Intellectual Property Law Notes and Cases KHB

Day 3
Purpose of Patent

Pearl & Dean v. Shoemart

GR 148222, 15 August 2003;
Third division, Corona (J)
Facts: Pearl & Dean is a corporation engaged in the manufacture of advertising display units (Poster Ads) referred
as light boxes. It acquired a Certificate of Copyright Registration over the illuminated display units, and acquired
trademark for Poster Ads. Pearl & Dean negotiated with Shoemart for the lease and installation of the light
boxes in Shoemart Malls. After Pearl & Deans contract was rescinded, exact copies of its light boxes were installed
in various SM malls (fabricated by Metro Industrial Services, and later EYD Rainbow Advertising Corp.)
Pearl & Dean sent a letter to Shoemart and its sister company, North EDSA Marketing, to cease using the light
boxes and to remove them from the malls, and demanded the discontinued use of the trade mark Poster Ads.
Unsatisfied with the compliance of its demands, Pearl & Dean sued. The trial court ruled in favor of Pearl & Dean,
while the appellate court reversed the decision of the trial court.
Issue: Whether or not there is patent infringement
Held: No.
It held that the petitioner never secured patent for the light boxes. Without any acquired rights to protect its
invention it cannot legally prevent anyone from manufacturing the same. There can be no infringement of a patent
until a patent has been issued, since whatever right one has to the invention covered by the patent arises alone
from the grant of patent. Inventors have no common law right to monopoly of his work. He has the right to invent
but once he voluntarily discloses it the world is free to copy and use it. A patent gives the inventor the exclusive
right to make, sell, use and exclude others from using his invention. Assuming the petitioners ad units were
patentable, he made them public by submitting its engineering drawings to the National Library. To legally
preclude others from copying and profiting from ones invention, patent is a primary requirement. The ultimate
goal of a patent system is to bring new designs and technologies into the public domain through disclosure. Ideas,
once disclosed to the public without the protection of a valid patent, are subject to appropriation without
significant restraint. Therefore, without any patent secured to protect ones work, there is no protection against its
use by the public.
Pearl & Dean secured its copyright under the classification class o work. This being so, its protection extended
only to the technical drawings and not to the light box itself. Pearl & Dean cannot exclude others from the
manufacture, sale and/or commercial use over the light boxes on the sole basis of its copyright, certificate over the
technical drawings. It cannot be the intention of the law that the right of exclusivity would be granted for a longer
time (50 years in copyright, and 17 years in patent) through the simplified procedure of copyright registration with
the National Library, without the rigor of defending the patentability of its invention before the IPO and the
public. On the other hand, there has been no evidence that Pearl & Deans use of Poster Ads was distinctive or
well known. Poster Ads was too generic a name to identify it to a specific company or entity. Poster Ads was
generic and incapable of being used as a trademark because it was used in the field of poster advertising, the very
business engaged by earl & Dean. Furthermore, Pearl & Deans exclusive right to the use of Poster Ads is limited
to what is written in its certificate of registration. Shoemart, et. al. cannot be held liable for the infringement of the
trademark.

