The IP year in review

Christmas is a big deal in New Zealand. For most of us the 25th of December marks the start of a two, three or even four week summer vacation. It is a chance to recharge our batteries, ready to return refreshed in the New Year.

I'll be taking a break for a few weeks and returning mid-January. I'll leave you all with a list of my ten most popular posts for the year.

The New Zealand Patents Bill has been a hot topic thanks to a campaign by the open source community to introduce a European-style exclusion for computer software. The patentability of software has also been the subject of a few decisions of the US Courts and the BPAI. Copyright enforcement news in both New Zealand and Australia has also been popular.

Alice and the Abstract Idea: When is a computer-implemented invention a mere "abstract idea”? Does the presence of a computer in a claim make an unpatentable "abstract idea" a patentable invention? Should it matter that a computer-implemented invention is claimed as a method, system, or storage medium? Is there any real difference between these types of claims? These are the questions that the United States Court of Appeals for the Federal Circuit is going to be considering over the next 12 months.

The show goes on: These are interesting times for copyright infringement actions. We have seen a conclusion to the long running dispute between Roadshow Films/AFACT and iiNet in Australia. We have also seen a couple of test cases emerge for New Zealand's three strikes law.

A forum on software patents: Fellow blogger Patentology comments on a recent IP Forum held by the IP Australia on the subject of 'software patents'.

KOHA - Better late than never: Another chapter closes on the KOHA trade mark saga. The New Zealand trade mark application is the subject of a kind of tug-of-war between two competing factions within the open source community that have fallen out with each other.

D. finds non-functional descriptive matter: The Board of Patent Appeals and Interferences considers a data structure for generating network data traffic utilizable in communication systems. The BPAI rejected the data structure claim as relating to non-functional descriptive material.

The embedded software conundrum: The New Zealand Patents Bill had a second reading in Parliament this year. On the table is a Supplementary Order Paper (SOP) setting out proposed amendments to the Bill. The SOP clarifies the extent to which computer programs will be patentable. It better reflects the intentions of the Parliamentary Commerce Select Committee who originally recommended changes to the Bill.

A public slap from Twitter: Laws can certainly be broken in 140 characters or less and Twitter is starting to take a more transparent approach to copyright infringement. It is a bad look for your company to be accused of copyright infringement. And even worse to be slapped so publicly.

Hu finds that storage is the key: The BPAI considered the patentability of a claim in the field of performing log-based recovery by allowing a plurality of worker processes to process in parallel a plurality of work items in a log. Each work item represented an ordered operation on a corresponding data object. The BPAI found that the term "computer-readable medium" is broad enough to cover intangible media. However, a computer-readable storage medium is confined to tangible media for storing data.

Edelson finds an abstract intangible asset: The BPAI looked at a claim for a way for creating financial instrument derivatives of rollups of recurrent yield monetary based assets. Whatever that means! The Board found that simply using some computer-implemented method in some undefined manner alone cannot confer patentability.

Patent party in the House: It's always good to try something new. I gathered some of my work colleagues together and we watched the Second Reading of the New Zealand Patents Bill on the tellie. I didn't quite know what to expect but I wasn't surprised at what I saw. It was certainly an interesting experience.

Photo courtesy of author Daniel Peckham under Creative Commons licence.

An early Christmas for Samsung

It looks like Samsung's Christmas elves will be delivering Galaxy Nexus smartphones after all. It was looking a bit 'iffy' there for a while. Earlier this year Apple filed a motion for a preliminary injunction in a United States district court. The court granted the request based on infringement of US Patent 8,086,604 (the '604 patent).

Last week the United States Court of Appeals for the Federal Circuit overturned that decision.

Unified search

So what did the '604 patent cover exactly?

Claim 6 of the patent covered an apparatus for a unified search that uses heuristic modules to search multiple data storage locations. When we talk about a unified search, we mean the ability to access information on more than one data storage through a single interface. A device equipped with unified search allows a user to search the local memory of the device as well as the Internet by entering a single search query.

Apple reckoned that the Quick Search Box (QSB) on Samsung's Galaxy Nexus infringed claim 6.

Getting a preliminary injunction

A preliminary injunction is a pretty serious matter with pretty serious consequences. A plaintiff must establish that:

• he is likely to succeed on the merits,
• he is likely to suffer irreparable harm in the absence of preliminary relief,
• the balance of equities tips in his favour, and
• an injunction is in the public interest.

The district court found all four of these factors satisfied. It granted an injunction that prevented Samsung selling Galaxy Nexus smartphones in the United States.

In the appeal the parties argued over the district court's analysis of two of those factors.

