Posts Tagged: "DDR Holdings v. Hotels.com"

Since the issuance by the United States Supreme Court of its opinion in Alice Corporation Pty Ltd. v. CLS Bank International, 573 U.S. 208, 134 S. Ct. 2347 (2014), the United States Patent and Trademark Office (USPTO) has increased its focus on patent eligibility. As a consequence, patent applicants now receive more claim rejections under 35 U.S.C. § 101, leading to protracted prosecution. While rejections under 35 U.S.C. § 101 are likely unavoidable, patent attorneys and agents can take steps during application preparation and prosecution to minimize the likelihood of such rejections and to successfully rebut such rejections when they do arise.

If you innovate and invest more than $10,000 to obtain patent protection on your idea, do you trust a government-issued patent to be a valid one?  And if you believe you have a valid patent, would you trust that government’s judicial system to protect you from sanctions for believing in its validity? These underlying assumptions provide the foundation to any system. If you purchase and obtain title to a car, stock, or real estate, you expect that title to be valid. And you expect not to be penalized for believing in that title’s validity.     For patents, it’s quite the opposite. It has become so commonplace for government-issued patents to be invalidated after issuance, we hardly bat an eye. But with the development of Section 101 law, the patent system has turned down a twisted path—one that sanctions patent holders for believing their patent to be valid. In Finnavations LLC v. Payoneer, Inc., the U.S. District court for the District of Delaware unfortunately advanced our patent system down this path

Much of the havoc wrought in the software patent system by the landmark decision Alice v. CLS Bank International, 134 S. Ct. 2347 (2014) stems from the unworkable two-part patent eligibility test based on vaguely defined and nebulous Abstract idea and significantly more constructs… In a patent eligibility landscape riddled with Alice-based rejections and invalidation it behooves patent practitioner and applicants alike to appreciate that not every innovation that achieves “a new, useful, and tangible result” is patentable… It is now more imperative than ever for practitioners to probe inventors with the right set of questions directed at identifying any distinctive technical features in the implementation, structure, configuration or arrangement of the software invention.

In accordance with the above discussion, particularly point (a), the client should be apprised of the necessity of fully fleshing out the inventive aspects of the technical implementation (i.e. the fuzzy logic). The client, however, may not know what the technical implementation is or what technical problems may need to be overcome. At this point, there may be no harm in filing a provisional patent application to capture the earliest priority date for the client. The next step under point (b) is to work with the client to develop a plan for implementation. Actual technical implementation can be expensive, but it is a very effective way to reveal technical problems that have to be solved. Technical implementation always (in our humble experience) reveals unforeseen technical problems. At some point, what is readily available may need to be modified or customized to serve the specific needs of the new business application, particularly as that application is scaled up. This is where patentable innovation occurs.

The Federal Circuit held that the claim was directed to the abstract idea of encoding and decoding image data. According to the panel, the claim recited “a method whereby a user displays images on a first display, assigns image codes to the images through an interface using a mathematical formula, and then reproduces the image based on the codes… This method reflects standard encoding and decoding, an abstract concept long utilized to transmit information.” The Federal Circuit went on to note under step one that RecogniCorp’s Claim 1 differed from the invention in Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016) because, unlike Enfish’s invention, Claim 1 did not recite a software method that improved the functioning of a computer but instead recited a process “for which computers are invoked merely as a tool.”

A recent opinion by the Federal Circuit suggests that there will be considerable uncertainty about the respective boundaries of §§ 101 and 112 in the years ahead. In Trading Technologies Intl. Inc. v. CQG, Inc., Judge Newman wrote on behalf of a unanimous panel, following up on her concurrence in Bascom… Of particular interest is her continued endorsement of a flexible approach to § 101 and the traditional measures of patentability, such as § 112. Judge Newman wrote that the “threshold level of eligibility is often usefully explored by way of the substantive statutory criteria of patentability,” and that this approach is in harmony with the Supreme Court’s reasoning in in Alice.

The ’510, ‘984, and ‘797 patents were each held eligible for similar reasons. Again, the court found that even if the claims were directed to an abstract idea, they would be eligible under step two of the Alice framework. The Court again relied on the unique and unconventional distributed architecture found in the specification and construed into the claim in the previous proceeding. This architecture allowed for load distribution – a technological and unconventional solution to a technological problem. While the ‘984 claims contained generic components and functions, the overall ordered combination of the limitations were unconventional and solved the technological problem.