Intellectual Property Law Notes and Cases KHB

Definition of Patentable Invention
Section 21. Patentable Inventions. - Any technical solution of a problem in any field of human activity which is new,
involves an inventive step and is industrially applicable shall be Patentable. It may be, or may relate to, a product,
or process, or an improvement of any of the foregoing. (Sec. 7, R.A. No. 165a)
Aguas vs. De Leon
111 SCRA 238 (1982)
FACTS: On April 14, 1962, respondent Conrado de Leon filed in the CFI of Rizal at Quezon City a complaint for
infringement of patent against petitioner Domiciano Aguas and F.H. Aquino and Sons alleging among others that
being the original first and sole inventor of certain new and useful improvements in the process of making mosaic
pre-cast tiles, and thereafter lawfully acquired from the Philippine Patent Office, Patent No. 658, the latter
infringed the same by making, using and selling tiles embodying said patent invention. A writ of Preliminary
Injuction was subsequently issued.
Petitioner Aguas, in his answer, denied the allegations and instead averred inter alia that respondent De
Leon is neither the original first nor sole inventor of the improvements in the process of making mosaic pre-cast
tiles, the same having been used by several tile-making factories both here and abroad years before the alleged
invention by De Leon; hence, it is not patentable.
The trial court and the Court of Appeals, upon appeal rendered judgment in favor of respondent de Leon.
Thus, this petition.
ISSUE: Whether or not a process pertaining to an improvement of the old process of tile making is patentable; and
if such, was there an infringement?
HELD: The records disclose that de Leon's process is an improvement of the old process of tile making. The tiles
produced from de Leon's process are suitable for construction and ornamentation, which previously had not been
achieved by tiles made out of the old process of tile making. De Leon's invention has therefore brought about a
new and useful kind of tile. The old type of tiles were usually intended for floors although there is nothing to
prevent one from using them for walling purposes. These tiles are neither artistic nor ornamental. They are heavy
and massive.
The respondent's improvement is indeed inventive and goes beyond the exercise of mechanical skill. He has
introduced a new kind of tile for a new purpose. He has improved the old method of making tiles and pre-cast
articles which were not satisfactory because of an intolerable number of breakages, especially if deep engravings
are made on the tile. He has overcome the problem of producing decorative tiles with deep engraving, but with
sufficient durability.
In view of the foregoing, this Court finds that Patent No. 658 was legally issued, the process and/or improvement
being patentable.
Who may apply
Section 28. Right to a Patent. - The right to a patent belongs to the inventor, his heirs, or assigns. When two (2) or
more persons have jointly made an invention, the right to a patent shall belong to them jointly. (Sec. 10, R.A. No.
165a)
Section 29. First to File Rule. - If two (2) or more persons have made the invention separately and independently of
each other, the right to the patent shall belong to the person who filed an application for such invention, or where
two or more applications are filed for the same invention, to the applicant who has the earliest filing date or, the
earliest priority date. (3rd sentence, Sec. 10, R.A. No. 165a.)

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Section 30. Inventions Created Pursuant to a Commission. - 30.1. The person who commissions the work shall own
the patent, unless otherwise provided in the contract.
30.2. In case the employee made the invention in the course of his employment contract, the patent shall belong
to:
(a) The employee, if the inventive activity is not a part of his regular duties even if the employee uses the
time, facilities and materials of the employer.
(b) The employer, if the invention is the result of the performance of his regularly-assigned duties, unless
there is an agreement, express or implied, to the contrary. (n)
Section 31. Right of Priority. . - An application for patent filed by any person who has previously applied for the
same invention in another country which by treaty, convention, or law affords similar privileges to Filipino citizens,
shall be considered as filed as of the date of filing the foreign application: Provided, That: (a) the local application
expressly claims priority; (b) it is filed within twelve (12) months from the date the earliest foreign application was
filed; and (c) a certified copy of the foreign application together with an English translation is filed within six (6)
months from the date of filing in the Philippines. (Sec. 15, R.A. No. 165a)
Ownership of Patent
a) Inventor (Sec. 28)
b) First to File (Sec. 29)
c) One who commissions the work (Sec. 30)
d) Employer
e) Employee
f) Assignees (Sec. 104)
Section 104. Assignment of Inventions. - An assignment may be of the entire right, title or interest in and to the
patent and the invention covered thereby, or of an undivided share of the entire patent and invention, in which
event the parties become joint owners thereof. An assignment may be limited to a specified territory. (Sec. 51, R.A.
No. 165)
e) Joint Owners (Sec 104 and 107)
Section 107. Rights of Joint Owners. - If two (2) or more persons jointly own a patent and the invention covered
thereby, either by the issuance of the patent in their joint favor or by reason of the assignment of an undivided
share in the patent and invention or by reason of the succession in title to such share, each of the joint owners
shall be entitled to personally make, use, sell, or import the invention for his own profit: Provided, however, That
neither of the joint owners shall be entitled to grant licenses or to assign his right, title or interest or part thereof
without the consent of the other owner or owners, or without proportionally dividing the proceeds with such
other owner or owners. (Sec. 54, R.A. No. 165)

