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If you missed last week’s USPTO webinar on the revised guidance in view of Berkheimer v. HP, the video  recording of the webinar is available below:

The slides are available here: [Link].

The machine-or-transformation test may well provide a sufficient basis for evaluating processes similar to those in the Industrial Age—for example, inventions grounded in a physical 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. As numerous amicus briefs argue, the machine-or-transformation test would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals. See, e.g., Brief for Business Software Alliance 24-25; Brief for Biotechnology Industry Organization et al. 14-27; Brief for Boston Patent Law Association 8-15; Brief for Houston Intellectual Property Law Association 17-22; Brief for Dolby Labs., Inc., et al. 9-10.

In the course of applying the machine-or-transformation test to emerging technologies, courts may pose questions of such intricacy and refinement that they risk obscuring the larger object of securing patents for valuable inventions without transgressing the public domain. The dissent by Judge Rader refers to some of these difficulties. 545 F.3d, at 1015. As a result, in deciding whether previously unforeseen inventions qualify as patentable 3228*3228 “process[es],” it may not make sense to require courts to confine themselves to asking the questions posed by the machine-or-transformation test. Section 101’s terms suggest that new technologies may call for new inquiries. See Benson, supra, at 71, 93 S.Ct. 253 (to “freeze process patents to old technologies, leaving no room for the revelations of the new, onrushing technology[,] . . . is not our purpose”).

Bilski v. Kappos, 130 S. Ct. 3218, 3227-28 (2010)(Justice Kennedy writing for himself, Chief Justice Roberts, and Justices Thomas and Alito).

The SCOTUSblog discussed the recent Oil States and SAS Institute decisions in a recent podcast.  You can access the podcast here: Link.

The oral argument of the day comes from Dialware Communications, LLC v. Hasbro, Inc.  This is yet another patent eligibility case.  From the oral argument, it appears that the claims were for toys that respond to sounds made by other toys — for example, use of the doppler effect to determine if another toy is moving toward the sound-receiving toy.

Despite the Rule 36 affirmance that all 250+ claims are patent ineligible based on a single representative claim, one argument theme that appears to be getting some traction these days is the theme of “over-reductionism.”  Over-reductionism was an issue raised by Judge Hughes in the oral argument of Dialware as well as Judge Linn in the oral argument of Finjan.

After listening to Judge Hughes’ questions raised during the oral argument, you might find yourself curious as to how the Federal Circuit reached its decision in its de novo review of the patent ineligibility determination.  Unfortunately, the Rule 36 Judgment will not fill the void for you.

The oral argument is available here:

The Rule 36 Judgment is available [here].

If you are looking for an excuse to visit Denver this June, there are three IP programs worth your attention.

The annual Denver IP Institute will be held May 31 – June 1:  [Link];

There is a 2 1/2 day PCT seminar being held June 13-15 [Link]; and

The AIPLA Electronics and Computer Law Summit will be held on June 19th [Link].

If you want to visit the Denver Patent Office while you are here, you can find visitor information at this [Link].

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Update May 8, 2018:
Also, on May 30th from 4:00-6:00, there will be a reception at the Denver Patent Office for USPTO Day: [Link].

The oral argument of the day is from Finjan v. Blue Coat.  You can listen to the oral argument here:

The Federal Circuit opinion is available [here].

The independent claim at issue reads:

1. A method comprising:

receiving by an inspector a Downloadable;

generating by the inspector a first Downloadable security profile that identifies suspicious code in the received Downloadable; and

linking by the inspector the first Downloadable security profile to the Downloadable before a web server makes the Downloadable available to web clients.

Judge Dyk writing for the court concluded the §101 analysis by stating:

Here, the claims recite more than a mere result. Instead, they recite specific steps—generating a security profile that identifies suspicious code and linking it to a downloadable—that accomplish the desired result. Moreover, there is no contention that the only thing disclosed is the result and not an inventive arrangement for accomplishing the result. There is no need to set forth a further inventive concept for implementing the invention. The idea is non-abstract and there is no need to proceed to step two of Alice.

