State of Innovation

Patents and Innovation Economics

Is 35 USC 101 Judged by the Claims?: CLS Bank v. Alice Corp CAFC en banc decision: Nation of Men

CLS Bank v. Alice Corp was an en banc decision that attempted to set the record straight on 35 USC 101.  IT FAILED.  The patents in suit deal with settlement risk in financial transactions.  The holding can be boiled down to we don’t like patents on software or on financial transactions and we really don’t like patents that cover both.

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May 17, 2013 Posted by | -Law, News, Patents | , , , | 1 Comment

CLS Bank v. Alice: 35 USC 101 Presumption of Validity

The en banc rehearing of this case is considering whether the presumption of validity applies to under 35 USC 101.  The statute involved in this question is 35 USC § 282 which states:

(a) In General.— A patent shall be presumed valid. Each claim of a patent (whether in independent, dependent, or multiple dependent form) shall be presumed valid independently of the validity of other claims; dependent or multiple dependent claims shall be presumed valid even though dependent upon an invalid claim. The burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity. (Emphasis added)

CLS Bank argued in their brief that validity and eligibility are different and 35 USC 101 is directed to the latter.  Nothing in the statute suggestions that there is a distinction between eligibility and validity.  How can a patent be valid and not meet the requirements of 35 USC 101?  It can’t.  When you turn the question around you see the absurdity of this position.  In addition, the reason for a Patent Office is to review inventions to determine if they are eligible for a patent.  If the courts are going to ignore the determinations of the Patent Office, then we should just have a registration system.  In every other area of law the courts are extremely deferential to administrative agency decisions, but not with patents.  Ask yourself why this is.  I would suggest the reason is that every other administrative agency increases the power of government, but the Patent Office increases the power of the people.  It is patently unfair that an inventor has to defend their patent, two, three or more times and on multiple issues.  If the EPA or the FCC or the FTC, etc. had to survive this scrutiny or legislation in general, almost none of the laws or regulations passed in the last decade would stand.  It is time to end the double standard that gives a pass for every regulation that increases government power, while forcing private people to jump through hoops.  In fact it is time to reverse the process, as the Founders intended.


NO RATIONAL person would buy CLS argument that there is a difference between validity and eligibilityBut that does not mean the Judges on the CAFC or Supreme Court will not buy into CLS argument.


For more on the earlier decision CLICK HERE.

April 15, 2013 Posted by | -Law, -Legal, Patents | , , , , , | Leave a comment

CLS Bank v. Alice Corp: Abstract Ideas

This is another case looking at subject matter jurisdiction (35 USC 101) of patents.  Alice Corp sued CLS Bank for infringement under four patents.  The patents are directed to eliminating the risks associated with financial transactions. Specifically, something called settlement risk.

The Federal Circuit has ordered a rehearing of the case en banc.  In the previous opinion of the court, they found the claims were directed to an abstract idea and therefore not patent eligible.  35 USC 101 states:

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.

First of all let’s acknowledge that this is bad legislative drafting since section 101 talks about new and section 102 of the patent statute is directed to what is new (novelty).  Of course the AIA did not correct this poor legislative drafting, because it was too busy handing out goodies to special interest groups.

Because the “new” requirement of 35 USC 101 is redundant with that more clearly defined in 35 USC 102 we are going to ignore it and assume that the new requirement of 101 is met if the invention meets the requirements of section 102.

Second of all let’s notice that “abstract idea” is never mentioned in the statute.  Where does this theory that an abstract idea is not patent eligible come from?  It comes from the Supreme Court.  See LeRoy v. Tatham, 55 U.S. 156, 14 How. 156, 14 L.Ed. 367 (1852) and the most recent history starts with Gottschalk v. Benson, 409 U.S. 63 (1972).  Does it make any sense?  Before we can answer that we need to define what we mean by an “abstract idea.”  Some of the potential definitions of “Abstract” from are provided below:

1. Considered apart from concrete existence: an abstract concept.

2. Not applied or practical; theoretical. See Synonyms at theoretical.

3. Difficult to understand; abstruse: abstract philosophical problems.

4. Thought of or stated without reference to a specific instance: abstract words like truth and justice.

5. Impersonal, as in attitude or views.

6. Having an intellectual and affective artistic content that depends solely on intrinsic form rather than on narrative content or pictorial representation: abstract painting and sculpture.


