The Alice/Mayo framework represents the approach adopted by the United States Supreme Court for determining whether a patent claim exhibits patent eligible subject matter. The Alice/Mayo framework requires the decision maker, whether a patent examiner, Administrative Patent Judge on the Patent Trial and Appeal Board (PTAB) or federal judge to ask and answer a series of questions before determining whether the patent claim in question constitutes patent eligible subject matter. These questions are represented in the flowchart seen below.
The judicial exception at play when computer implemented inventions are claimed is the abstract idea exception. Unfortunately, the Supreme Court has never defined the phrase abstract idea, and neither has the United States Court of Appeals for the Federal Circuit. Similarly, there is no definition for significantly more. Therefore, in practice, deciding whether a claimed invention is directed to an abstract idea and/or adds significantly more than the abstract idea has proved to be rather subjective. Notwithstanding, the United States Patent and Trademark Office has created a Quick Reference Guide based on current case law.
In November 2016 I wrote A Guide to Software Patent Eligibility at the Federal Circuit, which summarized the notable cases on software patent eligibility from 2016, starting with Enfish v. Microsoft, 822 F.3d 1327 (Fed. Cir. 2016). What follows picks up where that article left off and provides summary and analysis of the notable software patent eligibility cases decided by the Federal Circuit in 2017. For practitioners representing innovators it is important to remember that as much (if not more) can be learned from reading those decisions where claims were found ineligible.
If there was a theme that emerged in 2017 it is the necessity to have what is specifically innovative disclosed in the claims. While not a particularly new concept, there were cases in 2017 where the Federal Circuit acknowledged that a patent eligible innovation may well have been disclosed in the specification, but which was not found in the claims. With many legacy software patents the description of the technology (if one actually existed) was only in the specification while the claims were written to be quite broad. The Federal Circuit requires both a thick technical description of the innovation and why it is an improvement (see Enfish) and incorporation of what is innovative into the claims. Incorporating specifics into claims is something that has for a variety of reasons been avoided by some practitioners not wanting claims of narrower scope. Today those extremely broad claims do little more than contaminate the entire patent given that focus will be placed on the most broad and easily invalidated claim, which will be deemed representative.
Of course, means plus function claims would import the technological description of the specification into the claims, but do not forget the teachings of the Algorithm Cases, which require 100% of the algorithms disclosed in the specification when using means plus function claims. Even if you are not going to use means plus function claims that level of disclosure is most wise, assuming of course the client gives the practitioner sufficient time and budget to actually do what the law seems to be increasingly requiring.
Trading Technologies Int’l v. CQG – Non-Precedential (Fed. Cir. Jan. 18, 2017)
In a non-precedential opinion the Federal Circuit found claims to a graphical user interface (GUI) patent to be patent eligible.
The ’132 and ’304 patents describe and claim a method and system for the electronic trading of stocks, bonds, futures, options and similar products. The patents explain problems that arise when a trader attempts to enter an order at a particular price, but misses the price because the market moved before the order was entered and executed. Federal Circuit agreed with the district court that the claims do not relate to an abstract idea. The Federal Circuit added further that the graphical user interface does not represent a long known idea, which is a threshold criterion for abstract idea ineligibility. Cf. DDR Holdings supra. Notwithstanding the patent eligibility finding on Step 2A, both the district court and Federal Circuit agreed that even if the claims were abstract there was an inventive concept that amounted to significantly more.
The claims that have been found to be patent eligible under 35 U.S.C. 101 were under review by the Patent Trial and Appeal Board (PTAB) in a Covered Business Method (CBM) review because the PTAB believed the graphical user interface patent claims were likely patent ineligible. After this non-precedential ruling the PTAB did find the claims to the ‘304 patent to be patent eligible, agreeing with the Federal Circuit. Notwithstanding, on the same day the PTAB terminated the CBM on the ‘304 patent the same panel of PTAB judges issued a final written decision finding the claims of another Technology Trading International GUI patent to be patent ineligible. See CBM2-15-00179.
It is unfortunate that the Federal Circuit did not make this decision precedential. Still, the analysis should be at least somewhat instructive moving forward. It is also further worth noting that the Legislative History of the America Invents Act does specifically include mention from Senator Chuck Schumer (D-NY), the champion for CBM, that GUI patents were not intended to be susceptible to CBM review at the PTAB. It is also further worth noting that Trading Technologies has received patents on these same innovations in Europe where there is a prohibition on patenting business methods and a specific requirement that there be a technological solution to a technological problem in order for a patent to issue. When there is such a technological solution at CBM review is supposed to be prohibited based on the express language of the Statute.
