IP Update - August 2011 (PART 1)

Edited by Paul Devinsky and Rita Weeks

Patents / Patentable Subject Matter

Underlying Invention and Not Category Literally Invoked by Claim Determines Subject Matter Eligibility By Babak Akhlaghi

The U.S. Court of Appeals for the Federal Circuit held that the patent-eligible subject matter is determined based on the underlying invention, regardless of the statutory category literally invoked by the claim language. CyberSource Corp. v. Retail Decisions, Inc., Case No. 2009-1358 (Fed. Cir., Aug. 16, 2011) (Dyk, J.).

CyberSource appealed from a decision of the district court granting summary judgment of invalidity of claims 2 and 3 of U.S. Patent Number 6,029,154 (the '154 patent) for failure to recite patent-eligible subject matter under 35 U.S.C. §101. Claim 3 recites a process for verifying the validity of credit card transactions over the Internet and claim 2 recites a computer readable medium containing program instructions for executing the same process.

Claim 3 states the following:

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

1. obtaining information about other transactions that have utilized an Internet address that is identified with the [] credit card transaction;

2. constructing a map of credit card numbers based upon the other transaction and;

3. utilizing the map of credit card numbers to determine if the credit card transaction is valid."

Applying the Bilski "machine-or-transformation" test, the Federal Circuit stated that process claim 3 would be patent-eligible under §101 if it is tied to a particular machine or apparatus or if it transforms a particular article into a different state or thing. The Federal Circuit found that claim 3 does not require the process to be performed by a machine and does not transform a particular article into a different state or thing. Thus, the Federal Circuit held that claim 3 is not drawn to a patent-eligible subject matter.

Turning to claim 2, the Court rejected CyberSource's main argument that claim 2 recites a patent-eligible subject matter per se because it recites a "manufacturer" rather than a "process," under the statutory language of §101. The Federal Circuit found as follows:

"Regardless of what statutory category ('process, machine, manufacture, or composition of matter,' 35 U.S.C. §101) a claim's language is crafted to literally invoke, we look to the underlying invention for patent-eligibility purposes. Here, it is clear that the invention underlying both claims 2 and 3 is a method for detecting credit card fraud, not a manufacture for storing computer-readable information." The Federal Circuit therefore treated claim 2 as a process claim, and, similar to claim 3, analyzed claim 2 under the machine-or-transformation test. CyberSource argued that "claim 2 satisfies the machine prong of the machine-or-transformation test, since the recited 'computer readable medium' contains software instructions that can only be executed by 'one or more processors of a computer system.'" The Federal Circuit disagreed, holding that "incidental use of a computer to perform the mental process of claim 3 does not impose a sufficiently meaningful limit on the claim's scope." As such, the Federal Circuit concluded that the "computer readable medium" recitation of claim 2 does not make otherwise unpatentable subject matter patentable.

Patents / Obviousness

After-Acquired Knowledge of Unexpected Results Can Defeat Obviousness

By Daniel Bucca, Ph.D.

In determining whether certain patent claims that were the subject of interference were obvious in view of each other, the U.S. Court of Appeals for the Federal Circuit held that unexpected results discovered after a patent has issued can be considered in an obviousness analysis. Genetics Institute LLC v. Novartis Vaccines and Diagnostics Inc., Case No. 2010-1264 (Fed. Cir. Aug. 23, 2011) (Lourie, J.) (Dyk, J., concurring-in-part and dissenting-in-part).

Plaintiff Genetics Institute (GI) filed an "interfering patents" action under 35 U.S.C. §291 against Novartis Vaccines and Diagnostics in order to determine priority of invention between one GI patent and two Novartis patents. The patents are directed to truncated forms of a protein known as Factor VIII, a blood clotting protein used to treat patients with hemophilia. The question at the lower court was whether structural differences between the proteins claimed in the patents would have been obvious to a person skilled in the art. Novartis offered evidence that its truncated Factor VIII protein included an additional amino acid region that, unbeknownst to Novartis at the time of filing its application, rendered its proteins more stable in the bloodstream. The lower court relied, in part, on this evidence in concluding that no interference-in-fact was present.

