Editor’s note: Leonid (“Lenny”) Kravets is a patent attorney at Panitch, Schwarze, Belisario and Nadel, LLP in Philadelphia, PA. Lenny focuses his practice on patent prosecution and intellectual property transactions in computer-related technology areas. He specializes in developing IP strategy for young technology companies and blogs on this topic at StartupsIP. Follow Lenny on Twitter @lkravets.

One of the main changes resulting from the passage of the America Invents Act (AIA) is the transition of U.S. patent law from a “first-to-invent” system to a “first-to-file” system on March 16. With the transition a mere four weeks away, it is important to understand what this change to the patent system means for inventors and companies.

First-To-Invent

Before addressing first-to-file, it is important to understand how the first-to-invent system, which we’ve operated under for the last 200 years, works. Under the first-to-invent system, when two or more inventors file a patent application for the same invention, the patent office should identify and award the patent to the inventor who was first to conceive and diligently reduce the invention to practice, even if (subject to some limitations) the first inventor was not the first to file a patent application. An example helps illustrate this system:

In this scenario, inventor A would be entitled to receive the patent on her widget even though inventor A filed her patent application after inventor B. Inventor A may need to “swear behind” inventor B’s patent application by showing documentation regarding her earlier invention date of the widget, and that she diligently worked to actually or constructively “reduce the invention to practice” (constructive reduction to practice can be shown by preparing and filing the patent application). Under the first-to-invent system, inventor B would not receive a patent on the invention.

First-To-File

The first-to-file system being implemented on March 16, 2013, attempts to further harmonize U.S. patent law with that of most of the rest of the world by de-emphasizing the actual invention date.

A lot of informed people think that the change to first-to-file will be a boon to patent trolls because they will be able to file patent applications on inventions released, but not yet filed on, by underfunded startups. However, the term “first-to-file” is a bit of a misnomer. In the United States, whether under first-to-invent or first-to-file, an inventor can publicly disclose their invention, such as in a blog post, and still file a patent application within one year of that public disclosure.  The system being implemented under the AIA is not a true first-to-file system as in most foreign countries because this grace period on public disclosure will remain. Thus, the new system can really be considered a “first-to-disclose” system.

The new system can really be considered a “first-to-disclose” system.

Inventors can attempt to market and sell their inventions and still file for a patent in the United States within one year of the first public disclosure. However, they would not be able to pursue patents for the previously disclosed invention in most foreign countries, because foreign countries that operate on the first-to-file standard typically do not have this grace period for public disclosure. In these foreign countries, a public disclosure prior to filing a patent application is an absolute bar on receiving a patent on the disclosed invention.

Taking the disclosure grace period into account, under the first-to-file/first-to-disclose system being implemented on March 16, the key question to consider is not when an invention was first conceived as in the first-to-invent system, but rather when the invention was first publicly disclosed by another inventor or first filed with the USPTO. Thus, while an inventor can publicly disclose his invention and still file a patent application with the USPTO within one year of the disclosure, that disclosure would prevent any other inventor from receiving a patent on the same invention, even if the other inventor invented the same invention before the disclosure.

Similarly, if no previous disclosure was made, a filing at the USPTO by a later inventor would entitle that later inventor to a patent even though a second inventor came up with the invention earlier than the second inventor’s filing date. An example will better illustrate this scenario:

In this scenario, Inventor B would receive the patent, even though inventor A came up with the invention for the widget first. Inventor A would therefore be prohibited from practicing the invention patented by inventor B even though he came up with the invention before Inventor B did.

Now consider a second, somewhat modified scenario:

In this modified scenario, Inventor A would be entitled to the patent even though Inventor B filed his patent application first because Inventor A disclosed the invention before Inventor B filed his patent application.  Therefore, because Inventor A filed the patent application within one year of his public disclosure, Inventor A will be entitled to receive the patent. Inventor B would therefore be prohibited from practicing the invention patented by Inventor A.

