Patent Docs

Athena Diagnostics v. Mayo Collaborative Services -- The Concurrences

By Donald Zuhn --

On July 3, the Federal Circuit issued a per curiam Order in Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC, denying a petition for rehearing en banc filed by Plaintiffs-Appellants Athena Diagnostics, Inc., Oxford University Innovation Ltd., and the Max-Planck-Gesellschaft zur Forderung der Wissenschaften E.V.  The Court also denied Plaintiffs-Appellants a panel rehearing.

The four page per curiam Order was accompanied by eight opinions, four concurring in the denial of the petition and four dissenting in the denial of the petition, adding an additional 82 pages to the Order.  The four concurring opinions were authored by Circuit Judges Lourie, Hughes, Dyk, and Chen, with Chief Judge Prost and Circuit Judges Reyna, Taranto, and Hughes joining in one of the concurrences and Circuit Judge Chen joining in one concurrence and several parts of another.  The four dissenting opinions were authored by Circuit Judges Moore, Newman, Stoll, and O'Malley, with Circuit Judges O'Malley and Stoll joining in one of the dissents and Circuit Judge Wallach joining in three of the dissents.  Thus, a total of seven members of the Court (Chief Judge Prost and Circuit Judges Lourie, Dyk, Reyna, Taranto, Chen, and Hughes) authored or joined opinions concurring in the denial, and a total of five members (Circuit Judges Newman, Moore, O'Malley, Wallach, and Stoll) authored or joined opinions dissenting in the denial.

Last week, we reviewed the procedural history of the case and provided a brief summary of the eight concurring and dissenting opinions (see "Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC (Fed. Cir. 2019)").  In this post, we focus more closely on the four opinions concurring in the Order's denial of the petition for rehearing en banc.  As we noted last week, the general theme of the concurrences is that the Supreme Court's decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc. left the members of the Court with no choice other than to deny the petition.

In the first concurrence, Judge Lourie, joined by Judges Reyna and Chen, declares in a 4-page opinion that the Court "can accomplish little in [rehearing the case en banc], as we are bound by the Supreme Court's decision in Mayo," adding that:

If I could write on a clean slate, I would write as an exception to patent eligibility, as respects natural laws, only claims directed to the natural law itself, e.g., E=mc2, F=ma, Boyle's Law, Maxwell's Equations, etc.  I would not exclude uses or detection of natural laws.  The laws of anticipation, obviousness, indefiniteness, and written description provide other filters to determine what is patentable.

"But," as Judge Lourie states, "we do not write here on a clean slate; we are bound by Supreme Court precedent."

Judge Lourie notes that the Federal Circuit has "held claims focused on detecting new and useful natural laws with conventional steps to be ineligible," citing Cleveland Clinic Found. v. True Health Diagnostics LLC and Ariosa Diagnostics, Inc. v. Sequenom, Inc. in support (without mentioning that both examples concern claims to diagnostic methods), but that "[i]n contrast, new method of treatment patents do not fall prey to Mayo's prohibition," citing Vanda Pharm. Inc. v. West-Ward Pharm. Int'l Ltd.  Judge Lourie also notes that "unconventional arrangements of known laboratory techniques, even if directed to a natural law" have also been found by the Federal Circuit to be patent eligible, citing Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc.  However, the instant case, as he points out, "involves neither scenario."

While explaining that "[t]he only unconventional aspect is the inventors' discovery of what the Supreme Court would call the natural law—the correlation between MuSK autoantibodies and the neurological disorder myasthenia gravis," Judge Lourie concedes that the Court "cannot premise eligibility solely on the natural law's novelty."  Judge Lourie also opines that:

Under Supreme Court precedent, I do not believe that specific yet purely conventional detection steps impart eligibility to a claim that otherwise only sets forth what the Court has held is a natural law.  That is the situation presented in Ariosa, Cleveland Clinic, and now Athena.  Accordingly, as long as the Court's precedent stands, the only possible solution lies in the pens of claim drafters or legislators.  We are neither.

And to those in the patent community (including amici) who have complained that the Federal Circuit's eligibility precedent is "confused," Judge Lourie responds that "our cases are consistent," explaining that the Court has "distinguished between new method of treatment claims and unconventional laboratory techniques, on the one hand, and, on the other hand, diagnostic methods that consist of routine steps to observe the operation of a natural law," which he finds to be "a clear line."  He concludes his opinion by stating that beyond this distinction, he does "not see a way clear to distinguish Mayo in a useful, principled, fashion," and therefore is left to concur with the denial of the petition "because I do not believe we can convincingly distinguish Mayo in this case."

In the second concurrence (which at a little over a page is the shortest of the concurring opinions), Judge Hughes, joined by Chief Judge Prost and Judge Taranto, notes that "[t]he multiple concurring and dissenting opinions regarding the denial of en banc rehearing in this case are illustrative of how fraught the issue of § 101 eligibility, especially as applied to medical diagnostics patents, is."  However, he also notes that while "the bottom line for diagnostics patents is problematic . . . this is not a problem that we can solve," adding that "[a]s an inferior appellate court, we are bound by the Supreme Court."

Judge Hughes concludes by stating that:

I, for one, would welcome further explication of eligibility standards in the area of diagnostics patents.  Such standards could permit patenting of essential life saving inventions based on natural laws while providing a reasonable and measured way to differentiate between overly broad patents claiming natural laws and truly worthy specific applications.  Such an explication might come from the Supreme Court.  Or it might come from Congress, with its distinctive role in making the factual and policy determinations relevant to setting the proper balance of innovation incentives under patent law.

In the third concurrence (which numbers more than thirteen pages), Judge Dyk, joined by Judges Hughes and Chen (with Judge Chen only joining the last three parts of the concurrence), points out (to begin Part IV of his opinion) that:

[T]here is tension between Mayo and the Supreme Court's later decision in Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576 (2013), and that the holding of Mayo may be overbroad.  The language of § 101 does cover "discover[ies]," 35 U.S.C. § 101, and there is no doubt that determining the relationship between specific genetic abnormalities and specific diseases constitutes an important discovery with proven utility.  There is much to be said for the patentability of claims to such discoveries, if not drafted overbroadly.

Of the authors of the four concurring opinions, Judge Dyk stands apart in finding something beneficial in the Supreme Court's precedent on subject matter eligibility.  In Part I of his opinion, Judge Dyk explains that:

In the realm of abstract ideas, the Mayo/Alice framework has successfully screened out claims that few would contend should be patent eligible, for example, those that merely apply well-known business methods and other processes using computers or the Internet.  The Mayo/Alice framework has thus proven to be both valuable and effective at invalidating overly broad, non-inventive claims that would effectively "grant a monopoly over an abstract idea."

In support of his position, he cites Trading Techs. Int'l, Inc. v. IBG LLC (Fed. Cir. 2019); SAP Am., Inc., v. Investpic, LLC (Fed. Cir. 2018); Credit Acceptance Corp. v. Westlake Servs. (Fed. Cir. 2017); Elec. Power Grp., LLC v. Alstom S.A. (Fed. Cir. 2016); Intellectual Ventures I LLC v. Capital One Bank (Fed. Cir. 2015); Ultramercial, Inc. v. Hulu, LLC (Fed. Cir. 2014); and buySAFE, Inc. v. Google, Inc. (Fed. Cir. 2014).  However, Judge Dyk also notes that the Federal Circuit's subject matter eligibility precedent "has allowed room for claims that do more than recite conventional applications of abstract concepts," citing Ancora Techs., Inc. v. HTC Am., Inc. (Fed. Cir. 2018); Finjan, Inc. v. Blue Coat Sys., Inc. (Fed. Cir. 2018); and Enfish, LLC v. Microsoft Corp. (Fed. Cir. 2016) in support.

In Part II of his opinion, Judge Dyk defends the need for Alice/Mayo framework, contending that "[d]espite assertions to the contrary, the doctrines of novelty under § 102, obviousness under § 103, and enablement and written description under § 112 cannot adequately guard against the dangers of overclaiming."  Judge Dyk also notes that these provisions do not "typically allow early stage resolution of the 'threshold' issue of patent eligibility . . . necessary to avoid the costs of lengthy litigation," and therefore concludes that the patent eligibility analysis of "§ 101 serves an important purpose not served by these other provisions in the Patent Act."  Offering an example of the alleged inadequacy of the other provisions to guard against overclaiming, Judge Dyk suggests that "[i]f the first person to identify the relationship between a genetic abnormality and a disease had sought a broad patent on a method of searching for genetic abnormalities and determining their relationship to disease, the claims would have been neither anticipated nor obvious."

For Judge Dyk, "[t]he problem with § 101 arises not in implementing the abstract idea approach of Alice, but rather in implementing the natural law approach of Mayo," explaining in Part III of his opinion that "[a]lthough Mayo's framework is sound overall, I share the concerns expressed by my dissenting colleagues that the Mayo test for patent eligibility should leave room for sufficiently specific diagnostic patents."  However, as Judge Hughes indicated in his concurrence, Judge Dyk states that "it is the Supreme Court, not this court, that must reconsider the breadth of Mayo."

In Part IV of his concurrence, Judge Dyk elaborates on the tension between the Supreme Court's decisions in Mayo and Myriad, stating that:

Myriad thus recognized that an inventive concept can sometimes come from the discovery of an unknown natural phenomenon and its application for a diagnostic purpose.  This appears to be in tension with Mayo.  Under Mayo, a natural phenomenon itself, no matter how narrow and specific, cannot supply the requisite "inventive concept."

Judge Dyk suggests that "it would be desirable for the Supreme Court to refine the Mayo framework to allow for sufficiently specific diagnostic patent claims with proven utility," contending that "[t]he inventive concepts in this area may lie primarily in the application of a natural law."

According to Judge Dyk, however, the refinements to the Mayo framework that are needed are "limited."  In particular, Judge Dyk explains in Part V of his opinion that "if the claim is sufficiently tied to a specific and useful application of a natural law at Mayo step one, that application itself should serve as the necessary inventive concept at Mayo step two."  However, "the application must be more than determining the precise correlation of a known relationship using prior art processes, as was the case in Mayo itself."

With respect to the claims at issue in Athena, Judge Dyk suggests in Part VI of his concurrence that "this case may involve claims that could be patent eligible under []his suggested approach."  He points out that "claims 7–9 do not claim the natural law itself—the relationship between MuSK autoantibodies and MG, a rare neurological disorder—but rather claim specific methods of diagnosing neurological disorders like MG by detecting MuSK autoantibodies."  Thus, according to Judge Dyk, Athena, unlike Mayo, "involves a 'discovery' of the relationship, not mere determination of the precise correlations of a known natural law using prior art processes."  Judge Dyk concludes his opinion by suggesting that "this case could provide the Supreme Court with the opportunity to refine the Mayo framework as to diagnostic patents."

In the fourth and final concurrence (which at more than sixteen pages is the longest of the concurring opinions), Judge Chen states that "[w]hile I believe our court would benefit from the Supreme Court's guidance as to whether it intended to override central tenets of [Diamond v.] Diehr [450 U.S. 175 (1981)], Mayo's reasoning is clear and we are bound by it," adding that the analysis in Mayo "requires the affirmance of the district court’s decision to invalidate Athena's claims."  Judge Chen notes, however, that "[e]ven though Athena's claims likely would be found patent-eligible under Diehr's framework, it is not an inferior court's role to dodge the clear, recent direction of the Supreme Court."

Judge Chen begins his concurrence by noting that the Supreme Court in Diehr "adopted a relatively narrow and more administrable version of the judicial exceptions to the statutory text of 35 U.S.C. § 101 compared to what the Court articulated three years earlier in Parker v. Flook, 437 U.S. 584 (1978)."  He also suggests that "[u]nder Diehr's 'claim as a whole' principle, which does not divide the claim into new versus old elements, Athena's claims, particularly claims 7 and 9, likely would have been found to be directed to a patent-eligible process."  However, he acknowledges that in Mayo, the Supreme Court "set forth an inventive concept/point of novelty framework, which is a more far-reaching, aggressive version of the judicial exceptions to the statute and is largely incompatible with Diehr's core rationale," even though "nothing in Mayo suggests that it sought to repudiate Diehr's analysis."

Judge Chen provides a detailed analysis of Diehr, Flook, Mayo, and Alice, before turning to Athena's claims.  With respect to Diehr and Flook, Judge Chen contends that "[g]iven Diehr's evident disagreement with Flook's analysis, Diehr, as the later opinion, was widely understood to be the guiding, settled precedent on § 101 for three decades," with Diehr "reject[ing] the point of novelty/inventive concept approach to patent eligibility."  According to Judge Chen, "Mayo provided a framework for the judicial exceptions that strongly tracked the reasoning of Flook and the Diehr dissent."  Thus, Judge Chen argues that "Mayo is in considerable tension with Diehr's instruction to consider claims 'as a whole' and Diehr's disapproval of dissecting claims into elements and ignoring non-novel elements in the § 101 analysis."  And, as Judge Chen explains:

When it comes to applying the judicial exceptions, it bears noting that the Mayo analytical approach is considerably harder to apply consistently than the Diehr framework, and more aggressive in its reach.  Consider the claim in Mayo.  If that claim had recited just the single step of administering a synthetic drug to a patient, that single-step claim would be patent-eligible, but lack novelty under § 102.  And if that claim added a second step for determining the subsequent level of a non-naturally occurring metabolite in a patient, that claim also would pass muster under § 101, but lack novelty.  But when the claim further recites a relationship between a metabolite level and its efficacy in a patient, that claim suddenly would be invalid under § 101 for violating the law of nature exception.  In other words, steps 1 and 2 now get pushed aside and declared insignificant, and the last step is designated as the "focus" of the claim, i.e., the heart of the invention.  The notion that adding claim language can convert an otherwise patent-eligible claim into a patent-ineligible claim is counterintuitive and a very difficult thing to explain to 8,000 patent examiners.  Moreover, the process of determining what the claim is "really about" when the claim is viewed in pieces, rather than as a whole, can be highly subjective and impressionistic.