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Patentable Subject Matter
BERNARD
L. BILSKI AND
RAND
A.
WARSAW,
PETITIONERS,
V.
DAVID J. KAPPOS, UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR, PATENT AND
TRADEMARK OFFICE.
No. 08-964.
Supreme Court of United States.
Argued November 9, 2009.
Decided June 28, 2010.
Petitioners patent application seeks protection for a claimed invention that explains how commodities buyers and
sellers in the energy market can protect, or hedge, against the risk of price changes.
The key claims are:
claim 1, which describes a series of steps instructing how to hedge risk, and
claim 4, which places the claim 1 concept into a simple mathematical formula.
The remaining claims explain how claims 1 and 4 can be applied to allow energy suppliers and consumers to
minimize the risks resulting from fluctuations in market demand.
The patent examiner rejected the application on the grounds that the invention is not implemented on a specific
apparatus, merely manipulates an abstract idea, and solves a purely mathematical problem. The Board of Patent
Appeals and Interferences agreed and affirmed. The Federal Circuit, in turn, affirmed. The en banc court rejected
its prior test for determining whether a claimed invention was a patentable process under Patent Act, 35 U. S.
C. 101i.e., whether the invention produced a useful, concrete, and tangible result,
State Street Bank & Trust Co v. Signature Financial Group, Inc., 149 F. 3d 1368, 1373holding instead that a
claimed process is patent eligible if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a
particular article into a differentstate or thing.
Concluding that this machine-or-transformation test is the sole test for determining patent eligibility of a
process under 101, the court applied the test and held that the application was not patent eligible.
Held: The judgment is affirmed.
Section 101 defines the subject matter that may be patented under the Patent Act:
"Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or
any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and
requirements of this title."
Claim 1 consists of the following steps:
"(a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein
said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate
corresponding to a risk position of said consumers;
"(b) identifying market participants for said commodity having a counter-risk position to said consumers; and
"(c) initiating a series of transactions between said commodity provider and said market participants at a second
fixed rate such that said series of market participant transactions balances the risk position of said series of
consumer transactions."

Intellectual Property Law Notes and Cases KHB

Diamond v. Chakrabarty, 447 U.S. 303 (1980)
Diamond v. Chakrabarty
No. 79-136
Argued March 17, 1980
Decided June 16, 1980
447 U.S. 303
Facts
Chakrabarty, a scientist, sought patent protection related to his discovery of a method for developing a bacterium
that could break down multiple components of crude oil. His claims ranged from the process of developing the
bacterium to the bacterium itself and an inoculum in which the bacterium was stored with a carrier material.
While the examiner found that a patent was appropriate for the process and the inoculum, Chakrabarty was
denied a patent for the bacterium itself on the grounds that it did not meet the subject matter requirements for
a patent. Under 35 U.S.C. Section 101 and the 1930 Plant Patent Act, according to the patent examiner, a living
organism may not be patented. Various appellate review panels reached clashing decisions on the matter before
the Acting Commissioner of Patents and Trademarks sought certiorari review from the Supreme Court.
Title 35 U.S.C. 101 provides for the issuance of a patent to a person who invents or discovers "any" new and
useful "manufacture" or "composition of matter." The Court of Customs and Patent Appeals reversed, concluding
that the fact that micro-organisms are alive is without legal significance for purposes of the patent law.
Held: A live, human-made micro-organism is patentable subject matter under 101. Respondent's microorganism constitutes a "manufacture" or "composition of matter" within that statute.
(a) In choosing such expansive terms as "manufacture" and "composition of matter," modified by the
comprehensive "any," Congress contemplated that the patent laws should be given wide scope, and the relevant
legislative history also supports a broad construction. While laws of nature, physical phenomena, and abstract
ideas are not patentable, respondent's claim is not to a hitherto unknown natural phenomenon, but to a
nonnaturally occurring manufacture or composition of matter -- a product of human ingenuity "having a
distinctive name, character [and] use."
(b) The passage of the 1930 Plant Patent Act, which afforded patent protection to certain asexually reproduced
plants, and the 1970 Plant Variety Protection Act, which authorized protection for certain sexually reproduced
plants but excluded bacteria from its protection, does not evidence congressional understanding that the terms
"manufacture" or "composition of matter" in 101 do not include living things.
(c) Nor does the fact that genetic technology was unforeseen when Congress enacted 101 require the conclusion
that micro-organisms cannot qualify as patentable subject matter until Congress expressly authorizes such
protection. The unambiguous language of 101 fairly embraces respondent's invention. Arguments against
patentability under 101, based on potential hazards that may be generated by genetic research, should be
addressed to the Congress and the Executive, not to the Judiciary.

