To provide some  background:  in 2008, Ultramercial LLC received U.S. patent 7,346,545 covering media distribution methods that allow users to view copyrighted material over the Internet free of charge in exchange for watching advertisements.  Ultramercial sued Hulu LLC and WildTangent, Inc.  for patent infringement.  However, in August 2011, the U.S. District Court for the Central District of California struck down the patent, finding that its claims covered an abstract idea and thus  were not eligible for patent protection.

Ultramercial appealed, and in September 2011 the U.S. Court of Appeals for the Federal Circuit reversed the decision.  The Federal Circuit explained that “[a]lthough abstract principles are not eligible for patent protection, an application of an abstract idea may well be deserving of patent protection” (emphasis added).  The Federal Circuit also found that the claimed processes  could not be performed by a human but rather “require, among other things, controlled interaction with a consumer via an Internet website, something far removed from purely mental steps.”   Noting that the patent covered the application of certain steps to “monetizing and distributing copyrighted products over the Internet,”  the Federal Circuit found the claims to be patent-eligible.

In the latest development, the Supreme Court may have swung the patent-eligibility pendulum back toward the district court’s conclusion.  The Supreme Court’s order contains no explanation, but merely requires that the Federal Circuit give the patent “further consideration in view of Mayo Collaborative Services v. Prometheus Laboratories, Inc. ” (U.S. 2012).   As explained in a previous IP Spotlight post, Mayo v. Prometheus involved a “personalized medicine” process, in which the patent covered a method of administering a drug and then testing the patient to determine whether to decrease the amount of the drug administered in subsequent doses.  In its Mayo decision, the Supreme Court found the personalized medicine patent to be invalid on the basis that it claimed “laws of nature” that were not patent-eligible.

In its petition for Supreme Court review, WildTangent asked the Court to consider “whether, or in what circumstances, a patent’s general and indeterminate references to ‘over the Internet’ or ‘at an Internet website’ are sufficient to transform an unpatentable abstract idea into a patentable process for purposes of 35 U.S.C. § 101.”  While it’s clear that an Internet advertising method is not a “law of nature,” the Supreme Court’s order may be a nod toward the Mayo opinion’s statement that “to transform a law of nature into a patent-eligible application of such law, one must do more than simply state the law of nature while adding the words ‘apply it.’”

It remains to be seen whether the Federal Circuit will change the outcome of Ultramercial v. Hulu or simply keep the result but elaborate on its reasoning.  Either way, the order suggests that the Supreme Court wants Mayo v. Prometheus to have a wide-ranging impact in software and business method cases.  In the meantime, companies who have or seek patents for Internet-based methods should carefully watch future developments relating to this case.

In Cambridge University Press v. Becker, the U.S. District Court for the District of Georgia considered a case where Georgia State University (GSU) allowed its faculty to post excerpts from copyrighted books online so long as the faculty members filled out a “fair use checklist” to determine whether the posting qualified as fair use.  The plaintiffs alleged that GSU’s postings infringed plaintiffs’ copyright in 74 documents.

In its 350-page opinion,  the court sided with GSU with respect to all but five of the 74 documents.  In the decisions favoring GSU, the court generally found that the university published only small excerpts online with no intent to profit from the posting.

What amount is “small enough” to qualify as fair use?  The court acknowledged that “colleges and universities have been guessing about the permissible extent of fair use.”  Although most of the publications at issue involved no more than one chapter of a book (or less), the court said that the “amount  allowed to be excerpted will be determined in the overall fair use assessment.”  In other words, the court’s decision established no bright line test.

The court also found relevant the fact that GSU established a fair use policy.  However, the court found the policy to be deficient in that the policy did not limit copying to small amounts consisting of no more than a single chapter.  The court also criticized the GSU policy for not requiring  faculty members to consider a posting’s potential effect on the market for the copyrighted work.

If upheld, the decision suggests that academic institutions may be permitted to post excerpts of copyrighted works so long as the publication is in compliance with written policies that: (i) prohibit publication of more than a chapter (or other relevant section identifier); and (ii) consider the publication’s effect on the market for the original work.  However, as the case may be appealed, institutions should tread cautiously until other courts issue additional guidance in future decisions.

