28 August, 2014

Proposed Australian Copyright Law Changes - Copyright Infringement Challenged

Copyright seems to be going through some growing pains in the last few years, with extensive changes happening all over the world in the area. This has not been left out in the discussions of this blog, where copyright reform has been quite extensively covered in Ireland, Australia and the United Kingdom. As has been said by myself and others copyright needs this change, and updates have been warranted for some years. Arguably our neighbors in the Southern Hemisphere have been ahead of their UK counterparts for some time, at least in relation to copyright, with the introduction of the Copyright Amendment Act 2006, which amended the Australian Copyright Act 1968. Yet this didn't seem to be enough for the Aussies, and recently new changes to the 1968 Act have been brought up, flaring up opinions on both sides of the spectrum especially since the changes pertain largely to infringement. 

The proposed update to the current legislative scheme were introduced in a discussion paper titled "Online Copyright Infringement", commissioned by the Australian government, which was published last month. As presented by the paper itself: "[t]his paper outlines the Government’s proposed approach to amending the Copyright Act 1968 to provide a legal framework within which rights holders, ISPs and consumer representatives can develop flexible, fair and workable approaches to reducing online copyright infringement". Prima facie the paper does have a point, with millions of Australians accessing torrenting sites on an almost regular basis; however the issue isn't necessarily that one-sided and straightforward. This writer shall endeavor to discuss the proposed changes and whether the measures called for are appropriate for the current IP environment in Australia, which from just looking at things as a whole is quite complicated.

Extended Authorization Liability

The first proposed change is extended liability for the authorization of copyright infringement. What this is, in simple terms, is the allowance of copyright infringement through one's services more relevant to ISPs and websites. Authorization of infringement was the subject of a heated legal battle in the Roadshow Films Pty Ltd v iiNet Ltd case (discussed more extensively on this very blog over a year ago) - the very example discussed in the paper as well. Currently this is covered by section 36 of the Copyright Act 1968, which provides that certain factors have to be taken into account when assessing authorization under the Act: the party's power to prevent the infringement; the nature of the relationship between that party and the infringing party; and whether that party took any reasonable steps to prevent the infringement. Even though one can argue that the provisions is quite great in balancing blatant authorization vis-a-vis lesser forms of potential authorization such as the mere provision of services or the scope of measures which would have to be employed to fully prevent infringement, the provision can fall flat in the vastness of the Internet. The paper discusses this and states that "[e]xtending authorisation liability is essential to ensuring the existence of an effective legal framework that encourages industry cooperation and functions as originally intended, and is consistent with Australia’s international obligations"

How this is proposed to be done is by having the courts assess authorization by looking at the relationship between the parties, and whether the potentially authorizing party took any reasonable steps to prevent the infringement. The reasonable steps the party took would be gauged through certain factors: "(a) the extent (if any) of the person’s power to prevent the doing of the act concerned; (b) whether the person or entity was complying with any relevant industry schemes or commercial arrangements entered into by relevant parties; (c) whether the person or entity complied with any prescribed measures in the Copyright Regulations 1969; and (d) any other relevant factors". This change puts the onus quite heavily on the 'authorizing' party, in other words, potentially places ISPs and others with an onus that is potentially very vague and strict. Increases in liability and a need for more enforcement and monitoring will undoubtedly create costs, and potentially cause disruptions and claims processes for users (both legitimately and illegitimately in some cases one can imagine), which would only have a negative impact on the average Australian consumer.

Extended Injunctive Relief to Block Infringing Overseas Sites

The second proposal put forth is the extension of rights holders' capabilities to block foreign websites which facilitate the infringement of copyright. As put forth by the paper: "[w]here online copyright infringement is occurring on a commercial scale, rights holders need an efficient mechanism to disrupt business models operated outside of Australia". The changes discussed take cues from the UK regime where under section 97A of the Copyright, Designs and Patents Act 1988 a court can block access to a service provider, i.e. a website, should an ISP have 'actual knowledge' of a person using the aforementioned service to infringe copyright. As explained by the paper "[a] similar provision in Australian law could enable rights holders to take action to block access to a website offering infringing material without the need to establish that a particular ISP has authorised an infringement".

