INTELLECTUAL PROPERTY AND TECHNOLOGY NEWS Perspectives • Analysis • Visionary Ideas

SECRETARY COHEN SPEAKS IN TOKYO BUILDING STRONG RELATIONSHIPS

BILSKI’s IMPACT ON • LIFE SCIENCE PATENTS • Finance Industry Patents • SOFTWARE PATENTS

EUROPE’S APPROACH TO PATENTABILITY OF BUSINESS METHODS

UPDATE: False Patent Marking Cases

The ITC Rolls Out The Red Carpet For Patent Trolls

Issue 7, Q3 2010 | www.dlapiper.com/ip_global Attorney Advertising EDITOR’S COLUMN So What Happens Next? ADVANCEMENTS IN STEM CELLS The IP community had been anxiously awaiting the United States Supreme Court’s decision in Bilski for some time. Many believed, and some feared, that the Court would eradicate business method patents altogether or significantly curtail the ability of the software, financial services and life sciences industries to obtain patents. Instead, in its decision in late June, the Court deferred the tough questions for another DLA Piper Handles day, leaving us to navigate through a dim, amorphous fog. the First US Patent for Parthenogenetically Created I was disappointed that the Court did not provide a broader test of Brent K. Yamashita Stem Cells patentability that would cut across industries and be more appropriate Partner, Patent Litigation for the digital age than the machine-or-transformation test that was Human stem cell research holds adopted by the Federal Circuit as the exclusive test for patentability tremendous potential for medical of method claims. Instead, while the Court held that the machine- advances, but is at the heart of or-transformation test is not the only possible test, it refrained from offering any alternatives. an ethical and political firestorm. Recently, a significant breakthrough Shortly after Bilski was issued, the US Patent and Trademark Office allowed issuance of the world’s (PTO) issued Interim Guidance for Examiners in analyzing claims in first patent for developing human pending patent applications. This Guidance, which is markedly anti- business method, helps to fill the void left by Bilski. Federal Circuit stem cells without creating or decisions will follow and, we hope, will provide further guidance. destroying a human embryo. DLA Piper helped make it happen, In this issue, we explore the impact of Bilski and provide our thoughts representing International and practical advice on the patent prosecution and litigation fronts in Stem Cell Corporation. light of what was said in the opinion as well as what was not said. We focus particularly on the life science, financial services and software The patent protects industries, which are still the industries most affected by Bilski, and we a method of also offer a comparative examination of Europe’s approach to business creating stem cells method patents. from an unfertilized Although disappointing in scope and degree of clarity, Bilski does, at egg. “This patent least, provide an opportunity for the IP community to offer creative Dr. Lisa Haile Co-Chair, validates the arguments and propose new tests for patentability to courts and the PTO. Global Life company’s core Sciences Sector After all, turning abstract notions (whether in patent law or patents technology and themselves) into something concrete is how we IP attorneys earn our keep. gives our client a significant position in the entire stem cell field,” says Dr. Lisa Haile, Relationship Partner for International Stem Cell [email protected] Corporation. In addition to applying for the groundbreaking patent, DLA Piper counseled the company on how to align its This newsletter is also available as a digital PDF at http://www.dlapiper.com/IPT_Newsletter7. business and IP strategies. “You In support of our Global Sustainability Initiative, this publication is printed on 100% recycled paper. have to be proactive and predictive Please recycle this newsletter or share it with others. about what will come out of the science and apply it to the You are receiving this communication because you are a valued client, former client or friend of DLA Piper. The information contained law. You never get ahead of the in this newsletter is for informational purposes only and should not be construed as legal advice on any matter. To unsubscribe from competition if all you are doing is this mailing list, send an email to [email protected] or send your written request to: DLA Piper, Attention: Marketing Department, 401 B Street, Suite 1700, San Diego, California 92101-4297, USA. Copyright © 2010 DLA Piper llp (us), DLA Piper uk llp being reactive,” says Dr. Haile. and other affiliated entities. For questions, comments and suggestions, email us at [email protected] or contactD iane Vislisel, Senior Practice and Industry Marketing Manager, T +1 619 699 3541, [email protected].

