9th Circuit Oral Arguments YouTube Page

December 12th, 2014

The U.S. Court of Appeals for the 9th Circuit appears to have increased the number of oral arguments that it records on video.  Many of those are available at this YouTube link:  https://www.youtube.com/user/9thcirc/videos.

If you are coaching students in any upcoming moot court competitions, you might want to make them aware of these videos as a resource.

While I usually only have time to listen to oral argument recordings driving to and from work, I look forward to the day when the Federal Circuit follows the lead of the 9th Circuit and records the video of Federal Circuit oral arguments.  Some would be quite interesting to watch.

Abracadabra . . . Abstract Idea

November 21st, 2014

As I read Judge Lourie’s opinion for the court in Ultramercial et al. v. Hulu et al., 2010-1544 (Fed. Cir. Nov. 13, 2014), I was reminded of these previous comments by Judge Lourie with respect to judicial notice:

We have an examination system based on citation of references.  I may have used the word ’slippery slope’ already.  But, I worry about that — where an examiner who is of some skill and training in a particular art could simply say ‘Aha, I think, I think, and it is my common knowledge . . . .’ And, they start rejecting claims based on what they ‘think.’  Isn’t that a serious departure from our system of citation of references to reject claims?  [Listen]

It doesn’t seem to me to be the function of the appellate court to take judicial notice of the ordinariness of certain decided claim limitations.  We can take judicial notice that ‘today is Wednesday’ and ‘we had snow earlier in the week’ — I’m glad you made it through the snow — but, we don’t make rejections based on judicial notice of . . . finding a claim limitation to be common sense. [Listen]  See Oral Argument for HIMPP v. HEAR-WEAR TECHNOLOGIES, LLC, No. 2013-1549 (Fed. Cir. May 27, 2014).

The reason those comments stand out in my mind are that in Ultramercial Judge Lourie makes the following comment for the court without citing to any evidence:

This ordered combination of steps recites an abstraction—an idea, having no particular concrete or tangible form. The process of receiving copyrighted media, selecting an ad, offering the media in exchange for watching the selected ad, displaying the ad, allowing the consumer access to the media, and receiving payment from the sponsor of the ad all describe an abstract idea, devoid of a concrete or tangible application. Although certain additional limitations, such as consulting an activity log, add a degree of particularity, the concept embodied by the majority of the limitations describes only the abstract idea of showing an advertisement before delivering free content.

It strikes me that such a statement is the taking of judicial notice.

It is also interesting to note that the court identifies three different abstract ideas when assessing the claim.  First, the court writes:

The district court found that the abstract idea at the heart of the ’545 patent was “that one can use [an] advertisement as an exchange or currency.” Ultramercial, 2010 WL 3360098, at *6. We agree.
See Ultramercial, slip opinion at page 9.

Later on, the court writes:

“the majority of the limitations describes only the abstract idea of showing an advertisement before delivering free content.”

See Ultramercial, slip opinion at page 10.

And finally, the court states that:

“The majority of those steps comprise the abstract concept of offering media content in exchange for viewing an advertisement.”

See Ultramercial, slip opinion at page 11.

So, the Federal Circuit has identified three different abstract ideas with respect to the claim: (1) “that one can use [an] advertisement as an exchange or currency;” (2) ”showing an advertisement before delivering free content;” and (3) “offering media content in exchange for viewing an advertisement.”

In my heart of hearts (no pun intended)  I like to think that the panel in Ultramercial — well, at least Judges Lourie and O’Malley —  are discreetly serving up some softball issues for appeal to the Supreme Court:

1)  Can a court’s patent eligibility analysis be correct if it recites three different “abstract” ideas when assessing a claim;

2)  In a matter concerning a taking of property rights, can an appellate court take judicial notice of an abstract idea without citation of evidence;

3)  By choosing to refer to the “abstract” idea as the “heart of the ‘545″ patent, can the Supreme Court rationalize this analysis with its decision in  Aro I.

4)  By discounting several claim limitations, can the Supreme Court rationalize its §101 analysis with 35 U.S.C. §271.  For example, how irrational would it sound if a court wrote the following when assessing patent infringement under 35 U.S.C. §271:

The accused infringer has infringed the heart of the claim.  The process of receiving copyrighted media, selecting an ad, offering the media in exchange for watching the selected ad, displaying the ad, allowing the consumer access to the media, and receiving payment from the sponsor of the ad all describe the heart of the claim when the remaining claim limitations are not assessed.  Although certain additional limitations, such as consulting an activity log, add a degree of particularity, the concept embodied by the majority of the limitations, i.e., at least half, describes the heart of the claim of showing an advertisement before delivering free content.  We therefore find that the accused infringer performed the majority of the claim limitations, infringed the heart of the claim, and thus infringed claim 1.  The claim limitations that were not performed by the accused infringer are mere extra-solution activity.