Clearly the first or second definitions appear to be the closest to what the Supreme Court means when speaking of patents.  Now here are some of the definitions of “idea” from the same source.


1. Something, such as a thought or conception, that potentially or actually exists in the mind as a product of mental activity.

2. An opinion, conviction, or principle: has some strange political ideas.

3. A plan, scheme, or method.

4. The gist of a specific situation; significance: The idea is to finish the project under budget.

5. A notion; a fancy.


The first definition appears to be the most appropriate.  So what we end up with is a thought or conception that is separate from concrete existence or not applied to the practical.  None of the judges using the “Abstract Idea” standard have bothered to define what they mean by these words.  In the broadest sense of the word abstract, every patent defines an invention that has been abstracted.  An invention by definition is an abstraction or a category of things.  If this is what the judges mean, then the standard is complete nonsense, since it negates every patent.  Not defining your terms leads to an Alice in Wonderland world, where words mean whatever the person using them wants them to mean and the reader/listener has no idea what they are talking about.  Failure to define one’s term is the province of charlatans.

If we use the definition of an Abstract Idea given above “a thought or conception that is separate from concrete existence or not applied to the practical”, then every invention that meets the requirements of 35 USC 112 first paragraph is not an Abstract Idea, since this section requires that the invention be described in a manner so one skilled in the art can practice the invention.  Something that can be built and used (practiced) is concrete and applied, therefore it is not an abstract idea.  The ABSTRACT IDEA exclusion to 35 USC 101 should be dropped, because any logical definition of an abstract idea is excluded by 35 USC 112, first paragraph.  It should also be dropped, because, Judges should not read into statutes things that are not there.

A truly Abstract Idea is not a “process, machine, manufacture, or composition of matter” under 35 USC 101.  The Court need proceed no farther.  But the real thrust behind the Abstract Idea exclusion is to provide a broad (arbitrary) basis for Judges who do not like patents or do not like software patents or patents directed to financial transactions or directed to medical technology to rule patents invalid.  This turns patent law into nothing more than glorified politics.  It is shameful act by a bunch of charlatans and they are getting away with it, because litigants have not demanded terms be defined.

The CLS Bank v. Alice Corp case is nothing more than an attempt to steal the invention of Alice corporation, by a Kangaroo Court methods. 

October 22, 2012 Posted by | -Law, Patents | , , , , , , | Leave a comment

Supreme Court ‘Only Black Magic Patent Eligible’

The Supreme Court ruling in Mayo Collaborative Services v. Prometheus Labs., Inc. (Supreme Court 2012) was released on March 20, 2012 and they held unanimously against Prometheus and invalidated two patents under 35 USC 101.  My title may be a bit salacious, since the holding in the case does not limit patents to just black magic, it limits them to magic.  The holding on p. 4 states:

 The steps in the claimed processes (apart from the natural laws themselves) involve well-understood, routine, conventional activity previously engaged in by researchers in the field. P. 4

And adds:

 The three steps (of the claim) as an ordered combination adds nothing to the laws of nature that is not already present when the steps are considered separately.  P. 10

Logically, the Supreme Court is saying that known steps or elements in combination with a law of nature is not patent eligible.  First every invention ever made involves steps (elements) that were known individually before the invention, and laws of nature.  You cannot create something out of nothing.  Section 112 means that you have to be able to describe your invention in terms known to those skilled in the art.  Thus the Supreme Court’s holding means that any invention that satisfies 112 is unpatentable under 101.  The only inventions that will satisfy 101 are those that violate laws of nature or involve creating something out of nothing – or magic.

Get out your cauldrons-

For the lawyers in the audience this case reintroduces the point of novelty test nonsense.

I have written extensively about this case in the following posts and will not reiterate my earlier points.

Justice Breyer: Patent Ignorance 

Mayo v. Prometheus: An Update

Mayo v. Prometheus – Supreme Court Grants Cert (Again) 


But for those not familiar with the case here is a little background

The patents (6,355,623 and 6,680,302) claim methods for determining the optimal dosage of thiopurine drugs used to treat gastrointestinal and non-gastrointestinal autoimmune diseases. Thus, the questions in this case are whether determining optimal dosages of thiopurine drugs to treat autoimmune diseases exists in nature separate from man and whether this solves an objective problem? Clearly, determining optimal dosages does not exist in nature for any drug and the patent solves the objective problem of determining the optimal dosages of thiopurine drugs for autoimmune diseases.

