Eric Waltmire, Author at Eric Waltmire's Blog

June 4, 2016July 9, 2016

Patent Drawings: System Diagrams

9307033_Fig1

When drafting an patent application that has components communicating or connected to each other or to a network, one or more figures showing system level interactions between the components should usually be included. Such figures are common in patents directed to software, methods, computers, or other electronics. As the Manual of Patent Examining Procedure provides, “In a typical computer [patent] application, system components are often represented in a ‘block diagram’ format, i.e., a group of hollow rectangles representing the elements of the system, functionally labeled, and interconnected by lines.” MPEP 2164.06(c).

One requirement in writing a patent application is to enable one skilled in the art area of the particular invention to be able to make and use the invention without undue experimentation from reading the patent application (which later may be come a patent). Drawings are a component of a patent application that convey to the reader, together with the written description, how to make and use the invention.

There are many different ways of representing system information in drawings. Why one patent shows a system drawing in one manner and anther patent shows a system drawing in a different manner is, many times, simply the result of the drafter’s choice.Â Often there is a choice of whether a particular detail is shown in drawings or is described in the text description only of the patent application. There is no bright line rule for making this determination. It may depend on the invention, the known prior art, the drafter’s preference, and/or other factors. When in doubt as to whether a detail needs to be shown in the drawings, show it in the drawings.

Below are a few examples of system drawings from US patents and published patent applications. After reviewing many different system diagrams you will get a feel for theÂ variety in patent drawings.

Figure 1 of U.S. Patent Application Publication No. 2016/0062845 (the ‘845 publication) provides an example of a system diagram showing a number of different types of client devices 102, 108, 110 that can connect to the network 114.

20160062845_fig1 — U.S. Patent Application Publication No. 2016/0062845

Figure 1 of US Patent No. 9,271,260 shows a basic system diagram. User devices 106A, 106B, and 106N are shown in two-way communication with a base station 102. The base station is shown in communication with a network 100. Note that the user devices a represented as as rectangle and not in 3D as is the case in Figure 1 of the ‘845 publication above.

USPatent9271431_Fig1 — US Patent No. 9,271,260

Figure 1 of U.S. Patent No. 9,277,582 provides another example of a relatively simple system diagram where the user device 106 is within range of each base station 102A and 102B.

US9277582_Fig1 — U.S. Patent No. 9,277,582

Figure 1 of U.S. Patent Application Publication No. 2016/0066134 provides another example of a system diagram where the venue 110 is shown as a three dimensional representation of a building. Three dimensional representation is usually not required, unless there is something important about the invention that needs to be demonstrated in in 3D.

20160066134_Fig1 — U.S. Patent Application Publication No. 2016/0066134

Figure 1 of U.S. Patent No. 9,227,535 provides a more detailed system diagram. It is possible that some complexity could have been removed from this figure and put into additional figures. For example, the details within items 30 and 40 could have been omitted from figure 1, but provided in other drawings in the application. Whether detail is provided in one drawing or is conveyed through multiple drawings is often a matter of the drafter’s choice.

9277535_fig1 — U.S. Patent No. 9,227,535

Figure 1 of U.S. Patent No. 9,306,668 discloses a system of networked balloons. But the details of the balloons are not shown in figure 1. Instead they are shown in figure 3.

9306668_Fig1 — Figure 1 of U.S. Patent No. 9,306,668

The balloon in figure 3 is labeled 300, which is different from the the labels of 102A, 102B, etc. in Figure 1. But the text description of the application provides that balloon 102A of figure 1 could be the balloon 300 shown and described in figure 3.

USPat9306668_Fig3 — U.S. Patent No. 9,306,668

Figure 1 of U.S Patent No. 9,307,269 provides another example where components have shown internal additional details, such as the clients 123 and the Video Hosting Service 100.

Figure 1 of U.S. Patent No. 9,277,363 shows the use of ellipses in drawings. The ellipse between server 120A and server 120N indicates that other servers can connected to network 140A.

9277363_Fig1 — U.S. Patent No. 9,277,363

Figure 1 of U.S. Patent No. 9,307,466 discloses another example of a system diagram. Sometimes wireless communication is shown by a lighting bolt like symbol. However, a line with arrowhead could also be used in combination with a written description describing the communication between the two components being conducted wirelessly.

9307466_fig1 — U.S. Patent No. 9,307,466

Figure 1 of US Patent No. 9,307,045 discloses another example of a system diagram. A cloud it often used to indicated a computer network, such as network 125.

US9307045_Fig1 — US Patent No. 9,307,045

Figure 1 of US Patent No. 9,306,893 discloses a system diagram where the communication channels 111-a, 111-b, 111-c, etc are labeled with text. This is not required. Instead, nature of the communication at 111-a, 111-b, 111-c, etc could have been described in the text description.

These are just a few examples of system drawings.

The first drawing at the top of the post is from U.S. Patent No. 9,307,033.

February 19, 2016January 24, 2023

Patent Drawings: An Introduction

LegoFig4_US_Pat_3005282 One approach to drafting a patent application is to start with the drawings. I think this approach is the probably the best for those embarking on DIY patent drafting.

Once you have the drawings created, writing written description of the patent application, is partially a function of describing what is shown in the drawings and expanding beyond what shown in the drawings. In other words, the drawings can provide the initial road map for drafting the written description. The drawings can be road map because once the parts of the invention shown in the drawings are labeled, you can proceed by describing the parts of the invention and the way that operate or interact with other parts with reference to the parts shown in the drawings.

So, under one approach, to understand how to write a patent application, you must first understand how to create patent drawings. This post provides an introduction to patent drawings.

Table of Contents

When are Drawings Necessary?
When are Drawings Not Necessary?
What Needs to be Shown in the Drawings?
How Many Drawings Do You Need?
Drawings for Different Types of Patent Applications
Black and White Line Drawings
Types of Drawings Views
Demonstrating Movable Parts and Modes of Operation

1. When Are Drawings Necessary
Drawings are almost always necessary in a patent application. The relevant statute provides, “The applicant shall furnish a drawing where necessary for the understanding of the subject matter to be patented.” 35 U.S.C. 113. It further states, “When the nature of such subject matter admits of illustration by a drawing and the applicant has not furnished such a drawing, the Commissioner may require its submission…” Id.

This immediately preceding sentence may seem to indicate that you can add drawings after the application is filed if the patent office requires it. However, this is bad strategy. Since you can not add new subject matter to an application after an application is filed, if your written description does not disclose each and every feature of your new drawings, then your drawings submitted after filing may be rejected.

