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Bilski: Effect on software and
     business method applications




                    by, arun k narasani




10 December, 2008                         1
Agenda

    Background
    Bilski Case
    BPAI Decisions
    Summary




10 December, 2008              2
BACKGROUND




10 December, 2008                3
Patent eligible subject matter

    35 USC 101
         Process
         Machine
         Manufacture
         Composition of matter
      or
         Any new and useful improvement



10 December, 2008                          4
Patent eligible subject matter

    Diamond v. Chakrabarty (1980)
         Subject matter is intended to be broad
         Exclusions include laws of nature, natural
          phenomena, abstract ideas
    Diamond v. Diehr (1981)
         Process with steps including use of mathematical
          formula/algorithm
         Mere use of a formula in an otherwise patent
          eligible subject matter does not make it patent
          ineligible
10 December, 2008                                            5
BILSKI Case




10 December, 2008                 6
Case details

    US application 08/833,892: Claim
      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
10 December, 2008                                                                  7
Case details

    Patent originally rejected by Examiner
    BPAI rejects the original objection as
     “erroneous”
         Examiner used “technological arts” test which is
          irrelevant
         Specific apparatus was not required for patent
          eligibility. Ex. Chemical reaction




10 December, 2008                                            8
Case details: considerations

    Validity of a claim “is a matter of both claim
     construction and statutory construction”
    No claim construction dispute




10 December, 2008                                     9
Case details: considerations

    What is patent eligible process?
         Supreme court has held that “process” as used in
          §101 is narrower than its ordinary meaning (See
          Flook)
         Claim is not patent eligible “process” if it claims
          “laws of nature, natural phenomena, [or] abstract
          ideas” (Diamond v. Diehr)
    What is an abstract idea?
    Is applicant claiming a fundamental principle
     (an abstract idea) or a mental process?
10 December, 2008                                               10
Revisiting patent eligible subject
              matter
    Freeman-walter-Abele test
         In re freeman (1978); In re walter (1980); In re
          abele (1982)
         Rejected in In re Alappat (1994)
    Useful-concrete-tangible test
         State Street Bank v. Signature Financial Group
          (1998), "Data Processing System for Hub and
          Spoke Financial Services Configuration"
    Technological arts test

10 December, 2008                                            11
Machine-or-Transformation test

    1. Tied to a particular machine, or
    2. Involves transformation of an article
    Further restrictions:
         Should “not pre-empt all uses of a fundamental
          principle”
         “insignificant extra-solution activity” will not suffice
    Purpose: to preclude processes which pre-empt
     “all uses of a fundamental principle” from being
     patent eligible
10 December, 2008                                                    12
Machine Implementation

    Left ambiguous
         “We leave to future cases the elaboration of the
          precise contours of machine implementation, as
          well as the answers to particular questions, such as
          whether or when recitation of a computer suffices to
          tie a process claim to a particular machine.”




10 December, 2008                                            13
Transformation

    “A claimed process is patent-eligible if it
     transforms an article into a different state or
     thing. This transformation must be central to the
     purpose of the claimed process”
    Articles:
         Do not include: Abstract constructs such as legal
          obligations, organization relationships, and
          business risks
         Include: electronic data of a physical objects or
          substances (See Abele)
10 December, 2008                                             14
Case details: verdict

    Claims patent ineligible as they are neither tied
     to any particular machine nor transforming any
     article from one state to another




10 December, 2008                                        15
Case details: clarifications

    Business methods are not excluded from patent
     eligible subject matter
    Software is not excluded from patent eligible
     subject matter




10 December, 2008                                    16
Case details: clarifications

    “even a claim that recites "physical steps" but
     neither recites a particular machine or
     apparatus, nor transforms any article into a
     different state or thing, is not drawn to patent-
     eligible subject matter.”
    “Conversely, a claim that purportedly lacks any
     "physical steps" but is still tied to a machine or
     achieves an eligible transformation passes
     muster under § 101.”

10 December, 2008                                         17
Effect on software and business
           method applications
    Are pure business method patents out of patent
     eligible subject matter?
    Is US also moving towards “Software Per Se”
     exclusion like in India?




