patent eligible subject matter and high tech inventions

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Patent Eligible Subject Matter and High

Tech Inventions

October 19, 2012

Eric Nelson

Tokyo

The recipient may only view this work. No other right or license is granted.

© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 2

Introduction to Patentable Subject Matter

• §101 sets the standard for patentable subject matter

• 35 U.S.C. § 101: “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....”

• Contains an implicit exception: “laws of nature, natural

phenomena, and abstract ideas” are not patentable


§101 Issues for High Tech Inventions

Systems and Methods

Mathematical Algorithms

Abstract Ideas

And not

here?

How do you

know you

are here?

Or here?


Trends in High Tech Cases and §101

Lourie Prost Wallach Linn O’Malley Radar

Bancorp

CLS Bank ?

Ultramercial

Dealertrack

Research Corp.

In re Ferguson

Cybersource

Fort Properties

Bilski ?


Trends in High Tech Cases and §101

Dyk Plager Newman Mayer Schall Moore Bryson

Bancorp

CLS Bank

Ultramercial

Dealertrack ?

Research Corp.

In re Ferguson ?

Cybersource

Fort Properties

Bilski ? ?


§101 – A Closer Look at Recent Cases

• CLS Bank Int’l v. Alice Corp. (Fed. Cir. July 9, 2012)

• Bancorp Servs. L.L.C. v. Sun Life Assurance Co. of

Canada (U.S.) (Fed. Cir. July 26, 2012)


CLS Bank Int’l v. Alice Corp. (Fed. Cir. July 9, 2012)

– System Claims

• A data processing system … comprising:

– a data storage unit having stored therein information about a shadow

credit record and shadow debit record for a party … and

– a computer, coupled to said data storage unit … configured to

• (a) receive a transaction;

• (b) electronically adjust said shadow credit record and/or said

shadow debit record … allowing only those transactions that do

not result in a value of said shadow debit record being less than

a value of said shadow credit record; and

• (c) generate an instruction … at the end of a period of time to

adjust said credit record and/or said debit record in accordance

with the adjustment of said shadow credit record and/or said

shadow debit record.


The Federal Circuit

• The Supreme Court “did not directly address how to determine

whether a claim is drawn to an abstract idea”

– Preemption – the extent to which preemption forecloses

innovation

– Machine and transformation


The Federal Circuit

• “It is fundamentally improper to paraphrase a claim in

overly simplistic generalities in assessing whether the

claim falls under the limited ‘abstract ideas’

exception”

• “Nothing in the Supreme Court’s precedent … allows a

court to go hunting for abstraction by ignoring the

concrete, palpable, tangible, and otherwise not

abstract invention the patentee actually claims”


The Federal Circuit

• Does the computer play a significant part in permitting the

claimed method to be performed?

– “It is difficult to conclude that the computer limitations … do

not play a significant part in the performance of the invention

or that the claims are not limited to a very specific application

of the concept.”

• “The limitations requiring specific ‘shadow’ records leave broad

room for other methods of using intermediaries to help

consummate exchanges … and, thus do not appear to preempt

much in the way of innovation”


The Federal Circuit

• “A claim that is drawn to a specific way of doing

something with a computer is likely to be patent

eligible whereas a claim to nothing more than the idea

of doing that thing on a computer may not”


9. A method for managing a life insurance policy on behalf

of a policy holder, the method comprising the steps of:

generating a life insurance policy including

a stable value protected investment with an initial value

based on a value of underlying securities;

calculating fee units for members of a

management group which manage the life insurance

policy;

. . .

and

one of the steps of:

removing the fee units for members of the

management group which manage the life insurance

policy, and

accumulating fee units on behalf of the

management group.

Bancorp Servs. L.L.C. v. Sun Life Assurance Co. of

Canada (U.S.) (Fed. Cir. July 26, 2012)

OTHER CLAIMS

• Additional Independent claims similar in scope

• Claim 17: steps “performed by a computer”


Federal Circuit – Patent Eligibility

• Court looks to “underlying invention for patent-

eligibility purposes.” CyberSource Corp. v. Retail

Decisions, Inc.

• “Format of the various method, system, and media

claims [does] not change the patent eligibility

analysis under § 101.” CLS Bank Int’l v. Alice Corp.

• “To salvage a patent ineligible process, a computer

must be integral to the claimed invention, facilitating

the process in a way that a person making

calculations or computations could not.” SiRF Tech. v.

ITC.


Federal Circuit – Affirms

• Computers used to merely track, reconcile, and

administer a life insurance policy

– “Performing calculation more efficiently via a

computer does not materially alter the patent

eligibility of the claimed subject matter”

– “Using a computer to accelerate an ineligible

mental process does not make the process patent-

eligible”

• “[W]ithout the computer limitations nothing remains

in the claims but the abstract idea of managing a

stable value protected life insurance policy by

performing calculations and manipulating the

results”


Federal Circuit – Comparisons with CLS Bank

CLS BANK

• District Court ignored “claim limitations in order to abstract a process down to a fundamental truth”

• “[I]t was difficult to conclude that the computer limitations…did not play a significant part in the performance of the invention or that the claims were not limited to a very specific application of the inventive concept”

Bancorp

• District Court “evaluated limitations in the claims as a whole before concluding that they were invalid”

• “[C]omputer limitations do not play a ‘significant part’ in the performance of the claimed invention” AND “claims are not directed to a ‘very specific application’”


Practice Tips for High Tech Prosecution

• A method for identifying buyers of used cars, comprising:

– receiving one or more specifications from a buyer;

– comparing, via an electronic device, the one or more

specifications with a seller’s car inventory;

– identifying cars from the seller’s inventory that meet one or

more specifications from the buyer; and

– informing the seller and buyer of the identified cars.

Satisfies Machine

Prong, but

maybe not

sufficient





– comparing, via an electronic device, the one or more

specifications with a seller’s car inventory;


more specifications from the buyer [by using a particularized

process]; and


Increases the

complexity, but

may still not

sufficient





– converting the one or more specifications into coded

variables;

– comparing, via an electronic device, the coded variables with

a seller’s coded variable car inventory;


more specifications from the buyer [by using a particularized

process]; and


Satisfies the

Transformation

prong


Putting it All Together – Practice Tips for High

Tech Prosecution

• Use specification to focus on how invention improves “technology”

– e.g., uses less processing power, improves result

– but NOT simply performs a method more quickly or more efficiently

• Don’t simply copy/paste method steps into a CRM claim or add a

“component configured to” perform steps in a system claim

• Don’t rely simply on “System” or “CRM” claim style for patent eligibility

• Merely reciting “one or more computers” in the claim is likely

insufficient

– Draft claims so that if you take out the computer, the claim won’t work

• Integrate machine-related elements throughout the claim

• Provide language in the specification identifying a larger concept

of which the claims are a subgroup

• All independent claims should be prepared to withstand scrutiny

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