A Guide to Software Patent Eligibility at the Federal Circuit

By Gene Quinn
November 20, 2016

cafc-federal-circuit-topThe Alice/Mayo framework is the decisional approach adopted by the United States Supreme Court for determining whether a patent claim exhibits, such as software patent claims, embody patent eligible subject matter. The Alice/Mayo framework requires the decision maker, whether a patent examiner, administrative tribunal or reviewing court to ask and answer a series of questions before determining whether the patent claim in question constitutes patent eligible subject matter.

The first question (commonly referred to as Step 1) is whether the patent claim covers an invention from one of the four enumerated categories of invention defined in 35 U.S.C. §101 (i.e., is the invention a process, machine, article of manufacture, or composition of matter). If the answer to this question is no then the patent claim is patent ineligible. If the answer is yes the decision maker must move on to the next inquiry because the statutory test established by Congress is no longer the complete test for patent eligibility in the United States.

The second question (commonly referred to as Step 2A), where the Alice/Mayo framework truly begins, requires the decision maker to ask whether the patent claim seeks to cover one of the three specifically identified judicial exceptions to patent eligibility. Although there is no textual support for the creation of any judicial exceptions to patent eligibility in the Patent Act, the Supreme Court has long legislated from the bench in this area and ignored the clear language of the statute. At the moment there are only three identified judicial exceptions, which are: laws of nature, physical phenomena and abstract ideas. If the claim does NOT implicate one of those judicial exception then the claim is patent eligible.

In the case where the patent claim seeks to cover a judicial exception to patent eligibility, the final question (commonly referred to as Step 2B) asks whether the inventive concept covered in the claimed invention added “significantly more” than the judicial exception, or whether the claimed invention did not add “significantly more” and, therefore, was seeking to merely cover the judicial exception.

The judicial exception at play when computer implemented inventions are claimed is the abstract idea exception. Unfortunately, the Supreme Court has intentionally refused to define the phrase “abstract idea,” pointing out in Alice v. CLS bank that they did not need to “labor” to define the term. Equally unfortunate, the Supreme Court has not defined the meaning of “significantly more.” Thus, the two critical terms of art in the Alice/Mayo framework are have not accepted meaning.

Notwithstanding, over the last six months the Federal Circuit has provided a great deal of clarity, with 9 judges (Judges Moore, Taranto, Hughes, Chen, Newman, O’Malley, Reyna, Stoll, and Plager) signing on to decisions that found software patent claims to be patent eligible. What follows is a a summary of the significant developments over the last six months. It is probably worth noting that the cases below are precedential opinions. The recent non-precedential opinion in Transition, Inc. v. Lenovo (Fed. Cir. Nov. 16, 2016) is not included. As a non-precedential opinion the opinion is heavy on conclusions and extraordinarily light on analysis, which dramatically inhibits any useful lessons being learned.


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Enfish LLC v. Microsoft Corp. (May 12, 2016)

The patents at issue were directed to an innovative logical model for a computer database. Contrary to conventional logical models, the patented logical model includes all data entities in a single table, with column definitions provided by rows in that same table. The patents describe this as the “self-referential” property of the database. The patents explain that the claimed invention is an improvement, which the Federal Circuit would make a great deal about in their patent eligibility analysis. The patents teach that multiple benefits flow from this design. The Federal Circuit would go on to explain that the Supreme Court suggested in Alice that claims that improve the functioning of a computer might not succumb to the abstract idea exception.

From there the Federal Circuit said:

We do not read Alice to broadly hold that all improvements in computer-related technology are inherently abstract and, therefore, must be considered at step two. Indeed, some improvements in computer-related technology when appropriately claimed are undoubtedly not abstract, such as a chip architecture, an LED display, and the like. Nor do we think that claims directed to software, as opposed to hardware, are inherently abstract and therefore only properly analyzed at the second step of the Alice analysis. Software can make non-abstract improvements to computer technology just as hardware improvements can, and sometimes the improvements can be accomplished through either route. We thus see no reason to conclude that all claims directed to improvements in computer-related technology, including those directed to software, are abstract and necessarily analyzed at the second step of Alice, nor do we believe that Alice so directs. Therefore, we find it relevant to ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea, even at the first step of the Alice analysis.

The Federal Circuit explained that the claims at issue plainly focus on improvements to computer functionality. This led the panel to unanimously conclude, “the claims at issue in this appeal are not directed to an abstract idea within the meaning of Alice. Rather, they are directed to a specific improvement to the way computers operate, embodied in the self-referential table.” Thus, it was not necessary for the Federal Circuit to address Step 2B.

For more please see our Enfish v. Microsoft archive.

