IP Law Bulletin

In June, the Federal Circuit decided Ultramercial, Inc. v. Hulu, LLC, where a three judge panel held that a claim for an internet and computer-based method was patent eligible subject matter. Chief Judge Rader authored the majority opinion, which provides valuable insight into his approach to patent eligible subject matter and highlights key factors considered for computer-implemented inventions. Judge Rader’s opinion makes clear that he views 35 U.S.C. § 101 as a “course filter” meant to provide only rare exceptions to patentable subject matter. Judge Rader’s analysis focused on the question of whether a claim is directed to a particular application of an idea (patentable) or the idea itself (not patentable). Despite this decision’s insight, questions remain regarding where the line is drawn between claiming an idea or an application thereof, and uncertainty still exists regarding the rest of the court, especially given the fractured nature of the recent CLS Bank Int’l v. Alice Corp. ruling.

In March 2013, the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) issued three informative opinions in Ex parte Erol, Ex parte Lakkala, and Ex parte Smith. In each opinion, the same PTAB panel of five administrative patent judges construed a “processor” as a means-plus-function claim limitation despite both the presumption against such an interpretation when the term “means” is not explicitly used and the U.S. Patent and Trademark Office’s historical treatment of “processor” claims. Specifically, the Board found that the “processor” elements overcame the presumption against means-plus-function treatment and that the claims were indefinite pursuant to 35 U.S.C. §112, second paragraph, (pre-AIA) because the specifications disclosed insufficient structure for the processors to perform the recited functions. The Board’s designation of these opinions as “informative” sends a signal regarding the Board’s intent to provide guidance on how “processor” claims will be interpreted by the U.S. Patent and Trademark Office (USPTO) going forward.

In a highly anticipated decision issued on June 13, 2013 in Ass’n for Molecular Pathology v. Myriad, the U.S. Supreme Court unanimously ruled that isolated DNA sequences are not eligible for patent protection. The Court simultaneously held that cDNA can be patent eligible subject matter – as long as it is distinguishable from natural DNA. Justice Thomas, writing for the Court, clarified that the mixed ruling did not implicate methods, applications of knowledge about genes or alteration of sequences. The Court’s holding affects composition claims for patent owners and applicants, but both patent owners and applicants can take various actions to best protect their interests in view of Myriad.

In the second U.S. Supreme Court opinion this term to address the “exhaustion” of intellectual property rights, the Court unanimously held that the doctrine of patent exhaustion does not permit purchasers of certain types of patented, self-reproducing articles to reproduce the patented articles without the patent owner’s permission. The case, Bowman v. Monsanto Co., involved a farmer, Bowman, who planted and harvested soybeans that were the progeny of first generation soybeans embodying Monsanto’s patented technology. Justice Kagan, writing for the majority, explained that Monsanto’s sale of the first generation soybeans only exhausted its rights in that generation, not in subsequent generations.

When Justices Sonia Sotomayor and Elena Kagan joined the U.S. Supreme Court in 2009 and 2010, respectively, relatively little was known about their positions on intellectual property (“IP”) law. Nutter’s IP Bulletin provided IP records for both Justices prior to their Court appointments in November 2009 (Sotomayor) and September 2010 (Kagan). In the past few years, both Justices have taken part in several decisions involving intellectual property law. Their decisions have generally broadened patent rights post issuance, but the Justices have hesitated to extend patent rights too broadly.

This week the Federal Circuit again raised the bar for succeeding on claims of active inducement of infringement, holding that an alleged infringer’s “good-faith belief of invalidity may negate the requisite intent for induced infringement.” In doing so, it created an additional reason for companies to obtain opinions from counsel on the validity of competitors’ patents.

In a highly anticipated decision issued today in Association for Molecular Pathology v. Myriad Genetics, the Supreme Court unanimously ruled that isolated DNA sequences are not eligible for patent protection. The Court simultaneously held that cDNA can be patent eligible subject matter – as long as it is distinguishable from natural DNA. Justice Thomas, writing for the Court, clarified that the mixed ruling did not implicate methods, applications of knowledge about genes or alteration of sequences.

While the America Invents Act (AIA) brought many significant changes to the U.S. patent laws, there is arguably no more impactful change than the shift from a “first to invent” system to a “first inventor to file” system that occurred on March 16, 2013. This shift has significant effects on patent applications having an effective filing date on or after March 16, 2013. Under prior U.S. law, a patent applicant could rely on the earliest documented date of the invention, and thus obtain a patent over another’s earlier-filed application. Now, under the AIA, the U.S. Patent and Trademark Office (USPTO) will award a patent to an applicant with the earliest effective filing date. The earliest effective filing date is the actual filing date of the application or the date of the earliest priority application.

On May 10, 2013, the Federal Circuit issued a decision in its en banc rehearing of CLS Bank International v. Alice Corp. In a 5-5 split, the Federal Circuit affirmed a district court decision that Alice Corp’s. computer method patent claims, as well as similar claims directed to systems and computer-readable media, are not directed to eligible subject matter under 35 U.S.C. § 101. A total of six opinions were written, showing a deep divide among the judges over the patentability of computer method claims. Certain judges called for Supreme Court guidance, and Chief Judge Randall Rader even included “additional reflections” on the Court’s struggle with this issue. The divided decision once more throws computer method patent claims into uncertainty, but the multitude of opinions from the various judges does provide insight into their thinking that may be valuable to litigants and applicants dealing with computer method patent claims. At this time, however, any consideration of computer method patent claims should occur on a case-by-case basis with the assistance of a patent attorney, as the various analyses from this decision will have to be compared with prior precedent and the particular claims at issue to determine subject matter eligibility.

On April 1, 2013, the U.S. Patent and Trademark Office (USPTO) published interim final rules that implemented changes to patent term adjustment (PTA) provisions mandated by the AIA Technical Corrections Act of January 14, 2013. In addition to streamlining USPTO administrative procedures and procedures by which patentees can challenge PTA calculations, the rules also level the PTA "playing field" for filers of U.S. national stage applications. The new rules apply retroactively to any patent granted on or after January 14, 2013. While the rules became effective as of their publication, the USPTO will accept public comments until May 31, 2013, after which a final rule will be published.