Ayn Rand discussed this exact issue in Atlas Shrugged.  James Taggart is discussing Rearden Metal with his wife:

”…’he didn’t invent smelting and chemistry and air compression.  He couldn’t have invented HIS metal but for thousands and thousands of other people. HIS Metal! Why does he think it’s his? Why does he think it’s his invention?  Everybody uses the work of everybody else. Nobody ever invents anything.’ (Jim Taggart)  She(Jim Taggart’s Wife) said, puzzled, ‘But the iron ore and all those other things were there all the time. Why didn’t anybody else make that Metal, but Mr. Rearden did?’”  Kindle Location 5796-5802

These exact questions could be asked of the Supreme Court.  All these other steps were available to other people, but no one else discovered how to use thiopurine to safely treat Crohn’s disease.  In fact, the Supreme Court admits as much.

 . . . and it has been difficult for doctors to determine whether for a particular patient a given dose is too high, risking harmful side effects, or too low, and so likely ineffective.  p. 4

The reality is that this Supreme Court is anti-patent and anti-property rights.  The opinion states patents are monopolies in three spots and mentions rent seeking in one spot, but it does not mention that the Constitution clearly states that inventors have a RIGHT to their invention and it does not state that patents are property rights.  This case is just another example that the anti-property rights and anti-Natural Rights crowd is in control of our government.  This case will have long term negative ramifications for the US economy.  The US is losing its technological advantage because it believes that inventors should work for free.  Note that Singapore is taking another path and trying to figure out how to strengthen their patent laws (see Singapore and the US Divergent Patent Policies)

March 21, 2012 Posted by | -Law, -Philosophy, Patents | , , , , , | 5 Comments

Justice Breyer: Patent Ignorance

PatentlyO reported the following hypothetical.

In Mayo v. Prometheus, the Supreme Court is again addressing patentable subject matter. During oral arguments, Justice Breyer came-up with a hypothetical invention to help him draw the line on patentable subject matter.

JUSTICE BREYER: Suppose I discover that if … someone takes aspirin … for a headache and, you know, I see an amazing thing: if you look at a person’s little finger, and you notice the color [indicates that] you need a little more, unless it’s a different color, you need a little less. Now, I’ve discovered a law of nature and I may have spent millions on that. And I can’t patent that law of nature, but I say: I didn’t; I said apply it. I said: Look at his little finger.


JUSTICE BREYER: Okay? Is that a good patent or isn’t it?

MR. SHAPIRO: No … Well, because you — you’ve added to a law of nature [to] just a simple observation of the man’s little finger.

First of all taking aspirin is not a law of nature.  The law of nature would be how the body reacts to aspirin, but the process of taking aspirin is not a law of nature.   If you use this information to observe whether someone is taking too much or too little aspirin, then you have applied that “law of nature” to a human problem.  Namely, how to know how much aspiring one should take for a headache.

The Supremes struggled to find a hypothetical to understand 35 USC 101 according to the reports.  Here is a simple 35 USC 101 test that even they should be able to apply correctly.

Anything that man creates to solve an objective problem is an invention.  If a device/service is not found in nature separate from man then it is an invention.  For example, the ability to create fire or harness it is an invention of man.  No other animal has the ability to create or harness fire.  Man did not have some sort of inherent knowledge of how to create or harness fire, so creating fire is an invention.[1]

Applying this information to the above hypothetical, aspirin is created by man.  It does not exist separate from man, so this hypothetical is clearly within 35 USC 101.  Taking aspirin is not a part of nature.  Observing the effects of taking aspirin is not a part of nature.

Mayo’s argument in this case boils down to patents should not exist, or at least should not be apply to Mayo.

[1] However, it is no longer novel and therefore you could not patent for creating fire.


December 8, 2011 Posted by | -Law, News, Patents | , , | 4 Comments

Ultramercial v. Hulu

This case is directed to a method of delivering copyrighted material over the web.  It provides some interesting quotes related to software and web based inventions.

“[I]nventions with specific applications or improvements to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act.” Research Corp., 627 F.3d at 869.

The digital computer may be considered by some the greatest invention of the twentieth century, and both this court and the Patent Office have long acknowledged that “improvements thereof” through inter-changeable software or hardware enhancements deserve patent protection. Far from abstract, advances in computer technology—both hardware and software—drive innovation in every area of scientific and technical endeavor.

