“In 2020, there were 27 software-related patents on appeal for subject matter eligibility. The CAFC found four of the patents either partially or fully eligible under Section 101. It found 22 patents invalid and remanded one case to the district court.”
Last year was an active one at the United States Court of Appeals for the Federal Circuit (CAFC) for software eligibility. It also was a brutal year for patent owners, as the CAFC invalidated almost every software patent on appeal for eligibility. Despite the many cases decided last year, there is still some uncertainty about what passes muster under the Alice two-step framework promulgated by the Supreme Court in 2014.
But one thing that has become increasingly clear is that the CAFC wants to see how a particular result is achieved or how a problem is solved. This desire for a “how” or rule set from the claims creates an evident tension with the traditional notion that patent claims should recite structure, not functional language. These recent CAFC cases have also made it clear that courts will look to the specification for implementation details, even if these details do not emerge in the claims. This analysis has previously been reserved for the written description requirement under Section 112 but found its way into the Alice two-step.
This collection of cases may not fully represent what some consider to be every software patent case the CAFC decided last year. For instance, bioinformatics cases were not included in this case list even though they arguably may be “software-related.” Before we dive into the case summaries, here is a list of the Section 101 cases the CAFC decided under Alice in 2020. In total, there were 27 software-related patents on appeal for subject matter eligibility. The CAFC found four of the patents either partially or fully eligible under Section 101. It found 22 patents invalid and remanded one case to the district court, finding that it had not fully addressed the issue.
In March, the CAFC decided Customedia Technologies, LLC v. Dish Network Corporation, holding claims to dedicating memory for and delivering targeted advertising ineligible under Section 101. The CAFC rejected the argument that reserving specific memory for the targeted advertising improved computer functionality and noted that merely enhancing a user’s experience (by, for instance, providing targeted advertising), without more, was not enough to pass muster under 101.
In In re Thomas, the CAFC affirmed a rejection by the PTAB to claims for notifying a user of an electronic device about recent patent publications. In a terse opinion, the CAFC agreed with the Patent Trial and Appeal Board’s (PTAB’s) reasoning that the claims were directed the abstract idea of “alerting by notification message notice of a new publication indicated as relevant to the notifiee.” It also noted that the claims’ additional features did not add an inventive concept but did not elaborate as to what may have cleared the Section 101 hurdle.
Then, in April, the CAFC held ineligible patents directed to “systems and methods by which providers of professional services, using the Internet, send reminders to clients and obtain responses from them” in WhitServe LLC v. Donuts Inc. The CAFC observed that the claims were essentially for notifying professionals about approaching deadlines, a fundamental economic practice involving simple information exchange. It then honed in on the computer’s generic nature and the lack of constraints on the generic components, such as the database and processor. Unlike some recent decisions, the CAFC did not take issue because the lower court decided the case without factual inquiry.
On the same day as WhitServe, the CAFC also held ineligible claims to collect and analyze financial transaction fraud in Bozeman Financial LLC v. Federal Reserve Bank. The CAFC noted that verifying financial documents to reduce transaction fraud is a fundamental business practice. The claims collect such data, compare it, and display the results to a user. Bozeman argued that the claimed process was physical because it involved the actual processing of financial records. Still, the CAFC pointed to its similar decision in Solutran, Inc. v. Elavon, Inc., where it held that the presence of paper checks was not enough to make the process anything but abstract.
In the third case of the April 10, 2020 trilogy, the CAFC invalidated claims directed to “matching advertisers with entities via computer networks” in In re Morsa. The CAFC rejected the argument that because advertising is a “real, tangible, and concrete” thing, the claims were not abstract and honed in on the lack of specific implementation details that would change the computer and components from being merely generic. This case illustrates the uphill battle that patentees face when dealing with claims related to targeted advertising. The CAFC distinguished from BASCOM, where technology was related to filtering traffic on a network and noted the longstanding nature of targeting consumers with ads.
Just three days after In re Morsa, the CAFC invalidated claims for developing measurement strategies for spectrally-based measurements in In re Gopalan. While Gopalan argued that the claims optimized measuring “the number of true positives and false positives” in spectral measurement, the CAFC honed in on the generality of the claims and the lack of specific characteristics in the measurement process that would limit the claims to any particular context. The In re Morsa case illustrates the further refining of a distinction that the CAFC started to make in McRO, namely, that the claims did not limit themselves to any particular set of rules in solving the problem. The rule argument is an interesting one from a software perspective. At a high level computers simply store and manipulate 1s and 0s, so some amount of abstraction must be inherent in any claims not directed to bitwise (1 and 0) operations. However, the CAFC seems to look for some intermediate protocol that is more detailed than simple natural language.