Intellectual Ventures v. Capital One, 850 F.3d 1332 (Fed. Cir. 2017)
Thee claimed invention at issue was directed to a system and method for editing XML documents. The claimed invention creates the dynamic document based upon “management record types” (“MRTs”) and “primary record types” (“PRTs”). A PRT is a simple data structure that contains unspecified data extracted from XML documents and an MRT is merely a collection of PRTs.
Under Step 2A, the Federal Circuit determined the claimed invention was directed to an abstract idea, as the Court has previously concluded with patents reciting similar data manipulation steps. While the Federal Circuit noted that the data structures added a degree of particularity to the claims, the underlying concept embodied by the limitations merely encompass the abstract idea itself of organizing, displaying, and manipulating data of particular documents. According to the Court, the PRTs and MRTs are just defined labels for generic data types that transfer data from one type of electronic document to another.
With respect to Step 2B, the Federal Circuit explained that the mere fact that the inventor applied his own coined labels to conventional structures did not make the underlying concept inventive. Furthermore, although this patent claims to have met a need in the art to allow users to view and update XML documents in different formats, manipulate the data and perform actions without programming skills, the claims recited nothing inventive or transformative to achieve that stated goal. In essence, whether the steps are viewed individually or as an ordered combination, the claimed invention recited no more than routine steps of data collection and organization using generic computer components and conventional computer data processing activities. Therefore, there was no inventive concept present in the claims to transform the abstract idea into a patent eligible application.
Thales Visionix Inc. v. U.S., 850 F.3d 1343 (Fed. Cir. 2017)
Thales Visionix, Inc. appealed from the U.S. Court of Federal Claims judgment on the pleadings holding that claims of U.S. Patent No. 6,474,159 are directed to patent-ineligible subject matter. The ‘159 patent discloses an inertial tracking system for tracking the motion of an object relative to a moving reference frame. The ‘159 patent claims provide a method that eliminates many “complications” inherent previous solutions for determining position and orientation of an object on a moving platform, with multiple advantages disclosed over the prior art in the specification.
Although the invention is certainly of the type that would be patent eligible, the claims themselves did not contain as much detail as they could. Nevertheless, the Federal Circuit explained the claims are not merely directed to the abstract idea of using “mathematical equations for determining the relative position of a moving object to a moving reference frame,” as the Claims Court found. Rather, the Federal Circuit found the claims to be directed to systems and methods that use inertial sensors in a non-conventional manner to reduce errors in measuring the relative position and orientation of a moving object on a moving reference frame.
“Just as claims directed to a new and useful technique for defining a database that runs on general-purpose computer equipment are patent eligible, Enfish, 822 F.3d at 1337-38, so too are claims directed to a new and useful technique for using sensors to more efficiently track an object on a moving platform.”
The presence of a mathematical equation did not doom the claims to being abstract. The Federal Circuit explained “the claims seek to protect only the application of physics to the unconventional configuration of sensors as disclosed. As such, these claims are not directed to an abstract idea and thus the claims survive Alice step one.”
With a different panel it would be easy to see this case going another way. What likely saved the claims was the specification explaining that the inertial sensors do not use a convention approach with respect to measuring inertial changes relative to the earth. Instead, the inertial sensors measure the gravitation field in the platform frame. This allowed the panel to follow Enfish. Still, it would have been preferable to draft the claims to incorporate that core uniqueness in the claim itself. Patents with an inventive concept disclosed in the specification but not in the claims were found patent ineligible in RecogniCorp and Two-Way Media, discussed infra.
RecogniCorp, LLC v. Nintendo Co., 855 F.3d 1322 (Fed. Cir. 2017)
The patent in question, U.S. Patent No. 8,005,303, sought to encode images in a way that required less memory and bandwidth.
Under Step 2A, the Federal Circuit explained “[t]he inquiry often is whether the claims are directed to “a specific means or method” for improving technology or whether they are simply directed to an abstract end-result.” In this situation the Federal Circuit concluded that the claim was directed to an abstract idea of encoding and decoding image data, which they characterized a “an abstract concept long utilized to transmit information.” RecogniCorp argued Diamond v. Diehr, 450 U.S. 175 (1981) was dispositive in its favor because of the presence of a mathematical formula in the claims. The Federal Circuit explained that adding one abstract idea (i.e., math) to another abstract idea (encoding and decoding) does not render a claim non-abstract. The Federal Circuit distinguished Diehr by saying the Supreme Court focused on the claim as a whole, and the patent claim in Diehr was directed to otherwise eligible subject matter, while the claim of the ‘303 patent was not.
