NY Times Editorial on Patent Law:
The broken American patent system has a knack for sanctioning the ridiculous. In the latest example, businesses are receiving patents for devising ways to obey the law — the tax code, to be more specific. What’s next, a patented murder defense?
As Floyd Norris reported recently in The Times, the broad category known as business-method patents (like patenting the idea of pizza delivery rather than the pizza itself) has expanded once again. Now it includes the legal ways that accountants and lawyers help their clients pay less tax.
Once the Patent and Trademark Office has granted one of these patents, everyone who uses the same legal shelter — even if they draw the conclusion based on their own interpretation of the tax code — will be subject to lawsuits and even injunctions against using the method at all.
Defenders of these tax-strategy patents argue that they won’t affect the average person’s struggle with the 1040 form each April. The easy stuff should be rejected under the usual standard that requires patents to be novel and not obvious. Tax-strategy patents, they argue, are more geared toward the complicated tax returns of rich people.
While we don’t normally rush to make it easier for the rich to pay less tax, the precedent is a bad one. People should be treated the same under the law, and shouldn’t have to pay a licensing fee for the privilege. Congress needs to make spurious patents easier to challenge across the board, and should consider clarifying what may be patented. Recent technological advances raise questions about how patents apply to genes and life forms, or what standard should cover old business models on the Internet.
Patents are supposed to encourage innovation, rewarding the individual for the greater good of society. But excessive or overly broad patents can slow business activity to the pace of cold molasses. And we sure don’t need something else to worry about on tax day.
JRH
“The non-obviousness analysis is based on what goes on inside the head of a person of ordinary skill in the art, rather than on considerations of how the invention was made or functions.”
And people of ordinary skill in the art never think about how stuff is made or how it functions?
Please.
Paul
“After the KSR case goes to the Supreme Court, there is a high probability that we will see a stricter test for obviousness”
Doubt it.
In answer to JRH, I have been following US case law since 1980 if not before and do not need the briefs in KSR to inform me about Graham (incidentally if you have not already read it, look at footnote 13 which is one of the most devastating pieces of cross-examination ever).
As I understand that decision, the Supreme Court held that 35 USC 103 codified existing precedent, and therefore preserved existing case law rather than declaring it inapplicable. The earlier A & P case was cited on a number of occasions without any hint that the collocation rule as expressed was wrong in principle (though I am on published record as arguing that the case was wrongly decided on its facts and did injustice, see Patent World, March 1988, pages 12 – 17).
The A & P test of “no change in function” was specifically approved in Sakraida, where the court concluded:
“Though doubtless a matter of great convenience producing a desired result in a cheaper and faster way and enjoying commercial success, the Dairy Establishment ‘did not produce a ‘new or different function’ … within the test of validity of combination patents.”
So, sorry to say, it is STILL there in the case law and has to be dealt with.
After the KSR case goes to the Supreme Court, there is a high probability that we will see a stricter test for obviousness and the collocation test will probably be found to have a role. The problem is to fit it into the determination of obviousness under 35 USC 103 so that it passes patents that make a genuine technical contribution and helps to weed out those that do not, and hence produces a just outcome and not as often happened in the past an unjust one.
Apologies to Roger Daltry and The Who!
Paul,
I would respectfully argue that you’ve failed to closely read the decisions you cited. Perhaps you can only be faulted for relying too much on the petitioner’s brief in KSR v. Teleflex.
Any present day discussion of obviousness must begin with Graham v. John Deere, which first interpreted the statutory nonobviousness requirement (which did not exist prior to 1952). According to Graham, s. 103 did not change the general level of patentability and codified earlier decisions following Hotchkiss v. Greenwood, which required “more ingenuity and skill than that possessed by an ordinary mechanic.” Graham laid down the familiar inquiries in evaluating obviousness and called for strict observance of the statutory requirement: “Congress has emphasized ‘nonobviousness’ as the operative test of the section, rather than the less definitive ‘invention’ language.” According to the Court, “[t]he emphasis on non-obviousness is one of inquiry [i.e., the non-obviousness of differences between the claimed invention and the prior art], not quality.” The non-obviousness analysis is based on what goes on inside the head of a person of ordinary skill in the art, rather than on considerations of how the invention was made or functions.
