This presentation analyzes the patentability of software and business method patent applications in the light of Bilski Case

1. Bilski: Effect on software and
business method applications
by, arun k narasani
10 December, 2008 1

2. Agenda
 Background
 Bilski Case
 BPAI Decisions
 Summary
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3. BACKGROUND
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4. Patent eligible subject matter
 35 USC 101
 Process
 Machine
 Manufacture
 Composition of matter
or
 Any new and useful improvement
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5. Patent eligible subject matter
 Diamond v. Chakrabarty (1980)
 Subject matter is intended to be broad
 Exclusions include laws of nature, natural
phenomena, abstract ideas
 Diamond v. Diehr (1981)
 Process with steps including use of mathematical
formula/algorithm
 Mere use of a formula in an otherwise patent
eligible subject matter does not make it patent
ineligible
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6. BILSKI Case
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7. Case details
 US application 08/833,892: Claim
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
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8. Case details
 Patent originally rejected by Examiner
 BPAI rejects the original objection as
“erroneous”
 Examiner used “technological arts” test which is
irrelevant
 Specific apparatus was not required for patent
eligibility. Ex. Chemical reaction
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9. Case details: considerations
 Validity of a claim “is a matter of both claim
construction and statutory construction”
 No claim construction dispute
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10. Case details: considerations
 What is patent eligible process?
 Supreme court has held that “process” as used in
§101 is narrower than its ordinary meaning (See
Flook)
 Claim is not patent eligible “process” if it claims
“laws of nature, natural phenomena, [or] abstract
ideas” (Diamond v. Diehr)
 What is an abstract idea?
 Is applicant claiming a fundamental principle
(an abstract idea) or a mental process?
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11. Revisiting patent eligible subject
matter
 Freeman-walter-Abele test
 In re freeman (1978); In re walter (1980); In re
abele (1982)
 Rejected in In re Alappat (1994)
 Useful-concrete-tangible test
 State Street Bank v. Signature Financial Group
(1998), "Data Processing System for Hub and
Spoke Financial Services Configuration"
 Technological arts test
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12. Machine-or-Transformation test
 1. Tied to a particular machine, or
 2. Involves transformation of an article
 Further restrictions:
 Should “not pre-empt all uses of a fundamental
principle”
 “insignificant extra-solution activity” will not suffice
 Purpose: to preclude processes which pre-empt
“all uses of a fundamental principle” from being
patent eligible
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13. Machine Implementation
 Left ambiguous
 “We leave to future cases the elaboration of the
precise contours of machine implementation, as
well as the answers to particular questions, such as
whether or when recitation of a computer suffices to
tie a process claim to a particular machine.”
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14. Transformation
 “A claimed process is patent-eligible if it
transforms an article into a different state or
thing. This transformation must be central to the
purpose of the claimed process”
 Articles:
 Do not include: Abstract constructs such as legal
obligations, organization relationships, and
business risks
 Include: electronic data of a physical objects or
substances (See Abele)
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15. Case details: verdict
 Claims patent ineligible as they are neither tied
to any particular machine nor transforming any
article from one state to another
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16. Case details: clarifications
 Business methods are not excluded from patent
eligible subject matter
 Software is not excluded from patent eligible
subject matter
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17. Case details: clarifications
 “even a claim that recites "physical steps" but
neither recites a particular machine or
apparatus, nor transforms any article into a
different state or thing, is not drawn to patent-
eligible subject matter.”
 “Conversely, a claim that purportedly lacks any
"physical steps" but is still tied to a machine or
achieves an eligible transformation passes
muster under § 101.”
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18. Effect on software and business
method applications
 Are pure business method patents out of patent
eligible subject matter?
 Is US also moving towards “Software Per Se”
exclusion like in India?
