SIIA: Software & Information Industry Association

In a decision today affirming the Federal Circuit and the United States Patent & Trademark Office, the Supreme Court held that a patent application on a method of hedging risk in commodities trading is not patentable subject matter. All nine justices concurred in the result, though the “majority” opinion, authored by Justice Kennedy, only included five justices (and two parts of the opinion only included four).

The Court refused to adopt the “bright line” rule applied by the Federal Circuit, and instead held that Bilski’s claimed method was merely an abstract idea ineligible for patenting. The Court’s decision confirms that typical software — running on hardware and accomplishing non-abstract results — continues to be patentable subject matter as it has for several decades, and also suggests that some business methods are patentable as long as they are not abstract ideas like Bilski’s claim.

Scott Bain, SIIA Litigation Counsel, commented: “Today’s decision preserves a delicate but important balance. It keeps the door closed to patenting mere abstract ideas, which many ‘business method’ patent applications have been. But just as importantly, it affirms the continued viability of patenting useful software applications, which will allow software companies to continue in their role as a driver of economic growth.”

“However, much work remains to be done in improving patent quality,” said Bain, referring to ongoing patent reform discussions in the U.S. Congress.

Bain had authored the amicus brief submitted by the SIIA, urging rejection of Bilski’s application but continued viability of software patenting.

by Scott Bain
SIIA Litigation Counsel

With approximately one month left in the current Supreme Court term, it is likely that the highly anticipated decision in Bilski v. Kappos (formerly Bilski v. Doll) will be issued soon.  This may occur as soon as Monday June 7, when the next round of opinions is scheduled to be released, and almost certainly will occur by the end of the month, when the Court recesses for the summer.

The decision may be one of the most important intellectual property law opinions in years, and could have far reaching ramifications for the software, IT, and financial services industries among others.  Indeed, more than forty companies and organizations filed amicus briefs to advance their respective positions – including a brief I filed on behalf of SIIA and the software industry.  At issue in the case is perhaps the most fundamental of questions in IP law:  what things and activities are eligible to be patented?

The SIIA’s brief argued that software should remain eligible for patent protection, as it has for the past several decades.  The industry has grown, thrived, and matured during that time, and patent protection and eligibility has played a role in that success.  While problems with the patent system remain, those problems relate to other aspects of the law, and/or its application, such as weeding out purported inventions that are obvious in light of the prior art.  Problems also exist in the examination system itself, including the fact that the Patent & Trademark Office is widely believed to be underfunded, resulting in long delays in examination, and limited time and expertise that can be spent on any single application.  An ongoing concern of the patent law community is that Congress annually diverts a substantial portion of PTO user fees for unrelated purposes.  Patent Reform debate and proposed legislation have occupied Congress for the past several years.

Bilski’s invention is a “business method,” claimed as a series of steps to “hedge options and risk in commodities trading,” and does not expressly require software or any machine. The U.S. Patent Office rejected the application, and the Court of Appeals for the Federal Circuit upheld the Office’s rejection.  In attempting to define the boundary between patentable and non-patentable subject matter, the appeals court ruled that a process or method must (1) be tied to a particular machine or apparatus, or (2) transform an article into a different state or thing, in order to be patentable.

The Supreme Court seems likely to eschew the bright-line rule imposed by the Federal Circuit, and perhaps return to a more general inquiry as described in its 1981 opinion Diamond v. Diehr.  In that and prior opinions, the Court held that an invention purporting to claim laws of nature, physical phenomena, or abstract ideas was not eligible for patent protection.  That test had proved difficult to implement in practice, leading to the Federal Circuit’s attempt to create a more bright-line rule.  However, a similar theme has played out recently in other patent cases working their way up to the Supreme Court.  In both eBay v. MercExchange (injunctions) and KSR v. Teleflex (obviousness), the Supreme Court rejected bright-line tests developed by the Federal Circuit and instead reiterated more fundamental holdings of its own prior cases.

Whatever test is employed by the Court, it would be surprising if Bilski’s purported invention were deemed patentable subject matter.  The Court may simply deem Bilski’s claims to be too abstract.   But whatever the case may be, thousands of patent owners, licensees, and would-be patent applicants await the Court’s decision.  A broad holding that strikes down Bilski’s application might embolden challenges to other “business method” patents, such as declaratory actions as to existing patents.  Depending on the scope of the holding, software patents could be affected.  On the flip side, if Bilski’s invention is deemed eligible for patenting, one can expect a massive flood of new applications to the patent office.  It would be interesting, to say the least, to see how an already backlogged PTO would handle such a challenge.

by David LeDuc
SIIA Senior Director, Public Policy

For many years, there has been little debate about the need to reform the immigration system to enable continued U.S. leadership in innovation and economic growth.

