Driving home the point that software patents remain enforceable and of potentially high value to those who invest in them, the US Court of Appeals for the Federal Circuit upheld a recent District Court ruling that Microsoft had willfully infringed I4i’s U.S. Patent No. 5,787,449.

The .DOCX (or any file format containing custom XML) is to be removed from all Microsoft products that make use of the new format. Users who remain befuddled by the change from the .DOC format to .DOCX can breath a sigh of relief so long as the US Supreme Court doesn’t decide to weigh in.

The background on this situation is that Microsoft has been in litigation with a company known as I4i for quite some time and lost a jury trial wherein a ruling was handed down along with an injunction and an award of $200 million in damages resulting from Microsoft’s infringement of an I4i patent directed to a custom XML feature in Word. Microsoft appealed the case.

The patented invention created a reliable method of processing and storing content and metacodes separately and distinctly. The data structure primarily responsible for this separation is called a “metacode map.” According to the patent, the “metacode map” allows a computer to manipulate the structure of a document without reference to the content.  Reuters reported that the total damages owed from the original award plus interest and fees would reach $290 million.

More detail about the case can be found at www.i4ilp.com. In a statement release by I4i Loudon Owen, Chairman of i4i, says, “We couldn’t be more pleased with the ruling from the appeals court which upheld the lower court’s decision in its entirety.  This is both a vindication for i4i and a war cry for talented inventors whose patents are infringed.”  Mr. Owen adds, “The same guts and integrity that are needed to invent and go against the herd, are at the heart of success in patent litigation against a behemoth like Microsoft.  Congratulations to our entire team who provided such dynamic leadership, courage and tenacity!”

Michel Vulpe, founder of i4i and co-inventor, says, “This ruling is clear and convincing evidence that our case was just and right, and that Microsoft wilfully infringed our patent.”  Mr. Vulpe adds, “i4i is especially pleased with the court’s decision to uphold the injunction, an important step in protecting the property rights of small inventors.  We will continue to fully and vigorously enforce our rights and we invite all potential customers interested in custom xml to contact us.”

In Ex parte Bo Li, Appeal 2008-1213 (USPTO BPAI 2008, November 6, 2008) the Board of Patent Appeals and Interferences (BPAI) recently considered the patentability of a method and system for generating a report using software modules adapted for easy modification and updating and found the invention was directed to patentable subject matter.

This gives practitioners some guidance on claiming strategies for software and business method related inventions and clarifies the notion that the Bilski decision does not directly impact claims that are drafted as articles of manufacture. The court followed the analysis set forth in In re Nuijten, 500 F.3d 1346 (Fed. Cir., 2007), which considers the four statutory classes for a signal, and bases the determination of statutory subject matter on that basis. The language from the opinion is as follows:

“It has been the practice for a number of years that a “Beauregard Claim” of this nature be considered statutory at the USPTO as a product claim. (MPEP 2105.01, I). Though not finally adjudicated, this practice is not inconsistent with In re Nuijten. (Ibid.). Further, the instant claim presents a number of software components, such as the claimed logic processing module, configuration file processing module, data organization module, and data display organization module, that are embodied upon a computer readable medium. This combination has been found statutory under the teachings of In re Lowry, 32 F.3d 1579 (Fed. Cir., 1994). In view of the totality of these precedents, we decline to support the [nonstatutory subject matter] rejection under 35 U.S.C. § 101.”

The claim at issue in the Ex parte Bo Li decision involving Application No. 10/463,287 is copied below for reference:

42. A computer program product, comprising a computer usable medium having a computer readable program code embodied therein, said computer readable program code adapted to be executed to implement a method for generating a report, said method comprising:
providing a system, wherein the system comprises distinct software modules, and wherein the distinct software modules comprise a logic processing module, a configuration file processing module, a data organization module, and a data display organization module;
parsing a configuration file into definition data that specifies: a data organization of the report, a display organization of the report, and at least one data source comprising report data to be used for generating the report, and wherein said parsing is performed by the configuration file processing module in response to being called by the logic processing module;
extracting the report data from the at least one data source, wherein said extracting is performed by the data organization module in response to being called by the logic processing module;
receiving, by the logic processing module, the definition data from the configuration file processing module and the extracted report data from the data organization module; and
organizing, by the data display organization module in response to being called by the logic processing module, a data display organization of the report, wherein said organizing comprises utilizing the definition data received by the logic processing module and the extracted report data received by the logic processing module.

By Daniel Cotman

In a recently issued en-banc decision, In re Bilski, No.2007-1130 (Fed. Cir. Oct. 30, 2008), the Federal Circuit articulates a “machine-or-transformation” test, which resets the precedent for “method” patents by about a decade relying on the Benson, Flook and Diehr cases and overruling State Street and AT&T. This decision directly impacts claiming strategies for business method and computer software patents. The Federal Circuit clarifies the standards for determining whether an invention encompassing a “method” qualifies as patentable subject matter under 35 USC §101 as that which is either (1) tied to a particular machine or apparatus, or (2) transforms a particular article into a different state or thing. Claims that are narrowly tailored enough to encompass a specific application of a fundamental principle, while not pre-empting others from practicing the fundamental principle itself, will succeed under this new standard. Whereas those claims that are directed to abstract processes will likely fail. The Bilski claims, which were decoupled from any machine, were given the death knell by the Federal Circuit as they ran afoul of the mental steps doctrine contained in the transformation prong of the Bilski test. Claims that may be performed entirely in the human mind, without apparent use of a machine and without transforming an article into a different state or thing, do not qualify as patentable subject matter.

Under the law established by the State Street case it used to be that claims for business methods or software processes were patentable if it could be show that what is claimed accomplished a “useful, concrete and tangible result.” In this recent ruling the Federal Circuit declared the State Street inquiry to be inadequate and reaffirmed that the machine-or-transformation test outlined by the Supreme Court is the proper test to apply. Thus the case that ushered in the era of business method patents has been benched and is not expected by most legal scholars to be resurrected.

The true impact of the Bilski ruling on both pending applications and issued patents has yet to be felt, but the court made it clear that despite the naysayer’s business methods and software patent remain patentable. Under this new test, best practices for all pending patent applications is to conduct a thorough review of all method patents to determine if the claims will pass scrutiny under Bilski. While it remains unclear “what constitutes sufficient physical transformation or machine-implementation to render a process pantentable,” a review of the case law relying on the “machine-or-transformation” test that was first enunciated by the Supreme Court in the Benson case shows that the following basic principles should be adopted as best practices:

By drafting using one or more of these best practices claims directed to business methods and software patents remain patentable subject matter.

By: Daniel Cotman and Elaine Cruz