The old saying provides that a picture is worth a thousand words. In patent applications, a drawing is probably worth more than a thousand words. Therefore, a lot of written text description is necessary to describe each and every feature and detail of a drawing. And, you can see that adding drawings after an application is filed carries a high risk of adding new subject matter to the application and therefore begin refused.

Section 113 provides, “Drawings submitted after the filing date of the application may not be used to overcome any insufficiency of the specification due to lack of an enabling disclosure or otherwise inadequate disclosure therein….” In other words, later filed drawings cannot add subject matter to the application.

The bottom line is that you want to submit good drawings with the patent application at the time it is filed.

2. When Are Drawings Not Necessary
Almost never. There are some exceptions, but those exceptions are beyond the scope of this article.

3. What Needs to Be Shown in the Drawings
The first rule is show everything. The next rule is if your not sure whether a feature needs to be shown in the drawings, then show it in the drawings. There is little downside to showing extra details of your invention in the drawings. The more detail the better.

The rules provide that the drawings of an application must show every feature of the claimed invention. 37 C.F.R 1.83(a).

There are times when you can leave details out. But its risky and you should probably ignore all of this information about leaving things out and put everything in. The rule provides, “conventional features disclosed in the description and claims, where their detailed illustration is not essential for a proper understanding of the invention, should be illustrated in the drawing in the form of a graphical drawing symbol or a labeled representation (e.g., a labeled rectangular box).” 37 C.F.R 1.83(a).

For example, look at figure 1 of U.S. Patent No. 5,959,420, (the ‘420 patent) owned by Chrysler.

US_Patent_5959420_fig1

Figure 1 does not show the internal mechanical components of the transmission, engine, clutch, or differential. Those parts are merely abstracted to rectangles. Why? Because the invention is directed to a method of controlling a power train system for a hybrid electric vehicle. Therefore, the focus is on the electronic control and not on the mechanical internal components of the transmission, engine, clutch, or differential.

If the ‘420 patent was directed to a new gearing arrangement for a transmission, the transmission could not be shown as a rectangle. Instead the mechanical details of the transmission would need to be shown, probably in multiple drawings. For example, the second view of figure 3 of U.S. Patent No. 6,855,084 shows the internal mechanical components of a portion of a transmission.

USPat_6855084_Fig3

Regardless, you must show how the rest of your invention works and interacts with the conventional part. If you leave details of a component out that you should have included, you can irreversibly damage your patent application. Therefore leaving details out of a patent application is risky. So, show all the details of your invention.

4. How Many Drawings Do You Need?

You will need as many drawings as necessary to show the invention, its various parts, and if applicable, all of its stages of operation. At the least, as discussed above, you need as many drawings as are necessary to show every feature of the claimed invention.Â 37 C.F.R 1.83(a).

Although, it is not a requirement of utility patent drawings, to be safe you could include a perspective view and a view from each side of the invention (top view, bottom, view, front view, back view, right side view, left side view). These view are discussed in more detail below. In some cases, providing all of those views will be more than is necessary, but not detrimental.

In addition, you should include internal views and/or cut away views to show the internal details of the invention in each mode of operating the invention.

5. Drawings for Different Types of Patent Applications

There are at least three broad types of patents. The most common type is a utility patent, which seeks to protect a process or the way the invention functions or operates. The next type of is a design patent, which seeks to protect the appearance of the invention. The last type is a plant patent, which is rare and will not be discussed here. In this article, I will discuss utility patent drawing. In a future post, I will discuss design patent drawings.

6. Black and White Line Drawings

Normally black and white line drawings are required. 37 CFR 1.84(a)(1). There are some exceptions to this rule that allow for submitting color drawings, grayscale drawings, or photographs. But, the USPTO has particular rules that you must comply with before you can submit color drawings or photographs. See 37 CFR 1.84(a)(2), (b). Here, I’ll focus on line black and white drawings. And you probably should too.

Below is an example from U.S. Patent App. Publication No. 2014/0109700. Figure 11 shows the a gray scale drawing and figure 12 shows a black and white line drawing of the same part with items 44 and 18 in a vertical position. Generally, you should avoid gray scale or color drawings and instead provide black and white line drawings for patent applications, such as shown in figure 12. US20140109700_Fig11_12

Figure 12 is a section view and ideally the section cut surfaces would be shown with a cross-hatching pattern as discussed below. Nonetheless, figures 11 and 12 demonstrate the difference between gray scale drawings (figure 11) and black and white line drawings (figure 12) generally.

7. Types of Drawing Views

There are a number of different types of views of the invention that can be shown in the drawings. I will discuss here perspective, orthogonal, section, cut away, and exploded views. I will also cover how to demonstrate movable parts in an invention. I will cover flow charts, block diagrams, and graphs in a future post.

A. Perspective Views

There’s no rule about what the first drawing should be. However, generally I like to start with a perspective view of the overall invention if it is available. Starting with a perspective view of the invention as figure 1 quickly provides the reader of your patent application with a quick general understanding of your invention.

A perspective view provides a three dimensional representation of the invention from an angle to showing depth. In contrast an orthogonal view, with provides a two-dimensional representation of a side of the invention.

LegoFig4_US_Pat_3005282

What does a perspective view look like? Look at Figure 4. It is from US Patent 3,005,282 (the ‘282 patent) on the Lego toy building block. Figure 4 shows a bottom front perspective view of two building blocks joined together. It also shows one mode of operation of the invention, i.e. one way of connecting two blocks.

Figure 4 provides vertical line shading. Line shading is nice, but not entirely necessary in utility patent drawings, unless showing the curvature or surface treatment of a surface or component is important to the invention. Even when it is important, it might be possible to describe those features in words in the written description rather than show them with line shading.

USD388328_fig1 While figure 4 shows the block from a bottom front perspective view, figure 1 from US Patent D688328 (the ‘328 patent) shows a different type of block from a more traditional front (top) perspective view. Also, note that figure 1 does not have any line shading.

Perspective views enable the viewer to more quickly understand the invention, because view more closely replicates what a person would see of the object in real life, as compared to orthogonal views discussed next.

B. Orthogonal Views

An orthogonal view show the invention where one side of the invention is parallel to the drawing surface. Common orthogonal views are a front view, back view, top view, bottom view, right side view, left side view. Below are orthogonal views from the ‘328 patent.

USD388328_figs2-7

As described in the ‘328 patent FIG. 2 is a top view, FIG. 3 is a bottom view, FIG. 4 is a front view; FIG. 5 is a rear view, FIG. 6 is a right side view, and, FIG. 7 is a left side view.

As you can see it is much easier to quickly understand the invention from a perspective view than it is from studying orthogonal views.

