Centre for Internet and Society

The Bilski Case - Impact on Software Patents

praskrishna — 2011-08-23T03:24:31Z

The Supreme Court of the United States gave its decision in Bilski v Kappos on 28 June, 2010. In this case the petitioners’ patent application sought protection for a claimed invention that explains how commodities buyers and sellers in the energy market can protect, or hedge, against the risk of price changes. The Court in affirming the rejection by the Court of Appeals for the Federal Circuit also held that the machine- or-transformation test is not necessarily the sole test of patentability. The Court’s ruling of abstract ideas as unpatentable and its admission that patents do not necessarily promote innovation and may sometimes limit competition and stifle innovation have provided a ray of hope. In the light of the developments, the Bilski decision as far as patentability of software is concerned may not be totally insignificant, says Krithika Dutta Narayana.

The United States Supreme Court’s much awaited decision of last month in Bilski v. Kappos (2010) (Bilski), a case that was touted as a potential watershed in the debate surrounding patentability of software, was disappointing, even though it was not without any impact. While the Supreme Court affirmed the rejection by the Court of Appeals for the Federal Circuit (CAFC) of a patent claim for a business method, it failed to define with clarity, any test for patentability which might have constituted a precedent for future cases involving patentability of software or business method. At the same time, it held that the “machine- or- transformation” test which was the test followed by the CAFC in rejecting the claim, was not the sole test to determine patentability, thus effectively providing no guideline to determine patentability of software or business methods in future cases.

The Supreme Court in Bilski, affirmed the rejection by the CAFC in In re Bilski (2008) of a patent claim involving a method of providing insurance against fluctuating energy prices due to changes in weather. The applicants, Bernard L. Bilski and Rand Warsaw filed a patent application for such a method of hedging risks – essentially a claim for a business method – under Section 101 of US Patent Act before the United States Patent and Trademark Office (USPTO). The examiner at the USPTO rejected the claim on the ground that the claim was not for patentable subject matter and that “the invention is not implemented on a specific apparatus and merely manipulates (an) abstract idea and solves a purely mathematical problem without any limitation to a practical application, therefore, the invention is not directed to the technological arts”. The Board of Patent Appeals and Interferences (BPAI) took a re-look at the examiner’s decision and held that the “machine or apparatus” test was in itself insufficient to determine patentability since a claim that included transformation of a physical object from one state to another would also be patent eligible subject matter. The BPAI also struck down the requirement of the invention to be a “technological art”. Thus, it rejected the Bilski claim on the ground that it did not cause transformation of a physical object from one state to another, since transformation of financial liabilities and risks does not constitute transformation of physical matter.

In its decision on October 30, 2008, the CAFC affirmed the ruling of the BPAI and laid down the machine or transformation test for patentability and held that Bilski’s claim was neither tied to any machine or apparatus to derive the result nor did it cause transformation of any physical object from one state to another and is hence, unpatentable subject matter. The Court reasoned that the “machine or transformation” test was crucial for determining patentability as it ensured that the claim based on a fundamental principle did not preempt all other uses of the principle. This test was the first test since the US Supreme Court’s decision in Diamond v. Diehr (1981) – which held that laws of nature, mathematical formulae and algorithms are not patentable – that had a huge potential for laying down definitive rules for patentability including declaring software and business methods to be outside the realm of patentable subject matter. If this test was upheld in the Supreme Court, that would effectively put an end to the rise of software patents since software, in most cases, did not cause transformation of physical object from one state to another. Thus, the decision of the Supreme Court had huge stakes for both sides of the software patent debate.

In light of the same, the Supreme Court’s ruling holding that the machine or transformation test is not the sole test for determining patentability and at the same time, failing to provide any other test on which to determine patentability, was a sore disappointment. Though, it affirmed the rejection of Bilski’s patent claim on the ground that the subject matter claimed was abstract and thus not a patentable “process” under section 101, its core decision was only limited to this particular claim and it did not lay down a concrete and definitive guideline for future claims. However, one must not be too quick to dismiss this decision as either going against the interests of open society and free software or as a completely inconsequential case that simply maintains status quo. There are important takeaways for the patentability of software in the Bilski decision – The Court did not totally reject the machine or transformation test relied on by the CAFC. It only held that the machine or transformation test is not the sole test on basis of which the patentability of a subject matter of a claim can be decided. The Court, in fact, held that the “machine or transformation test” was a “useful and important clue, an investigative tool for determining whether some claimed inventions are processes under section 101.” This leaves open the possibility of using the test to determine patentability in future cases and this is good news for opponents of software patents since software (an algorithm designed to be operated upon by a computer) is merely an abstract idea which, in most cases, does not involve transformation of a physical object from one state to another.

