Tag Archives: Abstract Idea

Managing tipping payments is an administrative problem, not a technological problem

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by Dennis Crouch

This is the third eligibility post in as many days.  In a non-precedential decision issued September 10, 2024, the Federal Circuit affirmed the PTAB’s rejection of claims in a patent application directed to eliciting tips for media content — finding them ineligible. In re McDonald, No. 24-1015 (Fed. Cir. Sept. 10, 2024).

The applicant here is a Utah start-up VidAngel, Inc., that helps folks “Filter out the stuff you don’t want to see or hear in your streaming movies & TV shows, like profanity, nudity, violence & more.  But, the invention here has a different focus – it is a setup for eliciting and receiving tips from consumers of media content like streaming movies.

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Drafting for Eligibility: Insights from the Federal Circuit’s Contour IP v. GoPro

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by Dennis Crouch

In Contour IP v. GoPro, the Federal Circuit has reversed a Judge Orrick (N.D.Cal.) summary judgment of ineligibility.  The case here should be one for patent drafters  to consider — particularly thinking about how to incorporate specific technological improvements into their patent claims and specification (while still maintaining broad claim coverage).  Of course, the patentee here has the benefit of actual hardware beyond mere processing.

Contour owns two patents related to POV video cameras. These patents claim a camera system having lenses, sensors, etc., that generates two video streams of different quality in parallel, wirelessly transmitting the lower-quality stream to a remote device for real-time viewing and control on your phone. The higher-quality stream is stored on the camera for later use.

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From Knobs to Pixels: UI Patent Eligibility on Trial

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by Dennis Crouch

For over 150 years, “user interfaces” have been a staple of patent protection, evolving from the physical realm of tool handles and knobs to today’s digital screens. Although tangible interface elements continue be patented as components of larger systems, the market shift towards on-screen interfaces has been paralleled with the anti-eligibility shift in Mayo and Alice. The Federal Circuit recently waded into these murky waters in Broadband iTV, Inc. v. Amazon.com, Inc., No. 23-1107 (Fed. Cir. Sept. 3, 2024), examining the patent eligibility of electronic programming guides and content recommendation systems. Affirming a decision by Judge Albright, the appellate panel held that the claimed inventions lacked eligibility under 35 U.S.C. § 101, distinguishing some prior GUI cases that sided with the patentee.

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Means-Plus-Function Claims in Patent Eligibility and Infringement Analyses

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by Dennis Crouch

Means-plus-function claims have generally been disfavored because of the tendency of courts to  either (1) narrowly construe their scope when corresponding structure is detailed in the specification or (2) render them invalid as indefinite when the specification lacks sufficient corresponding structure. If Impact Engine’s petition is well received, there is a good chance that this historically popular claim style will see a revival. 

The Federal Circuit’s recent decision in Impact Engine v. Google has again raised the issue of over the proper treatment of MPF, this time regarding patent eligibility and infringement analyses. Appeal No. 22-2291  (Fed. Cir. July 3, 2024).  I had skipped a write-up of the non-precedential decision, but now Impact Engine has petitioned for en banc review, arguing that (more…)

Federal Circuit Affirms Invalidity of Blockchain Gemstone Tracking Patent Under Section 101

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by Dennis Crouch

In Rady v. The Boston Consulting Group, Inc., No. 2022-2218 (Fed. Cir. Mar. 27, 2024), the Federal Circuit affirmed the dismissal of a patent infringement lawsuit, holding that the asserted claims of Rady’s US10469250 were ineligible under 35 U.S.C. § 101.  The patent, owned by Max Rady, patent describes scanning a physical item, determining its unique pattern of imperfections (i.e., “signature”), and recording that signature to a blockchain if not previously registered.

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Eligibility for Dummies; Benson Redux

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by Dennis Crouch

I’ve become somewhat callous toward patent eligibility jurisprudence and so was surprised when I read the Federal Circuit’s decision in ADASA Inc. v. Avery Dennison Corp., 55 F.4th 900 (Fed. Cir. Dec 16, 2022). The case concluded that constructively dividing a fixed-length binary number into different sub-portions was not an abstract idea.  Now, the accused infringer has asked the Supreme Court for review.

ADASA’s US Patent 9,798,967 is directed toward an RFID chip “encoded with a unique object number.”  This object number as various blocks pre-allocated to identify the selling-company, product reference, and serial number as shown below.  The serial number has a unique feature of being divided into a section of “most significant bits” (MSBs) and “least significant bits” (LSBs). This division between MSBs and LSBs help in the allocation of unique serial numbers in a distributed production system.  The basic approach:

  • A product-line will be exclusively allocated a particular MSB and all possible accompanying LSBs. It will then enable RFID chips using the allocated MSB and then sequentially incrementing the LSB.
  • A separate product line might also be simultaneously enabling other other chips. To ensure no overlap in serial numbers, the second-line will be allocated a different MSB.
  • The result then is that we can guarantee that each chip has a unique serial number despite parallel production lines.

The claims do not appear to include any novel features other than this constructed division between bits in a binary number.  (Claim 1, is reproduced below). In its petition, the adjudged infringer relies heavily on the old cases of Benson and Flook to argue that the setup here lacks eligibility.

Question presented:

Radio Frequency Identification Device (RFID) tags are encoded with lengthy serial numbers that uniquely identify particular items. The patent at issue in this case designates the leading bits in a binary serial number as “the most significant bits,” and directs that all serial numbers in an allocated block begin with the same “most significant bits.”

