Thursday, May 25, 2017

Like Shark Tank? Wish it had more patents?

I'm a big fan of the show Shark Tank, and am always amazed at how it takes an inherently dry process (investment due diligence) and turns it into entertainment. In this video, I take that entertainment, and graft my own commentary on the patent issues raised by the business being vetted: If you like Shark Tank, but wish it had more patents, this is definitely the video for you!

Monday, January 30, 2017

The effectiveness of incentives in changing patenting behavior

The first article in the BJHS December 2016 special issue (Authority and ownership: the growth and wilting of medicine patenting in Georgian England (hereinafter "Authority and Ownership")) describes a sudden rise and equally precipitous fall in the patenting of medicines in England in the mid eighteenth and early nineteenth centuries. Specifically, it describes how medicine patenting expanded in response to specific economic pressures - the emergence of a truly national market, and the concomitant increase in the importance of a patent as both a means of protection and a tool for legitimization.1. It also describes how legal changes - judicial decisions tightening the disclosure requirements for a medicine patent2 and, more importantly, the introduction of an excise stamp which could perform many of the same roles as a patent but was cheaper and easier to obtain3 - led to a corresponding downfall at the end of the period of study.

Reading through the article, I was struck by the responsiveness of patenting of medicine in Georgian England to the changes in incentives caused by the various legal and economic changes the article discusses. By contrast today, despite recent anti-patent changes such as the institution of post grant review proceedings in the AIA and the tightening of subject matter eligibility standards in Alice and Mayo, the number of patent applications filed per year has held roughly steady through the patent office's 2015 fiscal year.4 One reason for this potential difference in responsiveness? At the end of the period examined in the article, those who might otherwise have gotten a patent had a viable alternative in the form of an excise stamp. By contrast, today the policy changes which could serve to make patenting less attractive have not been accompanied by any alternative form of protection that would be patent holders could avail themselves of. As a result, because inventors today (like in Georgian England) are responsive to economic incentives, I predict that the current anti-patent policies will ultimately prove ineffective at changing behavior unless they are supplemented with some kind of alternative protection which could address the needs which inventors will otherwise look to have satisfied by the patent system (regardless of how hostile it becomes).

1. Authority and Ownership at 553-54

The rise of medicine patenting was secondary to changes in the market for 'patent medicines' and their ownership in teh middle third of the eighteenth century. Helped by advertising in the expanding provincial press and improved communications, true national markets were created for several medicines, and the owners and wholesalers became more expert and specialized in supplying medicines across the country. ... So the participants in the industry had become more commercially aware, and they were probably seeking greater protection for their property. Also, selling medicines across the country needed better publicity and improved branding: both were enhanced by the authority of a royal patent.

2. Authority and Ownership at 555

Lord Mansfield’s judgement in Liardet v. Johnson (1778) determined that the patentee should ensure that the specification was sufficient for a skilled tradesman to make the product without further experimentation after the patent had expired. This seemed to place the patentee under a positive obligation to provide useful information on the composition of the medicine. Once again, the specification was threatening the secrecy of a patented medicine, though several more legal judgments were required before the specification of patents became fully informative. By the end of the eighteenth century, an owner would be more concerned about the risks to the secrecy of his recipe posed by the specification than he would have been thirty years earlier.

3. Authority and Ownership at 556

the major cause of the decline in medical patenting in the late eighteenth century was probably the introduction of the compulsory medicine excise stamp, another official device which could itself provide many of the benefits of the patent, but with much less expense and inconvenience.

4. According to the patenting activities table in the patent office's 2015 performance and accountability report, there was a slight drop off in the number of patent filings from 2014-2015, and that the number of filings had increased in each of the preceding three years.

Thursday, January 26, 2017

A new hope for inventors?

The Federal Circuit's recent opinion in Trading Technologies International, Inc. v. CQG, Inc., could be part of a broader trend signaling a liberalization of subject matter eligibility. As I wrote in an advisory with my colleague Doug Gastright, in that case, the Federal Circuit affirmed the lower court’s decision that the asserted patent claims, which covered a software invention relating to improved graphical user interfaces for electronic stock trading, were patent eligible subject matter. In handing down this opinion, the Federal Circuit designated it as being non-precedential, which is usually done when a decision “does not add significantly to the body of law.” However, notwithstanding the designation of this case as non-precedential, it should still be seen as noteworthy as it indicates that that the Federal Circuit may be coalescing around a relatively inventor-friendly approach to determining subject matter eligibility.

