The Toyota way also means that the company has not been litigious, preferring quiet licensing deals. Ford has a cross-license with Toyota for hybrid technology, where, Ford claims, no money changed hands.

More in the Wall Street Journal.

In Bilski, the CAFC took clues to patentability and rendered them exclusive metrics. ("Transformation and reduction of an article 'to a different state or thing' is the clue to the patentability of a process claim that does not include particular machines." - Diamond v. Diehr, 450 U.S. 175 (1981)) The law requires nothing more than a "new and useful process," or its "improvement thereof". In KSR, the Supreme Court chided the CAFC about its rigidity. Another reminder is in order, as old habits die hard. A very long-standing doctrine, Congress and SCOTUS have consistently left patentable subject matter open-ended with regard to technology, including process claims, whilst rightfully shutting the door to "laws of nature, natural phenomena, and abstract ideas." Patentability needs no further circumscription.

On the other hand, the CAFC has been far too lenient in enforcing definiteness, practically eviscerating the statute's requirement for clarity. From the CAFC in Praxair v. Advanced Technology Materials (2008) -

The second paragraph of 35 U.S.C. § 112 requires that the specification of every patent must "conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention." This requirement serves a public notice function, ensuring that the patent specification adequately notifies the public of the scope of the patentee's right to exclude. See Honeywell Int'l, Inc. v. Int'l Trade Comm'n, 341 F.3d 1332, 1338 (Fed. Cir. 2003). A claim satisfies the definiteness requirement of § 112 "[i]f one skilled in the art would understand the bounds of the claim when read in light of the specification." Exxon Research & Eng'g Co. v. United States, 265 F.3d 1371, 1375 (Fed. Cir. 2001). A claim will be found indefinite only if it "is insolubly ambiguous, and no narrowing construction can properly be adopted . . . ." Id. On the other hand, "[i]f the meaning of the claim is discernible, even though the task may be formidable and the conclusion may be one over which reasonable persons will disagree, we have held the claim sufficiently clear to avoid invalidity on indefiniteness grounds." Id.

Neither the Congress nor the Supreme Court had such laxity in mind. From the Supreme Court's Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd. (2002) -

The patent laws "promote the Progress of Science and useful Arts" by rewarding innovation with a temporary monopoly. U.S. Const., Art. I, §8, cl. 8. The monopoly is a property right; and like any property right, its boundaries should be clear. This clarity is essential to promote progress, because it enables efficient investment in innovation. A patent holder should know what he owns, and the public should know what he does not. For this reason, the patent laws require inventors to describe their work in "full, clear, concise, and exact terms," 35 U.S.C. § 112 as part of the delicate balance the law attempts to maintain between inventors, who rely on the promise of the law to bring the invention forth, and the public, which should be encouraged to pursue innovations, creations, and new ideas beyond the inventor's exclusive rights. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 150 (1989).

In its Bilski decision, the Supreme Court needs to right the definiteness requirement to "full, clear, concise, and exact terms," and remind "that Congress intended statutory subject matter to 'include anything under the sun that is made by man.'"

This is a companion piece to Definitely Not.

Back in March, I provided you an update on the budget challenges facing our agency. Today, I'd like to let you know where we stand and what steps we're taking to address these challenges.

As you know, the USPTO is funded solely by user fees. This process means the USPTO develops its budget based on projected fee collections. As the economy has worsened, fewer people have applied for patents or paid to maintain the ones they have. Declines in trademark filings continue to be experienced too. Thus, the agency has seen significant reductions in revenue.  As a result, a serious budget situation has developed.

Right now, we are operating at a "break even" level. This means, if the current pace of fee collection holds, the USPTO expects to finish FY09 without a budget shortfall.

But just getting to "break even" in this climate has required sacrifices. In response to the decrease in fee collections, we have enacted a series of budget cuts and cost-savings measures, which have resulted in more than $120 million in savings. Thus far, we have instituted a hiring freeze, curtailed non-bargaining unit performance awards, stopped overtime, and significantly reduced contracts, travel, supplies and other non-essential overhead expenses.  These cuts, while necessary, have been difficult, and I want to personally thank you for your understanding.

With the support of Commerce Secretary Locke, we are also seeking further cost-saving measures, which will save an additional $20 million in FY09.

All of this has been done with an eye toward avoiding furloughs.

Yet we know that in the current economy, fee collection could continue to decline. The USPTO and the Department of Commerce are monitoring the situation on a daily basis, and out of an abundance of caution, we are asking Congress for its help. We're now putting forward a number of different options to bridge any possible gaps, and we'll also be soliciting ideas from members of Congress.

We will continue to keep you apprised of any new developments, and I thank you again for your support during this challenging time.

Doll assumes no responsibility for declining fee collection. Any idiot can see the most likely cause of revenue reduction: decreasing allowance rates from over 70 percent to around 40 percent in less than 10 years, therefore crippling maintenance fee collection; and, declining applicant morality due to this new found rejection mentality, leading to decreased filings. This particular idiot is apparently too lazy or too stupid to enact any real meaningful change.

