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[dayzman]

Hi all,

Going back to a rather old case of eBay vs. MercExchange, particularly re. the "Buy It Now" function, does anyone know how the court found "Buy It Now" patent eligible? How does it pass the machine-or-transformation test? I know it's not the only test, but did the court use that test in this case? If not, does anyone know which tests were used?

Thanks

[JimIvey]

First, it's worth noting that the eBay case predated Bilski by several years.  So, it didn't follow Bilski.

Second, I'd suggest Googling the opinion and seeing what rationale was used.

Regards.

[dayzman]

First, it's worth noting that the eBay case predated Bilski by several years.  So, it didn't follow Bilski.

Sure, but hasn't the machine-or-transformation test been around for quite a while already?

Second, I'd suggest Googling the opinion and seeing what rationale was used.

I've tried all day and I'm surprised how not many opinions can be found online...

[JimIvey]

Here it is on Wikipedia.

It includes a link to the opinion itself, in PDF.

I took a quick look.  The SCt focused pretty much exclusively on the propriety of injunctive relief.  No 101 issues at all.

So, I looked up the CAFC opinion.  The district court below focused exclusively on obviousness.  Again, no 101 issues.

And, while the T|M (transformation or machine) test predated Bilski, only Bilski eliminated all other tests under Section 101.  And the SCt reversed the federal circuit on that issue.  So other tests can be used to establish compliance with Section 101.

Regards.

[khazzah]

how the court found "Buy It Now" patent eligible? How does it pass the machine-or-transformation test?

hasn't the machine-or-transformation test been around for quite a while already?

The short answer is, as JimIvey noted, that there was no Machine-or-Transformation test when the MercExchange patent was being examined.

This patent is too old for the file history to be on PAIR, so we can't see what happened in prosecution, and thus can't know whether the Examiner ever rejected under 101. The patent issued, which tells us if there was a 101 rejection, the Applicant overcame the objection.

The patent itself issued in 1998, well before the Federal Circuit created the MoT test in 2008. In fact, the patent issued only 6 months after the Federal Circuit issued State Street -- that's too early for the PTO to start applying State Street's "useful, concrete and tangible result" test. So I suppose the Examiner responsible for the MercExchange patent should have applied In re Alappat for 101 analysis.

Second, I'd suggest Googling the opinion and seeing what rationale was used.

I've tried all day and I'm surprised how not many opinions can be found online...

Google Scholar. I sorted through the many iterations of MercExchange v.Ebay. The accused infringer never brought up invalidity under 101.

At the district court, the parties filed summary judgment motions before trial. http://scholar.google.com/scholar_case?case=17195524823767157206&q=eBay+Inc.+v.+MercExchange+district+court&hl=en&as_sdt=80002
The accused infringer argued invalidity for anticipation and lack of written description-- but not 101. The court did not grant the invalidity motions, so the case went to the jury.

The jury found the patent valid and infringed. The accused infringer filed after-trial motions related to invalidity for obviousness -- nothing for 101. http://scholar.google.com/scholar_case?case=8831547716250722108&q=eBay+Inc.+v.+MercExchange+district+court&hl=en&as_sdt=80002. Patentee asked for a permanent injunction, which was the issue that ended up at the Supreme Court.

So, the invalidity of the MercExchange was being litigated back in 2002-3, when State Street's "useful, concrete and tangible result" was the law for 101. Relative to today's Bilski regime, the State Street era was considerably more friendly to computer-implemented business methods.

Today, I expect almost every lawsuit filed since In Re Bilski which has anything to do with computers includes an invalidity challege under 101.

[phillipsjc]

I'll bet if you actually looked at the claims of the patent in question (USP 5,845,265), you might be able to answer your own question, and indeed understand why a 101 defense was not asserted.  (HINT:  The '265 patent claims did NOT recite "A method of doing business comprising "buy it now.").

[khazzah]

I'll bet if you actually looked at the claims of the patent in question (USP 5,845,265), you might be able to answer your own question, and indeed understand why a 101 defense was not asserted.  (HINT:  The '265 patent claims did NOT recite "A method of doing business comprising "buy it now.").

philipsjc has a good point: not only are there no pure-business-method claims in the patent, there aren't even any method claims.

That said, don't assume that system claims are bullet-proof under today's law (Bilski v. Kappos). There are number of district court cases on appeal to the Federal Circuit which involve 101 as applied to system claims.

[JimIvey]

That said, don't assume that system claims are bullet-proof under today's law (Bilski v. Kappos). There are number of district court cases on appeal to the Federal Circuit which involve 101 as applied to system claims.

