Court Greatly Limits Software And Business Method Patents

from the huge-victory-for-innovation dept

I don’t say this often, but it looks like the Court of Appeals for the Federal Circuit (CAFC) — or “the patent court” — got a big one mostly right. In the rehearing of the Bilski case concerning the patentability of software and business method patents, CAFC just came out with its ruling that will significantly limit software and business method patents, bringing the rules way back towards what they were years ago, and effectively rolling back some of the earlier, dreadful, CAFC decisions that opened the barn doors towards tons and tons of software and business method patents.

The summary is that the court has said that there’s a two-pronged test to determine whether a software of business method process patent is valid: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. In other words, pure software or business method patents that are neither tied to a specific machine nor change something into a different state are not patentable. That means a significant number of software and business method patents are about to disappear, freeing up many industries to be much more innovative — at a time when that’s desperately needed.

Earlier this year, I laid out the arguments on both sides of the case, surprising some by pointing out that I did not think it was right for the courts to carve out a special “exemption” for software or business model patents, but that a single standard should be applied across all patents. From my first read of the ruling, it looks like CAFC may have gotten this right. It doesn’t carve out an exception, but makes it clear what the rules are for patents, based on earlier Supreme Court rulings, and makes sure the same rules are applied across the board. Specifically, CAFC recognizes that without that two-pronged test, the patent system effectively allows the patenting of overall concepts, rather than specific applications. While patent system defenders always claim that “ideas are not patentable,” in practice, that was not true over the past decade. This ruling brings things back into line.

The ruling does note that such rules may be changed in the future, as necessitated by changes in technology, but “we see no need for such a departure.” This statement strikes me as a bit odd — as it shouldn’t be the court’s determination for when there should be such a “departure,” but that of the legislative body (and you can bet lobbyists are rushing to Capitol Hill with new legislation to expand the scope of the patent system as we speak).

The ruling specifically addresses the State Street ruling that opened the doors to the widespread patenting of software and business methods and found that the earlier ruling erred, somewhat, in creating an improper standard for determining patentability that did not agree with Supreme Court precedent.

There are some dissenting opinions, with one that freaks out and claims that the court is usurping the legislative role, in changing what is patentable based on their own beliefs rather than what the law says. But, in a separate concurring opinion, two of the judges rightly point out that this is incorrect, show how their ruling is consistent with the law, and suggest that the only ones going beyond what the law says are those who are aggressively trying to expand what is patentable.

However, there’s another dissenting opinion, well worth reading, that goes even further and argues that the CAFC ruling doesn’t go far enough in repudiating the State Street ruling, and even points out why the courts are wrong to claim that “anything under the sun invented by man” is patentable. This dissent, written by Judge Mayer, is highly worth reading, showing all of the unintended consequences and harm done by the vast expansion of patentable materials — mainly focusing on the evils of business method patents. “Methods of doing business do not apply ‘the law of nature to a new and useful end.’ Because the innovative aspect of such methods is an entrepreneurial rather than a technological one, they should be deemed ineligible for patent protection.” Mayer points out, as we have noted repeatedly, that the clause in the Constitution that allows patents does “not grant Congress unfettered authority to issue patents,” but rather, only to issue patents that effectively promote the progress. The dissent goes on to show how so many patents do exactly the opposite. It’s really a fantastic read.

So What Happens Now?

Well, it may take some time to digest, but it’s likely this will be appealed to the Supreme Court, so that process may take a while. Given the Supreme Court’s recent rulings on patents, however, if I had to take a guess, I think they would support this ruling. But, you never know until it’s decided.

This ruling will, however, send serious shockwaves through pretty much every industry — because software and business method patents are found just about everywhere. Companies that rely on such patents (such as patent hoarding companies) may have just found out their current business model is about to go away. An awful lot of patents are now about to be invalidated, and a lot of patent lawsuits may get thrown out as the patents do not meet the criteria set forth in this decision.

You can bet, however, that the supporters of widespread software and business method patents will not go down without quite a fight. Beyond appealing the decision, it’s likely there will be a push for a different type of patent reform in Congress that will expand the patent system to allow software and business method patents. There will be ridiculous announcements from companies that have chosen to litigate rather than innovate, claiming that they cannot innovate (even though they weren’t) without much broader patents that they were actually using to hinder innovation.

So, while this is a huge victory for freeing up the ability to innovate, those who have used bogus patents to profit for years cannot be expected to go along quietly.

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Comments on “Court Greatly Limits Software And Business Method Patents”

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83 Comments
Michael Feigin (user link) says:

This is being overblown...

…software patents are still valid, but the 103 test should be applied, NOT 101 in many cases.

They did NOT overrule State Street or Diamond v. Dier which are both held to still be good law. What they did say – and what the Patent Office has already been doing – is requiring that your method not just be a mental transformation, but be tied to actually transforming a physical object or be tied to a physical object. Bilski had lousy claims and shouldn’t have been allowed. They chose it for just that purpose, but software patents, if they meet the test, are still valid.

I put more comments and quotes from the case on my own website at http://patentlawny.com/index.php/business-method-patents

Mike (profile) says:

Re: This is being overblown...

