Tag Archives: Abstract Idea

Patenting Software in the US as compared with Europe

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Guest post by Shubha Ghosh and Erika Ellyne

This post compares and contrasts the United States approach to patentable subject after last term’s Alice v CLS decision, with that in the European Union. The bottom line is that the EU may be now more favorable to software claims than the US.

In its 2014 Alice decision, the US Supreme Court makes clear that a two step test applies to determination of when an invention is patentable subject matter. First, the reviewer of the patent, whether patent examiner or judge, must determine if the patent covers an excluded area from patenting, such as an abstract idea or law of nature. If the patent covers an excluded area, the reviewer moves on to the second stage: whether there is an inventive concept that is an application of the abstract idea or law of nature. This two part test is a capstone to the Court’s prior decisions in Bilski v. Kappos (2010)(business method patents) and Prometheus v. Mayo (2012)(medical diagnostic and treatment patents).

By contrast, software is more easily patentable in Europe despite the existence of an express provision on the excludability of software. Article 52 of the EPC famously recites a list of ‘non-inventions’ that are excluded ‘as such’. The reading of this last condition has lead to a de minimis application of the provision. ‘Technical character’ is synonymous with invention in the EPO Board of Appeals’ (BoA) case law; any demonstration and degree of ‘technical character’ passes the patent eligibility threshold. The role of the technical feature is irrelevant; to the point that the mere use of technical means, such as a computer, renders a patent claim eligible (even the inclusion of the term ‘email ‘has ‘transformed’ a previously ineligible claim into an eligible one).

The European approach has been to adopt a formalistic rather than substantive approach; making patent eligibility a derisively low threshold. The US, on the other hand, has actively rejected this type of formalistic approach; neither adding the words ‘apply it’ to excluded subject matter nor the recitation of a computer can render the ineligible eligible. In Europe, the patent eligibility standard has become a question of drafting, a practice abhorred by patent Courts on both side of the Atlantic. In the end the standard is of little to no effect, looking at the context of its application no mixed claims (which recite a non invention along with other man made subject matter- where most questions arise) are ever rejected.

A technical application test can potentially help overcome the gaps/superficiality left open by the technical character test. The US approach suffers from its own ambiguities; the first branch of the US test, the determination of what is an ‘abstract idea’/subject matter is vague and in need of clarification/objectification. The European notion of ‘technical’, which is used in opposition to abstract in European case law as well, despite its numerous short comings could serve as a road map to a more developed test for abstraction. That is a subject for another day.

There are those that would counter that this is a determination for inventive step, that there is confusion here between eligibility and obviousness. It is true that in Europe, much of what is caught out under the US eligibly standards is further culled in the inventive step stage. However, in the inventive step assessment, much of inventive step is not about obviousness at all, but identification of the ‘invention’: the technical solution. The ‘problem solution’ approach usually proceeds first by the identification of the invention, the technical solution, to then derive the problem thereof. In this identification of the ‘technical solution’ a very controversial point is what extent ‘non technical features’, i.e. subject matter found under 52.2, can contribute to the technical effect/solution. At this stage, there is in fact a re-formulation of the invention; the main point of the tasks is a question of defining the invention not of ‘obviousness’ per se. The non-obvious determination is actually more a methodology than a veritable measure of ‘obviousness’ as such.

Shubha Ghosh is the Vilas Research Fellow & George Young Bascom Professor of Business Law at the University of Wisconsin School of Law where he is also the Associate Director of the Initiatives for Studies in Transformational Entrepreneurship (INSITE). Erika Ellyne is a law graduate and doctoral candidate at the Vrije Universiteit Brussel (Free University Brussels)

Patent Invalid for Unduly Preempting the Field of “Automatic Lip Synchronization For Computer-Generated 3D Animation Using a Rules-Based Morph Target Approach”

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by Dennis Crouch

McRO (Planet Blue) v. Activision Blizzard, et al. (C.D. Cal. 2014) Decision PDF

In his second major Section 101 decision in as many weeks, Judge Wu (C.D. Cal) has relied upon Alice Corp. (2014) to invalidate all of McRO’s asserted patent claims.  The case is quite important because it is one of the first major applications of Alice Corp. to invalidate non-business-method claims.  Here, the invention is directed toward a specific technological problem that had troubled the field of animation – automatically animating lip synchronization and facial expression of animated characters. See U.S. Patent Nos. 6,307,576 (“‘576 Patent”) and 6,611,278 (“‘278 Patent”).  The appeal will be interesting and may serve as one of the Federal Circuit’s first opportunities to draw a new line in the sand.

The problem addressed by the invention is that it has been historically quite difficult to match-up animation audio and video — so that the character’s mouth and face are moving to match the sound overlay.  Historically, this has been very expensive and time consuming to do well. What you might call the ‘gist’ of the invention is simply a data transformation — from an audio signal to a visual animation output.  The details are a bit more technical. According to claim 1 of the ‘278 patent, the invention operates by first creating a set of phoneme sequences keyed to a pre-recorded audio sequence. Then, those phenome sequences are used to create a set of morph-weight-set streams (based upon a set of factors provided by the animators).  Those morph-streams are then used as input sequences for the animated characters to provide both timing and movement of facial expressions, including emotion.   The inventions claim priority back to 1997.

1. A method for automatically animating lip synchronization and facial expression of three-dimensional characters comprising:

obtaining a first set of rules that defines a morph weight set stream as a function of phoneme sequence and times associated with said phoneme sequence;

obtaining a plurality of sub-sequences of timed phonemes corresponding to a desired audio sequence for said three-dimensional characters;

generating an output morph weight set stream by applying said first set of rules to each sub-sequence of said plurality of sub-sequences of timed phonemes; and

applying said output morph weight set stream to an input sequence of animated characters to generate an output sequence of animated characters with lip and facial expression synchronized to said audio sequence.

In writing about this patent claim, Judge Wu noted that – in isolation – it appears tangible and specific rather than abstract.

They are tangible, each covering an approach to automated three-dimensional computer animation, which is a specific technological process. They do not claim a monopoly, as Defendants argue, on “the idea that the human mouth looks a certain way while speaking particular sounds,” “applied to the field of animation.” Further, the patents do not cover the prior art methods of computer assisted, but non-automated, lip synchronization for three-dimensional computer animation.

Further, the defendants raised a defense of non-infringement – explaining that their particular method of automated lip synchronization is not even covered by the patents. Thus, Judge Wu writes: “At first blush, it is therefore difficult to see how the claims might implicate the ‘basic underlying concern that these patents tie up too much future use of’ any abstract idea they apply.”

However, Judge Wu recognized that the Supreme Court’s analysis of Alice Corp was not done in a vacuum but rather made reference to what was already known in the the art and asked whether the claimed invention extended that knowledge with an inventive concept that goes beyond a mere abstract idea.  In Judge Wu’s words the Section 101 eligibility of “the claims must be evaluated in the context of the prior art.”

Judge Wu’s approach was to identify the point-of-novelty for the claimed invention and then consider whether that point-of-novelty was itself an abstract idea.  That approach was made easy because the patents admitted that many elements of the invention were already part of thee prior art.  However, the patents claimed the new elements as the use of rules that define morph sets as a function of the phonemes which the court sees an an abstract idea that cannot be patented because it would allow the patentee to “preempt the field of automatic lip synchronization for computer-generated 3D animation … using a rules-based morph target approach.” Thus, the claims are invalid.

Judge Wu does show some sympathy to the patentee here — indicating that it appears to be a nice and important invention – just one that is not patent eligible.

But a § 101 defect does not mean that the invention was in the prior art. The invention here may have been novel, but the claims are directed to an abstract idea. And the patent’s casual – and honest – description of the prior art was made at a time when, under the then-prevalent interpretation of the law, such admissions were unlikely to be harmful. One
unintended consequence of Alice, and perhaps of this and other decisions to come, is an incentive for patent applicants to say as little as possible about the prior art in their applications.

Although he does not cite the Supreme Court’s 1946 decision in Halliburton v. Walker, Judge Wu does offer closing remarks that hearken back to the principle that patent claims must be specific at the point-of-novelty.  He writes: “This case illustrates the danger that exists when the novel portions of an invention are claimed too broadly.”

There are many interesting aspects to the decision, but I wanted to post these initial thoughts before moving forward.

Software Business Method Patent Fails Again

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Open Text v. Alfresco Software, 13-CV-04843-JD, 2014 WL 4684429 (N.D. Cal. Sept. 19, 2014) Open Text SA v Alfresco Software Ltd

Citing Alice Corp. as the deciding factor, Judge Donato has invalidated a set of challenged claims in U.S. Patent Nos. 7,647,372 and 7,975,007 owned by Open Text. Here, Open Text has only asserted claim 38 of the ‘372 patent and claim 22 of the ‘007 patent — both claims are now adjudged invalid.  As you’ll see below, the claims are so poorly and ambiguously drafted as to make an invalidity determination likely on other grounds as well.

[T]he Court finds that the challenged claims are directed to a very simple abstract marketing idea that uses generic computer and Internet technology, and contain no additional inventive concept.

The two companies in the lawsuit compete in a growing market for enterprise-wide information management (EIM).  Claim 38 at issue is directed toward the software in the form of a “computer readable storage medium” containing a set of instructions.  Basically, we have a claimed computer program that creates a group of “participants” based upon whether someone interacted with a web site, then it designates a subset of participants and executes an “instruction” associated with an “action” performed “in conjunction” with each member of the subset. Seriously? The claim reads as follows (with its independent claim).

