Source: https://cepgi.typepad.com/hrfm_today/
Timestamp: 2019-04-20 17:15:04+00:00

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On January 7, the USPTO published its new "2019 Revised Patent Subject Matter Eligibility Guidance" (the 2019 PEG), which became "effective" on that same day. However, the 2019 PEG "applies to all applications, and to all patents resulting from applications, filed before, on or after January 7, 2019." Therefore, the 2019 PEG even applies to applications filed prior to that date.
This article will provide a review of the history leading to 2019 PEG, plus an overview of the revised guidelines. Additionally, it will point out some of the issues related to the 2019 PEG.
However, courts have long recognized the judicially created exceptions of "abstract ideas," "laws of nature" and "natural phenomena" as being non-patentable subject matter because they are the "basic tools of scientific and technological work." Gottschalk v. Benson 93 S. Ct. 253 (1972). As such, "there is a danger that granting patents that tie up their use will inhibit future innovation." Mayo v. Prometheous 132 S.Ct. 1289, 1292 (2012). Courts have also recognized that too broad an interpretation of this exclusionary principle could eviscerate patent law because "all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas." Id. at 1293. Finding the proper balance in applying this exclusionary principle has proven challenging.
The foundational analysis for patent eligibility was, and still is, one of pre-emption. More specifically, a patent claim was analyzed to determine whether or not the claim would "wholly pre-empt" the judicial exception recited in the claim and in practical effect would be a patent on the judicial exception itself. Gottschalk v. Benson, 409 US 63 at 72 (1972). Over the years, many different approaches were used by the courts to determine such pre-emption.
In 2012, the Supreme Court created a more structured approach to the analysis of patentability in what has come to be known as the Alice/Mayo test. Mayo v. Prometheus, 132 S. Ct. 1289 (2012). Mayo applied the test to just laws of nature. However in 2014, the Supreme Court made it clear that the Alice/Mayo test was to be applied to all judicial exceptions. Alice Corp. V. CLS Bank International, 34 S. Ct. 2347 (2014).
The Alice/Mayo test, as applied by the USPTO, has three basic steps. They are: step 1) the statutory categories test, step 2A) the judicial exceptions test, and step 2B) the inventive concept test.
In step 1, a claim must be analyzed to determine if the claim is to one of the statutory categories of a process, machine, manufacture or composition of matter.
In step 2A, the claim must be analyzed to determine whether the claim at issue is "directed to" a law of nature, a natural phenomenon or an abstract idea. The "directed to" inquiry must be considered in light of the specification, and based on whether the character of the claim as a whole is directed to a judicial exception. Enfish, LLC v. Microsoft Corp., 822 F. 3d. 1327, 1335 (2016).
In step 2B, the elements of the claim must be examined to determine whether they contain an "inventive concept" sufficient to transform the claimed judicial exception into a patent-eligible application. Specifically, a claim must include additional features to ensure that the claim is more than a drafting effort designed to monopolize the judicial exception. The courts have said that an inventive concept must do more than simply recite well-understood, routine, conventional (WURC) activity.
The 2019 PEG changes step 2A (Revised Step 2A) into a two-prong inquiry.
In prong one, a claim must be evaluated as to whether the claim "recites" a judicial exception. Recited abstract ideas, specifically, must be identified from the group listed in Section I of the 2019 PEG.
"A claim that integrates a judicial exception into a practical application will apply, rely on, or use the judicial exception in a manner that imposes a meaningful limit on the judicial exception, such that the claim is more than a drafting effort designed to monopolize the judicial exception."
Under 2019 PEG, revised Step 2A specifically excludes consideration of whether the additional elements represent well-understood, routine, conventional activity. The analysis of such WURC activity is relegate to step 2B, where the claims will be evaluated for an inventive concept.
The USPTO has taken the position that the determination of a "practical application" for a judicial exception is equivalent to the "directed to" inquiry for the original step 2A. It has done so in order to develop a guideline that will be easier to apply consistently by the more than 8,500 USPTO examiners and administrative patent judges that have to use these guidelines. Further, the USPTO has stated that 2019 PEG is "rooted in Supreme Court case law."
However, the 2019 PEG does not constitute substantive rulemaking and does not have the force and effect of law. It remains to be seen whether the courts will accept, reject or modify these guidelines.
Additionally, the test for a "practical application" in the revised step 2A is now very similar, if not essentially the same, as the test for an "inventive concept" in step 2B. That is, both a practical application in revised step 2A and an inventive concept in step 2B are to be determined by analyzing whether a claim includes additional features that impose meaningful limits on the judicial exception such that the claim is more than a drafting effort designed to monopolize the judicial exception.
The one major difference between the tests in revised step 2A and original step 2B, is that the determination of a practical application in revised step 2A can include the use of well-understood, routine and conventional activity. Such WURC activity is specifically exempted from the analysis of an inventive concept in step 2B.
