Monday, June 28, 2010

Bilksi Comes Out With A Wimper, Rather Than With A Bang

After receiving dozens of amicus briefs and pondering the case for close to seven months following oral argument, the Supreme Court has finally released its much anticipated decision in Bilsky. Bilski v. Kappos, 561 U.S. ___(2010).   In short, the Court affirmed the judgment of the en banc Federal Circuit that the claims of the Bilski patent are not directed to patent eligible subject matter. In doing so, however, the Court specifically rejected the Federal Circuit's “machine or transformation test” as the sole test for patent eligibility for process or method claims. Instead, it viewed Bilski’s claims as “abstract ideas” that are outside the scope of patent eligible subject matter.

This result is not too surprising to this commentator.   As I mentioned last June when cert was granted, "[the Supreme Court's] past decisions over the years on the question of patentable subject matter, however, tend to avoid bright line standards and lean towards a more liberal scope of patentable subject matter, but certainly don’t embrace the scope of “anything under the sun made by man” as the Court once suggested.
The following quotations are from the syllabus and/or opinion of the Court and reflect the Court's holding. 

  • "The machine-or-transformation test is not the sole test for patent eligibility under §101. The Court’s precedents establish that although that test may be a useful and important clue or investigative tool, it is not the sole test for deciding whether an invention is a patent-eligible “process” under §101."

  • "[T]he Federal Circuit incorrectly concluded that this Court has endorsed the machine-or-transformation test as the exclusive test. Recent authorities show that the test was never intended to be exhaustive or exclusive."

  • "Section 101 similarly precludes a reading of the term “process” that would categorically exclude business methods. The term “method” within §100(b)’s “process” definition, at least as a textual matter and before other consulting other Patent Act limitations and this Court’s precedents, may include at least some methods of doing business."

  • "Section 273 thus clarifies the understanding that a business method is simply one kind of“method” that is, at least in some circumstances, eligible for patenting under §101."

  • "This Court’s precedents establish that the machine-or transformation test is a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under §101. The machine-or-transformation test is not the sole test for deciding whether an invention is a patent-eligible “process.”

  • "[I]n deciding whether previously unforeseen inventions qualify as patentable “process[es],” it may not make sense to require courts to confine themselves to asking the questions posed by the machine-or-transformation test."
  • "Even though petitioners’ application is not categorically outside of §101 under the two broad and  textual approaches the Court rejects today, that does not mean it is a “process” under §101."
  • "Rather than adopting categorical rules that might have wide-ranging and unforeseen impacts, the Court resolves this case narrowly on the basis of this Court’s decisions in Benson, Flook, and Diehr, which show that petitioners’ claims are not patentable processes because they are attempts to patent abstract ideas. Indeed, all members of the Court agree that the patent application at issue here falls outside of §101 because it claims an abstract idea."
  • "The concept of hedging, described in claim 1 and reduced to a mathematical formula in claim 4, is an unpatentable abstract idea, just like the algorithms at issue in Benson and Flook. Allowing petitioners to patent risk hedging would preempt use of this approach in all fields, and would effectively grant a monopoly over an abstract idea."

  • "Petitioners’ remaining claims are broad examples of how hedging can be used in commodities and energy markets. Flook established that limiting an abstract idea to one field of use or adding token post solution components did not make the concept patentable. That is exactly what the remaining claims in petitioners’ application do."

  • "Today, the Court once again declines to impose limitations on the Patent Act that are inconsistent with the Act’s text. The patent application here can be rejected under our precedents on the unpatentability of abstract ideas. The Court, therefore, need not define further what constitutes a patentable “process,” beyond pointing to the definition of that term provided in §100(b) and looking to the guideposts in Benson, Flook, and Diehr."

  • "And nothing in today’s opinion should be read as endorsing interpretations of §101 that the Court of Appeals for the Federal Circuit has used in the past."
More to come regarding the concurring opinions of Justice Stevens (joined by Justices Ginsburg, Breyer and Sotomayor) and Justice Breyer (joined by Justice Scalia) in a later post.

[Many thanks to Randall Berman, an associate with Dorsey & Whitney, for his assistance in quickly preparing this post]

Friday, June 11, 2010

False Marking Cases Are Likely to Live Another Day

Articles Marked With Expired Patent Numbers Are
"Falsely Marked," But Intent Will Be More Difficult For Relators to Establish

As reported in earlier posts, the number of false patent marking cases exploded following the Federal Circuit’s holding in The Forest Group v. Bon Tool, 590 F. 3d 1295 (Fed. Cir. 2009) that held that every falsely marked product constitutes a separate offense subject to fine under 35 U.S.C. 292. The vast majority of the recently filed false marking cases are based on the theory that a product marked with an expired patent number is an “unpatented article.” This issue was squarely presented in Pequignot v. Solo Cup, where the district court held that this was indeed the case. Many false marking defendants have been anxiously awaiting the Federal Circuit decision in Pequignot hoping that the Federal Circuit would reverse the finding of the district court with respect to expired patents and provide an opportunity to quickly defeat or dismiss many of these cases. Those folks will now be disappointed. In its June 10, 2010 decision, the Federal Circuit unequivocally held that “articles marked with expired patent numbers are falsely marked.” (See

Of course, finding that a product is falsely marked is not the end of the inquiry. In order to be liable for false marking, the marker must act “for the purpose of deceiving the public.” Under the Federal Circuit’s holding in Clontech Labs. v. Invitrogen, this intent element can be satisfied if it is proven that the statements about marking were false and the marking party knew the statements were false. It is here where Solo prevailed and where the Federal Circuit provided some helpful guidance to those accused of false marking. First, the Federal Circuit clearly held that Clontech only establishes a presumption of intent and that such a presumption can be rebutted with evidence of good faith. Second, the burden of proof needed to rebut the Clontech presumption is only a preponderance of evidence. Finally, the court agreed that when ‘the false markings at issue are expired patents that had previously covered the marked products, the Clontech presumption of intent to deceive is weaker” and therefore easier to rebut. In this case, Solo was able to rebut the Clontech presumption by establishing that the marking at issue was made for legitimate business reasons not related to “deceiving the public” and that it had acted consistently with the advice of counsel it had received. As both the district court and Federal Circuit noted, “Pequignot has provided not a scintilla of evidence that Solo ever ignored its counsel’s advise or, more importantly manifested any actual deceptive intent.”

In addition to expired patent numbers, Solo also marked certain packaging materials used for both patented and unpatented articles using the language that the products “may be covered” and referenced a website where more specific patent information could be found. The Federal Circuit noted, in dicta, that “it is highly questionable whether such a statement could be made ‘for purposes of deceiving the public,’ when the public would not reasonably be deceived into believing the products were definitely covered by a patent.”  In finding no intent to deceive the court noted that Solo proffered evidence to rebut a presumption of intent, including “provid[ing] the consumer with an easy way to verify whether a specific product was covered; the consumer could ‘contact’ for details.” Thus, while the broad language was still an act of “false marking,” there was ample evidence to rebut a presumption of intent to deceive the public.

Some takeaways from Pequignot:

• Marking with expired patents is “false marking.” This case is not a silver bullet that will result in false marking cases being dismissed en mass.

• If marking is false, and known by the marker to be false, there is a rebuttable presumption of intent to deceive the public.

• The presumption of intent to deceive the public can be rebutted with a preponderance of evidence establishing good faith reasons for the marking and/or reasons mitigating bad faith

• Referring to a collection of products and patents and indicating that the product “may be covered” still results in “false marking” but for a relator to establish that a marker had the requisite intent to deceive with such equivocal language should be difficult.