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Bilski Is Ruled Dispositive: In Re Ferguson, as text - Updated
Saturday, March 07 2009 @ 05:22 PM EST

The Federal Circuit Court of Appeals, the one that handles patent cases and which ruled in In Re Bilski has ruled in another business methods case, In Re Ferguson [PDF]. The "inventor" tried to patent a "paradigm" for marketing software.

No. I'm not kidding. Not just a software patent; a method for *marketing* software. Here's the short version of what the ruling says:

As to Applicants' method claims, which at least nominally fall into the category of process claims, this court's recent decision in Bilski is dispositive.
Dispositive. So he lost, though he may appeal, and that's why I put the word inventor in quotation marks. I've done the PDF as text for you now. The ruling is the dernier cri in patent law, and if we're looking for prior art, such as in the Microsoft v. TomTom or the Red Hat cases, we need to keep up, so we know what the rules are currently. My favorite part in the decision is the part where they describe one claim:
Applicants ... assert, however, that "[a] company is a physical thing, and as such analogous to a machine."
There you go, folks. Reductio ad absurdum: a company is a machine, or at least analogous to one, kinda sorta like one. Therefore any process or method they come up with to do business would be patentable, presumably, in that universe. Well. Could someone please patent what Wall Street just did to the economy, and then refuse to license the "invention", so as to prevent those dudes from ever doing it again? Or just patent flaming greed, will you, somebody? Do the rest of us a favor and get it off the table or at least constrained.

The court rejected that claim about a company being analogous to a machine, but Justice Pauline Newman, while agreeing with the majority, nevertheless argued that it's good for the economy to have business methods patents, so we shouldn't go too far in limiting them. *Too far*?!

I don't think I'd bring up excesses in a patent context. Justice Newman wrote a dissent in the Bilski case, as you may recall. Here's part of her argument:

Until we are confident in understanding the consequences of our rulings, let us not forget that today's "knowledge economy" arose and thrived under the past law of patent eligibility. Although I agree that new thinking is warranted, this court's broadside assault on patent-eligible subject matter is unsupported by any stated policy or benefit to either society or commerce. We are ignorant of whether competitive activity, creative energies, and entrepreneurial initiatives, will founder or be facilitated by this court's dramatic change in the legal framework. I take note that scholarship is starting to appear, as economists recognize "the new economy." See, e.g., Richard G. Anderson, The New Economy: How the United States is Adapting to the Knowledge-Based Economy of the Twenty-First Century, Southern Illinois Economic Development Conference 21 (Sept. 21, 2006) (discussing intellectual property rights and the creation of knowledge). But much more needs to be understood, as this court undertakes to change the legal framework of this economy.

Today's new capabilities of acquiring and using knowledge are producing myriad creative advances. This court has offered no explanation of the interests and policy that we intend to serve by removing such advances from the legal framework of the patent system.

I hope she reads Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk by James Bessen & Michael J. Meurer, speaking of scholarship. I hope other scholars start writing a lot about this topic, so judges can catch up to the harm some innovators are experiencing in real time. Like FOSS.

You can listen to the oral arguments. Patently O has some background on the case, and Harris, has some documents on his web site. And for more background, here's some information The Prior Art collected on Harris. Also here. Here's an article on Law.com regarding Harris and his prior law firm settling their dispute, and here's another about patent lawyers taking out patents themselves. The subhead: "Patent-holding companies are making fortunes through litigation, and some law firm attorneys have decided to play the game for themselves". You might also want to read Google's take on the trend of patent lawyers getting patents themselves, which is what happened here. Finally, here's the State Street case, referenced throughout, as well as the briefs filed in support of the appeal of Bilski [PDF], most of whom agreeing with Justice Newman and some with Harris's viewpoint. I think it's important to read carefully what folks who disagree with me think, and I hope you'll read as many of them as you have time for, so ideas can percolate on how to answer them.

Update: I came across an analysis of the Bilski decision, "In Re Bilski: The Good, The Bad and the Unanswered," written by several attorneys at the law firm Paul, Hastings, Janofsky & Walker, which I found very helpful in understanding some of the details. After listing some of the things the decision didn't resolve, the article makes some suggestions on how to creatively draft a patent to survive the new standard, and while I wish they'd cut that out, it is nevertheless a helpful guide to think about regarding Microsoft's chances with its FAT patent:

Creative Claim Drafting Strategies

Bilski undoubtedly reaffirms that there is no business method or software exception to patentability under § 101. The court, however, declined to provide details as to when, and under what circumstances, a business process implemented on a general purpose computer is sufficient to satisfy the “tied to particular machine” requirement.

For now, the inclusion of hardware limitations may be sufficient to transform otherwise non-eligible processes into patent-eligible subject matter. However, to satisfy the particular machine requirement, the computer would likely have to do more than simply function as a device to store, display and/or retrieve data. Rather, the computer should be programmed to actually implement a significant aspect of the claimed method. Moreover, it is still required that software based claims must not only meet the standards of novelty and non-obviousness under § 102 and § 103, but also the disclosure requirements under § 112 which mandate, at very least, disclosure of the key algorithms embedded in the software.

