Patent Docs

Sensormatic Electronics, LLC v. Wyze Labs, Inc. (Fed. Cir. 2021)

By Michael Borella --

Sensormatic asserted U.S. Patents 7,730,534, 7,936,370, 7,954,129, 8,208,019, and 8,610,772 against Wyze in the District of Delaware, alleging infringement.  Wyze moved the District Court to dismiss under Rule 12(c), on the grounds that the claims are directed to ineligible subject matter.  The motion was granted.  Sensormatic appealed.

In Alice v. CLS Bank, the Supreme Court set forth a two-part test to determine whether claims are directed to patent-eligible subject matter under 35 U.S.C. § 101.  One must first decide whether the claim at hand involves a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further decide whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exclusion.  But elements or combinations of elements that are well-understood, routine, and conventional will not lift the claim over the § 101 hurdle.  While this inquiry is generally carried out as a matter of law, factual issues can come into play when determining whether something is well-understood, routine, and conventional.

Last year, the Federal Circuit provided a major clue as to how to think about patent eligibility in practice.  In Dropbox Inc. v. Synchronoss Techs. Inc. the Court wrote that "an inventive concept exists when a claim recites a specific, discrete implementation of the abstract idea where the particular arrangement of elements is a technical improvement over the prior art."  This suggests that in order for a claim that is otherwise directed to an abstract idea to be successful under § 101, it should have three qualities:  specificity, a technical solution that it provides, and some degree of novelty.  More particularly, there should be a nexus between these three factors -- specificity, technical character, and novelty should appear in the same claim element or at least be explicitly linked in some fashion in the recitation of the claim.

Claim 14 of the '129 patent was deemed representative:

A surveillance system for wireless communication between components comprising:
    a base system including at least two wireless input capture devices (ICDs), the ICDs having at least one sensor and at least one input component for detecting and recording inputs, a processor, a memory, a transmitter/receiver, all constructed and configured in electronic connection;
    wherein the ICDs are operable for direct wireless cross-communication with each other without requiring interaction with a remote server computer for operation; and
    wherein the ICDs are operable for direct wireless communication with a remote viewing device operable by an authorized user.

Here we have one of those cases where the Court's main concern appears to be a lack of specificity in the claims, which the Court describes as "abstractness".  As claims go, this one is mostly outcome-oriented, in that it recites what the inventors want the invention to do rather than how it achieves this goal.  In past cases, this factor alone has been used to establish that a claim can be abstract regardless of whether it recites physical components.

Applying the Alice test, the District Court "court concluded that the claims are directed to the abstract ideas of wireless communication and remote surveillance, and determined that none of the claim limitations take the claims beyond those abstract ideas."  Further, the District Court opined, "the claims do not recite an inventive concept sufficient to transform them into patent-eligible subject matter because they merely describe implementing abstract ideas using well-known, generic computer components and functionalities."  Thus, the claims were found ineligible.

The Federal Circuit agreed.  But first it attempted to shed a little bit of light on the scope of the legal concept of "abstractness".  The Court stated:

As patent eligibility case law has developed, the Supreme Court has had opportunities to declare that claims to a machine are de facto eligible.  In fact, the statute pro-vides that "[w]hoever invents or discovered any new and useful . . . machine . . . may obtain a patent therefore," subject to other patentability requirements set forth in Title 35 of the United States Code.  But the law has not developed that way.  Instead, the Court has noted that the machine-or-transformation test is a "useful and important clue" for determining patent eligibility, but that not all claims drafted as machine or system claims are patent-eligible.  In Alice, the Court confirmed that recitation of a tangible system, "(in § 101 terms, a 'machine')," does not end the eligibility inquiry.  What matters, according to the Court, is the reality behind the machine or system language, whether or not it simply clothes abstract concepts.  The district court correctly followed that precedent in determining that the patents asserted here claim ineligible subject matter.

In other words, an invention that is a concrete and tangible machine, and claimed as such, can be found to be "abstract" if the claimed subject matter is otherwise abstract.  While this makes sense to a point, it ultimately requires that the finder of fact (or of law -- patent eligibility is a strange amalgam of both) decide whether certain claim elements can be ignored for purposes of the § 101 inquiry.  Putting a power this subjective in the hands of even a federal judge, much less an examiner or a PTAB judge, can be problematic.

Indeed, the Court's statement quoted above may be in response to the recent case of Yu v. Apple, a controversial split decision that found a digital camera with a particular hardware arrangement performing particular functions to be ineligible.  While the Court may have made this statement for explanatory reasons, it is likely to be taken as a warning shot.  Whatever the Court is trying to say, patentees are likely to hear, "All Your Devices Belong to Us!"  This is a reminder that the term "abstract" is not meant to be taken literally, and any statutory category of claims can be abstract (even if you can drop it on your foot).

In any event, Sensormatic argued before the Federal Circuit that:

[T]he claims are directed to three non-abstract improvements in surveil-lance technology: (1) a configuration of ICDs (surveillance sensors) that communicate with each other, which improves wireless range and removes the need for a central server; (2) dual encoding of input data, which improves use of bandwidth and device compatibility; and (3) prioritization of ICD input data through distributed detection of trigger events, which improves storage and retention of significant input data.

Wyze pointed out that the dual encoding and trigger events were not actually claimed, and in the alternative were abstract as well.

The Court largely agreed with Wyze, noting that "the broad concept of communicating information wirelessly, without more, is an abstract idea."  The Court further wrote:

First, although Sensormatic argues that its claims are directed to a specific configuration of ICDs, Sensormatic fails to identify any particular non-abstract configuration.  Second, dual encoding is itself abstract.  The concept of encoding or decoding image data is abstract, even if for the purpose of transmitting files to devices with less memory or bandwidth or by transcoding data into multiple formats.  Third, prioritization of ICD input data through detection of trigger events is an aspect of the abstract idea of remote surveillance as well as drawn to the abstract idea of classifying and organizing images.  Accordingly, we conclude that the claims are directed to an abstract idea at Alice step one.

Moving on to part two of Alice, Sensormatic asserted that the claimed invention would "distribute functions previously carried out at a server computer to a cluster of interconnected ICDs, thereby eliminating the need for software and extending the system's range."  Wyze countered, and the Court agreed, that "Sensormatic fails to explain how any combination of elements provides an inventive concept," either in its briefs or at oral argument.  Since "[p]roviding generic devices that communicate with each other . . . is a conventional application of an abstract idea, the Court found that the claim also failed under part two, and therefore is ineligible.

Sensormatic Electronics, LLC v. Wyze Labs, Inc. (Fed. Cir. 2021)
Panel: Circuit Judges Newman, Lourie, and Dyk
Opinion by Circuit Judge Lourie

Yu v. Apple (Fed. Cir. 2021)

By Michael Borella --

When the Supreme Court began poking around into the law of patent eligibility just over a decade ago, the invention topics that it considered under the abstract idea exception were limited to types of financial transactions.  The invention of Bilski v. Kappos was directed to hedging and that of Alice v. CLS Bank was directed to escrow.  While both inventions were ostensibly computer implemented, they involved software being applied to just one rather narrow field of endeavor.

The Court's findings of invalidity in both cases are open to criticism both on procedural and substantive grounds, and these decisions could have been held to the facts of their cases or those of cases similar thereto.  But that did not happen.  We have seen a continuous expansion of the scope of what is considered to be "abstract" occur in a way that would make 19th-century imperialists jealous.

Since Bilski and Alice, the Federal Circuit has grown the exception to encompass business methods in general, software in general, and more recently mechanical devices and processes involving such devices.  Notably, an electric car charger was deemed abstract in ChargePoint v. SemaConnect, as was a garage door opener in Chamberlain Group v. Techtronic Industries.  More recently, the controversial decision in American Axle v. Neapco found that a method for tuning driveshaft liners that improved damping capabilities was directed to nothing more than a law of nature and therefore ineligible.  American Axle is up for Supreme Court review, but no one expects that the justices will admit that their subject matter eligibility jurisprudence is a Gordian Knot that requires reformulation by way of a sword.

Which brings us to last week's eligibility decision that came down from the Federal Circuit, this one involving a camera.  Yanbin Yu and Zhongxuan Zhang sued Apple and Samsung for alleged infringement of U.S. Patent No. 6,611,289.  Claim 1 of the '289 patent, which was considered representative of all asserted claims, recites:

1.  An improved digital camera comprising:
    a first and a second image sensor closely positioned with respect to a common plane, said second image sensor sensitive to a full region of visible color spectrum;
    two lenses, each being mounted in front of one of said two image sensors;
    said first image sensor producing a first image and said second image sensor producing a second image;
    an analog-to-digital converting circuitry coupled to said first and said second image sensor and digitizing said first and said second intensity images to produce correspondingly a first digital image and a second digital image;
    an image memory, coupled to said analog-to-digital converting circuitry, for storing said first digital image and said second digital image; and
    a digital image processor, coupled to said image memory and receiving said first digital image and said second digital image, producing a resultant digital image from said first digital image enhanced with said second digital image.

The camera of claim 1 has some fairly specific hardware requirements, such as a pair of closely positioned image sensors, lenses, A-D circuitry, memory, and a digital image processor.  Also, the camera is configured to carry out a fairly broad set of tasks, such as producing a first image and a second image, producing a resultant digital image from said first digital image enhanced with said second digital image.  It is the latter functionality that was the focus of the majority opinion from Judges Prost and Taranto, and the perceived nature of this functionality ultimately doomed the claims.

In Alice, the Supreme Court set forth a two-part test to determine whether claims are directed to patent-eligible subject matter under 35 U.S.C. § 101.  One must first decide whether the claim at hand involves a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further decide whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exclusion.  But elements or combinations of elements that are well-understood, routine, and conventional will not lift the claim over the § 101 hurdle.  While this inquiry is generally carried out as a matter of law, factual issues can come into play when determining whether something is well-understood, routine, and conventional.

Last year, the Federal Circuit provided a major clue as to how to think about patent eligibility in practice.  In Dropbox Inc. v. Synchronoss Techs. Inc. the Court wrote that "an inventive concept exists when a claim recites a specific, discrete implementation of the abstract idea where the particular arrangement of elements is a technical improvement over the prior art."  This suggests that in order for a claim that is otherwise directed to an abstract idea to be successful under § 101, it should have three qualities: specificity, a technical solution that it provides, and some degree of novelty.  More particularly, there should be a nexus between these three factors -- specificity, technical character, and novelty should appear in the same claim element or at least be explicitly linked in some fashion in the recitation of the claim.

On a Rule 12(b)(6) motion, the District Court found that claim 1 was invalid under § 101 because the claim was directed to the abstract idea of "taking two pictures and using those pictures to enhance each other in some way."  The District Court also opined that there was a "complete absence of any facts showing that the claimed elements were not well-known, routine, and conventional."  Yu appealed.

Applying part one of the Alice test, the Federal Circuit quickly agreed with the District Court.  The majority noted that this process involves "asking what the patent asserts to be the focus of the claimed advance over the prior art."  On review of the language of claim 1 and Yu's specification, the majority found that the claim is "directed to a result or effect that itself is the abstract idea and merely invokes generic processes and machinery rather than a specific means or method that improves the relevant technology."

It was undisputed in the District Court that "the idea and practice of using multiple pictures to enhance each other has been known by photographers for over a century."  The majority then took this as given and concluded that the hardware aspects of the claimed camera were generic and conventional.

Yu argued that the specification described the technical advance provided by the claimed hardware configuration.  But the majority was unconvinced, finding that the specification described the benefits and advantages of a more specific hardware configuration (a "four-lens, four-image-sensor configuration in which three of the sensors are color-specific while the fourth is a black-and-white sensor") than what was claimed.  According to the majority, "the mismatch between the specification statements that Yu points to and the breadth of claim 1 underscores that the focus of the claimed advance is the abstract idea and not the particular configuration discussed in the specification that allegedly departs from the prior art."

Holding claim 1 abstract under part one of Alice, the majority moved on to part two.  Here, it reiterated the points made above regarding the well-understood, routine, conventional nature of the hardware configuration.  Yu argued that this configuration was actually unconventional because the claim was allowed by the USPTO "over multiple prior art references."  The majority was unpersuaded, however, and stated that "even if claim 1 recites novel subject matter, that fact is insufficient by itself to confer eligibility."

