Tuesday, June 29, 2010

Bilski (part 2) - Machine or transformation test is an important and useful clue

Yesterday, the Supreme Court issued its long-awaited decision in Bilski v. Kappos. I briefly posted on this yesterday here. The Court rejected the Federal Circuit's Machine or Transformation test as the sole mechanism for determining whether a process is patent-eligible:
This Court’s precedents establish that the machine-or-transformation test is a useful and important clue, aninvestigative tool, for determining whether some claimed inventions are processes under §101. The machine-or-transformation test is not the sole test for decidingwhether an invention is a patent-eligible “process.”
So what does that mean, and how did we get here? Keep reading.

Bilski's invention

Bernard Bilski and Rand Warsaw invented an "Energy Risk Management Method." This was a method to hedge against the risk of price changes in buying and selling commodities in the energy market. Claim 1 included the following steps:
(a) initiating a series of transactions between said commodity provider and consumers of said commoditywherein said consumers purchase said commodity at afixed rate based upon historical averages, said fixedrate corresponding to a risk position of said consumers;
(b) identifying market participants for said com-modity having a counter-risk position to said consumers; and
(c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market par-ticipant transactions balances the risk position of said series of consumer transactions.
This patent application sought to protect a method of doing business. The Patent Office rejected it, saying it was not a patent-eligible invention.

Patent-eligibility vs. Patentability

There are 2 main questions to ask when considering a patent on an invention: (1) is the type of invention eligible for patent protection; and (2) is the invention an invention at all? This second part, whether or not the invention is an invention at all, addresses whether the invention is new, useful and non-obvious. If someone else invented what you've claimed to invent, well then you haven't invented something that's new, useful or nonobvious. But before you get to that question, we must address the first consideration -- is the invention the type of thing that deserves patent protection.

Patent-eligiblity -What is patentable subject matter?

The U.S. statute that defines patent-eligible subject matter states:
Whoever invents or discovers any new and useful process, machine, manufacture, or composition ofmatter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.
Thus, there are 4 patent-eligible inventions: processes, machines, manufacturers, and compositions of matter.

Over the years, the Supreme Court has carved out three specific exceptions to this patent-eligibility requirement. Laws of nature, abstract ideas, and physical phenomenon are not eligible for patent protection. Galileo could not patent gravity. Pythagoras could not patent his theoreom. Nobody gets to own the Northern Lights. But everything else under the sun made by man? Well, that's a different beast.

Machine or Transformation Test

The Federal Circuit had used a test for deciding whether or not a particular process was patent-eligibilty. The test analyzed whether the claimed process (1) was tied to a particular machine or apparatus, or (2) transformed a particular article into a different state or thing. This so-called machine-or-transformation test was the basis for rejecting Bilski's claimed invention, and was considered the "sole test" for determining patent-eligibilty for a process.

As you can see above, the Supreme Court rejected this approach, holding that the machine-or-transformation test is a useful tool for considering patent-eligibity, but it is not the sole test. This was a statutory construction case. The patent laws say they protect processes, and they even define what a process is. Congress did not put the machine-or-transformation test into the statute, and so that test can not be the only test for determining patent-eligibility.

Software inventions, business methods, diagnostic medicine techniques, ...

This case drew attention from innovators on all sides of the spectrum. Many argued that all business method patents are bad and we shouldn't have any of them. Others argued that software patents are also bad because they're simply business method patents and we shouldn't have them. The medical diagnostic community was also concerned as their methods of diagnosing could also fall into a business method analysis resulting in a loss of patent rights.

The Supreme Court addressed these concerns essentially head on, and explained that it wasn't drawing any bright-rules excluding anything from patent protection that Congress didn't put into the patent laws. The Court explained that the machine-or-transformation test was probably excellent for the Industrial Age, but the Information Age presents new types of inventions worthy of our patent laws:
The machine-or-transformation test may well provide a sufficient basis for evaluating processes similar to those inthe Industrial Age—for example, inventions grounded in aphysical or other tangible form. But there are reasons to doubt whether the test should be the sole criterion for determining the patentability of inventions in the Information Age.
But we should not forget what Thomas Jefferson felt at the beginning -- "ingenuity should receive a liberal encouragement." New technologies call for new tests. The Court did not hold that any of the above technologies are or are not patent-eligible. Of course, that's too broad a statement or question. The Court left that issue to another day:
This Age puts the possibility of innovation in the hands of more people and raisesnew difficulties for the patent law. With ever more people trying to innovate and thus seeking patent protections fortheir inventions, the patent law faces a great challenge instriking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of generalprinciples. Nothing in this opinion should be read to takea position on where that balance ought to be struck.
Bilski still loses

After explaining that machine-or-transformation is not the only test, the Court affirmed the rejections of Bilski's patent application because it was an attempt to claim an abstract idea. As discussed above, abstract ideas are not patent eligible, and thus no patent for Bilski.