The question presented is whether that claim, by subdividing a serial number into “most significant bits” that are assigned such that they remain identical across RFID tags, constitutes patent-eligible subject matter under 35 U.S.C. § 101.

Avery Dennison Petition.

Chief Judge Moore wrote the opinion and concluded that the claims were not directed to an abstract idea but rather provides a novel data structure within a serial number.  Here, the idea is that the patentee was able to create a new data field that was “not a mere mental process, but a hardware-based data structure focused on improvements to the technological process by which that data is encoded;” and an improvement with “important technological consequences.”

An interesting feature is that the general idea presented by the patentee was already identified and discussed in the book RFID for Dummies.  If Avery Dennison loses here, then the district court will hold a trial on anticipation.  Still, the “for Dummies” label has strong rhetorical appeal — should everything in that book title be considered an abstract idea?  The petitioner writes:

“[A]bstract ideas are not patentable.” … It is hard to imagine a more blatant transgression of that rule than the claim in this case, which sought a patent monopoly over the simple concept of treating one long serial number as the combination of two shorter numbers, and then [requiring] blocks of RFID tags all start with the same shorter number. At bottom, that claim is no different from a direction to mentally subdivide all telephone numbers into two component parts and then assign the same leading part to an allocated block of numbers (e.g., all telephone numbers in the District of Columbia start with 202). That may be a good idea (indeed, the concept in ADASA’s patent appears in the pages of RFID for Dummies), but it is no more patentable than the other good but abstract ideas that this Court has held unpatentable for more than 150 years.

Id.  I’m confident that if the Supreme Court takes this case, it would even further expand eligibility doctrine.

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A Typical Eligibility Case in 2023

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by Dennis Crouch

The U.S. Constitution authorizes Congress to legislatively create a patent system. And, Congress has so since the beginning, with George Washington signing the the First Patent Act into law in 1790.  As Congress continued to legislatively develop the statute, courts also added common law nuance, including the law of patent eligibility.  In Bilski, the Supreme Court recognized that the traditional exclusions of “abstract ideas” and “laws of nature” were not textually derived, but were of such antiquity that their precedent could be maintained and justified. Bilski v. Kappos, 561 U.S. 593 (2010). Later, in Mayo and Alice, the Supreme Court fleshed-out its two step test for determining eligibility for these categorical exclusions.

  1. Ask whether the claimed invention is directed toward a categorical exclusion.
  2. If yes, ask whether the claimed invention includes something more, such as an inventive concept that transforms the abstract idea into a patent eligible invention.

Mayo v. Prometheus, 566 U.S. 66 (2012); Alice Corp. v. CLS Bank International, 573 U.S. 208 (2014).  Since 2012, almost 2,000 court decisions have referenced these cases along with 8,000+ PTAB decisions.  These were clearly watershed cases that dramatically changed the landscape of patent law and patent litigation.

Prior to Alice/Mayo, most courts focusing on eligibility  issues contended with major policy goals associated with preemption of ideas and fundamental principles.  That analysis reeks of policymaking and helps explain why courts shied away.  The Alice/Mayo revolution systemized eligibility doctrine into a framework more familiar to judges. Although the purpose is still to avoid improper preemption of fundamental ideas, courts no longer have to grapple with the question of preemption, but rather only the jurisprudential proxies created by the Court.

The recent decision in Hawk Tech Sys. v. Castle Retail, — F.4th — (Fed. Cir. 2023), highlights the current state of the law.  Hawk’s patent relates to video surveillance systems, and claims a method of receiving and/or converting stored video images and then displaying them simultaneously on a remote viewing device.  The district court quickly dismissed the case under R.12(b)(6), finding the claim ineligible on its face.  On appeal  the Federal Circuit affirmed.

At some level, all inventions rely upon abstract ideas and laws of nature for their operation.  At Step 1, Alice asks a more pointed question — is the claim “directed to” one of those excluded forms.  The primary focus then is on what the patent itself “asserts to be the focus of the claimed advance,” looking to both the claim language and the associated specification. Solutran, Inc. v. Elavon, Inc., 931 F.3d 1161 (Fed. Cir. 2019).   Hawk’s claims are directed to a method of viewing images, and includes a series of steps: “receiving, displaying, converting, storing, and transmitting digital video” that are all claimed “using results-based functional language.”  This combination of a data-manipulation process claimed at a high level of abstraction has been regularly tagged as being directed to an abstract idea.  In other cases, details in the specification showing a technological solution has saved claims at step 1.  Here, however, the court concluded that the abstract idea analysis focuses on the claim language itself.  Here, the court (in my view) mis-cited ChargePoint, Inc. v. SemaConnect, Inc., 920 F.3d 759 (Fed. Cir. 2019).  In that case, the court noted that technical details in the specification shouldn’t be imported into the claims for Alice step-on analysis.  Hawk’s argument was somewhat different — it suggested that the specification provided an explanation as to how the claimed approach solved a particular problem.  Even still, the patentee’s arguments are likely lacking because of the dearth of details in both the claims and the specification.  The court concluded that the claims simply “fail to recite a specific solution to make the alleged improvement … and at most recite abstract data manipulation.”

