Beyond Bilski – New Obstacles for Software and Business Method Related Innovations

(IPRinfo 4/2009)

Christine Hoeft McCarthy
Of Counsel, Barnes & Thornburg LLP, Washington DC

Both Bilski and Catlin will clearly alter the examination and litigation of US patent rights; however, at this point, it remains unclear what will be required in the future.

As the US Supreme Court will hear oral argument on In re Bilski, 88 USPQ2d 1385 (Fed. Cir. 2008, cert. granted) in the coming months, patent practitioners specializing in software-implemented and business method-related innovations are hoping for clarification of the US patent laws.

However, within the US Patent and Trademark Office (USPTO), the Board of Patent Appeals and Interferences (BPAI) is already setting out its own interpretation of whether and how such innovations should be patentable.

The BPAI’s focus is not limited to statutory subject matter requirements; rather, the BPAI is progressively restricting the scope of protection for such innovations as well as increasing the amount of technical disclosure required to obtain that protection.
In the confusion surrounding Bilski over the last year, the BPAI has issued a number of precedential and non-precedential opinions applying and interpreting Bilski. Although the Supreme Court has yet to rule on the issues presented in Bilski, the precedential opinions are already altering the way that US patent applications are examined and how US patent lawsuits are being decided.

Not all BPAI opinions are ”precedential;” rather, the BPAI elects to make certain opinions precedential when the interpretation of legal issues in a particular appeal is significant enough to justify the BPAI issuing a public and binding interpretation on those issues. Precedential opinions may be referred to in the examination of other patent applications or litigation involving other patents.

Restricting the Scope of Patentable Subject Matter
Recent BPAI opinions have altered patent examination and interpretation pertaining to the statutory subject matter requirement under 35 USC §101 in a number of ways.

First, the inclusion of structural limitations in a preamble is now almost always insufficient to overcome a rejection under §101; incorporation of structural limitations in the body of the claim is more likely to be required to overcome a rejection.
Second, understanding what structure is necessary and the format for that structure is best aided by contacting the USPTO examiner because: (a) the USPTO issued guidance on this issue is limited; and (b) the examiners’ positions are evolving as a result of new precedential opinions being issued by the BPAI.

Third, when one is claiming a ”computer readable medium” or the like, one can expect to receive a §101 rejection because recent BPAI case law has indicated that such mediums include a signal embodied on a carrier wave. However, often such rejections can be overcome by simply stating on the record that carrier waves are excluded from the claimed computer readable medium.

Increasing the Burden of Technical Disclosure
Although Bilski has clearly been a high priority at the BPAI, §101 is not the only statutory section that is being applied against software-implemented and business method-related innovations. Ex parte Catlin (BPAI, No. 2007-3072, 2/3/09) effectively raises the disclosure requirements for such innovations.

In Catlin, the BPAI held that an on-line method for generating frequent user points (application number 09/167,315; hereafter ”the ’315 application”) was unpatentable as indefinite because a means-plus-function (MPF) limitation recited in the claims was insufficiently supported by the underlying specification. As a result, the claims in question were rejected under 35 USC 112, second paragraph, for indefiniteness.

US patent law allows a patentee to claim inventive elements using MPF language. Under US case law, an MPF term is construed to cover the corresponding structures described in the specification as well as equivalents.

In Catlin, all the claims incorporated the same means clause: ”means for a consumer to participate in an earning activity to earn value from a merchant.” However, the amount of specification disclosure regarding the software algorithms used to implement the claimed means was limited and illustrative.

The BPAI based its indefiniteness rejection on the rationale that, for an MPF feature, the required supporting structure for a computer-implemented function must be more than a ”general purpose computer” and must be a ”special purpose computer programmed to perform the disclosed algorithm” of that function, as required in WMS Gaming Inc. v. International Game Technology, 184 F.3d 1339 (Fed. Cir. 1999) and Aristocrat Technologies Australia Pty. Ltd. v. International Game Technologies Inc., 521 F.3d 1328 (Fed. Cir. 2008).

As explained in the Opinion, software program instructions implemented on a general purpose computer effectively create a special purpose machine for carrying out the particular algorithm. However, the program instructions that implement the function must be disclosed with a degree of specificity that the BPAI felt was lacking in the ’315 application.

The BPAI discounted the ’315 application’s disclosure that a consumer could access an earning activity through the merchant’s web site, asserting that the disclosure merely provided the location through which the software was provided but did not sufficiently disclose the required algorithm itself. The BPIA also commented that examples of results of an algorithm were not specific enough to disclose the algorithm itself.

Thus, the BPAI held that all the ’315 application claims were indefinite for failure to disclose the algorithms that transform the general purpose processor to a special purpose computer programmed to perform the disclosed functions.

Ramifications of Bilski in View of Catlin
For software-implemented and business method-related technology, Catlin may indicate the beginning of a new set of obstacles beyond §101. The precedential affect of Catlin clearly extends to patent applications including MPF features; however, it is unclear whether and how Bilski and Catlin will alter or increase the disclosure requirements for software-implemented inventions in general.

Catlin is of particular concern for US patent applications claiming priority from European-origin priority applications. Such applications are often drafted with functional language in the claims and the European patent offices seem to more readily recognize that the person of ordinary skill has a fairly high skill level enabling him to easily implement disclosed functionality.
As a result, US patent applications with European parent applications often do not have detailed explanations of the structural context in which a software-implemented or business method-related innovation is implemented.

There was a time in US patent law when MPF limitations were intensively used as a mechanism to expand patent protection beyond what was disclosed in an application; however, the US legal system has progressively shut down this avenue of extending patent scope by limiting MPF limitations to the scope of the means disclosed in the specification itself and known equivalents.

At the minimum, Catlin provides reason to avoid language that could be construed at MPF language because using MPF language to describe one’s invention is likely to trigger heightened scrutiny of what is actually disclosed in the specification. However, moving away from MPF language is likely only part of what is necessary for a revised application drafting strategy.
Applicants would likely do well to increase the disclosure of implementation structure in underlying patent specifications. Inclusion of this type of information may be thought of in the same way that US patent practitioners have long been counseled by our European colleagues on the importance of describing how an invention solves the deficiencies of the closest prior art in counterpart European patent applications.

References and links:
A detailed choronology of Bilski’s patent struggles (Bilski v. Doll) is available on the blog site of PatentlyO

The oral hearing at the US Supreme Court was held on 9 Novvember 2009. The transcript of the session is available on the web site of the Court

Rosa Maria Ballardini wrote about the Bilski decision in IPRinfo 2/2009: ”Business Method Patents in the US – In re Bilski”

On August 24, 2009 USPTO gave interim examination guidelines for determining whether a claim is properly directed to patentable subject matter under 35 U.S.C. 101
This document ”INTERIM EXAMINATION INSTRUCTIONS FOR EVALUATING SUBJECT MATTER ELIGIBILITY UNDER 35 U.S.C. § 101” is available on the web site of USPTO (pdf, 30 pages)

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