In Private Practice for 25 Years


The U.S. Patent and Trademark Office (USPTO) took the unusual step of ordering on its own initiative, reexamination of a prominent software patent (the Eolas Patent No. 5,838,906). Microsoft, encouraged, reverses course.

    The Eolas patent has claims affecting any web page with "an embed text format ... [used] to automatically invoke [an] executable application to execute" on a client computer in order to display an object. The claim is seen by some as broad enough to cover clicking on a link to automatically use embedded ("active") content and applications; e.g. automat-ically running QuickTime, Macromedia Flash, Realplayer, etc.

    The reexamination order was made in response to strong objections to the patent by members of the software development community, most notably the World Wide Web Consortium. According to the USPTO, of the 6,786 reexaminations orders ever issued only 2% have been initiated by the USPTO.

    During this reexamination the USPTO can consider whether any prior art brought to the attention of the USPTO would invalidate or require narrowing of any claims of the Eolas patent. This reexamination order should be viewed as a significant event in the continuing campaign to bring sense and stability into the world of computer and software patents.

    The intense interest in this patent is the fallout of high-stakes litigation between Microsoft and the patent owner Eolas Technologies, which obtained a $521 million jury award against Microsoft about two months before the reexamination order The impact of this litigation spread when Microsoft advised software developers of its plans to modify Internet Explorer in order to comply with certain court rulings. These proposed modifications to this popular browser will defeat the code of many web pages across the Internet, sending web page designers into a recoding frenzy. After the reexamination was commenced, Microsoft then announced on January 29, 2004 that it was postponing revising Internet Explorer on the hope that the Eolas Patent would be invalidated in the USPTO reexamination. While the Eolas patent is the latest example of fear, uncertainty and doubt caused by patents of uncertain scope and validity, this concern has been arising regularly. Most will recall the prominent lawsuit between Amazon and Barnes & Noble over the so-called "one click" Patent No. 5,960,411. This suit settled around March 2002 on undisclosed terms.

    To many, the underlying problem sprang from the inability or unwillingness of the USPTO to deal with software inventions during a critical growth spurt when computer technology was appearing in diverse industries in unprecedented ways. This early resistance to software inventions can be traced to the refusal in 1972 by the U.S. Supreme Court to allow patent protection for a method for changing the encoded representation of data in a computer (BCD to binary) 1. Consequently, the USPTO would not consider inventions that were primarily software inventions during some very critical, formative years. As a result, the USPTO was not developing a well classified portfolio of patents that documented the advances in this burgeoning technology.

    In 1994 a series of decisions by the Court of Appeals for the Federal Circuit (CAFC) greatly expanded the opportunity to protect inventions that included software as a major component. In particular, the CAFC found statutory subject matter in a memory data structure2, and in memory having data arranged in a bubble hierarchy3. In the same year the CAFC found that a patent claim, even if characterized as a specially programmed general-purpose computer, may still be statutory subject matter since the special programming is deemed to create a new machine4. In a later case involving business methods and data transformation for a group of mutual funds, the CAFC went further and held that changing dollar amounts into a final share price was a "practical application of a mathematical algorithm, formula, or calculation, because it produces ‘a useful, concrete and tangible result,’" and was therefore statutory subject matter5.

    To deal with these shifting legal foundations, the USPTO has been working hard to develop the expertise to find and cite appropriate prior art against a groundswell of new applicants. The reexamination order for the Eolas patent is an encouraging sign that the USPTO is taking its difficult task seriously. If any governmental agency can handle rapid changes, the one charged with handling innovation ought to be the best equipped. Accomplishing this task, however, will not be easy and will require time, people, and resources. In the meantime, the best we can hope for is that the magnitude of these tremors will gradually diminish over time.

1. Gottschalk v. Benson, 409 U.S. 63 (1972).
2. In re Lowry, 32 F.3d 1579 (Fed. Cir. 1994)
3. In re Warmerdam, 33 F.3d 1354 (Fed. Cir. 1994)
4. In re Alappat, 33 F.3d 1526 (Fed. Cir 1994)
5. State Street Bank & Trust Co. v. Signature Fin. Group Inc., 149 F.3d 1368 (Fed. Cir. 1998)

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