As an aside, this reasoning illustrates the logical contortions that the current application of § 101 forces one to go through.  Claim 1 was considered to be abstract because some of its features were in the prior art and therefore lacked novelty.  But Yu's argument that the claim as a whole was novel has no weight in the § 101 realm.  This type of Kafkaesque reckoning from the Federal Circuit is not new and dates back to 2014's Ultramercial v. Hulu.

In any event, there is no evidence in this opinion that the majority properly considered the combination of elements in claim 1 as required by Alice.  Consequently, the majority ruled that Yu's claims failed the § 101 requirements and were invalid.

Writing in dissent, Judge Newman kicked off by stating that "[t]his camera is a mechanical and electronic device of defined structure and mechanism; it is not an abstract idea."  Put another way, if you can drop it on your foot, it is not an abstract idea.

Judge Newman criticized the majority for departing from the language of claim 1 when considering its eligibility.  She wrote:

I repeat: claim 1 is for a digital camera having a designated structure and mechanism that perform specified functions; claim 1 is not for the general idea of enhancing camera images.  The camera of the '289 patent may or may not ultimately satisfy all the substantive requirements of patentability, for this is an active field of technology.  However, that does not convert a mechanical/electronic device into an abstract idea.

Judge Newman also took a dim view of the majority's consideration of prior art under § 101.  In her opinion, Diamond v. Diehr and the legislative history of the 1952 Patent Act make it abundantly clear that there is an "explicit distinction" between §§ 101 and 102, and that the majority's wedging of § 102 factors into a § 101 analysis is improper.  She observed that "[s]ection 101 ineligibility does not arise simply because a device embodies minor and predictable differences from the prior art, as the majority holds."[1]

Instead, Judge Newman found that there is historical support for considering claim specificity in the § 101 inquiry.  She wrote:

[T]his reasoning has solidified the foundations of eligibility, drawing on the fundamental distinction between breadth of general scientific principle, and its embodiment in practical application.  This distinction between a general concept and its specific application is implemented in the Patent Act.

So, it appears that she is willing to consider some incorporation of § 112 considerations into § 101.  This is perhaps in contrast to her colleague, Judge Moore, who coined the term "enablement on steroids" to describe how some panels of the Federal Circuit require that the claims (and not just the specification) enable one to practice the invention.

Judge Newman concluded her dissent with a few pointed thoughts on novelty and non-obviousness being part of the eligibility calculus:

In the current state of Section 101 jurisprudence, inconsistency and unpredictability of adjudication have destabilized technologic development in important fields of commerce.  Although today's Section 101 uncertainties have arisen primarily in the biological and computer-implemented technologies, all fields are affected.  The case before us enlarges this instability in all fields, for the court holds that the question of whether the components of a new device are well-known and conventional affects Section 101 eligibility, without reaching the patentability criteria of novelty and nonobviousness.

The digital camera described and claimed in the '289 patent is a mechanical/electronic device that easily fits the standard subject matter eligibility criteria.  Neither the panel majority nor the district court decided patentability under Section 102 or Section 103, having eliminated the claims under Section 101.  The '289 claims warrant review under the substantive criteria of patentability—a review that they have never received.

The fresh uncertainties engendered by the majority's revision of Section 101 are contrary to the statute and the weight of precedent, and contrary to the public's interest in a stable and effective patent incentive.

Yu v. Apple (Fed. Cir. 2021)
Panel:  Circuit Judges Newman, Prost, and Taranto
Opinion by Circuit Judge Prost; dissenting opinion by Circuit Judge Newman

[1] While Judge Newman's interpretation of the law is logical and arguably how it should be interpreted, it is fair to note that Justice Breyer wrote in Mayo v. Prometheus that "the §101 patent-eligibility inquiry and, say, the §102 novelty inquiry might sometimes overlap."  But he did not specify or discuss any further the nature of this overlap.  The blame for the current incursion of prior art concerns into questions of eligibility falls largely on the Federal Circuit.

Supreme Court Requests View of Solicitor General in American Axle v. Neapco

By Kevin E. Noonan and Michael Borella --

Today, the Supreme Court requested the views of the Solicitor General in its consideration of American Axle's certiorari petition, which asks the Court to reverse the Federal Circuit's decision in American Axle & Mfg. v. Neapco Holdings LLC.  That decision is noteworthy on several grounds.  It is an application of the Federal Circuit's fractured jurisprudence on subject matter eligibility under 35 U.S.C. § 101 to a traditionally patent-eligible subject matter -- a method of producing shaft assemblies in a driveline system for trucks having reduced vibration during use.  The case was the occasion for the full Court to illustrate the deep divisions among the Judges, with half of them voting to rehear the case en banc and the other half refusing to do so.  Moreover, the decision not to grant rehearing en banc was accompanied by several opinions from various combinations of the Judges concurring or dissenting from the decision.  And those opinions (as well as Judge Moore's dissent from the panel opinion) contained sharp rhetoric regarding not only the panel decision but the pattern and scope of the Court's attempts to consistently and coherently explicate the broad principles enunciated by the Supreme Court in Mayo Collaborative Services v. Prometheus Laboratories and Alice Corp. v. CLS Bank International (which, to be fair, may itself have been a Herculean task).

It is foolhardy to speculate on why the Court asked these views, except noting that a sufficient number of the Justices felt it would be beneficial to their deliberations (regarding whether to grant certiorari) to hear what the Government has to say, in view of the Executive's role in granting patents.  However, it is evidence that there are several consequences of this decision that should be borne in mind.

The most immediate consequence is that it gives the Biden administration a chance to provide the Court (and the rest of us) with insights into how the administration views patent law in general and eligibility in particular.  This is an aspect that may very well be clearer depending on the administration's choice for U.S. Patent and Trademark Office Director, and how that individual responds to questions during confirmation hearing on these topics.

The time it takes to receive the SG's views (which can be a few to several months) will delay the Court's decision whether to grant certiorari until the October Term.  This may result in the certiorari decision (and if granted the Court's decision on the merits) being decided by a differently constituted Court, should for example Justice Breyer decide (as has been suggested) to retire.  A Justice Breyer retirement could be significant on this issue because he wrote the Mayo opinion (and before that a dissenting opinion on dismissal of certiorari in LabCorp v. Metabolite) and thus bears some responsibility for shaping the precedent the Federal Circuit (and district courts as well as the Office) have had such difficulty in consistently applying.

With regard to the certiorari decision itself, regardless of how the SG comes down on the question, if the Court does not grant it could indicate a continued unwillingness to address patent eligibility.  If the Court does hear arguments on the merits, of course, at a minimum the Justices could provide clarity regarding the "super-enablement" requirement that at least one Federal Circuit judge believes the panel majority has injected into the eligibility question, and more broadly the Court could provide more clarity on the eligibility issue in reassessing (or at least restating more clearly) the metes and bounds of what is patent-eligible subject matter.

On the other hand, it is possible (although hopefully unlikely) that the Court could further muddy the issue, making eligibility even less predictable, more confusing, and less clear.  While in the short term this would be unfortunate, it may raise the possibility that Congress would be able to enact meaningful reform of Section 101 -- something that certain legislators have been threatening for the last two years.

As has been the case for the past decade, a period during which the Court has denied certiorari on this issue more than fifty times, all we can do it wait.

Could Alice Be Used to Invalidate Diehr? Of Course It Could

By Michael Borella --

The Supreme Court's Alice Corp. v. CLS Bank Int'l case has been criticized for setting forth a patent eligibility analysis that is unworkably subjective.  As a consequence, the validity of particular types of inventions, especially those in the software and business method space, can be uncertain until undergoing judicial review.

In a nutshell, Alice sets forth a two-part test to determine whether claims are directed to patent-eligible subject matter under 35 U.S.C. § 101.  One must first decide whether the claim at hand is directed to a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further decide whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exclusion.  But elements or combinations of elements that are well-understood, routine, and conventional will not lift the claim over the § 101 hurdle.  While this inquiry is generally carried out as a matter of law, factual issues can come into play when determining whether something is well-understood, routine, and conventional.

Having said that, the test in practice usually amounts to eyeballing the claim and determining whether some of its elements recite or involve a judicial exclusion.  If so, the remaining elements are considered to determine whether they, individually or in combination, amount to significantly more.  In other words, § 101 includes a poor-man's form of prior art analysis.  Also, vague, non-specific or result-oriented elements have little or no weight in the "significantly more" inquiry.  So, § 101 also incorporates a form of enablement.

Thus, the confusion.  But don't take my word for it.

Judge Wu of the U.S. District Court for the Central District of California panned Alice for setting forth an "I know it when I see it" test.  Judge Pfaelzer, a colleague of Judge Wu, wrote that the Supreme Court's patent eligibility cases "often confuse more than they clarify [and] appear to contradict each other on important issues."  Judge Plager of the Federal Circuit wrote that the post-Alice § 101 inquiry "renders it near impossible to know with any certainty whether the invention is or is not patent eligible."  Other Federal Circuit judges have expressed similar concern.  Judge Newman recently stated that "[t]he court's rulings on patent eligibility have become so diverse and unpredictable as to have a serious effect on the innovation incentive in all fields of technology."  Judge Moore is concerned that the § 101 analysis has become "enablement on steroids."  Former Chief Judge of the Federal Circuit Paul Michel stated that Alice "create[d] a standard that is too vague, too subjective, too unpredictable and impossible to administer in a coherent consistent way in the patent office or in the district courts or even in the federal circuit."

I have previously written about how Alice can be stretched to find virtually any invention ineligible.  These tongue-in-cheek pieces explain how Edison's light bulb, Bell's telephone, and public-key cryptography -- all considered to be groundbreaking inventions -- could be interpreted to fail the Alice test.  Recently, my colleagues and I submitted an amicus brief to the Supreme Court in the American Axle v. Neapco case, making similar arguments.

But today, let's discuss something a little different.  In 1981, the Supreme Court considered the patent-eligibility of a claim that had been rejected by the USPTO.  The invention involved a computer-controlled process for curing rubber.  The case was Diamond v. Diehr, and was for 30 years the gold standard on § 101 interpretation.  The claim was found to be eligible and the Court set forth a few simple principles to guide the § 101 inquiry (claims must be considered as a whole and novelty of elements has no bearing on patent-eligibility).  In 2014, the Alice Court did not overrule Diehr -- and in fact went to lengths trying to justify how it's holding was consistent with the aforementioned principles.  But the justices left the rest of us scratching our collective heads, because Alice sure does seem to contradict Diehr in rather impactful ways.

So this begs the question:  if one were to apply the Alice test to the claim of Diehr, could an argument be made that this claim is actually ineligible?  Given the malleability of Alice, the outcome is most certainly "yes".  Let's see how.

Claim 1 of Diehr is shown below, enumerated for reference.

A method of operating a rubber-molding press for precision molded compounds with the aid of a digital computer, comprising:
    (a)    providing said computer with a data base for said press including at least, natural logarithm conversion data (ln), the activation energy constant (C) unique to each batch of said compound being molded, and a constant (x) dependent upon the geometry of the particular mold of the press,
    (b)    initiating an interval timer in said computer upon the closure of the press for monitoring the elapsed time of said closure,
    (c)    constantly determining the temperature (Z) of the mold at a location closely adjacent to the mold cavity in the press during molding,
    (d)    constantly providing the computer with the temperature (Z),
    (e)    repetitively calculating in the computer, at frequent intervals during each cure, the Arrhenius equation for reaction time during the cure, which is ln(v)=CZ+x where v is the total required cure time,
    (f)    repetitively comparing in the computer at said frequent intervals during the cure each said calculation of the total required cure time calculated with the Arrhenius equation and said elapsed time, and
    (g)    opening the press automatically when a said comparison indicates equivalence.

Under Alice, there would be little dispute that elements (a), (e), and (f) are mathematical in nature.  Indeed, the Diehr Court essentially admitted as much.[1]  Thus, the Diehr claim would be considered to be directed to an abstract idea under part one of Alice.