According to Judge Chen, "there is a serious question today in patent law as to what extent Diehr remains good law in light of Mayo," and he indicates that this is a question for the Supreme Court to resolve.

In the last part of his opinion, Judge Chen examines the claims at issue in Athena.  While conceding that "the Supreme Court has made clear that detecting a law of nature (without more than conventional steps for accessing the law of nature) does not qualify as a patent-eligible application of a law of nature," Judge Chen notes that "given that the dual 'invention or discovery' structure consistently has been part of every Patent Act since 1790, this statutory provision suggests that at least some discoveries, including Athena's 'discovery' of how to diagnose myasthenia gravis, have always been contemplated as patentable subject matter."  Thus, while Judge Chen "do[es] not think the claims here can withstand Mayo's scrutiny," he argues that "perhaps when read 'as a whole' under Diehr, claims such as claims 7 and 9 in this case could be viewed as methods of testing for a specific medical condition, employing a sequence of steps that physically transform materials," adding that "this sounds like a contribution to the 'useful arts' stated in Article I, Section 8, Clause 8 of the U.S. Constitution."

Judge Chen concludes his opinion by suggesting that:

New methods for diagnosing medical conditions, as a general matter, intuitively seem to be the kind of subject matter the patent system is designed for:  to encourage the risky, expensive, unpredictable technical research and development that people would not otherwise pursue in the hope that if they discover something of great medical value, then they will be protected and rewarded for that successful effort with a patent.

Nevertheless, Judge Chen declares that he is bound by "the clear, recent direction of the Supreme Court" to concur with the denial of Athena's petition for rehearing en banc.

In a subsequent post, we will focus more closely on the dissenting opinions.

Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC (Fed. Cir. 2019)

By Donald Zuhn --

Last week, the Federal Circuit issued a per curiam Order in Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC, denying a petition for rehearing en banc filed by Plaintiffs-Appellants Athena Diagnostics, Inc., Oxford University Innovation Ltd., and the Max-Planck-Gesellschaft zur Forderung der Wissenschaften E.V.  The Court also denied Plaintiffs-Appellants a panel rehearing.

The four-page per curiam Order was accompanied by eight opinions, four concurring in the denial of the petition and four dissenting in the denial of the petition, adding an additional 82 pages to the Order.  The four concurring opinions were authored by Circuit Judges Lourie, Hughes, Dyk, and Chen, with Chief Judge Prost and Circuit Judges Reyna, Taranto, and Hughes joining in one of the concurrences and Circuit Judge Chen joining in one concurrence and several parts of another.  The four dissenting opinions were authored by Circuit Judges Moore, Newman, Stoll, and O'Malley, with Circuit Judges O'Malley and Stoll joining in one of the dissents and Circuit Judge Wallach joining in three of the dissents.  Thus, a total of seven members of the Court (Chief Judge Prost and Circuit Judges Lourie, Dyk, Reyna, Taranto, Chen, and Hughes) authored or joined opinions concurring in the denial, and a total of five members (Circuit Judges Newman, Moore, O'Malley, Wallach, and Stoll) authored or joined opinions dissenting in the denial.

Before turning to the eight opinions concurring or dissenting in the Order's denial of the petition for rehearing en banc, it may be helpful to review the procedural history of this case.  In February, a divided panel affirmed a decision by the District Court for the District of Massachusetts, holding claims 6-9 of U.S. Patent No. 7,267,820 invalid under 35 U.S.C. § 101, and dismissing under Fed. R. Civ. P. 12(b)(6) a complaint filed by Plaintiffs-Appellants for infringement of the '820 patent.

Athena Diagnostics is the exclusive licensee of the '820 patent, which is directed to methods for diagnosing neurological disorders by detecting antibodies to a protein called muscle-specific tyrosine kinase (MuSK).  Athena markets a test called FMUSK that functions by evaluating those antibodies.  After Mayo developed two competing tests, Athena filed suit against Mayo for infringement of the '820 patent, and Mayo moved to dismiss under Rule 12(b)(6), arguing that the asserted claims of the '820 patent were invalid under § 101 for claiming patent ineligible subject matter.  The District Court granted Mayo's motion, and Athena appealed for a determination of whether claims 6-9 are patent eligible under § 101.

The '820 patent notes that about 80% of patients with Myasthenia gravis (MG) produce acetylcholine receptor autoantibodies, and that the remaining 20% do not.  The named inventors of the '820 patent discovered that many of the 20% of MG patients without acetylcholine receptor autoantibodies instead generate autoantibodies to MuSK.  The '820 patent discloses and claims methods of diagnosing neurological disorders such as MG by detecting autoantibodies that bind to a MuSK epitope.  The '820 patent contains only one independent claim, which, while not at issue in the case, recites:

1.  A method for diagnosing neurotransmission or developmental disorders related to muscle specific tyrosine kinase (MuSK) in a mammal comprising the step of detecting in a bodily fluid of said mammal autoantibodies to an epitope of muscle specific tyrosine kinase (MuSK).

Claims 6-9, which were at issue in the case, recite:

6.  A method according to claim 3 whereby the intensity of the signal from the anti-human IgG antibody is indicative of the relative amount of the anti-MuSK autoantibody in the bodily fluid when compared to a positive and negative control reading.

7.  A method according to claim 1, comprising contacting MuSK or an epitope or antigenic determinant thereof having a suitable label thereon, with said bodily fluid, immunoprecipitating any antibody/MuSK complex or antibody/MuSK epitope or antigenic determinant complex from said bodily fluid and monitoring for said label on any of said antibody/MuSK complex or antibody/MuSK epitope or antigen determinant complex, wherein the presence of said label is indicative of said mammal is suffering from said neurotransmission or developmental disorder related to muscle specific tyrosine kinase (MuSK).

8.  A method according to claim 7 wherein said label is a radioactive label.

9.  A method according to claim 8 wherein said label is 125I.

In the panel opinion, authored by Judge Lourie and joined by Judge Stoll (with Judge Newman dissenting), the Court affirmed the District Court's determination that claims 6-9 are invalid under § 101.  The panel majority "ultimately agree[d] with Mayo that, under Mayo [Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66, 70 (2012)], the claims are directed to a natural law," and that in the instant case, the natural law "is the correlation between the presence of naturally-occurring MuSK autoantibodies in bodily fluid and MuSK related neurological diseases like MG."  The panel majority also agreed with Mayo that "the steps of the claims not drawn to ineligible subject matter, whether viewed individually or as an ordered combination, only require standard techniques to be applied in a standard way."  In a lengthy footnote, the panel majority responded to Judge Newman's dissent by explaining that:

The dissent states much that one can agree with from the standpoint of policy, and history, including that "the public interest is poorly served by adding disincentive to the development of new diagnostic methods."  We would add further that, in our view, providing patent protection to novel and non-obvious diagnostic methods would promote the progress of science and useful arts.  But, whether or not we as individual judges might agree or not that these claims only recite a natural law, . . . the Supreme Court has effectively told us in Mayo that correlations between the presence of a biological material and a disease are laws of nature, and "[p]urely 'conventional or obvious' '[pre]-solution activity' is normally not sufficient to transform an unpatentable law of nature into a patent-eligible application of such a law," . . . .  Our precedent leaves no room for a different outcome here [citations omitted].

In her dissent, Judge Newman declared that "[t]he court again departs from the cautious restraints in the Supreme Court's Mayo/Alice application of laws of nature and abstract ideas," adding that "[t]his court's decisions on the patent-ineligibility of diagnostic methods are not consistent, and my colleagues today enlarge the inconsistencies and exacerbate the judge-made disincentives to development of new diagnostic methods, with no public benefit."  She contended that "[t]he '820 inventors did not patent their scientific discovery of MuSK autoantibodies," but rather "applied this discovery to create a new method of diagnosis, for a previously undiagnosable neurological condition."

Turning to the eight opinions concurring or dissenting in the Order's denial of the petition for rehearing en banc, the general theme of the concurrences is that the Supreme Court's decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc. left the members of the Court with no choice other than to deny the petition:

• Judge Lourie, joined by Judges Reyna and Chen, declared that the Court "can accomplish little in [rehearing the case en banc], as we are bound by the Supreme Court's decision in Mayo," adding that:

If I could write on a clean slate, I would write as an exception to patent eligibility, as respects natural laws, only claims directed to the natural law itself, e.g., E=mc2, F=ma, Boyle's Law, Maxwell's Equations, etc.  I would not exclude uses or detection of natural laws.  The laws of anticipation, obviousness, indefiniteness, and written description provide other filters to determine what is patentable.

"But," as Judge Lourie stated, "we do not write here on a clean slate; we are bound by Supreme Court precedent."

• Judge Hughes, joined by Chief Judge Prost and Judge Taranto, noted that "[t]he multiple concurring and dissenting opinions regarding the denial of en banc rehearing in this case are illustrative of how fraught the issue of § 101 eligibility, especially as applied to medical diagnostics patents, is."  However, he also noted that while "the bottom line for diagnostics patents is problematic . . . this is not a problem that we can solve," adding that "[a]s an inferior appellate court, we are bound by the Supreme Court."

• Judge Dyk, joined by Judges Hughes and Chen (with Judge Chen only joining the last three parts of the concurrence), pointed out (to begin Part IV of his opinion) that:

[T]here is tension between Mayo and the Supreme Court's later decision in Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576 (2013), and that the holding of Mayo may be overbroad.  The language of § 101 does cover "discover[ies]," 35 U.S.C. § 101, and there is no doubt that determining the relationship between specific genetic abnormalities and specific diseases constitutes an important discovery with proven utility.  There is much to be said for the patentability of claims to such discoveries, if not drafted overbroadly.

• Judge Chen stated that "[w]hile I believe our court would benefit from the Supreme Court's guidance as to whether it intended to override central tenets of [Diamond v.] Diehr [450 U.S. 175 (1981)], Mayo's reasoning is clear and we are bound by it," adding that the analysis in Mayo "requires the affirmance of the district court’s decision to invalidate Athena's claims." Judge Chen concluded his opinion by noting that "[e]ven though Athena's claims likely would be found patent-eligible under Diehr's framework, it is not an inferior court's role to dodge the clear, recent direction of the Supreme Court."

Several of the dissenting authors disagreed with the concurring authors that Mayo compelled a finding of patent ineligibility in this case:

• Judge Moore, joined by Judges O'Malley, Wallach, and Stoll, disagreed with "[t]he majority of my colleagues [that] believe that our hands are tied and that Mayo requires this outcome," indicating instead that "[t]he claims in this case should be held eligible, and they are distinguishable from Mayo."  Judge Moore contended that the Court "should reconsider this case and clarify our precedent."

• Judge Newman, who dissented in the panel decision, asserted in her dissenting opinion (which was joined by Judge Wallach) that:

The majority's position is a flawed interpretation of the Court's decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012).  The Court did not hold that methods of diagnosis are subject to unique patent-eligibility rules.  We have mistakenly enlarged the Court's holding, in substance and in application.

• Judge Stoll, joined by Judge Wallach, contended that the Federal Circuit had, "[i]n a series of cases since the Supreme Court's decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012), . . . established a bright-line rule of ineligibility for all diagnostic claims."  While conceding that "[t]his rule as applied to the facts of this case dictated that the majority panel find the claimed invention ineligible," she asserted that "this court's bright-line rule is based on an over-reaching and flawed test for eligibility, a test that undermines the constitutional rationale for having a patent system—promoting the progress of science and useful arts," and therefore she concluded that the Federal Circuit "should take this opportunity to correct its erroneous rule."

• While Judge O'Malley agreed with her dissenting colleagues that Federal Circuit precedent "applies the Supreme Court's holding in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012) too broadly," she also opined that:

[C]onfusion and disagreements over patent eligibility have been engendered by the fact that the Supreme Court has ignored Congress's direction to the courts to apply 35 U.S.C. sections 101, et seq ("Patent Act") as written.  Specifically, the Supreme Court has instructed federal courts to read into Section 101 an "inventive concept" requirement—a baffling standard that Congress removed when it amended the Patent Act in 1952.  I encourage Congress to amend the Patent Act once more to clarify that it meant what it said in 1952.

In subsequent posts, we will focus more closely on the concurring and dissenting opinions.

Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC (Fed. Cir. 2019)
Per curiam
Circuit Judge Lourie concurring in the denial of the petition for rehearing en banc, joined by Circuit Judges Reyna and Chen;
Circuit Judge Hughes concurring in the denial of the petition for rehearing en banc, joined by Chief Judge Prost and Circuit Judge Taranto;
Circuit Judge Dyk concurring in the denial of the petition for rehearing en banc, joined by Circuit Judge Hughes and joined as to Parts IV, V, and VI by Circuit Judge Chen;
Circuit Judge Chen concurring in the denial of the petition for rehearing en banc;
Circuit Judge Moore dissenting from the denial of the petition for rehearing en banc, joined by Circuit Judges O'Malley, Wallach, and Stoll;
Circuit Judge Newman dissenting from the denial of the petition for rehearing en banc, joined by Circuit Judge Wallach;
Circuit Judge Stoll dissenting from the denial of the petition for rehearing en banc, joined by Circuit Judge Wallach;
Circuit Judge O'Malley dissenting from the denial of the petition for rehearing en banc.