One day after In re Gopalan, the CAFC again rejected claims as invalid under Alice in Ericsson Inc. v. TCL Comm. Tech. In Ericsson, the CAFC noted that only including technical jargon in a claim set would not be enough to save the claims from ineligibility under Alice. It collapsed several of the limitations recited in the claims, noting that the “security access manager” and the “decision entity” controlling access to the network in claim 1 were the same thing. It rejected Ericsson’s argument that the claim was directed to mobile networks specifically, noting that controlling access to resources “can be performed in the human mind, or by using a pen and paper.” Harkening back to the reasoning in In re Gopalan, the CAFC found it persuasive that the claims did not “ha[ve] the specificity required to transform a claim from one claiming only a result to one claiming a way of achieving it.” Like Gopalan, the reasoning begs why and to what extent the CAFC has adopted this methodological bent on Alice. What level of code must a practitioner go down to for a claim to be “non-abstract” under this new “way of achieving results” analysis?
On April 30, 2020, the CAFC held software patent claims eligible in Uniloc USA, Inc. v. LG Electronics USA, Inc. The invention was a way of managing connections in ad hoc networks known as “piconets.” The piconets manage relationships between a primary station (i.e., a laptop) and at least one secondary station (e.g., a mouse or keyboard). While conventional piconets sent separate signals for (1) detecting new secondary stations and (2) polling active secondary stations, the claim at issue recited doing both with the same data packet:
- A primary station for use in a communication system comprising at least one secondary station, wherein means are provided:
for broadcasting a series of inquiry messages, each in the form of a plurality of predetermined data fields arranged according to a first communications protocol, and
for adding to each inquiry message to transmission an additional data field for polling at least one secondary station.
The CAFC reiterated the concept outlined in DDR that overcoming a problem arising in computer networks could be a patent-eligible concept. It also noted the similarity between the claims at issue and those in Enfish. Like Enfish, the claims do recite an improvement to computer functionality in that they reduce latency caused by “parked secondary stations” in communications systems. The CAFC rejected LG’s contention that the claims contemplated combining two sets of data, similar to the claims in Digitech Image Technologies, LLC v. Electronics For Imaging, Inc. It noted that the claims do not merely recite generalized steps, but rather “adding to each inquiry message before transmission an additional data field for polling at least one secondary station.” The case affirms the notion that the CAFC will find claims eligible if the patentee can describe:
- how a system or method manipulates a piece of data, and
- what is done with the manipulated data to improve functionality (e.g., send one signal instead of two, use one database instead of two, etc.).
In the first case of May 2020, In re Jobin, the CAFC affirmed the ineligibility of claims for developing “products, advertisements, games, and other creative realizations” by relying on contributors—who obtain stakes in the designed products. Specifically, claim 221 recited a system for receiving and evaluating developers’ contributions and compensating participants based on the evaluation. In affirming the examiner’s rejection of the claims, the PTAB relied on 2019 PEG, finding the claims to recite an abstract idea based on “methods of organizing human activity and mental processes.”
The CAFC refused to apply the Office Guidance in determining if the claims were eligible, noting that they use “the relevant Supreme Court precedent, not the Office Guidance when analyzing subject matter eligibility.” It is an intriguing stance given that the 2019 PEG is based on Supreme Court precedent and an issue that may become more relevant if the CAFC ever distinguishes its application of precedent from that promulgated by the USPTO. Nevertheless, the CAFC rejected Jobin’s argument that the “built-in capabilities” of the invention “pertaining to timing and measurement,” including an improved data structure, passed muster under Alice. It noted that a method of organizing human activity is “a hallmark” of abstract claims. At Alice step two, the court found the elements of Jobin’s claim 221 insufficient to transform the abstract idea into a patentable application.
In Cisco Sys. v. Uniloc 2017 LLC, the CAFC affirmed that a patent for a radio communication system comprising a plurality of stations capable of forming an ad-hoc network was ineligible. The claim recited:
- A method of operating an ad-hoc radio communication system having a plurality of stations formed into at least one network, the method comprising the step of:
determining a master/slave rank of each station in the network representative of the station’s suitability for acting as master in the network using antenna performance characteristics of each station in view of the antenna’s local environment; and enabling a station with the highest rank to be master.