In Electric Power Group v. Alstom, the claim deemed ineligible recited:

12. A method of detecting events on an interconnected electric power grid in real time over a wide area and automatically analyzing the events on the interconnected electric power grid, the method comprising:

receiving a plurality of data streams, each of the data streams comprising sub-second, time stamped synchronized phasor measurements wherein the measurements in each stream are collected in real time at geographically distinct points over the wide area of the interconnected electric power grid, the wide area comprising at least two elements from among control areas, transmission companies, utilities, regional reliability coordinators, and reliability jurisdictions;

receiving data from other power system data sources, the other power system data sources comprising at least one of transmission maps, power plant locations, EMS/SCADA systems;
receiving data from a plurality of non-grid data sources;

detecting and analyzing events in real-time from the plurality of data streams from the wide area based on at least one of limits, sensitivities and rates of change for one or more measure- ments from the data streams and dynamic stability metrics derived from analysis of the measurements from the data streams including at least one of frequency instability, volt- ages, power flows, phase angles, damping, and oscillation modes, derived from the phasor measurements and the other power system data sources in which the metrics are indicative of events, grid stress, and/or grid instability, over the wide area;

displaying the event analysis results and diag- noses of events and associated ones of the met- rics from different categories of data and the derived metrics in visuals, tables, charts, or combinations thereof, the data comprising at least one of monitoring data, tracking data, historical data, prediction data, and summary data;

displaying concurrent visualization of measurements from the data streams and the dynamic stability metrics directed to the wide area of the interconnected electric power grid;

accumulating and updating the measurements from the data streams and the dynamic stabil- ity metrics, grid data, and non-grid data in real time as to wide area and local area portions of the interconnected electric power grid; and

deriving a composite indicator of reliability that is an indicator of power grid vulnerability and is derived from a combination of one or more real time measurements or computations of measurements from the data streams and the dynamic stability metrics covering the wide area as well as non-power grid data received from the non-grid data source.

I thought this was interesting — a Google search does not return any results for the terms “negative public franchise” or “negative franchise right.”  We often think of patent rights as negative rights.  So, I was curious if there are any other negative public franchises or negative franchise rights.

Now that we have been told that patents are “public franchises,” it might be useful for someone to discuss the tax implications of the Oil States holding. Does the holding of Oil States require any revision to the tax code? Can a “public franchise” be taxed?  Can an owner of a patent be taxed for both “public franchise” purposes and “personal property” purposes?  Do any companies with large patent portfolios now owe back taxes for failing to pay a “public franchise” tax? Are any owed a refund?  Are some states better for “public franchise” tax purposes than other states?  The Court notes:  “Finally, our decision should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause.”  What about the taxing and spending clause?

Beyond the tax questions, are there any other complications caused by deeming a patent a “public franchise”?  Residency?  Nationality?  Restraints on alienation?

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Totally unrelated issue — if you can’t patent an “abstract idea” because it is “part of the storehouse of knowledge of all men … free to all men and reserved exclusively to none,” should you be able to tax it?

If (a) the FCC grants a public franchise by granting a party sole use to a portion of the radio spectrum and (b) the radio spectrum is a natural phenomenon, is the FCC granting a public franchise to a natural phenomenon?  Why should the FCC be able to grant public franchises on natural phenomenon if the USPTO cannot?

There were some interesting questions today in the oral argument of the ALJ case of Lucia v. SEC.  I think it is interesting to look at tangentially related cases to see if they hint where the Court is going with its IP cases.  Several of the questions focused on ALJ independence and accountability.

JUSTICE KENNEDY:  Could you address

14    the question that Justice Kagan and I asked

15    Mr. Perry?  Assume that the perception and fact

16    of fairness and — and impartiality are

17    enhanced by independence.  How does that factor

18    into what you’re arguing, and is it a proper

19    consideration for us in this case?

11             JUSTICE KAGAN:  Mr. Wall, all of these

12    things go to the same thing.  You know, you -­

13    you want to keep decisional independence as

14    something that you’re not interfering with.

15             There are different ways to interfere

16    with decisional independence.  One is by

17    docking somebody’s pay.  One is by having a

18    removal power that you hang over your head.

19    And another is by being the person who gets to

20    decide who gets the job or not.

21             And so all of these things in some

22    manner tie the adjudicator more closely to the

23    political system.  And the APA came up with

24    this foundational compromise which had as a

25    very significant part of it that the hearing

1    examiners, the adjudicators, would have some

2    detachment, would have some insulation from the

3    political system.  Not the way an Article III

4    judge does, but still something.

