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Jul. 2012

Patent and the Internet Economy
by

Ori Buberman

on 19 August 2014

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Transcript of Jul. 2012

Patents: Harnessing Innovation
Ori Buberman, Adv.
Legal Framework
Sec. 3
Israel
product or process
in any technological field
new, useful and involves an inventive step
No excluded subject matter
Similar to the US
Registrar's guidlines Mar. 2012 and UTC case - A
concrete technological process
must occur - expression of
physical features
in an object on which the invention is carried out, or in the nature of the operation carried out by the product or process
A discovery, a scientific theory, a mathematical formula , rules for playing games, and mental acts, as such , will be considered as
abstract ideas
or processes that are
devoid of technical character
, irrespective of whether they are performed in a “manual” manner or by a computer.
Business methods per se
that belong to the economic world, will not be considered as inventions in a technological field
A technological character may be crystallized by
combining
the aforementioned ideas or processes with additional technological means - The invention should be
evaluated as a whole
to determine whether it has a concrete expression
(contribution)
in a technological field
Expression or modification in the physical features beyond the regular operation of an integrated computer system
Examples of Auxiliary Tests
Causes the computer to
operate in a new manner
, including, but not only, improving the computer’s performance (such as speed, reliable performance, improved utilization of data storage capacity), or whether inter-operability is created between components of the computer system in a manner that did not exist beforehand.
If the invention is implemented by a computer, and the operation of the computer does not add anything beyond the
“regular” technical effect
resulting from executing a computer program on a computer, then there would be no concrete technological character.
A data carrier claim, in which software is an element in a patentable invention as stipulated in these guidelines, will be allowed.
3. Execution of authorized online transaction, by performing the communication in two different paths

The essence of the invention does not reside in the business process as such, but rather in the communication means being used.
The contribution of the invention is brought about in the communication infrastructure (such as the type of communication that is required between two defined paths).
Examples from The Registrar's Guidlines
4. A computerized process of editing a document that is visually displayed, in a manner that renders the division of blank areas more efficient during the editing process.

The contribution is in automation of the manual design process and is limited to the
obvious improvement obtained from the automation
that is known in the field. Examining the invention as a whole
does not reveal any contribution beyond the computer program per se
, since the manner of executing the program and the execution results do not involve any concrete expression beyond the regular operation of the computer or the system.
5. The invention defines a visual display of information. The user controls the manner of displaying (of data - e.h.) in an interface of the program guide.

Displaying information according to the characteristics selected by a user is on the face of it similar to example 4 above...However...the invention provides additional aspects which involve
concrete technological character
: the implementation supports the same display of information performed by a combination of various storage devices and associating unique displays to each one of them; and recording from one device to another.
7.Matching score between features appearing in different images, using a mathematical calculation performed on the different groups of points.

Focused on a calculation process performed on numbers, the outcome of which is likewise a number,
without elaborating in the claim an implementation which goes beyond an abstract calculation
.
8. The invention defines filtering of noises in an image composed of pixels.

In this example, similarly to example 6, a mathematical process is executed, as a part of the image processing. However, here there is
a clear expression of a concrete process
that is performed as a part of the signal processing. Ultimately it is a process which is
limited to the manner of operation
of a system for digital processing, as opposed to a pure mathematical process.
In addition...it would be far-fetched to assert that the manner in which the process of the kind defined above is performed, corresponds to a mental process in which a person would have performed a mental analysis and processing of an image using multiple pixels. Such a
“manual” operation is not feasible
.
9. Classification of an image by computerized analysis of different properties appearing in the image.

Processing an image in a manner which is unique to the quantitative analysis that
can only be performed using a computer
. Since the computational process should be regarded as a part of the invention, as a whole, it can be determined that the claimed process is concrete and technical, both since it can be performed only by using a computer, and further since
the processing end result is concrete
(classification of images).
EPO
Patent applications for computer-based inventions have the highest growth rate among all patent categories presented to the European Patent Office (EPO) over the past few years.
Article 52(1) EPC
Industrial application
New
Inventive step
but...
The following in particular shall not be regarded as inventions within the meaning of paragraph 1:
(a) discoveries, scientific theories and mathematical methods;
(b) aesthetic creations;
(c) schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers;
(d) presentations of information.
Opinion of the Enlarged Board of Appeals G0003/08
T 258/03 Hitachi
A decision of a Technical Board of Appeal of the European Patent Office
The first question "Is there an invention?" is equivalent to: "Is the claimed subject-matter
as a whole
excluded from the realm of patentable subject-matter?"