US Chair – Intellectual Property and Technology, John Allcock: T +1 619 699 2828, [email protected]. Past results are not a guarantee of Editor in Chief, Brent K. Yamashita: T +1 650 833 2348, [email protected]. future success. DLA Piper llp (us), 401 B Street, Suite 1700, San Diego, California 92101-4297, USA. SUPREME COURT Welcome Aboard

ISSUES BILSKI DECISION I am very pleased to announce that, as of this writing, more than By Brent Yamashita and Stan Panikowski 20 new professionals have joined our IPT On June 28, 2010, the United States alternative tests or guidance, beyond group, located in our Supreme Court issued its long-awaited reiterating that abstract ideas are not Los Angeles and Tokyo decision in Bilski v. Kappos, 130 S. Ct. patentable. This vacuum likely will offices, led by nationally 3218 (2010), ruling on the Federal create new litigation battlefields. Future and internationally Circuit’s en banc decision that the litigation likely will center on whether recognized patent John Allcock so-called machine-or-transformation an asserted claim recites an abstract litigator Rich de Bodo. test is the sole test for determining idea and whether any claim elements Partner whether a process is patentable under that the patent holder asserts are non- Our new lawyers fit Global Co-Chair and 35 U.S.C. §101, and more generally, abstract are merely attempts to limit an in perfectly because US Chair, Intellectual whether business methods can be abstract idea to one field of use or to they reflect our Property and Technology patentable. The Federal Circuit decision add token post-solution components to group’s existing core had created a penumbra of doubt about an otherwise abstract idea. competencies. Many of the patentability of certain technologies, them are accomplished The first post-Bilski guidance was ranging from software to medical trial lawyers – which has been our most basic provided by the US Patent and diagnostic procedures and equipment. strength since our firm began. Our group’s combined Trademark Office on July 27, 2010, when track record is impressive: since 2002, our patent The patent application at issue it issued Interim Guidelines in response litigators have tried 24 patent cases to conclusion, involved methods for hedging risk in to Bilski in the Federal Register, Volume and have prevailed in 21 of them. Most of our new commodities trading. The claims were 75, No. 143. The Guidelines provide lawyers have technical backgrounds in electronics classic “business method” claims in that criteria for Examiners to consider in and life sciences, including a number with advanced they recited steps that were performed deciding whether a claim recites an degrees. This adds to the deep technical bench we as part of a business operation. The abstract idea. Notably, in an attempt to already have, and to which we have been committed Patent Office rejected the claims, provide clarity on the types of business since we started. We now have more than 70 lawyers and the rejection was then appealed methods that are patentable, the admitted to the patent bar, many with advanced to the Federal Circuit and ultimately Guidelines state that the presence of a technical degrees. was the subject of an en banc decision “general concept” in executing method in In re Bilski¸ 545 F.3d 943 (Fed. Cir. steps “can be a clue that the claim is In addition, our new lawyers have a substantial 2008), holding that a claimed process is drawn to an abstract idea.” Examples international dimension – fitting for a firm with a patentable only if it is tied to a particular provided by the Guidelines include basic 400-person international IPT group found in over 40 machine or apparatus or it transforms economic practices or theories, mental cities in 20-plus countries with top patent litigation a particular article into a different state activities, interpersonal interactions capabilities in all the important international venues. or thing. The court referred to this as or relationships, and instructing how Our new group includes a strong Japanese practice the “machine-or-transformation test.” business should be conducted. with many talented bilingual patent attorneys in both our Los Angeles and Tokyo offices. The Supreme Court issued its decision Bilski, and the many court and PTO on the last day of the October 2009 decisions that surely will follow in its Indeed, as I write this note I am returning from term. Although many expected the Bilski wake, will have a particularly strong spending a week with many members of our new decision to have a dramatic impact on impact on the life science, financial team, visiting many new, and some old, DLA Piper the patent world, it is remarkable for services and software industries – clients in Tokyo, Kyoto and Osaka. The week had how little it decided. The majority of the focus of the articles that follow. an exciting end – a reception in Tokyo attended by the Court expressly agreed on only The same issues discussed in Bilski many IP clients, featuring an address by former three points: (1) the Federal Circuit’s also have arisen in Europe, and are US Secretary of Defense William S. Cohen on machine-or-transformation test is not the subject of a fourth article. US-Japan relations. the exclusive test for patent subject matter eligibility; (2) business methods After a week on the road, I can report first-hand that are not categorically unpatentable; and Brent Yamashita, based in DLA Piper’s our new lawyers fit in on another important dimension (3) the invention at issue in Bilski is an Silicon Valley office, is a partner in the – our sense of camaraderie and client-focused unpatentable abstract idea. Patent Litigation practice and is the editor approach. And to them I say: welcome aboard. in chief of the IPT News. You may reach him It feels to me like you have always been here. Essentially, the majority opinion was a at [email protected]. course correction. The Court affirmed the Federal Circuit’s ultimate judgment, Stan Panikowski, based in San Diego, is a Patent Litigation partner. Stan previously but ruled that the Federal Circuit had served as a law clerk to Supreme Court an improperly narrow view of patent Justice Sandra Day O’Connor. You may reach subject matter eligibility. However, him at [email protected]. the Court refrained from offering [email protected] By Richard Mulloy and Lisa Haile Inc. v. Biogen Idec, Nos. 2006-1634 In Classen, however, the Federal Classen is more questionable and 2006-1649. The Prometheus Circuit invalidated claims directed in the wake of Bilski, the more Two significant developments and Classen cases were both to immunizing a treatment group interesting question is what other arose out of Bilski regarding life remanded to the Federal Circuit and comparing the incidence “limiting criteria” or analytical tools science patent claims. First, the for additional consideration in light of chronic immune-mediated the Federal Circuit will develop to Supreme Court’s endorsement of of Bilski. Prometheus involves claims disorders