Reyna Concurs in CAFC Reversal of Ineligibility Holding, But Blasts Majority’s Approach to Alice

By Eileen McDermott
October 4, 2021

“The majority skips step one of the Alice inquiry and bases its decision on what it claims is step two. I believe this approach is extraordinary and contrary to Supreme Court precedent. It turns the Alice inquiry on its head.” – Judge Reyna

Judge Jimmie Reyna

Judge Jimmie Reyna

The U.S. Court of Appeals for the Federal Circuit (CAFC) today reversed a district court decision that patent claims directed to an “authentication method” were ineligible as abstract under Section 101. The CAFC said that the claims at issue satisfied Alice step two because they “recite a specific improvement to a particular computer-implemented authentication technique” and were thus eligible for patenting. The opinion was authored by Judge Stoll and a concurring opinion was filed by Judge Reyna.

CosmoKey’s U.S. Patent No. 9,246,903 covers “a method of authenticating a user to a transaction at a terminal,” including using a mobile device to activate an authentication function. The specification explains that the patent improves on existing authentication methods by improving security and reducing complexity by eliminating the need for multi-factor manual authentication.

CosmoKey sued Duo Security, Inc. for patent infringement in the U.S. District Court for the District of Delaware in 2018, and Duo Security moved for judgment on the pleadings that all claims were patent ineligible because they were “directed to the abstract idea of authentication and do not recite any patent-eligible inventive concept.” The district court agreed at Alice step one that all of the asserted claims were abstract. Specifically, the district court said the claims broadly covered “the verification of identity to permit access to transactions.” And at step two, the court said “the [’]903 patent merely teaches generic computer functionality to perform the abstract concept of authentication; and it therefore fails Alice’s step two inquiry.”

As a refresher, the two-step inquiry under Alice v. CLS Bank is:

  1. “Determine whether the claims at issue are directed to a patent-ineligible concept[,]” such as an abstract idea”; and 
  2. “Consider the elements of each claim both individually and ‘as an ordered combination’ to determine whether the additional elements ‘transform the nature of the claim’ into a patent-eligible application.”

Straight to Step Two

In its analysis, the CAFC dodged the question of whether the claims were actually abstract, saying that “[w]e are not convinced that [the district court’s] broad characterization of the focus of the claimed advance is correct,” but concluding that “[w]e need not answer this question, however, because even if we accept the district court’s narrow characterization of the ’903 patent claims, the claims satisfy Alice step two.”

At step two, the CAFC said that “[c]ontrary to the district court’s conclusion, the ’903 patent discloses a technical solution to a security problem in networks and computers.” The district court’s conclusion that the specification admitted that “detection of activation of an authentication function’s activity and the activation by users of an authentication function within a pre-determined time relation were ‘well-understood and routine, conventional activities previously known in the authentication technology field” was “misplaced,” said the CAFC. The section of the specification on which the district court relied to reach that conclusion was misinterpreted; the prior art references mentioned in the relevant section did not teach the recited claim steps, but were instead included to demonstrated the claims’ advantages over them.

Duo attempted to argue that “using a second communication channel in a timing mechanism and an authentication function that is normally inactive, activated only preliminarily, and automatically deactivated” is itself abstract and cannot be used to prove an inventive concept. Duo here cited ChargePoint, Inc. v. SemaConnect, Inc., in which the CAFC court held “claims directed to network-controlled charging stations for electric vehicles abstract, including a dependent claim reciting a component ‘that can activate or deactivate charging at the connection.’” But the CAFC said that each case must be evaluated individually and distinguished Chargepoint:

While prior cases can be helpful in analyzing eligibility, whether particular claim limitations are abstract or, as an ordered combination, involve an inventive concept that transforms the claim into patent eligible subject matter, must be decided on a case-by-case basis in light of the particular claim limitations, patent specification, and invention at issue. Here, the claim limitations are more specific and recite an improved method for overcoming hacking by ensuring that the authentication function is normally inactive, activating only for a transaction, communicating the activation within a certain time window, and thereafter ensuring that the authentication function is automatically deactivated.

Reyna: Right Conclusion, Wrong Reasoning

In his concurring opinion, Judge Reyna disagreed with the majority’s analysis and application of the law. He found the claims directed to patent eligible subject matter at Alice step one for the same reasons the majority found them to be eligible at step two, and criticized the majority for essentially skipping step one and treating step two as if it operates independently. He wrote: “In sum, the majority skips step one of the Alice inquiry and bases its decision on what it claims is step two. I believe this approach is extraordinary and contrary to Supreme Court precedent. It turns the Alice inquiry on its head.”