At step 2 the appellate panel agreed with the district court that the claims failed to show any technological improvement sufficient to be considered an inventive concept.  Here, the court concluded that achieving a novel technological benefit was insufficient because the claims were written in “generical functional language” relying upon “conventional computer and network components operating according to their ordinary function.”

One quirk of the district court decision was that it held a hearing and considered some evidence prior to deciding the R.12(b)(6) motion.  But, those motions are designed to be based simply on the pleadings. The rules further provide that, if a court considers matters outside the pleadings then “the motion must be treated as one for summary judgment.”  FRCP 12(d).  And, once it becomes summary judgment, then the court needs to allow more time for the parties to develop the factual evidence.   On appeal, the Federal Circuit agreed that the district court erred, but concluded that the error was harmless since the district court’s decision did not hinge on any of the additional material presented.

Affirmed.

Note: The patent here claims a 2002 priority date, but the particular application was filed in 2017 and issued in 2019.  I.e., the case was considered and passed muster under the USPTO’s eligibility examination guidelines.

Justin Hasford of Finnegan handled the the case below and the appeal for the defendant, Castle Retail.  Chris Austin of Weide & Miller represented the patentee .

Receiving a Sequence of Symbols

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I am somewhat amazed by Google’s New Patent No. US 9633013 B2; Claim 1 below:

1. A computer-implemented method comprising:

receiving a sequence of symbols that have been optically captured from a rendered document;

determining that the sequence of symbols includes a particular symbol, word, or phrase that has been mapped to one or more actions;

selecting an action from the one or more actions; and

transmitting an instruction to a document management system to perform the selected action.

In addition to its gaping abstract idea problems, the patent claims priority to a collection of more than one hundred (100) provisional patent applications – 2004 priority date.

Despite this application being filed in 2016 and issued in 2017, the claims were never rejected on eligibility grounds – or on any grounds other than obviousness-type-double-patenting.  The notice of allowance explains:

The prior art of the record fail to teach or suggest singly and/or in combination a system and computer implemented method which provides for receiving a sequence of symbols that have been optically captured from a rendered document, determining that the sequence of symbols includes a particular symbol, word, or phrase that has been mapped to one or more actions, selecting an action from the one or more actions, and transmitting an instruction to a document management system to perform the selected action as prescribed for in the claimed invention.

I’ll also note here that the patent appears to be co-owned by Google and the widow of named inventor, Martin King.  More claims continue to be filed in the family, including pending APN 15/462,309, which has also been rejected only on one ground – obviousness type double patenting – without any consideration for Alice/Mayo.   The first claim of the ‘309 patent soon-to-issue is as follows (written as Claim 20):

15462309

Abstract Ideas: The Turnstile Keeps Spinning

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by Dennis Crouch

Smart Sys. Innovations v. Chicago Transit Authority (Fed. Cir. 2017)

In a split opinion, the Federal Circuit has affirmed the district court’s judgment on the pleadings – R. 12(c) – that the asserted claims of SSI’s four patents are invalid under Section 101 for claiming an abstract idea.  U.S. Patent Nos. 7,566,003, 7,568,617, 8,505,816, and 8,662,390. (Claim 14 of the ‘003 patent – covering a method for validating entry to a city bus or train – is reproduced below).

The baseline for eligibility analysis is the two-step Alice test:

A patent claim falls outside § 101 where (1) it is “directed to” a patent-ineligible concept, i.e., a law of nature, natural phenomenon, or abstract idea, and (2) if so, the particular elements of the claim, considered “both individually and ‘as an ordered combination,’” do not add enough to “‘transform the nature of the claim’ into a patent-eligible application.”

Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350 (Fed. Cir. 2016) (quoting Alice).

The patents here are are directed to a method for collecting fares – without dedicated fare-cards, paper tickets, or tokens.  Instead, the system uses credit/debit cards.   After “stripping” the patent claims from their technical jargon and obtuse syntax, the District Court ruled that the patents “really only cover an abstract concept [of] paying for a subway or bus ride with a credit card.”

On appeal, the Federal Circuit affirmed – holding that these steps were – as a whole – directed toward an abstract idea:

The Asserted Claims are not directed to a new type of bankcard, turnstile, or database, nor do the claims provide a method for processing data that improves existing technological processes. Rather, the claims are directed to the collection, storage, and recognition of data. We have determined that claims directed to the collection, storage, and recognition of data are not [sic] directed to an abstract idea.

Note here the suggestion from the court that “a new type of bankcard, turnstile, or database” could be patent eligible.  Here, the limitation to the field of mass-transit did not help the patentee: “merely limiting the field of use . . . does not render the claims any less abstract.” Quoting Affinity Labs.  In thinking through the step one, the majority looked toward the Alice focus on whether the claims are “directed to” an abstract idea.  According to the court – that question is separate and distinct from the “thrust,” “heart,” or “focus” of the invention.

According to the majority, Alice Step 2 is also easily met – because the tech-focused aspects of the claims are simply directed to the use of a general purpose computer and thus “offer no inventive concept that transforms them into patent-eligible subject matter.”  In the process of reaching this result, the court distinguished both Diehr and DDR Holdings:

  • Diehr does not apply when, as here, the claims at issue use generic computer components “in which to carry out the abstract idea.”
  • DDR Holdings does not apply when, as here, the asserted claims do not “attempt to solve a challenge particular to the Internet.”