Bilski’s claim was essentially interpreted to be a patent for a business method. The Supreme Court was completely silent on the issue of patentability of software in its decision and stuck to only the narrow issue in hand – that of the patentability of a particular business method. This means that the “machine or transformation test”, whose applicability was ruled out in this particular case, may still be applicable for software patents. Nothing in this case precludes an opponent of a software patent from urging the courts to use the “machine or transformation test” to rule on patentability. Thus, the very fact that the Supreme Court only dealt with the narrow issue in hand ensures that the “machine or transformation test” is not altogether dismissed.

The main ground on which Bilski’s claim was rejected was that the patent claim was for an overly abstract idea which was not patent-eligible. The Court held that the basic concept on which the claim was based – the concept of hedging risks against risk is an unpatentable abstract idea. Further, some of the claims are constituted by equations and are purely mathematical in nature and are abstract and thus not patentable. This means that basic concepts and use of mathematical formulae constitute abstract ideas which are unpatentable. This test can strike down many software patents as these are simply algorithms executed by a computer and incorporate very fundamental and basic concepts which are abstract in nature and are thus, not patentable. This test for determining patentability on the basis of the claim being abstract as laid down in Bilski reaffirms the patentability test laid down in Diamond v. Deihr which kept laws of nature, mathematical formulae and algorithms outside the scope of patentable subject matter. This may serve as an important test to determine and especially, limit the patentability of software in coming years.

Notwithstanding the fact that Bilski’s claim has been interpreted to be one of a business method patent, when examined in detail, the claims indicate that the ‘method’ cannot be implemented without a computer. Certain claims for calculating probability (and risk), although mathematical or algorithmic in nature, have too many variables to be executed in any way other than by using a computer.1 Such algorithms which can be executed only by a computer fall under the category of software and the patent is thus, also, a software patent. That being said, the ruling of the Court that the claim is for an overly abstract idea and thus not patentable lends credence and indicates that software patents can be validly claimed to be abstract ideas not falling under the scope of patentable subject matter.

Another important outcome of the Supreme Court’s ruling was the invalidation of the 1998 CAFC decision in State Street Bank v. Signature Financial Group2 which opened the floodgates for software patents by holding that a practical application of an algorithm or formula to produce “useful, concrete and tangible result” was sufficient to constitute patentable subject matter. The State Street test was too broad and afforded an opportunity for many frivolous patent applications to be admitted. In fact, Justice Stevens, in his concurring opinion, has stated that it would be a “grave mistake” to follow the test. By clearly striking down and dismissing such a test to determine patentable subject matter, the Court in Bilski has precluded future software patent claims for taking recourse to this test and has effectively, to an extent, made it that much harder for a software to be granted patent. The test in State Street Bank which opened the floodgates for software patents was definitively dismissed.

The Court in the 1978 case of Parker v. Flook, had rejected patent for a mathematical algorithm on the ground that an algorithm was a law of nature although its use was limited to a specific field in this case (the “field of use” test) and added an insignificant post solution activity (“post solution activity” test). The test laid down in Flook had been subsequently questioned and thus, subtly dismissed by the Court in Diehr in 1991. The Court in Bilski emphasized on the test for patentability laid down in Flook and opined that the two tests may well come in handy in future challenges or oppositions to a patent claim while determining if the claim pertained to an idea that was abstract and hence, not patentable. Thus, this test can be used in future for invalidating software patents which are characterized by broad claims adding insignificant post solution activity.