How do you determine what is the front view? Sometimes it is not inherently clear which side is the front side of an invention. In such case, you–the drafter–get to decide. All the remaining common orthogonal views follow from the decision of what is the front view, e.g. the rear side is opposite the front side, the top side is opposite the bottom side, and the right side is opposite left side.

In a utility patent application, it is not always necessary to include all of the common orthogonal views. For example, the the ‘283 patent on the Lego block provides only one orthogonal view in figure 2, which is a bottom view (not counting figures 8 through 12 which are of a different variation of the block as compared to that of figure 1). The remaining drawings of figure 1-8 are either a perspective view (figures 1, 4, and 6) or a section view (figure 3, and 5).

C. Section Views

Sometimes it is necessary to show the internal parts and components of a device. To do that, a section view is often used. The section view is taken along a plane that intersects the device/object. Figure 5 of the ‘282 patent provides a section view of the interlocked blocks from figure 4.

USPat_3005282_Fig4_5

Look back to figure 4 and notice that figure 4 has the number “5” located in two places next to arrows on opposite sides of the blocks. Those arrows intersect a broken line that runs along the length of the block and demonstrates the plane along which the section is cut. The arrows show the direction the section view. And the use of the numeral “5” generally indicates the figure in which the section view is provided, e.g. figure 5.

In figure 5, the surface that is “cut” by the section plane is provided with diagonal hatching lines to indicate the section surface. Sometimes the hatching lines are different widths, such as the thin and thick hatching lines of figure 5. And sometimes the hatching lines are all the same width. The section hatching should provide “regularly spaced oblique parallel lines spaced sufficiently apart to enable the lines to be distinguished without difficulty.”

In the case of figure 5, the section view allows you to see the interaction and connection of the projections 21 of one block with interior and the secondary interior projections 22 of the other block when the blocks are connected as shown in figure 4.

As another example, figure 7 of the ‘282 patent provides a section view along the line 7–7 from figure 6.

US3005282_Fig6_7

D. Cut Away Views

Another way to demonstrate the interior components of an object is to cut away portions parts in the drawing. In a cut away view, only portion(s) of the object are cut as distinguished from a section view where all of the object is cut along the section plane.

Figure 2 from U.S. Patent No. 2,929,922 shows a cut away view of a laser. The cylindrical walls of items 19, 22, and 27 are cut and the location of the cut has section hatching to indicate a cutaway. The cutaway allows a view of items 16, 16a, 17, an 18. USPatent2929922_Fig2

E. Exploded Views

AppleMouse_ExplodedView_USPat4464652

An exploded view allows you to show the relationship and order of parts in an assembly. Figure 11 of U.S. Patent No. 4,464,652 shows an exploded view of a computer mouse. This type of mouse has a ball for tracking the movement of the mouse. The ball 62 and the cap lock 86 are each shown with broken projection lines showing where each would be located in the finally assembled mouse. In addition the curved arrow adjacent the cap lock 86 shows the direction of rotation when the cap lock meets the ridges 84 of the main body 26.

If projection lines showing the path of the parts are not used, a bracket should be used to show all the parts the are a part of the exploded assembly. For example, Figure 1 of U.S. Patent 5,526,536 provides a bracket at 10 demonstrating that parts 42, 16, 12, 60, 62, and 14 are all a part of the exploded assembly. While some projections lines (e.g. between parts 18 and 20) are used in Figure 1, projection lines do not connect all of the parts, so a bracket is necessary.

USPat5526526_Fig1

8. Demonstrating Movable Parts and Modes of Operation

There are a number of ways of demonstrating the movement or multiple positions of a part(s) in an invention.

A. Arrow and Describe

The first way is to provide an arrow on the drawing and describe in the text how the object moves and interacts with the other parts of the invention. This was done in figure 11 of the Apple mouse patent shown above. A curved arrow is shown adjacent to the locking cap 86. The text description explains that “In operation, a user desiring to insert or remove ball 62 from the cursor control unit 20, may unlock and remove the lock cap 86 from the orifice 82 by simply rotating the cap such that the tabs 88 and ridges 84 no longer interleaf.”

B. Broken Lines

The Wright Bothers Patent No. 821,393 on a flying machine shows the use of broken lines to demonstrate a moved position of the wings in figure 1. The broken lines at items c and g and items a and e show those portions of the wing in a raised position. The broken lines at items b and items f and d show those portions of the wing in a lowered position. The solid lines show the home position of the wing.

USPat821393_WrightBrosPlane

Regarding alternative or moved positions of parts, the USPTO says, “A moved position may be shown by a broken line superimposed upon a suitable view if this can be done without crowding; otherwise, a separate view must be used for this purpose.” So, next we will discuss the use of multiple views.

C. Multiple Drawings

The third way to demonstrate the movement or multiple positions of parts is to create a drawing showing the part in each of its positions. The charcoal grill of US Patent No. 3,688,758 shows the grill with the lid 28 closed on top of the grill in figure 1 and the lid hanging by hanger 62 off the side of the grill in figure 3.

Grill_USPatent_3688758_Fig_1_3

This post provides a introductions to patent drawings. In future posts, I’ll cover other aspects of patent drawings and other types of drawings, such as flow charts, block diagrams, and graphs.

December 3, 2015March 12, 2018

What Galileo’s Pendulum Clock Teaches About Inventing

Fifty-eight years in the making, his slow hunch about the pendulum’s “magical property” had finally begun to take shape. The idea lay at the intersection point of multiple disciplines and interests: …Physics, astronomy, maritime navigation, and the daydreams of a college student: all these different strains converged in Galileo’s mind.

“After experiencing a desire to invent a particular thing, I may go on for months or years with the idea in the back of my head,” said Nikola Tesla. Tesla calls this the incubation period, which precedes direct effort on the invention. Science writer, Steve Johnson, calls it a slow hunch; an idea that comes into focus over a long time.

Johnson discusses several examples of how slow hunches develop in his excellent book, Where Good Ideas Come From and again is his most recent book How We Got to Now: Six Innovations That Made the Modern World. Johnson shows how innovation is most often a product of slow hunches and not eureka moments.

One of the six innovations that made the modern world is the clock for keeping accurate time. In Johnson’s discussion of time, he recounts the events and circumstances that led up to Galileo invention of the pendulum clock.

The story shows the invention of the pendulum clock was not a product of a eureka moment, but of Galileo’s experiences and cross-disciplinary studies over 58 years. Johnson starts with Galileo’s experience at university.

