Federal Circuit finds Internet content filtering patent eligible after Alice

For the second time in two months, the Federal Circuit has issued a decision that describes a situation in which a software invention can be eligible for patenting.

In Bascom Global Internet Services, Inc. v. AT&T Mobility et al., the court vacated and remanded a district court’s decision that found a content filtering system invention to be not patent-eligible.

The patent at issue covered a system by which a remote ISP server filters content that a client computer requests from a website. Claim 1 of the patent is directed to:

1. A content filtering system for filtering content retrieved from an Internet computer network by individual controlled access network accounts, said filtering system comprising:
  a local client computer generating network access requests for said individual controlled access network accounts;
  at least one filtering scheme;
  a plurality of sets of logical filtering elements; and
  a remote ISP server coupled to said client computer and said Internet computer network, said ISP server associating each said network account to at least one filtering scheme and at least one set of filtering elements, said ISP server further receiving said network access requests from said client computer and executing said associated filtering scheme utilizing said associated set of logical filtering elements.

The Federal Circuit passed on considering whether the claims were directed to an abstract idea, but instead focused on the second prong of the Alice v CLS Bank patent-eligibility analysis and found the claims to include an inventive concept. The Federal Circuit noted that “[t]he claims do not merely recite the abstract idea of filtering content along with the requirement to perform it on the Internet, or perform it on a set of generic computer components…nor do the claims preempt all ways of filtering content on the Internet; rather, they recite a specific, discrete implementation of the abstract idea of filtering content.”

The court also cautioned against confusing patent-eligibility with obviousness: “The district court’s analysis in this case … looks similar to an obviousness analysis under 35 U.S.C. 103, except lacking an explanation of a reason to combine the limitations as claimed. The inventive concept inquiry requires more than recognizing that each claim element, by itself, was known in the art. As is the case here, an inventive concept can be found in the non-conventional and non-generic arrangement of known, conventional pieces.”

The decision closely follows the Federal Circuit’s recent decision in Enfish LLC v. Microsoft Corporation, in which the court cautioned against a broad interpretation of Alice v. CLS Bank as holding that all improvements in computer-related technology are inherently abstract.

For a summary of more Federal Circuit, district court, and PTAB decisions that have found software patents to be eligible for patenting since Alice, click here.

Thanks to my colleague Brienne Terril for her help writing this post.

Physically impossible, yes. But is it still obvious?

A recent Federal Circuit decision held that a patent directed to a tool attachment for demolition equipment was obvious in view of two prior art references. The court reached this conclusion even though it did not deny that the proposed combination was physically impossible.

FIG 1 489 patentIn Allied Erecting and Dismantling Co., Inc. v. Genesis Attachments, LLC (Fed. Cir. June 15, 2016), the court reviewed certain claims of the patent, which included various features for attaching and detaching jaw sets from a demolition tool. The Patent Trial and Appeals Board found the patent to be obvious based on two prior patents:  one covering a different jaw attachment system, and the other describing a convertible bucket attachment for an excavator.

The patent holder argued that the proposed combination would render the prior art devices inoperable. The court did contradict this assertion. In fact, the court conceded that the combination “may impede the quick change functionality” disclosed in the first patent. Nonetheless, the court agreed with the PTAB and found it to be irrelevant:  “it is not necessary that [the prior art] be physically combinable to render obvious the [‘489 patent].” The court also quoted a 1983 decision stating that “the criterion [is] not whether the references could be physically combined but whether the claimed inventions are rendered obvious by the teachings of the prior art as a whole.”

Notably, the court did not explain how its decision could be reconciled with certain other conflicting precedent. For example, previous Federal Circuit decisions held that if a combination of two references would render one of them unsuitable for its intended purpose, the prior art then teaches away from the combination. In re Gordon, (Fed. Cir. 1984). In fact, in cases as recent January 2016’s In re Urbanski, a different panel of Federal Circuit judges held: “[i]f references taken in combination would produce a ‘seemingly inoperative device,’… such references teach away from the combination and thus cannot serve as predicates for a prima facie case of obviousness.”

The Federal Circuit’s conflicting decisions leave open substantial questions about the effect that impossibility and inoperability have on obviousness.

