Federal Circuit finds software license verification technology patent-eligible under Section 101

A new Federal Circuit decision found the claims of a patent directed to software license verification to be eligible for patenting under Section 101 of the Patent Act.

In Ancora Technologies, Inc. v. HTC America, Inc., the court reviewed the claims of U.S. patent 6,411,941, which involved methods of restricting software operation on a computer to be within a license for that computer. Representative claim 1 of the patent is:

A method of restricting software operation within a license for use with a computerincluding an erasable, non-volatile memory area of a BIOS of the computer, anda volatile memory area; the method comprising the steps of:

selecting a program residing in the volatile memory,

using an agent to set up a verification structure in the erasable, non-volatile memoryof the BIOS, the verification structure accommodating data that includes atleast one license record,

verifying the program using at least the verification structure from the erasable non-volatile memory of the BIOS, and

acting on the program according to the verification.

Thus, the method required storage of a license record in a “verification structure” created in a portion of the computer’s BIOS memory.

In its decision, the court noted that as in its Enfish, Visual Memory, Finjan, Core Wireless and Data Technologies cases, “[i]mproving security — here, against acomputer’s unauthorized use of a program — can be a non-abstract computer-functionality improvement if done by a specific technique that departs from earlier approaches to solve a specific computer problem.” The court also found that because in the representative claim “a license record is stored in a particular, modifiable, non-volatile portion of the computer’s BIOS … the claim addresses a technological problem with computers:  vulnerability of license-authorization software to hacking.”

Quoting its SAP America, Inc. v. InvestPic, LLC decision, the court also noted that the claim has “the specificity required to transform a claim from one claiming only a result to one claiming away of achieving it.” Therefore the court stated that it did not need to consider step two of the Alice analysis.


[1] ____ USPQ2d____ (Fed. Cir. Nov. 16, 2018).

[2] 127 USPQ2d 1597 (Fed. Cir. 2018).

Federal Circuit: Even the inventor can challenge patent’s validity

Historically, inventors who assign a patent to a company or other entity have been barred from later challenging the patent’s validity under the doctrine of “assignor estoppel.” This common-law doctrine has been in place for years. However, a new Federal Circuit decision scales it back by holding that assignor estoppel cannot stop certain inter partes review (IPR) proceedings filed by inventors with the Patent Trial and Appeals Board (PTAB).

In Arista Networks v. Cisco Systems, Inc. (Fed. Cir. Nov. 9, 2018), the court considered an appeal from the PTAB decision in an IPR proceeding. In the case, a company founded by an inventor (who was a former employee of the patent holder) argued that certain claims of the patent were obvious in view of prior art. While acknowledging that assignor estoppel is a “rule well settled by 45 years of judicial consideration and conclusion,” the court found that in the America Invents Act reveals Congress’ intent for a different rule in IPR proceedings. Specifically, since 35 U.S.C. §311(a) states that any “person who is not an owner of the patent” may file an IPR petition, the court ruled that an inventor who has assigned his or her interest — and who therefore is no longer an owner of the patent — may file an IPR petition that challenges validity of the patent.

What government contractors need to know about the revised disclosure requirements (and patent filing deadlines) for federally-funded inventions

The Bayh-Dole Act and federal regulations implementing the Act permit government contractors to retain ownership of inventions developed with federal government funding. However, to retain ownership the contractor must take certain actions within certain deadlines. If the contractor misses these deadlines, the government agency can take title to the invention.

These deadlines are about to become even more important when a regulatory change takes effect on May 14, 2018. Significant deadlines to keep in mind include:

1.  Disclose the invention to the government agency within two months of discovery, and elect title within two years of the disclosure.

The first required action is disclosure of the invention to the contracting agency. The Bayh-Dole Act (at 35 U.S.C.  § 202(c)(1)) requires any contractor who receives government funding to “disclose each subject invention to the Federal agency within a reasonable time after it becomes known to contractor personnel responsible for administration of patent matters.” Regulations implementing the Act state that the “reasonable time” is “two months after the inventor discloses it in writing to contractor personnel responsible for patent matters.” 37 C.F.R. § 401.14(c)(1).

The second required action is that if the contractor wants to retain ownership of the invention, the contractor must elect to retain title within two years of the disclosure. 37 C.F.R. § 401.14(c)(2).

If the contractor fails to make the required disclosure to the Federal agency within two months, or if the contractor fails to elect to retain title within two years, the Federal agency may take ownership to the invention.

Currently, a time limit also applies to the Federal agency’s right to take title to the invention. However, that is about to change. Continue reading

In Vanda decision, Federal Circuit finds method of treatment claims eligible for patenting

A recent Federal Circuit decision provides patent holders and applicants some guidance as to when patent claims that include methods of treatment may be eligible for patenting.

In Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals Int’l Ltd. (Fed. Cir. Apr. 13 2018), the decision involved U.S. Patent 8,586,610, which is directed to a method of trating a patient who is suffering from schizophrenia with iloperidone. The representative claims included the steps of performing a genotypic assay on the patient, and administering one of multiple dosages of iloperidone to the patient depending on the results of the assay.