It is heartening to note that the Court looked at the importance of patent law while recognizing that patents are not always necessary to encourage innovation. It noted that patents could also limit competition and stifle innovation. They can have ill effects such as increasing prices while slowing progress and could actually be deterrent to free flow of information within society. By recognizing and validating this, the ruling not only helped increase awareness about the debate surrounding software patents but also showed that the Courts are open to such an approach to patent law in future. This can only be good news for busting software patents.

For further reading

Claim 4 of Bliski's claims is as follows - “perform a Monte Carlo simulation across all deals at all locations ... over the last 20 years of weather patterns and establish the payoffs from each deal under each historical weather pattern “ Such a simulation would involve multiple parameters such as deals, locations, weather patterns, to establish a payoff.
149 F.3d. 1368.

For more details visit https://cis-india.org/a2k/blogs/bilski-case

First Post-Bilski Decision - Software Patent Rejected

praskrishna — 2011-08-23T03:24:25Z

In the first decision post-Bilski, the Board of Patents Appeals and Interferences (BPAI) rejected a software patent claimed by Hewlett-Packard. The ruling in this case has buttressed the fact that the Bilski decision furthered the cause of narrowing the patentability of software even though the Supreme Court of the United States totally avoided mentioning software patents or the applicability of the machine or transformation test for software patents in its decision.

As eagerly as it was awaited, the United States Supreme Court’s decision in Bilski v. Kappos (2010) was a dampener as far as its impact (or the lack of it) on patentability of software was concerned. The Supreme Court totally avoided even mentioning software patents or the applicability of the machine or transformation test for software patents in its decision and while many claimed that it was status quo maintained, a few of us found a silver lining in the Court’s ruling of abstract ideas as unpatentable and its admission of an argument that patents do not necessarily promote innovation and may, sometimes result in limiting competition and stifling innovation. Our hope that the Bilski case furthered the cause of narrowing the patentability of software was not misplaced is evident from the first decision post-Bilski, of the BPAI, which rejected a software patent claimed by Hewlett-Packard. The BPAI, in In Re Proudler, rejected a patent claim for software made by Hewlett Packard on the ground that software, being an abstract idea, is not patentable. The BPAI relied on, among others, the Supreme Court’s decision in Bilski v. Kappos in holding that an abstract idea was not patentable.

The case before the BPAI was on appeal from the decision of the patent examiner who refused patent for the claim on the ground that it was obvious (on basis of prior art analysis) and therefore, “barred at the threshold” for patentability under US patent law. The patent was claimed for “a method of controlling the processing of data” comprising “defining security controls for a plurality of data items, and applying individualised security rules to each of the data items based on a measurement of integrity of a computing entity to which the data items are to be made available”. It was essentially a claim for software facilitation data processing and involving security controls for several data items. The BPAI refused patent for the claim but differed from the patent examiner in its reasoning. The BPAI held that all claims related to non-patentable subject matter and hence, could not be granted patent.

In coming to this conclusion, the BPAI relied on previous decisions including In Re Nuijten which held that Section 35 of the US Code of Patents which allows patents for a machine, a manufacture, a process or a composition of matter constitutes “the exclusive reach of patentable subject matter”. In ruling that HP’s claim was not patentable, BPAI also held that software, being an abstract idea, was not patentable. The line of argument relied on by the BPAI was something like this – “[A] machine, a manufacture, a process or a composition of matter” constitutes the exclusive reach of patentable subject matter. Thus, laws of nature, abstract ideas, and natural phenomena are excluded from patent protection as held in the well known case of Diamond v. Diehr. The Federal Circuit in its decision in In re Warmerdam has held that an abstraction is not a patentable subject matter. In other words, a claim that recites no more than software, logic or a data structure (that is, an abstraction) does not fall within any statutory category. It has been held in Microsoft Corp. v. AT & T Corp. that an abstract software code is an idea without physical embodiment. Finally, and most significantly, the Bilski case has put the nail in the coffin by ruling that abstract ideas are not patentable. Against the background of these precedents, BPAI has confirmed the unpatentability of software on the ground that it is an abstract idea.

