Software Patents. Asher Wilk Ph.D. (Computer Science), LL.B. (Law) wilk.asher

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Software Patents Asher Wilk Ph.D. (Computer Science), LL.B. (Law) wilk.asherpost.idc.ac.il Advanced Software Tools Seminar Tel-Aviv University, November 2012 Disclaimer This presentation is intended
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Software Patents Asher Wilk Ph.D. (Computer Science), LL.B. (Law) wilk.asher at sign post.idc.ac.il Advanced Software Tools Seminar Tel-Aviv University, November 2012 Disclaimer This presentation is intended to provide general information only, and is for educational purposes. It is not intended as legal advice and cannot be relied upon as such. Patent law is a complex subject, and in addition is constantly changing and evolving. Persons should seek professional legal advice regarding their specific fact situation. 2 Abstract This talk provides an introduction to software patents, and addresses problems in patenting software and algorithms. It suggests possible solutions and directions. This talk is based on the following paper presented at the SWSTE 2012 conference: Asher Wilk, Patentability of Software, 2012 IEEE International Conference on Software Science, Technology & Engineering (SWSTE 2012), June Talk Outline Protecting Intellectual Property Introduction to Patents Patentability (in the U.S.) Patentability of Software Patenting Business Methods Software Patents in Europe Pros and Cons of Software Patents The Controversy Regarding Software Patents Problems and Possible Directions Summary 4 How to Protect Software? Some computer software can be protected by multiple mechanisms: Patent Copyright(source or object code) Does not protect methods of operation Trade secret No protection against reverse engineering Contracts 5 What is a Patent? A Patent is an exclusive monopoly granted by a Government to an inventor over his invention for a limited period of time. Limited time (typically 20 years). Limited territory (issuing country). The patentee is given a market monopoly and the invention is disclosed to the public. 20 years First to file approach Issue Expires 6 Copyright Copyright does not protect ideas. It protects expression Patent Protects ideas that have been reduced to practice Long term protection Fair Use Short term protection No Fair Use Protects against copying Protection is automatic (no formalities) Originality Innocent infringement not a defense Extensive examination process Novelty and Nonobviousness 7 Talk Outline Protecting Intellectual Property Introduction to Patents Patentability (in the U.S.) Patentability of Software Patenting Business Methods Software Patents in Europe Pros and Cons of Software Patents The Controversy Regarding Software Patents Problems and Possible Directions Summary 8 Why Get a Patent? Secrecy protection is sometimes impossible Non-secret inventions can be copied at low cost forcing market price down to levels not justifying investments of investors. The free rider problem Patents are valuable to start-up companies to attract investments. 9 Historical Background Venice, Italy first patent law England 1561 (Elisabeth I) letters patent Abuse of the system Case of Monopolies [Darcy v. Allin] Statute of Monopolies 1624 U.S patent act. U.S st modern patent act U.K st modern patent act 10 What Can Be Patented? In the United States: Utility patents Machine Composition of matter (pharmaceuticals) Method, Process Software, Method of doing business An article of manufacture An improvement of an invention that fits within one of the first four categories Design patents Plant patents 11 What is a Business Method? The expression business methods refers to a broad category of subject matter which often relates to financial, marketing and other commercial activities Business methods are frequently implemented using computers Historically, methods of doing business were not patentable until the court case State Street Bank & Trust Co. v. Signature Financial Group, Inc. (1998) 12 What Can Not Be Patented? In the United States: Laws of nature (e.g., law of gravity) Abstract ideas (e.g., mathematical formulas) Physical phenomena. See: Gottschalk v. Benson, 409 U.S. 63 (1972); Parker v. Flook, 437 U.S. 584 (1978); and Diamond v. Diehr, 450 U.S. 175 (1981). 13 Patent Specification A utility patent application must satisfy very stringent standards Abstract, Background, Summary of invention Brief description of Drawings, Drawings Brief description of the preferred embodiments Claims-describe legal rights of the patent owner A patentee seeks to maximize the scope of patent, whereas the public benefits from limiting the scope so that more inventions can be brought out. Designing around a patent 14 What do you get? True or False: If I got a patent, am I free to manufacture and sell my invention? False A patent is a negative right it gives the right to exclude others from practicing your invention Making, using, selling, offering for sale, importing You may not be able to practice the invention Someone else may have a broader patent. Broad patents may block the use of rights granted by narrower ( improvement ) patents. 