Finally, the majority considered several ‘other arguments’ regarding eligibility:

  • No preemption: Although one purpose of the abstract-idea exception is to limit preemption, the test itself does not actually consider preemption.  Thus, once the abstract idea analysis is completed “preemption concerns are … moot” Ariosa.
  • Transformation:  Although the machine-or-transformation test “can provide a useful clue to the second step of the Alice framework” it does not overwhelm the primary search for an ‘inventive concept.’ Quoting Ultramercial.

Thus, the claims were all affirmed to be invalid and thus not enforceable.

The majority opinion was penned by Judge Wallach and joined by Judge Reyna.  Judge Linn filed an opinion dissenting in part. Judge Linn argues that the “gist” analysis by the Federal Circuit is improper:

The majority commits the same error as the district court in engaging in a reductionist exercise of ignoring the limitations of the claims in question and, at least with respect to the ’003 and ’617 patents, in failing to appreciate that the abstract idea exception—if it is to be applied at all—must be applied narrowly, consistent with its genesis. . . . All three nonstatutory exceptions are intended to foreclose only those claims that preempt and thereby preclude or inhibit human ingenuity with regard to basic building blocks of scientific or technological activity. They are intended to be read narrowly.

As the Supreme Court has done in its 101 analysis, Judge Linn linked his work back to cases such as Le Roy, Mackay, and Funk Bros. The language of those cases focus on “fundamental truths” and “hitherto unknown phenomenon of nature.”  In Benson and Alice, the court also explained “Phenomena of nature, though just discovered, mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work.”

For Judge Linn, a method of charging a bank-card at a bus-turnstile does not fit into those expansive definitions.

Judge Linn’s opinion recognizes that his concern directly stems from the Supreme Court’s approach in Alice and Mayo.  He writes: “The problem with this test, however, is that it is indeterminate and often leads to arbitrary results.”  His solution is that the two part test should not be “applied in a legal vacuum divorced from its genesis” and the three exceptions should be treated consistently. Patents should not be struck down simply because they “seemingly fail the Supreme Court’s test.” Rather, the focus should be on whether the patents “attempt to appropriate a basic building block of scientific or technological work.”

The solution for Judge Linn: Focus on the language of the claims and each limitation when determining whether a claim is directed to an abstract idea – “a basic building block of scientific or technological activity” or instead to a “tangible application” that serves a “new and useful end.”

= = = = =

Here is Claim 14 of the ‘003 patent:

A method for validating entry into a first transit system using a bankcard terminal, the method comprising:

downloading, from a processing system associated with a set of transit systems including the first transit system, a set of bankcard records comprising, for each bankcard record in the set, an identifier of a bankcard previously registered with the processing system, and wherein the set of bankcard records identifies bankcards from a plurality of issuers;

receiving, from a bankcard reader, bankcard data comprising data from a bankcard currently presented by a holder of the bankcard, wherein the bankcard comprises one of a credit card and a debit card;

determining an identifier based on at least part of the bankcard data from the currently presented bankcard;

determining whether the currently presented bankcard is contained in the set of bankcard records;

verifying the currently presented bankcard with a bankcard verification system, if the bankcard was not contained in the set of bankcard records; and

denying access, if the act of verifying the currently presented bankcard with the bankcard verification system results in a determination of an invalid bankcard.

Do you get the Gist: Tracking Mail is an Abstract Idea

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Secured Mail v. Universal Wilde (Fed. Cir. 2017)

The district court dismissed this case for failure to state a claim upon which relief can be granted – R.12(b)(6) – after finding that the claims of all seven asserted patents were ineligible under 35 U.S.C. 101.  On appeal, the Federal Circuit has affirmed.  U.S. Patent Nos. 7,814,032, 7,818,268, and 8,073,787 (“Intelligent Mail Barcode”); Nos. 8,260,629 and 8,429,093 (“QR Code”); and Nos. 8,910,860 and 9,105,002 (“Personalized URL”).

The patents all involve an mailer (i.e. package or envelope) with an identifier on the outside such as a barcode, QR code, or URL.  Once delivered, information is communicated (via computers) to the recipient about the contents and the sender.

As Patently-O readers understand, abstract ideas themselves are not patentable. Likewise a patent directed to an abstract idea is also unpatentable, unless the claims include an additional inventive concept that goes beyond the unpatentable idea to “transform the nature of the claim into a patent-eligible invention.” Alice.

The Alice two-step inquiry first asks whether the claims are directed to an abstract idea.  Here, the courts agreed that the claims “are directed to the abstract idea of communicating information about a [mailer] by use of a marking.”  Under Step Two, the appellate panel found that the claims merely recited “well known and conventional ways to allow generic communication between a sender and recipient using generic computer technology.”  Invalid.

I have included claim 1 of the ‘002 patent below (issued post-Alice):

 

1. A method for providing electronic data to a recipient of a mail object, comprising:

using an output device to affix a single set of mail ID data to said mail object, said single set of mail ID data including at least recipient data, said recipient data comprising a personalized network address associated with said recipient of said mail object;

submitting said mail object to a mail carrier for delivery to said recipient of said mail object;

receiving said recipient data from a reception device of said recipient via a network; and

providing by at least one processor said electronic data to said reception device via said network in response to receiving said recipient data, said electronic data comprising a sender’s web page that identifies said recipient of said mail object and includes data corresponding to a content of said mail object;

wherein said electronic data is configured to be displayed to said recipient via a web browser on a display of said reception device.