The question implies the further question:
"Does the claimed subject-matter have a technical character?"
Patentable subject-matter considerations also intervene again at a secondary level,
during the inventive step examination
.
The Board then confirmed the fact that
a mixture of technical and non-technical feature may be patentable
. An apparatus claim comprising clearly technical features such as a "server computer", "client computers" and a "network" is an invention within the meaning of Article 52(1) EPC .
General guidelines for the examination of patentable subject-matter under the EPC :
"What matters having regard to the concept of "invention" within the meaning of Article 52(1) EPC is the
presence of technical character which may be implied by the physical features of an entity or the nature of an activity, or may be conferred to a nontechnical activity by the use of technical means
. Hence, (...), activities falling within the notion of a non-invention "as such" would typically represent
purely abstract concepts devoid of any technical implications
." [11]
The Board also held that the approach also applies to method claims.
"An invention consisting of a mixture of technical and non-technical features and having technical character as a whole is to be assessed with respect to the requirement of inventive step by taking account of all those features which contribute to said technical character whereas
features making no such contribution cannot support the presence of inventive step
."

Under this test, a patent application or patent which does not provide a technical solution to a technical problem would be refused or revoked as lacking inventive step.
Based on our experience more than 1/3 of Applications relating to technological CII inventions filed with the EPO are allowed based on the Hitachi test.

Most of the Applications which were rejected, were rejected due to lack of inventive step...
On the other hand, business method applications in the EPO see a much lower success rate - only 4%, and the allowed Applications involved a technical solution to a technical problem.
EP-B-1964022 -"slide to unlock" feature found in iPhones.
The Examining Division accepted that the provision of a device control method with visual feedback was a technical problem but objected that the claimed subject matter was obvious because dragging and dropping were known.
In their reply, Apple argued that the objective technical problem was to provide
a more efficient user-friendly procedure
for unlocking a portable device and to provide a sensory feedback to the user regarding
progress towards satisfaction
of a user input condition that was required for unlocking to occur.
In the claim, the unlock image signalled to the user that the device was locked and simultaneously indicated a contact point that a user had to touch in order to unlock the device. The displayed path indicated to the user where and how the unlock image had to be moved and the current position of the image indicated progress already made towards the unlocked condition. The method was easier than in the prior art where a sequence of operations had to be memorised.
EP-B-2059868 - The Camera Roll Feature
The technical effect of allowing a user to navigate within an image and to switch between images with a minimum of user input types was sufficient to support patentability
EP1249014, Appeal Board decision T 0050/07; US 6396520
A method of transitioning a window on a computer screen between an open state and a minimized state, comprising the steps of:
...displaying said window at successive positions within said curves from said first position to said second position while scaling said dimension of the window to fit within said curves in a manner so as to give the appearance of sliding.
"The alleged ergonomic improvement achieved by directing the user's attention to the final destination of the minimized window, so that the user will remember its location and, thus, find it again more rapidly, is not convincing either. ...this will only be ergonomically valuable to the user for a short amount of time... Furthermore, as minimized windows are at any rate typically arranged according to some predefined scheme (typically added at the end of the task bar or returned to the corresponding application button on the task bar) the user would already know where to find the minimized window. Therefore, the board
is not convinced that there would be any added ergonomic value
..."
The differences between the invention and the prior art were held to reside in the production of an aesthetic effect.
Since that effect had no technical character, it could not in itself contribute to inventive step
. However, it could be taken into account in formulating the objective technical problem which was how to achieve the specified "funnel-like" effect. The information in the specification in this regard was limited.
The description did not show that there was any difficulty in the shifting and scaling operations...
The invention is in the field of moving images where visibility and human persistence of vision are important. Was there an optimum time, or a range of optimum times within which the "micro-movie" transition could take place without interfering with the operation of the
computer
and which would display the most clearly visible and most aesthetically satisfying sequence of images to the
user?
A key business tool
IP transactions
Patents and Patent Applications
Facebook
acquired 650 “web-related” patents from
Microsoft.
The portfolio includes patents related to: instant-messaging, e-commerce, LTE, mobile, handsets, search and advertising
Google's CEO Larry Page and other executives talked about how Motorola Mobility’s portfolio of thousands of patents will help
protect Google and its Android phone software
from “anti-competitive threats” from Microsoft, Apple and other companies
Google purchase Motorola Mobility for $12.5 billion
CNET: make no mistake, Google is picking up Motorola to
get its hands on the company's vast patent portfolio
Facebook had a choice to make: With just
56 patents
to its name at the start of 2012 it could pay its way out of Yahoo’s infringement lawsuit with
gobs of money and remain vulnerable
to other patent attacks, or make a
long-term investment
into an intellectual property portfolio it could protect itself with for years to come.

Facebook has wisely taken the second path, upping its patent stockpile to over
1,400
...