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Harvard College v. Canada (Commissioner of Patents)

Case summary: Harvard College applied for a patent on an invention entitled "transgenic animals", which consisted
of a way of breeding genetically altered mice that would be especially susceptible to cancer, and thus useful in
medical research. The patent was to cover both the "process" for producing these mice or any similar animals; and
the "product" - the mice (or other animals) themselves. The patent authorities allowed the patent on the process
but disallowed it on the transgenic animals themselves, finding that a higher life form is not a "manufacture" or
"composition of matter", which is what this kind of patent is supposed to cover.
Harvard College researchers developed a process by which they could create transgenic animals whose genomes
are altered by a cancer-promoting gene (called an activated oncogene). The researchers injected the oncogene
into fertilized mouse eggs close to the one-cell stage and implanted them into a female host mouse where they
developed to term. The resulting offspring were then tested for the presence or absence of the oncogene. Those
with the gene are referred to as founder mice and are mated with unaltered mice. Offspring that contain the
oncogene and have every cell in their body affected (including germ cells and somatic cells) by it are referred to as
oncomice. Oncomice are useful for carcinogenic studies as they are more susceptible to carcinogens. Such mice
can be given material suspected of being a carcinogen and if tumours develop, it is an indication that the material
is carcinogenic.
Initial Patent Application and Trial
In 1985, the President and Fellows of Harvard College applied for a patent for an invention called transgenic
animals. In particular, they applied for a process patent for the process by which they created the mice as well as
a product patent for the end product of the process, namely the founder mice and the oncomice, offspring
whose cells are affected by the gene. These patent claims also extend to all non-human mammals whose genomes
have been altered in a similar manner. .
In March 1993, the Patent Examiner rejected the product claims (Claims 1 to 12) on the grounds that higher life
forms were outside the definition of invention in section 2 of the Canadian Patent Act and are therefore not
patentable subject matter. The process claims (Claims 13 to 26) were allowed.
Supreme Court Ruling
The court found in favour of the government, ruling that higher life forms are not patentable. The sole question
before the court was whether the words manufacture or composition of matter, in the context of the Patent
Act, are broad enough to encompass higher life forms such as the oncomouse. The court found that they are not.
Bastarache J. stated that the determination of the patentability of higher life forms such as the oncomouse is
beyond the authority of the court and would be a massive change in the current patent regime. The majority
indicated that as there are significant public policy concerns at play, Parliament is best suited to address this issue.

Intellectual Property Law Notes and Cases KHB

STATE STREET BANK & TRUST V. SIGNATURE FINANCIAL GROUP, INC.

United States Court of Appeals,
Federal Circuit.
July 23, 1998.
In this case, the Federal Circuit determined that software programs that transform data are patentable subject
matter under Section 101 of the Patent Act even when there is no physical transformation of an article. The
court emphasized that software or other processes that yield a useful, concrete and tangible result should be
considered patentable. The court also laid to rest the business method exception. This means that while prior
courts considered business methods inventions to be unpatentable, the State Street court found that these
inventions are as patentable as any other inventions.
BACKGROUND
Signature is the assignee of the '056 patent which is entitled "Data Processing System for Hub and Spoke
Financial Services Configuration." The '056 patent is generally directed to a data processing system for
implementing an investment structure which was developed for use in Signature's business as an administrator
and accounting agent for mutual funds. In essence, the system, facilitates a structure whereby mutual funds
(Spokes) pool their assets in an investment portfolio (Hub) organized as a partnership. This investment
configuration provides the administrator of a mutual fund with the advantageous combination of economies of
scale in administering investments coupled with the tax advantages of a partnership.
State Street negotiated with Signature for a license to use its patented data processing system described and
claimed in the '056 patent. When negotiations broke down, State Street filed a motion for partial summary
judgment of patent invalidity for failure to claim statutory subject matter under 101.
DISCUSSION
The patented invention relates generally to a system that allows an administrator to monitor and record the
financial information flow and make all calculations necessary for maintaining a partner fund financial services
configuration. As previously mentioned, a partner fund financial services configuration essentially allows several
mutual funds, or "Spokes," to pool their investment funds into a single portfolio, or "Hub," allowing for
consolidation of, inter alia, the costs of administering the fund combined with the tax advantages of a partnership.
In particular, this system provides means for a daily allocation of assets for two or more Spokes that are invested in
the same Hub. The system determines the percentage share that each Spoke maintains in the Hub, while taking
into consideration daily changes both in the value of the Hub's investment securities and in the concomitant
amount of each Spoke's assets.
When independent claim 1 is properly construed in accordance with 112, p 6, it is directed to a machine, as
demonstrated below, where representative claim 1 is set forth, the subject matter in brackets stating the structure
the written description discloses as corresponding to the respective "means" recited in the claims.
1. A data processing system for managing a financial services configuration of a portfolio established as a
partnership, each partner being one of a plurality of funds, comprising:
(a) computer processor means [a personal computer including a CPU] for processing data;
(b) storage means [a data disk] for storing data on a storage medium;
(c) first means [an arithmetic logic circuit configured to prepare the data disk to magnetically store selected data]
for initializing the storage medium;
(d) second means [an arithmetic logic circuit configured to retrieve information from a specific file, calculate
incremental increases or decreases based on specific input, allocate the results on a percentage basis, and store
the output in a separate file] for processing data regarding assets in the portfolio and each of the funds from a
previous day and data regarding increases or decreases in each of the funds, [sic, funds'] assets and for allocating
the percentage share that each fund holds in the portfolio;