The Court’s reaction to the Eighth Circuit’s decision should resolve any doubt that “new function or result” is not the legal test of nonobviousness: “In 1955, the Fifth Circuit had held the patent valid under its rule that when a combination produces an ‘old result in a cheaper and otherwise more advantageous way,’ it is patentable. In 1964, the Eighth Circuit held, in the case at bar, that there was no new result in the patented combination and that the patent was, therefore, not valid. We granted certiorari. Although we have determined that neither Circuit applied the correct test . . .” The Eighth Circuit applied the test you argue for, and the Supreme Court expressly rejected it.
Sakraida and Anderson’s are not necessarily contrary. The PTO says: “In each case, the Court discussed whether the claimed combinations produced a ‘new or different function’ and a ‘synergistic result,’ but it clearly decided whether the claimed inventions were [nonobvious] on the basis of the three-way test in Graham. Nowhere in its decisions in these cases does the Court state that the ‘new or different function’ and ‘synergistic result’ tests supersede a finding of [nonobviousness] under the Graham test.” MPEP 2141. The Solicitor General’s brief agrees.
It would be poor lawyering (and possibly malpractice) to adhere to dicta in old Supreme Court decisions interpreting old statutes that are contradicted by the plain language of s. 103 and its interpretation by Graham. Until the Supreme Court decides otherwise, I certainly won’t roll over just because a nonobvious combination doesn’t produce a new and beneficial result.
Paul writes
“Especially if you study the cases I have mentioned, and observe that what the Supreme Court was really saying was that the features in the specification that were relied on at trial were never indicated in the patent specification as having any special merit, and therefore it was not credible, and particularly on the evidence, that they did indeed have inventive merit.”
Indeed. And it’s the failure to pay attention to this basic fact that causes much of the silliness exhibited during prosecution of patent applications in the United States today. The “invention” is not what the “inventor” says it is. Rather, the process of “inventing” becomes a process of comparing the prior art discovered by the Examiner to the text in the specification. The last shred of text which remains undisclosed (either explicitly or by explicit teaching to combine if we take the patent bulls’ approach) becomes the “invention” by default. Thus, the “key” to patentability of, e.g., a drug formulation can miraculously reside in one of the “well-known excipients” that are listed in some “boilerplate” in the specification that was tossed in by the attorney on the day of filing.
I respectfully submit that this method of “patenting inventions” in the United States is about as intellectually dishonest as lawyering can get.
But nobody with power to change the status quo really gives a darn so I guess “it’s all right” (to quote George Harrison).
Paul
“Malcolm Mooney says that I should beware of the patent bulls in New Pamplona. However, I practice near Londinium, Britannia ”
I dunno, man. Based on the evidence presented by “An Examiner,” it appears that you might be pulling my leg. Or you might just have made an honest error.
In any event, “you are forgiven” (to quote Roger Daltry).
P.S. Excellent comment, by the way.
Paul Cole wrote:
“old in no uncertain terms to F..F..F..Fade away (to quote Mick Jagger)”
Hate to burst your bubble, but it was Roger Daltry of The Who in “My Generation”. The Stone did “Not Fade Away”, but it lacks those extra F-F-F’s who had there.
Sheesh, the Brits can’t even remember their own bands, what’s the world coming to?
😉
Malcolm Mooney says that I should beware of the patent bulls in New Pamplona. However, I practice near Londinium, Britannia where our local patent office and the EPO examine for inventive step, and I prefer not to get clients over-excited about patents of low prima facie inventive merit and to file cases where there are clear and identifiable arguments for inventive step. That way I loose very few applications and have clients who generally get the patents that they expect. I may have to file and prosecute very difficult cases, but I do not encourage them.
Obviously there are Friday afternoon cases which get granted when they should not, but the client should always be warned about these. If the client takes a Friday afternoon patent to a potential licensee or the court, he is likely to be told in no uncertain terms to F..F..F..Fade away (to quote Mick Jagger), and that causes disappointed expectations and sometimes loss of a client. The EPO Enlarged Appeal Board has made it abundantly clear that the ultimate responsibility for what goes into the patent is not for the examination staff but is for the prosecuting attorney, and I am confident that the position is similar in the USA. So the fact that something ridiculously broad sneaks through should not be a cause for irrationally exuberant rejoicing but for prudent and cautious advice.