Microsoft
buys more than 800 patents and related patent applications from
AOL
for
$1.056 billion in cash
AOL continues to hold 300 patents "spanning core and strategic technologies, including advertising, search, content generation/management, social networking, mapping, multimedia/streaming, and security among others." The
300 patents retained by AOL will be licensed to Microsoft non-exclusively
, while
AOL keeps a license to the patents it's selling to Microsoft
.
Google
has acquired more
IBM
patents, adding more than
200
to approximately
2,000
patents it had previously bought from IBM.

The latest set of IBM patents covers a variety of technologies, including email management, server backup, tuning and recovery,
e-commerce, advertising, mobile Web page display, instant messaging,
online calendaring and database tuning.
Consortium led by
Apple
buys Nortel's 6,000 patents for $4.5 billion. The Patents cover key telecommunications technologies, from Internet services to wireless data networking
USA
In re Bilski
En banc decision of the CAFC on the patenting of
method
claims, particularly business methods.
Affirmed the rejection of the patent claims involving a method of hedging risks in commodities trading.
The court also reiterated the
machine-or-transformation
test as the applicable test for patent-eligible subject matter.
The Supreme Court of the United States issued an opinion on appeal (as Bilski v. Kappos) that affirmed the judgment of the CAFC, but revised many aspects of the CAFC's decision. In their decision, the Supreme Court
rejected the machine-or-transformation test as the sole test of process patent eligibility
.
Stated that the test in State Street Bank v. Signature Financial Group should no longer be relied upon.
The Supreme Court
affirmed
that Bilski’s risk-management method was not the type of innovation that may be patented. However, rather than using the Federal Circuit's "machine-or-transformation test", the court relied on prior precedent to find the claimed method
unpatentably abstract
.
The opinion offers
no clarity or aid
for those tasked with determining whether a particular innovation falls within Section 101
Section 101 does not categorically exclude business methods from patentability.
the court expressly refused to rule on the patentability of software
But the opinion seems to imply a favorable approach towards software patents
USPTO's Guidelines
The machine-or transformation test remains
an investigative tool
and is a useful starting point for determining whether a claimed invention is a patent-eligible process.
The guidelines provide
additional factors
to aid in the determination of whether a claimed method that fails the machine-or-transformation test is nonetheless patent eligible (i.e. ,is not an abstract idea) and also whether a claimed method that meets the machine-or-transformation test is nonetheless patent-ineligible.
Since claims directed to abstract ideas were not patentable prior to Bilski, subject matter eligibility
outcomes based on the interim Bilski Guidance are not likely to change in most cases
The factors should be considered when analyzing the claim
as a whole
to evaluate whether a method claim is directed to an abstract idea
Factors Weighing Toward Eligibility:

Recitation of a machine or transformation (either express or inherent).
o Machine or transformation is particular.
o Machine or transformation meaningfully limits the execution of the steps.
o Machine implements the claimed steps.
o The article being transformed is particular.
o The article undergoes a change in state or thing (e.g., objectively different function or use).
o The article being transformed is an object or substance.

The claim is directed toward applying a law of nature.
o Law of nature is practically applied.
o The application of the law of nature meaningfully limits the execution of the steps.

The claim is more than a mere statement of a concept.
o The claim describes a particular solution to a problem to be solved.
o The claim implements a concept in some tangible way.
o The performance of the steps is observable and verifiable.
Factors Weighing Against Eligibility:

No recitation of a machine or transformation (either express or inherent).

Insufficient recitation of a machine or transformation.
o Involvement of machine, or transformation, with the steps is merely nominally, insignificantly, or
tangentially related to the performance of the steps, e.g., data gathering, or merely recites a field in
which the method is intended to be applied.
o Machine is generically recited such that it covers any machine capable of performing the claimed
step(s).
o Machine is merely an object on which the method operates.
o Transformation involves only a change in position or location of article.
o “Article” is merely a general concept (see notes below).

The claim is not directed to an application of a law of nature.
o The claim would monopolize a natural force or patent a scientific fact; e.g., by claiming every mode
of producing an effect of that law of nature.
o Law of nature is applied in a merely subjective determination.
o Law of nature is merely nominally, insignificantly, or tangentially related to the performance of the
steps.

