section 101: what’s a practitioner to do? · section 101: what’s a practitioner to do? ......

Colin P. Cahoon Kevin Klughart

Brandon Zuniga 13760 Noel Rd.| Suite 900 | Dallas, Texas 75240

972.367.2001 | www.cclaw.com | [email protected]

Section 101:

What’s a Practitioner to do?

The Great and Powerful Oz

Why Aren’t We in Kansas Anymore?

Article I, Section 8, Clause 8 US Constitution

To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries (September 17, 1787)

35 USC § 101

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title (July 19, 1952)


Inventions of the Mid to Late 1700’s

Benjamin Franklin’s

Lightning rod (1749)

Benjamin Franklin’s Bifocals

(~1784)

Eli Whitney’s

Cotton Gin (1793)

Joseph and Jacques

Etienne Montgolfier Hot

Air Balloon (1782)

James Watt’s steam

Engine Design (1765)


Inventions of the First Half of 20th Century

Richard G. Drew’s Scotch

(TM) Brand Cellulose Tape

(1930)

Wright Brothers’

"Wright Flyer" (1903)

Jacques-Yves

Cousteau’s

Aqualung (1943)

Henry Ford’s Conveyor Belt-

Based Assembly Line (1913-14)

Edwin Herbert Land’s

Polaroid Camera First

Sold to Public (1948)


The World in Which We Live

Lemelson

The Judicial Pendulum Swings

State Street Bank


CLS Bank

Myriad Genetics

Trying to deal with a 102/103 problem with a 101

meat axe

Congress could have spoken with the AIA, but did not

What the heck to do?


§ 101 – Process – Machine – Manufacture – Composition of matter


Judicial exceptions – Laws of nature – Natural phenomena – Abstract idea

These are the weapons for a skeptical court

Myriad Genetics

Product of nature/laws of nature case

Shaped wood vs. Leaf

“Nor are Myriad’s claims saved by the fact that isolating DNA from the human genome severs chemical bonds and thereby creates a nonnaturally occurring molecule.”

Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2118 (U.S. 2013)

Supreme Court reverses 30 years of USPTO policy

Six separate opinions

Three general types of claims – Method

– Computer readable medium

– System

Majority found method and computer readable medium claims invalid under §101

Panel split on system claims

No single precedential opinion

What the heck to do?

CLS Bank

CLS Bank

Judge Lourie Dyk Prost Reyna Wallach Rader Moore Newman Linn O’Malley Total

Resulting Opinion

Lourie Lourie Lourie Lourie Lourie Rader Moore

Rader Moore

Newman Linn Linn

Method No No No No No No No Yes Yes Yes 7 – No 3 - Yes

Medium No No No No No No No Yes Yes Yes 7 – No 3 - Yes

System No No No No No Yes Yes Yes Yes Yes 5 – No 5 – Yes

CLS Bank

Ultramerical, LLC v. Hulu

– Rader and O’Malley find claims valid, as might be predicted

– Lourie does, as well, but this is a 12(b)(6) case

Accenture v. Guidewire

– Lourie and Reyna find claims ineligible

– Rader dissenting

Little help yet from Federal Circuit

Core Claims

a) Create shadow credit record and shadow debit record

b) Obtain a starting balance for both records

c) Adjust balances chronologically but always keeping records in the black (permitted transactions)

d) Instructing exchange of permitted transaction

CLS Bank

CLS Bank

Newman, Linn & O’Malley

All claims valid

Linn & O’Malley: [A]ssuming the presence of all the computer-based limitations in the written description, none of these claims are unduly pre-emptive. While the abstract idea at their heart may be the use of an intermediary to facilitate financial transactions, the claims here are directed to very specific ways of doing that . . . .

Newman: The court should acknowledge the statutory purpose of section 101, to provide an inclusive listing of the "useful arts."

