Archive for November, 2009


Wednesday, November 18th, 2009

By Bill Bennett, Pizzeys, Canberra, AU

A unique aspect of Australian Patent Law is the requirement that a reference must be “reasonably ascertained, understood and regarded as relevant” by the hypothetical skilled person before it can be applied in an inventive step rejection.

In practice, this means that references which are difficult to find, or difficult to understand, or which are not, prima facie, relevant to the problem being solved by the skilled person, may be excluded from the prior art base for inventive step considerations.

For some time we have speculated that it may be possible to have a non-English reference excluded from the prior art base for inventive step considerations on the basis that the hypothetical skilled person could not be reasonably expected to understand the reference and hence would not regard it as being relevant to the problem being solved.

The APO has now handed down a decision in which a German reference has been excluded from inventive step considerations. It is worth noting that the German reference did not have an English-language abstract. If there had been an English language abstract, the outcome may have been different as the abstract may have led the hypothetical skilled person to have obtained an English translation of the German reference.

Similarly, it may be possible that Figures or drawings in the reference may have been enough to cause the hypothetical skilled person to have investigated the reference more closely. However, no evidence was led by the opponent on this point.

The full decision can be found here (see paragraph 86 in particular):

"LOOKS BAD FOR BUSINESS METHODS" — A note by Erwin J. Basinski

Tuesday, November 17th, 2009

The Bilski case before the US Supreme Court came up for oral argument on November 9. After a couple of reads, My initial impressions are:

1. Most of the questions from the Justices (primarily Scalia, Breyer, Roberts, Sotomeyor, Stevens, Kennedy, Ginsburg) seemed focused on a concern that a) if they upheld the machine or transformation test they would interfere gravely with existing software, biotech and other patents as well as kill all business method patents; and b) if they negated the machine or transformation test but only killed business method patents, how would that square with BM processes that DO have a valid machine element or DO have an acceptable transformation involved.

2. Malcomb Stewart, Esq., Deputy Solicitor General, spoke for the US Patent Office and said that they fully believed that the hedging claim of Bilski was basically an abstract process with no physicality, and that they would be happy if the court so ruled. Chief Justice Roberts asked why the court shouldn’t so rule and avoid the issue of whether the machine or transformation test is OK. Justice Sotomayor asked “How about if we say something as simple as patent law doesn’t cover business matters instead of what the Federal Circuit has begun to say, which is technology is tied to a machine or a transformation of the substance, but I have no idea what the limits of that ruling would impose in the computer world, in the biomedical world, all of the amicii who are talking about how it will destroy industries? If we are unsure about that, wouldn’t it be safer to say it doesn’t involve business methods?” [I am not sure what this really means.] But Solicitor Stewart responded that this wouldn’t work because of the State Street Bank case , pointing out that the innovation in State Street was a “machine” whereas the Bilski case relates to “processes”. This led to a long and confused discussion between Stewart and several of the Justices about machines made to be unique by a specific computer program, etc., etc. Justice Ginsburg reminded Mr. Stewart that the PTO had proposed the machine or transformation test to the Federal Circuit and was now saying this test should not be supported by the Supreme Court because of the ambiguities about “what is a ‘machine’? and what exactly is an acceptable transformation?” She quoted Justice Meyer in the Federal Circuit Bilski opinion as saying ” . . . it has a simplicity to it. It says, if its technology, then its within the realm of patent, and if its not technology, it isnt, if it is based on science or technology, and that seems to be what is used in other places [i.e. she means countries]? Mr. Stewart said focusing on whether technology is involved would not make the patent eligibility argument any easier, and moreover such a test would not allow a court to avoid the difficulties that it has identified with the machine-or-transformation test.

3. Chief Justice Roberts, and Justices Kennedy, Stevens, Breyer and Ginsburg found difficulty in Mr. Stewart’s argument that State Street was decided correctly and would be today because it was claimed as a machine and was deemed by the Federal Circuit (and agreed by the PTO) to be a computer changed into a new machine by the computer program involved. All of them felt that State Street’s claim was merely a business process programmed to run on a general purpose computer in which the focus should rightly be on the “process,” and seemed to imply that it should have been rejected as a business method process. Mr. Stewart argued it would pass the machine or transformation test. So Justice Breyer summed up by saying – well all of the hypothetical business methods we seem to have excluded from patentability sound like that could be patented if we simply programmed a computer to execute the process according to the PTO. [These Justices appear to be leaning towards denying the patentability of business methods whether or not a computer is used to execute the process.]

4. Mr. Stewart said that the PTO would be happy if the court would affirm the machine-or-transformation test without trying to define what a machine or transformation is [sounds like the Europeans and their happiness with no court trying to define what technology is].

A majority of the Justices seem to be against the patenting of business methods in general but some worry about the impact on the Internet and new and emerging technology, including medical diagnostic methods.

My guess is that the Supremes will rule somewhat as follows:

A Business Method defined as a process of abstract steps of doing something NOT tied to any technology is NOT patent eligible. Implementing the process on a general purpose computer, whether claimed as a machine or process, does not make the business method patent eligible.

The “machine-or-transformation” test for determining patent eligibility for a process is not affirmed, but some non-trivial physical steps or elements must be included in a claim for a process to be patent eligible.

The fact that Congress has recognized some business methods as patentable in section 273 regarding prior user defenses, seems to be a nettlesome issue for the court here but I suspect they may find some way around this.

The Bilski claim at issue will likely be deemed a business method having abstract steps not tied to any technology and is therefore deemed not to be eligible for a patent.

The Court might even overturn the State Street Bank case.