Under Step 2B, the Federal Circuit found the claims lacked an inventive concept that transforms the claimed subject matter from an abstract idea into a patent-eligible application. The Federal Circuit distinguished BASCOM Global Internet Services v. AT&T, 827 F.3d 1341 (Fed. Cir. 2016) by saying the claims did not allege a particularized application of encoding and decoding image data, further pointing out that “claim 1 does not even require a computer; the invention can be practiced verbally or with a telephone.” That characterization by the Federal Circuit was disingenuous because the claim, a method claim, specifically required displaying images on a display, selecting facial features from an area on the display and then reproducing a composite image on a second display. How that could be accomplished verbally or over the telephone is not explained by the Federal Circuit, and in fact would be impossible. Having said that, the morale of the story here is probably to beware method claims, to make sure more tangible components are present in the claims, that the claims incorporate the inventive concept (not just the specification) and to more consciously fall into the safe harbor of McRo, Inc. v. Bandai Namco Games America, Inc., 837 F.3d 1299 (Fed. Cir. 2016), it is necessary for rules engine to both be specifically disclosed and incorporated into the claims.
Credit Acceptance Corp. v. Westlake Services, 859 F.3d 1044 (Fed. Cir. 2017)
This case began with the filing of a petition for CBM review of U.S. Patent No. 6,950,807, which includes both system and method claims directed to “provid[ing] financing for allowing a customer to purchase a product selected from an inventory of products maintained by a dealer.”
Credit Acceptance argued that the claims were not abstract because they improved the functionality of a general purpose computer by programming fundamentally new features. Under Step 2A, the Federal Circuit explained that mere automation of manual processes using generic computers does not constitute a patentable improvement in computer technology. The Federal Circuit explained that the claims here focus not on such an improvement in computers as tools, as was the case in Enfish, but on certain independently abstract ideas that use computers as tools. Ultimately, the Federal Circuit concluded that there was “no meaningful distinction between this type of financial industry practice and “the concept of intermediated settlement” held to be abstract in Alice.”
Under Step 2B, the Federal Circuit explained that merely configuring generic computers in order to “supplant and enhance” an otherwise abstract manual process is precisely the sort of invention that the Supreme Court in Alice deemed ineligible for patenting. In concluding that the claims to not add significantly more to an otherwise abstract idea the Federal Circuit explained that in this case the claims do not provide details as to any non-conventional software for enhancing the financing process. Ultimately the Federal Circuit found the claims not even arguably inventive and, therefore, insufficient to establish a sufficient inventive concept of an abstract idea.
Visual Memory LLC v. NVIDIA Corp., 867 F.3d 1253 (Fed. Cir. 2017)
The patent at issue was U.S. Patent No. 5,93,740. The ’740 patent teaches that computer systems at the time of filing frequently used a three tiers of memory to enhance performance – low speed, medium speed and high-speed memory, which were described as problematic for various reasons. The invention described in the ‘740 patent overcame the limitations of the prior art by creating a memory system having programmable characteristics, which would allow it to be used with multiple different processors without any reduction in performance.
“Our review of the ’740 patent claims demonstrates that they are directed to an improved computer memory system, not to the abstract idea of categorical data storage,” Judge Stoll wrote. “The specification explains that multiple benefits flow from the ’740 patent’s improved memory system.” Dissenting, Judge Hughes disagreed, saying that the claims covered “nothing more than a black box,” and that “the patent lacks any details about how [the invention’s purpose] is achieved.”
The majority found three flaws with Judge Hughes’ conclusion. First, the patent included an appendix having 263 frames of computer code. Thus, the majority found the assumption that those frames of computer code taught nothing was improper. “Second, whether a patent specification teaches an ordinarily skilled artisan how to implement the claimed invention presents an enablement issue under 35 U.S.C. § 112, not an eligibility issue under § 101,” Judge Stoll wrote. Third, the majority explained that the dissent assumes the innovative effort was found in the programming, but that assumption is contradicted by the patent specification itself. After pointing to various places within the specification that explained that the invention is an improved memory system, Judge Stoll concluded: “Configuring the memory system based on the type of processor connected to the memory system is the improvement in computer technology to which the claims are directed.”
Return Mail, Inc. v. U.S. Postal Service, 868 F.3d 1350 (Fed. Cir. 2017)
This case began as a CBM review at the PTAB. The representative claim was directed to a method for processing a plurality of undeliverable mail items. According to the specification, the claimed invention “overcomes the historical problems with prior art manual handling” and “does so quickly, more accurately, and at substantially less cost.” It teaches encoding useful information, such as the name and address of intended recipients, on mail items in the form of a two-dimensional barcode. Undeliverable mail items are returned to a processing location, where the barcodes are scanned. The scanned information is then processed, such as by obtaining corresponding updated address data from a computer or database, and the updated information is then electronically provided to the sender to be used as the sender deems appropriate. In other words, the claimed invention allows returned mail to be processed “virtually entirely automatically through the exchange of data files between computers.”
