Patents in Higher Education: Issues Arising from the Blackboard Case by Bruce Wieder May 29, 2008

2 Why Care About Patents Now?

3 Blackboard sued Desire2Learn for infringement of U.S. Patent No. 6,988,138. (The patent issued on January 17, 2006.)

4 The ‘138 patent is based on three provisional patent applications filed from mid-1999 to early 2000 which were combined into a single application in June of 2000.

5 What Does the Blackboard Patent Cover?

6 The ‘138 patent has 2 independent claims.

7 What Does the Blackboard Patent Cover? The ‘138 patent has 2 independent claims. The first independent claim (claim 1) was found by the trial court to be invalid for indefiniteness.

8 What Does the Blackboard Patent Cover? The ‘138 patent has 2 independent claims. The second independent claim (claim 36) was found by the jury to have been infringed by Desire2Learn.

9 Claim 36 of the ‘138 Patent claims: An online education method for a community of users in a network based system comprising the steps of: a. establishing that each user is capable of having predefined characteristics indicative of multiple predetermined roles in the system and each role providing a level of access to and control of a plurality of course files; b. establishing a course to be offered online, comprising i. generating a set of course files for use with teaching a course; ii. transferring the course files to a server computer for storage and iii. allowing access to and control of the course files according to the established roles for the users according to step (a); c. providing a predetermined level of access and control over the network to the course files to users with an established role as a student user enrolled in the course; and d. providing a predetermined level of access and control over the network to the course files to users with an established role other than a student user enrolled in the course.

10 Presumption of Validity Claims in an issued U.S. patent are presumed valid.

11 Presumption of Validity Claims in an issued U.S. patent are presumed valid. The burden of proving the claims invalid is on the party challenging the validity.

12 Presumption of Validity Claims in an issued U.S. patent are presumed valid. The burden of proving the claims invalid is on the party challenging the validity. The challenger must prove invalidity by clear and convincing evidence.

13 Blackboard v. Desire2Learn On March 11, 2008, the court entered a judgment and permanent injunction against Desire2Learn. The court awarded Blackboard $3,265,633 plus post- judgment interest. The court enjoined the sale and use of the Desire2Learn Learning Environment (version and earlier). The court granted a 60 day stay.

14 Blackboard v. Desire2Learn Desire2Learn filed post-judgment motions asking the court to: reduce the damage award; and find as a matter of law that the claims were not infringed and were invalid.

15 Blackboard v. Desire2Learn Desire2Learn filed post-judgment motions asking the court to: reduce the damage award; and find as a matter of law that the claims were not infringed and were invalid. The court denied these motions on May 5, but extended the stay until June 11. On May 12, Desire2Learn filed its notice of appeal. On May 13, Blackboard filed its notice of appeal.

16 How Did We Get to This Point in the Patent Law?

17 What is Patentable Subject Matter?

18 What is Patentable Subject Matter? The U.S. patent act is found at Title 35 of the United States Code. Section 101 of Title 35 states: “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 therefore, subject to the conditions and requirement of this title.” [Section 103 requires that the claimed invention also be nonobvious in view of what was known in the art.]

19 Does this mean that “anything under the sun made by man” is patentable?

20 “A person may have ‘invented’ a machine or a manufacture, which may include anything under the sun made by man, but it is not necessarily patentable under Section 101 unless the conditions of the title are fulfilled.” S. Rep. No. 1979, 82d Cong., 2d Sess., 5 (1952); H.R. Rep. No. 1923, 82d Cong., 2d Sess, 6 (1952).

21 The Supreme Court said “[p]henomena of nature, though just discovered, mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work.” Gottschalk v. Benson, 409 U.S. 63, 67 (1972)

22 Consider: You invent MPEG2 encoding.

23 Consider: You invent MPEG2 encoding. How do you protect your invention?

24 Is MPEG2 a: - Process? - Machine? - Manufacture? - Composition of Matter?

25 In 1998, the Federal Circuit decided State Street Bank & Trust Co. v. Signature Financial Group, Inc. (149 F.3d 1368).

26 In 1999, the Federal Circuit decided AT&T v. Excel Communications, Inc. (172 F.3d 1352).

27 Was the U.S. Patent and Trademark Office ready for the “business method” patent applications that arrived following State Street and AT&T?

28 On September 20, 2007, the Federal Circuit decided two cases (In re Comiskey and In re Nuijten) involving the question of patentable subject matter.

