Software Patents Michael I. Shamos, Ph.D., J.D.

Software Patents Michael I. Shamos, Ph.D., J.D.
Institute for Software Research School of Computer Science Carnegie Mellon University LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS
Software Patents Software is patentable. Should it be? What is software? Can it be distinguished from other inventions? What about software embedded in circuits? Arguments for: The purpose of patents is to encourage innovation Why shouldn’t software inventors be rewarded like all others? Arguments against: 20-year term is too long for a very fast moving industry Patents inhibit software development. Constant searching for infringement? Patent suits can destroy small companies LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

Software Subject Matter
To be patentable, an invention must be a process, machine, manufacture, or composition of matter How does software fit in? (1) a process (2) a machine (computer programmed in a particular way) a “system” is a machine (3) a manufacture (machine-readable medium containing program instructions) Algorithms in the abstract (manipulation of numbers or symbols) are not patentable Algorithms that produce useful results are patentable LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

Valuable Software Patents
Nokia v. Apple (July 2017) Apple paid $2 billion to settle a case involving 32 Nokia smartphone patents. Sprint v. Time-Warner Cable (March 2017) Jury award of $139 million for infringement of Voice over IP patents. Award might be tripled. ZeniMax v Oculus (February 2017) Jury award of $500 million against for infringement of CMU v. Marvell (December 2012) Jury award of $1.16 billion against Marvell Increased by the Court to $1.54 billion (CMU endowment is only 1.37 billion) Reduced on appeal to $278 million for PAST DAMAGES Settled for $750 million LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS
TYLER DIVISION SOVERAIN SOFTWARE LLC, § Plaintiff, § § Hon. Leonard E. Davis v § § Civil Action No: 6-04CV14 AMAZON.COM, INC., § Defendant. § Three patents obtained by Open Market, Inc. Acquired by Divine, Inc. Divine went bankrupt Soverain bought patents out of Divine’s bankruptcy for $750K Soverain didn’t invent anything, but owns the patents January 2004: case filed August 2005: Amazon paid Soverain $40M to settle LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

Patent Litigation Phases
Claim interpretation What did the words of the claims mean to one of ordinary skill in the art when the application was filed? Determination is made by the judge alone Infringement Given the claim interpretation, does the defendant infringe the claim? Invalidity Given the claim interpretation, is the claim valid? EXPERT TESTIMONY PRE-TRIAL (JUDGE) PRE-TRIAL (JUDGE) OR AT TRIAL (JURY) LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

Prior Art An invention is not patentable if it was in public use or on sale more than 1 year before the date of the patent application; or it was patented or described in a printed publication before the date of invention; or “the differences between the subject matter … and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.” 35 U.S.C. §103 PRIOR ART REJECTIONS LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

Patent Litigation The patent owner must prove infringement by a preponderance of the evidence (more likely than not) The defendant has several defenses: Non-infringement. We didn’t infringe. Invalidity. The patent should not have been issued. Not new or new but obvious. Inequitable conduct. The inventor failed to disclose relevant prior art to the Patent Office. … Standard of proof: “clear and convincing evidence” LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

Levergood ’780 Claim 1 1. A method of processing service requests from a client to a server system through a network, said method comprising the steps of: [a] forwarding a service request from the client to the server system, wherein communications between the client and server system are according to hypertext transfer protocol; [b] returning a session identifier from the server system to the client; and [c] appending as part of a path name in a uniform resource locator the session identifier to the request and to subsequent service requests from the client to the server system within a session of requests.

Claim Interpretation IS A REQUEST A SINGLE MESSAGE? 1. A method of processing service requests from a client to a server system through a network, said method comprising the steps of: [a] forwarding a service request from the client to the server system, wherein communications between the client and server system are according to hypertext transfer protocol; [b] returning a session identifier from the server system to the client; and [c] appending as part of a path name in a uniform resource locator the session identifier to the request and to subsequent service requests from the client to the server system within a session of requests. IS THIS RESTRICTED TO HTTP 1.0? MUST IT BE CONTIGUOUS? DOES THIS ONLY MEAN “ADD AT END”? DOES THIS INCLUDE THE FILE NAME? MUST A SESSION BE UNINTERRUPTED? BETWEEN ONE CLIENT AND ONE SERVER?