10 December, 2008                                  18
POST-BILSKI: BPAI Decisions




10 December, 2008                                 19
Ex parte BO LI (BPAI), 6 Nov, 08

    Claim 42 rejected under §101:
      A computer program product, comprising a computer usable medium having a computer readable program
         code embodied therein, said computer readable program code adapted to be executed to implement a
         method for generating a report, said method comprising:
      providing a system, wherein the system comprises distinct software modules, and wherein the distinct
         software modules comprise a logic processing module, a configuration file processing module, a data
         organization module, and a data display organization module;
      parsing a configuration file into definition data that specifies: a data organization of the report, a display
         organization of the report, and at least one data source comprising report data to be used for
         generating the report, and wherein said parsing is performed by the configuration file processing
         module in response to being called by the logic processing module;
      extracting the report data from the at least one data source, wherein said extracting is performed by the
          data organization module in response to being called by the logic processing module;
      receiving, by the logic processing module, the definition data from the configuration file processing module
         and the extracted report data from the data organization module; and
      organizing, by the data display organization module in response to being called by the logic processing
         module, a data display organization of the report, wherein said organizing comprises utilizing the
         definition data received by the logic processing module and the extracted report data received by the
         logic processing module.

10 December, 2008                                                                                                      20
Ex parte BO LI (BPAI), 6 Nov, 08

    BPAI applied the new machine-or-
     transformation test as opposed to the “useful,
     concrete, tangible” used by the examiner
    BPAI decided that ““Beauregard claim” of this
     nature be considered statutory at the USPTO
     as a product claim”

    Beauregard claims are still valid post Bilski

10 December, 2008                                     21
Ex parte Godwin and Wanderski,
     13 Nov, 08 (Rehearing)
    Claim 7 rejected under §101:
          A portal server system comprising:
          a portal coupled to a plurality of portlets, each of said portlets having
          associated portlet rendering logic;
          a portlet aggregator communicatively linked to said portlet rendering
          logic; and,
          a visual service extension to said portlet aggregator programmed to
          process said portlet rendering logic to transform visual style attributes in
          said portlet rendering logic into markup language tags which can be
          rendered for display in a specified type of pervasive agent.




10 December, 2008                                                                     22
Ex parte Godwin and Wanderski,
     13 Nov, 08 (Rehearing)
    Issue considered: Have Appellants shown that
     the claimed invention recited in claims 7 and 12
     is not directed to software per se?
         application: “The present invention can be realized in
          hardware, software, or a combination of hardware and
          software.”
         “As per our discussion above, in the context of a software
          embodiment, we maintain that a server is broadly but
          reasonably interpreted as a provider of services.”
         “it is our view that independent claims 7 .. do not positively
          recite implementing the invention on a specific apparatus.”

10 December, 2008                                                          23
Ex parte Halligan and Weyand,
               24 Nov, 08
    Claim 119 rejected under §101:
      119. A programmed computer method based upon the six factors of a trade secret from the First
         Restatement of Torts for identifying trade secrets within a plurality of potential trade secrets of a
         business, where each of the plurality of potential trade secrets comprise information, said method
         implemented by the programmed computer to effect the following steps:
           a) the programmed computer providing a predetermined criteria for evaluating a potential trade secret
          of the plurality of potential trade secrets under each of the six factors of a trade secret from the First
          Restatement of Torts, said six factors including (1) the extent to which the information is known outside
          of the business; (2) the extent to which it is known by employees and others involved in the business;
          (3) the extent of measures taken by the business to guard the secrecy of the information; (4) the value
          of the information to the business and its competitors; (5) the amount of time, effort or money expended
          by the business in developing the information and (6) the ease or difficulty with which the information
          could be properly acquired or duplicated by others;
           b) the programmed computer receiving a numerical score value for the potential trade secret under the
          predetermined criteria for each of the six factors;
           c) the programmed computer calculating a metric from the received numerical score values under the
          six factors; and
           d) the programmed computer determining that the potential trade secret is a trade secret when the
          calculated metric exceeds a predetermined threshold value.