So we view Sens. Reid, Schumer and Menendez’ recent release of a “Conceptual Proposal for Immigration Reform” as a very welcome, significant step forward.

This action demonstrates willingness by the Democratic leadership to tackle this difficult political issue head-on, even in an election year. President Obama also has reiterated the imperative for the Federal Government to assert its leadership. We agree, and we are very thankful to see substance and conviction put behind this commitment..

The good news is that there are promising signs that the U.S. tech sector isn’t far from getting back on track. However, it is clear that this economic growth cannot be sustained, if U.S. employers continue to be handicapped by arbitrary limits on access to the world’s best and brightest minds. Some of the industry’s greatest companies - such as Intel, Yahoo! and Google—were founded in the U.S. with the leadership of foreign-born innovators.

While recognizing the conceptual framework is a rough draft, we believe it holds great promise. Not only does the section on legal immigration lead-off with the priority to reform the high-skilled immigration system, but it incorporates the critical step we have been promoting: the equivalent of a mandate to staple a green card to the diploma of all non-U.S.-born students graduating a U.S. university with an advanced STEM degree.

Of course, real challenges remain, such as reforms to the temporary H-1B and L-1 programs. The proposal is vague in these areas, but indications are that the proposed reforms could have a chilling effect on the global competitiveness of U.S. employers, particularly technology companies. We are hopeful that the legislation can strike the right balance between the need to further combat fraud and misuse of these programs, without compromising their essential contributions to the high-skilled economy.

The President has said that Democrats cannot fix this problem alone and he called on Republicans to join the effort. We echo that call, and we remain optimistic that Congress will move forward this year with an effective, bipartisan immigration reform bill.

Following the introduction of the Obama Administration’s ESEA Blueprint for Reform and with healthcare reform signed into law, the U.S. Congress  has once again turned to reauthorization of the Elementary and Secondary Education Act (ESEA).  Among the many programmatic and regulatory issues needing to be addressed is the role of technology.  The Obama/Duncan plan is short on details, but raises concerns by ending the Enhancing Education through Technology (EETT) program without an alternative targeted program.

A coalition of 50 education and high-tech organizations supports the Administration’s proposal for infusing technology throughout the ESEA programs, but as part of a two-tiered approach that also includes the Achievement Through Technology and Innovation (ATTAIN) Act.  The coalition – including Apple, ASCD, Intel, NSBA and NCTM – affirmed: “Many of today’s educational goals and requirements – including both the central tenets of ESEA as well as those set forth in the Obama Administration ESEA Reauthorization Blueprint for Reform – can be most effectively achieved by modernizing our educational practices and system through technology.”

SIIA also recently submitted recommendations to Congress on ESEA addressing several areas: Systemic Transformation from Mass Production to Mass Customization;  Modernize Education Practice Through Technology; Innovation, Public-Private Partnership and Appropriate Federal R&D Role; School Improvement and Low-Performing Students; Teacher Effectiveness and Connectedness; Assessment, Data & Accountability; and High-Tech Workforce Readiness.

SIIA called for ESEA to “drive transformational innovation that reengineers education delivery models [and] Incentivize the shift from a seat-time, assembly-line education model to a more flexible, student-centered outcomes-based model built around individual learning needs and pace, and anytime-anywhere learning [i.e., personalization].”

ESEA was last reauthorized in 2002 through the No Child Left Behind Act.  Congress made a similar attempt in 2007, but policies and politics prevented the House and Senate Committee Chairs from ever formally introducing a bill.  While there appears to be much agreement in principle, including on fixes to the current accountability system, many hurdles exist, and many insiders are suggesting Congress will run out of time in this election year before completing work to update Title I and most other major federal K-12 programs.

Amid the flurry of recent federal policy activity around education and the role of technology, SIIA’s successful 2010 Ed Tech Government Forum seems a distant memory.  A record 100 SIIA members participated in two full days of discussion with national education leaders on topics critical to the education sector. 

2010 Conference Photo Album & Session Summaries 

Among the highlights were U.S. Secretary of Education Arne Duncan’s first speech focused on technology. 

