Intellectual Property Directions

With last week’s announcement of the CAFC’s decision in in re Belski you might asked an Emily Litella question, “Who is Ray Bilski and why is the court deciding what’s in him?”. Emily, upon learning that it’s a court case “in re” Bilski would have said “Never mind”, but for us it’s worth thinking about.

Bilski was at the wrong place at the wrong time with the wrong “invention”. On April 10, 1997 (yes, 11.5 years ago) Bernard Bilski and Rand Warsaw filed a patent application for method of hedging risk in commodities trading - that is, a business method. Claim 1 read:

 A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:

(a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;

(b) identifying market participants for said commodity 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 participant transactions balances the risk position of said series of consumer transactions

The PTO rejected this application as not being directed to patentable subject matter.  The CAFC concurred with this decision. So, after previously opening the door to a flood of business method patents with the so called State Street decision, the CAFC has tried to jam the door at least partially closed.

I’ve never been a fan of “methods” claims in general and of business methods claims in particular. Bilski, it seems, is the poster child for everything wrong with these patent applications.

First, the very basis of the US patent system is the Constitutional phrase: “Congress shall have power … to promote the progress of science and useful arts…” Frankly, I doubt the founders would consider hedging risk in commodity trading part of science and the useful arts.

Second, the patent law drafted on the basis of this power lists the patentable invention subject matter to be a ”useful process, machine, manufacture, or composition of matter.” Now I may be old fashioned, but I think a patentable process has to be more than just an activity that can be described by a series of steps; everything we do can be broken down into a series of steps - A method of blogging comprising the steps of a) logging on to a blog site, b) placing fingers on a computer keyboard, c) initiating a series of keystrokes wherein the keystrokes form known words, wherein further the words are sequenced and punctuated in accordance to the know rules of a pre-selected language. You get the idea!

So what is the test of process patentability? According to the Bilski decision, there is a two-part “machine-or-transformation test” for eligibility of process claims. First, eligibility may be demonstrated if a claim “is tied to a particular machine or apparatus.” Second, and alternatively, eligibility may be shown if a claim “transforms a particular article into a different state or thing.” Also note that the “tie” to a machine or apparatus must be a meaningful limitation in the claim.

I would have preferred to see methods of performing business/financial operations per se be declared unpatentable as not being part of science or the “useful arts”, as was urged by some.

The bottom line for most of my clients is “very little impact”, since I focus on hardware/device IP, but if you are in the financial or software industries, a consultation with your IP attorney may be in order.

Inventors (abetted by their patent attorneys) always seem to want to get a broader patent than their invention deserves. Some inventors think they can achieve this goal by throwing extra words into their patents and hoping those extra words will solidify their infringement suits under the doctrine of equivalents. The DOE has its place, but if you spend time grasping at these last straws you may end up dropping your whole bundle.

I was recently reviewing a patent to see what it probably covered (you never know what a patent really covers until you’re in court and hear the claim construction). The claims were relatively straight forward; the invention was a widget connected to a framish and whosit. The specification, however, was filled with throw-away comments like: “Other designs are possible.” ”Other dimensions can also be used.” “Still other methods may be used to provide….” “Still other configurations are possible.”

Even worse, there are statements that say, in effect, the invention may comprise different components and any of the components “can be excluded” or replaced by some other, un-named component. None of these alternatives, all of which might very well affect function, are described in any specificity, nor are they enabled or claimed.

It appears that the inventor is hoping that his otherwise narrow claims will be magically broadened by mentioning that all these alternatives are conceptually possible to implement. However, he may have just put himself between a rock and hard place. Judges are not likely to be swayed by these throw-away comments when doing claim construction, so where is the extra protection going to come from; the only extra protection will come from a continuation.

But if the inventor really believes these alternatives fall under the doctrine of equivalents as being insubstantially different from his claimed invention, then he can’t use a continuation to claim these as unique inventions; if he believes them to be substantial, then he has most likely lost the right to a patent on them under the rule of thumb that described but unclaimed matter is dedicated to the public.

Admittedly, he could claim that the alternatives are substantially different but that they were not adequately disclosed in the specification to support a claim. He could, under that view, have filed a continuation-in-part in which he added the written description and enabled these alternatives… but I’d bet his prior throw-away comments would be the basis of an obviousness objection from today’s patent examiners.

