1. Latest Developments Patent Eligibility in the U.S. post-Bilski:

2. Bilski v. Kappos Background CAFC ruled that Bilski is not patentable under §101 “A claimed process is surely patent-eligible under §101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing." Machine or Transformation Test was the new standard to determine patentability The Supreme Court disagreed, holding that the Machine or Transformation Test is a very useful investigatory tool, but is not the sole test for patentability under §101 2 © AIPLA 2012

3. Unresolved Questions left by Bilski The Machine or Transformation Test is useful but not dispositive Does passing the Machine or Transformation Test guarantee patent eligibility? Or can an invention pass the Machine or Transformation Test and still not satisfy §101? If the Machine or Transformation Test is not the sole test for patent eligibility, what other tests are there? 3 © AIPLA 2012

4. RCT v. Microsoft First major post-Bilski CAFC case on patent eligibility RCT asserted 6 patents against Microsoft Patents discuss digital image halftoning; i.e. processes of generating electronic and print images using just a few pixel colors Federal Circuit looks for other tests beyond Machine or Transformation Test The court states that the Supreme Court has only listed three exceptions to the Patent Act Laws of Nature, Physical Phenomena, Abstract Ideas RCT didn’t deal with Laws of Nature or Physical Phenomena, so the issue is: What is “Abstract?” 4 © AIPLA 2012

5. RCT v. Microsoft Test and Rationale for determining what is “Abstract” “…this court will not presume to define ‘abstract’ beyond the recognition that this disqualifying characteristic should exhibit itself so manifestly as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary attention on the patentability of the rest of the Patent Act” Here, the claims, when viewed in their entirety, are not abstract according to the CAFC 5 © AIPLA 2012

6. RCT v. Microsoft Claim Interpretation: Claims are “functional and palpable” applications in the field of computer technology Invention addresses “a need in the art for a method of and apparatus for the halftone rendering of gray scale images” Claims explicitly state a need for “high contrast film”, “a film printer”, “a memory” and “printer and display devices” Such physical items and requirements are not abstract “Inventions with specific applications or improvements to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act” 6 © AIPLA 2012

7. RCT v. Microsoft More Claim Interpretation by the CAFC: The mere incorporation of algorithms and formulas does not force the claims into an unpatentable area of abstractness Algorithms and formulas alone will still be viewed as either laws of nature or abstract Here the patent isn’t on a “formula”, it is a process of halftoning using a variety of computer applications But that’s not the whole question: 101 is a threshold test “An invention which is not so manifestly abstract as to override the statutory language of section 101 may nonetheless lack sufficient concrete disclosure to warrant a patent.” 7 © AIPLA 2012

8. CyberSource Corp v. Retail Decisions Recent Federal Circuit decision regarding the patent eligibility of certain software patents Two claims at issue: Claim 3: Method of using IP addresses to flag potential fraudulent credit card purchases obtaining information about other transactions using the same IP address constructing a map of credit card numbers based upon the other transactions, and utilizing the map of credit card numbers to determine if the credit card transaction is valid. Claim 2: Beauregard claim that is essentially Claim 3 implemented on a “computer-readable medium” 8 © AIPLA 2012

9. CyberSource Corp v. Retail Decisions Federal Circuit ruled that Claim 3 does not pass the Machine or Transformation Test Mere data gathering steps such as "obtaining information" do not necessarily make an otherwise nonstatutory claim statutory Data structures (“information” or “map”) do not make claims technical as they can be written with pencil and paper But Machine or Transformation is not the only test Other indicia of ineligibility: mental processes standing alone are not patent eligible This is one such process, as it can be performed “by a human using a pen and paper.” 9 © AIPLA 2012

10. CyberSource Corp v. Retail Decisions Federal Circuit also ruled Claim 2 to be ineligible CyberSource contended that a “computer-readable medium” is an article of manufacture. The court directed focus away from the claim's literal statutory category, instead focused on "underlying invention” Determines that “the invention underlying both claims 2 and 3 is a method for detecting credit card fraud” “merely claiming a software implementation of a purely mental process … does not satisfy the machine prong of the machine- or-transformation test” This places all Beauregard claims in an uncertain position 10 © AIPLA 2012

11. Ultramercial v. Hulu Federal Circuit case that further explores the line between steps that can be performed in the human mind or by a human using pencil and paper, and steps that require a computer Claim at issue: method for distributing copyrighted products over the Internet in which the viewer is shown advertisements in exchange for viewing copyrighted materials paid for by the advertisers 11 © AIPLA 2012

