State of Innovation

Patents and Innovation Economics

What’s Wrong with Patents Today?

A recent order by the Court of Appeals for the Federal Circuit (CAFC) summarizes everything that is wrong with patent law today (and perhaps the US generally).  The CAFC in an order in Cascades vs. Epson, Sony stated “there is no inconsistency in concluding that patent rights are property and that the source of that right is a public right conferred by federal statute”  A number of things should stand out in this statement, for instance the idea that a right is granted by a federal statute.  This means are rights come from government, not as the Declaration of Independence says that they are inalienable.  If rights come from our government, then they can be taken away by the government, which means they are not “rights” but grants.  This idea goes back to the Devine Right of Kings.  The American Revolution was fought over the idea that there is no such thing as the Devine Right of Kings.  However, in the United States today it is clear that the law does not apply to the government, just like it did not apply to the King, it only applies to private citizens.  For instance, see Hillary Clinton, the IRS, Eric Holder, the NSA, the EPA, and on and on and on.

The next thing that should strike you is the phrase “public right.”  What is a public right?  A right is a moral claim to take action and in which no one can morally stop them from taking that action.  Only individuals can take action.  A group all doing the same thing is just a group of individuals in which all of them are taking action.  This nonsense of a public right goes hand in hand with group identity politics, such as women’s rights, Black rights, gay right.

Patents are issued in the name of the inventor(s) not the company employing them, because they recognize that people create inventions not entities.  The inventors legally own the invention (patent) first and then they assign it to the company.  This clearly shows that inventions are owned by the individual(s) not the public.  What is a public right anyway?  Here is how Wikipedia explains a public right.

In America, public rights, as compared to private rights, belong to citizens but are vested in and vindicated by political entities. Public rights cannot be vindicated by private citizens. A right must normally be a private right to be vindicated in court.

A patent does not and never did fit this definition.  A patent is private right and the government is recognizing that right not creating it.  A patent is not like the “right” to a trial by jury, which is not really a right but a procedural guarantee and is still not a public right according to the definition from Wikipedia.


May 13, 2017 Posted by | -Law, News, Patents | , , | Leave a comment

Fallout from Alice: Digitech Image v. Electronics for Imaging

We are beginning to see the absurd results from Alice in the case Digitech Image Technologies, LLC v. Electronics For Imaging, Inc., Case No. 13-1600 (Fed. Cir. July 14, 2014), the Federal Circuit affirmed a district court decision invalidating all claims of Digitech’s patent (U.S. Patent No. 6,128,415).  The invention tags digital images with particular information about the camera and its color/spatial image qualities in a form that is device-independent. The patent includes claims directed to both a “device profile” and a “method of generating a device profile.”  The Court found the claims invalid under 35 USC 101.  Independent Claim 1 states:


1. A device profile for describing properties of a device in a digital image reproduction system to capture, transform or render an image, said device profile comprising:

first data for describing a device dependent transformation of color information content of the image to a device independent color space; and

second data for describing a device dependent transformation of spatial information content of the image in said device independent color space.

According to Patently O:

At the Federal Circuit, the patentee argued that one of skill in the art would understand that the claims required hardware or software within a digital image processing system. However, in an implicit claim construction, the appellate panel rejected that argument – finding that the claims are not so limited. “The claims encompass all embodiments of the information contained in the device profile, regardless of the process through which this information is obtained or the physical medium in which it is stored.” The underlying problem with this analysis is the reality that data is always stored in a physical form lest it disappear.

The court disagreed and found the patent was directed to an Abstract Idea, a term that the Supreme Court has refused to define.  Logically all inventions are directed to an abstract idea, in that they abstract the invention from the particular or specifics.  The only logical definition of Abstract Idea is a thought or conception that is separate from concrete existence or not applied to the practical.  Here the invention is clearly drawn to the practical and is being widely used.

You can argue that patentee wrote the claims incorrectly, but the Supremes would then counter than cleaver draftmanship will not save you from 101.  Of course the Supremes then look to the claims to determine 101 eligibility.  This is circular reasoning on the part of the Supremes.

Claims are supposed to define the invention, they are not the invention.  A definition should not have extraneous information that does not add meaning.  Here the physical structure would not have added anything to the definition.  This is why I have been arguing that 101 should really be about the specification.  Here the patentee clearly describes an invention.  Patent law is devolving back to the 1940s and now we are all talking about how many angels can dance on a pinhead.

July 24, 2014 Posted by | -Law, News, Patents | , , | Leave a comment

Disuniformity: Paper on CAFC’s Failure to Provide Clarity

Disuniformity[1], is an academic paper that concludes the CAFC has had a marked increase in doctrinal disagreement over the last few years.  The paper explains that the whole purpose of the CAFC was to provide doctrinal consistency in patent law.  Perhaps the most interest parts of the paper are on what lead to the creation of the CAFC.  Below are some parts I found interesting.

In the time leading up to the creation of the Federal Circuit, the United States faced economic recession, high unemployment, mass layoffs of scientists and engineers, and extreme inflation. P.2

Gee that sounds like today.  Think there is any correlation between weakening the property rights of inventors and a weak economy?

Other information demonstrated that the patent office was “freelancing” with respect to the standards of patentability

Can anyone say Jon Dudas?  Actually the authors are talking about the PTO in the 1970s, but obviously history repeats itself.  But David Kappos was no saint either, he got rid of the absurd “rejection equal quality” but he helped push the unconstitutional AIA.

