PATENTS Software and Biotech

1. PATENTSSoftware and Biotech Victor H. Bouganim WCL, American University

2. EU and UK Computer programs “as such” are not patentable. The requirement of “technical effect.” Systems in which one of the components is software are patentable. USA Systems and processes are patentable. Software “as such” may be patentable. Old law: mathematical algorithms are not patentable. New law: software, including algorithms, are patentable. Thousands of software patents are currently registered. Some of them are controversial. [http://www.bustpatents.com] Software Patents

3. Source: The Economist, 21 June 2001

4. Software Patentability • Patentable Subject Matter • Utility • Novelty • Non-obviousness • Enablement - Disclosure

5. Patentable Subject Matter 35 U.S.C. Sec. 101 “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”

6. Patents are intended to cover “devices” or physical things in the useful arts, not abstract, speculative, or esoteric matters. A patent issues only if the invention achieves a tangible, practical result. E.g., a hypothetical attempt by Einstein to patent the formula E=mc2 -- not patentable. Excluded: advances in the social sciences advances in business management articulation of a scientific principle Patenting “Abstract Ideas”

7. Gottschalk v. BensonU.S. Supreme Court (1972) • Benson submitted patent claims for a method of converting binary-coded-decimal numerals into pure binary numerals. • Not directed to any particular technology or machinery, the claims covered any use of the claimed method in a computer. • The claims were rejected by the PTO, but the rejection was overturned on appeal; the PTO Commissioner appealed the reversal of his rejection. • Issue: whether a mathematical formula that has no substantial practical application, except in a general purpose computer, is patentable. • The Court held that mathematical algorithms, such as the formula at issue, were not patentable.

8. In re AlappatCourt of Appeals, Fed. Cir., 1994 • Alappat’s invention smoothed the waveform displays on a digital oscilloscope using mathematical formulas to create a clearer picture. • Issue: whether a general purpose machine programmed to perform certain specialized functions is patentable if it creates a unique machine that produces a useful, concrete result. • The court found that, although algorithms are not patentable, Alappat’s claim was not a “disembodied mathematical concept”; rather, this was a specific machine producing a concrete result, and was, therefore, patentable. • The court held that a general purpose computer programmed to perform specific functions pursuant to software instructions created a new machine which was patentable.

9. Stac Electronics v. Microsoft • Stac sued Microsoft for infringement of its patent for data-compression technology. • A federal jury in Los Angeles awarded (in February 1994) Stac $120 million for patent infringement and Microsoft $13.6 million for trade secret misuse. • The parties ended up signing a broad cross-licensing agreement after they reached an out-of-court settlement in June 1994.

10. Wang Labs. v. AOL and NetscapeFed. Cir. 1999 • Wang sues AOL and Netscape for patent infringement on its “Videotex Frame Processing” patent, which allows users to review, retrieve, and store pages from many information suppliers. • A key feature in this dispute was a claim in Wang’s patent that allows the user to assign a name to a particular page or frame for ease of retrieval, i.e., “bookmarking.” • The court finds no infringement because Wang’s patent is limited to character-based protocol, while AOL and Netscape utilize bit-mapped protocol for their bookmarking features.

11. RSA Algorithm PatentPublic-Key Encryption US Patent 4,405,829 by Rivest, Shamir & Adleman (MIT). Issued: September 20, 1983. RSA Inc.

12. “The specification shall contain a written description of the invention…as to enable any person skilled in the art to make and use the same, and shall set forth the best mode…”35 U.S.C. sec. 112, paragraph 1 The primary issue for software patents under section 112 has been whether a patent applicant must deposit source code to meet the disclosure requirement. PTO Guidelines provide means of disclosure regarding software patents. Disclosure of Software Inventions

13. Business Method Patents • Traditionally, courts held that a system of transacting business was not patentable unless what was claimed were the physical means for carrying out the system--The Business Method Exception • In 1994, a dissenting opinion in In re Schrader (C.A.F.C.) criticized the exception as “poorly defined, redundant, and unnecessary.” • In 1998, the C.A.F.C. in State Street put “this ill-conceived exception to rest.” • Since State Street, hundreds of business methods patents have issued.

14. State Street Bank v. Signature Financial GroupC.A.F.C. (1999) • Signature appeals from a summary judgment in favor of State Street finding Signature’s patent invalid under section 101. • Signature’s patent discloses a data processing system for implementing an investment structure that allows an administrator to monitor and record financial information flow and maintain a mutual fund portfolio. • The court held that the transformation of data, representing discrete dollar amounts, by a machine through a series of mathematical calculations into a final share price, constitutes a practical application of a mathematical formula because it produces a concrete result. • After laying the “Business Method Exception” to rest, the court reversed the district court’s findings.

15. Lockwood v. American Airlines, Inc.C.A.F.C. (1997) • Lockwood held patents relating to automated interactive sales terminals that provide sales presentations to customers and allowed customers to order goods and services. • Lockwood sued American asserting that American’s airline reservation system infringed its patents. • The district court held that Lockwood’s claims would have been obvious in light of the prior art. • The court, referring to 35 U.S.C. 102(a) and (b), stated that “if a device was “known or used by others” in this country before the date of invention or if it was “in public use” in this country more than one year before the date of application, it qualifies as prior art. • The court upheld the lower court finding of obviousness.