For inventions not tied to a particular machine, the “transformation test” requires that claims identify a physical object or representation thereof. Thus, it appears that for electronic data to satisfy the transformation test, a claim should include limitations identifying what physical object the data represents. Keep in mind that abstract constructs, legal obligations, organizations relationships and business risks do not amount to physical and tangible objects.

As depressing as it is otherwise to contemplate the country's attorney brains immediately putting so much effort into reaching the outer edges of the new line drawn by the court, I do like the detail about having to disclose the key algorithms embedded in the software. That should slow down some software patent cowboys. And while I'm not a lawyer or a programmer, I still can't see how the FAT patent can qualify in a post-Bilski world. Still, keep the prior art coming, please. - End Update.]

**********************

United States Court of Appeals for the Federal Circuit

2007-1232
(Serial No. 09/387,823)

IN RE LEWIS FERGUSON, DARRYL COSTIN
and SCOTT C. HARRIS

Scott C. Harris, of Rancho Santa Fe, California, argued for appellants.

Raymond T. Chen, Solicitor, Office of the Solicitor, United States Patent and Trademark Office, of Alexandria, Virginia, argued for the Director of the United States Patent and Trademark Office. With him on the brief was Thomas W. Krause, Associate Solicitor.

Appealed from: United States Patent and Trademark Office
Board of Patent Appeals and Interferences

United States Court of Appeals for the Federal Circuit

2007-1232
(Serial No. 09/387,823)

IN RE LEWIS FERGUSON, DARRYL COSTIN
and SCOTT C. HARRIS

Appeal from the United States Patent and Trademark Office, Board of Patent Appeals and Interferences.

__________________________
DECIDED: March 6, 2009
__________________________

Before NEWMAN, MAYER, and GAJARSA, Circuit Judges.

Opinion for the court filed by Circuit Judge GAJARSA. Concurring opinion filed by Circuit Judge NEWMAN.

GAJARSA, Circuit Judge.

Lewis Ferguson, Darryl Costin and Scott C. Harris (collectively, "Applicants") appeal from the final decision of the Board of Patent Appeals and Interferences ("Board") sustaining the rejection of all sixty-eight claims of their U.S. Patent Application Serial No. 09/387,823 ("the '823 application"). See Ex parte Ferguson, No. 2003-1044 (B.P.A.I. Dec. 18, 2006) ("Board Decision III"). Specifically, Applicants argue that the Board erroneously decided that the claims are not directed to patent-eligible subject matter under 35 U.S.C. ß 101. Because we conclude that Applicants' claims are not

within the parameters of the statutory requirements and do not cover patent-eligible subject matter, particularly in light of this court's recent decision in In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), we affirm the decision of the Board.

BACKGROUND

Applicants filed the '823 application on September 1, 1999. The application is directed to a marketing paradigm for bringing products to market. Claims 1-23 and 36-68 are method claims; claims 24-35 are "paradigm" claims. Claim 1, which is representative of Applicants' method claims, reads:

A method of marketing a product, comprising:

developing a shared marketing force, said shared marketing force including at least marketing channels, which enable marketing a number of related products;

using said shared marketing force to market a plurality of different products that are made by a plurality of different autonomous producing company, so that different autonomous companies, having different ownerships, respectively produce said related products;

obtaining a share of total profits from each of said plurality of different autonomous producing companies in return for said using; and

obtaining an exclusive right to market each of said plurality of products in return for said using.

'823 application cl.1. Claim 24, which is representative of Applicants' paradigm claims, reads:
A paradigm for marketing software, comprising:

a marketing company that markets software from a plurality of different independent and autonomous software companies, and carries out and pays for operations associated with marketing of software for all of said different independent and autonomous software companies, in return for a contingent share of a total income stream from marketing of the software from all of said software companies, while allowing all of said software companies to retain their autonomy.

2

'823 application cl.24.

The examiner rejected each of claims 168 under 35 U.S.C. §§ 102, 103 and/or 112. See Ex parte Ferguson, No. 2003-1044, slip op. at 23 (B.P.A.I. Aug. 27, 2004) ("Board Decision I").

On appeal, the Board did not sustain any of the examiner's grounds for rejection and, therefore, reversed the decision of the examiner. Id. at 313. Relying on its authority under 37 CFR § 1.196(b), however, the Board entered a new rejection of all claims under 35 U.S.C. § 101, stating: "Our interpretation of these claims is that they do not expressly or implicitly require performance of any of the steps by a machine, such as a general purpose digital computer." Board Decision I, slip op. at 13. The Board then analyzed the previous decisions of the Supreme Court and of this court and its predecessor and concluded that, pursuant to those precedents, Applicants' claims were not directed to statutory subject matter.

Upon Applicants' request for rehearing, the Board issued a response, which included a superseding rejection under 35 U.S.C. § 101. Ex parte Ferguson, No. 2003-1044 (B.P.A.I. July 27, 2006) ("Board Decision II"). The Board entered the new § 101 rejection "to allow [the Board] to properly address each separate claim on appeal and to consider the U.S. Patent and Trademark Office's Interim Guidelines for Examination of Patent Applications for Patent Subject Matter Eligibility [("Guidelines")], . . . which were promulgated after the decision on appeal in this case." Board Decision II, slip op. at 12 (citation omitted). Referring primarily to representative claims 1 and 24, the Board proceeded to clarify the bases for its rejection with reference to the Guidelines.

