Category Archives: Patents

If a patent can’t cover an “abstract idea,” can it be a trade secret?

Should I patent my invention or keep it a trade secret?  QuestionInventors often ask me this question.  And after a recent court decision and USPTO actions that raise the bar for patenting software inventions, the question is becoming even more important for software developers who want to protect their IP.

In Alice Corporation Pty Ltd. v. CLS Bank Int’l, the Supreme Court made it clear that “abstract ideas” are not eligible subject matter for patent protection. The decision, as well USPTO Preliminary Examination Instructions that followed the decision, suggest that inventive concepts such as algorithms, financial business methods and methods of organizing human activity are not, in themselves, patentable unless claimed with additional elements that make the claim cover significantly more than just the abstract idea.

So, does this mean that it’s better to keep certain inventions as a trade secret? Will trade secret law protect abstract ideas in a way that patent law can’t?

In most cases, probably not. Several state court decisions suggest that a trade secret needs to be described in an enabling manner in order for the owner to enforce trade secret rights against others.

For example,the Court of Appeal for the State of California recently held that in California, a “trade secrets plaintiff must, prior to commencing discovery, ‘identify the trade secret with reasonable particularity.’” New Castle Beverage, Inc. v. Spicy Beer Mix, Inc., (Cal. App. 6/17/2014).  In that case, the complaint described the trade secret as a “process of applying a secret solution to the inner and outer surfaces adjacent the lip of a beverage cup to permit a first mixture of spices to adhere to those surfaces.” The court found this description to be too vague.  Also, the lower (trial) court expressed a concern that if it were to grant a preliminary injunction, the court would have difficulty determining whether the defendant was violating the injunction.

This means that when deciding whether to patent a process or keep it trade secret, the inventor should work with his or her attorney to assess which area of law provides the best protection, not which regime is easier to use. In both situations, the inventor should identify and document a complete description of the process.  This description needs to include more than just the general idea itself, it needs to explain how the idea is implemented as technology.

So, if the question is “can I protect it,” patent law and trade secret law will often lead to similar answers.  Neither area of law is likely to help an inventor who either can’t or won’t fully describe the process in a way that enables a reader to make and use the process, and that allows a court to determine when an infringer is using the process.

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Alice’s Adventures: how has USPTO examination changed in the first few weeks after Alice v. CLS Bank?

In the first few weeks after the Supreme Court published its opinion in Alice Corporation Pty Ltd. v. CLS Bank Int’l, the USPTO appears to be struggling with exactly how the Court’s decision should affect USPTO examination procedures. However, that struggle may soon be resolved as additional guidance from the USPTO and the courts shed more light on how Alice will be implemented.

A week after the Court issued its decision, the USPTO published a set of Preliminary Examination Instructions in view of the Supreme Court Decision in Alice.  The Preliminary Examination Instructions explained that Alice made clear that (1) the USPTO should consistently use the same subject matter eligibility analysis for evaluating abstract ideas as it uses for laws of nature, and (2) the USPTO should treat method claims and apparatus claims the same for the purpose of eligibility.

With those two exceptions, the Preliminary Examination Instructions state that “the basic inquiries to determine subject matter eligibility remain the same.” In particular, Examiners should ask (1) does the claim involve an abstract idea, and (2) if so, does the claim include enough additional elements to ensure that the claim amounts to significantly more than the abstract idea itself?

However, in the weeks since the decision, USPTO Office Actions in pending applications have been anything but consistent. In some cases, the USPTO has Continue reading

USPTO seeks comment on “virtual marking” of patented products

When a company sells a product for which it also holds a patent, it is common practice for the company to mark the product with the patent number.  Patent marking serves to place the public on notice that the product is patented  — thus potentially deterring infringers.

More importantly, marking a product helps to maximize the damages available in an infringement action.  Section 287(a) of the Patent Act states that a patent owner who fails to mark its products can only collect damages for infringement if the infringer was notified of the infringement and continued to infringe anyway.

Complying with patent marking obligations can be difficult, especially for products that are covered by multiple patents. The ubiquity of e-commerce, smartphones, and our “always wired” society have led many to consider whether the patent marking requirement is antiquated. Congress did so in 2011, when the America Invents Act (AIA) allowed patent holders to mark a product with a website address instead of a patent number, if the website contains a list of patents covering the product.

The AIA also directed the USPTO to provide Congress with a report on the effectiveness of virtual marking by September 16, 2014.

In order to help it prepare that report, the USPTO seeks public input. Specifically, the USPTO is inviting public comment on the following aspects of virtual marking:

  • whether virtual marking is effective for giving public notice;
  • whether virtual marking has limited or improved the public’s ability to access patent information;
  • whether and what legal issues arise from virtual marking; and
  • whether virtual marking has any deficiencies.

The USPTO is accepting comments via email at virtualmarking@uspto.gov, and via other methods described in the USPTO’s full notice.  Act fast:  comments must be submitted by July 16, 2014.

