Specifically, the Federal Circuit’s appellate jurisdiction is governed by 28 U.S.C. § 1295.  For appeals from district courts in patent cases, the court generally follows the “final judgment rule.”  The Federal Circuit is free to review final judgments of the district courts in patent cases.  A “final judgment” usually means that the district court has nothing left to determine.  The court has determined all questions of liability and damages.

There are, as always in the legal world, exceptions to the final judgment rule.  On occasion, appellate courts may entertain “interlocutory” appeals.  These usually arise in special circumstances where a ruling of the lower court would be dispositive to the outcome of the case or would be unreviewable by the appellate court if an immediate appeal were not allowed.  An example of such a situation is the grant of a preliminary injunction is generally immediately appealable.  District court judges can also ask the appellate court to immediately rule on an issue of which there is substantial uncertainty.

In patent infringement cases, the district court will often “bifurcate” the case into separate trials or proceedings on liability and damages.  In some instances, the court may conduct separate trials on various issues of infringement, invalidity, damages, willfulness, and others.

The Federal Circuit also has a special statute regarding appeals.  28 U.S.C. § 1292(c)(2) provides the Federal Circuit with jurisdiction

of an appeal from a judgment in a civil action for patent infringement which would otherwise be appealable to the United States Court of Appeals for the Federal Circuit and is final except for an accounting.

Last week, an en banc Federal Circuit decided the question of what is meant by “except for an accounting.”

Robert Bosch, LLC v. Pylon Mfg. Corp.

The specific question that the court was addressing in this case was whether the court could hear appeals in cases where liability for infringement has been determined, but the district court has not yet ruled on damages or willfulness.  The court held, in a sharply divided 5-4 decision, that it could hear such appeals.  Interestingly, the 5 judges in the majority joined the court in 2001 and earlier, while the 4 dissenting judges were appointed since 2001.

Damages

Historically, once liability had been established in a patent infringement case, an “accounting” was an equitable proceeding conducted before an expert “special master” appointed by the court.  Now, however, the generally established practice is for juries to hear evidence and decide issues of damages in patent cases.  These usually include lost profits and reasonable royalties.

The court decided, by a 7-2 margin, that the Federal Circuit can hear appeals from any infringement case where damage determinations have not yet been made, regardless of the fact that a trial on damages was generally not referred to as an “accounting.”  Judge O’Malley wrote a vigorous dissent on the issue.

Willfulness

If an infringer is determined to have “willfully” infringed the patent, the court can enhance the damage award by an amount up to three times the originally determined amount.  The majority of the court ruled, this time 5-4, that historically the determination of willfulness was conducted in the accounting proceedings before the special master.  Since the court had already determined that such proceedings came within the definition of “accounting,” the majority determined that appeals could be heard before a ruling on willfulness.

Judge Moore and Judge Reyna each dissented on this issue.  They each wrote that a determination of willfulness requires the fact-finder to determine the intent or state of mind of the infringer.  Clearly, this does not fall within the plain meaning of the term “accounting.”  The court should review the plain meaning of the term instead of the historical meaning, which may or may not have been different.

Judge O’Malley’s dissent on this issue criticizes the court for making the wrong inquiry.  The question is not whether special masters made determinations of willfulness, but rather whether the meaning of “accounting” included such a determination.  She very strongly argues that it does not.

The gene patent saga filed by the ACLU on behalf of a large number of plaintiffs has finally come to an end.  After 4 years of litigation and 2 trips to the Supreme Court, the law is that isolated DNA is no longer eligible for patent protection.  cDNA, however, remains patentable.

Given the recent Supreme Court decisions on patent eligibility under § 101, the only surprising thing about the opinion was that they did not strike down all of the claims.  Myriad retains its claims to methods of screening patients for the genetic mutation that indicates a higher propensity for breast and ovarian cancers, and it retains its claims to complementary DNA (cDNA).

