1. B EI JI N G F RAN KFU RT H O N G KO N G LO N D O N L O S AN G ELES MUNICH N EW YO RK SI N G AP O RE T O KYO W ASH I N G T O N , D C
Judicially Re(de)fining Software Patent Eligibility
Blake Reese*
May 7, 2010
AIPLA 2010 Spring Meeting
*Blake Reese is an attorney in the intellectual property and litigation group of Milbank, Tweed,
Hadley & McCloy. The views expressed in the presentation are those of the author and may not
be attributed to Milbank or its clients.
2. Road Map
• Survey post-Bilski Federal Circuit cases
• Discuss selected district court cases that
substantively analyzed Bilski
1
3. Introduction
• My purpose: Discuss post-Bilski jurisprudence
in case the Supreme Court’s holding, at least
in part, affirms the machine-or-transformation
(M-or-T) test
2
4. Foreshadowing
• “[W]e recognize that the Supreme Court may
ultimately decide to alter or perhaps even set
aside [the M-or-T] test to accommodate
emerging technologies. And we certainly do
not rule out the possibility that this court may
in the future refine or augment the [M-or-T]
test or how it is applied.”
– In re Bilski, 545 F.3d 943, 956 (Fed. Cir. 2008) (en banc)
3
5. In re Bilski
• Seems to give district courts concern about
issuing judgments pursuant to In re Bilski
– Risk of reversal
– Wait-and-see how other courts, Fed. Cir., and now
Supreme Court will handle
• Some have issued stays on such issues
pending Supreme Court’s opinion
4
6. Stayed Pending Bilski v. Kappos
• “After the Supreme Court issues its Bilski
opinion, this Court will likely have clear
direction on the precise standard to be applied
in evaluating the patentability of method
claims. With that guidance, the Court will be
able to efficiently consider and evaluate [the
accused infringer’s] argument that the [patent-
at-issue] is invalid.”
– Lincoln Nat’l Life Ins. Co. v. Transamerica Fin. Life Ins. Co., No.
1:08-CV-135-JVB-RBC, 2010 WL 567993, at *1 (N.D. Ind. Feb. 12,
2010)
5
7. Road Map
• Survey post-Bilski Federal Circuit cases
• Discuss selected district court cases that
substantively analyzed Bilski
6
8. In re Ferguson (Fed. Cir. March 6, 2009)
• Bilski M-or-T test is for process claims only
• Adopted definition of “machine” from In re
Nuitjen:
– “Machine” means “a concrete thing, consisting of
parts, or of certain devices and combination of
devices.” Burr v. Duryee, 68 U.S. 531, 570 (1863).
– This “includes every mechanical device or
combination of mechanical powers and devices to
perform some function and produce a certain effect or
result.” Corning v. Burden, 56 U.S. 252, 267 (1854).
7
9. Prometheus Labs., Inc. v. Mayo Collaborative
Servs. (Fed. Cir. Sept. 16, 2009)
• Claims directed to “methods for
calibrating the proper dosage of
thiopurine drugs” for autoimmune
disease treatment
• “The invention’s purpose to treat the
human body is made clear in the
specification and the preambles of the
asserted claims”
8
10. Prometheus Labs., Inc. v. Mayo Collaborative
Servs. (Fed. Cir. Sept. 16, 2009) (cont.)
• Administration of drugs causes “the
human body … to undergo[] a
transformation” as “[t]he drugs do not
pass through the body untouched
without affecting it”
9
11. General Human v. General Purpose Computer
•Could one argue that the
use of software causes a
general purpose computer
“to undergo[] a
transformation” as “[t]he
[generated signals] do not
pass through the
[computer] untouched
without affecting it”?
10
12. SiRF Tech. Inc. v. ITC (Fed. Cir. April 12, 2010) (cont.)
• GPS receiver is a “machine” under In re
Nuijten
• GPS receiver is a “particular machine”
because “[p]seudoranges, which are the
distances or estimated distances between
satellites and a GPS receiver, can exist only
with respect to a particular GPS receiver that
receives the satellite signals.”
