Tag Archives: Abstract Idea

Pending Supreme Court Patent Cases 2016 (February 17 Update)

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by Dennis Crouch

Justice Scalia died this week. May he rest in peace. Although he (as well as Justice Kagan) had left the University of Chicago before I arrived, their influence continues to be felt in that institution.  (Posner, Obama, Sunstein, Meltzer & Epstein, etc. were all still around). On her blog, Professor Ouellette (Stanford) has a nice post about the mixed bag of Justice Scalia’s IP scholarship legacy.  Most recently, Justice Scalia may be best remembered for calling-out Federal Circuit jurisprudence on obviousness as “gobbledygook.”  In many cases, I would expect that his ‘vote’ was less important than the ideas he brought to the table and the way he changed the debates.

I don’t see Scalia’s death having any impact on Halo/Stryker — where I predict the Federal Circuit will be reversed.  Cuozzo is perhaps a different story where I expect a divided court to affirm in a situation where Justice Scalia may have voted to reverse.  Oral arguments are still set for February 23, 2016 in Halo and Stryker. Tony Mauro has an interesting article on the case titled “Coin toss decides which advocate will argue key patent case.”  Professor Mann provides an argument preview on SCOTUSblog.

New petitions this week include the reappearance of Limelight v. Akamai.  The Supreme Court previously shot-down the Federal Circuit’s expanded definition of inducing infringement, but on remand the Federal Circuit expanded its definition of direct infringement (to include joint enterprise liability).  The case is interesting and I hope that the court grants certiorari, but I would side with the patentee here.

In Medinol v. Cordis, the patentee questions whether the laches doctrine still applies in patent cases. This case parallels SCA Hygiene and comes on the heels of the Supreme Court’s Petrella decision which eliminated the laches defense for back-damages in copyright cases.

Briartek IP v. DeLorme, delves into interesting separation of powers and jurisdiction issues, asking: Whether a binding consent order, entered between the federal government, the ITC, and an ITC respondent, deprives federal district courts of jurisdiction over a declaratory judgment action, seeking to invalidate the patent at issue, filed by the ITC respondent … against the patent holder: a non-party to the consent order.  The Federal Circuit had affirmed without substantive opinion.

Finally, last but not least, is Click-to-Call Tech v. Oracle Corp. who has copied the questions from Cuozzo and the recently denied Achates v. Apple.  These questions challenge the seeming the absolute bar on judicial review of Patent Trial & Appeal Board’s power to institute IPR proceedings.  Although this particular petition is unlikely to be granted. It lends additional credence to the other two.  The petition is also a mechanism for the patentee here to keep the issue alive.

1. Petitions Granted:

2. Petitions Granted with immediate Vacatur and Remand (GVR)

3. Petitions for Writ of Certiorari Pending:

  • Infringement by Joint Enterprise: Limelight Networks, Inc. v. Akamai Technologies, Inc., et al., No. 15-993 (can a defendant be held liable for the collective performance of method steps by multiple independent parties?)
  • Post Grant Admin: Cooper v. Lee, No. 15-955 (whether IPRs violate Separation of Powers).
  • Post Grant Admin: Click-to-Call Tech, LP v. Oracale Corp., No. 15-1014 (Same questions as Achates v. Apple and Cuozo)
  • Laches: Medinol Ltd. v. Cordis Corporation, et al., No. 15-998
  • Laches: SCA Hygiene Products Aktiebolag, et al. v. First Quality Baby Products, LLC, et al., No. 15-927
  • Post Grant Admin: Interval Licensing LLC v. Michelle K. Lee, No. 15-716 (Can the Patent and Trademark Office appropriately apply the “broadest reasonable interpretation” standard in construing patent claims in post-grant validity challenges?)
  • Design Patents: Samsung Electronics Co. v. Apple Inc., No 15-777 (design patent scope and damages calculation)
  • Design Patents: Systems, Inc. v. Nordock, Inc., No. 15-978 (design patent damage calculations – similar issues as Samsung v. Apple). []
  • Inducement: Life Technologies Corporation, et al. v. Promega Corporation, No. 14-1538 (whether an entity can “induce itself” under 271(f)(1))(CVSG, awaiting government brief)
  • Inducement: Arthrex, Inc. v. Smith & Nephew, Inc., et al., No. 15-559 (Commil re-hash – if actions were “not objectively unreasonable” can they constitute inducement?)
  • Claim Construction: Universal Lighting Technologies, Inc., v. Lighting Ballast Control LLC, No. 15-893 (intrinsic vs extrinsic evidence for claim construction).
  • Preclusion or Jurisdiction:  BriarTek IP, Inc. v. DeLorme Publishing Company, Inc., et al., No. 15-1025 (Preclusive impact of ITC consent judgment).
  • Preclusion or Jurisdiction: Vermont v. MPHJ Technology Investments, LLC, No. 15-838 (Federal court jurisdiction in anti-troll consumer protection case)
  • Preclusion or Jurisdiction: Alexsam, Inc. v. The Gap, Inc., No. 15-736 (appellate jurisdiction over patents that were dropped from case pre-trial)
  • Preclusion or Jurisdiction: ePlus, Inc. v. Lawson Software, Inc., No. 15-639 (what happens with a finally-determined permanent injunction after PTO cancels the patent claim?)
  • Preclusion or Jurisdiction: Biogen MA, Inc. v. Japanese Foundation for Cancer Research, et al., No. 15-607 (Whether AIA eliminated federal district courts’ jurisdiction over patent interference actions under 35 U.S.C. § 146.)
  • Eligibility Challenges: Retirement Capital Access Management Company, LLC v. U.S. Bancorp, et al., No. 15-591 (Whether subject matter eligibility under 35 U.S.C. § 101 is a ground specified as a condition for patentability under 35 U.S.C. § 282(b)(2))
  • Eligibility Challenges: Joao Bock Transaction Systems, LLC v. Jack Henry & Associates, Inc., No. 15-974 (defining an abstract idea)
  • Claim Construction: Media Rights Technologies, Inc. v. Capital One Financial Corporation, et al., No. 15-725 (Claim Construction: whether there a strong presumption against construing terms as subject to 35 U.S.C. § 112p6 that do not recite the term “means.”)
  • Patent Term Adjustment Dispute: Daiichi Sankyo Company, Ltd. v. Michelle K. Lee, No. 15-652 (Patent Term Adjustment – whether the 180 day deadline applies; could bleed into admin law issues)
  • Damages: STC, Inc. v. Global Traffic Technologies, No. 15-592 (Whether marking the packaging of a patented article with patent notification satisfies the marking provision of 35 U.S.C. § 287(a) where the patented article itself is undisputedly capable of being marked.)
  • Damages: Innovention Toys, LLC v. MGA Entertainment, Inc., et al., No. 15-635 (Stryker/Halo follow-on – potential wait-and-see)
  • Low Quality Brief: Morales v. Square, No. 15-896 (eligibility under Alice)

3. Petitions for Writ of Certiorari Denied:

  • Achates Reference Publishing, Inc. v. Apple Inc., et al., No. 15-842 (IPR institution decisions unreviewable, even when addressed in a final written decision by PTAB)
  • Alps South, LLC v. The Ohio Willow Wood Company, No. 15-567
  • Allvoice Developments US, LLC v. Microsoft Corp., No. 15-538
  • OIP Technologies, Inc. v. Amazon.com, Inc., No. 15-642
  • Fivetech Technology Inc. v. Southco, Inc., No. 15-381
  • Tyco Healthcare Group LP, et al. v. Ethicon Endo-Surgery, Inc., No. 15-115
  • Nautilus, Inc. v. Biosig Instruments, Inc., No. 15-561
  • Chunghwa Picture Tubes, Ltd., et al. v. Eidos Display, LLC, et al., No. 15-288
  • Kenneth Butler, Sr. v. Balkamp Inc., et al., No. 15-273
  • Arthrex, Inc. v. KFx Medical Corporation, No. 15-291
  • Daiichi Sankyo, Inc., et al. v. Apotex Inc., No. 15-281
  • Mylan Pharmaceuticals Inc. v. Apotex Inc., No. 15-307
  • Luv N’ Care, Ltd. v. Munchkin, Inc., No. 15-242
  • Automated Merchandising Systems, Inc. v. Michelle K. Lee, Director, United States Patent and Trademark Office, No. 15-326
  • I/P Engine, Inc. v. AOL Inc., et al., No. 14-1358
  • Interval Licensing LLC v. AOL Inc., et al., No. 14-1362
  • Content Extraction and Transmission LLC v. Wells Fargo Bank, National Association, et al., No. 14-1473
  • W.L. Gore & Associates, Inc. v. Bard Peripheral Vascular, Inc., et al., No. 15-41
  • NetAirus Technologies, LLC v. Apple Inc., No. 14-1353
  • Muffin Faye Anderson v. Kimberly-Clark Corporation, No. 14-10337
  • MobileMedia Ideas LLC v. Apple Inc., No. 15-206
  • SpeedTrack, Inc. v. Office Depot, Inc. et al., No. 15-461 (Kessler doctrine)
  • Rodney K. Morgan, et al. v. Global Traffic Technologies LLC, No. 15-602
  • Lakshmi Arunachalam v. JPMorgan Chase & Co., No. 15-691

4. Prior versions of this report:

 

 

Claim Construction Leads to Nonsensical Result and thus Indefiniteness Holding

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Columbia University v. Symantec Corp (Fed. Cir. 2015)

Back in 2013, the NPE known as Columbia University sued Symantec for infringing at least six of its data-analytics patents covering the process of detecting and blocking computer malware.[1]  Following a 2014 claim construction it was clear that all of the asserted claims were either (1) not infringed or (2) invalid as indefinite.  As a result, Columbia stipulated to such and filed its appeal of the claim construction order.[2]  On appeal, the Federal Circuit has affirmed the indefiniteness holding and substantially affirmed the claim construction, but did find enough problems with the lower-court decision to re-ignite the case.

Here, I’m just going to focus on the claim term “Byte Sequence Feature.”

Defining Byte Sequence Feature: The claim construction issues in this case are parallel to those debated in many cases – when a term is understood by one skilled in the art, does the specification limit that definition by using the term in particular ways (but not expressly re-defining the term), or does the term retain its ordinary and customary meaning?   Here, the court reiterated its en banc statements from Phillips that “the specification may define claim terms by implication.”

Columbia argued that the term “byte sequence feature” includes more than merely machine code instructions, and also extends to other non-compiled elements of an executable attachment.   On appeal, the Federal Circuit rejected that argument — finding that the specification indicates that the byte sequence feature “represents the machine code in an executable.”  The court also found that the machine-code limitation “most naturally aligns” with the inventor’s description of his invention.[3]

Since none of the accused products analyze machine code instructions, they don’t infringe (under this construction).

Loose Statements in the Provisional: Of interest to patent prosecutors, the associated provisional application included a statement essentially saying that the byte sequence feature does not include non-machine code “resource information.” That statement was removed from the non-provisional application, but the Federal Circuit indicated that the original definition still stands.[4]  This fits within the normal approach to patent prosecution that the mere withdrawal of a mis-statement is insufficient.  Rather, following a mis-statement or change-in-definition, the patent applicant should affirmatively identify the change for the examiner’s consideration.

Resource Code is Indefinite: I noted above that both courts agreed – the proper definition of “byte sequence feature” covers machine code and not ancillary resource information that may be part of the executable file.  Now, the confusing part is that many of these same claims include a express limitation that the “byte sequence feature” includes this resource information — exactly opposite of the court’s definition of the term.

It is a problematic ambiguity to have a claim element include embodiments excluded from the element’s definition.  As such, the court determined that those claims must be found invalid as failing the definiteness requirement of 35 U.S.C. 112. The court writes:

Claims 1 and 16 conflate a “byte sequence feature,” which is a feature extracted from machine code instructions, with the extraction of “resource information,” which is not a machine code instruction. Specifically, the claims describe the step of extracting machine code instructions from something that does not have machine code instructions. . . . The claims are nonsensical in the way a claim to extracting orange juice from apples would be, and are thus indefinite.

The court’s decision on indefiniteness appears correct but avoids the patentee’s actual argument that the claim terms should be construed so as to avoid this nonsense approach.

As noted in the intro, the Federal Circuit did reverse the claim construction as to the claims of two of the patents and vacated the non-infringement judgment. Thus, the patent case will continue on remand.  In the case, Columbia also sued Symantec for fraudulent concealment, unjust enrichment, and conversion. Those state law claims are apparently still pending before the district court.

