Patent Docs

Symantec Corp. v. Zscaler, Inc. (N.D. Cal. 2018)

Claims for Dynamically Rating Internet Content Deemed Patent-Ineligible

By James Korenchan --

In a suit by Plaintiff Symantec Corp. ("Symantec") against Defendant Zscaler, Inc. ("Zscaler"), Symantec alleged that Zscaler's cloud-based security products infringe seven of Symantec's patents.  Zscaler moved to dismiss infringement claims for four of the patents, U.S. Patent Nos. 6,285,658 (the '658 patent), 7,587,488 (the '488 patent), 8,316,446 (the '446 patent), and 8,316,429 (the '429 patent), on grounds that the claims of the patents are directed to patent-ineligible subject matter under 35 U.S.C. § 101.  Earlier this month, Judge Jon S. Tigar of the U.S. District Court for the Northern District of California granted the motion in part, denied the motion in part as moot, and held the remainder of the motion in abeyance pending briefing on Symantec's assertion of assignor estoppel.

The '658 patent claims relate to a system for managing network bandwidth based on data contained in packets flowing in various Open Systems Interconnection (OSI) protocol layers (e.g., network layer, transport layer, and application layer).  The '488 patent claims relate to filtering and dynamically rating Internet content.  The '446 patent claims relate to a system for blocking unwanted software downloads.  And the '429 patent claims relate to extracting and categorizing encrypted Internet communications between clients and hosts servers without having to decrypt network traffic between those clients and host servers.

During pendency of the motion to dismiss, the parties stipulated to dismiss the infringement claims with respect to the '658 patent with prejudice, and thus the Court denied the motion with respect to the '658 patent as moot.  The Court also holds the motion in abeyance with respect to the '446 and '429 patents until the parties' cross-motions for partial summary judgement on the basis of assignor estoppel are resolved.  Additionally, the Court noted that it would not consider the motion with respect to the '429 patent because the PTAB recently instituted inter partes review of the asserted claims of that patent.

Thus, the Court only addressed patent eligibility with respect to the '488 patent.  Symantec asserted that both claims 1 and 12 of the '488 patent -- which recite similar language -- contain non-abstract and inventive concepts.  Claim 1 is provided as follows as a representative example:

1.  At a computer system, a method for dispatching an Internet-content identifier to a content-rating system, the method comprising:
    receiving an indication that at least one unrated Internet-content identifier is available to be rated;
    receiving an indication that one or more computerized content raters are available for rating the at least one unrated Internet-content identifier, wherein the computerized content raters include a plurality of content classifiers configured to rate content based on respective criteria;
    selecting an Internet-content identifier from among the at least one unrated Internet-content identifier based on content-identifier selection criteria;
    selecting one computerized content rater from among the one or more available computerized content raters to rate the selected unrated Internet-content identifier;
    transferring the selected Internet-content identifier to the selected available computerized content rater, wherein the selected Internet-content identifier identifies a portion of content; and
    dynamically determining a content category rating for the selected Internet-content identifier, wherein determining a content category rating comprises dynamically combining a rating for the selected Internet-content identifier with at least one of a rating for an Internet-content identifier identified within the portion of content for the selected Internet-content identifier and an Internet-content identifier for a portion of content that identifies the selected Internet-content identifier.

The background of the '488 patent suggests that existing approaches for Internet content filtering suffer from accuracy issues and other problems.  For example, a rating of a given website coming from a single rating source might be inaccurate.  The patent also notes that existing approaches primarily used blocked lists of content categories, and so website operators who did not want their websites blocked would circumvent filters by varying their URLs or by including non-blocked content.  The patent thus purports to dynamically filter Internet content by dynamically combining multiple different ratings of that content.  As an example, the patent describes how content raters can employ a variety of different classifiers, each configured to "rate content based on different criteria and/or algorithms," and thus, at a high level, the claimed invention can filter Internet content by using a combination of such ratings.

With respect to step one of the Alice test, Zscaler argued that the claims are abstract because they merely describe filtering Internet content.  The Court agreed, citing primarily to the Federal Circuit's decision in BASCOM, in which the Federal Circuit upheld a district court's determination that "claims were directed to the abstract idea of 'filtering content' because 'content provided on the Internet is not fundamentally different from content observed, read, and interacted with through other mediums like books, magazines, television, or movies.'"  The Court also reiterated that filtering content has long been viewed as a well-known manner of organizing human behavior.  As to the claimed concept of dynamically combining ratings for Internet content, the Court stated that the dynamic nature of the recited functions did not save the claims from abstraction, and that "organizing existing information into a new form or employing mathematical algorithms to manipulate information and generate additional information" is not patent-eligible.

The Court also found the claims to lack inventiveness under step two of the Alice test.  In its defense, Symantec primarily argued that the dynamic nature of rating content recited by the claims provided an improvement over the static, list-based systems of the prior art.  But the Court found this argument unavailing, asserting that "nowhere does the patent describe how this more accurate, non-list-based filtering occurs.  Instead, the claim language reflects that dynamically rating simply means combining several ratings into one."  (As an aside, I assume one can reasonably appreciate that a rating from a single source could be biased, and thus less accurate than a rating that takes into account multiple different sources, but I doubt that notion would have persuaded the Court in any fashion.)

With no more definition in the '488 patent as to the dynamic nature of rating content, the Court and Zscaler likened the idea of combining ratings into one as merely being directed to aggregating multiple data sets.  In fact, the Court even went as far to suggest that the patent does not describe any improvement whatsoever:

[T]he patent may not even describe an improvement.  The specification admits that the prior art included "automated and/or server-based approaches to Internet content filtering" which "constant[ly] updat[ed]" the applicable "list of content categories and . . . approved and non-approved sites" [citation omitted].  The patent is silent as to any differences between dynamic rating and automatic rating.  . . .  Nor does the patent explain how dynamic, non-list-based rating accomplishes more than automatic, continually updated filtering.

Symantec also attempted to argue that the claimed system's alleged scalability made it inventive, but the Court was not convinced by this either.  The specification describes that multiple content-rating machines could be simultaneously connected to the claimed system, thus allowing for scalability (e.g., by adjusting the quantity of raters based on demand).  Still, the Court asserted that the specification does not describe this kind of scalability as an improvement over the prior art, and thus concluded that "it cannot serve as the inventive concept."

Ultimately, neither the claims nor the specification of the '488 patent conveyed improvements over the prior art to a degree sufficient for patent-eligibility.

Symantec Corp. v. Zscaler, Inc. (N.D. Cal. 2018)
Order Granting in Part and Denying in Part Motion to Dismiss by District Judge Tigar

Ni-Q, LLC v. Prolacta Bioscience, Inc. (D. Or. 2019)

By Donald Zuhn --

Last month, in Ni-Q, LLC v. Prolacta Bioscience, Inc., District Judge Michael H. Simon of the U.S. District Court for the District of Oregon granted a motion for summary judgment filed by Plaintiff Ni-Q, LLC that the asserted claims of U.S. Patent No. 8,628,921, which is assigned to Defendant Prolacta Bioscience, Inc. ("Prolacta"), are invalid under 35 U.S.C. § 101 for failure to claim patent-eligible subject matter.  The District Court also determined on summary judgment that Ni-Q did not infringe the asserted claims of the '921 patent, even if those claims had been found valid.  We previously reported on this case in 2017 when the District Court denied Ni-Q's motion for judgment on the pleadings under Rule 12(c) of the Federal Rules of Civil Procedure that the claims of the '921 patent were invalid under 35 U.S.C. § 101 for failure to claim patent-eligible subject matter.

Ni-Q had initiated the dispute between the parties by filing a complaint for declaratory judgment of noninfringement and invalidity of the '921 patent, as well as alleging a violation of the Oregon Unlawful Trade Practices Act.  Prolacta responded by filing a counterclaim against Ni-Q for money damages and injunctive relief, asserting that Ni-Q had infringed claims 1, 2, and 9 of the '921 patent.

The '921 patent, which is entitled "Methods for testing milk," is directed to methods for testing mammary fluid (including milk) to establish or confirm the identity of the donor of the mammary fluid.  Independent claim 1 recites (emphasis in opinion):

1.  A method for determining whether a donated mammary fluid was obtained from a specific subject, the method comprising:
    (a) testing a donated biological sample from the specific subject to obtain at least one reference identity marker profile for at least one marker;
    (b) testing a sample of the donated mammary fluid to obtain at least one identity marker profile for the at least one marker in step (a);
    (c) comparing the identity marker profiles, wherein a match between the identity marker profiles indicates that the mammary fluid was obtained from the specific subject; and
    (d) processing the donated mammary fluid whose identity marker profile has been matched with a reference identity marker profile, wherein the processed donated mammary fluid comprises a human protein constituent of 11-20 mg/mL; a human fat constituent of 35-55 mg/mL; and a human carbohydrate constituent of 70-120 mg/mL.

Prolacta receives human milk from donors and processes it to make fortifier and other products for use in feeding premature and other medically fragile infants.  Ni-Q is also engaged in the procurement, production, and sale of human milk-based products for use in feeding premature infants.

In construing the claims, the parties stipulated and the District Court adopted that the term "wherein a match" means "a determination that the marker(s) in the biological sample and donated fluid or milk are the same and that there are no additional unmatched marker(s)."  The District Court also construed the term "processing" to mean:  "One or more of the following: filtering, heat-treating, separating into cream and skim, adding cream to the skim, or pasteurizing."  Following the District Court's construction of the claims, Ni-Q filed a motion for partial summary judgment, arguing that in view of the Court's claim construction, claims 1, 2, 4, 6-9, and 11 of the '921 patent were invalid under 35 U.S.C. § 101 for being directed to patent-eligible subject matter, and that it did not infringe the claims of the '921 patent because it did not perform all of the steps of the asserted claims.

With respect to the issue of validity, Ni-Q argued that the asserted claims were invalid under 35 U.S.C. § 101 because they are directed to a patent-ineligible natural law with no inventive concept to transform the natural law into patent-eligible subject matter.  More specifically, Ni-Q argued that the presence of identity markers such as DNA and proteins in a woman's tissue or milk is natural, and the nutritional levels required by the patent occur naturally.  Prolacta responded by asserting that the claims are directed to producing safer milk that is standardized with optimal nutritional values, contending that the claimed method recites steps for selecting for processing safe milk from health-screened donors and manufacturing a nutrient-enhanced human milk product.

With respect to the first step of Alice/Mayo framework, the District Court agreed with Ni-Q that "the asserted claims are directed to the laws of nature," and that "[t]he presence of identity markers such as DNA in a woman's mammary fluid and other biological tissue is natural."  The Court explained that "[a]lthough the patent describes the human action of testing the original reference sample and the mammary fluid sample and comparing them, that does not convert the claim to patent-eligible subject matter," adding that "[t]he relationship of the markers in the samples exists naturally."  The Court determined that "Claim 1 merely describes the natural law that two different biological samples from the same individual contain the same identity markers and thus can be tested and compared."

The District Court found Prolacta's argument that the claims are directed to producing safer milk that is standardized with optimal nutritional value to be unpersuasive, pointing out that the steps recited in claim 1 "require no step, method, or process relating to safety or the health screening of donors," but rather "merely require testing a reference sample of a donor, testing a sample of the donated mammary fluid, comparing the two test results, and processing only the mammary fluid when the two tests match," and noting that "[t]here is nothing in Claim 1 . . . that requires testing the donor for disease or drug use or anything else relating to health or safety."  According to the Court, claim 1 "is about identification—it does not suggest that its goal or purpose relates to safety or health concerns."  The Court also found to be unavailing Prolacta's argument that claim 1 covers a method of standardizing optimal nutrient level, noting that claim 1 "does not require that nutrient levels of donated mammary fluid be altered," but instead "merely requires that after processing is complete, the mammary fluid consist of wide-ranging levels of nutrients that, as conceded by Prolacta, are naturally found in human breast milk."  In finding that "Claim 1 . . . is impermissibly directed to a patent-ineligible subject," the Court concluded that:

Claim 1 is a broad claim that is not limited to a particular application of natural law.  It is not limited to commercial human breast milk production, to certain processing that alter the makeup of the breast milk, or to testing breast milk donors for viruses, bacteria, drugs, or other health issues and then ensuring that later-donated milk matches the originally-screened donor.  Indeed, it purports to cover any use where: (1) a donor has donated a reference sample and mammary fluid that are tested for a match; (2) if there is a match, the donated mammary fluid is processed using any of the five types of processing; and (3) after processing, the mammary fluid contains the identified nutrient ranges.  Because these nutrient ranges are found naturally in breast milk, the claim's covered use could include, for example, researchers who are testing the efficacy of DNA comparisons between breast milk and other biological samples and in so doing heat-treat or pasteurize the milk.

With respect to the second step of the Alice/Mayo analytic framework, Ni-Q argued that Prolacta's comparison of DNA to match the reference sample to the donated mammary fluid was not new or inventive, and that because processing can include pasteurization, that is also not a new or innovative step.  Prolacta responded that three aspects of the claims are new or inventive: (1) applying DNA analysis to mammary fluid; (2) selecting mammary fluid for processing based on a matching processing that ensured the donated fluid was from a specific subject, thereby eliminating the risk of communicable diseases in donated milk; and (3) requiring the recited nutrient ranges.

The District Court rejected Prolacta's second and third arguments, stating that "the elimination of health concerns and communicable diseases in processed milk is not contained in any of the asserted claims (and therefore cannot provide an inventive concept) and the required nutrient ranges may not require any processing other than pasteurization of donated milk, which is not new or inventive."  The Court also took issue with Prolacta's first argument, noting that "nothing in the claims requires screening of the donor," and therefore, that Prolacta's "new application" -- i.e., the genetic link between screened donors and donated milk and excluding milk containing DNA from unknown and unscreened donors –- "is not the application in the claims."  The Court also noted that the claims "do not require the matching be through maternal DNA," and that "[a]ny identity marker will suffice."  The Court therefore concluded that "the claims add no new or inventive concept not already known in the art," and that "[c]onsidering the steps 'as an ordered combination adds nothing to the laws of nature that is not already present when the steps are considered separately,'" quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 79 (2012).  Thus, the Court found the claims to also "fail at step two" of the Alice/Mayo framework.

