Lecture 2

PATENTABLE SUBJECT MATTER, UTILITY, AND THE REQUIREMENT OF NOVELTY

2.1 What Constitutes Patentable Subject Matter?

2.1.1 Categories of Patentable Subject Matter

The first threshold that must be reached in determining patentable subject matter is to establish that the invention itself is in the form of an embodiment, such as a prototype, or has been described or illustrated in terms sufficiently concrete, and not merely conceptual, to qualify for patent protection. Once it has been determined that this concrete embodiment of the invention has been formulated, it must be determined whether the invention falls within one of the statutory classes of patentable invention covered by 35 U.S.C. §101, which means that the invention must be a process, a machine, an article of manufacture, or a composition of matter, or any new and useful improvement thereof. At this point, it must also be determined whether an article patent, method patent, design patent or combination of these would best serve the interests of protecting the invention. As mentioned previously, more recently and to a certain extent, algorithms embodied in software and tied to a machine, biotech strains and business methods are now patentable subject matter under certain conditions to be explained later in the lecture, where several years ago they were not. More specifically defining the categories of patentable subject matter, a process or method may involve treating a material to produce a particular result or product, or may involve manipulating tangible matter to produce a desired end result. One example would be a process to temper glass to make it shatter resistant. Processes can also comprise a new use for a known composition, such as a new use for a chemical compound. A machine is a device which performs a useful operation, usually having mechanical or electrical elements such as for example, springs, hinges, transistors, resistors, sensors, controls, etc. A composition of matter is a combination of two or more substances, and includes chemical elements or compositions, such as a soft drink formulation or a drug compound. A manufacture is a catch-all category for the remaining statutory subject matter which comprises anything not a process, machine or composition of matter. A manufacture may be a man-made genetically engineered bacterium, for example, which is capable of breaking down crude oil. Additional items that cannot be patented because they are not patentable subject matter are naturally occurring articles, scientific principles, and abstract ideas.

2.1.2 The Invention Must Be Useful and Work for its Intended Purpose

To be patentable, an invention must be shown to work for its intended purpose. Under the Constitutional mandate of Article 1, Section 8, patents can only be granted for advances in the “useful” arts. A patent cannot be granted for an inoperative device or method, and is subject to post-grant cancellation if the covered device is proven to be inoperative. This is the reason why patents on

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perpetual motion machines are not granted - they don’t work.

2.1.3 The Invention Must Be Novel Compared to the Prior Art

Throughout the world, patents are granted only on inventions that are novel or new, as measured against the vast body of prior art existing in the world. Different countries have different definitions for what constitutes prior art. For example, a public use or sale of, or an offer to sell, a product anywhere in the world by someone else, which product embodies your new technology, prior to the U.S. filing date of your patent is considered prior art and would bar you from obtaining a patent. Further comments on additional limitations on novelty will be covered in more detail later in this lecture.

2.1.4 The Invention Must Be Non-Obvious Compared to the Prior Art

The United States patent statutes, and most patent statutes throughout the world, state that even though there are differences between the invention attempted to be patented and the prior art, if those differences would be mere obvious manifestations by one skilled in the art to which the subject matter of the patent relates, patent protection may not be obtained. The determination of non-obviousness is rather difficult to those uninitiated in dealing with patents and a later lecture of this course is dedicated solely to the development of and the technical determinations as to how the standard of non-obviousness plays an important part in the granting and upholding of patents.

2.1.5 The True Inventors Must Be Named

In the United States, patent applications must be originally filed in the names of the inventor, or inventors if there is more than one, or in the name of a business entity to which the inventors or inventors are obligated to assign their invention, possibly pursuant to an employment contract or other agreement. In addition, the application, upon filing, can be immediately assigned to the company for whom the inventors work and have a previous assignment agreement, or if the inventors have decided prior to filing the application that they desire to assign the rights either among each other or to other people or companies. However, it is important to know that in the United States, the true inventors must initially be named in a patent application data sheet that accompanies filing of the patent application. These inventors must be the true inventors of the subject matter claimed to be novel and non-obvious in the patent application. An assignment document may be filed for recording along with the initial patent application, or later, in which the inventors assign their rights over to their employers or others. Regardless of assignment, it is imperative in the United States that the actual inventor be named as the inventors in the application documents. The patent laws do not allow those to be named as inventors who did not contribute to the conception or reduction practice of the invention. In several instances I have noted during my years of practice, politics within a business environment may result in inventors being named who have nothing to do with the actual conception or reduction to practice

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of the invention. This should be avoided at all costs. After the patent issues, and the owner attempts to enforce the patent against an infringer, the acts of invention by the named inventors will be part of the discovery and trial testimony in the case. If it is ultimately determined that individuals who are named are not inventors, the patent’s validity and/or enforceability could be jeopardized. Therefore, when working with a patent attorney, the inventors must ensure that all of the proper inventors be named, and also be sure that those who are not inventors do not appear on the application as inventors. To determine the identity of actual inventors on a project that involves several people, I have applied a simple test, which you may also use. The addition of technical features to an invention usually does not qualify as contributing to the “invention.” Thus, one who can take a sketch appearing on a piece of paper and create a workable and valuable product, composition or other item from the sketch, is normally not named as an inventor. By contrast, an inventor starts with a blank piece of paper and places the sketch on the sheet which the technician eventually works from. Therefore, in determining who the inventors are to be named in a patent application, it is important to determine who started with the blank sheet of paper, and who acted only in a purely technical capacity and carried out the invention that was actually conceived and reduced to practice by others. Since there is very little latitude in complying with this requirement of the patent law, management should understand that there is no room for politics in the naming of inventors in patent applications.