The defendant argued that the claims were not patent-eligible “because they are directed to a natural relationship between iloperidone, CYP2D6 metabolism, and QT prolongation, and add nothing inventive to those natural laws and phenomena.” The patent holder argued that while the claims may “touch upon” laws of nature, they are not directed to any law of nature.

The court agreed with the patent holder, nothing that while the “inventors recognized the relationships between iloperidone [and certain natural phenomena,] that is not what they claimed. They claimed an application of that relationship. Unlike the claim at issue in Mayo [v. Prometheus], the claims here require a treating doctor to administer iloperidone in the amount of either (1) 12 mg/day or less or (2) between 12 mg/day to 24 mg/day, depending on the result of a genotyping assay.” Thus, the court found that the “patent claims are ‘a new way of using an existing drug’ that is safer for patients because it reduces the risk of QTc prolongation,” rather than purely a law of nature.

The Vanda decision can be a useful reference point for applicants who seek to claim personalized medicine delivery methods. The court’s discussion of claims that touch on, but are not directed to, laws of nature may be helpful for those who are inventing new and useful methods that rely on laws of nature, but which aren’t inherently laws of nature on their own.

Are invention disclosure documents protected by attorney-client privilege?

A common first step in the patent filing process is the completion of an invention disclosure form. The form asks the inventors to provide basic details about the invention, including who invented it, what problem does the invention solve, and how is the invention different from the prior art.

Many businesses and research institutions with patent filing programs require their inventors to complete invention disclosure forms to help the entity decide whether to file a patent application. The form may be reviewed by an intellectual property manager, by a patent review committee, or by others who decide whether or not to pursue a patent application for the invention.

Are invention disclosures protected by attorney-client privilege?

Recent court decisions indicate that the answer depends on what happens after the inventors complete the form. Continue reading

Federal Circuit starts 2018 with two favorable decisions for software patents

After issuing two very negative decisions that called the future of software patent-eligbility into question, in January 2018 the Federal Circuit moved its software patent-eligibility pendulum back in the direction of finding eligible subject matter in software patents.

In Core Wireless Licensing S.A.R.L.. v. LG Electronics, Inc. (Jan. 25, 2018), the court affirmed a district court decision that denied a request for summary judgment that the claims of patents 8,713,476 and 8,434,020 were directed to ineligible subject matter.

The patents disclosed and claimed “improved display interfaces, particularly for electronic devices with small screens like mobile telephones…. The improved interfaces allow a user to more quickly access desired data stored in, and functions of applications included in, the electronic devices.”

Claim 1 of the ‘476 patent recited (with emphases added by the court):

1.  A computing device comprising a display screen, the computing device being configured to display on the screen a menu listing one or more applications, and additionally being configured to display on the screen an application summary that can be reached directly from the menu, wherein the application summary displays a limited list of data offered within the one or more applications, each of the data in the list being selectable to launch the respective application and enable the selected data to be seen within the respective application, and wherein the application summary is displayed while the one or more applications are in an un-launched state.

Claim 1 of the ‘020 patent recited (with emphases added by the court): Continue reading

Cybersecurity Patent Strategies vs. the Growing Barriers to Software Patents

More and more companies who offer blockchain and other next generation cybersecurity technologies are seeking patents to help protect their competitive position. The U.S. Patent and Trademark Office’s (USPTO’s) Technology Center 2400, which covers networking, multiplexing, cable and security technologies, includes over 200 Patent Examiners who focus on security technologies. TC 2400 issued over 33,000 patents in 2017. During this period, the USPTO’s overall allowance rate was 59.4%.

Despite this apparent boom, patent applications covering cybersecurity technologies have faced increasing scrutiny since the June 2014 U.S. Supreme Court decision in Alice Corporation Pty Ltd. v. CLS Bank Int’l. In Alice, the Court found that a software implementation of an escrow arrangement was not eligible for patenting in the U.S. because it merely involved implementing an “abstract idea” on a computer. The Court did not define the term “abstract idea” other than to describe it as a building block of human ingenuity, or a fundamental concept, including concepts that involve a “fundamental economic practice.”

Since then, the USPTO has issued several guidance documents, and lower courts have issued several opinions, describing when software is and (more often) is not eligible for patenting under Section 101 of the Patent Act. The USPTO typically denies, and courts often strike down, patent applications and patents covering methods of manipulating data, completing financial transactions, and algorithms that do not require any particular hardware other than a general-purpose computer.

Patent applications that focus on financial applications of blockchain technologies often face patent-eligibility hurdles. A search of the USPTO’s Patent Application Information Retrieval (PIR) system indicated that as of January 2018, over 90% of the published applications and issued patents having the term “blockchain” and any combination of “cryptocurrency,” “coin,” or “currency” in the claims were assigned to the USPTO’s Technology Center 3600. (TC 3600 includes the USPTO’s business methods examining unit.) Over 80% of these patents and patents applications received a Section 101 rejection on first action. In addition, the allowance rate in TC 3600 remains far below that of the USPTO’s overall statistics.

Claim Drafting Strategies Continue reading