When applying part two of Alice, it is important to be cognizant of how the Federal Circuit has interpreted this portion of the test.  Notably, elements that involve mere gathering of data are also considered to be abstract (see Electric Power Group, LLC v. Alstom S.A. and CyberSource Corp. v. Retail Decisions, Inc.).  Thus, element (d) would actually be part of the abstract idea and would not qualify as an additional element.

This leaves elements (b), (c), and (g) as candidate additional elements.  But as noted above, well-understood, routine, and conventional steps do not count in the "significantly more" calculus.  Further, elements describing steps at a high level, lacking in detail, or in a results-oriented fashion without reciting particular means for achieving those results, also do not contribute "significantly more" under American Axle and many other Federal Circuit holdings.

Viewing these candidate elements individually, element (b) recites initiating a timer, element (c) recites measuring a temperature, and element (g) recites opening a press.  All of these claimed steps would have been well-understood, routine, or conventional at the time of invention.  For example, interval timers have been well-known in the art of computing for decades, temperature measurements have been common for hundreds of years, and opening a mold has been a conventional step in curing rubber since the advent of molds.  Therefore, considered individually, elements (b), (c), and (g) do not provide "significantly more".

But what about their combination?  This is where the Diehr court found eligibility in the claim, writing that "a new combination of steps in a process may be patentable even though all the constituents of the combination were well known and in common use before the combination was made."  Alice, however, de-emphasized the role of such combinations of elements.

Writing for the Alice court, Justice Thomas stated, "[c]onsidered as an ordered combination, the computer components of petitioner's method add nothing . . . that is not already present when the steps are considered separately."  He further explained, "[v]iewed as a whole, petitioner's method claims simply recite the [abstract idea] as performed by a generic computer."  These conclusory statements have been relied on heavily by the courts and the USPTO to essentially eviscerate the language of Diehr.

To that point, one could argue that the claim of Diehr, when considered as an ordered combination, simply recites an abstract process performed by a generic computer, and that a series of abstract and conventional steps recited at a high level do not provide patent eligibility.  Alternatively, one could argue that elements (b), (c), and (g) are so vague that all elements of the Diehr claim are abstract.  And then, following the Federal Circuit's reasoning in Recognicorp, LLC v. Nintendo Co.,[2] find that adding more abstract elements to an abstract idea does not lift a claim over the § 101 hurdle.

So, yes, Alice could be used to invalidate Diehr.  Such a notion should give one pause.

Hopefully, the Court will eventually take up another § 101 case and begin its opinion with, "Ok, fine, what we really meant was . . . ."  Or Congress will step in to revert § 101 back to the language of the statute or at least that of Diehr.  Until then, we will have uncertainty in the form of Schrodinger's Patents -- granted patents that are considered to be both valid and invalid until observed by a court.

[1] "[I]n several steps of the process a mathematical equation and a programmed digital computer are used."

[2] Reasoning that is questionable at best.  But similar reasoning can be found in other Federal Circuit cases and boatloads of USPTO Office actions.

In re Board of Trustees of the Leland Stanford Junior University (Fed. Cir. 2021)

By Kevin E. Noonan --

Exactly two weeks after affirming a decision by the U.S. Patent and Trademark Office Patent Trial and Appeal Board (PTAB) rejecting claims for failure to satisfy the subject matter eligibility standard under 35 U.S.C. § 101, in ex parte examination of claims to methods and related computing systems for genetic haplotyping in In re Board of Trustees of the Leland Stanford Junior University,  the Federal Circuit again affirmed the PTAB's rejection of claims for failure to satisfy the subject matter eligibility standard under 35 U.S.C. § 101, in ex parte examination of claims expressly directed to computerized methods for genetic haplotyping in In re Board of Trustees of the Leland Stanford Junior University, raising sure citation confusion in the future.

The claimed method is recited in representative claim 1:

1.  A computerized method for inferring haplotype phase in a collection of unrelated individuals, comprising:
    receiving genotype data describing human genotypes for a plurality of individuals and storing the genotype data on a memory of a computer system;
    imputing an initial haplotype phase for each individual in the plurality of individuals based on a statistical model and storing the initial haplotype phase for each individual in the plurality of individuals on a computer system comprising a processor a memory [sic];
    building a data structure describing a Hidden Markov Model, where the data structure contains:
        a set of imputed haplotype phases comprising the imputed initial haplotype phases for each individual in the plurality of individuals;
        a set of parameters comprising local recombination rates and mutation rates;
    wherein any change to the set of imputed haplotype phases contained within the data structure automatically results in re-computation of the set of parameters comprising local recombination rates and mutation rates contained within the data structure;
    repeatedly randomly modifying at least one of the imputed initial haplotype phases in the set of imputed haplotype phases to automatically re-compute a new set of parameters comprising local recombination rates and mutation rates that are stored within the data structure;
    automatically replacing an imputed haplotype phase for an individual with a randomly modified haplotype phase within the data structure, when the new set of parameters indicate that the randomly modified haplotype phase is more likely than an existing imputed haplotype phase;
    extracting at least one final predicted haplotype phase from the data structure as a phased haplotype for an individual; and
    storing the at least one final predicted haplotype phase for the individual on a memory of a computer system.

As explained in the opinion, the claims are directed to "computerized statistical methods for determining haplotype phase, which is 'a process for determining the parent from whom alleles—i.e., versions of a gene—are inherited.'"  The opinion further characterizes the invention as:

The written description of the '982 application explains that accurately estimating haplotype phase based on genotype data obtained through sequencing an individual's genome "plays pivotal roles in population and medical genetic studies."  . . .  The '982 application is directed to methods for inferring haplotype phase in a collection of unrelated individuals.  . . .  According to the written description, although high-throughput DNA sequencing methods provide genotype data for individuals, those methods do not provide haplotype information.  . . .  Though difficult, it is possible to infer haplotype phase, even without information about relatives, using statistics based algorithms.  . . .  Prior art methods for performing this analysis include PHASE, fastPHASE, and Beagle.  . . .  These methods involve using, among other things, a hidden Markov model ("HMM"), which is a statistical tool used in various applications to make probabilistic determinations of latent variables.

The opinion then describes embodiments of the claimed methods in further detail but the relevant characterization of these methods are that they involve "abstract mathematical algorithms and mental processes," the basis relied upon by the Examiner and affirmed by the PTAB.  According to the Federal Circuit's opinion, the Examiner and the Board applied the two-step test set forth by the Supreme Court in Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 573 U.S. 208 (2014), in making this determination.  With regard to step 1 of the test, the Examiner and Board determined that all steps recited in claim 1 were "directed to . . . abstract ideas in the form of mathematical concepts, i.e., mathematical relationship, formulas, equations, and calculations" and specifically "an initial step of receiving genotype data, followed by the mathematical operations of building a data structure describing an HMM and randomly modifying at least one imputed haplotype to automatically recompute the HMM's parameters."  Indeed, the Board concluded that claim 1 recited two abstract mental processes, viz., a step of "imputing an initial haplotype phase for each individual in the plurality of individuals based on a statistical model"; this step does not require computer implementation.  The second abstract mental process, on the other hand, does require a computer, "automatically replacing an imputed haplotype phase with a randomly modified haplotype phase when the latter is more likely correct than the former."  The remaining elements in the claim merely recite "generic steps of receiving and storing genotype data in a computer memory, extracting the predicted haplotype phase from the data structure, and storing it in a computer memory."  The Board rejected Stanford's contention that these steps enhanced computer functionality and thus rendered the claim patent-eligible, in analogy to Enfish, LLC v. Microsoft Corp., based on lack of specific disclosure in the specification to support improved computer functionality.  For similar reasons, the Board rejected Stanford's reliance on McRO, Inc. v. Bandai Namco Games America Inc. to satisfy the first prong of the Alice test.

Turning to step two of the Alice analysis, the Board concluded that the claims did not satisfy these requirements either, because the recited steps of receiving, storing, and extracting data were "well-known, routine, and conventional."  Likewise, the Board was not convinced that the specific steps as recited in the claim satisfied this prong, because "although the abstract computational steps 'might be a highly significant discovery in the field of haplotype prediction,' that alone is insufficient to establish patent eligibility."  Completing the patent ineligibility trifecta, the Board relied on Ariosa v. Sequenom for the principle that "the absence of complete preemption does not demonstrate patent eligibility."  This appeal followed.

The Federal Circuit affirmed in an opinion by Judge Reyna joined by Chief Judge Prost and Judge Lourie (the same panel that rendered the earlier decisions; indeed, the appeals were heard jointly).  As in the earlier opinion, the panel here recited the Court's familiar litany of purported obeisance to the Supreme Court's subject matter eligibility jurisprudence.  Here, the basis of the opinion was evident on the face of the claims:  as the opinion states, "the claims are directed to the use of mathematical calculations and statistical modeling" and "[c]ourts have long held that mathematical algorithms for performing calculations, without more, are patent ineligible under § 101," citing Parker v. Flook, 437 U.S. 584, 595 (1978); Gottschalk v. Benson, 409 U.S. 63, 71–72 (1972); and (for good measure and to blunt the Court's frank obeisance) In re Schrader, 22 F.3d 290, 294 (Fed. Cir. 1994).  After reciting elements of claim 1, the panel opined that "[t]hese generic steps of implementing and processing calculations with a regular computer do not change the character of claim 1 from an abstract idea into a practical application."  According to the panel, the only application of these algorithms in claim 1 was storage of the haplotype phase.  Neither did the panel find that the claims recited any improvement in performance of a generic computer (although being aided in this regard by Stanford's failure to raise this argument before the Board).  The opinion nicely illustrates the difference between claims to methods wherein the outcome of the method is improved (which is not otherwise patent-eligible) and claims to methods that improve performance of a general purpose computer per se (which can be patent eligible), citing McRO, Enfish, Finjan, Inc. v. Blue Coat Sys., Inc., and CardioNet, LLC v. InfoBionic, Inc.  The distinction with the former is that there "the improvement in computational accuracy alleged here does not qualify as an improvement to a technological process; rather, it is merely an enhancement to the abstract mathematical calculation of haplotype phase itself," citing Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC and Synopsys, Inc. v. Mentor Graphics Corp.

With regard to step 2 of the Alice test (which the panel asserts "is like a lifeline: it can rescue and save a claim that has been deemed, at step one, directed to non-statutory subject matter"), the Court concluded that the claims are not saved in this instance.  The reasons:

• "We find no inventive concept that would warrant treating the use of the claimed algorithms and mathematical calculations as patent eligible subject matter.

• Further, the recited steps of receiving, extracting, and storing data amount to well known, routine, and conventional steps taken when executing a mathematical algorithm on a regular computer.

• Using a conventional computer to receive, extract, and store information does not transform an abstract idea into patent eligible subject matter."

And as has frequently been the case, applicant's assertions in the specification, intended to provide a broad scope to the claims, provide their Achille's heal, wherein the panel asserted that "[t]he written description further illustrates that the mathematical steps performed and the data received are conventional and well understood in the prior art."  The Federal Circuit also states that "it is hard to imagine a patent claim that recites hardware limitations in more generic terms than the terms employed by claim 1."

Finally, the panel rejected Stanford's argument that the claims recite an ordered combination of steps sufficient to impart patent eligibility.  On the contrary, in the panel's view ("We are not persuaded"),

The Board correctly determined that claim 1 simply appends the abstract calculations to the well-understood, routine, and conventional steps of receiving and storing data in a computer memory and extracting a predicted haplotype.  The application of those elements results in the mathematical analysis itself, and therefore the claimed method subsists in "the basic tools of scientific and technological work.  . . .  Such basic tools are not patent eligible.

And applying the judicial coup de gras, regarding Stanford's argument that this ordered combination is novel, the panel asserts "[n]or is novelty the touchstone of patent eligibility.  That a specific or different combination of mathematical steps yields more accurate haplotype predictions than previously achievable under the prior art is not enough to transform the abstract idea in claim 1 into a patent eligible application," citing SAP Am., Inc. v. InvestPic, LLC.

As with this panel's first opinion on this technology, nothing about this decision is surprising.  U.S. patent law has come to a pretty pass when seemingly the only hope is that the Supreme Court will grant certiorari in American Axle & Mfg. v. Neapco Holdings to perhaps straighten out the illogical morass that is subject matter eligibility at the Federal Circuit.  But it is where we are.

