No Bridge Over the Troubled Waters of Section 101

bridge-closed-2The 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.

The Author

Scott W. Doyle

Scott W. Doyle is the head of Fried Frank's Intellectual Property Litigation Group and is resident in the Firm's Washington, DC office.

Mr. Doyle focuses primarily on patent and intellectual property infringement actions in the federal courts and Section 337 actions at the International Trade Commission, where he once worked in the General Counsel's office. He also has extensive experience in arbitrations and mediations involving patent and intellectual property issues. A trained electrical engineer and registered patent attorney, he has litigated cases involving a wide range of technologies including telecommunications, Internet, digital cameras, computer hardware and software, automotive, photolithography machines, chemical compositions, medical devices, semiconductor, and biotechnology. Mr. Doyle has also developed extensive experience in Inter Partes Review at the Patent Trial and Appeal Board ("PTAB") and other PTO patent review proceedings. Chambers USA, Benchmark Litigation, and several other legal directories, have named Mr. Doyle one of the leading individuals in Intellectual Property.

Scott W. Doyle

Jonathan R. DeFosse is a litigation partner resident in Fried Frank's Washington, DC office. Mr. DeFosse's practice focuses on intellectual property litigation and counseling involving a wide range of product areas, including automotive technologies, consumer electronics, telecommunications, website design, cloud computing, and medical devices. Mr. DeFosse regularly appears in federal courts throughout the United States, including the US District Courts for the Eastern District of Texas, the Eastern District of Virginia, the District of Delaware, the Northern and Central Districts of California, and the Northern District of Illinois. Mr. DeFosse also regularly appears before the Patent Trial and Appeal Board in connection with post-grant review proceedings.

Scott W. Doyle

Kristin M. Whidby is a litigation associate and registered patent attorney resident in Fried Frank's Washington, DC office. Ms. Whidby's practice is concentrated in the field of intellectual property, including the drafting of patent opinions, providing pre-litigation counseling, and engaging in patent litigation. She has extensive experience in litigating matters relating to nuclear and mechanical technologies, as well as the chemical, pharmaceutical and biotechnological fields. Ms. Whidby has assisted in several trials concerning intellectual property issues, including a recent international arbitration concerning a patent related to night vision technology, a US District Court trial concerning a patent related to coding of digital data, and a US District Court trial over the validity of a patent related to contact lens materials. She has also represented clients in patent-related disputes before the Patent Trial and Appeals Board, Virginia state court, the US Court of Appeals for the Federal Circuit, and the US Supreme Court.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 18 Comments comments.

  1. Patent Commentator June 29, 2016 2:19 pm

    Bascom v. AT&T just handed down from the Federal Circuit a couple of days ago could be the “bridge over troubled waters”. It’s very new, but it’s a significant enough decision this blog post probably should have been delayed a day or two if necessary to consider it. Link to the decision: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/15-1763.Opinion.6-23-2016.1.PDF

  2. Gene Quinn June 29, 2016 2:47 pm

    Patent Commentator-

    I understand what you are saying, but I disagree. Here are my thoughts.

    First, this article was submitted prior to the Bascom v. AT&T decision and has been in our pipeline for publication. Could it have been pulled and withheld, yes. Should it have been pulled and withheld, that question is more difficult and less clear to me.

    Second, I don’t think anything said in this article is incorrect. The focus of the article is on the fact that the way the CAFC interpreted Alice in Enfish and TLI (both authored by Judge Hughes) the Alice steps become redundant, which conflicts with precedent and may create more long term confusion than they provide analytical assistance. So the point of the article remains perfectly valid even in light of the recent CAFC decision in Bascom v. AT&T.

    Third, unlike in Enfish, in Bascom the CAFC did rule that the claims were seeking to cover an abstract idea (whatever that means), but that there was significantly more (whatever that means). So an article that focuses on whether Enfish really provides a bridge over the troubled waters of 101 I’m not really sure that more than a passing reference to Bascom would be warranted anyway, particularly given the whole point of the article was to explain the redundancy of this CAFC approach to the Alice test.