The opinion did not seem to conflate patent eligibility with novelty or obviousness as in Mayo v. Prometheus.  The opinion in Myriad started with the statutory language and then turned to the judicial exceptions for “laws of nature, natural phenomena, and abstract ideas.”  The Court then quoted extensively from Mayo to expound on these exceptions:

without [these] exception[s], there would be considerable danger that the grant of patents would “tie up” the use of [basic tools of scientific and technological work] and thereby “inhibit future innovation premised upon them.”

This idea from Mayo is that patents inhibit research and development instead of encouraging it.  It has been thought for years that one of the purposes of patents is to provide an incentive to innovate.  These statements bring that premise into question.

And, of course, by definition a patent will “tie up” the claimed subject matter.  That’s the whole point:  to be able to exclude others from copying the claimed invention.

In the analysis of the isolated DNA, the Court held that Myriad’s principal contribution was uncovering the precise location and genetic sequence of the BRCA1 and BRCA2 genes.  ”Myriad did not create anything,” according to the Court.  ”[S]eparating [the] gene[s] from [the] surrounding genetic material is not an act of invention.”  The PTO apparently thought otherwise for about 30 years.  The Supreme Court whisks it all away without providing support for the contention that is does not constitute an act of invention.

The Court did recognize that cDNA is not naturally occurring.  It may retain some characteristics of the isolated DNA, but it is generally created in the lab and does not exist in the human body.  Therefore, cDNA is still patent eligible.

Finally, the Court seemed to try to give some hope and encouragement to the biotechnology industry:

1. The Court noted that no method claims were included in its opinion.  Innovative methods of manipulating the genes would still be patent eligible.
2. The Court noted that new applications of knowledge about particular genes may still remain patent eligible.
3. The Court noted that it provided no opinion on the patent eligibility of DNA in which the order of the naturally occurring nucleotide sequences has been altered.

On the third point, the Court did not provide guidance.  How much alteration is required for patent eligibility?

Justice Scalia wrote a rather bizarre opinion concurring in part and concurring in the judgment.

I join the judgment of the Court, and all of its opinion except Part I–A and some portions of the rest of the opinion going into fine details of molecular biology. I am unable to affirm those details on my own knowledge or even my own belief. It suffices for me to affirm, having studied the opinions below and the expert briefs presented here, that the portion of DNA isolated from its natural state sought to be patented is identical to that portion of the DNA in its natural state; and that complementary DNA (cDNA) is a synthetic creation not normally present in nature.

This is something to keep in mind regarding these cases.  The judges and juries who must ultimately rule on them will very rarely understand the science behind them.  They are usually not this candid in admitting their lack of understanding.

Implications

How will this opinion affect the biotechnology industry? Given this and other recent Supreme Court opinions on patentable subject matter, it seems that patents in the area of personalized medicine will be difficult to obtain and enforce. Many biotechnology companies are working on ways to grow organs that can be transplanted into the human body to replace defective organs. The goal is for these organs to be as similar to the natural organs as possible. This opinion seems to indicate that such organs could not be patented.  HT:  IPWatchdog.

Given the extensive costs of research in these areas, will companies continue to make large scale investments? The Supreme Court seems to be arguing, somewhat contrary to historical understandings, that patent inhibit rather than encourage research. Monopoly profits for the limited term of the patent are set to encourage companies to make large initial upfront investments.

Legislative Recommendations

1. Require patentees and applicants to disclose the real party in interest.
2. Permit more discretion in the awarding of fees to winners in patent cases.
3. Expand the PTO’s transitional program for covered business method patents.
4. Protect off-the-shelf use by consumers and businesses of products purchased and used for its intended purpose.  This would include staying proceedings against consumers if the manufacturer, retailer, or vendor has also been sued.
5. Change the ITC standard for issuing injunctions to match the judicial standard set forth in eBay v. MercExchange.
6. Incentivize public filing of demand letters to make them searchable by the public.
7. Permit the ITC to hire more qualified judges.

Executive Actions

1. PTO rulemaking will require patent owners and applicants to update regularly ownership information.
2. Tighten functional claiming by training examiners to better examine such claims.
3. The PTO will publish new education and outreach materials to help consumers who may be targeted by patent trolls.
4. Continue and expand outreach and study by the PTO, FTC, and DOJ to reach consensus on updates to patent laws and policies.
5. Strengthen ITC exclusion orders to make them more transparent, effective, and efficient.