I'd be really surprised if the Federal Circuit applied a body of law that, to date, has only applied to "processes" to other things such as "articles of manufacture", "machines", etc.  How can a physical machine be an "abstract idea"?

And, if they do, I'd expect another quick smack-down from the Supremes.

I'm glad this issue is coming up.  It will stop the silliness of the BPAI on this issue.

Regards.

[khazzah]

I'd be really surprised if the Federal Circuit applied a body of law that, to date, has only applied to "processes" to other things such as "articles of manufacture", "machines", etc.  How can a physical machine be an "abstract idea"?

I agree with you -- a physical machine is *by definition* not an abstract idea. But I'm afraid the Supremes understand abstract differently than you and I do. According to Bilski v. Kappos, an "abstract idea" is one that “would wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself.” The Supremes seem to conflate abstract with broad.

And, if they do, I'd expect another quick smack-down from the Supremes.

Are you sure about that? Bilski v. Kappos makes clear that the "abstract" exception to patent-eligible subject matter remains.

I'm afraid that judges who don't understand technology will find that a claim to a computer programmed to do binary-coded-decimal conversion would be abstract because it “would wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself.” That's from Benson v. Gottschalk. And though Benson was about a method claim, the analysis applies to non-method claims.

The reasoning I see in Bilski v. Kappos worries me. Why has no one explained to these judges why a computer is not, by definition, an abstract idea?

I'm glad this issue is coming up.  It will stop the silliness of the BPAI on this issue.

Me too. IMHO, Ex parte Gutta -- the precedential BPAI decision holding that procesor+memory and computer-readable medium claims are both subject to "abstract" analysis -- is a real problem for us.

[dayzman]

The patent itself issued in 1998, well before the Federal Circuit created the MoT test in 2008.

Didn't the MoT test exist before Bilski?

The test has been articulated recently in In re Bilski,[2] but dates back to the nineteenth century.[3] The test is articulated also in the patent-eligibility trilogy—Gottschalk v. Benson,[4] Parker v. Flook,[5] and Diamond v. Diehr.[6]

http://en.wikipedia.org/wiki/Machine-or-transformation_test

[dablueman]

I'd be really surprised if the Federal Circuit applied a body of law that, to date, has only applied to "processes" to other things such as "articles of manufacture", "machines", etc.  How can a physical machine be an "abstract idea"?

Sorry Jim, I'm going to have to respectfully disagree given the current state of 101 in a post-Biski world. The Supremes and the new guidance told examiners that there is no sole test that is dispositive one way or the other and to look back at their other fine decisions regarding 101. Well that leads to Gottschalk v. Benson where they're using a "particular" machine with shift registers to convert decimal to binary. If converting decimal to binary on a particular machine is too abstract, then how is a "machine" with a processor and memory that performs an algorithm any less abstract (software being an algorithm). Unless you're using a computer and software to perform some physical transformation like in Diehr, I think all software claims have been thrown into limbo whether they're the process, system, or medium claims. From what I've seen the Board is applying "abstractness" to method, machine, and medium alike. After all, an abstract idea recorded on a CD-ROM is still an abstract idea. It looks to me that the Board and the Supreme Court are leaning more toward classifying software as literary works of authorship of abstract ideas.

The reasoning I see in Bilski v. Kappos worries me.

You see some to begin with? All I see is a long version of Justice Stewart's "I know it when I see it".

I personally have no opinion on the subject other than there needs to be clarification, and fast!

[JimIvey]

Didn't the MoT test exist before Bilski?

It did.  Bilski (Fed Cir) eliminated all other tests.  Bilski (SCt) reversed that, sort of.

Regards.

[khazzah]

Didn't the MoT test exist before Bilski?

It did.  

Perhaps we're arguing semantics, but I don't think there a thing called the "Machine or Transformation test" existed before In re Bilski.

Before In re Bilski, the test was "useful, concrete and tangible result" from the Fed Cir's State Street decision.

The controlling Supreme Court law at the time of State Street was Diamond v. Diehr, but that didn't establish a test so much as simply reiterate the three judicial exceptions to statutory subject matter (laws of nature, natural phenomena, and abstract ideas). 

In re Bilski was the Fed Cir's attempt to fashion a "test" to determine whether something was abstract. If tied to a particular machine, not abstract. If transforming an article of manufacturer, not abstract.

[JimIvey]

Well that leads to Gottschalk v. Benson where they're using a "particular" machine with shift registers to convert decimal to binary.

True enough.  Bilski (SCt) reaffirmed Benson as laying down the law.  I've got it in front of me.

