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Judicially Re(de)fining Software Patent EligibilityBlake Reese*

May 7, 2010

AIPLA 2010 Spring Meeting

*Blake Reese is an attorney in the intellectual property and litigation group of Milbank, Tweed, Hadley & McCloy. The views expressed in the presentation are those of the author and may not be attributed to Milbank or its clients.

1

Road Map

• Survey post-Bilski Federal Circuit cases• Discuss selected district court cases that

substantively analyzed Bilski

2

Introduction

• My purpose: Discuss post-Bilski jurisprudence in case the Supreme Court’s holding, at least in part, affirms the machine-or-transformation (M-or-T) test

3

Foreshadowing

• “[W]e recognize that the Supreme Court may ultimately decide to alter or perhaps even set aside [the M-or-T] test to accommodate emerging technologies. And we certainly do not rule out the possibility that this court may in the future refine or augment the [M-or-T] test or how it is applied.”

– In re Bilski, 545 F.3d 943, 956 (Fed. Cir. 2008) (en banc)

4

In re Bilski

• Seems to give district courts concern about issuing judgments pursuant to In re Bilski

– Risk of reversal

– Wait-and-see how other courts, Fed. Cir., and now Supreme Court will handle

• Some have issued stays on such issues pending Supreme Court’s opinion

5

Stayed Pending Bilski v. Kappos

• “After the Supreme Court issues its Bilskiopinion, this Court will likely have clear direction on the precise standard to be applied in evaluating the patentability of method claims. With that guidance, the Court will be able to efficiently consider and evaluate [the accused infringer’s] argument that the [patent-at-issue] is invalid.”

– Lincoln Nat’l Life Ins. Co. v. Transamerica Fin. Life Ins. Co., No. 1:08-CV-135-JVB-RBC, 2010 WL 567993, at *1 (N.D. Ind. Feb. 12, 2010)

6

Road Map

• Survey post-Bilski Federal Circuit cases• Discuss selected district court cases that

substantively analyzed Bilski

7

In re Ferguson (Fed. Cir. March 6, 2009)

• Bilski M-or-T test is for process claims only• Adopted definition of “machine” from In re

Nuitjen:– “Machine” means “a concrete thing, consisting of

parts, or of certain devices and combination of devices.” Burr v. Duryee, 68 U.S. 531, 570 (1863).

– This “includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result.” Corning v. Burden, 56 U.S. 252, 267 (1854).

8

Prometheus Labs., Inc. v. Mayo Collaborative Servs. (Fed. Cir. Sept. 16, 2009)

• Claims directed to “methods for calibrating the proper dosage of thiopurine drugs” for autoimmune disease treatment

• “The invention’s purpose to treat the human body is made clear in the specification and the preambles of the asserted claims”

9

Prometheus Labs., Inc. v. Mayo Collaborative Servs. (Fed. Cir. Sept. 16, 2009) (cont.)

• Administration of drugs causes “the human body … to undergo[] a transformation” as “[t]he drugs do not pass through the body untouched without affecting it”

10

General Human v. General Purpose Computer

•Could one argue that the use of software causes a general purpose computer “to undergo[] a transformation” as “[t]he[generated signals] do not pass through the [computer] untouched without affecting it”?

11

SiRF Tech. Inc. v. ITC (Fed. Cir. April 12, 2010) (cont.)

• GPS receiver is a “machine” under In re Nuijten

• GPS receiver is a “particular machine”because “[p]seudoranges, which are the distances or estimated distances between satellites and a GPS receiver, can exist only with respect to a particular GPS receiver that receives the satellite signals.”

– specifically programmed device v. particular machine – “methods at issue could not be performed without the

use of a GPS receiver”

12

SiRF Tech. Inc. v. ITC (Fed. Cir. April 12, 2010) (cont.)

• Meaningful limits/No Post-solution activity:– The machine “must play a significant part in

permitting the claimed method to be performed, rather than function solely as an obvious mechanism for permitting a solution to be achieved more quickly, i.e., through the utilization of a computer for performing calculations.”

– Court focused on whether a human could perform the claimed method without the machine, but only more slowly

13

Road Map

• Survey post-Bilski Federal Circuit cases• Discuss selected district court cases that

substantively analyzed Bilski

14

CyberSource Corp. v. Retail Decisions, Inc. (N.D. Cal. March 27, 2009)

• Involved CRM claim and method claim directed to “detecting fraud in a credit card transaction between a consumer and a merchant over the internet”

15

CyberSource Corp. v. Retail Decisions, Inc. (N.D. Cal. March 27, 2009) (cont.)

• Method claim– Noted Federal Circuit left to future cases to

determine whether or when recitation of a “computer” = tie to particular machine

– “internet” not particular machine because it’s an “abstraction … as [o]ne can touch a computer or a network cable, but one cannot touch ‘the internet’”

– Not transformative because credit cards ≠ physical objects or substances nor representations of those

• Also, no “visual depiction”

16

CyberSource Corp. v. Retail Decisions, Inc. (N.D. Cal. March 27, 2009) (cont.)

• Contrary to Ferguson, Court also applied Bilski M-or-T test to find CRM claim invalid

– “over the Internet” and “one or more processors” not particular machines

• Spec failed to describe the processors of a computer

• Found BPAI cases persuasive– “Following Bilski, the Board has rightly held that simply

appending ‘A computer readable media including program instructions…’ to an otherwise non-statutory process claim is insufficient to make it statutory.’”