It is interesting that the BPAI also mentioned that “no true hardware structure is recited” in the claims to buttress its conclusion that the idea claimed was an abstract one. This means that the BPAI took note of the fact that although a hardware structure may have been essential to implement the abstract idea forming the claim such structure itself was not claimed for patent. The innovation claimed lay in the software alone and not in the hardware and therefore, did not merit patent protection. Thus, a claimed invention which is a combination of hardware (required to implement the software) and software may not be patentable as long as there is no ingenuity in the hardware as software alone, being a mere algorithm and an abstraction, falls outside the scope of patentable subject matter.

The first post-Bilski decision gives us more than one reason to cheer about –

It refused patent for software on the ground that it was an abstract idea and hence, did not fall under patentable subject matter. Acceptance of software as merely an abstract idea is catching up and is thus, good news for those who challenge the patentability of software.
The BPAI, in ruling software as an abstraction and thus, unpatentable relied directly on the Bilski decision and therefore, provided a clear, much-needed guideline for conclusively interpreting the Bilski decision as one restricting the patentability of software.
The decision supported the argument that any combination of hardware and software, to be patentable, must demonstrate ingenuity in the hardware component. As long as there is no claim for hardware, the software itself, being an abstraction, cannot be patented. This brings about greater clarity in the definition of software to be limited to an algorithm (and thus, abstract) and to be looked at in isolation from a hardware component which is solely used to implement the software and no more.

It will be interesting to follow the developments in this case and in other future claims for software which may rely on the Bilski decision. In Re Proudler is certainly encouraging for limiting software patents especially in the aftermath of Bilski. As far as patentability of software is concerned, the Bilski decision may not be that insignificant after all.

For more details visit https://cis-india.org/a2k/blogs/post-bilski

Statement of CIS, India, on the WIPO Broadcast Treaty at the 22nd SCCR

praskrishna — 2011-08-04T04:41:12Z

The twenty-second session of the Standing Committee on Copyright and Related Rights is being held in Geneva from June 15 to June 24, 2011. Nirmita Narasimhan and Pranesh Prakash are attending the conference. CIS delivered its statement, on the Broadcast Treaty, and made it available in print form as well.

The Centre for Internet and Society would like to associate itself with the comprehensive statement made by the Electronic Frontier Foundation (EFF). We are one of the signatories of the joint statement, which EFF referred to, of the many civil society non-governmental organizations, cable casters and technology companies opposing an intellectual property rights based Broadcasting Treaty.

We believe that the protection that may be afforded to broadcasters under existing international treaties, including Article 14 of the TRIPS Agreement, are sufficient to safeguard the interests of broadcasters, and that the Broadcast Treaty, which has been under discussion for more than a decade without any progress is, as the WIPO Chair observed in the conclusion to the informal summary prepared after the 16th SCCR (SCCR/17/1/inf), an expenditure of "time, energy and resources to no avail". Without prejudice to that position, we would like to make a few points on the content of the treaty as well.

There has been talk of ensuring a technology-neutral approach. While a technology-neutral approach is useful since technology keeps changing, we believe that that necessarily means the differences between different technologies should be recognized. The capital costs and investments of traditional broadcasters, which are—as has been highlighted in the many statements here today—the basis on which broadcasters' rights are demanded, are not in the least comparable with the capital costs and investments of webcasting.

These differences have not come out adequately in the various regional seminars that WIPO helped organize, since those were mostly with traditional broadcasters and did not cover webcasters.

"Communication to the public", while that is a technologically neutral formulation, is an element of copyright, and is not the same of broadcast rights, which is a related right.

Any departure from a signal-based approach would require the assent of the WIPO General Assembly, which has in 2007 specifically requested for signal-based approach for the treaty.

Specifically, we believe that Paragraph 16 of the WIPO Development Agenda, which relates to preservation of a vibrant public domain, will be endangered by a right being given to webcasters which is separate from the underlying content of the transmission.

In this regard, we strongly support the delegations of South Africa and India, in their strong pronunciation of public interests while looking at such a treaty. We further support the delegation of Canada, for strongly emphasizing the need to allow countries the flexibility to opt-out of the provisions of the treaty for certain forms of broadcasting.