Erv Basinski


Tuesday, November 17th, 2009

By Paul Cole, Lucas & Co., UK

The UK counterpart of In re Ngai is Bayer’s (Meyer’s) Application [1984] R.P.C. 11. In that case a claim to a package containing a known drug together with instructions for a new use were not allowed because the inventive step set out in the claims resided in the information given in the instructions, which was mere presentation of information and accordingly not an invention under Section 1(2)(d) of the UK Patents Act, 1977. That decision was followed closely in time by the EPO Enlarged Appeal Board decision in G 0005/83 EISAI/Second Medical Indication which approved Swiss form use claims, and which has since been followed by the UK courts, see John Wyeth and Schering’s Application [1985] R.P.C. 545. After that time it was no longer necessary to pursue claims to a substance plus instructions for use.

Sir Isaac Newton is reputed to have lost some £20,000 in the South Sea Bubble which was a financial crisis of 1720 and said: “I can calculate the movement of stars, but not the madness of men.” One of the infamous companies launched in that year was ‘for carrying out an undertaking of great advantage, but nobody to know what it is.” The examples put forward by the Supreme Court in Bilski approach that level: a process for maximising wealth by buying low and selling high, a method of resisting a corporate takeover and a method of avoiding tax.

When asked about the patentability of a method of teaching antitrust law that keeps 80% of students awake, Mr. Michael Jakes for the petitioners averred that there have been a number of patents for teaching methods, and that such a method is indeed patentable if defined as a process. Justice Breyer responded: “Now, suppose I reject that view, hypothetically, and suppose I were to take the view that this is way too far, that that is not the purpose of the statute… Have you any suggestion for me?” Justice Sotomayor asked: “How about if we say something as simple as patent law doesn’t cover business matters …” Malcolm Stewart on behalf of the respondent found himself in difficulty in even defending State Street in the face of observations e.g. from Mr Justice Stevens: “I don’t understand why that isn’t just the application of a process, which is not itself patentable subject matter, to a particular machine that can use [that] process.”

As is well known, the EPC contains a prohibition on the patenting of business methods. The EPO Appeal Board has held in T 0931/95 that a computer programmed to carry out a business method is not caught by the prohibition, but that was a Pyrrhic victory because it went on to hold that claimed features of a non-technical nature should not be taken into account when evaluating inventive step, and the application was refused on that ground. It remains almost impossible in Europe to obtain grant of patents for inventions where novelty is confined to matters of business administration. It would appear that the position in the US may move at least partway towards that in Europe.


Wednesday, November 11th, 2009

Reading the transcript of the oral arguments presented yesterday (a copy is attached at the end of this posting) as Bilski was presented to the Supreme Court, I was struck by how quickly certain Justices homed in on one of the last frontiers of patentable subject matter, namely whether or not the simple transmittal of information from one person to another should be patentable subject matter. Particularly, Justice Breyer’s first question was to ask whether or not a method of teaching antitrust law could be patentable subject matter [laughter]. Justice Sotomayor then mentioned “speed dating.” Bilski’s counsel replied that, while the data itself is not patentable, “but if it is a series of steps,” it might be. Breyer demanded that counsel “make that balance in terms of information.” Sotomayor asked “[Doesn’t there have] to be something more substantive than the mere exchange of information; that it has to involve…’transformation’? [The Fed. Cir.] hasn’t defined the outer limits of what it means by that.” Counsel Jakes, “Yes.”

Suddenly, I thought of a fairly obscure but interesting decision, In re Ngai, 367 F.3d 1336 (Fed. Cir. 2004). The claims in question were to a “kit” for amplifying RNA comprising certain known reagents and “instructions describing the [amplification] method of claim 1.” In other words, the only “point of novelty” was the instructional material. The court affirmed the rejection below, and distinguished In re Gulack (where a sort of circular slide rule was claimed), stating:

As the Gulack court pointed out,”[w]here the printed matter is not functionally related to the substrate, the printed matter will not distinguish the invention from the prior art in terms of patentability.” If we were to adopt Ngai’s position, anyone could continue patenting a product indefinitely provided that they add a new instruction sheet to the product. This was not envisioned by Gulack. Ngai is entitled to patent his invention of a new RNA extraction method, and claims covering that invention were properly allowed. He is not, however, entitled to patent a known product by simply attaching a set of instructions to that product.”

“Hold on,” you may say, “this is a section 102 rejection, not a section 101 decision.” But I re-read this decision after being asked to opine about the potential patentability of claim in a published application. I will simplify it as follows: “A method of increasing the safety of drug x by providing instructions to a patient taking drug x to stop taking drug x if side effect y is observed.” One of the other claims recited the further step of providing drug x to the patient and then providing the patient with the warning (label, most likely). But there was no step involving administering the drug or adjusting the dosage.

This is about as pure a claim to a transmittal of information between two people as I can think of, that does not come off as a judicial joke (“speed dating”). It might be categorized broadly as a method of medical treatment. As Justice Sotomayor questioned, “Do you think that there is some benefit to society from patenting a method to cure someone that just involves human activity, as opposed to some machine, substance or other apparatus to help that process?” The answer is “yes.” In fact, there was some discussion before the Supreme Court relevant to the fact that pure surgical methods are patentable, even after Congress acted to limit damages for infringement.

The “warning claim” I summarized would also seem to be an attempt to answer this question affirmatively, and to patent “the mere exchange of information.” Hopefully the Bilski Court will not attempt to resolve this question, as they deal with the “machine or transformation test” that is before them, but a number of the Justices are certainly interested in the broader issue a la the Metabolite Labs, dissent by Justice Breyer et al. Mr. Stewart for the PTO made it clear that he hoped that the S. Ct. would not muck around in “software innovations or medical diagnostic techniques.” We can only hope.

Bilski Transcript.pdf