This begs the question as to whether the scope of revised step 2A has been expanded to the point where step 2B is now a subset of it. Certainly, there is a lot of overlap between the two tests. However, if a practical application cannot be found in revised step 2A even with the use of WURC activity, it is hard to see how an inventive concept will be found without the use of such WURC activity in step 2B. Further, it is hard to see the utility of an inventive concept that is not a practical application.
Stephen P. Scuderi is an associate with the law firm of Heslin Rothenberg Farley & Mesiti P.C. His practice involves all phases of intellectual property law, including the drafting of hundreds of patents in the electrical and mechanical arts. Stephen can be reached at (518) 452-5600 or at stephen.scuderi@hrfmlaw.com.
Signed into law on Oct. 11, 2018, the Orrin G. Hatch-Bob Goodlatte Music Modernization Act (MMA) reforms U.S. Copyright law in significant ways that will affect the licensing of digital music.
Pursuant to pre-MMA copyright law, "mechanical" licenses for reproduction and distribution of musical works in phonorecords were obtained by licensees on a per-work, song-by-song basis. Under the MMA, Section 115 of the Copyright Act, which covers compulsory licenses for making and distributing phonorecords, has been modified to provide for a new blanket license for digital music providers — such as Spotify, Apple Music, Pandora, SiriusXM, Amazon Music, Google Play, TIDAL and others — to engage in specific covered activities.
What is a mechanical license? It is the means by which rights are granted to reproduce and/or distribute a song that is not yours. Pre-MMA, a digital music provider wishing to obtain a license to record and distribute a protected work had to either negotiate directly with the copyright owner to procure a voluntary license or obtain a compulsory license under 17 U.S.C. 115.
Under Title I of the MMA, a broad blanket license to reproduce and distribute digital music through downloading or interactive streaming will be implemented. Licensing of music distribution via physical media such as CDs and vinyl will still operate on a per-work, individual song license, basis. It is envisioned that the new blanket license system will take approximately two years to implement, with a target license availability date of Jan. 1, 2021. A transition period will be established, allowing digital music providers to limit copyright infringement liability provided they engage in good-faith, commercially reasonable efforts to identify and pay musical work copyright owners.
The initial step in implementation of the MMA is the designation of a Mechanical Licensing Collective (MLC)—essentially a quasi-governmental agency—that will administer the new system. Among its duties, the MLC will collect and distribute royalties from digital music providers, establish a musical works database that will be publicly available and is expected to become the most comprehensive database in the music industry, and administer a system by which copyright owners can claim ownership of musical works and receive royalties they are due.
Once the blanket licensing model is put into effect, a licensee must report usage and pay royalties to the MLC on a monthly basis. The MLC will then distribute royalties to copyright owners that can be identified and located. For any royalties that cannot be distributed, the MLC will deposit the royalties into an interest-bearing account for "unclaimed accrued royalties." After a minimum period of three years, if a copyright owner who is due unclaimed accrued royalties cannot be identified and located, these royalties may be distributed on a pro rata share to other copyright owners receiving royalties through the mechanical licensing collective.
It is important to note that only digital mechanical licenses will be licensed by the MLC. Other types of license, such as synchronization licenses, public performance licenses, lyric licenses, derivative licenses and hybrid licenses will not be licensed by the MLC. In addition, digital music providers still have the option to obtain a voluntary license directly with a copyright owner or his/her representative; however, an administrative assessment fee may be due to MLC if the volume of such direct licenses is considered significant.
Details of the MLC requirements and a corresponding request for proposals was published by the U.S. Copyright Office in the Dec. 21, 2018 Federal Register. Under the MMA, the MLC should be a nonprofit entity governed by a board of directors that is created and endorsed by copyright owners in the relevant music industry and can demonstrate that it has the administrative and technological capabilities to perform the required functions under the statute.
In addition, the Register of Copyright is empowered to designate a digital license coordinator (DLC) to represent digital music providers in the administration of the new blanket mechanical license. Among the duties of the DLC will be to help locate and identify copyright owners who are due unclaimed accrued royalties and ensure proper payment to those parties.
Initial proposals for the MLC must be received by March 21, 2019, and the Register of Copyrights is directed to designate the MLC by July 8, 2019, or 270 days from the enactment of the statute.
In addition to music licensing modernization, Title II of the MMA, known as the "Compensating Legacy Artists for their Songs, Services & Important Contributions to Society" or "CLASSICS" Act changes the law with respect to pre-1972 sound recordings. Specifically, it means federal remedies for copyright infringement will be available to owners of sound recordings fixed before Feb. 15, 1972. Such remedies will be available for 95 years after first publication of the recording. In addition, a statutory licensing regime for pre-1972 sound recordings will be implemented to require that songwriters, performers and record labels will all be paid royalties when such sound recordings are played on digital radio, including internet radio, satellite radio and cable TV music services.
