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The U.S. Court of Appeals for the Federal Circuit (the Court that hears patent appeals) recently addressed this issue (in the context of arbitration) and determined that you can't patent a method that can be performed mentally (e.g., all in a person's head). So, to answer you question, you can't patent a business method if it isn't limited to use of a particular machine (like a processor that executes an arbitration algorithm).

"First sale doctrine already does apply to patents."

True, but the article summary and your response both gloss over the interesting issue in favor of something that's irrelevant. Patent exhaustion exists. Caselaw preventing double dipping for infringement damages already exists. This situation is different.

The decision in the Federal Circuit holds that a patent is exhausted by an unconditional sale, p. 7, in line with Supreme Court precedent, but also holds that a patent rights are not exhausted by a conditional sale, pp. 7-8, in line with about 20 years of Federal Circuit precedent.

The interesting problem here is that the LGE patents do not cover the products sold by Intel. They only cover those products when combined with additional components. It appears that in the absence of a license, LGE could only have sued Intel for "contributory infringement" because Intel would be making products specially adapted to implement LGE's invention when combined with other components, see 35 U.S.C. 271(f), but not the patented combination itself. In essence, LGE and Intel negotiated a license that makes Intel a component source/supplier. Now those who purchased the specialized components and combined them in a manner that would infringe the patents are arguing that a license to manufacture a non-infringing but specialized component without fear of a patent lawsuit also conveys to the supplier's customers the right to practice the entire invention. That's not a clear cut question.

One of the axioms of property law is that you can only sell that which you yourself possess. If Intel has a license that merely permits it to manufacture and sell a specialized component, then arguably the purchasors have the right to resell the specialized component (that fraction of the patent right is exhausted), but do not have the right to manufacture or sell the patented invention because not even Intel has the right to manufacture and sell the patented invention. If Intel has a license to manufacture and sell the patented invention using its own components, with LGE getting a percentage of the revenues for the Intel components, then arguably neither Intel nor its purchasors have the right to manufacture or sell the patented invention when manufactured using non-Intel components -- LGE would be deprived it its rightful revenues, and Intel would infringe the patent for those combinations made with non-Intel parts.

The decision is unclear on the license structure, and I don't have time to dredge up the District Court decision, but there are potentially valid reasons for dividing up patent rights and royalty rates in this manner that cannot be reasonably described as double-dipping. For example, the Intel chips may still have value when combined with non-Intel chips in ways that do not produce the patented invention, but it may not make economic sense to manufacture two types of chips, one with the specialized aspect and one without. A licence with a modest royalty that is less than the entire royalty, whatever that is, benefits Intel by simplifying its product line and securing it from the potential of being sued as a result of the actions of its customers.

For a good review of the Verizon patents see the decision from the Federal Circuit that was handed down today-

http://www.fedcir.gov/opinions/07-1240.pdf/

Since when are business models subject to patent rights?

Up until 1998, business methods were thought to be so called unstatutory subject matter, meaning that the laws governing patents did not allow for business methods to be patented. However, in State Street Bank & Trust Company v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), the court found:

Since the 1952 Patent Act, business methods have been, and should have been, subject to the same legal requirements for patentability as applied to any other process or method.

Since then business method patents have become very common in the US and around the world.

It's not. Lizardtech finally ran out of routes for appeal earlier this year.

Don't be a patent judge. That's a lot of what they do, interpret ('construe') patent claims by looking at what their words mean. For example, read Part II(B) of Phillips v. AWH, 415 F.3d 1303 (Fed. Cir. 2005).

Actually this is not correct either , the patent matter was dismissed as to Lucent, He had not sued the government for infringment at all. http://www.fedcir.gov/opinions/04-1349.pdf He could have and may still be able to. You just sue the government in a differnt forum then companies. It is by way of an action in the Court of Claims as opposed to a District court. This is called a 28 U.S.C. section 1498 action. The court held that Lucent had adefense in infringing the patent as a government contractor and that any recovery would be from the government via a 1498 action, not that the patent holder could not collect, just that as to a patent infringement action he had come to the wrong court house.

The article for some reason links to an unrelated decision in the wrong court. It's an interesting decision that appears to be related to the PATRIOT act, but it has nothing to do with Crater v. Lucent. The correct link is here.

The conclusions of the Wired article may be a bit far reaching, at least based on a quick reading of the decision. Crater's patent infringement claim wasn't dismissed because of the secrecy of the documents requested. Their claim was dismissed because when the United States hires a contractor to make something and the contractor infringes in the processing of fulfilling the contract, the inventor has to sue the United States, not the contractor. See 14 USC Sec. 1498(a).

Crater continued to sue Lucent on a misappropriation of trade secrets claim and a breach of contract claim, which fall under State law, not Federal law. The lower court originally dismissed the claims because the evidence to support the claims was being protected as secret information. The Federal Circuit reversed this decision, holding that the lower court has to first determine what the trade secret or breach of contract claims are precisely (evidently, at the time of the lower court's ruling, evidence had not even been introduced that there ever was a contract). Only then should the lower court analyze the requested documents to determine how they affect the claims.

