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What Is Patentable Subject Matter?

Changing Perspectives in the

Biotechnology and Software

Arts

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35 U.S.C. § 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, . . .”

The Law of Patentable Subject Matter

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Bilski Sets the Stage:Bilski Representative Claim

1. A method for managing the consumption risk costs of a commodity … comprising the steps of:

(a) initiating a series of transactions … wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;

(b) identifying market participants for said commodity having a counter-risk position to said consumers; and

(c) initiating a series of transactions … at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.

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Bilski v. Kappos, 130 S. Ct. 3218, 561 US ___ (2010). Hedging risk is an unpatentable abstract idea. The claim would wholly preempt the use of this

approach in all fields and grant a monopoly over an abstract idea.

Limiting this abstract idea to one field of use or adding token post-solution steps does not render the claim compliant with §101.

The machine-or-transformation test is not the definitive test of patent eligibility, but is merely a useful tool in the analysis.

Bilski Sets the Stage:And the Supreme Court Says…

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Cybersource v. Retail Decisions, 654 F.3d 1366 (Fed. Cir. 2011). “[W]e have never suggested that simply reciting the use

of a computer to execute an algorithm that can be performed entirely in the human mind [is sufficient].”

Ultramercial, LLC v. Hulu, LLC, 657 F.3d 1323 (Fed. Cir. 2011), vacated sub nom. Wildtangent, Inc. v. Ultramercial, LLC, --- U.S. ---- 132 S. Ct. 2431 (2012). “[A]s a practical application of the general concept of

advertising as currency and an improvement to prior art technology, the claimed invention is not ‘so manifestly abstract as to override the statutory language of section 101.’”

Vacated by the Supreme Court and remanded to Federal Circuit in view of Prometheus – en banc petition denied

Post-Bilski Case Law Developments

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MySpace, Inc. v. GraphOn Corp., 672 F.3d 1250 (Fed. Cir. 2012). Majority: Claim anticipated or obvious, no

need to decide patentability. Dissent: o Claims an abstract idea and does not satisfy

§ 101 This case may have signaled a different

approach to the issue – but….

Post-Bilksi Case Law Developments

Then Comes Prometheus:Prometheus Representative Claim

1. A method of optimizing therapeutic efficacy for treatment of [a specific] disorder, comprising:

(a) administering a drug providing 6-TG to a subject having said … disorder; and

(b) determining the level of 6-TG in said subject having said … disorder,

wherein the level of 6-TG less than about 230 [units] indicates a need to increase the amount of said drug subsequently administered to said subject and

wherein the level of 6-TG greater than about 400 [units] indicates a need to decrease the amount of said drug subsequently administered to said subject.

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Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ----, 132 S.Ct. 1289 (2012). Wherein clause recites a law of nature As for administering and detecting steps,o “Transformation” alone is not sufficiento Limiting claims to a particular technological field is not

the same as reciting a specific applicationo In “stating that the ‘machine-or-transformation’ test is

an ‘important and useful clue’ …, we have neither said nor implied that the test trumps the ‘law of nature’ exclusion.”

Then Comes Prometheus:And the Supreme Court Says…

PTO Interim Prometheus Guidelines 1. Is claim a method? 2. Does claim include a natural principle?• Occurs naturally or occurs when man-made

product interacts with naturally occurring substance

• Does not include methods of treatment with novel diseases or indications

3. Do other claim elements integrate natural principle in narrowing fashion• Not routine but not necessarily novel or

nonobvious• Administering prodrug and measuring level of

drug (Prometheus) not enough

Would This Claim Satisfy § 101?1. A method of optimizing therapeutic efficacy for treatment of [a specific] disorder, comprising:

administering a first amount of a drug providing 6-TG to a population of patients in need thereof,

administering an increased amount of the drug to patients in the population when an amount of 6-TG in the patient’s blood is less than 230 [units], and

administering a decreased amount of said drug to the patient when an amount of 6-TG in the patient’s blood is greater than 400 [units].