In the case that a person learns of an invention that another inventor disclosed, copies the idea and attempts to file a patent application under first-to-file, the copier could not receive a valid patent on the invention by simply filing the patent application first because he did not “invent” the invention and is therefore not entitled to receive patent protection (though if the USPTO grants a patent to a non-inventor, the burden of proof would be on the other party to show that the non-inventor was not the true inventor of the patented technology).

Similarly, the non-inventor could not prevent the inventor from receiving a patent by publicly disclosing the invention based on information obtained from the inventor because in this case, the inventor will still retain the one-year grace period to file a patent application on the invention.

Preparing For First-To-File

There are a number of ways companies can prepare for the implementation of first to file. While it is always best to file patent applications as soon as possible, prior to implementation of first-to-file, companies should consider whether provisional applications should be filed to secure first-to-invent filing dates. Companies should also develop processes for quickly identifying inventions, and deciding whether to patent, disclose or otherwise protect those inventions.

Filing a provisional or non-provisional patent application with the USPTO prior to March 16 is the only way to ensure that the application will be treated under the first-to-invent regime. While it is preferable to file non-provisional applications to ensure that the claims of the patent application are fully supported by the description in the specification, if budget and timing does not allow for a non-provisional application to be filed by March 16, great care should be taken in preparing provisional applications (which do not require claims) to ensure that the invention and any known variations are disclosed in full detail.

It is important to take great care to fully describe the technology and all known variations in detail, because if the provisional application is converted after the March 16 changeover date, any claim directed to disclosure that was not supported by the original “first-to-invent” provisional application will be treated under the first-to-file regime.

After its implementation on March 16, first-to-file will present unique challenges and opportunities for inventors and businesses. Well-timed disclosures of inventions can block better-funded competitors from receiving patents. However, delaying the patent application or disclosure process can result in forfeiting of patent rights by exposing the application to more prior art. Even worse, delaying disclosing or filing a patent application can allow a competitor to file a patent application on the same technology even though they invented it later.

Therefore, companies should look to establish processes to quickly and efficiently identify inventions, and to determine whether to file patent applications or to otherwise publicly disclose those inventions. If the technology is worthy of patent protection, filing a series of low-cost provisional applications during the course of development of the technology can be a cost-effective way to establish a series of early “first-to-file” filing dates for the technology.

On the other hand, if it is decided that an invention is not worth immediately filing a patent application for, publicly disclosing the invention should prevent others from receiving patents on the same technology. But the decision to publicly disclose an invention before filing a patent application should not be taken lightly. Public disclosure prior to filing a patent application will likely cause foreign patent rights to be forfeited. In the case of software, which is not patentable in most foreign patent systems, this is not a problem. Therefore, disclosures for software-based inventions can be an ideal way to create prior art for others without the trade-off of forfeiting any patent rights that a company would otherwise be entitled to.

Article courtesy of TechCrunch

A few years ago in Prague I met a guy named Jeffrey Martin who is one of the world’s best panoramic photographers. At that time he had a bunch of weird hardware that took mostly panoramic photos but he’s since branched out to video, building his own methods for capturing 360-degree scenes. The Sphericam is his invention and it looks pretty amazing.

The project is now on Kickstarter and for $599 you can get the entry-level model which includes:

More expensive units include more features topping out at $2,000 for a unit with WiFi streaming and a huge battery for field reporting. Obviously this isn’t for the the dabbler, but it’s still cool that you can get a device that essentially videos an entire environment for less than a price of an entry-level DSLR.

The device takes 1280

Article courtesy of TechCrunch

Editor’s note: This is the second in a series of articles by Brad Woodcox that explores the patent system for entrepreneurs. The first examined the basics of the system. Woodcox is a technical specialist focusing on startup development for Novak Druce + Quigg, an intellectual property super boutique law firm. Follow him on Google+ and Twitter.

Now that you have background knowledge of the patent system (at least within the U.S.), we can analyze probably the most difficult question: “Should you pursue patents for your company or invention?” Unfortunately, there isn’t an easy or direct way to answer this question. Each business is unique and requires an individual analysis. This article discusses some frequently asked questions and presents an analysis framework that may be useful for you to explore the applicability of patents for your business/invention.

