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.
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:
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.
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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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.
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 .
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):
This is something I hadn’t seen. You go to this web page, and it allows you to enter a claim and get a prediction — based upon, it says, analysis of more than 30,000 applications and office actions — whether your claim is eligible, or not.
Update: the creator of the service has authored a piece explaining the analytics, and is available here.
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:
Finally, the majority considered several ‘other arguments’ regarding eligibility:
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.”
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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.
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.
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 anduseful 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 requirementsofset 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] 
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:
- 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;
- convert at least a second portion of the message from the first format to a second format; and
- 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.
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.
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.
The historic problem associated with poor business method examination quality has now been fixed.
Patents need to be strengthened, not weakened.
The PTAB process is either corrupt or incompetent.
The approach should be ended because it violates the constitutional rights of patent owners.
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.
According to at least one hearsay report, members of Congress are working toward a new patent reform bill on subject matter eligibility – likely partially following the models prepared by the IPO and pushed by Dave Kappos (among others). There is some chance that it will be introduced this month.
I previously discussed the IPO Proposal:
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.
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)]
by Dennis Crouch
Douglas Dynamics v. Meyer Prods (W.D. Wisc 2017) [2017-04-18 (68) Order re post IPR invalidity defenses].
After 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.
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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.
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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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Guest 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:
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…)
Ji-Yong (David) Chung is a patent attorney and partner at Snyder, Clark, Lesch & Chung. David.Chung@snyderllp.
Dennis Crouch
The principle that patent prosecutors are following today is in the headline: Get Technical or Get Denied. The following is a case-in-point.
Nonprecedential decision today in Clarilogic v. FormFree Holdings affirming that the claims of FormFree’s U.S. Patent No. 8,762,243 are ineligible under 35 U.S.C. § 101 as directed to an abstract idea. [Decision: clarilogic] The patent is directed toward a credit reporting scheme. The gist – according to the court:
In brief, the … system seeks a potential borrower’s financial information from a third party, applies an “algorithm engine” to the data, and outputs a report. . . . the logic rules applied by the engine are received “from government entities or particular users.”
Claim 1 is drafted as a seven step method as follows :
1. A computer-implemented method for providing certified financial data indicating financial risk about an individual, comprising:
(a) receiving a request for the certified financial data;(b) electronically collecting financial account data about the individual from at least one financial source,(c) transforming the financial account data into a desired format;(d) validating the financial account data by applying an algorithm engine to the financial account data to identify exceptions, wherein the exceptions indicate incorrect data or financial risk;(e) confirming the exceptions by collecting additional data and applying the algorithm engine to the additional data,(f) marking the exceptions as valid exceptions when output of the algorithm engine validates the exceptions; and(g) generating, using a computer, a report from the financial account data and the valid exceptions,wherein the financial account data comprises at least one of real-time transaction data, real time balance data, historical transaction data, or historical balance data; and the algorithm engine identifies a pattern of financial risk; the method is computer implemented, and steps (c), (e), and (f) are executed via the computer or a series of computers.
The Supreme Court’s atextual reading of 35 U.S.C. 101 has created a set of subject matter excluded from patentability – including abstract ideas. The two step eligibility framework under Alice/Mayo first asks whether the claims are “directed to” an abstract idea and then, if so, asks whether the claims include “something more” beyond the abstract idea such as an “inventive concept” that is “sufficient to transform the nature of the claim into a patent eligible application.” Quoting Alice. These issues have generally been treated as questions of law amenable to judgment by a court even at the pleading stage of a lawsuit.
Step 1: The claims are directed to an abstract idea because their focus is “on collecting information, analyzing it, and displaying certain results of the collection and analysis.” (quoting Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350 (Fed. Cir. 2016). Here, the court suggests the claims might have passed the test if the “algorithm engine” had been further identified or explained, but simply “claiming an algorithm does not alone render subject matter patent eligible.”
Step 2: The requisite ‘something more,’ does not include recitation of the use of a generic computer. Here, FreeForm argues that its invention uses algorithms to transform data in parallel fashion to the way that Diehr used an algorithm to transform rubber. On appeal, however, the Federal Circuit disagreed:
In contrast to Diehr, claim 1 recites a method that changes the way electronic information is displayed via an unknown and unclaimed process. Absent any limitation to how the data are changed, there is little, if any, transformative effect. Data are still data.
The problem, according to the court, is that the patent simply does not reach any inventive “technical manner” in which the “data is gathered, analyzed, or output.”
Nidec Motor v. Zhongshan Broad Ocean Motor (Fed. Cir. 2017)
In a short and tidy opinion, the Federal Circuit has reversed a PTAB anticipation decision in an inter partes review – holding that the Board’s decision “is not supported by substantial evidence.”
At issue is claim 21 of Nidec’s U.S. Patent No. 7,208,895, which claims a “permanent magnet rotating machine and controller assembly configured to perform the method of claim 12.” Claim 12, in turn is a motor control-method that involves calculating two different phase currents:
The method disclosed in the ‘895 Patent relates to vector control of a permanent magnet machine in the rotating frame of reference. The claimed novel feature requires “combining” calculated Q-axis and d-axis currents to produce an “IQdr current demand” in the rotating frame of reference, which can later be further manipulated and back-transformed into the three phase currents in the stationary frame of reference that drive the motor. Combining the Q-axis and d-axis currents to produce a unitary IQdr demand occurs prior to the back-transformation process.
Appellant Brief.