• utility patent application basic filing fee:  $390 (increase of $10)
• utility patent examination fee:  $260 (increase of $10)
• provisional application filing fee:  $260 (increase of $10)
• extension of time fees:  increased $20 after two months, $40 after three months, $60 after four months, and $80 after five months:
• maintenance fees:  increased $30 at the first stage, $80 at the second stage, and $140 at the third stage.

Although the proposed increases reflect what the USPTO typically implements each year, this may be end up being atypical.  First, the current fees already reflect a 15% increase that occurred in September 2011 in response to requirements of the America Invents Act.  Second, the America Invents Act also gave the USPTO increased fee-setting authority, and the USPTO’s May 14 notice hints of future use of that authority by stating that “[AIA] Section 10 fee-setting will be addressed in a future proposal.”

The USPTO will accept public comments on the fee increases through June 13, 2012.

Sometimes, during prosecution, applicants become aware of additional prior art.  For example, if the application is pending in multiple countries, a foreign patent office may cite a patent or other document that the applicant hasn’t seen before.  If so, the applicant must file an Information Disclosure Statement with the USPTO to ensure that the USPTO is informed of that document.  However, if the issue fee has already been paid, previously applicants needed to file a request for continued examination (and a substantial fee) to ensure that the USPTO considered the newly-discovered document.

The USPTO recently announced a four-month pilot program that will obviate the need for a request for continued examination in most such cases.  Under the new “Quick Path Information Disclosure Statement (QPIDS)” pilot.  Under the pilot, a request for examination (but no fee) must be included with the IDS.  However, the USPTO will only require the fee and act on the request for continued examination if the USPTO determines that the new information warrants reopening prosecution.

The QPIDS pilot program will run through September 30, 2012.

The full article is available on the Pittsburgh Business Times website.  (Subscription may be required to access the full article.)

The good folks at Think IP Strategy have captured all of 2011′s IP news in a new publication, the 2011 IP Think Tank Almanac.  The Almanac provides day-by-day updates, with formatting to allow links to common topic or keyword-based searching.

The 2011 IP Think Tank Almanac is available from the Think IP Strategy website.

The court ruled that the patent holder was not justified in bringing the suit, as the agreement did not expressly exclude continuation patents from the scope of the license.  The court relied on the Federal Circuit’s 2011 decision in Gen. Protecht Group, Inc. v. Leviton Mfg. Co., Inc., which held that “where, as here, continuations issue from parent patents that previously have been licensed as to certain products, it may be presumed that, absent a clear indication of mutual intent to the contrary, those products are impliedly licensed under the continuations as well.”

The S.D.N.Y decision is ICOS Vision Systems N.V. v. Scanner Technologies Corporation, No. 1-10-cv-00604 (S.D.N.Y. Feb. 15, 2012)

The new program is intended to help patent owners avoid costly challenges that could be raised against a patent during litigation.  The program is also intended to help patent owners avoid charges of inequitable conduct based on an allegation that the patent holder withheld material information from the USPTO.  However, information pled against a patent holder during litigation is not eligible, so the program’s practical effect may be limited to pre-litigation correction of a patent before a lawsuit is filed.

In addition, because patent holders who are considering litigation will likely be hesitant to highlight potential weaknesses in the patents, and because the supplemental examination rules require patent holders to explain why the submission raises a substantial new question of patentability, patent holders may be hesitant to file for supplemental examination in most situations.

Under the proposed rules, within three months of filing the USPTO will consider the patent owner’s request and either (a) issue a certificate confirming patentability or (b) initiate an ex parte reexamination to review the patent.

The proposed fee for requesting supplemental examination is $5,180.  If the USPTO orders an ex parte reexamination, an additional fee of $16,120 will be required.  In a related action, the USPTO proposed to raise the fees for filing a request for ex parte reexamination from $2,520 to $17,750.

It is a commitment from Twitter to our employees that patents can only be used for defensive purposes. We will not use the patents from employees’ inventions in offensive litigation without their permission. What’s more, this control flows with the patents, so if we sold them to others, they could only use them as the inventor intended.

On this basis, Twitter has rolled out what it calls the Innovator’s Patent Agreement (IPA).  Under the IPA,  Twitter agrees that it will not assert the assigned patent against any third party unless the assertion is for a
“Defensive Purpose.”  The IPA also states that this restriction will follow the patents to any subsequent purchaser.   The announcement states that by introducing the IPA, “employees can be assured that their patents will be used only as a shield rather than as a weapon.”

