World Technology Network

During the past year, Elman Technology Law, P.C. (“ETL”) sponsored two programs of the World Technology Network.  Earlier this month, we participated in a World Technology Summit, an annual event that I first attended in London in 2001 as a founding member of the WTN.  Each Summit is a two-day conference with a variety of presentations and active workshops, culminating in a gala World Technology Awards dinner honoring individuals and companies in various categories, including technology law.  At this year’s Summit, our firm sponsored a roundtable of Science Fiction authors, including my friend and mentor Paul Levinson.  Click here for more about this illuminating program on How Sci-Fi Legends Dream the Future for Us.

In June, we sponsored the WTN’s East Coast premier of a film by another dreamer of the future.  Ray Kurzweil invented, among other things, the omni-font scanner and text-to-speech readers.   Based on his 2005 book The Singularity is Near, Kurzweil has now produced a feature-length film of that title.  Before the film screening, he spoke of his calculations showing exponential growth of technologies, that lead him to expect a “singularity” within the next few decades.  At that point, the computational power of the world’s computers would exceed that of humanity’s collective brains, and biological evolution would be superseded by development of information technology.   Watch this space for information about a biographical film about Kurzweil entitled Transcendent Man, which we expect to see again this year.

 Go West Young Man

This summer, our colleague Scott Powell moved from New York City back to the Midwest, accompanying his wife Christy to Bloomington, Indiana, as she pursues a Ph.D. in Education.  Though Scott is now even farther away geographically, he retains his affiliation with our firm and is a productive member of the growing cadre of teleworkers.  Already a patent attorney and a member of the Bar in Pennsylvania, Scott has added the Indiana Bar to his credentials.  He continues to provide a high level of service for our clients for a variety of patent, trademark and Internet business law matters, working with us as closely as he did when he was here in Media, Pennsylvania.

 And … Returning to Kansas City

Last year at this time, we introduced Jerome Smith as our newest colleague at ETL.  Alas, next month Jerome will be leaving us to take on the in-house role of Senior Intellectual Property Counsel of Adknowledge, Inc., a long-time client of Jerome’s that became an ETL client upon Jerome’s arrival.  He’s moving to Kansas City, Missouri, from whence he had come to the Philadelphia area.  The good news is that our firm will continue to serve as outside IP counsel for Adknowledge, and will provide support for Jerome and the Adknowledge team of inventors and managers.  Though we will miss having Jerome in the office, we expect our connection with him to remain strong. 

Developments in IP Law

In October, M.P. Moon and I attended the Annual Meeting in Washington, D.C. of the American Intellectual Property Law Association.  We took part in workshops on such matters as dispute resolution, the patenting of biotechnology in uncertain times, chemical patent practice, and copyright law.

Also in Washington that month, my wife Lois and I attended an American Bar Association luncheon sponsored by the Standing Committee on Law and National Security.  It featured a lecture on the subject of cyberterrorism by Richard Clarke, author of Cyber War.  Since then, in the wake of recent WikiLeaks disclosures, examples of cyber attacks have raised awareness of such threats.  Stay tuned for further developments on this front.

Join Us on Social Networks

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Last year at this time I wrote of the passing of my mother.  This year, my family and I fulfilled my parents’ wishes to scatter their remains into the sea.  In October, we participated in a lovely ritual in San Pedro Bay, conducted on a boat of the Neptune Society. Lois and I got the chance to see my brother and sister, our nephews, who filled us in on doings with their babies and their careers in Silicon Valley, and to spend time with my daughter Floren, her husband Sodhi, and my 32-month-old grandson Elijah.

Once again …. a blessing:  May happiness health and prosperity be yours — next year and forever

-Gerry

Since 2001, Gerry Elman has been a founding member of the World Technology Network (the “WTN”). Annually since then, the WTN has produced a summit conference and awards gala, the World Technology Summit and Awards, at venues ranging from London, to San Francisco, to New York City.

This year’s World Technology Summit and Awards took place in New York City on November 30 and December 1 at the Time & Life Building at Rockefeller Center.