They did NOT overrule State Street or Diamond v. Dier which are both held to still be good law.

Nor did I say they overruled either, so I’m not sure why you would suggest it. However, they very clearly did note that State Street decision erred in terms of setting a new standard.

They chose it for just that purpose, but software patents, if they meet the test, are still valid.

As I stated — though this WILL *significantly* limit what’s patentable.

MIKE PASS THE LSTAT FIRST says:

Masnick misinterprets YET ANOTHER ruling

Mike:

You are flat out wrong on your interpretation of the decision, and are blowing the entire thing out of proportion.

Your opinion of what is–and is not–good law means nothing.

You should consider driving an ice cream truck. Leave the legal blogging for the adults.

Back to IT class, Mike.

PatentLawHurtsMikesHead says:

Mike Swings and Misses Wildly on 7th Grade Review of Decision

Mike

Everyone at our firm loves your blog, for all of the wrong reasons.

1. Your interpretation of rulings–like this one–remind us of 1st year law students who end up flunking out.

2. You’re a bit obtuse.

3. You misidentified the case number.

If you were in law school, the prof would have you stand up and apologize to the rest of us.

But that will never happen. Because you don’t seem intellectually gifted enough to pass the exam.

DanC says:

Re: This is being overblown...

I think he may be referring to page 20 of the decision:

Therefore, we also conclude that the “useful, concrete and tangible result” inquiry is inadequate and reaffirm that the machine-or-transformation test outlined by the Supreme Court is the proper test to apply.

And the footnote on the same page:

As a result, those portions of our opinions in State Street and AT&T relying solely on a “useful, concrete and tangible result” analysis should no longer be relied on.

Anonymous Coward says:

Software patents are an important mechanism to encourge firms to produce computer software. True innovation does not involve reverse engineering someone elses code. Patents serve the purpose of protecting the investors who fund innovation. All this hippie speak about “..That means a significant number of software and business method patents are about to disappear, freeing up many industries to be much more innovative..” is a bunch of crap. Its going to free up competitors to hitch a ride on someone elses work. You DOT COM people think innovation involves putting a new logo on something, it makes me sick.

Why don’t you people try coming up with original ideas. If you aren’t a creative thinker you pay someone who is.

If you can’t innovate, duplicate. BAH!

mike42 (profile) says:

Re: Re:

Wow! You made my argument for me. You claim software patents “serve the purpose of protecting the investors who fund innovation.” The purpose of patents is to encourage innovation, not protect investors. And if it was so important, why didn’t it exist prior to 1999 in any real form? And why has R&D spending in the US remained flat in the past 50 years?
I have never had a problem with “classic” patents. With a real product, you have R&D, toolup, manufacturing, transportation, and marketing to pay for. That’s a significant amount of time and money. But software? I’ve built apps in 6 months that rivaled commercial apps. And once their even slightly done, they’re ready to go out the door.
I’m a professional programmer who is totally against software patents. I’ve rarely seen a piece of truly innovative software, and I can’t recall a single piece of innovative software produced by a corporation who patented, or would want to patent, that innovation. Some of the greatest innovations, in my opinion, where made by John Carmack (of ID Software), and he publicly hates software patents!
Maybe you aren’t aware of what has been patented, but one-click, double-click, and FAT are not new ideas, and not remotely innovative, IMHO.

Lonnie E. Holder says:

Re: Re: Mike 42, R&D Spending & Software Patents

And why has R&D spending in the US remained flat in the past 50 years?

Well, probably because it hasn’t remained “flat in the past 50 years.” The graph below shows R&D spending over since 1953. It only appears flat if you look parallel to the slope. Indeed, R&D spending has virtually exploded since the early 1980’s.

http://www.nsf.gov/statistics/seind04/c4/fig04-01.htm

An article noting the growth of R&D in 2008, even though the economy has not done well.

http://www.rdmag.com/pdf/RD0802_FundForecast.pdf

An article noting that U.S. pharm R&D has caught up and passed EU R&D spending over the last several years:

http://www.nber.org/papers/w12676

A simple search of the internet seems to indicate that R&D spending has generally grown over the last 50 years rather than remained stagnant. Perhaps even more important, while the U.S. has moved its emphasis to the service sector, R&D spending has continued to grow along with GDP. You would think that the move into the service sectors would have the opposite effect.

Now, with respect to software patents, the very first software patent was issued in 1966, in Great Britain (GB 1039141). U.S. software patents date back to the 1970’s though with controversy. By the early 1990’s, software patents were being routinely issued, and the USPTO issued a guideline for examining patents in 1996 (which seems a little before 1999).

Here is a graph showing the number of patents in the software class issued by year, going by to 1985:

http://en.wikipedia.org/wiki/Image:Software_patents2.JPG

Mike (profile) says:

Seems to have struck a never...

Apparently this post has struck a nerve with someone who is commenting repeatedly under different names (same IP address, though) full of insults and defamatory statements, but not a single actual point of fact. Actually, at one point he claims I got the case number wrong… which is interesting because I never mentioned the case number.

Amusing to see folks whose money train just screeched to a halt reacting by lashing out at me.

