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USPTO October 2019 Update On Subject Matter Eligibility
Harrity & Harrity
Articles, USPTO 101, subject matter eligibility, Tim Hirzel, USPTO
By Tim Hirzel
The PTO's Revised Patent Subject Matter Eligibility Guidance (2019 PEG) has been generally well received for providing a more reliable manner of applying the Alice/Mayo test used by the courts. Even so, the 2019 PEG still left some matters unclear and the PTO has now responded to public feedback by providing further clarification in the October 2019 Update. Below, we discuss the updates and how practitioners can use the updated guidance in practice.
Step 2A Prong One
In Step 2A Prong One, the 2019 PEG instructs examiners to evaluate whether a claim recites an abstract idea by a) identifying specific limitations in the claims believed to be an abstract idea, and b) determining whether the identified limitations fall within any of the three specific groupings of abstract ideas (mathematical concepts, certain methods of organizing human activity, and mental processes).
However, there was some question as to how explicitly limitations in the claims have to recite an abstract idea. The October 2019 Update clarifies that "recites" should broadly be construed to mean that the claims either explicitly set forth the abstract idea or merely describe the abstract idea without explicitly using words that identify the abstract idea. The PTO further clarifies that claims may recite multiple abstract ideas, which may fall in the same or different groupings, and that the groupings are not mutually exclusive (i.e., a single claim limitation may fall into more than one abstract idea grouping).
The October 2019 Update also provides clarification on what the three groupings of abstract ideas entail.
Mathematical Concepts – The 2019 PEG defines "mathematical concepts" as mathematical relationships, mathematical formulas or equations, and mathematical calculations. The PTO interprets the courts as having declined to distinguish between types of math when evaluating claims for eligibility, and the PTO will do the same. For example, math used to solve a particular technical problem (e.g., an engineering problem) will still be considered to fall within the mathematical concepts grouping. However, a claim does not recite a mathematical concept if it is only based on or involves a mathematical concept.
Certain Method of Organizing Human Activity – The PTO clarifies that not all methods of organizing human activity are abstract ideas, and this grouping is limited to only fundamental economic principles or practices, commercial or legal interactions, managing personal behavior, and relationships or interactions between people.
Mental Processes – Under the 2019 PEG, "mental processes" are concepts performed in the human mind, such as observations, evaluations, judgments, and opinions. A footnote in the 2019 PEG indicates that a claim limitation is not a mental process when it "cannot practically be performed in the mind." The October 2019 update expanded on this and clarified that this is "when the human mind is not equipped to perform the claim limitations." The PTO reemphasized that claims can recite a mental process even if they are performed by a computer in the claim and further clarified that there is no requirement that the claim be performed entirely in the human mind to fall into the mental processes grouping.
The 2019 PEG also allows for the possibility that a claim limitation that does not fall into one of the three groupings of abstract idea may be still determined to be an abstract idea upon TC Director approval. The October 2019 update indicates that the public will be notified once such an office action issues. At this time, the PTO has not provided any such notification.
Step 2A Prong Two
In Step 2A Prong Two, the 2019 PEG instructs examiners to evaluate whether the claim as a whole integrates the abstract idea into a practical application and gives several considerations in making this determination, such as: improving the functioning of a computer or a technical field, effecting a treatment for a medical condition, using the judicial exception with a particular machine, or transforming or reducing a particular article to a different state or thing.
The October 2019 Update reemphasized that this analysis considers the claim as a whole, and that the additional elements of the claim (i.e., those not identified as an abstract idea) are not to be evaluated separately from the limitations reciting the abstract idea. Moreover, the PTO clarified that merely claiming a specific way of achieving a result is not a stand-alone consideration in Step 2A Prong Two and is not enough by itself to integrate the abstract idea into a practical application. However, the specificity of the claims is relevant to the considerations related to using a particular machine, a particular transformation, and whether the limitations are mere instructions to apply an exception.
The October 2019 Update devotes lengthy discussion to how a claim improves the functioning of a computer or a technical field and provides a two-step procedure for how examiners are to perform this analysis.
Step One – Examiners are to evaluate the specification to determine if sufficient details are provided to establish the claimed invention provides an improvement to technology. However, there is no requirement that the specification explicitly recite the improvement. The improvement is not relative to what is well-understood, routine, conventional activity in the field, but rather relative to existing technology. Importantly, the PTO noted that an improvement to an abstract idea is not an improvement to technology.
Step Two – If the specification sets forth an improvement in technology, the claims must be analyzed to determine if the claims recite features that provide the improvement described in the specification. However, there is no need for the claims to explicitly recite the improvement.
Step 2B
In Step 2B, examiners are to evaluate whether the claims provide an inventive concept by reciting significantly more than the abstract idea. The October 2019 Update itself provides almost no discussion or clarification of Step 2B other than to reemphasize that well-understood, routine, conventional activity will only be considered under Step 2B and not Step 2A. However, the PTO provided Example 43 along with the October 2019 Update that shows how a claim can fail Step 2A but still be determined eligible under Step 2B. Such an example was notably absent from the examples provided with the 2019 PEG.
Example 43 is a hypothetical based on the well-known Diamond v. Diehr case. Example 43 is directed to a controller for an injection molding apparatus that repeatedly obtains temperature measurements of a mold, calculates an extent of curing completion based on the temperatures and an equation, and determines a percentage of curing completion. Claim 3 specifies that the controller is connected to a means for temperature measuring (which is specifically interpreted to be an ARCXY thermocouple). Under Step 2A Prong One, the claim is determined to recite a mathematical concept. Under Step 2A Prong Two, the step of obtaining the temperature measurements is deemed to be insignificant extra-solution activity of data gathering and does not integrate the abstract idea into a practical application. Notably, the fact that claim 3 uses an ARCXY thermocouple to obtain the temperature measurements is not considered in Step 2A Prong Two (not even to establish use of a particular machine). Thus, claim 3 is determined to be directed to the abstract idea.
However, the consideration of whether the ARCXY thermocouple feature is mere insignificant extra-solution activity is reconsidered under Step 2B taking into account whether such extra-solution activity is well-known. The PTO found that while use of ARCXY thermocouples is known in the aeronautical industry, the use of ARCXY thermocouples was not routine or conventional in injection molding apparatuses. Because the ARXCY thermocouple resulted in better long-term performance, durability, and response time than other thermocouples, the result of using the unconventional thermocouple in the claimed manner amounts to significantly more than the abstract idea (i.e., mathematical concept) and the claim is patent eligible.
The October 2019 Update reinforces the idea that the best practice when drafting a patent application is to describe the invention as providing a technical solution to a technical problem. In this way, should a Step 2A Prong One argument fail, practitioners can rely on a Step 2A Prong Two argument that the claims improve the functioning of a computer or other technology. This argument seems to be the argument preferred by examiners and often cited by the courts as a basis for patent eligibility when there is a 101 issue.
Specifically, practitioners should keep in mind that examiners will heavily rely on the specification to determine if such a technical solution or technical improvement is provided. The improvement should not be merely recited in a conclusory manner (e.g., an unsupported assertion that the invention provides a specific improvement), but should be explained in sufficient detail to tie specific features of the invention to the improvement. Importantly, the claims should be drafted in such way to include the features that provide the improvement. Examiners have often requested, or even required, that the claims explicitly recite the improvement to overcome a 101 rejection even though these claim features are often considered intended use or given little patentable weight. The October 2019 update makes it clear this is not necessary.
The PTO also appears to narrow at least some of the three groupings of abstract ideas in Step 2A Prong One. Practitioners should use this to their advantage when drafting applications to characterize features that may be arguably abstract in a way that avoids falling into the three groupings of abstract ideas. For example, when appropriate, the application could describe the complexity of steps that may be arguably mental processes (e.g., determining steps, processing steps, analyzing steps, etc.) to establish that these steps cannot be practically performed in the human mind. However, practitioners should be careful not to try to game the system by describing a simple step, which truly could be performed in the mind, as a complex step that cannot be performed in the mind because such a characterization could have unintended consequences for potential infringement and claim interpretation. Moreover, if a feature truly could be performed in the mind, then there is most likely a better way to establish eligibility under Step 2A Prong Two or Step 2B.
