Transcript Slide 1

How Prometheus Has Upended
Patent Eligibility
An Anatomy of CLS Bank v. Alice Corp.
717 F.3d 1269 (Fed. Cir. 2013)(en banc)
Bruce D. Sunstein
Sunstein Kann Murphy & Timbers LLP
Boston
www.sunsteinlaw.com
©2013 Sunstein Kann Murphy & Timbers LLP
The Patent Claims: ‘479 Method
(No recitation of “computer”)
33. A method of exchanging obligations as between parties, each party
holding a credit record and a debit record with an exchange institution, the
credit records and debit records for exchange of predetermined obligations,
the method comprising the steps of:
(a) creating a shadow credit record and a shadow debit record for each
stakeholder party to be held independently by a supervisory institution
from the exchange institutions;
(b) obtaining from each exchange institution a start-of-day balance for
each shadow credit record and shadow debit record;
(c) for every transaction resulting in an exchange obligation, the
supervisory institution adjusting each respective party's shadow credit
record or shadow debit record, allowing only these transactions that do not
result in the value of the shadow debit record being less than the value of
the shadow credit record at any time, each said adjustment taking place in
chronological order; and
(d) at the end-of-day, the supervisory institution instructing ones of the
exchange institutions to exchange credits or debits to the credit record and
debit record of the respective parties in accordance with the adjustments of
the said permitted transactions, the credits and debits being irrevocable,
time invariant obligations placed on the exchange institutions.
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The Patent Claims: ‘375 Medium
39. A computer program product comprising a computer readable storage
medium having computer readable program code embodied in the medium for
use by a party to exchange an obligation between a first party and a second
party, the computer program product comprising:
program code for causing a computer to send a transaction from said first
party relating to an exchange obligation *1288 arising from a currency
exchange transaction between said first party and said second party; and
program code for causing a computer to allow viewing of information relating
to processing, by a supervisory institution, of said exchange obligation,
wherein said processing includes (1) maintaining information about a first
account for the first party, independent from a second account maintained by a
first exchange institution, and information about a third account for the second
party, independent from a fourth account maintained by a second exchange
institution; (2) electronically adjusting said first account and said third
account, in order to effect an exchange obligation arising from said transaction
between said first party and said second party, after ensuring that said first
party and/or said second party have adequate value in said first account
and/or said third account, respectively; and (3) generating an instruction to
said first exchange institution and/or said second exchange institution to
adjust said second account and/or said fourth account in accordance with the
adjustment of said first account and/or said third account, wherein said
instruction being an irrevocable, time invariant obligation placed on said first
exchange institution and/or said second exchange institution.
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The Patent Claims: ‘720 System
1. A data processing system to enable the exchange of an obligation
between parties, the system comprising:
a data storage unit having stored therein information about a shadow
credit record and shadow debit record for a party, independent from a
credit record and debit record maintained by an exchange institution;
and
a computer, coupled to said data storage unit, that is configured to (a)
receive a transaction; (b) electronically adjust said shadow credit
record and/or said shadow debit record in order to effect an exchange
obligation arising from said transaction, allowing only those
transactions that do not result in a value of said shadow debit record
being less than a value of said shadow credit record; and (c) generate
an instruction to said exchange institution at the end of a period of
time to adjust said credit record and/or said debit record in
accordance with the adjustment of said shadow credit record and/or
said shadow debit record, wherein said instruction being an
irrevocable, time invariant obligation placed on said exchange
institution.
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The Vote:
5 votes: Judge Lourie (with Dyk,
Prost, Reyna, and Wallach)—The
method claims are too abstract to
be patent eligible, the storage
claims are disguised method
claims, and the system claims are
merely carrying out abstract
method claims. Nothing is patent
eligible. Gottschalk v. Benson
followed.
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The Vote:
4 votes: Judge Rader (with Linn,
Moore, and O’Malley) and Moore (with
Rader, Linn, and O’Malley)—The system
claims are patent eligible because the
computer performs a specific method
as in Diehr.