in the treatment group analyze the validity of the claims the machine-or-transformation directed to a method of treating an to a control group. See Classen, under §101. test as one tool to analyze claims immune-mediated gastrointestinal 2008 WL 5273107, at *1 (Fed. Cir. In addition to Prometheus and under 35 U.S.C. §101 provides disorder by administering a drug Dec. 19, 2008). The court indicated Classen, the Federal Circuit is some guidance to patent applicants and then determining appropriate it had applied the machine-or- currently receiving briefing in and litigants. Second, the Court’s dosage by measuring changes in transformation test but provided Ass’n for Molecular Pathology v. U.S. suggestion that the Federal Circuit the patient’s metabolite levels. no substantive Patent and Trademark Office develop “other limiting criteria” to See Prometheus, 581 F.3d 1336, discussion of the (Myriad). In Myriad, analyze claims under §101 provides 1339-40 (Fed. Cir. 2009). The merits. Id. the district court additional flexibility to develop Federal Circuit previously found Although invalidated method tests more applicable to the life the claims valid under §101 the likely and composition sciences, where the machine- after applying the machine- result in claims related or-transformation test is not or-transformation test. Id. at to BRCA gene particularly appropriate. 1345-48. In view of the Supreme LIFE sequences Court’s holding in Bilski that The Federal Circuit will have an under §101. See the machine-or-transformation SCIENCE opportunity to provide additional Myriad, 2010 test is a valid tool for analyzing guidance in two pending cases: WL 1233416 claims under §101, it seems likely PATENTS Prometheus Laboratories, Inc. v. Mayo (S.D.N.Y. the Federal Circuit will Collaborative Services, No. 2008- Mar. 29, 2010). reach the same result 1403, and Classen Immunotherapies, The method on remand. BILSKI’S IMPACT ON By Dale Lazar consistent with the idea, it is important to link the and Jim Heintz State Street holding inventive concept to the physical in which claims must world. The PTO’s Interim When the recite a “concrete” Guidelines provide some guidance. Supreme Court result to qualify for patent The Interim Guidelines note that announced it protection. even before Bilski, “the Office had would hear used the ‘abstract idea’ exception Finance Comparing the Bilski and State the Bilski in cases where a claimed ‘method’ Street claims highlights another case, many did not sufficiently recite a physical Industry important issue: the Bilski claims speculated instantiation.” In analyzing the were directed toward methods that the Court Bilski claims, the Interim Guidelines Patents and do not recite any machine would use the conclude that the Supreme Court (computer) limitations, whereas opportunity to considered the claims to recite no inventions. the State Street claims were declare an end to more than an abstract idea “in the Comparing directed toward “a data processing patents on business sense that there are no limitations Bilski’s claims system” which can be a general methods. This did not as to the mechanism for entering with claims at issue purpose computer programmed happen. However, the Court into the transactions,” thereby in the Federal Circuit’s to perform specific steps. The did find that Bilski’s claims to a indicating a belief that the Supreme opinion in State Street Bank & issue of whether a general method for hedging risk were not Court was using “abstract” in Trust Co.,1 which is the case many purpose computer performing an the kind of invention for which a the sense of not related to a view as opening the floodgates unpatentable business method can patent should be granted. tangible thing. to business method patents, qualify for patent protection was What does this mean for other highlights the difficulties. State raised before the Supreme Court, Maximize the likelihood of a finance industry patents and patent Street upheld the patentability of a but was not addressed in the favorable outcome by providing applications? Certain types of claim that constituted a practical majority opinion. It is therefore an in the specification a physical business method patents may be application of a mathematical important open question. instantiation or a mechanism safe for now – but warning signs algorithm, formula or calculation for implementing the inventive point to hazards down the road. because it produced “a useful, Implications for Patent concept. In the financial industry, concrete, and tangible result.” Prosecution this typically means describing The Supreme Court’s lack of “Concrete” is the opposite of the computer system or network guidance as to how to determine Avoiding statutory subject “abstract” as those terms are on which the inventive concept whether a claim recites an matter rejections begins with the typically understood. Thus, to is implemented. Providing more “abstract idea” or an unpatentable specification. To avoid creating some extent, the Supreme Court’s details strengthens the case for business method is a potential the impression that an invention use of an “abstract ideas” test the invention being more than a hazard for finance industry is nothing more than an abstract in Bilski might be interpreted as mere abstract idea. claims at issue are directed to criteria” the Federal Circuit will new LA-based team, with determining susceptibility to disease develop to analyze the validity of by comparing the patient’s DNA claims under §101, or how the court global relationships, sequence to normal and mutant will apply the test’s “machine” joins DLA Piper BRCA gene sequences. Id. at *28. component to life science patent A significant team of The district court found the method claims, where the “machines” are intellectual property claims were invalid because they often intangibles. Until the court lawyers, led by were not tied to any particular answers those questions, applicants prominent IP lawyer machine and did not result in a and litigants in the life sciences Richard de Bodo, has tangible transformation. Id. at *47-49. should continue to emphasize the joined DLA Piper’s Although the composition claims at transformative aspects of data and Intellectual Property issue in Myriad may implicate §101 information in their patent claims. and Technology issues related to the patentability practice in our Los of naturally occurring substances, Richard Mulloy, based in DLA Piper’s Angeles – Century the method claims will provide San Diego office, is a partner in the City office. the Federal Circuit with another Patent Litigation practice. Richard has opportunity to define the limits of handled patent litigation on a variety “We are excited to be patentable subject matter in the of subjects, including pharmaceuticals joining DLA Piper,” wake of Bilski. and life sciences. You may reach him Rich de Bodo says, at [email protected]. “Thanks to its global On balance, Bilski raises as many platform and its questions as it answers for the life Lisa Haile, based in San