2.1.6 Notable Recent Court Cases Attempting to Determine Patentable Subject Matter

Initially upon the development of mathematical algorithms for use in computer software several years ago, the U.S. Patent Office refused to grant patent applications on such algorithms since they were considered to be merely abstract mathematical expressions that existed before. However, as the importance of protection for such embedded software became important to business and society, the interpretation of the patent laws was changed by the courts and the Patent Office to include some such algorithms, and the machines which use these algorithms, within the scope of patentable subject matter under certain conditions. Therefore, today it is possible to obtain patent protection, as well as copyright protection, for algorithms and other embedded software, but only under certain circumstances. As explained in this portion of the lecture, these circumstances seem to constantly shift, and give rise to complex questions and answers. Over the past several years, court decisions regarding the patent eligibility of computer-related inventions, and life science inventions have taken many twists and turns. At present, the status of the law on this point is described in the following paragraphs and sections, and may not be readily understandable at first. But I shall try to be clear. As stated earlier in this lecture, patents are granted on new and non-obvious processes, machines, articles of manufacture, compositions of matter, or any new and useful improvement of such inventions. Some examples of claimed subject matter that do not fall within one of these categories, and do not define patentable subject matter are: 1. Transmitting forms of electronic signal transmission, such as a propagating electrical or electromagnetic signal per se (carrier waves).

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2. A human per se, or part of a human.3. A legal contractual agreement between two parties.4. A mere arrangement of printed matter.5. Data per se. After it has been determined that the invention falls within one of the categories of patentable subject matter, it must be found whether the claim wholly embrace a “judicially recognized exception” (rules created by court decisions, not by the legislature). These exceptions which do not comprise patentable subject matter include:1. Laws of nature.2. Natural phenomena.3. Abstract ideas, such as pure mathematical algorithms. The most recent Supreme Court case on this point is Alice Corp. Pty. Ltd. v. CLS Bank Int’l., 573 U.S. ____, 134 S. Ct 2347, 2354 (2014). The Alice Corp v. CLS Bank case involved patents that disclose a computer-based method and system for mitigating “settlement risk.” The risk was that only one party to an agreed upon financial exchange would satisfy its obligation. Particularly, the patent claims were designed to facilitate the exchange of financial obligations between two parties by using the computer system as a third party intermediary. The patents in suite claim: 1) a method for exchanging financial obligations, 2) a computer system configured to carry out the method for exchanging obligations, and 3) a computer-readable medium containing program code for performing the method of exchanging obligations. Both the District Court and the Court of Appeals for the Federal Circuit held that the patent claims were directed to an abstract idea and, therefore, the claims were not directed to patent eligible subject matter. The Supreme Court confirmed the opinions of both lower courts. In deciding the case, the Supreme Court stated that the court has long held that Section 101 of the patent statute, which defines the subject matter eligibility for patent protection contains an implicit exception for laws of nature, natural phenomena and abstract ideas which are not patentable subject matter. The Supreme Court stated that in making such decisions, the Court must distinguish patents that claim the building blocks of human ingenuity which are ineligible for patent protection from those that integrate the building blocks into something more, thereby transforming these building blocks into a patent eligible invention. The Court decided that a two-step test must be applied. First, it must be determined whether the claims at issue are directed to a patent ineligible concept such as an abstract idea. If so, the Court then asks whether the claim’s elements considered both individually and as an ordered combination transform the nature of the claim into a patent eligible application. The Court first stated that the claims at issue in the Alice case were directed to a patent ineligible concept; the abstract idea of an intermediated financial settlement. The Court went on to say that under its long-standing rule that an idea of itself is not patentable, it has found ineligible patent claims previously involving an algorithm for converting binary coded decimal numerals into pure binary form, a mathematical formula for computing alarm limits in a catalytic conversion process, and in the Bilski case to be detailed further, a method for hedging against the financial risk of price fluxuations.

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The Court stated that it follows from these cases, and Bilski in particular, that the claims in the Alice case were directed to an abstract idea. On their face the claims were drawn to the concept of an intermediated settlement which is the use of a third party to mitigate settlement risk. Like the risk hedging in Bilski, the concept of intermediated settlement is a fundamental economic practice long prevalent in our system of commerce, and the use of a third party intermediary or clearing house is a building block of the modern economy. Thus, an intermediated settlement like hedging is an abstract idea beyond Section 101’s scope. The Court then applied the second step of its test, holding that the method claims in the Alice case which merely required generic computer implementation, fail to transform that abstract idea into a patent eligible invention. Simply appending conventional steps, specified at a high level of generality to a method already well known in the art is not “enough” to supply the “inventive concept” needed to make the transformation to patent eligibility. The introduction of a computer into the claims does not alter the analysis. Wholly generic computer implementation is not generally the sort of “additional feature” that provides any “practical assurance” that the process is more than a drafting effort designed to monopolize the abstract idea itself. The representative method claim in the Alice case was held to be no more than to simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer. The function performed by the computer at each step - creating and maintaining shadow accounts, obtaining data, adjusting account balances, and issuing automated instructions - is purely conventional. The Court went on to state that as an ordered combination, these computer components added nothing that is not already present when the steps are considered separately. Also viewed as a whole, these method claims simply recite the concept of an intermediated settlement as performed by a generic computer. They do not purport to improve the functioning of the computer itself or effect an improvement in any other technology. An instruction to apply the abstract idea of intermediated settlement using some unspecified generic computer is not enough to transform the abstract idea into a patent eligible invention. The court continued by stating that the patent owner’s system claims and media claims added nothing of substance to the underlying abstract idea. The method claims recited the abstract idea implemented on the generic computer, and the system claims recited a handful of generic computer components configured to implement the same idea. Also, the media claims were the same as the method claims and the decision by the court regarding the method claims is also directly applicable to the media claims. Other terms used by the courts to describe non-patentable subject matter include “physical phenomena,” “scientific principles,” “systems that depend on human intelligence alone,” “disembodied concepts,” “mental processes,” and “disembodied mathematical algorithms and formulas,” for example. These rules reflect the Supreme Court’s view that the basic tools of scientific and technological work and research are not patentable, and that such fundamental principles and truths cannot be given to one as an exclusive right. While laws of nature, natural phenomena and abstract ideas are not patent eligible, methods and products employing applications of abstract ideas, natural phenomena and laws of nature that perform a real-world function may be patentable. Thus, if the individual or combined elements of the claimed invention amount to significantly more than the judicial exception, patentability may be established.