Supreme Court delivers blow to “abstract” software patents, while stating that software still can be patent-eligible

In an opinion long-awaited by the software community, the U.S. Supreme Court has found a computer-implemented method and system for exchanging financial obligations ineligible for patenting.

In Alice Corporation Pty Ltd. v. CLS Bank Int’l, the Court considered the question of whether the claims of four patents covered patent-eligible subject matter. In its decision, the Court found all of the patents’ claims were “drawn to the abstract idea of intermediated settlement,” which is “a fundamental economic practice long prevalent in our system of commerce.” While acknowledging that “at some level, all inventions … embody, use, rest upon, or apply … abstract ideas,” the Court found this particular set of inventions to be patent-ineligible.

The Court declined to provide any general guidance on what other inventions might be considered to be “abstract ideas.” Instead, the Court focused on the particular patent claims in front of it and stated:

we need not labor to delimit the precise contours of the “abstract ideas” category in this case.  It is enough to recognize that there is no meaningful distinction between the concept of risk hedging in Bilski [v Kappos] and the concept of intermediated settlement at issue here.

In contrast to the highly fractured Federal Circuit decision, the Supreme Court’s decision was unanimous. However, by declining to provide any general guidance, the Court’s long-awaited opinion does not fully resolve the confusion about precisely when software is and is not patent-eligible.

However, the Court did provide some insight into its thought process by way of example. The Court discussed prior decisions involving: (1) methods of measuring metabolites in the bloodstream (Mayo v. Prometheus); (2) using a mathematical formula to adjust alarm limits for certain operating conditions in a catalytic conversion process (Parker v. Flook); and (3) a computer-implemented process for curing rubber (Diamond v. Diehr). Noting that the first two inventions were patent-ineligible while the third invention qualified for patenting, the Court explained that the rubber curing invention “improved an existing technological process” and was designed to “solve a technological problem.”

The Court explained that “[t]hese cases demonstrate that the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.”  Applying those cases to a representative claim (claim 33 of U.S. Patent 5,970,479), the Court found discrete processing steps such as limitations requiring creating shadow records, using a computer to adjust and maintain those shadow records, and reconciling shadow records and corresponding exchange institution accounts through end-of-day transactions to be “purely conventional” steps in an intermediated settlement.  Adding a generic computer to those steps did not make them patent-eligible.

The Court’s decision suggests that software inventions that are tied to particular technologies (such as manufacturing processes) may fare better than those that are tied to non-technological methods (such financial transactions). However, time and future court interpretations of this decision will be required to determine the decision’s precise impact.

By focusing its analysis on a specific claim set rather than providing any general guidance, the Court seemed to be mindful of Federal Circuit Judge Moore’s warning that the result could mean “the death of hundreds of thousands of patents.” Instead, the Court specifically stated:  “There is no dispute that many computer-implemented claims are formally addressed to patent-eligible subject matter.”

So, while the Court’s decision places number of software patents into question, it does not quite deliver a knockout punch to software patents in general.

IAM Patent 1000 Released – 2014 Edition

Intellectual Asset Management (IAM) magazine has released the IAM Patent 1000:  The World’s Leading Patent  Practitioners 2014.  Each year, IAM surveys its readers and asks them to recommend patent licensing and prosecution attorneys for inclusion in the guide.  According to IAM:

[The IAM Patent 1000 is] a unique guide that identifies the top patent practitioners in key jurisdictions around the globe. . . .
The IAM Patent 1000 has fast become the definitive directory exclusively dedicated to identifying the world’s leading patent services providers. The extensive research process for this guide was conducted over several months by a team of full-time analysts, and involved in excess of 1,500 interviews with patent specialists across the globe.

The IAM Patent 1000 is available on the IAM website to registered users via this link.   I am honored that IAM named me to its lists for both patent licensing and patent prosecution for the fourth consecutive year.  In addition, I am pleased to note that my law firm, Fox Rothschild, is named to the guide’s honor roll for patent prosecution.

Joint ownership of patents can create enforcement risks; here’s how to avoid them

When two or more research institutions, corporations or other entities collaborate on an invention, it is common for them to agree that any patents resulting from the collaboration will be jointly owned. However, a jointly owned patent can be nothing more than a piece of paper if no party has a right to use the patent to stop infringement. The collaboration agreement, patent assignment documents or both must be carefully drafted to ensure that enforcement rights are protected.

This risk was recently highlighted in STC.UNM v. Intel Corp., Fed. Cir., No. 2013-1241, 6/6/14. In the case, STC.UNM attempted to sue Intel for infringement of a patent. The patent was a continuation-in-part of an earlier patent application that was jointly owned by the University of New Mexico (UNM) and Sandia Corp. Because of procedural matters involving a terminal disclaimer, UNM and Sandia also were co-owners of the patent in suit. However, Sandia refused to join the lawsuit, and there was no agreement in place between UNM and Sandia that required Sandia to do so.

The district court dismissed the case for a lack of standing, and the Federal Circuit affirmed.  As the Federal Circuit stated:

“as a matter of substantive patent law, all co-owners must ordinarily consent to join as plaintiffs in an infringement suit”

The reasoning for this ruling was that if only one co-owner sues, it effectively deprives the other co-owner of the right to sue and collect damages for infringement.