3

As to method claims 1-23 and 36-68, the Board conceded that the claims nominally fell within one of the four categories of statutory subject matter--processes. But after detailed analysis, the Board concluded that Applicants' method claims were directed to an "abstract idea"--not patent-eligible subject matter. Id. at 9.

As to paradigm claims 24-35, the Board found that a "paradigm" 1 does not clearly fall within any of the four enumerated categories of statutory subject matter. And considering the paradigm claims' reference to "a marketing company," the Board determined:

There is nothing in the record of this case that would suggest that "a marketing company" can be considered to be a process, a machine, a manufacture or a composition of matter. In other words, the paradigm claims on appeal are not directed to statutory subject matter under 35 U.S.C. § 101 because they are not directed to subject matter within the four recognized categories of patentable inventions. Therefore, the paradigm claims, claims 2435, are not patentable under 35 U.S.C. [§] 101 for at least this reason. Id. at 5.
Applicants again filed a request for rehearing; but the Board declined to modify its decision, stating: "We are still of the view that the invention set forth in claims 168 is directed to non-statutory subject matter." Board Decision III, slip op. at 4.

Applicants timely appealed to this court under 35 U.S.C. § 141. We have jurisdiction under 28 U.S.C. § 1295(a)(4)(A).

DISCUSSION

As this court recently reiterated in Bilski, "[w]hether a claim is drawn to patent-eligible subject matter under § 101 is a threshold inquiry, and any claim of an

4

application failing the requirements of § 101 must be rejected even if it meets all of the other legal requirements of patentability." Bilski, 545 F.3d at 950; see also Parker v. Flook, 437 U.S. 584, 593 (1978). "Whether a claim is drawn to patent-eligible subject matter under § 101 is an issue of law that we review de novo." Bilski, 545 F.3d at 951.

As this appeal turns on whether Applicants' invention as claimed meets the requirements set forth in § 101, we begin with the words of the statute:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title.
35 U.S.C. § 101.

The statute thus recites four categories of subject matter: processes, machines, manufactures, and compositions of matter. But even if a claim may be deemed to fit literally within one or more of the statutory categories, it may not be patent eligible. As the Supreme Court has repeatedly cautioned: "Phenomena of nature, though just discovered, mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work." Gottschalk v. Benson, 409 U.S. 63, 67 (1972); see also Bilski, 545 F.3d at 952 (collecting cases). We thus consider below whether any of Applicants' claims are drawn to patent-eligible subject matter within any of the four statutory categories.

I. The Method Claims

As to Applicants' method claims, which at least nominally fall into the category of process claims, this court's recent decision in Bilski is dispositive. In Bilski, we resolved the question: "what test or set of criteria governs the determination by the Patent and Trademark Office (`PTO') or courts as to whether a claim to a process is patentable

5

under § 101, or conversely, is drawn to unpatentable subject matter because it claims only a fundamental principle." 2 Bilski, 545 F.3d at 952. We stated that the Supreme Court's machine-or-transformation test is the "definitive test to determine whether a process claim is tailored narrowly enough to encompass only a particular application of a fundamental principle rather than to pre-empt the principle itself." Id. at 954. As this court phrased the machine-or-transformation test in Bilski:

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.
Id. (emphasis in original) (citing Gottschalk, 409 U.S. at 70; Diamond v. Diehr, 450 U.S. 175, 192 (1981); Parker, 437 U.S. at 589 n.9; Cochrane v. Deener, 94 U.S. 780, 788 (1876)). Applicants' method claims do not meet either prong of the machine-or-transformation test.

Applicants' method claims are not tied to any particular machine or apparatus. Although Applicants argue that the method claims are tied to the use of a shared marketing force, a marketing force is not a machine or apparatus. As this court recently stated in In re Nuijten, 500 F.3d 1346 (Fed. Cir. 2007), a machine is a "'concrete thing, consisting of parts, or of certain devices and combination of devices.' This 'includes every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result.'" Id. at 1355 (citation omitted) (quoting Burr v. Duryee, 68 U.S. (1 Wall.) 531, 570 (1863); Corning v. Burden, 56 U.S. (15 How.) 252, 267 (1853)). Applicants' method claims are not tied to any concrete parts, devices, or combination of devices.

6

Nor do Applicants' methods, as claimed, transform any article into a different state or thing. At best it can be said that Applicants' methods are directed to organizing business or legal relationships in the structuring of a sales force (or marketing company). But as this court stated in Bilski, "[p]urported transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances." 545 F.3d at 963.

Because Applicants' method claims fail to meet either prong of the machine-or-transformation test, we affirm the Board's rejection of claims 1-23 and 36-68 under § 101 as not drawn to patent-eligible subject matter. 3

The decisions of the Board and the briefing and argument on appeal include extensive discussion of a so-called "useful, concrete, and tangible result" test. To avoid confusion, we clarify here that in Bilski , this court considered whether this "test" is valid and useful and concluded that it is not. 4 Specifically, we rejected the viability of the "useful, concrete, and tangible result" language of State Street Bank & Trust Co. v.