The Concurring Opinions

Each Justice agreed with the result of the decision -- Bilski was not entitled to a patent on his method of hedging risk. Justice Scalia did not join with the Court's discussion of software and diagnostic patent-eligibility or the discussion relating to the Industrial Age vs. Information Age. Two other Justices authored opinions concurring in the result.

Justice Stevens, joined by Justices Ginsburg, Breyer and Sotomayor

This opinion advocates restoring patent law to its historical and constitutional moorings and excluding business methods from patent protection. Justice Stevens attacks the Court's opinion ("The opinion is less than pellucid in more than one respect, and, if misunderstood, could result in confusion or upset settled areas of the law."), and at times calls it absurd.

Under the Court's view, processes (like any other invention) must satisfy the two questions I discuss above: (1) is the process eligible for patent protection; and (2) is the process an invention (i.e. is it new, useful and nonobvious). Justice Stevens believes this approach renders the patent-eligibility question "comical."
A process for training a dog, a series of dance steps, a method of shooting a basketball, maybe even words, stories, or songs if framed as the steps of typing letters or uttering sounds—all would be patent-eligible. I am confident that the term “process” in §101 isnot nearly so capacious.
Justice Stevens does go on to note (in a footnote) that the patentability questions (is the method of walking a dog new, useful, and nonobvious) would still preclude these "comical" ideas from patent protection. He does not explain, however, why letting the patentability question protect against these "absurd" inventions is not sufficient.

Justice Stevens then traces our patent laws back to the English patent practice prior to our nation's founding. He tries to explain that business methods were never part of the picture, even though he does identify at least one "business method" patent issued in 1778 on a "Plan for assurances on lives of persons from 10 to 80 years of Age." Justice Stevens writes this off as little more than the whim or error of a single patent clerk.

So, we were one vote away from adding business methods as a fourth judicial exception to patent-eligibility.

Justice Breyer, joined by Justice Scalia

"I agree with Justice Stevens that a 'general method of engaging in business transactions' is not a patentable 'process' within the meaning of 35 U.S.C. §101." By joining this opinion, has Justice Scalia cast the 5th vote and excepted business methods from patent protection? I don't know the answer to that, and I trust we'll see plenty of litigation directed to that point.

Justice Breyer's opinion is that the Court has not changed anything, and the machine-or-transformation test was never the "sole" test used.
In sum, it is my view that, in reemphasizing that the“machine-or-transformation” test is not necessarily the sole test of patentability, the Court intends neither to de-emphasize the test’s usefulness nor to suggest that many patentable processes lie beyond its reach.

Monday, June 28, 2010


The Supreme Court released its much anticipated Bilski decision today. I am still digesting the 71 pages (which includes the main opinion authored by Justice Kennedy, as well Justice Stevens' opinion (joined by Justices Ginsburg, Breyer and Sotomayor) concurring in the judgment, and Justice Breyer's opinion (joined in part by Justice Scalia) concurring in the judgment).

In the interim, my colleague Michael J. Colitz, III, provides the following analysis:

The Supreme Court affirmed the Federal Circuit's rejection of the Bilski claims but not on the basis of the Machine or Transformation Test. The Court noted that the Machine or Transformation Test is not an exclusive test for determining patent eligible subject matter under 35 U.S.C. 101. The Court likewise rejected any categorical rule against business method patents. This apparently breaths new life into the State Street Bank decision. The Court ultimately determined that the Bilski claims represented an improper attempt to claim an abstract idea, which is unpatentable under the existing precedents of Benson, Flook and Diehr.

It kind of reminds me of the KSR decision. The Federal Circuit likes to apply the Patent Act via simple tests (i.e. Machine or Transformation; Teaching Suggestion or Motivation). The Supreme Court seems to be saying that while tests can be helpful they cannot be relied upon as an exclusive means of applying a statute.

Sunday, June 27, 2010

I hope I'm never in a situation where I need to use this invention

Anticipate This!™ has an excellent and entertaining string of posts on interesting patents called "They Invented What." The "Fresh Air Breathing Device and Method" (U.S. Patent 4,320,756)sounds harmless enough. As you can see from the picture, it is a method of breathing fresh air out of your toilet to avoid breathing toxic fumes while trapped in a bathroom. The idea seems good -- while you wait for the firepeople to rescue you, you don't suffocate or inhale toxic smoke. But still, I hope to never have to breathe out of the toilet.