No more bright lines: Supreme Court overturns test for willful patent infringement

In a consolidated decision involving two new cases, the U.S. Supreme Court continued its trend of shunning bright-line rules in patent infringement cases. The cases overturned the “objective recklessness” test that the Federal Circuit established in 2007 as a threshold criterion for finding that an accused infringer willfully infringed a patent.

In Halo Electronics, Inc. v. Pulse Electronics Inc. (consolidated with Stryker Corp. v. Zimmer Corp.) the Court held that Section 284 of the Patent Act gives district courts the discretion to determine whether to award enhanced damages against those guilty of patent infringement, and if so how much. The Court expressed concern that the “objective recklessness” test made it too easy for bad-faith infringers to avoid enhanced damages by simply presenting a reasonable defense to infringement at trial — even if the defense was unsuccessful and the infringer did not act on the basis of that defense. Instead, the Court said that in the context of willfulness, the proper rule is that “culpability is generally measured against the knowledge of the actor at the time of the challenged conduct.”

However, the Court cautioned that district court discretion is not without limits:  “Awards of enhanced damages under the Patent Act … are not to be meted out in a typical infringement case, but instead are designed as a ‘punitive’ or ‘vindictive’ sanction for egregious infringement behavior” and “are generally reserved for egregious cases of culpable behavior.”

Because of this, the Court’s decision may not significantly alter the situations when damages are actually awarded for patent infringement, nor is the decision likely to have much effect on the amounts awarded. However, the decision will likely to make it easier for patent holders to bring patent infringement claims and avoid having those claims cut off in a summary judgment ruling. In addition, the decisions will ensure that truly bad-faith infringers don’t use a bright-line rule such as objective recklessness as a shield to avoid enhanced damages.

European Unitary Patents and Possible Brexit

In recent weeks I’ve had several clients ask me whether they should alter their European filing strategies in view of a potential split between the UK and the European Union. Julia D’Arcy of Harrison IP has been instrumental in helping several of these clients understand the issues involved with a potential “Brexit.” In this guest post, Julia writes:

On June 23, 2016 there will be a referendum to determine whether Britain will leave the European Union (Brexit). The polls are close although most suggest that the UK will vote to stay in the EU. In any case, Britain leaving the EU would have no impact on obtaining Patents through the European Patent Office (EPO). A European Patent Application is governed by the European Patent Convention (EPC), and membership of the EPC is separate to membership of the EU. Indeed, the EPC currently includes a number of states which are not members of the EU, for instance, Switzerland.

It is likely that the European Unitary Patent will finally come into effect in the first half of 2017. A European Patent proprietor will then have the option of validating their European Patent in each territory of interest (as in the current system), or allowing their European Patent to become a Unitary Patent covering all states party to the Unitary Patent Convention. A Unitary Patent (UP) differs from the current European Patent (EP) system as it will have unitary effect for all countries of the EU (with the exception of Spain and Croatia). If Britain votes to leave the EU, a UP will not be effective for Britain, and separate validation of a European Patent into Britain will be required.

If a European Patent proprietor decides to allow their European Patent to become a Unitary Patent, the proprietor will be granted a single Patent that is effective for the whole of the EU (with the exception of Spain and Croatia), as opposed to the bundle of national Patents that are currently awarded. There are pros and cons to this new system. Validity and infringement of a UP will be decided by the Unified Patent Court (UPC) which is in the process of being established. Decisions by the UPC will have a pan-European effect and the Court will have the power to issue pan-European injunctions. This means that UPs are subject to central revocation. Some Patentees are reluctant to allow Patent protection for the whole of the EU to be invalidated with a decision of an untested Court.

If the proprietor validates in each European state of interest, he will have the option of opting out of the jurisdiction of the Unified Patent Court for an initial interim period of at least seven years. This opt out will not be available if proceedings have already been commenced before the UPC. After this interim period, the UPC will have exclusive jurisdiction for any European Patents unless already opted out, as well as for UPs which are incapable of being opted out at any stage.

A single annual renewal fee will become due for a UP as opposed to the multiple renewal fees which will become due if the proprietor validates in each European state of interest. This means that the administration of a UP will be simpler and cheaper where multiple European countries are of interest. However, the proprietor will not have the option of reducing coverage, and the associated cost of renewal payments during the life of a UP.