The 2019 PEG stripped Step 2B of most of its previous considerations and moved them to Step 2A Prong Two. While the 2019 PEG indicated that Step 2B was still a viable option to establish eligibility, there was little instruction on how practitioners could actually present a successful argument and no examples of succeeding under Step 2B were given. Given this, examiners have been reluctant to seriously consider Step 2B arguments. Although arguments under Step 2B are likely to remain an improbable way to overcome a 101 rejection in view of the of the October 2019 Update, practitioners should keep in mind that new Example 43 provides a manner of establishing an inventive concept and a rationale that can be used as a backup position under Step 2B going forward. Therefore, practitioners should draft their specifications to highlight how their inventions differ from what is well-understood, routine, conventional in the field, even if it is a feature that is more tangentially related to the core invention that could be considered extra solution activity.
Overall, the October 2019 Update should help the PTO continue to provide more reliable subject matter eligibility analysis and clarify what kinds of arguments will successfully overcome a 101 rejection.
Statements in Specification May Harm Patent Eligibility
Articles, Case Summary 101, Elavon, Matthew Allen, patent preparation, Solutran, subject matter eligibility, US Bancorp
By Matthew Allen, Associate
The Federal Circuit recently issued a decision that indicates how certain types of statements, made in an Applicant's own specification, can undermine patent eligibility. Specifically, in Solutran Inc. v. Elavon, Inc., U.S. Bancorp, 2019-1345, (Fed. Cir. Jul. 30, 2019) ("Solutran"), the Federal Circuit highlights how patent eligibility under 35 U.S.C. §101 might turn based on a specification's background information and statements regarding proposed advancements, or benefits, of an invention .
At issue in Solutran is claim 1 of U.S. Patent No. 8,311,945 ('945 patent), which recites:
A method for processing paper checks, comprising:
a) electronically receiving a data file containing data captured at a merchant s point of purchase, said data including an amount of a transaction associated with MICR information for each paper check, and said data file not including images of said checks;
b) after step a), crediting an account for the merchant;
c) after step b), receiving said paper checks and scanning said checks with a digital image scanner thereby creating digital images of said checks and, for each said check, associating said digital image with said check s MICR information; and
d) comparing by a computer said digital images, with said data in the data file to find matches.
When analyzing the claim under part one of the Supreme Court's Alice test, the Federal Circuit determined that claim 1 was "directed to the abstract idea of crediting a merchant's account as early as possible while electronically processing a check." In making its determination, the court examined the purported benefits of the '945 patent. Two benefits were identified in the specification: "improved funds availability," and "outsourcing." However, the court noted that while two benefits were identified in the specification, the claims were not limited to an embodiment that resulted in both benefits, stating that "[t]he only advance recited in the asserted claims is thus crediting the merchant's account before the paper check is scanned." In other words, because the claims did not include features that required "outsourcing," the court considered the only relevant benefit to be "improved funds availability."
The court determined that the claimed advance ("improved funds availability") was similar to abstract concepts such as "hedging" and "mitigating settlement risk," and that "[t]he desire to credit a merchant's account as soon as possible is an equally long standing commercial practice." Thus, the Federal Circuit used the purported advance of the '945 patent, as indicated in the specification and supported by the claims, in determining that claim 1 was directed to an abstract idea. The court also noted that its characterization of claim 1 was appropriate where "the abstract idea tracks the claim language and accurately captures what the patent asserts to be the 'focus of the claimed advance over the prior art.'" This further signifies the importance the court placed on the alleged benefits of the application.
When addressing step two of the Alice test, the Federal Circuit used the background of the '945 patent against the patentee by stating that "the background of the '945 patent describes each individual step in claim 1 as being conventional. Reordering the steps so that account crediting occurs before check scanning (as opposed to the other way around) represents the abstract idea in the claim, making it insufficient to constitute an inventive concept." In other words, simply re-ordering admittedly known steps will not constitute an inventive concept for purposes of step two of the Alice test. Thus, the court used the applicant's own statements in the specification, indicating that certain steps are conventional, to find that the claim was not patent eligible.
This decision provides important lessons about drafting and prosecuting a patent application that may increase the application's likelihood to survive a §101 challenge. First, practitioners should make sure that benefits identified in a patent application are exhibited in the claimed embodiments. The identified benefits should ideally be clearly technical. Second, practitioners should ensure that the patent application does not include any statements that might be used to argue against the patent eligibility of the claims. This may include considering whether a detailed background may do more harm than good.
Technical Details are Needed to Avoid Patent Eligibility Issues for Patent Applications
Articles, Case Summary 101, Kenneth Hartmann, patent preparation, subject matter eligibility
By Kenneth Hartmann, Associate
Many patent practitioners have likely found success in overcoming and/or avoiding 35 USC §101 rejections since the USPTO's Revised Patent Subject Matter Eligibility Guidance was released last January. However, the Federal Circuit ("the court") recently made it clear that continued attention and care should be given when drafting patent applications focused on payment systems and/or payment processing.
In Innovation Sciences, LLC v. Amazon.com, Inc. 2018-1495 (Fed. Cir. Jul. 2, 2019) ("Innovation Sciences v. Amazon") the court determined that a claim to an "online method for a payment server to support online buying over the Internet" in U.S. Reissue Patent No. 46,140 (the '140 patent) was ineligible under Step 2 of Alice. More specifically, the court agreed with the district court that the claim was directed to the abstract idea of "securely processing a credit card transaction with a payment server" and that the claim lacked an inventive step, stating that the transmission of credit card payment information through the completion of a purchase are the same as those used in a "conventional Internet transaction system having adequate credit card information security" as admitted in the specification of the '140 patent.
While Innovation Sciences argued that a "wherein" clause indicating the process involved a switch from a server with less security to a server with more security, the court held that that claim is directed to the abstract idea of "switching." The court further mentioned that the claim seeks to capture the broad concept of switching to a more secure server, rather than a "specific way of doing so." For Step 1 of the Alice test, the court indicated that the claim may have avoided being directed to an abstract idea if the claim and/or specification had indicated a specific way of carrying out the switch from a less secure server to a more secure server.
Patent applications directed to payments or other financial related processes will likely continue to receive the highest level of scrutiny with respect to patent eligibility due to the Alice decision being based on a financial/business method patent application. The fact is, many of these patent applications and/or patents likely involve novel technical features, communications, and/or processes that were overlooked and/or not considered when the patent application was drafted. In Innovation Sciences v. Amazon, the court specifically referred to a lack of detail with respect to switching between a less secure server and a more secure server. In fact, the word "switched" is mentioned only ONCE in the specification and ONCE in a flowchart. It is no wonder that the court found Innovation Science's arguments regarding the switch between servers to be futile.
The '140 patent claims priority to a patent application filed back in April 2000. That was obviously a different era of patent preparation and prosecution. Today, patent practitioners should consider and outline the technical aspects of processes (especially business method processes) without taking for granted that one or more steps of the process are inventive, in and of, themselves. Clearly, the switch between servers, considered to be one step in the overall process for performing an online method for a payment server, involved its own processes and/or steps. How/when was the decision made to switch the servers? What parameters were used to select the new server? How were those parameters analyzed to make the selection? What types of communications (and/or how many) were needed to perform the switch? Again, it was a different era of drafting patent applications in 2000. However, if the patent application drafter was able to predict the future, those are just a few example questions that, if answered in the claim and/or specification, would have improved Innovation Sciences' case for patent eligibility. Moreover, to have the best chances of success, patent drafters should continue to discuss the technical problems solved by these processes (and/or by the steps of the processes) and any corresponding technical benefits.
Why the Revised 101 Guidance Continues to be Important After Cleveland Clinic
Articles, USPTO 101, Alice, Cleveland Clinic, Eli Mazour, USPTO
By Eli Mazour
After the 2014 Supreme Court Alice decision, the judges of the Federal Circuit failed to reach a meaningful consensus regarding how the subject matter eligibility test set out in Alice should be applied. As a result, new USPTO Director Andrei Iancu recognized that there was no practical way for examiners to navigate all of the patent eligibility decisions for each individual patent application. To address this problem, the USPTO released the "2019 Revised Patent Subject Matter Eligibility Guidance."
In the recent Cleveland Clinic Foundation v. True Health Diagnostics decision, a panel of the Federal Circuit invalidated claims related to cardiovascular testing under § 101 and stated that "[w]hile we greatly respect the PTO's expertise on all matters relating to patentability, including patent eligibility, we are not bound by its guidance" (Fed. Cir. 2019). The decision caused consternation among some practitioners regarding the value of relying on USPTO guidance.
Director Iancu's comments regarding Cleveland Clinic
This past Thursday, at the ABA's annual IP conference, Iancu addressed those concerns. First, he pointed out that Cleveland Clinic did not even mention the 2019 revised guidance. Instead, Cleveland Clinic discussed Example 29 from guidance that was published by the PTO on May 4, 2016, which is almost two years before Iancu became the director. Second, Iancu noted that Cleveland Clinic just stated that to the extent that Example 29 contradicts a court decision, the court decision controls. In other words, Cleveland Clinic pointed out facts that were clear before the 2019 revised guidance was even released: 1) courts are not bound by guidance released by the USPTO and 2) incorrect guidance released by the USPTO would not override previous court decisions. Cleveland Clinic did not in any way directly undermine the 2019 revised guidance.