Given the significant costs of obtaining a patent, should you spend any of your limited capital on them?

It depends. A patent will not directly make your company’s product or service more successful, but it can have a positive financial impact on the business. The best way to analyze your situation is to look at what a patent could do for your company and how it would fit into your company strategy. This self-analysis should include product, finance, and market/competition elements.

For many Internet startups, the timeline to make it or pivot and try something else is often 9-24 months. With a standard patent application taking three-plus years and 80 percent to 90 percent of startups failing in that timeframe, most startups will not be around long enough to enforce the patent.

Given the startup failure rate and patent timeframe, should most Internet startups skip patents?

Not necessarily. A patent (or portfolio of patents) may be useful for both successful and unsuccessful companies. For successful companies, the reason is clear in that patents can be used as an offensive or defensive tool against competitors. An example of this is the patents that are being asserted in the smartphone industry by companies such as Apple and Samsung. For unsuccessful companies, the patented innovations can still hold tremendous value.

An example is Internet search engines. There have been dozens or even hundreds of Internet search engines, but most failed, as Google became the dominant search engine, even though they weren’t the first to market. Some of these now-defunct search companies had patents on innovative elements for search engines that Google later licensed or acquired (see Google acquires Cuil patents). Other large-scale examples are companies, such as Nortel, Novell, and Kodak, that faced financial challenges and were able to sell or are in the process of selling their patent portfolios for billions of dollars. Hence, a company can use patents as a tradable asset, perhaps even earning a profitable return which otherwise wouldn’t have occurred.

How can you determine whether your patent will be valuable?

This is difficult to expound. At the highest level, the patent must be regarding a topic in which other people or companies are interested. You can design the most amazing product, but if no one wants, needs, or buys the product, then it isn’t worth very much. While this sounds trivial, innovation bias can affect intelligent inventors and entrepreneurs. Other factors to consider are:

Article courtesy of TechCrunch

The end of needles is nigh: researches have developed a laser-based system “that blasts microscopic jets of drugs into the skin [that] could soon make getting a shot as painless as being hit with a puff of air,” reports phys.org. The laser system works by creating microsecond bubbles of air that penetrate the skin and injects a drug through a narrow space about as wide as a human hair.

Tests on guinea pigs has already proven successful and engineer Jack Yoh, professor of mechanical and aerospace engineering at Seoul National University in South Korea, is looking to commercialize it for clinical use. “In the immediate future, this technology could be most easily adopted to situations where small doses of drugs are injected at multiple sites,” he says.

For those who fear needles (or have young children), this invention cannot come soon enough.

Article courtesy of TechCrunch

Editor’s Note: This guest post was written by G. Nagesh Rao, an IP-Law and Technology Commercialization Strategist based out of San Francisco and Washington DC. He most recently worked for The City of Los Angeles’s CleanTech Initiatives and before that as a US Patent Examiner and Senior Policy Advisor for The US Department of Commerce’s Patent & Trademark Office and Office of Innovation and Entrepreneurship.

On the surface patent law might seem like a mundane subject, but it is actually an important type of law that is not properly appreciated. To illustrate this point consider the following example, US Patent No. 7,863,798, entitled as a “Nanocrystal Powered Nanomotor”; where the invention’s broadest claim, states:

1. A nanoscale motor, comprising: an atom reservoir operable to provide atoms; a nanoparticle ram coupled to the atom reservoir and operable to receive the atoms from the atom reservoir; a substrate coupling the atom reservoir to the nanoparticle ram; a nanolever coupled to the nanoparticle ram, the nanolever operable to move in response to the nanoparticle ram receiving the atoms from the atom reservoir; and a voltage source electrically coupled to the substrate and operable to deliver reversible positive and negative voltages to electrical connections of the motor, the reversible positive and negative voltages operable to cause reciprocal movement of the nanolever.

Now a good number of you just scratched your head and went “wtf” is this all about and what is this thing he is referring to as “claim”?

