Search Results for: Alice v. CLS Bank

CLS Bank v. Alice Corp: Patenting Software Ideas

Patent, , , , ,

By Dennis Crouch

"Settlement risk" is real in almost every transaction. When a lawyer does legal work, how does she know that she'll get paid. Conversely, if a client pays up-front, how does he know that the work will actually be performed. There is always a possibility of filing a lawsuit to demand fulfillment. However, most businesses would prefer a system that better guarantees a more immediate positive result. A trusted (and bonded) escrow agent can help relieve the problem, but even an escrow agent needs assurances. Further, in the age of electronic funding of transactions, we should be able to take advantage of features of a computer network that might not have been available in an offline world.

The recent Federal Circuit decision in CLS Bank v. Alice Corp. focuses on the subject matter eligibility of Alice's claim to a computer system for assisting with closing financial transactions in a way that avoids settlement risk. The system includes two elements: (1) data storage with various "shadow" variables stored therein; and (2) a computer that is programmed to conduct the transaction. Basically, the transaction is initially conducted in the shadow (i.e., mock) system and then, if the shadow system shows that the parties have sufficient funds to conduct the transaction, post the obligation to the real exchange institution.

The claim reads as follows:

1. A data processing system to enable the exchange of an obligation between parties, the system comprising:

a data storage unit having stored therein information about a shadow credit record and shadow debit record for a party, independent from a credit record and debit record maintained by an exchange institution; and

a computer, coupled to said data storage unit, that is configured to (a) receive a transaction; (b) electronically adjust said shadow credit record and/or said shadow debit record in order to effect an exchange obligation arising from said transaction, allowing only those transactions that do not result in a value of said shadow debit record being less than a value of said shadow credit record; and (c) generate an instruction to said exchange institution at the end of a period of time to adjust said credit record and/or said debit record in accordance with the adjustment of said shadow credit record and/or said shadow debit record, wherein said instruction being an irrevocable, time invariant obligation placed on said exchange institution.

The district court initially ruled that the patent claim lacked subject matter eligibility. I wrote about that decision in a 2011 post entitled Bilski Applied to Invalidate Computer System Claims. In 2012, a divided Court of Appeals for the Federal Circuit revered – holding that that, when considered as a whole, the claim is patent eligible. Judge Linn wrote the majority opinion that was joined by Judge O'Malley. In many ways, Judge Linn's opinion follows the advice that Professor Rob Merges and I gave in our paper titled Operating Efficiently Post-Bilski by Ordering Patent Doctrine Decision-Making. Judge Linn's approach is to only reach Section 101 issues when subject matter ineligibility is "manifestly evident". Judge Prost wrote in dissent and argued that the majority improperly ignored the Supreme Court's most recent statements on the topic found in Prometheus. Professor Jason Rantanen wrote a nice post on the Federal Circuit decision titled CLS Bank v. Alice: The "Nothing More Than" Limitation on Abstract Ideas.

When I consider this claim, a few thoughts arise:

  1. This is a system claim rather than a method claim. However, the structure of the claim is such that the system is designed around the method that it is intended to perform. This makes me think that the teaching of Bilski and Mayo v. Prometheus cannot be ignored here even though those cases were focused on the eligibility of method claims.
  2. The claim requires computer hardware as an integral portion of the invention. However, the particularly claimed computer hardware is entirely conventional and being used in an unsurprisingly conventional manner. Further, if we relax the claim requirements of a computer and "electronic" communications then this same transaction could be fully conducted offline with paper as the data storage unit and contracts creating the time invariant obligation.
  3. Use of the system does not require any physical transformation recognized by the courts (unless you interpret the claim to be limited to only include data storage units that work by physical transformation). The claim does require changes in bank account values and legal obligations, but those have not traditionally been seen as qualifying transformations in the patent eligibility context.
  4. Finally, and most importantly for me, the invention is designed to solve a particular problem in industry and claims a system that operates by performing a series of identified steps to address that particular problem.

Many of you know that, in my view, the Supreme Court precedent on subject matter eligibility has not been internally reconciled. That ongoing precedential conflict coupled with the fuzziness of boundary lines continue to fuel debate on the topic both within and outside of the courthouse. On balance, both sides of this debate have strong arguments based upon patent law history and precedent and I can understand why someone versed in Supreme Court patent eligibility precedent could end up with a conclusion on either side.

Despite the Federal Circuit opinion, this case has not gone away. In recent days, the accused infringer (CLS Bank) has filed a request for rehearing and that request is supported by three amicus briefs. CLS Bank's main point in its brief is that the CLS Bank computer system claim is unpatentable when fully analyzed against Bilski and Prometheus. The brief asks two questions:

  1. Whether the new test for patent-eligibility articulated by the panel majority is inconsistent with Bilski's and Mayo's approach to 35 U.S.C. § 101; and
  2. Whether the method, system, and media claims at issue are patent ineligible because, albeit computer-implemented, they recite no more than an abstract fundamental mechanism of financial intermediation with no inventive concept.

The CLS Bank brief was filed by Mark Perry and his team at Gibson Dunn in DC. This is a change from the Kaye Scholer firm that represented CLS Bank at the district court and in the original appeal.

An amicus brief filed on behalf of a diverse group of five companies including British Airways and LinkedIN (and who all tend to be defendants in patent cases) spelled out how the "course filter" approach used by Judge Linn went against both recent and old Supreme Court precedent. That brief asks two additional questions:

  1. Should courts enforce the patent eligibility requirement evenhandedly without imposing a "manifestly evident" or "coarse filter" hurdle on the patent challenger?
  2. Is patent eligibility a threshold requirement well suited for decision on the pleadings and on early summary judgment?

John Vandenberg of Klarquist Sparkman filed the BA/LinkedIN brief.

Daryl Joseffer of King & Spalding filed a second amicus brief on behalf of Google, HP, Red Hat and Twitter. The brief explains how Mayo identifies four "guideposts" for determining whether an invention lacks subject matter eligibility under the prohibitions of abstract ideas and laws of nature. The four clues all begin with the notion that a patentable invention must be "significantly more than an abstract idea." Thus, if you begin with an abstract idea, "(1) adding steps that are conventional or obvious is insufficient to confer patentable subject matter (Mayo at 1294, 1298, 1299); (2) adding steps that are so general and non-specific that they do not significantly limit the claim's scope is insufficient (id. at 1300, 1302); (3) limiting an idea to a particular technological environment is insufficient (id. at 1294, 1297); and (4) claims that fail the machine-or-transformation test are likewise dubious (id. at 1296, 1303). Explaining the first point, the brief argues that a claim must contain an "inventive concept" apart from the identified law of nature or abstract idea.

The EFF brief filed by Julie Samuel reminds the court of the extensive literature concluding that software patents are bad – especially when in the hands of "patent trolls."

The patentee's responsive brief is due later this month.

*****

*****

At least two additional software patent cases are pending at the Federal Circuit. In Bancorp v. Sun Life, a different panel of Federal Circuit judges considered software patents similar to those in CLS Bank but found the claims ineligible under Section 101. In WildTangent v. Ultramercial, the Federal Circuit initially ruled that patented method of distributing copyrighted media was eligible. However, that case was vacated and remanded by the Supreme Court following its decision in Mayo and with instructions to reconsider the holding based upon the new Supreme Court precedent. WildTangent has also requested an en banc hearing. WildTangent's petition asks: "When does a patent's reference to the use of a general purpose computer or an Internet website transform an otherwise unpatentable abstract concept into a process that satisfies the subject-matter eligibility requirement of 35 U.S. C. § 101?" Arguing from the other side (asking for its patent to be revalidated), Bancorp identifies the conflict with CLS Bank and argues that the "manifestly abstract" standard should be applied to its case.

*****

Judge Linn, author of the CLS Bank decision has announced his move to Senior Status in November 2012. Senior judges ordinarily do not decide whether to hear cases en banc and do not sit en banc. The one significant exception to that rule is that a senior judge will be a part of the en banc panel if that judge was a part of the original panel that heard the case. For this particular contentious issue, Judge Linn's status may well impact the results.

*****

Counting votes is always difficult and may not be worthwhile, but I pulled-up seven recent software patent eligibility decisions and classified the results based upon how the various panel member voted on the eligibility question. If I leave out judges Schall and Plager (Senior judges), the result is that three of the judges sit on the "claims eligible" side (Chief Judge Rader and Judges O'Malley and Newman); five of the judges are on the "claims ineligible" side (Judges Prost, Bryson, Dyk, Moore, and Wallach); two have decisions on both sides (Judges Linn and Lourie); and one is not in my sample (Judge Reyna).

Case

Claims Eligible

Claims Ineligible

WildTangent

Rader, Lourie, O'Malley

  

CLS Bank

Linn, O'Malley

Prost

Bancorp

  

Lourie, Prost, Wallach

RCT v. Microsoft

Rader, Newman, Plager

  

Cybersource

  

Bryson, Dyk, Prost

Dealtracker*

Plager

Linn, Dyk

Fort Properties

  

Prost, Schall, Moore


 

Keys to Eligibility: Preemption, History, and Levels of Abstraction

Patent

by Dennis Crouch

The US Solicitor General has provided her input–arguing that the Supreme Court should grant American Axle’s petition and decide whether the claimed method of manufacturing a driveshaft is patent eligible. American Axle & Mfg., Inc. v. Neapco Holdings LLC, Docket No. 20-891 (Supreme Court 2022). [USDOJ Brief]

A decade ago, the Supreme Court decided Mayo v. Prometheus, 566 U.S. 66 (2012). Mayo broadened the scope of excluded “laws of nature” and established a two-step test for judging eligibility. The court followed-up two years later with Alice Corp. v. CLS Bank International, 573 U.S. 208 (2014), extending Mayo‘s holdings to abstract ideas and computer implemented inventions.  In the wake of these decisions, the USPTO substantially changed its practices as did the U.S. Courts.  Thousands of claims have been denied, cancelled, or invalidated, but those involved still experience “substantial uncertainty about the proper application of Section 101.”  In American Axle, the Federal Circuit reluctantly took the law a further step by finding abstract a method of manufacturing and calibrating a mechanical structure.  The USDOJ concludes that the claim at issue here is a “paradigmatic examples of the ‘arts’ or ‘processes’ that may receive patent protection if other statutory criteria are satisfied.”

American Axle’s US Patent No. 7,774,911 claims a method of manufacturing an automobile driveshaft that operates with reduced vibration & noise.  The claims are particular directed to the use of a shaft liner that has been tuned to reduces multiple vibration modes (bending and shell mode vibrations).  Prior technology included a shaft liner, but not one tuned to multiple vibration modes.  So, the novel feature here is that the liner has been tuned to both resistively absorb shell mode vibrations and reactively absorb bending mode vibrations.

22. … tuning a mass and a stiffness of at least one liner … wherein the … liner is a tuned resistive absorber for attenuating shell mode vibrations and wherein the at least one liner is a tuned reactive absorber for attenuating bending mode vibrations.

The crux of the problem found by the Federal Circuit is that these novel features are claimed functionally–at a fairly high level of abstraction.  Rather than claiming the actual steps of tuning, the patentee has endeavored to claim all methods that achieve the claimed result. In some ways, this is like the claimed process in Diehr, but instead of using the Arrhenius equation the inventors here just use an unstated algorithm.

Broad claims like these have been typically dealt-with under the disclosure requirements–written description and enablement; as well as obviousness.  Under those doctrines, broad functional claims are permitted so long as the disclosure is sufficient and the prior art allows.   By shifting to eligibility the defense was able cut-off the broad claims straight away.  And importantly from a procedure perspective, was able to achieve this without worrying about the strictures of “evidence” or “fact finding” because eligibility is a question of law that rarely involves any underlying factual findings.

Substantial Uncertainty: The DOJ brief focuses on uncertainty created by Mayo/Alice framework, both at Step 1 and Step 2.

Clarification of both steps is especially important, both because a court’s step-two analysis often finally resolves the determination as to patenteligibility, and because the nature of the initial step-one screen logically depends in part on the inquiry that courts will apply at step two.

DOJ Brief.  The original petitioner brief focused on Alice Step 1 — asking what is the “appropriate standard for determining whether a patent claim is ‘directed to’ a patent-ineligible concept.”  The DOJ suggested that the court focus on both steps and ask more generally is it patent eligible?