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(e) third means [an arithmetic logic circuit configured to retrieve information from a specific file, calculate
incremental increases and decreases based on specific input, allocate the results on a percentage basis and store
the output in a separate file] for processing data regarding daily incremental income, expenses, and net realized
gain or loss for the portfolio and for allocating such data among each fund;
(f) fourth means [an arithmetic logic circuit configured to retrieve information from a specific file, calculate
incremental increases and decreases based on specific input, allocate the results on a percentage basis and store
the output in a separate file] for processing data regarding daily net unrealized gain or loss for the portfolio and for
allocating such data among each fund; and
(g) fifth means [an arithmetic logic circuit configured to retrieve information from specific files, calculate that
information on an aggregate basis and store the output in a separate file] for processing data regarding aggregate
year-end income, expenses, and capital gain or loss for the portfolio and each of the funds.
Each claim component, recited as a "means" plus its function, is to be read, of course, pursuant to 112, p 6, as
inclusive of the "equivalents" of the structures disclosed in the written description portion of the specification.
Thus, claim 1, properly construed, claims a machine, namely, a data processing system for managing a financial
services configuration of a portfolio established as a partnership, which machine is made up of, at the very least,
the specific structures disclosed in the written description and corresponding to the means-plus-function
elements (a)-(g) recited in the claim.
A "machine" is proper statutory subject matter under 101. We note that, for the purposes of a 101 analysis, it
is of little relevance whether claim 1 is directed to a "machine" or a "process," as long as it falls within at least one
of the four enumerated categories of patentable subject matter, "machine" and "process" being such categories.
This does not end our analysis, however, because the court concluded that the claimed subject matter fell into one
of two alternative judicially-created exceptions to statutory subject matter.1 The court refers to the first
exception as the "mathematical algorithm" exception and the second exception as the "business method"
exception.
Section 101 reads:
Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or
any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and
requirements of this title.
The "Mathematical Algorithm" Exception
The Supreme Court has identified three categories of subject matter that are unpatentable, namely "laws of
nature, natural phenomena, and abstract ideas." Of particular relevance to this case, the Court has held that
mathematical algorithms are not patentable subject matter to the extent that they are merely abstract ideas.,
the Court explained that certain types of mathematical subject matter, standing alone, represent nothing more
than abstract ideas until reduced to some type of practical application,
Unpatentable mathematical algorithms are identifiable by showing they are merely abstract ideas constituting
disembodied concepts or truths that are not "useful." From a practical standpoint, this means that to be
patentable an algorithm must be applied in a "useful" way.
In Alappat, we held that data, transformed by a machine through a series of mathematical calculations to produce
a smooth waveform display on a rasterizer monitor, constituted a practical application of an abstract idea (a
mathematical algorithm, formula, or calculation), because it produced "a useful, concrete and tangible result"--the
smooth waveform.
Similarly, in Arrhythmia Research Technology Inc. v. Corazonix Corp., we held that the transformation of
electrocardiograph signals from a patient's heartbeat by a machine through a series of mathematical calculations
constituted a practical application of an abstract idea (a mathematical algorithm, formula, or calculation), because
it corresponded to a useful, concrete or tangible thing--the condition of a patient's heart.

