Claim Interpretation and 35 USC 101 for the Business Methods Partnership Meeting July 15, 2009 by Robert Weinhardt SPE

1. Claim Interpretation and 35 USC 101 for the Business Methods Partnership Meeting July 15, 2009 by Robert Weinhardt SPE AU 3688, Technology Center 3600 robert.weinhardt@uspto.gov

2. 35 USC 101 Update • The test for a practical application of method claims was clarified by the Federal Circuit in In re Bilski last October. • The DCPEP issued a memo to the examining corps (Jan. 7, 2009 accessible on our website) that the machine-or-transformation test is the proper test to determine if a method claim qualifies as a statutory process. • http://www.uspto.gov/web/offices/pac/dapp/opla/documents/bilski_guidance_memo.pdf Business Methods Partnership Summer 2009

3. 35 USC 101 Update • The Office has been following the Federal Circuit’s “Machine-or-Transformation” test for process claims. The Supreme Court is scheduled to take this issue up next term. • Under the test, an eligible process claim must either be tied to a machine, or must transform an article to a different state or thing, in a meaningful way (not mere field of use or post-solution activity, for example). • Method claims that would likely pass the machine prong of the machine-or-transformation test are those that are drafted in terms that clearly show that the steps are machine implemented. Business Methods Partnership Summer 2009

4. 35 USC 101 Update • The Federal Circuit specifically reaffirmed that there is no business method exception for subject matter eligibility. • Methods for conducting business continue to be treated by the Office in the same manner as all method claims are examined. • We know from Bilski that purported transformations or manipulations of public or private legal obligations or relationships, business risks, or other such abstractions, without more, cannot meet the M-or-T test. Business Methods Partnership Summer 2009

5. Claim Interpretation and 101 • USPTO personnel must first determine the scope of a claim by thoroughly analyzing the language of the claim before determining if the claim complies with each statutory requirement for patentability. • MPEP 2106, Section II C Business Methods Partnership Summer 2009

6. Selected Issues in Claim Interpretation • Broadest Reasonable Interpretation • Conditional Language in Methods • “Chain of Commerce” Claims • “Hybrid” Claims Business Methods Partnership Summer 2009

7. Broadest Reasonable Interpretation (BRI) • “[T]he ordinary and customary meaning of a claim term is the meaning that the term would have to a person of ordinary skill in the art in question at the time of the invention, i.e., as of the effective filing date of the patent application.” Phillips v. AWH Corp., 75 USPQ2d 1321, 1326 (Fed. Cir. 2005) (en banc). Business Methods Partnership Summer 2009

8. BRI – 4 Sources • “Those sources include ‘the words of the claims themselves, the remainder of thespecification, the prosecution history, and extrinsic evidence concerning relevant scientific principles, the meaning of technical terms, and the state of the art’”. Phillips v. AWH, 75 USPQ2d 1321,1327 Business Methods Partnership Summer 2009

9. BRI - Consistency • “The broadest reasonable interpretation of the claims must also be consistent with the interpretation that those skilled in the art would reach.” MPEP 2111, with reference to In re Cortright, 49 USPQ2d 1464, 1468. Business Methods Partnership Summer 2009

10. BRI Example: “Computer Readable Medium” • A claim that covers both statutory and nonstatutory embodiments embraces subject matter that is not eligible for patent protection and is therefore nonstatutory. • Thus, proper interpretation of “computer readable medium” claims is critical in view of In re Nuijten, 84 USPQ2d 1495, 1503 (Fed. Cir. 2007) Business Methods Partnership Summer 2009

11. Consider the Sources:“Computer Readable Medium” • Words of the claims themselves: • “A computer readable medium having encoded therein…” • (Amended) “A computer readable storage medium having encoded therein…” Business Methods Partnership Summer 2009

12. Consider the Sources:“Computer Readable Medium” • The remainder of the specification: • “The term ‘computer-readable medium’ as used herein encompasses many forms including such common forms as, for example, a hard disk, an EPROM, a CD-ROM, a carrier wave, electrical, electromagnetic or optical signals, or any other medium from which a computer can read.” • “The term ‘computer-readable medium’ as used herein encompasses many forms including such common forms as, for example, a hard disk, an EPROM, a CD-ROM.” Business Methods Partnership Summer 2009

13. Consider the Sources:“Computer Readable Medium” • The remainder of the specification (cont’d): • “The term ‘computer-readable medium’ as used herein is limited to physical storage media, such physical storage media including such common forms as, for example, a hard disk, an EPROM, a CD-ROM.” Business Methods Partnership Summer 2009

14. Consider the Sources:“Computer Readable Medium” • The prosecution history: • Statements by Applicant • Affidavits by Applicant, Experts • Statements by the Examiner Business Methods Partnership Summer 2009