Moreover, Iancu indicated a change in approach by the USPTO: instead of reacting to each new Federal Circuit decision that deals with § 101, the USPTO is now taking a look at the § 101 issue holistically. And, Iancu argued that the Federal Circuit should address the § 101 problem through en banc decisions by the full Federal Circuit. In totality, this suggests that a single Federal Circuit decision by a panel of three judges is unlikely to significantly change the USPTO's approach set out by the 2019 revised guidance.
Practical tips for drafting & prosecution
As it stands now, USPTO examiners and PTAB judges are expected to apply the 2019 revised guidance for § 101 analysis. In fact, ex parte appeal decisions that deal with § 101 are currently being reviewed at the PTAB to make sure that the 2019 revised guidance is being applied by PTAB judges. Therefore, in order to ensure efficient prosecution and positive appeal results, practitioners should primarily rely on the 2019 revised guidance to overcome § 101 rejections.
However, when drafting new patent applications, practitioners should plan for the possibility of the Federal Circuit, the Supreme Court, or even possibly Congress taking a narrower view of patent eligibility. Therefore, to the extent possible, patent applications should be drafted with all of the relevant court decisions in mind. The goal should be for an eventual patent to be able to withstand – or even better yet avoid – the most stringent § 101 scrutiny during litigation.
In-depth Summary of USPTO Revised Guidance on Subject Matter Eligibility
USPTO 101, subject matter eligibility, Tim Hirzel, USPTO
The PTO released their highly anticipated revised guidance on subject matter eligibility that take effect on January 7, 2019.[1] Below, we discuss the changes to the subject matter eligibility analysis made by the revised guidance and how Applicants may address these changes in practice.
Summary of Revised Guidance
The revised guidance maintains the two step Alice/Mayo Test but revises the procedure for determining whether a claim is directed to a judicial exception (e.g., an abstract idea) under Step 2A. Previously, the PTO guidelines (wrongly) equated a claim merely "reciting" an abstract idea with a claim being "directed to" the abstract idea under Step 2A. The PTO has replaced this approach with a new two prong analysis.
In the first prong of Step 2A, Examiners evaluate whether a claim recites an abstract idea. The first prong is similar to the previous approach with one important change. Previously, Examiners were to describe the subject matter claimed and identify whether the subject matter had previously been found to be directed to an abstract idea by the courts. The PTO found this approach impractical due to the ever-increasing number of court decisions and rightly noted that it has been difficult for Examiners to apply this approach in a predictable manner, especially between different technology centers.
Instead of this case law specific approach, the PTO newly identified three groups of abstract ideas: mathematical concepts, certain methods of organizing human activity, and mental processes. Examiners must now a) identify specific limitations in the claims believed to be an abstract idea, and b) determine whether the identified limitations fall within any of the three newly identified groups. If the identified limitations fall within the three groups of abstract ideas, the analysis proceeds to the second prong of Step 2A.
In the second prong of Step 2A, Examiners evaluate whether the claim as a whole integrates the abstract idea into a practical application. The million-dollar question then becomes what is a practical application? The PTO broadly answers this question by stating "[a] claim that integrates a judicial exception into a practical application will apply, rely on, or use the judicial exception in a manner that imposes a meaningful limit on the judicial exception." The PTO also gives several examples based on case law that indicate an additional element or combination of elements may have integrated an exception into a practical application, such as: improving the functioning of a computer or a technical field, effecting a treatment for a medical condition, using the judicial exception with a particular machine, or transforming or reducing a particular article to a different state or thing.
The PTO acknowledges that these examples and the second prong of step 2A overlap considerations that the courts and the PTO's guidance consider under Step 2B but feels that this new approach will increase certainty and reliability. For clarity, the PTO reiterated that merely using a computer as a tool to perform the abstract idea, adding insignificant extra-solution activity, or generally linking the abstract idea to a technical field will still not be enough to establish a practical application and patent eligibility. If the claim does not integrate the abstract idea into a practical application, then the claim is directed to an abstract idea under Step 2A and the analysis proceeds to Step 2B.
Step 2B has not been changed under the revised guidance and Examiners are still to evaluate whether the claims provide an inventive concept by reciting significantly more than the abstract idea. However, the incorporation of several Step 2B considerations into the second prong of Step 2A limits how much additional analysis the Examiner needs to apply in Step 2B. Importantly, whether the additional elements are well-understood, routine, conventional activity is not evaluated under the second prong of Step 2A and is unrelated to whether the claim integrates the abstract idea into a practical application. This evaluation is still done in Step 2B pursuant to the Berkheimer memo[2] to determine whether the additional element or combination of elements adds limitations that are not well-understood, routine, conventional activity in the field which is indicative that an inventive concept may be present.
Our Impressions
The new two prong approach to Step 2A should make it easier to work with Examiners, especially during interviews, to overcome 101 rejections. Under the prior guidance, Examiners would often dismiss any Step 2A arguments because their guidelines simply said a claim was directed to an abstract idea if any part of the claim recited an abstract idea. This made it very easy for Examiners to establish the claims were directed to an abstract idea without much analysis. The revised guidelines will make it much more difficult for the Examiner to simply dismiss an Applicant's Step 2A arguments.
Equally as frustrating was Examiners misapplying case law when attempting to identify a decision that found subject matter, similar to the claims, to be directed to an abstract idea. Applicants should be able to avoid the necessity of debating case law cited by Examiners (which was rarely an effective manner of overcoming a 101 rejection anyway) because the Examiners are not required to cite specific decisions in their rejections anymore and merely must identify one of the three newly defined groups of abstract ideas.
Instead, Applicants can now focus on the newly articulated "practical application" consideration in the second prong of Step 2A. While the examples of practical applications given in the revised guidelines are nothing new and come straight from case law Applicants should have already been using to overcome 101 rejections, the examples were not always given much weight by the Examiners or simply dismissed nominally in Step 2B. The revised guidelines' focus on the "practical application" consideration and the given examples may make it easier to use these examples to effectively overcome the 101 rejections (without necessarily having to argue the case law behind the examples).
Moreover, the PTO broadly describing the case law as establishing a "practical application" consideration gives Applicants more leeway than relying on specific court decisions as done in the past. For example, it may be easier to convince an Examiner on a technical level that claims "apply, rely on, or use the judicial exception" in a meaningful manner than to convince the Examiner that claims are similar to subject matter previously held by the courts to be directed to statutory subject matter. However, Applicants must be mindful that the goal is not simply to get patent applications allowed by satisfying the PTO's revised guidelines, but to have claims that are statutory as supported by case law and that can withstand the 101 analysis performed by the courts.
Any noticeable change in examination will depend heavily on how Examiners are trained to implement the new guidance. Accordingly, it may be months before we fully realize how significant the changes will be to 101 rejections in practice.
[1] 2019 Revised Patent Subject Matter Eligibility Guidance
[2] Revising 101 Eligibility Procedure in view of Berkheimer v. HP, Inc.
For a shorter summary of the above, visit here.
Summary of USPTO Revised Guidance on Subject Matter Eligibility
Articles 101, subject matter eligibility, Tim Hirzel
The PTO released their highly anticipated revised guidance on subject matter eligibility that take effect on January 7, 2019. A summary of the guidance is provided below. A more in-depth discussion can be found on our website HERE.
The revised guidance maintains the two step Alice/Mayo Test but revises the procedure for determining whether a claim is directed to a judicial exception (e.g., an abstract idea) under Step 2A by instituting a two-prong analysis.
First prong of Step 2A – Examiners evaluate whether a claim recites an abstract idea. Instead of a case law specific approach as previously performed, the PTO newly identified three groups of abstract ideas: mathematical concepts, certain methods of organizing human activity, and mental processes. If any recited claim limitations fall within the three groups of abstract ideas, the analysis proceeds to the second prong of Step 2A.
Second prong of Step 2A – Examiners evaluate whether the claim as a whole integrates the abstract idea into a practical application. A practical application will apply, rely on, or use the judicial exception in a manner that imposes a meaningful limit on the judicial exception. The PTO gives examples based on case law that indicate practical applications, such as: improving the functioning of a computer or a technical field, effecting a treatment for a medical condition, using the judicial exception with a particular machine, or transforming or reducing a particular article to a different state or thing. If the claim does not integrate the abstract idea into a practical application, then the claim is directed to an abstract idea under Step 2A and the analysis proceeds to Step 2B.