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Thus, if the claimed invention comprises a particular novel application of an abstract idea, natural phenomena or law of nature, patent protection may be available. 2.1.6.1 Computer Related Inventions

Following the Alice decision, the Court of Appeals for the Federal Circuit decided several cases in which patents covering computer-related inventions were held invalid as being directed to “abstract ideas,” and several others where the patents were held valid. One of the first cases decided by the Court of Appeals for the Federal Circuit after the Supreme Court decision in Alice that held claims valid directed to a computer-related invention was Enfish LLC. v. Microsoft Corporation, decided May 12, 2016, wherein the invention was directed to software and a database. The court in that case advised that an analysis to compare the invention to other inventions found to be abstract ideas in previous cases should be conducted. Also, the court held that claims to the invention should be interpreted in view of the definitions in the specification. The Court went on to hold that a claim is not abstract if the claimed invention provides improvements in computer related technology, such as chip architecture or an LED display, which are not abstract ideas. Further, the Court in this case held that since software can make non-abstract improvements to computer technology, just as hardware can, software is not inherently abstract. The Court held that claims directed to an improvement to computer related technology such as computer functionality, may not be directed to abstract ideas. In this case, the claims were held valid. Closely following Enfish, the Federal Circuit decided TLI Communications, LLC v. AV Automotive LLC on May 17, 2016, which provides a contrast between non-abstract claims directed to an improvement to computer functionality and abstract claims directed, for example, to generalized steps to be performed on a computer using conventional computer activity. In the TLI case, the claims of the patent described steps of recording, administration and archiving of digital images and found them to be directed to the abstract idea of classifying and storing digital images in an organized manner. The Court then found that the additional elements of performing these functions using a telephone unit and a server did not add significantly more to the abstract idea because they were well understood, routine, conventional activities. In this case, therefore, following Enfish, the Court of Appeals of the Federal Circuit held the claims invalid. The takeout of this case is that if the claim recites a concept that is similar to concepts previously found abstract by the Courts, the claim will be held invalid as covering an abstract idea. The fact that a claim is directed to an improvement in computer-related technology, such as operation of the computer itself, can demonstrate that the claim does not recite a concept similar to previously identified unpatentable abstract ideas. An important decision from the U.S. Court of Appeals for the Federal Circuit came down on November 1, 2016, Amdocs v. Openet Telecom, Inc., which by some analysist’s opinions gave a boost to software patentability. The Plaintiff in this case accused the defendant of infringing four patents, each related to parts of a computer-based system designed to solve an accounting and billing problem faced by network service providers. In a nutshell, these patents describe components that were arrayed in a distributed architecture that minimized the impact on network and system resources by collecting and processing data close to its source, thereby reducing congestion in network

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bottlenecks that had made it previously difficult to keep up with the mass of record flows from the network devices and which required huge databases. In this particular case, the term “enhanced” was used in the patent’s claims and was interpreted by the court to mean to apply a number of field enhancements in a distributed fashion. Importantly, in reading the specification, the court approved the terms “in a distributed fashion” and “close to the source” of network information requirements as being part of the claim coverage because of the word “enhance” in the claims. The Court’s analysis went like this: The Patent Statute states that whoever invents or discovers any new and useful process, machine, manufacture of composition of matter or any new and useful improvement thereof may obtain a patent. Court decisions have placed limitations on that definition holding that certain fundamental principles are not included within patentable subject matter, which are called the “judicial exceptions,” to patentable subject matter. These judicial exceptions are laws of nature, natural phenomenon and abstract ideas. The Supreme Court, in the Alice case, set out a two step analysis to determine whether particular inventions meet the requirements of patentability. First, it must be determined whether the patent claims are directed to one of those patent ineligible concepts such as an abstract idea. If the claims are so directed, a second step in the analysis considers the elements of each claim, both individually and as defining a combination, to determine whether the additional elements of the claim transform the nature of the claim into a patent eligible application. The second step requires searching for an element or combination of elements in the claim that are sufficient to insure that the patent would amount to “significantly more” than a patent upon the ineligible concept itself. In the life sciences area, the ineligible concept may rely upon natural phenomenon or a law of nature, while in the computer-related invention field, emphasis is placed on the abstract idea of the “judicial exceptions.” If the first step is applied and the claim is found not to be directed to an abstract idea or any other exception, the claim is held valid without going into the second step. The second step of the analysis determines whether or not an invention is eligible for patenting based on the generally accepted and understood definition of what an abstract idea encompasses when dealing with computer related inventions. However, at present there is no such single succinct useable definition or test stated by the court defining what an abstract idea is. As stated by the Court in the Amdocs decision, this vagueness may be preferable because it is difficult to fashion a workable definition to be applied to as yet unknown cases with as yet unknown inventions. Therefore, the Court decided that instead of relying on a bright line definition of an abstract idea, the courts should now apply a test that examines earlier patent cases and decisions in which a similar or parallel descriptive nature in the claim language, can be seen, i.e., what prior cases were about and which way they were decided. In other words, what the Court is suggesting is comparing the claims in the case at issue to claims held either eligible or ineligible in previous cases, of which there are many at present. The Court determined in Amdocs that this is the classic common law methodology for creating law when a single governing definition is not available. Therefore, the problem facing inventors and their patent attorneys going forward is that the claims of their inventions must not be directed to abstract ideas, however, the courts have admitted that there is no single definition for what is or is not an abstract idea. One point, though, is to determine whether or not the invention meets the requirement of an inventive concept as actually applied in the real world, and to scour previous cases for guidance