For comparison, the representative claim recited in the first opinion reads as follows:

1.  A method for resolving haplotype phase, comprising:
    receiving allele data describing allele information regarding genotypes for a family comprising at least a mother, a father, and at least two children of the mother and the father, where the genotypes for the family contain single nucleotide variants and storing the allele data on a computer system comprising a processor and a memory;
    receiving pedigree data for the family describing information regarding a pedigree for the family and storing the pedigree data on a computer system comprising a processor and a memory;
    determining an inheritance state for the allele information described in the allele data based on identity between single nucleotide variants contained in the genotypes for the family using a Hidden Markov Model having hidden states implemented on a computer system comprising a processor and a memory,
        wherein the hidden states comprise inheritance states, a compression fixed error state, and a[ Mendelian inheritance error]-rich fixed error state,
        wherein the inheritance states are maternal identical, paternal identical, identical, and non-identical;
    receiving transition probability data describing transition probabilities for inheritance states and storing the transition probability data on a computer system comprising a processor and a memory;
    receiving population linkage disequilibrium data and storing the population disequilibrium data on a computer system comprising a processor and a memory;
    determining a haplotype phase for at least one member of the family based on the pedigree data for the family, the inheritance state for the information described in the allele data, the transition probability data, and the population linkage disequilibrium data using a computer system comprising a processor and a memory;
    storing the haplotype phase for at least one member of the family using a computer system comprising a processor and a memory; and
    providing the stored haplotype phase for at least one member of the family in response to a request using a computer system comprising a processor and a memory.

In re Board of Trustees of the Leland Stanford Junior University (Fed. Cir. 2021)
Panel: Chief Judge Prost and Circuit Judges Lourie and Reyna
Opinion by Circuit Judge Reyna

Senators Tillis and Cotton Propose Sequenced Examination Approach

By Donald Zuhn --

On Monday, Senators Thom Tillis (R-NC) and Tom Cotton (R-AR) sent a letter to Drew Hirshfeld, the Commissioner for Patents at the U.S. Patent and Trademark Office, to propose that the USPTO conduct a pilot program on a sequenced approach to patent examination.  In their letter, Sen. Tillis (at right), the Ranking Member of the Senate Subcommittee on Intellectual Property, and Sen. Cotton (at left), a member of the Subcommittee on Intellectual Property, suggest that a sequenced approach to patent examination, in which applications are first examined for compliance with 35 U.S.C. §§ 102, 103, and 112, and then for compliance with 35 U.S.C. § 101, could "avoid unnecessary and inefficient rejections on grounds of patent eligibility."

The Senators express their concern that "by conducting an eligibility analysis as per current practice, patent examiners may be issuing Section 101 rejections without the benefit of addressing prior art, clarity and enablement issues that may well inform the examiner that the claim is eligible under Section 101."  While stating that examination under §§ 102, 103, and 112 is based on "well-developed and objective criteria under the law," the Senators assert that "current patent eligibility jurisprudence lacks the clarity, consistency, and objectiveness the other grounds of patentability possess."  They argue that:

By conducting an inherently vague and subjective analysis of eligibility early in the examination process, examiners may be spending inordinate time on Section 101 at a time when it is difficult or impossible to conduct a meaningful examination under Section 101, at the expense of the more rigorous analysis and precise and thoughtful work that can be conducted at the outset of examination under Sections 102, 103, and 112.

In view of discussions they have had with USPTO officials, the Senators note that by using a sequenced examination approach, Applicants "rarely receive[] a rejection on grounds of patent eligibility," because "by bringing claims into compliance with Sections 102, 103, and 112, examiners inevitably brought the claims into compliance with Section 101 as well."

The Senators provide three reasons why a sequenced approach to examination may improve the examination process.  First, they argue that a sequenced approach would "focus[] initial examination on the objective areas of patentability as opposed to the abstract, vague, and subjective questions of eligibility, leaving eligibility examination to a point in the process where it can be conducted much more effectively."  Second, a sequenced approach would "improve[] efficiency by avoiding the waste of valuable examination and applicant time on vague questions of patent eligibility as a threshold matter."  And finally, the Senators argue that a sequenced approach would "lead[] to stronger, more reliable, and higher quality patents by focusing first on the more rigorous and easy to identify standards of patentability."

The Senators conclude their letter by requesting that the Commissioner initiate a pilot program to determine whether a sequenced approach would be more effective and produce higher quality patents than the traditional compact examination approach.  They also ask the Commissioner to let them know by April 20, 2021 whether such a program will be implemented, and if the USPTO elects not to implement such a program, "provide us with a detailed explanation of why you will not conduct the requested pilot program."

On the Patent Eligibility of Information Processing

By Michael Borella --

A computer does just three things:  receives information in the form of bits, transforms this information, and provides output based on the information as transformed.  The receiving may take place by way of various types of input modalities, such as keyboards, touchscreens, mice, audio microphones, video cameras, network interfaces, sensors, and so on.  The transforming may involve a literally infinite number of possibilities in the form of algorithms.  The output may also take on various modalities, including images displayed on a screen, audio, storage to volatile or non-volatile memory, and transmission by way of network interfaces, just to name a few.

Given the fundamental nature of information processing in computing technology, it would be natural to assume that such endeavors would be protected by patent law -- after all, the stated constitutional goal of such law is to "promote the progress of science and useful arts."  But due to how the Federal Circuit has interpreted recent Supreme Court decisions, a ground-breaking information processing invention can be unpatentable even if it is novel and non-obvious.  More than a philosophical or legal concern, the Federal Circuit's narrow (and many would agree, inconsistent) view on what subject matter can be patented causes business and economic uncertainty across the many industries in which computers have become ubiquitous.

Differentiating between which types of information processing are eligible and which are not is fraught with danger, and even the most experienced patent attorneys (not to mention judges) can find this area of the law perplexing.  As a consequence, many entities are struggling to obtain patents on inventions that involve information processing.

This article dips into these waters by exploring the origins of this current bias against information processing, and attempts to stake out a few areas in which claims to information processing may find more or less success.  Such an understanding, in turn, provides practical considerations for patenting decisions as well as prosecution and litigation strategies.  Nonetheless, more clarity is ultimately needed from the courts.

At the outset, it is undisputed that information itself is not patentable.  Information per se, in bits, writing, or some other form, is not a process, machine, article of manufacture, or composition of matter, the four statutory categories set forth in 35 U.S.C. § 101.  See Digitech Image Techs. v. Electronics for Imaging (Fed. Cir 2014).  Further, attempts to make the mere storage of data on a tangible medium statutory will fail due to printed matter doctrine.  See C R Bard Inc. v. AngioDynamics, Inc. (Fed. Cir. 2020).  Thus, trying to obtain a patent on a CDROM containing a performance of Beethoven's 5th Symphony will come to naught no matter how you claim the representation of the information encoding the performance.

Information processing is different.  It involves steps taken by a computer (or other devices or maybe even humans) to obtain, transform, and provide information.  Information processing inventions are not directed to static information -- they are drawn to using and changing information.

Nonetheless, ever since Alice Corp. v. CLS Bank Int'l, it has become increasingly difficult to patent information processing claims, no matter how innovative or useful.  In that case, the Supreme Court brought the ill-defined notion of abstract ideas to the fore, which has been used extensively by the Federal Circuit, district courts, and the USPTO to find information processing claims ineligible, even if those claims are otherwise statutory.

A case that typifies the current difficulties information processing inventions can face is Electric Power Group, LLC v. Alstom S.A. (Fed. Cir. 2016).  The claims therein recited, albeit in a rather broad fashion, (i) gathering streams of data related to sensor measurements of a power grid, (ii) from this data, determining events occurring in the power grid, and (iii) displaying visualizations of the events.  Here, the events could be faults in the power grid that could cause the power grid to fail.  Despite this sort of invention seemingly being of the "science and useful arts", the Federal Circuit knocked down the claims under § 101.  The Court wrote "[t]he focus of the asserted claims . . . is on collecting information, analyzing it, and displaying certain results of the collection and analysis."  This, according to the Court, directly leads to the conclusion that the claims are focused on an abstract idea.

The justification for this conclusion was broken down to mirror the three functional parts of the claim.  Regarding the gathering steps, the Court cited to precedent in Digitech, as well as the pre-Alice case CyberSource Corp. v. Retail Decisions, Inc. (Fed. Cir. 2011), for the notion that gathering information is an abstract idea.  Particularly, this gathering was deemed to be an abstract mental process even when carried out by computer.  CyberSource cites to a line of cases reaching back to Gottschalk v. Benson for the notion that gathering data for mathematical calculations has little -- if any -- patentable weight under § 101.  Regarding the data analysis steps, the Court once again viewed these as abstract mental processes, and cited to support for such a conclusion going back to Benson.  Finally, regarding the displaying steps, the Court cited to Ultramercial, Inc. v. Hulu, LLC (Fed. Cir. 2014), where displaying an advertisement was considered to be an abstract idea.  The Court wrote:  "we have recognized that merely presenting the results of abstract processes of collecting and analyzing information, without more . . . is abstract as an ancillary part of such collection and analysis."  What you are hearing is an echo of the so-called post-solution activity from Parker v. Flook.

The Court also took issue with the claims' lack of specificity, noting that "rather than claiming some specific way of enabling a computer to monitor data from multiple sources across an electric power grid, [the claims] purport to monopolize every potential solution to the problem—any way of effectively monitoring multiple sources on a power grid."  In other words, the claims recited an outcome rather than specific steps to achieve that outcome.

So the issue seems to be not only the information processing nature of the claims, but also that the processing allegedly could be carried out mentally, included mathematical calculations, and lacked specificity.  We also know from related cases that the type of information can matter.  For example, processing of financial, business, or social information can be viewed as abstract.  See, e.g., Intellectual Ventures I LLC v. Capital One Bank (Fed. Cir. 2015); Versata Dev. Group, Inc. v. SAP Am., Inc. (Fed. Cir. 2015); Voter Verified, Inc. v. Election Systems & Software, LLC (Fed. Cir. 2018).

But information processing inventions are not doomed to fall under the § 101 inquiry.  Notably, the claims of McRO, Inc. v. Bandai Namco Games America Inc. (Fed. Cir. 2016), involved obtaining rules and phoneme timing, generating morph weights based on the rules and phoneme timing, and then producing lip synchronization and facial expressions in animated characters from the morph weights.  Like Electric Power Group, these claims involve gathering, transforming, and displaying information.  Nonetheless, the Federal Circuit found the claims to not be abstract.

Why the different outcome?  Several reasons, including the claims being more specific and not directed to a mental, financial, or business process.  The Court looked to the specification for the understanding that a goal of this invention was to eliminate the subjectivity associated with human-rendered animations.  Thus, the invention was more closely tied to a computer than that of Electric Power Group.

The dichotomy of these two cases represents how patent eligibility can be twisted like the proverbial nose of wax.  In Electric Power Group, the Court viewed the claims in a deconstructionist manner -- looking at the invention as a series of discrete pieces and finding each of them abstract.  In McRO, the focus was on what the claim as a whole provided -- the problem that it solved.  The reasoning of Electric Power Group certainly could have been used to justify the opposite outcome in McRO.  But the latter's claims were just different enough to be found eligible.

Sometimes information processing inventions can be made patent-eligible by having their output control another device or physical process.  The classic case of this is Diamond v. Diehr, the claims of which, at their core, involve a computer receiving temperature readings, the computer performing calculations based on these readings, and the computer causing a rubber press to change state when the calculations take on a certain value.  But not all technologies lend themselves to being claimed similarly to Diehr.

Indeed, there are many computerized inventions that are similar to McRO, in that they solve a specific problem in a specific manner without affecting another device -- i.e., the processing is all "in the box".  And yet, they are still vulnerable to subject matter eligibility challenges in the USPTO and the courts.  As one example, a virus scanning application may involve no more than gathering data (network traffic and/or files), analyzing that data (determining if it matches a virus signature), and providing output (an indication of a detected virus or the lack thereof).  As another example, a machine learning application may involve no more than gathering data (training sets), analyzing that data (training the model), and providing output (the trained model).  As a further example, a computer-aided design application may involve no more than gathering data (parameters of the design), analyzing that data (formulating the design), and providing output (the final design).