The Secretary challenged SIIA member publishers and developers of technology-based educational interventions:  “As providers of educational products and services, you have a huge impact on—and share a huge stake in—the success of America’s students. So, I ask you to join the great endeavor to not just reform education but to transform it. I challenge you to put your talent and ingenuity to work to equip 21st century students with 21st century skills.”

And the Secretary laid out the opportunity:  “As research gives us new insights into how today’s students learn, and technology enables us to respond as never before, you can help lead the way in providing a model for 21st century learning.”

The Secretary spoke at a joint forum before members of SIIA and the Association of American Publishers (AAP).  SIIA and AAP issued a joint statement to “support the voluntary Common Core State Standards Initiative for education and its implementation through our members’ development of instructional, curricular, professional development, assessment and other resources, both digital and print, that align to the standards and are necessary for the teaching and learning of those Standards.”            

The Forum also featured visits to 200 Congressional offices to advocate for federal school technology with partners CoSN, ISTE and SETDA representing state and local educators and administrators. 

SIIA members can review summaries of all the conference sessions, including on Race to the Top and i3, Title I and School Improvement, the Obama College Initiatives, ESEA reauthorization, Common Core implementation, and Government OER Initiatives.

In the last few weeks, federal and state officials have introduced a plethora of plans and proposals with implications for education and the role of technology that is perhaps unprecedented in scale and scope.  The latest is the “National Broadband Plan: Connecting America” released today by the Federal Communications Commission (FCC), in response to a Congressional request in the Recovery Act a year ago.  The others: the National Education Technology Plan, titled “Transforming American Education: Learning Powered by Technology” released two weeks ago,  the Obama Administration’s ESEA “blueprint for reform” and the NGA-CCSSO Common Core standards, not to mention the final Investing in Innovation (i3) rules.  The timing is largely coincidental.  The question: What does it all mean?

A few observations specific to education technology and SIIA members:

-The Obama Administration (including the independent FCC) seems to view technology as an important means to educating our students to maintain our global competitiveness.

- The Obama Administration is proposing a new federal policy path to realizing that goal, proposing to increase the E-Rate, eliminate targeted DoED funding through the Enhancing Education Through Technology (EETT) program, infuse technology in other ESEA programs, and look to “supply-side solutions” such as investment in open educational resources (OER) and interoperability as well as potentially far-reaching regulation around copyright, technology standards, etc.

- It is unclear whether the Obama Administration’s vision for transforming education through technology is a priority or sufficiently backed by “demand-side” targeted federal policies and investments (i.e., those directly supporting educational agencies and teachers around technology) needed to help lead the nation’s education system in this new direction.

- It is less clear how the U.S. Congress, not to mention education leaders, will react in that their actions are largely need to legislate and enact these policies and recommendations.  For example, “Many of the FCC’s proposals are short on details, and lawmakers and the agency can accept or reject any number of the ideas.” 

A few examples of policies of potential concern that seek to expand the federal role on the “supply-side” around technology or change federal regulation:

- “When the Department of Education funds technology-based learning tools and resources, they should give priority to bids that will produce open resources, and the Department should identify and promote new business models that provide for sustaining and maintaining these resources.” (NETP, p.62)

- “The Department of Education with the Office of Science and Technology Policy should convene a cross-agency effort to create, publish, and maintain open standards for content, student learning, and financial data interoperability.” (NETP, p.73)

- “Congress should consider taking legislative action to encourage copyright holders to grant educational digital rights of use, without prejudicing their other rights. (NBBP, Rec. 11.4)

- “Whenever possible, federal investments in digital educational content should be made available under licenses that permit free access and derivative commercial use and should be compatible with the standards defined in Recommendation 11.1.” (NBBP, Rec. 11.2)

- “The U.S. Department of Education, with support from the National Institute of Standards and Technology (NIST) and the Federal Communications Commission (FCC), should establish standards to be adopted by the federal government for locating, sharing and licensing digital educational content by March 2011.” (NBBP, Rec. 11.1)

- “The U.S. Department of Education should provide a simple Request for Proposal (RFP) online ‘broadcast’ service where vendors can register to receive RFP notifications from local or state educational agencies within various product categories.” (NBBP, Rec. 11.13)

With regard to the Broadband Plan, reactions are mixed.  SIIA commends the FCC for a comprehensive National Broadband Plan recognizing the importance of ubiquitous high speed broadband access to our nation’s educational and economic health.  While many education ideas are touched on, we encourage the FCC and Congress to focus on those most appropriate and direct to the core goal: improving broadband access to schools and students necessary for learning in this digital age, including especially the raising of the E-rate cap.