While cutting spending through a hiring freeze, curtailing performance awards, and eliminating overtime may provide temporary relief, these measures may also drastically increase pendency rates, providing additional disservice to already dissatisfied applicants.

35 U.S.C. § 101 Inventions patentable.
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.

In a nutshell, the Supreme Court has followed statute in defining the boundaries of §101 eligible processes: 1) useful and 2) not abstract. From Diamond v. Diehr:

Excluded from such patent protection are laws of nature, natural phenomena, and abstract ideas. See Parker v. Flook, 437 U.S. 584 (1978); Gottschalk v. Benson, supra, at 67; Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948). "An idea of itself is not patentable," Rubber-Tip Pencil Co. v. Howard, 20 Wall. 498, 507 (1874). "A principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right." Le Roy v. Tatham, 14 How. 156, 175 (1853).

Bilski claim 1:

1. A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of: (a) initiating a series of transactions between said commodity provider and consumers of said commodity 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 between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.

Bilski's process claims three steps: 1) initiate transactions; 2) identify market participants; and 3) initiate transactions. Useful? Where is there a stated useful result? What about the "such that" clause? It balances risk. Maybe useful. Maybe abstract.

§112 ¶2

Prior to the Patent Act of 1952, the dual prongs of definiteness and enablement were in the same sentence. That incurred sometime confusion, though clarity shone in Eibel Process Co. v. Minnesota & Ontario Paper Co., 261 U.S. 45 (1923), where the Supreme Court related definiteness to usefulness.

Indefiniteness is objectionable, because the patent does not disclose to the public how the discovery, if there is one, can be made useful, and how its infringement may be avoided.

Since 1952...

35 U.S.C. 112 Specification.

¶2 The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention.

In Markman v. Westview Instruments, 517 U.S. 370, 38 USPQ2d 1461 (1996), the Supreme Court laid the table for claim construction as the centerpiece of patent litigation. On definiteness:

It has long been understood  that a patent must describe the exact scope of an invention and its manufacture to "secure to [the patentee] all to which he is entitled, [and] to apprise the public of what is still open to them." McClain v. Ortmayer, 141 U.S. 419, 424 (1891)...

Whereupon SCOTUS reiterated §112 ¶1&2. The point of definiteness in a patent claim is to set boundaries.

Back to Bilski, balancing risk. The claim goes to managing "consumption risk" for which Bilski gave an example, not a definition: "e.g., the need to use more or less energy than planned due to the weather." What constitutes the cost of consumption risk? What constitutes balance? The scope is unclear. Definitely not definite. Hence, not §112 ¶2 compliant. That practically proves that the claim goes an "abstract idea."

The Supreme Court found the CAFC too rigid with its TSM (teaching-suggestion-motivation) test for obviousness, but then went overboard in grabbing a non-objective yardstick. Many fear that the Supreme Court will become even more rigid than the CAFC in Bilski, curtailing or even adding more prongs to the CAFC's two-prong process patentability test (1. machine dependence; or 2. transformation). But, to get it right, all the Supreme Court has to do in Bilski is reaffirm its own precedents, and tighten the loop - that a process claim failing "exact scope" demonstrates lack of patentability, either in not being clearly useful, or in claiming an abstraction.

Richard P. Mettke appeals the decision of the Board of Patent Appeals and Interferences affirming the examiner's rejection of the sole remaining claim (claim 6) in his application for reissue of U.S. Patent No. 5,602,905. Ex parte Mettke, Appeal 2008-0610 (B.P.A.I. Sept. 30, 2008). The Board concluded that claim 6 would have been obvious in light of any of several different combinations of references, and was therefore properly rejected under 35 U.S.C. §103(a).

Obviousness is a legal conclusion based on underlying findings of fact. In re Thrift, 298 F.3d 1357, 1363 (Fed. Cir. 2002). The factual inquiries relevant to obviousness are set forth in Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966), and include (1) the scope and content of the prior art, (2) the differences between the prior art and the claims, (3) the level of ordinary skill in the relevant art, and (4) any objective indicia of non-obviousness such as commercial success, long felt need, and failure of others.

Mettke apparently hadn't heard the shout of KSR: "A court must ask whether the improvement is more than the predictable use of prior art elements according to their established functions."

Mr. Mettke criticizes the Board's finding that the field of endeavor is "pay-for-use public communication terminals," arguing that this field was too broad and led the Board to consider non-analogous art.

But the prior art was analogous, even as four references were used for invalidation. The capper was "article by Rawn Shah titled 'Suggestions for Information Kiosk Systems using the World Wide Web.'"

The Board found that the Shah reference teaches the addition of the sole remaining element: "means for accessing the Internet." Shah describes "a kiosk based information system using the World Wide Web on the Internet as an interface."

Mettke, delusional, argued otherwise.

