1. Software Patents for Higher Education by Bruce Wieder August 12, 2008 © 2008 Bruce Wieder

2. 2 But first, a word from our sponsor… Title 35 of the United States Code.

3. 3 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.”

4. 4 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.

5. 5 Does this mean that “anything under the sun made by man” is patentable?

6. 6 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)

7. 7 In 1998, the Federal Circuit decided State Street Bank & Trust Co. v. Signature Financial Group, Inc. (149 F.3d 1368).

8. 8 In 1999, the Federal Circuit decided AT&T v. Excel Communications, Inc. (172 F.3d 1352).

9. 9 Was the U.S. Patent and Trademark Office ready for the “business method” patent applications that arrived following State Street and AT&T?

10. 10 On September 20, 2007, the Federal Circuit decided two cases (In re Nuijten and In re Comiskey) involving the question of patentable subject matter.

11. 11 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.”

12. 12 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.” (Nuijten has petitioned the Supreme Court to hear his case. The government’s brief opposing Nuijten’s petition is due August 13, 2008.)

13. 13 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.

14. 14 Notice that Comiskey’s claim does not require the use of any device, i.e., no computer is required.

15. 15 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].”

16. 16 On May 8, 2009, the Federal Circuit, sitting en banc, heard argument in In re Bilski.

17. 17 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.

18. 18 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?

19. 19 A Brief History of Blackboard v. Desire2Learn

20. 20 On January 17, 2006, U.S. Patent No. 6,988,138 was issued to Blackboard. 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.

21. 21 What Does the Blackboard Patent Cover? The ‘138 patent has 2 independent claims.

22. 22 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.

23. 23 Blackboard v. Desire2Learn On July 26, 2006, Blackboard sued Desire2Learn for infringement of the ‘138 patent.

24. 24 Infringement The patent owner must prove infringement by a preponderance of the evidence.

25. 25 Presumption of Validity Claims in an issued U.S. patent are presumed valid.

26. 26 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.

27. 27 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.

28. 28 Blackboard v. Desire2Learn On February 22, 2008, a jury in Lufkin, Texas found that claims 36-38 of the ‘138 patent had not been proven invalid and had been proven infringed. 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 8.2.2 and earlier). The court granted a 60 day stay of the injunction.

29. 29 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 to the Federal Circuit. (Brief due August 15, 2008) On May 13, Blackboard filed its notice of appeal to the Federal Circuit.

30. 30 Blackboard v. Desire2Learn According to Desire2Learn, as of June 12, 2008, it had migrated all of its U.S. clients “to Learning Environment version 8.3, our official design-around....” On June 16, Blackboard filed a motion asking the District Court to find Desire2Learn in contempt of the permanent injunction. On July 21, the District Court denied the motion for contempt. - This is not the same as a finding of no infringement.

31. 31 Meanwhile, at the U.S. Patent and Trademark Office… On November 14, 2006, the Software Freedom Law Center filed a request for ex parte reexamination of all of the claims of the ‘138 patent. On December 1, 2007, Desire2Learn filed a request for inter partes reexamination of all of the claims of the ‘138 patent. On January 25, 2007, the PTO ordered ex parte reexamination of all of the claims of the ‘138 patent. On February 26, 2007, the PTO ordered inter partes reexamination of all of the claims of the ‘138 patent.

32. 32 Meanwhile, at the U.S. Patent and Trademark Office (continued)… On March 17, 2008, the PTO merged the ex parte and inter partes reexaminations. On March 25, 2008, the PTO rejected all of the claims of the ‘138 patent in view of prior art cited by the reexamination requestors. On May 27, 2008, Blackboard filed its response to the March 25 rejection. On May 29, 2008, Blackboard petitioned the PTO to suspend the reexamination pending a final decision from the Court of Appeals for the Federal Circuit. On June 19, 2008, both the Software Freedom Law Center and Desire2Learn filed oppositions to Blackboard’s petition to suspend reexamination.

33. 33 Meanwhile, at the U.S. Patent and Trademark Office (continued)… On June 26, 2008, Desire2Learn filed its “comments” to Blackboard’s response to the PTO’s March 25 rejection of all claims in the ‘138 patent. - The Software Freedom Law Center cannot file any comments because it requested ex parte reexamination.

34. 34 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 e-mail. … 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.

35. 35 Thank you. Questions?