State of Innovation

Patents and Innovation Economics

Business Method Patents: A Solution?

I have been particularly critical of the whole notion of business method patents.  Every patent is part of a business and any method patent is therefore broadly speaking a business method patent.  The first patent issued in the US was a method of making potash.  Since making potash is/was a business the very first patent issued in the US was a business method patent.  The people who argue against business method patents have failed to provide a consistent, clear definition of what they mean.

I have also defined an invention as a human creation with an objective result, while art is a human creation with a subjective result.  By objective result I mean that the invention has a repeatable result.  For instance, a patent for an incandescent light bulb always produces light when the correct electrical signal is applied to the light bulb.  Just because a person performs one of the steps in a claim does not make it invalid.  For instance, in the patent for the method of making potash a person performed many if not all the steps.  However, if the person is making a non-objective evaluation or decision as part of the method, then the process does not have a repeatable or objective result.  This is why most management theories are not patentable.  For instance, the popular SWOT (Strengths, Weakness, Opportunities, Threats) analysis relies on experts to define each of these points.  If you put different experts into the process then you get a different result.  On the other hand double entry accounting yields the same results no matter who is performing the process (as long as they apply it correctly), so it has an objective or repeatable result.

Using this standard I have found that a number of ‘business method’ patents that are invalid.  These patents rely on the use of subject matter experts to evaluate something and then provide input in the middle of a process.  This does not result in an objective, repeatable result.  Now if these experts’ subjective opinions are at the beginning of a process, then this may still provide an objective result.  For instance, if the SMEs provide a subjective 1-10 evaluation of certain Strengths in a SWOT analysis and the invention then processes these to determine the mean or rank them is some way, then this is an invention, because if the process receives the same inputs it will provide the same output, i.e, it is repeatable and objective.  Alternatively, if the SMEs are provided with processed information at the end of the process, then this is an invention.

January 21, 2014 Posted by | -Law, -Philosophy, -Prosecution, Patents | , | Leave a comment

Does the Myriad Decision Constitute a 5th Amendment Taking?

The Supreme Court in ASSOCIATION FOR MOLECULAR PATHOLOGY ET AL. v. MYRIAD GENETICS, INC., ET AL retroactively withdrew the property rights of hundreds if not thousands of inventors, by stating patents to isolated forms of DNA are not patent eligible.  The relevant part of the 5th amendment states:

nor shall private property be taken for public use, without just compensation

Patents are private property, they are owned by private individuals and the statute says they have attributes of personal property.  The Myriad decision is not just relevant to Myriad but thousands of patents.  It was a long established policy of the Patent Office to issue patents to isolated strands of DNA.  This decision changes that policy and invalidates these patents, which eliminates the patent holders’ property rights.  There was not compensation, so the question is whether this is a public use?  People often state that patent right revert to the public, but of course what really happens is there are no rights in the invention.  The situation is roughly analogous to the EPA regulating that no building can occur on wetlands.  Governmental land-use regulations that deny the property owner any economically viable use are deemed a taking of the affected property. See, e.g., Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1982), First English Evangelical Lutheran Church v. County of Los Angeles (1987).  Here the Supreme Court has denied a group of patent holders and economically viable use of their property.

These sort of broad policy changes by the courts are clearly unfair to patent owners.  The patent owner who applied for a patent when it was the clear policy of the Patent Office to allow patents on isolated strands of DNA has not done anything wrong.  If the policy had been different then they might of structured their claims to their patent differently or invested their efforts in other areas of invention.  At the least the aggrieved patent holders should have a right to a reexamination that allows them to introduce new claims based on the Myriad decision.

June 18, 2013 Posted by | -Law, -Philosophy, -Prosecution, Patents | , | 2 Comments

Patent Office Uses Restriction Requirement to Limit Scope of Claims

Periodically, the PTO decides they need a more aggressive (more European) approach to restrictions.  This practice not only fails to follow the law but it is an attempt to use restriction practice to limit the applicant’s right to define their invention.  In other words, it is a backhanded way of limiting invention under 35 USC 101 or 35 USC 103.