New York Times Editorial

Perhaps more surprisingly, an editorial appeared in the New York Times last week “Make Patent Trolls Pay in Court.”  The editorial was written by Chief Judge Randall Rader and Professors Colleen Chien of Santa Clara University and David Hricik of Mercer University.

The editorial attacks frivolous lawsuits by patent trolls.  It suggests that patent trolls have a significant number of advantages over the entities they sue for infringement.  First, they don’t need to fear a countersuit because they don’t make anything and therefore would not infringe any patent.  They are also not worried about their reputations with the public like other companies are.

Second, patent trolls often hire attorneys on a contingent fee basis:  they only pay their attorneys if they win the lawsuit.  Conversely, defendants must typically pay their attorneys on an hourly basis.  Thus, even if the defendant prevails in a lawsuit, it may have run up a large legal bill.  This causes defendants to settle cases more quickly to avoid such costs, which in turn encourages more suits by the patent trolls.  If the trolls lose, they don’t have large legal bills to pay.

The authors argue that patent trolls should pay for abusive litigation.  Section 285 of the Patent Act and Rule 11 of the Federal Rules of Civil Procedure permit judges to shift the costs of litigation to the losers in the case of litigation abuse.  The authors note that only such shifting occurred in only 20 out of 3,000 patent cases filed in 2011.

How does one decide if the litigation tactics are abusive?  One sign, according to the authors, is where the patent troll sues a large number of end users of a patented invention rather than the manufacturer itself.  Other signs include where demands for settlement are a fraction of the defense costs or where patent trolls continue to pursue settlements against product users even where courts have already ruled against the patent owner.  Finally, abusive litigation tactics include where patent owners pursue litigation against defendants that already have a license to the patent or where they seek to enforce the patent vastly beyond its plain meaning and precedent.

Analysis

The Obama Administration has now thrown its weight behind the anti-patent troll lobby.  It is a bit late to the party, as most of its proposals are already pending in bills before Congress.

Of the legislative proposals, the real-party-in-interest requirement is contained in several congressional bills, as is the expansion of review of business method patents by the PTO.  The hiring of qualified ITC judges should be a no-brainer.  Qualified judges are always going to be an improvement over those appointed for political reasons.

Changes to ITC injunction standards have been discussed in the past.  The problem with this proposal is that the ITC cannot award damages, which are the alternative to an injunctions at the district court.  If a patent owner can’t get an injunction at the ITC–or if the chances for such an injunction are significantly reduced–that owner won’t file at the ITC.  He will instead pursue his case in district court.  Do we really want to shift more cases to court from the ITC?

There is nothing to prevent the recipient of a demand letter from making its existence and contents public.  Most companies, however, choose not to do so.  If there was an accessible and searchable database of such letters, it is very possible that patent owners would forego sending such letters and simply file infringement suits prior to seeking settlement.

I will discuss the end user and fee shifting proposals below with respect to the editorial.

On the executive front at the PTO, there are some good proposals.  Further training of examiners is always a good idea.  As anyone who has written a patent application knows, there are some inventions that are more easily claimed functionally, rather than structurally.  There are some inventions that are best claimed both ways.  Functional language can seem overly broad.  If properly examined, however, the language can be limited to only cover the invention sought to be protected.  Examiners need to understand this and properly reject overly broad claims, whether functional or structural in nature.

Further public education and outreach of the public with respect to patent infringement is a noble endeavor.  Most people don’t know about or understand patents in any significant way.  They merely hear about patents in the media where such stories are sensationalized and are not based on any solid understanding either.  Continued to study and improvement of the patent system is also good, especially if it can result in changes that have a consensus among all interested parties.  The problem is that, due to sequestration and fee diversion, the PTO does not have the money to continue its current reform efforts and to perform these public services.  Congress needs to end fee diversion for good before this will work.

