Posts Tagged: "Electric Power Group v. Alstom"

The U.S. District court for the Northern District of Texas, Dallas Division, overturned a $10.1 million jury verdict on January 17 against Japanese gaming giant Nintendo under the Supreme Court’s Alice test, which the High Court recently declined to clarify amidst confusion. In August of 2017, a Texas jury entered a verdict against Nintendo, finding that the company had infringed upon a patent asserted by Texas-based medical tech firm iLife Technologies Inc. The jury agreed that iLife proved that it was owed $10.1 million in a lump sum royalty for the sales of a series of games for Nintendo’s Wii U console. The jury also found that Nintendo didn’t prove invalidity of the asserted patent. In its analysis overturning the jury verdict, the district court reasoned that “[a]t its core, Claim 1 is directed to the abstract idea of ‘gathering, processing and transmitting…information.’”

The Supreme Court’s 2014 decision in Alice v. CLS Bank made it significantly more difficult to obtain patents for some computer-related technologies. it is, at best, questionable whether court decisions since then have been coherent and consistent. Similarly, marked variation has been observed across art units and across post-Alice time periods as to how examiners are applying Section 101. However, the U.S. Patent and Trademark Office’s (USPTO’s) 2019 Patent Eligibility Guidance added some much-needed clarity and predictability as to how eligibility of computer-related patent applications is being assessed at the agency. Our previous research focused on the effect that Alice and Electric Power Group had on examination trends in computer-related art units. To investigate how the new 2019 USPTO eligibility guidance has affected those trends, we updated our analysis.

I thought the Electric Power Group decision was effectively dead. It used an overbroad characterization of patent claims under Step 1 of Mayo/Alice. Following that decision, I encountered many Section 101 rejections that put forth an extremely broad characterization of claims, citing Electric Power Group as authority. I saw no rebuttal until the 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50, 52 (January 7, 2019). “Claims that do not recite matter that falls within these enumerated groupings of abstract ideas should not be treated as reciting abstract ideas.”  See id. at 53. The Electric Power Group decision was nowhere cited, and “collecting information” was not listed as one of the abstract ideas. Indeed, the Patent Trial and Appeal Board’s (PTAB’s) art unit 3600 soon decided that “‘collecting usage information’ … is not an abstract idea.” See Final Decision in Ex parte Fanaru, Appeal 2017-2898 at page 5 (PTAB 2019). I was thus able to use the 2019 Revised Patent Subject Matter Eligibility Guidance and Ex parte Fanaru to counter an examiner’s broad characterization of claims. Now, however, Electric Power Group may make a comeback. The very recent Cellspin decision again cited to Electric Power Group to support a very broad Step 1 characterization of claims. The Federal Circuit panel (Lourie, O’Malley, and Taranto) found the claims were “drawn to the idea of capturing and transmitting data from one device to another.”  See Cellspin Soft, Inc. v. Fitbit, Inc., et al., at page 16 slip opinion (CAFC, decided June 25, 2019).

On June 19, it will be five years since the United States Supreme Court issued a decision in Alice Corp. v. CLS Bank, 134 S.Ct. 2347 (2014), which significantly changed the way courts and patent examiners evaluated patent eligibility of computer implemented innovation in the United States. While the Supreme Court ostensibly extended the patent eligibility analysis applied in the life sciences context that had previously been adopted in Mayo Collaborative v. Prometheus Labs., 132 S.Ct. 1289 (2012), even a cursory review of allowance rates from the USPTO and invalidity rates in federal courts shows that Alice changed the prevailing analysis in profound ways. We will be commemorating this anniversary on June 24-25 in Washington, DC with a dedicated event examining the damage, discussing real solutions, and offering strategies for innovators who need protection in these uncertain times (see below for more detail). Almost immediately after Alice, patent examiners started to issue new subject-matter eligibility rejections for computer implemented innovations using the abstract idea exception to the statutory categories of patent eligibility. “The ubiquity of subject-matter eligibility rejections in office actions exploded, leading many to wonder whether software implemented inventions remained patentable at all,” explained Kate Gaudry and Samuel Hayim, who have done a series of articles on IPWatchdog detailing their statistical analysis. “This effect was largely centered in business method art units of [USPTO technology center] (TC) 3600. For example, the number of allowances issued from business-method art units dropped from 24% in the months before Alice was decided to about 3% in months after.” For months there has been growing hope that a legislative fix spearheaded by a few dedicated Members of Congress would provide a solution. But in recent weeks, that hope is waning as the uncomfortable reality that big tech is dominating the discussions has started to set in.

The Federal Circuit has often demanded some technical advantage under § 101 when none is required by U.S. patent law. The Federal Circuit has also made § 101 more burdensome, unpredictable and subjective than an obviousness determination under § 103, and § 101 is supposed to be a threshold test that acts to weed out only the most egregious attempts to patent fundamental principles. § 101 was never meant to weed out whole new areas of technology, particularly not nascent technologies. But that is exactly what is happening and the Court that has been charged to make sense of it all, the Federal Circuit, seems to be abdicating its collective responsibility by refusing to settle on a repeatable test that results in predictable outcomes.

It’s been over eight years since the Supreme Court issued its Bilski v Kappos decision, over six years since the Supreme Court issued its Mayo v. Prometheus decision and over four years since the Supreme Court issued its Alice Corp. v. CLS Bank decision.  In case anyone missed it, each of these three landmark cases was decided based on evidence on the record.  Thus, the Supreme Court not only contemplated the need for evidence when determining patent eligibility for abstract ideas of man-made origin, but wholly embraced the practice. Yet despite the Supreme Court’s trio of evidence-based holdings, it was February of this year before a single three-judge Federal Circuit panel definitively ruled on the evidence issue in Berkheimer v. HP, and it was the end of May before a majority of the Federal Circuit signed on to the idea that determining whether a man-made something is well-understood (or well-known), routine and conventional is an issue of fact that should be based on objective evidence. That’s the better part of a decade of the Federal Circuit wandering the desert.

The CAFC then approvingly noted that the district court invoked “an important common-sense distinction between ends sought and particular means of achieving them, between desired results (functions) and particular ways of achieving (performing) them.” As the district court reasoned, “‘there is a critical difference between patenting a particular concrete solution to a problem and attempting to patent the abstract idea of a solution to the problem in general.’” According to the CAFC, the claims at issue in this case do the latter, namely, “rather than claiming ‘some specific way of enabling a computer to monitor data from multiple sources across an electric power grid,’ some ‘particular implementation,’ they ‘purport to monopolize every potential solution to the problem’…Whereas patenting a particular solution ‘would incentivize further innovation in the form of alternative methods for achieving the same result’… allowing claims like [the ones at issue here] would ‘inhibit[] innovation by prohibiting other inventors from developing their own solutions to the problem without first licensing the abstract idea.’”