= = = = =

[1] The asserted patents include Patent No. 7,487,544 (“the ’544 patent”), U.S. Patent No. 7,979,907 (“the ’907 patent”), U.S. Patent No. 7,448,084 (“the ’084 patent”), U.S. Patent No. 7,913,306 (“the ’306 patent”), U.S. Patent No. 8,074,115 (“the ’115 patent”), and U.S. Patent No. 8,601,322 (“the ’322 patent”).

[2] You might question whether the claims are valid under 35 U.S.C. § 101 for being directed to an unpatentable abstract idea.  Claim 1 of the ‘544 patent is directed to a “method for classifying” an executable file attached to an email by (1) extracting a byte sequence from the attachment “representative of resources referenced by the … attachment”; and (2) using a set of classification rules (not defined by the claim) to predict whether the byte sequence is malicious.  I suspect that the full-throated Section 101 argument was not raised because the defendant Symantec also supports broad subject matter eligibility.  In that situation, it may be the Court’s jurisdictional role to take up the mantle.

[3] See Renishaw PLC v. Marposs Societa’ per Azioni, 158 F.3d 1243, 1250 (Fed. Cir. 2003).

[4] See Advanced Display Sys., Inc. v. Kent State Univ., 212 F.3d 1272, 1282 (Fed. Cir. 2000) (provisional applications incorporated by reference are “effectively part of the” specification as though it was “explicitly contained therein.”).  This suggests that the oft-used approach of ‘fixing it in the non-provisional’ may need to be reconsidered.

[5] In the ‘115 and ‘322 patents.

Pending Supreme Court Patent Cases 2016 (February 3 Update)

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by Dennis Crouch

With Washington DC snowed-in, action within the Supreme Court has also been somewhat slow.  Briefing is now complete in ePlus v. Lawson. In that case, a district court originally held an adjudged infringer in contempt-of-court for refusing to comply with its injunction order. Following the contempt order, the USPTO independently cancelled the patent claims and, at that point, the Federal Circuit vacated both the injunction and the contempt order. ePlus presents the following questions:

1. Whether civil contempt of a permanent injunction order that has been affirmed on appeal and is binding on the litigants under the law of judgments, may be set aside based on a legal development that came after both the permanent injunction and the contumacious conduct, and that did not call into question the correctness of the injunction when it was entered.
2. Whether, under Plaut v. Spendthrift Farm, 514 U.S. 211 (1995), the PTO, an administrative agency, may issue an order that retroactively overrides a federal court’s judgment on a question of law that is not subject to further judicial review, so long as some other part of the litigation is pending.

BIO/PhRMA filed a brief in support of the petition.  The ePlus case is one of several challenging the structure of administrative review proceedings running in parallel with court litigation.  William Jay (Goodwin Proctor) is representing ePlus with Mark Perry (Gibson Dunn)  on the other side.

Oral arguments for the parallel willfulness cases of Halo and Stryker are set for February 23, 2016.  The cases are consolidated to a single one-hour hearing. The attorneys for Halo/Stryker will chose a representative who gets 20-minutes; the US Department of Justice (who generally supports the Halo/Stryker position) will have 10-minutes of oral arguments; and Pulse/Zimmer will choose an attorney for a 30-minute opposition.  For those attending, the other case being heard that day is the criminal case of Taylor v. US involving the Hobbs Act that creates federal criminal liability for “interference with commerce by threats of violence.” 18 U.S.C. 1951.  The question is whether the required element of interstate commerce must be proven beyond a reasonable doubt in order to obtain a criminal conviction.

A new petition for certiorari has been filed in Cooper v. Lee, No. 15-955 (whether IPRs violate Separation of Powers).  The petition by Robert Greenspoon links itself with the Cuozzo challenge — noting that Cuozzo raises the “smaller issue” while Cooper raises “larger issues.”

Other new petitions include a filing from Joao Bock Transaction Systems, LLC v. Jack Henry & Associates, Inc., No. 15-974 (defining an abstract idea) and Systems, Inc. v. Nordock, Inc., No. 15-978 (design patent damage calculations).  The Federal Circuit decided Joao Bock with a R.36 affirmance (without opinion affirming that claim 30, et. al, of U.S. Patent No. 7,096,003 are invalid as effectively claiming abstract ideas).  Regarding Nordock, although it is not as high profile, its simplicity may make it a better vehicle than Samsung v. Apple for challenging design patent damage calculations. In any event Nordock’s timing is good and I would expect that the court will at least withhold judgment until it decides whether to grant certiorari in Samsung v. Apple.

1. Petitions Granted:

2. Petitions Granted with immediate Vacatur and Remand (GVR)

3. Petitions for Writ of Certiorari Pending:

  • Post Grant Admin: Cooper v. Lee, No. 15-955 (whether IPRs violate Separation of Powers).
  • Post Grant Admin: Achates Reference Publishing, Inc. v. Apple, Inc., et al., No. 15-842 (IPR institution decisions unreviewable, even when addressed in a final written decision by PTAB)
  • Post Grant Admin: Interval Licensing LLC v. Michelle K. Lee, No. 15-716 (Can the Patent and Trademark Office appropriately apply the “broadest reasonable interpretation” standard in construing patent claims in post-grant validity challenges?)
  • Design Patents: Samsung Electronics Co. v. Apple Inc., No 15-777 (design patent scope and damages calculation)
  • Design Patents: Systems, Inc. v. Nordock, Inc., No. 15-978 (design patent damage calculations – similar issues as Samsung v. Apple).
  • Inducement: Life Technologies Corporation, et al. v. Promega Corporation, No. 14-1538 (whether an entity can “induce itself” under 271(f)(1))(CVSG, awaiting government brief)
  • Inducement: Arthrex, Inc. v. Smith & Nephew, Inc., et al., No. 15-559 (Commil re-hash – if actions were “not objectively unreasonable” can they constitute inducement?)
  • Claim Construction: Universal Lighting Technologies, Inc., v. Lighting Ballast Control LLC, No. 15-893 (intrinsic vs extrinsic evidence for claim construction).
  • Preclusion or Jurisdiction: Vermont v. MPHJ Technology Investments, LLC, No. 15-838 (Federal court jurisdiction in anti-troll consumer protection case)
  • Preclusion or Jurisdiction: Alexsam, Inc. v. The Gap, Inc., No. 15-736 (appellate jurisdiction over patents that were dropped from case pre-trial)
  • Preclusion or Jurisdiction:
    ePlus, Inc. v. Lawson Software, Inc., No. 15-639 (what happens with a finally-determined permanent injunction after PTO cancels the patent claim?)
  • Preclusion or Jurisdiction: Biogen MA, Inc. v. Japanese Foundation for Cancer Research, et al., No. 15-607 (Whether AIA eliminated federal district courts’ jurisdiction over patent interference actions under 35 U.S.C. § 146.)
  • Eligibility Challenges: Retirement Capital Access Management Company, LLC v. U.S. Bancorp, et al., No. 15-591 (Whether subject matter eligibility under 35 U.S.C. § 101 is a ground specified as a condition for patentability under 35 U.S.C. § 282(b)(2))
  • Eligibility Challenges: Joao Bock Transaction Systems, LLC v. Jack Henry & Associates, Inc., No. 15-974 (defining an abstract idea)
  • Claim Construction: Media Rights Technologies, Inc. v. Capital One Financial Corporation, et al., No. 15-725 (Claim Construction: whether there a strong presumption against construing terms as subject to 35 U.S.C. § 112p6 that do not recite the term “means.”)
  • Patent Term Adjustment Dispute: Daiichi Sankyo Company, Ltd. v. Michelle K. Lee, No. 15-652 (Patent Term Adjustment – whether the 180 day deadline applies; could bleed into admin law issues)
  • Damages: STC, Inc. v. Global Traffic Technologies, No. 15-592 (Whether marking the packaging of a patented article with patent notification satisfies the marking provision of 35 U.S.C. § 287(a) where the patented article itself is undisputedly capable of being marked.)
  • Damages: Innovention Toys, LLC v. MGA Entertainment, Inc., et al., No. 15-635 (Stryker/Halo follow-on – potential wait-and-see)
  • Low Quality Brief: Morales v. Square, No. 15-896 (eligibility under Alice)

3. Petitions for Writ of Certiorari Denied:

  • Alps South, LLC v. The Ohio Willow Wood Company, No. 15-567
  • Allvoice Developments US, LLC v. Microsoft Corp., No. 15-538
  • OIP Technologies, Inc. v. Amazon.com, Inc., No. 15-642
  • Fivetech Technology Inc. v. Southco, Inc., No. 15-381
  • Tyco Healthcare Group LP, et al. v. Ethicon Endo-Surgery, Inc., No. 15-115
  • Nautilus, Inc. v. Biosig Instruments, Inc., No. 15-561
  • Chunghwa Picture Tubes, Ltd., et al. v. Eidos Display, LLC, et al., No. 15-288
  • Kenneth Butler, Sr. v. Balkamp Inc., et al., No. 15-273
  • Arthrex, Inc. v. KFx Medical Corporation, No. 15-291
  • Daiichi Sankyo, Inc., et al. v. Apotex Inc., No. 15-281
  • Mylan Pharmaceuticals Inc. v. Apotex Inc., No. 15-307
  • Luv N’ Care, Ltd. v. Munchkin, Inc., No. 15-242
  • Automated Merchandising Systems, Inc. v. Michelle K. Lee, Director, United States Patent and Trademark Office, No. 15-326
  • I/P Engine, Inc. v. AOL Inc., et al., No. 14-1358
  • Interval Licensing LLC v. AOL Inc., et al., No. 14-1362
  • Content Extraction and Transmission LLC v. Wells Fargo Bank, National Association, et al., No. 14-1473
  • W.L. Gore & Associates, Inc. v. Bard Peripheral Vascular, Inc., et al., No. 15-41
  • NetAirus Technologies, LLC v. Apple Inc., No. 14-1353
  • Muffin Faye Anderson v. Kimberly-Clark Corporation, No. 14-10337
  • MobileMedia Ideas LLC v. Apple Inc., No. 15-206
  • SpeedTrack, Inc. v. Office Depot, Inc. et al., No. 15-461 (Kessler doctrine)
  • Rodney K. Morgan, et al. v. Global Traffic Technologies LLC, No. 15-602
  • Lakshmi Arunachalam v. JPMorgan Chase & Co., No. 15-691

4. Prior versions of this report:

Anonymous Loan Shopping — An Unpatentable Abstract Idea

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By Dennis Crouch

On summary judgment, Judge Guilford (C.D.Cal) found Mortgage Grader’s asserted patents[1] ineligible under 35 U.S.C. § 101.[2]  On appeal, the Federal Circuit has affirmed this substantive holding as well as the district court’s procedural decision to allow the defendant (First Choice) to re-add its Section 101 contention after first dropping it.[3]  The appellate decision here was authored by Chief Judge Stark (D.Del) who was sitting by designation.  Judges O’Malley and Taranto joined the unanimous opinion.

A patent is not permitted to effectively claim an abstract idea.  In Mayo/Alice, the Supreme Court outlined a two-step process for determining whether this exception applies to Section 101’s otherwise broad eligibility principles: (1) is the claim at issue directed to a patent-ineligible concept and (2) if so, does the claim include an “inventive concept … sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.”[4]

Here, the district court found that the claims-at-issue were generally directed to “anonymous loan shopping” which is an unpatentable abstract idea.[5]  According to the court and apart from the computerization claim limits, the “series of steps covered by the asserted claims—borrower applies for a loan, a third party calculates the borrower’s credit grading, lenders provide loan pricing information to the third party based on the borrower’s credit grading, and only thereafter (at the election of the borrower) the borrower discloses its identity to a lender—could all be performed by humans without a computer.”  These human-mind-potentials cannot be claimed in the abstract.  In step two of Mayo/Alice, the court considered the computerization elements of the claims, but found only “generic computer components such as an ‘interface,’ ‘network,’ and ‘database.’ These generic computer components do not satisfy the inventive concept requirement.”

In the appeal, the patentee argued a factual dispute regarding the history of loan processing in an attempt to show that the process here was not “old.”  The appellate panel, however, found the testimony essentially irrelevant to the legal question of whether claim is directed to an abstract idea.

