Alice in 2020: Slashing Software Patents and Searching for Functional Language at the Federal Circuit (Part II)

By Theodore Rand
January 10, 2021

“It is not particularly clear what passes muster under Alice when it comes to software claims, but lines are emerging in the sand as to what the court is looking for.”

In Part I of this article, I explained that the CAFC invalidated almost every software patent on appeal for eligibility in 2020 and recapped the first 13 such cases of the year. Despite the many software eligibility cases decided last year, there is still some uncertainty about what passes muster under the Alice two-step framework. Below is a recap of the remaining 14 cases considered by the CAFC in 2020 with respect to software patent eligibility.

Read about cases 1-13 here.

  1. Ubisoft Entertainment, S.A., Ubisoft, Inc. v. Yousician Oy

In Ubisoft Entertainment, S.A., Ubisoft, Inc. v. Yousician Oy, the CAFC affirmed a Section 101 rejection to claims for an interactive guitar game. The district court found the claims to be directed to the ineligible idea of “teaching guitar by evaluating a user’s performance and generating appropriate exercises to improve the performance.” In this case, the CAFC took issue with the generality of the proposed advance in computer technology, noting that that the claims did not recite a particular way of programming or designing software. Of the many decisions decided by the court on the issue of Section 101 invalidity, the notion that the Alice standard requires a showing of a way of solving a problem has been cited with increasing frequency by the CAFC since at least the ChargePoint decision in 2019. This concept seems to stand in tension with the idea that a reviewing court will ignore functional language in claims. As a practitioner, it seems like a safe bet to go further in describing the “how” or “way” behind the computer-implemented method based on decisions like this one.

  1. Dropbox, Inc. v. Synchronoss Techs., Inc.

Dropbox may end up being one of the more notable cases of the year in that it involved three different patents, U.S. Patent Numbers 6,178,505 (the ‘505 patent), 6,058,399 (the ‘399 patent), and 7,567,541 (the ‘541 patent). The court invalidated for slightly different reasons (though all under the Alice standard).

As to the ‘505 patent, the CAFC found that it provided only as much authentication and encryption as required for a given user, a given path through a network, and a given information source. Interestingly, the CAFC at oral argument discussed how the claim could be assimilated as a technical parallel to having different key cards to offices at a government agency and ignored the claims’ actual substance, eliminating unnecessary authentication filters along a file access path for a given user.

The district court found the ‘399 patent related to “combining the user interface of an interactive connection, like a website, with a file upload connection, such as an FTP connection.” It found the patent’s claimed advance of generating a single session ID linking the interactive connection and the data transfer connection as “simply a label by which the connections are identified[,] … hardly a specific improvement on computer functionality or a nongeneralized computer activity.” First, anybody who has worked with session IDs knows that they are more than a label, but a state signature that tethers a computer connected to a network as an associated user. But the CAFC did not think that aspect of the decision mattered because it found the patent “claim[ed] its improvements in an abstract manner.” It noted that in “claim[ing] a technological solution to a technological problem, the patent must actually claim the technological solution.” It found that neither having a single session ID or a synchronizer for managing the two connections amounted to a non-abstract improvement.

Finally, the CAFC looked to the ‘541, which was to upload and download data from a mobile device to a server through a mobile network. In almost ridiculous fashion, the district court “recited essentially the same process as a person manually transferring data from one mobile device to another with the person herself acting as the “server.” Again, in what has become the call of the CAFC recently, it observed that the claim “provides less of ‘a specific means or method’ than ‘a result or effect that itself is the abstract idea and merely invokes generic processes and machinery.’” (citing Two-Way Media Ltd. v. Comcast Cable Commc’ns). It also looked to the specification and noted that it contradicted the idea that the patent teaches a novel data structure. It stressed that methods that are known in the art (such as XML or HTML) “may be used to create the data structure.” The CAFC seems to create a massive barrier in this statement by saying that if a conventional technique is used to create a data structure, then the structure itself cannot be inventive.

  1. 16. Data Scape Limited v. Western Digital Corp.