 

TLI Communications, LLC v. AV Automotive, LLC (May 17, 2016)

The patent at issue related to a method and system for taking, transmitting, and organizing digital images. With respect to the Alice/Mayo framework – Step 2A, the abstract idea was defined as “classifying and storing digital images in an organized manner.” The court pointed out that the claims were not directed to any specific improvement to computer functionality, but rather were directed to the use of conventional technology in a well-known environment. The Federal Circuit found that no claims exhibited an inventive solution to any problem presented. Further, the Federal Circuit explained that specification did not describe any new physical components or combinations, and failed to provide any technical details for the tangible components that were mention. Instead, the court explained that the specification “predominately describes the system and methods in purely functional terms.” The court also explained: “Likewise, the server is described simply in terms of performing generic computer functions such as storing, receiving, and extracting data.” Ultimately, the claims: (1) were not directed to a solution for a technological problem; and (2) did not attempt to solve “a challenge particular to the Internet.” As a result, the claims were held to be directed to an abstract idea under Step 2A. With respect to Step 2B, the court determined that the claims failed to recite any elements (either individually or when considered as an ordered combination) that transform the abstract idea into a patent-eligible application of that idea. Ultimately, the court reaffirmed that generic computer components that operate in well-understood, routine, conventional ways, are insufficient to add inventive concept to an otherwise abstract idea.

For more please see our TLI Communication archive.

 

BASCOM v. AT&T (June 27, 2016)

The claims generally recited a system for filtering Internet content. The claimed filtering system is located on a remote ISP server that associates each network account with (1) one or more filtering schemes and (2) at least one set of filtering elements from a plurality of sets of filtering elements, thereby allowing individual network accounts to customize the filtering of Internet traffic associated with the account. The patent explains that the advantages of the invention are found in the combination of the then-known filtering tools in a manner that avoids their known drawbacks. The claimed filtering system avoids being “modified or thwarted by a computer literate end-user,” and avoids being installed on and dependent on “individual end-user hardware and operating systems” or “tied to a single local area network or a local server platform” by installing the filter at the ISP server. Thus, the claimed invention is able to provide individually customizable filtering at the remote ISP server by taking advantage of the technical capability of certain communication networks.

Under Step 2A of the Alice/Mayo framework, the Federal Circuit agreed with the district court that the filtering of content is an abstract idea because “it is a long-standing, well-known method of organizing human behavior, similar to concepts previously found to be abstract.” With respect to Step 2B, the court acknowledged that the limitations of the claims, when viewed individually, do recite a generic computer network and Internet components, none of which is inventive by itself. Based on the procedural posture of the case (i.e., a motion to dismiss where all inferences are to be given to the non-moving party) the court explained that the specific method of filtering Internet content claimed could not as a matter of law be said to be conventional or generic. Ultimately, the Federal Circuit explained that the “claims do not merely recite the abstract idea of filtering content along with the requirement to perform it on the Internet… Nor do the claims preempt all ways of filtering content on the Internet.” Thus, the Federal Circuit determined that the inventive concept was found in the ordered combination of claim limitations (i.e., there was “significantly more”).

For more please see our BASCOM v. AT&T archive.

 

Rapid Litigation Management v. CellzDirect (July 5, 2016)

The inventors of the ’929 patent discovered that some fraction of hepatocytes (i.e., liver cells) are capable of surviving multiple freeze-thaw cycles. Armed with this discovery, the inventors developed an improved process of preserving hepatocytes, claimed in the ’929 patent. The Federal Circuit determined that the claims were not directed to a judicial exception (Step 2A) and, therefore, the 101 inquiry ended with a finding that the claims were patent eligible. This life sciences case is on this list because of what was said with respect to the issue of preemption. On the issue of preemption, the Federal Circuit recognized that it is not the test for determining patent-eligibility, but explained that preemption is certainly an important consideration. In this case the defendant managed to engineer around the patent, which the court explained was in accordance with the conclusion that the claim is “not directed to a patent-ineligible building block of human ingenuity.”

This ruling, if applied outside the life sciences context, could be very important. In many instances engineering around a software patent claim to accomplish substitute functionality would frequently, if not almost always, be possible. There is much more to be decided with respect to the remaining viability of a preemption argument, but patent owners and applicants in the software space should absolutely explore “engineering around” arguments.

For more see Federal Circuit gives hope to life sciences.