Turning to the issue of infringement, Ni-Q asserted that it does not perform the "wherein a match" step of the asserted claims and therefore did not literally infringe the '921 patent or infringe the '921 patent under the doctrine of equivalents.  In particular, Ni-Q asserted that in view of the District Court's claim construction, the "wherein a match" step requires a determination that there are no additional unmatched markers between the biological sample and the donated fluid or milk, and that it never determined that there were no additional unmatched markers.  The Court again agreed with Ni-Q, finding that "the '921 Patent requires a determination that the milk processed had no additional unmatched markers," and determining that "because Ni-Q processed the milk and did not make that determination before processing, Ni-Q did not infringe the patent" (emphasis in opinion).  The District Court also concluded that Ni-Q did not infringe the '921 patent under the doctrine of equivalents because "[t]he purpose of the second step of the 'wherein a match' requirement—making sure there are 'no unmatched markers'—is to prevent contamination from unscreened donors," and "Ni-Q does nothing equivalent to that step to prevent contamination from other donors."

The District Court therefore granted Ni-Q's motion for summary judgement, finding that there were no genuine issues of material fact, the asserted claims of the '921 patent are invalid under 35 U.S.C. § 101, and that Ni-Q did not infringe the asserted claims even if they were valid.

Ni-Q, LLC v. Prolacta Bioscience, Inc. (D. Or. 2019)
Opinion and Order by District Judge Simon

University of Florida Research Foundation, Inc. v. General Electric Co. (Fed. Cir. 2019)

By Kevin E. Noonan --

Legal creativity in argument is the lifeblood of the litigator's craft, and nowhere more than in patent litigation in view of the complexities of the law applied to technological fact.  But occasionally creative arguments can be a bridge too far, which was the case regarding a claim of sovereign immunity by plaintiffs in University of Florida Research Foundation, Inc. v. General Electric Co.

The case arose over patent infringement brought by the University of Florida Research Foundation (UFRF) against General Electric (GE) over U.S. Patent No. 7,062,251 regarding automated (computer) management of critical care physiologic data (collected bedside for critically ill patients).  GE, unsurprisingly, filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), on the grounds that the claims (see below) were invalid for being ineligible for patenting under Alice Corp. Party Ltd. v. CLS Bank International, 573 U.S. 208 (2014).  The District Court granted the motion and UFRF appealed.

The Federal Circuit affirmed, in an opinion by Judge Moore joined by Chief Judge Prost and Judge Wallach.  Before reaching the merits, the panel opined on UFRF's argument that GE was barred under the Eleventh Amendment from moving for dismissal because UFRF was an arm of the State of Florida and thus enjoyed sovereign immunity against GE's Section 101 challenge.  As pithily put by Judge Moore, the Court's response to this argument was:  "We do not agree."  Sovereign immunity under the Eleventh Amendment can be waived, said the panel, and one way for such waiver is to bring a patent infringement action, citing Regents of the Univ. of N.M. v. Knight, 321 F.3d 1111, 1124 (Fed. Cir. 2003) (citing Clark v. Bernard, 108 U.S. 436, 447 (1883)), and Regents of the Univ. of Cal. v. Eli Lilly & Co., 119 F.3d 1559, 1564–65 (Fed. Cir. 1997).  The Federal Circuit expressly rejected UFRF's argument that "defenses" to a patent infringement allegation were limited under 35 U.S.C. § 282(b) to § 102 and § 103 challenges, citing the Court's decision directly to the contrary in Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1330 n.3 (Fed. Cir. 2012).  The panel also rejected UFRF's argument that the Supreme Court had "undermined" Dealertrack in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 137 S. Ct. 954 (2017), saying that "[u]nlike laches [the subject of the SCA Hygiene decision], which conflicts with the statute of limitations set forth in § 282, treating a § 101 eligibility challenge as a defense to a claim of patent infringement poses no conflict with § 282 and, thus, no risk of 'jettison[ing] Congress' judgment'" (emphasis in opinion).  The opinion also notes that both the Federal Circuit's own precedent and that of the Supreme Court had long recognized that § 101 was a "condition for patentability" along with § 102 and § 103, citing inter alia Graham v. John Deere Co., 383 U.S. 1, 12 (1966), and Aristocrat Techs. Austl. PTY Ltd. v. Int'l Game Tech., 543 F.3d 657, 661 (Fed. Cir. 2008) (as well as, with particular relevance to the merits, Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 75−76 (2012)).  It was an easy task for the Court to hold that UFRF had waived sovereign immunity in this case.

On the merits, this is a garden-variety, § 101 subject matter eligibility opinion.  Claim 1 of the '251 patent is representative:

1.  A method of integrating physiologic treatment data comprising the steps of:
    receiving physiologic treatment data from at least two bedside machines;
    converting said physiologic treatment data from a machine specific format into a ma- chine independent format within a computing device remotely located from said bedside machines;
    performing at least one programmatic action involving said machine-independent data; and
    presenting results from said programmatic actions upon a bedside graphical user interface.

Applying the Alice two-step framework the panel held that under the first prong the claim was directed to a patent-ineligible abstract idea, "collecting, analyzing, manipulating, and displaying data" in agreement with the District Court.  Using the language of the '251 patent against the claims the Court easily held that there was nothing that rescued the claim from § 101 subject matter ineligibility:

On its face, the '251 patent seeks to automate "pen and paper methodologies" to conserve human resources and minimize errors.  This is a quintessential "do it on a computer" patent: it acknowledges that data from bedside machines was previously collected, analyzed, manipulated, and displayed manually, and it simply proposes doing so with a computer.  We have held such claims are directed to abstract ideas.  See, e.g., Intellectual Ventures I LLC v. Capital One Fin. Corp., 850 F.3d 1332, 1340 (Fed. Cir. 2017) (holding abstract claims "directed to . . . collecting, displaying, and manipulating data"); Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353–54 (Fed. Cir. 2016) (holding abstract claims directed to "collecting information, analyzing it, and displaying certain results of the collection and analysis").  That the automation can "result in life altering consequences," '251 patent at 1:54−56, is laudable, but it does not render it any less abstract.

The panel found nothing in the '251 patent that identified and "specific improvement to the way computers operate" such as was found in Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1336 (Fed. Cir. 2016).  The very generality used to avoid unduly limiting the scope of the invention became in the Court's hands evidence that there was nothing analogous to the improvement in computer function that the Court held sufficient to avoid invalidation in Visual Memory LLC v. NVIDIA Corp., 867 F.3d 1253 (Fed. Cir. 2017) (eliciting another "We are not persuaded" from Judge Moore).  The distinction is that here the claimed components UFRF attempts to rely upon are "described in purely functional terms" (emphasis in opinion) in both the specification and claims, without providing any "technical details for the tangible components."  Accordingly the Court held that "at Alice step one that representative claim 1 is directed to the abstract idea of 'collecting, analyzing, manipulating, and displaying data.'"

Nor did anything in the '251 specification or claims satisfy the requirement in step 2 of the Alice calculus that the claims recite something more than what was "well-understood, routine, [and] conventional."  UFRF's assertion of BASCOM Global Internet Services, Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1350 (Fed. Cir. 2016) was (consistently) unpersuasive to the panel, for failing to show any technical improvement over the prior art (fatally, reciting the use of a general-purpose computer for "collecting, analyzing, manipulating, and displaying data").  Under these facts, the Court readily affirmed the District Court's invalidation of the '251 patent for failure to claim a patent-eligible invention under § 101.

University of Florida Research Foundation, Inc. v. General Electric Co. (Fed. Cir. 2019)
Panel: Chief Judge Prost and Circuit Judges Moore and Wallach
Opinion by Circuit Judge Moore

Express Mobile, Inc. v. Code and Theory LLC (N.D. Cal. 2019)

Web Page Creation Patents Found to Be Directed to Patent Eligible Subject Matter

By Joseph Herndon --

Two related patent cases Express Mobile, Inc. v. Code and Theory LLC and Express Mobile, Inc. v. Pantheon Systems Inc. within the U.S. District Court for the Northern District of California each involve allegations that the various Defendants infringe U.S. Patent Nos. 6,546,397 (the '397 patent) and 7,594,168 (the '168 patent), which share the same specification.

Defendants in these two actions moved to dismiss, contending that the patent claims are drawn only to abstract ideas, ineligible for protection under § 101 of the Patent Act, as explained in Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 134 S. Ct. 2347 (2014), and its progeny.  The Court, however, found that the patents described a novel technological solution, and that Defendants' characterization of the patents as claiming only an abstract idea failed.  Thus, the motions to dismiss were denied.

The patents relate to building web pages.  The inventive methodology described in the patents involves building a web page by defining it as a set of user-selected "objects" and/or "settings."  The result is not a markup language code file for the web page, but instead a collection of user selected objects and object attributes.  These can be saved in a database, for ease of access and efficient storage.  Because complete code files for each page do not need to be stored, the page structure—the full HTML code itself—is created on the fly each time the page is loaded in a user's Web browser.  This is achieved in part through a browser-appropriate "run time engine" and related files.

Prior methods for building web pages included either programming directly in HTML or JavaScript code, or using a visual editor that output HTML formatted files.  These approaches allegedly were cumbersome and inflexible, in various respects.

Claim 1 of the '397 patent is representative of both patents for purposes of the Alice analysis.  It provides:

A method to allow users to produce Internet websites on and for computers having a browser and a virtual machine capable of generating displays, said method comprising:
    (a) presenting a viewable menu having a user selectable panel of settings describing elements on a website, said panel of setting being presented through a browser on a computer adapted to accept one or more of said selectable settings in said panel as inputs therefrom, and where at least one of said user selectable settings in said panel corresponds to commands in said virtual machine;
    (b) generating a display in accordance with one or more user selected settings substantially contemporaneously with the selection thereof;
    (c) storing information representative of said one or more user selected settings in a database;
    (d) generating a website at least in part by retrieving said information representative of said one or more user selected settings stored in said database; and
    (e) building one or more webpages to generate said website from at least a portion of said database and at least one run time file, where said at least one run time file utilizes information stored in said database to generate virtual machine commands for the display of at least a portion of said one or more web pages.

The Alice court set out a two-step framework for determining patent eligibility.  First, a court determines whether the claims at issue are directed a patent-ineligible concept, namely, an abstract idea.  If so, the court considers the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application.  Step two of this analysis is described as a search for 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.

Express Mobile contended that the patents bring together a number of disparate ideas and concepts, to create a new paradigm for creating, storing, and building web pages.

In contrast, Defendants relied primarily on Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363 (Fed. Cir. 2015).  They argued that the patents here are not meaningfully distinguishable from one held invalid in that case, U.S. Patent No. 7,603,382, entitled "Advanced Internet Interface Providing User Display Access of Customized Webpages."  But the Court found otherwise.

The Court stated that the '382 patent in Intellectual Ventures generally related to customizing web page content as a function of navigation history and information known about the user.  The representative claim described a system for providing web pages accessed from a web site in a manner which presents the web pages tailored to an individual user.  The Intellectual Ventures court had little trouble concluding that merely tailoring the information presented to a website user based on information about that user or when the website was being viewed represented patent-ineligible abstract ideas.

The sort of information tailoring in the Intellectual Ventures court was considered a fundamental practice long prevalent in our system.  Examples given included newspaper inserts often being tailored based on information known about the customer—for instance, a newspaper might advertise based on the customer's location.  Providing this minimal tailoring—e.g., providing different newspaper inserts based upon the location of the individual—is an abstract idea.

Tailoring information based on the time of day of viewing was also given as an example of an abstract, overly broad concept long-practiced in our society.  There can be no doubt that television commercials for decades tailored advertisements based on the time of day during which the advertisement was viewed.

The Court found that the patents here are not comparable to those in Intellectual Ventures merely because they also involve webpages that reflect information provided by a user.  Indeed, the patents do not even involve the same category of user—here the "user" is the person who is trying to create webpages, whereas in Intellectual Ventures the user is a person viewing the webpage to whom customized content will be delivered.  The patents here are directed at a purportedly revolutionary technological solution to a technological problem—how to create webpages for the internet in a manner that permits "what you see is what you get" editing, and a number of other alleged improvements over the then-existing methodologies.

The Court found that a more apt comparison to the present patents are those found in Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016), which reversed a district court's finding of ineligibility under Alice.  At issue in Enfish was an innovative logical model for a computer database.  Enfish supports the notion that a dividing line can be drawn between patents which merely describe using a computer and/or the internet to carry out pre-existing and well-known tasks and techniques, and those that relate to the functioning of computers themselves.  The former will virtually always fail under Alice unless some "inventive concept" can be found in the second step of the analysis; the latter are substantially less easily characterized as merely abstract ideas.

Thus, the Court focused on the claims being directed to a specific asserted improvement in computer capabilities versus a process that qualifies as an "abstract idea" for which computers are invoked merely as a tool.  The claims were not found to be directed to tasks for which a computer is used in its ordinary capacity.

The Defendants further argued that any potentially patent-eligible technological improvements set out in the specification were not fully reflected in the actual claims.  But the Court stated that dismissal under Alice is not appropriate, at least at this juncture, for such reasons because full claim construction is needed.  It simply cannot be said on the present record that the claims are drawn so broadly as to be divorced from the potentially patent-eligible purported technological improvements described in the specification.  Accordingly, the Court denied the motions to dismiss, and the patents survived a first challenge in the litigation.

Express Mobile, Inc. v. Code and Theory LLC (N.D. Cal. 2019)
Order Denying Motions to Dismiss by District Judge Seeborg

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

By Donald Zuhn –-

Last week, in Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC, the Federal Circuit affirmed the 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.  The Federal Circuit also affirmed the District Court's dismissal under Fed. R. Civ. P. 12(b)(6) of a complaint filed by Athena Diagnostics, Inc., Oxford University Innovation Ltd., and the Max-Planck-Gesellschaft zur Forderung der Wissenschaften E.V. against Mayo Collaborative Services, LLC 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 affirming the District Court's determination that claims 6-9 are invalid under § 101, Judge Lourie, joined by Judge Stoll (with Judge Newman dissenting) begins by noting that "[u]nder the law as set forth by the Supreme Court, § 101, while broad, 'contains an important implicit exception,'" namely that laws of nature, natural phenomena, and abstract ideas are not patentable, citing Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66, 70 (2012) (quoting Diamond v. Diehr, 450 U.S. 175, 185 (1981)).  The panel majority also notes that while "[l]aws of nature are not patentable, . . . applications of such laws may be patentable," and sets forth the Supreme Court's two-part test for "distinguish[ing] claims to patent-eligible applications of laws of nature from claims that impermissibly tie up such laws":

First, we examine whether the claims are "directed to" a law of nature.  If they are, then we proceed to the second inquiry, where we ask whether the limitations of the claim apart from the law of nature, considered individually and as an ordered combination, "'transform the nature of the claim' into a patent-eligible application" [citations omitted].