The Power of Populations1. A method of optimizing therapeutic efficacy for treatment of [a specific] disorder, comprising:

administering a first amount of a drug providing 6-TG to a population of patients in need thereof,

administering an increased amount of the drug to patients in the population responsive to a determination that an amount of 6-TG in the patient’s blood is less than 230 [units], and

administering a decreased amount of said drug to patients in the population responsive to a determination that an amount of 6-TG in the patient’s blood is greater than 400 [units].

Post Prometheus Case Law Developments:CLS Bank – Representative Claim

1. A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:

(a) creating a shadow credit record and a shadow debit record for each stakeholder party to be held independently by a supervisory institution from the exchange institutions; (b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record; (c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party's shadow credit record or shadow debit record, allowing only these transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order; and (d) at the end-of-day, the supervisory institution instructing one of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.

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CLS Bank International v. Alice Corp. Pty. Ltd., 685 F.3d 1341 (Fed. Cir. 2012). Unless the single most reasonable understanding is that a claim is directed to

nothing more than a fundamental truth or disembodied concept, with no limitations in the claim attaching that idea to a specific application, it is inappropriate to hold that the claim is directed to a patent ineligible “abstract idea” under Section 101.

In reaching the conclusion, the court considered: o All inventions at some level embody, use, reflect, rest upon, or apply laws of

nature, natural phenomena, or abstract ideas.” Prometheus. o In assessing patent eligibility, a court must consider the asserted claim as a

whole rather than to generalize the invention. Diehr. o A new combination of known elements may be patentable. o Ignoring claim limitations in order to abstract a process down to a

fundamental truth is legally impermissible.

• HOWEVER, Petition for Rehearing En Banc was granted on October 9, 2012 and the CLS decision was vacated. Both parties recently filed en banc briefs (Nov 2012, Jan 2013).

Post-Prometheus Case Law Developments

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Bancorp Servs., L.L.C., v. Sun Life Assurance Co., 687 F.3d 1266 (Fed. Cir. 2012). Managing a stable value protected life insurance policy is an abstract

idea, and can be performed (albeit inefficiently) without a computer. Mentioning a computer or referring to, e.g., a “fee calculator for

calculating fees” instead of just “calculating fees” is not sufficient. “[U]nder Cybersource and CLS, a machine, system, medium, or the

like may in some cases be equivalent to an abstract mental process.” Basic digital computation is interchangeable with certain mental

processes, so the use of a computer in an otherwise patent-ineligible process for no more than the basic function of making calculations or computations fails to avoid the prohibition against patenting abstract ideas and mental processes.

Post-Prometheus Case Law Developments

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A method for verifying the validity of a credit card transaction over the Internet comprising the steps of:a) obtaining information about other transactions that have

utilized an Internet address that is identified with the [ ] credit card transaction;

b) constructing a map of credit card numbers based upon the other transactions; and

c) utilizing, by a computing system comprising one or more processors, the map of credit card numbers to determine if the credit card transaction is valid.

Would This Claim Satisfy § 101? – Example 1

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A computer system comprising:one or more hardware processors in communication with a computer

readable medium storing software modules including instructions that are executable by the one or more hardware processors, the software modules including at least:

a current transaction computer module configured to obtain electronic data transmitted over a computer network about an Internet credit card transaction and at least one Internet address associated with the credit card transaction;

a past transaction computer module configured to access electronic data stored in computer storage about other transactions that have utilized an Internet address that is associated with the credit card transaction;

a mapping computer module configured to construct a map in computer memory of credit card numbers based upon the other transactions; and

a transaction validity analysis computer module configured to use the map of credit card numbers to determine if the credit card transaction is valid.

Example 2

Post-Prometheus Case Law DevelopmentsMyriad – Representative Claims

Isolated DNA Claims1. An isolated DNA coding for a BRCA1 polypeptide [of] SEQ ID NO:2.