Preemption: An overarching theme in patent eligibility jurisprudence has been the potential of handing-over exclusive rights  to fundamental aspects of human life and “building blocks” human ingenuity.  Avoiding improper preemption is the key goal.  But, the Alice/Mayo test does not use preemption in its decision process, and the Federal Circuit has found evidence of no preemption irrelevant to eligibility.  Rather, as the DOJ implies, preemption considerations should be fundamental to the eligibility analysis.

Levels of Abstraction: The role of patent attorneys has historically been to help inventors abstract-out their inventions to ensure that the claims cover sufficiently valuable scope.  What we know is that some abstraction is OK, too much is not.  The DOJ suggests that it would be helpful to have a bit more guidance.

Historic Exceptions: The court wrote in Bilski that these exceptions are historic and based upon longstanding precedent.  The suggestion is that they should be guided by the old precedent and not expanded further without congressional input.

Despite my earlier focus on results-based claiming, the DOJ Brief explains that the claims here go far enough in reciting:

a specific sequence of steps … taking a “hollow shaft”; “tuning” the “mass” and “stiffness” of a liner, which the district court construed to mean “controlling” the liner’s mass and stiffness “to match the relevant frequency or frequencies” of vibration of the shaft; and “inserting the” liner “into the shaft,” whereupon the liner acts as an “absorber” of two kinds of vibrations.

DOJ Brief.  These sequence of steps make the case look much more like Diamond v. Diehr than O’Reilly v. Morse.

Regarding Alice Step 2, the DOJ argues that “conventional claim elements” should not be disregarded.  Rather, the focus should continue to be on the claimed invention “as a whole.”

The petition asks a second question — whether eligibility is a question of law.  The DOJ suggests that this is a secondary question that can only be addressed once the general doctrine is established. “Answering the second question presented thus would be difficult while uncertainty about the substance of the Section 101 inquiry persists.”

Guest Post: America Invents Act Cost the US Economy over $1 Trillion

Patent, ,

By Richard Baker, President of New England Intellectual Property, LLC

The American Invents Act, passed into law in 2011, is one of the biggest changes to US patent laws in the past fifty years.  Its sweeping reforms changed our system from the “First to Invent” to a “First to File” system, and created a new method for infringers to invalidate patents.  While many aspects of this legislation had impacts on inventors, the most striking impact has been the devastating financial impact of the post grant review process.  The post grant review process, or more specifically, the inter partes review (“IPR”) procedure allows any entity to request that the US Patent Office initiate a review of a valid, issued US Patent.  In the two and a half years since the first IPR was filed, 77% of all patent claims reviewed have been invalidated[1].

To obtain a patent in the United States, an inventor must submit his invention to an examination process before a patent examiner.  This process involves several years and often many vigorous debates between the examiner and the inventor in papers that are exchanged.  If the examiner is convinced at the end of this proceeding that a patent is warranted, the US Patent Office issues a patent to the inventor.  By the time a patent issues, there typically is a significant examination of the merits of the patent claims.

In essence, the IPR procedure is a request for the Patent Office to admit that they made a mistake and reverse themselves on the validity of the patent.  The problem with this reversal is that the inventor has relied on the patent to build a business or to initiate licensing discussions based on his faith in the original decision of the Patent Office.  This is similar to a property owner building a house based on the issuance of a deed to the property.  A reversal of the patent, or of the deed, after the fact impacts the investments made in the invention.

Some have argued that the IPR procedure is weeding out the weakest patents in the United States, but experience has shown that the opposite is true.  The IPR procedure is only being used against the best United States patents.  This is because of pure economics.  The cost for a company to file and prosecute an IPR to a decision by the Patent Trial and Appeal Board (“PTAB) is between $200,000 and $500,000.  No corporation can afford to file an IPR unless the patent in question is a significant threat.  In fact, a review of the IPRs filed in the past month or two shows that almost every patent that is IPR’ed is involved in litigation (the few that are not in litigation are in the pharmaceutical arts).  Only a small percentage of all patents are used in litigation or licensing; these patents are considered the top tier of all patents.  It is these patents that are the subject of IPRs.  Given the high rate of invalidation at the PTAB, most all patent litigation defenses now involve an IPR of the patents in suit.

To quantify the financial impact of the IPR proceedings in the AIA bill, we need to first assess the impact on the price of an average US patent.  The lore of the US patent brokers, individuals who help inventors and companies to sell their patents, is that the price of an average US patent has dropped about 66% since the institution of the AIA IPR procedure.   According to Scott Bechtel of AmiCOUR IP Group, an experienced patent broker, “US Patents have lost 2/3rds of their value since the AIA was passed in 2011.”

A bigger sampling of deal values can be found in IPOfferring’s Patent Value Quotient Annual Report of patent sales[2].  This report has been issued from 2012 through 2014, giving us three years of sales data to analyze.  The deals listed in these reports may not represent all patent sales, as this list consist of deals large enough to be material and thus publicly reported as well as deals that brokers chose to report to IPOfferrings.  Furthermore, there is no readily available data from before 2012 to see deal values before the AIA was passed.  However, these reports show the dramatic drop in patent values over 13,564 patent sales in 93 deals over a three year period.

IPOfferings Patent Value
Year Dollar Sales Patents Sold Average Price
2012 $2,949,666,000 6,985 $422,286
2103 $1,007,902,750 3,731 $270,143
2014 $467,731,502 2,848 $164,232
2012-2013 -66% -47% -36%
2013-2014 -54% -24% -39%
2012-2014 -84% -59% -61%

This chart shows a dramatic drop in the average price per patent over the three year period, with values dropping 61% from $422,286 per patent to $164,232.  In that timeframe, the number of patents sold dropped from just under 7000 to 2800, showing a decrease in liquidity in the patent market.  The overall sales dropped from $3 Billion to well under one half billion in patent sales per year, or by 84%.

But this decrease in value of US Patents should be expected given the invalidation rate of the Patent Office’s IPR proceedings.  If 77% of all valid patents are canceled through this new proceeding, then the risk adjustments on patent values should also decrease by roughly the same amount.  While our empirical data is showing a 60-70% drop in values, the theoretical impact should be 77%.  Perhaps this is reflecting an inefficiency in the market, suggesting that patent values will drop another 10-15% in the next year or two.  Or it could indicate that our samplings are not fully reflecting the actual decrease in values.

One could suggest that the Alice v CLS Bank Supreme Court decision also had an impact.  However, the Alice decision only impacts software patents, and the IPOfferrings numbers come from all fields.  The IPOfferrings numbers can be seen across three years since the AIA was implemented; Alice was decided less than a year ago and at first was not seen as a big change in patent law.  Only in the past 4-5 months has Alice been expanded by the lower courts to impact a wide set of software patents, thus possibly impacting the value of software patents.  Experienced brokers are seeing that software patents with Alice issues are simply not being sold, with buyers afraid to spend anything on these patents and sellers holding until the law settles in this area.  Thus we believe the IPOfferrings numbers are primarily showing the impact of the AIA IPR procedure with only a minor impact from the Supreme Court’s Alice decision.

The decrease in value of patents means that the valuations of companies with US patent assets are also devalued accordingly.  If a hypothetical company has patent assets on the books (much of which may be in Good Will if the company purchased the patents from others) at $1 Billion from a pre-2011 acquisition, these assets should be written down to about $390 Million based on the impact of the AIA[3].

This raises many questions on the overall impact of the AIA’s IPR procedure on the United States economy.  Using one methodology to evaluate the impact, we look at the US economy and approximate the impact from top down.  Intellectual capital (patents, copyrights, and other forms of economic ideas are worth about $9 Trillion in the United States[4].  So a 61% markdown of patents (and their resulting goodwill when small companies are bought) corresponds to a 61% markdown of a portion of the $9.2 Trillion.  Say patents are worth about 25% of the overall value of intellectual capital[5], or about $2.3 Trillion, then a 61% loss in value is $1.37 Trillion decrease in the value of the US economy based on the impact of the AIA bill.  The American Invents Act bill cost the economy about $1.37 Trillion, or an amount equal to about 7% of the US GDP.

Another way to look at the impact of the AIA starts with the count of the number of US Patents in force, about 2.1 Million according to Professor Dennis Crouch of the University of Missouri School of Law[6].  Given our 2012 IPOfferings value of $422,000 per patent, the value of patents to the US economy was $886 Billion.  The AIA dropped the value to one third, leaving $344 Billion in value.  This one act of Congress, the IPR proceeding of the AIA bill, destroyed $546 Billion of the US economy using this methodology.

While additional study is required to refine the macroeconomic impact of the AIA IPR procedure, it is clear that this bill has wiped out about $1 Trillion of value in the US economy.

But this number is probably greatly underestimated, as it only incorporates the first order loss in value.  It does not include lost opportunities, disincentives to innovation, the inability to raise money due to the decrease in collateral, and the loss of jobs without those investments.  We leave this analysis to economists in future studies.

Given the huge impact of the AIA and its IPR proceedings on the US economy, on corporate valuations, and on the value provided to individual inventors, it is time for Congress to reevaluate this procedure to assure that a much greater percentage of patents survive the IPR process.

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[1] US Patent and Trademark Office, “Inter Partes Review Petitions Terminated to Date (as of 1/15/2015)”, downloaded from http://www.uspto.gov/sites/default/files/documents/inter_partes_review_petitions_terminated_to_date%2001%2015%202015.pdf  on 6 May 2015.  In the proceeding where the USPTO decided the merits of the Inter Partes Review petitions, 643 claims were found patentable and 2176 claims were found unpatentable, or 77%.

[2] IPOfferring’s Patent Value Quotient Annual Report is available at http://www.ipofferings.com/patent-value-quotient.html.

[3] Patents generated internally in a company are not valued on a corporation’s balance sheets, according the US accounting rules.  Only patents acquired in a purchase or a merger are included on a balance sheet.

[4] See Kevin A. Hassett & Robert Shapiro, What Ideas Are Worth: The Value of Intellectual Capital And Intangible Assets in the American Economy, Sonecon (Sept. 2011), available at www.sonecon.com/docs/studies/Value_of_Intellectual_Capital_in_American_Economy.pdf.

[5] Robert Shapiro estimates in a private email that patents make up 25-30% of intellectual capital, but states that it varies per industry and per company.  Additional research is needed to calculate this percentage more precisely.

[6] Crouch, Dennis, “How many US patents are in-force”, May 4, 2012, found at https://patentlyo.com/patent/2012/05/how-many-us-patents-are-in-force.html.

Is Software Patentable?: Supreme Court to Decide

Patent, ,

By Dennis Crouch

50-years on, we still don’t have the answer as to whether computer programs are patentable.

The Supreme Court has granted a writ of certiorari in the software patent case of ALICE CORPORATION PTY. LTD. V. CLS BANK INTERNATIONAL, ET AL., Docket No. 13-298 (Supreme Court 2013). The Australian patent holder Alice Corp presented the following question:

Issue: Whether claims to computer-implemented inventions – including claims to systems and machines, processes, and items of manufacture – are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court.

In a highly fractured en banc decision, the Federal Circuit determined that Alice Corp’s claims lacked eligibility. Because none of the opinions in the decision carried a majority, the result was that the Federal Circuit only added confusion to the area.

Alice Corp’s Patent No. 7,725,375 covers software for managing the risk associated with an online transaction essentially by using an electronic escrow service. Claim 26 recites how the system would work:

26. A data processing system to enable the exchange of an obligation between parties, the system comprising:

a communications controller,

a first party device, coupled to said communications controller,

a data storage unit having stored therein (a) information about a first account for a first party, independent from a second account maintained by a first exchange institution, and (b) information about a third account for a second party, independent from a fourth account maintained by a second exchange institution; and

a computer, coupled to said data storage unit and said communications controller, that is configured to (a) receive a transaction from said first party device via said communications controller; (b) electronically adjust said first account and said third account in order to effect an exchange obligation arising from said transaction between said first party and said second party after ensuring that said first party and/or said second party have adequate value in said first account and/or said third account, respectively; and (c) generate an instruction to said first exchange institution and/or said second exchange institution to adjust said second account and/or said fourth account in accordance with the adjustment of said first account and/or said third account, wherein said instruction being an irrevocable, time invariant obligation placed on said first exchange institution and/or said second exchange institution.

The patent also claims “a computer program” for accomplishing the same result.

