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Alice in Patentland II – Can a Look Across the Pond Help?

May 20th, 2013

by Orlando Lopez

On May 10, 2013, the Federal Circuit (CAFC) issued their en-banc opinion(s) on CLS Bank Int’l v. Alice Corp. Alice, an Australian corporation, had appealed the decision of the District Court invalidating the claims for not being directed to statutory (patentable) subject matter. The claims at issue relate to conducting financial transactions using a third party supervisory institutions to settle obligations, in order to reduce the risk. A divided court upheld the decision of the District Court.

The en-banc opinion does not provide a precedent that can guide us as how to determine whether a claim including an abstract idea recites statutory subject (or how to determine what qualifies as an “abstract idea”- I guess we will know one when we see one). Although I do not embrace the “technical effect” approach of the EPO and “invention concept” is as nebulous as “technical effect,” a look at the EPO Boards of Appeal decisions could have been useful.

In decision T258/97 (citing T 27/97), the Boards of Appeal stated that the abstract concept could be included in the lack of obviousness consideration only if a contribution to a solution of a problem was linked to the abstract concept. Assessment of lack of obviousness has to be based on the other elements of the claim if a contribution by the abstract concept to a solution of the problem could not be established.

Once the method claims aredeemed not to be patentable subject matter, the system claims can be attacked by obviousness (35U.S.C. §103). In the Alice patents, the system claims have usual components – storage units, communications units – and a processor configured to perform the method. If the method is not available for the §103 analysis, anyone skilled in the art (or not so skilled) could assemble the system from known parts. That renders the system obvious and non-patentable. The above approach avoids having to extend the patentable subject matter (35 USC §101) analysis to systems and articles of manufacture, which are statutory subject matter.

Maybe a look at the EPO approach could have been useful.

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How Sequestration Will Affect the SBIR/STTR Programs

March 4th, 2013

by Orlando Lopez

One topic of interest and importance to most entrepreneurs is funding, and one popular form of funding is through SBIRs (the Small Business Innovation Research Programs). My colleague Jesse Erlich focuses much of his practice on assisting clients with SBIR and STTR programs, as well as the intellectual property issues associated with SBIRs and STTRs and other government funding. This week he has provided some information on how he anticipates the sequestration will affect these programs.

– Orlando

The below information is a summary of a more detailed analysis presented by Rick Shindell in his recent newsletter, “SBIR Insider.” This and back issues of the “SBIR Insider” are available here.

“Just the threat of sequestration has already had a negative impact on some SBIR awards, and that is likely to worsen unless congress and the administration “acts” on how the $85 billion in across the board budget cuts are to be handled for the remainder of FY-13… The smart money is now saying that sequester will be here for a while, perhaps through May or longer. Most may not see much happen until April. However, many experts agree that the $85 billion in cuts for FY-13 will stay, but there is hope that something will be done to allow a more targeted approach to the cuts rather than the broad based across the board meat cleaver approach the sequestration calls for… To our SBIR community, the net effect of these threats have resulted in many new SBIR awards being slowed down or halted. We hear reports from SBIR selectees that agencies want to fund their proposals but are unable to due to lack and/or uncertainty of funds… Don’t blame the agency SBIR program managers because it is not their fault. Orders come down from “on high” i.e. agency comptrollers, who offer the spending guidance within their agency.

In light of the sequester (as described above) the Small Business Technology Council (SBTC) is concerned that small business programs such as SBIR may be disproportionately targeted for cuts. Small business programs are often lower on agencies’ lists of priorities than they should be, and in fact many of their members have already reported that awards and contracts have slowed down or even stopped. Some firms have even been given stop-work orders on contracts they already have in anticipation of budget cuts. In response to these concerns, the SBTC has drafted a letter to the President and Congress urging them to take steps to ensure that small businesses are not disproportionately and unfairly targeted by the upcoming cuts. SBTC is asking every technology-oriented small business to read this letter, and if you agree with it, add your company’s signature.”

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Some Old Cases We Should Revisit: Weber, Haas, Harnisch and Restrictions

February 1st, 2013

by Orlando Lopez

Typically at the beginning of a new year we go out with the old and in with the new. But, at the beginning of this year, I am taking a look at some old cases that we should revisit. The cases, decided by the Court of Customs and Patent Appeals (CCPA), the predecessor to the Federal Circuit Court of Appeals, relate to restriction requirements and “Markush claims.”

