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Douglas Panzer
May 7, 2015

Software Patents with Means-Plus-Function Claims Must Disclose Algorithm

Software patents are a challenging field these days.  The big news of late has been the effect of the Supreme Court’s June 2014 ruling in Alice v. CLS Bank, which has caused many patents — especially in the business method and software realms — to fall into the category of unpatentable abstract ideas.  A decision this week by the Court of Appeals for the Federal Circuit — the court tasked with all federal patent appeals — further illustrates the stringent requirements for software patents and the danger of claiming software inventions in the means-plus-function form permitted under the Patent Act.

In a decision yesterday, May 6th, 2015, the CAFC affirmed a lower court decision invalidating a patent asserted by plaintiff EON Corp. IP Holdings, LLC against AT&T Mobility, Sprint, HTC, Qualcomm and Wirefly.

The Patent Act permits patent claims to be written in so-called “means-plus-function” language. 

Section 112, paragraph 6 states that:

An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.

35 U.S.C. § 112 ¶ 6.

That is, the claim may say “a means for <doing some function>” without specifying in the claim what the means is.  In order to properly achieve patentability, however, the patent’s specification must detail a structure corresponding to the claimed function.  Essentially, the specification has to disclose a means.  If it fails to do so, the patent does not fully teach one of skill in the art how to implement the invention and is indefinite (therefore invalid).

In this case, the CAFC reminded us that while some inventions are amenable to the disclosure of a physical structure, “[i]t is well-established that the corresponding structure for a function performed by a software algorithm is the algorithm itself.”  In this case it was also “uncontested that the only structure disclosed in the ’757 patent is a microprocessor,” not the algorithm.

EON, despite admitting the lack of structure, attempted to save its case and its patent.  The court summarized: “EON relies on an exception to the algorithm rule created in In re Katz Interactive Call Processing Patent Litigation, 639 F.3d 1303 (Fed. Cir. 2011). Katz held that a standard microprocessor can serve as sufficient structure for ‘functions [that] can be achieved by any general purpose computer without special programming.’ Katz, 639 F.3d at 1316. In Katz, claim terms involving basic ‘processing,’ ‘receiving,’ and ‘storing’ functions were not necessarily indefinite because a general purpose computer need not ‘be specially programmed to perform the recited function.’ Id. However, other claim terms involving conditionally coupling calls were indefinite because those functions required special programming.”

The court called the Katz exception a “narrow” one and wrote, “it is only in the rare circumstances where any general-purpose computer without any special programming can perform the function that an algorithm need not be disclosed.”  This case was not that rare circumstance.

The message to patent attorneys and those seeking software patents is clear.  If claiming software in means-plus-function form, the actual algorithm must be disclosed in the specification.  Patent attorneys should not rely on the general microprocessor exception as even the simplest control structures, such as an if-statement, may cause the algorithm to fall outside of the very narrow general purpose computer exception.

December 6, 2013

Overwhelming Support for House Anti-Patent Troll Bill

The US House of Representatives yesterday passed a proposed patent litigation reform bill aimed at making it much more difficult for non-practicing entities or “patent trolls” to bring patent infringement suits.  The bill passed with major bipartisan support in a 325 to 91 vote.  This bill, introduced by Representative Bob Goodlatte, sets new standards for suits by NPE’s, including such highlights:

  • Significant increases in the pleading specificity requirements for patent suits
  • Disclosure of the ultimate beneficiary of any damage award or settlement
  • New double-patenting rules
  • Judicially limited early discovery
  • Early determination of patent validity

The passage of this bill, referred to as The Innovation Act, is sure to be followed quickly by introduction in the Senate of a sister bill sponsored by Representative Patrick Leahy, one of the sponsors of the American Invents Act, which introduced the most sweeping patent legislation reforms in decades last year.