Cellspin Soft, Inc. v. Fitbit, Inc. (Fed. Cir. 2019)

By Michael Borella --

Background

Cellspin Soft Inc. (Cellspin) filed an infringement suit against Fitbit Inc. (Fitbit) and ten other defendants in the Northern District of California, asserting U.S. Patent Nos. 8,738,794, 8,892,752, 9,258,698, and 9,749,847.  These patents have a common specification and their claims are directed to a data capture device being connected to a mobile device so that captured data can be published to a web site.  The defendants moved the District Court to dismiss all counts under Rule 12(b)(6) or 12(c), alleging that the patents did not meet the eligibility requirements of 35 U.S.C.§ 101.  Ultimately, the District Court not only granted this motion, but also awarded the defendants attorney fees under § 285.  Cellspin appealed.

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.

The Claimed Inventions

As a representative example of the claimed inventions, the '794 patent "teaches a way to transfer and upload data automatically or with minimal user intervention using a data capture device and a mobile device."  Notably, a client application on the mobile device wirelessly receives data from the data capture device and then publishes this data to one or more websites.  Such a procedure takes place "automatically or with minimal user intervention."

Claim 1 of this patent recites:

A method for acquiring and transferring data from a Bluetooth enabled data capture device to one or more web services via a Bluetooth enabled mobile device, the method comprising:
    providing a software module on the Bluetooth enabled data capture device;
    providing a software module on the Bluetooth enabled mobile device;
    establishing a paired connection between the Bluetooth enabled data capture device and the Bluetooth enabled mobile device;
    acquiring new data in the Bluetooth enabled data capture device, wherein new data is data acquired after the paired connection is established;
    detecting and signaling the new data for transfer to the Bluetooth enabled mobile device, wherein detecting and signaling the new data for transfer comprises:
        determining the existence of new data for transfer, by the software module on the Bluetooth enabled data capture device; and
        sending a data signal to the Bluetooth enabled mobile device, corresponding to existence of new data, by the software module on the Bluetooth enabled data capture device automatically, over the established paired Bluetooth connection, wherein the software module on the Bluetooth enabled mobile device listens for the data signal sent from the Bluetooth enabled data capture device, wherein if permitted by the software module on the Bluetooth enabled data capture device, the data signal sent to the Bluetooth enabled mobile device comprises a data signal and one or more portions of the new data;
        transferring the new data from the Bluetooth enabled data capture device to the Bluetooth enabled mobile device automatically over the paired Bluetooth connection by the software module on the Bluetooth enabled data capture device;
        receiving, at the Bluetooth enabled mobile device, the new data from the Bluetooth enabled data capture device;
        applying, using the software module on the Bluetooth enabled mobile device, a user identifier to the new data for each destination web service, wherein each user identifier uniquely identifies a particular user of the web service;
        transferring the new data received by the Bluetooth enabled mobile device along with a user identifier to the one or more web services, using the software module on the Blue-tooth enabled mobile device;
        receiving, at the one or more web services, the new data and user identifier from the Bluetooth enabled mobile device, wherein the one or more web services receive the transferred new data corresponding to a user identifier; and
        making available, at the one or more web services, the new data received from the Bluetooth enabled mobile device for public or private consumption over the internet, wherein one or more portions of the new data correspond to a particular user identifier.

The other asserted claims are substantially similar, though they recite further variations including: (1) a polling mechanism through which the mobile device checks for and then pulls data from the data capture device, (2) establishing a connection between the mobile device and the data capture device using encryption, (3) the mobile device using the hypertext transfer protocol (HTTP) to transfer the captured data to the web sites, and (4) broader embodiments that do not use Bluetooth.

District Court Proceedings

One month after the defendants filed the motion to dismiss, Cellspin filed a notice of supplemental authority.  The notice cited the recently-decided Aatrix Software, Inc. v. Green Shades Software, Inc. and Berkheimer v. HP Inc., two cases that established the contours of the factual analysis in the Alice test's second part.  Cellspin also amended its complaints to allege that the combination of elements recited by the claims was unconventional at the time the patents were filed.

Applying part one of the Alice test, the District Court found that the claims were directed to the abstract idea of "acquiring, transferring, and publishing data and multimedia content on one or more websites."  The District Court noted that "Cellspin failed to show that the data acquisition, transfer, and publication described in the '794 patent represents something more than a simple automation of a conventional (manual) process."

Moving on the part two, the District Court "concluded that the various claim elements, e.g., the data capture device and Bluetooth enabled mobile device, represent generic computer components performing as expected according to their ordinary use."  The District Court acknowledged that there was a factual dispute between the parties regarding whether the combination of these elements was well-understood, routine, and conventional.  But the District Court declined to take this factual dispute into account because, in the District Court's view, Berkheimer only applied to the summary judgment stage, and also because Cellspin did not identify where the specification described the unconventional aspects of the claimed inventions as alleged in the amended complaint.  Thus, all claims were found invalid under § 101.

A number of the defendants moved the District Court for attorney fees.  The District Court found that the case met the definition of "exceptional" under § 285 because the "claims were manifestly directed to an abstract idea" and "exceptionally meritless."  Further, the District Court determined that Cellspin litigated aggressively, noting that Cellspin amended "its complaint only three days prior to the hearing on the motions to dismiss."

The District Court further admonished Cellspin for "a refusal to analyze its patents critically before filing suit," noting that "Cellspin could have litigated a test case but instead chose to file and pursue aggressively fourteen lawsuits simultaneously."  The District Court recommended this approach because "Cellspin's patents are not presumed eligible under Section 101."

Based on these factors, the District Court awarded attorney fees to the defendants.

Appeal to the Federal Circuit

On appeal, the Federal Circuit re-applied the Alice test and also considered the attorney fees award.

Particularly, the Court found that, under part one of Alice, the claims were indeed directed to an abstract idea.  The Court determined that this outcome was required given the similarities between Cellspin's claims and those held abstract in In re TLI Communications LLC Patent Litigation ("claims reciting recording . . . transmitting . . . and storing digital images were directed to an abstract idea") and Elec. Power Grp., LLC v. Alstom S.A. ("claims reciting collecting information, analyzing it, and displaying certain results" are typically abstract in nature).

Moving on to part two of Alice, the Court looked to Cellspin's amended complaint for allegations that its claims are unconventional.  There, it found Cellspin's argument that "prior art devices included a capture device with built in mobile wireless Internet," and that "at the time of the patent priority date . . . the combined apparatus was bulky, expensive in terms of hardware, and expensive in terms of requiring a user to purchase an extra and/or separate cellular service for the data capture device."  Cellspin further argued that "it was unconventional to separate the steps of capturing and publishing data so that each step would be performed by a different device linked via a wireless, paired connection" and that doing so "allows data capture devices to be smaller and cheaper to build."  Additionally, Cellspin asserted that the ordering of the claimed elements was also unconventional, as prior art devices "forwarded data to a mobile device as captured," whereas the claims involve "establishing a paired connection between the mobile device and the data capture device before data is transmitted."  According to Cellspin, this has the advantage of data only being transmitted "if the mobile device is capable of receiving it."

As noted above, the District Court faulted Cellspin for not citing to support in the specification for these allegations.  But the Federal Circuit disagreed that this was required, noting that under Aatrix, "allegations in the complaint [are sufficient] to conclude that the disputed claims were potentially inventive."  The Court went on:

While we do not read Aatrix to say that any allegation about inventiveness, wholly divorced from the claims or the specification, defeats a motion to dismiss, plausible and specific factual allegations that aspects of the claims are inventive are sufficient.  As long as what makes the claims inventive is recited by the claims, the specification need not expressly list all the reasons why this claimed structure is unconventional.  In this case, Cellspin made specific, plausible factual allegations about why aspects of its claimed inventions were not conventional, e.g., its two-step, two-device structure requiring a connection before data is transmitted.  The district court erred by not accepting those allegations as true.

The Court also made it clear that Aatrix "expressly stated that patentees who adequately allege their claims contain inventive concepts survive a § 101 eligibility analysis under Rule 12(b)(6)."  Thus, the District Court's reliance on Berkheimer to discount Cellspin's allegations was misplaced.

Putting this all together, the Court stated "accepting the allegations stated above as true, we cannot conclude that the asserted claims lack an inventive concept . . . we have no basis, at the pleadings stage, to say that these claimed techniques, among others, were well-known or conventional as a matter of law."  A major factor that led the Court toward this conclusion was that "Cellspin did more than simply label [the claimed] techniques as inventive . . . [i]t pointed to evidence suggesting that these techniques had not been implemented in a similar way."  Thus, based on the allegations, the claims "recite a specific, plausibly inventive way of arranging devices and using protocols rather than the general idea of capturing, transferring, and publishing data," and cannot be found ineligible at this point in the case.

As the District Court's opinion was vacated, the attorney fees award was necessarily vacated as well.  To that point, the Federal Circuit clarified the principle that an issued patent has a presumption of validity:

This presumption reflects the fact that the Patent and Trademark Office has already examined whether the patent satisfies the prerequisites for issuance of a patent, including § 101.  While an alleged infringer may attempt to prove that the patent never should have issued in the first place, i.e., challenge its validity, the alleged infringer must prove that the patent does not satisfy these prerequisites before the patent loses its presumption of validity.  To the extent the district court departed from this principle by concluding that issued patents are presumed valid but not presumed patent eligible, it was wrong to do so.

The Court also found that the District Court erred when admonishing Cellspin for amending its complaints so close to the hearing thereon.  Looking to the record, the Court observed that "Cellspin's amendment was timely based on a scheduling order entered by the district court just three days before Cellspin's amendment," and that "Cellspin's decision to amend was also justified in light of Berkheimer and Aatrix, decided just a few weeks earlier."

Thus, both issues of patent eligibility and attorney fees were remanded to the District Court for further review.

Cellspin Soft, Inc. v. Fitbit, Inc. (Fed. Cir. 2019)
Panel: Circuit Judges Loruie, O'Malley, and Taranto
Opinion by Circuit Judge O'Malley

Biotech Prospects for Patent Reform

By Kevin E. Noonan --

With great fanfare (and a seeming exercise of appropriate diligence), Senators Thom Tillis (R-NC) and Chris Coons (D-DE), chair and ranking member of the Intellectual Property Subcommittee of the Senate Judiciary committee, over the past few weeks have held a series of public hearings on the subject of legislative intervention to reform patent eligibility law rendered somewhat askew by several recent Supreme Court decisions (and, to be fair, how those decisions have been expansively, if not slavishly, implemented by the U.S. Patent and Trademark Office and the inferior courts, including the Federal Circuit).

On Monday, the Senators posted a synopsis of their recent efforts, entitled "What We Learned at Patent Reform Hearings."  This synopsis is generally informative but particularly with regard to the Senators' understanding and commitment (at least for now) to solving the problems caused to the life sciences industry by the Court's decisions in Mayo v. Prometheus (as interpreted by CLS Bank v. Alice) and AMP v. Myriad Genetics.

Their missive begins with the almost requisite encomiums to innovation and entrepreneurship, and the contributions of the patent system to U.S. success in these endeavors.  The Senators certainly "get it" with regard to the problem, saying that "[o]ver time, courts have clouded the [patent eligibility] line to exclude critical medical advances like life-saving precision medicine and diagnostics.  Recent decisions have also made it difficult to predict whether exciting and important technologies like artificial intelligence make the cut."  And they are careful (in these fraught days) to be sure to mention that their efforts have been "thorough, thoughtful, bipartisan and bicameral legislating."  But the need is clear:  "the U.S. patent system with regard to patent eligibility is broken and desperately needs to be repaired" because "[t]he U.S. Supreme Court has confused and narrowed Section 101 of the Patent Act to the point that investors are reluctant to pursue the innovations that propel our country forward."  A more succinct and damning indictment by one branch of government of another is (fortunately) rare and even more significant because (in large part) it is true (although again, to be fair, the Supreme Court undoubtedly did not intend the consequences of its rather Delphic pronouncements on patent subject matter eligibility).  These Senators' position that Congress needs to step in is further justified, according to their statement, in that there have been "over 40 [actually, 42]" denials of petitions for certiorari on patent eligibility issues, indicating the Supreme Court's refusal to address the issue and as a result the lower courts and USPTO are and have been unable to ignore this precedent (but, until recently, it is at least arguable whether they have tried particularly hard to do so).

And what of the concerns of the life sciences industry?  It is gratifying for those laboring in these particularly patent-infertile fields that the Senators understand how the life sciences have been specifically hard-hit by the current climate.  The statement cites the Ariosa v. Sequenom case, not only because of the groundbreaking nature of the technology (and its beneficial effects on women no longer needing to be subjected to invasive procedures to obtain important diagnostic information about their babies), but because those individuals charged with stewarding U.S. patent law, embodied in Judge Richard Linn's "concurring" opinion in Ariosa, have said that there is discernably "no reason, in policy or statute, why this breakthrough invention should be deemed patent ineligible."

The Senators attest that they have considered the testimony of the naysayers, who are concerned that the current system "provides a mechanism to terminate baseless patent infringement lawsuits quickly and efficiently," but while acknowledging them (and the need for taking steps to mitigate these problems), the Senators understand that courts cannot be permitted to "destabilize" the patent system in an effort to correct issues like "deterring nuisance litigation."  They are also careful to rebut the allegation that their proposal would "permit patenting of scientific research per se, mere abstract ideas and nontechnical methods of doing business," specifying that "our patent system was never intended to protect artistic creations, methods of investing, or items found in nature" (although the latter category would do with a bit of clarification and limitation as to its scope).

