Business method patents ride Bilski to the Supreme Court

In 1998, the Court of Appeals for the Federal Circuit (CAFC), affirmed the patentability of business methods in State Street Bank v. Signature Financial Group,  prompting a flood of business method applications into the U.S. Patent and Trademark Office.  However, in 2008, an en banc CAFC emphatically (9-3) proclaimed, 'Enough!'  Bernard Bilski and Randall Warsaw's claimed method for hedging risks in commodities trading was found unpatentable.  With certiorari recently granted, questions regarding the scope of patentable business methods now move to the Supreme Court.
 
In State Street, the CAFC required only that a claimed invention provide a ‘useful, concrete and tangible result’.  True, "a...process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing."  In Bilski however, the CAFC for the first time stated these two alternatives not as indicators, but as the exclusive 'machine-or-transformation' requirements for business method patentability.
 
Almost immediately, the U.S. Patent and Trademark Office (USPTO) began rejecting, based on Bilski, numerous computer-implemented processes that are not 'business methods'.  Why?  Apparently, in the eyes of the USPTO, a 'particular machine or apparatus' does not include general purpose machines (e.g. computers and processors) if they are not specially configured for the claimed process.
 
Until the Supreme Court rules, business method patents remain vulnerable to invalidity challenges, and many pending process patents face a new and formidable obstacle to allowance.  Key questions remain.  How much 'transformation' is sufficient?  What constitutes a 'particular machine'?  For now, to avoid losing rights due to the holdings in Bilski and their implementation by the USPTO, applicants must pay to keep their applications alive pending Supreme Court action. 
 
Our predictions?  The Supreme Court will reject the rigid and exclusive new 'machine-or-transformation' rule, while reciting and renewing precedent already fat with patentability indicators.  Bilski will be remanded to the CAFC, where the applicants will ultimately lose as they should have, for claiming an overly broad and abstract idea.  Ultimately, we believe the validity of already granted business method patents will be left to case-by-case evaluation through litigation, with the apple cart remaining happily upright and rolling down a well trodden road.

Oregon legislature approves ban on cell phone use while driving

On June 24, the Oregon Legislature passed a bill banning the use of any "mobile communication device" while driving unless the device is in hands-free mode.  The ban, which applies to cellular phones and text messaging devices, is subject to several exceptions. An offense is a Class D traffic violation that carries a fine of up to $90.  The governor is expected to sign the bill, which would go into effect on January 1, 2010.

Many employers already have policies banning the use of cell phones and text messaging devices while driving for a work-related purpose.  Those employers who don't yet have a policy will want one in place by the time the new law goes into effect.

Oregon courts strictly enforce filing fees for motions

The Oregon State Bar's Professional Liability Fund today warned members that some circuit courts no longer accept for filing motions and responses to motions unless they are accompanied by the appropriate filing fees.  According to the PLF, Multnomah and Washington counties are among those now rejecting filings that arrive at the clerk's office without a check.  See the PLF's statement here.

Effective invention disclosures save clients money and more

The client rapidly dictates, draws, and gestures, the details of her invention haphazardly spilling forth in all their problem-solving glory.  Across the table, her attorney scribbles furiously to capture every word.  Later in the quiet of his office, the attorney labors to assemble his patchwork of notes into a robust, comprehensive, and technically correct patent application.

A lawyer's time is a hungry machine that consumes money as fuel.  A tenth of an hour saved may be a dinner-out-for-two earned.  Therefore, the savvy client simplifies her attorney's task.  An effective first step: deliver a clear, complete, well organized tutorial of the invention.  To this end, inventors can learn a cost saving trick from corporations, which frequently require their employee/inventors to fill out an Invention Disclosure Form. 

Effective invention disclosures guide inventors to draft a thorough description, and prompt them to think about their invention in new and more structured ways, frequently squeezing out valuable new elements and embodiments in the process.  Further, a completed invention disclosure may provide essential documentary evidence useful to defeat prior art asserted by the Patent Office during prosecution.  Lastly, and significantly for nearly every client, a thorough and organized invention disclosure can dramatically reduce the time required to draft a patent application, saving money sorely needed for other endeavors.

After drafting numerous patent applications across widely varying technical fields, patent attorneys generally know what information, delivered in what form, is most helpful to them.  Therefore, when engaging a patent attorney, a client should ask for an invention disclosure form preferred by that attorney.  A blank stare in reply is a good clue that the client may want to take his business elsewhere. 