17

Every Penny Counts, Inc. v. Bank of Am. Corp. (M.D. Fla. May 27, 2009)

• Claims directed to a “system whereby consumers can save and/or donate a portion of a credit or debit transaction”

• Contrary to Ferguson, system claim with means-plus function limitations analyzed under Bilski M-or-T test

– Court found system claim was effectively a process claim

– “[T]he ‘system’ … ‘has no substantial practical application except in connection with’ computers, cash registers, and networks, but it is not comprised of those devices.”

ry Penny Counts, Inc. v. Bank of Am. Corp. (M.D. Fla. May 27, 2009) (cont.)

• Use of machines were “insignificant extra-solution activity”

– The claimed “process” includes “a mathematical algorithm [that] uses machines for data input and data output to perform the required calculations”

– But, “those machines do not … impose any limit on the process itself.”

DealerTrack, Inc. v. Huber (C.D. Cal. July 7, 2009)

• Claims directed to “a computer aided method of managing a credit application”

• Court construed two disputed terms as – (1) “any device, e.g., personal computer or dumb

terminal, remote from the central processor, for application entry and display”

– (2) “any device, e.g., personal computer or dumb terminal, located at a logical or physical terminus of the system”

DealerTrack, Inc. v. Huber (C.D. Cal. July 7, 2009) (cont.)

• Based on its analysis, in part, of CyberSourceand a string of BPAI cases, the court found that those construed structures were not a “particular machine” under Bilski

• The patent “does not specify precisely how the computer hardware and database are ‘specifically programmed,’ and the claimed central processor is nothing more than a general purpose computer that has been programmed in some unspecified manner”

earch Corp. Techs., Inc. v. Microsoft Corp. (D. Ariz. July 28, 2009)

• Claims directed to “image halftoningtechnology used in computers and printers”

• “Comparator” construed to be a “device (or collection of operations, as in software)” could be software per se and thus not a particular machine

earch Corp. Techs., Inc. v. Microsoft Corp. (D. Ariz. July 28, 2009) (cont.)

• For electronic transformation, claimed process must be

– (1) limited to transformation of specific data, and

– (2) limited to a visual depiction representing specific objects or substances

earch Corp. Techs., Inc. v. Microsoft Corp. (D. Ariz. July 28, 2009) (cont.)

• Claims that recited “the production of an image as a result of the comparison numbers”are transformative because limited to a “visual depiction that represents specific objects”

• Claims that merely “assembl[ed] ... gray scale images to generate final dot profiles” not transformative because no “visual display or image”

• Literal reading of Bilski’s interpretation of Abele

Electronic Transformation

• What about some blood sugar meters?

Abstrax, Inc. v. Dell, Inc. (E.D. Tex. Oct. 7, 2009)

• Claims directed to “a method for assembling a product having components wherein the variable portions of a set of abstract assembly steps are resolved in accordance with data from a desired configuration”

Abstrax, Inc. v. Dell, Inc. (E.D. Tex. Oct. 7, 2009) (cont.)

• Transformative because: – claim “represents physical and tangible

objects and their respective structures”; and• Concerns “how parts, pieces, or components of a

product fit together and how they are configured”

– Transformative claim term imposed meaningful limits on claim scope

• “Ostensibly, a claim term that both parties feel warrants construction would impose limits on a claim and would not be merely extra-solution activity”

zzysharp Techs. Inc. v. 3D Labs Inc., Ltd. (N.D. Cal Dec. 11, 2009)

• Claims directed to “mathematical algorithms that can be used to reduce the number of calculations required to determine whether a 3D surface is visible or invisible on a display screen”

• Fuzzysharp conceded that claims were not transformative

zzysharp Techs. Inc. v. 3D Labs Inc., Ltd. (N.D. Cal Dec. 11, 2009) (cont.)

• Relying on CyberSource, DealerTrack, and a string of BPAI cases, court held “the claims are not tied to a particular computer, but simply make a general[ ] reference to ‘a’ computer.”

• “Courts applying Bilski have concluded that the mere recitation of ‘computer’ or reference to using a computer in a patent claim [i]s insufficient to tie a patent claim to a particular machine”

centure Global Servs. GmbH v. GuidewireSoftware Inc. (D. Del. 2010)

• Claims directed to “a computer program for developing component based software for the insurance industry.”

• Court stayed trial until after Bilski v. Kapposopinion issues and seven days later, issued an opinion substantively describing its reading of Bilski.

centure Global Servs. GmbH v. GuidewireSoftware Inc. (D. Del. 2010) (cont.)

• Not transformative, because “even if a tangible visual ‘display’ [was] provided, that visual image would not represent any specific tangible objects (or type of data).”

• Relying on Every Penny Counts and Research Corp., the court held “[i]f the architecture of the computer is of no import, it is unclear how the claimed methods are drawn to a specificmachine within the meaning of Bilski”

centure Global Servs. GmbH v. GuidewireSoftware Inc. (D. Del. 2010) (cont.)

• “It is unclear to the court whether (and how) the claims may be interpreted to define a particularly-programmed computer.”

• Although “it is not self evident that the patents are drawn to tangible inventions rather to concepts, … [the] court may revisit the issue upon defendant’s renewed motion should the Supreme Court validate the Bilski framework.”

– Summary judgment of invalidity under 101 denied without prejudice

Conclusion

• We are all hopeful that the Supreme Court will provide us with “clear direction on the precise standard to be applied in evaluating the patentability of method [and machine] claims”

AIPLA 2010 Spring Meeting: Judicially Re(de)fining Software Patent Eligibility

Thank you

Blake ReeseMilbank, Tweed, Hadley & McCloy LLP1 Chase Manhattan PlazaNew York, NY 10005(212) 530-5496 BReese@milbank.com