I’ll have more on this later, as I’ve been talking to some patent attorneys on all sides of the issue. It’s fascinating to see how they’re interpreting this ruling.

Anonymous Coward says:

Re: Seems to have struck a never...

“I’ll have more on this later, as I’ve been talking to some patent attorneys on all sides of the issue. It’s fascinating to see how they’re interpreting this ruling.”

Concur, especially since the decision is quite lengthy and in no way can anyone assimilate its content and potential ramifications on the same day it issued. It will take me considerable time over several days just to read it for comprehension. Fleshing out its nuances will take even longer.

Anonymous Coward says:

Facts:

“As to machine implementation, Applicants themselves admit that the language of claim 1 does not limit any process step to any specific machine or apparatus. See Appellants’ Br. at 11. As a result, issues specific to the machine implementation part of the test are not before us today. We leave to future cases the elaboration of the precise contours of machine implementation, as well as the answers to particular questions, such as whether or when recitation of a computer suffices to tie a process claim to a particular machine.”

“… although invited to do so by several amici, we decline to adopt a broad exclusion over software or any other such category of subject matter beyond the exclusion of claims drawn to fundamental principles set forth by the Supreme Court … We also note that the process claim at issue in this appeal is not, in any event, a software claim. Thus, the facts here would be largely unhelpful in illuminating the distinctions between those software claims that are patent-eligible and those that are not.”

ThinskinnedMike says:

Hippie Masnick Can't Stand when People Disagree w Him

Masnick:

You Hippie! You hate when all of these people disagree with your childlike interpretation of the ruling.

People call you out on the fact your NOT a lawyer. You hate it. It makes you cry.

But all of these people can’t be wrong Mike. And I highly doubt they are all coming from the same IP address.

That is paranoid delusional thinking on your part, Mike. It’s a bit insincere as well. You can’t stand the fact that you might be dead wrong on an issue. So like Arrington, you call out the very people who support your blog.

The people have spoken, Michael. Respect their opinion, even if it differs from yours.

Jake Lieber says:

I respectfully disagree with you Mike

Mike:

Gotta say I’m one of your readers and I could not disagree with you more on how you read the ruling. Not sure why you hate people for protecting their inventions. Maybe you should copyright this blog and then let someone else use it for profit.

Love ya, pal. But you missed on this one.

Mike (profile) says:

Re: I respectfully disagree with you Mike

Gotta say I’m one of your readers and I could not disagree with you more on how you read the ruling.

Hi Jake, can you point out on which points you disagree with me on? It’s difficult to discuss anything when everyone disagreeing with me doesn’t make any actual points.

Not sure why you hate people for protecting their inventions

Hmm. I don’t hate anyone. What gives you that idea? I am only interested in what will lead to the best overall outcome for innovation, and that means recognizing that protectionist policies quite often harm everyone — including those they’re designed to “protect.” I don’t hate anyone for protecting their inventions. I just think that there are better ways to build a business these days.

How is it hateful to explain to someone how they can make more money?

Maybe you should copyright this blog and then let someone else use it for profit.

I honestly have no clue what that means. We have said before that anyone is free to try to do whatever they want with the blog’s content, even if they want to profit from it. If they can, more power to them.

G. Fernandes says:

Re: I respectfully disagree with you Mike

Well, this is not about protecting anyone’s inventions. It’s about how that is achieved. Patents block alternative solutions to the patented problem domain. This is especially true for software – e.g. one-click might be implemented in several ways completely independent of each other. Patenting one-click prevents others from improving it.

Copyright on the other hand is different than patents and it’s perfectly acceptable to apply copyright laws to protect software.

The fact that many software companies (and not a few shell companies) buy patents on methods and use them to prevent innovation and improvement is the problem here. That’s the problem that this ruling addresses somewhat.

Anonymous Coward says:

Association is not causation. To assume that strong intellectual property laws foster innovation ignores the simple fact that you can track innovation before said laws, and that you can track innovation in countries without strong IP laws.

I’m always amazed that the strongest proponents of a “free market” also seem to be the strongest proponent of government granted monopolies in the form of extended patent, copyright, and trademark laws.

Its the new world order, everyone is connected to a global communication network that causes anything that can be converted into a digital format to become an infinte good. For the love of god change your business model instead of trying to reverse time.

(btw, Felony interference with a business model is my favorite phrase Mike)

Willton says:

Re: No Ex Post Facto

101 reject the incoming and yet-to-be-granted software business methods – but patents prev. granted should be upheld

An interpretation of an existing statute is not an ex post facto law. The law has not changed; only its interpretation has changed. The idea is that the law has been on the books since it’s inception (in this case, 1952), and interpretations of such law, even if they change from time to time, will be enforceable retroactively to the date of the law’s enaction. Hence, previously granted patents that are not valid in light of Bilski will be subject to invalidation.

David A. Wheeler (user link) says:

HUH? It _affirms_ State Street, etc.