Irreparable Harm

This was a case, according to the Federal Circuit, where the accused product includes many features of which only one (or a small minority) infringe. It's not enough for the patentee to show irreparable harm. The patentee also has to show a 'sufficiently strong causal nexus relates the alleged harm to the alleged infringement'.

Putting this another way, the patentee must show that the infringing feature drives consumer demand for the accused product. The Federal Circuit was not convinced that the Quick Search Box (QSB) feature drove consumer demand.

Even if there was the potential for harm, Apple couldn't show that the harm flows from Samsung's alleged infringement.

Likelihood of Success

Given its finding above, there was no need for the Court to go on and consider the likelihood of success factor. But they did anyway. And found another reason to chuck out the injunction.

Claim 6 required "a plurality of modules ... wherein ... each heuristic module corresponds to a respective area of search and employs a different, predetermined heuristic algorithm". The district court found that the term "plurality" means "at least two," or "simply the state of being plural."

So what does "each" of "a plurality of heuristic modules" mean? Does it mean "each of at least two modules"? Or does it mean "each of every module"? It's quite an important distinction.

Apple argued that the claim limitation is satisfied as long as the Quick Search Box (QSB) contains at least two modules that use different heuristic algorithms. Apple pointed to three heuristic modules within the QSB that use different heuristic algorithms. These are Google which searches the internet, Browser which searches the Internet browsing history, and People which searches the user's contacts list.

Samsung argued that claim 6 requires every heuristic module within the accused device use a unique heuristic algorithm. The QSB, said Samsung, contains other search modules besides the three picked out by Apple. Some of those other search modules might share the same heuristic algorithm.

The district court agreed with Apple that the claim wording means "each of at least two modules". It didn't agree on the Google module, but agreed that the modules Browser and People each use different heuristic algorithms.

The Federal Circuit didn't like that construction. The district court, said the Federal Circuit, has construed "plurality" to mean "at least two" without any indication that the term refers to a hand-picked selection of a larger set.

The plain language of the claim, the patent specification, and the prosecution history all point to a claim construction where each of every module within the claimed apparatus must use a different heuristic algorithm.

Apple couldn't show that it was likely to succeed in its infringement claim, therefore providing another reason for the Federal Circuit to chuck out the injunction.

What now?

A preliminary injunction would have presented Apple with an easy win over Samsung. It would have been a bit hard for Samsung to compete with Apple if Samsung could not sell its Galaxy Nexus at all. Apple has some hard graft ahead of it if it still wants to challenge Samsung's use of the Quick Search Box.


Photo courtesy of author TAKA@P.P.R.S under Creative Commons licence.

Alice and the Abstract Idea

When is a computer-implemented invention a mere "abstract idea”? Does the presence of a computer in a claim make an unpatentable "abstract idea" a patentable invention? Should it matter that a computer-implemented invention is claimed as a method, system, or storage medium? Is there any real difference between these types of claims?

These are the questions that the United States Court of Appeals for the Federal Circuit is going to be considering over the next 12 months.

CLS meets Alice

On 9 October 2012 the Federal Circuit granted en banc review of CLS Bank International v. Alice Corp., Fed. Cir., No. 11-1301, 10/9/2012.

The patents under consideration involve a computerised trading platform for exchanging obligations in which a trusted third party settles obligations between a first and second party so as to eliminate “settlement risk.” The district court thought the claims were not patentable because they are directed to an abstract idea. On appeal the Federal Circuit panel reversed, concluding that the system, method, and media claims are directed to practical applications of patent eligible subject matter.

The Federal Circuit has asked the parties to file new briefs addressing my opening questions. The court has asked for the United States Patent and Trademark Office (USPTO) to file a brief as amicus curiae. Other briefs of amici curiae may be filed without consent of the parties or leave of the court. All the court asks is that the briefs comply with Federal Rules of Appellate Procedure and Federal Circuit Rules.

I guess it's time to study Alice Through the Looking-Glass. I wonder what we will find there?

Legislative intervention

Back in New Zealand we await the next chapter of our own fairy tale. Parliament resumes its Sitting Programme next week after a two week recess. The Patents Bill has passed its Second Reading on 12 September amidst much parliamentary debate. I cover the Second Reading in an earlier post Patent party in the House.

The Bill contains an exclusion for computer programs, added in response to submissions received from the open source movement. There doesn't appear to be a problem in New Zealand with the current Patents Act and the jurisprudence around it. The exclusion seems to be a preemptive strike against a harm that might eventuate. It is possible that there may be a patent troll under every bridge unless our lawmakers intervene. Just ask Alice. She found that anything is possible in Wonderland.

The exclusion, as set out in a Government Supplementary Order Paper, reads as follows:

10A Computer programs
(1) A computer program is not an invention for the purposes of this Act.
(2) Subsection (1) prevents anything from being an invention for the purposes of this Act only to the extent that a patent or an application relates to a computer program as such.

