The History of Software Patents

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SAP America, Inc. v. Versata Development Group, Inc., slip op. CBM2012-00001 (PTAB Jan. 9, 2013) (Software Patents)
By Deepak MalhotraMarch 20, 2013

The America Invents Act (AIA) created a new special transitional procedure for challenging business method patents, which are apparently considered to be more suspect than other patents. The procedure is called the Covered Business Method review procedure.

An issued business method patent, that has gone through a complete review by the U.S. Patent and Trademark Office and that has been allowed by an examiner, and litigated in court, can be reviewed again by the Patent Trial and Appeal Board (Board) of the U.S. Patent and Trademark Office under this procedure if it is a covered business method patent.

Only a person who is sued or charged with infringement of a covered business method patent may petition for a covered business method review of the…

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Post-Bilski case on Beauregard claims, CyberSource v. Retail Decisions, Federal Circuit 2011 (Software Patents)
By Deepak MalhotraAugust 27, 2011

The Federal Circuit reviewed an appeal by CyberSource Corporation from a decision of the District Court for the Northern District of California. The district court had granted summary judgment of invalidity of claims 2 and 3 of U.S. Patent No. 6,029,154 (“’154 patent”) under 35 U.S.C. § 101 for failure to recite patent-eligible subject matter. The patent relates to a method and system for detecting fraud in a credit card transaction between a consumer and a merchant over the Internet.

The Federal Circuit refused to hold that all Beauregard claims are necessarily statutory. Instead, they treated a Beauregard claims as a process claim and then applied the machine-or-transformation test.

Claim 3, after reexamination, reads:

3. A method for verifying the validity of a credit card transaction over the Internet comprising…

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Microsoft Corp. v. i4i Limited Partnership et al., U.S. Supreme Court 2011 (Software Patents)
By Deepak MalhotraJune 9, 2011

i4i sued Microsoft Corp. for willful infringement of a software patent. The Patent Act provides patentees with a presumption of validity under 35 U.S.C. 282. Since 1984, the Federal Circuit has read §282 to require a defendant seeking to overcome the presumption to persuade the fact finder of its invalidity defense by clear and convincing evidence.

Microsoft sought to change the presumption of validity. Instead of a “clear and convincing” standard, Microsoft proposed instead using a “preponderance of the evidence” standard. This would have, in effect, weakened or reduced the value of all issued U.S. patents.

More particularly, more than a year before filing its patent application, i4i had sold a software program known as S4 in the United States, but…

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Post-Bilski Case, RCT v. Microsoft Corp.(Software Patents)
By Deepak MalhotraJune 4, 2011

This case is significant because the Federal Circuit took a broad view of patent eligible subject matter in a post-Bilski case. This case involved patents related to digital image. Some of the claims didn’t outright specify hardware items.

In this case, Research Corporation Technologies, Inc. (“RCT”) initiated an action against Microsoft Corporation (“Microsoft”), alleging infringement of six related patents: U.S. Patent Nos. 5,111,310; 5,341,228; 5,477,305; 5,543,941; 5,708,518 (“’518 patent”); and 5,726,772. The United States District Court for the District of Arizona held that certain claims of the ’310 and ’228 patents were invalid under 35 U.S.C. § 101.

RCT’s six patents relate to digital image halftoning. Digital images are, in fact, thousands of pixels arranged in arrays of rows and columns. Each pixel…

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Bilski et al. v. Kappos Under Secretary of Commerce for Intellectual Property, Supreme Court, 2010 (Software Patents)
By Deepak MalhotraJune 28, 2010

In October 2008, the Federal Circuit reviewed the decision of the Board of Patent Appeals and Interferences that sustained a rejection of all eleven of Bilski’s patent claims under 35 U.S.C. 101 as not directed to patent-eligible subject matter. Bilski sought patent protection for a method of hedging against risk in commodity trading. The Federal Circuit affirmed, holding that Bilski’s claims were not statutory under 35 U.S.C. 101. The Federal Circuit revived the Benson test, that a claimed process is patent-eligible under Section 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. The Federal Circuit rejected its prior test of State Street Bank & Trust Co. v. Signature Financial Group, Inc.,…

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June 1, 2009, Supreme Court grants cert. for Bilski
By Deepak MalhotraJune 1, 2009

The Supreme Court of the U.S. has agreed to review the Bilski case discussed below. The Bilski case disavowed the controversial State Street Bank decision and severely limited the possibility of obtaining business method patents and put the validity of many into question. It also affects software patents that do not describe a lot of hardware, and, in fact, is relevant to all method patents.