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Today, we hold that the transformation of data, representing discrete dollar amounts, by a machine through a
series of mathematical calculations into a final share price, constitutes a practical application of a mathematical
algorithm, formula, or calculation, because it produces "a useful, concrete and tangible result"--a final share price
momentarily fixed for recording and reporting purposes and even accepted and relied upon by regulatory
authorities and in subsequent trades.
The Freeman-Walter-Abele test:
First, the claim is analyzed to determine whether a mathematical algorithm is directly or indirectly recited. Next, if
a mathematical algorithm is found, the claim as a whole is further analyzed to determine whether the algorithm is
"applied in any manner to physical elements or process steps," and, if it is, it "passes muster under 101."
For purpose of our analysis, as noted above, claim 1 is directed to a machine programmed with the Hub and
Spoke software and admittedly produces a "useful, concrete, and tangible result." This renders it statutory
subject matter, even if the useful result is expressed in numbers, such as price, profit, percentage, cost, or loss.
The Business Method Exception
Since its inception, the "business method" exception has merely represented the application of some general, but
no longer applicable legal principle, perhaps arising out of the "requirement for invention"--which was eliminated
by 103.
The business method exception has never been invoked by this court, or the CCPA, to deem an invention
unpatentable.11 Application of this particular exception has always been preceded by a ruling based on some
clearer concept of Title 35 or, more commonly, application of the abstract idea exception based on finding a
mathematical algorithm.
This case is no exception. The district court announced the precepts of the business method exception as set forth
in several treatises, but noted as its primary reason for finding the patent invalid under the business method
exception as follows:
If Signature's invention were patentable, any financial institution desirous of implementing a multi-tiered funding
complex modelled (sic) on a Hub and Spoke configuration would be required to seek Signature's permission before
embarking on such a project. This is so because the '056 Patent is claimed [sic] sufficiently broadly to foreclose
virtually any computer-implemented accounting method necessary to manage this type of financial structure.
Whether the patent's claims are too broad to be patentable is not to be judged under 101, but rather under
102, 103 and 112. Assuming the above statement to be correct, it has nothing to do with whether what is claimed
is statutory subject matter.
.
CONCLUSION
The appealed decision is reversed and the case is remanded to the district court for further proceedings consistent
with this opinion.
*This is an 1998 Case -- RULING NO LONGER APPLICABLE
**Updates:
The Supreme Court's subsequent decisions in Mayo v. Prometheus and Alice v. CLS Bank further expanded
on Bilski and substantially obliterated State Street. These decisions established a two-step inquiry in which, first,
the court is to look to whether the claimed invention is directed to an abstract idea or natural principle; if it is, a
second step follows in which the court must determine whether the claimed invention implements the abstract
idea inventively or instead in a merely routine or conventional manner. Unless the implementation or application
of the abstract idea embodies an "inventive concept," the claimed invention is patent ineligible. (These concepts

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are explained further in the articles on the Mayo and Alice cases.) Under this test the State Street patent would be
invalid.
Alice specifically holds that a generic computer implementation of an abstract idea is patent ineligible. In Alice, the
Supreme Court held that a software-related invention on an existing business procedure could not be saved from
patent ineligibility and be made patent eligible simply by saying, "Do it with a computer." Instead, it would be
necessary to implement the procedure in an inventive manner
In one of these district court decisions, Federal Circuit Judge Bryson, sitting by designation as a district judge, spoke
of these business method patents as uninventive and mere "aspirational" recitations of "methods for performing a
commonplace business function" without any description of "any novel manner of performing that function" other
than saying "do it with a computer":
In short, such patents, although frequently dressed up in the argot of invention, simply describe a problem,
announce purely functional steps that purport to solve the problem, and recite standard computer operations to
perform some of those steps. The principal flaw in these patents is that they do not contain an "inventive concept"
that solves practical problems and ensures that the patent is directed to something "significantly more than" the
ineligible abstract idea itself. As such, they represent little more than functional descriptions of objectives, rather
than inventive solutions. In addition, because they describe the claimed methods in functional terms, they
preempt any subsequent specific solutions to the problem at issue.

Criteria for Patentability

a) Novelty
Section 23. Novelty. . - An invention shall not be considered new if it forms part of a prior art. (Sec. 9, R.A. No.
165a)
Section 24. Prior Art. - Prior art shall consist of:
24.1. Everything which has been made available to the public anywhere in the world, before the filing date or the
priority date of the application claiming the invention; and
24.2. The whole contents of an application for a patent, utility model, or industrial design registration, published in
accordance with this Act, filed or effective in the Philippines, with a filing or priority date that is earlier than the
filing or priority date of the application: Provided, That the application which has validly claimed the filing date of
an earlier application under Section 31 of this Act, shall be prior art with effect as of the filing date of such earlier
application: Provided further, That the applicant or the inventor identified in both applications are not one and the
same. (Sec. 9, R.A. No. 165a)
Section 25. Non-Prejudicial Disclosure. . - 25.1. The disclosure of information contained in the application during
the twelve (12) months preceding the filing date or the priority date of the application shall not prejudice the
applicant on the ground of lack of novelty if such disclosure was made by:
(a) The inventor;
(b) A patent office and the information was contained (a) in another application filed by the inventor and
should not have been disclosed by the office, or (b) in an application filed without the knowledge or