The eligibility exclusion for purely mental steps is particularly narrow. See Prometheus Labs., 628 F.3d at 1358 (noting that claims must be considered as a whole and that “the presence of mental steps [in a claim] does not detract from the patentability of [other] steps”).

Perhaps this is the beginning of a resurgence of rationality with respect to 35 USC 101 and software.


September 15, 2011 Posted by | -Law, Patents | , , | 2 Comments

Cybersource v. Retail Decisions: 101 Judicial Activism

This case is another example of the courts ignoring the statutory language and not understanding basic technical and patent concepts.  Cybersource invented a process for determining if credit card fraud was likely in an online transaction based on the relationship between the IP (Internet Protocol) information’s past association with the credit card.  They sued Retail Decisions for infringement of their patent 6,029,154 and Retail Decisions counter that the claims were unenforceable because they were not directed to statutory subject matter.

The court first examined claim 3, which had undergone a reissue examination.  Claim 3 is a method of first discovering the IP information normally used with the credit card and then determining if this indicative of a fraudulent transaction.

3.  A method for verifying the validity of a credit card transaction over the Internet comprising the steps of:

a) obtaining information about other transactions that have utilized an Internet address that is identified with the [ ] credit card transaction;

b) constructing a map of credit card numbers based upon the other transactions and;

c) utilizing the map of credit card numbers to determine if the credit card transaction is valid.


The Court found this claim invalid under 35 USC 101, which states

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.

Claim 3 is clearly directed to a process, but somehow the courts have decided to legislate from the bench and add additional requirements.  Here, the court argued that claim 3 did not meet either of the prongs of the machine or transformation test.  Which the court explained, “we held that a claimed process would only be “patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus; or (2) it transforms a particular article into a different state or thing.”  Step (a) requires obtaining information about other transactions on the internet associated with the credit card.  This is going to require a computer to access the internet and acquire this information and store it somewhere, probably on the computer.  In order for the computer to access the internet it needs a modem, which is an electronic circuit that generates voltage signals that are sent over the internet to another computer.  These are physical processes (transform voltages and currents) by machines.  A computer is a machine as is a modem.  This claim clearly meets both the machine and transformation prong of the test.

The court’s response that it would be possible for someone to just look at a previously compiled database of this information is inconsistent with the patent and reality.  The court ignores that a patent is presumed valid, which means that it MUST try to find an interpretation of the claim that is valid. Instead the court does the exact opposite.  A clear reading of the specification finds that a merchant will send credit card information to the internet verification system over the internet or at least over some communication system.  That means the method is tied to a machine, namely a computer and communication system comprising multiple computers.  It also means the computer is transformed.  The voltages stored in its memory change.  It makes no practical sense for this process to be undertaken by hand.  The merchant cannot have a customer wait for hours for a person to review a previously created written record (because if it is a database on a computer – it’s a MACHINE) to create the map of credit card numbers.  Then wait on the person to hand evaluate this information.  This process only makes sense when carried out by machines.  Retail Decisions is not arguing that they be allowed to carry the process out by hand to avoid the claims.  This line of reasoning is completely disingenuous.  This Courts’ reasoning makes a mockery of 35 USC § 282 and 35 USC § 101 and the machine or transformation test.

Claim 2 was a Beauregard claim—named after In re Beauregard, 53 F.3d 1583 (Fed. Cir. 1995)—is a claim to a computer readable medium (e.g., a disk, hard drive, or other data storage device) containing program instructions for a computer to perform a particular process.  This case made it clear that you did not have to claim the computer to meet 35 USC § 101 requirements.  The Court just ignored this case and found claim 2 non-statutory for the same reasons as claim 3.  Whatever happened to stare decisis?  This is a clear case of Judicial Activism.

It is clear from the way the opinion was written that the judges felt the Cybersource patent was just too broad.  However, their reason for rejecting the claim was not on Novelty (102) or nonobviousness (103) it was lack of statutory subject matter.  The opinion seems to show a lack of understanding between the sections 101 and 102/103 of the code.


Non-Patent Attorneys on CAFC

This is another case that demonstrate that a requirement for being a judge on the CAFC should be that you were a practicing patent attorney, who actually prosecuted patent application.  In this case, none of the three judges are patent attorneys and Bryson and Dyk do not have a technical background.  The Court clearly did not understand how the invention worked.  They seem to believe that computer are not machines and perform mental processes.  They do not understand that computers are electrical circuits, the internet is made of computers, and all these computers are transforming voltages and currents, not unlike a transformer.  The judges showed confusion between different sections of the code and they ignored the previous ruling of their own Court.  Patent law is too important to be left to attorneys without the appropriate training.