Diego, is a Patent Prosecution partner and the co-chair culture of teamwork sciences industry. Although the of DLA Piper’s Global Life Sciences and collaboration, we Supreme Court’s endorsement of sector. Lisa has a Ph.D. in microbiology already feel that we are the machine-or-transformation test and immunology. You may reach her at a part of the worldwide provides some guidance, it remains [email protected]. IPT team.” to be seen what additional “limiting The group is an important addition to DLA Piper’s Intellectual Property and Technology, Patent Litigation and Patent Prosecution practices. They add Drafting claims for financial industry Clearly, the law is still developing. technical depth and experience to our electronics, inventions requires finesse. To avoid To what extent must a claim recite a life sciences, pharmaceutical, chemistry, biologics, a rejection under §101, the claims physical instantiation to avoid a §101 semiconductor and Internet practices. should recite something about the defense? Is it sufficient to merely Many members of the team already have thriving practices physical instantiation or mechanism mention a computer or processor stretching into Japan. Several have advanced scientific for achieving the inventive concept. in a claim? Or does a claim require degrees and some have foreign language capabilities, This typically requires the claim a more granular recitation of a including Japanese, Mandarin and Russian. They also bring to recite that at least some of mechanism for implementing a significant knowledge and experience in litigating and the steps therein are performed financial services method, with trying Hatch-Waxman and biologics cases, representing by a computer processor. If the the inventive concept tied into Japanese electronics and pharmaceutical companies and invention requires a computer the mechanism for the claim to representing companies in the Internet space. network, then the claim should meet the requirements under include components of the network. §101? Future case law will provide The team joins DLA Piper from Hogan Lovells, where It is helpful to enlist the inventor to answers to these questions. de Bodo was co-chair of the Intellectual Property Practice help brainstorm alternative ways for Group and head of the West Coast IP group. Key players implementing the invention so that on the team are partners Siegmund Gutman, Robert generic claims covering all alternative Dale Lazar is a partner in DLA Piper’s Benson, Christopher Broderick, Troy Schmelzer and implementations can be drafted, Northern Virginia office. He focuses Lawrence McClure. yet still be limited to a physical on patent prosecution, counseling and litigation. Reach him at Also part of the team are Counsel Jeffrey Arrington and instantiation of the invention. [email protected]. nine associates: Susan Acquista, Olga Berson, Andrew Devkar, Takashi Hashimoto, Jordan Kushner, Clive Implications for Patent Jim Heintz is a partner in DLA Piper’s McClintock, Patrick Park, Adam Poulin-Kerstien and Litigation Washington, DC, office. He focuses on patent litigation and prosecution with Andrew Yen. Associate Chris Mizumoto has joined in Financial industry patents that do an emphasis on electrical and computer DLA Piper’s Tokyo office. Patent agents Barry Shuman not recite a physical instantiation technologies. He can be reached at and Terry Tsai also have joined in Los Angeles and patent or mechanism for implementing [email protected]. agent Robert Wu has joined in San Francisco. the inventive concept likely are vulnerable in light of Bilski. Patent 1. State Street Bank & Trust Co. v. Signature Fin. Grp., Inc., Front row: Takashi Hashimoto. Second row: Troy Schmelzer, Richard de Bodo, owners must decide whether the 149 F.3d 1368 (Fed. Cir. 1998), overruled by In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc). Andrew Devkar. Third row: Lawrence McClure, Robert Benson, Andrew Yen. cost of litigation justifies the risk of Fourth row: Susan Acquista, Siegmund Gutman, Jordan Kushner. Fifth row: having claims declared invalid under Olga Berson, Jeffrey Arrington, Patrick Park. Top row: Adam Poulin-Kerstien, §101. Parties accused of infringing Clive McClintock, Christopher Broderick. L to R throughout. such claims need to consider §101 in formulating defenses. www.dlapiper.com/ip_global | 05 Former US Secretary of Defense William S. Cohen Speaks in Tokyo BUILDING STRONG RELATIONSHIPS By Robert Benson

06 | Intellectual Property and Technology News On September 10, 2010, DLA Piper was Secretary Cohen next emphasized the privileged to have the Honorable William S. importance of Japan’s leadership in the Cohen, former US Secretary of Defense, share world and its relationship with the US. He his perspectives on the importance of US- noted America wants Japan to play a leading Japan relations at the elegant Tokyo Kaikan political and economic role in the world. Union Club. The words printed on a banner To this end, the current Administration has hanging behind the lectern defined the event: appointed officials who strongly advocate for “Relationship-Driven Legal Services.” US-Japan ties. He cited athlete Ichiro Suzuki as an example of competitiveness and excellence, Throughout the evening, every conversation accomplished with humility and grace – ideals I participated in reinforced this theme – that, he observed, are shared by both the people effective legal services are grounded in strong of Japan and the global team at DLA Piper. relationships and a deep understanding of our clients. The first person I spoke with was a As with diplomacy, the desire to increase client who had transferred to an elementary understanding and strengthen communications school while living temporarily in Pasadena, penetrates every part of our legal practice. L to R: Hajime Kinoshita, General Manager, Legal Division, California, and he recalled how difficult A representative of a telecommunications NEC; Secretary Cohen, The Cohen Group; Shinobu Obata, Senior Manager, Legal Division, NEC; Fujio Okada, Senior Vice it was to attend an English school without company spoke of the need for his engineers President, Risk Control and Compliance, Legal Division, NEC knowing the English language. One of his to be able to communicate directly with colleagues then joked about the reputation that attorneys who are both fluent in Japanese and Americans have for lacking foreign language technically trained. He was excited to learn skills. “What do you call someone who speaks that in DLA Piper’s IPT Group, we have two languages? Bilingual. What do you added to our Tokyo and Los Angeles offices call someone who speaks three languages? several Japanese-speaking IP lawyers and Trilingual. What do you call someone who professionals with different technical degrees. speaks one language? American.” By increasing our ability to understand our

“…every conversation I participated in reinforced this theme – effective legal services are grounded in strong relationships and a deep understanding of our clients.”