Transformation of data surviving §101 challenges in some circumstances

November 6th, 2014

In two recent instances, a transformation of data has been recognized as potentially sufficient to satisfy the patent eligibility test under 35 U.S.C. §101.

In the Board’s decision in PNC Bank v. Secure Axcess, CBM2014-0100 (PTAB Sept. 9, 2014) (available [here]), the Board noted that the particular transformation of data under consideration was (1) not an abstract idea and (2) satisfied the “machine or transformation test”:

Petitioner challenges claims 1-32 of the ‘191 patent as directed to patent-ineligible subject matter under 35 U.S.C. § 101. Pet. 72-77. Patent­ eligible subject matter is defined in 35 U.S.C. § 101:

Whoever  invents  or  discovers  any  new  and  useful  process, machine,  manufacture,  or  composition  of matter,  or any  new and useful  improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

There are, however, three limited, judicially-created  exceptions to the broad categories of patent-eligible subject matter in §.101:  laws of nature; natural phenomena; and abstract ideas.  Mayo Collaborative Servs. v.Prometheus Labs., Inc., 132 S. Ct. 1289, 1293 (2012).  The Supreme Court has made clear that the test for patent eligibility under § 101 is not amenable to bright-line categorical rules.  See Bilski v. Kappos, 130 S. Ct. 3218, 3222 (2010).

1. Whether the Claims Are Directed to an Abstract Idea

Petitioner challenges each claim of the ‘191 patent as failing to recite patentable subject matter under § 101, because the claims fall within the judicially created exception encompassing abstract ideas. Pet. 73-76. In Alice Corp. Pty, Ltd. v. CLS Bank International, 134 S. Ct. 2347 (2014), the Supreme Court reiterated the framework set forth previously in Mayo, “for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of these concepts.” Alice, 134 S. Ct. at 2355. The first step in the analysis is to “determine whether the claims at issue are directed to one of those patent­ ineligible concepts.” Id. If they are directed to a patent-ineligible concept, the second step in the analysis is to consider the elements of the claims “individually and ‘as an ordered combination’” to determine whether there are additional elements that ‘”transform the nature of the claim’ into a patent-eligible application.” Id. (quoting Mayo, 132 S. Ct. at 1291, 1297). In other words, the second step is to “search for an ‘inventive concept’- i.e., an element or combination of elements that is ’sufficient to ensure that the patent in practice amounts to significantly more than a patent on the [ineligible concept] itself.”‘ Id. (alteration in original) (quoting Mayo, 132 S. Ct. at 1294).

Turning to the Petition, Petitioner, relying on the framework set forth in Mayo and followed in Alice, asserts that claims 1-32 are unpatentable under § 101, because the claims are drawn to patent-ineligible “abstract ideas, with only insignificant, well-known subject matter added.” Pet. 73; see also Pet. 73-76. Patent Owner disagrees. Prelim. Resp. 56-65.

In determining whether a method or process claim recites an abstract idea, we must examine the claim as a whole. Alice, 134 S. Ct. at 2355 n. 3. Claim 1, as a whole, relates to a computer-implemented method to transform data in a particular manner-by inserting an authenticity key to create formatted data, enabling a particular type of computer file to be located and from which an authenticity stamp is retrieved. On its face, there is nothing immediately apparent about these physical steps that would indicate the claim is directed to an abstract idea.

Moreover, claim 1, as a whole, is distinguishable from the patent­ ineligible abstract concepts found in Alice or Bilski. Alice involved “a method of exchanging financial obligations between two parties using a third-party intermediary to mitigate settlement risk.” Alice, 134 S. Ct. at 2356. Bilski involved the concept of hedging risk, which the Court deemed “a method of organizing human activity.” Bilski, 130 S. Ct. at 3222. Like the concept of hedging risk in Bilski, Alice’s “concept of intermediated settlement” was held to be “‘a fundamental economic practice long prevalent in our system of commerce.”‘ Alice, 134 S. Ct. at 2356. Similarly, the Court in Alice found that “[t]he use of a third-party intermediary . . . is also a building block of the modem economy.” Id. “Thus,” the Court held, “intermediated settlement . . . is an ‘abstract idea’ beyond the scope of § 101.” Id.