In each of these cases, it may not be viable to claim the invention in a way that is directly analogous to Diehr, because doing so would lead to a problem with divided infringement.  For instance, the entity that makes the computer-aided design application is unlikely to also use the designs to create physical products.

For at least these reasons, there is a need for the Federal Circuit to elucidate and define what factors are more or less likely to make an information processing inventions patent-eligible.[1]  The current take on § 101 puts too much flexibility in the hands of judges and examiners; particularly, at what level they consider the claims, how much emphasis they put on the specification, and the role that prior art plays.  Patentees, especially small- and medium-sized companies with limited budgets, need to make smart decisions with respect to their investments in patents.  Without clarity, the risks and rewards associated with such investments will remain difficult to quantify.

[1] One approach that we have outlined before is to, when possible, draft claims that are specific, solve a technical problem in a technical fashion, and recite features not in the prior art. 

In re Board of Trustees of the Leland Stanford Junior University (Fed. Cir. 2021)

By Kevin E. Noonan --

The Federal Circuit affirmed a decision by the U.S. Patent and Trademark Office Patent Trial and Appeal Board (PTAB) rejecting claims for failure to satisfy the subject matter eligibility standard under 35 U.S.C. § 101, in ex parte examination of claims to methods and related computing systems for genetic haplotyping in In re Board of Trustees of the Leland Stanford Junior University.

The claimed method is recited in representative claim 1:

1.  A method for resolving haplotype phase, comprising:
    receiving allele data describing allele information regarding genotypes for a family comprising at least a mother, a father, and at least two children of the mother and the father, where the genotypes for the family contain single nucleotide variants and storing the allele data on a computer system comprising a processor and a memory;
    receiving pedigree data for the family describing information regarding a pedigree for the family and storing the pedigree data on a computer system comprising a processor and a memory;
    determining an inheritance state for the allele information described in the allele data based on identity between single nucleotide variants contained in the genotypes for the family using a Hidden Markov Model having hidden states implemented on a computer system comprising a processor and a memory,
        wherein the hidden states comprise inheritance states, a compression fixed error state, and a[ Mendelian inheritance error]- rich fixed error state,
        wherein the inheritance states are maternal identical, paternal identical, identical, and non-identical;
    receiving transition probability data describing transition probabilities for inheritance states and storing the transition probability data on a computer system comprising a processor and a memory;
    receiving population linkage disequilibrium data and storing the population disequilibrium data on a computer system comprising a processor and a memory;
    determining a haplotype phase for at least one member of the family based on the pedigree data for the family, the inheritance state for the information described in the allele data, the transition probability data, and the population linkage disequilibrium data using a computer system comprising a processor and a memory;
    storing the haplotype phase for at least one member of the family using a computer system comprising a processor and a memory; and
    providing the stored haplotype phase for at least one member of the family in response to a request using a computer system comprising a processor and a memory.

As explained in the opinion, the claimed method involves determining haplotype phase, i.e., "a process for determining the parent from whom alleles—i.e., versions of a gene—are inherited."  The specification describes using genotype data and pedigree data and applying a known prior art method as disclosed in Roach et al., Analysis of Genetic Inheritance in a Family Quartet by Whole Genome Sequencing, 328 SCIENCE 636 (2010).  This method uses a statistical tool termed a hidden Markov model for these predictions.  The specification discloses that prior art methods were inadequate and that the disclosed methods cure such shortcomings, increasing the number of possible prediction to 97.9% by "factoring additional data into the analysis."  These additional data include linkage disequilibrium data (a measure of reduction of expected crossing over frequency events during meiosis produced, inter alia, by marker genes being adjacent to one another on a chromosome) obtained from an art-available database of single nucleotide polymorphisms, as well as "transition probability date," wherein "transition probabilities are set depending on 'the expected number of state transitions and the total number of allele assortments in the pedigree.'"

The Examiner, affirmed by the PTAB, rejected the claims based on their being directed to "abstract mathematical algorithms and mental processes."  According to the Federal Circuit's opinion, the Examiner and the Board applied the two-step test set forth by the Supreme Court in Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 573 U.S. 208 (2014), in making this determination.  With regard to step 1 of the test, the Examiner and Board determined that all steps recited in claim 1 were "directed to" either "mental steps of receiving, storing, or providing information[ or ]mathematical concepts"; the rationale is that the steps recited receiving or analyzing information, "which humans could process in their minds," or mathematical algorithms.  (It would be doctrinally beneficial for both the USPTO and the Federal Circuit to abandon the charade that the types of processes recited in claims related to computer implementation could be performed in the human mind; surely there must be a better rationale for the question-begging conclusion than this!)  Further, the Board also held that these mathematical algorithms, steps, and processes were not "integrated into a practical application" (which might be a surprise to patentees and patients who benefit from the application of the claimed methods).  The distinction drawn by the Board was that the method does not improve computer technology, citing Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016), but rather provides an improved mathematical analysis (which results in a seemingly unappreciated practical application in genetic analysis).

Completing its Alice analysis, the Board concluded that the claims did not satisfy the requirements of step 2 either, insofar as they did not "include additional limitations that, when taken individually or as a whole, provide an inventive concept that transforms the abstract idea into patent eligible subject matter" (an analysis that illustrates one again the wisdom Congress demonstrated generations ago in substituting obviousness for "inventive concept").  The recited steps "did not go beyond the well-known, routine, and conventional" according to the Board.  And in the philosophical coup de grace stemming from dicta in Justice Thomas's opinion in AMP v Myriad Genetics, the Board stated that the claimed invention was patent-ineligible "although the claims may provide a valuable contribution to science."

Certain other claims, which recited as an affirmative step "providing the drug for treatment" did not transform the genetic analysis claims to patent-eligible ones for failing to satisfy the "five specificities" recited by Judge Lourie in Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals International Ltd., 887 F.3d 1117 (Fed. Cir. 2018), because "they are not directed to a specific method of treatment, do not identify specific patients, do not recite a specific compound, do not prescribe particular doses, and do not identify the resulting outcome."

The Federal Circuit affirmed (not surprisingly, under the circumstances) in an opinion by Judge Reyna joined by Chief Judge Prost and Judge Lourie.  The opinion recited the Court's familiar litany of purported obeisance to the Supreme Court's subject matter eligibility jurisprudence, down to Gottschalk v. Benson, 409 U.S. 63 (1972), and Parker v. Flook, 437 U.S. 584 (1978), with regard to claims relying on mathematical algorithms.  After parsing claim 1 according to the context of its analytical steps, the Federal Circuit held that the Board was correct in finding this claim patent-ineligible because "Claim 1 recites no concrete application for the haplotype phase beyond storing it and providing it upon request."  The Court's response to Stanford's argument that "the specific application of the steps is novel and enables scientists to ascertain more haplotype information than was previously possible" was that "we are not persuaded" even if they were to accept Stanford's argument, nor was this panel convinced even if the invention provides the claimed advance in genetic analysis that the process is "an improved technological process" (which raises the question of the wisdom of denying patent eligibility to an invention that provides an improvement in genetic analysis that does not require a concommittant improvement in the technological process).

Having found no legal (not logical) fault in the Board's determinations regarding step 1 of the Alice test, the Court turned to step 2, finding no error in the Board's determination regarding this step, because "Claim 1 recites no steps that practically apply the claimed mathematical algorithm; instead, claim 1 ends at storing the haplotype phase and 'providing' it 'in response to a request.'"  This rhetorical formulation evokes Justice Breyer's objection to the claims Mayo Collaborative Services v. Prometheus Laboratories, Inc. (2012), which curiously was not cited in the opinion.  This is perhaps because the clear distinction with the case before the Court is that everything except the correlation recited in the Mayo case was known in the prior art.  And the failure to recite "a specialized computer or a computer with a specialized memory or processor" in claim 1 here was enough to confirm patent ineligibility, analogous to the use of known detection methods that the Court used to sustain invalidation of claims directed to detecting cell-free fetal DNA in maternal blood in Ariosa v. Sequenom.  The opinion states:

The written description makes clear that the mathematical steps performed, and the types of data received, as claimed, are conventional and well understood in the prior art.  . . .  Thus, taken individually, the limitations of claim 1 fail to transform the claims into a patent eligible application [emphasis added].

Illustrating that a willingness to apply Alice seems to include a similar willingness to ignore Diamond v. Diehr (1981).  To Stanford's argument that the claim recites an ordered combination of elements, it is enough for this panel to conclude that because "[t]he alleged innovation accomplished in claim 1 is in the mathematical analysis itself, namely, in the receipt of data, executing mathematical calculations, and storing the resulting data, [t]he alleged innovation therefore subsists in 'the basic tools of scientific and technological work.'"

And none of the limitations recited in any of the dependent claims in the application, including those directed towards drug treatment, rise (in this panel's view) above the characterization of the claims "do[ing] nothing more than recite the haplotype phase algorithm and instruct, 'apply it,' as the Supreme Court has prohibited," citing Alice instead of Mayo.

Nothing about this decision is surprising; fortunately it is also non-precedential.  But that very fact should be enough to illustrate the importance of the Supreme Court granting certiorari in American Axle & Mfg. v. Neapco Holdings to perhaps straighten out the illogical morass that is subject matter eligibility at the Federal Circuit.

In re Board of Trustees of the Leland Stanford Junior University (Fed. Cir. 2021)
Panel: Chief Judge Prost and Circuit Judges Lourie and Reyna
Opinion by Circuit Judge Reyna

Senators Request USPTO to Provide Information on Subject Matter Eligibility

By Kevin E. Noonan --

Senator Thom Tillis (R-NC) has been busy letter writing lately (see "Sen. Tillis Sends Letter to President Regarding Next USPTO Director"), and spent a good portion of 2019 being busy trying to convince his colleagues in Congress to address the morass over subject matter eligibility that has arisen in the wake of the Supreme Court's Alice Corp. v. CLS Bank International and Mayo Collaborative Services Inc. v. Prometheus Laboratories, Inc. decisions (as well as Association for Molecular Pathology v. Myriad Genetics, Inc.) (see "The Zombie Apocalypse of Patent Eligibility Reform and a Possible Escape Route").

Last week, Senator Tillis' latest literary foray took the form of a letter to the Hon. Drew Hirschfeld, current Commissioner of Patents and Acting Director of the U.S. Patent and Trademark Office.  In it, the Senator asks the USPTO to "publish a request for information on the current state of patent eligibility jurisprudence in the United States, evaluate the responses, and provide us with a detailed summary of your finding, particularly with regard to "how the current jurisprudence has adversely impacted investment and innovation in critical technologies like quantum computing, artificial intelligence, precision medicine, diagnostic methods, and pharmaceutical treatments."  The letter illustrates and justifies the request by reciting the "lack of consistency and clarity in our nation's patent eligibility laws."  These circumstances have "had a dramatic negative impact on investment, research, and innovation," not only discouraged investment in critical emerging technologies, but also led the courts to foreclose protection entirely for certain important inventions in the diagnostics, biopharmaceutical, and life sciences industries."  Of course, the letter references the struggle to "contain and treat the worst global pandemic in more than one hundred years" and professes astonishment that current jurisprudence "makes it virtually impossible to obtain many patents in the diagnostic methods and precision medicine sectors."  The letter asks for the report to be delivered to Congress no later than March 2022.

Sen. Tillis was joined in this letter by Senator Chris Coons (D-DE), who was his partner in earlier efforts in Congress (see "Senators Tillis and Coons Release Statement on Recent Patent Reform Hearings"), as well as Senators Tom Cotton (R-AR) and Mazie Hirono (D-HI), illustrating bipartisan support for Sen. Tillis' request.

Of course, while appropriate for Congress to ask these questions of the (acting) head of the administrative agency charged with executing the patent laws, the courts (specifically the Federal Circuit) have made it clear that the USPTO's views are not binding on their interpretation of subject matter eligibility standards (see "Cleveland Clinic Foundation v. True Health Diagnostics LLC").  Nevertheless, the bipartisan nature of the letter and the identities of the signatories suggests Congressional recognition of the problem that current jurisprudence has created over subject matter eligibility and continuing efforts in Congress to address them.  While legislation is unlikely this year or perhaps even in this Congress, it remains the case that "a small group of thoughtful, committed, citizens can change the world" because "it is the only thing that ever has."  With any luck, that sentiment applies even more strongly when those citizens are Senators.