Simply put, claims are the heart of a patent, and serve as the social contract between the inventor and the public as to what limited term monopoly rights the owner of the invention is permitted.

The real invention disclosed here was the claimed functional arrangement of parts in the motor design’s ability to operate, not what the title of the invention states. I emphasize this point, because it is so important for the technology community to not only get the facts straight on a patent dispute but also make sure to comprehend what are the legal issues at hand from a patent infringement perspective, i.e. the violation of an invention’s patented claims.

Which is why it was a bit disappointing to read the overwhelming coverage behind the Apple vs Samsung case, among the many other notorious patent disputes underway (Yahoo vs Facebook, Google vs. Oracle, etc…) all consistently laced with sexy soundbites and a constant misuse of patent terminology, to what I can best guess were various authors decisions to offer diversity in word choices.

It was not until a colleague of mine sent over a blog post by Steve Wildstrom in Tech.Pinions which referenced  Nilay Patel’s separate posting as well, that I was able to get a better of sense of the issues after the verdict was rendered, and I am a frakking former seasoned US Patent Examiner.

Now this leads me to my next point, given how complex patent law is to even explain to the layman, why would these two companies allow for a random judge and jury, none of whom are technically qualified in the art of patent law juxtaposed with the Mobile Computing Arts, oversee such a complicated case in the first place? Furthermore the notion that these types of cases should be handled by trained experts has been emphasized recently by a few well-respected legal and technology thought leaders. I am looking at you Judge Richard Posner and Om Malik.

As a former Patent Examiner, it is my firm belief that the tech-community should adhere to some sort of gentleman’s agreement policy of having these legal cases always handled and mediated by the technically appropriate authorities. You do not need some legal fix to encourage such a behavior, just do it, like Twitter did with its pledge on avoiding frivolous patent litigation.

My educated guess for why many companies choose not to go down that road is because they probably do not want a trained mediating professional to call out “BS” on either side with respect to each other’s complaints of patent infringement.

However I do not feel that is a good reason to avoid having technically competent trained officials review these types of cases, especially when there is a lot at stake. As a side note,Apple, I am a tad surprised by your push to have this case even heard, given your patent infringement woes by Creative Technologies, 6-7 years ago regarding the iPod music player device. What’s with the love for patents all of a sudden?

I do want to give credit and a “gold star” to Judge Lucy Koh for having the foresight to initially ask not once but twice for Apple and Samsung to sit down and talk through the issues of claimed infringement rather than waste the court’s time, and avoid a railroad mess which will undoubtedly have to be cleaned up via appeal at the Court of Appeals for the Federal Circuit aka “The Patent Court”.

In closing I can tell you all from my seven years of government service as a US Patent Examiner, I probably saw between 1-2 inventions per year that really wow’ed me. A vast majority of the patent applications that came my way never saw the light of day as a patent and when they did it was much more often due to a technical matter of patent regulations, as required by the Manual of Patent Examining Procedure (MPEP) aka the “Gospel on Patent Law”, rather than the claimed invention showcasing a truly innovative and groundbreaking step above the known and cited prior art.

The ones that did wow me, well…I’ll craft up a series of posts in the near future discussing them, starting off with the invention pertaining to the 3D printing of body parts.

Article courtesy of TechCrunch

Some members of the Tesla community are currently directing a movie about the incredible life of inventor, Nikola Tesla — Electricity, The Life Story of Nikola Tesla. Tesla is the scientist was mostly credited with the invention of alternating current. After The Oatmeal proclaimed him as the greatest geek and helped the new Tesla museum raise one million dollars, Tesla is currently under the spotlights.

His work was essential to make electricity a commercial success because direct current cannot be transported efficiently. Yet, what is fascinating in Tesla’s story is that he used magic to spread the word about his invention.

The duo behind the movie is very serious about the project. Wilhelm Cashen is an engineer and entrepreneur with a long career in electromagnet controls and systems. Carol Bourgeouis has spent years studying and reading Tesla’s life and work.