Petitioner asserts that claim 1 is an abstract idea, because it is nothing more than computerizing a purported centuries old practice of placing a trusted stamp or seal on a document to indicate the authenticity of the document. Pet. 74. Petitioner’s position is unpersuasive, because as indicated by Patent Owner (Prelim. Resp. 64-65), Petitioner does not tie adequately the claim language to the purported abstract concept of placing a trusted stamp or seal on a document. Although the claim recites retrieving an authenticity stamp, the claim does not recite placing the stamp, much less. doing so on a paper document, presumably as “centuries-old” practices have done.  Similarly, the claim does not recite a paper document.  Moreover, claim 2, which depends from claim 1, additionally recites that the formatted data is a web page, not a paper document.

We also find that Petitioner does not provide sufficient persuasive evidentiary support that the placing of a trusted stamp or seal on a document is “a fundamental economic practice” or a “building block of the modern economy.” See Alice, 134 S. Ct. at 2356 (citing various references concerning the concept of intermediated settlement, including an 1896 reference).

Petitioner further asserts claim 1 is patent-ineligible abstract idea, because it “relates to nothing more than manipulating and collecting data.” Pet 73 (citing CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1370 (Fed. Cir. 2011); In re Grams, 888 F.2d 835, 840 (Fed. Cir. 1989)).  Patent Owner disagrees, indicating that claim 1 recites (1) transforming at an authentication host computer, received data (a) by inserting an authenticity key (b) _to create formatted data; and (2) returning, from the authentication host computer, the formatted data (a) to enable the authenticity key to be retrieved fro the formatted data and (b) to locate a preferences file.  Prelim. · Resp. 58-59.

Petitioner’s reliance on CyberSource and Grams is unpersuasive. In CyberSource, the Federal Circuit indicated that mere collection and organization of data does not satisfy the transformation prong in the machine-or-transformation  test  See CyberSource, 654 F.3d at 1370.  The Federal Circuit also indicated that the mere manipulation or reorganization of data also did not satisfy the transformation prong.  See id. at 1375. The Federal Circuit concluded, however, that the claims at issue were to a patent­ ineligible abstract idea, not merely because of the collection, organization, and manipulation of data, but because all the claimed steps could be performed in the human mind, which is not the case here.  See id. at 1373, 1376-77.  Rather, the challenged claims specifically recite “transforming . . . received data by inserting an authenticity key to create formatted data,” thereby authenticating a web page with an authenticity stamp.  Thus, the claims require a fundamental change to the data; a change that cannot be performed in the human mind.

Although the Federal Circuit in Grams held that data gathering steps cannot make an otherwise nonstatutory claim statutory, the court did not indicate that a claim with only data gathering steps and a mathematical algorithm necessarily always would be nonstatutory. Grams, 888 F.3d at 840 (quoting In re Meyer, 688 F.2d 789, 794 (CCPA 1982)).

Claim 1 of the ‘191 patent recites “transforming . . . at an authentication host computer” and “returning . . . from the authentication host computer,” which are not immediately apparent as being limited to data gathering. As such, on this record, claim 1 can be distinguished from claims in Grams, which rely on data gathering as the recited physical steps.  Petitioner does not provide further arguments specifically addressing limitations in claims 2-32 (see generally Pet. 73-76).

For these reasons, we are not persuaded by Petitioner’s assertion that claims 1-32 are patent-ineligible abstract ideas. As such, we need not tum to the second step in the Mayo framework to look for additional elements that can transform the nature of the claim into a patent-eligible application of an abstract idea.

2. Whether the Claims Satisfy the Machine-or-Transformation Test

Petitioner also contends that claims 1-32 are unpatentable under § 101, because the claims are not tied to any particular machine and transform no article into a different state or thing, and thus do not satisfy the machine-or-transformation  test.  We understand that the machine-or­ transformation test is a useful tool, but is not sole test for whether an invention is a patent-eligible process under § 101. See Bilski 130 S. Ct. at 3227.

Petitioner asserts claim 1 does not transform an article into a different state or thing. Pet 76. Rather, according to Petitioner, the transforming limitation in claim 1 is merely manipulation or reorganization of data, which is not patent eligible. Pet. 76-77 (citing CyberSource, 654 F.3d 1375).