Note – the patentee has at least one additional patent issued in the family (US 9,390,394). However, that new patent does not appear to include any new inventive elements that go beyond the prior family members.

Read it and weep: [Federal Circuit Opinion]

I’ll note here that I believe the force behind the patentee is patent attorney Todd Fitzsimmons who also runs his own LA County patent firm.

 

AIPLA On Board with Statutory Reform of 101

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The AIPLA has now offered its legislative proposal for rewriting 35 U.S.C. § 101 that is quite close to that offered by the IPO:

Inventions Patentable

(a) Eligible Subject Matter.—Whoever invents or discovers any new and useful process, machine, manufacture, composition of matter, or any useful improvement thereof, may obtainshall be entitled to a patent therefor, subject only to the conditions and requirements ofset forth in this title.

(b) Sole Exceptions to Subject Matter Eligibility.—A claimed invention is ineligible under subsection (a) only if the claimed invention as a whole exists in nature independent of and prior to any human activity, or can be performed solely in the human mind.

(c) Sole Eligibility Standard.—The eligibility of a claimed invention under subsections (a) and (b) shall be determined without regard to the requirements or conditions of sections 102, 103, and 112 of this title, the manner in which the claimed invention was made or discovered, or whether the claimed invention includes an inventive concept.

AIPLA statement. The AIPLA proposal is strikingly similar to that of the IPO’s (although not acknowledged by the AIPLA statement).

[DOCX File of Table: Comparing101Proposals] Comparing101

EasyWeb => Easy 101 Invalidation

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EasyWeb v. Twitter (Fed. Cir. 2017) (nonprecedential opinion)

In this case, the appellate court affirmed summary judgment that all of the asserted claims of five EasyWeb patents are ineligible under the Mayo/Alice interpretation of 35 U.S.C. 101 and therefore invalid.

Representative Claim 1 of U.S. Patent No. 7,685,247 is directed to a message-publishing-system that “accepts messages in multiple ways, such as by fax, telephone, or email” then verifies the message as being sent from an authorized sender, converts the message to a web format, and publishes the message on the Internet.  Although claim 1 is directed to a computer system, it includes a functionally claimed software component:

A message publishing system (MPS) operative to process a message from a sender in a first format, comprising:

a central processor;

at least one sender account;

at least one storage area configured to store at least a first portion of the message;

and software executing in the central processor to configure the processor so as to:

  1. identify the sender of the message as an authorized sender based on information associated with the message in comparison to data in the sender account, wherein the identification is dependent upon the first format;
  2. convert at least a second portion of the message from the first format to a second format; and
  3. publish the converted second portion of the message so as to be viewable in the second format only if the sender has been identified as an authorized sender.

Following the now standard two-step eligibility analysis, the court first found the claim directed toward an abstract idea.

Claim 1 merely recites the familiar concepts of receiving, authenticating, and publishing data. As we have explained in a number of cases, claims involving data collection, analysis, and publication are directed to an abstract idea.

Of import here for the abstract idea finding is that the claim simply uses generic computer technology rather than improving-upon the technology or designing particularized components.

Moving to step-two, the court looked – but could not find – an “inventive concept” beyond the claimed abstract idea sufficient to “transform the nature of the claim’ into a patent-eligible application.” (quoting Alice).

Although EasyWeb argues that an inventive concept arises from the ordered combination of steps in claim 1, we disagree. Claim 1 recites the most basic of steps in data collection, analysis, and publication and they are recited in the ordinary order. In sum, all the claims are directed to the abstract idea of receiving, authenticating, and publishing data, and fail to recite any inventive concepts sufficient to transform the abstract idea into a patent eligible invention.

Its decision is not quite correct, the Federal Circuit does not find abstract ideas simply because a claim involves “data collection, analysis, and publication.”  However, when (as here), the claim is directed toward these activities at a high level of abstraction, then the Alice/Mayo approach easily fits.

Analytically, the decision adds further weight to the theory that steps 1 and 2 are closely linked and are highly likely to correlate with one another.

No real consensus yet on CBM Sunsetting

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Once initiated, CBMs are identical to post-grant reviews (PGR) – allowing for patents to be challenged on any patentability grounds.  As implemented, this includes 101 and 112 challenges in addition to the more traditional obviousness and novelty grounds.   PGRs, however, are limited to only AIA-patents and must be filed within a 9-month window from issuance.  Those caveats have severely limited the number of PGR petitions filed thus far.   For CBMs, the AIA-patent restriction and 9-month window are both eliminated.  However, the statute creates a subject-matter limitation that restricts CBMs to only non-technological financial-services business method patents.

Another feature of the CBM program is that it is “transitional” – i.e., it sunsets in 2020 and no petitions will be accepted after that date.

Last week, I hosted a quick anonymous survey on the transitional Covered Business Method Review program — asking whether the CBM program should be allowed to sunset or somehow extended.  240 Patently-O readers responded with results shown in the chart below.  About 44% of responses favored ending of the program outright — allowing it to sunset.  About 29% favored extending the program as-is, with the narrow financial-services scope.  The remaining favored extension and expansion: 17% would expand the scope to include all information processing patents, and the remaining 10% would extend the program to include all patents.  This final option would essentially mean ending the 9-month window for PGR filing.

