Blockchain patent activity increases – but granted patents are still rare in this field

Since late 2015 a considerable media hype could be observed around cryptocurrencies and blockchain technology, or, more generalized, distributed ledger technology. Is this hype reflected by a corresponding rapidly rising number of patent applications ?

The following diagram shows the number of US-, EP- and PCT patent applications (source: Derwent Innovation patent database) since 2011 as well as granted US and EP patents containing the expressions “blockchain” or “bitcoin” or “distributed ledger” in the title, the abstract, or the claims. The x-axis represents the year of the first filing date (priority date) of a patent family; applications filed both e.g. in the US and in Europe are thus counted only once.

Blockchain patents Feb 2018

The diagram shows a siginificant increase of the patent activity from 20 patent applications in 2013 to 324 patent applications in 2016, but not a hype. One must keep in mind, however, that patent applications are in general published only 18 months after the earliest filing date. The development in the last 18 months is thus not visible in this diagram. Moreover, many blockchain projects are open source and do not seek patent protection.

The number of patent grants (which are publidhed without delay) shows only very modest numbers. In 2017, 21 US patents and 1 EP patent relating to blockchain technology have been granted.

The top 10 patent applicants (assignees) are shown in the following diagram:

 

Blockchain patent applicants Feb 2018

US applicants dominate, lead by Mastercard with 44 applications, bearing in mind that Chinese national applications are not included. The most important applicants from Europe are Nchain, the vehicle of “would-be Satoshi Nakamoto” Craig Wright and British Telecom, owning the single granted European patent relating to blockchain technology.

 

CRISPR EP Update: Broad Institute loses fundamental patent EP 2 771 468 at opposition hearing on 17 January 2018

The patent dispute relating to the revolutionary CRISPR-Cas9 gene-editing technology between the Broad Institute (jointly operated by Harvard and MIT) on the one side and UC Berkeley on the other side is followed by the biotech community with great interest .

Broad Institute has been the first one to get a patent issued on CRISPR-Cas9 technology in Europe, namely EP 2 771 468. Against this patent, 9 oppositions have been filed, most of which so-called strawman oppositions. The oral hearing finalizing the first instance of the opposition proceedings has been scheduled to take place on 16-19 January at the EPO in Munich. In the preliminary opinion issued together with the summons to the oral hearing, the oppisition division took a non-binding provisional view that the four priorities P1, P2, P5, and P11 cannot be validly claimed by the patentee, because the priority right had not been validly transferred to the applicants of PCT application forming the basis of the granted EP patent.

The decision was issued already in the early afternoon of the second day of the hearing: The opposition division maintained its position laid out in the provisional opinion and decided that the patent proprietor cannot validly claim priorities P1, P2, P5, and P11. As a consequence the claims as granted (main request) were revoked on the ground of lack of novelty. The 64 auxiliary requests filed by the patent proprietor were not admitted to the proceedings. The patent was thus revoked in full. The course of the oral proceedings can be seen in this twitter thread.

In short, the grounds for losing the essential priority rights are as follows: In order to validly claim priority right of a European patent application either directly filed or as a national phase of a PCT application (as in the present case), either (i) the applicant of the priority application and of the later application are identical or (ii) the applicant of the priority application assigns the application to the applicant of the later application, or (iii) the applicant of the priority application assigns the priority right to the applicant of the later application.

The assignments of the application or the priority right must have occurred before the filing of the later application (here: the PCT application), since, for reasons of legal certainty, a retroactive effect is excluded. However proof of such transfer may be provided later.

Furthermore, in case of more than one joint applicants of the priority application, each applicant of the priority application must either be also applicant of the later application or have assigned the application or the priority right to one of the applicants of the later application before the later application date. This was not the case for the priority applications P1, P2, P5, and P11. One of the applicants (and inventors) of these US provisional priority applications was no longer applicant of the PCT application and did not assign the right to the application or the priority right to one of the applicants of the PCT application. As a harsh consequence, the applicants of the PCT application and proprietors of the European Patent lost priorities P1, P2, P5, and P11. Without entitle-ment to these priorities, the subject-matter of the granted claims lacked novelty over the prior art on record.

