Archive | 2008, October | (5) posts

The Bilski decision is here! State Street Bank is out.

Yesterday (October 30, 2008), United States Court of Appeals for the Federal Circuit (CAFC) closed the door on the State Street Bank decision from 1998, a decision stating that it would be enough in regards to patentability under 35 U.S.C. § 101 if an invention produces “useful, concrete, and tangible result”.

In the decision from yesterday, the CAFC instead made use of the so called machine-or-transformation test, where either a specific machine with specific ties to the claimed process or the specific transformation of a physical entity to another must be present for the invention to be patentable. Thus, an invention, such as the Bernie Bilski invention, which is not tied to any specific machine or apparatus for any of its process steps nor is limited to any particular transformation, is not patentable.

The machine-or-transformation test has been applied before, for example in relation to Gottschalk v. Benson (1972). However, in the Gottschalk v. Benson case, the claimed process was still held to be ineligible subject matter, even though it operated on a machine such as a digital computer, since the claim’s tie to the machine were not specific enough. Accordingly, an algorithm implemented on a general purpose computer, such as a PC, was in this case not enough for reaching patentability.

On the other hand, a case where the court ruled the machine to be specific enough when applying the machine-or-transformation test, was in relation to Diamond v. Diehr (1981), where the Arrhenius equation was used for deciding when a process for curing rubber in a mould was completed. In this case, the machine had means for both the curing of the rubber as well as the computation of the Arrhenius equation (i.e. means for installing rubber in a press, closing the mold, constantly determining the temperature of the mold, constantly recalculating the appropriate cure time through the use of the Arrhenius equation and a digital computer, and automatically opening the press at the proper time).

Accordingly, for not failing the machine-or-transformation test it seems that one has to be very specific when drafting an application in this area, such that the ties between a claimed process implemented on a machine are made obvious.

On the positive side the CAFC noted that there will be no implementation of the so-called “business method exception” (as well as in relation to software), which they rather state would be unlawful. Accordingly, business method and software claims are still in as long as they fulfil the machine-or-transformation test.

If you would like to read the whole decision it can be found here: http://www.cafc.uscourts.gov/opinions/07-1130.pdf.

Magnus Nilsson, European Patent Attorney

New Patent Law in China

Everybody knows that China (PRC) is the most populous country in the world. Most are probably also aware of the fact that the Chinese economy is steadily growing by about 10% each year, and that China has a foreign exchange reserve of stunning 1,600 billion dollars to be compared with the national debt of the USA, which is about 5,000 billion dollars.

What may be a little less known is that only the American and Japanese patent offices receive more patent applications than the Chinese patent office (SIPO). In 2007, almost 250,000 applications for invention patent were filed with the SIPO, which can be compared with the about 140,000 patent applications filed with the European Patent Office (EPO). In addition to the 250,000 invention patent application, about 180,000 utility model patent applications were filed with the SIPO. Since utility model patent applications are not examined with respect to novelty and inventive step, practically all of the utility model applications that are filed result in registered IP rights with a time lag of about 1 – 1.5 years.

Of this total of 430,000 patent applications, less than 100,000 were filed by foreign (mainly Japanese) applicants, indicating that Chinese enterprises are very actively developing and protecting technology.

This trend of growing economy, an increased level of domestic technological development and IP awareness can be said to have been embodied by last year’s famous Chint vs. Schneider decision, where the People’s Court of Wenzhu ordered the Chinese (joint venture) subsidiary of French multinational Schneider Electronic to pay Chinese competitor Chint Group 330 million Yuan (about 33 million Euro) for infringing a utility model patent held by Chint. Since Schneider has appealed the decision to the next instance, the award of the record-breaking damages is not the end of the story, but still marks a new situation where a Chinese company is on the winning side of an infringement case.

Considering these recent developments, there are more reasons than ever before for learning more about China in general, and the Chinese IPR-system in particular.

Since the first Chinese patent law was put into force in 1985 based on the German patent law, it has been revised twice, in 1992 and in 2000. Currently, the third revision is being processed by the People’s Congress and is expected to come into force early 2009.