Under Step 2A, the Federal Circuit determined that the claimed invention was directed to an abstract idea. The Federal Circuit specifically pointed out that the encoding and decoding mail recipient information is a process that can be, and has been, performed in the human mind. Therefore, the claims simply recited an existing business practice with the benefit of generic computing technology, which is insufficient under Step 2A to result in a finding of patent eligibility.
Under Step 2B, the Federal Circuit pointed out that the claims only recite routine, conventional activities such as identifying undeliverable mail items, decoding data on those mail items, and creating output data. The claimed invention does not improve the functioning of the computer or barcode system. Instead, the claimed invention merely applies those functionalities in the context of processing returned mail. This was not enough to demonstrate the presence of an inventive concept to turn an otherwise abstract idea into patent-eligible subject matter.
Although irrelevant to the discussion of patent eligibility, it may be interesting to note that it is curious as to how these patent claims were susceptible to CBM review. In Unwired Planet LLC v. Google Inc., 841 F.3d 1376 (Fed. Cir. 2016), the Federal Circuit had previously ruled that an invention that can be used for a financial business purpose does not mean that the patent qualifies for CBM review. See Federal Circuit Slams PTAB. In this case the invention could be used as part of a financial process, but could also be used for many more uses outside a financial context.
Smart Systems Innovations v. Chicago Transit Authority (Oct. 18, 2017)
The patents in question deal with various methods of using a bankcard to fund mass transit rides through the use of an open-payment fare system, which allows riders to conveniently and quickly access mass transit by using existing bankcards, thereby eliminating the need for, and added operational cost of, dedicated fare-cards.
In its appeal, Under Step 2A, the Federal Circuit panel found that the asserted patent claims, when taken together, are directed to financial transactions in the field of mass transit and not directed to a new type of bankcard, turnstile, database or methods for processing data that would improve existing technological processes. The Federal Circuit panel was unconvinced by Smart Systems’ argument the claimed invention solved time of transaction issues at turnstiles.
With respect to Step 2B, Smart Systems argued that the asserted claims solved a technical problem with conventional industry practice, and represent an unconventional way to make an electronic process better. The Federal Circuit disagreed, finding that the asserted claims failed to provide an inventive concept. The Federal Circuit explained the asserted claims recite the abstract idea of collecting financial data using generic computer components and, therefore, offer no inventive concept that transforms them into patent-eligible subject matter.
In dissent Judge Linn would have found the claims of two of the asserted patents to be patent eligible under Step 2A. More specifically, Judge Linn explained that to find the claims abstract the majority had to rewrite the claims, or at least ignore the specific limitations of the claims, which specifically relate to a transit system and incorporate various physical components.
The moral of the story here may well be that payment gateways will be perceived to be both abstract and non-inventive regardless of whether they address existing problems in an innovate way and incorporate tangible elements into the claim.
Two-Way Media LTD. V. Comcast Cable Communications, LLC (Nov. 1, 2017)
The patents at issue describe the invention as an improved scalable architecture for delivering real-time information. Embedded in the architecture is a control mechanism that provides for the management and administration of users who are to receive real-time information. The patents also describe monitoring network conditions and generating records about the real-time streams.
The claims at issue recite either: (1) a method for routing information using result-based functional language, (2) monitoring the delivery of real-time information to a user or users, or (3) measuring the delivery of real-time information for commercial purposes. The claims requires the functional results of “converting,” “routing,” “controlling,” “monitoring,” and “accumulating records,” but does not sufficiently describe how to achieve these results in a non-abstract way. The proposed construction by Two-Way Media, that the claims are sufficiently tied to a particular scalable network architecture, were unpersuasive. The Federal Circuit explained that “[a]t best, the constructions propose the use of generic computer components to carry out the recited abstract idea, but that is not sufficient.” Therefore, the claims were found under Step 2A to be directed to an abstract idea.
Under Step 2B, the Federal Circuit found the claims lack an inventive concept, which precludes patent eligibility. Particularly important is the fact that Federal Circuit agreed with the district court conclusion that while the specification describes a system architecture as a technological innovation, the claim did not recite this architecture even under construction offered by Two-Way. The Federal Circuit further explained that the claim uses a conventional ordering of steps with conventional technology being used to achieve the desired result. Furthermore, the Federal Circuit did not see any inventive concept in the ordered combination of the limitations found in the claim, as can sometimes save a claim – See BASCOM. Thus, the claim failed to transform the abstract idea into something more and, therefore, the claim was not patent eligible.