– specifically programmed device v. particular machine
– “methods at issue could not be performed without the
use of a GPS receiver”
11
13. SiRF Tech. Inc. v. ITC (Fed. Cir. April 12, 2010) (cont.)
• Meaningful limits/No Post-solution activity:
– The machine “must play a significant part in
permitting the claimed method to be performed, rather
than function solely as an obvious mechanism for
permitting a solution to be achieved more quickly, i.e.,
through the utilization of a computer for performing
calculations.”
– Court focused on whether a human could perform the
claimed method without the machine, but only more
slowly
12
14. Road Map
• Survey post-Bilski Federal Circuit cases
• Discuss selected district court cases that
substantively analyzed Bilski
13
15. CyberSource Corp. v. Retail Decisions, Inc.
(N.D. Cal. March 27, 2009)
• Involved CRM claim and method claim
directed to “detecting fraud in a credit card
transaction between a consumer and a
merchant over the internet”
14
16. CyberSource Corp. v. Retail Decisions, Inc.
(N.D. Cal. March 27, 2009) (cont.)
• Method claim
– Noted Federal Circuit left to future cases to
determine whether or when recitation of a
“computer” = tie to particular machine
– “internet” not particular machine because it’s an
“abstraction … as [o]ne can touch a computer or a
network cable, but one cannot touch ‘the internet’”
– Not transformative because credit cards ≠ physical
objects or substances nor representations of those
• Also, no “visual depiction”
15
17. CyberSource Corp. v. Retail Decisions, Inc.
(N.D. Cal. March 27, 2009) (cont.)
• Contrary to Ferguson, Court also applied
Bilski M-or-T test to find CRM claim
invalid
– “over the Internet” and “one or more
processors” not particular machines
• Spec failed to describe the processors of a
computer
• Found BPAI cases persuasive
– “Following Bilski, the Board has rightly held that simply
appending ‘A computer readable media including
program instructions…’ to an otherwise non-statutory
process claim is insufficient to make it statutory.’”
16
18. Every Penny Counts, Inc. v. Bank of Am. Corp.
(M.D. Fla. May 27, 2009)
• Claims directed to a “system whereby
consumers can save and/or donate a portion
of a credit or debit transaction”
• Contrary to Ferguson, system claim with
means-plus function limitations analyzed
under Bilski M-or-T test
– Court found system claim was effectively a process
claim
– “[T]he ‘system’ … ‘has no substantial practical
application except in connection with’ computers,
cash registers, and networks, but it is not
comprised of those devices.”
17
19. ry Penny Counts, Inc. v. Bank of Am. Corp.
(M.D. Fla. May 27, 2009) (cont.)
• Use of machines were “insignificant
extra-solution activity”
– The claimed “process” includes “a
mathematical algorithm [that] uses
machines for data input and data output to
perform the required calculations”
– But, “those machines do not … impose any
limit on the process itself.”
20. DealerTrack, Inc. v. Huber
(C.D. Cal. July 7, 2009)
• Claims directed to “a computer aided method
of managing a credit application”
• Court construed two disputed terms as
– (1) “any device, e.g., personal computer or dumb
terminal, remote from the central processor, for
application entry and display”
– (2) “any device, e.g., personal computer or dumb
terminal, located at a logical or physical terminus of
the system”
21. DealerTrack, Inc. v. Huber
(C.D. Cal. July 7, 2009) (cont.)
• Based on its analysis, in part, of CyberSource
and a string of BPAI cases, the court found
that those construed structures were not a
“particular machine” under Bilski
• The patent “does not specify precisely how the
computer hardware and database are
‘specifically programmed,’ and the claimed
central processor is nothing more than a
general purpose computer that has been
programmed in some unspecified manner”
22. earch Corp. Techs., Inc. v. Microsoft Corp.
(D. Ariz. July 28, 2009)
• Claims directed to “image halftoning
technology used in computers and printers”
• “Comparator” construed to be a “device (or
collection of operations, as in software)” could
be software per se and thus not a particular
machine
23. earch Corp. Techs., Inc. v. Microsoft Corp.