Interestingly, the abstract idea the district court found the claims directed to was “ranking stations based on antenna performance characteristics and selecting the station with the highest rank to act as master in a network.” In rejecting Uniloc’s argument that the claims were for improving the computer or network functionality, the CAFC reiterated that such ideas can still be found abstract.
In Elec. Commun. Techs., LLC v. ShoppersChoice.com, LLC, the CAFC affirmed that a patent for providing advance notification to a customer that a “mobile thing” is being delivered or ready for pickup was abstract. The district court found the claim to be directed to “business practices designed to advise customers of the status of delivery of goods,” which they held to have “existed for several decades, if not longer.” The CAFC noted that while claim 11 additionally recites added measures for increasing the security of the delivery (“enabling a first party to input authentication information, storing the authentication information, and providing the authentication information along with the advance notice of arrival to help ensure the customer that the notice”), those functions were also abstract. Notably, the CAFC did not elaborate on whether combining two abstract ideas could generally amount to “significantly more” than an abstract idea.
In rejecting ECT’s arguments that claim 11 was “unique” and “is directed toward and addresses solutions to minimize hacker’s impacts when mimicking order conversations and shipment notification emails.” The CAFC noted that claimed techniques could be “groundbreaking, innovative, or even brilliant,” but that is not enough for eligibility. Confoundingly, the CAFC’s reasoning did not elaborate on how such a technique is distinguishable from BASCOM, where claims were directed to an improvement to an existing technological solution. At step 1 of Alice, it also rejected the notion that the prosecution history reflected that the claims were not abstract. The growing divide between the CAFC’s view on eligibility and that of the Patent Office may become more contentious as more opinions from the Federal Circuit veer from the USPTO’s standards and guidance for examining these kinds of patents.
At step two, the CAFC summarily rejected ECT’s argument that the claims were similar in substance to Amdocs (Israel) Ltd. v. Openet Telecom, Inc., noting that the number of words in the claim does not determine eligibility. It also rejected the argument that the district court should have undergone claim construction to assess eligibility, finding no terms worthy of claim construction to determine eligibility.
In British Telecommunications PLC v. IAC/InterActiveCorp, the CAFC held invalid claims directed to a computer-implemented method for automatically delivering shortlists of location-specific information to mobile users based on user preferences. The court noted that in Intellectual Ventures I LLC v. Capital One Bank, it had previously held that “tailoring the provision of information to a user’s characteristics, such as location, is an abstract idea.” This holding seems to be a clear departure from the USPTO’s standards, which seem to allow patenting features for increasing user experience by configuring a digital response or display based on a user’s preference. It went on to find no elements of the claim to “require anything other than an off-the-shelf, conventional computer, network, and display technology for gathering, sending, and presenting the desired information.”
The CAFC rejected a patent directed to collecting performance-related data about a clinical trial, analyzing that data, and reporting whether to make adjustments to the clinical trial based on a review of the collected data. Unlike some of the other cases on this list, this case squarely falls within a very traditional notion of the abstract idea exception. The CAFC agreed with the PTAB that the claims recited the “basic idea of deciding whether to fine-tune a given system (here, a clinical trial) based on reviewing the system’s performance data.”
The CAFC compared the claims to those in Electric Power. It held ineligible claims directed to optimally managing an electric power grid at a central location by receiving data streams from geographically distinct electric power grid locations, analyzing them for vulnerabilities, and then displaying the results. It went on to note that, contrary to the applicant’s arguments, the claims did not require the collection of the data to be “in real-time.” It also reiterated its reasoning from the first Alice case of the year that “‘claiming the improved speed or efficiency inherent with applying the abstract idea on a computer’ is insufficient to render the claims patent-eligible.” This reasoning harkens back to Alice—where the patentee argued that the system’s speed was an improvement over the human counterpart to the claimed invention was insufficient to render the claims eligible.
At step two, the court rejected the argument that the “pre-programmed computer module” was not generic. In doing so, it affirmed that the In re Allapat reasoning—that programming a computer for a particular purpose indeed makes it a “special-purpose computer”—is no longer valid.
Part II will recap the remaining 14 cases.
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