Surviving 101 Challenges After Alice Gone Wild

Before the Supreme Court’s decision in Alice Corp. v CLS Bank Int’l [2], Judge Moore said “this case is the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents.”[3] This concern is premised on about twenty years of patent practice grounded in the en banc 1994 Federal Circuit decision in In re Alappat which previously established the “special purpose computer” justification for patent eligibility under 35 USC §101 for computer-implemented inventions.[4] Alice makes clear that although a computer is recognized as a machine which would fall under one of the statutory categories of §101, that isn’t the end of the inquiry under §101.[5] Instead, the Mayo 2-part test applies to computer-implemented subject matter.[6] The game-changing new rationale, contrary to Alappat, is that “the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.”[7] Simply “doing it” on a generic computer isn’t enough to satisfy §101.[8]

Surviving §101 Step 1

Mayo’s two part §101 test requires: (1) determining whether the claims at issue are directed to one of the patent-ineligible concepts; and (2) if yes, then is there an “inventive concept” – does the claim include an element or a combination of elements that is sufficient to ensure that the claim amounts to significantly more than a claim to the ineligible concept itself.[9] For §101 step 1, the Supreme Court avoided addressing the “precise contours of the ‘abstract ideas’ category in this case.”[10] Instead, the Court noted examples of a patent-ineligible abstract idea including fundamental/longstanding economic practices, certain methods of organizing human activity, an idea of itself, and mathematical relationships/formulas. However, more guidance is needed. In part 1 of this article, I summarize the following seven strategies should be considered for addressing §101 step 1:

1. ensure that a “patent ineligible” abstract idea is identified for §101 step 1 that is directed to a fundamental principle/truth, building block of human ingenuity, or basic tool of scientific and technological work
2. ensure that there is a reasoned link between the asserted abstract idea and the actual claimed features
3. ensure that some evidentiary support is provided to show that the identified patent ineligible abstract idea is indeed something fundamental, a building block, or a basic tool of science/technology
4. check if the claim satisfies the Federal Circuit’s machine or transformation test (MoT test)
5. are there claimed features that cannot be done solely by a human, in one’s mind, or by paper and pencil
6. suggest an abstract idea that is defined at a high level of generality, e., as abstract as possible, to improve chances of finding “significantly more” in §101 step 2
7. during patent prosecution, determine if the examiner might be relying on his/her personal knowledge regarding the abstract idea being a fundamental principle, building block, or basic tool; and if so, request an affidavit/declaration of that personal information relied upon

“Patent Ineligible” Abstract Idea Must Be Fundamental, Building Block, or Basic Tool

With regard to computer-implemented inventions, the issue generally involves whether there is a patent ineligible abstract idea, or whether the claim is directed to a mathematical formula/calculation. However, what is sometimes dropped from the abstract idea question is the “patent ineligible” aspect.

For example, the recently issued USPTO Preliminary Examination Instructions in view of the Alice decision refers to this “Part 1” §101 analysis as “determin[ing] whether the claim is directed to an abstract idea.” There is no reference to a “patent ineligible” abstract idea. This reflects a fundamental misunderstanding of the Supreme Court’s Mayo step 1. As the Supreme Court recognized, every invention can be characterized at some level as an abstract idea. §101 step 1 is not asking to simply identify an abstract idea. This is why the Supreme Court stated Mayo’s step 1 is to “determine whether the claims at issue are directed to one of those patent-ineligible concepts” – not “determine what is the abstract idea.” If the question is simply asking what is the abstract idea, every single patent claim would satisfy §101 step 1 as being directed an abstract idea at some level of abstraction – which is why the Supreme Court cautioned that “we tread carefully in construing this exclusionary principle lest it swallow all of patent law.”[11]

The judge made exception to §101 for laws of nature, natural phenomena, and abstract ideas exists because a patent on these would impede innovation more than promote it, contrary to the primary objective of patent law. As the Supreme Court emphasized, we must distinguish between claims to the building blocks of human ingenuity versus those that integrate the building blocks into something more.[12] The former would risk pre-empting or disproportionately tying up the use of the underlying ideas – to the detriment of progress in the useful arts.[13] Basically, the purpose of the Mayo test is to ensure that patent law not inhibit further discovery by preempting or improperly tying up the future use of building blocks of human ingenuity. [14]