DDG says that the 1952 Patent Act abolished the standard of invention that I am relying on. Try reading your own case law, DDG, and especially the Graham trilogy 148 USPQ 459 and then Andersons-Black Rock 163 USPQ 673 and Sakraida v Ag Pro 189 USPQ 449. Contrary to prevailing opinion, the CAFC is obliged to follow the precedent cases of the Supreme Court. It may explain those cases and distinguish them on the facts but where a ratio decidendi has been established by the Supreme Court, the CAFC is obliged to follow it – as I am fairly confident we shall shortly see. I think it is much better to fit the collocation rule into a rational scheme of examination for novelty and inventive step, as we have done in Europe, rather than pretend that it does not exist. Especially if you study the cases I have mentioned, and observe that what the Supreme Court was really saying was that the features in the specification that were relied on at trial were never indicated in the patent specification as having any special merit, and therefore it was not credible, and particularly on the evidence, that they did indeed have inventive merit.
If you look at the dictum in Carnegie, it tells an attorney what he should look for and promises that if he finds it, then that is evidence of invention. Why kick against this dictum, when if you follow it you have Supreme Court authority on your side? I have no problem in finding new and beneficial results in almost all the cases I file and prosecute because I know what I am looking and am well trained to find it where it exists. Most of my colleagues in Europe would say much the same
Axel…
It would pass the novelty test if they really meant it. It would likely even pass 103. What could be more non-obvious than a politico who actually does what he/she promises?
Since we are at it: A patent covering a “method for winning elections by promising tax cuts” would be nice to have… might not pass the novelty test though.
While we don’t normally rush to make it easier for the rich to pay less tax
That’s true. The NYT prefers to simply report the propaganda of “some Republicans in Congress” and leave it to their readers to figure out whether out what’s garbage and what’s not. Such is the state of “journalism” in 2006.
I just filed a patent application on a method of facilitating discussion of patent law via an electronic network and a set of image-creating screens, wherein at least two individuals’ messages are displayed on the screens at the same time and wherein at least one of the individuals is named after a member of a European electronic music group with at least two records on a major label.
I’ll let you everyone know when it publishes (I wouldn’t want to jeopardize any intervening rights).
“The term “invention” means invention or discovery.”
I may be wrong, but I find the definition to be a bit short of the mark. Perhaps those who created the copyright definitions should be invited to take a crack at Section 100.
Legal methods, including tax strategies, cannot be patented because they cannot qualify as an “invention” within the meaning of the Patent Act (which does, by the way, purport to define “invention” in Section 100(a)), as explained in my article, “The Patent Office Meets the Poison Pill: Why Legal Methods Cannot Be Patented,” forthcoming in the Harvard Journal of Law and Technology, Vol. 20, No. 2, Spring 2007, available at link to ssrn.com.
The New York Times opined, “While we don’t normally rush to make it easier for the rich to pay less tax, the precedent is a bad one. People should be treated the same under the law, and shouldn’t have to pay a licensing fee for the privilege.”
Let’s ban any patent that helps people spend less money!!
Let’s ban any patent that helps people make more money!!
After all, if weren’t for these spurious expense-avoiding and money-making patents, everyone could avoid more expenses and make more money — and be treated the same under the law!!
Horse crap.
Patents are intended to prevent some people from engaging in behavior that would have otherwise been legal (that is, making, using and selling the invention), while allowing other people to engage in that behavior. Patents inherently treat people different under the law — get used to it, New York Times.
We are also facing the threat of software, business and more generally intellectual method patents in Europe. To date, they are not really enforceable, but the European Patent Office is doing much efforts to have them legalized.
I have written a synthesis paper on this issue, which demonstrates the economic insanity of such patents. It is at:
link to labri.fr
Some sections might be considered as “exotic” from a US point of view, but may yet give food for thought with respect to the current US situation.
Sorry for the typos and bad English it contains.
Good luck with the same problem on your side of the Atlantic.
f.p.
Paul,
Fortuntely or unfortunately, the 1952 Patent Act abolished the standard of invention you would rely on. The courts may have laid down that rule, but Congress abolished it.
There is no such thing as “invention” in the sense you mean in the law any longer. It has not existed for over 50 years. Invention is defined by 101, not 103. An invention may be new and yet not a patentable invention under 103.
Further, rather than an issue to be addressed in the context of obviousness, I believe business method patents to be an issue of statutory subject matter, rather than patentability.
Much as the NYT argues, perhaps this kind of thing should be excluded as a matter of public policy from patentability.
I am quite sure, however, that we don’t need the Supreme Court considering this kind of issue in KSR. And if it’s this kind of hack journalism (at least insofar as the patentability test is implicated) that influenced the Supreme Court to grant certiorari, then we’re all in trouble.
NYT writes in terms of “excessive or overly broad patents.” Riddle me this, NYT, what in tarnation is an “excessive” patent?