37. A computer readable storage medium for facilitating a network based dialogue, comprising instructions translatable for:

assembling a set of first corresponding participants, wherein assembling the first set of corresponding participants comprises executing a first instruction of a first program in conjunction with each of the first corresponding participants, wherein the first instruction is operable to determine the occurrence of a first specified event in conjunction with each of the first corresponding participants;

assembling a set of second corresponding participants, wherein each of the set of second corresponding participants is in the set of first corresponding participants; and

executing a second instruction in conjunction with each of the second set of corresponding participants, wherein the second instruction is associated with a first action to be performed in conjunction with each of the set of second corresponding participants.

38. The computer readable storage medium of claim 37, wherein the first specified event is an interaction with a web site.

Following Alice Corp., the district court first identified the abstract idea embodied by the claim.

[The claims] recite a very simple computer-driven method to engage in the commonplace and time-honored practice of interacting with customers to promote marketing and sales.” Claim 38 … claims a storage medium containing software that identifies whether each participant in a set of participants has interacted with a website, assembles a set of second participants that are a subset of the first group, and performs an second action with that subset. This describes the most basic and widely-understood principle of marketing: identify potential or current customers and engage with them to improve their customer experience. On its face, asking a customer about his or her experience and replying “Thank You” to those who respond positively and, “I’m sorry, what can we do better?” to those who respond negatively is an unpatentable abstract idea.

With that unpatentable abstract idea in mind, the court then considered (and rejected) the notion that the claim provides an “inventive concept” or “something more” that would positively transform its eligibility.

The additional steps must be more than “well-understood, routine, conventional activity” or just computerizing the abstract idea. . . .

The asserted claims … fail to transform the abstract idea into a patent-eligible invention. The asserted claims in both patents implement the basic marketing scheme on a generic computer system without any meaningful limitations. Open Text’s counsel conceded at the hearing that the patents could be implemented on a generic computer. Open Text argues that the asserted claims “contain limitations tying them to specific ways of using computers.” But as the Court in Alice Corp. and the Federal Circuit have concluded, “[a]t best, that narrowing is an attempt to limit the use of the abstract … idea to a particular technological environment, which has long been held insufficient to save a claim in this context.” buySAFE. For example, although claim 37 of the ‘372 patent—from which claim 38 depends ––––recites a “computer readable storage medium,” this adds nothing of substance to the basic, patent-ineligible marketing scheme. … Nor does claim 38’s requirement that participants be identified based on their interaction with a website compel a different result: simply identifying a criterion for selecting participants is a prime example of attempting to save a claim by limiting it to a particular technological environment.

Invalid.

Here, the court purposefully characterized the invention in the business method context with the unpatentable abstract idea being a longstanding principle of marketing.  What remains to be seen is how courts will react to software patents whose abstraction are not focused on old business ideas.

 

Is VPN Software Patent Eligible?

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VirnetX v. Cisco and Apple (Fed. Cir. 2014)

An E.D. Texas jury sided with the patentee VirnetX — finding that the four asserted patents are not-invalid and that Apple’s VPN-On-Demand and FaceTime products infringe.  The jury then awarded $350 million in damages.  On appeal, Apple presented a number of winning arguments that, in the end, result in only a partial victory because some of the claims remain valid and infringed.  After altering claim construction of the term “secure communication link”, the jury will re-determine whether FaceTime infringes and recalculate damages.

Before getting into the merits (in a separate post), we might pause to consider the subject matter eligibility of asserted claim 1 of Patent No. 7,418,504:

1. A system for providing a domain name service for establishing a secure communication link, the system comprising:
a domain name service system configured
to be connected to a communication network,
to store a plurality of domain names and corresponding network addresses,
to receive a query for a network address, and
to comprise an indication that the domain name service system supports establishing a secure communication link.

At a high level of abstraction, the invention is designed to implement private communication which, at that generalized level would likely be seen as an abstract idea.  The particular implementation steps included in the claim here are themselves written in broad functional language whose implementation were well known and conventional aspects of DNS systems as of the 1998 application date.  Now, the court does not sua sponte raise the 101 issue here and so we do not know the answer.

Finding the limits of ineligibility

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by Dennis Crouch

It is safe to say that hundreds of thousands of U.S. patents rely upon the manipulation of information or laws of nature as fundamental aspects of their respective inventions. Many of these patents rest on shaky ground following the Supreme Court’s recent decision in Alice Corp. v. CLS Bank (2014).  Alice Corp.  has the potential of being broadly interpreted, but a major problem with the opinion is that it offers few limiting principles for the definitions of ‘abstract idea’ and ‘law of nature.’  Federal District Court Judge Wu most recently pessimistically described the new test as “I know it when I see it.”  As such, patent attorneys working in the software and biotechnology fields wonder if the sky is falling.  Although storm-clouds have gathered for some, the sky is not falling for the patent system. And, the new scope of eligibility is more well defined than many think.

The critical step for understanding Alice Corp. is to recognize that the case was not decided in a vacuum. Rather, the Supreme Court has a long and multi-generational history of wrestling with concepts of patent eligibility.  Alice Corp. fits within that precedent as an incremental addition, but without rejecting or even modifying the Supreme Court’s own prior precedent.  Rather, what Alice Corp. has rejected is the prior analysis of the Federal Circuit and US Patent Office that seemingly allowed for the patenting of systems and processes whose inventors relied upon only an iota of hardware to separate the patented invention from an underlying abstract idea or law of nature. The new cohort of Alice Corp. (2014),  Myriad (2013), Mayo (2012) and Bilski (2010) collectively wipe-away thirty years of Federal Circuit precedent on eligibility, but at the same time, revive 150-years of Supreme Court doctrine on the topic. Although somewhat cyclic, throughout this time inventors have continually been able to obtain new patents to cover their inventions and enforce those patents against would-be free-riders.  This has been the situation for decade upon decade and will continue.  As Chisum writes, the patent laws “have been interpreted so as to cover most of the new technologies that evolved during the last 200 years.” Chisum on Patents Section 1-1 (2014).

Moving forward a key approach is to look again for the limiting principles of the last cohort of eligibility cases — Diamond v. Diehr, 450 U.S. 175 (1981); Diamond v. Chakrabarty, 447 U.S. 303 (1980), Parker v. Flook, 437 U.S. 584 (1978); and Gottschalk v. Benson, 409 U.S. 63 (1972).  Of course, these cases were decided in a different technological age – before even the birth of many contemporary inventors and need to be understood and given credence in a way that fits with the direction of technological innovation. However, care should be taken not to simply whitewash their holdings.  And, although these pre-CAFC decisions by the court appear historical, they are relatively new when compared with the Supreme Court’s body of eligibility decisions.  The principles laid down by the Supreme Court’s Pre-CAFC decisions were already known and discussed in dozens of prior cases.  As you read these old cases, the language and patterns become repetitive and more predictable, if also nuanced.  See, e.g., Le Roy v. Tatham, 55 U.S. (14 How.) 156 (1852); Burr v. Duryee, 68 U.S. (1 Wall.) 531, 570 (1863); O’Reilly v. Morse, 56 U.S. (15 How.) 62, 112-20 0853); Cochrane v. Deener, 94 U.S. 780 (1876); Munson v. Mayor of New York City; Kewanee Oil v. Bicron Corp., 416 U.S. 470, 483 (1974);  Jacobs v. Baker, 74 U.S. (7 Wall.) 295, 19 L. Ed. 200 (1869); Corning v. Burden, 56 U.S. 252, 267 (1853); Risdon Iron & Locomotive Works v. Medart, 158 U.S. 68, 72-73 (1895); Am. Wood-Paper Co. v. Fibre Disintegrating Co., 90 U.S. 566, 593-96 (1874); Cochrane v. Badische Anilin & Soda Fabrik, 111 U.S. 293, 311-12 (1884); Smith v. Snow, 294 U.S. 1, 5-6 (1935); Waxham v. Smith, 294 U.S. 20, 22 (1935); J.E.M. AG Supply, Inc. v. Pioneer Hi-Bred Int’l, Inc., 534 U.S. 124, 130 (2001); Mackay Radio & Tel. Co. v. Radio Corp., 306 U.S. 86, 94 (1939); Rubber-Tip Pencil v. Howard, 87 U.S. 498, 507 (1874); Great Atlantic & Pac. Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147 (1950); etc.

As Bilski suggests, the historic cases offer clues to understanding our revived approach to patent eligibility.  For some, the answers uncovered from will be frustrating because we are far from the pithy expanse of “anything under the sun made by man” that has – at times – been supported by the Federal Circuit.  And certainly, a number of patents will be invalidated. However, this policy shift does not foretell the death of our system and likewise, it does not offer a free-for-all to invalidate any patent on a whim.  Of course, in order to avoid those results, the next steps need to be re-identifying and categorizing our years of precedent with an eye to applying them today and tomorrow.

Section 101 Invalidates Another Financial Services Patent

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In what is beginning to look like a deluge, another district court has invalidated a set of asserted patents as lacking eligible subject matter under 35 U.S.C. 101 as interpreted by the Supreme Court in Alice Corp. (2014).

Every Penny Counts (EPC) v. Wells Fargo Bank (M.D. Fla. September 2014) EveryPennyCounts101

EPC’s invention is a computerized method for rounding-up credit and debit transactions to the nearest dollar and then putting the extra money to a special use. See U.S. Patent Nos. 8,025,217 and 7,571,849.