Sarnoff: The Patent Act’s Mention of Business Method Patents Does Not Mean that Section 101 Should Extend to Cover Business Methods

Patent,

Section 273 of the Patent Act mentions the possibility of a patent covering “a method of doing or conducting business.” Part of Bilski’s petition for certiorari relies on that section as an argument that Congress intended for Section 101 to cover business methods. That argument is a red herring — The Federal Circuit's Bilski decision did not eliminate business method patents. Rather, the decision only requires that any claimed process meet the machine-or-transformation test.

In his Federal Circuit amicus brief, professor Joshua Sarnoff wholly rejected the implication that Section 273 proves that Congress intended the Patent Act to extend coverage to novel business methods. He argues as follows:

Sarnoff: … [T]he State Street Bank decision did not motivate the enactment of Section 273’s prior user rights provision. Rather, it motivated restriction of that provision to business methods from an earlier and broader proposal.[2] Congress did not approve of this Court’s decision, but focused on business methods because it felt that the strongest fairness arguments for a prior user defense existed in regard to the newly patentable subject matter.[3] As stated by Senator Schumer, Section 273 “should be viewed as just the first step in defining the appropriate limits and boundaries of the State Street decision…. I believe that it is time for Congress to take a closer look at the potentially broad and, perhaps, adverse consequences of the State Street decision.”[4]

Ratification should not be found here, given that Congress did not amend Section 101 or otherwise specifically address patent eligibility.[5] Instead, Congress created only an isolated change to the law that responded to specific concerns raised by this Court’s changed interpretation of Section 101. See, e.g., Alexander v. Sandoval, 532 U.S. 275, 292 (2001) (“when, as here, Congress has not comprehensively revised a statutory scheme but has made only isolated amendments, we have spoken more bluntly: ‘It is “impossible to assert with any degree of assurance that congressional failure to act represents” affirmative congressional approval of the Court's statutory interpretation.’”) (citations omitted). Similarly, ratification should not be found here, given that the State Street Bank holding was a significant change to the law and conflicted with binding Supreme Court precedent. See, e.g., Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164, 185 (1994) (ratification is implied when Congress “reenact[s] statutory language that has been given a consistent judicial construction”).[6] Had Congress thought that adopting a new defense to liability might affect subsequent interpretation of Section 101, it could have expressed its intent either to alter or to preserve earlier law – as it did with regard to Sections 102 and 103. See 35 U.S.C. § 273(b)(9) (2000).[7]

Moreover, ratification of the “useful, concrete, and tangible result” test as applied in State Street Bank would pose serious constitutional concerns by authorizing patents for claims reflecting only insignificant post-solution activity. The test would thereby encroach on permissible public uses of categorically excluded public domain information, potentially extending protection beyond any inventive concept properly attributable to the applicant and retarding rather than promoting sequential innovation. It would require patents for non-technological inventive concepts, extending protection to activities that may not be within the useful arts (however broadly or narrowly that category is construed).

Given the reasonable alternative interpretation discussed above, this Court should not construe Section 273 to have ratified the “useful, concrete, and tangible result” test as applied in State Street Bank. See, e.g., Gomez v. United States, 490 U.S. 858, 864 (1989) (describing “settled policy to avoid an interpretation of a federal statute that engenders constitutional issues if a reasonable alternative interpretation poses no constitutional question”); Ashwander v. Tennessee Valley Auth., 297 U.S. 288, 346-48 (Brandeis, J., concurring) (establishing the policy). Finding such ratification would force the Court to decide whether Section 101 (at least since 1999) is constitutional. Cf. Richardson v. United States, 526 U.S. 813, 820 (1999) (“We have no reason to believe that Congress intended to come close to, or to test, those constitutional limits when it wrote this statute”). Without ratification, the binding Diehr-Flook precedent remains the law and avoids any such constitutional concerns.

[1] See, e.g., H.R. Rep. 106-464, 121 (1999) (Conf. Rep.) (“business methods and processes, many of which until recently were thought not to be patentable”); id. at 122 (the “1998 opinion … in State Street Bank … which held that methods of doing business are patentable, has added urgency to the issue.… [T]housands of methods and processes used internally are now being patented.”). See also H.R. Rep. 106-287, 45-46 (1999) (“many businesses … thought secrecy was the only protection available,” and such methods “previously had been thought to be unpatentable”); Cong. Rec. E1789 (Aug. 5, 1999) (speech of Rep. Coble) (same); Cong. Rec. S13259 (Oct. 27, 1999) (statement of Sen. Hatch) (same).

[2] See, e.g., Cong. Rec. H6944 (Aug. 3, 1999) (statement of Rep. Rohrbacher). Cf. H.R. Rep. 106-464, 121 (noting importance of the “earlier-invention defense” to “any business that relies on innovative business processes and methods”).

[3] See, e.g., Cong. Rec. S14836 (Nov. 18, 1999) (statement of Sen. Schumer) (the “decision has raised questions about what types of business methods may now be eligible for patent protection…. It has created doubt regarding whether or not particular business methods … might now suddenly become subject to new claims under the patent law.”); Cong. Rec. H6947 (Aug. 3, 1999) (statement of Rep. Manzullo) (Congress “felt that those who kept their business practices secret had an equitable cause not to be stopped by someone who subsequently reinvented the method”). Congress limited the defense to business methods because it believed that the law had been changed only in regard to such methods. See id.

[4] Cong. Rec. S14836 (Nov. 18, 1999) (statement of Sen. Schumer)

[5] Congress expressly acknowledged that State Street Bank altered the law in regard both to “the business method exception” and to “the essential question of whether the invention produced a ‘useful, concrete, and tangible result.’” H.R. Rep. 106-464, 122.   However, Congress did not approve of that result. Rather, it noted only that the new defense applied to systems as well as to processes. See id. at 123.

[6] Cf. Food and Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 157 (2000) (finding effective ratification from enactment of a specific set of separate regulatory provisions, at a time when the agency’s interpretation had historic “consistency”); Brown v. Gardner, 513 U.S. 115, 121 (1994) (“‘[w]here the law is plain, subsequent reenactment does not constitute an adoption of a previous administrative construction.’”) (citation omitted); Fogerty v. Fantasy, 510 U.S. 517, 532 (1994) (rejecting effective ratification and noting that “this is hardly the sort of uniform construction that Congress might have endorsed.”).

[7] See also H.R. Rep. 106-464, 124-25; H.R. Rep. 106-287, 49.

Alice Corp v. CLS Bank: When Two Become One

Patent

by Dennis Crouch

The Alice test officially includes two steps. But these are highly correlated steps. Thus, if a claim fails step one, it usually fails step two as well. In this case, the court appears to borrow heavily from typical step two analysis in order to make its step one conclusion:

Universal Secure Registry v. Apple and Visa (Fed. Cir. 2021)

The district court dismissed USR’s patent infringement complaint, holding of all four asserted patents were ineligible under the abstract idea test incorporated into 35 U.S.C. § 101.  On appeal, the Federal Circuit has affirmed. U.S. Patent Nos. 8,856,539; 8,577,813; 9,100,826; and 9,530,137.

The patents here are directed to technology for securing electronic payment transactions.  This is an area of technology that the Federal Circuit has previously addressed. Here, the court notes that cases “often turn[] on whether the claims provide sufficient specificity to constitute an improvement to computer functionality itself.” Slip Op. Note that this statement from the court has two specific requirements: (1) that the claims be drafted with specificity; and (2) that the element claimed by an “improvement to computer functionality.”  Generic claims are not enough; neither are specific claim limitations directed toward elements already well known in the art.

  • Secured Mail Solutions LLC v. Universal Wilde, Inc., 873 F.3d 905  (Fed. Cir. 2017) (use of conventional generically claimed barcode to communicate information about the object being mailed was an abstract idea).
  • Electronic Communication Technologies, LLC v. ShoppersChoice.com, LLC, 958 F.3d 1178 (Fed. Cir. 2020) (requirement of input, storage, and use of generically claimed authentication information was abstract).
  • Solutran, Inc. v. Elavon, Inc., 931 F.3d 1161 (Fed. Cir. 2019) (use of well known check verification method did not save the claims from being abstract).
  • Prism Technologies LLC v. T-Mobile USA, 696 F. App’x 1014 (Fed. Cir.
    2017) (receiving and authenticating identity data to permit access was abstract since they were claimed generically rather than offering a “concrete, specific solution”).

Here, the claimed method enables a merchant transaction. The merchant is given a time-varying code instead of a credit card number.  That code is then set the credit card company servers for authorization, including any restrictions on transactions with the merchant.  The company then either approves or denies the transaction.  This approach allows for purchases without actually providing the merchant with the “secure information” such as the credit card or account number.

The district court identified the abstract idea here of “obtaining the secure verification of a user’s identity to enable a transaction.” On appeal, the Federal Circuit suggested that analysis wasn’t entirely correct, but did agree that the claims are directed to an abstract idea.

In our view, the claims “simply recite conventional actions in a generic way” (e.g., receiving a transaction request, verifying the identity of a customer and merchant, allowing a transaction) and “do not purport to improve any underlying technology.” Solutran. Accordingly, the claims are directed to an abstract idea under Alice step one.

[T]he asserted claims are directed to a method for verifying the identity of a user to facilitate an economic transaction, for which computers are merely used in a conventional way, rather than a technological improvement to computer functionality itself.

Slip Op.   The court found this case “closer to the demarcation line between what is abstract and non-abstract” than some other cases, but still on the wrong side of the line.

As you’ll see, the court’s conclusions in Alice Step One (conventional actions in a generic way) fully answer Alice Step Two as well.   The court particularly notes that time-varying codes were already well known in the field. Further, this case of using a third-party intermediary is also well known and an abstract idea itself.

Invalidity Affirmed.

Notes

  • The court walked through several other related claims, including the use of a biometric sensor, but found them all abstract.
  • The decision discussed here was precedential. The court also released four non-precedential USR v. Apple decisions. Apple v. USR, 20-1330.  The PTAB sided with the patentee in an IPR and found claims of US8856539 not proven invalid.  That decision was vacated based upon the invalidity finding.  See also, Visa and Apple v. USR, 20-1662 (Same result); Apple v. USR, 20-1222 (appeal rendered moot); Apple v. USR, 20-1223 (appeal rendered moot; vacate and remand for dismissal; holding that substitute claim was also ineligible).

 

 

 

The Ethical Issues Caused by Devaluation of Patents by Alice and CLS

Ethics

First, to confirm Dennis’s anecdotal belief on the main page that firms are moving toward trade secrets, I heard that repeatedly at the IMPI conference, which had chief IP counsel from lots of big players.  Any benefit that the quid-pro-quo of our system is eroded by Myriad and CLS.  I have no clue whether that affects stock liquidity, but it sounds intuitively correct.

But, I’m writing because what I heard, and what others are saying on line, are making me concerned that the enormous impact on patent value represented by Myriad and CLS, and the years of absolute confusion that we’re facing, may trigger disclosure obligations by lawyers in some circumstances. While most firms, I am told, do not capitalize patents, some do. Sarbanes Oxley could be implicated by that.  In M&A transactions, valuation statements need to be thought through.  Google, for example, after it recently acquired a slew of patents said it had acquired certain value of patents.  That value is down.

Here is what one author has said:

 It would be an unwise publicly-traded tech company in the US that is not currently doing a full audit of its patent portfolio to assess where it stands in this post-Alice world.

The full article is here.  Another article from ipwatchdog is here.  (Both link to a study that I personally find very unreliable and so I’m not linking to it.)

I’m not sure that’s good advice.  I am sure that, without legislative investigation, consideration of actual policies and data, the Supreme Court has radically changed our patent system.

What a mess. Read the statute, Supreme Court. Read the statute.

Guest Post: Patent Prosecution Trends Following the Patent Eligibility (101) and 112 Guidelines

Patent

By: Colleen V. Chien, Professor of Law; Nicholas Halkowski, first-year associate at Wilson Sonsini and 2020 JD grad; Maria He, Masters Graduate of the Masters in Business Analytics Program at Leavey Business School, and Rodney Swartz, PhD, patent agent, Intellectual Property Associate at SRI International, and third-year JD student; all at Santa Clara University and writing in their personal capacity. This post is the third in a series about insights developed based on data released by the USPTO.