If converting decimal to binary on a particular machine is too abstract, then how is a "machine" with a processor and memory that performs an algorithm any less abstract (software being an algorithm).

Well, let's see what the SCt said about that in Benson:

It is said that the decision precludes a patent for any program servicing a computer. We do not so hold.

The mathematical formula involved here has no substantial practical application except in connection with a digital computer, ... the patent would wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself.

So, the holding of the SCt in Benson is based on a finding that, since the algorithm "has no substantial practical application except in connection with a digital computer", the claim recites the the algorithm itself.  Whether the algorithm has a substantial application outside of a digital computer seems to be a fact adopted by the SCt.

I, too, have problems as at least one claim recites specific types of registers.  The only way that makes sense to me is that someone in the history of that case (perhaps the district court) decided that those were logical things, not physical things.

But the issue of pre-emption was huge -- much like the Walter-Freeman-Abele cases that clung to that issue.

A re-reading of the discussion in Benson of the Telephone Cases is helpful in understanding the notion of pre-emption and the "particular machine" requirement.  In particular:

But the Court denied the eighth claim in which Morse claimed the use of "electro magnetism, however developed for marking or printing intelligible characters, signs, or letters, at any distances."

Unless you're using a computer and software to perform some physical transformation like in Diehr, I think all software claims have been thrown into limbo whether they're the process, system, or medium claims.

I'll respectfully disagree with this.  I see nothing in the case law that suggests that any of the analysis of method claims applies in any way to articles or machines. 

From what I've seen the Board is applying "abstractness" to method, machine, and medium alike. After all, an abstract idea recorded on a CD-ROM is still an abstract idea. It looks to me that the Board and the Supreme Court are leaning more toward classifying software as literary works of authorship of abstract ideas.

Yes, they are.  And, they're doing so outside of the law.  I've heard this issue is headed for the Federal Circuit.  I'm curious to see how it goes. 

I personally have no opinion on the subject other than there needs to be clarification, and fast!

I'll just say that I had a hard time understanding how the law can say that computer science isn't "technical" -- which is more or less what the law breaks down to.  I find myself doing mental gymnastics in my practice area that are just not required in any other art.  For every other art, you just look at your solution to your particular problem and you describe it and claim it.  I have to go beyond that. 

I have to look to some benefit outside the computer -- my technology might just sort data particularly efficiently and, while a perfectly legitimate technological innovation, can be disqualified if I can't tie my technology to something external.  Imagine if someone inventing a new fuel-injection nozzle had to show some effect beyond dispersing fuel effectively.  Because, as we all know, a new fuel-injection nozzle has no significant practical application outside of a fuel-injected, internal combustion engine.  Thus, it's just an abstract idea.

Thinking to the absence of a Nobel prize for mathematics, it makes me wonder if Turing or some other early computer scientist was romancing someone he shouldn't have.  I see no other rational reason for the taboo placed on computer science technologies.

Regards.

[JimIvey]

Perhaps we're arguing semantics, but I don't think there a thing called the "Machine or Transformation test" existed before In re Bilski.

I'll respectfully disagree here.  Since I have Benson in front of me still, let me point out some things.

Transformation and reduction of an article "to a different state or thing" is the clue to the patentability of a process claim that does not include particular machines.

Before In re Bilski, the test was "useful, concrete and tangible result" from the Fed Cir's State Street decision.

That's a portion of the Walter-Freeman-Abele test I keep mentioning.  My understanding is that both tests peacefully coexisted until Bilski (Fed Cir).

The tests overlap considerably in my opinion.  The clearest way to show a "useful, concrete and tangible result" is to show a transformation of matter.  Of course, whether having the result of more efficient processing of a computer appears to be an open question.

Again, I'm at a loss for understanding why computers are singled out.  If I have a fuel-injection nozzle design (claimed as a method for injecting fuel into a combustion chamber for whatever reason), the fact that the car accelerates faster with better fuel efficiency is completely adequate to get past Section 101.  However, if I have a method in a computer that allows me to sort data 10 times faster than earlier methods, I have extra hoops to jump through.  Why?

And, note that I limited this hypothetical to methods.  As dablueman suggests, the same dilemma applies to computers that sort so efficiently as related to physical fuel-injection nozzles.

Am I the only person that sees this distinction as pure lunacy?  I don't mean that reading the law as it now stands should not lead to this result (which is at least dubious in my opinion) but that there's no underlying policy reason for having this extra scrutiny for just one type of technology.  What social good is satisfied by casting computer technology aside as the neglected step-child of the patent system?  What is so special about computer technology that justifies its own special rules?

Regards.