Out of “The Good, The Bad, and The Ugly” of these plans and proposals, SIIA looks forward to working further with our members, policy makers and other stakeholders to create an appropriate and positive set of policies and investments needed to transform education through technology.

The National Governors Association (NGA) and the Council of Chief State School Officers (CCSSO) today released  the much anticipated, first official public draft of the K-12 standards as part of the Common Core State Standards Initiative.  The standards in (1) English Language Arts and Literacy in History/Social Studies & Science and (2) Mathematics are expected to be finalized in early Spring.  Initial reviews, as expected, are a mix of praise and skepticism.  SIIA notes the inclusion in the standars of student digital/media literacy, use of technology to enhance writing, and use of technology to visualize and represent mathematical concepts as important ways the standards reflect 21^st century learning, knowledge and skills. 

At last week at SIIA’s Ed Tech Government Forum, representatives from CCSSO, Achieve and the Council of Great City Schools presented to more than 150 publishers and developers about the Common Core timeline and impact on curriculum, assessment and publishers.  They noted the key role played by publishers and developers, as well as the extended timeline and investment that will be needed to transition to the new standards. 

SIIA, along with session co-host the Association of American Publishers, took that opportunity to release a joint statement to support implementation of the Common Core state standards:

“The Association of American Publishers (AAP) and the Software & Information Industry Association (SIIA) support the voluntary Common Core State Standards Initiative for education and its implementation through our members’ development of instructional, curricular, professional development, assessment and other resources, both digital and print, that align to the standards and are necessary for the teaching and learning of those Standards.  AAP, SIIA and our member publishers and developers look forward to the final approval and adoption of a set of Common Core Standards that ensure students gain the knowledge and skills necessary for their success in the 21st century. We expect the commonality of standards will reduce some burdens on our education system, resulting in enhanced opportunity for curriculum innovation and personalized learning to ensure all students are college and career ready.”

In so doing, SIIA and AAP affirmed that we and our member publishers and developers look forward to continued work with education agencies and other stakeholders to provide instructional resources aligned to state standards.  AAP and SIIA members collectively develop and publish a large majority of textbooks, software, online content, assessments and other primary and supplemental materials and related professional development used by educators and students in virtually all states and school districts across the country.

The U.S. Department of Education today released a draft of the National Educational Technology Plan titled, “Transforming American Education: Learning Powered by Technology.”  U.S. Secretary of Education Arne Duncan previewed the plan March 3rd during SIIA’s Ed Tech Government Forum in his first speech centered around technology-enabled teaching and learning.  SIIA staff and members were pleased to be invited to provide input into the draft plan, including an SIIA member focus group held in June 2009.

The Plan is not merely a technology plan; it is importantly a plan for the future of teaching and learning. The described model of 21st century learning, powered by technology, is very consistent with SIIA’s Vision K-20. It calls for “personalized learning instead of a one-size-fits-all curriculum, pace of teaching, and instructional practices,” “technology-based assessments,” and “using technology . . . [for] enabling a shift to a model of connected teaching.”  The plan also recognizes that technology can make our education system more productive, as it has done in most other sectors, as well as that “an essential component of the 21st century learning model is a comprehensive infrastructure.”

The Plan’s release comes on the heels of the Obama Administration’s FY2011 budget, which proposes, among other changes, to eliminate funding for the Enhancing Education Through Technology (EETT) program and instead infuse technology into other programs.  SIIA is working to understand the details and implications of this policy shift and has shared some early thoughts (here and here).

SIIA has little doubt those few communities with the vision, capacity and resources will continue to pursue the model outlined in the Plan, but what will happen to those without absent this federal investment?  How credible and viable will the Plan and federal leadership be without matching targeted resources? Failing to adequately plan has slowed our nation’s progress toward a technology-enabled 21^st century education system, but absent the enabling investments, this important initiative could amount to no more than planning to fail.

Upon initial review, SIIA supports the Plan’s vision, and many of the recommendations.  We are very pleased that the Obama Administration has put forward such a bold model for the transformation of our educational system.  And we look forward to working further with our members, education stakeholders and the Obama Administration to not only further refine the Plan to ensure it is appropriate and actionable, but more importantly to ensure the critical investments in technology are made and systems changed to realize the Plan’s successful implementation and the continued competitiveness of our education system.