Almost two years have passed since the USPTO issued its January 2019 Patent Eligibility Guidance (PEG). As the prospect of near-term Supreme Court or Congressional action on Section 101 remains murky, it is worth taking stock of patent prosecution and application trends following the PEG, and also, the Office’s accompanying Guidance on Section 112. In this post, we report on quarterly trends in office actions and filings before and after the PEG. We build on earlier analyses reported in PatentlyO and the USPTO Office of Chief Economist’s own report from earlier this year, Adjusting to Alice, which found that the PEG was followed by decreases in both the likelihood of receiving a rejection and the uncertainty in patent examination.

It is thanks to the exciting continued releases of patent data from the Patent Office, collectively as part of the Open Data Portal (in beta), that we can follow these trends in an attempt to understand the impact of policy. We encourage the USPTO to continue providing data and improving its coverage and quality, providing the only source of data that the courts and policymakers can turn to on the prosecution impacts of their work, as well as research and patent data startups. As to the office action and appeals data, discontinuities and quality issues in currently available datasets presented challenges to our analysis, which we overcame by developing a number of computational approaches. The accompanying PatentlyO Bar Journal Article, Parsing the Impact of Alice and the PEG, (hereinafter referred to as “Article”), has the details and code we used, as well as a summary of the supporting analyses described below.

We find, following the PEG:

1. Decline in 101 Subject Matter Rejections and Stabilization of Appeals: The prevalence of 101 subject matter rejections declined by 37% after the PEG with absolute declines most dramatic among “software” applications as previously defined. (Fig. 1) Ex parte appeal decisions addressing 101 subject matter appeared to stem their rise. (Article 1A)

2. No Discernable Increase in 112 Rejections: The 112 Guidance issued by the Patent Office in January 2019 described the use of 112(a), (b), and (f) to address functional claims in computer-implemented inventions. Following the 112 Guidance, we did not discern an increase in the examiner’s application of 112 rejections, in general (Fig. 2) or at the subsection level, except in the case of 112(f) rejections as applied to “software” applications which have increased steadily since the USPTO’s February 2014 Executive Action on Claim Clarity and Federal Circuit’s June 2015 Williamson decision, both directed to functional claiming, from 2.7% in 1Q14 to 7.6% in 4Q19. (See Article 2A)

3. Leaving Small Entities Behind Through Forum Shopping?: Some applicants have responded to elevated 101 rejection rates by using analytic tools to draft their claims in order to “forum shop” out of Alice-impacted art units. Though the use of these tools is not observable, it is plausible that their cost puts them out of reach of small and micro entities, and might, as a result, lead to a greater concentration of discounted applications in these art units. However, when we looked at the data, we found that the share of applications by discounted entities over time had not increased but rather, has stayed relatively steady among applications filed from 2010 to 2018. (See Article Fig. 3)

4. No Noticeable Decline in “Medical Diagnostic” or “Software” Applications following Alice or Mayo: One limitation of focusing solely on rejection rates is that they do not capture applications “never filed” due to the changes in law or policy. To gauge whether or not there was an “Alice” or “Mayo” “effect” on the number of applications, we looked for declines, in absolute and relative terms, among medical diagnostic and software technology applications, as previously defined, but found no such declines. (See Article Fig.4) Although the PEG came out more than 18 months ago, we do not yet have a complete picture of application trends following the PEG, so cannot rule out that it was followed by increases in filings.

5. More Unique Words in Issued Patent Claims post Alice: Another limitation of focusing on examiner behavior is that it does not take into account changes in applicant behavior and the dynamic there between. With the help of Rocky Berndsen, Peter Glaser, and William Gvoth of Harrity and Harrity, we looked at the number of words included in patents filed after Alice. Applying a “differences in differences” approach, we found that the number of unique words in “software” patents relative to a baseline doubled from 10 additional to 20 additional words, consistent with the hypothesis that the Alice decision led to the addition of claim details. (See Article Fig. 5) As patents filed after the PEG are granted, it will be worth seeing whether or not outcomes along this metric have changed.

Conclusion

The data indicate that, following the PEG, the prevalence of 101 subject matter rejections, and likely frustration associated with same, declined. At the same time, we did not find that 112 rejections increased noticeably to take their place, or that caselaw or the PEG resulted in sustained diminished filings. While we are not able to report on the impact of the PEG on filings and application “quality” (words and details), due to time effects, fortunately, the USPTO’s data releases should seed continued study and analysis of the impact of it and future guidance and court decisions.

The authors represent that they are not being paid to take a position in this post nor do they have any conflicts of interest in the subject matter discussed in this post.

 

In re Killian: Spurious Eligibility Arguments

Patent

by Dennis Crouch

In re Killian, — F.4th — (Fed. Cir. August 23, 2022)

This decision authored by Judge Chen and joined by Judges Taranto and Clevenger appears as something of a tour-de-force rejecting a large number of spurious eligibility arguments.  The court seemingly made the case precedential to help avoid seeing these same arguments arise again.

Jeffrey Killian filed his patent application back in 2014 seeking to patent his computerized algorithm for identifying “overlooked eligibility for social security disability insurance” and other adult-child benefits.  The basic approach is to get access to state records of individuals receiving treatment for developmental disabilities or mental illness from a state licensed facility. Those records are then compared against the Federal SSDI rolls.   Once an individual is identified, the claims then call for information a GUI to open for a caseworker who inputs various information such as SSN, birth information, family information in order to determine eligibility for benefits.   The examiner found the claims novel, non-obvious, and sufficiently definite.  But, still, the claims suffered from the fatal defect of being directed toward an abstract idea.  The PTAB affirmed the examiner rejection of all pending claims — concluding that the claims were directed to an “abstract mental process.”  Although the claim recited various technology, the Board concluded that those were ancillary under Alice Step 1 (“insignificant extra-solution activity”); and under Alice Step 2, those additions were insufficient to transform the unpatentable idea into a patent eligible invention.  On appeal, the Federal Circuit has affirmed.

Step 1.  At Step 1 of the eligibility exception analysis, the court asks whether the claims are “directed to” an unpatentable exception, such as an abstract idea.  In that process, the court endeavors to consider the claimed invention’s “character as a whole.”  Here, it found that the “thrust” of the claims is collection and examining of data.  Those are steps that humans do regularly in their own mind and, as such, the court found them an unpatentable abstract idea. The claims also recite various computer technology and use of input screens.  However, the court the extra activity insufficient under Alice: A claim does not pass muster at step two by “[s]tating an abstract idea while adding the words ‘apply it with a computer.'”  Slip Op. (quoting Alice).

Killian argued to the appellate panel that the eligibility standard applied by the USPTO was arbitrary and capricious–thus violating due process and APA requirements, inter alia.  The court disagreed and provided two responses.  (1) Appeal to Authority: The rules here come from the Supreme Court and therefore are not arbitrary & capricious; (2) Appeal to Reason: The Federal Circuit has provided sufficient guidance on how to apply the doctrine and how to figure out what counts as an abstract idea.

Although there is no single, inflexible rule for the abstract idea inquiry, our court has provided guidance as to what constitutes an abstract idea. We have explained that, first, “[t]he ‘abstract idea’ step of the inquiry calls upon us to look at the ‘focus of the claimed advance over the prior art’ to determine if the claim’s ‘character as a whole’ is directed to excluded subject matter.” Affinity Labs. Once we identify the “focus of the asserted claims,” we may consider whether the claims “fall into a familiar class of claims directed to’ a patent-ineligible concept.” Elec. Power Grp.

We have provided still further guidance for those familiar classes of claims. For example, in the context of claims to results, we have explained that claims that “simply demand[] the production of a desired result . . . without any limitation on how to produce that result” are directed to an abstract idea. Interval Licensing. In the context of mental processes … we have explained that if a claim’s steps “can be performed in the human mind, or by a human using a pen and paper,” and the elements in the claim do not contain a sufficient inventive concept under Alice/Mayo step two, the claim is for a patent-ineligible abstract idea. Ericsson Inc. v. TCL Commc’n Tech. Holdings Ltd., 955 F.3d 1317, 1327 (Fed. Cir. 2020) And we have explained that “[i]nformation as such is an intangible”; accordingly, “gathering and analyzing information of a specified content, then displaying the results” without “any particular assertedly inventive technology for performing those functions” is an abstract idea. Elec. Power Grp. We have provided further guidance for “cases involving software innovations,” where the abstract idea “inquiry often turns on whether the claims focus on ‘the specific asserted improvement in computer capabilities . . . or, instead, on a process that qualifies as an “abstract idea” for which computers are invoked merely as a tool.’ ” Finjan.

Our case law also provides guidance as to “inventive concept,” particularly in the context of claims for computer implementations of abstract ideas. We have explained that claims for methods that “improve[] an existing technological process” include an inventive concept at step two. BASCOM. And claims that “recite a specific, discrete implementation of the abstract idea” rather than “preempt[ing] all ways of” achieving an abstract idea using a computer may include an inventive concept. Id. But claims to “an abstract idea implemented on generic computer components, without providing a specific technical solution beyond simply using generic computer concepts in a conventional way” do not pass muster at step
two. Id. “Neither attempting to limit the use of [the idea] to a particular technological environment nor a wholly generic computer implementation is sufficient.” buySAFE.

Slip Op.

Kilian argued that prior eligibility precedent should not apply to him because he did not have the opportunity to litigate those cases.  On appeal the court rejected that attempt to undermine classic common law methodology.

Killian argued that the search for “inventive concept” at Alice Step 2 is improper because the Invention Requirement was eliminated by the 1952 Patent Act.  On appeal, the court noted first that the old “invention” requirement is different from the “inventive concept” element of Alice.  And, take it up with the Supreme Court.

Killian argued that the “mental steps” doctrine has no foundation.  On appeal, the court found that argument “plainly incorrect” based upon statements from the Supreme Court in Mayo (quoting Benson).

Killian argued that the PTO failed to provide any actual evidence that its computer usage was routine and conventional. On appeal, the Federal Circuit pointed to Killian’s patent application statement that the claimed method “may be performed by any suitable computer system.”  That said, the appellate court appears to have accepted the implicit judicial notice from the Board that “operations of storing, analyzing, receiving, and writing data are primitive computer operations found in any computer system.”  At this very basic level, these issues can really be seen as questions of law (and thus subject to precedential enforcement).  “As the Supreme Court has explained, generic computer functions, performed on, as the application itself admits, any generic computer, do not provide an inventive concept.”

If there had been a true question of fact in dispute, then prior precedent regarding similar inventions would not automatically establish those factual conclusions outside of the context of issue preclusion.  Here, the patentee’s “specification admits that the computer, which the Board correctly identified as the additional element of the claims, is well-understood, routine, and conventional, no further evidence is needed.”  Slip Op.

Rejection affirmed.

Question: Can you do anything to save Killian save his claims? [94488_14450042_03-29-2018_CLM]

= = =

Burman Mathis argued for Killian; Monica Lateef (USPTO Associate Solicitor) argued for the Agency.  Lateef is also a member of the Federal Circuit’s advisory council.

CareDx v. Natera: A Response To Professor Holman

Patent

Guest Post by Edward Reines.  Reines Co-Chairs the nationwide Patent Litigation practice at Weil Gotshal. He represents CareDx and Stanford in the pending patent lawsuits.

Professor Holman’s recent post on the Federal Circuit’s CareDx v. Natera opinion is a thoughtful addition to Professor Crouch’s review of that decision.  Professor Holman concludes that the Stanford inventions were doomed from the start because they can be labelled as “molecular diagnostics methods” and are thus patent ineligible under Federal Circuit law.  Professor Holman’s conclusion is troubling.  It would limit the patentability of new inventions in an entire scientific discipline merely based on a label.

This labelling mode of analysis is fundamentally flawed because the Supreme Court’s Alice decision mandates a two-step test focused on the claimed advance of the patent, no matter the field of invention.  The test is designed to “distinguish between patents” that would pre-empt a field by broadly claiming “[l]aws of nature, natural phenomena, and abstract ideas” and patents that do not pose this risk because they add to these concepts with “human ingenuity.” There is thus nothing inherent about molecular diagnostics that precludes their patentability and merely labelling a method as “molecular diagnostics” should not be a kiss of death.

Take the Stanford patents.  Those patents document that the natural correlation between organ rejection and elevated levels of cell-free DNA of the organ donor was known for almost a decade before the inventions.   The patents then explain that numerous scientists motivated to measure that increase in cell-free DNA failed to come up with the patented measurement methods.   The patents cite an article published right before the Stanford patent filing that concluded that it was altogether “impractical” to measure cell-free DNA to monitor organ rejection.