Read it again, I think you missed key factors; this isn’t as good a ruling for innovation as you THINK it is. For example, the ruling REAFFIRMS State Street (page 21), in particular: “We further reject calls for categorical exclusions beyond those for fundamental principles already identified by the Supreme Court. 22 We rejected just such an
exclusion in State Street, noting that the so-called “business method exception” was
unlawful and that business method claims (and indeed all process claims) are “subject
to the same legal requirements for patentability as applied to any other process or
method.” 149 F.3d at 1375-76. We reaffirm this conclusion.”

So after convoluted arguments, they’ve managed to rule out stuff that even the patent office agrees shouldn’t be patentable, but they’re still allowing business method patents, software patents, and other nonsense.

Mike (profile) says:

Re: HUH? It _affirms_ State Street, etc.

Read it again, I think you missed key factors; this isn’t as good a ruling for innovation as you THINK it is. For example, the ruling REAFFIRMS State Street (page 21), in particular: “We further reject calls for categorical exclusions beyond those for fundamental principles already identified by the Supreme Court

It rejects it in all but name. It says the standard set forth by State Street is no longer valid. The only way they uphold State Street is in saying that there shouldn’t be a special carve out exemption for business method patents — and I’ve pointed out in the past that I agree on that. There shouldn’t be a carve out. There such just be a much more stringent overall test.

While they say they reaffirm State Street, they cut the meat of State Street out completely.

So after convoluted arguments, they’ve managed to rule out stuff that even the patent office agrees shouldn’t be patentable, but they’re still allowing business method patents, software patents, and other nonsense.

Only in a greatly diminished capacity.

An embedded real-time software engineer. says:

It does sound like somebody out there is a tad worried that he may have to find a real job because of this ruling. I’m no lawyer, but I’ve worked in software engineering for over 25 years. I’ve always known that software patents are absolute nonsense. The way things work now, I’m surprised nobody’s tried to patent the C: command line prompt in DOS windows.

“Software patents are an important mechanism to encourge firms to produce computer software.”

Utter nonsense. We’ve had commercial software long before the notion of software patents was introduced.

In reality software patents interfere with the production of computer software due the the hassles and fear of law suits.

angry dude says:

Re: Re:

You are a bad “embedded real-time software engineer”, pal
You know almost nothing about the subject
What is your area of expertise, in addition to hacking some C and assembly code, probably just fixing bugs in someone elses’ code ?
Do you know, for example, what kind of software runs on your cell phone ?
It does have a tiny DSP chip, most probably TI, running a shitload of software
One of the most important components is speech codec – making it possible to compress digitized speech signals in real time while preserving good quality
This is one of the most important areas of embedded software engineering
But before embedded software even existed, I mean long before semiconductor ships and even before the transistors, the speech coding theory was rather well developed – but it was all analog, not digital
Evethyhint was patented of course starting with the first patent granted to Homer Dudley of Bell Labs back in early 30s
Do you realy think that just because speech coding technology became digital and is enabled nowadays by DSP chips running software code it should be unpatentable ?
Nobody objected patenting analog electronic devices for encoding and transmitting speech signals – it was just like patenting any other machinery
But today everything can be implemented or at least prototyped in softwate
Why do you think it should cease to be patentable ?
If you have a problem with general concept of patents then petition your congressional representaivesd to change US Constitution: we’ll see how it goes…
Until then just shup up, dude, really, just shut up already

Anonymous Coward says:

I agree patents should be limited to specific applications – but does this mean that a new technological development will be unpatentable, if it is implemented in software and operates on data? I see there’s a problem of excessive generality there, because “data” could be *anything*.

Concrete example: would Google’s *PageRank* patent remain valid?

My thought is that it can, provided the data is limited in some way. The precise extent of which needs to to be worked out by the courts (expensive and uncertain) or legislature.

dinnerbell says:

stop the shilling!!!

“There will be ridiculous announcements from companies that have chosen to litigate rather than innovate, claiming that they cannot innovate (even though they weren’t)…”

if you came up with something first, you innovated by definition. if it wasn’t worthwhile, no one will use it so who cares. faulty logic as usual.

Otto says:

Motivations and rational choice?

Really interesting to observe how many of the commentors appear to be practitioners in the field.

This decision means what it means, and the debate in this forum won’t change the outcome. So it strikes me that in terms of purely economic motivation, those disputing the original interpretation are not acting in their own rational interests.

The logic goes like this. Suppose for a moment that the popular press thinks software patents are no longer valid, but you think they’re misinterpreting, AND you’re a practitioner in the field. What you would want is for the news to scare away other practitioners from plaintiff practice, leaving you with less competition and your pick of the best cases.

Now, I’m not opining either way on who is right about the underlying issue. All I’m saying is, if someone from the plaintiff’s bar feels a need to set the record straight from his or her point of view, that would be an altruistic gesture indeed.

confused says:

Hmm, I think it’s all starting to make sense. We have Republicans, Democrats, and Liberals. And, w/r/to business method patents, we have believers, non-believers and the liberals (who believe that before a decision can be reached, we should publicly debate the issue for all eternity). OK, maybe that’s a stretch, but we all would agree that liberals would want to debate the issue well past patent expiration just so that each side, and each person on each side, had their voice heard.