2 votes: Judge Rader (with Moore): the
method claims are patent ineligible
because too abstract and not in a
computer
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The Vote:
2 votes: Judges Linn and
O’Malley—The method claims are
also patent eligible because they
correspond to the system claims
and are performed in a computer
1 vote: Judge Newman—All claims
are patent eligible because within
the statutory classes (brilliant
opinion worth studying)
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Summary of the score
7 votes (Lourie, Dyk, Prost, Reyna,
Wallach, Rader, Moore): Method claims
are not patent eligible.
5 votes (Lourie, Dyk, Prost, Reyna,
Wallach): System claims are not patent
eligible.
5 votes (Rader, Linn, Moore, O’Malley,
and Newman): System claims are patent
eligible.
3 votes (Linn, O’Malley, and Newman):
Method claims are patent eligible.
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Summary of the score
new
ground
7 votes (Lourie, Dyk, Prost, Reyna,
Wallach, Rader, Moore): Method claims
are not patent eligible.
5 votes (Lourie, Dyk, Prost, Reyna,
Wallach): System claims are not patent
eligible.
5 votes (Rader, Linn, Moore, O’Malley,
and Newman): System claims are patent
eligible.
3 votes (Linn, O’Malley, and Newman):
Method claims are patent eligible.
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The new ground
5 votes (Lourie, Dyk, Prost, Reyna,
Wallach): System claims are not patent
eligible.
“Does the claim, in practical effect, place
an abstract idea at risk of preemption?
And, if so, do the limitations of the claim,
including any computer-based
limitations, add “enough” beyond the
abstract idea itself to limit the claim to a
narrower, patent-eligible application of
that idea?”
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The new ground (cont’d)
“The computer-based limitations recited in the
system claims here cannot support any
meaningful distinction from the computerbased limitations that failed to supply an
‘inventive concept’ to the related method
claims.”
“[T]he system claims recite a handful of
computer components in generic, functional
terms that would encompass any device
capable of performing the same ubiquitous
calculation, storage, and connectivity
functions required by the method claims.
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The authority for the new ground
“[S]ee Mayo, 132 S.Ct. at 1301 (‘[The Court in
Benson] held that simply implementing a
mathematical principle on a physical machine,
namely a computer, was not a patentable
application of that principle.’).”
“For all practical purposes, every generalpurpose computer will include “a computer,”
“a data storage unit,” and “a communications
controller” that would be capable of
performing the same generalized functions
required of the claimed systems to carry out
the otherwise abstract methods recited
therein.”
12
The authority explained
“Therefore, as with the asserted method
claims, such limitations are not actually
limiting in the sense required under
§101; they provide no significant
‘inventive concept.’”
“The system claims are instead akin to
stating the abstract idea of third party
intermediation and adding the words:
‘apply it’ on a computer. See Mayo, 132
S.Ct. at 1294.”
13
Five judges in CLS Bank v. Alice Corp.
Would use Prometheus and
Benson to deny patent
eligibility to a system claim
that recites computer
components without
reciting an “inventive
concept”
14
The roots of CLS Bank v. Alice Corp.:
Gottschalk v. Benson, 409 U.S. 63 (1972),
claim 8
The method of converting signals from binary coded decimal form into
binary which comprises the steps of
(1) storing the binary coded decimal signals in a reentrant shift register,
(2) shifting the signals to the right by at least three places, until there is a
binary ‘1’ in the second position of said register,
(3) masking out said binary ‘1’ in said second position of said register,
(4) adding a binary ‘1’ to the first position of said register,
(5) shifting the signals to the left by two positions,
(6) adding a ‘1’ to said first position, and
(7) shifting the signals to the right by at least three positions in
preparation for a succeeding binary ‘1’ in the second position of said
register.
15
Benson holding, per Justice Douglas:
“The mathematical formula involved
here has no substantial practical
application except in connection with a
digital computer, which means that if the
judgment below is affirmed, the patent
would wholly pre-empt the mathematical
formula and in practical effect would be
a patent on the algorithm itself.”