Wednesday, June 23, 2010

Content owners must police their intellectual property -- not service providers. Youtube/Google wins summary judgment against Viacom

After Google bought Youtube for $1.65 billion, Viacom announced that it was suing Youtube for copyright infringement, seeking more than $1 billion in damages. Specifically, Viacom was unhappy that a tremendous amount of its content was appearing on Youtube without Viacom's permission. Enter the DMCA -- the Digital Millenium Copyright Act. Enacted in 1998, the DMCA protects service providers from liability for copyright infringement if they meet certain criteria. The service provider must not:
  • have actual knowledge of infringing activity, or must not be aware of facts from which infringing activity is apparent
  • upon obtaining such knowledge, act expeditiously to remove the infringing activity
A service provider must also designate an agent to receive notices of infringing activity from content owners.

Youtube/Google had designated an agent. When Viacom sent a list of 100,000s of pieces of infringing content, Youtube took those videos down within 24 hours. Viacom sought to impose liability because Youtube makes a lot of money off of videos, and it knows that some of them must be infringing. Youtube's response was that it doesn't know which ones are infringing, and looking through all of its videos to figure that out is the obligation of the rights holder -- not the service provider. Youtube further explained that its users upload 24 full hours of new video content. Every minute. Yes, every minute.

The parties asked the Court to resolve the issue on summary judgment. The Court framed the primary issue as follows:
Thus, the critical question is whether the statutory phrases "actual knowledge that the material or an activity using the material on the system or network is infringing," and "facts or circumstances from which the infringing activity is apparent"... mean a general awareness that there are infringements (here, claimed to be widespread and common), or rather mean actual or constructive knowledge of specific and identifiable infringements of individual items.
After extensively analyzing the legislative history of the DMCA, the Court agreed with Google, and held that the content-owner is the one with the obligation of enforcing its rights. Thus, the burden of identifying infringing content and informing the service provider of such content is the content owner's burden -- a service provider isn't obligated to police everyone else's content.

Viacom also argued that Youtube didn't properly comply with the DMCA in that one notification provision of the DMCA allows content owners to identify a "representative list" of infringing content, which the service provider should then take to remove all content which infringes the same work. The law states:
Identification of the copyrighted work claimed to have been infringed, or, if multiple copyrighted works at a single online site are covered by a single notification, a representative list of such works at that site.
The Court rejected this argument, noting that it was at conflict with the rest of the DMCA's emphasis on allowing the service provider to avoid the task of searching for infringing content. From what I understand, Viacom intends to appeal, and I imagine they will delve into this issue deeper.

Google describes its win at its official blog. Read the decision below.

Tuesday, June 22, 2010

Unicorn meat - the other white meat?

On April 1, Geeknet announced a new product. Canned Unicorn Meat. According to the site, unicorn meat tastes like rotisserie chicken, but with a hint of marshmallow sweetness. Sounds delicious. Geeknet included the following text in trying to promote this delectable product

Pâté is passé. Unicorn - the new white meat.

Excellent source of sparkles!

Unicorns, as we all know, frolic all over the world, pooping rainbows and marshmallows wherever they go. What you don't know is that when unicorns reach the end of their lifespan, they are drawn to County Meath, Ireland. The Sisters at Radiant Farms have dedicated their lives to nursing these elegant creatures through their final days. Taking a cue from the Kobe beef industry, they massage each unicorn's coat with Guinness daily and fatten them on a diet comprised entirely of candy corn.

About a month later, the National Pork Board send Geeknet a cease-and-desist letter:
We are writing to you in connection with your activities at the website www.thinkgeek.com, wherein you have been marketing a product called "Radiant Farms Canned Unicorn Meat" using the slogan "Unicorn - the new white meat."
NPB said this ran afoul of its "The Other White Meat" line of marks. (It's not clear if they claimed a likelihood of confusion, dilution, or some other theory).