Fundamentally, the evening was all about clients on a technical level, as well as on L to R: Rich de Bodo, DLA Piper (LA); Troy Schmelzer, learning to speak one another’s language. cultural and linguistic levels, we are enhancing DLA Piper (LA); Tetsuaki Oda, Assistant Professor Nearly 20 US lawyers traveled to Japan to our ability to understand our clients’ needs and and Patent Attorney, Graduate School of Technology Management, Ritsumeikan University enjoy this special event with their clients to provide the most effective legal services. and to spend time interacting with them in Looking around the room, I saw that my person. As a new partner to the firm, I found experience was being replicated many times the evening to be a powerful illustration of over. One of my partners from Los Angeles, this distinguishing feature of DLA Piper: its Troy Schmelzer, made a personal connection commitment to bridging cultural, geographic with an in-house lawyer at NEC when and linguistic barriers to build strong they discovered they had both attended the relationships with its clients. University of Illinois. When I spoke of my During his opening remarks, Secretary son’s upcoming dog-sledding trip to Sweden, Cohen illustrated this principle with a another client shared how a dog-sledding trip personal story about the consequences of to Sweden had a positive impact on his teenage being misunderstood. During his first trip to daughter. In every corner of the room, personal Japan as the US Secretary of Defense, Cohen connections enriched our lives, increased participated in an interview with Japanese understanding and strengthened relationships. reporters while en route. With his comments, At DLA Piper, we know that achieving Cohen sought to reassure his audience that optimal results requires more than smart Japan would remain the primary anchor of lawyers, deep experience, and a strong security for the US in the Far East. But when he global platform. It begins with relationships. L to R: Lance J. Miller, Tokyo Office Managing Partner, landed, Cohen was confronted with newspaper DLA Piper; Secretary Cohen; John Allcock, Global Co-Chair headlines reading, “Cohen Dashes Hopes of and US Chair, IPT, DLA Piper Okinawans.” His comments were intended Robert Benson is a Patent Litigation partner to emphasize the commitment of the US in DLA Piper’s Los Angeles office. He has to security in the region, but instead were represented numerous clients in Asia and the US. misconstrued as a signal that the US was Reach him at [email protected]. unwilling to close its military base at Okinawa. www.dlapiper.com/ip_global | 07 UK Court approach not patentable. Nor is software differs as such, although software which has a sufficient technical effect An English court (when assessing will be patentable (whether within validity in post-grant proceedings) or outside the computer). Nor approaches the issue in a different are business methods as such way, applying a four-stage test: EUROPE’S patentable, unless the claims 1. Properly construe the claim (which must combine the method APPROACH TO 2. Identify the actual contribution with an apparatus or technical to the art process) demonstrate a sufficient PATENTABILITY 3. Ask whether that contribution technical effect. Accordingly, OF BUSINESS falls solely within the excluded the lesson is that, to maximize subject matter the chances of getting a business METHODS 4. As a cross-check, decide method patent granted in the EPO whether the actual or alleged and upheld by national courts, contribution is actually an applicant should specify the technical in nature. apparatus and technical processes in as detailed a way as possible, If the claim passes these tests, then and highlight any technical it falls outside the exclusions and the advantages the invention achieves court goes on to consider such issues and the specific processing steps as novelty and inventive step. This and interactions described in the By George Godar and David Alberti “technical contribution” approach claims. The same is true in the US was formerly used within the EPO after Bilski. The issues raised in the United States Supreme Court Bilski decision are but now has been abandoned in not exclusive to the US. Europe has been considering these issues for years favor of the approach described US approach now similar and has still not reached a conclusion accepted by all signatory countries to earlier. For computer-related to EPO’s the European Patent Convention (EPC). inventions, technical contribution to the art may be internal to the The Supreme Court’s rejection Under the EPC, rules and methods for performing mental acts and computer itself, for instance of the claims in Bilski as being doing business, or a program for a computer, are excluded from patent improving a computer’s operation merely abstract ideas may protection if the claims of the patent relate to that thing as such. by solving a problem arising from its be getting close to the EPO’s The European Patent Office (EPO), and national courts, have wrestled programming (such as a tendency to threshold test described above: an with these exclusions. The solutions they have reached may be pragmatic, crash under certain circumstances). abstract idea in US parlance may but are not always mutually consistent. be the EPO’s “naked” business Because irrelevant technical effects method claim which will not get cannot be taken into account when EPO: Examine as a whole over the patentability bar. The assessing technical contribution “machine-or-transformation” test The EPO starts its assessment of patentability by first looking for a bare under this test, the court has also may be equivalent to the EPO’s minimum of matter of a technical nature (so a “naked” business method suggested helpful signposts to “technical character” requirement will not get over this threshold). If it finds the bare minimum, then it determine whether a relevant to which the tests of novelty and proceeds to assess the invention in the usual way for novelty and inventive technical effect exists. These include inventive step are applied. step but ignoring for this purpose any non-technical matter. For a business whether the claimed technical method which specifies an apparatus or technical process for