Claim 1 of the ‘217 patent is listed as follows:

1. A system for accumulating credits from a customer account belonging to the customer and managed by an institution and placing the credits into a provider account, comprising:

an information processor; said information processor including a data store with data identifying the customer, the rounding determinant, the managed institution, and the account;

said data store including machine readable instructions authorizing the processor to access and read the customer account;

said data store including machine readable instructions to calculate rounders after receiving a plurality of payment transactions from the read customer account and to calculate an excess based on the rounders;

said data store including machine readable instructions to withdraw the excess from the customer account;

said data store including machine readable instructions to transfer the withdrawn excess to the provider account.

In a previous decision (pre-Nautilus), District Court Judge Merryday had found the claim to “lack definiteness” but yet not fall to the standard set by the Federal Circuit for a finding of invalid-as-indefinite.  Under the Supreme Court’s Nautilus decision the claim may in-fact be legally indefinite.  However, Judge Merryday shorted the invalidity decision by finding all of the claims of both asserted patents invalid as indefinite.

In judging this claim under the two-step Alice Corp approach, Judge Merryday first identified the abstract idea that the claims are “drawn to” as “the concept of routinely modifying transaction amounts and depositing the designated incremental differences into a recipient account.”  The court explained that this concept is an abstract idea because as in Alice and Bilski, it is a “basic concept” and a “fundamental economic practice long prevalent in our system of commerce.”  Judge Merryday took steps to provide a variety of examples of how the concept has been historically known and used. Since an abstract idea was identified within the claim, the court then moved to the second step of the Alice Corp analysis — determining whether the claim contains an ‘inventive concept’ sufficient to transform the claimed abstract idea into a patent eligible application.  On that point, the court found that each step in the method included “purely conventional” uses of a computer to do the type of tasks that you would expect a computer to be used for such as receiving data, rounding, adding, etc. As such, those steps were insufficient to overcome the step-two hurdle.

In sum, the ’849 patent, a method patent, is invalid under Section 101 because the patent claims an abstract idea that is implemented by “well-understood, routine, conventional activities previously known to the industry.” Alice (2014).  Similarly, the ’217 patent, a system patent, is invalid under Section 101 because the patent merely implements – on a generic, unspecified computer – the ’849 patent’s (unpatentable) method.

What we’re still looking for is a post-Alice court decision that upholds a computer-method patent under Section 101.

The Abele test

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Just before the dawn of the Court of Appeals Federal Circuit, its predecessor court, the Court of Customs and Patent Appeals (CCPA) decided the eligiblity case In re Abele, 684 F.2d 902 (August 1982).  In that case, Philips Medical sought protection for a method of transforming of a data-field to in order to highlight portions of the data with the most contrast.  To me, the transformation seems to be the digital equivalent of a multi-dimensional derivative with the outcome displayed in greyscale.  Claim 5 is limited to this method of transformation and display. Dependent claim 6 adds the limitation that the data is “X-ray attenuation data produced in a two dimensional field by a computed tomography (CT) scanner.”

In considering eligibility, Judge Nies distinguished between these two claims — finding 5 ineligible and 6 eligible.  Nies explained that the calculating step – if it were alone – recites an ineligible algorithm and little was added by the display step. However, claim 6 brought something more because, with those express limitations, we now have an improvement to the CAT scan process. Similarly, the court found the apparatus-claim that was parallel to claim 5 ineligible.

What I don’t know is how these claims would be treated under the doctrines expounded by the Supreme Court in Alice Corp. and Mayo.

The claims:

5. A method of displaying data in a field comprising the steps of

calculating the difference between the local value of the data at a data point in the field and the average value of the data in a region of the field which surrounds said point for each point in said field, and

displaying the value of said difference as a signed gray scale at a point in a picture which corresponds to said data point.

6. The method of claim 5 wherein said data is X-ray attenuation data produced in a two dimensional field by a computed tomography scanner.

The questions are: (a) is the algorithm recited in claim 5 an abstract idea; and (b) do the limitations of claim 6 provide a sufficient inventive concept?

Abstract Idea: I know it when I see it

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Eclipse IP v. McKinley Equipment (C.D. Cal. 2014) EclipseIP101

In a interesting and somewhat darkly-comic opinion, Judge Wu has dismissed EclipseIP’s infringement lawsuit on the pleadings – finding that the patentee has no case because the asserted claims lack eligible subject matter under 35 U.S.C. §101.  In the process of invalidating the claims, Judge Wu also offers some criticisms of the law.  Most pointedly, Judge Wu describes the Supreme Court’s test as offering pure unstructured judicial authority

First, describing the two-step process from Alice Corp, Judge Wu writes:

[T]he two-step test may be more like a one step test evocative of Justice Stewart’s most famous phrase. See Jacobellis v. State of Ohio, 378 U.S. 184, 197 (1964) (Stewart, J. concurring) (“I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it . . . .); cf. Alice, 134 S.Ct. at 2357 (“In any event, we need not labor to delimit the precise contours of the ‘abstract ideas’ category in this case.”).

This sort of test is obviously problematic – and especially in the context of patent examination where the discretion is handed to patent examiners.  Judge Wu also goes on to caution against overzealous use of the preemption argument — presenting two reasons: First, the reality is that every patent provides some amount of preclusive impact — that is the point of the exclusive rights offered under the law and Constitution.  Second, we should recognize that the effort in working around patent rights is an important innovative process and patents should not be eliminated under Section 101 simply because it is a cheaper alternative than to invent around.

But the patent law does not privilege the leisure of an infringer over the labors of an inventor. Patents should not be casually discarded as failing § 101 just because the infringer would prefer to avoid the work required to develop non-infringing uses of the abstract idea.

Despite his caution, Judge Wu found that the law still supports invalidity here.

The patents at issue are the creation of inventor Scott Horstemeyer, who is also a patent attorney and founding partner of the Thomas|Horstemeyer firm.  Horstemeyer’s asserted patents claim priority back to a 2003 filing and are related to a method of sending & receiving messages. Patent Nos. 7,064,681, 7,113,110, and 7,119,716.

Asserted claim 1 of the ‘716 patent is here:

1. A method for communications in connection with a computer-based notification system, comprising the steps of: initiating a notification communication to a personal communications device associated with a party; receiving a response communication from the party’s personal communications device, indicating that the party has received the notification communication and is now occupied with a task associated with the notification communication; and refraining from sending any further notification communications to the party’s personal communications device, until detection of one or more events that indicate that the party is no longer occupied with the task and can perform another task associated with another notification communication.

The abstract idea categorized from this claim is as follows: “asking someone if they are available to perform a task and then either waiting for them to complete
it or contacting the next person.”  Further, folks will recognize that the steps can be performed by someone talking on the telephone.

Tying the case to Morse, Judge Wu sees the claims here as likewise not limited to any “specific machinery or parts of machinery described in the foregoing specification.” As a result, the claims cannot “overcome the abstractness problem” and are invalid under 35 U.S.C. 101.

101 Decision on the Pleadings: ECommerce Patent Ineligible

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by Dennis Crouch

In Tuxis Tech v. Amazon, Delaware District Court Judge Andrews has invalidated asserterted claim 1 of Tuxis Tech’s Patent No. 6,055,513 – finding that the claim lacks eligibility under 35 U.S.C. 101.  2014 WL 4382446 (D.Del September 2014) (TuxisDecisionOnPleadings). Like other decisions this week, this case was decided on the pleadings.

The patent claim is related to a computerized method for individualizing up-selling based both on the identity of the purchaser and the original product being purchased.  This generalized idea (the ‘gist’) is quite old in our market economy with sellers first obtaining a commitment for an initial purchase and then use that anchor to seek to add-on purchases based upon what the seller thinks might work for the buyer.  Amazon does this regularly and thus was an obvious target for infringement allegations.

Of course, the ‘gist’ as described above is not what was particularly claimed, rather the claim walks through a multi-step algorithm of electronic communication and data processing. Those steps are at a fairly high level of abstraction — using action verbs such as “obtaining … transaction data”, “generating an upsell offer”, “utilizing … transaction data”, etc.

Here, Tuxis agreed that the mere notion of “upselling” is an abstract idea and with that in-hand, the court moved forward with the question of whether the claims offer an inventive concept that goes beyond upselling — answering that in the negative.

None of the limitations recited by Tuxis, however, are “meaningful.” Although the claim elements have some narrowing effect on the scope of claim 1, the practical effect is insubstantial. . . .

Claim 1 requires nothing more than suggesting an additional good or service, in real time over an electronic communications device, based on certain information obtained about the customer and the initial purchase. Shrewd sales representatives have long made their living off of this basic practice.

A simple hypothetical is instructive: A man enters a clothing store to purchase a new pair of dress slacks (“a user initiated primary transaction for the purchase of a good or service”). The sales representative assists the man in finding a pair of pants, and in the process learns that the man is a banker (“a second data element relating to the [identity of the customer]”). Knowing that suspenders are fashionable in the banking profession, the sales representative offers the banker a pair of suspenders that match his pants (“utilizing at least in part the primary transaction data including the identity of the good or service of the primary transaction and the second data element [related to the customer] and determining at least one item for a prospective upsell”). The customer agrees with the sales representative and purchases the suspenders (“receiving an acceptance of the offer … in real time”). This type of marketing strategy is at the heart of claim 1 and has been practiced as long as markets have been in operation. Conduct this transaction on “an electronic communications device” instead of in a physical store and it would be an infringing sales practice if claim 1 were valid. This cannot be permitted, as it would “tend to impede innovation more than it would tend to promote it.” Mayo.

Claim invalid.