    Finally, it is hard to know what significance Bascom v. AT&T will have, if any. With Judge Chen authoring the opinion and Judges Newman and O’Malley also on the panel this was about the best panel a patentee could hope to have for a 101 issue relating to software. Further, Chen makes a big deal about the civil procedure aspects of a 12(b)(6) motion, giving all inference to the nonmoving party (i.e., the patentee) for example. Chen is certainly right to point out the procedural posture, which many have been talking about in the community for some time, but to my knowledge this is the first decision to actually apply civil procedure to a 12(b)(6) motion arguing that patent claims are ineligible. I think the story of Bascom will be whether other panels pick up on that and whether district courts get the message. A motion to dismiss is an extraordinary remedy in practically every situation other than when a patent owner sues an alleged infringer, where is it commonplace.

    -Gene

  3. step back June 29, 2016 3:40 pm

    Gene @2 re your last statement about patent owners being treated as a lower class of plaintiff (ones with merely “putative” rights that are disposable by way of an initial motion to dismiss), totally agree.

    http://patentu.blogspot.com/2016/06/women-maybe-inventors-definitely-not.html

  4. Gene Quinn June 29, 2016 3:52 pm

    Thanks Step. You will read that again in my write-up of Bascom v. AT&T, likely published tomorrow.

    I hope all is well your way.

    -Gene

  5. EG June 29, 2016 4:22 pm

    Hey Gene,

    The reason we’ve got “troubled” waters is for at least the following: (1) the Mayo/Alice framework was broken from the outset, as proven by Sequenom which SCOTUS was frankly too chicken to take to fix the egregious mess they’ve created; (2) SCOTUS won’t define what an “abstract idea” is, yet expect us “mere mortals” to somehow define what that term means; and (3) SCOTUS essentially reads the term “discovery” completely out of the patent-eligibility equation, even though patent statute (35 USC 101 + 100(a), as well as the Patent Clause expressly refer to “discoveries” as being protectable. I agree with Anon: completely strip SCOTUS of any appellate review of cases involving patent law, and make all of SCOTUS’ prior precedent on patent law as it relates to patent-eligibility “null and void.”

  6. Gene Quinn June 29, 2016 5:28 pm

    EG-

    I completely agree. You could add that they refuse to define “significantly more,” that they are pathologically preoccupied by the patent troll not in the room, that SCOTUS relies on amicus briefs for facts that have not been vetted, and they refuse to acknowledge the purpose of 101 as being only to weed out the most egregiously unpatentable claims (see Diamond v. Diehr… or actually… maybe they should read Diamond v. Diehr).

    -Gene

  7. step back June 29, 2016 5:42 pm

    Glad to see practitioners standing up and saying “We’re mad and not going to take it anymore” instead of cowering to SCOTUS skullduggery.

  8. EG June 30, 2016 7:58 am

    SB,

    Some appropriate quotes from Justice Jackson:

    “Reversal by a higher court is not proof that justice is thereby better done. There is no doubt that if there were a super-Supreme Court, a substantial proportion of our reversals of state courts would also be reversed. We are not final because we are infallible, but we are infallible only because we are final.” Brown v. Allen, 344 U.S. 443, 540 (1953) (concurring).

    “It would not be difficult to cite many instances of patents that have been granted, improperly I think, and without adequate tests of invention by the Patent Office. But I doubt that the remedy for such Patent Office passion for granting patents is an equally strong passion in this Court for striking them down so that the only patent that is valid is one which this Court has not been able to get its hands on.” Jungerson v. Ostby, 335 U.S. 560, 572(1949) (dissenting).

  9. Ternary June 30, 2016 8:15 am

    Gene, I am looking forward to your analysis of Bascom. It seems that finally some sanity may be re-appearing related to the troubled waters of section 101.

    Judge Newman in his concurring opinion in this case writes: “I propose returning to the letter of Section 101, where eligibility is recognized for “any new and useful process, machine, manufacture, or composition of matter.”” I had to read it several times to make sure it was there. But it is.

  10. Night Writer June 30, 2016 10:21 am

    The best analogy is with the finance industry since Goldman Sachs and Google behave in about the same way. Note that the founders of Google admitted in a documentary that their biggest fear is innovation from a start-up taking over their business.

    Read that last sentence about 10 times.

  11. Edward Heller June 30, 2016 10:43 am

    There does seem to be some confusion about just what an abstract idea is. I think at a minimum it must be directed to something that is neither a machine, manufacture or composition. Because the claims in EnFish were directed to improvements in computer technology qua computer technology, I think the Federal Circuit was right to state that such is not an abstract idea.