(D. Ariz. July 28, 2009) (cont.)
• For electronic transformation, claimed process
must be
– (1) limited to transformation of specific data, and
– (2) limited to a visual depiction representing
specific objects or substances
24. earch Corp. Techs., Inc. v. Microsoft Corp.
(D. Ariz. July 28, 2009) (cont.)
• Claims that recited “the production of an
image as a result of the comparison numbers”
are transformative because limited to a “visual
depiction that represents specific objects”
• Claims that merely “assembl[ed] ... gray scale
images to generate final dot profiles” not
transformative because no “visual display or
image”
• Literal reading of Bilski’s interpretation of
Abele
26. Abstrax, Inc. v. Dell, Inc.
(E.D. Tex. Oct. 7, 2009)
• Claims directed to “a method for assembling a
product having components wherein the
variable portions of a set of abstract assembly
steps are resolved in accordance with data
from a desired configuration”
27. Abstrax, Inc. v. Dell, Inc.
(E.D. Tex. Oct. 7, 2009) (cont.)
• Transformative because:
– claim “represents physical and tangible
objects and their respective structures”; and
• Concerns “how parts, pieces, or components of a
product fit together and how they are configured”
– Transformative claim term imposed
meaningful limits on claim scope
• “Ostensibly, a claim term that both parties feel
warrants construction would impose limits on a
claim and would not be merely extra-solution
activity”
28. zzysharp Techs. Inc. v. 3D Labs Inc., Ltd.
(N.D. Cal Dec. 11, 2009)
• Claims directed to “mathematical algorithms
that can be used to reduce the number of
calculations required to determine whether a
3D surface is visible or invisible on a display
screen”
• Fuzzysharp conceded that claims were not
transformative
29. zzysharp Techs. Inc. v. 3D Labs Inc., Ltd.
(N.D. Cal Dec. 11, 2009) (cont.)
• Relying on CyberSource, DealerTrack,
and a string of BPAI cases, court held
“the claims are not tied to a particular
computer, but simply make a general[ ]
reference to ‘a’ computer.”
• “Courts applying Bilski have concluded
that the mere recitation of ‘computer’ or
reference to using a computer in a
patent claim [i]s insufficient to tie a
patent claim to a particular machine”
30. centure Global Servs. GmbH v. Guidewire
Software Inc. (D. Del. 2010)
• Claims directed to “a computer program for
developing component based software for the
insurance industry.”
• Court stayed trial until after Bilski v. Kappos
opinion issues and seven days later, issued an
opinion substantively describing its reading of
Bilski.
31. centure Global Servs. GmbH v. Guidewire
Software Inc. (D. Del. 2010) (cont.)
• Not transformative, because “even if a tangible
visual ‘display’ [was] provided, that visual
image would not represent any specific
tangible objects (or type of data).”
• Relying on Every Penny Counts and Research
Corp., the court held “[i]f the architecture of the
computer is of no import, it is unclear how the
claimed methods are drawn to a specific
machine within the meaning of Bilski”
32. centure Global Servs. GmbH v. Guidewire
Software Inc. (D. Del. 2010) (cont.)
• “It is unclear to the court whether (and how)
the claims may be interpreted to define a
particularly-programmed computer.”
• Although “it is not self evident that the patents
are drawn to tangible inventions rather to
concepts, … [the] court may revisit the issue
upon defendant’s renewed motion should the
Supreme Court validate the Bilski framework.”
– Summary judgment of invalidity under 101 denied
without prejudice
33. Conclusion
• We are all hopeful that the Supreme Court will
provide us with “clear direction on the precise
standard to be applied in evaluating the
patentability of method [and machine] claims”
34. AIPLA 2010 Spring Meeting: Judicially
Re(de)fining Software Patent Eligibility
Thank you
Blake Reese
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, NY 10005
(212) 530-5496
BReese@milbank.com
