The Munich-based CIPLITEC (Center for Intellectual Property Law, Information and Technology) is a recently-created forum for an exchange of views between the leading Bavarian law schools and practitioners. Yesterday, Dr. Ralf Uhrich, in-house patent litigation counsel at Google and in charge of all European patent infringement cases to which Google is a party (always as a defendant unless I missed something), gave a talk at Ludwig Maximilian University, as per CIPLITEC's invitation, on the subject of "patent protection for data." I had previously seen Dr. Uhrich at various German patent trials while he was a Quinn Emanuel associate, and at a couple of conferences in the area.
As a result of CIPLITEC's inclusive approach, there were 200 or 300 people in the audience as per my estimate; most of them were students, but I also spotted a number of law professors, patent attorneys, and patent litigators. In response to strong demand, this event had to be moved to a larger room than the one they had originally reserved. I attribute this to the topic, to many people's interest in Google's views (though one of the organizers stressed that Dr. Uhrich was expressing his personal views as opposed to engaging in advocacy on his company's behalf), and to Dr. Uhrich's great personal reputation in the German legal community. By the way, if you didn't know who he is, you might be led to believe he's the younger and smarter brother of Liverpool FC manager (and this year's UEFA Champions League-winning coach) Juergen Klopp.
The starting point for the presentation was the European legal framework for patent-eligible subject matter: Article 52 of the European Patent Convention (EPC). As Dr. Uhrich explained, the exclusions set forth there appear broader than they are applied when it comes to entire patents: a token reference to a computer or even just a storage medium salvages a claim, but non-technical claim limitations (though a more efficient use of computing resources is considered technical) are irrelevant to a novelty or inventiveness analysis. Having campaigned against software patents in the EU, my personal view is that the European Patent Office as well as national courts act as if Art. 52 EPC didn't exist as far as entire patent claims are concerned, and while the situation is indeed substantially better with respect to what counts in a novelty or inventiveness context, the statutory exclusions have simply been gutted. A 1969 decision by the Federal Court of Justice of Germany, Rote Taube ("Red Dove"), defined technicity as the planned use of controllable forces of nature for the purpose of achieving a specific result, and on that basis it would be possible to distinguish a software-controlled braking mechanism or other advanced in an applied natural science from pure advances in software such as more efficient memory (or bandwidth) usage through data compression.
The good news in the early part of Dr. Uhrich's presentation was that even the EPO doesn't grant patents that claim a data structure per se. So the issue here is not one of patentable subject matter in the strictest sense, but of the scope given to patent claims at the enforcement stage. To share the bad news upfront, the effect of an overreaching infringement theory can be just as bad as straightforward patent claims on data formats. But, at least for now, the related case law in the United States is fundamentally better than in Germany, though this may be attributable in no small part to the historic happenstance of what cases were put before the courts in what sequence--and what questions for review the parties raised.
Just so there is no misunderstanding: Dr. Uhrich's academic talk was nonjudgmental, so when you find words like "good news" and "bad news" here, rest assured they're just my opinion. He may or may not agree depending on context.
The enforcement-related main part of Dr. Uhrich's talk started with a 19th-century holding by the German Reichsgericht (Imperial Court), Methylenblau, involving a patent covering a chemical manufacturing process that was employed outside of Germany, but the resulting product entered the German market. The key doctrine there was that the scope of protection of a manufacturing patent potentially extends to the output if the substance so produced is an integral part of the patented process. On that basis, the Reichsgericht remanded the matter to the trial court.
The legal tradition that started with Methylenblau wouldn't have had to inevitably lead to a high-court decision, more than a century later, that data sequences generated by a patented data processing operation are afforded the same degree of protection (potentially, as it's always subject to the specific facts of a case). Not only is there a fundamental difference between physical goods and non-physical data but what makes this doubly unreasonable is the blatant inconsistency of such an outcome with the statutory exclusion of patents on "computer programs as such." Unfortunately, it nevertheless happened.
In 2012, the Bundesgerichtshof (Federal Court of Justice of Germany) handed down a decision on whether data storage media manufactured outside of, but imported into, Germany might infringe a video encoding patent, EP0630157 on "systems and methods for coding alternate fields of interlaced video sequences," a patent declared essential to the MPEG 2 video standard. While the patent holder lost the case due to a combination of other reasons, particularly patent exhaustion (the video data was generated with a licensed tool), the decision held that the case could not be dismissed on the grounds of the accused products containing data sequences as opposed to an encoder (be it a physical device or a piece of software).
I have read the MPEG-2-Videosignalcodierung (MPEG 2 video signal encoding) decision, and there is no reference in it to the statutory exclusion of patentable subject matter under the EPC, suggesting very strongly that counsel for defendant didn't raise this point with the top court. German patent litigators rarely recur to the Article 52 exclusions as they have been rendered as meaningless as I explained above when it comes to entire patent claims. Many of my allies in the movement opposing software patents suspect that patent litigators wouldn't even want Article 52 to be given meaning since it would discourage the filing of many patent applications and infringement cases in the first place. Whatever the reason may be, I had a conversation in 2014 with a Federal Court of Justice patent judge (who was on the panel of five judges who made the MPEG 2 decision, though one never knows where a member of a German panel actually stood since there is no such thing in Germany as a dissenting opinion), and I mentioned my opposition to software patents. He noted that their decisions are often misunderstood as being exceedingly permissive in this regard just because the questions put before them--which may just be about novelty or inventiveness, for instance--don't even enable them to address subject matter. I'm still grateful for a very interesting conversation on a train ride from Bayreuth to Nuremberg after a conference, so I don't want to criticize the Federal Court of Justice for a decision that I regard as inconsistent with the letter and the spirit of Article 52 EPC. However, I would strongly encourage other litigants (knowing how many litigators read this blog) to raise the Article 52 question when the opportunity arises in connection with patent enforcement against pure byte sequences.