Roo was worried over his habit of downloading the newest jams
The proposed change to the provision would impose a vague duty on ISPs for injunctive relief against websites given: "[t]he Copyright Act would be amended to enable rights holders to apply to a court for an order against ISPs to block access to an internet site operated outside Australia, the dominant purpose of which is to infringe copyright... Rights holders would be required to meet any reasonable costs associated with an ISP giving effect to an order and to indemnify the ISP against any damages claimed by a third party". On the face of it the proposed change would give third-parties more capabilities to block websites, however when compared to its UK cousin, leaves out the specification of 'actual knowledge' on the ISPs part, affording rights holders a carte blanche of injunction possibilities against potentially any website which serves the 'dominant purpose' of infringing copyright. 

Extended Safe Harbor Scheme

The final proposed change is one which provides protection for monetary damages for service providers, such as ISPs. Under section 116AA (and subsequent sections 116AC-116AF) of the Copyright Act 1968 a service provider is protected, if they fulfill the conditions set out in section 116AH, for acting as a conduit for Internet activity; for caching through an automatic process; for storing protected material in its systems or network; and for referring users to a location on the web. Even though the provision is akin to its American cousin in the Digital Millennium Copyright Act, it's still much stricter as it currently stands. 

The proposal merely wishes to extend the application of the safe harbor provision to others beyond 'carriage service providers', the wording currently used, to 'service providers', extending the scope of protection beyond just ISPs. As the paper states: "[t]he Copyright Act would be amended to extend the application of the safe harbour scheme to entities engaged in the activities set out in sections 116AC to 116AF. This would be achieved by removing the reference to carriage service provider and replacing it with a definition of ‘service provider’, being any person who engages in activities defined in sections 116AC to 116AF". This is the only change which will wholly, at least on the face of it, impact the current scheme positively rather than negatively. 

Thoughts on the Changes

The proposed alterations to the current scheme have drawn a heap of criticism from several parties. Nicolas Suzor and Alex Button-Sloan have argued that "[the changes] could include blocking peer-to-peer traffic, slowing down internet connections, passing on warnings from industry groups, and handing over subscriber details to copyright owners". In their mind the heart of the issue is not the lack of addressing copyright infringement, but "... that Australians are not being fairly treated by the copyright industries", which stems from the fact that "...Australians pay more for digital downloads, have less choice in how they can access film and television, face large delays before content is released, and much foreign content is still not available at all in Australia". This is arguably very true, and lies at the heart of the high infringement rates, as Australians are paying 50% or even more for software and other digital goods than other nations; an example which serves to illustrate what drives illegal copying. 

Mr. Suzor and Button-Sloan further state that "...the draft proposal is likely to have serious unintended consequences. It is likely to raise the price of internet access in Australia... [and] cause major uncertainty in copyright law". Arguably this is true, as was discussed above, the buck for extra enforcement and monitoring will be passed onto the consumer. One final thought the gentlemen provide is that consumers have been left out the debate; a debate which potentially impacts them in a drastic way. 

Overall the proposed changes are quite rights holder heavy, and showcase somewhat of a one-sided approach to the issue if infringement. What needs to be addressed is the pure and unadulterated heavy pricing of our Southern Hemisphere friends, especially in a time when the digital distribution of content is practically free for software companies. Physical media will incur more costs due to the distance it needs to be shipped, storage costs and so forth, but in a world where media is shifting to an intangible form, this pricing is nothing short of a money-grab. How the proposal is finally implemented, if at all, remains to be seen; however this writer for one hopes the Australian legislature will think long and hard about the implications to the average Australian it may cause.

Source: TechDirt

22 August, 2014

Can You Patent Embryonic Stem Cells? - Preliminary Thoughts

Sometimes people seeking patents just seem to want to be the focus of hatred or controversy, especially when it comes to newer areas of medicine or scientific progression. Although this blog has discussed more unsavory topics, such as patenting clones or the method of selecting desirable traits for your child, the field constantly brings forward more interesting questions posed to the judiciaries of various countries. It so happens yet another such a question has been posed, this time pertaining to the potential patenting of embryonic stem cells; a topic which has been discussed at length by our neighbors across the pond in the US.