With this new revision, some important aspects of Chinese patent law will change. One of these changes is that the current relative novelty standard will be replaced with the absolute novelty standard which already applies in most other patent laws and conventions, including the US patent law and the European patent convention.

According to the Chinese patent law currently in force, disclosure by other means than publication, such as exhibition, sale, use etc, that takes place outside China cannot be used against a Chinese patent application. That means that an invention can receive a valid patent protection in China even if it had already been made public outside China prior to the filing/priority date of the Chinese application for an invention patent or a utility model patent.

One practical implication of the current patent law is that it is possible for enterprises to obtain patent protection in China for products already on the market outside China. The other side of this is that less scrupulous parties may obtain patent protection in China for inventions conceived and disclosed by others. These patents will not be validly obtained, because the applicant has no right to file the application, but will be very difficult, if not impossible, to invalidate due to difficulties in proving the non-entitlement.

With the new law, both of these possibilities (threats) will seize to be possible, which should, on the whole, be positive to foreign companies.

You may, however, want to check whether your enterprise has any inventions/technical solutions which have been disclosed outside China, but not yet through (written) publication, and consider whether to take this final opportunity to file applications in China. In particular, the Chinese utility model patent protection could be considered for relatively simple “structural” inventions because of the relatively cheap and simple procedure required for obtaining such rights.

Daniel Fritsche, European Patent Attorney

Customs and police – reluctant to help?

Are Swedish customs officers and police reluctant when it comes to helping IP rights holders combat illegal copying? It may look like that – at least when they are compared with their colleagues in Germany. Recently we have seen proof that their German counterparts can mobilise huge resources when this is necessary.

At the IFA consumer electronics fair in Berlin earlier this autumn over 200 police and customs officers launched an offensive against the sale of pirated products after receiving around 70 reports from rights holders. The raid resulted in the seizure of televisions, MP3 players, mobile phones and other electronic gadgetry.

Could something similar happen in Sweden? It’s certainly not impossible, although it must be acknowledged that customs authorities and the police here are struggling with a shortage of resources. Compared to drugs smuggling and murder, trademark and patent infringement come far down the list of priorities. This is something that rights holders need to understand if they have cause to report infringement to the authorities.

To secure the help you need, it is important to make the authorities understand why their involvement is necessary. If you have received information about a consignment of counterfeit goods, there is often only a very short window of opportunity during which these can be confiscated. Otherwise the goods will soon disappear into a shadowy network of dealers among whom any seizures will consist of a mere handful of products. Working together with competitors who have also been targeted by the pirates, as was the case in Germany, is a smart move. In Sweden with its well-established traditions of trade associations, the prospects for this kind of collaboration should be good.

What’s more, it’s high time to explode the myth of pirates as unfortunate entrepreneurs who are down on their luck! Interpol has provided clear proof that the global counterfeiting industry helps to finance terror organisations, and the industry’s close links to drugs smuggling, organised crime and the mafia have been known for years.

The basic requirement for combating product piracy is a well-informed, active network of dealers and other contacts who can sound the alarm immediately when any illegal copies are discovered. Notifying the customs authorities of this costs nothing, and the Swedish Customs Service is happy to receive any information that makes it easier for its officers to identify counterfeit goods. But, of course, the first rule is always to make sure that your products are protected by strong and strategically managed IP rights.

Kristina Fredlund, Senior Attorney at Law

UK Court grants software patent

In its ruling on October 8, 2008, the British Court of Appeal confirmed the decision of the High Court that the invention claimed in GB application 0325145.1 by Symbian Ltd is patentable under UK law.

The claimed invention relates to a new and improved way to access DLL (dynamic link library) files in an operating system, potentially making a computer function faster. The court decided that such a solution could not be considered a computer program “as such”, and was thus not excluded by Article 1(2) of the British patent law (corresponding to Article 52(2) EPC). It also noted that a corresponding patent has been granted by the EPO.

In its decision the Court made a significant effort to deal with the tendency of recent decisions by UK Courts to diverge from the practice of the EPO. The Court stated its view that, at least as a matter of broad principle, the British Appeal Court precedence (Merrill Lynch, 1989, Gale, 1991, and Macrossan, 2007) should be reconcilable with the recent Technical Board of Appeal decisions (T154/04 and T1543/06).