The New York Times editorial is a bit surprising.  Chief Judge Rader has a reputation for being in favor of a strong patent system.  This seems a bit out of character for him.

Where to start here . . .

Fee shifting is generally disfavored in the US system.  We generally believe that each party should pay its own way in litigation.  This will encourage suits by smaller companies or individuals, without the fear of being stuck with the legal bill of a large entity or corporation should it lose the suit.

That being said, the statutory and rule provisions cited in the editorial do exist.  If a party brings a frivolous lawsuit or engages in abusive litigation tactics, whether in the patent field or in any civil litigation, it should be sanctioned by the court.  Such sanctions should include payment of the other parties fees and expenses in responding to such a lawsuit or tactic.  Courts should more commonly exercise their discretion in awarding such fees and costs.

Why don’t the courts currently award fees in such cases?  One reason is the Federal Circuit.  As long as reversal rates are at 40-50% in patent infringement cases, district court judges will have a difficult time determining a suit to be without merit.  Who knows what the appellate court will decide on appeal?  The Federal Circuit itself has provisions for awarding costs in its rules.  Yet, it very rarely does so.  Perhaps the Chief Judge should start with his own court on this issue.

Next comes the issue of suits against end users of products that infringe patents.  The Patent Act currently makes “use” of a patented article to be an act of infringement.  Yet, the Obama Administration wants courts to stay such suits if the manufacturer, retailer, or vendor are sued.  And the authors of the editorial believe such such for “use” of a patented article are abusive.  Do they propose to change the statute to eliminate “use” as an act of infringement?  This is peculiar to say the least.

Patent Trolls

It’s time to address patent trolls in a bit more detail.  A big question that arises is:  where do they get the patents that they seek to enforce?  I’m not sure anyone has actually done an analysis of this question.

The Patent Act does not require that an applicant actually make (reduce to practice) its invention to obtain a patent for the invention.  Thus, it is possible that some of the so-called trolls actually employ inventors that come up with novel and non-obvious inventions that they don’t actually make.  They file disclosures of these inventions, and provided they meet the requirements of the Patent Act, obtain patents for them.  Is this a bad thing?  Are none of the patents they obtain worthwhile?  Then, why are companies infringing the patents?

In the US, we have historically sought to protect the “garage inventor” (at least until the AIA) or university inventors.  We do this by offering reduced PTO filing fees and other incentives.  Often, such small inventors come up with new inventions, but are not able to bring the invention to market.  Many large companies are not willing to pay them for the inventions.

A potential source of funding for such inventors are the patent trolls.  If the trolls are not able to enforce the patents after acquisition, it is unlikely that they will pay small inventors for the patents.  In that case, many of these inventors would not be able to have the funding to do the inventing.  Patent trolls are often a source of funding for small inventors.

Patent trolls often acquire the assets, or at least the patents, of companies when they go through bankruptcy proceedings.  In this case, they provide the bankrupt estate with some funds to pay creditors.  If they could not enforce the patents, they would not provide such funds for them.

While the term certainly carries a pejorative connotation, they are simply not all bad.

Don’t get me wrong, some patent trolls are absolutely engaged in abusive tactics by sending out unwarranted demand letters, filing frivolous suits, and seeking overly broad patent claim interpretations.  But these tactics are not limited to patent trolls.  Companies in other fields seek to do exactly the same thing.

Fee shifting for frivolous suits or abusive tactics is appropriate and should become more common . . . in all civil litigation.

As noted earlier, the SHIELD Act in the House in February (and in the last Congress) to require losing NPEs to pay the costs of litigation.  A few weeks ago, a new business method review bill was introduced in the Senate.

Now, several more bills have been or shortly may be introduced in Congress.

End Anonymous Patents Act

Rep. Ted Deutch (D-FL) introduced the End Anonymous Patents Act, H.R. 2024, that would require parties that apply for or acquire patents to publicly reveal the real party in interest.  The bill is designed to prevent NPEs from using shell corporations to hide the real owners of patents.  The real party must be revealed when a patent application is filed, when maintenance fees are paid, and when ownership is transferred.  Damage awards would be limited to the time period from which this requirement is met.