Method Claims2. A method for detecting a germline alteration in a BRCA1 gene comprising analyzing a sequence of a BRCA1 gene or BRCA1 RNA or cDNA from a human sample. 3. A method for screening a tumor sample from a human subject for a somatic alteration in a BRCA1 gene comprising comparing a first sequence made from mRNA from said tumor sample with a second sequence. 4. A method for screening potential cancer therapeutics comprising: growing a transformed eukaryotic host cell with an altered BRCA1 gene in presence and absence of a compound, determining the rate of growth, wherein a slower growth in the presence of said compound indicates a cancer therapeutic.

Post-Prometheus Case Law Developments Myriad Genetics - Ass'n for Molecular Pathology v. U.S. Patent &

Trademark Office, 653 F.3d 1329 (Fed. Cir. 2011), reh'g denied (Sept. 13, 2011), reh'g denied (Sept. 16, 2011), cert. granted, judgment vacated sub nom. Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 132 S. Ct. 1794, 182 L. Ed. 2d 613 (U.S. 2012) and opinion vacated, appeal reinstated, 467 F. App'x 890 (Fed. Cir. 2012), cert granted 133 S. Ct. 694 (2012)

First Federal Circuit Decision◦ DNA claims upheld◦ Comparing/analyzing method claims unpatentable as mental

process◦ Screening claims upheld (growing cells transformative)

Vacated and remanded by Supreme Court in view of Prometheus

Second Federal Circuit Decision◦ Unchanged

Supreme Court grants cert.◦ Are human genes patentable?

Would These Claims Satisfy § 101?

1. Isolated, purified compound X.2. An orally-administered capsule comprising:

isolated, purified compound X, and a pharmaceutically acceptable carrier.

3. A method of treating cancer comprising:administering the compound X to a patient in need thereof.

Post-Prometheus Case Law Developments PerkinElmer, Inc. v. Intema Ltd., 2011-1577, 2012 WL

5861658 (Fed. Cir. Nov. 20, 2012) Method of determining risk of Down’s syndrome in fetus

Measuring level of a first screening marker in first trimestero (Conventional pre-solution activity)

Measuring level of a second screening marker in second trimestero (Conventional pre-solution activity)

Determining risk of Down’s syndrome by comparing markers with relative frequencies of markers in pregnancies with Down’s syndrome and control pregnancies. o (Mental abstraction or law of nature)

Another suggestion: Performing an abortion on some but not other subjects in a population according to the determined level of risk.

How Are These Decisions Impacting Policy? – A Corporate Perspective on Software Patents• Patent litigation has spiked

• NPE assertion:o cost US economy $320B in last 4 yearso 2011: $29B in direct costo 59% of NPE litigation directed to SMB

SMB bear 37% of aggregate costsThis is a substantial drag on innovation

• Not all patents are equal• Software patents:

o 20.8% of patents litigated onceo 74.1% of the most litigated patents (8 or

more suits since 2000)o 62% of patents asserted by NPEs from 1990-

2010 are software patents

• Common software patent problems that fuel litigationo obviousnesso vague, unclear scopeo overbreadtho abstractness

• The hard work is in writing the code - how to implement the functiono ideas are easier to come by than working

implementationso abstract claims are a tax on the hard parto abstract claims hinder innovation

• Application of 101 can reduce abstract claimso Require claims to recite a concrete application of an

abstract ideao Apply Prometheus framework to softwareo guideposts for determining 101 compliance:

(1) adding steps or elements that are conventional or obvious is insufficient to confer patent-eligibility; (2) adding general and non-specific steps or elements that do not significantly limit the claim's scope is insufficient; (3) limiting an idea to a particular technological environment- such as a computerized environment is insufficient; and (4) claims that fail the machine-or-transformation test are likewise dubious.

How Are These Decisions Impacting Policy? – A Biotech Perspective Divergent interests• Non-profit or third world health care• Biotech diagnostic companies

Many countries limit or prohibit diagnostic methods by statute (India, China)

Does Prometheus achieve the right balance for the US?

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Thank you for coming!