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on how the claims defining your computer-related invention should be written. In the Amdocs case, the Federal Circuit Court made a somewhat extensive analysis of a few previous decisions regarding claims that were held patent ineligible and then a few cases where the claims were held to be patent eligible. With its analysis of decisions that held patent claims ineligible, the Court examined the case of Digitech Image Techs., LLC v. Elecs. For Imaging, Inc., 758 F.3d 1344, 1350 (Fed. Cir. 2014). The claim in question was directed to an ineligible abstract process of gathering and combining data that does not require input from a physical device. The two data sets and the resulting device profile were held to be patent ineligible subject matter. The Court observed that without additional limitations, a process that employs mathematical algorithms to manipulate existing information to generate additional information is not patent eligible, and is an abstract idea. The next case the Court commented upon was Content Extraction and Transmission, LLC v. Wells Fargo Bank, 776 F.3d 1343, 1345 (Fed. Cir. 2014). Under step one, the Court held that the claims in issue were directed to an abstract idea of 1) collecting data, 2) recognizing certain data within the collected data set, and 3) storing the recognized data in a memory. The Court recognized that data collection recognition and storage were undisputedly well known in the prior art, and the Court went on to observe that the role of the computer in a computer implemented invention would only be meaningful under the Patent Law if the invention involved more than the performance of well understood routine and conventional activities previously known to the industry. The claims in this case fell short of this criteria and were patent ineligible. The third case reviewed by the Court in this section of its opinion was TLI Commc’ns LLC Patent Litigation, 823 Fed.3d 607, 610 (Fed. Cir. 2016). Under step one, the Court found the claims directed to the abstract idea of classifying and storing digital images in an organized matter. Also under step one, the Court found that the claims were not directed to a specific improvement in computer functionality, but instead were directed to the use of a conventional or generic technology in a nascent but well known environment without any claim that the invention reflected an inventive solution to any problem presented by combining the two. Instead, the recited components and functions were well understood, routine, conventional activities previously known in the industry. In beginning its discussion of patent eligible claims in previous decisions of the Court, the Court began with the case of DDR Holdings v. Hotels. com, L.P et al, 773 Fed.3d at 1257 (Dec. 5, 2014), where the Court had found that the asserted claims did not recite a step or function performed by a computerized mathematical algorithm, but were instead focused on a challenge particular to the Internet. The Court observed that the claimed solution to the problem in this case was necessarily rooted in computer technology to overcome a problem specifically arising in the realm of computer networks, and that the claim in this patent was not merely directed to a routine or conventional use of the Internet. On this basis, the claim in this case was held to be patent eligible. The last case cited by the Court in the Amdocs case was Bascom Global Internet Servers v. AT&T Mobility, 827 Fed.3d 1341, 1345 (June 27, 2016), where the Court first held that the claims were directed to an abstract idea under step one. However, under step two, the Court found that the ordered combination of the limitations in the claim provided the requisite inventive concept, i.e. the installation of a filtering tool at a specific location remote from the end users with customizable

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filtering features specific to each end user. This was held not to be a conventional or generic process, and the claims did not pre-empt all ways of filtering content on the Internet. The Court thus distinguished ineligible abstract idea-based solutions implemented with generic technical components in a conventional way from the patent eligible claim in this case that described a technology based solution and a software based invention that improved the performance of the computer system itself. Keep in mind that these are only five of the Court of Appeals for the Federal Circuit cases out of approximately 100 other decisions that could have been analyzed in the same way. Obviously for brevity, all of these cases are not being discussed in the Amdocs case or in this course. In the Amdocs case, after reciting this background of previous cases, the Court turned to an examination of the claims of the patents that were involved in the particular case at hand, with the added caveat that the Judges interpreted the claims in view of the written description or specification of the patent. This is often done by courts when a patent claim term may be a broad term, and the broad term has to be defined more particularly by referring to the patent specification. In the Amdocs case, four separate patents were being reviewed, and each of the patents was held to comprise patent eligible claims. In analyzing the first of the four patents, the Court first cited the Enfish case, discussed previously, in which case the Court found that there was not an abstract idea in the patent claims because the patent claims in Enfish solved a technology based problem with conventional generic components combined in an unconventional manner. Getting back to the meat of the Amdocs case, first patent, the Court held that the claims in the first patent were much closer to those in Bascom and DDR Holdings then they were to the claims in Digitech and In re TLI. The Court held that even if claim 1 was directed to an ineligible abstract idea under step one, the claim is eligible under step two because it contains a sufficient inventive concept. The Court noted that the claim required computer code for using the accounting information with which a first network accounting record is correlated to enhance the first network accounting record. In other words, the Court stated this claim entails an unconventional technological solution (enhancing data in a distributed fashion) to a technological problem (massive record flows which previously required massive databases). The claim’s “enhancing” limitation required that these generic components operate in an unconventional manner to achieve an improvement in computer functionality. Contrasting this particular patent claim to the Digitech case, the Court held that the claim under analysis in Digitech was not tied to any particular structure that broadly preempted related technologies and merely involved combining data in an ordinary manner without any inventive step. The Court distinguished the present Amdocs claims by stating that the Amdocs claims constituted an architecture providing a technological solution to a technological problem, providing the requisite “something more” than the performance of well understood, routine and conventional activities previously known to the computer industry. The Court also held that claim 1 of this particular patent solved a technological problem (massive data flows requiring huge databases) akin to the problem in DDR Holdings (conventional hyperlink protocol preventing websites from retaining visitors). The Court commented also about the Bascom case which permitted the system to have a filtering tool with the benefits of the filter on a local computer and the benefits of a filter on an ISP server. The benefits in Bascom were realized because of customizable filter features at specific locations remote from the user due to the distributed remote

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enhancement that produced an unconventional result - reduced dataflows and the possibility of smaller databases. The arrangement in this particular Amdocs claim is not so broadly described as to cause preemptive concerns, instead it is narrowly circumscribed to cover the particular system outlined. Therefore, this claim was held to be patent eligible of a generic concept. The second patent examined in the Amdocs case related to a network usage system where information is collected in real time from a plurality of networked devices at a plurality of layers and is filtered and aggregated before being completed into a plurality of data records. The collection, filtering, aggregating and completing steps all depend upon the inventions unique and unconventional distributed architecture. The specification of the patent explained that the distributed architecture allows the system to efficiently and accurately collect network usage information in a manner designed for efficiency to minimalize impact on network and system resources, enabling load distribution and making it easier to keep up with record flows and allowing for smaller databases. The Court also stated that while some individual limitations arguably may be generic, others are unconventional and the ordered combination of these limitations yields an inventive concept sufficient to confer eligibility without undue preemption of a generic concept. The third patent under analysis in the Amdocs decision included claims reporting on the collection of network usage information from a plurality of network devices, requiring the completion of a plurality of data records in a manner that depends upon enhancement - which depends upon the system’s distributed architecture. The Court also held this claim to be patent eligible for the same reasons it decided the first two Amdoc patents to be eligible. The fourth patent in the Amdocs decision involved a decision where one record that includes customer usage data for each of the plurality of services used by the customer allowed the inclusion of a plurality of services by aggregation. The Court held that this aggregation depends upon the invention’s distributed architecture, and held this patent claim also to be patent eligible based upon the analyses regarding the previous patent claims in the Amdocs decision.

