The standard for patentable subject matter under Bilski is a “machine-or-transformation test,” which restricts patenting to inventions that are either tied to a particular machine or apparatus, or that transform a particular article into a different state or thing.
Patents on Software and Business Methods: Have the Rules Changed?
1. Patents on Software and
Business Methods
Have The Rules Changed?
Karl Larson
January 29, 2009
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2. Presentation Overview
• Privacy Limitation Justifications
• Introduction
• New Standard Applied
• Significant Questions Raised by Bilski
• Effect on Patent Applications and Existing
Patents
• Case Study
• Latest News and Current Trends
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3. Introduction
Patent Authority
U.S. Constitution, Art. I, §8(8)
The Congress shall have Power…
Clause 8: To promote the Progress of Science
and useful Arts, by securing for limited Times
to Authors and Inventors the exclusive Right
to their respective Writings and Discoveries
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5. Introduction
Patent Protection
Inventions that are useful, novel, and nonobvious to a
person with ordinary skill in the relevant technology.
Discoveries cannot be laws of nature, mental
processes, ideas, natural formulas, natural phenomena,
and methods of calculation.
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6. Acquiring a Patent
Basics
Patent application must be filed within one year of first
commercial use, sale, or offer for sale
Patent claims are examined by patent examiner
Claims may be rejected in an Office Action by the
examiner
Patent application either allowed to issue or abandoned
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7. Acquiring a Patent
Typical rejections
35 U.S.C. § 101 – patentable subject matter
“Whoever invents or discovers any new and useful process, machine,
manufacture, or composition of matter, or any new and useful
improvement thereof, may obtain a patent therefor, subject to the
conditions and requirements of this title.
35 U.S.C. § 112 – defects in the specification or
claims
35 U.S.C. § 102 – anticipated (not novel) by the prior
art
35 U.S.C. § 103 – obvious in view of the prior art
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9. Acquiring a Patent
Patent Term
20 years from filing
Before June 8, 1995, 17 years
from registration
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10. New Standard Applied
In re Bilski, 545 F.3d 943, 88 U.S.P.Q.2d 1385 (Fed. Cir. 2008)(en
banc)
Under Bilski, the test for patentable subject matter (35 U.S.C.
§ 101) is no longer that a claimed process produce a “useful,
concrete, and tangible result.”
The new standard articulated by the majority of the Federal
Circuit in Bilski is a “machine-or-transformation test,” which
restricts patenting to inventions that are either:
• tied to a particular machine or apparatus; or
• that transform a particular article into a different state or thing
The involvement of the machine or transformation in the
claimed process must not merely be insignificant extra-
solution activity.
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11. Significant Questions Raised
Does “tied to a particular machine” include general-
purpose computers?
The court did not consider the viability of patenting
specific functions carried out by a general-purpose
computer.
If interpreted narrowly – i.e., requiring the use of
special-purpose hardware to receive a patent – many if
not most business method and software patents may not
survive.
On the other hand, if read less restrictively, the status
quo may largely prevail.
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12. Significant Questions Raised
What “articles” can be transformed ?
The Federal Circuit made it clear that transforming business
risks were not articles.
Certainly any physical object or substance is an “article.”
Something representing a physical object or substance (e.g.,
a display showing an X-ray of a bone) also qualifies.
However, the Federal Circuit offered limited guidance
beyond this as to what articles can be transformed.
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13. Effect on Pending/Future Patent Applications
• Patents directed to business methods that do not involve the
use of computers or other machines are clearly at risk and
likely no longer enforceable.
• Such patents could be placed in reissue or re-examination to
recast coverage in compliance with the new “machine or
transformation” test.
• If a continuing application is pending or can be filed, it may
be used as a vehicle for new patent claims.
• For pending applications, it is worth reviewing the claims to
determine whether they call for the involvement of a
computer, the operation of a mechanical device, or the
transformation of an article to a different state or thing.
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14. Effect on Pending/Future Patent Applications
• Review of existing patent portfolios of software and
business method patents advisable.
• If “tied to a particular machine” is interpreted narrowly,
many existing “method” claims in software patents will be
unenforceable. This possibility was recognized in the
dissenting opinion in Bilski by Judge Newman, who said,
“For the thousands of inventors who obtained patents under
the court’s now-discarded criteria, their property rights are
now vulnerable.”
• Increased Ex parte and Inter Partes reexamination requests
of software and business method patents by non-patent
owners seeking to invalidate the patents are inevitable.
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15. Case Study
Consider five different patent claims:
1. Claims a mathematical computation.
2. Claims an algorithm – a sequence of steps – without
any specific application or result and not coupled to a
computer.
3. Same as No. 2 above except now coupled to a general
purpose computer.
4. Claims an algorithm which manipulates the mechanical
behavior of a robot arm.
5. Claims an method to predict future stock prices based
on historical market data.
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16. Latest News and Current Trends
The Federal Circuit’s ruling in Bilski reflects a growing
tendency among courts to subject patents to increased
scrutiny.
The Patent Office has increased its 35 U.S.C. § 101
rejections over the past couple of years.
Examiners are interpreting 35 U.S.C. § 101
inconsistently and the interpretation changes over time.
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17. Gardere Wynne Sewell LLP
Karl Larson
3000 Thanksgiving Tower
1601 Elm Street
Dallas, TX 75201-4761
Phone: 214.999.4582 Fax: 214.999.3582
klarson@gardere.com
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