We are not persuaded that “transforming . . . received data by inserting an authenticity key to create formatted data” fails to satisfy the transformation prong. The claim language recites “transforming” one thing (”received data”) “to create” something else (”formatted data”) and further recites a particular manner of transforming (”by inserting an authenticity key”).

Petitioner does not provide persuasive argument or supporting evidence to support its position that the transforming limitation is merely manipulation or reorganization of data. Because Petitioner has not persuaded us that claim 1 does not meet the transformation prong of the machine-or-transformation test, we need not consider Petitioner’s other assertions that claim 1 does not meet the machine prong of the test. Furthermore, Petitioner does not provide further arguments regarding claims 2-32 (see generally Pet. 76-77), thus, we are not persuaded claims 1- 32 fail to satisfy the machine-or-transformation  test.

Therefore, having considered the information provided in the Petition, as well as Patent Owner’s Preliminary Response, we are not persuaded Petitioner has demonstrated that it is more likely than not that the claims challenged in the Petition are unpatentable under 35 U.S.C. § 101.

(emphasis added).

In addition to noting that transformation of data can satisfy the test for patent eligibility in some circumstances, this decision is also important for noting that the determination of an abstract idea is sometimes grounded in underlying factual determinations — that is the determination of an abstract idea sometimes requires factual evidence.  See also Arrhythmia Research Technology v. Corazonix Corp., 958 F. 2d 1053 (Fed. Cir.  1992)(”Whether a claim is directed to statutory subject matter is a question of law. Although determination of this question may require findings of underlying facts specific to the particular subject matter and its mode of claiming“).

Providing factual evidence of what is an abstract idea implicates In re Zurko and the associated  procedural requirements for evidencing a factual finding:

Finally, the deficiencies of the cited references cannot be remedied by the Board’s general conclusions about what is “basic knowledge” or “common sense” to one of ordinary skill in the art. As described above, the Board contended that even if the cited UNIX and FILER2 references did not disclose a trusted path, “it is basic knowledge that communication in trusted environments is performed over trusted paths” and, moreover, verifying the trusted command in UNIX over a trusted path is “nothing more than good common sense.” Ex parte Zurko, slip op. at 8. We cannot accept these findings by the Board. This assessment of basic knowledge and common sense was not based on any evidence in the record and, therefore, lacks substantial evidence support. As an administrative tribunal, the Board clearly has expertise in the subject 1386*1386 matter over which it exercises jurisdiction. This expertise may provide sufficient support for conclusions as to peripheral issues. With respect to core factual findings in a determination of patentability, however, the Board cannot simply reach conclusions based on its own understanding or experience — or on its assessment of what would be basic knowledge or common sense. Rather, the Board must point to some concrete evidence in the record in support of these findings.

See In re Zurko, 258 F.3d 1379, 1385-86 (Fed. Cir. 2001).

Thus, PNC  Bank v. Secure Axcess reminds us of several important points:

(1)  the assessment of 35 U.S.C. §101 is a question of law grounded in underlying factual findings;

(2)  the assessment of whether something is an abstract idea can be based on factual findings — failure to provide sufficient evidence of facts with respect to an abstract idea can cause an abstract idea challenge to fail;

(3) with respect to core factual findings in a determination of patentability . . . the Board must point to some concrete evidence in the record in support of [its] findings.

The second recent decision of note is from  Card Verification v. Citigroup, Docket No. 13 C 6339 (N.D. Ill.  Sept. 29, 2014), where a district court stated in response to a 12(b)(6) motion:

But the claims may be sufficiently limited by the plausible transformation that occurs when the randomly-generated tag is added to the piece of confidential information. Typically, transforming data from one form to another does not qualify as the kind of transformation regarded as an important indicator of patent eligibility. See CyberSource, 654 F.3d at 1375 (“[T]he mere manipulation or reorganization of data … does not satisfy the transformation prong.”). But here, the claimed invention goes beyond manipulating, reorganizing, or collecting data by actually adding a new subset of numbers or characters to the data, thereby fundamentally altering the original confidential information. Contra id. at 1372 (process of constructing “map” of credit card numbers was no different than writing down a list of numbers and compiling information).