The key point in §101 step 1 is whether the claim is directed to a patent ineligible abstract idea. The Supreme Court clarifies such patent ineligible abstract ideas as those directed to fundamental principles/truths, building blocks of human ingenuity, and basic tools of scientific and technological work. Claims to such fundamental truths, building blocks, and basic tools impede innovation, rather than promote it. Therefore, the first line of defense is to ensure that a “patent ineligible” abstract idea is identified for §101 step 1 that is directed to the specific type of “patent ineligible” abstract idea that “accords with the preemption concern that undergirds our §101 jurisprudence”[15] – namely, a fundamental principle/truth, building block of human ingenuity, or basic tool of scientific and technological work.

An example of this first line of defense can be found in Helios Software.[16] There, the court held that the asserted claims are not drawn to patent-ineligible subject matter in part because the defendant “makes no effort to show that [the asserted abstract ideas] are fundamental truths or fundamental principles the patenting of which would pre-empt the use of basic tools of scientific and technological work.” [17] Similarly, in PNC Bank, a CBM review was not instituted for §101 because the PTAB panel held that there was no §101 step 1 abstract idea.[18]  Looking at the claim as a whole, the PTAB panel held that the claim “relates to a computer-implemented method to transform data in a particular manner – by inserting an authenticity key to create formatted data, enabling a particular type of computer file to be located and from which an authenticity stamp is retrieved.”[19] As such, the claim as a whole was not directed to any “method of organizing human activity,” “fundamental economic practice long prevalent in our system of commerce,” nor “a building block of the modern economy.”

Abstract Idea Tied to Claim Language

The PNC panel went further to point out that the petitioner did not adequately tie claim language to the alleged abstract concept of placing a trusted stamp or seal on a document.[20] This is a second line of defense for §101 step 1, which is to ensure that there is a reasoned link between the asserted abstract idea and the actual claimed features. In PNC, the claim language does not “place” any stamp on any paper document. Quite the contrary, the claim retrieves an authenticity stamp from data and creates formatted data in a web page, not a paper document. Therefore, the asserted abstract idea is not adequately tied to the actual claim language.

Evidentiary Support that the Abstract Idea is Fundamental/Building Block/Basic Tool

A third line of defense for §101 step 1 is to ensure that some evidentiary support is provided to show that the identified patent ineligible abstract idea is indeed something fundamental, or a building block/basic tool of science/technology. The Supreme Court cited three references (one from 1896) in support of the assertion that the patent ineligible abstract idea of “intermediated settlements” was a fundamental economic practice and a building block of modern economy.[21] In PNC, the PTAB panel found that the petitioner did not provide sufficient persuasive evidentiary support that the asserted abstract idea is a “fundamental economic practice” or a “building block of the modern economy.”[22] Likewise, in Helios, the court noted that the defendant provided no support for the assertion that the asserted abstract idea of “remotely monitoring data associated with an Internet session” or “controlling network access” were fundamental principles in the ubiquitous use of the internet or computers in general.[23]

Machine or Transformation

A fourth line of defense for §101 step 1 is to consider if a case can be made to satisfy the Federal Circuit’s machine or transformation test (MoT test). Although the Bilski Supreme Court decision held that the MoT test is not the sole test for determining §101 patent eligibility, it is still a useful tool for the §101 analysis.[24] The “machine” aspect of this test may be more difficult to satisfy with just claimed features to a generic computer in view of Alice. But one case so far that met the “machine” aspect was in Helios, where the court found the claims tied to a machine because claimed features directed to exchanging data over different internet sessions to capture the content of an ongoing internet communication session were meaningful limitations that tied the claimed method to a machine.[25] As for the “transformation” prong of the MoT test, the typical issue in computer implemented inventions is overcoming the rule from CyberSource, a 2011 Federal Circuit case holding that the mere collection, organization, manipulation or reorganization of data does not satisfy the transformation prong of the MoT test.[26] However, in Card Verification, the court distinguished CyberSource, saying “the claimed invention goes beyond manipulating, reorganizing, or collecting data by actually adding a new subset of numbers or characters to the data, thereby fundamentally altering the original confidential information.”[27] In PNC, the PTAB panel found the claim met the transformation prong of the MoT test because “[t]he claim language requires ‘transforming’ one thing (‘received data’) ‘to create’ something else (‘formatted data’) and further recites a particular manner of transforming (‘by inserting an authenticity key’).”[28] Therefore, claimed features that “fundamentally alter” data or “transform” the data goes beyond the proscription against mere collection, organization, manipulation, or reorganization of data.