The Innovation Act is sure to continue the dialogue/debate regarding patent infringement suits brought by those not commercializing the patented subject matter.  On one extreme the argument will be raised that shell companies sweeping up dozens or even thousands of patents solely for the purpose of litigating them for profit is stifling of innovation, in contravention to the Constitution and the Patent Act.  On the other extreme we’ll find the argument that in this age of costly, complex and time-intensive litigation, such enforcement represents the only real means for individual or small company inventors to protect their inventions and in turn spur further innovation.  In true Goldilocks fashion, the answer likely lies somewhere in between.  Whether the Innovation Act becomes law and whether it finds the happy medium is one step closer to determination.

New York Times report: http://www.nytimes.com/2013/12/06/business/house-bill-raises-bar-for-suits-over-patents.html?emc=edit_tnt_20131206&tntemail0=y&_r=0

May 15, 2013

Not the End of Business Method Patents…But Could it Finally Be the End of Bad Business Method Patents?

Posted By Douglas Panzer @ 11:44 pm
Filed under: Business Method Patents,Eligibility,Invalidity,Patents

The debate continues to rage over the patent-eligibility of so-called business method patents. With each judicial installment from the Federal Circuit or the Supreme Court, legal pundits proclaim either that the latest opinion ensures business methods remain eligible for patent protection or that the opinion jeopardizes the validity of thousands of issued patents, casting peril upon the economic certainty of the industries related to those patents (frequently software and finance). With its May 10, 2013 opinion in CLS Bank Int’l. v. Alice Corp., the CAFC has taken a significant step toward proclaiming the continued patentability of business methods, while simultaneously reigning in the devious draftsmanship of patent attorneys/agents that floods the U.S. Patent Office and the patent system with paper-thin claims of method invention, thinly cloaked and uncomfortably shoehorned into nominal hardware and computer system language.

The CLS Bank opinion trails behind it all the above-referenced pundit commotion. One legal news outfit has even headlined it a “Nightmare Ruling” (subscription req’d.) that “Baffles [Attorneys].” But for those truly interested in innovation and those interested in coaxing the patent system into requiring that patents be not only formalistically acceptable, but innovatively worthwhile and not counter to the Constitutional goal of promoting science, CLS Bank is the closest the CAFC has come to returning the threshold question of patent eligibility to a true and common sense analysis of the claimed invention’s substance and closing the loophole that has allowed countless stifling, worthless patents to issue based on twists of cloaking claim language.

Patent attorneys, IP litigators, tech entrepreneurs and others have become accustomed to patents like the ones at issue in CLS Bank. These contain a set of method claims as well as system claims and computer readable medium (CRM) claims that purport to address physical articles of manufacture in an attempt to hurdle over the judicially fashioned abstract idea rejection that causes so many method-only claims to fall outside of the bounds of 35 USC 101. The court in CLS Bank however, has finally and directly addressed this clear ruse.

The court calls out the elephant in the room that patent practitioners have looked past for years and observed that the system and CRM claims of the Alice patents, though nominally claiming objects of manufacture, really re-claim the subject matter of the method claims, but formalistically mention physical articles that perform those methods, hoping to gain eligibility under Section 101. The system claims, the court says, by requiring a “computer” and a “data storage unit,” among other nominal physical objects, “provide for computer implementation at an incrementally reduced, though still striking level of generality.” Similarly, the CRM claims simply state “a computer readable medium” and instructions on that medium causing the method to be executed.

The CAFC has clearly stated in CLS Bank that business method and software patents remain patent eligible. However, the claimed method must be truly inventive, embodying “significantly more” than an abstract process. Further, the nominal addition of physical components does not gain eligibility for methods that do not otherwise meet this standard. The CAFC appears to have placed a great challenge before patent practitioners and inventors to improve the quality of business method inventions in exchange for the award of a patent monopoly. The next steps that we should watch with great interest will be: 1) whether the USPTO issues guidance to examiners based upon the CLS Bank holding; and 2) whether the Supreme Court chooses to review CLS Bank in order to cap its 40+ year old line of Section 101 cases. Hopefully both will occur, establishing without question the continued viability of business method patents as well as raising the bar to require true scientific progress in exchange for patentability.

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