One of the reasons for which I believe it would be worth trying is that, as Google's Dr. Uhrich explained yesterday, the Federal Court of Justice seized the opportunity afforded to it by a non-digital patent case, Rezeptortyrosinkinase II, to clarify (well, there's a floating border in case law between clarifications and corrections) that the MPEG 2 doctrine doesn't cover just any information resulting from a patented process. In that case decided in 2016, the Federal Court of Justice did not see a patent infringement in the mere communication of the result of a medical analysis from the country in which the analysis is performed to the country in which the process is protected by a patent. In that case, the result was basically just a binary yes-or-no piece of information on whether a certain medical condition was present.
The relevant line-drawing is centered around the question of whether the transmitted data bears actual and technical characteristics engraved by the patented process. In the case of MPEG 2 video data, that was deemed to be potentially the case as the encoding process results in a particular data structure. Apart from the general concerns I raised above, I do have an MPEG-2-specific concern, which is that the key characteristic of MPEG 2 is "lossy" compression, so at least to the extent that data is removed (so as to allow for more efficient compression), it's hard to see how it can simultaneously be "engraved." However, despite disagreeing with the MPEG 2 doctrine, I certainly see the difference between a specific data format on the one hand and some abstract information on the other hand.
However, it will take more decisions to get a better idea of where exactly the line is drawn (and ideally one of the cases would eliminate the problem on the basis of Article 52 EPC). In the Q&A part, I brought up a case I had watched in Mannheim earlier this decade. A cellular standard-essential patent covered an algorithm for calculating a number sequence used as a key (like a cryptographic key) for mathematical operations that transformed data (the data to be sent over the wireless network) in a way that minimized undesirable physical effects at the radio frequency level. The key was clearly standard-essential, just like a cryptographic key prescribed by a security standard would be; but the asserted patent claim, in the preliminary opinion of the panel of judges, probably wasn't because the accused baseband chipsets simply had the number sequence hardwired instead of performing the patented process to derive them. That case was somewhere in the middle between MPEG 2 and Rezeptortyrosinkinase II, but never reached the higher courts due to a settlement.
Thankfully, Dr. Uhrich also drew a comparison between German and U.S. case law on patent enforcement against data sequences. In Bayer v. Housey Pharmaceuticals (2003), the United States Court of Appeals for the Federal Circuit affirmed the dismissal of an infringement claim because "infringement under 35 U.S.C. § 271(g) is limited to physical goods that were manufactured and does not include information generated by a patented process, and because the physical goods here (drug products) were not 'manufactured' by a process claimed in the asserted patents." The opinion was authored by Circuit Judge Timothy Dyk, joined by then-Chief Judge Mayer and now-Chief Judge Prost.
The term "manufacture" plays a key role in U.S. patent law. As some of you may remember, it was key to the Samsung v. Apple Supreme Court appeal related to the "article of manufacture" based on which a design patent holder would be entitled to an unapportioned disgorgement of an infringer's profits. The term "manufacture" alone, coupled with an almost-originalist interpretative standard that takes into account what lawmakers really meant way back when, enabled the Federal Circuit to decide against what would have been a similarly expansive school of thought as the one of the Federal Court of Justice of Germany.
Here comes Judge Sharon Prost again, who in most contexts (with exceptions like design patent damages proving the rule) takes very balanced positions. Meanwhile she had become Chief Judge, and she authored the Federal Circuit opinion in ClearCorrect v. ITC, a decision that Google's Dr. Uhrich also explained yesterday. In that case, the ITC had ordered an import ban on data generated outside the U.S. but sent to the U.S. for the purpose of 3D printing. It's not unheard of for the ITC to have an expansive view of its jurisdiction, even including digital data transfers, but the appeals court made clear that it disagreed with what the ITC had already held prior to ClearCorrect, which was that the statutory term "articles" "should be construed to include electronic transmission of digital data [...]."
The way things work, there's no doubt that some patent-asserting plaintiffs are still going to try to push the envelope of data format patentability in the United States. But at least for now, they'll be facing an uphill battle whenever they try.
What is clearly needed is a pushback against overreaching patent enforcement in Germany. Yesterday's academic presentation was neither a campaign speech nor particularly alarmist. Expressing a personal--not corporate--view, Dr. Uhrich responded to a question from the audience with a reference to other forms of intellectual property protection for data, such as database rights (a big thing in the EU, by the way) and copyright law.
I mentioned my Art. 52 EPC concern, but I also think that regardless of software patent-eligibility, the MPEG 2 decision is bad as a matter of policy because if an encoder is patentable, then so is, typically, the related decoder. And that's what the enforcement of codec patents should be limited to.
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