The Specter of Indefiniteness: Recent Rulings Pose Further Challenges for Computer Software Patents

By Jay Sandvos. A member of our Patent Practice Group

 

In 1980, the Supreme Court declared that “anything under the sun that is made by man” could be patented. At that time, the main challenge in getting a patent was to demonstrate how the claims were novel and inventive over the teachings of the prior art.  But more recent court decisions now require a fiendishly difficult consideration of the “subject matter” of patent claims, which probably is fatal for most business method inventions and many inventions implemented in computer software.  (The lecturing, sanctimonious tone of these decisions is a little grating, too.)

In June 2015, two decisions continued the recent trend in patent law by revising the law on “functional” claim language—that is, language that describes what something does, as opposed to “structural” claim language, what something is.  There are various kinds of claims that can be used in a patent (device claims, method claims, etc.), and the United States Code governing patent law expressly permits functional claim language:

“An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.”

35 U.S.C. 112(b).

Such claims are referred to as means-plus-function claims.  Until now, a patent claim using the magic word “means” signaled that what followed was a functional description rather than a structural one. And if the claim language did not recite any particular structure, the proper construction of a means-for claim element referred to “the corresponding structure, material, or acts described in the specification and equivalents thereof.”

Since computer software is not structural in the same physical way as an eggbeater or a swing set, the claims in a computer software patent will have mainly functional language rather than structural language. In WMS Gaming Inc. v. Int’l Game Tech, the Federal Circuit Court of Appeals in 1999 held that when a software claim is set forth in means-plus-function form, the functional language is understood to refer to a “corresponding structure” in the specification in the form of “a specific algorithm” for performing the function recited by the claim.

In other words, to prevent a claim from being deemed invalid for indefiniteness, the specification must recite a specific algorithm for each software means-for element recited by a claim or else the claim is invalid. On the other hand, the Federal Circuit later acknowledged in In re Katz (2011) that a standard microprocessor could serve as sufficient structure for some generic functions that could be achieved by any general purpose computer without special programming, for example, “processing,” “receiving,” etc.

Recently, the Federal Circuit significantly narrowed the applicability of In re Katz.  In Eon Corp. IP Holding LLC v. AT&T Mobility LLC, the patentee, Eon, conceded that for some of the means-for claim elements at issue, the specification did not recite a specific algorithm as required by WMS Gaming. But, argued Eon, the various means-for claim elements could all be achieved by any general purpose computer without special programming, and hence, the “Katz Exception” should be applied. The Federal Circuit rejected that argument, concluding that the rule recited by WMS Gaming was broad and general, while the exception recited by Katz was narrow and limited, covering only a few of the most generic means-for claim elements. (Read the full article)

Recent (and Anticipated) Developments in the International Application of US Patent Laws

By Thomas Carey. Chair of our Business Practice Group

 

The international patent system is premised on the notion that each country regulates patent laws and their enforcement within its own borders.  International commerce does not always lend itself to such tidy compartments, however, forcing courts and legislatures to address complex situations.  Two recent decisions of the Federal Circuit Court of Appeals, as well as another case that is ripe for decision by that court, offer new guidelines for patent owners.

Inbound Sales.  Lelo Inc. v. International Trade Commission, decided in May 2015, considered the power of the International Trade Commission (ITC) to ban the import of items made abroad.  That power stems from 19 USC § 1337, which permits the ITC to ban imports of infringing articles that pose significant harm to an industry (actual or nascent) in the U.S.  To demonstrate the existence of a protectable industry, the statute requires the patent holder to prove that there has been substantial investment in plant and equipment; or significant employment of capital or labor; or significant investment in the exploitation of the patent, which may take the form of engineering, R&D or licensing activity.

In Lelo, the patent holder was Standard Innovation Corporation (SIC), whose products were not manufactured in the US.  Instead, they were made in China by a manufacturer that assembled components sourced from many countries.  Four of the components, accounting for about 5% of the total cost of the bill of materials, came from the US.

Lelo, a California corporation, imported a product competitive with SIC’s product and, it turns out, one that infringed SIC’s patents.  SIC sought a ban on the import of Lelo’s product into the US.

The initial review of the matter was conducted by an administrative law judge who held that the ITC lacked the power to ban the import of Lelo’s product because there was insufficient evidence of a US industry that would be harmed by the infringement.  Specifically, there was no proof that SIC’s purchases of US-sourced components were the result of significant capital investment or R&D in the US, or that they resulted in an increase in labor here.

On appeal, the ITC reversed the judge because it deemed the US-sourced components to be qualitatively significant because of “the critical nature of the components to the patented products.”

The Federal Circuit then reversed the ITC, stating that the statute compels a quantitative analysis.  The court referred to a 2007 decision that, where US subcontractors contributed 34% of the value of a product, there was a significant US industry to protect.  That earlier case was distinguished both because of the gap between 34% and 5% and because of the different nature of the sourcing.  The 2007 case involved US subcontractors to a US patent holder.  By contrast, SIC did not subcontract the manufacture of the US components; its Chinese supplier bought off-the-shelf articles from retailers. (More)

Issues Resolved in an Administrative Trademark Proceeding May Bind Federal Courts in Subsequent Infringement Actions

By Steven Abreu. A member of our Trademark Practice Group

 

In B&B Hardware, Inc. v. Hargis Industries, Inc., B&B opposed Hargis’s attempt to register its trademark SEALTITE, arguing that it would create confusion with its own SEALTIGHT mark.  The Trademark Trial and Appeal Board (TTAB) agreed and refused to register the mark.  Hargis did not appeal this ruling.

B&B Hardware then sued Hargis for trademark infringement. It asked the federal district court to preclude Hargis from arguing that the mark SEALTIGHT was not similar to SEALTITE because likelihood of confusion had already been decided in B&B’s favor by the TTAB.

The district court denied B&B’s request, and on appeal the Eighth Circuit Court of Appeals agreed because, it said, the courts use different criteria from the TTAB in evaluating likelihood of confusion. In March 2015, the Supreme Court reversed, ruling that TTAB decisions could have a preclusive effect on other trademark proceedings, including those in federal courts.

The Supreme Court held that if the TTAB has materially considered all factors relevant to the federal court’s determination and the normal elements of issue preclusion are also present, then the TTAB’s decision on an issue may preclude further litigation of the same issue in federal court. (MORE)