Â Suspended from the ceiling is a collection of altar lamps. They are motionless now, but legend has it that in 1583, a nineteen-year-old student at the University of Pisa attended prayers at the cathedral and, while daydreaming in the pews, noticed one of the altar lamps swaying back and forth. While his companions dutifully recited the Nicene Creed around him, the student became almost hypnotized by the lamp’s regular motion. No matter how large the arc, the lamp appeared to take the same amount of time to swing back and forth. As the arc decreased in length, the speed of the lamp decreased as well. To confirm his observations, the student measured the lamp’s swing against the only reliable clock he could find: his own pulse.

Galileo’s daydreaming about time could have been influenced by the fact that his father was a music theorist and played the lute. Twenty years later, after becoming a professor of mathematics, Galileo decided to build a pendulum that would recreate what he had observed at Pisa.

He discovered that the time it takes a pendulum to swing is not dependent on the size of the arc or the mass of the object swinging, but only on the length of the string. “The marvelous property of the pendulum,” he wrote to fellow scientist Giovanni Battista Baliani, “is that it makes all its vibrations, large or small, in equal times.”

The then existing clocks did not keep accurate time. They could be off by tweenty minutes a day and had to be reset using a sundial. But no one needed accurate clocks in the sixteenth century for keeping daily schedules. The need for accurate time keeping arose from shipping navigation needs.

But sailors lacked any way to determine longitude at sea. Latitude you could gauge just by looking up at the sky. But before modern navigation technology, the only way to figure out a ship’s longitude involved two clocks. One clock was set to the exact time of your origin point (assuming you knew the longitude of that location). The other clock recorded the current time at your location at sea. The difference between the two times told your longitudinal position: every four minutes of difference translated to one degree of longitude, or sixty-eight miles at the equator.

The problem with this system was the accuracy of the clock at the point of origin.

With timekeeping technology losing or gaining up to twenty minutes a day, it was practically useless on day two of the journey. All across Europe, bounties were offered for anyone who could solve the problem of determining longitude at sea.

So, after years of working in various disciplines and influenced by the rise of a need for accurate time keeping, Galileo together with his son, drew up plans for the first pendulum clock.

Fifty-eight years in the making, his slow hunch about the pendulum’s “magical property” had finally begun to take shape. The idea lay at the intersection point of multiple disciplines and interests: Galileo’s memory of the altar lamp, his studies of motion and the moons of Jupiter, the rise of a global shipping industry, and its new demand for clocks that would be accurate to the second. Physics, astronomy, maritime navigation, and the daydreams of a college student: all these different strains converged in Galileo’s mind.

Owning to the improved accuracy of the pendulum clock it was in wide use by the end of the next century.

Galileo’s invention of the pendulum clock is just one example of many where the invention resulted from a long series of events and cross-disciplinary influences rather than a momentary flash of genius.

October 27, 2015November 17, 2015

Don’t Admit That: Problems in DIY Patent Application Drafting

“Mr. Morsa … admitted in the specification that the system as described in the patent ‘can be implemented by any programmer of ordinary skill . . . ‘ . . . Therefore, by using Mr. Morsa’s admissions, the Board simply held him to the statements he made in attempting to procure the patent.” – Federal Circuit Court of Appeals.

US20030093283A1_Fig3 Properly drafting your own patent application can be difficult. Client-drafted DIY patent applications sometimes say too much, don’t say enough, or both. A client drafted patent application can say too little by failing to describe the invention with sufficient detail. And a client drafted patent application could say too much by making unnecessary admissions that can negatively impact the application.

In the case of In Re Morsa, No. 2015-1107 (Fed. Cir. 2015), the applicant wrote his own patent application and in doing so made admissions that contributed to the final refusal of his patent application. This case demonstrates how admissions in the patent application can negatively impact the prospect obtaining a patent.

Morsa’s Application

Morsa filed his patent application directed to a method and apparatus for furnishing benefits information. Claim 271 of his application provided:

A benefit information match mechanism comprising:

[1] storing a plurality of benefit registrations on at least one physical memory device;

[2] receiving via at least one data transmission device a benefit request from a benefit desiring seeker;

[3] resolving said benefit request against said benefit registrations to determine one or more matching said benefit registrations;

[4] automatically providing to at least one data receiving device benefit results for said benefit requesting seeker; wherein said match mechanism is operated at least in part via a computer compatible network.

The patent office cited a publication entitled Peter Martian Associates Press Release, dated September 27, 1999 (“PMA”) to show claim 271 was not new. Morsa argued that PMA did not provide enough detail to enable one skilled in this art to create Morsa’s claimed invention from the PMA without undue experimentation.

Prior Art

The Court maps disclosures from PMA to each of the elements of Morsa’s claim. The Court said with respect to each of the elements:

[1] [Regarding the first element] …the PMA reference describes the storage of “benefits and services that consumers receive from public and private agencies” along with the storage of “benefits services, health risks, or anything else an agency wishes to implement via its eligibility library.

[2] [The second element] correlates with the PMA’s statement that “consumers use the web to screen themselves for benefits, services, health risks, or anything else an agency wishes to implement via its eligibility library.”

[3] [The third element] maps onto the PMA’s use of the internet.

[4] [Regarding the fourth element] the PMA reference allows “consumers [to] use the Web to screen themselves for benefits, services, health risks, or anything else an agency wishes toÂ implement via its eligibility library.”

Morsa’s Admissions in his Patent Application

Morsa argued that these high level statements in PMA did not provide enough detail to enable one create Morsa’s claimed invention. The Patent Office solved this problem be pointing to admissions in Morsa’s application (“the specification”) as to what one skilled in the art would have known at the time of the invention.

The court noted that Morsa’s specification admitted that:

central processing units and memories were “well known to those skilled in the art,”
central processing units and memories were “used in conventional ways to process requests for benefit information in accordance with stored instructions,”
the system as described in the patent application “can be implemented by any programmer of ordinary skill in the art using commercially available development tools . . . ,” and
“search routines for accomplishing this purpose are well within the knowledge of those of ordinary skill in the art.”

Therefore, based on those admissions, the Court concluded that one of ordinary skill in the art was capable of programming the invention based on the disclosure in the PMA reference.

In other words, the Court used Morsa’s admissions in the application to “fill in the gaps” in PMA as to what one skilled in the art would have know how to do related to Morsa’s invention.

Avoid Admissions in Application

If Morsa had not made such admissions, the Patent Office would have need to work harder to find reference that described the what one skilled in the art would have known at the time.

It probably would not have been too hard for the Patent Office to find a reference that described the use of databases and searching routines for use in an obviousness rejection. And, it possible that even if Morsa had not made the admissions in his application that his application still would have been refused.

Nonetheless, you do not what to make it easy for the patent office to refuse your patent application. Admitting that portions of an invention are “within the knowledge of those of ordinary skill in the art” or “well known to those skilled in the art” can be a problem, as shown in the Morsa case.