12. Ultramercial v. Hulu The Federal Circuit determined that this fit into the “process” category of §101 and then looked to its abstractness The court declined to use the Machine or Transformation Test, instead looking at the programming complexity required by the claim Although "the mere idea that advertising can be used as a form of currency is abstract... [this] patent does not simply claim the age-old idea that advertising can serve as a currency. Instead, [this] patent discloses a practical application of this idea.“ Notes that claims are specific as to how this is accomplished Distinguished CyberSource as an example of “purely mental steps” 12 © AIPLA 2012

13. Dealertrack v. Huber Latest Federal Circuit decision on the subject-matter eligibility of computer-related inventions The court draws on CyberSource while distinguishing Ultramercial Claims are drawn to a “computer-aided” method of managing a credit application receiving credit application data from a remote application entry and display device selectively forwarding the credit application data to remote funding source terminal devices forwarding funding decision data from at least one of the remote funding source terminal devices to the remote application entry and display device 13 © AIPLA 2012

14. Dealertrack v. Huber Ultimately, the Federal Circuit found the claims to be invalid under §101, as they are "directed to an abstract idea preemptive of a fundamental concept or idea that would foreclose innovation in this area” Essentially, the claimed process explains the basic concept of processing information through a clearinghouse. "Neither Dealertrack nor any other entity is entitled to wholly preempt the clearinghouse concept.” Simply saying that the claims are “computer-aided,” without providing any detail as to how, does not make an otherwise ineligible invention into an eligible invention 14 © AIPLA 2012

15. MySpace v. GraphOn Signifies a growing split in approach among the judges of the Federal Circuit This CAFC panel is reluctant to look at patent eligibility unless absolutely necessary “§101 of the Patent Act can be thought of as the patent law analogy to the Bill of Rights of the Constitution” “The Supreme Court has wisely adopted a policy of not deciding cases on broad constitutional grounds when they can be decided on narrower, typically statutorily limited, grounds. Following the Supreme Court's lead, courts should avoid reaching for interpretations of broad provisions, such as § 101, when more specific statutes, such as §§ 102, 103, and 112, can decide the case.” 15 © AIPLA 2012

16. Mayo v. Prometheus Method of treating IBD/Crohn’s disease and of optimizing drug efficacy Claimed method is a two-step method for: "administering" the drug, and "determining" the levels of the drug’s metabolites in order provide the doctor with instructions for the next dosage Also includes steps wherein presence of a metabolite at certain levels indicates a need to increase or decrease the amount of drug administered in the future 16 © AIPLA 2012

17. Mayo v. Prometheus After Bilski v. Kappos, Supreme Court vacated an earlier decision and remanded back to Federal Circuit Central question: whether the claims wholly preempt a natural phenomenon, or whether they are only drawn to a particular application of the phenomenon Federal Circuit found the method to be patent eligible subject matter “Administering” and “determining” steps were found to be transformative, satisfying the Machine or Transformation Test According to the Federal Circuit, although the method has subsequent mental steps, the use of a mental step does not, in itself, negate the transformative nature of prior steps 17 © AIPLA 2012

18. Mayo v. Prometheus The Supreme Court reversed the Federal Circuit Processes involving laws of nature are not patentable unless they are applications of those laws rather than drafting efforts designed to monopolize the correlations The “administering” and “determining” steps are “not themselves natural laws, but neither are they sufficient to transform the nature of the claim” Simply tells doctors to engage in well-understood, routine, conventional activity already engaged in by scientists in the field This is not sufficient to transform a law of nature into a patentable application of that law 18 © AIPLA 2012

19. Mayo v. Prometheus This case gives an important clarification of the status of the Machine or Transformation Test The Court reaffirms that the test is an “important and useful clue” to patentability However, the Court notes that “we have neither said nor implied that the test trumps the ‘law of nature’ exclusion” Here, the “law of nature” exclusion defeats the Machine or Transformation Test So the Machine or Transformation test is definitively not dispositive An invention can pass the Machine or Transformation Test and nevertheless still be ineligible 19 © AIPLA 2012

20. Thank you! For the latest news regarding USPTO initiatives, the impact of Mayo v. Prometheus, or any new case law, please visit: www.maierandmaier.com and www.postgrant.com tjm@maierandmaier.com Maier & Maier, PLLC © 2012 20 © AIPLA 2012