CBMSunset

 

The survey also offered (but did not require) an explanation of the answer.  A variety of themes emerge from that explanation. The following are a few examples.

For patent challengers, the key response is that “it works” as a mechanism for cancelling patents, and could be extended to other technology areas.  

  • CBM is a big success addressing one of the most abused categories of patents. Extend it to the very worst and most abused patents by including all of information processing and it can help clean up the system and make it stronger.
  • Business methods are not the only abstract processes being patented by the Office Patent. A majority of all information processing methods (even those outside of the Business arts) suffer from encompassing non-statutory abstract processes without reciting subject matter that amounts to anything significantly more than said abstract processes.

The historic problem associated with poor business method examination quality has now been fixed. 

  • It was intended to handle a temporary problem in a specific area.  State Street caused a flood of applications in an area that was new to the USPTO.  Now skills and databases have developed and the stats show that there is no particular need for either expanding or extending CBM.  Permanently singling out a particular subject matter for extra scrutiny could cause other countries to do the same in other areas.
  • If the goal was to clean up shoddy and overly broad patents and applications, then most all of the necessary work should be done by then.  There are existing mechanisms in place that should be forcing quality such that this becomes redundant and therefore unnecessary.
  • It was a political sop to begin with and should be allowed to expire per the legislation and the underlying political agreement.  It’s argument was to take care of “low-hanging fruit”, patents of old vintage, issued when the Office’s resources in this area were low.  8 years is more than enough time to pick that fruit.
  • CBM petitions are declining because most of the patents intended for consideration have already been undone.

Patents need to be strengthened, not weakened. 

  • The patent systems is already nearly dead.  Make patent owners in all areas feel the pain of having their patent rights trampled over by a kangaroo administrative court.
  • Broad restrictions on patentability are harming U.S. competitiveness in the areas of its greatest strength.  China and the EU are poised to eat our lunch, and we are serving it up to them.
  • A terrible idea from the outset.
  • It (CBM) deprives some of the best technological innovators the chance to protect their valuable property.  Abandon CBM, and instead seek recourse to the traditional approaches (102, 103 and 112) to rid the patent landscape of those patents that don’t rise to the level of technological innovation.

The PTAB process is either corrupt or incompetent. 

  • It has been abused by petitioners and PTAB has taken it too far.
  • Go back to district court litigation. The present scheme is a disaster.
  • The USPTO is turning into a mini-court system. That is not its competency. It needs to focus on technology, granting patents to those inventions that meet the basic statutory criteria, and leave the legal hair-splitting to courts.
  • This is a corrupt Review that benefits a specific class of infringers and is detrimental to the development of new technology.

The approach should be ended because it violates the constitutional rights of patent owners.

  • Unconstitutional.
  • AIA has overstepped its boundaries on constitutional grounds as patents are private rights.
  • All patent owners are entitled to due process, and that includes the right of access to a court of law before their patents are summarily cancelled by a political, the end-justifies-the means, so-called court.

Of course, there are other responses as well (perhaps more below in the comments).

The bottom line here, as you might expect, is that there is not yet any consensus on whether to extend the CBM program.  My own general framework begins with the recognition that CBM does no longer adds much value post Alice/Mayo and with district court eligibility determinations being done on the pleadings.  However, I would like to see the empirical evidence.   The point of creating legislation that sunsets is that it effectively places the burden of proof on anyone wanting to continue the program.  That work has not yet been done.

 

Step one: Find the Gist (Do not Construe)

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In Blue Spike v. Google, the patentee has asked the Supreme Court to further elucidate its test for eligibility under Mayo, Alice, and Myriad with the following three questions presented.

  1. May patentable subject matter under § 101 properly be assessed by over-generalizing patent claims to a “gist”?
  2. May a district court properly assess patentability under § 101 prior to authoritatively construing the patent’s claims?
  3. May a district court adjudicating a motion for judgment on the pleadings on § 101 patentability grounds properly consider questions of patent enablement under 35 U.S.C. § 112?

We have an interesting case here where the district court expressly stated its approach to Mayo/Alice Step 1 is to distill the claimed invention to its “gist” and ask whether that gist is an abstract idea.

In its lawsuit against Google, Blue Spike asserted five related patents: U.S. Patent Nos. 7,346,472 (the “’472 Patent”), 7,660, 700 (the “’700 Patent”), 7,949,494 (the “’494 Patent”), 8,214,175 (the “’175 Patent”), and 8,712,728 (the “’728 Patent”).  Looking at asserted claim 1 of the ‘472 patent as an example: the claim requires comparing a query signal with a reference signal.  The process involves creating an “abstract” (essentially a hash or digital fingerprint) of each signal that uses “perceptual qualities” of each signal, and then comparing those abstracts.

The district court dismissed the case on the pleadings – holding that the asserted claims were all invalid as a matter of law for effectively encompassing an abstract idea.  On appeal, the Federal Circuit affirmed without opinion.