====

On the procedural point, the defendant had dropped its eligibility defense from its contentions. However, following the Supreme Court’s Alice decision added the contention back into place – but well after the court appointed deadline.  On appeal, the appellate panel confirmed that the district court did not abuse its discretion in allowing that procedural anomaly because of the significance of the decision:

In Alice, the Supreme Court held that “merely requiring generic computer implementation fails to transform [an] abstract idea into a patent-eligible invention.” 134 S. Ct. at 2352. We recognized the significance of Alice in buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1354–55 (Fed. Cir. 2014), in which we stated that Alice “made clear that a claim directed to an abstract idea does not move into § 101 eligibility territory by merely requiring generic computer implementation” (internal quotation marks omitted). The impact of Alice is also illustrated by our decision in Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed. Cir. 2014) (“Ultramercial III”). Ultramercial had sued WildTangent for infringement of U.S. Patent No. 7,346,545, a patent directed to allowing consumers to view copyrighted media products on the Internet at no cost in exchange for viewing an advertisement. See id. at 712. When the case was first before us, in 2011, we reversed the district court’s grant of WildTangent’s Rule 12(b)(6) motion to dismiss, holding that “as a practical application of the general concept of advertising as currency and an improvement to prior art technology, the claimed invention is not so manifestly abstract as to override the statutory language of § 101.” Ultramercial, LLC v. Hulu, LLC, 657 F.3d 1323, 1330 (Fed. Cir. 2011) (“Ultramercial I”) (internal quotation marks omitted). The Supreme Court granted WildTangent’s petition for certiorari, vacated our order, and remanded for further consideration in light of Mayo. Ultramercial III, 772 F.3d at 713. On remand, we again reversed the district court, holding yet again that the claims were patent-eligible. Ultramercial v. Hulu, 722 F.3d 1335, 1354 (Fed. Cir. 2013) (“Ultramercial II”). Once more, the Supreme Court granted WildTangent’s petition for certiorari, vacated our order, and remanded, this time for further consideration in light of Alice. Id. On this further remand, with the “added benefit of the Supreme Court’s reasoning in Alice,” we affirmed the district court and found the claims to be not patent-eligible. Id. Our conclusion was expressly based on Alice’s holding that “adding a computer to otherwise conventional steps does not make an invention patent-eligible.” Id. at 713, 716–17.

Ultramercial III demonstrates that a § 101 defense previously lacking in merit may be meritorious after Alice. This scenario is most likely to occur with respect to patent claims that involve implementations of economic arrangements using generic computer technology, as the claims do here. For example, the asserted claims of the ’694 patent require use of a “computer system” or “computer network” for facilitating anonymous loan shopping and the asserted claim of the ’728 patent requires “programmatically generating” and uses a “network” for shopping for loans. In this context, it was not an abuse of discretion to allow Appellees to inject a § 101 defense into the case after Alice.

= = = = =

[1] U.S. Patent Nos. 7,366,694 (“’694 patent”) and 7,680,728 (“’728 patent”).

[2] Mortgage Grader, Inc. v. Costco Wholesale Corp., 89 F. Supp. 3d 1055, 1065 (C.D. Cal. 2015) (Costco was later dismissed as a party).

[3] Mortgage Grade, Inc. v. First Choice Loan Services, ___ F.3d ___, App. No. 15-1415 (Fed. Cir. 2016) available at http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/15-1415.Opinion.1-15-2016.1.PDF.

[4] Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012) (as clarified by Alice).

[5] Claim 1 of the ‘694 patent, that the court found sufficiently representative is listed as follows:

1. A computer-implemented system for enabling borrowers to anonymously shop for loan packages offered by a plurality of lenders, the system comprising:

a database that stores loan package data specifying loan packages for home loans offered by the lenders, the loan package data specifying, for each of the loan packages, at least a loan type, an interest rate, and a required borrower credit grading; and

a computer system that provides:

a first interface that allows the lenders to securely upload at least some of the loan package data for their respective loan packages to the database over a computer network; and

a second interface that prompts a borrower to enter personal loan evaluation information, and invokes, on a computer, a borrower grading module which uses at least the entered personal loan evaluation information to calculate a credit grading for the borrower, said credit grading being distinct from a credit score of the borrower, and being based on underwriting criteria used by at least some of said lenders;

wherein the second interface provides functionality for the borrower to search the database to identify a set of loan packages for which the borrower qualifies based on the credit grading, and to compare the loan packages within the set, including loan type and interest rate, while remaining anonymous to each of the lenders and without having to post a request to any of the lenders, said second interface configured to display to the borrower an indication of a total cost of each loan package in the set, said total cost including costs of closing services not provided by corresponding lenders;

and wherein the computer-implemented system further enables the borrower to selectively expose at least the personal loan evaluation information to a lender corresponding to a selected loan package.

Apple, Samsung & Design Patent Claim Construction

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By Sarah Burstein, Associate Professor of Law at the University of Oklahoma College of Law

Samsung Electronics Co., Ltd. v. Apple Inc. (on petition for a writ of certiorari)

In its recently-filed cert petition, Samsung makes some particularly interesting arguments about design patent claim construction. Specifically, Samsung argues “that district courts have a duty to construe [design] patent claims and eliminate unprotected features” under Markman and that the Federal Circuit has erred in “allow[ing] district courts . . . to decline to provide any meaningful claim construction.” To put these arguments in context, a bit of background is in order.

Twenty years ago, the Federal Circuit held that Markman applies to design patents. Since then, it has struggled to decide and describe how, exactly, it applies in the design context. This difficulty isn’t particularly surprising. Markman (and later Supreme Court cases about claim construction) only dealt with utility patent claims. And utility patent claims are fundamentally different from design patent claims. Unlike utility patents, design patents can contain only one claim. The verbal portion of this claim must (in general) read as follows: “The ornamental design for [the article which embodies the design or to which it is applied] as shown.” The phrase “as shown” refers to the drawings or photographs submitted by the applicant. Therefore, design patent claims consist mainly of images, not words.

The Federal revisited the issue of Markman and design patents in 2007. When it granted en banc review in Egyptian Goddess, the court asked for briefing on the issue of whether claim construction should apply to design patents and, if so, what role that construction should play in the infringement analysis. The court received numerous amicus briefs on this issue, expressing a wide range of opinions. When the court issued its decision in 2008, it ruled that district courts do not have to—and ordinarily, should not—construe a design patent claim by providing a detailed verbal description of the design. It suggested that district courts could, nonetheless, “usefully guide the finder of fact by addressing a number of other issues that bear on the scope of the claim” by, for example, describing any relevant drawing conventions, describing the effect of any relevant matters in the prosecution history, and “distinguishing between those features of the claimed design that are ornamental and those that are purely functional.”

Then, in its 2010 decision in Richardson, the Federal Circuit indicated that district courts should “factor out” functional elements in construing design patent claims. This “factoring out” approach proved to be both unworkable and unnecessary, as Chris Carani explained in this recent LANDSLIDE article. (I think of this whole line of cases as the “FUBAR cases,” in reference to the product at issue in that case.)

When Apple v. Samsung was before the Federal Circuit, Samsung argued the district court erred in “fail[ing] to instruct the jury to ‘factor out’ the unprotectable structural and functional elements of Apple’s designs,” relying on Richardson and related cases. The Federal Circuit disagreed. In its May 2015 decision in Apple v. Samsung, the court ruled that its case law did not support Samsung’s “structural” argument. It also seemed to back away from Richardson, insisting that case “did not establish a rule to eliminate entire elements from the claim scope.” A few months later, the Federal Circuit backed even further away from Richardson in Ethicon.

In its cert petition, Samsung does not rely on—or even mention—Richardson. Instead, Samsung advocates a new approach to design patent claim construction.

Samsung’s approach is based in requirement that a patentable design be “ornamental.” Samsung argues that certain features (or aspects) of a design cannot be “ornamental” as a matter of law and that district courts must “eliminate” these “unprotected features” during claim construction.

So what are the “unprotected features” that Samsung wants courts to “eliminate”? Samsung argues that an ornamental design “cannot include ‘functional’ features, for those are the proper domain of utility patent law,” citing Bonito Boats. In this respect, Samsung’s approach sounds similar to one taken in the FUBAR cases. But Samsung would apparently go further, arguing that an ornamental design “cannot include concepts, shapes or colors,” likening them to “abstract ideas” or “physical phenomenon” under Bilski.

Samsung argues that “[a] district court can easily . . . identify to a jury a design patent’s conceptual, functional and ornamental aspects, and instruct a jury not to find infringement based on conceptual or functional similarities.” Whether or not this would actually be easy may be a matter of some debate, especially in light of past experience with the FUBAR cases. It’s also not clear what would qualify as a “conceptual” aspect (or feature) of a design.

And as a larger policy issue, it’s questionable whether verbal claim dissection is either desirable or appropriate in the context of design patents. The better approach may be, as Chris Carani argued in the LANDSLIDE article mentioned above, to simply instruct juries “that design patents only protect the appearance of the overall design depicted in the drawings, and not any functional attributes, purposes or characteristics embodied in the claimed design.”

It’s also worth noting that under Egyptian Goddess, the prior art may be used to narrow the scope of a claimed design—not through formal claim construction but as part of the infringement analysis. But in Apple v. Samsung, prior art that could have been used to narrow the scope of the claimed designs was not admitted at trial. So, if anything, this case represents a failure to make full use of the Egyptian Goddess framework, not a failure of the framework itself.

Inter Partes Reviews are Won/Lost on the First Filing

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In Redline Detection v. Star Envirotech,[1] the Federal Circuit has affirmed (1) the PTAB substantive determination that Star’s patent claims[2] are not invalid as obvious and (2) the PTAB procedural refusal to allow Redline to submit a post-institution expert declaration in its attempt to challenge the patent.[3]

On procedure, the Federal Circuit found that the Patent Office must be given deference in interpreting its own regulations regarding PTAB process and that the PTO’s rules make sense as they are designed to encourage submission of “all of the efidence that supports the ground of unpatentability” at the petition stage.  Here, although the PTAB rules do allow for submission of supplemental information – the PTAB was justified in denying the submission here since the petitioner gave no reason for the delayed submission other than cost-savings.

Although the PTAB rules (§ 42.123) suggest that supplemental filings may be made within one-month of a petition being granted – that simply might not work in many cases.  Thus, this case stands for the proposition that, even when timely filed within the one-month deadline, a motion to submit supplemental information must be justified beyond merely being “relevant.” More broadly, the result here repeats the conventional wisdom that inter partes reviews are generally won/lost on the first-punch.

Star’s patent relates generally to the abstract idea of generating leak-identifying smoke for use in volatile environments such as a vehicle brake-system.  On the merits, the PTAB found that the submitted prior art did not render the particularly challenged claims obvious.

= = = =

[1] Redline Detection, LLC v. Star Envirotech, Inc., App. No. 2015-1047 (Fed. Cir. 2015), appealed from the Patent Trial Appeal Board’s final decision in IPR2013-00106.

[2]  Claims 9 and 10 of U.S. Patent No. 6,526,808.

[3] See 37 C.F.R. § 42.123(a) (2012).

Federal Circuit: Testing Vehicle Operators for Impairment is an Unpatentable Abstract Idea

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Vehicle Intelligence v. Mercedes-Benz (Fed. Cir. 2015) (Non-precedential opinion)

Vehicle Intelligence and Safety LLC is the owner of United States Patent Number 7,394,392 vehicle safety improvements. In particular, the patent claims systems and methods for testing vehicle operators and then taking control of the vehicle if the operator is deemed impaired. Senior Judge Hart of the Northern District of Illinois ruled on the pleadings (12(c)) that the asserted claims were invalid as being drawn to patent-ineligible subject matter under Section 101 of the Patent Act. On appeal, the Federal Circuit here affirms – holding that “the disputed claims cover only abstract ideas coupled with routine data-gathering steps and conventional computer activity.” An early potential strike against the patent that the inventor, Kevin Roe, is also the patent attorney who prosecuted the case and the litigator who filed the appellate briefs.

Claim 16 reads as follows:

A system to screen an equipment operator, comprising:

a screening module to screen and selectively test an equipment operator when said screening indicates potential impairment of said equipment operator, wherein said screening module utilizes one or more expert system modules in screening said equipment operator; and

a control module to control operation of said equipment if said selective testing of said equipment operator indicates said impairment of said equipment operator, wherein said screening module includes one or more expert system modules that utilize at least a portion of one or more equipment modules selected from the group of equipment modules consisting of: an operations module, an audio module, a navigation module, an anti-theft module, and a climate control module.

In applying Alice Corp., Federal Circuit began with step one – is the claim drawn to ineligible subject matter? Answer: Yes. Here, the court found the claims directed toward “the abstract idea of testing operators of any kind of moving equipment for any kind of physical or mental impairment.”

Although the court did not explain particularly how the testing of operators for impairment fits within the definition of an abstract idea, the court made clear that one element of its decision was based upon the fact that the claims were broadly written and not limited to particular impairments, particular screening or testing methods, the method of programming the claimed “expert system,” or the “nature” of the control.