15. Consider the Sources:“Computer Readable Medium” • Extrinsic evidence: • IEEE dictionary definition: • “medium (1) (computers) the material, or configuration thereof, on which data are recorded; for example paper tape, cards, magnetic tape. (2) (information transfer) a vehicle capable of transferring data” • A review of patents and published applications within analogous arts shows that “computer readable medium” was defined prior to applicant’s filing date as being inclusive of both physical storage media and transitory propagation media. Business Methods Partnership Summer 2009

16. Consider the Sources:“Computer Readable Medium” • Extrinsic evidence (cont’d): • In re Cortright, 49 USPQ2d 1464, 1468 • The court held that, consistent with applicant's disclosure and the disclosure of three patents from analogous arts using the same phrase to require only some increase in hair growth, one of ordinary skill would construe "restore hair growth" to mean that the claimed method increases the amount of hair grown on the scalp, but does not necessarily produce a full head of hair. • In re Nelson, 126 USPQ 242 (CCPA 1960) • “The descriptions in patents are not addressed to the public generally, to lawyers or to judges, but, as section 112 says, to those skilled in the art to which the invention pertains or with which it is most nearly connected.” as cited by Phillips v. AWH @ 1326 Business Methods Partnership Summer 2009

17. Conditional Language in Methods • In re Nuijten, 84 USPQ2d 1495, 1501 explains the nature of a “process”: • “The Supreme Court and this court have consistently interpreted the statutory term ‘process’ to require action.” • “It is an act, or a series of acts…” • “It consists of doing something, and therefore has to be carried out or performed.” Business Methods Partnership Summer 2009

18. Conditional Language in Methods • “Language that suggests or makes optional but does not require steps to be performed or does not limit a claim to a particular structure does not limit the scope of a claim or claim limitation.” MPEP 2106 II C Business Methods Partnership Summer 2009

19. Conditional Language in Methods • Consider the following example • A method comprising: inputting data A and B; calculating X based on A and B; and optionally performing function Y by a programmed processor when X is greater than a predetermined threshold. Business Methods Partnership Summer 2009

20. Conditional Language in Methods • In this instance, function Y does not have to be carried out or performed within the scope of the claim. • As a result, the implementation of function Y by the programmed processor could not be relied upon to satisfy Bilski’s “M or T” test. Business Methods Partnership Summer 2009

21. “Chain of Commerce” Claims • In addition to claims directed to a disclosed product or apparatus, applicants sometimes include claims directed to actions involving e.g. the manufacture, distribution and sale of the disclosed product or apparatus. • Given Bilski’s “M or T” test and the requirement that the machine or transformation must impose “meaningful limits” on the scope of a method claim, such claims can be problematic in some instances. Business Methods Partnership Summer 2009

22. “Chain of Commerce” Claims • For example, given an apparatus programmed to calculate a tax return, consider: • 1. A method for distributing comprising: providing an apparatus programmed to calculate a tax return. • 2. A method comprising: leasing an apparatus programmed to calculate a tax return. • Depending on BRI, these claims may encompass embodiments where no machine is required. • “providing” may merely include delivery or making the machine available, neither of which requires a machine to perform the “providing” step • “leasing” itself is not recited as performed by a machine even though the lease is about a machine. Business Methods Partnership Summer 2009

23. Hybrid Claims • A single claim which claims both an apparatus and the method steps of using the apparatus is indefinite under 35 USC 112, second paragraph. IPXL Holdings v. Amazon.com, Inc., 77 USPQ2d 1140, 1145 (Fed. Cir. 2005) • Such claims may also be rejected under 35 USC 101 based on the theory that the claim is directed to neither a "process" nor a "machine," but rather embraces or overlaps two different statutory classes of invention set forth in 35 USC 101 which is drafted so as to set forth the statutory classes of invention in the alternative only. Business Methods Partnership Summer 2009

24. Hybrid Claims – Example • 1. An electronic financial transaction system for executing financial transactions, the transactions being characterized by a transaction type and a plurality of transaction parameters, the system comprising: a central controller; a communications network; a terminal device selectively connectable to the central controller through the communications network, the terminal device comprising: a processor; a display connected to the processor; an input mechanism for providing input to the processor; the system further comprising means for storing user defined transaction information, the transaction information comprising at least one of user defined transactions and user defined transaction parameters; the processor causing the display to display on a single screen stored transaction information; the input mechanism enabling a user to use the displayed transaction information to execute a financial transaction or to enter selections to specify one or more transaction parameters. Business Methods Partnership Summer 2009

25. Hybrid Claims – Example • The system of claim 2 [including an input means] wherein the predicted transaction information comprises both a transaction type and transaction parameters associated with that transaction type, and the user uses the input means to either change the predicted transaction information or accept the displayed transaction type and transaction parameters. • “Thus, it is unclear whether infringement of claim 25 occurs when one creates a system that allows the user to change the predicted transaction information or accept the displayed transaction, or whether infringement occurs when the user actually uses the input means to change transaction information or uses the input means to accept a displayed transaction.” IPXL v. Amazon @ 1145. Business Methods Partnership Summer 2009

26. Thank You