The reason Morsa made those admissions was so that he did not have to describe details of the items referenced as known, e.g. CPUs, search routines, etc. It’s a short cut.

But, it is better to describe the details of missing item or process or otherwise formulate statements without admitting components of the invention or the processes of making those components are “known by one skilled in the art.”

There maybe some instances where it would be acceptable to admit that a common component of the invention could be made by methods known by one skilled in the art. However, doing so is a double edge sword that can hurt you if not done properly. Given the potential downsides it is safer generally to avoid making such admissions.

September 29, 2015December 26, 2015

Overcoming the Difficulty of Recognizing Good Ideas

Knowledge formation, even when theoretical, takes time, some boredom, and the freedom that comes from having another occupation, therefore allowing one to escape the journalistic-style pressure of modern publish-and-perish academia…Â –Nassim Talab.

“The future is already here – it’s just not evenly distributed” is a quote often attributed to William Gibson. Nassiam Taleb, the author of Black Swan, and more recently Antifragile: Things That Gain from Disorder, asserts that in many cases you cannot predict the future. We have a hard time recognizing good ideas and implementing them. Having time and cultivating a capacity for boredom, as explained below, can contribute to one’s ability to recognize good ideas.

When a good idea succeeds, it can have a huge upside–a much greater upside than downside. Taleb says that anything that has more upside than downside from random events is antifragile. Further, antifragility describesÂ “things that benefit from shocks; [] thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty.” Inventing can be an antifragile activity.

The Difficulty of Recognizing Good Ideas

Taleb points out we have a difficult time recognizing opportunities that areÂ staring us in the face. This is the same vein as the Gibson quote above, which was repeated by Chris Anderson, editor of Wired Magazine.Â Taleb says:

It struck me how lacking in imagination we are: we had been putting out suitcase on top of a cart with wheels, but nobody thought of putting tiny wheels directly under the suitcase…Can you imagine that it took close to six thousand years between the invention of the wheel (by, we assume, the Mesopotamians) and this brilliant implementation (by some luggage maker in a drab industrial suburb)? And billions of hours spent by travelers like myself schlepping luggage through corridors full of rude customs officers. Worse, this took place three decades or so after we put a man on the moon….Indeed, though [the wheeled suitcase was] extremely consequential, we are talking about something trivial: a very simple technology.

…

This tells us something about the way we map the future. We humans lack imagination, to the point of not even knowing what tomorrow’s important things look like.

Although not the case with the wheeled suit case, sometimes the difficulty in recognizing good ideas is–as Peter Thiel notes–they oftenÂ look like bad ideas.

As Steven Johnson asserted in his bookÂ Where Good Ideas Come From: The Natural History of Innovation, we need to cultivate opportunities where ideas can collide unpredictably. Taleb too asserts that we need randomness to stumble upon good ideas:

We are managed by small (or large) accidental changes, more accidental than we admit. We talk big but hardly have any imagination, except for a few visionaries who seem to recognize the optionality of things. We need some randomness to help us out–with a double dose of antifragility.

Implementation Does Not Always Follow Quickly From Invention

Even when you do stumble upon a good idea and develop it into an invention, there’s still the difficult road to implementation and commercial success. This is, in part, why there are many many uncommercialized inventions described in patents and patent applications, which you can’t find on the market.

…Implementation does not necessarily proceed from invention. It too, requires luck and circumstances. The history of medicine is littered with the strange sequence of discovery of a cure followed, much later, by the implementation–as if the two were completely separate ventures, the second harder, much harder, than the first. Just taking something to market requires struggling against a collection of naysayers, administrators, empty suits, formalists, mountains of details that invite you to drown, and one’s own discouraged mood on occasion. In other words, to identify the option (again, there is this option blindness). This is where all you need is the wisdom to realize what you have on your hands.

For there is a category of things that we can call half-invented, and taking the half-invented into the invented is often the real breakthrough. Sometimes you need a visionary to figure out what to do with a discovery, a vision that he and only he can have. For instance, take the computer mouse, or what is call the graphical interface: it took Steve Jobs to put it on your desk, then laptop–only he had a vision of the dialectic between images and humans–later adding sound to a trilectic. The things, as they say, that are “staring at us.”

The difficulty of recognizing good ideas, and the uncertainty of proceeding with an idea, contributes to huge upsides for those that do.

The Need for Time to Allow Ideas to Percolate: The Clergy and Hobbyists

Chris Dixon said, “What the smartest people do on the weekends is what everyone else will do during the week in ten years.” Taleb makes a similar point. Â Many significant inventions were developed by hobbyist and the English clergy. They had ample time to let ideas percolate and collide–in other words, to invent.

Knowledge formation, even when theoretical, takes time, some boredom, and the freedom that comes from having another occupation, therefore allowing one to escape the journalistic-style pressure of modern publish-and-perish academia to produce cosmetic knowledge…

There were two main sources of technical knowledge and innovation in the nineteenth and early twentieth centuries: the hobbyist and the English rector, both of whom were generally in barbell situations.

An extraordinary proportion of work came out of the rector, the English parish priest with no worries, erudition, a large or at least comfortable house, domestic help, a reliable supply of tea and scones with clotted cream, and an abundance of free time. And, of course, optionality. The Reverends Thomas Bayes (as in Bayesian probability) and Thomas Malthus (Malthusian overpopulation) are the most famous. But there are many more surprises, cataloged in Bill Bryson’s Home, in which the author found ten times more vicars and clergymen leaving recorded traces for posterity than scientists, physicists, economists, and even inventors. In addition to the previous two giants, I randomly list contributions by country clergymen: Edmund Cartwright invented the power loom, contributing to the Industrial Revolution; Rev. Jack Russell bred the terrier; Rev. William Buckland was the first authority on dinosaurs; Rev. William Greenwell invented modern archaeology; Rev. Octavius Pickard-Cambridge was the foremost authority on spiders; Rev. George Garrett invented the submarine; Rev. Gilbert White was the most esteemed naturalist of his day; Rev. M. J. Berkeley was the top expert on fungi; Rev. John Michell helped discover Uranus; and many more.

…

The Industrial Revolution, for a refresher, came from “technologists building technology,” or what he [Terence Kealey] calls “hobby science.” Take again the steam engine, the one artifact that more than anything else embodies the Industrial Revolution. As we saw, we had a blueprint of how to build it from Hero of Alexandria. Yet the theory didn’t interest anyone for about two millennia. So practice and rediscovery had to be the cause of the interest in Hero’s blueprint, not the other way around.