7

Signature Financial Group , 149 F.3d 1373 (1998), as a test, because while such an inquiry "may in many instances provide useful indications of whether a claim is drawn to a fundamental principle or a practical application of such a principle," it inappropriately focuses on the result of the claimed invention rather than the invention itself. Bilski, 545 F.3d at 959.

Applicants also ask this court to consider a new test: "Does the claimed subject matter require that the product or process has more than a scintilla of interaction with the real world in a specific way?" In light of this court's clear statements that the "sole," "definitive," "applicable," "governing," and "proper" test for a process claim under § 101 is the Supreme Court's machine-or-transformation test, see Bilski, passim, we are reluctant to consider Applicants' proposed test. Suffice it to say that Applicants' proposed "scintilla of interaction" test begs the question whether even the most abstract of ideas and natural of phenomena interact with the real world. Applicants' proposed test would lead, therefore, both to ambiguity and to conflict with the Supreme Court precedents discussed above and in Bilski. We thus decline to adopt Applicants' proposed "scintilla of interaction" test and reaffirm that the machine-or-transformation test is the singular test for a process claim under § 101.

Finally, Applicants' assertion that the method claims are directed to business methods and should be treated as statutory subject matter in light of State Street is misplaced. "In State Street, as is often forgotten, we addressed a claim drawn not to a process but to a machine." Bilski, 545 F.3d at 959 n.18 (emphasis in original); see also State Street, 149 F.3d at 1373 ("Today, we hold that the transformation of data, representing discrete dollar amounts, by a machine through a series of mathematical

8

calculations into a final share price, constitutes a [patent-eligible invention] because it produces a useful, concrete and tangible result . . . ." (internal quotation marks omitted) (emphasis added)). The claim at issue in State Street was thus drawn to a patent-eligible machine implementation of what may have otherwise been a nonpatent-eligible abstract idea. Moreover, we note that in Bilski this court refused to extend or even to take a broad reading of the holding in State Street, holding that the language employed in State Street "was certainly never intended to supplant the Supreme Court's [machine-or-transformation] test" and that "those portions of our opinion[] in State Street . . . relying solely on a 'useful, concrete and tangible result' analysis should no longer be relied on." Bilski, 545 F.3d at 95960 & n.19.

For these reasons, we decline to consider Applicants' method claims other than through the lens of the machine-or-transformation test, upon the application of which we have determined that the claims are not drawn to patent-eligible subject matter. We hold, therefore, that Applicants' method claims are not patentable.

II. The "Paradigm" Claims

Turning now to Applicants' paradigm claims, this court's recent decisions in In re Nuijten, 500 F.3d 1346 (Fed. Cir. 2007), cert. denied sub nom. Nuijten v. Dudas, 129 S. Ct. 70 (2008), 5 and in Bilski are instructive. As in Nuijten, Applicants' paradigm claims force us to consider whether the claimed subject matter fits into any of the four enumerated categories of statutory subject matter. Although we need not resolve the particular class of statutory subject matter into which Applicants' paradigm claims fall, the claims must satisfy at least one category. Nuijten, 500 F.3d at 1354 ("If a claim

9

covers material not found in any of the four statutory categories, that claim falls outside the plainly expressed scope of § 101 even if the subject matter is otherwise new and useful."). We hold that they do not.

Applicants' paradigm claims are not directed to processes, as "no act or series of acts" is required. Nuijten, 500 F.3d at 1355. Applicants do not argue otherwise. Applicants' marketing company paradigm is also not a manufacture, because although a marketing company may own or produce tangible articles or commodities, it clearly cannot itself be an "'article[]' resulting from the process of manufacture." Nuijten, 500 F.3d at 1356. Again, Applicants do not argue otherwise. And Applicants' marketing company paradigm is certainly not a composition of matter. Applicants do not argue otherwise.

Applicants do assert, however, that "[a] company is a physical thing, and as such analogous to a machine." But the paradigm claims do not recite "a concrete thing, consisting of parts, or of certain devices and combination of devices," Nuijten, 500 F.3d at 1355, and as Applicants conceded during oral argument, "you cannot touch the company." Recording of Oral Argument at 11:3011:32, In re Ferguson, No. 2007-1232 (Fed. Cir. Dec. 5, 2007), available at http://oralarguments.cafc.uscourts.gov/mp3/ 2007-1232.mp3. To the contrary, Applicants do no more than provide an abstract idea--a

10

business model for an intangible marketing company. 6 See Bilski, 545 F.3d at 952 ("The true issue before us then is whether Applicants are seeking to claim a fundamental principle (such as an abstract idea) or a mental process."). Indeed, it can be said that Applicants' paradigm claims are drawn quite literally to the "paradigmatic 'abstract idea.'" Cf. In re Warmerdam, 33 F.3d 1354, 1360 (Fed. Cir. 1994). Applicants' argument is, therefore, unavailing.

Absent identity with any statutory category, Applicants' paradigm claims are, therefore, unpatentable as not directed to statutory subject matter. 7

CONCLUSION

The decision of the Board, entering the rejection of claims 1-68 of the '823 application for lack of statutory subject matter, is affirmed.

AFFIRMED

COSTS

Each party to bear its own costs.