On appeal, the Federal Circuit affirmed the district court's holding that there was no interference-in-fact because the claims of the patents were not obvious in view of each other. The Court credited Novartis' proffered unexpected results as relevant objective indicia of non-obviousness, even though the unexpected results were discovered years after the patent issued. The Court stated that the full range of an invention is not always achieved at the time of filing the patent application, and, thus, evidence of unexpected results developed after a patent issued should not be excluded from consideration.

Judge Dyk dissented from this portion of the majority's holding. He stated that the structural similarity and overlap of the proteins claimed in the two patents rendered them prima facie obvious, holding that later-discovered, undisclosed benefits cannot be used to defeat this prima facie showing.

Practice Note: Patentees trying to overcome an obviousness attack should note that unexpected results need not be known at the time of filing a patent application to be considered in a secondary considerations analysis. This case is also noteworthy in light of the Court's holding that patent term extension under 35 U.S.C. §156 does not apply on a claim-by-claim basis but to the patent as a whole; the expiration of a patent in an interference proceeding under 35 U.S.C. §291 does not strip the Court of subject matter jurisdiction; and unexpected results do not require absolute identity of scope with the claims.

Patents / Standing

Broad Assignment of "Inventions and Discoveries" Puts Auto Giants on the Road Again

By Theresa M. Dawson

In a patent infringement action brought against eight automobile manufacturers, the U.S. Court of Appeals for the Federal Circuit concluded that the plaintiff lacked standing to assert any of the three patents at-issue. MHL Tek, LLC v. Nissan Motor Co., et al., Case Nos. 10-1287, -1317, -1318 (Fed. Cir., Aug. 10, 2011) (Gajarsa, J.).

Plaintiff MHL Tek asserted infringement of U.S. Patent Nos. 5,663,496 (the '496 patent), 5,741,966 (the '966 patent) and 5,731,516 (the '516 patent). The patents relate to a tire pressure monitoring system. The '496 and '966 patents were divisionals of the same application (the Parent Application). The '516 patent was not related to the '496 or '966 patents, but all three patents named the same two inventors. Two days after the Parent Application was filed, the inventors assigned "the entire right, title and interest ... in and to the inventions and discoveries in" the Parent Application to third-party Animatronics, Inc. Animatronics subsequently assigned its rights to McLaughlin Electronics. Despite their prior assignment, a week before the suit was filed, the inventors purported to assign their rights in all three patents to plaintiff MHL Tek. Later, several months after the complaint was filed, despite its prior assignment, Animatronics purportedly assigned its rights to MHL Tek.

At the lower court, the defendants moved to dismiss the action as to all three patents for lack of standing. The district court granted the defendants' motion with respect to the '496 and '966 patents, agreeing that the inventors assigned their rights in those patents to Animatronics, which had subsequently assigned its rights to McLaughlin, and, thus, MHL Tek lacked standing to sue.

The defendants then filed another motion to dismiss for lack of standing as to the '516 patent. The district court found that the '516 patent was not included within the scope of the original assignment between the inventors and Animatronics, and, thus, the district court denied the motion.

On appeal, the Federal Circuit affirmed the district court's dismissal with respect to the '496 and '966 patents. Further, the Federal Circuit reversed the district court's holding that MHL Tek had standing to assert the '516 patent. The Court concluded that the '516 patent, while not in the same family tree, was within the scope of the "inventions and discoveries" of the Parent Application because each of the limitations of the invention claimed in the '516 patent is supported in the Parent Application's written description for purposes of 35 U.S.C. §112. Thus, the Court found that the pre-suit assignment by the inventors to MHL Tek was ineffective because "the invention claimed by the '516 patent was covered by the assignment ... to Animatronics, which then assigned it to [McLaughlin ]," and, as a result, MHL Tek lacked standing.

Practice Note: Assignments broadly drafted to include the entire right, title and interest in "the inventions and discoveries" of one named patent application may inadvertently transfer rights in a patent that issues from an application in a different family but that covers related subject matter.

Patents / Patentable Subject Matter

Two Patents Revived and Immunized from Subject Matter Ineligibility Under Post-Bilski "Coarse Eligibility Filter"

By John C. Low

Administering the post-Bilski standard for analyzing whether subject matter is eligible for patenting under 35 U.S.C. §101, the U.S. Court of Appeals for the Federal...