Having free time and cultivating a capacity for boredom allows ideas to percolate, even subconsciously. This appears to enhance the ability to recognize and implement good ideas and to possibly profit from the antifragile nature of inventing.

Antifragle is a thought provoking book in its entirety with possible wide ranging applicability.

September 7, 2015September 7, 2015

Secretary of State Approval of Corporate Name Is No Defense to Trademark Infringement

“the fact that defendant received a charter [from the State of Illinois] to use the name ‘Lady Esther Corset Shoppe, Inc.’ does not protect [the defendant].”

Lady Esther, Ltd. sued Lady Esther Corset Shoppe, Inc. for unfair competition based on the defendant’s use of “Lady Esther” in it company name. It appears the defendant arguedÂ it was protected from suit because the Illinois Secretary of State approved the formation of its corporation under the nameÂ Lady Esther Corset Shoppe. The court rejected this argument inÂ Lady Esther, Ltd. v. Lady Esther Corset Shoppe, Inc., 317 Ill. App. 451, 458 (Ill. App. Ct. 1943).

The Lady Esther case is old, but this point is still valid: the approval of a corporate or LLC name by the Illinois Secretary of State is no defense against claims of trademark infringement. Therefore you cannot rely on the Secretary of State’s approval of the name of your corporation or LLC as clearance that you are free to use the name.

Trademark rights in the U.S. accrue to the person/entity who is first to use the trademark in commerce (or files an intent-to-use trademark application).

First User Wins; Later Incorporation Irrelevant

In 1913, Syma Busiel started a cosmetic business under the name Lady Esther. In 1922, she incorporated her business in the state of Illinois as Lady Esther Company (later changed to Lady Esther Ltd.). Â Cosmetic sales between 1923 and 1936 totaled 36 million dollars.

In 1926, Ben Seigel and his wife Anna incorporated and began operating the Lady Esther Corset Shoppe selling women’s apparel and jewelry.

The court issued an injection prohibitingÂ Lady Esther Corset Shoppe from using name Lady Esther.Â The appeals court agreed and stated, “the fact that defendant received a charter [from the State of Illinois] to use the name ‘Lady Esther Corset Shoppe, Inc.’ does not protect [the defendant].”

Do not rely on the Secretary of State’s approval of your corporation name or LLC name as an indication Â that you are free to use the name. First, have a comprehensive trademark search performed.

August 31, 2015December 3, 2024

Trademark Disclaimers and Hopeless Trademark Appeals

This appears to be another case where the applicant pursued a hopeless claim. Why did this happen? The problem is that the applicant initially chose a weak trademark and then tried to prop it up by pursing a course that it could not win.

Louisiana Fish Fry Products (LFFP) filed a trademark application on LOUISIANA FISH FRY PRODUCTS BRING THE TASTE OF LOUISIANA HOME! as shown at the beginning of this post.

The Trademark Examining Attorney and the Trademark Trial and Appeals Board (TTAB) both found that LFFP was required to disclaim “Fish Fry Products” as it was descriptive and generic of LFFP’s products. LFFP appealed this requirement to the Federal Circuit Appeals Court and lost in In Re: Louisiana Fish Fry Products, Ltd., No. 2013-1619, (Fed Cir. 2015).

The applicant could have avoided two rounds of appeal along with the associated attorney’s fees while still obtaining a registration on its mark. All it had to do was disclaim “Fish Fry Products.” But it didn’t, likely because of its prior dispute over Florida Fish Fry Products.

What is a Disclaimer?

A disclaimer is a statement made by a trademark applicant, usually at the request of the USPTO, to “disclaim an unregistrable component of a mark otherwise registrable.” 15 USC 1056. Or stated another way:

…a disclaimer of a component of a composite mark amounts merely to a statement that, in so far as that particular registration is concerned, no rights are being asserted in the disclaimed component standing alone, but rights are asserted in the composite; and the particular registration represents only such rights as flow from the use of the composite mark.

[Sprague Electric Co. v. Erie Resistor Corp., 101 USPQ 486, 486-87 (Comm’r Pats. 1954); TMEP 1213]

So here the question is does LFFP have rights in “Fish Fry Products” alone when used in relation to the applicant’s goods of: marinades sauce mixes, namely, barbecue shrimp sauce mix, remoulade dressing, cocktail sauce, seafood sauce, tartar sauce, gumbo fil©, and cayenne pepper. The Trademark Examiner said no, the TTAB said no, and the Federal Circuit said no, and predictably so.

Why Fight? The History Against Florida Fish Fry Products

Is it so bad to disclaim a portion of text in a trademark at the request of the USPTO? The Trademark Act provides “No disclaimer…shall prejudice or affect the applicant’s or registrant’s rights then existing or thereafter arising in the disclaimed matter, or his right of registration on another application if the disclaimed matter be or shall have become distinctive of his goods or services.” 15 UCS 1056(b). Therefore, a disclaimer does not prohibit you from claiming rights in the disclaimed text later in ligation or in other trademark applications.

Why not just take the disclaimer in this case?

I speculate the reason is that in 2007 LFFP sued Charles Corry. Corry was selling products under the mark FLORIDA FISH FRY PRODUCTS. In 2008, Corry settled and agreed not to use Florida Fish Fry Products.

I predict LFFP would have had a very difficult time proving infringement by Corry if the case had not settled.

Here, LFFP probably didn’t want another Corry coming along and selling under Florida Fish Fry Products, Mississippi Fish Fry Products, Texas Fish Fry Products, or the like. So it was determined to fight this disclaimer requirement to better strengthen its position against such future problems on the common element “Fish Fry Products.”

The problem is LFFP didn’t have a chance. The fight over the disclaimer was a waste of money and a predictable loss.

Further, it not only was a loss of money, but the appeal put LFFP in a somewhat worse position than if it had not appealed. One concurring judge in this case asserted that FISH FRY PRODUCTS was generic. If FISH FRY PRODUCTS is generic, it can never achieve protection. Future defendants accused by LFFP could point to the this opinion that the term was generic as a defense.

The majority of the court did not reach the genericness question and instead relied on descriptiveness, as explained below.

Highly Descriptive: Fish Fry Products

The TTAB found that “Fish Fry Products” was highly descriptive of the applicant’s goods. The TTAB said that the evidence showed (1) public understands “fish fry” to refer to fried fish meals, (2) public understands “products” to mean, inter alia, “something produced; especially: COMMODITY … something . . . that is marketed or sold as a commodity,” (3) therefore the relevant public understands FISH FRY PRODUCTS to identify a type of sauce, marinade or spice used for fish fries.