In Data Scape Ltd. v. Western Digital Corp., the CAFC affirmed the invalidity of four patents, all of them related to the idea of transferring management information from one storage location to another. Specifically, the CAFC found the claims directed to “select[ing] certain data” to be transmitted from one apparatus to another, determining whether the devices were connected and comparing the two machines’ information before initiating the transfer. The CAFC rejected the plaintiff’s argument that the patents were for synchronization methods. However, it is reasonably clear from the brief description above that the processes involved synchronizing information across two devices. This duality shows that the CAFC will read these claims somewhat mechanically, and practitioners should use the exact words for what they want the claims to mean. The CAFC distinguished the case from Core Wireless, where it held claims patentable because they “specified a particular configuration of the sensors and a particular method of utilizing the raw data that eliminated many of the complications inherent in conventional methods.” At step two, the CAFC found the additional features of “editing information, comparing data on the two devices, and transmitting selected data from one apparatus to another” insufficient to transform the claims into “significantly more” than the abstract idea of, well, synchronization between two devices.

  1. W. Express Bancshares, LLC v. Green Dot Corp.

In W. Express Bancshares, LLC v. Green DOT Corp., the CAFC affirmed the invalidity of claims for transferring funds using a payment card in a way that could “create[e] a bank account without an approval process, allow[] the immediate purchase of goods, and allow[] the purchaser to alter the functionality of the card after the card is already connected to the bank account.” The CAFC noted that even with all of these steps, the only potential “transformation” claimed was “a transformation in the legal and financial obligations between the parties,” which it found to be abstract. It also rejected the argument that the physical card required to perform the method rendered the claims patent-eligible, citing Smart Systems, where it held the use of a bank card to access public transport to be a patent-ineligible abstract idea.

  1. Packet Intelligence v. Netscout

In Packet Intelligence v. Netscout, the CAFC reviewed the patent eligibility of claims directed to monitoring packets exchanged over a computer network and detecting disjointed “conversational flows.” The idea behind the claims is to identify such disjointed “conversational flows” and find a way to connect the dots and determine the underlying application or protocol sending the disconnected flows. The CAFC agreed, rejecting NetScout’s argument that the claims recited merely “the collection, comparison, and classification of information.”

The CAFC reiterated an increasingly standard line of analysis in looking to the specification to determine that the claims were instead related to “solving a discrete technical problem: relating disjointed connection flows to each other.” The case highlights that having detailed technical information in the specification will likely change how the CAFC views the claims themselves. Specifically, the patent recited using the “Track Sessions” technique in a figure of the specification, which the CAFC appeared to find significant despite the method not being explicitly recited in the claims.

  1. Salwan v. Iancu

In September, the CAFC decided Salwan v. Iancu, finding unpatentable claims contemplating the exchange of patient health information, including electronic medical records data (“EMR”) data and billing data. The patents at issue claim priority to a patent previously litigated on Section 101, and the CAFC tracked the reasoning in the previous case (Salwan I). It reiterated its finding from that decision that claims of this type set out “a method of organizing human activity concerning medical information.

  1. Tenstreet, LLC v. DriverReach, LLC

In Tenstreet, LLC v. DriverReach, LLC, Judge Hughes issued a cryptic opinion upholding patent claims’ invalidity for using peer-to-peer networking to verify employment history. In the opinion scant of any real analysis, Hughes simply noted that even if an invention provides “advantages over the previous method,” it is ineligible without a technological improvement. The CAFC rejected Tenstreet’s argument that the claims were eligible based on three advantages over the prior art:

(1) a single channel for routing transmissions; (2) the ability for job applicants to monitor the verification process; and (3) database storage of employment history.

It is difficult to discern what Judge Hughes is getting at with the notion of a “technical advance” here. The claims seem to be for a novel platform that allows prospective employees to track their verification process on the same platform as is used by requesters and providers. An important takeaway from this case may be the importance of specifying the problem in terms of “hard tech” so that the CAFC will see them as more as a business problem. For instance, instead of describing the problem as “making the verification process less opaque for drivers,” perhaps a litigant and patent prosecutor can frame the issue as “providing multi-level access to a unified data platform.”