The claim is a mere statement of a general concept (see notes below for examples).
o Use of the concept, as expressed in the method, would effectively grant a monopoly over the concept.
o Both known and unknown uses of the concept are covered, and can be performed through any existing
or future-devised machinery, or even without any apparatus.
o The claim only states a problem to be solved.
o The general concept is disembodied.
o The mechanism(s) by which the steps are implemented is subjective or imperceptible.
Examples of general concepts include, but are not limited, to:
ƒBasic economic practices or theories (e.g., hedging, insurance, financial transactions, marketing);
ƒBasic legal theories (e.g., contracts, dispute resolution, rules of law);
ƒMathematical concepts (e.g., algorithms, spatial relationships, geometry);
ƒMental activity (e.g., forming a judgment, observation, evaluation, or opinion);
ƒInterpersonal interactions or relationships (e.g., conversing, dating);
ƒTeaching concepts (e.g., memorization, repetition);
ƒHuman behavior (e.g., exercising, wearing clothing, following rules or instructions);
ƒInstructing “how business should be conducted.”
When making a subject matter eligibility determination, the relevant factors should be weighed with respect to the
claim as a whole
Mayo v. Prometheus &
WIldTangent v. Ultramercial
In Mayo a unanimous (9–0) Supreme Court has held that the personalized medicine dosing process invented by Prometheus is not eligible for patent protection because the process is effectively an unpatentable law of nature.
The court still maintains that “an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.” On the other hand, the “application” must be
“significant,”
not “too broadly preempt” use of the law, and
include other elements that constitute an “inventive concept” that is significant and separate from the natural law itself
.
(1) a newly discovered law of nature is itself unpatentable and
(2) the application of that newly discovered law is also normally unpatentable if the application merely relies upon elements already known in the art.
The court unfavorably cited the previous requirement that eligibility under § 101 “must be” based on claims “considered as a whole.”
In WildTangent the patent involved a particular method for distributing copyrighted products over the Internet. The basic gist of the invention is that the consumer receives a copyrighted product in exchange for viewing an advertisement, and it all takes place over the internet and with a particular monetization scheme.
The Federal Circuit found the claimed invention patentable under Section 101 based upon the requirement that a computer be used to perform the method and the programming complexity required to carry out the claimed elements
The Supreme Court GVR'd the case requiring the Federal Circuit to apply its new Mayo test that dissects a patent claim, discards whatever a court thinks is conventional then determines subject matter eligibility with whatever remains in the claim
USPTO's Guidelines
As part of a complete analysis under 35 U.S.c. § 101, examiners should continue to examine patent applications for compliance with section 101 using the existing Interim Bilski Guidance, factoring in the additional considerations below.
Examiners must continue to ensure that claims, particularly process claims, are not directed to
an exception to eligibility such that the claim amounts to a monopoly on the law of nature,
natural phenomenon, or abstract idea itself.
A claim that includes an exception should include other elements or combination of elements such that, in practice, the claimed product or process amounts to significantly more than a law of nature, a natural phenomenon, or an abstract idea with conventional steps specified at a high level of generality appended thereto.
Who Needs Patents Anyway?!
Exclusive rights
Strong market position
Prevent others from commercially using your patented invention
Establishing yourself in the market as an innovator
Create a financial asset
Investors demand it (and for good reason)
Increase value for M&A opportunities
Licensing/Monetization - even if there is no product
Increase negotiating power
Patent cross licensing
Business ecosystem positioning
Positive image
Demonstration of the high level of expertise, specialization and technological capacity
Patent Litigation
i4i vs. Microsoft
Microsoft's implementation of "custom XML", a proprietary extension within Word's native OOXML document format
Microsoft was forced to withdraw current versions of Word and to remove or reduce the functionality of the OOXML format from future versions...
...and pay $290 Million
NTP vs. RIM
agreed to pay $612.5 million to avoid shutdown of wireless e-mail service
Some Practical Advise
Integration with Business Activities
Research and development
Marketing and sales
IP
Must occur within a certain time frame (publication, first to file)
Documentation
Research papers
FTO
Patent Disclosure forms
Research documents (grace period)
Patent disclosure forms
FTO
Patent disclosure forms
It is critical to clarify inventorship as soon as possible
Who contributed to the technical solution?
Evidence in case of a challenge:
JV and other collaborations
Former employer
Disgruntled employees (and former employees)
Identify the problem which the invention is intended to solve
Prior art solutions (independent search)
- or
Is this a newly identified challenge?
Describe the solution
Focus on the how rather than one the what or why
Provide a detailed description (step by step)
Refer to alternatives, optimizations, different configurations, etc. in particular ones which may appeal to competitors, clients, suppliers and M&A candidates
Give A-Z examples - Choose examples which emphasize critical points
Provide a description of the structure of the device (can be tricky for SW)
Describe the process (baby steps!)
Any other uses for this technology?
How will this invention be used by the company?
When is the expected public disclosure
Various classifications can be implemented
Searching
Independently
CTO level and down
ongoing
you have the best chance of success
Assisted
Best of both worlds
Access to professional search resources
Can use local service providers for a lesser cost
Time consuming
but can also save a lot of time (reviewing search results...)... and money
Patentability vs. FTO
Purchased Search
Various price points ...and quality
Consider the investment that will be required in order to filter the results
Consider consulting a PA about the definition of the invention, and the search strategy
Obligation to disclose (US, IL)
Provisional application - is not necessarily what you thought...
PCT can help with cash flow
FTO can be expensive
but can save a lot(!) of time and money down the road
What should you search? and when?
Full transcript