One thing is clear – the short-circuiting of the litigation process here is a powerful tool in the hands of defendants.

= = = =

Claim 1 is as follows:

1. A method for providing offers in real time of an item constituting a good or a service in the form of offers for purchase of the item to prospective customers as users of the system, utilizing an electronic communications device, comprising the steps of:

establishing a communication via the electronic communications device between the user and the system for purpose of a user initiated primary transaction for purchase of a specific good or service,

obtaining primary transaction data with respect to the primary transaction, including the identity of the prospective customer and of the good or service for purchase in the primary transaction,

generating an upsell offer as a result of the user initiated primary transaction by:
utilizing the identity of the prospective customer to obtain at least a second data element relating to the user,

utilizing at least in part the primary transaction data including the identity of the good or service of the primary transaction and the second data element and determining at least one item for a prospective upsell transaction with the prospective customer, and

offering the item to the prospective customer and receiving an acceptance of the offer from at least one user in real time during the course of the user initiated communication.

New Abstract Ideas?

Patent,

In the recent spate of abstract idea cases, the identified abstract ideas have been concepts that are old and well known such that the court can easily take judicial notice of their antiquity.  The courts particularly point to the long heritage of an idea as evidence of its abstractness.  However, that antiquity-limitation does not appear to be a requirement. Rather, it seems correct to say that a “newly discovered” abstract idea is also an ineligible abstract idea.  My question here then is what importance or relevance should be given in the abstract-idea analysis as to whether or not the central idea is old or new?  Or, is my assumption wrong and abstract ideas (in this context) are only those that are old?

Australia: Myriad Gene Patents Look Good

Patent,

Guest post by Ben McEniery.  McEniery is a Senior Lecturer in Law at the Queensland University of Technology and a Barrister who specialises in Intellectual Property Law matters.

On Friday the Full Court of the Federal Court of Australia in D’Arcy v Myriad Genetics Inc [2014] FCAFC 115 upheld the validity of Myriad Genetics’ Australian BRCA1 gene patent over isolated DNA sequences.

The five judges who constituted the court in a joint judgment unanimously held that isolating a DNA sequence from its surrounding genetic material involves more than simply taking the nucleic acid out of the cell, and instead involves structural and functional changes that create a new composition of matter. The court thus took the view that the patent in question claims something other than subject matter that had previously existed in nature, and as such, the isolated nucleic acid, including cDNA, constitutes patentable subject matter.

The expressly court rejected the conclusion reached last year by the US Supreme Court in AMP v Myriad Genetics that isolated genes and the information they encode are not patent eligible. Instead, it adopted the reasoning of Judges Lourie and Moore in the Federal Circuit below, finding that isolated genes are not naturally-occurring substances but are “the products of man”. At paragraph [212] the court said that:

What is being claimed is not the nucleic acid as it exists in the human body, but the nucleic acid as isolated from the cell. The claimed product is not the same as the naturally occurring product. There are structural differences but, more importantly, there are functional differences because of isolation.

Although the court characterised isolated DNA as material derived from naturally occurring material, it held that this is not a reason for it to be excluded from patentability. In this regard, the court by reference to precedent explained the distinction between a discovery (and an idea in the abstract) and an invention at paragraphs [111] to [113]. The court thus took the view that in determining whether an invention is patentable subject matter, there is no requirement for a consideration of whether a claimed composition of matter is a “product of nature” or whether a microorganism is “markedly different” from something that already exists in nature. The court also noted at paragraph [155] that “the analysis should focus on differences in structure and function effected by the intervention of man and not on the similarities [with what is found in nature]”.

The court, for the purposes of Australian law, sought to delineate patentable and non-patentable subject matter by stating that, “[a] mere discovery is not patentable and an idea is not patentable, but a “manner of manufacture”, as that term has been developed, is.” In doing so, the court rejected any suggested that there is a “product of nature” subject matter exclusion in Australian law.

Unlike the US Supreme Court, the Full Federal Court considered that the correct approach when determining patentable subject matter is to focus on the products of human ingenuity claimed (in this instance being the isolated nucleotide sequences) and not on the information that they contain. In this regard, the court criticised the US Supreme Court noting at paragraph [215] that:

It is difficult to reconcile that Court’s endorsement of the reasoning in Chakrabarty, with its rejection of isolated nucleic acid as eligible for patentability. With respect, the Supreme Court’s emphasis on the similarity of ‘the location and order of the nucleotides’ existing within the nucleic acid in nature before Myriad found them is misplaced. It is the chemical changes in the isolated nucleic acid which are of critical importance, as this is what distinguishes the product as artificial and economically useful.

Unlike in places such as the United States and Canada where subject matter eligibility is defined by reference to enumerated classes of subject matter, the scope of patentable subject matter in Australia is defined by reference to whether an invention is a “manner of manufacture” of the kind envisaged by s 6 of the Statute of Monopolies 1623.

While it is difficult to fault the Full Federal Court’s reasoning, it is unlikely that this will be the final chapter in Myriad’s defense of its Australian patent. Rather, it is likely that the unsuccessful applicant in this instance will appeal to the High Court of Australia, Australia’s final court of appeal, and that that the High Court will give leave (a statutory equivalent to certiorari) to hear the appeal given the importance of the subject matter concerned.

New Section 101 Decisions: Patents Invalid

Patent,

The Supreme Court’s decisions from Alice and Mayo are beginning to really have their impact. A few examples:

  • Walker Digital v. Google (D. Del. September 2014) (data processing patent invalid under 101 as an abstract idea) (Judge Stark).
  • Genetic Tech v. LabCorp and 23AndMe (D. Del. September 2014) (method of predicting human performance based upon genetic testing invalid under 101 as a law of nature) (report and recommendation from Magistrate Judge to Judge Stark)
  • Ex parte Cote (P.T.A.B. August 2014) (computer method and hardware for ‘phase shifting’ design data invalid under 101)
  • Ex parte Jung (P.T.A.B. August 2014) (diagnostic method associated with epigenetic risk factors invalid under 101).

Some of the claims invalidated are listed below:

Walker:

1. A method for operating a computer system to facilitate an exchange of identities between two anonymous parties, comprising the steps of:
receiving from a first party first data including an identity of said first party;
receiving from said first party at least two first-party rules for releasing said first data including a rule for releasing said identity of said first party;
receiving from a second party a search request comprising at least one search criterion;
receiving from said second party second data including an identity of said second party;
receiving from said second party at least two second-party rules for releasing said second party data including a rule for releasing said identity of said second party;
processing said search request to determine if said first data satisfies said search criterion; and
if said first data satisfies said search criterion, then
exchanging said first and second data, except said identities of said first and second parties, between said first and second parties in accordance with said first-party and second-party rules,
after said exchanging step, upon satisfying said first-party rule for releasing said identity of said first party, transmitting said identity of said first party to said second party, and
after said exchanging step, upon satisfying said second-party rule for releasing said identity of said second party, transmitting said identity of said second party to said first party.

Genetic Tech:

1. A method to predict potential sprinting, strength, or power performance in a human comprising:
a) analyzing a sample obtained from the human for the presence of one or more genetic variations in a-actinin-3 (ACTN3) gene;
b) detecting the presence of two 577R alleles at the loci encoding amino acid number 577 of the a-actinin-3 (ACTN3) protein; and
c) predicting the potential sprinting, strength, or power performance of the human, wherein the presence of two copies of the 577R allele is positively associated with potential sprinting, strength, or power performance.

Cote:

1. A computer-readable storage device including code segments, to be executed by a computer, relating to a lithographic process technology, the computer-readable medium comprising:
a code segment for receiving a plurality of bins, each bin including a plurality of clusters corresponding to layout data, wherein each cluster represents a plurality of shapes in the layout data, the plurality of shapes having a proximity to each other determined by a grow operation; and
a code segment for phase shifting the plurality of clusters independently of one another.

3. A method of using clusters in electronic design automation, the method comprising:
receiving data for a plurality of bins, each bin including a plurality of clusters, each cluster representing a plurality of shapes in an original layout, the plurality of shapes having a proximity to each other determined by a grow operation; and
using a computer, preparing a phase shifting layout for the original layout by phase shifting each of the plurality of clusters independently of one another.

7. An electronic design automation program to be executed by a computer and stored on a non-transient computer-readable medium, the electronic design automation program comprising:
a source code segment designed to receive layout data in a bin and cluster format, wherein at least one bin includes a plurality of clusters, each cluster representing a plurality of shapes in the layout data having a predetermined spatial relationship to each other as determined by a grow operation; and
a source code segment designed to phase shift the plurality of clusters independently of one another.

Jung:

1. A computer-implemented method comprising:
receiving epigenetic information associated with at least one individual;
calculating, using a microprocessor, a risk utilizing the epigenetic information; and
transferring at least a portion of the risk utilizing the epigenetic information.

Federal Circuit Falls in Line: Supporting Strong Limits on Patent Eligibility

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By Dennis Crouch

In buySAFE v. Google (Fed. Cir. 2014), the Federal Circuit has found the patentee’s computer-based-transaction patent to be invalid as an abstract idea lacking subject matter eligibility. The decision by Judge Taranto and Joined by Judge Hughes is somewhat unremarkable and the holding falls easily within the framework created by Alice Corp and Mayo.  At the same time, the Federal Circuit offers several nuggets that may provide broader fodder for future eligibility challenges.