On December 1,  the roundtable on IMAGINED WORLDS / PLAUSIBLE FUTURES: How Sci-Fi Legends Dream for Us, featured

• Paul Levinson, Author; Former President of Science Fiction Writers of America; and Professor of Communication and Media Studies at Fordham University
• Stanley Schmidt, Author; Editor of Analog Science Fiction & Fact magazine
• David Hartwell, Three-time Winner of the Hugo Award; Administrator of the Philip K. Dick Award

It was moderated by Dr. Moira Gunn, Host of Tech Nation and BioTech Nation on National Public Radio’s 24-hour program stream.   [Click here to watch a short video clip from the event]   [Click here for a video on FORA.tv of the full roundtable, payment required]

Said Gerry Elman,

“I am delighted that WTN founder Jim Clark acted on my suggestion to include such a roundtable in this year’s Summit, and that Elman Technology Law has been afforded the opportunity to sponsor this event.  It is exciting to acknowledge that many of the technological advances we are living with were first envisioned by authors writing in the genre of science fiction.  By reading science fiction, we stretch our minds towards a vision of the future that we, as technologists, then help to engender.”

Indeed, at a previous World Technology Summit, science fiction legend Sir Arthur C. Clarke was interviewed via a satellite link from his home in Sri Lanka, fitting–in that he had first proposed satellite communications in 1945.

Gerry asserts that an unsung prophet of biotechnology is Damon Knight, who in 1953 wrote a story called Natural State in which rural agricultural biotechnologists (the “muckfeet”) are at war against city folk whose lives are based on electromechanical technology.   In the story, the muckfeet communicate via genetically engineered vines with a nervous system that provides telephony, and transport themselves via genetically engineered big birds.  They win the war with the urbanites by splicing genes into a microbe to get it to gobble up copper, thereby destroying the technological infrastructure by which the city people communicate.

Gerry notes that, at the same time that James Watson and Francis Crick were sussing out the double-helix structure of DNA, Damon Knight conceived for that story the concept of splicing genes to create a biological chimera.  Later, Stanley Cohen and Herbert Boyer were to develop a tool to realize that dream, the technique of recombinant DNA, that was patented due to the watchful eye of patent attorney Bertram Rowland (whose recent passing we sadly note), working with Niels Reimers of the Stanford University technology transfer office.  Gerry observes wryly that Damon Knight’s story was not among the “prior art” cited during the prosecution of the Cohen-Boyer patents.

Damon Knight went on to found an organization of authors then called Science Fiction Writers of America (“SWFA”) and now known as Science Fiction and Fantasy Writers of America.  More recently, Roundtable panelist Paul Levinson served as president of SWFA.  Coincidentally many scenes of Levinson’s sci-fi novels are set in midtown Manhattan, close to the venue of the Summit conference.

Gerry observes that the war between biotechnologists and information technologists envisioned by Damon Knight in Natural State has an eerily familiar echo in the present debate over “patent reform.” Many major information technology companies have been lobbying Congress to defang U.S. patent law, while most biotechnology companies are striving to resist such a statutory change.  For further information on this, subscribe to Elman’s Patent Reform News by sending Gerry  an email addressed to info@elman.com, and visit the website of American Innovators for Patent Reform.

As to the vulnerability of our technological infrastructure highlighted by Knight’s story, Gerry urges us also to heed the cautionary message in Richard Clarke’s recent book Cyber War.

The researchers set up a very miniature version of a spiral staircase and caused a molecule to climb up this staircase using information. In the setup, the staircase was actually made of potential energy

and created using electric fields. The molecule had some thermal energy – heat so it would fluctuate, moving in random directions.

The scientists used a high-speed camera to photograph the molecule. When it happened to be moving up the staircase, they let it move freely, but when it happened to be moving down the staircase, the  researchers blocked its motion by inserting a virtual wall using an electric field.

“It’s like the particle is making random steps up or down, but only when the particle goes up the stairs, we put some wall on the stairs to avoid the particle falling down,” Sano told LiveScience.  ”This is kind of a Maxwell’s demon.”