10 December, 2008                                                                                                 24
Ex parte Halligan and Weyand,
               24 Nov, 08
    Method is performed using an unspecified
     algorithm
    No physical object or data relating to physical
     object is being transformed
    “..recitation fails to impose any meaningful
     limits on the claim's scope as it adds nothing
     more than a general purpose computer that has
     been programmed in an unspecified manner to
     implement the functional steps recited in the
     claims.”
10 December, 2008                                      25
Summary

    General Business methods without any relation
     to real world objects go out of window
    Software is still patentable
         Beauregard claims are allowed
         Software claims without structural limitations may
          not go through
         Need to be careful about general disclaimers
         Provide definitions to words in claims to indicate tie
          up to a “particular machine”

10 December, 2008                                              26
QUESTIONS?




10 December, 2008                27

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Bilski: Effect on patentability of Software and Business Method patent applications, By Arun Narasani

  • 1. Bilski: Effect on software and business method applications by, arun k narasani 10 December, 2008 1
  • 2. Agenda  Background  Bilski Case  BPAI Decisions  Summary 10 December, 2008 2
  • 4. Patent eligible subject matter  35 USC 101  Process  Machine  Manufacture  Composition of matter or  Any new and useful improvement 10 December, 2008 4
  • 5. Patent eligible subject matter  Diamond v. Chakrabarty (1980)  Subject matter is intended to be broad  Exclusions include laws of nature, natural phenomena, abstract ideas  Diamond v. Diehr (1981)  Process with steps including use of mathematical formula/algorithm  Mere use of a formula in an otherwise patent eligible subject matter does not make it patent ineligible 10 December, 2008 5
  • 7. Case details  US application 08/833,892: Claim 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 10 December, 2008 7
  • 8. Case details  Patent originally rejected by Examiner  BPAI rejects the original objection as “erroneous”  Examiner used “technological arts” test which is irrelevant  Specific apparatus was not required for patent eligibility. Ex. Chemical reaction 10 December, 2008 8
  • 9. Case details: considerations  Validity of a claim “is a matter of both claim construction and statutory construction”  No claim construction dispute 10 December, 2008 9
  • 10. Case details: considerations  What is patent eligible process?  Supreme court has held that “process” as used in §101 is narrower than its ordinary meaning (See Flook)  Claim is not patent eligible “process” if it claims “laws of nature, natural phenomena, [or] abstract ideas” (Diamond v. Diehr)  What is an abstract idea?  Is applicant claiming a fundamental principle (an abstract idea) or a mental process? 10 December, 2008 10
  • 11. Revisiting patent eligible subject matter  Freeman-walter-Abele test  In re freeman (1978); In re walter (1980); In re abele (1982)  Rejected in In re Alappat (1994)  Useful-concrete-tangible test  State Street Bank v. Signature Financial Group (1998), "Data Processing System for Hub and Spoke Financial Services Configuration"  Technological arts test 10 December, 2008 11
  • 12. Machine-or-Transformation test  1. Tied to a particular machine, or  2. Involves transformation of an article  Further restrictions:  Should “not pre-empt all uses of a fundamental principle”  “insignificant extra-solution activity” will not suffice  Purpose: to preclude processes which pre-empt “all uses of a fundamental principle” from being patent eligible 10 December, 2008 12
  • 13. Machine Implementation  Left ambiguous  “We leave to future cases the elaboration of the precise contours of machine implementation, as well as the answers to particular questions, such as whether or when recitation of a computer suffices to tie a process claim to a particular machine.” 10 December, 2008 13
  • 14. Transformation  “A claimed process is patent-eligible if it transforms an article into a different state or thing. This transformation must be central to the purpose of the claimed process”  Articles:  Do not include: Abstract constructs such as legal obligations, organization relationships, and business risks  Include: electronic data of a physical objects or substances (See Abele) 10 December, 2008 14
  • 15. Case details: verdict  Claims patent ineligible as they are neither tied to any particular machine nor transforming any article from one state to another 10 December, 2008 15
  • 16. Case details: clarifications  Business methods are not excluded from patent eligible subject matter  Software is not excluded from patent eligible subject matter 10 December, 2008 16
  • 17. Case details: clarifications  “even a claim that recites "physical steps" but neither recites a particular machine or apparatus, nor transforms any article into a different state or thing, is not drawn to patent- eligible subject matter.”  “Conversely, a claim that purportedly lacks any "physical steps" but is still tied to a machine or achieves an eligible transformation passes muster under § 101.” 10 December, 2008 17
  • 18. Effect on software and business method applications  Are pure business method patents out of patent eligible subject matter?  Is US also moving towards “Software Per Se” exclusion like in India? 10 December, 2008 18
  • 19. POST-BILSKI: BPAI Decisions 10 December, 2008 19