Now, I only need to figure out whether a believer = Republican and a non-believer = Democrat (or vice versa) before I go off to vote since I’m quite certain that every politician is very familiar with this case.

Seriously, I firmly believe this if, as a country, we erode our patent rights, we will stifle innovation and ultimately lead our country away from being an economic power (and ultimately the one superpower).

angry dude says:

Re: Wake up, dude

“Seriously, I firmly believe this if, as a country, we erode our patent rights, we will stifle innovation and ultimately lead our country away from being an economic power (and ultimately the one superpower).”

Patent rights have been severely eroded in this country
since the infamous EBay decision by the US Supreme Court back in 2005
That decision pretty much denied patent protection power to the small patent holders – the ones who cannot directly compete in the market with the likes of Mshit or IBM and thus need patent protection the most

I filed my patent back in early 2002, got it approved in late 2006
Had I known about the things to come I would never even consider filing for patent protection

My advice to small inventors in the curent environment: if you can sell your invention and still keep it a trade secret then just do it, don’t patent it, patenting your invention will only give the big guys a free ride on your work
If you can’t keep it a trade secret (e.g. if it’s some simple mechanical contraption easy to disassemble and copy) then just forget about it, have a beer and relax
YOu are up against the wall and you only gonna waste your hard earned money and a good part of your life pursuing your inventions
Just watch the movie “Flash of Genius”
It’s all in the movie

Pan says:

Software patents are a nuissance i agree

I work as an attorney for one of the biggest international software and hardware companies.I am staged in Europe and I have finished law school with honors (just for you “I am a smart lawyer with nothing to say but a lot to brag about” guys).
I agree that the article is misleading from legal point of view, however I have to support the fact that software patents are not used to protect innovative ideas.I know it from my own practice that they are used as a defensive tool.The general thinking is “we have to have patent this before someone else does”.I would like all of you software patent supporters to think of a software patent that actually serves its purpose as a protection of an innovative idea, name JUST ONE software patent that is not a complete nonsense please.
I must say that I strongly encourage our company to strive towards non patentability of software, becasue we outsorce millions of dollars on patents just for the sake of having them before someone else does, without actually using them.
BTW.: Without going into much detail,there are no software patents allowed in Europe, and we have managed to protect our porgrams with copyright law just as fine.

angry dude says:

Re: Software patents are a nuissance i agree

What’s wrong with you, dude

I pity your education and your job

Just one software patent ???

OK

RSA Patent

It revolutionized the field of cryptography and enabled secure e-commerce
Say thanks to those 3 guys from MIT every time you tyoe your credit card number in your browser

RSA algorithm is an essential part of many tools and software packages like secure shell etc etc etc

Get your GED first before passing your opinion
Seriously, I mean it

Embedded real-time software engineer says:

Dude, You’ve giving me a good laugh this morning,, thanks.

“Do you know, for example, what kind of software runs on your cell phone ?”

You could say that as I develop audio processing applications.

“It does have a tiny DSP chip, most probably TI, running a shitload of software”

I don’t use those boring little cell-phone dsp’s, I prefer TI320C6455’s and C6414’s in my work. I occasionally program on C5510’s and C6211’s also. And I know all about the nonsense and hassles you’ve gotta go through anytime you try to use codecs more complicated than G.711. I’ve been interviewed by lawyers on such development. There was somebody who went on a mass lawsuit over G.722 some years back. I’m not sure how it ended, but it was a total waste of everybodies time and money.

Software (algorithms) should be copyrightable, not patentable. Software is much closer to mathmatical formulas than to inventions. Nothing I’ve written or used should be subject to patents. Period.

Now I ask you again, are you worried you’re going to have to find a real job because of this?

angry dude says:

Re: a litle education might help you

“Software (algorithms) should be copyrightable, not patentable.”

Hm, how do you copyright an algorithm ?
Do you write it in plain English, as a flowchart, in a pseudo code, in one of the dozens of programming languages like C or Java or heck maybe even Lisp or Forth, all of them ?
Dude, you don’t know what you are talking about

“Software is much closer to mathmatical formulas than to inventions. Nothing I’ve written or used should be subject to patents. Period.”

Oh, I am quite sure nothing that you’ve personally written is patentable…
But you use ideas of other, much brighter people, every day when you hack your DSP code
Was it you who came up with FFT, or linear predictive coding for speech, or homomorphic signal processing etc. etc etc ?

You are a parasite, dude. Period.

BillySV says:

Re: Re:

“Software (algorithms) should be copyrightable, not patentable. Software is much closer to mathmatical formulas than to inventions. Nothing I’ve written or used should be subject to patents. Period”

??? such as RSA

??? Such as MPEG-2, VC1, H.264, Dolby AC3, G.7xx, MP-3?

If someone invented a good algorithm to compress video or aduio, can anyone argue this is not innovation that deserves protection, regardless these are ensentially mathmatic expression?

If an algorithm implemented in ASIC is patentable why not if it is implemented in software running on any programmable device such as DSP?

If a company invested in developing such algorithms such as compressing video/audio and make product based on the algorithms, the other companies can take use the same algorithms, implemented it slightly differently and make the same type products. Obviously they don’t have to invest in R&D, they can undercut the price of the orignal innovator. Is that helpful for innovation?