    I think we all have to consider the printed matter doctrine as a template for the Alice analysis. Clearly printed matter is nonstatutory and would qualify under Alice to be an abstract idea. Nevertheless, the claim, considered as a whole, is patentable subject matter even though it includes printed matter if that printed matter is functional with respect to the underlying subject matter so as to transform the printed matter/substrate combination into a practical and patentable application.

  12. Ternary June 30, 2016 12:09 pm

    Confusion about what an abstract idea is? Not with me there isn’t. An abstract idea is a concept articulated in and by the mind of a person. Its antonym is a concrete (as in tangible) device. Edward Heller’s @11 “I think at a minimum it must be directed to something that is neither a machine, manufacture or composition” covers that.

    A mathematical formula is an abstract idea. A computer device receiving input signals and generating output signals determined in accordance with the mathematical formula is a concrete device. That computer device may be conventional or obvious, but it is not an abstract idea and it never was. In common understanding there is no dispute about that.

    Judge Newman’s concurring opinion in BASCOM appears to be an attempt to shake off the ridiculous use of the term “abstract idea” as redefined from its common meaning (in 1984-like fashion) by SCOTUS.

    The Alice decision is by justices who give an appearance of having little grasp of modern science and technology or methodology of science. Like with some other (but not all) elderly people and some current politicians, Alice seems to reflect a desire to maintain earlier and simpler standards. But that simple time has gone and it will get worse and more theoretical in inventions because of computers and yes, by applying extremely abstract ideas to computers. That is why I find Judge Newton’s opinion right on the mark and in line what is going on in the field of science and technology.

  13. Anon June 30, 2016 12:16 pm

    Mr. Heller,

    If you are going to discuss the printed matter doctrine, may I suggest that you at least get the doctrine correct and include the exceptions (that control in software cases) to that judicial doctrine.

    After all, the omission that you make (functionally related) is the very reason why the “ware” that is software is pursued in the first place.

    Let’s have none of your prevarications and such critical omissions here.

  14. Anon June 30, 2016 2:21 pm

    A quick follow up for Mr. Heller: is there such as thing as software that is NOT:

    that printed matter is functional with respect to the underlying subject matter“…?

    If you have an example of such software that is (somehow) not so functional, I will show you someone who does not know what software is.

  15. Paul Cole June 30, 2016 4:52 pm

    May I add my thanks for this paper which is a very valuable contribution to the debate and will become a key reference for me.

  16. Night Writer June 30, 2016 6:56 pm

    @11 Edward (the local anti-patent judicial activist) and @14: I agree Anon. Edward is intellectually dishonest and consistently misrepresents science and case law.

  17. Anon June 30, 2016 7:49 pm

    I have to take issue with the presumption inherent in a lead-off statement of this article:

    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.

    Prior to 1952, while the courts still had the authority to define the word “invention” through the power of common law rule making (a power provided to the courts by an earlier Congress), that MAY have been true.

    Congress changed that in 1952 by withdrawing that authority and in the place of the word “invention” (which the courts – much like today’s Court, simply would not define the word – think “abstract,” or “sufficiently more”) set out on a different path by carving out of what was a single paragraph an entirely new set of law: 103 and obviousness.

    To do as the authors here have done, to imply that current Court has some authority that they no longer have is to only prolong the misery and mashing of the wax nose of 101.

    This area of law needs to take care and note these historical subtleties. We need to learn the past lessons of history so that we do not make the same mistakes over and over and over again.

    Of course, what would truly help prevent this type of mistake – no matter what other words that Congress may come up with – would be jurisdiction stripping of the non-original jurisdiction of hearing patent cases from the Supreme Court.

  18. EE July 5, 2016 12:31 pm

    “The concept involved — data storage in this example — does not become less abstract simply because the invention is an improvement thereof.”

    Data storage is only abstract to the folks who are clueless about how it works, like the SCOTUS. Real, physical storage devices are ALWAYS required, not abstract ideas and pixie dust. For example, present day hard disk drives and DVDs work because binary data is stored as a magnetic field on a disk, a hole in an optical media, changes in circuitry, etc. These are all changes to real devices.

    In exactly the same way the mere abstract idea of being able to wash up at home is made real by plumbing, the abstract idea of retaining information is made real by electronic hardware and software for storing digitized data. Improvements to plumbing and improvements to data storage require changes to real devices, not merely wishful abstract ideas.