carrying effect has a technical effect on a Nations on both sides of the out at least a part of the business method, the EPO Guidelines direct that process which is carried on outside Atlantic continue to grapple with the method and the apparatus or technical process must be examined as the computer; whether the effect is how to gauge the patentability of a whole. Note that if the claims specify computers, computer networks or produced irrespective of the data software and business methods. other computer-programmable apparatus or software for carrying out at being processed or the applications least some steps of the business method, the patent application will be being run; whether the claimed examined as a “computer-implemented invention.” technical effect results in the Co-head of the Patent practice in Once an invention passes that threshold, the EPO looks to its “technical computer being made to operate in the UK, George Godar is an IP and effect” and, in particular, to a “further technical effect” (or “practical a new way; whether the computer’s Technology partner in the London office. He focuses on intellectual application”) that goes beyond the normal physical interaction between speed or reliability increases; and property. He can be reached at whether the perceived problem is the program and the apparatus/technical process when assessing inventive [email protected]. step. This effect can be, for instance in the context of software-related overcome by the claimed invention inventions, improved processor performance or improved security or as opposed to merely being A partner in DLA Piper’s Silicon Valley office, David Alberti focuses on patent efficiency of a process. circumvented. litigation, prosecution and counseling. When assessing inventive step, the EPO excludes from consideration any He has extensive experience in In Europe, abstract ideas federal courts and the United States non-technical matter, unless these non-technical features interact with the for business methods truly technical features to provide the desired technical effect. Further, International Trade Commission. Reach not patentable him at [email protected]. the exclusions are not regarded as part of the relevant technical field when assessing inventive step. The skilled addressee (person skilled in the art) The result of either of these cannot be the skilled user within the relevant business field: that addressee approaches is that mere abstract has to be taken from the field within which the technical effect is found. ideas for business methods are

08 | Intellectual Property and Technology News understandable path for the public, DLA PIPER practitioners, and examiners to determine REPRESENTS whether claims (including claims drawn to business methods and software) meet MOTOROLA IN BILSKI’S statutory requirements. GLOBAL PATENT IMPACT ON Even though the Court was unwilling to DISPUTE commit to the machine-or-transformation Motorola Inc., represented by test, the Court explained it is still the preferred test for determining whether DLA Piper, settled a two-year patent a process is patentable. Clearly, the dispute with Blackberry maker machine-or-transformation Research in Motion Ltd. (RIM) just test is preferred by the three days before the matter was Federal Circuit, and it appears to be the due to be heard in court. preference of the This recently concluded patent USPTO as well. By J.D. Harriman For example, the offensive, focused on key technology and Robert Buergi SOFTWARE USPTO’s Interim found in Motorola’s wireless Guidelines in handheld devices and wireless Bilski is a favorable Patents Response to Bilski networks, involved a 27-patent case decision for explain that factors software patents – it weighing in favor in the Northern District of Texas broadened patentable of patent eligibility (Dallas) (17 Motorola patents and processes beyond for process claims 10 RIM patents), and three separate those that meet the are satisfaction of the lawsuits in the United Kingdom machine-or-transformation machine-or-transformation involving a total of five UK patents test, and expressly recognized test or evidence that an abstract that even some business methods are idea has been “practically applied.” See (4 Motorola patents and one RIM patentable. Overall, Bilski will allow properly Federal Register, Volume 75, No. 143. patent). One UK case went to trial drafted software method claims to enjoy in the first quarter of 2010, and patentability for years to come. These guidelines provide a clear boundary for practitioners in drafting claim families the second was scheduled to begin In the majority opinion, the Court discussed in patent applications, and software and trial in June 2010. On the eve of the the country’s shift from the Industrial Age business method patent application claims second UK trial, the parties reached to the Information Age, the former being should therefore be drafted in the style characterized by traditional machines of the machine-or-transformation test a global settlement on favorable and the latter being characterized by, with the USPTO’s patent eligibility factors terms for Motorola. for example, computer programs. Bilski in mind. The claims of the Bilski patent v. Kappos, 130 S. Ct. 3218, 3227 (2010). application that were held unpatentable Motorola and RIM entered into a Determining patentability of processes truly claimed an abstract idea, and did not settlement and license agreement using solely the machine-or-transformation follow the guidelines. The claims were which ends all outstanding test “would create uncertainty as to the not tied to a machine, did not describe a worldwide litigation between the patentability of software.” Id. particular implementation of the hedging two companies, allowing Motorola According to Raymond Chen, Deputy risk, and did not describe observable or General Counsel for Intellectual Property verifiable results. and RIM to benefit from a long-term Law and Solicitor at the USPTO, the In the litigation context, suits over intellectual property cross-licensing Supreme Court decision in Bilski has in some software patents likely will involve arrangement. ways created uncertainty for the public, disputes over whether the claims cover practitioners, and patent examiners