15 (Patent) Law is Territorial Example: Harvard Transgenic Mouse (Oncomouse) U.S. patent (1988) Transgenic non-human mammals Europe: Moral issues. European patents will not be granted for inventions which would be contrary to the 'ordre public' or morality. Canada: The claim involving the mouse itself is not patentable. Court Decision: The Question is whether the words manufacture and composition of matter , within the context of the Patent Act, are sufficiently broad to include higher life forms. Conclusion: higher life forms are not patentable. 16 Harmonization is Difficult The are differences among countries in patenting software, algorithms and business methods in law (interpretation), culture, interests, politics between developing countries and industrialized countries Patent Law Treaties WIPO(http://www.wipo.int/) TRIPS[World Trade Organization]: minimal standard. 17 Patent Litigation Claim interpretation What did the words of the claims mean to one of ordinary skill in the art when the application was filed? Infringement [35 U.S.C. 271(a)]: Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent. Invalidity Given the claim interpretation, is the claim valid? U.S. Patent System U.S. SUPREME COURT COURT OF APPEALS FOR THE FEDERAL CIRCUIT (CAFC) U.S. DISTRICT COURTS U.S. PATENT AND TRADEMARK OFFICE BOARD OF PATENT APPEALS AND INTERFERENCES (BPAI) PATENT APPLICATION PATENT EXAMINERS Patents Cost Cost in U.S. $5,000 to $15,000 per application Patent drafting $5000-$7500 The minimum cost of taking a relatively simple patent infringement lawsuit through trial would be half a million dollars [M. H. Jester, Patents and Trademarks Plain & Simple, page 124] RIM v. NTP Research in Motion s Blackberry product allegedly infringed NTP s patents Settlement: $612,500,000 20 Talk Outline Protecting Intellectual Property Introduction to Patents Patentability (in the U.S.) Utility Novelty Nonobviousness Enablement Patentable Subject Matter [35 U.S.C. 101] Patentability of Software Patenting Business Methods Software Patents in Europe Pros and Cons of Software Patents Problems and Possible Directions Summary 21 Constitutional Basis U.S. Constitution Art. I, 8(8) Congress shall have Power To promote the Progress of Science and Useful Arts, By securing for Limited Times to Authors and Inventors PATENT the exclusive Right COPYRIGHT to their respective Writings and Discoveries. 35 U.S.C. 101 (Patent Act 1952) Whoever invents or discovers any new and useful 1. process (method), 2. machine, 3. manufacture, or 4. composition of matter, or Patentable Subject Matter UTILITY 5. any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title. Subject Matter Eligibility - a threshold test Exceptions: laws of nature, natural phenomenon, abstract idea. 35 USC 112 Adequate written description Enablement 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. 24 35 USC 102 Novelty A necessary requirement in any patent system. The invention must be new. The invention must differ from existing public information disclosing the state of the art. Singe prior-art reference. On September 16, 2011 President Obama signed the America Invents Act into law. It changes 35 U.S.C. 102 and other sections. A major change: from first-to-invent to first-to-file (not yet effective). A person shall be entitled to a patent unless (a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent, or (b) (c) [Notice: this is 102(a) before the AIA amendment] 25 What is Prior Art? Prior Art includes: Patents Patent application publications Non-patent publications (e.g. scientific publications) Prior art search is used to determine whether inventions are novel and nonobvious. 26 35 USC 103 [Nonobviousness] (a) A patent may not be obtained if the... subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made. 27 Compare the invention as a whole to the prior art In the early 1980s, scientists at 3Mcombined an adhesive (that seemed to be useless because it did not permanently stick) with note-sized paper to create Post-It notes. The invention became a worldwide commercial success. This invention, however, was merely the combination of a glue (element A) with note-sized paper (element B). Both elements were in the prior art. Evaluating the invention part by part might have rendered this patentable invention obvious. Evaluating it as a whole shows that this new combination warranted an exclusive right. 