New Obstacles Are Raised to Protecting Computer-Related Inventions

By Bruce Sunstein. A member of our Patent Practice Group

 

Recent court decisions make it more challenging to protect computer-related inventions with patents. On September 5, in the case of Accenture v. Guidewire,^[1] the Federal Circuit issued a split decision holding that a computer-related invention was not eligible to be patented.

At issue in Accenture was the validity of an already issued patent having claims directed to a system, and to a method, for generating tasks to be performed in an insurance organization. The system claims required an “insurance transaction database,” a “task library database,” a “client component,” and a “server component.” These items, which have sub-items that also appear in the claim, cooperate with each other to generate the tasks to be performed.

The patent also included a method claim that recited steps in a computer environment involving an event processor that interacts with an insurance transaction database, a task assistant, and a storing step.

In the past, this kind of structural detail in a computer-implemented system claim and a computer-implemented method claim would be sufficient to support a determination that the subject matter would be eligible for a patent, and, indeed, a patent with such claims was issued by the Patent and Trademark Office. Illustrating the structural detail in the system claim, the last subparagraph of the claim reads this way:

. . . wherein the event processor is triggered by application events associated with a change in the information, and sends an event trigger to the task engine; wherein in response to the event trigger, the task engine identifies rules in the task library database associated with the event and applies the information to the identified rules to determine the tasks to be completed, and populates on a task assistant the determined tasks to be completed, wherein the task assistant transmits the determined tasks to the client component.

 

Accenture put considerable additional detail into its patent, which has 15 figures, and occupies 110 columns of print. The patent is loaded with examples, including numerous excerpts of actual programming code, showing how Object Oriented Programming structures implement the invention.

Yet the Federal Circuit held that the subject matter defined by the system claims is not patent-eligible, relying on the court’s own non-precedential opinion in CLS Bank Int’l v. Alice Corp., decided in May 2013 .^[2] The plurality opinion in Alice Corp. in turn relied principally on the Supreme Court’s 2012 decision in Mayo Collaborative Servs. v. Prometheus Labs., Inc.^[3]

Determining that subject matter defined by a patent claim is eligible for a patent does not mean that the owner of such a patent claim deserves a patent, because the patent law also requires that the subject matter must be new and must not have been obvious to a person of ordinary skill in the field of the invention. These last two requirements correspond to sections 102 and 103 of the patent law.^{[4]
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^[1]Accenture v. Guidewire, No. 2011-1486 (Fed. Cir. 9/5/13)(slip opinion).

^[2] Accenture v. Guidewire, slip opinion, page 8 et seq., citing CLS Bank Int’l v. Alice Corp., 717 F.3d 1269 (Fed. Cir. 2013) (en banc). Accenture had not appealed invalidation of the method claims.

^[3] Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2013), cited in CLS Bank Int’l v. Alice Corp., 717 F.3d 1269 at 1279.

^[4] 35 U.S.C. §§ 102 and 103.

Trademark Selection Guidelines

Choosing a Trademark. The choice of a trademark can be critical to the ability to protect one’s rights in a mark. A weak mark may not serve as a good identifier of source. A strong mark, which becomes identified in the mind of the consumer with a particular product or service—e.g., LEXUS® for luxury cars or AT&T® for long distance telephone services—makes possible more effective protection of rights. Thus, it is easier for the owner of a strong mark to preclude third parties from adopting similar marks than it is for those with weak marks. By helping our clients identify and select strong marks, we assist them in developing trademark portfolios that become valuable business assets.

It is natural for the owner of a trademark to want to choose a mark that tells consumers something about its products. Unfortunately, this understandable tendency can sometimes come into conflict with certain principles of trademark law. In the United States, as well as in most other jurisdictions, only “distinctive” terms may be protected as trademarks. Terms that are considered “merely descriptive” or generic are generally not able to function as trademarks and will not be protected.

The line between an imaginative mark that cleverly suggests the nature of the products for which it is used and a mark that is “merely descriptive” of those products can be quite fine. Case law in the United States describes a spectrum of types of marks: fanciful, arbitrary, suggestive, descriptive and generic.

The “Strength” of a Mark. The strongest marks are those that are considered fanciful. A fanciful mark is one that has been made up or invented by its owner. Fanciful marks are either previously unknown words, or archaic or obsolete terms that are no longer commonly known. Non-word marks (letters, numbers, designs and pictures) may also be considered fanciful. Examples of fanciful marks are EXXON®, KODAK®, and XEROX®.

Arbitrary marks are the next on the spectrum of trademark strength. An arbitrary mark is one that may have a commonly known meaning, but the meaning is unrelated to the products for which the mark is used. Examples of arbitrary marks are APPLE® (for computers), DELPHI™ (for computer software), and RADIUS™ (for a restaurant). (More)

Licensing and Strategic Partnering

Companies have different strengths. The company with creative, technically trained executives may turn out marvelous products that they have little idea how to market, while other companies may be marketing whizzes with little product flow. Out of this may be born licensing or strategic partnering transactions.

Licensing
Licensing may involve patents, trademarks, copyrights (including copyrights in software), or trade secrets and know-how. Different legal doctrines and issues will arise in each of these types of transactions. The primary business issues that need to be resolved may include:

1. Is the license exclusive or non-exclusive?
2. What is the royalty rate? Are there any lump-sum license fees? Are they to be credited against future royalties?
3. What is the duration of the license?
4. For what field of use is the license being granted?
5. What territory is covered?
6. Who is responsible for warranty coverage and customer support?
7. Who is responsible for enforcing any intellectual property rights that may be involved?
8. Are there any performance targets, such as sales volumes, that the licensee must achieve to keep its license rights alive?

Strategic Partnering
Strategic partnering refers to special business relationships that, while close, are in fact something less than a true partnership. They typically involve one company assisting another in making sales to the first company’s customers. These relationships often involve the payment of sales commissions, and require particular attention to issues of quality control and customer support and maintenance. Since both companies will be selling to the same customers as a team, each company has an interest in how well the other satisfies the customer. (More)