in the abstract ideas and whether they satisfy The DLA Piper team in the UK was preparation and prosecution of process the machine-or-transformation test or led by Global Co-Chair and EMEA claim patent applications. Although the perhaps an alternative test that has yet to Group Head of IPT, Simon Levine, Supreme Court has discussed the abstract be adopted. At least in the near future, it is assisted by partners George Godar idea exception to patent eligibility, no clear probable that district courts will utilize the test was given. The only clear boundary USPTO’s Interim Guidelines as an aid in and Ruth Hoy. DLA Piper’s US team provided by the Supreme Court is that their analysis of patentability issues. includes Global Co-Chair and US Bilski’s claims, as drafted, violated the Chair of IPT, John Allcock, along abstract idea standard. As to the future with partners Sean Cunningham and of software and business method patents, J.D. Harriman is a partner in DLA Piper’s Mr. Chen reiterated a position that is Los Angeles office, and focuses on patent John Kinton. spelled out in the briefs and arguments of prosecution and intellectual property counseling. the USPTO in the Bilski case, namely, the You may reach him at [email protected]. Past results are not a guarantee of future success. USPTO never sought to exclude software Robert Buergi is a senior associate in DLA Piper’s or business methods from patent eligibility, Silicon Valley office, focusing on patent litigation. but has merely been seeking a clear and You may reach him at [email protected]. www.dlapiper.com/ip_global | 09 IN THE ITC DLA Piper at INTA DLA Piper’s global trademark group The ITC Rolls Out was actively involved at the 132nd Annual Meeting of the International The Red Carpet For Trademark Association (INTA) held in May in Boston. INTA involved Patent Trolls By Brian Fogarty more than 8,000 participants from The brief respite provided by eBay is gone. infringement litigation, conducting settlement more than 190 countries, the Injunctions are now available to patent trolls, negotiations, and negotiating, drafting, largest meeting of the international or non-practicing entities, through a patent and executing a license” – as long as the trademark community. More than 30 infringement lawsuit in the ITC. complainant can clearly link each activity to licensing the asserted patent(s).4 In practice, trademark lawyers from DLA Piper’s Since the eBay decision, corporations could this means if a patent troll has secured several offices around the world attended treat cases filed by patent trolls differently license agreements prior to filing in the ITC, because, post-eBay, district courts have the conference. it will almost certainly satisfy the domestic been unlikely to award injunctive relief to industry requirement through §337(a)(3)(C). The INTA conference sessions non-practicing entities. In a recent decision, addressed cutting-edge trademark however, the ITC has provided a road map Another less heralded but nonetheless issues, including infringement for patent trolls to obtain standing to sue in important consequence of this ruling is the ITC, thus providing access to injunctive that the ITC has now further clarified that issues arising from third-party use relief in the form of an exclusion order. As a companies are clearly permitted to assert of trademarks in social media and result, corporations importing products into patents at the ITC that do not cover their virtual worlds the United States may be subject to a new own products, but are instead directed to online, anti- one-two punch from patent trolls: a suit in competing products, as long as companies federal district court for monetary damages; can satisfy §337(a)(3)(C). counterfeiting and a simultaneous suit in the ITC for a After Coaxial Cable Connectors, patentees and strategies and limited exclusion order. their assignees will almost certainly be able to infringement of The ITC’s decision in Coaxial Cable Connectors1 use their current litigation expenses to meet domain name will have a significant impact on companies the economic prong of the domestic industry registrations. and individuals relying primarily on licensing requirement if they can demonstrate those activities to establish a domestic industry expenses are “clearly linked” to licensing DLA Piper under 19 U.S.C. §1337(a)(3)(C), especially activities relating to the patent asserted in the lawyers were corporations having substantial licensing ITC. We can therefore expect the number of featured in the operations. The case clarifies that the ITC §337 cases to continue trending upward, with is a forum available to many more patent more patent trolls filing ITC complaints. conference owners than once thought. Expenditures on program. litigation and other related activities may be Original artwork featured at INTA by Heather Dunn Mark Feldman considered as part of the domestic industry, Brian M. Fogarty is a trial lawyer focusing on patent litigation involving multiple parties, patents and (San Francisco) (Chicago) but those expenditures must be truly licensing-related and tied to exploitation of jurisdictions. He has extensive experience handling spoke at a plenary session, “USPTO patent cases through trial in both the ITC and district the asserted patent(s). Notably, the issue was courts. Reach him at [email protected]. Practice for Non-US Attorneys,” giving raised before the Commission because the a presentation on Trademark Trial Office of Unfair Import Investigations (OUII), and Appeal Board Practice. Alexander not a respondent, petitioned for review 1. Certain Coaxial Cable Connectors and Components Thereof of the economic prong of the domestic and Products Containing Same, Inv. No. 337-TA-650, Commission Tsoutsanis (Amsterdam) gave a Opinion issued on April 14, 2010. industry requirement. 