1. 9th class: Patent Protection
Computer Law 2018
9th class:
Patent Protection

2. February 27 Quiz

3. 1. Which of the following statements are true for Software as a Service (“SaaS”)? Pick all true statements. i. The SaaS provider does not have to distribute copies of its software to customers if the customers access the service through a third party web browser (e.g., Microsoft Internet Explorer, Mozilla Firefox, Google Chrome, etc.) they already have. [x] ii. Customers are not responsible for maintaining the software. [x] iii. Customers typically transfer ownership to their data to the SaaS provider who keeps the data in the cloud by the provider. iv. The software is less likely to be reverse engineered by customers if providers offer access only on a SaaS basis. [x]

4. 2. Which exclusive rights under Section 106 of the Copyright Act are exercised by customers in a typical SaaS scenario where a customer accesses the server-side software via a third party web browser and the graphic user interface (GUI) is not very original?
Possibly public display – if GUI has some originality and if it is accessible to the public (but the call of the question suggests GUI is not very original).

5. 3. In the hypothetical involving RIM, RAM, Cole Codewriter and Rolf where Cole and thousands of other developers contribute to the development of software governed by the GPLv2, and then RIM and RAM modify and distribute the software on phones to end users in violation of the GPLv2 (because RIM and RAM don't make their adaptations available in source code form and don't apply the GPLv2), and Rolf uses a phone with the modified software: a. Rolf is permitted to upload and run the software on the phone under Section 117 of the Copyright Act regardless of whether RIM and RAM were legally permitted to make or distribute the software in violation of the GPLv2. b. Rolf cannot rely on Section 117 of the Copyright Act, because Cole and the other developers did not consent to the sale of the software version by RIM or RAM (they consented only on the terms of the GPLv2, which RIM and RAM did not comply with). Even if RIM and RAM had complied with the GPLv2 a court may not qualify the transaction with Rolf as a sale if the license agreement with Rolf had restrictions atypical for a sales transaction. [x] c. Rolf can rely on the general license to all end users under Section 0, 1 and 6 of the GPLv2 regardless of whether RIM and RAM were legally permitted to make or distribute the software in violation of the GPLv2 to Rolf. [x] d. License restrictions in the GPLv2 are effective as unilateral conditions and limitations on the scope of the permission even if licensees do not agree to the GPLv2 and a contract is not formed [x]

6. Patent Protection

7. Is software patentable subject matter?

8. Most cases on software patents have focused on the question whether software is eligible for patent protection under 101
35 U.S.C. 101
“Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, many obtain a patent therefor, subject to the conditions and requirements of this title”
Judge-made exceptions:
Laws of nature
Natural phenomena
Abstract ideas

9. Law on patent eligibility for software before Bilski?
Machine-or-transformation test (Gottschalk v. Benson, Diamond v. Diehr)
Tied to a particular machine or apparatus OR transforms a particular article into a different state or thing
Clue to eligibility for a patent
Useful, concrete, and tangible” result test (State Street Bank & Trust v. Signature Financial Services (Fed. Cir. 1998))
the transformation of data through a series of mathematical calculations, by a machine constituted a practical application of a mathematical algorithm, formula or calculation because it was considered to produce a “useful, concrete, and tangible” result and the claims in the case were therefore patent eligible under 101.
That case opened the door for patents on business methods claimed as steps implemented through software on a computer.

10. Supreme Court concluded that:
Bilski v. Kappos:
Bilski applied for patent on process of hedging against risk of price changes in commodities in the energy market
Supreme Court examined 3 arguments on whether the risk hedging method were outside the scope of 101:
Not tied to machine and does not transform an article
It involves a method for conducting business
It is merely an abstract idea
Supreme Court concluded that:
Machine or transformation test is not sole test for determining patent eligibility of process (but is a useful and important clue)
Business method patents are not categorically excluded under 101
Bilski’s claims were rejected as not patent eligible under 101, because the claims were directed to “an unpatentable abstract idea” and “allowing petitioners to patent risk hedging would preempt use of this approach in all fields, and would effectively grant a monopoly over an abstract idea”

11. “You know, I have a great, wonderful, really original method of teaching antitrust law, and it kept 80% of the students awake. And I could probably have reduced it to a set of steps and other teachers could have followed it. That you are going to say is patentable, too?” – Justice Breyer from the Bilski transcript

12. “Let’s take training horses
“Let’s take training horses. Don’t you think that – some people, horse whisperers or others, had some, you know, some insights into the best way to train horses? And that should have been patentable on your theory.”– Justice Scalia from the Bilski transcript

13. Does rejecting the “machine or transformation” test as the sole test narrow or expand the scope of inventions patentable under 101?