In its recent software patent decision of Alice Corp., the Supreme Court identified its underlying policy motivation for denying patent rights to abstract ideas, laws of nature, and natural phenomenon. The high court’s concern is “that patent law not inhibit further discovery by improperly tying up the future use of these building blocks of human ingenuity.” Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S.Ct. 2347 (2014), quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 1289 (2012).

Bright Line Test as a Proxy for the Policy Goals: In Mayo, the Supreme Court explained that the exceptions to patentability (law of nature, abstract idea, product of nature) serve as proxies “for the underlying building-block concern.”  Although admittedly an inexact substitute for the particular policy concern, the named exceptions are “somewhat more easily administered” and also have the benefit of substantial tradition. By using a proxy for its underlying concern, the Supreme Court seems ready to admit that some excluded inventions will not have raised substantial building-block concerns, however, the court concludes that judges simply “are not institutionally well suited to making the kinds of judgments needed to distinguish between” them. Mayo.  Thus, the result is a “bright line” exclusion against abstract ideas, laws of nature, mathematical formulae, and natural phenomenon.

Narrowness of Idea Cannot be Judged: Of particular importance here, although the breadth of an abstract idea is relevant to its impact on future innovation, the court here is clear that the breadth or narrowness is not relevant to the application of the exclusionary rule itself.  Rather, the exclusionary rule applies “even if the particular . . . abstract idea at issue is narrow.”

The Process of Determining Eligibility: The process then for determining subject matter eligibility is: (1) determine whether the patent claim is “directed to subject matter in one of the three excluded categories;” and (2) if so, determine whether “the additional elements” of the claim supply an “inventive concept” that is “significantly more than” the ineligible matter itself.  In explaining this second step, the Federal Circuit expounded that the inventive concept must be “in the physical realm of things and acts – a ‘new and useful application’ of the ineligible matter in the physical realm.” Further, merely requiring a generic computer implementation of an ineligible idea does not move the invention “into section 101 eligibility territory.”

Physicality requirement?: You might query how the Federal Circuit’s physicality requirement comports with Bilski v. Kappos, 561 U.S. 593 (2010) (rejecting the machine-or-transformation test as determinative).  The Federal Circuit actually takes an odd interpretation of Bilski.  The court here suggests that the Supreme Court rule on business method patents is that they are certainly directed to abstract ideas (step 1 above), and that they are only patentable with additional inventive concepts tied to the physical realm.

What is an Abstract Idea?:  Up to now, the courts have avoided providing any solid definition for the abstract idea test.  And here, the Federal Circuit was also able to duck that issue because the particular claims at issue are somewhat parallel to those seen in Bilski and Alice. Namely, the claims focus on arrangement involving contractual relations between parties and involving “a fundamental economic practice long prevalent in our system of commerce.”

In the present case, the patented “transaction performance guarantee” is, according to the court here “beyond question of ancient lineage.” And, the patentee’s addition of the computer and computer program in generic terms were insufficient to meet the eligibility test outlined above.

Invalidity affirmed.

I should note that the court did not discuss the presumption of validity or the standard of evidence applied to the underlying elements of the Alice Corp eligibility test.

= = = =

Claim 1 of US Patent No. 7,644,019:

A method, comprising:

receiving, by at least one computer application program running on a computer of a safe transaction service provider, a request from a first party for obtaining a transaction performance guaranty service with respect to an online commercial transaction following closing of the online commercial transaction;

processing, by at least one computer application program running on the safe transaction service provider computer, the request by underwriting the first party in order to provide the transaction performance guaranty service to the first party,

wherein the computer of the safe transaction service provider offers, via a computer network, the transaction performance guaranty service that binds a transaction performance guaranty to the online commercial transaction involving the first party to guarantee the performance of the first party following closing of the online commercial transaction.

= = = = =

An interesting element of this particular decision is that Judge Rader was originally a member of the panel but lost his vote when he retired in June 2014.  Most certainly Judge Rader’s presence on the panel would have impacted the language used to reach these results.

Guest Post: The Case Against Federalizing Trade Secrecy

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Guest post by Christopher B. Seaman, Assistant Professor of Law at Washington and Lee University School of Law. 

As Dennis recently discussed, the idea of creating a private cause of action for trade secret misappropriation under federal law appears to be gaining traction. Bipartisan legislation has been introduced in both the House and the Senate, and congressional action on these bills may occur as early as this fall. A number of influential actors in the intellectual property world, including the AIPLA, former USPTO Director David Kappos, and a coalition of large manufacturing and technology firms, have publicly supported federalizing trade secrecy. And several legal academics have advocated adoption of a federal trade secrets act.[1]

In a forthcoming article in the Virginia Law Review, I contend there are several important reasons why trade secrecy should remain primarily the province of state law. First, despite claims by proponents, the adoption of a federal civil cause of action would not create greater uniformity for trade secret protection. Currently, there is widespread agreement regarding the basic principles of trade secrecy under state law.   For instance, to establish the existence of a trade secret, both the UTSA (adopted by 47 states) and the Restatement of Torts (largely followed by the remaining jurisdictions) require the trade secret holder to prove that the allege secret has value because it is not generally known or used, and that the holder of the trade secret took sufficient efforts to keep the information secret from others. Similarly, the UTSA and Restatement largely agree on what conduct qualifies as “improper means” of acquiring a trade secret, and both recognize that reverse engineering and independent invention cannot create liability for misappropriation. While there are some variations between states regarding the particular details of trade secret protection, these differences are relatively minor, as the Federal Circuit has recognized.[2]

In fact, adopting federal legislation likely would result in less uniformity by creating two parallel regimes—federal and state—with overlapping authority over trade secret claims. As noted in the recent letter signed by 31 law professors, none of the current bills pending Congress would preempt state law, thus permitting a federal cause of action to exist in parallel with existing state remedies. Notably, there are important differences between the Economic Espionage Act (“EEA”), which would be amended to create a private cause of action, and current state law, such as the EEA’s mens rea (intent) requirements and its lack of express protection for reverse engineering. Moreover because trade secret claims frequently turn on the resolution of related state law issues—such as the scope and enforceability of nondisclosure agreements, or the fiduciary duties of an employee to a current or former employer—courts would either have to borrow from existing state law or create a new body of federal law in these areas to supplement the statutory text.

Second, proponents claim that federal legislation is needed to secure access to a federal forum, which they argue is imperative to adequately protect vital trade secret information. However, a substantial number of trade secret claims are already litigated in federal courts under diversity and/or supplemental jurisdiction, with the number of reported trade secret decisions increasing at least fourfold since the late 1980s.[3] In particular, acts of misappropriation by foreign actors and entities—which feature prominently in proponents’ arguments for federalization—generally would fall within the scope of district courts’ so-called alienage jurisdiction.[4] Others claim that additional federal remedies, like the ex parte seizure provisions in the House and Senate bills, are necessary to prevent irreparable harm after a trade secret has been stolen. However, they fail to explain why existing procedures, such as temporary restraining orders,[5] preliminary injunctions,[6] and civil seizures pursuant to state law under Federal Rule of Civil Procedure 64, are inadequate to protect trade secret holders.

Third, and perhaps most significantly, the proposed federalization of trade secrecy may negatively impact innovation by undermining a key objective of patent law: the disclosure of patentable inventions. Innovators who develop a potentially patentable invention often face the dilemma of whether to incur the cost, delay, and uncertainty of seeking patent protection, or instead maintaining the invention as a trade secret. Stronger trade secret protection via federalization will likely cause more inventors to opt out of the patent system in favor of trade secrecy. This, in turn, will reduce the amount of public disclosure regarding patentable inventions that can be used by others to improve upon the invention and to practice it after the patent’s expiration. In contrast to patenting, trade secret protection is “theoretically unlimited in duration, lasting so long as the information remains a trade secret.”[7]

As an alternative to federalization, my article instead proposes a modest expansion of federal courts’ jurisdiction over state law trade secret claims that could be achieved by tweaking some existing jurisdictional rules. For instance, Congress could adopt a so-called “minimal diversity” standard in trade secret cases that would make a federal forum available whenever at least one party is a citizen of another state from the other parties. Congress also could adopt a “national contacts” standard that would allow a U.S. company to rely on a foreign misappropriator’s contacts with the United States a whole, rather than just the forum state, to establish personal jurisdiction over foreign defendants. This proposal would offer the benefits of a federal forum for more trade secret claims, while at the same time avoiding the potential drawbacks of creating a new federal private cause of action for trade secret misappropriation.

[1] David L. Almeling, Four Reasons to Enact a Federal Trade Secrets Act, 19 Fordham Intell. Prop. Media & Ent. L.J. 769, 770 (2009); Marina Lao, Federalizing Trade Secrets Law in an Information Economy, 59 Ohio St. L.J. 1633, 1653 (1998); Christopher Rebel J. Pace, The Case for a Federal Trade Secrets Act, 8 Harv. J.L. & Tech. 427, 433-34 (1995).

[2] See TianRui Grp. Co. v. U.S. Int’l Trade Comm’n, 661 F.3d 1322, 1327-28 (Fed. Cir. 2011) (noting that “trade secret law varies little from state to state”).

[3] David S. Almeling et al., A Statistical Analysis of Trade Secret Litigation in Federal Court, 45 Gonzaga L. Rev. 291, 293, 302 tbl.1 (2010).

[4] See 28 U.S.C. § 1332(a)(2) (granting the district courts original jurisdiction over civil actions between “citizen of a State and citizens or subjects of a foreign state”).

[5] See, e.g., V’Guara Inc. v. Dec, 925 F. Supp. 2d 1120 (D. Nev. 2013) (granting a TRO to prevent trade secret misappropriation).