On appeal, Athena argued that claims 7-9 are patent eligible because they recite innovative, specific, and concrete steps that do not preempt a natural law and are directed to a new laboratory technique that makes use of man-made molecules.  Mayo responded that the asserted claims are directed to a natural law, namely, the correlation between naturally-occurring MuSK autoantibodies and MuSK-related neurological diseases like MG, that the remaining steps apart from the natural law are standard immunoassay techniques that still leave the claims directed to a natural law, and that it makes no difference with respect to patent eligibility whether the claimed diagnostic method uses man-made materials.  The panel majority "ultimately agree[d] with Mayo that, under Mayo, 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."  With regard to Athena's argument that the claimed methods make use of man-made molecules, the opinion "reaffirm[s] that use of a man-made molecule in a method claim employing standard techniques to detect or observe a natural law may still leave the claim directed to a natural law."

Before turning to step two of the Mayo/Alice test, the panel majority took a moment "to note the difference between the claims before us here, which recite a natural law and conventional means for detecting it, and applications of natural laws, which are patent-eligible," specifically citing the Court's decision in Vanda Pharm. Inc. v. West-Ward Pharm. Int'l Ltd., 887 F.3d 1117 (Fed. Cir. 2018).  In particular, the opinion points out that "[c]laiming a natural cause of an ailment and well-known means of observing it is not eligible for patent because such a claim in effect only encompasses the natural law itself," and notes that "claiming a new treatment for an ailment, albeit using a natural law, is not claiming the natural law."  The panel majority also includes a lengthy footnote in response to Judge Newman's dissent:

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].

With regard to step two of the Mayo/Alice test, Athena argued that the claims provide an inventive concept, namely, an innovative sequence of steps involving man-made molecules, and that the existence of factual disputes precluded dismissal under Rule 12(b)(6).  Mayo countered that the claims lack an inventive concept because the specification describes the steps for detecting MuSK autoantibodies as standard techniques in the art, and that no factual issues precluded dismissal under Rule 12(b)(6).  The panel majority 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 response to Athena's assertion that the claimed steps were unconventional because they had not been applied to detect MuSK autoantibodies prior to Athena’s discovery of the correlation between MuSK autoantibodies and MG, the panel majority concludes that "we cannot hold that performing standard techniques in a standard way to observe a newly discovered natural law provides an inventive concept."

Following its analysis of claims 7-9, the panel majority next considers claim 6, noting that while the former claims recite a radioimmunoassay, the latter recites an ELISA method.  Noting that Athena did not make any particularized arguments regarding claim 6 at trial, the panel majority "agree[d] with Mayo that Athena waived its arguments specific to claim 6 by not making them before the district court," adding that "[e]ven if we had reached the issue, we would hold claim 6 ineligible."  Finding that "claims 6–9 of the '820 patent recite only a natural law together with conventional steps to detect that law," and therefore are patent ineligible under § 101, the panel majority affirmed the judgment of the District Court.

In a dissent that runs a little more than fourteen pages (five and a half pages less than the majority opinion), Judge Newman begins by declaring 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 contends 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."

Judge Newman argues that the majority's "analysis of patent-eligibility is incorrect," noting that "[e]ligibility is determined for the claim considered as a whole, including all its elements and limitations," and cites Diehr, 450 U.S. at 188, for the proposition that "[i]t is inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis."  She points out, therefore, that "[i]t is incorrect to excise from the claims any steps that are performed by conventional procedures," asserting that "[t]his is misconstruction of claims, and misapplication of Section 101."  With respect to the claims at issue, Judge Newman concludes that:

Applied to the '820 patent, the claimed method is a new method of diagnosing Myasthenia Gravis.  After eliminating the "conventional" procedures, my colleagues rule that this new method is a "law of nature."  However, these inventors are not claiming the scientific fact of a newly described autoantibody; they are claiming a new multi-step diagnostic method.  This is not a law of nature, but a man-made reaction sequence employing new components in a new combination to perform a new diagnostic procedure.

Judge Newman also contends that "Section 101 does not exclude new methods of diagnosis of human ailments."

The dissent concludes with a discussion of the amici curiae briefs (five of which were submitted for the Court's consideration).  Noting that "[t]his court's decisions have not been consistent," Judge Newman declares that "[a]mici curiae point out that the public interest is poorly served by adding disincentive to the development of new diagnostic methods," asserting that "[t]his is a severe criticism; and when presented by the entire industry, and stressed by thoughtful scholars, it warrants judicial attention."  In particular, she argues that "[t]he judicial obligation is to provide stable, consistent application of statute and precedent, to implement the legislative purpose."  Judge Newman concludes by stating that:

[F]or procedures that require extensive development and federal approval, unpredictability of patent support is a disincentive to development of new diagnostic methods.  The loser is the afflicted public, for diagnostic methods that are not developed benefit no one.

Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC (Fed. Cir. 2019)
Panel: Circuit Judges Newman, Lourie, and Stoll
Opinion by Circuit Judge Lourie; dissenting opinion by Circuit Judge Newman

USPTO on Patent Eligibility -- Examples 41 and 42

By Michael Borella --

On January 7, 2019, the U.S. Patent and Trademark Office published updated examination guidance, instructing the examining corps and the PTAB how they should apply 35 U.S.C. § 101.  On the same day, the USPTO also published the latest in its series of examples of how this application of the § 101 inquiry should be carried out.  This latest set, encompassing Examples 37-42, apply the updated guidance (Examples 1-36 were previously published over the last four years and apply previous versions of the guidance).  Our analyses of Examples 37, 38, 39, and 40 were recently posted.

The USPTO emphasizes that these examples are "hypothetical and only intended to be illustrative of the claim analysis" under the updated guidance.  Furthermore, the examples "should be interpreted based on the fact patterns set forth below as other fact patterns may have different eligibility outcomes."  In other words, even if an applicant's claim recites similar language and functionality as that of one of the examples, that does not mean the applicant's claim is patent-eligible.

The updated guidance modified only part of the § 101 analysis (step 2A in the USPTO's parlance).  As set forth in Alice Corp. v. CLS Bank Int'l, this step involves determining whether a claim is directed to a judicial exception, such as an abstract idea.  If not, then no § 101 rejection can be made.

The updated guidance breaks step 2A into a pair of sub-steps:

• In sub-step 2A(i), one is to determine whether the claim recites a judicial exception, such as an abstract idea. Abstract ideas are now limited to three categories: mathematical concepts, certain methods of organizing human activity, and mental processes.  If there is no exception recited, the claim is eligible.

• If the claim recites such an exception, then in sub-step 2A(ii) one is to determine further "whether the recited judicial exception is integrated into a practical application of that exception."  If so, the claim is eligible.

If the claim fails to establish its eligibility in step 2A, the second part of the § 101 analysis (step 2B) is applied to determine whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exception.  If this is the case, the claim is patent-eligible under § 101.  If not, it can be rejected.

Example 41

Example 41 relates to cryptographic communication.  The background provided by the USPTO is as follows (abbreviated to focus on key aspects):

It is critical that data being sent from a sender to a recipient is unable to be intercepted and understood by an intermediate source.  In addition, authentication of the source of the message must be ensured along with the verification of and security of the message content.  Various cryptographic encoding and decoding methods are available to assist with these security and authentication needs.  However, many of them require expensive encoding and decoding hardware as well as a secure way of sharing the private key used to encrypt and decrypt the message.

The invention improves upon prior methods for establishing cryptographic communications because by using only the variables [n=p*q] and e (which are publicly known), a plaintext can be encrypted by anyone.  The variables p and q are [prime numbers and] only known by the owner of the decryption key d and are used to generate the decryption key (private key d is not claimed below).  Thus, the security of the cipher relies on the difficulty of factoring large integers by computers, and there is no known efficient algorithm to recover the plaintext given the ciphertext and the public information (n, e).

The claim of Example 41 recites:

A method for establishing cryptographic communications between a first computer terminal and a second computer terminal comprising:
    receiving a plaintext word signal at the first computer terminal;
    transforming the plaintext word signal to one or more message block word signals M_A;
    encoding each of the message block word signals M_A to produce a ciphertext word signal C_A, whereby C_A=M_Ae (mod n);
        where C_A is a number representative of an encoded form of message word M_A;
        where M_A corresponds to a number representative of a message and 0 ≤ M_A ≤ n-1;
        where n is a composite number of the form n=p*q;
        where p and q are prime numbers;
        where e is a number relatively prime to (p-1)*(q-1); and
    transmitting the ciphertext word signal C_A to the second computer terminal over a communication channel.

Applying the first sub-step of 2A, the USPTO states that this claim recites a mathematical concept.  Particularly, "the encoding step is determined to recite a mathematical concept because the claim explicitly recites a mathematical formula or calculation."

Moving on to the second sub-step of 2A, the USPTO finds that the additional elements integrate this mathematical concept into a practical application thereof.  The USPTO states that "the combination of additional elements use the mathematical formulas and calculations in a specific manner that sufficiently limits the use of the mathematical concepts to the practical application of transmitting the ciphertext word signal to a computer terminal over a communication channel."  According to the USPTO, the claimed invention secures communications "so that a ciphertext word signal can be transmitted between computers of people who do not know each other or who have not shared a private key between them in advance of the message being transmitted, where the security of the cipher relies on the difficulty of factoring large integers by computers."

Accordingly, the claim is not directed to an abstract idea, which renders it patent-eligible under step 2A.  No step 2B analysis need take place.

Example 42

Example 42 relates to transmission of notifications when medical records are updated.  The background provided by the USPTO is as follows (again, abbreviated to focus on key aspects):

Patients with chronic or undiagnosed illnesses often must visit several different medical providers for diagnosis and treatment.  These physicians may be physically separate from each other and unaware of each other.  During a visit, each medical provider records information about the patient's condition in their own local patient records.  These records are often stored locally on a computer in a non-standard format selected by whichever hardware or software platform is in use in the medical provider's local office.  It is difficult for medical providers to share updated information about a patient's condition with other health care providers using current patient management systems, due to the above challenges.

To solve this problem, applicant has invented a network-based patient management method that collects, converts and consolidates patient information from various physicians and health-care providers into a standardized format, stores it in network-based storage devices, and generates messages notifying health care providers or patients whenever that information is updated.

Claim 1 of Example 41 recites:

A method comprising:
    a) storing information in a standardized format about a patient's condition in a plurality of network-based non-transitory storage devices having a collection of medical records stored thereon;
    b) providing remote access to users over a network so any one of the users can update the information about the patient's condition in the collection of medical records in real time through a graphical user interface, wherein the one of the users provides the updated information in a non-standardized format dependent on the hardware and software platform used by the one of the users;
    c) converting, by a content server, the non-standardized updated information into the standardized format,
    d) storing the standardized updated information about the patient's condition in the collection of medical records in the standardized format;
    e) automatically generating a message containing the updated information about the patient's condition by the content server whenever updated information has been stored; and
    f) transmitting the message to all of the users over the computer network in real time, so that each user has immediate access to up-to-date patient information.

Applying the first sub-step of 2A, the USPTO states that this claim recites a method of organizing human activity.  Notably, the method "allows for users to access patients' medical records and receive updated patient information in real time from other users which is a method of managing interactions between people."  Therefore, the claim 1 recites an abstract idea.

Moving on to the second sub-step of 2A, the USPTO finds that the claim integrates its additional elements into a practical application of this abstract idea.  The USPTO writes that "the additional elements recite a specific improvement over prior art systems by allowing remote users to share information in real time in a standardized format regardless of the format in which the information was input by the user."  Therefore, the claim is not directed to an abstract idea and thus patent-eligible.  No step 2B analysis need take place.

Claim 2 of Example 41 recites:

A method comprising:
    a) storing information about a patient's condition in a plurality of network-based non-transitory storage devices having a collection of medical records stored thereon;
    b) providing access, by a content server, to users so that any one of the users can update the information about the patient's condition in the collection of medical records, and;
    c) storing the updated information about the patient's condition in the collection of medical records in the plurality of network-based non-transitory storage devices.

In addition to being less detailed than claim 1, claim 2 also fails to recite that the medical records are converted to a standard format or that updates are transmitted in real time to other users.

Applying the first sub-step of 2A, the USPTO states that claim 2 recites a method of organizing human activity, largely based on the same grounds as claim 1.  The USPTO notes that "[t]he mere nominal recitation of a generic content server and generic network-based storage devices does not take the claim out of the methods of organizing human interactions grouping."  Thus, the claim recites an abstract idea.

For the second sub-step of 2A, the USPTO concludes that the additional elements do not integrate this abstract idea into a practical application thereof.  Particularly, "[t]he claimed computer components are recited at a high level of generality and are merely invoked as tools to perform an existing medical records update process," and "[s]imply implementing the abstract idea on a generic computer is not a practical application of the abstract idea."

Moving on to step 2B, the USPTO states that "the claim as a whole merely describes how to generally apply the concept of updating medical records in a computer environment."  Since this does not add significantly more to the abstract idea, the claim lacks an inventive concept and is ultimately ineligible.

Analysis

After reviewing Examples 41 and 42, one has to wonder if the Office's approach in the Revised Guidance can be rectified with how examiners have been applying the Electric Power Group v. Alstom S.A. case.  For those of you who have not yet experienced the distinct pleasure of a rejection based on Electric Power Group, some examiners and/or art units have taken the position that it stands for the notion that any collecting of data, processing of that data, and providing of a result of the processing (all abstract ideas) is virtually per se ineligible.  While this expansive view of Electric Power Group is rebuttable, it does tend to cover the essence of many computer-implemented inventions.