2.1.6.2 Additional Exemplary Decisions Regarding Computer Related Inventions

As discussed in the previous section of this lecture, computer-related inventions are patentable in some instances and not in others. There are many issued patents today covering machines operated and controlled by software, and electronic devices that incorporate software. On the other side of the coin, there are some software inventions that cannot be patented. An important question in determining whether a software related invention is patentable is whether the invention produces a “useful, tangible result.” In one case, the invention was a method of operating a rubber molding press. The temperature of the mold was constantly determined and provided to a digital computer for computation of the cure time using a well-known formula, the Arrhenius equation. The computer controlled the molding process with a program that used the mathematical formula. The useful tangible result was a molded product. The invention was patentable. In another case, the invention was a method for seismic exploration used for oil prospecting. In that invention, seismic waves reflected from subsurface formations were summed to simulate

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substantially plane or cylindrical waves. A computer summed the reflection signals and processed them to obtain meaningful subsurface information. The court said the invention was patentable. It was not a mere solution to a mathematical algorithm (summing) but defined the process of taking substantially spherical seismic signals and converting them into another form, i.e., a form representative of a plane or a cylindrical wave. This case established that signals are physical, and a process that involves physically transforming signals into different states can be patentable. Here, the plane or cylindrical wave could be viewed on a computer display. A mathematical formula or abstract idea alone cannot be protected through patents. In another case, the invention was a method and apparatus for controlling the motion of objects such as robotic machines to avoid collisions with other objects, either fixed or moving. The invention used a “bubble hierarchy” technique in which the object to be avoided is encircled by theoretical spheres. This technique was known, and the invention was in placing these bubbles along a particular “medial axis” of the object. The claim broadly recited a method for generating a data structure which represents the shape of the physical object by first locating the medial axis of the object and then creating a hierarchy of bubbles on the medial axis. The court held that the steps of “locating a medial axis” and “creating a bubble hierarchy” were nothing more than the manipulation of basic mathematical constructs, or an abstract idea. The “data structure” was not considered a useful, tangible result. We see here that the way in which a patent claim is drafted is critical in determining whether there is patentable subject matter. Merely locating the medial axis and creating the bubble hierarchy to generate a data structure does not produce a useful, tangible result. If the claims had defined a method of preventing the collision of objects that included the steps of locating the medial axis and creating the hierarchy of bubbles on the medial axis, the claim might have been patentable. In other words, the discovery of locating the medial axis from the object and using it to create the hierarchy of bubbles was not patentable, but the application of that algorithm or idea to prevent collisions might have been patentable. In another important case, the invention was a rasterizer for enhancing the display of an oscilloscope. The display was digitized, stored as a vector list, processed into a bit map, and displayed by illuminating pixels positioned on a type of graph. Horizontal columns (called “elevations”), corresponded to the magnitude of the data, and rows corresponded to time.The invention used an anti-aliasing system where each vector making up the waveform was represented by modulating the illumination intensity of pixels having center points bounding the trajectory of the vector. The anti-aliasing technique eliminated discontinuities, jaggedness and oscillation in the waveform, giving the visual appearance of a smooth continuous waveform. Thus, the useful tangible result was an improvement in an oscilloscope comparable to a TV having a clearer picture. Indeed, the last element of the claim was means for outputting illumination intensity data as a predetermined function of the normalized vertical distance and elevation of the pixels in the display.The court found that the claim defined patentable subject matter, even though it manipulated data using software. The court stated:

When a claim containing a mathematical formula implements or applies that formula in a structure or process which when considered as a whole, is performing a function

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which the patent laws were designed to protect (e.g., transforming or reducing an article to a different state or thing), then the claim [defines patentable subject matter].

In that case, the court emphasized that the analysis is performed on the patent claim as a whole, not just by examining the mathematical algorithm or formula described in the claim. Thus, reciting the formula or reciting steps in a computer program in a patent claim is acceptable, provided that other claim elements define a useful, tangible result. We learn from these cases that just because a mathematical formula or program implemented with software is involved, there still might be a patentable invention, even though the mathematical formula is not patentable by itself. We also learn, though, that how the claim is drafted makes a difference. A good test of whether a claim defines patentable subject matter is whether a step or a component in the claim describes a tangible, useful result.

2.1.6.3 The Life Sciences

Regarding the patent eligibility of life science inventions, it was held at one time that living organisms could not be the subject of a patent. However, at present, modified living organisms which are the product of genetic engineering can be patented, but humans cannot be patented. The products of genetic engineering that are patentable must satisfy all the other conditions for patentability, such as patentable subject matter, novelty and non-obviousness. Two examples are the Harvard Mouse which has been genetically engineered to be more susceptible to certain strains of cancer for purposes of medical research, and certain genetically modified organisms which can absorb oil developed to clean up oil spills that occur when a tanker or pipeline accidentally splits open. Today, the subject of genetics includes inventions that may or may not fall within the scope of patentable subject matter, and discussions are continually ongoing about the patentability of the results of the genome project completed a few years ago. It is my prediction that, in the future, additional patent laws will be required to determine which newly developed subject matter may be patented and which may be available for public use without restraint, as medical procedures are today.

2.1.6.3.1 Life Sciences Method Claims

In the case of Rapid Litigation Management v. CellzDirect, decided on July 5, 2016, the Court of Appeals for the Federal Circuit held that methods of cryopreserving hepatocyte cells were patent eligible because they were not directed to a judicial exception. The claims were held to recite a method of producing a preparation of hepatocytes capable of being frozen and thawed at least two times, comprising performing the steps of density gradient fractionation to separate viable and non-viable hepatocytes, recovering the viable hepatocytes, and cryopreserving the recovered viable hepatocytes. The Federal Circuit determined that the inventors discovered the cell’s ability to survive multiple freeze-thaw cycles, but that is not where they stopped, nor is it what they patented. Instead, the inventors employed their natural discovery to create a new and improved way of preserving hepatocyte cells for later use. As a result, the Court held the claims eligible as not constituting something naturally found in nature.