Step 2B has not changed under the revised guidance and is still performed pursuant to the Berkheimer memo.
Under the prior guidance, Examiners would often dismiss any Step 2A arguments because their guidelines simply said a claim was directed to an abstract idea if any part of the claim recited an abstract idea. The two-prong approach will make it much more difficult for Examiners to simply dismiss an Applicant's Step 2A arguments.
Applicants should now be able to avoid the necessity of debating case law with Examiners because the Examiners are not required to cite specific decisions in their rejections and only have to identify one of the three newly defined groups of abstract ideas. Instead, Applicants can now focus on the newly articulated "practical application" consideration in the second prong of Step 2A.
While the examples of practical applications given in the revised guidelines are nothing new, the revised guidelines' focus on the "practical application" consideration may make it easier to use these examples to effectively overcome the 101 rejections (without necessarily having to argue the case law behind the examples).
The PTO broadly describing the case law as establishing a "practical application" consideration gives Applicants more leeway than relying on specific court decisions as done in the past. For example, it may be easier to convince an Examiner on a technical level that claims "apply, rely on, or use the judicial exception" in a meaningful manner than to convince the Examiner that claims are similar to subject matter previously held by the courts to be directed to statutory subject matter.
Dissecting Dissents for Ex Parte Appeals
Articles 101, Eli Mazour, ex parte appeals, patent preparation, patent prosecution, Sora Ko
By Eli Mazour and So Ra Ko
Dissent is not the highest form of judgment for judges on the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO). As discussed in further detail below, our own analysis indicates that dissents for ex parte appeals are found in about .5% of decisions issued by the PTAB. A PTAB judge deciding an ex parte appeal is more than ten times less likely to dissent than a Federal Circuit (CAFC) judge.
The PTAB decides thousands of ex parte appeals per year. Each appeal is assigned to a panel of three Administrative Patent Judges (APJs). While one judge is designated to write the initial opinion, all three judges are supposed to take an active role in adjudication before the final decision is issued.
Case Summary of SAP America, Inc. v. InvestPic, LLC
Case Summary 101, case summary, InvestPic, patent prosecution, SAP America
By Rebecca Bachner
In SAP America, Inc. v. InvestPic, LLC, 2017-2081 (Fed. Cir. May 15, 2018), the Federal Circuit ("the Court") agreed with the U.S. District Court for the Northern District of Texas (the "District Court") that the claims of U.S. Patent No. 6,349,291 ("the '291 patent"), were invalid because their subject matter is invalid under 35 U.S.C § 101 ("Section 101").
The '291 patent is directed to calculating and analyzing investment data in order to generate a resampled distribution. In 2016, SAP America, Inc. filed a declaratory judgment alleging the that '291 patent was invalid and moved for a judgment on the pleadings on that ground. In May 2017, at the judgment on the pleadings, the District Court granted the motion and held all claims ineligible under Section 101 and hence invalid. The District Court concluded that the claims were directed to performing statistical analysis based on the language in the claims and the mathematical calculations in the written description and dependent claims. InvestPic, LLC appealed the grant of the motion.
On the merits with regards to the claims of the '291 patent, the Court found, as did the District Court, that the claims in the '291 patent are ineligible under Section 101. The Court stated that "[w]e may assume that the techniques claimed are 'groundbreaking, innovative, or even brilliant,' but that is not enough for eligibility." Ass'n for Molecular Pathology v. Myriad Genetics Inc, 569 U.S. 576, 591 (2013). The Court reiterated that overcoming novelty and non-obviousness is not enough and that "[t]he claims here are ineligible because their innovation is an innovation in ineligible subject matter." SAP America, Inc. v. InvestPic, LLC at p. 3. The Court said that the subject matter is nothing but a series of mathematical calculations and the presentation of the results in the plot of a probability distribution function.
To make this determination, the Court looked to the patent's description of existing practices being improved by the '291 patent. The '291 patent discusses that conventional financial information websites perform rudimentary statistical functions relying on a false presumption of a probability distribution and that the patent proposes a technique that "utilizes resampled statistical methods for the analysis of financial data." The patent then discusses using a bootstrap method and bias parameters.
The Court then looked to the independent claims. Independent claims 1 and 11 are method claims and claim 22 is a system claim.
Claim 1: A method for calculating, analyzing and displaying investment data comprising the steps of:
(a) selecting a sample space, wherein the sample space includes at least one investment data sample;
(b) generating a distribution function using a re-sampled statistical method and a bias parameter, wherein the bias parameter determines a degree of randomness in a resampling process; and,
(c) generating a plot of the distribution function.
Claim 11: A method for providing statistical analysis of investment data over an information network, comprising the steps of:
(a)storing investment data pertaining to at least one investment;
(b)receiving a statistical analysis request corresponding to a selected investment;
(c)receiving a bias parameter, wherein the bias parameter determines a degree of randomness in a resampling processing; and
(d)based on upon investment data pertaining to the selected investment, performing a resampled statistical analysis to generate a resampled distribution.
Claim 22: A system for providing statistical analysis of investment information over an information network comprising:
a financial data databased for storing investment data;
a client database;
a plurality of processors collectively arranged to perform a parallel processing computation, wherein the plurality of processors is adapted to:
receive a statistical analysis request corresponding to a selected investment;
based upon investment data pertaining to the elected investment, perform a resampled statistical analysis to generate a resampled distribution; and
provide a report of the resampled distribution.
Upon reviewing the claims, the Court found them directed to abstract ideas. The Court found this case to be similar to Electric Power Group v. Alstom S.A. 830 F.3d 1350 (Fed. Cir. 2016) as the claims select certain information, analyze it using mathematical techniques and report or display the results of the analysis.
The Court distinguished this case from McRO, Inc. v. Bandai Namco Games America Inc., 837 F.3d 1299 (Fed. Cir. 2016) by stating that McRO was directed to the creation of something physical and the improvement was to how the physical display operated. However, the claims in the '291 patent claimed an improvement to a mathematical technique with no improved display mechanism. The Court further distinguished these claims from McRO stating that McRO had the specificity required to transform a claim from claiming only a result to claiming a way of achieving it. Similarly, the Court stated that Thales Visionix Inc. v. U.S., 850 F.3d 1343 (Fed. Cir. 2017) taught an improvement of a physical tracking system.
In contrast, the Court stated, the focus of the claims in the '291 patent is not a physical-realm improvement, but an improvement in the selection and mathematical analysis of information followed by reporting or displaying the results. The Court stated that it did not matter as to whether the information claimed is information about real investments as the limitations were not enough to make the collection or analysis of that information not abstract.
Further, the Court also distinguished the claims in the '291 patent from the results of the first test of the Alice inquiry in Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016) and BASCOM Global Internet Services, Inc. v. AT&T Mobility LLC., 827 F.3d 1341 (Fed. Cir. 2016), stating that those claims were directed to improvements in the way the computers and networks carry out their basic functions. Alice Corp Pty. Ltd v. CLS Bank Int'l, 134 S.Ct 2347 (2014). The Court said that the claims of the '291 patent are directed to improved mathematical analysis and that the technology used can be off-the-shelf computer technology. As such, the claims of the '291 patent did not meet the first test of the Alice inquiry.
Looking to the second test of the Alice inquiry, the Court concluded that there is nothing in the claims sufficient to transform them to patent eligible and that the claims in the '291 patent are merely an advance of mathematical techniques in finance. As such, the Federal Circuit agreed with the District Court that the claims of the '291 patent lack subject matter eligibility.
This case illustrates the importance of having claims that are specific and solve a technical problem. Furthermore, the decision in SAP America, Inc. v. InvestPic, LLC emphasizes the importance of having claims focused on advancements in an area of technology.
Download Case Summary of SAP America, Inc. v. InvestPic, LLC.
Practice Insights in the Wake of Blackbird Tech LLC v. ELB Electronics, Inc.
Case Summary 101, case summary, patent preparation, patent prosecution
By Matthew Allen
July 26, 2018- Practice Insights in the Wake of Blackbird Tech LLC v. ELB Electronics, Inc.
In Blackbird Tech LLC v. ELB Electronics, Inc. (Fed. Cir. July 16, 2018), the Federal Circuit found, with one judge dissenting, that the district court erred during claim construction by construing a claim limitation to include a requirement not included in the plain language of the claim, and not supported during the prosecution history.
The decision provides insight into how choices made during drafting and prosecution may affect claim construction, and provides insight into how issues of claim construction might be avoided.