The Senators are also careful to state that by abrogating the "judicial exceptions" in prior case law they do not intend to reverse the individual outcomes of these cases; some, they say, were decided correctly while others excluded inventions that should have been deemed eligible for patenting.  But they recognize that the issue is one of proper application of patent law to questions of prosecution, validity, and infringement, and that the Supreme Court's calculus has "collapsed" in error the more nuanced (yet well-defined) requirements for patentability into Section 101.  In view of the propensity for many of the "naysayers" to be representatives of the electrical, mechanical, and "high technology" arts, the Senators wisely cite as an example of the errors occasioned by recent precedent invalidation of claims to a "network charging station for electric vehicles," subject matter having much less emotional impact than, for example, gene patenting.  And Senators Tillis and Coons characterize as "admissions" concessions from high-tech representatives and legal academics that the law was being improperly applied to life sciences inventions.

Turning to the ACLU and their fellow travellers, the Senators address their concerns (which are to preserve their signal, albeit Pyrrhic, victory over gene patents):

Other witnesses, including the American Civil Liberties Union, expressed concerns about the patenting of human genes.  As we stated at the hearing, it is not our intent to allow such patents, and several witnesses, including the Association of American Universities and the Intellectual Property Owners Association, disagreed that our proposal would enable that result.

Testimony at the hearings further clarified that — because the entire human genome has been mapped for many years — these concerns are misplaced.  That said, we want to be very clear on this point, and we welcome proposals to clarify our proposed legislation.

So what do the Senators see as the aim of their legislation with regard to life sciences inventions?  It includes at least this:

We do want to incentivize research and development into the exciting prospects of individualized diagnostics and precision medicine, which is tied to genetics.  We are working hard to ensure the protections that will enable our innovators to bring these products to market while safeguarding research into the next generation of medical advances.

For example, we are considering a provision that would exempt research and experimentation from infringement liability.  This type of exception is common around the world.  It would allow basic research to continue unimpeded by patents, which are designed to control commercialization, not stifle research.  We will be reviewing any additional suggestions we receive that would promote research without discouraging product development.

The latter idea is one that has been suggested before, and has the advantage of taking some of the force from the argument (always more as a possibility than reality; see "Falsehoods, Distortions and Outright Lies in the Gene Patenting Debate") that basic research would be negatively impacted by permitting life sciences inventions to be patented.

Finally in the "lessons we have learned" section, the Senators mention that the alternative to fixing the patent subject matter eligibility pickle recent events have conspired to create will be to cloud inventions important to human health and diagnostics in trade secrecy -- a real risk with real consequences.

The Senators then set out the next steps:  clarifying in statutory language exclusion of human genes, and identifying the meaning of the "field of technology" requirement, so that "critical advances like artificial intelligence and medical diagnostics qualify, but not economic transactions or social interactions."

How these efforts go forward are important to track, because the Senators state that "[w]e will also consider ideas for reinforcing Section 112 of the Patent Act, which should operate to prevent inventors from claiming all possible solutions to a problem while also serving to protect inventors against those seeking to profit on trivial modifications."  There is much possible mischief in that statement, but these Senators are due the benefit of the doubt (and time) to fully flesh out how they intend to use Section 112 to address issues that have arisen (and have been imperfectly addressed) under Section 101.

Senators Tillis and Coons Release Statement on Recent Patent Reform Hearings

By Michael Borella --

As we have previously covered, the Senate Subcommittee on Intellectual Property recently held hearings on proposed revisions to 35 U.S.C. § 101 and related sections of the patent statute.  Chairman Thom Tillis (a Republican from North Carolina) and Ranking Member Chris Coons (a Democrat from Delaware) heard testimony from 45 individuals earlier this month.  These witnesses, including industry executives and groups, inventors, a former Federal Circuit judge, former USPTO officials, and law professors, discussed the pros and cons of the senators' proposal.  The purpose of the revisions and the hearings was to address the series of Supreme Court decisions in the last decade (most recently Alice Corp. v. CLS Bank Int'l) that has made it more difficult to obtain patents on certain types of inventions, most notably those related to software, business methods, and life sciences.

The Senators introduced a draft bill that eliminates the current two-part Supreme Court § 101 test, removes judicial exceptions to eligibility, draws a strict line between the inquiries of §§ 101, 102, 103, and 112, and would result in virtually any invention that "provides specific and practical utility in any field of technology through human intervention" being eligible.  The draft bill also changes § 112(f) in a fashion that narrows the interpretation of functional claim language.

On June 24, Senators Tillis and Coons released a statement regarding their takeaway from the hearings.  If anything, it reflects an understanding that the law needs to change, the Senators are committed to doing so, and that they are still working out some of the details.

The statement unequivocally acknowledges that there is a problem:

The hearings reinforced what we've been hearing for years — the U.S. patent system with regard to patent eligibility is broken and desperately needs to be repaired.  The U.S. Supreme Court has confused and narrowed Section 101 of the Patent Act to the point that investors are reluctant to pursue the innovations that propel our country forward.  We heard about studies showing that investors familiar with the current lack of clarity invest less in critical research and development in areas like medical diagnostics and artificial intelligence, at least in the United States.

The current director of the USPTO recently noted that inventors and judges alike struggle on a daily basis to determine "what is in and what is out" and wondered whether even Thomas Edison's famous phonograph patent would survive the courts' recent tests for eligible subject matter.

Likewise, two former USPTO directors testified to this disturbing lack of clarity, and the former chief judge of the U.S. Court of Appeals for the Federal Circuit characterized patent eligibility as "the number one problem in our patent system today."  He noted that, despite having personally drafted over 800 patent opinions, he struggled to predict the results in any given case.  His view is shared by current Federal Circuit judges, one of whom recently wrote that the lack of clarity in the law made it "near impossible to know with any certainty whether the invention is or is not patent eligible."

Given that, the Senators note that the Supreme Court has had ample opportunity to clarify the law, but has denied over 40 petitions for certiorari regarding § 101 since the Alice decision came down.  Thus, Senators Tillis and Coons have concluded that the ball is in Congress's court.

But reform will not be easy.  The Senators acknowledge that some witnesses like the state of § 101 as it is and the draft bill could open up areas of patenting that some suggest should be verboten.  But they are adamant that this will not derail their efforts:

Not everyone agrees that reform is needed.  Some witnesses cautioned that the status quo provides a mechanism to terminate baseless patent infringement lawsuits quickly and efficiently.  We hear these concerns, and we invite suggestions to mitigate them.  We cannot permit the courts, however, to destabilize our patent system for the sake of deterring nuisance litigation.  We can consider legislative provisions directly targeting the behavior of bad actors, and we welcome additional feedback on this point.

Several witnesses urged us not to permit patenting of scientific research per se, mere abstract ideas and nontechnical methods of doing business.  It is not our intent to do so.  To be clear, our patent system was never intended to protect artistic creations, methods of investing, or items found in nature.  Our framework attempts to provide a positive definition of eligibility to focus courts on subject matter that is eligible while eliminating the confusing and unreliable judicially created tests that dissect patent claims looking for "abstract ideas" and "inventive concepts."

Notably, the Senators signal that they are looking for ways to address nuisance litigation that does not involve the throwing-out-the-baby-with-the-bathwater approach of Alice, where legitimate technical and scientific advances are as easily invalidated as broad, vague claims with questionable novelty.  Furthermore, Senators Tillis and Coons write "we proposed amendments to other portions of the Patent Act to guard against the types of overly broad, functional patent claims frequently cited by those concerned about abuse."  This is a reference to the proposed changes to §§ 100 and 112(f), both of which promise to simplify the § 101 inquiry by taking on some of its baggage.  But the danger in doing so is that it may be difficult to limit functional claiming without enabling "those seeking to profit on trivial modifications" to a claimed invention.

The Senators also cast the need for § 101 reform as a matter of American competitiveness and national security.  Senators Tillis and Coons echo several witnesses when they decry "the uncertainty surrounding patent eligibility is affecting the development of technologies like 5G, quantum computing and artificial intelligence — innovations that not only promise to make life better for Americans, but also to protect our national security."  Implicitly referencing studies that some emerging technologies are much easier to patent in other countries, the Senators state that "inventions like these are receiving patents in Europe and China, but not in the United States."

The trick here is where to draw the line on patentability.  The dichotomy between inventions directed to "business" or "abstract" concepts and those that are "technical" is often false.  If the Senators propose a ban on business methods in the next iteration of the bill, does that include packet processing accelerators for financial transactions or innovative user interfaces for traders?  While both of these hypothetical inventions might have a business-oriented goal, they also rely on technological advances for their very existence and may involve groundbreaking ways of solving respective problems.  And what about artificial intelligence?  Looking from one angle, it is a pile of complex, abstract mathematics.  But from another angle, human ingenuity has recognized how to use these inherent mathematical properties in clever combinations to obtain results not otherwise attainable by humans or computers.

Building a wall between what is too abstract / business-oriented and what is patentable will be challenging, and may need to be taken on a case-by-case basis.  But the Alice test's attempt to do so resulted in an inquiry so vague and subjective that straight-faced arguments could be made for both the eligibility and the ineligibility of virtually any invention in which software takes a leading role.

Furthermore, any categorical exclusion to patentability needs to be tempered with the understanding that we do not know where the next great scientific and technical advances are coming from or what they will look like.  By definition, one cannot put a fence around innovation because inventiveness requires drawing outside the lines.

Clearly, Senators Tillis and Coons have some work to do, and codifying a softer variation of Alice may send reform efforts down a rat-hole.

Thus, while reaffirming the subcommittee's interest in § 101 reform, the statement in and of itself does not move the ball forward in a substantive fashion.  We will need to wait for the next version of the bill, which the Senators have previously indicated that they hope to have ready by the end of summer.  In the meantime, the statement asks repeatedly for feedback on the current draft and suggestions for its successor.  Serious proposals for addressing abusive litigation outside the ambit of § 101, a balanced approach to software patents, and how to define the scope of functional claims will almost certainly be welcome.

Xlear, Inc. v. STS Health, LLC (D. Utah 2019)

By Donald Zuhn --

In April, in Xlear, Inc. v. STS Health, LLC, District Judge David Nuffer of the U.S. District Court for the District of Utah denied a motion for summary judgment filed by Defendant STS Health, LLC, finding that the asserted claims of U.S. Patent No. 6,054,143 "do not point to an ineligible subject matter."  In denying STS's motion, the District Court also noted that "even if it were necessary to analyze the '143 patent under step two of the Alice Framework, STS has not carried its burden under that step."

Plaintiff Xlear initiated the dispute between the parties when it filed suit against STS for infringement of the '143 patent.  In response, STS filed a motion to dismiss, arguing that the asserted claims were directed to the naturally occurring product xylitol, which was administered using well-understood, routine, conventional activity previously engaged in by researchers in the field.  The District Court denied the motion, finding that the '143 patent did not claim the naturally occurring product xylitol/xylose, but rather was directed to a method for delivery of the xylitol/xylose to clean out the nasopharynx in a human.  The Court also found that STS had not presented evidence of similar applications of xylitol prior to the '143 patent.  STS then filed its motion for summary judgment that the asserted claims were invalid under 35 U.S.C. § 101 for failing to recite patent eligible subject matter, citing seven issued patents as evidence that the nasal administration of xylitol/xylose was well-known, conventional, and routine when Xlear filed the application that issued as the '143 patent.

In dismissing STS's motion for summary judgment, the District Court noted that when it denied STS's motion to dismiss, the Court had determined that under step one of the Alice framework the asserted claims were directed to a process or method that is not a law of nature or natural phenomenon.  In particular, the Court found that "the '143 patent does not claim the discovery of xylitol/xylose or the product itself," and "does not claim the exclusive right to every application of xylitol/xylose," but rather, the asserted claims "focus on the process of practically applying xylitol/xylose to clean the nasopharynx."  The Court therefore noted that:

Because it was determined that the claims do not point to an ineligible subject matter, it was unnecessary to proceed to the second step and determine "whether additional elements 'transform[ed] the nature of the claims' into a patent-eligible application."  The analysis in the Previous Order should have stopped after concluding that the claims of the '143 patent do not point to patent ineligible subject matter.  The Previous Order should not have stated that additional evidence was needed to resolve the second step of the Alice Framework.

However, the Court also noted that STS's motion for summary judgment would have failed even if it had been necessary to analyze the '143 patent under step two of the Alice framework.  In support, the District Court cited the Federal Circuit's decision in Berkheimer v. HP, Inc. for the proposition that whether "something is well-understood, routine, or conventional to a skilled artisan at the time of the patent is a factual determination" that "goes beyond what was simply known in the prior art."  In particular, the Court noted that:

STS has not shown how the seven cited patents teach the same invention as the '143 [patent].  The seven cited patents address the use of xylitol/xylose to aid in the absorption of other compounds through mucosal membranes, such as that found in the nose.  None of the cited patents address using xylitol/xylose to clean the nasopharynx.

The Court also pointed out that notwithstanding the seven patents identified by STS, Xlear continued to argue that nasal administration of xylose/xylitol for cleaning the nasopharynx in a human was not conventional at the time of application, and the Court determined that "[t]he seven cited patents do not disprove that contention and STS has not demonstrated the absence of an underlying genuine issue of material fact that would permit deciding patent eligibility 'on summary judgment as a matter of law.'"

The District Court concluded its opinion by noting that "[a]s the Previous Order determined under the first step of the Alice Framework, the claims of the '143 patent do not point to patent ineligible subject matter," and finding that "[t]he ‘143 Patent is therefore not invalid under § 101."  The Court therefore denied STS's motion for summary judgment.