Many startups rely on patent protection for their innovations and business. Otherwise, the big company can simply copy the innovations and undercut the price to drive the startups out of business. There will be no VC that willing fund startups and there will be no innovations as we have seen in States, especially in Silicon Valley. If you look at the source of innovations, it is mostly the startups and small companies, the big companies such as Oracle, Cisco, Broadcom, Microsoft etc they just buy the small companies.

Just some common sense.

Anonymous Coward says:

“Hm, how do you copyright an algorithm ?”

Agreed. Thanks for the correction. Algorithms should be neither copyrightable nor patentable.

Just as a binary search should not be patentable, though if somebody came up with the idea today, I’m sure they’d try.

Oh well, no more feeding the patent trolls for me…

BillySV says:

Re: Re:

The binary search tree has been proposed long before patent system was established.

If someone can invent an algorithm for a better balanced binary tree, it is innovation, isn’t it? Why it cannot be patented simply because there were alogrithms before patent system established? Patent will expired, isn’t that fair enough. Why someone else benifit from the new balanced binary tree without paying a resonable loyalties to the inventor. For example, if some kind of database benifit from the algorithm by make seraching more efficient, it reduces the physical resource of running the database. Is it so wrong that the inventor get a small percentage of saving of physical resource as the reward for inventing the alogrhitm.

Is anything should be free your idea? Life itself is not free.

Also don’t confuse the public funded research and private funded research. Public funded research uses tax payer money. Now, even public funded universities patent everything out of their reseach even though they are supported by tax payer money.

Another thing about patent is if you don’t want to pay loalties, you just don’t use the patent alogorithm. There are alternatives.

BillySV says:

Are algorithm patentable under this ruling

Isn’t that software code execuated on a computer changes computer state such as CPU state (registers), volatile or nonvolatile memory, screen etc?

Algorithm such as MPEG-2, Dolby AC3 (used in DVD) patents (pooled by many companies) are still valid? The MPEG-2 License Authority gathers billions dollars of loyaties. Encoding/Decoding MPEG-2, H.264 (MPEG part 10 or AVC) can all be done on general purpose MPU or DSP. Are they patentable or not.

What about algorithm such as RSA (patent expired), the inventors collected billions patent loyaties?

Could some patent lawyer sheld some light on these?

angry dude says:

Re: Are algorithm patentable under this ruling

“What about algorithm such as RSA (patent expired), the inventors collected billions patent loyaties?”

You are completely misinformed, dude

While the 3 original inventors are (hopefully) better off financially than the average clueless techdirt lemming punk, they are hardly multi-millioners
As far as I remember the entire company “RSA Data Security” was sold to a larger comapny for several hundred million dollars
Heck, you can ask Ron Rivest if he is a billioner
This would give him a good laugh

It is the software industry at large and the whole e-commerce that benefitted enourmously from the use of RSA algorithm

BillySV says:

Mike Masnick blog extrapolates the ruling to software patent to an absolute absurdity

Hey, Mike and the crowd (those who want software patent to go away so they can use others innovation for free)

I am no lawyer. I have a Ph.D. degree and worked at American’s best and most prestige’s companies in computer/chip/consumer&industry electronics and low-level/silicon-touching software for more than 15 years as a true researcher and developer (never a QA or Web or high-level application developer, or manager) and I significantly contributed to release many real products that are used by real customers. I filed a few algorithm related patents when I was with the biggest software company.

I carefully read the article http://www.portfolio.com/news-markets/top-5/2008/10/30/Business-Process-Patents-Overturned and http://mashable.com/2008/10/30/patent-business-ideas/ which is quoted in Good Morning Silicon Valley that the later one quote Mike’s blog. None of the two articles go nearly as far as Mike’s absurd and outrageous extrapolating reading of the ruling that extends to all software patents, at least in the article title.

I do agree with the statement in the first article about most so called business process patents

Patents must pass a “machine-or-transformation test” to be valid, the court said. In the case it was reviewing, In Re Bilski, the court concluded that “purported transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances.”

However, for example, most patent algorithms are computer algorithms. Algorithm by itself can be considered as abstract mathematics or code. Nevertheless without running the code implementation on some kind of electronic device such as a computer device or an ASIC, which is physical machine, it is practically useless. For example, MP3 encoding algorithm compress, which is a physical transform, digitized audio into bits that stored in some kind of (volatile/nonvolatile) storage devices, which is physical device. These allows those bits to transfer to other devices that are capable of decoding those bits and convert back to audio wave, albeit a somewhat different from the original audio. It passes the machine-or-transformation test. In fact, it pass both machine and transformation test. Note that no one can argue they are not physical transforms, regardless you can see it or not with naked eye or feel it or not, macroscopic or microscopic.

When an algorithm is patented, it allows other researchers to study and examine it and come up with new and better improvement or similar algorithm inspired by the one in consideration. For example MP3 compression algorithm is major improvement to MPEG-2 level1/2 audio algorithms, which are all patented. This promotes innovation. On the other hand, if there is no incentive for the inventor for algorithms, the inventor or the company that hires the inventor will most make it trade secrets, preventing it from benefit large populations and humanity in most cases. Considering the popularity of MP3 player.