As you likely know, trademarks are associated with certain goods and services. NPB identified 3 U.S. trademarks (at least on the only page of the cease-and-desist letter I've seen) with the following goods and services:

"Cookbooks, brochures about pork, pens, pencils, crayons, bumperstickers, and stickers"
"Shirts, t-shirts, sweatshirts, aprons, jackets, and hats"
"Providing an internet web site featuring food preparation/cooking information regarding pork and accompanying recipes"

"Promoting the interests of the members of the pork industry"
"Providing an internet web site featuring information about cooking and accompanying recipes"
"Association services namely, promoting the interests of members of the pork industry"

In response to the letter, Geeknet has apologized
"It was never our intention to cause a national crisis and misguide American citizens regarding the differences between the pig and the unicorn," said Scott Kauffman, President and CEO of Geeknet. "In fact, ThinkGeek's canned unicorn meat is sparkly, a bit red, and not approved by any government entity."
Geeknet describes the incident fully here. NPR discussed it this morning as well. As you might image, lots of others are writing about this too. Enjoy.

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Monday, June 21, 2010

The long arm of the law. Specifically, website postings and Florida's long arm statute.

Tabatha Marshall, who lives in Washington, posted comments on her website where she accused Internet Solutions Corporation of criminal activity. ISC, whose principal place of business is in Florida, sued her for defamation in federal court here in Florida. Marc Randazza (the editor of Legal Satyricon) represented Marshall. His blog described the background of the case briefly here.
The Middle District of Florida dismissed the case for lack of personal jurisdiction over Marshall. Internet Solutions appealed to the Eleventh Circuit. The Eleventh Circuit then a certified the question to the Florida Supreme Court on whether Marshall’s alleged activities were within the scope of Florida’s long-arm statute.
The Florida Supreme Court phrased the certified question as:
The Florida Supreme Court answered -- yes.
We answer the rephrased certified question in the affirmative. We conclude that posting defamatory material on a website alone does not constitute the commission of a tortious act within Florida for purposes of section 48.193(1)(b), Florida Statutes. Rather, the material posted on the website about a Florida resident must not only be accessible in Florida, but also be accessed in Florida in order to constitute the commission of the tortious act of defamation within Florida under section 48.193(1)(b).
(emphasis in original). So, a defendant is subject to personal jurisdiction in Florida if she: (1) posts something on a webpage; (2) the webpage is accessible in Florida; and (3) someone also access it in Florida. But if nobody accesses it here (even if it's accessible), she's not subject to personal jurisdiction?

My colleague Jeffrey Kuntz has additional information here.

Monday, June 14, 2010

Want to file your own trademark registration? The USPTO walks you through it.

Click here for an interesting intro video from the Patent and Trademark Office offering tips and guidance for first time trademark application filers. Enjoy.

Thursday, June 10, 2010

Will this curtail the infestation of dandelions? Federal Circuit decides the Solo cup false marking appeal

As I discussed earlier, a cottage industry has developed in the patent community of plaintiffs asserting, on behalf of the Government, false marking claims against defendants who are marking their products with expired patents. One of the key cases to kick this frenzy off was a patent lawyer's attempt to recover damages from Solo Cup for distributing cups that were marked with expired patents. I briefly discussed this matter here and here.

To recap, Solo Cup was sued for falsely marking billions (yes, billions) of cups with expired patent numbers. The penalty for falsely marking an item as patented is $500/item. (As I discussed in a prior post on the Forest Group v. Bon Tool decision, the Federal Circuit recently explained that the damage award was per falsely marked article -- not just for each act of falsely marking). Half of the damage award goes to the government, the other half goes to the plaintiff. You can see why plaintiffs would be willing (encouraged) to bring these cases.

Returning to Solo's exposure, it had sold billions of cups marked with expired patent numbers. As you can imagine, this is a pretty steep penalty to be facing. Today, the Federal Circuit affirmed the grant of summary judgment in favor of Solo Cup and even quantified its exposure:
...such an award to the United States [which would be half of the entire damage award] of approximately $5.4 trillion, would be sufficient to pay back 42% of the country's total national debt.
There are some notable points in the decision. I don't think the decision will entirely curtail the infestation of dandelions that has become false marking cases (at least in 1 Judge's opinion).

Unpatented article

To be on the hook for false marking, the article must be an "unpatented article." Solo argued that products which were previously covered by patents, which have since expired, are not "unpatented articles" because, at one point in time, they were actually patented articles. The Court disagreed.
...an article covered by a now-expired patent is 'unpatented.' As the district court pointed out, '[a]n article that was once protected by a now-expired patent is no different [from] an article that has never received protection from a patent. Both are in the public domain.
The Court further agreed with the plaintiff that it was too much to impose upon the public "the cost of determining whether the involved patents are valid and enforceable."

