No Bridge Over the Troubled Waters of Section 101

The waters surrounding Section 101 of the Patent Act are as muddied as they come.  The statute sets forth only in broad strokes what inventions are patentable, leaving it to the courts to create an implied exception to patentability for laws of nature, natural phenomena, and abstract ideas.  It has been difficult for lower courts to determine whether an invention falls within one of these excluded categories, and the U.S. Supreme Court has refused to provide a definition of what constitutes an “abstract idea.”  Nonetheless, the Court in recent years has laid several foundation stones in Bilski, Mayo, Myriad and Alice for a bridge over these troubled waters.  Trying to build upon these, the Federal Circuit issued two recent opinions dealing with Section 101: Enfish, LLC v. Microsoft Corporation and In re: TLI Communications LLC Patent Litigation.  However, these decisions only create more confusion and cannot provide a safe means of passage over the turbulent waters of patent eligibility.

Laying the Foundation

Section 101 of the Patent Act consists of only 36 words, yet it has spawned countless hours of litigation.[1]  Through this process, the courts have recognized three implied limitations to patentable subject matter:  laws of nature, natural phenomena, and abstract ideas.[2]  But these categories have never been clearly defined.[3]  And, to compound the problem, the lines between these categories have often blurred over the years, leading to much confusion among — and unpredictability between — the lower courts as to the difference between patentable and unpatentable subject matter.

In recent years, the U.S. Supreme Court has attempted to lay a foundation for bridging the troubled waters of Section 101.  In Bilski, the Court rejected the machine-or-transformation test as the sole test for determining patentability while reiterating that it remains a “useful and important clue” in the process.[4]  In Mayo, a unanimous Court held that a process involving a law of nature is not patentable unless it “has additional features that provide practical assurance that the process is more than a drafting effort designed to monopolize the law of nature itself.”[5]  In Myraid, the Court unanimously held that “a naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated, but that cDNA is patent eligible because it is not naturally occurring.”[6]

Also forming part of this foundation is the unanimous opinion in Alice, in which the Court upheld and clarified Mayo’s analysis as a two-step test.[7]  First, a court must determine whether the claim at issue is directed to one of the three patent-ineligible categories.[8]  If it is, a court must then determine whether the elements of the claim, either individually or in combination add enough to transform the claim into a patent-eligible invention.[9]  This second step is referred to as the search for the “‘inventive concept.’”[10]  These two steps are the supporting piers upon which any future bridge over the raging waters of Section 101 must be built.

Despite the seemingly straight-forward two-part test, however, district courts have struggled to apply Alice.[11]  In particular, courts have made little headway in giving step one a meaningful role in the Alice analysis.  District courts have often identified an abstract concept involved with little-to-no discussion and then address the meat of the analysis in step two.  This is especially true when the patented invention involves computer software.

Recent Construction Efforts: Enfish and TLI

The Federal Circuit recently attempted to carve out a meaningful role for step one of the Alice analysis in its opinion in Enfish.  The Federal Circuit explained that there is “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.”[12]  Instead, district courts should “ask[ ] whether the focus of the claims is on the specific asserted improvement in computer capabilities . . . or, instead, on a process that qualifies as an ‘abstract idea’ for which computers are involved merely as a tool.”[13]  If the focus is on the former, the claim is not abstract.  If the focus is on the latter, the court must proceed to step two of the Alice analysis.  And, if a district court is unsure, it must likewise perform the second step of the analysis.[14]

In Enfish, the patents were “directed to an innovative logical model for a computer database.”[15]  In particular, the patented logical model included all data entries in a single table, with the column definitions being provided in the same table.  Thus, the database was described as being “self-referential.”[16]  The Federal Circuit found that this was “a specific improvement to the way computers operate,” and, as such, was not an abstract idea within the meaning of Alice.[17]

In coming to this conclusion, the Federal Circuit rejected the district court’s characterization of the asserted claims.  The lower court had found that the claims “were directed to the abstract idea of ‘storing, organizing, and retrieving memory in a logical table’ or, more simply, ‘the concept of organizing information using tabular formats.’”[18]  The Federal Circuit, however, called this an oversimplification and instead found that “the claims are not simply directed to any form of storing tabular data, but instead are specifically directed to a self-referential table for a computer database.”[19]  The reason that the Federal Circuit found the claims to be directed to self-referential tabular formats as opposed to tabular formats more generally was the specification’s teachings that the claimed invention was superior to traditional database models.[20]  Thus, Enfish essentially turns step one of Alice into another inventive step analysis.

The Federal Circuit’s conflation of the Alice steps continued in TLI, which issued only five days after Enfish.  The patent at issue in TLI “relate[d] generally to an apparatus for recording of a digital image, communicating the digital image from the recording device to a storage device, and to administering the digital image in the storage device.”[21]  Put more simply, the general nature of the invention was simply “the abstract idea of classifying and storing digital images in an organized manner.”[22]  The asserted claims were “directed to” this abstract idea since the claims merely set forth or describe the abstract idea.

Rather than stopping there, the Federal Circuit spent the bulk of its step one analysis justifying its conclusion that the invention was not a specific asserted improvement in how digital images are stored or an inventive solution to any technological problem.[23]  The court’s analysis of step two then largely repeated the same arguments.[24]

The Bridge Collapses

While Enfish and TLI at first appear to be guidance that could reinforce step one of the Alice analysis, the inadequacy of these opinions becomes apparent once stress is applied.  Contrary to the Federal Circuit’s reasoning in these cases, step one does not ask whether the claimed invention is superior to the prior art.  Rather, it asks: (1) what is the general character of the invention and (2) is that general character a law of nature, natural phenomenon, or abstract idea?