The targeted audience of the Kickstarter project is clearly the hardcore fan of Tesla’s identity as the incentives indicate it. You can pledge $5 to get a Tesla button. Even more interesting, when you pledge $10 or more, you get a nice “I’m Helping to Correct History” sticker. Other goodies are available as well as copies of the movie when it’s finished. One backer even pledged $5,000 to become a producer and visit sets.

There are only four days to go. With $15,330 pledged of a goal of $35,000 to complete the production costs, the project may be a little too much targeted toward the Tesla fans. Nevertheless, seeing a project carried with so much passion is an inspiration.

Tesla has over 700 patents with his name revolving around radio, wireless telegraphy, remote control and even robotics. But he accumulated many debts and did not have the successful life he deserved.

Here is an insightful quote from Tesla: “We build but to tear down. Most of our work and resource is squandered. Our onward march is marked by devastation. Everywhere there is an appalling loss of time, effort and life. A cheerless view, but true.”

Article courtesy of TechCrunch

Editor’s Note: Leonid (“Lenny”) Kravets is a patent attorney at Panitch, Schwarze, Belisario and Nadel, LLP in Philadelphia, PA. Lenny focuses his practice on patent prosecution and intellectual property transactions in computer-related technology areas. He specializes in developing IP strategy for young technology companies and blogs on this topic at StartupsIP. Follow Lenny on Twitter: @lkravets and@startupsIP.

In the wake of Apple’s billion-plus dollar win in their patent suit against Samsung last week, much of the focus appears to be on the flaws in the patent system. Many argue that the suit involved patents that are “obvious,” and that Apple is a bully in enforcing them. These arguments show blatant disregard for the job of Patent Examiners in reviewing patent applications and prior art, and the jury in hearing and deciding the case, which listened to both sides of the arguments and decided that the patents are valid.

The obviousness argument highlights a misconception held by many about the patent system. Patent law requires that obviousness of a patent claim be considered at the time the invention was made. This means that the Patent Examiner considering a patent application must determine whether the invention would have been obvious as of the filing date (or possibly even earlier) of the patent application. It is irrelevant whether the invention is obvious when the patent is being examined, and is even more irrelevant whether the invention seems obvious many years after the invention has been brought to market. After-the-fact obviousness arguments being presented by many of the Internet commentators are therefore improper under the current patent law system.

The patents involved in Apple v. Samsung provide a perfect example of why this obviousness standard is proper. Perceptions of the state of the art (and therefore what is obvious) change quickly. For example, in 2007, when the BlackBerry was still king of the mobile market, many ridiculed Apple for the iPhone’s lack of a keyboard. Today, a phone with a physical keyboard is becoming rare. Therefore, I don’t think it is any stretch to say that Apple’s release of the iPhone revolutionized the mobile phone industry. This chart from AllThingsD’s John Paczkowski compares Samsung’s pre-iPhone selections to those that came after the iPhone’s release.

One of the jurors, Manuel Ilagan, pointed to this piece of evidence in support of the jury’s decision, saying that, “the e-mails that went back and forth from Samsung execs about the Apple features that they should incorporate into their devices was pretty damning to me. And also, on the last day, they showed the pictures of the phones that Samsung made before the iPhone came out and ones that they made after the iPhone came out….”

So why wasn’t Samsung able to prove obviousness? Granted patents are afforded a presumption of validity, making invaliding them more challenging. In such a high stakes case, it is likely that Samsung spent a great deal of time and energy trying to find prior art which would invalidate Apple’s patents. Despite their best efforts, the results of the case demonstrate that Samsung was ultimately unsuccessful in their search. It should be noted that this does not mean that relevant art does not exist, rather Samsung was simply unable to produce any such art that convinced the jury that Apple’s patents were invalid. Many believe that the jury was wrong on this point. However, given that the jury received extensive instructions on how to determine patent validity and had a chance to review all the evidence offered by both sides, their opinion on the validity of the patents was much more informed that most of us watching the case from the outside.