Xlear, Inc. v. STS Health, LLC (D. Utah 2019)
Memorandum Decision and Order Denying Motion for Summary Judgment by District Judge Nuffer

ACLU (Predictably) Opposes Patent Subject Matter Eligibility Proposal

By Kevin E. Noonan --

It is perhaps not surprising that several medical groups, as well as other organizations with little regard for the patent system, and their legal accomplice, the American Civil Liberties Union, would oppose the recent efforts to amend the subject matter eligibility section of the statute (35 U.S.C. § 101) to correct the imbalances caused by recent U.S. Supreme Court jurisprudence on the matter.  After all, one of the pillars of the current standard for (in)eligibility was the Court's decision in AMP v. Myriad Genetics, championed by the ACLU beginning with the District Court case challenging "gene patenting" (an effort, not inconsequentially, that has taken the place of Nazis marching through the predominantly Jewish suburb of Skokie, IL in the group's fundraising efforts).  This opposition has taken the form of a letter to Senators Coons (D-DE) and Tillis (R-NC) as well as Representatives Collins, Johnson, and Stivers setting forth these groups' views.

Before getting into the substance of their allegations of the sky-falling effects of enactment of any revisions to the statutory status quo, two important realities need to be understood.  First, despite all the trumpeting and bally-hoo that ensued after the Supreme Court's Myriad decision was handed down, human genes remain patent-eligible.  Admittedly, the species of genes that can be patented has been limited, from genes isolated as they exist in the chromosome to a particular, processed form of the gene called "complementary DNA" or cDNA.  While this limitation can restrict the capacity for a small subset of human genes to be patented, the overwhelming majority of the ~30,000 genes present in the human genome remain patent eligible in the cDNA form.

The second important (overlooked) fact is that most human genes are not patentable.  The reason for the distinction is that patent-eligibility is a categorical criterion, while patentability depends on the circumstances of the invention in light of the prior art.  The genomic sequence of the totality of human genes (as well as the ~80% of the genome that does not encode proteins) has been publicly available since the turn of the 21st Century, due in large part to such luminaries as Sir John Shulston who were motivated precisely to prevent (or forestall or at least retard) patenting of human genes.  And for those human genes for which patent applications were filed at that time, the statutory limit of patent term as 20 years from filing ensures that there are very few such patents that have not expired (or been abandoned); Myriad's BRCA gene patents, for example, are almost all expired or will be in short order.

Thus, no matter what Congress may do, the historical fact is that the "gene age" is over and if there was ever a diminution of innovation, medical progress, or benefit to humanity occasioned by these patents, that time is truly past.

This is not to say that the Supreme Court's precedent has not made mischief with regard to patenting "natural products" (see "Sherry Knowles Addresses Real World Impact of Myriad-Mayo Guidance at BIO Symposium"); how the Court's Myriad precedent has been interpreted, by both the Patent Office and the lower courts is a source of concern that is blithely ignored by the ACLU and their clients.

Turning to the ACLU's letter, it is clear from the introductory sentence, stating that the signatories are "civil rights, medical, scientific, patient advocacy, and women's health organizations," that the ACLU turned its Rolodex to the groups it assembled for the Myriad case to once again raise an alarm over ephemeral consequences (and, sadly resulting in consequences these groups or at least their members would not have envisioned with approval; see "The ACLU, Working for the Man") that could result by enactment of the revisions suggested in the latest proposal.  The letter states that the proposed revisions to patent subject matter eligibility standards would "authorize patenting products and laws of nature, abstract ideas, and other general fields of knowledge" (they wouldn't, of course; they would just substitute per se, categorical standards to ones better suited to identifying that subject matter whose patenting would not "promote progress of the useful arts").

But the ACLU and friends have expanded the litany of their worries from the Myriad days -- the letter announces that they consider "[m]ost troubling[]" the prospect of "patenting of human genes and naturally-occurring associations between genes and diseases," which they claim "will prevent the discovery of novel treatments for diseases including cancer, muscular dystrophy, Alzheimer's disease, heart disease, and other rare and common diseases."  It would be understandable to think from this rhetoric that, before the Myriad decision no one ever discovered "novel treatments for diseases including cancer, muscular dystrophy, Alzheimer's disease, heart disease, and other rare and common diseases," when the truth of the matter is that, perhaps with the exception of Alzheimer's disease, the history of the past thirty years has been the discovery of treatments for such diseases, supported by the patent system to permit these treatments to come to market.  In addition, the letter claims, revising patent law as proposed would "create barriers to patients' access to potentially lifesaving genomic tests, eliminate access to confirmatory testing and dramatically increase the cost of tests that have benefited from innovation that led to reduced costs of DNA sequencing technology."  Sadly, of course, the true sequellae of the Myriad decision has been to permit corporate testing labs to expropriate the scientific advances which, as in Myriad, tend to come from academia and startup biotechnology companies; the even sadder reality is that access to medicine and diagnostic testing is thwarted by insufficient insurance coverage not patents.  Indeed, one of the reasons genetic diagnostic testing is (relatively) widely accepted (and reimbursed) is due to the success Myriad had in convincing skeptical insurance providers (public and private) in the late 1990's that something as frightening and serendipitous as cancer could be predicted with reliability at all (see "In Defense of Patenting").  And as for the letter's further allegation that the proposed revisions to statutory patent eligibility would "stymie competition for developing and improving diagnostic and medical tests, and increase the cost and hinder advancement of targeted therapeutics involving genomic markers" that would result in "higher costs for patients, payers, and the healthcare system overall," what will be stymied would be investment in such new technologies (except for those established businesses for whom innovation upsets their established channels of commerce and thus tend to avoid truly groundbreaking inventions).

The letter goes on to provide an encomium for recent patent eligibility jurisprudence, highlighting the signal victory for the ACLU in Myriad and particularly noting the unanimity of the Supreme Court's decisions (which paradoxically does not necessarily demonstrate their correctness, erudition, or deep and penetrating thought concerning the patent issues at bar).  More troubling is the unsupported allegations that follow, that these decisions "have created a legal foundation that is promoting innovation across numerous sectors."  (It is worth noting that the only support for the assertion that human gene patent ineligibility should lead to lower cost diagnostic tests cited in the letter is an article by a journalist, written the day the Supreme Court handed down its Myriad decision.  One would think that the experience, putatively represented by the co-signers of the letter, six years after the Myriad decision, would yield ample, real-world evidence of this speculation but it's nowhere to be found in the letter.)

In something of a factual (but not emotional or rhetorical) nonsequitur, the letter then recites the purported sins of Myriad, backed not by court findings but by allegations from an amicus brief from the American Medical Association and other medical groups.  (It is significant that plaintiffs and their ACLU counsel did not attempt to invalidate Myriad's patents for misuse or other misbehavior, but used allegations of misbehavior to drum up support for invalidating the patents on categorical grounds.)  Included in these allegations in the letter is the slander that "[t]he patents authorized Myriad to block all manner of scientific inquiry into the genes shutting down research at academic medical centers throughout the country," a statement belied by the more than 10,000 academic research papers that could be found in Medline and other databases having been published between 1997 (when the University of Utah or its licensee Myriad was granted the patents) and 2013 (when the Supreme Court invalidated a small subset of those patent claims).

This false litany leads to a reiteration of the ACLU's Myriad rhetoric:  that there is a "fundamental truth" that "genes and other naturally occurring matter and relationships should never be granted to anyone as intellectual property."  But the consequence of taking that "truth" to its logical extreme is that nothing in the natural world, no matter how changed by human intervention, could be patented.  It is nothing less than hubris (and like much hubris, arising from ignorance) to think that only that which arises solely without reliance on the natural world deserves patent protection.  And the further roll call of intellectual luminaries and medical, religious, and interest groups recited as supporting the Myriad decision just shows that excellence and achievement in one field does not lead to wisdom is another (see William Shockley and Peter Duesberg as illustrative examples).

As might have been expected, the ACLU's concern has been inflamed by language in the draft proposed legislation that the judicial exceptions (laws of nature, natural phenomena, and abstract ideas) and case law supporting them would be abrogated.  This tactic raises many more concerns that importuning the ACLU and its friends and supporters, the most worrisome of which being that the Supreme Court would, at best, decide that such abrogation was unconstitutional for being beyond the patenting powers granted to Congress in Article I and, at worst, give rise to even more stringent limitations on patent eligibility (no doubt applauded by the ACLU and their co-signers of this letter).  The reality is, of course, more measured and reasoned than that:  what is proposed is replacing the poorly defined, inconsistently applied, subjective, per se judicial (instead of statutory) "exceptions" with legislation, vetted through the political process and (with luck) capable of consistent, predictable application in ways that do not turn patenting into a lottery dependent on the whims of district court or appellate judges or, indeed, the Supreme Court.  (It is ironic that the letter casts the consequences of this legislation as creating uncertainty, when even the casual observer will find plainly evident that it has been the Supreme Court's recent decisions, and its unwillingness to revisit them, that has caused the greatest uncertainty that the legislation proposes to correct.)  The ACLU's letter castigates the proposed legislation for wiping out "one hundred and fifty years of case law" but of course that's the point; said more properly the legislation will remove the uncertainties created by this case law.

The letter ends with the disingenuous suggestion that "[t]o the extent that there are problems with the current application of the law that must be solved, narrower paths to addressing them are preferable to rewriting current 101 standards and overturning over a century of precedent." Not only does the letter contain no hint regarding what those "narrow paths" might be, it is unlikely that any such path would be acceptable to the ACLU and their supporters.

One thing is certain:  there are competing memes involved in the patent subject matter eligibility debate, and for the pro-patent proponents to prevail this time it will take more political savvy than was exhibited during the Myriad case.

Tangelo IP, LLC v. Tupperware Brands Corp. (D. Del. 2019)

By Donald Zuhn --

Last week, in Tangelo IP, LLC v. Tupperware Brands Corp., District Judge Richard G. Andrews of the U.S. District Court for the District of Delaware denied a motion for exceptional case filed by Defendant Tupperware Brands Corp., finding that Tupperware Brands had failed to establish that the case was exceptional under 35 U.S.C. § 285.  Plaintiff Tangelo IP, LLC had filed suit against Tupperware Brands, alleging infringement of U.S. Patent No. 8,429,005.  Tupperware Brands responded by filing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing that the '005 patent was invalid under 35 U.S.C. § 101.  The District Court granted the motion, and Tupperware Brands then moved for a finding of exceptional case and requested attorneys' fees under § 285.

In determining that the case was not exceptional, the District Court noted that although it had found the '005 patent to be invalid under § 101, "that does not mean Plaintiff's contrary position was unreasonable."  In support, the Court cited SFA Sys., LLC v. Newegg Inc., 793 F.3d 1344, 1348 (Fed. Cir. 2015), for the proposition that "it is the substantive strength of the party's litigating position that is relevant to an exceptional case determination, not the correctness or eventual success of that position" (emphasis in opinion).

In response to Tupperware Brands' argument that Tangelo had "ignored substantial precedent dismissing analogous claims directed to concepts long-practiced in society," the Court noted that Tupperware Brands had "identifie[d] no precedent addressing claims analogous to those in the '005 patent, at least beyond the broad category of claims directed to 'concepts long-practiced in society.'"  Judge Andrews also noted that he had not identified any cases in which analogous claims had been found to be patent ineligible.

Judge Andrews concluded the opinion by distinguishing the instant case from his decision in Finnavations LLC v. Payoneer, Inc., 2019 WL 1236358 (D. Del. Mar. 18, 2019).  In Finnavations, Judge Andrews had granted motions for exceptional case and attorneys' fees based on claims that were "plainly directed at a patent ineligible concept," where there was "no question" that the patent at issue was invalid because the claims were analogous to those struck down in Alice.  Judge Andrews found the instant case to be "clearly a different situation," explaining that while he ultimately agreed with Tupperware Brands regarding the validity of the '005 patent, "there is room for argument."  Judge Andrews also pointed out that he was not aware of any precedent that leaves "no question" as to the validity of the '005 patent, "particularly in view of the somewhat opaque nature of § 101."  The Court therefore denied Tupperware Brands' motion for a finding of exceptional case.

Tangelo IP, LLC v. Tupperware Brands Corp. (D. Del. 2019)
Memorandum Order by District Judge Andrews

A Comparison of U.S. and Japanese Patent Subject Matter Eligibility

By James Korenchan, Michael Anderson, and Yukio Oishi --

Patent practitioners who focus their practice in the high-tech sector have most likely encountered Japanese patent law in one form or another.  More often than not, companies at the forefront of technological advancement make, use, and sell products in Japan, or have competitors who do the same.  This alone can make Japan an attractive place for obtaining patent protection in high-tech fields.  Additionally, Japan is often viewed as having a very pro-patent (and thus, pro-patentee) court system, especially over the last ten or more years.  In April of 2015, the Japan Patent Office (JPO) implemented a new opposition system to invalidate patents as part of the Japanese Patent Act of 2014.^[1]  This new system has greatly reduced the number of patents found invalid.  For instance, between 2008 and 2017 the number of Requests for Trial for Invalidation in Japan fell by 40%.^[2]  Moreover, between 2008 and 2017 the percentage of patents found to be invalid fell from 59% to 21%.^[3]

Despite a growing interest in pursuing Japanese patent protection, many U.S. practitioners have a limited understanding of Japanese patent law and limited interactions with Japanese firms.  While having an extensive knowledge of Japanese patent law is not always necessary for U.S. practitioners to provide sound legal counsel, an appreciation of the differences between U.S. and Japanese patent prosecution can improve the quality of representation that practitioners provide.  Of the various patent prosecution issues faced in the high-tech space, subject matter eligibility is a common hurdle.  Thus, the focus of this article is the differences in subject matter eligibility analysis in the U.S. and Japan as it pertains to high-tech patent applications, particularly for computer-implemented inventions involving software or business methods.