Of course, if the party being sued manages to keep all the evidence secret, it could be difficult to establish a case. Of course, if they had orginally agreed to settle disputes through arbitration, they wouldn't be able to go through discovery in the first place and Crater would have had to establish a case using only information found through their own investigative efforts. At least in this case, they can force the United States to search for and redact relevant documents through FOIA requests.

The Court of Appeals for the FC decision is here (as a PDF). It lists the patents, and everything else you can think of.

http://www.fedcir.gov/opinions/03-1615.pdf/

kisrael wrote:

The 1994 patent describes a 'multifunction, credit card-sized computer that allows users to securely store a multitude of account numbers, PIN codes, access information and other data from multiple credit cards, check cards, identification cards and similar personal documents.'

It looks like the text in (single) quotes is directly from the patent. That is not the case at all.

dtolton wrote:

I find it suprising that a judge would say "credit card sized" doesn't really mean "credit card sized", he actually agreed with E-Pass that it's simply a generic term for a small computer!!

The phrase "credit card sized" does not appear even once in the patent. The "Advantages of the Invention" section does say "[p]articular advantages are provided by the simple form of the electronic multi-function card which has the outer dimensions of usual credit or check cards." The appeals court decision noted that "[i]nterpretation of descriptive statements in a patent's written description is a difficult task, as an inherent tension exists as to whether a statement is a clear lexicographic definition or a description of a preferred embodiment." So it is clear that the basis of the appeals court's ruling is not "credit card sized" doesn't really mean "credit card sized".

Also of interest, the appeals court refers to definitions of the word "card" from two different dictionaries.

I have read both the patent and the decision, and frankly I find them both unreasonable.

It is sad that this decision is only available in a proprietary format like Microsoft Word when there are so many better options.

Unfortunately, the court only posts its decisions in MS Word format, but if you want to read it, here's the link: E-Pass Technologies v. 3Com, Inc.

Don't read too much into this decision. The court hasn't found that there was infringement, only that the lower court nees to take a closer look at the issue. (In legal terms, the court of appeals overturned a grant of summary judgment by the lower court, meaning that the lower court has to hear additional evidence and/or reconsider its application of law before it can render a final judgment.) This is an interim opinion, but the case is not over yet.

I hardly ever read of a patent's validity being challenged in court

HP's patent claims ruled invalid just last week. (HP v. Mustek Systems)

The US patent system as it stands today is a system by which innovations are registered by the government with little or no background check.

Should I believe this because you tell me it is so?

I agree with ajakk on all but two points. First, I think district court judges get it wrong because attorneys generally present patent cases badly. Second, I think that these days most of the judges on the Federal Circuit are not former patent attorneys or examiners. The Federal Circuit was formed by combining a couple of other appeals courts, the ones that reviewed the Patent Office and the Court of Claims, and giving it appeals over federal employment and veterans cases also. While patent cases are about 1/3 of their cases, patent cases probably consume 2/3 of the time of the judges.

Patent attorneys (4 full, 0 senior): Newman (last transferred member from the Circuit Court of Patent Appeals), Lourie, Gajarsa, Linn.

Other (8 full, 5 senior): Full: Mayer, Michel, Clevenger, Rader, Schall, Bryson, Dyk, Prost. Senior: Cowen, Skelton, Friedman, Archer, Plager.

Senior judges are older judges who are working with reduced caseloads.

This is based on the bios at the Federal Circuit website.

U.S. Court of Appeals for the Federal Circuit, Rambus v. Infineon Technologies [corrected]. If the site asks for a password, hit "Cancel" and the document (a 60-page MS Word file) should appear.

It's sort of pointless to bring a strictly patent case in anything but federal district court, since the Court of Appeals for the Federal Circuit is the exclusive appellate court for patent (and some other) matters under 28 U.S.C. 1295.

FYI, the Court of Appeals for the Federal Circuit that rendered the Bowers decision is the national court of second-to-last resort in intellectual property cases. The Supreme Court is the only higher appellate authority, and it is extremely unlikely that the Supreme Court would grant a hearing on this case.

In case for some strange reason you actually want the facts of the case:

Lawyers for Bowers

Baystate/CADKEY

Federal Circuit Court Decision

No your patent would not hold up.

I would have to assume that your patent involves the "identification" of vowels since vowels themselves would constitute prior art.

The identification of vowels would not be patentable just as the identification of certain types of vegetables would not be patentable

The court of appeals for the FEDERAL CIRCUIT, has exclusive jurisdiction over appeal from patent infringement cases. I don't think the reporter got his court right in the story.

The Fourth Circuit does not show a disposition of a Rambus case. However, the Federal Circuit does show last weeks dispositions including a denial of mandamus "In Re Rambus Inc." (Sorry, no opinion on the site.)

As if anyone cares about the difference but me, but I needed to vent about the reporter apparently not even checking which court issued the ruling.

The court of appeals for the FEDERAL CIRCUIT, has exclusive jurisdiction over appeal from patent infringement cases. I don't think the reporter got his court right in the story.

The Fourth Circuit does not show a disposition of a Rambus case. However, the Federal Circuit does show last weeks dispositions including a denial of mandamus "In Re Rambus Inc." (Sorry, no opinion on the site.)

As if anyone cares about the difference but me, but I needed to vent about the reporter apparently not even checking which court issued the ruling.

You can get the opinion at either Findlaw(HTML) or at the Federal Circuit(MS-WORD) web pages.