The written decision of the opposition division can be expected in approximately two to three months. In a press release issued shortly after the decision on priority and before announcement of the full decision, the Broad Institute already announced to lodge an appeal against the finding of the opposition division.

Disclaimer: Neither I myself nor the patent firm Betten & Resch, of which I am a partner, are involved in any patent cases relating to CRISPR-cas9 technology.

(picture by sporst)   Twitter: @patentlyGerman

German Federal Court of Justice (FCJ) takes different view on undisclosed disclaimers than recent EPO Enlarged Board of Appeal decision G1-16 – FCJ “Phosphatidylcholin” (19 September 2017)

Unofficial Headnote:

Including a not originally disclosed negative feature (disclaimer) in a patent claim in order to delimit the claimed subject-matter from the prior art does not constitute an inadmissible extension of the subject-matter of the original patent application if the disclaimer does not have a technical effect.

To the relief of many patentees in particular in the chemical and biotech industries the Enlarged Board of Appeal has in its most recent decision G1-16 confirmed that undisclosed disclaimers are allowable under certain circumstances defined in the decision G1-03, namely in order to

  1. restore novelty by delimiting a claim against state of the art under Article 54(3) and (4) EPC (later published prior art);
  2. restore novelty by delimiting a claim against an accidental anticipation under Article 54(2) EPC; an anticipation being accidental if it is so unrelated to and remote from the claimed invention that the person skilled in the art would never have taken it into consideration when making the invention; and
  3. disclaim subject-matter which, under Articles 52 to 57 EPC, is excluded from patentability for nontechnical reasons.

An undisclosed disclaimer is defined by including into a patent claim a negative technical feature, whereby neither the disclaimer itself nor the subject-matter excluded by it have been disclosed in the application as filed (G1-16, point 14).

The Enlarged Board of Appeal (EBA) reasoned that such undisclosed disclaimers in most cases constitute added matter, i.e. “the requirements of Article 123(2) EPC leave virtually no chance of an undisclosed disclaimer being allowable” since “introducing any disclaimer per definitionem excludes subject-matter from a claim and, hence, changes the technical content of the claim” (G1-16, point 42). The EBO allowed undisclosed disclaimers under the above-mentioned clearly defined conditions despite the fact that they violate Art. 123(2) EPC, because under these circumstances a violation of Art. 123(2) EPC would not give the patentee or applicant an unwarranted advantage damaging to the legal security of third parties; this being the rationale behind Art. 123(2) EPC (G1-16, point 36).

The German Federal Court of Justice (FCJ), however, applies in the recently published ex-parte decision “Phosphatidylcholin” a different reasoning. In the case the FCJ had to decide upon an appeal on points of law (“Rechtsbeschwerde”) of the applicant of a patent application, which has been rejected both by the GPTO and the Federal Patent Court based on the ground that of an undisclosed disclaimer consisted of an inadmissible extension beyond the content of the original application. The patent claim before the FCJ reads as follows:

“Cosmetic, nontherapeutic use of

a) 5 – 30% by weight of sodium chloride and 

b) 5 – 30% by weight of glycerol,

in each case based on the total composition,

c) wherein these preparations are free from phosphatidylcholine

d) in hand protection creams, cleansing milk, sun protection lotions, nourishing creams, day creams or night creams for reinforcing the barrier function of the skin.”

The undisclosed disclaimer (feature c)) requires that the claimed preparations are free from phosphatidylcholine (a particular form of lecithin). Such preparations free from phosphatidylcholine are not disclosed in the original application documents. The GPTO and the Federal Patent Court therefore rejected the claim as inadmissibly amended, which finding was not contested by the applicant itself.

The FCJ, however, takes a different position and concludes that in the original application documents there is also no indication that phosphatidylcholine is a necessary component of the preparation or that its addition is considered advantageous. Therefore, the disclaimer “merely expresses the fact that from the large number of possible compositions of the preparation, which are possible according to the original application documents, only those containing phosphatidylcholine are excluded”. In addition, the undisclosed disclaimer merely serves to distinguish the invention over a (non-accidental, prepublished) prior art reference R disclosing skin protection preparations containing sodium chloride and glycerin in addition to the main ingredient phosphatidylcholine. The FCJ concludes that undisclosed disclaimers do not consist of an inadmissible amendment if (i) they serve the purpose to distinguish the claimed subject-matter over the prior art and (ii) the disclaimer has no technical effect. The use of undisclosed disclaimers is allowable during the examination as well as in post grant procedures.