[6] See, e.g., Core Labs v. Spectrum Tracer Servs., 532 Fed. Appx. 904 (Fed. Cir. 2013) (granting preliminary injunctive relief for a trade secret misappropriation claim).

[7] Nova Chems., Inc. v. Sekisui Plastics Co., 579 F.3d 319, 327 (3d Cir. 2009).

Alice Corp. and Patent Claiming: A Simple Example

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By Howard Skaist[1]

In the wake of Alice Corp (“Alice”), many practitioners, including myself, are thinking about its implications, in particular, with respect to drafting patent claims. Of note, especially, is the Court’s statement, recited more than once in Alice, that “this Court has long “warn[ed] …. against” interpreting section 101 “in ways that make patent eligibility ‘depend simply on the draftsman’s art.’”  See 573 U.S. ____ (2014); slip opinion at 16. I would like to test that notion and, potentially, its general boundaries with a simple example.

Let’s consider, as an example, the early days of computers and the creation of VisiCalc.  If today’s law applied then, e.g., Alice, would a patent claim covering VisiCalc have been statutory? I would be inclined to say, even today, that it depends a lot on the particular claim, but we also have the Supreme Court’s position on the matter, mentioned above. So, to what extent does the answer depend on the particular claim?

Here is one possible claim to VisiCalc:

  1.  A method comprising:  implementing a spreadsheet on a computer.

One issue worthy of mention here is that cases getting to the Court are ones in which the claims do not appear on their face to appropriately flush out the subject matter considered innovative, at least if we can rely on the opinions without taking the trouble to look at other claims of the particular patents.   However, most skilled practitioners tend to make sure that a spectrum of claims are included, at least for considerations related to section 103.  As shall be seen, this may also be the best practice for addressing 101 issues.

The claim above, thus, is in line with claims previously adjudicated before the Court.  That is, the claim on its face does not appear to communicate details about the innovation itself. Rather, this claim would likely be held non-statutory under the approach in Alice.  Applying the analysis, spreadsheets constitute a way to organize human activity that is of longstanding use.  Thus, it would seem that, following Bilski and Alice, a spreadsheet may potentially be deemed an abstract idea or a fundamental concept.  Thus, it is, if anything, a building block for human ingenuity and, on policy grounds, section 101 exceptions to statutory subject matter are potentially implicated.

Again, then, following the approach in Alice, the aspect of the claim calling out implementation on a computer likewise does not constitute a sufficiently meaningful addition, whether analyzed element by element or as a whole.  It might be argued that computer implementation is faster than performing spreadsheet calculations on paper, but merely being faster is not sufficient, generally, to pass muster here.

It is important to realize, however, that when technology is implemented, rarely does it just result in being faster and nothing more.  Usually, the implementation provides other advantages.  Here, referring to this simple example as an illustration, VisiCalc made a type of functionality possible that had not existed before.  Therefore, if that aspect were particularly claimed, perhaps such a claim would be deemed statutory under the analysis in Alice.

For example, consider the following two claims, recognizing that this example is not intended to illustrate the best claims possible, but is just a simple example to test the Court’s recent pronouncement.

  1.  A method comprising:

generating and displaying a matrix of cells comprising an electronic spreadsheet on a computer, said electronic spreadsheet to implement on said computer one or more user-specified mathematical operations in which one or more operands for said one or more user-specified mathematical operations are to be entered in particular cells of said matrix and results of performing said one or more user-specified mathematical operations on said one or more operands are to be displayed in other particular cells of said matrix; and

displaying on said computer, in said particular cells and in said particular other cells, after said one or more operands are entered, said one or more operands and said results of performing said one or more user-specified mathematical operations on said one or more operands, respectively.

  1. The method of claim 1, wherein said results of performing said one or more user-specified mathematical operations on said one or more operands comprise one or more operands of one or more other user-specified mathematical operations either with or without displaying said one or more operands of said one or more other user-specified mathematical operations in cells of said matrix.

Several arguments are available that one, if not both, of these claims is statutory.  To turn the issue around, we should, perhaps, ask the following:  If we ignore the conventional hardware elements of the claim, is the implementation, as claimed, more than merely conventional?

This question, of course, as framed, clearly is not the same question presented under section 103. Thus, while the Court may be criticized for making considerations under 101 more similar to considerations under 103 than had previously been the case, the analysis is still different.

To be even more explicit, we may ask:  is an innovation being claimed (even if it may in light of prior art later be determined to be an obvious one)? 

Here, the answer is quite arguably, yes!

Most everyone is familiar with the functioning of VisiCalc and Excel.  Certainly, at the time Apple introduced VisiCalc, it was an innovation over what had been done previously with conventional spreadsheets of the time.

Perhaps I am overly optimistic and not everyone will agree that claim 2 at least is statutory.  However, these claims call out an improvement over existing processes involving spreadsheets. See 573 U.S. ____ (2014); slip opinion at 13 (discussing that the claims in Diehr improved on an existing process).  A user is able to link together in a spreadsheet format, complex calculations and display the results in a manner so that any change in “operands” is able to be rippled across the spreadsheet and displayed immediately.  This is an improvement over use of a paper spreadsheet and provides a new functionality that previously did not exist.  I am not arguing that this is necessarily patentable, since that is judged relative to particular prior art, only that it is at least statutory because it is not merely conventional.

If it were generally agreed that the first example is likely non-statutory under the Court’s recent pronouncement and the second example is likely statutory[2], then what does that tell us in terms of claim drafting? One thing it demonstrates is that including limitations directed to innovative aspects of particular implementations may provide a claim drafting safe harbor, so to speak, for this area. Where this is done correctly, it would seem that claims of value to a client should ultimately stand up as statutory.  As was mentioned, most practitioners tend to make sure that a spectrum of claims are included.  This is good practice, now, to address, not just 102 and 103, but also 101.

If we compare the two example claims above, what is the difference?  Why, from a policy perspective should one be statutory and the other not, since they are both directed to what is meant to be the same core subject matter?  It appears that section 101 imposes a statutory requirement of proper form.  That is, from a formal perspective, it is necessary that innovative aspects of the invention, as implemented or intended to be implemented, be on the face of the claim for the claim to be statutory.[3]

Recall that we started with the notion that “this Court has long “warn[ed] …. against” interpreting section 101 “in ways that make patent eligibility ‘depend simply on the draftsman’s art.’”  The ironic twist here seems to be that, if section 101 imposes a statutory requirement of proper form, then the prevailing situation would seem quite the opposite of the Court’s stated view.  That is, that patent eligibility indeed depends on the draftsman’s art and our example appears to confirm as much.

Several points are therefore addressed with this example.

  1. Take care when evaluating inventions for meeting statutory subject matter – rarely are things as simple as they look.
  2. Great care is needed in drafting claims in general but particularly in this area because otherwise there may have been a statutory invention inadvertently left unclaimed.
  3. The policy view that patent-eligibility should not turn on the draftsman’s art is not the full story.

[1] Howard Skaist founded Berkeley Law & Technology Group (BLTG) in 2003 after having been employed as the Director of Patents for Intel Corp.  BLTG has a total of twelve patent lawyers and handles all aspects of intellectual property law practice, including patent law.  Mr. Skaist has also been an adjunct professor at Boalt Hall Law School in Berkeley, CA, at Willamette School of Law in Salem, OR, at Lewis and Clark Law School in Portland, OR, and at Albany Law School.

[2] A separate twist is raised by Sotomayor’s concurrence (also expressly by Judge Mayer recently in I/P Engine v. AOL). Would the second example get over those hurdles?  I would say probably not.  It appears difficult here to argue that the problem solved is technical in nature rather than being directed to organizing human activity.  Thus, three justices would probably say that the second example is also non-statutory.

[3] Of course, one would expect that this would also be true to meet section 103.  However, perhaps a difference is that, for purposes of section 103, dissection is not permitted, at least not yet.  While Alice looks at the claim as a whole as well as the claim elements, it was clear as far back as Flook, that some amount of dissection was permissible.  Alice has made that even clearer, following Mayo, by permitting an element by element analysis.

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

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by Dennis Crouch

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

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

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

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

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

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

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

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

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

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

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

Patent Invalid.

Update on USPTO’s Implementation of ‘Alice v. CLS Bank’

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The following guest post comes from USPTO Commissioner for Patents Peggy Focarino and is a re-publication of what Commissioner Focarino published on the USPTO Director’s Blog.

Today I would like to address our ongoing implementation of the June 19, 2014, unanimous Supreme Court decision in Alice Corporation Pty. Ltd. v. CLS Bank International, et al. (Alice Corp.). In the decision, the court held claims to a computerized scheme for mitigating settlement risk patent-ineligible because they are drawn to an abstract idea. I want to share with you the steps we’re taking to implement the decision.

First, on June 25th, we issued preliminary examination instructions to assist examiners when evaluating subject matter eligibility of claims involving abstract ideas, particularly computer-implemented abstract ideas, in view of Alice Corp.

Second, the USPTO has applications that were indicated as allowable prior to Alice Corp., but that have not yet issued as patents. Given our duty to issue patents in compliance with existing case law, we have taken steps to avoid granting patents on those applications containing patent ineligible claims in view of Alice Corp. To this end, our primary examiners and supervisory patent examiners (SPEs) promptly reviewed the small group of such applications that were most likely to be affected by the Alice Corp. ruling.