Note: One of our patent attorneys developed the invention disclosure training used worldwide by one of the world's largest technology companies, a nearly perennial top-ten filer of U.S. patent applications.  You'll find no blank stares at Ater Wynne.

Attorneys not subject to sanctions under the Fair Debt Collection Practices Act

The Ninth Circuit Court of Appeals last week addressed the scope of sanctions for bad faith claims under the Fair Debt Collections Practices Act ("FDCPA").  A California plaintiff brought suit against two companies for violations of the FDCPA.  The plaintiff lost the suit, and the federal district court awarded attorney's fees and costs against the both plaintiff and his lawyers, finding that the lawsuit had been filed in bad faith and for the purpose of harassment as defined by the FDCPA.  The plaintiff's attorneys appealed.

On June 9, the Ninth Circuit issued its opinion in Hyde v. Midland Credit Management, Inc., holding that even if an FDCPA case is brought in bad faith and for the purpose of harassment, attorney's fees and costs cannot be awarded against the plaintiff's attorney under the FDCPA.

While the FDCPA does provide for an award of attorney's fees and costs against an unsuccessful abusive plaintiff, the Ninth Circuit looked at laws the FDCPA is modeled after and determined that Congress did not intend to allow fee awards against an attorney.  The Court reasoned that, had Congress intended to allow direct sanctions against an attorney, it would have explicitly said so.  The Court noted that there are other laws and rules by which courts can penalize attorneys directly.

EEOC votes to approve ADAAA regulations

On June 16, 2009, the EEOC approved proposed regulations intended to conform with changes made by the ADA Amendments Act (ADAAA) of 2008. The ADAAA makes it easier for an individual seeking protection under the ADA to establish that he or she has a disability.

The next stage in the legislative process will be for the Office of Management and Budget and federal agencies to review the proposed regulations. Following that review process, the EEOC will publish the proposed regulations for public comment.

Stay tuned ...

Ninth Circuit puts Internet domain name registry in dispute

In an opinion issued earlier this month, Ninth Circuit Judge Mary M. Schroeder applied "antitrust statutes drafted in the late 19th century" to reinstate a lawsuit alleging wrongful acts in a very 21st century business:  the registry for ".com" and ".net" Internet domain names.

Plaintiff in Coalition for ICANN Transparency, Inc. v. VeriSign, Inc. alleges that VeriSign, the company that has the exclusive right to administer the registry of domain names, and ICANN, the non-profit oversight body that coordinates the Internet domain name system, prevented competition in the pricing of domain name registration.  While the trial court had dismissed the complaint for failure to state a claim, the Ninth Circuit held that, among other things, plaintiff adequately pleaded conspiracies to set artificially high prices for ".com" domain names and to prevent competitive bidding for the right to register domain names.

Ninth Circuit on standing to seek plan benefits

"Standing" is the legal doctrine that requires a plaintiff to have a sufficient stake in a controversy before seeking judicial remedies.  Standing is often an issue in ERISA litigation, where benefit plans may seek to dismiss a participant's claims for lack of standing. 

A recent Ninth Circuit decision, in the case of Poore v. Simpson Paper Co., discussed the standing of participants in a retiree health plan.  The plan provided benefits to members of a union.  The collective bargaining agreement between the employer and the union provided that retirees over age 55 would receive retiree health benefits until they turned 65 or became eligible for Medicare.  The employer specifically reserved the right to alter, amend or cancel the retiree benefit at any time.

Eventually, the employer decided to terminate the retiree health benefit.  A group of retirees sued, claiming that their rights to benefits under the plan had "vested," or become permanent, and were no longer subject to the termination right of the employer.  (ERISA prohibits an employer from eliminating a vested benefit.) 

Initially, the Ninth Circuit held the plaintiffs' benefits had not vested, and as a result they did not have standing.  Without a vested benefit, the participants had no stake in a controversy that the court could resolve.  But after dismissing the case, the court withdrew its initial decision and reversed itself, holding that ERISA provides that plan participants may seek judicial enforcement of plan benefits and that a recent U.S. Supreme Court decision held "plan participant" for ERISA purposes "may include a former employee with a colorable claim for benefits" - without the requirement that the benefit be vested.

The Ninth Circuit did not reach the merits of the plaintiffs' claim -- whether they were entitled to retiree health benefits -- but merely that they had standing to pursue the claim.  This decision is a reminder of the statutory intricacies of ERISA, and the difficulties both participants and plans have in resolving a dispute.