For more details visit https://cis-india.org/a2k/blogs/sccr-22-broadcast-cis-statement

Seminar on Software Patent and the Commons

praskrishna — 2011-10-23T14:22:15Z

A pre-grant opposition has been filed against a software patent application filed in the patent office by Certicom, a wholly owned subsidiary of Research in Motion (RIM), manufacturers of Blackberry. The opposition was filed on August 31, 2010 by the Software Freedom Law Centre which has recently expanded its operations to India. This exciting development was announced by Mishi Choudhary from SFLC on the lines of the seminar on “Software Patents and the Commons” organised on 1 September 2010 in Delhi jointly by SFLC, the Centre for Internet and Society, the Society for Knowledge Commons and Red Hat. Filing more such oppositions to software patents in India was in the pipeline and this is just the beginning of a movement to take on monopolisation of knowledge and ideas through patenting software, the organisers said.

Software patent opposition is still in its nascent stage in India while several oppositions have been filed against software patents in the US and the EU. The harmful effects of software patents are little known to the Indian public, especially from the context of its danger to development in small and medium size enterprises, as pointed out by Pranesh Prakash from the Centre for Internet and Society who spoke about why software patents are bad for innovation and development in society and also in the software industry, in particular.

In the same context, Venkatesh Hariharan from Red Hat as also Mr. T.C. James, Director of the National Intellectual Property Organisation spoke about the growing importance of free and open source software in education, governmental agencies and as a key agent in information technology policy making in India. “Out of 500 super computers in the world, 446 are running on Linux”, he said, talking about how open source software makes computing highly accessible and affordable while allowing for improvements to be made to the software by any user and releasing it back to benefit the whole community. Dr. Anshu Bhardwaj involved in the Open Source Drug Discovery project undertaken by CSIR, spoke at length about the project as a live demonstration of the power of open source software in impacting drug access and development and health care reform across communities at highly economical rates.

Prof. Eben Moglen, Executive Director of Software Freedom Law Centre in New York who was the keynote speaker at the conference spoke about the growth of the free software and open source movement based on the principle of equating knowledge with commons – that is, a good to be commonly shared by all members of the public – resulting in access to and sharing of knowledge and distribution of information in society for greater innovation, creation of new ideas, communication and development. Dr. Abhijit Sen, member of the Planning Commission was the other keynote speaker who stressed on the role of the government and the policy making bodies to ensure that knowledge and education is accessible and shared without restrictions in such a way that it is not misused by the members of the society.

Other notable speakers in the event included Prabir Purkayastha from the Society for Knowledge Commons, Pradyut Bora, Chief Convenor of BJP's information and technology cell, Jaijit Bhattacharjee from Hewlett Packard and Sudhir Krishnaswamy, Professor, National University of Juridical Sciences. The event also witnessed the participants discuss the various strategies to be used from the perspective of legal analysis as well as policy reform, for opposing software patents filed or granted in India. Indian patent law clearly declares computer programmes per se or software patents to be unpatentable. Prabir Purkayastha pointed out that the most important and major scientific discoveries in history have not been patented and that this has, in no way prevented new ideas from being created and has in fact fostered such innovation. In spite of such a clear legal restriction on grant of software patents, around 1000 software patents have been filed in the patent offices in India in the last year. This trend is extremely disturbing since it poses a serious threat to access to knowledge and distribution of information in society in addition to stifling innovation and development in the software industry.

The seminar was attended by people from diverse backgrounds including the IT industry, civil society organisations, and groups working in pharma patent advocacy, media persons and government officials.

Videos

For more details visit https://cis-india.org/a2k/blogs/softtware-patents-and-the-commons

Govt for legalising parallel import of copyright works; publishers oppose

praskrishna — 2011-08-30T04:24:05Z

This article by Shamnad Basheer was published in the Economic Times on 17 March 2011.

For more details visit https://cis-india.org/a2k/blogs/govt-legalising-parallel-import

CIS Hosts Scanned Version of George Orwell’s Books vs. Cigarettes

praskrishna — 2011-12-01T13:31:39Z

Verbindingen/Jonctions (V/J), the bi-annual multidisciplinary festival organised by Constant is taking place on December 1, 2011. Amateur scanning of books often raises a lot of questions, around the issue of copyright. For this V/J13 is scanning George Orwell’s Books vs. Cigarettes. The essay is in public domain in Russia, India and South Africa, but not in Europe and America due to copyright issues. CIS is hosting the scanned pages of the essay in public domain.