  1. Realtime Data LLC v. Reduxio

One case issued on October 23, Realtime Data LLC v. Reduxio, presented an interesting issue where the CAFC did not find the district court’s reasoning compliant with the Alice two-step. It reprimanded the district court for using shorthand to describe the steps of Alice and for failing to analyze the claim’s specific limitations in finding them ineligible. At oral argument, the CAFC noted that while writing an opinion from the bench is acceptable practice, a court’s reasoning must be sufficient for the reviewing court to analyze the issues presented below.

  1. TecSec v. Adobe Inc.

The other Alice opinion released on October 23 was TecSec v. Adobe Inc. The case involved patents for providing multi-level security in a data network. The CAFC described the claims as “assign[ing] a level of security that corresponds to a certain combination of security that corresponds to a certain combination of access controls and encryption.” Practically, a label is applied to an encrypted object to provide an extra layer of access control based on an accessor’s authorization level. While Adobe argued that “the claims are directed to the impermissibly abstract idea of managing access to objects using multiple levels of encryption,” the CAFC found this to be a generalization that ignored critical elements of the specification. The CAFC found it notable that the claim expressly required an “object-oriented key manager” and labels in addition to encryption.

The CAFC gave immense credence to the details in the specification about the “unwieldy” nature of multi-level keying in encrypted objects, particularly for non-programmers, such as administrators. It found the solution to be therefore rooted in a “problem specific to computer data networks.” To put it another way (which the specification explicitly did), the multi-level encryption technique ensured that if a user who knew the key attempted to access the encrypted object from another terminal (i.e., someone else’s computer), that did not have the correct level of access, they would not be allowed to access the object. The CAFC further rejected Adobe’s argument that this was not a specific solution based on the reasoning above.

  1. 23. GREE, Inc. v. Supercell Oy

The November decision of GREE, Inc. v. Supercell Oy provides a useful context for analyzing current CAFC software patentability jurisprudence because it includes eligible and ineligible claims. The patents at issue related to “city building games” specifically addressed the problem of adjusting multiple objects at once in an arrangement of items in a “large city.” The claims overcame the issue by allowing a player to use a “template defining positions of one or more game contents and subsequently applying the template to a predetermined area within the game space.”

The CAFC found that claims 1-4 and 8-20 of the patent were broad enough to cover “correspondence chess” in that they involved instructions for using a template to move game contents from a first position to a second position and were broad enough to read on “correspondence chess.” However, claims 5-7 recited methods for applying the template when there was a mismatch between the template size and the game board (a “template mismatch scenario”). The CAFC agreed with the Board that the claims reciting methods for handling such a mismatch went beyond “correspondence chess” and upheld the validity finding. It found it persuasive that the method of claim 5 recited a rule or “way” of applying the transformation (“moves the game contents arranged at the first positions within the game space to the second positions of the game contents defined by the template to which the moving distance is the smallest.”) (emphasis added).

  1. Fast 101 Pty Ltd. v. CitiGroup Inc.

In Fast 101 Pty Ltd. v. CitiGroup Inc., it again struck down a business method patent related to providing “incentive amounts” for early repayments. The CAFC found the claims directed to an intermediated settlement’s abstract idea that employs a discount for early payment. Unsurprisingly, it did not find “[i]ncreased cash flow” or “[c]ost reduction through automation and paper reduction” to be persuasive technical improvements to pass muster.

  1. Adaptive Streaming Inc. v. Netflix, Inc.

In its first December decision on software patent validity, Adaptive Streaming Inc. v. Netflix, Inc., the CAFC affirmed the ineligibility of claims for receiving a video signal in one format and broadcasting it to at least one device that requires a different format. The district court found the claims directed to the abstract idea of “collecting information and transcoding it into multiple formats.” The CAFC “relented” to the petitioner that there was at least one broadcast device despite the claim only reciting “at least one device,” noting that the claims suggest (by the word “broadcast,” that there must be at least two devices. The CAFC observed that the patent lacked specificity sufficient to clear the 101 hurdles: “The focus is not any specific advance in coding or other techniques for implementing that idea; no such specific technique is required.”