Mr. Mettke argues, as he did before the Board, that the Shah reference does not disclose "accessing the Internet" at all. He contends that the PTO "grossly misinterpret[ed] the Shah prior art," and that Shah "teaches away from accessing the Internet." Petr.'s Br. 6. He contends that Shah's discussion of the World Wide Web is limited to the use of a Web "browser" to access only limited information on a "standalone network," meaning one that is not connected to the larger Internet. The Board considered these contentions, and rejected them based on the text of the Shah reference, finding that Shah plainly discloses an information kiosk that uses the "World Wide Web on the Internet as an interface." Board op. at 22 (quoting Shah, abstract). Shah mentions access to the Internet expressly and repeatedly, as the Board explained. Substantial evidence supports the Board's reading of the content of the Shah reference and its application, as analogous art, to claim 6.

Mettke got a response about hindsight, but not the one hoped for.

Mr. Mettke contends the Board engaged in hindsight analysis, using his patent as a blueprint for the combination of elements from various sources. Mr. Mettke is correct that the selective hindsight combination of references that show various elements of the claim generally does not suffice to establish obviousness. See KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 418 (2007) ("[A] patent composed of several elements is not proved obvious merely by demonstrating that each of its elements was, independently, known in the prior art.").

But the Board's analysis included more than a combination of disparate references disclosing different elements, for the Board explained why Shah teaches the very combination of elements that Mr. Mettke sought to claim. The Board found that Shah does not merely disclose "accessing the Internet" as a general matter; Shah expressly teaches Internet access in connection with information and communication kiosks--the kinds of public communication terminals described in Exhibits E and F. Shah provides explicit support for the Board's finding that a person of ordinary skill would have been motivated to modify existing information kiosks or terminals to provide access to the Internet.

The final cup of weak tea was arguing non-obviousness because of commercial success.

Mr. Mettke also states that "over 50% of all [now-existing] kiosks have all of the elements" of claim 6, suggesting commercial success. The Board found that Mr. Mettke failed to establish a "nexus" between this asserted wide use and his invention. See In re Paulsen, 30 F.3d 1475, 1482 (Fed. Cir. 1994) ("When a patentee offers objective evidence of nonobviousness, there must be a sufficient relationship between that evidence and the patented invention."). We note that when the commercially successful device is the claimed invention itself, there is a presumption of nexus. See Demaco Corp. v. F. Von Langsdorff Licensing Ltd., 851 F.2d 1387, 1392 (Fed. Cir. 1988). However, the Board found that Mr. Mettke failed to meet his burden because he has not shown that the alleged commercial success is due to the claimed invention. We conclude that the evidence of obviousness was not, in this case, rebutted by the asserted commercial success.

Affirmed.

Professor Crouch:

Most appeals from examiner rejections focus on two or more issues. [2.1 issues was the average.] Of those, the majority of rejections (61%) are affirmed and the remainder reversed. When more issues are presented, the case as a whole becomes more likely to be affirmed-in-part.

87% - 90% of cases decided an issue of obviousness. Only 4% of appeals consider neither obviousness nor novelty.

The Board is authorized to offer new grounds for rejection, and did so in about 4% of the cases in the hand-scored study. The most common new ground was for obviousness.

More than half of the appeal decisions (54%) focused solely on obviousness. The closest runner-up issue - anticipation - was an issue in 37% of the appeals. Other issues on appeal (each with a frequency of < 5%) included in descending frequency: written description requirement; indefiniteness, patentable subject matter, obviousness-type double patenting, and enablement.

The fact that the majority of issues involve obviousness spells trouble for applicants.

Biotechnology and organic chemistry (TC 1600) are an outlier: 18% of those BPAI decisions are focused on issues other than prior art.

The non-objective standard of KSR renders obviousness a pandemic killer. Otherwise, an examiner is far more often found wrong than right, a figure that indicates general examiner incompetence, for sticking with rejections that are not well-founded.

Obviousness rejections are more likely to be affirmed than are other types of rejections. Cases that discuss neither obviousness nor novelty are reversed in 74% of cases.

The outcome upshot is shown by Table 1. "10% of cases that were affirmed included one or more individual issues that were reversed." This occurred where an examiner piled on the rejections, both anticipated & obvious over multiple prior art references, and while reversing the most outlandish rejection, the Board need only agree with the examiner on one issue to down the application.

In the case of multiple issues, the BPAI tends to split the baby from the bathwater. "As more issues are presented, the likelihood of a split decision (affirmed-in-part) rises dramatically while the likelihood of the case being completely affirmed or completely reversed drops."

The good Professor points out that examiner error on rejected claims is but a partial story. The other side of the examiner error coin is allowing claims that should not have been. That appeal is more often than not heard in the courthouse.

Chavez, who has nationalized many Venezuela industries and is critical of the private sector, ordered his trade minister to analyze the patent rules in the OPEC nation.

AP:

Venezuelan officials plan to invalidate some pharmaceutical patents and allow domestic manufacturers to produce licensed medicines, an action that could cause shortages and scare off foreign investment, industry leaders said Sunday.

Chavez also called "on the world to respect Iran" and the election "triumph" of its incumbent president, Mahmoud Ahmadinejad. "Ahmadinejad's triumph was a triumph all the way."