According the MPEP 803,

There are two criteria for a proper requirement for restriction between patentably distinct inventions:

(A) The inventions must be independent (see MPEP § 802.01, § *>806.06<, § 808.01) or distinct as claimed (see MPEP § 806.05 – § *>806.05(j)<); and

(B) There *>would< be a serious burden on the examiner if restriction is >not< required (see MPEP § 803.02, **> § 808<, and § 808.02).

 The statutory basis for restriction requirements is 35 USC 121, which states

If two or more independent and distinct inventions are claimed in one application, the Director may require the application to be restricted to one of the inventions. If the other invention is made the subject of a divisional application which complies with the requirements of section 120 of this title it shall be entitled to the benefit of the filing date of the original application. A patent issuing on an application with respect to which a requirement for restriction under this section has been made, or on an application filed as a result of such a requirement, shall not be used as a reference either in the Patent and Trademark Office or in the courts against a divisional application or against the original application or any patent issued on either of them, if the divisional application is filed before the issuance of the patent on the other application. If a divisional application is directed solely to subject matter described and claimed in the original application as filed, the Director may dispense with signing and execution by the inventor. The validity of a patent shall not be questioned for failure of the Director to require the application to be restricted to one invention.

Why does the MPEP change “independent and distinct” to “independent or distinct?”  It appears the Patent Office’s is not following the law and attempting to make it easier to require a restriction.

The question the statute leaves unanswered is what is an independent and distinct invention.  According to the MPEP 802.1:

The term “independent” (i.e., **>unrelated<) means that there is no disclosed relationship between the two or more inventions claimed, that is, they are unconnected in design, operation, and effect.

According the MPEP 802.2 the term distinct means

Related inventions are distinct if the inventions as claimed are not connected in at least one of design, operation, or effect.

From the above it is clear that “distinct” casts the widest net.  I will note the MPEP suggests that the case law on point does not always use the above definition.  The important thing to remember is that we are talking about the inventions as claimed.  Thus, if any set of claims incorporates both inventions, they are clearly connected by design, operation or effect.

The Patent Office when issue a restriction requirement often asserts the combination/sub-combination rule to argue that two inventions in an application are distinct.  However, this rule is still based on how the combination/subcombination are claimed and requires the PTO show that it would be a serious burden if the restriction were not upheld.

Unfortunately, the PTO often ignores the “claimed” requirement for distinct inventions.  If the PTO is allowed to do this it arbitrarily limits what the applicant can claim as their invention.  Every invention is a combination of known elements (conservation of matter and energy) and when the PTO incorrectly limits which subcombinations the inventor can claim, they limit the right of the inventor to define what their invention is.  This has the same effect as limiting what the inventor can claim under 35 USC 101 or 35 USC 103.  From a practical point of view this arises when a subsequent Office Action rejects the claims based on certain prior art and the applicant then wants to modify their claims to incorporate the features of one of the subcombinations.  The PTO disallows this amendment by suggesting the applicant has not selected that subcombination.  This practice is wrong, illegal, denies the applicant of due process, and denies the applicant’s right to define their invention.


August 22, 2012 Posted by | -How to, -Law, -Prosecution, Patents | , , , , , | 1 Comment

New Ex-Parte Appeals Rules from the USPTO

The USPTO just issued new rules for ex-parte Appeals.  These changes appear to be an honest attempt to reduce the unnecessary paper work and formalities associated with Appeals.  They also attempt to deal with Examiner’s introducing new grounds of rejections during appeals.  However, they do not deal with the churning of Appeals where the PTO decides to reopen prosecution and this process repeats itself several times with no resolution for the applicant.  Here are the notable changes according to the USPTO:

