Section 101 Update

1
Section 101 Update

• Prof Merges
• 2.26.08

2
State Street Claims, p. 158

• Element b?
• D-G means . . . For processing data . . .

3
Conclusion, p. 159

• Claim 1 . . . claims a machine, namely a data
  processing system . . . .

4
Exceptions

• Software
• Business methods

5
Which might apply?

• Abstract ideas . . .
• disembodied concepts

6
Disembodied concepts vs. practical application

• NEW TEST
• correspond to a useful, concrete or tangible
  thing

7
Categorical prohibition vs. patent-by-patent
analysis

• Business methods
• Versus does this claim cover a
  useful/concrete/tangible result?

8

• In re Bilski, Fed. Cir. App. No. 2007-1130, en
  banc rehearing ordered sua sponte 2/15/08

9
From Patently-O

• Bernie Bilski apparently was the CEO and owner of
  a small company called WeatherWise. At least some
  WeatherWise patents were purchased in 2007 by the
  Pittsburgh Technology Licensing Corp  According
  to court documents, PTL is a wholly owned
  subsidiary of WeatherWise holdings. (See
  WeatherWise v. WeatherBill).

10
US Patent 6,785,620

• Kishlock, et al., Energy Efficient Measuring
  System and Reporting Methods
• Assigned to Weatherwise, Pittsburgh, PA

11

• Offers assistance in the mitigation of underlying
  volume and price risk by providing advice
  concerning positions, quantities, types and
  pricing of instruments to purchase.
• Who can use itUtilities and energy marketers
  concerned with risk management of their earnings.
  Utilities that offer fixed or capped unit priced
  products. Large energy consumers wishing to
  stabilize their energy expenditures.

12

• WeatherWise Analytical Hedging Services provide
  recommendations to allow energy companies or
  users to reduce risk caused by volatility of
  weather and price. Our financial risk evaluation
  provides detailed analysis of total weather and
  pricing risk including determination of
  appropriate hedges, financial tools and
  underwriting. This expert review is beneficial in
  guiding commodity purchases for fixed unit
  pricing and managing plant outage and weather
  related business risks.
• -- http//www.weatherwiseusa.com/hedging.htm

13

• Pittsburgh Technology Licensing Corp., also
  headquartered in Pittsburgh, is the software
  licensing division of WeatherWise Holdings. Their
  unique use of computerized models based on
  engineering, rather than econometric, principles
  enables the development of products and services
  that reduce financial risk for energy providers
  and their residential and commercial consumers.

14

• Claims method for hedging risk by buying
  positions in offsetting commodity futures

15

• A method for managing the consumption risk costs
  of a commodity sold by a commodity provider at a
  fixed price comprising the steps of
• (a) initiating a series of transactions between
  said commodity provider and consumers of said
  commodity wherein said consumers purchase said
  commodity at a fixed rate based upon historical
  averages, said fixed rate corresponding to a risk
  position of said consumer

16

• (b) identifying market participants for said
  commodity having a counter-risk position to said
  consumers and
• (c) initiating a series of transactions between
  said commodity provider and said market
  participants at a second fixed rate such that
  said series of market participant transactions
  balances the risk position of said series of
  consumer transactions.

17
Essence of the claim

• Hedging matching buyers and sellers with
  offsetting positions
• Scope of claim commodities
• Oil, wheat, etc.

18
2/15/2008 Federal Circuit En Banc Order

• 1. Whether claim 1 of the 08/833,892 patent
  application claims patent-eligible subject matter
  under 35 U.S.C. 101?
• 2. What standard should govern in determining
  whether a process is patent-eligible subject
  matter under section 101?
• 3. Whether the claimed subject matter is not
  patent-eligible because it constitutes an
  abstract idea or mental process when does a
  claim that contains both mental and physical
  steps create patent-eligible subject matter?

19
En banc order (contd)

• 4. Whether a method or process must result in a
  physical transformation of an article or be tied
  to a machine to be patent-eligible subject matter
  under section 101?
• 5. Whether it is appropriate to reconsider State
  Street Bank Trust Co. v. Signature Financial
  Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), and
  ATT Corp. v. Excel Communications, Inc., 172
  F.3d 1352 (Fed. Cir. 1999), in this case and, if
  so, whether those cases should be overruled in
  any respect?

20
Example of hedging

• What investment would offset the cost of a rise
  in energy prices?

21
Example of hedging

• What investment would offset the cost of a rise
  in energy prices?
• Oil company stock?
• Ski resort stock?
• Utility stocks?

22
Dependent claim

• Swap receipts from energy distributors
• Low-cost holder of energy supply swaps with
  high-cost buyer

23
The rejection in the PTO

• P. 3 No references were cited.
• Why would PTO favor a section 101 rejection?

24
Dennis Crouch research

• Increasing complexity of patent applications,
  increasing workload at PTO

25
Decision by the Board

• The examiner's position is summarized in the
  statement that, "regarding claims 1-11, the
  invention is not implemented on a specific
  apparatus and merely manipulates an abstract
  idea and solves a purely mathematical problem
  without any limitation to a practical
  application, therefore, the invention is not
  directed to the technological arts -- op at 3.

26

• "Applicant s admission that the steps of the
  method need not be performed on a computer
  (Appeal Brief at page 6) coupled with no
  disclosure of a computer or any other means to
  carry out the invention, make it clear that the
  invention is not in the technological arts"

27
Holding

• Not statutory (section 101) subject matter
• State Street does not control that case involved
  special case of transformation of data by a
  machine

28
Major concern

• Non-physical, non-traditional patents
  increasingly being filed p. 7
• 101 rejections are unpopular, but they are part
  of the PTOs job

29
Ex parte Lundgren

• Adopted useful arts test for section 101

30

• Technology is defined as the totality of means
  employed to provide objects necessary for human
  sustenance and comfort. Id. at 1394. The
  definition of "engineering" as "the application
  of science and mathematics by which the
  properties of matter and the sources of energy in
  nature are made useful to man in structures,
  machines, products, systems, and processes is
  considered a good description of technology and
  the useful arts. -Id.

31
Definitions of technology

• Historical
• Metaphysical/ontological trying to get at the
  essence of what technology is

32
John R. Thomas, The Patenting of the Liberal
Professions, 40 BCL Rev 1139 (1999)

• Proposing technological arts test
• Similar to old In re Musgrave standard for
  software patents

33
Machine-implemented methods

• Generally patentable
• Except for algorithms with no real-world effect
  that have only a nominal hardware limitation

34
3 definitions of a method (process) p. 32

• Physical transformation
• All literal processes except laws of nature,
  abstract ideas, natural phenomena
• All literal process producing a useful, tangible
  and concrete result

35
Applying the 3 tests to Bilski application

• No physical transformation
• It is an abstract idea ( claims do not recite
  how those steps are implemented in some physical
  way the steps remain disembodied) p. 46

36
Is the hedging plan concrete and useful?

• Test Requires some sort of physical
  instantiation not present here
• Claimed too abstractly, too generally
• P. 49

37

• Software and Patent Scope A Report from the
  Middle Innings, 85 Tex. L. Rev. 1528 (2007)