[C]ritically absent from the entire patent is how the existing vehicle equipment can be used to measure these characteristics; assuming these measurements can be made, how the decision module determines if an operator is impaired based on these measurements; assuming this determination can be made, how the decision module decides which control response to make; and assuming the control response decision can be made, how the “expert system” effectuates the chosen control response. At best, the ‘392 patent answers the question of how to provide faster, more accurate and reliable impairment testing by simply stating “use an expert system.” Thus, in the absence of any details about how the “expert system” works, the claims at issue are drawn to a patent ineligible abstract idea, satisfying Mayo/Alice step one.

An important take-away from this analysis is that the concept of an abstract-idea is closely tied-in with the novelty of the claims themselves – even at step-one of Alice. Thus, contrary to what many patent attorneys continue to believe, whether a concept is an “abstract idea” will depend upon the invention’s priority dates. However, on that same point, the Court rejected Vehicle Intelligence’s argument that its claim did not embody that broad concept of “testing-operators and taking control” since prior patents held by other companies already disclosed and claimed other methods of achieving those same results. The court rejected that notion since full-preemption is not a requirement of the Alice test.

Readers will also notice the linkage between the court’s analysis for eligibility and the doctrines of written description and indefiniteness. The suggestion in this case appears to be that the same claim could have been eligible if the patentee had provided (in the specification) a full explanation of how to implement its system.

On step two of Alice, the court found that “nothing” in the claims disclosed “any inventive concept sufficient to transform the abstract idea of testing operators of any kind of moving equipment for any kind of physical or mental impairment into a patent-eligible application of that idea.” On this point, the patentee argued that its claims were tied to particular device (one of “an operations module, an audio module, a navigation module, an anti-theft module, and a climate control module.”). However, the court found that the patent did not include enough of an explanation of “how the methods at issue can be embedded into these existing modules.”

The court also notes that being “tied to particular machines” is not “sufficient to confer eligibility.”

Although non-precedential, the case will certainly reverberate – especially the court’s refusal to limit the definition of ‘abstract idea’ and its continued acceptance of judgment-on-the-pleadings as the proper method for dismissing cases on Section 101.

Joe Herndon at Patent Docs has more.

Two-Step Printed Matter Doctrine: (1) Is it Printed Matter?; (2) Do we give it patentable weight?

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By Dennis Crouch

The printed matter doctrine probably arises less than it should as its contours are likely integral to an understanding of the patentability of software related inventions.  Like the abstract idea test the doctrine barring the patentability of certain “printed matter” is nonstatutory and judicially created.

In the recent DeStefano case, the Federal Circuit vacated a PTAB anticipation decision that was based upon the printed matter doctrine — holding that the Board erred in its understanding of the test.

Distefano claims a user-directed method of designing an electronic document.[1] The PTAB found that all of the elements of the claim were anticipated by a prior art reference except for the claimed requirement of “selecting a first element from a database including web assets authored by third party authors and web assets provided to the user interface from outside the user interface by the user.”  Rather than finding that element in the prior art, the Board ruled that it should be given no patentable weight under the printed matter doctrine.

The printed matter doctrine has a long history and generally stands for the principle that no patentable weight should be given to the content of information recorded in a substrate.[2]  leading case in the area continues to be 1931 Russell decision.[3] In Russell, the CCPA ruled that a “mere arrangement of printed matter on a sheet or sheets of paper, in book form or otherwise, does not constitute any new and useful art.”

The Federal Circuit has ruled on several printed matter cases — holding that the content labels providing dosage instructions, instructions for performing tests, and numbers printed on a wristband were all printed matter.[4] on the other side, the Federal Circuit ruled in Lowry that data structures themselves should not be considered printed matter if they include “information regarding physical interrelationships within a memory.”[5]

To be clear, the question of whether or not a claim element is printed matter represents just the first step in the process. Once an element is determined to be printed matter the court must take the next step of determining whether or not it should be given patentable weight.  Regarding the second step, the court writes here that the “common thread amongst all of these cases is that printed matter must be matter claimed for what it communicates.”  Thus, information content can be given patentable weight if it “has a functional or structural relation to the substrate.”

Coming back to DiStefano’s case, the appellate panel here ruled that the claimed “selecting a first element” step failed the threshold question and was not itself a claim directed toward printed matter. The court writes:

Although the selected web assets can and likely do communicate some information, the content of the information is not claimed. And where the information came from, its “origin,” is not part of the informational content at all. Nothing in the claim calls for origin identification to be inserted into the content of the web asset.

Thus the case was vacated and remanded back to the patent office for another go-round.  I’ll note here that this is the second time the Federal Circuit has reached a decision in this case. In its 2014 unpublished decision the Federal Circuit also rejected the board’s attempt at an anticipation rejection-that time finding that the rejection was an “new ground of rejection” that required a remand.[6]

The claim itself appears fairly simple and straightforward, and one that is, in my guesstimate, likely directed to an idea already known.[7] Of course, so far the patent office has been unable to find the right references and unfortunately had to really stretch the law in this one.

On remand, it will be interesting to see whether the patent office follows its usual procedure of allowing a case after a successful appeal by the applicant, or will a new search and new rejection be submitted?

My understanding is that Mr. DiStefano continues to own the patent via his Patent Trust LLC.  Patents in his portfolio include US Patent Numbers 6,331,400, 6,771,291, 7,353,199, 7,996,259, 8,335,713, 8,412,570, 8,417,567, 8,423,399, 8,442,860, 8,589,222, 8,650,076, 8,768,760, 8,781,890 and 8,996,398.[8]

= = = = =

[1] US patent Application No. 10/868,312, claim number 24.

[2] See 1 Chisum on Patents section 1.02.

[3] In re Russell, 48 F.2d 668, 669 (CCPA 1931)(indexing the names in directories and dictionaries).

[4] AstraZeneca LP v. Apotex, Inc., 633 F.3d 1042, 1048 (Fed. Cir. 2010); King Pharm., Inc. v. Eon Labs, Inc., 616 F.3d 1267, 1279 (Fed. Cir. 2010); In re Ngai, 367 F.3d 1336, 1337–38 (Fed. Cir. 2004); and In re Gulack, 703 F.2d 1381, 1385 (Fed. Cir. 1983).

[5] In re Lowry, 32 F.3d 1579 (Fed. Cir. 1994).

[6] In re DiStefano, 562 F. App’x 984, 984 (Fed. Cir. 2014).

[7] The text of the claim is as follows:

A method of designing, by a user in a user interface having first and second display regions each capable of displaying a plurality of element, an electronic document, comprising:

selecting a first element from a database including web assets authored by third party authors and web assets provided to the user interface or outside the user interface by the user;

displaying the first element in the second display region;

interactively displaying the electronic document in the first display region;

modifying the first element displayed in the second display region upon receiving a first command to modify the first element in the second display region; and

displaying the modified first element in the first display region, wherein the modified first element forms at least part of the electronic document.

[8] Thomas L DeStefano III, LinkedIn biography available at https://www.linkedin.com/in/thomas-l-distefano-iii-a538811.

Petition of the Day: Does the Statute Allow Section 101 Challenges in CBM/PGR proceedings?

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Retirement Capital Access Mgm’t Co. v. U.S. Bancorp and Michelle Lee, on petition for writ of certiorari 2015.

The question presented here stems directly from the posts that Prof Hricik and I wrote back in 2012 and 2013.

RCAM presents the following question:

The AIA limits the [PTAB’s] jurisdiction with respect to CBM review to challenges based on any ground that could be raised under paragraph (2) or (3) of 35 U.S.C. § 282(b). Paragraph 2 provides that a party may seek to invalidate a patent or claim on any ground specified in part II of Title 35 as a condition for patentability.

The questions presented arise from the Federal Circuit affirming, without comment, the Board’s holding that 35 U.S.C. § 101 is a ground specified in part II of Title 35 as a condition for patentability and therefore constitutes a proper basis for review in a CBM proceeding, and from the Federal Circuit affirming the Board’s application of § 101 to the patent claims at issue.

They are:

1. Whether subject matter eligibility under 35 U.S.C. § 101 is a ground specified as a condition for patentability under 35 U.S.C. § 282(b)(2).

2. Whether the Board errs when it invalidates issued patent claims posing no risk of pre-emption under the abstract idea exception to patent eligibility.

Read the petition: Petition101.

Federal Circuit Reluctantly Affirms Ariosa v. Sequenom and Denies En Banc Rehearing

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Ariosa v. Sequenom (Fed. Cir. 2015) (en banc petition denied)

The Federal Circuit has denied Sequenom’s petition for en banc rehearing – reconfirming the panel holding that the claimed “method of detecting paternally inherited nucleic acid” is unpatentable as a law of nature.  Patent No. 6,258,540.  Following this case, the USPTO may finally begin applying the law-of-nature exception in a major way. The decision also sets up a petition for writ of certiorari to the Supreme Court with several members of the Federal Circuit expressly calling for review.

As I previously wrote, the invention at issue here solves a very practical problem accessing fetal DNA without creating a major health risk for the unborn child.  The big idea was the hypothesis that fetal DNA might be floating around in the mother’s blood and that the fetal DNA could be selectively amplified by focusing on the paternally inherited portion of its DNA (rather than the maternally inherited).

The claim itself has two simple steps: (1) amplifying paternally inherited DNA from a plasma sample taken from a pregnant female and then (2) detecting the presence of the DNA. As I mentioned, the big idea was understanding where the baby-DNA could be found (in the mother’s blood plama) and that it could be separated from the mother’s DNA by linking it to the father’s sequence. The technology for amplifying and detecting was already well known at the time of the invention here.  Further, these two steps – amplifying and detecting – are the ones always almost used to detect particular DNA sequences.

The district court found the patent invalid under Section 101.  That decision was affirmed by a Federal Circuit panel in an opinion written by Judge Reyna and a concurrence by Judge Linn.  Now, in the 11-1 en banc denial, we add three more opinions – Judge Lourie (joined by Judge Moore) and Judge Dyk, both concurring in the denial as well as Judge Newman dissenting.

The basic controlling precedent in this case is Mayo v. Prometheus. In that case, the Supreme Court held that the discovered therapeutic efficacy and toxicity of a particular administered drug to be an unpatentable natural law and that the patented testing and dosage methods were also unpatentable as effectively claiming the same law of nature. In particular, the court noted that the claimed steps were not “genuine applications of those laws[, but] rather … drafting efforts designed to monopolize the [unpatentable] correlations.” As in Ariosa, the testing and determination steps were well known in the art and relied upon well-understood, routine, and conventional activity known to those in the field. As such, those additional steps were insufficient to transform the unpatentable law of nature into a patent eligible application of the natural law.  

In Ariosa, the Federal Circuit stands almost unanimously in the conclusion that Sequenom’s invention is not patent-eligible under the Mayo precedent (only Judge Newman disagrees).  There is, however, substantial disagreement about whether the Supreme Court was correct in its Mayo analysis.

Judge Dyk: I share the concerns of some of my colleagues that a too restrictive test for patent eligibility under 35 U.S.C. § 101 with respect to laws of nature (reflected in some of the language in Mayo) may discourage development and disclosure of new diagnostic and therapeutic methods in the life sciences, which are often driven by discovery of new natural laws and phenomena. This leads me to think that some further illumination as to the scope of Mayo would be beneficial in one limited aspect. At the same time I think that we are bound by the language of Mayo, and any further guidance must come from the Supreme Court, not this court.

Judge Lourie: [I]t is unsound to have a rule that takes inventions of this nature out of the realm of patent-eligibility on grounds that they only claim a natural phenomenon plus conventional steps, or that they claim abstract concepts. But I agree that the panel did not err in its conclusion that under Supreme Court precedent it had no option other than to affirm the district court.

Judge Linn:  In my view, the breadth of the second part of the test was unnecessary to the decision reached in Mayo. This case represents the consequence—perhaps unintended—of that broad language in excluding a meritorious invention from the patent protection it deserves and should have been entitled to retain.  (Note, Judge Linn participated in the original panel decision but could not dissent here because of his Senior Status).

It will be interesting to see how this proceeds, but my view is that the case has a low-chance for certiorari.  In Mayo, the Supreme Court indicated its understanding that the case would halt patenting of many diagnostics, but expressly called on Congress to “craft[] more finely tailored rules where necessary.”  In the 3 1/2 years since the Mayo decision, the diagnostic industry has not been able to get a bill even proposed in Congress that would so-tailor these rules (at least that I know of).