The second article made quite some extrapolates the ruling and contains false information. It states
” As a result, infamous patents like Amazon’s “one-click” shopping concept may no longer be valid, because they don’t either “involve a particular machine” or “physically transform anything.”

Amazon’s infamous patent “one-click” is invalidated not because it does not involve a particular machine or physically transform anything. It is invalidated because someone found a previous art dated before Amazon’s patent filing. In fact, the patent does involve particular machine and it does transform something physically. Without an internet device, such as computer and server, the “one-click” is useless. Transform comes from the server side state (be it in volatile and nonvolatile storage change as well as client side). Amazon will not sue you if you shout out “one-click” concept to anyone who will listen to you. It would if you were its competitor and doing the same thing without paying the patent license fee.

On the other hand, I suspect the “one-click” patent may not pass non-trivial test. However, this is only my opinion and I could be very wrong since I don’t work in Internet e-commerce field. I would have joined Yahoo and ridded the dot com gold rush in 1998 if I had not foolishly believed what I was doing had higher tech content.

Obviously there are lot of junk patents, whether it is a physical device, software, business/industry/chemical process, material/gentic material. There are a lot of too broad patents that are often hardly innovative and that could not and should not pass the non-trivial test. These patents are the result of too many overworked or unqualified patent examiners in US patent office. These patents are giving patent and innovations bad names and allow patent troller to profit and stymie innovations.

We need to press our congressional representatives to have the real patent reform that allows expert review and comment on patent applications publically to weed out those too board, bad, fake, obvious and trivial patent applications. And also we should demand patent examiner to have at least Master degree and real working experience in the subject field of the patents they exam. I know this is a tall order given our elected officials are too influenced by whoever give them the most campaign contributions.

To the crowd that claims that software and computer algorithm cannot be patentable, you can keep dreaming because that simply won’t happen.

Also let’s see what is your reasoning that you think good software and algorithm patents such as MP3, RSA are not patentable.

To the blogger, we wish you could tell us your qualification on the subject you blog.

BillySV says:

Hey, Mike and the crowd (those who want software patent to go away so they can use others innovation for free)

I am no lawyer. I have a Ph.D. degree and worked at American’s best and most prestige’s companies in computer/chip/consumer&industry electronics and low-level/silicon-touching software for more than 15 years as a true researcher and developer (never a QA or Web or high-level application developer, or manager) and I significantly contributed to release many real products that are used by real customers.

I filed a few algorithm related patents when I was with the biggest software company. I carefully read the article http://www.portfolio.com/news-markets/top-5/2008/10/30/Business-Process-Patents-Overturned and http://mashable.com/2008/10/30/patent-business-ideas/ which is quoted in Good Morning Silicon Valley that the later one quote Mike’s blog. None of the two articles go nearly as far as Mike’s absurd and outrageous extrapolating reading of the ruling that extends to all software patents, at least in the article title.

I do agree with the statement in the first article about most so called business process patents

Patents must pass a “machine-or-transformation test” to be valid, the court said. In the case it was reviewing, In Re Bilski, the court concluded that “purported transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances.”

However, for example, most patent algorithms are computer algorithms. Algorithm by itself can be considered as abstract mathematics or code. Nevertheless without running the code implementation on some kind of electronic device such as a computer device or an ASIC, which is physical machine, it is practically useless. For example, MP3 encoding algorithm compress, which is a physical transform, digitized audio into bits that stored in some kind of (volatile/nonvolatile) storage devices, which is physical device. These allows those bits to transfer to other devices that are capable of decoding those bits and convert back to audio wave, albeit a somewhat different from the original audio. It passes the machine-or-transformation test. In fact, it passes both machine and transformation test. Note that no one can argue they are not physical transforms, regardless you can see it or not with naked eye or feel it or not, macroscopic or microscopic.

When an algorithm is patented, it allows other researchers to study and examine it and come up with new and better improvement or similar algorithm inspired by the one in consideration. For example MP3 compression algorithm is major improvement to MPEG-2 level1/2 audio algorithms, which are all patented. This promotes innovation. On the other hand, if there is no incentive for the inventor for algorithms, the inventor or the company that hires the inventor will most make it trade secrets, preventing it from benefit large populations and humanity in most cases. Considering the popularity of MP3 player.

The second article made quite some extrapolates the ruling and contains false information. It states ” As a result, infamous patents like Amazon’s “one-click” shopping concept may no longer be valid, because they don’t either “involve a particular machine” or “physically transform anything.” Amazon’s infamous patent “one-click” is invalidated not because it does not involve a particular machine or physically transform anything. It is invalidated because someone found a previous art dated before Amazon’s patent filing. In fact, the patent does involve particular machine and it does transform something physically. Without an internet device, such as computer and server, the “one-click” is useless. Transform comes from the server side state (be it in volatile and nonvolatile storage change as well as client side). Amazon will not sue you if you shout out “one-click” concept to anyone who will listen to you. It would if you were its competitor and doing the same thing without paying the patent license fee.