Chicago Patent Attorneys File Supreme Court Amicus Brief in American Axle

Chicago patent attorneys Kevin E. Noonan, Michael S. Borella, Aaron V. Gin, and Adnan M. "Eddie" Obissi have filed an amicus brief supporting Supreme Court review of the Federal Circuit's decision to invalidate claims of American Axle's U.S. Patent No. 7,774,911 under 35 U.S.C § 101.  The Attorneys (who are all Patent Docs authors or contributors) argue that the Federal Circuit's 6-6 split on whether to rehear the case en banc is compelling evidence that the court is severely divided in how it applies the patent-eligibility analysis of Alice Corp. v. CLS Bank Int'l.

In finding American Axle's method of manufacturing vibration-damping driveline shafts to be directed to no more than an unclaimed law of physics, the Federal Circuit has misapplied the Supreme Court's Alice test, and in doing so, has called into question the eligibility of any invention, the Attorneys write.  They walk through examples of how the Federal Circuit's application of the test would have rendered iconic historical inventions such as the telephone and light bulb invalid under § 101, whereas proper application of the test would have had the opposite outcome.

The Attorneys urge the Supreme Court to take up this case because the lower courts and the U.S. Patent and Trademark Office desperately need its guidance.  The justices are scheduled to confer on February 19, and the certiorari decision should follow shortly after that.

The brief can be found on the Supreme Court's American Axle docket.

Personalized Media Communications, LLC v. Apple, Inc. (E.D. Tex. 2021)

Signal Processing Claims for Decrypting Encrypted Information Found Patent Eligible

By James Korenchan --

Last week, the U.S. District Court for the Eastern District of Texas, Marshall Division ruled that Defendant Apple, Inc. (hereinafter "Apple") failed to show that claims related to signal processing are patent ineligible under 35 U.S.C. § 101.

Plaintiff Personalized Media Communications, LLC (hereinafter "PMC") asserted that Apple infringed PMC's U.S. Patent. No. 8,191,091 (the '091 patent).  Apple had moved to dismiss all claims of the '091 patent as directed to ineligible subject matter.  The Court denied this motion to dismiss, finding that the '091 patent claims to be patent-eligible.  Apple then moved for summary judgement that all the claims of the '091 patent are invalid under § 101.  (Apple's motion also moved for relief under § 101 with respect to PMC's U.S. Patent Nos. 8,559,635 and 7,752,649, but only the '091 patent was addressed by the Court in the present decision due to it being the only patent set for trial at the time.)

The '091 patent includes four independent claims, including claim 13, which Apple asserted as being representative of all of the claims of the '091 patent.  The Court's decision thus addressed only claim 13.

Claim 13 is as follows:

13.  A method of decrypting programming at a receiver station, said method comprising the steps of:
    receiving an encrypted digital information transmission including encrypted information;
    detecting in said encrypted digital information transmission the presence of an instruct-to-enable signal;
    passing said instruct-to-enable signal to a processor;
    determining a fashion in which said receiver station locates a first decryption key by processing said instruct-to-enable signal;
    locating said first decryption key based on said step of determining;
    decrypting said encrypted information using said first decryption key; and
    outputting said programming based on said step of decrypting.

The '091 patent generally aims to provide an integrated multimedia system in which a "receiver station" can, among other things, combine various types of programming (e.g., television, radio, computer communications), generate user-specific information related to such programming, identify and block those who pirate programming, and -- in the case of the invention of claim 13 -- identify, and then decrypt, programming and instruction signals that are encrypted.

The Court began its analysis by determining whether claim 13 as a whole is directed to an abstract idea.  In its motion for summary judgement and in the previous motion to dismiss, Apple argued that the '091 patent is directed to the abstract idea of "using an instruct-to-enable signal to decrypt (convert from unintelligible to intelligible) information," and asserted that claim 13 claim "focuses on the abstract idea of decrypting encrypted information, rather than the physical system or the specific software that processes and decrypts the information."  Apple argued that this alleged abstract idea is akin to the "manipulation of data" and other abstract ideas that the Federal Circuit found to be patent ineligible in the likes of Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307 (Fed. Cir. 2016), and Digitech Image Techs., LLC v. Elecs. For Imaging, Inc., 758 F.3d 1344, 1351 (Fed. Cir. 2014).  Additionally, Apple argued that all but the decrypting and outputting steps were known in the art before the priority date of the '091 patent.

Apple also noted that the Federal Circuit previously affirmed invalidity of other PMC patents that are "closely related" to the '091 patent under § 101.  Lastly, Apple cited to a deposition of a named inventor in an attempt to demonstrate that the concepts of encryption and decryption were well-known before the '091 patent and fail to render the claims eligible.

In response to Apple's motion to dismiss, the Court had concluded that that the claims of the '091 patent are directed to methods of using an instruct-to-enable signal included in digital information to determine a fashion in which a station locates a decryption key that can decrypt encrypted information.  The Court had also concluded that claim 13 "describes an improvement to the delivery of 'instruct-to-enable signals' and a technical way to decrypt transmitted information.  In support of this improvement, the Court cited to the specification of the '091 patent:

[T]he '091 patent says that transmitting the "instruct-to-enable signal" in the "information transmission" improves the reliability of the signal's delivery.  The patent states the improved delivery process increases the number of functions the "instruct-to-enable signal" can control because the signal can "occur at precise times in programming and can synchronize the operation of receiver station apparatus to the timing of programming transmission."  Second, the claim requires a "receiver station" that is able to "locate[] a first decryption key" by processing the "instruct-to-enable signal."  The specification shows that decrypting "digital programming" "based on" the "control signal" can be a technical solution for causing a receiving device to decrypt a transmission.  [Citations omitted.]

Here, PMC indicated that it agreed with the Court's previous analysis, and the Court indicated that Apple provided no contrary evidence.

The Court nevertheless proceeded with its § 101 analysis, referring yet again to its previous finding that, even if the claims were directed to an abstract idea, additional elements in the claims would transform them into patent-eligible applications of that idea:

Claim 13 of the '091 Patent is a patent-eligible application at least because of its arrangement of steps.  "[A]n inventive concept can be found in the nonconventional and non-generic arrangement of known, conventional pieces."  Bascom Glob. Internet Servs. v. AT&T Mobility LLC, Case No. 2015-1763, 2016 WL 3514158, at *6 (Fed. Cir. Jun. 27, 2016).  Although some of the pieces in the '091 Patent are perhaps known and conventional—such as encryption and decryption—the '091 Patent arranges them in a way that is sufficient to confer an inventive concept, including "determining a fashion in which [a] receiver station locates a first decryption key by processing [an] instruct-to-enable signal" and "locating said first decryption key based on said step of determining."  [Citations omitted.]

The Court thus found that the '091 patent is directed to patent eligible subject matter.

Personalized Media Communications, LLC v. Apple, Inc. (E.D. Tex. 2021)
Report & Recommendation by Magistrate Judge Payne

Top Four Stories of 2020

By Donald Zuhn –-

After reflecting upon the events of the past twelve months, Patent Docs presents its 14th annual list of top patent stories.  For 2020, we identified eight stories that were covered on Patent Docs last year that we believe had (or are likely to have) a significant impact on patent practitioners and applicants.  On Monday, we counted down stories #8 to #5, and today we count down the top four stories of 2020.  As with our other lists (2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012, 2011, 2010, 2009, 2008, and 2007), links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look.  As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with anything we included, please let us know.  In addition, we will be offering a live webinar on the "Top Patent Law Stories of 2020" on January 20, 2020 from 10:00 am to 11:15 am (CT).  Details regarding the webinar, which will focus on a few of the most important stories on this year's list, can be found here.

4.  Arthrex and Other PTAB Developments

In October, the Supreme Court granted petitions for a writ of certiorari to review the Federal Circuit's decision in Arthrex, Inc. v. Smith & Nephew, Inc., in which the Court of Appeals determined that the manner in which administrative patent judges were appointed to the Patent Trial and Appeal Board violated the Appointments Clause of the Constitution (Art. II, sec. 2, cl. 2).  A decision in the case is likely to be issued by the Supreme Court this June, so it is quite possible that Arthrex will make our 2021 list.

In addition to Arthrex, there were several other developments involving the PTAB that occurred in 2020.  In Facebook, Inc. v. Windy City Innovations, LLC, Facebook tried to join its own IPR to attack the claims asserted against it, which worked before the PTAB, but not before the Federal Circuit, which determined that joinder was only permitted for other parties who were seeking review of the same issues, and not for the same party seeking to change the scope of the review.  In Bozeman Financial LLC v. Federal Reserve Bank, the Federal Circuit held that the twelve regional Federal Reserve Banks, which sought to invalidate two Bozeman Financial patents in covered business method (CBM) review proceedings, are "persons" under the AIA, and therefore entitled to seek PTAB review.  In Argentum Pharmaceuticals LLC v. Novartis Pharmaceuticals Corp., Pfizer Inc. v. Chugai Pharmaceuticals Co., and Adidas AG v. Nike, Inc., the Federal Circuit continued its explication of the standing issue for unsuccessful petitioners in inter partes reviews.  In Amneal Pharmaceuticals LLC v. Almirall, LLC, the Federal Circuit determined that attorney's fees and an exceptional case determination were not available for fees and costs incurred when a patent owner defends an inter partes review challenge before the PTAB.  And in Uniloc 2017 LLC v. Hulu, LLC, the Federal Circuit found that the PTAB may consider patent eligibility under 35 U.S.C. § 101 for substitute claims.

For information regarding this and other related topics, please see:

• "Supreme Court to Consider Constitutional Propriety of Appointment of PTAB Judges," October 13, 2020
• "Snyders Heart Valve LLC v. St. Jude Medical, LLC (Fed. Cir. 2020)," September 9, 2020
• "USPTO Initiates Fast-Track Appeals Pilot Program," August 11, 2020
• "Uniloc 2017 LLC v. Hulu, LLC (Fed. Cir. 2020)," July 26, 2020
• "Arthrex Files Certiorari Petition in Arthrex Case, July 19, 2020
• "Arthrex Files Certiorari Petition in Arthrex Case," July 14, 2020
• "U.S. Government Petitions for Certiorari in Arthrex Case," July 13, 2020
• "Smith & Nephew File Certiorari Petition in Arthrex Case," July 12, 2020
• "In re Boloro Global Ltd. (Fed. Cir. 2020)," July 9, 2020
• "Adidas AG v. Nike, Inc. (Fed. Cir. 2020)," June 28, 2020
• "Supreme Court Takes Pass on Considering IPR Constitutionality," June 24, 2020
• "Amneal Pharmaceuticals LLC v. Almirall, LLC (Fed. Cir. 2020)," June 8, 2020
• "Pfizer Inc. v. Chugai Pharmaceuticals Co. (Fed. Cir. 2020)," May 5, 2020
• "Argentum Pharmaceuticals LLC v. Novartis Pharmaceuticals Corp. (Fed. Cir. 2020)," May 3, 2020
• "Thryv, Inc. v. Click-to-Call Technologies, LP (2020)," April 20, 2020
• "Bozeman Financial LLC v. Federal Reserve Bank (Fed. Cir. 2020)," April 15, 2020
• "Nike, Inc. v. Adidas AG (Fed. Cir. 2020)," April 13, 2020
• "Genentech, Inc. v. Iancu (Fed. Cir. 2020)," March 30, 2020
• "Facebook, Inc. v. Windy City Innovations, LLC (Fed. Cir. 2020)," March 22, 2020
• "Naples Roundtable Requests PTAB to Make Decisions Precedential," March 20, 2020

3.  But cf. American Axle & Mfg. v. Neapco Holdings LLC

In contrast with past years, there was some sense that fewer "major" developments occurred with respect to subject matter eligibility in 2020.  For example, stories involving subject matter eligibility took the #2 and #5 spots on our 2019 list; the #2 spot on our 2018 list; the #1, #2, and #4 spots on both our 2016 and 2015 lists; the #1 and #2 spots on our 2014 list; and the #1 spot on our 2013 list.  And yet, our #2 and #3 stories for 2020 involve subject matter eligibility.