Both of the examples herein would have been candidates for an Electric Power Group rejection.  But two of these three claims are not directed to an abstract idea, according to the USPTO's new view of the world.  Will the courts agree?  Probably not.  Thus, applicants must proceed with caution and try to draft claims that will satisfy the Alice test (to the extent doing so in any reliable fashion is possible), not just the USPTO's version thereof.

To sum up this series of articles on Revised Guidance, the USPTO should be commended for attempting to bring some clarity and consistency to an area of the law that has so far resisted such efforts.  But the new prongs of step 2A open new cans of worms, and it remains to be seen whether the USPTO can apply its own test in a harmonious manner.

Ex parte Milder (PTAB 2018)

PTAB Affirms Patent Eligibility of Claims for Playing Dice Game

By James Korenchan --

In a decision issued last month, the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office reversed the final rejection of all pending claims in U.S. Application No. 14/207,507.  Claims 2-7 were rejected under 35 U.S.C. § 101 as directed to patent-ineligible subject matter and claims 1-22 under 35 U.S.C. § 103.  This post focuses on the § 101 decision.

The claims at issue are generally directed to a dice game, which the application refers to as "Rainbow Dice."  In particular, the game utilizes even number sided polyhedrons as dice, such as two-sided, four-sided, or twenty-sided die, where each side is of a different color.  Bets are then placed on the various color-combinations that are possible outcomes from rolling a set of one or more of such dice.  The game is played on a table similar to, but still different from, a Craps table.  The table has two sides, each corresponding to a different betting category: single roll and multiple roll.  Various bets can then be placed based on the predicted colors and/or values of the rolled dice.  The patent application touts the game as easy to learn, quick to play and administer, and capable of providing sufficient returns for players, all while retaining a desirable house advantage.

Representative claim 2 recites:

2.  A method of playing a dice game comprising:
    presenting a gaming table comprising a first side and a second side, said first side of said gaming table comprises:
        a first section containing a plurality of color combinations,
        a second section containing a plurality of color combinations wherein each combination contains one color and one blank,
        a third section containing two blanks for colors that are the same,
        a fourth section containing a plurality of color combinations that are less than the number of color combinations in said first section;
    said second side of said gaming table comprises:
        a first section containing the same color combinations as in said first side's fourth section;
        a second section containing a plurality of color combinations each of which comprises a combination with identical colors;
        a third section containing a plurality of color combinations other than those in said second side's first section;
    receiving a plurality of wagers on said first side or said second side of said gaming table;
    presenting a set of regular, non-standard, polyhedron dice comprising a plurality of identical die, each said die having an even number of faces and each said die having different color on each of its said faces;
    wherein said first side and said second side contain pre-determined color combinations associated with rolling said pre-determined color combinations using said set of dice and wherein said pre-determined color combinations are assigned odds for wagering on the outcome of a roll of said set of dice;
    rolling said set of dice to expose a top face of each said die;
    identifying colors exposed on the top face of each said die after said rolling of said set of dice; and
    resolving wagers placed in sections of said gaming table solely based on combinations of said colors exposed on said top surface of each said die.

Figure 4 of the patent application is as follows and is a helpful representation of the recited gaming table:

In rejecting claims 2-7 under § 101, the Examiner indicated that the claims are directed to the abstract idea of playing a game and contain no additional elements that elevate the claims to a level of patent eligibility.  The Board's opinion, which was quite short, did not address the Examiner's conclusion on step one of the Alice test and instead focused on step two.

In the briefing, the Appellant primarily argued that the claims set forth an inventive concept because they involve using a non-standard set of die having colored markings.  The Appellant also pointed to the Federal Circuit's decision in 2016's In re Smith, in which the Court expressed in dicta the notion that claims directed to conducting a card game using a non-standard deck of cards could potentially meet the requirements under § 101.  (In that case, the Court found that claims directed to rules of wagering on a card game were patent ineligible, likening those claims to the exchange of financial obligations found ineligible in Alice and Bilski v. Kappos.)

The Board agreed with the Appellant, echoing the non-standard aspect of the claimed dice game and concluding that the claims recite an inventive concept:

Craps and other well-known dice games are typically played with six-sided dice where each side is marked with a numbered indicia, from one to six, usually in the form of a number of dots.  Unless and until we receive additional and further guidance from the Federal Circuit on Section 101 as it applies to game method claims, Appellant's non-standard use of color and geometric forms in lieu of conventional number/dot indicia is sufficient to set forth an inventive concept under step two of the Alice analysis.  Given the diversity of subject matter that arises in Section 101 cases, particularly gaming cases, and pending further guidance from the Federal Circuit, our holding here should be limited to the specific facts of this case.

The Board's comments on awaiting further guidance from the Federal Circuit are amusing because this decision happened to be issued on the same day as the Federal Circuit's In re Marco Guldenaar Holding B.V. decision, in which the Federal Circuit struck down dice game claims under § 101.  In that case, the Federal Circuit relied heavily on In re Smith as well, holding that the claims were directed to the abstract idea of rules for playing a dice game and had no limitations sufficient for transforming the abstract idea into patent-eligible subject matter.  In particular, the Court stated that "[t]he claims here recite the steps of placing a wager, rolling the dice, and paying a payout amount if at least one wagered outcome occurs—none of which Appellant on appeal disputes is conventional, either alone or in combination," and thus, under step two of Alice, "the claimed activities here are purely conventional and are insufficient to recite an inventive concept."  Notably, the Court also applied the printed matter doctrine and observed that the printed indicia on each die were not functionally related to the substrate of the die.

However, even if this Board had considered the Federal Circuit's reasoning in that case, it might not have swayed the Board in the other direction.  In contrast to the Court's application of the printed matter doctrine, the Board observed in this decision (albeit in its reversal of the § 103 rejections) that "there is a functional relationship between the colored indicia, the respective faces of the dice, and the outcome of playing the game."  The claims here are also narrower than those in Federal Circuit case.  In addition to reciting non-standard dice colors and geometries, these claims also recite a specific gaming table tailored to these dice and specific rules for playing the game.

While resolving wagers based on the colors and color combinations of the rolled dice per the claimed game is arguably akin to resolving wagers based on markings on standard dice such as in Craps, the claims here do not recite conventional dice or conventional rules for playing and wagering.  Still, it would be interesting to see how the Federal Circuit might have addressed the patent eligibility of these claims.

Panel: Administrative Patent Judges Capp, Hill, and Warner
Decision on Appeal by Administrative Patent Judge Warner

USPTO on Patent Eligibility -- Examples 38 & 39

By Michael Borella --

On January 7, 2019, the U.S. Patent and Trademark Office published updated examination guidance, instructing the examining corps and the PTAB how they should apply 35 U.S.C. § 101.  On the same day, the USPTO also published the latest in its series of examples of how this application of the § 101 inquiry should be carried out.  This latest set, encompassing Examples 37-42, apply the updated guidance (Examples 1-36 were previously published over the last four years).  Our analysis of Example 37 was recently published.

The USPTO emphasizes that these examples are "hypothetical and only intended to be illustrative of the claim analysis" under the updated guidance.  Furthermore, the examples "should be interpreted based on the fact patterns set forth below as other fact patterns may have different eligibility outcomes."  In other words, even if an applicant's claim recites similar language and functionality as that of one of the examples, that does not mean the applicant's claim is patent-eligible.  Context matters.

The updated guidance modified only part of the § 101 analysis (step 2A in the USPTO's parlance).  As set forth in Alice Corp. v. CLS Bank Int'l, this step involves determining whether a claim is directed to a judicial exception, such as an abstract idea.  If not, then no § 101 rejection can be made.

The updated guidance breaks step 2A into a pair of sub-steps:

• In sub-step 2A(i), one is to determine whether the claim recites a judicial exception, such as an abstract idea. Abstract ideas are now limited to three categories: mathematical concepts, certain methods of organizing human activity, and mental processes.  If there is no exception recited, the claim is eligible.

• If the claim recites such an exception, then in sub-step 2A(ii) one is to determine further "whether the recited judicial exception is integrated into a practical application of that exception." If so, the claim is eligible.

If the claim fails to establish its eligibility in step 2A, the second part of the § 101 analysis (step 2B) is applied to determine whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exception.  If this is the case, the claim is patent-eligible under § 101.  If not, it can be rejected.

Example 38

Example 38 relates to simulating an analog audio mixer.  The background provided by the USPTO is as follows (abbreviated to focus on key aspects):

[Many audiophiles prefer] listening to music in its analog form, as digital audio files are considered to "lose" much of the sound quality in the conversion from analog to digital.  Prior inventions attempted to create digital simulations of analog audio mixers to simulate the sounds from analog circuits.  However, the prior art audio mixer simulations do not produce the same sound quality as the actual analog circuits.

Applicant's invention . . . begins with a model of an analog circuit representing an audio mixing console.  The model includes a location of all the circuit elements within the circuit, an initial value for each of the circuit elements, and a manufacturing tolerance range for each of the circuit elements.  A randomized working value of each element is then determined using a normally distributed pseudo random number generator (PRNG) based on the initial value of the circuit element and the manufacturing tolerance range.  The model is then simulated using a bilinear transformation to create a digital representation of the analog circuit.

The claim of Example 38 recites:

A method for providing a digital computer simulation of an analog audio mixer comprising:
    initializing a model of an analog circuit in the digital computer, said model including a location, initial value, and a manufacturing tolerance range for each of the circuit elements within the analog circuit;
    generating a normally distributed first random value for each circuit element, using a pseudo random number generator, based on a respective initial value and manufacturing tolerance range; and
    simulating a first digital representation of the analog circuit based on the first random value and the location of each circuit element within the analog circuit.

Applying the first sub-step of 2A, the USPTO states that this claim does not recite any of the three types of abstract ideas.  Notably, the USPTO concludes that despite explicitly reciting "generating a normally distributed first random value," the claim does not recite a mathematical calculation.  The USPTO's reasoning to support this rather surprising outcome is that "[w]hile some of the limitations may be based on mathematical concepts, the mathematical concepts are not recited in the claims."  The USPTO quickly concludes that the claim also does not recite a mental process ("because the steps are not practically performed in the human mind") or a method of organizing human activity.  Therefore, the claim is eligible and the analysis ends without moving on to the second sub-step.

Example 39

Example 39 relates to training a neural network for facial detection.  The background provided by the USPTO is as follows (again abbreviated to focus on key aspects):

In facial detection, a neural network classifies images as either containing a human face or not, based upon the model being previously trained on a set of facial and non-facial images.  However, these prior methods suffer from the inability to robustly detect human faces in images where there are shifts, distortions, and variations in scale and rotation of the face pattern in the image.

Applicant's invention addresses this issue by using a combination of features to more robustly detect human faces.  The first feature is the use of an expanded training set of facial images . . . developed by applying mathematical transformation functions on an acquired set of facial images.  Unfortunately, the introduction of an expanded training set increases false positives when classifying non-facial images.  Accordingly, the second feature of applicant's invention is the minimization of these false positives by performing an iterative training algorithm, in which the system is retrained with an updated training set containing the false positives produced after face detection has been performed on a set of non-facial images.

The claim of Example 39 recites:

A computer-implemented method of training a neural network for facial detection comprising:
    collecting a set of digital facial images from a database;
    applying one or more transformations to each digital facial image including mirroring, rotating, smoothing, or contrast reduction to create a modified set of digital facial images;
    creating a first training set comprising the collected set of digital facial images, the modified set of digital facial images, and a set of digital non-facial images;
    training the neural network in a first stage using the first training set;
    creating a second training set for a second stage of training comprising the first training set and digital non-facial images that are incorrectly detected as facial images after the first stage of training; and
    training the neural network in a second stage using the second training set.

Applying the first sub-step of 2A, the USPTO states that this claim does not recite any of the three types of abstract ideas.  It is reasonably well known that neural networks can be considered mathematical structures (albeit very complex ones), and are often modelled using linear algebra and calculus.  But, not unlike the analysis of Example 38's claim, the USPTO finds this claim to not recite any mathematical concepts.  Also like that of Example 38's claim, the USPTO further concludes that the claim does not recite a mental process or a method of organizing human activity.  Even the admittedly mathematical image transformations escape unscathed.  Therefore, the claim is eligible and the analysis ends at the first sub-step.

Analysis

If the goal of Example 38 is to draw a clearer line around the nebulous notion of abstract ideas, it has failed spectacularly.  Randomly generating a variable according to proscribed distribution is almost always a mathematical calculation.  And if the USPTO is giving patentable weight to the notion of pseudorandom generation being the differentiator, that would be a mistake.  Under a broadest reasonable interpretation, pseudorandom number generators include linear congruential generators, which are simple recursive mathematical functions.

Of course, even if one were to conclude that the claim of Example 38 does recite the abstract idea of a mathematical calculation, it could be argued that the additional elements of the claim integrate this abstract idea into a practical application thereof -- notably, a circuit simulation that can be used to general audible analog impurities.  Still, it remains difficult to rectify the USPTO's reasoning with the scientific and technical reality underlying its example.

Example 39 on the other hand, provides some relief to patentees who are attempting to protect advances in machine learning.  This example does not describe the structure of the neural network being trained, and essentially treats it like a black box.  But the claim is eligible because of the two-phase training technique in combination with the transforming of the facial images.  In this example, the USPTO is signaling that it will not treat a reasonably-claimed machine learning invention as "just a bunch of math."

USPTO on Patent Eligibility -- Example 37

By Michael Borella --

On January 7, 2019, the U.S. Patent and Trademark Office published updated examination guidance, instructing the examining corps and the PTAB how they should apply 35 U.S.C. § 101.  On the same day, the USPTO also published the latest in its series of examples of how this application of the § 101 inquiry should be carried out.  This latest set, encompassing examples 37-42, apply the updated guidance (examples 1-36 were previously published over the last four years).

The USPTO emphasizes that these examples are "hypothetical and only intended to be illustrative of the claim analysis" under the updated guidance.  Furthermore, the examples "should be interpreted based on the fact patterns set forth below as other fact patterns may have different eligibility outcomes."  In other words, even if an applicant's claim recites similar language and functionality as that of one of the examples, that does not mean the applicant's claim is patent-eligible.  Context matters.