On the other hand, I suspect the “one-click” patent may not pass non-trivial test. However, this is only my opinion and I could be very wrong since I don’t work in Internet e-commerce field. I would have joined Yahoo and ridded the dot com gold rush in 1998 if I had not foolishly believed what I was doing had higher tech content.

Obviously there are lot of junk patents, whether it is a physical device, software, business/industry/chemical process, material/gentic material. There are a lot of too broad patents that are often hardly innovative and that could not and should not pass the non-trivial test. These patents are the result of too many overworked or unqualified patent examiners in US patent office. These patents are giving patent and innovations bad names and allow patent troller to profit and stymie innovations.

We need to press our congressional representatives to have the real patent reform that allows expert review and comment on patent applications publically to weed out those too board, bad, fake, obvious and trivial patent applications. And also we should demand patent examiner to have at least Master degree and real working experience in the subject field of the patents they exam. I know this is a tall order given our elected officials are too influenced by whoever give them the most campaign contributions.

To the crowd that claims that software and computer algorithm cannot be patentable, you can keep dreaming because that simply won’t happen.

Also let’s see what is your reasoning that you think good software and algorithm patents such as MP3, RSA should not be patentable.

To the blogger, we wish you could tell us your qualification on the subject you blog.

just me says:

A main argument of the pro-patent side seems to be that “I am really, really smart and have lots of PhD’s to prove it, so I’m right” (with an implicit “and you’re stupid, so shut up”). They also sound like they have a financial stake in patents and so must be assumed to be extremely biased. The arrogance is astonishing.

Would we have say, mpeg or G.7xx (etc), without software patents? Yes we would. Ideas march on. The only thing that would be different is how profit is made on the things that are created.

It hit me today – A lot of the pro-patent posters here remind me of how Scientologists attack their critics – not by reason, but by name calling and intimidation. Quite frankly, I don’t understand why they bother in this forum. Is it that they are so insecure in their position?

Willton says:

Re: Re:

It hit me today – A lot of the pro-patent posters here remind me of how Scientologists attack their critics – not by reason, but by name calling and intimidation. Quite frankly, I don’t understand why they bother in this forum. Is it that they are so insecure in their position?

You know what hit me today? A lot of anti-patent folks like to make sweeping pejorative generalizations about pro-patent folks. See above.

angry dude says:

Re: Re:

Hey punky

If you have PhD and have worked in the engineering field for quite a while and know how things really work (or don’t work, depending on your particular situation) then you would be offended yourself reading shitty articles by Mikey & Co

Finish your GED first, then get your BS, MS and PhD
Come back to express your opinion when you are done
Until then just shut up

Franssu says:

Re: Re: Re:

Hey angry dude (or may I call you Patent Hawk ?),

You always tell everyone that “people who know how things really work” agree on your interesting points of view…

As you are so clever and educated and articulate, maybe you could enlighten us a bit on “how things really work”, in terms understandable by non-PhDs… please ?

Franssu says:

Re: Re:

Agreed.

The main thing that strikes me in this particular post is that the guy is proud of never having done QA, application engineering, management… which are the things that make an idea marketable.

Most pro-patent people tend to forget that for an idea or product to be a success, a lot of effort should be put in the execution of putting it to market. Sometimes good marketing will suffice, sometimes you also need kickass logistics and customer service to make it.

And please, guys, stop calling software patent haters communists, you’re insulting everyone’s intelligence here, and more specifically your own.

just me says:

A main argument of the pro-patent side seems to be that “I am really, really smart and have lots of PhD’s to prove it, so I’m right” (with an implicit “and you’re stupid, so shut up”). They also sound like they have a financial stake in patents and so must be assumed to be extremely biased. The arrogance is astonishing.

Would we have say, mpeg or G.7xx (etc), without software patents? Yes we would. Ideas march on. The only thing that would be different is how profit is made on the things that are created.

It hit me today – A lot of the pro-patent posters here remind me of how Scientologists attack their critics – not by reason, but by name calling and intimidation. Quite frankly, I don’t understand why they bother in this forum. Is it that they are so insecure in their position?

super angry dude says:

angry dude

hey dude!

I saw this thread browsing the patent ruling. you’re pretty hilarious with how badly you need attention. you sound like an angry teenager, dude! let me guess, hiding in your room typing rants is pretty much the highlight of your day, dude? oh well, at least it gives your life meaning, dude.

try some education, dude. no doubt you’ll benefit, dude. and this blog doesn’t count, try a real school, dude.

unfortunately won’t be back to read your response, dude. hope it’s a really zinger, dude. get on it, dude. NOW dude!

Anonymous Coward says:

Suppose there is a software application that is used to analyze data collected from sensors for use in algorithms to diagnose and prognose when equipment may fail. The algorithms may have been calibrated using data collected from a particular manufacturer but eventually the software will be used for the same type of equipment but by different manufacturers. The software would analyze data while the equipment is in operation and issue warnings. The software could potentially run on any targeted operating system.

The algorithms would be based on general engineering principles but the algorithms would be innovative.

Would these algorithms be patentable according to this 2 step test or would probably be the opinion of most free software advocates.

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