1 The Board found that "[a] 'paradigm' is generally defined as `a pattern, example or model.'" Board Decision II, slip op. at 4 (citing Webster's New World Dictionary (1966)).

2 As used in Bilski, the term "fundamental principle" means "laws of nature, natural phenomena, and abstract ideas." 545 F.3d at 952 n.5.

3 Contrary to the concurrence's assertion, we do not contend that this court has overturned State Street Bank & Trust Co. v. Signature Financial Group, 149 F.3d 1373 (1998), but merely note that the "useful, concrete and tangible result test" "is insufficient to determine whether a claim is patent-eligible under § 101," Bilski, 545 F.3d at 959, and "is inadequate," id. at 960 (reaffirming that "the machine-or-transformation test outlined by the Supreme Court is the proper test to apply" (emphasis added)), and that "those portions of our opinions in State Street and AT&T [Corp. v. Excel Commc'ns, Inc., 172 F.3d 1352 (Fed. Cir. 1999),] relying on a 'useful, concrete and tangible result' analysis should not longer be relied on," id. at 960 n.19.

4 In Bilski, this court also rejected the so-called Freeman-Walter-Abele test, the "technological arts" test, and the "physical steps" test. 545 F.3d at 959, 960, 960-61. Because these "tests" were not subjects of extensive argument in this case, we see no need to revisit them here.

5 This court's decision in Bilski expressly did not disturb Nuijten. Bilski, 545 F.3d at 951 n.2.

6 The concurrence asserts that Ferguson's marketing paradigm is not an abstract idea, contending that "it is definite and concrete and limited." Concurring op. at 2. We disagree. As explained above, there is nothing definite or concrete about Ferguson's marketing paradigm. At most, it is simply composed of "legal obligations, organizational relationships, and business risks," which this court characterized in Bilski as "abstract constructs." 545 F.3d at 962; see also id. at 963 (comparing "physical objects or substances" to "public or private legal obligations or relationships, business risks, or other such abstractions").

7 The essence of the concurrence is an argument premised on policy and philosophical grounds. We disagree with this approach, as it is not the role of courts to make such arguments but rather the responsibility of Congress to consider amending the patent laws as necessary to recognize and allow for innovation in the future.

11

United States Court of Appeals for the Federal Circuit

2007-1232
(Serial No. 09/387,823)

IN RE LEWIS FERGUSON, DARRYL COSTIN
and SCOTT C. HARRIS

Appeal from the United States Patent and Trademark Office, Board of Patent Appeals and Interferences.

NEWMAN, Circuit Judge, concurring in the judgment. If the court had simply held that the Ferguson marketing method fits the class of processes now barred from patenting by this court's ruling in In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), I could not object. However, the panel majority goes farther than is necessary or appropriate, redefining the Bilski opinion and expounding dicta that transcend the facts of this case. My colleagues err in asserting that the "machine-or-transformation" test is that of the Supreme Court. See Gottschalk v. Benson, 409 U.S. 63, 71 (1972) ("We do not so hold."). And in their purported "clarification" of the Bilski decision, my colleagues suggest that Bilski overturned not only State Street Bank but also other precedent including that based on the Freeman-Walter-Abele test, the "technological arts" test, and the "physical steps" test. Maj.

op. at 7 n.3. This sweeping rejection of precedent simply enlarges the taint on the thousands of patents that were granted on application of these tests. Indeed, this court in Bilski reaffirmed the holding of State Street Bank that the "'business method exception' was unlawful and that business method claims (and indeed all process claims) are 'subject to the same legal requirements for patentability as applied to any other process or method.'" Bilski, 545 F.3d at 960 (quoting State Street Bank, 149 F.3d at 1375-76). Although the Bilski court held that the State Street Bank criterion of "useful, concrete and tangible result" does not provide patent-eligibility if the machine-or-transformation test is not met, the court recognized that the State Street Bank test was directed to processes performed by computer, thus meeting the Bilski test: "In State Street, as is often forgotten, we addressed a claim drawn not to a process but to a machine." Bilski, 545 F.3d at 959 n.18 (emphasis in original).

There are indeed many uncertainties remaining in this court's restructure of the legal framework of modern technology and its fruits. However, the potentially complex issues of when computers are Bilski-acceptable machines do not arise in the Ferguson claims. I agree that these issues require clarification, for uncertainty as to legal rights is as much a disincentive to commerce as is their deprivation. However, this case is not the appropriate vehicle for dictum of potentially large consequence. For example, the court disposes of the Ferguson method on the ground that it is an "abstract idea," although it is definite and concrete and limited, and not at all abstract. The court resolves this dilemma by defining "abstract idea" as anything that does not meet the Bilski machine-or-transformation test. However, the Ferguson marketing method is not an abstraction, even in Bilski terms. The Ferguson method "does not pre-empt all uses of a fundamental principle in any field but is

2

limited to a particular use, a specific application. Therefore, it is not drawn to the principle in the abstract". Bilski, 545 F.3d at 957.

The court's circular definition of "abstraction" as anything that is not patent-eligible under Bilski can impact the many new methods flowing from the new information technologies. These methods have enhanced human capabilities, blurring the traditional line between machine and human; their patentability warrants at least consideration in appropriate cases, not disposition in dictum.