28 Nonobviousness (Inventive Step) Nonobvious to whom? Nonobviousness is difficult to determine Framework for analyzing obviousness Graham v. John Deere Co. (1966) The problem of Hindsight bias Obviousness determination may occur years after the invention. This brings subjectivity into the examination. Teaching-suggestion-motivation (TSM) test CAFC created TSM to carry out the Graham analysis. Must be some suggestion or teaching in the prior art to combine elements shown in the prior art in order to find a patent obvious. 29 KSR v. Telefax Teleflex claims KSR infringed on their patent KSR argued that it is not patentable because it is obvious DISTRICT COURT: Favor KSR (Basis: 103) APPEALS COURT: Favor Teleflex (Basis: TSM) SUPREME COURT: Favor KSR (Basis: 103) TSM is not the exclusive test. 30 Supreme Court in KSR TSM is not to be employed in a rigid or formalistic manner. Motivation could be found implicitly when it is obvious to try. Electrical sensors are becoming a norm over mechanical connections in everything, so market pressure dictated that KSR putting a sensor on the pedal is obvious. Combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results. TSM test sets the patentability bar too low. Allows too many trivial inventions to receive patent protection. Justice Kennedy: A person of ordinary skill is also a person of ordinary creativity, not an automaton. 31 Talk Outline Protecting Intellectual Property Introduction to Patents Patentability (in the U.S.) Patentability of Software Gottschalk v. Benson Diamond v. Diehr State Street Bank v. Signature Financial Patenting Business Methods Software Patents in Europe Pros and Cons of Software Patents Problems and Possible Directions Summary 32 Gottschalk v. Benson (1972) A method of converting signals from binary coded decimal (BCD) form into binary form. The supreme court considered the algorithm as an abstract principle and therefore unpatentable. Supreme Court Decision (1972) Congress to determine whether computer software should receive patent protection. Allowing the claims would wholly pre-empt the underlying mathematical formulaand in practical effect would amount to a patent on the algorithm itself. 33 Diamond v. Diehr A method for operating a rubber-molding press under control of a computer program. The examiner: the only non-program steps recited in the claims were conventional and necessary to the process and cannot be the basis of patentability. the claims sought protection of a computer program and were therefore directed to nonstatutory subject matter. 34 Diamond v. Diehr (S.Ct. 1981) Claim must be directed to practical and definite application with a useful result (cure rubber). A Claimed method for operating a rubber-molding press is directed to statutory subject matter since the claims are directed to an industrial process of the type that has historically been eligible for patent protection. The fact that it uses a programmed computer as a part of the processto operate the press does not render the subject matter non-statutory. 35 Patenting Algorithms Algorithms in the abstract are not patentable An algorithm embedded in a general purpose computer becomes a patentable machine [In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994)] An example: We found that claim does not seek to patent its mathematical algorithm in the abstract and is instead directed to a particular machine implementation of the mathematical algorithm. 36 An Example Title:US : Apparatus and method for compressing data signals and restoring the compressed data signals Country: US United States of America Inventor: Eastman, Willard L.; Lexington, MA Lempel, Abraham; Haifa, Israel Ziv, Jacob; Haifa, Israel Cohn, Martin; Arlington, MA Assignee: Sperry Corporation, New York, NY Published / Filed: / References: Ziv, IEEE Transactions on Information Theory , IT 23-3, pp , May, (7pages) Huffman, Proceedings of the Ire , Sep. 1952, pp State Street Bank & Trust Co. v. Signature Financial Group, Inc. (1998) Seminal court case on the eligibility of business methods under 35 U.S.C Claimed a programmed computer configured to calculate various output financial data based on input data. No business method exception under 35 U.S.C The patent had been held invalid by the District Court as directed to non-statutory subject matter. an abstract idea, mental process 38 State Street Bank & Trust Co. v. Signature Financial Group, Inc. Federal Circuit: Mathematical formulas, equations, and algorithms are not statutory subject matter unless applied in some manner by the claimed invention to produce a useful, concrete, and tangible result. Software and business methods are patentable if the invention produced a useful,concrete,andtangibleresult 39 State Street Bank [T]he transformation of data, representing discrete dollar amounts, by a machine through a series of mathematical calculations into a final share price, constitutes a practical application of a mathematical algorithm, formula, or calculation because the final share price produced is a useful, concrete, and tangible result. Statutory subject matter determinations involving methods utilized in business should be analyzed like any other process claims and not on whether the claimed subject matter does business. 