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Re: libdts patent issue?

On 7/21/05, Arnoud Engelfriet <galactus@stack.nl> wrote:
> US Patent class 705 is full of such patents where the examiner
> wasn't "on the ball". Only very recently have I seen US office
> actions where the examiner talks about "technological progress".

Oh, I agree with you completely that this is one of the worst areas of
incompetence and/or regulatory capture in the USPTO.  But it's hard
for me to lay the majority of the blame at the feet of the legislative
or judicial branches, based on what I understand to be the public
record.  Maybe the State Street case was chosen for litigation because
it's an extraordinarily convincing presentation of the facts
illustrating the principle that an invention can solve a microeconomic
problem rather than engineering as such.  If so, it has its parallels
in EPO case law, including two cases cited by your PBS Partnership

> My understanding was that this kind of patent was perfectly
> allowable under US law. There's a useful, concrete and tangible
> result, and you can't throw it out because it's a method of
> doing business. That's how "everyone" interpreted State Street Bank.

There still needs to be an authentic engineering relationship between
the claimed process and a tangible outcome, which I just don't see in
PBS Partnership.  The State Street opinion didn't change that
requirement, and I find it difficult to imagine the Federal Circuit
authorizing the acceptance of the disclosure and claims of #4,750,121
as an "invention".

Generally speaking, the precedential value of an appellate opinion
doesn't extend far beyond its holdings.  The only holdings I can find
in the State Street opinion are:

We hold that declaratory judgment plaintiff State Street was not
entitled to the grant of summary judgment of invalidity of the '056
patent under § 101 as a matter of law, because the patent claims are
directed to statutory subject matter.

OK, that's just a summary of the holding below; no risk of that
statement by itself being dispositive in a later case.

Today, we hold that the transformation of data, representing discrete
dollar amounts, by a machine through a series of mathematical
calculations into a final share price, constitutes a practical
application of a mathematical algorithm, formula, or calculation,
because it produces "a useful, concrete and tangible result" -- a
final share price momentarily fixed for recording and reporting
purposes and even accepted and relied upon by regulatory authorities
and in subsequent trades.

That's a statement that Alappat's "useful, concrete, and tangible
result" test is applicable when the result is market activity rather
than seed-free cotton or goop in a test tube.

Now, if you ask me (IANAL, TINLA), this holding is unfounded in
Supreme Court authority.  The main Supreme Court precedents (Diehr and
Benson) cited as support by the State Street court rely on the 1877
Cochrane v. Deener case, cited in part: "A process is a mode of
treatment of certain materials to produce a given result. It is an
act, or a series of acts, performed upon the subject-matter to be
transformed and reduced to a different state or thing."  That doesn't
sound to me like carte blanche to patent a mode of pricing analysis. 
Flook isn't on point, and to my eye the claim of support from
Chakrabarty is disingenuous at best; I cannot agree that "the Supreme
Court has acknowledged that Congress intended § 101 to extend to
'anything under the sun that is made by man" based on a passing
quotation from legislative history in the Chakrabarty opinion, nor
does a pricing proposal strike me as a "_thing_ made by man".

But I see no indication that State Street Bank sought certioriari; so
we may have to wait for a later business methods case to see whether
the Supremes rip the Federal Circuit a new one for abuse of

By the way, I need to correct something I said earlier.  The State
Street court did not direct the USPTO to cease the practice of
automatically denying patents on business methods.  The USPTO had
already done so in 1996, presumably in part as a consequence of the
Alappat ruling.  The State Street opinion comments approvingly on the
1996 editions of the Manual of Patent Examining Procedures and
Examination Guidelines for Computer Related Inventions, closing with: 
"We agree that this is precisely the manner in which this type of
claim should be treated.  Whether the claims are directed to subject
matter within § 101 should not turn on whether the claimed subject
matter does 'business' instead of something else."

- Michael

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