5             And you want to ratchet that down.

6    And the question is, isn’t that interfering

7    with decisional independence?

 

8             CHIEF JUSTICE ROBERTS:  One of the

9    principles that caused the drafters to give the

10    authority to appoint officers to the President

11    was the important one of accountability.

12             MR. METLITSKY:  Exactly.

13             CHIEF JUSTICE ROBERTS:  And in this

14    case, if — if the individual were an officer,

15    he would have to be appointed by the

16    Commission, and people would know who was

17    responsible for whatever conduct or misconduct

18    or decisions he would — he would take.

19             But in this case, you don’t have that

20    accountability.  The Commission can say:  Don’t

21    blame us.  We didn’t do it.  The President can

22    say:  Don’t blame me.  I didn’t appoint them.

23    And, instead, it’s something in the

24    administrative bureaucracy which operates as

25    insulation from the political accountability

1    that the drafters of the Constitution intended.

 

 

CHIEF JUSTICE ROBERTS:  And it seems

to me, I mean, we’ve heard about the

independence of the adjudicator.  You seem to

be suggesting that he is not an officer because

he doesn’t have the kind of independence that

has been suggested the APA and other things

were designed to promote.

The transcript is available [here].

You can listen to the oral argument here:

The Federal Circuit’s decision in Voter Verified, Inc. v. Election Systems Software, LLC __ F.3d __ (Fed.Cir. 2018) seems to be in conflict with the Federal Circuit’s earlier decision in INVENTOR HOLDINGS, LLC v. BED BATH & BEYOND, INC., __ F.3d __ (Fed. Cir. 2017).  In Voter Verified, Inc., the court proposes that Alice “did not alter the governing law under §101.”  In contrast, in Inventor Holdings, LLC, the court states that Alice created a “significant change in the law.”  Moreover, the Voter Verified, Inc. decision fails to even mention the court’s earlier decision in Inventor Holdings, LLC.

Reproduced below are portions of the two opinions:

Second, we find that Alice was a significant change in the law as applied to the facts of this particular case. Prior to Alice, the state of the law for computerimplemented business transaction inventions was less than clear, given this court’s divided en banc opinion in CLS Bank International v. Alice Corp., 717 F.3d 1269, 1273 (Fed. Cir. 2013). As we later explained, post-Alice, in Mortgage Grader, Inc. v. First Choice Loan Services Inc., “a § 101 defense previously lacking in merit may be meritorious after Alice. This scenario is most likely to occur with respect to patent claims that involve implementations of economic arrangements using generic computer technology, as the claims do here.” 811 F.3d 1314, 1322 (Fed. Cir. 2016). Like the claims at issue in Mortgage Grader, the ‘582 patent’s claims are directed to an “economic arrangement” implemented using “generic computer technology.” These issues were significant, if not determinative, of the Court’s holding in Alice.

INVENTOR HOLDINGS, LLC v. BED BATH & BEYOND, INC., __ F.3d __ (Fed. Cir. 2017)(slip op. at page 12)(Judges Wallach, Chen (Author), Stoll).

Turning to the first condition, we conclude that Alice, which was decided after the first litigation ended, did not alter the governing law of § 101. In Alice, the Court applied the same two-step framework it created in Mayo in its § 101 analysis. Alice, 134 S. Ct. at 2355 (citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 77–79 (2012)). The Court stated, “[f]irst, we determine whether the claims at issue are directed to one of those patent-ineligible concepts.” Id. (citing Mayo, 566 U.S. at 77–78). If so, it stated, one must then determine “what else is there in the claims before us?” Id. (quoting Mayo, 566 U.S. at 78). Just as it did in Mayo, the Court characterized the second inquiry “as a search for an inventive concept,” id. at 2355 (internal quotation marks and citation omitted), that is “sufficient to transform the claimed abstract idea into a patent-eligible application,” id. at 2357 (internal quotation marks and citation omit- ted). It is thus evident from the Court’s reliance on Mayo that it was merely applying the same test as it set out in Mayo, and did not materially change it. See id. at 2355, 2357 (citing Mayo for the rule of law). We therefore hold that Alice did not alter the governing law under § 101.

Voter Verified, Inc. v. Election Systems Software, LLC __ F.3d __ (Fed.Cir. 2018)(slip op. at page 7)(Judges Newman, Lourie (Author), Reyna).