The reasoning of the FCJ thus differs from that of the EBA. The EBO concludes: Undisclosed disclaimers constitute an inadmissible amendment but are exceptionally allowable under the above-mentioned circumstances 1., 2., or 3. The FCJ finds: Undisclosed disclaimers do not constitute an inadmissible amendment in the first place and are therefore allowable (i) if they serve to distinguish the claim over the prior art and (ii) if they do not have a technical effect.

In practice, the main difference is that under the FCJ approach the allowability of undisclosed disclaimers is also applicable to non-accidental prepublished prior art (as reference R in the subject decision “phosphatidylcholine”). Condition (ii) requires that the undisclosed disclaimer must not have a technical effect, i.e. the skilled person must not derive any new technical information therefrom. This condition seems to imply that undisclosed disclaimers are not be accepted to support inventive step. The FCJ has decided in the “phosphatidylcholine” case that the disclaimer does not have any technical effect based on the application documents without reference to the prior art, such that the question of inadmissible extension is independent from the considered prior art.

The assessment of a potential technical effect of the undisclosed disclaimer, however, may lead to the following problem:

In the present appeal on points of law case the FCJ had to refer the matter back to the Federal Patent Court to decide on the merits whether the claim containing the disclaimer is novel and involves an inventive step over the prior art. It is to be expected that novelty will be confirmed, because otherwise the disclaimer would not have made any sense. More interesting, however, is the assessment of inventive step: The closest prior art document R discloses a skin protection preparation comprising phosphatidylcholin (as main, essential ingredient) + glycerol + sodium chloride (features [C+A+B]). The application under review claims glycerol + sodium chloride + (not phosphatidylcholin), i.e. features [A+B+notC]. Would it be obvious for the skilled person starting from closest reference R to provide a skin protection preparation removing the main, essential component? Probably not. In this case, however, the disclaimer notC would indeed have a technical effect establishing inventive step, contrary to the finding of the FCJ allowing the disclaimer in the first place. It will be interesting to see how the Federal Patent Court will resolve this matter.

The EBA approach, in contrast, appears to avoid such problems: A negatively claimed technical feature is regarded as (almost) always having a technical effect such that its addition contravenes Art. 123(2) EPC, but is exceptionally allowed under certain precisely defined conditions avoiding unnecessary hardship for the patent proprietor while preserving legal certainty for third parties.

Patent protection for computer system architecture: EPO Appeal Board Decision T 1658/15 “Universal merchant platform for payment authentication”

Author´s headnotes:

  1. In the assessment of inventive step, the business person is just as fictional as the skilled person of Article 56 EPC. The notion of the skilled person is an artificial one; that is the price paid for an objective assessment. So it is too with the business person, who represents an abstraction or shorthand for a separation of business considerations from technical. A real business person, a real technically-skilled person, or a real inventor does not hold such considerations separately from one another.
  2. Outsourcing a commercial transaction such as the authentication of an online purchase transaction to a different computing device cannot in all cases be abstracted to a purely business activity because it may encompass technical aspects such as the use of plug-ins and servers.
  3. If a prima-facie technical prejudice existed at the relevant date against the outsourcing of a commercial transaction such as the authentication of an online purchase transaction to a different computing device, then this outsourcing involves an inventive step.

The patent application allowed by the decision T 1658/15 of the Technical Boards of Appeal of 29 November 2016 relates to online payment systems.

To complete an online purchase transaction in such systems, the buyer has to be authenticated. The online store passes information about the intended transaction to the credit-card company, which handles the task of ensuring the buyer is entitled to use the chosen payment instrument, and which informs the online shop of the outcome of the authentication procedure. The technical implementation of this authentication involves the server of the online shop communicating with the computer of the credit-card company. This communication is according to the prior art handled by a “plug-in” in the merchant server, a piece of software specific to the particular authenticating authority and to the needs of the authentication process. Different plug-ins are provided for different payment instruments. The update and maintenance of these different authentication plug-ins requires substantial resources of the operator of the merchant server.