The Stanford patents distinguish the failed prior art measurement efforts and describe new inventions on how to better measure cell-free DNA using advanced DNA analysis techniques.  The claimed inventions are better measurement methods that previously eluded the field – not the discovery of the natural correlation itself.  And there was no claim that they posed the pre-emption risk that animated Alice.

Federal Circuit law places at the heart of Alice step one whether the “claimed advance” is the natural law.  In CareDx, as Magistrate Judge Burke had originally concluded, the claimed advance of the Stanford patents is an improved human-devised measurement method.  The Federal Circuit’s opinion failed to properly focus on the “claimed advance” analysis and failed to squarely address that the patents describe numerous prior art failures. This prior art history is irreconcilable with the panel’s conclusion that the patented measurement methods are so conventional as applied to the natural correlation that they could not possibly qualify as patent-eligible human invention.

Instead, the Federal Circuit imported the “conventionality” analysis from step two into step one in lieu of a proper “claimed advance” analysis of Federal Circuit precedent.  As originally contemplated in Mayo, the “conventionality” analysis was akin to determining if the claims included mere trivial additions on top of discovery of a natural law.   Here, the conventionality analysis instead became a short-cut obviousness analysis.  Yet, even that fails because the decade of prior failures at measuring the cell-free DNA for a good organ rejection test proves that it was not conventional to use the patented measurement methods for this purpose – otherwise the many groups working on the problem would have arrived at that solution ultimately invented by the Stanford team.  And the supposed disclaimers in the patents never even suggest that applying the claimed measurement techniques to the tough context of cell-free DNA somehow was not an invention.  Everything about the description of the inventions is inconsistent with that conclusion.

The Federal Circuit cannot blame the Supreme Court for this latest constriction of molecular diagnostic patenting even though many Federal Circuit judges have bemoaned the stinginess of the Supreme Court’s Alice test in this area.  As explained long ago in Diamond v. Diehr, and as repeated in Bilski and Mayo, the Supreme Court recognizes that: “It is now commonplace that an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.”  Even if the Stanford measurement methods were known (and the prior art history calls that into serious doubt) their application to a natural law can certainly be patent eligible if it is the product of human innovation, as claimed by the patents.

Professor Holman’s conclusion that the Federal Circuit labelling method may have controlled the CareDx outcome should give real pause to the patent law community.   Such labelling might be useful to describe the inventions at issue in prior decisions, but it is not a basis to proscribe whether an invention is eligible for patenting.   The Stanford patents are plainly directed to a better measurement method that evaded many motivated prior artists.  Such human innovation is the claimed advance and is patent eligible under Alice even if it can be labelled as a molecular diagnostic method.

Eligibility: Turning Application On-and-Off for Authentication Patent Eligible

Patent

by Dennis Crouch

CosmoKey Solutions v. Duo Security (Fed. Cir. 2021)

Patentee wins this one–with the Federal Circuit reversing the district court and finding the claims on patent-eligibility under Alice step-two.  This is another case that serves as a data-point, but I struggle to differentiate it from similar cases finding claims ineligible.

CosmoKey’s U.S. Patent No. 9,246,903 is directed a low-complexity, high-security method of authenticating a user transaction. (2011 priority filing date).  The basic idea here is two-factor-authentication that uses a second communication channel (mobile phone) to authenticate a transaction.  This general idea was already in the prior art, but the claims add a couple of additional features:

  • Authentication function is normally inactive on the mobile device but is activated by the user for the transaction; and when once the transaction is done the authentication function is automatically deactivated.  This on/off function is designed to both save power on the device and also help prevent hacking.
  • As part of the authentication, there is a check on how long the user takes to respond (whether a predetermined time relation exists between the transmission of the user identification and a response from the second communication channel);

See ‘903 Patent Claim 1.

The district court found the claim ineligible under Section 101 after finding them closely parallel to the authentication method claims invalided in Prism Techs. LLC v. T-Mobile USA, Inc., 696 F. App’x 1014 (Fed. Cir. 2017) (nonprecedential opinion).  In particular, the district court found the claims directed to “the abstract idea of authentication—that is, the verification of identity to permit access to transactions”  (Alice Step 1) and that the claims recite generic computer functionality that were all well understood, routine, and conventional activities at the time of the invention (Alice Step 2).

On appeal, the Federal Circuit has reversed — holding that the patent “discloses a technical solution to a security problem in networks and computers.”  That statement suggests reversal on Alice Step 1; but the court actually leapt to Step 2 without a clear holding on Step 1.  Here, the court found that the claimed steps were (1) developed by the inventors; (2) not admitted prior art; and (3) yield advantages over the described prior art.  The court noted the difficulty with this case — the purpose of the invention was to “reduce significantly” “the complexity of the authentication function.”  But, simplification can quickly suggest abstraction.

Eligibility Jurisprudence: It has been quite difficult to nail down the meaning of “abstract idea.”  The Supreme Court suggested that we look back to prior cases to find the answer, and that is the same approach that has been followed by the lower courts as well as the USPTO.  Here, however, the Federal Circuit cautioned that analysis:

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.

Slip Op.

The court’s opinion was written by Judge Stoll and joined by Judge O’Malley.  Judge Reyna penned a concurring opinion arguing that the two step Alice approach should be taken in-order:

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.

Concurring Opinion. Judge Reyna goes on to explain how Step 2 should be seen as a “lifeline” that only comes into play to save claims that are directed toward abstract ideas.  But, we can’t know if there is “something more” without first answering the question “more than what.”

Step two is rendered superfluous and unworkable without step one. Without the benefit of a step-one analysis, we are hobbled at step two in reasonably determining whether additional elements transform the nature of the claim into a patent-eligible application of the abstract idea. And by skipping step one, we create a risk that claims that are not directed to an abstract idea might be deemed to “fail” at
step two.

Id.  Judge Reyna then goes on to conclude that the claims are not directed to an abstract idea. Id. Quoting the majority statement that “the claims and specification recite a specific improvement to authentication that increases security, prevents unauthorized access by a third party, is easily implemented, and can advantageously be carried out with mobile devices of low complexity.”

Guest Post: Patent Office Shows New Respect for Software

Patent

Guest Post from Richard P. Beem.  Beem’s firm handled the Intelligent Medical Objects case discussed below. – DC

Software patents and applications are making a quiet comeback under Director Andrei Iancu’s leadership of the U.S. Patent and Trademark Office. This is a welcome shift, since thousands of applications have been held captive in the Office in the wake of Supreme Court decisions culminating in Alice v. CLS Bank, 134 S.Ct. 2347 (2014).

In the hands of reductionists, the Alice formula for rejection/invalidation was easy to apply. Every invention can be reduced to an abstract idea. Whatever is left can be explained away as “routine” or “conventional.” In the last four years, many software patent applications suffered repeated rejection and the ignoble death of abandonment for lack of will or lack of funds. Even when granted, many software patents were mowed down in inter partes review (IPR) in the Patent Trial and Appeal Board (PTAB).

The Federal Circuit’s February 2018 decision in Berkheimer, 881 F.3d 1360 (citing Alice and other authority), paved the way for recent progress, holding that when there are genuine issues of material fact concerning alleged routineness or conventionality, evidence of the same must be presented before patent claims properly can be invalidated on such grounds.

Berkheimer was an appeal from an inter partes district court litigation. What hope does Berkheimer hold for software patent applicants in ex parte proceedings in the Patent Office?

My firm and I took an appeal from a final rejection to the PTAB, In re Naeymi-Rad et al., Appeal 2016-005478, where the rejection was affirmed in a lengthy opinion, and thence to the Federal Circuit, where the case was renamed for the assignee, In re Intelligent Medical Objects, Appeal 18-1586 [Federal Circuit Order].

Intelligent Medical Objects (IMO) is the world’s leading provider of medical vocabulary that allows doctors to capture and preserve truth (or clinical intent) at the point of care. In the course of its work, IMO invented a method of creating and maintaining a “longitudinal” (over the course of several visits) electronic medical record (LEMR) with software that runs on a general purpose (albeit high powered) computer.

Several patents were granted to IMO, each directed to a different aspect of the LEMR, before one examiner dug in with a final rejection in the case at bar, in which the claims were directed to a method of implementing an LEMR with a controlled medical vocabulary. The final rejection was based solely on alleged abstractness under 35 U.S.C. 101; earlier rejections based on Sections 102 and 103 were overcome.

The examiner in the IMO case turned the claims into clichés of “providing healthcare” and “generating and processing medical records.” Typical of such cases, the examiner restated the claimed method even more generally as “collecting, storing, and organizing data.” This is a formula for finding claims to be abstract. The examiner and the PTAB found IMO’s novel use of pointers and directed graphs, taken out of context, to be merely routine and conventional, without citing any evidence, and they shifted the burden to IMO to prove the contrary.

We filed appellant IMO’s principal brief in the Federal Circuit at the end of May 2018. Within a few days, the Patent Office filed an unopposed motion to vacate the PTAB decision. Shortly thereafter, the Federal Circuit issued its opinion, vacating the PTAB decision and remanding the application to the Office for further proceedings. In re Intelligent Medical Objects, Appeal 18-1586 (slip op. June 27, 2018).

The IMO decision and a similar decision in In re Allscripts Software, LLC, Appeal 2018-1451 (Fed. Cir. slip op., June 27, 2018) were the subject of a blog post “Berkheimer, the Administrative Procedure Act and PTO Motions to Vacate PTAB § 101 Decisions,” in IP Watchdog (July 16, 2018), praising the Patent Office for acknowledging the Berkheimer decision and doing the right thing in the two Federal Circuit appeals.

Meanwhile, in April 2018, the Patent Office issued new guidance for examination of software patent applications. That guidance makes it clear that software patent claims cannot legally be rejected without grounds supported by evidence. There will be more guidance from the Office, and there will be more opinions from the Federal Circuit.

Notwithstanding the substantial and growing body of legal authority, however, there will be further erroneous rejections of software patent claims. Many of those rejections will be maintained, and a few of those will be taken on appeal. It is only a matter of time before the Federal Circuit issues one or more published opinions holding that Berkheimer applies in ex parte patent prosecution.

Published Federal Circuit opinions are the tip of the iceberg. But, ah, the cost to applicants! And for every successful appellant, there are 10, 20 or more applicants who sadly accede to final rejections and abandon worthy applications. This is a not a good outcome from a patent system that is intended to promote the progress of technology by issuing patents for meritorious inventions.

Some of the greatest challenges facing the world today will be solved with new and improved software. The need for better electronic medical records is one example. Another, literally inside the Patent Office, is the need to manage ever-growing terabytes of data without crashing electronic filing and retrieval systems. Hacking and cybercrimes often take advantage of shortcomings in software; better cybersecurity will depend on better software. Many of these issues are technical problems that will be solved with novel, non-obvious, applied technical solutions.

Such software inventions are deserving of patent protection. Director Iancu is to be applauded for his recent acknowledgements of legal errors in final rejections appealed to the Federal Circuit.

As for patent applicants, owners, and attorneys, the patent system is not and never will be perfect. Skillful drafting and prosecution go a long way toward obtaining allowance of claims directed to deserving inventions. In some cases, appeals even to the Federal Circuit may be necessary, and, as in the cases of Intelligent Medical Objects and Allscripts Software, they may win.

By Richard P. Beem

Bio: Richard Beem, a graduate of Iowa State (B.S. in chemical engineering) and the University of Houston (J.D., cum laude), served as Law Clerk to the late Hon. Edward S. Smith, one of the original 12 judges of the Federal Circuit. Richard is the founder and principal of Beem Patent Law Firm in Chicago.

 

Chien and Wu: Decoding Patentable Subject Matter

Journal, Patent

Professor Colleen Chien and Jiun Ying Wu are working their way through an analysis of millions of USPTO office actions.  In this Patently-O L.J. essay, the pair reports on how the PTO is examining applications for patentable subject matter.  The article documents “a spike in 101 rejections among select medical diagnostics and software/business method applications following the Alice and Mayo decisions.”  Although rejections rose within certain art units, the pair found little impact elsewhere.

Colleen Chien and Jiun-Ying Wu, Decoding Patentable Subject Matter, 2018 PatentlyO Patent Law Journal 1.