No Acquired Distinctiveness

The applicant asserted that even if the mark was descriptive, the applicant had rights in “Fish Fry Products” through acquired distinctiveness (also known as “secondary meaning”). A trademark–or in this case the “Fish Fry Products” portion–has acquired distinctiveness when “in the minds of the public, the primary significance of a product feature or term is to identify the source of the product rather than the product itself.”

Here, we ask this: when you see “Fish Fry Products” do you think of a source such as LFFP (then we have trademark protection) or do you think of the product itself (then no trademark protection)? Here, the “Fish Fry Products” refers to the product itself and not to the source, LFFP.

The applicant can show acquired distinctiveness by advertising expenditures, sales success, and length and exclusivity of use of the mark.

LFFP’s evidence fell short of proving acquired distinctiveness.

First, Under section 2(f) of the Lanham Act, the USPTO may accept five years of “substantially exclusive and continuous” use as prima facie evidence of acquired distinctiveness. But the USPTO is not required to do so. Therefore, LFFP’s allegation of five year of “substantially exclusive and continuous” of the mark did not prove acquired distinctiveness. The USPTO often does not accept section 2(f) declarations for highly descriptive marks.

Second, a declaration from LFFP’s president (1) stating that the LOUISIANA FISH FRY PRODUCTS has been used for 30 years was insufficient, and (2) providing sales and advertising expenditures for food products bearing LOUISIANA FISH FRY PRODUCTS was insufficient. This evidence was insufficient because it related to product bearing LOUISIANA FISH FRY PRODUCTS and not on the acquired distinctiveness FISH FRY PRODUCTS alone.

LFFP would have saved a lot of money, and an adverse ruling, by accepting the disclaimer and avoiding two rounds of appeal losses.

August 14, 2015November 16, 2015

Know When to Stop Wasting Money on Trademark Litigation

MoneyWaste You need to know when to stop wasting money on trademark litigation. Here is a case where the plaintiff should have stopped on day two of the lawsuit, but didn’t.

Dr. Tartell and Dr. Mandel jointly practiced medicine until 2011, when they split their practice and went separate ways. The break up was contentious.

After the break up, Dr. Mandrel (1) registered six domain names using some variation of Dr. Tartell’s name, redirecting some toÂ Dr. Mandrel new website, and (2) purchased Google AdWords keyword for Dr. Tartell name, which caused Dr. Mandell’s website to appear as an advertisement whenever someone searched with those terms on Google.

Tartell filed suit against Dr. Mandell including claims for cybersquatting, false designation of origin, and unfair competition (all trademark law related claims).

The day after the suit was filed in 2012, Dr. Mandel canceled the domain names. Many trademark related disputes are resolved this way, e.g. with one party stopping or changing their name.

It is unclear whether the Adword purchases stopped. They probably did, but even if they did not, plaintiffs do not fare well in competitive keyword advertising suits.

So, the day after the suit was filed, Dr. Tartell probably got the best he could get, e.g. Dr. Mandell releasing the domain names and (probably) stopping the Google Adword buy. This was a good time to settle.

Litigating on Principle is Expensive and Often Unsatisfying

But the case continued for at least three years. It continued all the way through a four day bench trial and through an appeal in 2015. Why did this case continue? As stated by the trial court:

this action continued all the way through [a four-day bench] trial because Dr. Mandel refused to take responsibility for his antics while Dr. Tartell sought a statutory windfall for a short-lived and largely pointless deceit.

In other words, (1) Dr. Mandel would not apologize and (2) Dr. Tartell wanted statutory damages and attorneys fees as a result of the alleged cybersquating.

Pursuing litigation to achieve an apology or an an acknowledgment of wrong doing (litigating on principle) can be a very expensive undertaking with often unsatisfying results, as Dr. Tartell experienced here. Dr. Tartell won only $6000 at trial, much less than he likely paid his attorneys. But he would not keep even that amount. Dr. Tartell ultimately lost on appeal in Tartell v. South Florida Sinus and Allergy Center, Inc., No. 14-13178 (8th Cir. 2015). And it is a pretty safe bet that Dr. Mandel did not apologize to Dr. Tartell.

Short Use and Quick Turnover Kills Off Statutory Windfall

On the second issue, you need to carefully evaluate your likelihood of success in obtaining money damages, even when the other side’s actions appear willful and to reflect poorly on them. The statistical likelihood of receiving an award of any damages in trademark litigation is low.

Dr. Tartell may have been expecting closer to $600,000 in statutory damages and not the $6,000 that was awarded by the trial court. The Lanham Act provides for statutory damages of between $1,000 and $100,000 per domain name for cybersquatting. 15 U.S.C 1117(d). This case indicates that when the defendant carries on with the offending conduct only a short time and cancels or turns over the domains immediately after suit, the court could see this as a mitigating factor leading to an award of damages at the low end of the range and not the top, e.g 6 domain names * $1,000 = $6,000 and not 6Â domain names * $100,000 = $600,000. This is true here even though Dr. Mandrel’s “antics” were in bad taste and, as the court noted, included “deceit.”

Difficulty in Protecting One’s Personal Name in Medicine

Dr. Tartell lost on appeal because he could not establish that his name was protectable. Therefore he could not recover anyÂ money damages. This result should have been predicted.

A quick reference to McCarthy on Trademarks reveals that “in professions where use of personal names as identifiers is traditional, a court may require a strong showing of secondary meaning.” McCarthy 13.2. Or as the Eighth Circuit Appeals Court stated, “in professions where use of personal names as identifiers is traditional such as the medical profession, it is more difficult to establish secondary meaning [in such personal names].” In other words, it is known that it is difficult to protect your personal name in the medical profession under trademark law.

In the Eighth Circuit, a plaintiff must prove that his service mark is “distinctive” to establish a claim for cybersquatting, false designation of origin, and unfair competition. So to obtain any relief, Dr. Tartell needed to prove that the consuming public recognized Dr. Tartell as the source of a service and not merely as a person’s name.

For example, “Ford” was a surname of Henry Ford, but overtime through sales and advertising “Ford” became associated in the minds of the consuming public with a car producing company and not merely the individual.

In the Eighth Circuit, a plaintiff can show a name is distinctive through consumer surveys or circumstantial evidence. Circumstantial evidence may include (1) the length and nature of name’s use, (2) the nature and extent of advertising and promotion of the name, (3) the efforts of the proprietor to promote a conscious connection between the name and the business, and (4) the degree of actual recognition by the public that the name designates the proprietor’s product or services.

Dr. Tartell provided no consumer surveys. Dr. Tartell presented evidence of his academic activities and reputation among other medical professionals. But this is not relevant because the target audience for such information was professionals and not the consumers of his medical services.