The updated guidance modified only part of the § 101 analysis (step 2A in the USPTO's parlance).  As set forth in Alice Corp. v. CLS Bank Int'l, this step involves determining whether a claim is directed to a judicial exception, such as an abstract idea.  If not, then no § 101 rejection can be made.

The updated guidance breaks step 2A into a pair of sub-steps:

• In sub-step 2A(i), one is to determine whether the claim recites a judicial exception, such as an abstract idea.  Abstract ideas are now limited to three categories:  mathematical concepts, certain methods of organizing human activity, and mental processes.

• If so, then in sub-step 2A(ii), one is to determine further "whether the recited judicial exception is integrated into a practical application of that exception."

If the claim involves such an exception, the second part of the § 101 analysis (step 2B) is applied to determine whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exception.  If this is the case, the claim is patent-eligible under § 101.  If not, it can be rejected.

Hypothetical Background

Example 37 relates to relocation of icons on a graphical user interface (GUI).  The background provided by the USPTO is as follows (abbreviated to focus on key aspects):

[C]omputer users may have a large number of icons on their display, making it difficult to find the icons most used.  The typically available ways to organize icons are alphabetically, by file size, and by file type.  If a computer user wants a non-typical arrangement of icons, the user would need to manually manipulate the icons on their display.

Accordingly, applicant's invention addresses this issue by providing a method for rearranging icons on a [GUI], wherein the method moves the most used icons to a position on the GUI, specifically, closest to the "start" icon of the computer system, based on a determined amount of use.

Claim 1

Claim 1 of Example 37 recites:

A method of rearranging icons on a graphical user interface (GUI) of a computer system, the method comprising:
    receiving, via the GUI, a user selection to organize each icon based on a specific criteria, wherein the specific criteria is an amount of use of each icon;
    determining, by a processor, the amount of use of each icon over a predetermined period of time; and
    automatically moving the most used icons to a position on the GUI closest to the start icon of the computer system based on the determined amount of use.

Applying the first sub-step of 2A, the USPTO states that claim 1, under its broadest reasonable interpretation, "covers performance of the limitation in the mind but for the recitation of generic computer components."  In other words, "nothing in the claim element precludes the step from practically being performed in the mind," and "[t]he mere nominal recitation of a generic processor does not take the claim limitation out of the mental processes grouping."  Thus, the claim recites an abstract idea.

Moving on to the second sub-step, the USPTO notes that the claim "recites the combination of additional elements of receiving, via a GUI, a user selection to organize each icon based on the amount of use of each icon, a processor for performing the determining step, and automatically moving the most used icons to a position on the GUI closest to the start icon of the computer system based on the determined amount of use."  Thus, the claim integrates the mental process into a practical application by reciting "a specific manner of automatically displaying icons to the user based on usage which provides a specific improvement over prior systems."  As a result, the claim is eligible under step 2A because it is not directed to a judicial exception, and step 2B need not be applied.

Claim 2

Claim 2 of Example 37 recites:

A method of rearranging icons on a graphical user interface (GUI) of a computer system, the method comprising:
    receiving, via the GUI, a user selection to organize each icon based on a specific criteria, wherein the specific criteria is an amount of use of each icon;
    determining the amount of use of each icon using a processor that tracks how much memory has been allocated to each application associated with each icon over a predetermined period of time; and
    automatically moving the most used icons to a position on the GUI closest to the start icon of the computer system based on the determined amount of use.

Key differences between claim 2 and claim 1 are highlighted.

Applying the first sub-step of 2A, the USPTO states that claim 2 does not recite any of the three types of abstract ideas.  According to the USPTO, the determining step now "requires action by a processor that cannot be practically applied in the mind" because it involves "a processor accessing computer memory indicative of application usage."  The USPTO further states that the claim does not recite either of the other two types of abstract ideas (mathematical relationships and methods of organizing human activity) either.  Like claim 1, claim 2 is eligible under step 2A because it is not directed to a judicial exception, and step 2B need not be applied.

Claim 3

Claim 3 of Example 37 recites:

A method of ranking icons of a computer system, the method comprising:
    determining, by a processor, the amount of use of each icon over a predetermined period of time; and
    ranking the icons, by the processor, based on the determined amount of use.

Applying the first sub-step of 2A, the USPTO states that claim 3, like claim 1, "covers performance of the [determining] limitation in the mind but for the recitation of generic computer components."  Therefore, claim 3 recites a mental process.  The USPTO notes that the ranking limitation also recites a mental process because "the claim encompasses the user thinking that the most-used icons should be ranked higher than the least-used icons."

Under the second sub-step of 2A, the USPTO finds that the only additional element is the processor, and that "[t]his generic processor limitation is no more than mere instructions to apply the exception using a generic computer component."  Thus, the claim does not integrate the abstract idea of the recited mental process into a practical application thereof, and the claim is therefore directed to an abstract idea.

Invoking step 2B, the USPTO similarly concludes that "the additional element in the claim amounts to no more than mere instructions to apply the exception using a generic computer component."  Thus, the 2B analysis follows that of the second sub-step of 2A, resulting in the claim not containing significantly more than the abstract idea.  Accordingly, the claim is patent-ineligible.

Analysis

The USPTO makes it clear in this example that the mental process category of abstract ideas is not meant to be taken literally.  It is not limited to steps that are carried out wholly in the human mind.  Instead, a step that (in theory) could be performed in the mind but is recited as being performed by a processor is still considered a mental step.  This is a bit of legal fiction to note well.

The distinction between claims 1 and 2 is also quite fine.  Claim 1 recites "determining the amount of use of each icon over a predetermined period of time" while claim 2 recites "the amount of use of each icon using a processor that tracks how much memory has been allocated to each application associated with each icon over a predetermined period of time.  While claim 2 is narrower than claim 1, it is not 100% clear why claim 2 is not also reciting a mental process.

The USPTO's justification for concluding that it does not is that claim 2 involves "a processor accessing computer memory indicative of application usage."  But if we are allowed to ignore the literal meaning of the term "processor" in these claims, why is the processor's use of memory not ignored as well?  Why isn't the "computer" qualifier disregarded to find the term "memory" broad enough to encompass human memory?

Perhaps the answer is that the combination of a processor and the specific use of the memory is enough to find the claim not directed to a mental process.  But the USPTO is silent in this regard, and it remains difficult to know where to draw the line.

Further, the determination of whether a recited abstract idea is integrated into a practical application is similarly vague.  In claim 1, such an integration is found because the claim recites specific requirements that leads to an improvement over the prior art.  In claim 3, however, the apparent lack of recited detail was enough to conclude that any such integration was de minimis at best.  Perhaps the absence of any movement of the icons damned claim 3 to abstractness hell.

From the outset, the Alice test has required a certain suspension of logic in order to follow the Supreme Court's reasoning.  By expanding the test with two additional sub-steps, the USPTO is attempting to provide clarity.  Unfortunately, the USPTO appears to be adopting the same legal fictions that have made the post-Alice § 101 inquiry so subjective in the first place.

Coqui Technologies, LLC v. Gyft, Inc. (D. Del. 2018)

By Joseph Herndon --

In the U.S. District Court for the District of Delaware, a patent directed to electronic gift card distribution was found to be directed to patent-ineligible subject matter.

Coqui filed related patent infringement actions claiming infringement of U.S. Patent No. 7,580,864, entitled "Method for Circulating an Electronic Gift Certificate in Online and Offline System," which claims a method of circulating electronic gift certificates and managing sales of electronic gift certificates according to requests made through wired and wireless networks.

The '864 patent describes that a gift certificate database and a gift certificate service server manage sales of the electronic gift certificates according to requests by a communication terminal through wired and wireless networks.  A user provides a purchase request from a communication terminal, and the server determines if proper funds were supplied for the gift certificate.  If so, the purchased electronic gift certificate is provided to the user and stored in the gift certificate database.  A user can buy a desired product at an online shopping mall through a terminal such as a subscriber's computer, and perform an online settlement with the user's electronic gift certificate.  Here, the electronic gift certificate circulation system can authenticate the user by using a telephone number of the subscriber's communication terminal and an electronic gift certificate password through the online shopping mall, and then settle the corresponding electronic gift certificate.

Claim 1 of the '864 patent is representative and is reproduced below:

1.  A gift certificate service system for managing sales, gifting, and usage of electronic gift certificates according to a request by a user's communication terminal through a wired network, wireless network, or both, comprising:
    a gift certificate service server for managing purchase, gifting, and usage operations on the electronic gift certificates from the communication terminal;
    a gift certificate database, accessed by the gift certificate service server, for storing electronic gift certificate information prior to transferring the gift certificate to a transferee, and processing a reply to an inquiry of electronic gift certificate usage from the gift certificate service server; and
    a network server, accessed by the gift certificate service server and accessed by the user's communication terminal through the wired network, wireless network, or both, for performing a client interface function with the purchase, gifting, and usage of the electronic gift certificates, and transmitting the user's gift certificate purchase particulars and gift certificate information for usage of the corresponding gift certificate to the communication terminal,
    wherein the electronic gift certificate is a multimedia message including barcode data, wherein the network server is responsive to use of the electronic gift certificate occasioned by displaying the barcode data on the communication terminal, and wherein the electronic gift certificate information stored by the gift certificate database includes at least one of a gifting history of the gift certificates or a usage history of the gift certificates.

The '864 patent describes that by unifying an electronic gift certificate management system and a mobile communication system into a single system, the invention simplifies an electronic gift certificate circulation system and allows the electronic gift certificates to be quickly and accurately purchased, gifted, and used.

Defendants filed motions to dismiss for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6).  According to Defendants, Coqui's complaint fails to state a claim because the patents-in-suit are ineligible for patent protection under 35 U.S.C. § 101.

The Court followed the two-step framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts.

A.    Step 1

In step 1, the Court determined whether the claims at issue are directed to a patent-ineligible concept.  Applying the first step of the framework to the asserted claims, the Court concluded that the claims are directed to the abstract idea of selling, gifting, and using electronic gift certificates over a network, which is a longstanding commercial practice.

Coqui argued that claims of the '864 patent represent patent eligible material unique to the Internet directed to a concrete method of purchasing and using an electronic gift card-in the form of a barcode received via a MMS message and displayed on a display device with Internet access-as well as tracking the usage and gifting history of the particular electronic gift card.  In addition, Coqui argued that the additional security provided by the patented method's authentication of gift certificate membership and usage histories is not an established commercial practice defeating Defendants' abstract idea allegation.

However, the Court found that the claims of the '864 patent relate to the abstract idea of selling, gifting, and using an electronic gift certificate.  The preamble of claim 1 identifies a gift certificate service system for managing sales, gifting, and usage of electronic gift certificates according to a request by a user's communication terminal through a wired network, wireless network, or both.  Claim 1 subsequently lists the following elements:  (1) a gift certificate service server; (2) a database; and (3) a network server.  Each of the subsequent claim 1 limitations refer back to either managing the purchase, gifting and usage operations or the gifting or usage history of electronic gift certificates.

The Court noted that a gift certificate is defined in the '864 patent as a bill that has an exchangeable value so that a user may give it to a shop to make a purchase or get a discount on a desired product.  Applying the Internet and computer components to the commercial practice of electronic gift certificates does not preclude a finding that the '864 patent is abstract.

The Court highlighted that the claims of the '864 patent do not improve the functioning of a computer or any of the other components involved in the method.  Instead, the asserted claims add conventional computer components to well-known business practices.

The Court found that the '864 patent's alleged security benefits do not confer patent eligibility because the authentication of a gift certificate transaction could be performed by a human with a pen and paper.  The preferred embodiment of the '864 patent describes a database that stores a gifting history and usage history as well as a history of gift certificates bought by the client to authenticate that the client's gifting or usage of the electronic gift certificate is fair.  Such authentication could be performed using a pen and paper; therefore, the Court found that the '864 patent is directed to an abstract idea despite the added security benefits that might result from using a computer to perform authentication.

In addition, authenticating and verifying the balance of the electronic gift certificate was found to be abstract because it relates to the "organizing of human activity."

B.    Step 2

Because the '864 patent was found to be directed to the abstract idea of selling, gifting, and using electronic gift certificates, the Court turned to the inventive concept analysis in step 2.

The '864 patent claims implement the longstanding commercial practice of selling, gifting, and using gift certificates by using a generic computer and networking components in conventional ways.

Coqui argued that the '864 Patent offers a useful, non-conventional and non-generic arrangement of components and functionality, namely, an inventive configuration of components that solve problems associated with conventional gift certificate circulation like the requirement of being physically present to purchase a gift certificate and additional settlement processes.

But the computer components described in the '864 patent are generic and function in conventional ways.  The communication terminal is used as a "mobile user interface."  The service server is used for "managing purchase, gifting, and usage operations."  The database is used "for storing electronic gift certificate information."  The network server is used for "transmitting . . . gift certificate information . . . to the communication terminal."  These components, as described in the '864 patent, operate in their typical capacities in conventional ways and do not embody an inventive concept.  The '864 patent does not specify precise devices that must be used in the method or provide any explanation about how the software solves a technological problem.

Coqui also did not explain or argue that the arrangement of the components or some type of configuration unique to the '864 patent improves the functionality of a generic computer or solves a technical problem.

The Court noted that the application of barcodes, MMS messages, and devices with Internet access to a system comprising generic computing components for circulating electronic gift certificates is not an inventive concept.

The Court discounted the idea that the '864 patent improves the electronic gift certificate process by facilitating the purchase, usage, and gifting of certificates without requiring the customer to be physically present in the store as not being an inventive concept because it was found that the claims at issue here do not solve a technological problem.  Instead, the claims provide a conventional technological environment (i.e., computers and the Internet) in which to carry out the abstract idea of using electronic gift certificates.

Because the claims were found to be directed to an abstract idea without an inventive concept, the Court recommended to grant defendants' motions to dismiss pursuant to Rule 12(b)(6).

Coqui Technologies, LLC v. Gyft, Inc. (D. Del. 2018)
Report and Recommendation by U.S. Magistrate Judge Sherry R. Fallon

USPTO Issues Updated Subject Matter Eligibility Guidance

By Michael Borella --

On January 4, the U.S. Patent and Trademark Office published updated examination guidance regarding the subject matter eligibility of inventions involving abstract ideas.  The guidance went into effect on January 7, upon its publication in the Federal Register.