The case in question is International Stem Cell Corporation v Comptroller General of Patents, initially having been dealt with in the High Courts of the UK, having since been referred to the European Court of Justice for clarification. Although the opinion delivered is of the Advocate General Cruz Villalon's, it still remains an important indication of the potential direction of the ECJ's ultimate decision on the question, but is no way binding.

What the matter dealt with were two patent applications filed by the International Stem Cell Corporation, namely GB2431411 and GB2440333 (application numbers GB0621068.6 and  GB0621069.4 respectively), which effectively sought to patent certain applications for the use of human stem cells taken from embryos. Upon first inspection the patents were rejected by the UK Intellectual Property Office, based on the ECJ's previous decision in Oliver Brüstle v Greenpeace almost three years ago, which sought to decide what the definition of a 'human embryo' was under Directive 98/44/EC. This decision was important for the case in hand as it effectively limits the patentability of embryos, through which embryonic stem cells, for commercial or industrial purposes. The decision in Brüstle was why the patents were rejected at first instance, and serves as a platform from which the Advocate General formulated his view on the case.

To give more exposition on the patents at hand, as said above, they both deal with specific applications involving human stem cells extracted from embryos. Application GB0621068.6, titled "Parthenogenic activation of human oocytes for the production of human embryonic stem cells", to put in incredibly simplistic terms, deals with the production and cultivation of stems cells from unfertilized oocytes (female egg cells) through the manipulation of oxygen tension. These cells are often referred to as "parthenotes", which can turn into practically any cell type in the human body. Application GB0621069.4 deals with the use of said parthenotes to produce synthetic corneas. What is worth noting is that the ECJ saw, in Brüstle, that "...any human ovum after fertilisation, any non-fertilised human ovum into which the cell nucleus from a mature human cell has been transplanted, and any non-fertilised human ovum whose division and further development have been stimulated by parthenogenesis constitute a ‘human embryo’". This would, through superficial assessment, include Stem Cell Corporation's inventions and therefore prevent them from being patented.

The distinguishing factor for the Stem Cell Corporation, in their argument, is that the cells harvested have been modified so that they cannot continue human development; a reason under which the UK IPO rejected the application: "...Brüstle was intended to exclude from patentability only organisms capable of commencing the process of development which leads to a human being". This would run contrary to Schedule A2 of the Patents Act 1977 and the Directive it implements. According to the Stem Cell Corporation "...the inventions in question concern parthenogenetically-activated oocytes [ which are] not 'capable of commencing the process of development of a human being...' due to the phenomenon of genomic imprinting" and are therefore beyond the interpretation of Brüstle and the legislation.

The Advocate General's opinion is an interesting one, as he argues that "[t]he wording of Article 6(2) [of the Directive] itself makes clear that the list of prohibitions is non-exhaustive", which leads to an issue of whether the Directive would therefore include a non-developmentally capable parthenote. Mr. Villalon proposed that "[t]he non-exhaustive character of the list in Article 6(2) of the Directive implies that the exclusion of a parthenote from the concept of human embryo contained in Article 6(2)(c) of the Directive, does not prevent a Member State from excluding parthenotes from patentability based on Article 6(1) of the Directive".

Mr. Villalon furthered this point by arguing that the Directive is not one which is meant to be the 'law of bioethics'. Interpreting the Directive can lead to a discussion of morality and public impression; a discussion the judiciary will have to address to a degree. He leaves the matter more for Member States to decide, to see whether they deem the prohibition of embryonic patents a necessity in light of morality of public order.

