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May 29, 2009

Breaking

Every Penny Counts is running a problematic enforcement campaign with a bankrupt patent family. Florida district court Judge Paul A. Magnuson saw through claim 15 of 6,112,191, which ostensibly claims an apparatus, but really claims a method, as not being patentable subject matter. Bilski takes another bite.

Every Penny Counts (EPC) v. Bank of America (Florida 2:07-cv-042)

This patent claims a system whereby consumers can save and/or donate a portion of a credit or debit transaction. For example, a consumer can determine that any credit or debit transaction will be rounded up to the nearest dollar, and the difference between the actual transaction price and the rounded price will go to the consumer's savings account, or to a charitable organization, or a portion to each. A consumer can also select a particular amount to be added to each transaction, rather than rounding the transaction to the nearest dollar.

Defendants Bank of America Corporation and Bank of America, N.A. (collectively, "BOA") have a system called Keep the Change, or KTC. This system allows BOA customers to round up credit or debit transactions to the nearest dollar. The difference is presumably put into one of the customer's BOA accounts.

EPC contends that Keep the Change infringes claim 15 of the 191 patent. This claim provides:

A system, comprising:
A network;
entry means coupled to said network for entering into the network an amount being paid in a transaction by a payor;
identification entering means in said entry means and coupled to said network for entering an identification of the payor;
said network including computing means having data concerning the payor including an excess determinant established by the payor for the accounts;
said computing means in said network being responsive to said data and said identification entering means for determining an excess payment on the basis of the determinant established by the payor, and
said computing means in said network being responsive to the excess payment for apportioning, at least a part of the excess payment amount said accounts on the basis of the excess determined and established by the payor and on the basis of commands established by the payor and controlled by other than the payee.

(Defs.' Ex. B (191 patent), claim 15.)

This application of Bilski merits attention. Judge Magnuson treats a system claim as a process claim.

35 U.S.C. § 101 provides: "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." Courts have struggled for years with what sorts of "processes" are patentable under § 101.

On October 30, 2008, the Federal Circuit issued the en banc decision In re Bilski, 545 F.3d 943 (Fed. Cir. 2008). This decision clarified that the "machine-or-transformation" test applies to determine the patent eligibility of "process" patents. The court explicitly overruled its prior test, which allowed a patent to issue if the process produced a "useful, concrete and tangible result." In re Alappat, 33 F.3d 1526, 1544 (Fed. Cir. 1994). Bilski explained that a process is patentable only if "(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing." Bilski, 545 F.3d at 954.

The amorphousness of a patent claiming network operations as such should be trounced.

EPC argues that the 191 patent does not claim a process, but rather claims a system, which is analogous to a machine. Thus, according to EPC, Bilski does not apply in the first instance. A machine is "a concrete thing, consisting of parts, or of certain devices and combination of devices." In re Nuijten, 500 F.3d 1346, 1355 (Fed. Cir. 2007). EPC contends that, because claim 15 claims a "network," an "entry means," an "identification entry means," and a "computing means," the 191 patent is a "machine" under the above definition.

Simply because the process at issue requires machines or computers to work, however, does not mean that the process or system is a machine. See, e.g., Gottschalk v. Benson, 409 U.S. 63, 71-72 (1972) (finding that "the mathematical formula involved here has no substantial practical application except in connection with a digital computer" and was therefore not eligible for a patent). The "system" described by the 191 patent "has no substantial practical application except in connection with" computers, cash registers, and networks, but it is not comprised of those devices. The 191 patent is a process, not a machine.

Judge Magnuson's logic wanders into the weeds in failing to see utility in cash diversion as a process, regardless of its automation.

Bilski emphasized that the use of a machine in the process in question was not particularly relevant in determining whether that process was patent-eligible. Rather, a Court must examine whether "the use of a specific machine . . . impose[s] meaningful limits on the claim's scope" and whether "the involvement of the machine in the claimed process [is] merely . . . insignificant extra-solution activity." Id. at 961-62. In the process claimed by the 191 patent, a mathematical algorithm uses machines for data input and data output and to perform the required calculations. Those machines do not, however, impose any limit on the process itself. The involvement of the machine in the process is insignificant extrasolution activity and thus the process is not patentable under § 101.

The 191 patent is invalid unless it "is tied to a particular machine" or "transforms a particular article into a different state or thing." Bilski, 545 F.3d at 954. EPC does not argue that the 191 patent transforms any article into something different. Thus, the patent is valid only if it is tied to a particular machine. Because it is beyond question that the patented process is not tied to a particular computer or other device, the process embodied by the 191 patent is invalid under § 101.

Judge Magnuson got it right that EPC, by claiming a network, did not tie its claim to a particular machine.

Judge Magnuson should have pointed out that automation per se does not make for patentability. All the claimed system process does is divert funds, by which there is no transformation of the claimed subject matter, hence not §101 patentable, and funds diversion as claimed, that is, giving spare change, is as old as success in begging, so would be obvious under §103.

Posted by Patent Hawk at May 29, 2009 2:51 PM | § 101

Comments

"which ostensibly claims a toolbar, but really claims nonstatutory subject matter, as not being patentable subject matter."

Sounds familiar somehow.

Posted by: 6 at May 30, 2009 6:44 AM

6,

It's a shame we can't lay a bet on that.

You clearly are unable to construe claims or interpret 101. Your career as an examiner at the USPTO is assured.

Posted by: Patent Hawk at May 30, 2009 8:54 AM

Look man, in this instance it's just a joke, it really could go either way. Only a judge can sort out the validity of claims.

But if you'd like to place a bet on a hypothetical claim which is very similar, but not the exact same as, some specific claim in a litigation somewhere then I'm in. I'll need to read a hypothetical specification to make sure that controversy exists first though.

Posted by: 6 at May 30, 2009 10:43 AM

Poor Hawkie.

6 is being too generous. The proprietor of the ever growing family of alleged "patents" deriving from application no 09/707,194 ostensibly claims a crude drawing of a toolbar, while actually attempting to preclude continued application of the prior arts in the actual programming of computers.

Fortunately, you have amici with stunning proof of the validity of your "claims".

Posted by: Mud at May 31, 2009 4:24 AM

"09/707,194"

Now there's a real class act.

"You clearly are unable to construe claims or interpret 101. Your career as an examiner at the USPTO is assured."

Says the man who, iirc, was an examiner and who drafted and paid a certain fee in the above application. Or maybe that was just Mr. Platnum. Either way, the same man that wrote those claims is stating the above. Irony, you sweet sweet delicacy.

Posted by: 6000 at May 31, 2009 2:36 PM