In substance, the new guidance falls in line with statements made previously by USPTO Director Andrei Iancu.  But at first blush, it does not appear to be a radical departure from substantive USPTO examination practice despite raising a few additional procedural hurdles that examiners are to overcome before rejecting claims under 35 U.S.C. § 101.  Further, the guidance is non-binding on examiners and the PTAB.[1]

Will the existence of the guidance result in more consistent examining practices across USPTO technical centers, art units, and examiners?  Time will tell.  But at the very least, the way in which § 101 rejections are rebutted by applicants is likely to become more nuanced.

Prior USPTO § 101 examination practice was to combine the § 101 statutory language with the exceptions set forth in Alice Corp. v. CLS Bank Int'l.  First, in what the USPTO refers to as step 1, the examiner was to determine "whether the claimed subject matter falls within the four statutory categories of patentable subject matter identified by 35 U.S.C. 101: process, machine, manufacture, or composition of matter."  If the answer to this question is that it does not, then the claims are to be rejected as non-statutory.

Otherwise, the two-part Alice test is applied.  The USPTO refers to these parts as steps 2A and 2B.  Step 2A involves determining whether a claim is directed to a judicial exception, such as an abstract idea.  If not, then no § 101 rejection can be made.  But if the claim involves such an exception, step 2B is applied to determine further whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exception.  If this is the case, the claim is patent-eligible under § 101.  If not, it can be rejected.  Notably, under step 2B, elements that are well-understood, routine, and conventional, alone and in combination, have no patentable weight.

The January 4 guidance only modifies step 2A, and leaves steps 1 and 2B intact.  But in a rather odd and semi-redundant manner, the USPTO is now breaking step 2A into two sub-steps that mirror the language and procedure of steps 2A and 2B.

In particular, these two sub-steps (let's call them 2A(i) and 2A(ii) for purposes of clarity), involve the following:

• In sub-step 2A(i), the examiner is to determine whether the claim recites a judicial exception, such as an abstract idea.
• If so, then in sub-step 2A(ii), the examiner is to determine further "whether the recited judicial exception is integrated into a practical application of that exception."

In an attempt to make sub-step 2A(i) easier to follow, the USPTO has set forth three general classes of abstract ideas.  We can think of them as the "three M's" -- math, money, and mental steps.  Or, in the words of the USPTO:

a) Mathematical concepts – mathematical relationships, mathematical formulas or equations, mathematical calculations;

b) Certain methods of organizing human activity – fundamental economic principles or practices (including hedging, insurance, mitigating risk); commercial or legal interactions (including agreements in the form of contracts; legal obligations; advertising, marketing or sales activities or behaviors; business relations); managing personal behavior or relationships or interactions between people (including social activities, teaching, and following rules or instructions); and

c) Mental processes – concepts performed in the human mind (including an observation, evaluation, judgment, opinion).

Thus, rather than reviewing the case law and attempting to make an analogy between the claim under examination and a precedential opinion, examiners can consult this list of abstract ideas.  But the list is not meant to be exhaustive nor exclusive.  The USPTO notes that "[i]n the rare circumstance in which an examiner believes a claim limitation that does not fall within the enumerated groupings of abstract ideas should nonetheless be treated as reciting an abstract idea", the examiner can view the claimed as directed to a "tentative abstract idea."  If this categorization would result in a rejection, "the examiner should bring the application to the attention of the Technology Center Director," who then must approve the rejection and "provide a justification for why such claim limitation is being treated as reciting an abstract idea."

The new sub-steps of 2A are worth digging into.  The goal of step 2A as revised is to clarify the determination of whether a claim is directed to an abstract idea.  Presumably this clarification is needed because the exact scope of the "directed to" language of this step has proven difficult to define.

Sub-step 2A(i) instructs examiners to "identify the specific limitation(s) in the claim under examination (individually or in combination) that the examiner believes recites an abstract idea."  But examiners are also asked to "determine whether the identified limitation(s) falls within the subject matter groupings of abstract ideas" listed above.  Thus, the examiner's burden under sub-step 2A(i) is two-fold:  point out specific claim language reciting an abstract idea, and explain how that language fits into one or more of the three categories of abstract ideas.

If the analysis moves on to sub-step 2A(ii), the examiner determines "whether the claim as a whole integrates the recited judicial exception into a practical application of the exception."  Such a claim "will apply, rely on, or use the judicial exception in a manner that imposes a meaningful limit on the judicial exception, such that the claim is more than a drafting effort designed to monopolize the judicial exception."

The examiner carries out this latter inquiry by "(a) identifying whether there are any additional elements recited in the claim beyond the judicial exception(s); and (b) evaluating those additional elements individually and in combination to determine whether they integrate the exception into a practical application, using one or more of the considerations laid out by the [courts]."  A successful integration of an abstract idea into a practical application may include:

    an additional element reflects an improvement in the functioning of a computer, or an improvement to other technology or technical field;
    an additional element that applies or uses a judicial exception to effect a particular treatment or prophylaxis for a disease or medical condition;
    an additional element implements a judicial exception with, or uses a judicial exception in conjunction with, a particular machine or manufacture that is integral to the claim;
    an additional element effects a transformation or reduction of a particular article to a different state or thing; and
    an additional element applies or uses the judicial exception in some other meaningful way beyond generally linking the use of the judicial exception to a particular technological environment, such that the claim as a whole is more than a drafting effort designed to monopolize the exception.

This language should look familiar.  It mirrors that of step 2B -- the second prong of the Alice test.  But the USPTO clarifies that "revised Step 2A specifically excludes consideration of whether the additional elements represent well-understood, routine, conventional activity."  Putting this together, revised 2A appears to require that examiners consider all elements of the claim, dividing the claim into the recitation of the abstract idea and the additional elements.  Then examiners are to determine whether the sum of the additional elements results in an integration into a practical application, but do so without any consideration of whether these additional elements are known (i.e., in the prior art).  In other words, for computer-implemented inventions, whether a claimed technique is performed by generic processors, memory, and peripherals should be irrelevant to revised step 2A.[2]

But even if the applicant loses on step 2A and the claim is found to be directed to an abstract idea by sub-steps 2A(i) and 2A(ii), step 2B still applies.  This guidance does not touch that part of the test.  Therefore, a claimed invention that is not well-understood, routine, or conventional should still be patent-eligible under Alice as interpreted in Berkheimer v. HP Inc.

The USPTO provides an example in an attempt to clarify the distinction between sub-step 2A(ii) and step 2B:

For example, when evaluating a claim reciting an abstract idea such as a mathematical equation and a series of data gathering steps that collect a necessary input for the equation, an examiner might consider the data gathering steps to be insignificant extra-solution activity in revised Step 2A, and therefore find that the judicial exception is not integrated into a practical application.  However, when the examiner reconsiders the data gathering steps in Step 2B, the examiner could determine that the combination of steps gather data in an unconventional way and therefore include an "inventive concept," rendering the claim eligible at Step 2B.

So why is the USPTO promulgating a potentially confusing two-prong test to replace one prong of another two-prong test?  Is this the first step of making the Alice inquiry infinitely recursive?  To hazard a guess, it is an attempt to mitigate one of the most controversial and problematic aspects of Alice -- how much of the § 101 analysis should be decided as a matter of law and how much should be a matter of fact.  By effectively eliminating prior art from the revised step 2A analysis, examiners can now find claims to be patent-eligible without comparing the claimed invention to what is well-understood, routine, and conventional.  But to find claims patent-ineligible, such a comparison should be made and it may incorporate factual questions per Berkheimer.

Despite all of that, revised step 2A opens a new can of worms.  What exactly does it mean for "the recited judicial exception [to be] integrated into a practical application of that exception?"  How much integration is required?  How does one identify a practical application thereof?  As noted above, the examples provided by the new guidance mirror the language of the Alice decision itself, which is not a paragon of clarity.  Further, how broadly are examiners going to interpret the three categories of abstract ideas?  While the "math" and "mental processes" buckets are relatively cut and dry, the "methods of organizing human activity" bucket is fairly expansive.

Current § 101 examination practice in the USPTO can vary dramatically between technical centers, art units, and even examiners within the same art unit.[3] While a handful of examiners appear to have a reasonable, if not above-average, grasp on the nuances of the § 101 case law, others do not.  Consider a business method invention that claims a technical improvement.  Review by a poorly-trained junior examiner, in an art unit with a § 101 specialist that believes virtually all data processing to be per se abstract, can rapidly devolve into absurdity that would make both Kafka and Monty Python proud.

And will the courts give any deference at all to claims issued under the new guidance?  Probably not, as the judiciary's concern is whether a claimed invention complies with the relevant case law rather than whether the USPTO's test is satisfied.

In sum, we will have to wait and see how the new guidance plays out in practice.  If anything, the additional procedural requirements introduced and the limiting of abstract ideas to only three categories is likely to favor applicants for at least some types of inventions.  It is unlikely that any claims that could be found patent-eligible under previous examination procedures are suddenly going to be viewed as ineligible under the new guidance.  Modulo examiner variability, of course.

Applicants will likely have to adjust their § 101 rebuttal strategies to specifically address and argue sub-steps 2A(i) and 2A(ii).  But applicants should still argue the case law as well, because it may be helpful to have such arguments on the record should the file history be reviewed.

[1] "All USPTO personnel are, as a matter of internal agency management, expected to follow the guidance.  Failure of USPTO personnel to follow the guidance, however, is not, in itself, a proper basis for either an appeal or a petition."

[2] Then again, if reciting "an improvement in the functioning of a computer" renders a claim patent-eligible under step 2A(ii), what is the frame of reference for evaluating this improvement?  What does the claim improve upon if not the prior art?

[3] In the new guidance, the USPTO states that "[t]he legal uncertainty surrounding Section 101 poses unique challenges for the USPTO, which must ensure that its more than 8500 patent examiners and administrative patent judges apply the Alice/Mayo test in a manner that produces reasonably consistent and predictable results across applications, art units and technology fields."

Top Five Stories of 2018

By Donald Zuhn –-

After reflecting upon the events of the past twelve months, Patent Docs presents its 12th annual list of top patent stories.  For 2018, we identified fifteen stories that were covered on Patent Docs last year that we believe had (or are likely to have) a significant impact on patent practitioners and applicants.  In previous posts, we counted down stories #15 to #11 and stories #10 to #6, and today we count down the top five stories of 2018.  As with our other lists (2017, 2016, 2015, 2014, 2013, 2012, 2011, 2010, 2009, 2008, and 2007), links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look.  As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with anything we included, please let us know.  In addition, we will be offering a live webinar on the "Top Patent Law Stories of 2018" on January 16, 2019 from 10:00 am to 11:15 am (CT).  Details regarding the webinar, which will focus on a handful of the most important stories on this year's list, can be found here.

5.  Supreme Court Denies Certiorari in Regeneron Pharmaceuticals v. Merus

In October, the Supreme Court denied certiorari to Regeneron Pharmaceuticals in its appeal of the Federal Circuit's decision in Regeneron Pharmaceuticals v. Merus that affirmed the District Court's decision that the claims of Regeneron's patent-in-suit were unenforceable due to inequitable conduct.  In so doing, the Court passed up the opportunity to consider whether the Federal Circuit's split panel decision was consistent with its inequitable conduct jurisprudence, most recently handed down en banc in Therasense, Inc. v. Becton, Dickinson and Co.  The case arose over Regeneron's infringement suit against Merus involving U.S. Patent No. 8,502,018, which is directed to transgenic mice expressing human variable domain immunoglobulin (Ig) genes.  During prosecution of the '018 patent, four references were known to Regeneron and its counsel, but were not cited to the U.S. Patent and Trademark Office.  Although neither the District Court nor the Federal Circuit found these references, alone or in combination, satisfied the requirements in the statute for invalidating the '018 patent claims, the District Court found that these references were "but for" material and this satisfied the first prong of the Therasense test for finding inequitable conduct.  With regard to the second prong of the Therasense test, intent to deceive, the Federal Circuit found the District Court's drawing of an adverse inference based on the litigation misconduct catalogued by the District Court in its opinion was not an abuse of discretion.  Because intent to deceive is personal (insofar as it applies only to those individuals who have a Rule 56 duty to disclose), it seems inequitable to draw such an inference against the attorneys who prosecuted the '018 patent based on the conduct of litigation counsel who did not have a Rule 56 duty of candor and were not involved in prosecuting the '018 patent to allowance.  The decision also perhaps raises questions of whether improperly rendering a patent unenforceable for inequitable conduct by a misapplication of the Therasense standard may amount to a 14th Amendment violation for taking property rights without due process.  These issues, however, were not enough for the Supreme Court to consider them worthy of its review.

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

• "Supreme Court Denies Certiorari in Regeneron Pharmaceuticals v. Merus," October 7, 2018

4.  Federal Circuit Rejects Use of Tribal Sovereign Immunity to Shield Patents in Inter Partes Review Proceedings

In July, in St. Regis Mohawk Tribe v. Mylan Pharmaceuticals, the Federal Circuit affirmed the decision by the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office that denied the Tribe's motion to terminate Mylan's inter partes review proceedings as being barred by tribal sovereign immunity.  The issue arose over six IPRs (and parallel IPRs filed by Petitioners Teva Pharmaceuticals USA, Inc. and Akorn, Inc., which had been joined with Mylan's IPRs) instituted against six U.S. patents.  After the PTAB instituted IPRs against the six patents owned by Allergan and directed to its Restasis^® product, Allergan assigned its rights in the patents to the Tribe in return for a license.  The Tribe argued unsuccessfully before the Board that as rightful owner of the patents the Board lost jurisdiction based on tribal sovereign immunity.  The Board held that, as an issue of first impression, the Tribe had not borne its burden of showing it was entitled to the requested relief, and that the nature of the license left all substantive patent rights with Allergan, and thus that the company could amply represent the Tribe's rights even in its absence.  The Federal Circuit affirmed, with Fed. Maritime Comm'n v. S.C. State Ports Auth., 535 U.S. 743 (2002), forming the basis of the panel's opinion.  In particular, the panel found IPRs to be more akin to federal administrative proceedings (in which the Federal government is the "superior sovereign" and tribal immunity does not apply) than to a dispute between private parties, in which a government agency plays an adjudicatory role (as in the FMC precedent).  It is very likely that the Tribe will file a petition for certiorari to the Supreme Court.  In view of the importance of the issue of the proper scope of tribal sovereign immunity (and the Court's recent penchant for patent law cases), there is a good chance that the final decision on this matter has not been rendered.  So, it is likely that tribal sovereign immunity will be back on our Top Stories list again next year.

