project end up on the scrapheap, given that it has the potential to save them significant amounts of time and money, and provide them with greater legal certainty.

The Blogosphere Vibrates: Bilski's Business Method Rejected but Software Remains Patent Eligible

Much as expected, the US Supreme Court affirmed the Federal Circuit's decision Bilski v. Kappos in that the rejection of Bilski's patent claims was upheld. While the Court considered the claims as impermissible attempt to patent abstract ideas, it explicitly left open the possibility of protecting "business method" inventions in more tangible contexts.

Even though Bilski's patent application relates to a pure business method ("method of hedging risk in the commodity and energy markets against price changes"), it has been widely expected that the Supreme Court would also comment on the question whether or not software-related inventions are patentable per se, which in fact has been the case.

The quintessence of the Supreme Court's opinion is that
  1. the claims of Bilski's application are not eligible subject matter because they merely claim abstract ideas;
  2. the machine or transformation test established by the CAFC is not the only possible test for providing guidance regarding the question whether or not a method represents eligible subject matter.
That is, while the decision of the CAFC has been substantively confirmed, the CAFC's grounds have been rejected as defective due to the CAFC's one-sided consideration of the machine or transformation test, according to which a method is patent eligible only if it (1) is tied to a particular machine or (2) transforms an article from one thing or state to another.

Since, however, the machine or transformation test may be interpreted - and in fact has been interpreted by USPTO examiners - such that business methods and software-related inventions are essentially excluded from patent protection, one can conclude from the Supreme Court's ruling that both business methods and software-related inventions remain patent eligible in the US.

This applicant-friendly opinion is in fact somewhat clouded by the ongoing uncertainty as to under which criteria (other than the machine or transformation test) software-implemented inventions may be considered patent eligible now and in furture. Such further criteria will now have to be determined by the USPTO and the competent courts. The USPTO has already issued a memorandum for guidance of Patent Examiners, according to which the PTO will continue to use the CAFC's machine or transformation test as the benchmark for patentability determinations under Section 101:
Examiners should continue to examine patent applications for compliance with section 101 using the existing guidance concerning the machine-or-transformation test as a tool for determining whether the claimed invention is a process under section 101. If a claimed method meets the machine-or-transformation test, the method is likely patent-eligible under section 101 unless there is a clear indication that the method is directed to an abstract idea. If a claimed method does not meet the machine-or- transformation test, the examiner should reject the claim under section 101 unless there is a clear indication that the method is not directed to an abstract idea. If a claim is rejected under section 101 on the basis that it is drawn to an abstract idea, the applicant then has the opportunity to explain why the claimed method is not drawn to an abstract idea. The USPTO is reviewing the decision in Bilski and will be developing further guidance on patent subject matter eligibility under 35 U.S.C. § 10 1.
Blogosphere: The Bilski opinion was probably the most awaited patent-related opinion of the Supreme Court ever. So it's no surprise that it is extensively covered and widely discussed throughout patent-related blogs. In fact, the IP blogosphere vibrates:

Leagal Analysis:
Open Source Community:
Industry and Technology:
Justice's Opinions:
Software Patents and Business Methods:
Machine or Transformation Test: