- 1 - William Penn Chapter AIIM An Overview of Patents, and Computer- and Internet-Related Issues Presented by Steven Meyer, Esq. Woodcock Washburn LLP for the William Penn Chapter AIIM November 13, 2003

- 2 - William Penn Chapter AIIM Agenda ä What is and is not a Patent ä Purpose of a Patent ä What is Patentable ä What are the Parts of a Patent ä Process of Inventing and Getting a Patent

- 3 - William Penn Chapter AIIM Agenda ä Internet Access to Patents ä The Rest of the World ä Software-Related Patents ä Patent Information on the Internet

- 4 - William Penn Chapter AIIM What is not a Patent ä Copyrights -- protect expressions of ideas ä Trade Secrets -- anything that is kept secret by an entity for strategic or business advantage; only a secret as long as it is kept a secret. ä Trademarks -- anything that identifies source of origin of a good or service in commerce   ®

- 5 - William Penn Chapter AIIM What is a Patent ä A grant from the US government that allows patentee to prevent another from making, selling or using the invention as it is claimed in the patent ä A reference that is available to define the state of the art and to prevent others from patenting what is already known in the prior art.

- 6 - William Penn Chapter AIIM Purpose of a Patent ä Competitive advantage over competitors ä can’t make the patented invention ä can’t get their own patents ä Use patent as money-making device by selling or licensing patent ä Useful as “cross-licensing ammunition”

- 7 - William Penn Chapter AIIM What is Patentable ä Inventorship ä Utility ä Process, Machine, Manufacture, Composition of Matter ä Novelty ä Non-obviousness

- 8 - William Penn Chapter AIIM The Parts of a Patent ä Specification -- detailed description of preferred embodiments of invention ä Claims -- numbered paragraphs at end of patent -- set forth legal metes and bounds of patent right granted ä Drawings -- illustrate preferred embodiments of invention and show every element recited in claims

- 9 - William Penn Chapter AIIM Process of Inventing and Getting a Patent ä Do not assume what you are doing is NOT patentable. ä Get a patent attorney ä Disclose what you are doing in terms of structure and function ä Attorney can do patentability search

William Penn Chapter AIIM Process of Inventing and Getting a Patent ä Based on search, attorney opines on patentability ä Decide whether to prepare and file patent application ä Patent attorney drafts patent application: claims, specifications, and drawing, and sends draft to inventor(s) / client

William Penn Chapter AIIM Process of Inventing and Getting a Patent ä Based on feedback, attorney prepares final draft and sends out with formal papers: declaration and assignment ä Application filed with U.S. Patent & Trademark Office (PTO) in Washington, D.C.

William Penn Chapter AIIM Process of Inventing and Getting a Patent ä Patent application can take 6-12 months OR MORE to receive substantive response (Office Action) -- computer- related applications can take longer. ä Office Action - written report from PTO with opinion on patentability based on prior art search for claimed invention ä Can allow / reject some or all claims

William Penn Chapter AIIM Process of Inventing and Getting a Patent ä Applicant(s) respond to Office Action as necessary ä Hopefully, after some back-and-forth, claims and application are allowed

William Penn Chapter AIIM Process of Inventing and Getting a Patent ä Patent is granted or not granted

William Penn Chapter AIIM What about the Rest of the World? ä Most every other country in the world has a patent system AND many countries have joined multi- national patent organizations ä Under Paris Convention, can foreign-file US application in any signatory country or body (EPO, WIPO) ä Rules on patentability are similar, procedures can vary ä Examining vs. non-examining countries

William Penn Chapter AIIM BUT ä US – first public disclosure of invention starts one-year grace period within which patent application must be filed (if not already), else BARRED ä Rest of World (for most part) – NO grace period, for most part – public disclosure without application on file is BAR

William Penn Chapter AIIM Patent Cooperation Treaty ä Simplifies and reduces the cost of obtaining international patent protection ä Can file one PCT application to simultaneously seek protection for an invention in most countries ä Result is NOT a patent, but....

William Penn Chapter AIIM Software-Related Patents ä Software-related inventions ARE patentable BUT only in certain formats ä NOT patentable: ä Method performed by computer WITHOUT any physical post-computational activity ä Data structure

William Penn Chapter AIIM Software-Related Patents ä Patentable: ä Computer-readable medium with method thereon for being performed by computer, or with data structure ä Computer running method thereon ä The difference? Physicality vs. Etherealness

William Penn Chapter AIIM Software-Related Patents ä Why Physicality? ä Longstanding ‘tradition’ that patents are for things you can see or touch, or for methods that produce things that you can see or touch ä For most of the 19 th century a U.S. patent application had to include a working model of the invention ä This has eased significantly -

William Penn Chapter AIIM A Primer on Patentable Subject Matter ä Section 101 of the Patent Statute - 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...

William Penn Chapter AIIM BUT ä Body of case law beginning in the 19 th century established as NOT PATENTABLE inventions amounting to: ä Mathematical Algorithms ä Business Methods ä Initially, many software-related patent applications were rejected on both of these bases

William Penn Chapter AIIM HOWEVER ä New View - ä “ANYTHING UNDER THE SUN THAT IS MADE BY MAN” can be the basis for patentable subject matter Chakrabarty, 447 U.S. 303 (1980) ä The Harvard Mouse case ä NOT MADE BY MAN - “LAWS OF NATURE, NATURAL PHENOMENA, AND ABSTRACT IDEAS” Diehr, 450 U.S. 175 (1981)

William Penn Chapter AIIM In re Alappat ä 33 F.3d 1526 (Fed. Cir. 1994) (in banc) ä The first crack in the dam ä The technology at issue: A way to create a smooth waveform display in a digital oscilloscope. To overcome the jaggedness caused by the limited resolution of a CRT display, Alappat's invention provided an algorithm for properly setting the illumination intensity of display pixels.

William Penn Chapter AIIM Holding: ä The Court of Appeals reversed the Patent Office rejection of the claim under § 101 as being directed to a mathematical algorithm. ä Recited claim limitations represented elements that performed a mathematical algorithm, BUT the claimed invention as a whole was directed to a combination of interrelated elements which combine to form a “new machine.”

William Penn Chapter AIIM In Summary: ä An old computer is a “new machine” if it is programmed in a new way. ä Such a “new machine” is patentable subject matter, even if the novelty is tied to a mathematical algorithm, if it produces a “useful, concrete and tangible result.”

William Penn Chapter AIIM State Street Bank & Trust Co. v. Signature Financial Group, Inc. ä 149 F.3d 1368 (Fed. Cir. 1998) ä The dam breaks ä Patent Claims - Directed to “Hub and Spoke” Financial System that allows several mutual fund “spokes” to pool their resources in a single portfolio “hub”

William Penn Chapter AIIM Court’s Finding: ä “[T]he transformation of data, representing discrete dollar amounts, by a machine through a series of mathematical calculations into a final share price, constitutes a practical application of a mathematical algorithm, formula, or calculation, because it produces 'a useful concrete and tangible result' -- a final share price momentarily fixed for recording and reporting purposes and even accepted and relied upon by regulatory authorities and in subsequent trades.”

William Penn Chapter AIIM HOLDING ä “[C]ertain types of mathematical subject matter, standing alone, represent nothing more than abstract ideas until reduced to some type of practical application, i.e., 'a useful, concrete, and tangible result.'”

William Penn Chapter AIIM ALSO ä The Business Method Exception Is DEAD

William Penn Chapter AIIM SO – ä A software-related inventions can be the basis for patentable subject matter if USEFUL as a practical application of technology: ä Production of a smooth waveform on a rasterizer monitor. In re Alappat ä Transformation of electrocardiograph signals from a patients heartbeat. State Street Bank

William Penn Chapter AIIM BUT ä Courts and the PTO have interpreted State Street Bank and Alappat as still requiring software-related claims to recite something physical or something that produces a physical result

William Penn Chapter AIIM Software-Related Patents ä Real-World Reason for Physicality ä An almost irrational animosity to patent applicants that don’t really ‘make’ anything yet make oodles of money doing it – the Microsofts of the world ä This despite the fact that the Microsofts are much more likely to be patent defendants than plaintiffs

William Penn Chapter AIIM Software-Related Patents ä Animosity in PTO patent examination process ä Weak rejections based on type of subject matter ä Weak rejections where the Examiner can only say the claims are ‘too broad’ ä Rejections where rationale is that ‘any computer can be programmed to do that’ ä Fortunately, most of these rejections can be overcome, but takes time and money

William Penn Chapter AIIM Software-Related Patents ä NEVERTHELESS ä Microsoft has almost 3000 US patents, most relating to software ä Microsoft intends to file 1800 US patent applications this fiscal year

William Penn Chapter AIIM Software-Related Patents ä US vs. Rest of World – ä US – PTO and Courts have grudgingly allowed computer-related inventions to be patentable, and only in last 5-10 years or so ä Rest of World – still significant pockets of incredible hostility to computer-related inventions, almost to point of irrationality

William Penn Chapter AIIM US Patent Info on Internet ä ä ä Can search by Patent Number, Inventor, Assignee, Title, Abstract, Claims, Agent, etc.

William Penn Chapter AIIM World Patent Info on Internet ä ä From the World Intellectual Property Organization ä ä From the European Patent Office

William Penn Chapter AIIM A Word of Caution ä Could be charged with ‘knowledge’ of any patent you find from searching on the Internet or elsewhere ä IF you ‘know’ of a patent AND you are found to infringe AND your knowledge of the patent while infringing is proven, could be liable for WILLFUL infringement – monetary damages could be trebled

William Penn Chapter AIIM Questions???