After an initial reaction here Monday to the Obama Administration’s proposed FY2011 budget for the U.S. Department of Education and educational technology, a fuller analysis is now possible (see others here, here and here).  The budget notes that: “The President strongly believes that technology, when used creatively and effectively, can transform education and training in the same way that it has transformed the private sector.”  The question then is how the budget proposes to support that notion, and if in fact it would.

The Obama educational technology proposal includes three core elements: (1) “consolidation” of the Enhancing Education Through Technology (EETT) program, which would end the program and diffuse those dollars as a technology priority throughout the new Effective Teaching and Learning programs (p.7, 26-27, and 34); (2) integration of technology into other programs including i3 and RttT; and (3) enhanced R&D investment in USED and National Science Foundation.

The EETT budget justification reads:  “The Administration‟s ESEA reauthorization proposal would consolidate this [EETT] program into the Effective Teaching and Learning for a Complete Education authority. Each of the three programs under this new authority would include a focus on integrating technology into instruction and using technology to drive improvements in teaching and learning. In addition, using technology to improve student outcomes is a key priority in the Race to the Top and Investing in Innovation (i3) programs. The Administration‟s proposal for College- and Career-Ready Students [i.e., Title I] also will promote the development of State capacity to support district efforts to use technology to improve instruction.” 

SIIA applauds the Obama Administration’s proposed budget for recognizing the important role of technology to transform education and improve student outcomes.  We also welcome proposals to better integrate technology to drive improvements in teaching and learning throughout the many grant programs. This integration currently exists on paper, but there are many opportunities to further leverage this approach into practice.

SIIA also believes targeted federal investment, including through the EETT program, plays a critical role in both building state and local capacity for educational innovation through technology, as well as for coordinating disparate school improvement investments that leverage educational technologies. Directed investment may be especially important where capacity and resources are otherwise lacking to take advantage of existing and new flexibility, thus risking exacerbation of the classroom digital divide between schools.

SIIA looks forward to working with the Administration and Congress to ensure that any new federal K-12 paradigm continues the systematic and coordinated investment in educational technology leadership needed to drive education innovation and continuous improvement.  This includes work during the ESEA reauthorization processes to further integrate technology throughout all education programs as proposed, as well as continued support for increased investment in EETT (or an alternative such as the ATTAIN Act) at least until such time as there are meaningful and quantifiable alternative approaches enacted to achieve these goals.

The FY2011 (2011-12 school year) budget proposal released today by the Obama Administration would dramatically remake the federal education landscape in the name of flexibility and alignment around the four assurances.  Among the changes would be the “consolidation” of the Enhancing Education Through Technology program (and 38 others down to 11), perhaps ending some 15+ years of targeted USED investment in educational innovation and improvement through technology only recently touted by 30+ national education and high-tech organizations and supported in the stimulus.  While SIIA has been ensured of the goal to integrate technology throughout, those details to date are not available. 

Flexibility to use an array of federal program funds to meet educational needs through technology is an important principle, and in fact, advocacy by SIIA and others has ensured technology is already allowed in most core U.S. Department of Education programs (though much more work is needed).  The flexibility is most often taken advantage of by those with the vision, capacity and existing success.  The questions therefore are: What federal leadership teeth will be given to the integration policies to drive technology-based practices that would not otherwise happen.  And what will happen to those many communities and teachers without the vision, capacity and resources, if targeted investment is no longer provided?  EETT has been successful in targeting high-need schools especially in building local capacity and providing needed professional development.  Pending bipartisan legislation would build on those successes and revamp the program.

Among the other major proposals as part of a $3.5 billion overall increase: $1.35 B for RttT, $500 M for i3, $200 M more for literacy and STEM, $354 more for school improvement/turnaround, $800 M more for innovative teacher and leader reforms/recruitment/preparation, and slight increases for Title I and IDEA to about $25 B total.   Included is a shift in some cases from formula to competitive programs, while much of the proposal depends upon uncertain enabling legislation through the ESEA/NCLB reauthorization.  [Note that SIIA will be further analyzing the proposal for its members in the days ahead.] 

SIIA looks forward to learning more about the Administration’s proposals, and working with the USED and other stakeholders to ensure that any new federal policy paradigm pushes real transformation  and closes the gap of educational improvement enabled by educational technologies.