While “business method” patents are absurd in many respects and to that extent I agree with the sentiment expressed in the article, this is a glowing example of someone who doesn’t know a patent from a pair of shiny shoes writing authoritatively about our patent system. It is just this kind of nattering negativity from nabobs that is causing our patent system to go into spasms.
Ridiculous!
Paul Cole writes
“If we cannot find it, then we should tell our clients not to bother with the patent system and spend the money on a good vacation or a new item of equipment instead.”
Ha! I agree 100% with the sentimeent but such quaint idealism will get you gored here by the patent bulls around here. In New Pamplona, we simply file the applications we are asked to file and zealously advocate for the issuance of those patents before the honorable and highly respected USPTO.
The fact is that every once in a while, something ridiculously broad squeaks through the system and the lucky client is DEE-LIGHTED! All the other clients see that patent and say, “I want one just like that! I want one just like that! How do I get one like that?”
The answer is obvious: do what the other applicant did, i.e., keep filing, filing and FILING!!!!!!!
In this case, the NYT got it right, but I wouldn’t have credited the NYT without some comment, because the NYT has but one opinion about the patent system — negative. Thus, the NYT is bound to get it right some of the time.
Len
___
Patents of the kind objected to by the NY Times illustrate irrational exuberance of a kind which is likely to be curbed by the Surpeme Court.
The US constitution permits the grant of patents to inventors for their discoveries. That means that to qualify as an inventor and make use of the system a skilled person has to have done more than an ordinary mechanic and have made an invention which embodies a discovery made by him.
In the case of a combination invention, which almost all inventions are, the discovery is almost always the new function or result which flows from the discovery. If we don’t have that, we don’t have an invention. That fact has been known since the nineteenth century and is to be found in a succession of US Supreme Court decisions.
As I like to regard my glass as half full rather than half empty, I like the formulation in Carnegie Steel v Cambria Iron Company (1901):
“It may be laid down as a general rule, though perhaps not an invariable one, that if a new combination and arrangement of known elements produce a new and beneficial result, never attained before, it is evidence of invention.”
So the judges have told us for over a century what we as patent lawyers should look for when we write specifications. Why not obey them, and when we find the new result disclose it in our specifications as the basis for inventive merit? If we cannot find it, then we should tell our clients not to bother with the patent system and spend the money on a good vacation or a new item of equipment instead.
After we have found the new function or result, then the teaching/suggestion/motivation test works fine, and provides a justified barrier against hindsight dissection of useful inventions. But before we apply that test, we do need to know that the combination of features in our claim does indeed embody a discovery. It is only too apparent when you read a patent specification whether this test is satisfied or not.
How does this fit in with the NYT editorial? The answer, I fear, is that many members of the USPTO examining staff and many members of the patent bar do not correctly see what is meant by “invention” – a fact that is not surprising when we recall that it has no statutory definition. But the judges have done much to explain what invention is, especially in some of the older case law, and we neglect their advice at our peril. I do not think that software for handling tax returns embodies a discovery of the kind intended by the US constitution – as it was put in the Carnegie case a new result never obtained before.
What has been said above is neither pro-patent nor anti-patent. The EPO implicitly uses the new function or result test as part of its technical problem approach, since the technical problem is a reconstruction from the technical effect(s) that the inventors have achieved. Over a period of approaching 30 years the test has been applied routinely by the EPO and has resulted in granted patents running into the hundreds of thousands, and the decision of opposition cases now running into the tens of thousands. These patents include many relating to computer software inventions, the attitude of the EPO examining divisions being that they are prepared to grant such patents provided that a technical effect can be demonstrated, the invention does not lie wholly in the field of business andministration, and grant of a patent will not make the EPO appear ridiculous in they eyes of of software writers and developers.
I hope that the Supreme Court in KSR will take the opportunity to fix rather than simply meddle with the patent system by propounding a sensible and workable test for inventive step that will command wide acceptance and stop silly patents issuing that bring the system into discredit. The Supremes could do worse than have a look at what we are doing in Europe. In olden days the UK government used to have a policy of “splendid isolation” and the idea seems to have taken root in the USA – few of the briefs in the KSR case say anything about standards of inventive step in other jurisdictions despite the US having signed up to the PCT which in its provisions and implementing regulations sets out a highest common factor amongst the laws of the contracting states. In Europe I believe we have a good and workable test for inventive step, and have managed to escape some of the worst follies of business method patenting, and those in the US should spare time to have a look at what we are doing over here.
link to breakingnews.redstate.com
Scroll down to his criticism of media reporting court decisions.
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