CLS Bank Int'l v. Alice Corp. Pty, 717 F.3d 1269, 1322 (Fed. Cir. 2013)

CLS Bank

Valid System Claims

Does not address other claims, but joined with Rader on finding media and method claims invalid

Look to the claims as a whole

Moore Result

CLS Bank

Moore Approach

This distinction between an abstract idea and its application reflects a delicate balance

between promoting innovation through patents and preventing monopolization of the basic

tools of scientific and technological work. Id. at 1293, 1301-02. The key question is thus

whether a claim recites a sufficiently concrete and practical application of an abstract idea to

qualify as patent-eligible.

Prometheus instructs us to answer this question by determining whether a process involving

a natural law or abstract idea also contains an "inventive concept," which it defined as "other

elements or a combination of elements . . . sufficient to ensure that the patent in practice

amounts to significantly more than a patent upon the natural law itself."

[A]dding insignificant pre- or post-solution activity to an abstract idea does not make the

claim any less abstract.

The act of modifying the circuitry of a known device such that it is configured to apply an

abstract idea does not transform it into an abstract idea.

CLS Bank

Drafting Valid Claims Under the Moore Approach

A computer configured to…

a) Create shadow credit record and shadow debit record

b) Obtain a starting balance for both records

c) Adjust balances chronologically but always keeping records in the black (permitted transactions)

d) Instructing exchange of permitted transaction

CLS Bank

Rader Result

Valid System Claims

Invalid Media and Method Claims

Look to the claim as a whole

CLS Bank

Rader Approach [T]hat a claim is limited by a tie to a computer is an important indication of patent eligibility.

The key to this inquiry is whether the claims tie the otherwise abstract idea to a specific way of doing

something with a computer, or a specific computer for doing something; if so, they likely will be patent

eligible, unlike claims directed to nothing more than the idea of doing that thing on a computer. While no

particular type of limitation is necessary, meaningful limitations may include the computer being part of the

solution, being integral to the performance of the method, or containing an improvement in computer

technology.

At bottom, where the claim is tied to a computer in such a way that the computer plays a meaningful role in

the performance of the claimed invention, and the claim does not preempt virtually all uses of an underlying

abstract idea, the claim is patent eligible.

[A] claim embodying the machine itself, with all its structural and functional limitations, would rarely, if ever,

be an abstract idea.

The claim begins with the machine acquiring data and ends with the machine exchanging financial

instructions with other machines. The "abstract idea" present here is not disembodied at all, but is instead

integrated into a system utilizing machines.

CLS Bank

Drafting Valid Claims Under the Rader Approach

A method that uses a computer to…

a) Create shadow credit record and shadow debit record using a computer

b) Obtain a starting balance for both records using a computer

c) Adjust balances chronologically but always keeping records in the black (permitted transactions) using a computer

d) Instructing exchange of permitted transaction using a computer

CLS Bank

Lourie Approach

All claims invalid

Ignore the claim language and look to underlying concept

All claims rise or fall together

Focus on preemption

Fancy claim drafting won’t save you

CLS Bank

Does the claim pose any risk of preempting an abstract idea?

…one cannot meaningfully evaluate whether a claim preempts an abstract idea until the idea supposedly at risk of preemption has been unambiguously identified.

With the pertinent abstract idea identified, the balance of the claim can be evaluated to determine whether it contains additional substantive limitations that narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself.

The concept of reducing settlement risk by facilitating a trade through third-party intermediation is an abstract idea because it is a “disembodied” concept…

The analysis therefore turns to whether the balance of the claim adds “significantly more.”

…the claim lacks any express language to define the computer’s participation.

The §101 preemption analysis centers on the practical, real world effects of the claim.