Title III of the MMA, the Allocation for Music Producers (AMP) Act provides an allocation of royalties for music producers of sound recordings that are used on digital radio.
As with all significant revisions to law, the devil is in the details, and the quality of the implementation of the MMA will greatly influence its success. Members of the public who wish to share information with the Register of Copyrights, or submit a suggestion or proposal for the MLC or DLC, are invited to do so.
Annette I. Kahler is of counsel at the law firm of Heslin Rothenberg Farley & Mesiti P.C. with experience in technology, law and business. Annette can be reached at (518) 452-5600 or at annette.kahler@hrfmlaw.com.
Which Firms Are Best at Overcoming Alice?
HRFM has earned its place as one of the Top 10 Firms with the Best Allowance Rate by Juristat.
With an 86.82 Alice Allowance Rate, HRFM has one of the 10 highest percentages of applications with one or more Alice rejections that were eventually allowed by the USPTO -- a true measurement of strategic effectiveness.
HRFM placed in the top 10 among 368 firms with at least 50 disposed applications that had experienced an Alice rejection.
Since June of 2014, Alice has become one of the most feared names in patent prosecution. Rejections citing Alice have multiplied exponentially since then, and they now account for more than 60% of §101 rejections and more than 8% of all rejections, as of our latest analysis.
But Alice rejections aren’t necessarily fatal to an application – and we found the firms to prove it. Which firms are the best at overcoming Alice rejections and getting to an NOA? Read on to find out.
• and the Alice overcome rate, or the success rate at overcoming Alice rejections on the first try. In these cases, either the application’s next office action doesn't reference Alice or the next office action is a notice of allowance.
The first is a measurement of strategic effectiveness – getting from rejection to allowance – while the second looks at tactical effectiveness – getting past one Alice office action and then facing the next.
To get a better idea of how successful firms are against Alice rejections, we looked at disposed applications with an Alice rejection from June of 2014 through December of 2017, and narrowed our review to firms that are experienced in handling those rejections.
Continue reading Which Firms Are the Best at Overcoming Alice?
The start of a new year provides the opportunity for a highly subjective retrospective on 35 years of patent law — where we've been and where we might be going.
Supreme Court Justice Abe Fortas (1965-1969) was reputed to have said that a typical judge's reaction to a patent is like that of a man suddenly encountering a snake: His first instinct is to try to kill it. Justice Fortas' view reflected the general tenor of the courts throughout much of the mid-twentieth century; finding patents valid, enforceable and infringed was uncommon.
The first awakenings of a more pro-patent stance became discernible in Diamond v. Chakrabarty in 1980, when the Supreme Court ruled 5-4 that genetically engineered microorganisms were patentable. This was followed by Congress' creation in 1982 of the Court of Appeals for the Federal Circuit (colloquially known as the CAFC or "the Federal Circuit") as the only appellate-level court with the jurisdiction to hear patent case appeals.
The first chief judge of the CAFC was Howard Markey, a WWII pilot, recipient of the Distinguished Service Medal, the Legion of Merit and the Distinguished Flying Cross and, subsequently, a patent lawyer. He was an outgoing, genial, retired Air Force General who did not suffer fools gladly. His opinions remain both insightful and entertaining reading.
He was joined by Giles Sutherland Rich, who was born in Rochester, the son of a Kodak patent attorney. Judge Rich and Pasquale Federico had drafted the patent statute that took effect in 1953 as the first full revision of U.S. patent law since the Patent Act of 1870. Judge Rich's opinions were marked by the depth of his understanding of patent law. They, and the other nine judges, were joined in 1984 by Pauline Newman, a Ph.D. chemist from Yale who had worked as a research scientist for American Cyanamid for three years and for FMC Corp for 30 as a patent attorney and in-house counsel. Together, these three and the CAFC initiated the golden age of patent law.
For the next 10 years, patents were upheld, and infringers were found to have infringed. Patents became valuable property. With law suits for infringement actually succeeding, litigation by patentees took off, and the practice of patent law went from a quiet, back-office operation to considerable prominence and profitability. The pro-patent era reached its high-water mark in 1998 with State Street Bank v. Signature Financial Group, in which the CAFC found business methods patentable.
But, as always, the pendulum swings.
In rushing forward into new territory, it is human nature to push the envelope, and patent applicants did so with vigor, enthusiasm and not much self-restraint. Compounding the effect of exuberant patent seekers, the U.S. Patent and Trademark Office (USPTO) initially had no expertise in examining patents in subject areas that had not previously come before them. The result was the issuance of patents that should not have issued.