By now, U.S. practitioners are all-too-familiar with the two-part Alice Corp. test for determining the patent eligibility of claims under 35 U.S.C. § 101.  In part one of this test, one must first determine whether the claimed subject matter as a whole is directed to a judicial exception.  Further, under Alice Corp. and its progeny, the judicial exception that high-tech claims typically face is whether the claims recite an "abstract idea."  If the claim is found to be directed to something other than a judicial exception, then the claim is patent-eligible.  But if the claim is found to be directed to a judicial exception, then part two of the test is applied.  In part two of the test, one must determine whether any element or combination of elements in the claim is sufficient to ensure that the claim recites "significantly more" than the judicial exception.

To call the recent history of patent eligibility in the U.S. tumultuous might be an understatement.  The U.S. Patent and Trademark Office (USPTO) and the courts have wrestled for years over how to guide examination of claims under § 101.  Court cases -- particularly, those from the Federal Circuit -- have provided differently-nuanced interpretations as to what constitutes an abstract idea and what elevates a claim to the realm of "significantly more."  The USPTO typically then follows suit by periodically updating its subject matter eligibility guidance.  However, in practice, the manner in which examiners apply the case law of the courts and the guidance issued by the USPTO can be a mixed bag, often to the chagrin of practitioners.

Under the most recent subject matter eligibility guidance issued by the USPTO on January 7, 2019, the USPTO attempted to clarify part two of the Alice Corp. test.^[4] According to the guidance, "a claim is not 'directed to' a judicial exception if the judicial exception is integrated into a practical application of that exception."  Thus, the guidance provides clarification to the previous test on step two of the Alice Corp. test as to what constitutes "significantly more" than the judicial exception.

The new guidance is based in part on the Federal Circuit decisions in BASCOM Glob. Internet Servs., Inc. v. AT&T Mobility LLC ^[5] and Arrhythmia Research Tech., Inc. v. Corazonix Corp.^[6]  In BASCOM, the Court concluded "that claims could be eligible if ordered combination of limitations 'transform the abstract idea . . . into a particular, practical application of that abstract idea.'"[7]  Additionally, in Arrhythmia, the claims were found patent eligible because "inventions that were implemented by the mathematically-directed performance of computers were viewed in the context of the practical application to which the computer-generated data were put."[8]

In practice, the new guidance is a powerful tool for patent practitioners.  For example, before the guidance, many software-based patent applications were faced with arguing there was "significantly more" than algorithms and computer hardware in the claims.  However, the new guidance obviates the previously opaque requirements.  Now, rather than advocate for "significantly more," practitioners can argue that their claim is a practical application of something that could be a judicial exception.  One manner to do this can be to argue that additional elements in the claims improve the functioning of a computer or provide an improvement to other technological areas.  Notably, the new guidance also does not involve a consideration as to whether such additional elements are merely conventional.  Thus, a claim with conventional elements can still be patent eligible as long as it integrates a judicial exception into a practical application.

While the new USPTO guidance attempts to bring some clarity and consistency to patent eligibility, the interplay between the courts and the patent office remains uncertain.  Thankfully for patentees seeking protection in Japan, the bar for patent eligibility appears to be lower and more clearly defined.  In contrast to the U.S., the hurdle for patent eligibility in Japan is lower.  For example, in Japan, an examiner must determine whether a claimed invention as a whole involves the "creation of a technical idea utilizing the laws of nature."^[9]  But similar to the U.S., examples of inventions typically deemed patent ineligible under this Japanese standard include those that are directed to economic laws, rules for playing a game, mental activities, mathematical formulas, or the mere presentation of information (e.g., image data taken with a digital camera).^[10]

When claims are deemed "software-related," the determination takes a slightly different form and involves a two-part inquiry.^[11]  First, the examiner evaluates the claimed invention from a non-software focused standpoint.  In other words, the patent eligibility of a software-related invention evaluated using this standpoint should not rest on the fact that the invention involves software.  Thus, the examiner first determines whether the invention stands on its own, and is patent eligible notwithstanding the software aspect.  But if the examiner is unable to make this first determination, the examiner then evaluates the invention with a heavier emphasis on the software aspects of the claim.

From a non-software focused standpoint, a software-related invention is likely to be found to be patent-eligible when it involves (i) "concretely performing control of an apparatus (e.g., an engine, a washing machine, a disk drive), or processing with respect to the control" or (ii) concretely performing information processing based on the technical properties of an object (e.g., physical, chemical, or electrical properties).^[12]  Interestingly, even claims that involve "software for causing a computer to execute a procedure of a method," or "a computer or system for executing such a procedure" are often found to be patent eligible in Japan without further inquiry.^[13]

From a software-focused standpoint, a software-related invention is likely to be found to be patent-eligible when "information processing by the software is concretely realized by using hardware resources."^[14] In other words, the cooperation of software and hardware resources can elevate a claim to a level of patent eligibility.  Examples of hardware resources include various "physical device[s] or physical element[s]" that are "used in processing, operation, or implementation of a function," such as a computer, CPU, memory, input device, output device, or a physical device connected to a computer.^[15]

The Japanese software-focused standard for patent eligibility is particularly notable for several reasons.  For one, it is in stark contrast with U.S. standards, in which merely implementing a process using software and hardware is almost always insufficient for patent eligibility.  Additionally, the lower hurdle before the JPO is undoubtedly a contributing factor to the higher level of allowed software-related claims and business method claims in Japan compared to that in the U.S.

For software-related claims, the Japanese standard as a whole, and particularly the software-focused standard, allows for a certain type of patent protection in Japan that is not currently available in the U.S.: program claims.  A "program claim" is distinct from a computer readable medium (CRM) claim and was introduced into Japan Patent Law in 2002 to address the issue that a CRM claim does not cover a situation where a software program is provided to a user, not by a CRM such as a CD-ROM, but rather by the user downloading the software program over a network.^[16]  In the JPO examination handbook, the JPO provides the following example forms that program claims can take, which U.S. practitioners will certainly note as being quite different from the scope of what is patent eligible in the U.S.^[17]

    Example 1: A program for causing a computer to execute a step A, a step B, a step C, …

    Example 2: A program for causing a computer to function as means A, means B, means C, …

    Example 3: A program for causing a computer to implement a function A, a function B, a function C, ...

Because program claims do not require an apparatus that stores the software code, program claims provide patent protection in an area that CRM claims do not, and are thus useful for at least that reason.

There are other types of claims that fall under the JPO's definition of a "program" and are often found to be patentable using the software-focused standard.  One example is a "trained model," such as "[a] trained model for causing a computer to function to output quantified values of reputations of accommodations based on text data on reputations of accommodations," where the model comprises multiple neural networks.^[18] Another example is a "data structure," such as "[a] data structure of dialogue scenarios utilized in a voice interactive system."  These types of claims can be more difficult to obtain in the U.S.^[19]

As for business method claims, between 2012 and 2017 in the U.S., the allowance rate for business method claims was 32.4% in 2013, dropped to 6.2% by 2016, and rose to 12.7% in 2017.^[20]  Over the same period of time in Japan, however, the allowance rate for such claims was consistently near 70%.^[21] The high allowance rate in Japan can be attributed to the low hurdle for software.  In particular, while business methods are not patent eligible on their own, software for implementing such methods are patent eligible as long as they meet the aforementioned requirements.  For example, claim 1 of Japanese Patent No. 5492261 is directed to "a system for determining executability of a loan transaction" and is recited as follows:

1.  A system for determining executability of a loan transaction comprising:
    means for receiving a loan application telegraphic message including an identifier of a loan application client, a loan execution date and a loan application amount from a terminal device;
    means for storing, for the loan application client, a loan limit amount, a total amount of loan balance and a future loan execution amount that has been scheduled to be loaned during a period of time up to the loan execution date; and
    means for determining that a loan transaction for the loan application telegraphic message is executable if a first total amount of the loan application amount, the total amount of loan balance and the future loan execution amount is less than or equal to the loan limit amount.

The key feature of this claim is not the presence of "a terminal device" (which is arguably the only concrete recitation of hardware in the claim) or another technical aspect, but rather a business process.  However, based on the JPO Examination Handbook, it would be clear to a person skilled in the art that, considering the claim as a whole, the underlying business process is "implemented by concrete means or procedures on which the software and hardware resources that a 'computer' usually comprises, such as a CPU, memory, storage means, input and output means, etc. cooperate."^[22]  Here, a "means for determining" implies a CPU, a "means for storing" implies memory, and a "means for receiving" implies an input or output means.  The business process is concretely realized by using hardware resources and is thus patentable.

A clear understanding of Japanese patent law in the areas of software and business methods can help practitioners avoid missteps and better represent companies who have or seek to have patent protection in Japan.  For example, even when U.S. patentees pursue software-related claims in Japan, they often attempt to do so with CRM-style claims and do not consider whether they should file program claims.  In fact, due to how unfavorably U.S. patent law is on business methods, and how risky U.S. patent law can be on software claims, U.S. patentees often forego pursuing patent protection in these areas altogether.  Thus, U.S. practitioners and patent applicants alike should be aware of all the particular advantages of Japanese patent law in these areas and reach out to a Japanese associate if any other advice is needed.  After all, it could be worthwhile for both parties.

^[1] Outline of the Partial Revision of the Patent Act, etc., Japan Patent Office (May 19, 2014), available at https://www.jpo.go.jp/e/system/laws/rule/hokaisei/document/tokkyohoutou_kaiei_2605 14/outline.pdf.

^[2] JPO Status Report 2019, Japan Patent Office, at 36 (March 2019), available at https://www.jpo.go.jp/e/resources/report/statusreport/2019/document/index/all.pdf.  

^[3] Overview of Trial for Invalidation and Opposition Systems in Japan, JPO Trial and Appeal Department at 6 (March 2017), http://www.ptabbar.org/wp-content/uploads/2018/03/Pre-Conference-Session-Comparing-the-PTAB-to-Other-Forums-Around-the-World-FINAL.pdf.  

^[4] 2019 Revised Patent Subject Matter Eligibility Guidance, Federal Register, 84 Fed. Reg 50 (Jan. 7, 2019).

^[5] 827 F.3d 1341, 1352 (Fed. Cir. 2016).

^[6] 958 F.2d 1053, 1056-57 (Fed. Cir. 1992).

[7] BASCOM Glob. Internet Servs., 827 F.3d at 1352.

[8] Arrhythmia Research Tech, 958 F.2d at 1057.

^[9] Examination Handbook for Patent and Utility Model in Japan, Japan Patent Office, Annex B, Chapter 1, Computer Software-Related Inventions, Section 2.1 and 2.1.1, available at https://www.jpo.go.jp/e/system/laws/rule/guideline/patent/handbook_shinsa/document/index/app_b1_e.pdf

^[10] Id.

^[11] Id. at Section 2.1.1.

^[12] Id. at Section 2.1.1.1.

^[13] Id.

^[14] Id. at Section 2.1.1.2.

^[15] Id.

^[16] News Release, JPO (April 2002)

https://www.jpo.go.jp/system/laws/rule/hokaisei/tokkyo/houkaisei_h140417/houkaisei_gaiyou.html.

^[17] Examination Handbook for Patent and Utility Model in Japan, Japan Patent Office, Annex B, Chapter 1, Computer Software-Related Inventions, Section 1.2.1.1.

^[18] Id. at Section 3, Case 2-14; see also Section 1.2.1.1.

^[19] Id. at Section 3, Case 2-13.

^[20] Business Methods Allowance Rate, USPTO, https://www.uspto.gov/patents-getting-started/patent-basics/types-patent-applications/utility-patent/business-methods-27 (last visited May 23, 2019).

^[21] See Nobuyuki Taniguchi, Recent Developments on Software-related Patents in Japan, Nakamura & Partners (Aug. 18, 2017), http://www.nakapat.gr.jp/en/legal_updates_eng/recent-developments-on-software-related-patents-in-japan/; Yukio Oishi, Protecting Fintech Business by Obtaining Patent Protection in Japan, Japan Patent and Trademark Update, TMI Associates (November 2017), available at https://www.tmi.gr.jp/wp-content/uploads/2017/11/jptu_issue_8.pdf.

^[22] See, e.g., Examination Handbook for Patent and Utility Model in Japan, Japan Patent Office, Annex B, Chapter 1, Computer Software-Related Inventions, Section 2.1.1.2, Example 4.

Hyper Search LLC v. Facebook Inc. (D. Del. 2018)

By Michael Borella --

In October 2017, Hyper Search brought a patent infringement action against Facebook in the District of Delaware, asserting U.S. Patent Nos. 6,085,219, 6,271,840, and 6,792,412.  Facebook sought to dismiss the complaint under Rule 12(b)(6), alleging that all asserted claims were invalid under 35 U.S.C. § 101.  While all three patents suffered a similar fate, the '412 patent and the Court's reasoning regarding this patent is of particular interest because the claims thereof specifically address machine learning.

Machine learning is a subset of artificial intelligence in which a data set -- usually a large one -- is used to train a computational model.  This model is then applied to new instances of data to provide a result in line with the training.  In this fashion, software can be used to classify and/or predict outcomes often with greater accuracy than can be expected from human performance or programs developed in a more traditional manner.  Notably, the exact algorithm and rules used by the model are not explicitly provided by the programmer -- instead, the process of training the model develops these rules from the training data.  Machine learning has been applied with success to various technological fields, such as speech recognition, image classification, supply chain management, drug efficacy, genetic similarity, and information technology services, just to name a few.

The patent eligibility of artificial intelligence, machine learning in particular, is an open issue.  There have been no substantive Supreme Court or Federal Circuit § 101 cases to date, and just a handful in the district courts.  But this handful has not been representative of how machine learning claims are now drafted (or should be drafted), and the machine learning content therein was often tangentially related to the actual claim language.  Thus, any proceeding that can provide insight on the nuances of how machine learning inventions are being viewed by the courts is potentially helpful.

