Social Networking Patents Emerge from US Patent and Trademark Office (“USPTO”)

Amazon, Google and Facebook have each recently been granted US Patents for social networking related patents.  Each of the patents have issued in the wake of the important case of In re Bilske, 545 F.3d 943 (Fed. Cir. Oct. 30, 2008), cert. Granted sub nom. Bilski v. Doll, 129 S. Ct. 2735 (June 1, 2009) (No. 08-964), renamed Bilski v. Kappos, No. 08-964.  A decision on the Bilske case is expected sometime this spring. 

The issue in the Bilske case involves what test or set of criteria governs the determination of whether a claim to a process is patentable under 35 USC § 101.  Specifically, the questions now before the US Supreme Court are:

1.      1.   [w]hether the Federal Circuit erred by holding that a ‘process’ must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing (‘machine-or-transformation’ test), to be eligible for patenting under 35 U.S.C. § 101, despite this Court's precedent declining to limit the broad statutory grant of patent eligibility for ‘any new and useful process beyond excluding patents for ‘laws of nature, physical phenomena, and abstract ideas’,” and

2.       2. “[w]hether the Federal Circuit's ‘machine-or-transformation’ test for patent eligibility…contradicts the clear Congressional intent that patents protect ‘method[s] of doing or conducting business.’ 35 U.S.C. § 273.” See Bilski v. Kappos, No. 08-964 (June 1, 2009) at  http://origin.www.supremecourtus.gov/qp/08-00964qp.pdf.

US Patent 7,606,725 (“the Amazon patent”) issued October 20, 2009 for a networked computer system that provides various services for assisting users in locating, and sharing information with other users.  The system provides a user interface through which users can establish contact relationships with other users. The system also provides functionality for users to identify contacts of their respective contacts. For example, in one embodiment, each respective user can conduct a search of contacts of the respective user. The search may be limited in scope to users that satisfy one or more particular search criteria, such as users that reside in a particular region or are affiliated with a particular group.

US Patent 7,668,832 (“the Google patent”) issued February 23, 2010 for a computer-implemented method of determining and using geolocation information to target advertisements, determine scoring and pricing information about the advertisements.

US Patent 7,669,123 (“the Facebook patent”) issued February 23, 2010 for generating news items regarding activities associated with a user of a social network environment and attaching an informational link associated with at least one of the activities, to at least one of the news items, as well as limiting access to the news items to a predetermined set of viewers and assigning an order to the news items. The method further may further include displaying the news items in the assigned order to at least one viewing user of the predetermined set of viewers and dynamically limiting the number of news items displayed.

The US Supreme Court decision could render the validity in doubt of many business method patents, including the Amazon, Google and Facebook patents.  

The US Patent and Trademark Office issued Interim PatentSubject Matter Eligibility Examination Instructions on August 24, 2009 after the CAFC Bilske decision.  In the examples provided, example claim 5 is determined to be eligible subject matter because comparing is performed using a microprocessor, whereas example claim 6 is not eligible subject matter even though it provides method steps that include sorting, ranking and comparing, but does not explicitly state using a microprocessor.  Based on this criteria, the Facebook patent may be at risk because the only reference to a computer is in the second paragraph, “storing the plurality of activities in a computer…”  The Amazon and Google patents by comparison, do satisfy the criteria by performing transformational processes by a computer.

Business method patents will be front and center soon after the US Supreme Court issues its ruling and there will be plenty at stake.

Federal Circuit Equates Specific Intent with Deliberate Indifference for Inducement to Infringe a Patent

IN SEB S.A. and T-FAL Corporation v. Montgomery Ward et al., the Court of Appeals for the Federal Circuit (“CAFC”) considered the appeal of a host of issues concerning the infringement of US Patent 4,995,312 (“the ‘312 patent”) relating to a jury verdict and the district court’s post-trial rulings. The ‘312 covered deep fryers having a metal pan surrounded by an air cavity that sits within a plastic material housing that can be ordinary-grade plastic that does not have high heat resistance.

Pentalpha was one of three named defendants. The other two defendants, Montgomery Ward and Global-Tech Appliances were buying deep fryers from Pentalpha that were accused of infringing the ‘312 patent. In addition to questions of claim construction and infringement, the Court had to consider on appeal whether Pentalpha acted with sufficient intent to be liable for inducement to infringe the ‘312 patent by Montgomery Ward and Global-Tech Appliances.

The CAFC first cited its precedent that inducement requires a showing of “specific intent to encourage another’s infringement” Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683, 699 (Fed. Cir. 2008) (quoting DSU Medical, 471 F.3d at 1306). But the CAFC then relied upon Crawford-EL v. Britton, 951 F.2d 1314, 1318 (D.C. Cir. 1991) for the proposition that “specific intent” in the civil context is not so narrow as to allow an accused wrongdoer to actively disregard a known risk that an element of the offense exists. And further, specific intent is equated to deliberate indifference.

Based on the facts of the case, the CAFC found that even though the SEB had not produced direct evidence that Pentalpha SEB acted with deliberate indifference based on the following:

It had purchased an SEB deep fryer in Hong Kong and copying all but the cosmetics.

It failed to inform its patent counsel that it copied the SEB deep fryer when it requested a freedom to operate search opinion.

Its Its president, John Sham, was well versed in the U.S. patent system and understood SEB to be cognizant of patent rights as well. Sham testified that he was the named inventor on 29 U.S. patents and that Pentalpha and SEB had an earlier business relationship that involved one of Pentalpha’s patented steamer products.

The CAFC also noted that the case did not “purport to establish the outer limits of the type of knowledge needed for inducement” A patentee may only need to show, as the Insituform case suggests, constructive knowledge with persuasive evidence of disregard for clear patent markings may be enough.