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04.22.18

In Maxon v Funai the High ‘Patent Court’ (CAFC) Reaffirms Disdain for Software Patents, Which Are Nowadays Harder to Get and Then Defend

Posted in America, Law, Patents at 9:34 pm by Dr. Roy Schestowitz

In the fight against (or to water down) 35 U.S.C. § 101 the patent microcosm coins inane if not laughable sound bites like “Berkheimer Effect”

FunaiSummary: With the wealth of decisions from the Court of Appeals for the Federal Circuit (CAFC) wherein software patents get discarded (Funai being the latest example), the public needs to ask itself whether patent law firms are honest when they make claims about resurgence of software patents by 'pulling a Berkheimer' or coming up with terms like “Berkheimer Effect”

ANOTHER week goes by and the USPTO is still rejecting software patents. Not all of them, but a lot of them. That might soon change, but not so radically. This post outlines some recent developments.

A few hours ago BGR published this report, revealing that Walmart is pursuing shoddy software patents but dresses these up as “blockchain” (the usual trick).

To quote BGR:

While the majority of the world is having fun watching Bitcoin go up and down faster than a yo-yo, companies are scrambling to get in on the craze. In some cases, that just means announcing a “pivot to Bitcoin” and watching your company die; in other instances, it means taking the underlying technology of blockchain and applying it to conventional retail.

[...]

Of course, Walmart isn’t new to the world of payment processing. It spearheaded a new payment protocol that was being developed a few years ago as a rival to Apple Pay and other mobile wallet systems, called CurrentC. That system relied on users scanning a QR code and then the cashier scanning another QR code off your phone screen, and was undeniably terrible. Luckily, the popularity of Apple Pay and Google Wallet made CurrentC DOA.

One week ago we wrote about this 'blockchaining' of patents; this is the first time we see Walmart being mentioned in this context.

It’s not hard to understand why Walmart relies on hype like blockchains. It’s one pretty trivial way to make old ideas sound more innovative. Maybe when the hype tapers off they’ll just move on to the next hype wave. Maybe they’ll just call servers “cloud”, databases “blockchain”, algorithms “AI”, and surveillance “smart”. It’s all about ‘fashion’ and marketing.

When it comes to software patents, nothing has inherently or profoundly changed. The Office and patent courts still mostly reject these. As a new example of software patents being rendered invalid (under the Mayo/Alice test and 35 U.S.C. § 101) see this short article by Mike McCandlish. It’s about Funai and Maxon:

Affirming a motion to dismiss, the Federal Circuit found claims from four patents, directed to “electronic means of increasing user control over subscription entertainment content,” patent-ineligible under the Mayo/Alice test and 35 U.S.C. § 101. Maxon, LLC, v. Funai Corporation, Inc., (Fed. Cir. April 9, 2018) (non-precedential).

[...]

In step 2, the court agreed with the district court that the claims did not provide an inventive concept. The claims recited only generic computing processes using functional language. The claimed computer elements such as “computer-readable medium,” “logic,” “processor,” and “transceiver” were also generic, with no distinguishing limitations. The ordered combination of the claimed elements did nothing to elevate them to an inventive concept.

For the Federal Circuit to do this is noteworthy, even if the decision is non-precedential. Cheryl Beise wrote that “dismissing a patent infringement suit filed by Maxon, LLC against several smart television manufacturers on the ground that the asserted patents [...] an abstract idea that lacked an inventive concept…”

She too mentioned that it’s “a nonprecedential decision.” To quote:

The federal district court in Chicago did not err in dismissing a patent infringement suit filed by Maxon, LLC against several smart television manufacturers on the ground that the asserted patents—describing an electronic means of increasing user control over subscription entertainment content for smart TVs—were invalid as directed to an abstract idea that lacked an inventive concept, the U.S. Court of Appeals for the Federal Circuit has held in a nonprecedential decision.

Watchtroll wrote about it almost 12 days late:

On Monday, April 9th, the Court of Appeals for the Federal Circuit upheld the invalidity of a series of patents asserted against the American subsidiary of Japanese consumer electronics firm Funai. The patents, owned by Illinois-based Maxon, LLC, covered electronic means for improving user control over subscription entertainment content but the claimed technologies were deemed to be invalid under 35 U.S.C. § 101, the basic statute governing the patentability of inventions. The decision was issued by a panel comprised of Chief Judge Sharon Prost and Circuit Judges Todd Hughes and Kara Stoll.

What’s noteworthy here is that the Federal Circuit sticks to its guns, no matter what the patent microcosm keeps trying to tell the public. Several days ago we saw Steven M. Jensen and Jonathon P. Western spending more money promoting loopholes; we covered this before (rebuttal), but this has just been reposted by sites of the patent microcosm [1, 2].