My reading of the single prior art reference (Kusaka, U.S. Patent No. 5,569,995) is that it also uses the same inputs to achieve a three-part motor-control output, but does not particularly disclose that the transformation happens by first combining the inputs and then transforming the combination into the three-part output. In its opinion, the Federal Circuit found this analysis compelling:
Because Kusaka does not disclose a signal in the rotating frame of reference, it does not disclose an IQdr demand.
Reversed.
Abstract Idea Creep: The decision approach here is important because it holds the line against encroachment of eligibility issues (Section 101) into the anticipation analysis. Notably, the identified inventive step here is essentially requiring a two-step mathematical transformation (with IQdr intemediary) rather than a single-step transformation done in the prior art. Of course, the claims themselves do not indicate how the combination occurs occurs – just requiring “combining” the inputs. I expect that a number of courts thinking about the eligibility analysis would see that step as lacking sufficient concrete inventiveness.
Remand? The court reversed, but did not indicate any remand. That suggests to me that the case is over with the patentee winning the IPR.
Claim Scope: I’m still somewhat confused about whether the claim structure used here is proper under the law. 35 USC 112 states that “A claim in dependent form shall be construed to incorporate by reference all the limitations of the claim to which it refers.” In my mind, one element of claim 12 is that it is a “method” and claim 21 is a “machine . . . configured to perform the method.” As such, claim 21 cannot itself meet the method limitation of claim 12.
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12. A method of controlling a permanent magnet rotating machine, the machine including a stator and a rotor situated to rotate relative to the stator, the stator having a plurality of energizable phase windings situated therein, the method comprising:
by Dennis Crouch
Intellectual Ventures v. Capital One (Fed. Cir. 2017)
In parallel decisions, the Federal Circuit has affirmed two lower court judgments that Intellectual Ventures patents are ineligible under 35 U.S.C. § 101. This post discusses the Capital One decision and leaves Erie for later.[1]
Collateral Estoppel Following Partial Summary Judgment: An initial issue is that of collateral estoppel. In a parallel still-pending case, a SDNY district court found IV’s Patent No. 6,715,084 ineligible under Section 101.[2] That decision was a partial summary judgment – not yet final judgment – since other patents are still at issue. Still, the MD district court in Capital One found that the prior invalidity decision collaterally estopped IV from arguing validity in this case. On appeal, the Federal Circuit affirmed the preclusion – finding that, under 4th Circuit law, a sufficiently complete partial-summary-judgment of invalidity is sufficient to preclude a patentee from asserting a patent in a parallel case. This outcome contradicts the Federal Circuit’s prior decision in Vardon Golf (issue preclusion does not flow from partial summary judgment prior to final judgment).[3] However, the Federal Circuit distinguished that case by noting that Vardon Golf was based on 7th Circuit law rather than 4th Circuit law at issue here.
The two additional patents at issue in Capital One (U.S. Patent Nos. 7,984,081; and 6,546,002) cover the editing of XML data. A representative claim (claim 21) of the ‘081 patent is directed to an “apparatus for manipulating XML documents” and includes a processor along with operational elements (software?). The patent claims use of a hierarchy of data structures for creating a dynamic document. At the top of the hierarchy is a “management record type” made-up of “primary record types” that are, in turn made up of “data objects” designated by “data components” of an XML document. A user interface allows modification and modifies (in an undefined way) the underlying XML document.[4]
Alice Step 1: Reviewing these elements, the Federal Circuit found that “the patent claims are, at their core, directed to the abstract idea of collecting, displaying, and manipulating data.” IV had argued that the claims offered “a concrete solution” to the problem of dynamically managing multiple sets of XML documents. That view, according to the court, limits the patent to the XML technological environment but does not make it any less abstract since XML documents were already well known and used in routine business transactions.
Further, the inventor’s naming of the data structures with unique names does not overcome the fact that the limitations are directed to generic data types and “merely encompass the abstract idea itself of organizing, displaying, and manipulating data of particular documents.”
Alice Step 2: In applying step two of Alice, the court looked for whether the claims included something “significantly more” than merely describing the abstract idea and applying well-understood, routine, conventional activity.” In considering the claims at issue, the court found “no inventive concept” beyond the aforementioned abstract idea.
[T]he Claims recite both a generic computer element—a processor—and a series of generic computer “components” that merely restate their individual functions—i.e., organizing, mapping, identifying, defining, detecting, and modifying. That is to say, they merely describe the functions of the abstract idea itself, without particularity. This is simply not enough under step two.
Repeating its prior statement regarding the inventor’s coined-terms, the court wrote: “The mere fact that the inventor applied coined labels to conventional structures does not make the underlying concept inventive.”
Invalid.
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[1] Intellectual Ventures v. Erie Indemnity (Fed. Cir. 2017) affirming invalidity of U.S. Patent Nos. 6,510,434; 6,519,581; and 6,546,002 under 35 U.S.C. § 101 (eligibility).
[2] See Intellectual Ventures II, LLC v. JP Morgan Chase & Co., No. 13-cv-3777-AKH, 2015 WL 1941331, at *17 (S.D.N.Y. Apr. 28, 2015) (“JPMC”).
[3] Vardon Golf Co. v. Karsten Manufacturing Corp., 294 F.3d 1330 (Fed. Cir. 2002).
[4] Claim 21.
An apparatus for manipulating XML documents, comprising:
a processor;
a component that organizes data components of one or more XML documents into data objects;
a component that identifies a plurality of primary record types for the XML documents;
a component that maps the data components of each data object to one of the plurality of primary record types;
a component that organizes the instances of the plurality of primary record types into a hierarchy to form a management record type;
a component that defines a dynamic document for display of an instance of a management record type through a user interface; and
a component that detects modification of the data in the dynamic document via the user interface, and in response thereto modifies a data component in an XML document.
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