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consent of the inventor by a third party which obtained the information directly or indirectly from the
inventor; or
(c) A third party which obtained the information directly or indirectly from the inventor.
25.2. For the purposes of Subsection 25.1, "inventor" also means any person who, at the filing date of application,
had the right to the patent. (n)
ANGEL VARGAS vs F. M. YAPTICO & CO. (Ltd.)
G.R. No. 14101, September 24, 1919
Facts:
Plaintiff Angel Vargas, a farmer, was issued patents by the United States Patent Office for his so-called invention of
an improved adjustable plow with the use his own native plow. A certified copy of the patent was filed in the
Division of Patents, Copyrights, and Trademarks of the Executive Bureau, Government of the Philippine Islands.
Defendant F. M. Yaptico & Co. (Ltd.), a firm engaged in the foundry business in Iloilo City, was a manufacturer of
plow parts. It produced points, shares, shoes, and heel pieces in a considerable amount adapted to replace wornout parts of the Vargas plow.
Vargas filed a case in the Court of First Instance of Iloilo to enjoin the alleged infringement of his U.S. Patent by the
defendant F. M Yaptico & Co. (Ltd.), and to recover the damages suffered by reason of this infringement, to which
the court issued the preliminary injunction prayed for.
The defendant denied the allegations and defended that the patent lacked novelty or invention, that there was no
priority of ideas or device in the principle and construction of the plow, and that the plow, whose manufacture it
was sought to have enjoined by the plaintiff, had already been in public use for more than two years before the
application of the plaintiff for his patent.
The trial judge rendered judgment in favor of the defendant, declaring null and without effect the patent in
question and dismissing the suit with costs against the plaintiff. Hence, the plaintiff appealed said judgment.
Issues:
1. Whether the patented invention is void for lack of novelty and invention?
2. Whether the patent is invalid considering that the plow had already been in public use for over two years prior
to the application for a patent.
Ruling:
1. Yes, the patent if void. The Supreme Court affirmed the trial courts conclusion that the plow of the plaintiff is
not different from the native plow, except in the material, in the form, in the weight and the grade of the result,
the said differences giving it neither a new function nor a new result distinct from the function and the result
obtained from the native plow. Also, its production does not presuppose the exercise of the inventive faculty but
merely of mechanical skill, which does not give a right to a patent of an invention under the provisions of the
Patent Law.
2. Yes, the patent is void. Under the provisions of the statute, an inventor's creation must not have been in public
use or on sale in the United States (and the Philippine Islands) for more than two years prior to his application.

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Further, it was proved that the invention was used in public at Iloilo by others than Vargas, the inventor, more than
two years before the application for the patent thus, the patent is invalid.
PATRICK HENRY FRANK and WILLIAM HENRY GOHN, plaintiffs-appellants,
vs.
G. KOSUYAMA, defendant-appellee.
Patent No. 1519579 (Exhibit 117) on improvement in hemp stripping machines, issued by the United States Patent
Office on December 16,1924, and registered in the Bureau of Commerce and Industry of the Philippine Islands on
March 17,1925, was the origin of this action brought by the plaintiffs herein who prayed that the judgment be
rendered against the defendant, ordering him thereby to refrain immediately from the manufacture and sale of
machines similar to the one covered by the patent: The action therefore was based upon alleged infringement by
the defendant of the rights and privileges acquired by the plaintiffs over the aforesaid patent through the
manufacture and sale by the former of machines similar to that covered by the aforesaid patent.
The plaintiff alleged that their hemp stripping machines, for which they obtained a patent, have the following
characteristics: "A stripping head, a horizontal table, a stripping knife supported upon such table, a tappering
spindle, a rest holder adjustably secured on the table portion, a lever and means of compelling the knife to close
upon the table, a pallet or rest in the bottom of the table, a resilient cushion under such palletor rest." In spite of
the fact that they filed an amended complaint from which the "spindle" or conical drum, which was the only
characteristic feature of the machine mentioned in the original complaint, was eliminated, the plaintiffs insisted
that the said part constitutes the essential difference between the machine in question and other machines and
that it was the principal consideration upon which their patent was issued. The said plaintiffs sustained their
contention on this point even in their printed brief and memorandum filed in this appeal.
In constructing their machine the plaintiffs did nothing but improve, to a certain degree, those that were
already in vogue and in actual us in hemp producing provinces. It cannot be said that they have invented
the "spindle" inasmuch as this was already known since the year 1909 or 1910. Neither it can be said
that they have invented the stripping knife and the contrivance which controls the movement and
pressure thereof on the ground that stripping knives together with their control sets were already in
actual use in the different stripping machines long before their machine appeared. Neither can it be said
that they invented the fly wheel because that part or piece thereof, so essential in every machine from
time immemorial, was already known and actually employed in hemp stripping machines, all of which
were in use for the benefit of hemp long before the appearance of the plaintiffs' machines in the market.
Much less can it be said that they invented the pedal to raise the knife in order to allow the hemp to be
stripped to pass under it, on the ground that the use of such contrivance has, likewise, been known since
the invention of the most primitive of hemp stripping machines.
On the other hand, although the plaintiffs alleged in their original complaint that "the principal and
important feature of said machine is a spindle upon which the hemp to be stripped is wound in the
process of stripping," nevertheless, in their amended complaint of March 3, 1928, which was filed after a
portion of the evidence therein had already been submitted and it was known that the use of the spindle
was nothing new, they still made the allegations appearing in paragraph 3 of their said amended
complaint and reproduced on pages 2,3,4 and 5 hereof, copying the same from the application which they
filed with the United States Patent Office, under which they obtained their patent in question. The
aforesaid application clearly shows that what they applied for was not a patent for a "pioneer or primary
invention" but only for some "new and useful improvement in hemp stripping machines."
We have carefully reviewed the evidence presented and have had the opportunity of ascertaining the truth of the
conclusions above stated. We agree with the trial court that, strictly speaking, the hemp stripping machine of the
plaintiffs does not constitute an invention on the ground that it lacks the elements of novelty, originality and
precedence.