To be more specific, the Court noted that the test stipulated by UK courts for determining whether claimed subject matter is excluded from patentability, is whether the “contribution” (i.e. novel features) relates to excluded matter as such. It further argued that this test corresponds to the test applied by the TBA, for example in T154/04, to determine whether or not a contribution is technical.

However, the Court explicitly disagreed with the approach followed in some EPO decisions (e.g. T1188/04 and T1351/04). The Court motivated its decision not to follow these precedents, by arguing that such an approach indicates that “the computer program exclusion may have lost all meaning”. Further, these decisions are not in line with earlier EPO jurisprudence, at least not until they have been confirmed by the Enlarged Board of Appeals.

The Court finally noted that, as long as the principles of Pension Benefit (T931/95) and Hitachi (T258/03) are applied by the EPO, there will be a discrepancy between the practice of the UKIPO and the EPO, and called for a “two-way dialogue between the national tribunals and the EPO”. As long as the discrepancy remains, the Court believes that efforts need to be made to minimise the effect on practical outcome as far as possible. In the present case, the Court has done just that, and decided that the claimed invention is patentable in the UK, just as it was found patentable by the EPO.

While the outcome of this case, at least for the time being, seems to harmonize UK standards for patentability with those of the EPO, it should be noted that the “discrepancy” may be greater than the Court admits. According to present EPO jurisprudence (including T154/04 and T1543/06 mentioned above) Article 52(2) is only used to determine what features may contribute to inventive step. Or, to put it differently, the EPO will not reject any claim under Article 52(2), as long as it contains the slightest of technical details. The UK Court of Appeal, on the other hand, is prepared to reject an admittedly technical invention as excluded subject matter, if its “contribution” lies within Article 52(2).

Fabian Edlund, European Patent Attorney

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The end of business method patents in US soon to come?

It all started in the late 90’s with the State Street Bank decision (State Street Bank & Trust Company v. Signature Financial Group, Inc.) by the United States Court of Appeals for the Federal Circuit (CAFC) broadening the inventive area and thus opening up a flood of business and financially related method patents in the US. After that point, we have seen numerous patent and patent applications for banks, financial institutions and companies like IBM Inc., eBay Inc. and Amazon Inc, relating to on-line bidding, customer relationship management, portfolio handling and so on, together rendering a value of many billions of dollars. However, it looks like the CAFC once again will re-define what may be called an invention, possibly this time decreasing the patentable area and killing the US saying “it is possible to patent anything under the sun made by man”. 

The current trend at the United States Patent and Trademark Office (USPTO) is to tighten up what may be granted in relation to both business method and computer related inventions, e.g. In re Nuijten relating to “encoding to computer signals” and In re Comiskey relating to a business method. The most current case relates to a patent application by Bernie Bilski, which involves claims to a method of managing the risk of bad weather through commodities trading. According to the USPTO the problem is that the wording of the Bilski claims does not include any particular form of technology, e.g. it does not involve any form of computer or storage media, and may thus be seen solely a “mental method” which by the opinion of the USPTO is non-patentable. The case has therefore been forwarded to the CAFC who have to decide if an invention must involve some practical application and if a pure business method really produces “a useful, concrete and tangible result”.

The forthcoming decision was briefly discussed on September 9, 2008 at the AIPPI 41st World Intellectual Property Congress in Boston where Chief Judge Paul Michel of the CAFC said that he expects the Bilski decision to be issued within one to two months. Consequently, we may hopefully expect a publication of the decision no later than early November this year.

As a result and with the present uncertainty, it is necessary (as is well known by all attorneys working in the European jurisdiction) to draft “robust” specifications, and include various embodiments that specify the use of e.g. machines for performing “processing steps”, or demonstrate physical process steps that transform one physical entity into another, thus making the invention concrete and tangible.

Consequently, be prepared for some changes in the US legislation which may have impact on both business method and computer related inventions, and please check back soon – we promise to keep you posted on the forthcoming process.

Magnus Nilsson, Patent Attorney

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