In the US patent practice, as in most other patent systems, the Examiner can decide that the claims that the applicant presented relate to more than one invention and require the applicant to elect only one group of claims for examination, where the other claims can be presented later in a divisional application. (The Examiner’s action is known as a restriction requirement.) Markush claims are claims written in the alternative, such as a composition comprising B wherein B is selected from B2, B3 and B4.

The name Markush claims comes from the name of the patent applicant who first used the claim and appealed a rejection to the Commissioner. The interest in this old case stems from the fact that restrictions are more common in US practice. They also result in the applicant having to pay double fees or more and extend the patent prosecution. Usually, there is not much that can be done. The argument against a restriction requirement is one that patent attorneys do not win too often. It is possible to petition the Commissioner to review the matter, an action that involves another fee, but decisions on such petitions may take longer than the patent prosecution.

However, there is one set of circumstances where the old cases of In re Weber (“Weber”) and In re Haas (In re Haas was decided the same day as In re Weber and follows Weber) can provide a strong argument. When the Examiner restricts within a claim, such as restricting within a Markush claim (that is, asking the applicant to select for examination one of the alternatives in the Markush claim), the Examiner is going against the applicant’s right given by the statute to claim this invention as he/she sees fit. The Weber court stated that the applicant’s right under 35 USC 112, second paragraph, to claim his/her invention as he/she sees fit overcomes any discretion that the Director may have had to restrict within a claim. Such a statement makes restrictions within a claim invalid. Restrictions within claims can happen in two circumstances, when the Examiner restricts within a Markush claim or when the Examiner restricts a dependent claim from the independent claim. There are some alternatives to arguing in the second circumstance, such as when the independent claim is generic and should be examined together with the dependent claim. But, when the Examiner restricts within a Markush claim, sometimes the only alternative left is to go back and cite Weber.

The one concern here is that patent prosecution should be a negotiation between the applicant and the Examiner; whereas, the above approach is more like a confrontation between the applicant and the Examiner. One possibility is to make the US restriction practice closer to that of the European patent office (EPO), an approach that is also followed by other patent offices. “Unity of Invention,” the EPO and PCT term related to restriction requirements (as in PCT Rule13.1), requires the same or corresponding “special technical feature” in the group of claims. At the EPO, in some cases, a prior art reference is used to show lack of “special technical feature.” In other cases, the fact that the claims are directed to solving different technical problems is used to show lack of special technical feature. Moving the US practice closer to the EPO practice could result in fewer restriction requirements and could allow for amendments to the claims that would resolve the unity of invention question.

If you’re interested in more information, on Tuesday, February 5, the ABA is holding a webinar entitled, “Single Claim Restriction Requirements: The Interplay Between 35 USC § 112 and 35 USC § 121” (This free advertising is included because I am one of the presenters).

In a subsequent post, we will consider In re Harnisch.

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Passing the Baton: The SIPO Takes the Lead Among Patent Offices

December 20th, 2012

by Orlando Lopez

The October 2012 World Intellectual Property Organization (WIPO) report signaled a significant change. The Intellectual Property Office of China (SIPO), for the first time, leads in the number of patent applications. In fact, SIPO became the largest Intellectual Property office in the world, leading in patents, trademarks and designs. It could be argued that the number of applications cited in the patent category included utility models, but the statistic is still noteworthy. Utility models are issued for a shorter period of time and are granted, at most offices, without significant examination. About 60 countries, excluding the U.S., issued utility models in 2011.

Although some may consider this change in the leading IP office in terms of number of applications as a change in the lead in innovation, such a conclusion is not warranted. As I had previously stated, there is not a one-to-one relation between patents and innovation. Rather, as aptly stated by President Lincoln, “… [Patents] add[ed] the fuel of interest to the fire of genius.” Viewed in that light, the growth of patent applications received by SIPO is a strong indication of economic interest and an indicator that China’s 15-year science and technology plan is moving forward. The majority of the patent and utility model applications filed at SIPO are filed by residents of China, which also indicates the move to technology ecommerce.

Before we feel that the sky is falling and the U.S. is declining, we should look at history. It is not the first time that the USPTO is not the patent office with the largest number of applications. In 1968, the Japan Patent Office (JPO) became the patent office with the largest number of applications and retained that stature until 2005, at which point the USPTO went back to the leading position it had held from 1883 to 1967. The access to capital, the lack of stigma due of trying and failing (as most start ups do) and the ability to create new markets (as done recently by Apple, Google and Facebook) still remain advantages of the American environment.

Although the sky is not falling, we should recognize the move in China toward a technology economy and learn how to participate in it.

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