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In the Rapid Litigation case, the Court also made several statements regarding what steps should be taken in the conduct and analysis of whether a claim is directed to a law of nature. First, the Court stated that the “directed to” analysis of a process claim requires more than merely identifying a patent-eligible concept underlying the claim, and instead requires an analysis of whether the end result of the process, the essence of the whole, was a patent-eligible concept. The result of the claims at issue in this case were not simply an observation or detection of the ability of hepatocytes to survive multiple freeze-thaw cycles, but instead the claims recited a number of process steps (e.g. fractionating, recovering and cryopreserving) that manipulate the hepatocytes in accordance with their ability to survive multiple freeze-thaw cycles to achieve a desired outcome. Thus, these claims were not directed to a natural phenomenon. The claims were held to be distinguishable from claims in other decided cases that were found to be directed to patent-ineligible concepts where the claimed invention amounted to nothing more than observing or identifying the ineligible concept itself. In another case, Sequenom v. Ariosa, decided on June 27, 2016 the Supreme Court denied a petition for a writ of certiorari leaving in place the Federal Circuit decision of June 2015 invalidating method claims as being patent ineligible that were directed to a natural phenomenon, the presence of cffDNA in maternal serum or plasma, holding that the claims did not recite an inventive concept that transformed cffDNA into a patentable invention because the amplifying and detecting steps in the claim are routine and conventional.

2.2 Utility - The Invention Must Be Useful

As briefly touched upon previously, under the Constitutional mandate of Article 1, Section 8, patents can only be granted for advances in the “useful” arts. Following this directive, the Patent Office and the courts have determined that a patent cannot be granted for an inoperative device or method, and is even subject to post-grant cancellation if the covered device is proven to be inoperative. It is also required that the invention disclosure in the patent must define an invention and a device that will work for its intended purpose. If the device will not work for the purpose set forth in the specification, the patent, if granted, will become unenforceable and invalid. The requirement of usefulness also holds that inventions which have not been developed to the point where a working embodiment can be disclosed in the patent application cannot be supported by a patent application. This requirement that the invention must be useful is especially significant for a new chemical compound (including pharmaceuticals) because there may be no known use for the new compound. Often much work must be conducted to experimentally verify the utility of a new compound before a patent application can be filed. Upon development of any invention, the inventors should ask themselves the question “what is my idea useful for and why.” Once this question has been answered, the patent application can be drafted around a showing that the invention will solve problems in the area in which your idea has been determined by you to be useful. By way of anecdotal information, many years ago when I was a Patent Examiner some of the other

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Examiners in the chemical arts, over lunch, would tell stories about patent applications that were filed on chemical compounds, and that the usefulness for the chemical compound was described as “for filling sandbags.” These were patent applications that were filed before the corporation really knew what the chemical could be useful for. Today, the requirement is that the invention must have some stated use before the patent application is filed. I don’t think filling sandbags today will carry much weight.

2.3 Novelty - The Invention Must Be New

2.3.1 The Statutory Requirements

2.3.1.1 Time Limits for Filing a Patent Application

The time at which a patent application is filed is important both as to the activities of the inventor and as to the inventions of others. By way of example, consider a possible history regarding the discovery of the wheel. I’m only using this example as a way of explaining some of the time limits for patentability. Suppose the first inventor of the wheel merely recognized the problems associated with moving large loads on top of rolling logs, which comprises the prior art. At this point, the inventor has only recognized the need for a better structure, and a patent application would not yet be timely since a patentable invention has not yet been fully thought through. A patent application is not proper until a working form of an invention has been fully conceived. At the time when a complete invention is mentally pictured, and is fully conceived in operating form, and can be described, the inventor may properly pursue patent protection. In continuing with the example, after conceiving of the wheel invention, and quite independently of the effort to obtain patent protection on the wheel, the same inventor might have published a description of his or her wheel, or may have built a wagon and gone into the moving business. Such activities raise another question of timing under U.S. patent laws. The patent application must be filed within one year after the invention is first described in any publication anywhere in the world, or placed on sale, sold, used or known publicly anywhere in the world. This is known as the one year “grace period,” and is based on the philosophy that the inventor abandons his/her patent rights if a proper patent application is not filed within one year from public disclosure or commercial activity with respect to the invention. A major exception to this rule is the case of legitimate experimental use to perfect or develop the invention. The one-year grace period does not start until experimentation is completed. For example, in a famous case dating back to the 1800’s, an inventor filed a patent application directed to an asphalt paving material that was used for six years on a highway before the patent application was filed. The Supreme Court held that the patent was still valid since six years of experimentation were required to determine whether the highway material would hold up under long and continued use. A further timing consideration regarding filing a patent application involves the protection of foreign patent rights. It is important to know that any publication, public use, sale or offer for sale of

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an invention that takes place before the filing date of a patent application in the United States may prevent the inventor from obtaining valid patents in many foreign countries that rely upon the “absolute novelty” standard, which are those countries that do not have the one year grace period. In those countries, a patent application must be on file in the inventor’s home country prior to any public use, public knowledge or disclosure of the invention anywhere in the world. Later, in Lecture 10, we will be covering in detail how to adequately protect your foreign patent rights. An inventor may keep his/her invention secret for a period of time, and still obtain a patent. However, a long delay in applying for a patent may result in the loss of all patent rights, which may end up going to a second independent inventor who acts more promptly to file a patent application. The law of novelty of inventions also covers situations where an inventor places a product in public use, but the invention is not discernable to the user upon observation. One such case involved the invention of an improved golf ball cover that was marketed by the inventor, which cover comprised a “secret ingredient” that the inventor did not disclose to the public. In other words, the public use of the improved golf balls was a “non-informing” use of the secret ingredient. The court held that had the inventor filed a patent application on his invention more than one year after the “non-informing” use of the new golf balls, his application would have been barred, notwithstanding the fact that the user could not ascertain the “secret ingredient.” The invention was held to be in public use for more than one year. The Court offered three reasons for its conclusion. First, even the non-informing use gives the public the benefit of the invention, and the invention has had an impact in the marketplace. Second, even though the complete formulation of the golf ball cover was not available to the user, when the article itself is freely available to the public, it is fair to presume that the secret will be uncovered by potential competitors, such as by reverse engineering, long before a patent would have expired based upon a timely filed patent application. Third, the inventor is under no duty to apply for a patent, and is free to elect to contribute the invention to the public. For these reasons, the Court held that the inventor’s non-informing use of the golf balls with the inventive cover was a “public use” that allowed the public use to qualify as prior art in a lawsuit involving someone else’s patent covering a similarly covered golf ball. An important thing to remember is that it is highly recommended to keep careful records of the conception of inventions and their development, which also should be signed by a witness. This is to assist later in corroborating the dates that the invention was conceived and reduced to practice, if it becomes necessary to prove that someone else derived, or “stole” your invention from you, discussed in Lecture 9. Another suggestion is to file a patent application at the earliest practical time, and most importantly before any public description or disclosure or commercial development of the invention has been made.