In its decision, the district court expressly “distill[ed] the gist of the claim[s]” and found that the gist of the claims is to “model, on a computer, ‘the highly effective ability of humans to identify and recognize a signal’ [using a method that] mirrors the manner in which the human mind undertakes the same task.” (quoting the patent specification).   Essentially, the court found, all of the claims are directed to the abstract idea – “the idea of comparing one thing to another.”  Moving on from there, the court recognized the computer implementation, but found no inventive concept in that implementation.  The patentee argues here that the court erred in its gist analysis, and compounded that error by failing to construe the claims prior to the gisting process:

[M]any trial courts have adopted the practice of reducing patent claims to a highly general “gist,” then assessing that gist to determine whether it is so abstract as to be unpatentable. Because distillation to a “gist” inherently abstracts from a patent’s specific claims, this approach builds in a bias towards invalidity. . . . Deciding eligibility before claim construction exacerbates the tendency noted above to ignore a patent’s specific claims and over-generalize its “gist.”

The petition also spends substantial time discussing the Federal Circuit’s new status quo of issuing a substantial number of no-opinion judgments under Rule 36:

[T]he Federal Circuit appears unwilling to shoulder the responsibility for clarifying the Alice/Mayo analysis. That court’s use of summary Rule 36 affirmances seems to be both commonplace and increasing. This is particularly true in cases concerning patentable subject matter under § 101. One recent report identified a dozen Federal Circuit appeals raising this issue decided by Rule 36 affirmances in 2016 alone. . . . [P]recedential opinions in § 101 cases are important not just for trial courts reviewing issued patents, but also for the PTO’s examiners who must determine whether to issue patents in the first place. When the Federal Circuit fails to write a written opinion, it fails to provide the USPTO with necessary examples to use in granting patent applications.

In this particular case, the R.36 judgment is not a law violation (since the case arose from the district court rather than the PTO) but should also not be an excuse for failing to properly resolve the case – certainly the issues raised are not resolved and there is need for explanatory precedent.

[Blue Spike Petition (April 6 2017)]

 

Broad Estoppel After Failed IPR: What Prior Art “could have been found by a skilled searcher’s diligent search?”

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by Dennis Crouch

Douglas Dynamics v. Meyer Prods (W.D. Wisc 2017) [2017-04-18 (68) Order re post IPR invalidity defenses].US06928757-20050816-D00003After Douglas sued Meyer for infringing its U.S. Patent No. 6,928,757 (Snowplow mounting assembly), Meyer petition for inter partes review — alleging that several of the claims were invalid.  Although the “director” iniated the review, the PTAB eventually sided with the patentee – reaffirming the validity of the claims.

Back at the district court, Douglass asked the court to apply the estoppel provisions that of Section 315(e)(e):

The petitioner in an inter partes review … that results in a final written decision under section 318(a) . . . may not assert . . . in a civil action arising [under the patent laws] . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.

35 U.S.C. § 315(e)(2).  The question for the district court here, was the scope of estoppel – what constitutes grounds that were “raised or reasonably could have [been] raised” during the IPR.  Here, the court took a position for fairly strong estoppel:

If the defendant pursues the IPR option, it cannot expect to hold a second-string invalidity case in reserve in case the IPR does not go defendant’s way. In many patent cases, particularly those involving well-developed arts, there is an abundance of prior art with which to make out an arguable invalidity case, so it would be easy to have a secondary set of invalidity contentions ready to go. The court will interpret the estoppel provision in § 315(e)(2) to preclude this defense strategy. Accordingly, the court will construe the statutory language “any ground that the petitioner . . . reasonably could have raised during that inter partes review” to include non-petitioned grounds that the defendant chose not to present in its petition to PTAB.

In Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir.), the Federal Circuit wrote in dicta that no estoppel should apply to grounds that were petitioned, but not instituted.  The Wisconsin court here suggested some potential problems with that outcome, but decided to follow the CAFC’s lead, writing:

So until Shaw is limited or reconsidered, this court will not apply § 315(e)(2) estoppel to [petitioned but] non-instituted grounds, but it will apply § 315(e)(2) estoppel to grounds not asserted in the IPR petition, so long as they are based on prior art that could have been found by a skilled searcher’s diligent search.

 

What this means for the defendant here is that the only 102/103 arguments that it gets to raise are ones already deemed total failures by the PTAB – and thus are unlikely winners before a district court.

= = = = =

Of some importance, the PTAB’s final written decision was released in November 2016.  For estoppel purposes, that final decision is all that is required for estoppel to kick-in. However, the case currently on appeal to the Federal Circuit — already giving the defendant its second bite at the apple.

= = = =  (more…)

Supreme Court: Challenging Quick-Look Eligibility Denials

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by Dennis Crouch

Broadband ITV v. Hawaiian Telecom (Supreme Court 2017)

A newly filed petition for writ of certiorari offers a substantial challenge to the quick-look eligibility decisions that have been so popular among district courts.  The challenge here is especially focused on no-evidence eligibility decisions that serve as a substitute for an obviousness determination.

In the case, the claims of BBiTV’s U.S. Patent No. 7,631,336 have been repeatedly upheld as non-obvious before a Hawaii district court ruled them ineligible on summary judgment.  In its 103 analysis, the Hawaii court also denied summary judgment of obviousness – finding questions of material fact regarding whether (1) elements of the claims were found in the prior art or (2) PHOSITA would have been motivated to combine those elements.  In its simultaneous 101 decision, however, the court determined as a matter of law that those same elements were “well-understood, routine, conventional activities previously known to the industry” that lack the “inventive concept” required by Alice.  The decision was (as is now common) affirmed without opinion by the Federal Circuit.