Patent Abuse Reduction Act

Sen. John Cornyn (R-TX) introduced the Patent Abuse Reduction Act, S. 1013, that would add a number of new requirements for patent litigation.

The bill would require a heightened pleading requirement where complaints would be required to identify asserted patent claims and accused products “with heightened specificity.”  Complaints must detail the plaintiff’s principal business and its right to assert the patent, as well as an indication of other suits where the patent has been asserted.

The bill includes dramatic limits on discovery.  Discovery will generally not commence until after a claim construction ruling and will be limited to “core evidence” such as conception of the invention and invalidating prior art.  Requests for additional discovery, such as e-mails and other electronic evidence, must be approved by the court and requires that the requesting party pay for such discovery.

The bill includes a presumption of an award of attorneys’ fees to the prevailing party.  The court should award such fees to the prevailing party unless “the position and conduct of the non-prevailing party was objectively reasonable” or “exceptional circumstances make such an award unjust.”

Another Bill on Horizon

IP360 (subscription) is reporting that House Judiciary Committee Chairman Bob Goodlatte (R-VA) and Senate Judiciary Committee Chairman Patrick Leahy (D-VT) are circulating a draft bill that is also aimed at ending abusive litigation tactics.

The bill sounds similar to S. 1013 in that it would impose the heightened pleading requirements and limits on discovery.  The bill would also permit manufacturers to intervene in infringement suits that target their customers.  This targeting tactic is sometimes used to pressure manufacturers into settlement.

Finally, this bill includes provisions to encourage settlement of patent infringement suits, changes to post-grant review under the AIA, and requires the PTO to conduct outreach to assist small businesses accused of patent infringement (adding more requirements to the PTO sounds like a great idea after Congress diverts more PTO fees).

***

There is enough rumbling on Congress to predict that something might pass this year.  The question is whether Congress can agree on what that should be.  House Judiciary Committee Ranking Member John Conyers (D-MI) and House Intellectual Property Subcommittee Ranking Member Melvin Watt (D-NC) are urging Congress to wait to act until a planned report on patent litigation from the Government Accountability Office is received by Congress.

As noted previously, the PTO is facing another budget crisis due to cuts in its funding from sequestration.  This is despite the fact that the PTO relies on no tax revenue, but is funded by user fees.

In its letter, the AIPLA argues that this distinction should exempt the PTO from these budget cuts.  During negotiation for passage of the America Invents Act, the understanding by all parties that any fees collected in excess of the congressional appropriation would be placed in a reserve fund and that only the PTO would have access to the fees.  The budget cuts due to sequestration undermine this understanding and result in a return to fee diversion.

The AIPLA continues in the letter that AIA implementation is at an early and critical stage.  Benefits are just starting to be seen with additional hiring and new procedure implementation.  In other words, this is a particularly bad time for the Administration to begin taking fees away from the agency.  The AIA provided the agency with the authority to set its own fees; sequestration severely undermines that authority.

The AIPLA argues that the sequestration statute does not apply to the PTO because PTO fees are not taxes that the government collects as part of its sovereign power, but are instead business-like transactions with the public.  The public is not required to pay PTO fees as they are taxes.  Rather, PTO fees are paid with the understanding that the PTO will provide examination services.  Thus, sequestration does not apply to such fees.

Finally, even if sequestration applies to the PTO, the sequestered fees should be placed in the reserve fund for use by the PTO and not into the general coffers of the federal government.  Again, the understanding and agreement of all parties was that the AIA would end fee diversion as practiced on the PTO for the last 20 years.

***

When will we learn?  The removal of the specific language to end fee diversion from the AIA should have been a strong signal that this would happen.  ”Trust me” does not work when dealing with congress or the federal government.

In MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 137 (2007), this Court ruled that a patent licensee that believes that its products do not infringe the patent and accordingly are not subject to royalty payments is “not required … to break or terminate its … license agreement before seeking a declaratory judgment in federal court that the underlying patent is … not infringed.”