So what can startups take away from this decision involving two tech giants?  For one, patents in the U.S. are incredibly valuable, and will continue to be valuable for the foreseeable future. Two, if you believe your technology holds any value, it is probably valuable enough to protect it through intellectual property rights. This is especially true where a startup is operating in a crowded space and producing innovations that may only be improvements over a competitor’s existing products or designs. As Apple demonstrated, these improvements – even if subtle – may be adopted and indeed even become commonplace in the startup’s market. As Benedict Evans so eloquently put on Twitter, “[t]he measure of Apple’s achievement: what was unimaginable in 2006 now seems so obvious that people claim Apple should have no patents.”

Finally, if you are a startup worrying about competitors suing you out of existence, consider Robert Scoble’s take on the Samsung decision, “I think this is actually a sizable win for Samsung. Why? It only cost $1 billion to become the #2 most profitable mobile company….I bet that RIM wishes it had copied the iPhone a lot sooner than it did. So does Nokia, and HTC and a raft of other manufacturers I bet. Samsung is a much healthier company than any of those BECAUSE it copied the iPhone.” So while as a patent attorney I never advocate knowingly infringing the patent rights of others, and patent licensing and purchase deals can avoid many of the troubles faced by Samsung (if Samsung had simply taken Apple’s license offer, their total cost would have been half the jury verdict), Samsung may still be in a better position having copied Apple and been found to infringe than if it had never copied at all.

Special thanks to patent attorney Joseph Holovachuk (@twitchuk) for his comments in drafting this article.

Article courtesy of TechCrunch

Lectures are often the least educational aspect of college; I know, I’ve taught college seniors and witnessed how little students learn during their four years in higher education. So, while it’s noble that MIT and Harvard are opening their otherwise exclusive lecture content to the public with EdX, hanging a webcam inside of a classroom is a not a “revolution in education”.

A revolution in education would be replacing lectures with the Khan Academy and dedicating class time to hands-on learning, which is exactly what Stanford’s medical school proposed last week. Stanford realizes that great education comes from being surrounded by inspiring peers, being coached by world-class thinkers, and spending time solving actual problems.

To give a little background, last week, Harvard and MIT made headlines with the launch of EdX, a joint online education initiative that will place lectures from the best instructors online, complete with reading material, automated quizzes, wiki-style forums, and a tailored assessment of progress. Essentially, EdX slightly expands the existing MIT OpenCourseWare with some basic forum and feedback technology–technology that has been around since the dial-up days of the late 90′s (and what universities have had since the invention of the Scantron). MIT OpenCourseWare has been wildly popular, with over 125 million lifetime visitors; so, the new EdX will certainly be useful for the existing base of MIT students who use it in deciding their course schedule and those in the public who want to enhance a neatly organized syllabus of readings with some occasional online chats.

But, saying that EdX is “the biggest change in education since the invention of the printing press” ignores the fact that lectures are often the least educational aspect of college: after four years of instruction, research shows that many students haven’t mastered basic reasoning or communication skills. Students forget most of what they hear in lecture and then only recall 40% of the tested material two years later. Lectures do little for students actually enrolled in the school, let alone the millions of online users who will study part-time, without a supportive community or frequent feedback from a professor.

So, last week, two Stanford professors made a courageous proposal to ditch lectures in the medical school. “For most of the 20th century, lectures provided an efficient way to transfer knowledge, But in an era with a perfect video-delivery platform — one that serves up billions of YouTube views and millions of TED Talks on such things as technology, entertainment, and design — why would anyone waste precious class time on a lecture?,” write Associate Medical School dean, Charles Prober and business professor, Chip Heath, in The New England Journal of Medicine. Instead, they call for an embrace of the “flipped” classroom, where students review Khan Academy’s YouTube lectures at home and solve problems alongside professors in the classroom. Students seem to love the idea: when Stanford piloted the flipped classroom in a Biochemistry course, attendance ballooned from roughly 30% to 80%.