The notable changes to the rules are: (1) The Board will presume that an appeal is taken from the rejection of all claims under rejection unless cancelled by an amendment filed by appellant (final Bd.R. 41.31(c)); (2) the Board will take jurisdiction upon the filing of a reply brief or the expiration of time in which to file such a reply brief, whichever is earlier (final Bd.R. 41.35(a)); (3) the requirements to include statements of the status of claims, status of amendments, and grounds of rejection to be reviewed on appeal and the requirements to include an evidence appendix and a related proceedings appendix are eliminated from the appeal brief (final Bd.R. 41.37(c)); (4) the Board may apply default assumptions if a brief omits a statement of the real party-in-interest or a statement of related cases (final Bd.R. 41.37(c)(1)(i) and (ii)); (5) for purposes of the examiner’s answer, any rejection that relies upon Evidence not relied upon in the Office action from which the appeal is taken (as modified by any advisory action) shall be designated as a new ground of rejection (final Bd.R. 41.39(a)(2)); (6) an appellant can await a decision on a petition seeking review of an examiner’s failure to designate a rejection in the answer as a new ground of rejection prior to filing a reply brief (final Bd.R. 41.40) and thereby avoid having to file a request for extension of time in which to file the reply brief; and (7) the examiner’s response to a reply brief is eliminated.


December 1, 2011 Posted by | -Prosecution, Patents | Leave a comment

Conservative Groups: Patent Reform Bill a Disaster for US

According to Tech Daily Dose, 20 conservative groups voiced their opposition to the so called Patent Reform bill in the Senate.  Here is their letter.

“Dear Speaker Boehner, Senators Reid and McConnell, and Rep. Pelosi:

We are writing to ask that you prevent the passage in this Congress of patent legislation that hampers U.S. competitiveness and threatens American jobs by undermining property rights. With our economy in crisis and millions of Americans out of work, this is the wrong time to jeopardize our recovery by passing legislation to remove incentives for innovation and commercialization of new products and processes.

Now being discussed is so-called “patent reform” legislation, like that offered by Rep. John Conyers and Senator Leahy in the 111th Congress, which would cripple most of America’s smaller inventors, research consortia and universities, and even the larger industrial firms that depend on patents. Downgrading patent rights — which are fundamental property rights — will hamper innovation and domestic manufacturing. Unfortunately, some Members of Congress are poised to move ill-considered patent legislation through the House and Senate this year. Diminishing patent rights would be dangerous to the future of our economy and our country’s global leadership, and must be stopped.

The Federal Government does many things that exceed its constitutional authority and hamper our free- enterprise system. In contrast, issuing patents is one of the few things specifically mentioned in the Constitution. According to Article 1, Section 8: “The Congress shall have Power . . . [t]o 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.” The Founders understood that protection of intellectual property was vital to innovation and progress. President Washington urged the first Congress of the United States to pass laws encouraging American innovation. James Madison wrote in the Federalist Papers, “The utility of this power will scarcely be questioned.” Yet, today it is being threatened in the Senate and the House – at the behest of a minority of large technology companies.

Sadly, the Federal Government has fallen down in its patent responsibilities and has become a bottleneck to genuine innovation. According to the United States Patent & Trademark Office (USPTO), the average patent applicant must wait 25 months before his or her application is first acted upon. The logical remedy to this problem is to fully fund the USPTO, allowing it to set user fees and keep them to run USPTO efficiently and effectively, rather than letting them be diverted to other parts of the government. In recent years, approximately $700 million originally allocated to the USPTO has been used for general government spending, causing a huge backlog of approximately 720,000 patent applications. This is the situation that must be reformed immediately.

Instead, some in Congress – again following the lead of several large IT companies — want to make it easier to infringe patents, easier to challenge patent rights in administrative proceedings and in the courts, and more expensive for inventors to defend their patents. By creating a new, expensive procedure to challenge the validity of a patent throughout its life, the benefits to patent-holders become far less certain. Incentives to seek patents are severely weakened, and venture capitalists face much higher risks when backing new ideas. The cumulative effect of such “reforms” would be to raise barriers to innovation and dis-incentivize commercialization of those ideas. Changes along these lines will certainly not help us to remain economically competitive in the world economy, which is why officials in China and India have hailed the proposed “reforms” as helpful to their economic interests.

Additionally, some of these so-called reforms have been proposed in the name of “harmonization” with foreign law. Frankly, this notion is misguided. Our competitors should have to “harmonize up” to our superior intellectual property regime, rather than our having to weaken our patent system and “harmonize down” to their levels. Does the United States really need to be “harmonized” with a calcified European system or the impossibly unfair Japanese system, not to mention the Chinese system, where intellectual property theft is a way of life? Such “patent reform” will lead to the plundering of American intellectual property and the loss of American factories and jobs to overseas competitors.