Prior Patently-O Patent L.J. Articles: (more…)

Software as an Abstract Idea

Patent, ,

Amdocs v. Openet Telecom (E.D.Va. 2014)

In yet another case, a district court has invalidated a set of software patents as unduly abstract under Alice Corp., Mayo, and 35 U.S.C. 101.  In this case, E.D. Va. Judge Brinkema issued a judgment-on-the-pleadings that all of the asserted claims of the four Amdocs patents were invalid as patent-ineligible. The Decision.

In Alice Corp., the Supreme Court outlined a two step process for determining eligibility: (1) determine whether the claim encompasses excluded subject matter and then (2) determine whether the claim includes “something more” sufficient to “transform the nature of the claim into a patent-eligible application.”  As it turns out, neither of these tests are straightforward.

The patents-in-suit here relate to computer software designed for reporting network usage. Claim 16 of Amdocs Patent No. 6,836,797 is on point:

16. A computer program product stored in a computer readable medium for reporting on a collection of network usage information from a plurality of network devices, comprising:

computer code for collecting network communications usage information in real-time from a plurality of network devices at a plurality of layers;

computer code for filtering and aggregating the network communications usage information;

computer code for completing a plurality of data records from the filtered and aggregated network communications usage information, the plurality of data records corresponding to network usage by a plurality of users;

computer code for storing the plurality of data records in a database;

computer code for submitting queries to the database utilizing predetermined reports for retrieving information on the collection of the network usage information from the network devices; and

computer code for outputting a report based on the queries;

wherein resource consumption queries are submitted to the database utilizing the reports for retrieving information on resource consumption in a network; and

wherein a resource consumption report is outputted based on the resource consumption queries.

In applying Alice, Judge Brinkema first examined the claim to determine whether it is directed to an abstract idea.  Brinkema’s particular approach here follows the “gist approach” used by other post-Alice district court decisions.  Notably, to find the abstract idea, Brinkema “look[ed] past the mere claim language” to determine that the claim is “directed to the abstract idea of using a database to compile and report on network usage.”  It is probably important to pause here to consider what considerations make us think that a network usage database creation and report tool is abstract.  Unfortunately, Judge Brinkema does not.

At step two, Judge Brinkema looked for “something more” but found instead that “the claim does not add much” beyond the stated abstract idea.

In claim 16, a generic computer collects, filters, aggregates, and completes network communications information.  The generic computer then stores the information in a database, and queries the database to retrieve reports. Collecting, filtering, aggregating, and completing network information amounts to “electronic recordkeeping,” which is “one of the most basic functions of a computer.” (quoting Alice).  Similarly, storing and querying information in a database, and building reports based on that information, is one of the most basic functions of a database system. Accordingly, claim 16 is directed to a computer functioning in a conventional way, and a database functioning in a conventional way. The claim does not add any specific implementation beyond the abstract idea that information is collected and stored, and reports are generated.

The result then is that the claim is ineligible and thus invalid. The opinion similarly walks through other challenged claims and rejects them.  Throughout the opinion, the Judge’s largest concern appears to be that the claims lack “specific hardware” as well as “any detail” regarding how the claimed functions actually operate.

The Judge was also clear that overall novelty is irrelevant to patent eligibility. “That argument misses the point. The concern of § 101 is not novelty, but preemption.”

A person may have invented an entirely new and useful advance, but if the patent claims sweep too broadly, or only claim the idea that was achieved rather than implementation of the idea, § 101 directs that the patent is invalid. Amdocs’s asserted claims recite such conventional operation, in such a general way, that even if the inventor had developed an actual working system, the patent claims could foreclose fields of research beyond the actual invention. Accordingly, all asserted claims are invalid as patent-ineligible.

= = = = =

Notes:

Software?: Although the court made a few pushes for “hardware” in its analysis, it did not make any express statements that software is problematic from an eligibility standpoint. An open question following Alice Corp., is whether any claimed invention would be patent eligible if beginning with the preamble: “A computer program product stored in a computer readable medium…”

Federal Circuit: Bingo Gaming Software Improperly Encompasses the “Basic Tools of Scientific and Technological Work”

Patent, , , ,

by Dennis Crouch

Planet Bingo v. VKGS (Fed. Cir. 2014)

In a non-precedential decision earlier this week, the Federal Circuit found Planet Bingo’s patents invalid as lacking eligible subject matter under 35 U.S.C. 101.  The court’s opinion self-identifies as a “straightforward application of the Supreme Court’s recent holding in Alice Corp. v. CLS Bank International.”

The patent claims a computerized method for managing a game of Bingo – yes, the multi-billion dollar industry of Bingo. The basic idea of the invention is that some folks want to play ‘their numbers’ each week.  The computerized system lets individuals pre-select their numbers and also helps the Bingo-hall to track sales, verify winners, and avoid tampering.  VKGS and Planet Bingo compete in the marketplace for bingo equipment.

Claim 1 of U.S. Patent No. 6,398,646 recites typical computer hardware including a computer with a CPU, memory device, a printer, input and output terminal, and also a computer program with particular features.  As is typical with software related inventions, the only novel features of the invention stem from software-related functionality. Here, the program is configured to allow input and storage of the pre-selected Bingo numbers in files associated with the players. A player with stored numbers can then retrieve them to play Bingo. At that point, a control number is also associated with the numbers that can later be used to verify winnings.  The patents also include method claims that basically step through the program steps outlined above.

Although I am no Bingo expert, nothing here appears amazingly inventive. Of course, the challenge to the patent is not on grounds of obviousness or anticipation. Rather, the challenge is on subject matter eligiblity grounds – that the patent unduly encompasses an “abstract idea” and therefore unduly limits “the basic tools of scientific and technological work.”

The Patent Act is broadly written so as to allow the patenting of “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” 35 U.S.C. 101.  In addition to the text of the statute, the Supreme Court has further restricted the patenting of “laws of nature, natural phenomena, and abstract ideas.”  According to the court, these exceptions to patentability are necessary to protect “the basic tools of scientific and technological work.”  In Alice Corp, the Supreme Court explained:

“[M]onopolization of those tools through the grant of a patent might tend to impede innovation more than it would tend to promote it,” thereby thwarting the primary object of the patent laws. Mayo. We have “repeatedly emphasized this . . . concern that patent law not inhibit further discovery by improperly tying up the future use of ” these building blocks of human ingenuity. Mayo (citing Morse).

Here, the Federal Court found that – yes – those building blocks of scientific inquiry are being inhibited by Planet Bingo’s bingo software patent.  To reach this result, the court began by recognizing that the method and system claims are basically the same and thus should rise-and-fall with the same analysis.  The court then analyzed the case through the lens of the method claims as ineligiblity tends to be easier to show for method claims.

Following the process outlined in Alice Corp., the Federal Circuit first identified the abstract idea as the steps of selecting, storing, and retrieving the bingo numbers, assigning the control number, and checking to see whether the set of numbers is a winner. These steps are collectively an abstract because they are “mental steps which can be carried out by a human using pen and paper.”  Particularly, none of these steps require new technology but rather may be “carried out in existing computers long in use.” (quoting Benson).  Further, the Federal Circuit was unable to find an “inventive concept” in the rest of the claimed subject matter sufficient to transform these abstract ideas into a patent eligible invention. The court writes:

Apart from managing a game of bingo, the claims at issue also require “a computer with a central processing unit,” “a memory,” “an input and output terminal,” “a printer,” in some cases “a video screen,” and “a program
. . . enabling” the steps of managing a game of bingo. These elements, in turn, select, store, and retrieve two sets of numbers, assign a player identifier and a control number, and then
compare a winning set of bingo numbers with a selected set of bingo numbers.

Here, however, the claims recite merely a generic computer and instructions that simply implement the abstract idea discussed above.

Patent Invalid.

SmartGene v. ABL: Foreshadow of the Supreme Court in CLS Bank?

Patent, Supreme Court, , ,

By Dennis Crouch

SmartGene v. ABL (Fed. Cir. 2014) (nonprecedential)

35 U.S.C. 101 is a foundational patent law statute that defines the scope of patent eligibility. The statute states that:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

Section 101 is written in broad and open terms and has been seen as providing notice that patent law is not intended to be limited to any particular forms of technology.

In interpreting the statute, the Supreme Court has added an additional set of subject matter eligibility restrictions only nominally grounded in the statute. Most notable, these include proscriptions against the patenting of abstract ideas, natural phenomenon, and products of nature. Also excluded from eligibility are “mental processes.” It is somewhat unclear from precedent whether these mental processes are whole included within the abstract idea construct or whether instead there are some mental processes that would be excluded even though not considered abstract ideas.

Here, ABL’s patents cover a diagnostic method that basically pulls information from three separate knowledge bases, ranks the results and provides advisory information related to those results. As claimed these steps use a “computing device” to generate and provide the results. The patents also include computerized “system” claims; computer program claims; and sorage-medium claims that are all designed to facilitate the practice of the method. See U.S. Patent Nos. 6,081,786 and 6,188,988.

In 2008, SmartGene filed for declaratory judgment of invalidity and also filed a reexamination request with the USPTO. The PTO considered the prior art and confirmed patentability. However, the District Court ruled that all of the patented claims were invalid as ineligible under Section 101. Rather than walking through each claim of each patent, the District Court (1) first held that, for eligibility purposes, Claim 1 of the ‘786 patent (the method claim) was representative of all claims in the patents and (2) then found that claim ineligible under § 101. The district court wrote that the claim does “no more than describe . . . an abstract mental process engaged in routinely, either entirely within a physician’s mind, or potentially aided by other resources in the treatment of patients.”

On appeal, the Federal Circuit has affirmed in a non-precedential decision written by Judge Taranto and joined by Judges Lourie and Dyk. Famed eligibility defender Robert Sachs of Fenwick represented the Patentee whkle Fred Samuels (Cahn & Samuels) represented the DJ Plaintiff.

The Federal Circuit first considered the district court’s process in holding all claims from both patents ineligible based only upon consideration of one claim from one patent. The court affirmed the district court finding based upon a waiver principle.

On to the meat of the 101 analysis, the Federal Circuit began with a citation to CyberSource:

This conclusion [of ineligibility] follows from CyberSource Corp. v. Retail Decisions, Inc., where, based on earlier precedents, this court held that section 101 did not embrace a process defined simply as using a computer to perform a series of mental steps that people, aware of each step, can and regularly do perform in their heads.

The court went on to write that mental processes are not eligible nor are processes that use basic computer functionality to implement mental processes unless the invention specifies “new physical components” or other steps “defined other than by the mentally performable steps.”

For these princples, the court relied heavily on Supreme Court precedent of Benson, Flook, and Mayo as well as the appellate decisions of CyberSource as well as In re Grams, 888 F.2d 835, 840-41 (Fed. Cir. 1989) and In re Meyer, 688 F.2d 789, 794-95 (C.C.P.A. 1982).

The discussion of Mayo in the decision is interesting in the way that the court draws close parallels between the way laws of nature and abstract ideas should be interpreted:

Mayo demanded that, when a claim involves an abstract idea (or, in Mayo itself, a law of nature), eligibility under section 101 requires that the claim involve “enough” else—applying the idea in the realm of tangible physical objects (for product claims) or physical actions (for process claims)—that is beyond “well-understood, routine, conventional activity.” 132 S. Ct. at 1294, 1298, 1299. The claim here does not do so. It calls on a computer to do nothing that is even arguably an advance in physical implementations of routine mental information-comparison and rule-application processes. In this context, the concern about preempting public use of certain kinds of knowledge, emphasized in Mayo, is a grave one.

It appears from Myriad, that the process for determining the product-of-nature exclusion is somewhat different since there, the court allowed the patentee to obtain protection for a DNA sequence whose physical differences from the naturally occurring sequence were due to well-understood, routine, and then conventional laboratory processes.

Is a mental step an abstract idea?: The court punts on this question and instead writing that:

[M]ental processes and abstract ideas (whatever may be the precise definition and relation of those concepts) are excluded from section 101. Whatever the boundaries of the abstract ideas category, the claim at issue here involves a mental process excluded from section 101: the mental steps of comparing new and stored information and using rules to identify medical options.

The analysis here pessimistically fits the approach leading abstract idea jurisprudence that traditionally fails to explain the scope and bounds of the abstract idea category but finds that the particular invention in question fits within the category.

Judge Taranto: This decision is important because it was written by Judge Taranto. Although there was not tremendous doubt in his position, Judge Taranto did not participate in the CLS Bank en banc fiasco that resulted in no majority opinion. Judge Taranto’s participation would have likely shifted the balance in favor of a majority opinion ruling strongly against subject matter eligibility of software claims that do not add new “technology.”

