By: Ashley Sloat, Ph.D., President of Aurora Consulting LLC
In Integrated Technological Systems, Inc. v. First Internet Bank of Indiana, the U.S. District Court for the Eastern District of Texas recently held that the claims are not directed to patent-eligible subject matter because the claims recited nothing more than conventional computer activities or routine data-gathering steps. However, an invention’s ability to run on a general-purpose computer should not and does not necessarily doom the claims.
Exemplary claim 1 of U.S. Patent No. 7,912,786, one of the four patents at issue, recites:
In particular, note the following limitation: “so that the computer system processes and effects a money transfer from a sending debit card account to a receiving debit card account without the necessity of a pre-established relationship between the sending debit card account and the receiving debit card account.” (emphasis added). Integrated Technological Systems highlighted this limitation stating that it was novel over the art of record cited by the USPTO and was the reason the Examiner allowed the application. As such, this limitation seems (at least to me) to fulfill the “something more” prong of Step Two of the Alice/Mayo Framework, despite the claim being directed to an abstract idea.
According to the MPEP 2106 “Patent Subject Matter Eligibility,” “Thus, if a claim is directed to a judicial exception, it must be analyzed to determine whether the elements of the claim, considered both individually and as an ordered combination, are sufficient to ensure that the claim as a whole amounts to significantly more than the exception itself - this has been termed a search for an inventive concept. Alice Corp., 134 S. Ct. at 2357, 110 USPQ2d at 1981.” (emphasis added).
The inventive concept is this notion of being able to transfer money between accounts without a previously established link between them. If this is the inventive concept, why did the U.S. District Court for the Eastern District of Texas fail to find the claims directed to patent eligible subject matter?
The answer is that there is substantial ambiguity in the Alice/Mayo Framework that has resulted in each court interpreting the framework differently. Some courts hang their hats on the search for a new piece of hardware in the claims (like in this case), while others hang their hats on the search for an inventive concept. Patentees and practitioners alike would immensely benefit from increased clarity in the framework. But, alas, we wait for such clarity.
The Three Ws of Patent Strategy
By: Ashley Sloat, Ph.D., President of Aurora Consulting LLC
A tailored patent strategy is imperative for the success and growth of most startups, but… What? Why? and When? These are the three questions many startups face when first considering patent protection.
Let’s first consider What. “What is patentable?” Generally speaking, any new, non-obvious, and useful system, device, or method is protectable by a patent in the U.S. This may sound broad, but it is so by design. That said, recent U.S. court decisions on the patentability of software and diagnostic methods have created some difficulty in protecting these innovations, but for the right innovation, patent protection remains possible.
Next comes Why. “Why should we apply for a patent?” The reasons can be numerous, but for startups, a patent can provide three main advantages: assisting fundraising efforts, deterring copycats, and delineating partnership contributions.
Assist fundraising efforts. A patent provides the patent owner the right to exclude competitors from making, using, or selling the patented product. Having this right can stimulate investment or acquisition. Many investors will not invest in a company of interest unless the company has an issued patent or at least a pending patent application. A pending patent application signals to investors that you are taking steps to protect your market share. For potential acquirers, a pending patent application or issued patent signifies that, if the acquirer buys the company, the acquirer has the potential for a monopoly on the market for up to 20 years for the protected product.
Deter copying. If a competitor observes that a product or features of a product are protected by a patent, the competitor may be less likely to copy that product or those features. Further, if a competitor does copy patent-protected elements of a product, an infringement lawsuit can be brought against the competitor to seek monetary damages and stop the copying.
Delineate partnership contributions. If an invention is shared with a potential partner while collaborating together before filing a patent application, the potential partner may mistakenly claim rights to the invention, thinking that he or she independently derived it. Filing a patent application before talking to any potential partners can clearly delineate which ideas preceded the collaboration.
Finally, but perhaps most pressing, comes When. “When should we apply for a patent?” To protect your rights in the U.S. and internationally, ideally a patent application should be filed before any public disclosure (e.g., publication, seminar, trade show, etc.). However, if you have already publicly disclosed, the U.S. has a one-year grace period, which allows an inventor or applicant to file a patent application up to one year after the initial public disclosure. For international filings, if the product has already been publicly disclosed, any new, non-obvious improvements in the product, that have not been previously disclosed publicly, can still be protected by a patent.
Further, it is important to note that patent applications can be filed on ideas that have not been actually reduced to practice so long as the idea can be described in such detail in the patent application that others skilled in the relevant technical field could make and use the invention.
If you have more detailed inquiries about the Three Ws or any other aspects of your patent strategy, Aurora Consulting would love to hear from you!
TC Woman Owns Patent Strategy Company by Mark Urban at the Traverse City Record Eagle.
TRAVERSE CITY — Aurora is the Roman goddess of the dawn. It is also a natural electrical phenomenon in the northern sky.
Blending the two was the perfect name for Ashley Sloat’s patent strategy firm, Aurora Consulting. Sloat, who holds a doctorate from the University of Michigan in biomedical sciences, serves clients across the globe while firmly rooted in her home office on the shore of Rennie Lake.