The Court’s Interpretations
hypertext transfer protocol The client/server protocol used to access information on the World Wide Web (not limited to HTTP 1.0) session A series of requests and responses to perform a complete task or set of tasks between a client and a server system session identifier A text string that identifies a session (not necessarily numeric) path name A sequence of zero or more elements that follows the host address in a URL (not excluding the file name and after) appending Tagging, adding, affixing or supplementing (not just a suffix) LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

An Invalidity Argument
From “Using Tcl to Process HTML Forms,” by Glenn Trewitt, allegedly published in May 1994 as a DEC Tech Report. (’780 patent filing date: June 1995) LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

Invalidity Is the Tech report a “printed publication” as used in the statute? Is there a difference between maintaining “state” and maintaining a “session”? Is there any mention of including the “handle” in subsequent service requests? What is the effect of the “speculative” language? Patent Office determined “no”! Not “generally available.” Amazon moved to prevent me from testifying on the distinction. No. Reference mentions only one element of the claim Does the reference instruct the reader to make the invention? LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

The Result Infringement was clear Amazon could not demonstrate invalidity The case settled 3 days before trial for $40 million Years later, in a different case, the claims were found invalid as obvious. (Amazon doesn’t get its money back.) LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

Alice Corp. v. CLS Bank (Sup. Ct., 2014)
Disallows patents on “abstract ideas” Alice owned patents on mitigating settlement risk in financial transactions. “Settlement risk” is the risk that only one party to a transaction will pay It sued CLS Bank for infringement The District Court in the District of D.C. ruled that the claims were not patentable subject matter The Federal Circuit affirmed. Alice appealed to the Supreme Court LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

Claim 33 of U.S. Patent 5,970,479 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: 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; obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record; 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 at the end-of-day, the supervisory institution instructing on[e] 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. LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

“all inventions at some level embody, use, reflect, rest upon, or apply abstract ideas “Laws of nature, natural phenomena, and abstract ideas are not patentable.” Granting a patent “would pre-empt use of this approach in all fields, and would effectively grant a monopoly over an abstract idea.” “Laws of nature, natural phenomena, and abstract ideas are the basic tools of scientific and technological work.” “We must distinguish between patents that claim the ‘buildin[g] block[s]’ of human ingenuity and those that integrate the building blocks into something more” LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

“The claims before us are drawn to the concept of the use of a third party to mitigate settlement risk. … the concept of intermediated settlement is a fundamental economic practice long prevalent in our system of commerce.” “The method claims, which merely require generic computer implementation, fail to transform that abstract idea into a patent-eligible invention.” “If a patent’s recitation of a computer amounts to a mere instruction to “implemen[t]” an abstract idea on a computer, that addition cannot impart patent eligibility. Affirmed. LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

The Alice Two-Step Analysis
Is the claim directed to a “patent-ineligible concept”? If not, the claim may be patentable else go to step 2. Consider the elements of each claim both individually and as an ordered combination to determine whether the additional elements “transform the nature of the claim” into a patent-eligible application. Step 2 is a search for an “inventive concept” -- some element or combination of elements sufficient to ensure that the claim in practice amounts to “significantly more” than a patent on an ineligible idea. Use of conventional elements in their usual way is not an “inventive concept.” LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS 20

Enfish v. Microsoft (Fed. Cir., May 12, 2016)
U.S. Patent 6,151,604 “we find that the claims at issue in this appeal are not directed to an abstract idea within the meaning of Alice. Rather, they are directed to a specific improvement to the way computers operate, embodied in the self-referential table. LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS 21

Intellectual Ventures v. Symantec (Fed. Cir., Sept. 30, 2016)
U.S. Patent 5,987,610, claim 7: “claim 7 involves an idea that originated in the computer era—computer virus screening. But the idea of virus screening was nonetheless well known when the ’610 patent was filed. Performing virus screening was a long prevalent practice in the field of computers, and, as the patent admits, performed by many computer users. The specification recites conventional “virus screening software.” By itself, virus screening is well-known and constitutes an abstract idea. At step two of Mayo/Alice, there is no other aspect of the claim that is anything but conventional. Just as performance of an abstract idea on the Internet is abstract, so too the performance of an abstract concept in the environment of the telephone network is abstract.” CLAIM HELD INVALID AS AN ABSTRACT IDEA 22