 

McCarthy on the Federal Circuit as a trademark court

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by Dennis Crouch

Thomas McCarthy and Dina Roumiantseva have published a new article titled: Divert All Trademark Appeals to the Federal Circuit? We Think Not.  They write:

With some regularity over the years, a proposal is made to change the Lanham Act so that appeals in all Lanham Act trademark and false advertising cases from district courts across the United States will be diverted from the regional circuit courts of appeal to the Court of Appeals for the Federal Circuit. We think it is time to discuss this proposal head on and hopefully to convince the reader that this diversion is not a good idea and should never be implemented. Advocates of this proposal claim that trademark law would benefit from the consistency that a single appeals court could provide and that the Federal Circuit has exceptional expertise in trademark law. We believe, however, that trademark law does not suffer from the kind of circuit conflict that led to the channeling of all patent appeals to the Federal Circuit in 1982. Moreover, our review of case law suggests that some regional circuits have a comparable or greater experience with trademark law. We argue that no change in the present system of trademark appeals is needed.

I see merit to the McCarthy-Roumiantseva argument.  However, I also see a major problem with the current intellectual property system is its disjointed implementation nature.  Copyright is adminstered by a branch of the Library of Congress. Patent and Trademark registration is handled by a single agency, except for state-law and FDA exclusivity issues. And, the appellate courts that hear most copyright and trademark infringement actions almost never hear any patent infringement actions – and vice versa. Trade secret is almost (but not quite) entirely state law derived. These major divides in administration and adjudication have led to a system that lacks substantial coherence across doctrinal silos and has opened the door for special interests to tweak individual portions of the law toward their favor.

Three Recent PTAB Decisions on Patent Eligibility

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Ex Parte Bak, Application 12/822,772 (PTAB 2015) (Owned by IBM)

Claim at issue: 1. In a network of computer controlled user interactive display stations, a method for the scheduling of meetings on the calendars of invitee users comprising:

prompting an inviter, at a sending display station, to enter into an invitation a predetermined set of general attributes for the scheduled meeting;

enabling each invitee to predetermine a set of invitee-specific attributes applicable to each invitation; and

enabling each invitee to prioritize each predetermined general attribute and each invitee-specific attribute to a numerical priority level to determine the priority of said meeting on the invitee’s calendar.

Holding: [T]he claim is directed to the abstract idea of scheduling a meeting. . . . In this case, to the extent that claim 1 requires a network of computer controlled user interactive display stations and a sending display station, we determine that the recitation of such generic component is insufficient to transform the nature of the claim into a patent-eligible application.

Ex Parte Base, Application 10/489,651 (PTAB 2015) (Owned by Siemens)

Claim at issue: 11. A method for video coding using symbols, the method performed by execution of a computer program stored on a non-transitory computer readable medium and comprising the steps of:

providing a prediction error matrix;

converting the prediction error matrix by coefficient sampling into a series of symbols; and

performing context-adaptive arithmetic encoding of the symbols, wherein the encoding includes for a symbol being encoded, selecting from different predetermined distributions of symbol frequencies a particular predetermined distribution of symbol frequencies based on the symbol encoded immediately beforehand, the predetermined distribution of symbol frequencies indicating the likelihood of different types of symbols occurring immediately following the type of the symbol encoded immediately beforehand based on known statistical interdependencies between different types of symbols occurring in succession;

wherein a number of symbols read out for coefficient sampling is encoded and transmitted.

Holding: Independent claims 11, 20, and 21 are directed to methods of video coding using symbols with three steps: providing a prediction error matrix; converting the prediction into a series of symbols; and performing context-adaptive arithmetic encoding of the symbols. These are mental process steps which can be performed in the human mind, or by a human using a pen and paper. . . . And the recitation in the preamble of independent claims 11 and 21 of performing the method “by execution of a computer program” does not transform the recited abstract idea into a patentable invention.

Ex parte Shideler, Application 11/779,876 (PTAB 2015)

Claim at issue: 12. A method of playing a story based card game associated with a predetermined story and having a series of locations associated with the predetermined story and wherein the game includes a preset number of sequential rounds, the card game comprising: a plurality of sets of location cards, one set of location cards for each of the plurality of locations associated with an aspect of the predetermined story, each set of location cards including one card for each round of the game, wherein each round includes at least one correct location card for that round, wherein each correct location card for each round includes indicia indicating that it is the correct card for that round and including a continuation of the story, whereby a series of correct locations cards for the rounds of the game combine to form a story summary, the method comprising the steps of having the players selectively choose a location card for each round and having the players repeat the selection process until one player can identify all of the correct location cards in the series of correct location cards.

Holding: It is our view that selectively choosing a card and repeating that step until a predetermined goal is reached amounts to merely receiving and evaluating data, and therefore constitutes an abstract idea. . . . [Step 2:] The use of cards having indicia specific to the subject matter of a game is well-known, well-understood, routine and conventional in the field. Thus, from our perspective, such cards, and the other limitations of claim 12, do not add “significantly more” than an abstract idea.

Guest Post by Profs. Lefstin & Menell on Sequenom v. Ariosa

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In a parallel post, Dennis summarized the numerous amicus briefs filed in support of Sequenom’s petition for rehearing en banc.  Below, professors Jeffrey Lefstin (Hastings) and Peter Menell (Berkeley) discuss the core issues raised in their amicus brief.

Don’t Throw Out Fetal-Diagnostic Innovation with the Bathwater:
Why Ariosa v. Sequenom Is an Ideal Vehicle for Constructing a Sound Patent-Eligibility Framework

By Jeffrey A. Lefstin and Peter S. Menell
Over the past five years, the U.S. Supreme Court has reinvigorated patentable subject-matter limitations, issuing four significant decisions after nearly three decades of dormancy.  These decisions reflect justifiable concerns about the patenting of abstract business methods and laws of nature. Just as importantly, they reveal internal inconsistencies and confusion about the scope of patentable subject matter and tension with the centuries-old fabric of patent-eligibility jurisprudence. As Justice Breyer remarked at the oral argument in Alice Corp. v. CLS Bank Int’l (2014), the Mayo (2012) decision did no more than “sketch an outer shell of the content” of the patent-eligibility test, leaving much of the substance to be developed by the patent bar in conjunction with the Federal Circuit.

Two of the Supreme Court’s recent patent-eligibility decisions (Bilski and Alice) involve non-technological business methods.  Mayo glosses over several key issues, including how to reconcile prior discordant decisions (Flook and Diehr), and whether the requirement of “inventive concept” demands an unconventional application, or merely more than the generic instruction to “apply the law.” And Myriad departs from Mayo in a critical respect in that it authorizes patentability for a conventional transformation of a natural compound.

Unfortunately, the Federal Circuit’s panel decision in Ariosa v. Sequenom elides the critical questions.  In view of Congress’s reluctance to weigh in on the scope of patentable subject matter and the Supreme Court’s signals to the patent bar and the Federal Circuit to bring coherence to these rough outlines, Ariosa v. Sequenom marks a critical juncture in the development of a modern patent-eligibility framework.  Failure to vet these issues risks undermining the patent system’s role in promoting biomedical research.  Beyond Supreme Court review, which is never guaranteed (consider the havoc wreaked by the Court’s passing on State Street Bank), or corrective legislation (which is even more speculative), en banc review by the Federal Circuit presents the last clear chance to avert potentially dire consequences.

Our amicus brief urges the Federal Circuit to grant en banc review in Ariosa v. Sequenom to ventilate the critical issues left unanswered by the Supreme Court’s patent-eligibility decisions.  Although some language in Mayo could be interpreted to set forth unconventional or inventive application as a possible test for patent-eligibility, Mayo suggests two other possibilities for an “inventive concept”: non-preemptive application; and non-generic application – that is, more than a statement of a natural law coupled with an instruction to apply it.  While the panel was correct to perceive that Mayo describes preemption as the underlying justification for the patent-eligibility doctrine, not the operative test, we believe that the panel was incorrect to conclude that Mayo dictates unconventional or inventive application.

Our brief further shows that the Ariosa panel decision conflicts with several strands of prior Supreme Court decisions.  The panel decision jeopardizes valuable innovation in diagnostic research and other biomedical fields as unintended fallout of the Supreme Court’s justifiable desire to discard vague and non-technological business method patents.  The primary responsibility for developing patent-eligibility doctrine now rests with the Federal Circuit and this case presents an ideal vehicle for explicating sensible jurisprudential boundaries.

Jeffrey A. Lefstin is Professor of Law at the University of California Hastings College of Law.  Peter S. Menell is Koret Professor of Law and a Director of the Berkeley Center for Law & Technology at the University of California at Berkeley School of Law.  Their amicus brief in support of en banc review in Ariosa v. Sequenom is available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2652452

In Brief: Amici Provide Reasons to Reconsider Ariosa v. Sequenom

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[This post includes links to the 12 amicus briefs supporting Sequenom’s petition for en banc rehearing in this Subject Matter Eligibility Case.]

by Dennis Crouch

Ariosa Diagnostics, Inc v. Sequenom, Inc. (Fed. Cir. 2015) (en banc petition 2015)

This subject matter eligibility case revolves around an important scientific discovery that a pregnant woman’s blood plasma/serum contains fetal DNA and that the fetal DNA can teased-out by amplifying paternally-inherited sequences from the cell-free fractions of the mother’s blood. Sequenom’s patents focus on methods of prenatal genetic diagnoses that rely upon these discovery by the inventors. U.S. Patent No. 6,258,540.

Invalid: Applying Mayo v. Prometheous, the Federal Circuit held all the claims in-suit to be ineligible. In step one of the Mayo inquiry, the court found that the claims were all directed to a natural phenomenon: the existence of paternally-inherited cell-free fetal DNA (cffDNA) in the maternal bloodstream. In step two, the search for an ‘inventive concept,’ the court found that the practical implementation of the natural phenomenon was insufficient because it merely involved well known methods of amplifying DNA.  (CitingFlook).  Without an inventive concept beyond the excluded subject matter – the claims were left ineligible for patent protection.

In his usual understated approach, Professor Chris Holman identified the Federal Circuit decision “not good news for innovation in the life sciences.”  The USPTO has also seemingly delayed providing examiner’s with guidance on how to implement Ariosa during examination.

En Banc Rehearing Petition: The patentee has now put forward a strong move for rehearing en banc  with a well drafted petition and support from a host of amici. Aptly describing the core issue, Sequenom’s counsel Tom Goldstein explains:

[Under the Federal Circuit’s rule] the person who first discovers a natural phenomenon can never obtain a patent on any practical application of that new knowledge, however surprising or revolutionary the results, unless the steps she teaches to use it are independently novel. . . . that cannot be correct.

Read the Ariosa.Petition.  The petitioner’s main argument here is with the Supreme Court’s broad language used in Mayo that also revitalized Flook.  Of course, those cases conflict with other Supreme historic precedent. In the coming months, the Federal Circuit will decide this en banc request, but the case is very much being set-up for Supreme Court review.

The 12 amicus briefs filed in support of the petition are strong and well written.

My former boss Kevin Noonan is counsel of record for a group of 23 law professors, including Adam Mossoff, Dan Burk, Tim Holbrook, and Richard Epstein. The brief makes two main arguments: (1) the genetic diagnostic tests developed and commercialized here are the type “historically unforeseen invention” that the patent system is designed to promote; and (2) the panel’s approach here of requiring novelty beyond straightforward application of excluded natural phenomenon “would call into question nineteenth century patented innovation the Supreme Court deemed valid.”Read Ariosa.lawprof.  The sentiment of the Law Professor Brief is consistent with the brief filed by Matthew Dowd on behalf of JYANT Tech, explaining that “in Diamond v. Diehr … the [Supreme] Court explained that “a new combination of steps in a process may be patentable even though all the constituents of the combination were well known and in common use before the combination was made.” Read Ariosa.JYANT

As we will discuss in a parallel post, the brief of Professors Lefstin and Menell provide their reading of recent Supreme Court cases of Mayo and Alice — arguing that (1) a close reading shows that inventive application of a law of nature is not required but instead a non-preemptive or non-generic application; and (2) the Flook-type claim dissection is prohibited. Read Ariosa.Leftsin. This analyze-it-as-a-whole sentiment was repeated by the IPO Brief field by Tiege Sheehan as well as the brief from Amarantus filed by Gideon Schor. Read  Ariosa.IPO and Ariosa.Amarantus.

My Fellow Missouri Professor Chris Holman filed a brief on behalf of the major industry organizations BIO and PhRMA making the credible argument that all this is a very big deal in the diagnostic space and that the resulting uncertainty is having a negative impact on research. Read Ariosa.BIO.

Preemption: When the Supreme Court explained its two two-step approach in Mayo andAlice, it noted the purpose was to avoid preemption of any excluded subject matter — that is, to ensure that no single entity could claim exclusive sovereignty over an abstract idea, law of nature, or natural phenomenon.  Rather, those basic fundamentals of society should not be subject to private claims of right.  Although the purpose behind the test is preventing this preemption, the test itself seemingly does not ask whether preemption has occurred. In its brief, the NYIPLA argues that this fundamental question of preemption must be asked and the Mayo/Alice framework does not authorize a court to ignore that inquiry.READ Ariosa.IPLA.  This focus on preemption is repeated by WARF’s brief filed by Dan Bagatell — writing that “the critical question is whether a patent impermissibly claims and prevents others from using a natural phenomenon, law of nature, or abstract idea itself, or instead permissibly claims a practical application of one of those things.”Read Ariosa.WARF.