Until we are confident in understanding the consequences of our rulings, let us not forget that today's "knowledge economy" arose and thrived under the past law of patent eligibility. Although I agree that new thinking is warranted, this court's broadside assault on patent-eligible subject matter is unsupported by any stated policy or benefit to either society or commerce. We are ignorant of whether competitive activity, creative energies, and entrepreneurial initiatives, will founder or be facilitated by this court's dramatic change in the legal framework. I take note that scholarship is starting to appear, as economists recognize "the new economy." See, e.g., Richard G. Anderson, The New Economy: How the United States is Adapting to the Knowledge-Based Economy of the Twenty-First Century, Southern Illinois Economic Development Conference 21 (Sept. 21, 2006) (discussing intellectual property rights and the creation of knowledge). But much more needs to be understood, as this court undertakes to change the legal framework of this economy.

Today's new capabilities of acquiring and using knowledge are producing myriad creative advances. This court has offered no explanation of the interests and policy that we intend to serve by removing such advances from the legal framework of the patent system.

3

See, e.g., Milton Katz, The Role of the Legal System in Technological Innovation and Economic Growth, The Positive Sum Strategy 169 (1986) (explaining that the legal system plays a part in facilitating and promoting "business enterprise, technological innovation, and economic thought").

This court's retreat into the methods of the past is unworthy of our responsibility to support innovation in the future. Major adjustment in established law should be based on changing industrial or intellectual or equitable needs of which no evidence is before this court. The only need of which I am aware is that of the current harsh economic times, when the need is of enhanced incentives to innovation and investment in new things and new industries, not reduction in the existing incentives. *1

Meanwhile, the patentability of inventions directed to information-based procedures and computer-facilitated processes is readily tested under the established substantive criteria of patentability. I agree with the patent examiner's determination that the Ferguson marketing method does not pass the test of unobviousness, 35 U.S.C. §103. On this ground, I concur in the judgment.

4


*1 I take note of the panel majority's criticism of my views as "policy" related. Indeed, the major concern with my colleagues' aggressive elimination of patent access in areas of modern commerce is their failure to consider the policy effects. The success of the common law derives from its relation to the policy that it implements. As Justice Holmes stated:
The very considerations which judges most rarely mention, and always with an apology, are the secret root from which the law draws all the justices of life. I mean, of course, considerations of what is expedient for the community concerned. Every important principle which is developed by litigation is in fact and at bottom the result of more or less definitely understood views of public policy; most generally, to be sure, under our practice and traditions, the unconscious result of instinctive preferences and inarticulate convictions, but nonetheless traceable to views of public policy in the last analysis.

  


Bilski Is Ruled Dispositive: In Re Ferguson, as text - Updated | 122 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
corrections
Authored by: webster on Saturday, March 07 2009 @ 05:37 PM EST
.

[ Reply to This | # ]

Newspicks discussions here please
Authored by: tiger99 on Saturday, March 07 2009 @ 05:58 PM EST
It would be very helpful if you were to indicate which newspick item you are
referring to in the title of your post.

[ Reply to This | # ]

Off topic here please
Authored by: tiger99 on Saturday, March 07 2009 @ 06:04 PM EST
Stuff which has nothing to do with the main article, but of interest to Groklaw readers, can go here.

Please remember to make clickable links where appropriate, and use preview to check what you have done before posting. Thanks.

[ Reply to This | # ]

Watch out Microsoft... here comes PJ
Authored by: gjleger on Saturday, March 07 2009 @ 06:29 PM EST
Once again... huge kudos to you Pamela for bringing all this stuff to light...
and THANK YOU for coming out of "retirement"

The more these patent decisions are brought to light, the less likely it is for
companies to just "cave in".

Companies like Tom Tom will at least... stop and look first...

Once again... job well done. :-)

[ Reply to This | # ]

a company is a machine
Authored by: Anonymous on Saturday, March 07 2009 @ 06:41 PM EST
I thought a company was an "abstact" person, whatever that means.
Well, puh-lease, can you legal people just get your act together, while us
techies, us developers, keep pushing out the code. I mean, WTF, like who is
contributing, trying to contribute, the good of the people, the economy here,
and who is not being much better than a bunch of fancy looking parasites, ...
makes me sick.

[ Reply to This | # ]

"a method for *marketing* software"
Authored by: bigbert on Saturday, March 07 2009 @ 06:44 PM EST
What next? A method of designing methods for marketing ideas?


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Surfo, ergo sum.

[ Reply to This | # ]

Biski Is Ruled Dispositive: In Re Ferguson, as text
Authored by: Anonymous on Saturday, March 07 2009 @ 07:14 PM EST
The only reasonable explanation that I can find for a patent like this is that a bunch of patent lawyers sit together during their lunch break, and they egg each other on what would be the most stupid idea that anyone could get a patent for. And one of them says "I bet I can get a patent on running a marketing firm". The next one says "I bet you hundred dollars you can't". And the first one says "I bet you hundred dollars that I can". And the second one says "The bet is on. ".

Really, there can't be any other explanation for this.