 

The Author

Eileen McDermott

Eileen McDermott is the Editor-in-Chief of IPWatchdog.com. Eileen is a veteran IP and legal journalist, and no stranger to the intellectual property world, having held editorial and managerial positions at several publications and industry organizations. She has acted as editorial consultant for the International Trademark Association (INTA), chiefly overseeing the editorial process for the Association’s twice-monthly newsletter, the INTA Bulletin. Eileen has also served as a freelance editor for the World Intellectual Property Organization (WIPO); as senior consulting editor for the Intellectual Property Owners Association (IPO) from 2015 to 2017; as Managing Editor and Editor-in-Chief at INTA from 2013 to 2016; and was Americas Editor for Managing Intellectual Property magazine from 2007 to 2013.

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 15 Comments comments. Join the discussion.

  1. Night Writer October 4, 2021 3:05 pm

    I think this is the first time that Alice second step has been used at the CAFC to reverse a 101 ruling.

  2. J. Doerre October 4, 2021 4:31 pm

    Night, see Cellspin Soft, Inc. v. Fitbit, Inc., 927 F.3d 1306 (Fed. Cir. 2019); Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288 (Fed. Cir. 2016); Bascom Global Internet Services, Inc. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016).

  3. Dmitry Karshtedt October 4, 2021 8:12 pm

    I think Alice second step was also used in Berkheimer.

  4. Dmitry Karshtedt October 5, 2021 7:58 am

    Berkheimer also turned on the second step.

  5. B October 5, 2021 12:09 pm

    @ Dmitry “I think Alice second step was also used in Berkheimer.”

    Berkheimer was decided based on a lack of evidence. While the lower dist. ct. made the analysis under step 2 (and you are correct in this respect), the CAFC really didn’t get into step 1 versus step 2.

    “We do not decide today that claims 4–7 are patent eligible under § 101. We only decide that on this record summary judgment was improper, given the fact questions created by the specification’s disclosure”

  6. Dmitry Karshtedt October 5, 2021 12:27 pm

    I think that conclusion in Berkheimer was based on step 2 – but yes Berkheimer was a vacatur of a summary judgement for the defendant, while Cosmokey is a full reversal on step 2 after a 12(b)(6) invalidity dismissal, with the Federal Circuit rendering judgment that the claims are not invalid under 101. Quite unusual. Something similar happened (but in reverse) in Soverain, a 103 case.

  7. Model 101 October 5, 2021 2:11 pm

    Where is any of this in the 1952 patent act? Step 1…2…or any of the other nonsense.
    Turn Alice on it’s head?

    The hole has eaten the donut.

    This is all just lipstick on a pig.

  8. B October 5, 2021 2:59 pm

    @ Dmitry,

    FWIW, I’m about ready (days away) to file a blue brief for an Alice-Mayo issue out of the USPTO.

    I’m always up for some advice or insight from academia

  9. Dmitry Karshtedt October 5, 2021 4:46 pm

    Send me a draft, B – and I’m not difficult to find!

  10. Particularly Pointing Out October 8, 2021 8:04 pm

    @8

    Then definitely run it by Colleen Chien. I know how much you love to whine and complain about her so her positive feedback will either make you feel you’re completely correct or fundamentally wrong.

  11. B October 10, 2021 4:54 pm

    @ PPO a.k.a. MCI a.k.a. the only poster banned multiple times from IPWatchdog

    I’m pretty sure I’ve never said a bad word about Prof. Chien, but feel free to correct me as I may be mistaken.

    Stop projecting your innate racism on others

  12. Pariticularly Pointing Out October 21, 2021 6:38 pm

    Your comment has no rational relationship to what I posted, or any apparent connection to reality, B.

  13. B October 22, 2021 11:09 am

    @ PPO “Your comment has no rational relationship to what I posted, or any apparent connection to reality, B.”

    You stated “Then definitely run it by Colleen Chien. I know how much you love to whine and complain about her . . . ”

    I merely stated (correctly) that I’ve never said a bad word about Prof. Chien. But, please, explain how my retort “has no rational relationship” to the nonsense you posted. That and increase your meds

  14. B October 22, 2021 11:12 am

    @ PPO

    Seek professional help

  15. Moderate Centrist Independent October 22, 2021 1:34 pm

    Thank you for proving PPO’s point, B.

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