Congress, moreover, was informed that the Supreme Court rarely stepped in to resolve inconsistencies in patent law, and might not be well equipped to even if it were so inclined. P. 3

Actually, the evidence is now overwhelming that the Supreme Court justices are not competent to review patent law cases.

The central empirical observation is a remarkable increase in decisional disagreement among Federal Circuit judges – an observation we interpret as likely to reflect a decrease in doctrinal uniformity – over the past several years. P. 9

The main cause for this lack of uniformity is the Supreme Court’s decision to get involved in patent law cases and their complete incompetence in this area.  If you read their recent cases on point, SCOTUS has stated that only inventions that are black magic and not marketable should obtain patents.  Another problem is appoint none patent attorneys and people without a scientific or technical background to the CAFC.

In other words, the rate at which judges were writing dissents had reached a point where it was higher than the rate at which panels were unanimous in precedential opinions. P. 13

The first is that the Supreme Court has been positively discouraging doctrinal uniformity in patent law, and encouraging legal uncertainty. P. 18

Here the authors hint at the real cause for the problem.  But more broadly we have a fight going on in this country about whether we should even have property rights and no coherent theory of property rights.  See the Supreme Court’s decision in Kelo v. City of New London.

Perhaps one of the earliest examples of this is presented by Court’s 2005 decision in eBay v. MercExchange.  By pretty much any measure eBay reduced the uniformity of application of remedies law to patent cases, and encouraged judicial discretion in making remedy decisions. P. 18

The net effect of decisions like eBay, KSR and Global-Tech is to reduce the uniformity of patent doctrine and to increase the decisional space available to judges hearing patent cases and patent appeals. P. 19

As Judge Rader observed, the Federal Circuit could not even resolve the issue en banc. Indeed, this may be a situation where the Supreme Court has announced rules in different opinions that lead to different results. P. 20.

More hints that the Supreme Court is the root of the problem


The Federal Circuit is a response to a failure in judicial administration that produced a fractured, unworkable patent law. P. 33

Thanks to the Supreme Court it did not work.


Rantanen, Jason and Petherbridge, Lee, Disuniformity (November 10, 2013). U Iowa Legal Studies Research Paper No. 13-42. Available at SSRN:

[1] Rantanen, Jason and Petherbridge, Lee, Disuniformity (November 10, 2013). U Iowa Legal Studies Research Paper No. 13-42. Available at SSRN:

November 14, 2013 Posted by | -Law, Patents | , , , | Leave a comment

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.

Continue reading

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

Why Judges on the CAFC Should be Required to be Patent Attorneys

DYSTAR TEXTILFARBEN GMBH & CO DEUTSCHLAND KG, Plaintiff-Appellee, v. C.H. PATRICK CO., and Bann Quimica LTDA, Defendants-Appellants, 464 F.3d 1356, 1368 (Fed. Cir. 2006) illustrates the problem of non-technical, non-patent attorney judges on the CAFC.  I suspect this case will cause more and more problems.

The case states:

Indeed, we have repeatedly held that an implicit motivation to combine exists not only when a suggestion may be gleaned from the prior art as a whole, but when the “improvement” is technology-independent and the combination of references results in a product or process that is more desirable, for example because it is stronger, cheaper, cleaner, faster, lighter, smaller, more durable, or more efficient. Because the desire to enhance commercial opportunities by improving a product or process is universal — and even common-sensical — we have held that there exists in these situations a motivation to combine prior art references even absent any hint of suggestion in the references themselves. In such situations, the proper question is whether the ordinary artisan possesses knowledge and skills rendering him capable of combining the prior art references.

I guess you can obtain a patent when your invention is not more desirable, one that is weaker, more expensive, slower, heavier (unless that would make it better), less durable, or less efficient.  Inventors need to focus on inventions that have reduce their commercial opportunities, according to these judges.

Do these people actually read what they write?  Do they understand the logical implications of their statements?  The judges on this case were Michel, Raider and Schall.  Not surprisingly, none of the judges who wrote this have a technical background and none are patent attorneys.

What the hell does “the ‘improvement’ is technology-independent” mean?  Not surprisingly, there is no explanation of this phrase in the case.

This is just one more example of why we should not allow non-patent attorneys on the CAFC – or at least they should have to take a course on logic as it applies to patents and inventions. 


February 18, 2013 Posted by | -Law, 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

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

CAFC Appointments

According to IPWATCHDOG President Obama has renominated Edward C. DuMont and Jimmie Reyna to serve on the United States Court of Appeals for the Federal Circuit.  Neither of them are patent attorneys.  As I pointed out in my post Makeup of the CAFC, the number of patent attorneys on the court has been shrinking since its creation.  Neither DuMont or Reyna have a technical background.  Patent law requires both an understanding of the underlying technologies involved and an understanding of the law.  We have seen consistently bad decisions out of the Supreme Court and CAFC because they do not understand the underlying technologies.  It takes a number of years to understand patent law, it is not like other areas of the law.  For instance, most judges do not understand the very basic concept that all inventions are combinations of existing elements.  They do not understand that this follows from conservation of matter and energy.  It is not a legal concept it is fundamental principle of reality.  We need patent attorneys with strong technical backgrounds on the CAFC, if we are going to have a well function patent system in the US.


January 11, 2011 Posted by | -How to, Patents | , | Leave a comment