409 U.S. 63.
16
Diamond v. Diehr, 450 U.S. 175 (1981)
Claims directed to a method of molding
rubber with the aid of digital computer,
including “repetitively calculating in the
computer, at frequent intervals during each
cure, the Arrhenius equation for reaction
time during the cure … and opening the
press automatically when a said comparison
indicates equivalence.”
Held, patent eligibility “is not altered by the
fact that in several steps of the process a
mathematical equation and a programmed
digital computer are used.”
17
The roots of CLS Bank v. Alice Corp.:
Mayo v. Prometheus, 132 S. Ct. 1289 (2012)
The Claims
administering a thiopurine drug to a
subject with a gastrointestinal disorder,
determining the level of a specific
metabolite in the subject,
wherein a level below a first threshold
indicates a need to increase drug dosage
and
wherein a level above a second
threshold indicates a need to decrease
drug dosage.
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The roots of CLS Bank v. Alice Corp.:
Mayo v. Prometheus, 132 S. Ct. 1289 (2012)
The Holding
“the ‘administering’ step simply refers to
the relevant audience, namely doctors
who treat patients with certain diseases
with thiopurine drugs”
“the ‘wherein’ clauses simply tell a
doctor about the relevant natural laws”
and
the determining step “tells doctors to
engage in well-understood, routine,
conventional activity previously engaged
in by scientists who work in the field”.
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The Prometheus effect
Diehr distinguished as having other steps
that “apparently added to the formula
something that in terms of patent law's
objectives had significance—they
transformed the process into an inventive
application of the formula.”
Benson approved because “the claim (like
the claims before us) was overly broad; it
did not differ significantly from a claim
that just said ‘apply the algorithm.’”
This thinking drives the Lourie faction in
CLS Bank v. Alice Corp.
20
Ultramercial v. Hulu, 722 F.3d 1335
(Fed. Cir. 6/21/13) shows the Fed. Cir. split.
1. A method for distribution of products over the Internet via a
facilitator, said method comprising the steps of:
a first step of receiving, from a content provider, media products
that are covered by intellectual property rights protection and are
available for purchase, wherein each said media product being
comprised of at least one of text data, music data, and video
data;
a second step of selecting a sponsor message to be associated
with the media product, said sponsor message being selected
from a plurality of sponsor messages, said second step including
accessing an activity log to verify that the total number of times
which the sponsor message has been previously presented is less
than the number of transaction cycles contracted by the sponsor
of the sponsor message;
… offering to a consumer access to the media product without
charge to the consumer on the precondition that the consumer
views the sponsor message
etc.
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Ultramercial v. Hulu, opinion by Raider
(with O’Malley)
The claimed invention is a method for monetizing and
distributing copyrighted products over the Internet.
As a method, it easily satisfies § 100's definition of
“process” and thus falls within a § 101 category of
patent-eligible subject matter. Thus, this court focuses
on whether the claim is meaningfully limited to
something less than an abstract idea that pre-empts
use of an abstract concept.
“[T]he '545 patent claims a particular internet and
computer-based method for monetizing copyrighted
products” using the specific steps recited in the
claims. “[I]t is clear that several steps plainly require
that the method be performed through computers, on
the internet, and in a cyber-market environment.”
22
Ultramercial v. Hulu, Raider opinion
(cont’d)
“In other words, a programmed computer contains circuitry
unique to that computer. That ‘new machine’ could be claimed in
terms of a complex array of hardware circuits, or more efficiently,
in terms of the programming that facilitates a unique function.”
This court understands that the broadly claimed method in the
'545 patent does not specify a particular mechanism for
delivering media content to the consumer (i.e., FTP downloads,
email, or real-time streaming). This breadth and lack of
specificity does not render the claimed subject matter
impermissibly abstract. Assuming the patent provides sufficient
disclosure to enable a person of ordinary skill in the art to
practice the invention and to satisfy the written description
requirement, the disclosure need not detail the particular
instrumentalities for each step in the process.
“[A]s a practical application of the general concept of advertising
as currency and an improvement to prior art technology, the
claimed invention is not ‘so manifestly abstract as to override the
statutory language of section 101.’”