Discussing submissions from the UK, France, Sweden and the Stem Cell Corporation, in addition to his understanding of the Brüstle case, Mr. Villalon did come up to a conclusion where he saw that the term 'human embryo' should not include developmentally incapable parthenotes: "Unfertilised human ova whose division and further development have been stimulated by parthenogenesis are not included in the term ‘human embryos’ in Article 6(2)... of [the] Directive... as long as they are not capable of developing into a human being and have not been genetically manipulated to acquire such a capacity".

Whether the ECJ sees things like the Advocate General will remain to be seen, but the opinion at least leaves the option of embryonic patents relating to cells which are not able to develop into a human being. This is a promising sign in light of future developments in the field of using stems cells to treat humans, yet still limiting it to ones where there is a lesser issue of morality, i.e.  the development of a human being. This writer for one is quite keen on reading the Court's opinion upon its publications, along with a healthy amount of others I am sure.

Source: PatentlyO

15 August, 2014

Retrospective - What is a 'Work' in Copyright?

Lawyers and the legal profession love their words and their singular interpretations, which can be quite odd from the perspective of the layman, especially when the interpretation seems quite obvious from the very beginning. Even so, we have learned to embrace this tradition, and understand that the nuanced meanings of words can have a huge impact on cases and their outcomes, and have no shame in jostling over the meanings of even the most basic of words. Intellectual property in this regard is no exception, and a word that is very important in terms of copyright is what is a 'work' protectable by copyright? As said, the answer may seem obvious and the discussion of what is a work seem a bit frivolous, but the reason why is incredibly important. What constitutes a 'work' under copyright sets up boundaries for the laws and expands or limits its application to both old and new artistic endeavors, making it one of the most important parts of interpretation when discussing the scope of copyright. Although discussed for for as long as copyright has existed, the modern definition of what a 'work' is came about in the 1960s through the hands of the House of Lords in the United Kingdom.

The case in question was Ladbroke (Football) Ltd v William Hill, which dealt with two competing companies in the sphere of bookmaking. The respondents to the appeal, William Hill, were firmly established in the marketplace, sending out weekly football odds to their customers during the season. The appellants, Ladbroke, have also been well-established players in the world of bookies, and entered the football bookmaking scene in the late 1950s, sending out coupons which looked very much like the ones William Hill sent to their customers. As a result William Hill sued Ladbroke for copyright infringement, with the case culminating in the highest court of the UK in 1964.

Sisyphus, for some reason, thought his work was for naught.
The coupons which the case concerned were very simple in their design, consisting of a list of the games that week along with boxes next to each match, allowing for the person to indicate the games' outcomes and therefore to change the odds of winning, as each bet would have to be successful for the individual to win. Some of the lists provided contained all of the games that week, whereas some only contained a selection of games. William Hill's coupons contained 16 lists, while Ladbroke's coupons contained 15 lists of games. The latter lists were almost identical to William Hill's ones, with only some slight deviations in terms of headers or different odds. What was allegedly copied were the possible wagers to be made and, to a large extent at least, the layout and headers of the lists. The big question that remained was whether such lists would be a work protectable under copyright.

Under the Copyright, Designs and Patents Act 1988 a 'work' is defined as "...a work of any of those descriptions in which copyright subsists", which include musical, literary and artistic works, among others. That definition alone seems like not much help, but it's an important statement of what can be considered as obvious, which can be expanded upon. Although the wording differs from the Copyright Act 1956 which was at issue in the case, the considerations can be argued to applying equally to the newer 1988 Act.

The discussion in the case pertained mostly to whether such a work could be considered as an original work (more on which can be found here); however whether the sheer compilation of information into tables and lists would be a work is also quite important under this consideration. After all, even if a work is 'original', but does not qualify as a genuine 'work' (in most cases quite hard as the two are more or less intertwined), the piece would not attract copyright protection. In the end this is a determination by assessing the "...skill, judgment or labour" put into the creation of the work; or in other words, did the author of the work do anything more than the bare minimum in the creation of the work in question. Many have mentioned the very scattered approach to this question, as often judges will take into account expense, knowledge and even literary skill employed into the creation of the work; leaving the question without a definitive judicial consideration. This has been seen different in the United States, as under the Feist Publications v Rural Telephone Service decision (more on which can be found here) effort alone won't give a work protectability under copyright. In the end the appeal was dismissed by the House of Lords, and William Hill's coupons and lists were indeed protected by copyright.