Both courts also refused to involuntarily join Sandia to the case as a necessary party.

The case highlights risks that can occur if joint owners of a patent don’t carefully specify enforcement rights — and obligations of both parties — in the relevant agreements.  When collaboration will result in invention, it’s important that the collaboration agreement, assignment agreement, or both specify who has enforcement rights. Even more important, it’s critical that the agreement require the non-enforcing co-owners to participate in the enforcement action when and if needed.

Supreme Court reverts to stricter standard for finding induced patent infringement

Continuing its string of reversals of Federal Circuit patent decisions, the United States Supreme Court has done it again.  In  Limelight Technologies, Inc. v. Akamai Technologies, Inc., the Court ruled that a defendant can be liable for induced infringement of a patented method only if a single entity directly infringed the patent by performing all of the method’s steps.

The Federal Circuit decision at issue made it easier for patent holders to sue in a situations where no single entity performed all of the steps of a patented method, but several parties collectively performed all of the steps. In that decision, the Federal Circuit held that a defendant who performed some steps of a method and encouraged others to perform the rest could be liable for inducement of infringement.

In the Limelight decision, the Supreme Court pulled no punches when explaining that the Federal Circuit got it wrong: Continue reading

Supreme Court: Patents require “reasonable certainty” or may be invalid

With the much-publicized issue of vague patent claims square in its sights, the United States Supreme Court has issued a new standard by which courts may find patents invalid for indefiniteness. The  new standard may give defendants another tool in their arsenal to challenge the validity of patent claims that are not precise or clear.

In Nautilus, Inc. v. Biosig Instruments, the Court addressed the Patent Act’s definiteness requirement, which requires a patent to conclude with “claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as the invention.” 35 U.S.C. § 112 ¶ 2. Under the prior standard, a claim was indefinite only if it were either “not amenable to construction” or “insolubly ambiguous.” Under the new standard, a patent claim is invalid if it fails to “inform those of skill in the art about the scope of the invention with reasonable certainty.”

In its opinion, the Court also noted that indefiniteness is to be assessed: (i) from the perspective of someone who is skilled in the relevant art; (ii) in light of the patent’s specification and prosecution history; and (iii) as of the time of the patent’s filing.

The definiteness requirement has been part of the Patent Act since 1870, and the text quoted above has remained unchanged since 1957. Nonetheless, the Court’s opinion shows that its meaning has remained open to dispute. As it has done in so many recent patent cases, the Court’s new opinion strikes down a standard set by the Federal Circuit for patents.

The Court found the previous “insolubly ambiguous” standard to be, simply, ambiguous.  One part of the Court decision that may be a key to future indefiniteness cases may be the following text:

It cannot be sufficient that a court can ascribe some meaning to a patent’s claims; the definiteness decision trains on the understanding of a skilled artisan at the time of the patent application, not a court viewing matters post hoc. To tolerate imprecision just short of that rendering a claim ‘insolubly ambiguous’ would diminish the definiteness requirement’s public-notice function and foster the innovation discouraging ‘zone of uncertainty’ against which this Court has warned.

Whether the new standard is actually more precise than the previous one remains to be seen as it is applied to specific claims, including the claims in this case on remand.

Patent Quality + International IP Transactions = A Busy Week

In the next week I will talk about the business of intellectual property at two very unique events. I’m excited to share the details of each event below:

First, on May 13, 2014 I will be part of a program entitled “Solving Problems in U.S.-Israel Cross-Border Transactions.” Hosted by Herzog Fox & Neeman in Tel Aviv and co-sponsored by Fox Rothschild, the event will feature two panel discussions providing a spectrum of perspectives on the complex investment challenges of cross-border M&A transactions. In a panel moderated by Michael Sweet, I’ll discuss the intellectual property issues that are most important to U.S. companies who are investing in or acquiring non-U.S. businesses or IP assets. The conference will offer practical solutions to various challenges that may arise during inbound and outbound transactions. Details are available here.

Second, on May 16, 2014, the topic of the Intangible Asset Finance Society’s monthly Mission: Intangible Monthly Briefing will be “IP Quality – 1, 2, 3 What Are We Fighting For?” Intellectual property can be extremely valuable — provided it is really good stuff. Whether it be due to a lack of attention, resources, or knowledge, too often companies build IP portfolios that appear to be strong, but are actually of questionable quality. What are the measures of “good?” John Kepler and I will debate this with host Jonathan Salem Baskin during this online briefing. Details are available here.

Supreme Court opens door to expanded fee-shifting in patent infringement litigation

Patent holders may consider hitting the “pause” button before enforcing their patents, based on a pair of U.S. Supreme Court decisions that relaxed the standard for awarding fees to the prevailing party in patent litigation. While several news outlets are (correctly) reporting that the Supreme Court rulings will make it easier for lower courts to impose financial penalties on so-called “patent trolls,” the facts behind the rulings suggest that the Court’s new standard may have an even broader effect.

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