 

McRo v. Bandai (September 13, 2016)

The patents relate to automating a part of a 3D animation method. Essentially, the patents cover lip synchronization of animated characters so that the lips of the animated character move normally. The claims covered an improvement, which was pivotal in the Federal Circuit analysis. The district court had determined that the claim was drawn to the abstract idea of automated rules-based lip synchronization of a 3D animation. Under Step 2A, the Federal Circuit disagreed with this articulation of the abstract idea, reminding of previous admonitions about oversimplifying the claims by looking at them generally and failing to take into account the specific limitations in the claim itself. The Federal Circuit explained that the claims themselves set out meaningful requirements for a first set of rules and application of those rules. “When looked at as a whole, claim 1 is directed to a patentable, technological improvement over the existing, manual 3-D animation techniques. The claim uses the limited rules in a process specifically designed to achieve an improved technological result in conventional industry practice.” Therefore, the claim was not directed to an abstract idea and the court did not need to reach Step 2B.

On the issue of the role of preemption in the patent eligibility analysis, the Federal Circuit explained that the preemption concern arises if claims try to improperly monopolize the basic tools of scientific and technological work, not when they are directed to a specific invention. Thus, the court looks “to whether the claims in these patents focus on a specific means or method that improves the relevant technology or are instead directed to a result or effect that itself is the abstract idea and merely invoke generic processes and machinery.”

For more please see our McRo v. Bandai archives.

 

FairWarning IP v. Iatric Systems (October 11, 2016)

The claims generally covered a method of detecting improper access of a patient’s protected health information (PHI) in a computer environment. The Federal Circuit determined under Step 2A that the claims were directed to an abstract idea, which was defined as analyzing records of human activity to detect suspicious behavior. The analyzed claim merely collects information regarding accesses of a patient’s personal health information, analyzes the information according to one of several rules to determine if the activity indicates improper access, and then provides notification if it determines that improper access has occurred. The court explained that while the claims recite one of a few possible rules they were distinguished from McRo because in McRo there was a specific asserted improvement that transformed a process traditionally carried out by human artists into an automated process executed on computers. “The claims here are more like those in Alice than McRo,” the Federal Circuit wrote. “FairWarning’s claims merely implement an old practice in a new environment.” The Federal Circuit also distinguished Enfish, saying: “The claims here, in contrast, are not directed to an improvement in the way computers operate, nor does FairWarning contend as much.” With respect to Step 2B, the Federal Circuit concluded that after searching for “something more” there was nothing in the patent, either with respect to the individual limitations or as ordered combinations, that made the claims eligible.

Please see Federal Circuit clarifies McRo and Enfish.

 

Amdocs (Israel) Limited v. Openet Telecom, Inc. (November 1, 2016)

Under Step 2A, the district court determined that the claim was directed to the abstract idea of correlating two network accounting records to enhance the first record. Under Step 2B, the district court found that the claim did not add a sufficient inventive concept to confer eligibility. Without breaking its analysis down into a traditional framework that separated Step 2A from 2B, the Federal Circuit recognized that the claim of the ‘065 patent was patent eligible because it entails an unconventional technological solution (enhancing data in a distributed fashion) to a technological problem (massive record flows which previously required massive databases). While the solution requires arguably generic components, the claim’s limitations necessarily require that these generic components operate in an unconventional manner to achieve an improvement in computer functionality. With respect to the ‘510 patent, the Federal Circuit explained that even if the claim were viewed as being directed to an abstract idea under Step 2A, as opposed to an improvement in computer functionality, the claim would add significantly more under Step 2B because the limitations all depend upon the system’s unconventional distributed architecture. With respect to the ‘984 patent, even if the claim were directed to an abstract idea it would have added significantly more under Step 2B for the same reason as would the claim of the ‘510 patent.

While the decision in this case is somewhat difficult to follow because it is not broken down into the Step 2A and 2B framework as is most other decisions, it is important because it stands for the proposition that claims are not directed to an abstract idea when generic components are described in the claim to operate in unconventional ways to achieve an improvement in computer functionality.

 

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 13 Comments comments.

  1. step back November 20, 2016 8:21 pm

    Gene,

    Nice summary of some of the more recent cases at the CAFC.

    Thanks

  2. step back November 20, 2016 8:30 pm

    Gene,

    Just a nit pick of mine:
    You say (top paragraph):
    “The Alice/Mayo framework requires the decision maker, whether a patent examiner, administrative tribunal or reviewing court to ask and answer a series of questions”

    Not exactly true.
    The SCOTeti said “we” the SCOTeti follow this framework.
    They never authorized any other decision making body to arbitrarily and capriciously determine what the claim is “directed to” or whether there is “something more”.

    Only the SCOTetei have the divine insight which allows them to so judge (without belaboring their superior minds).
    The rest of us who merely dwell in shadow of Mount Olympus should not be so bold as to think ourselves capable of such Olympian feats (fetes?).

  3. Gene Quinn November 21, 2016 9:53 am

    Step-

    “Only the SCOTetei have the divine insight…” It is at moments such as this that I really feel the need to incorporate “LIKE” functionality to the comments! Indeed, we who are mortal merely dwell in the shadow of the SCOTeti!