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

• "St. Regis Mohawk Tribe Petitions Federal Circuit for En Banc Review of Panel Decision Voiding Sovereign Immunity in Inter Partes Review," August 21, 2018
• "Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2018)," July 22, 2018
• "Federal Circuit Issues Stay in St. Regis Mohawk Tribe Sovereign Immunity Appeal," March 28, 2018
• "Senators Introduce Bill to Abrogate Tribal Sovereign Immunity," March 14, 2018
• "St. Regis Mohawk Tribe (and Allergan) File Motion to Preclude PTAB Final Written Decision in IPR," March 12, 2018
• "St. Regis Mohawk Tribe and Allergan Appeal Denial of Motion to Dismiss on Sovereign Immunity Grounds," March 1, 2018
• "PTAB Denies St. Regis Mohawk Tribe's Motion to Terminate IPRs based on Sovereign Immunity," February 25, 2018
• "Amicus Briefs Filed in Mohawk Tribe's Motion to Dismiss IPRs," January 28, 2018
• "The PTAB Strikes Back -- Issues Order Prohibiting St. Regis Mohawk Tribe from Filing Any Additional Papers in IPR," January 8, 2018
• "Skeptical St. Regis Mohawk Tribe Requests Discovery Regarding Panel Selection Circumstances," January 3, 2018

3.  PTAB to Adopt Same Claim Construction Standard Used in Litigation

In May, the U.S. Patent and Trademark Office published a notice of proposed Rulemaking in the Federal Register to change the claim construction standard used in inter partes reviews, post-grant proceedings, and covered business method reviews.  Instead of the broadest reasonable interpretation standard, the Office proposed adopting the same standard used by district courts and the ITC.  In October, the Office published a new rule specifying that the PTAB apply the same claim construction standards in IPRs, PGRs, and CBMs filed on November 13, 2018 or later as would apply in litigation.  Under the new rule, the PTAB will also consider claim construction decisions from litigation (whether from courts or the U.S. International Trade Commission) in construing claims in AIA proceedings.  The new rule abandons the PTO's former approach of using the broadest reasonable interpretation in claim construction, and thereby reflects a continuing move from considering AIA proceedings analogous to prosecution to considering them analogous -- or part of -- the litigation process.  Notably, the new rule recognizes -- and adopts -- the canon of construction that claims will be construed, if possible, to preserve their validity.  The wholesale adoption of the Phillips standard for claim construction provides a clear benefit:  court and ITC claim constructions will be directly relevant to AIA proceedings, and vice versa.  While the outcome of the claim construction process was previously generally the same under either standard, it technically involved different legal standards.  Now, the decisions in the two types of fora will be directly relevant to one another, increasing efficiency and decreasing cost.  And because the rule specifically indicates that "[a]ny prior claim construction determination concerning a term of the claim in a civil action, or a proceeding before the [ITC], that is timely made of record in the . . . proceeding will be considered," the chance of inconsistent decisions will be greatly lessened.

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

• "PTAB Adopts Litigation Standards for Claim Construction in AIA Proceedings," October 11, 2018
• "USPTO Proposes Harmonizing Claim Construction Standard In PTAB Proceedings," May 9, 2018

2.  Federal Circuit Holds That Patent Eligibility is Question of Law That May Contain Underlying Facts

In February, the Federal Circuit provided a degree of clarity as to the evidentiary standard applicable to a § 101 challenge on summary judgment in Berkheimer v. HP Inc.  In that case, Steven E. Berkheimer brought an action against HP in the Northern District of Illinois, alleging infringement of U.S. Patent No. 7,447,713, which is directed to "digitally processing and archiving files in a digital asset management system."  After a Markman hearing in which the District Court construed several claim terms, HP moved for summary judgment under § 101.  The District Court granted the motion and Berkheimer appealed.  On appeal, Berkheimer argued that summary judgment was improper because whether the claimed invention is well-understood, routine, and conventional is an underlying fact question for which HP offered no evidence.  The Federal Circuit concluded that "[w]hether claims 4-7 perform well-understood, routine, and conventional activities to a skilled artisan is a genuine issue of material fact making summary judgment inappropriate with respect to these claims."  The Federal Circuit's holding and supportive reasoning appear to be the first time that the Court has explicitly required that a district court make findings of fact in order to justify a § 101 decision.  In April, the U.S. Patent and Trademark Office issued a memorandum on the Berkheimer decision to the patent examining corps, noting that when applying the second part of the Alice test, an Examiner should not find that an additional element is well-understood, routine or conventional unless the Examiner can expressly support (in writing) that finding using one of four rationales:  a citation to an express statement in the specification or to a statement made by an applicant during prosecution, a citation to one or more court decisions, a citation to a publication (provided that the publication demonstrates that the additional elements are widely prevalent or in common use in the relevant field), or a statement that the Examiner is taking official notice (provided that the Examiner follows the procedures of MPEP § 2144.03 for taking official notice).  In May, the Federal Circuit denied en banc review of Berkheimer (and of the related case, Aatrix Software, Inc. v. Green Shades Software, Inc.).  However, in September HP filed a petition for writ of certiorari with the Supreme Court, and the case was distributed for conference on January 4, 2019.  So, it is likely that the Berkheimer case will be back on our Top Stories list again next year.

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

• "In re Marco Guldenaar Holding B.V. (Fed. Cir. 2018)," December 30, 2018
• "Deadline to Submit Comments to USPTO on Berkheimer Memo Approaching," August 5, 2018
• "Will Alice Become the New Markman?" July 19, 2018
• "Federal Circuit Denies En Banc Review of Berkheimer and Aatrix," June 3, 2018
• "USPTO Updates Patent Eligibility Guidance in View of Berkheimer," April 23, 2018
• "Berkheimer Files Response to HP's Petition for En Banc Review," April 1, 2018
• "Whether Facts Matter in the Patent Eligibility Analysis: HP Files Petition for En Banc Rehearing," March 20, 2018
• "Aatrix Software, Inc. v. Green Shades Software, Inc. (Fed. Cir. 2018)," February 18, 2018
• "Berkheimer v. HP Inc. (Fed. Cir. 2018)," February 8, 2018

1.  Supreme Court Finds Inter Partes Review Proceedings Constitutional

In April, the Supreme Court held in Oil States Energy Services, LLC v. Greene's Energy Group, LLC that inter partes review proceedings do not violate Article III or the Seventh Amendment of the Constitution.  Justice Thomas, writing for the 7-2 majority, explained that a grant of a patent is a matter involving a public right.  Moreover, because IPR proceedings involve the same basic matter as the grant of a patent, they also fall within the public rights doctrine.  As a result, the Constitution does not prohibit the Patent Office from resolving issues of validity post issuance outside of an Article III Court.  Important to the Court's analysis was the lack of distinction between IPR proceedings and the initial grant of the patent because "[p]atent claims are granted subject to the qualifications that the PTO has 'the authority to reexamine – and perhaps cancel – a patent claim' in an inter partes review."  Justice Gorsuch dissented, and was joined by Chief Justice Roberts.  In his dissent, Justice Gorsuch explained that the history of the patent system and the prior case law required the finding that patents are private rights, and therefore must be adjudicated in Article III courts.  Both the majority and dissent cited to the 1898 Supreme Court decision in McCormick Harvesting Machine v. Aultman in support of their opinions.  Justice Gorsuch pointed to the broad sweeping language from that case that stated "[t]he only authority competent to set a patent aside, or to annul it, or to correct it for any reason whatever, is vested in the courts of the United States, and not in the department which issued the patent."  The majority, however, pointed out that this language is "best read as a description of the statutory scheme that existed at that time," and did not address whether Congress had authority to establish an entirely different scheme.  In fact, before the 1870 change to the patent statute discussed in McCormick Harvesting, Congress had provided examiners with absolute discretion to cancel any reintroduced original claim in a reissue proceeding.  It was the fact that Congress withdrew this grant of authority before McCormick Harvesting that made the Patent Office's cancellation of original claims in reissue proceedings a violation of due process and an invasion on the then-exclusive jurisdiction of the judicial branch by the executive.

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

• "Oil States Energy Services, LLC. v. Greene's Energy Group, LLC (2018)," April 24, 2018

Top Stories of 2018: #6 to #10

By Donald Zuhn –-

After reflecting upon the events of the past twelve months, Patent Docs presents its 12th annual list of top patent stories.  For 2018, we identified fifteen stories that were covered on Patent Docs last year that we believe had (or are likely to have) a significant impact on patent practitioners and applicants.  Yesterday, we counted down stories #15 to #11, and today we count down stories #10 to #6 as we work our way towards the top five stories of 2018.  As with our other lists (2017, 2016, 2015, 2014, 2013, 2012, 2011, 2010, 2009, 2008, and 2007), links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look.  As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with anything we included, please let us know.  In addition, we will be offering a live webinar on the "Top Patent Law Stories of 2018" on January 16, 2019 from 10:00 am to 11:15 am (CT).  Details regarding the webinar, which will focus on a handful of the most important stories on this year's list, can be found here.

10.  Does Unsettled § 101 Jurisprudence Preclude Attorneys' Fees

In December, in SAP America, Inc. v. InvestPic, LLC, the Northern District of Texas awarded $679,420.46 in attorneys' fees to SAP America after the Federal Circuit affirmed an earlier decision of the District Court finding InvestPic's '291 patent invalid under 35 U.S.C. § 101.  SAP America was successful in its attempt to obtain attorney's fees based on a supposedly weak litigating position under § 101.  However, since Alice v. CLS Bank, just about any patent involving software or a business method can have its validity challenged under § 101.  Moreover, not even the federal courts have been able to crack the § 101 egg.  It is well-known that multiple federal judges have commented on the record that Alice was hard to apply in practice.  In addition, Judge Wu of the Central District of California criticized Alice for setting forth an "I know it when I see it" test.  Judge Pfaelzer, a colleague of Judge Wu, wrote that the Supreme Court's patent-eligibility cases "often confuse more than they clarify [and] appear to contradict each other on important issues."  In July, in Interval Licensing LLC v. AOL, Inc., the Federal Circuit's Judge Plager wrote that the post-Alice § 101 inquiry "renders it near impossible to know with any certainty whether the invention is or is not patent eligible."  And these are just a few examples of judicial confusion.  There are more.  For example, in September, in Gust, Inc. v. AlphaCap Ventures, LLC, the Federal Circuit ruled 2-1 that § 101 jurisprudence was too murky to be used as the basis of an attorney's fees award.  Writing in a concurring-in-part and dissenting-in-part opinion, Judge Plager concluded:

This emperor clearly has no clothes; we need not wait for our children to tell us this.  The legitimate expectations of the innovation community, as well as basic notions of fairness and due process, compel us to address this § 101 conundrum.

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

• "SAP America, Inc. v. InvestPic, LLC (N.D. Tex. 2018)," December 10, 2018
• "Gust, Inc. v. AlphaCap Ventures, LLC (Fed. Cir. 2018)," September 30, 2018
• "Interval Licensing LLC v. AOL, Inc. (Fed. Cir. 2018)," July 24, 2018
• "Cellspin Soft, Inc. v. Fitbit, Inc. (N.D. Cal. 2018)," July 12, 2018
• "SAP America, Inc. v. InvestPic, LLC (Fed. Cir. 2018)," May 20, 2018

9.  En Banc Federal Circuit: USPTO Not Entitled to Attorneys' Fees in § 145 Appeals

In July, the Federal Circuit handed down an en banc decision in NantKwest, Inc. v. Iancu, regarding the question of whether under 35 U.S.C. § 145 an applicant must pay the U.S. Patent and Trademark Office's attorneys' fees as part of the "expenses" the statute mandates, regardless of whether the applicant won or lost the case.  The District Court had rejected the Office's argument that it was entitled to recover attorneys' fees (and other expenses), and a divided panel of the Federal Circuit reversed the District Court's decision and ordered payment of the Office's fees.  The Federal Circuit chose to review the panel's decision sua sponte, and the en banc Federal Circuit affirmed the District Court's decision, over a spirited dissent, holding that the Office was not entitled to its attorneys' fees in appeals under § 145.

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

• "NantKwest, Inc. v. Iancu (Fed. Cir. 2018) (en banc)," July 29, 2018

8.  Supreme Court to Decide Whether Government Can File Petitions for Post-Grant Review

In October, the Supreme Court granted certiorari in Return Mail, Inc. v. U.S. Postal Service, in order to answer the question whether the government can bring post-grant review proceedings under the Leahy-Smith America Invents Act (AIA).  Specifically, the Supreme Court agreed to review whether the government is a "person" under the AIA, as is required to file a petition seeking the institution of AIA review proceedings.  The case began with Return Mail seeking to license its '548 patent, which claims methods, computer programs, and systems for processing undeliverable or returned mail, to the Postal Service.  Instead of licensing the '548 patent, however, the Postal Service filed a petition for ex parte reexamination with the U.S. Patent and Trademark Office.  The USPTO instituted the reexamination proceeding, but eventually confirmed the validity of the patent.  Return Mail then filed a complaint against the Postal Service in the Court of Federal Claims.  While that action was pending, the Postal Service filed a petition seeking the institution of covered business method (CBM) review of the '548 patent.  Return Mail opposed the institution of the CBM review​ on both substantive and procedural grounds, including that the Postal Service lacked standing to file a CBM petition.  Both the PTAB and a majority of the Federal Circuit panel hearing the appeal found that the Postal Service satisfied the requirement that it be a "person."  The Supreme Court granted certiorari on the issue of whether the government is a "person" in the context of the AIA's CBM proceeding.  Thus, by the middle of next year, we should know whether government agencies are "persons," permitted to bring AIA proceedings.