The question presented is whether, in such a declaratory judgment action brought by a licensee under MedImmune, the licensee has the burden to prove that its products do not infringe the patent, or whether (as is the case in all other patent litigation, including other declaratory judgment actions), the patentee must prove infringement.

Federal Circuit Decision

Medtronic licensed patented technology related to cardiac resynchronization therapy (CST) from Mirowski Family Ventures (MFV).  Nearly from the start of the relationship, the parties disagreed as to which products were covered by the patents and whether the patents were valid.  In 2003, Medtronic challenged the validity of a licensed patent while paying royalties into an escrow account.  The parties ultimately settled the case.  The settlement agreement indicated that MFV would inform Medtronic as to which products were covered by the patents.  If Medtronic disagreed, it could retain the license while bringing a declaratory judgment action to have the court decide the issue.

In late 2007, Medtronic filed just such a declaratory judgment action of non-infringement and invalidity of the patents.  Because it continued in the license agreement, MFV could not counterclaim for infringement.  The parties disputed whether the burden to prove infringement rested on MFV, as is typically the case for the patent owner, or if, given the stature of the case, Medtronic bore the burden to prove non-infringement.  The district court sided with Medtronic and found the MFV did not meet its burden of proving infringement of the Medtronic products.

On appeal, the Federal Circuit recognized that the case is not the typical patent infringement situation where the patent owner files the initial complaint, nor is it the typical declaratory judgment case where the patent owner files the compulsory infringement counterclaim.  In those situations, the patent owner quite clearly bears the burden of proving infringement.

Now that the Supreme Court has indicated that counterclaims can be filed in the absence of ceasing royalty payments, patent owners cannot always file infringement counterclaims in the face of a declaratory judgment action.  Does the patent owner still bear the burden of proving infringement or has it shifted to the declaratory judgment plaintiff?

The Federal Circuit reversed the district court and allocated the burden of proof to the declaratory judgment plaintiff.  The court clearly struggled with how to handle the burden in light of MedImmune.  The court ultimately reasoned that MedImmune would become not simply a shield to keep licensees from large damage awards from non-payment of the license, but also a sword to haul the patent owner into court where the patent owner must prove infringement.  It is the licensee and not the patent owner who seeks relief from the court and a change in the status quo.  If neither party presented evidence, the court should not upset the status quo of the license agreement.  Thus, fairness requires them to bear the burden of proof.

The Supreme Court has now agreed to resolve this dilemma of its own making during its October 2013 term.

The Federal Circuit currently includes 10 active judges, although the court has 12 judicial seats.  Todd Hughes was nominated at the same time as Raymond Chen.  He has not yet received a hearing before the Senate Judiciary Committee.

Chen’s nomination seems to be proceeding with incredible speed compared to recent nominations.

HT:  Hal Wegner

Justice Kagan, writing for a unanimous Court, held that the doctrine of patent exhaustion only restricts a patent owner’s rights to a particular article sold.  It does not limit the patent owner’s right to keep others from making additional copies of the patented invention.

Exhaustion protected Bowman as to his ability to use the patented seeds as he saw fit.  It does not, however, protect him from charges of infringement should he decide to “make” new seeds.  This is what the Court said he did.  He planted the original seeds and harvested new ones from the resulting plants.  The act of making the new seeds was an act of infringement not protected by patent exhaustion.

More details are available in my preview post for the Supreme Court’s current term.

Today, the 10 member en banc court overruled the panel decision and affirmed the district court.  If you were looking for precedent, however, you will be disappointed.  Here is the entire per curiam opinion:

Upon consideration en banc, a majority of the court affirms the district court’s holding that the asserted method and computer-readable media claims are not directed to eligible subject matter under 35 U.S.C. § 101.

An equally divided court affirms the district court’s holding that the asserted system claims are not directed to eligible subject matter under that statute.

In other words, a majority of the court holds that the method and computer-readable media claims are not patent eligible, but they can’t agree on the reasoning.  The court divided 5-5, however, on the patent eligibility of the system claims.  In such a case, an appellate court affirms the lower court; the tie goes to the runner so to speak.