The change in approach which this case represents can be seen by contrasting it with the Federal Circuit’s initial opinions applying the Supreme Court’s decision in Alice v. CLS Bank to software inventions. In those early decisions, the Federal Circuit almost seemed poised to adopt a per-se rule that software-implemented inventions which solved business problems were not patent eligible. However, Trading Technologies not only made clear that there was no such per-se rule, it also demonstrated that an invention which solves a problem specific to a particular computer-enabled business context could be patent eligible even if it didn’t include any further inventive concept to limit the scope of its claims. This result was consistent with, and built on, several recent Federal Circuit cases dealing with software-implemented inventions, including Enfish LLC v. Microsoft Corp., which established that a software invention could be patent eligible even if didn’t include any additional hardware-based inventive concept, and Bascom Global Internet Services, Inc. v. AT&T Mobility LLC, which made clear that an invention which solved a business problem could be patent eligible if it was claimed in a manner which included an additional inventive concept. Accordingly, while non-precedential, the decision in Trading Technologies could be very useful as an inventor-friendly demonstration of how the Federal Circuit’s precedential decisions (e.g., Enfish and Bascom) should be applied.

The advisory I co-authored with Doug Gastright, which includes links to, and supporting citations from, the cases referred to above, is available here.

Tuesday, January 10, 2017

BJHS Special Issue on Patents

The December 2016 issue of the British Journal for the History of Science is a special issue titled Owning Health: Medicine and Anglo-American Patent Cultures, and reading through it has had the odd effect of making me simultaneously more disgusted with, and hopeful for, the U.S. patent system. The disgust is for the law as it is, as taking a historical view brings into sharp relief how inappropriate it is for cases like Association for Molecular Pathology v. Myriad Genetics, Mayo v. Prometheus and Alice v. CLS to graft 19th century anti-patent sentiment onto 21st century research and development. The hope is for the law as it is likely to be, as history also illustrates that the pressures which lead people to seek patent protection are deep-rooted and can ultimately sway even the most vociferous patent critics.

As it happens, I'm a firm believer in the much less quotable corollary to the saying "those who do not learn history are doomed to repeat it" - i.e., "those who do not learn history make the rules, and so we are all doomed to repeat it, but that repetition can be made less onerous by learning history so you have some idea of what comes next." Accordingly, throughout the month I'll be blogging the individual articles from the December 2016 BJHS special issue, I'll be blogging the individual articles from the December 2016 special issue, addressing not only what they say about the past, but also what I think they can tell us about the future.

Wednesday, November 30, 2016

One thing website operators MUST do under new DMCA rule

My colleague Melissa Kern wrote an advisory about the copyright office's final rule regarding designating a DMCA agent. I thought it was important enough to repost (with permission) here.

Beginning December 1, 2016, the Copyright Office is rolling out its new online filing system for designating an agent to receive notices of copyright infringement. Website operators and other online service providers who store user content must submit new designated agent information electronically before the deadline to continue to take advantage of the Digital Millennium Copyright Act’s (DMCA’s) safe harbor from copyright infringement liability.

The new online filing system replaces the interim, paper-based system that had been used since the DMCA was first enacted in 1998. Under the old system, service providers could designate agents by sending in paper forms to the Copyright Office, which the Copyright Office then scanned and publicly posted in its directory of agents. Previous filings made under the old, paper-based system will continue to meet the DMCA’s requirements until they are phased out on December 31, 2017.

In connection with its new online filing system, the Copyright Office has issued its Final Rule relating to designating an agent with the Copyright Office. Highlights are as follows:

  • Beginning December 1, 2016, the Copyright Office will no longer accept paper agent designations. All new filings must be made electronically using the online filing system.
  • All service providers who have previously filed with the U.S. Copyright Office for DMCA safe-harbor protection under the old, paper-based system will have until December 31, 2017 to refile using the online filing system or lose the safe harbor protection. To do this, the service provider, or its designee, must establish an account that will be used to log into the system and register.
  • The DMCA filings will expire every three years, so they will need to be renewed. The Copyright Office’s new system will send out email reminders.
  • Filing fees are significantly lower ($6 per entity). There is no limit to the number of alternative names, URLs, service names, software names, and other commonly used names that can be listed on a service provider’s filing for this fee. All alternative names that the public would be likely to use to search for the service provider’s designated agent must be provided. However, separate legal entities must file separately and are not considered alternative names.
  • The designated agent does not have to be a natural person. Service providers now have the option to designate a specific person (e.g., Jane Doe), specific position or title of an individual (e.g., Copyright Manager), a department within the service provider’s organization or within a third-party entity (e.g., Copyright Compliance Department), or the service provider or third-party entity generally (e.g., ACME Takedown Service).
  • The designated agent’s physical mail address, telephone number and email address must be provided to the Copyright Office, and a designated agent may now provide a post office box to be displayed as its physical address. However, in a nod to technological obsolescence, a fax number is no longer required.