[ Reply to This | # ]

It's good to see a court mostly not falling for word games...
Authored by: Hyrion on Saturday, March 07 2009 @ 10:00 PM EST

Turning now to Applicants' paradigm claims... force us to consider whether the claimed subject matter fits into any of the four enumerated categories of statutory subject matter
It's beautiful to see them consider the matter based on the actual specifications rather than falling for the word games.

Call it what you want, non-patentable subject matter should stay non-patentable.

---
IANAL - But I am very curious and like to research.
There are many kinds of dreams. All can be reached if a person chooses.
RAS

[ Reply to This | # ]

Lament for the loss of 'particular'
Authored by: dio gratia on Saturday, March 07 2009 @ 10:53 PM EST
Judge Newman wrote:
....the court recognized that the State Street Bank test was directed to processes performed by computer, thus meeting the Bilski test: "In State Street, as is often forgotten, we addressed a claim drawn not to a process but to a machine."
While the language of the Bilski test is:
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.
I'd imagine that simply dropping 'particular' from 'particular machine' is pretty much the equivalent of saying 'on a computer'. The danger therein lies that a patent passing the test (and it appears that State Street would have), is overly broad and would encompass more than one possible invention. If an invention is an expression of an idea, than accepting vague language as an expression approaches idea expression merger. While Thomas Jefferson referred to inventions as ideas, the patent office originally required working models or earlier as proof of claims a demonstration, a working invention provided the limits of what was patented. Where is that bounds around an invention described as software as a method 'on a computer'?

It may also be that a vague description of a method is not sufficient to enable a person having ordinary skill in the arts to implement 'on a computer'. § 112 tells us:

The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention.

As far as the second alternative in the test, some transformational result in computer memory would require being fixated as a 'particular article' - a bit more than the vague idea of executing a method 'on a computer'.

That word 'particular' is strong magic and implies specificity, let's not lose it. It could also be the difference between patenting an expression of an idea and a multitude of expressions of that idea. While the latter might be extremely lucrative to the recipient, it may not be best for advancing the sciences and arts. There is no advancement when there is no other expression possible and no room for 'innovation'. And yes, if you dropped 'particular' it appears pure software-as-the-invention patents are possible, too.

[ Reply to This | # ]

Bilski Is Ruled Dispositive: In Re Ferguson, as text
Authored by: webster on Sunday, March 08 2009 @ 01:57 AM EST

Thanks for the Ferguson decision. It's short, simple, favorable, and it beats going through the 87 page SCO appeal. That would make one have to go back to Kimball's August 10, 115 page decision.

  1. What did they plan to do with this patent? The parts and their combination is not new. Manufacturers, salesmen and buyers are obviously not new concepts nor is any way of organizing them. Nevertheless, they expected to typically bamboozle the Patent Office. Then they probably wanted to wait a few years and go after Amazon and eBay for selling things this way. They would wait for a generation of YouTubescent jurors to mature and click them on the the genius of their patent and its obvious violation.
  2. It is good to hear from the horse's mouth what the horse meant in their Bilski performance. The Federal Circuit applies the transformation-machine test to the method claims and denies them. They then chop up the paradigm claims as not falling into any of the four statutory patent categories.
  3. Most importantly the court saddles itself first with the blanket of Supreme Court authority citing Gottschalk, Diamond, Parker and Cochrane, venerable precedents from 1876 to 1981. They don't anticipate any more mocking tones during oral arguments from the SCOTUS.
  4. Most interesting is the repartee between the diversely concurring judicial factions. Indeed the judges comment on each others' decisions in their decisions. One wonders who gets the last edit. It appears the majority did with their barrage of footnotes. The "dissenting" judge affirms the denial of this patent as obvious, but doesn't agree with the majority's application of the "machine-transformation" test and its abuse of her perception of Bilski and State Street. The majority accuses her of going beyond the bounds of caselaw and statute with her touchy-feely, philosophical concern for "innovation" in the information age. That, they say, is for Congress. If you invent paradigms, you want her on your panel.
  5. Ironically in dissent, Judge Newman may have stumbled on the best articulation of the effect of Bilski even thought she doesn't like it:
    This sweeping rejection of precedent simply enlarges the taint on the thousands of patents that were granted on application of these tests. Indeed, this court in Bilski reaffirmed the holding of State Street Bank that the "'business method exception' was unlawful and that business method claims (and indeed all process claims) are 'subject to the same legal requirements for patentability as applied to any other process or method.'" Bilski, 545 F.3d at 960 (quoting State Street Bank, 149 F.3d at 1375-76).
    Newman, concurring opinion, p. 2. Do you hear that USPTO? You have issued thousands of tainted patents! An"enlarging" taint at that! Issue a statement. Tag them. Render them unenforceable until reviewed. Allow innovation to flourish. Litigiousness is not productive.

This is a very good day for software against the rich and powerful patent trolls.


~webster~

Tyrants live their delusions. Beware. Deal with the PIPE Fairy and you will sell your soul.



[ Reply to This | # ]

Stora
Authored by: IMANAL_TOO on Sunday, March 08 2009 @ 04:07 AM EDT
PJ: My favorite part in the decision is the part where they describe one claim: uote> Applicants ... assert, however, that "[a] company is a physical thing, and as such analogous to a machine."