The petition challenges the decision and the newly-popular approach of using eligibility as a shortcut to more difficult and fact-intensive obviousness analysis. The three three questions:

1. Evidence for Underlying Factual Findings: Whether the statutory presumption of validity set forth in 35 U.S.C. § 282 applies to claims challenged under 35 U.S.C. § 101, as set forth by this Court in Microsoft Corp. v. i4i L.P., 564 U.S. 91 (2011), when the ultimate legal conclusion relies upon underlying findings of fact, such as whether the additional novel and non-obvious elements of the claims are merely well-understood, routine, and conventional or whether they add an inventive concept.

2. Standard for Summary Judgment: Whether, unlike every other area of law involving motions for summary judgment, as set forth by Fed. R. Civ. P. 56 and Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986), and its progeny, a district court may resolve material underlying fact disputes against the non-movant party on a summary judgment motion for lack of patent-eligibility under § 101.

3. Not All Abstraction Are Abstract: Whether the judicially-created exception for “abstract ideas” broadly includes any abstraction of a claim (including novel business practices or methods of organizing human activities) or only “fundamental” and “long-standing” (i.e., pre-existing) practices and methods, as recognized by this Court in Bilski v. Kappos, 561 U.S. 593, 611 (2010) and Alice Corp. Pty. v. CLS Bank Int’l, 134 S. Ct. 2347, 2356- 57 (2014).

The questions begin with the implicit understanding that, although a question of law, eligibility decisions are based upon a set of factual determinations that should be treated like any other factual determination by the court.  This approach is directly contrary to the approach often taken these days that follows Judge Mayer’s concurring opinion in Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed. Cir. 2014).

An important legal question here is how close the link should be between obviousness and eligibility.  Post-KSR and Alice, there does appear to be substantial connection between the obviousness analysis associated with combining-old-elements and the eligibility analysis of elements that are “well-understood, routine, and conventional.”  The two should often correlate, the court here may have the opportunity to explain the differences both in doctrine and procedure.

Read the petition here: [LINK]

Amicus Briefs in support of the Petition are due by May 17, 2017.

 

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Unwired Planet v. Huawei: An English Perspective on FRAND Royalties

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FRONDGuest Post by Professor Jorge L. Contreras

In the latest decision by the UK High Court of Justice (Patents) in Unwired Planet v. Huawei ([2017] EWHC 711 (Pat), 5 Apr. 2017], Mister Justice Colin Birss has issued a detailed and illuminating opinion regarding the assessment of royalties on standards-essential patents (SEPs) that are subject to FRAND (fair, reasonable and non-discriminatory) licensing commitments.  Among the important and potentially controversial rulings in the case are:

  1. Single Royalty: there is but a single FRAND royalty rate applicable to any given set of SEPs and circumstances,
  2. Significance of Overstep: neither a breach of contract nor a competition claim for abuse of dominance will succeed unless a SEP holder’s offer is significantly above the true FRAND rate,
  3. Global License: FRAND licenses for global market players are necessarily global licenses and should not be limited to a single jurisdiction, and
  4. Soft-Edge: the “non-discrimination” (ND) prong of the FRAND commitment does not imply a “hard-edged” test in which a licensee may challenge the FRAND license that it has been granted on the basis that another similarly situated licensee has been granted a lower rate, so long as the difference does not distort competition between the two licensees.

Background

This case began in 2014 when Unwired Planet, a U.S.-based patent assertion entity, sued Google, Samsung and Huawei for infringement under six UK patents (corresponding actions were filed in Germany).  Unwired Planet claimed that five of the asserted patents, which it acquired from Ericsson in 2013 as part of a portfolio comprising approximately 2000 patents, were essential to the 2G, 3G and 4G wireless telecommunications standards developed under the auspices of the European Telecommunications Standards Institute (ETSI).  Because Ericsson participated in development of the standards at ETSI, any patents shown to be SEPs would necessarily be encumbered by Ericsson’s FRAND commitment to ETSI.

The UK proceedings involved numerous stages, including five scheduled “technical trials” which would determine whether each of the asserted patents was valid, infringed and essential to the ETSI standards.  During these proceedings Google and Samsung settled with Unwired Planet and Ericsson (which receives a portion of the licensing and settlement revenue earned by Unwired Planet from the patents), leaving Huawei as the sole UK defendant.  By April 2016 three of the technical trials had been completed, resulting in findings that two of the asserted patents were invalid and that two were both valid and essential to the standards.  These findings are currently under appeal. The parties then agreed to suspend further technical trials.  In October 2016 a “non-technical” trial began regarding issues of competition law, FRAND, injunction and damages.  Hearings were concluded in December 2016, and the court’s opinion and judgment were issued on April 5, 2017.

A. The High Court’s Decision – Overview

The principal questions before the court were (1) the level of the FRAND royalty for Unwired Planet’s SEPs, (2) whether Unwired Planet abused a dominant position in violation of Section 102 of the Treaty for the Formation of the European Union (TFEU) by failing to adhere to the procedural requirements for FRAND negotiations outlined by the European Court of Justice (CJEU) in Huawei v. ZTE (2014), and (3) whether an injunction should issue in the case.  In the below discussion, Paragraph numbers (¶) correspond to the numbered paragraphs in the High Court’s April 2017 opinion.

B. FRAND Commitments – General Observations

Justice Birss begins his opinion with some general observations and background about the standard-setting process and FRAND commitments.  A few notable points emerge from this discussion. (more…)