Myriad‘s counsel Benjamin Jackson filed a brief on behalf of the industry organization21st Century Medicine that challenges the “gist” method of determining whether a claim encompasses excluded subject matter and suggests that the claim here is simply a technological improvement over the prior art.

Sequenom’s patent teaches it was known in the art that fetal cells can pass into the mother’s blood. Diagnostic techniques had been devised to isolate these cells and analyze fetal DNA extracted from them, but these techniques were expensive and time consuming. The phrase “cell-free fetal DNA” was therefore not an attempt to claim a natural phenomenon but instead a key claim limitation to distinguish over the art. Fifteen years ago, back when patent claiming and examination focused on prior art rather than ill-defined “natural phenomena,” Sequenom appropriately emphasized that its methods used cell-free fetal DNA rather than the cell-derived fetal DNA known in the art.

Thus, the claimed invention is a significant technical improvement in the laboratory process for prenatal diagnosis, allowing laboratories to eliminate the costly and labor-intensive step of isolating fetal cells and then fetal DNA. Such an inventive improvement to the technical performance of an existing technological process is precisely what patents are for.

Read Ariosa.21st. The Novartis brief, filed by its in house counsel Corey Salsberg, makes the important point eligibility has become a tougher test that patentability (nonobviousness). Read Ariosa.Novartis.

Taking a more international approach,Paul Cole and Donald Zuhn teamed-up to file a brief indicating, inter alia, that the panel’s approach in Ariosa creates a potential TRIPs Violation. “This case is an example of an internationally discordant, not harmonious, result, contrary to the eligibility requirements of TRIPS Article 27.”  Read Ariosa.COLE. Similarly, the Bioindustry Association (BIA) also argues that the panel’s approach here means that U.S. eligibility is substantially narrower than that of our global trading partners. Read Ariosa.BIA.

The Federal Circuit may take several weeks to decide this en banc petition. This case is a hot potato and the court’s likely reason for ducking the case would be to avoid being scalded.

 

Read This: USPTO’s New Examination Guidelines Subject Matter Eligibility Provide “Pathways to Eligibility”

Patent,

By Dennis Crouch

The Supreme Court’s decisions in Alice Corp v. CLS Bank and Mayo v. Prometheus serve as dramatic turning points in the conventional wisdom of subject matter eligibility.  Inventions that were previously thought to be patent eligible are no longer; and we continue to re-calibrate toward this new normal. The USPTO has found some amount of understandable difficulty in implementing the two step Alice/Mayo eligibility test.  In a chicken-and-egg problem, the test has major gaps in its structure, but the USPTO lacks substantive rulemaking authority to fill those gaps. 

The USPTO’s Office of Patent Examination Policy (under Mr. Drew Hirshfeld) has released a new set of Eligibility Examination Guidelines intended to supplement those released in 2014 with the intent of both educating examiners on best practices and also informing applicants of the agency’s approach. I spoke with Hirshfeld who reiterated that these guidelines are incremental and that the USPTO continues to welcome input from the patent law community.

The July 2015 update builds upon Federal Circuit eligibility decisions made during interim and also responds to user comments.  The guidelines major thrust, however, appears to be its attempt to offer a counterweight against those announcing that “nothing is patentable.” In the words of the notice, the idea is to provide “pathways to eligibility.”  To be clear, the update does not cancel the prior guidance but only serves as a supplement.

Identifying Abstract Ideas and Laws of Nature: “Don’t Get Creative.” Although we know that “abstract ideas” are not patent eligible, the courts have chosen not to provide any crisp definition or description of that set of concepts. As I mentioned earlier, the USPTO also lacks authority to further define that question of law. Rather than guessing at the vast gray areas, the agency is instructing examiners to only find an abstract idea when the concept in question parallels one found to be abstract in a court decision.

“These associations define the judicial descriptors in a manner that stays within the confines of the judicial precedent . . . a claimed concept [should] not [be] identified as an abstract idea unless it is similar to at least one concept that the courts have identified as an abstract idea.”

Here, it also appears that the “court decisions” to be followed are primarily those of the Federal Circuit or Supreme Court rather than district courts.

The examples provided in the most recent guidelines include a further focus on business methods and human-mind-activities. , graphical user interface (GUI), and software areas. (This update does not include the most recent decisions such as Versata, Intellectual Ventures, Webb, Internet Patents, Sequenom, and OIP Tech.) The on its guidelines page, the PTO continues to maintain a list of the court decisions.

One way to think about an abstract idea is a concept defined at a high level of abstraction and likely in functional form – here, the PTO does not take that approach but rather continues to define “abstract” as something akin to a category of subject matter that is excluded from eligibility.

The PTO’s Streamlined Analysis: The guidelines continue to promote its “streamlined analysis” for eligibility – essentially a shortcut for examiners when an abstract idea or law of nature is clearly only tangential to the thrust of the claim and therefore that eligibility is self-evident.

Requirement of “Evidence” for Eligibility Rejections:  The most controversial aspect of the guidelines will likely turn out to be the PTO’s decision that evidence is not needed as a prerequisite to an eligibility rejection. “For subject matter eligibility, the examiner’s burden is met by clearly articulating the reason(s) why the claimed invention is not eligible.” The PTO’s reasoning makes sense – eligibility has been repeatedly seen as a pure question of law adjudged without reliance upon any ‘evidence’ beyond that intrinsic to the patent documents themselves. “[C]ourts do not rely on evidence that a claimed concept is a judicial exception, and in most cases resolve the ultimate legal conclusion on eligibility without making any factual findings.”

To be clear, the PTO is requiring a “clear articulation” of an examiner’s reasons for rejection, but nothing more is required. Here, of course, the devil will be in the details of what is sufficient to constitute such clarity. To help settle that debate, the PTO has provided a further set of examples and reasoning seen sufficient. Interestingly, however, a “clear articulation” does not necessarily include determining the type of exception (abstract idea, law of nature, product of nature) that is being highlighted – “examiners are not required to distinguish between exceptions which can prove to be difficult.” This approach makes some sense in that the “law of nature” vs “abstract idea” distinction is likely merely philosophical. The one major difference is that both the Supreme Court and the USPTO appear to treat “products of nature” somewhat different. For products of nature only, the PTO includes a “markedly different characteristics” (MDC) shortcut to eligibility.

For further consideration of sufficient evidence, the PTO has also provides a set of worksheets (esp. Worksheets 5-8) that give explanations that satisfy the clear articulation burden. Although not “law,” these worksheets and examples are designed to carry weight with examiners and I would expect applicants to cite them directly in office action responses.

Preemption: I have mentioned this oddity before – although the eligibility test is designed to prevent a single entity from privatizing/preempting an abstract idea or law of nature, the eligibility test does not actually ask whether the invention as claimed accomplishes the prohibited preemption. Here, the PTO repeats that approach – noting that “the absence of complete preemption does not guarantee that a claim is eligible.”

Training: Examiners have apparently not yet been trained on the new guidance, and so someone immediately relying upon the guidance may need to self-educate the examiner. If I had a pending eligibility rejection that does not fit within the guidelines, I would talk through the situation with the examiner in an interview with the hope of having the rejection withdrawn.

Patent Office Issues Updated “Interim Guidance” on Patent Subject Matter Eligibility

Patent,

By Jason Rantanen

This morning, the USPTO issued a substantial update to its December 2014 “Interim Guidance” on patent subject matter eligibility.  The update addresses comments on the 2014 Guidance and includes several new examples of eligible and ineligible claims.  The update is available here: http://www.uspto.gov/patent/laws-and-regulations/examination-policy/2014-interim-guidance-subject-matter-eligibility-0  (The title says 2014 Interim Guidance, but the contents include the 2015 update.)

The new examples are directed to abstract ideas rather than biotechnology based inventions, although the commentary notes that the office is working on additional biotech-based examples.  According to the update,

These examples provide additional eligible claims in various technologies, as well as sample analyses applying the Supreme Court and Federal Circuit’s considerations for determining whether a claim with additional elements amounts to significantly more than the judicialexception itself. The examples, along with the case law precedent identified in the training materials as pertinent to the considerations,3 will assist examiners in evaluating claim elements that can lead to eligibility (i.e., by amounting to significantly more) in a consistent manner across the corps.

While these examples will likely be welcomed by attorneys practicing in this area, a substantial limitation is that the only recent Federal Circuit opinion finding an abstract idea-based claim eligible is DDR Holdings v. Hotels.com.  Thus, while there are several other examples of claims that the PTO would find eligible, those examples are based on either (1) PTO (as opposed to Federal Circuit) precedent; (2) hypothetical situations; or (3) pre-Mayo/Alice decisions (such as Diamond v. Diehr).

A particularly interesting part of the examples are two directed to use of the “streamlined” patent eligible subject matter analysis.  Those examples analyze claims directed to an internal combustion engine and remote storage of BIOS.  For these claims, the examiner would conduct only a “streamlined” analysis that would not become part of a written rejection.

As with the earlier Interim Guidance, the PTO is seeking public feedback on the  update.  From the website:

Any member of the public may submit written comments by electronic mail message over the Internet addressed to 2014_interim_guidance@uspto.gov (link sends e-mail). Electronic comments submitted in plain text are preferred, but also may be submitted in ADOBE® portable document format or MICROSOFT WORD® format. The comments will be available for public inspection here at this Web page. Because comments will be available for public inspection, information that is not desired to be made public, such as an address or a phone number, should not be included in the comments. Comments will be accepted until October 28, 2015.

Sensor Based Motion Tracking System Ineligible under Section 101

Patent, , ,

Thales Visionix v. USA and Elbit Systems (Ct. Fed. Clm. 2015).

Suing the government is always an interesting proposition because it is government-employed judges who decide whether or not the government is liable. In the U.S. claims of patent infringement against the Federal Government (or its contractors, typically) are brought in the Court of Federal Claims (CFC).

Here, Thales sued the Government and its contractor Elbit systems for infringing its U.S. Patent No. 6,474,159 used to track the relative motion between two moving objects. The allegation is that the invention is used in F-35 helmet-mounted displays – when the pilot turns his head, the relative tracking system shifts the display information.

The ‘159 patent is expressly directed to “cockpit helmet-tracking,” although it is not expressly limited to those applications. See Claim 1:

1. A system for tracking the motion of an object relative to a moving reference frame, comprising:

a first inertial sensor mounted on the tracked object;

a second inertial sensor mounted on the moving reference frame; and

an element adapted to receive signals from said first and second inertial sensors and configured to determine an orientation of the object relative to the moving reference frame based on the signals received from the first and second inertial sensors.

Reading claim 1, you’ll note the requirement of two sensors physically mounted upon two different objects as well as a signal receiver configured to receive data and compute the relative orientations. Further claims define the types of sensors as well as mechanisms for computation.

In the lawsuit, the United States Government raised the defense that the patent lacks subject matter eligibility – as impermissibly directed to an abstract idea. In its opinion, the CFC agrees;

Here, the Court … finds that TVI fails the first prong of the Alice analysis because the independent claims of the ‘159 Patent are directed to mathematical equations for determining the relative position of a moving object to a moving reference frame. Derived from Newtonian principles of motion and “borrowing the mathematics that an inertial navigation system uses to track an airplane relative to a rotating earth”, the navigation equation is undoubtedly a complex mathematical concept, and a solution to the problem of tracking two moving objects in relation to each other. However, the Court finds that this concept is a “building block of human ingenuity”, and the solution lies in the mathematical formulae, not the generic devices listed in the system claim. Accordingly, TVI’s claims fail the first prong of the Alice analysis because the claims are directed to the abstract idea of tracking two moving objects, and incorporate laws of nature governing motion, both of which are ineligible for patent protection.

[Regarding Alice Step 2] the system claim fails to transform the method claim into a patent-eligible invention. The plain language of Claim 1 describes generic, fungible inertial sensors that admittedly have already gained “widespread acceptance” in the field of motion tracking. Like the computer elements in Alice, these inertial trackers, when considered as an ordered combination in the claimed system, add nothing transformative to the patent. Although the concept of tracking the motion of a moving object relative to a moving reference frame may have been novel and nonobvious, the claimed system does nothing to ground this abstract idea in a specific way. The claims allow for the application of the navigation equation in almost endless environments, and are not limited to a fighter jet and a pilot’s helmet. . . .