After that brief opinion, however, an additional 120+ pages are allocated to concurring and dissenting opinions that apparently could not garner a majority.

Judges Lourie, Dyk, Prost, Reyna, and Wallach

Judges Lourie, Dyk, Prost, Reyna, and Wallach filed a concurring opinion where they laid out the analysis they would use for the claims at issue.

First, it must be determined whether the claims fit within one of the four statutory classes:  process, machine, manufacture, composition of matter.  Next, does the claim pose the risk of preemption of an abstract idea?  The claim must include an inventive concept, a genuine human contribution.

In applying this analysis to the claims-at-issue, this group of 5 judges would hold that none of the claims are patent eligible.

Chief Judge Rader and Judges Linn, Moore, and O’Malley

Next, Chief Judge Rader and Judges Linn, Moore, and O’Malley filed an opinion concurring-in-part and dissenting-in-part.  Chief Judge Rader and Judge Moore agree with the majority that the method and computer-readable media claims are not patent eligbile, while Judges Linn and O’Malley would find all of the claims to be patent eligible.

This opinion notes that the exceptions to patent eligibility are “laws of nature, natural phenomena, and abstract ideas.”  In crafting these exceptions, the Supreme Court was concerned with the “monopolization of the basic tools of scientific and technological work” and impede innovation more than promote it.

The opinion notes that claims must be “meaningfully limited.”  For computer-related claims, this means that the otherwise abstract idea must be performed in a “specific way” on the computer or be performed on a “specific computer.”  The computer must perform a meaningful role in the performance of the invention.  The court must be careful not to consider novelty, obviousness, or section 112 issues when determining patent eligibility.

Judge Moore filed an opinion dissenting-in-part that was joined by Chief Judge Rader and Judges Linn and O’Malley.

Judge Moore is very concerned that the exception to patent eligible subject matter is getting too large and that a very large number of currently valid patents may be implicated.  She describes the court as “irretrievably fractured” over the issue of patent eligibility.  The Supreme Court only seems to review cases where it is going to rule the claims to be patent ineligible.  She seems to urge them to review this case and hold otherwise.

She is extremely critical of Judge Lourie’s opinion.  She indicates that he strips away all known features from the claims in his search for an “inventive concept.”  This is, of course, continuing the confusion between § 101 and §§ 102 and 103 of the Patent Act.

Judge Newman

Judge Newman filed an opinion concurring-in-part and dissenting-in-part.  Judge Newman is concerned over the added uncertainty to patentees now that patent eligibility seems to be a completely separate litigation issue.  She decries the division over the issue on the court and that it will not provide any guidance to patent owners.  She would hold all of the claims in this case to be patent eligible.

Judges Linn and O’Malley

Judges Linn and O’Malley filed a dissenting opinion.  They note that no claim construction analysis was conducted in this case and it comes to the court on a grant of summary judgment of patent ineligibility.  The defendant in the case has agreed to a much narrower construction of the claims than they have been given by the court.  Based on the sparse record, they would hold all of the claims to be patent eligible.

Finally, Chief Judge Rader provided “additional reflections” where he reviews other patent eligibility cases with which he has been involved.  He leaves us with a mantra to ponder:

When all else fails, consult the statute!

The bill is designated as S. 866 and has been referred to the Senate Judiciary Committee.

While the bill does not use the term “patent trolls” at all, Sen. Schumer recently issued a press release where he indicated that he intended to introduce legislation to crack down on patent trolls.  These entities are costing “legitimate companies” billions of dollars per year.  He asserts that the expanded potential to have patents reviewed by administrative experts at the PTO will save legitimate companies on litigation costs.

Some might suggest that this legislation can have a very different effect from that intended by Sen. Schumer.  If the patent makes it through the PTO review a second time (and they usually do for reexamination), the patent may actually be viewed more strongly by juries.  The patent has not only survived initial review by the PTO, but it has also withstood the additional scrutiny of the new review procedure.