When it comes to all the possible alternatives to your invention, I suggest foregoing the slim, slim advantage you might get under the DOE by including a mere mention of alternatives for the stronger stronger advantage of getting a second patent under the CIP process.

Conventional wisdom dictates “Make your claims as broad as possible” but some inventors and their attorneys seem to forget that, broad or narrow, the claims have to define the invention you have, not the invention you wish you had. In a recent case, Liebel-Flarsheim Company overplayed their hand by filing (and getting) overly broad claims, made a losing bet by suing Medrad for infringing, and capped it all off by doubling down with an appeal in which their patent was ruled infringed but invalid.

Liebel’s invention was a fluid injector with a pressure jacket to contain the high pressures involved. At some point in the prosecution of their patent application someone got the bright idea that they could get broader protection by leaving out some of the limitations in their claims (a truth); they removed all references in the claims to the pressure jacket. The patent examiner allowed the claims.

The patent examiner did them no favor. When Liebel sued Medrad, they first lost the claims construction battle (the judge decided that the claims required the pressure jacket) but then won the appeals battle (the CAFC said NO pressure jacket was required). Based on the new claims construction, the district court concluded that Liebel’s patent was infringed (by the jacketless Medrad device) but that the claims were invalid because Liebel had failed to comply with the written description and enablement requirements!

This conclusion was to be expected - Liebel had never successfully made a jacketless system; their engineers testified that the use of a jacket was not a mere design option and that one of skill in the art would not know how to make a jacketless system; the specification described jacketless systems as “impractical“; the inventors had tried unsuccessfully to produce a jacketless system and that it was “too risky” to pursue further.

Yet, in spite of this understanding of the limits of the invention, in spite of having filed all claims with the limitation of a pressure jacket, Liebel and its patent attorney decided to delete these limitations from the claims and get a patent on the invention they wish they had invented.

Although I put most of the blame on Liebel’s patent attorneys, I also blame the patent examiner for allowing claims for which there was little or no support in the specification - no matter how loudly the patent attorneys cried.

Remember, to paraphrase Don Rumsfeld, you have to go to the patent office with the invention you have, not the invention you want.

If you are like me and maybe 28, 999,999 other US sports fans, you probably were watching the men’s marathon the other night from Beijing. Through the miracle of HDTV you could see the look of exhaustion on the faces of all but the very top finishers. Like most of the runners, patents get exhausted too.

Just as a runner’s legs get exhausted when their owner tries to push them too far, so too a patent is exhausted when the owner tries to claim rights beyond the first sale of the patented invention. In a June 2008 decision, the Supreme Court extended this concept even further, explicitly extending it to methods claims as well as apparatus claims.

The basic concept of patent exhaustion is straight forward; if you, the patent owner, authorize the sale of a product incorporating your patented invention, you no longer have control of the further use or sale of that product. While there are complicating details, the logic of the doctrine is clear; once you’ve gain the benefit of your patent “monopoly” by selling the patented product you’re not allowed to double-dip by, for example, collecting another royalty when your customer resells your product as part of his product.

The particular case involved LG Electronics patents that had been licensed to Intel, who in turn made chipsets that were sold to Quanta Computer. LG had stipulated in its license to Intel that the chipsets were NOT to be combined with non-Intel parts and required Intel to inform chipset buyers of that requirement, which they did. However, LG did not require Intel to explicitly license each purchase with that restriction.

When Quanta combined the Intel chipsets with non-Intel parts, LG sued Quanta. The case progressed through both district court and the CAFC, ending up in the Supreme Court. That Court decided that, by virtue of its license to Intel, LG had authorized the sale of the chipsets to Quanta and that the principle of patent exhaustion applied to both the apparatus and the methods claims in LG’s patents. That the lower courts had felt the principle did NOT apply to the methods claims is hard to understand; however, the Supreme Court has now said explicitly that it does apply.

So if your goal is to have your patent go the extra mile for you, you will have to write explicit licenses to cover your expectations covering the secondary sales and uses of your patent, both apparatus claims and method claims.