The Bilski decision set forth a requirement that any process claim in a software patent must be tied to a particular machine or apparatus, or transform a particular article into a different
state or thing (“machine-or-transformation” test), to be eligible for patenting under 35 U.S.C.
§ 101.

The requirements for patentability of software has been in flux for…

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In re Bernard L. Bilski and Rand A. Warsaw, 2008 (Software Patents)
By Deepak MalhotraOctober 31, 2008

In October 2008, the Federal Circuit reviewed the decision of the Board of Patent Appeals and Interferences that discussed below in a 132 page decision. The Board had sustained a rejection of all eleven claims under 35 U.S.C. 101 as not directed to patent-eligible subject matter. The Federal Circuit affirmed, holding that Bilski’s claims were not statutory under 35 U.S.C. 101.

In this case, the Federal Circuit revived the Benson test, that claimed process is surely patent-eligible under Section 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. The Federal Circuit also stated that the State Street test is no longer valid. The Federal Circuit was reacting to Supreme Court criticism during…

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In re Stephen W. Comiskey, 2007 (Software Patents)
By Deepak MalhotraSeptember 25, 2007

In this case, the Federal Circuit held that methods that employ only human intelligence without involving machines, manufactures, or compositions of matter do not qualify as statutory suject matter under 35 U.S.C. Section 101 because they are directed to abstract ideas.

According to the Comiskey court, mental processes (or processes of human thinking) standing alone are not patentable even if they have a practical application.

The Court concluded that:

It is thus clear that the present statute does not allow patents to be issued on particular business systems—such as a particular type of arbitration—that depend entirely on the use of mental processes. In other words, the patent statute does not allow patents on particular systems that depend for their operation on human intelligence alone, a field of endeavor that both…

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In re Petrus A.C.M. Nuijten, 2007 (Software Patents)
By Deepak Malhotra

This case has been decided by the Court of Appeals for the Federal Circuit.

The decision marks the death of signal claims.The issue on appeal was whether the Board of Appeals erred when it affirmed the Patent Examiner’s final rejection of Claims 14 and 22-24 of Mr. Nuijten’s patent application under 35 U.S.C. 101 as being directed to non-statutory subject matter. More specifically, the Court was to decide whether the invention of a signal, which is otherwise patentable when stored in a physical storage medium, is in and of itself patentable subject matter. The case relates to U.S. Patent Application Serial No. 09/211,928 for an invention “Embedding Supplemental Data in an Encoded Signal” which relates to signal watermarking. The apparatus claims were found to be statutory and allowable…

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Lucent Technologies, Inc. v. Gateway Inc. and Microsoft Corp., S.D. Calif., 2007
By Deepak MalhotraFebruary 25, 2007

This is not a Federal Circuit software patents decision, but a lower court decision. In an appeal, the Federal Circuit could completely reverse the lower court.

This case involved two Lucent software patents, Nos. 5,341,457 and Re. 39,080, relating to reducing the size of computer audio files.

In this case, a jury awarded a 1.5 billion dollar verdict against Microsoft.

Expect to see Microsoft make further efforts to reform the patent system. Microsoft has been actively trying to weaken the patent system even though they are one of the U.S. Patent and Trademark Office’s largest customers. For example, in 2004 alone, they filed more than 3,000 patent applications.

Recently, Microsoft and many others commented on proposed rule changes to make it more difficult to file continuations.

Contrary to Microsoft’s position that the…

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