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Ultramercial v. Hulu, Lourie concuring
opinion
“The plurality opinion in CLS Bank identified a two-step process,
derived from Mayo, for analyzing patent eligibility under § 101. First,
a court must identify ‘whether the claimed invention fits within one of
the four statutory classes set out in § 101.’ … Second, one must
assess whether any of the judicial exceptions to subject-matter
eligibility apply, including whether the claims are to patent-ineligible
abstract ideas.”
“In the case of abstractness, as discussed in CLS Bank, we must
determine whether the claim poses ‘any risk of preempting an
abstract idea.’ … To do so we must first ‘identify and define whatever
fundamental concept appears wrapped up in the claim’; a claim
construction may be helpful in this analysis. … Then, proceeding with
the preemption analysis, the balance of the claim is evaluated to
determine whether ‘additional substantive limitations ... narrow,
confine, or otherwise tie down the claim so that, in practical terms, it
does not cover the full abstract idea itself.’”
The “limitations in these claims represent significantly more than the
underlying abstract idea of using advertising as an exchange or
currency and, as a consequence, do not preempt the use of that idea
in all fields.”
24
Accenture v. Guidewire, No. 2011-1486
(Fed. Cir. 9/5/13). Claim 1:
A system for generating tasks to be performed in an
insurance organization, the system comprising:
an insurance transaction database for storing information
related to an insurance transaction, the insurance transaction
database comprising a claim folder containing the
information related to the insurance transaction decomposed
into a plurality of levels from the group comprising a policy
level, a claim level, a participant level and a line level,
wherein the plurality of levels reflects a policy, the
information related to the insurance transaction, claimants
and an insured person in a structured format;
a task library database for storing rules for determining tasks
to be completed upon an occurrence of an event;
a client component …
a server component … the server component including an
event processor …
wherein the event processor ….
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Accenture v. Guidewire, Opinion by
Lourie (with Reyna)
“We conclude that the district court’s
decision on patent-ineligibility of the
system claims must also be affirmed,
both because the system claims offer no
meaningful limitations beyond the
method claims that have been held
patent-ineligible and because, when
considered on their own, under Mayo
and our plurality opinion in CLS Bank,
they fail to pass muster.”
26
Accenture v. Guidewire, dissenting
opinion by Rader
“[A]ny claim can be stripped down, simplified,
generalized, or paraphrased to remove all of
its concrete limitations, until at its core,
something that could be characterized as an
abstract idea is revealed. A court cannot go
hunting for abstractions by ignoring the
concrete, palpable, tangible limitations of the
invention the patentee actually claims.”
Ultramercial, Inc. v. Hulu, LLC, 2010-1544,
2013 WL 3111303, at *8 (Fed. Cir. June 21,
2013). In my judgment, the court has done
precisely that. Therefore, I respectfully
dissent.”
27
Judge Moore in CLS Bank v. Alice Corp.
“I am concerned that the current
interpretation of § 101, and in particular
the abstract idea exception, is causing a
free fall in the patent system. … See
Bilski, Prometheus, Myriad (under
consideration). … Holding that all of
these claims are directed to no more
than an abstract idea gives staggering
breadth to what is meant to be a narrow
judicial exception.”
28
Judge Moore (cont’d)
“[I]f all of these claims, including
the system claims, are not patenteligible, this case is the death of
hundreds of thousands of patents,
including all business method,
financial system, and software
patents as well as many computer
implemented and telecommunications patents.”
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Conclusion
Uncertainty of the law relating to patent eligibility,
introduced by Mayo v. Prometheus, and now manifested in
cases like CLS Bank v. Alice Corp., desperately needs to be
repaired. If repaired by a court, it will be the very court that
unanimously delivered Mayo v. Prometheus.
A one sentence legislative amendment would solve these
problems:
Section 101 of Title 35 of the United States Code shall be
amended by adding the following sentence at the end
thereof:
An invention that produces a useful, concrete, and tangible
result shall not be denied eligibility for a patent on the
ground that it is directed to a law of nature, natural
phenomenon, or abstract idea.
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Thank you.
[email protected]
www.sunsteinlaw.com