Coming in at #3 is American Axle & Manufacturing, Inc. v. Neapco Holdings LLC, where the Federal Circuit issued an interesting (and somewhat troubling) decision on the patent eligibility of claims directed to a method for manufacturing a shaft assembly of a driveline system.  In October 2019, a divided panel of the Federal Circuit affirmed a District Court finding of patent ineligibility.  The Court of Appeals then denied rehearing en banc.  And in August, the Federal Circuit withdrew its original opinion and handed down a substitute opinion in response to the petition for rehearing and rehearing en banc (as the Federal Circuit also did in IIllumina, Inc. v. Ariosa Diagnostics, Inc.).  The Federal Circuit followed this practice in what we wrote at the time was perhaps its most confusing and controversial application of the Supreme Court's subject matter eligibility jurisprudence under Alice Corp. Pty. Ltd. v. CLS Bank International.  Judge Moore, writing in dissent, expressed the view that the Federal Circuit had embarked on a course that resembles "enablement on steroids" and "turns the [Section 101] gatekeeper into a barricade.  In October, the Federal Circuit followed up its substitute opinion by denying American Axle's motion to stay issuance of the Court of Appeals' mandate while awaiting the Supreme Court's decision on American Axle's petition for certiorari.

For information regarding this and other related topics, please see:

• "American Axle & Manufacturing, Inc. v. Neapco Holdings LLC (Fed. Cir. 2020)," October 25, 2020
• "American Axle & Mfg. v. Neapco Holdings LLC (Fed. Cir. 2020)," August 9, 2020

2.  Nothing to See Here -- Congress and Courts "Move Along" on Patent Eligibility

Aside from American Axle & Manufacturing, Inc., however, Congress and the courts appeared to "move along" on subject matter eligibility.  In January, the Supreme Court entered orders denying certiorari in five cases having petitions on subject matter eligibility, including Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC; Hikma Pharmaceuticals USA Inc. v. Vanda Pharmaceuticals Inc.; and Berkheimer v. HP Inc.  One possible conclusion is that the Court is comfortable with the state of diagnostic method patenting (i.e., it no longer exists in the U.S.).  Or perhaps the Court believed that its decision not to decide would motivate Congress to change the law.  Or maybe the Court was facing up to the reality that it did not have a solution to the problem, in which case Congress would be the only answer.  That last hope appeared to have been dashed (or at least put on hold) in February when Senator Thom Tillis, Chair of the Senate's Subcommittee on Intellectual Property, in an interview with the Intellectual Property Owner's association, noted that Congress would not be completing its work on a legislative solution to the patent eligibility problem.  Sen. Tillis told the IPO that "[g]iven the reasonable concerns that have been expressed about the draft [legislation] as well as the practical realities of the difficulty of passing legislation, absent stakeholder consensus I don't see a path forward for producing a bill—much less steering it to passage—in this Congress."  Sen Tillis noted that "[i]f we're going to get anything done on this issue, everyone will have to compromise," adding that "[a]nything less than that is dead on arrival."  So, 2020 provided no judicial or legislative solutions to the patent eligibility problem, and yet this lack of solutions was still good enough for this story to take the #2 spot on our list (which somehow seems fitting for 2020).

For information regarding this and other related topics, please see:

• "Simio, LLC v. FlexSim Software Products, Inc. (Fed. Cir. 2020)," December 29, 2020
• "Adaptive Streaming Inc. v. Netflix, Inc. (Fed. Cir. 2020)," December 22, 2020
• "An Analytic Approach to Patent Eligibility," December 16, 2020
• "Gree, Inc. v. Supercell Oy (Fed. Cir. 2020)," December 3, 2020
• "C R Bard Inc. v. AngioDynamics, Inc. (Fed. Cir. 2020)," November 15, 2020
• "On the Patent Eligibility of Graphical User Interfaces: Part II," November 9, 2020
• "On the Patent Eligibility of Graphical User Interfaces: Part I," November 8, 2020
• "Stupid § 101 Tricks," November 1, 2020
• "Realtime Data LLC v. Reduxio Systems, Inc. (Fed. Cir. 2020)," October 26, 2020
• "Reconsidered: The Federal Circuit's Enfish Interpretation of Mayo-Alice," September 13, 2020
• "Illumina, Inc. v. Ariosa Diagnostics, Inc. (Fed. Cir. 2020)," August 3, 2020
• "XY, LLC v. Trans Ova Genetics, LC (Fed. Cir. 2020)," August 2, 2020
• "The Three Properties of Patent-Eligibility: An Empirical Study," July 30, 2020
• "Federal Circuit Rules Public Key Cryptography Algorithm Invalid Under 35 U.S.C. § 101," July 22, 2020
• "Packet Intelligence LLC v. NetScout Systems, Inc. (Fed. Cir. 2020)," July 20, 2020
• "Electronic Communication Technologies, LLC v. ShoppersChoice.com, LLC (Fed. Cir. 2020)," July 16, 2020
• "In re Zunshine (Fed. Cir. 2020)," July 8, 2020
• "Barbaro Technologies, LLC v. Niantic, Inc. (N.D. Cal. 2020)," May 28, 2020
• "Uniloc USA, Inc. v. LG Electronics USA, Inc. (Fed. Cir. 2020)," May 6, 2020
• "USPTO Assesses the Impact of Patent Eligibility's Changing Landscape," April 27, 2020
• "Cardionet, LLC v. Infobionic, Inc. (Fed. Cir. 2020)," April 19, 2020
• "Boehringer Ingelheim Pharmaceuticals Inc. v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2020)," April 5, 2020
• "Mallinckrodt Files Certiorari Petition in iNO v. Praxair," March 19, 2020
• "Illumina, Inc. v. Ariosa Diagnostics, Inc. (Fed. Cir. 2020)," March 17, 2020
• "What is an Abstract Idea, Anyway?" March 1, 2020
• "A Step-by-Step Approach to Patent Subject Matter Eligibility Reform," February 17, 2020
• "Pebble Tide LLC v. Arlo Technologies, Inc. (D. Del. 2020)," February 13, 2020
• "CareDX, Inc. v. Natera, Inc. (D. Del. 2020)," February 12, 2020
• "The Zombie Apocalypse of Patent Eligibility Reform and a Possible Escape Route," February 4, 2020
• "iLife Technologies, Inc. v. Nintendo of America, Inc. (N.D. Tex. 2020)," January 27, 2020
• "U.S. Supreme Court on Eligibility: Nothing to See Here, Move Along," January 13, 2020

1.  Pandemic Impacts Patent Practice

On March 11, World Health Organization Director-General Tedros Adhanom declared that the COVID-19 outbreak "can be characterized as a pandemic," cautioning that the WHO has "rung the alarm bell loud and clear."  At the time of the announcement, the WHO noted that there were 118,000 cases reported globally in 114 countries.  In its latest situation report, issued on January 12, 2021, the WHO indicates that there have been 88,387,352 cases globally.  The Director-General also stated in March that the pandemic was "not just a public health crisis, it is a crisis that will touch every sector -- so every sector and every individual must be involved in the fight."

As it has for nearly every single industry, the COVID-19 pandemic has had a profound impact on patent practice.  The pandemic has changed how most of us work, where most of us work, and what many of us work on.  In the early weeks and months of the pandemic, the U.S. Patent and Trademark Office, World Intellectual Property Organization, European Patent Office, IP Australia, Intellectual Property Office of New Zealand (IPONZ), Brazilian Patent and Trademark Office (INPI), Canadian Intellectual Property Office (CIPO), Mexican Institute of Industrial Property (IMPI), National Office of Intellectual Property (ONAPI) in the Dominican Republic, Intellectual Property India, National Intellectual Property Office (NIPO) in Sri Lanka, Israel Patent Office, Intellectual Property Office of Vietnam (NOIP), and Directorate General of Intellectual Property (DGIP) in Indonesia, among numerous other patent offices, modified deadlines and procedures to accommodate applicants and their representatives.

In addition to providing some deadline relief at the beginning of the pandemic, the USPTO implemented a COVID-19 prioritized examination pilot program, in which applicants that qualify for small or micro entity status can request prioritized examination without paying the fees typically associated with such prioritized examination.  In September, the USPTO also implemented a deferred-fee provisional patent application pilot program in order to promote the expedited exchange of information about inventions designed to combat COVID–19.  And in June, USPTO Director Andrei Iancu sent a letter to the Chairmen and Ranking Members of the Senate and House Committees on the Judiciary, Senate Subcommittee on Intellectual Property, and House Subcommittee on Courts, Intellectual Property, and the Internet, to provide information regarding the Office's transition to full time telework, the status of patent and trademark filings and fee collections, and cost saving measures that the Office had taken in response to the COVID-19 pandemic-related economic downturn.  In his letter, the Director stated that the trends through mid-May were "troubling and the current economic uncertainty could lead us to revise FY 2020 and FY 2021 revenue estimates further downward."  Even though the U.S., like many other countries, is currently confronting a third wave of the COVID-19 pandemic, the USPTO, like many other patent offices, has tried to return to something akin to "normal" operations (or at least what must pass for normal during a pandemic).  The hope is that the coming spring will see sufficient distribution and adoption of vaccines such that we can all return to something that is not merely akin to normal.

For information regarding this and other related topics, please see:

• "Inherited Neanderthal Gene Encodes Genetic Risk for COVID-19," November 4, 2020
• "USPTO Announces Deferred-Fee Provisional Application Pilot Program to Encourage COVID-19 Related Inventions," September 17, 2020
• "USPTO Announces Additional Extension of Certain Patent Deadlines for Small and Micro Entities," June 29, 2020
• "USPTO Director Updates Congress Regarding Impact of COVID-19 Pandemic on USPTO Operations," June 18, 2020
• "USPTO Announces Extension for Petitioning for Restoration of Right of Priority or Benefit," June 14, 2020
• "Impact of COVID-19 Pandemic on Patent Offices – June 10 Update," June 10, 2020
• "USPTO News Briefs," June 2, 2020
• "USPTO Announces Further Extension of Certain Patent Deadlines for Small and Micro Entities," May 27, 2020
• "USPTO Announces COVID-19 Prioritized Examination Pilot Program," May 18, 2020
• "Life Sciences Court Report & COVID-19 Impact on District Court Filings," May 17, 2020
• "USPTO Announces Further Extension of Certain Patent Deadlines," April 30, 2020
• "Impact of COVID-19 Pandemic on Patent Offices and Federal Courts – April 12 UPDATE," April 12, 2020
• "USPTO Answers FAQs on Extension of Patent Deadlines under CARES Act," April 6, 2020
• "USPTO Announces Extension of Certain Patent Deadlines," March 31, 2020
• "Impact of COVID-19 Pandemic on Patent Offices and Federal Courts -- March 29 UPDATE," MARCH 29, 2020
• "Impact of COVID-19 Pandemic on Patent Offices and Federal Courts -- March 26 UPDATE," March 26, 2020
• "Impact of COVID-19 Pandemic on Patent Offices and Federal Courts -- March 19 UPDATE," March 19, 2020
• "Impact of COVID-19 Pandemic on Patent Offices and Federal Courts -- March 18 UPDATE," March 18, 2020
• "Impact of COVID-19 Pandemic on Patent Offices and Federal Courts -- March 17 UPDATE," March 17, 2020
• "Impact of COVID-19 Pandemic on Patent Offices and Federal Courts -- UPDATED," March 16, 2020
• "Impact of COVID-19 Pandemic on Patent Offices and Federal Courts," March 15, 2020

Simio, LLC v. FlexSim Software Products, Inc. (Fed. Cir. 2020)

By Michael Borella --

This decision is bad.  Not an American Axle level of bad, but still quite far from good.

Simio sued FlexSim in the District of Utah for alleged infringement of its U.S. Patent No. 8,156,468.  FlexSim moved for dismissal on the pleadings under 35 U.S.C. § 101, on the grounds that the claims were directed to no more than an abstract idea.  The District Court granted the motion, and Simio appealed.

