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University of North Carolina School of Law
Chin, Andrew

Andrew Chin Patent Law Fall 2014
Conditions for Patentability
v  Foundations of the United States Patent System
ØWhat is a Patent?
§  One use of “patent” refers to an official document issued by US government—the entirety of the document is the patent’s specification, which is comprised of (1) the written description, (2) drawings (where necessary to fully enable others to make and use the invention), and (3) the claims—numbered, single-sentence paragraphs found at the very end of the patent document defining the scope of the owner’s right to exclude others from making, using, selling, offering to sell, or importing his invention
·         Patent does not convey any positive/affirmative rights, the property right is a NEGATIVE RIGHT
§  Term: enforceable life of a patent does not begin until the date the patent is issued by USPTO and expires on the date that is 20 years after the earliest effective US filing date
Ø Should we have a patent system?
§  Cost Benefit Analysis for Patents
·         Costs:
¨   Reduction in the quantity of widgets supplied compared with what would’ve been in a perfectly competitive market
¨   Raise the price above that which would have been set in perfectly competitive market
¨   Administrative costs
¨   Duplicative, overlapping expenditures on R&D in the same tech field by different firms
¨   Foregone R&D that is not conducted b/c of existing patents owned by others
¨   Litigation expenses—particularly when infringement is inadvertent
·         Benefits
¨   Powerful incentive for creation of new innovation from which society benefits
¨   Public domain is enhanced by disclosure of info in the application
¨   Dissemination of new tech info
¨   Domestic economy is enhanced when patent is “practiced” or “worked” in US—generates sales, creates jobs, and spurs investment
§  Fundamental Fairness/Natural Rights
·         Labor Theory (Locke)= persons have a property interest in their own body and own their own labor—when a person mixes his labor with objects found in the common, he makes it his propertyàbut mandates that right to private ownership is conditional on a person leaving in common enough and as good for others; nor must he take more from the common than he can make use of
¨   Shortcomings: doesn’t address central question of balancing proprietary rights against enhancement of the public domain; fails to grapple with allocation of efforts by multiple innovators
·         Reward for Services Theory: Inventors render a useful service to society and society must reward them for itàreward for the inventor’s services in proportion to their usefulness to society
Ø  Shortcomings: doesn’t guide us in rewarding the invention made by accident, rather than conscious effort and hard work; assumes that the price a patentee can attain for his invention in the marketplace is the correct measure of its usefulness to society
§  Utilitarian Theories: most aligned with US patent law
·         Incentive to Invest (The Free Rider Problem)
¨   Incentive for investments to invention – high cost to make “the first pill” compared to low costs of all the subsequent ones. Gives person who created an ample opportunity to recoup initial investment costs (eliminates free rider problem)
¨   Efficient way to spur creation of invention itself. Inventor gets something in return for work in creating inventionàassumes that innovation is good for society, and that the correct incentive to bring forth the societally optimal level of innovation is the 20year period of exclusivity that a patent represents
·         Incentive to Disclose (Patents vs.Trade Secrets)
¨   Exclusive right a trade-off for divulging how invention works; quid pro quo based on public benefit, not solely to help inventor have a limited monopoly
Ø  Bargain-Exchange: inventor is conveyed a time-limited right to exclude others from exploiting his invention in exchange for disclosing how to make and use the invention in an enabling fashion that will facilitate practice of the invention by all once the patent expires
¨   Helps spur future invention because of public knowledge, so researchers don't have to keep re-inventing the wheel when someone else already created.
¨   Trade secret might not be most effective way of protection, since the product itself might be the invention.
¨   Also used to break up trade guilds. Technology (protection) + transfer
§  Prospect Theory: Similar to prospect claims for minerals. Should give inventors room to explore an area.
Ø Patent vs. Monopoly
§  Patents are a limited time right to exclusively use, make and sell an invention. Monopoly is taking from the public domain. Since patents do not exist before being granted, there is no taking from the public domain. It is a grant for giving something to the public. Patent = exclusive right
§  Modern antitrust law recognizes that mere ownership of a patent doesn’t necessarily confer monopoly power of the type necessary to establish a violation of the Sherman Actàthe relevant market for antitrust purposes may be much broader than the market for the claimed invention
Ø Bonito Boats, Inc. v.Thunder Craft Boats, Inc., 489 U.S. 141 (1847)
§  Instant Facts: Bonito's (π) fiberglass recreational hull was molded and reproduced by Thunder Craft (∆), whereupon Bonito (π) sued in state court under a FL statute prohibiting direct molding of unpatented designs.
§  Black Letter: States may not offer patent-like protections to intellectual creations that would otherwise remain unprotected as a matter of federal law.
Ø Copyright & Patent Clause, Art. I, § 8, cl. 8
§  Gives Congress the power to promote the Progress of Science and useful Arts, by securing for limited Times the exclusive right to their respective writings and Discoveries
§  Patent: to promote the useful arts, give exclusive right to discoveries. Copyright: to promote science, exclusive right to writings
§  Incentive program to spur new inventions and disclosure of the new invention, as opposed to keeping it a secret. Does not give any natural rights to creator, just serves as a carrot on a stick.
§  “Limited Times” now is 20 yrs., but Congress has the power to extend or shorten.
ØOrigins of the Patent System
§  The Statute of Monopolies (1624)
·         Made to breakup monopolies in trade. Made an exception for “letters of patent”, which gave exclusive license for 14 years.
Ø The U.S. Patent System
§  The Constitution and Early Patent Laws
·         Colonial governments granted privileges and rewards for invention
·         Constitutional Convention recognized the need to make state patent laws uniform to prevent interstate conflicts. Charles Pinckney the principal source for national power to grant patents.