14. The U.S. Supreme Court seem reluctant to abandon the physical transformation approach that characterized the previous case law. Should patent eligibility be tied to the physical transformation of something? Should patent eligibility be limited to “traditional” technologies?

15. Should the basic principles of section 101 remain the same even as technology changes? Should the legislature step in to “save” software patents from possibly failing the test for patent eligibility under 101?

16. Alice Corp. Pty. Ltd. v. CLS Bank International:
Alice had patents that disclose computer-implemented schemes for mitigating “settlement risk” by using a third-party intermediary
Supreme Court examined whether the claims were directed to a patent ineligible abstract idea

17. Supreme Court concluded that:
The law should distinguish between patents that claim building blocks of human ingenuity and those that integrate them into something more (the concern is preemption)
A two part test should be used to determine whether claims are directed to a patent ineligible abstract idea (2-part test from Mayo Collaborative Services v. Prometheus Labs., Inc., 132 S. Ct (2012) applies to all patent eligibility questions under 101)
Step 1: Is the claim directed to a law of nature, natural phenomena or an abstract idea?
Here, yes, directed to abstract idea of intermediated settlement
Step 2: Does the claim recite additional elements that amount to significantly more than the judicial exception?
Here, implementation on a general purpose computer carrying out conventional steps does not supply the necessary “inventive concept”

18. USPTO framework
Step 1. Directed to one of the statutory categories under 101? If no, claim is not directed to patent eligible subject matter. If yes, go to 2a. (example of something not directed to a statutory category: a signal)
Step 2a. Is claim directed to a judicial exception? If no, claim is directed to patent eligible subject matter. If yes, go to 2b.
Step 2b. Does claim recite additional elements that amount to significantly more than the judicial exception? If no, claim is not directed to patent eligible subject matter. If yes, claim is directed to patent eligible subject matter.

19. Alice v. CLS Bank.
Representative System Claim:
Claim 26. A data processing system to enable the exchange of an obligation between parties, the system comprising:
a communications controller,
a first party device, coupled to said communications controller,
a data storage unit having stored therein
information about a first account for a first party, independent from a second account maintained by a first exchange institution, and
information about a third account for a second party, independent from a fourth account maintained by a second exchange institution; and

20. a computer, coupled to said data storage unit and said communications controller, that is configured to
receive a transaction from said first party device via said communications controller;
electronically adjust said first account and said third account in order to effect an exchange obligation arising from said transaction between said first party and second party after ensuring that said first party and/or said second party have adequate value in said first account and/or said third party account, respectively; and
generate an instruction to said first exchange institution and/or said second exchange institution to adjust said second account and/or said fourth account in accordance with the adjustment of said first account and/or third account, wherein said instruction being an irrevocable, time invariant obligation placed on said first exchange institution and/or said second exchange institution.

21. Step 1: YES. The claim is directed to a machine (a system), which is a statutory category.
Step 2A: YES. Judicial exception?
The claim describes procedures an intermediary should take in managing “settlement risk” between two parties, i.e., specific details of intermediating settlement. “Settlement risk” is the risk that only one party to an agreed-upon financial exchange will satisfy its obligation.
While intermediated settlement is not a preexisting fundamental truth, it is a longstanding commercial practice (a method of organizing human activity).
Because the claim recites this abstract idea, it is directed to a judicial exception.

22. Step 2B: NO. Analyze the claim as a whole, considering the additional limitations individually and as an ordered combination.
A programmed computer acts as an intermediary, maintains accounts, obtains data, adjusts account balances, and issuing automated instructions.
These functions (recordkeeping, obtaining data, adjusting balances, and issuing automated instructions) are basic functions of a computer, and are “well-understood, routine, conventional activit[ies]” previously known to the industry.
The recited hardware (communications controller, first party device, data storage device and compute) is generic hardware that nearly every computer will include.
Considering these elements as an ordered combination adds nothing significant beyond the sum of their parts taken separately.
The claim as a whole fails to add significantly more to the exceptions (abstract idea). The claim is not eligible, and should be rejected under 35 U.S.C. 101.

23. How has the scope of patent eligibility for software under 101 changed under Alice?

24. Should the analysis start with 102, 103 and 112 to prevent the need for the controversial 101 analysis?

25. Rights and remedies: Cause of action?
Remedy by civil action for infringement of patent (35 U.S.C. 281)
Valid patent?
Could the software be the subject of a patent? New, useful, non-obvious, enabled, definite and directed to patent eligible subject matter under 35. U.S.C. 101, 102, 103, 112.
If a valid patent has been issued, has there been infringement?
35 U.S.C. 271 (without authority makes, uses, offers to sell or sells patented invention).
Defenses?
License, permissions, exhaustion, invalidity, noninfringement (282)
What remedies are available?
35 U.S.C (damages, injunctions, attorneys fees)