For the Purpose of Deceiving the Public

This is the substantive issue in many false marking cases. Did the defendant falsely mark the article as patented for the purpose of deceiving the public? That question is what the false marking statute is there to prevent. The plaintiff's evidence of this intent to deceive was that Solo cup knew its patents were expired, and it still marked them anyway. Solo, on the other hand, had asked its patent lawyers whether it needed to remove the markings to avoid liability under the statute. Here's what he said:
When a patent expires you don't have to take the old number off. However, I'm going to do a little research to see if the situation is different when adding an already expired number to a product. My gut fee[ing] is that as long as the patent claims would have covered the product, there isn't a problem.
He later added
The false marking of a product with a patent number does create liability for the offender. However, it appears liability hinges on the 'intent to deceive the public.' Best case scenario is to remove the number, if possible. If not, it is important that Solo not further any unintentional falsity in product literature or the like. If you want to discuss, please give me a call.
The patent lawyers later advised Solo to add the following language: "This product may be covered by one or more U.S. or foreign pending or issued patents. For details, contact www.solocup.com."

So, did Solo "intend to deceive?" No.

When you put an expired patent number on an article, the law creates a rebuttable presumption that you did this with an intent to deceive. But again, the presumption is rebuttable, which means the defendant has to prove that it did not intend to deceive. The Court explained succinctly
Thus, mere knowledge that a marking is false is insufficient to prove intent if Solo can prove that it did not consciously desire the result that the public be deceived.
And Solo's burden of proof is a preponderance of evidence -- not the more challenging clear and convincing standard. The Court then explained that the presumption that a party intended to deceive with a falsely marked article is even weaker when that article was previously protected by the patent number at issue.

Solo offered the Court 2 main reasons for keeping the expired marking on its cups: (1) specific advice of its counsel; and (2) its true intent to reduce costs and business disruption by replacing and retooling the cup molds.
Such evidence rebuts the presumption of deceptive purpose, as Solo's actions indicate its good faith. Solo did not state on its packaging that any product was definitely covered by a patent, and it provided the consumer with an easy way to verify whether a specific product was covered; the consumer could 'contact www.solocup.com' for details.
Time will tell if this stems the flow of false marking cases for companies marking their products with expired patent numbers. I doubt it will, as the burden remains on the defendants to prove that they didn't intend to deceive.

Wednesday, June 9, 2010

Stephen Colbert explains US patent priority

Outside the U.S., whoever first applies for a patent will be entitled to a patent on the respective invention (assuming the invention is patentable). Here, we have a different system. The first person to invent the innovation is entitled to the patent protecting it. Steven Colbert was kind enough to explain that to his audience here. Enjoy.

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Monday, June 7, 2010

Don't nod when you can wink

What does that expression have to do with intellectual property? Well, Amazon's Jeff Bezos has invented a method of interacting with a graphical user interface by figuring out how the user's facial features change (smile, nod, etc.) and reacting to that. He filed this patent application in December, 2008, and it published last month (patent applications generally publish 18 months after they've been filed). The application, titled "Movement Recognition as Input Mechanism" has the following steps in its first method claim:
  1. obtain a first image of a facial feature
  2. obtain a second image of the same facial feature
  3. analyze the two images to see how the facial feature has changed
  4. alter information on the graphical user interface based, at least in part, on the facial feature
There are some other limitations in the applied-for claim (notably, the computer must be a portable computing device and the graphical user interface doesn't display a representation of either or both of the 2 images of the facial feature). There are also claims directed to a method of typing by essentially displaying a bunch of letters/digits on the screen and detecting a change in orientation of the screen (i.e. the user is tilting the device) to figure out which letters the user wants to enter.

So, no more 1-click -- going forward we'll look at the product we want to buy, smile at it, and 2 days later it'll show up at our front door. Cool stuff.

You can read the application either at the Patent Office or FreePatentsOnline or just skim through the pictures below.

Wednesday, June 2, 2010

Whatcha gonna do, Brother?

Local celebrity Hulk Hogan (a.k.a. Terry Bollea) is suing cereal giant Post over its Cocoa Smashdown commercial (below). The St. Pete Times reported it here. Legal Satyricon has it here. The Hulkster asserts that Post misappropriated Hulk's likeness, violated his of his right of publicity, and falsely suggest Hulk has endorsed Post's cereal. Specifically, Hulk argues that
a larger, muscular wrestler with long blond hair and blond Fu Manchu mustache named Hulk Boulder is likely to cause confusion ... as to the affiliation, connection, or association with Plaintiff Terry Bollea, or as to the origin, sponsorhip, or approval of Defendant Post Foods' goods, services or commercial activities by Plaintiff Terry Bollea.
Hulk does explain that early in his career he performed under the name Terry "The Hulk" Boulder. What do you think?