Allvoice v. Microsoft (Fed. Cir., May 22, 2015)
Claim 60 of U.S. Patent 5,799,273: Problem: Allvoice asserted that the “means” were software interfaces. The Court held that a “software interface” is not a process, machine, manufacture or composition of matter. Pure software, not tied to a machine, is NOT PATENTABLE unless claimed as a process 23

^^^ Disallows patents on “abstract ideas” Alice owned patents on mitigating settlement risk in financial transactions. “Settlement risk” is the risk that only one party to a transaction will pay It sued CLS Bank for infringement The District Court in the District of D.C. ruled that the claims were not patentable subject matter The Federal Circuit affirmed. Alice appealed to the Supreme Court LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

23andME, Inc. v. Ancestry.com DNA, LLC (N.D, Cal, 2018)
Both 23andMe and Ancestry.com offer genetic analysis services to allow people to learn their genetic origins and locate relatives. 23andMe obtained U.S. Patent 8,463,554 for the technique and sued Ancestry.com for patent infringement Ancestry.com asked the judge to find the patent invalid under Alice as not claiming any of the five categories of patentable invention. LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

Claim 1 of the ’554 Patent 52

Claim 1, Simplified A method for determining a relationship of people who share a common ancestor comprising: obtaining DNA sequences of a first user and a second user; storing the sequences in a database; determining by computer a predicted degree of relative relationship between users sharing a common ancestor; and notifying the first user of the relationship with the second user. Problem: Nothing about this claim requires a computer except the requirement to “do it on a computer.” This is classic Alice. LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

23andME v. Ancestry.com Ancestry.com asserted that claim 1 is no more than the abstract idea of “determining a relative relationship by comparing similarities between DNA” and a law of nature: “people who share similar DNA are related”) and is not patentable The judge found that the claim is “directed to” a law of nature because the focus of the claim is a correlation that exists in nature –the more DNA information that is shared between two people, the closer the degree of relationship. That correlation “exists in principle apart from any human action.” The ’554 patent was found invalid as merely claiming a law of nature. LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

Major Ideas Software is patentable as a process, machine, or manufacture “Pure” algorithms, devoid of any application, are not patentable Software patents are controversial. Many in the industry hate them, but file large numbers of applications Implementing a known business process by “doiung it on a computer” does not result in a patentable invention Many “bad” (invalid) software patents have issued, covering material well known in the prior art Software patent infringement has resulted in huge damage awards LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

Patent Reform Act of 2011 (“America Invents Act”)
Signed by President Obama on Sept. 16, 2011 Major revision to U.S. patent law: First-to-file (“race to the patent office”) replaces first-to-invent Critical to file a patent application befor any pubic diclosure, sale or use Simplified challenge for financial business method patents (“covered business methods”) Prior art can be submitted by the public No patents on tax-avoidance methods LAW OF COMPUTER TECHNOLOGY FALL © 2018 MICHAEL I. SHAMOS

Viterbi Algorithm (1967) Give a hidden Markov model and a set of outputs, the Viterbi algorithm computes the most likely sequence of inputs that produced the outputs HIDDEN MARKOV MODEL (HMM) Consider a village where everyone is either healthy or has a fever and only the village doctor can determine if someone has a fever. The doctor diagnoses fever by asking patients how they feel. The villagers may only answer that they feel normal, dizzy, or cold. The doctor believes that the health condition of his patients operate as a discrete Markov chain. There are two states, "Healthy" and "Fever", but the doctor cannot observe them directly; they are hidden from him. On each day, there is a certain chance that the patient will tell the doctor he/she is "normal", "cold", or "dizzy", depending on her health condition.The observations (normal, cold, dizzy) along with a hidden state (healthy, fever) form a hidden Markov model (HMM) A patient visits three days in a row and the doctor discovers that she feels normal the first day, cold the second day and dizzy the third day. The doctor has a question: what is the most likely sequence of health conditions of the patient that would explain these observations? This is answered by the Viterbi algorithm.

Software Patents Michael I. Shamos, Ph.D., J.D.

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Software Patents Michael I. Shamos, Ph.D., J.D.

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