Dr. Tartell’s name used in advertisements for his business withÂ Dr. Mandell before the split did not show Dr. Tartell’s name was distinctive because his name was not used prominently as a trademark in such advertising.

The appeals court ultimately found that Dr. Tartell did not establish any of the fourÂ distinctiveness factors. Therefore, Dr. Tartell lost and received no money damages. Dr. Tartell should have settled on the second day of his lawsuit.

Photo credit to flickr user Mike Poresky under this creative commons license.

July 8, 2015July 9, 2015

Names Predictive of Future Product Success?

“…the names of companies are often very predictive of future failure or success.” — Peter Theil.

“[a] great name can’t fix a bad product. A great product can fix a bad name.” — Paola Norambuena.

Choosing a name for your company, product, or service can be difficult and time consuming. But does the name you choose matter?

In other words, assuming that the name you choose does not conflict with another’s trademark rights and the name is a strong trademark, does the name impact the success of your company, product, or service?

Peter Theil, venture capitalist and co-founder of Paypal, thinks names matter. Peter discusses his view on naming in an exchange with Tyler Cowen:

TYLER COWEN: You mentioned Facebook a few minutes ago. In the back, we were talking about good and bad names for companies. If you could tell us your view on this, how important is the name of a company? What are a few good names, and why, and what are a few bad names?

PETER THIEL: A slight aesthetic thing I believe in very strongly is the names of companies are often very predictive of future failure or success.

PayPal was a very friendly name. It was the friend that helps you pay. Napster was a bad name. It was the music sharing site. You nap some music, you nap a kid. That sounds like a bad thing to be doing.

[laughter]

PETER THIEL: It’s no wonder the government then comes in and shuts the company down, within a few years. You want to be very careful how you name companies. In the sharing economy context, I like Airbnb, way more than Uber. Airbnb sounds like this very innocent, virtual bed and breakfast. It’s [a] very light, nonthreatening company. Uber, it sounds like a bad name from Germany sometime in the 1930s.

[laughter]

PETER THIEL: What are you exactly above? Maybe the law?

[laughter]

PETER THIEL: This is probably something that, again, from government regulatory perspective, Airbnb is a vastly better name than Uber. On the social networking side, I would say that I actually think Facebook was a very good name. MySpace was a more problematic name.

You can say that all these social networks involve both reading and writing. Unlike real life, you have to write, before you read. You first have to write some things about yourself, then you read more about other people. Over time, reading dominates writing.

Facebook was about learning about people around you. About the real identities at Harvard. MySpace started among wannabe actors in Los Angeles, and it was about them coming up with fictional narratives around themselves, and then a lot of other people in LA, who are generally like that.

Because reading dominates writing, Facebook would ultimately dominate MySpace. There’s a certain version where the whole product arc was implicit in the names.

[Peter Theil on the Future of Innovation ]

This raises the proverbial chicken-and-the egg question: does the name cause a particular product direction or does the preexisting product direction manifest itself in the chosen product name? Maybe the direction of Myspace was not a result of its name, but a preexisting direction in the company independent of its name. Nonetheless, it is possible that a name can influence or reinforce the direction of a company, product, or service.

Paola Norambuena, the executive director of verbal identity at Interbrand, explains that a great product can fix a bad name and provides examples:

…even if the name they chose received a tepid reception, the power of their production process could still overcome it. Most namers will tell you, as Paola Norambuena puts it, that a “great name can’t fix a bad product. A great product can fix a bad name.” Accenture was met with derision for reminding people of dentures. Gap was an empty space. Yelp was a dog in pain. The iPad was confused with a tampon. Now these names have no odd connotations at all, thanks to the success of the things they name.

So it may have been that after hours upon hours of brainstorming and hours more of deliberations and still hours more of trademark searches, and after the expenditure of tens of thousands of dollars, not as much was at stake as Christensen, van Hoff and Annau thought – at least not in commercial terms. Personal and emotional stakes were a different story….

[The Weird Science of Naming Products, New York Times (Jan 15, 2015)].

Norambuena’s view tempers the otherwise stress inducing, “better get the name right” conclusion from Theil’s view. If a name is predictive of future success, then that predictive tenancy can be overcome by a great product or bad product according to Norambuena.

June 19, 2015

Computer Based Method of Determining Optimal Product Price Not Patent Eligible

OIP Technologies sued Amazon alleging that Amazon infringed OIP’s patent 7,970,713 directed to a computer based method of automatically determining the optimal price for a product. The court of appeals determined that the claimed method was not patent eligible as an abstract idea under 35 USC 101 in OIP Technologies v. Amazon, No. 2012-1696 (Fed. Cir. 2015).

The court summarized the limitations of claims 1 of the ‘713 patent as: “(1) testing a plurality of prices; (2) gathering statistics generated about how customers reacted to the offers testing the prices; (3) using that data to estimate outcomes (i.e. mapping the demand curve over time for a given product); and (4) automatically selecting and offering a new price based on the estimated outcome.”

Following the two step test from Alice v. CLS Bank, 134 S. Ct. 2347 (2014), the court found under step one that the claims were directed to the abstract idea of offer-based price optimization. The court summarized a problem that the method of the ‘713 patent aimed to solve:

The ’713 patent explains that traditionally merchandisers manually determine prices based on their qualitative knowledge of the items, pricing experience, and other business policies. In setting the price of a particular good, the merchandiser estimates the shape of a demand curve for a particular product based on, for example, the good itself, the brand strength, market conditions, seasons, and past sales. . . The ’713 patent states that a problem with this approach is that the merchandiser is slow to react to changing market conditions, resulting in an imperfect pricing model where the merchandiser often is not charging an optimal price that maximizes profit.

Accordingly, the ’713 patent teaches a price optimization method that “help[s] vendors automatically reach better pricing decisions through automatic estimation and measurement of actual demand to select prices.”

The court found that the offer-based price optimization of the ‘713 patent was similar to other ‘fundamental economic concepts” found to by abstract ideas and then cited the following cases: Alice, 134 S. Ct. at 2357 (intermediated settlement); Bilski v. Kappos, 561 U.S. 593, 611 (2010) (risk hedging); Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715 (Fed. Cir. 2014) (using advertising as an exchange or currency); Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343, 1347 (Fed. Cir. 2014) (data collection); Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1346 (Fed. Cir. 2013) (generating tasks in an insurance organization).

In the second step of the Alice test, the court found that the other elements of the claims did not transform the abstract idea of offer-based price optimization into a patentable method. The court found that the additional elements in the claims merely recited well-understood, routine conventional activities either by requiring conventional computer activities or routine data-gathering steps.

The court concluded that “[a]t best, the claims describe the automation of the fundamental economic concept of offer-based price optimization through the use of generic-computer functions.