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19. POST-BILSKI: BPAI Decisions
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20. Ex parte BO LI (BPAI), 6 Nov, 08
 Claim 42 rejected under §101:
A computer program product, comprising a computer usable medium having a computer readable program
code embodied therein, said computer readable program code adapted to be executed to implement a
method for generating a report, said method comprising:
providing a system, wherein the system comprises distinct software modules, and wherein the distinct
software modules comprise a logic processing module, a configuration file processing module, a data
organization module, and a data display organization module;
parsing a configuration file into definition data that specifies: a data organization of the report, a display
organization of the report, and at least one data source comprising report data to be used for
generating the report, and wherein said parsing is performed by the configuration file processing
module in response to being called by the logic processing module;
extracting the report data from the at least one data source, wherein said extracting is performed by the
data organization module in response to being called by the logic processing module;
receiving, by the logic processing module, the definition data from the configuration file processing module
and the extracted report data from the data organization module; and
organizing, by the data display organization module in response to being called by the logic processing
module, a data display organization of the report, wherein said organizing comprises utilizing the
definition data received by the logic processing module and the extracted report data received by the
logic processing module.
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21. Ex parte BO LI (BPAI), 6 Nov, 08
 BPAI applied the new machine-or-
transformation test as opposed to the “useful,
concrete, tangible” used by the examiner
 BPAI decided that ““Beauregard claim” of this
nature be considered statutory at the USPTO
as a product claim”
 Beauregard claims are still valid post Bilski
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22. Ex parte Godwin and Wanderski,
13 Nov, 08 (Rehearing)
 Claim 7 rejected under §101:
A portal server system comprising:
a portal coupled to a plurality of portlets, each of said portlets having
associated portlet rendering logic;
a portlet aggregator communicatively linked to said portlet rendering
logic; and,
a visual service extension to said portlet aggregator programmed to
process said portlet rendering logic to transform visual style attributes in
said portlet rendering logic into markup language tags which can be
rendered for display in a specified type of pervasive agent.
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23. Ex parte Godwin and Wanderski,
13 Nov, 08 (Rehearing)
 Issue considered: Have Appellants shown that
the claimed invention recited in claims 7 and 12
is not directed to software per se?
 application: “The present invention can be realized in
hardware, software, or a combination of hardware and
software.”
 “As per our discussion above, in the context of a software
embodiment, we maintain that a server is broadly but
reasonably interpreted as a provider of services.”
 “it is our view that independent claims 7 .. do not positively
recite implementing the invention on a specific apparatus.”
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24. Ex parte Halligan and Weyand,
24 Nov, 08
 Claim 119 rejected under §101:
119. A programmed computer method based upon the six factors of a trade secret from the First
Restatement of Torts for identifying trade secrets within a plurality of potential trade secrets of a
business, where each of the plurality of potential trade secrets comprise information, said method
implemented by the programmed computer to effect the following steps:
a) the programmed computer providing a predetermined criteria for evaluating a potential trade secret
of the plurality of potential trade secrets under each of the six factors of a trade secret from the First
Restatement of Torts, said six factors including (1) the extent to which the information is known outside
of the business; (2) the extent to which it is known by employees and others involved in the business;
(3) the extent of measures taken by the business to guard the secrecy of the information; (4) the value
of the information to the business and its competitors; (5) the amount of time, effort or money expended
by the business in developing the information and (6) the ease or difficulty with which the information
could be properly acquired or duplicated by others;
b) the programmed computer receiving a numerical score value for the potential trade secret under the
predetermined criteria for each of the six factors;
c) the programmed computer calculating a metric from the received numerical score values under the
six factors; and
d) the programmed computer determining that the potential trade secret is a trade secret when the
calculated metric exceeds a predetermined threshold value.
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25. Ex parte Halligan and Weyand,
24 Nov, 08
 Method is performed using an unspecified
algorithm
 No physical object or data relating to physical
object is being transformed
 “..recitation fails to impose any meaningful
limits on the claim's scope as it adds nothing
more than a general purpose computer that has
been programmed in an unspecified manner to
implement the functional steps recited in the
claims.”
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26. Summary
 General Business methods without any relation
to real world objects go out of window
 Software is still patentable
 Beauregard claims are allowed
 Software claims without structural limitations may
not go through
 Need to be careful about general disclaimers
 Provide definitions to words in claims to indicate tie
up to a “particular machine”
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27. QUESTIONS?
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