29 In In re Comiskey, Stephen Comiskey sought to patent: A method for mandatory arbitration resolution regarding one or more unilateral documents comprising the steps of: enrolling a person and one or more unilateral documents associated with the person in a mandatory arbitration system at a time prior to or as of the time of creation of or execution of the one or more unilateral documents; incorporating arbitration language, that is specific to the enrolled person, in the previously enrolled unilateral document wherein the arbitration language provides that any contested issue related to the unilateral document must be presented to the mandatory arbitration system, in which the person and the one or more unilateral documents are enrolled, for binding arbitration wherein the contested issue comprises one or more of a challenge to the documents, interpretation of the documents, interpretation or application of terms of the documents and execution of the documents or terms of the documents; requiring a complainant to submit a request for arbitration resolution to the mandatory arbitration system wherein the request is directed to the contested issue related to the unilateral document containing the arbitration language; conducting arbitration resolution for the contested issue related to the unilateral document in response to the request for arbitration resolution; providing support to the arbitration resolution; and determining an award or a decision for the contested issue related to the unilateral document in accordance with the incorporated arbitration language, wherein the award or the decision is final and binding with respect to the complainant.

30 Notice that Comiskey’s claim does not require the use of any device, i.e., no computer is required.

31 In re Comiskey ruled that “the patent statute [§101] does not allow patents on particular systems that depend for their operation on human intelligence alone, a field of endeavor that both the framers and Congress intended to be beyond the reach of patentable subject matter.” In re Comiskey also said that “[t]he routine addition of modern electronics to an otherwise unpatentable invention typically creates a prima case of obviousness [and thus invalidity].”

32 In In re Nuijten, Petrus Nuijten sought to patent a method of embedding data in a signal (claims allowed), a system for encoding a signal (claims allowed), and a signal. At issue on appeal was claim 14 which read: “A signal with embedded supplemental data, the signal being encoded in accordance with a given encoding process and selected samples of the signal representing the supplemental data, and at least one of the samples preceding the selected samples is different from the sample corresponding to the given encoding process.”

33 Notice that the claim covers “physical but transitory forms of signal transmission….”

34 In re Nuijten ruled that a signal was not a process or a machine. In considering whether the signal could be an article of manufacture, the court said that articles of manufacture are “tangible articles or commodities. A transient electrical or electromagnetic transmission does not fit within that definition.”

35 On May 8, 2009, the Federal Circuit, sitting en banc, heard argument in In re Bilski.

36 Bernard Bilski seeks to patent: 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.

37 The en banc Federal Circuit asked the parties to address: “Whether the claimed subject matter is not patent eligible because it constitutes an abstract idea or mental process; when does a claim that contains both mental and physical steps create patent-eligible subject matter?” “Whether a method or process must result in a physical transformation of an article or be tied to a machine to be patent-eligible subject matter under section 101?” “Whether it is appropriate to reconsider State Street Bank & Trust Co. v. Signature Financial Group, Inc. … and AT&T v. Excel Communications, Inc. …, in this case and, if so, whether those cases should be overruled in any respect?

38 Recall that Section 103 of Title 35 requires that the claimed invention be nonobvious in view of what was known in the art.

39 Prior to April 30, 2007, to prove that an invention was obvious, it was often necessary to find in the prior art a teaching, suggestion or motivation to make the claimed combination of elements that make up the invention.

40 On April 30, 2007, the Supreme Court decided KSR International Co. v. Teleflex Inc. KSR found the teaching, suggestion or motivation test to be too strict. The Court stated that “[w]hen there is a design need or market of identified, predictable solutions, a person of ordinary skill has a good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense. In that instance the fact that a combination was obvious to try might show that it was obvious under ‘103 [and thus not patentable].”

41 One final note: On May 19, Techradium, Inc. sued Blackboard Connect, Inc. and Blackboard, Inc. for infringement. Techradium claims that NTI Inc., now owned by Blackboard, infringes three Techradium patents related to “mass notification systems that allow a group administrator to send a single message that will be delivered to the members of the group via numerous communication devices such as cell phones, pagers, standard landline telephones, and . … Prior technology required multiple messages to be sent via the mode the group member requested.” The patents involved are U.S. Patent Nos. 7,130,389, 7,174,005 and 7,362,852.

42 Thank you. Questions?