We withdrew notice of allowances for some of these applications due to the presence of at least one claim having an abstract idea and no more than a generic computer to perform generic computer functions. After withdrawal, the applications were returned to the originally assigned examiner for further prosecution. Over the past several days, our examiners have proactively notified those applicants whose applications were withdrawn. (Applicants who had already paid the issue fee for applications withdrawn from allowance may request a refund, a credit to a deposit account, or reapplication of the fee if the applications return to allowed status.)

This limited action was closely-tailored and taken specifically in reaction to the Alice Corp. decision. We do not anticipate further review of any applications indicated as allowable under this process, as examiners are currently following the Alice Corp. preliminary instructions during examination (i.e., prior to allowance).

Third, as we continue to study Alice Corp. in the context of existing and developing precedent, public feedback will assist us in formulating further guidance for our examiners. On June 30th, a Federal Register Notice was published to solicit written comments from the public on the preliminary examination instructions. The period for submitting those comments ended July 31, 2014. We appreciate the comments we have received to date. All input will be carefully considered as we work to develop further examination guidance, which we anticipate issuing this coming fall.

We look forward to working with our stakeholders in refining our examination guidance, and will continue to seek feedback as we implement changes as the laws evolve.

USPTO Moves to Strongly Enforce Eligibility Limitations

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By Dennis Crouch

Earlier this summer, the Supreme Court decided the subject matter eligibility case of Alice Corp. v. CLS Bank Int’l, 573 U.S. ___ (2014). The main point of Alice Corp. was to find that the eligibility-limiting holding of Mayo v. Prometheus, 566 U.S. ___ (2012) applies equally to the patenting of abstract ideas. (Mayo focused on laws of nature).

Alice Corp. offers a two-step process for determining patent eligibility of a claimed invention:

  • Building Block: First, determine whether the claim recites or is directed to a patent-ineligible concept such as an abstract idea, law of nature, or product of nature. The court calls these “building blocks of human ingenuity” that should not themselves be patentable.
  • Something More: Second, determine whether the claim recites sufficient additional inventive features such that the claim does not solely capture the abstract idea.

Although Alice Corp decision stemmed from a district court challenge to an issued patent, the law of subject matter eligibility applies (roughly) equally to pending patent applications. In particular, the USPTO is charged with the task of ensuring that patents are only issued for eligible inventions. Thus, following Alice Corp the USPTO issued a set of guidance instructions to its examiners that follow the two step process. Although the two step approach appears straightforward. There is no standard definition for “abstract” and so it is difficult to identify abstract ideas from non-abstract ideas. Further, we do not know the threshold of “something more” that would allow patentability.

As I have written before, every patent claim serves as an abstraction from any physical implementation of an invention – and so any line-drawing rules on this front will necessarily be either arbitrary or murky. Still, the USPTO is charged with moving forward and examining these cases and, in the absence of concrete guidance in the law, the USPTO must create its own policy. At this stage, USPTO policy on examining for 101 can be largely impacted by White House views on patentability. And the current White House viewpoint seems to be that information-software focused inventions are likely unpatentable under 101 unless tied to inventive technology.

Based on information from several sources, it appears that the USPTO is now taking a more aggressive stance on subject matter eligibility and is particularly re-examining all claims for eligibility grounds prior to issuance. This is most apparent in technology centers managing data-processing inventions classes (Classes 700-707).

A set of form-paragraphs are being used that may present a prima facie case but that do not really provide much analysis:

Claims XXXX are rejected under 35 U.S.C. § 101 because the claimed invention is directed to non-statutory subject matter, specifically an abstract idea.

Claims are directed to a judicial exception (i. e., law of nature, natural phenomenon, or abstract idea), specifically, the abstract idea of [INSERT INVENTION HERE]. After considering all claim elements, both individually and in combination, it has been determined that the claim does not amount to significantly more than the abstract idea itself. Further, while the claims recite [hardware or software elements, such as processors or modules], these limitations are not enough to qualify as “significantly more” being recited in the claim along with the abstract idea. Therefore, since there are no limitations in the claim that transform the exception into a patent eligible application such that the claim amounts to significantly more than the exception itself, the claim is rejected under 35 USC § 101 as being directed to non-statutory subject matter.

. . . Indeed, the claims fail to recite any improvements to another technology or technical field, improvements to the functioning of the computer itself, and/or meaningful limitations beyond generally linking the use of an abstract idea to a particular environment. Although the claims do recite the use of a computer, nothing more than a generic computer, performing generic, well-understood and routine computer functions, would be required to implement the aforementioned abstract idea.

Therefore, because there are no meaningful limitations in the claim that transform the exception into a patent eligible application such that the claim amounts to significantly more than the exception itself, the claim is rejected under 35 U.S.C. § 101 as being directed to non-statutory subject matter.

It appears that applications whose inventive features are found in software or information processing will now have a difficult time being patented.

Data Structure Patent Ineligible

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By Dennis Crouch

Digitech Image v. Electronics for Imaging (Fed. Cir. 2014)

Digitech sued dozens of companies for infringing its U.S. Patent No. 6,128,415. As I wrote back in April 2014, basic idea behind the invention is to tag digital images with particular information about the camera and its color/spatial image qualities in a form that is device-independent. The patent includes claims directed to both a “device profile” and a “method of generating a device profile.” The profile is simply a set of data elements regarding the camera qualities discussed above and the method simply involves generating and combining those data elements. This sort of tagging of digital images has become ubiquitous and so the patent could be quite valuable – except that the Federal Circuit has held the patent invalid as lacking subject matter eligibility under 35 U.S.C. §101.

Claim 1 is drafted as follows:

1. A device profile for describing properties of a device in a digital image reproduction system to capture, transform or render an image, said device profile comprising:

first data for describing a device dependent transformation of color information content of the image to a device independent color space; and

second data for describing a device dependent transformation of spatial information content of the image in said device independent color space.

The District Court found the claims invalid and that decision has been affirmed by the Federal Circuit. Decision by Judge Reyna, joined by Judges Moore and Hughes. Because subject matter eligibility is a question of law, the Federal Circuit reviews that issue de novo without giving deference to the district court analysis.

Most subject matter eligibility cases rely upon the non-statutory limitations on eligibility (abstract idea, law of nature, natural phenomenon). However, the court here begins with the statute:

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

35 U.S.C. §101. The statute identifies four categories of patent eligible inventions: processes, machines, manufactures, and compositions of matter. In considering the “device profile” claim, the appellate panel concluded that the claim did not properly fit within any category and is therefore not eligible for patenting. The court writes:

Data in its ethereal, non-physical form is simply information that does not fall under any of the categories of eligible subject matter under section 101.

At the Federal Circuit, the patentee argued that one of skill in the art would understand that the claims required hardware or software within a digital image processing system. However, in an implicit claim construction, the appellate panel rejected that argument – finding that the claims are not so limited. “The claims encompass all embodiments of the information contained in the device profile, regardless of the process through which this information is obtained or the physical medium in which it is stored.” The underlying problem with this analysis is the reality that data is always stored in a physical form lest it disappear.

This first portion of the opinion has the important resulting holding that patent eligible subject matter must be in “a physical or tangible form.” Quoting Burr v. Duryee (1863) (“a concrete thing, consisting of parts, or of certain devices and combination of devices”). The court declined to discuss how it would hold if the claimed data structure had been linked to a physical item such as some sort of computer hardware. Of course, this physicality test as an absolute rule was seemingly rejected by the Supreme Court in Bilski.

In the second part of the short opinion, the Federal Circuit addressed the method claims. Those claims clearly passed the statutory category test as being drawn to processes. For the method claims then, the court turned to the abstract idea limitation recently discussed by the Supreme Court in Alice Corp. v. CLS Bank Int’l, 573 U.S. ___ (2014).

Alice Corp. offers a two-step process for determining patent eligibility of a claimed invention:

  • Building Block: First, determine whether the claim recites or is directed to a patent-ineligible concept such as an abstract idea, law of nature, or product of nature.
  • Something More: Second, determine whether the claim recites sufficient additional inventive features such that the claim does not solely capture the abstract idea.

As the Court wrote in Alice:

At some level, “all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Mayo. Thus, an invention is not rendered ineligible for patent simply because it involves an abstract concept. See Diamond v. Diehr, 450 U. S. 175, 187 (1981). “[A]pplication[s]” of such concepts “‘to a new and useful end,'” we have said, remain eligible for patent protection. Gottschalk v. Benson, 409 U. S. 63, 67 (1972).

Accordingly, in applying the §101 exception, we must distinguish between patents that claim the “‘buildin[g] block[s]'” of human ingenuity and those that integrate the building blocks into something more, Mayo, 566 U. S., at ___ (slip op., at 20), thereby “transform[ing]” them into a patent-eligible invention, id., at ___ (slip op., at 3). The former “would risk disproportionately tying up the use of the underlying” ideas, id., at ___ (slip op., at 4), and are therefore ineligible for patent protection. The latter pose no comparable risk of pre-emption, and therefore remain eligible for the monopoly granted under our patent laws.

Although the Supreme Court provided this two-step framework, it left some gaps for lower courts to discern, such as the meaning of “abstract idea” and “something more.”

The process claim at issue here is directed to a method of generating a device profile and includes three steps:

[Transform First Data] generating first data for describing a device dependent transformation of color information content of the image to a device independent color space through use of measured chromatic stimuli and device response characteristic functions;

[Transform Second Data] generating second data for describing a device dependent transformation of spatial information content of the image in said device independent color space through use of spatial stimuli and device response characteristic functions; and

[Combine Data] combining said first and second data into the device profile.

