Lipton, Weinberger & Husick

The USPTO has launched “Inventors Eye,” a bimonthly on-line publication for independent inventors.  Here is a link to the most recent edition.  “Inventors Eye” leans toward encouragement, anecdotes and success stories, but includes valuable information in a non-technical style.  We recommend that you check it out.

– Robert J. Yarbrough, Esq.

June 28, 2010 — In an a unanimous opinion on the result, though fractured on the reasoning, the Supreme Court issued its long-awaited decision today on patentable subject matter.  The Bilski v Kappos decision is important for inventors and owners of software, Internet and particularly business method patents.

Under the law, even if an invention is novel, un-obvious, has utility, and meets all of the technical requirements for a patent, a patent cannot issue unless the invention addresses patentable subject matter.  Patentable subject matter includes “any new and useful process, machine, manufacture, or composition of matter….”  The concept is very broad and under Supreme Court precedent includes everything EXCEPT laws of nature, physical phenomena and abstract ideas.

The Bilski case involved whether a business method was the proper subject for patent protection.  The Bilski method was for hedging risk relating to the energy supply business.  The Federal Circuit Court of Appeals, which was the lower court, held that the Bilski method was not patentable subject matter since it was not tied to any particular machine and did not transform an article into another state or thing.  The Federal Circuit further held that this “machine or transformation” test was the exclusive test to determine whether a method can be patentable subject matter.

The Supreme Court affirmed the Federal Circuit’s determination that the Bilski hedging method is unpatentable, but rejected the reasons given by the Federal Circuit.  The Supreme Court expressly held that the “machine or transformation” test is not the only way to determine that a method is patentable subject matter and is instead only ‘the clue’ to be considered. The Court did not flesh out what other ‘clues’ might point to whether a method addresses patentable subject matter.

The Supreme Court also held that business methods are not categorically excluded from patent protection, declining to read non-existent limitations into the patent statute.  The Court noted the uncertainty as to how the term ‘business method’ is defined and the unintended consequences that such a categorical exclusion likely would have.

The Court concluded that the Bilski invention was not patentable since it attempted to patent a prohibited abstract idea under Supreme Court precedent.  The decision creates hope, but also substantial uncertainty, for inventors of business methods and owners of business method patents.

– Robert J. Yarbrough, Esq.

The delay between the filing of a utility patent application to the first office action by the PTO averages three years.  The PTO is considering whether to offer multiple options for patent application review in an effort to reduce the delay.  The proposal would allow the applicant to select fast, medium or slow review.  For the fast option, the patent applicant would pay higher fees in return for expedited review.  The medium option is the current system.  The slow option would allow an applicant to pay a lower fee and postpone examination for up to 30 months, which is equivalent to the current deferred examination.

The PTO also proposes to delay examination of applications claiming foreign priority, which comprise approximately 40% of U.S. patent filings. The PTO would not review the application claiming foreign priority until the first office action by the foreign patent office and the applicant’s response.  This requirement would instantly incorporate deferred examination (at least insofar as foreign inventors are concerned), and off-load at least the initial review to the foreign patent office.  The proposal is not as xenophobic as it first appears – a foreign inventor can avoid the result by filing first with the United States PTO or otherwise eliminating claims of foreign priority. The PTO reports that Japan and the European Patent Office already give priority to local applications.

We believe that more choices available to an applicant are a good thing; however, the proposal may present a significant danger to the fairness of the U.S. patent system.  Depending on its cost, expedited review may create a patent class system and small companies and independent inventors with limited resources may become second class citizens.  The patent applications of those second-class citizens may languish while the PTO expends its resources on expedited reviews for wealthier, more lucrative customers.

The proposal is not final and the PTO is accepting public comment.

– Robert J. Yarbrough, Esq.

Our economy is global and an invention that is valuable in the U.S. likely is valuable in other countries as well.  The Patent Prosecution Highway allows for expedited review of corresponding foreign patent applications upon the allowance of a U.S. patent application. If a patent applicant receives a decision from the U.S. PTO that at least one claim of a patent application is allowable, then the applicant can request any of several foreign patent offices to ‘fast track’ the corresponding claims of a pending application in the foreign patent office.

Several countries participate in the Patent Prosecution Highway program, including the United States, the European Patent Office, Canada, Australia, the United Kingdom, Germany, Japan, Korea, Denmark, Finland and Singapore.  The Patent Prosecution Highway works both ways – an application having at least one allowed claim in any of these foreign patent offices is entitled to ‘fast track’ review by the U.S. PTO.

– Robert J. Yarbrough, Esq.