Moreover, the mood of the public — to the extent that any portion of the public was aware of patents — began to swing. This was the dawn of the era for two burgeoning technologies: computers and biotechnology. It did not seem fair that someone could own the basic underpinnings of a new technology (either genetics or computers) and thereby block "the progress of science and useful arts" in that area. It also did not seem fair that a pharmaceutical company could, by virtue of its patent "monopoly," make life-saving drugs sickeningly expensive. The result of the confluence of over-reaching patent applicants and an aggrieved public was that the courts began to look for — and find — bases for invalidating patents.
In both the biotech area and the software area, 2010 was a watershed year. The tide began to ebb. In Ariad v. Eli Lilly, the CAFC discovered a basis for invalidating claims that hadn't been thought of in 57 years of patent law. This allowed the courts to invalidate — and the USPTO to reject — the broad claims of most biotech patents. Since the ruling was based on an interpretation of law and not on subject matter, it spilled over into other technology areas, where it continues to bedevil prosecution.
At the same time, in Bilski v. Kappos, the Supreme Court began to circumscribe the recently expanded scope of subject matter that could be patented in computer science. The Supreme Court followed up in 2014 with Alice v. CLS Bank, in which patentable subject matter was further constrained. In the meantime, in 2012, Congress went so far as to create a whole new mechanism specifically to facilitate challenges to patents in general and business method patents in particular.
In 2013 the Supreme Court also reduced the scope of patent eligible subject matter in the biotech area with their decision in Association for Molecular Pathology v. Myriad Genetics (known colloquially as "Myriad"). Overturning years of patent practice, the court determined that an isolated segment of DNA was not patentable because its sequence was the same as a portion of a sequence embedded in native DNA — even though it did not exist in isolated form anywhere in nature. This decision too has spilled over into other technologies where purified chemicals from natural sources are no longer deemed patentable by virtue of their having been isolated, identified and purified.
In 2014, in Gilead v Natco, the CAFC promulgated a line of reasoning that allows a judicially created (i.e., non-statutory) doctrine to truncate the term of coverage of plural members of a patent family. The Gilead opinion and its proliferating progeny continue to generate uncertainty, particularly in the pharmaceutical industry, for whom the path to market is long and expensive, and the days at the end of a patent's life are its most valuable.
From the heady era at the turn of the century we have entered a more sober period in which patents, to be successful in protecting inventive advances "in science and the useful arts," will have to be more conservatively drafted, more astutely prosecuted and more judiciously asserted. Patents can still have significant commercial value and profound effect — as our U.S. Constitution intended — but they will be less expansive. We're going back to having to avoid anything that might provide the tool for a judge who wants to kill the snake.
About five months have gone by since my last update on the state of patentable subject matter after the 2014 Alice Supreme Court decision and its progeny. A number of important developments have taken place during this time, mostly positive in the sense of rebalancing the outcomes Alice patentable subject matter inquiries by courts.
The two-part Alice test for patentable subject matter starts by determining whether the claims are directed to a judicially recognized exception; namely, laws of nature, natural phenomena and abstract ideas. If an exception is present, it is then determined whether the elements of each claim both individually and as an ordered combination, are sufficient to transform the nature of the claim into something patentable. In practice, however, the second part of the test is often given short shrift. During the first four months of 2018, the Federal Circuit (federal appeals court for patents) has, in three cases, found the claims of the relevant patents to be patentable subject matter, surviving the two-step Supreme Court Alice test. For comparison, in only two precedential cases (and one non-precedential) did the Federal Circuit find no patentable subject matter. Further, a fourth case found patentable subject matter in some of the disputed claims and in yet another case, the dismissal on abstract idea grounds was vacated and remanded. In addition, two Patent Trial and Appeal Board (PTAB) cases reversed the Examiner’s rejections based on patentable subject matter. Hopefully, this is a trend toward rebalancing Alice test outcomes.
I have come across several smaller gaming companies that say they have never explored Intellectual Property (IP) protection. Typically, I respond with some examples of things they could be protecting. The reactions run the gamut from panic to interest to a glassy-eyed stare. This article will address the various types of IP protection that may be available to a gaming company.
This paper will present an overview of some of the issues pertaining to the disposition of patent rights to inventions made under a government R&D contract. As will be seen, without careful adherence to the statutes and regulations governing such patent rights, it is possible for a contractor to unintentionally lose or waive these valuable rights.
In 1980, Congress implemented chapter 18 of 35 United States Code (USC), which is titled “Patent Rights in Inventions Made with Federal Assistance” (“the Law”). The Law originally applied to only small business firms and nonprofit organizations. However in 1983, President Ronald Reagan issued a “Memorandum on Government Patent Policy” extending the benefits of the Law to all R&D contractors, including large businesses and for-profit organizations.

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