Judge Taranto is also important because, of all the Federal Circuit judges, he likely best understands the pulse of the Supreme Court and I will not be surprised when the Supreme Court decision in CLS Bank parallels this one.

 

Drafting Functional Claims Still Risky Post-Alice

Patent

by Dennis Crouch

Western Digital Techs., Inc. v. Viasat, Inc., No. 22-CV-04376-HSG, 2023 WL 7739816 (N.D. Cal. Nov. 15, 2023) Docket No. 4_22-cv-04376

Western Digital sued Viasat for infringing claims from several patents, including US8,504,834, which covers “media streaming systems and software.” In a recent decision, Judge Haywood (N.D.Cal.) granted a motion to dismiss — finding the claims of the ‘834 patent directed to ineligible subject matter.  The background section of the patent explains explains that prior art systems decrypted locally stored content using a decryption key obtained from a digital rights management (DRM) server. This had drawbacks related to efficiency and cost. The patent describes an improved system where the decryption key is derived from a stream of data received over a network, rather than needing to contact a DRM server.

Claim 14, treated by the court as representative, recites:

A method for activation of local content, the method comprising:

performing the following in a host device in communication with a storage device storing encrypted content:

receiving a stream of data from a network;

deriving a key from the received stream of data; and

decrypting the encrypted content using the key derived from the received stream of data.

The claim covers a method for decrypting locally stored encrypted content. A host device receives a stream of data over a network, derives an encryption key from that stream, and uses that derived key to decrypt encrypted content stored on a connected storage device.

Alice Step One – Is the Claim Directed to an Abstract Idea?

At Alice step one, the court asks whether the claim is “directed to” a patent ineligible  abstract idea. Here, the court found claim 14 is directed to the abstract idea of “delivering and deriving a decryption key from a stream of data.” The court provided several bases for deriving this idea as gist of the claim and for concluding that it constitutes an abstract idea.

First, the court analyzed the focus of the claimed advance over prior art systems as described in the patent background and specification. The court found the focus was on using a stream of data to deliver and derive a decryption key, rather than contacting a DRM server.

The court then noted that the claims are functional in nature — claiming the result itself.  On this point, the court found that claim 14 does not recite any practical method of implementation, but rather uses only generic computer components like a “host device” and “network” along with conventional processes like “receiving,” “deriving,” and “decrypting” to achieve the result. This demonstrated the claim was drafted in a result-oriented or functional manner focused on the principle itself.

The court also found that the key steps of claim 14 could be performed by a human mind or with pen and paper by deriving a decryption key from a received communication and using it to decrypt content. This indicated abstraction under Federal Circuit precedent.

Finally, the court analogized the claim to those found abstract in several other cases, where claims merely collected, organized, transmitted data without a specific new process for doing so, including Electric Power Group, LLC v. Alstom S.A., 830 F.3d 1350 (Fed. Cir. 2016) (collection, analysis, and display of data are abstract), and Two-Way Media Ltd. v. Comcast Cable Commc’ns, LLC, 874 F.3d 1329 (Fed. Cir. 2017) (broad functional steps that lacked technical details were abstract).

Alice Step Two – Does the Claim Recite an Inventive Concept beyond the  Abstract Idea itself?

At step two of Alice, the court searches for an inventive concept to ensure the claim amounts to significantly more than the abstract idea. Here, the court found no inventive concept in claim 14, when considered either element-by-element or as an ordered combination.

The court found that the claim elements recite only generic computer components like a “host device” performing conventional computer functions like “receiving” and “deriving.” Plaintiffs apparently did not dispute this.

For the ordered combination, Plaintiffs argued that using streaming data to provide decryption keys in the claimed manner was unconventional and advantageous over prior systems. But the court rejected this, finding that any such unconventional use or improvement described in the specification was untethered from the broad claim language.  The court held that even assuming the specification discloses specific steps rendering use of streams unconventional, those details are missing from claim 14.

Conclusion

Because this was at the motion to dismiss stage, the Court permitted Plaintiffs leave to amend their infringement allegations related — perhaps to include factual allegations that show eligibility.  However, the patentee subsequently provided the court with notice that it will not be filing an amended complaint.

While Plaintiffs respectfully disagree with the Court’s determination under 35 U.S.C. § 101 for all of the reasons set forth in its briefing on the issue (see, e.g., Dkt. No. 53), Plaintiffs are not filing an amended complaint and instead reserve the right to appeal the Court’s decision when final judgment is entered in this case.

P’s Response to the Court’s Order. The case is ongoing with two additional Western Digital patents — each which contain claims with more technological detail imbedded into the claims.  The outcome here recognizes that patentees are finding ways to overcome the eligibility issues, both at the PTO and in court, but there are still lots of traps. Though workarounds now often exist, Alice/Mayo still present ample opportunities to find claims abstract – particularly for computer-implemented inventions. The path forward for Plaintiffs remains challenging despite their arguments on appealability.

Alice and TRIPS Compliance

Patent

I asked Prof. Daniel H. Brean for this guest post that stems from his new paper on international patent law issues titled Business Methods, Technology, and Discrimination.  Brean is an assistant professor at Akron School of Law and Of Counsel at The Webb Law Firm. – DC

by Daniel H. Brean

The United States is obligated under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) treaty to make patent rights available and enjoyable without discrimination as to the “field of technology” of the invention.[i]  No specific areas of technology may be singled out for unjustified special treatment.

In a new paper (Business Methods, Technology, and Discrimination, 2018 Mich. St. L. Rev. __ (forthcoming), available at https://ssrn.com/abstract=3071000), I argue that the United States is doing just that with respect to computer-implemented business methods.  Doctrinally, such methods are subject to an especially high bar for patent eligibility.  Statutorily, patents on such methods may be challenged in invalidity proceedings that are exclusively available for so-called “covered business method patents.”  The law seems to reflect a skepticism that computer-implemented business methods should be broadly eligible for patenting, as well as a distaste for the aggressive enforcement of many such patents by patent assertion entities.  While these may be real problems and serious policy challenges, discrimination by technological field is not a TRIPS-compliant solution.

Discrimination can be de jure—where the law facially discriminates—or de facto.   De facto discrimination can be shown by evidence of the discriminatory effects of the law, as well as by showing that a discriminatory purpose can be inferred from the objective characteristics of the law.

From a doctrinal standpoint, Alice v. CLS Bank[ii] appears to have caused at least de facto discrimination against what the Court considered “mere” computerization of business methods. Though rooted in Mayo v. Prometheus’s[iii] field-neutral analysis, Alice fashioned a new rule against “generic computer implementation” of business practices.  The result is that the vast majority of challenged patents in the computer-implemented business method space have been rendered ineligible in district courts, in the Federal Circuit, and in the PTAB.  For applications still in prosecution, Alice rejections are disproportionately affecting the technology center that includes business method art units, with most rejections being applied in the e-commerce art units.

The upshot of the post-Alice landscape seems to be that improving computer technology per se is patent eligible, as is using computers to solve industrial or computer-centric problems, but using computer technology to facilitate a business process is not. When Alice purports to exclude generic computerization from patenting, it essentially draws a line between using technology and creating technology.  Alice calls the former non-technology when what it really means is non-inventive, which is beside the point. Many have criticized Alice for how the framework’s “search for an inventive concept” improperly blurs the line between § 101 and §§ 102-103, flying in the face of Diamond v. Diehr’s proclamation that the novelty of the components used or steps performed in a method should have “no relevance” to a § 101 determination.[iv]  TRIPS art. 27.1 itself expressly distinguishes the idea of being within a “field of technology” from the notion that patentable inventions must also be “new” and “involve an inventive step.” For Alice to exclude almost all computerized business methods from the patent system for these reasons, but on § 101 grounds, lacks coherence and appears at least de facto discriminatory.

By contrast, the Covered Business Method Review (“CBM”) program presents a fairly clear case of de jure discrimination. Alongside the creation of two other technology-neutral proceedings (inter partes review and post-grant reveiew), Congress created the CBM program, limited it to “covered business method patents,” and allowed for challenges on § 101 grounds to be made.[v]  Although Congress purported to exclude “technological inventions” from the program, the Federal Circuit and the USPTO have closely tied the reach of the CBM program to Alice, such that CBM patents are now largely coextensive with the computerized business methods that the courts, following Alice, deem ineligible.[vi]  As expected, patent claims that reach a final judgment in the CBM program are being invalidated at very high rates, especially on § 101 grounds. On top of that, the CBM program even includes two provisions that uniquely disadvantage the owners of CBM patents: (1) a narrow estoppel provision that gives petitioners broader abilities to challenge CBM patents in both the PTAB and district court;[vii] and (2) a rare right for interlocutory appeal of any decision denying a motion to stay parallel litigation—with even rarer de novo appellate review.[viii]

To be clear, not all differential treatment rises to the level of TRIPS-violating discrimination.  In the pharmaceutical context, for example, the inventions are subject to regulations and market restrictions that can justify some special accommodations.  A member country’s patent laws may properly extend the term of a drug patent to offset a lengthy regulatory review period, or may properly allow generic drug makers to begin seeking their own regulatory approval during the patent term.[ix]  But the United States’ handling of computer-implemented business methods seems to go beyond the kind of justifiable differential treatment that TRIPS tolerates. For computer-implemented business methods, the legal differences in treatment discussed above correspond to nothing unique about the subject matter, but arguably reflect broader problems in the United States patent system concerning patent examination quality and litigation abuse.

None of this discrimination is in violation of the treaty, of course, unless computer-implemented business methods are a “field of technology” under art. 27.1.  Congress and the USPTO have ostensibly assumed not, but there are several good reasons to interpret TRIPS as deeming such methods technological.  First, most definitions of “technology” encompass not only creation but also use of technological tools—a view that is consistent with Diehr’s proscription against novelty forming a part of the § 101 analysis.  Second, although business methods per se were not clearly patent eligible in the U.S. until 1998[x] (three years after TRIPS went into effect), many computerized processes had long been eligible for U.S. patent protection when TRIPS was negotiated.  Third, the U.S. has on ten separate occasions questioned, for TRIPS compliance purposes, whether the laws of other countries provided adequate protection for software and business methods.[xi]  Fourth, though the U.S. has been an outlier among TRIPS members in patenting non-computerized business methods, it is not alone.[xii]  Fifth, patenting computer-implemented business methods not only accords with the broad “useful arts” scope of patent systems historically,[xiii] but also reflects modern trends applying more scientific and technological rigor to business and financial practices.[xiv]

The fact that at least some computer-implemented business methods are patent eligible in the U.S. itself suggests that the field is technological, even if many methods in the field ultimately fall short on inventive merit.  Eligibility at the threshold is a long way from patentability, and what Alice would view as mere computerization of a well-known business process will rarely be inventive enough to be patented as a novel, nonobvious process.  But arranging and employing computers and software for practical business purposes is nonetheless a technological endeavor that brings such methods under TRIPS’ protections.

As the United States considers more changes to the availability and enjoyment of patent rights, it should end this discrimination in favor of technology-neutral practices or reforms.[xv] Otherwise, it sets a precedent of singling out disfavored technologies for disadvantageous treatment on a country-by-country basis, which could undermine the international patent law harmony that TRIPS is intended to facilitate.

= = = = =

[i] TRIPS art. 27.1 (“[P]atents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. … [P]atents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.”).

[ii] Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014).

[iii] Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012).

[iv] Diamond v. Diehr, 450 U.S. 175, 187-88 (1981) (“The ‘novelty’ of any element or steps in a process, or even of the process itself, is of no relevance in determining whether the subject matter of a claim falls within the § 101 categories of possibly patentable subject matter. … It is inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis. This is particularly true in a process claim because a new combination of steps in a process may be patentable even though all the constituents of the combination were well known and in common use before the combination was made.”); cf. KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398, 418-19 (2007) (“[I]nventions in most, if not all, instances rely upon building blocks long since uncovered, and claimed discoveries almost of necessity will be combinations of what, in some sense, is already known.”).

[v] AIA § 18(d)(1) (defining CBM patent generally as “a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service”).