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

• "Supreme Court to Decide if Government Can Bring AIA Proceedings," October 29, 2018

7.  Supreme Court: PTAB Must Render Final Written Decision on All Challenged Claims

In April, the Supreme Court reversed the judgment of the Federal Circuit in SAS Institute Inc. v. Iancu, with Justice Gorsuch (joined by the Chief Justice and Justices Kennedy, Thomas, and Alito) providing a textual explication of the inter partes review (IPR) statute in deciding that the U.S. Patent and Trademark Office was compelled to render a Final Written Decision (FWD) on all claims challenged by a petitioner in its IPR petition.  This decision overruled the Patent Office's practice that the Director (through the Patent Trial and Appeal Board) could institute an IPR on less than all challenged claims and then limit the FWD to only the instituted claims.  Just two days after the Supreme Court's decision, the U.S. Patent and Trademark Office issued Guidance regarding how the PTAB will apply the Court's mandate in SAS Institute.  In particular, the Office noted that for all pending and future-filed petitions, the Board will institute on all challenged claims so long as the petitioner has shown a reasonable likelihood of invalidating at least one of the claims, and for cases where the Board has engaged the parties in partial institution proceedings, the Board "may" issue an order "supplementing the institution decision to institute on all challenges raised in the petition."

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

• "USPTO Issues Guidance on Supreme Court Ruling in SAS v. Iancu," April 26, 2018
• "SAS Institute Inc. v. Iancu (2018)," April 24, 2018

6.  Supreme Court to Decide Whether AIA Changed Application of On-sale Bar

In June, the Supreme Court granted certiorari on Helsinn Healthcare's petition to overturn the Federal Circuit's decision in Helsinn Healthcare v. Teva Pharmaceuticals that its patents were invalid by application of the on-sale bar under 35 U.S.C. 102(b).  The Question Presented in the petition was as follows:

Whether, under the Leahy-Smith America Invents Act, an inventor's sale of an invention to a third party that is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention.

The issue is specifically related to the question of whether the AIA changed the application of the on-sale bar.  In December, the Supreme Court heard oral argument in this case.  The Supreme Court's decision will likely land this case on our Top Stories list again next year.

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

• "Supreme Court Hears Oral Argument in Helsinn v. Teva," December 6, 2018
• "Supreme Court Grants Certiorari in Helsinn Healthcare v. Teva Pharmaceuticals," June 26, 2018

Top Stories of 2018: #11 to #15

By Donald Zuhn –-

After reflecting upon the events of the past twelve months, Patent Docs presents its 12th annual list of top patent stories.  For 2018, we identified fifteen stories that were covered on Patent Docs last year that we believe had (or are likely to have) a significant impact on patent practitioners and applicants.  Today, we count down stories #15 to #11, and in the coming week, we will work our way towards the top stories of 2018.  As with our other lists (2017, 2016, 2015, 2014, 2013, 2012, 2011, 2010, 2009, 2008, and 2007), links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look.  As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with anything we included, please let us know.  In addition, we will be offering a live webinar on the "Top Patent Law Stories of 2018" on January 16, 2019 from 10:00 am to 11:15 am (CT).  Details regarding the webinar, which will focus on a handful of the most important stories on this year's list, can be found here.

15.  USPTO Implements New Authentication System

In October, the U.S. Patent and Trademark Office announced the implementation of a new authentication method for signing into the EFS-Web and Private PAIR, which will replace the use of PKI certificates, and which constitutes a major change in the way stakeholders interact with the USPTO's Patent Electronic Business Center (EBC).  The Office has indicated that the new method will provide users with access to the EFS-Web and Private PAIR until the full release of Patent Center, which is scheduled to replace the EFS-Web and Private PAIR, in 2020.  When announcing the new authentication system, the Office cautioned practitioners that migration to link USPTO.gov accounts to PKI certificates should be completed by the end of October (using the Office's migration tool), sponsorship of support staff should be completed by the end of November (using the Office's sponsorship tool), and that PKI certificates would be phased out on December 31, 2018.  While implementation of the new authentication system has been a fairly straightforward process for many stakeholders, many others were happy to receive an early holiday gift from the USPTO on December 21, when the Office announced that it was delaying the date on which PKI certificates would be retired.  The Office's latest word on PKI certificate retirement is that "EFS-Web and Private PAIR users will no longer be able to authenticate using PKI certificates as of February 15."

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

• "USPTO Delays PKI Certificate Termination Date," December 23, 2018
• "USPTO Director Issues Notice on New Authentication System for EFS-Web and Private PAIR," December 3, 2018
• "USPTO News Briefs," October 25, 2018
• "USPTO Moving to New Authentication System for EFS-Web and Private PAIR," October 4, 2018

14.  Federal Circuit Affirms PTAB Decision Finding No Interference in CRISPR Dispute

CRISPR (an acronym for Clustered Regularly lnterspaced Short Palindromic Repeats), which is part of a system for altering chromosomal sequences in situ in a cell in combination with a bacterially derived protein called Cas9, was hailed as a "Breakthrough of the Year" for 2015.  CRISPR provides a mechanism for inserting or deleting specific DNA sequences using CRISPR-associate targeting RNAs and the Cas9 RNA-guided DNA endonuclease enzyme.  Given the commercial potential of this method, patenting was an obvious concern and, as it turned out, more than one group of inventors filed patent applications on the reagents, methods, and cells produced or used to produce CRISPR modifications.  Because these applications were filed prior to March 16, 2013, the dispute regarding who was the first to invent had to be resolved via an interference.  In 2016, the USPTO declared Interference No. 106,048, naming Feng Zhang and his colleagues, the named inventor of the Broad Institute/MIT's patents, as the Junior Party, and Jennifer Doudna and her colleagues at UC/Berkeley as Senior Party.  In February of 2017, the Patent Trial and Appeal Board handed down its decision, finding no interference-in-fact between several patents and patent applications owned by The Broad Institute and applications owned by the Regents of the University of California, Berkeley.  The decision ended the interference and allowed both parties to license (and assert) their patents to (or against) any third party.  The basis for the decision was that UC's claims would not anticipate Broad's claims-in-interference because all of Broad's claims contained the affirmative limitation that the CRISPR technology be operative in eukaryotic cells, and the UC's claims were devoid of any limitation regarding the context in which CRISPR was applied.  In September, the Federal Circuit affirmed the PTAB's decision that there is no interference-in-fact between the Broad's twelve patents and one application-in-interference and the University of California/Berkeley's pending application, thereby concluding the interference between the parties.  This marks the third consecutive appearance – and perhaps the last -- on our Top Stories list for the CRISPR dispute (the dispute was #19 in 2017 and #18 in 2016).

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

• "Whither CRISPR? University of California/Berkeley Granted Another CRISPR Patent," October 30, 2018
• "Regents of the University of California v. Broad Institute, Inc. (Fed. Cir. 2018)," September 10, 2018
• "The CRISPR Chronicles -- Broad Institute Wins One and Loses One," January 24, 2018

13.  Federal Circuit Defines Contours of Obviousness-type Double Patenting Doctrine

Four years after issuing decisions in AbbVie Inc. v. Mathilda & Terence Kennedy Institute of Rheumatology Trust and Gilead Sciences, Inc. v. Natco Pharma Ltd., the Federal Circuit again handed down opinions concerning the proper application of the judicially created doctrine of obviousness-type double patenting (OTDP).  In January, in In re Janssen Biotech, Inc., the Federal Circuit affirmed a rejection by the Patent Trial and Appeal Board of certain claims of U.S. Patent No. 6,284,471 for OTDP.  The co-assignees of the '471 patent argued on appeal that OTDP was not applicable because the safe-harbor provision of 35 U.S.C. § 121 protected the '471 patent claims.  The Federal Circuit determined, however, that the '471 patent was not entitled to safe-harbor protections because the '471 patent had issued from a CIP application (even though the co-assignees sought to re-designate the application as a divisional during a reexamination twelve years after the '471 patent issued).  In December, the Federal Circuit issued two more decisions that help define the contours of the OTDP doctrine.  In Novartis AG v. Ezra Ventures LLC, the Court addressed a narrow but important question regarding its OTDP jurisprudence:  whether a first patent filed earlier than a second patent, but that issued later, could be used to invalidate the second patent on OTDP grounds if the reason the later-expiring patent was later expiring was due to Patent Term Extension (PTE) awarded under 35 U.S.C. § 156.  The Federal Circuit affirmed the District Court's determination that OTDP does not invalidate an otherwise validly obtained PTE under § 156.  In Novartis Pharmaceuticals Corp. v. Breckenridge Pharmaceutical Inc., the Federal Circuit was provided with an opportunity to decide whether the operation of the OTDP doctrine was the same for (a) two patents granted after the Uruguay Round Agreements Act of 1994 (URAA) changed the term of U.S. patents from 17 years from the grant date to 20 years from the earliest claimed priority date, and (b) circumstances in which one patent is subject to the pre-URAA term and the other to the post-URAA term.  In reversing the District Court, the Federal Circuit determined that its decision in Gilead Sciences, Inc. v. Natco Pharma Ltd. did not control in this instance, because the difference between how the patents were related to one another with respect to their expiration dates made a difference in how the doctrine of OTDP should be applied.  The Court noted that "because a change in patent term law should not truncate the term statutorily assigned to the pre-URAA '772 patent," the '990 patent "cannot properly be used as an OTDP reference."

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

• "Novartis Pharmaceuticals Corp. v. Breckenridge Pharmaceutical Inc. (Fed. Cir. 2018)," December 11, 2018
• "Novartis AG v. Ezra Ventures LLC (Fed. Cir. 2018)," December 9, 2018
• "In re Janssen Biotech, Inc. (Fed. Cir. 2018)," January 29, 2018

12.  Federal Circuit Finds Method of Treatment Claims Patent Eligible

Although there were several interesting decisions issued in 2018 that addressed the issue of subject matter eligibility in the context of life sciences inventions (see list below), the most interesting of these decisions to most life sciences practitioners and applicants is likely one issued by the Federal Circuit in April.  In Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals, the Federal Circuit affirmed a District Court decision finding, inter alia, that the claims of U.S. Patent No. 8,586,610, which are directed to methods of treating a patient suffering from schizophrenia with iloperidone, were not invalid under 35 U.S.C. § 101.  Two months after that decision, the U.S. Patent and Trademark Office distributed a memorandum to the patent examining corps that addressed the impact of the Vanda decision.  The memorandum explains that in Vanda, the Federal Circuit determined that the claims at issue are "patent eligible under 35 U.S.C. § 101 because they are not 'directed to' a judicial exception" (emphasis in memorandum).  The memorandum also states that (with emphasis in memorandum):

The USPTO's current subject matter eligibility guidance and training examples are consistent with the Federal Circuit's decision in Vanda, with the understanding that: (1) "method of treatment" claims that practically apply natural relationships should be considered patent eligible under Step 2A of the USPTO's subject matter eligibility guidance; and (2) it is not necessary for "method of treatment" claims that practically apply natural relationships to include nonroutine or unconventional steps to be considered patent eligible under 35 U.S .C. § 101.  For example, claims 5 and 6 of USPTO Example 29 (Diagnosing and Treating Julitis) should be considered patent eligible under Step 2A of the USPTO's subject matter eligibility guidance in light of the Federal Circuit decision in Vanda.

Last week, Hikma Pharmaceuticals and West-Ward Pharmaceuticals filed a Petition for a Writ of Certiorari for Supreme Court review of the Federal Circuit's decision.

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

• "Illumina, Inc. v. Ariosa Diagnostics, Inc. (N.D. Cal. 2018)," December 27, 2018
• "A Glimmer of an Idea on an Experimental Use Exemption," November 7, 2018
• "Roche Molecular Systems, Inc. v. Cepheid (Fed. Cir. 2018)," October 10, 2018
• "Ex parte Galloway (PTAB 2018)," July 26, 2018
• "Illumina, Inc. v. Natera, Inc. (N.D. Cal. 2018)," July 11, 2018
• "USPTO Issues Memorandum on Vanda Pharmaceuticals v. West-Ward Pharmaceuticals," July 9, 2018
• "Supreme Court Denies Certiorari Again in Patent Eligibility and Safe Harbor Cases," June 20, 2018
• "Pernix Ireland Pain DAC v. Alvogen Malta Operations Ltd. (D. Del. 2018)," June 12, 2018
• "Genetic Veterinary Sciences, Inc. v. LABOklin GmbH (E.D. Va. 2018)," May 22, 2018
• "Exergen Corp. v. Kaz USA, Inc. (Fed. Cir. 2018)," March 11, 2018
• "Ex parte Kotanko (PTAB 2018)," February 12, 2018

11.  Supreme Court: Patentees Can Recover Lost Foreign Profits

In June, in WesternGeco LLC v. ION Geophysical Corp., the Supreme Court determined that, based on the "focus" of 35 U.S.C. § 284 of the Patent Act (the general damages provision) when read in light of domestic infringement under 35 U.S.C. § 271(f)(2) (barring exportation of components specifically adapted for a patented invention), a patent owner could recover lost foreign profits.  The decision overruled the Federal Circuit's general practice of interpreting damages under § 271(f)(2) in the same fashion as § 271(a) (the general infringement provision, which does not allow patent owners to recover lost foreign profits).  Justice Thomas, joined by Chief Justice Roberts and Justices Kennedy, Ginsburg, Alito, Sotomayor, and Kagan, determined that despite the "presumption against extraterritoriality" in the enforcement of federal statutes, foreign lost profits due to domestic acts of infringement under § 271(f)(2) should not be categorically barred.  The majority reiterated the facts presented and that "the focus of § 284, in a case involving infringement under § 271(f)(2), is on the act of exporting components from the United States."  In this context, because the infringing act happens domestically, any lost profits (foreign or otherwise) based on that domestic infringement were merely a domestic application of § 284.  The dissent (Justices Gorsuch and Breyer) takes issue with the majority's decision permitting a patentee to be sued for damages for the use abroad of a patented article infringed under the provisions of 35 U.S.C. § 271(f)(2), arguing that "[p]ermitting damages of this sort would effectively allow U. S. patent owners to use American courts to extend their monopolies to foreign markets," and that this "would invite other countries to use their own patent laws and courts to assert control over our economy."

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

• "WesternGeco LLC v. ION Geophysical Corp. (2018)," June 24, 2018