As the particle moved up the staircase, it gained energy because it moved to a location of higher potential – akin to climbing a mountain.  Yet the researchers never had to push the particle up the mountain

(i.e. do work or input energy) – they simply used the information about which direction it happened to be moving in at any given time to guide the climb.

Energy boost

Not only were the researchers able to move the particle up the stairs, but they were able to precisely measure how much energy was converted from information.  The researchers describe their results in the Nov. 14 online edition of the journal Nature Physics.

In an accompanying essay in the same issue of the journal, physicist Christian Van den Broeck of the University of Hasselt in Belgium, who was not involved in the new study, called it “a direct verification of information-to-energy conversion.”

“Here we demonstrate that a non-equilibrium feedback manipulation of a Brownian particle on the basis of information about its location achieves a Szilard-type information-to-energy conversion.”

–In Bilski v. Kappos, the Supreme Court Hits the Reset Button, Then Tosses the Baton Back to the CAFC

by Gerry J. Elman and Jerome R. Smith, Jr.

On June 28, 2010, the U.S. Supreme Court issued its long-awaited decision in Bilski v. Kappos.  The case was expected to resolve the hotly contested question of whether business methods could be protected by the claims of a U.S. patent, and there was some trepidation that the decision might adversely impact at least some patents for computer software as well.  Because the majority of the Court rested their decision on narrow grounds, they left intact much of the body of case law on patent eligibility, though hitting reset by disavowing a legal test known for short as machine-or-transformation. Many unresolved issues live on, to be addressed another day. 

In a decision written by Justice Kennedy, the Court voted unanimously to affirm the en banc judgment by the U.S. Court of Appeals for the Federal Circuit (“CAFC”) that the claims of Bilski and Warsaw’s patent application are not patent-eligible under 35 USC § 101. The majority opinion rests this affirmance on narrow grounds.  Yet a minority of three other Justices joined a separate opinion by retiring Justice Stevens that decries the patentability of “business methods” in general, recognizing that significant factions disfavor such protection. 

By this decision, issued on the last opinion day of the Supreme Court’s 2009-2010 term, thus concluded the saga of the most closely-watched patent appeal in history. 

The Legal Framework – We start by pointing to the provision in the U.S. Constitution (Article 1, section 8, clause 8 ) that grants Congress the power: “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”  In exercise of that power, Congress has enacted laws providing for copyrights and patents.

The patent statute, Title 35 of the United States Code [“35 U.S.C.”], provides that “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, subject to the conditions and requirements of this title.”  35 U.S.C. § 101.  Some of the conditions stated in 35 U.S.C. are that the claimed invention be novel (as compared to the “prior art,” generally the information publicly available at the time the invention was made) and that it not have been obvious at that time to a person having ordinary skill in the art.  The statute also requires that the applicant disclose the subject matter clearly and completely enough to enable the invention to be made and used by others.

The owner of a patent has the exclusive right to make, use, sell or import the invention as defined by any of its valid claims.  The patent’s term is 20 years from the date the first regular patent application disclosing the invention was filed, subject to adjustment in certain situations and to the payment of a maintenance fee every few years.

If an applicant believes that a rejection by a Patent Examiner was improper, he may appeal within the Patent and Trademark Office (“USPTO”) to the Board of Appeals and Interferences (“Board”).  Failing to obtain satisfaction there, such an applicant may appeal to the CAFC.  Most appeals end there, but a still-dissatisfied applicant might also seek a further appeal to the Supreme Court, and sometimes, as in Bilski, the Supreme Court chooses to accept the case.

Background – Before 1998, it had been unclear whether an inventive process reciting a method of doing business could be the subject of a patent claim.  But that year the CAFC decided in State Street Bank v. Signature Financial Group that a claim to an apparatus that implements a business method is not for that reason unpatentable.  News of the State Street Bank decision led some to find opportunity to obtain protection for inventive business methods hitherto considered outside the scope of patenting.  Others were shocked to find that the kinds of things they were doing in their offices might infringe a patent granted to another company.