There is still the Committee of the whole House stage and the Third Reading ahead of us. We are getting there slowly. But at least we are getting there.

Photo courtesy of author Elena Kalis under Creative Commons licence.

A dud deal for Dealertrack

In Dealertrack v Huber Case No. 2009-1566 we saw Dealertrack, Inc. ("Dealertrack") take an appeal to the United States Court of Appeals for the Federal Circuit (CAFC). The United States District Court for the Central District of California had found claims 1, 3, and 4 of their US Patent 7,181,427 invalid for failure to claim patentable subject matter under 35 USC 101.

The invention

Car dealers were sick of filling in forms.  In seeking car loans on behalf of their customers, they would apply to funding sources for example banks. This involved filling out application forms particular to each bank, faxing or transmitting the application to the respective banks, waiting for bank personnel to enter the application information into their internal computer systems, and eventually receiving responses from each bank.

Dealertrack proposed to automate the process through the use of a "central processor," which receives credit application data from dealers, processes the data to conform to the individual application forms of different banks, forwards the completed applications to banks selected by the dealer, receives answers from the banks, and forwards those answers back to the dealer.

Claim 1, as a representative claim, read as follows:

1. A computer aided method of managing a credit application, the method comprising the steps of:

receiving credit application data from a remote application entry and display device;

selectively forwarding the credit application data to remote funding source terminal devices;

forwarding funding decision data from at least one of the remote funding source terminal devices to the remote application entry and display device;

wherein the selectively forwarding the credit application data step further comprises:

sending at least a portion of a credit application to more than one of said remote funding sources substantially at the same time;

sending at least a portion of a credit application to more than one of said remote funding sources sequentially until a [funding] source returns a positive funding decision;

sending at least a portion of a credit application to a first one of said remote funding sources, and then, after a predetermined time, sending to at least one other remote funding source, until one of the [funding] sources returns a positive funding decision or until all funding sources have been exhausted; or,

sending the credit application from a first remote funding source to a second remote [funding] source if the first funding source declines to approve the credit application.

What does computer aided mean?

The CAFC observed that the claim, in its simplest form, involved three steps:

1. receiving data from one source
2. selectively forwarding the data
3. forwarding reply data to the first source

The claim was directed to the basic concept of processing information through a kind of clearinghouse. The Court felt that the steps did not impose meaningful limits on the claim's scope. Neither Dealertrack nor any other entity were entitled to wholly preempt the clearinghouse concept.

Dealertrack argued that the “computer aided” limitation in the preamble sufficiently limits the claims to an application of the idea. The Court disagreed.

The patent did not specify how the computer hardware and database are specially programmed to perform the steps claimed in the patent. The claims were silent as to how a computer aids the method, the extent to which a computer aids the method, or the significance of a computer to the performance of the method.

The undefined phrase “computer aided”, said the CAFC, is no less abstract than the idea of a clearinghouse itself. Because the computer here can be programmed to perform very different tasks in very different ways it was held not to play a significant part in permitting the claimed method to be performed.

Simply adding a “computer aided” limitation to a claim covering an abstract concept, without more, is insufficient to render the claim patent eligible.

It was noted that the claims here do not require a specific application, nor are they tied to a particular machine. The claims were held to cover a clearinghouse process using any existing or future-devised machinery.

The Court then distinguished Dealertrack's claims from those in Ultramercial, LLC v. Hulu, LLC, No. 2010-1544 (Fed. Cir. Sept. 15, 2011) (see my blog post).

In Ultramercial, the Court found that the patent claimed a practical application with concrete steps requiring an extensive computer interface.

However, in the case of Dealertrack, the claims recite only that the method is “computer aided” without specifying any level of involvement or detail. The fact that certain algorithms are disclosed in the specification does not change the outcome. In considering patent eligibility under § 101, the Court felt it needed to focus on the claims. This is because a claim may “preempt” only that which the claims encompass, not what is disclosed but left unclaimed.

It didn't help that Dealertrack's claims had already been construed not to be limited to any particular algorithm. Dealertrack had not appealed the District Court’s construction.

A particular use

Dealertrack also argued that claim 1 was patent eligible because it covers the use of a clearinghouse only in the car loan application process, and not all uses thereof.

The Court didn't buy this argument either. The claim was directed to a particular use, sure. But it still covered a broad idea. The notion of using a clearinghouse generally and using a clearinghouse specifically to apply for car loans, like the relationship between hedging and hedging in the energy market in Bilski, is of no consequence without more.

Further steps

The Court affirmed the determination of the District Court that claims 1, 3 and 4 are patent ineligible abstract ideas.

Photo courtesy of author Ben McLeod under Creative Commons licence.