However,  the IPA’s definition of “Defensive Purpose” is fairly broad.  The IPA defines  ”Defensive Purpose” as the assertion of a patent claim:

• (a) against an Entity that has filed, maintained, threatened, or voluntarily participated in an intellectual property lawsuit against [Twitter] or any of [Twitter's] users, affiliates, customers, suppliers, or distributors;
• (b) against an Entity that has filed, maintained, or voluntarily participated in a patent infringement lawsuit against another in the past ten years, so long as the Entity has not instituted the patent infringement lawsuit defensively in response to a patent litigation threat against the Entity; or
• (c) otherwise to deter a patent litigation threat against [Twitter] or [Twitter's]  users, affiliates, customers, suppliers, or distributors.

In other words, if a company was a plaintiff in any patent infringement suit during the past ten years, or if the company ever threatened or instituted litigation against Twitter or any of its more than 140 million users, customers or suppliers, then that company is fair game to be sued under Twitter’s patents.

Twitter has posted the IPA on GitHub, in an apparent nod to the open source community and as a way to solicit feedback and encourage other companies to use the IPA.   Because of this, we might compare Twitter’s IPA with the patent license clause of the GNU General Public License v3.  The GPL v3 applies to open source software and states that if any “contributor” creates or modifies GPL v3-licensed software, then that contributor grants downstream users a non-exclusive, worldwide, royalty-free  license under the contributor’s essential patent claims, to make, use, sell, offer for sale, import and otherwise run, modify and propagate the contents of the version of the software that the contributor creates or modifies.  There are no restrictions on this license — it applies to all downstream users.

So, the Twitter IPA’s non-assertion clause is not nearly as “open” as the patent licensing terms that are familiar to the open source community under the  GPL v3.  However, as others have commented, a truly open approach would significantly reduce the value of a company’s patent portfolio.  It will be interesting to watch whether other companies use Twitter’s approach, and if so how they may modify it in the future

In Ergo Licensing, Inc. v. Carefusion 303, Inc. (No. 2011-1229, March 26, 2012), the court considered a patent covering an infusion system for metering and delivering fluids into a patient’s body.  An element of the patent’s claims was a “programmable control means” that had data fields with metering properties of individual fluid flows.  The court interpreted this element as a “means-plus-function” limitation, for which Section 112, ¶ 6 of the Patent Act requires the patent to disclose a corresponding structure.  In this case, the court said that the patent’s disclosure corresponding structure of a general purpose computer or control device was not sufficient.  Instead, the court required that the patent disclose the algorithm under which the control is performed.  ”Requiring disclosure of an algorithm properly defines the scope of the claim and prevents pure functional claiming.”  On this basis, the court found the claims to be indefinite.

In the second case, Noah Systems, Inc. v. Intuit, Inc. (No. 2011-1390, April 9, 2012), the court reviewed a patent covering an automated accounting system.  Each of the patent’s claims included an “access means,” such as a “means for providing access to [a] file of [a] financial accounting computer.”  Here, the court again found the claims to be invalid because the patent did not disclose an algorithm by which access is performed.  The court noted that the algorithm didn’t necessarily have to be a mathematical formula:  ”The specification can express the algorithm in any understandable terms including as a mathematical formula, in prose, or as a flow chart, or in any other manner that provides sufficient structure.”  (citing Finisar Corp. v. DirecTV Grp. Inc. (Fed. Cir. 2008)).   The patent did include an algorithm for a passcode function, but the court found even that disclosure to be lacking.  In addition to the passcode function, the court also required disclosure of an algorithm for enabling performance of the delineated operations.

The recent decisions illustrate how caselaw governing the validity of software patents continues to evolve.  While it has long been settled that software patent applications do not need to disclose source code, the Federal Circuit’s caselaw shows that it wants some description beyond purely functional language.   Although the Ergo Licensing and Noah Systems cases were limited to software patents with means-plus-function language, when working with a patent attorney or agent to prepare your patent application,  is a good practice to give him or her process flow diagrams, functional design specifications, and algorithms that describe how the software actually works.  The stronger your disclosure, the less likely that a court (or the USPTO) will find the claims to be indefinite or not enabled in the future.