  • 20. Ex parte BO LI (BPAI), 6 Nov, 08  Claim 42 rejected under §101: A computer program product, comprising a computer usable medium having a computer readable program code embodied therein, said computer readable program code adapted to be executed to implement a method for generating a report, said method comprising: providing a system, wherein the system comprises distinct software modules, and wherein the distinct software modules comprise a logic processing module, a configuration file processing module, a data organization module, and a data display organization module; parsing a configuration file into definition data that specifies: a data organization of the report, a display organization of the report, and at least one data source comprising report data to be used for generating the report, and wherein said parsing is performed by the configuration file processing module in response to being called by the logic processing module; extracting the report data from the at least one data source, wherein said extracting is performed by the data organization module in response to being called by the logic processing module; receiving, by the logic processing module, the definition data from the configuration file processing module and the extracted report data from the data organization module; and organizing, by the data display organization module in response to being called by the logic processing module, a data display organization of the report, wherein said organizing comprises utilizing the definition data received by the logic processing module and the extracted report data received by the logic processing module. 10 December, 2008 20
  • 21. Ex parte BO LI (BPAI), 6 Nov, 08  BPAI applied the new machine-or- transformation test as opposed to the “useful, concrete, tangible” used by the examiner  BPAI decided that ““Beauregard claim” of this nature be considered statutory at the USPTO as a product claim”  Beauregard claims are still valid post Bilski 10 December, 2008 21
  • 22. Ex parte Godwin and Wanderski, 13 Nov, 08 (Rehearing)  Claim 7 rejected under §101: A portal server system comprising: a portal coupled to a plurality of portlets, each of said portlets having associated portlet rendering logic; a portlet aggregator communicatively linked to said portlet rendering logic; and, a visual service extension to said portlet aggregator programmed to process said portlet rendering logic to transform visual style attributes in said portlet rendering logic into markup language tags which can be rendered for display in a specified type of pervasive agent. 10 December, 2008 22
  • 23. Ex parte Godwin and Wanderski, 13 Nov, 08 (Rehearing)  Issue considered: Have Appellants shown that the claimed invention recited in claims 7 and 12 is not directed to software per se?  application: “The present invention can be realized in hardware, software, or a combination of hardware and software.”  “As per our discussion above, in the context of a software embodiment, we maintain that a server is broadly but reasonably interpreted as a provider of services.”  “it is our view that independent claims 7 .. do not positively recite implementing the invention on a specific apparatus.” 10 December, 2008 23
  • 24. Ex parte Halligan and Weyand, 24 Nov, 08  Claim 119 rejected under §101: 119. A programmed computer method based upon the six factors of a trade secret from the First Restatement of Torts for identifying trade secrets within a plurality of potential trade secrets of a business, where each of the plurality of potential trade secrets comprise information, said method implemented by the programmed computer to effect the following steps: a) the programmed computer providing a predetermined criteria for evaluating a potential trade secret of the plurality of potential trade secrets under each of the six factors of a trade secret from the First Restatement of Torts, said six factors including (1) the extent to which the information is known outside of the business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent of measures taken by the business to guard the secrecy of the information; (4) the value of the information to the business and its competitors; (5) the amount of time, effort or money expended by the business in developing the information and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others; b) the programmed computer receiving a numerical score value for the potential trade secret under the predetermined criteria for each of the six factors; c) the programmed computer calculating a metric from the received numerical score values under the six factors; and d) the programmed computer determining that the potential trade secret is a trade secret when the calculated metric exceeds a predetermined threshold value. 10 December, 2008 24
  • 25. Ex parte Halligan and Weyand, 24 Nov, 08  Method is performed using an unspecified algorithm  No physical object or data relating to physical object is being transformed  “..recitation fails to impose any meaningful limits on the claim's scope as it adds nothing more than a general purpose computer that has been programmed in an unspecified manner to implement the functional steps recited in the claims.” 10 December, 2008 25
  • 26. Summary  General Business methods without any relation to real world objects go out of window  Software is still patentable  Beauregard claims are allowed  Software claims without structural limitations may not go through  Need to be careful about general disclaimers  Provide definitions to words in claims to indicate tie up to a “particular machine” 10 December, 2008 26