As one can see what a 'work' is is quite ambiguous, and the consideration of judgment, skill and labor leaves it even more in the mist, as plain effort might not be the most accurate description or factor in deciding what truly amounts to a work or not. This uncertainty leaves short pieces and low-effort works potentially in the fringes of copyright, and can cause issues to those authors as a result. Clearly this is something which copyright should not cause, and might be a reason why the definition of a 'work' should be revisited by either the judiciary or the legislature in the future.

09 August, 2014

Monkey Business - When Copyright and Simians Collide

The law and the world surrounding it can often be dry and, quite frankly, boring to those who don't love it as most of us working within the legal profession. However, sometimes a topic comes through that permeates that misconception and brings the law and its impact into the discussion at large, often through more unconventional events. In this vein a question can be posed: can an animal own the copyright to a work? This writer for one had never considered this and found himself pondering it a bit longer than I would like to admit. Due to this extended contemplation this answer should be shared for those interested in the implications of animal artistry and copyright.

This issue came to light after an image of a macaques taking a 'selfie' was spread around the Internet, springing up a discussion of both copyright and whether the trend of the 'selfie' has well and truly gone too far. The photograph was taken with a camera which the monkey appropriated from David Slater, a nature photographer in his own right. After his acquisition of the camera the monkey took several pictures, a few of which turned out quite fantastic and display the monkey grinning and staring at the camera. The images were shortly thereafter uploaded to Wikimedia, and have remained there since as freely usable images, with Wikimedia firmly contesting any and all assertions of copyright in the pictures and argue they are in the public domain. As posed above the question still stands: can this monkey own the copyright to its 'selfie', or can Mr. Slater claim the rights over the picture even though he did not take the picture himself?

Rick wanted to ride the animal selfie fame train as well
Under the UK Copyright, Designs and Patents Act 1988 a work is only protected by copyright if it is created by an 'author', defined as "...the person who creates [the work]". Arguably, at least on the face of things, the monkey will have no rights in the pictures as animals are not 'persons' within the meaning of the Act, making the work ineligible for copyright. Although Mr. Slater owned the camera and potentially set up the photo he still does not own the copyright for the work as he himself did not take the photograph. Sometimes the final piece of the puzzle is the most important, especially in intellectual property law.

In the United States there is no real definition of an 'author' under US Copyright law, leaving the matter, on the onset, in limbo. However, through the guidance of the United States Copyright Office's Copyright Compendium, the term 'authorship' used in the US legislation "...implies that, for a work to be copyrightable, it must owe its origin to a human being. Materials produced solely by nature, by plants, or by animals are not copyrightable", and that non-human authors such as monkeys, therefore cannot hold the copyright to a work.

The photographer has since argued that the monkey "...was [his] assistant", potentially causing a case of joint authorship in the work or even affording the rights to Mr. Slater outright. Through his own admission Mr. Slater "...set the camera up on a tripod, framed [the shot] up and got the exposure right", giving the final shot to the monkey itself. Right from the start one has to be slightly incredulous about Mr. Slater's assertion here, and with no evidence bar his own word, as the monkey has refused to comment on the matter, his presentation of what happened has to be taken with a pinch of salt. Should he have effectively directed and set out the shot for the monkey he could potentially claim authorship, as framed by Brad Newberg: "If the photographer actually developed it in a certain way, made some tweaks, used some lighting to make some original choices, and said essentially 'Look at my collaboration with this monkey,' then he would have had some part of the creative process", and could potentially claim the rights to the work. In the end this would be a matter he would have to argue in court, and would be hard-pressed to do so.

So far the monkey's picture has lost Mr. Slater over 10,000 pounds since 2011, and clearly presents him with an incentive to pursue the matter further, especially due to the notoriety of the case at the moment. This writer for one would absolutely love to see the argument go into litigation and hopes Mr. Slater will pursue the matter further, if not just for the legal profession's enjoyment. The case would decide the rights of dozens of animals and who knows, maybe one of them will be the new big thing in nature photography.