The patent at issue (7,086,747) describes an energy efficient lighting apparatus designed to be retrofitted with an existing light fixture. At issue was claim construction regarding the meaning of "attachment surface," and whether the attachment surface must be secured to a "ballast cover." Specifically, claim 12 recites:
12. An energy-efficient lighting apparatus for retrofit with an existing light fixture having a ballast cover, comprising:
a housing having an attachment surface and an illumination surface;
a plurality of illumination surface holes in the illumination surface;
a circuit board comprising a plurality of light-emitting diodes, wherein the circuit board is positioned adjacent the housing so that the plurality of light-emitting diodes protrude through the plurality of illumination surface holes in the illumination surface; and
a fastening mechanism for securing the attachment surface of the lighting apparatus to the illumination surface, wherein the lighting apparatus is coupled to a wall switch and wherein the illumination of the light-emitting diodes is controllable based upon the position of the wall switch.
Blackbird argued that "attachment surface" should be construed as "layer of the housing to which the illumination surface is secured," while ELB argued (and the district court agreed) that "attachment surface" should be construed as "layer of the housing that is secured to the ballast cover."
In concluding that "claim 12 does not require the attachment surface to be secured to the ballast cover," the Federal Circuit relied on the plain language of claim 12, stating that claim 12 "does not require the attachment surface be secured to anything other than the illumination surface." The Court also pointed out that there was no suggestion (e.g., in the specification or during prosecution or litigation) indicating that the fastening mechanism securing the attachment surface to the ballast cover was an important feature of the claimed invention.
Interestingly, the Federal Circuit also noted that "possibly the most important reason why the fastener for connecting the attachment surface to the ballast cover disclosed in an embodiment ought not be imported into the claim is because that limitation was originally present in claim 12 and was expressly eliminated during prosecution." During prosecution, an amendment made "to resolve 112 issues" deleted "ballast cover" and replaced it with "illumination surface." The federal circuit concluded that "[n]o ordinary artisan could read the prosecution history as anything other than eliminating the requirement that a fastening mechanism secures the attachment surface to the ballast cover."
In his dissent, Circuit Judge Reyna concluded "that the district court correctly construed 'attachment surface' to mean 'layer of the housing that is secured to the ballast cover.'" In particular, Circuit Judge Reyna states:
The plain language of claim 12, read in the context of the specification, implicitly requires that the attachment surface be secured to the ballast cover to achieve the retrofit function. Apart from the preamble, which the parties agree is limiting, claim 12 contains no reference to the ballast cover, the existing light fixture, or where or how the apparatus is retrofit with the existing light fixture. Because the only feature of the existing light fixture described in claim 12 is the ballast cover, a person of ordinary skill would necessarily conclude that the attachment surface is secured to the ballast cover of the existing light fixture.
In addition to the plain language argument, Circuit Judge Reyna noted that "[e]very single embodiment of the retrofit lighting apparatus in the specification describes securing the attachment surface to the ballast cover of the existing light fixture." He also cites a portion of the specification, which states that "[i]n typical operation, the attachment surface 530 is secured to the ballast cover," to support his conclusion that the attachment surface should be read as being secured to the ballast cover.
Clearly, this case was not as clear cut as the plain language of claim 12 might have made it seem. However, the case does provide insight into how practitioners might draft and prosecute an application in a manner designed to avoid unfavorable claim construction.
For example, both the district court, and the dissenting Circuit Judge, felt that the specification did not make it clear that the attachment surface might not be secured to the ballast cover. In describing various components, a patent drafter might avoid similar issues by describing components as having multiple functions or capabilities, or avoiding describing a component as serving only one function.
In addition, the inclusion of "ballast cover" in the preamble of claim 12 was given weight in both the majority and dissenting opinions. During drafting, or prosecution, a practitioner might wish to avoid including (or amend to exclude), in the preamble of a claim, limitations, structure, or the like, which might be construed as being somehow tied into other claimed features.
Also, during prosecution, the elimination of claim features is clearly given weight in determining whether an eliminated feature might be required for patentability. Accordingly, rather than leaving in unnecessary claim features, it may be beneficial to remove claim features in a manner designed to pre-empt a claim construction that requires a claim feature that is actually not necessary for patentability.
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Case Summary of Medtronic, Inc. v. Barry
Case Summary 101, Barry, case summary, Medtronic, patent preparation, patent prosecution
By James Olsen
June 17, 2018- Case Summary of Medtronic, Inc. v. Barry, C.A. No. 2017-1169 (Fed. Cir. June 11, 2018)
This is an appeal from two related decisions of the U.S. Patent and Trademark Office's Patent Trial and Appeals Board (Board) in inter partes review (IPR) proceedings. The Board concluded that the petitioner, Medtronic, Inc., had not proven that the challenged patent claims are unpatentable. The Federal Circuit affirmed-in-part and vacated-in-part the decision.
Dr. Mark Barry sued Medtronic for patent infringement in the Eastern District of Texas. Barry alleged that Medtronic's products infringed U.S. Patent Nos. 7,670,358 (the 358 Patent) and 7,776,072 (the 072 Patent). Medtronic petitioned for, and the Board instituted, IPR proceedings for all claims in both patents.
During the IPR proceedings, Medtronic asserted that the claims of the patents were obvious over three references: (1) U.S. Patent Application No. 2005/0245928 (the 928 Application), (2) a book chapter which appears in Masters Techniques in Orthopaedic Surgery: The Spine (2d ed.) (MTOS); and (3) a video entitled "Thoracic Pedicle Screws for Idiopathic Scoliosis" and slides entitled "Free Hand Thoracic Screw Placement and Clinical Use in Scoliosis and Kyphosis Surgery" (Video and Slides). The Board determined that the claims of the patents were not obvious over the 928 Application and MTOS, and that the Video and Slides were not prior art since they were not publicly accessible.
The primary dispute is whether the Video and Slides were publicly accessible, and thus, prior art to the 358 patent and the 072 patent.
Patents at Issue
The 358 patent relates to a method for ameliorating aberrant spinal column deviation conditions, such as scoliosis. The 072 patent is a continuation-in-part of the application that led to the 358 patent and shares substantially the same specification.
The Federal Circuit affirmed the Board's determination that the claims of the patents were not obvious over the 928 Application and MTOS. However, Federal Circuit held that the Board erred in concluding that the Video and Slides were not accessible to the public.
On appeal, the parties disputed whether the Video and Slides constituted printed publications within the meaning of 35 U.S.C. § 102(b). A CD containing the Video was distributed at three separate programs in 2003: (1) a meeting of the "Spinal Deformity Study Group" (SDSG) in Scottsdale, Arizona, (the Scottsdale program); (2) the Advanced Concepts in Spinal Deformity Surgery meeting in Colorado Springs, Colorado (the Colorado Springs program); and (3) the Spinal Deformity Study Symposium meeting in St. Louis, Missouri. Binders containing relevant portions of the Slides were also distributed at the Colorado Springs and St. Louis programs. The earliest of the three 2003 programs, the Scottsdale program, was limited to 20 SDSG members (e.g., experts within the field of spinal deformity), and the other two programs were attended by 20 and 55 surgeons at the Colorado Springs and St. Louis programs, respectively.
The Federal Circuit found that the determination of whether a document is a "printed publication" under 35 U.S.C. § 102(b) involves a case-by-case inquiry into the facts and circumstances surrounding the reference's disclosure to members of the public (citing In re Klopfenstein, 380 F.3d 1345, 1350 (Fed. Cir. 2004)). A reference will be considered publicly accessible if it was disseminated or otherwise made available to the extent that persons interested and ordinarily skilled in the subject matter or art exercising reasonable diligence can locate it.
The Federal Circuit held that the question becomes whether such materials were sufficiently disseminated at the time of their distribution at the conferences. The Federal Circuit pointed to Massachusetts Institute of Technology v. AB Fortia (MIT), where a paper that was orally presented at a conference to a group of cell culturists interested in the subject matter was considered a "printed publication." 774 F.2d 1104, 1109 (Fed. Cir. 1985). In that case, between 50 and 500 persons having ordinary skill in the art were told of the existence of the paper and informed of its contents by the oral presentation, the document was disseminated without restriction to at least six persons, and whether the copies were freely distributed to interested members of the public was a key consideration in the analysis.
The Federal Circuit also pointed to Cordis Corp. v. Boston Scientific Corp., 561 F.3d 1319 (Fed. Cir. 2009), where the issue pertained to whether a set of research papers distributed by a doctor to certain colleagues and two commercial entities rendered the documents printed publications. In that case, the Federal Circuit concluded that such documents were not publicly accessible since academic norms gave rise to an expectation that disclosures would remain confidential, and there was an expectation of confidentiality between the doctor and each of the two commercial entities.
