1 Patent Preparation and Prosecution under Uncertain Patent Eligibility Standards Bruce D. Sunstein Bromberg & Sunstein LLP Boston © 2007 Bromberg & Sunstein LLP

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3 Claims affect the reception of an application and of a patent Claim drafting distinctions and tensions are critical in business method patents  Claim breadth v. claim abstraction  Context of the subject matter But they are not new

4 A seminal case: O’Reilly v. Morse, 56 U.S. 62 (1854) Yes, Samuel F.B. Morse.

5 This claim valid, 1854: “1 st. … making use of the motive power of magnetism … developed by the action of … current as a means of operating … machinery … to imprint signals upon paper … or to produce sounds … for the purpose of telegraphic communication at any distances.” 56 U.S. at 112,

6 This claim invalid, 1854: “Eighth. … the use of the motive power of the electric … current, which I call electromagnetism, however developed, for marking or printing … characters, signs, or letters, at any distances….” 56 U.S. at

7 Operative principle: Abstract principles won't be protected. A patent claim must reflect structure,  namely, the structure by which principles are harnessed to practical effect.

8 In re Alappat: “Phenomena of nature and abstract scientific and mathematical principles have always been excluded from the patent system. Some have justified this exclusion simply on the ground of lack of ‘utility’; some on the ground of lack of ‘novelty’; and some on the ground that laws of nature, albeit newly discovered, are the heritage of humankind. On whatever theory, the unpatentability of the principle does not defeat patentability of its practical applications.” 33 F.3d 1526, 1569 (Fed. Cir. 1994)(J. Newman concurring), citing O'Reilly v. Morse.

9 What is the rule today? Not different! Merely abstract ideas are not “useful” and not patentable. An algorithm applied in a useful way is patentable. State Street Bank & Tr. Co. v. Signature Financial Group, Inc., 149 F.3d 1368, 1373 (Fed Cir. 1998) (Alappat followed).

10 What State Street also holds Patents can’t be invalidated just because they claim “business methods” (OK to patent a system for managing a mutual fund investment structure) 149 F.3d at

11 What State Street means “Anything under the sun that is made by man” can be patented If new, non-obvious, and If harnessed to practical effect as claimed 149 F.3d at 1373 and 1377.

12 State Street threatened: Lab. Corp. v. Metabolite, 126 S.Ct (2006)(dissent) method of detecting vitamin deficiency  drawn to “an unpatentable ‘natural phenomenon’” Supreme Court last ruled on statutory subject matter in Diamond v. Diehr in 1981  17 years before State Street  More than a quarter of a century ago How will the Court treat State Street?

13 Example 1: the claim in Labcorp. A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of:  assaying a body fluid for an elevated level of total homocysteine; and  correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.

14 The claim in Labcorp. fixed in hindsight: A method for detecting a likelihood of deficiency of cobalamin or folate in a warm- blooded animal[s] subject comprising [the steps of]:  assaying a body fluid of the animal subject for a [an elevated] level of total homocysteine;  comparing the assayed level of total homocysteine with a normative range of levels thereof determined by analysis of levels of total homocysteine in a relevant population of subjects having no apparent deficiency of cobalamin or folate; and  classifying the animal subject as likely deficient in cobalamin or folate if the assayed level is above the normative range so determined […].

15 How does Justice Breyer like our improved claim? One might, of course, reduce the “process” to a series of steps, e.g., Step 1: gather data; Step 2: read a number; Step 3: compare the number with the norm; Step 4: act accordingly. But one can reduce any process to a series of steps. The question is what those steps embody. And here, aside from the unpatented test, they embody only the correlation between homocysteine and vitamin deficiency that the researchers uncovered.

16 Example 2: Claim in Ex parte Bilski, 2006 WL (Bd. Pat. App. & Int. 2006) 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.

17 Example 2: Claim in Ex parte Bilski, lessons: Not limited to a specific context Not limited to processes performed in a computer No physical transformation Held: not drawn to statutory subject matter

18 Example 3: Patent 5,960,411 (Amazon “One- Click”) Preamble and first line of body: “A method of placing an order for an item comprising: under control of a client system,”

19 Amazon “One-Click” displaying information identifying the item; and in response to only a single action being performed, sending a request to order the item along with an identifier of a purchaser of the item to a server system; under control of a single-action ordering component of the server system, receiving the request; retrieving additional information previously stored for the purchaser identified by the identifier in the received request; and generating an order to purchase the requested item for the purchaser identified by the identifier in the received request using the retrieved additional information; and fulfilling the generated order to complete purchase of the item whereby the item is ordered without using a shopping cart ordering model.

20 Amazon one-click litigation amazon.com v. barnesandnoble.com, 239 F.3d 1343 (Fed. Cir. 2001) Grant of preliminary injunction vacated, since substantial questions raised as to patent validity, based on prior art. 239 F.3d at 1367 and passim. But: no question as to non-statutory subject matter, and claims held likely infringed. 239 F.3d at Amazon settled with barnesandnoble.com.

21 Sunstein principle 1: claim breadth does not require abstraction Breadth relates to coverage of varied schemes for implementation Abstraction relates to removal of context from the structure of the claim

22 Sunstein principle 2: claim structure needs the context of the subject matter The context anchors the subject matter of the claim  Helps illuminate the meaning of the claim  Clear claims are easier to enforce The context makes the claim statutory by making the subject matter concrete

23 Sunstein principle 3: A claim directed to a physical trans- formation that results from harnessing a discovery may fare better The physical transformation moves the claim further away from an unpatentable discovery The physical transformation supplies context to the subject matter, making the subject matter less abstract

24 Why prior art is a big deal Software patents and business method patents often use vocabulary that is not standardized, so finding prior art is difficult, even when it exists Failure to cite and to know relevant prior art undermines patent validity Early knowledge of prior art required to claim efficiently in the compact prosecution environment of the new continuation rules Prior art, when known, can be used to provide a practical context in which to claim subject matter—a help in making subject matter statutory

25 Practical Lessons Work to identify extensive prior art and use it to provide a practical context for the subject matter to be claimed Use language in the claims to tie the subject matter to the practical context: “a useful, concrete and tangible result” (State Street) Where possible, claim subject matter wherein a discovery has been harnessed to bring about a physical transformation Make a record of the prior art to establish firmly both novelty and non-obviousness