US Federal Circuit: Business Method patentable as Claims show technological Advance – How would Europe decide?

The patent US 7,346,545, relating to delivering copyrighted media products through a server free of charge in exchange for watching advertisements, has been enforced by Ultramercial against a number of Internet media competitors, like Hulu, WildTangent and YouTube. In August 2010 the 545 patent has been found invalid by a California District Court in view of the Bilski v. Kappos ruling which has been issued shortly before by the US Supreme Court (CV 09-06918). For further information on this case, please see my earlier posting here.

To be on the safe side, the District Court applied a two-stage approach, that is, as a screening filter, the CAFC’s machine-or-transformation test and then the SCOTUS abstract idea test.

The MOT test failed as the District Court found that the “mere act of storing media on computer memory does not tie the invention to a machine in any meaningful way”. Further, the Court identified “using advertisement as a currency” as the core principle of the patent, while the claims do not cite any concrete features as to how the core principle can be implemented.  

Some observers criticised the District Court’s reasoning as being capable to kill any invention where a key concept can be labelled ‘abstract’ even if the invention is clearly limited to an electronic implementation and even if the electronic implementation is central to the idea.

Now, as the Federal Circuit under Chief Judge Radar reviewed the case in appeal, it turns out that such criticism hit the mark (see decision of June 21, 2013), as the case was reversed and remanded. In its decision the Federal Circuit referred multiple times to the term “technology”, e.g.:

• The plain language of the [patent act] provides that any new, non-obvious, and fully disclosed technical advance is eligible for protection.
• After all, unlike the Copyright Act which divides ideas from expression, the Patent Act covers and protects any new and useful technical advance, including applied ideas.
• Far from abstract, advances in computer technology—both hardware and software—drive innovation in every area of scientific and technical endeavor.

Theses three statements distributed across the 36 pages of the decision seem to define the underlying rational of this decision: Technical progress is -nowadays- driven by computer technology which in turn is patent-eligible even if, e.g. in case of software, only an abstract idea is applied (i.e. implemented).

Of course, this does not mean that each software-implemented abstract idea qualifies for a US patent, however, it at least means that software-implemented abstract ideas are protectable if they are novel and unobvious. With a bit more context, the Circuit’s understanding of patent-eligible software is expressed in this paragraph on page 31:

In other words, a programmed computer contains circuitry unique to that computer. That “new machine” could be claimed in terms of a complex array of hardware circuits, or more efficiently, in terms of the programming that facilitates a unique function. With the digital computer, considered by some the greatest invention of the twentieth century, as a vital invention, both this court and the Patent Office have long acknowledged that “improvements thereof” through interchangeable software or hardware enhancements deserve patent protection.

Before this background, the Circuit assesses the means required to lead a computer-program out of abstractness into patentability:

When assessing computer implemented claims, while the mere reference to a general purpose computer will not save a method claim from being deemed too abstract to be patent eligible, the fact that a claim is limited by a tie to a computer is an important indication of patent eligibility.

[...] While no particular type of limitation is necessary, meaningful limitations may include the computer being part of the solution, being integral to the performance of the method, or containing an improvement in computer technology.

The Federal Circuit thus held that technical features relating to the implementation of a software-based invention can render a claim non-abstract and patent eligible. The MOT test, whose exclusiveness has been eliminated in Bilski v Kappos, appears to be substituted by some sort of a  ’programming complexity test’:

We have held that such programming creates a new machine, because a general purpose computer in effect becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software.

[...] Having said that, this court does not define the level of programming complexity required before a computer-implemented method can be patent-eligible.

Thus, besides tangible implementational features a certain programming complexity that is required to implement the claimed method can overcome abstractness too. But what exactly are those features that render claim 1 of the 545 patent eligible:

[...] This court does not need the record of a formal claim construction to see that many of these steps [of claim 1] require intricate and complex computer programming.

From a European perspective, the business method according to claim 1 may well pass the trivial “technical character” test according to Art. 52 (2), (3) EPC as the method is conducted via the “Internet”, which would be sufficient to establish so called a priori technicality. 

As “Internet” appears to be the only technical feature, an EPO Opposition Division could then very quickly finish examination – even without a prior art search – by considering this feature notoriously known, such as a standard computer or standard database (cf. EPO Boards of Appeal T 641/00,T1284/04, T1928/06). 

If the imagined EPO Opposition Division would not take that exit, next would be to identify the novel features of that claim via-a-vis the closest prior art reference. As those novel features (if any) would be entirely non-technical, the claim would immediately be classified obvious, as no technical feature are present by which a technical problem could be derived and which may establish an inventive step, as required by so called a posteriori technicallity.

Further, as European examiners are allowed to consider all non-technical disclosure of an application as admitted prior art and thus may use it upon assessing inventive step, claim 1 of the 545 patent would – if nevertheless some technical features could be identified in the claim – at least fail at this point, as the non-technical disclosure would direct the skilled person towards the technical aspects of the claimed subject-matter.

For an in-depth explanation of how software inventions are examined in Europe please see here.

Consequently, as the Federal Circuit appears to consider many of the steps of claim 1 technical because complex programming is needed to implement them, only the Internet feature would be accepted as technical in Europe. The standards of patent-eligibility of software-based inventions are thus much more restricted in Europe – at least as compared to this decision under Chief Judge Radar.  

As the Federal Circuit remanded the case bach to the previous instance, we may in future here more about the unobviousness of the patent before the background of the CAFC’s decision. For now, however, it appears fair to assume that the basis of features usable for assessing inventiveness/unobviousness is more restricted in Europe as well. While in Europe only technical features can establish inventive step, the reasons of allowance for the 545 patent were:

The prior art on record neither alone nor in combination [...] teach and suggest the ordered combination of a second step of selecting a sponsor message to be associated with the media product, said sponsor message being selected from a plurality of sponsor messages, said second step including accessing an activity log to verify that the total number of times which the sponsor message has been previously presented is less than the number of transaction cycles contracted by the sponsor of the sponsor message, a fourth step of offering to a consumer access to the media product without charge to the consumer on the precondition that the consumer views the sponsor message, and subsequent to the ninth step, a tenth step of receiving payment from the sponsor of the sponsor message displayed.

Probably, none of theses steps would have qualified for inventive step assessment under the standards of the case law of the EPO Boards of Appeal. Assuming these feature are novel over prior art, that claim would have to be considered non-inventive due to lack of technical features.