Intellectual Property Directions

Uncharacteristically, I remember the punch line to a joke making the rounds when I was in elementary school – I’ll spare you the joke but the punch line went something like “[my dog] used to an alligator before I cut off his tail and painted him yellow”. Well, now I’m out of elementary school but I still see many patent attorneys who think that you can change something’s essence by just painting it yellow. Happily, the Court of Appeals for the Federal Circuit is willing to set them straight.

For example, CyberSource Corp. had an issued patent on a “system” for detecting credit card fraud during internet transactions. It sued Retail Decisions, Inc. for infringement, only to find its patent invalided in court because their “system” was not eligible for patenting. Although the patent statues broadly define what can be patented, the courts have repeated made three clear exceptions; laws of nature, physical phenomena, and “abstract ideas”. CyberSource’s system was judged to fall into the abstract idea category – essentially the system was nothing more than thinking about the observed the IP addresses from which credit card transactions originated and deciding if any particular transaction was likely to be fraudulent.

Pure mental activities – abstract ideas – are not patentable subject matter, so many software, internet, and business methods inventions – inherently non-physical inventions – have a hurdle to get over; do they contain “patent eligible subject matter”  Hardware based inventions have no problem but usually the non-physical inventions are considered to be processes that, perhaps, are “just” mental activities.

Patent attorneys, being clever, have tried to convert non-physical processes into a patent-eligible physical embodiments (and therefor not purely mental activities). One way to do this, as CyberSource’s attorneys did, is to write a claim for “a computer readable medium containing program instructions for…[the otherwise purely mental  process]“. Their argument was that a computer readable medium is clearly NOT a patent-ineliglible  law of nature, physical phenomenon, or abstract idea. An argument that is technically true but sophistic and disingenuous. As the Court of Appeals said:

Regardless of what statutory category a claim’s language is crafted to literally invoke, we look to the underlying invention for patent-eligibility purposes.  Here, it is clear that the invention [...] is a method for detecting credit card fraud, not a[n article of] manufacture for storing computer-readable information.

In other words, don’t bother to cut off your alligator’s tail and paint him yellow; it will still be deadly.

And don’t waste your money prosecuting a patent if that’s the basis for your claim. “Getting” a claim allowed by the examiner doesn’t mean you will be able to use the patent to add value to your company…as CyberSource learned.