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Circuit held that the subject matter defined by the system claims is not patent-eligible, relying on the court’s own non-precedential opinion in CLS Bank Int’l v. Alice Corp., decided in May 2013 .^[2] The plurality opinion in Alice Corp.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]
(More...)}

^[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)

Copyright Flowchart

We have prepared a flowchart setting forth some general guidelines regarding the duration of United States federal statutory copyright. There are a number of exceptions to these guidelines. In most cases, these exceptions may involve expiration prior to the theoretical date indicated. However, in some cases, copyright protection may continue past the indicated date. In addition, some remnants of state common law copyright protection continue to exist, and may provide protection even when federal copyright does not. See, e.g., Capitol Records, Inc. v. Naxos of Am., Inc., 4 N.Y.3d 540 (2005) (holding that New York state common law copyright protects sound recordings made before 1972 until February 15, 2067).

View the flowchart.

Comparison of Types of Intellectual Property

What are the types of intellectual property, and what are the differences among them? We try to answer these questions succinctly, based on current U.S. law. The classic IP types are copyrights, patents, trademarks, and trade secrets.

Copyrights

Copyright law protects original works of authorship, such as books, films, music, but many other things as well. Copyright law protects only the original expression set forth in those works, however, and not the underlying ideas, procedures, processes, systems, methods of operation, concepts, principles, and discoveries themselves. In other words, copyright protects how something is expressed, not what is expressed.

In the United States, federal copyright law protects a wide range of works, including literary works; musical works and lyrics; dramatic works; pantomimes and choreographic works; pictorial, graphic, and sculptural works; motion pictures and other audiovisual works; sound recordings; and architectural works, and computer programs. Federal copyright law is set forth in Title 17 of the U.S. Code.

Under current U.S. law, a copyright begins on the date that a work is created and lasts until 70 years after its author’s death. If the author is anonymous or pseudonymous, or if the work is made for hire, the copyright term is 95 years from the date of publication or 120 years from the date of creation, whichever expires first.

The copyright in a work is separate from the work itself and, in the absence of an agreement to the contrary, the copyright is not transferred when the work itself is sold or given away. Thus, an artist who creates a painting and sells it to a collector has not given up the copyright in the work and may prevent the collector from making and selling posters or postcards of the painting. Although the collector does not own the copyright in the work, he or she does have the right to display and sell the work itself. (More)

Patent Litigation 101

A patent owner who finds that another party is making, using or selling its patented invention may bring suit for patent infringement. Federal courts have exclusive jurisdiction over patent infringement claims. Hence the litigation must be brought in a federal district court having jurisdiction over the parties. A party accused of infringement by letter or otherwise may bring a suit against a patent owner for declaratory judgment of patent invalidity or noninfringement. Either party in a patent infringement action may demand a jury, or the case can be tried to the judge if both parties waive their jury rights.

As a general rule, patent litigation presents unusually complex issues and a case will typically take at least 18 months or more to get to trial. During the initial discovery phase, each side will make demands on the other for responses to written questions and for the production of documents relevant to the issues in the case, followed by depositions of key witnesses, including the inventor, design and engineering personnel, and financial and accounting personnel. Next, in the expert witness phase, expert witness reports are exchanged, followed by depositions of the experts. Thereafter, either side may file a motion for summary judgment with supporting briefs and documentation, seeking a ruling from the court without the need for a full-scale trial. Following resolution of such motions, the case is ready for trial.

At some point in this process, it is necessary for the court to conduct a Markman hearing to determine proper construction of the claims. Even in a jury case, it is the job of the judge to determine the meaning of the claims as a matter of law. The terms in a claim are given their ordinary and accustomed meaning unless it appears the terms were used differently by the inventor. Claim language is construed by reference to the claims, the specification of the patent, the prosecution history of the patent and the prior art. Expert witness testimony is also often considered. The timing of the Markman hearing is currently a subject of considerable controversy. Some judges have even permitted the case to be tried to the jury before resolving disputes about claim construction. In other cases the Markman hearing has been held at a preliminary stage well before trial. In many cases, the judge’s decision on the meaning of the claims may be determinative of the question of infringement. (More)

America Invents Act Delivers: Quick Administrative Decision On Patent Challenge Brings Hope to Accused Infringers

By Kerry Timbers. Co-Chair of our Litigation Practice Group

When the America Invents Act (AIA) was enacted last year to overhaul the patent laws, one of its goals was to provide cheaper and faster ways to attack patents, relative to the multimillion-dollar patent lawsuits that seem to take forever to resolve.

One of these new procedures, the Covered Business Method (CMB) review procedure, provides a relatively quick way to attack method patents in the financial and banking areas. This month, the first party to pursue the challenge was rewarded with a ruling from the Patent Trial and Appeal Board (PTAB) invalidating the patent asserted against it in a pending district court lawsuit.

SAP America has been in a multi-year infringement battle with patent owner Versata Development Group over a software-based patent for determining pricing based on which customer, from which geographic region, is buying which product. Versata claimed great success with its software until the much larger SAP introduced a competing product which, according to Versata, destroyed Versata’s customer base.

Versata sued for patent infringement and in late 2011 won a jury verdict of over $330 million. While this case was being appealed, CBM reviews became available under the AIA on September 16, 2012, and SAP took advantage of it on the very day the law took effect.

CBM reviews are available only to parties being sued or threatened on a patent involving a financial product or service. Unlike prior post-issuance reviews of patents, CBMs allow attacks on a patent not only on the basis of prior art, but also on the basis of lack of written description, lack of enablement, and indefiniteness, as well as whether the patent’s subject matter is even eligible for patenting. (More)