The use of a credit card number provides an illustrative example. Once the computer in the process splits up the credit card number into two separate pieces, randomly generated tags are added to the two pieces. The addition of the tag transforms what was once a credit card number into an identifier for use by the verifying party. The verifying party then matches up the two pieces of the information solely because the randomly-generated tag is affixed to both. At least one of the objects of the ‘245 Patent process is to transform data from one form into another “that will be recognized by the intended recipient but secure against decryption by unintended recipients.” See, e.g., TQP Dev., LLC v. Intuit, Inc., No. 2:12 CV 180 WCB, 2014 WL 651935, at *5 (E.D. Tex. Feb. 19, 2014). The claim requiring the addition of the tags plausibly does just that. The patent not only recites a process for verifying transaction information, it also involves a protocol for making the communication system itself more secure. (‘245 Patent, 2:14-20). Therefore, even though the method does not result in the physical transformation of matter, see Diehr, 450 U.S. 175, it utilizes a system for modifying data that may have a concrete effect in the field of electronic communications. Accordingly, when viewing the patent in the light most favorable to Card Verification, it plausibly recites a patent-eligible application of the abstract idea of verifying a transaction. Citigroup’s Motion to Dismiss is therefore denied without prejudice. Citigroup is free to challenge the validity of the ‘245 Patent after discovery and claim construction are completed in this case.

Notably, in both of these decisions, the transformation of data occurred by adding an additional piece of data to an original piece of data so as to create a new piece of data.

Teva v. Sandoz Oral Argument Recording

October 24th, 2014

The Supreme Court has published the oral argument recording for the Teva v. Sandoz case.  You can listen/download the oral argument recording [here].

The transcript of the oral argument is available [here].

PNC Bank v. Secure Axccess, LLC

October 17th, 2014

The Patent Docs website had an interesting post yesterday about recent §101 decisions by the PTAB. [Link] One decision discussed is PNC Bank v. Secure Axccess, LLC.  In that PTAB proceeding, the Board rejected an assertion that a claim directed at a computer implemented method failed to satisfy §101 under the Alice v. CLS test.   You can review the Board’s opinion by judges Barbara Benoit, Trenton Ward, and Georgianna Braden [here].

If you think this decision warrants being designated precedential by the Board, see this earlier post:  [Requesting That a Board Decision Be Made Precedential].

Federal Circuit Judges of the American Law Institute

October 6th, 2014

You might recall that the American Law Institute is the association of judges, scholars, and attorneys that formulates the various Restatements of the Law.  I have been curious why there is no Restatement of Patent Law — perhaps because there is a single intermediate appellate court.  At any rate, given the turmoil associated with 35 U.S.C. §101, among other issues, a restatement might not be a bad idea.

I was curious which Federal Circuit judges are members of the ALI.  It appears that Judges Bryson, Wallach, Dyk, and O’Malley are all members.  Congratulations to Judges Dyk and O’Malley who became members in 2013.

Riding Circuit?

September 25th, 2014

The Federal Circuit has posted the oral argument schedule for October and November and it appears that all sessions are going to be held in D.C. this year.  Usually, the Federal Circuit sits outside of D.C. during the fall.  Perhaps the court is counting its visit to Baltimore in February as its trip for the year.  Or, perhaps the court will ride circuit to a warm weather location in December.  Florida? San Diego?  U.S. District Court of the Virgin Islands (St. Thomas and St. Croix)?  U.S. District Court for the District of Puerto Rico?  U.S. District Court for the Northern Mariana Islands?  U.S. District Court of Guam?

Here’s a list of previous locations where the court rode circuit through 2009. [List]   Since 2010, the court also rode circuit to Atlanta, Oregon, Denver, and various Third Circuit locales.

Akamai v. Limelight, Take 3

September 12th, 2014

The Federal Circuit heard oral argument in Akamai v. Limelight yesterday for the third time.  The case is back at the Federal Circuit after remand from the Supreme Court.  You can listen to the oral argument [here].

Sitting by Designation

September 11th, 2014

george_h_wu_district_judgeThe Federal Circuit hasn’t had a district court judge sit by designation for quite some time.  During Chief Judge Rader’s tenure there was a marked decline in judges sitting by designation, as compared to his predecessor Chief Judge Michel.

Here’s one suggestion:  Judge George Wu of the Central District of California.

See Judge Wu’s most recent patent opinion over at Patently-O [Link].

Russell Slifer to be Keynote Speaker at BioWest 2014

September 4th, 2014

slifer

Those of you in the Denver area might be interested to know that Russell Slifer — former Micron chief patent counsel and new head of the USPTO-Denver office — will be the keynote speaker at BioWest 2014, on September 10th.  Details are available [here].