2.3.1.2 Prior Art Activities of the Inventor and Others That Can Defeat Patent Rights

The patent law, at 35 U.S.C. §102, as amended by the AIA, states that an inventor shall be entitled to a patent unless the invention (1) was known or used by others, or (2) patented or described in a printed publication, or (3) placed on sale or sold, anywhere in the world, before the patent application

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filing date. Therefore, if the same invention was made public by someone else prior to your filing date, you cannot obtain a patent. This provision of the patent law also prevents a person who merely recognizes the commercial merits of an existing product, or who discovers the product in an ancient document or in the U.S. or in a foreign country, from properly obtaining a U.S. patent, for patents in the U.S. are granted only to the “inventor” who is also the first to file a patent application. The activities of others who may have publicly disclosed the same invention as yours, without necessarily obtaining any patent protection for that invention may also defeat your right to a patent if those activities occurred prior to your patent application filing date. 35 U.S.C. §102 is the provision that includes the “grace period” discussed previously, requiring that a patent application be filed within one year from the date of first public disclosure or public knowledge anywhere of the invention. The policy behind this provision is to require inventors to make a prompt decision regarding filing a patent application, so that the public will obtain the benefit of the inventor’s work upon expiration of the patent that much earlier. One who suppresses, abandons or conceals their invention is not entitled to patent protection. Under this provision of the Patent Statute, the activities of the inventor or inventors themselves, as well as the activities of others may defeat rights to patents. For example, if one completes an invention, and then delivers a paper or a speech describing the details of that invention to a professional or a trade group, and the speech or paper is distributed to the group in attendance, or afterward, that inventor then has one year from the time of that disclosure to file a United States patent application. Therefore, it is imperative that inventors discuss the patentability of their inventions during that first year period, or face the potential loss of all patent protection. It is also important to note what was briefly discussed previously regarding the protection of foreign patent rights. If at all possible, it is highly recommended to seek the advice of a patent attorney prior to any public disclosure of any invention, even a speech or paper delivered to a professional organization, so that foreign patent rights will not be lost. In today’s global economy, I cannot think of many inventions that would have use just in the United States, and not in many other countries throughout the world. Public uses of an invention that can be proven to be experimental uses are not considered prior public uses within the requirement that an application must be filed within one year from public use. However, it is important to realize that in litigation, with an adversary party, any disclosure which you may have considered experimental may ultimately be held by a court or a jury to be proven as a public use of a completed invention. In one instance I can recall, a conversation on a bus travelling between a hotel and a convention center during a trade show, where the inventor disclosed some of the ideas of his invention to someone on the bus, constituted a public disclosure. Therefore, it is important to note that if any public comments or disclosures are made about an invention, the inventor should be aware of what can and cannot be done with regard to protecting patent rights in the U.S. and throughout the world. Appropriate non-disclosure agreements should be used to cloak invention disclosures, at all times when possible.

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2.3.1.3. Prior Publications, U.S. and Foreign, as Prior Art

In the Patent Office and in the courts, the novelty of an invention, and thus the validity of a patent application or of an issued patent is tested against the body of prior patents, public inventions and published material known as “prior art,” which basically encompasses everything known throughout the world that took place prior to the filing date of the patent application. Under the United States patent examination and legal system, (1) any publication that shows all or part of your invention prior to your patent application filing date is prior art, and (2) any of the inventor’s prior publications or patents that were made public or issued more than one year before the patent application filing date is also “prior art” under the patent laws. In addition, any foreign patents, foreign publications, information in text books or data bases, and any other publicly available knowledge about work that was performed relating to your invention before your filing date becomes prior art for use by the Examiner and the courts in determining the novelty and thus the validity of your patent application or patent. An inventor is charged with constructive knowledge of all public materials and prior art that were generated from the beginning of time up until the date of his/her application filing date, regarding the subject matter of the invention. Although it is impossible for any single inventor to know all this subject matter, without such constructive knowledge the patent system would not work. As will be explained in a further lecture, it is possible to obtain a search of relevant literature, patents, and other materials prior to filing a patent application to determine what the state of the prior art is regarding the subject matter of any invention. Thus, it is possible before filing a patent application for an inventor and the inventor’s attorney, to obtain a fairly large and detailed amount of information regarding the state of the prior art to which an invention pertains. Upon examination by the Patent Examiner, and later in litigation before the courts, such prior patents, publications, uses, offers for sale, sales and public knowledge are used to limit the scope of the claims of a patent application or issued patent to define only that which is new, and to eliminate that which encompasses the prior art. The claims of a patent are drafted to potentially cover everything related to the invention which may be devised by others in the future, and yet the same claims cannot cover any material that has been shown or disclosed in the prior art. Thus, determining the content of the prior art is very significant in the patenting process.