Skeptical readers may argue that Khan Academy can’t compete with lectures from the world’s great thinkers. In response, Prober and Heath point to a recent one-week study that compared the outcomes of two classes, a control class that received a lecture from a Nobel Prize-winning physicist and an experimental section where students worked with graduate assistants to solve physics problems. Test scores for the experimental group (non-lecture) was nearly double that of the control section (41% to 74%).

“Students are being taught roughly the same way they were taught when the Wright brothers were tinkering at Kitty Hawk,” they explain. After a revolution, an organization should bear little resemblance to its former self. Harvard and MIT have merely placed the 20th century education model online. Stanford, on the other hand, is completely doing away with the old model of the “sage on the stage” and embracing a learning environment that mirrors life forever connected to the world’s information.

[Image via the University of Waterloo.]

Article courtesy of TechCrunch

Patent blogs were lit up after the Supreme Court’s decision in Prometheus v. Mayo. Some have hailed the decision as a “harbinger of progress to come” while others have denounced it as revealing “just how little the Court understands the nuances of science, philosophy and language – let alone the patent law itself.” Describing the decision as “controversial” is probably an understatement.

The opinion focused primarily on Section 101 of the United States Patent Act, which sets out the basic categories of patent eligible subject matter. The statute is short and sweet: “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 therefore …” So simple, right?

Obviously not. Interpreting Section 101, Courts have consistently held that abstract ideas, natural phenomena, and laws of nature are not eligible for patent protection. Courts have also (less consistently) held that mathematical algorithms are either abstract ideas or laws of nature. Software is essentially composed of mathematical algorithms. Thus, the judicial interpretation of Section 101 could decide, once and for all, whether software patents are valid. If you’re serious about software patents, you read Prometheus v. Mayo with bated breath.

The case: Prometheus Labs patented a test to identify the appropriate dose of thiopurines, a class of drugs used to treat gastrointestinal disorders. The problem with thiopurines is that at levels too low the drug is ineffective, while at levels too high it is toxic – even worse, different people metabolize the drug differently.

Although scientists knew that levels of blood metabolites were correlated with effective treatment, Prometheus discovered the specific range of this correlation and patented a test that basically involved (1) administering thiopurine drugs and (2) determining whether the concentration of blood metabolites fell within a specified range. Mayo Labs purchased these tests from Prometheus for some time, but eventually went in-house, developing and marketing its own test. None too pleased, Prometheus filed suit against Mayo for patent infringement.

I know what you’re thinking. What does any of this have to do with software?

It turns out that software patents have tormented the Supreme Court for years. In 1978, the Court first refused to grant patent protection to a mathematical algorithm, but then in 1981 held that a process having novel elements, which included software, could be patented if the software was tied to a specific machine. As Professor Menell of U.C. Berkeley put it, “Coming during the first decade of software’s ascendancy, the [prior case law] produced more heat than light in applying century-old patent jurisprudence to an amorphous, rapidly developing field of technology.” Well said.

In 1998, the Federal Circuit ruled that software by itself was patentable, without need for any specific machine, so long as the invention produced a “useful, concrete, and tangible result.” That all changed in 2008, however, when the Federal Circuit displaced the this “tangible result” standard with the “machine-or-transformation test” (call it “MoT” for the sake of brevity). MoT provides that a claimed process is patent-eligible if (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.

The Supreme Court affirmed this decision, but noted that MoT was not the exclusive test of patentability, although it was “a useful and important clue, an investigative tool.” Since then, most lower courts have continued to rely on MoT in evaluating software patents, having little else to guide them.

That’s unfortunate because MoT fails, hard. And this failure is partially to blame for the present – somewhat ridiculous – state of the patent system, where startups essentially ignore prior patents (far too many to review anyway) and large companies stockpile and cross-license nearly worthless patents to protect themselves from patent trolls that are likely gunning for them.

My favorite example of MoT shortcoming is the infamous “Method of Exercising a Cat,” which consists of directing a laser pointer in the vicinity of a cat, then moving the laser pointer “so as to cause the bright pattern of light to move in an irregular way fascinating to cats, and to any other animal with a chase instinct.” Judges have remarked that this patent could satisfy MoT because “the sedentary cat becomes a fit feline” – it involves both a transformation (the physical properties of the cat) and a specific machine (the laser pointer).