Source: Ars Technica

04 August, 2014

Can You Infringe Copyright by Browsing the Internet?

Browsing the web can be full of pitfalls, both legally and in terms of your own safety. It's this world that we endeavor to navigate on our times surfing, but often don't think about the unknown issues or are blissfully unaware of the implications of our digital actions. It's because of this many things can slip through the cracks. Web browsers have made temporary copies of the content we read, look at and watch for years, more often than not without our knowledge, and this can present legal issues when dealing with copyrighted content, whether we want it or not. Whether just innocent surfing can infringe copyright is an interesting question, and this writer for one automatically thought the answer would be obvious, yet one would be surprised about the nuances behind the answer.

The case which dealt with this interesting conundrum was Public Relations Consultants Association Ltd v The Newspaper Licensing Agency Ltd, having been referred to the European Court of Justice by its UK counterpart earlier on in 2013. The Public Relations Consultants Agency (PRCA) is an association public relations professionals, who among other duties monitor the news for their clients, clearly to safeguard or preempt any potential PR disasters. The members of this association used a service provided by the Meltwater group of companies; one which used software to automatically compile an index of words used by newspapers in their content online. To better utilize this service Meltwater's clients provide them with a list of search terms which interest them, which are then used to create an index which is oriented around those key words. In the service's results the opening words of the article, the key word and a few surrounding words and a hyperlink are provided for the client, allowing them to find the article containing their desired content more easily. The service does not circumvent any paywalled articles, and the client will have to pay for that specific content should they wish to view it. The respondents of the appeal objected to this use of their content, and took the Agency to court, culminating in the UK Supreme Court in the earlier part of 2013.

The button that all internet users wished existed for certain purposes
The question faced by the ECJ therefore was, as iterated by the Supreme Court: "The question which arises on this appeal is whether [Internet users reading the an article online] are nonetheless infringing copies unless licensed by the rights owner [by creating temporary copies of those works]". More specifically whether this infringes Directive 2001/29/EC, and through which the Copyright, Designs and Patents Act 1988.

Under Article 5 of the Directive incidental copies are treated as not infringing copyright should they be "... temporary, transient or incidental, which are an integral and essential part of a technological process and whose sole purpose is to enable... a transmission in a network between third parties by an intermediary, or a lawful use... and has no independent economic significance". Arguably, on the face of it, the matter is quite clear-cut, as temporary copies are essential to how the internet functions and how we both conserve and make internet traffic more efficient. Nonetheless, the matter is still not that simple, at least from a legal perspective.

The court quickly saw that the temporary copies made through the viewing of websites indeed do satisfy the first requirement under Article 5, as the copies are lost once the user moves on from the website and other content is subsequently brought in to replace the temporary copies of the prior page. This makes those copies wholly temporary in nature. The court then moved on to the third requirement, under which the copies have to be essential for the technology to work properly; or as presented in Infopaq International v Danske Dagblades Forening: "...first, the acts of reproduction are carried out entirely in the context of the implementation of a technological process and, secondly, the completion of those acts of reproduction is necessary, in that the technological process could not function correctly and efficiently without those acts". As the user has to say (mostly) in the creation or deletion of these copies, the technology needs for those copies to be created in order to function as intended, as they are a part of its process. The copies are, as said above, essential to the internet's proper function and help prevent excess volumes of traffic, which would undoubtedly choke the internet beyond use. The court seemed quite satisfied with the technology satisfying the second requirement, meaning that the technology is needed for the process to function properly and efficiently, and therefore satisfies the third requirement.

Under the second requirement the copies have to be transient or incidental, and as the copies, as stated above, are deleted once the user switches to a different page, they are transient, even if there is some level of human intervention in their deletion. Finally, the copies are created as a part of the technology which uses them, and do not by themselves exist independent of it nor have a purpose outside of it, making the copies incidental for the purposes of Article 5. The court therefore saw that the temporary copies created during web browsing do not infringe copyright and are excluded as a part of Article 5.