To overcome these problems, the claimed invention in the decided case provides a separate computer called “merchant authentication processing system” (MAPS) handling the interface functionality with the authenticating servers, which was previously handled by the corresponding plug-ins of the merchant server. The invention thus replaces the three-machine prior art (buyer computer, merchant server, authenticating server) with a four-machine system (buyer computer, merchant server, authenticating server, and merchant authentication processing system). The invention thus differs from the prior art in the system architecture, namely replacing the several plug-ins for different payment instruments at the merchant server by a separate merchant authentication processing system. The advantage achieved by the invention is to reduce the service costs for the merchant. In addition, the operator of the merchant authentication processing system can offer this service to several different merchants and thus enjoy economies of scale for operating the authentication interface service for the authentication process.

According to the established case law of the EPO (following T 0641/00: Two identities/COMVIK) only technical features of an invention comprising technical and non-technical features can contribute to the inventive step. The technical features are separated from the non-technical features. The non-technical features are implied as being known to the skilled person and only the technical features are compared with the closest prior art. It is then assessed which technical problem is solved by the distinguishing technical features and whether or not this technical solution of the technical problem would have been obvious for the skilled person at the priority date of the application.

This approach often results in a novel and non-obvious technical concept to be divided into a novel and non-obvious concept itself, which is deemed non-technical, lying in the field of business or organization, and the distinguishing technical features, which are regarded only as straightforward technical (mostly software) implementation, which is obvious for the technically skilled person leading to the refusal of the patent application. The “Comvik-Approach” thus often unduly reduces the chances of success of computer-implemented inventions compared to inventions in other technical fields.

The decision discussed here provides an approach to overcome this problem: As the skilled person is a hypothetical construction for assessing inventive step, so should be the the business person or organisation expert providing the non-obvious, but non-technical concept. This business person in the Board´s view “represents an abstraction or shorthand for a separation of business considerations from technical” and as such should – different from a real business person – not have any technical knowledge or capability for technical considerations. The Board states:

“Thus, the notional business person might not do things a real business person would. He would not require the use of the internet, wireless, or XXXX processors. This approach ensures that, in line with the Comvik principle, all the technical matter, including known or even notorious matter, is considered for obviousness and can contribute to inventive step.

Similarly, the notional business person might do things that a real business person would not, such as include requirements that go against business thinking at the time – a sort of business prejudice, as is alleged in this case (see below). If this were not the case, business requirements would need to be evaluated and would contribute to inventive step, contrary to the Comvik principle.”

Applying these principles to the concrete case, the Board finds “that the transaction authentication in the present case cannot be abstracted to a purely business activity because it has aspects such as the use of plug-ins and servers.” Therefore, “the decision to centralise the plug-ins in a separate server that can be accessed by several merchant servers, in order to simplify installation and maintenance and reduce load, should be considered a technical matter”.

The Board considered that it might have been obvious for the skilled person seeking to simplify the merchant server or the installation or updating of plug-ins to locate the authentication interface functionality at a separate server that could be accessed by various merchants’ servers. On the other hand, at the priority date of the application a number of technical considerations spoke against relocation of the plug-ins, as increased latency, increased bandwidth requirements and security considerations. On balance, the Board concluded, there existed “a prima facie case for technical prejudice” against relocating the plug-ins to a separate server and the invention thus is to be regarded as involving an inventive step.

According to the Board´s decision, the selection of a favorable system architecture for a particular technical issue is thus to be regarded as a patentable invention if its technical implementation is not obvious even if such system architecture may be regarded obvious from a business perspective.

The technical problem solved by the claimed invention in the decided case can thus not simply be formulated as “to reduce the maintenance and update requirements of the merchant server” as this would be not a technical, but a commercial problem. The business person intending to solve this commercial problem would in turn formulate for the technically skilled person the technical problem “to provide a technical solution to reduce maintenance and update requirements of the merchant server”. The skilled person would thus consider – independently from any business considerations – different options to solve this technical problem, including amendments at the level of the merchant server itself as well as changes of the system architecture. As the Board found, the provision of the particular system architecture of the claimed invention, namely to provide a separate merchant authentication processing system handling the interface functionality with the authenticating servers, was not obvious for the skilled person at the priority date.