Claimed Limitations That Cannot Be Done By a Human, In Mind, Or By Pen and Paper

A fifth line of defense for §101 step 1 is if an argument can be made that claimed features cannot be done solely by a human, in one’s mind, or by pen and paper – a fact that goes against the claim being directed to a patent ineligible abstract idea. For example, in Helios, the court noted that the parties conceded that none of the claimed limitations, directed to access configurations and communication protocols that control computer network access and monitoring activity, could be performed by a human alone.[29] In PNC, the PTAB panel distinguished CyberSource because CyberSource’s claim was patent ineligible not merely because of manipulation and reorganization of data, but also because it could be performed in the human mind – which was not possible in PNC.[30] In US Bancorp, CBM review was not instituted for §101 review because there was no patent-ineligible abstract idea, primarily because the claim as a whole was directed to processing paper checks with limitations including receiving paper checks, scanning the paper checks with a digital scanner, and comparing the digital images by a computer.[31] These limitations go against the claim being an abstract idea, because they require paper checks, a digital scanner, digital images, and comparison of the digital images – all features that cannot be done just by a human, in one’s mind, or by paper and pencil. In Card Verification, the claims survived a §101 challenge in a motion to dismiss on the pleadings. Part of the court’s justification was that “[h]ere, an entirely plausible interpretation of the claims include a limitation requiring pseudorandom tag generating software that could not be done with pen and paper.”[32]

Defining the Patent Ineligible Abstract Idea at a High Level of Generality

A sixth consideration for §101 step 1 is to find the “right” level of abstraction. Knowing that §101 step 2 will be searching for some claimed features that are “significantly more” than the patent ineligible abstract idea, an abstract idea defined at a high level of generality, i.e., as abstract as possible, would help the search for claimed features constituting “significantly more” than the defined abstract idea. Stated differently, if the patent ineligible abstract idea was defined in §101 step 1 to be essentially all the claimed features, there would be nothing left to constitute “significantly more” in §101 step 2.

Take, for example, the abstract idea identified by the examiner in Ex Parte Cote.[33] One of the independent claims at issue was “a method of using clusters in electronic design automation, the method comprising: receiving data for a plurality of bins, each bin including a plurality of clusters, each cluster representing a plurality of shapes in an original layout, the plurality of shapes having a proximity to each other determined by a grow operation; and using a computer, preparing a phase shifting layout for the original layout by phase shifting each of the plurality of clusters independently of one another.” The abstract idea identified by the examiner was essentially the entire claim: “independently phase shifting each of a plurality of clusters which each represent a plurality of shapes having a proximity to each other determined by a grow operation.” With such a narrowly defined abstract idea, it comes as no surprise that there was nothing left in the claim that could be “significantly more” than that abstract idea.

Ex Parte Cote is an example of Alice gone wild, where the alleged abstract idea was essentially all the claimed limitations. Why isn’t the abstract idea in Cote “electronic design automation?” If so, a better case of “significantly more” can be presented for Cote’s invention of “preparing a phase shifting layout for the original layout by phase shifting each of the plurality of clusters independently of one another.” Basically, the starting point for comparison from §101 step 1 makes a difference in §101 step 2. Moreover, rarely would a narrowly defined abstract idea, repeating the entire claim, constitute the type of patent ineligible abstract idea that is a fundamental principle/truth, building block of human ingenuity, or basic tool of science and technology. Perhaps the abstract idea of electronic design automation could be a basic tool of technology, but not the entire claim, with all the detailed limitations.

Framed correctly, this is not a concession that there is some patent ineligible abstract idea. Instead, this argument should be presented argumentatively, “assuming for the sake of argument that the patent ineligible abstract idea could be characterized as ____, the claimed invention still satisfies patent eligibility under §101 step 2.” This will at least provide the opportunity to phrase an abstract idea favorable to positions anticipated to be taken in the §101 step 2 analysis.