16. Patenting the multimedia concept? Compton’s new media Methods of doing business on the internet Amazon’s 1-click ordering system Amazon’s affiliate program system Internet Patents • US Pat. No. 5,960,411 (28 Sep 1999) - Method and System for Placing a Purchase Order Via a Communications Network. • Amazon.Com v Barnesandnoble.Com(Dist. Wash 1999).

17. Amazon.com v. Barnesandnoble.comC.A.F.C. (2001) • Amazon holds a patent directed to a method and system for “single action” ordering of items, which allows a consumer to complete a purchase using only a click of a mouse. • Amazon asserts that BN’s “Express Lane,” a similar “single action” system, is infringing its patent. • Issues: whether BN’s system infringes and whether Amazon’s patent is valid. • The court vacated the preliminary injunction, finding that, while Amazon carried its burden in showing a likelihood of success on the merits of its infringement claim, BN raised substantial issues of validity of Amazon’s patent.

18. Nonobviousness 35 U.S.C. Sec. 103 (a) “A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains…”

19. Non-obviousness Considerations (1) The scope and content of the prior art (2) The differences between the claimed invention and the prior art (3) The level of ordinary skill in the art (4) Secondary considerations

20. Non-obviousnessSecondary Considerations • Commercial success • Long-felt but unresolved need • Failure of others to make the invention

21. Biotech Patents • U.S. Patent law has been extended to include the patentability of living creatures, their components and their genes. • Biotech patents have been granted for the following inventions: • Alzheimer-prone mice • DNA sequences • Dolly – the cloned sheep • Genetically modified crops

22. Diamond v. ChakrabartyU.S. Supreme Court (1980) • Dr. Chakrabarty artificially created an oil-eating bacterium and filed a patent application. • The PTO rejected the claim for the bacterium itself on the grounds it was living matter, and thus outside the scope of 35 U.S.C. Sec. 101. • Issue: Are living organisms patentable? • The Court finds that the bacterium falls under the broad language of the statute • Further, the Court stated that any public policy concerns should be addressed by Congress.

23. DISCUSSION • Do Biotech patents slow the progress of scientific research? • Should a patent be issued for a living organism? • Should there be ethical boundaries that limit the patentability of biotechnology? • Should the duration of a biotechnology patent be shorter than 20 years?

24. Discovery of DNA • DNA (Deoxyribonucleic acid) is the molecule of life. • Watson and Crick worked together to construct the first three-dimensional model of the structure of DNA in 1953. The model is known as a double helix and is shaped like a twisted ladder. • DNA consists of sugars, phosphates, and four different nitrogen bases. • All animals have DNA – the proportion of nitrogen bases varies among species.

25. Patenting Human DNA • The U.S. Human Genome Project • Financing the H.G.P. • Race to Map the Genome • Issues Raised by Patenting DNA • Arguments For and Against Patenting DNA

26. Begun in 1990 and expected to be completed in 2003, the U.S. HGP is an international research program designed to construct detailed genetic and physical maps of the human genome and to determine the complete nucleotide sequence of human DNA. GOALS identify all the genes (about 30,000) in human DNA determine the sequences of the 3 billion chemical base pairs in human DNA store information in databases develop tools for data analysis transfer related technologies to the private sector address ethical, legal, and social issues The Human Genome Project

27. H.G.P. Financing • During Fiscal years 1988 through 2000, the U.S. Department of Energy and the National Institute of Health have spent approximately $2.53 billion dollars. • The DOE and NIH genome programs set aside 3% to 5% of their respective total annual budgets for the study of the project's ethical, legal, and social issues. • Currently, there are several private companies at work on the HGP, which has fueled controversy.

28. Race to Map the Genome • The U.S. HGP is in competition with Celera, a Maryland-based corporation, to successfully map the human genome. • The U.S. HGP publishes its results daily and provides free access via such mediums as the Internet--by being publicly available, the information compiled by the U.S. HGP becomes unpatentable. • In contrast, Celera compiles its information in a database, charging an access fee to users, and is seeking patents on certain portions of its results.

29. Issues Raised by Patenting DNA The patentability of DNA molecules in forms that involve human intervention and that serve a function appears to be well settled. • Are DNA sequences the sort of subject matter that our patent system protects? • DNA sequences are not only molecules, but also valuable scientific information--can and should the value of this information be captured through patents? • Would allowing patents for DNA sequences upset the balance between inventors’ interests and public interests?

30. Arguments For Patenting DNA • Researchers rewarded for discoveries and can use profits from patenting to further their research. • Investment of resources encouraged by providing a monopoly to the inventor. • Wasteful duplication of effort prevented. • Research is forced into new, unexplored areas. • Secrecy is reduced and all researchers are insured access to the new invention.

31. Arguments Against Patenting DNA • Patents of partial and uncharacterized DNA sequences will reward those who make routine discoveries but penalize those who determine biological applications and functions. • Patents could impede the development of diagnostics and therapeutics by third parties due to costs associated with using patented data. • As patent applications remain secret, companies may work on developing a product that is already being patented.

32. CLASS DISCUSSION • What exactly is patented in the HGP? • Are the HGP results patentable at all? • i.e., are they merely the discovery of laws of nature which are not protectable or are they protectable inventions? • Is it legitimate that private companies monopolize their discoveries related to the HGP? • Should only the process of DNA sequencing be patentable or should the sequences themselves be patentable?