The existing competences of the EPO will remain unchanged, with the opposition period remaining intact. Decisions by the EPO are valid throughout the territory where the European Patent is valid and may thus encompass 38 countries. Furthermore, countries may still grant their own national Patents independently of the European Patent Office.

Once the UP comes into effect, European Patent attorneys based in the UK will continue to be permitted to prosecute European Patents covering all designations (including Unitary Patents). There is a possibility that the Unitary Patent Convention (UPC) will not go ahead if the UK votes to leave the EU as its economic value would be greatly diminished – the UK is the second largest economy within the EU. However, in my view this is unlikely and the UPC will probably nonetheless proceed.

Julia D'ArcyJulia D’Arcy is a Chartered and European Patent Attorney focusing on he protection of inventions in the chemical, pharmaceutical and medical sectors. Julia’s fields of expertise include biomaterials; polymer sciences; medical devices ranging from contact lenses to stents and grafts; methods to assist in the diagnosis and treatment of a variety of medical conditions; drug delivery systems; ionic liquids and materials including diamond, paper and glass technology.

Do your employee/contractor non-disclosure agreements comply with new DTSA notice requirements?

Magnifying glassHave you updated your company’s form employee and independent contractor non-disclosure agreements lately? Do they comply with the notice requirements relating to “whistleblowers” that took effect May 11, 2016 under a new federal law? If your answer is “no” or “I don’t know”, read on.

The new Defend Trade Secrets Act helps U.S. businesses protect their trade secrets by asking federal courts to order seizure of property necessary to prevent dissemination of the trade secrets. It also permits businesses to seek injunctions and damages in federal court for trade secret misappropriation.

The DTSA also provides some immunity for whistleblowers who use trade secrets by stating that:

An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (a) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

and

An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.

The immunity section of the DTSA is especially important for employers because it requires employers to provide with notice of the DTSA’s immunity clauses “in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.” The Act defines “employee” to include both actual employees and independent contractors. If an employer does not comply with the notice requirement, the employer’s ability to recover damages against that employee in a federal action for theft or other misappropriation of trade secrets will be limited.

Employers can comply with the notice requirement by updating their form employee and independent contractor agreements to include either the notice requirement or a cross-reference to a policy document (such as an employee handbook) that states the employer’s reporting policy for a suspected violation of law.

For additional information about the DTSA, including the law’s seizure and damages provisions, see this previous IP Spotlight post.

[Image copyright:  bacho12345]

IP3: Industry Patent Purchase Program allows patent owners to offer patents to leading global companies

A new website will give patent holders a limited-time opportunity to offer their patents for sale to some of the world’s largest companies.  According to a press release from Allied Security Trust (AST):

IP3 creates a patent marketplace that brings together a pool of significant money from [participating] companies … to purchase patents in a format that allows sellers to set their own price for their patent assets and reduces the time and complexity usually associated with patent transactions.  IP3 builds on the success of Google’s innovative 2015 Patent Purchase Promotion (PPP), and seeks to attract the submission of high quality patents from patent owners across a wide array of industries during a limited time period.

Participating companies include Google, Facebook, IBM, Microsoft, Adobe, SAP, Ford, Honda , Hyundai, Kia Motors, Verizon,  Cisco, Arris, leading cable service providers, and others. Technologies that the group is particularly interested in include enterprise software, communications, networking, semiconductors, content delivery and cloud computing.

The IP3 portal (ip3ast.com) will be open from May 25, 2016 to June 8, 2016. AST expects that all transactions will be completed by the end of September 2016.

Examiner Ninja website offers free insight into USPTO Patent Examiner data

A new website offers a useful — and free — tool to help patent applicants and their attorneys make data-driven decisions about patent prosecution strategy. The Examiner Ninja website publishes allowance rates, interview effectiveness data, and appeal records for USPTO Patent Examiners in a searchable form. This data can be very useful for applicants and their attorneys who are trying to decide whether an interview, amendment, or appeal may be the best open when responding to a particular Examiner’s rejection.

The data for individual Examiners currently spans an Examiner’s entire USPTO career, while art unit and overall statistics cover the last 15 years. The website plans to roll out additional search and filtering capabilities in the near future.

The website is offered by Justin Roettger, a web developer and attorney in California who gathers the information from several public websites and makes it available in an easy-to-use format.