A catch-all statement could also be added, similar to what the Federal Circuit said in the recent DDR case: alternatively, to the extent that “identifying the precise nature of the abstract idea is not as straightforward as in Alice or some of [the] other recent [Federal Circuit] abstract idea cases,” under any characterization of the abstract idea, patent eligibility is met under §101 step 2.[34] This step 1 bypass works well when there may be a reasonably strong case under §101 step 2 and the judge is unsure of the precise characterization of the patent ineligible abstract idea. In my next article, I will explore strategies for building robust §101 step 2 positions.

Challenging Examiner’s Reliance on Personal Knowledge

A seventh consideration for §101 step 1 exists during patent prosecution. If no evidentiary support is cited for establishing the alleged patent ineligible abstract idea as being a fundamental principle/truth, building block of human ingenuity, or basic tool of science and technology, then the examiner could be said to be relying on his/her personal knowledge on that point. To the extent the Examiner relies on his/her personal knowledge about how the asserted abstract idea is a “fundamental” truth/principle, “building block of human ingenuity,” or some “basic tool of science or technology,” the examiner should be requested, pursuant to 37 CFR 1.104(d)(2) and MPEP 2144.03(C), to provide an affidavit or declaration setting forth specific factual statements regarding his personal knowledge about how such an alleged abstract idea is a “fundamental” truth/principle, “building block of human ingenuity,” or some “basic tool of science or technology.”

TO BE CONTINUED… Stay tuned for part two in my strategies for surviving §101 step 2.

Copyright December 2014 by John P. Kong. Mr. Kong is a partner with Westerman, Hattori, Daniels & Adrian, LLP (WHDA) and can be reached at [email protected]. The views expressed in this paper are personal to the author. They do not represent the views of WHDA, its employees, or its clients.

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[2] 573 U.S. __, 134 S. Ct. 2347 (2014).

[3] CLS Bank Int’l v. Alice Corp. Pty. Ltd., 717 F.3d 1269, 1313 (Fed. Cir. 2013) (Moore, J., dissenting), aff’d sub no. Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014).

[4] In re Alappat, 33 F.3d 1526, 1545 (Fed. Cir. 1994) (en banc).

[5] Alice, 134 S. Ct. at 2358-59.

[6] Id. at 2355.

[7] Id. at 2358.

[8] Id.

[9] Alice, 134 S. Ct. at 2355.

[10] Id. at 2357.

[11] Id. at 2354.

[12] Id.

[13] Id.

[14] Id.

[15] Id. at 2358.

[16] Helios Software, LLC. v. Spectorsoft Corp., 2014 U.S. Dist. LEXIS 135379 (D. Del, Sept. 18, 2014).

[17] Id. at *53.

[18] PNC Bank v Secure Axcess, LLC., CBM 2014-00100, p.23 (PTAB, Sept. 9, 2014).

[19] Id. at p.20.

[20] Id. at p.21.

[21] Alice, 134 S. Ct. at 2356.

[22] PNC Bank, CBM 2014-00100 at p.21.

[23] Helios Software, 2014 U.S. Dist. LEXIS 135379 at *54.

[24] Bilski v. Kappos, 130 S. Ct. 3218, 3227 (2010).

[25] Helios Software, 2014 U.S. Dist. LEXIS 135379 at *54-55.

[26] Cybersource Corp. v. Retail Decisions, Inc., 654.F.3d 1366, 1370 & 1375 (Fed. Cir. 2011).

[27] Card Verification Solutions, LLC v Citigroup Inc., 2014 U.S. Dist. LEXIS 137577, *13 (N.D. Ill., Sept. 29, 2014).

[28] PNC Bank, CBM 2014-00100 at p.24.

[29] Helios Software, 2014 U.S. Dist. LEXIS 135379 at *55.

[30] PNC Bank, CBM 2014-00100 at p.22.

[31] US Bancorp v Solutran, Inc., CBM2014-00076 (PTAB, August 7, 2014).

[32] Card Verification, 2014 U.S. Dist. LEXIS 137577 at *12.

[33] Ex Parte Cote, Appeal 2012-010730 (PTAB Sept. 3, 2014, App. S/N 12/352,538).

[34] DDR Holdings, LLC v Hotels.com, LP, 2014 U.S. App. LEXIS 22902, *26 (Fed. Cir. Dec. 5, 2014).