Much more ink could be spilled laying bare the many faults of MoT, but you get the idea. MoT is supposed to limit patents to technological or industrial processes, it has been fashioned as a gatekeeper, a threshold analysis if you will. The fundamental problem is that MoT allows the tail to wag the dog (or cat) by focusing on whether a new invention is “tied to a particular machine” or “transforms a particular thing” rather than the invention itself.

Courts seemingly cannot do any better. This reflects the immense difficulty of creating an effective “gatekeeper” test that draws conceptual circles around categories of technology that are rapidly changing and says definitively, as a threshold matter, what’s in and what’s out. Instead, we need an approach that is focused directly on the invention, its practical application, and whether, if patented, it would stymie further discovery by precluding the fundamental building blocks of innovation. This is what Section 101 is really about.

Back to Prometheus v. Mayo: Given these problems, many hoped the Supreme Court would provide some much-needed guidance in applying Section 101. Wishful thinking I suppose. The highest court ultimately decided that the metabolite correlations themselves are laws of nature and that Prometheus did not “add enough to the correlations to allow the processes they describe to qualify as patent eligible.”

The Court reasoned, “If a law of nature is not patentable, then neither is a process reciting a law of nature, unless that process has additional features that provide practical assurance that the process is more than a drafting effort designed to monopolize the law of nature itself.”

What would be “enough” to make the processes patent eligible? What “additional features” would provide the requisite practical assurance? The court doesn’t say. While the word “enough” was helpfully italicized in the court’s opinion, italics alone do not add clarity to otherwise vague, amorphous standards. Although we can applaud concern over monopolization of natural laws, simply saying that Prometheus did not add “enough” to these laws is basically useless.

The court also notes that “the steps in the claimed processes (apart from the natural laws themselves) involve well-understood, routine, conventional activity previously engaged in by researchers in the field.” These steps do not include, as the court remarks, “an ‘inventive concept’ sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the natural law itself.”

So, besides the correlation between metabolite levels and effective treatment (which is an unpatentable natural law), there is nothing “inventive” about the test developed by Prometheus; really they were just trying to patent an underlying law of nature.

This analysis is all bad. Section 101 tells us what categories of inventions are eligible for patent protection. Section 102 tells us a quality that an invention must have (i.e., novelty) to be patentable. Patent-eligibility under Section 101 is not the same as patentability under Section 102 (even though they sound alike).

The court should not be sneaking the Section 102 analysis into a Section 101 inquiry. In fact, in that 1981 case I mentioned earlier, the Supreme Court specifically said, “the ‘novelty’ of any element or steps in a process, or even of the process itself, is of no relevance in determining whether the subject matter of a claim falls within the [Section] 101 categories of possibly patentable subject matter.” See, all bad.

The take away point is that the Supreme Court didn’t give us what we needed; in fact, it probably made things worse from a doctrinal standpoint. This is especially true because the opinion supports the view that Section 101 is a threshold inquiry that must be decided before any analysis under Sections 102, 103, or 112. That the court nevertheless sneaks Section 102 principles into its Section 101 inquiry is telling – it’s telling me that the threshold approach isn’t a very good one.

Despite all this, there is some encouraging language at the end of the opinion:

Patent protection is, after all, a two-edged sword. On the one hand, the promise of exclusive rights provides monetary incentives that lead to creation, invention, and discovery. On the other hand, that very exclusivity can impede the flow of information that might permit, indeed spur, invention …

That’s something we can all agree on. It also shows a willingness by this Supreme Court (the decision was unanimous) to think about principles of patent law from a policy perspective. Perhaps we’re seeing a shift in that direction, with more focus on the invention, its practical application, and the effects of patents on further discovery. That is, after all, what Section 101 is really about.

The other possibility is that the court is punting to Congress. In the penultimate paragraph, the court says, “And we must recognize the role of Congress in crafting more finely tailored rules where necessary.” I won’t hold my breath.