The claimed invention relates to object-oriented simulations by way of graphical user interfaces.  In the past, these simulations had required at least some programming.  The '468 patent describes its advance as simplifying this process by facilitating the development of simulations in a completely graphical manner, with no programming necessary.  Claim 1 of the patent recites:

A computer-based system for developing simulation models on a physical computing device, the system comprising:
    one or more graphical processes;
    one or more base objects created from the one or more graphical processes,
    wherein a new object is created from a base object of the one or more base objects by a user by assigning the one or more graphical processes to the base object of the one or more base objects;
    wherein the new object is implemented in a 3-tier structure comprising:
        an object definition, wherein the object definition includes a behavior,
        one or more object instances related to the object definition, and
        one or more object realizations related to the one or more object instances;
    wherein the behavior of the object definition is shared by the one or more object instances and the one or more object realizations; and
    an executable process to add a new behavior directly to an object instance of the one or more object instances without changing the object definition and the added new behavior is executed only for that one instance of the object.

In Alice Corp. v. CLS Bank Int'l, the Supreme Court set forth a two-part test to determine whether claims are directed to patent-eligible subject matter under § 101.  One must first decide whether the claim at hand involves a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further decide whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exclusion.  But elements or combinations of elements that are well-understood, routine, and conventional will not lift the claim over the § 101 hurdle.  While this inquiry is generally carried out as a matter of law, factual issues can come into play when determining whether something is well-understood, routine, and conventional.

Recently, the Federal Circuit provided a major clue as to how to think about patent eligibility in practice.  In Dropbox Inc. v. Synchronoss Techs. Inc., the Court wrote that "an inventive concept exists when a claim recites a specific, discrete implementation of the abstract idea where the particular arrangement of elements is a technical improvement over the prior art."  This suggests that in order for a claim that is otherwise directed to an abstract idea to be successful under § 101, it should have three qualities: specificity, a technical solution that it provides, and some degree of novelty.  More particularly, there should be a nexus between these three factors -- specificity, technical character, and novelty should appear in the same claim element or at least be explicitly linked in some fashion in the recitation of the claim.

Starting with part one of Alice, the Federal Circuit focused almost entirely on how the specification describes the invention rather than how it is claimed.  The portion of the specification that the Court considered is at a higher level and is less detailed than the actual claim language, and describes how the claimed invention makes it easier for non-programmers to construct object-oriented simulations.  The Court summarized the preamble of claim 1 and a few of its broader elements, waving its hands over the rest (the Court was apparently willing to ignore any claim elements that Simio did not rely on in its arguments).  Staying at this high level, the Court also noted that the '468 patent "acknowledges, using graphical processes to simplify simulation building has been done since the 1980s and 1990s."

All of this led the Court to conclude that "[s]imply applying the already-widespread practice of using graphics instead of programming to the environment of object-oriented simulations is no more than an abstract idea."  The Court justified its analysis by stating that when "the abstract idea tracks the claim language and accurately captures what the patent asserts to be the focus of the claimed advance, characterizing the claim as being directed to an abstract idea is appropriate."

The problem here is that the Court rendered its decision based on what the claimed invention purports to do (as described in the parts of the specification that the Court considered and the preamble), rather than how it gets done (recited in the claim as a whole).  This type of superficial reasoning is unfortunately common in § 101 cases, and does violence to the actual language of the claim by relegating it to secondary status.

Simio argued that "claim 1 is not directed to an abstract idea because it presents improvements to computer-implemented simulation, resulting in improvements in the computers' capabilities."  Particularly, Simio stated that the claim "improves on the functionality of prior simulation systems through the use of graphical or process modeling flowcharts with no programming code required."  The Court, however, did not buy into this point, stating that "this argument does not explain how the computer's functionality is improved beyond the inherent improvement of the experience of a user who cannot (or maybe, would rather not) use programming."

This dichotomy between an improvement to a computer versus an improvement to one's experience when using the computer is a sticky one at best.  To be sure, an improvement in user experience is fundamentally rooted in computer technology itself.  The Court's distinction is that software for improving a computer (by making the computer faster, better, more efficient) can be the basis of an eligible invention whereas software for improving a use of the computer (by making the user's interaction with the computer faster, better, more efficient) cannot.

But this reasoning does not stand up to logical scrutiny or even the Court's prior case law.  One of the main purposes of invention (perhaps the main purpose) is to improve lives through technological advancement.  If a device is not eligible for patenting because it merely improves user experience, then there is a long list of classic inventions that would not be patentable (sorry Alex Bell, sorry Tom Edison).  But the invention of claim 1 does improve the device -- it makes the computer perform new and useful functions that (at least according to the specification) were not previously performed.  The Federal Circuit, however, often takes a reductionist view that differentiates between improvements to the "computer" (the hardware, operating system, and certain utilities) and "other applications" that run thereon (pretty much all the other software aside from the operating system and the aforementioned utilities).  The former are much more likely to be eligible than the latter, presumably because improving a "computer" is more technical than improving the usefulness of the computer -- never mind that trying to drawn a line between improvements to the "computer" and the "other applications" is an exercise in futility.  Try to square the reasoning in this case with that of Trading Technologies Int'l, Inc. v. CQG, Inc., Data Engine Technologies LLC v. Google LLC, and McRO, Inc. v. Bandai Namco Games America Inc., all of which involved an interface that improved user experience and that the Court deemed eligible.[1]  Hint: you can't.

In any event, Simio also argued that the final limitation of claim 1 ("an executable process . . ."), was a sufficiently significant improvement to computer technology.  The Court looked to the specification and found that it "dedicates relatively little attention to the functionality reflected in the executable-process limitation."  Once again, the specification appears to have primacy over the claims.  Notably, the Court wrote, that "disparity—in both quality and quantity—between how the specification treats the abstract idea and how it treats the executable-process limitation suggests that the former remains the claim's focus."

Finding the claim directed to an abstract idea, the Court moved on to part two of Alice.  Not helping its own case, Simio argued again for eligibility based on the executable process limitation but ended up admitting that this feature was conventional in object-oriented programming.  Simio attempted to render this admission harmless in further arguments.  In the words of the Court, "while Simio acknowledges that implementing the executable process's functionality through programming was conventional or known, it contends that doing so with graphics in a simulation provides the inventive concept necessary to confer eligibility."  But according to the Court, this purported inventive concept was "just the abstract idea itself, which cannot supply the inventive concept that renders the invention significantly more than that abstract idea at step two."

Simio's further arguments that limitation exhibited some novelty fell on deaf ears.[2]  The Court wrote that what it had in front of it was "a claim directed to the idea of using graphics instead of programming to create object-oriented simulations—maybe a new idea, but still an abstract one—and lacking any inventive concept, any meaningful application of this idea, sufficient to save the claim's eligibility."  Thus, the Court found the claim invalid under § 101.

Put in terms of the Dropbox factors, the Court found the claim to be non-technical and to lack a requisite degree of specificity.  Despite the Court appearing to be willing to grant that the claim may exhibit a modicum of novelty, two factors out of three working against the claim was enough for it to be patent-ineligible.

Again, we have the Federal Circuit playing prior art games under the guise of a § 101 decision.  The claim's "conventional" elements counted toward it being found ineligible because conventional elements are, by definition, in the prior art.  But arguments that the elements exhibit novelty -- and therefore are not in the prior art -- had no weight at all.  In other words, if someone contends that a claim element is in the prior art, the claim can be considered abstract.  Rebutting this contention is not possible.

[1] To be fair, the Court addressed McRO, stating that its "claims were eligible at step one because they used a combined order of specific rules to achieve an improved technological result."  This still does not sit well with the Court's reasoning in this case because the outcome of McRO was a patent-eligibile invention that improved animated lip-synching -- still an improvement to user experience. 

[2] Here, the opinion is confusing, as the Court seems to indicate that Simio admitted the limitation in question is conventional but argued that it is novel.  These positions are contradictory.

Simio, LLC v. FlexSim Software Products, Inc. (Fed. Cir. 2020)
Panel: Chief Judge Prost and Circuit Judges Clevenger and Stoll
Opinion by Chief Judge Prost

Adaptive Streaming Inc. v. Netflix, Inc. (Fed. Cir. 2020)

By Michael Borella --

Adaptive Streaming, the owner of U.S. Patent No. 7,047,305, sued Netflix in the Central District of California for alleged infringement.  Netflix moved to dismiss the case on the pleadings under Rule 12(b)(6), asserting that the claims did not meet the subject matter eligibility requirements of 35 U.S.C. § 101.  The District Court agreed, and Adaptive appealed.

Representative claim 39 of the '305 patent recites:

A system to broadcast to at least one client device, the system comprising:
    a processor; and
    a broadcasting server coupled to the processor, the broadcasting server including:
    an image retrieval portion to retrieve at least one incoming video signal having a first format;
    a data structure usable to determine parameters for second compression formats for the at least one incoming video signal; and
    at least one transcoding module coupled to the image retrieval portion and which has access to the data structure, the transcoding module being capable to transcode the at least one incoming video signal from the first format into multiple compressed output video signals having respective second compression formats based at least in part on the parameters;
    wherein at least one of the second compression formats is more suitable for the at least one client device than the first format; and
    wherein the multiple compressed output video signals having the at least one second compression format more suitable for the at least one client device can be provided by the broadcasting server, wherein any one of the multiple compressed output video signals can be selected to be presented at the at least one client device.

According to the specification, the claimed invention "provides a technique including a system for capturing audio and video information from a first source and displaying such video and audio information at a second source, where the format of the first source and the format of the second source are different from each other."

In Alice Corp. v. CLS Bank Int'l, the Supreme Court set forth a two-part test to determine whether claims are directed to patent-eligible subject matter under § 101.  One must first decide whether the claim at hand involves a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further decide whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exclusion.  But elements or combinations of elements that are well-understood, routine, and conventional will not lift the claim over the § 101 hurdle.  While this inquiry is generally carried out as a matter of law, factual issues can come into play when determining whether something is well-understood, routine, and conventional.

Recently, the Federal Circuit provided a major clue as to how to think about patent eligibility in practice.  In Dropbox Inc. v. Synchronoss Techs. Inc., the Court wrote that "an inventive concept exists when a claim recites a specific, discrete implementation of the abstract idea where the particular arrangement of elements is a technical improvement over the prior art."  This suggests that in order for a claim that is otherwise directed to an abstract idea to be successful under § 101, it should have three qualities: specificity, a technical solution that it provides, and some degree of novelty.  More particularly, there should be a nexus between these three factors -- specificity, technical character, and novelty should appear in the same claim element or at least be explicitly linked in some fashion in the recitation of the claim.

Applying the first part of Alice, the District Court found the claims directed to the abstract idea of "collecting information and transcoding it into multiple formats."  The Federal Circuit found no error in this assessment, and noted that the claims and specification "make clear that the focus of the claimed advance is the abstract idea of format conversion" and not "any specific advance in coding or other techniques for implementing that idea; no such specific technique is required."  Further, the specification included, through incorporation by reference, what amounted to an admission that such translation of content was a known communication practice.  Moreover, the Court cited a number of recent cases in which it found other claims encompassing basic communication practices to be abstract.  Based on these observations, the Court concluded that the claims were directed to an abstract idea.

Turning to part two of Alice, the Court noted that the claims recite only generic computer hardware.  The Court put particular weight on there being "no identification in the claims or written description of specific, unconventional encoding, decoding, compression, or broadcasting techniques."

Put in the context of the Dropbox factors, the Court determined that the claims lacked specificity and novelty to an extent that rendered them no more than abstract, regardless of whether they provided a technical solution.

Adaptive argued that the USPTO's finding the claims to be novel and non-obvious cut against the Court's position.  The Court disagreed, observing that "satisfying the requirements of novelty and non-obviousness does not imply eligibility under § 101, including under the second step of the Alice inquiry, because what may be novel and non-obvious may still be abstract."

But this statement reflects the intellectual dishonesty that underlies the current interpretation of Alice -- claim elements that are deemed "conventional" -- i.e., in the prior art -- count against the patentee in the § 101 inquiry.  But arguments that the claimed invention exhibits an overall novelty are given no weight in that analysis.  Until the exact nature of the prior art consideration under § 101 is clarified, this is an area that will continue lack consistency and render patent-eligibility procedurally unclear.

In any event, this apparent hypocrisy did not bother the Federal Circuit, as it affirmed the District Court's invalidity ruling.