The patent microcosm generally likes to name-drop Berkheimer and Aatrix these days; we wrote nearly a dozen rebuttals on this topic alone (those two cases), but here we see the same thing brought up again. The patent microcosm says that an “opinion has had a particularly adverse effect on so-called “software” enabled patents; the buzz being that the very concept of “software” patents is now dead.”

They’re not dead per se, but the low chances of winning cases with software patents makes them too risky to assert and thus unworthy of pursuing in the first place.

Here is how the patent microcosm put it:

It seems that Douglas Adams has a great many fans in the universe of IP law. While he almost certainly didn’t have patent issues in mind while penning his cult classic, he was nevertheless prophetic of our current situation. In 2014, the Supreme Court issued its landmark Alice decision, which had the effect of significantly raising the bar for “patent eligibility.” The opinion has had a particularly adverse effect on so-called “software” enabled patents; the buzz being that the very concept of “software” patents is now dead. As a general proposition, that statement is simply wrong. However, it is true that many software patents—primarily those issued before the days of Alice—are now being invalidated for claiming only “abstract” ideas.

But what exactly does it mean to be “abstract”? Because of the amorphous state of patent “eligibility” standards, the decisions invalidating “abstract” patents largely lack consistency or predictability. I have listened to numerous District and Appellate Judges as well as new USPTO director Adrei Iancu suggest, or say outright, that the current standards for defining an “abstract idea” are a virtual black hole. I completely agree.

They can’t even spell Andrei Iancu right; we keep seeing law firms failing to name him correctly (variation of mistakes) while pressuring him to embrace patent maximalism.

Moving on a bit, watch Charles Bieneman trying to 'pull a Berkheimer' because he refuses to tolerate the de facto ‘death’ of software patents in the US.

He comes up with the term “Berkheimer Effect”:

A complaint for patent infringement has survived a Rule 12 motion to dismiss by making specific factual allegations to support arguments that the claims met the patent-eligibility requirements of Alice and 35 U.S.C. § 101. Sound View Innovations, LLC v. Hulu, LLC, No. LA CV17-04146 JAK (PLAx) (C.D. Cal. April 11, 2018). The patents at issue related to systems for operating and managing databases. (US Patent Nos. 5,806,062; 6,125,371; and 9,462,074.) This case is another sign that the Federal Circuit’s early-2018 decisions in Berkheimer v. HP, Inc. and Aatrix Software, Inc. v. Green Shades Software, Inc., may pose a new obstacle for parties seeing to invalidate patent claims under Section 101 – especially defendants filing motions at the pleadings stage in patent infringement lawsuits.

Bieneman wrote about another § 101 case:

Providing a common data format for “out-of-band network management” is patent-eligible, said a court in denying a motion to dismiss under FRCP 12 and 35 U.S.C. § 101. Avocent Huntsville LLC v. ZPE Systems, Inc., No. 3:17-cv-04319-WHO (N.D. Cal. March 21, 2018). In applying the Alice patent-eligibility test, the court thought that the claims of U.S. Patent Nos. 7,478,152 and 7,853,682 fell under the umbrella of cases like Enfish, LLC v. Microsoft Corp. (Fed. Cir. 2016), and were distinguishable from cases in which claims were found patent-ineligible, like In re TLI Commc’ns LLC Patent Litig. (Fed. Cir. 2016), and Digitech Image Techs., LLC v. Elecs. for Imaging, Inc. (Fed. Cir. 2014).

A short article by Mark St. Amour, posted in the same site (Bieneman’s), mentions Baker v Microsoft. This, for a change, isn’t about § 101 but about “the importance of prosecution history,” which is explained contextually as follows:

The Federal Circuit has again highlighted the importance of prosecution history for patent claim interpretation. In Baker v. Microsoft Corp., No. 2017-2357 (Fed. Cir. Apr. 9, 2018) the Federal Circuit upheld a district court claim interpretation and grant of summary judgement of non-infringement of US Patent 5,486,001.

Defendant Microsoft manufactures and sells various computing devices, peripheral devices, and software. For example, Microsoft sold a computer system that included a camera as a peripheral device.

[...]

Key to this case was the court’s reliance on the amendments to the claims and the remarks made to distinguish the amended claims from the prior art. Accordingly, such considerations that may arise during litigation of a patent should be kept in mind during prosecution, especially in the case when arguing features that distinguish from the prior art, but may not be explicitly be claimed. For example, when remarks accompanying an amendment describe the amendment as being narrower than a broadest reasonable interpretation.

If one assesses prosecution history of entities that wield software patents, a lot of these are patent trolls. It’s not exactly surprising considering the nature and breadth of patents on algorithms. With patents on medicine (chemistry), for instance, there might be just one or two large companies one can sue, due to the logistics of drug production. These companies are large enough to fight back and these companies are not likely to just shell out ‘protection’ money to trolls. There are no ‘indie’ drug producers operating from one’s basement, whereas software development is inherently different. The US patent office ought to recognise this and put an end to the lunacy which is patents on software. They’re economically unsound.

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