2.3.2 Preliminary Comments on Protecting Foreign Patent Rights

As alluded to previously, and as discussed in Lecture 10, a significant amount of foreign countries throughout the world utilize what is called the Absolute Novelty Rule, which requires that a patent application be on file in that country before any public disclosure or public knowledge of the invention anywhere in the world. In other words, there is no one year grace period as offered by U.S. law. Based upon a series of treaties adhered to by the United States and most countries throughout the world, procedures have been established, when followed, to protect the patentability of inventions throughout the world. Pursuant to these treaties, if a U.S. inventor files a patent application in the United States, and a

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corresponding foreign patent application is filed in a foreign country within one year of the date of the United States application filing date, according to the provisions of the Paris Convention of 1883, the constructive filing date of the foreign patent application is the United States application filing date, or the “priority date.” By way of example how this works, if you were to file an application for a patent on an invention on January 1 in the United States, and then publicly disclose that invention at a trade show, sales meeting or otherwise on January 2, and then filed patent applications in the European Union, South Korea, Japan and Australia on December 1 of the same year, the filing date of your foreign patent applications would be the same as your United States filing date, and therefore your patent application in those foreign countries would not be barred based upon the public exposure of your invention on January 2. There is a further treaty called the Patent Cooperation Treaty, PCT, which allows you to file a document within that one year period with the U.S. Patent & Trademark Office which extends the time that you have to file foreign patent applications for a total of up to 30 or 31 months from your initial U.S. patent application filing date, depending on the foreign country rules regarding the 30 or 31 month period. Therefore, if you determine that your invention is going to have worldbwide acceptance and value, it is extremely important to ensure that there is no public disclosure of your invention before your United States patent application filing date. After filing, you are free to publicly show and exploit your invention. There are provisions in the United States patent law, such as Provisional Patent Application filings, which allow the patent attorney to make a rapid and proper filing in the United States Patent and Trademark Office and obtain an official filing date before you make any public disclosure of the invention. If necessary, the patent attorney can work to one or two day requirements in preparing a provisional patent application. However it is not recommended that you wait until a late date to inform your patent attorney about the subject matter of your invention.

2.3.3. Duty of Disclosure of Known Prior Art to the United States Patent and Trademark Office

During the first meeting with your patent attorney regarding an invention, the patent attorney will prudently ask you to disclose to her or him all information you are aware of regarding the state of the prior art relating to the subject matter of your invention. This involves disclosure to the patent attorney of your knowledge of printed or electronic publications, devices already existing in the market, issued patents, and any other prior acts or materials of either the inventor(s) themselves or others that may relate to the subject matter of the invention. The reason is that Rule 56 of the Patent Office Rules requires that an inventor and the inventor’s attorney or agent disclose “information they are aware of which is material to the examination of the application” to the Patent Examiner prior to the commencement of examination, and during the entire time of examination. The determination of whether such prior art would be material to examination is whether that prior art would be considered by the Examiner as information which is material to patentability in deciding whether or not to issue the patent. Normally, an Information Disclosure Statement is submitted to the patent Examiner with the filing of the application setting forth all prior art that the inventor and the attorney are aware of

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that is material to examination of the application. This would include all prior art that was uncovered by a pre-filing patentability search. In my opinion, the purpose of this rule is two-fold. First, the applicant and the attorney are legally held to a strict duty of candor in making a showing before the Patent Office of the reasons they believe the inventor is the first inventor. It is no longer possible to attempt to hide prior art that you are aware of from the Examiner, and obtain issuance of a patent upon the theory that the Examiner will never find that information. In this regard, the disclosure to the Examiner must also include any activities of the inventors themselves which are material to consideration of possible statutory bars for granting a patent, such as public uses, offers for sale or sales, or prior inventions before your patent application filing date as explained previously. By way of example, an explanation of the inventor’s activities relating to the invention that transpired more than one year prior to the filing date, which activities could be considered as public disclosures, should be presented to the Examiner, along with an explanation as to why such activities are only experimental or test activities and do not give rise to a disabling “public use” or an “on sale” situation. The second reason for submitting this prior art to the Patent Office is that the patent application is prepared with a view towards ultimately being enforced, if necessary, before a Federal Court and explaining to the court every step taken in developing the invention and obtaining patent protection. In patent litigation, the lawyer representing the alleged infringer will introduce into evidence all prior art which is believed to be relevant in an effort to invalidate your patent. However, under existing law governing patent litigation, the court can give short shrift or ignore all together all prior art that was previously considered by the Patent Office during the examination procedure, if such prior art is presented as part of an invalidity defense in court. In simple terms, the court is asking defense counsel to present prior art that was not previously considered by the Patent Examiner. Therefore, the more prior art you present to the Examiner and introduce into the history of the prosecution of the patent application, the more difficult it becomes for a lawyer representing an infringer to obtain additional prior art material in an effort to invalidate the patent. Thus, in my opinion, it is definitely to the inventor’s advantage to have as much prior art as possible made of record in the Patent Office prosecution history and reviewed by the Examiner, as a way of strengthening the patent if that patent faces enforcement in a court proceeding.

2.3.4 Experimental Use Versus Actual Use of the Invention

If for reasons that are beyond your control, such as a lack of financing or the fact that a budget for introduction for new products for a given year has already been expended, you find yourself in a situation where your invention, or certain aspects of your invention, may have been exposed to third parties more than a year before your patent application filing date without being covered by a Confidential Disclosure Agreement, consideration must be given to inquire whether such use can be established as “experimental use” and not public use. One major consideration is whether or not the disclosure to third parties involved a disclosure of a complete workable invention, or whether or not development work was still being conducted on the invention, and additional work on the invention took place after such disclosure. The disclosure that will defeat the validity of the patent must be that

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of the complete invention, and disclosures to such third parties such as vendors or potential marketing partners more than a year before the patent application was filed may be held to be experimental uses if it can be shown that development work continued from the point of that disclosure forward to perfect and modify the invention, and the invention was not completed and should not be considered an “invention” upon the date of disclosure. Any changes to your invention made after such disclosure tend to prove that the disclosure was made only of the experimental model, and not the complete invention. Also, public uses of the invention for technical test purposes are usually considered as experimental uses, while on the other hand, market testing of the complete or near complete invention are considered as public uses, and not experimental uses. Again, to avoid any possibility of the existence of public information that may affect the validity of the patent adversely, I suggest that as soon as you have determined that the project you are working on may lead to a patentable invention, and before there is any public disclosure of the invention outside the realm of the inventors or the company for whom you may be working, consideration be given to patenting of your invention, and that you gain information from a patent professional as to what disclosure of the invention can or cannot be made, and how confidential disclosures can be made that will not affect patent rights. This will avoid the issues adverse to patentability from arising in the first place, and eliminate doubt as to the validity of your patent.

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