Finally, the Federal Circuit identified In re Klopfenstein, 380 F.3d 1345, 1350 (Fed. Cir. 2004), where a reference in dispute was a printed slide presentation that was displayed prominently for three days at a conference to a wide variety of participants. The reference was shown with no stated expectation that the information would not be copied or reproduced by those viewing it, but copies were never distributed to the public and never indexed. In that the case, the Federal Circuit identified the relevant factors to include: (1) the length of time the display was exhibited, (2) the expertise of the target audience (to determine how easily those who viewed the material could retain the information), (3) the existence (or lack thereof) of reasonable expectations that the material displayed would not be copied, and (4) the simplicity or ease with which the material displayed could have been copied. After reviewing these factors, the Federal Circuit determined that the reference was sufficiently publicly accessible to count as a "printed publication" for the purposes of § 102(b).
The Federal Circuit held that the size and nature of the meetings and whether they are open to people interested in the subject matter of the material disclosed are important considerations. The Federal Circuit further held that another consideration is whether there is an expectation of confidentiality between the distributor and the recipients of the materials.
The Federal Circuit found that the Board did not fully consider all of the relevant factors. For example, the Board did not address the potentially-critical difference between the SDSG meeting in Arizona and the programs in Colorado Springs and St. Louis, which were not limited to members of the SDSG but instead were attended by at least 75 other surgeons, collectively. The Board's analysis was silent on the distribution that occurred in the two non-SDSG programs. Further, even if the Board were correct in its assumption that Medtronic only gave the Video and Slides to the SDSG members, it did not address whether the disclosures would remain confidential.
Accordingly, the Federal Circuit held that whether dissemination of the Video and Slides to a set of supremely-skilled experts in a technical field precludes finding such materials to be printed publications warrants further development in the record. For these reasons, the Federal Circuit vacated the Board's finding that the Video and Slides are not printed publications and remanded for further proceedings.
Consider counseling inventors and clients regarding the appropriate factors to consider when presenting materials at conferences and distributing materials without a legal obligation of confidentiality. It may be wise to file a provisional patent application before presenting or distributing materials related to an invention. Also, one may enter non-disclosure agreements with parties viewing a presentation or receiving distributed materials.
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Steven E. Berkheimer v. HP Inc.
Case Summary 101, Berkheimer, case summary, HP Inc., patent prosecution
By Kenneth Kwan
March 28, 2018- In Steven E. Berkheimer v. HP Inc., 2017-1437 (Fed. Cir. Feb. 8, 2018), the Federal Circuit affirmed the district court's summary judgment that claim 1 (among other claims) of U.S. Patent No. 7,447,713 (the '713 Patent) is patent-ineligible under 35 U.S.C. 101, but reversed the district court's summary judgment that claims 4 and 5 (among other claims) of the '713 Patent are patent‑ineligible.
The '713 Patent is directed to archiving files. Different files can have portions (objects) that are the same. A main aspect of the invention in the '713 Patent is to archive files by linking the objects (that are in common) to one another, such that an update to one of the objects of one file can be reflected in linked objects of other files.
The specification of the '713 Patent provides the following:
By eliminating redundancy in the archive 14, system operating efficiency will be improved, storage costs will be reduced and a one-to-many editing process can be implemented wherein a singular linked object, common to many documents or files, can be edited once and have the consequence of the editing process propagate through all of the linked documents and files. The one-to-many editing capability substantially reduces effort needed to up-date files which represent packages or packaging manuals or the like as would be understood by those of skill in the art.
Claims 1, 4, and 5 of the '713 Patent read:
A method of archiving an item comprising in a computer processing system:
presenting the item to a parser;
parsing the item into a plurality of multi-part object structures wherein portions of the structures have searchable information tags associated therewith;
evaluating the object structures in accordance with object structures previously stored in an archive;
presenting an evaluated object structure for manual reconciliation at least where there is a predetermined variance between the object and at least one of a predetermined standard and a user defined rule.
The method as in claim 1 which includes storing a reconciled object structure in the archive without substantial redundancy.
The method as in claim 4 which includes selectively editing an object structure, linked to other structures to thereby effect a one-to-many change in a plurality of archived items.
The Federal Circuit found that claim 1 is not patent eligible under 35 U.S.C. 101, since parsers and parsing functions are conventional in the art, the analysis and comparison of data, to reconcile differences between two objects, fail to transform the abstract idea into something patent-eligible, and the claim does not contain limitations that relate to the benefits of the invention.
In contrast, the Federal Circuit found that dependent claims 4 and 5 may be patent eligible, since these claims contain limitations relating to the benefits of the invention—i.e., the recitation "without substantial redundancy" in claim 4 and the recitation "to thereby effect a one-to-many change in a plurality of archived items" in claim 5 relate to the benefit of redundancy elimination, which leads to increased operating efficiency and reduces storage costs.
This opinion illustrates the potential importance of including claim limitations that directly relate to the technological improvements described in the patent's specification, since this might help with the question of subject matter eligibility (particularly Step 2 of the Alice test).
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Finjan, Inc. v. Blue Coat Systems, Inc.
Case Summary 101, Blue Coat Systems, case summary, Finjan, patent prosecution
By Timothy Hirzel
February 9, 2018- In Finjan, Inc. v. Blue Coat Systems, Inc., 2016-2520 (Fed. Cir. Jan. 10, 2018), the Federal Circuit found that claims of U.S. Patent No. 6,154,844 ('844 patent) were directed to patent eligible subject matter under 35 U.S.C. § 101 ("101"). This opinion provides insight on how the first step of Alice's two-step test is applied and provides an example of claims that are not "directed to" an abstract idea under Step 1 of the Alice test.
A jury found Blue Coat infringed the '844 patent owned by Finjan and the District Court held, as a matter of law, that the '844 patent was patent eligible under 101. Blue Coat appealed the subject-matter eligibility decision under 101 to the Federal Circuit.
The '844 patent recites a system and method for providing computer security by attaching a security profile to a downloadable (i.e., an executable application program). Representative claim 1 of the '844 patent reads:
A method comprising:
receiving by an inspector a Downloadable;
generating by the inspector a first Downloadable security profile that identifies suspicious code in the received Downloadable; and
linking by the inspector the first Downloadable security profile to the Downloadable before a web server makes the Downloadable available to web clients.
The Federal Circuit applied Alice's two-step test and reiterated that under Step 1, the court determines whether the claims at issue are "directed to" a patent-ineligible concept, such as an abstract idea. If they are, the court proceeds to Step 2 and determines whether the additional elements of the claims transform the nature of the claim into a patent-eligible application.
Starting at Step 1, the Federal Circuit first examined the '844 patent's "claimed advance" to determine whether the claims are directed to an abstract idea or whether the claims focus on a specific asserted improvement in computer capabilities. During claim construction, the "identif[y] suspicious code" feature was construed to be only satisfied if the security profile includes "details about the suspicious code in the received downloadable such as 'all potentially hostile or suspicious code operations that may be attempted by the Downloadable.'" Importantly, the Federal Circuit further stated that "[t]he security profile must include the information about potentially hostile operations produced by a 'behavior-based' virus scan," as opposed to "code-matching" virus scans. The question under Step 1 then became whether this behavior-based virus scan in the '844 patent constitutes an improvement in computer functionality.
The Federal Circuit determined the behavior-based virus scan was in fact an improvement to computer functionality. Behavior-based scans are not limited to recognizing the presence of previously-identified viruses like code-matching scans. Accordingly, the behavior-based scans can be used to protect against previously unknown viruses as well as "obfuscated code" known virus that attempt to avoid detection by code-matching scans. Moreover, the Federal Circuit found that claim 1 "employs a new kind of file that enables a computer security system to do things it could not do before." For example, the security profile approach allows administrators to tailor access for different users and ensures potential threats do not reach a user's computer.
The Federal Circuit distinguished this case from Intellectual Ventures v. Symantec Corp., which held virus screening by itself constitutes an abstract idea, because the claimed method in the '844 patent "does a good deal more" than conventional approaches to virus screening. The Federal Circuit also distinguished the '844 patent from other cases that have held a result, even an innovative result, is not itself patentable because the '844 claims recite more than just the desired result. Instead, the claims recite specific steps to accomplish the desired results, such as generating a security profile that identifies suspicious code and linking it to a downloadable.