The wood/mining company Stora Enso is known also for its continuous history of shares dating back to the year 1288 (www.storaenso.com or en.wikipedia.org/wiki/Stora).

(BTW, someone should quickly ask them to patent the concept of a company, or, the concept of a share holding company in general.)

I wonder if the parties in Re: Ferguson would welcome Stora to their scene. Stora may be a behemoth when it come to prior art. But, what do I know, today?





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IMANAL


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[ Reply to This | # ]

  • Stora - Authored by: tiger99 on Sunday, March 08 2009 @ 07:16 AM EDT
Worship me!
Authored by: Ian Al on Sunday, March 08 2009 @ 05:11 AM EDT
Worship me! Ian Al is analogous to a god. No, on second thoughts, don't. You
see, so many folk say god is an invention that god could well be patented and
then I would be in patent violation.

Smile, you've been Bilskied!

---
Regards
Ian Al

Linux: Viri can't hear you in free space.

[ Reply to This | # ]

Can't patent greed...
Authored by: hardcode57 on Sunday, March 08 2009 @ 09:18 AM EDT
too much prior art.
:-~

[ Reply to This | # ]

Bilski Is Ruled Dispositive: In Re Ferguson, as text
Authored by: Anonymous on Sunday, March 08 2009 @ 12:42 PM EDT
"...unsupported by any stated policy or benefit to either society or
commerce..."

The lady has obviously never written a line of code! I'd say something else,
but PJ would pull the comment. Either that, or perhaps the right person has not
stated it forcefully enough.

How about this. The ability to freely inter-operate between different
applications without paying a toll for every transaction is critical to growing
commerce.

[ Reply to This | # ]

  • More likely - Authored by: Anonymous on Sunday, March 08 2009 @ 04:19 PM EDT
It's a TCO thing
Authored by: DannyB on Sunday, March 08 2009 @ 03:42 PM EDT
Like with SCO before it, Microsoft wants to create an environment where users of
Linux or even any Open Source can potentially draw a lawsuit.

If you do NOT sign a patent deal with Microsoft, then get sued by Microsoft.

If you DO sign a patent deal with Microsoft, then violate the GPL and get sued
by copyright owners.

Wouldn't it just be easier to use Microsoft software? Stop using Linux in all
those embedded systems and use Windows CE.

It's a TCO thing.

Using Microsoft software is cheaper than defending a lawsuit.

Yes, cheaper. Therefore, we should all just shut up and stop whining about the
high cost of Microsoft software. Microsoft is doing us a favor by offering
software cheaper than the cost of a lawsuit.

Oh, yeah, and Laura DiDio can helpfully sing a song of Indemnification to make
us feel better.

Now doesn't that make you feel better?


---
The price of freedom is eternal litigation.

[ Reply to This | # ]

Bilski Is Ruled Dispositive: In Re Ferguson, as text
Authored by: Anonymous on Sunday, March 08 2009 @ 07:39 PM EDT
It is unfortunate that this "patent" is at the same time absolutely obvious and very not patent worthy, but also falls under Bilski, because this makes it harder to look at it objectively.

It would have been much more useful to have a patent application for an idea that is useful, not in any way obvious, clearly written, contains everything that someone versed in the art needs to implement it, and that is not patentable because of Bilski and nothing else.

On the other hand, may these useful and non-obvious ideas for business methods are so rare, we are better off if we (unfairly) not allow patents for these 0.01% of business patent applications in order to get rid cheaply of the 99.99% that don't benefit society.

[ Reply to This | # ]

If you are blocked by a patent, you are not inovating
Authored by: Anonymous on Tuesday, March 10 2009 @ 09:43 AM EDT
Re:
--I hope she reads Patent Failure: How Judges, Bureaucrats, and Lawyers Put
Innovators at Risk by James Bessen & Michael J. Meurer, speaking of
scholarship. I hope other scholars start writing a lot about this topic, so
judges can catch up to the harm some innovators are experiencing in real time.
Like FOSS.--

By definition, if you are blocked by a patent, you are not innovating. The
inventor that invented the patented subject matter was innovating and the patent
encourages him/her to do so by providing financial incentive.

[ Reply to This | # ]

RE: update
Authored by: Anonymous on Wednesday, March 11 2009 @ 12:58 PM EDT
The FAT claims are tied to a machine.

Therefore, they pass with flying colors through the machine leg of the machine
or transformation test latched onto by the Bilski court.

[ Reply to This | # ]

  • RE: update - Authored by: PJ on Wednesday, March 11 2009 @ 04:37 PM EDT
    • RE: update - Authored by: Anonymous on Wednesday, March 11 2009 @ 07:59 PM EDT
      • RE: update - Authored by: PJ on Friday, March 13 2009 @ 03:06 AM EDT
    • RE: update - Authored by: Anonymous on Thursday, March 12 2009 @ 09:58 AM EDT
      • RE: update - Authored by: PJ on Thursday, March 12 2009 @ 12:16 PM EDT
        • RE: update - Authored by: Anonymous on Thursday, March 12 2009 @ 01:11 PM EDT
          • RE: update - Authored by: PJ on Friday, March 13 2009 @ 03:05 AM EDT
            • RE: update - Authored by: Anonymous on Friday, March 13 2009 @ 10:51 AM EDT
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