In reading these steps, the Federal Circuit identified what it sees as the abstract idea:

The two data sets are generated by taking existing information—i.e., measured chromatic stimuli, spatial stimuli, and device response characteristic functions—and organizing this information into a new form. The above claim thus recites an ineligible abstract process of gathering and combining data that does not require input from a physical device.

According to the court, the reason this result is abstract is that it is simply a “process that employs mathematical algorithms to manipulate existing information to generate additional information.” As the Supreme Court wrote in Flook,

If a claim is directed essentially to a method of calculating, using a mathematical formula, even if the solution is for a specific purpose, the claimed method is nonstatutory.

Parker v. Flook, 437 U.S. 584 (1978).

After identifying the abstract idea, the Court considered and rejected the notion that the patent provided “something more” that would be sufficient to transform the result into something patentable.

The Federal Circuit did not raise or discuss the presumption of validity afforded patents under 35 U.S.C. §282. In i4i, the Supreme Court ruled that invalidity for missing the §102(b) statutory-bar date must be proven with clear and convincing evidence. However, that defense is a question of fact. As discussed above, subject matter eligibility is a question of law and such questions are generally not controlled by the same evidentiary standards.

= = = = =

A major difficulty in abstract idea cases is defining the “abstract idea.” Here, the court’s description of the abstract idea at issue is somewhat confusing. Its clearest statement is that it is the “abstract process of gathering and combining data that does not require input from a physical device.” That statement has the qualities of (1) being well known and old; (2) being totally divorced from any physical device or technology; and (3) focused on information transformation rather than the transformation of anything in the physical realm. These clues here closely follow the machine-or-transformation test that the Federal Circuit implemented in its Bilski decision. Later, the Supreme Court rejected the reasoning that the MoT test was the absolute test, but agreed that it served as an important clue of subject matter eligibility.

Alice, Artifice, and Action – and Ultramercial

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Guest post by Emily Michiko Morris, Associate Professor, Indiana University Robert H. McKinney School of Law

Anyone familiar with recent Supreme Court patent jurisprudence was perhaps disappointed but certainly not surprised by the Court’s latest decision, Alice Corp. v. CLS Bank Int’l. The Court once again left many questions unanswered and failed to provide a clear rubric for identifying patentable subject matter. When viewed within the broader context, however, Alice fits nicely within what is actually a long-standing pattern in § 101 cases. IF Ultramercial v. Hulu follows this pattern after its now second GVR, the Federal Circuit may finally affirm that the internet-mediate advertising method at issue there is unpatentable subject matter.

In What Is “Technology”?, I explain that as unmethodical as patentable subject matter often seems, two surprisingly consistent concepts explain how courts identify patentable subject matter. The article dubs these concepts “artifice” and “action.”

Artifice refers to the well-recognized requirement that patentable subject matter be the product of human ingenuity, not nature. Less appreciated is the fact that artifice requires more than just changes in structural or other physical characteristics; to be patentable, a claimed invention must also function in some new, non-naturally occurring way. We can see this latter point illustrated in the purification line of cases as well as Myriad, Funk Brothers, and Chakrabarty.

Much more obscure but more relevant to Alice is the concept of action. Roughly defined, action is the requirement of active rather than passive utility through operating, behaving, performing, or otherwise actively doing something; that is to say, an invention must be “self-executing.” Inventions that display, transmit, or even store information may satisfy the action requirement, but works such as laws of nature, mathematical algorithms, and “abstract ideas” are (perceived as) merely informational or descriptive in value and therefore unpatentably inert. Moreover, as Alice explains, the abstract idea category is not “confined to ‘preexisting, fundamental truth[s].’” By definition any purely informational or descriptive content, whether naturally occurring laws of nature and mathematical algorithms or human-made financial and economic methods, fails the action requirement. As the Court in Diamond v. Diehr put it, such works simply do not “perform[ ] a function which the patent laws were designed to protect.”

To the extent different tests appear to govern natural products versus laws of nature and abstract ideas, then, artifice and action – and more importantly, the circumstances in which each are likely to be invoked – account for these differences. Artifice obviously plays its largest role in cases involving products or laws of nature, whereas action is most important in cases involving abstract ideas and laws of nature. Nonetheless, patentability under § 101 requires both artifice and action.

Both Alice and Bilski illustrate what role action plays under § 101. The methods in both Alice and Bilski involved hedging risk during business transactions by relying on intermediaries, but more importantly, both methods served solely to inform parties about when they can safely transact. The Alice and Bilski opinions describe this as the abstract concept of intermediated settlement, but really it is just information – information about risk. As such, both methods were unpatentably inactive under § 101.

And although Alice differs from Bilski in that Alice’s method was computer-implemented, the Court found both methods to be unpatentable. Like artifice, action is also a scalar characteristic. Just as artifice depends on an invention’s perceived degree of alteration from nature, action depends on an invention’s perceived degree of activity, and despite Alice’s computer-implementation, the method was still not active enough under § 101.

Indeed, both Alice and Mayo emphasize the scalar nature of patentability under § 101. Under Mayo’s two-step test, a court first determines whether a claim is directed to a law of nature, natural phenomenon, or abstract idea. As the Alice Court observed, however, all inventions are directed to one of the patent-ineligible concepts at some level. The second and pivotal step is therefore to determine whether the claim demonstrates an “inventive concept” – that is, does the claim add elements “sufficient” and “enough” to establish patentable subject matter.

And to see that a sufficient “inventive concept” requires sufficient action, one need only look at how the Court treats computer-mediated elements with regard to patentability under § 101. Computers are widely regarded as “technological,” but much computer technology is “information technology,” and computer use primarily to manipulate data or other information thus adds no patentable action. Computer implementation in Alice’s method followed exactly this pattern – as the Court noted, the computer served only to create and maintain “shadow” accounts, obtain data, adjust account balances, and issue automated instructions. Accordingly, whether Alice claimed its invention as a method, system, or medium, the invention failed to provide an adequate “inventive concept” because it did not demonstrate sufficient action.

Under an artifice-plus-action standard, then, Ultramercial’s internet-mediated advertising method fails § 101. Ultramercial claimed a method of distributing copyrighted content for free in return for viewing an advertisement. The method is purely an exchange of informational and expressive content and performs no action whatsoever, and the claim’s cursory reference to the internet does nothing to add a “sufficient inventive concept.”

This is not to say, of course, that computer-implemented methods are never patentable subject matter. The Alice Court pointed out the difference between computers used purely for information processing and computers used to effect improvements in “any other technology or technical field,” or improvements in the function of the computer itself. Diehr’s computer-assisted rubber-curing process, for example, was adequately “technological” and therefore patentable, whereas the computer-implemented methods in Benson and Flook yielded “simply a number” and were therefore unpatentable. Per the view of the patent system, information processing is simply not “technological.” Similarly, computer or storage media that are distinguishable only by their informational or expressive content alone been held unpatentable if the content has no “functional” relationship with the device. The variable role that computers and other tangible devices can thus play in an invention may be why the Supreme Court rejected the machine-or-transformation test as the sole test for methods under § 101.

And while the discussion here focuses mostly on business methods, note that the Mayo two-step test as stated in Alice covers all patent-ineligible abstract ideas, laws of nature, and even phenomena of nature – all are subject to the same requirement that a claimed invention add “enough” to constitute a patentable inventive concept. For claims directed to phenomena of nature, “enough” means artifice and meeting the age-old test of “markedly different characteristics from any found in nature.” For abstract ideas, laws of nature, mathematical algorithms, mental processes, and all other forms of information, “enough” means action and demonstrating function beyond merely informing.

As simple as artifice and action may sound, however, patentable subject matter clearly remains a difficult and ambiguous issue. The difficulty lies in the scalar quality of both artifice and action and deciding where along these spectra any given new invention falls. The requisite degree of artifice and action has also varied over time as the liberality of patentable subject matter has waxed and waned, creating yet further uncertainty. Most significantly, where the line between patentable and unpatentable lies along the spectrum is entirely unclear. There are no bright-line rules and no magical claim elements that can guarantee patentability under § 101.

The Court has often (but not always, as our host Jason Rantanen has pointed out) expressed a preference for a “functional” approach to patent law, however: that is, a preference for standards over hard and fast rules. As stated in Bilski’s rejection of the machine-or-transformation test, to do otherwise would “make patent eligibility ‘depend simply on the draftsman’s art.’” True, the artifice-plus-action standard requires courts to make many judgment calls about where along the spectrum of artifice and action any given invention must fall before it can be considered patentable technology, but standards are often vague. Besides, patent law frequently must address these kinds of line-drawing exercises. The non-obviousness, utility, enablement, and even written description requirements all force courts to make judgment calls.

Compounding the difficulty is the fact that § 101 determinations are in the end based on nothing more than intuition. As I and a number of others have noted, none of the pragmatic justifications commonly cited in support of § 101, such as preemption and disproportionality explain how patentable subject matter determinations are actually made or, more importantly, why. Thus, although artifice and action consistently appear in patentable subject matter, the combination does not necessarily reflect the most efficient or “correct” way to define patentable subject matter. Rather, the combination merely reflects an underlying intuition about what constitutes technology. (In Intuitive Patenting, a companion article to What Is “Technology”?, I argue that there simply are no more objective bases on which to make these determinations.) Unfortunately, patentable subject matter’s intuitive nature leaves courts effectively unable to specify how they reached their determinations. This often leads to language that sounds more like non-obviousness, novelty, or utility than to § 101, but in the end, artifice and action are better explanations for these otherwise perplexing references.