40 Talk Outline Protecting Intellectual Property Introduction to Patents Patentability (in the U.S.) Patentability of Software Patenting Business Methods Bilski v. Kappos (Machine or Transformation Test) Software Patents in Europe Pros and Cons of Software Patents Problems and Possible Directions Summary 41 Bilski s Patent A method of hedging risk in trading commodities. Claims not limited to operation on a computer. One could think his method is yielding a useful, concrete tangible result. Examiner rejected the claims under 35 USC 101. BPAI affirmed the rejection: Claims fail the transformation test. Claims are abstract ideas Not a practical application or concrete and tangible result under State Street. non-machine implemented methods. In re Bilski (2008) CAFC (en banc) ruled that Bilski s method was unpatentable under a new rule called: machine or transformation test. At present, and certainly for the present case, we reaffirm that the machine-or-transformation test, properly applied, is the governing test Producing useful, concrete and tangible results is insufficient. 43 Machine or Transformation Test A claimed process is patent eligible under 101 if (1) it is tied to a particular machineor apparatus, or (2) it transformsa particular article into a different state or thing. What is a particular machine? Will Bilski s hedging method becomes patentable if he adds a computer? What transformations will qualify? -Historically a process involved physical transformationof tangible materials, as in a chemical process. 44 U.S. Supreme Court Decision Bilski v. Kappos Rejected calls to categorically exclude business methods or any technology from the scope of patent law. Rejected as the sole test of subject matter eligibility the machine or transformation test. Did not provide important additional guidance Did not provide a good explanation why Bilski s invention was unpatentable 45 Talk Outline Protecting Intellectual Property Introduction to Patents Patentability (in the U.S.) Patentability of Software Patenting Business Methods Software Patents in Europe Pros and Cons of Software Patents The Controversy Regarding Software Patents Problems and Possible directions Summary 46 European Patent Convention (EPC) Art (1): European patents shall be granted for any inventions, in all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application. 47 EPC Art (2): The following in particular shall not be regarded as inventions within the meaning of paragraph 1: a) discoveries, scientific theories and mathematical methods; b) aesthetic creations; c) schemes, rules and method for performing mental acts, playing games or doing business, and program for computers; d) presentation of information. 48 EPC Art (3): Paragraph 2 shall exclude the patentability of the subject-matter or activities referred to therein only to the extent to which a European patent application or European patent relates to such subject-matter or activities as such. 49 Technical Character The European Patent Office (EPO) first tests technical character. Then, novelty and inventive step. Guidelines for examination in the EPO the invention must be of technical character to the extent that it must relate to a technical field (Rule42(1)(a)), must be concerned with a technical problem (Rule42(1)(c)), and must have technical features in terms of which the matter for which protection is sought can be defined in the claim (Rule 43(1)) (see F-IV, 2.1). 50 Technical Character Guidelines for examination in the EPO The basic patentability considerations in respect of claims for computer programs are in principle the same as for other subject-matter. While programs for computers are included among the items listed in Art.52(2), if the claimed subject-matter has a technical character it is not excluded from patentability by the provisions of Art.52(2) and Art.52(3). 51 Technical Character According to the Boards of Appeal (BOA) An Invention must have a technical character. Technical has no definition (intentionally). Instead we have examples given by the BOA: Processing physical data controlling industrial processes is technical. Sales methods and Mathematical methods are non technical. 52 Technical Character Look at the claim as a whole and ask whether it does have technical character. A machine, an article of manufacture, a process of operating a m
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