2. Id. at 44. presentation covering “The European 3. Id. at 50. The ITC held that “litigation activities 4. Id. at 50-51. Perspective on the Proper Scope of (including patent infringement lawsuits) Trademarks and Other IP Rights.” may satisfy [§337(a)(3)(C)] if a complainant can prove that the activities are related to licensing and pertain to the patent at issue, DLA Piper has won 9 of 9 ITC 2 and can document the associated costs.” patent trials for its clients since 2000. The ITC stressed that for litigation costs Most recently, on September 23, 2010, related to licensing to apply toward subsection DLA Piper won another patent trial (C) of the domestic industry requirement, a on behalf of its client Ricoh in the complainant must “prove that each asserted activity is related to licensing” and must show ITC when the ALJ found a violation that the “licensing activities pertain to the of Section 337 by Respondents 3 particular patent(s) at issue.” The ITC also Oki Data and Oki Data America. provided a roadmap in the form of concrete examples: “drafting and sending cease and L to R: Cecelia Dempsey, Trademark Counsel, Burger King Corporation; Simon Levine, DLA Piper desist letters, filing and conducting a patent Past results are not a guarantee of future success. (London); Ann Ford, DLA Piper (Washington, DC) UPDATE: GENERAL CIGAR RIGHTFUL OWNER OF False Patent COHIBA BRAND IN US DLA Piper recently won an important Marking Cases trademark victory for clients General By Andrew P. Valentine and Elizabeth Day Cigar Company, Inc. and General Cigar Holdings Inc., ensuring they will be able In Issue 5 (Q1 2010) of the IPT News, was whether Stauffer (an individual we posed the question “Will Bon Tool who purchased bow ties alleged to to sell super-premium Cohiba cigars in Open the Floodgates to Patent Marking be falsely marked) had standing to the United States. Trolls?” Since Bon Tool, more than 350 pursue false marking claims as a qui false patent marking cases have been tam plaintiff. A qui tam plaintiff is General Cigar holds filed. The floodgates did not open – the one who brings a claim on behalf of two US trademark dam completely burst. the government and then splits the registrations for the “penalty” with the govenment. Because Recently, the Federal Circuit issued two Cohiba trademark and most of the current plaintiffs bringing important decisions relating to false false marking claims are similarly has been selling cigars patent marking. On June 10, 2010, the Andrew L. Deutsch situated to Stauffer, many of the cases under that brand for Federal Circuit issued its opinion in Partner, New York that had been filed in 2010 were stayed Pequignot v. Solo Cup Co., 608 F.3d almost 20 years. But pending this decision. The Federal 1356 (Fed. Cir. 2010). The primary for the past 13 years, in a legal roller Circuit held that Stauffer did not need issue in Solo Cup was how to interpret to suffer an injury in fact to have coaster ride, General Cigar has been the “for the purpose of deceiving the standing, but only defending a trademark infringement public” requirement needed to allege that of 35 U.S.C. §292 and unfair competition lawsuit brought the United States had (the false marking by the Cuban state tobacco monopoly suffered an injury in provision of the fact. The court then Cubatabaco, which produces a “Cohiba”- Patent Act). Chief found that Stauffer branded cigar in Cuba. Over the years, Judge Randall R. had standing Rader, authoring the General Cigar has faced being forbidden and reversed and opinion, found that by court injunction to sell Cohibas in remanded the case. the bar was high. Accordingly, the the US; has seen that injunction lifted by The opinion states: case did not deal the Second Circuit; and then faced being “The bar for proving the knockout punch deceptive intent barred again from selling the brand by defendants were here is particularly another district court order. hoping for. However, high, given that the one issue deferred by the lower court false marking statute is a criminal In 2008, DLA Piper sought and was was whether Stauffer adequately pled one, despite being punishable only granted a stay of the latest injunction the “intent to deceive” element required with a civil fine.” The Federal Circuit and an expedited appeal to the Second in false patent marking cases. In light concluded that even if a plaintiff can of the Federal Circuit ruling in Solo Circuit. On July 14, 2010, the Second establish a false statement related to Cup, Stauffer still may have an uphill Circuit issued an opinion that adopted patent marking and knowledge of the battle getting past the pleading stage. false statement, a defendant may rebut our arguments. The appellate court any presumption of intent with actual In any event, because Solo Cup reversed the district court’s judgment evidence that there was not a conscious established such a high burden of and vacated the injunction. General desire to deceive. (“[M]ere knowledge proof, as stays are lifted in other false Cigar announced that the Second that a marking is false is insufficient to marking cases, we can expect to see prove intent if Solo can prove that it did both pleading challenges (motions Circuit ruling “upholds what we have not consciously desire the result that to dismiss) and dispositive motions always believed…General Cigar is the the public be deceived.”) Accordingly, (motions for summary judgment) rightful owner of Cohiba in the US.” the key factor will be not whether a relating to failure to plead or prove defendant knew it was marking its “intent to deceive.” The DLA Piper team consisted of product and not even whether it knew Andrew Deutsch (who argued the the statement was false, but whether it appeal), along with Joshua Sohn, intended to deceive the public: a high Andrew P. Valentine is US co-chair of burden of proof indeed. Patent Litigation and managing partner Airina Rodrigues, and Carl Lawrence of the Silicon Valley office. Reach him at (all New York). Ignacio Sanchez (DC) In another important decision, the [email protected]. Federal Circuit recently issued its is the client relationship partner. Elizabeth Day is a trial lawyer concentrating ruling in Stauffer v. Brooks Brothers, her practice on litigation of patent Inc., Nos. 2009-1428, 2009-1430, 2009- infringement and other IP-related lawsuits. Past results are not a guarantee of future success. 1453, 2010 WL 3397419 (Fed. Cir. Aug. A partner, she is based in Silicon Valley. 31, 2010). The key issue in that case Reach her at [email protected]. www.dlapiper.com/ip_global | 11 DLA Piper llp (us) 401 B Street, Suite 1700 San Diego, California 92101-4297

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