Updated Guidelines on Patent Eligible Subject Matter

Written by Daniel DeLuca

In December 2014, the United States Patent and Trademark Office (USPTO), in view of recent case law and comments, updated the guidelines that their examiners use to determine subject matter eligibility under 35 U.S.C. 101. Following the major changes found in the June 25, 2014 update (incorporating Alice Corp. v. CLS Bank International) and the March 4, 2014 update (incorporating Mayo Collaborative Services v Prometheus Laboratories, Inc. and Association for Molecular Pathology v. Myriad Genetics), the most recent update contains noticeably less change.

The most notable change in the December guidelines concerns the analysis for products of nature. For nature-based products one must compare the nature-based limitations and their naturally occurring counterparts in their natural state. If after this comparison, a “markedly different” characteristic was found, then the product will be patent eligible. Under the March 2014 Guidelines, only structural changes were sufficient to show a marked difference. The most recent December 2014 guidelines have revised this analysis by now allowing demonstrations of changes in functional characteristics and other non-structural properties in order to show a marked difference.

The USPTO identified a number of Non-limiting examples of the types of characteristics considered by the courts when determining whether there is a marked difference. These include differences in biological or pharmacological functions or activities (Diamond v. Chakrabarty), chemical and physical properties (Parke-Davis & Co. v. H.K. Mulford Co.), phenotype, including functional and structural characteristics (In re Roslin Inst.), and structure and form, whether chemical, genetic, or physical (Association for Molecular Pathology v. Myriad Genetics).

Under the December 2014 guidelines, claims including a nature-based product are analyzed under step 2A of the Mayo Test to identify whether the claim is directed to (recites) a “product of nature” exception. Step 2B of the analysis is only for claims that show no markedly different characteristics. At this point, to satisfy 2B, the applicant would have to show that the claim recites an addition element that amounts to “significantly more” than the judicial exception to make the product patent eligible.

The USPTO also notes in the December 2014 guidelines that all claims (product and process) with a judicial exception (of any type) are subject to the same steps. However, the analysis now differs slightly from the March 2014 procedure. The application of the analysis is now based on claims “directed to judicial exceptions” (now defined as claims reciting the exception), rather than claims merely “involving” an exception. The USPTO uses nature based products as an example of how this change may be applied. The guidelines explain, process claims that merely use nature-based products are not necessarily subject to an analysis for markedly different characteristics. In other words, claims that recite nature-based product limitations may not be “products of nature” if they are not directed to inventions that clearly seek to tie up any judicial exception. The product when viewed as a whole must be nature based.

Lastly, the USPTO has included DDR Holdings, LLC v. Hotels.com, L.P. in the most recent guidelines. This is the only abstract idea decision from the Federal Circuit since Alice Corp. that resulted in a holding of patent eligibility. In DDR, the claimed invention addressed the problem of retaining website visitors from being diverted from a host’s website to an advertiser’s website by using computer technology to create hybrid sites that looked and felt like the host site while still being associated with the advertiser’s product. Though similar to the patent ineligible claims found in Ultramerical, LLC v. Hulu LLC and WildTangent), also directed to a method of facilitating sale of advertiser’s products over the internet , the court distinguished DDR by holding that unlike in Ultramerical, the claimed invention does not generically recite “use the internet” to perform a known business practice, but instead recites a specific way to automate the creation of a hybrid web page by an outsource provider that uses  elements from multiple sources to solve a specific problem faced by many websites on the internet. The addition of this case to the guidelines may be interpreted as a gesture of good faith on the part of the USPTO to help demonstrate their willingness to be receptive to public comment as the guidelines continue to evolve.

The PDF of the most recent version of the USPTO Guidelines may be found at: http://www.gpo.gov/fdsys/pkg/FR-2014-12-16/pdf/2014-29414.pdf

Hague Agreement Regarding Industrial Designs (Design Patents) Taking Effect in US on May 13, 2015

Written by Tom Matikainen

The United States has deposited its instrument of ratification to the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs on February 13, 2015 with the WIPO.  The Hague Agreement took effect on May 13, 2015, and enables inventors of industrial designs to file a single standardized application with the USPTO to apply for a design patent in each of 62 territories that are members of the Agreement.  Such an Agreement will make it so much easier for inventors to seek design patent protection in many countries outside the US, thereby reducing costs and time to acquire foreign protection.  Plus, international design patent applications filed on or after May 13, 2015 will have a term of 15 years, instead of the current 14 year term

Does Innovation lead to Prosperity for All?

By Evan Jensen

The modern industrialized economy is a fascinating experiment because never before in history have so many people been so productive. The scientific method, objective metrics of efficiency, mass production, information technology, flight, the list goes on of new capabilities and methods that have arisen fairly recently on the timescale of human civilization.

But today’s economy is so productive that it suffers from a surplus of workers, making it difficult for many people to earn a living. Which means we have to ask the question- does innovation lead to prosperity for everyone,[1] or does innovation cause centralization of wealth because of automation and offshoring?

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Game Theory and Patent Enforcement

By Evan Jensen

The patent system is a complex and sometimes controversial aspect of the American economic, technological, and legal systems. I will attempt to explain why both sides of the controversy; both the ‘pro-patent’ and many of the so-called ‘anti-patent’ advocates are actually substantially in agreement, but prefer different strategies for dealing with collective action problems.

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The Aereo Decision

By Evan Jensen

The Aereo decision gives the impression of the Supreme Court twisting itself into knots to find a reason why Aereo is infringing. And ultimately the Court decided to help broadcasters kill off the competition, rather than push broadcasters to innovate.

On June 25 the Supreme Court’s decision in the ABC v Aereo case came down.[1] The Supreme Court sided with ABC and the other broadcasters against Aereo. In its opinion, the Court held that Aereo’s transmissions are public performances and that therefore Aereo is infringing on copyrights owned by ABC and the other petitioners.

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The Weird World of Software Startups: Where Everything’s Made Up and the Patents Don’t Matter

By Evan Jensen

Today’s high tech industry is characterized by the extremes of modern business. Massive tech giants like Google and Microsoft sit atop the industry, with a menagerie of startups popping up all over the place trying to break into the market.

For large companies patents are akin to nuclear weapons. For a large company like Apple or Samsung the strategic usefulness of the patent tremendously outweighs the cost of the application, and the large company can file for thousands of patents. A large patent portfolio opens up a world of business and litigation options because of the large scale of the company’s operations and the long time scale that the large company operates within.

But for fledgling startups, like insects living in their own microcosm while giants stride by, patents don’t necessarily serve the same purposes. In the world of tech startups patents behave very differently.

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The Patent Wars

By Evan Jensen

Patents protect the lifeblood of tech companies- the technology that powers their products. Large tech companies with complex products need many patents in order to protect their technology. But huge patent accumulation for defensive purposes leads to a nasty impasse where even if there were legitimate infringement, it would be irrational to sue because it is just too difficult and dangerous.

Large companies can use patents as weapons to attack their competitors. And when those companies own a massive stockpile of patents that cover critical technology in consumer products, a patent fight can become a knock-down, drag-out fight where the winner takes home all the marbles. In some respects a large patent stockpile resembles a nuclear weapon stockpile.

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