As one can see the ECJ's decision was one of pragmatism and common sense. The prevention of transient copies in the viewing of content on the web would be detrimental to how the internet functions today, potentially even causing issues in its overall usability. As said above the answer to the question seemed obvious, and quite frankly, should not have even been argued in court this far. The matter will be passed onto the Supreme Court to decide on ultimately; however the ECJ's word is a powerful one and clearly demonstrates an unwillingness to compromise the net as we know it for the sake of copyright.

Source: The Guardian

26 July, 2014

Thoughts on the Alice Corp v CLS Bank Decision

Software is big business in the 21st century. With over 400 billion dollars worth of revenue having been created in 2013 alone, and arguably the market is growing by the year, you can't help but understand the vehement defense of those interests even if it often seems to be for nothing but profit, and not the defense of a legitimate product or competitive edge. What gives software, and subsequently software patents (discussed in more detail here), a bad name are so-called 'patent trolls', or more officially Non-Practicing Entities (sometimes also called Patent Assertion Entities). The companies rarely produce or use the patents they control, but merely use them as a means to recover licensing fees, potentially affecting the marketplace and software development quite negatively. In light of this whether software should be patentable or not, and if so what the limits are, has been highly contentious and of interest to many. Finally the matter arrived in the open arms of the United States Supreme Court, which issued is ruling on the question a bit over a month ago (discussion of the earlier decision can be found here).

The case of Alice Corporation v CLS Bank International dealt with Alice Corporation's patented method of mitigating 'settlement risk', which is the uncertainty of whether only one party will pay what it owes to another, by the use of a third-party. The software or computer process creates 'shadow records' of the parties' debits and credits, effectively mirroring their payment capabilities within their real world finances. It then allows or denies any transactions based on those records, should they fall within the payment capabilities of the owing party, finally issuing the payment order to the bank responsible for that transaction. This mitigates the risk of such transactions for both parties, leaving much less uncertainty as to the other party's payment capabilities. The patent's claims in question are as follows: "...(1) the foregoing method for exchanging obligations (the method claims), (2) a computer system configured to carry out the method for exchanging obligations (the system claims), and (3) a computer-readable medium containing program code for performing the method of exchanging obligations (the media claims)" - all of which are handled through a computer. CLS Bank handle currency exchanges internationally, and sought a declaratory judgment to invalidate Alice Corporation's patent under 35 USC 101.

What abstract truly looks like
In determining whether Alice Corporation's patent is invalid, the Supreme Court had to decide whether it would fall under a patent ineligible category such as laws of nature or an abstract idea. This assessment, as expressed by Justice Thompson in the unanimous judgment of the court, would entail: "First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts... If so, we then ask, '[w]hat else is there in the claims before us?'" The second step entails an assessment of whether the patent is an 'inventive concept', or in other words, brings something more to the table than just the idea itself.

The Supreme Court in their judgment draw heavily from the case of Bilski v Kappos (more extensively discussed on this very blog). They aligned Bilski's method of hedging risk to Alice Corporation's mitigation method, and determined the patent was indeed an abstract idea and therefore ineligible for the patent. This is because, referring to the Bilski decision: "...all of the claims at issue were abstract ideas in the understanding that risk hedging was a ‘fundamental economic practice.’". As, according to Justice Thompson, there is no meaningful distinction between Alice Corporation's patent and Bilski's patent, the former can be concluded to be an abstract idea in the same vein.

Although the court did determine that the patent was ineligible it could still contain a transformative element which turns it into an 'inventive concept'.  To put into better terms, referring to Mayo Collaborative v Prometheus Labs: "A claim that recites an abstract idea must include “additional features” to ensure “that the [claim] is more than a drafting effort designed to monopolize the [abstract idea]". The mere addition of a computer into the process, as evident from the extensive precedent in this area, will not make non-patentable inventions into patentable ones unless the implementation via the computer is more extensive.