The proposed reforms really benefit large, established corporate market players at the expense of U.S. economic growth. Start-up companies drive innovation and job creation. About one-third of all patent applications are made by independent inventors, small companies, universities, and nonprofit research groups. Some larger IT companies, however, which ironically benefited greatly from the current patent system when they were start-ups, fear having their market positions disrupted or constrained by new ideas outside their control. They want current law rewritten to make challenges to patents easier and more frequent after they are granted.

This phony, market-distorting “patent reform” is bad for America. We ask that you stop any such legislation from reaching the floor and protect the property rights enshrined in the Constitution. Our nation’s economic future depends on your cooperation.”

Phyllis Schlafly
Eagle Forum
Kevin L. Kearns
US Business and Industry Council
Morton Blackwell
Chairman, Weyrich Lunch
Colin A. Hanna,

February 25, 2011 Posted by | -Prosecution, Patents | , , , , , , , | 1 Comment

Patent Ombudsman Program: A First Review

I have a patent case that appeared to be going nowhere and a client who did not want to wait for the appeal process.  As a result, we decided to try the Ombudsman Program.  The facts are that we had filed four separate responses (one RCE) and had three telephone interviews in this case.  We also filed a Notice of Appeal with a Pre-Appeal Brief.  The case was reopened after the Pre-Appeal Conference.

The inventor is highly educated and well respected in the area of technology of the invention.  The inventor has several other patents in this area of technology and is over 65 so we filed a Petition to Make Special.  The company is a typical start-up that is looking to raise additional financing in order bring the invention to the market.  Having an issued patent would provide a huge boost to their fund raising efforts.  This funding would provide jobs and the technology will save billions of dollars a year to the U.S. economy.  This is exactly the sort of company that drives employment in the U.S. according to the Kauffman foundation.  Their study showed that all net new jobs in the U.S. are created by new companies – to see the study click here.  High paying, high quality jobs are mainly created by companies with new technology.

I was concerned that the Ombudsman Program may not be able to help me, since it is clear that it is not designed to circumvent the normal examination process.  The essence of the problem was failure to follow the requirements for compact prosecution.  In the first telephone interview, I explained that our technology was able to cut a channel in the substance without creating enough heat to change the state of the material surrounding the channel.  All the prior art not only generates enough heat to change the state of the material it is a goal of the prior art to generate this heat and cause the change in the state of the material.  During the first telephone interview, the Examiner and the SPE told me the claims were just TOO BROAD.  Of course, no such rejection exists under the law and the Ombudsman program should be able to deal with this issue.  While Jon Dudas may have thought this was valid rejection, he was not a patent attorney and his ignorance of patent law and technology would fill whole libraries.  In an attempt to work with the Examiner, I added additional structure to the claims.  Some of this structure made it even more clear that we were not heating the material and changing its state.  I was told that the changes looked good and it was likely we would receive a Notice of Allowance, but they could not make any promises.  The next Office Action cited a new reference that again purposely generated enough heat to change the state of the material.  This process was repeated three times.  This sort of switch and bait process where the applicant amends the claims based on an interview to only be shot down in the next Office Action became standard under the Dudas’ regime.  In many cases, the only reason the applicant agreed to the amendment was to obtain allowance, not because they agreed with the Examiner.  These amendments to the claims should be considered contingent on allowance.  Otherwise they should be withdrawn.

Only once was a prior art reference not in the category of purposefully generating heat while cutting to change the state of the material, but it was even more irrelevant to the invention.  Then we filed a Notice of Appeal with a request for a Pre-Appeal Conference.  The result of the Conference was to reopen prosecution with another reference that again purposely generated enough heat to change the state of the material.  That was when we decided to try the Ombudsman Program.