·         In Re Bergy, 596 F. 2d 952 (C.C.P.A. 1979)
¨   The purpose of granting patent rights to inventors for their discoveries is to promote progress in the useful arts or technological arts, rather than science or knowledge in general. Copyright and Patent Clause (Art. I, § 8, cl. 8) a dual grant of power separately for patents and copyrights.
¨   Promotion of “science” does not mean science in general, so cannot patent ideas. Inclination against direct national involvement in economic affairs is reason enough to limit clause to exclusive rights
§  The 1790 and 1793 Acts
·         Patent Act of 1790, 1 Stat. 109-112 (1790)
¨   Used a commission to determine if invention was sufficiently useful to deserve a patent. Commission board was made up of the Secretary of State (Jefferson), Secretary of War (Knox) and Attorney General (Randolph). Jefferson therefore is good source for intention of patent clause.
·         Patent Act of 1793, 2 Stat. 318 (1793)
¨   Amount of work too much for 3-member panel. Whether a registered patent was valid and enforceable was left to the courts, with the State Department maintaining a registry of patents (no reviewing function)
§  The 1836 and 1870 Acts
·         Patent Act of 1836, 5 Stat. 117 (1836)
¨   Created the Patent Office within the State Department. Created Filing and Formal Examination procedure for patent applications
·         Patent Act of 1870, 16 Stat. 198 (1870)
¨   Made patent applications have a distinctly drafted claim and define their interest specifically in the claim. Supreme Court decisions from the evaluation process established nonobviousness, enablement, experimental use and other doctrines.
Ø The Paris Convention for the Protection of Industrial Property, 13 U.S.T. 25
§  Formed in 1884 as the foundational patent harmonization treaty. Currently has 163 nations signed on and is administered by the World Intellectual Property Organization (WIPO)
§  Main Principles
·         (1) National Treatment: Member nations treat foreign inventors no worse than domestic inventors in their patent laws (if foreign inventor is from a member nation)
·         (2) Patent Independence: Patents must be enforced individually, so identical applications might not have in the same treatment in different countries
·         (3) International Priority: If inventor files patent application in a member nation within 12 months, the foreign country will treat the application as if it were filed on the first filing date Patents in the 20th Century: U.S. Developments
Ø Patent Act of 1952
§  Replaced subjective invention tests with an objective test for nonobviousness (35 U.S.C. § 101), requiring objective comparison of invention with prior art at the time of the invention from the vantage point of one of ordinary skill in the art. (Invention tests came back in Black Rock in 1966.

tentable only if the process itself (not merely the mathematical algorithm) is new and useful. SCOTUS required that the claim demonstrate novelty independent of the law of nature. Decision reversed in Diamond v. Diehr
ØDiamond v. Diehr, 450 U.S. 175 (1981)
§  Instant Facts: In Diehr's (π) suit against the patent examiner, Diamond (∆), for rejection of Diehr's (π) patent on a process for curing synthetic rubber, Diamond (∆) contended that the steps in Diehr's (π) claims that were carried out by a computer under control of a stored program constituted non-statutory subject matter under § 101.
§  Black Letter: Patentable claims do not become invalid because they include mathematical formulas.
§  Details
·         Facts: Diehr (π) developed a process for curing synthetic rubber which included in several of its steps the use of a mathematical formula and a programmed digital computer. USPTO rejected the claims, since steps were carried out by a computer, unstatutory subject matter. CCPA reversed, saying that Diehr's (π) claims used a mathematical formula in a process which, when considered as a whole, performed a function which the patent laws were designed to protect. Diamond (∆) appealed.
·         Issue: Do patentable claims become invalid because they include mathematical formulas?
·         Rationale: NO. Patentable claims do not become invalid because they include mathematical formulas. In deciding the eligibility of Diehr's (π) claimed process for patent protection under § 101, the claims must be considered as a whole. Diehr's claims are nothing more than a process for molding rubber products and not an attempt to patent a mathematical formula, when considered as a whole. Diehr's (π) claims, which contain a mathematical formula, implement that formula in a process which is performing a function which the patent laws were designed to protect – that is, transforming an article to a different state or thing.
§  Analysis:
·         Must consider claims as a whole. Especially true for process claims because a new combination of steps may be patentable even though all constituents of the process may have been known
·         Use of a mathematical formula or scientific truth in a structure or process which, when considered as a whole, performs a new and useful (patentable) function satisfies § 101, but a disembodied mathematical concept is not patentable. Make a proper computer-related invention claim by making a physical (not just number-to-number) transformation.
·         Even though the elements of what you claim aren't patentable individually, the combination of the elements can be
·         Distinguished Benson because there, that algorithm could only be used in a computer. Distinguished Flook in that it was only a formula for computing an alarm limit, which is ultimately just a number
·         Federal Circuit Reaction: still used the FWA test imposed by Benson, since Benson wasn't actually overruled.
Ø Freeman-Walter-Abebe (FWA) Test: (used as test before Benson was overruled. NOT USED NOW)
1. Is the formula recited in the claim directly or indirectly?
§  DIRECTLY→ 2. is the claim no more than the formula itself?
·         YES→ Not patent eligible
·         NO→ 3. Is it applied in any manner to the physical elements or a process or the steps in a process?
¨   YES→ The clam is patent eligible;
¨   NO → Not patent eligible
ØArrhythmia Research Technology, Inc. v. Corazonix Corp., 958 F.2d 1053 (Fed. Cir. 1992)
§  Instant Facts:The inventor (π) of machine & process to analyze heart functions appealed a finding that his
§  patent was invalid.
§  Black Letter: If a mathematical algorithm recited in a patent claim only applies to the physical elements of an apparatus or steps in a process, then the claim is patentable subject matter.
§  Details