Two years before the CAFC’s State Street Bank decision, on April 16, 1996, Bernard Bilski and Rand Warsaw (the “Bilski” applicants) had filed a provisional patent application for a method to be used by an electric utility to hedge against adverse changes in the cost of fuel, so it could provide longer-term fixed pricing to its customers, despite “consumption risk” due to bad weather.  Within a year, they filed the requisite nonprovisional application, no. 08/833,892, including the following as its first claim:

 1.  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.

It is typical for claims of a patent application to be rejected for lack of novelty or for obviousness in view of two or more items of prior art, but the examiner rejected each of the 11 claims recited in this patent application solely on the basis that “the invention is not implemented on a specific apparatus and merely manipulates [an] abstract idea and solves a purely mathematical problem without any limitation to a practical application, therefore, the invention is not directed to the technological arts.” 

Appeal to the Board – Bilski then embarked on what would become a multi-step appeals process by asking the Board to reverse this rejection.  On September 26, 2006, a panel of five administrative patent judges declined to reverse the examiner, though they chose to explain the rejection with different language.  Stating that the “USPTO is struggling to identify some way to objectively analyze the statutory subject matter issue instead of just saying ‘We know it when we see it.’” they explained that  “[n]ot every process in the dictionary sense constitutes a “process” under [35 U.S.C.] § 101” and noted that “[s]ome subject matter, although invented by man, does not fall within any of the four categories of  § 101. e.g. data structures, computer programs, documents, music, art, and literature, etc.” 

The Board recast the rejection as follows: “Although the examiner rejected the claims as nonstatutory subject matter, in part, because they ‘solve a purely mathematical problem’ our new ground of rejection is not based on the presence of mathematical algorithms, but focuses on the lack of a physical transformation and the lack of a practical application of the ‘abstract idea’ of risk management in the claims as a whole.”  The Board added: “We agree with appellants that ‘technological arts’ means ‘useful arts’ as stated in the Constitution, and that apparatus is not required to be claimed in order for a method claim to be a ‘process’ under § 101.”  Yet they concluded that: “None of the claims recites a transformation of physical subject matter and the claims recite an ‘abstract idea’ rather than a practical implementation of that idea.”

Appeal to the CAFC – Bilski then sought review by the CAFC, and the case was eventually heard by all of its judges, sitting en banc.  The rejection was upheld by a 9-3 vote.  The majority opinion by now-retired Chief Judge Michel asked, as did the Board below, whether the recited method is a patent-eligible “process” within the meaning of  35 U.S.C. § 101, and agreed that it was not.  “The true issue before us then is whether Applicants are seeking to claim a fundamental principle (such as an abstract idea) or a mental process.  And the underlying legal question thus presented is what test or set of criteria governs the determination by the [USPTO] or courts as to whether a claim to a process is patentable under § 101 or, conversely, is drawn to unpatentable subject matter because it claims only a fundamental principle.”

In the State Street Bank case, the CAFC in 1998 had posited a legal test for a patent-eligible process, namely that it produce a useful, concrete and tangible result.  Ten years later, in In re Bilski, the CAFC said “never mind” and articulated the test as follows:

 “A claimed process involving a fundamental principle that uses a particular machine or apparatus would not pre-empt uses of the principle that do not also use the specified machine or apparatus in the manner claimed. And a claimed process that transforms a particular article to a specified different state or thing by applying a fundamental principle would not pre-empt the use of the principle to transform any other article, to transform the same article but in a manner not covered by the claim, or to do anything other than transform the specified article.”  This concept was then described for short as the machine-or-transformation test, which the court held was “the applicable test for § 101 analyses of process claims”.  The court pointed out that “it is irrelevant to the § 101 analysis whether Applicants’ claimed process is novel or non-obvious.”

The CAFC concluded that: “Applicants here seek to claim a non-transformative process that encompasses a purely mental process of performing requisite mathematical calculations without the aid of a computer or any other device, mentally identifying those transactions that the calculations have revealed would hedge each other’s risks, and performing the post-solution step of consummating those transactions. Therefore, claim 1 would effectively pre-empt any application of the fundamental concept of hedging and mathematical calculations inherent in hedging (not even limited to any particular mathematical formula). …  Moreover, while the claimed process contains physical steps (initiating, identifying), it does not involve transforming an article into a different state or thing. Therefore, Applicants’ claim is not drawn to patent-eligible subject matter under § 101.”