Alice Corporation's patent largely relies on a computerized method which handled the risk mitigation, and on the face of it, seems to fall within precedent as unpatentable. The court outright rejected Alice Corporation's argument that the computer plays a substantial and meaningful role and determined that the patent is not an 'inventive concept'. Expressed better by Justice Thompson: "...the claims at issue amount to “nothing significantly more” than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer". The Supreme Court therefore rejected the appeal and Alice Corporation's patent was deemed invalid.

The decision is very important, however is not necessarily the axe to the head of software patents on the block. Although the Supreme Court rejected patents which merely give instructions to a computer, if applied more thoroughly and in such a way that it solves a problem such as in Diamond v Diehr. This distinction was expressed incredibly well by David Kappos for SCOTUSBlog: "[t]he distinction between patentable software in Diamond v. Diehr and unpatentable software in Bilski and CLS Bank is not about software at all; rather, the difference is the presence or absence of a definitive invention versus abstraction. Diehr's new and useful process for curing rubber was held to be innately patentable – the fact that it happened to be manifest in a software language was tributary". To put into different terms, software patents should be a nuanced application, a solution to a distinct problem rather than a blanket cover for a larger area, stifling progression and potentially causing issues in the technological developments of the future. The reception of the decision has been wildly mixed, and rightfully so, since the decision does both good and bad things to the patent sphere in the US. What impact it will have remains to be seen more down the line, but hopefully this will tackle patent trolls more than it does legitimate businesses - regardless of your definition of 'legitimate'.

Source: The Verge

20 July, 2014

Patenting Drugs - The Case of Marijuana

Drugs are very much a sensitive subject, especially when the law is concerned. Yet, with the ever-growing movement to legalize marijuana, which is gaining a lot of head-wind in the United States, the topic has to be considered from the perspective of business much rather than the perspective of disdain. This would entail revisiting the patentability of at least some sub-sets of drugs in the name of protecting the legitimate business interests of marijuana growers. Would such a change be desirable, and is it possible under today's laws?

In the States of Colorado, where marijuana was legalized in February of this year, sales have been incredible, with the business raking in over 20 million dollars in the first 6 months alone and some estimates seeing it grow to over 100 million dollars in the full year of 2014. Clearly business is booming, and could be argued to only grow if more States enact similar laws. In the market right now there are at least dozens of different strains of cannabis, and much like other commercial products with distinct features of their own, could merit protecting to ensure their viability in the marketplace.

Under 35 USC 161: "Whoever invents or discovers and asexually reproduces any distinct and new variety of plant... may obtain a patent [for that plant]". On the face of it, one could easily argue that cannabis plants could be patentable subject matter. This is overshadowed by the fact that marijuana still remains a controlled substance federally under 21 USC 812. It is because of this a federal patent cannot be issued over marijuana plants, effectively making them unpatentable. As the public perception and acceptance of cannabis and its use change, the laws might allow for the patenting of cannabis plants and plant varieties; however this change seems unlikely in the immediate future.

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Plant varieties could be protected through trademarks, albeit only in name. The USPTO briefly added a category for marijuana in 2010, promptly removing it stating it was "...a mistake". Nevertheless marijuana strains could potentially be protected under trademark legislation, which was well explained by Kal Raustiala: "...trademark protection under both state and federal law does not require registration of the trademark with the government, but merely that the mark actually be used in commerce to identify the source of a particular product or service". Simply put protection is possible, but whether protection would be afforded by the courts is a question that will remain to be answered. One still has to note that trademark protection does not protect the plant strain itself, but merely the name as a badge of origin for that particular product. Trademarks will not necessarily prevent a competitor from using the plant strain and selling it, as long as they use a different name for the product.

As one can see, cannabis is, and will be, a hot-button issue in IP for years to come, and it'll be truly interesting to see where the law will go especially when considering the movement to legalize the substances gains more momentum. From a purely pragmatic, business point of view, the law should accommodate the change and allow for such plant variations to be protected. Whether this will happen will remain to be seen, but this writer for one sees it as almost an inevitability.

Source: Bloomberg