CLS Bank

Drafting Valid Claims Under the Lourie Approach

A method using specifically configured computers and the internet to…

a) Create shadow credit record and shadow debit record with specifically configured computers communicating via the internet

b) Obtain a starting balance for both records with specifically configured computers

c) Adjust balances chronologically but always keeping records in the black (permitted transactions) with specifically configured computers

d) Instructing via the internet exchange of permitted transaction over the internet and with specifically configured computers

CLS Bank

Drafting Valid Claims Under the Lourie Approach

Other considerations

– Claims rise or fall as a whole

– Preemption concept

– Looks past claim language to abstract idea presented

Draft specification more narrowly

Draft a series of specifications with different scope

Define abstract idea in specification and then tie it down

CLS Bank

A financial transaction processing method comprising:

1. maintaining a shadow copy of debit-credit records hosted by an exchange transaction computer (ETC) on an exchange institution computer (EIC) by communication between said ETC and said EIC over a computer communications network (CCN);

2. via said ETC, communicating via said CCN with a plurality of remote user computers (RUC) each interacting with a respective customer;

3. via said RUC, accepting a financial transfer transaction (FTT) from said respective customers;

4. via said ETC, accepting said FTT from said RUC;

5. via said ETC, detecting if said FTT results in a credit-debit surplus for said ETC shadow copy debit-credit records corresponding to said respective customers; and

6. via said ETC, communicating with said EIC over said CCN and instructing said EIC to commit said FTT to said credit-debit records hosted by said EIC if said credit-debit surplus is detected.

CLS Bank

A tangible non-transitory computer usable medium having computer-readable program code means embodied thereon comprising a financial transaction processing method comprising:

1. maintaining a shadow copy of debit-credit records hosted by an exchange transaction computer (ETC) on an exchange institution computer (EIC) by communication between said ETC and said EIC over a computer communications network (CCN);

2. via said ETC, communicating via said CCN with a plurality of remote user computers (RUC) each interacting with a respective customer;

3. via said RUC, accepting a financial transfer transaction (FTT) from said respective customers;

4. via said ETC, accepting said FTT from said RUC;

5. via said ETC, detecting if said FTT results in a credit-debit surplus for said ETC shadow copy debit-credit records corresponding to said respective customers; and

6. via said ETC, communicating with said EIC over said CCN and instructing said EIC to commit said FTT to said credit-debit records hosted by said EIC if said credit-debit surplus is detected.

CLS Bank

A financial transaction processing system comprising: a) exchange institution computer (EIC);

b) exchange transaction computer (ETC); and

c) computer communications network (CCN);

wherein

said EIC is configured to communicate with said ETC via said CCN;

said ETC is configured to maintain a shadow copy of debit-credit records hosted by said ETC;

said ETC is configured communicate via said CCN with a plurality of remote user computers (RUC) each interacting with a respective customer;

said RUC are configured to accept a financial transfer transaction (FTT) from said respective customers;

said ETC is configured to accept said FTT from said RUC;

said ETC is configured to detect if said FTT results in a credit-debit surplus for said ETC shadow copy debit-credit records corresponding to said respective customers;

said ETC is configured to communicate with said EIC and instruct said EIC to commit said

FTT to said credit-debit records hosted by said EIC if said credit-debit surplus is detected.

Conclusion

Tie claims to a computer structure

File separate applications directed to different types of claims

Always pour water on witches.

Make the internet a limiting element

When it rains, be sure to oil the tin man.

See appendix in your materials

Section 101:

What’s a Practitioner to do?

Colin P. Cahoon Kevin Klughart

Brandon Zuniga 13760 Noel Rd.| Suite 900 | Dallas, Texas 75240

972.367.2001 | www.cclaw.com | [email protected]

© Carstens & Cahoon, LLP. All rights reserved. Carstens & Cahoon and its symbol are registered trademarks or trademarks of Carstens & Cahoon, LLP. Other company and product names mentioned herein are property of their respective owners. The contents of this publication are subject to change without notification and are the property of and cannot be reproduced without the written permission of Carstens & Cahoon. The contents of this publication are not a commitment by Carstens & Cahoon to provide the features and benefits described.

section 101: what’s a practitioner to do? · section 101: what’s a practitioner to do? ......

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