Why is patent-eligibility an issue for machine learning inventions?  This is because the validity of software patents as a whole has been subject to an additional layer of scrutiny for the last five years.

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 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 that are well-understood, routine, and conventional will not lift the claim over the § 101 hurdle.

Considering machine learning from one viewpoint, it is no more than abstract mathematics enabled by generic computing devices and applied to data; therefore, it is inherently ineligible under § 101.  From the other end of the spectrum, machine learning can be thought of as solving complex problems by creating new algorithms that in practice can only be used by computers; thus, it is inherently technical.  Most uses of machine learning lie between these two extremes.  Applying a vanilla model to any data -- even new data -- is probably not eligible and may even be obvious as well.  On the other hand, most practical uses of machine learning require at least some innovative model design, training techniques, data preparation, mapping of the prepared data to the model, and post-processing of model output.  Any of one or more of these latter mechanisms may be enough to lift a claim over the § 101 hurdle.

In any event, claim language and the problem being solved matters in the § 101 inquiry, as Hyper Search found out the hard way.  Claim 1 of the '412 patent recites:

A system for controlling information output based on user feedback about the information comprising:
    a plurality of information sources providing information;
    at least one neural network module that selects one or more of a plurality of objects to receive information from the plurality of information sources based at least in part on a plurality of inputs and a plurality of weight values;
    at least one server, associated with the neural network module, that provides one or more of the objects to one or more recipients;
    the recipients enabling for one or more users to generate feedback about the information; and
    wherein the neural network module generates a rating value for a plurality of the objects at the end of an epoch, redetermines the weight values using the rating values, and selects which objects to receive information during a subsequent epoch using the redetermined weight values and the inputs for that subsequent epoch.

In a nutshell, the invention uses a neural network (which is a type of machine learning model) to determine how to provide information from particular sources to particular output objects.  The neural network periodically re-evaluates the weights based on ratings from the objects.

Facebook contended that this claim "is directed to the abstract idea of providing information based on feedback from recipients."  Hyper Search countered that its invention is "an improvement in computer capability because the system controls information output based on user feedback about the information itself" and "that this is a specific process that is new, performed by a computer, iterative, and adaptive."

The Court appeared to adopt Facebook's interpretation of the claim, finding that "[c]laims directed to providing information based on feedback have previously been held patent-ineligible by this court" due to their being abstract.  The Court further asserted that the "claims of the '412 patent implement a generic computer system to obtain functional results of providing information based on feedback from recipients" and that "Hyper Search does not show how the system of claim 1 is an improvement in computer capability."  The Court further criticized the breadth and vagueness of the asserted claims, stating that this "sets the [them] apart from the claim language deemed sufficient to establish patent eligibility in the Federal Circuit's recent decisions, such as [Enfish v. Microsoft]."

Finding claim 1 abstract, the Court moved on to the second part of the Alice test.  The Court noted that the claim "recites generic computer functionality such as a 'neural network module' and a 'server.'"  Hyper Search's specification worked against it, as "[t]he specification states that neural networks were well-known in the art, and the inventors stated that the alleged invention is not limited to neural networks but rather to 'any artificial intelligence agent.'"

Hyper Search attempted to rely on BASCOM Glob. Internet Servs., Inc. v. AT&T Mobility LLC to establish that its claimed arrangement of elements provides a technical improvement.  But the Court was not convinced since "Hyper Search does not identify any such example in the specifications in the patents-in-suit, and does not show how any of the prior elements are particularly arranged in the claimed inventions such that they improve the performance of the computer itself."  Further, "Hyper Search does not identify any concrete improvements to specific computer functionality or solutions rooted in problems that only existed on computers, but instead generally asserts that each of the asserted claims is directed to solving a computer-related problem."

Consequently, the Court concluded that the asserted claims were invalid under § 101 and that the case should be dismissed.

Not unlike previous cases where the patent-eligibility of machine learning inventions was considered, the patentee here was hobbled by overly broad and non-specific claims that did not focus on exactly how the model operated or was trained.  Additionally, there was no particular detail in the claim of how this model's input or output was processed.  As a result, the facts of this case are so skewed against finding the claims eligible that it is a not a great data point.  Thus, it would be a mistake to conclude that the outcome here does anything more than reiterate that generic claims with sweeping language are likely to have difficulties under § 101.

Ways to avoid or at least mitigate patent-eligibility challenges for machine learning inventions have been discussed previously and still apply.  Until a claim written in accordance with these techniques is subject of a § 101 challenge, the eligibility landscape of machine learning inventions will remain largely unmapped.

Finnavations LLC v. Payoneer, Inc. (D. Del. 2019)

Court Grants Exceptional Case/Attorney Fees When Software Patent Has Invalid Claims under § 101

By Joseph Herndon --

In the U.S. District Court for the District of Delaware, motions for an exceptional case and attorneys' fees were granted on the basis that the patent owner brought suit with a software patent having claims so "ugly" that they had no chance to survive a challenge under 35 U.S.C. § 101.  The case is Finnavations LLC v. Payoneer, Inc. and Finnavations LLC v. Stitch Labs, Inc.  Here, Defendant Payoneer Inc. filed a Motion for Exceptional Case and Defendant Stitch Labs, Inc. filed a Motion for Attorneys' Fees after prevailing in the action by invalidating the asserted patent under § 101.  The District Court granted each of these motions and offered some strong opinions on the invalidity of the patent.  However, it's difficult to see, based on current standards, how the patent claim is as "ugly" as the Court stated.

Background

Plaintiff sued Defendants on March 23, 2018, alleging infringement of U.S. Patent No. 9,569,755 ('755 Patent).  Defendants filed Motions to Dismiss for Failure to State a Claim based on patent ineligibility of the '755 Patent under 35 U.S.C. § 101.  The Court granted the motions, and specifically found that the '755 Patent was directed to the patent ineligible abstract idea of bookkeeping and did not contain an inventive concept.

The '755 Patent

The '755 Patent is directed to a "Financial Managment System," and is described as a system designed to facilitate the record keeping associated with online transactions to increase the amount of transaction data relating to an online purchase of goods or services that is retained by a personal financial management system.

Claim 1 recites:

1.  A method for transferring payment information to a personal financial management program comprising:
    invoking a financial assistant operating on a network device upon a determination of a transmission of transaction data to a commercial web server configured to conduct online financial transactions;
    intercepting, by the financial assistant on the network device, the transaction data in a first data structure comprising a plurality of components of transaction data, the first data structure compatible with conducting an online transaction with the commercial web server;
    copying, by the financial assistant on the network device, each component of the transaction data into a second data structure compatible with the personal financial management program, wherein the second data structure differs from the first data structure;
    entering, by the financial assistant on the network device, additional transaction data not included in the transmitted transaction data into the second data structure including at least one of a category and remarks; and
    transmitting, by the network device, the copied transaction data and the additional transaction data to the personal financial management program.

Analysis

The Patent Act provides that "in exceptional cases [the court] may award reasonable attorney fees to the prevailing party."  35 U.S.C. § 285.  Under the statute, there are two basic requirements:  (1) that the case is "exceptional," and (2) that the party seeking fees is a "prevailing party."

The Supreme Court defines an "exceptional" case as "simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated."  Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756 (2014).

Here, the Defendants are prevailing parties.  Thus, the only issue is whether the cases are exceptional.

The Court had a strong opinion that there was "no question" that the '755 Patent is patent ineligible under the Federal Circuit's current precedent.  Even though the Court noted that since Alice, the law of patent eligibility has perhaps become unpredictable and unclear, the Court stated that patents that look like those at issue in Alice are ineligible.  The Court issued further strong statements, declaring that "I have rarely been more confident in the patent ineligibility of a set of claims or more confident in the unreasonableness of a Plaintiff's decision to sue on a patent."  It seems that the Court easily found this case to be "one that stands out from others" with regard to the substantive weakness of Plaintiff's litigation position.

Even though the Examiner allowed the '755 Patent despite four separate § 101 rejections, the Court still found that the USPTO's decision to grant the patent does not relieve the patent holder from making an independent evaluation of the strength of the patent prior to suing.  The Court stated that the "issuance of a patent cannot and should not be a license to sue with abandon."  The Court further noted that patent examiners are non-lawyers, and an Examiner's opinion on the legal question of patent eligibility does not relieve a patent attorney from his or her obligation to make an independent assessment based on an evaluation of the relevant law.

The Court issued yet another strong opinion:

I have resolved scores of Section 101 motions and seen a wide array of validity arguments.  Usually the quality of an argument falls somewhere between good and mediocre.  Infrequently, I have encountered arguments which I would classify as bad.  Plaintiff's defense of the validity of the '755 Patent was not just mediocre or bad; it was ugly.

Plaintiff argued that the law is unclear and that it made reasonable arguments in response to Defendants' motions.  But the Court disagreed and found that the claims of the '755 Patent are plainly directed at a patent ineligible concept and amount to no more than the underlying idea, and further that "[a]ny reasonable patent attorney with an understanding of Section 101 law could have predicted the outcome."

Thus, the Court found that Plaintiff should not have filed suit, asserting "the clearly patent ineligible claims of the '755 Patent."  The Court found that this decision was unreasonable under the law and Plaintiff's behavior should be deterred.  Thus, the Court granted Defendant Payoneer's Motion for Exceptional Case and Defendant Stitch Labs' Motion for Attorneys' Fees.

Commentary

At times, I believe I am a reasonable patent attorney with an understanding of § 101 law, and perhaps I could have predicted that the claims of the '755 Patent would face § 101 challenges, BUT, the claims at issue in this case are far from "ugly," and in view of the prosecution history, it would have been reasonable to consider the claims valid on their face.

The District Court made much of the claims looking like those at issue in Alice, which, if true, then of course they should be found invalid under § 101.  But the representative claim in Alice, shown below, appears far different, in my opinion, from the claims of the '755 Patent:

(Alice claim)   A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:
    (a) creating a shadow credit record and a shadow debit record for each stakeholder party to be held independently by a supervisory institution from the exchange institutions;
    (b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;
    (c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party's shadow credit record or shadow debit record, allowing only these transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order, and
    (d) at the end-of-day, the supervisory institution instructing one of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.

In particular, the claims of the '755 Patent are grounded in computer technology, and include exchange of data between network components.  This is not to say that the claim at issue in this case should survive a § 101 challenge, as the '755 Patent appears to be void of description to support a factual analysis that the invention solves a technical problem with a technical solution.  However, the patent owner would appear to be on sufficiently solid ground asserting this patent, as the claims were heavily tested during prosecution, and the USPTO issued the patent after a long examination process.  Since the claims at issue in this case differ from Alice in this way, the granting of motions for an exceptional case by the District Court are hard to accept.

Finnavations LLC v. Payoneer, Inc. (D. Del. 2019)
Memorandum by District Judge Andrews

Bio-Rad Laboratories, Inc. v. 10X Genomics, Inc. (D. Del. 2019)

By Donald Zuhn --

Last month, in Bio-Rad Laboratories, Inc. v. 10X Genomics, Inc., District Judge Richard G. Andrews of the U.S. District Court for the District of Delaware denied a motion to dismiss and/or strike filed by Defendant 10X Genomics, finding that U.S. Patent Nos. 9,562,837 and 9,896,722 were not directed to patent-ineligible subject matter under 35 U.S.C. § 101.  The '837 and '722 patents, which are assigned to Plaintiff Bio-Rad Laboratories, are directed to assemblies and methods for handling samples in a way that reduces sample contamination and sample loss.  Asserted claim 1 of the '837 patent recites:

1.  An assembly, the assembly comprising:
    a microchannel in a horizontal plane;
    at least one droplet formation module comprising a sample inlet, an immiscible fluid inlet, and a junction, wherein the junction is located between the sample inlet and the microchannel and the droplet formation module is configured to produce droplets comprising the sample surrounded by the immiscible fluid; and
    at least one downstream separation chamber comprising a droplet receiving chamber inlet and at least one droplet receiving outlet, wherein the separation chamber is upright to the microchannel and out of the horizontal plane;
    wherein the droplet formation module and the separation chamber are in fluid communication with each other via the microchannel; and wherein the separation chamber has a wider cross-section than the microchannel cross-section to accumulate a plurality of droplets comprising the sample and is of a volume sufficient to separate the plurality of droplets comprising the sample from the immiscible fluid within the separation chamber.

Asserted claim 1 of the '722 patent recites:

1.  A method of reducing contamination associated with sample handling, comprising:
    providing an aqueous fluid comprising a sample through a sample inlet;
    providing an immiscible fluid flowing through a main channel that is in fluidic communication with the sample inlet, wherein the main channel is in a horizontal plane;
    partitioning the aqueous fluid with the immiscible fluid to form a plurality of droplets in the main channel, wherein at least one droplet comprises a sample;
    flowing the droplets toward a downstream separation chamber that is in fluidic communication with the main channel,
    wherein the separation chamber has a wider cross-section than the main channel cross-section and the separation chamber is disposed perpendicular to the main channel; and
    separating the plurality of droplets from the immiscible fluid in the separation chamber based on the different densities of the droplets and the immiscible fluid.

Bio-Rad initiated the dispute between the parties by filing a complaint against 10X Genomics for infringement of claim 1 of the '837 patent and claim 1 of the '722 patent.  10X Genomics responded by filing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for lack of patent eligibility under 35 U.S.C. § 101, or in the alternative, to dismiss and/or strike under Rules 12(b)(6) and/or 12(f) for failure to state a claim of induced, contributory, or willful infringement.