Ultimately, the concern that drives the exclusionary exceptions for abstract ideas and laws of nature from § 101 eligibility “[i]s one of pre-emption.” Alice. The Court finds that the scope of the subject patent’s claims is insufficiently limited under the holdings of Mayo and Diehr, and if the patent were considered to protect eligible subject matter, it would pre-empt the use of the underlying abstract idea of relative motion tracking by others in the field. The patent’s ineligibility is confirmed by the machine-or-transformation test, under which the claims are not tied to any specific machine and do not transform the nature of the patent into something more than the abstract mathematics behind it. At its core, the patent is seeking protection for the mathematical formulae used in determining the relative orientation of two moving objects. The Court is unwilling to afford patent protection to Plaintiff’s claim on this building block of motion tracking technology.

101 – Read the Court Decision.

My Rant on Versata: Non-existent Statutory Analysis Continues

Ethics, Patent, , , , , ,

by David Hricik

Over on the main page, Dennis has done a good job laying out the court’s “analysis” in Versata v. SAP of whether section 101 is a defense to invalidity.  The court recognized that, by the text of the statute, it is not.

But, it reasoned that because, today, section 101 challenges are a cottage industry, that that interpretation must be wrong.  It cites to dicta from old Supreme Court cases.  And, it says basically, “well, people are doing it so it must be right.”

Um, wrong:   See Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164, 177 & 191 (1994) (overruling six decades of case law implying a cause of action), superseded on other grounds by 15 U.S.C. § 78(t)(e). Whatever a court says a statute says, the Constitution makes paramount what the enacted text actually says.  Courts can get something wrong for a long time; a judge’s Constitutionally required job is not to continue the nonsense; it is to stop it.

The fact is that no court has ever actually analyzed whether 101 is a defense, particularly after 1952, when (I believe) Congress meant to get rid of this “inventive concept” and other nonsense that courts had, previously, read into the word “invention” in what was then 101.  Congress put all of those odd requirements into the objective section 103.  But… the point is:  no court has analyzed the text — about whether “eligibility” is a defense to any infringement suit (and obviously not in CBM proceedings), and when this court did, it recognized the text did not support Section 101 as an invalidity defense.

That should have been the end of the inquiry, absent (a) an absurd result; (b) ambiguity; or (c) some other narrow exception to ignoring the plain text.  But the panel went further, and suggested that some sort of history precluded giving the statutory text its plain meaning.  (I wrote a book on statutory interpretation; I won’t bore you with the details.)

Let’s go past the text and look for some strong reason to ignore its plain meaning.  What is this evidence?

Courts sometimes use the purpose of a statute to interpret it.  Likewise, they look at legislative history to discern meaning or to find purpose.  What if there was some huge committee report droning on about 101 and so on?  We should likely take that into account.

But it’s not there.

The legislative history shows that the purpose CBM was adopted to address shortcomings with the PTO’s ability in the late 1990’s to find prior art, and that was Congress’s intent.  The House report makes clear that the purpose was to deal with the perception that in the late 1990’s, the PTO had not found the best prior art to apply under sections 102 and 103:

A number of patent observers believe the issuance of poor business-method patents during the late 1990’s through the early 2000’s led to the patent ‘‘troll’’ lawsuits that compelled the Committee to launch the patent reform project 6 years ago. At the time, the USPTO lacked a sufficient number of examiners with expertise in the relevant art area. Compounding this problem, there was a dearth of available prior art to assist examiners as they reviewed business method applications. Critics also note that most countries do not grant patents for business methods.

The Act responds to the problem by creating a transitional program 1 year after enactment of the bill to implement a provisional post-grant proceeding for review of the validity of any business method patent. In contrast to the era of the late 1990’s-early 2000’s, examiners will review the best prior art available….

H. Rep. 112-98, at p. 54 (June 1, 2011) (emphases added).  Thus, the committee report shows that the purpose of the amendments adding CBM is consistent with the statute’s plain text:  to allow people to bring CBM to show that the invention was not new or would have been obvious in light of “the best prior art available.”  The report emphasized the lack of “a sufficient number of examiners with expertise in the relevant art area.” 

Conversely, nothing in the House report mentions the failure to recognize “abstract ideas” or the failure to properly apply Section 101.  Further, it is absurd to suggest that in the late 1990s lack of access to prior art or lack of sufficient examiners with familiarity with prior art had any impact on the ability to determine what is a “law of nature,” or “abstract idea,” or the like.  Indeed, courts are doing this now on 12(b)(6) motions based on their own “evidence”(?) of what is known, etc.

So, so far:  purpose and history, based on the “good” legislative history (committee reports and such usually get more weight than other stuff), 101 is  not a defense.

What about random statements of legislators?  Once you get into random statements, the legislative history of the AIA on this transitional program is, like almost all legislative histories in this granular level, murky.  I have reviewed the remarks made on the Floor of the Senate, and there is no doubt that a few members of Congress mentioned business method patents.  A fair reading is that at least some members of Congress thought the source of the problem to be addressed was with “abstract” patents, while others believed the failure to consider the most pertinent prior art was the source of the problem.

I have also considered other aspects of the legislative history that this panel didn’t cite.  For example, then-Director Kappos observed:  “a key House Committee Report states that ‘the post-grant review proceeding permits a challenge on any ground related to invalidity under section 282.’ H.R. Rep. No.112-98, at 47 (2011).” Yet, it is undeniable – and the Versata court held — that the text of the adopted statute points to only two subsections of Section 282, and so this sentence from that report flatly contradicts the enacted statute.  (It accurately reflects the text at the time Kappos spoke; but Congress didn’t adopt it.)  A sentence in a committee report that directly contradicts the enacted language does not control.  As with most bills, the legislative history of the AIA contains many statements that are not the law, and a few that contradict the enacted statute.

Others have pointed to this statement from a senator from Arizona, Senator Kyl:  “section 101 invention issues” were among those “that can be raised in post-grant review.”  157 Cong. Rec. S1375 (daily ed. Mar. 8, 2011).  Relying on this statement for the proposition that eligible subject matter is covered by the text is doubly problematic.  Foremost, “section 101 invention issues” is not in the enacted text, as the Versata court correctly held. Further, the Supreme Court has long and repeatedly rejected relying upon one legislator’s statement as having been enacted into federal law.  Doing so jeopardizes the Constitutional requirements of enactment and presentment.  This is especially true where, as here, that statement contradicts the plain text as well as other more weighty evidence of legislative intent.  Those sources – which, if entitled to any weight — are entitled to more weight than one Senator’s floor statement – contradict Senator Kyl’s subjective interpretation of the statute.  Again, however, I believe none of this matters here.

So, at best, there is some slight indication that a few members of Congress thought that “abstract” patents (whatever that might mean”) is the problem.

But it is long-settled there has to be some reason, much stronger than a few random statements, to ignore the plain text of an enacted statute.  What controls is the language Congress enacted, not our speculation about the intent of a handful of elected representatives.

Let’s go further.

Sometimes courts interpret statutes in light of existing case law, and that’s what the Versata court relied upon.  Well, what about case law, and the notion this court adopted that there’s some sort of “long-standing” understanding that 101 is a defense.  This is weird:  despite the plain language, and despite Congress knowing that 101 should be a defense, it did not list it.  Think about judicial activism for a moment.

And let’s be real here.

First, post-1952 it was not until Myriad that there was a challenge in the Supreme Court to an issued patent based on 101.  All the others were fights with the PTO.  No one in Myriad litigated whether 101 was a defense in terms of section 282. It’s not, as even this panel recognized.

So, saying there’s some long-standing line of cases from the Supreme Court is simply wrong:  there’s now two cases, one just decided (Alice).  Further, we all know that 101 defenses were about as rare as a blue zebra until a few years ago.

But maybe there is some long-standing interpretation, even in dicta?

Wrong.  If you read the authority relied upon by the court, they don’t support the this “history” at all — instead they undermine it.

Foremost, the Supreme Court case relied upon is Graham v. John Deere Co., 383 U.S. 1 (1966).  That famous case about Section 103 had nothing to do with whether “eligible subject matter” was a condition for patentability, and did not decide that issue. Instead, in dicta analyzing the “condition for patentability” in Section 103, the court noted:

The Act sets out the conditions of patentability in three sections. An analysis of the structure of these three sections indicates that patentability is dependent upon three explicit conditions: novelty and utility as articulated and defined in § 101 and § 102, and nonobviousness, the new statutory formulation, as set out in § 103.  The first two sections, which trace closely the 1874 codification, express the ‘new and useful’ tests which have always existed in the statutory scheme and, for our purposes here, need no clarification. The pivotal section around which the present controversy centers is § 103 . . . .

383 U.S. at 12-13.

That statement actually undermines the argument that “eligible subject matter” is a condition for patentability.

Here’s why:

Graham explains that the Patent Act of 1793 had only two conditions for patentability:  utility and novelty (both of which were once in the same statute, a precursor to sections 101 and 102).  Id. at 10 (“Although the Patent Act was amended, revised or codified some 50 times between 1790 and 1950, Congress steered clear of a statutory set of requirements other than the bare novelty and utility tests reformulated in Jefferson’s draft of the 1793 Patent Act”).  The Graham Court recognized that in 1952 Congress had added a third condition, non-obviousness.  See id. at 14 (“Patentability is to depend, in addition to novelty and utility, upon the ‘non-obvious’ nature of the ‘subject matter sought to be patented’ to a person having ordinary skill in the art.’”) (quoting Section 103).

So… the Graham case suggests — if anything, as it is dicta — that “eligible subject matter” is not a condition for patentability.  If Graham stated that utility, novelty, and non-obviousness were the three conditions for patentability, then the Court’s statement that there are “three conditions” means “eligible subject matter” is not one:  if “eligible subject matter” were also a condition for patentability, then there would be four, not three, conditions.

The panel also cites dicta in a footnote in Aristrocrat Techs., Austl. PTY LTd. v. Int’l Game Tech., 543 F.3d 657, 661 (Fed. Cir. 2008).  Although the merits of a Section 101 issue was decided in Dealertrack, the patentee did not contend that Section 101 was not a statutory defense, and the court did not decide that issue.  Further, dicta in that case traces directly back to the dicta from Graham.  So, there is no long line of cases that, somehow, Congress knew about and intended to adopt.

Worse, there is loose language in other cases saying exactly the opposite, that only 102 and 103 are conditions of patentability (i.e., are consistent with the plain text.).  For example, the Federal Circuit has stated: “The two sections of part II that Congress has denominated ‘conditions of patentability’ are § 102 . . . and § 103 . . . .”  Myspace, Inc. v. GraphOn Corp., 672 F.3d 1250, 1260-61 (Fed. Cir. 2012).   The Supreme Court made essentially the same observation in Diamond v. Diehr, 450 U.S. 175, 190-91 (1981).

So… in fact there is no case law supporting this history, and instead the “case history” is, at best, split and unclear.

The important fact to me is that none of these cases parse the statutory text, or examine the purpose and legislative history of the AIA discussed here.  Ignoring the actual text in favor of what courts have said a statute says is obviously incorrect.  In that regard, the Supreme Court has overridden judicial interpretations of statutes that failed to adhere to the text, and has done so even after decades of having lower courts adhere to those incorrect constructions.  See Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164, 177 & 191 (1994) (overruling six decades of case law implying a cause of action), superseded on other grounds by 15 U.S.C. § 78(t)(e). Whatever a court says a statute says, the Constitution makes paramount what the enacted text actually says.

To sum up, absent some good reason to ignore the plain text, in my opinion random statements from one or two legislators and dicta in cases does not control.  Dicta in cases that do not analyze the statutory text do not control.  A committee report that flatly contradicts the enacted text does not control.  And one Senator’s opinion is not enacted statutory text.

I understand why the panel did what it did.  But the Constitution is more important than judicial politics.

Finally, let’s be real again:  if you look at what Congress did in 1952, it was to get rid of this subjective nonsense.  I strongly believe that then Chief-Judge Rader’s opinion, and “additional views” in CLS Bank v. Alice (which, textually, this panel confirmed in holding 101 is not even a listed defense) need to be raised and litigated.  Statutes should matter.

(You can find the original version of this, with citations and footnotes at:

My exhaustive (and last, really I promise!) post about why 101 is not a defense, nor properly raised in CBM proceedings

Intellectual Ventures Software Patents Too Generic (i.e., Abstract)

Patent,

by Dennis Crouch

On appeal, the Federal Circuit has affirmed that Intellectual Ventures’ asserted patent claims are invalid for lacking eligible subject matter. Intellectual Ventures v. Capital One (Fed. Cir. 2015) (Patent Nos. 8,083,137, 7,603,382, and 7,260,587).