During the morning session DIY-made book scanner and OCR-software will be used to transform the scans into text files and in the afternoon session the digital material generated in the morning will be remixed.

The main sessions can be followed online at the home page of VJ13

About VJ13

Verbindingen/Jonctions (V/J) is the bi-annual multidisciplinary festival organised by Constant. Since 1997, Verbindingen/Jonctions combines high, low and no-tech strategies from utopian, contemporary, traditional and tribal cultures, free software, feminism and queer theories. V/J is an occasion to explore the space between thinking and doing, and the festival is always a mix of activities. It is an occasion to invite radio makers, artists, programmers, academics, Linux users, interface designers, urban explorers, performance artists, technicians, lawyers and others to experience each other’s practice, and to share their interests with a broad public of visitors.

V/J13 has been developed in collaboration with Le P’tit Ciné, Recyclart, Hacker Space Brussels (HSB), QO2, Renovas, Boutique de Quartier and Yves Poliart, Myriam Van Imschoot, Piet Zwart Institute: Networked Media.

Download the scanned version (Zip files, 28091 kb)

For more details visit https://cis-india.org/a2k/blogs/books-vs-cigarettes

Consumers International IP Watchlist 2011 — India Report

praskrishna — 2012-01-02T08:48:45Z

Pranesh Prakash prepared the India report for Consumers International IP Watchlist 2011. The report was published on the A2K website.

For more details visit https://cis-india.org/a2k/blogs/ip-watch-list-2011.pdf

Notes for Mobile Phone Spreadsheet

praskrishna — 2012-10-30T06:24:17Z

For more details visit https://cis-india.org/a2k/blogs/notes-for-mobile-phone-spreadsheet.pdf

WIPO SCCR 25 Day 1, November 19, 2012 (Full Text)

praskrishna — 2012-12-05T00:35:56Z

Rough transcript of proceedings from WIPO SCCR on Day 1, November 19, 2012.

For more details visit https://cis-india.org/a2k/blogs/wipo-sccr-25-day-1-november-19-2012.txt

WIPO SCCR 25 Day 2, November 20, 2012 (Full Text)

praskrishna — 2012-12-05T00:46:53Z

Rough transcript of proceedings from WIPO SCCR on Day 1, November 20, 2012.

For more details visit https://cis-india.org/a2k/blogs/wipo-sccr-25-day-2-november-20-2012.txt

WIPO SCCR 25 Day 3, November 21, 2012 (Full Text)

praskrishna — 2012-12-05T00:45:51Z

Rough transcript of proceedings from WIPO SCCR on Day 3, November 21, 2012.

For more details visit https://cis-india.org/a2k/blogs/wipo-sccr-25-day-3-november-21-2012.txt

Archives and Access

praskrishna — 2012-06-22T06:45:08Z

For more details visit https://cis-india.org/home-images/archives.jpg

Open Source

praskrishna — 2021-11-29T15:08:33Z

Open Source

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Panel discussion on 'How to Avoid Digital ID Systems That Put People at Risk: Lessons from Afghanistan' at Freedom Online Conference

praskrishna — 2021-12-03T14:52:35Z

Amber Sinha participated as a panelist in a panel discussion on How to Avoid Digital ID Systems That Put People at Risk: Lessons from Afghanistan at the Freedom Online Conference yesterday.

The Freedom Online Coalition (FOC) was established in 2011 in response to the growing recognition of the importance of the Internet for the enjoyment of human rights. Periodically, the FOC holds a multistakeholder Conference that aims to deepen the discussion on how online freedoms are helping to promote social, cultural and economic development. The ownership of the Conference program and outputs lies with the host country, most often the Chair of the Coalition during that year.

The aim of the panel was to use the lessons learned from the Afghanistan case to take a critical and realistic look at the implementation of digital identification programs around the world. A video of the panel can be accessed here.

For more details visit https://cis-india.org/internet-governance/news/panel-discussion-how-to-avoid-digital-id-systems-that-put-people-at-risk

Gig

praskrishna — 2021-12-07T01:57:40Z

Gig Work

For more details visit https://cis-india.org/home-images/Gig.png