Improvements over the prior art are irrelevant to step one and should only be considered in the search for an inventive concept in step two.[25]  Thus, while a “specific asserted improvement in computer functionality” survives a Section 101 challenge, it should be because the claim passes muster under the step two inventive concept inquiry despite being directed to an abstract concept such as data storage.  The concept involved — data storage in this example — does not become less abstract simply because the invention is an improvement thereof.

Prior to Enfish and TLI, the Federal Circuit had correctly limited consideration of any improvements over the prior art to step two of the Alice analysis.  For example, in DDR Holdings, the fact that the claims provided an innovative solution to an Internet-specific problem was only part of the discussion of step two.  In that case, the claims were directed to systems and methods of generating a composite web page that combined certain visual elements of a “host” website with the content of a third-party merchant, such as information about a third-party’s product.[26]  The Federal Circuit found that the claims were directed to an abstract concept while acknowledging that it had difficulty articulating the exact abstract idea involved.[27]  A precise characterization of the abstract idea was unnecessary, however, as the claims satisfied Alice step two.  In particular, the claims overrode “the routine and conventional sequence of events ordinarily triggered by the click of a hyperlink” by sending the users to a novel, hybrid webpage rather than the third-party’s website. [28]  Because “the claimed solution amount[ed] to an inventive concept for resolving this particular Internet-centric problem,” the claims were patent-eligible.[29]

While the proper outcomes were arguably reached in Enfish and TLI, the way that the Federal Circuit achieved those results in these cases conflicts with prior precedent and renders the two Alice steps redundant of each other.  This cannot be correct.  Unless the court adjusts its construction efforts soon, the bridge slowly being built over the troubled waters of Section 101 will ultimately collapse, leaving the district courts without a means of safe passage through the chaos.

[1]   35 U.S.C. § 101 reads in its entirety: “Whoever invents or discovers any new or useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”

[2] See, e.g., Gottschalk v. Benson, 409 U.S. 63, 67 (1972).

[3] See, e.g., Bilski v. Kappos, 561 U.S. 593, 612 (2010) (refusing to provide a specific definition of what constitutes an “abstract idea”).

[4] Id. at 606.

[5] Mayo Collaborative Services v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1297 (2012).

[6] Association for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2111 (2013).

[7] Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014).

[8] Id. at 2355.

[9] Id.

[10] Id.

[11] See, e.g., Device Enhancement LLC v. Amazon.com, Inc., — F. Supp. 3d –, 2016 WL 2899246, at *7 (D. Del. May 17, 2016) (“§101 jurisprudence has evolved from the complete rejection of patentability for computer programs, to the almost complete acceptance of such, to the still difficult-to-discern requirements of the Alice analysis.”); Parus Holdings, Inc. v. Sallie Mae Bank, 137 F. Supp. 3d 660, 669 (D. Del. 2015) (“Given the evolving state of the law, the § 101 analysis should be, and is, a difficult exercise.”); Fairfield Indus., Inc. v. Wireless Seismic, Inc., 2014 WL 7342525, at *4 (S.D. Tex. Dec. 23, 2014) (“This difficulty is compounded by the fact that the two-part test outlined in Alice is new, and lower courts have received little guidance on how to determine whether a claim is directed to an abstract idea.”); Cal. Inst. of Tech. v. Hughes Commc’ns Inc., 59 F. Supp. 3d 974, 980 (C.D. Cal. 2014) (“The Supreme Court decisions on § 101 often confuse more than they clarify.”).

[12] Enfish, LLC v. Microsoft Corp., Case No. 2015-1244, slip op. at 11 (Fed. Cir. May 12, 2016).

[13] Id.

[14] Id., slip op. at 18.

[15] Id., slip op. at 2.

[16] Id., slip op. at 3.

[17] Id., slip op. at 12.

[18] Id., slip op. at 14.

[19] Id. (emphasis in original).

[20] Id., slip op. at 15 (“The specification also teaches that the self-referential table functions differently than conventional database structures.  According to the specification, traditional databases . . . are inferior to the claimed invention. . . . Moreover, our conclusion . . . is bolstered by the specification’s teachings that the claimed invention achieves other benefits over conventional databases, such as increased flexibility, faster search times, and smaller memory requirements.”) (citations omitted).

[21] TLI Commc’ns LLC v. AV Auto., L.L.C., Case Nos. 2015-1372, -1376, -1377, -1378, -1379,     -1382, -1383, -1384, -1385, -1417, -1419, -1421, slip op. at 3 (Fed. Cir. May 17, 2016).

[22] Id., slip op. at 10.

[23] Id., slip op. at 8-11.

[24] Compare, e.g., id., slip op. at 9 (discussing how the telephone and server were generic computer components in the step one analysis section) with id., slip op. at 12-13 (discussing same in the step two analysis section).

[25] See, e.g., Datatrak Int’l, Inc. v. Medidata Solutions, Inc., 2015 WL 6870109, at *5 (N.D. Ohio Nov. 6, 2015) (The “purpose at step one is to ascertain the general nature of the patent and determine whether it is directed at an abstract idea.  At step two, the Court looks to specific limitations in the patent to see whether a patent directed at an otherwise abstract idea contains an inventive concept.”); Genetic Veterinary Sciences, Inc. v. Canine EIC Genetics, LLC, 101 F. Supp. 3d 833, 842 (D. Minn. 2015) (“Although this argument may be relevant to the inquiry at Mayo step two, it does not alter the Court’s step one analysis.  Whether a claim is narrowly drawn, or more broadly attempts to capture every facet of a law of nature, is a debate that is relevant at Mayo step two . . . .”).

[26] DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1248 (Fed. Cir. 2014).

[27] Id. at 1257.

[28] Id. at 1258-59.

[29] Id. at 1259.