This decision may also prove to be helpful for inventors seeking to obtain patent protection in Europe for distributed or serverless applications based on distributed-ledger or blockchain technologies if the application of these technologies for the particular task was not technically obvious at the respective priority date.

CRISPR EP Update: Oral hearing at EPO in opposition case against Broad patent is scheduled for 16 January 2018. Preliminary opinion negative for Broad

The patent dispute about the revolutionary CRISPR-Cas9 gene-editing technology between the Broad Institute (jointly operated by Harvard and MIT) on the one side and UC Berkeley on the other side is of great interest in the biotech community.

In the US, the Broad Institute prevailed in the interference hearing at the USPTO. The UC Berkeley has meanwhile filed an appeal to the CAFC.

In Europe, the first patent of UC Berkeley has very recently been granted by the EPO.

As in the US, however, the Broad Institute has been the first one to get a patent issued in Europe, namely EP 2 771 468. Against this patent, 9 oppositions have been filed, most of which appear to be so-called strawman oppositions.

With office communication of April 19, the EPO has now scheduled oral proceedings at the EPO main building at 16 January 2018. In the preliminary opinion issued together with the summons to the oral hearing, the oppisition division takes the non-binding provisional view that the opposition is expected to be successful on the ground of added matter (claims 1 and 2) and the ground of lack of novelty (claims 1-6 and 9-17). Even though the EPO emphasizes the non-binding nature of such provisional opinions, it is in most cases very difficult for the party negatively affected by the opinion to reverse the view of the opposition division. It will thus be tough for the Broad Institute to repeat its success in the US in Europe.

CRISPR EP Update: Berkeley EP patent application close to grant

EPO by sporst

While the CRISPR-cas9 patent fight between the Broad Institute (“Team Zhang”) and the UC Berkeley (“Team Doudna”) in the US saw its first hearing at the USPTO´s Patent Trial and Appeal Board on December 5, the UC Berkeley has only a few days later received good news from the European Patent Office. An Office Action from December 8, 2016 indicated allowability of broad claims for its European patent application (publication number EP 2 800 811). Claim 1 reads as follows:

1. A method of modifying a target DNA, the method comprising contacting the target DNA with a complex comprising:

(a) a Cas9 polypeptide and
(b) a single-molecule DNA-targeting RNA comprising:
(i) a DNA-targeting segment comprising a nucleotide sequence that is complementary to a sequence in the target DNA, and
(ii) a protein-binding segment that interacts with said Cas9 polypeptide, wherein
the protein-binding segment comprises two complementary stretches of nucleotides that
hybridize to form a double stranded RNA (dsRNA) duplex,
wherein said two complementary stretches of nucleotides are covalently linked
by intervening nucleotides,
wherein said contacting is in vitro or in a cell ex vivo; and
wherein said modifying is cleavage of the target DNA.

A restriction to either eukaryotic or procaryotic cells seems not to be present. The contacting of the target DNA to be modyfied by the method, however, according to the claim has to take place in vitro or in a cell ex vivo. 

A notice of allowance from the EPO (communication under Rule 71(3) EPC) can be expected soon.

 

Disclaimer: Neither I myself nor the patent firm Betten & Resch, of which I am a partner, is involved in any patent cases relating to CRISPR-cas9 technology.

(picture by sporst)

New decision of the German Federal Patent Court: Payor bears the risk of missing deadline before the GPTO if GPTO does not use direct debiting mandate

Official headnote of the decision 7 W (pat) 29/15 of the 7th Senate (legal senate) of the GPTO dated May 12, 2016:

If a patent office fee is payed by a direct debiting mandate, the date of receipt of the mandate is according to § 2 No. 4 PatKostZV (Rules on payment of patent fees) regarded as the day of payment of the fee only if the mandated amount is withdrawn by the Federal Account on behalf of the Patent Office. According to this regulation the debtor alone bears the risk that, for whatever reasons, the amount is not withdrawn. This is true also if the amount has not been withdrawn because the Patent Office does not make use of the direct debiting mandate close to the due date. 