August 25, 2011 Posted by | -Law, Patents | , , , , , , , | Leave a comment

Mayo Clinic’s Invention Theft Strategy

Mayo clinic’s management is pursuing a business strategy of efficient infringement  – more commonly known as theft of other people’s inventions.  This immoral course of action is exemplified by Mayo’s involvement in two frivolous patent lawsuits Mayo v. Prometheus and ACLU, Mayo et al. v. Myriad and in their support, through their lobbying organizations, for the America Invents Act (H.R. 1249 & S.23). The Act is nothing but a power grab by large multinational companies to steal the inventions of individuals and startups.  The researchers at Mayo better wake up and realize that their managements’ actions, if successful, will not be limited to stealing the intellectual effort of non-Mayo inventors.

Mayo’s argument in the Prometheus case,  patent claims cover a natural phenomenon and are therefore not patentable, does not pass the laugh test.  The Prometheus invention is a method of treating Crohn’s disease.  There is no method of treating Crohn’s disease in nature, other than letting the disease take its natural course.  Mayo’s defense is clearly an immoral attempt to appropriate the property of the inventor.

Mayo and the ACLU’s arguments in the Myriad case run the gamut from: patents are monopolies, to the patent office (PTO) actions violated their 1st Amendment free speech rights, to property rights should not stand in the way of science, to the need of public out weighs the property rights of the inventor, and finally to the idea that patent claims to “isolated genes” cover “products” of nature.  Mayo justification for stealing other people’s property rights is right out of Ayn Rand’s Atlas Shrugged.  Every looter tries to denigrate patents by claiming they are a monopoly.  Patents are granted because the inventor created something new that did not exist before.  This is the basis of all property rights.  The value of science over property rights is also straight from Atlas Shrugged – the State Science Institute (in the novel) makes exactly the same argument.  The needs of the public or the poor are the arguments of every dictator from Hitler, to Stalin, to Mao and now includes the Mayo Clinic.  One argument that was so bizarre that even Ayn Rand could not anticipate it was the free speech claim.  Nothing in patent law or the regulations say anything about speech.  Their argument seemed to be that other people’s property rights were interfering with their free speech rights.  This is a rehash of a Marxist argument,  based on the idea that my need for an outlet for my speech means that you have to give me your property to achieve my need.  It is not surprising to see the ACLU rehashing tired, worn out, and intellectually dishonest socialist arguments, but for Mayo to be associated with them is frightening.

The only argument the trial court addressed was the idea that claims to “isolated genes” are a product of nature.  The trial court opinion was  156 pages of rambling nonsense by a senile judge who does not understand patent law.  Despite this, it is clear to anyone who wants to exercise their reason,  genes are not found in isolation in nature.  Even the argument that they are in isolation during mitosis does not separate them from the cell or from the human body.  As a result, the nonsense argument that this allows companies to own a part of you is without any foundation.

Mayo has not only put forth intellectual dishonest arguments for stealing Myriad’s inventions,  they are also  hypocrites.  Mayo owns three patents directed to “isolated genes”: see USPN 5981217 and USPN 5618695 and USPN 6207375, ironically for Breast Cancer.  The patent, 6207375,  shows that the argument by Mayo researchers, namely, that it is impossible to design around the Myriad patents is nonsense and is being used as just another excuse to steal other people’s property.

Mayo better wake up and realize that using the government to be a parasite works both ways.  With the likely enactment of the America Invents Act, Mayo will soon get a taste of their own medicine.  Unfortunately, they are likely to hurt a number of innocent people along the way.

The researchers at Mayo need to understand that their management will not confine their theft to just outside inventors.  The reason Mayo supports the America Invents Act and is pushing these lawsuits is that they do not want to pay for people’s inventions whether they be internal or external inventors.  Weakening our patent laws has been a favorite way for large companies to reduce the wages they have to pay for engineers and scientists.

These cases are likely the tip of the iceberg of Mayo’s systematic theft of other people’s intellectual property.  The cost of filing a lawsuit has probably discouraged many other’s from filing a patent infringement case against Mayo.  The actions by the management at Mayo should result in their immediate firing, imprisonment for theft and civil racketeering.

June 25, 2011 Posted by | -Philosophy, Patents | , , , , , , | 12 Comments