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In the light of sound logic, the plaintiffs cannot insist that the "spindle" was a patented invention on the ground
that said part of the machine was voluntarily omitted by them from their application, as evidenced by the
photographic copy thereof wherein it likewise appears that the patent on Improved Hemp Stripping Machines was
issued minus the "spindle" in question. Were we to stress to this part of the machine, we would be giving the
patent obtained by the plaintiffs a wider range than it actually has, which is contrary to the principles of
interpretation in matters relating to patents.
Wherefore, reiterating that the defendant cannot be held civilly liable for alleged infringement of the patent upon
which the present action is based on the ground that there is no essential part of the machine manufactured and
sold by him, which was unknown to the public in the Province of Davao at the time the plaintiffs applied for and
obtained their patent for improved hemp stripping machines, the judgment appealed from is hereby affirmed,
with the costs against the plaintiffs-appellants. So ordered.
b) Inventive Step
Section 26. Inventive Step. - An invention involves an inventive step if, having regard to prior art, it is not obvious
to a person skilled in the art at the time of the filing date or priority date of the application claiming the invention.
(n)

c) Industrial Applicability
Section 27. Industrial Applicability. - An invention that can be produced and used in any industry shall be
industrially applicable. (n)
d) Enablement/Sufficient disclosure
Section 35. Disclosure and Description of the Invention. - 35.1. Disclosure. - The application shall disclose the
invention in a manner sufficiently clear and complete for it to be carried out by a person skilled in the art. Where
the application concerns a microbiological process or the product thereof and involves the use of a micro-organism
which cannot be sufficiently disclosed in the application in such a way as to enable the invention to be carried out
by a person skilled in the art, and such material is not available to the public, the application shall be
supplemented by a deposit of such material with an international depository institution.
35.2. Description. - The Regulations shall prescribe the contents of the description and the order of presentation.
(Sec. 14, R.A. No. 165a)
e) Patentable Subject Matter
Section 22. Non-Patentable Inventions. - The following shall be excluded from patent protection:
22.1. Discoveries, scientific theories and mathematical methods;
22.2. Schemes, rules and methods of performing mental acts, playing games or doing business, and programs for
computers;
22.3. Methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practiced
on the human or animal body. This provision shall not apply to products and composition for use in any of these
methods;

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22.4. Plant varieties or animal breeds or essentially biological process for the production of plants or animals. This
provision shall not apply to micro-organisms and non-biological and microbiological processes.
Provisions under this subsection shall not preclude Congress to consider the enactment of a law providing sui
generis protection of plant varieties and animal breeds and a system of community intellectual rights protection:
22.5. Aesthetic creations; and
22.6. Anything which is contrary to public order or morality. (Sec. 8, R.A. No. 165a)