Accordingly, the Federal Circuit found the claims of the '844 patent not to be abstract and affirmed the District Court. Because the claims were not abstract, the Federal Circuit found no need to proceed to Step 2 of Alice.
This opinion illustrates the importance to subject matter eligibility under 101 of tying the claims to the asserted technical advance. In this case, the advance was a new type of file that enabled new capabilities in a computer that could not be performed before. This opinion also shows that claims should be drafted to do more than simply recite the desired result of the invention, but actually, recite specific steps to accomplish that result. This opinion further illustrates the importance of claim construction because even though the claims did not recite "behavior-based" virus scanning, this feature was read into the claims and became an important factor in determining whether the claims constituted an improvement to computers. Rather than relying on a court's hopefully beneficial claim construction, patent applicants should carefully draft claims to capture necessary features to illustrate the technical improvement or advance.
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Two-Way Media LTD v. Comcast Cable Communications, LLC, et al.
Case Summary 101, case summary, Comcast Cable, patent preparation, patent prosecution, Two-Way Media
By William Gvoth
January 23, 2018 – In Two-Way Media LTD v. Comcast Cable Communications, LLC, et al., 2017 U.S. App. LEXIS 21706 (Fed. Cir. Nov. 1, 2017), the Court of Appeals for the Federal Circuit found that claims of various patents owned by Two-Way Media LTD were directed to ineligible subject matter under 35 U.S.C. § 101 ("101").
This opinion provides insight into how claims may be construed and how this might impact an analysis of the claims under 101.
Four continuation patents were at issue: 5,778,187 ('187 patent), 5,983,005 ('005 patent), 6,434,622 ('622 patent), and 7,266,686 ('686 patent). The patents relate generally to a system for streaming audio/visual data over a communications system like the Internet. Claim 1 of the '187 patent is representative of all the claims of the '187 patent and the '005 patent; claims 1 and 29 are representative of the '622 patent; and claims 1, 22, 26, and 30 are representative of the '686 patent.
As an example, and at a high level, claim 1 of the '187 patent is generally directed to a method for:
Converting a plurality of streams of data into a plurality of streams of addressed digital packets;
Controlling the routing of the stream of packets in response to selection signals; and
Monitoring receptions of packets by the users and accumulating records.
The other representative claims are directed to similar methods or to systems with means plus function claiming similar to the previously described claim.
The common specification describes the invention as a scalable architecture for delivering real-time information (e.g., a distribution architecture integrated with a control architecture). Embedded in the architecture is a control mechanism that provides for the management and administration of users who are to receive real-time information. The specification also describes monitoring network conditions and generating records about real-time streams.
The Federal Circuit first analyzed the '187 and '005 patents. Under Step 1 of the Alice test – the district court found that the claims of these patents are directed to the abstract idea of 1) sending information, 2) directing the sent information, 3) monitoring the receipt of the sent information, and 4) accumulating records about receipt of the sent information. In analyzing this determination, the Federal Circuit stated that "claim 1 recites a method for routing information using result-based functional language…but does not describe how to achieve these results in a non-abstract way." Further, the Federal Circuit rejected proposed claim constructions, offered by Two-Way Media, that the claims are tied to the network architecture described in the specification. In rejecting the proposed claim constructions, the Federal Circuit stated that the "constructions recite only conventional computer components."
After affirming the analysis of the district court under step 1 of the Alice test, the Federal Circuit analyzed these claims under step 2 of the Alice test. Under step 2, the district court "found no saving inventive concept" in the claims. Although the district court acknowledged that the specification describes "a system architecture as a technical innovation," the claim is not tied to the described architecture. The Federal Circuit rejected Two-Way Media's assertions that the "claim solves various technical problems" because the claim recites generic functional language to solve these problems. In addition, the Federal Circuit stated that the claim does not require anything other than conventional technology and that the claim merely recites a conventional ordering of steps.
After analyzing the '187 and '005 patents, the Federal Circuit analyzed the '622 patent and '686 patent under the Alice test. For these patents, the district court concluded that the '622 patent was directed to "the abstract idea of monitoring the delivery of real-time information to a user…and that the '686 patent was directed to the abstract idea of measuring the delivery of the real-time information for commercial purposes." It is worth noting that the district court, in part, based its conclusion on the preamble of the claims at issue. The Federal Circuit found no error in the district court citing the preamble in its review. The Federal Circuit then concluded that the claims are "directed to monitoring the delivery of real-time information to user(s) or measuring such delivery for commercial purposes."
Under step 2 of the Alice test, the Federal Circuit reviewed the district court's finding that the claims of the '622 and '686 patents did not contain an inventive concept. Similar to the claims discussed above, the Federal Circuit disagreed with the argument that the district court failed to account for the system architecture and failed to give weight the "nonconventional arrangement of components" of the system architecture. The Federal Circuit agreed with the district court, stating that the claims do not include an inventive concept. For example, the claims recite use of an "intermediate computer" and an "intermediate server." The Federal Circuit stated that these components are "conventional computer and network components operating according to their ordinary functions." Further, the Federal Circuit stated that the steps of the claims "are organized in a completely conventional way – data are first processed, sent, and once sent, information is recorded" and "fail to describe a 'specific, discrete implementation of the abstract idea' sufficient to qualify for eligibility under 101."
One of the main takeaways from this opinion is that even though the specification of the patents at issue arguably recited a novel concept (e.g., a novel system architecture), the claims were not tied sufficiently to that novel concept. This opinion highlights the importance of the relationship between the claims and the specification with regard to a 101 analysis. It shows that it may be difficult to argue that broad terms used in the claims are tied to novel concepts described in the specification, unless those broad terms are explicitly, or very clearly, tied to the novel concepts. For example, for purposes of a 101 analysis and with regard to this opinion, reciting generic devices in the claims, such as an "intermediate server" or an "intermediate computer," may not sufficiently tie the claims to a novel system architecture described in the specification unless the specification or the claims describe the relationship between the terms and the novel concepts.
Download Two-Way Media LTD v. Comcast Cable Communications, LLC, et al.
Changes in Patent Language to Ensure Eligibility Under Alice
Articles 101, Alice, patent preparation, patent prosecution
By Peter Glaser and William Gvoth
When a rule becomes a target, it ceases to be a good rule. In the three years since the Supreme Court issued its opinion in Alice, there have been positive changes to patent applications, but there remains a long-term risk that patent practitioners will use tricks to beat the Alice test. Here, we focus on the changes to patent applications by drafters, as well as changes to patent applications that have issued since Alice.
*Please note, citations were inadvertently omitted from the original publication of this article. Please contact the authors, directly, to obtain a version of this article including citations*
Trading Technologies International, Inc. v. CQG, Inc.
Case Summary 101, case summary, CQG, patent prosecution, Trading Technologies
November 16, 2017- Trading Technologies International, Inc. v. CQG, Inc. relates to abstract ideas under § 101. In Trading Technologies, two patents were at issue: U.S. Patent Nos. 6,772,132 ('132) and 6,766,304 ('304) (referred to collectively as "patents"). These patents shared a common specification and related to a method and a system for electronic trading of stocks, bonds, futures, options and similar products. The patents describe a problem that arises when a trader attempts to enter an order at a particular price but misses the price because the market moved before the order was entered. The patents describe implementations that reduce the time it takes for a trader to place a trade when electronically trading on an exchange and that improve the way information is displayed to the trader. For example, the implementations display market depth, which moves visually up/down and left/right as the market for a product fluctuates. In addition, the implementations described in the patents permit a user to place an order for a product via a click on a user interface.
Trading Technologies appealed, to the Federal Circuit, the decision of the District Court for the Northern District of Illinois (District Court), finding that the patents were directed to patent-eligible subject matter under the two step test from Alice Corporation Pty. Ltd. v. CLS Bank International (Alice), 573 U.S., 134 S. Ct. 2347 (2014). The Federal Circuit affirmed.
To analyze the patent eligibility of the patents, the Federal Circuit selected claim 1 of the '304 patent as the representative claim. At a high level, claim 1 of the '304 patent was directed to "a method for displaying market information relating to and facilitating trading of a commodity being traded in an electronic exchange…on a graphical user interface" that comprised dynamically or statically displaying various information and submitting a trade based on a user selection of a portion of the user interface.