    -Gene

  4. Chris Gallagher November 21, 2016 10:40 am

    Chris Gallagher
    Gene…. thanks for this very helpful summary of where we stand on Alice/Mayo

  5. Independent Inventor November 21, 2016 12:52 pm

    Thanks Gene for yet another high-value, actionable article.

    No inventor should underestimate the importance of all the good that you do on our behalf.

    Our Founding Fathers would be very proud indeed.

  6. Gene Quinn November 21, 2016 3:17 pm

    Thanks independent inventor. I appreciate your praise. Cheers!

  7. Gene Quinn November 21, 2016 3:19 pm

    Thanks Chris. As it turns out we are probably better off than a lot of people realize, but it isn’t good. We still have a matching-game (as per Judge Hughes in Enfish who was only being honest).

    I’ll have more to write on this, likely after Thanksgiving now. Cheers.

  8. slira November 22, 2016 11:39 am

    Fantastic. I’ve been looking for something like this. I don’t deal with 101 much, but clients have lots of questions about it anyway.

  9. Simon Smith (RPL Central) November 23, 2016 5:11 am

    Hello Mr. Quinn,
    Nice to meet you. You are most definitely aware of my case, hopefully intimately. They got it wrong in the Full Federal Court at pure ‘fact’. The entire order of the patent was misquoted and it showed they heard ‘computer’ and ‘pacemakers’ was the first thing that entered their mind. Of course, Justice stops when the High Court don’t feel like appealing, public interest, too many donuts to eat, and hence we have the law. I wonder if American’s can come and tell our Justices how to administer law?

  10. step back November 23, 2016 2:44 pm

    SS@9
    By your comment one might imagine that Gene is directly involved somehow.
    The rest of us are not. Especially for a case that comes from down under.
    It would help if you include a web link, for example:

    http://www.lexology.com/library/detail.aspx?g=d9aef947-90ed-4e38-88ee-07ce7b78b256

    What goes on the Justices’ heads?
    That is one question we would all like to get an answer to.
    But as they say, be careful what you ask for.

  11. Simon Smith November 23, 2016 5:53 pm

    Hello US friends,

    http://blog.patentology.com.au/2015/12/australian-appeals-court-kills-another.html

    Sorry I thought you may know. It set case law in Australia and MS and SS where watching, and its success even upheld reliance from multi-million dollar patent challenges from the UK in Research Affiliates where the RPL patent was quoted (by the same Full Court but with more experienced Justices) as being unique and in not so many words a manner of manufacture, essentially the opposite of what the Full Court later hastily found not to be, it was a sad day for Australia because it truly was an ‘error’ both in the fact of strength of application, as it was only an innovation patent, and ‘error of law’ as factually the Commissioner and Justices completely misinterpreted the order of data manipulation and processing. The key to the patented manner of manufacture. Something evident in a simple table in the specification which on could literally print out and show as a diagram to a primary school classroom in a data flow diagram and every student would see the major flaw in the decision of how the Justices decided the processing occurred at end user level despite the patent saying nothing of the sort. Dr. Summerfield sets it out much more technical than me. I just wanted to know Mr. Quinn’s thoughts and the thoughts from abroad. This is not the sole reason why Dr. Summerfield quit the profession (the way IP Australia does not respect this kind of IP) but he truly is genuine expert, and it is in my view a contributing factor, and it does not give me much incentive to give any creativity to this country at all, as during the proceedings over 100 breachers, including the Government were at full force, and the legislation of course would punish the patentee for daring to protect their IP.

  12. step back November 24, 2016 2:00 pm

    Simon @11

    Sorry mate.
    You’re not going to get much of a response today from us Yanks.
    Today is the day we give thanks for having taken this continent away from our aborigines. (We call it “Thanksgiving” Day.)

    The short answer to your complaint is that all over the world babies are born without the gift of speech. Then they learn to make noises. They learn to mouth sounds deemed to be highly sophisticated like “business” or “abstract idea” or “computer”.

    Generally speaking, most of them have no idea what these noises signify. All they need to know is that they can use these noises to bamboozle themselves as well as others.

    Judges are no different than the general flock of tweeting and twittering bird brains. They like the sounds and effects of their meaningless cacophonies. It’s the same here in the States as it is on your continent. Just the noises are slightly different. Yours say “business manufacture” and ours say “abstract idea without something significantly more”. Same kangaroo dung. Just sung with a slightly different tune. Same old song.

    Cheers.

    check out U Tube at watch?v=uS2nWLz-AbE 😉

  13. Simon Smith November 24, 2016 5:45 pm

    Happy thanksgiving day!