Melissa's original advisory can be found here.

Photo credit from

Thursday, November 17, 2016

One Weird Trick to Beat Alice Rejections (Examiners HATE This)

Alice v. CLS Bank has had a tremendous impact on how the patent office treats applications for business method inventions. Indeed, since the Supreme Court’s decision in Alice, the allowance rate for class 705 (Data Processing: Financial, Business Practice, Management, or Cost/Price Determination) dropped from a pre-Alice high of 31.2% in 2013, to 23.5% in 2014, 9.4% in 2015, and 4.7% in 2016. In a previous article I explained that one way to try and deal with this was to avoid claims which described something which sounded like a business method, even if doing so meant that the claims had to be somewhat vague. However, that may not be possible in all cases, and so the question becomes what to do when you’ve already been pigeonholed as a business method and need to overcome a rejection based on Alice.

The allowance rate statistics for class 705 reflect how difficult it is for a patent applicant to overcome an Alice rejection, but a close reading of the Federal Circuit’s opinion in Enfish, LLC v. Microsoft Corporation suggests a way forward. In that case, the Federal Circuit reversed a determination that a claim was directed to ineligible subject matter because “the district court oversimplified the self-referential component of the claims and downplayed the invention’s benefits.” However, the “self-referential component” wasn’t explicitly recited in the claim in question. Instead, it was incorporated as part of the supporting structure for a “means for configuring” that the claim actually did recite. Given that how a claim’s limitations should be treated when determining what it is “directed to” is often a point of contention when analyzing subject matter eligibility, the fact that means + function limitations are required by statute to be construed as covering the supporting structure described in the specification and its equivalents could provide a useful tool for responding to Alice rejections.

So can using means + function language in this way actually overcome Alice rejections? Yes, but examiners hate it. In one example from my practice, we were able to overcome an Alice rejection using a pre-appeal brief by pointing out that the rejection relied on improperly interpreting a software implemented means + function limitation as simply “a computer configured to perform processes.” Unfortunately, rather than this leading to the application being allowed, the result was that prosecution was re-opened with an 89 page long office action that attacked the means + function language at length for (allegedly) being both indefinite and not properly supported. Ultimately, we were able to overcome those rejections as well, but it required submission of a declaration walking through the corresponding structure in the specification and explaining how it would be understood by one of ordinary skill in the art. I believe the fact that we got the rejections in the first place and had to make such a submission to overcome them reflects a significant level discomfort on the part of the examiner (which I believe is much less the exception than the rule within the PTO) with software implemented means plus function limitations. Nevertheless, despite the fact that it might require dealing with an unfamiliar mode of analysis, if you’re faced with an Alice rejection, means + function language might just be the one weird trick you need to get a patent.

For a version of this post with supporting citations, see here.

Thursday, October 27, 2016

What's happened to software inventions? Five unexpected facts that will change how you see patent eligibility.

The third quarter of 2016 was a busy one for the Federal Circuit when it comes to subject matter eligibility – with Federal Circuit issuing more opinions addressing Alice in 3Q2016 than it had in the preceding three calendar quarters combined. After such a flurry of activity, it seems reasonable to wonder what remains of what we thought we knew about subject matter eligibility, especially since there seems to be some controversy even within the Federal Circuit itself. However, after looking at the cases the Federal Circuit has decided since Alice, I concluded that there are at least five things we now know about subject matter eligibility, starting with…

5. The name of the game is no longer the claim
Judge Giles Rich (about whom more later) famously stated that “the name of the game is the claim.” While the accuracy of that aphorism may have been arguable in the past, it has been effectively abjured in the Federal Circuit’s subject matter eligibility jurisprudence. Regardless of the ultimate conclusion, the Federal Circuit has turned time and again to the remainder of the specification when evaluating eligibility. Of course, that’s not to say that the claims are completely irrelevant to the subject matter eligibility determination. The Federal Circuit still at least ostensibly considers claim language when applying § 101, and their recent decisions have illustrated that…