The CAFC went on to hold that the claims “flunk[ed] the second step of the Alice inquiry by failing to incorporate anything more than generic computer hardware such as a “processor,” a “broadcasting server,” an “image retrieval portion,” “a data structure,” and a transcoding module. In doing so, it also rejected the argument that the USPTO’s novelty and non-obviousness determinations undermined the notion that the claims were ineligible under section 101, observing that “what may be novel and non-obvious may still be abstract.”

  1. Simio, LLC v. Flexsim Software Products

In one of the last cases of 2020, the CAFC reviewed the patent eligibility of claims directed to a graphical system for “making object-oriented simulation easier and more accessible by letting users build simulations with graphics instead of programming.” The key advance over prior art systems for graphical object-oriented simulations is that in Simio’s program, the process of building an object was entirely graphical, requiring no program code. At step 1, the CAFC noted that “using graphical processes to simplify simulation building has been done since the 1980s,” and that applying the practice to the environment of “object-oriented” simulations is abstract. It rejected Simio’s argument that the claim recited an improvement to computer functionality, noting that the claimed advance only improved the user’s ability to build simulation models faster, not “processing speed.”

The claim included a “executable-process limitation” that the CAFC considered at steps 1 and 2: “an executable process to add a new behavior directly to an object instance of the one or more object instances without changing the object definition and the added new behavior is executed only for that one instance of the object.” While the court did not find the limitation abstract, it concluded that the limitation did not change the claim’s “character as a whole” because the specification and claim emphasized the abstract idea. It also found the limitation insufficient to provide “significantly more” at step two, observing that the novelty of the executable-process limitation lied in it being used in a graphical, rather than a programming interface. Simio provides a stark warning to patentees and practitioners that even a novel improvement to computer functionality will not be sufficient if a court finds the limitation to be a “peripheral” aspect of the “claim as a whole.” As a former software engineer, it is startling to read this case and observe the CAFC cast off a claim that is so obviously rooted in computer technology.

  1. NetSoc, LLC v. Match Group, LLC

On the last day of 2020, the CAFC affirmed the invalidity of patent claims directed to establishing and using a social network to facilitate people in resolving life issues in a particular geographic reason. The court held the claims to be directed to the abstract idea of “automating the conventional establishment of social networks to allow humans to exchange information and form relationships.”  The CAFC rejected NetSoc’s arguments that the claims of one of the patents recited a technological improvement of providing “ratings” for the social connections based in part on tracking the response times of respondents to a given message. As to the other patent, the CAFC also rejected the argument that augmenting a connection rating based on the published feedback of participants provided a technological improvement. For all those brick-and-mortar retailers and restaurant chains updating their driver and inventory tracking systems in this “new normal” age of “digital transformation,” NetSoc provides a cautionary warning that improvements that the Federal Circuit would consider “methods of organizing human activity” (such as, for instance, driver tracking or order pickups) will face an uphill battle in a validity challenge.

Lines in the Sand

As one can observe from these opinions, it is not particularly clear what passes muster under Alice, but lines are emerging in the sand as to what the court is looking for. Particularly, as noted in a recent blog post on this site, an “enablement-like test” seems to be finding its way into the Alice analysis. The difference is that this new test looks to the claims, not the specification, for “rules” or “implementation details.” While the CAFC has in the past tended to ignore this kind of “mere functional language” in patent claims, practitioners may want to consider including some level of technical detail as to how a result is achieved when it comes to software claims.

Read Part I here.

Image rights acquired by 123RF.com 

The Author

Theodore Rand

Theodore Rand is a registered patent agent and recent graduate from UNH Franklin Pierce School of Law. Theodore will be joining Morgan, Lewis, & Bockius LLP as an associate in the Silicon Valley’s patent prosecution practice group in October 2021.

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 as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 3 Comments comments.

  1. Model 101 January 11, 2021 12:38 pm

    More crook stuff at the Federal Circuit.

  2. Pro Say January 11, 2021 4:30 pm

    With innovation friends like the CAFC (and SCOTUS) . . . who needs enemies?

  3. B January 11, 2021 5:49 pm

    “Despite the many software eligibility cases decided last year, there is still some uncertainty about what passes muster under the Alice two-step framework.”

    Some uncertainty?

    Seriously?

    There’s no certainty, and when the CAFC can’t commit to an honest analysis they’ll lie through their teeth about the record.