Key Case About Software Patents May Hinge On How You Define 'Significantly More'

from the who-did-what-now dept

Last year, we wrote about the next important lawsuit concerning software patents, the CLS Bank v. Alice case, which the full Federal Circuit appeals court (CAFC) heard today. Our last post on the case provided the background, but the short version was that it involves some software concerning doing a "shadow transaction" to see if there are really enough funds to complete a transaction, before completing the actual transaction. The district court found that this was just a representation of an abstract idea, and thus not patentable. CAFC, using a typical three judge panel, reversed that decision, saying that it was patentable subject matter. However, CAFC agreed to rehear "en banc" with the entire 10 judges, because there was some concern about the original ruling (which was split 2 against 1).

I've spoken to two people who were at the hearing this morning, and some other reports are trickling out as well. As always, what gets covered in the oral hearings is not always as indicative of how the court will rule as many people hope. Often times, what is discussed in the hearing may end up being a side item in the eventual decision, which considers a lot more information, usually from the various briefs filed by the key parties and amicis (friends of the court). And this case had a lot of "friends" on all sides. If you'd like to understand the full arguments, the Patent Progress blog has a good summary of the arguments.

Either way, lots of folks recognize that this is a key case for software patents and apparently there was a packed house, with lots of patent lawyers and Patent Office folks in attendance. There was plenty of discussion concerning what makes something an abstract idea vs. a specific implementation of an idea. Alice Corp. (the patent holder) argued that its patent was really on just a "specific way" of doing such net settlement transactions, but had trouble answering the question of whether or not it was possible to do a net settlement transaction without violating the patent.

One of the key questions that CAFC is supposed to answer in the case is:

What test should the court adopt to determine whether a computer implemented invention is a patent ineligible “abstract idea”; and when, if ever, does the presence of a computer in a claim lend patent eligibility to an otherwise patent-ineligible idea?

Here, apparently, the parties actually seemed to more or less agree that the "test" is a "significantly more" test -- and whether or not the computers are doing "significantly more" than just speeding up a process that could be done in one's head or with pencil and paper. A lot of this test is built on last year's ruling in the Prometheus Labs. v. Mayo Labs case concerning medical diagnostics patents, and that case was discussed a fair amount during the hearing (though that case involved doing "significantly more" than laws of nature, rather than general computing).

Lawyer Bob Sachs, a patent lawyer from Fenwick and West who was at the hearing today, told me that the "significantly more" test worries him, in that it's not an "objective test" and effectively leaves too much to chance. "It's a way of saying 'we can't figure this out.'" He also noted that the "significantly more" test may favor the idea that this particular patent is legitimate, since the patent in question was much more detailed and involved than your average software patent. That said, in his early handicapping of the field, he comes up with a 5 judge to 5 judge tie, based on their perceived opinions and the sorts of questions they were asking, so he's wondering if it'll end up that way or if any of the judges will swing to the other side.

While Sachs was disappointed that there wasn't a clear attempt to define what constitutes an "abstract idea," I'm not as sure that's an issue. In fact, it almost seems oxymoronic to say that you need a strict definition of an abstract idea. The reason an idea is abstract is just that: it's abstract. But, at the same time, I can understand why patent lawyers would generally prefer a brightline, objective rule that can demarcate what is and what is not patentable. Either way, lots of patent lawyers will be waiting eagerly for this ruling.

Filed Under: abstract through, shadow trades, significantly more, software patents, test
Companies: alice corp., cls bank

Seth Godin Uses Kickstarter To Test The Market For His Next Book (And The Results Are Good)

from the demand-proofing dept

As a few people sent in, famed author Seth Godin is doing an interesting experiment with Kickstarter, where he has teamed up with a publisher who essentially wanted to use the platform to prove there's significant demand for Godin's next book. Basically, if he could effectively sell pre-orders for the project to raise $40,000, then the publisher would invest in the project as well and support getting it into bookstores and putting a promotional campaign behind it. It took Godin less than three hours to surpass that goal (and then go way, way beyond it as well).
Godin makes a strong point about how the traditional process, of investing a ton of money upfront, without knowing if there's really demand, is inherently risky for traditional publishers (and studios and labels). This is one area where a platform like Kickstarter is quite interesting beyond just the "fundraising" side of things. It can also be a tool for gauging demand for a project.

In fact, some others have been recognizing exactly that. Andy Baio recently wrote a column at Wired, in which he talks about using Kickstarter as a way to judge demand for something without having to put forth that initial capital expenditure.

Of course, once you realize that it can be a demand platform, rather than purely a funding platform, interesting possibilities open up:

As far as I can tell, nobody’s flipped it around and tried to commission a musician to play for fans. Most bands already play corporate events and private parties. If fans collectively raise the same amount of money, why not play a house show for them instead? For fans, it’d be a once-in-a-lifetime experience to see an artist they love in an intimate setting. For musicians, it’d pay well without the malaise that comes from playing the Intel holiday party.

In other words, as a demand platform, Kickstarter (or others) can be used to demonstrate demand (and actual money) for something that people want to come into existence, and then people can figure out how to make it happen. That's pretty powerful just for being different than how things have been done before.

That's not to say that this makes sense for everything, or that there aren't risks associated with it. Execution matters, and paying up at the demand stage can lead to disappointment if the eventual product doesn't live up to expectations (or, worse, never actually gets made). So there's a different kind of risk there, though one that is likely to be more distributed. There is also the risk of "failure." A good idea that may not be explained well at this stage may not come to fruition. But, in the end, these are really just flipsides to the traditional risk taken by gatekeepers. It's just that it's getting moved around, and done in a way that actually decreases the overall burden of the risk, which makes it possible to create more with less overhead (a good thing for everyone!)

And, remember, we're really only in the first few years of these types of efforts. Kickstarter, which gets most of the attention, is just three years old. Imagine where things will be 10 years from now.

Filed Under: books, business models, demand, seth godin, test

Patent Office Releases New Temporary Post-Bilski Test For Software Patents

from the it's-something dept

While we're still waiting for the Supreme Court to rule on the Bilski case, which may or may not directly impact the question of software patents, JJ points out that the Patent Office has released some new rules on patentability, based on the appeals court ruling in Bilski (technically, the Patent Office issued a ruling, back in August, but just recently declared that ruling "precedential"). The full ruling can be found here (pdf). The key bit:

For a claimed machine (or article of manufacture) involving a mathematical algorithm,

1. Is the claim limited to a tangible practical application, in which the mathematical algorithm is applied, that results in a real-world use (e.g., "not a mere field-of-use label having no significance")?
2. Is the claim limited so as to not encompass substantially all practical applications of the mathematical algorithm either "in all fields" of use of the algorithm or even in "only one field?"

If the machine (or article of manufacture) claim fails either prong of the two-part inquiry, then the claim is not directed to patent eligible subject matter.

As many are noting, this remains incredibly vague, though the Patent Office is limited by what the courts have said. One would hope that the Supreme Court's ruling in Bilski might lend some clarity, but the oral arguments suggested that the court might try to steer the decision away from anything having to do with software patents entirely. So, we may still have something of a mess for quite some time.

Filed Under: patents, software patents, test, uspto
Companies: uspto