Judge Newman dissented, stating: “The court today acts en banc to impose a new and far-reaching restriction on the kinds of inventions that are eligible to participate in the patent system. The court achieves this result by redefining the word ‘process’ in the patent statute, to exclude all processes that do not transform physical matter or that are not performed by machines. The court thus excludes many of the kinds of inventions that apply today’s electronic and photonic technologies, as well as other processes that handle data and information in novel ways. Such processes have long been patent eligible, and contribute to the vigor and variety of today’s Information Age. This exclusion of process inventions is contrary to statute, contrary to precedent, and a negation of the constitutional mandate. Its impact on the future, as well as on the thousands of patents already granted, is unknown.”

Judge Rader (who this month became Chief Judge of the CAFC) dissented, stating: “This court labors for page after page, paragraph after paragraph, explanation after explanation to say what could have been said in a single sentence: ‘Because Bilski claims merely an abstract idea, this court affirms the Board’s rejection.’” 

Appeal to the Supreme Court – After an oral argument November 9, 2009, the Supreme Court waited almost eight months to issue the Bilski decision.  There is speculation that the opinion had originally been assigned to retiring Justice Stevens, but that the condemnation of business method patents included in the opinion he wrote led to the majority opinion being reassigned to centrist Justice Kennedy. 

Justice Kennedy’s opinion of the Court pretty much follows the pattern suggested by CAFC Judge Rader’s dissent (and the Government’s brief). Bilski’s claims were held unpatentable, as they were drawn to an “abstract idea,” which, like laws of nature and physical phenomena, was previously recognized by the Supreme Court as being outside of  statutory subject matter under 35 USC § 101.   

This opinion also gives a nod to Judge Newman’s dissent in the CAFC case.  Looking at the term “process” in the patent statutes, the Court did not find any requirement that a process be tied to a machine or that it transform an article.  Accordingly, the Supreme Court disavowed the machine-or-transformation test as the sole and exclusive desideratum for patent-eligible methods.  Rather, the “’machine-or-transformation test’ is a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under § 101.”   

We read this as a sort of “safe harbor,” meaning that a claim that satisfies the machine-or-transformation test is almost certainly patent-eligible, but that if a claim doesn’t meet that test, it isn’t automatically unpatentable for not reciting statutory subject matter.

What does this mean for computerized methods and software?  This subject matter remains patentable, provided it does not fall within any of the exceptions to statutory subject matter for processes, e.g., laws of nature, physical phenomena, and abstract ideas.  However, further examples of these exceptions were left open for the CAFC to determine in future decisions. 

What about computerized components and systems?  These components and systems remain patentable as apparatus, as has always been the case under the patent law.

What about business methods?  Business methods are not excluded as a class from patent-eligible subject matter.  However, this opinion doesn’t give additional guidance about how to meet the requirement for claiming statutory subject matter, beyond reciting the aforementioned exceptions (e.g., laws of nature, physical phenomena, and abstract ideas).

What about medical diagnostic methods?  On June 29th, the Supreme Court issued a GVR in the cases of Mayo v. Prometheus Labs and Classen Immunotherapies v. Biogen IDEC.  This means that they granted certiorari to accept the appeals from the CAFC, then vacated the CAFC’s decisions and remanded the cases for further consideration in light of the Supreme Coourt’s Bilski decision.   The CAFC will soon have the opportunity to address whether a patent may validly claim a process that involves injecting a subject with a drug or immunogen and then comparing certain results.   Because real substances move in the world, the claims in Prometheus Labs appear to meet the transformation prong of the machine-or-transformation test.  So it seems likely that the CAFC will continue to find statutory subject matter in these claims.  The opposite result was obtained in the Classen case. Let’s see what happens when the CAFC catches the baton and runs with it.  Stay tuned. 

What about other methods?  Methods that are determined to fall outside the aforementioned exceptions to statutory subject matter remain proper subject matter for U.S. patents.