The basic idea behind the patent ‘137 patent is to help users budget and then stick to their budget. Incredibly important task that many of us find quite challenging.  The court identified Claim 5 as representative.  That claim includes two steps: (1) storing a user profile with a set of categories – each with a pre-set budget limit; an (2) transmitting a summary of transactions for a category along with the pre-set budget limit.  Claim text:

5. A method comprising:

storing, in a database, a [user] profile … containing one or more user-selected categories to track transactions associated with said user identity, wherein individual user-selected categories include a user pre-set limit; and

causing communication, over a communication medium and to a receiving device, of transaction summary data in the database for at least one of the one or more user-selected categories, said transaction summary data containing said at least one user-selected category’s user pre-set limit.

In reading this claim in the context of Alice Corp., the Federal Circuit first found it directed to the abstract idea of “tracking financial transactions to determine whether they exceed a pre-set spending limit (i.e., budgeting).”  In Alice Corp. step two, the court found no inventive concept: “it is clear that the claims contain no inventive concept. . . . Instructing one to ‘apply’ an abstract idea and reciting no more than generic computer elements performing generic computer tasks does not make an abstract idea patent eligible.”

The court similarly agreed that the claims of the ‘382 patent are also ineligible. Claim 1 provides:

A system for providing web pages accessed from a web site in a manner which presents the web pages tailored to an individual user, comprising:

an interactive interface configured to provide dynamic web site navigation data to the user, the interactive interface comprising:

a display depicting portions of the web site visited by the user as a function of the web site navigation data; and

a display depicting portions of the web site visited by the user as a function of the user’s personal characteristics.

Thus, the claim relates generally to a system for customizing information based upon information known about a user and also web-site navigation data (such a the time-of-day a site is being visited). With Alice Corp. step 1, the court agreed that the aforementioned gist is in fact an abstract idea because such information tailoring is “a fundamental . . . practice long prevalent in our system . . . .” Quoting Alice Corp. Regarding Alice Corp step 2, the court found no inventive concept.  Intellectual ventures had argued that its approach provided a dynamic and real-time application of the concepts — however, the court rejected that argument on its facts — finding that “the claims are not so limited.”

Of special concern for the patentees here is the claimed “interactive interface” configured to implement the method.  Intellectual Ventures argued that device provided an inventive application of the broader idea.  The Federal Circuit disagreed – finding that “nowhere does Intellectual Ventures assert that it invented an interactive interface …. Rather, the interactive interface limitation is a generic computer element.”

Intellectual Ventures third patent included claims with more substance, including a process of sorting, scanning, and organizing images obtained from hard copy prints.  However, those asserted claims were found not-infringed.

Guest Post: In Rush to Invalidate Patents at Pleadings Stage, Are Courts Coloring Outside the Lines?

Patent, , , , , , ,

Guest post by David Bohrer, Patent Trial Practice, Valorem Law Group.colored floppy

OIP Technologies v. Amazon.com and IPC v. Active Network are the most recent of a growing number of decisions dismissing software and business method patent lawsuits on the pleadings. In these decisions, the courts are finding that the invention alleged in the complaint is an abstract idea that is not eligible for patent protection.

While early resolution of patent litigation is laudable, motions directed to the pleadings generally may not consider matters outside what is pled in the complaint. Yet this is what courts are doing — they have been coloring outside the lines when deciding whether a patented software or business method is an ineligible abstraction.  They are looking beyond the allegations in the complaint to discern “fundamental economic concepts.”  Independent of anything pled in the complaint, they are making historical observations about alleged longstanding commercial practices and deciding whether the claimed invention is analogous to such practices.

Coloring outside the lines may not be acceptable.  The benefit of providing an early exit from otherwise expensive and burdensome patent litigation may be outweighed by the prejudice to all parties of eroding the rules regarding the matters that may be considered before throwing out a lawsuit. Perhaps there is a better solution. Perhaps pleading motions challenging patent subject matter eligibility should be converted to expedited and limited scope summary judgment motions, thereby allowing the parties to present declarations, testimony and other extrinsic evidence that better address whether a claimed economic practice is an unpatentable idea or a patentable invention.

Alice is being used to obtain early dismissal of lawsuits based on software and business method patents

Courts granting patent ineligible subject matter motions are using the Supreme Court’s 2014 Alice decision as an effective weapon to combat vexatious patent litigation brought by non-practicing entities (NPEs). See Curiouser and Curiouser Is Alice the Long Sought Troll Killer _ The Legal Intelligencer.  Alice provides relatively easy to satisfy requirements for demonstrating that an asserted software patent is claiming an “abstract idea” and therefore is not eligible for patent protection under section 101 of the patent statute.

Not only have courts found in Alice the tools necessary to dispose of vexatious patent lawsuits asserting software and business method patents, they also are willing to entertain an Alice challenge at the pleadings stage.  The procedural posture of a pleading motion is key to using Alice to “kill trolls.”  Defendants can challenge the merits of the patent lawsuit at the pleadings stage and before having to incur significant expenses associated with discovery, claim construction, experts and summary judgment. The nuisance value of the lawsuit goes way down.  Defendants are less likely to feel they have to pay a distasteful settlement or else bear the much greater expense of defending on the merits.

Recent Federal Circuit decisions continue the trend

On June 11, 2015 and again on June 23, 2015, the Federal Circuit affirmed decisions by the Northern District of California dismissing software patent lawsuits at the pleading stage. In each of these cases, OIP Technologies v. Amazon.com (underlying patent claimed offer-based price optimization) and IPC v. Active Network (retaining information lost in the navigation of online forms) the district courts granted Rule 12(b)(6) motions to dismiss on the grounds that the patents claimed abstract ideas ineligible for patent protection.

In each case, the Federal Circuit approved the resolution of 101 eligibility at the pleading stage with little to no analysis. In IPC, the Federal Circuit’s opinion includes one sentence in which the court states that claim construction (which had not yet occurred) is “not an inviolable concept.” In OIP, the lead opinion does not address how early in litigation alleged ineligibility may be resolved, but in a concurring opinion Judge Mayer supports addressing eligibility at the motion-to-dismiss stage.

Failure to recite statutory subject matter is the sort of “basic deficiency,” that can, and should, “be exposed at the point of minimum expenditure of time and money by the parties and the court,” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 558 (2007) (citations and internal quotation marks omitted). Addressing 35 U.S.C. § 101 at the outset not only conserves scarce judicial resources and spares litigants the staggering costs associated with discovery and protracted claim construction litigation, it also works to stem the tide of vexatious suits brought by the owners of vague and overbroad business method patents. Accordingly, where, as here, asserted claims are plainly directed to a patent ineligible abstract idea, we have repeatedly sanctioned a district court’s decision to dispose of them on the pleadings. See, e.g., Content Extraction & Transmission LLC v. Wells Fargo Bank, 776 F.3d 1343, 1349 (Fed. Cir. 2014); Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 717 (Fed. Cir. 2014); buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1352 (Fed. Cir. 2014). I commend the district court’s adherence to the Supreme Court’s instruction that patent eligibility is a “threshold” issue, Bilski v. Kappos, 561 U.S. 593, 602 (2010), by resolving it at the first opportunity.

Contrary to the suggestion made by Judge Mayer, the Supreme Court has not addressed whether it is appropriate to address a 101 challenge at the pleading stage. Bilski’s characterization of patent eligibility as a “threshold” issue was made with reference to the 102 and 103 invalidity defenses and did not address the procedural issue. Bilski also cites to extrinsic economic treatises and other evidence of economic practice in support of the decision reviewing the denial of a patent application. Alice did NOT address patent eligibility in the context of a pleadings motion, but instead reviewed a patent eligibility ruling that was made at summary judgment. Alice cites to the same extrinsic economic evidence relied upon in Bilski.

There is not supposed to be any coloring outside the lines on pleadings motions

The well-established general rule is that Rule 12(b)(6) motions to dismiss as well as Rule 12(c) motions for judgment on the pleadings are limited to the well-pled factual allegations made in the complaint. “A court generally cannot consider material outside of the complaint (e.g., facts presented in briefs, affidavits or discovery materials).” Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir. 2012); In re American Cont’l Corp./Lincoln Sav. & Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996) (As recognized in OIP and IPC, the Federal Circuit applies regional circuit law in deciding motions to dismiss.).

Yet this is what is happening

Notwithstanding these rules, OIP and IPC each looked beyond the complaint in determining whether the asserted claims are directed to ineligible abstract ideas. In OIP, the asserted price optimization claims were deemed “similar to other ‘fundamental economic concepts’ found to be abstract ideas.” In IPC, the asserted online information retention claims were deemed “well-understood, routine, conventional activities previously known.” In each instance, the court is looking at practices and activities outside of anything alleged in the complaint.

These Federal Circuit cases teach that it is acceptable to consider matters outside of the complaint, as confirmed by Affinity Labs of Texas v. Amazon.com (June 12, 2015 WD Tex.), in which the magistrate judge, applying 101 precedent from OIP and other Federal Circuit decisions, says that it is making “general historical observations that come to mind.” Based on such extrinsic “historical observations,” the court finds that the claimed invention of delivering selectable media content and subsequently playing the selected content on a portable devices is a “long-standing commercial practice and is therefore abstract.”

The Court notes that the first transistor radio, which delivers selectable audio media to a portable device, was developed in the late 1940s and was immensely popular in the succeeding decades. Similarly, the first portable televisions, another form of delivering “selectable” media content to a portable device, were introduced in the 1980s and 1990s. The above examples represent just a few of the many general historical observations that come to mind as evidence of the long-standing commercial practice of delivering selectable media content and subsequently playing the selected content on a portable device.

Reliance on extrinsic evidence of economic practices and concepts found in precedent

OIP and IPC support their abstract idea findings by equating the economic purpose of the asserted patent with the economic concepts successfully challenged in other cases. For example, in OIP, the Federal Circuit says offer-based price optimization (at issue in OIP) is analogous to using advertising as an exchange or currency (deemed an abstract idea in the earlier Federal Circuit decision Ultramercial v. Hulu). Likewise, in IPC, the Federal Circuit said that recent precedent illustrates the boundary between abstraction and patent eligible subject matter. But how is the court in a position to make the connection between the asserted claims and prior precedent on its own observation and independent of expert testimony or other relevant extrinsic evidence? Judge Mayer and many other respected judges might reply that it is acceptable to make this connection because it is “plain” or “obvious.” Yet this seems to invite the application of 20-20 hindsight and of the “I know it when I see it” standard.

Can’t take judicial notice of truth of findings made in other decisions

Furthermore, while a court may take judicial notice of another court’s opinion in ruling on a motion to dismiss, it may do so only as to the existence of the opinion and not for the truth of the facts recited therein. Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001). It appears that cases such as OIP and IPC are relying on the truth of factual findings made in other decisions regarding whether certain economic concepts are “conventional” or “well-known” – such matters appear outside the scope of what may be judicially noticed in a motion to dismiss.

Possible solution is expedited and limited scope summary judgment motions

A court’s consideration of information outside the four corners of the complaint, assuming it does not fall within exceptions such as judicial notice, converts a motion to dismiss into a summary judgment motion. Lee, 250 F.3d at 688. True enough, this raises the specter of time-consuming discovery and case development (see the criticism of ED Texas Judge Gilstrap’s requirement that the parties demonstrate that there is a good faith basis for such a motion). This said, district courts have the discretion to expedite such motions as well as limit their scope. They could, for example, specifically require the responding party to submit to expedited discovery on the issue whether the asserted patent claims eligible subject matter followed by expedited briefing and submission of evidence on both the question whether the purpose of the asserted claims is a conventional economic concept and therefore an ineligible abstract idea, and if so, whether there is an inventive concept that saves the claim from dismissal. They could stay other case development or discovery during the expedited resolution of the motion. It does not necessarily follow that the court would have to conduct claim construction as part of the process. The parties, as they do now, could brief whether claim construction is necessary, but would also have greater flexibility in terms of their ability to submit proofs in support of their claim construction arguments. Woe unto the party who purports without any reasonable basis to have compelling extrinsic evidence that they are not asserting a conventional economic concept or that their patent is directed to a protected inventive concept– the district courts have ample support in High Octane and its progeny for awarding fees under such circumstances.

If courts are going to color outside the lines, then let the parties do the same thing

Courts are willing to color outside the lines and consider extrinsic evidence upon addressing motions to dismiss challenging alleged ineligible patent subject matter. This contravenes well-established rules and policies regarding pleading challenges and may cause undue prejudice by denying a party the ability to submit extrinsic evidence in support of a well-pled claim. A possible solution is for the court to allow the parties to color outside the lines as well. The court has the discretion to impose time and scope limits on discovery and briefing without opening the door to prolonged, vexatious litigation.