“For us, it’s ‘where do we want to live’ because our client base doesn’t dictate where we have to live,” Sloat said. “So for us it was, let’s try to be near family and raise our own family.”
Sloat, whose husband, Josh, is a Lake City native, moved to Traverse City in early 2014. Like his wife, Josh Sloat also works remotely from their house, as a software engineer.
Ashley Sloat said Traverse City is a dawning innovation center.
“Our hope is to really grow the business here with lots of potential long term,” Sloat said. “Maybe we’re a little early, but I’d rather be early to the party than late to the party.”
Sloat pointed to TC New Tech, a monthly meeting of technology enthusiasts to highlight new products or business ventures, and the Geek Breakfast, a monthly morning meeting of “technology-minded people,” according to the group’s website.
“There’s a lot of ways for people to get connected in Traverse City and I think it’s a great start to keep building the area,” she said. “I think it’s going to be a big tech center at some point. I think we’re just at the beginning of it.”
When Sloat began her education at North Dakota State, becoming a patent agent was not part of the plan. She graduated in 2007 with a 4.0 GPA in microbiology with chemistry, biotechnology and Spanish minors.
The initial plan while pursing her PhD at the University of Michigan was to become a research scientist and a professor. During grad school she discovered two important facts.
“One, there aren’t enough positions for all of us, and, two, maybe it wasn’t as glamorous as we thought it was,” Sloat said.
While Sloat was still at U-M, Jessica Hudak contacted the tech transfer office at Michigan where Sloat worked, looking for assistance with her patent company. Sloat went to work for Hudak “almost like an apprenticeship” and joined the firm full time as a patent strategy specialist and after passing the patent bar in 2014 as a licensed agent.
“There was definitely a big movement in PhD students on how to find ‘alternative careers’ as they were calling it,” Sloat said. “For me, I was fortunate enough to kind of stumble upon the patent field through a couple of different connections that I had and ultimately, obviously, ended up really liking it and making it more of a long-term career and not just a bump in the road.”
When Hudak went to law school, Sloat handled “75 to 80 percent of the clients.” Hudak now works as a law clerk for the U.S. Court of Appeals. Sloat acquired Hudak Consulting Group on Jan. 1.
Patent attorneys and agents both take the patent bar and handle the duties such as correspondence with the U.S. Patent and Trademark Office, draft patent applications and post-grant proceedings. The only difference, Sloat said, is that agents can’t handle litigation or trademark disputes, which falls under state-to-state commerce rules and is handled by patent attorneys.
A lot of the work Sloat does is in the “biotech and biomedical space.” But she’s also worked on patents for a company that produces a surfboard. So the diversity she sought as a PhD has come to fruition as the president of Aurora Consulting.
“One of the things that bothered me during the PhD is that you spend your whole career on one cell type or one protein pathway or maybe like a subset,” Sloat said. “There’s just so much other science out there that you would never get to read about because you don’t have time.
“So with patents, I have clients that are a wide-range of technology so I get to be excited and learn about their technologies with them. They get to be the ones that are innovating, but I still get to share in the excitement and learn about it. For me, that’s the excitement I get in this process.”
Sloat said her background in science also helps her adapt to realms outside of her specialty.
One of Aurora Consulting’s largest clients, CardioKinetix, has more than a hundred issue patents. Based in Menlo Park, Calif. CardioKinetix has a “parachute” implant that, by partitioning the enlarged left ventricle, helps the heart pump more efficiently following organ failure.
“I’ve definitely had to teach myself a bit of engineering in the process,” Sloat said. “I tell PhD students all the time that are looking for that alternative career that, yes, a PhD teaches you about science, but even more it teaches you critical thinking and the ability to adapt to new technology, adapt to new information and learning new information more readily.”
While CardioKinetix holds a lot of patents and has been working with Sloat since 2012, it is still considered a start-up company. Aurora Consulting’s clients are mostly start-ups that have anywhere from a handful of patents to 15 or 20.
“That’s more the size we deal in, those new companies,” she said.
Sloat said there are different ways for inventors to get a patent, a process that takes an average of five years.
“There isn’t any one path to a patent,” Sloat said. “There are lot of different paths to a patent and there’s also a lot of different types of patents. There’s design patents and utility patents and they have different pros and cons to them. That’s where I feel we really shine in the patent space.”
Since Aurora has many California clients, Sloat travels quarterly to the West coast and tries to pack as many meetings as possible into each visit. Just as in Traverse City, the company has no physical “office” in California.
Like Sloat, the other two members of the Aurora Consulting team are based in different locations. Director of Patent Strategy Kirsten Wolff is in Seattle. Patent paralegal Alisa McCarthy is in southwestern Michigan.
Tools like Skype and Google Hangouts allow Aurora Consulting to stay in touch with clients anywhere in the world.
Ashley Sloat, Ph.D.
Startups have a unique set of patent strategy needs - so let this blog be a resource to you as you embark on your patent strategy journey.