The Federal Circuit analyzed the District Court's analysis of the representative claim under the two step test from Alice. Under the first step, the Federal Circuit reviewed, and agreed with, the District Court's findings that the patents solve problems of prior graphical user interface devices used for computerized trading. Specifically, the Federal Circuit stated that "the patents describe a trading system in which a graphical user interface 'display[s] the market depth of a commodity traded in a market" including various static and dynamic displays and this graphical user interface solves "'problems of prior graphical user interface devices…relating to speed, accuracy and usability.'" Further, the Federal Circuit referenced the District Court's findings that "the challenged patents do not simply claim displaying information on a graphical user interface" but rather "require a specific, structured graphical user interface paired with a prescribed functionality directly related to the graphical user interface's structure that is addressed to and resolves a specifically identified problem in the prior state of the art." Based on the reasons stated by the District Court, the Federal Circuit agreed that the patents presented patent-eligible subject matter.
The Federal Circuit then analyzed the District Court's analysis of the representative claim under the second step of the test from Alice and concluded that the District Court correctly "determined that the challenged claims recite an 'inventive concept.'" The Federal Circuit agreed with the District Court's identification of the feature of "the static price index as an inventive concept" that permits more efficient and accurate trade placement when using electronic trading systems. In addition, Federal Circuit agreed with the District Court's distinction of the trading system from a conventional computer or the Internet based in part on the idea that the trading system presents "specific technologic modifications to solve a problem or improve the functioning of a known system."
One of the main takeaways from the Federal Circuit's analysis is that the claimed graphical user interface addresses specific problems with prior art graphical user interfaces in electronic trading. In other words, the claimed invention includes an improvement to the functioning of technology and steps that address a specific problem. This decision highlights the importance of framing a problem solved by an invention in technical terms and then presenting claims that solve the problem.
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Practice Insights in the Wake of Visual Memory LLC v. NVIDIA Corp.
Case Summary, USPTO 101, case summary, NVIDIA, patent prosecution, Visual Memory
By Sean Quinn & Peter Glaser
August 25, 2017- In Visual Memory LLC v. NVIDIA Corp. (Fed. Cir. Aug. 15, 2017), a divided panel at the Federal Circuit determined that U.S. Patent No. 5,953,740 is not directed to an abstract idea.
The decision provides a positive result in the context of software-based inventions, and provides a few insights regarding potential patent drafting strategies. Namely, the decision highlights the importance of focusing the specification on improvements to hardware components, and bolsters the importance of mentioning technical benefits wherever appropriate.
The '740 patent teaches a memory system having programmable operational characteristics that are capable of being configured for use with multiple different types of processors without causing a reduction in performance ostensibly present in the prior art computer systems. This enables the memory system to be used efficiently with multiple types of processors, rather than only with a single type of processor. Further, the '740 patent claims a computer memory system comprising a main memory, a cache, and programmable operational characteristics that determine a type of data stored by the cache.
On appeal from a district court's grant of NVIDIA's motion to dismiss based on the asserted claims being directed to patent -ineligible subject matter, Judge Stoll, writing for the majority, stated that "[courts] must articulate with specificity what the claims are directed to (citing Thales Visionix Inc. v. United States)," and "ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea (citing Enfish LLC v. Microsoft)." (Opinion at 7).
Using Enfish and Thales as guidance, the majority stated that the '740 patent's claims are directed to an improved computer memory system rather than to an abstract idea of categorical data storage and mentioned that claim 1 of the '740 patent requires a memory system "having one or more programmable operational characteristics, said characteristics being defined through configuration by said computer based on the type of said processor," and "determin[ing] a type of data stored by said cache." (Opinion at 9). Further, the majority stated that dependent claims 2 and 3, respectively, narrow the memory system's programmable operational characteristic to storing certain types of data and buffering data from certain sources and that none of the claims recite all types and all forms of categorical data storage.
The majority noted that the '740 patent's specification mentions various technical benefits associated with the memory system, such as permitting different types of processors to be installed with the subject memory system without significantly compromising their individual performance, obviating the need to design a separate memory system for each type of processor, avoiding the performance problems of prior art memory systems, enabling interoperability with multiple different processors, and outperforming prior art memory systems having larger cache sizes.
Analogizing the '740 patent to the self-referential table in Enfish and the motion tracking system in Thales, the majority noted that the '740 patent's claims are directed to a technological improvement and focus on a specific asserted improvement in computer capabilities rather than a process that qualifies as an abstract idea for which computers are invoked merely as a tool. Further, the majority noted that the specification of the '740 patent discusses the advantages offered by the proffered technological improvement.
Juxtaposing the '740 patent and the claims in Content Extraction & Transmission LLC v. Wells Fargo Bank and In re TLI Communications LLC Patent Litigation, the majority noted that the '740 patent recites an ostensibly new, improved, and more efficient memory system as opposed to claims that are not directed to an improvement in computer functionality and cover abstract ideas operating on generic hardware.
In dissent, Justice Hughes posited that the '740 patent fails to describe how the invention's purpose is achieved, fails to describe how to implement the programmable operational characteristic, requires a third party to supply the innovative programming, and, as such, is not properly described as being directed to an improvement in computer systems.
In response, the majority identified three flaws with Justice Hughes's posit.
First, the majority noted that the '740 patent includes an appendix having 263 frames of code, and noted that the assumption that the code does not teach a person of ordinary skill in the art was improper at the stage of reviewing a Rule 12(b)(6) motion, where all factual inferences must be drawn in favor of the non-moving party.
Second, the majority noted that the question of whether a patent specification teaches a person of ordinary skill in the art how to implement the claimed invention presents an enablement issue under 35 U.S.C. § 112 rather than an eligibility issue under § 101. Further, the majority noted that the implementation details regarding how to configure a programmable operational characteristic may very well fall within the routine knowledge of persons having ordinary skill in the art and, as such, may have been permissibly omitted.
Third, the majority noted that Justice Hughes's assumption that the innovative effort in the '740 patent lies in the programming required for a computer to configure a programmable operational characteristic of a cache memory was misplaced. In support, the majority noted that the assumption was inconsistent with the '740 patent's specification and claims, which expressly state that the improved memory system is achieved by configuring a programmable operational characteristics of a cache memory based on the type of processor connected to the memory system.
In closing, the majority refrained from proceeding to step two of the Alice test because of the finding that the claims of the '740 patent are not directed to an abstract idea.
Going forward, the decision provides some instruction regarding potential patent drafting and prosecution strategies regarding software-based inventions and § 101 issues. For example, the decision highlights the importance of directing the specification and claims to improvements in computer systems, and the importance of mentioning technical benefits provided by the invention wherever feasible. Moreover, the case highlights a distinction that can be drawn between enablement and eligibility.
Download Practice Insights in the Wake of Visual Memory LLC v. NVIDIA Corp.
Analysis of December 2016 USPTO Subject Matter Eligibility Examples
Articles, USPTO 101, patent preparation, patent prosecution, software, subject matter eligibility, USPTO
By Kris Rhu & Paul Gurzo
On December 15, 2016, the USPTO published three subject matter eligibility examples focusing on business method claims, which can be found here. The purpose of these examples is to give guidance on how claims should be analyzed using the 2014 Interim Guidance on Subject Matter Eligibility, recent Supreme Court and Federal Circuit decisions, and recent Memorandums published by the USPTO. These examples seem to indicate that the power of §101 to restrict patentability has been whittled down since Alice and that the USPTO would like to reduce the number of §101 rejections for technological claims in light of court decisions post-Alice. Below, we describe each example provided by the USPTO, explain the USPTO guidance for each example, and provide practical practice tips that practitioners can use to help reduce or overcome §101 rejections.
Alice on Dulany Street: How the PTAB Handles 101 in Ex Parte Appeals
Articles 101, Alice, Eli Mazour, ex parte appeals, patent prosecution, USPTO
By Eli Mazour & James Bennin
"The outlook has become only more grim for appellants who are hoping that the PTAB will overturn a § 101 rejection."
Previously, we analyzed ex parte appeal decisions by the Patent Trial and Appeal Board (PTAB) from the year following the Alice v. CLS Bank decision. At the time, we concluded that the PTAB is unlikely to reverse § 101 rejections based on Alice. We decided to revisit this conclusion based on ex parte appeal decisions from December 2016.
Drafting Software Patents Amidst the Heightened Standard: The Alice v. CLS Bank Aftershock
Firm News, Webinar 101, Alice, CLS Bank, patent preparation, software, software patents, webinar
September 28, 2016 – Nathan Phares was part of a panel of speakers that discussed software patents in the aftermath of Alice v. CLS Bank. He provided insights and recommendations regarding post-Alice case law, drafting strategies in view of recent software eligibility decisions, and winning prosecution techniques for software patents.
For over 10 years, The Knowledge Group has produced thousands of best in class educational webcasts for a variety of industries and professions including legal, tax, accounting, finance, human resources, risk/compliance, and many others.
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