With respect to patent eligibility, Judge Andrews noted that the framework laid out in Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012), "for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts" was reaffirmed by the Supreme Court in Alice Corp. Pty. v. CLS Bank Int'l, 573 U.S. 208 (2014).  In describing that framework, Judge Andrews explained that:

First, the court must determine whether the claims are drawn to a patent-ineligible concept.  If the answer is yes, the court must look to "the elements of the claim both individually and as an 'ordered combination"' to see if there is an '"inventive concept'––i.e., an element or combination of elements that is 'sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself."' [citations omitted]

With respect to its motion to dismiss for lack of patent eligibility, 10X Genomics argued that the asserted patents are directed to "the natural phenomenon of allowing two different liquids of different densities to separate from each other."  Bio-Rad responded that the asserted patents are directed to the patent-eligible result of a method and apparatus to reduce sample contamination when handling samples.

Applying the Mayo/Alice framework to the asserted patents, Judge Andrews agreed with Bio-Rad, finding that "[t]he Asserted Patents claim methods and an assembly designed to reduce contamination when handling samples," and that 10X Genomics' argument that the claims are directed to the natural phenomenon of allowing two different liquids of different densities to separate from each other "improperly oversimplifies the claims by reducing them to a single claim element."  Judge Andrews explained that "[w]hile the claims certainly utilize the separation of liquids with different densities to effect the desired outcome, this is insufficient to determine that the claims are wholly directed to a patent ineligible concept," adding that "here, '[t]he end result of the [] claims is not simply an observation or detection of the ability' of liquids to separate by density" (quoting Rapid Lit. Mgmt. Ltd. v. CellzDirect, Inc., 827 F.3d 1042, 1048 (Fed. Cir. 2016)).  Judge Andrews noted that "[t]he Federal Circuit has continued to endorse this distinction in recent cases" citing as examples the Federal Circuit's decisions in Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC and Endo Pharms., Inc. v. Teva Pharms. USA, Inc. Finding that the recited steps and assembly of the asserted claims achieve an improved way of handling samples that reduces the sample contamination that would otherwise occur, Judge Andrews determined that the asserted patents are not directed to patent-ineligible subject matter under 35 U.S.C. § 101.

Judge Andrews also denied 10X Genomics' motion to dismiss and/or strike portions of Bio-Rad's prayer for relief, finding that "Plaintiff's complaint merely preserves a broad range of potential remedies by requesting relief that could be granted, depending on the facts as ultimately proven."  Judge Andrews therefore denied 10X Genomics' motion to dismiss and/or strike.

Bio-Rad Laboratories, Inc. v. 10X Genomics, Inc. (D. Del. 2019)
Memorandum Order by District Judge Andrews

United Cannabis Corp. v. Pure Hemp Collective Inc. (D. Colo. 2019)

By Donald Zuhn --

Last week, in United Cannabis Corp. v. Pure Hemp Collective Inc., District Judge William J. Martinez of the U.S. District Court for the District of Colorado issued an order denying a motion for partial summary judgment filed by Defendant Pure Hemp Collective Inc., finding that Pure Hemp was not entitled to summary judgment on the record.  Pure Hemp had filed an Early Motion for Partial Summary Judgement, arguing that the asserted claims of U.S. Patent No. 9,730,911, which is owned by United Cannabis Corp. ("UCANN"), were invalid under 35 U.S.C. § 101 (claims 10, 12, 14, 20–22, 25, 27, 28, 31, and 33 of the '911 patent) or 35 U.S.C. § 112(e) (claim 31).

UCANN had initiated the dispute between the parties by filing a complaint against Pure Hemp for infringement of claims 10, 12, 14, 20–22, 25, 27, 28, 31, and 33 of the '911 patent.  Pure Hemp responded by filing its motion for partial summary judgment, contending that all of the asserted claims were invalid.

The '911 patent, which is entitled "Cannabis extracts and methods of preparing and using same," is directed to liquid cannabinoid formulations.  Claims 10, 20, and 25 (the independent claims asserted in UCANN's complaint) recite:

10.  A liquid cannabinoid formulation, wherein at least 95% of the total cannabinoids is cannabidiol (CBD).

20.  A liquid cannabinoid formulation, wherein at least 95% of the total cannabinoids are THC [tetrahydrocannabinol] and CBD.

25.  A liquid cannabinoid formulation, wherein at least 95% of the total cannabinoids are CBD, cannabinol (CBN) and THC.

Asserted claim 31 also recites:

31.  The formulation of any one of the proceeding claims, wherein the formulation is infused in a medium chain triglyceride (MCT).

Judge Martinez began his Order by describing the two-part patent eligibility inquiry set forth by the Supreme Court in Alice Corp. Pty. v. CLS Bank Int'l, 573 U.S. 208, 216 (2014):

"[D]istinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts" first requires a court to "determine whether the claims at issue are directed to one of those patent-ineligible concepts."  Id. at 217.  If the answer is no, the inquiry ends; but if the answer is yes, a court must then determine whether the claims in question nonetheless offer "an inventive concept—i.e., an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself."  Id. at 217–18 (internal quotation marks omitted; alterations incorporated).

Judge Martinez then "summarize[ed] certain Supreme Court and Federal Circuit decisions in which those courts have examined questions of patentability in roughly similar contexts," including Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948); Diamond v. Chakrabarty, 447 U.S. 303 (1980); Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012); and Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir. 2015).  After providing summaries of the above cases, Judge Martinez offered his comments on the Alice test, stating that:

[T]he proper application of the Supreme Court's Alice standard is an evolving and sometimes hazy area of law.  Deciding whether a patent claim is "directed to" a law of nature is not as straightforward as the Supreme Court makes it sound in Alice itself.  Moreover, the Federal Circuit itself has remarked on the difficulty, at times, of distinguishing the first Alice inquiry from the second, see, e.g., Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016); or distinguishing the two Alice inquiries (comprising a patentability analysis rooted in 35 U.S.C. § 101) from other common inquiries such as anticipation and obviousness (which are rooted in 35 U.S.C. §§ 102–03), see, e.g., Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., 827 F.3d 1042, 1052 & n.2 (Fed. Cir. 2016).

However, after applying the Alice test to the asserted claims, Judge Martinez determined that "[d]espite the potential ambiguities [of the Alice test], the Court is convinced under the current state of the case law that the challenged claims of the 911 Patent are not directed at unpatentable subject matter."  With respect to the first Alice inquiry, Pure Hemp had argued that the asserted claims are "directed to" the patent ineligible natural phenomenon of the specified chemical compounds (cannabinoids, terpenes, and flavonoids).  UCANN had countered that "the claims are not directed to laws of nature or natural phenomena because they claim human-modified liquid formulations that require converting solid cannabinoids into a different state with markedly different physiological characteristics" (citation omitted).

The Court was persuaded by UCANN's argument that the claims are directed to human-modified liquid formulations, and did not feel the need to address the second part of UCANN's argument (i.e., that the claimed liquid formulations had been converted into a different state having markedly different physiological effects).  Judge Martinez explained that:

Pure Hemp has failed to establish beyond genuine dispute that a liquefied version of cannabinoids and related chemicals at the concentrations specified in the 911 Patent is anything like a natural phenomenon.  It may be true, as Pure Hemp insists, that cannabinoids in nature can take the form of a resin; that a resin can be highly viscous; that a highly viscous substance may at times be considered a liquid; and therefore it is logically possible that cannabinoids in nature might appear in a form that could, in some sense, be deemed a "liquid."  . . .  Even accepting as much, the 911 Patent specifies threshold concentrations of cannabinoids and related chemicals.  Pure Hemp nowhere claims that these precise concentrations, or anything close to them, occur in liquid form in nature.  Accordingly, UCANN's claims are not restatements of "the handiwork of nature," Funk Brothers, 333 U.S. at 131, "but [UCANN's] own [handiwork]," Chakrabarty, 447 U.S. at 310.

While noting that "the Court sees reason to question whether the 911 Patent claims anything novel, useful, or nonobvious," with respect to the Alice inquiry, the Court determined that "the 911 Patent is not 'directed to' an unpatentable law of nature, a natural phenomenon, or an abstract idea," but "is instead 'directed to' a non-naturally occurring delivery method of naturally occurring chemicals in (as far as the record reveals) non-naturally occurring proportions and concentrations."  Finding that the asserted claims did not fail at step one of the Alice inquiry, the Court determined that it did not need to address step two.

As for claim 31, Pure Hemp argued that this claim was invalid for depending from a multiple dependent claim when claim 31 is itself a multiple dependent claim (i.e., claim 31 depends from "any preceding claim" -- following UCANN's correction of the claim -- and claim 9 depends from claim 1 or 5, and claim 24 depends from claim 16 or 20).  Judge Martinez noted, however, that UCANN had disclaimed claim 9 and 24, and cited Guinn v. Kopf, 96 F.3d 1419, 1422 (Fed. Cir. 1996), for the proposition that "[a] statutory disclaimer under 35 U.S.C. § 253 has the effect of canceling the claims from the patent and the patent is viewed as though the disclaimed claims had never existed in the patent."  While noting that "[o]ne would expect that this would end the argument as to Claim 31," the Order points out that Pure Hemp insisted in its reply brief that the Court could still declare claim 31 to be invalid for depending from multiple dependent claims, even though those multiple dependent claims are now deemed to be nonexistent.  To support its argument, Pure Hemp relied on Rembrandt Wireless Technologies, LP v. Samsung Electronics Co., 853 F.3d 1370 (sFed. Cir. 2017), in which the patentee had disclaimed one of two claims in order to seek damages that would have been otherwise prohibited by a failure to mark its products.  Pure Hemp argued that the same public notice concerns raised in Rembrandt Wireless undergird the requirements of 35 U.S.C. § 112(e) with respect to multiple dependencies, and therefore contended that there must be "clear public notice" of invalidity.  Judge Martinez, however, noted that Pure Hemp's argument was circular, since "Claim 31 is not invalid anymore, at least not on account of the multiple dependency problem that existed before UCANN's disclaimer," finding that "there is neither a good reason nor a statutory basis to declare Claim 31 invalid, even though it previously depended on multiple dependent claims."

Rejecting both of Pure Hemp's invalidity arguments, the District Court denied Pure Hemp's Early Motion for Partial Summary Judgment.

United Cannabis Corp. v. Pure Hemp Collective Inc. (D. Colo. 2019)
Order Denying Defendant's Early Motion for Partial Summary Judgment by District Judge Martinez

Congress Releases Framework for Section 101 Reform

By Kevin E. Noonan --

Over the past six years, since the Supreme Court handed down its decision in Mayo Collaborative Services, Inc. v. Prometheus Laboratories, it has become more and more evident that correction of the path embarked upon by the USPTO, the district courts, and the Federal Circuit could only occur if Congress changed the law of patent subject matter eligibility.  Recently Senator Thom Tillis (R-NC), Chair of the Senate Judiciary Subcommittee on Intellectual Property, and Senator Chris Coons (D-DE), Ranking Member, have been holding meetings with stakeholders in an attempt to craft such revisions in a way that would garner sufficient political consensus for passage (what would happen if it crossed President Trump's desk is anyone's guess, but one challenge at a time).

Today these Senators, joined by Representative Doug Collins (R-GA-9), Ranking Member of the House Judiciary Committee, and Representatives Hank Johnson (D-GA-4), and Steve Stivers (R-OH-15), released a "bipartisan, bicameral framework on Section 101 patent reform."  The need is acute, according to Chairman Coons:

Today, U.S. patent law discourages innovation in some of the most critical areas of technology, including artificial intelligence, medical diagnostics, and personalized medicine.  That's why Senator Tillis and I launched this effort to improve U.S. patent law based on input from those impacted most.  I am grateful for the engagement of all stakeholders participating in our roundtables, as well as the bipartisan and collaborative efforts of colleagues in both the Senate and the House.  I look forward to continuing to receive feedback as we craft a legislative solution that encourages innovation.

The framework has the following provisions:

• Keep existing statutory categories of process, machine, manufacture, or composition of matter, or any useful improvement thereof.

• Eliminate, within the eligibility requirement, that any invention or discovery be both "new and useful."  Instead, simply require that the invention meet existing statutory utility requirements.

• Define, in a closed list, exclusive categories of statutory subject matter which alone should not be eligible for patent protection.  The sole list of exclusions might include the following categories, for example:

▪ Fundamental scientific principles;

▪ Products that exist solely and exclusively in nature;

▪ Pure mathematical formulas;

▪ Economic or commercial principles;

▪ Mental activities.

• Create a "practical application" test to ensure that the statutorily ineligible subject matter is construed narrowly.

• Ensure that simply reciting generic technical language or generic functional language does not salvage an otherwise ineligible claim.

• Statutorily abrogate judicially created exceptions to patent eligible subject matter in favor of exclusive statutory categories of ineligible subject matter.

• Make clear that eligibility is determined by considering each and every element of the claim as a whole and without regard to considerations properly addressed by 102, 103 and 112.

While a "work in progress," the framework contains several of the provisions proposed by IPLAC, AIPLA, IPO, and the ABA-IPL section.  But this proposal provides for frank abrogation of the judicial exceptions, a stratagem within Congress's purview but perhaps one not particularly well advised.  The judicial exceptions (occasional effects not to the contrary) are not judicial whims: the Court firmly believes that they are necessary to prevent Congress from exceeding its Constitutional authority under Article I, Section 8, clause 8.  This is consistent with their role in our system of government, and at best the consequence of any such abrogation will be that it is ignored in practice, and at worst it could motivate the Court to recite even more stringent and strictly applied limitations on Congress's power to grant patents.  The Court's forays into patent policy making have been unfortunate to say the least; anything that encourages these tendencies is unlikely to end well for U.S. innovation.  Instead, it may be more productive to recognize, if not acknowledge, the basis for the judicial exceptions and try to introduce into the patent statute more circumscribed, exact, and defined recitations of these principles in ways that might cabin the Court's application to a greater extent than is possible under current law.