I sent my issue into the Ombudsman form and was quickly contacted by an Ombudsman.  Our telephone conversation was very cordial and they said that they would contact the SPE.  This process took awhile because it was around the holidays.  Eventually, I received a call from the SPE.  The SPE has not reviewed the case, they had no idea of the issues involved, and instead of listening to me they quickly starting arguing about the case.  The SPE even went so far as to call our invention “MAGICAL” because the claims state that we generate essentially no heat during the cutting process.  This was not only rude it is wrong.  I have a MS in physics and I clearly understand that any frictional engagement is going to generate heat.  However, we have viewed this procedure with an infrared camera with sensitivities down to 1/10th a degree and the surrounding material does not appear to heat up at all.  The phrase about generating essentially no heat is clearly true and is in context of the prior art which generates enough heat to change the state of the material.  In order to change the state of the material it must be heated around 32 degrees Celsius above its standard operating temperature.  The most likely reason we do not generate any measurable amount of heat in the cutting operation is that the cutting tool starts at ambient room temperature, which is below the operating temperature of the material being cut, and the material is relatively soft so the cutting process takes very little time and does generate much frictional heat.  In the end, all I got was another useless interview the SPE.  I could have done this without contacting the Ombudsman.

Conclusion – Is it worth it to use the Ombudsman Program?

1) It is possible I asked too much of the Ombudsman Program, but I should have told this in the initial conversation with the Ombudsman.

2) The Ombudsman program should be able to at least demand that Examiner and SPE comply with the requirements for compact prosecution.  This is a procedural issue which is the type of issues the Ombudsman Program is suppose to deal with.  It is also a huge problem with Examiners trained under the Dudas’ regime.  The Ombudsman should be able to demand that the Examiner and SPE clearly explain why they keep citing new art with each new Office Action.  If the Examiner and SPE cannot explain this to the satisfaction of the Ombudsman, the Ombudsman should have the authority to demand that no new art be introduced in the case.

Note that the excuse by Examiners and SPEs that changes to the claims required an additional search is usually not valid.  The Examiner is suppose to perform their search based on the specification, not the claims.  None of the changes to the claims in this case in anyway change the basic thrust of the invention.

3) I have another case where an Office Action after the Appeal has raised the same issues that were decided on Appeal.  This would be a perfect case for the Ombudsman program to demand the Examiner and SPE comply with the law and not reargue issues already decided, but based on my present experience I doubt I will contact the Ombudsman program.

4) It would be nice for the PTO or anyone reading this to post any successes they have had with the Ombudsman Program so that we all know what issues they are capable of solving.


February 2, 2011 Posted by | -How to, -Prosecution, Patents | 4 Comments

USPTO Allowance Rate Increase to 45.6%

This is the first time since 2003 that the allowance rate has increased.  For a historical graph see Patent Allowance Rate Falls (Again).  This is excellent news and shows that David Kappos, Director of the Patent Office, has started to reverse the economically disastrous policies of Jon Dudas.  The more realistic allowance rate that ignores RCE (Requests for Continued Examination) is 61.1%.

The USPTO now has a Data Visualization Center, shows the allowance rate and well as a number of other useful metrics updated monthly.  Another important metric is total pendency time (traditional) which stands at 35.4 months.  This means that if you file a patent application, on average it will take almost three years for it issue.  Another interesting metric is actions per disposal.  This is the number of Office Actions the average application receives before it is allowed, abandoned, or appealed.  This has declined to 2.42.  The total number of actions that an applicant has to endure is particularly important for small entities and independent inventors.  However, this number does not include appeals.  I have had clients that have gone through numerous appeals without any resolution of the issues in the last eight years.  The absurd treatment of these clients’ patent applications would not be captured by this metric.

October 24, 2010 Posted by | -Prosecution, Patents | Leave a comment

Obviousness – Flow Chart

Novel2This is my second post on the nonobviousness standard for patents (35 USC 103).  The earlier post focused on the practical questions that an inventor and his attorney face when negotiating with the Patent Office (PTO).  This post attempts to provide a rational approach to the nonobviousness requirement.

Once it has been determined that a patent claim is novel, step 10 in the flow chart, there are only two things that can make the invention nonobvious.  One is a new result and the other is a new combination that has provides same result in the prior art.  At step 12, we determine if the invention has a new result.  For instance, Edison’s light bulb had a new result of a high resistance filament.  This result is important because it makes it possible to build an economically Continue reading

October 20, 2009 Posted by | -How to, -Philosophy, -Prosecution, Patents, Uncategorized | , , , , | 4 Comments