[vi] See Versata Dev. Group, Inc. v. SAP Am., Inc., 793 F.3d 1306, 1327 (Fed. Cir. 2015) (“[E]ven if the invention required the use of a computer, the claim did not constitute a technological invention. As we are now instructed, the presence of a general purpose computer to facilitate operations through uninventive steps does not change the fundamental character of an invention.”) (citing Alice); Office Patent Trial Practice Guide, 77 Fed. Reg. 48756, 48763-64 (Aug. 14, 2012) (explaining that inventions are not shown to be “technological” by: (1) the “recitation of known technologies”; (2) “reciting the use of known prior art technology”; or (3) “combining prior art structures to achieve the normal, expected, or predictable result of that combination.”).

[vii] Compare AIA § 18(a)(1)(D) (applying estoppel only to arguments actually “raised” by the petitioner) with 35 U.S.C. §§ 315(e)(2), 325(e)(2) (applying estoppel to all arguments that the petitioner “raised or reasonably could have raised”).

[viii] AIA § 18(b)(2).

[ix] See Report of WTO Dispute Settlement Panel, Canada-Patent Protection of Pharmaceutical Products, WT/DS114/R (March 17, 2000), at 170-71 (“Article 27 does not prohibit bona fide exceptions to deal with problems that may exist only in certain product areas. … [Rather, Article 27 is concerned with] the unjustified imposition of differentially disadvantageous treatment.”); see also 35 U.S.C. § 156(c) (extending patent term to offset regulatory review); 35 U.S.C. § 271(e) (immunizing certain regulatory-approval activities from infringement liability).

[x] State Street Bank and Trust Company v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998) (holding patent eligible a business process involving share price calculations because it “produces a useful, concrete and tangible result”).

[xi] Stefania Fusco, TRIPS Non-Discrimination Principle: Are Alice and Bilski Really the End of NPEs?, 24 Tex. Intell. Prop. L.J. 131, 147, 150 (2016) (concluding that “the U.S. has consistently interpreted of Article 27(1) TRIPS as requiring WTO countries to provide protection to both software and business methods”).

[xii] See John R. Allison & Emerson H. Tiller, The Business Method Patent Myth, 18 Berkeley Tech. L.J. 987, 1022 (2003) (“[M]ost other countries do not recognize patents on business methods.”); Rajnish Kumar Rai & Srinath Jagannathan, Do Business Method Patents Encourage Innovation?, 2012 B.C. Intell. Prop. & Tech. F. 1, 5-6 (2012) (“Japan, Australia, Singapore and possibly Korea generally appear to follow the U.S., whereas the European Union (‘EU’), the United Kingdom (‘UK’), Canada and India are more conservative on the issue and do not favor BMPs.”).

[xiii] See generally Sean M. O’Connor, Finding the Lost “Art” of the Patent System, 2015 U. Ill. L. Rev. 1397, 1476 (2015) (explaining that “useful arts,” in its proper historical context, would include “any and all arts that involve the use of natural materials or forces for practical ends” that can be objectively measured, as opposed to measured only by taste or sentiment).

[xiv] John F. Duffy, Why Business Method Patents?, 63 Stan. L. Rev. 1247, 1263 (2011) (explaining that “[a]s early as the mid-twentieth century, engineers and physical scientists were already migrating into the academic realms of business, economics, and management”).

[xv] For example, avoiding the § 101 question and resolving such issues on other patentability grounds. See Dennis Crouch & Robert Merges, Operating Efficiently Post-Bilski by Ordering Patent Doctrine Decision-Making, 25 Berk. Tech. L. J. 1673, 1686-87 (2010) (describing studies showing that 84-94% of claims rejected on Section 101 grounds in the USPTO are also rejected on other grounds, which “show[s] an exceptionally high rate of doctrinal overlap and lends credence to the idea that, by initially avoiding subject-matter-eligibility questions, many of those potential issues will be avoided”).

“Intent Engine” Claims Fail 101 for Lack of Technological Inventive Concept

Patent

by Dennis Crouch

USC IP P’ship, L.P. v. Meta Platforms (Facebook), 22-1397 (Fed. Cir. August 30, 2023)

In a non-precedential opinion authored by Judge Pauline Newman, the Federal Circuit has affirmed USC IP Partnership’s asserted patent claims are all invalid.  Back in 2020, USC IP sued Facebook for infringing its U.S. Patent No. 8,645,300.  The arguably pro-patentee Judge Alan Albright served as the district court judge.  Like Judge Newman, he had also found the claims invalid as unduly directed to an abstract idea. USC IP P’ship, L.P. v. Facebook, Inc., 576 F. Supp. 3d 446 (W.D. Tex. 2021) (granting summary judgment of ineligibility).

A difficulty with search engines, and communication generally, is that parties often fail to fully and literally state their needs.  We are often left inferring intent based upon other clues, such as situational context or our knowledge of the speaker.  USC IP’s ‘300 patent attempts to provide some solutions to this problem through its “intent engine” that uses an “intent tool” as well as a ranking tool to provide better results. The intent engine analyzes information about the user to predict their intent and displays this inferred intent in the intent field. It also recommends webpages matching the intent in the recommendation field. The user can provide ranking data on how well the webpage matches their intent via the ranking tool, and this data is stored in a database. As recited in the claims, the intent engine combines intent prediction, webpage recommendation, and user ranking to deliver a customized browsing experience. But, the claims focus on the high-level functionality of the system rather than the technical details of how intent analysis, recommendation algorithms, or data storage operate.  In some of the claims, the process is interactive — with the system prompting visitors to confirm their intent before recommending webpages matching the intent.

As per usual, the Federal Circuit analyzed patent eligibility under the two-step test set forth in Alice Corp. v. CLS Bank Int’l, 573 U.S. 208 (2014). At step one, the court looks to whether the claims are directed to an abstract idea such as a fundamental economic practice or mathematical formula. If so, the court proceeds to step two, where it considers whether the claims contain an “inventive concept” sufficient to transform the abstract idea into a patent-eligible application. This process involves looking at the claim elements individually and in combination to assess whether they amount to significantly more than the abstract idea itself.

Applying the two-step Alice framework, the Federal Circuit agreed with the district court that the claims are directed to the abstract idea of “collecting, analyzing and using intent data.” This kind of data collection and analysis is an abstract idea, even  if implemented on a computer. The court compared USC IP’s claims to those invalidated in Electric Power Group, LLC v. Alstom S.A., 830 F.3d 1350 (Fed. Cir. 2016).

At Alice step two, the court agreed that the claims lack an inventive concept to transform the abstract idea into a patent-eligible application. They merely invoke generic computer components like web browsers and databases. As Judge Albright explained, the “intent engine” is described only as a black box without accompanying technical details.

The patentee’s key argument on appeal was at step-2, arguing that the “intent engine” was not a conventional or generic computer component, but provided a technical solution rooted in computer technology like the claims in DDR Holdings. The patentee argued the intent engine played a role that went beyond well-understood, routine, and conventional computer functionality.  And, the patentee provided expert testimony at the district court level in an attempt to support this conclusion.

On appeal, the Federal Circuit rejected these arguments and again affirmed Judge Albright’s holdings. Albright had disregarded the expert testimony as merely providing legal conclusions without underlying factual support — finding it not “backed by any concrete facts from the specification or prior art.”  The appellate panel went on to agree that the ‘300 patent claims are not directed to any improvement in computer functionality itself but merely describe the use computers as a tool.

The claims here were filed and issued prior to Alice and Mayo at a time when many patents were focused more on the functional terms without the accompanying technical details.  Today, many are thinking of similar tools in the generative AI context. Like here, I expect that gen-AI tools will face high patent eligibility obsticles absent inclusion of strong technical implementation details placed at least within the specification, but more likely within the claims themselves.

 

Patent Eligibility of Claims Directed to Printed Matter

Patent

by Dennis Crouch

C R Bard Inc. v. AngioDynamics, Inc., No. 19-1756 (Fed. Cir. 2020) (Opinion by Judge Reyna, joined by Judges Schall and Stoll).

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Important: The court in this case particularly holds that “a claim may be found patent ineligible under § 101 on the grounds that it is directed solely to non-functional printed matter and the claim contains no additional inventive concept.”

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Question: How does the printed-matter-doctrine apply to letters that can only be read using an X-ray?

Answer: It is still printed matter; the limitations are given no patentable weight; and might render the whole claim ineligible.

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The invention in this case was prompted by a 2005 FDA labelling requirement for IV ports capable of handling fluids “power injected” directly into a patient’s veins.  (Most IV ports are designed for low-pressure gravity flow).  Bard’s IV ports were apparently already designed for use in power-injection, but not fully labelled.

More than Skin Deep: The problem with labelling is that the ports are under the skin, and so are not susceptible to a written label.  Bard’s solution: “a radiographic marker in the form of the letters ‘CT’ etched in titanium foil on the device.”   The radiomarker would then be seen on a pre-treatment “scout scan.”  The products also include shapes palpable through the skin, although that feature is not required in the claims:

providing an access port including … a radiographic feature indicating that the access port is suitable for flowing fluid at a rate of at least 1 milliliter per second through the access port …

identifying the access port as being suitable for flowing fluid at a rate of at least 1 milliliter per second through the access port via the image of the radiographic feature of the access port …

Claim 8 of US8805478.  In essence, Bard wants to be the only company that sells ports with the CT radiographic marker.

In 2015, Bard sued AngioDynamics for infringement and the case went to trial before a jury. But, the jury never got to deliberate.  After Bard presented its case-in-chief the court terminated the trial and granted JMOL (directed verdict) for the defendant — finding particularly: no infringement, no willful infringement, and that the claims are invalid as directed ineligible subject matter (printed matter) and also not inventive. The district court explained:

Fundamentally, after listening to the evidence presented to the jury and considering the evidence for the previous motions for summary judgment, the Court finds this patent is about labeling, not invention and not technology.

C R Bard Inc. v. AngioDynamics Inc., 382 F. Supp. 3d 332 (D. Del. 2019).

Printed Matter Doctrine: Under Praxair and other cases, the Federal Circuit has expanded the printed matter doctrine to “encompass[] any information claimed for its communicative content.” Printed matter can be patent eligible it is functional rather than merely communicating about the invention.

Here, the court found that the marker is on the port as a label precisely for the purpose of informing others about the functionality of the product.

Indeed, as early as the 1930s, our predecessor court recognized that the mere marking of products, such as meat and wooden boards, with information concerning the product, does not create a functional relationship between the printed information and the substrate. See In re McKee, 75 F.2d 991 (CCPA 1935); In re Johns, 70 F.2d 913 (CCPA 1934); In re Bruce, 56 F.2d 673 (CCPA 1932).

Slip Op.

Printed Matter and Eligibility: So we have claimed printed matter what next?:  One answer is that portion of the claim is “not entitled to patentable weight.”  The second question though is weather the entire claim fails under Alice?

Although the underlying rationale of the printed matter doctrine lies in the requirements of subject matter eligibility under § 101, our case law has typically applied the doctrine to hold that specific limitations of a claim are not entitled to patentable weight for purposes of novelty under § 102 and non-obviousness under § 103.

Slip Op.

Although the court has traditionally not applied eligibility-doctrine to printed-matter, the court here notes that prior precedent “did we foreclose the possibility that an entire claim could be found patent ineligible when the claim as a whole is directed to printed matter.” Slip Op.

We therefore hold that a claim may be found patent ineligible under § 101 on the grounds that it is directed solely to non-functional printed matter and the claim contains no additional inventive concept.

Id. On the merits of this case, the court found that Step-Two of Alice (lack of “something more”) was not clear enough for a directed verdict summary judgment:

AngioDynamics’s evidence is not sufficient to establish as a matter of law, at Alice step two, that the use of a radiographic marker, in the “ordered combination” of elements claimed, was not an inventive concept.  Even if the prior art asserted by AngioDynamics demonstrated that it would have been obvious to combine radiographic marking with the other claim elements, that evidence does not establish that radiographic marking was routine and conventional under Alice step two.

Id.  A confusing aspect of the decision is that it identified its judgment on Section 101 as a “reversal”, but really looks more like a vacatur.

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What is the impact of a claim term being “not entitled to patentable weight.”  Here, the court narrowly defined the printed matter as “the information that the claimed access ports are suitable for [power] injection.”  The court still gave weight to the requirement of a “radiographic marker.” Thus, if you scroll up to the two claim-terms that I copied, it appears that the first term (“providing … a radiographic feature”) is given patentable weight while the second term (acting on information provided by the feature) is not.  The district court gave neither patentable weight. On appeal the court also vacated on anticipation.

On remand there will be a new trial on infringement and validity, apparently including aspects of Alice Step 2.