4. It’s better for a claim to be vague than to describe something that sounds familiar or like a business method
What do you get for describing an invention as one which bases the management of records on rules rather than one which uses rules in patient record management? The answer is ten times more likely to get a patent, since “policy, rule-based management of records, files and documents” is included in class 707 (database and file management or data structures) while “patient record management” is included in class 705 (financial, business practice, management, or cost/price determination), and as of writing, the allowance rates for those classes are, respectively, 42.1% and 4.7%. There’s a similar difference between describing an invention as a way for organizing data, and as a way of organizing a particular type of data that a judge is likely to be familiar with – i.e., pictures. The former type of description is arguably covered by the holding that a model for organizing data in a database isn’t an abstract idea, while the latter type of description would result in an invention being deemed ineligible because organizing a specific type of data which is likely to be familiar to a judge – i.e., pictures – is an abstract idea. This is a big change from the days when vague claims would have hurt the chances for a patent to be upheld or issued, but that’s not the only change that’s stemmed from our current subject matter eligibility jurisprudence because…

3. Subject matter eligibility is exorcising the ghost of Judge Rich
Until the current line of subject matter eligibility cases, the impact of Judge Giles Rich on the patent law was undeniable. He was one of the architects of the 1952 patent act, and authored the decisions which established that patent eligibility hinged on the presence of a “useful, concrete and tangible result” and formally ended the practice of treating business methods as per se unpatentable. However, the current subject matter eligibility cases are directly undoing Judge Rich’s legal changes. This is somewhat ironic, since during the oral arguments for Bilski v. Kappos, Justice Stevens professed to admire Judge Rich, and asked if he had written anything on what methods should be patentable. Nevertheless, current subject matter eligibility jurisprudence rejects Judge Rich’s subject matter eligibility decisions in State Street and Alappat, and the necessity of identifying an “inventive concept” to establish a claim’s eligibility has reintroduced an amorphous “invention” requirement that Judge Rich had specifically criticized and that the 1952 act had sought to eliminate. You might imagine that the courts wouldn’t be undoing the life’s work of a hugely influential and well-respected figure in patent law unless there was a good reason, but you’d be wrong because …

2. There is no reason for what we’re doing
In Alice, the Supreme Court explained that the reason for treating certain subject matter as ineligible is to avoid pre-emption. However, current subject matter eligibility jurisprudence is clearly not limited to only invalidating claims where necessary to avoid preemption. Some opinions have also hinted at policy-based reasons for aggressively policing subject matter eligibility – e.g., that certain classes of patents, like those claiming the use of a computer to perform well-known business methods, don’t protect real innovation and therefore should be eliminated – which may be closer to the truth for why the law has developed as it has. However, other rules – such as the rule that simply performing a known business process in a particular commonplace technical environment is obvious – were already in place before we started focusing on eligibility, and could have been used to eliminate non-innovative patents without having to create an entirely new body subject matter eligibility law. Of course, it’s possible that some opinions’ inclusion of dismissive references to the “draftsman’s art,” or warning against the “in terrorem power of patent trolls” may reflect a distrust of patent attorneys and a desire to protect innovators from the cost and difficulty of dealing with them. However, if we’re trying to do is protect innovators, aggressively policing subject matter eligibility makes no sense because …

1. We’ve been down this road before, and the end result will be to transfer resources to attorneys while making patents more opaque
This isn’t the first time courts have tried to issue new rules to rein in what they see as an out of control patent system. Claim construction is treated as a matter of law because the Federal Circuit saw juries as being unpredictable and wanted to minimize their role in patent cases as a matter of policy. The result was to increase expense to patent litigants by making claim construction into a separate trial within a trial in virtually all cases, and to make patents more difficult/expensive to prepare and interpret by spawning rules such as that saying what the invention is or what features are important could result in narrow protection. Indeed, this isn’t even the first time aggressive policing of subject matter eligibility has been used to try and limit the patenting of software. In the 1960s, the patent office strongly opposed the patenting of software, and issued guidance that computer programming was unpatentable. The result was that the nascent software industry didn’t stop trying to get patents, but instead started describing their patents as being directed to something other than software. Is there any evidence that the current aggressive policing of subject matter eligibility will have similar effects? Well, we already know that, like treating claim construction as a matter of law, it’s generated a new kind of trial within a trial – the subject matter eligibility determination – which patent litigants have to go through and pay their attorneys to handle. We also know that aggressive policing of subject matter eligibility hasn’t stopped the number of patent application filings from increasing year over year for each of the past five years, but that it has resulted in recommendations to omit features – like a high-level summary or a discussion of economic benefits – that could otherwise make patents easier to read and understand. While we can’t be certain that history will repeat itself, if you think that policing subject matter eligibility will necessarily make the patent system easier, cheaper, or more efficient, or even that policing subject matter eligibility makes sense when evaluated on its own terms, may want to consider this history as a reason to change how they think of subject matter eligibility. For a version of this article with supporting citations, see here.