In the case to be decided by the court an opponent filed an opposition against a German patent on October 7, 2011, i.e. on the last day of the opposition period, and paid the statutory opposition fee of EUR 200 by means of a direct debit mandate. The GPTO, however, did not make use of the direct debit mandate, allegedly because it was not forwarded to the accounting office. Only after initiation of an insolvency procedure with respect to the opponent on November 25, 2011, which was communicated to the GPTO on December 6, 2011, did the GPTO accounting office take notice of the direct debiting mandate, but could no longer make use of it due to the insolvency. On December 20, 2011 (date of receipt) the opposition fee was paid to the GPTO by remittance with the authorization of the insolvency administrator.

The GPTO decided on June 25, 2015 that the opposition is deemed not having been filed due to failure to pay the opposition fee within the prescribed deadline.

The opponent appealed to the Federal Patent Court (FPC), which, however, rejected the appeal with the following reasoning:

According to the court, prereqisite of the “privileged” payment date of the receipt of the direct debit authorization is the actual withdrawal of the authorized amount by the GPTO. The withdrawal was no longer possible upon initiation of the insolvency proceedings on November 25, 2011. In the courtś view the fact that the GPTO had sufficient time to withdraw the money between October 7, 2011 and November 24, 2011 (i.e. about 7 weeks, whereas this procedure according to the statement of the GPTO typically takes about 2-3 weeks) does not change this general rule as long as by the delay general principles of the rule of law are not violated. The fact that the opponent is not responsible for these delays could only taken into account in abreinstatement procedure which, however, is not available in case of missing the opposition deadline. In addition, the court reasoned the opponent could use other possible payment methods avoiding this risk. The remittance received by the GPTO on December 20, 2011 was regarded as too late.

The Federal Patent Court allowed further appeal (Rechtsbeschwerde) to the Federal Court of Justice (FCJ).

Personal comment:

I hope that the opponent will lodge further appeal with the FCJ and that the decision will be revised upon appeal.

In my view, the decision unduely shifts the burden of the settlement risk of a payment of GPTO fees completely to parties of proceedings before the GPTO, be it opponents against a patent grant of a third party or patent applicants itself having to pay annuity fees or the like. This is true in particular for the formulation of the official headnote, which generalizes the individual case decided by the court to a general responsibility of parties before the GPTO using fee payment by direct debit authorization to bear the risk if any failure of the office to use the authorization to withdraw the fee.

Strict deadlines in patent proceedings serve the purpose of legal certainty for the involved parties as well as for the public, e.g. the public has a right to know whether a patent grant has been opposed to or not. Strict deadlines for fee payments can serve the same purpose as in the case of annuity fees, where the public needs to know whether or not a patent lapses or not. Payment of procedural fees as filing fees, opposition fees etc., however, are irrelevant for legal certainty but mainly serve the purpose of contributing to the procedural costs of the office.

Therefore it should be sufficient if the involved party of proceedings before the GPTO has timely and in accordance with the procedural rules initiated payment of the correct amount. Any delay caused by the office should not be to the disadvantage of the involved party. This should be particularly true in the decided case in which not a withdrawal attempt of the GPTO failed, because the GPTO never undertook such attempt, and the opponent has actualy made payment of the opposition fee after initiation of the insovolvency proceedings, albeit inevitably after expiry of the opposition deadline.

The reference of the FPC to other payment methods avoiding this risk is not helpful either. According to the rules on payment of patent fees there are in total four ways to pay fees to the GPTO (and the FPC):

1. Direct debit authorization (according to SEPA procedural rules). This payment method is the most popular one.

2. Remittance. The deadline is met only if the GPTO receives the money in time. The delay risk thus is also borne by the debtor.

3. Cash payment to the cashier of the GPTO.

4. Cash payment at a bank to the benefit of the corresponding Federal Account of the GPTO.

As the payment methods of direct debit authorization and remittance are unpredictable and thus not “save” to meet a GPTO or FPC deadline, the discussed decision and in particular the very gneral official headnote thus has the consequence that careful applicants and their patent attorneys have to pay patent fees (wish can be substantial for large applicants) using less “privileged” routes, namely to use cash only. This cannot be the intention of an important government agency in 2016 !

An innovative solution in addition to a reversal of the decision at the FCJ would instead be to allow payment in the cryptocurrency bitcoin, where a payment confirmation is received within about 60 minutes.